Tilly's, Inc. (TLYS) Q1 2019 Earnings Report, Transcript and Summary

Ladies and gentlemen, greetings and welcome to Tilly's, Inc. First Quarter 2019 Earnings Results Conference Call. [Operator Instructions] As a reminder, this program is being recorded. It is now my pleasure to introduce your host, Gar Jackson of Investor Relations. Thank you. You may begin.

Good afternoon, everyone, and welcome to the Tilly's fiscal 2019 first quarter earnings call. Ed Thomas, President and CEO; and Michael Henry, CFO will discuss the company's results and then host the Q&A session. For a copy of Tilly's earnings press release, please visit the Investor Relations section of the company's website at tillys.com. From the same section, shortly after the conclusion of the call, you will also be able to find a recorded replay of this call for the next 30 days. Certain forward-looking statements will be made during this call that reflect Tilly's judgment and analysis only as of today, May 29, 2019, and actual results may differ materially from current expectations based on a number of factors affecting Tilly's business. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with any forward-looking statements, please see the disclaimer regarding forward looking statements that is included in our fiscal 2019 first quarter earnings release, which was furnished to the SEC today on Form 8-K, as well as our other filings with the SEC referenced in that disclaimer. Today's call will be limited to one hour and will include a Q&A session after our prepared remarks. I will now turn the call over to Ed.

Good afternoon, everyone and thank you for joining us today. Both our top line and bottom line results for the first quarter of fiscal 2019 were on the higher side of our outlook ranges. After a slow start to the quarter due to unseasonably poor weather and the late Easter shift this year, our business rebounded during April to produce a positive 2.4% total comp in earnings per share of $0.02 for the quarter. Footwear was again our strongest performer with a low double-digit percentage comp sales increase over last year. Men's accessories and Boys were all up low single digits. Girl's and Women's were down mid to high single digits with weakness in fashion tops and dresses. Fashion bottoms and swim were also weak within Women's. Turning to real estate, we opened one new full-size store in Chico, California and closed our original RSQ pop-up store in Dallas upon lease expiration during the first quarter. In the second quarter, we will open one new full-size store at Natick, Massachusetts in mid-June and have just closed our Cerritos, California RSQ pop-up store due to landlord recapture. We currently expect to open up five new full-size stores during the third quarter and up to six during the fourth quarter, bringing the total number of new store openings for the year up to 13. 5 of these 13 new stores have fully executed leases as of today. Given that, we expect to open full-size stores in both King of Prussia and Del Amo later this year. Our remaining two RSQ stores will close upon the opening of the new full-size stores in those properties. We've also completed negotiations for just over a quarter of the nearly 80 lease action decisions to be made this year, which we anticipate will continue to improve our occupancy cost structure going forward. At this time, we have no additional known store closures although a few may still occur as we finalize negotiations on our various lease actions. Despite the expected closure of our initial four RSQ pop-ups, we've learned a lot from them and are actively working on establishing RSQ as a permanent concept. We do not have any signed leases as of today, but we have received meaningful interest from certain members of the retail landlord community about adding RSQ stores to their properties. We believe that this can be a growth vehicle for us to complement our traditional full-size stores, while also strengthening our proprietary brand recognition. Next, I'd like to discuss our continued focus on customer engagement, brand awareness and driving store traffic. We formally announced our new partnership with the High School Esports league in mid-April. This league is the largest Esports league at the high school level in the country, encompassing approximately 1,500 schools nationwide. We're excited about the opportunities this partnership may provide to bring step -- to bring new eyes to Tilly's and inspire creative fun experience for our customers to help drive in-store traffic. Additionally, we're working on several other promising efforts to improve brand awareness and customer engagement for the remainder of the year. While we are not ready to go into detail on any of these items at this time, all are aimed at continuing to improve customer engagement and brand awareness for our company. Turning to technology, we expect to launch an expanded loyalty program and enhanced mobile app during the second quarter. We also expect to be able to go live with a buy now pay later program during the second half of the year, likely, in between back-to-school and holiday season, holiday shopping seasons. We remain committed to investing and our customer facing technologies to further strengthen customer engagement and provide convenience to drive sales. Turning to the second quarter, we are off to a slow start across almost all geographies and all spring summer products. Total comp sales were down 6.6% through Memorial Day weekend, consistent with store traffic thus far. We believe this deceleration is mostly weather-related given the cool and wet weather patterns we've experienced across much of the country, particularly, here in California where 95 of our 228 stores reside. It is essentially the same assortment that produced a positive 2.4% comp in the first quarter that have suddenly decelerated in May. In Florida, and in the Northeast where weather turned quite warm last week, we posted positive comps. This gives us some confidence that our results will improve from where they are currently. By the time, the quarter is complete assuming more normal weather patterns occur from here. Michael will now provide details of our first quarter operating performance and introduce our second quarter earnings outlook. Mike?

