Citi Trends Inc (CTRN) 2010 Q1 法說會逐字稿

Ladies and gentlemen, thank you you for standing by. Welcome to the Citi Trends first quarter 2010 earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards we'll conduct a question-and-answer session. (Operator Instructions). As a reminder this conference is being recorded, Wednesday, May 19, 2010. And I would now like to turn the conference over to Tripp Sullivan, Corporate Communications. Please go ahead, sir.

Thank you, Operator. Our earnings release was sent out at 6:45 AM Eastern Time this morning. If you've not received a copy of the release, it's available on the Company website 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 to you the Company's most recent report of 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, everyone 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 some details related to the first quarter results, as well as guidance for the remainder of 2010, then David will discuss further the first quarter results and our business outlook, after which we'll address any questions you may have.

Total sales in the first quarter increased almost 27% to $181 million, including a 9.6% increase in comparable store sales, which was a strong follow-up to the first quarter of last year when comp sales increased 7.4%. About two-thirds of the comp increase this year was due to more customer transactions, while the other third was the result of a higher average ticket.

By merchandise categories, sales in the first quarter in comparable stores were as follows. Accessories were up 25% after being up 8% in 2009's first quarter; the home division was up 15% on top of a 14% increase last year; the men's department was up 8% this year and up 7% last year; Women's was also up 8% after being up 4% in last year's first quarter. children's sales were up 4% on top of last year's 13% increase.

Sales of nationally recognized urban brands represented 49% of total sales in the quarter, the same as in 2009's first quarter. Comparable store sales by month in the first quarter were up 10.6% in February, up 22.8% in March, and down 8.9% in April, with all of the negative comp in April occurring during the first week due to the shift of Easter business to March from April this year. While the Easter shift -- with the Easter shift, it is more appropriate to combine March and April when analyzing monthly sales. For those two months combined, comp sales were up 8.9%. As we've entered May, comp store sales have been flat for the first two weeks. Gross margin in the quarter was almost identical to last year's first quarter, 39.9% this year versus 40% last year. And all of the components of gross margin, including initial mark-up, freight, shrinkage and markdowns, were individually within 30 basis points of last year's first quarter results.

SG&A expenses as a percent of sales improved by 130 basis points, decreasing to 26.7% in the first quarter of 2010 from 28% in the first quarter last year. And this was after realizing 200 basis points of expense leverage in the first quarter of 2009 versus 2008. The improvement in the expense ratio this year was a result of the leveraging effect that occurs when comparable store sales increase at a rate as high as 9.6%. SG&A expense dollars increased 20.7% over the first quarter 2009, which was more than the 17% increase in store selling square footage, due to higher variable expenses that tend to move in tandem with sales.

Depreciation expense provided 50 basis points of leverage in addition to that discussed previously for SG&A expense, as it increased $400,000 or 9% over last year due to the increase in store opening activity. As a result of the expense leverage created by the strong comparable store sales, our operating profit improved 170 basis points in the quarter, to 10.6% from 8.9%, and increased 500 basis points from the level obtained two years ago. The effective income tax rate increased to 35.3% from 34.2% last year due to pre-tax income increasing at a faster rate than employment tax credits. First quarter net income increased to $12.4 million from $7.9 million. After a 50% increase in earnings per share in the first quarter last year, EPS increased an additional 59% in 2010's first quarter, to $0.86 from $0.54. Earnings were higher in the first quarter than any other quarter in the Company's history, beating the recently completed fourth quarter of 2009 by $0.08 per share.

In reviewing the balance sheet, inventories continued to be tightly managed, up only 13% from 2009's first quarter, despite the 17% increase in square footage. The improvement in our inventory turns is also reflected in accounts payable, as 64% of our inventory is currently financed through trade payables, compared to 57% a year ago, and 51% two years ago. Our cash position also continued to improve, as cash and investments increased $25 million in the past 12 months.

