Big 5 Sporting Goods Corp (BGFV) 2013 Q4 法說會逐字稿

Good day and welcome to the Big 5 Sporting Goods fourth quarter 2013 earnings results conference call. Today's conference is being recorded. On the call today from the Company we have Steve Miller, President and CEO, and Barry Emerson, CFO.

I would now like to turn the conference over to Mr. Steve Miller. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone. Welcome to our 2013 fourth quarter conference call. Today we will review our financial results for the fourth quarter and full year of fiscal 2013 and provide general updates to our business as well as provide guidance for the first quarter. At the end of our remarks we will open the call for questions.

I will now turn the call over to Barry to read our Safe Harbor statement.

Thanks, Steve. Except for statements of historical fact, any remarks that we may make about our future expectations, plans and prospects constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in current and future periods to differ materially from forecasted results.

These risks and uncertainties include more fully described in our annual report on Form 10-K for fiscal 2012, our quarterly report on Form 10-Q for the third quarter of fiscal 2013, and other filings with the Securities and Exchange Commission. We undertake no obligation to revise or update any forward-looking statements that may be made from time to time by us or on our behalf.

Thank you, Barry. We are please today have delivered another quarter of earnings growth in what turned out to be a very challenging retail environment. Although our fourth quarter sales comparisons were impacted by extraordinary firearms and ammunition sales from the prior year as well as unfavorable winter weather across our western markets, our team's ability to improve profit margins and control operating expenses enabled us to achieve over 20% growth in earnings for the quarter, capping off a year of 84% earnings growth in fiscal 2013.

Now I will comment on sales for the fourth quarter. As we previously announced, we rang the register tots tune of $248 million, up 1.8% from $243.6 million for the fourth quarter of fiscal 2012. Same-store sales decreased 0.5% during the fourth quarter of 2013 compared to a 6.5% increase during the fourth quarter of 2012. We experienced a low single digit decrease in customer transactions and a low single digit increase in average ticket during the fourth quarter versus the prior year.

While the fourth quarter started off well with positive same-store sales in October, sales comparisons softened in November and December as we began to comp against the surge in firearm and ammunition sales from the prior year and as we comped against more favorable and certainly more timely winter weather in our markets during the prior year. Apart from the impact of these headwinds, our products generally performed well for us in what turned out to be a challenging holiday retail environment.

We did compositely over the Black Friday weekend, even though we maintained our stores hours from the previous year-to-date. In other words, we did not open on Thanksgiving Day as so many others did. We also saw a nice rush in holiday business for the several days leading up to Christmas, even without the benefit of favorable weather.

From a product category standpoint, apparel was again our strongest performing category, comping up low double digits. Sales in our footwear category were slightly positive, while sales in our hard goods categories comped down mid single digits in the fourth quarter, primarily due to lower demand year-over-year for firearms and ammunition products. Merchandise margins increased by 47 basis points for the period, primarily due to the shift in our product sales mix away from firearms and ammunition products.

Now commenting on store openings. During the fourth quarter we opened nine stores, ending the year with 429 stores in operation. The new store openings were in Green Valley and Phoenix, Arizona; Coachella, Susanville, Hayward and Santa Paula, California; Canyon City, Colorado; and Gallup and Taos, New Mexico.

For the first quarter we have closed four stores, three of which were part of relocations. At this time our plans for 2014 call for us to open approximately 15 net new stores. In addition, we plan to continue our program of upgrading and remodeling our store base to better support our evolving merchandise mix.

Now turning to current trends. The first quarter of 2014 has been very challenging, particularly when compared to the 10.5% same-store sales increase that we achieved in the first quarter of last year, which was driven by the peak in the surge in demand for firearm and ammunition products as well as generally favorable winter weather in our markets. As I expect most of you are aware, while much of the country has experienced near record levels of snowfall this year, many of our key western markets have had a very warm and dry winter.

Here in California we had our third warmest and third driest January in the last 120 years, which followed our second dries December in 120 years. These drought conditions have a led to significantly reduced demand for winter-related products and, coupled with low -- the lower firearms and ammunition sales, have a adversely affected store traffic levels. Our same-store sales are currently running down in the low double digit range for the period.

To add some perspective to that figure, sales of our firearms and ammunition products are running down in excess of 50% for the period to date, and sales of our winter and cold weather related products are down over 30% for the period. All other product categories combined are comping up in the healthy low single digit range for the period to date.

