Burlington Stores Inc (BURL) 2010 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Burlington Coat Factory year-end 2010 conference call. During the presentation, participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded Thursday, April 21, 2011.

I would now like to turn the conference over to Bob LaPenta. Please go ahead, sir.

Thank you, operator. Good morning, everyone. We appreciate everyone's participation in this morning's conference call to discuss Burlington Coat Factory's fiscal 2010 operating results. I am Bob LaPenta, Vice President and Treasurer of the Company.

With me today are Tom Kingsbury, our President and Chief Executive Officer; Todd Weyhrich, our Chief Financial Officer; and Marc Katz, our Executive Vice President of Merchandising, Support and Information Technology. Also attending today's call is John Crimmins, our new Senior Vice President and Chief Accounting Officer.

We will begin with a review of our operating results followed by a discussion of the business conditions and business performance. Tom will then briefly discuss sales results and our top three priorities. After the prepared remarks, this group will be available to answer questions. This call may not be transcribed, recorded, or broadcast without our express permission. A replay of this call will be available for 24 hours.

In addition, I need to remind everyone that information provided on this call is primarily related to the Company's results of operations for the fiscal year ended January 29, 2011. Remarks made on this call concerning future expectations, events, objectives, strategies, trends, or projected financial results are forward-looking statements that are subject to certain risks and uncertainties. Actual results or events may differ materially from those that are projected in such forward-looking statements.

Such risks and uncertainties include those that are described in the Company's annual report on Form 10-K and in the Company's other filings with the SEC, all of which are expressly incorporated herein by reference.

We will now discuss our results for the fiscal year ended January 29, 2011 compared with last year's recast 52-week period ended January 30, 2010. As part of our routine closing process, certain timing adjustments were made to the recast financial statements to make them comparative to the current period.

I will now turn the call over to Todd.

Thank you, Bob. Good morning, everyone. I would like to start by providing some information regarding our new financing arrangement, which was successfully completed during the first quarter of fiscal 2011. On February 24, 2011, we completed the refinancing of our term loan senior notes and senior discount notes. As a result of these transactions, the senior notes and senior discount notes with a total aggregate carrying value at January 29, 2011 of $401.3 million were repurchased.

In conjunction with that repurchase, we completed the sale of $450 million of 10% senior notes due 2019. Additionally, the term loan with a carrying value of $777.6 million as of January 29 has been replaced with a $100 senior secured term loan facility. In connection with the offering of the notes and the refinancing of the term loan facility during Q1 of fiscal 2011, a cash dividend of $300 million was declared to the equity holders.

Borrowings on the ABL line of credit related to these transactions were $101.6 million, all of which were repaid during the first quarter of fiscal 2011. These transactions have substantially extended the maturities of our debt incidence, resulting in no significant maturities related to our new term loan or our new notes until fiscal 2017. This provides us increased flexibility to continue to invest in the Company's core operations through various capital expenditures and other initiatives.

I will now move on to our financial performance. Net sales for fiscal 2010 increased $146.7 million or 4.2% to $3.669 billion. New and non-comparative store sales increased $174.3 million, partially offset by a decrease in net sales related to closed stores.

Comparative store sales decreased $6.3 million or 0.2%. The decline in our comparative store sales for the year was driven by the unseasonably warm weather in September and October of 2010. Comparative store sales during the fourth quarter of fiscal 2010 increased 1.2%. Cost of sales as a percent of sales improved to 61.4% during fiscal 2010 compared with 61.9% last year. The improvement is the result of the need for fewer markdowns, increased freight expense period over period, and a slight improvement in shrink expense.

During fiscal 2010, selling and administrative expenses as a percentage of net sales improved slightly from 31.6% in the prior period to 31.5%. Total selling and administrative expenses increased $42.6 million compared with the prior period, driven entirely by new and other non-comparative stores. Selling and administrative expenses related to our comparable stores and corporate locations decreased $3.7 million primarily related to decreases in our workers' compensation, general liability, and occupancy-related expenses.

Interest expense increased $14.9 million to $99.3 million during fiscal 2010 compared with the prior period. The increase is primarily driven by an increase in our non-cash interest rate cap expense of $10.9 million. Also contributing to the increase was interest incurred as part of a litigation settlement and increased commitment fees. These increases were partially offset by lower average interest rates and lower average balances on our term loan and ABL line of credit.

