Sally Beauty Holdings, Inc. (SBH) Q4 2015 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Sally Beauty Holdings Fiscal 2015 Fourth Quarter and Full-Year Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. And as a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Karen Fugate, Vice President of Investor Relations. Please go ahead. Karen Fugate - Vice President Investor Relations & Strategic Planning: Thank you. Before we begin, I would like to remind you that certain comments, including matters such as forecasted financial information, contracts or business, and trend information made during this call may contain forward-looking statements within the meaning of Section 21-E of the Securities Exchange Act of 1934. Many of these forward-looking statements can be identified by the use of words such as may, will, should, expect, anticipate, estimate, assume, continue, project, plan and believe. These matters are subject to a number of factors that could cause actual results to differ materially from expectations. Those factors are described in the Sally Beauty Holdings' SEC filings, including its most recent Annual Report on Form 10-K being filed today. The company does not undertake any obligation to publicly update or revise its forward-looking statements. The company has provided a detailed explanation and reconciliations of its adjusting items and non-GAAP financial measures in its earnings press release and on its website. With me on the call today are Chris Brickman, President and CEO, and Mark Flaherty, CFO. Now, I'd like to turn the call over to Chris. Christian A. Brickman - President & CEO: Thank you, Karen, and good morning, everyone. Thank you for joining us for our fiscal 2015 fourth quarter and full-year earnings call. I'll briefly provide an update on our business performance and Mark will discuss our 2015 fourth quarter results in more detail. We finished the year with solid consolidated same-store sales growth of 3.5% in the fourth quarter. Our BSG business achieved a record comp of 7.4%, leading to strong operating performance. In our Sally business, the two-year same-store sales stack was the highest level in nine quarters. In addition, we generated $301 million in operating cash flow in fiscal 2015 and repurchased approximately $228 million or 8.1 million shares of stock. Over the fiscal year, we launched multiple initiatives in the Sally U.S. business to stimulate brand awareness and transform the consumer experience. As I mentioned before, it is taken longer than we expected for traffic from the non-Beauty Club Card customer to recover. But we are seeing positive indicators that our initiatives are working. We are nearing the anniversary of the Nail Studio rollout and we continue to be pleased with the results. Although, the nail category has experienced softness across the industry, we ended 2015 with year-over-year sales growth. Sales in our lash category have consistently grown in the high teens, since we launched our new static studio last April. And the rollout of our cosmetic studio in October is off to an impressive start with double-digit sales growth. Both cosmetics and eyelashes are high trend, high impulse categories, and we believe the updated presentation and improved assortment will continue to have a positive impact. The new impulse kiosk installed near the sales counter entices the customer to increase their basket with on trend high margin impulse items. We expect to have this unit installed in 2,400 Sally stores by early November. In fiscal 2016, we will continue our visual merchandising innovations. Starting in January, we expect to launch the hair care solution center in both general market and multi-cultural hair care. This upgrade should demystify the extensive offerings of shampoo, conditioners and styling aids by organizing the products by the solution they are meant to address. For example dry, frizzy, thinning or colored hair. The refresh to our own brand packaging in Ion hair care is expected to be completed by the end of this year. So far the brand has outperformed other brands in this category and we expect to extend this strategy to all of our own brand products. Our largest category, hair color, can also be overwhelming for a retail customer. We intend to implement a merchandising solution late this spring that will provide the customer with an easier shopping experience for home hair coloring. We also have concepts and design for appliances, brushes and combs. And these are scheduled for mid to late fiscal 2016. About six months ago, we launched our sophisticated CRM program with automated triggers and dynamic capabilities and we've seen strong responses to our email and digital campaigns. We will continue to enhance the platform with new benefits and features as we learn more about our customers' shopping behaviors. By the end of November approximately 1,000 Sally U.S. stores will have been refreshed with new lighting, flooring and graphics. The uplift in sales in the refreshed stores is encouraging. We continue to realize a comp improvement of 100 basis points to 150 basis points versus the benchmark of stores that has not been refreshed. These results exclude any marketing support designed to inform the consumer about these changes. Most recently we've tested radio and local TV in the regions with refreshed stores. We expect this advertising will further increase awareness of our refreshed stores and lead to traffic improvement. As we look towards the new fiscal year, we now anticipate that the Sally Beauty segment same-store sales will continue to improve sequentially and reach historical growth levels of 3% in the back half of next year. Our Beauty Systems Group consistently performed well throughout the year; and the fourth quarter was no exception. The introduction of new brands and product innovation continues to drive sales growth above historical run rates, resulting in strong bottom-line performance. In fiscal 2016, it's clear that BSG will be up against difficult sales comparisons. However, we believe they will continue to win new brands and customer loyalty, resulting in another solid year of performance. On a consolidated basis, we expect our sales and profit improvement initiatives we implemented in the back half of 2015, such as tactical and zone pricing, increased vendor support, global sourcing and other cost savings programs will largely offset anticipated cost headwinds and allow for steady profit growth for SBH in fiscal 2016. In addition, we are excited about the pipeline of initiatives for the coming fiscal year, including the completion of our own brand packaging upgrades, the reset of our hair care and hair color categories, as well as the introduction of local TV and radio advertising. These investments, combined with all of the projects and upgrades completed during fiscal 2015 will create significant points of difference and a modern image for Sally. As a result, we believe we're well on our way to reframing and repositioning the Sally brand to be more meaningful to the next generation of consumers. Now, I'll turn it over to Mark. Mark J. Flaherty - Chief Financial Officer & Senior Vice President: Thanks, Chris. Consolidated net sales for the fourth quarter increased 2.1% to $964 million. This increase was driven by same-store sales growth of 3.5% versus 2.6% in the prior-year quarter and the addition of new stores. The impact from unfavorable foreign currency exchange rate for the quarter was $27.6 million or 2.9% of sales growth. GAAP gross profit margin in the fourth quarter was 49.3%, a 20 basis point decline over the fiscal 2014 fourth quarter. Excluding a $1.4 million impact from the Sally Germany restructuring, adjusted gross profit margin declined 10 basis points to 49.4%. Fourth quarter SG&A expenses as a percent of sales, including charges associated with the data security incident and the restructuring of our Sally Germany business, were 34.3%, a 40 basis point increase from the prior year fourth quarter. Consolidated adjusted SG&A expenses, excluding the data security and the restructuring charges, was 34% of sales. Unallocated corporate expenses, including share-based compensation were $36.5 million or 3.8% of sales, up $737,000 from the prior year quarter. GAAP consolidated operating earnings in the fourth quarter, including charges associated with the data security incident and the Germany restructuring were $119 million, a decrease of 5.5%. Operating margin was 12.4%, 100 basis point decrease from the prior year. Adjusting for the data security and the Germany restructure charges, operating earnings were $124 million, down 2.1%. Adjusted operating margin was 12.9%, a 50 basis point decrease from the prior year metric of 13.4%. For the fiscal year 2015, our effective tax rate was 37.9% versus 37% in the prior year. GAAP net earnings in the fiscal 2015 fourth quarter were $56.2 million compared to fiscal 2014 fourth quarter net earnings of $61.8 million. Adjusted net earnings excluding the data security charges and the Germany restructuring charges were $59.2 million. GAAP and adjusted net earnings per share was $0.36 and $0.38 respectively compared to the fiscal 2014 fourth quarter earnings per share of $0.39. And looking at the balance sheet for the fiscal yearend, inventories increased $56.8 million or 6.9% compared to ending inventory on September 30, 2014. This year-over-year increase was primarily due to the additional inventory for new store openings and the addition of new brands. Capital expenditures finished the year at $107 million, which was above the high-end of our guidance range of $95 million to $100 million. Capital expenditures were higher due to additional stores in the Sally refresh initiative versus our original plan. And turning to the segment performance for the fourth quarter starting with Sally Beauty Supply, net sales were $582 million compared to $581 million in the prior year quarter. The unfavorable impact of foreign currency exchange on sales was $21.7 million or 3.7% of sales. Same-store sales grew 1.8% versus 2.1% in the fiscal 2014 quarter. Gross profit margin at Sally Beauty was 54.6%, a 20 basis point decline from the prior year quarter. This decline was primarily due to the $1.4 million charge from the Germany restructuring, which led to an unfavorable impact on Sally's gross margin of 30 basis points. Operating earnings were $97.9 million with an operating margin of 16.8%, down 180 basis points from the fiscal 2014 fourth quarter. The $4.2 million charge from the Germany restructuring had an unfavorable impact to operating margin of 70 basis points. Sally Beauty ended the fiscal year with 8.9 million active Beauty Club Card members, a 10% increase over the prior year. These customers now represent 59% of Sally's U.S. retail sales versus 57% last year. Net new stores opened in the Sally's segment in fiscal 2015 were 110 stores for a growth of 3.1%. This growth is net of the 15 stores closed in Germany. And turning to BSG, BSG had another great quarter with same-store sales of 7.4%. Sales reached $382 million for growth of 5.2%. This performance includes an unfavorable foreign currency exchange impact of $5.9 million or 1.6% of sales. Gross margin in the fourth quarter was 41.2%, up 10 basis points over the prior year. Fourth quarter operating margin improved 20 basis points to reach 15.1%. Net new stores at BSG increased 29 or a growth of 2.3% for a total store count of 1,294. We ended the year with 958 sales consultants. Now I'd like to provide some guidance for fiscal year 2016. For 2016, our consolidated same-store sales, we expect our growth to be in the low 3% range with sequential quarterly improvement in our Sally segment and slightly slower year-over-year growth in our BSG segment as they anniversary at very strong performance in fiscal 2015. Consolidated organic store growth is expected to be approximately 3%. Consolidated gross profit margin expansion is expected to be in the range of 35 basis points to 45 basis points. We believe we can achieve the gross margin expansion because of the initiatives we have started in the back half of fiscal 2015, such as tactical and zone pricing as well as our ongoing vendor negotiations. For fiscal 2016 unallocated corporate expenses, including approximately $16 million in share-based compensation are expected to be in the range of $150 million to $155 million. Consolidated SG&A as a percentage of sales, including the unallocated expenses is expected to be up 10 basis points to 20 basis points from the fiscal 2015 GAAP metric of 34.2%. The 2016 SG&A includes approximately $16 million in new business developments, initiatives in South America and continued investments in Loxa Beauty. The effective tax rate for fiscal year 2016 is expected to be in the range of 37.5% to 38.5%. And finally, we anticipate capital expenditures in fiscal 2016 to be in the range of $125 million to $135 million. Capital expenditure projects for the fiscal year include investments in new payment terminals for Sally U.S. merchandise resets in the Sally U.S. stores and the continuation of the Sally store refresh initiative and upgrades to our U.S. distribution centers. Chris? Christian A. Brickman - President & CEO: Thank you, Mark. In summary, fiscal 2015 was a very busy and productive year. I'm extremely pleased with our BSG results and I remain encouraged with the progress in our Sally Beauty business. We have a great team in place and we're executing against the right initiatives to create significant points of difference for our business. I believe fiscal 2016 will be rewarding and successful year. Now, I'll turn it back to the operator to open it up for questions.

