Hibbett Inc (HIBB) 2008 Q4 法說會逐字稿

Good day everyone and welcome to the Hibbett Sports Inc. conference call. Today's call is being recorded. At this time, for opening remarks and introductions I would like to turn the call over to the Chairman and Chief Executive Officer, Mr. Mickey Newsome.

Thank you and good morning everyone. With me also is Gary Smith, our CFO; Nissan Joseph, our President and COO; and Jeff Rosenthal, our VP of merchandise. We appreciate you being on the call today and your interest in Hibbett Sporting Goods. Before we start, Gary Smith will cover the Safe Harbor language.

Thank you. In order for us to take advantage of Safe Harbor rules, I would like to remind you that any projections or statements made today reflect our current views with respect to future events and our financial performance. There is no assurance that such events will occur or that any projections will be achieved. Our actual results could differ materially from any projections due to various risk factors which are described from time to time in our periodic reports with the SEC.

Thank you, Gary. As you know from our press release, like yesterday our fourth quarter earnings per diluted share were $0.26. Sales for the thirteen weeks ended February 2, 2008 versus the 14th week ending February 3, 2007 decreased 5.5%. Comp store sales on a thirteen-week calendar basis decreased 7.3%. Comp store sales on a thirteen week fiscal basis decreased 4.7%.

On a calendar basis, November was slightly positive, up slightly less than 1% but we were more promotional during Thanksgiving weekend then we were last year. December and January on a calendar basis were both negative 10%. First-quarter to date through March 13 we are slightly negative less than 1%. So things have improved some.

Some fourth quarter detail on a thirteen week versus thirteen week calendar basis. Nonurban stores outperformed urban stores. Nonurban were minus 5%, urban were minus 9%. Strip center stores outperformed enclosed mall stores. Strip centers were minus 6 and enclosed malls were minus 8. Now why was the fourth quarter weak?

We feel that the number one reason was it is the consumer. The consumer is weak. We have less traffic in our stores and they purchase slightly lower price points than last year. Number two, is a lack of a hot item in our industry, a brand or a hot fashion.

One year ago we had Helix. Also one year ago we were coming off of the St. Louis Cardinals winning the World Series which meant a lot to us. The Boston Red Sox did not mean that much to us. One year ago we had the Chicago Bears and the Indianapolis Colts in the Super Bowl which meant to a lot more to us than the New York Giants and the New England Patriots.

Fiscal 2008 new stores, we opened 84 new stores and closed nine for a net increase of 75 new stores or a 12.3% increase. We opened 40 in the fourth quarter. I want you to know that people like Steve Kowal, our VP of construction and property management did a great job of getting those stores built, 40 in one quarter.

Cathy Pryor, VP of store operations did a great job of setting the stores, staffing the stores. Jeff Rosenthal, our VP of merchandise, I know they did a great job as did the distribution center getting the merchandise to the stores. That group of new stores is outperforming the other new stores. It is above expectations. Now for some further detail, Jeff Rosenthal, our VP of merchandise will speak to you.

Three major areas of business -- apparel, footwear and equipment. License is broken into college and pro. It was down double digits. Pro license was tough going against Colts, Bears and Cardinals comparisons. Youth and ladies college was very good. Activewear was up double digits led by Under Armour and Nike. Kids, women's and men's activewear were way up. Urban apparel remains soft, however, first quarter in urban apparel has improved.

Footwear down single digits; tough comparisons against Heely's from a year ago. Classic footwear still remains soft. Nike Shocks, Air Force Ones, Jordans and Asics performed well. For the first quarter footwear has improved from the fourth quarter trends.

Collegiate footwear, mainly baseball has remained soft. Hard goods has been down double digits. Inventory from an (inaudible) standpoint is in good shape. We're still clearing out some winter goods but feel we are in a good inventory position for the spring selling period.

Gary Smith will now speak with you.

Fourth-quarter total sales were $142.8 million which represents a 5.5% decrease from the previous year which contained an additional selling week. Gross profit rate decreased due increased mark-downs and unfavorable inventory adjustment related to shrinkage and the de-leveraging of store occupancy and warehouse cost.

