This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk05: everyone and welcome to the Boot Barn Holdings fourth quarter fiscal year 2021 earnings conference call. As a reminder, this call is being recorded. It is now my pleasure to turn the conference over to your host, Mr. Jim Watkins, Senior Vice President of Finance and Investor Relations. Please go ahead, sir.
spk12: Thank you. Good afternoon, everyone. Thank you for joining us today to discuss Boot Barn's fourth quarter and fiscal 2021 earnings results. With me on today's call are Jim Conroy, President and Chief Executive Officer, and Greg Hackman, Chief Operating Officer and Chief Financial Officer. A copy of today's press release is available on the investor relations section of Boot Barn's website at bootbarn.com. Shortly after we end this call, a recording of the call will be available as a replay for 30 days on the investor relations section of the company's website. I would like to remind you that certain statements we will make in this presentation are forward-looking statements. These forward-looking statements reflect Boot Barn's judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting Boot Barn's business. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with the forward-looking statements to be made during this conference call and webcast, we refer you to the disclaimer regarding forward-looking statements that is included in our fourth quarter fiscal 2021 earnings release, as well as our filings with the SEC referenced in that disclaimer. We do not undertake any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. I will now turn the call over to Jim Conrad, Boot Barn's President and Chief Executive Officer. Jim?
spk02: Thank you, Jim, and good afternoon. Thank you, everyone, for joining us. On today's call, I will review our fourth quarter and fiscal 2021 results highlight each of our key strategic initiatives, and provide an update on current business. Following my remarks, Greg will review our financial performance in more detail, and then we will open the call up for questions. Looking at our recent results, the fourth quarter was extremely strong, with consolidated same-store sales growth of 26.9%, driven by a combination of underlying strength in the business and external factors, including a boost from recent government stimulus, as well as an easy comparison to the end of March last year. Same-store sales in our physical stores were very strong, increasing 28.5%, with growth driven primarily by an increase in transactions. The momentum our e-commerce business experienced since the start of fiscal 2021 has continued, with sales increasing 19.5% over the same period last year with even more pronounced growth in profitability. Merchandise margins were also very strong, increasing 300 basis points year over year, driven primarily by better full-price selling. Another component of the improvement in merchandise margin was a 120 basis point benefit from lower shrink. I am pleased with the ability to drive profitable sales and maintain our full-price selling philosophy across both channels. The acceleration in sales and strength in merchandise margin resulted in fourth quarter earnings per diluted share of $0.82 compared to $0.20 in the prior year. When adjusting for the tax benefit in both years, we grew earnings per diluted share more than 300% to $0.75 compared to $0.18 in the prior year period. Moving to the full year, despite the impact of COVID-19 and subsequent macroeconomic headwinds, we were able to achieve very strong results. Consolidated same-store sales grew 3.1%, led by e-commerce growth of 23.6%, partially offset by a 1.1% decline in retail stores. For our store comps to be down only 1% for the year, after such a slow start due to COVID, is truly remarkable and shows how strongly the business has rebounded. Our e-commerce business exhibited very strong sales growth during the year and we made significant progress improving the omnichannel experience for our customers. Our continued focus on full price selling and commitment to profitability drove consolidated operating profit growth of 100 basis points during fiscal 2021 to 9.7% up from 8.7% in fiscal 2020. When adjusting for the tax benefits recognized in both periods, earnings per diluted share grew 23% to $1.92 compared to $1.56 in the prior year. We are extremely pleased with the earnings power demonstrated by the business given the myriad of challenges over the last year. I will now provide an update on each of our four strategic initiatives beginning with driving same-store sales growth. During the fourth quarter, we saw very healthy sales across both our stores and e-commerce business. As discussed on our last earnings call, sales started off strong in January with outsized same-store sales growth of 17%, helped by stimulus payments received at the start of the calendar year. While February business was also positive, both in stores and online, We did see a sequential deceleration compared to January as a result of headwinds, including a lack of rodeos and events, delayed tax refunds, and severe weather across much of the country. With the release of additional stimulus funds in the month of March, business re-accelerated with outsized growth in bulk channels, especially in comparison to March of 2020 when sales declined sharply due to the original onset of COVID. From a geographic perspective, we saw solid growth across all three regions of our stores. Business in the West remains strong, showing sequential improvement over the prior quarter. Notably, the North region showed the most sequential improvement from roughly flat in the third quarter to growth similar to the West region in the fourth quarter. The South region, which includes Texas, posted strong growth in the fourth quarter, rebounding nicely after comping negatively in the third quarter. From a merchandise perspective, we saw broad-based growth across all major merchandise categories, with particular strength in work boots, men's and ladies' Western apparel, and Western boots. Consistent with the third quarter, work boots again performed extremely well. The strength in men's and ladies' Western apparel was driven by solid growth in denim and in knit tops. Our work apparel business comped positively during the fourth quarter despite continued pressure on FR work apparel, which declined mid-single digits year over year, which was a sequential improvement from the third quarter. We believe the broad-based growth across merchandise categories is a testament to the strength of the underlying business represents a desire of our customers to refresh their wardrobe, and has been influenced by our customers' receipt of stimulus payments. From a marketing perspective, we continue to focus on each of our core customer segments through a comprehensive media mix by segment that includes radio, television, direct mail, and digital. We use a combination of customized marketing messages and tailored merchandising strategies to address each of our customer segments. During our third quarter call, we discussed our increased focus and attention on the newly created Just Country segment. As part of this initiative, we have augmented our assortment in hiking boots, outerwear, casual footwear, and apparel. We believe that this work, coupled with advantageous consumer trends towards being outdoors and dressing more casually, has enabled us to further increase sales and capture a broader group of customers. From an operational perspective, our field leadership team once again rose to the challenge of the ongoing acceleration in sales volume. I must call out our regional directors and our district managers who pivoted quickly from the challenge of keeping stores open and operating at the onset of the pandemic to then hiring sales associates aggressively and ensuring that every store has a solid management team in place to meet the outsized consumer demand in the business today. During an incredibly tumultuous year, this team managed to grow total annual sales, maintain a high level of customer service, and keep voluntary store manager turnover below 15%. This is quite a feat in retail today, and even more of an accomplishment during a COVID impacted year. I would be remiss not to express my gratitude to this group for the leadership and strength they have shown over the past year. Similarly, our e-commerce team and each of our two distribution centers have been able to keep pace with the surge in demand. In fact, in order to further support the outsized business we are experiencing, we have reduced the reliance on our vendor supply chain. Accordingly, We are servicing more of our e-commerce orders directly from our fulfillment center rather than relying on vendors to drop ship orders. Additionally, we took action early on