Thank you. And our first question will come from the line of Simeon Siegel with Nomura Securities. Your line is open.

Hey guys, thanks, and good morning. Christian A. Brickman - President & CEO: Good morning, Simeon.

So, to your point about the comfort in that gross margin expansion, have you seen the beginnings of a lift from any of those initiatives. I guess what assumptions are baked into the guidance, you mentioned the Sally initiatives. But is there anything in terms of international improvement in there, what do you think about the BSG rate? Just any help drilling into that number would be very helpful. Christian A. Brickman - President & CEO: You bet. And the reality is, roughly 70% or 80% of those initiatives are already executed. So, we got to work about five months ago. And in the U.S., those initiatives, at least in Sally, focused on tactical pricing in key categories, which was mostly implemented in August and September. Zone pricing, which was implemented in the very beginning of October, obviously vendor allowances, which were pretty much all negotiated, or at least the majority were negotiated before October 1 and global sourcing. In addition, we took some price internationally and we had some vendor allowance negotiations internationally as well. So, pretty much all of those are in the marketplace and executing. We did not assume 100% capture rate from the initiatives in our guidance, we assumed that that some point something would go wrong, we'd have to deal some of it back or adjust. The reality is it's been in the marketplace five weeks or six weeks and as of yet we see no adverse impact at all and we're continuing to work on further initiatives in terms of additional stores that we might zone price, as well as further negotiations globally.

Okay, great. And then just maybe to that point, so the international sales at Sally, looks like they declined in penetration slightly, is that Germany? And then just given the progress with international, how should we think about the comps there and kind of the progression to stronger profitability? Christian A. Brickman - President & CEO: Yeah. We don't break those comps out. We did obviously reduce – shutdown half of our stores in Germany, so that will reduce our sales there. Mark, I don't know if you want to add something. Mark J. Flaherty - Chief Financial Officer & Senior Vice President: Yeah. We had a couple of things this year. You had – like Chris said is the 15 stores we shut down in Germany, as part of that, we slowed down a little bit of the store opening cadence in Europe. And we also were remodeling some stores in Chile for our conversion from InterSalon to Sally, which also had an impact, because of the delay of where those stores were – we actually had to close those stores for a period of time when we were doing the remodeling efforts. So, that had a bit of a headwind as well. Looking at next year, we should go back to the same kind of cadence in terms of what we expect on comp, so it's just that that mid-to-high single digit run rate from our international business. Christian A. Brickman - President & CEO: You bet.

