Zumiez Inc. (ZUMZ) Q4 2015 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen and welcome to the Zumiez, Inc. Fourth Quarter 2015 Earnings Conference Call. At this time all participants are in listen-only mode. Before we begin, I would like to remind everyone of the company's Safe Harbor language. Today's conference call includes comments concerning Zumiez, Inc., business outlook, and contains forward-looking statements. These forward-looking statements and all other statements that may be made on this call that are not based on historical facts are subject to risks and uncertainties. Actual results may differ materially. Additional information concerning a number or factors that could cause actual results to differ materially from the information that will be discussed, is available in Zumiez' filing with the SEC. At this time, I will turn the call over to Rick Brooks, Chief Executive Advisor (sic) [Officer] (0:56). Please go ahead, sir. Richard Miles Brooks - Chief Executive Officer & Director: Thank you and welcome, everyone. Joining me on the call today is Chris Work, our Chief Financial Officer. I'll start today's call with a few brief remarks regarding our fourth quarter and our start to the 2016 fiscal year. I'll then give an update on our broader strategy and I'll hand the call over to Chris, who will take you through the numbers. After that, we'll open the call to your questions. Fourth quarter was another challenging quarter for us. While net sales came in ahead of our guidance range at $242.4 million, it was led by a negative same store sales comp of 9.5%. In light of these top line headwinds, we continue to tightly manage expenses in the quarter, which benefited margins and resulted in diluted EPS of $0.50, also ahead of our previous guidance. Evident in our results are some of the ongoing trends affecting our industry, including weak consumer traffic, the lack of a clear and compelling fashion trend within our target customer base, as well as the impact of foreign exchange on our international and more tourism-oriented locations. These pressures have unfortunately followed us into 2016, with February sales comps down 8.6% year-over-year. While holiday results were better than we originally expected, our fourth quarter performance was certainly not how we wanted to finish the year. We recognize our ability to successfully navigate the current headwinds and return our sales trends to positive territory is predicated on our ability to have merchandise assortments that align with our customer's preferences and needs available anytime and anywhere. This is why we invested heavily in several components of our omni-channel infrastructure over the last five years that work in concert to better serve the customer, including; an enhanced assortment planning software allows us to micro-sort our stores, localizing the trends that appeal to our diverse customer base; enhancing our in-store telecommunication infrastructure, allowing us to better facilitate the omni-channel experience; the upgrade of our web platforms in both the U.S. and Europe, providing fast and stable performance as well as continued enhancement of our omni-channel functionality; the roll out of our Stash loyalty program rewarding our best customers and continuing to find a way that we interact with them; the 2016 roll out of our new leading-edge customer engagement suite that will better integrate all of our sales channels; and launching full localization, enabling our best-in-class sales teams to serve their local customers with nearly 100% in-store fulfillment of online orders. Even with all the technological enhancements that we have introduced, it's important to emphasize the critical role that our dedicated sales teams play in delivering a highly-differentiated and hyper-localized product mix and sales experience. We continue to view our people as a competitive advantage that differentiates us as an authentic lifestyle-focused brand. The roll out of our new customer engagement suite in 2016 will further capitalize upon this fundamental strength in our business, marrying up our point-of-sale engagement with our back-end systems, creating an integrated experience that both optimizes operational performance, and most importantly, provides our sales teams with the technology to further enhance the Zumiez brand and culture in an authentic way for our core customer. We've already begun phase one of the roll out and expect the phased North American implementation to continue throughout 2016 and into 2017. In addition to these investments in our omni-channel infrastructure, we also continue to address more immediate concerns arising from the shift in consumer traffic. This includes reducing our 2016 store openings domestically and continuing to be disciplined with our spending where possible to protect profitability and overall shareholder return. While addressing near-term issues is required, we remain steadfast on our long-term strategic focus, as we reinforce our success through sustainable investments in the business. Let me take a moment to update you on what we've been doing and our early thoughts on 2016. I touched earlier on some of the exciting steps we've taken to enhance our technological platform. These advancements are done in tandem with our physical store growth. During 2015, we opened 51 new stores in North America, including six that opened during the fourth quarter, bringing our total North American store count to 634. In 2016, we plan to open 27 new stores in North America, and our goal remains to strategically leverage our integrated technological platform to optimize our store footprint by maximizing the impact within each geographic trade area. We do not want one more store than necessary in any given trade area, which is why our new store openings are targeted in areas where we are underpenetrated, and have the opportunity to expose our in-store experience to a larger group of customers. In Europe, we opened six stores during 2015 and are projected to open seven stores in 2016. We continue to invest behind our positive momentum in Europe, as we remain optimistic about potential for growth in this highly fragmented market. While still a small portion of our business, performance has been strong, and we believe our diligence in maintaining our unique culture and perspective on both sides of the Atlantic is paying dividends. Wrapping up, I want to thank the entire Zumiez team for their hard work and dedication during this challenging past year. Even while headwinds persist on the industry, strong culture of our employees that our employees embody, combined with our unique brand positioning, differentiated product assortments and advanced omni-channel capabilities, gives us confidence that we're well positioned to continue gaining share and delivering long-term shareholder value. With that, I'll hand the call to Chris for his review of our financials. Chris?