Adjusted EBITDA during fiscal 2010 increased $31.3 million or 10.2% to $331.8 million, primarily driven by the total sales growth of 4.2% and our improvement in gross margin rate partially offset by incremental costs of new and non-comparative stores, as previously mentioned.

During January of fiscal 2010, given the strength of our business performance and the cash generated throughout the year, we elected to advance pay $237.7 million of payables as part of our working capital management initiative. In addition to the advanced payment of our payables, we estimated that our excess cash flow payment related to the term loan would be $75 million and with lender approval, we advanced paid the $75 million as an optional prepayment in January of 2011.

Taking these transactions into account, at the end of the year we had $30.2 million in cash, $168.6 million in borrowings on the ABL, and $180 million in unused availability. Today we have $17.8 million borrowed on our ABL and our availability on the ABL has increased to $390.3 million. We expect to be entirely out of the line by the end of the quarter.

We continue to be in compliance with all our bank agreements and financial covenants. We believe that significant additional covenant cushion compared with the similar periods a year ago will continue to be generated throughout the next fiscal year as a result of both an improvement in our overall operations as well as less restrictive covenants as a result of our refinancing.

We believe that the cash generated from operations along with cash on hand and the availability under our ABL line of credit will be more than sufficient to fund our expected cash flow requirements and planned capital expenditures for the foreseeable future.

Merchandise inventory at the end of the year was $644.2 million compared with $613.3 million in the prior period. Comparative store inventory decreased slightly as a result of our ongoing initiatives to enhance our merchandise content and freshness. Accounts payable as a percent of merchandise inventory at the end of the year was 29.6% compared with 22.8% in the prior period. These percentages reflect our working capital management initiative, which resulted in the advanced payment of certain payables of $237.7 million at January 29, 2011, and $274.8 million at January 30, 2010, thereby significantly reducing our accounts payable balance as of those dates.

During fiscal 2010, we spent $119.6 million net of $19.4 million of landlord allowances and capital expenditures. During fiscal 2011, we estimate that we will spend between $125 million and $135 million net of the benefit of landlord allowances. These capital expenditures are expected to include $68 million net of landlord allowances related to store expenditures, $17 million to support information technology, and $45 million to support continued distribution facility enhancements and other initiatives.

During fiscal 2010, we opened 25 new stores including six relocations. For fiscal 2011, we are planning to open between 18 and 23 new stores.

I would now like to turn the call over to Tom Kingsbury.

Thank you, Todd. Good morning, everyone. In addition to Todd's comments, I will provide some additional information about our sales performance and an update on our key priorities.

As Todd mentioned, total sales for the year increased 4.2% and our comparative store sales decreased 0.2%. We experienced strong performances in key businesses that cater to our core female consumer, such as dresses and suits, intimate apparel, accessories, and shoes. In addition, we experienced growth in our men's and home divisions. Our coat and outerwear business experienced declines, as well as Missy sportswear and Baby Depot.

By geographic region, the Southeast and Southwest outperformed and we were weaker in the Midwest and the mid-Atlantic.

As I discussed with many of you on the call during our recent refinancing, I feel very good about the progress that we made in 2010. The majority of our businesses are performing well, our [five GMM] structure has now been in place for six months and we have gone back to what was successful in the past as it relates to the right balance of upfront, in season, and opportunistic purchasing. I firmly believe we are well positioned for 2011.

I would now like to give an update on the Company's top three priorities -- merchandise content, receipt management, and the store experience.

Merchandise content continues to be our first priority, designed to ensure that we deliver consistent flow of trend-right national brands at outstanding values. We continue to stay focused on developing assortments that reflect a good/better/best strategy across many lifestyles. Those areas I previously mentioned, dresses and suits, accessories, intimate apparel, and shoes have done a very good job at delivering a balanced assortment on a consistent basis.

Where we have not consistently executed the strategy, we are performing below the average for example Missy sportswear and coats. These are key areas for us to turn around in 2011. We continue to believe strongly that our customer is excited about our everyday low price model. The consumer can come into our stores every day and feel confident that she is getting a good deal.

Our second priority is receipt management. We continue to manage our receipts based on a receipt-to-reduction ratio with an emphasis on liquidity. This affords us the ability to buy more goods opportunistically in season to take full advantage of a very good supply of merchandise that is available in the market. By maximizing our in-season buys, we believe that we are able to take advantage of known trends and emerging businesses as well as drive better terms with our suppliers.

We were pleased with the overall currency of our inventories at the end of the year; the percentage of inventory 91 days and older improved versus last year.