Looking beyond the first quarter, we expect to see pressures ease as we move past the winter selling season and the peak of the surge edge in demand for firearms and ammunition last year. Although we anticipate that comping against last year's ammunition sales will remain a challenge over most of the year, we do believe that after the first quarter strength in our other categories should put us in a position to produce positive same-store sales for the balance of the year.

Finally, I should note that we are pleased to be in the final phase of development of our new e-commerce platform, which is now pointing to a launch during the summer of this year. With that said, now I will turn the call over to Barry, who will provide more information about the quarter as well as speak to our balance sheet, cash flows and provide first quarter guidance.

Thanks, Steve. Our gross profit margin for fiscal 2013 fourth quarter improved to 32.6% of sales from 32.2% of sales for the fourth quarter of fiscal 2012. This increase reflected the 47 basis point improvement in merchandise margins that Steve mentioned.

Our selling and administrative expense as a percentage of sales improved to 28.9% in the fourth quarter from 29.2% of sales for the fourth quarter of fiscal 2012. On and absolute basis, SG&A expense increased $0.5 million year-over-year.

Now looking at our bottom line, net income for the fourth quarter was $5.2 million or $0.23 per diluted share, including $0.01 per diluted share of expense related to the development of our e-commerce platform, compared to net income of $4.0 million or $0.19 per diluted share in the same period during the prior year.

Briefly reviewing our 2013 full year results, net sales increased to $993.3 million from $940.5 million fiscal 2012. Same-store sales for fiscal 2013 increased 3.9% versus the prior year.

Net income was $27.9 million or $1.27 per diluted share, including $0.04 for legal settlement charges and $0.02 for e-commerce development expense. This compares to net income for fiscal 2012 of $14.9 million or $0.69 per diluted share, including $0.04 for store closing and non-cash impairment charges.

Turning to our balance sheet, total merchandise inventory was $301 million at the end of the fourth quarter, up 11.3% from the prior year. On a per store basis, inventory was up 7.4%, which largely reflects the impact of lower than anticipated fourth quarter sales, more normalized firearm and ammunition inventory versus the prior year, and the timing of certain inventory receipts. In light of reduced demand for winterer products this season, we do anticipate a greater than normal carryover of winter product to next season and plan to structure our purchasing for next season around this carryover.

Looking at our capital spending our CapEx, excluding noncash acquisitions, totalled $22.0 million for 2013. Primarily reflected expenditures for 17 new stores, increases in existing store maintenance and remodeling, and computer hardware and software purchases, including investments related to the development of our new e-commerce platform. We expect a higher level of capital expenditures for 2014, excluding noncash acquisitions, of approximately $28 million to $32 million for new stores, store related remodeling, increased investment in distribution center equipment, computer hardware and software, and development of our new e-commerce platform.

We generated cash flow from operations of $26.3 million for fiscal 2013 compared to $39.6 million for fiscal 2012. The decrease in cash flow from operations primarily reflects higher merchandise event levels as a result of lower than expected sales in the fourth quarter, partially offsets by higher net income for 2013.

In the fourth quarter we continued to pay our quarterly cash dividend of $0.10 per share and also paid down borrowings under our revolving credit facility. Our long-term debt at the end of fiscal 2013 was $43.0 million, down 9% from $47.5 million at the end of fiscal 2012.

Now I will spend a minute on our guidance. As Steve mentioned, in the first quarter of 2014 we are comping against the peak of the surge edge demand for firearms and ammunition products and favorable winter weather last year. These difficult comparisons combined with the very unfavorable dry and warm weather conditions experienced quarter to date have negatively impacted sales trends.

Based on results to date for this year's first quarter, we are projecting same-store sales in the negative high single digit range and earnings per diluted share in the range of $0.05 to $0.11. Our first quarter guidance reflects anticipated expenses of approximately $0.01 per diluted share associated with the development of our new e-commerce platform. For comparative purposes, in the first quarter of 2013 same-store sales increased 10.5% and earnings per diluted share were $0.34.

Operator, we are now ready turn the call back to you for questions and answers.

Thank you. (Operator Instructions). And we'll hear first from Sean Naughton with Piper Jaffray.

Good afternoon. When you just take a step back and you look at the -- some of the lost traffic from the difficult comparison in firearms and ammunition I guess specifically, is there a way to look at it from a basket perspective to see how much of the sales kind of across the store that were actually lost from those transactions that had a firearm or ammunition on it year-over-year?