Thank you, Rick. Good afternoon, everyone. Let me take a moment to briefly review the results of our fourth quarter and February, and then I'll outline our guidance for the first quarter and how we're thinking about fiscal 2016. Then, I'll hand the call over for your questions. Fourth quarter net sales declined $16.1 million or 6.2% year-over-year to $242.4 million, from $258.6 million a year ago. From a retail perspective, North America sales decreased $18.2 million or 7.9% to $212.5 million, while our European sales increased $2 million or 7.2% to $29.9 million. Included in these numbers is the negative impact of foreign currency translation in the quarter of approximately $5.5 million. On a constant currency basis, consolidated sales were down 4.1%. North America sales were down 7% and Europe sales increased 19.9%. Consolidated comparable sales declined 9.5% this quarter, driven primarily by lower transaction volume, partially offset by an increase in dollars per transaction. Dollars per transaction in the period were impacted by an increase in average unit retail, offset slightly by a decline in units per transaction. In terms of category performance, Accessories, Men's, Junior's, Footwear and Hardgoods posted negative comps. During fiscal 2015, we added 44 new stores in the U.S. and seven in Canada, bringing our total stores to 634 in North America as of January 30, 2016. We increased our total locations in Europe by 33% ending the year with 24 stores in this region. Total store count as of January 30, 2015 was 658. Fourth quarter gross profit was $84.3 million, a decrease of $13.5 million or 13.8% compared to the fourth quarter of 2014. Gross margin was 34.8% in the quarter, down 300 basis points compared to 37.8% a year ago. The decline from the prior year was driven largely by the deleveraging of our occupancy costs from lower sales worth 160 basis points, a decrease in product margins to clear inventory worth 110 basis points, and the $1.2 million impact during the quarter from the closure of our Kansas Fulfillment Center. Fourth quarter SG&A expenses were $62.8 million or 25.9% of net sales, compared to $66.5 million or 25.7% of net sales in the fourth quarter of 2014. For purposes of comparison, the SG&A expense for the 2014 fourth quarter includes charges associated with the acquisition of Blue Tomato at $6.9 million. Excluding these charges, the increase in SG&A primarily are related to the de-leverage of our store operating expenses worth 190 basis points and store asset impairment charges incurred in the fourth quarter were $2.1 million, or 90 basis points. There were no charges associated with the Blue Tomato acquisition during the fourth quarter 2015, and we do not expect any further charges with this transaction in 2016. Operating profit in the fourth quarter 2015 was $21.5 million, down from $31.3 million in the fourth quarter 2014. As a percentage of net sales, fourth quarter 2015 operating profit was 8.9%, compared to 12.1% in the year ago quarter. As Rick mentioned earlier, we made a concerted effort to manage costs and reduce discretionary spending during the back half of 2015, as consumer buying trends in our industry became increasingly difficult. Net income for the fourth quarter 2015 was $13.1 million, or $0.50 per diluted share, inclusive of the charges related to the Kansas fulfillment center closure of $0.03 per share. This compares with net income of $17.5 million, or $0.60 per diluted share in the fourth quarter 2014, inclusive of $0.20 per diluted shares of charges associated with the acquisition of Blue Tomato. Turning to full year results, net sales for the full year 2015 were $804.2 million, down $7.4 million or 0.9% from a $811.6 million in fiscal 2014. By region, North America sales were $728.2 million, down 2.5%, and Europe sales were $76 million, an increase of 18% year-over-year. Comparable sales decreased 5.3% year-over-year. In 2015, foreign currency translation variances negatively impacted sales by approximately $19.6 million. On a constant currency basis, consolidated net sales grew by 1.5%. North America sales were down 1.7%, and Europe sales grew by 37.1%. 2015 gross margin was 33.4% compared to 35.4% in 2014. Gross margin declined in the year primarily as a result of de-leveraging of occupancy costs on lower sales comps worth 140 basis points and, to a lesser extent, an increase in ecommerce related costs, including the $1.2 million in exit costs associated with the closure of our Kansas fulfillment center and lower product margins. Annual SG&A expenses were $222.5 million, or 27.7% of net sales, compared to $215.5 million or 26.6% of net sales in 2014. Included in SG&A expenses for 2015 was $1.5 million of charges associated with the acquisition of Blue Tomato, compared to $8.7 million of charges included in 2014. Excluding these charges, the increase in SG&A primarily related to de-leverage of our store operating expenses, worth 170 basis points. Operating margin for fiscal 2015 was 5.7%, compared to 8.8% in 2014. Included in operating margins for 2015 was the $1.2 million charge related to Kansas fulfillment center closure and $1.5 million charge related to the Blue Tomato acquisition costs. 2014 operating margins include $8.7 million in charges related to the Blue Tomato acquisition. Full year 2015 net income was $28.8 million, or $1.04 per diluted share, compared to 2014 net income of $43.2 million, or $1.47 per diluted share. Turning to the balance sheet, we had cash and current marketable securities of $75.6 million as of January 30, 2016, down from $154.6 million as of January 31, 2015. This decline was driven primarily by $92.2 million in stock repurchase activity and $34.8 million in capital expenditures, primarily related to new store growth and remodels, partially offset by $48.6 million in cash flow from operations. During the quarter, we repurchased 1 million shares on the open market for a total of $15.6 million, bringing our full year buyback total to 4 million shares for a total of $93.3 million. As of January 30, 2016, we had $54.4 million remaining under our share repurchase authorization. We ended our 2015 fiscal year with $98.3 million in inventory, up 4.7% from fiscal 2014, primarily as a result of our increased store footprint compared to this time last year. Looking at our February sales results, total net sales for the four-week period ended February 27, 2016 decreased 3.9% to $51.9 million, compared to $54 million for the four-week period ended February 28, 2015. Our comparable sales decreased 8.6% during the four-week period ended February 27, 2016 compared to a comparable sales increase of 6.9% for the four-week period ended February 28, 2015. Lower transaction volume continues to drive year-over-year declines, partially offset by an increase in dollars per transaction. Dollars per transaction in the period were up, driven by an increase in average unit retail, while units per transaction were flat to last year. During the four weeks ended February 27, 2015, Men's, Accessories, Junior's and Hardgoods posted negative comps, while Footwear posted a positive comp. Turning to guidance, once again I'll start off by reminding everyone that formulating our guidance involves some inherent uncertainty and complexity in estimating sales, product margin, and earnings growth, given the variety of internal and external factors that impact our performance. With that in mind, we are currently planning first quarter comparable sales results in the range of negative 5% to negative 7%, with total sales in the range of $172 million to $175 million. Please keep in mind when reviewing our monthly sales releases for the quarter that the Easter shift is expected to be a slight detriment to the March month, and a benefit to April, based on the calendar shift. We anticipate gross margins will decrease 230 basis points to 300 basis points compared to the first quarter of 2015, due primarily to deleveraging of our store occupancy costs. Consolidated operating margins are expected to be negative low single digits, with diluted loss per share between $0.07 and $0.11. As a reminder, our go-forward financial results will no longer be impacted by Blue Tomato acquisition charges. Before I wrap up, I'd like to give a few thoughts on how we're thinking about 2016. While the retail environment in general remains uncertain, we continue to believe that the investments we've made in our infrastructure, particularly our omni-channel presence, as well as those investments we continue to make in the Zumiez team, will drive long-term top line and bottom line growth. However, with the ongoing lack of fashion trend compelling the consumer to buy and other retail headwinds, we remain cautious as we enter into the new fiscal year. As a result, we are planning comparable sales to be softer in the front half of the year, and stronger over the back half of 2016. As a reminder, our product margins were pressured as we moved through 2015, with a decline in top line performance. As a result, we expect product margins for the year to improve, based on stronger sell-through. However, we anticipate these increases will be concentrated in the back half of the year, with the largest opportunity in the fourth quarter of 2016. From a cost perspective, we are currently planning SG&A to grow at a greater rate than in 2015, as we absorb minimum wage increases across the country and invest in important initiatives for our long-term success, such as the roll out of our new Customer Engagement Suite, continued investments in our people, and other strategic initiatives that we believe will drive long-term value for our shareholders. We expect foreign currency translation to impact total sales unfavorably for the year, however the impact on earnings will be subdued because the contribution margins from other international operations are lower than our mature U.S. business. We are planning to open approximately 34 new stores, including seven in Europe, with a similar chains (18:34) to what we've done historically, with two-thirds of these openings occurring ahead of the back-to-school season. We expect capital expenditures for the full 2016 fiscal year to be between $27 million and $29 million, compared to $34.8 million in 2015, with the majority of the capital spend dedicated to new store openings and planned remodels. We anticipate depreciation and amortization will be approximately $30 million, and in line with the prior year. We are planning our business assuming an annual-effective tax rate of approximately 37%. And lastly, we are currently projecting our diluted outstanding share count for the full year to be approximately 26 million shares. This does not contemplate any share repurchases during the year, and any additional share repurchase during the year from the $54.4 million remaining on our authorized repurchase programs will further reduce our share count. And with that, operator, we'd like to open up the call for questions.

