SpartanNash Co (SPTN) 2007 Q1 法說會逐字稿

Greetings, ladies and gentlemen, and welcome to the Spartan Stores, Incorporated First Quarter Fiscal 2007 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Mr. Craig Sturken, President and Chief Executive Officer for Spartan Stores, Incorporated Thank you, Mr. Sturken, you may begin.

Thank you. Good morning, everyone, and thank you for joining our First Quarter Fiscal 2007 Earnings Conference Call. With me this morning are members of our team, including Executive VP and CFO, Dave Staples, and our Executive VP of Retail Operations, Ted Adornato.

Before we begin I must remind you that our comments today will contain forward-looking statements. These forward-looking statements may contain plans, expectations, estimates, and projections that involve significant risks and uncertainties. Actual results may differ materially from the results [inaudible] these forward-looking statements. Internal and external factors that might cause such a difference include, but are not limited to, competitive pressures among food retail and distribution companies, general economic and market conditions, and other factors described in our earnings announcement and annual report on form 10K and other filings with the SEC. Spartan Stores disclaims any intention or obligation to update or revise any forward-looking statement.

Fiscal 2007 is off to a very good start and our financial results, excluding the asset impairments in exit cost disclosed in the earnings release, were better than expected. Excluding the charge, the fiscal 2007 first quarter is the best first quarter earnings results that Spartan has achieved since becoming a public company nearly six years ago.

In addition, consolidated net sales of $528 million reached their highest first quarter level in five years. The net sales improvement represents a 15% increase from the same period last year. As demonstrated from these results, we continue to show good progress with our business plan despite higher consumer energy costs and a challenging economic climate.

During the first quarter, we commenced integrating our D&W acquisition, rationalized overlapping capacity in our West Michigan market by closing two Family Fair retail stores, and completed the transfer of our Central Bakery operation in Grand Rapids through our Family Fair stores.

The integration of our D&W acquisition was our top priority during the quarter and we dedicated the appropriate resources for the task. During the quarter we re-branded six of the acquired stores to Family Fair retail store brand. This effort required extensive remerchandising, cleaning, and minor remodeling at each store location. These stores now participate fully in our corporate store ad and display program under their new retail store brand and we are pleased with the initial sales performance of these stores. We will continue to focus on improving the operations of these stores to bring them in line with our target performance and profit polls.

During the quarter we completed one major store remodel and two smaller remodels to stores that retain the D&W retail banner. In addition, we refocused our D&W promotional programs to emphasize a commitment to fresh product.

This emphasis includes a major overhaul and redesign of our ad circular to strongly promote a distinct and fresh product offering. Also, we implemented a more disciplined display program that exhibits significant product values now available in stores along with more targeted promotions designed to strengthen the D&W Fresh Markets retail store brands. Although we are just beginning efforts to strengthen the D&W store brand, we expect these actions to improve the growth potential of these stores.

As previously disclosed, we evaluated the retail grocery capacity in our markets following our D&W acquisition and decided to close two former Family Fair stores. These stores were located in areas where an alternative corporate store offered customers a better shopping experience and where excess retail capacity existed. We now have a more optimal store network to properly penetrate the market while providing high quality products, services, and convenience to consumers in these markets.

Also during the quarter, we cycled a majority of the competitor's super centers that opened during fiscal 2006. You may recall that during fiscal 2006, we had a record number of competitor super center openings. We are pleased with the competitive strength and performance of our stores that cycle these openings and believe our remodels, incremental fuel offerings, and store rationalization efforts are very effective in proving market strategies. We do not expect any additional supermarket or super center openings in markets that affect our corporate stores during the remainder of our fiscal year. I will provide additional details about our business outlook for the remainder of fiscal 2007 following Dave's review of our first quarter financial results. Dave.

Thank you, Craig, and good morning. Consolidated net sales for the first quarter increased 15% to $528 million from $459.3 million in the same period last year due primarily to the addition of D&W stores, higher distribution segment sales from new and existing customers, the shift in the Easter holiday sales for this year's first quarter, and incremental fuel center sales.

Gross margin for the first quarter increased 90 basis points to 19.6% compared to 18.7% in the last year's first quarter. The increase was due to the change in our sales mix to a higher concentration of retail sales and synergies gained with the initial opening and integration of the acquired stores. Partially offsetting this improvement, however, were the additional distribution and fuel center sales, which yield lower profit margins than retail grocery sales.