In looking forward to the rest of year, we're currently estimating 2010 earnings per share in a range of approximately $1.75 to $1 80, up from our previous estimate of $1.60 to $1.65. The new estimate includes for the full year a 4% to 5% comparable store sales increase assumption and 15% growth in selling square footage. The comp sales assumption for 2010 implies an increase of approximately 2% or 3% over the remaining three quarters of the year after experiencing a 2% comp decline in those same quarters last year.

Other comparability considerations between the last three quarters of 2009 and 2010 include a non-recurring unrealized gain on investments of $0.03 per share in last year's second quarter, and a higher tax rate this year, which translates to about $0.02 per share. Now I'll turn the call over to David.

Thank you, Bruce, and good morning, everyone. We are very pleased with what our associates accomplished during the first quarter of 2010. The highlights include a comp sales increase of 9.6%, the highest earnings for any quarter in our history; an exceptionally strong start for the year from a real estate perspective; excellent management and shrink control; strong expense control in both store operations and distribution; and finally, significant progress in our search for a third distribution center culminating in the selection of an existing building in the southwest.

Since Bruce has already shared the details of our sales and earnings results, I'll focus my comments on other areas of accomplishment. On the real estate front, we opened 19 new stores and expanded or re-located five others in the first quarter. All of these new and expanded stores are performing well. In addition to the stores we opened, we he also approved an additional 36 new stores and nine more relocations or expansions. This means that all 55 of our planned 2010 new stores are either opened or approved and slotted to open, and we now have the luxury of turning our attention to 2011.

Also significant from a long-term perspective, in the first quarter, we completed a detailed market-by-market saturation analysis of the continental United States and have concluded that our chain saturation level is close to 1,000 stores, roughly 200 higher than our prior estimates.

Expense management in the first quarter was excellent. Both store payroll and DC payroll were well controlled. As Bruce mentioned, inventory management was also quite strong. We ended the quarter with comp inventories down 3% on top of an 8% reduction last year, and inventories are as current as they've been in years.

During the quarter, we concluded our search for a third distribution center, selecting an existing building in the southwest. We're now in the final days of due diligence and assuming that we don't encounter any unexpected issues, we expect to close on this property very soon. Our plan is to begin operations from this facility early next year.

The remainder of the year we're forecasting comps of 2% to 3%. We believe the second quarter should be the easiest of the three remaining quarters, since we're up against negative comps. The back half will be a bit more challenging, with last year's comp at a positive 3.4%. However, with signs that unemployment is finally stabilizing, we expect to be able to deliver a positive comp on this number, as well. We're pleased about how 2010 has started, and with our solid financial position and clean inventories, we believe we're well positioned to continue our success. And with that, we'll now turn the call back to the Operator, and we'll take your questions.

Thank you. (Operator Instructions). Our first question comes from the line of Brian Tunick I can with JPMorgan. Please proceed.

Hey guys, it is actually Ike calling in for Brian. Congratulations on a great quarter. Was wondering if the month-to-date, your quarter-to-date comps, you said were running flat. I was just wondering is there any reason for any volatility in there in terms of payments to your customer, is there anything going on this there that we should be thinking about?

Thank you, Ike. I appreciate your comments. The, one thing I would comment on is we are flat, but we're really not flat as you look across the regions of the country. We are negative in the more northern regions. We're positive in the more southern regions. So for example, the further south you go, the higher the comps, sort of mid-single- to high-single-digit positive. The further north you go, the more negative the comps, up to a mid-single negative.

So while we would never -- we don't like to think about weather being that big of a driver, we do think there have been some weather issues that have affected us. We feel like our inventory positions are very good and things that were very strong in the spring we think should continue to be strong in the summer. We had great dress business in the spring. We, did very well with a lot of the summer categories in the spring. So we're not terribly concerned with the fact that we are flat the first two weeks of May, and we do see some weather pattern variations there that we think explain part of that.

Okay. So it sounds like it's -- it sounds like weather is definitely having the impact on you on your own stores that are in the more northern part of the United States, is that fair?

Yes, that's very fair.

Okay. And second question, just on the fixed expense side, the D&A growth only up 10% in Q1 it looks like. Is that something that is sustainable or should we expect more of a mid-teens growth year-over-year for the next couple of quarters?

