Hibbett Inc (HIBB) 2011 Q1 法說會逐字稿

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

Thank you, Operator . Good morning, everyone. This is Mickey Newsome. I'm the Executive Chairman of the Board. Jeff Rosenthal, our President and CEO is with us. Gary Smith, our Senior VP of Finance is with us. Cathy Pryor, our Senior VP of Store Operations, and Becky Jones, our Senior VP of Merchandise and Marketing. All of us will be available for questions and answers. We appreciate you being on the conference today, and we appreciate your interest in Hibbett Sporting Goods. Before we start, Gary Smith will cover the Safe Harbor

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. Now Jeff Rosenthal, our President and CEO, will speak with you.

As you know from our press release this morning, our first quarter earnings per share were $0.59, compared to $0.38 first quarter last year and a 57.8% increase in net income year-over-year. Best first quarter earnings per share at Hibbett ever. We feel that we are effectively managing our business. Sales by month were, February up 17.4%. March and April sales combined with the Easter shift was up 12.8%. Strip centers outperformed enclosed malls, however, much closer than in previous quarters. The first 20 days of May, we are positive comp in the low double-digits.

From a real-estate perspective, we opened two new stores and expanded three high performing stores. We closed two unprofitable stores. We plan to open at least 30 new stores and expand at least 20 high performing stores. We will close approximately ten to 15 unprofitable stores. We have identified 400 additional small markets for a new Hibbett Sporting Goods in our 24-state area.

Our major areas of business is apparel, footwear, and equipment. First, apparel is broken down into two areas. Active wear and license. Our active wear was up low double-digits, led by women's and girls' active wear. Key vendors were Nike and Under Armour and North Face. Licensed business was up over 30%, led by Alabama and Saints. Excluding that performance by Alabama and Saints comps were still up 13.5%.

Footwear was up low double-digits led by women's. However, men's and kids' performed very high -- performed at very high levels. Key vendors were Nike, Asics, and Reebok. Toning shoes have become a major factor and will become a major focus for Hibbett. Nike Lunar, Jordan's Air Force One's, Reebok Toning, Reebok Zips, and Asics Technical Footwear have all performed well.

Equipment was up high single-digits. Baseball, football, basketball, soccer, fitness -- all had gains. Key vendors were Nike, Under Armour, Easton, Wilson, and McDavid. Our accessory business continues to outpace all areas of the business with shoe care, socks, and sunglasses, and miscellaneous items performing well. Our replenishment system, E3, has continued to be a major factor in driving profitable sales and customer satisfaction. Our operations team continues to build items per transaction and drive extra business. Aged inventory is in great shape, and we look forward in having a good second quarter.

Now Gary Smith, our Senior VP of Finance, will speak with you.

From a financial perspective, first quarter sales were $184.5 million, a 17% increase from the prior year, while comparable store sales were up 14.5%. We opened two stores, closed two, and expanded three high performing stores while square footage grew 2.6%. Retail product margin rate grew 116 basis points versus last year due to better discounts, less promotions, mix, and improved shrinkage rates. Warehouse and occupancy levered favorably the remaining 125 points with warehouse costs under last year's dollars. Store operating, selling, and admin costs decreased 127 basis points in the first quarter as we continued to make strategic investments both at the store and corporate level. We have selectively increased advertising to improve market share. We've increased selling hours in our stores to improve customer satisfaction, and we have made corporate investments in inventory management and systems.

Depreciation and amortization leveraged 18 basis points versus last year, and operating income was $27.7 million, 15% versus last year's $17.6 million and 11.1%. This is a 57% increase. We also had a favorable tax rate versus last year due to the increased exercise of incentive stock options. Diluted EPS came in at $0.59 versus last year's $0.38, a 54% increase, and this marks the second consecutive quarter of plus 50% EPS growth.

From a balance sheet perspective, the Company ended the quarter with $71.4 million in cash. This represents a $36.8 million increase from the first quarter last year, and a $21.7 million increase from year-end. Inventories increased 6.5% over the previous year, but up 4.6% on a store-by-store basis. We also spent $1.3 million in CapEx for the quarter.

Operator, we're now ready for questions.

Thank you, sir. (Operator Instructions) Our first question comes from the line of Chris Horvers of JPMorgan. Please proceed with your question.

Thanks, and good morning. Can you talk about how much toners is as a percentage of sales, perhaps? And how you are seeing trends in that category from a momentum perspective?