Thanks, Ed. Good afternoon, everyone. Our fiscal 2019 first quarter operating results compared to last year's first quarter were as follows: total net sales of $130.3 million increased by $6.7 million or 5.4% from $123.6 million last year. Total comparable store net sales including e-commerce increased 2.4% on top of last year's 0.1% total comp sales increase. E-comm net sales increased 29.6% and represented approximately 15.1% of our total net sales this year compared to a decrease of 7.2% and a 12.2% share of our total net sales last year. Store comps decreased 1.4% and represented approximately 84.9% of our total net sales this year compared to an increase of 1.2% and 87.8% share of our total net sales last year. We ended the first quarter with 229 total stores compared to 222 total stores last year both inclusive of three RSQ branded pop-up stores. Gross profit, including buying, distribution and occupancy expenses was $35.7 million or 27.4% of net sales compared to $35.0 million or 28.3% of net sales last year. The 90 basis point decline in gross margin was primarily attributable to an 80 basis point increase in e-comm shipping costs associated with e-comm net sales growth and the 70 basis point decline in product margins primarily due to higher markdowns. These variances were partially offset by 60 basis points of improved leverage of occupancy and buying costs as a percentage of net sales. Regarding the legal settlement coupons, we issued last September less than 2% have been redeemed to date resulting in no material impact on our business. All such coupons will expire on September 4 of this year. While it can be no guarantee that redemptions will remain immaterial during the upcoming back-to-school season we're not expecting any meaningful impacts on our business during the final three months of the redemption period based on the redemption results thus far. Total SG&A expenses were $35.5 million or 27.3% of net sales compared to $33.6 million or 27.2% of net sales last year. SG&A increased by approximately $1.9 million primarily due to higher store payroll costs of approximately $1 million arising from minimum wage and annual merit increases together with higher e-comm marketing and fulfillment expenses of approximately $0.8 million associated with e-comm net sales growth. Operating income was $0.1 million or 0.1% of net sales, compared to $1.3 million or 1.1% of net sales last year. This decline in operating results was largely attributable to the increased costs associated with e-comm net sales growth and the minimum wage impact on store payroll noted earlier, partially offset by the positive impact of improved comp sales results. Other income increased to $0.8 million from $0.4 million last year, primarily due to higher interest rates on our cash and marketable securities investment portfolio compared to last year. Income tax expense was $0.3 million or 30.6% of pre-tax income compared to $0.5 million or 28.6% of pre-tax income last year. This year's income tax rate includes approximately $39,000 of discrete items relating to employee stock-based compensation. We continue to expect our effective income tax rate to be approximately 27% on a quarterly basis for the remainder of fiscal 2019, absent discrete items. Net income was $0.7 million or $0.02 per diluted share compared to $1.2 million or $0.04 per diluted share last year. Weighted average diluted shares for the quarter were 29.8 million versus 29.4 million last year. Turning to our balance sheet, we ended the first quarter with cash and marketable securities totaling $109.8 million and no debt compared to $105 million and no debt last year. In February 2019, we paid a special dividend to stockholders for the third consecutive year. This year's special dividend totaled approximately $29.5 million in aggregate or $1 per share. We ended the quarter with inventories up 1.8% below our comp sales increase of 2.4% and with a more current inventory aging compared to last year. Total capital expenditures were $3.1 million compared to $2.9 million last year. Now turning to our outlook for the second quarter of fiscal 2019. As Ed noted earlier, the second quarter is off to a slow start with total comps down 6.6% through Memorial Day weekend. However, we believe our results will improve over the remainder of the quarter assuming more normal weather patterns occur. Accordingly, based on current and historical trends, we expect total net sales to range from approximately $154 million to approximately $159 million based on a decrease of 1% to 4% incompatible store net sales for the quarter. Operating income to range from approximately $6.5 million to approximately $8.5 million and earnings per diluted share to range from $0.17 to $0.23. This outlook assumes no non-cash store asset impairment charges and effective income tax rate of approximately 27% and weighted average diluted shares of approximately 30 million. We expect inventories per square foot to remain consistent with our comp sales performance. Operator, we will now go to Q&A.

