In a recent earnings call, Academy Sports + Outdoors (ASO) reported a mixed performance for the fourth quarter and full fiscal year 2023. The company saw a slight increase in sales during the quarter, reaching $1.8 billion, but experienced a 3.6% decrease in comparable store sales. Despite this, Academy improved its gross margin rate to 33.3%.
Looking forward, the company has provided guidance for fiscal 2024, projecting net sales between $6.07 billion and $6.35 billion, with comparable sales growth ranging from negative 4% to positive 1%. Academy's leadership highlighted plans to open 15 to 17 new stores in 2024 and to focus on enhancing the customer experience, productivity, and supply chain efficiency.
Key Takeaways
- Q4 sales increased to $1.8 billion, up 2.8% year-over-year.
- Comparable store sales decreased by 3.6% in Q4.
- Gross margin improved by 50 basis points to 33.3% for the quarter.
- Net income for Q4 stood at $168.2 million.
- Fiscal 2024 guidance anticipates net sales of $6.07 billion to $6.35 billion.
- Comparable sales growth for fiscal 2024 is expected to range from -4% to 1%.
- The company plans to open 15 to 17 new stores in 2024.
Company Outlook
- Academy Sports + Outdoors aims for 160 to 180 new stores over the next five years.
- Online sales are targeted to reach 15% of total revenue.
- The company is prioritizing value proposition and omni-channel capabilities.
Bearish Highlights
- Economic uncertainty has led to a conservative model of -4% to +1% comp for 2024.
- SG&A expenses de-levered by 80 basis points in Q4.
- Anticipated soft performance in Q1 of the next fiscal year.
Bullish Highlights
- Gross margin rate is expected to be between 34.3% and 34.7% for fiscal 2024.
- GAAP net income is estimated to be between $455 million and $530 million.
- Free cash flow is projected to be $290 million to $375 million, including capital expenditures.
Misses
- Full year 2023 sales saw a negative 6.5% comp.
- Inventory levels stood at $1.2 billion at year-end.
Q&A Highlights
- The company has gained market share in key categories.
- New store openings are focused on mid-sized markets.
- Long-term customer relationship management initiatives are underway.
Academy Sports + Outdoors, facing the challenges of a dynamic retail environment, is striving to maintain steady growth and market share. The company's leadership remains committed to improving the customer experience and investing in key areas of the business to ensure long-term success. With strategic plans in place, Academy Sports + Outdoors is poised to navigate the uncertain economic landscape while aiming to deliver value to customers and stakeholders alike.
InvestingPro Insights
In light of Academy Sports + Outdoors' (ASO) recent earnings report, several key metrics and insights from InvestingPro offer additional context to the company's financial health and stock performance. The company's management has been proactive in capital allocation, as evidenced by aggressive share buybacks, which can signal confidence in the company's value and future prospects. Furthermore, analysts have taken a positive stance on ASO, with four analysts revising their earnings upwards for the upcoming period, highlighting potential upside for the company's financial performance.
InvestingPro Data metrics provide a snapshot of the company's valuation and profitability:
- The Market Cap stands at $4.78 billion, reflecting the company's size and market valuation.
- A P/E Ratio of 10.63 suggests that the stock may be reasonably valued compared to earnings, with an adjusted P/E Ratio for the last twelve months as of Q3 2024 even lower at 9.48.
- The company has demonstrated profitability over the last twelve months, with a Gross Profit Margin of 34.13%, which aligns with the gross margin rate improvement reported in the earnings call.
InvestingPro Tips further reveal that the stock has experienced a significant price uptick over the last six months, boasting a 38.01% return. This momentum, along with the company's ability to cover interest payments with its cash flows and maintain liquidity with assets exceeding short-term obligations, paints a picture of financial resilience.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available, including insights into the company's long-term return performance and profitability predictions for the year. These tips, along with real-time data, can be found at https://www.investing.com/pro/ASO. Additionally, users can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to a total of 10 InvestingPro Tips that provide a comprehensive view of ASO's investment potential.
Full transcript - Academy Sports Outdoors Inc (ASO) Q4 2023:
Operator: Good morning, ladies and gentlemen, and welcome to the Academy Sports and Outdoors Fourth Quarter and Fiscal Year and 2023 Results Conference Call. At this time, this call is being recorded. [Operator Instructions] I would now like to turn the conference over to Matt Hodges, Vice President of Investor Relations for Academy Sports and Outdoors. Matt, please go ahead.
Matt Hodges: Good morning, everyone. And thank you for joining the Academy Sports and Outdoors' fourth quarter and fiscal 2023 financial results call. Participating on the call are Steve Lawrence, Chief Executive Officer; and Carl Ford (NYSE:F), Chief Financial Officer. As a reminder, statements in today's earnings release and the comments made by management during this call may be considered forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results, to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to the factors identified in the earnings release and in our SEC filings. The company undertakes no obligation, to revise any forward-looking statements. Today's remarks also refer to certain non-GAAP financial measures, reconciliations to the most comparable GAAP measures are included in today's earnings release, which is available at investors.academy.com. Please note that we have posted a supplemental slide presentation on our website, to accompany today's earnings release. I'll now turn the call over to Steve Lawrence for his remarks. Steve?