We don't give out the exact percentage, but it has made a meaningful impact on the women's business. Our women's business overall is very good throughout all the categories, but it has definitely brought the women shopper back to us in a very big way. And it's also helped our women's apparel sales.

Okay. And as we look to the second quarter, can you help us conceptualize how you're thinking about it? If I look at it, it looks like you have a very easy compare, but that was also as you lapped against a tougher compare two years ago by the tax refund checks. How are you thinking about potential sales and productivity as you look at the second quarter?

I would say certainly our compares get easier as we go through the quarter. May was down approximately 8% last year. June was down almost 10%, and July was down 13.6%. With some of the momentum we have going for us in May, I think we could have as good a relative quarter in the second quarter as we had last fourth quarter and first quarter.

Okay. And finally, as you think about the apparel side of the business, and it sounds like it's a long way off. But thinking about North Face potential store expansion this year as we get into -- as compares get tougher in the fourth quarter. What are you -- where are you at now? And what are you planning there?

We're going to grow the outdoor space to over half our stores in the fall, and we are adding Columbia to that mix. And we expect it to be a big part of what we're going against the fourth quarter, and we think there's a lot of opportunity there.

And how much was outdoor last year? How many stores?

It was a very small percentage, and we really aren't giving that out.

Okay, fair enough, thank you.

Thank you, gentlemen. And our next question comes from the line of Dan Wewer from Raymond James. Please proceed with your question.

Thanks. Gary, just to follow up on the next three quarters. As Chris alluded to there, pretty easy comparison in 2Q. Can you remind us how much of the second quarter last year was impacted by the change in the back-to-school tax events? And how you think that is going to lay out this year? And how that may distort the numbers between the second and third quarter? And also, Jeff, curious, when you think about the fourth quarter and the 9.6% gain you achieved a year ago, are you thinking that you will have positive comps on top of that big lift a year ago? As I recall, partly it was due to weather.

Dan, I would think that last year's shift was probably anywhere $0.02 to $0.03, and going against the stimulus could have been about the same amount also.

$0.03 per share or same-store sales?

Right. Normally second quarter is probably low to mid-teens for us, historically.

Just to make sure I understand, in the second quarter of last year, we were minus 10% in same store sales. We're thinking maybe a couple of percentage points of that was due to the change in back-to-school.

Probably four or five of it was due going against the stimulus checks. 4% or 5% of that, down comp. Because the year before we were up plus 5%. Last year, we were down 10%.

Based on what we know today, Cathy, you want to speak to the tax brings are going to fall about the same this year versus last year?

Yes, from what we know so far, they look very similar to last year on dating. That is supposed to change over the next few months, but it looks like today that they are very similar.

Okay. And then, Jeff, just the entire industry last year benefited from favorable weather during the fourth quarter. Curious, if you think you can show positive comps on top of that almost 10% increase a year ago.

We couldn't have had a better winter last year from a cold weather perspective. However, for us, we still think there's a lot of opportunity in the outdoor space because we weren't playing on there. So it's a door increase. We hope we have favorable weather again, but we see some opportunities still there. And I guess you can't always fight weather, but from the outdoor space -- for us, it's a door count increase. So we expect to make up some of that just by having coverage.

Just the last question I have, the 15% operating margin in the first quarter is the highest that the Company has achieved, at least in the last ten years. There's some periods back in 2005 and 2006 where your first quarter operating margins were 14.6% and 14.3%. And for the entire year, as you are generating operating margins of around 12% in those two years. So in looking at the guidance, it looks like maybe you're thinking operating margins around 11% this year. Is there any reason why they can't return to levels in '05 and '06, since you have a better start this year than you did then?

Prior to the start this year as we moved the inventory forward, we didn't really drain any sales out of the quarter because of that. But certainly, we think that we're a better Company than we were a few years ago from an operational standpoint. I think the only thing that could keep us away from that might be the macro.

Right. That's a good point. Thanks.

Dan, in regard to the guidance, we're hopeful we're very conservative. Our goal is to raise it again in August, and raise it again in November, but we want to be conservative.

I'm sure you will. Thank you.

Thank you. And our next question comes from the line of Rick Nelson from Stephens. Please proceed with your question.

Thank you and good morning, and congratulations on a great quarter.

Thank you.

Can you update us on the status of the real estate market, and how you see the cadence of openings this year and any preliminary thinking on next year?