Thank you. Ladies and gentlemen, we will now be conducting our Q&A session. [Operator Instructions] Our first question comes from the line of Dave King with ROTH Capital. You are now live.

Thanks. Good afternoon, guys.

Hi.

I guess first on the quarter to date performance in Q2, how did e-commerce perform versus the down 6.6% and more importantly what’s embedded in your guidance for the full quarter?

So both stores and e-comm decelerated from the performance of the first quarter. Stores are down high-single digits through Memorial Day weekend and e-comm was up high-single digits. So it decelerated quite meaningfully from up nearly 30 that it was in Q1. So both sides, whether stores or e-comm slowed down.

Okay. But I think e-comm had a little bit more difficult compare, right, that may have …?

At this time last year, we were just starting to get back into positive territory after cleaning up some of the issues that we had upon system transitions back in Q4 of the year prior.

Yes, and category performance on both channels were pretty similar. So, where we saw the summer/spring goods was more challenging on both channels.

Okay. Okay. That helps. Then maybe sticking with the guidance a bit, how should we be thinking about -- I think last year there was a shift to some back-to-school days in the Q2 from Q3. Are those shifting back into Q3, and then, is that weighing at all on the guide?

No, it should be much more consistent this year in that regard in terms of dates from what we’ve seen thus far. Really what we are contemplating going forward to get -- I will just be make it abundantly clear. To get to the higher-end of our guidance, we basically need to be flat in the total business the rest of the way. On the lower-end of the guidance, we need to be down about 3% to get to the lower-end of guidance the rest of the way.

Okay. Okay. That helps. And then, in terms of thinking about the impact then on operating income, can you -- Mike, maybe just talk a little bit about the puts and takes there, in terms of the outlook between merch margin, shipping costs, rents, SG&A leverage et cetera.

Sure. So, with the negative comp, we would expect product margins to be down on either end of our guidance range. We are going to continue to be disciplined about inventory management, we are not going to let problems build up. So, we will take whatever pain we have to, to keep inventory clean. So, product margins were down 70 basis points in Q1. They could be down up to that much in Q2, maybe not down quite that much on the better end of the guidance range. Buying, distribution and occupancy costs as a bucket are going to deleverage if we are in negative comp territory. It could be anywhere from plus or minus 100 basis points, 80 to 120 basis points on either end. And then of course, SG&A is going to deleverage on a negative comp as well. It could be up to as much as a 100 basis points. And the nature of the costs are no different than they’ve been in the last two quarters. If e-comm is leading the comp, that is more expensive for us. And that comes with e-comm shipping within the distribution components of the BDO costs. And it comes with the e-comm marketing and fulfillment costs that are within the SG&A line, and then we are going to continue to have the impact of minimum wage increases just as we’ve called out I think three quarters ago now that this sort of thing would happen this year. So nothing new in terms of different costs or unexpected variances, other than we certainly weren't planning on having a negative comp this quarter, coming in. We were planning for a positive comp for Q2 and I have just been really surprised and disappointed in how May has kicked off. We were positive comp each of the last five weeks of Q1. And then, as soon as we flipped over to Q2, traffic fell off several points. Traffic has been down about 5% and changed each week so far for the first three weeks of May and comps have fallen accordingly. And it's been across the board in terms of departments and it's been very largely across geographies. So, again as Ed noted in the prepared remarks, it's the same assortment. So we didn't go through any kind of assortment transition that would have caused some sort of fashion risk to cause this kind of deceleration. We really do think it's -- it has an awful lot to do with local weather here in California, in particular, but really across the country and we are where we are unfortunately.

Okay. Okay. That's a great color. All right. Well, I will step back and good luck for rest of the quarter and year. Thanks.

Okay. Thank you.

Thank you. Our next question comes from the line of Jeff Van Sinderen from B. Riley. You are now live.

Hi, everybody. Just looking at the business in May in California, can you give us more on what you are seeing -- what you saw in May in California versus other regions? Also curious about how e-comm has been doing in California. Again, just specific to California, how that’s been trending in May versus brick-and-mortar? Any color there would be helpful.