For the full year we're expecting depreciation to come in right around $22 million. We're finally getting to the point where the store opening pace is similar to what it was five years ago, and that's important because typically our stores are depreciated over five years, all the equipment and fixtures and even the leaseholds are depreciated over five years.

Got you. Okay. Great. Congratulations guys.

Thank you, Ike.

Thank you. Our next line come from the line of Patrick McKeever with MKM Partners. Please proceed.

Thanks, good morning, guys.

Hey Patrick.

Hi. I was just wondering if you had any sense of how higher tax refunds may have played into the first quarter results? I mean, there was -- I know it's tough to measure, but there have been -- there's a lot of -- there have been a lot of reports out there about tax refunds being way up because, particularly for your core customer, because of the Making Work Pay tax credits of last year, and I'm just wondering if you feel like that had an impact on the business in the first quarter? Thanks.

Thank you, Patrick. We've done a lot to try to get our hands around that, and have read a lot of things that seem to contradict each other in terms of exactly what the impact was. So we don't have a real good answer in terms of how much the tax refunds affected that. Certainly the timing of the tax refunds affected it, as we mentioned before. January, our sales were impacted by the fact that tax money wasn't out there, February was very favorably impacted by the fact that tax money was out there. But we've seen strength a cross a lot of categories.

One of the things that we think drove a lot of sales this spring is, as we mentioned last year, we really had not carried much in the way of dresses based on focus groups we did last summer, we chose to expand our dress business fairly significantly in terms of our offering, but also to expand it to the entire chain instead instead of just half the stores. We had some very substantial increases related to dresses and we've had a better spring across all summer seasonal-type departments. So we think that's where a lot of the sales have come from. But the exact impact of changes in tax refunds, I really can't comment on intelligently.

Okay. Yes, I know I've seen the bigger -- the expanded dress assortment in the stores, it's very -- it seems pretty prominent toward the -- right at the front of the stores, for the most part, from what I've seen anyway.

Second question is on the, the unemployment -- the high teen unemployment for your core customer.p I'm wondering how you think about that as we move into the summer. I know it came up, or it was an issue or you talked about it as being an issue, last summer, one of the factors behind the 12% decrease in same-store sales in the second quarter. Any sense there how -- or any concerns about that? Do you think thing are getting better, worse; how are you thinking about it as it relates to the second quarter and planning the business? Thanks.

We're really playing the business for more of a stabilization of unemployment. We're certainly trying to keep our finger on the pulse in terms of what's going on. And there's a bit of noise in term of all the different things we're reading, but our best read is that after a couple of years of climbing unemployment, things are at least stabilizing. And we expect very high African-American teenage unemployment this summer, we expect it will be high 30s to 40s, but that's very consistent with what we experienced last year. So our thought process is, while the numbers are not great an we're not seeing real declines in unemployment, we are seeing stabilization in unemployment so we're not up against some of the headwinds we have been for the last 18 months or so.

Thanks David.

Thank you.

Thank you. (Operator Instructions). Our next question comes from the line of Thomas Filandro with Susquehanna Financial Group. Please proceed with your question.

Thank you. I'd like to add my congratulations as well. Great start to the new year. Couple of questions. First on the AUR on the first quarter, I think, Bruce, I heard you mention that two-thirds of the increase in comp was driven by transactions and you had a ticket increase for the other third. Can you guys dig a little deeper into what was driving that? Was that less promotional activity, higher initials, and how should we view AUR for the balance of year. And I have a follow-on question for Beth, please.

Okay. In the first quarter, the increase in average transactions size, which did represent one-third of the comp increase, was entirely complied of a higher AUR. So in other words, the number of transactions was virtually flat. I mean, the number of items within the transaction was virtually flat. And when we looked at that, one leading reason for that was that David mentioned the dress business did really well in the first quarter, and that tends to carry a higher AUR, so as those sales increased, the mix shift related to dresses helped the AUR. You want to ask a question of Beth?

So Bruce, hearing David's comments and your comments that suggest that the AUR performance, given spring and summer product, tends to work in conjunction with one another, we should see continued AUR improvement at least for the second quarter. Is that a fair statement?