Rick, most of the openings this year will be in the third and fourth quarters. Although we will do some stores in the second quarter, also. Things are still soft out there in regard to getting deals, but we are seeing it loosen up some because of Blockbuster closings and Movie Gallery closings. We think we've got the potential to do a few more stores than we thought. And I think by next year, it really should pick back up pretty good.

The Movie Gallery store openings, last quarter you indicated you were looking at some of those. Are you indeed moving forward with some of those locations?

Yes, Jeff will -- .

Yes, we have nine deals already for this year that we're doing with Movie Gallery. We're looking at quite a few more deals. So we see that opening, and some of them may be later just because the landlord has to get out of it, and all those type things. But it may help us even more next year. But we are looking at quite a few of those, Rick.

Thank you. I'd also like to ask you about the gross margin. I know Dan had mentioned the operating margin, but the gross margin, I think, is the biggest we've seen in Company history. How big of a driver was licensed apparel to that margin in the quarter? Where do you see that going?

Well, that was part of the driver, but really all categories had significant margin improvement.

Okay. At the expense leverage, 80 basis points this quarter. How should we think about that in a mid-single-digit comp?

I would think it grew about half the rate of total sales. I would expect it to grow probably anywhere from one third to 40% of the sales growth.

Thanks a lot. Good luck.

Thanks.

Thank you for your question. Continuing on, our next question comes from the line of Peter Benedict from Robert Baird. Please proceed with your question.

Hello. Sticking with the gross margin, Gary, of the 125 basis points that came from the occupancy and the warehouse distribution leverage, could you help us break down that between those two?

Sure. The occupancy was levered over 90 basis points, and the warehouse was a little over 30. So like a three to one.

And as we think about moving into the second quarter, I know seasonally it's a lower sales quarter for you. Is there -- if comps are similar to what you saw in the first quarter, is there any reason to believe that the leverage on warehouse and occupancy won't be a similar 125?

That would make sense.

Secondly, on the buyback, $71 million in cash at the end of the quarter. Trends are strong. Could we see you involved in the second quarter, or is that something that we should still think about?

We had a fractional buyback in the first quarter. That will -- we have our Board meeting next week, and we'll talk about that.

Great, thanks very much.

Thank you.

Thank you for your question. Continuing on, our next question comes from the line of Mitch Kaiser from Piper Jaffray. Please proceed with your question.

Thanks, good morning. Great quarter.

Thank you.

Gary, first on the finance side. On the payables, I noticed they were down with inventory up. Was there any change there, and did that impact your terms with vendors and maybe better initial markup?

A couple things happened there, Mitch. Certainly, the fact that we brought some inventory in earlier, the payable got out of the system. The second thing was that some of this license stuff we bought are from smaller people, and they're like net 10% or 30%. Then the third thing was, last year we had some favorable dating for some buys. The key is always to get us back to 40% of inventory.

So that's what we should expect on a go-forward basis, do you think?

Yes.

Good. Then just thinking about that gross margin. It looks like the product mark-up was very strong, or the merchandise margin. Is that something we should see continuing going forward, do you think? Or how should we think about that?

I think definitely for the second quarter, it may be a little bit more challenging as we get into third and fourth quarter. But at least for the second quarter, it should be pretty good.

Okay. Sounds good. Then just lastly, I don't know if you have looked at fiscal stimulus or anything like that. Could you just maybe comment on how you are seeing -- I know tax rebates are up pretty substantially. Some of the 'Make Work Pay' tax credits and some of those things. Have you gone back and ever looked at what impact that may have had on the comps?

Certainly, in the early part of the quarter we saw significant gains both from us executing operationally by bringing inventory in early and having the inventory there, so it was there when the customer came in. But that sort of dissipated somewhat through the quarter. We're not seeing anything out there from a dollar stimulus that might be affecting business.

Okay. Great. Thanks, and good luck.

Thank you for your question. Continuing on, our next question comes from the line of Sam Poser from Sterne Agee. Please proceed with your question.

Good morning. Can you tell us the -- can you give us some information regarding the SG&A per store, and how you look at that going forward -- or per square foot?

Well, certainly with sales at this level, Sam, it brings a whole different dynamic in. We're certainly -- we'd like to keep it flat on a same-store basis. But when you're running 15% comp business, you need to staff those stores. We have some opportunity to advertise in some areas and pick up market share. And again, we've seen the benefit that systems have contributed to the Company, and we're spending a lot more internally from an inventory management standpoint. So we expect to accelerate comp store sales, total sales, and increase gross margin rate.