Steve Lawrence: Thanks, Matt. Good morning to everyone, and thank you for joining us on our fourth quarter earnings call. During our call today, will provide details on the results for both Q4 and 2023 full year. We'll also share a progress update on achieving our long-range goals, and our thoughts on initial guidance for 2024. First, I'd like to start with our Q4 performance. As you saw from the results we announced earlier this morning, we had an improvement in our trend during the fourth quarter, with sales coming in at $1.8 billion, which was up 2.8% in total, and translated into a negative 3.6% comp. This was a 400 basis point improvement in comp sales trend, versus the negative 7.6%, we ran during the first three quarters of the year. Our adjusted earnings per share for the fourth quarter, came in at $2.21, an increase of 8% versus last year. We would characterized the cadence of the quarter, as reverting back to the traffic patterns and volume progression, that we traditionally saw pre-pandemic. There was less pull forward of demand in early November, than we'd experienced over the last couple years, when customers shopped early based on scarcity of supply. We then saw the traditional acceleration in business, during Thanksgiving and Cyber Week, followed by a lull in traffic during the middle part of December. We finished holiday with a strong surge of sales and traffic, the week leading up to Christmas, but sustained into the post-Christmas time period and early January. The sales increase we ran in December made it the strongest month of both the quarter, and the past year. Based on these results, when you pull back and look at the full year 2023 sales, we came in at $6.2 billion or negative 6.5% comp. These results were at the high end of our annual guidance and on a 52-week basis remain roughly up 25%, versus pre-pandemic levels. Moving on to gross margin, the quarter came in at 33.3%, which is a 50 basis point improvement above last year. This increase was primarily driven, by inventory and freight savings, partially offset, by our merchandise margins. Holiday season played out as we anticipated. It was more promotional than the past couple of Christmases, but still not back to the discount levels that were common pre-pandemic. For the full year, our gross margin rate came in at 34.3%, or 30 basis points below last year, which was at the high end of our guidance, remains roughly 500 basis points higher than the margins we ran pre-pandemic. A combination of sales and margin performance, allowed us to generate adjusted earnings per share, for the full year of $6.96. Now I'd like to give you an update on our progress, against the long-range plan goals we issued in April of 2023, and our path towards achieving them, as we move forward. 2023 was a busy year for us, and we made progress across multiple fronts. We opened 14 new stores, which is five more stores than we opened in 2022. The team is applying learnings for the prior year's openings, and as a result, these stores are projected, to have a higher year one volume, than the '22 vintage. We also installed our new customer data platform, which is going to be a huge unlock for us moving forward, as we gain greater insights into our customer shopping patterns. This new tool, allows us to increase, our targeted marketing capabilities, which we believe will drive more store visits, and greater sales through our conversion rates. The team also laid the groundwork, for the launch of our new Warehouse Management System, or WMS for short, which we'll be rolling out, to all of our distribution centers over the next 18 to 24 months. We're also proud to give back to the communities we serve. 2023, through direct giving, partnership support, merchant-wise discounts, various organizations, Academy distributed over $30 million of our customers and local and national charities. Another important accomplishment for us, was the strengthening of our executive team, with the addition of Chad Fox as our new Chief Customer Officer, and Rob Howell as our Chief Supply Chain Officer. In addition to these two talented and experienced executives, coupled with combining supply chain and stores under our President, Sam Johnson, provides the right structure and team, to help accelerate our progress against our long range goals. While we made good headway across multiple fronts. One place we failed to make progress, is growing our top line sales. We believe that the primary driver of our sales decline, was underlying weakness in our consumer spending on durable goods, due to a weakening in overall consumer health. In that this, we're increasing our focus around delivering an outstanding value proposition, to our customers in order to help them stretch their wallet, as they outfit their family, for all of their sports and outdoor activities. A great example of this, is a promotion we just ran to kick-off baseball in early March. The team created a package, where we provided a parent all the gear their child would need to start T-ball, including a glove, hat, helmet, pant and bag, all for under $100. In other cases, we'll be lowering prices in key categories such as bikes and grills, as we head into the summer months. Turning to Slide 5 of the supplemental deck, while we continue to manage through the short-term choppiness in the business, we remain focused on delivering against the long range goals that, we articulated last spring. To reiterate a few of the key metrics, our plan is to grow top line sales to $10 billion plus, generate earnings of 10%, or greater, keep a 13.5% adjusted EBIT margin rate, drive our .com penetration to 15% of total revenue, or greater, and thoughtfully invest in our cash flows into initiatives that drive a 30% ROIC. We learned a lot over the past year, and as we move forward, we'll continue to refine the tactics, for us achieving our long range goals. We've done a deep dive on the 23 stores that we opened up in 2022 and 2023. We're applying the lessons we've learned from these two vintages for our new store opening plans moving forward. Page 7 of the supplemental deck details, how we're fine tuning our forecast, for new store openings. Initially, we modeled 120 to 140 stores, with a year one volume target of $18 million that would mature over five years. The majority of the stores that we've opened up over the past two years have been in newer markets. As we've discussed previously, we're seeing faster ramps in stores open in existing markets. We have higher brand awareness and slower ramps in stores open in newer markets so the customers are less familiar with Academy. Based on this, we're revising our new store forecast for year one sales volume to be, between $12 million to $16 million with a 5-year ramp maturity. The second change, is how we're building out and sequencing our new store pipeline. Moving forward, we'll strive for a better balance each year with roughly half the new stores, being opened in existing markets, and the other half in new, or adjacent markets. It's also important for us to balance our openings by time of year. We've learned that stores open in the first half of the year, get out of the gate faster than stores open up in Q3 and Q4. Based on this, starting in 2025 and forward, building our new store pipeline, to support roughly 50% of the stores for each year, to open up in first and second quarters. Another win is that we've seen strong results in smaller and mid-sized markets. While these stores may have slightly lower volume potential, the favorable expense structure, it takes to run these stores, helps ensure the profitable investments, and clear our ROIC hurdles. As we build out our future pipeline, we're opening the aperture of our consideration set, to include more single or 2-store markets versus focusing primarily on large multi-store markets. Once again, we have balanced approach between various market sizes. Finally, over the past 18 months, we've opened up four new stores in Southern and Central Indiana. While they did not all open in the same weekend, having a cluster of stores that opened in a relative close-time proximity to each other, helps us gain greater efficiencies, across multiple fronts, with the clear win being and driving greater marketing synergy. As we move into 2025 and beyond, our goal will be to go into new markets, with a greater density of new store openings around the same time. The end result of all this work, is that we believe we have an opportunity to open up, even more stores than we initially modeled in our long-range plan. As you can see on Slide 7, our revised new store growth plan now projects 160 to 180 stores