DICK'S Sporting Goods Inc (DKS) 2015 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 2015 financial results.

On today's call will be Ed Stack, our Chairman and Chief Executive Officer; and Teri List-Stoll, our Chief Financial Officer.

Andre Hawaux, our Chief Operating Officer, will join us for Q&A.

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

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

During this call, we will be making forward-looking statements which are predictions, projections, or other statements about future events.

These statements are based on current expectations and assumptions that are subject to risk and uncertainty.

Actual results could materially differ because of factors discussed in today's earnings press release and the comments made during this conference call, and in the Risk Factor section of our Form 10-K, Form 10-Q, and other reports and filings with the Securities and Exchange Commission.

We do not undertake any duty to update any forward-looking statement.

We've 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 Dick's.com.

I'll now turn the call over to Ed Stack.

Thank you, Anne-Marie.

Good morning.

As we close out one of our more challenging years, it's important to step back and assess the state of our business in light of the opportunities that lie ahead.

During 2015, we meaningfully grew our omni-channel platform, ending the year with 644 DICK'S stores, 73 Golf Galaxy stores, 19 Field & Stream stores, including 4 combo locations.

We maintained a very strong new-store productivity, well over our goal of 90% in these new stores.

And our stores continued to score our eCommerce business, which for the full year increased approximately 19%, to over $748 million.

We also made significant progress transitioning our eCommerce business onto our own web platform.

We relaunched golfgalaxy.com onto this platform, including ship-from-store capabilities.

We launched Field & Stream's first-ever eCommerce website, and both have been very successful.

Finally, we have a very strong balance sheet, ending the year with over $100 million in cash, with no borrowings outstanding at our $1 billion credit facility.

We returned over $420 million to shareholders, through dividends and share repurchases, representing a 9.5% cash yield.

We believe we are very well positioned to capitalize on the opportunities we see ahead.

It will require some investments, and some time to see the returns, but we remain confident in our ability to create substantial long-term value from here.

Before I get into more details on that, let's cover the fourth quarter.

We delivered earnings per diluted share of $1.13, which is within our guidance range.

Total sales for the quarter were $2.2 billion, up 3.7%.

Consolidated same-store sales decreased 2.5%, below our guided range.

The results for the quarter were significantly impacted negatively by performance of cold-weather-related categories.

These categories include jackets, fleece, cold-weather compression, boots, and accessories.

They represent a significant portion of our business in the fourth quarter, and they were down double digits.

Our team did a great job managing the inventory in these categories by taking aggressive markdowns, working with our vendors, and, along with packing up some basic winter items for next year, we are well positioned as we exit this quarter.

Looking outside the cold-weather categories, the balance of our business performed very well, comping up nearly 3%.

In particular, we continue to be very pleased with our performance across important growth categories such as athletic footwear, licensed, and our women's business, where we have invested in improved product content, merchandise presentation, shopping experience, and marketing.

As anticipated, the hunt business remained under pressure, due in a large part to warm weather.

Within this category, guns and ammunition comped positively.

For the second straight quarter, margins in our golf business expanded over 200 basis points compared to last year, reflecting cleaner inventory levels, and lost less promotional product in everyone's pipeline.

Our consolidated golf comps were relatively flat for the quarter, supporting our view that this business is beginning to stabilize.

In summary, given the challenging conditions we faced with the unseasonably warm weather, we operated very well in the fourth quarter.

We delivered earnings per share within our guided range and continued to drive results in the important categories.

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

Thanks, Ed.

Good morning, everyone.

Beginning with our fourth-quarter financial results, as Ed mentioned, consolidated sales increased 3.7%, to approximately $2.2 billion.

Consolidated same-store sales, which includes all banners, both online and in-store, decreased 2.5%.

Within this, DICK'S Sporting Goods omni-channel same-store sales, which includes Dick's.com and DICK'S stores only, also decreased 2.5%.

Our eCommerce business grew 13% despite being impacted by the unseasonably warm weather throughout the quarter.

Gross profit for the fourth quarter was $672 million, or 30% of sales.

And, as expected, contracted year over year.

This 200-basis-point decline in gross profit margin was primarily driven by 131 basis points of merchandise margin contraction, due to a more promotional holiday season, and markdowns, due to the persistently warm weather.

The balance of the decline was due to occupancy deleverage and increased shipping expense as a percentage of sales resulting from the growth of our eCommerce business.

SG&A expenses were $461 million for the quarter.

This is 20.6% of sales, deleveraging 29 basis points from the fourth quarter of last year.

The deleverage primarily was due to store payroll and planned investments in building our brands, and eCommerce, partially offset by lower incentive compensation.

We delivered earnings per diluted share of $1.13, within our guidance of between $1.10 and $1.25.

Within this, there's approximately $0.02 per share benefit associated with discrete tax items.

Now looking to our balance sheet, as Ed mentioned, we ended the fourth quarter with approximately $119 million of cash and cash equivalents, and no borrowings outstanding on our revolving credit facility.

Total inventory increased 9.8% versus the end of last year.

About $90 million of this is either merchandise being returned to vendors in the first quarter or cold-weather merchandise that is being packed away for the 2016 winter season.

This is split roughly 50/50.

As Ed mentioned, our merchants did a great job managing our inventory exposure through this weather-challenged quarter.

But we also recognize the need to stay focused on our overall inventory management.

Turning to our fourth-quarter capital allocation, net capital expenditures were $49 million, or $96 million on a gross basis.

Additionally, during the quarter, we paid dividends of $15.5 million.

As you know, we recently increased our quarterly dividend by 10%, to $0.15125 at an average -- payable March 31.

We also completed share repurchases of $57 million at an average price of $36.44, taking advantage of what we believe is a very good value.

Since we started our $1 billion authorization at the beginning of 2013, we have repurchased approximately $813 million of common stock and have approximately $187 million remaining under that authorization.

Now let's turn to our 2016 outlook.

As Ed will cover in more detail, 2016 will be an important investment year for us.

First, we will continue to invest in eCommerce to transition to full operational control in January 2017.

Second, we are partnering with the United States Olympic Committee and Team USA in a way that will have far-reaching impact on our brand.

And last, we have exciting plans to enhance the shopping experience in our stores, including an elevated athletic footwear business.

We estimate these strategic investments will have an approximate $50 million to $55 million impact on EBT in 2016.

