Big 5 Sporting Goods Corp (BGFV) 2014 Q2 法說會逐字稿

Good day and welcome to the Big Five Sporting Goods second quarter 2014 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. At this time, I would like to turn the conference over to Mr. Steve Miller. Please go ahead, sir.

Thank you. Good afternoon, everyone. Welcome to our 2014 second quarter conference call. Today we will review our financial results for the second quarter of fiscal 2014 and provide general updates on our business, as well as provide guidance for the third quarter. At the end of our remarks, we will open the call for questions.

I will now to 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 those more fully described in our annual report on Form 10-K for fiscal 2013, our quarterly report on Form 10-Q for the first quarter of fiscal 2014, 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. When we last reported at the end of April, we indicated that we were sensing what appeared to be some softness in the overall consumer environment. As the second quarter progressed, this softness persisted and began evident to us, as well as I believe to a number of other retailers that have recently reported, that the retail climate has been generally lackluster.

Additionally, our second quarter sales continue to be meaningfully impacted by significantly reduced demand for firearms, ammunition and related products. While we are disappointed in our results, we are encouraged that our sales trends have improved thus far in the third quarter.

Now I will comment on sales for the second quarter. Second quarter net sales were $231.2 million, down 3.6% from $239.9 million for the second quarter of fiscal 2013. Same-store sales decreased 4.9% for the second quarter of 2014, compared to a 4.4% increase for the second quarter of 2013.

The reduced demand for firearms, ammunition and related products accounted for approximately 300 basis points of the same-store sales decline in the second quarter. In addition, sales reflect the small unfavorable impact from the calendar shift of the Easter holiday, during which our stores were closed, out of the first quarter and into the second quarter this year.

For the quarter, we experienced a mid-single digit decrease in customer transactions and a slight decrease in average sale. From a product category standpoint, the general retail malaise appeared to affect all three of our major merchandise categories for the quarter, while the reduced sales of firearms-related products solely impacted our hard goods category.

Hard goods comped down high single digits for the quarter. Footwear comped down mid-single digits. And apparel remained our strongest performing category, comping up in the mid-single digit range for the period. Our hard goods and apparel categories receives some benefit from World Cup-related business during the quarter.

Merchandise margins decreased by 19 basis points for the period compared to the second quarter of last year, when merchandise margins increased by 34 basis points over the second quarter of fiscal 2012.

Now commenting on store openings. During the second quarter, we opened 2 stores in Prescott, Arizona and Fallon, Nevada and ended the quarter with 427 stores in operation. During the third quarter, we have closed two stores, in Redmond, Washington and Santa Rosa, California, as part of relocation, and we plan to open four new stores. For the 2014 full year, we currently expect to open approximately 12 net new stores.

Now turning to current trends. In addition to the ongoing consumer headwinds, the reduced demand for firearms and ammunition products remains very significant to our sales performance, although the impact is moderating slightly from what it was during the second quarter. Also, although difficult to quantify, we believe the ongoing severe drought throughout much of the West, particularly California, is impacting many of our markets, both economically and recreationally.

Despite these challenges, we see encouraging signs in our business. Although same-store sales are running down in the low single digit range for the third quarter to date, we have seen trends improve from the second quarter in a number of our key business metrics. Each of our major merchandise categories of hard goods, footwear and apparel is comping better relative to last year in the third quarter than they did in the second quarter.

Our customer transaction count, which as mentioned was down mid-single digits for the second quarter, is down low single digits for the third quarter to date; and our average sale, which was down slightly in the second quarter versus last year, is now running up slightly for the current period. Additionally, I will note that if we exclude firearms and ammunition and related products, our same-store sales are currently running up in the low single digit range for the third quarter to date.

Given this improved trending in recent weeks, we believe that we're in a position to produce positive same-store sales over the balance of the quarter. We have a number positive factors in play, including initiatives to drive traffic into our stores and easier weather comparisons ahead of us. As a reminder, last year our sales for much of the peak summer selling season in August were impacted by generally unfavorable summer weather conditions in many of our markets.

Finally, regarding the status of our e-commerce platform, we are currently engaged in an extensive testing process internally, and assuming that all goes as planned, we would expect to begin a phased in soft launch of our e-commerce site to the public in September.

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 third quarter guidance.