Our third priority entails refining our store experience to the eyes of the customer. We continue to measure 13 different aspects of customer satisfaction through our in-store customer satisfaction survey program. I am pleased to report we experienced 11% improvement in overall satisfaction versus last year.

Some of our initiatives that are currently underway include rolling out our new design characteristics to all new and remodeled stores. At the end of the fiscal year, we had 46 stores that reflected elements of this new design.

We are implementing a store refresh program in stores that have certain needs such as new carpet, painting, fitting room improvements, and various other improvements. We have completed store refreshes in 53 stores during the past two fiscal years and expect to continue this program going forward.

We are conducting lighting retrofits which will make the stores more energy-efficient while improving the lighting within the stores to make it easier for the customers to navigate the stores. We have completed lighting retrofits at 144 stores over the last two fiscal years and expect to continue an aggressive lighting retrofit program going forward.

In closing, I would like to thank our store and corporate team for contributing to our 4.2% increase in total sales and a 10.2% increase in adjusted EBITDA.

In addition, I would like to thank our vendor community. We continue to receive outstanding support and involvement. They are excited about our growth and they continue to assist us in developing strong merchandising strategies.

With these comments, I'm going to conclude our prepared remarks. Operator, we are ready to begin the question-and-answer session. Thank you.

(Operator Instructions). William Reuter, Bank of America Merrill Lynch.

Good morning, guys. In terms of -- your gross margins were up nicely in the fourth quarter. I'm wondering if you can talk about the mix of in-season versus preseason products and how this mix would have compared to the comparable quarter in 2009?

As I have been saying on previous calls, we have moved towards more of a mix of in-season opportunistic goods. And previous years, we would have had the more preseason goods. We are trying -- we are at a model broad brush -- a third preseason, a third in-season, and a third opportunistic. So -- and that's overall for the total Company.

So the fourth quarter would reflect more in-season opportunistic goods versus the previous year.

Bill, the thing that I would add to that as it relates to margin rate for the year, we did come in a little bit better for the full year rate than we had in our original plan, and that was really driven by the combination of all the things that the merchant team has been doing to improve our model, get back to what made us successful, and to keep the inventory more fresh, to take markdowns more currently.

That all together resulted in a need for lower markdowns this year and we did have a little bit of a decrease in freight expense and shrink versus where -- what we had in our original plan. So those were the primary drivers of the margin differential.

I guess on what -- you mentioned shrinkage. Can you talk at all about where we are in that initiative? I don't know if you could tell us where your shrink is at this point as a percentage and where you think that can go either in 2011 or longer term than that?

Yes, we have not disclosed the detail what the shrink rate is. Obviously we've not been happy with it for the last couple of years. The shrink rate that we ended for 2010 was a very slight improvement from where we were the year before and if we look at basically the trajectory of what our shrink results have done the last couple of years, we look at that as a very good improvement. Because, while we did -- obviously when we took inventories a year ago, we knew that we were still on an upward trend and we worked this last year to build the asset protection team and the procedure changes to better control our shrink.

We really didn't get the full benefit of those initiatives and certainly the initiatives that we put in this year aren't everything that we are going to do. We only got that benefit for the last three or four months of the year. So basically we look at that as we have turned the tide and we think it is moving back the other direction. We do expect there to be additional improvement in this next year, but we have not modeled in a significant change in this next year. We really think it's 2012 is where the big change will come.

So in the end we are happy. We have clearly made progress, but we do have a ways to go to get back to basically our historical rates, which is what we're expecting in the 2012, 2013 timeframe.

Bill, just to piggyback on what Todd just said -- your first question was related to gross margin in Q4, so this year we did come in, as Todd mentioned, slightly better than what we had been reserving for throughout the year.

The year before, we came in worse and all that hit in Q4, so that shortage difference year-over-year was one of the drivers of that better margin rate in Q4 that you asked about.

Okay, then just one last one from me. As we're thing about the first quarter, I am wondering if you guys could comment on whether the cadence of discounting whether any sales that you're going to have may have shifted between the first and second quarter, how you're discounting those in 2011 versus 2010 as we start to think about how that might play out from a margin perspective?

Well, I don't think there's going to be a big change between first and second quarter. The best changes really occurred based on the Easter shift this year between March and April, so between first and second quarter there really isn't any material changes.

Okay, that's it from me. Thanks, guys.

Grant Jordan, Wells Fargo Securities.

Good morning. Thanks for taking the questions. My first question, if you can maybe just talk about the higher apparel prices and how you expect that to impact your business model as well as your customers?