Total first quarter operating expenses increased to $96.6 million from $79.8 million in the same period last year. As a percent of sales, first quarter operating expenses increased to 18.3% from 17.4% in the same period last year. This increase was due primarily for the $4.5 million asset impairment and exit cost charge, $1.1 million in training and startup costs for the D&W stores, and higher fixed costs associated with retail operations. Reported first quarter operating earnings including the charge were $6.9 million compared with $6 million in the same period last year as a result of higher sales and stronger profit margins in our retail segment.

Reported net earnings for the quarter were $2.7 million, which equal last year despite the charge and higher interest expense associated with increased borrowings related to the acquisition.

First quarter EBITDA increased by more than 44% to $17.6 million compared with $12.2 million in the same period last year as a result of the factors previously mentioned. Please note that we included a financial table with our press announcement that reconciles GAAP earnings to EBITDA, which is a non-GAAP financial measure.

Turning to our business segments, first quarter retail sales increased 24.5% to $252.2 million from $202.6 million in the same period last year due to the addition of the 16 D&W stores, the shift in the Easter holiday sales, and the incremental fuel center sales. The acquired D&W stores contributed approximately $43 million to the first quarter retail sales, while the Easter holiday contributed approximately $3 million.

Total comparable store sales increased 4%. Fuel center sales contributed a positive 3.1% to comparable store sales during the quarter, while the shift in the Easter holiday sales for the fiscal 2007 first quarter led to a 1.5% increase in comparable store sales.

The $4.5 million first quarter charge and $1.1 million in startup costs were related to the retail operations which led to reported first quarter retail operating earnings of $1.2 million compared with $2.5 million in the same period last year. In addition retail-operating earnings were negatively influenced by higher utility expenses and bankcard processing fees. Excluding the asset impairment and exit cost and startup costs, retail operating earnings improved significantly compared to last year's first quarter.

First quarter distribution segment sales increased 7.5% to $275.9 million from $256.7 million in the same period last year due to the shift in Easter holiday, new distribution customers, and higher sales penetration with existing customers. The Easter holiday sales contributed approximately $3 million to first quarter distribution sales. First quarter operating earnings for the segment increased 63.4% due to better fixed cost absorption from additional D&W store sales volumes, a shift in the Easter holiday sales volumes, and incremental sale volumes from the new and existing customers.

Turning to the balance sheet, long-term debt at the end of the quarter including current maturities and capital lease obligations from the acquired D&W stores increased to $135.4 million from $65.7 million at March 25, 2006.

I will now cover our outlook for the remainder of our 53-week fiscal 2007-year. We expect distribution segment sales to continue to show growth compared with a year ago period because of the new stores added to distribution base during fiscal 2006, our improved private label and perishable product offerings, and because many of our customers are also performing well in a highly competitive retail market environment.

In our retail division we expect retail comparable store sales to be in the low to mid single digits for the year as we cycle the remaining fiscal 2006 super center openings in the upcoming second quarter, as we gain sales from the opening of more fuel centers, and position the company to take advantage of competitive developments in our markets. These favorable trends however will be somewhat mitigated by the impact on consumer behavior from higher energy costs and the uncertain economic growth outlook.

We continue to expect fiscal 2007 gross margins to be above the levels achieved in the previous year due to a greater mix of higher margin retail sales from our acquired stores and synergies resulting from the integration of these stores. The fist quarter margin run rate improvement however, will be somewhat lower as we move through the year due to our higher promotional activity, which is designed to take advantage of existing market opportunity from the current economic climate. We expect the gross margin improvement to be partially offset by higher SG&A expense as a percentage of sales due to the higher mix of retail sales. SG&A expense as a percentage of sales however should improve slightly compared with the first quarter results as we are not expecting any additional asset impairment and exit costs or startup costs related to the D&W acquisition and due to better operating leverage from the expected higher sales volumes.

We expect full year earnings in fiscal 2007 to exceed our earnings reported in fiscal 2006. We expect fiscal 2000 capital expenditures to range from $30 to $35 million and depreciation and amortization expense to range from $22 to $25 million. In addition, we anticipate interest expense to range from $13 to $14 million in fiscal 2007.

I will now turn the call back to Craig. Craig.

