Shoe Carnival, Inc.
Q4 2021 Earnings Call Transcript

Published: 16 Mar 2022

[Operator:]

Good morning. My name is Chris and I’ll be your conference Operator today. At this time, I’d like to welcome everyone to the Shoe Carnival 2021 fourth quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. To withdraw your question, please press star, one again. Thank you. Mark Worden, President and Chief Executive Officer, you may begin.

[Mark Worden:]

Good morning and welcome to Shoe Carnival’s fourth quarter earnings conference call. Joining me on today’s call are Carl Scibetta, Chief Merchandising Officer, and Kerry Jackson, Chief Financial and Administrative Officer. We’d like to start by recognizing our team of nearly 6000 members for their commitment, perseverance and their winning spirit demonstrated throughout 2021, and to our millions of loyal customers and new customers across the hundreds of communities we serve, we are thankful you selected Shoe Carnival for your family’s footwear shopping experiences. I have the pleasure of opening today’s call by reporting that Shoe Carnival generated more profit for our shareholders during 2021 than the prior six year combined. Furthermore, growth momentum remains very strong at Shoe Carnival. No doubt 2021 presented a challenging macro environment. COVID-19 and supply chain disruptions required our exceptional merchandising team and operators to navigate ongoing complications. Inflation and a tight job market made clear how essential our team members are and how important our commitment to invest in competitive wages, compelling benefits, and long term career growth is. One element was constant for Shoe Carnival every quarter in 2021

[Carl Scibetta:]