Great. Thanks a lot guys. And best of luck for the year ahead. Christian A. Brickman - President & CEO: Thanks for the questions, Simeon.

Thank you. Our next question comes from the line of Mark Altschwager with Robert W. Baird. Your line is open. Mark R. Altschwager - Robert W. Baird & Co., Inc. (Broker): Great. Good morning everyone. Just first on the comps, nice job in the quarter. Can you just give a bit more color on what drove the strength at BSG, I know it accelerated on a two-year basis throughout the back half of the year. So, are you seeing stronger trends generally in the industry? Are there some competitive wins that are driving that? And then in terms of the guidance, you talked about the more difficult comparison, but is there anything beyond that that you're watching for that could result in the slowdown from these levels? Christian A. Brickman - President & CEO: Yeah. So, let me go back to your first question. A substantial part of that is driven by competitive wins. So, they continue to win brands over from the competition and there are some additional brands that are moving over as we enter 2016 as well. So that's obviously a big driver. Industry comps are good, but they're not necessarily above the trend line. Industry trends are pretty much where you would expect in the low single digits. And the business is executing very well. We're running the stores well, we're executing in terms of our marketing programs well, we just turned on CRM finally, where we're building out our stylist CRM database. And, I think, that will help us as well. But based on a long list of wins, both in terms of territory expansions and brand wins that are adding to their trajectory, we do expect that to return a little bit more to a more normal trend line. But I don't expect them to slow much. They're a high performing business right now. We're continuing to win brands in the competition. We just expected to return a little bit more towards normal trend line. Mark R. Altschwager - Robert W. Baird & Co., Inc. (Broker): Thank you. And then just a quick follow up on the changes in Europe. Can you just talk a little bit bigger picture about, where you are with the restructuring there? It's been a lot of moving pieces, I mean what inning are you in? And what are your expectations for comp growth and margin expansion within the international business for fiscal 2016? Christian A. Brickman - President & CEO: Yeah. For the most part Germany is done. The team continues to consolidate back office operations and some of that is completed, although there will be more, that will happen throughout the year, as we drive for more efficiencies in Europe. So, I'd say they are sixth or seventh inning there in terms of driving the efficiencies and getting the restructuring done. And overall, at international, we expect as Mark mentioned to be in the high single digits, in terms of comp store growth internationally. Mark R. Altschwager - Robert W. Baird & Co., Inc. (Broker): Right. Thank you and best of luck. Christian A. Brickman - President & CEO: Thank you.

Thank you. Our next question comes from the line of Simeon Gutman with Morgan Stanley. Your line is open. Simeon Ari Gutman - Morgan Stanley & Co. LLC: Thanks, good morning. So, first following up on the previous gross margin question. How much of it involves price optimization, some of the upside? And how confident are you in that success or the eventual success with some of the price optimization work? Christian A. Brickman - President & CEO: Yeah. I mean, roughly 60% to 70% of it is probably price optimization, Simeon. And as I said most of that was in place as of October 1. The reality is, we did not assume 100% capture on our pricing activity as of yet and it's early days, we're not seeing any adverse impact that would make us believe we're going to have to deal that back, but we'll monitor it closely. And in addition to that we're working on some additional specifically zone prices where we could take price up in additional high cost to operate locations, given that the first wave seems to be very successful. And those would probably go out in the second quarter of the year, assuming that we continue to perform as we are right now relative to the pricing activity. So, at this point, I'd say, it's mostly in the marketplace, it's a substantial part of how we plan to offset cost headwinds. It seems to be working quite well at this point, without any clear change in behavior from the consumer. And if that maintains the pace then, we'll continue to push further. Simeon Ari Gutman - Morgan Stanley & Co. LLC: So, that's a good tie in. My second question was going to just asking about the environment right now, and I guess you have some price optimization initiatives just in place and what looks like is a pretty fluid moment for retail. Now, you sell into a pretty stable category, so I think that make this business more resilient, but at the same time you depend on foot traffic at some strip centers. So can you give us any color or diagnosis of the consumer and what seems to be going on at the moment? Christian A. Brickman - President & CEO: Yeah. I mean, I think you said something quite important there, which is I think we're in a category where price sensitivity is not as high. I think we got an early start of some of these initiatives as well. And then finally, I think we're taking advantages of some things that most other retailers have already done, and we're playing a little catch up, but it's an opportunity for us. So, I think most retailers were already doing zone pricing in high cost to operate locations and we were a little behind the curve on that. So, it's a great chance for us to take advantage of that opportunity. And I think other retailers were further down the path on global sourcing as well. So, I think the reality is it's an opportunity for us to play catch up and capture some value there. And then I think the other side of that is, we've got to continue to differentiate our brand, both in terms of our loyalty program, in terms of upgrading our products and packaging and delivering better value in terms of our overall value proposition and telling customers about that value proposition of salon quality products available at a better value and backed by our Love it or Return it guarantee. And I think if we get better at communicating that message, which we tested through some radio and TV advertising in October and we're pushing big down that path in digital and social now, that's a great segment and place to be in the marketplace. It allows us to add value to the customer despite the fact that we're taking a little bit of price. Simeon Ari Gutman - Morgan Stanley & Co. LLC: Okay. Thanks.

Thank you. Our next question comes from the line of Taposh Bari with Goldman Sachs. Your line is open. Taposh Bari - Goldman Sachs & Co.: Hey, good morning. Chris, can you provide some context into the split between U.S. versus international comp performance from the Sally segment this past quarter and how that's trended over the past year? Christian A. Brickman - President & CEO: We're not going to break the two apart, we'll leave them together. The reality is, is that we're seeing progress as we enter this year in both segments and we plan on that, right. We needed to restructure our European business to get it right. We've now done that and we expect to see continued progress there. We're seeing terrific growth at our business in Mexico, our comps are strong in South America with a little bit of slowdown in Chile potentially as they deal with an economic slowdown in a commodity-driven marketplace. And the U.S. we expect continued sequential improvement in our comps in the U.S. And so the reality is, we expect next year to be mid-to-high-single digits internationally and low-single digits in Sally in the U.S. Taposh Bari - Goldman Sachs & Co.: Okay. Great. That's helpful. And as we think about the comp lift that you get from these refresh stores. Could you give us some sense as to which cohorts of customer basis or customer cohorts that you're getting that lift from, is it universal across the board or are there certain groups that are benefiting disproportionately? Christian A. Brickman - President & CEO: It's overall, but as we paired it up with marketing, which is what we've done more recently, we're seeing more lift in the list customer than in say the pro customer. And, I guess, I would have expected that, right, because that marketing is targeting a retail consumer and that's where the advertising ran as well. So I think as we go into next year, we're going to see this bifurcate a little bit, we're going to see more lift from the refresh and the marketing around the refresh be associated with the list in BCC customer and probably less so with the pro customer. Taposh Bari - Goldman Sachs & Co.: Just one last house-keeping item for Mark. What's your D&A outlook for next year? And can you quantify the impact that FX had both on revenues and EPS this past year? Mark J. Flaherty - Chief Financial Officer & Senior Vice President: Well, the D&A outlook should be pretty consistent with what you saw for the year, it should be in that $89 million to $90 million range. As far as FX impact on the bottom line; from an EBIT standpoint, it was still very immaterial and overall it was roughly $87 million on the sales side. Taposh Bari - Goldman Sachs & Co.: Thank you.

