Shoe Carnival, Inc.
Q3 2019 Earnings Call Transcript

Published: 21 Nov 2019

[Operator:]

Good afternoon and welcome to Shoe Carnival's Third Quarter Fiscal 2019 Earnings Conference Call. Today's conference is being recorded. It's also being broadcast via webcast. Any reproduction or rebroadcast of any portion of this call is expressly prohibited. Management's remarks may contain forward-looking statements that involve a number of risk factors. These risk factors could cause the company's actual results to be materially different from those projected in such statements. Forward-looking statements should also be considered in conjunction with the discussion of risk factors included in the company's SEC filings in today's earnings press release.

[Cliff Sifford:]

Thank you and welcome to Shoe Carnival's third quarter 2019 earnings conference call. Joining me on the call today is Mark Worden, President and Chief Customer Officer; and Kerry Jackson, Senior Executive Vice President Chief Financial and Administrative Officer. On today's call, I'll provide a brief overview of our third quarter operating highlights, and sales results, as well as review our fiscal 2019 outlook. Mark will update you on the progress around our customer-centric initiative, and Kerry will discuss the financial results in more detail. Then we'll open up the call to take your questions. I'm pleased to report comparable store sales for the quarter increased 3.5% on top of the 4.5% increase for the third quarter last year. This increase was driven across all merchandise departments in both the athletic and non-athletic categories and across all sales channels. Each month of the quarter delivered positive comparable results. We generated our 17th consecutive year of positive comps for the month of August demonstrating that Shoe Carnival remains the store of choice for shoes during the back-to-school season. This year's August comp increase of 3.3% was on top of the 6.5% increase in August last year. Our customers trust us to have the latest trends from the best brands in-depth throughout the year. Our commitment to merchandising our stores based on the unique and differentiated customer demographics of each store has always been our focus. Now, with the initial implementation of our CRM program, we can customize our communication to each customer based on their individual shopping preferences. Mark will provide greater detail on this initiative in just a moment. We ended the quarter with inventory up 1.4% per store on a per-store basis as our team continued to shift receipts earlier to avoid any possible future increase in tariffs. Our merchandise margin was up 50 basis points to last year. BD&O expenses decreased 20 basis points as a percentage of sales and SG&A was flat as a percentage of sales compared to the third quarter last year.

[Mark Worden:]

Thank you, Cliff. It's a pleasure to be speaking with you on my first earnings call with Cliff and Kerry. I've enjoyed getting to meet many of you from the investment community since joining the company in 2018. Shoe Carnival has generated consistent results over several years. As Cliff mentioned, we deliver on everyday family footwear needs. And when consumers count on us most for seasonal or special occasions, we have what they're looking for. We believe the strong foundation with consumers as just the beginning. Over the past year, our team has made significant progress on our long-term strategies. Our customer-centric organization is focused on delighting the family channel shopper and creating sustainable, long-term growth for our shareholders. Today, I'd like to share an update on four of our core strategic imperatives fueling our growth

[Kerry Jackson:]

Thank you, Mark. Our net sales for the third quarter ended November 2, 2019 decreased $5.5 million to $274.6 million compared to the third quarter of last year. Of this increase in net sales $9.2 million was attributable to the 3.5% increase in comparable store sales and $1.2 million was attributable to the four new stores opened since the beginning of the third quarter of fiscal 2018. This was partially offset by a loss in sales of $4.9 million from the 13 stores closed and other non-comp stores over the same period. Our gross profit margin for the quarter was 30.9% compared to 30.2% in the third quarter last year. Our merchandise margin increased 50 basis points during the quarter while buying distribution and occupancy expense, decreased 20 basis points as a percentage of sales.

[Operator:]

Our first question comes from Mitch Kummetz with Pivotal Research. Please go ahead.

[Mitch Kummetz:]

Yeah. Thanks for taking my questions, and also congrats on the quarter. Kerry, let me start where you ended on the guide. I just want to be clear. So you're saying that the high-end of your Q4 range is a low single-digit comp flat gross margin and substantial SG&A leverage. If that's correct, is there – are there assumptions embedded on the low-end? And, if there are, do you care to share those with us?

[Kerry Jackson:]

Well, you could take a little bit of – a few things. So we end up on the low end of the sales, you could end up with a flattish to slightly down gross profit margin, and we'll probably would not have quite as high a leverage. We'd still be leveraging our SG&A because of the comparisons, but they won't be as quite as high as we're expecting.

