Good afternoon, and welcome to the Ollie's Bargain Outlet Conference Call to discuss Financial Results for the First Quarter of Fiscal 2016. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session, and instructions will follow at that time.

Please be advised that reproduction of this call in whole or in part is not permitted without written authorization from OLLI's. And as a reminder, this call is being recorded.

On the call today from management are Mark Butler, Chairman, President, and Chief Executive Officer; and John Swygert, Executive Vice President and Chief Financial Officer; and Jay Stasz, Senior Vice President of Finance and Chief Accounting Officer. I will now turn the program over to Mr. Stasz to get started. Please go ahead sir..

Thank you, and hello everyone. A press release covering the company's first quarter fiscal 2016 financial results was issued this afternoon, and a copy of that press release can be found in the Investor Relations section on the company's Web site.

I also want to remind everyone that management's remarks on this call may contain certain forward-looking statements including predictions, expectations, estimates or other information that might be considered forward-looking, and that actual results could differ materially from those mentioned on today's call.

Any such items including our outlook for fiscal year 2016 and details relating to our future performance should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

You should not place undue reliance on these forward-looking statements, which speak only as of today, and the company undertakes no obligation to update them for any new information or future events.

Factors that might affect future results are discussed in our filings with the SEC, and we encourage you to review these filings, including the company's Annual Report on Form 10-K and quarterly reports on Form 10-Q, for a more detailed description of these factors.

Please also note that we will be referring to certain non-GAAP financial measures on today's call such as adjusted operating income, EBITDA, adjusted EBITDA, adjusted net income, and adjusted net income per diluted share that we believe may be important to investors to assess the operating performance of our business.

Reconciliations of these non-GAAP financial measures to GAAP financial measures are included in our earnings release. I will now turn the call over to Mark..

Thank you, Jay, and hello to everyone. We had another very strong quarter and we are pleased with the trends in our business. Once again, the strength was broad-based and across the entire business, with sales, new store performance, margins, expense control and Ollie's Army, all performing well.

As you have heard me say many times, our business is all about the deals and our deal flow remained very strong in the quarter. Our growing size, scale and visibility in the marketplace is giving us better access to merchandize, expanding our vendor base and building stronger direct relationships.

This is allowing our buyers to be even more selective, and offer our customers even better bargains on great quality branded merchandise, each and every time they walk in to one of our stores. Real brands, real bargains, this is what our customers expect from Ollie's and this is what we continue to deliver.

On the sales side, comparable store sales increased 6% for the quarter, versus a two year stack comp of 5.8%, the majority of our 21 departments delivered a comp increase in the mid single digits or better. Some of the best performing areas were bed and bath, books and stationery, food and candy, lawn and gardening house wares.

Our stores performed very well, and we saw a very consistent performance across the chain. New stores continue to perform in line or above our expectations. We opened five new stores in the quarter, including our first store in the state of Florida in Orlando.

We are very excited to be in Florida, and we believe Florida will be another strong state for Ollie's. While the store has only been open for a few weeks, we are very pleased with the customer response and the sales trends.

In 2016, we plan to open a total of six to eight stores in Florida, with our next store opening in the Jacksonville area in late June or early July. Florida represents the 18th state of operation for Ollie's and in the next week, we will be entering our 19th state, with our very first store in Mississippi.

We continue to feel good about our ability to open new stores, and we are on track to meet our target of 28 to 32 new stores in fiscal 2016. Gross margin was very strong in the quarter. We discussed in the past, we generally target a full year gross margin of about 40%.

Paramount to our business is our offering customers great bargains, a major brand name merchandise. We manage our margins very closely on a category-by-category basis, and at times, as the deals present themselves, we have the ability to realize higher margins that might be typical.

We did have a couple of deals like this in Q1, which helped drive our merchandise margin in the quarter. We continue to work hard to control our DC and transportation costs, and we leveraged those costs during the quarter versus last year.

Ollie's Army membership continues to grow well ahead of sales, and members continue to spend significantly more than non-members. In the quarter, we began implementing Phase-II of our customer loyalty management system, and this will continue throughout the rest of the year.

We are very excited about this phase, because it will give us the ability to have customized communication with the Army. Ollie's Army members are our best customers, and they are always on the look-out for a new deals and merchandise. The way we reach many of our customers today, is through direct mail and flyers.

We think the customized direct e-mail will be a great way to communicate with the Army, but we are also very sensitive to their privacy and not pounding them with too much information or offers. In summary, we feel very good about our first quarter results and the trends across our business.

