Good day, and welcome to the Shoe Carnival's Fourth Quarter Fiscal 2016 Earnings Conference Call. Today's call is being recorded. It is also being broadcast via webcast. Any reproduction or rebroadcast of any portion of this call is expressly prohibited. .

Management's remarks may contain forward-looking statements that involve a number of risk factors. These risk factors could cause the company's actual results to be materially different from those projected in such statements.

Forward-looking statements should be considered in conjunction with the discussion of risk factors included in the company's SEC filings and today's earnings press release. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only of today's date.

The company disclaims any obligation to update any of the risk factors or to publicly announce any revisions to the forward-looking statements discussed on today's conference call or contained in today's press release to reflect future events or developments. .

I would now like to turn the call over to Mr. Cliff Sifford, President and Chief Executive Officer of Shoe Carnival, for any opening comments. Mr. Sifford, you may begin. .

Thank you, and welcome to Shoe Carnival's Fourth Quarter and Fiscal Year 2016 Earnings Conference Call. Joining me on the call today is Kerry Jackson, Senior Executive Vice President, Chief Operating and Financial Officer.

On today's call, I will provide a brief overview of annual operating highlights and our fourth quarter results as well as an overview of our fiscal year 2017 guidance. Kerry will review the financial results, and then we'll open up the call to take questions. .

During this call, we'll refer to certain non-GAAP financial measures, included -- including adjusted SG&A expenses, adjusted net income and adjusted diluted earnings per share. These non-GAAP financial measures exclude the impact of noncash impairment charges related to long-lived assets associated with 7 of our Puerto Rico stores.

The non-GAAP financial measures are provided in addition to, and not as alternatives for, our reported results determined in accordance with GAAP. A reconciliation of our reported results determined in accordance with GAAP to the non-GAAP financial measures is included in the financial tables of our earnings release. .

Fiscal 2016 represented a significant corporate milestone for us. Our net sales exceeded $1 billion. I am very pleased with this accomplishment, which reflects the hard work and dedicated efforts of our store associates and corporate team.

Over the last several years, we have benefited from the execution of our strategic initiatives, including our disciplined store approach strategy, our strong merchandising efforts as we deliver a compelling offering of branded, moderately priced family footwear, our multichannel sales capabilities, our expanded digital and national marketing presence and our extremely loyal and growing customer base.

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Our relentless focus on efficiently managing our business through both favorable and challenging operating environments has served us well. Today, we currently have stores in 35 states, and we believe the future opportunities for growth in large and smaller markets is tremendous as we work together to achieve our next $1 billion in sales.

In addition, we are fortunate to have the financial flexibility through the strength of our balance sheet and consistent cash flow generation to support our growth and return value to shareholders in fiscal 2017 and beyond. .

Now I'd like to focus on our strategic initiatives in a little more detail. In fiscal 2016, we continued to see growth in our loyalty program, Shoe Perks. For the year, our loyal shoppers accounted for approximately 66% of our net sales.

Our Shoe Perks members not only -- are not only loyal, they love shoes and they show it by spending, on average, 19% more per transaction than nonmembers. Even with the success of our Shoe Perks program, we believe we can do better at consistently finding ways to actively engage our most loyal customers.

In 2017, our team is tasked with the key objective of leveraging the wealth of customer data we have available. We will create targeted communications that appeal to our Shoe Perk members and their unique family footwear needs in the pursuit of increasing shopper frequency..

We believe we can improve our overall performance by utilizing our customer information in marketing, merchandising, e-commerce as well as real estate. It really is an incredibly valuable resource for us to leverage as we move forward.

While we remain committed to the acquisition of new members, we believe identifying our high-valued customers, how they shop and how best to retain them will deliver increased sales and better margins over the long term. In addition, we are offering our customers the option of signing up to the Shoe Perks through SMS.

This allows us to send offers and Shoe Perks-related information directly to their mobile devices. .

Our team has done an excellent job with our multichannel strategy as consumer shopping habits continue to evolve. It has been a priority for us to enhance our digital store experience over the past few years. .

As we have discussed in recent quarters, our much anticipated launch of Shoe Carnival's buy online, pick up in store and buy online, ship to store initiative began in the third quarter of fiscal 2016. We are very pleased with our early results of this program as our customers embraced this opportunity in greater numbers than anticipated..

