Hibbett, Inc.
Q2 2018 Earnings Call Transcript

Published: 24 Aug 2018

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to the Hibbett Sports’ Second Quarter 2019 Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we’ll conduct the question-and-answer session [Operator Instructions]. As a reminder, today’s call is being recorded, Friday, August 24, 2018. Now I would like to turn the conference over to Pat Watson of Corporate Communications. Please go ahead.

[Pat Watson:]

Thank you for joining Hibbett Sports to review the company’s financial and operating results for the second quarter and first half of fiscal year 2019, which ended on August 4, 2018. Before we begin, I would like to remind everyone that management’s comments during this conference call not based on historical facts, including those in response to your questions, are forward-looking statements. These statements, which reflect the Company’s views with respect to future events and financial performance, are made in reliance on the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to uncertainties and risks. It should be noted that the Company’s future results may differ materially from those anticipated and discussed in the forward-looking statements. Some of the factors that could cause or contribute to such differences have been described in the news release issued earlier this morning, in the Company’s Annual Report on Form 10-K and in other filings with the Securities and Exchange Commission. We refer you to these sources for more information. Lastly, I would like to point out that management’s remarks during this conference call are based on information and understandings believed accurate as of today’s date, August 24, 2018. Because of the time-sensitive nature of this information, it is the policy of Hibbett Sports to limit the archived replay of this conference call webcast to a period of 30 days. I would now like to turn the call over to Jeff Rosenthal, Chief Executive Officer. Please go ahead, Jeff.

[Jeff Rosenthal:]

Thank you and good morning everyone. Welcome to the Hibbett Sports’ second quarter earnings call. I have with me this morning, Scott Bowman, Senior VP and CFO; Jared Briskin, Senior VP, Chief Merchant; and Cathy Pryor, Senior VP of Store Operations. Net sales for the 13-week period ending August 4, 2018 increased 12.3% to $211.1 million compared with $188 million for the 13-week period ending July 29, 2017. Comparable store sales increased 4.1%. E-commerce sales represented 8% of total sales for the second quarter. The year-over-year increase in net sales also included an increase of approximately $16.9 million due to the weak shift resulting from the 53rd week last year. We continue to make investments for the long-term success of the business and we are starting to see benefits from these investments in our operations. Although, we experienced softness in our licensed equipment and accessory business in the quarter, we’ve see significant movement in branded apparel and footwear. We are very encouraged by the acceleration of our e-commerce business. Additionally, our gross margin rate continues to show significant improvement with cleaner inventory and much more full price selling. Looking forward, we expect to continue improvement in our assortments as we approach the holiday season and to benefit from our omnichannel initiatives with the rollout a buy online pickup in store and reserve in store. This upcoming quarter, we will see enhancements in our omnichannel capabilities. Our pickup in store initiative is now being tested in our Birmingham stores with plans to roll out to most stores during Q3; the ability to shop your store and the choice to either buy or reserve items online, a compelling new experience to our customers that will drive both online sales and in-store purchases. We have an advanced implementation of our stock pickup that will differentiate Hibbett and provide a robust set of features to better serve our customers; customers can buy product to pickup in store; they can reserve items to try on at our stores; you can also shop the entire local in a dedicated section on our Web site. We are very happy to report that we’re continuing to see very robust results from our online business, driven by the continual investments we are making in online marketing, merchandising and consumer experience. The last couple weeks in Q2 marked our anniversary launch of the Web site. During the quarter, we invested more in advertising, which had a positive return on investment. Part of the decision to increase our spend was also to learn about the effectiveness of our marketing. As expected during our testing, we saw investments that had positive and negative results. These findings have allowed us to build more effective plans going into Q3 and Q4 to drive stores and fully optimized our return on advertising spend. As we begin the second half year, we feel that we’re in great position to deliver the results. Our investments that we have made in system example BOPIS and ROPIS and marketing and people will set Hibbett for the long-term. I now will turn the call over to Jared Briskin, Senior VP, Chief merchant to talk about our merchandise trends.