Thanks very much, Mark. As Mark said, we are delighted to report our strongest ever fourth quarter as well as our best fiscal year ever. I will highlight several areas that were key to delivering our outstanding performance. The first is we are winning with loyalty and brand building. Through our ongoing investment in CRM, we understand our customers better than ever. This enables us to continue to execute our promotional strategy using data intelligence to drive customers into our stores and online. These targeted personalized promotions have been a key component of our innovative marketing plan that has served us well since we implemented it over a year ago. Our best-in-class CRM is driving record sales and gross margins, and as we saw in the fourth quarter, it consistently drove higher customer acquisition, retention and reactivation all at the same time. With the use of the valuable consumer insights our CRM provides, we can leverage deeper engagement across both online and in-store channels. The stellar results we announced today are the strongest evidence to date our strategy is working. Secondly is our unparalleled vendor relations. Our merchandise story is, above all, one of overcoming supply chain challenges through working with our vendors daily to minimize the disruptions being caused by the global supply chain issues. In this challenging environment, our vendors are highly selective with their inventory allocations and many do not have the capacity to supply demand from retailers at the mall, department stores and discount stores. Customers want brands, and they will go to retailers where they can reliably find those brands. Given our firmly embedded relationships with our vendor partners, we continue to stay stocked with a variety of depth and breadth of the hottest in demand products. As a result, we are uniquely positioned to capture customers dislocated from other sources which are no longer able to cater consistently to customers’ needs. We saw the power of those relationships throughout every quarter in fiscal 2021. The outstanding results mean we had the right products at the right time. As a result, we enjoyed an exceptional holiday season. During the final weeks of 2021, we generated record sales and six times earnings per share compared to the fourth quarter of 2019. That said, our industry faces potential challenges this spring. Consumer spending will be impacted as the stimulus programs of 2021 are no longer and the supply chain and inflation issues continue. We aren’t immune from these challenges, but thankfully we are well positioned to continue to increase our market share due to our strong management and vendor relations. Our inventory levels are up versus last year and our stores are ready for spring selling, and we are winning with strong merchandise categories and assortments. As Mark mentioned, customers shopped in person for their holiday needs. Drilling down to consumer trends, we are seeing customers back to buying non-athletic shoes. Across customer groups, non-athletic sales grew by over 20% in the fourth quarter while athletics continued to grow by low teen percentage points. Currently we have a 50/50 non-athletic/athletic merchandise portfolio which has us well positioned for growth and mitigates risks related to changes in consumer demand. We feel this balance gives us an advantage over competition. Q4 continued the path of business normalization that we saw in preceding quarters as our brick and mortar customers responded very positively to merchandise and store strategies. Comp sales in the fourth quarter versus 2020 were up 17.7% and up 25.3% versus 2019. We are also delighted with our ecommerce business. In 2021, ecommerce sales grew 146% to over $160 million compared to fiscal 2019. While we don’t see explosive growth in a post-pandemic environment, we do expect our thriving ecommerce channel to play a significant role with our customers as they balance their new hybrid work-life lives. Our ecommerce margins as a result of these evolving customer trends were 880 basis points higher compared to Q4 2020. Improving last mile delivery is a key aspect of ecommerce. During the fourth quarter, we became the first in the family footwear channel to launch same day deliver in partnership with Door Dash in late December. We are proud of our team’s ability to launch this innovative offering to benefit our many busy last-minute holiday shoppers. Going forward, we expect ecommerce to be a high single digit, low double digit long term growth area. We will continue to be an omnichannel growth story as we provide a highly complementary bricks and clicks offering that provides our customers with winning merchandise and high quality service they have come to expect from us. As Mark mentioned, we continue an aggressive rollout of our store modernization program. We want our customers to feel the joy and fulfillment of in-person shopping in our stores. Our efforts are moving fast. We will complete modernization of over 100 stores in 2022 and half the fleet will be completed by year end. Our stores have an open modern clean look that facilitates a pleasant browsing experience. Our digital displays and brand shops connect customers to the trends and the promotions they seek. Our athletic shops continue to roll out. Our assortment of brands and our strategic vendor partnerships with the top global athletic brands are strong. These environments are motivating and more customers step through the door and browse. As we continue to invest in new store designs, our Shoe Station prototype flagship store is well underway and will open later this year. Our integration of Shoe Station is ahead of schedule. We had worked with our vendor partners from the Shoe Station business and we are mutually excited about the future growth opportunities ahead. Our southern-based Shoe Station buying team is engaged and ready to go. We expect modernization of all existing 21 stores to be completed along with our company-wide modernization strategy. Above all, our people are friendly and knowledgeable and always put the customer first. In fact, customer first is a core value and key differentiator in the category. Now turning to results, all merchandise categories and comparable store sales for the quarter were up double digits versus 2020 and margins were up 710 basis points for the same period, and 1,030 basis points versus 2019. Even though inflation could have some effect on margin levels in 2022, we feel the changes in our promotional strategies and the power of our CRM program has fundamentally changed the merchandise marketing levels for the company going forward. comparable stores in the fourth quarter were up in the low 20s. Both athletic and non-athletic kid sales were up over 20%. Men’s non-athletic comparable store sales were up in the high 20s. Sales were driven by both the dress and casual shoe categories. Women’s non-athletic comparable store sales were up in the low 20s. Sales were driven by dress, casual and sports shoes. Adult athletics were up in the low double digits. As mentioned earlier on our previous calls, non-athletic shoes across men’s, women’s and children’s have made a huge comeback. Our team of seasoned merchants continued to navigate through supply chain challenges with the same anticipatory approach to sales and inventory as they have throughout the pandemic. Through their hard work and excellent vendor partnerships, the team was able to deliver the products customers wanted to generate these outstanding results. Despite industry-wide near term headwinds, we feel we are well positioned to succeed in fiscal 2022 with a strong inventory position. Fiscal 2022 beginning inventories per door were up in the high teens versus 2021 and mid single digits versus 2020. With that, now let me turn the call over to Kerry Jackson to provide more insight into our financial performance for the quarter and full year.