In fiscal 2017, we look forward to our next digital sales enhancement strategies, including our new mobile app, which will launch in the next few months; a new and improved digital storefront that will allow us the opportunity to give our online shoppers the same surprise and delight they experience when shopping at a Shoe Carnival brick-and-mortar store; and the development of vendor drop-ship.

Vendor drop-ship will allow us to expand our assortment with key brands without the risk of inventory ownership. .

From a real estate perspective, we ended the year with 415 stores in the U.S. and Puerto Rico. For the year, we opened 19 stores, closed 9 stores and relocated 3 stores. For the fourth quarter, we opened 4 stores and closed 4 stores. Our store growth plan continues to focus on strong trade areas within our current footprint.

We consistently evaluate and take our underperforming stores that have minimal opportunity to improve, and either renegotiated lease terms, relocate or close the store..

It was just a year ago that we discussed our opportunity to open stores in key small markets across the U.S. We continue to be pleased with the 9 small market stores we opened over the past 15 months. Our small market stores are running well ahead of our first year expectations in both sales and margin.

Our strategy for 2017 and '18 is for approximately 2/3 of our new stores we opened to be a small and mid-market location. .

Our mid-market stores generally operate in smaller markets just outside a large city. And based on the volume expectation, these stores average about 7,000 square feet in size and are planned at approximately 80% of a traditional store model. .

For fiscal 2017, we plan to open approximately 20 new stores. 3 will be in smaller markets, 9 in mid-markets and 7 in traditional markets. In addition, we will close approximately 15 stores and relocate 3 stores.

It is important to note that the majority of these new store opens -- openings are focused on filling in the designated market areas we currently operate. Any new DMA will be in midsized markets where we expect to leverage our strong name-brand recognition.

We believe the continued disciplined approach to new market openings is very important as we pursue opportunities for store growth in large, mid and smaller markets as well as leverage our multichannel sales strategy. .

Now I would like to review our performance for the fourth quarter and the initial view of -- on fiscal 2017. Overall, fourth quarter comparable sales were in line with the updated annual guidance we provided in January, and our gross profit margin came in better than anticipated.

Comparable store sales for the fourth quarter decreased 1.2%, store traffic was down mid-single digits, units per transaction were flat and conversion and average transaction were up slightly. .

With the combination of highly promotional activity on seasonal product and the tremendous growth of our multichannel initiatives, merchandise margin finished the quarter down 130 basis points.

We ended the year with inventory down $13 million -- $13.2 million, which included 10 additional net stores open or down 6.8% on a per-store basis versus the prior year-end. Our team prudently managed our expenses.

It should be noted that during the fourth quarter of fiscal 2016, we recorded $4.3 million of noncash impairment charges, of which $3.6 million were [indiscernible] for 7 stores in Puerto Rico, which Kerry will discuss in more detail. .

SG&A adjusted to exclude the Puerto Rico impairment charges for the fourth quarter of fiscal 2016 increased $700,000 to $62.4 million or 26.6% of net sales, an increase of 20 basis points compared to the prior year period. From a merchandise perspective, athletic footwear remained a key category throughout the quarter.

Our merchandise team has done a terrific job in offering a broad assortment of great athletic brands that our customers know they can consistently find in our stores. .

By department, women's nonathletic footwear ended the quarter down mid-single digits compared to the same period last year on a comparable basis. Women's boots ended the quarter slightly negative on a comparable store basis. We are able to accelerate units without a lower average retail price.

Importantly, boot inventories were down double digit in every category, except rain boots, hikers and booties. The merchant team did an outstanding job with aggressive promotions as a clear through seasonal boots. Women's sandals ended the quarter with a comparable store increase in the teens. .

Men's athletic footwear -- Men's nonathletic footwear was down low single digits on a comparable store basis versus the prior year period. Similar to our results in women's, our men's sandals sales were up in the teens on a comparable basis. We also experienced increases in men's casual boots, particularly in the hiking category. .

Kids footwear ended the quarter flat on a comparable basis with nonathletic down mid-singles and athletic up low singles. .