Thanks Dave. As I stated earlier, fiscal 2007 is off to a very strong start and we expect to continue building on that momentum in spite the somewhat uncertain economic environment. We will continue to complete our retail store integration in order to realize the full synergies we expect, but are also firmly committed to pursuing strategies for sales and profit growth. We firmly believe that additional growth opportunities are available and we are prepared to prudently take advantage of market opportunities as they arrive. Our balance sheet remains strong and our continuing financial performance improvements provide ready access and capacity to raise additional capital if needed.

We will move forward leveraging our retail strategy built on consumer convenience, quality products and services, and healthy living. And we'll be expanding these strategies to other stores in our retail network. We also expect to open two to three fuel centers at existing store locations and expect to begin construction on at least one, and possibly two new stores, before fiscal 2007 year end as well, as securing sights for up to two additional stores.

From a distribution standpoint, we will seek opportunities to expand our customer base and to increase sales to our existing customers. During the first quarter we gained a produce distribution business from one of our top ten customer groups. This represents our second top ten customer to award us their produce business in less than 12 months.

We believe that this progress, along with the D&W acquisition, validates the resent decision to expand our produce distribution capability. We also continue to make additional progress with new customers. In order to continue expanding our new customer base and increase sales penetration with existing customers, we will focus on our award-winning portfolio of private label products, perishable product offerings, and other value added customer services.

In closing I want to state that our strategy is working and we are on track to continue pursuing our goal of achieving profitable growth. We will now open the call for your questions.

Thank you. Ladies and gentlemen at this time we will be conduction a question and answer session. [OPERATOR INSTRUCTIONS.]

Our first question is from Chuck Cerankosky with Key Bank McDonald. Please proceed with your question.

Good morning, gentlemen, great quarter. I've got a quick question. First on the $4.5 million pre-tax asset impairment and exit cost charge, Dave, how much of that is cash and how much is strict asset impairment?

It's basically all non-cash for the quarter. When you look down through it, it's broken out between leases and assets that are written off. So the bulk of the charge is really going to be your lease impairment but that's a non-cash charge for the quarter. Your fair market value of assets is somewhere around $.5 million.

Okay. And you mentioned the $1.1 million startup cost and training cost. That all hit retail, correct?

Correct.

All right. Is that over?

Yes. That had a lot to do with just these stores needed a lot of work to get them up and running. We also needed to put our culture into those stores. So the predominance of that is over. I mean there'll always be some incremental training as we continue to bring them up to speed with our policies and procedures and the way we do things, but yes, predominantly that is over.

All right.

Yes, Chuck, let me just ad lib a little bit, this is Craig. When we took the D&W stores over, we wanted to be sure that we integrated the Spartan culture into these employees. And there were 1300 employees that spent at least one full day here at our distribution center in the training process along with additional hours spent at store level. So it was sizable but it's behind us.

Okay, 1300 people that's a lot of employees. And then you mentioned the part of the [inaudible] sales increase in distribution was incremental sales from new and existing customers. Can you quantify that as sort of an annual rate for this year?

Well one thing that- - well yes, I guess we can. We have already stated that we added 51 new customers during the last 12 months period time and we annualized that at around $85 million. Some of that business is a little bit left on a per store basis than what we're use to because we are counting, for example, the Martin stores which is a real premier operator in South Bend, Indiana where we were able to land their health and beauty aid and general merchandise business. So we don't have all of their sales we just have a portion of their sales, but it does give us a foot in the door with a premier operator that is supplied by one our competitors.

[inaudible question - microphone inaccessible]

No they're [inaudible]

Okay. Do you see any of the Super Value customers that you have a shot at any- of them a bit discouraged by Super Value's acquisition of Albertson's?

Well, I can't quote any of the Super Value customers but I- but of course, we took away from Super Value the number one customer that they had in the state of Michigan and the number one customer that they had out of their Fort Wayne, Indiana distribution center and that was D&W. When we look at the current penetration with Super Value in the trade area in which we operate, it just seems like it's not as strong as it was before we got involved.

Okay. Talk about the opportunity for additional in market acquisitions and also put in that context, please, Carter's Chapter 7 filing. And that was 14 stores?

Yes. Let me- let's talk about Carter's first. The 14 stores that Carter's closed primarily in central and northern Michigan, in the Lower Peninsula, five of those stores are head to head with stores that we own and operate up north under the Glen's banner. So consequently, we realized a nice increase in sales at a time in the year that we wouldn't expect Carter's to, by the way, go out of business because the summertime is the best time of the year. And my goodness, for Carter's to lock up during the middle of July was really a surprise for us. We just had no expectation that that would happen. Even though we've seen Carter's weaken over the years we just didn't think it would happen during the summertime because that tends to be the time that you make a lot of hay.