And, due to the timing of the spend, this will cause earnings per diluted share to decline year over year in both the first and the third quarters.

While investing in these important areas, we remain committed to operate with a lean mindset, focused on reducing discretionary spending and driving productivity throughout the Company.

Importantly, as we look beyond 2016, these investments will benefit our business for many years to come.

For example, we expect our eCommerce business to generate at least 30 basis points in consolidated operating margin benefits in 2017 as compared to 2016.

All this considered, for 2016, we expect full-year earnings per diluted share of between $2.85 and $3.

We expect consolidated same-store sales to be approximately flat to up 2%.

Operating margin is expected to decrease year over year, driven by SG&A deleverage as we make these strategic investments in our business.

This will be partially offset by an expected increase in growth margin.

Net capital expenditures for the full year of 2016 are expected to be approximately $230 million, or about $420 million on a gross basis.

2015 net capital expenditures were $204 million, or $370 million on a gross basis.

As we noted in our press release this morning, our earnings guidance includes the expectation of approximately $100 million to $200 million of share repurchases in 2016.

While the exact timing of the repurchases during the year may vary, we remain committed to returning capital to shareholders through both share repurchases and dividends.

In 2016, we expect to open up approximately 36 new DICK'S stores and relocate approximately 9 DICK'S stores.

We also expect to open approximately two new Golf Galaxy stores and nine new Field & Stream stores, with all but one of those in the combo-store format.

For the first quarter, we anticipate earnings per diluted share of between $0.48 and $0.50.

Consolidated same-store sales are expected to be approximately flat, up 1%.

Operating margin is expected to decrease, driven by SG&A deleverage, while gross margin is expected to be relatively flat.

During the quarter, we expect to open approximately three new DICK'S stores, relocate three DICK'S stores, and open two new Field & Stream stores.

Before concluding, I would take just a moment for a quick housekeeping item.

Due to the fact that Golf Galaxy is only approximately 3% of our total sales, 2016 will be the final year we will disclose Golf Galaxy same-store sales.

With that, I'll turn it back over to Ed to review our 2016 strategy.

Thanks, Teri.

This is certainly a unique time in the industry.

The competitive landscape is evolving, which is creating pressure for some and opportunities for others.

As the largest and most profitable full-line sporting goods retailer in the country, we [will] continue to make strategic, transformative investments in our business during 2016, as we did in 2014 and 2015, to capture this opportunity and further solidify our leadership position.

These investments align to our growth initiatives to drive store productivity, grow our store presence in new and underpenetrated markets, grow and control our eCommerce, and expand our presence in the outdoor space.

In 2016, we will enhance our assortment, our merchandise presentation, and the shopping experience.

As part of this, we will elevate our athletic footwear business through the industry-leading presentation and service, and an increased marketing effort.

We will also continue to drive growth and differentiation through our private brands.

For example, CALIA will be expanded to all doors, and it remains well positioned to become our third-largest women's athletic apparel brand by the end of this year.

Additionally, we have several new projects underway that will begin to launch in 2017.

On the marketing front, our partnership with the United States Olympic Committee and Team USA will provide us the ability to significantly broaden our reach.

The Olympics are one of the few mass sporting events that appeals equally to both men and women, and will enable us to build our brand equity on a much bigger stage.

In addition, the contenders program, through which we are employing nearly 200 Olympic hopefuls, brings our sponsorship to life in our stores and greatly enhances our customer service.

There is not a sporting event or a set of athletes that align better with our Company's core belief that sports matter, and we're thrilled to be able to provide these Olympic contenders with flexible work arrangements so they can pursue their Olympic dreams.

Beyond that, we will continue to leverage the valuable customer data from our scorecard loyalty program to provide more tailored and effective digital marketing and improved consumer insights.

We will aggressively seek to capture the displaced market share that we expect will continue to be available in the marketplace in 2016.

We will also continue to invest in our omni-channel platform, through both new stores and eCommerce.

Our store growth will remain focused on new and underpenetrated markets.

We remain on track to transition our eCommerce business to full operational control in January 2017.

This will position us to capitalize on the significantly improved economics and other strategic benefits, including the control to create a differentiated online experience, easier access to data, and the ability to leverage cross-channel data; control over development cycles, including faster testing and implementation; and the ability to quickly stand up new sites.

Lastly, we remain enthusiastic about expanding our outdoor business through the co-location and cross-shopping experience of our DICK'S and Field & Stream stores.

We believe the merging of brands differentiates us from the competition and will enable us to capture share in this highly fragmented market.

In summary, 2016 is a very important year in which we are making strategic, transformative investments to further solidify our leadership position.

These investments are laying the groundwork to build meaningful momentum as we progress through 2017 and beyond.

I'd also like to take a moment to thank our associates for all of their hard work and dedication.

They bring the skill and commitment that will drive our performance and create substantial value for our investors.

This concludes our prepared comments.

We appreciate your interest in DICK'S Sporting Goods.

Operator, please open the line for questions.

Thank you, sir.

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

(Operator Instructions)

Seth Sigman, Credit Suisse.

Please go ahead.

Thank you.

Good morning.

I think one of the key investment questions here just centers on the investment outlook for this year.

You guys outlined that $50 million to $55 million of spending in 2016.

Can you clarify how much of that is incremental year-over-year and also parse that out between the various buckets you mentioned?

And I guess just a final piece of that, most importantly, how do you think about those costs and how they play out in 2017?

Which of that actually goes away?

Seth, I'll start and I'll turn it over to Ed for some additional perspective.

The $50 million to $55 million is the incremental spend.

Now not all of it is new news, so a portion of that is what we've referred to as Project Eagle, the eCommerce platform work.

And we've disclosed previously that that's about $20 million -- $20 million to $23 million, I think.

$20 million to $21 million, Anne-Marie is helping me correct the numbers.

And so that number remains about right.

The other two pieces are for the additional store investments that Ed mentioned and then for the Olympics investment.

So those incrementals maybe of the remainder tilted a little toward the store environment, but split fairly evenly between those two.

As we think about it, those are current-year investments.

The Eagle investment, we expect very little to go into 2017.

I think in previous conversations we've talked about $6 million essentially being carried over into 2017, so somewhere in that range for 2017.

And the rest, those investments at this point we don't have a plan for 2017.

We obviously will look to see the benefits, the Olympics piece is, obviously, a one-year thing, but the store environment we will continue to look at to see the returns we generate and what may be necessary in the future.