Thank you. Our next question comes from the line of Rupesh Parikh with Oppenheimer. Your line is open. Rupesh D. Parikh - Oppenheimer & Co., Inc. (Broker): Thanks for taking my questions. So, I wanted to just touch on some of your marketing efforts during the quarter. I know you recently had a partnership with Project Runway. Based on what you saw, do you feel that it brought more people into Sally store? And is there any way to tie your performance at Sally to what you did with Project Runway? Christian A. Brickman - President & CEO: Yeah. I think it's a little too early to tell, but I see Project Runway as part of an overall marketing mix. Remember Project Runway was only about 4%, 5% of our total marketing budget for Sally. And I see Project Runway offering us credibility in terms of positioning the brand in a professional stylist situation. And then we match that up with local advertising that really drives, what I'll call, action, right. So, there is a call to action that happens through our radio and TV, which drives people to the stores on a more immediate basis. And Project Runway is more about creating a halo for the brand, that puts us in the right setting, which obviously reinforces our salon quality imagery. So, as part of an overall marketing mix, I'm really excited about what Project Runway does for us, because as you see us pushing more towards digital, social, radio, TV and a variety of methodologies by which we will communicate our brand value proposition, Project Runway will create the halo of salon quality, which is what we want to be known for. And salon quality at a better value backed by Love it or Return it, is the core value proposition we're trying to communicate. Rupesh D. Parikh - Oppenheimer & Co., Inc. (Broker): And then Chris, going back to your comments in the press release, just more of a focus on local TV and radio advertising. Based on your tests so far and what gives you confidence that this is the right vehicles maybe to advertise some of the changes in Sally stores? Christian A. Brickman - President & CEO: Well, we'll keep learning that we saw increases across all nine test markets where we ran the advertising and we split it up and in some markets we ran radio, in others we ran radio and TV and others we ran just TV. And what we saw actually was the more we spent, the higher the impact we got. And so, we're taking the learnings from that now, and beginning to really design the rest of our marketing for the remainder of the year based on that, but it was great early indications that, as we tell our value proposition to the consumer, and they hear about it, they like it and now we got to make sure our stores deliver on that and our products deliver on that, but the reality is, is that radio seems to drive the most immediate impact in terms of short-term response, but TV also probably has more of a lingering impact. Rupesh D. Parikh - Oppenheimer & Co., Inc. (Broker): Great. Thank you for all the color. Christian A. Brickman - President & CEO: You bet.

Thank you. Our next question comes from the line of Ike Boruchow with Wells Fargo. Your line is open.

Hi, everyone. Thanks for taking my question. Christian A. Brickman - President & CEO: You bet, Ike.

Just a quick one, I'm sorry if I missed it. But did you give the growth of the BCC customer at Sally, and then also, what the growth or the decline of the List customer was in the quarter? Christian A. Brickman - President & CEO: For the quarter, did we break those out in the quarter? Karen Fugate - Vice President Investor Relations & Strategic Planning: On the BCC sales, it was up about 7.5%. Christian A. Brickman - President & CEO: And what was the List customer? Karen Fugate - Vice President Investor Relations & Strategic Planning: It was down 2.8%. Christian A. Brickman - President & CEO: 2.8%. So down 2.8% for list and up 7%s or so for BCC.

Got it. And then so, the follow-up to that question is, I definitely appreciate the refreshes, and you guys are putting in a lot of hard work and heavy lifting with Nail Studio and you added OPI, and there's been a lot of change. But you haven't really seen much of a change in that list customer and the comp is kind of still sub 2%, So, I'm just kind of curious, what kind of gives you the confidence when you look out to next fiscal year that you will see the ongoing sequential improvement, is there data points you're looking at in the refresh stores or is there something else you could share? Christian A. Brickman - President & CEO: No, absolutely. So, a couple of things I'd say, so we're now just beginning to see all of the activity across all of these categories get executed. So, we obviously did the nail wall early in the year. We did the cash-wrap during the year. We did the lash studio during the year, we're seeing double-digit growth there. We obviously got our CRM up and running. We've just got the cosmetics studio done. And all of that is starting to really show terrific – cosmetics is showing double-digit gains already as well. And if you look at our core categories actually like hair color and hair care, we continue to see progress there. We had two categories that were a drag this year. Both appliances and hair were a meaningful drag on our same-store sales. And the reality is that as we go into next year, the comps for those categories are going to be substantially lower. In addition to that, we're making some progress there. Hair was really driven by some supply chain issues in terms of our ability to put the right product in store at the right time, and we've made a lot of progress in terms of building inventory at the distribution center and store level there, so we have the right products available. And with electricals, we're not only anniversarying much less activity, we're also bringing some innovation to market as well as we're re-launching some of our vendor lines. So if we can just bring those categories closer to flat or above that next year, and the comp guidance we're giving is actually pretty conservative. So, as we look at the progress we're making and the categories and the initiatives that are done and then the categories that were the headwind last year rolling over and lapping some lower numbers and then solving some of the problems that drove those declines, we actually feel pretty confident about comp growth next year.

Got it. Thanks so much.

Thank you. Our next question comes from the line of Kelly Halsor with Buckingham Research Group. Your line is open.

Hi, thanks guys for taking my question. I just wanted to go back to the store refreshes, just one more time here. So, you're saying that the store refreshes see a 100 basis points to 150 basis points lift when you also have the marketing in place, is that correct? Christian A. Brickman - President & CEO: No, that's with no marketing. That's with saying nothing to the consumer.