over the next five years, with a target of 15 to 17 of them opening up in 2024. The second pillar of our growth strategy is to drive our .com penetration, to 15% of total revenue. On the surface, this doesn't seem like an overly audacious goal, when you consider that many other retailers are already at or above this level of penetration. However, when you consider that we're expanding our store base by greater than 50% during the same time period, it means that we'll have to double our .com sales over the next five years in order to hit this goal, which would characterize as challenging, but achievable. The major driver of this strategy, will be to have a laser focus on the customer, with a mission to seamlessly streamline the shopping experience, across all touch points. This was the primary reason we recently created our new Chief Customer Officer position, and hired Chad Fox to fill this role. We've combine our marketing, customer analytics, and e-commerce teams into one organization to make more nimble while also driving greater synergies across the organization. Chad is a seasoned executive, who has helped other large retailers such as Walmart (NYSE:WMT) and Dollar General (NYSE:DG) accomplish these same goals. He's a data-driven merchant, who's going to help us lever our new customer data platform, drive greater customer engagement, and new customer acquisition. The key focuses for Chad over the next year will be driving increased traffic, to our physical and digital stores, dramatically improving the site experience on both academy.com and our mobile app, improving customer identification and engagement, with the rollout of an expanded loyalty program. The third leg of our growth plan, is to drive greater productivity out of our existing businesses and assets. We've made a lot of progress in upgrading our merchandising, processes and procedures, along with our store execution over the past several years, which has resulted in the volume and margin gains that we've made. While these initiatives are in the middle to later innings, we believe that there's still opportunity, for improvement on both these fronts. But what the Chad and his team are focused on, will also help accelerate growth from these initiatives. While we believe we have the most untapped opportunity to improve efficiency is the work we're undertaking, to strengthen our supply chain infrastructure and capabilities. Hiring Rob Howell, as our new Chief Supply Chain Officer, will be a huge unlock for us as we build out our supply chain capabilities. He's a skilled strategist will help develop a world-class supply chain for Cisco (NASDAQ:CSCO). His deep experience in working with Manhattan, would also help us ensure that the WMS rollout we're embarking on over the next 18 to 24 months, goes as smoothly as possible. In the short term, we're focused on improving our cross-stock with steep flow and speeding up the pace at which we speak to move out to the stores. This will allow us to reduce the average inventory we carry, resulting in increased turnover, while also freeing up cash flow. While I'll also be reviewing the current assumptions in our long-range plan, to identify ways to drive greater efficiencies across all of our existing assets. One preliminary outcome from this review, that we now believe, we can deliver improved utilization of our existing DC network. The result of this is that our forecasted need of a fourth distribution center, will move from a 2026 go live, 2027, or 2028. As you can see, we're making solid progress across multiple fronts. That being said, as we turn our focus to 2024 guidance, the short-term economic outlook remains cloudy. The customer continues to be under pressure, and is being very thoughtful, over when and how, they will spend their money. The upcoming election, coupled with a compressed holiday calendar, also adds a degree of uncertainty to the outlook for the year. Based on these factors, we're conservatively modeling a negative four to plus one comp for next year, which would translate into a negative 1.5% plus 3% total sales growth for the year. We believe this is a prudent base, to build our expense and receipt plans off of, knowing that we can chase the business, if we see the headwinds abate, they'll start trending upward. I'm now going to turn it over to Carl Ford, our CFO to walk you through a deeper dive on our Q4, and full year financial performance, along with an expanded look at our 2024 guidance.
Carl Ford: Thanks, Steve. Good morning, everyone. While our top line in Q4 and full year, was impacted by our customer being financially pressured, we diligently controlled inventory and operating costs, which enabled us to generate healthy cash flows and profits, as well as invest in future growth drivers. I will now walk you through the details of our fourth quarter and full year results. Our fourth quarter net sales, came in at $1.8 billion, with a comp of negative 3.6%. This was at the upper end of our expectations, led by December sales that were higher than last year. So we were pleased with the trajectory change from prior quarters. While customers were financially stressed, they responded to our strong value message, across a broad assortment of products. For the quarter, ticket size increased by 1%, while transactions declined by 5%. E-commerce sales were 14.7% of total merchandise sales, compared to 13.5% in the fourth quarter of 2022. Our fourth quarter 2023, had an extra week of sales. So when discussing divisional sales to last year, we are providing comparable sales by division, instead of total sales, for a more accurate comparison. The best performing division was outdoor, whose sales increased 6.3%, compared to Q4 of last year, driven by strength in hunting and camping. Within camping, the standouts were Stanley and YETI. Both brands did an outstanding job of driving newness through color and product extensions, such as the barware collection that YETI rolled out prior to holiday. Apparel was our second best division, with a 6% sales decrease. We saw growth in work apparel and fleece driven by Carhartt and Nike (NYSE:NKE), offset by declines in outdoor and athletic apparel, footwear sales declined 8.8%. We continue to see outperformance in key brands such as Brooks, Hey Dude, and Nike. One area that struggled was our cleated business. Cleats were one of our last businesses to fully get back in stock, and we faced strong sales from Q4 of last year, that were still being driven, by some scarcity in the marketplace and the World Cup. Last, sports and recreation sales decreased 8.9%. Growth in outdoor cooking and games was offset, by continued weakness in fitness and bikes. For the full year, net sales were $6.2 billion, with comparable sales of negative 6.5%. E-commerce sales were 10.7%, of total merchandise sales, which was the same as last year. Looking at gross margins, the gross margin rate in the fourth quarter was 33.3%, a 50 basis point increase compared to Q4 of last year. Merchandise margins declined, by 40 basis points, and shrink was 37 basis points worse than Q4, of last year. These declines were offset, by inventory and freight savings. For the full year, our gross margin rate, was 34.3%. Freight savings were offset, by merchandise margin and shrink declines, leading to a 30 basis point decline, compared to last year. This is the third consecutive year that our gross margin rate has exceeded 34%. This demonstrates that the merchandising and operational changes, made over the last few years, such as the investments made in price optimization and planning and allocation, as well as better clearance, and promotions management and disciplined inventory management, are now reflected in the long-term margin structure of Academy. We continue to find opportunities in these areas, to drive margin improvement, through technology enhancements, and stronger processes. During the fourth quarter, our SG&A de-levered by 80 basis points. We are focused on managing our cost structure, while investing in the pillars of our long-term growth strategy. More than 75% of the dollars spent above last year, were for investments in our growth initiatives, new stores, omni-channel, customer data, and supply chain. For the full year, over 90% of the SG&A dollar growth, was spent on our growth initiatives. Overall, we controlled inventory, promotions, and expense to deliver net income during the fourth quarter of $168.2 million, a 6.7% increase over last year. GAAP diluted earnings per share was $2.21 for the fourth quarter and $6.70, for fiscal 2023. Adjusted diluted earnings per share was also $2.21 for Q4 and $6.96 for fiscal 