Citi Trends Inc (CTRN) 2009 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. And welcome to the Citi Trends fourth quarter 2009 earnings conference call. During the presentation all 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, Friday, March 12th, 2010. It is now my pleasure to introduce Tripp Sullivan of Corporate Communications. You may proceed sir.

Thank you, Fran. Our earnings release was sent out at 6:45 AM Eastern time today. If you have not received the release, it is available on the Company web site under the Investor Relations section at www.cititrends.com. You should be aware that the prepared remarks made during the call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and management may make additional forward-looking statements in response to your questions. These statements do not guarantee future performance. Therefore, undue reliance should not be placed on them. We refer you to the Company's most recent report on Form 10-K filed with the Securities and Exchange Commission for a more detailed discussion of the factors that could cause actual results to differ materially from those described in any forward-looking statements.

I would now like to turn the call over to Bruce Smith, Chief Financial Officer. Bruce?

Thank you, Tripp. Good morning, everybody, and thank you for joining us today. Also on the call are David Alexander, President and Chief Executive Officer, and Beth Feher, Executive Vice President and Chief Merchandising Officer. First, I will provide you with details related to the fourth quarter and full year results as well as 2010 guidance, and then David will discuss further the 2009 results and our business outlook, after which we will address any questions you may have.

Total sales in the fourth quarter increased 16% to $170 million, and comparable store sales increased 1.2%. Sales for the full year increased 13% to $552 million, and comparable store sales were up 0.6%. As disclosed in an earlier press release, comp store sales by month in the fourth quarter were down 0.3% in November, and up 6% in the critical month of December before falling 8% in January. With respect to January, we saw a continuation of last year's trend towards income tax refunds being received by our customers later, due to a move away from refund anticipation loans. Instead of the loans our customers are just waiting a few weeks more to receive the refund directly from the IRS in order to eliminate the cost of the loan. In addition, the last weekend of January, which is our third largest weekend of the year, was negatively impacted by a number of weather-related store closings and a shift in the timing of the first of the month around the end of the fiscal year. These circumstances had the effect of pushing sales into February in 2010.

By merchandise category, sales in the fourth quarter for comparable stores were as follows. Accessories were up 24% in this year's fourth quarter after being down 14% in the same quarter last year. The home division increased 14% on top of an 8% increase last year. Children's sales were flat compared with being up 2% in last year's fourth quarter. Men's was down 3% after being down 3% last year, and women's was down 4% in the fourth quarter both this year and last year. Sales of nationally recognized urban brands represented 50% of total sales in the quarter versus 52% in last year's fourth quarter. While for the full year branded sales were 47% of total sales in both 2009 and 2008. Gross margin for the quarter increased to 38.6% from 38.1% in last year's fourth quarter, with a 30-basis-point improvement in inventory shrinkage being the primary component of the margin increase. For the year, gross margin improved to 38.6% from 38.2% last year with the entire 40-basis-point improvement being attributable to shrinkage. The steps we have taken to reduce our shrinkage rate include a greater focus on problem stores by our loss prevention and store operation departments, the addition of more sophisticated surveillance systems in about 45 stores and lower inventory levels. We are pleased with these efforts which have led to a full year shrinkage rate of 1.1% of sales. While we believe that a rate that is 10 to 20 basis points higher than the current rate is probably the more likely sustainable rate over time, we will not take our eye off this important measure.

SG&A expenses were 25.9% of sales in the fourth quarter, up from 25.5% in the fourth quarter last year, due primarily to the de-leveraging effect that occurs on expenses as a percent of sales when comp store sales increase at a rate such as 1.2% while operating expenses are increasing at a normal rate of inflation that is slightly higher than that. For the full year, we were actually able to attain a small amount of expense leverage on a comparable sales increase of only 0.6%. Expenses as a percent of sales were 29.9% this year compared with 30.1% in fiscal 2008. As we discussed earlier in the year we experienced greater productivity in our Darlington distribution center, and we did a good job of managing store payroll, particularly during the second quarter when we experienced a difficult sales environment. As a result, the 12% increase in expenses in 2009 was less than the 13% increase in sales and the 15% increase in store square footage.

