Good day, everyone and welcome to the Boot Barn Holdings Incorporated Third Quarter Fiscal Year 2019 Earnings Call. As a reminder, this call is being recorded. Now I would like to turn the conference over to your host, Mr. Jim Watkins, Vice President, Investor Relations. Mr. Watkins, please go ahead.

Thank you. Good afternoon, everyone. Thank you for joining us today to discuss Boot Barn's third quarter fiscal 2019 earnings results. With me on today's call are Jim Conroy, President and Chief Executive Officer; and Greg Hackman, 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 on this conference call and webcast, we refer you to the disclaimer regarding forward-looking statements that is included in our third quarter fiscal 2019 earnings release, as well as our filings with the SEC referenced in our 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 Conroy, Boot Barn's President and Chief Executive Officer. Jim?

Thank you Jim, and good afternoon. Thank you for joining us. On today's call, I'll be providing a review of our third quarter results and an update of each of our four strategic initiatives. Greg will then review our financial performance in more detail. Following Greg, we will open the call up for your questions. We are thrilled with our third quarter results which reflect continued strength across the business in virtually all geographies and major product categories. Beginning with our top line, consolidated same-store sales increased 9.2% with double-digit growth in e-commerce and high single digit growth in retail stores. Strong sales combined with 120 basis points of improvement in merchandise margin drove earnings per share of $0.66 in the quarter. When excluding $0.27 in the prior year related to tax reform we grew EPS approximately 43% year-over-year in the quarter. We believe the continued focus on each of our four strategic initiatives helped fuel these strong results during the holiday quarter. I would now like to take a moment to provide an update on each of them starting with driving same-store sales growth. We are very pleased with the robust same-store sales growth we achieved in the third quarter which was highlighted by our seventh consecutive quarter of positive comps in our retail stores. At the same time, digital sales once again increased double-digits as our direct channel maintained the strong momentum it experienced in the second quarter. The increase in same-store sales was driven by both an increase in transactions and a larger basket with wide spread growth across most of the country. Notably, Texas continued to deliver results above the chain average even as it cycled in exceptionally strong performance in the prior year period. Nearly all major product categories grew year-over-year with particular strength in…

Thank you, Jim. Good afternoon everyone. In the third quarter net sales increased 13% to $254 million. As Jim mentioned, sales growth was driven by a 9.2% increase in same-store sales, the contribution from acquired stores and from sales stores from these stores added over the past 12 months. During the quarter we added two new stores bringing our store count at the end of the quarter to 234 stores in 31 states. Gross profit increased 19% to $85.7 million or 33.7% of net sales compared to gross profit of $71.9 million or 32.0% of net sales in the prior year period. The 170 basis point increase in gross profit rate resulted from a 120 basis point increase in merchandise margin and 50 basis points of leverage in buying and occupancy costs. Merchandise margin rate increased as a result of more full price selling and growth in exclusive brand penetration. Operating expense for the quarter was $56.4 million or 22.2% of net sales compared to $47.5 million or 21% of net sales in the prior year period. Operating expense increased primarily as a result of additional costs to support higher sales and expenses for both new and acquired stores. As a percentage of sales operating expense increased primarily as a result of higher incentive compensation in the current year and a gain from insurance claims that lowered operating expense in the prior year. Excluding these items we had approximately 30 basis points of operating expense leverage. Income from operations was $29.3 million or 11.5% of net sales in the quarter compared to $24.4 million or 10.9% in the prior year period. This represents more than 60 basis points of improvement in operating profit margin. Net income for the quarter was $19 million or $0.66 per diluted share. This compares to…

Thanks Greg. We are pleased with the strength of our third quarter results and are excited about the current momentum we are seeing in the business through the first five weeks of our fiscal fourth quarter. As we look forward to the end of the year and into fiscal 2020, we are eager to drive same-store sales, continue our store growth, strengthen our omni-channel capabilities and enhance margins through increased exclusive brand penetration. Before we open up the call to take your questions, I would like to thank the entire Boot Barn team for their hard work and dedication to growing the brand and delivering strong results. Thank you for your many contributions toward the success of Boot Barn. Now, I would like to open up the call to take your questions. Justin?

Well, thank you. [Operator Instructions] The first question comes from Matthew Boss with JPMorgan.

Great, congrats on a nice quarter guys.

Thanks, Matt.

Thanks, Matt.

So as you breakdown the comps that you are seeing, I guess maybe can you speak to the composition between traffic and ticket and then anything other than potential conservatism and just time remaining in the quarter behind the embedded moderation and trend that you have in the 4Q guide?