Selling and administrative cost increased 2.6% over the previous year but de-leveraged 117 basis points as the rates of sale. Those increases were mainly in store payroll, new store cost due to the back-end loading of the 40 stores and an increased advertising spend. A quarter tax rate of 35% reflects the favorable resolution of certain state tax issues and EPS came in at $0.26 versus revised guidance of $0.20 to $0.26.

For the year, total sales increased 1.7% to $520.7 million while fiscal comp store sales declined 3.1. Gross profit rate decreased due to increased markdowns and the de-leveraging of store occupancy and warehouse cost. Selling and admin cost increased approximately 8% and 120 basis points from the previous year. Again the increases were in store payroll, stock option expense, advertising and data processing related costs. EPS came in at $0.98 versus last year's $1.17.

From a balance sheet perspective, the Company ended the quarter with $11 million in cash versus $30 million last year. We spent $26 million to buy back 1.4 million shares in the quarter and through the end of the fiscal year we spent $150 million to repurchase 6.7 million shares.

Inventories increased 13.5% over the previous year but marginally on a store-by-store basis. Working capital needs decreased as AP growth outpaced the inventory. We spent approximately $16 million in CapEx for the year and planned to spend $24 million on CapEx in the next fiscal year.

Thank you, Gary. Nissan Joseph, our President and Chief Operating Officer will now speak with you.

Good morning. Fiscal 2009 has significant challenges ahead for retailers and Hibbett is not unique in that sense. As stated in our release, we plan on opening 87 new stores in line with our proven strategy of going to small markets and estimate closing about 10 stores. We plan on opening 12 stores Q1 followed by 20, 27 and 28 in the subsequent quarters thereby being a little less loaded on the back end as we were last year.

Our comps for fiscal '09 are estimated to be a breakeven to negative 3% leading to an EPS of $0.88 to $1.00. We do recognize the economic challenge facing us but are equally focused on the execution of key initiatives we have identified to drive sales in '09. These initiatives include processes and models in areas like supply chain, merchandise assortment and customer segmentation to better serve the markets we exist in.

Hibbett continues to be profitable Company with a sound strategy for organic growth. While predicting an economic upturn at the moment would be irresponsible we are ensuring that Hibbett will be position to capitalize on opportunities in our channel and space. Operator, now we will open up for questions.

(OPERATOR INSTRUCTIONS) Rick Nelson.

Thank you and good morning. I have a question about the four-year guidance as it relates to the consumer. Does it assume a continuing tough consumer environment throughout the year or does it those some improvement later?

It assumes a pretty tough year, Rick.

Okay, gotcha. The Under Armour on Nike Battles I'm wondering how you see that affecting your footwear sales?

Well, Under Armour is coming out with their crosstraining shoes May 3 and crosstraining is such a small part of the overall footwear business. It is really -- it is not really about marketshare or anything like that. So you know we expect the Under Armour shoes to perform well with all of the marketing that they're getting behind it. For this year it will not really be such a huge battle because training is such a small category.

Thanks for that. And then a question on store openings, the store growth I'm calculating 11.1% net of closings. That is below the historical growth right there. It is that desired to be conservative or --?

Rick, we're just being conservative. We thought in these economic conditions and times that it might be good to back off slightly and be real picky and choosy about our real estate selections. We may end up with more than that but we think we should be conservative this year. 11% still gives us additional 77 new stores net of any closings.

Gotcha, thanks. And how about on the competitive front, are you seeing any more competition from Dick's as they open more stores in small markets?

Yes, we are seeing some of that. They are opening stores, Dick's and Academy, are opening stores in midsize markets. We would consider both in Alabama and Montgomery, Alabama more midsize markets. Most of our growth is in the Hazard, Kentucky's of the world and Paris, Texas.

So about 20% of our stores are within a 15 mile or 15 minute driving distance of a big box. We do not expect hat to grow. They will open additional stores near us but we will open many, many additional stores that's more isolated than that.