The majority of our products are basic household items that people need each and every day. The performance of our core departments was strong in Q1, and continues strong in Q2. This time of the year, we do carry a higher mix of seasonal items, like lawn and gardens, swimming pool related products and air conditioners.

Weather was favorable in Q1, and we think we may have pulled some seasonal business forward. Weather in the first few weeks of Q2, I got to tell you, it was less than desirable for seasonal sales, but we had seen this rebound nicely over the past two weeks.

A slower start to the seasonal business, and tougher comparisons, could keep a lid on the second quarter sales.

Regardless, we continue to execute the strategy we have laid out for everyone, which centers around opening new stores in contiguous and existing states, strengthening our relationship with vendors, gaining better access to merchandise, leveraging our second distribution center, investing back into the business, paying down debt, and generating strong returns for our shareholders.

Our deal flow remains very healthy, and we have a full pipeline of new store opportunities. We opened our two newest stores this morning, and we are now up to 212 stores in 18 states. In my nearly 34 years with the company, I am more excited today than ever about our business, and our long term growth potential.

With that, I will turn the call over to John, he will take you through the financial results in more detail..

Thanks Mark. Good afternoon everyone. As Mark indicated, we had a strong first quarter and we were pleased with our results. Net sales increased 19.2% to $193.7 million. Comparable store sales increased 6% versus an increase of 8.8% in the first quarter of last year.

The increase in comparable store sales was driven by an increase in the number of transactions and basket. We opened five new stores in the quarter, ending with 208 stores in 18 states, versus 181 stores in 16 states last year, an increase of 14.9%.

Our new stores continue to perform in line or above our expectations, and we remain pleased with the new store productivity. Gross profit increased 23.4% to $79 million, and gross margin increased 140 basis points to 40.8%.

The increase in gross margin was driven by reduced transportation and distribution costs, as a percent of net sales and higher merchandise margins. SG&A expenses increased 19.5% to $54.8 million in the quarter, and included $890,000 of transaction related expenses. Excluding transaction related expenses, SG&A expenses increased 17.5% to $53.9 million.

The majority of the increase was related to higher selling expenses from our new stores opened over the past year, and increased sales volumes. The remaining increase in SG&A was primarily related to public company expenses. As a percent of net sales SG&A increased 10 basis points to 28.3% in the first quarter.

Excluding transaction related expenses, our SG&A ratio decreased 40 basis points to 27.8% in the quarter. Pre-opening expenses were $1.2 million versus $1 million in the first quarter of last year. The increase was related to timing difference in new store openings. Operating income for the first quarter increased 35.5% to $21 million.

Excluding transaction related expenses, adjusted operating income increased 41.2% to $21.9 million. Our effective tax rate was 39.2% versus 39% in the first quarter of last year. Net income increased 76.4% to $11.7 million or $0.19 per diluted share.

Excluding transaction related expenses, adjusted net income increased 84.5% to $12.3 million or $0.20 per diluted share. EBITDA increased 32.5% to $23.5 million, and adjusted EBITDA increased 37.6% to $27.1 million.

At the end of the first quarter, we had $37.1 million in cash and no outstanding borrowings under our $100 million revolving credit facility. During the quarter, we paid down approximately $1.3 million of our term loan debt, and ended the quarter with total debt of $198.8 million versus $320.6 million in the same period last year.

Capital expenditures were $4.8 million in the first quarter versus $2.5 million in the same period last year. Now let me conclude with some commentary on the outlook for fiscal 2016; as we discussed, we had a strong first quarter that benefitted from strong deal flow, solid execution and favorable weather.

The first quarter was also our easiest comparison of the year, when looking at comparable store sales on a two year stack basis. We indicated in our earnings call, that we expect comparable store sales to be higher in the first quarter, than the rest of the year.

Specifically, we expected first quarter comps to be somewhere in the mid-single digit range in the remaining three quarters to be in the 1% to 2% range. This equates to a full year comp estimate of 1.5% to 2.5%.

We faced our most challenging two year comparisons in the second and fourth quarters, and as Mark discussed, the weather to start the second quarter was less than ideal for our seasonal departments.

With that said, however, we feel very good about our core business and we have seen improving trends in the seasonal categories, most recently with the return of warmer weather. The deal flow remains strong, and we continue to benefit from better access to merchandise, growing relationship with vendors, and our increased size and scale.

