Good morning, and thank you for holding. Welcome to Rent-A-Center's Fourth Quarter Earnings Conference Call. As a reminder, this conference is being recorded, Wednesday, February 21, 2018. Your speakers today are Mr. Mitch Fadel, Chief Executive Officer of Rent-A-Center; Maureen Short, Interim Chief Financial Officer; Joel Mussat, Chief Operating Officer; and Daniel O'Rourke, Vice President of Finance, Investor Relations, and Treasury. I'd now like to turn the conference over to Mr. O'Rourke. Please go ahead, sir.

Thank you, Maria. Good morning, everyone, and thank you for joining us. Our earnings release was distributed after market close yesterday, which outlines our operational and financial results for the fourth quarter of 2017. All related materials are available on our Web site at investor.rentacenter.com. As a reminder, some of the statements provided on this call are forward-looking statements, which are subject to many factors that could cause actual results to differ materially from our expectations. Rent-A-Center undertakes no obligation to publicly update or revise any forward-looking statement. These factors are described in our earnings release issued yesterday as well as in the Company's SEC filings. I'd now like to turn the call over to Mitch.

Thank you, Daniel. Good morning, everyone. Thank you for joining us. Before I get into my prepared remarks, I want to provide some clarification regarding certain details from yesterday's press release. I believe there is some confusion as to why the Board hired consultants to work on a restructuring plan? Well, the company is in the midst of a strategic and financial alternative review process. Some have mistakenly taken our announcement of a significant cost savings plan as evidence that the strategic and financial alternatives process has concluded. I’m here to tell you that’s not the case. The Board made a decision to hire AlixPartners in December, because it believed that a major cost savings opportunity existed inside the company. This belief was clearly validated based on the substantial savings target we’ve outlined and we will discuss today. The Board also recognized that the completion of this analysis using competent outside experts would benefit our shareholders where the company have sold its result to the strategic and financial alternatives process or remained an independent company. As was stated in the press release, the alternatives process, strategic and financial alternatives process does remain ongoing and the Board plan to provide an update to investors once this work has concluded. So I hope this helps to clarify the situation for those of you who may have been confused, but the strategic and financial alternatives process has not been concluded. Having said that, I’d like to say how excited I’m to be back at Rent-A-Center. Many of you know I was previously part of Rent-A-Center for over 30 years and served 15 years as the President and Chief Operating Officer, having left that position in mid 2015. I understand the cash and credit constrained customer and believe strongly in the business. Although the…

Thanks, Mitch. I will first start with the core business. In the fourth quarter, we were able to grow the overall portfolio as we continued to trend a five consecutive months of portfolio growth. This was mainly due to ticket in the third quarter, while in fourth quarter we're able to drive customer growth as well. This enabled our portfolio size to be essentially flat year-over-year on a per store basis compared to where we began in 2017 and retention trends are positive with these agreements. Our quarterly comps improved sequentially throughout 2017, and we saw 150 basis point improvement in the fourth quarter. However, our goal of positive same-store sales in the fourth quarter was not met and came in at negative 3.6%. As Mitch mentioned, we had a promotion in the fourth quarter with low initial payment offers to drive customer growth. However we did not collect sufficient revenue on these new agreements to hit our goal. We’ve adjusted our promotions accordingly and so far in 2018 we see the business back in the right trajectory and we’re seeing sequential revenue improvements as we'd expect. For example, January same-store sales were approximately flat in the quarter. Our ownership rates improved year-over-year by about 18%. Our delinquency rates in the quarter were in line with our estimates and a 160 basis points better than fourth quarter of 2016 with a similar improvement in our loss rate. Going forward in the quarter, we will be focusing on a balanced approach to both customer and ticket growth. Mitch touched on our plans around pricing, and we will get much more surgical when it comes to how we price by category and different pricing levels within these category. We believe there are specific categories we can expand margin within and somewhere we…