And then if you hit your EPS targets for the year, what should free cash flow look like, Gary?

Probably in the 25 to $30 million range.

Thank you and good luck.

Sam Poser, Sterne, Agee & Leach, Inc.

Good morning. A quick question, what kind of headwind, Jeffrey, are you going to be facing with Heely's? I guess and how are you viewing Crocs in the same view for the first half of the year?

Heely's, the toughest comparison would be this quarter or would be first quarter and then as we go through second, third and fourth it's not that meaningful. But the first quarter is the biggest comparison. Crocs from a basic standpoint it is mostly just fill-in and then it's more of an item business so not huge numbers that we're going against.

And then just a follow-up on a last question. As we look at the year and especially as you have on Heely's I would guess is a material amount of sales in the first quarter, could you quantify how much that was last year?

We don't really have that number. We would be guessing. We'd be afraid to do that off the top of our head.

We want to give just from a comparison standpoint the biggest numbers were of course in fourth quarter and it's get lighter in first quarter and then second, third and fourth we can pretty much go over that.

Gotcha. But as we look at the year, are you looking at it as the comparisons are easier on the back half of the year, that the front half of the year will be softer or should we be looking at a negative -- should we be looking at worse comps on the front half and then improving towards the back or less (inaudible) towards the back half?

It is really hard to tell. If I were guessing I would say probably, yes. The back half should be a little softer. I am saying we should be better in the back half (inaudible)

Okay. You mentioned briefly, Jeff, that the classics were weak. Can you gave us any more clarity there or any signs of any improvement?

We have seen a little bit in the first quarter. Some of our Reebok classics have done a little bit better. We are still doing well with more if you put Air Force Ones and some of the Max-90 in that classic category, we're doing okay. K Swiss has still been a little bit tough.

One thing we've got going for us in second half is we got the Olympics. That usually means something good for the sporting goods industry. Also no matter who is in the World Series or no matter who is in the Super Bowl we won't be going against a big number there at all. And we will not the going against Michael Vick either wchich we were this past year where we did the year before -- we had a lot of sales in Michael Vick jerseys. So we have got some decent things happening for us this year.

How have you planned the -- how have you planned that -- and then you have an incremental opportunity with the Under Armour launch as well in the second quarter. How do you view that or is that -- you are just hoping it will make up for something else that may be softening up at that time?

You know it is not a significant amount of dollars that we're still being very conservative out there on sales because right now with the way the economy and those type factors and traffic. So if it sells through better hopefully it will help our comps but we are really being pretty cautious.

There is also cannibalization effect that could potentially have. So we are not being necessarily elated about the Under Armour launch against our comps.

Thank you guys very much; good luck.

Seam McGowen, Needham & Co.

Thank you guys. Good morning. I was wondering if you would not mind just repeating quickly that store growth opening pattern. Was that 12, 20, 27, 28?

That is correct. It is 12, 20, 27 and 28.

Okay, thank you. Maybe a question for Gary. Given your cautious outlook at this point, what would you say what the expectations would be on gross margin? I'm assuming if you you go into the year cautiously there might be less risk of (inaudible) to markdown. So well would be your expectation at this point?

We are planning a gross margin rate up, the product margin rate up, with a slight de-leveraging on the occupancy in the warehouse side.

Okay and what is your expectation or philosophy and strategy for ad spending?

We picked it up last year and I think we will probably pick it up a bit this year but not significantly.

Okay, thanks. Final question -- can you gave us an idea of what we can expect for tax rate in '08?

38.5.

38.5. So it's back to normal. All right, thank you very much.

Thank you.

Chris Svezia, Susquehanna Financial Group.

Thank you. Good morning gentlemen. I guess can you maybe just add some color in terms of the improvement you're seeing thus far into the first quarter? I know it's sort of the early stages but is there any particular driver that is creating that improvement whether you're doing something from a promotional perspective or is it -- it seems somewhat broad-based (inaudible) footwear and some elements on the apparel side? You maybe can add a little color in terms of the drivers of that?