Your first question comes from the line of Dorothy Lakner with Topeka Capital Markets. Please proceed.

Thanks and good afternoon, everyone. Just wondered, Rick or Chris, whoever wants to handle it, just if you could talk about where you think you are in the I guess I'd call it search for the next big fashion trend or even some smaller ones? I know you talk in general terms. And then if you could talk a little bit about Europe and how you think that business is going. Obviously you're opening more stores. Are there new markets included there? Just where are you in the thought process on Europe? Richard Miles Brooks - Chief Executive Officer & Director: All right. Thank you, Dorothy. Let me start and I'll ask Chris to join in, too. So let me, and again, you're right, we talk in generalities relative to the fashion trends and cycles that we're in. But let me start just by reminding everyone kind of what has always driven the Zumiez business. We've been – our sales have always been driven largely by emerging in growth brands, by really hot items that can drive a lot of volume for us and then, of course, by fashion cycles and trends that are relevant for our consumers. So the answer, Dorothy, is yes, we have some things that are working, but not to the degree – not to a large enough degree, they are offsetting the larger benefits we had in 2014. So in 2014, as we said before, just to put some context around this, we had two – well, we had a fashion cycle that we were really maximizing and we had a hot item. We had two of the three really working for us in a strong way. And in 2015, we do have some brands that are growing, we have some really some interesting items that are driving volume, but they haven't been large enough to offset the bigger more powerful forces from 2014. So as we look forward into 2016, we do know that we're going to anniversary those bigger drivers from 2014 here over the next few months, and I think you'd see that probably that's in some relation to the comp cadence from a year ago in terms of how those comparative strengths of 2014 versus 2015. So we're going to anniversary those just here in the next few months, Dorothy, and then we're going to see at that point whether the momentum will continue to grow with the momentum of some of the brands that are emerging for us and some of the items that are driving. And then, I do expect that we'll see trends from a fashion perspective continue to develop and move also. Having done this for a long time like you, I know that this is retail and trends – pretty much everything cycles in retail. And so I'm confident we're going to see something, Dorothy, emerge, particularly as we get up, as we peak those trends from 2014, they really fade out here in the first few months of 2016 on a relative basis. And so I'm confident that we're going to see something happen. Can I tell you if it's going to be large or how big it's going to be at this point? No I can't. I can tell you we do have some things that we feel good about but it's we're going to have to see and we're going to have to prove it through results.

Yes. Richard Miles Brooks - Chief Executive Officer & Director: The one thing I really feel strongly about is that, though, this is a trends related issue. I can tell you that from our perspective, our brand has never been stronger. We continue to work on things to improve our brand strength and our brand positioning. We have good indicators I think from our customers about how they feel about our brand positioning and likewise, our cultural strength within the organization. We have all evidence from you from our (23:19) interactions with our team, travels around the country is that we're in a really good position there, too, in terms of both brand and culture, Dorothy. So I feel very strongly about that. I think these are trend related issues for us. I think that in the modern consumer world where trends move so much more quickly, I think every retailer is going to find more trend holes in their business because of the speed of fashion cycles, unique for each retailer's positioning. But we're going to see here as we anniversary those larger 2014 trends, they really roll out, our comps get easier through the year as whether how much momentum we continue to gain with the newer, younger brands, as well as the – some of the item things we're driving. And I do think we're going to have to see some fashion cycle shifts. We just haven't seen any for a long time. So we have things, Dorothy, we're going to have to prove it.

Yup. Thanks. Richard Miles Brooks - Chief Executive Officer & Director: Europe...

And I'd just jump in on Europe. Dorothy, I'd tell you, we're still really pleased with the progress that Europe is making. I think what you've seen here since the acquisition in 2012 is pretty consistent growth over that period of time despite the fact that shortly after the acquisition, Europe kind of dipped back into a recessionary period. But as we look at 2015 with 37.1% growth on a constant currency on really adding six additional stores, we're still seeing pretty strong comps there.

Yes.

And we've talked about that throughout the years that Blue Tomato has definitely been a comp driver over the last few months or over the last 12 months. So we're really pleased with what's happening there. As far as opening new markets, I mean, what I'd tell us is when you only started with three stores in 2012, you're always opening new markets. Now those new markets to date have been really concentrated in Austria, in Germany, but we continue to see good signs from where we are opening and we're very diligent about how we're testing this and opening in different markets and different types as to whether it's a mall or a street or a potential flagship location. We're testing all of those things. And as we've said over our last few calls, there's really no major red flags at this point. We're continuing to invest there. And from an overall profitability perspective, this is still roughly a break even business but this is something we're seeing – we're going to see the harvest of what we've been doing here in the years to come. And so we are really excited. The team is still intact for the most part since the acquisition and they are really excited about what they are doing over there, and we are excited for them. So it's been a good partnership.

Great. Thanks so much. Richard Miles Brooks - Chief Executive Officer & Director: Thanks, Dorothy.

Your next question comes from the line of Neely Tamminga with Piper Jaffray. Please proceed. Neely J. N. Tamminga - Piper Jaffray & Co (Broker): Great. Good afternoon. Two housekeeping questions for Chris, and then a big picture for you, Rick. On the housekeeping, on your inventory levels, could you characterize kind of how you are feeling about the currency of your inventory as you're going to be exiting out of maybe the year and into February and March? And then also are you contemplating any store closings? And how should we think about the potential of magnitude of that? Big picture, Rick, for you. Could you just remind us the strength that's going on in Blue Tomato? What is the opportunity again, and kind of the action sports lifestyle, the consumer adoption curve around that over maybe in Europe as well as maybe UK? Where are they in that? My travels don't take me over there that often, so maybe reminding us of what the bigger picture opportunity is for the action sports lifestyle over in UK and Europe? Thanks.