Adult athletic footwear increased mid-single digits on a comparable basis, driven by both men's and women's product categories. .

Now I'd like to give a little color on our fiscal 2017 guidance. We cannot update you on our first quarter performance due to tax refund delays and the shift of Easter. As I've mentioned earlier, per-store inventory was down 6.8% at the beginning of fiscal 2017.

We believe the strong athletic footwear cycle we experienced during 2016 will continue in 2017, and we will ensure that our inventory positions will take advantage of that athletic trend going forward. We are also pleased with the early results from our casual sandal footwear. .

In the fall, we will plan boots cautiously with the expectation of selling fewer units. We believe this cautious approach will allow us to increase average unit retail and margin in the boot category.

Therefore, we expect full year net sales to be in the range of $1,028,000,000 to $1,040,000,000 with comparable store sales flat to up low single digits. Earnings per diluted share are expected to be in the range of $1.45 to $1.54. .

Included in the earnings estimate for the year is the expectation at the high end of our guidance, gross profit margin will be up approximately 30 basis points with slight leverage of our buying, distribution and occupancy cost. We expect SG&A will be flat as a percentage of sales.

It is also important to note that fiscal 2017 is a 53-week year with the extra week falling in the fourth quarter. We estimate the 53rd-week sales to be approximately $15 million and will be slightly accretive to fiscal 2017 earnings per diluted share. .

That concludes my overview. I would now like to turn the call over to Kerry.

Kerry?.

Thanks, Cliff. And good afternoon, everyone. Fourth quarter net sales increased to $234.2 million compared to $233.7 million in the fourth quarter last year. The net sales increase was driven by sales of $5.0 million from the 21 new stores opened since the beginning of the fourth quarter of fiscal 2015.

This net sales increase was partially offset by a $2.8 million decrease in comp store sales and a $1.7 million loss in sales from the 10 stores closed since the beginning of the fourth quarter of fiscal 2015. .

Our gross profit margin for the quarter was 27.5% compared to 29.2% in the fourth quarter of fiscal 2015.

Due to promotional selling in Q4 and margin pressures from cost association -- associated with our multichannel business, our merchandise margin decreased 130 basis points and our buying, distribution and occupancy expenses as a percentage of sales increased 40 basis points due primarily to higher occupancy cost.

As a reminder, we typically need a 2% to 3% comp increase to leverage our occupancy cost. .

Selling, general and administrative expenses for the fourth quarter of fiscal 2016 increased $4.2 million to $65.9 million or 28.1% of sales. SG&A in the fourth quarter of fiscal 2016 included noncash impairment charges of $3.6 million for 7 Puerto Rico stores.

Excluding these noncash impairment charges, adjusted SG&A increased $668,000 to $62.4 million or 26.6% of net sales in the fourth quarter of fiscal 2016. .

In addition to the noncash impairment charges for our Puerto Rico stores, store closing and impairment charges included in both cost of sales and SG&A in Q4 this year were $1.0 million compared to $701,000 in Q4 last year. There were no noncash impairment charges of long-lived assets for our Puerto Rico stores in fiscal 2015.

Preopening costs included in both cost of sales and SG&A increased $23,000 in the fourth quarter of fiscal 2016 to $196,000. The effective income tax rate for the fourth quarter of fiscal 2016 was 39.8% compared to 36.0% for the same period of fiscal 2015. .

Net loss for the fourth quarter fiscal 2016 was $0.9 million or a loss of $0.05 per diluted share. Included in the fourth quarter of 2016 were the previously mentioned noncash impairment charges of $0.12 per diluted share. Adjusted net income was $1.3 million or $0.07 per diluted share in the fourth quarter of fiscal 2016.

For the fourth quarter of fiscal 2015, net earnings were $4.2 million or $0.21 per diluted share..

I would now like to transition to our full year fiscal 2016 results. Fiscal 2016 net sales increased $17.1 million to $1,001,000,000 compared to fiscal 2015. Comparable store sales increased 0.5%.

The net sales increase was driven by sales of $23.3 million from the 39 new stores opened since the beginning of fiscal 2015 and a $4.7 million increase in comp store sales. This net sales increase was partially offset by a $10.9 million loss in sales from the 24 stores closed since the beginning of fiscal 2015. .