Yes. We have seen in the beginning of February we see a little bit of the early consumer come back a little bit. We're seeing some of our urban brands and some of the fashion end of it coming back a little bit. So we feel pretty good about that but it's gotten a little bit better than what it was.

Jeff, are you doing anything differently from a merchandising perspective? I know the urban side has been somewhat of an evolution for you guys but are you doing something different in terms of brands or products that you're bringing in that's sort of driving an improvement?

We do have a few new brands in apparel and we continue to explore that and from a footwear standpoint, it is still a lot of Air Force Ones, Jordan type product that are still doing pretty well.

We also think we wore aided somewhat by the deployment and the leveraging of our investment in IT for the first quarter of this year so far.

Okay, that's helpful. With regard to on the inventory side you mentioned a little bit heavier on some of the winter product. I guess you are preparing to clear that product out during the first quarter. Are there any other areas that you are maybe a little bit heavier on?

We feel like we are pretty in pretty good shape on inventories especially from an (inaudible) standpoint so we are trying to clean up the last of the winter goods now.

So if anything just a little bit of a merchandise margin hit possibly in the first quarter but improves as you sort of go through the balance of the year. Is that fair?

We expect to improve in all four quarters.

Okay, that's good to hear. Lastly, Jeff, for you, when you look at the overall (inaudible) product that you see and the (inaudible) launches you've done and there's been talk obviously about Under Armour but obviously not a major impact to your business in terms of the footwear; but is there anything you can kind of call out in terms of what you are seeing down the pipe in terms of maybe what Nike might be doing to just sort of stimulate consumer demand for product. Obviously, traffic is an issue here but is there anything you guys are seeing down the pipeline that you are hopeful for that could certainly drive traffic particularly as you get to back-to-school?

You know all through -- New Balance, Under Armour, Nike are all spending a lot of money in advertising crosstraining so naturally and hopefully that will bring some traffic to the stores which will help hopefully sell other products. As we get into the Olympics that brings more excitement to athletics. We feel that hopefully that will help drive some traffic.

From a product standpoint, there's a new item from a Nike it's a Shocks with air that is very limited in distribution in the beginning but that may have some legs as we get later in the year. So other than that we have not seen anything that much more innovation but crosstraining just the amount of attention that's going to bring to us at least from a marketing standpoint.

The other strength in footwear is some high-end running shoes are performing pretty good light Asics, and Brooks and Mizuno and Nike, some of the higher price points are doing pretty good.

Okay that's good to hear. Thank you gentlemen. Good luck.

Jeff Mintz, Wedbush Morgan.

Thanks very much. Can you talk a little bit -- I know we've been hearing a lot about mall traffic being down. Can you talk a little bit about traffic from comparing your mall versus non-mall stores?

Definitely malls have less traffic than strip centers. We feel that strip centers are our future. 95% of our new stores last year and this year are going to be in strip centers because it just seems like malls don't need any more of what we do. But the strip centers they're building they're newer, they're more convenient.

We think convenience is getting getting to be a very strong a meaningful word to the consumer. We feel like we get in a strip center out in the outskirts of a town near a huge growth area that we're going to being good shape. Closed mall traffic is definitely down for us.

Thanks. That is very helpful. And then, Gary, can you just out a little bit about what the CapEx increase for 2009 is? You're going from 16 to $24 million on the same number of store openings. Can you talk a little bit about where the increases are coming?

Well, certainly. If you recall, last year, our gross budget was approximately $24 million also. We ended up using 16 and really nine net when you count the money we got back from landlords. But the big nut that that we had in last year was $4 million for another distribution center which we opted not to do.

And the cost of constructing new stores has actually come down as we move more to strips as opposed to some mall-based stores. And then talking about this year, the big increase in spend is in IT. That is only a couple million dollars. I would expect us to be at the end of the year we're always under our CapEx budget. I would expect the spend to be up a little bit more from this year but probably under $20 million at the end of the day.

Okay, great. Thanks. And then finally on SG&A obviously you guys did a good job controlling SG&A in a tough environment. How do you see that playing out for 2009? Can you continue the same level of SG&A control that you had this year?