Sean, I'm not sure that we can precisely quantify on a basket by basket standpoint what was lost. We do certainly sense that we lost traffic, and clearly the customers that were coming in buying firearms and ammunition products often added to their basket last year, not to mention the traffic that was generated in the winter, which winter business that is lost throughout the store. That's why we're really please that in spite of the headwind from lost traffic from the firearms and ammunition phenomenon and the winter sales, that the rest of our products are comping positively for the quarter to date.

Okay. Got it. And then I guess just thinking about the surge in demand really last year, have we kind of passed peak, I believe? But do we have a few more months of pretty strong trends in this particular category. Does that extend into Q2 and into Q3 where that's still going to be a material headwind for you, you believe at this point in time?

Well, it will continue, particularly ammunition. Firearms, I think we're for the most part past the surge in demand for firearms for the most part. The ammunition headwinds expand throughout much of the year, although certainly to a lesser degree than what we've experienced thus far in the first quarter.

Okay. That's helpful. And then maybe just a clarifying question on the comp. You mentioned that you're running down low doubles now, down high singles probably for the first quarter, and then you made a comment about the balance of the year. You expect it to run positive. Was that -- do you think that each quarter is going to be a positive comp, or you just think that the next nine months after that is going to be positive?

We're not guiding on say quarter-over-quarter basis for the rest of the year, but we believe we're positioned to comp positively throughout the rest the year and for indeed each quarter.

Okay. That's helpful. And then just one last question. On the SG&A side, obviously a lot of changes with healthcare, and minimum wages, specifically in one of your larger markets, is set to go higher here in the middle of 2014. How does that impact the P&L, or can you move things and enough to offset that through better scheduling and et cetera? Thank you.

Yes, Sean. I mean, on the healthcare, I mean clearly there is a little bit -- no. And moving things around is a little challenging.

I mean, we do have headwind on the -- a little bit on the Affordable Healthcare Act. That is adding, as it is for everybody, slightly incremental costs to our medical plans for 2014. We're doing our best, as you say, to kind of figure out how to work around that and try and mitigate those increases, but clearly there's pressure there.

Also, on the minimum wage, as you know, California implemented a minimum wage here -- a two tier minimum wage, increasing is it from $8 to $10. The first $1 is effective here in July of 2014, and then the other -- the increase from $9 to $10 is in 2016. For the overall magnitude of that impact on our SG&A, it represents less than 1% of our overall store salaries.

I mean, it's clearly something -- there's another minimum wage that states are considering as well, and we have to deal with these and always have, but in terms of the California -- with the number of stores we have in the state, I mean, there's clearly a larger impact. But overall not material, clearly. I mean, less than 1% of our overall store salaries.

Okay. That's helpful. Best of luck for the rest of Q1. Thank you.

Thanks, Sean.

Thank you. And we'll take our Sean McGowan with Needham & Company.

Couple questions. Some of them are clarifying. Tax rate expectation in 2014, Barry?

Sean, I would use 39% even.

Okay. That's helpful. Thank you. When you call out the expenses related to the e-commerce platform, I assume that those expenses will endure, or are you really calling out that part of the expenses that won't endure?

Sean, these are really more of the planning upfront costs, the development costs of the overall platform, so these are consulting costs primarily that we're incurring from folks helping us design and develop the overall e-commerce platform. So -- I mean, where is this a co-mingling, clearly we're hiring people as we move forward for our distribution, our advertising, our marketing. Those kind of things.

And those head counts are starts to go ramp-up and so on, but I think what you are seeing -- what you saw in 2013 and what you're seeing at the beginning of 2014 is more of the planning costs. And then of course as we get closer and closer, you'll see some permanent costs that are adding net cost to the business before we starts generating revenues in the second half.

That's sounds -- I'm still a little unclear, so would you advise us to kind of take those costs out as a base case or not? We're going to see them transition from planning to permanent cost, so this really is the base level.

Well, no. I guess -- well, first of all, the overall costs that we're talking about -- well, the costs in 2013 were obviously not going to continue. These are strictly the planning costs.

The costs going forward in this year, we've estimates in addition overall net effect on our cost for 2014 is about $0.03 to $0.06 a share. I would say that just -- if you had to pick something, I would say half of that is going to be continuing and half of it's going to go away.