Okay. So it seems that out of 1,000 stores here, you've started to reach kind of critical mass, but we haven't really seen that come through in the comps, so does that lift just does not sustain itself for an extend period of time? Or are we just not there yet in terms of how many stores we need to get to? And then just on that same note, how many stores are there out there left for you to refresh and kind of what pace should we expect you guys to do that this year? Christian A. Brickman - President & CEO: Yeah, I mean, most of what you're hearing about is the first kind of 500, which is about 16% of the network. And the reality is that – that next 500 is just finishing now here in November. It'll be done by the end of 2015 calendar year. So, we'll be in 1,000 by the end of November, effectively early December. And again, we're going to also be start talking to the customer about that in terms of some radio, TV and digital and social in those markets, so that we begin to communicate to the list customer that there is a reason to come back and visit. And then next year, we expect in the back half of the year to do another 500. We'd probably do those earlier in the year except that we've got this hair care category launch in Q2, which is a big undertaking to really re-launch that category. We'll be moving a lot of SKUs around the store. So, what we want to do is focus the stores on the hair care category reset in January and February and not disturb them with refreshes. So, we'll pick back up with the next 500 in the back half of the year. That would get us to half the network being refreshed. I don't think all the network needs to be refreshed because there are some stores that were done recently that are in good condition. But I could see us doing another 500 to 1,000 over the course of next year or 2017.

Great. That's very helpful. And then you mentioned some initiatives around the cosmetics category. Could you remind us how big of a category that is for you guys and is that an opportunity for you guys to grow there and is there any chance to get access to more brands in the category? Christian A. Brickman - President & CEO: It's not a huge category for us, but it's a high-margin category. And we really didn't look good in that category. I don't know if you'd seen our pre – or set before we did the reset. We looked out at data and – it was a little beaten up, but it had been there a long time. The team did a great job, they actually expanded the category in terms of the square footage allocated and they brought out really modern fixturing that looks terrific in store and it's right across from the Nail Studio. What I like now is, when you enter the front of the store, even if you're in a non-refresh store, everything at the front of the store is now done. So that's the first impression. Lash studio is done, nail studio is done, cosmetics are done, cash-wraps done, impulse area done, and then, we've also put in new merchandising systems in the front of the store as well. And then finally, once hair care gets done and move forward, that will be last of the notch in terms of what you see when you first walk into the store. So it creates a great chance to get a great first impression. I don't know if I mentioned lashes as well, those are also completed. So that's what we're really shooting for is to make the first impression substantially different so that as we invite consumers back in now with our advertising, they use to come in and they see something different and actually give us a new chance.

All right. Great thank you.

Thank you. Our next question comes from the line of Oliver Chen with Cowen and Company. Your line is open.

Hi congrats (36:58 – 37:07). Christian A. Brickman - President & CEO: Hey Oliver, why don't you try that one again?

And in the meantime, we'll go to the line of Joe Altobello with Raymond James. Your line is open. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Hey guys, can you hear me okay? Christian A. Brickman - President & CEO: You bet, Joe. (37:19). Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Exactly. So the first question is back to the Sally comp for a second, if you could sort of put that into context for us, how does that compare to what you were expecting because if it's – if you're looking at it from a glass half full perspective, to your stack, accelerated modestly, but it did decelerate from the third quarter. So, help us understand how you thought about the fourth quarter comp. Christian A. Brickman - President & CEO: Yeah, I mean it was below what we wanted, Joe. You're exactly right. But the reality is, it didn't decelerate much. It's pretty much flat. And the reality – here's what we're thinking, which is, we've now just got to the point where our core categories are al reset with hair care, we'll really feel that way and obviously want hair care colors done in the back half of the year, we'll definitely feel that way. And again, some of the categories that were the drags on comp last year, which really was appliances and hair extensions, we're going to be lapping much easier numbers there, as well as we've got some good solutions there that we're implementing, supply chain and solution in hair care and hair extensions and some innovation in the appliance category. So, that's what really gives us the confidence that, hey, as we make more progress with the list customer and get her back to the store, we've got the right category resets done. We're seeing good growth out of those category resets. We're seeing good growth out of the store refreshes. The advertising is showing early strong impact on sales growth and we're getting out of our down cycle in these categories that have been a drag on our comps. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Okay. Great. It's helpful. And then just in terms of the share repurchase activity, obviously you guys stepped it up in the fourth quarter. How should we think about that in 2016? Is it going to be the same level as we saw in 2015? Because that's sort of the missing piece to your EPS guidance is, how much shares you decide to buy back next year, so it looks like your operating income guide is probably up low-single as best we can tell? Mark J. Flaherty - Chief Financial Officer & Senior Vice President: Yeah. I would look at our share repurchase cadence in the future very similar to what we've done in the past is, we're very committed to the program. Our board is very committed to it. And certainly, we've looked at entry points in terms of being opportunistic at times. We've had a little bit of a fits and starts this year with some of the blackout periods for some of the data security breaches that we had to prohibit ourselves from buying at times. But overall, on an annual basis, we should be back to that kind of normal cadence that we've been at. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Okay. So, about $300 million a year or thereabouts? Mark J. Flaherty - Chief Financial Officer & Senior Vice President: $250 million to $300 million. I think is probably a fair assumption. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Okay. And then just one last one for you Mark, you mentioned earlier the D&A next year $89 million and $90 million. In the fourth quarter, it was $25 million, so that would imply a $100 million run rate. So, it sounds like you're expecting that to come down next year. Mark J. Flaherty - Chief Financial Officer & Senior Vice President: Well, you got to tail off some amortization from some of the legacy BSG acquisitions. And some of those have a shorter useful life. And there is also some just – some additional kind of housekeeping cleanup, I think, in the fourth quarter for some write-off of just some dispositions. So, I think, looking at the fourth quarter as kind of your proxy of a run rate, I think it's probably a little bit inaccurate. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Okay. Thank you for that. Appreciate it.

Thank you. And we'll go back to the line of Oliver Chen with Cowen and Company. Your line is open.