Sure. I think the comp, yes, we're really pleased with the health of the comp. Right? It is driven by more customers, more transactions and a higher basket. During the most recent quarter transactions is about 60% and basket was about 40%. For the last few quarters prior to that it was probably 80/20 in favorable transactions and in the quarter we're in right now it is probably about 80/20 in favorable transaction. So this is a very, very healthy same-store sales growth driven by more people shopping. As you know we've reduced promotions and sort of we're getting a nice pickup in merchandise margin rate. And we've seen strength across the country, across the country in virtually every geography, virtually every merchandise category, so we're pleased not only with the overall business, but with the health of the comp and we've been able to do that while really focusing our e-commerce business on the bottom line almost more than the top line. So if we were just trying to drive same-store sales growth higher then we could "buy" some more sales online and get even a better comp. But we're not focusing on doing that. We're really focusing on the profitability of the business. So that gives you a bit of color on sort of the growth and the health of the comp. In terms of the fourth quarter guide, we're five weeks into the quarter, but we're not tied to key – way through our sales volume given the volume like come to the end of February and into March with rodeo season in Texas, yes particularly you can say there is some conservatism in the guide. You know we'd like to put out a number that we feel good about and as you know we're rocking a plus 12 in the fourth quarter of last year and so that's in the back of our mind. As we look at the January business I think we are further involved in that we can kind of cycle a pretty strong quarter last year and continue to deliver a positive same-store sales great number.

That's great. And then on the expense front, I guess what's the comp you see needed to leverage SG&A in the fourth quarter and is that the same as we think to next year, just maybe any incremental investments you see constraining model flow through or is that pretty clean from here on out?

Its relatively clean math. Bonus, incentive based compensation has been a little bit higher this year than last year and continues to be higher. The e-com team delivering outsized EBIT growth, et cetera. So that's been a bit of a pressure point. We do expect to see leverage based on our guidance of 5 to 7 in the quarter.

Great, that's about it.

Thank you.

Thanks.

And our next question will come from Jonathan Komp with Baird.

Yes, hi, thank you. I wanted to ask first just following up on the quarter-to-date commentary, could you just remind us how things started off last year, just trying to get a sense of the multiyear trend that you're seeing and then maybe color on the balance of the quarter too what you'll be facing, just give a little more color there?

The quickest way to answer that is that fourth quarter last year across the three months was roughly consistent. The only inconsistency actually was related to the prior year when tax refunds came later and it dipped February sales improved much of the business. But when we look at last year's Q4, the business was roughly consistent throughout the months. As we were on the call I think we called out a high single digit comp in the stores last year in January and what we called out today was we are from a two-year stack basis we're plus 20 in the stores. So we're thrilled with the ability to go up again essentially double-digit comp last year and post another double-digit comp this year. And for the balance of the quarter while there is more volume ahead of us it is not necessarily an inclined plane from a interior sales perspective.

I mean is there any, just following up on what you just mentioned, the acceleration in January in the store performance relative to the third quarters is there anything that you can pinpoint within that, any geographies or categories that stand out?

I guess, you know, we've seen strength across the business, the Texas business in January is actually stronger than the Texas business was in the third quarter. And as a reminder, Texas was better in the third quarter than the chain average even as it went up against the recovery from Houston. So that's helped us, but essentially everything seems to be working right now across the country and across merchandise categories. So you know, we feel great about the underlying strength of business.

Okay great. And then maybe one other margin related question for Greg. Just wondering if the recent and in the last quarter or so the pull back in some of the promotions, I'm curious if that's a shift in mindset that you have internally and as you look forward, how much more opportunity is there to pull back on the promotional activity? Just trying to think about the formulate the merchandise margin projections for the quarter ahead and further out what we should expect there?

You know, when we talked about this for probably three or four quarters, Jon, it's a great question. The mindset here is to make sure that the promotions are delivering incrementality meaning more customers shopping and it is not gratuitous right? That we're not just giving a discount to the customer that shows up to buy work boots that day. So the mindset across the organization is to be careful with our promotions and we'll continue to look at that as an opportunity. The big promotions for us are Christmas time and we're pleased with our merchandise margin expansion in the quarter by 120 basis points, part of that was because of the 17-day promotion at the beginning of the quarter that we had our Boots sale the prior year and we didn’t anniversary that, so a fair amount of that 120 relates to more regular price selling because we were off promotions for those 17 days this year. But as we look forward we do think this is an area to expand margin, but it won't be the main driver like increasing private brand penetration though we get a 1000 basis points of improvement points that we increase the exclusive brands.

