DICK'S Sporting Goods Inc (DKS) 2013 Q4 法說會逐字稿

Good morning, and welcome to the DICK'S Sporting Goods fourth-quarter earnings conference call.

(Operator Instructions)

Please note this event is being recorded.

I would now like to turn the conference over to Anne-Marie Megela, Vice President Treasury Services and Investor Relations.

Please go ahead.

Thank you.

Good morning, and thank you for joining us to discuss our fourth-quarter and full-year 2013 financial results.

Please note that a rebroadcast of today's call will be archived on the Investor Relations portion of our website, located at www.dickssportinggoods.com, for approximately 30 days.

In addition, as outlined in our press release, the dial-in replay will be available for approximately 30 days.

In order for us to take advantage of the Safe Harbor rules, I would like to remind you that today's discussion includes some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which includes, but are not limited to, our views and expectations concerning our future results.

Such statements relate to future events and expectations, and involve known and unknown risks and uncertainties.

Our actual results or actions may differ materially from those projected in the forward-looking statements.

For a summary of the risk factors that could cause results to differ materially from those expressed in the forward-looking statements, please refer to our periodic reports filed by the SEC, including the Company's annual report on Form 10-K for the year ended February 2, 2013.

We disclaim any obligation, and do not intend to update these statements, except as required by the securities law.

We have also included some non-GAAP financial measures in our discussion today.

Our presentation of the most directly comparable financial measures calculated in accordance with Generally Accepted Accounting Principles and related reconciliations can be found on the Investor Relations portion of our website at dickssportinggoods.com.

Leading our call today will be Ed Stack, our Chairman and Chief Executive Officer.

Ed will review our fourth quarter financial and operational results, and discuss our guidance.

Joe Schmidt, our President and Chief Operating Officer, will then review our business development program.

After Joe's comments, Andre Hawaux, our Chief Financial Officer, will provide greater detail regarding our financial results and expectations.

I will now turn the call over to Ed Stack.

Thank you, Anne-Marie.

And I'd like to thank everyone for joining us today.

We had a strong fourth quarter and generated record earnings per diluted share of $1.11, which were $0.04 above of the upper end of our $1.04 to $1.07 guidance we provided at the end of our third-quarter call.

Our fourth-quarter total sales increased 12.5% on a 13-week to 13-week basis, excluding the 14th week in the fourth quarter of last year.

This was driven by omni-channel growth, both online and in our stores.

Shifted consolidated same-store sales increased 7.3%, which was above our expectations of 3% to 4%, which was on top of a 1.2% increase from the fourth quarter of last year.

Shifted same-store sales for DICK'S Sporting Goods were up 7.9%.

Golf Galaxy was down 11.7%.

Our e-commerce growth accelerated and exceeded our original expectations, while again increasing in profitability.

E-commerce represented 12.2% of sales in the quarter.

During the fourth quarter we saw strong performance across multiple categories, led by cold weather-related products and athletic apparel.

We also saw strength in licensed apparel, team sports and footwear, partially offset by declines in hunting and golf.

With this broad-based strength and an increase in mix of higher-margin categories, we were able to expand our merchandise margin, despite the shorter and more promotional holiday season.

Our fourth-quarter traffic increased 6.3%, as we benefited from investments in advertising, store payroll, opening price points, and cold-weather.

In 2013 we made significant advancements with our omni-channel network.

We opened 40 DICK'S Sporting Goods stores, increased store traffic, and grew our e-Commerce business by 65% to over $480 million.

We also strengthened our mobile capabilities, including the development and rollout of a new tablet site.

With this new tablet site, we generated a 12.5% increase in dollars per visit, and we are seeing success across all devices, including strong traffic and a 30%-plus increase in online conversion.

We also lowered our per-unit shipping cost by nearly 10% in 2013.

This has been accomplished through an increase in units per transaction, an increase in volume, and our ability to ship from store, which has reduced delivery costs.

As we continued to make investments and grow our business, we also returned $320 million in capital to our shareholders in 2013 through $64 million in quarterly dividends and approximately $255 million in share repurchases, and we still have up to $745 million left on our share repurchase authorization of $1 billion.

As we look to 2014 and further develop our omni-channel network, it's critical that we grow our store base while making our existing stores more productive.

According to Forrester Research, it's anticipated that by 2017 for every $1 the consumer spends online, they will spend nearly $5 in physical stores.

And our own research indicates that customers who shop both in-store and online spend three times as much as a customer who shops in only one channel.

To serve that customer demand, we will open approximately 50 DICK'S stores this year.

We are also executing a space reallocation plan with inside our existing DICK'S stores.

As we've discussed, we are shifting square footage to growing areas as we address challenges in categories like fitness and golf.

We anticipate completing the work in time for back-to-school.

Our online, we will further enhance site functionality, optimize navigation, expand merchandise availability while improving the profitability of our online transactions.

And by 2017, we expect online transactions to be more profitable than in-store transactions.

Joe will provide additional details on both fronts.

We are excited about the opportunities in athletic apparel, footwear, and team sports.

We do expect continued headwinds this year in our hunting business from lapping the guns and ammo business we saw for most of last year.

We also see headwinds in our golf business, as we expect the softness we saw in Q4 to continue.

For 2014 we anticipate generating consolidated same-store sales of approximately 3% to 4% and growing our diluted earnings per share by about 13% to 14% to $3.03 to $3.08 while we continue to make investments in e-commerce and Field & Stream to support our future growth.

We expect to continue to return capital to our shareholders, including utilizing our share repurchase program and paying quarterly dividends.

As you will recall from Analyst Day last year, our long-term targets are to generate $10 billion in sales at a 10.5% operating margin by the end of 2017.

We are confident in our ability to meet these targets, and as noted in Analyst Day, exactly how we reach those targets will continue to evolve as we adjust to changes in the business and apply new learnings.

For example, if the accelerated momentum in our e-commerce business that we saw in the fourth quarter continues, we would expect to reach our $10 billion in sales with more e-commerce sales and possibly an adjusted pace of new store openings.

In summary, we produced record fourth-quarter results, despite a shorter and more promotional holiday season.

We're excited about the opportunities in our business for 2014, and are confident that we will meet our long-term targets.

Before I pass the call to Joe, I want to take a minute to thank all of our associates for their hard work and dedication.

Without their commitment we would not be able to deliver record results and make the progress that we made toward our long-term goals.

I'd now like to turn the call over to Joe.

Thank you, Ed.

In the fourth quarter of 2013 we continued to expand our omni-channel reach and capabilities.

We opened 6 new DICK'S stores, bringing our store base to 558 stores in 46 states, and fully remodeled 1 store.