[Kerry Jackson:]

Thank you Carl. It’s exciting to share with you some financial highlights from the best fourth quarter and the best fiscal year in the company’s history. We achieved a record fourth quarter with net sales of $313.4 million, an increase of $59.5 million or 23.4% compared to the fourth quarter of fiscal 2020. Comparable store sales increased 17.7% for the fourth quarter of fiscal 2021 compared to the prior year. Our brick and mortar comparable store sales were up 22.1% and ecommerce was mostly flat in the fourth quarter compared to the fourth quarter of 2020. Fourth quarter 2021 gross profit margin was 37.3%, a Q4 record high for Shoe Carnival and up more than 650 basis points compared to the fourth quarter of 2020, driven primarily by continued strength in our merchandise margins in the quarter. Excluding one-time acquisition costs, our Q4 gross profit margin was 37.6%. Buying, distribution and occupancy expenses decreased 140 basis points as a percentage of sales when compared to the fourth quarter of 2020 despite higher supply chain expense. These results clearly underscore the successful execution of our merchandising strategy highlighted by Mark and Carl earlier in the call. SG&A expenses increased by $21.3 million in the fourth quarter of fiscal 2021 to $88.9 million. As a percentage of net sales, these expenses increased to 28.4% compared to 26.6% in the fourth quarter of fiscal 2020. Excluding one-time acquisition costs, SG&A expenses in Q4 were $85.7 million or 27.3% of net sales. The increase in adjusted SG&A was driven primarily by increased investments in advertising and store level wages. Operating income was $27.9 million or 8.9% of fourth quarter 2021 sales. In comparison, operating income was $10.6 million or 4.2% of sales in the prior year quarter. Adjusted operating income in Q4 was $32.2 million or 10.3% of net sales. Net income in the fourth quarter of 2021 was an all-time fourth quarter record of $20.6 million compared to net income of $7.4 million during the same period last year. Earnings per diluted share for the fourth quarter of 2021 increased by $0.46 to a record $0.72 per diluted share. Adjusted net income in Q4 was $23.8 million or $0.83 in diluted earnings per share. We closed out the quarter with inventory of $285.2 million, which was up $51.9 million compared to the prior year or 19.2% on a per-store basis. A little over half of the increase in inventory was due to the 21 stores acquired in the Shoe Station acquisition. We have ample liquidity to fund our growth through store expansion and modernization, target further acquisitions while continuing to build cash on our balance sheet. As of January 29, 2022 we had total cash, cash equivalents and marketable securities of $132.4 million and no outstanding debt. We had more cash on hand than last year even after paying for the Shoe Station acquisition in cash. As we invest for future growth, we continue to follow through on our commitment to shareholder returns. In addition to our current share repurchase authorization, our Board of Directors approved the payment of a 29% increase in our quarterly cash dividend to $0.09 per share from $0.07 per share previously. Turning to our longer term outlook, as we continue to see momentum in our business as we come into March and based on our expectations of continued strength, we expect fiscal 2022 net sales to increase mid single digits to $1.38 billion to $1.42 billion, and earnings per diluted share for the fiscal year to be in the range of $3.80 to $4.10. In closing, this morning we announced the best results in our 43-year history. Looking ahead, with continued strength and success of our fast growing omnichannel sales model and our transformed profitability profile, all supported by robust cash flow, we are better positioned financially than ever before to execute on our growth strategy, which combines organic store expansion and modernization on one hand and selective acquisition strategy on the other. With that, I’ll conclude our financial review. Now I’d like to open up the call for questions.

[Operator:]

Our first question is from Mitch Kummetz with Seaport. Your line is open.

[Mitch Kummetz:]

Yes, thanks for taking my questions, and congratulations on the quarter and the year. I’ve got a few questions. You guys have referred to momentum through the first six weeks of Q1. I was hoping you might be able to quantify that, and I’d be most interested in knowing how that performance compares to the first six weeks of 2019, if you happen to have that.

[Mark Worden:]

Good morning Mitch, it’s Mark. Thank you for the congratulations. We’re thrilled with the way last year concluded, and that momentum has carried into the first six weeks of fiscal 2022. We have great confidence based on the start that we can continue to grow and have a record 2022 this year, as we said, growing 4% to 7% revenue range. Specific to this first six weeks, we are seeing continued strength in store traffic and people coming out despite all of the macroeconomic things going on, and we’re very comfortable that before we started lapping the stimulus, we were seeing high single digit type growth, Mitch, compared to the prior year.