Sure. I'll go ahead and start with the inventory and the store question, and then I'll kick it over to Rick here. I'd tell you from an inventory perspective, we feel really good about where we ended the year. And I think what you've seen from us as we've moved through 2015 is that we are not one that's going to fall in love with our inventory and hold on to it forever. We are focused on moving inventory. And as our sales results have dipped, our buying teams have done a really good of job continuing to move through, and really strategic markdowns here. This is not marking down the whole store. They are marking down those things that aren't selling. And so they've done a good job at 4.7% inventory growth on the store growth that we've had. From a per square footage basis, we feel fine with where we've landed. And from an aging perspective, we actually feel pretty good about where the aging stands. So the teams have done a really nice job managing through that. From a store closing perspective – what you've seen from us over the last few years is we've closed a handful of stores each year. This just last year was actually a smaller amount, we only closed stores. But it's something we continue to watch. And as you've heard us talk about, we don't want one more store than we need to have in any given trade area. So we are still actively managing the portfolio and looking at trade areas where we have the potential to either decrease our store count and still capture the same volume in that area, or relocate within those trade areas. So you're probably going to continue to see a similar cadence to what you've seen from us. There's no substantial store-close plans at this time. Richard Miles Brooks - Chief Executive Officer & Director: All right. Thanks, Chris. So let me try to address your second part of your question there about the longer-term view and then the size of opportunity in Europe, Neely. And again, as Chris said, relative to a moment ago about Blue Tomato, we feel great about where the team's at there. We have a really strong team in place, and it essentially is the core of the group that was part of the acquisition when we acquired Blue Tomato. They're an awesome group of people, culturally aligned with us, and so we think we're in a really good spot to continue to push our growth in Europe in a really good quality way, from a people perspective. So while we haven't officially sized the opportunity in Europe – and we will here, at some point – and we haven't done that because what we really want to do when we come out here to talk to the market about how big we think the opportunity is in Europe because we want to – we want to be able to tell you about what the impact of building the omni-channel business has been, what the types of storage we've tested have been, how those metrics have worked, as again Chris said, across malls, across street stores, across the flagship stores. We actually want to bring evidence to the market and say, this is what we can tell you, these are the maturation curves as we see them today, and this is how it will play out and here's the scale and the timeframe we think we can deliver the maximum size of the business in Europe. Now, we do know that from a lifestyle adoption point of view, Blue Tomato resonates all over Europe. And we know that because of the strength of Blue Tomato's ecommerce business. That was the biggest piece, as Chris said, there were really only three stores at the time of the acquisition. They are one of the most internationalized websites in Europe, business from 14 languages, multiple shipping methods all localized to each local country. So we know that what Blue Tomato is doing is resonating across Western Europe, and even into the Eastern European countries. So we feel very strong that the lifestyle adoption is there. We have evidence for that, and based on the strength of their ecommerce business. Their ecommerce business is helping us determine which countries we enter, and what orders we lay out that longer-term plan, Neely. So I don't think there's any question about the strength of the lifestyle in this category in Europe. And you combine that with the fact that Blue Tomato is one of the few Pan-European businesses in Europe, and particularly not just on the ecommerce role, but now as we're building out the fiscal world, we're in the few that's crossing borders with physical stores, and we believe doing that successfully at this point. So I think the opportunity, that all being said, we feel great about where we're at. I think the opportunity is going to be very large, but I want to have more evidence, Neely, to bring to the – and to share with the analysts in the investor community. And that evidence needs to be based upon actual results, so we can really tell you with real data what the stores look like, how they mature, what it means from an omni-channel perspective to the Web business when we open stores and markets and build markets. So more to come on that front. The headline is we feel great about where we're at, we think the opportunity is big, and we just need to continue flushing it out so we can give really a meaningful response over the longer term to this question. Neely J. N. Tamminga - Piper Jaffray & Co (Broker): Thanks, Rick. Thanks, team. And best wishes out there. Richard Miles Brooks - Chief Executive Officer & Director: Thank you.

Your next question comes from the line of Richard Jaffe with Stifel. Please proceed. Richard Jaffe - Stifel, Nicolaus & Co., Inc.: Thanks very much, guys, and just a question – a bigger picture question on ecommerce and the payoff of all your investments and your ability to use online and to sell from online in stores and then to use the stores for fulfillment is clearly a break from the norm in our space and wondering how that's playing out? And how you see the growth of ecommerce versus the growth of comp store sales, how that's been trending. Thank you. Richard Miles Brooks - Chief Executive Officer & Director: Okay. Great, Richard. Thanks for the question. A lot to that question. So let me try to parse it here in terms of laying that out for you. Now I'll start by saying that again, we are almost not even considering – we're not even (32:57) any distinction today between physical stores and ecommerce business. Think about what we are doing here from the perspective of maximizing business in a trade area. And not just maximizing our sales in a trade area, but what we're trying to do now, particularly as we layer in the idea of micro-assortments and localization of fulfillment, we're going to in the long run try to maximize the efficiency of the business model on a trade area basis. So that's kind of the headline in all of this, but let me break it down a little bit more for you and I'll talk maybe a little bit within that specifically about the idea of localization. So I think when we talk about all these things, you have to think of localization as one of – a series of steps being taken over the last few years to really build this integrated channel and selling platform. And we're really in essence trying to empower our teams in the local market. Just like in the old days, they used to own the customer relationships with the local customers. That's what we're trying to do today, give back to our local teams the power for owning in its entirety the customer relationship. So we've been working on that in a number of ways over the last, really, six years, and we can highlight some of that relative to the investments we've made. And I'd start with assortment planning. I think, like any great retailer, you have to really focus on the basics of right product in the right place at the right time. And we have developed what I believe, over the last six years, some of the most powerful micro-assortment tools, localization assortment tools, (34:27) thinking about these things on a store-by-store basis, and now we're thinking about that on a store-by-store and trade area basis, for how we're operating the business. So that's a huge part of what we've been doing on that side. We also have the investment in the next generation commerce engine, our new Customer Engagement Suite. This is like another one of those connecting pieces for us, Richard, that is so important, again, about unleashing the power of our teams in new and innovative ways in serving customers. The Zumiez Stash is another one of those, that's another connecting piece. You're going to see us localize even more of that over time, in terms of how we work with customers and empowering our people to really have those personal, impactful relations with our local customers, our local teams, and our local customers. So then you think about what we're trying to do with in-store fulfillment. Again, it's really about localized fulfillment, and again, giving power back to the team. We have some very simple goals with this. It's to be really fast. And I can tell you that we have achieved that goal. We are significantly faster today in delivering product to our consumers than we've ever been in our history of doing ecommerce. And again, it's about trade area commerce, is really how I want everyone to start thinking about this, from our perspective. We are much faster today than we were just a few months ago, in meeting customer expectations. And I think speed is a huge part of meeting customer expectations in today's world. But that's not the only thing we are doing with the idea of localization fulfillment. As we said in the comments, and I said a moment ago, it's about empowering our teams, our local teams, to serve the local customers. I'm not going to share with you exactly how we are all doing it. But let's just say there's a much improved brand experience in how we're doing fulfillment locally for customers, and you are going to continue to see us evolve that here over the next few months and the next few years, as Chris said, we continue to fine-tune what we are doing here. I'm going to ask Chris to talk a little about the economics in a moment on this topic, Richard, so we get a sense of that aspect of it. So we have both those goals, in that are both about better brand experience. Much, much faster in terms of delivering product to our customers, as well as a better brand experience in that process itself. So, in the long run, what we are really trying to do here is, from a relationship with the customer perspective relative to product is, we want to have same day, next day availability in every localized market for that relevant product for them. Localized assortment, same day next day capabilities, and across a wide variety of path to purchase, with digital integrating with physical seamlessly, whether that be marketing digital, the ecommerce, the website digital aspect of that. These are all about how we make the seamless experience with multiple paths to purchase, same day next day availability on virtually everything we need, and with this feedback loop coming in all the way back to localized assortments in trade areas that are going to allow us to really meet the needs of our customers. So the last thing I'll add before I ask Chris, is obviously we're going to have to some measures, and this will get back to us about the distinction between ecommerce and stores, there is no distinction anymore, it's about how we're all one integrated world. We're going to have to think about different measures, we're going to have to think about different incentives. I think, over the next few years, we're going to really be rolling out – it's going to revolve around these idea of trade areas and trade area profitability, trade area penetration within markets. So a lot more to come on that front I think, Richard, is that – as we evolve this process. So let me stop there and let Chris talk a little bit about some of the economics of the localization effort.