Well, first of all, we've talked about this before. We really feel that based on our model and based on the fact that we are buying more in season and more opportunistically, we will be able to continue to deliver a lot of great value to our customers overall.

Candidly, it should help our business because obviously the apparel prices are impacting all retailers and based on our value equation, we really feel that we will be able to really get some market share based on that because customers are going to continue to want to buy value and we will be able to deliver it to them.

And again, changing our model or going back to the original model in terms of buying more opportunistically, that should help us. Candidly, there's a really great supply or good supply of product in the marketplace right now that we are taking advantage of so that we can really mitigate any increases that would occur in the later half of the year.

Do you think that one of the reasons why there is such good supply of inventory in the market is that because other retailers are just trying to be conservative with the unknown of higher apparel prices?

I think that's part of it. I think overall, plus relative to last year, we are able to take advantage of it more based on changing the model and having money to buy every single week. We are in the market weekly and we have money now. We have really worked hard on our receipt flow and making sure we have open to buy every day. So the model change and the fact that we have money to spend to buy goods is really what's helping us get more goods, but there is a good supply.

Okay, then my last question, during the roadshow you talked a lot about the new merchandising team. Maybe just give us an update in terms of what you've seen, kind of when the timing of when all the new products will really flow through the system and some of the metrics you expect to measure the new merchandising team.

Okay, well the team really, the last general merchandise manager finished onboarding on November 15. So I really feel that the change in the product that will be coming in really will occur really in the second quarter of this year going into the fall season. So what was the last part of your question?

Just kind of how you're going to measure that. Is it strictly same-store sales or --?

They're measured based on sales and gross margin performance.

All right, thank you.

Emily Shanks, Barclays Capital.

Good morning. I wanted to ask a follow-up on Bill's question around the promotional cadence. I just want to be crystal clear because I know -- and the first and second quarter of 2010 it seemed like there was -- if I have my numbers right -- a $35 million impact to gross profit. As we look this year 1Q '11, 2Q '11, there is going to be no year-over-year difference, right?

Yes, Emily, in 2010 when we had that issue, it was really related to changing our fiscal quarters and what we have done in the quarters that prior year. So what our -- this year numbers that happened last year are comparable to what we would be going across in 2011. So we will be comparable to last year now and when we talked about that last year it was because the prior year calendar change related to the fiscal year end.

Perfect. Okay, thank you. My other question is around some of your prepared comments talking about coats perhaps being an underperforming category. I was wondering if you were seeing an increase in competition? And if that's the case if you could comment if it was more out of the department store format or more the discounters or sort of what was driving that?

Candidly, it wasn't really because of the competition. It was really things that we did internally. We changed the mix of our assortment relative to how we had been operating before. We really weren't taking full advantage of the model in terms of buying goods in season opportunistically. But it's really an internal problem. We have a new general merchandise manager running that division that has a lot of coat experience and he is helping us craft the assortment so that we can be successful in fall of 2011. But it was really more of what we did versus what the competition was doing.

Okay, great. My final question was just a bigger picture question around your customer relationship management. I just was curious; do you have a formal CRM system in place? Are you targeting customers specifically via email, mailings, etc.? If you could just give us an update on your strategy there.

Sure, we do have a CRM in place. It's fairly new, but it's building overall and we are really working hard really to identify who our customer is and where they are buying within our store overall. But we are using emails. We've been able to really grow our email file over the last 12 months and it's one of our key initiatives. It's really a great way to really reach the customer at very -- at low cost overall, so it's very efficient. So we are doing all that. That's something we're working really hard on in 2011.

We feel that's important. We started to get it in place last year and we are going to continue to grow it.

Great, best of luck. Thank you.

Carla Casella, JPMorgan.

This is [Paul Sohnhauer] for Carla Casella. I just kind of wanted to ask you a follow-up in terms of your merchandising mix preseason versus in season. I was wondering what the margin differential was on those?

Really it's not material, the differential. We really use the in season and opportunistic buys to really pass on more value to the customer. So it's really not material.

Got it. Thanks, guys.

Karru Martinson, Deutsche Bank.

Hi, it's [Pat DiMeglio] stepping in for Karru. What is your ability right now to reduce SG&A costs going forward?

We have had -- this is Todd. We have had an ongoing initiative for a few years now to continue to challenge the expense structure of the Company. We talked about this a good bit during the refinancing and there really hasn't anything changed. We are undoubtedly continuing to pursue opportunities there and we do think there are material dollars to go after, but we are without question reinvesting the vast majority of those back into the Company.