2023. Looking at the balance sheet, our inventory at year-end was $1.2 billion, a decrease of 7% compared to fiscal 2022. Total inventory units were down 7.2%, and this includes having an additional 14 stores, compared to fiscal 2022. On a per store basis, inventory units were down 11.8%. We have had a balanced approach to capital allocation since going public in October of 2020. The three pillars of our strategy, are maintaining adequate liquidity for financial stability, self-funding our growth initiatives, and increasing shareholder return. Our cumulative shareholder return, over this time period is more than 500%, driven by operational execution, and more than $1 billion of share repurchases. We've also reduced our debt, by almost $1 billion and paid more than $50 million in dividends. As a result of these actions, Academy is one of the highest returning stocks, from the class of 2020 IPOs. During Q4 and fiscal 2023, Academy continued to generate positive net cash from operations. In Q4, we generated approximately $235 million and $536 million for the full year. We utilized the cash to paydown $100 million of the company's term loan, reducing the outstanding balance to $91.8 million. After the paydown, we have $348 million in cash $484.6 million of total debt, and no outstanding borrowings on our $1 billion credit facility, which was recently amended and extended through March of 2029. During Q4, we repurchased approximately $3 million worth of shares. For all of fiscal 2023, we decreased our net share count by $3.7 million through $204 million in share repurchases. As of the end of the fiscal year, Academy has $697 million remaining on its share repurchase authorization. In addition, the Board recently approved a 22% dividend increase to $0.11 per share, payable on April 18, 2024, to stockholders of record as of March 26, 2024. Heading into 2024, we have the cash to fund our growth initiatives and to continue to execute our capital allocation plan. Turning to 2024 guidance and Slide 8 of the deck, we expect to operate in a challenging economic environment as the current macro dynamics, are still impacting our customers. We are going to run the business as efficiently as possible, while also making investments that support our long-term strategic opportunities, as outlined on Slide 6. Opening new stores, growing our omni-channel business, leveraging our customer data platform, and modernizing and scaling our supply chain. Based on this, Academy is providing the following initial guidance for fiscal 2024. Net sales ranging from $6.07 billion to $6.35 billion. At the midpoint, this is 2% growth compared to fiscal 2023, when excluding the $73 million in sales related to the 53rd week. Comparable sales of negative 4% to positive 1%. Gross margin rate between 34.3% and 34.7%. GAAP net income between $455 million and $530 million, resulting in GAAP diluted earnings ranging from $5.90 per share to $6.90 per share. The earnings per share estimates are calculated on a share count of approximately $77 million diluted weighted average shares outstanding, for the full year and do not include any potential repurchase activity. In 2024, we will no longer be guiding to adjusted net income or adjusted earnings per share. Any adjustments, such as stock compensation, will be provided in the quarterly results. SG&A expenses, which include stock-based compensation expense of $30 million or approximately $0.30 of earnings per share, are expected to be approximately 100 basis points higher than in 2023. Interest expense is expected to be $38 million down from $46 million in fiscal 2023, due to our reduced debt levels. We expect to generate $290 million to $375 million of free cash flow, including $225 million to $275 million of capital expenditures. As we begin a new year, we are focused on addressing our opportunities to return to growth and delivering long-term value to our customers and stakeholders. I will now turn the call back over to Steve.
Steve Lawrence: Thanks Carl. As we turn our focus to 2024 and beyond, we remain committed to our long-range targets. We've taken the lessons we've learned over the past year and if we leverage them, help improve our go-forward strategies. We believe that this refined approach to new store openings, coupled with an increased focus on improving customer experience and driving more productivity of our supply chain, with the keys to driving growth and unlocking value for our shareholders. We've put in place a strong, talented team to help guide the company through our next phase of growth and we're energized and optimistic about the future of our Academy. With that, we'll now open it up for questions.
Operator: Thank you. [Operator Instructions] My first question comes from Simeon Gutman with Morgan Stanley. Please proceed with your question.
Simeon Gutman: Hi guys, thanks for the question. My first question is on thinking about the normalized comp rate for the business. It's three years sort of post-COVID and the business did really well, but it is still coming negative. And I don't know if it's taking longer in your mind to turn the corner or not, but because it is, does that affect the normalized comp rate going forward, especially since you're adding more stores?
Steve Lawrence: Yes, thanks for the question. So, how we would characterize it is we have a challenge customer, not necessarily a challenge strategy. We really believe in obviously the long-range goals that we put forward out there. If you go back, as you pointed out, we obviously had pretty strong growth in - 2020 and 2021, then we saw a pullback in '22. We think that was the start of the rebase lining coming out of COVID that continued into '23. I think as we got through '23, that's why we put some commentary in there around. We're starting to see the kind of the builds on a weekly, monthly basis return to pre-COVID time periods. We feel like we're past a lot of that rebase lining. What we're dealing with right now is primarily a challenge customer, and I think that's pretty well documented. Obviously inflation continues to be pretty high, consumer debt's pretty high. What that's really translating into, is a customer who's behaving in a specific way. They're shopping for newness, they're shopping for value, and they're coming out and shopping at key time periods during the year when they need to shop, whether it's a replacement cycle as a kid starts a new sports season or a gift giving time. And so that's really how we modeled our business and built it moving forward.
Simeon Gutman: And the one follow-up related is, I think just to clarify what you said, the stores that you're opening in existing markets, those are performing better relative to either new space productivity, or a comp order fall second and third year. Then you thought it's the stores that are in markets in which you don't have a presence that have been ramping more slowly. Is that a fair characterization?
Steve Lawrence: Yes, that's correct. I mean and that's why we went into some pretty good detail on that. I mean, it stands for reason. Where we've got high brand awareness, we're seeing those store start out very, very strong. And some of these smaller markets where we're going in with one or two stores at a time, is taking a little longer to build brand awareness. We're changing kind of how we think about modeling these new stores going forward and building performance, which we detailed in the call as well as on the supplemental material that we provided. But over time, I mean, the expectation is that these stores are going to have a 5-year ramp with outside growth in the first five years. Over the next five to 10 years beyond that, we would accept them to continue to grow maybe slightly faster than the chain, and settle in around the average of what an average store volume does for us. But new stores, new markets, low brand awareness are definitely a little more slow to start out than stores in existing markets with high brand awareness.
Simeon Gutman: Makes sense. Okay. Thanks. Good luck.
Steve Lawrence: Thanks.
Operator: Our next question comes from Kate McShane with Goldman Sachs. Please proceed with your question.
Kate McShane: Hi. Good morning. Thanks for taking our question. You mentioned in the prepared comments that you're going to focus on value and price. And I know that's pretty much always where you have been focused. But do you think that you've got a little bit away from where you've been historically? And that could be part of the reason why you've seen some pressure on the comps. And how should we think about just this renewed emphasis on value going forward in 24?