[Jared Briskin:]

Thank you, Jeff. Good morning. During the second quarter, we saw an acceleration from our first quarter trend. Apparel, footwear and cleats continue to improve while accessories, licensed products and equipment related headwinds and continue to downtrend. Our apparel business posted its third consecutive comp store gain, producing a low double-digit improvement. Men's and kid's apparel were both up double digits, while women's apparel grew mid-single digits. Trend relevant sportswear that showed strong connectivity to our sneaker business was a primary driver across all categories. We also saw improvement year-over-year in performance apparel as we lap big decreases, as well as marketplace saturation from a year ago. The accessory category remains a challenge down mid-single digits. We had solid gains in backpacks, sneaker cleaner and incremental sales from phone accessories. This was offset from declines in socks, sunglasses and hydration. Beginning with the third quarter, the hydration comparable becomes less of a headwind to our business. The license business remains our most challenged area down high single-digits. While this remains the poor trend, it is improved over our previous trends as we adjust and pivot. While the core fan apparel and headwear business remains very challenging, investments made in items that have strong connectivity to our sneaker business are trending and improving results. Team sports business was down low single digits. Cleated business comp high single digits and has now been positive in three consecutive quarters. We are very encouraged that all cleated categories were positive for the quarter, led by baseball, soccer and track, which were all up double digits; softer equipment business, which was down mid single digits, offset the cleated gains; positive business in baseball, soccer and volleyball equipment did not offset declines in fitness and football. Footwear was up mid single digits, posting the fourth consecutive quarterly comp store gain. Men’s business was up double digit for the quarter, while women's was up low single digits. Both of these categories were led by new innovation platforms, a very strong retro trend and improvements in access and allocation of key models. The kid’s business was flat for the quarter, while similar trends were impacting the kid’s business as a whole, there's a lack of available product being taken down into kids sizing capitalize on the demand. As we head into the back half of the year, we’re pleased with our inventory management efforts. Our inventory is linear and much fresher than a year ago. We believe that our inventory position and flow of receipts have us position well for the back half as we continue to enhance the cross category connectivity and relevancy of our assortment. I’ll now turn the call over to Scott Bowman to discuss our financial results.

[Scott Bowman:]

Thanks Jared and good morning. For the second quarter, total sales increased 12.3% to $211 million and overall comp sales increased 4.1%. By month, comp sales were 3% in May, 5.4% in June and 3.7% in July. E-commerce sales continued to accelerate and represented 8% of sales in the quarter. At a point of clarification, the percentage increase in total sales is much higher than the increase in comp sales, mainly due to the weak shift caused from the 53rd week last year. Due to the weak shift, we captured a very high volume of back-to-school sales in the quarter and lost a relatively low volume week at the beginning of the quarter. The effectiveness shift resulted in approximately $16.9 million of additional sales being recognized in the quarterly. Originally, we estimate this weak shift would result in an increase of approximately $18 million. We attribute this difference mainly to a slight difference in school start dates versus the prior year. Gross profit rate increased 248 basis points in the quarter. Product margin increased 80 basis points, mainly due to cleaner inventory and more full price selling. Logistics and store occupancy expenses increased or decreased hundred 68 basis points as a percent of sales, which is mainly due to leverage gain from higher sales versus last year. G&A expenses increased 15.7% in the quarter and increased 86 basis points as a percent of sales. The increase was mainly due to marketing and omnichannel investments and an increase in employee benefit costs. During the quarter, we expedited our initiative buy online pickup in store and reserve in store in an effort to launch prior to the holiday season. The team did a great job on the development and store training needed to execute this initiative, and we are looking forward to rolling it out later in the quarter. We also increased our investment in marketing during the quarter, which help to increase traffic but also allowed us to acquire more customers and increase brand awareness. As a point of reference, we have added over 860,000 customers to our loyalty program so far this year, and loyalty members now represent 60% of our transactions. The income tax rate for the quarter was 28.9%, which compared to last year's rate of 39.1%. This reduction was mainly due to the decrease in the federal rate as a result of tax reform. Cost per share for the quarter was $0.06 per share compared to a loss of $0.15 per share last year. Turning to the balance sheet, the Company ended the quarter with $120 million in cash versus $53 million last year with no borrowings outstanding on our revolving credit facilities. Inventory decreased 10% from last year and was 9% lower on a per store basis. We spent $3.9 million in CapEx for the quarter as we opened six new stores and made further progress on our major initiatives. Also, the Company repurchased 336,000 shares for a total of $8 million in the quarter. At quarter end, we had approximately $196 million remaining under the existing purchase authorization. Turning to our guidance, we are updating our full year guidance with the following changes; we are updating earnings per share to a range of $1.57 to $1.75 compared with previous guidance of $1.65 to $1.95. For comp sales, we’re updating our guidance to a range of negative 1% to positive 1%, which compared to previous guidance of negative 1% to positive 2%. For SG&A expense, we are updating guidance to an increase of 7% to 9% compared with previous guidance of 6% to 8%. Finally for CapEx, we expect to spend $18 million to $22 million compared with previous guidance of $20 million to $25 million. With that update, operator, we are now ready for questions.