Yes. Jeff, I don't have e-comm comps by state, so I can't answer that definitively. But every significant geographic area where we’ve at least 10 stores decelerated by several points between how we finished Q1 in early May. So Northern California so far has been down 10%, Southern California has been down 8%. There are other areas in the Midwest that have been down 10% or more. The Northeast up until just this past week was down in the teens. So it's been pronounced. And, again, we think it has an awful lot to do with what we've been [indiscernible] every single day.

As Mike called out earlier, where we've seen the weather be warm, we’ve seen that turnaround in the comps. That gives us a lot of confidence that it's not an assortment problem, it's mostly weather-related.

Okay. What is -- so for example, if I think about some place like Florida, how should we think about the trend there?

It's better.

Yes. It's actually improved from Q1. It's the only area that’s positive comp right now.

It's better.

Okay. So just kind of following up on that, aside from the weather, what else do you think is driving the sequential slowdown from Q1? And I guess what else kind of underpins your thinking other than whether that you are going to see trends improve?

Well, I mean the soft -- the softness we've seen by category, we still continue to see good momentum in shoes and pretty much across the board in most men's categories. Women's has been softer than what we had planned and we think we’ve a pretty good handle on the reasons why. But then you take seasonal categories in women's like shorts, and that has followed the weather pattern. So I ..

That’s been true regardless of women's.

That's right. Men's, women's, yes …

Doesn't matter, shorts, swim, sandals, they are all meaningfully down.

Yes. The one thing I would called out is, we think in the women's we had too many crop tops as part of our assortment, that’s been corrected for now going forward. And so, that -- we just -- we identified a few mix challenges where we’ve corrected that, and we will be in good shape for back-to-school.

Okay. So, if I remember, I think Q1 started pretty slowly as well and it sounds like we could see -- even though we don't really have a counter shift, we could see a similar progression in Q2, given that in the warmer weather regions your business is actually improving as the weather improves. We should see, knock on wood, we should see business improve in California and other places that have been colder. Is that a fair way to look at it?

That’s what we are expecting, yes.

Yes, we are expecting that.

Okay, great. Thanks for taking my questions and best of luck to rest of the quarter.

All right. Thanks, Jeff.

Thank you. Our next question comes from the line of Janet Kloppenburg from JJK Research. You are now live.

Hi, everybody. I just wanted to ask on May, most companies that I've been talking to, they say that it's the smallest month of the quarter. And that it's the toughest comparison from last year. Would you say -- of second quarter's comp last year, May was the most challenging comparison. Would you say that those -- that you are in a similar position?

May is the smallest month of the quarter, yes. It's roughly about 20%, maybe a little over 20% of the way into the quarter so far. And then, for us, we were pretty consistent each month last year, although May was the strongest comp, but just barely. So all three months of the quarter were within about a point of each other, maybe just barely over a point.

Okay. And the markdowns in the first quarter, Mike, they related to the fact that the quarter got off to a slow start, you have to just move through the inventory and that’s probably going to be a similar situation here on the second quarter?

Yes, just addressing slow sellers, addressing issues that we see, we are not sitting on any issues. We continue to act to keep inventory disciplined.

The inventory is as clean as it's ever been right now. So that's a good thing. So despite the challenges of top line, I feel pretty good about the composition of the inventory write-down.

And what about the women's business with some softness here in the first quarter and maybe overexposure right now to the call, crop top etcetera and bottoms being weak, what's the outlook there for improvement and what’s implied in your guidance?

Well, we are expecting the women's business to turn positive in terms of comps. And again, we’ve identified a couple of categories where we know even though we were not that far off from the rest of the industry and what the mix was like. We know that there are certain things that we could have done a little differently. We’ve made those adjustments and it gives us confidence that women's will improve during the quarter going into back-to-school.

Okay. So, you think that, that gets better.

Yes.

Okay. And on the footwear business, is there -- what’s being implied in your guidance? I know it's been robust and slightly better than expected. Do you think that category will slow as we move forward? I know you are up against challenging back half comparison.

We are not expecting it to slow in any meaningful way. And it remains -- it still remains a solid performance for us and I’m expecting that will continue maybe not as strong as it has been, but certainly should be positive.

Okay. And just last question. In terms of the digital channel and the impact of that channel's growth on your gross margin, is there some crossover point where it gets to a certain volume level that would allow that pressure to diminish, or will it continue to have that kind of impact on the gross margin?