As always, we will remain conservative in the way we plan the business and our full year outlook. For fiscal 2016, we currently estimate the following; total net sales of $878 million, up slightly from our previous guidance of $865 million to $875 million. Comparable store sales growth of 1.5% to 2.5%, which is consistent with previous guidance.

The opening of 28 to 32 new stores and no planned closures. Operating income of $93 million to $96 million, which is up slightly from our previous guidance of $90 million to $93 million. Net income of $53 million to $54 million, up from our previous guidance of $51 million to $52 million.

The updated net income range assumes a full year effective tax rate of 38.8% versus our previous assumption of 38.5%. Net income per diluted share of $0.84 to $0.86 up from our previous guidance of $0.82 to $0.84 per diluted share. This assumes a full year diluted share count of 62.5 million shares versus our previous assumption of 62 million shares.

The slightly higher share count, combined with a slightly higher effective tax rate, negatively impacts our full year diluted earnings per share outlook by about $0.01. Excluding transaction related expenses, we expected adjusted net income to be in the $53.5 million to $54.5 million or $0.85 to $0.87 per diluted share.

These are up slightly from previous ranges of $51.4 million to $52.4 million or $0.83 to $0.85 respectively. Finally, capital expenditures are expected to be $16.5 million to $17.5 million. This is up from $14 million to $15 million previously, due to an opportunistic purchase of one of our store location.

And with that said, we would like to turn the call back over to the operator, to start the Q&A session.

Operator?.

[Operator Instructions]. Our first question comes from the line of Matthew Boss from JPMorgan. Your question please..

Thanks. Nice quarter guys. So multiyear, any change to low-single digit same store sales driving 20% net income growth, and then more near term? Sounds like some puts and takes in May. Clearly, we have seen it from some other guys out there.

But where do comps stand quarter-to-date today, and just what's the best way to think about same store sales in 2Q versus the back half of the year?.

Yeah Matt; let me answer some of that question for you, then Mark may have to chime in a little bit. But with regards to providing any type of guidance on where our sales stand for the quarter, we obviously don't provide quarterly information, and we won't do that going forward as well.

But overall, we have seen a nice rebound in the business from Memorial Day Weekend and the Week of Memorial Day. So we have seen the momentum pickup in the quarter, but overall, we feel comfortable with the core business and the seasonal business is just starting to work much better than they were in the first few weeks of the month.

The overall outlook on a long term basis, we are really remaining the 1% and 2% comp story, as we continue to grow on a long term basis, and we believe that will generate the net income growth in the approximately 20% range year-over-year.

So we are pretty comfortable with our long term targets have set, and we believe, we still will maintain those as well..

Great.

And then just a follow-up; your best margin performance in roughly two years; if we could just breakdown the 140 basis points of gross margin, how much were your merchandise margins up, versus transportation distribution benefits? Just trying to think of the best way to think about this going forward in terms of drivers?.

Sure Matt. The breakdown of the 140 basis point improvement, about 65 basis points of the improvement was merchandise related and 75 basis points was distribution and transportation related. We obviously, as we said in the past, we have been working hard to get the distribution leveraged with the opening of the second DC in April 2014.

We are starting to see some benefits there. But most importantly, we saw a very nice pickup in the transportation side of the business. We had a pretty tough Q1 last year, with regards to the increased import costs, and we have seen that, really taper off significantly, fuel costs actually subsided as well.

So the distribution and transportation side of the business seems to be getting a little more stable. The merchandise margins we had mentioned was really related to a couple of deals we had during the quarter. We are not modeling out an improvement in the merchandise margin, above and beyond what we started the year with.

So that was really a onetime benefit that we were able to capitalize on, and we are really focused on the consistent 40% long term gross margin target that we set out previously..

Great. Best of luck guys..

Thanks..

Hey Matt, if I can just add to that, we planned the business at a 1% to 2% comp, and as you are well aware, as almost everybody on the call is well aware; we are up against real good numbers for the rest of the year, and I got to tell you, if we are able to execute our plan and we are at the 1% or 2%, I mean, I am given high fives and I am given hugs.

I mean, we are up against some big numbers. So I feel really-really good about where we are at..

Great. Thanks..

Thanks Matt..

Thank you. Our next question comes from the line of Dan Binder from Jefferies. Your question please..

Hi. Its Dan Binder, thanks. I was wondering if you could talk a little bit about just the cadence of first quarter.