Well you have the same factor that I just mentioned affecting the second quarter. You'll have the dressing becoming a bigger part of the mix, so yes, that would be reasonable.

Okay. And if I could, Beth, maybe she can dig into this, or David. Just a little, better understanding about the bins, the front table, the front of the store strategy on clearance. I think you guys have made some changes there, and are there any other merchandising initiatives that we might see for the balance of this year designed to either increase penetration of shopper wallet or drive UPTs, any other o initiatives on the merchandising front, please?

I'll start and then I'll see if Beth wants to add anything. There are two or three things we've done. One, we know that price is very important to our customers and we really want to make sure that we have a price message when the customer comes in, so we've made some changes in our markdown process, and one of those is that we have very specific price points $5, $3, and $1 that everything as it goes through the markdown process will hit those price points. That's allowing us to use some different in-store signage and to put that product together and feature it, and we're seeing very good performance from a sell-through on clearance merchandise now that we're doing that. So that's one thing we're pricing stores a little different. Our racks that are highlighted with $5-, $3-, $1-type messaging.

Second thing that we've done in a portion of our stores and have had had a very good response to, we believe that we have a lot of upside in terms of sell at check out, in terms of add-on sale. So we started with a small number of stores where we placed three fixtures perpendicular to the registers that will feature product. Predominantly we've been featuring our fragrances on those fixtures, and it had very good results in those stores in terms of sells of fragrances. So we're now ordering more of those fixtures and placing them in quite a few more stores, we'll probably bump that up to about 100 stores in the next few weeks. And the other thing we're doing is we're using sort a speed table concept as you first come into the store for any special promotions that we have that month. So if we're buying something that is maybe outside our normal mix or something we're just really excited about, we're using speed tables at the front of the store to try to feature those, and the products we've put on that we've seen very good sell-throughs. So those are things that we have done, and anything you want to add Beth, in terms of other merchandising initiatives?

The other thing that I would add to David's comments would be that we're going to continue to plan-up the jewelry area, which has been very strong for us, the footwear area, and the fragrance business, which we think can be a 12-month business.

Okay. Fantastic, thank you. Can I ask one final question, please.

Certainly.

The chain saturation analysis that you eluded to David, can you -- I'm new to the story, can you give me a better understanding of how you guys assess the market potential? And a second add-on question to that, are the brands that you work with, those 50% roughly urban brands, are they prepared for the kind of growth that you guys have in front of you?

Let me answer your first question. What we've done, really over I guess the last three months, is we began by taking all of our existing markets and looking at what our current concentration is in our existing markets. We then tried to evaluate how saturated they are, we used that to establish our benchmarks, and we benchmarked in different-sized markets.

The number of stores that we could put relative to population. In Atlanta, it is very different than the number of stores relative to population we could put in a small market. In a small market, if you have maybe 15,000 customers, that might be plenty sufficient to operate a store. In a major metro, just because of the geography and the density of the population, the numbers are going to be much higher. So we we did a lot of evaluation of markets, we then set up parameters that, based on the size of the market, based on the demographics of the market, here's what we felt the population needed to be.

From that, we then looked at each, what's called CBRE -- CBS -- yes, CBRE, which actually stands for core-based statistical area. There's about 950 of those in the United States and they're both -- I think they refer to them as Micropolitan and Metropolitan markets. We took each of those markets, we applied our assumptions against those markets and then we further tested that in terms of geography, the market and how the market might layout. From doing that, we looked at, again, every market in the continental United States, basically placed the stores, at least from a planning standpoint, and found that we could support 1,000 Citi Trends stores.

Historically we've used some other, sort of higher level benchmarks and that's how we said historically that we could open at least 800. This was a much lower level dive that we did, and much more involved process, and we're very comfortable that we can open -- we can operate, including the ones already open, 1,000 Citi Trends stores in the continental US.

Terrific.

I'll let Beth address your second question.

Thank you.

As you're aware, we do purchase goods three different ways. We purchase it up front, in season and we do next season buys. And we -- the buyer's partner with the manufacturers to make sure that we have enough in the pipeline to fill our needs. Our growth is actually great news for them. They love to hear that we're growing because it brings them more business. I don't have we have any concerns about filling up our pipeline that we see in the next few years.

