Shoe Carnival Inc (NASDAQ: SCVL) Q1 2023 Earnings Call dated May. 24, 2023.
Corporate Participants:
Mark J. Worden — President and Chief Executive Officer
Carl N. Scibetta — Senior Executive Vice President – Chief Merchandising Officer
Erik D. Gast — Executive Vice President – Chief Financial Officer
Analysts:
Mitch Kummetz — Seaport Research — Analyst
Presentation:
Operator
Good morning and welcome to Shoe Carnival Inc.’s Fiscal Year 2023 First Quarter Earnings Call. Today’s conference is being recorded. It is 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 and today’s earnings press release. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today’s date. The company disclaims any obligation to update any of the risk factors or to publicly announce any revisions to the forward-looking statements discussed on today’s conference call or contained in today’s press release to reflect future events or developments.
I’ll now turn the conference over to Mr. Mark Worden, President and CEO of Shoe Carnival for opening remarks. Mr. Worden, you may begin.
Mark J. Worden — President and Chief Executive Officer
Good morning everyone and thank you for joining us today for Shoe Carnival’s first quarter 2023 earnings conference call.
Joining me on today’s call are Carl Scibetta, Chief Merchandising Officer and Erik Gast, our new Chief Financial Officer. Erik joined the company a few weeks ago and we are excited to have him on the team and to engage with the investment community ahead.
Let me start out today saying that Q1 was a challenging quarter. While we continued to make significant progress against our long-term strategies and achieved many important milestones, we saw softer than expected consumer trends develop in March and April and unseasonable weather persist throughout quarter end. The biggest headwinds that our customer faced in Q1 were persistent inflation across everyday expenses they need to spend on, interest rates continuing to climb and unexpectedly federal tax refunds ended the quarter with a nearly 10% reduction versus the prior year. Historically, our traffic and sales surge when our customer receives their annual tax refund. This year, the reduced tax refund announced did not generate traffic levels as prior year. These headwinds resulted in store traffic declining approximately 10% versus prior year. What we saw was a segment of customers from lower income households who had stretched disposable income they delayed their shopping trips for footwear, apparel and accessories. Furthermore, spring weather did not improve in the second half of the quarter as unseasonably cold, wet conditions persisted across most of markets. This resulted in a sandal season that did not meaningfully start during March or April. All combined Q1 sales and earnings finished at the low end of our annual expectations.
We see a pathway to deliver the low end of our original annual guidance if economic conditions improve this summer. However, we do not have clear visibility to when the economic landscape will turn positive. As such, we are reducing our annual sales and our profit guidance to reflect the short-term economic uncertainty. Erik will review the updated guidance shortly.
Despite the challenging economic backdrop, I’m incredibly thankful for our nearly 6,000 team members’ commitment to delivering the preferred footwear shopping experience. Their focus on advancing our long-term strategies led to many wins and has us in a strong financial and operational position to accelerate profitable growth as soon as we have visibility to the economic landscape improving.
I’ll now provide an overview of the company’s key strategic progress and results of the quarter. First, the achievement I’m most energized about is how fast we grew our loyal customer base this quarter. Customer membership surged to a record 32.7 million at quarter-end, growth of 12% versus the prior year. This is the fastest expansion of members in any quarter over the last three years. Although a segment of customers are currently not in a strong buying position, they’re still engaging actively with retailers they love and making decisions on where they will shop for footwear when the economic conditions improve. Simply put, more and more customers every day are picking us.
Our CRM platform has now reached a meaningful scale and has advanced capabilities to engage with the American footwear shoppers wherever and whenever they choose. We now engage ongoing with approximately one out of every eight American adults, up nearly 65% from just five years ago. Our commitment to providing this group the preferred family footwear shopping experience has customers rapidly choosing to become a part of our Shoe Perks customer loyalty program. With this largescale customer reach, 70% of our sales now come from our loyalty members at a very efficient cost to engage. We continue to see this a core advantage of our company and are confident we will keep growing our customer base this year and in the years ahead.
Second, we continue to deliver gross profit margins of over 35% for the ninth consecutive quarter. Over the last few years, we have sustainably transformed our margins from among the lowest tier in our industry to the top tier. We’ve done so by leveraging our deep customer relationship management capabilities and analytics to engage profitably with our customers, to provide the freshest in-demand products they want at the right value and to deliver the customer the preferred shopping experience. As a benchmark, the 35% gross profit achieved this quarter is growth of over 500 basis points from just four years ago.