[Mitch Kummetz:]

Okay. And then you guys raised, so you raised the sales outlook for the year but you're still seeing kind of a low single-digit comp on the full year, right? So are you – is the – do you now expect – so I'm not sure what your definition of a low single-digit comp is. I'm going to say like maybe 1% to 3%. Are you now expecting something more towards the higher end of the range of low single digits? Is that the reason why you raised the sales guide by a few million for the year?

[Kerry Jackson:]

Look keep in mind that's a flow through primarily of what we saw come through in the third quarter. We exceeded what our expectations have been on the third quarter and we're flowing it through the year.

[Mitch Kummetz:]

Okay. And then, could you make any comments on Q4 to date? We're two-plus weeks, I guess into the quarter. You talked about improving trends on the boot side. Is there – can you give us any numbers around kind of how you're trending?

[Cliff Sifford:]

We're just not going to give fourth quarter to date. And let me tell you the number one, reason was that Thanksgiving moves out of the third week of November into the fourth week of November. And that changes a lot of metrics. So we're going to stay silent and tell you that we expect low single-digit increase for the fourth quarter.

[Mitch Kummetz:]

Cliff, can you talk a little bit about that calendar shift? If I'm not mistaken, I think the last time we saw Thanksgiving on the 28th was in 2013. I don't know, if you have any recollection as to how that impacted your fourth quarter results that year?

[Cliff Sifford:]

I don't – no I'd have to go back and specifically look at that. Kerry is looking at that right now. It creates one week less between Thanksgiving and Christmas, which doesn't affect the shoe business there as much as it does the department store business. It has a pretty good effect on the department store business, but not so much in shoes.

[Mitch Kummetz:]

Okay.

[Cliff Sifford:]

We're more concerned in the fourth quarter about weather trends than we are about calendar shift.

[Mitch Kummetz:]

Sure. And then speaking to weather on boots. So, I just want to be clear as to what you said about the third quarter and then I want to ask you a little bit about your Q4 outlook there. But in third quarter, I think you said that women's fashion boots were positive. I wasn't sure, if that would comment on the quarter itself or if that was more…

[Cliff Sifford:]

I think what I said was that as we – as the weather got cooler throughout the quarter. Women's boots turned positive.

[Mitch Kummetz:]

Okay.

[Cliff Sifford:]

Or I might have said less positive once it turned cooler. We were not positive early in the quarter in boots. We needed the weather to change. And once it did change the customer did show up and started buying boots.

[Mitch Kummetz:]

Can you say what boots were for the quarter? Were they down for the quarter? Were they -- is there just sort of an overall boot number that you could give us?

[Cliff Sifford:]

Well, if you look at our overall boot business it was flattish. But that would include men's. Our women's fashion boots were slightly down.

[Mitch Kummetz:]

Okay. And then I guess just lastly on your outlook for boots in Q4. I think you said that seasonal boots were -- are 25% of the total. Is that just the weather dependent? I mean, I guess all boots are weather-dependent to some degree, but is that like more like insulated boots? Is your overall boot business bigger than 25% of that?

[Cliff Sifford:]

What I'm trying to say in that and maybe I need to figure out a way to clean it up is that excluding work.

[Mitch Kummetz:]

Okay.

[Cliff Sifford:]

So if you look at boots for everyday wear fashion that's approximately 25% of our total fourth quarter of footwear sales.

[Mitch Kummetz:]

Got it. All right. Thanks, guys. I get back in the queue.

[Operator:]

And our next question comes from Greg Pendy with Sidoti.

[Greg Pendy:]

The new store guidance that you gave was that a net, or is that just the new stores and we can expect some -- that was going to be offset…

[Cliff Sifford:]

Greg, I'm afraid that the first part of your question was muted. So if I can get you to ask it out more time.

[Greg Pendy:]

Sure. Can you hear me now?

[Cliff Sifford:]

I can hear you fine now.

[Greg Pendy:]

Okay. Sorry about that. I just wanted to understand on the new stores was that just new stores, or is that the net of stores and store closings. I think you were targeting six to eight new stores in 2020, but can we expect that to be offset by some closings?

[Mark Worden:]

Hi, Greg. You're right. Those are new stores we're talking about there. Six to eight is the range of new stores, and then eight to 12 for 2021. And if we look into that -- if you look further into that trend we are forecasting climbing to net store growth towards the end of 2021 or into early 2022 depending on the success of finding a highly productive highly, profitable sites and markets we know we can win with.