Okay.

Got it.

And just specifically on eCommerce, in the past you've discussed $25 million to $30 million of net savings from that transition.

How is your line of sight into those numbers today?

And as we look out over the next 12 months, what are the biggest milestones towards that goal?

So what we talked about today was the 30 basis point improvement in consolidated operating margin that we expect to be able to deliver from Eagle.

We've used other benchmarks in the past to talk about annual savings and that was really a bit more of a kind of on a pro forma basis, if we had compared the future steady-state of, if we had stayed with our current provider versus an in-sourced benefit.

So it doesn't translate directly into financial statement modeling.

So that's why we wanted to give you the basis point benchmark today so that you can understand exactly how to play it through in the financial model.

Andre, do you want to talk a little bit about the milestone?

Yes, sure.

Seth, the milestones for us continue to add features and benefits to the two sites we have up and running, Golf Galaxy and Field & Stream, such as continuing the ship from store methodology there as well as buy online, pick up in store.

And then getting ready for the Dick's.com site to be ready by the time we transition.

And there's a lot of things we're doing in advance of that to make sure that it's not big bang, that we're installing new feature packs and things like that.

So those are the big milestones, as well as getting our fulfillment center contracts lined up for some of the fulfillment that we will do outside of our stores and outside of office.

So those are the big milestones that we see coming down the road.

Okay.

Got it.

Thank you.

Chris Horvers, JPMorgan.

Please go ahead.

Thanks.

Good morning, everybody.

So following up on that.

The 30 basis points that you mentioned for the eCommerce.

That seems to be -- I mean, looking at the numbers you put out for the spending side, that seems to be solely the benefit from less spending in 2017 versus 2016.

So there's benefits on top of that in terms of the fees that you pay to GSI, so is that accurate?

And last year you talked about a three-year algorithm in the mid-teens, which would've implied earnings growth in sort of the high teens percent as you looked at 2017.

So are you still comfortable with that overall?

Well, the 30 basis points that we talked about from an improvement in the consolidated operating margin is around $24 million or $25 million and we are very comfortable with that.

And that includes the benefit of lack of GSI fees?

That's correct.

In the first year, yes.

Okay.

And then as you make --

Those benefits will ramp up over time.

Understood.

So as you think about the algorithm you talked about and the sort of weighted nature of it to 2017, are you still comfortable with what you implied last year at the Analyst Day?

With regard to -- I'm not sure what the question is.

So last year you talked about a midteens algorithm, 2016 -- 2015, 2016 and 2017, at the Analyst Day.

And in the Q&A, based on the eCommerce savings and the investments that you were making, it was weighted towards 2017.

And it seemed to back into a high-teens-type algorithm.

So is that still intact for next year?

I think the issue we're having is we don't ever remember talking about an algorithm.

Are you talking about an EPS growth rate?

Yes.

Okay.

We never used the word algorithm.

Okay.

We do.

You guys might.

We didn't.

But, yes, we are still comfortable in that from where we are right now, that growth rate of midteens.

Understood.

And then one last question.

What did you embed for the potential impact of TSA and what's going on with their Chapter 11?

Obviously if it close doors, there's some potential comp lift, but at the same time, if they go through a clearance phase, they're going to be very loud in the market and that could cause some promotional pressure, some traffic shifts.

So could you share with us how you think about how you've impacted that into the guidance?

Thanks.

Sure.

So for right now with TSA, we really don't have anything positive or negative impact in the guidance because, as you said, as they go through this clearance time and I suspect even the stores that they're going to leave open, they'll start to do some clearance to kind of clear through some inventory, that there will be some more promotional activity that could be a bit negative.

But then as we get to the back half of the year when those stores are closed, there should be a positive benefit.

So we're really not sure exactly how to look at this right now, and we haven't baked anything into it.

But I think as we go forward into 2017, net net it will be positive.

Understood.

Thanks very much.

And as we said in here, we're going to be pretty aggressive going to try to capture some of that displaced market share that we expect is going to become available.

Robbie Ohmes of Bank of America Merrill Lynch.

Please go ahead.

Oh, thanks; good morning.

Just actually two questions.

The first question, Ed, could you talk a little bit more about the elevated athletic footwear investment and specifically maybe exactly what elevated means?

And also, do you expect significant improvements in the type of allocations you get from the vendors in footwear that related to this?

And when could we look to see that in your stores?

And the second question is just a little more in the competitive environment, appreciate what you're saying on Sports Authority, but also wanted to ask about really about the midtier channel like Kohl's, who is talking repeatedly about how well they're doing with Nike, and also the off-price channel which looks like they're getting a lot more stuff from some of your key vendors and how you're thinking about that as we look over the next six months?

Well, with the footwear, we've got this in a number of stores, this full-service presentation which is an elevated presentation, not only from how the product is displayed but also the service level and the technology that we've employed in the stores to better take care of the consumer.

So we've got several of these open.

We've found those pretty -- we're pretty enthusiastic about this and we've got quite a few more that we're planning to do through this year.

As far as the competitive landscape, there are two things, the mid-channel, Kohl's and those, they may be doing fine with Nike, but we've got more of an elevated presentation and assortment than Kohl's does with the product for that runner, for the fitness of women, men, the young athlete presentation we have.

We certainly keep an eye on them but they haven't really impacted our business.

And as far as TSA goes, it will be interesting to see what happens.

There's a list of a number of stores they're closing.

And, as I said, we're going to be very aggressive to go after that displaced market share, so it comes to us versus another competitor.

And we expect that may not be accretive with these investments we're going to make in those markets where they are closing stores right now in 2016, but we expect it to be accretive as we move into 2017.

And just to clarify, the stores you've done the full service presentation, are the assortments significantly different from the stores you haven't?

There is some difference in assortment, yes, and we're enthusiastic about what we can do with that assortment, but it is a bit different, yes.

Got it.

Thanks very much.

Sure.

Thanks, Robbie.

Peter Benedict, Robert Baird.

Please go ahead.

Hi, guys, thanks.

Just to follow up on Chris's question a little bit.

Teri, the 30 basis point lift to margins in 2017 from eCommerce coming in half, I think the three-year plan that was laid out last year implied roughly something in the 50 basis points to100 basis points of improvement in 2017.

So my question is really on that incremental, call it 20-plus basis points.

What were those factors that you were thinking about at least a year ago and are they still relevant as you sit here today?