Yeah, absolutely. I think... Richard Jaffe - Stifel, Nicolaus & Co., Inc.: Yeah.

...it's good to talk about this cost side because, since we announced this in late December here, that we were moving this direction. From a cost perspective, as we're planning this for 2016, we're really looking at this as a break-even proposition from 2015 to 2016 when you compare cost as a percent of sales. And what that means is that the cost of the Kansas fulfillment center going away is really swapped for higher costs associated with store labor to fulfill the product in store and also shipping, because you do end up with more split shipments when you move to this type of model. And from an overall financial statement modeling perspective, I should note here that the shipping cost is still within the cost of goods sold line item. However, the store labor is actually flipped from cost of goods sold into SG&A. So you'll see a little bit of... Richard Jaffe - Stifel, Nicolaus & Co., Inc.: Right.

...movement there, but the model does not come without challenges. And the impact of inventory planning and labor utilization is impactful, but we do believe this is going to drive the best customer experience, as Rick mentioned. So over the coming years, we're going to be working hard to harvest the efficiency of the model through better assortment planning, better order algorithm, aligning shipments, better in-store labor planning and really, what we believe will be an increased margin with the benefit of harvesting slow moving product more efficiently before markdowns. So we're really excited about the way that we're going to be able to serve the customer doing that – or doing this – and we're going to learn a lot from it. We're going to keep getting better at it. Richard Jaffe - Stifel, Nicolaus & Co., Inc.: It's going to be very interesting to watch. I look forward to it. And just one more question. The Stash membership, would you comment on its growth?

Yeah. So we're up to about 3.8 million members today. So we continue to see really strong growth here, and we're continuing to service those members in lots of different ways, which our marketing team, as you know, is very creative. And they're really finding ways to bring excitement to the program and to generate interest from our best customers. So we're continuing to learn a lot and, as you can see, the numbers are getting a lot bigger, right, as far as members in the program, and that's just a benefit for us in marketing to our customers. Richard Miles Brooks - Chief Executive Officer & Director: And I'd just add to that, Richard, you'll see us continue to evolve what we're doing there in terms of the Zumiez Stash, particularly as we get towards the end of the year, there'll be some new elements of it rolling out. I think it will be exciting for our customers and if we continue to offer, I think, really unique, hard-to-find, exclusive rewards, some pretty amazing stuff through the catalog rewards for our customers too. So really cool stuff; as you know, stuff we don't sell. They're all about unique experiences, unique product that you can't buy. So it's a pretty cool program, and you'll see us continuing to evolve that here over the next few months in a year or two. Richard Jaffe - Stifel, Nicolaus & Co., Inc.: Great. Thanks very much. Richard Miles Brooks - Chief Executive Officer & Director: Thank you.

Your next question comes from the line of Jessica Schmidt with KeyBanc Capital Markets. Please proceed.

Hi, thanks for taking my question. Can you just talk about the impact, if any, as you anniversary last year's port delays? I guess how big of an impact was it to your business in terms of, I don't know, (41:18) sets in first quarter? And then on Footwear, can you just talk about what drove the improvement in February, and I guess how sustainable you think that could be?

Okay, great. I'll take those questions, and fortunately they're going to come in one answer. I think our buying team – and we talked about this a lot – as we moved through the end of 2014, and into the beginning of 2015, the impact that the port strike had on us -and I think our buying teams, in connection with working with our brands, did a great job of working through that. And we are really able to not have a very big impact on the 2014 holiday season, albeit we did see some impact as we moved into the early parts of 2015, and we talked about that. And one of the areas that we had the biggest impact was actually Footwear. And so what you're seeing today in the February result on a negative 8.6% (42:10) comp is you're also seeing that Footwear was a positive category, and I would chalk most of that up to the port delays we had last year. So we're getting a little bit of benefit there with Footwear coming back. I will tell you Footwear has been down since Q4 of 2012, so we're lapping some numbers that are on multi-years decline. So we're still working on Footwear. It's been a challenging category, and especially with the athletic cycle, there we continue to test new things and try new things, and we're going to keep working on it for the foreseeable future because it's an important part of our business. It didn't lose ground overall, when you look at all of our categories as a percent of total sales over the year, but it's been a slow performer for a period of few years after being a huge driver of the comp for the few years before that. So we'll continue to work on it, but the increases you're seeing today are mostly port-related.

Great. Thank you.

Your next question comes from the line of Betty Chen with Mizuho Securities. Please proceed.