[Greg Pendy:]

Okay. And then can you just talk a little bit about as you're evaluating these new stores what you're seeing in the real estate environment for these new stores and how you're thinking about that?

[Mark Worden:]

Yeah. We're focusing on our 35 core states first of all where we know our shoppers very well and where we have a strong propensity to succeed with growth. We're finding in our core markets it is a challenging marketplace to find robust opportunities, because we're being incredibly selective to find ones where we know our shoppers are. And so from our perspective here, we're going to stay really focused on finding stores we believe can be accretive to our revenue per door averages and accretive to our profit for the corporation long-term.

[Cliff Sifford:]

If I can -- and Greg if I can add to that it's -- there are sites out there, but we're being very, very selective. And that's one of the things that CRM has brought to us is that we know exactly -- we have a very real idea as to who our customer is and who's shopping in our stores. And so we're making sure that the sites that have been brought to us our real estate team as we go out to visit those stores we make sure that the demographics and the customer profile in and around those stores match exactly who we are.

[Greg Pendy:]

Okay. That's helpful. Thanks a lot.

[Operator:]

Our next question in the queue comes from Chris Svezia with Wedbush Securities. Please go ahead.

[Chris Svezia:]

Good afternoon everyone. And congratulations on the quarter and welcome Mark to the conference call.

[Mark Worden:]

Thank you, Chris. Thank you.

[Chris Svezia:]

I guess, first Kerry for you. Just what's the -- when we think about Q4 remind me again what the comp by month what you're up against? Just walk through that if you could?

[Kerry Jackson:]

So last year our November was up high singles. Our December was up -- and December and January were up low singles and we ended the quarter at 4 7.

[Chris Svezia:]

Okay. Okay. Thank you. And then Mark for you just on the CRM. I'm just -- I know you went live during the quarter. And I know you've been getting incremental wins throughout the year. But I guess was there anything material that developed during the quarter that drove comp acceleration to the loyalty program when you talked about your gold membership and the growth there? Just anything you did maybe that you suddenly -- was incremental in terms of turning on that CRM or no?

[Mark Worden:]

Absolutely Chris. We were able to capture multiple quick wins. And one I'd say is, we're able to utilize the data to understand shoppers who used to shop at corporations that no longer exist in our competitive space and try to communicate to those folks to help them understand we're a new alternative for family footwear when they used to shop at a place that no longer is there. That was really very profitable use of our early analytical data this quarter.

[Cliff Sifford:]

I'll also add to that that we saw an increase in traffic from our gold members so not only did we -- were we able to attract new members, but our most loyal customers, which are our gold members shopped us. We saw an increase in basket size from them as well.

[Chris Svezia:]

Okay. That's great. Good to hear. I want to go just from a product perspective just on the athletic seeing a slight increase. I know you're talking about there's some shift to casual from technical athletic. What's sort of your thoughts about the outlook as you go into Q4 and maybe early next year? Any color about Q4 as sort of availability of certain product becomes more heightened or whatever the case? Are you talking about trying to continue or do you expect something to change a bit in Q4?

[Cliff Sifford:]

I definitely expect the casual trend that we've seen over the past couple of quarters to continue and maybe even accelerate a little bit. However, I also think that as we head into 2020 and the product that we've seen and as you know, like the bulk categories and our brands, but the product we've seen is very encouraging. And, I believe, we're going to see continued growth out of the athletic maybe not -- I think, we'll see growth out of the casual categories, but I think you're going to see, even the technical or, what we would consider to be technical, accelerate as well.

[Chris Svezia:]

Okay. Got it. And then, just on -- another just category question. Just on the dress category performing well. Any -- I know, it's been spotty there, but I think you have some recent success. Just kind of what's driving that? Any color you want to add about that?

[Cliff Sifford:]

Well, six months ago, I would not have told you that in the third quarter our dress shoe business would be good. Okay? That was a -- I'm not going to tell you, it caught us by surprise. I'm just going to tell you, our merchants did an incredible job of going after the right item. And I don't want to get specific on the categories that are selling, because I got competition, as you know, listening to this call. But I was very pleasantly surprised to see our women's dress shoe business accelerate the way it did.

[Chris Svezia:]

Okay. Final thing for me. Just on a margin question and just on the boot. Just curious, how do you think about demonstrating fashion boots and cold weather boots and what you saw in the quarter and your expectation in Q4? And, Kerry, why flat gross margin if you comp up low single? Are you assuming the merchandise margin is down and that's just because of difficult comp, or is that predicated on how well the boot business performs?