Our customer sales conversion climbed this quarter to the highest level in nearly two years. The customer that is ready to make a footwear shopping trip in this challenging economy, is finding the brand and shopping experience they love at Shoe Carnival and Shoe Station stores. Our compelling assortments at the right value for our target customers generated not only strong margins and conversion growth, but resulted in yet another quarter of market share growth for our company. Given the current economic landscape, we have prioritized reducing our inventory levels, sustaining healthy margins, and building an even stronger financial position for future growth, while also providing our customers the freshest products for the remainder of 2023.
Progress is encouraging on all fronts and Carl and Erik will elaborate more shortly, but here are the headlines. We ended 2022 with inventory up $105 million versus the prior year, with plans in place with our vendor partners to right size this level rapidly during 2023. I’m so pleased with the progress made already as we ended Q1 with approximately $45 million more inventory versus prior year, chipping away about $60 million during the quarter. Importantly, we are not reducing inventory levels by dumping product in the market nor drastically eroding margins.
The hard work on this inventory reduction topic is complete. Receipts and inventory flows are updated. We continue to have our inventory fresh with no material aged inventory concerns. I can share we remain confidently on track for inventory to be below prior year levels after back-to-school and on track to deliver our annual guidance to be approximately $40 million below prior year inventory by yearend. Our merchants’ team has done an excellent job managing the balance of freshness, margin delivery, and inventory levels, as always demonstrating they along with our partners are best-in-class. Carl will elaborate on inventory in a moment.
Our athletic inventory position has also materially improved versus last year. As you’ll recall, vendor supply chain issues disrupted our on-hand inventory for back-to-school 2022 and we disappointed some of our athletic shoppers last year. This year we have the athletic brand assortment depth and freshness in hand that we did not have last year. While I’m not saying the customer economic issues driving soft traffic will be solved in Q2, I do see we are in a position to continue to grab athletic market share this year convert to very high levels and maintain our healthy gross profits in this declining market environment we face.
Our store development plans continue to advance with success. The Shoe Carnival fleet modernization continues to roll out rapidly and it’s on track for approximately 60% of the chain to be completed at fiscal end. We see this as a key contributor to our sales conversion growing and a differentiator to our customers who are rewarding us with continued market share growth.
New Shoe Station store growth continues to deliver on our expectations. One of our big wins has been the market entry into Birmingham, Alabama, grand opening two stores over the past six months. These stores are pacing to be among the strongest in the Shoe Station fleet and in the top tier of stores across the entire corporation. We’re seeing great success as we bring our new Shoe Station prototype store to customers in adjacent markets. These expansion wins give us confidence to advance methodically on a roadmap to reach a 100 stores for Shoe Station and over 500 stores for the corporation in 2028.
We are seeing our Shoe Station banner show positive signs over the past weeks. With Shoe Stations more affluent customer base, the addition to our CRM platform and the launch of the online platform, Shoe Station is outperforming the overall company. Sales for Q1 declined single digits compared to Shoe Carnival low double digit. However, over the past few weeks, the Shoe Station banner is building momentum and growing mid-to-high singles. We continue to see Shoe Station capable of growing in the quarters ahead despite the economic headwinds discussed.
The bottom line for the quarter is that customer traffic was disappointing due to unfavorable near-term macro conditions and unseasonable weather. Yet our foundations were stronger than ever. Customer growth accelerated to a record level. Gross margins sustained at very high levels. Customer conversion surged on fresh product, great value and experiences. Inventory levels are rapidly progressing in line and athletic positions are where we want for back-to-school season ahead. We’re focused on executing our winning strategic plans on the path to become a multi-billion dollar retailer in 2028 and providing our shareholders with the top-tier returns in our sector. I am confident in the American consumer resilience and in our economy returning to health ahead. When it does, we are ready to rapidly accelerate growth.
I would now like to ask Carl to provide further color on the quarter and year ahead. Carl?