I know seasonal for some folks, was tough in April as well, was curious what you saw there, and maybe if you could break out what the seasonal mix looks at this time of the year, call it Q1, Q2?.

Sure Dan, this is John. With regards to the cadence, we actually had a pretty nice seasonal period from the complete months of March and April. We didn't really see any downtick in the month of April, really towards the back end of it, but did not impact in any significant fashion. The weather was so favorable upfront.

So one thing to keep in mind, we are not as seasonally driven as some others might be. Our core business is really basics and not seasonal related, while seasonal is very important for us in Q1 and Q2, and obviously Q4.

But our core business is not a seasonal type of business, so it's not something that could necessarily drive us in a bad situation, on any material aspect..

And then just as a follow-up; you mentioned that there were some exceptional buys in the quarter that drove the surprise in the gross margin.

I was curious if you could just comment, what part of the business, what category you saw that in, and -- I know your focus is 40% longer term, with the upside in Q1, in which you expect the gross margin to be higher on the year than we originally though?.

Yeah Dan; in terms of what drove the business; we have been really performing well in the bed and the bath. Some folks are going to call it domestic. Books and stationery have been doing very-very well. Food and candy, lawn and garden and house wares, those are the ones that I called out. In particular, there was a candy deal.

In particular, there was a hardware deal, that it's going to be a long time that we are going to have it in the stores, but it's going to continue to sell. And you know my personality, I am not going to be giving the names of those deals out, but they helped to drive the margin. So we feel really-really good.

In terms of the previous question, with the seasonal activity; I think what really excites me is the performance of the core departments. We did really-really strong; any department that did not do quite as well in the first quarter, was marginally off.

There was no big deal and -- including into the second quarter, the core departments are really-really doing well. Weather -- weather was crappy, what do you want me to say? So I feel really good about where we are at..

Great. Thank you..

Thank you. Our next question comes from the line of Brad Thomas from KeyBanc. Your question please..

Yes, hi. Let me add my congratulations as well on a nice quarter here. To follow-up on the last topic of the deal availability, we get asked pretty regularly is, how much of this is a function of Ollie's getting more well known versus perhaps the backdrop that we are in, with a choppy consumer and retailers going out of business.

Any new insights that you could share for us in that regard, Mark?.

Yeah. The phone keeps ringing Brad. We keep getting the deals, and we keep making major commitments with these manufacturers and their -- some long term commitments. So I am really-really excited about that.

As far as like the -- any of the activity, whether going out of business situation, the phone has started ringing, in some instances and that perhaps, some of the product might have been destined for a sporting goods company.

I don't know, but it might be that kind of product related, and just so that we are perfectly clear, and I know you know this Brad, but we don't get the product, or we would not be offered the product that would be in a GOB in the store.

We would get off with the product that the manufacturer perhaps would have had in their warehouse, destined for a particular retailer in the future, and then that creates a backlog, and that might create the offering to us. But the deal flow is very-very strong.

I feel good about where we are at, and even on the season side, obviously, that we are in right now, for whatever business we do in the seasonal, we are locked and we are loaded and we are ready to do business and we -- I had a really good weekend..

That's great. And if I could add a follow-up question on Florida? I know, it's still very early. I appreciate your comments on Orlando.

Could you just give us some updates in terms of what maybe some of the other inputs in Florida might look like? How expensive are these stores relative to the rest of the chain? What do wages look like and how should we think about returns on new stores in Florida, if the sales continue to perform as they have early on here in Orlando?.

Sure Brad. Obviously, we are real new into the state of Florida, but in terms of -- our rent structure in Florida, is a little bit higher than our average, but nothing that is concerning to us, in terms of being able to still get the deals in Florida, and be able to perform the way we have historically performed in line with our models.

So not a lot of pressure from that perspective. The wages are in line with what we had expected to be there. So the early returns would tell you that, our new store prototype in the markets -- the one market we have entered so far is not a real trend that I could tell you on a definitive basis.

But we believe, it appears that it's going to work right in line with our expectations, and hopefully, get a little bit ahead of what our new store model is at this point in time..

Sounds great. Thanks so much, John..

Thanks Brad..

Thanks Brad..

Thank you. Our next question comes from the line of Peter Keith from Piper Jaffray. Your question please..

Hi. Thanks and good afternoon. We are wondering on the same-store sales growth; you had commented its driven by both traffic or ticket.