I just -- I think I missed this. The gross margin -- the increase in the gross margin. Can you give us -- repeat if you did -- the breakout of merchandise margin to buying occupancy?

Of the 240 increase in rate, about -- a little less than half, 116 bps, was due to product margin improvement. Occupancy levered plus 90, and warehouse was at plus 30.

Two last questions. The percent of business on E3 right now -- on replenishment? And where you stand with price optimization looking ahead?

The amount of business on E3 grew by 15% versus last year and is mid- to high 20% on an SKU basis, and it contributes at a higher margin rate than the rest of business. And price optimization, we're talking about that later in the year, and that will probably be a next-year initiative.

Thanks. Continued success.

Thank you.

And thank you for your question. Our next question comes from the line of David Magee from SunTrust. Please proceed with your question.

Hello. Good morning. Great quarter.

Thank you, David.

Couple questions. One, you mentioned more advertising this year. How important is that behind the better top line trends, and are you going about the advertising any differently with regard to what you are emphasizing, et cetera?

David, Becky is in here, and she's in charge of marketing -- has done a great job with it. She'll address that.

From a marketing perspective, really what we're doing is focusing in on locations where we need to have a little bit more recognition of who we are. And so we're doing a consistent message out to the consumer just to make sure that there's brand awareness, specifically in markets that we're not necessarily known. From that perspective, it's working well for us. And we also are looking at targeted markets where we think that we could do a little bit better, and by that perspective as well, it's working for us. So it's not huge cost to the total, but it's been very effective for us.

Thank you, Becky. Second question I had is, seems like some of your competition might be moving away from full-service footwear gradually. Does that help you all? Or does it potentially help you all with regard to your negotiations with vendors and the fact that you're full service, et cetera?

David, I think that helps us overall, especially as the trends change more toward technical footwear. I think the service part is a big deal. Definitely on certain products, I know that some of the major suppliers don't want to sell to self-service people. There's quite a few products, and a lot of our markets are against Family Footwear people. In a lot of our markets, they won't get a lot of the product that we'll have. So I think that is definitely an advantage for us.

Great, thank you. And good luck.

Thank you.

(Operator Instructions) And our next question comes from the line of Mr. Sam Poser. Please proceed with your question.

I've got another question. Sports Authority announced they're thinking about these small format doors. How are you looking at that? Do you know -- have you spoken to the real estate people to find out where they're thinking of going? And how do you look at that possibly impacting you?

Sam, until they open, it will be interesting. I know they will be mostly in major markets, so I don't think it will affect us. We'll see what they do with it. Right now, they haven't opened their first store. So we'll have to look at that. But right now, I don't think it's going affect us much.

Okay. And then on the marketing. Are you making -- are you moving toward any decisions regarding doing e-commerce rather than just the website -- the informational website? Where are you in that internal discussion?

We're doing some affiliate business through the vendors. We are talking about when do we go into e-commerce. But for the next year, we will not be doing it ourselves. But it's definitely a three- or five-year plan that we will address that.

Thanks very much.

And thank you for your question. Continuing on, our next question comes from the line of Anthony Lebiedzinski from Sidoti & Company. Please proceed with your question.

Good morning. I was wondering what the overall impact of Alabama and the Saints comp. What was that in the first quarter?

It was about 1% of the comp. So we still would have been up 13.5%.

Got it, okay. And also, I was wondering how much of the comp increase would you attribute to you bringing in spring inventory earlier than last year?

I don't know if we got exact number around it, but we felt very good about our decision in doing that because we got a lot of business very early. And we think we capitalized on business much earlier than we did a year ago and think that it's the right thing to do for the customer.

We even think we probably could have brought more in. We may have some more opportunity here next first quarter.

Okay. And also just looking at your business here. Your equipment sales were a little bit behind your apparel and footwear. Going forward, would you expect the equipment side of the business to catch up with the rest?

Well, I think we were still up. I think we got affected a little bit in February with baseball. It was very wet out. And baseball was pretty tough. And then in February, and then it got -- started getting better in March and April. So hopefully we will start performing at a little higher level, but we got off to a slow start. And February is a big baseball month.

What are the trends that you are seeing so far this quarter?

It has been good. Yes, football has been very good early.

All right, thanks.

Thank you.

And thank you. Continuing on, our next question comes from the line of Kristine Koerber from JMP Securities. Please proceed with your question.

Hello. A couple of questions. First, just want some clarification on your guidance -- the more upbeat guidance. Is that primarily reflecting the upside in Q1, and what you are expecting in Q2? I'm just trying to figure out if your outlook in the second half is unchanged at this point?