And I think this is where we were afraid there might be a little bit of confusion so we wanted to provide clarity on how to think about the impact.

So we had been talking about the benefit -- and it was really more of a pro forma modeling of kind of if we kept going with our current provider versus insourcing, we would see that much of a differential, but that doesn't translate directly into a year-to-year impact as you try to model our future results.

And so there hasn't really been any kind of substantial change in any of the assumptions related to the eCommerce project.

If we ran that pro forma analysis today, it would look about the same.

We would ramp up to about the same level.

So really we just wanted to make sure that everyone understood what those numbers represented and then also provide a benchmark that's more relevant to the actual task of trying to model the outlook.

I don't believe we ever said that there was 100 basis point improvement in margin -- 50 basis points to 100 basis points improvement margin rate from an eCommerce standpoint.

We said a consolidated overall margin rate increase, which would be across all banners and we're still comfortable with that.

Yes.

No, thanks, that's what I was referring to.

But thank you for the color.

My second question would just be on gross margin.

First of all, in the fourth quarter the 70 basis points or so of occupancy in shipping pressure, any color on those two in terms of order of magnitude between the two?

And what really gives you the confidence in forecasting gross margin expansion for 2016?

Thank you.

Well, I think as we continue to move through a mix shift, as we focus more on the athletic footwear business, the athletic apparel business, the team sports business, we think the hunt business is going to continue to be under a little bit of pressure which is lower margins.

So we think from a mix standpoint it will be better and we also believe that we took some pretty aggressive markdowns in the fourth quarter to clear out merchandise that we don't expect we'll have to do next year and that should help margin rates.

Okay.

Thanks very much.

Kate McShane, Citi Research.

Please go ahead.

Hi, this is Ryan Wallace filling in for Kate.

Just two quick questions on our end.

Yes, first one, can you just talk a little bit about the timing of the incremental investment and sort of why now makes sense to move forward with those?

And then in the shorter term, can you just help us understand which categories you expect to drive comp the most in Q1?

Well, we will tell you that our comp drivers, our business drivers we think that the footwear business is going to continue to be strong.

We feel that the team sports business is going to be strong and the apparel business is going to continue to be strong.

We think the golf business is stabilized.

We don't think that will be dilutive to the business and we think there's a possibility the golf business could even comp positively.

And from a timing standpoint of why now, there's a lot going on in this marketplace right now.

There's a lot of displaced market share that's going to become available, as we know, from not only Sports Authority is closing 140 stores.

Last year City Sport went out of business up in the Northeast and [South] Smith is closing stores.

And it's a big Olympic year.

So there's a lot going on and we need to take advantage of what's going on in the marketplace.

And we're doing what's right for the business long term, and although some people on the Street may not agree with it, we're doing what's right for the business long term, not for what's from one quarter to the next.

Got it.

Thanks, Ed.

Matthew McClintock, Barclays.

Please go ahead.

Hi, yes; good morning, everyone.

I was wondering if you could, Ed, talk more a little bit about the hunt business specifically.

It sounds like in the near term you still expect softer results for that business.

Can you elaborate that and take that over to store expansion plans for Field & Stream, how to think about that?

And just bigger picture longer term, what's necessary to get that hunt business back on track?

Thanks.

Well, I think it's just going to be a little bit softer.

We think that long-term it's still a very good business, and we have consolidated the Field & Stream business into the Dick's business with these combo stores and we provide the consumer a shopping experience of Field & Stream right next to a Dick's store and they can cross-shop, they can move in between the two banners once inside the store.

We have found that to be very compelling.

There's only one independent or freestanding Field & Stream store that we'll open this year and we've got nothing else on the drawing board there.

All part of this Dick's Field & Stream combo and the results we've had there, we're really quite pleased with.

Thank you.

Sure.

Simeon Gutman, Morgan Stanley.

Please go ahead.

Thanks, good morning.

I may have missed this, Ed, but the investments back in stores and Olympics, are you building in a meaningful benefit from those in the outlook?

I mean, the 0% to 2% against relatively easy comparison would suggest that maybe there's not much of a benefit in there from those investments.

Well, we're not looking at a big investment in 2016.

We think it will be in 2017.

In footwear we're building out these new footwear platforms.

There's a training component of that to get the people up and running to be able to service the consumer.

We've got some write-offs associated with what we've got in the store today.

We think it's the right thing to do with the business long term.

But there's not a huge benefit to this in 2016.

We believe we will get that benefit in 2017.

Some of it comes in 2016, terrific, but we think there's a learning curve and an investment curve that we need to make here to make sure we're positioned going forward into 2017.

Okay.

And then my follow-up on the eComm growth in the quarter, was that entirely just symptomatic of the tough weather and it just followed the tougher category sales and it was those categories that dragged down the overall growth in eCommerce?

Absolutely.

It was cold-weather related across the entire omni-channel platform, both in stores and online.

Okay.

Thank you.

Sure.

Camilo Lyon, Canaccord Genuity.

Please go ahead.

Thanks.

Good morning, everyone.

Ed, you made a comment a few different times about being aggressive and picking some of the market share resulting from the disruptions.

Could you just articulate what that means?

Does that mean that there is going to be incremental expenses that you anticipate engaging in to capture some of the lost TSA sales in the marketplace or can you just try to rein in those customers that will be looking for places to shop?

Yes, there will be increased expenses.

We'll increase our marketing expense in these markets.

We will be increasing some payroll dollars to make sure that those customers are serviced once we get there.

Yes, we are making the investments that we feel necessary to capture a big part of that vacated market share with the TSA closings.

We want that business to come to us versus somebody else.

And we're going to be very aggressive going after this.

And that's embedded in the guidance you provided?

It is.

Okay.

And then just with respect to the recapture rates that you might contemplate in those markets where closures are happening, how should we think about that?

Maybe you can use an analog from maybe some of the City Sports locations or prior store closures in markets that are experiencing the same or did experience the same sort of phenomenon that the TSA markets are experiencing.

How do we think about what your benefit is from those actions?

Well, we're going to try to get as much of that market share as we possibly can.

We can't really lay out to you what we think that benefit is going to be.

We don't really know what Sports Authority's sales are on a per store basis.

Each market is going to be a little different because each market has a different competitive landscape where we have a market where there's no other full line sporting goods retailer, we will get a bigger market share than a place where there might be two or three other competitors.