Could you give us a sense if one of those is a more meaningful driver than the other?.

Sure Peter, this is John. With regards to the traffic or ticket for the quarter, the transaction side of the business was more the high single digit perspective, and the overall basket was in the low single digits. So the bigger driver was in the transactions on the quarter..

Okay.

That's the high single digit on a total basis, not on a comp store basis?.

On a comp store basis, Peter. That's how we track our transactions comp-to-comp..

Okay. Just also pivoting off --.

Let me back up a little bit Peter. I wouldn't necessarily say high single -- the high single digits, we are in the mid single digits there, sorry..

Okay. That makes more sense. Thank you, John. Just pivoting back to the popular questions around deal flow; so I had it in my notes that you guys have historically turned down about 80% of deals that are presented to you. I guess just, maybe, you are becoming a bit more selective, more things coming in, in front of you.

Do you have a sense now, on maybe what's being turned down today?.

I would say, it's very-very similar. I think that we are able to, I think, perhaps buy a name brand deal now, because of the relationship and the chemistry that we are developing with these manufacturers, that fit our margin profile, that perhaps did not fit our margin profile before.

So I do think we are able to buy a little bit better, and that's fitting our margin profile, whereas before when it didn't, we perhaps might have turned it down. We just weren't able to make as much money on it. So we just didn't do that. As far as, and of course, Peter, we don't track the exact calls.

It's a merchant heartbeat, when I give you the eight out of 10 calls; but I would say, the phone keeps ringing and we are being able to very selective and I am extraordinarily pleased with the product assortment, the breadth and the depth that is in our stores..

Thanks Mark. And maybe just a follow-on from a comment you had made earlier about, your making long term commitments.

Could you help us understand, maybe the example of what that would look like? Would it be commitments for six to 12 months, or what's the general structure of that?.

In several instances when we have done that, they have been either one or two year commitments..

Okay Sounds great. Thanks a lot and congratulations..

Thank you very much..

[Operator Instructions]. Our next question comes from the line of Denise Chai from Bank of America Merrill Lynch. Your question please..

Thank you and congratulations on another great quarter.

Could you talk a little bit more about gross margins; I mean, if you exclude those couple of really good deals, were merch markets stable on the rest of the business?.

Yeah Denise, this is John. With regards to the overall merch margin; the merch margin was very-very stable, and the benefit was really deal driven, and then obviously, leveraging the distribution-transportation side of the business. But the business -- the product mix in the assortment continues to work very well for us..

Okay, thanks.

And then, again, just thinking about the comp lift from those couple of really good deals, was it more material for margins than it was for comps, for example?.

Yes Denise. The deal flow was more beneficial on the margin side versus the comp lift..

Okay, great.

And just a quick one; how do we think about the pull forward out of the second quarter?.

That's something that I think is very difficult for a retailer to really answer until the season is done. So from our perspective, we are not really in a position to give guidance on how much of the business we think we pulled forward into Q1 out of Q2.

But we will tell you, we are in a very good inventory position to do the business from a seasonal perspective, and as the weather continues to warm up, the customer is responding. So we feel very good, that the business will come around from a seasonal perspective, and as Mark mentioned earlier, the core business remains very strong.

So we are excited about the prospects here for Q2..

Great. Thank you..

Thank you..

Thank you. Our next question comes from the line of Edward Kelly from Credit Suisse. Your question please..

Yes hi, good afternoon guys. I was hoping that you could maybe give us a bit more color on sort of like what you are seeing from a new store perspective? It certainly sounds like the first store in Florida is doing well.

What are you hearing from customers, as you went to that market now? Is the merchandising different on that market? Just remind us how big you see the opportunity there?.

Yes. We think that Florida could handle 40 to 60 stores. We think that we will be able to open up six to eight this year. The initial response in Orlando was quite strong, it was above average. It's such a great store. I am excited about our next store, which is scheduled to open late June in Jacksonville.

Prospects in Jacksonville is, you know, we might be able to have three or four stores, because geographically, it's really-really difficult to get around. But as far as the -- how the consumers responding is very-very strong. I am very-very pleased there; and we have no notoriety down there, that's just whatever advertising that we have done.

So once I get economies of scale down there, and get into the greater Orlando market with perhaps three stores, four stores, really try to get some economies of scale on the advertising. I think we are going to continue to grow. As far as the merchandising mix, I'd say it's probably 90% the same.