[Cliff Sifford:]

Chris, I'm going to take the easy question, which is, what's the difference between fashion boots and all other. When I say fashion or seasonal boots, what I'm doing is excluding work that you guys don't really want to know about work, because that's an ongoing business for us. You want to know how the fashion business, which is where all the risk is. So when I talked about fashion boots or seasonal boots, it really is just excluding work.

[Chris Svezia:]

Okay. But is there any difference between the two of them, between a fashion, which is like a boot or something like that?

[Cliff Sifford:]

No, I probably just simply get work – I just probably -- no, I include cold weather into that, because that’s crossing the line. I mean, what you could include fur boots as cold weather, would you say cold leather is strictly cold -- leather that keeps dampness away from your foot? That I don't know. So what we do is anything that's not work, that's our fashion boot category.

[Chris Svezia:]

Got it. Okay. And on margin?

[Kerry Jackson:]

So, Chris, we are expecting to be able to leverage our -- as I said, our flattish gross profit margin. We expect to see some leveraging out of our buyer's fees and occupancy costs on that on a little more cost base than the year before, plus having the comp store sales increase. We also expect though there's two parts of our merchandise margin; the actual sale and cost of the shoe. But then we have some accounting adjustments we have to add into it. And one of them is you have to put capitalized costs into the cost of the shoe. As your inventories are increasing those reserves increase along with it. We are expecting due to offering fewer stores and putting -- lowering our per store inventory, to have actual total dollar inventories down at the end of this year versus last year. That's reversing out some of those capitalized costs that we had accrued in prior periods into Q4 and causing that to be -- so the overall merchandise margin will be down because of those accounting adjustments, even though we expect a pure profit on the sale of the shoe to be up on a year-over-year basis.

[Chris Svezia:]

Okay. I think I got it. Okay. I got it. Thank you. All the best guys. It's great to hear.

[Cliff Sifford:]

Thank you, Chris.

[Operator:]

And we'll take our next question. This one comes from Mitch Kummetz with Pivotal Research. Please go ahead.

[Mitch Kummetz:]

Yes. I've got some follow-ups. So, first of all, I did -- because I didn't hear what you said about adult athletic. I think maybe you just said it was up slightly in the quarter. What was it up -- was it up in the quarter?

[Cliff Sifford:]

Adult athletic was basic -- was dead on flat.

[Mitch Kummetz:]

It was -- I'm sorry, it was flat?

[Cliff Sifford:]

It was flat. That's correct.

[Mitch Kummetz:]

Okay, okay. So, I think, that's a slight improvement from last quarter, right? I think last quarter was down slightly.

[Cliff Sifford:]

What?

[Mitch Kummetz:]

I guess, this isn't my really -- my question. I find it interesting that you're talking about 2020 and you like what you're seeing on the product side for 2020. Correct me if I'm wrong, but I kind of feel like going into this year you guys were pretty bullish on what you were seeing product-wise as well on the athletic side. And it seems like two of your more important athletic quarters Q2 and Q3 didn't really play out as well as maybe you would have anticipated going into this year. I'm just wondering, if you could do like a postmortem on that. I don't want to say what went wrong, but did that not live up to your expectations? And if so, why?

[Cliff Sifford:]

No, that's a great question. We were excited coming into the year unscathed and we expected, as we entered into the second half of the year, for certain brands to strengthen. We knew that we have brands that were not going to be strong for the first half of the year, but we expected the other brands to strengthen, as we headed into the second half of the year. And I really don't want to get specific on whether that brand disappointed us or came along. But I am -- to be honest with you, I think what happened to the fact that athletic was flat and we showed a 3.5% comp store increase for the quarter shows the strength of our concept that as customers shift from one category to the other we can take advantage of that and I believe we did.

[Mitch Kummetz:]

Okay. And then on Payless, I think last quarter you guys talked about how it didn't really have much of an impact because Payless was dumping a bunch of product and then their customer kind of went away for a little bit because they weren't -- didn't have much of an appetite to buy after that, but you were kind of expecting them to kind of come back this quarter. I'm wondering if you could maybe talk about the impact of Payless. Is there any way to kind of break out your comp versus stores that overlap

[Cliff Sifford:]

I can tell you that our comps within a -- I'm not going to break out the comps between overall Payless and non-Payless. But I will tell you that the stores that were closest to where a Payless store was within a mile or 2-mile radius those stores had better sales results than the stores that were more than 5 miles away from a Payless store. But you got to remember, Payless has got a lot of stores so I think -- were near a lot of our stores. I'm sure a lot.

