Greetings, and welcome to the Citi Trends Third Quarter 2023 Earnings Conference Call [Operator Instructions]. As a reminder, this conference is being recorded on Tuesday, November 28, 2023. I would now like to turn the conference over to Ms. Nitza McKee, Senior Associate. Please go ahead.

Thank you, and good morning, everyone. Thank you for joining us on Citi Trends' third quarter 2023 earnings call. On our call today is our Chief Executive Officer, David Makuen; and Chief Financial Officer, Heather Plutino. Our earnings release was sent out this morning at 6:45 a.m. Eastern Time. If you have not received a copy of the release, it's available on the company's Web site under the Investor Relations section at www.cititrends.com. You should be aware that prepared remarks today made during this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Management may make additional forward-looking statements in response to your questions. These statements do not guarantee future performance. Therefore, you should not place undue reliance on these statements. We refer you to the company's most recent report on Form 10-K and other subsequent filings with the Securities and Exchange Commission for a more detailed discussion of the factors that can cause actual results to differ materially from those described in the forward-looking statements. I will now turn the call over to our Chief Executive Officer, David Makuen. David?

Thank you, Nitza. Good morning, everyone. And thanks for joining us today on our third quarter fiscal 2023 earnings call. I will begin our call with highlights of our third quarter performance. Heather Plutino, our Chief Financial Officer, will then elaborate on our detailed financial results and our outlook. Then we'll open the call for your questions. In the third quarter, our team continued to advance our strategic initiatives while navigating a very challenging selling environment and controlling the controllables, like we always do. We successfully managed the middle of the P&L as we registered a strong gross margin of 38.2% and kept operating expense dollars essentially flat compared to the prior year. That said, our third quarter top line performance did not meet our expectations with sales held back more than we expected by the ongoing challenging macroeconomic backdrop. Our primarily low income customer base, consisting mostly of families earning $45,000 and less per year, is being very selective and purchasing much closer to need as they navigate higher cost of living, a buying pattern further impacted by unseasonably warm weather throughout the quarter. Our third quarter comp sales decline of 6.2%, while similar to the prior quarter's run rate, did benefit from the intentional inventory rebuilds that I referenced during our Q2 earnings call. In particular, rebuilds in Home, Men's, Big Men's and Beauty were embraced by customers, thanks to significantly better inventory levels, enhanced assortments and better values than last year. Additionally, our Ladies business benefited from excellent preseason trend forecasting that showed up in one of our best assortments ever. As the quarter unfolded, we experienced strong and consistent in-store conversion, signaling that many components of our trend right assortment for all ages continue to resonate with our customers. Our total sales were held back equally…

Thank you, David, and good morning, everyone. As David mentioned, our third quarter results were softer than expected, given the difficult macro environment that continued to pressure our customers, coupled with unseasonably warm weather. The quarter was highlighted by healthy gross margin of 38.2%, flat to the second quarter, continued expense control and inventory that remained in good shape throughout the quarter as we made progress on improving in-stocks in targeted merchandise categories. We finished the quarter with a strong balance sheet that provides us with the financial flexibility to continue to navigate the current uncertain environment. Importantly, we are very proud of our team's execution against our strategic initiatives that will continue to drive our business forward as we focus on driving profitable growth ahead. Turning to the specifics of our third quarter financial results. Total sales for the quarter were $179.5 million, a decrease of 6.7% versus Q3 2022. Strong shopper conversion throughout the quarter once again served as proof that our assortment is resonating with our customers. Basket, while still under pressure versus last year, showed trends consistent with the second quarter. Third quarter comp sales decreased 6.2% compared to last year. Gross margin remained strong in the third quarter at 38.2%. While flat to prior quarter, we did see contraction versus prior year, driven primarily by higher freight expense as we moved more cartons through the network. The decline to last year was also impacted by higher shrink with a small group of stores accounting for most of the impact. Through cross functional collaboration, we remain keenly focused on minimizing the impact of shrink. SG&A expense dollars remained well controlled and flat to prior year at $69.7 million for the quarter or $70.8 million as adjusted. Lower sales in the quarter drove adjusted SG&A deleverage to…