Certainly, and I think we have talked before, I am not going to put Penn state stuff down in Orlando, that just doesn't work. We also know that the same lawn fertilizer that we sell in Kentucky and in Pennsylvania is not the same lawn fertilizer that we are going to be able to sell in Florida. So there are some regional shifts that we have.

Perhaps, we won't sell as much air conditioning in Orlando. I know that's counterintuitive. But most of the houses or many of the houses have central air down there. We might sell more air conditioners in Rochester, New York, believe it or not. So there is minor things, but 90% of the product is going to be the same..

Just a quick question on the new overtime rules and just kind of labor costs in general; is there any impact that you might be able to speak to, later to these general retail headwinds?.

Sure Ed. This is John; obviously, I think this is a two-part question. With regards to the new overtime rules, and the increase in the minimum wage for the exempt employees. Obviously the ruling just came down very recently. We are in the process of evaluating this and the impact on the business.

At initial glance, we don't view this as a very material impact to Ollie's, based on what we currently pay our personnel in our entire chain of stores. Only two people in the stores currently are in the exempt status. Everyone else is already hourly.

So evaluating that, we believe to be very-very minimal on the business, but obviously, we need a little bit more time to dig through everything, and hopefully, in the near future, we will have an update on that, and any potential impacts that we will have on the business.

We wouldn't expect anything in 2016, this would not go into effect until December 1, but we will have more information, as time comes on.

But with regards to overall minimum wage in general and the changes that some of the mass merchants have made, we pay, what we believe to be a very competitive wage and benefits and work environment, and even with the change from last year.

We have been able to run our business without making changes of any significance and continue to be competitive and not have any issues hiring. So we think we are positioned pretty well in how we compensate our employee base and the benefits we offer them.

So we feel pretty good right now that we are functioning without any real headwinds from a wage perspective..

Excellent. Thank you..

Thanks Ed..

Thank you. Our next question comes from the line of David Mann from Johnson Rice. Your question please..

Yes, thank you. Let me add my congratulations. Two part question on your category performance; first, can you update us on where you stand on coffee, you said still comping the comp.

And then secondly, the floor covering categories -- recently, good sized category for you, but it seems to have been a weaker callout the last couple of quarters; just curious, why you think that's going and why that's happening, given the strength in the housing market? Thank you..

Sure David. This is John, I will take part of it, and then let Mark take the other part. With regards to coffee, as you know, we are really trying to stay away from calling out coffee individually, from a perspective that it has now been in the chain for over two years, and would pretty much become part of the staple of our business.

But in general, coffee has comped well and we continue to comp positive from a coffee perspective, so we are very comfortable that that's become a pretty staple item within our store base, and something that we are not overly concerned with as of today. So from that, we really don't have any concerns there.

With regards to flooring, I don't think we called the flooring out as a negative within our overall quarter. Flooring definitely did not comp negative for the quarter, so I am not sure if we misspoke or you misheard us, but the flooring department did comp positive for the quarter, so it was not a negative on the business.

And flooring is a large part of our business, but it's not the -- within the 21 departments that we segment the business in, not one single department is what I call a category killer for us..

All righty. And then, if you could clarify on the seasonal business, the sales year-to-date, are you generally on-plan, and is there potential exposure for markdowns, or would that be subcategories that you would potentially pack away? Thank you..

Yes I think that would be -- that's a good question. It could be a little bit of both. We still have -- its June 1, and I had a really good weekend last weekend. So we are really excited. So we got a long way to go. But we don't have any of the real markdown risks that a traditional retailer has.

Most of our, as we have talked individually David, most of the time, when we do a markdown, it’s cubically related. So in other words, if I have patio furniture and we have that at the end of June, early July, perhaps we might mark that down, because cubically, we don't want to be challenged by carrying that over.

But I think it would be a little bit of both..

And David, from my perspective; the overall business is -- with this past week that just experienced Memorial Day, business is turning in the right direction, so we are feeling pretty good about it. We’ve got the inventory to do the business. We are not overly concerned with the market on behalf of the [indiscernible]. So we are in pretty good shape..

Great. Good luck with the quarter. Thank you..

Thanks David..

Thank you..

Thank you. And this does conclude the question-and-answer session of today's program. I'd like to hand the program back to Mark Butler..

Thank you everyone for listening to our first quarter earnings call. We are pleased with our first quarter results and the underlying trends in the business. We look forward to speaking to you again on our second quarter call at the end of August. Thank you very much..

Thank you ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day..