Carl N. Scibetta — Senior Executive Vice President – Chief Merchandising Officer
Thank you, Mark. As highlighted, today’s first quarter performance was below our expectations. Persistent inflation and the large reduction in tax refunds were major factors that affected Q1. In addition, the cool weather we called out in March continued the remainder of the quarter. We anticipated that the weather will have normalized the back half of the quarter and unfortunately that number materialized. As a result, sales in seasonal categories did not hit our expectations and contributed to the shortfall.
With that said, we continue to focus on driving our strategic objectives, which include connecting with our consumers, using our CRM program to maximize sales, reducing our inventory throughout the year and continuing to deliver our transformational product margin.
By categories, first quarter comp sales in women’s non-athletic footwear were down low double digits with dress and boots being down over 20%. Sales in women’s sandals were negatively affected by the late arrival of spring and comp sales were down high teens in the category. Sport and casuals were the bright spot with sport down low single digit and casuals increased mid-single digits. Men’s non-athletic comps were also down low double digits with casuals down mid singles. Men’s dress was down low double digits and boots down high teens. Children’s comp sales were down high singles with non-athletic flat and athletic down low teens.
Comp sales in adult athletic footwear were down low teens. Due to the late start of new seasonal selling and enhanced promotional activity in the marketplace, merchandise margins were down, however remained up 750 basis points over pre-pandemic levels. This further demonstrates the transformation of our promotional strategy.
Our outstanding team of merchants continues to collaborate closely with our vendor partners, ensuring the appropriate flow of products to our stores. Our best-in-class vendor relationships are enabling us to adjust to the consumer demand. The result we see inventory is reducing as we move through the year. We entered first quarter with inventory up 36.9% versus the previous year. First quarter ending inventory was up 13% versus 2022. We expect as we end the third quarter inventory levels will be below 2022 levels and we anticipate we will finish the year at the previously stated level, approximately $40 million below fiscal 2022 ending inventory. Currently our inventory content is clean and we see no reason to aggressively promote distressed inventory to achieve our goals.
As we move into the back-to-school timeframe, we will be in a much better inventory position versus 2022 with the most desirable key athletic brands. This will position us to maximize the sales opportunity during this critical selling season. Diligently managing our inventory flow will ensure our stores are stocked with the most desired product offerings that are time appropriate as we move through the second quarter and the balance of fiscal 2023. This reduction will further support our store modernization as well as our aggressive store growth plans.
Our best-in-class CRM program continues to drive loyal customer growth. We have seen success engaging with our loyal consumers with targeted offers. This program continues to drive sales and plays a key role in maximizing margins or reducing inventory levels. Using this data enables us to communicate to our over 30 million, 32 million consumers and continues to maximize sales opportunities without reducing margins below expectations.
With that, I will turn the call over to Erik for a review of our financials. Erik?
Erik D. Gast — Executive Vice President – Chief Financial Officer
Thank you, Carl and good morning, everyone. First, I joined Shoe Carnival in late April and I’m appreciative of the collective team and how they have supported me in the transition from Kerry Jackson, the previous CFO. Kerry, as you know, was here 35 years and recently retired. I am looking forward to continuing the good work he started and working with the team at Shoe Carnival.
Having worked over 30 years with most of that time in retail, I look forward to sharing experiences and collaborating with the Shoe Carnival team. The company has long-term plans to grow to over 500 stores and become a multi billion dollar retailer in 2028, and I am excited to be a part of it. Now moving to the financial results. In my remarks I will compare our first quarter results with the first quarter of 2022, noting comparison to 2019 if needed for context.
Starting with revenues. Our net sales in Q1 were $281.2 million. This is down 11.4% on a comp decline of 11.9% versus prior year. To offer some perspective, while representing a larger than expected decline, the sales were the third highest first quarter in company history. The comp decline was driven by an approximately 10% reduction in traffic. Our consumers are being negatively impacted by inflation and lower tax refunds. Lack of normal seasonal weather shifts driven by cooler weather patterns was also a contributing negative factor resulting in spring seasonal product down by over 20% to prior years. Shoe Station banner sales came in at a mid-single digit decline versus Shoe Station banner sales at a low double digit decline.