Thanks, Heather. As a brand and a company, we're really proud of our connection to our neighborhoods, employing and serving true locals with a high quality experience. During our 77 years of operation, our differentiated positioning in markets where others aren't, including the vast majority of stores located within 5 miles or less of our core customer, has fueled our ongoing presence in more than 250 amazing neighborhoods in 33 states. Importantly, our strong and expanding partnerships with our vendors continue to supply our customers with a compelling merchandise offering that drives our customers' loyalty and continued engagement, even in a challenging environment. As we look ahead, we will continue to execute against our key strategies in support of our Citi Life purpose, which is live bold, live proud, respect all. Perhaps most vital is our ability to help our customers show up for whatever comes their way and bring opportunities to life at prices that don't break the bank. We continue to be excited to drive the full potential of our brand as we focus on driving long term profitability and shareholder value. Before I turn the call over to the operator, I want to again extend my gratitude and appreciation to our Citi Trends team. It is their execution that drives our strategy forward and reinforces my confidence and excitement in our future. Happy holidays to all. We are now ready to take your questions. Over to you, Frank.

[Operator Instructions] Our first question comes from Jeremy Hamblin with Craig-Hallum Capital Group.

So I wanted to start by getting an understanding of the cadence of comps that you saw throughout the quarter. You noted on the August call that July was the best month that you had in Q2, and I wanted to get a sense, given that you missed your own expectations. Does that imply that was September worse than you expected or October worse than you expected? Can you provide a little bit more color? And then also just to get a sense for what you're seeing thus far in Q4 on a same store sales basis?

I'll take at least part of that question. Cadence of comps in the quarter, in Q3, it was really consistent. The range between the months was fairly tight and just really in line with full Q2. So you're right, July was our strongest month in the second quarter, but that's what I'll say about Q3, right, tight and more in line with the full quarter of Q2 results. So when you peel it back and you look underneath the cover of those months, it's really a story of -- weather was abnormally warm, comps are down. Weather is not back, comps are up. And I will say that we thought -- we used the word stubborn, stubborn traffic and basket trends throughout the quarter as well for all the reasons that we talked about in the call, right, continued pressure, buying closer to needs. And we talked about this in many earnings release calls, right, that need equals weather changes for our customer as well, right, not just gifting moments but the weather changes, back-to-school is a good example. The mom and dad were only buying what the kids needed. And if they're going back in 90-degree weather, they are wearing the T-shirts and shorts that they were wearing during the Summer, we mentioned in the prepared remarks, right, so that had an impact on Fall selling, for sure, throughout the quarter.

On the Q4 question, yes, I mean, the headline really is like we stated in our release, improved momentum has been really encouraging, driven by a really timely setup of our gift presentation kind of within the context of our Ready. Set. GIFT! holiday campaign. We were in boxes by late October, meaning in our stores with the right assortment, that's driving the momentum. And we've seen some decent weather snaps throughout some, not all, of November. And so that's all contributing to the improved momentum, giving us a nice run into the rest of the quarter. So we're excited about what we're seeing.

So just coming back then to what you saw in Q3. So if comp trends were relatively steady, then you were expecting more of an acceleration on comps than what you got and you think maybe that didn't happen because of weather or maybe was a macro maybe more of a factor? Just trying to understand the difference between your expectation and the end result.

I think they were both important factors, Jeremy. As we stated in the Q2 call, we entered BTS set up really well, similarly to the setup that I just mentioned for Q4. So we were confident in our offering, in our values and in the mix across all ages. And what really bamboozled the quarter, in our view, was weather and the macro impact being far more pressurized than we anticipated, right? As we've often said, we can't predict the macro. We do our best to estimate whether it gets worse or better. But in this case, it really presented a lot of pressure. And I think one of the telltale metrics, Jeremy, that we've shared before is our conversion remains incredibly good. So for those who come in and have the means to shop, we convert so consistently. I mean, it's been 24 months of consistent conversion. But what we see, as Heather pointed out in her remarks, is the stubborn traffic -- the stubborn basket pressure is just kind of presenting more of a fight for every dollar in the basket. We're getting the conversion, we're getting the transactions. It's just the basket pressure. And it's both, right? It's abnormally hot weather, it's the macro. So I can't give you exact percentages, but it's -- they're both being felt, for sure.

And just coming back to Q4 because I want to make sure that on the guidance -- is it implying like a down 1 to a down 4 comp, is that kind of what your expectations are? There's some noise added, obviously, with the extra week in Q4.