Okay great, I appreciate that perspective. Thanks guys.

Thanks, Jon.

Thanks, Jon.

And the next question comes from Peter Keith with Piper Jaffray.

Good afternoon guys. It's actually Bobby [indiscernible] for Peter. Thanks for taking my question. First just on oil markets, I know there's always a lot of focus on Texas, but on the bigger problems in the oil downturn a few years ago was in the Dakota, in the Colorado Wyoming area. So I was wondering if you could give an update on how those stores are performing, also maybe where those stores are from a sales based standpoint versus four years ago when oil rolled there?

So the quick answer is on the oil markets that are non-Texas, they are essentially in line with the rest of the business. So we haven’t seen any real pressure there. I think the other thing that's worth noting and it's kind of coming to the second piece of your question, if you went all the way back to an oil rate at $100 a barrel, you know some of those stores were extremely high sales volume and when oil prices came down to $30 a barrel, they lost a lot of their volume and have been building it back up. But we're not close to where they were, so even – but we're frankly not very worried about the price of oil and I think that is something that is kind of now in our rear view near. But even if it became a depressed ail price for an extended period of time, we have just not as far to fall in some of these stores from where they were at their peak sales volume and average store basis back in 2014. So that's kind of the way we're thinking about the business.

All right, thanks for the color, Jim. Just a followup on tax refunds, and those reports out there and what are views that tax refunds will be up for a lot of middle America. Just wondering if you could discuss how you think about your position as a beneficiary of higher consumer spend if it is indeed a strong tax refund season?

But we're not banking on that. There has been a lot of discussion about that in the news and some other retailers have called it out. We haven’t built it into our Q4 sales forecast. Having said that, it would be nice additional tailwind to our business. But the one decent color that we can share and I sort of said this earlier is, if you went back a couple of years when tax refunds were later, we absolutely saw the impact to our customer. So, our customer does get that check and in many instances it is the largest check they'll get throughout the entire year. And if that check this year does come in outsized it would be a nice incremental tailwind to what we're guiding to and so we'll see and if that comes we'll be quite pleased and if it doesn’t, well I think our business will still be pretty solid.

All right great, thanks a lot and good luck this quarter.

Thank you.

Thank you.

And moving on to Oliver Chen with Cowen and Company.

Thank you, great quarter. Regarding e-commerce, as you think about the momentum there and the opportunity, you'll be anniversaring some nice increases as well. What do you see happening in terms of growth in traffic and the opportunity for traffic in the market versus factor is that you are driving in terms of keeping up momentum as compares toughen? And also the factors that you spoke to about driving profitability, we just love your view on what inning you are with profitability drivers online as well?

So it's a good question. Yes, we are beginning to cycle stronger numbers right? In the third quarter last year e-commerce business actually comped negative, so we cycled those numbers and posted I think a pretty solid double-digit comp with some really strong improvement in our EBIT rate. Even in January, as we're starting to cycle some very strong e-commerce business we're continuing to focus on profitability. We're continuing to look at a return on ad spend. We're looking at pricing and margin for EBIT eroding items on the site and that will slower overall comp. We're still positive e-commerce of course. We are - we'll just continue to focus on driving more profitability there. And in terms of what inning we're in, I'd say we're about half way through as I – the fourth inning, the bottom of the pit or top of the pit or something. We started this about six months ago. We really pressed the accelerator down during the holiday quarter and Black Friday and Cyber Monday and didn’t cheese unprofitable sales. And I think can continue to do that for this quarter and going through the first and second quarter of the next fiscal year. And it's a constant day-to-day tweaking and remixing of the business and looking at what items are selling, what their out the door EBIT is, what our return on ad spend is, how that splits brand and non-brand. So I give a lot of credit to that team for really focusing on a healthy e-commerce business and healthy growth and not chasing sort of unprofitable growth.

And you found a lot of success in private label and so has that changes or helped and formed more optimism about where private label should go next and how you are thinking about inventory as well as product planning in the year ahead?