in the fiscal year by deciding to temporarily warehouse some non-fashion replenishment goods to ensure that we have more control over the replenishment process to the stores, allowing us to react quickly to customers' product needs. I must commend the entire merchandising and supply chain organization for working tirelessly to fuel the spike in business, minimize out of stocks, and enable us to continue to build market share. Moving to our second initiative, strengthening our omnichannel leadership. During the fourth quarter, we saw very strong sales in our e-commerce business with same-store sales increasing 19.5%. As we've discussed for some time, Increasing the profitability of this channel has been a major focus, and therefore we were very pleased to see EBIT growth more than double during the fourth quarter. Once again, BOOTPLINE.com sales outperformed the balance of our e-commerce business with top-line growth of over 40% in the quarter. Sales at SHEPPLERS.com declined when compared to the prior year as a result of the new pricing structure completed in July of last year. Several omnichannel initiatives we've implemented over the past two years, including buy online pickup in-store, buy online curbside pickup, in-store fulfillment, same day delivery, and buy online return in-store continue to be very well received by our customers. We continue to develop faster and more effective ways to deliver e-commerce orders to our customers, further enhancing customer service and mitigating freight costs. Additionally, we are using many of these new capabilities to drive increased traffic to the stores, which is helping us to both drive incremental store sales as well as grow the percent of our customers that shop across both channels. This should serve us well going forward as it further drives customer loyalty and strengthens our competitive position against pure e-commerce players. As we look to fiscal 2022, Our focus will remain on augmenting our omnichannel service offerings while continuing to build the profitability of that channel. Now to our third strategic initiative, exclusive brands. During the fourth quarter, exclusive brand penetration reached 24.2%, an increase of approximately 10 basis points compared to the prior year period, despite facing product constraints due to supply chain disruptions. Our fiscal 2021, Exclusive brand penetration grew approximately 170 basis points over the prior year to 23.7%. We are very pleased with our penetration growth during the year given the challenges we have faced as a result of COVID-19. The high quality nature of our exclusive product is further evidenced by their representation as top selling brands in our stores. Cody James, Cheyenne, Idlewind, and Hawks for each in our top 10 selling brands in the store during the fourth quarter. As we look to fiscal 2022, we have already seen nice improvement in the supply chain. As a result, we expect exclusive brand penetration to grow approximately 250 basis points in our first fiscal quarter, as well as our fiscal year. Finally, our fourth initiative expanding our store base. During the fourth quarter, we opened eight new stores and closed one store, bringing our total store count to 273 stores across 36 states. For the full fiscal year, we opened 15 new stores as planned. We are pleased with our new store performance during fiscal 2021, given the difficult environment and uncertainty with how new stores would perform during the pandemic. Our new stores opened this past year have exceeded our sales plans. and are expected to pay back within our targeted three-year period or better. We continue to be emboldened by the white space opportunity we have across the country to continue building our store base. We have a solid pipeline set up for fiscal 2022 and expect to deliver 10% new unit growth in the coming year. That said, given the impact of COVID-19, We did not re-accelerate our new unit growth plan until the last six months of fiscal 2021. As a result, we expect new store openings to be back half loaded in fiscal 2022. Our current plan is to open approximately three stores in the first quarter and seven stores in each of the second and third quarters with the balance to be opened in our fourth fiscal quarter. I'd now like to provide an update on current business. Our first quarter is off to a tremendous start with both our stores and digital channels continuing to produce very strong results. Given the impact of COVID on our early fiscal 2021 results, we believe that a comparison of current business to the same period two years ago provides the most helpful view into our results relative to a more normalized environment. When compared to the same period two years ago, total sales in the first six weeks of our first quarter increased approximately 67% from $87 million in fiscal 2020 to approximately $145 million. This also represents a sequential acceleration when comparing total sales growth in Q4 of fiscal 2021 for the same period two years ago. Not only has the business been extremely strong, but the week-to-week sales volume has been relatively consistent for the entire six-week period. We are very pleased with the underlying strength of the business and solid execution of the team, and believe that our growth is outpacing the underlying growth in the industry. That said, we do attribute a portion of the strength in the business to our customers' receipt of stimulus payments, pent-up demand, and an overall more favorable macro environment. I'd like to now turn the call over to Greg Hackman.
spk15: Thank you, Jim. Good afternoon, everyone. In the fourth quarter, net sales increased 37.2% to $259 million. The increase in net sales was primarily a result of the 26.9% increase in same-store sales The sales contribution from temporarily closed stores that were excluded from the comp base and the incremental sales from new stores opened over the past 12 months. Gross profit increased 59.4% to $92.4 million or 35.7% of sales compared to gross profit of $58 million or 30.7% of sales in the prior period. The 500 basis point increase in gross profit rate resulted from a 300-point increase in merchandise margin rate and 200 basis points of leverage in buying and occupancy costs. Merchandise margin increased 300 basis points primarily as a result of better full-price selling and a 120 basis point benefit from lower shrink. Operating expense for the quarter was $59.5 million, or $0.23 percent of sales compared to $48.3 million or 25.6 percent of sales in the prior year period. Operating expense increased primarily as a result of additional costs to support higher sales and increased incentive-based compensation. Operating expense as a percentage of sales decreased by 260 basis points primarily as a result of expense leverage on higher sales. Income from operations was $32.9 million or 12.7% of sales in the quarter compared to $9.7 million or 5.1% of sales in the prior year period. Income tax expense was $6.3 million in the quarter compared to $900,000 in the prior year period resulting in an effective income tax rate of 20.3% in the fourth quarter. Net income was $24.6 million or $0.82 per diluted share compared to net income of $5.7 million or $0.20 per diluted share in the prior year period. Excluding the tax benefit in both periods, net income per diluted share in the current period was $0.75 compared to $0.18 in the prior year period. Turning to the balance sheet. Inventory decreased approximately 8.7% on a comp store basis compared to last year. On a consolidated basis, inventory decreased 4.5% to $276 million. This decrease was primarily driven by the reduction in comp store inventory, partially offset by an increase in inventory for the new stores added in the last 12 months. As of March 27, 2021 we had a total of 111.5 million dollars of debt outstanding related to our term loan and zero drawn on our 165 million dollar line of credit we had 73 million dollars in cash on hand at the end of the quarter and our net debt leverage ratio at the end of the quarter was 0.4 subsequent to year end we made a 41.5 million dollar voluntary prepayment on our term loan reducing the outstanding balance to $70 million. While we are pleased with the underlying strength in the business, it is very difficult to parse out the impact and duration of government stimulus, pent-up demand, and macroeconomic tailwinds on the business. Given the circumstances, the company is only providing select full-year fiscal 2022 guidance at this time. In addition to new unit growth of 10% and exclusive brand penetration growth of approximately 250 basis points, the company also expects capital expenditures to be in the range of $33 to $36 million and the effective tax rate for the year to be 26%. Now I'd like to turn the call back to Jim for some closing remarks.