Steve Lawrence: I think you said it best in your question, Kate. It's not a renewed focus. It's always a focus for us. We see ourselves in our customer see us as the value provider in our space. And we deliver value on a multitude of fronts. A lot of that is driven by our private label, which is about 22% of our total business. We have strong, strong value in those items. And they're priced every day at really low prices, compared to like items in the marketplace. At the same time, we also deliver value on a lot of well-known national brands where we provide a price, a split ticket price on there where we're selling that at a slightly lower price than competitors are selling at an MSRP. And then the third way - we deliver value is promotions. And so, we generally aren't a promotional retailer, but we certainly do promote during key time periods during the year, certainly holiday being one of the biggest one of those. And I think we leaned into those three different ways to deliver value for holiday. And we think that's what we saw in inflection during Q4. We saw a negative three, six comp versus a negative seven, six at running through the first three quarters of the year. So we think that that really kind of broke, through during that time period. So I wouldn't say it's as much a renewed focus. It's just a continued focus. And then looking for ways to expand it. And that's what the customer is telling us, they're voting on. So you're going to look at ways that we're going to add some more, we call them key value items. So really, sharp items on well-known categories like bikes and grills at really sharp prices. We're expanding some of the offerings there. And I think you're going to see us continue to lean into promotions during those key moments on the calendar when the customer is really shopping.
Kate McShane: If I could just ask a quick follow-up on the promotions. I know there's been a lot of vendor support for promotions over the last year or so. Are you expecting the same level of vendor support in '24, is what you saw in '23?
Steve Lawrence: Yes. I mean, obviously we have really strong partnerships with our vendors. I don't see any reason why they wouldn't support us to the degree that they've supported us in '23 and beyond. I think that candidly we're seeing more vendor support on a multitude of fronts, not just obviously margin of price support, but on marketing and other initiatives, because they look at us as a growth partner. And that means we're getting access to more products, newer products, more innovative products. It means better support on the marketing front. So, we actually see our vendor support growing in the future, not declining or maintaining.
Kate McShane: Thank you.
Steve Lawrence: Thank you.
Operator: Our next question is from Greg Melich with Evercore ISI. Please proceed with your question.
Greg Melich: Hi, thanks. Maybe just to help us on the, what's driving the growth of that inflection you talked about, Steve. In the fourth quarter, ticket was still positive and transactions running down 5. If you look at the guide this year, would you expect all the improvement to be on transactions and transaction growth if we get back to a zero comp, actually being positive this year?
Carl Ford: Yes. I'll take it, Greg. This is Carl embedded within the '24 guidance. If you just kind of look at the midpoint, how we see it, is tickets lightly up and traffic slightly down. We're very aware that the consumer is challenged. We're going to monitor it throughout the year. But at the midpoint, that's how we would model it.
Greg Melich: And in terms of a progression, just given how it sounds like it's the first quarter would be the weakest and then we'll get slowly better over time or do the comparisons get harder by the end of the year given how December was strong?
Steve Lawrence: I think you stated it correctly the first way you said it, the way we see the quarter progressing or the year progressing is, and obviously customers still under pressure. That didn't change as we turn the page 2024. So we think that's going to continue into the first part of 2024. So we do expect Q1, to be the softest quarter. And that's how we model it. We expect Q2 to build upon that. We expect the back half of the year to be better than the first half of the year.
Greg Melich: Got it. And just to clarify that the SG&A now including the stock comp and thanks for that. It's nice to make it clean. Is that 100 bps increase that you flagged? Is that a new run rate that we should think of in terms of stock-based comp, or was there something about this year that sort of steps it up versus last year?
Carl Ford: No, I think the $30 million is spare to use going forward. But I do want to kind of speak to what's embedded within FY '24 in the holistic SG&A. It's about at the midpoint it's about 100 basis points of deleverage and expense. And I want to take you back to our long range plan, where we said we anticipate 200 basis points of expense deleverage offset, by about 150 basis points of supply chain and overall like gross margin benefits, which is inclusive of private brands and what not. So the deleverage that we're seeing is from a dollar perspective what we anticipated. What is causing the, deleverage from a rate perspective is running a negative 6.5% comp. To Steve's earlier point and I think it's been very well discussed in the retail industry this year, the consumers under pressure. So that is what we are experiencing. That does not make us second guess these strategies that we're building this long range plan on. We're going to continue to open stores. We're going to continue to invest in omni-channel. We're going to continue to invest in customer data and supply chain. But specific to stock compensation, $30 million in the next year is a fine run rate to think about. But we'll obviously update you year-by-year.
Greg Melich: That's great. Thanks and good luck.
Steve Lawrence: Thanks. Appreciate it.
Operator: Our next question is from Chris Horvers with JPMorgan. Please proceed with your question.
Chris Horvers: Thanks and good morning guys. So a couple follow-ups there. So first on the comp, do you expect the first quarter to be within the range of the year and sort of, are you essentially expecting 1Q look like the quarter to-date trend? And then as you think about it, can you talk about like the gross margin puts and takes you mentioned rolling out WMS over the next 18 months, you talked about some efficiencies that the new head of supply chain is seeing. How are you thinking about the gross margin good guys in 2024, and what are the offsets?
Steve Lawrence: Yes so, we'll probably tag this one. In terms of the comp progression I think it plays out exactly as I said before, where we see the first quarter being the weakest. You know it's certainly we're coming out of Q4 last year, with the down 3-6 trend. If you look at - one of our guidance it's negative forward, which is basically in line with that. And then as you progress forward through the year we expect the Q2 to be better and then obviously the fall will be better than that. So you can kind of model it based off of that feedback. In terms of margin puts and takes you know there's several right and Carl's got a long list here. A couple I just hit on is, private brand continues to be a tailwind for us. They're mixing into a higher margin mix and private brand is a big tailwind for us. Promotional intensity is kind of settling into a more normal life state moving forward. So I don't expect that, we're going to see a tremendous uptick in promotions. Carl I know you've got a couple you want to hit on as well.
Carl Ford: Yes from a gross margin going forward standpoint, we're seeing what's going on with international shipping. We don't put quite as much through the Red Sea as perhaps others do, but there is a delay coming around Africa, and kind of the equipment that's being used. And so there might be modest deleverage there, but we've got we've talked about like outbound transportation and how we run our trucks between our distribution centers and our stores. We've got opportunity there associated with WMS, just keeping out the trucks and doing multi-stop shuttles, which we don't really do in any large way now. The second would be just in that broader supply chain space if you think about kind of labor management aspect associated, with what we're doing within the distribution centers. Yes, we get a new tool in WMS that is - a lot more sophisticated than the almost 30-year Exeter system that we're using now. And just from an overall labor management standpoint I would say the merchants are really leaning into this as well, as we think about cross-stock penetration or how much stuff doesn't need to be put away and separately repicked. That's a big opportunity at the company and Matt McCabe, the Chief Merchant and Rob, the new Rob Howell the new Chief Supply Chain Officer are in lockstep on this. We've seen that there's betterment there and we started executing on that. Yes, I won't reiterate kind of the merchandising stuff, but I am excited about our private brands offering freely in row, are doing well and we're seeing customers resonate with that value opportunity. The last thing I would say as it relates to you know specific to FY '24. I want to be clear, we did not make our sales plan for FY '23, although we ended with an inventory that was down 7%. And we feel was well managed, and the merchants really did a herculean effort at bringing that in where they wanted to. There was some promotional activity associated with pockets of inventory where when you're planning on something a little bit higher, and it comes in after we re-guided in Q1. They took some actions and we're ending clean now. We like our inventory position and so, we don't think that we'll have to kind of execute in that manner for FY '24.