New store productivity was 91.7% in the fourth quarter.

Within our stores, we have 218 shared service footwear decks, 285 Nike Field House shops, 238 Under Armour All-American and Blue Chip shops, and 90 The North Face permanent shops.

In the fourth quarter, we again improved our ship-from-store capabilities by increasing the assortment available by over 120%, further leveraging our store base to fulfill e-commerce demand.

In January, we began testing buy-online-pickup-in-store in select doors, as we work to add an additional function that further integrates our stores and e-commerce operations.

As Ed mentioned, in 2014 we expect to open approximately 50 new DICK'S locations.

We also plan to relocate 6 stores to preferred locations, and fully remodel 5 stores.

We are pleased with the improvement we are seeing in the commercial real estate market, with approximately 75% of our 2014 openings attributable to new builds.

We will continue to invest in our existing stores through our space reallocation plan, which allows us to touch all of our stores and to increase their productivity.

This program will allow us to expand in strategic growth areas, such as young athletes and women's, where we see some great opportunities.

This year we are also continuing our journey towards e-commerce independence, building a multi- banner platform with our best-in-class partners.

And planning to bring golfgalaxy.com onto our own platform later this year.

Looking at our specialty concepts, we ended 2013 with 79 Golf Galaxy stores.

We made the decision to close 3 underperforming Golf Galaxy stores in the fourth quarter, as we continue to evaluate our store portfolio to maximize productivity.

We are pleased with the performance of the two Golf Galaxy stores we opened earlier this year in our new, larger prototype, as we have been able to increase our apparel penetration and enhance the customer experience.

In 2014, we expect to open one new Golf Galaxy store and relocate two stores, all in this new format.

During 2013 we opened two Field & Stream specialty stores, and we are seeing very positive reactions and enthusiasm from customers, vendors, and our associates.

Our grand openings were the most successful grand openings of any stores we've ever opened, and this momentum with our customers continues, with rapid sign-up and usage of our Sportsmen's Advantage card loyalty program.

The vendor community is also excited about Field & Stream, not only about the look and feel of the stores, but also about our extremely talented associates, many who have run their own outdoor businesses prior to joining the Field & Stream team.

The enthusiasm from these constituents is in response to just two stores.

So as we go into 2014 with plans to open an additional eight stores, we are very excited about the opportunity ahead of us.

I'll now turn the call over to Andre to review our financial performance and outlook in greater detail.

Thank you Joe, and good morning everyone.

Today I want to review with you four primary areas: our fourth-quarter results, our balance sheet and capital allocation, our 2014 outlook, and our long-term financial targets.

Beginning with our fourth-quarter results.

Our fourth-quarter sales grew 7.9% to $1.9 billion on a 13-week to 14-week basis compared to the fourth quarter last year.

On a 13-week to 13-week basis, total sales increased 12.5%.

Adjusted for the shifted calendar due to the 53rd week in 2012, consolidated same-store sales increased 7.3%.

DICK'S Sporting Goods same-store sales increased 7.9%, while Golf Galaxy decreased 11.7% in the fourth quarter.

The same-store sales increase in the DICK'S Sporting Goods business was driven by a 6.3% increase in traffic, as we benefited from our traffic-driving initiatives and by 1.6% increase in sales per transaction.

Unshifted consolidated same-store sales increased 6.3%.

For DICK'S Sporting Goods, unshifted same-store sales increased 6.8%, and for Golf Galaxy they decreased 9.4%.

E-commerce penetration was 12.2% of the total sales in the quarter.

Keep in mind that our same store-sales figures include e-commerce, as we believe providing same-store sales on a combined basis is more meaningful, given the symbiotic relationship between our stores and e-commerce.

Consolidated gross profit was $628.1 million, or 32.25% of sales, and was 36 basis points lower than the fourth quarter of 2012.

Merchandise margin expanded 33 basis points.

This was offset by an increase in shipping expense due to the growth in e-commerce and by occupancy deleverage.

Without the impact of the 53rd week and the calendar shift, occupancy expense would have leveraged slightly.

SG&A expenses in the fourth quarter of 2013 were $402.9 million, or 20.69% of sales, compared to SG&A expenses of $375.8 million, or 20.82% of sales, in last year's fourth quarter.

The 13 basis points lower SG&A expense as a percentage of sales was primarily lower due to lower administrative expenses.

Earnings per diluted share were $1.11 in the fourth quarter.

This was above our previous expectations and compare with consolidated earnings per diluted share of $1.03 for the same period in 2012.

You'll recall that the fourth quarter of 2012 included approximately $0.03 benefit from the 14th week.

When you look at our results compared to the guidance we provided on our third-quarter call, our Q4 2013 earnings reflect better than expected sales and merchandise margin, partially offset by higher than planned incentive compensation as a result of the better performance, and to a lesser extent the accelerated e-commerce growth that we had in the quarter.

As you know, our e-commerce business currently has lower operating margins.

We are continually improving the profitability of the channel, and expect online transactions to be more profitable than in-store transactions by the end of FY16.

Looking to our balance sheet, we ended FY13 with approximately $182 million of cash and cash equivalents compared to $345 million at the end of FY12, and no borrowings under our $500 million revolving credit facility.

Over the past 12 months we have invested in omni-channel growth, remodeled our stores, and returned capital to our shareholders.

Total inventory increased 12.4% at the end of the fourth quarter of this year compared to the end of the fourth quarter of last year.

Our inventory growth supports both our stores and our e-commerce business, and was in line with our 13-week to 13-week sales growth of 12.5%.

In the fourth quarter we repurchased an additional 2.6 million shares for a total cost of $150 million.

In total for 2013, we repurchased over 4.8 million shares for a total cost of $255 million.

In 2013 we made investments to support our omni-channel growth, launch our Field & Stream concept, and drive traffic.

These initiatives contributed to the accelerated growth in our e-commerce business, the very successful launch of Field & Stream, and the increase in traffic we saw in the second half of the year.

We also increased our return on invested capital to 12.1% in 2013 from 11.8% in 2012.

Since 2009 we have increased our return on invested capital by approximately 290 basis points.

Before I move on to guidance, I wanted to discuss one housekeeping item with you related to the calculation of new store productivity.

Beginning next quarter, we will calculate our new store productivity figure on a trailing 12-month basis as a relative comparison of the sales per square foot for new stores compared to our existing stores.

We believe that looking at the relative sales per square foot over four quarters more accurately reflects the performance of our stores and will minimize fluctuations in the metric due to the difference in timing of new store openings.

We have provided a more detailed explanation of the change in our press release.

Now turning to our 2014 guidance.