Well that's where the dilemma comes. It is a good news, bad news thing. Part of the SG&A decrease was the fact that in the year there was not much of a bonus accrual. That was down about a couple million dollars. So from that standpoint, I guess we are not proud of the dollar (inaudible). But we're planning that to been this year.

But normally being low-cost operators, we keep control and watch every expense going forward. So I would certainly think that we would maintain at least that same rate of discipline over the expenses this year. In fact, we're probably going to delay bringing on some budgeted payroll heads that we would normally put in place just due to store growth.

Okay, great. Thank you very much.

Anthony Lebiedzinski, Sidoti & Co.

Good morning. A couple of questions regarding the Q4 comps. Can you give us a breakdown of the traffic versus ticket and also what are you seeing in terms of the Q1 to date comps again traffic versus ticket?

Anthony, in the fourth quarter ticket was down, price per item was down about 3%. Of course, traffic was down, the balance of it probably in the four or five range. The first quarter has gotten a little better on the ticket and the traffic. We are down less than 1% in the first quarter so they both come back up somewhat.

Okay and also as far as the IT system that you have talked about, what is the plan for this year in terms of the timing of the rollout? I know you guys have talked about price optimization and some other things. Can you give us the plan for this year, what do you plan to do?

Sure, we had three major initiatives going into this year. The planning piece was installed at the beginning of March. We're looking for the more robust replenishment piece to be installed in April and we are working through the price optimization piece and if we decide to go ahead with that that would probably be later in the year.

So you are still not sure if you're going to put in price optimization?

We're working through that right now.

And also as far as the new stores you are targeting for this year, are they mostly backfills or are you planning to enter any new markets?

All but one are backfills. We are in Quincy, Illinois and we're going to go right across the Wisconsin line, one little market but we see about ten markets we could probably do in Southwest Wisconsin but we're going to do one just across the line and -- is Quincy (multiple speakers) Iowa. What is the town? (multiple speakers) is right across the line from Dubuque, Iowa. But otherwise we're going to be in the same 23 states. We may do one or two in southern Wisconsin.

David Magee, Suntrust Robinson Humphrey.

I had a question about your DC plan. You've talked about the possibility of putting one in the more northern region of your territory over the next couple of years and I was wondering where you stood with that? Thanks.

From a distribution standpoint we have decided to -- we can't increase the footprint here. We made some modifications and changes. We think here with using de-consolidators and so forth that we can go well into 1200 stores. We've got some auxiliary space here in Birmingham which has helped. So we really don't see another distribution center out there in the next four or five years.

We're also looking to use improvement in supply chain that have come from vendors and just the industry in general to leverage [RDC] here and take it beyond that point to. We're looking at vendor de-consolidations on the East Coast and the West Coast that will further extend the life of [RDC] to service our stores.

Okay, thank you.

Steven O'Brien, Wellington Management.

Good morning. Could you kind of go into how you will operate the Company a little differently this year given the headwinds versus last year? What are the things you are -- there's probably some obvious things. But can you just take us through what changes since things have gotten a little more difficult?

Sure. One of the things we are focusing on is rigorous execution of things we believe drive sales. We're looking at the three spaces of merchandise assortment, supply chain initiatives and customer segmentation. We're using systems to be able to give us better granularity on stores and where they are headed thereby maximizing our investment both on the real estate side and also on the inventory side.

We also see some upside operationally as we change and improve behaviors on the sales floor with our staff. We have always invested heavily in training. We will continue that by adding and also add dimensions to it.

We're also looking at relationship -- relational marketing initiatives that create a relationship with our consumers that drive them into stores. So there a lot of different initiatives we can do internally but retail at the end of the day is all about rigorous execution and that's where we will keep our focus as we continue to face the headwinds.

A couple of other things. We're going to be very careful on hiring additional people. Now we're going to hire all the people we need in systems. We have got to be the best at systems and we're getting good but we're not the best. We want to be the best so we're going to be very careful there but we installed JDA last year. We're going to really concentrate on getting some benefits from it this year and we really should get it.