Chris Horvers: Got it. And then my follow-up just on the new store maturity ramp you lowered the year one given the new market mix, but as you think about like where can you remind us what you said about where did they get in year five because it sounds like you said there's this very steep ramp to year five and that over the next five years it'll get to the average - the average of the chain 10 years out. So can you maybe just provide some more color, because typically we think of double-digit comps in year one and then by year five you're floating with the overall business?
Carl Ford: Yes so, we you know in our long-range plan we initially modeled this, we said 18 million in year one and then ramped five years from there. We didn't put an endpoint associated with where we think they matured over time. We said it would come in close to where the average store volume is. We don't think that that necessarily changes starting from a lower base right. So obviously, the $12 million to $16 million is meant to encompass a couple of different types of stores, right smaller stores and smaller markets, where we have less brand awareness. Probably would be towards the low end of that 12 versus new stores in the existing geography, where we have high brand awareness probably to the high end of that range, we would expect them to grow at a faster rate - at least two times faster than the company growth during the first five years. That wouldn't get them all the way to the average for the new store that's why when you look at it over 10 to 15 year time horizon, we expect them to get there. And we've really seen this play out over time. If you go back 10-15 years Northern Florida was a new market for us, and when we looked at those stores initially they started off with lower volumes, because it was a new market. And as we look at them today, we've been in that market now over 10 years. Those stores are doing on average store volume so that's how we're looking at it over time, but it's a 5-year faster ramp and then five to 10 year after that, but it's settling at the company average.
Chris Horvers: Thank you very much.
Operator: Our next question is from Robbie Ohmes with Bank of America. Please proceed with your question.
Robbie Ohmes: Hi good morning guys, can you talk a little more about you know you've mentioned how well the private label is doing. How are you thinking about getting the athletic apparel, the outdoor apparel some of the branded athletic footwear, are there things you can do to get those businesses to be a little stronger, or any initiatives underway how are things like L.L.Bean doing you know I'd love to get some color on that?
Steve Lawrence: Yes, so I would say in general a theme we've seen happen over the past a couple years, is new ideas have done very well. So a lot of the new brands you've heard us mention like L.L.Bean or Bogg Bags continue to do very well and we're expanding a lot of these categories. You think last year, we've had Birkenstocks and a small number of doors or Ufos and a small number of doors we're expanding those very rapidly. We've got new brands, we're introducing this year like [Crush City Baits] that's already off to a fast start. So new brands are working for us, and we're scaling them out very rapidly. In terms of larger legacy brands, where they're a little more challenged. We're partnering with them, around making sure we've got a strong pipeline of innovation, flowing out to our stores. And we're optimistic as we partner with our large brands that we're going to start seeing that, turn the tide as we move through 2024. We've got great partnerships, I think Carl called out on the call Nike that's been one of our stronger businesses that's certainly our largest business we're having that work has been a really good thing for us. And where we've got some brands that are a little softer. I think we've got good plans in place with those teams to turn them around and get them moving in the right direction.
Robbie Ohmes: Thanks. And then, my follow-up is actually I want to follow-up on Kate's question. When you look at the vendor community, are you seeing prices coming down?
Steve Lawrence: I wouldn't say we've seen prices coming down, certainly there are places where we've negotiated better deals on things, but we haven't seen as freight settle in that necessarily translate through a ton of cost reduction so far. But we continue to work and negotiate with vendors on that front.
Robbie Ohmes: Got it. Thanks.
Steve Lawrence: Thank you.
Operator: Our next question comes from Michael Lasser with UBS. Please proceed with your question.
Michael Lasser: Good morning. Thanks a lot, for taking my question. To see when we compare Academy's results to especially in the footwear and apparel categories, to several other retailers especially those retailers that also index lower income segments. That the footwear and apparel categories in particular, seem to be doing worse at Academy's than many other players out there suggesting it's eating market share A) why do you think that is the case and B) outside of some of the factors that you pointed to what do you think is the principal strategy that's going to allow Academy to stabilize its market share, because if it's simply a function of its core customer base getting healthier that might prove to be elusive? Thanks a lot.
Steve Lawrence: Yes, I'd start with I'm not sure I agree with the premise of the question. We can tell you we look at market share on a monthly quarterly annual basis. We use Circana as primary source for that and if you look at Circana data, they will tell you that we picked up market share broadly across the business in 2023. We'd also say that we picked up market share over a 4-year stack pretty aggressively considering the fact we're still up about 25% versus where we're in 2019. And I would also say when we look at our comparison in footwear and apparel to other retailers in general, the results I've seen as others have called out and gone through the earnings cycle for the most part are at or maybe a little better than broad-based retail. I mean we do have a competitor, who is out performing us right now. I think we have a different customer than they have. I think, we've got a more middle income consumer, versus a high-end consumer. We've certainly seen the high-end consumer continue to spend a little bit more than the middle or lower income consumer, is a little more pressured. So one of the ways we combat that is continuing to build out, the better best end of our assortment and get access to more premium product from our existing vendor base like a Nike like a new balance. And we've had some really good success on those fronts. We continue to bring in new brands, so that we're ahead of the curve there. And have them in some cases first to market and it's going to be a journey for us as we move forward. But we are not losing market share, the data doesn't really support that, and we actually like we're picking up market share from every data point we see.
Michael Lasser: My follow-up question is on the gross margin and the elasticity you're seeing to any investment that you might be making either promotions or price. Would you see how much would, you see an improvement in sales, if you're willing to sacrifice some of the gross margin gains that you've achieved. And as a quick housekeeping note, how much will SG&A grow how much will SG&A dollars grow this year, due to investments that you might be making in wages or labor within the store? Thank you very much.