The gross profit margin for fiscal 2016 was 28.9% compared to 29.5% last year. Merchandise margin decreased 60 basis points while buying, distribution and occupancy cost as a percentage of sales remained flat compared to the prior year. SG&A for the fiscal 2016 increased $7.4 million to $251.3 million or 25.1% of net sales.

For fiscal 2016, SG&A included the previously mentioned noncash impairment charges of $3.6 million. Excluding these noncash impairment charges, adjusted SG&A increased $3.9 million to $247.8 million or 24.8% of net sales in fiscal 2016. .

Net earnings for fiscal 2016 were $23.5 million or $1.28 per diluted share compared to net earnings of $28.8 million or $1.45 per diluted share in fiscal 2015. Adjusted net income was $25.7 million or $1.40 per diluted share for fiscal 2016. .

Now turning to information affecting cash flow in fiscal 2016. We declared and paid cash dividends in each quarter of fiscal 2016. During the first quarter, we paid cash dividend of $0.065 per share and during the second, third and fourth quarters, we paid cash dividends of $0.07 per share to our shareholders.

The cumulative amount of dividends returned to shareholders in fiscal 2016 was $5.0 million. During the fourth quarter, our board authorized a new share repurchase program for up to $50 million of our outstanding common stock, effective January 1, 2017. The previous plan expired December 31, 2016. .

During Q4, we repurchased 285,000 shares at a total cost of $7.2 million. For the full year of fiscal 2016, we repurchased 1.7 million shares for $42.6 million. For the first quarter this year through yesterday, we have repurchased through our Rule 10b5-1 repurchase plan approximately 361,000 shares at a cost of $9.2 million..

During fiscal 2016, we expended $21.8 million for the purchase of property and equipment, of which $16.4 million was for new stores, remodels and relocations. Incentives received from landlords were $4.3 million. Depreciation expense was $6.0 million in Q4. Depreciation expense was $23.7 million for the full fiscal year.

Cash and cash equivalents at the end of the year were $62.9 million, and we had no bank debt outstanding. .

I'd now like to add a little -- briefly discuss forecasted cash flow information for fiscal 2017 and add a little color on our Q1's earnings expectations. Capital expenditures are expected to be $22 million to $23 million in fiscal 2017.

As Cliff mentioned, for fiscal 2017, we expect to open approximately 20 stores, which will account for approximately $10 million to $11 million of our total capital expenditures. Approximately $6 million of the total capital expenditure should be used for store relocations and remodels -- remodeling of approximately 5% of our existing store base.

Incentives we received from landlords are expected to be approximately $4 million to $5 million. .

Included in our earnings expectations for the first quarter of fiscal 2017 is a comp store sales increase -- to be flat to up slightly. Additionally, we expect our gross profit margin will increase but will be partially offset by an expected increase in our SG&A as a percentage of sales compared to Q1 last year.

We expect to open 7 stores in Q1 and close 5. .

This concludes our financial review. Now I'd like to open up the call for questions. .

[Operator Instructions] And we'll take our first question from Mitch Kummetz with B. Riley & Co. .

Let's see, I think I've got 3 questions. Just kind of on the guidance. I guess, this is all for Kerry. So Kerry, you just mentioned on Q1 gross margin up a bit, SG&A up a bit.

I mean, did those offset? Are you looking for kind of EBITDA margin to be flat year-over-year? And can you maybe speak a little bit to kind of what you're expecting on the gross margin side? Because I know that you have a reasonably easy comparison in terms of March margin. I think March margin was down like 90 bps last year in Q1.

So I'm kind of curious how you're thinking about that. .

We do expect our gross profit margin increase to be higher than the increase in our SG&A. However, we're not planning to have a full recovery of the loss of the gross profit margin that we sustained in Q1 last year. .

Got it. Okay, that's helpful. And then on the year, I think you mentioned that merch margin was down 60 bps on the year. I know your guide on gross margin for 2017 is up 30. It sounds like the majority, if not all of that, is coming in terms of BDO leverage.

How are you thinking about merch margin opportunity over the course of the year, particularly in Q4 where your merch margin was down 130 bps this past quarter?.