It’s a very true question Oliver. We are quite pleased with the receptivity of the two new brands on the work side of the business. The conventional wisdom had always been that our core work customer might be a little bit harder to switch over to new brand and of course they have tried to do to whatever brand they had worn either it is work wear or work boots. And with the launch of Hawx apparel and Hawx boots and the launch of Cody James work boots we've seen a really nice pick up in those businesses and we called out that January's improvement in exclusive brands was 3.5 points of penetration which is an acceleration from where we've been over the last few years. So I do think there is a bit more opportunity in exclusive brands given the fact that we've demonstrated while early that the work customer would be receptive to a new brand and we're getting a new work customers that is buying Hawx and entering Boot brand perhaps for the first time. Having said that, I would want to ensure that we will continue to rely on our third party branded vendors for the majority of our business for a long period of time going forward. So there maybe some of the tertiary brands will be minimized or removed from the stores, but some of our bigger vendors continue to grow in shipments to us and continue to be extremely important to the house of brands that Boot Barn is.

Thank you, and last question, some of the techniques you've been using in terms of segmentation as well as marketing strategy are quite advanced. What are your thoughts on the impact that that's having and what we should know about in terms of driving traffic and transactions in the stores and online?

Look, I think we've gotten, we've developed a CRM capability a couple of years back. We married up the science and analytics of that group with sort of the art of the creative and we have taken essentially every single one of our customers and have signed them into one of three different customer segments and in some cases you can belong to more than one. And while I think that has absolutely helped our business thus far and helped us communicate to these customers in a much more meaningful ways specific to what they are interested in, I think we will need opportunity for us to get better at that. So we continue to develop our capability, we continue to test and learn new techniques from a targeting standpoint through email and direct mail and in social. That will continue to push the team to further sophistication using more advanced analytics and seeing how far we can take it.

Thanks and best regards.

Thank you.

And our next question comes from Janine Stichter with Jefferies.

Hi, congrats on the quarter.

Thank you.

Thank you.

I'm interested in that number you quoted, I think you said a 7% increase in the number of same-store customers purchasing, just want to dig a little bit there and if you can give some thoughts on what might be driving that, how that compares to prior quarters? And then if you have any sense of how much of that might be new customers versus last? I think that you are seeing new customers any sense that maybe where that customer is coming from?

Okay, those are beautiful questions. So we've seen an increase in net new customers on the same-store basis over the last several quarters, I think it is five quarters in a row now. And that growth is two pieces, which we haven't really split out, but it is brand new customers trialing Boot Barn as well as customers that had shopped with us in the past and have now come back. I think what attribute that to is, probably two different things. If you were a Boot Barn customer in the past and for whatever reason had lapsed, but we've changed the assortment, we've changed the in-store merchandising and probably more than anything we've changed the look and feel and creative of our marketing and I think we've reawakened that customer to bring Boot Barn back into the store. In terms of new customers, we've also shifted our media mix a little bit away from spending money on direct mail, only going to our own customers that are already in our database and doing more broadcast type marketing whether that's television or radio or social to introduce brand new customers into the brand. And I think what works in conjunction with that strategy is the launch of Idyllwind by Miranda Lambert, we are clearly thrilled to have that product line in the store, like equal to the merchandize is the marketing muscle that comes with a performer like Miranda and what she does to bring the Boot Barn brand and it's awareness to her 3 plus million Instagram followers and 8 million Facebook followers and the countless fans that go see her in concert. So it's a very coordinated strategy to go after brand new customers, both from a marketing standpoint and from a merchandise partnership standpoint.

All right, that's helpful. And then just on the in-store returns I think you said two thirds of the returns are now coming to the stores, do you have any sense of what the attachment rate is there and how often the sale can be saved by being returned in-store versus online?

It's a fantastic question and the quick answer is we don't other than anecdotally. And the reason for that is while we're very excited that we're able to get the returns portal rolled out, we haven't yet connected it back to POS. So it's going to take us another few months before we can see if customer X, Y, Z comes back in for a return if they also buy from the dial up in the stores. Those guys are thrilled to see a customer come back in with a return and they are incented just by nature of or by virtue of the fact that they're trying to grow their same-store sales in their store to turn them around and show them the assortment in the store. A very minor point of clarification, when we quoted the percentage of returns coming back into the store, that was at bootbarn.com's business, not at the total e-commerce business. We haven't fully brought the Sheplers' e-commerce business to the point where they can return in the store and of course if they walk-in with a product we'd probably allow the customer to return it, but we haven't marketed that. So it is, the statistic that was quoted was really at the bootbarn.com business which is roughly half of the e-commerce business.

That’s great. Thank you very much.

Thank you. Operator And the next question will come from Paul Lejuez with Citi.

Hey, thanks guys. I'm curious if there were any places that you felt you actually missed sales during the holiday quarter, maybe you were running a little light on inventory, and I'm also curious as you grow the private label business where are you on lead times right now?