So we're doing quite well in those five stores. Currently the Carter's is going through a bankruptcy situation where the stores are going to be auctioned off along with the equipment and inventory and it remains to be seen how many of those stores are acquired. Remember that most of them are in a state of disrepair. The inventory is de minimis, and we're not sure whether there will be a neglect of auction for this. There are a couple of spots that we think that there's an opportunity for us but we haven't really disclosed that to anybody as of this time. What was the other part of your question?

Well I guess you covered the Carter's. How about the in market acquisition environment in general for you.

Well all of that would be confidential but we see the environment as being the same as it has been for the past several years. We have stated and continue to state that we are the exit strategy for our retailers and they are fully aware of that. And that's sort of a process that is- will be ongoing for a long time with us. We also feel pretty good about the [inaudible] that we've been able to make with new retailers, not just in the state of Michigan but outside. If you look at the Michigan peninsula, it seems to be sort of like land locked by the Great Lakes. But we're very receptive to expanding our horizons in the two continuous states of Ohio and Indiana. And we see that as maybe a better opportunity for us today than it was in the past because we sort of stabilized our position here in the state.

And finally Craig you mentioned higher consumer energy burdens and the challenging economic environment. Can you elaborate on that a little bit because I see where you're coming from but you had one hell of a nice quarter?

Yes I know it's sort of contradictory. But we just looked at some information today from the State of Michigan. For example, the bridge crossing at the Mackinaw Bridge is down 2% from a year ago. And although that doesn't seem like a lot, that is a lot. Some of those state parks are seeing a reduction of as much as 10% in traffic in the form of campers and occupancy in the campsites. There are businesses that are primarily tourist focused, for example the canoe trips, river rafting, that business is showing signs of a little bit of weakness. And remember it's our customers that, and it might be year round customers up north, that gain their income and they're- they earn their living off of this kind of business, so sooner or later that will have some affect on us.

I think that probably though that our first quarter reflects, and really maybe, continue sharpening of our marketing strategy and certainly the synergies of the acquisition of D&W.

Okay. Last question, what kind of merchandise cost pressure are you seeing?

It's nothing- - there is no pressure. I mean its continual negotiations. There's de minimis cost increases. But it's not as wild as it was years ago when you had petroleum based cost went up so high that anything that was affected by petroleum went a little bit out of control. We're not really seeing that this time when you're talking paper or detergents or non-edible it's been pretty good. And another point is that the dairy industry is very productive so we are seeing a, for the moderation of costs on that side of the equation.

Thank you very much.

Thank you Chuck.

[OPERATOR INSTRUCTIONS.]

The next question is from [Karen Short] with Freidman, Billing, Ramsey. Please state your question.

Hey, everyone, great quarter. Just a couple of questions, can you just clarify- do you have a goal for where your next debt will be at year-end because I kind of, I mean the [inaudible] calculation I show probably have about 30 maybe $30 million to pay down debt throughout the year assuming your not paying any past taxes this year? I'm just wondering where you're at or what your goal would be for year-end?

[Karen] I wouldn't say we have a specific goal that we've disclosed. I mean there's always our intention to pay down debt. Based on your analysis, obviously, we'll generate some free cash flow. In my head I'm not sure that's $30 million that'll go towards pay down debt but we surely do look to pay it down somewhat.

Okay, are you going to be paying past taxes this year?

At this point we don't anticipate that.

Okay but next- - but starting next year you will be?

Yes we think we might be able to get through he first quarter. But don't take that as the gospel, it'll depend on how this year runs out. But we think somewhere through the end of the year, through the first quarter we will be not paying and so it'll flip somewhere in that range.

Okay. Then just to make me- - help me understand interest expense that you gave your interest expense guidance for year. I mean given that you're probably going to pay down debt a little bit throughout the year I kind of - I show interest expense ramping in the second quarter through the fourth quarter. So what do you- - is that just based on rate expectations on your part?

Yes, if I could perfectly forecast rates I probably would be, maybe, in a different job, I don't know. But it's - you tell me how many more rate increases are going to come in.

Okay.

So that's kind of where we're at with that.

So if we don't have more rate increases it might be a bit lower?

Correct.

Okay. Just kind of switching gears to D&W, how much higher were or are D&W's gross margins than yours?