For the first quarter of 2014, we anticipate consolidated earnings per diluted share of $0.51 to $0.53.

Consolidated same store sales are expected to increase approximately 3% to 4% compared to a 3.8% decrease in our shifted comp in the first quarter of last year.

Gross margins are expected to increase slightly, with an increase in merchandise margins.

SG&A expenses as a percentage of sales is expected to be flat.

We are anticipating pre-opening expenses to increase year over year in the first quarter, due primarily to an increase in the number of new store openings relative to last year's first quarter.

The timing of these store openings will have an approximate $0.03 effect in the first quarter.

For the full-year 2014, we anticipate consolidated earnings per diluted share of approximately $3.03 to $3.08.

Consolidated same store sales are expected to increase approximately 3% to 4% on top of a 1.9% increase in 2013.

Slight gross margin expansion and SG&A leverage are expected to result in operating margin expansion.

With our share repurchases in 2013, diluted shares outstanding are expected to be approximately 124 million outstanding shares compared to approximately 126 million outstanding shares in 2013.

Our 2014 guidance contemplates a $0.03 impact on earnings per diluted share from e-commerce and an additional $0.03 from Field & Stream.

The impact from e-commerce reflects initiatives to bring our e-commerce business in-house by the end of FY16.

As Joe mentioned, this year we are building a multi-banner platform and developing the capabilities to run our Golf Galaxy site, as we lay the groundwork to run the much larger DICK'S Sporting Goods site.

We expect Field & Stream to be dilutive in 2014 and the ramp-up to continue into 2015, but it should impact earnings to a lesser degree that year.

In 2016, we anticipate the Field & Stream concept to be accretive.

The initial reactions to our new concept have been incredible.

Our two Field & Stream stores are more productive than our DICK'S stores, generating higher sales per square foot, are performing above plan, and are profitable on a four-wall basis.

We have clearly created disruption in the space, and believe there is much to be gained here.

Net capital expenditures for the full year 2014 are expected to be approximately $265 million, or about $360 million on a gross basis.

2013 net capital expenditures were $238 million, or $286 million on a gross basis.

Now, as we look to our long-term targets for $10 billion of sales and 10.5% operating margin by 2017, we remain confident in our ability to reach these goals.

We do not expect our operating margin expansion to be linear over the next several years.

The in-sourcing of our e-commerce platform and the launch of our Field & Stream will create short-term pressure on the growth rate of our operating margin.

Now to be clear, we will see operating margins increase every year, but we expect to see meaningful operating margin expansion once we bring our e-commerce business in-house, which is planned for the end of FY16.

We also expect Field & Stream to become accretive to earnings in 2016.

To sum it up, we had a strong fourth quarter and we are excited about the opportunities in our business for 2014.

We have a leading brand, a powerful omni-channel platform, and excellent vendor relationships.

We have a clear strategy that has delivered results, and a strong and flexible balance sheet.

Most importantly, we have a highly experienced and motivated team who constantly works to make our vision a reality.

I want to thank all of you for your interest in DICK'S Sporting Goods.

This concludes our prepared remarks.

Operator, you may now open the line for questions.

We will now begin the question-and-answer session.

(Operator Instructions)

Kate McShane, Citi Research.

Thank you.

Good morning.

Morning, Kate.

(Multiple speakers)question is around golf.

I think you said in your prepared comments that you're expecting it, the headwinds to still exist for golf, but we were under the impression there was a fair amount of new innovation coming.

Can you reconcile why that may be more of headwind than a tailwind?

There is some new things out in the market Calloway Big Bertha's done very well.

The SLD driver's done very well, but there are other launches that haven't done as well.

And we're a bit cautious about the golf business based on what happened in the fourth quarter.

Okay, thank you.

And then just my second question, with the square footage relocation that you're doing this year, are you expecting any disruption from that?

Is that very disruptive to the store?

And are you incorporating any lift from the square footage reallocation once it's finished for back-to-school?

Kate, we don't expect much disruption in the stores at all.

This is, I won't say business as usual, but it's not uncommon for us to make floor shifts in our stores, and we're pretty accustomed at doing these.

As far as the margin rate, what lift we see, we think that's one of the things that will help drive our comps.

That's one of the things that will help drive our margin rate, slight margin rate expansion, as this product is more accretive to the margin rate than the square footage we're taking it away from.

Okay, thank you very much.

Sure.

Brian Nagel, Oppenheimer.

Hi, good morning.

Good morning, Brian.

Congrats on a nice quarter.

I wanted to dive a little deeper into gross margin.

I know you addressed some of the drivers in your prepared comments, but so gross margins in the fourth quarter were down 30 basis points.

The 53rd week was somewhat of a disruptive factor, but the question I have is, as we think about the puts and takes for the fourth quarter, then your guidance [we have] up gross margins in 2014.

How are those puts and takes going to basically shift, and what should we think about for cadence through the course of 2014?

Yes, Brian.

This is Andre.

I'm not going to get into the cadence of the full year.

I think we talked a little bit about what's going to happen in Q1.

I think the way you should take a look at it is, as I mentioned for the year, we're going to see our sales with a slight merch margin increase year over year.

We believe over the full year we will leverage occupancy.

We will continue to see some headwinds on a basis points basis with respect to shipping expense, because of the strong growth that we're anticipating for our e-comm business.

I think that's the way you should look out the composition of that gross margin performance.

We do expect it to be positive on a full-year basis.

There's some puts and takes in each quarter.

You can see us increasing merch margin for the full year.

You'll see us leverage occupancy, and you'll see slightly higher shipping expenses on a basis point basis.

Okay.

Just a follow-up.

So when we think about the shipping cost, is that simply a function of e-commerce continuing to grow as a percentage of your total sales, or are you doing something more on the shipping side with e-commerce?

No, absolutely.

That's exactly what you should see.

It's a function of the outsize growth we have in that space.

Got it.

And then the follow-up question, weather.

It's my assumption that, to a certain extent, DICK'S benefited from weather in the fourth quarter.

So now we're basically, what, a third of the way through the first quarter.

Maybe we're starting to see some temperatures improve.

Is there any commentary you can give about what you're seeing as far as sales as weather has maybe begun to turn more spring-like?

Well as you know, Brian, we don't talk about -- comment on a quarter within a quarter, but we've got all the weather patterns, everything that's happened to date is baked into our guidance, and we're comfortable with the guidance that we've just provided.

Okay, fair enough.

Thank you.

Okay, thanks.

Matthew Fassler, Goldman Sachs.

Thanks a lot, and good morning to you.

I want to -- I have two questions.

The first relates to the sales outlook for the first quarter and for the year.