Thanks, Steve. Our gross profit margin for the fiscal 2014 second quarter was 32.7% of sales versus 33.2% of sales for the second quarter of fiscal 2013. This reduction reflected the 19 basis point decline in merchandise margins that Steve mentioned, along with an increase in store occupancy cost as a percentage of sales, primarily as a result of new store openings.

Our selling and administrative expense as a percentage of sales increased to 30.8% in the second quarter, from 28.8% of sales for the second quarter of fiscal 2013. On an absolute basis, SG&A expense increased $1.9 million year-over-year, or 2.8%, primarily due to higher employee labor and benefit-related expense, added expense for new stores, and costs associated with the development of our new e-commerce platform. In addition, we recorded a non-cash pretax impairment charge of $0.8 million related to certain underperforming stores.

Now looking at our bottom line, net income for the second quarter was $2.5 million, or $0.11 per diluted share, including a non-cash impairment charge of $0.02 per diluted share and expenses related to the development of our e-commerce platform of $0.01 per diluted share. This compares to net income of $6.1 million, or $0.28 per diluted share, in the second quarter last year.

Briefly reviewing our 2014 first half results. Net sales decreased to $462.4 million from $486.2 million during the first six months of fiscal 2013. Same-store sales decreased 6.4% during the first half of fiscal 2014 versus the comparable period last year. For comparison purposes, the Company's same-store sales increased 7.4% for the first 26 weeks of fiscal 2013 over the comparable period in fiscal 2012.

Net income for the first half of fiscal 2014 was $4.6 million, or $0.21 per diluted share, including $0.02 per diluted share of non-cash impairment charges and $0.01 per diluted share of e-commerce development expenses. This compares to net income of $13.6 million, or $0.62 per diluted share, in the first half of last year.

Turning to our balance sheet. Total merchandise inventory was $324.9 million at the end of the second quarter, up 7.4% on a per store basis versus the prior year. The increase in second quarter inventory levels over the prior year largely reflects greater winter product carryover earlier in the year, combined with the impact of lower than anticipated sales, and more normalized firearm and ammunition inventory versus the prior year.

For the third quarter, through July 28, our inventory comparison versus the prior year has improved by roughly 240 basis points from where it was at the end of the second quarter, and we feel good about our ability to right size our inventory position in the second half of the year.

Looking at our capital spending. Our CapEx, excluding non-cash acquisitions, totaled $8.8 million for the first half of 2014, primarily reflecting expenditures for existing store maintenance and remodeling, new stores, computer hardware and software purchases, and investments related to the development of our new e-commerce platform.

We currently expect total capital expenditures for 2014, excluding non-cash acquisitions, of approximately $25 million to $29 million for new stores, store-related maintenance and remodeling, distribution center equipment, and computer hardware and software, including investments related to the development of our new e-commerce platform.

From a cash flow perspective, our operating cash flow was a negative $2.2 million for the first half of 2014, compared to a positive $10.4 million for the same period last year. The decrease in cash flow from operations primarily reflects lower net income and increased prepaid expenses related to the timing of payments for rent and income taxes. For the second quarter, we continued to pay our quarterly cash dividend of $0.10 per share.

Our long-term debt at the end of the second quarter of fiscal 2014 was $68.2 million, up from $44.9 million at the end of the second quarter last year, and from $43.0 million at the end of fiscal 2013. The increase in debt at the end of the second quarter compared to the same period last year primarily reflects higher inventory levels as a result of lower than anticipated sales, combined with the increased funding of other working capital.

During the second quarter, we repurchased 63,012 shares of our common stock for a total of $0.8 million. In the first half of fiscal 2014, we have repurchased 91,524 shares for $1.2 million. As of the end of the second quarter, we had $8.4 million available for stock repurchases under our $20 million share repurchase program.

Now I'll spend a minute on our guidance. As Steve mentioned, sales comparisons continue to be negatively impacted by the reduction in demand for firearms-related products, and the retail environment in our markets and for our consumer remains challenging. Based on results to date for this year's third quarter, we are projecting same-store sales in the slightly negative to low positive single-digit range and earnings per diluted share in the range of $0.24 to $0.32.

Our guidance reflects the previously mentioned variables, as well as expenses of approximately $0.01 per diluted share associated with the development of our e-commerce platform. For comparative purposes, in the third quarter of fiscal 2013, same-store sales increased 1.4% and earnings per diluted share were $0.41, including a $0.04 per diluted share charge for legal settlements.