Oh, thank you. Good afternoon. I was wondering if you can talk a little bit about the product pipeline, if you can, Rick, I know – you mentioned February, maybe impacted by some fashion. Just looking farther down the road, are there some things that the team is getting a little bit encouraged with? And then also separately just curious on when we think about these trade areas I know there were only two closures in 2015. But when that does occur, do you see a certain amount of sales transfer either moving to the online business or to a nearby store that could perhaps lead you to kind of be considered these trade area strategies going forward? Thanks. Richard Miles Brooks - Chief Executive Officer & Director: All right. I'll take the – let's start with the last part, Betty, of your question. And I think we're going to figure all – this is the exciting part I guess about this modern world we're in now, where at this point we've made so much progress in developing our capabilities and our infrastructure at this point. We're going to actually start to really now experiment with these ideas and see what the impact is and measure the impact because once you can really start to think in a trade area way, you break out of the channels, whether that be physical channels or marketing channels, whatever that may be that we used to think in, you break out of those channels and you can really start to look at what happens in the trade area. And when we talk about optimizing our store portfolio in our trade area that's really what we're talking about. What would it mean to unplug a store? How much of the volume do we maintain within the digital realm? And how much moves to other physical locations? How much of that can we control via marketing messages, right, in terms of moving customers and telling them where our product is that they really care about the most. So these are all things I think now that we have all these tools in place, we've spent all the time getting here that we can now actually start to measure. And we've done some experimenting with this over the last few years and – but I would tell you that we're in a new capability level to do this at this point. So the idea of a trade area will be that over time, we'll be able to look at the market and try to maximize profitability. And so we're going to, in a new way, yes, we'll still probably look at four-wall contributions on a physical store. We'll probably still have those disciplines in place, but we're also going to be looking at what's our penetration end markets, how do we think about trade area profitability across all channels, against the marketing spend in our market, what does more marketing spend mean in a trade area versus not, what does pulling a unit out or adding a unit in mean to the profitability in a trade area. So we only have anecdotal stuff because we've just kind of been experimenting with it over the past few years. Now that we're getting to this point, we can be much more scientific about what we're going to do in the markets, really measure and be more purposeful in terms of how we're going to think about the marketplaces and this idea of trade area profitability. And I would tell you that our thinking is that over time, trade area itself, the idea of it will progress. They're probably going to be bigger as we – for where we're thinking about them today, and over time, we'll probably be able to find out maybe we can narrow that down even more, and we can get more within smaller units, because we know most of our customers have a primary store, and maybe only shop in one of the store, based on our market research. So, we may be able to narrow them down over time. Today that we're looking at bigger markets from a trade area definition point of view, different (46:48) different definitions based upon their objectives and what they're trying to achieve. But it's just a really cool part about where we are going. Still a lot of work to do in it, but I think this is one of the really exciting parts about retail in general. About how we do that domestically, how we do that across the world in terms of our International capabilities, because all these consumer needs and desires are the same across geographies. So, that's why store growth in Europe is important to complement the ecommerce growth there. So, a long answer, but that's generally how we're thinking about it, and I think we're in an all new world. I love where we're at in terms of capabilities to really think and experiment this way now. From a product pipeline perspective, I will echo back to some of my comments a moment ago, Betty, we do have things that we're encouraged about, but at this point they haven't been big enough to offset the bigger more powerful trends from a fashion cycle perspective and an item perspective from the 2014. Now, as those anniversary here over the next few months, we're going to get a chance to see where those are at, and will they continue to gain momentum, right? Will they continue to grow? Will new things come up that we can drive again? I mean our buyers – let's put it this way, and we are trying about every possible thing you think we can – that we think can work for our customers, interesting for our customer. We are out there experimenting and pushing things on a market-by-market basis, localized, again, to see what we can do. We're not being cautious in this area. We're really going out and seeing what we can make happen in every marketplace. So, we're going to see, I think and then I still think the big question mark for us will be the fashion cycle there, this kind of fashion cycle that we can run. I think you hear this from all the retailers that sell higher price points, that aren't value-driven retailers, and that have higher price points and have a bit more of a fashion quotient in terms of what their customers demand from us, those businesses, not just ours, but those retailers are having tougher times today. So, I do think we're going to see something move around fashion cycles too. And that's what our customer wants, they like newness, they like to be different and to be individual. So, I would expect we're going to see some movement on a fashion cycle basis too hopefully over the next six months, twelve months also.

Betty, the only thing I would add to that is one of the things we have shared with you guys over the years is just our concentration of vendors in our top 10 and our top 20. You know, we track that as an indicator of where our brands are going based on how highly concentrated they are, when we find things that really drive comp versus when they did aggregate (49:22), we also often see more new vendors come along. And as we look at our top 10 and our top 20, there really has been no change in what we've seen over the last few years from a standpoint of 20% to 30% turnover in the top 10 and top 20. What has changed is the overall penetration when you look at those top 20 vendors as a percent of our total sales, over the last two years, we've seen pretty meaningful declines, which to us leads us to that new kind of wave of product. You are seeing some brands cycle out of the top 20 and you're going to see a lot more brands cycle back in. So we're optimistic about what that means for the future and we'll continue to track the brand movement. Richard Miles Brooks - Chief Executive Officer & Director: And this is, again, one of those things that are always cyclical in retail on our end, and retail in our business is that we're seeing that disaggregation of sales out of those top 20 and into and being spread out more among the smaller brands that we're carrying out there. So again, from our perspective, it's a good sign for our cycle we're in today and we just need to see those brands continue to build momentum, Betty, for where we're at today.

Great. Thank you so much. Best of luck. Richard Miles Brooks - Chief Executive Officer & Director: Thank you.

Your next question comes from the line of Paul Alexander with BB&T Capital. Please proceed. Paul Stephen Alexander - BB&T Capital Markets: Hi. Thank you. Apologize if I missed it, but could you just talk little bit about the comp guidance? February comps were a little bit worse than what you were expecting for the overall first quarter. So, what gives you the confidence in the acceleration coming? Thank you.

Yeah. Thanks, Paul. I'll take that question. And what I'll tell you is, as we've looked at the quarter, you're right, the February comps came in at negative 8.2%. We're looking at comp guidance of down 5% to down 7%. And really what's the predictor behind our guidance is looking at what we're seeing on a week-to-week basis. And we did see much tougher results over the first couple weeks of February than what we saw over the last couple of weeks of February and into March. And so, as we started to look at the trend line going forward, we felt comfortable that we are seeing enough in the business today to move ahead of what our February results were. And there's not a lot more to it than that just trying to – so we're trying to forecast based on the trends we're seeing in the business today.

Your next question comes from the line of Howard Tubin with Guggenheim Securities. Please proceed.

Thanks, guys. I was just curious to get your view on the overall promotional environment here as we moved into the spring season and whether or not that's having any impact on how you view promotions within your own business. Richard Miles Brooks - Chief Executive Officer & Director: Sure. We – it's been a promotional environment forever, I think, over the last few years. It doesn't seem like it's relented that much, and our basic position hasn't really changed in that, in that what we want to do is offer uniqueness to our customer. So, where we do that, we're able to sell products at full price and maintain a strong margin profile in our business. And as Chris said earlier, yes, we had to take markdowns on those things that did not move as sales toughened through the back-half of 2015, but we're very targeted of what we do. We don't do fall store promotions. It just doesn't make sense in our world, because of the nature of supporting our brand partners and doing what's right for our brand partners and helping them build equity within their brands through price discipline. So, I guess from my perspective, I don't think it's going to get any less promotional. I think that's going to continue. I think – again, that's part of the modern world. I still feel as if there's too much capacity in the retail world, and when I say retail world, I mean in both the digital and physical spaces. And I think that part of our issue, in terms of the promotional environment is working through that capacity relative to the modern consumer world where you have complete price transparency, complete inventory transparency, domestically as well as globally, in terms of buying product, and even to the point where you see people, based on currency movements, shopping cross-border in today's world. So, I don't think we're going to see the promotional environment slow down. it's really about – again, in our case – our unique position relative to trend cycles, and relative to brand emergence, hot items, those things for us that we have to drive out and provide a uniqueness for our customers. So I don't see it being getting less promotional, in fact, I think we've got a ways to go to work through the excess capacity that is in the retail world today.