Q1 gross profit margin was 35%, reflecting the ninth consecutive quarter at or exceeding 35%. The margin reflects continued advancement in our CRM capabilities, resulting in high customer conversion and increased loyalty members as Mark discussed. The gross margin represents an increase of over 500 basis points compared to pre-CRM implementation and pre-pandemic in 2019. Compared to prior year, merchandise margins decreased 30 basis points, reflecting our promotional intensity. Buying, distribution, and occupancy costs declined however. We are de-leveraging by 20 basis points as a result of the sales declines. The buying, distribution and occupancy expense reductions were primarily the result of the absence of the high distribution cost experienced in the prior year with a return to more normal levels this year.
SG&A expense in Q1 was $77.6 million, while essentially flat in cost to the prior year was de-leveraging to 27.6% as a result of the sales decline. Overall, SG&A expenses were under plan with increases in depreciation associated with our store modernization program and healthcare costs offset by reduced selling costs when compared to the prior year, Q1 operating income was $20.9 million or 7.4% of sales. This is at the low end of our expectations.
Net income for the first quarter of 2023 was $16.5 million or $0.60 in diluted earnings per share. Although this was our third highest Q1 diluted EPS with only 2022 and 2021 being higher, this was at the low end of our expectations. We closed out the quarter with inventory of $389 million, which was up approximately $45 million compared to the prior year or 12.3% on a per store basis. The increased inventory reflects an improved athletic merchandise assortment from back-to-school shopping this year and the increase of $45 million compares to $105 million higher than the prior year of just three months ago. After back-to-school shopping we do expect inventory to be lower than last year and be approximately $40 million lower by yearend 2023 compared to yearend 2022. We continue to have ample liquidity to fund our growth initiatives.
At the end of Q1, we had total cash, cash equivalents and marketable securities of $44 million and no outstanding debt. As of the end of 2022 the company has maintained no debt for the 18th consecutive year and continued funding its operations without debt through the first quarter. During the quarter, there were no share repurchases. We currently have the full amount of $50 million available for the share repurchase program. Given the Q1 results driven by traffic declines and consumer trends, we now are updating our sales guidance for fiscal 2023 to down 3% to down 6% compared to the prior range of down 2% to up 2%. We are expecting gross profit margin to be between 36% and 37% versus prior guidance of approximately 37%. For the year, including the extra week, we are lowering our diluted EPS guidance to $3.60 to $3.85 from previous expectations of $3.96 to $4.20.
In closing, allow me to share some initial observations about the company. There are headwinds upon the industry. We highlighted them, macroeconomic conditions, promotional intensity, and higher inventory. However, I am encouraged about the company. We have no debt. We are producing product and gross margins that are up meaningfully in a transformative way versus pre-pandemic periods. Plans are underway to reduce the inventory and are being implemented as evidenced by the current quarter reductions. The business has solid financial fundamentals to build and grow upon that can outlast an economic downturn. There is an ample growth opportunity for the business. I am glad I am here and look forward to working with the team and all of you.
This does conclude our financial review. Now I would like to open the call up for questions.
Questions and Answers:
Operator
Thank you. [Operator Instructions] Your first question comes from the line of Mitch Kummetz with Seaport Research. Please go ahead.
Mitch Kummetz — Seaport Research — Analyst
Yes, thanks for taking my questions and I’d like to welcome Erik. Let me start with the guide. Can you update us on SG&A and either operating margin or EBIT for the year? There’s nothing in the release and I didn’t hear anything in your comments, but I think you previously had given guidance on those line items?
Erik D. Gast — Executive Vice President – Chief Financial Officer
Sure, Mitch, and thank you for that kind welcome. SG&A as you know in our previous guidance we called out approximately 25.6%. As we look through the balance of the year, we continue to look for cost management and as we look through operating income, you can see that our EPS does reflect that continued management. So the guidance that we would give is that our percentages are going to be consistent with what we’ve provided in the original guidance. There will be some increased basis point changes possibly in the range of 30 to 50 basis points.
Regarding operating income. Regarding operating income, we’ve talked about the original guidance at 11.4%. Really we’re looking at a range of there is going to be some impacts to the operating income in the range of 40 to 100 basis points as a result of the sales decline.