Tom has talked about the initiatives that we have had over the last couple of years and strengthening the team and improving our execution ability through process improvement changes.

So you shouldn't be modeling in dramatic changes in the expense structure because we are using those savings to invest in our ability to execute better with the primary objective here being to drive comp store sales.

Okay, thanks. Also can you provide an update on timing of your new systems rollout and pretty much when we should expect to see some benefits from it?

Sure, we can talk about that briefly. There's really been no changes in the timeline. We are going live with certain aspects of the system here in the fall of this year, but it's really starting next year and in the back half of 2012 that we expect to have real differences in our ability to execute and have better markdown optimization and better allocation optimization.

So when you turn one of these on, it's not a flip the switch and everything changes. There's a maturity curve as folks learn to use the system and as we tweak settings and so forth to make sure that we ultimately are getting the best benefit.

Okay, thank you. So moving on, the quarter seemed a bit soft after I guess the one third quarter that depressed outerwear sales. What do you think happened to those expected sales when the weather got colder?

Is your question when we had the warmer weather in September and October, did we recapture those?

Yes, exactly, were they recaptured? Do you feel like a lot of them were recaptured, they were pushed forward or some of them were lost?

Well, overall based on the comment I made on our coat assortments overall, we feel that we probably lost some business in coats because we underperformed, but we did recoup. Our trend was down 5.6% in the third quarter and we picked up 1.2% in the fourth quarter, so yes, we got some of it back. We do obviously need to do some work on our coat assortments, as I mentioned, and perform well for next year.

All right, thank you. Just lastly with new store development, do you feel committed to the big box concept or do you think Burlington would work as a smaller format store?

Well, yes, we're definitely going to continue with the big box formula. Could we have a smaller box? We are opening some smaller box, slightly smaller boxes going forward just to see what -- how they perform. One of the keys we really feel about our overall business and our business model is we do have a differentiated box overall based on the fact that we do have a big coat business. We have our Baby Depot business. We have nice sized youth business and we really feel the stores need to have complete representation of our assortments and our departments to really be successful and continue our differentiation overall.

So we are still going to have larger boxes than some of our chief competitors.

Okay, thanks very much. That's it for me. Have a good day.

[Martin Dunn], Highland Capital.

A couple of clarification questions, Todd, on the cash and restricted cash on the balance sheet. I think you mentioned that there's currently a $17 million ABL draw, but I missed the cash and restricted cash current balances. Can you provide that?

Martin, this is Bob. Yes, we currently have $17 million outstanding on the ABL. We repaid the ABL earlier in the quarter. The borrowings currently is from the current 10th of the month payment, but we expect to be fully out of it by the end of this month. The cash at the end of the year was around $30 million unrestricted but in addition to that, there is some restricted cash that sits on the balance sheet that's really used as collateral for some of our workers comp and general liability reserves that we set up for our insurance programs. That's around $22 million, $23 million.

Right, and then I guess you have an update? I think you provided the current balance on the ABL. Can you provide a current balance on the cash?

We don't cut cash off daily, but we will give you the quarter end cash information when we come out and report our first quarter.

It just doesn't fluctuate very much during the quarters anyway.

But essentially we have plenty of liquidity and availability between our cash balances and our line of credit.

I guess what I was just trying to get to is I know that with the refinance there's a lot of moving parts and then with the dividend getting paid out post the quarter numbers or the year-end numbers, excuse me, I was trying to get a sense of where we sat kind of roundabout on a cash balance today.

Well, cash balance is essentially when we are borrowing. We use all the cash -- we sweep all the cash first to pay down ABL balances, so we currently have an ABL balance of about $17 million. So the cash would be very consistent now with where we were at the end of Q4.

If we pay down and get out of the line, the cash may grow somewhat by now and the end of the quarter. But essentially right now the cash would be pretty consistent with where it was at the end of the Q4.

Martin, the only cash that we really have in the system when we are borrowing on the line is what is needed in the stores to run operations day in and day out.

Okay, so it's safe to assume then the cash is pretty much zero?

Yes, because we use our excess cash to pay down the line and what we have in the stores for the tills and in the system is relatively consistent during the quarters.

Okay, got it. Thank you. Then another question regarding whether. I know you called out whether in the third quarter and it seemed like weather was pretty favorable through the fourth quarter and then I think through February and part of March, it was also fairly favorable. I was wondering if you could comment on the weather impact and then tie that into the underperformance of the coats business. And did the underperformance of the coats business continue through 4Q into 1Q despite the benefit of the weather?