[Mitch Kummetz:]

So in those stores do you -- yes in those stores that you overlapped did you see any real difference in terms of how you comped by category? I think when you were talking about -- I know that from a price point standpoint there was only so much overlap. But I think you'd said that you thought you could that could benefit you on the athletic side a little bit, maybe some other sides? Maybe work? I'm not sure. Did you see it help you?

[Cliff Sifford:]

I think that benefited us in dress shoes. We were asked earlier why our dress shoes business was up. We think it's the Payless effect. They sold a lot of dress shoes.

[Mitch Kummetz:]

Yes. Okay that's helpful. And then on boots, I'm just curious in terms of -- it sounds like goods are probably a little worse than what you thought in the quarter. I know you had a tough comp last year. I know what the weather was doing. How do you feel about your boot inventory? Do you feel like there's any risk, or can you just sort of shut off the spigot if need be? Could you probably push things back to your vendors? And then how do you think about just sort of channel inventory for boots more broadly outside of kind of what you guys are carrying?

[Cliff Sifford:]

Well I think maybe you're asking me if it's gotten more promotional. That's a way of asking me if it's more promotional. We haven't seen that yet. Our boot inventory is in great shape. The reason for that right is the way we run our business is that, we buy what we need upfront and then we place backups. And if the boots don't take off the way we originally thought they were going to sell then those backups are cancelable. And we're aggressive on that as we go through. So I -- my inventory is in great shape and I give the merchants all the credit in the world. If you -- because I -- we had a decent third quarter in boots. And actually we had a flat third quarter in boots, we're having a pretty decent fourth quarter in boots and I think we're going to be in good shape.

[Mitch Kummetz:]

Okay. And then last question maybe for Kerry. I know that you guys said that you were a 3.3% comp in August. I don't know if you can tell us October -- or I'm sorry September and October. I'm guessing October was stronger than September just from a weather standpoint. But...

[Kerry Jackson:]

No. What we saw was September was low single-digit comp increase. And in October we accelerated to a mid single digit comp increase.

[Mitch Kummetz:]

Okay. Great. All right, thanks again guys.

[Cliff Sifford:]

Thank you.

[Operator:]

Our next question in the queue comes from Sam Poser with Susquehanna.

[Sam Poser:]

I just went to work for a new bank apparently. Congratulations guys. Phenomenal quarter. Best quarter I've ever seen from you guys. But anyway let's keep moving. Yes. Can you -- I want to follow up. How many stores are you planning on closing next year and the following year? Could you just give us an idea? You said you were going to be net opening -- you're probably going to be net opening maybe in 2021. But next year I mean can we expect you're going to net flat or net close? Could you give us some idea?

[Cliff Sifford:]

It's going to be a net flat is where our thoughts are now because we haven't talked about that as much to date Sam because we're working really hard to actually show store growth for next year. And we've been...

[Sam Poser:]

But I mean if we were going to model it we're not -- if we're going to model it it's better modeling it in for close to flat than flat and then it will get an improvement. And then the following year, I mean what like net 5 open would probably be a good starting point, or you think….

[Cliff Sifford:]

Right now I tell you the following year it would be a little lower than that, somewhere net flat to 5.

[Sam Poser:]

Okay. And then can you talk about the -- like you're -- given the and I'm going to get to CRM in a second, but can you given the CRM and given what you're learning from it with the new stores, can you talk about what that productivity expectation will be for those new stores that you open with the new information that you're garnering?

[Cliff Sifford:]

We would fully expect that a new store within a reasonable point in time. And let's say between the year 3 -- around year 3 to be at the company average.

[Sam Poser:]

So you don't expect those to outperform given the new information and open faster and like open stronger because of the new manner by which you're taking the patience and the manner...

[Cliff Sifford:]

Sam it's a difficult question because it depends upon where you open the store. What we found this year is and we haven't opened many stores, but where we open up stores where they already know us they're outpacing -- they outpaced our current comp…..

[Sam Poser:]

Got you. If they know you are, the work shows itself more quickly. Fair?

[Cliff Sifford:]

That's right. That's fair.