Well, comp again, is on a 13 to 13 week basis. So that's the cleanest way to look at it, Jeremy. And as I mentioned in the prepared remarks, we are expecting down mid single digits to flat in the quarter from a comp perspective.

And then moving on, I want to understand a little bit about the gross margin impact. So down 160 basis points year-over-year. Conversion remains strong, I think you noted two things in here, higher shrink, higher freight expense year-over-year. I wanted to understand attribution of each of those components. And if there was anything else that might have contributed to it, given where you were in Q2, which was also the 38.2% gross margin. But on a year-over-year basis, certainly was a bit more of a step back, I think, than expected.

Yes, as you mentioned, the two components really are freight and shrink, more heavily weighted towards freight. And the issue there is that, as I mentioned, we've got more cartons going through the system. And if you think about some of the rebuilds that David called out, Big Men's, Home, Footwear, those are bulkier items, right? So in the weeds here, Jeremy, forgive me, but the units per carton are lower. So in order to get that 1% increase in inventory that we reported at the end of the quarter, you're moving a lot more cartons through the system. So higher volume equals higher freight expense as we expect that to mitigate in Q4 as the rebuild, the bulk of the rebuild is behind us. So for the shrink line, which is a smaller component, but still a component, is as I mentioned and I think you know this, we talked about this in the past. Our cadence is to take physical inventories in a section of our stores every month, as opposed to other retailers to do it maybe 1 time a year or 2 times a year. So we're testing our results every month, but it is subject to how those particular stores are performing from a shrink perspective. So in Q3, we had a group of stores, a class of stores, if you will, who had higher strength than the balance of the chain, which was driving the majority of that increase in shrink expense. So bummer, for sure. As I mentioned, we're really focused on controlling strength. We've got a cross functional team, loss prevention, field HR, field leadership that are really, really focused on controlling shrink, whether it's from a talent perspective, from a reporting perspective, from a local law enforcement perspective, we are all over it. So hopefully, I'm giving you the feel that we are all over both shrink and freight and don't expect the same level of headwinds going forward.

Our next question comes from Mike Baker with D.A. Davidson.

A little bit of a follow-up and some new questions. I guess for the fourth quarter, does that guidance of down mid single digits to flat, what does that -- does that imply a pickup throughout the rest of the quarter or not? And I guess maybe another way to ask that, can you remind us what you're up against by month from the fourth quarter of last year, does comparisons get easier, harder, et cetera, and if you are expecting a pickup? I presume if people are shopping closer to need than last year, you're assuming that sales get better as you get closer to the holidays, but just wanted to confirm that?

So the Q4 guidance does assume improvements, right, down mid single digits to flat versus the down 6 that we produced in Q3, for sure. As I look at the -- I'm speaking slowly as I find the numbers, as I look at the forecast throughout the month, I mean, it won't surprise you, it's really about the moment within the quarter, right? So November, it's about the lead in to Thanksgiving, that's where we see strong sales, right? And we expect, because of all of the merch initiatives that David laid out, we expect to have stronger performance around the lead-in to Thanksgiving. And a reminder, our customer, actually, the Wednesday before Thanksgiving is very important to our customer as opposed to Friday after, still important, but they're coming in to dress for their events, right? And then as we get closer to the actual Christmas holiday later in December, that becomes important as well. So it's really about the moment within. But yes, improvement throughout. And then as I look at versus last year, I would say, David, I might ask for a bailout here. I would say that there's -- we have a softer than expected holiday season last year as well. So I don't think there's anything that I would say is a headwind tailwind, it was -- there's room to improve, for sure. David, anything you'd add?

Yes, Mike, I think the last thing I'd add, good to hear from you, is these rebuilds that we've been talking about give us some added fuel for the quarter. And so there's nothing really abnormal from a lapping perspective I'd call out, but I would give you confidence and it gives us confidence that there's a bunch of what I'd call added firepower to Q4 that weren't kind of in the mix last year as strong as we would have wanted them to be. Example, our Home business was weaker last year than this year from an inventory quality and value standpoint. So we believe we're much better positioned in that very high indexing holiday category, because we embed in that category our gifts and our toys and our throes and all the things that people gift. So that's what gives us good confidence in being able to improve our trend from Q3, as you can tell, and as it's framed in the guide.

A couple of more questions. One, within the gross margin commentary, nothing on markdowns or clearance or anything like that. Can you just give us a sense as to full price selling or if with sales being a little bit weaker this quarter, is there any kind of markdown risk or how that may have impacted gross margins on a year-over-year basis?