In the first quarter, you're up against one of your easier comparisons, and your guiding in line essentially with your comp outlook for the year when presumably you have some tougher comparisons going forward.

How should we think about kind of the multi-year stacks, or the thought process behind that, given that the compares get tough and the sales forecast tougher, and the sales forecast in aggregate remain essentially unchanged from the Q1 level?

We've taken a look at what we think is going to happen in Q1 to date.

And it's been well chronicled, kind of what's happened in Q1.

So I'm not going to get into that, but as we've taken a look at what we feel Q1 will be, we're comfortable with that guidance and we're comfortable with our overall guidance.

I wouldn't expect to see it necessarily be in a linear fashion every quarter, but we're comfortable with the sales guidance we've given in the first quarter and for the whole year.

Should we assume to some degree that the weather impact that we've had so far is nullifying some of the pressure that you would have seen a year ago when we think about the compare?

Yes, it was not a great weather year last year.

We benefited from, in the fourth quarter from weather.

That was -- there was a number of retailers that might not have been happy about it, we loved it.

We thought it was great.

But it wasn't very good last year in the first quarter for getting kids out on the field and playing golf and all of those things, and this is actually probably a bit worse than last year.

Got it.

Okay, that's helpful.

And we've got all that baked into this quarter.

Second question I'd ask.

As I think about the fourth-quarter occupancy number, Andre, you indicated that without the extra week, without the calendar shift, your occupancy would have leveraged slightly.

Now that was with a 7% comp.

I'm not sure if it leveraged only slightly because the 7% comp includes a lot of online and your not necessarily leveraging the store, or if they're rent escalators or something like that.

So how should we think about the moving pieces that drives your occupancy leverage in any given quarter?

And can you, with a more moderate comp then you put up in Q4, generate consistent occupancy leverage?

So the answer to the tail end of your question is yes, Matt, we can and will leverage our occupancy with lower comp then the plus-7% that you saw in the fourth quarter.

I think there's a couple of other things that we do not call out because we also benefited from weather, obviously significantly in the fourth quarter, but inside that occupancy number there were also we had this year versus last year our utility costs were slightly higher and our snow removal costs were actually slightly higher.

They did have an effect on our occupancy in the fourth quarter.

We didn't feel it was appropriate to talk about those things because they were something significantly more than we have the year before, but we got a lot of benefit from weather.

I think that's the other reason you're not seeing as much.

When I said it was a slight leverage factor, if we have gone 13 weeks to 13 weeks.

It would've been significantly more, had we not had one-time costs related to some of those weather-related items.

That's very helpful color.

Thank you so much.

Chris Horvers, JPMorgan.

Thanks, and good morning.

Wanted to focus on something you said at the of end of your commentary, Ed, in terms of the sales composition over the 2017 plan.

You said you'll adjust and you'll evolve as you learn, and perhaps e-comm becomes a bigger portion at the expense of new store open.

Can you just expand on that, share your thoughts in terms of what that could mean in terms of the potential number of store openings, and did you dial back on any opens this year, reflecting those learnings?

We have not dialed anything back this year.

And the purpose of the comment is to kind of articulate what we said at the Analysts Day, that we know that the composition of this $10 billion can change slightly.

We were very pleased with how well we did from an e-commerce standpoint this fourth quarter.

Our team did a great job.

We get very aggressive from marketing our e-commerce business, not only in the traditional inserts that we put in the newspaper, but also we did our first-ever dedicated TV ad to just e-commerce.

And we had great results.

So as we take a look at this, and if those results continue to accelerate the way that they have, we could modify our store growth plans, kind of how many stores we open up in a year.

We did not take anything out of this year.

We're going to open up 50 stores, that's what we planned.

And we will see as we go forward, do we want to modify that plan in any way.

That doesn't mean that our total store number is wrong.

We still feel pretty comfortable about that, but the timeframe by which we get there may adjust slightly.

Okay.

I got you.

So there could be growth beyond 2017 that gets to the number of stores that you think about, but the pacing of e-commerce, the upside that you're seeing in terms of the sales growth, it could be a bigger portion?

Yes, there's a couple of things there.

So we're really referring to the DICK'S stores here, and there's the acceleration of the e-commerce business, there's the, what we're doing from a Field & Stream standpoint, that as we go through this and we learn more about Field & Stream, about e-commerce, we could choose to change the trajectory of our store opening.

We're not doing that yet, but we're just saying that there is the possibility we could do that based on what we learn over the next 12, 18, 24 months.

Chris, what you and the team, this is Andre, what you and the team should take away, and the investors should take away is we have a very disciplined capital allocation strategy.

So we're going to watch how our business performs.

And we have very high standards.

When we put a store in, the return criteria we have for that store is very, very high.

And we're very disciplined about reviewing that.

Myself, Joe, and Ed are constantly looking at those, evaluating those new stores.

You should take comfort that that is the discipline we're going to put into place.

And can you share what your conversion rate actually is online?

I know you mentioned was up 30% year over year, and perhaps share what percentage of your online orders actually ship from store in the fourth quarter, and how that grew year over year?

Yes, for competitive reasons we're not going to lay that out there, but our conversion rate up 30%, or roughly 30%, is still not where we would like it to be, but it's significantly better than it has been.

And we still think as we continue to try to look and compare ourself to best-of-class online retailers, our conversion rate is still lower than we would like it to be but we're making great strides in it.

And then one just cleanup question.

D&A and tax rate for 2014?

I think we're looking at 38%, 35% or 39% -- 38.5% is what you should model for the full year.

There's going to be some quarterly ebbs and flows based on, say, tax audits and things like that, but I think you should use 38.5% for your rate for modeling purposes for 2014.

And depreciation?

We're not going to share that [data].

Okay.

Thanks very much.

Piper Jaffray.

Hi.

Thanks for taking the question.

So Field & Stream, sounds like things are off to a really good start for you guys.

But can you talk a little bit about the impact it is potentially having on your other DICK'S Sporting Goods stores, specifically the Lodge business in that Pittsburgh market, and any learnings that you have at this point from that experience?

It's actually not having any different change to the Lodge business than some of the other competitors that we have a lot of respect for in the space, such as the Cabela's or Bass Pro.

We're not seeing anything different than if it was one of those competitors that came in.

We've been competing with this group of very good retailers for a long time.

So we compete kind of a similar way with the Field & Stream concept.

So we're not seen anything different than what we anticipated.

Okay, that's helpful.

Thank you.

And then can you talk a little bit about the licensing business?

You been doing some space optimization in-store.

Is this potentially helping this business?

And then historically, do the Olympics or World Cup have any lift in this area?

Yes, the Olympics, not much, never really do.