Steve Lawrence: Carl and I are going to tag team this one. I'll start on the margin front it's a question that I think every retailer asks themselves on a regular basis. If I promoted more would I see a higher sales trend and you certainly understand the math is Michael that if you sell you know a discount of 25 off, you got to sell 33% more units to offset that. And so, what we've seen candidly throughout the course of 2023 in part of '22, is when we've leaned into promotions during kind of non-peak time periods, when the customer is not willing to shop we've seen a trade down in AUR, and we haven't seen an offset in terms of unit growth offset the sales decline. So, we've been very thoughtful about where we plan our promotions, as we talked about. We plan them around the big market share moments on the calendar, like a Mother's Day like a Father's Day, like an Easter, like a back-to-school, like a holiday. Ad that strategies work for us, I mean if you look at our margin our merch margin for Q4, it was down about 50 basis points. We had offsets and other lines to help pull the total gross profit up, but we did certainly lean into promotion a little bit during Q4. And I think that that definitely helped. So I think, you'll see us continue to run those plays as we move forward, but broadly promoting all the time we don't think is the pathway to success.
Carl Ford: And I'll take from an SG&A standpoint Michael I said 90% of what we invested in this year from a SG&A rate standpoint was the investments. I also said expect at the midpoint 100% growth and SG&A rate next year it's really all investments like 100% of it. I'm actually pretty proud of the team, when anything incremental that was over and above launching new stores investing in omni-channel making investments on the customer data platform that we implemented last year. We're all really offset dollar-for-dollar with incremental savings. So if you think about how that is going to manifest itself on a more detailed P&L 15 to 17 stores versus 14 this year. We'd like to start a little bit earlier in the year, so there's a little bit of capital investment late in '24 that'll get us out of the gate good in FY '25 that represents the wages that we pay to our associates and managers in those facilities. The rent property taxes, the seating of the market. Steve talked about - where there's low brand awareness and now we've got a new tool, with the customer database platform and some other tactics investing in advertising associated, with those new markets. And the other thing would be, just the technology a cost associated with the WMS is a SaaS-based system. There's going to be tech expenses associated with that. The treasure data, customer data platform has a cost to it. And obviously omni-channel from the user experience investments that we're making there. So in short, the 100 basis points of expense deleverage that you should expect for next year, and that was embedded within our long-range plan, is all of the investment that's the totality of the investment cost.
Michael Lasser: Thank you very much.
Carl Ford: Thanks Michael.
Operator: Our next question is from Anthony Chukumba with Loop Capital Markets. Please proceed with your question.
Anthony Chukumba: Good morning and thanks for taking my question. So I'm just want to kind of tie a couple things together in terms of my question. You talked about the outperformance in certain footwear brands specifically brought up Brooks. You also talked about you know the fact that you're definitely counting on some new products to drive growth in 2024 to help in 2024. So kind of tying those two together any insights in terms of some of the sort of hot running brands specifically [indiscernible] on any insights in terms of whether what your expectation is, in terms of whether you can get one or both of those brands particularly giving you the fact you've had success with Brooks which is a relatively sort of high ticket footwear brand? Thank you.
Steve Lawrence: Yes. No I think you ask this question last time too. We don't have any updates on that front I mean as you know that you're right. Those are two of the hottest brands that are out there. We would love to have access to those and as I've said before I don't think it's a matter of if it's when - we continue to have dialogue. And we'll continue to put our ass out there, right now we don't have access to those. And so, our mission and our plan is to win with the brands we have access to. And I think you're seeing that play out in some of the successes Carl called out with Nike particularly some of the higher end running shoes that we've gotten from them. Brooks a great call out there, Brooks has been absolutely on fire for us. We're seeing great success in brands like New Balance and other running brands. So, we're going to win with the brands, we currently have. We're going to continue to try to get, the brands we don't have access to that the customer's telling us what they want. And we're going to continue, to seek out more brands that and incubate new brands earlier in the cycle. So that we're not trying to catch them when they're hot, we're going to have them at the moment they start to turn. So you'll see that and that's not just a footwork conversation. I think that's probably across the store, we've got - to get better at getting newness in the stores and I think, the teams really rallied around that, and you see that and a lot of the new brand initiatives we've called out. And we're going we're going to scale them very quickly, and make them big and important. So that we don't have to have a conversation about why we don't have access to a whole coming on going forward.
Carl Ford: Yes, at the at the risk of double dip and I will so, we've got 282 stores in 18 states. And when we talk with our vendors about what's on the horizon and we talk to them about 160 to 180 stores over the next five years, but longer term, we see runway to be an 800 plus store location that's nationwide. And partnering with us and what has the unitary growth potential of an Academy. So, we definitely talk to them about the here and now and how we're happy about 25% sales growth from pre-pandemic and all the things that we talk about here. But we talk with them more about the future what's over the mid-term and the longer-term horizon. And I think it really resonates of the growth potential associated with the company.
Anthony Chukumba: Got it. An apologies for asking the same question two quarters in a row. I'm nothing if not consistent.
Steve Lawrence: You are.
Anthony Chukumba: I'm just one quick follow-up. So you talked about the stock-based compensation that's like $0.30 so when - as I look at this initial guide and so on a kind of apples-to-apples like a adjusted basis that would say the guidance was really more like kind of $620 million to $720 million on an adjusted basis. Is it is there also the potential for there to be other ad backs over the course. I mean I know it's obviously hard to - it's hard to say and then you want to stick with the GAAP. But I'm just trying to make sure I'm thinking about this apples-to-apples I mean could there be other potential ad backs to GAAP as the year progresses? Thanks.
Carl Ford: So I'm going to take that, as we think about ad backs we actually pride ourselves on the simplicity of our P&L. So stock-based comp is the one and for the last three years, there's been a small ad back for early extinguishment on debt, which we think is the right thing to do for our business. We're not going to we disclose to you in the 10-K what pre-opening store costs are, but the SEC frowns upon a lot of ad backs. And so, we're really vanilla, because our business just makes sense without the ad backs. If you think about the guidance for next year from an adjusted EBIT standpoint at the midpoint, it's about a negative 70 basis point decline. At the pre-tax income standpoint, it's about negative 60 basis points to FY '23. And net income is about 50 basis points of degradation at the midpoint. And literally all of it is, related to our strategic initiatives that we have confidence and that are getting better, with each vintage. And so yes, we're not there's probably I mean who knows what comes, but we're not thinking about any new adjusting items.
Steve Lawrence: And Anthony I just, I want to tell you, you don't have to apologize for asking the same questions, a fair question we always look forward to the challenging questions you put us to us.
Anthony Chukumba: Thanks for the kind words. Good luck with fiscal 2024.
Steve Lawrence: Thank you.