Due primarily to the shrinkage improvement and expense control, our income from operations increased 27% on a comparable store sales increase of 0.6%. Our operating margin increased to 5.3% of sales in 2009 from 4.7% last year. Below the operating income line, interest income was much lower throughout 2009 due to the declining overall interest rate environment. This also caused the effective income tax rate to be higher this year because much of the interest income earned in 2008 was tax-free. Net income for the quarter was $11.3 million this year compared with $10.1 million in 2008's fourth quarter, a 12% increase. Net income per diluted share increased $0.78 in this year's fourth quarter from $0.69 last year. And for the full year, net income increased 13% to almost $20 million from $17.4 million last year while earnings per diluted share increased to $1.36 from $1.20.

In looking at the balance sheet, total inventories were up 17% from the end of 2008. Approximately 75% of this increase was in new stores with the remainder in comparable stores and the distribution centers. The increase in inventories at year end would have paralleled the 15% growth in square footage if it had not been for the shift in sales from the last two weeks of January to early February. Our cash position continued to improve in 2009 as cash and investments increased to $96 million from $77 million due to the strong earnings for the year. Also, accounts payable as a percent of inventory was higher throughout 2009, due to improved inventory turns which resulted in more of our inventory still being in payables at each quarter end. As we look forward to 2010, we are currently estimating earnings per share in a range of $1.60 to $1.65, which includes a comparable store sales increase assumption of 3% to 4% and 15% growth in selling square footage. We expect that next year's tax rate will be closer to 35% compared with 33.6% in 2009, with the increase being due to having fewer tax credits available to us in 2010. Capital expenditures are expected to be in a range of $45 million to $50 million, approximately half of which is attributable to a new distribution center, with most of the remainder related to new stores and store relocations and expansions.

Now I will turn the call over to David.

Thank you, Bruce, and good morning, everyone. We're pleased to have ended 2009 with strong financial results. And to have begun 2010 with a strong sales performance. While Bruce has already recapped the 2009 numbers, before I turn my attention to our plans for 2010, I would like to highlight a few of our other 2009 accomplishments.

In the past 12 months, Citi Trends has continued its rapid growth, opening 49 new stores and completing 11 relocations or expansions. Increased its distribution productivity and throughput capacity with the implementation of a new warehouse management system and new Put To Light technology in our Darlington distribution center. Improved our ability to allocate merchandise by upgrading our tools for inventory management. Provided new purchase options to our customers through the introduction of the Citi Trends gift card and changes to our product mix. Streamlined our applicant flow and evaluation process through the initial rollout of a new system for applicant screening and tracking. Strengthened our assessment of potential new store locations by partnering with a third party to develop a new predictive real-estate model. And finally, we've continued to build a management team that will support our future growth and success. I'm very proud of what the team at Citi Trends accomplished in 2009, and I appreciate each of their efforts.

Now let's turn to 2010. As Bruce stated, after a disappointing January, sales were very strong in February. We produced a comp sales increase of over 10% for the month on top of a 14% comp increase in February 2009. Just as we experienced last year, we believe a large part of this year's sales increase in February was effectively a transfer of business out of January. Tax refunds started even slower this year, hurting January sales, but benefiting February's. The increase in comparable sales dollars in February was about $3.5 million greater than the dollar decreases we experienced in January, which is an indication that February's sales results also included a strong start to the spring season. February's positive sales trends have continued into March with month to date comparable store sales up over 10%. With Easter a week earlier this year than last year we expect to deliver good March sales results, but we also expect that we'll see negative comps in April with the acceleration of Easter business this year. For the full first quarter we're forecasting comps in the mid single digits. After the first quarter, we expect comps of roughly 3% for the remaining three quarters. With the strong sales results of the past few weeks, our inventories are in excellent shape. Very clean and very current.

On the real estate front, we opened eight new stores and closed two in February. We plan to open a total of 19 new stores in the first quarter, compared to eight openings for Q1 of 2009. We remain committed to annual selling square footage growth of 15%. For 2010 that will mean approximately 55 new stores. Of the 55 needed openings we have already opened or approved and slotted to open 44 of them. So we're very confident in our ability to deliver on this year's real-estate objectives. In addition to new store growth we also plan to expand our relocate a dozen stores.

As discussed before, we'll also be expanding our distribution infrastructure with the addition of a new distribution center in the southwestern United States in late 2010 or early 2011. We're currently analyzing several available DCs in the Oklahoma, Texas, and Arkansas area. While our preference is to purchase an existing building, we will also consider construction of a new DC. Our financial position remains very strong. We have not had to borrow money since we went public in 2005, and even with the upcoming acquisition or construction of a new distribution center we do not expect to have to borrow in 2010.

With that we'll now turn the call back to the operator, and we'll take your questions. Operator?