Okay. That's very helpful. Thanks.

Sure.

A couple others. When you talk about where you are so far in the first quarter with number of closings, can you help us out a little bit on what we should expect as a net number for the first quarter? Is that going to be a net negative for the first quarter?

Yes.

Okay.

Net negative [of four] for the first quarter.

Okay. And would you expect to be kind of back in a net positive position by mid-year?

Yes. I mean, I'm not -- yes, somewhere during the course -- certainly over the course of the year we anticipate being net 15 to the positive. We will again be backend loaded, so I'm not quite sure at what point we

cross the barrier for the year.

Okay. And then last question. If you could just help us kind of size the impact on gross margin of what might be the diminishment of theheadwind from ammo. I mean, is this a quarter of a -- is this a 25 basis points thing, a 100 basis points point thing going forward? In other words, how much is the margin improvement that we should be expecting could come just from that shift in mix?

I'm not sure we can quantify that, Sean. I mean the --

Sure.

The ammo is historically below average margins, or the ammo sales that we were achieving last year, because of the supply-demand issue, were higher than normal ammo. So in one sense we're going to have less sales of a lower margin item, but it wasn't dramatically apart from our typical margin. So I'm not sure that there will be a meaningful margin shift to the business as a result of fluctuations in sales of that category, as I just think off the top of my head.

I thought you were pointing to the merchandise margin improvement seen in the fourth quarter as being to some degree helped by in a mix shift, so I was wondering --

The fourth quarter was different. The timing of -- again, the sales -- in the fourth quarter [there was a] stronger [amount] of firearm sales, which are significantly below our average rate of margin. And the ammunition sales in the fourth quarter were at lower margins than we achieved throughout much of 2014 when we were less promotional in the category, given the supply issue.

Oh, okay. Got it. So it had more of an impact in that quarter than we could expect to see going forward. Okay. Thank you.

Right.

Thank you. And we'll hear next from Mark Smith with Feltl and Company.

Hey, guys. Just another question on merchandise margins here as we look at Q1. Barry, it sounds like you said that you guys are able to carry over a fair amount of this inventory to next year. [You look to be maybe a] negative impact on merchandise margin from discounting and trying to clear out some of this winter gear during Q1?

Well, without much winter you can't here it out real well, so we'll see to what extent we -- if we still have an opportunity to get some winter weather, some of which is forecasted for this coming weekend in some parts of our markets. It could have a little dampening effect to margins just with efforts to try to sell the products. We're not anticipate -- we're anticipating our margins to be somewhat down in Q1.

That's right, but, Mark, we don't sell a lot of fashion product, as you know, and the vast majority of this product is going to be stowed away and retained and brought back out next year. And just because of the dynamics over the last couple years, the winter product that we have today is actually quite fresh, and so we feel good about that product and really feel that we can stow it away, like I say, and bring it out again and sell it very effectively again next year.

In looking at the comps year-to-date, I think you said down low double digits. Can you give us what that was last year quarter to date?

Oh, well, we were running up double digits a year-ago.

Have we passed the peak?

Pardon me?

Have we passed the comp peak.

Oh, absolutely. The absolute peak of our comps was over the course of really January, when we were up a very solid double digits in excess of -- well in excess of 20% last year in January. I mean, again, to try to put perspective on what we're facing with the -- our comps down now in the low double-digit range, our -- as mentioned, our winter and cold weather-related business is running down over 30%.

That product represented roughly 20% of our sales at this time a year ago. So we have that 20% of our business running down over 30%. Our firearm and ammunition business is running down, as I mentioned, over 50% quarter to date. Normally speaking our firearms, ammunition is less than -- meaningful less than 10% of our business, but during the surge of -- that we experienced last year they were running in excess of 10% quarter to date.

So now we have that business -- well over 10% of our business running down over 50%, the winter business over 20% of our business -- roughly 20% running down over 30%. So that creates quite a headwind in our business and certainly affects customer traffic levels. As we mentioned, given the loss of traffic, we're pleased with the sales we're' experiencing in a number of other categories, and we think that is just a very unusual situation.

The firearms and ammunition phenomenon we obviously anticipated. The winter business was not something that we could anticipate. This is -- I think as sort of epic as the weather is back East, I think it's equally epic in the sense of what's going on in our marketplaces, and that clearly has an impacts on our business.