Okay and you had been raising your price points over the last two years. Are you still going to try to continue to do that this year?

Steve, we will try to do it but our price points have gone up for about the last six years including last year. But they fell off in the fourth quarter for the first time. So we are not sure. I think a lot of that raised price point comes from cleaner inventory, selling more inventory at regular price rather than a discounted price and -- but we're going to certainly try to get it back.

Steve, two things to note is our athletic footwear and our apparel haved maintained their ASPs. Also we forecast that ASPs will rise in the future given the fact that a lot of our vendors are facing price increases from their sourcing in China. We're hearing that from all sources and as a retailer we would plan on passing those increases onto consumers. So that would have a natural lift on ASPs, Steve.

Okay. Is it fair to say that gross margins -- you may feel more gross margin pressure in the first -- relative to last year in the first half of this year versus the second half? Or how do you see that going?

I don't believe so. We feel that we can increase it in all four quarters. Hopefully we will be as -- have to take as many markdowns in the fourth quarter next year. So we are planning on increasing our margins.

And do you have a target for SG&A and what that could look like for the entire year as a present of sales?

I don't have it here in front of me.

One last question -- with all of the turmoil taking place in the financial markets in mortgages etcetera is it -- do you find it more difficult to find the store sites or -- I mean you did a great job in getting a lot of stores built in the fourth quarter. But do you find it a little tougher to get the store sites and then to try to get them built?

Not really. It is almost the opposite. We're seeing some softening in prices of rents (inaudible) occupancy. We think we're on the front end of the softening. We think as we go through the year we're going to see more and more. Now there's some projects not being built but going to small markets a lot of times we go into existing centers and we're seeing some softening on prices.

We think what is driving that also is the exiting by undercapitalized retailers that are going out of business in this marketplace. Obviously, we will have some centers not come to fruition, but I must reiterate that given this new store number that we posted out there we feel very confident about being able to hit our new store projection given the headwinds and the tailwinds in the real estate market.

Now for really my last question, have you felt the impact yet of higher prices from vendors? I mean everybody knows that Chinese currency has been revaluing and wages are going up. Have they been trying to get price from you yet?

A lot of our Nike footwear for the spring are at a higher retail. So Nike is probably on the forefront on already raising prices. But we are seeing it coming down the pipe and other vendors are doing that also.

Okay, thank you.

Jim Chartier, Monness, Crespi & Hardt.

Good morning. I'm just curious what is your inventory plan for the year? Do you plan to inventory down given your guidance for comps should be down?

It will be down.

Okay. And then for Mr. Joseph, last week at a conference you mentioned some expense savings you've already found in the Company. I'm curious if you could give us some sense of now having looked at the Company for a little bit more what opportunity as far as cost cutting or expense savings are you seeing?

Jim, there are a lot of opportunities for cost savings in some matters. We want to make sure that those are truly savings and not cost avoidance because in times like this it is important that we stay focused on building Hibbett and making it a stronger company to take advantage of opportunities as retail turns. There's always ways to do business.

The most significant of it will be in our supply chain. We continue to find opportunities to reduce costs but the biggest driver to retail is going to be increasing topline revenue. So equally we want to make sure -- we don't cut in any areas that can affect our ability to capture topline revenue, Jim.

And you bought back a lot of stock in fourth quarter. I'm curious if you would be willing to take on debt to buy back additional stock.

As you may or may not know, we issued an 8-K a few weeks ago that we increased our credit line with Bank of America by $50 million. So we have $30 million with Regents and $50 million with Bank of America. With that being said, we have the capacity to do that. Whether or not we think it is a prudent thing to do we will decide that on an ongoing basis.

Okay. And as far as Footlocker's announcement that they're going to start carrying Under Armour apparel in their stores, I know you only overlap in 30% of your store base or so but what is your thought there?

We will watch Under Armour as they expand distribution. A lot of what we do was [unreplenishable] so as sales slow down or they (inaudible) we can adjust. But we will be watching it as our distribution expands.