Well we don't break that out. And we don't really intend to break it out. We don't look at D&W as a different segment. But they certainly with their emphasis on fresh command the better gross margin.

Okay.

Karen, to assist Dave, D&W has a better mix in the higher margin departments. So we generate a higher market but it's not due to a higher cost or higher retail prices it's primarily due to a mix.

Right, okay. Okay, I'm just going to your prior utility and bankcard fees. I know Chuck kind of asked you about it a little bit but what was the [scholar] impact on operating earnings in retail for the quarter? Do you have some sense of what it was?

On the- - you're saying on the higher- - well that's a hard one to put your hands around exactly how much it is because if you saw we still had a good quarter.

Right.

So I mean a higher energy cost on the consumer - I mean Craig quoted some of the statistics that bridge crossing reductions. When your earnings and everything still go up it's hard to know exactly what that is. You know what I'm saying? There's just so many factors that blur that.

Right okay. So are you seeing, from the beginning of the second quarter, are you seeing a shift in the consumer behavior from what you saw in the first quarter, like a distinct shift?

Well no. Probably - no nothing special. But in the last couple of weeks once the price of gas went over $3.00 there is- - I really believe you're going to have some impact. I've read some stuff locally about people that just said that the $3.00 number is sort of a threshold for them and that that could affect consumer activity. And right now I think that gas - our gas price here is like $3.12, $3.13 a gallon. I don't know what it is where you are. That's like a new high.

We don't- - when you get in a cab everyday you don't notice as much. Okay, and then I guess just switching gears maybe to The Pharm for a second. What are you - what's your feeling on where the state of the business is? I guess I'd like to see higher same store sales in that division given that it was a pretty easy comparison.

Well I tell you we continue stay committed and we just completed a sort of a repositioning of our strategy in The Pharm and we've rolled it out in one store and we're going to now go through some additional stores because it's done so well. In addition we opened the Cure Quick K, which is an in store like clinic. We did one in the first store, and by the way we looked at this out at [inaudible] [Hivey], I'm sorry. Our people went out to Iowa to look at [Hivey] that has one of the most mature in store clinic programs. They liked what they saw. They came back, recommended it, we approved, we lined up a provider and so we opened four weeks ago the first in store clinic. And really just provides minimal services like a physical or a small incidental kind of a emergency stuff. It is, we think, a real winner of a program. And we-

I'm sorry, did you open that in a store that you also did the repositioning in?

Yes.

Okay.

Yes, and we are really delighted with the results that we've had with the repositioning and with this. We think that this is something that we can get out in front of as opposed to, for example in gasoline, we were behind the eight ball. We're playing catch up on the fuel side where - and on this particular offering, we think we can be ahead of the curve. And we're now, I think, in a position to take the moderate risks that would go along with it because you're not talking about a lot of capital to prepare an area, I think it's only 200 or 300 square feet of space. But you have to provide security and those kinds of things.

The results so far have been very encouraging. We know that already that a large percentage of the people that use Cure Quick will also use our pharmacy because of the - if there's a prescription provided or prescribed that customer will go right to our pharmacy and establish a relationship. So we think it's good. As a matter of fact I just read that CBS bought the largest provider of this service. And so they see it as having a real future too, so.

So you outsource it?

Yes.

Oh, okay. And what are you taking- - I mean you must be clearing something out of the store to make room for it? What are you removing from the store?

Actually we, and all of our Pharm stores, we are over displayed and over dedicated to video, okay. Video is yesterday's concepts and with iPod and everything and all of this stuff that's going on with electronic technology we - video is dead. We see it as a dead item. So here we have this space dedicated to video - Bingo! - we can reconfigure the store and dedicate that space to something that is more appropriate.

And what is the CapEx that goes into that?

Oh, it's like $200,000.

Oh, okay.

Almost nothing.

And can you just elaborate a little more on the repositioning.

Well, the repositioning is all about resetting the store to have an appropriate offering, a bit more focus on things that the consumer wants today. For example, cosmetics, makeup; that area is something that we are doing a much better job. A more lower profile, a better assortment in health and beauty aids, a stronger commitment to health and natural, a stronger commitment to the more discountable products that we have had available but were never really focused on. And it's just an easier flow, a better environment, and for example, in these stores a lot - in most of these stores, the courtesy counter is in the back of the store where the video has been.

Oh, okay.