I think one the thing that's happening, Tom, actually is we're just becoming more important to a lot of these vendor. We're moving up their list of priorities as we continue to grow.

Fantastic. The best of continued success to all of you. Thank you.

Thank you.

Thank you or next question comes from the line of Sean Naughton with Piper Jaffray. Please proceed.

Yes, let me also add my congratulations, great job in the first quarter. Bruce, just maybe a question on the SG&A. Are there any things that we should be thinking about in terms of incremental spend on the distribution center and how that could potentially flow through in the back-half of the year, and then maybe if you could also remind us of your leverage point on comp, as well?

Sure. Yes. There could be some expenses later in the year, the back-half, particularly the fourth quarter. We don't think it will be substantial this year. Some of the costs will be capitalized as part of the project anyway, so they'll go into CapEx, but then there will be some operating expenses probably late in the year. But most of that will come next year.

And comp break-even?

Oh, the leverage point, somewhere around 2.5%, if we get 3%, we get slight leverage, if we get as high as 4% we'll get a little bit more.

Okay. Great. And then also last year there was some shifting of the tax-free holidays, I believe Florida may be bringing back their tax-free holiday this year in August. Have you looked at your store base and thought about how that could shift between Q2 and Q3 this year and how are you planning your inventories for this particular shift?

Yes. Based on what we've seen so far. There's not a lot in the way of shifts. Georgia may not have theirs this year and as you said, Florida may add it, so those two could have an offsetting impact in terms of shift. But all the other states are going to have their holidays at the exact same time they had them last year. So we don't see a lot in the way of movement.

Okay. And then lastly, I apologize if I missed this, I joined a few minutes late on the call. Any update on how the performance has been in your California stores, and then maybe any new markets where Atlanta -- I know you've had some competitors come into those markets, have you seen any deterioration in performance of your stores in those markets? Thanks.

California stores, I think we're continuing to see slightly better trends. I think we're gaining customer awareness there. I was actually in our Southern California stores last week, and I liked what I saw, liked what I heard from our store employees. The Northern California stores continue to perform a little better than chain average. Southern California stores, a little below chain average. That's not really a northern-southern issue as much as the Northern stores tend to have been a little bit better real estate sites from a demographic standpoint than the Southern stores. Nothing negative, and I've approved three additional stores for California this year, so it's a market that we feel good about.

In terms of new markets for us, and then I'll also address your question about competition, in the first quarter, we opened Oklahoma City, which is a new market for us. During the rest of 2010, the markets we've approved, and have actual locations approved in, are Las Vegas, Pittsburgh, Syracuse, Buffalo and Des Moines, Iowa. We'll be opening some new markets for us.

Regarding your question on competition, I think the primary impact is, if new competition comes into a market that we've been around a while, and our stores are starting to look a little older and they come in with bright new stores, we'll tend to see an impact from that for some period of time, but historically, if we execute well, that's really the determine of our success. And, in fact, a lot of times, if we're in the same center with a competitor, we actually view that as positive, because it tends to create more of a a traffic to a center. So there's real no competitor that we don't feel we could compete against well if we execute well, and we're continuing to grow new markets and, again, back to California, we feel good long-term about where California's going.

Okay. Great. And then lastly, one last question on the second quarter, just on the gross margin rate, looks like there was some pretty significant decline in the markdown rate last year in order to stay current given the 12.4% comp on the inventory level. Is there any reason to believe that you guys couldn't get some of that mark down, are there any puts and takes in that particular quarter from shrink or freight or initial mark-up that we should be thinking about? Thanks.

Yes. Sean, as we have in the past we typically don't try to give guidance by quarter, particularly at the gross margin level. But I will tell you that over the last three quarters of the year, we wouldn't expect gross margin to vary much at all from last year. The first quarter tends to be the highest gross margin quarter and that's because it's the beginning of a season and therefore does not have as much in the way of markdowns as some of the later quarters. But I think you to generally expect something like 38% in the last three quarters of the year, much like last year's number.