We basically missed the opportunity to sell winter product during the key selling periods, the New Years, Martin Luther King holiday, Presidents Day. Much of our geographies were tremendously lacking in snow. In the limited geographies where we saw favorable winter weather, and most principally like in Colorado, our winter product sales have been solid. Strong and comped up there.

But unfortunately much of our geography is in the areas that are impacted by the drought-like conditions, and for this first quarter it's not simply the lack of snowfall that's affected us, it'sthe warm weather, which creates a double whammy to -- so to speak -- to our business, so.

But, Mark, overall, I do want to -- I just want too make sure it's clear that firearms and ammunition, even though we had the clear peak here in growth in Q1, for all of 2013 our sales for that category were still meaningfully below 10% of our overall sales.

Just -- again, just given how dramatic this impact is, I thought it would be helpful hopefully just to provide more color than we typically do, particularly mid quarter on our sales.

That's helpful. Can you give us and update just on two programs. First, on kind of your analytic software, where you stand, the potential upside left [from] that? And then also on your remodel program?

Sure. I mean, in terms of the analytics, I mean, we remain very excited about the benefits that we're getting in analytics, and we continue to use the experience we're gaining to, we think, to make better decisions in evolving our product mix. It did help us on really the one area that was quite exciting for us in this first quarter to date, and that is the licensed product aspects of our business.

We were fortunate enough to have the Super Bowl winner in our geography in Seattle, and I think the business analytics enabled us to do really a terrific job of getting products out to our stores, of being able to really fine tune and get a great understanding of the stores that have the best chance, and what quantities of a product to try to direct to the stores. Some it's obviously is relatively obvious, but as you go further away from Seattle, having the analytics to help guide our decision making was very helpful.

Are second part of the question was -- what was that?

Remodel.

The remodel.

The remodel program, and specifically what were you -- what was the question? I mean, we're --

Just kind of where you are? What you've got left? What maybe we [could] see remodeled this year? Any uptick in sales that you are seeing out of those?

Yes, I mean, we -- lastyear was I think the first year that we specifically called out a heavier investment in remodeling our store base, and we certainly touched more stores last year than we typically have been touching in a typical year. Probably roughly 50 stores last year.

This year we're' going to continue with that program, and we expect a similar capital investment in our store upgrades. We'll probably really touch more stores this year than last, and it's just varying degrees of investments in each store. We're certainly looking at the 2013 remodels, what we learned from the type of investments that had the greatest impact on our business, and we plan to apply what we learned last year to this year's efforts.

We're excited about leveraging our merchandising initiatives by -- really, and what these remodels are all about, reconfiguring store space, investing in fixtures that we think will better showcase our evolving product mix. The vendor communities has been excited with our efforts, and they're involved in partnering with us. So we're quite happy with what we're doing and certainly are excited about continuing the program this year and beyond.

Thank you.

Thank you. (Operator Instructions). We'll take our next question from Bill Dezellem from Tieton Capital Management.

Thank you. A couple of questions. First of all, relative to the minimum wage increase, when you look back historically, is there a noticeable impact on your sales? Meaning a benefit from that minimum wage increase?

We've never correlated a sales benefit to the minimum wage increase, no. I can't say there is or there is not, but it's not something that we've ever -- I don't recall us measuring and speaking to. Too many other variables. It's never exactly and 11th grade science experiment, where you can isolate the one variable.

Thank you. And another question that's not an 11th grade science experiment either is the store up grade program. Would you discuss some of the things that you are doing? Because it like these are not necessarily full remodels, but talk about some of the things that you have done and what is the overall impact? I won't ask you to isolate any one of the items that you're doing, but what's the overall impact intended to be?

Oh, I think certainly the overall impact is intended to be more sales. And I think again the more obvious area where we see a bang for the buck is in our apparel sales, which over the course of the last couple years has been very strong and I think benefiting a stronger presentation of some of the branded apparel items that we're carrying.

And I mean the efforts again involve reconfiguring space within our stores, getting more vendor supported fixtures and vendor specific fixtures in our stores, and just improving the presentation of the product. Additionally we're focused on some exterior face lifts to our stores, just to get a little more pop into some of our stores as folks are driving by.

And would it be fair to say that ware hearing you correctly here that you are -- you do not have a cookie cutter model that you're coming into every store with for the upgrade? It's really dependent on what that store appears to need the most?