Thanks, Joel. Good morning, everyone. I will cover our fourth quarter financial results in more detail, provide an overview of our balance sheet, and walk through the company benefits from tax reform. I will then close with our financial targets for 2018 before turning it back to Mitch. During the fourth quarter of 2017, consolidated total revenues were $638 million, down 6.6% versus prior year primarily due to store closures, a same-store sales decline of 2% and the impact of the 2017 hurricane. Adjusted EBITDA was negative $8.5 million and EBITDA margin was down 280 basis points versus the prior year. Net diluted earnings per share on a GAAP basis were $0.65 and net diluted loss per share excluding special items was $0.41. GAAP earnings were positively impacted by $1.45 per share related to the Tax Cuts and Jobs Act passed in December of 2017. In our Core U.S segment, total revenues in the fourth quarter were down 6% driven by same-store sales decline of 3.6%, the impact from the hurricane and store closures. Same-store sales improved sequentially by 150 basis points, driven by higher growth in customers and agreements and a higher average ticket, partially offset by higher promotional free time. Rental merchandise on rent increased $44 million from Q3 to Q4, compared to an increase of $13 million in the same period of the prior year, highlighting the portfolio growth in the fourth quarter. Store labor expense was down $4.2 million driven by lower store count and other store expenses were down $2.7 million driven by lower losses and lower store count. Skip/stolen losses in the quarter were 2.7% in the quarter compared to 3.7% in the prior year due to lower delinquencies and a higher quality portfolio. Core U.S. EBITDA was $18.9 million in the fourth quarter…

Thanks, Maureen. Thanks, Joel. We are going to open it up to questions now. We mentioned the strategic review process a couple of times and as we’ve said its ongoing, we will have a complete update when it is concluded. But we don’t have any other further update, so I appreciate the questions being -- avoiding questions on that, because we don’t have anything more to say other than it is ongoing and we’re running our turnaround plan in parallel with that, with the Board working on the strategic review process. So, with that, let's open it up to questions.

[Operator Instructions] Our first question comes from the line of Kyle Joseph of Jefferies.

Good morning, guys. Welcome back, Mitch, and thanks very much for taking my questions. Maureen, just wanted to get into the one-time other store expense in Acceptance Now. I believe that was credit related. Is it fair to assume that was primarily Conn's and hhgregg related? Any more color you could give us there?

Sure. The one-time noncash charge was the write-off unreconciled invoices with certain of our Acceptance Now vendors, we will pay an invoice before the product is delivered. And then we have difficulty after the fact matching up the invoice to a rental agreement. And so the write-off was a result of a special reconciliation project over our inventory payables process for certain of our Acceptance Now partners. It's not credit related, Kyle. So it's basically a manual process to reconcile the items. We’ve been making a number of improvements and believe that we resolve these issues with this write-off. There's no concern of a restatement of our financial statements, but the write-off is on invoices that occurred within 2015 and 2016. But it's not related to credit and it's a nonrecurring one-time item.

Got it. Sorry, go ahead.

Kyle, I was just going to add, in overall, as Maureen said, it was 2015 and 2016 invoices. It was less than 1% of all the invoicing that was done over those two years well under 1%. So it's unfortunate we have to take that charge, but I think the key point is it's not cash, its nonrecurring. We believe the problem is fixed going forward. And just to give you the size of it, the practicality of it was under 1%. Still unfortunate, but like I said the key points are: it's not cash and nonrecurring.

Got it. And just a little more color on Conn's and hhgregg, if you could give us any sense of the remaining size of that portfolio as a percentage of Acceptance Now and how much of that is wound down?

Yes, I think in general, it's become a much smaller portion of the portfolio as time has gone by. I think now we’re somewhere south of 10% overall as a percent of the overall agreements for right now.

Okay. And then just one last to follow on there. In terms of the timing of the loss of Conn's and hhgregg, could you refresh us on that and could you give us a sense of when we should anticipate sort of lapping those difficult comps?

We exited those brands in the spring of 2017. We probably wrote our last agreements in April.