I'll take that one, Mike. I mean basically, Heather has highlighted shrink and freight, which we've got a handle on, as you can hopefully hear from her past answer, were really the big reasons for the slight deleverage in gross margin versus [OI]. From a markdown perspective, the team has done a really good job managing our inventory and trying to -- in the moment, make adjustments and all that good stuff. It is a little bit of fancy footwork, especially when the Fall goods, as I pointed out in my comments, are selling a little slower than we like or did sell a little slower than we liked in Q3. But we're taking appropriate action when it matters the most, which is in the time period sell, not waiting too long and all that good stuff. So we're on it, but there was no newsworthy item in Q3 to call out, it was pretty much as we expected.

And in line with prior year.

One more, if I could. The new marketing initiatives. Any more color on that? What kind of sales lift is it driving? And what's the cost associated with that? Your SG&A has been pretty consistent around $70 million a quarter. Does that go up because of the marketing initiative or do you have to see the comps work out before you invest in that? Just how should we think about that dynamic?

Well, first off, Mike, on the test base for Q3 that I comment on. It's too small, it's a rounding error in SG&A. So you don't need to worry about that. But what the test did inform us about is our ability to drive both new and lapsed customers back into the fold. And so our ability to kind of see lifts in traffic and conversion, which was nice to see, and even a little bit in basket per customer showed that we can reignite the audience in very established markets. I want to be clear, these tests were not in new markets where capturing new customers, you could argue, is easy. These are in long time legacy Citi Trends markets, very African American and [flat] markets where we wanted to test the water. So we're seeing some, I would couch it as healthy lifts, encouraging lifts. And that’s what drove us to drive into about 20% of the chain for Q4. Again, that number is not huge, it's embedded in our SG&A. And really, what's exciting is -- and I'll give a little sneak peek. We're going to figure out how to do more of this in Q1 and more to come on that. But we're bullish on basically reawakening lapsed customers and convincing even some existing ones to shop a little more often during and even post the advertising exposure window. So more to come but we're pretty pumped about what we're seeing and what can it do for top line improvement.

But just to be specific, so any reason -- do we bump up -- will SG&A, just on the marketing, be higher than it has been, what kind of dollar investment is embedded in that SG&A -- in that marketing?

We don't release at that line level detail, Mike. But I can tell you, we're -- I'll call it, we're self funding it out of our expected and what you have expected in our SG&A budget for Q4. It's not a big enough number to unsettle that overall SG&A.

70 range is still fine. Yes.

Got it.

If I point out, Mike, 70 range is still fine. Yes, yes.

Our next question comes from Chuck Grom with Gordon Haskett.

I just wanted to follow up on Mike's question, just on the quarter-to-date. You talked about a lot of improvement and you're not alone, a lot of retailers called that out at this point. I'm just curious if you guys are in that range, that down mid single digits to flat. And I believe your holiday comp last year was down 17.5. So I just wonder if you could just confirm that for us.

Yes, we won't divulge an exact number, but what I can leave you with, Chuck, is that it is within the negative 5 to negative 1. So it's certainly shown improvement versus our run rate for both Q2 and Q3. And we're cautiously optimistic about December being a strong month, based on some of the answers I provided, more firepower from the inventory quality and availability standpoint, even better values than last year. And this phenomenon that we've seen largely all year long where our customers are so tied to these family moments. So we're excited for what's to come. I think the one wildcard, which I know you study a lot, Chuck, is weather. We've definitely seen, as you've heard and can ascertain to our Q3 comments, that our customers are more than they used to be sensitive to the weather, in part tethered to their economic status. They're just holding off until they really need something. So I would asterisk Q4 a little bit with if weather goes the wrong way, they'll have an impact. But at the same token, we know that particularly in the last two weeks of December, our customers come out in droves, whether it's 70 or 20 out and we're ready for them. So that's how I describe kind of the back half for the rest of the quarter.

And then just looking ahead to Spring, and I wondered to see if you guys could talk about the opportunity from the new ERP system and the product -- in the inventory product you're going to be rolling out in terms of the newness that you referenced as one of the four sales drivers for next year. So if you maybe just dive into that a little bit more.