Thank you. (Operator Instructions) Our first question from the line of Brian Tunick with JPMorgan. You may proceed.

Thanks. Good morning, guys, and congrats on a decent end to the year. I guess the question is, trying to understand, on a 3 to 4 comp guidance for the year, it seems like the earnings range, seems a little lower than we would have thought. Can you maybe talk through, are there pressures from the DC that's going to cause you guys to not get as much operating leverage as you would have expected? Are you expecting freight costs to go in the opposite direction? I guess we're just trying to understand, we thought on a 3 to 4 comp would you get some more operating leverage.

No, there's really not anything that unusual in 2010 that we see at this time, Brian. Generally we say that gross margin is going to be in a range of 38% to 38.5%. We're going to start getting expense leverage somewhere around 2.5%, and, of course, if we get to 3%, it would be very slight leverage, but if we get to 4% it might be 40, 50 basis points. And then there is one thing that, when you look at that time EPS increase, that is below the operating line, and that is as I mentioned the income tax rate is going to be a little bit higher in 2010 -- maybe 35% versus 33.6%. Other than that, I think it's a pretty normal model for us.

And then maybe you can talk about what's happening on the women's product side. We thought dresses and denim would be a good opportunity here. Sounds like Q4 was still a struggle. What's happening from a change perspective to give us optimism for spring?

Let's start with the fact that for the first five plus weeks of the month we've got a 10 plus comp. And I'll have Beth talk more about that. The January sales miss agaub was weather and delayed tax refunds. Dresses we talked about as a spring-summer benefit. We never intended dresses to be really a fall benefit because our customers aren't buying them in the fall.

In the first five weeks of this fiscal year, dress sales are up about $1.3 million over last year. As we described last fall, based on what we had seen in the summer, we intended in January-February time frame to expand dresses to all stores rather than just half the chain and to expand our dress offering. And we're actually very pleased with what we're seeing there. And let me let Beth talk a little broader about what we're seeing in terms of spring merchandise. Beth?

I'll just pick up on your specific point on the junior business first. We did see the junior business fall in the fourth quarter, but the entire loss came in the last month, which was January. We definitely experienced a shift as we talked about earlier from the income tax refunds from January into February. February sales in the junior business are actually up 8%. So we do feel that the ladies business specifically is heading in the right direction as we go forward.

From a trend point of view, outside of dresses, the denim business across the Company -- ladies, female, and kids -- continues to be really strong. And we also continue to see great momentum coming out of our accessory area, our jewelry area, our footwear area and our home area, and we think those businesses will continue as we go throughout the year. From an actual what's happening trend-wise, leggings are really strong in the ladies area, and we're seeing a lot of shifts happening in denim that continue to make denim look new in capris or shorts. Lighter finishes in blue as well as going all the way in and being white in color. Polos are really strong both in ladies and men's, and we're also seeing a lot of this bigger logo-ed product happening, both in ladies and men's. So we're getting a lot of good indications from trends that we think can take us throughout the first and second quarter.

We're also doing really well with all the bright colors which generally resonate with our customers, the fuschias, the yellows, the purples. And gray, which started really strong in the fourth quarter is still really strong as we go into first quarter. So we're feeling pretty -- really pretty positive about what we're seeing from a trend point of view, both in ladies and in the men's area.

And just my final question I guess for Bruce, on the real estate side, anything you're seeing from a store buildout cost or occupancy or store payback, anything to look forward to for 2010 that you still see as an opportunity?

As far as the store buildout goes, no big changes there. I guess over the past couple years, there have been certain instances where we've elected to do the build-out, and recover it from the landlord, either as soon as the store opens, or in future rent reductions, but nothing significant there. As far as rent costs go, over the past year or two, I guess we've started to see some loosening up there. We've talked about that before. I don't have a precise number for you, because every market is different. But maybe new leases you could say are somewhere between 5% and 10% less, on average, than what we had been seeing prior to that period of time.

The other thing I would add, Brian, you and I talked about this a little bit in the past, is as you are aware, our leases, we normally sign a five-year initial term, and then multiple additional five-year options. We're having a lot of success in terms of lease renewals in terms of mitigating increases because of the economy. So we're seeing better initial rents, as Bruce talked about. We're seeing better renewals in terms of our -- after our first five years or additional five-year options come up for renewal -- and we're seeing opportunities to get into markets we probably couldn't have gotten into before, particularly California. And we're seeing a lot of good opportunities for relocations and expansions -- because of our balance sheet, a lot of landlords are coming to us when they have opportunities in their centers to relocate or expand, and that's been a real positive.