Okay. That's helpful. Best of luck.

Thank you.

Our next question comes from the line of Jonathan Grassi with Longbow Research. Please proceed.

Hey, good morning guys. Just a few quick questions. On the second quarter, do you guys expect you're going to benefit at all from the Fourth of July weekend moving from the third quarter to the second quarter?

I don't believe it does because with the fiscal January year-end, that would fall within our second quarter. Our second quarter ends at the end of (inaudible -- multiple speakers).

Okay. I apologize, I got confused, sorry about that. And then on the extra 100 stores that you guys found during your market saturation report, where -- I guess is there any region in particular, any type of demographic where you found these stores? And I guess what were your assumptions you made as far as competitor growth?

Well we assumed competitor growth would stay as is. We assumed flat US population, so there's no US population growth in those numbers. We assumed demographically that US would stay as is, so there's no demographic change in those numbers.

In terms of any specific region, not really. And again the real difference this time than how we have done this in the past is it was just a much deeper dive going on the way down to the core-based fiscal areas, and within a smallest of those is a region with a Metropolitan -- with a urban center of at least 10,000 people. So we got to fairly low-level markets, and we did a lot of initial work to understand what our potential is in existing markets, and then also to slice that into different-sized markets that we could then benchmark against. So there's really no one part of the country we saw a big difference, what we saw is, that there were markets we maybe had not identified all across the United States.

Okay. Fair enough. Thank you.

Thank you.

Our next question comes from the line of Evren Kopelman with Wells Fargo Securities. Please proceed.

Thanks. Hi, guys.

Hey, Evren.

So I had a question on inventory. I think you said on a comp-store basis they were down 3% at the end of the quarter. How are you thinking about that going forward? Is that kind of a lower level than you planned to run with because of the strong performance in Q1, or do you plan to run with kind of down inventories on a comp-store basis? I'm curious because some of the larger off price chains have had this strategy and it's been helping their markdown levels and gross margins, so I didn't know if that was your plan as well?

Yes. Evren, we would expect to see inventory pretty much consistent on a same-store basis, so growing at the same rate as square footage growth. And you mentioned the fact that the sales were strong in the first quarter, that did help drive down the inventory at the end of the quarter. On any given date at the end of a quarter or within a quarter, it can move up or down on a comp-store basis, but generally we're going to expect it to be flat.

Okay. Another question on the dresses, can you put some numbers behind it? I think you've talk previously about maybe it used to be 1% or 2% of total sales. Can you talk about how much have you increased the penetration maybe as a percent of the merchandise this year versus last year?

Evren, the dress area for the first quarter actually picked up 80% over last year, and last year it represented 2.8% of our store sales and this year ,in the first quarter it represented 4.6%. For a first-half look, we're expecting the penetration to go up to 5.3% of our total business versus last year's 3.4%.

Okay. Oh, great. And do you -- aside from dresses, can you talk about some of the other trends that are driving your business? It sounded like accessories was a strong area in the first quarter. Can you talk about that? Should we expect that going forward?

Yes. We have experienced some great trends in the business outside of the dress area. Denim, which we've talked about in the last several conference calls, continued to be good as we went into first quarter in every category with every zone within the Company. We do see accessories continuing to have strong momentum, along with intimate and footwear, which we cary for both ladies and kids.

From an item point of view, we're doing really well with leggings, with big logo polos, the romper business that emerged this year has been very strong for us. The skirt business is good and we're seeing a big trend toward active looks. From a high-level trend point of view, utilitary looks or military looks are doing strong. We're also selling the preppy looks that include like stripes or plaids, and this Rocker Chic look has been good for us now for about four months. But as we go into second quarter, we're adding on a new trend, flower prints and motifs are starting to sell very well.

Very interesting. And then last question's on the rent environment as you're looking -- beginning to think about the 2011. Are you seeing any change in the environment for rents that, if there's any differences geographically, if you could comment on that, that would be great as well? Thanks.

Thanks, Evren. We've really not seen a lot of differences. We continue to see good availability of real estate and we continue to see good rents. And again, really in three ways.