So I can't really lay out something for you to take a look at because each market is so different.

Okay.

And then just two more final questions.

Would you consider taking any of the leases over that are coming up for auction from TSA?

Well, we're certainly going to take a look at some of those.

They've got some real estate that we would be interested in and we will be taking a look at that and see if it makes economic sense with what the value of the lease is, what the term left is on the lease, what they're paying from a rent standpoint.

So there's a number of different things that go into evaluating a store, but we're going to be taking a look at some of those, yes.

Okay.

My final question just relates to the Q1 comp guidance of flat to up 1%.

It looks like it's a bit of an acceleration.

Is that representative of how you're comping right now in the quarter or is that something that you expect to attain as the quarter progresses?

Well, we're not going to talk about exactly how the quarter is progressing, we've never done that, but it's a couple of different things.

Last year the weather really hammered us in the first quarter, if you remember.

A year ago right now, the Northeast and Boston and New England, in particular, was buried under roughly eight feet of snow.

So the weather has been more conducive to us right now.

And last year a number -- Dick's Sporting Goods and a number of other retailers were also impacted by the port strike and didn't get some inventory in on a timely basis and we don't have that.

So between the easier comps, the better weather, and the lack of any merchandise issues resulting from a port strike, make us feel confident that we can hit these numbers.

I understand.

All the best.

Thank you.

Thank you.

Paul Swinand, Morningstar.

Please go ahead.

Good morning.

A lot of stuff going on and I know you're saying it's a little early with the closures of the competitors, but given that you're seeing the positive outlook for the Field & Stream coupled with the Dick's.

And obviously you've got a lot of competitive closures, would you still feel comfortable with your endgame of how many stores you think your national network will be in approximately five years?

Yes, we don't really see anything meaningfully different.

The other thing I noticed was that the net CapEx to gross CapEx as the spread got larger, is that as you are getting more incentives from landlords?

And just as a follow-up to that, that is all cash this year and then it falls into the deferred construction allowance; is that correct?

That's correct.

Okay.

Thank you.

Best of luck.

Thank you.

Sam Poser, Sterne Agee CRT.

Please go ahead.

Good morning; thanks for taking my question.

I just wanted to follow up on the $50 million to $55 million incremental, the spend this year on the Olympics and the store build, how much of that falls away next year?

I mean, as you see it.

There is a fair amount of that.

We're not going to tell you -- we're still working through some of that, but there's a fair amount of that that falls through, falls away next year.

We will take a look and see what kind of a return we get from the footwear component of this and if it's what we think it is, we could come back and say we want to do this again next year, but we would not see that accelerate to a greater degree than it was this year.

And you'll be living off the payoff you'd be getting from it this year that you're not seeing because you already have a number of stores set up that way?

That's correct, yes.

And then, secondly, when you look at Field & Stream, the Field & Stream businesses, do you see a time where you start really accelerating that, those store openings there?

Or how are you thinking about that right now?

We think the rate of growth right now is where we feel comfortable.

We feel that this is definitely a combo play of both the Dick's and Field & Stream combined.

There is certain places that this works and there's other places that we wouldn't put it there.

So we're very comfortable with the growth rate right now and don't see that accelerating anytime in the next year or two.

And lastly on the inventory levels, you talked about the split of 45 RTVs and it sounded like and 45 of pack and holds.

As we look at the inventory-to-sales ratio, when do you see those falling into line this year?

What quarter would we expect sales and inventory to be in line?

Well, there's going to be -- the packaway merchandise is going to be with us through next year, so that's going to be built into the space.

And this is merchandise that we would just go back and buy again next year.

It's black ski pants, it's black gloves, it's base layer product.

It's all very basic merchandise that has really no end-of-life or fashion risk to it at all.

The fashion risk product, the vendors were very helpful with us as we canceled some merchandise, as we marked down some merchandise.

We don't have a lot of this with fashion risk.

So for the balance of this year, that inventory is going to be a little bit higher than we would like it to be because of what we're carrying forward.

So basically by the end of next year you expect inventories to basically be in line -- by the end of this year, you'd expect inventories to be in line with sales, otherwise you'll be slightly elevated --

They could be slightly elevated through the balance of this year because of this pack and hold.

As you know, Sam, the inventory we carry at any given point in time is to match the expected sales going forward as opposed to the sales we just experienced.

So now that number isn't always the best one to look at to indicate.

We look at the quality of the inventory, the aging, the turn, there are a number of metrics that we use internally to make sure we're comfortable with the amount and quality of the inventory.

I looked at it.

It looks like if you take out the $45 million of the RTVs, you're going to have about 15-plus weeks of supply on a go-forward basis.

Is that higher than you'd like?

What is a good forward weeks of supply kind of thing for you guys?

As Ed said, he talked about the factors we have at the moment.

Our overall as we look at it is we feel comfortable with where we are.

Okay.

Thank you and good luck.

Thanks, Sam.

Brian Nagel, Oppenheimer.

Please go ahead.

Good morning; thanks for taking my questions.

First question on Sports Authority and recognizing that it's very early in the process there, but as you've been talking to your key vendors, have the conversations changed at all as they're positioning now for a potentially smaller major competitor in the marketplace?

With regard to -- I'm not sure of the question.

I guess what I'm asking is, simplistically now, Dick's has an even greater stand with some of these vendors if Sports Authority begins to shrink.

And, like I said, I recognize it is early, are you seeing this in your conversations with vendors?

And how should we think about that with either potential positive or negative going forward?

Well, I would think it would be we've got great relationships with our vendors, whether it be Nike, Under Armour, TaylorMade, Callaway, North Face, we've got great relationships with them.

We feel that we will continue to have those great relationships and they've always been a partnership, as opposed to who really has the upper hand.

We work very closely with those brands.

They work very closely with us.

So we don't expect an awful lot to change.

I think we'll have access to, as TSA closes some stores and maybe cancels some inventory, we're going to have -- and we've had a couple of people call us and we've been able to buy some product off-price that has been canceled or doesn't want to be shipped to Sports Authority, so we'll get a bit of a benefit from things like that.

Got it.

And then the second question I had with respect to weather, it was -- clearly warmer weather had an impact on your business early in the fourth quarter, but at least in the Northeast and late in the quarter, it did get cold with a big storm.

Did that benefit your sales at all of that kind of product later in the period or was it simply too little too late?