World Cup is impactful, and we expect the World Cup to be, and has already been, a nice, helpful driver of the business.

In the fourth quarter we had a nice World Cup Run With The Ball and some other things, and we continue to accelerate our exposure to the World Cup as we get closer to the games, but we're very excited about the World Cup.

The Olympics, from a sales standpoint, although a lot of people are really interested in it, they're watching it, it really doesn't translate into an awful lot of sales.

Got it.

And then just quickly on, assuming the weather normalizes for Q1, would you typically say a later Easter holiday is positive for your Q1 comps?

Or doesn't really move the needle too much?

A later Easter is usually not good for the Q1 comps.

We like to get Easter earlier, but later Easter is not positive.

Got it.

Thank you.

Best of luck in Q1.

Sure.

Thank you.

Gary Balter, Credit Suisse.

Thank you.

I was going to mention if you have stores in Canada you would have done well with the Olympics, but we'll skip over that (laughter).

Could you talk about the guns and ammo and the headwinds?

Like, you mentioned that's obviously having an impact right now in the comparison?

And the Field & Stream obviously doesn't count, it's only two new stores.

But in the DICK'S stores, how much headwinds is hitting first quarter and future quarters?

As you take a look, Field & Stream, even if we had more stores in Field & Streams, they're not comp yet because we just open them.

Right.

But the gun and ammunition business has really softened.

I'm not going to give you an exact number, Gary, but it's relatively significant.

It's relatively meaningful to our business, and if you kind of see some of the other guys, what Cabela's suggested is their first quarter comps are going to be down 20% because of the gun and ammunition business.

And you can kind of apply that, it's a pretty significant reduction in that business, it's really cold off.

It will become less as we get further into the year.

So in the first quarter is probably the most significant quarter impact on the guns and ammunition, business because it the first quarter was still relatively close to the tragedy that happened at Sandy Hook when there was a lot of conversation about gun reform and a lot of people bought that product because of the issues of what they felt was going to happen from a legislative standpoint.

As it got later into the year, you can see that that wasn't going to happen, it becomes less of an impact.

So Q1 is the biggest impact, Q2 would be next, and then Q3, and then Q4.

Okay.

If you look at the -- e-commerce now is, I guess, about 8% or just under 8% of the business.

If you look at the gross margin, how much lower is the gross margin right now in e-commerce versus in the stores?

It's not a lot different.

It's a little bit lower on the actual merchandise margin.

But it's not a lot lower.

The difference, the reason why it's not as profitable is we anticipate it could be are because of the transaction fees with GSI, the fact that -- primarily the transaction fees with GSI is the biggest issue.

And, as we continue to escalate the shift from store penetration, that will make it more profitable.

And when we get the buy-online-pickup-in-store, which we are now up and running in a test in several stores with, that will be -- that will help it be more profitable also.

So when does the GSI transaction fees, when you take full control of it?

Not until the end of 2016.

Okay.

2016, sometime in 2017.

And then one last question.

As you -- you talked about the reset of the store, and you've talked about that before at the Analyst Meeting.

Putting aside the near-term impact of getting out of the fitness and reducing golf and expanding out some of the other apparel areas, if you look at the return on invested capital, or the box, like a year ago, and then you look at the way it's going to look when it's all reset, what are your thoughts about what that does to either sales productivity or margin opportunities or returns?

Well we're not going to provide guidance at that level of detail, but we think it's definitely positive and accretive.

The apparel business that we're looking to expand in the women's side and the youth side is more profitable than the golf area or the fitness area that it's replacing from a square footage standpoint.

And we think we can -- we don't think we're going to lose any sales by reducing the square footage in golf and square footage in fitness.

As we looked at it, and kind what's happening to that business, they were oversized.

So the reduction in space isn't necessarily going to mean a reduction in sales, but an expansion in space and content that we'll have on the women's and youth area, and a little bit in the team sports area, should be accretive to the sales and to the margin.

Okay.

Thank you very much.

Sure.

Thanks, Gary.

Sean McGowan, Needham and Company.

Thank you, guys.

Regarding Field & Stream, can you give us some sense of what you expect the timing of those openings to be in 2014?

And going forward, how much detail will you be giving us regarding the sales, same store sales for that line?

Sure, I'll talk about the timing.

We'll open our first Field & Stream store in the second quarter of this year, and the remainder, the other seven, will be in the third quarter of this year.

As we take a look at what information we're going to give you on Field & Stream, we're probably not going to get to too detailed of a level until we have some stores of some scale.

So we've got two stores open now, we're going to open up eight stores next year.

We'll open up, I expect we'll open up more stores, the plan is, in 2015, and sometime around 2015 -- sometime in 20135 we'll start to give you some more detail around Field & Stream.

With that being said, as Andre indicated in his remarks, the stores are very productive from a sales per square foot basis, pretty meaningfully more than what we get out of a DICK'S Sporting Goods store.

I will tell you the margins are a little bit lower right now, as you would expect.

As we continue to kind of evolve the mix of the business, the apparel penetration of the business, guns and ammo is still a meaningful part of this business.

We think it will continue to become less part of the business, and the four walls of the two stores that we have opened today are profitable, and the four-wall profitability of the new stores we're opening do not have to be any more then the sales that we're getting out of these two stores.

So we don't have a model where we have to improve what we're doing right now to make sure that those four walls are profitable.

So we continue to be really enthusiastic about this.

We just think it's too early to provide much detail until we get some scale.

Okay, and I would imagine that at the point at which those two stores do comp next year, it will move the needle much, but will you include those in your overall comp commentary?

They will be in the overall comp number, but we're not going to call them out specifically right now.

Okay.

And then Andre, last question I have is in your guidance, do you make any assumptions for future buybacks, or it's just what's already been done?

For purposes of your modeling, you should assume 124 million outstanding shares.

Do not assume any buyback.

That's the guidance we provided today.

Okay, thank you.

Michael Lasser, UBS.

Good morning.

Thanks a lot for taking my question.

You provided some commentary that a big driver, the margin expansion over the next few years is going to be scaling the profitability of the e-commerce business.

It sounds like a big piece of that's going to be coming from rolling off the GSI relationship.

When all said and done by a few years from now how -- can you contrast the margin profile of the online business to the in-store business from both -- what's going to drive the profitability of that business to be better than the online business -- the in-store business?

I'm not sure how much detail I'm going to lay out since this isn't going to happen for a couple more years, but the transaction fees are pretty meaningful.

We will be able to leverage some of the distribution expense on the e-commerce business, which right now with the GSI -- the deal we have from GSI, it's difficult to leverage those costs.

So our fulfillment costs we will be able to leverage going forward, which is very difficult to do right now based on the transaction fees we have.