spk02: Thanks, Greg. While fiscal 2021 proved to be a challenging year, I am proud of the resiliency of this organization and the overall strength of the Boot Barn model. We have proven our ability to navigate as a company through difficult times, and I believe we will continue to fortify our leadership position in the Western and work industry. I'm looking forward to fiscal 2022 and the opportunities we have to continue to build the business. Now I would like to open the call to take your questions. Devin?
spk05: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from the line of Matthew Boss. With J.P. Morgan, please proceed with your question.
spk07: Great, congrats, and that's on a really great quarter and even more so on the momentum. Thanks, Matt. So, Jim, maybe on the 67% quarter-to-date comp relative to fiscal 20, and I think even more importantly, the consistency that you mentioned, particularly in May or the back half of that comp period, what do you attribute to the magnitude that you're seeing, and just any way to parse out the micro drivers of continued category opportunity that you're excited about, or the market share opportunity that you see going forward in the Western landscape, which I know is fragmented?
spk02: Sure, good question. We will absolutely start with attributing you know, a healthy dose of our current business to macro. You know, the stimulus checks that came out at the end of March is our immediate pickup in business. I will say that the business has remained very strong for longer than it has in the past coming off of stimulus. So we view that, of course, as very positive. I think one of the things we're experiencing is people are now finally feeling more free to get out, go outside, go out for dinner, et cetera. And we're seeing it across the merchandise categories. So while we were continuing to get some sales growth in the last couple of quarters, More of it was needs-based, and now it's really much more discretionary categories. So it's men's and ladies' apparel. It's Western boots. We've seen a decent business in our exotic skin cowboy boots. And we've seen sort of a pivot from purely functional to just, you know, discretionary and more a wants-based business. To try to give you real specifics, you know, the 67%, Firstly, that is a total sales growth over two years ago. So there are some sales in there attributed to additional store count. That might be 10% or 12% of the 67%. So then the balance is, well, how do you parse up the remaining 55%? I would say that we were coming in with a sales trend of several quarters prior to COVID that were was right around plus 10, and maybe we're executing a bit better than that, but the balance of it is going to be macro, it's going to be pent-up demand. As we look forward, all that said, in attributing a fair amount of the current business to macro, there's still wind in our sails, double entendre unintended, going forward, I suppose, because We're still operating in an environment where many rodeos and concerts aren't going forward, but they're finally starting to come on sporadically. So over the next 12 months, we'll start to see big events, rodeos, concerts that weren't in the LY period come back online. The second macro thing that might give us additional sales going forward is the recovery in the oil patch. We call that FR work apparel for a reason. It's still negative, but it's less negative. The price of a barrel of oil is between 60 and 70 today. And we believe that part of the economy will start to show some more growth. So while some of these macro factors may dissipate over time, we'd like to think that there are some other things that will help us continue a very strong sales growth. perhaps maybe not 67% over two years, but still a pretty strong growth over the next couple of quarters. Hopefully that gave you some color on sort of how we're feeling about the business.
spk07: Yeah, that's great color. And then maybe if we broke it apart one level deeper on brick and mortar. So just given the strength that you're seeing at stores, And then tying to the acceleration in unit growth that you cited for the back half of the year, is there any ceiling for annual unit growth relative to the 10% that you've historically pegged the model at as we look forward? And just any metrics that maybe you could share on some of the new market builds that give you confidence in longer-term accelerating the unit growth opportunity here?
spk02: Absolutely. We feel very good about our new store development. We have a full pipeline, albeit that many of those stores will open in the latter half and even in the fourth quarter of this fiscal year. The positive signs that we're seeing are multiple, to be honest. We've seen very strong openings for brand new stores in essentially brand new markets that may not have the same brand strength, the Boot Barn brand strength that we would see in some of our more mature markets like California and Texas. So that gives us confidence that as we get into parts of the country that may not traditionally seem to be fertile ground for a Western retailer, those stores are doing quite well, and they're doing quite well selling Western products merchandise as well as work merchandise, but the split of business is very similar to the rest of the country. So very strong positive signs from the Northeast markets for the initial group of stores there. The second piece I would say is as we are filling in some of our mature markets, most notably California and Texas, The level of cannibalization that we're seeing from surrounding stores has been very minor. Admittedly, it's being completely masked in today's business by extremely outsized sales growth. But even prior to the acceleration, as we were filling in these more mature markets, the pull from local markets was pretty minor. And then perhaps the third piece of it is to be able to open up new stores during a pandemic when people aren't necessarily out buying footwear and apparel, particularly in new markets, and to have these stores open and project them to be coming in at better than a three-year payback is just very, very confidence-inspiring for a new store. pipeline. So as we get to the next fiscal year, I'd like to think that we'd probably accelerate a bit beyond the 10% new unit growth.
spk07: That's great, Culler. Best of luck, guys.
spk03: Thank you.
spk05: Thank you. Our next question comes from the line of Max Rocklenko with Cowan & Company. Please proceed with your question.
spk06: Great. Thanks a lot. And congrats on a very nice quarter. So Greg, any color on a framework, how you're thinking about gross margin and SG&A for 1Q? And then just maybe more broadly, there are many inflationary pressures across the industry. So how are you thinking about offsetting those, whether it's transportation, labor, or any other headwinds?