All right, terrific. And good luck.

Thank you.

Our next question is from the line of Elizabeth Montgomery, Longbow Research. You may proceed with your question.

Hi, guys, congratulations on the good year.

Thank you.

I guess I have a question for David first. I know you talked in the past about the opportunity to lower the comp store sales leverage point, I wondered if you could give us an update on how you're thinking about that both in terms of the magnitude of opportunity and the timing.

We've said that we think that our leverage point is somewhere in the 2.5% to 3% range. And view that as where it will be for the next few years because we're investing a lot in the business. As I talked about some of the things we're doing, we're investing in new systems, we're investing in new processes, we're investing in building a management team. So for those reasons, we're -- the 2.5% to 3% range is probably the right point for us from an expense leverage standpoint, particularly being a growth retailer that wants to invest in itself. That's where I would see it being the next few years.

And longer term, you think it's an opportunity to get it more towards the 2% range? After some of those investments have been completed?

Well, again, depends on what kind of growth rates we continue with. As long as we're continuing to grow, we're going to continue to invest in the Company. So maybe 2.5% is a realistic long-term run rate.

Okay, that's fair, thank you. And then could you just give us an update on the performance of the California stores, I know in the past you had said that a couple were beating your expectations, and a couple were in line to maybe a little bit below.

I'd say pretty much the same report. Our northern California stores are performing a little above our average, and, in fact, they're actually starting to show some positive trends that are moving them a little further above our average stores. Southern California stores continue to perform a little below average, but when we look at California in general, we view it sufficiently positively, and that we intend to open more stores there this year. And we won't open a lot, but probably in the three to seven range of additional stores in California. So certainly nothing negative. We see a lot of positives, and in northern California, believe that customers are starting to get to know us and figure us out, because we've seen some recent trends that we like.

Okay. And would you attribute maybe the difference in the performance between the northern California stores to maybe more of dd's discount stores being in southern California or is that (multiple speakers)?

No, I would really attribute it to real estate. I probably should clarify my comments more. Our northern California stores -- Oakland, Sacramento -- are in very good areas for us demographically. Southern California is not as -- the two locations we have at this point in southern California are not as strong demographically for us in terms of the customer mix. So I think that's probably a lot of the difference.

Okay, that makes sense. That segues into my third question which is, I know you guys had previously disappointing results in Baltimore. I wondered if that was still continuing and if you had any insight into what might be driving that.

It's continuing. It won't continue quite as much because we just closed two of our four Baltimore stores. We've talked for about five years that that market, for whatever reason, and we've done market research and focus groups. We know some of the reasons. That market -- we have never resonated well with the customer in that market. So we had an opportunity to close two of those stores based on our real estate terms and chose to do that.

That leaves us two stores in Baltimore. We're hoping to see some transference of sales into those two stores. We're not giving up on that market but we felt like it was time in those two locations to walk away. We have done market research in that market and have heard from the customers that our brands and our styles don't seem to resonate quite as much in that market as they seem to pretty much everywhere else. So we're definitely not very bullish on the Baltimore market.

On the other hand, we've opened a store in Dover, Delaware that does very, very well. Our stores in Richmond, Virginia do very, very well. This year we'll open western New York, we'll open Pittsburgh. So it's mainly the Baltimore area is the one place we've run into not very good acceptance.

Can I ask where the store in western New York is?

Well, we haven't -- those are not announced or finalized yet. We're looking in Buffalo, we're looking in Syracuse. We have actually signed leases in Pittsburgh and Erie. Western New York and up the western side of Pennsylvania are some new areas for us that will open this year.

Okay, that sounds great, thanks, guys, and good luck.

Thank you.

Our next question is from the line of Patrick McKeever, MKM Partners. Please proceed.

Thanks. On the tax refund spending and the shift in the timing of that spending this year versus last year, David, just wondering if you could run through that again. I think I understand the dynamic, but what exactly changed again? And then how much longer do you -- presumably you're still seeing a fair amount of tax refund spending now. How much longer do you think that will last? And the last question on that same basic topic, what about size of the refunds that your core customer -- customers are getting this year versus last year? Is it a bigger dollar amount? Is there any way of telling? Thanks.

Yes, sir, thank you, Patrick. The first question -- this is the second year that we've seen a fairly significant shift in terms of when our customers receive their tax refunds. Last year, as you recall, the IRS delayed the e-filing dates, and that moved everything back. So we saw this big shift last year of sales moving out of January, moving into February. We had a 14% comp last February after a weak January. We assumed that was a one-time event that had related to the e-filing change.