Anytime it gets cold in the month of December or January or even the beginning of February, if it gets cold, that's helpful to our business.

As I've always said, if we're playing golf in Pittsburgh on December 15, it's going to be a relatively tough quarter.

They were playing golf in December in Pittsburgh; the middle of January, they weren't.

So it was a little better.

Okay; fair enough.

I appreciate it.

Thank you.

Great.

Thanks, Brian.

Michael Lasser, UBS.

Please go ahead.

Good morning.

Thanks a lot for taking my question.

You previously outlined $21 million to $25 million of incremental spend for the eCommerce transition in 2016.

Presumably that amount is the same, based on your previous commentary.

So that would mean there's an incremental $30 million to $35 million of spend associated with this full-service footwear buildout, the Olympic partnership and some spending on marketing and payroll associated with the TSA transition; is that right?

That's pretty close.

Okay.

On the footwear piece, is this a reversal of the move to the shared service footwear decks that you've been undertaking over the last few years?

And if it is, are there other parts of the business, other parts of the store, that we should anticipate you might reverse or change in a similar way to the footwear piece?

So it is a change from what we had been doing with the shared service footwear.

We felt that it was the right thing to do at that time as we've kind of gotten in there and we tested this based on what people are looking for from a service standpoint, what they're looking for from a presentation standpoint.

We have tested this.

We have talked with some vendors on this.

It's been very well-received.

So, yes, it's a change in direction here.

Going back to basically our original roots of what we've done in footwear.

As far as is there something in other areas of the store that you would see a big change in, the answer is no.

It's just footwear.

And are you doing this because you think you're losing share within the footwear category?

We're doing this because we feel that we can give the customer an elevated and differentiated presentation in the marketplace.

And no one else is delivering footwear the way that we've done this in these test stores.

The results have been very good and we plan to now go roll this out.

And one of the big things that has changed in the time that we went from full-service to shared and back now to full-service, is technology.

And so the experience previously was really quite slow for the customer.

They'd come.

They'd ask for a shoe.

We'd go in the back room.

We'd hunt and peck and try to find it.

We'd come back and say, No, we're out of that size.

And now with new technology that we're investing as part of this, there is that instantaneous checking of inventory, the ability to service the customer at a much higher level and provide even more opportunities to go beyond just the sale of the shoe to other items.

So technology is a big enabler for this.

And then on the Olympics piece, the Olympics occurs every couple of years.

Your business is already exhibiting increased volatility because of the weather.

How do you think about the economic return and the variability from leveraging a partnership with them that only takes place a couple of years.

We're using this as a great marketing effort to broaden the reach of our brand.

And what we're doing with the Olympic hopefuls, the marketing effort we're doing there is all around building our brand and it's not necessarily tied to how much business we will do around the Olympics.

It's around building a brand in a terrific sporting event that has equal interest for both men and women.

And then my last question is on the labor in the stores.

You're going to be asking your stores to do a lot more as you transition away from the eBay relationship.

So do you think your stores are appropriately staffed?

Do you think you have the right amount of labor or is that something that could be an incremental investment above and beyond the $50 million to $55 million that you're talking about today?

When we make this transition, it's got nothing to do with store labor.

We will already have a significant amount of the merchandise is in the ship-for-store channel of distribution, so as we move out of the GSI contract, it's got nothing to do with store payroll.

We've already got all of that covered.

We're doing that today.

Okay.

Thank you very much.

Sure.

Mike Baker, Deutsche Bank.

Please go ahead.

Thanks, guys.

So just two.

You talked about maybe taking a look at some of these Sports Authority leases, which makes sense.

If you were to take some of those, do you think those would be above and beyond what your store growth plan otherwise would be, or would those sort of be embedded into the 36 this year and whatever else you were already thinking about for future years?

If we got to some of those, it would be above and beyond what we're doing right now.

Okay.

Thanks.

And then related to the store openings, just on Field & Stream, including the standalone ones you have and the combo stores, what do you now think is the ultimate number of Field & Stream stores that you would have?

Can't tell you that yet.

We're still working through that.

But we think it can be pretty meaningful.

So originally, I think when you first talked about this a few years ago, I don't remember if it was 50 or 55.

Is that still the number?

Or then I seem to recall it got cut down to 30 or so at one of the subsequent Analyst Days.

So, which one of those?

Are you talking about total stores that we can put in the marketplace or --?

Correct.

Total Field & Stream stores you will have including the combo stores.

In the marketplace over what period of time?

I guess the sort of total that you think the market can support.

Go back and look at that.

I don't think that's what we said.

All right.

I guess it was over five years.

Meaningfully more than 50 or 55.

How many we can put in the marketplace, we're not sure yet, but I can tell you that it will be well north of 55.

Okay.

And then one last follow-up to that.

The side-by-side stores, so those are roughly 50,000-square foot Dick's stores right next to a 50,000-square foot Field & Stream, right?

It's just sort of total of 100,000 square foot; is that right?

The Field & Stream is 40,000 to 50,000.

Okay.

Understood.

Thank you.

Rick Nelson, Stephens.

Please go ahead.

Thanks; good morning.

The store closings outside of the 140 that they've outlined, how many of those do you think directly overlap with an existing Dick's store?

There's probably close to 90 to 100 of them, give or take.

And the potential share gains in those 98 to 100?

Can you frame that up sort of low-end, high-end?

We really can't.

It depends on what's going on in the marketplace.

What the competitive set is, how far away a TSA store is from a Dick's store.

You know, if there's one a mile away it's going to be a different number than if it's 10 miles away.

So I really can't.

I can tell you that we're taking a look at this and we're going to go after this market share that's displaced pretty aggressively.

We will go more aggressively with stores that are closer to us than are further away.

Thanks for that.

Also I'd like to ask you about the hunting business.

We've seen a big increase in the NICS checks, how you're thinking about that as 2016 unfolds?

Well, we think this business is going to continue to be under a little bit of pressure.

Some of the what's driving the NICS we're not into, so a lot of it is handguns.

In the Dick's stores, we have handguns in not many stores.

Okay.

Very good.

Thanks.

Sure.

Thanks.

Steven Tanal, Goldman Sachs.

Please go ahead.

Mr. Tanal, your line is open.

Thank you, guys, can you hear me?

Sure.

I appreciate the question.

I guess, just on TSA, and to round this out, you mentioned you're going to go aggressively after the share that's displaced.