[Operator:]

Thank you very much [Operator Instructions] and we’ll get our first question on the line from the line of Seth Sigman of Credit Suisse. Please go ahead.

[Seth Sigman:]

Couple of questions here, just in terms of the comps and the cadence throughout the quarter, I think you’re running mid single-digits early in the second quarter. If I recall the comparisons got a little bit more difficult throughout the quarter, so just want to better understand how demand played out for you throughout the quarter. And then as we look at the change in the guidance at the high end, just any more color on what that difference is versus your initial expectations? Thanks.

[Scott Bowman:]

As we started in May, we did see a pretty good demand and pretty quick start in the month of May, it did soften up a little bit as we got further into the month. June was pretty solid for us, all-in up 5%, so we're pretty pleased there. In July, I mentioned we did 3.7% and actually the front end of July was better. We did see some weakness as we got into late July and specifically the last week of July. And so as I indicated with that week shift, we saw that last week of July pretty soft but then as we got into August without giving any comp numbers, we did see a little of that business going to the first week of August.

[Seth Sigman:]

And then just in terms of the SG&A moving pieces here, the increase in the guidance any more color on what's driving that change. How much of that is internally driven versus external pressures? And then as you think about next year, should we be assuming basically a similar level of growth? Thanks.

[Scott Bowman:]

So the increase in the guidance with SG&A was mainly to just build in a little bit of overweight that we saw in the second quarter. So healthcare costs were elevated and with us being self-insured, we do see volatility from time-to-time in expense, so part of it was that. I do expect that to moderate somewhat in the back half but may still be a tick higher. The other one is the marketing expense that we mentioned. We did overspend a bit and in the quarter and mainly that was because we saw some things working, and so we did put some more dollars behind it. We’ll continue to do that, look for opportunities in the back half for marketing and advertising. And so those are really the two main components that led to the increase in guidance.

[Operator:]

Thank you very much. And we’ll get to our next question on the phone line from the line of Dan Wewer with Raymond James. Please go ahead.

[Dan Wewer:]

Jeff, first question I have is industry promotional activity and how you would evaluate that let's say compared to a year ago and how you see that playing out for the balance of 2018?

[Jeff Rosenthal:]

Dan, I see a pretty -- about the same as it was last year. I think you continue to see same level of promotions going on. I do think there is some opportunity not to be promoting as some of these new models as they come in and some of the new innovative and higher end products are doing well that are really not be promoted. So I believe as we get into the second half, you will see it quite as promotional. But we’ve seen so far this year I would say it's pretty steady.

[Dan Wewer:]

Scott, a question about operating margin rate, it looks like you're probably coming in slightly under 4% this year. Do you think that operating margin rate drops again next year, or you think this year we’re going to see the bottom?

[Scott Bowman:]

Dan, I think it will start to flatten out. I think we get into next year follow-up on the SG&A comment that increase should moderate. Remember this year that we did just in wages in our stores and we did have some omnichannel investments with our mobile app and with BOPIS and ROPIS, and so that was little elevated this year as well. Our gross margin as we get into next year will probably be fairly strong as our inventory is cleaner. So there's some positives that will carry into next year, as well as continued acceleration of e-com and as it does that will get more profitable. So we think that there's some good opportunity to start to see some flattening out if not improvement in that operating margin going into next year.

[Dan Wewer:]

Then the last question I have is it looks like the reduction and the fiscal year guidance is pretty much all due to the second quarter shortfall. It looks like the second half outlook, correct me if I'm wrong. It looks like the second half outlook is pretty much in line with the original expectations. If that's correct, why would you not maybe reduce the outlook for the second half of the year given the issues in 2Q?