What we also had begun to hear a lot from actually talking to people at H & R Block and Jackson-Hewitt and different tax preparation companies was that there was a further shift on the part of the customer to wait and actually do their own e-filing and not do the anticipation loans. So, again, 2008, IRS delayed things that caused a ripple effects, H & R Block and Jackson Hewitt and others delayed when they would do anticipation loans. And now, again, we've had more customers move to actually doing their own e-filing. To do that, they have to have a W-2. They can't simply come in with their payroll stub, which they could do with an anticipation loan. So we saw this further continuation of last year's trend this year to more and more customers waiting, e-filing, and when the money comes to them, then coming into our stores.

We don't have a real good understanding of whether there will be even more of a trend next year. We have planned a very conservative January with the assumption that there may be another year of that. But again, that's all we know about it. We don't have a good understanding of exactly how much our customers are getting in terms of tax increases this year versus last. I'm not aware of many things that would have caused a big difference.

Okay. Then my second question is, I know you're not giving guidance for the quarters, but given how uneven last year was, by quarter, both from a same-store sales standpoint and also an earnings standpoint, maybe could you give us a little color or just some ideas on how the year -- I know you said 3% comps over the balance of the year after the first quarter. But you're up against a negative 12% comparison in the second quarter, and then a positive 6% in the third, that kind of thing. So just any help on how the year might look from a quarterly standpoint would be helpful. Thanks.

Sure. We think the second quarter is probably our easiest quarter. We are up against a negative 12%. Part of that negative 12% had been because we were up against a very strong second quarter from the prior year, but again, we believe by expanding our mix with dresses, expanding those to the entire chain, and the fact that we like some initial summer trends we're seeing, we feel good about the second quarter. The third and fourth quarters combined were about a plus 3% comp. And we believe that, again, for the back half, we can achieve a plus 3% this year.

If you look at the third quarter where we had a 6% comp increase, we were up against a year where there had been very, very high gas prices, gas shortages, several other things, and we think that drove last year's 6%. We don't think that number, from a comparable standpoint, is as difficult as would it seem. And then if you look at the fourth quarter, we had a very poor November with it being one of the hottest Novembers in the last hundred years, a good December, and we got hit hand in January with the tax shift. We would believe that we won't be hit as hard this November or as hard this January, so when we look at that quarter, we believe a 3% for the last three quarters is attainable.

Second quarter is the easiest. Third and fourth quarter are probably about even in terms of difficulty, in our view.

And then just one last one, if I could. How much of the recent -- and the business has been pretty -- the sales trends have been pretty volatile over the past few months and all , but how much -- when you look on a net basis, and you try to look through the volatility, do you feel like the underlying trend is improving? Do you think things are getting better for your core customer, or do you think you're managing the business better and merchandising the stores better and so forth? Do you feel like there's an underlying improvement in trends beyond all the tax refund issues and weather issues and so forth?

Thank you. I would say, again, there's always going to be a little bit of volatility in our sales, because we're serving a low to low to middle income consumer. They're young, and they're very fashion conscious and if we have the brands -- the styles and brands they like, and they have money -- then we're going to get our share of the sales. In periods they don't have money, then obviously we're going to be affected by that.

When I look at 2010, the thing I feel the best about is while unemployment has increased for several years, I believe this year it's now -- well, it's certainly a lot higher than we'd like for it to be. I believe it's now reached a fairly stable level. So rather than fighting strong headwinds of increasing unemployment, I believe this year anyway, we're finally moving into more of a stable unemployment picture, and that's one of the things that we feel good about for this year.

We like the trends that we're seeing for the spring/summer period. We've continued to strengthen our buying staff. We've continued to strengthen our allocation team. Last year we added a director of allocation, director of planning. We've upgraded our allocation systems so our ability to put the right product in the right place, our ability to buy effectively, I think we've strengthened all of those things.

Thanks, David.

Thank you.

(Operator Instructions) Our next question is from the line of [Shawn Naughton] from Piper Jaffray. Please proceed.

Thanks for taking my call. Can you talk about -- can you deconstruct your comp a little bit for the fourth quarter on breakdown between traffic and ticket, then also discuss whether or not those same types of trends you have been -- you have followed through into the first quarter?