You also mentioned looking at leases.

Can you make any sort of comment on how big the lease piece could be?

The big thing here, [is it] gaining share organically or is there potentially something bigger strategically that could happen here that we should be aware of?

Well, we can't lay this out.

This is all very new information.

We're just taking a look at the stores that they're closing.

We're taking a look at what stores that we may be interested in and then we've got to do a deep analysis of what's associated with those leases.

So what's the rent?

What's the cam?

What's the whole occupancy cost?

How much term do they have left on the lease?

Do they have any options left on the lease and what we think our sales and profitability could be in that.

So we're way too early on this to be able to give you any of that information.

We'd love to, but we just can't.

It's too early in the process.

Understood.

No, that makes sense.

Then in thinking about [the hunt] in this, obviously [NICS data is] strong, clearly the (inaudible) and that's helpful to you guys, but is there anything you'd care to say about competitive pressures?

It seems like the store growth in that sector broadly is slowing down.

Do you think any softer than that?

Does that help your outlook or how are you thinking about the competitive environment?

The outdoor competitive set from a store opening and additional square footage is slowing down and that will help our business.

It will be less of a competitive intrusion into our business so, yes, it will help our business.

Okay.

And lastly here, the ramp that is sort of innately embedded in the 2016 guide with one [tier] kind of below the -- at the lower half of the range, is there anything more than sort of easier back-half compares, which, of course, is real.

We can see that, but is there anything more than that to that kind of a ramp?

Well, we think the Olympics will be happening in the third quarter.

We will have those footwear decks in a pretty good shape at that point.

And in the fourth quarter we could have a fourth quarter weather pattern exactly the same way as we did last year, but we're counting on something slightly different, not meaningfully different, but slightly different.

And if nothing else, the margin rates should be better because we're a bit more conservative from a buying standpoint.

Okay.

Great; thanks so much, guys.

Matt Nemer, Wells Fargo Securities.

Please go ahead.

Thanks; good morning.

Two quick questions.

First, your interest in some of the TSA real estate, does that indicate willingness to look at some smaller store formats?

And how much would you need to change the Dick's planograms to fit into one of those boxes?

And then secondly, could you remind us what the historical benefit is of a Summer Olympics to your business?

Thank you.

So as far as do we go with a smaller box, we've got a smaller box.

We've done a smaller concept box.

And if the trade area the TSA is in warrants a smaller box, we'll take a look at it, if all the other attributes fit into our game plan.

And as far as the Summer Olympics, what it does to our business, it actually doesn't do an awful lot to the business from the selling of Olympic product, et cetera.

We think it is a great marketing opportunity to support.

It's a great opportunity for us to support the US Olympic Committee and Team USA.

It's a great opportunity for us to market and broaden the reach of our brand in partnership with the US Olympic Committee and Team USA and it's given us a great opportunity which we think is really important around, that sports really matter in people's lives to give these Olympic hopefuls an opportunity for a flexible work arrangement while they're trying to make the Olympic team.

So this is not as much about how much business are we going to get because of the Olympics, it's how we can market our brand and align ourselves with a great partner like the US Olympic Committee and Team USA.

Understood.

It's a noble cause.

Thank you very much.

The next question will come from Joseph Feldman of Telsey Advisory Group.

Please go ahead.

Hi, guys, thanks for the question.

I wanted to ask about Chelsea Collective and what you're learning, I guess, from the two test stores right now and how that's impacting the actual Dick's chain.

Are you rolling out anything?

Have you learned any brands or things you can chat about?

Yes.

So what we're learning is there is different brands that we've put into the Chelsea Collective that can play in the Dick's store.

We're just starting to roll some of those out.

I'm not going to get into any details on those or who they are, but we're learning a lot about that consumer, about the different brands, about the products around footwear, the accessory piece of this, and we continue to be excited about this test with the Chelsea Collective.

We couldn't be happier that we put it in place.

That's great.

That's great.

And then one other sort of unrelated question.

When you were talking about gross margin and the impacts in the quarter, I know shipping expenses were part of that.

Can you remind us, maybe I missed it, what that impact actually was and how we should think about that going forward, especially as you guys do ultimately take full ownership of the website next year, how you're baking that in?

I'm sorry, could you repeat the last part of your question?

Yes, I just wanted to understand how you're thinking about shipping costs as you have full ownership of the eCommerce business and if that actually continues to ramp or if it's this stable level, how you think about that going forward?

Because, obviously, you with shipping cost pressures on web sales, it's a big factor, so we're just trying to figure that out.

So what we saw in the quarter was nothing extraordinary.

It was just matched with the growth of the business, so we would expect that to be proportionate as we move forward.

Got it.

Okay.

Thanks.

Good luck with this quarter.

Thank you.

Mitch Kummetz, B. Riley.

Please go ahead.

Yes thanks for taking my questions.

I've got a few.

Let me start with you, you made some comments around the Q1 comp environment, talking about an easy compare as it relates to weather and the port situation last year, so that sounds like a pretty favorable backdrop.

So I guess I'm wondering why your comp outlook there isn't a little stronger than flat to plus 1%.

Is that more of an indictment of the consumer these days or is that because February was a little soft, given that I would suspect that you were maybe still hoping for some cold weather in February.

Can you speak a little bit to that comp guidance based on what, again, sounds like a favorable backdrop to last year?

So you can look at it as a favorable backdrop to last year, but I think the consumer is fine.

The consumer, as a couple of other retailers have indicated, has kind of cycled out into some other categories right now and so I think that's a bit of an issue at traditional retail.

We're taking a look at what's happening in the hunt business still, based on the recent trends that we've had and we feel that this is the guidance we are comfortable giving right now.

Okay.

And then on (multiple speakers) --

The other component of this, too, is that we feel they'll be some pressure from the TSA closings in this first quarter, second quarter, I don't know how far they'll go.

Longer term, I think it will be a net positive for us, but the TSA closings and the promotional activity could have an impact.

In those stores, I suspect that they're closing and running some going out of business sales, they'll move merchandise from other stores in there to try to clear it out.

If they have a liquidator, a liquidator will bring in some additional merchandise to try to clean out of there.

So there's going to be some competitive pressure in this first quarter with the TSA closings, we suspect.

Got it.

That makes sense.

And then, Teri, on the Q1 gross margin guide, you're saying flat.

I'm guessing from a merchandise margin standpoint, you're not really looking at much pressure in Q1.