[Mitch Kummetz:]

Okay, that’s helpful. Then Mark, you kind of broke out the year first half, second half in terms of the year-over-year. Quick back of the envelope math that I’ve done, again we’re not trying to compare this to 2019, which is the last pre-COVID year, that kind of implies high 20s growth in the first half, high 30s growth in the second half versus 2019. I can appreciate the lapping of stimulus on a year-over-year basis, but I’m kind of curious why more growth in the back half versus the first half when you compare it to that pre-COVID, is that mainly inflation and supply chain that’s holding back the sales growth a little bit in the first half that you would expect to be alleviated in the back half, or is there something else going on?

[Mark Worden:]

Yes, you’re right regarding versus prior year - it is purely the stimulus that’s going to be a challenging headwind for retail for the next month or two, and then we get into rapid growth once we start lapping that. If you look two years back, no doubt the supply chain and inflation are challenging headwinds that everyone’s facing at this moment in time, and we expect that to continue to be challenging for us to navigate. Our merchants, as we talked about last year, navigated it with astonishing nimbleness and were able to secure the inventory we needed, had our stores well stocked when customers were there, so we have confidence we’re going to do that again this year. However, compared to 2019, we’re not immune to there are delays in shipping, there are delays throughout the supply chain, and inflation is causing consumer sentiment to be different than 2019. With all that said, we have great confidence we get beyond that in the coming weeks as we head towards back to school. We’re positioned very well to accelerate growth.

[Mitch Kummetz:]

Then Mark, you mentioned double digit operating margin as kind of a new, sustainable level for the company. That’s up, I think over 500 BPs from where you were pre-COVID. Can you just talk about the structural changes that you’ve seen in the business that gets you to this new level? I would imagine a pretty good piece of that is going to be the CRM and your ability to be more targeted and strategic with your promotions. If there’s anything else that you might want to refer to, to help explain that lift in margins, whether that’s market share gains that you’ve taken that helps with the fixed cost leverage, can you maybe go through some of those components?

[Mark Worden:]

Sure. I’ll highlight three of them that are key drivers. First is our investment to build advanced analytics and CRM capabilities, like you touched on. We’re at the stage of gaining leverage from those systems we’ve been investing in for multi years and gaining . We can target consumers effectively, we can promote far more profitably and still generate the top line we want. That’s going to be a key contributor. Second, that capability and our merchants’ excellence has enabled us to eliminate the historical buy one, get one half off and other deeply unprofitable promotions we used to do. Between those two key elements, we can sustain margins significantly higher, and Carl and Kerry can build on that. Third, the job environment is tighter than I’ve seen in my nearly 30 years, and we have made a conscious decision to invest in our employees, invest in compelling pay for them, invest in benefits, and invest in career opportunities, and so I’m thrilled today to share that effective this year, all full-time employees at Shoe Carnival will be earning at minimum $15 per hour, and this is allowing us to invest in having that best talent we need in our stores, that customer first mindset. So two major tailwinds from more analytics are helping increase our gross margin, and an investment in our people helps us win but also puts pressure on SG&A pulling down some of the high results and that 49%-plus return on equity we delivered this past year.

[Mitch Kummetz:]

Okay. All right, guys, thanks and good luck.

[Mark Worden:]

Thank you Mitch.

[Operator:]

Our next question is from Sam Poser with Williams Trading. Your line is open.

[Sam Poser:]

Thank you very much. Thanks for answering my questions. Kerry, I was just wondering if you could just give us some details, or Carl, on the sales increases by month, the same store sales increases by month in the fourth quarter given how there was some stimulus lapping in January.