[Scott Bowman:]

I think it’s a couple things. As we look in the back half, the product pipeline will be much better than what we saw in the first half. So that will absolutely help us as we rollout BOPIS and ROPIS, that should help us stabilize some business, especially in the stores. We have some good opportunity in gross margin in the back half. We were way down last year and we’re coming into the back half this year with much cleaner inventory. So those are the main things that we see helping us in the back half versus the first half.

[Operator:]

Thank you very much. And we’ll get to our next question on the line from the line of Camilo Lyon with Canaccord Genuity. Please go ahead.

[Pallav Saini:]

This is Pallav Saini on behalf of Camilo. My first question is on the comp performance in Q2. Did the quarter unfold as you planned? Were there any surprises on the category performances? And if you can provide the traffic, transaction and the ASP metrics, that’d be helpful as well.

[Scott Bowman:]

I’ll cover the transaction and ASP average ticket, and I’ll let Jared give you his thoughts on progression by category. So in stores our transactions were down low single digits and average ticket was just down slightly. Our average unit retail was up. We saw our basket size contract a bit. So that was the dynamics for the stores. And I’ll let Jared give some commentary on category.

[Jared Briskin:]

Yes, from a category perspective in the prepared remarks, we talked about some of the headwind categories. So those did perform slightly below our plan. But as Scott mentioned as well the business during the last two weeks of the quarter was more negative than we had anticipated.

[Pallav Saini:]

And my second question is on SG&A. You mentioned that you are accelerating some of the expenses associated with some of the omnichannel projects that you are launching, and also talked about the increase in advertising. Is there -- in your guidance going forward, is there an assumption of increased advertising in the back half as well? And if that is the case, why is that not being reflected in your comp guidance, which you have taken down for the year. So I’m just trying to connect the dots there.

[Scott Bowman:]

The back half is really pretty much as planned from an SG&A standpoint. As I said with healthcare that maybe a little bit higher based on recent trends but we do expect it to moderate. Outside of that most of the increase in SG&A was just incorporating what we saw in the second quarter.

[Pallav Saini:]

And the last question is on gross margin. You saw some improvement in the merchandise margins it was bit lower than what you we’re expecting. As we look to Q3, should we expect a similar level of recovery in gross margin, or do you see more opportunities there? [Multiple Speakers] comparison from last year in Q3 than Q2, I believe.

[Scott Bowman:]

We do. So I think the important thing for Q3 to understand is that there is probably little more opportunity in the merch margin based on where we finished last year. But take a look at the logistics and store occupancy expenses, because with that week shift based on last year's numbers there’s about $17 million of revenue that would come out of Q3. Again, that can change but based on last year’s numbers. And so that will cause you to be leverage those expenses, not to the degree that we saw the leverage in Q2. But there will be some deleverage there, which will temper that increase in merch margin in Q3.

[Operator:]

Thank you very much. We’ll get to our next question on the line from the line of Ray Jadrosich from Bank of America Merrill Lynch. Please go ahead.

[Ray Jadrosich:]

The first question is, how should we think about the anniversary of the e-commerce launch and the benefit of clearance to comps from the back half of last year? And also as part that, can you talk about how significant you think buy online and pickup in store could be for you?

[Scott Bowman:]

From a e-com standpoint, we expect -- we continue to drive more and more traffic there. So we think as we went through the year, we saw that continuing and we expect that to continue throughout this year. Obviously, the compares will be a little bit difficult which are going against something. But at the same time, a lot of work we've done around SEO and search and loyalty, the app. We have a lot of things that we didn't have at this time last year. So we think that we could still have some pretty good increases there from an e-com standpoint. Also, the mix will change too. Last year, when we were coming in the third quarter and launching the site, we had lot of aged inventory. We sold a lot of that online. This year with our inventories being much cleaner, we’ll have a better balance between clearance and full price selling. So we have an opportunity there to make some margin there, which last year was really cleaning up inventory early.

[Ray Jadrosich:]

And just in terms of margins for your online versus store. Can you just talk about the early trend of your online margins? And then how do you think about the breakeven point for online sales?

[Scott Bowman:]

So when you look at online margins, obviously, the biggest drag is the freight cost. So that is a drag. But you do see some benefit, because you don’t have the occupancy and warehouse expenses like you do for store business. It’s not a total offset but it does help. I think as we go forward that e-com margin will firm up a little bit. It’s always going to be over weighted on clearance I mean that’s just a nature of online. But we have seen it tick up as our clearance percentage has gone down, so that’s encouraging. Speaking to the breakeven point, I have said before that I think it’s around $70 million. That will fluctuate a little bit and depending on how much effort we put into marketing and our clearance penetration. But as I would think that our clearance penetration will continue to decline a bit, our marketing will level off somewhat than that $70 million member normalized with just normal operations of e-commerce. It’s a pretty good number where we start to get close to that breakeven point.