Mitch Kummetz — Seaport Research — Analyst
Got it. All right. Thanks for that. And then just looking at the revised sales guidance, obviously it came down for the year, but it looks like at least I can kind of back into growth that’s sort of flat to maybe up low single digits over the balance of the year, on a year-over-year basis, which is obviously better than what you achieved in the quarter. Can you just elaborate on why that is, that just, that we’re past tax refunds, do you expect the weather to be more normal? I’m just kind of curious your assumptions around the consumer to kind of get to those numbers. And also if there’s any color you can kind of provide by quarter, I would guess that you’re maybe most optimistic around 3Q just given, what you said around back-to-school and better athletic inventory, but maybe some more color there would be helpful?
Mark J. Worden — President and Chief Executive Officer
Hey, Mitch, it’s Mark. Thanks for joining today. Yes, you got it right with those key elements. We see back-to-school being significantly improved versus last year. As I shared on the call, our athletic inventory positions, it’s in hand, it’s fresh and it’s far superior. So the supply chain disrupted back-to-school we had last year. We think that’s going to come in Q3 Mitch. We’re still seeing the macro headwinds in Q2. But I — we believe our Q3 position is ready to go for back-to-school and then moderate as the year continues on, as inflation continues to get more and more in control.
I think the second thing you talked about that is encouraging and I talked briefly about it as the weather has turned our Shoe Station business is getting some good momentum along with the new stores as Shoe Station, the.com going live, CRM going live. Yes, we’re growing nicely as we progress into this Q2, and we see that continuing to accelerate as the year goes on. So we’re really highlighting that we think Shoe Carnival’s segment of customers that are really hit by the inflation. It’s that small segment under a third of our customers. That’s the variability that we’re just not sure yet when that customer’s going to be healthier, which quarter that’s going to turn. Soon as it does, we’re in great shape to start accelerating growth.
Mitch Kummetz — Seaport Research — Analyst
Got it. And then Carl on sandals, I know they were challenged in the quarter. I believe that, Q2 is by far your largest sandal quarter. What are you thinking there? Do you think there’s pent-up demand for the category and how do you feel about, your sandal inventory and your ability to kind of work through that in Q2?
Operator
I’m sorry. This is the operator. Could you start again? The line is coming in broken.
Mitch Kummetz — Seaport Research — Analyst
Okay. Hopefully you guys can hear me better now. The question has to do about sandals. I was asking Carl about sandals and obviously it didn’t perform well in the quarter, but I was curious if you feel like there’s, with Q2 being your biggest quarter for sandals, do you think there’s pent-up demand and how do you sort of expect that to play? How are you planning that for the second quarter especially kind of working through whatever sandal inventory you have?
Operator
[Technical Issues] I’m sorry, this is the operator. It seems as though we’re having some technical difficulties with the speaker line. We’re going to try to rectify them. One moment please, the conference will continue momentarily [Operator Instructions] We will continue with Mitch Kummetz’s question.
Mitch Kummetz — Seaport Research — Analyst
So I don’t know if you guys heard my question about sandals. It’s really for Carl. Just curious about your outlook for 2Q that being your biggest sandal quarter, wondering if you think there’s any pent-up demand just given the challenges in the first quarter, and also how you’re expecting to, work through your sandal inventory given the shortfall on Q1.
Carl N. Scibetta — Senior Executive Vice President – Chief Merchandising Officer
Sure. Mitch, thanks. We do believe starting to see some movement on sandal business as we have consistent warm weather that has hit apart most of the Midwest. So we’re encouraged by some very recent sandal business in the Shoe Carnival business, Shoe Station business. And actually started a bit earlier. Pretty much I believe based on the geographics of that business and a higher income consumer that tends to shop earlier.
In regards to the inventory, we have made the necessary adjustments as we move forward with our position on sandals based on fourth quarter results. And we anticipate ending the season in a better inventory, more reduced inventory position than we did last year. So we’re confident we’ve got that business under control.
Mitch Kummetz — Seaport Research — Analyst
All right. Thanks. I’ll just get back in the queue.
Operator
[Operator Instructions] And there are no further questions at this time. I will turn the call back to — oh, sorry. We do have a follow-up from Mitch Kummetz. Please go ahead.
Mitch Kummetz — Seaport Research — Analyst
Okay. I thought there’d be other people. So I guess my other question or one of my other questions was just on the BOGOs, you talked about the gross margin. Obviously it was down year-over-year, but still way up from four years ago, particularly on the merch margin side. I am curious, you guys still do BOGOs, but you do them very differently than before. Is there any way you can comment on the margin of the BOGOs? Is there any way you can kind of isolate that and talk about how that’s different from what it was four years ago?