I think, A, our ERP system went live end of August, as we told everybody it would. And we've been learning and using adapting to the new system, which is pretty normal, call it, change management. And at the end of the day, what we're discovering is it's going to deliver on many of the commitments we made to all of you starting back in last first quarter of this year. And I'll highlight a couple, Chuck, because it relates directly to your Spring question. First off, we've got much deeper analytics. I've been touting this ever since we announced our plans to do a new ERP system. And the analytics are powerful and insightful and enable far better action. Second, we're able to really dissect and define our chain differently. I've mentioned in this call prior that we've been more accustomed to peanut buttering a lot of our allocations across the chain. And our chain is pretty dynamic. We've got [uber] hot, we've got warm, we've got kind of cool, and then we got cold within our 600-plus stores. And they all need a little bit of love from an allocation standpoint based on the climate. And so this system allows us to get at a much finer level of detail around all of that and allow us to better allocate back into the demand that we see in those different climates, as an example. So our allocation would be number three, being more precise and accurate about where things go at what time. And so that's a perfect lead into setting up our warm and hot stores, which we have a lot of, it's well over 40% of our fleet. We can be more accurate in sending them the right goods that they'll more likely adopt in as early as late December or during as early as late December and certainly in January and Feb. So what this all leads to is it sets us up for the tax refund season in mid to late Feb. And we're excited to comment on that because we're pretty bullish on all of the things we're doing across that list of four items, Chuck. It's going to have marketing, it's going to have different inventory optimization, it's got to have better experience and it's going to have more appropriate product for the climates that we serve. So a lot of that will be additive, we believe, in contributing to a strong Q1 of '24 as we look into the future. Does that make sense?

Yes. No, it totally does. It seems like a big opportunity. My last question is for Heather. I'm just looking at the '24. And just in the scenario that the comps stay, call it flat to down, just the opportunity to get EBIT margins, not EBITDA, EBIT margins back in a positive territory. Can you just maybe speak to that opportunity? And then as a follow-up, how should we be thinking about new store growth in '24, the number of CTX remodels, which are clearly good? That's my final question.

We're not revealing anything really about '24 right now. But in the spirit of being helpful, it really is all about top line, right? So I know you asked that we say that comp performance stays the same, but that's not our plan. Our plan is that top line improves. And as we've talked about many times in the past, that's the real juice here. You get the top line going, the flow through to get that EBITDA margin and EBIT margin is there. We have very limited variable expenses relative to other retailers. We believe we have a healthy margin. So the flow through is really strong. So I'm going to tell you that really it's all about the top line. And that's why driving -- driving comp store productivity always is number one when we talk about our strategic initiatives. And then new stores, it's too thin to say what we're going to do with new stores in 2024. But I will say that remodels, you know that we like our remodel cadence, we like what we see from remodels. We get a nice lift, mid- to high- single-digit lift after the remodel. It's important to us, it's important to our store associates and it's important to our customers, right? They get excited about what have we done to refresh their Citi Trends store and that buzz is real and it shows up in top line, again, our most important lever, top line. So more to come on '24 but that's what we're thinking right now.

Our next question comes from John Lawrence with Benchmark.

David, not to beat a dead horse here on the weather, et cetera. But the stores are in the South, I mean, the weather situation -- am I correct that if you looked at the planogram with the weather, you only had about 10 days to two weeks of weather correct merchandise that match the weather in the quarter?

John, you're referring to kind of an estimate on the number of days, weeks in the quarter that was more suitable to sell Fall goods, is that what you're asking?

Yes, that's correct.

You're not far off. And we made this comment in the prepared remarks. The weather impact was felt across the entire quarter. I mean, we had stores in the heart of our chain in Louisiana, Texas that were 10, 15, 20 degrees hotter for prolonged periods of time with zero rain, people were staying inside, et cetera, et cetera, or just wearing short sleeves and shorts all day long. And so when the weather snapped, which you got your math generally right, John, it was a couple of weeks max that snapped and we saw an appropriate, almost immediate bounce back to a much better trend than the quarterly trend. And that's what prompted me to share that comment in the last question from Chuck in that the sensitivity is even more heightened. But I really believe that's brought on by a lot of macro, too. But the weather is certainly not helping to be in our favor.

And once again, just briefly here that -- my checks in stores saw, for instance, the NBA hoodies or the NFL hoodies really didn't fly until that, obviously, til that first of November, first week of November. And once it was weather correct, they flew off the shelf and was the hottest item in the store. Can you explain to me, am I looking at that right? So when the customer has the need, as you talk about to come get a hoodie, does that spread then to picking up to making other purchases around the store for home, et cetera, because of the need for that hoodie?