[Ray Jadrosich:]

And then one more for Jared as you think about the license category has been soft for a while, as you think about the long-term strategy there. Do you think you'll continue to reduce that, or is there a point where it will start to flatten out? How should we think about that longer-term?

[Jared Briskin:]

I think long-term our expectation was we felt like as we ramped up e-commerce, we will start to hopefully claw back some potential of the license business that we may have lost from a fan perspective. Throughout our history, there's always been somewhat of a push pull between branded apparel and licensed product depending on the trend. Today certainly there is a more of a trend with regard to branded apparel. We are pulling some investments out of the license category but at the same time are broadening our assortment and offering from an online perspective, and partnering with more of our vendors. So hoping to pick some of that backup but so much of the licensed fan business is based off teams winning and losing. So there's a lot of volatility there that really does play out based on how the teams performed. Well, what’s the trend there have been times throughout our history where license products were trending and then we’ll certainly revamp our investments there. Today, that doesn’t seem to be the trending area so we are pulling back.

[Operator:]

Thank you very much. We’ll get to our next question on the line from the line of Patrick McKeever with MKM Partners. Please go ahead.

[Patrick McKeever:]

So then Scott you mentioned the $70 million breakeven point for e-commerce. You’re pretty much there right now, right, because I think it’s around $68 million for the past four quarters. So would that imply that just absent some of the incremental investment in omnichannel in the back half of the year that you would be more or less breakeven on e-commerce from a normalized standpoint?

[Scott Bowman:]

Yes, I think you could take the investments into account and the lower margin, because of liquidating some of the clearance. Under a more normal margins scenario with lower clearance, which is what we're working into, I think that's really very close to breakeven.

[Patrick McKeever:]

And then how does the buy online pickup in store and the reserve online pickup in store and some of the other things that you're doing to drive traffic to the stores. How does that impact the store labor model?

[Scott Bowman:]

It really doesn’t affect the store labor model much. It's really driven of technology and business procedures in the stores. And the biggest part of it was really just getting ready for it and setting up, and really we’re ready to do that. As I mentioned earlier, we’re testing it in the Birmingham stores. And it really does feature some unique things that will most people don't do, such as those doing buy online or reserve online, which is a unique feature that most people do one or the other or not both at one time. Another feature is that you’ll go actually look at exactly all the items that are available by store. So you’ll be able to shop your store from anywhere and see if they have it in stock or not. So very unique for our industry and we really think that it really once we get our associates and all our customers trained that it really will drive a lot of traffic to the store. Also hopefully it’ll save some money on freight, because people pick it up in the stores instead of having to ship it to their home. So we’re very encouraged and we’re really have innovated buy online pickup in store, we think that we can drive additional business.

[Jared Briskin:]

And we do look at some of those peak periods whether it’d be back-to-school or holiday and so forth. And so we had discussions on labor during those time periods and do give them or labor during those periods, because we know that demand will be higher. So we do have those discussions and have done that. The stores have gotten quite efficient in fulfilling product though. And so this will be one more thing but they have proven to be very efficient at fulfilling online orders and that's -- the bulk of our online orders are fulfilled from stores. And so it’s not an entirely new process for them.

[Patrick McKeever:]

And then just last one from me. Just thinking about the store closures across retail, particularly in the department store space, I think previously you had said you don't really see much impact there one way or the other, just given the geographic -- your geographic footprint and print and being in smaller markets. But I was wondering where you’ve -- if you’ve had any change -- if that was the case, if there's been any change to the thought process there. Are there opportunities with some of the more recent store closures that have been announced, or do you think some of that market share just shifts two other players, maybe Kohl’s and online retail and that kind of thing?

[Scott Bowman:]

I think you'll see a mixture of both. In some of our markets, we have started seeing some sears in a few pennies, and so the department stores close. So in some markets that has affected us, sometimes it doesn’t affect us as much as others, a lot of times we go to percent rent or lower our costs that way. But we have seen quite a few of those. I do believe on some of those categories, you maybe it does lend itself little bit to more online some things I do think that we can pick up. But we have seen more and more of the acres going out in some of the specialty mall places that we have seen over the last couple years.