First of all, as we've discussed before, almost all of our leases are five-year initial term, so we have a lot of leases coming up for renewal each year and we're finding we're in a pretty good position of strength in those renewals. Secondly, we're being able to get into the markets at historically meet have been too high rent for us, California being a very good example. And third, with our balance sheet and with landlords' need to lease space, we're getting a lot of opportunities to relocate and expand stores. We've already opened, re-located or expanded five, we've approved another nine. So we're already over what was our original plan for this year. We originally said 12, we're already going to do 14, just because we're seeing a lot of very good opportunities for locations and expansions. So I would say, really nationwide, we continue to benefit from a very good real estate environment.

Great. And how many stores for the second quarter are opening?

Second quarter is just five, and that will be in July. Third quarter will be north of 30. And those will be spread out across the three months fairly evenly.

Okay. Great. Thank you so much. Good luck.

Thank you.

Our next question comes from the line of Brian Ronnick with BLR Capital Partners. Please proceed.

Hi. I sort of missed the beginning of the call. Could you call out again, Bruce, the sales by month?

Yes.

The comp, I'm sorry.

The comp sales by month, we were -- in February we were up 10.6% and in March we were up 22.8%, and then we were down 8.9% in April, and I mentioned there that all of that decrease came in the very first week due to the Easter shift, and if you combine --

March was -- I'm sorry, that was 8.9% combined?

Yes, 8.9% combined.

And March was 22.-- ?

22.8%

Great, okay. Got you. How are you factoring in the Memorial Day shift, with the effect probably on business now, although it sound like the weather is more of a drag than anything else?

Yes. The Memorial Day shift, from a reporting standpoint is, probably doesn't affect us that much because we only report comps once a quarter, so we're not --

I meant internally.

Yes internally, we, losing the week, we expect to see a little bit of a drop in sales right now and then we'll pick it up before the month's over, we're not viewing that as a big impact.

Same thing with July 4 sales?

Exactly.

Same effect?

Exactly.

Got you.

Yes, sir.

And I think, Beth, you mentioned dresses a percentage of total sales I guess rising to 4.6% from 2.8% in the first quarter?

Yes.

Is that correct? Okay. You also had mentioned I think, was it dresses for Q2 was 5.3% versus 3.4% expected? Or did I get that wrong?

That was actually for the first half.

First half. Thank you.

Right. Right.

I appreciate the clarification. And Bruce, also, I think it was brought up earlier that the comp increase for the first quarter, two-thirds was due to transactions the other third was due to AUR?

Yes.

Okay. And the AUR, obviously shift was a result of the mix shift with the dresses?

Correct.

Okay. Great. Thanks, guys.

Thank you.

We have a follow-up question from the line of Tom Filandro, Susquehanna Financial Group. Please proceed.

Okay. Thanks. Just a quick question as you're cash position continues to build and you clearly have self funding, how do you guys view your current cash position? How do you feel about -- what do you feel about dividends. Special dividend and/or buy backs?

Yes. Tom, this is something that we obviously discussed with our Board every quarter. Also, we did engage our investment banking firm to help us with with a study a few months ago where we went through and analyzed our cash positions and our cash flows in relation to other retailers, particularly growth retailers like us.

As a part of that study, we looked at everything from cash to total market cap, cash flow versus CapEx needs, cash to free cash flow, all those types of ratios. We also considered our float, and liquidity for our shareholders, and after we looked at all that, we really didn't see a pressing need to do anything right now, particularly when you consider our growth needs, including the new distribution center that we're going to be spending money on over the next year. So we didn't see anything that was really urgent in terms of paying dividends or buying back stock, but it is something that we will continue to look at every quarter as we go forward.

Much appreciated. Thank you.

And we have a follow-up question from the line of Brian Tunick with JPMorgan. Please proceed.

Hey guys. My question was answered.

Thank you. Mr. Alexander, there are no further questions at this time. I'll now turn the call back to you. Please continue with your presentation or closing remarks.

I'd like thank everyone for their participation. Hope everyone has a great day and look forward to talking to you again soon. Goodbye.

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