spk15: Sure, Max. Great questions. In terms of, we aren't giving specific guidance, of course, but in In terms of gross margin, right, we've continued to see over the past several quarters really nice improvement in full price selling. Some of that's been benefited by exclusive brand growth, and part of that has been just being a bit less promotional, whether it's depth of discounting or duration of the event. So I would expect that we'll continue to expand merchandise margins somewhat. with the help of exclusive brands. So I think that trend will continue. Obviously, the 120 basis point increase in shrink was one time to Q4. I mean, you'd spread that out over four quarters, if you will, to more normalize it. We also benefited, I think, in shrink from having really great customer service. I think our, Jim talked to this, our stores, our field group was really focused on managing that customer connection, and I think that helped us with reducing the external shrink component. You did touch on another piece of gross margin that's probably a headwind, and that is freight expense. We expect to see increased inbound freight expense. We saw a little bit of that in Q4. Having said that, we were able to mitigate that expense by some of the The things that the E commerce team is doing in terms of shipping you know, encouraging the customers to pick up the product at the store. Where we can consolidate a shipment and reduce our freight costs so we'll have good news on the on the merchandise margin expansion and we'll probably have some headwind from freight net I think will will grow our gross margin rates. In terms of SG&A and some of the pressure there, we have seen increased labor costs over the last couple of years. I expect that we'll continue to do that. Again, the field has done a nice job of building a basket, and that helps us alleviate some of that wage rate pressure and kind of keeps the labor rate component in check. And we saw some nice leverage in Q4 with the outsized sales growth Those are the main things. And then finally, in terms of, you know, perhaps vendor pricing increases, I think we'll see some of that. We've heard that from some vendors that they're going to pass along some price or price cost increases, whether it's cotton or perhaps the resin on the performance or boot or whatever. Again, we would expect to pass that along to the customer. We're not uniquely disadvantaged here, right? And so I think we'll be able to, again, manage our margin rate at the level we've done in the past, even with those price increases.
spk06: Got it. That's very helpful. And then can you provide some more color on things that you're doing proactively to drive strong private brand growth? And then on Just Country, how are you seeing that category evolve over time? And do you think that there could be a new private brand on the horizon? And then just last, You've historically spoken to 10-point higher merchandise margins versus national brands. Is that still the case? And as you gain economies of scale, are there opportunities to maybe increase that by several points over time? Thanks a lot, and good luck.
spk02: So the EB growth, there's a couple of things. What's happening in the current and in this quarter is – our supply chain has started flowing again. And we're certainly chasing some businesses here and there. But the big difference between the fourth quarter and the first quarter is the exclusive brand team, the supply chain team has gotten us back in stock and has done that despite the fact that the overall business had grown in such an outsized manner. I think that coupled with the fact that, you know, the stores team is educated on our exclusive brands. They understand the features and functions. They tend to wear the product in the store, et cetera, et cetera. So when you put all those things together, you know, we really are seeing some very nice momentum and exclusive brands that have continued now for several years. Just Country as a customer segment is, you know, is really helping us to continue to drive more sales in general. I'll come back to exclusive brands in one second. But we launched that initiative. The timeliness of it was somewhat coincidental, but very, very fortuitous. Just as people were going out and hiking more and being outside more and wearing more casual clothing, we were launching an initiative that fit that perfectly. So we've seen some really nice early reads on hiking boots, knit tops, both men's and ladies, baseball caps, and all for that customer that is maybe one concentric circle right outside a Western customer, a core Western customer. Your question is spot on. You might surmise that as we look at our portfolio of brands and we have a Western customer and a Western exclusive brand or two, one is men's and one is ladies. And then we have a work customer and we have a work exclusive brand. We are in their early stages of developing new exclusive brands that would be targeting the more country customer. I would not build anything into this year while the product might hit the stores in the fall or into the fourth quarter. We're really looking at that product being a more meaningful part of the assortment in our next fiscal year. And in terms of your last part of your question was around what's the margin expansion opportunity in exclusive brands versus our vendors. We are absolutely getting more efficient. We're getting better economies of scale when we buy and source our exclusive brands. But we're also very keen on developing the best product in the industry. And we want to make sure that if we can get two points more of markup, we might put it right back into the make of the product or maybe split it and make it 11% and put a bit back into the make of the product. Because we want these brands to be able to stand on their own against our other third-party branded partners and let the customer decide what they want to buy. Ironically, one of the things that may happen is as our third-party branded vendors begin to change their pricing to us, it actually might make them a little bit less competitive to the consumer. while they need to run their business and they have been tremendous partners to us in building ours, we may actually wind up with an opportunity to grow exclusive brands even more because we'll wind up increasing the prices of our third-party brands. But for the time being, I would model that 10 points of margin expansion. Got it. Thanks a lot, Jim.
spk06: That's very helpful. You're welcome.
spk05: Thank you. Our next question comes from the line of Jonathan Komp with Baird. Please proceed with your question.
spk13: Yeah. Hi. Thank you very much. Jim, I want to just follow up to maybe clarify how you're thinking about the business. It seems like maybe you're signaling looking at sales on a two-year basis and really using maybe the trend before the most recent period that you've seen. sort of 20% or so growth on a two-year basis, maybe as a floor going forward. So I want to just clarify if that's how you're thinking of things. And then also, when you look forward, what are the events that you're looking forward to, whether it's late July or in the summer in terms of some of the social events coming back that could be meaningful?