Thanks a lot. Congrats on the overall comp. Chris, as we do think about list customers and our models and traffic, how would you prioritize which of the drivers will be more needle-moving than others and how do you contrast – thinking about demand creation and marketing versus kind of the in-store actions that you're taking? And Mark, I just had a few modeling questions. Is there – I know there were some moving pieces with labor. I was just curious about updated thoughts there. And then I wanted to try to zoom out just to get an update on Internet pure-play versus your business model. Mark J. Flaherty - Chief Financial Officer & Senior Vice President: Oliver, let me take care of the housekeeping question real quick is, I think in our guidance and the overall increase in margins, I think we've kind of covered what we believe is the labor headwinds as we know today. And I feel very comfortable about where we've landed SG&A-wise, we are up a couple of a basis points from where we ended in 2015. There is a part of that, that is the $16 million of investments that we're making not only in South America, but the further investments in Loxa. When you kind of break down that $16 million, there is roughly $2.9 million of it in Colombia, there is roughly $4 million for new store growth in Peru. And we are also entering the Brazilian market next year. We have begun the product registration in a lot of the legal organizations. And the goal would be, by the end of fiscal year 2016 that we would be close to opening our very first store in Brazil. And the remainder of that $16 million is investments in Loxa for the continued development of their platform. And we feel pretty good about the overall behavior and cadence that we see in it and how it helps integrate both the professional customers, the retail customer with BSG. So, I think overall, that's kind of how we look at the SG&A for next year. Christian A. Brickman - President & CEO: And Oliver, let me try and hit a couple of these other questions. So, it's obviously hard to disaggregate which initiative is driving how much impact. That means that quite logically, we believed we had to execute sort of the store refreshes and updates, category refreshes and updates, as well as packaging and product updates before we really dug down and marketed too much to bring those customers in because what we didn't want to do is, bring customers in and have them see the exact same Sally. So, we wanted to clarify our brand message and then make sure our stores, our products and our packaging was delivering on that message before we push too far down the marketing front. What I think you're going to see us do in the upcoming year is start to shift that down, right? As we complete the hair care category reset and the color reset and we continue to push down, refreshing our stores, we'll be investing more dollars in driving the list customer back to our store because we believe we have something unique and different to offer her and that we can deliver on the value proposition of salon quality products at a better value and backed by the Love it or Return it guarantee. And versus the Internet pure-play, obviously, we have a very distinctive offering, right. We're not just selling any brand out there, right. What we do is, we go out and obviously, we want to upgrade our own Internet experience and our own online experience. But what we offer is salon quality products that we source direct from the world's best manufacturers. They're sold on our own brands that are not available elsewhere. And the reality is, we deliver those at a price that's one-half to one-third of what a salon product would typically charge for that product. It's a pretty unique value proposition. The reality is, we want to deliver that in a way where we're agnostic to what channel they buy in. But I think it's very hard for Internet pure-plays to go against that because they don't have the supply chain or the vendor relationships or the brands that they can leverage to do it. I think what we want to do is build our distinctive value proposition in both channels, both online and in the store and be agnostic to where they buy.

Okay, Chris. And just regarding the list customer, what are your thoughts on the competitive landscape and what other sources might they be interested in or how is the competition moving? And I was just curious to get your thought on the general consumer shopping environment, just because there has been so many different variables at play, with positives and negatives about the way the consumer is feeling? Christian A. Brickman - President & CEO: Well, the reality is, again, I think we have a really distinctive value proposition that we have to talk about, right? So, we go – and this is very true, right? We go to manufacturers who are making salon products that sell $20 a bottle, $30 a bottle, $40 a bottle. We source our formulations directly from them and sell them under our own brand, and as a result, we can offer them for $6 to $9. And we may have done a poor job of talking about that value proposition, but it's a pretty unique supply chain and value proposition. What we're trying to do is professionalize and upgrade the way we deliver that to the customer, both in terms of the category look, the store look and feel as well as the online digital and social look and feel. So, I think what we have to do is focus on our unique value proposition. And I do think that competitors will continue to get better, which means we have to continue to get better. This is a high-margin category and I can't imagine why they wouldn't invest in it and they have. I think they've done most of that investment. And now what we have a chance to do is really discern and separate and educate them about our value proposition, also our unique expertise and capability in store, and we're doing that now. And I think the consumer is reasonably strong, but I think they're still cautious and they're looking for value and they're looking for unique buys. And I actually think that's an opportunity for us to position our value proposition which is, we can bring you the world's best salon products and we can do it at a better value than anybody else can because we go direct to the source and buy it and sell it under our own brands. And we have to live up to that every day, but I think if we do, we actually could stand out from the crowd in a pretty compelling way.

Thank you. Encouraging guidance and best regards. Christian A. Brickman - President & CEO: Thank you.

Thank you. Our next question comes from the line of Jason Gere with KeyBanc Capital Markets. Your line is open.

Hey, I can still say good morning. Hey, guys. So, I have a couple of, I guess, questions, so just one clarification question and then just kind of one real question. Do you know what was the shares outstanding at on the last day of the quarter, if you have that, that would be great? And then the other question is just to clarify, you said for the Sally stores, it would be 3% comps in the back half. So, we're implying two and a half for the year? Mark J. Flaherty - Chief Financial Officer & Senior Vice President: Jason, the easy one which is the shares outstanding, it was about 151 million.

Okay. So, that's kind of our starting point for this year, okay. And then, just on the Sally, on the SBS, that was 3% comp in the back half of the year. I just want to make sure it wasn't 3% for the year. Christian A. Brickman - President & CEO: For just the Sally business unit you're talking about?

Yeah, just the Sally business. Christian A. Brickman - President & CEO: We didn't articulate it. We articulated our overall comp, which was in the low 3%, which is our blend. But the bottom line is, we want to see good continued progression in comps throughout the year. So therefore, we would expect the back half to be stronger than the front half.

Okay. And then just I guess adding on that, what's your longer-term view on this business? I know in the past, you've kind of said 3% to 4%, somewhere in that range. Are you still as optimistic about it? I know obviously, you've got some easy comparisons coming up, SKU optimization, you've got Germany kind of falling out. So, just wondering the longer-term view on this business beyond obviously this fiscal year? Christian A. Brickman - President & CEO: Are you thinking just Sally, or you're thinking the overall business?

Just Sally. Christian A. Brickman - President & CEO: Just Sally, I think that's we're at in the 3% range, a little above 3% is where we'd like to get to.

Okay. So, then the other question I have is about operating income. And I think doing the calculation, it looks like about low-single-digit for this year. And I was just wondering, the last few years, it's been low single digit. I know there's a lot of puts and takes. Do you think that when you get beyond this year and when you've done the refreshes and everything there, can you get back to a mid-single-digit to high-single-digit operating income? Is that being too aggressive? Or just kind of taking all the pluses and minuses, and obviously this is a beyond 2016 kind of question. How do we think about the long-term kind of structure of this business? Thanks. Christian A. Brickman - President & CEO: That's what we're shooting for clearly is to think about high- single-digits operating income growth over time. We're going to get fairly close to that this year, I think. We'll definitely make progress on the EBIT line this year. I don't think it will be a long-term trend, but we'll make good progress against it this year. And these investments over time will wane. But we're going have to step up some of the investments here in the next couple years both in capital and marketing investments and other investments internationally. It will be a little bit of a drag on SG&A, but the reality is that we're seeing the business respond and if we can continue to get pricing leverage and get a nice mix shift leverage in the business by getting the list customer back in, I think you'll see good top-line margin growth, as well as bottom-line margin growth.