One thing I would like to bring up too, we're going to have more (inaudible) in 50 markets beginning in July. So we're going to have something in the second half we did not have last year. It could be a positive thing.

And then on Heely's I think that had a pretty big impact on your fourth quarter gross margin. I'm curious if that is going to have a similar impact in first quarter or if you've been doing something to mitigate that impact?

No, that really won't have an impact from a margin standpoint in the first quarter. What's adjusted has already been adjusted.

And as far as your guidance, have you included any boost from tax rebates the second and third quarter of the year?

We have not.

Great, thank you.

Steve Martin, Slater Capital.

Hey guys. You did a long discussion of systems and upgrading systems and driving customers into the store and I know I've asked you this a number of times -- have you reconsidered given all about what to do about e-commerce and making your web site more of a shopping proposition?

Absolutely. We have looked at the web platform as a way to increase our presence in the marketplace. We equally do not want to get into -- to embark into any operations that truly does not add value to the organization from a profit standpoint.

Having said that, we have identified key vendors that we can roll out the web platform with at very little incremental cost to us and seamless to the consumer and leverage our brick and mortar strategy with a click and mortar strategy. So that is number one.

We're also looking at the web to increase our relational marketing efforts with consumers that shop our stores. So we're looking at the web and the portal that it offers in a holistic manner rather than limiting it just on e-commerce base.

When you say with specific vendors you are talking about mostly [Dropship]?

Correct.

(OPERATOR INSTRUCTIONS) Sam Poser.

I just wanted to follow up on the inventory levels. Just to understand, you said they weren't too bad on a store-by-store basis. Is that a timing impact of when you opened the stores in Q4 because it looks significantly heavier than it has relative to how that has been in the past?

Certainly we'll have inventory in those stores because a number of them opened up in the latter part of a January. So it's inventory on the books that really has not been productive yet.

How many of those stores of the 40 opened in the latter part of January?

20 plus.

And (inaudible) if you take out those stores could you tell us where you are on inventory taking those out or could you give us a value for the inventory on those 20 plus stores so we can sort of put them on an apples-to-apples basis?

(inaudible) would probably be down by one. Does that make sense?

It is close to being flattish.

So that is still a big swing to negative seven -- negative 7.3 our negative four even on a fiscal basis for the quarter. That difference of inventory, Jeffrey, you said you felt pretty good about it but there was some -- how much holiday carryover was there (inaudible)?

Well we have cleaned up most of it in that quarter and a lot of it was spring deliveries and spring goods and we feel we are in a pretty good position. There's not a lot of issues from an age standpoint.

I would expect that inventories at the end of Q1 will be slightly on the high side primarily because you have got to lock and load the Under Armour stuff which won't launch until the first day of the month.

It really have that big an impact. We have that already planned in our numbers.

So we should not see this kind of swing at the end of the next few quarters?

No, sir.

Thank you very much.

Sean McGowan.

I was just wondering if you were aware at the president of any changes in the tax holiday plans for the states where you have stores?

I have not heard of it yet. Tennessee is (inaudible) but for back-to-school it is a little early. Usually it comes -- we usually get that probably closer to May/June time period before they all decide.

Okay, thank you.

There appear to be no additional questions Mr. Newsome. Please continue with your presentation.

Thank you. In summary we think we are conservative with our fiscal '09 guidance. The consumers is weak. It's uncertain when he will return to normal. We do believe he will return to normal.

Our industry lacks hot items, hot trends, hot brands. That could change with the China Olympics and some other things that may happen this year. We're going to stay in small markets where we are needed by landlords, vendors and consumers. We're going to generally stay in the Sunbelt where the population growth is huge.

We're confident we can have 1200 stores in six years and over 1500 in nine years. The consumer will return. Thanks for being on the call today. We look forward to speaking with on May 2d at 9 AM Central Standard Time with our first-quarter results. Thanks for being with us.

Ladies and gentlemen this does conclude the Hibbett Sports fourth-quarter 2008 earnings conference call. You may now disconnect and (inaudible) would like to thank you for your participation.