Yes. I don't think the volume growth alone is going to solve that challenge. Really with free shipping being as prevalent as it is throughout the industry, that’s our biggest challenge. And to be competitive, you almost have to offer free shipping more often than what we historically have been. So, that’s a challenge for everybody, but I don't think we’ve our own fulfillment center as you know. So we operate pretty -- we're not the most efficient, but certainly we operate pretty efficiently because we run our own show throughout.

Okay. But what’s the operating income look like the weight for that channel versus the brick-and-mortar channel?

It's significantly lower than stores.

Did they?

E-comm is in single digit in terms of kind of full-in, all-in, four-wall profitability and stores are in high teens average. So, there is a big disparity there.

Yes, one of the causes or major cause of that we've talked about this before is, we sell a lot of clearance to e-comm versus stores.

Yes, that's right. Yes.

Yes, so that brings the merchandise margins down lower than stores. So therefore operating -- it falls through the operating income.

Within all the shipping costs and all the fulfillment costs added on top.

Okay. And did you say that the West Coast has turned positive in comp now? Michael, did I get that wrong?

No it has not. We said Florida in the Northeast last week turned positive.

Okay, great. All right. Thank you, guys. Best of luck.

Thank you. Thanks, Janet.

Thank you. Our next question comes from the line of Mitch Kummetz with Pivotal Research. You are now live.

Yes. Thanks for taking my questions. So Ed, Mike, on the first quarter, so you mentioned there was a rebound in April. Is it possible to give us the comps by month for the first quarter?

Give me just a second, I will find something that has that on it. We were down 5% in February, down 4% in March, and then up 18% in April. And again, that's …

So, do you have a sense, I mean, obviously with the April -- with the Easter shift, do you have a blended March-April number too?

Not in front of me now. Oh wait, hang on, I think I do. Blended March-April was up 5%.

Okay. So plus 5%. I know that when you guys reported Q4, you talked about the slow start to the first quarter and you also mentioned the weather. So I’m guessing that the weather turned in March and April and that got you the positive 5% comp for the last two months combined. I guess what I’m trying to understand is, Mike, it sounds like what you said earlier to get to the high-end of your comp outlook, you are basically assuming -- you say a flat, whatever you are saying, a flat comp, is that right?

Total company needs to be flat the rest of the way.

So last time you guys started slow, a lot having to do with weather, and then you ended up doing a plus 5% in the last couple of months. Now you’ve gotten off to an even slower start, but the high-end of the range is only a flat. I’m just trying to understand the difference, is there something else happening this quarter versus last quarter that you wouldn't think you could get back as much as you got back last quarter? Do you see where I'm going with that?

Well, we don't have an Easter shift coming in our favor in Q2.

Yes, but March-April combined were plus 5%. You know what I mean, you went from a minus 5% to a plus 5% from February to March-April, and now you are at a minus 6% or minus 7% and the high-end of the range only assumes a flat. I guess I'm just wondering if there's something else at play in June and July that gives you pause to be more aggressive with your outlook for the balance of the quarter.

Yes. The slower start and the fact that all spring and summer categories are down very meaningfully double-digit down. So that’s where we've started. And quite frankly, we're starting in a hole that we have to dig out of. And I don't have an Easter shift to count on for the back part of the quarter. So we think things are going to get better with more consistent weather, but we also can't predict the weather either. So there's a lot of unknowns about the rest of the way, but we’ve studied it every which way with all of our historical data and this is what we think is realistic.

Got it. And then, as far as your inventory goes, I mean is there any way to say what percent is seasonal? I’m trying to think about how you are thinking about that seasonal inventory. Like when do things need to start to turn before you get nervous about that seasonal inventory and have to kind of cut -- and get more aggressive on the pricing? If you got like 5 or 10 days of really good weather, does that kind of straighten everything out, or what point is your sort of a drop dead date in your mind where you got to start to move the stuff?

Yes, I don't think there's a big risk there at all. I mean a lot of our stores are in warmer weather climates year round. So obviously, there's some extreme seasonal categories like swim, that we would have an impact, but I don't see any risk to that at all. I mean it's -- we are expecting with the -- I know that reading everybody about everybody else's results, we are not alone in terms of the seasonal performance of categories. We are expecting it to get pretty promotional in some categories, but I don't see us having a major exposure there.

Got it. All right. That's all I had. Thanks, guys. Good luck.

All right. Thanks.