Sure. As far as the fourth quarter goes, the 1.2% comp increase that we had, it was made up of a 3% increase in customer transactions, which indicates that we actually had a decline in the average ticket. When you drill down into the average ticket, we actually had a lower AUR during the quarter, but that was partially offset by a greater number of items in the basket. The AUR being lower this year is primarily due to the fact that we had some add-on sales in some departments such as accessories and home, which are typically lower average unit retails.

As far as the first quarter goes, with us being up thus far up 10%, it's really a combination of everything. Customer transactions, and the average ticket are both up, and I'm really primarily talking about February, because that's all we've closed at this point.

And then for the balance of the year, how are you thinking about AURs for the full year?

Beth, you want to talk about that? I guess generally, we would say some of the trends that we saw in the first quarter would probably continue next year, because we have really improved the accessory and the home assortments, and with those being a lower AUR, to the extent that those continue to do well, it will naturally drive down the AUR slightly.

Okay. And then, David, you had talked earlier about you were pleased with the gift card program that you had initiated, it sounds like, and some of the product mix. Can you just elaborate on that little bit further, and are you happy with the category mix that you have in the store? Are there opportunities to increase your penetration of footwear? Just how you're thinking about the overall merchandising in the store as well would be helpful.

Certainly. In terms of gift cards, we -- I'm happy from a couple of standpoints. Number one, we began a test of that right around Thanksgiving, really piloted in December with 40 stores. Liked the results. They weren't dramatic, spectacular type results, but they were good results. And based on that, we decided to roll that forward to the entire chain, and in the first five or six weeks of calendar 2010, we completed that rollout, so we now accept gift cards in every store in the chain. So I'm pleased with the results, I'm pleased with the average transaction on gift cards and I'm particularly pleased with how well the team executed that and got it done.

In terms of product mix, as Beth has talked about, I like what I'm seeing in accessories and how we're growing that business. I like what we're doing with home, particularly like what we're doing with fragrances. We're growing that business very rapidly and having a lot of success with our customers there. We really are having a lot of success in footwear. I mentioned dresses. That's really a business that, apart from church dresses, we really had never done much in dresses. We had at one point carried missy dresses which we got rid of at the end of 2008.

So now we've taken a strong look at dresses, based on things we heard in focus groups, and based on things we heard from listening to sales calls of our competitors, and decided that was a business we needed to be in, and out of the gate as we've expanded to the entire chain and actually expanded the offering, we're very excited about what we are seeing.

Okay, great. And then lastly, how would you describe where you are and where you feel -- how far you are down the efficiency curve in terms of getting the benefit from your new warehouse management system and then some of the other things that you're implementing in terms of the allocation process? Is there still room to grow here to get some additional benefits, or are we at the end of the line here?

I would say in most areas, if you compare it to a baseball game, we're in the 2nd or 3rd inning. In the distribution center we have a new WMS system, we have new Put To Light technology, we're getting better and better at using them and we're seeing productivity gains. We're working on our third distribution center. We have hired an outside DC design firm to look at everything we're doing, and do blank piece of paper design to see what other efficiencies we can drive in distribution.

We're working on new labor management tools and processes in terms of our stores. We've made some tweaks in inventory management. There's others that we will try to tackle that will get us better and better allocation.

So we're a relatively young Company. My predecessor did an excellent job building a management team that can take us forward, and we're really beginning to look at what are all the tools we need to input to take to us where we want to go.

Okay, great --.

But again -- go ahead.

I was just going to ask one more follow-up question on your private and your national label. Are you happy with the mix there? Are there new private brands you're thinking about introducing to the box? Is there any significant delta between the gross margin on those two?

As Bruce mentioned, our mix in brands was slightly lower in the fourth quarter than in the previous year, but for the past three years, each consecutive year we've run about 47% brands to fashion. We don't see that overall percentage really fluctuating. Within the brands themselves, depending on what kind of movement we see from one licensee to the other, we sometimes see brands trending up or trending down, based on what we're seeing in the market from them.

But overall the percentage of brands we feel is 47%, sounds and feels like a pretty good number to us. On a gross margin point of view, brands to fashion, there's relatively -- they run about the same. There's not a discernible difference between the two.

Okay, great. Best of luck on 2010.

Thanks.

Mr. Alexander, there are no further questions at this time. You may proceed with your closing remarks.

Thank you for joining us this morning. We appreciate your interest and hope you have a wonderful day. Good-bye.

Ladies and gentlemen, this does conclude the conference call for today. We thank you all for your participation and kindly ask that you please disconnect your lines. Have a great weekend everyone.