Okay.

Yes.

I think it -- and the same-store sales in Acceptance Now, I’d say that it's going to put a stress on same-store sales and Acceptance Now for the majority of the year, probably at least till the fourth quarter, because it will be comping over the revenue that’s been diluted because as Joel said we’re down under 10% of our agreements now. So now the good news there, Kyle, is that the agreements that are left aren't adversely affecting our past due numbers as was the case most of the last year. So that part of the story is over, which is a good news in that.

Yes, that makes sense. Thank you. And then, Mitch, just sort of stepping back, I wanted to get your view on the industry and sort of what’s driving the headwinds at the Core? Is it more secular, cyclical, competitive pressures, and just get your sort of thoughts on the industry?

Sure, Kyle. I think it's a combination of things. So I think there's the customer does have more options. I think we can't kid ourselves from that standpoint. They do have more options and I think when you combine that with the self inflicted wounds that the company has been talking about for the -- for over a year now, it's a bad combination. So there's a little less traffic as they have more options and then we’ve got a lot of things to fix in our organization, not only on the cost side that I talked about to put the -- our overhead in line with the company that exist today from revenue standpoint, but also to drive traffic. I mentioned bringing back our Chief Marketing Officer that was -- that left almost six years ago to help us as well as the pricing enhancements. The pricing that was done last year was -- is on the right track. But I think it just need to be tweaked by product category little more to give some incentives. Even though the promotional free time offers in the fourth quarter hurt the revenue, as Joel mentioned, to build the portfolio I mean the customer was there in the fourth quarter to build the portfolio. Joel mentioned that January, now that the portfolio ended the year strong, that January was flat year-over-year, essentially flat in the Core business. So I think, sure, the customer has a few more options out there when it comes to the traffic in the brick-and-mortar stores, but with some enhancements that we’re doing, we’re correcting some of these self inflicted wounds and some of the enhancements I’m mentioning, we can get that back in a positive direction and as I said January is probably the best indicator of that so far.

Got it. And then, one last one for me on tax refunds. Can you give us any sense you have for the timing and the magnitude of those this year versus last?

Yes, I think we expect the tax refunds to be similar to last year to come in starting late this week and to be similar to last year.

Great. That’s helpful. Thanks a lot for answering my questions.

Thanks, Kyle.

Our next question comes from the line of John Rowan of Janney.

Good morning, everyone.

Hi, John.

Cash flow guidance for 2018, does that include the refund and possibly -- the possibility of no cash tax is being paid because of the bonus depreciation? Just give me an idea of what that $130 million consists of?

Sure. Yes, John. The $130 million in free cash flow does include a tax refund of $30 million to $40 million. It includes the cost savings benefits that we expect to achieve in 2018, which is about two-thirds of the $65 million to $85 million, improving EBITDA from a cost savings side. It also includes the $20 million to $25 million in working capital benefit that will be achieved in 2018. It includes the CapEx guidance that I gave of $40 million to $50 million. And then it also includes additional working capital benefits on top of the $20 million to $25 million from the cost savings initiatives due to store closures and the value proposition changes where we’re getting our cash back faster from our customers. And then an assumption around the base business.

And -- but, okay, so $130 million includes $30 million to $40 of tax refunds. How much does that include increases in the DTL, which I assume is from the bonus depreciation? How much of that number is the lack of cash tax is being paid in 2018?

The majority of the tax refund is due to the adjustment of our deferred tax liability. And then also just based on our expected free tax earnings.

Okay. That’s what I was getting too. So, you have $200 million over the next couple of years, I assume over the next three years of benefit from lower -- or from bonus depreciation, is that $30 million to $40 million refund included in that $200 million or is that -- $200 million in addition to the $30 million to $40 million of tax refund?

It is included in the $200 million. The refund is included.

So, if you were to take out the $30 million to $40 million in gross up that expected tax savings, I mean, is that basically what your projections are for pre-tax income over the next three years?