And that's a very big part of it.

Another part of it is, just as we build out the infrastructure here, as Andre indicated, there's going to be roughly $0.03 that we're going to be investing from an e-commerce standpoint that's dilutive to earnings this year.

We're going to be investing that infrastructure, and as we continue to drive the business that will make it more profitable because we'll be able to leverage the infrastructure investments we've been making and will my continue make over the next several years.

Okay, and then related to that, as you think about the profitability of the in-store business over the next few years, what have you factored in from customers migrating out of store into online, and then its subsequent impact on the profitability of the stores?

We don't think that that's going to make a significant -- we feel our gross profit will be flat or up inside the stores as we continue to move to the these higher-margin rate products that we have been talking about.

We think that the store comps we kind of laid out at Analyst Day.

We think we can do that.

So we don't think that we will see a decrease in profitability in the stores, but it up for us to make the store more productive, which one of the things we're working on based on this space reallocation.

I'd also just add s point to Ed mentioned is, we believe our stores are very critical to the strength and the health of our e-commerce business, specific what we do with ship-from-store and how we utilize the store as a distribution point.

Joe mentioned also we're piloting and have piloted buy-online-pickup-in-store, another critical factor.

And what we've seen based on our data and our research is when we put stores in new markets, the amount of e-commerce that moves -- the amount of e-commerce traffic that we get from those zip codes is pretty significant because people understand DICK'S a whole lot better.

We believe that the stores play a very critical role in our entire e-commerce business.

Thank you, that's helpful.

My follow-up question is on the competitive landscape.

In the third quarter you talked about some flare-ups within particular regions.

Can you give us an update on the promotional environment?

Thank you.

Just to be clear, we didn't characterize it as a flare-up.

We characterized it as that we've got some competitors that have gotten a bit more aggressive from a pricing standpoint.

That hasn't changed.

We've continued to keep that pricing in place.

And we have that baked into our guidance going forward.

Thank you very much.

That's helpful.

Sure.

Camilo Lyon, Canaccord Genuity.

Thanks.

Good morning, everyone.

I was hoping you could just talk about your shop-in-shop opening plan for 2014 by brand, and is that incremental to the space reallocation that you're talking about with women's and kids, or will that include dedicated shops for the women's and kids categories?

In the kids categories there will be some space devoted to Under Armour and Nike specifically.

As we really reallocate that space.

Some stores will get more, some stores will get less from a square footage standpoint and from a build-out.

As we continue to go forward, all of our new stores will have -- virtually every new store will have a Nike shop, an Under Armour shop, and a couple of other brand presence in there.

And all of the stores that we open up new will have this reallocated space that we're doing, which we think will be quite helpful.

And just to add to that, any remodeled or relocated stores will add those shops in as well.

So that's about roughly 70 or so programmed?

About right?

Mid- 60s.

Okay, great.

And then going back to the e-commerce discussion, I'm more curious to know if you could shed some light on what the magnitude of the benefit should be in 2017 when the GSI contract rolls off from a basis point perspective?

We're not going to get into the outlook for 2017 and what the impact of that's going to be at that point in time.

Rest assured we've modeled it.

We know when the fees comes off, but we're not going to start speculating about 2017 or 2016.

Okay, and then just lastly, you mentioned the pre-opening costs in the first quarter that's going to weigh on the earnings a little bit.

It looks like that's about $1 million per store.

Is that the right run rate to use for the rest of the year?

No.

No, that is not.

That seems a little bit high.

I think part of it is the comparison, or the comment I made about $0.03 is really our comparison, we opened up two stores last first quarter, well Q1 of last year.

We're opening up a total of nine, including Field & Stream, which the grand openings there and the pre-openings are a little bit more because we make a very big splash in the marketplace with the building of that brand.

So I don't think that's the way to look at it.

So on a per store basis, then, it's still pretty consistent, is that right?

Yes, correct.

Okay, great.

Thanks, and good luck with the rest of the year.

Thank you.

Dan Wewer, Raymond James.

Thanks.

Ed, on your comments about the golf business perhaps being softer, I believe that category represents over 20% of your revenues April through June.

Last year the industry was negatively impacted by weather.

Are you expecting a repeat of that, or is there something more secular changing that makes you a bit more cautious?

We've talked about that we're cautious -- have been cautious about the golf business for a while.

We kind of laid out in the Analyst Day why we're -- how we feel about the golf business and what our strategy is around the golf business.

I think it's a difficult business.

We expect it to continue to be somewhat soft, but as we said it's all baked into our guidance, and we're comfortable with our guidance.

You highlighted taking space out of the golf category, reallocating there faster-growing departments.

At the same time you're highlighting increasing the size of the Golf Galaxy prototype.

Is the takeaway that this industry is changing now that the superstores, whether it's Golf Galaxy, PGA Tour Superstore are making the golf departments in stores like DICK'S less competitive?

I wouldn't go to that extent, and you've got to remember PGA Superstores has less than 20 stores.

We've got 560 stores.

So, and Golfsmith doesn't have very many of the larger stores.

So I don't think that's -- that's not what's impacting the golf business right now.

There's just a secular issue in the golf business with, whether it's new products out there, or rounds played, the weather, there's a whole bunch of things that are issues with the golf business, and it is a somewhat soft business right now.

And we don't expect that to change.

We've taken the appropriate steps inside of our stores to reallocate space to make it more profitable.

I think even if the golf business was positive we would probably be making these changes in the space for the women's and youth business because those businesses are just growing at a much faster rate than golf would on a normal basis.

And the margin rates in those categories are higher than the golf business, and the turn is higher than the golf business.

So with less than 20 PGA Superstores and a few Golfsmith superstores, that's got absolutely no impact on our golf business or how we feel about the golf business.

And just the last question I have.

Cabela's and Bass Pro have, for the most part, effectively avoided opening stores and cannibalizing each other's business.

When you think about the next 50 store openings for Field & Stream, do you think you'll be able to identify locations avoiding those two competitors, or will there be a tipping point where you begin to see two or three of those same competitors in the same trade area?

I think that right now we will do our best to avoid the competitive markets and move to the less competitive markets.

I don't know what they'll do, but I suspect they would probably do something similar to that.

And again, Bass Pro and Cabela's, although they're terrific retailers and we've got a lot of respect for them, they don't have that many stores, each of them don't have that many stores in the grand scheme of things.

And so there's still an awful lot of open areas out there where we can open and where they can open that they will be -- that those markets will be less competitive or not competitive with each other.

Great.

Thank you, and good luck.

Sure.

Michael Baker, Deutsche Bank.

Thanks.