[Operator:]

Thank you very much. And we’ll get to our next question on the line from the line of Peter Benedict with Baird. Please go ahead.

[Peter Benedict:]

First question, Scott, could you isolate the occupancy impact on margin in the second quarter?

[Scott Bowman:]

Peter, the occupancy expense was 145 basis points of benefit.

[Peter Benedict:]

And then how should we think about now that you’ve got the store base net store closures. How are you thinking about the occupancy dollars this year in aggregate versus what you guys incurred last year?

[Scott Bowman:]

We said the occupancy dollars come down a bit because of that net closure number.

[Peter Benedict:]

And then for the gross margin view in aggregate this year, I know at one point you were thinking 70 to 100 basis points. What's the -- and if we think about maybe the midpoint of your earnings guidance. What does that envision in terms of maybe what this gross margin will look like?

[Scott Bowman:]

I see it’s still in that range, Peter. I mean, we were I think about 66 points higher in margin for the first half of the year. And so it's really coming as I expected. And so I expect the back half to have similar favorability, maybe little bit more favorability on the merch margin in Q3 as I said but less on the store occupancy and warehouse expense. But it should still be in that 70 to 100 basis point range for the year.

[Peter Benedict:]

And then just I guess last on the allocations, it sounds like better product coming in back half of the year. The allocation levels that you're getting from the key vendors similar to year ago, are they more narrow? Just what's the latest on that?

[Scott Bowman:]

I think it varies by category. But overall, we’re seeing a much more of a commitment from our vendor partners with regard to both access and allocation.

[Operator:]

And we’ll go to our next question on the line from the line of Rick Nelson with Stephens. Please go ahead.

[Rick Nelson:]

As I look on the SG&A as we think about the next year, are there one-time costs that are going to roll off? Or how should we think about the growth rate in SG&A?

[Scott Bowman:]

I think you’ll see the growth rate moderate next year. This year we did have some increases with wages with tax reform that I mentioned and some of the development costs with omnichannel. So those are probably the two biggest ones that we’ll see moderate next year. And so that 7% to 9% that we’ll likely see this year will back off next year.

[Rick Nelson:]

And how are you thinking about the e-com next year, Scott, that would break into profitability?

[Scott Bowman:]

I mean, we continue to see upside for e-com going into next year of especially with BOPIS and ROPIS. I mean we continue to try to do things to grow that business. And the SEO traction that we’re getting is pretty significant as well. So a lot of good signs and so we continue -- we expect to continue some good growth next year. And as we do that the profitability will continue to improve, because there is some good leverage in the model and we’ll likely see better margins as well with cleaner inventory.

[Operator:]

Thank you very much. We’ll get to our next question on the line from the line of David Schick with Consumer Edge Research. Please go ahead.

[David Schick:]

I have two, first could you just give us more detail on what you know about and see from the digital customer, whether it's differences in categories or AUR. So what you know about them, either over time or just relative to your stores customer? And second, it’s the traffic -- understood there’s investments to drive folks into the store. But at the end of the day, it sounds like it’s transaction at the store level. If that persists, how will you think about the store count to optimize for an omnichannel strategy?

[Jared Briskin:]

I think from a trend perspective online, we’re seeing our customers participate across all of our categories. We are seeing some additional leverage from our consumers, particularly in footwear as well as the cleated business and our apparel business. Obviously, as Scott mentioned, our ability to clearance to the online channel was certainly significant, as well as our inventory has gotten into a much cleaner place. We are starting to see the balance change pretty significantly between clearance and regular price. But the drivers of our brick-and-mortar business from a category perspective are the same drivers online.

[Scott Bowman:]

And as to your question around traffic, so that is obviously a concern for us. And part of the marketing dollars that we’ll spend going forward will be directed towards driving store traffic that will be communicating with our loyalty members to give them offers to come in our store. BOPIS/ROPIS that connectivity with our Web site, we expect to see some benefit there. There's statistics out there that say that usually a customer will increase their purchase once they come in to pickup an item. Apparel growth will remain strong and so we’re seeing some very nice traction with apparel in our stores. And so we’ve got some good earnings from that and we’ll try to expand on that. And then on the other category, we’ll continue to look at those for opportunities and to fine-tune those assortments to try to stabilize those businesses as well.