Yes, that would be the majority of the tax -- cash taxes that we expect to pay is based on the pre-tax earning estimates in our forecast as well as the benefits from the bonus depreciation.

Okay. What’s the -- there's additional one open Board seat, correct?

Correct.

What’s the plan for that Board seat and is there -- where are the other kind of the non-engaged Board members up for election and any color around what’s going to happen with the composition of the Board this year?

Well, I think as we announced in that corporation agreement with Engaged Capital, we are going to add a seat. The Board is very well unified at this point. I can speak to as a Board member and we’re going to add one more seat and I think we’re -- the Board is working hard on the strategic review and financial alternatives process and working together on it. So I think we will add another important Board member and move forward in unison.

Okay. And then just lastly, can you just explain what refranchising looks like? I mean, is that selling stores to franchises or selling markets, just probably frame out what exactly a refranchising strategy looks like?

It's a great question. We are still working on that and it's a -- its probably both of which you just mentioned, John. Some of its selling certain stores to franchisees, there may be markets that we sell. Now this is a multiyear plan. And as I mentioned in my prepared comments, 2018 is really preparing to do more franchising, and in fact there's a little bit of cost associated with it this year and no benefit. We might later in the year be in a position to franchise some stores, but there's -- its really a preparation year for that, so that’s more -- its small, but there's some cost in our -- in that cash flow guidance we gave you for this year. So as you think -- if you think the next four five years out though, our plan is to sell some of our current stores. I think it will also help us expand the footprint, because as you sell markets, what we’ve seen so far when we sold a few of the franchisees, we will then fill in those markets, which we're not doing now and the company stores. So if we sell a particular market, the franchisees will -- like I said, what we’ve seen so far is we see fill in openings. So I think you can help put more Rent-A-Center flags out there as well. So I think it's a growth strategy as well as refranchising strategy for the reasons I just said. And I think it's a combination of those things, selling -- selling existing markets, selling some stores, but mostly we’ve a robust franchising model you’ve got to sell for markets when you do it versus a store here or store there. So we’re still working on which markets and the whole marketing plan around that. And really it's something you hear more about it as the year goes on, but it's something that’s really we’re working on this year as part of our strategy and really doesn’t become robust still late in the year.

All right. Thank you very much.

Thanks, John.

Our next question comes from the line of Brad Thomas of KeyBanc Capital Markets.

Yes. Hi, good morning and Mitch welcome back to the company.

Thanks, Brad. Good morning.

Just wanted to follow-up on the free cash flow guidance and Maureen I think that was helpful walking through it with the last questions. But just to trying to connect the dots with, I guess, EBITDA, could you give us a sense of what kind of EBITDA is assumed to get to the $130 million free cash flow number?

Brad, we’re not providing guidance around EBITDA. I outlined most of the guidance components that can get you pretty close to what our EBITDA projections would be, but we’re not providing guidance on EBITDA.

Yes, Brad, with the strategic review process going on, we just decided that we hold it to the savings that we’ve identified, the EBITDA savings and how much we can realize this year versus annualized and then of course the cash flow number. Again, because of the strategic review process we’ve decided not to put out EBITDA guidance.

Got you. So should we think of it as you’re building on more off of what you’ve done here in '17 and layering on these initiatives, and that’s kind of how you get to the $130 million?

Yes, I would say as long as you use the whole year of '17, I would agree with the way you just said it. I wouldn’t -- obviously, I wouldn’t use the fourth quarter based on what happened with free time, some hurricane impact and some of the expense in the -- expense issues that happened in the fourth quarter. So I wouldn’t build off the fourth quarter, but I would build off 2017.

Got you. Okay. And then, Mitch, just on some of the changes in the business model, I guess, maybe starting with Acceptance Now. It sounds like you’re trying to shorten term. Am I hearing this correctly that you maybe raising prices and shortening term to try to increase the cash flow you get closer to the time you initiate the agreements? Is that basically what’s happening?