Operator: We have time for two more questions. Our next question comes from John Heinbockel with Guggenheim Securities. Please proceed with your question.
John Heinbockel: Hi Steve, can you just walk through CRM initiatives this year, right now that you've stood that up whether it's reactivating customers wallet share. And how you're going to lean into that. And then, the thought about personalized promotions, right you talk about this pricing bikes and fitness and stuff like that, do you see an opportunity to do personalized promotions where you're not blasting that out to the marketplace, but being very surgical in how you attack that?
Steve Lawrence: Yes, it's a great question. So I would say a couple things, first we installed the new CDP last summer. We spent the back half of last year testing a lot of different use cases in terms of customer reacquisition customer acquisition. I think as you move forward you're going to see us lean into a couple of focuses first. Traffic is a challenge, I mean the traffic for and transactions for Q4 were down mid-single digits. Our goal is to drive more customers coming into our storm drive traffic. So I think you're going to see us use, the CDP and working with our various agencies and partners to generate more lookalike audiences. And to really start filling the top of the funnel up that's going to be a big focus for us. I think you're going to also see us then look at our high-value customers and look at ways to get them to shop with us more frequently and move people up the identity ladder. And have them become have some customers, who are more occasional shoppers become more loyal shoppers, and move them up. So I think you're going to see a multi-prong focus there, but new customer acquisition and driving traffic is number one. And then moving customers up that identity ladder, to shop with us will be the second focus. In terms of more personalized promotions, I think you're dead on I mean that that is the future. And that's where I think we're ultimately headed, we're probably a little behind on this one that being said, it's an opportunity for us. And I think you're going to see us as we learn more about our customers have more one-to-one marketing, and to have more targeted promotions. I think that will allow us to pull back on some of the more global promotions that we do run and that will be a journey to move forward. But there's definitely an opportunity for that and it's something we're looking at very closely.
John Heinbockel: And just quickly last thing, when do you think - when do you launch the new loyalty program is that you know pre-holiday?
Steve Lawrence: Our goal is to have it in place sometime this year so pre-holiday definitely for sure. If we can get it in place before back-to-school we'd like to, but we want to make sure whatever we roll out is fully vetted and we're very comfortable with. That being said what I want to make sure you understand is, we see this loyalty program as being a long-term build over time. This is not something we don't want to come out with a bunch of benefits the customer may, or may not want. We want to make sure whatever we include in the initial rollout, is something the customers told us that they value. And so, you're probably see us take some things that have resonated well with our credit card customer, which is kind of the basis of our loyalty program and extend that more broadly to a broader range of customers. And then, test into new capabilities as we progress forward. So it'll be a slow burn and an add over time, but we definitely want to get something out in the marketplace, before holiday.
John Heinbockel: Thank you.
Steve Lawrence: Thank you.
Operator: Our next question comes from Will Gaertner with Wells Fargo. Please proceed with your question.
Will Gaertner: Hi guys thanks for squeezing me in here. So if we just talk about the new stores, can you just talk a little bit about lowering the guide for the new stores I mean where's the drag coming from? And then secondly are all the new stores that you're opening are they all EBITDA positive is it vary by new - markets versus existing. And then, what gives you confidence in increasing your store footprint particularly is comps remain negative?
Steve Lawrence: Yes so, I'd go back to answer probably last question first I mean we're investing in opening new stores, because it's critical to our future. And so we are going to keep pushing forward on this pace. Now that being said we're moderating it a little bit, right. So this year candidly we guided 15 to 17 new stores, we probably could have opened up a few more stores this year. But we pushed some out of Q4 into Q1, and next year so, we could get more densities - going into the new market. And so, we're trying to be very deliberate and thoughtful about how we pace out these new stores, it's kind of going slow. So you can go fast in the future. In terms of the volume expectation, I think it's really driven by what we described in the call. Obviously the stores that are in newer markets, is taking a little longer to build brand awareness. So those would be at the lower range of that $12 million range versus stores and existing markets being in or in larger markets being in a higher end of that volume range at $16 million. I think the key is in terms of the number of stores, looking at more mid-sized markets. I would say initially, we were focused primarily on going into large metro markets. And I think as we've had some stores in more mid-sized markets be very successful. We've got store in Christiansburg, Virginia that's done very well for us or Heartland in Texas. And so, I think we look at those stores and say okay there's an appetite for sporting goods stores such as ours sports and outdoor stores, such as ours to go into those markets and really take care of an underserved customer. So you see us, kind of opening the window a little bit in terms of our consideration set, and that's what's really driving more stores. So it'll be more stores maybe a slightly lower volume, but because they're in smaller markets the operating costs to run those stores are very favorable and more than offset the slightly lower volume target.
Carl Ford: And well I'll hit the last kind of two parts of your question as you think about I think you said, like slowing new store growth and headwinds of negative comps. On a negative 6, five comp this year we generated $536 million in cash flow from operations. We invested that $208 million in the capital, $203 million in the share repurchases, $103 million into debt service, and $27 million into dividends. And ended with $10 million more in cash than we did the year before. And that's on a negative 6, five comp. So I give all the credit to the merchants for their inventory management, but negative comps are not going to cause us to come off of this strategy. We have so much white space we want to open great stores, and we're going to methodically do that over our long-range plan. As it relates to EBITDA by vintage they're all positive. I would tell you at $12 million we're EBITDA positive depending upon the location that if it's in the city or something like that below that it gets tough to be EBITDA positive and that's why we're just being really discerning. Specifically with these new markets that we're going into.
Steve Lawrence: Okay so with that oh sorry. I didn't know if you had more question.
Will Gaertner: No that's it Steve. Thank you appreciate it.
Steve Lawrence: Okay. No I appreciate it. I appreciate everybody joining us on the call today. Just in closing, our goal over the next year is to move back to top line growth we'll continue to make investments that will drive returns in future years and allow us to achieve our long-term objectives. We believe that we have a unique concept that resonates with a wide-range consumers and is scalable and transportable. While our long-range plan encompasses targets that we plan to achieve over the next five years, our ultimate long-term goal is to be the best sports and outdoor retailer in the country. The store stretching across the continent and that is what we remain focused on. In closing, I want to thank all 22,000 of our Academy associates, for all the hard work and efforts they put in over the past year. We continue to believe that our employees are the key ingredient our secret sauce and I know that every one of our team members is going to give it their best effort out there and help more people have fun out there in 2024. Thanks for joining us today and have a great rest of your day.
Operator: Ladies and gentlemen the call is now concluded. Thank you for your participation, you may now disconnect your line.
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