It sounds like the $90 million in excess inventory that's RTV and packaway, that's really not going to put any pressure on your margins, really.

I mean, you're not expecting a lot of inventory liquidations occurring in the first quarter; is that correct?

That's not entirely true.

We did have outerwear that, post the end of the fiscal, we were still clearing true.

So it was kind of a mix of things.

As Ed said, we managed our orders, we did promotion which carried through into part of the first quarter and then we had the vendor agreements as well as the packaway.

And then we do have some of the ramp-up of the investments that we talked about, so some of those will start to hit the first quarter and will impact that.

Okay.

And remind me, can you leverage occupancy on a flat to plus-1% comp?

No.

No.

Okay.

So I guess I'm still having a tough time reconciling the [slight] growth margin Q1.

But I'll move on.

Last question, just in terms of I know you talked about, I think it's 47 new stores for the year when you add up the concepts, but I assume that's a gross number.

Is there a net number you can give us?

I don't know what kind of store closings you have baked into that.

We're relocating some stores, but we don't have any real -- it's a gross number.

Okay, so what is the net number?

We don't typically disclose what we're going to close during the year.

We talk about it when we actually close those stores, but our gross number [is four].

There's not much.

Okay.

Fair enough.

Thanks and good luck.

Scot Ciccarelli, RBC Capital Markets.

Please go ahead.

Hi, this is Mike [Lehrhoff] in for Scot Ciccarelli.

Sorry if you already mentioned this.

I was wondering if you could just give some more detail on the cadence of the investments you're making over the next year as far as quarter to quarter?

Yes, we haven't been specific quarter by quarter other than to indicate that the way the variety of factors will fall, we do expect the first quarter and the third quarter to be below prior year.

And then the second half we will start to see, particularly in the fourth quarter, better progress.

I'm sorry?

From an investment perspective?

Well, in the fourth quarter we will have, from an overall earnings standpoint, I was talking.

Okay.

I'm sorry, what about the $50 million to $55 million?

What should we expect on the cadence throughout the year?

So there will be peaks of spending.

So for example, as Ed mentioned, in the third quarter that's where the bulk of the Olympics spending will be, which is why we expect that quarter to be below prior year.

The footwear investments and the store environment investments will be more pro rata, slightly less in the fourth quarter, so you start to get some slowdown in the fourth quarter.

Okay.

And then just a quick question on team sports.

It seemed like you called that out as a positive.

I saw a report from Performance Sports Group this morning calling out weakness in baseball.

I was just wondering if you've seen any of that or have any thoughts there?

We don't talk about category by category specifically, but the team sports area, we think it's still going to -- is an important business for us, it's a growing business for us.

And the longer term would be with the TSA Sports closings, that business should get even better for us longer term.

Okay, great.

Thank you, guys.

Sure.

John Kernan, Cowen.

Please go ahead.

Good morning, guys, thanks for taking my question.

A lot of questions obviously got answered, but I wanted to go back to the deferred construction allowances.

It looks like it's going to be about $190 million this year, up from $102 million in 2014.

So is there anything that's going to reverse there, or is that type of run rate for the deferred construction allowances sustainable for the next couple years?

That's really more a function of the nature of the lease terms.

And so as we do more, and it's really to non-cash accounting kind of effect as opposed to a cash effect, so it really is a function of moving more toward a reverse build to suit, where we take on some accelerated timing of the recognition of rent, which then reverses itself over the remaining term of the rent.

So as we have, particularly with our combo store format, that tends to be more in that kind of lease structure and so that's where you're seeing the elevation.

Okay.

And then just on the $90 million in inventory you're planning on returning to some of the vendors, is that concentrated with any vendor or any specific category?

I just want to be clear, the $90 million is not all being returned to vendors, it is split between that and packaway.

And it's through a broad range of vendors that we've cooperated with that have cooperated with us.

I wouldn't call out any one or two vendors that is the majority of it.

Okay.

And then just finally the midteens earnings growth that you're comfortable with, that's off of 2016 numbers into 2017?

Correct.

Okay.

Thank you.

Chris Svezia, Susquehanna Financial Group.

Please go ahead.

Good morning, everyone, thanks for taking the questions.

I guess first to clarify, The Sports Authority, the 140 stores that are closing, you are anticipating investments to go after that market share by this year but absolutely no benefit as you think about the P&L; is that fair?

We didn't say there was no benefit.

We said there may not be any net benefit this year.

There could be pressure as they go through the liquidation and then as we get to the back half of the year, we could be picking up some market share.

Net net, it could be neutral this year.

We expect it to be positive next year.

Okay.

And you're not making any assumptions if there is potentially additional store closures either?

No.

We're reacting to what they have disclosed, which is 140 stores.

If it's more than that, then we'll go after -- we will take a look at what those stores are and will try to go after those stores also.

But right now, (technical difficulty) they've announced 140, that's all we know.

Fair enough.

And then on the full-service footwear, just remind us how many stores you'll have this year with full-service footwear?

And is it just Nike that you're doing with or is it a host of other brands that are supporting it?

There's a host of other brands that will be supporting this also and we're going through the process right now and we'll let you know next quarter how many we think we will get done for this year.

Okay.

And then the last question I have is on the last call you made some reference to the long-term targets, 9%, 9.5%, operating margins by 2017.

And at that point we're not willing to say it's off the table.

Since we've stepped into this year, you've had, call it, 40 basis points of additional expense related to the Olympics and the full-service footwear.

So I guess maybe if you just refresh back to this targets of 9%, 9.5%, just how we think about it for 2017?

Is it completely off the table, or sort of your thought process in and around that.

Well, there's some things that have changed.

So what the pressure is going to be with TSA right now, what the opportunity will be with TSA going forward with what's happening with some other competitors, so we'll try to come back to you with some more information over the next couple of quarters, but there's just too much uncertainty in the marketplace right now to talk very meaningfully about that.

Okay, fair enough.

Thank you very much.

All the best.

Thanks.

And, ladies and gentlemen, this will conclude our question-and-answer session.

I would like to hand the conference back over to Ed Stack for his closing thoughts.

I'd like to thank everyone for joining us today as we discussed our fourth-quarter call and we look forward to talking about our first-quarter call in a couple of months.

Thank you.

Ladies and gentlemen, the conference has now concluded.

Thank you for attending today's presentation.

You may now disconnect your lines.