Do you think that – I mean, I understand the price and what's in place for this year. But do you think every year, getting some price optimization, do you think that's, I guess, realistic? I know there's been some changes in – there'll be changes in ownership, and with among – some of your suppliers. I was just wondering if you think that that's realistic or is it just really more, maybe you weren't as efficient on some of the trade spending out there and you can, I guess, be more efficient going forward. Christian A. Brickman - President & CEO: So, I think there's definitely a one-time element to some of the margin improvement, but I wouldn't say all of it, right. So we will get a larger pop than usual this year as we took some very decisive action to cover the cost headwinds we saw. That being said, the biggest shift we'll see probably is, if we can reignite list customer growth, right, and that grows faster than our pros, which is what we expect to happen, that's a huge margin swing between those two customer mix. And that's what we want to drive is to add margin expansion through a combination of own brands and a shift towards list customers and BCC customers as we move the business more and more towards a retail business with Pro Heritage.

Okay. No, it's great. And hey, Chris, thanks for the clarification. Christian A. Brickman - President & CEO: Thank you.

Thank you. Our next question comes from the line of Meredith Adler with Barclays. Your line is open.

Hi, this is Sean Kras on for Meredith, thanks for taking my question. Christian A. Brickman - President & CEO: Hi, Sean.

Hi. Can you talk a little bit more about your plans for entering Brazil, I thought that was pretty interesting, and also to just how competing in this market might differ from other South American markets? Mark J. Flaherty - Chief Financial Officer & Senior Vice President: Sure. We still believe in a dual-track approach in which we believe that what we have learned from the Andean region, which is really the Chilean, Peruvian and Colombian areas that there is an opportunity and there is a void that's in the marketplace in Brazil that I think we can be very successful at as a small-box retailer of professional beauty supplies. And our ability to execute on that promise, I think, is not matched whatsoever by any of the competitive environment that we've seen in our experience over the last couple of years of studying the market. With that said, to your point, there are certain nuances to the market that are much more challenging than the other markets that we exist in today in South America, namely, the importation and the duties and tariffs that are involved in bringing products into Brazil can be a bit of a barrier for some people. We believe that our price points, particularly our ability to bring our own label into Brazil, and eventually with the partnership that we have around the world with a lot of the name brand professional brands that are willing to do local filling for us that we'll be able to overcome some of those barriers certainly as we develop into the marketplace. Now, the other track to this is certainly, we still would look at acquisitions that would make sense in the marketplace, that would be highly accretive to our proposition and our platform and certainly are keeping our eyes open to those opportunities. But we actually are very optimistic about our long-term prospects there. It will be a very – it is a long-term investment. Brazil is not – it's not a small country like the other ones that we operate in. So, we certainly are going at this with a very realistic and a very cautious and conservative approach.

That's helpful. And can you also maybe talk a little bit more about some of the investments you're making in Loxa Beauty and maybe just more generally an update there? Christian A. Brickman - President & CEO: Yeah, I mean, Loxa was originally purchased and it's serving that purpose and growing quite well as a way to take professional brands, so salon brands, to retail, but still engage the stylist by compensation them through a commission model. So, that's working well and growing off a small base, but growing quickly. What we're finding though is that the Loxa team has all kinds of capability that can also help our BSG business. So, they've got some terrific apps for the stylist that help the stylist run their business, whether that be scheduling apps, apps around transactions and actually covering their transactions more of them, as well as resupplying their own product and finally then linking that to a retail site. And so, what we're really beginning to do is engage Loxa across our entire BSG platform as a core strategy across our BSG platform, of a way to basically build a stronger relationship with the stylist, let's say, an electronic or virtual relationship with the stylist that will allow us to market to her differently, support her in all of her activities, help her conduct transactions with customers and help her sell to customers. And that's a game changer for us. It's a bigger idea for Loxa than probably what we had when we bought it, but it's turning out to be that way. And we're excited about it because we think it really differentiates BSG for the long run.

That's great. And just one more if I may, just you mentioned that you just launched the CRM program at BSG. I'm curious if there's any kind of initial comments you can make on that and just what stylist sourcing? Christian A. Brickman - President & CEO: Well, I think that the biggest thing we can say is, we're in early days. We have roughly 300,000 stylists who are kind of up and running in that program. And we're going to need to get it to five times or six times that over the course of the next year or two. But I think it's a game changer in terms of our ability to market the stylist, and equally is important to add value to the professional brands. Because in the future, if we can get all of the stylists registered into that program, as they shop our stores, we suddenly can market to those stylists in a very selective way, in a much more efficient way to direct mail, which is what we've historically used. We can track their purchase behaviors and help our vendors understand unique purchase behaviors of various stylists in different regions of the country. So, I actually think it's quite a game changer down the road. It may even be more valuable than on the Sally side. But, we're early days, we're just building up the capability in the program, it will be built out dramatically over the course of the next year. And I think you will see us reach critical mass in terms of names during the course of that year, and then we'll start really changing the way we use it to market and go to market.

Sounds great. Thanks guys.

Thank you. Our next question will come from the line of Jill Nelson with Johnson Rice. Your line is open. Jill Caruthers Nelson - Johnson Rice & Co. LLC: Good morning. I'm just looking at fiscal 2016 SG&A guidance you've given out there. Just – is there any big fluctuations quarterly on the timing of some of these investments that we should be looking for? Mark J. Flaherty - Chief Financial Officer & Senior Vice President: No, Jill, I think it's pretty ratable. I think when you looked at the big investments we made in 2015 where we talked about last year during the guidance, the $10 million that we made in new business development. I think we ended up at about $8.7 million for the year. That cadence, in terms of the waterfall, was pretty consistent. And when you get beyond – the Brazil one will be very consistent because it's product registration, it will be a very smooth cadence, and also the cadence with Colombia and Peru are also very consistent because of just the timing of the new stores is very proportionate. Jill Caruthers Nelson - Johnson Rice & Co. LLC: Okay. And then just the BSG segment, it's been performing very strongly. You could talk about it – it looks like for this past fiscal year, you hit a EBIT margin record. Could you talk about maybe the potential for that segment and where you see that going? Christian A. Brickman - President & CEO: Yeah. I mean, we're very excited about what BSG is doing and it's both for the short term and the long term. So in the short term, they continue to win brands from the competition and steal share in the marketplace which is great, and obviously more of those have yet and will continue to hit as we go out of the last year into this year. But beyond that, I think we're also really upgrading our ability, as I've just talked about, to build a relationship with the stylist, both through our CRM through absolutely bringing to market and through other ways, we'll connect ourselves to the stylist. And we'll be able to add more value to the vendors over time. And I think that will really distinguish us from the competition in a meaningful way. So, I think this is a very strong business, with very high market share, it's performing well and executing well, which is why it's stealing brands from the competition and it's only going to get better from here. I'd just think it's unrealistic to assume that it's going to deliver 7% lapping comp sales, which is what it did last quarter. I think that will come a little bit more into moderation. But it's a strong business, which has a solid foundation. Jill Caruthers Nelson - Johnson Rice & Co. LLC: Appreciate it. Thank you. Christian A. Brickman - President & CEO: You bet.