What we're looking at is that we continue to have headwinds against our merchandise margin on our multichannel initiatives. We're expecting to see a significant increase continuing in our e-commerce and other multichannel initiatives. And with that comes the higher cost structure associated with that.

So that's one reason you're seeing it not aggressively growing our gross profit margin on a year-over-year basis. We do expect to see the fourth quarter to be a higher rate -- one of the higher rates for the quarter -- for the year per quarter. .

Got it.

In terms of the improvement?.

Right. .

Okay. And then lastly, just really a housekeeping question.

Is there a kind of underlying tax rate and share count assumption on the -- on earnings range for the year?.

What we're looking at for tax rate is what we -- more of a historical rate, about 38.25%. And the fully diluted shares for the year, we're projecting to continue to do some buybacks and we expect those to be, with that taken into account, a little over 17 million shares outstanding on a diluted basis at the end of the year. .

Our next question comes from Randy Konik with Jefferies Group. .

I guess a question for Cliff. You gave us the statistics on the Shoe Perks loyalty program. I think you said 66% of sales and the purchase, I guess, total amount was about 19% higher than nonmembers.

Any kind of data on the members' frequency of purchases versus kind of nonmembers in the system? I'm just kind of curious on if you're seeing kind of a lift in visits per quarter or something like that. And you mentioned the opportunity to increase engagement.

Give us some kind of perspective on kind of strategies you're going to use to reach out to both -- I guess, to existing Shoe Perks members but also kind of strategies you're going to use to engage potential new members to drive new member sign-ups. Just curious there. .

No problem, Randy. We have done a great job over the past 4 years of getting people to sign up for Shoe Perks. What we have not done a good job of is reengaging with those customers that may have dropped off or been inactive.

So that is a focus of ours as we move through 2017, is to reengage with any of those customers that may not be as active as we want them to be. From a shopping standpoint, from a frequency standpoint, I don't have that number in front of me. I know that we measure that, the number of times a customer shops per quarter or within a year.

And I apologize, I don't have that number with me today. However, we recognize that we have a wealth of data out there from not only from our Shoe Perks members, but from the -- from our e-commerce site as well. And our plan this year is to dig into that wealth of data and looking for customers that have not yet signed up for Shoe Perks.

And that's how we expect to grow that program this year, not only in our store base, but -- at our brick-and-mortar base and online, but -- with the amount of data that we have throughout all our touch points. That's how we expect to get growth out of that. I hope that answer your question with the exception of one data point I didn't have. .

Yes, it's helpful. And then maybe give us some perspective on -- you talked about early successes in the small and mid-market strategy relative to the traditional market strategy or stores markets.

Can you give us some perspective on how you're thinking about margin by class of stores and how that may be different near term versus long term? Just trying to get some perspective on how we should be thinking about medium-term EBIT margin structure for the company. .

Well, the best -- let me see if I can -- let's talk about the mid and the small quickly. We see -- we're not looking to expand right now outside of our current footprint, as I said in my prepared remarks. What we want to do is to take advantage of the customer that knows us so well in our current footprint. So that saves us from a marketing expense.

You don't have to go into a large market and buy a local TV. So that saves from a marketing expense. We also don't plan, especially in our small markets, to be as promotional as we are in our larger markets. So we do look for margin expansion there.

We don't give margin by segment or by store delineation, so I'm not -- I'm afraid I can't share much with you on that other than the fact that we expect our small market stores to drive a higher margin. And right now, I don't have enough history on our mid-market stores. In fact, we've just opened up our first one this past quarter.

So we -- first couple, so you got to give you some more time on that. But the way we perform those stores was to run at a higher margin rate than our traditional stores. .

Our next question comes from Alex Pham with Mizuho Securities. .

I guess, first question, in the first quarter guidance assumption for comps of flat to up slightly, is that sort of an acceleration from -- or are we assuming acceleration from what you guys are seeing quarter to date? I'm just trying to get a feel for how you're thinking about the first quarter from a top line perspective. .

when tax refunds come out, because our customer is driven -- it's almost like the second back-to-school for us when tax refund season hits, and Easter. And Easter moved 3 weeks later. So we've naturally expected for comps to accelerate later in the quarter than last year because of the shift of Easter. .