spk02: Sure. So on the first piece, right, if you think about 10% new stores. And if we can just X out the fact that they're coming later in the year, but that would give us not quite 10% new sales growth, right? You know, stores are only a portion of total sales and a new store doesn't always operate, doesn't always open at the average volume of a store. So 10% new stores doesn't give us completely 10% new sales growth. And our, our same store sales are underlying same store sales, which of course, is the question I think everybody is trying to understand, as are we. We have been able to post plus 10 comps in store, and better than that, online. And our online business may even get stronger once we cycle the Sheplers.com pricing in July of last year. So our underlying comp can be quite strong as we get through you know, the macro impact of some of the things we're facing right now or the tailwinds that we're benefiting from. In terms of events, there's a number of them. I'll give you two or three real examples. The first is one of the larger rodeos. It's not a massive sales driver like Houston or Fort Worth, but one of the larger rodeos in the country every year is Cheyenne Frontier Days. That happens in July, and it's going forward. Now, notably, that's an outdoor rodeo, not an indoor rodeo, but it certainly seems to be a step in the right direction. Many of the country music artists, including our partner, Brad Paisley, has posted his concert schedule. He is going to be very active over the next several months almost entirely outdoor amphitheater kind of concerts. But both he and Miranda are starting to play, and I think a lot of the country music artists will be much more active than they certainly were in the last 12 months. In December is the finals of the rodeo season. It's in Las Vegas. It drives growth everywhere and a lot of growth in December. So that will be potentially – more opportunity to grow the business. And then perhaps this is two-fold looking, but as we cycle into the spring of next year, this is where some of the real large events we expect will come back. So the Fort Worth Stock Show, the Houston Rodeo, Houston Rodeo is three weeks long, and the entire rodeo season in Texas just has a massive impact on sales. And then we'll get back to cycling festivals in the spring that didn't go forward this year, like Stagecoach or CMA Fest in Nashville. And hopefully those businesses will come back online. So there is reason to believe that there's some optimism looking forward. Again, admittedly, business right now is also benefiting tremendously from some macro factors.
spk13: Excellent. Very helpful. Maybe a follow-up for Greg. When I look at gross margin the last two quarters of above 35% and overall EBIT margin, you know, above 13% combining the most recent quarters, anything in the mix there or the components of the business that's not sustainable from a margin perspective, especially Given some of the commentary about growing the exclusive penetration and continuing to grow e-commerce profitability, just how should we think about using the last two quarters as a baseline from a margin perspective?
spk15: I think if you look at the merchandise margin, John, I think that we believe that expansion, that the improved full price selling, et cetera, can continue. Maybe not at the pace it ran the last two quarters, but but being able to grow it beyond the 25 basis points that we typically call out as it relates to exclusive brand penetration that, you know, we have seen a benefit in leverage, both in the buying and occupancy line that sits within a gross profit. And also in SG&A, we've seen leverage in marketing expense, for example, where we weren't able to, we wouldn't have been able to spend up to the Q4 levels. And frankly, if you look at the Q1 T. quarter to date growth over the two year period, you know that's hard to spend at our typical 3% rate at so I don't think we'll get the same leverage out of buying occupancy and estimate that we've seen the last two quarters. T. But we've managed payroll pretty effectively we've tried to fill open jobs, I would tell you that we've got. a tool that helps us flex up labor that we haven't been able to hit those targets exactly. Part of that is trying to hire more and more people to meet the demand. So long story short, I think some of the leverage will stick with us, and some of it will be transitory. Again, the marketing, we really do want to earmark, call it 3% of sales as a spend, and Q4 and Q1, we didn't do that. And in Q1, I don't think we'll be able to spend to the growth we've seen. But again, labor and corporate overhead, those things, as we're able to grow sales in an outsized way, we'll get leverage.
spk10: Okay, very helpful. Well, thank you. Thank you.
spk05: Thank you. Our next question comes from the line of Janine Stichter with Jefferies. Please proceed with your question.
spk00: Hi. Hi, everyone, and congrats on the incredible momentum. I want to ask a bit about the inventory. I think you mentioned you're doing more of your own fulfillment versus I think you typically do a lot of dropship. Maybe just talk a little bit more about that. Are there any margin implications there, anything we should think through in terms of the impact as the balance sheet? And then secondly, I was just curious about the Schepler's rebranding. I think that was a quarter or two ago. I'm just curious where that stands and if that's still a headwind to e-comm considering the growth you've already seen.
spk02: Okay. On the first piece, there's really two pieces as to what we did differently in our supply chain. The first was because we have a fair amount of product that is low fashion quotient, high replenishment, we sort of pre-bought some of that and brought it into our distribution center, which as you well know, Janine, is that how we typically handle third party goods. Typically they go directly from the vendors distribution center to our stores. But as we started to see the business accelerate, we took a couple of our bigger vendors and said, let's, let's just really be secure with our supply chain, their ability to stay in stock in the stores. And we brought that product into our stores distribution center. I think that is somewhat of a temporary move, and it also wasn't all of our vendors. It was just a couple of them. But having done so, and then competitive shopping some other stores, we're seeing that we have a better in-stock position than lots of other people in our industry based on the fact that we did that. The second piece, and you called out dropship. When we sell product online to the customers coming from us to them, historically 25% of the time, roughly that product would be ordered on boot barn.com or shepard's.com and be shipped to them from the vendor. We've expanded our Wichita based fulfillment center. We've added automation and we've just got a really well oiled machine there. So we have added and broadened the assortment that we carry in Wichita, and we've taken that 25% dropship down to basically in half, roughly 10 or 12%. The margin implications for us is it's actually more profitable because our vendors would charge a dropship fee, which we now don't have to pay. So we can only do this to a point because there's a long tail and we couldn't carry everything that our customers would want online. But as we go a little bit further, we can control more of the supply chain, and it's a bit more profitable to us, and hopefully as good, if not a better, customer experience. The third part of your question was around Sheplers. Two or three different dates, I guess, to remember. We changed the branding of last year in call it april first but we still were very price promotional until about july 1st so when we get to july 1st we'll be cycling more of a full-priced business where now we're cycling a promotional business so while that is a drag on top line which we want the analysts and the investors to understand We're still massively up on a profitability basis on that part of our business, because even in a down sales environment, our margin rate is so much stronger on those sales that it's great for us. Now, once we get to July, we expect that business to be, if not positive, you know, call it flattish. Its profitability profile will remain strong. And, of course, we still expect our BootBarn.com business to be the bigger winner in terms of our two brands online.
spk00: Okay. And just as you think about the difference between Sheplers.com and BootBarn.com, I always thought Sheplers as being the more promotional site. What do you think is, like, the biggest point of differentiation? Are you seeing more cross-shopping between the sites, or at some point do you think most customers should ultimately migrate to BootBarn? How do you think about what Sheplers kind of stands for now that you've rebranded it?
spk02: Sure, the rebranding went back to its roots, which was sort of real hardcore Western. Its focus is a bit more denim-based and apparel-based than Boot Barn. It skews more male. It skews a bit older. And there are, of course, some overlaps between the two brands, but Less than you might think. In terms of the pricing, we like the fact that we have a brand that if we needed to match an irrational competitor, I guess that seems critical, match a competitor's pricing that is lower than our store's pricing, we can chase them down with a different brand, i.e. Sheffler's. and not change the Groupon.com pricing and therefore not have a big disconnect between Groupon.com and the store. So that strategic benefit still exists if we need it. We haven't seen a lot of what I would call irrational pricing behavior in the industry, in the business, which is great. But we do have shiplers to try to cover it if it were to come.