Well, Christine, first of all, congratulations to you and Rick for being named top Wall Street pickers last week by The Wall Street Journal. But when you take a look at our guidance going forward, our low was what the high was by $0.05 in the first -- or the end of the year guidance. And we moved the high up. We're cautiously optimistic about the rest of the year. We think that certainly we're much better improved fundamentally and from a systemic standpoint, and we're doing a better job of getting the right product in the right stores. The only thing that's really scares us out there is the macro, and Jeff is convinced that Alabama will win a 14th national championship in the fourth quarter to cover his bets.

That would be a nice help. Did you break out average ticket in traffic?

Yes. Jeff, you want to -- .

Our average ticket was about flat, and we definitely saw more transactions from the customer. And our items per transaction, from each store is definitely going up.

Okay, and then lastly, comment on commodity costs, and any impact on your business going forward or what you may see?

We haven't really seen really any impact from a cost perspective on merchandise. It's pretty much flat to where it was. We're not seeing pressure for increases at this point.

What about freight? Fuel?

We're seeing a little upside pressure on inbound freight and certainly with fuel.

We have heard, and we have seen freight -- flying goods in or something from China or wherever, we have definitely seen increases there from a freight standpoint.

Great. Thank you.

And thank you for your question. Continuing on, our next question comes from the line of John Lawrence from Morgan Keegan. Please proceed with your question.

Good morning.

Good morning, John.

Just quick, Gary, on the E3. As you continue to put -- I thought that part of the SKUs that were going on it was footwear. Does that help this -- maintaining that merchandise margin as you get footwear on the E3?

It certainly does, but remember, footwear is at the lower spectrum of the gross margin rate. Where we're making hay on the E3, as Jeff mentioned, is the accessory business. That's been on fire for the last two or three years.

And the sell-through that we're seeing right now should maybe help a little bit of the promotional activity as we move into July and August?

Yes, sir.

And last question on the advertising. I know you've touched on it, but Becky, you mentioned letting people know of who you are. Does that include some higher advertising dollars to let people know about this outdoor merchandise in the second half?

No, not necessarily. It's pretty consistent what our plan is against last year. Certainly, we'll let the markets know when we go into them with new product. But that's not based off of only outdoor. And we do target marketing as well, so we have the capability of going in and speaking directly about products to specific markets.

Great, thanks. Good luck.

Thank you.

Thank you for your question. Continuing on, our next question comes from the line of Jonathan Grassi from Longbow Research. Please proceed with your question.

Good morning. Thank you for take my questions. You comped up double-digits on both apparel and footwear throughout the quarter. Was there any -- did you notice any shifting in how that trended throughout the quarter? Was apparel strong to start, then start to slow down as the quarter continued? Give an idea of how footwear and apparel trended?

Actually, it was pretty consistent throughout the quarter. They both performed at pretty much double-digit rates most of the quarter. So it's pretty consistent.

And are both trending about the same in the second quarter?

Yes.

Okay. And then, did you have toning footwear in all your stores throughout the entire quarter?

No, we still are only in about 400 stores. So we still after big opportunity there to get to all stores.

Okay. Is it just Reebok? Or is it Reebok and Skechers that are in the stores?

Well, it's a little bit of -- it's Reebok and Skechers as we get further in back-to-school. But Reebok, we expected to expand it earlier, but our sell-throughs were so high that we couldn't expand it earlier. It's just a matter of getting caught up because the demand has been so high.

Okay. Thank you.

Thank you.

And we're going to continue on with our next question. This comes from the line of Camilo Lyon from Wedbush Securities. Please proceed with your question.

Thanks. Good morning, everyone. Just to follow up on that toning question. Do you plan to expand the number of brands that you are going to sell in the store as the year progresses?

We really don't. We think that we can cover the business between our Reebok business, Skechers, and then, of course, Nike has the toning -- or a wellness program that they're going after later in the year. Between those three brands we believe that we're covering all customer segments.

Great. And maybe could you speak to the availability of product in the channel? I guess in particular as it relates to Reebok. We've been hearing that they've had a little difficulty meeting some of the demand. Is that still the case? We don't believe we're going to have an issue with that going forward, and I wouldn't tell you that it's because -- I don't necessarily believe that it's because Reebok didn't have it. I think it was because when it hit the floor -- for all retailers -- it just took off so quickly that no one was quite prepared for how good it was going to be. So we all wanted more immediately, and that put them behind. But with good pre-planning, I expect to get what we need for our business. Sounds good. Then just separately, you commented on the strip malls outpacing -- or the strips outpacing the malls, but that the gap is closing. Is that because the mall channel is improving a little bit? Or the strips are slowing down a little bit? Maybe a little bit more color on that would be helpful, and maybe as to why you think that?