Mark J. Worden — President and Chief Executive Officer
Sure. I’ll take that. Any BOGO promotion that we run, and we only do it a couple times a week on seasonal product that we have purchased at a very adventitious price. So they’re planned in on selected items. And the margin on them during BOGO actually is in line with the total company margin and in fact in some cases there is margin increase. So they’re limited time, very targeted product and merchandise that was bought for that intent.
Mitch Kummetz — Seaport Research — Analyst
And so how does that compare from like four years ago when it was more of an all store BOGO? I assume that those margins were dilutive to the total, but I mean, have you seen like within kind of the BOGO piece, I mean is like the margin 1,000 bps better than it was four years ago, or is there any way you can again sort of isolate how much that’s improved and how much of that’s kind of a story for the overall margin expansion of the business?
Mark J. Worden — President and Chief Executive Officer
Sure, Mitch. That is definitely the story. The BOGOs that we used to run included the entire inventory. They weren’t targeted and the margin was, you’re pretty much [Technical Issues] about 1,000 basis points dilutive to the margin we run today on the very selected BOGO products. So that is a major factor in the transitional margins we’ve been producing.
Mitch Kummetz — Seaport Research — Analyst
Got it. And then maybe one last from me, just on back-to-school and athletic. Carl, can you speak to how much better the athletic inventory is versus last year? I don’t know if you can kind of speak to it in percentage terms, and then just remind us of the athletic comparison that you’re going up against for back-to-school? I assume it’s a pretty easy comp.
Carl N. Scibetta — Senior Executive Vice President – Chief Merchandising Officer
Yes, it is. The athletic inventory, if we go back historically we looked at last year, our athletic inventory was really hampered by supply chain. We received quite a few delays with [Technical Issues] late August into September and really missed the back-to-school timeframe. And in addition to that, we had many products that we purchased that frankly we never got. So from an athletic standpoint, I see a major improvement also in products, but in the quality of the brands and the quality of the products we have. We anticipate our athletic inventory as we go into the back-to-school timeframe being up in the teens. But it’s really that the quality of the inventory that we have and the timing of the delivery of that inventory actually ending July in the mid-teens and as we moved through the early part of August around 20%.
Mark J. Worden — President and Chief Executive Officer
And then, yes, Mitch, I’ll give you one point. So if you look at comps last year to remind you in Q2 was down 13.8% and it was really driven by between 15% and 20% to declines in comp in June and July during that period where our supply chain was really disrupted. So we see that as an opportunity with this great position Carl talked about to claw back and gain market share, and have a much more solid Q2 than we did last year.
Mitch Kummetz — Seaport Research — Analyst
Okay. And then and then I guess maybe one last one from me, just on the loyalty Mark. I know that Shoe Station is now plugged into Shoe Perks and has access to all of those loyalty members. What have you seen there? Have you seen some of those customers buying product from Shoe Station, especially maybe some brands and some price points that they didn’t have access to in the Shoe Carnival stores?
Mark J. Worden — President and Chief Executive Officer
We do. We see we’ve got almost 2 million people already have joined Shoe Perks on the Shoe Station side. I would see a great opportunity to grow that rapidly. So we’re just starting now to engage with them and we are, we’re seeing them buy purchases in different price tiers now that they can cross shop. We’re seeing them engage with different categories that they haven’t had before. And importantly, we’re seeing the direction too, where the Shoe Carnival, Shoe Perks members are also being introduced to new products from the new brand too that aren’t offered. This is a big opportunity for cross introducing over the quarters ahead and really fueling growth.
Mitch Kummetz — Seaport Research — Analyst
All right. Thanks, guys. Good luck.
Mark J. Worden — President and Chief Executive Officer
Thank you, Mitch.
Operator
There are no further questions at this time. I will turn the call back to Mr. Mark Worden.
Mark J. Worden — President and Chief Executive Officer
Thank you all for joining us for today’s call and thank you for bearing with our technology struggles there for a moment. We look forward to talking to you all again as we get into the back-to-school season and have Q2 report.
Operator
[Operator Closing Remarks]