And did we miss – we very planned fully turn on profitable sales away online, so that we definitely left demand on the table in the effort to grow earnings which I don't think is really the spirit of your question. In terms of inventory, as we'd started to get into September and October the merchants and the planning team, really stepped up our inventory build and changed our replenishment models, so I think we were pretty well positioned for the holiday quarter. Probably the one area that we couldn't change as quickly as some of the other areas ironically was our own brands because we source those overseas, we were writing orders and replenishing back in, but the lead time was a little bit slower than our domestic third party brands that have product in warehouses around the country. I don't think that was a meaningful sales erosion. In terms of the second part of your question in terms of our supply chain going forward, when you think about the businesses that we're investing in from an exclusive brand standpoint and admittedly Idyllwind has a bit of a fashion quotient to it, but Hawx, Cody James, Western, Cody James Work and frankly most of Shyanne is a pretty basic assortment, right? So we can write our orders, we work in a pretty traditional product development calendar where we're working the year out, writing orders six months out and we get the product a couple of months before we get it into the store where a month before we get it into the store. And we are well positioned to manage that change in the supply chain with our current warehouse. May be we will expand it a little bit to have a little bit more capacity, but we're really not taking on any more fashion risk for three fourths or more of the exclusive brand product that we're bringing in. So, hopefully that helps to answer your question.

Yes, definitely and then just, one just bigger picture question, when you guys look back at this year and hit that 10% comp, I'm curious what you would call out as what were the primary drivers of the strong comp performance this year, if you had to kind of choose a few between macro, a certain product category, certain regions and marketing campaign, product launch, which are the real biggest drivers of the business if you had to kind of pick the top three?

Sure, probably not the answer that you're looking for, but I really couldn't find it to any single thing. I mean, it is the entire team working in concert, the merchants embracing the segmentation that was driven by the analytics part of marketing, the creative team within marketing, bringing that segmentation to life through how we talk to customers, the stores bringing our new brands to life by really learning about our new exclusive brands and the in-store training. There's not – but the work business I guess is probably the one thing that has been a bit of a continual driver of the business work boots and work apparel, but virtually every merchandize category is going ahead, virtually every geography is going ahead, so work is a little bit better, Texas is a little bit better, but if we stripped out Texas and stripped out work the underlying business is still pretty strong. So it's just sort of a proverbial flywheel and we'll continue to have the whole team pulling in the same direction and frankly it's just, it's coming back to the baseball analogy earlier it's a series of singles and doubles where we haven't swung for the fence on any given thing and had that amount to half of our comp.

Great, thanks guys. Good luck.

Thanks, Paul.

And moving on to Dylan Carden with William Blair.

Thank you. I just want to follow up from - hey how are you?

Hey Dylan.

Just want to follow up on a prior question, just there seems to be sort of a lot of change here in the business, higher penetration of online at more profitable level, some new functionalities from an inventory management standpoint that presumably helped some of the efficiencies in the box. Can you just update us on the sort of steady state leverage point as you see it now in the model particularly ahead of a period of likely comp deceleration?

Sure. That's a heck of a assumption at the end there Dylan.

You don’t have to bluff that by the way, just personal.

Dylan, long term we continue to believe that those leverage points are still roughly 3.5% for occupancy as we grow 10% units and SG&A is in 1.5% to 2% range, that's kind of our long term algorithm and that while we're not giving guidance for next year that's kind of the way we’re thinking about our initial planning or budgeting process.

Okay and then just a final one if I may, as you enter these new markets are there sort of more opportunities or do you anticipate doing more tuck-in acquisitions and if so and even sort of more broadly as you do these tuck-in acquisitions, what are the comp and margin applications given the comp is probably more mature but margins are presumably higher as you kind of run through that?

Yes, we do continue to contemplate the tuck-in acquisitions. We've been very pleased with the three that we completed over the last call it 18 months. You're right they turned to be higher volume stores, so the dry sales to the stores. There are two of them in Tulsa are very big in size and so will benefit from getting that mature volume. They may not have the same acceleration. Having said that, Lone Star which is a three-store chain kind of in the Dallas Metroplex area has had really nice growth in same-store sales since we've gotten our product assortment. And so, I'm not sure that we can't grow the business as significantly as we do with our new organic builds, kind of depends on that chain that we're acquiring and how they were merchandised, et cetera. We typically see the margin profile improve when we put that into a deep point [ph] model. Our private brands resonate well and when we get the penetration up that adds to the merchandise margin, again the stores would have higher volumes and typically our staffing model allows us to be a little bit more efficient with labor. So we think that the tuck-in acquisitions are a nice way to approach doubling our store count.