That’s correct. I think it's also to be more competitive in the marketplace from a -- an overall term standpoint. And I think you know from following it. When you shorten the terms and get more ownership, even if the projected turn that you started out with is lower than the previous model, the previous pricing model, the realized term ultimately is higher when you get more ownership. So we lowered our overall turns by lowering the term of the agreement, raising the rates a little bit, still competitive and much more competitive on the overall price. Not concerned with the margins, because more ownership will help with the margins and the cash flow as you mentioned. So it's a more competitive model and a better model from a cash flow standpoint for us.

Got you. And then with respect to the Core -- I mean, I guess, taking on the whole, do you intend to be lowering the prices? Obviously, a number of references to needing to be more competitively priced. What do you think happens on the whole in the core?

It's pretty much margin neutral as we’ve looked at it, as we talked about. There's something, some categories that needs some traffic drivers, but other categories that can help make up for that, it's -- so I think the pricing model that was put in last year was certainly much better than what was happening before that. I just think it needs little bit more targeted and there's some traffic drivers we can use on the electronic side and make up for it, and the more inelastic categories, like furniture and a little bit on appliances. But it's just a more targeted approach, but really net neutral from a margin standpoint.

Got you. And on the store base, Mitch, I know the company has been thoughtful about pruning overlapping stores in recent years. I mean, what do you think you need to do with the store base here over the next 12 or 18 months?

We’ve identified as we’re working and looking at non-productive stores and combining it with looking at wanting to do more franchising as the year moves on and as the years move on. There's alternatives rather than whether it's just a close and merge a store or possibly in some cases sell the franchisees. So we’re going through that process now. I think it's fair to say there's somewhere in the range of 150 stores in that range that we’re looking at to do one or the other with. So it's not huge, but there's certainly something pretty significant there when you start talking about a 150 stores or so. So that’s the extent of it and I’m not sure we will close them all, we may be able to sell some of them and we’re still -- we will have that finished up here in the next couple of weeks, that whole analysis on the potential store closures. But that’s the range. It's in the 150 store range whether we sell them or franchise them.

Got you. Okay. Well, I will turn it over to others. Thank you so much.

Thanks, Brad.

Our next question comes from the line of Budd Bugatch of Raymond James.

Hi. This is Katherine on the line for Budd. Thank you for taking my question. In the release you commented on the strategic initiatives to improve core traffic trends. Can you explain that initiative further and kind of what negatively impacted traffic trends? I know you commented on the competitive pressure, but kind of what your thoughts are there?

Well, I think the -- with the pricing model that was put on last year by shortening terms in the core business and raising pricing. Certainly the expectation was there probably be a little less traffic and as you saw that -- I mean, the ticket performance was fantastic all year long. And really helped drive sequential improvement in the comps throughout most of the year and we already talked about the fact that January was approximately flat. So I think there's a lot of good news in that. We want to drive a little more traffic, a little more be able to pull a little more of that traffic as -- rather than accept less traffic or to make it a more sustainable growth model. In other words, you get back to flat, you still want to try to get better than that. So I think it's just a matter of being a little bit more targeted around the pricing. Again, a few categories with some traffic drivers and a few categories that can make up for that. I think beyond the pricing, there's -- as Joel mentioned, there's some -- there's quite a few execution initiatives in place whether it's a mystery shop program to help our execution, some we haven't talked about yet putting the full time labor back in the stores is going to help our execution and we’re almost done with that conversion back to that model. So I think execution is a big part of it beyond just the pricing. I mentioned the Chief Marketing Officer, Chief Customer Officer/Marketing Officer and Dave's coming back actually today to help us from an advertising standpoint and drive traffic and help with the overall customer experience. So there's -- those are the bigger things in there. We have moved beyond the IT system issues that came up in late 2016, certainly we continue to enhance that program, but that’s starting to not be an issue as far as being able to operate the store. So there's a lot of good things going on to be able to take that height that’s nice performance on ticket and delinquency in the quarter last year and get even better.