I think the strip centers are still performing. I think it shows that the consumers felt better about the products that were out there, and people came back. Overall, our strips still are outperforming the malls, but it got closer. And I think it all goes back having to good products and feeling a little bit better about the economy had to have something to do with that.

So maybe people coming back to the mall a little bit more?

Yes.

The malls still do more business per store than strips. The strips have been gaining for two to three years.

Got it. Thank you.

And thank you. Our next question comes from the line of Christopher Svezia from Susquehanna International Group. Please proceed with your question.

Hello. This is Christina Chang for Christopher. Congratulations on a good quarter.

Thank you.

My question is, as toning becomes a little bit more widely distributed, are you seeing any slowdown in the demand for your stores just because it -- part of that seems to be available more on-line with other merchants?

We have not seen any slowdown in demand. I believe they've done a really good marketing job with the program. Not only Reebok, but Skechers. And the media impact -- across the board there's just a demand in every community.

Right. Are you seeing any price resistance to some of the newer products that they're rolling out? Because they're coming out at a little bit higher prices.

No, we have not seen that as of yet.

And then finally, for outdoor. As you increase your mix for outdoor in the back half, where are you taking -- what categories are actually going to be shrunk in the back half?

We're looking at outdoor as a lot of incremental sales that is really in a space, and we really weren't into outerwear and some of those type things. We look at it by assortment by door. It may be taken out of some licensed product or some other type products to look that we would have the space or whatever to do it. But we went in with it just as most of it being incremental because it's a space that we haven't played in.

Thank you.

And thank you. Our final question comes from the line of Dan Wewer -- a follow-up, from Raymond James. Please proceed.

Thanks. Becky, Nike has been talking about the field house concept. They're going to -- my understanding to be -- layering into the big box retailers. Dick's has alluded to this. Do you know if there's going to be anything similar for a format like Hibbett?

Not currently, no. I'm not aware of them looking at that at this point in time. We do support them, and a specific number of stores with what we call Nike shops that they supported us in, in the past few years. But not from a field house perspective that they're pursuing [the other way].

Second, you talked about having outdoor in half of your stores next fall and winter. Would all of those stores include North Face? Or are there going to be stores where maybe would you have brands like Mountain Hardwear, but North Face would not be available to all those outdoor locations?

Correct. You're correct in assuming that.

Okay. And then, you noted the benefits of bringing in the inventory earlier for the spring season. Mickey, you talked about there's probably even a bigger opportunity for that going forward. Do you see a similar opportunity with the fall and winter product? And that perhaps, historically, maybe you missed some opportunities not having that in place earlier?

Not really, no. We're -- we think that we have the timing right for our fall and holiday deliveries. Because that wasn't necessarily an opportunity in regard to -- consumers shop from Christmas to after Thanksgiving so as long as you're prepared for that -- you're in good shape. There's no real reason to start driving it too early.

You talked about E3 benefiting your accessory sales. Was E3 also helpful in identifying this opportunity to bring in spring earlier, or was that generated from something besides E3?

Yes, I agree with Becky. I think it's a little bit more customer demand. Most of the E3 items are not so seasonal. There are some that are, but that really didn't tell us that we were just seeing how much we were missing, especially in early February.

Okay, great. Thank you.

Thank you. And Mr. Newsome, I will now turn the conference back to you for your closing remarks. Thank you, sir.

In summary, we had an outstanding first quarter, and we feel very good about the second quarter. We're a much improved Company year-over-year. We've improved in systems, marketing. Our merchandise team is improved, and our store operations team has certainly improved. And the bottom line to all this is we're pleasing a greater percent of customers daily in each store. We've got a great new store model. We're confident we can grow our stores from 767 to 1,200 in the years ahead and expand many stores in the next three to four years.

Thanks for being on the call today. We look forward to speaking with you on August the 20th at nine Central Standard Time after our press release earlier that morning about our second quarter results. Thank you for being on the call.

Thank you, Mr. Newsome. Ladies and gentlemen, that does conclude the conference call for today. We thank you all for your participation, and ask that you please disconnect. Thank you once again. Have a fantastic weekend.