Martin, this is Tom. We really don't want to talk about the first quarter. We're going to have a conference call in June and we will give you full visibility as to what occurred in the first quarter, but at this point, we would really not like to talk about that.

Okay, and then Todd, looking forward for 2011, I know you gave a little bit of guidance but I was trying to get a bit better understanding on how you are planning inventory levels, especially with the new plan of forward buys versus open to buy in the quarters. Is your base inventory level plan for the forward buys going to be lower than last year? Then how are you planning on the open to buy when we look at kind of total inventory levels across the store base?

Martin, as Tom mentioned in the call and just so we have some reference here, we ended last year and I think in the 10-K in terms of comp store inventories were down 1.9%. The year before if you were to go back and look at our prior call last year you would see that our comp store inventories dropped 19% the year before versus that prior year.

As Tom said in his script, in terms of how we manage our inventories, we use a receipt-to-reduction ratio with an emphasis on liquidity and we invest in those businesses trending well and reducing the ones that are not.

At year end our inventory that was 91 days and older improved versus the prior year. We were very happy with that and as we go forward, we don't manage to an inventory number. We manage to an R-to-R metric but would I tell you that we are going to look to improve our inventory turnovers next year? The answer would be yes, we will look to improve those. We don't give numbers on what that will be but it's not as though we break everything down in terms of what was in season versus opportunistic versus preseason. We look at more in the aggregate on a seasonal level.

Right. But I guess there's also a time lag between what you are kind of buying in season versus what you can pre-buy right now. So your pre-buy is probably six to nine months ahead, so you've already bought for kind of the remainder of the year for the most part. And I guess I'm trying to understand for that pre-buy, are those levels higher or lower kind of going on (multiple speakers)?

I guess, Martin, the best answer to that would be, as Tom has said before, we really got to the one-third/one-third/one-third model starting in the spring of '10. So as we get to spring of '11, we really don't see any major differences.

Okay, so essentially flat on a year-over-year basis is kind of what the plan is?

You shouldn't be modeling anything that is a dramatic change. As Marc indicated, we are always looking to improve our inventory efficiency, but as we continue to refine our execution and our procedures here, the primary goal is to make sure that we are driving -- that we are doing everything to drive topline growth, not necessarily to optimize inventory at this point. That's coming down the road, but there shouldn't be major changes in inventory balances this year.

Okay, perfect. Thanks, guys.

Colleen Burns, Oppenheimer.

Thanks, good morning. I guess just focusing on gross margin a little bit, can you maybe talk about how you are looking at 2011 given some of the cost inflation we are planning to see? Maybe do you expect your shrink initiatives and some of your other initiatives to offset that or are you expecting to see some gross margin pressure in '11?

Tom has talked about this already and on previous calls, but what our model is right now, we fully believe we're going to be able to mitigate the cost pressures that are out there. What we've seen so far here in the first quarter is really no substantive changes in the underlying cost of the goods that we're buying again because it's our model here buying a lot of it opportunistically.

We did finish this last year a little ahead of our margin rate for the entire year and consistent with what we have said historically, we do expect our margins to maintain pretty steady, so for the year that we are in now, we do expect the margin rate for the full year to be very much in line with what our historical rates have been.

Okay, great. Just lastly, on some of your smaller concepts, the MJM Designer Shoes and Cohoes, fashions, what's the plans there? Do you still plan to keep those stores open? You are not expanding them, right?

No, we are not expanding MJM or Cohoes. Cohoes will maintain -- we have two Cohoes stores that are branded Cohoes and they will maintain. As far as MJM goes, right now it's just status quo. It's just we're going to operate the 13 stores we currently have and get the most out of those boxes. But our focus really is building and developing and moving the Burlington Coat Factory brand at a more aggressive rate, at a very aggressive rate, so versus those smaller concepts.

Are all those smaller concepts four-wall positive?

This is Todd. Our entire store base we have a very small number of stores that do not contribute on a four-wall basis, so there's not a meaningful number of stores in our entire base that aren't positive.

Okay, great. Thanks for the color.

That concludes the question-and-answer session. Gentlemen, I would turn it back to you for any closing remarks.

Okay, I would just like to thank everybody for participating in our -- (inaudible) conference call. Thank you and have a great day.

Ladies and gentlemen, that does conclude your conference call for today. We thank you for your participation and ask that you please disconnect your lines.