All right. Thank you. And now turning kind of Acceptance Now, you’ve seen higher delinquency rate there over the quarter. How are you managing the return merchandise? Have you had any problems with that lately or do you think that’s an issue that’s been solved?

Yes, I will let Joel talk about the improvements we made on that credit. But just keep in mind the losses were higher for the quarter. The delinquency wasn’t. The delinquency is coming down, but it takes a while before you see that in the losses. So the delinquent accounts, we’ve got some good trends going on and we’re -- we like the direction we’re going on delinquency. Of course, the charge-offs are done after what four or five months of delinquency. So they trail the improvements we’re making, but we’re seeing improvements in the first quarter and Joel, you want to talk about a few of the things that you had mentioned earlier about the enhancements as well as the return product question.

Yes, the enhancements we’ve done a number of things. Putting up -- we’ve a lot -- much higher percentage of our portfolio now on our AutoPay feature, which makes collections a much easier process for us. We put in place new software tool that helps us route our activity when it comes to collections. And just overall, I think we’ve made some very good tweaks or improvements to our decision engine. So our first payment default rate have come down substantially in the back half of -- since the back half of 2017. So all those ingredients, if you will, have shown good results so far in the last couple of months in bringing those overall loss rates down, which is good to see as I mentioned in my prepared comments, we do see our losses are getting back more toward historical levels here in the first quarter.

And even within the quarter, we saw October was [multiple speakers].

Yes, October was in peak and it came down in November, and December after that. So it's good news. Those numbers are all going in the right direction, which is great to see for that business model. So it's got to be a better balance for us when it comes to sales and collections it had been in the past. In terms of a returned product, our process -- we do have a process in place where we returned item to the store -- to our core rent to own store for rerenting. For some cases, given the age or the duration on certain -- that agreement has been on rent, we won't do a -- some kind of a mitigation plan with our customer, try and keep that item in their home and we’ve got some kind of payment strategy with them going forward. So we’re really too adolescent for returns for Acceptance Now and we’ve utilized more of the mitigation plan over the last couple of quarters to help keep items in customers' homes and out of the core rent to own stores.

Thank you.

There's been lot -- there's a lot of good news in that. The fact that with the new pricing model -- with some of the pricing model enhancements from last year and some we’ve already made this year as I mentioned, the returns are not the issue that used to be in this company. So that’s really good news.

Thank you.

Welcome.

Thanks, Katherine.

Our next question comes from the line of Carla Casella of JP Morgan.

Hi. You mentioned on your capital structure side, you’ve got only $85 million left on the revolver. Your focus is going to be paying on down debt. Is there a point where you’re using these excess cash flow to cash flow for the year to take out some of your longer dated bonds?

I’m sorry, Carla, can you say that last part again?

Would you use some of your cash flow to consider refinancing or taking out some of the longer dated bonds?

Regarding refinancing, the company is currently exploring refinancing options. We did not include any kind of refinancing assumptions in our projections. Our credit facility does expire in March of 2019 and once the outcome of the strategic alternative review process is determined, we will decide on the best path forward regarding our capital structure. And just to clarify an earlier point that I made, the tax refund season that we expect for our customers occurs later in this week and into next week. The cash refund that the company expect to receive will be about $10 million in the first quarter and the rest will come once we file our 2017 tax returns. So that will be later in the year. Just wanted to clarify that point.

Okay, great. And then, just as you look at the core stores and the number you’ve been -- your goal has been increase the number of customer agreements. Where would you say you stand on a per store basis today versus either where it had been at peak and/or where you think you can get back to in today’s environment?

Well, year-over-year we’re a little bit ahead on the per store basis with the overall portfolio. When it comes historical numbers, I mean, it's going to be down as the -- as our customer costs have gone down since our last three, four years.