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

(Operator Instructions)

Sean McGowan, Needham and Company.

Can you give us some clearer picture on what we're up against in the third and fourth quarter regarding the strength of firearms and ammunition a year ago? I had the impression it was going to abate a little faster than this. So what kind of strength are we up against in the third and fourth quarter, and when do you think it becomes not very meaningful headwind?

Yes. Well, there's two issues in play: what we're up against and how it's trending relative to expectations right now. Last year, the ammunition business stayed strong pretty much throughout the year, and was comping very positively. The firearm business, which comped very strong, particularly the first quarter and into the second quarter, leveled off quite a bit over the back half of the year. What caught us somewhat by surprise is how far the firearm business dropped this year, not just from last year, but really back to levels that we really haven't seen since 2008 -- into the 2008/2009 period.

So, we do now believe that we are going to continue to see some significant headwinds, depending when the firearm business -- I think that one way to say it is that we've sort of lost touch with what normal is for firearms. At this stage of the game, it's certainly been running -- I think there was a period of some overconsumption, and I think we're in a correction period. And when that period resolves itself is somewhat of a guess. We would expect that the firearms and ammunition business to impact our Q3 sales, somewhat similarly to Q2, a little bit less, and we would think somewhat less in Q4. But it's still going to be a significant headwind.

In terms of ammunition, I think one of the variables that are in play is availability of, particularly, 22 ammunition. And I think we're not alone in seeing that those have been relatively hard to come by. And not only does that affect the ammunition sales, but to, I think, a meaningful extent, it affects our ability to sell 22 rifles, which are pretty much core to our firearm business.

Okay. That's very helpful. Thanks, Steve. And, Barry, if you look at your guidance on sales for the third quarter, it would seem to suggest that given the additional EPS guidance, where is the pressure coming from that would allow for a basically flattish outlook on sales to have such a negative comparison on the bottom line? Is it gross margin or selling expenses?

It's really a combination of things, Sean. It is clearly gross margin. We're impacted -- first of all, at a flat same-store sales growth, call it, up a little, down a little, we're clearly deleveraging all of our expense categories at that rate.

But you've also got -- we are anticipating, to some degree, a higher level of promotional activity. And frankly, we could say, to some degree, it's normalizing. Because last year, based on the strength of the Business, we really didn't have to be as promotional. And this year, we're kind of getting back to somewhat of a normalized promotional cadence. And in the third quarter, may step it up just a little bit to try and drive traffic and sales. So there we do expect some pressure on our merchandise margins in the third quarter.

In addition, our occupancy and warehousing costs, and SG&A expense, will also be higher year over year, due primarily to store growth, along with higher labor and employee benefit-related expense. One thing to point out, of course, is that the California minimum wage kicked in here on July 1, and so we had the impact of an increase from $8 to $9 on our California store base. And that had the impact of roughly a $400,000 to $500,000 impact on the third quarter.

Okay. Thank you.

Sure.

Adam Sindler, Deutsche Bank.

A couple of questions, if I may, following up on guns and ammo, and then some other of the prepared remarks. First, on the guns and ammo, just to make sure we have this correct, I believe you said in the prepared remarks that it was about a 300-basis-point impact in the second quarter, and that it abates a little bit in the back half of the year. But then when you compare that to commentary that comps would be up low-single digits ex-guns and ammo versus down low-single digits, that seems to imply about a 500-basis-point impact in the third quarter. So, somewhat worse in the second quarter.

And then just as it relates to firearms and ammunition, we are seeing the NICS, the background check registration data improving somewhat, up year on year in each month of the second quarter. Is it potential that you're losing some share, as there is sort of a shortage in the ammunition?

Okay. Let me -- I'll answer your second question first, then try and get a little clarity on the first question you asked. But in terms of our firearm sales, I think it's difficult to compare our firearm business with many of the others in the industry. And you have to read the NICS report carefully. We don't have the breadth of inventory in this category that others in the industry have. We carry only long guns. We don't carry handguns or centerfire or modern sporting rifles, so-called assault rifles.

It's our understanding that the sales of these products have remained more brisk. If you look at the NICS report, there's a tremendous disparity between long gun and handgun sales; handguns being much stronger than long guns. So, I think you should keep that in mind in looking at our Business.