spk00: Great. Thanks for the call.
spk02: Thanks, Jeanine.
spk05: Thank you. Our next question comes from the line of Peter Keese with Piper Sandler. Please proceed with your question.
spk10: Hey, guys. Thanks for taking the time to answer the question and great results. Maybe just to follow up, Jim, with you on the gross margin dynamics. So the merge margin expansion is just tremendous. To think that this change is structural in nature, largely attributed to the dynamics at the Schepler's work, Is there some carryover effect to Boot Barn? And as you mentioned, it's a pretty rational environment and maybe looking forward a year or two. Promotions picking up, the Boot Barn margins could be under a bit of pressure from where they've been.
spk02: Well, let's just isolate the different pieces of your question. We had a very, very strong margin rate improvement in the quarter last You know, Greg called out 200 pips of leverage on the gross margin line, 120 pips of improvement on the merch margin line. So, you know, those are, you know, they're not merchandise margin, which I think is the spirit of your question. What's driving the merchandise margin on a consolidated basis, both stores and e-com, is we continue to back off on large sales and clearance promotions and we're either going less deep or shorter duration or a narrower part of the store being on sale and and as you well know peter the vast majority of our sales are at full price and we're just continuing to increase that we are very clean from an inventory standpoint um as clean as we've been in in years so our clearance inventory which is relatively small always, is even smaller. And I think that will continue for some time, particularly with the top-line sales being as strong as they are. And that leaves exclusive brands. And our exclusive brands have really started to show strength in this quarter. We're quite pleased that we're back to 250 bps plus of penetration growth versus Last year, and I think the outlook there is strong and that will continue to give us margin rate improvement going forward. So we, we tend to fall back right back to our long term algorithm of if we can increase exclusive brands by 2.5 percentage points. That drives 25 tips of merchandise, margin enhancement. We tend to then give ourselves a slightly higher target. And frankly, over the last few years, we've jumped right past both of those targets in terms of merchandise margins because our full price selling has exceeded our expectations. So, yes, that might get a little bit harder to lap, but I don't think – I don't envision a quarter in the near future where we come out and say we've lost 100 basis points of merchandise margin because of pricing pressure or increased sales or higher promotions than a prior year period. I think that would be – Maybe not impossible, but pretty unusual.
spk10: Okay. That's a good answer. Secondly, I wanted to dig into the comments on the Northeast stores. Just for years, there has been skepticism on the Boot Barn model moving into the Northeast. So you talked about the store productivity metrics looking pretty solid. You've got the four stores in Pennsylvania now.
spk02: you're opening up in the northeast are you having to make any changes to the sales mix or do you see any uh differences in the sales mix with with these northeast stores versus the rest of the base or are they kind of right in line with everyone else at a high level there's very little difference now if you were to walk through the store with the boot merchants or the apparel merchants you'd see some differences in aesthetic but Western still outsells work in those parts of the country. We're seeing a really nice business in our ladies apparel business, but that's still a relatively small business in the grand scheme of things. So the nice thing is the model that we have that works across 30 plus states is working up there with pretty minor adjustments. As you will recall, the Boot Barn brand name had some recognition in that part of the country even seven years ago when we were taking the company public and you had done that study. So I think we're benefiting a bit when we open up a store that some number of customers in that part of the country have heard of the brand and they're coming in and while conventional wisdom might be that you're not going to sell cowboy boots and cowboy hats in Pennsylvania, we are seeing that customer show up and they're absolutely buying cowboy hats and cowboy boots.
spk10: Okay. That's also a good answer. So thanks for remembering the study a long time ago, but I'm sure the trends still hold up. So keep up the good work. Thanks, Peter.
spk05: Thank you. Our next question comes from the line of Sam Poser with Williams Trading. Please proceed with your question.
spk04: Thank you for taking my question. I have two. Regarding the supply chain, what percent of your goods are coming from the Americas now? Because you've got a lot of boots and stuff coming out of Mexico. And how impacted are you? And then you have a lot of denim that also comes from the Americas, I think. So what percent... of your order flow is impacted by the port of LA and coming from Asia?
spk15: Yeah, that's Greg. Really good question. And I think it was our last 10K we disclosed that about half of our merchandise comes from China. And I don't think that's meaningfully changed. About a quarter of the merchandise comes out of Mexico, whether it's leather-soled boots or denim. things like that. And the balance is U.S. and perhaps, you know, some other countries. But a lot of our supply chain comes through the ports in Southern California. We're pleased that that seems to be getting more on track. There are still delays, but I think those delays have, you know, have gotten better by 50%, if you will. So we feel pretty good about that. And We continue to chase after product and protect the supply chain. But so far, I don't think it's had any meaningful impact on our top line.
spk04: Thanks. And then secondly, with the 40% comp that you ran on the BootBarn.com business, and you'll get an inventory question from me because I never can resist. Yeah, I understand that. But, I mean, I guess my question is what were the learnings you got from sort of seeing what people actually go to online and how is that impacting the way you assort the stores now? And now that you're running with, as you mentioned, your inventory levels, you know, on a store-by-store basis are relatively low, is this – Do you want to build them back or is this a, you know, are you at a good point here where you're taking learnings from online and applying it to the stores and then being able to achieve your objectives with slightly less inventory?
spk02: Yes, you're absolutely right. We have the ability to get reads online and feed those learnings over to our store merchants online. And as we see things emerge on our e-commerce business, we then either bring them to the stores or expand them more quickly than we otherwise would. One of the other things we're excited about is more and more we have the ability to fulfill our e-commerce demand from our stores inventory. So one thing we're thinking about is can we bring some more of the more exciting merchandise into some stores and use it as a mechanism to drive a better in-store experience. And even if it were to turn relatively slow in-store, we can then sell it down using our e-commerce channel. So both of those things are in play. In terms of overall inventory levels, are we trying to get back to where we were I would say we've learned that we can grow really top line business on a little bit less inventory. With that said, we do wish we had maybe not down 8.7% or something like that, but down 5% versus last year on a comp store basis might be fine. As you know, we have a philosophy as we always want to be in stock, with all sizes, particularly in footwear, and that requires a healthy inventory investment, but we probably can run a little bit leaner than we had in the most recent few years.