I think it's down -- it is up year-over-year, because of the closures from the last couple of years, so that’s good news. It's down a little bit from historical highs, not all that dramatically. Honestly, Carla, as I’ve been talking about this morning when you think about this business and the EBITDA use to make, a lot of it is -- the overhead has just continued to balloon, not just at the corporate overhead, but even at field management. Corporate overhead is -- has ballooned faster. And the average store is down a little bit. So not dramatically though, it's not like our average revenue per store is down 20% or anything like that, because we’ve reduced the footprint. So it's down a little, but I don’t have the exact numbers in front of me, but it's not down all that dramatically. And if we right size our overhead to the -- to match where it is today, I think there's an awful lot of opportunity here.

Okay, great. Thank you.

Thanks, Carla.

Our next question comes from the line of Karru Martinson of Jefferies.

Good morning. My apologies if I missed it, the expense for the cost savings, is that -- what was the number and does that flow into the $130 million free cash flow or is that separate from that?

It's -- part -- it's $65 million to $85 million on an annualized basis, with about two-thirds being -- we believe we can recognize about two-thirds of it this year. So two-thirds of $65 million to $85 million is flowing into the -- at least to $130 million of free cash flow.

Okay. But the costs to realize the $65 million to $85 million, are there expenses associated with that or it is $65 million to $85 million of costs associated with the savings?

The $65 million to $85 million doesn’t have the cost associated with achieving those savings in that -- within the $65 million to $85 million, it's not in that. But it is in the cash flow guidance, the costs of [multiple speakers].

Okay. It is in the guidance. Okay.

Yes.

Okay. And in the past, you guys have talked about Mexico kind of coming to a breakeven point and evaluating what the next steps were there. I mean, how do you guys look at Mexico today, separate from the strategic review that you are doing?

Well, it's hard to look at separate from the strategic review, because it's part of the strategic review. But the way we look at it is, it's breaking even. We from a cash flow standpoint, it haven't -- it's been positive cash flow for what, two years now, Maureen.

Self-sustaining.

Positive cash flow, self-sustaining. Obviously, we’re not doing anything to grow that model. That’s not part of our plan today. We obviously have bigger things to do, and we’re not going to go down there and invest in growing it. So that’s what makes it prior to strategic review process. So, guess what, we looked at it, it's great news. Its self-sustaining. We’ve got a good group of folks down there, doing a nice job, and that’s part of the strategic review process.

Okay. And just -- in prior calls and under the prior management, there was a lot of talk about, we want to move our inventory away from those kind of opening price points, get more into that better and best, kind of aspirational quality. I would say, where are we today and is there still kind of that movement to move that inventory up the channel or up the value chain?

Absolutely. As I said earlier, we are going to continue that strategy. We are going to mix in, occasionally, from a promotional standpoint, some traffic drivers that we feel we can make up for in other areas in the more inelastic categories, but a few traffic drivers. It's really a matter of taking what is a good inventory mix today and just tweaking it a little bit with some traffic drivers now and then to help us drive more traffic. Certainly, those kinds of things the devil's always in the details. So you could -- when I say traffic drivers, it's how many do you buy per store and make sure that it doesn't bring the ticket way down if the store gets a couple of pieces of inventory to drive traffic. So it's all about how you do it. But, overall, certainly the strategy of the better and best products and growing that ticket into more aspirational items that will continue.

Thank you very much, guys. I appreciate it.

Thank you.

Thank you, Karru.

And that was our final question. I’d now like to turn the call back over to Mitch for any additional or closing remarks.

Well, thank you and thank you everyone for your time this morning, and your support. We’ve covered a lot of ground today. I’ve been back now for a couple of months. I’m excited to be back. It's something I’m passionate about this business, I’m enjoying it. And as I said earlier, the job for me and my team is to execute on the successful turnaround of the business, in parallel with the Board's process that we’re going through. But we’ve got a turnaround plan that we need to do in parallel with that, that’s exactly what we intend to do. So with that, I wish everybody a great day, enjoy it. And we will talk to you soon. Thank you.

Thank you. Ladies and gentlemen, this does conclude today’s conference call. You may now disconnect and have a wonderful day.