[Sam Poser:]

Okay. How much help -- I know you just kicked off the CRM sort of in earnest this quarter. But if you could -- I know -- and I know this isn't going to be scientific, but how much do you think this improved communication with the customers vis-à-vis the CRM helped your comp in the quarter?

[Mark Worden:]

Hi Sam, it's a material contributor and a diagnosis I could give you is, if you look at our Shoe Perks gold members as I shared earlier, that membership grew 50% plus for the year. And if we look at the comp with that growth, they're growing at a rate more than two times faster than our total company comp rate we just did. So, said differently, the insights are allowing us to bring consumers into our loyalty program rapidly trade them up to our highest tier our most valuable location and their comps are growing at a pace we're extremely excited with.

[Sam Poser:]

Cool. And I have a few more. One, did you buy back any stock after -- since quarter end that would be reported in the Q?

[Kerry Jackson:]

No, because we've been in -- we're locked up until after we released earnings. So, we weren't -- we're in a blackout period until after the release of earnings. So we're not allowed to buy back.

[Sam Poser:]

Okay. The athletic business, Cliff. Do you when do you foresee that on a year-over-year basis sort of gaining momentum turning around given as Mitch brought up the expectations coming into the year and sort of what you've learned in the meantime?

[Cliff Sifford:]

Yes, I think -- let me say this. We're -- as we looked at new product for spring of 2020, we're excited about the things that we're seeing from some of our top vendors.

[Sam Poser:]

Is one of those vendors from the Northwest by chance?

[Cliff Sifford:]

To Mitch's point, we were not unexcited about entering into 2019. But -- and as you know we've been flattish all year with athletic. So, I feel good about it. I can tell you that I feel really good about where Shoe Carnival is right now with their customer and the fact that not many people are reporting increases in traffic and increases in sales the way we have. And based on whatever happens in the spring of 2020, we'll be prepared and we'll move with the customer as quickly as possible.

[Sam Poser:]

And you just mentioned your traffic in the stores for the quarter were up or not?

[Mark Worden:]

Traffic was up, Sam in both bricks-and-mortar and are our online. We were successful both on the traffic and conversion.

[Sam Poser:]

Okay, cool. Congratulations on that. Two more questions. Furry boots. How are you doing with them? How does it look? I know that had some fashion some weather. So any initial read on furry boots?

[Cliff Sifford:]

So far we're not unhappy with furry boots and in fact that's probably as close as I'm going to get to talking about product categories.

[Sam Poser:]

Okay. And then -- all right. So you brought in some product earlier in the quarter partially to offset tariffs. But it's going to be hard to offset tariffs and we're still waiting to find out if the December 15 ones happen. But assuming they don't, when you're looking at tariff impact into next year or prices that you're seeing if those -- the additional 25% happens, can you give us an idea of the magnitude of the increases and the progress you're making with factories and vendors and so on and so forth?

[Cliff Sifford:]

So far and we've talked about this quite a bit internally. So far, we haven't seen a lot of price increases. We did have a major vendor that you're familiar with that did institute across the board price increase and we were able to mitigate that somewhat by the product we bought. Some product is worth more than others. And so, we were able I think in my mind able to mitigate that price increase, but we haven't seen a lot of price increases. I think the majority of the vendor community is waiting to see exactly what happens. The good news within athletic is that the majority of the athletic goods are made in Vietnam not in China. So that's 52% of our total volume, so not seeing a lot there. Not seeing a lot other than the out brand I talked about. I'm not seeing a lot of increases.

[Sam Poser:]

And I mean on your dress -- women's dress product I mean most of that is non-weather and most of that would be impacted by the by 4B tariffs. And so everybody is sort of holding their breath on that is sort of how to think about it?

[Cliff Sifford:]

They're holding their breath on it at this point. And orders have been placed with cost given. So, no Sam, I don't expect that we're going to -- in fact Carl nor myself think we're going to be affected at least in the spring time period with tariffs.

[Sam Poser:]

All right. Well, thank you very much and continued success.

[Cliff Sifford:]

All right. Thank you.

[Operator:]

There are no further questions in queue. At this time, I would like to turn the call back over to speakers for closing remarks.

[Cliff Sifford:]

I'd like to thank you all for your participation on today's earnings call. We look forward to announcing our fourth quarter and full year results in March. I also want to wish each of you a great Thanksgiving and a very happy holiday season a great evening. And thanks again for tuning in.

[Operator:]

Thank you, ladies and gentlemen. This concludes today's presentation. You may now disconnect.