I got a little confused in your first question, when you were trying to get the clarity of the 300-basis-point impact to sales. So, in Q2, we said we comped down 4.9%. We said the firearms and ammunition, and related products, accounted for about 300 basis points. So, the takeaway from that is we still would've comped down a low-single digit in Q2 if we discounted the impact of the firearms and ammunition.

What we are encouraged about is the fact that we indicated that we're comping down low-single digits in the third quarter to date. And if we were to remove the impact of firearms and ammunition, which we suggested was slightly less than the 300 basis points it was in Q2, that we'd be comping up low-single digits. Does that make sense?

Okay. Yes, certainly.

And then two quick follow-ups, if I may. Just the commentary on apparel: It was hurt a little bit by malaise, yet was still up mid-single digits. Does that imply that you potentially think it could have been up more high-single digits, low-double digits excluding that?

We think so; no question about it. I think this general, call it what you want, retail malaise -- it's affecting the consumer, affecting traffic. And I think that pretty much affects all categories. So, we feel very good about what we're doing with apparel.

It got a little benefit, certainly, from the World Cup; a small benefit from the Stanley Cup run of the Los Angeles Kings. But even were we to discount the impact of World Cup and LA Kings activity, our apparel comped up very comfortably. (multiple speakers) Without the malaise, it would have been even better.

Okay. And one just real quickly, last one, just as it relates to the weather and guidance for the third quarter. So, even with the drought this year, the impact of weather will still be more favorable to last year?

Well, it depends how weather plays out. But we think -- the drought, I think, is significant. We got rivers that are dry, lakes that are low, marinas that are shut. They're talking about early closure of recreational areas. That's pretty impactful.

That said, we think the weather was so contrary last year for most of August that, assuming we get favorable weather -- and at least it's been favorable over the last few days, and we certainly see the benefit of our Business -- we think we have opportunities to offset the impact of the drought. No question, things would be a whole lot better were the drought not to occur. But fortunately, the oceans are still open. And if the weather cooperates, that helps as well.

Understood. Thank you very much. I appreciate it.

You're welcome.

Sean Naughton, Piper Jaffray.

So, quickly, on just the -- Barry, you mentioned some things about occupancy. Just curious about what's driving that up. I did think, at one point in time, you had lowered the threshold of that occupancy leverage down to close to flat. But are there investments that you're making or are there things that are happening within your occupancy number where that's changing a little bit, at this point in time?

Sean, I don't recall -- we've been working really hard, and have for the last several years, to try and mitigate any increases. But there's been significant inflation in the occupancy side for some time now. And I think that because of our hard work, we've been able to lower the bell curve a little bit.

But, no, there's pressure there, a combination of new stores and just when -- we've got some pretty nice leases that date back years and years and years. And when they come up for renewal and we've got to negotiate them, there's definitely some occupancy cost creep there. So that's an impact, clearly. And then, really at these levels, that's one impact, and then we're deleveraging on expenses and DC costs, as well, at these levels.

Okay. That's helpful.

Anything on -- you guys did mention the environment is a little bit challenging out there. And I don't think you guys are alone. At retail, at this point, it does seem like the consumer's a little bit softer.

Any thoughts on -- you guys talked about gas prices before and those types of things. Obviously, that is starting to come down. Any thoughts there, Steve, on whether or not there's other factors at play that could be impacting your consumer, based on your research?

No, I think it's the overall general economy that has the greatest impact of our consumer. I think it's a little perplexing why the consumer is seemingly as soft as they seem to be. And, as you mentioned, I think we've all heard -- I don't think we're alone.

I think others can try and figure that out. The gas prices -- I think it's a plus that they do seem to be coming down somewhat now. I think, obviously, the drought issues.

And it's not just the recreational impact. There's a real economic impact to the state. I think the state of California -- I think I saw a figure that was pretty remarkable, saying that the drought is going to cost the California economy $2.2 billion and 17,000 jobs alone this year. I think it's particularly tough in some of the farming communities that we serve.

The inflation -- I think the issue for our consumer, and may be contributing to this so-called retail malaise, is the inflation in food, which perhaps tells part of the issue or another consequence of the drought that affects our consumers, and everybody's consumers' pocketbooks. I think in this day and age, we see that the consumer being pretty sensitive to anything that dips into their wallet.