So just real quick, the e-commerce, the shipping drag.

What percent of your product ships for free already now?

And I guess if you had to do any more aggressive in terms of your shivering offering, like lowering the tare, right now I think right now it's $375 or higher, but any changes there?

Right now there's a significant amount of our products that shift for free.

It's probably somewheres around 90% of the products we ship for free.

So that's already based on the profitability model.

We don't have -- we're not worried about having to change our shipping model and to reduce costs, to increase costs, to drive sales.

We're just about 90% right now.

So you had said that the biggest drag on the margins, you said the merchandise margins is a little bit lower but the biggest drag is the GSI.

I imagine the shipping must be a big drag as well?

Well, the shipping, there's a cost to shipping it, of course, but we've looked at ways to reduce that, and as we said in our prepared remarks, we reduced the shipping costs by about 10%.

So, okay.

Obviously, then, as you said, not as big as the GSI drag.

Okay, and then another quick one, a question would be CapEx up significantly this year.

I assume that's Field & Stream and a lot of remodels, but is there anything else we should know about the big increase in the CapEx in this year versus last year?

Can you sort of break down, I guess, the number, the $360 million number?

Yes.

So Michael, just so you know, the delta, as you rightfully have pointed out, is really largely driven by the fact that we're opening significantly more stores year over year.

So it's all on the new store side versus a year ago.

All the other CapEx amounts are pretty much in line with what we spent a year ago.

So it's those 50 DICK'S stores and it is the 8 Field & Stream stores that are driving the biggest piece of the capital movement.

It's a new store CapEx is what percent of the total?

Do you guys ever talk about it that way?

No, we don't talk about it that way.

Okay, thank you.

Joe Edelstein, Stephens, Inc.

Good morning.

Thanks for taking the questions.

We've heard you talk about the outsized growth in e-commerce, and I think it's been tried to be asked a couple of different ways, but what level of growth rate do you have embedded into the 3% to 4% consolidated same-store sales growth forecast as it relates just specifically to e-commerce?

And then also if you excluded that e-comm growth, can you still comp positively at the retail stores?

So just to be clear, we did this several years ago.

We talked about the fact that we're an omni-channel retailer and so we are going to talk about omni-channel comp.

So we are not going to disaggregate our growth rates for e-commerce and what it is for sort of brick-and-mortar.

So the comps that we're sharing with you are a combination of those, and that's the way we're going to keep our guidance going forward.

But to answer the second part of your question, yes, we believe that we can still -- if we took that away, we could still comp positively in the traditional stores.

Okay, and also you commented on the change in the new store productivity calculation.

I'm curious, what is the new store productivity range that you'd expect in 2014, which primarily is going to be driven by the DICK'S store openings?

As we talked about at Analyst Day, we see ourselves doing the things we want to do if we're in that first year 90%, 95%, and then 100% by year three.

So that's kind of what we hold ourselves accountable to.

So you could expect us to be looking at those kind of numbers.

And right now we've been very, very happy with our new store openings and they are delivering against that metric.

We feel very good, but if you looked at -- we talked at Analyst Day, it was 90% in year one, 95%, and them 100% by year three.

Okay, and then just one last question from me on capital allocation.

You have the $0.0125 quarterly dividend for about two years now with the special dividend back in 2012.

Just how are you thinking about the dividend today?

Is there a specific yield that you'd like to target?

And then secondly, could you just kind of rank order some of the priorities for your cash?

Obviously, the store growth, but any potential for M&A activity as well?

Sure, I'll take that question.

So, I think our use of cash, we've talked about this, is kind of number one is investing in our business because we feel very strongly in the growth prospects of our business, that's number one.

Number two, we will also, and we demonstrated that in FY13, we will also return cash to shareholders via share buyback.

So that would be number two.

To your question relative to the dividend, we have a meeting whereby we take our Board through our capital allocation strategy.

There is an upcoming Board meeting where we'll be sharing our share repurchase strategy as well as our dividend policy as well going forward.

So that's on the docket with the Board in the next couple of Board meetings.

And any potential for M&A that you see today?

No we wouldn't -- if we did, we wouldn't comment on it.

It's one of the things we're always looking at, how do we enhance our business, what do we look at in the business development space?

But so really no comment at this point in time, but we're constantly looking at the landscape and seeing what's happening in our space.

Okay.

Thanks for taking the questions.

Paul Swinand, Morningstar Investment Research.

Good morning, and thanks as always for the patience with all the questions and your generosity with your time.

Looking at the golf business, I know you're making some cautious comments.

You've closed some stores, you're opening some stores.

You mentioned that it's a larger location, that's it's going to be a larger size.

Can you comment a little bit more about the fleet of Golf Galaxy stores and the sizes and locations, and is there more that you need to switch over to the new size and concept?

Well, as we indicated at Analyst Day, as these leases for the Golf Galaxy stores come up for renewal, we'll look at each one of those individual stores uniquely.

So if there's an opportunity to -- if we like the marketplace and there's an opportunity to drop in a new 25,000, 30,000 square foot superstore for Golf Galaxy, then that's what we'll do.

So we'll look at each case individually and make that call as these leases come up for expiration.

So the three stores that we did close, those that were at the end of their leases.

So the size improvement is a significant difference if the market warrants it?

Exactly, exactly.

And really what the size gives us, we called out in the notes a couple of things.

We think it gives us a fantastic apparel presentation and an opportunity to really move the margin rates in the stores.

And then second, we're able to put in some pretty significant fitting centers, together with our vendor partners, Calloway, Tailor Made, Titleist, and we think this really improves the experience for the golfer in our stores.

Thank you.

Yes.

David Schick, Stifel.

Hi, thanks.

Good morning.

Congratulations on the e-commerce success.

Sort of a different sort of question.

You got into a little bit of this.

In that online business with the growth, how much of that is coming from existing customers versus new customers that you're bringing in?

And then you mentioned the business does better where you see a store go in, your online business, rather, does better where you see a store go in.

How much business are you doing in markets where there really not a relevant DICK'S store?

The business is coming from both new customers and existing customers.

More of it's coming from existing customers than new customers.

And as we said, in the whole omni-channel world, if somebody is using multiple channels to buy product from us, they spend three times as much as somebody who doesn't.

So there is a combination of new and old.

There's more business being done in markets where we have stores than markets where we don't have stores, as you would expect.

So I don't think there's any surprises there.

Okay, thank you.

Sure.

Jay Sole, Morgan Stanley.

Hi, good morning.

Morning.

Another question on e-comm.

Did you see a spike in online sales when weather made it difficult for people to get to the stores because of bad weather?

That would be on a day-by-day basis, so I haven't looked at that.