Great. Thanks very much.

Your next question comes from the line of Jonathan Komp with Robert W. Baird. Please proceed. Jonathan R. Komp - Robert W. Baird & Co., Inc. (Broker): Yeah, hi. Thanks, guys. Maybe if I could start, just a couple of clarifications, Chris, with some of the details you've shared for the outlook for 2016. First, if I could just ask on the gross margin side, it sounded like you might expect to see some favorability later in the year. I know you're going to be (54:43) that the product margin decline in the fourth quarter, but can you help share your perspective on what types of comps do you think you'll need later in the year to get increment on the gross margin line year-over-year?

Yeah, and what I'll share is the way that we're thinking about our annual guidance here. And what we said is that we thought it was going to be softer in the front-half of the year, and we would see stronger comps in the back-half of the year. Obviously, when you're lapping a negative 7.3% comp in Q3 and a negative 9.5% comp in Q4, we would expect to be able to comp positively in the back-half of the year. And from a leverage perspective on gross margins, we are expecting to see product margin improvements as well. You've seen us, based on our tough sales results, we've had to really strategically discount some products to get out of it. And it's impacted gross margin here through our product margin declines over Q2, Q3 and Q4. And so we are expecting to drive product margins here on the back-half of the year. Absent that, when I just think about things like occupancies that I talked about, and store operating costs that I've talked about, we would still expect to leverage that on a 3% to 5% comp. So, the business has got to get to those levels to leverage those overall expenses. But, I think we're going to manage really strong inventory discipline is what you should expect to see from us, right? The team is going to manage to what the sales results are. And we've had to do that in 2015. And to the extent we are able to get sales results going in the right direction, in 2016, our expectation is we're going to see margin grow with sales. Jonathan R. Komp - Robert W. Baird & Co., Inc. (Broker): Okay, great. And then, just another clarification on the SG&A guidance. I know there is adjustments in a couple of the numbers in 2014 and 2015. So just wanted to clarify the percentage growth you're looking at in SG&A dollars for 2016. I think it would be kind of at least 7% or higher, but I wanted to confirm that's the same number you are looking at?

Yeah. Yeah. We are – obviously, there's our GAAP numbers, which is mostly what I speak to, but we've laid out all the adjustments in the script. And as you know, the SG&A growth, excluding those adjustments, is going to be quite a bit higher. And we are, as we laid out in our prepared remarks, we are expecting SG&A growth to be higher in 2016. And I think what this comes down to is, we've done a pretty good job of managing SG&A growth throughout 2015, and we've been – we kind of have a long -term path. And Rick talked a lot about this in his remarks earlier today, that we're long-term planners, and what we think the right investments for the business are. And the commerce engine is something that has been years in the making. And so, as we look at 2016, we are expecting 2016 to be a little bit more of an investment year, from a standpoint of things like our new Customer Engagement Suite. We're going to have to deal with the statutory minimum wage increases across the country, both on a state-by-state basis, as well as municipalities that are raising minimum wage. And it's not just the impact of minimum wage, it's those that are near minimum wage as well. There is continued investments in our people, plan and SG&A. As you know, we are a performance-based culture, and in a year like we just had, the incentives reflect the results that we've performed to. And so we are expecting some growth there, and there's other strategic initiatives that, again, are all in line with our long-term plans. So, these investments are all relative to the plan, I should say. So, to the extent that we see continued challenges in 2016, we're going to make some tough decisions around those investments, both those that we think are part of our long-term growth, as well as those that are related to performance. So we'll be monitoring it closely, but our plans today do have SG&A growing in excess of what the adjusted growth was in 2015. Jonathan R. Komp - Robert W. Baird & Co., Inc. (Broker): Okay, got it. And then, maybe last one from me then, Rick, I know you did a good job really explaining the localized fulfillment and the new commerce platform in terms of the potential benefits to the business. I want to just maybe ask, I know you'd characterized some of the rollouts as a phased rollout over the next couple of years. Could you maybe just address any potential complexities, or potential pitfalls, as you roll out the platform, and how you expect to mitigate any execution risk on that side? Richard Miles Brooks - Chief Executive Officer & Director: No, I'm pretty comfortable, Jonathan, where we're at in this. I mean, we are very disciplined in how we do this. In our execution of these projects, I think you can see that and what we've done, and how well we've implemented, for example, localization. It went incredibly smoothly. And again, as Chris said, these aren't things that we have come up – these are part of our long-term planning cycle. So we've been experimenting with localization of fulfillment, I think since back to 2012, and then have been increasing the proportion of the localization effort each year as we built algorithms, we implemented additional software tools to help us do this, rolled out new OMS, and I think we've done that all in a pretty seamless way, and executed at a pretty high level in that regard. I would tell you the same thing about rolling out our new commerce engine, the engagement suite, our Customer Engagement Suite. We have it well planned, because we had a launch partner for the software, it gave us some ability to really work with our software partner, software development partner, on which hardware it worked with, how we thought about that, how they built the integrations. It allowed us to really, I think, get a good jump on it. We will have to replace some equipment that is just – that we have just – that is just outdated in our system. So that is a significant part of the plan of our rollout, is replace some hardware. And – but our teams are, I think, we're well prepared. As Chris said, we'll do this in a phased approach throughout 2016, as well as into 2017. So I'm very confident. I think we're already using it in a number of locations today. So, I'm pretty confident in our ability to do it, and again, I think we had an advantage for being early and being the launch partner with our software partner in doing this. So I'm confident where we're at. And again, our experience internally is that we execute it at a very high level on these things. I'm not anticipating any significant execution issues. Jonathan R. Komp - Robert W. Baird & Co., Inc. (Broker): Okay, great. That's helpful to hear. Thanks, guys. Richard Miles Brooks - Chief Executive Officer & Director: Thanks.

The next question comes from the line of Pam Quintiliano with SunTrust. Please proceed.

Hi, this is David Kwon for Pam. Thanks for taking our question. In terms of the health of your consumer, you mentioned recent challenges are more trend-related, or a lack thereof? How's he feeling, (1:02:17) though, and has there been any recent differences in sentiment that you've picked up on related to lower gas prices, higher wages and warmer weather? Are these factors impacting allocation spend? Thank you. Richard Miles Brooks - Chief Executive Officer & Director: Yeah. I think again, we're seeing that, from our perspective – I'll address the weather issues. We always see weather issues every year. I would tell you that we had an amazingly good snow – good, one of our best snow Hardgoods business in the West Coast we've had in a long time is because it snowed in California, maybe for the first time in four years. The flip side of that was the East Coast and the Midwest were terrible in our snow Hardgoods business. So no, we always think about that. We always plan about that. We'll move products around to fulfill customer need where we it does, where we do get the appropriate weather. So weather is always a factor for us, particularly during these seasonal types of periods when you are transitioning from winter to spring. So, we see great variability day-to-day in our business that is, to a significant extent, driven by weather. Now, the broader issues around gas prices and things like that, I think, again, these trend is unfortunately overrides that in our case. And if you look at the lot of macro data, gas prices, it's not being spent on clothing, it's being spent other areas, on technology and homes and cars, but a large part for us is that we just haven't had that must-have item, that really must-have brand at a significant enough momentum level that then it will offset those trends from previous years. So I think we have some things that are unique to us, that we need to overcome in this. That is about our position relative to this time in this marketplace, that we need to deliver on for our customer, both on the trend set as well as on the emerging brand set and finding that hot item. Things like we did in 2014, that were more difficult in 2015. So we need to earn those dollars through how we execute in our business.