Excellent. Thank you very much for taking my questions.

Thank you.

Thank you.

And moving on to Tom Nikic with Wells Fargo.

Hey everybody, thanks for taking my question. Just taking a look at the balance sheet, you've got $50 million cash. I don't believe, you've ever had that much at the end of the quarter so far as the public financials go back and clearly you are generating some pretty nice free cash flow. How should we think about use of the cash go forward besides just building up the store base, should we think about debt paid down, maybe something else like dividend or buyback or something like that eventually, but just if you can just give us an idea about your use of the cash going forward that will be helpful? Thanks.

Yes, sure Tom. We do plan to continue to build out the 10% unit growth and that could involve buying a business where the cash outlay may be a little bit more than an organic build initially. But aside from the unit growth opportunity we're going to continue probably to pay down debt. We've said we want to get the leverage point below 2 and at the end of the quarter we were at 1.6 and that's artificially low point, that's why you're seeing $51 million of cash on the balance sheet, we've generated a lot of cash this year and we haven't paid down the term loan because we want to maintain our liquidity at this point, but we continue to look at opportunities to refinance the debt and again we'll use that cash to continue to de-lever.

Yes, thanks guys, that's helpful and good luck this rodeo season.

Thank you, Tom.

Thank you.

And our next question will come from Mitch Kummetz with Pivotal Research.

Yes, thanks for taking my questions. So, Texas has been running better than average for a little while now, could you remind us when that inflection occurred, when Texas went from below average to above average comp?

If you went back to fiscal '17 Texas was minus 5 essentially for four straight quarters. As we got into the first quarter of fiscal '18 it turned positive and has been I think better than company average every single quarter since.

Okay, so Texas has obviously been comping the comp in the recent quarters producing above average comp against above average comp, and I'm just wondering what do you make of that, is there anything you can put your finger on? Is it just the balance in oil employment or is there something else that's kind of specific to Texas that's working well for you guys?

I think we've seen that dynamic across the country. I think it's a little bit more enhanced in Texas because it was depressed in fiscal '17 and it's going up again to negative 5. And yes part of that is oil, I think part of that is, we have now cycled a couple of years past the Sheplers acquisition and pulling that their promotional strategy from high low pricing to the typical Boot barn and everyday low priced kind of point of view. We've learned a lot about the Texas business over the last few years since we've gotten into it and how to compete in probably the biggest and certainly they are so typically most Western market that we have with a very strong competitor. So I think we've continued to get more knowledgeable and more capable in driving the business forward there.

Got it and then on the, on the comp guide for Q4, 5 to 7 comp it points to 6. If I add that back to last year's Q4 I'm getting kind of an 18% to your stack at the midpoint. I'm just curious how instructive you think that is as we look at the business beyond the fourth quarter?

Do you mean, how far you could extrapolate an 18 two-year stack?

Well, if you want to answer that. I mean you've accelerated your two-year stack and so now you're looking at your - I mean the midpoint is at 18 and I'm just wondering if there is something unusual about that 18 or if there's any reason to think that the business couldn’t trend at that level beyond the quarter.

Yes, I think the company over a long period of time has averaged for the last 36 quarters an 8% comp. So it hasn’t been 8 every quarter but that would be a two-year stack of 16% forever at least for 9 years. Going forward can you think about as we started this most recent fiscal year off I think we were at 11.6 and 11.3 in the first two quarters. So I think we could have a two-year stack of 18 in those first few quarters I do, is we're far from providing a guide for that quarter, but that would be a high guide for us to put out for an entire year and have everybody banking on a plus 18. But having said that, the company certainly has proven its ability recently, but frankly before I got here, and some - most of my management team got here had the ability to comp on top of comp for years. So, I don't look forward at the upcoming quarters with great trepidation that we can't comp against that and be strong. And frankly, I mean we are to some degree we are restraining our consolidated comp by the work that we're doing on e-commerce, so even with that I think we can get growth on top of growth.

Got it, all right, that's very helpful. Thanks guys. Good luck.

Thank you.

And that does conclude the question-and-answer session. I’ll now turn the conference back over to you for any additional remarks.

Thank you everyone for joining the call today. We look forward to speaking with you on our fourth quarter earnings call. Take care.

Well, thank you. That does conclude today’s conference call. Thank you for your participation. Have a wonderful day.