But I think that you would intuitively think that would be the case, but we haven't looked at it on a day-by-day basis because we've got.

In the fourth quarter, beginning of the first quarter, you had bad weather.

You can't get out for a day or two, and maybe somebody shops online, but I can't, I really can't answer that question very effectively for you.

But it would make sense, intuitively it makes sense.

Okay.

And maybe on the shop-in-shops, can you talk about the kind of lifecycle for the shop-in=shops?

How long they last before they need to be refreshed and updated into like a new, fresher shop-in-shop concept?

Kind of ballpark, five to seven years.

Okay.

Then maybe lastly --

But with that being said, five to seven years, but we're changing graphics and some other things in there so it's not exactly the same.

But any meaningful change from a cost standpoint, probably five to seven years.

But we're changing, depending on who the key athlete is, we're changing those graphics.

Whatever the key season is, we're changing those graphics.

But a complete remodel is probably five to seven years.

Got it, okay.

Maybe just one last one.

Talking about the change in the way you're going to report new store productivity, what does that number look like now, and how has that trended?

And then if the new store productivity in some of the smaller kind of markets that you're moving into, like Findlay, Ohio or Salina, Kansas, how does this sales per square foot in those markets compare to some, like the average market?

Actually to answer the latter part of your question, I think actually we do very well in small markets, extremely well, and it doesn't matter whether in a small market we have a 50,000 square-foot box or a 30,000 square-foot box, which you know is one of the new prototypes that we have for much smaller markets.

We've actually seen that performance be very, very good.

I think your first part of your question, we detailed with quite some detail what the calculation was in our press release so I'm not going to go through that.

As I said earlier to another question that was asked, I think we're looking at in the neighborhood of 90%, 95%, and about 100% year one, year two, year three.

And we're tracking against that pretty well as we look at our new store openings that we have in FY13.

Got it.

Thanks so much.

Good luck.

Joe Feldman, Telsey Advisory Group.

Hello, guys.

I wanted to follow up on something you said earlier about Easter coming late having -- being not so good for the business.

And I guess I'll come out this comp thing from a different angle.

If the weather's still rough out there, I know up here in Northeast it's all still snow-covered fields.

We're not close to spring sports right now, at least getting out on the field, even though the timing would be now.

How does that impact you guys?

I guess I'm curious as to the confidence behind that 3% to 4%, that scenario?

We're quite confident of the 3% to 4%.

The field's aren't -- the field's are still snow-covered now, but the quarter doesn't end until April, and I'm not sure what the question is regarding Easter?

Well, no.

I just meant the late Easter plus this year, late Easter plus the snow-covered fields, what impact that has?

But you answered that, so.

Also can you talk a little about, you mentioned a few times some of the new product introductions for the year, the shop-in-shop.

Maybe just a little more color on some things?

Is it more in the apparel, is it technical, is it footwear where you might be seeing some of that?

We see it in different places.

As I said, there some things in the golf business doing very well.

Calloway has done quite well with the introduction of the new Big Bertha and the Big Bertha (technical difficulty) and Apex Irons.

Footwear continues to do well.

The move to the basketball silhouette, we find has been really very good for us.

And those are higher average retails than some of the other products that we've had.

So we're happy with that.

And also the hunt/fish apparel component we've added, that's been around for a while, we just haven't been as aggressive in its.

The hunt apparel and fishing apparel categories that we've put into the stores, really from our learnings of what we got out of Field & Stream is where we saw this and gave us the confidence to be more aggressive here.

We think that's an area that's going to help sales and margin rate from those categories.

Got it, thanks.

And then if I could just ask one more.

On the e-commerce, I may have missed it and I apologize if I did, the ship-from-store -- sorry, not ship-from-store, the pickup-in-store test, because I remember at the Analyst Day you guys had talked about that a bit, just where does that stand in its test process right now, and what -- maybe any color you could share that you're seeing from that?

Like, especially when you combine ship-from-store?

Like, does it really have a big boost in terms of total e-commerce sales, or do see a big pick-up when people come to the store to pick up the goods that they're buying online?

It's really in its infant stages.

So ship-from-store, we have a very robust program with ship-from-store.

Every store that e open is set to -- all new stores that we open have the capability to ship from store.

So we're really, we're well down the road in ship-from-store.

The buy-online-pickup-in-store, we've got in roughly 100 stores right now, but it's not in all categories.

So we're just testing -- we're testing several categories.

So this is really in its infant stage right now, and we'll accelerate through the balance of the year.

Got it.

Okay.

Thanks, guys, and good luck with this first quarter.

Thank you.

Thank you.

Omare Assis, Wells Fargo.

Good morning.

Just one quick question here.

With respect to the eight Field & Stream stores announced for 2014, can you talk to any changes being implemented relative to your initial prototypes?

I think the changes that you would see would be relatively small.

We continue to tweak the store inside with some categories, some items, but as far as the full presentation or the way that the construction and flow is, you're not going to see anything meaningfully different.

I think it's all around the content and some of the categories that we're trying to exploit inside stores.

That said, we'll obviously conduct some tests in a couple of stores that may not be rolled out to all stores until we feel a bit more comfortable about some of those.

Thank you.

Chris Svezia, Susquehanna Financial Group.

Good morning everyone, and thanks for taking all the questions.

I guess I have one here on store labor.

I know I think in the third quarter last year you increased your store labor, made some tweaks there.

Just any color about how that might have benefited you in the fourth quarter, either from a commercial perspective?

And any thoughts as you think about 2014 on the store-labor front?

We think that did help us in Q4.

Obviously having more associates on the sales floor to assist our customers we think is positive for us.

As far as 2014 and how we're looking at it, we continue to look at our processes and what we do today from an operational point of view that really doesn't make sense and how do we take those hours out of operations and put them into the customer selling portion of our labor.

So we learned a lot in Q3 and Q4 with evaluating some of these.

We think we picked up some additional hours in the stores, we know we did.

And we continue to look at those opportunities as a way to put more hours and selling associates in front of our customers.

Okay, thank you.

And then Ed, a question for you just on product, and I don't want to get too much (inaudible) here, but on the athletic side, any thoughts on the running business?

You got some new technology and product coming to market.

Any thoughts about how you guys are thinking about that segment of the business?

We think the running business can still continue to grow, both on the apparel side and on the footwear side.

Okay.

Thank you very much, and all the best to you guys.

Thank you.

Thank you.

This concludes our question-and-answer session.

I would like to turn the conference back over to Ed Stack for any closing remarks.

I would like to thank everyone for joining us on our fourth-quarter call, and look forward to seeing everybody on our first-quarter call.

Thanks a lot.

Thanks.