Thank you. Our next question will come from the line of Linda Bolton Weiser with B. Riley. Your line is open. Linda Bolton Weiser - B. Riley & Co. LLC: Hi, so, Chris, you mentioned a couple of times the importance of getting this list customer back into the store. And you're doing all these things to result in that. But where has the list customer been going? Is it the drug stores and grocery stores of the world or more like the Ulta's and Sephora's of the world? And then secondly, to the extent there is some just mass channel competition, what does the Walgreen-Rite Aid combination mean? Does that make it easier for you in terms of the strategies you're trying to execute on? Or is it going to make the competition harder down the road? Christian A. Brickman - President & CEO: Well, let's take – let's break this apart. I think the reality is, we're a trade-up customer. Right? So, as I've mentioned this before, our overlap is about 80% Walmart, 70% Target, 60% Walgreen, 50% CBS and Ulta is further down the list, more like 28%. The reality is, we want to trade customers up to salon quality solutions, but they don't want to pay salon prices. And that's our job and we got to define ourselves as offering those salon quality products and doing it at a good value. And I think we're getting better at that. We need to complete the refresh of both our packaging, our products, our marketing at our stores, in order to be better at that. But that's the game we want to win. In terms of our competition, a lot of them made those investments over the last five years and six years, they've upgraded their categories and their offerings against us. And so, most of that is already out there in the marketplace. I don't necessarily think the Walgreens-Rite Aid connection is a big change or in any way changes the marketplace. I do think you'll see competitors continue to invest in this category where you see most of them going including Ulta, but others, is they seem to be going more against department store, cosmetics and skin care, which is not our core, right. Our core is really hair color, hair care, that's where we want to be highly differentiated and the others are more impulse items in our stores. I think, what we got to do is continue to invest in our core. And if you've seen our ads recently, we're attacking and going after much more the idea of come and trade up to professional color and professional care, as where we want to be. We think that's a little bit zigging while the rest of the industry zags, we'll continue to do that. But I don't see a big change in the competitive environment right now. I think our job is to reaffirm our value proposition, which is delivering salon quality products at a better value and in a better store environment with better packaging and better marketing than we've done in the past. Linda Bolton Weiser - B. Riley & Co. LLC: Great. Thank you. Christian A. Brickman - President & CEO: You bet.

Thank you. And we have time for one final question and we'll go to the line of Olivia Tong with Bank of America. Your line is open.

Great. Thank you. I just had a couple of clarifying questions, first on the comps. BSG, you had mentioned that there was clearly a very nice comp this quarter. And we do have to go back probably three years to four years to see numbers like that. But also you mentioned that you now have this high -class problem in terms of next year's comps. So, can you help provide just a tiny bit of color in terms of the breakdown to get to that low 3%s between SBH and BSG? Because it looks like, BSG starts off the year pretty nicely and decelerates from there whereas for SBH, I assume that perhaps a bit more challenge in the first half, but you expect it to get better as the year progresses? Christian A. Brickman - President & CEO: Yeah, I mean, that's the right answer. Right, we expect SBH to show sequential improvement quarter-to-quarter and get better as it goes throughout the year. And we expect BSG to slow some, but still be above the marketplace. And that's about as much detail as we can provide around that. But that's how we would model it.

Got it. And are you still looking for 3% to 4% in the second half as you mentioned last quarter? Christian A. Brickman - President & CEO: 3% to 4% in the second half. I think we're looking at low 3% overall comp for the year.

Yes, right. Christian A. Brickman - President & CEO: Which means, it'll probably be higher than that in the back half of the year, but direction, that's we're looking for the whole year.

Got it. Okay. I'm just kind of trying to understand because last – if I remember correctly, last quarter you had said 3% to 4% in the second half. Is that still the expectation or...? Christian A. Brickman - President & CEO: Yeah, here's the thing, right, which is the 3.5% comp that we put out this quarter is terrific. There's nothing wrong with it. It's just the mix is wrong, right. Over time, we want the mix to be a little less BSG and a little more Sally. And that's what we expect that to accomplish during this fiscal year.

Got it. Perfect. And then, just on gross margin, nice to see that 35 basis point to 45 basis point outlook for fiscal 2016. And you sound pretty confident about some of the things that you've already done and how they're starting to bear fruit. But even excluding the Germany costs, it does look like gross margin didn't change all that much in Q4. So was it just kind of that these things take a little bit of time to build or it was more towards the end of the quarter, so you really didn't see it in the quarter and you do expect a little bit more benefit coming within 2016? Christian A. Brickman - President & CEO: Yeah, very little of it really got into the fourth quarter. So, the (1:04:36) pricing a little bit of it got in there because we started that in August and September. The Zone pricing did not hit at all in that quarter. The vendor allowance negotiation did not hit at all in that quarter. The benefit from Germany hits next year. And global sourcing will continue to build throughout the year. So very little of it got into the fourth quarter, it's pretty much all going to be in fiscal 2016.

Got it, perfect. And then, just lastly on, on CapEx clearly up quite a bit in fiscal 2016 after a pretty robust 2015. Do you expect it to come back down again in 2017, as we go to the out years and I know, I'm asking that question sort of 12 months from today? But... Christian A. Brickman - President & CEO: Still it's a legitimate question, I think we would say it'll probably high for one more year after that and then it might return to more of a normal baseline. But we do have some catch-up investments we need to make.

Perfect. Thanks so much. Christian A. Brickman - President & CEO: Just wanted to thank everybody for joining us today. Obviously, as you've heard, 2015 was a busy year. We probably didn't get all the payback from the initiatives last year, but we fully expect it in 2016, and we see the momentum building in the business. So, we're excited about fiscal 2016 and seeing all of those initiatives come to fruition. And thank you and we hope to see you all in person soon.

Thank you. And ladies and gentlemen, today's conference call will be available for replay after 12:00 PM today until midnight November 26. You may access the AT&T Teleconference Replay System by dialing 1-800-475-6701 and entering the access code of 371967. International participants may dial 320-365-3844. Those numbers once again, 1-800-475-6701 or 320-365-3844 and enter the access code of 371967. That does conclude your conference call for today. Thank you for your participation and for using AT&T Executive Teleconference Service. You may now disconnect.