Very fair to say. We don't operate, never have operated cookie cutter stores. Our stores come in all different shapes and to some degree sizes, and so we certainly cannot apply a cookie cutter approach. There's certainly some common themes to what we're trying to accomplish but never on the basis of a cookie cutter.

And given that it's not cookie cutter, this may not be an applicable question, but what is the average expense you're finding that you're spending per store as you're going through the upgrade process?

It's very variable. I mean, again, in some stores it's a major remodeled, which can include carpet, wall graphics, check stands, counters and more. In others it's simply a case of freshening up some fixtures and -- very, very variable.

Bill, our overall CapEx is going to run somewhere in the $3.5 million to $4 million, kind of the -- I mean, our base maintenance is usually around $3 million, and last year we spent about $7 million. We'll probably spend a similar amount this year, and we remodeled --

50 last year so, so divide by 50.

So whatever -- something in the $80,000 range.

Great. Thank you both.

Thanks, Bill.

Thank you. And our last question for the day will come from Mike Baker with Deutsche Bank.

Hi. Thanks. So two questions if I could. One is just on expenses, thinking about [them]. Anything you guys can do in the weaker sales environment to get more [aggressive]?I think you're pretty lean as it is, but anything you can do to cut back on expenses, and as we modeled out, you couple of headwinds maybe with the ACE and the [Internet app spending]. Can you do anything to offset that, or should we expect [development of] SG&A [per foot or] per store, should we expect that to be up? Or, again, can you cut anywhere?

Well, I guess what I can -- yes. I mean, we manage these things, that's one of the things of course we do, Mike, is really manage expenses, and we're going to continue to do that. But I would say that just from an overall kind of leverage standpoint costs are creeping up a little bit, but we're -- we feel good that from a leverage standpoint we should be able to leverage our expenses.

It's something close to a 2% to 3% comp for 2014, and at our low single digit expectation for the balance of the year, I mean we'll be on that cusp atlow single digit, so.

So it's not like you can go in one quarter and [really slash] things, and i don't think you would do that anyway. So you de-leverage this quarter but hope to normalize for the rest of the year?

Yes. Yes. Absolutely. Clearly that is the case.

Okay. And then that 2% to 3% for the [underlying] comp, I guess, [do you picture] -- and we could probably do the math, but if you could help us -- 2013, I think you said full year comp was 3.9%. So if you [adjust out weather] and if you adjust out the ammo and the guns [at the beginning] of the year, and I guess the weather part normalized, right? It was positive in the first quarter, [hurt] in the fourth quarter I think. What's the underlying comps for 2013? Is it in that 2% to 3% range, and is that the expectation that you guys have at least going forward?

Yes, I mean, keep in mind the -- 2013, if you're looking at it on the full year, included the fourth quarter where the comp in the firearms and ammunition was a real drag to the business. So we didn't get the lift that you may be thinking from [before] --

You got it in the first quarter, though, of 2013.

Right.

[So I mean I was just] trying to normalize. Adjust for the weather, adjust for the firearms, what's the real comp of this business?

I think we would have comped a low single digit -- probably a healthy low single digit number for 2013 if you factor out the -- certainly the firearm and ammunition on -- over the course of the year. The weather was favorable in the first quarter, it was unfavorable in the fourth quarter. We thought it was unfavorable in the third quarter from a summer perspective as you -- as we've reported, so I would say somewhere in the low single digits.

And that's a range where you have some (inaudible -- technical difficulties) SG&A leverage and maybe some leverage on the cost of goods sold? And then [is that the way] to think about the long-term model?

Yes, and,Mike, that is not dissimilar to where we were when we entered the recession as well, and we're down from a product -- sales productivity standpoint of a per -- sales per -- same-store sales per square foot versus where we were pre-recession, we're still down 12% or so. So we're -- we've got some ground to make up, but we were low single digit pre-recession, and what we've laid out in terms of expectations for the balance of the year is, again, low single digits. And as I mentioned, it looks like our leverage point is in the 2% to 3% range.

All right. Okay. Makes sense. Thank you.

Thanks, Mike.

That does conclude today's Q&A session. Mr. Miller, at this time I would like to turn the conference back to you for any additional or closing remarks.

Thank you, operator. Well, thank you. We appreciate you being on our call and look forward to speaking with you in our next call. Have a great good afternoon.

And again this does conclude the Big 5 Sporting Goods fourth quarter 2013 earnings results conference call. We thank you again for your participation.