[Mark Worden:]

Hi Sam, good morning. It’s Mark again. I can share that with you. Q4 was exceptional, delivering over 23% growth overall and over 17% comp. It was driven by holiday. We’d never seen stronger holiday traffic. Consumers were flocking in person back to our bricks, and we saw over 20% comp growth for both the month of November and the month of December. Turning to January, that was the unknown when we spoke to everyone last of what would be the impact of not having the stimulus funds which were in our consumers’ hands the prior year. We had expected to have an over 20% sales decline in January and we’re thrilled we far outperformed that. In fact, for the month of January, we had a mid single digit decline, again beating our expectations by over 10%. It was a great learning for us too, Sam, to show us we grew so many new customers, are able to talk with them with CRM, that we’ve been able to grow market share during this past January, offsetting some of the stimulus money that was there last.

[Sam Poser:]

Thank you. A number of retailers within your markets are losing access to one of your largest vendors, and others have closed. I’ve also heard that some of that may--some of that product flow, because of the delay, isn’t happening as quickly as anticipated. How do you foresee that helping or--I won’t say helping, impacting your business this year?

[Mark Worden:]

When we talk about our store modernization plans exciting us and accelerating our plans to have the whole fleet accomplished, one of the things that consumers are gravitating to is our athletic shop-in-shops, and so this year we have in flight another 100-plus to be rolled out with the best brands that those consumers are shopping for across channels, and they’re delighted when they can find them in our athletic shop-in-shops. The brand experience, the full price realization, the way that brands love seeing them come to life is at Shoe Carnival, we believe, better than anyone in the channel, so we’re moving full steam ahead and plan to have the entire fleet have athletic shop-in-shops by the end of fiscal 2024. Carl can build on our vendor base too, of how excited we are about that.

[Carl Scibetta:]

Sure. Sam, while we don’t talk about individual vendors on the call, what I’ll tell you is the top five athletic brands from 2021 produced 37% of the company’s business, and in 2022 those same top five athletic brands are projected to equal the same 37% of the company’s business.

[Sam Poser:]

Does that include the Shoe Station acquisition?

[Carl Scibetta:]

That includes those particular numbers under Shoe Carnival. The Shoe Station acquisition stores carry a different merchandise mix with access to some of the other, more premium running brands, and we don’t see a change in the way they have historically been assorted.

[Sam Poser:]

Then your store opening plans to open 10-plus stores this year and 20-plus stores next year, can you give us details as to what the composition of that is between Shoe Station and Shoe Carnival, and as far as I know, you don’t plan to close--I believe you said you’re not going to close any stores, or don’t plan to close any stores this year.

[Mark Worden:]

Yes, that’s correct, Sam. For 2022, we plan to add at least 10 stores. The lion’s share of those will be Shoe Station. We will be adding Shoe Carnival, but the vast majority this year will be Shoe Station as the real estate opportunities we see there are so exciting. The analytics we’re just diving into are pointing in to how we can explosively multiply that fleet number over the next few years. As we get into 2023 and 2024, we’re pursuing growth at both banners. It’s our aspiration to have double digit net store count growth for both banners. We do see more opportunity for Shoe Station based on the mere size - it’s a small footprint, and we have so many states we can bring this great new brand to. By 2024, it’s our ambition to be 25-plus additions per year, and we’re incredibly energized. The only thing keeping us at those low levels is we’re starting from scratch right now to get real estate. If more real estate becomes available, those numbers will go up quickly.

[Sam Poser:]

Then lastly, when you acquired Shoe Station, you said that you anticipated around $100 million in revenue in 2022 for Shoe Station, but I don’t imagine that that included opening as many stores as you’re now opening. Is that $100 million still the number or has that number gone up, and then when we think about over the next two years, you’re going to add more than 50% store growth, almost 100% store growth by the end of next year probably, so how should we think about that Shoe Station revenue?