Great. Thank you.

Your next question comes from the line of Jeff Van Sinderen with B. Riley. Please proceed. Jeff Van Sinderen - B. Riley & Co.: I know it's small concentration, but any color you can add on what you're seeing on the Girl's side of the business, and what your outlook is there. Is there anything to get excited about? And then, if you don't mind, given traffic generally running negative, lots of store closures in the industry, just wondering what your latest thinking is about rents as you negotiate renewals and new leases? Thanks. Richard Miles Brooks - Chief Executive Officer & Director: Okay, great. Thanks, Jeff. Just making some notes here, make sure I get all your points. I don't have a lot to say on Girl's. As you've just heard from our prepared comments, Girl's was negative, like most of our business unfortunately has been in the last few months. So I would tell you the same thing about Girl's that I said broadly. We have things that are working. We have some things we're excited about, but they haven't been of a scale at this point to offset that. So I think just more to come there in that business. And again I don't think we're unique in this way. I think anyone that's trying to sell higher price point has a higher fashion quotient to their consumer, whether that be in our world, fashion isn't just about fashion trends. It's about brand and uniqueness of those special items. We view those as trend fashion-driven items too. So I can't call out anything for you. Girl's has been a growing, significant growing part of our business over the last two years or three years, Chris, in terms of gaining penetration within our mix of our business. But, generally, I don't have anything that would be much different than overall business in terms of we're just really tactically trying to experiment and test all sorts of things in that Women's business, just like we are in the other aspects of our business.

Just to add some color to that, this is the third quarter in a row the Women's business has been down, but it was up over 36 months before that. So, the Women's business as a percent of our total sales has actually been consistent with the prior year, but this is a business that's gained 3% of the total sales over the last three years. So, we've seen a lot of growth there, but consistent with our overall business, it's experienced a slow down here. Richard Miles Brooks - Chief Executive Officer & Director: So then on your second part of your question, Jeff, regarding to our topics and discussions with landlords around rents and renewals, the answer here is always variable, depending on the centers that you're talking about. So, it's all about how important we are in particular centers relative to the demand for that center. So, no really new news here either, I think just like when we work, we have great partnership with our major landlords. They get what we do, they see – I think see the value we bring to their centers in terms of our customer. But it's always about balancing and the trade-offs between the really powerful centers who have this tremendous demand, and we will expect that the rent negotiations are much more challenging there versus centers in the B&C categories where we might have a bit more leverage on our side in talking and discussing with those landlords what the right levels are. And again, I would hearken back here to this idea of what we're trying to do in the broader market above trade area. So, you can think about our – how we might manage this, how we might work towards trade area profitability over the long run in our thinking about which centers are needed to fulfill and to capture the market within a particular trade area. So I think this kind of thinking and our ability to experiment and test with that, our ability to localize fulfillment and to what makes sense for the consumer and as well as our cost structures, I think will add additional dimensions to this conversation. So, we have again great, I think great relationships with our landlords, but it's always a balancing act. Jeff Van Sinderen - B. Riley & Co.: Got it. Thanks and best of luck for the rest of the quarter. Richard Miles Brooks - Chief Executive Officer & Director: Thank you.

Your next question comes from the line of Adrienne Yih with Wolfe Research. Please proceed.

Hi. It's actually Doug Drummond on for Adrienne. Thanks for taking our questions. Most of mine have been answered. But circling back to inventory, you've been exercising great discipline with respect to inventory management. When do you perceive that inventory growth will be in line with sales growth, and should we expect total inventory to be flat to down and in 1Q 2016? Thanks very much.

Yeah. I mean, I think when you experience the sales declines that we've had here in the last quarter, it is tough to match your inventory to sales specifically when you're growing units at the level we have, which we've added 57 units here in the last year. So, we actually feel like on a per square footage base, the inventory is very well situated. And I think when I would expect to – our long-term goals are always to grow sales at a faster rate than inventory. And I would expect we'd be able to continue to do that as we get sales in the positive territory and moving in the right direction. So, I think our challenges here have been more on the sales declines over the last six months. And so, as we look forward to 2016, our goals are to grow sales quicker than we grow inventory. Richard Miles Brooks - Chief Executive Officer & Director: The only thing I'd add to that, Doug, is the fact that we're kind of unique compared to a lot of shearer apparel fashion-driven retailers who you would – if you would report the inventory, in other words, you may be more concerned about, we have categories of our business like blank skateboard decks. They're blank skateboard decks. We can manage that relatively closely. So, if we have a down-trending cycle there, they don't lose – there's not an obsolescence factor in a number of areas of our business that other people do. So we're able to manage the quality of our inventory still to a high level and work to give ourselves a bit more time to work through challenges like that. And I can tell you that in our seasonal category, I think we feel good about, particularly the snow category for where we're at currently relative to how we've been able to manage through that. I think we feel good about that category that is more – we have more trend or seasonal risk really to inventory positions. So, again, our (1:10:26) inventory, I think Chris and I feel good about where we're at. Our buyers again I think have been very disciplined about where we're at. And the uniqueness of our business allows us – I think it gives us some more time to work through issues, again, because if we don't mark down a product – we're not marking it down, if we believe we can have a sufficient sell-through rate, and we can manage the open-to-buy to get inventory in the right position over time.

Okay. Great. That's helpful. Best of luck, guys. Richard Miles Brooks - Chief Executive Officer & Director: Thank you.

There are no further questions in queue at this time. Richard Miles Brooks - Chief Executive Officer & Director: All right. Well that means let's wrap this up then. And again, I – although it was a very challenging year in 2015, I just, again, I want to thank all of our teams and our vendor partners, because I actually think while very challenging on the sales front, we achieved a tremendous amount that's going to position us well for the longer term (1:11:19) 2015 is going to position us well over the longer-term. So, thanks to all of our Zumiez teams everywhere across the country and around the world, and thanks to our partners on the supply side, our technology partners. We greatly appreciate the effort that was made to help move our businesses forward. And we're looking forward to hopefully a much better year in 2016 and for many more better years beyond that. So thank you, everybody. I really appreciate it, and we'll look forward to talking at the next quarterly call.