spk04: Thanks very much, and continued success.
spk02: Thank you, Sam.
spk05: Thank you. Our next question comes from the line of Paul Louise with Citigroup. Please proceed with your question.
spk11: Hey, thanks, guys. Jim, on the last point, just talking about inventory, are there any places where, in categories specifically, where you feel more constrained than others? Or maybe even a better question is, you know, is there a point in time that you see that there may be some constraint just based on your ability to replenish inventory? goods in certain categories. And I guess along the same line, talking about inventory, just how do you plan to manage inventory as we kind of think about the quarters throughout the year?
spk01: Thanks.
spk02: So in terms of the different categories of the business, so the good news is that the big drivers of the business are are number one, either entirely in stock or mostly in stock, and number two, have an easy substitution effect, right? So work boots, blue jeans, men's cowboy boots, maybe cowboy boots, maybe to a somewhat lesser extent, are number one, our inventory position is pretty good, maybe with some opportunities here and there. But number two, if someone comes in and they're looking for a particular lace-up work boot and we don't have exactly that one, there's a very logical substitute for it. And by the way, I do need to call out that this has been a result of an enormous amount of work by the buyers chasing orders, putting orders back in place after some vendors have canceled them, et cetera. They are, they are working to make this happen. And I think it's part of the reason why our results seem to be outpacing the industry's results. The businesses that are, and the buyers and the merchants who are working even harder are the businesses, which are smaller for us, but still important, which is sort of ladies fashion apparel. Again, you know, it's a smaller piece of our business. But that business has performed extremely well. It tends not to be on automatic replenishment. So we do have to make commitments on somewhat of a more traditional seasonal basis. And we just were not able to forecast the strength of the business that we're seeing in the first quarter, even in the fourth quarter. And frankly, if you even go back to the third quarter call, we saw some real nice strength in ladies apparel. With that said, through sort of hard work and a lot of agility, we've had the ability to find new vendors and get some of that product in place so that business continues to be very strong. But that's the one place that we have some exposure. But we've been managing through it by, frankly, just by hustling like crazy to find that product in different places.
spk11: Got it. And then, Jim, I don't know the last time you gave this number, but I think to remember, maybe it was a couple years ago, you talked about 95% of your assortment sold at full price or, you know, outside of any promotion. Let me know if I'm misremembering that, but I'm kind of curious, how low did that number ever get to, and where are we now?
spk02: So, yeah, we tend to use words like the vast majority because it becomes a little complicated to, mail down a particular number, but it's, you know, I would say it's 75% plus of the store's business. You know, Schepler's used to be highly promotional as less so now. So I would say, you know, even on a consolidated basis, we're probably north of 75, 80% of the business. You know, the balance is all the clearance product and an occasional product promotion that we're running for Mother's Day or for Father's Day, how much smaller can that get? I think we'll always want to have some promotional activity in the stores, just A, that customer does exist and is sometimes looking for a sale. And it also gives us the ability to show some freshness by rotating through some items in one month that might be on sale and some items in the next month that might be on sale. And perhaps one third thing that might remain in our DNA for a time is oftentimes when we're trying to launch a new category of our exclusive brands, in order to try to get faster trial, we'll do some kind of modest promotion to get you know, Cody James jeans into people's closets. So if the question beyond the question is, do we have ongoing opportunity to do even a better job of more full price selling? I think the answer is yes. I think we'll get, you know, diminishing marginal returns as we go forward, but I don't think we're out of ideas. Got it. Thank you. Good luck. Thank you.
spk05: Thank you. Thank you. Our next question comes from the line of Mitch Kumitz with Pivotal Research. Please proceed with your question.
spk08: Yes, thanks for taking my questions. I've got two on the sequential improvement of the business. So you guys, I think you said plus 67 quarter to date on a two-year, and then for Q4 it was a plus 34. I guess my first question on that is that plus 34, is there any way you can give us the breakout by month? It sounds like there was a lot of things happening in the quarter period. And I'm just kind of curious how those months looked on a two year basis. And then I've got to follow it.
spk02: Sure. Um, so your way you, you call out the numbers perfectly from Q4 into Q1 on a two year comparison basis in total net sales, we've gone from approximately plus 34 to plus 67 in terms of sequential improvement between the quarters. Everything has improved, basically. The one business that continues to be negative is FR Work Apparel. In terms of, if you wanted to break it down to monthly sequential two years, it gets a little messy, but the quick answer is we've seen sequential improvement from February to March, March to April. And then a slight sequential deceleration from April to May, which is in the earnings relief. The messiness comes in February and March of fiscal 2021, we didn't have rodeos. And in February and March of fiscal 2019, we did have rodeos in Texas. And that's meaningful enough to register on the total sales basis. We've seen a really nice progression, very nice sequential improvement. Part of it is overstated, a small part, admittedly, by the fact that rodeos existed two years ago and didn't exist this year during February and March in Texas.
spk15: And, Mitch, I just want to clarify. I think you said 34%. Our total growth in Q4 was 37% to the prior year.
spk08: I was looking at the two-year. I thought it was 34. I calculated it as 34. But anyhow, my second question, just again, as it pertains to the sequential growth, is it fair to say that the bulk of the improvement is happening in these discretionary categories, categories that might be more dependent upon social interaction? I'm just trying to understand, you know, Is the money flowing to discretionary because it's stimulus dollars that tend to be used? I mean, that's discretionary income and people are spending it, or is it more because we're kind of starting to enter a post-COVID environment and people are interacting socially again, and so those dollars are flowing to those categories that have been depressed for the last year? How do you see that?