So here we are now we are relocating the courtesy counter to the front entrance, which is where the customer expects to find it the most. User-friendly location and - so it's sort of a - quite of a revolutionary change for these stores and it's very cost effective. We're not talking about spending a lot of capital. It's maybe a little human capital to do the work but it's not a lot of capital expenditures.

So what is the timing? Is it kind of throughout the year you should get to all the stores or?

It'll take us more than one year to do all of the stores because it's a process that it probably takes a month to do a store without disrupting the business for the existing customers.

Oh, okay. And then just last question on your same store sales, your consolidated same store sales- - well actually maybe stick with a conventional store base because that's probably easier, when you take fuel out of the equation, were both basket and customer count up or where was the mix for the two of those.

[Inaudible] transactions is where we get it.

So are you seeing some decline in traffics or customer accounts?

We see customer count being affected by fuel costs, particularly in stores that are in a more remote based location. Our stores up north, for example, the sales per transaction's up nicely, the customer count is a little bit soft.

Okay, great. Thanks a lot.

Okay, thank you.

[OPERATOR INSTRUCTIONS.]

The next question is a follow up from Chuck Cerankosky with Key Bank McDonald. Please state your question.

Yes, Chuck.

Can you hear me?

No. I can now though.

All right, thank you. If you guys are looking at how the economy might be affecting the consumer, what do you see in the merchandise mix when you're looking at trading and say some of the prepared food items, floral, higher priced lines, some of the categories you would say are clearly discretionary?

Well, Chuck, I think the consumer that buys floral and higher priced wine is less affected by the economy than the consumer that would be on the lower end of the mix. I think that where retailers are going to have difficulty is on those consumers that are making the $30,000 to $50,000 per household income whose - take some necessarily trafficking floral and wine. What we do see is a moderation of purchases to private label to stronger impact on our feature program. I think that is where we're going to see mixed changes as opposed to the higher end product. Actually, our produce business, our floral business, our high-end deli business is very strong. And the D&W perishable departments are very strong.

In referring to your accounts guidance is low to mid single digits in retail, what would you say would be the increase if you took fuel out of that projection?

You're talking about going forward?

Yes.

I think we said that we would have 1 to 3% increase and we feel very comfortable with that. We now have seen several weeks of our business outside of the super center activity of a year ago and we're comfortable with that guidance.

One to 3% excluding motor fuel?

Yes.

All right. Thank you.

Your next question is from [Karen Short] with Friedman, Billings, Ramsey.

Hi, again sorry, not to harp on The Pharm here but do you have a kind of longer term strategy for Toledo? Kind of - I mean, obviously, they're not within your market, they're not that far away but just kind of wondering what you're thoughts are longer term down the road in terms of Toledo.

Well, Toledo is in the State of Ohio and I think one of the - some of the guidance that we've given is that Ohio is in our sights as where we can expand our business. We see - there could be opportunities for us in Ohio in the form of additional retail stores, be it The Pharms or supermarkets. We also see real opportunities in Ohio on the distribution side of the business where we feel we - as a matter of fact, we just shipped this week some of our private - the President's Choice products to Fisher Foods in Cleveland. Now that's as far as we've ever gone in Ohio to the penetration in the Cleveland area but we have a retailer there that wants to traffic in the high-end private label arena and we are able to provide our President's Choice product to that customer. And that's brand new business for us.

Okay. Do you know how many skews does private label - does President's Choice have? [Inaudible] I know you guys have about 140 or something. Do you know how many they have in total?

In President's Choice we have 114.

Oh, 114, okay.

About 114. I happen to have it right.

About 114? Do you know how many President's Choice offers? I mean is that the whole offering?

Well, there's more - remember you have to have it labeled for the US.

Oh.

So there's a plethora of products in Canada but it hasn't been converted to US labeling. I believe there's probably 200 items available to us and we select 114 at this point in time.

Okay. And then just lastly, can you just take out your CapEx in terms of remodel new store, like what the buckets are?

Well, this year our - if you look at our - we're probably talking $30 million in everything other than new store. New store would be more like $3 to $4 million unless we get two stores then it would be more.

Okay, great. Thanks a lot.

Gentlemen, there are no further question in queue.

Well, at this point in time on behalf of Spartan Stores and my team I'd like to thank everybody for calling in and we look forward to a conference call with you at the end of our second quarter. Thank you and have a good day.

This concludes today's conference. Thank you for your participation.