Thank you. Our next question comes from the line of David Buckley from Bank of America Merrill Lynch. You are now live.

Hi, guys. Thanks for taking my question. I just want to focus on e-comm for a second. How should we think about growth for the remainder of the year and the comparisons getting more challenging? And then as the business becomes -- as the channel becomes a larger percentage of sales, how do you transition e-comm to being margin accretive over long-term? Thanks.

Well, e-comm is going to go up against tougher compares going forward. So we are not expecting and it's going to stay at plus 50% that it was in fourth quarter and maybe not the plus 30% that it was in Q1, but still expecting it to be a meaningful growth contributor to top line. The biggest issue for our business isn't e-comm, it's stores. Stores need to have positive comps to drive better profitability in this business.

Yes, and then -- although e-comm's operating margins are not as good as stores right now, they are still pretty decent. It's a profitable business for us. So -- and as it grows, I would expect it can get more profitable, for sure, but it will take some time for sure.

All right. Thanks, guys.

All right. Thank you.

Thank you. Our next question comes from the line of Sharon Zackfia from William Blair. You are now live.

Hi. Good afternoon.

Hi Sharon.

I just wanted to kind of switch over to the negotiated rent deals that you've been working on. Can you give us any color on kind of what you are seeing there as you are making your way through those, I think it's 80 that you are working on right now, where that’s taking your breakeven comps at those stores or any kind of context would be helpful and how that influences potentially your expansion plans going forward?

We’ve had pretty good cooperation with our landlords both off-mall and REITS, major REITs. We are making pretty good progress there and I can't disclose what the specific economic improvement is because of the confidentiality of what we are dealing with which we announced. But we are pretty --- and we’ve been very disciplined about making sure that if we have a lease coming up for renewal, and the economics are not right, we will not renew that lease. So there's only been a handful of situations in the past since Mike and I joined, where we’ve actually had to walk away or we thought it was profitable to walk away. So we haven't seen a lot of that, and I wouldn't expect that to change. The environment, as you know, continues to be very difficult. There's a lot of vacancy that's still we haven't seen the end of store closures. And so, we expect the economics that we get to be adjusted for what the environment is like. And so far, so good.

And when you go through those negotiations, do you simultaneously work on new potential unit openings? I mean, is that part of the carrot with the landlords?

Well, I wouldn't say it's part of the carrot, but certainly we have several negotiate -- we have several deals under negotiation at any one point in time both off-mall and mall. And we -- again, a lot of its relation -- we have good relationship with the landlord and no landlord want you to close, especially in this environment. So it helps us. We have leverage in our leases and that we have a lot of our leases, if not all, have kick-out clauses, so that helps. But we generally try to make it work with the existing landlord, it doesn't -- unless the property itself has deteriorated to a point where it's not worth of that staying there.

Okay. And then just one final question. I know historically you've talked a lot about driving better traffic in the malls and off-malls and your peers. Do you have any contacts from May and I know May has kind of been difficult across the board, but you think Tilly's has been outperforming general mall traffic during the month of May? Is that something that we could kind of hang our hats on in terms of the relevance of the concept?

Yes, even though -- as you know our traffic, we've outperformed the industry for several months, and that wasn't until recently we've seen some declines in our traffic. And from what we've seen, even though the declines might be slight or whatever we are still outperforming what we see as published traffic information for the industry. So we still feel pretty good about that and we are continuing to do events and types of things like that. We still are maintaining our discipline of not driving traffic by giving the store away. It's more through relationships.

Okay.

Go ahead, sorry.

Thank you.

Yes, Ed and I would just add, our store traffic have actually been up year-over-year store traffic for nine quarters in a row.

That’s right.

In Q1, it was down just slightly -- just below flat. I think it was down 0.3%, which is still far better than any industry reports we see. And then, in the first three weeks of May, it's fallen as we mentioned earlier to about minus 5%. So, we've read an awful a lot that there's been a deceleration from a number of our fellow retailers out there [indiscernible] for a long while.

Thank you.

Thank you.

Ladies and gentlemen, we have no further questions in queue at this time. I would like to turn the floor back over to management for closing.

Well, thank you everybody for joining us today. We look forward to discussing our second quarter results with you in late August. Have a good evening everyone.

Thank you, ladies and gentlemen. This does conclude our teleconference for today. You may now disconnect your line at this time. Thank you for your participation and have a wonderful day.