spk02: So I think the second piece of what you said is a huge factor. I think people are just refreshing their wardrobes. You know, there's some conversation around they need new sizes up or down. Not passing judgment, Greg. But there's also just the You called it, right? People are going out more. People are going to restaurants more. They're going out to bars more. And they're wearing, you know, our core customer wears our product. And they want new outfits. It's plain and simple. A part of it is certainly stimulus. I'll just tell you the way we think about it internally is we saw the jolt of stimulus in the third or fourth week of March. And it was a jolt. It was a very positive jolt. And immediately the next week, the business came down slightly, but then has kept pretty close to that level for the next five or six weeks. So stimulus is in the system for sure. But it seems to be more than that now, given the duration of the strength of the business. And it just seems to be more macro consumer trends, you know, people buying new pairs of pants and new footwear. You're right that if you want to really parse out the sequential improvement, work boots was strong and is still strong and slightly stronger, but the other categories, the more discretionary categories, have improved pretty significantly over that period. Okay. That's helpful. Thanks, guys.
spk03: Of course. Thank you.
spk05: Thank you. Our next question comes from the line of Jerry Hamlin with Craig Hallam. Please proceed with your question.
spk14: Thanks, and congrats on the tremendous performance. I wanted to come back to the gross margins for a second here. The improvement in shrink caught my attention just for the magnitude of it. 120 basis points, I think you called out. In terms of thinking about sustainability of that, that's a pretty high year-over-year change in shrink. Is that something that you feel like the rest of fiscal 22 that you have some gains you can make on that, or is there something maybe specific in that quarter that allowed such a large gain?
spk15: Really good question, Jeremy. The way I think about it is in the first half of the year, our store sales were somewhat depreciating. depressed right more depressed in the first quarter than the second quarter and our teams really took that opportunity with reduced customers in the store to provide outstanding customer service and I think that that helps us manage our shrink levels right and so I do think a piece of that was was opportunistic they made the most of the customer traffic that came in the store and And so that may not be as repeatable, but if I were to parse out, you know, how much of the 120 relates to that, it might be 20 basis points or 30 basis points. Um, the balance has been really, you know, just being focused on both I'll say paperwork and, and, uh, you know, that paper shrinks off as well as, as, um, you know, again, outstanding customer service and paying attention to people, you know, turning in known thefts, all those kinds of things. So I think a lot of that sticks with us as we move through fiscal 22.
spk14: Great. And then, you know, in terms of thinking about channel performance, you know, moving forward, you talked a little about Shepler's and the dynamics there, but In thinking about the outperformance that you're seeing, retail, same-store sales, in the March quarter, there's obviously some dynamics here in the current quarter. But in terms of thinking about the back half of the year when all your stores will be wrapping periods in which they were all open, Just thinking about that and expectations around which channel of business you expect to be higher in the back half of this year, how should we be looking at that? Do you think that retail stores are going to continue to outperform, and if so, why?
spk02: It's a very good question, and as Greg pointed out, we're trying to avoid providing real guidance on sales because it's just so complicated with so many macro factors. I think we can give you some color commentary on that. First, just a small point of clarification. The retail store business versus e-commerce business, retail stores will still be 80-20 versus e-commerce. Retail stores will continue to be that majority. of the business. I think you're asking about the growth rate, which I'll address. One other minor point for the benefit of everybody listening on the call, our stores were open last year. Now, business was depressed in many markets, but one of the things that has enabled us to capture new customers and build our market share is the fact that we stayed open in most markets, not every market, but every market that we legally could, we stayed open. You're right to call out that the retail store business will start to cycle stronger comps as we go forward. On a consolidated basis, in the second quarter, we cycle a minus 5.51, something like that. So unless something changes massively, we should be able to outperform in the second quarter. In the third quarter, we returned to positive comps. And if you went back through our third quarter call, I think we were plus 5-ish, 4.6. And we actually had positive retail store comps there, low single digits. But notably, that was on negative transactions. I certainly do not have the ability right now to project what's gonna happen in the holiday period of this upcoming year. But if this were sort of a normal year, I'd say, you know, we have, from Astoro's perspective, we have a relatively straightforward compare in the LY period. When we get to the fourth quarter of this year, it gets much more complicated, right? We had stimulus driving growth in January and stimulus driving growth in March, the offset to that pressure will be hopefully a full and vibrant rodeo season in Texas. That's going to be very hard to parse out. But I must say, it's going to be very hard to cycle our March business with a positive comp. I mean, our March business was so incredibly strong. But we'll still have on an absolute dollar basis, a very healthy, very profitable month, of course. So that's the best I can do to give you a sense for how we view the upcoming quarters from the store's perspective. The e-commerce business is cycling strong business, but pretty consistent quarter to quarter from a growth rate perspective. That's helpful. Keep up the great work, guys.
spk01: Thanks, Jeremy.
spk05: Thank you. Our next question comes from the line of Jay Sol with UBS. Please proceed with your question.
spk09: Great. Thank you so much for taking my question. Jim, I just wanted to ask you about some of the actions you took, it sounds like a couple months ago, about positioning inventory and maybe just changing some things, how you're doing the supply chain to be ready for this moment where stimulus was a big help and consumers came back. What was the insight that you had into your consumer that gave you confidence to take those actions and do things differently than maybe you had done in the past, you know, ahead of, you know, January, February, March, and April sales?
spk02: So, insight into the customer, it's a good question. You know, we do have a customer that needs our product as more – oftentimes has functional reasons for buying our product, et cetera. So we did see some strength building earlier. I'd say the other thing, though, and this is the bet that we made, but it was a bet with a low downside risk, which was given the fact that so much of our product is replenishment-based and low fashion and low markdown risk, and many other retailers were, particularly mall-based retailers, were slower to get customer traffic, perhaps through no fault of their own. We said, well, let's just kind of be aggressive from an inventory standpoint and buy into a stronger than perhaps expected sales trend. And it just, it turned out to be It turned out to just work out really well. And again, the credit really goes to the merchandising team that made that happen. But it was a, it was sort of an easy bet to make, I guess. All I'm saying is because if it didn't work out, all we would have had is a slower inventory turn, not a huge margin rate degradation. And, you know, the second part of it, all we did was take some vendors, product into our distribution center to make sure we had total security that we could stay in business in the stores. And that has worked out really well as well. I do think we'll transition out of that pretty quickly. That's not our model, but we have the space to do it. We had a team that could step up from a distribution center standpoint and get it done. So we brought on some more product.
spk09: Got it. Okay. Thanks so much. Thank you.
spk05: There are no further questions at this time. I'd like to turn the floor back over to management for closing remarks.
spk02: Well, thank you, everyone, for joining the call today, and we look forward to speaking with you all on our first quarter earnings call. Take care.
spk05: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.
Disclaimer