John, thanks for being in our stores. And then second question in a row, you're right on, yes. I mean, I don't have a lot to add to your findings. We are really confident in our assortment. I mentioned our ladies assortment being on trend better than anything I've ever seen in my tenure here. I can probably ditto that for some of the other businesses. Men's is another example. We are just -- we're nailing it with team apparel, branded apparel and then a terrific assortment like we do in ladies, of made for the African American customer. So we're out there with the right inventory. And you're right, when the weather snaps, boy oh boy, they come on in and flow into our stores, our conversion goes up in those weeks, up from already a high, high level. And you're absolutely right. Generally, all boats rise, it's not like they come only in for the guys' stuff if I'm a guy and I walk out. They're walking around getting other stuff, building a basket, same for mom, same for the young singles that come into our stores, Gen Z and young millennials, et cetera. So we watch it like clockwork. And what you said is true. And so where we are in Q4, I'll maybe dovetail you in November comments, we've got a bunch of really important moments. We just got through Black Friday and Black -- we call Black Wednesday and now we're going into massive stock up on gifts mode and make sure you got enough under the tree. And we've taken our prices down, John, in some cases. So we've got like-for-like items, QI versus [indiscernible], down $3 and $5 and $10, in some cases. So team has done just an amazing job, frankly, responding to the pressure that the customer is under and offering important vignettes within our assortments that are like, they're unbeatable and stoppable values. So we think that also helps garner engagement and continues to fuel our conversion and should fill the basket we hope in the rest of the quarter.

Just the tough subject, and I'll leave it alone, but the shrink situation. I know, as you're indicating you're all over it. But is there any parts or any stores that have gotten significant or difficult enough that you might consider closing?

Yes, we're not there yet, John. I appreciate the question. We're not there yet from a shrink perspective. I know other retailers have made the difficult decision based on the environment. That is it's not -- if we close the store, there are bigger factors going into it. Shrink, for us, as you know, particularly in the market that you know very well, Memphis, right, is something that we're very keenly aware of and are managing closely. For us, the external stuff happens. We're not -- I feel like I shouldn't say this out loud because I'm going to tempt the universe, right, but we're not subject to some of the smash and grab that you've seen in headlines that you see for others. Knock on wood that that doesn't come to us, but it's more small. It happens on occasion, and you know that, you've seen that, but it's not like broad based. So we're really focusing on what can we control, right? And we say that a lot, right, control the controllable. True to and shrink, what can we control? We make sure we have the right people on the team that we've got solid citizens who are looking out for the Citi Trends family that we've got reporting that helps us on [Technical Difficulty]. We've got concerns that need to be addressed. We partner with local law enforcement to make sure that we're aware of what the environment is, et cetera, et cetera. So that's a long way of saying no, shrink is not causing us to determine that we need to close some stores.

And last question for me. David, you've mentioned about the rebuilds. I mean, back several months ago, you were talking about -- and I think toys is one of those areas that there were opportunities for freshness and new brands, et cetera, I assume across the platform, I assume that continues to be the case?

I'm talking about gifts, and you're absolutely right, a good memory. We saw an opportunity to get into the toys business earlier, like I mentioned in my comments, set it up earlier for the customer to consider and gravitate to. And we have a little thing called layaway, and layaway is a meaningful part of our sales during Q4. But what the customer does is they come in, in October [slash] even first couple of weeks November and they go, oh, that's a pretty cool African American Barbie play set, as an example, or that's a really cool remote control race car. I'm going to put that and a bunch of other stuff on layaway and come back and get it in December. And so we rely pretty importantly on that, I'll call it, pre-consideration, I'm going to put it in layaway. I'm going to put a little down payment on it, and I'm going to pay it off, pick it up in time to put it under the tree in December. So you're absolutely right, rebuilding and getting those, I'll call it, layaway friendly businesses out on the floor earlier is really germane, it's a part of the intentional rebuilds that we've been doing. So we're looking forward to a good toy selling season as a result.

Mr. Makuen, there are no further questions at this time. I will now turn the call back to you.

Thanks, Frank. Thanks, everybody, for joining us today. Have a great holiday. See you at the next one. Bye-bye.

That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day, everyone.