[Operator:]

Thank you very much [Operator Instructions]. And we’ll get to our next question online from Sam Poser with SIG. Please go ahead.

[Sam Poser:]

Could you talk -- you talked about the weakness in the licensed businesses and the strength in apparel and footwear. Are you re-looking at how you -- to what degree, are we looking at remixing those businesses within the store and within online in order to better utilize make your inventory more efficient than it’s starting to become?

[Jared Briskin:]

Sam, we’re absolutely looking at that. We shifted a significant portion of the investment that we made historically in licensed products into branded apparel, as well as into the footwear businesses. We are seeing that payoff for us. From an online perspective, we have a pretty significant opportunity to broaden the assortments within categories that are weaker such as licenses, such as equipment working with our vendor partners. There are some vendor dropship programs. So while we are reducing some of that space and spend from an in-store perspective, we are actually getting wider from an assortment prospective through our digital channels. So as I mentioned earlier, there's always push pull between license and branded today that the brand and part of business is certainly outperforming the license core fan business. And then there is a fairly significant amount of license products that does connect to the current sneaker trend that's going on that we’re certainly positioning some investment dollars in.

[Sam Poser:]

Thank you. And then I think we’re in the process of lapping the hurricanes from last summer in Houston and so on. How is that impacting the current trends, I guess, Scott, for that one?

[Scott Bowman:]

Right now, we don't see that as a big impact. I think the impact last year was fairly isolated for us so we’re not seeing a material impact there.

[Sam Poser:]

And how much of the shortfall in the -- Jared, you said in response to another question that there was that -- it sounded like the last two weeks of the quarter were negative. Was that the case or not?

[Jared Briskin:]

Below our expectations, not negative, plus positive.

[Sam Poser:]

And then have you -- and I guess, what are the current trends quarter-to-date and have you made up that number? I know you don't like to talk about it normally. But I think your stock is now close to 30% right now, so it might be something that would at least give everybody little more perspective on what’s going on?

[Scott Bowman:]

So we did see business pick up in the first week of August. And just to be clear, that is a one week shift two weeks max, but we did see some of the recovery dollars we lost in the last week or so in July. And to cite it, Sam it’s probably between $1 million and $2 million from what we see.

[Sam Poser:]

And what about the current trend, I mean, you’ve guided basically the back half of the year to flat. And could you give us some idea of where you are right now? We know it's going to change. We know that you have the headwinds of e-commerce and/or headwinds, you’re going to lap the real start of e-commerce business and that’s not a clear -- there's not a lot of visibility to how that will all play out with BOPIS/ROPIS, the app and so on. But can you give us some idea of what's happening at quarter-to-date make this one-time thing given what’s going on right now?

[Scott Bowman:]

All I will say is the early quarter-to-date numbers are good number and that number I gave $1 million to $2 million is about the number that we see coming from that July shortfall, lot of moving parts but that’s the good estimate. I think as you look at the entire year, so the guidance is negative one to plus one on comp. Year-to-date we’re at 1.6, so that does say that we will pull back a little bit. I think as you look at the e-commerce business, very strong trends here, very good July business with e-com. So we’re confident that can continue to grow. And especially as we get into the holiday season, it’s still fairly new last year pre-holiday. So we think there's some good upside in that November-December timeframe.

[Operator:]

And we’ll go to our next question on the line, so another follow up question on the line of Peter Benedict with Baird. Please go ahead.

[Peter Benedict:]

Scott, just curious what you're thinking in terms of buyback, what's embedded in the plan, and also just the second half tax rate? Thanks.

[Scott Bowman:]

As far as far as buyback, so we bought back about $8 million in the quarter. We’ll likely pick up the pace in Q3 and Q4, guidance is $40 million to $50 million, so I would expect it to be in that range, but on the lower end of that range. The tax rate to the back half should be around 24%.

[Operator:]

Thank you very much. And Mr. Rosenthal, we have no further questions at this time. I’ll turn it back to you for any closing remarks.

[Jeff Rosenthal:]

Thank you for being on the call today. We look forward to giving our third quarter results in the near future. Thank you.

[Operator:]

Thank you very much. And ladies and gentlemen, that conclude the conference call for today. We thank you for your participation and ask that you disconnect your lines. Have a good day everyone.