Got it. And then, you're obviously talking a little bit about the recreational categories, I think on the lake categories, et cetera -- maybe the marine stuff. But is there anything in apparel or footwear that has been trending maybe a little bit better? Are there pockets of excitement inside of the store there in any of those soft-good categories that you're seeing?

Absolutely. The fact that, given all of the headwinds that we're facing, again, absence the firearms, we're comping positively. And we have a lot of good things happening within the four walls. And certainly, number of apparel has been on a good roll for a long time. And I think our efforts to drive more sales with brand and apparel, to use our analytics to fine tune individual store allocation has been very much a positive.

Our team sport business has been strong, particularly soccer. I think the World Cup was a real lift to that category.

Our other aspects of our outdoor business have been very positive, outside of the firearm arena. Our camping business seems healthy. A number of categories -- I'm not going to get too granular, just for competitive reasons. But we've got a lot of good things going on in the Business.

And just if I could sneak one last one in. Anything on your mix within those categories, in terms of your ASPs and your units? What's driving some of the improvement and a little bit of the growth? Is it a combination of both getting a little bit of pricing, or is it more mix related or more unit volume that you're driving?

I think it's some stepped-up price points is driving the higher ticket. The fact that we're able to achieve higher -- as we said, our ticket is up slightly quarter to date, despite our firearms, which are obviously high-ticket items for us, being considerably down, suggests that we are getting a higher ring across a number of categories.

Okay. That's helpful. Thank you.

You're welcome.

(Operator Instructions)

Mark Smith, Feltl and Company.

This is Shannon Richter on for Mark Smith. I just have a few questions for you guys here. Your eCommerce solutions business -- are you guys on budget with that?

Can you speak a little louder, please?

I'm sorry. With your eCommerce solution, are you guys on budget with that?

I think our eCommerce program is moving forward as planned, I should say. And I think we're pretty excited about the planned launch here for September.

And I, just from a CapEx standpoint, from an expense standpoint, we're not expecting any kind of material revenues for this year. We're expecting our net expenses for the year to be about $0.03 to $0.06, which is very consistent with what we've said so far earlier in the year. And our CapEx is roughly $4 million to $5 million in terms of spend for the eCommerce solution, which is, I don't think, out of the ordinary for this kind of a project.

Perfect. Thank you. And then, can you discuss the sales lift out of your remodels?

Discuss the -- say it one more time? We're having a hard time hearing you.

Sales lift out of your remodels?

Yes. We've been investing more heavily in existing-store maintenance and remodeling this year as we did last year, and we've been pleased by the results. I think there's too many factors in play, and there's too many variables in the types of remodels and investments that we make. But I'll tell you, we're very pleased and absolutely feel that it's creating very positively to sales. I think particularly in our apparel sales, which I think is a category that generally stands the most to gain as we go in and freshen up and initiate some new fixtures within our stores, is giving us a great lift.

Perfect. Thank you. And then just last question: How much of your inventory increase was in firearms and ammunition?

I don't have that figure in front of me. I mean, it was -- last year, particularly in ammunition, we were really chasing the product. So we were significantly underinventoried in the product at that time; where this year we're sort of caught up, with the exception of 20/22 ammo. But I think in round figures, it could be 100 basis points, plus or minus, of the increase.

Perfect. Thank you, guys, so much.

Sure.

David Magee, SunTrust.

I just had a couple of questions. One is: You had mentioned with regard to prospects for positive comps in the second half of the year, some programs, I guess, are new to drive sales. Can you give a little more color regarding that?

Well, I'm not going to give too much color, just because for competitive reasons. But we've got, we think, some strong initiatives to drive traffic, and strong promotions to see if we can excite the consumer in a challenging environment. That's a big part of it.

We're excited by a lot of efforts to bring in some new products of a number of categories in footwear, in particular, to try and help jump start that business. It's been a little more challenging for us. But all in all, just trying to -- go ahead.

Are you changing how you market or advertise the Business in the second half of the year?

Certainly not materially. We've been evolving our marketing over some time. We're still very -- we drive a ton of business through print advertising. We've been shifting some of our spend thoughtfully from a print to digital. We've been doing that now for certainly several years, and we're continuing in those efforts. But it's more an evolution than a revolution.

Thanks, Steve.

And secondly, Barry, you mentioned, I think, something about inventory looking better since the quarter end, on a year-to-year basis. Did I hear that correctly?