[Mark Worden:]

Now that we’re three and a half months deeper into it, we have even more conviction with what we’ve acquired. This brand, the growth, the profitability, we’re so energized. You should think about this year as we will deliver what we said - you know, the $100 million built in some thought of store growth, and with where we are in the year, Sam, when we talk about those 10, most of those will be Q4 or towards the very tail end, so it will have limited impacted on this year’s sales and profits. But as we go into next year, that’s where we can start to really ratchet it up. You’re right - you should think about the numbers I’ve just said will more than double, potentially triple the store footprint for that banner within two to three years, and we will commensurately more than double the revenues of that banner in that same time.

[Sam Poser:]

Lastly again, the sales--the margin structure, especially once you get the CRM all set up from a merchandise mix, is theoretically better at Shoe Station than it is at Shoe Carnival because there’s less mix of a lower margin athletic business, is that a fair way to think about it as well?

[Mark Worden:]

It’s fair to think about it. We see the margin and profitability structure lining up with the Shoe Carnival banner numbers that we just guided to. We see them very similar. There’s absolutely potential as we identify more synergies and get more into the buying and merchandising functions in the year ahead. There’s absolutely more potential for that trend to drive higher operating margins and higher margins, but at minimum we see it lining up with this new reset profit level for Shoe Carnival.

[Sam Poser:]

Thank you very much. Continued success.

[Mark Worden:]

Thank you Sam.

[Operator:]

Again that’s star, one to ask a question. The next question is from Jim Chartier with Monness Crespi Hardt. Your line is open.

[Jim Chartier:]

Good morning, thanks for taking my questions. I just wanted to follow on some of the previous questions. Do you expect share gains related to Nike’s exit from other retailers, and then the expectation for the penetration of your top five athletic brands being similar to last year, is that due to stronger growth in non-athletic business this year? Thanks.

[Carl Scibetta:]

Hi Jim, this is Carl. We do see growth in both athletic and non-athletic for 2022; however, we do see growth at a higher rate in non-athletic than in athletic based on consumer trends, based on recent history and new fashion that has emerged in the no-athletic side of the business.

[Jim Chartier:]

Okay, and then Kerry, what’s the timing of the new store openings this year? How should we plan for that, and do you expect to close any stores?

[Kerry Jackson:]

No, as Mark said in his prepared remarks, we’re done with our store closing program to improve the store profitability. With all stores on an ongoing basis cash flow positive, we’re very pleased and think it was a success, and looking out this year, we’re not anticipating closing any stores. Including in ’23 right now, we don’t have any visibility on closing of stores. On the openings this year, we just opened one for Shoe Station, so we’ll have one in Q1. The rest of them are going to be in--might have a store or two in Q3, but really it’s going to be in Q4 where the stores are going to open.

[Jim Chartier:]

Okay, and then finally in terms of the vendor mix between Shoe Carnival and Shoe Station, you mentioned some differences there. What are the opportunities to add some of the stronger Shoe Carnival brands to Shoe Station and vice versa, and when would that opportunity play out?

[Carl Scibetta:]

Sure Jim. We do see some synergies between the two businesses and we plan to use the power of Shoe Carnival to help leverage and aid some of the purchasing for Shoe Station, where appropriate. But as we have seen, as we anticipated in this business and it certainly has come to fruition for the short time we’ve operated them, they have a different consumer, and their consumer is really more, I would say, targeted at what a department store consumer should be, or department store consumer is based on the type of products they sell, based on the categories that drive their business. While we see some synergies between the two, and us being able to leverage the strength of Shoe Carnival purchasing power, there are some distinct differences between the two businesses. Not to say that with vendor support, we might try a few things, but the assortments have distinct differences targeted at a distinct customer, and we’ll continue that.

[Jim Chartier:]

Great, thank you.

[Operator:]

Our next question is from Mitch Kummetz with Seaport. Your line is open.

[Mitch Kummetz:]

Yes, thanks. I just have a couple of quick follow-ups. Mark, on the remodels, I know you’re early in the process but you could maybe speak to the lift that you’re seeing as you remodel those stores, whether it’s productivity or margin or whatever metrics you can speak of?

[Mark Worden:]

We’re seeing strong consumer feedback, conversion is exceeding our expectations, and comps are very strong. To be honest, it’s hard to unpack within the strong growth we had, the 23% in the fourth quarter, the different elements, but anecdotally it’s driving all of those core metrics the right way, and most importantly the profitability and contribution per square foot are ahead of our expectations.

[Mitch Kummetz:]

Okay, great. Then Carl, you’ve spoken to the strength of non-athletic. Can you remind us when that really started to kick in and how you think about the first half of this year, particularly around sandals? I don’t recall how strong that business was for you last year. I know that that can revolve around a lot of occasions, whether it’s Easter, Mother’s Day, graduation, things like that. I’m kind of curious if you feel like there’s an opportunity there versus last year, even.

[Carl Scibetta:]

Sure Mitch. We saw a change to more special occasion, dress up, go out kind of footwear starting mid-April last year. Fortunately, we were very well positioned with inventory and were able to take advantage of that for the majority of the second quarter. Now, that inventory got depleted and we have been aggressively chasing that, so I do see that opportunity first quarter this year to be very strong, second quarter as more social occasions - graduations, weddings, those things are happening, continuing through, and I see great opportunity in the second half of the year as we will be in a much better inventory position.

[Mitch Kummetz:]

Okay, great. Thanks again.

[Operator:]

Our next question is from Sam Poser with Williams Trading. Your line is open.

[Sam Poser:]

Thank you for taking my follow-up. Two things - one, where do you expect the Shoe Station stores, when you’re looking at markets, are you looking at backfilling, are you looking at new markets? Can you give us some color there?

[Mark Worden:]

Yes, we aim to grow rapidly in the southeast market. We’re starting first with the strategic stronghold that Shoe Station has in that Alabama and Mississippi, Georgia, Florida, Louisiana region, and the lion’s share of our near term growth will be bringing the brand to the consumers who already know and love them but don’t have access to. From there, once we fill that in, we expanding further, but the southeast market remains the focus of these growth numbers we’ve talked about in the near term.

[Sam Poser:]

Thanks, and then Carl, just wanted to make sure that--you know, you define athletic a little differently than some other retailers do, so can you provide a little color as to what does and does not work into your athletic businesses, because there are certain brands and so on that I know other people categorize as athletic and you do not.

[Carl Scibetta:]

I’ll say this - no matter where we categorize it, the numbers I quoted you were the total brand, not necessarily what category we put that particular brand in. We define athletic footwear as brands you could do a sport in, not a brand that is purely a fashion in and out.

[Sam Poser:]

Right, so for instance, the Nikes, the Asics, the Brooks, the Adidas, the Reeboks, those are all athletic?

[Carl Scibetta:]

Correct.

[Sam Poser:]

And the Skechers is not, Vans and Converse are, is that the right way to think about it? I mean, Skechers in general, they do have some running shoes.

[Carl Scibetta:]

In general, yes.

[Sam Poser:]

Okay, because obviously people do categorize a lot of Skechers shoes in their athletic, and you put it outside of it as well as other--

[Carl Scibetta:]

Sam, I would say--

[Sam Poser:]

--athletically influenced brands.

[Carl Scibetta:]

I would say with that brand, that brand covers every bit and every category we have as a company from accessories to sandals to athletics to men’s, women’s. That brand is scattered throughout the entire building, and when I look at that brand, I only look at the piece of athletic that fits into athletic.

[Sam Poser:]

Got you, okay. Thanks very much. Again, continued success.

[Carl Scibetta:]

Thanks Sam.

[Operator:]

We have no further questions at this time. I’ll turn the call back to the presenters for any closing remarks.

[Mark Worden:]

Thank you all for joining Shoe Carnival today. Growth momentum is incredibly strong and we are excited to put up another record year as we head forward throughout the year. Thank you all.

[Operator:]

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating and you may now disconnect.