That's right, David. Since the end of the second quarter, we're down about 240 basis points from where we ended the second quarter, as we speak.

So the year-to-year change is lessened by that much. Is that what you're saying?

That's exactly right. That's right.

As a reminder, a significant portion -- somebody asked me the question about how much the firearms and ammunition added to the inventory increase, and I suggested that it was about 100 basis points, and I'll sort of stick to that. I think that's reasonably close.

A much bigger number is the winter carryover, after the dismal winter season we had. And that inventory will basically get rightsized as we've obviously adjusted our buy for the 2014-15 winter season. So, all in all, certainly our inventories are high -- higher than we'd like to see them. But we feel very comfortable about our ability to rightsize them over the back half of the year.

Is some of the pressure on the gross margin in the third quarter related to that, just trying to get that inventory number down?

I would say it's more related to try to hopefully drive the consumer into the store in a challenging consumer environment, not so much a case of trying to rightsize our inventory. So I think we're going to rightsize our inventories [in half] to already to a meaningful degree over the month of July, just by adjusting certain orders. Any time you get surprised by some shifts in business trends, you wind up with a little more than you'd like. But most of that is easily fixed by adjusting orders.

Thank you. And just lastly, you all might be a little bit more promotional. What are you seeing with regard to your competition out there in recent months? Are others also being more promotional, as well?

I would absolutely say yes. I think that, not just our competition, but I think much of the whole retail environment has been, I would argue, more promotional than normal over recent weeks. And I suspect it's likely in response to their retail headwinds that we've mentioned and certainly others have spoken to.

Great. Thank you, and good luck here.

Thank you, David.

Bill Dezellem, Tieton Capital Management.

I had a group of questions. First of all, relative to the guns and ammo, did that rate of negative impact increase in the second quarter relative to the first, or decrease? I've been a bit unclear what you were trying to communicate there.

The rate -- the impact of firearms and ammunition was significantly larger in the first quarter. I think we suggested that it was about 650 basis points in Q1 of 2014. So it certainly was a whole lot less in Q2 than it was in Q1.

Okay. That is helpful. Thank you.

And then, I know that you generally don't do the sequential comparison, but gross margin sequentially was up, and yet sales were flat. And so that's a bit unusual and favorable, and that's why I'm hoping you can help us understand what might have led to that sequential increase on flat sales, please?

I'm not sure I follow the question. Say that again, Bill?

Your gross margin was up in Q2 versus Q1, and sales were basically flat Q2 versus Q1. And so that's a bit counter to be thinking that the gross margin would have increased on flat sales. And again, I recognize you normally don't do the sequential comparison; you tend to prefer to do a comparison over the prior year. But I'm hoping you can shed some light on this, if you could.

Yes. You're right, Bill. Sequentially is driven so much based on just seasonality and the different mix of products that take place and the new stores coming online, from an occupancy standpoint, and all those kinds of things, really kind of muddy the water. But the biggest thing is seasonality. So to try and talk about these things quarter to quarter, it's very, very difficult. It makes a lot more sense to talk about it year over year.

All right. Thank you.

And then the final question -- and it may have just been addressed by the prior questioner. But do you have any important merchandising initiatives for the second half of the year that we can talk about?

I do think it's the same answer I just gave that we're pretty excited about some initiatives and promotional plans to try and drive traffic and sales. We're certainly working hard on our footwear. We know that's been a more challenging category for us. And I think we're, I guess I can say accelerating the rate of change within the category, looking to apply some more of what's been successful in apparel to that category, shifting more of our buy dollars to certain branded products, in some cases at elevated price points. We're pretty enthused by that.

Again, a number of categories that are performing strong, we just want to build upon. And we feel pretty good about what we're doing in the Business. To us, the big question mark out there is just kind of what the -- how to battle through this retail malaise that we're talking to.

Great. Thank you, both.

Thank you, Bill.

And we'll take our final question from Sean McGowan of Needham and Company. Caller, your line is open. Please go ahead. Caller, please check your mute button.

It appears there are no further questions at this time. Mr. Miller, I'd like to turn the conference back to you for any additional or closing remarks.

All right. Thank you. We appreciate your interest in Big 5 Sporting Goods, and we look forward to speaking to you on our next call. Have a great afternoon. Thank you.

This does conclude today's conference. Thank you for your participation.