Got it. That's helpful. And I guess, if we could touch on the athletic portion of the business for a second. It seems like it's been a real driver of growth for you guys.

How are you guys planning the category for 2017? Do we think, as a -- from a penetration perspective, that it's going to grow as a percentage of sales? And is there a margin impact associated with that?.

So the answer to your second question is we don't anticipate a margin impact to that. Right now, athletic is and has been for the last 3, maybe 4 years our hottest category. We have and we do look to athletic to grow at a higher rate than nonathletic. So it will, from a penetration standpoint, be a larger percentage of our business. .

Got it. And what we're hearing in the athletic category, it seems like competition's really ramping up.

Should we think of that as a potential benefit for Shoe Carnival as you kind of diversify from a brand perspective?.

Competition heating up from a athletic perspective?.

Yes. .

Well, there are people that are expanding their -- some of our competitors are expanding their athletic product mix, and you're always concerned about anyone that sells athletic product. So I mean -- that competes with you.

However, there's quite a few stores or companies that are not surviving, I hate to even say that, but -- which expands the opportunity for athletic as an entire business. .

Got it. And then last question.

In terms of the vendor drop-ship program, how big do you guys think that could be in terms of penetration in the assortment? And any color you guys can share in terms of the -- maybe financial impact in terms of margin benefit?.

I think, again, to answer the second question first. I think margin benefit comes from not having to carry the merchandise, and the vendor takes a risk of the merchandise. So in that regard, I think that is helpful. To be perfectly honest with you, I'm not sure what the benefit from a top line sales standpoint is until we actually get this launched.

We'll test it with a few vendors. I think it's going to -- personally, I believe it's going to be more important to us in the men's nonathletic area than any other area because they're the ones that keep stock on hand for fill-ins. So I really don't know if -- I listen to my friends in retail that have already done this.

It could be a great benefit to us, but I would hate to quantify that for you today. .

Our next question comes from David Mann with Johnson Rice & Company. .

A couple of questions.

In terms of the questions about tax refunds, can you -- when you look back at how the -- your sales have trended quarter to date, has the role of tax refunds on that trend played out the way you expected? And do you expect that the later timing of refunds will not have a negative impact on the sales that you would have expected to have if it was similar timing to last year?.

David, that's a great question. I will tell you that, early in the quarter, tax refunds had a tremendous effect on our results. And as those tax refunds rolled out, we've begun to recover at a really good rate. We're just not going to know the answer to that until we get through Easter.

It's just hard to measure because as our business progresses -- this week a year ago was Easter week. So even though against our internal plan we’re doing well, you can't know from a comp perspective until you actually get through the Easter week. Not this Easter week, but actually 3 weeks from now through the Easter. .

Got you. In terms of the competitive environment, obviously, across-the-board lots of closings from department stores whether it be Macy's, Penney's, Sears, Payless, whomever.

When you look at all of these, while they may not be your most direct competitors, how do you see those closings impacting your business? Do you -- are you planning to gain some share or building some of that into your guidance for this year?.

We have not built that into our guidance at this point because all of those closings are also going to involve going out of business sale. So what you might build in for them actually closing those stores, you have to take away from the highly promotional environment they're going to have as they clear their inventory.

So I think that would be more of an '18 build than a '17 build. But we do look at that as an opportunity as, I guess, every retailer would that is competing against them. .

And then lastly, you commented in the release about the early performance of sandals, casual sandal footwear.

Can you just talk a little more about what you're seeing there and how that may play out for some of the opportunity for positive comps in the first quarter?.

David, I swore toward the end of fourth quarter that I wouldn't blame anything on weather again. But I'm going to have to go back on that and tell you that weather played a key role in those sandals selling in the fourth quarter. It was warmer than -- expected warmer than a year ago, and it did accelerate sandal sales.

The other thing we did from a strategy -- strategic standpoint is that we took our warm doors and we increased our sandal selection in those warm doors, and that was a very good strategy and worked out very, very well.

And not only did it work out from a sales standpoint from a sandal comp, but it also told us early on what was selling, and we were able to make sure that we're properly covered on those sandal items. .

[Operator Instructions] Our next question comes from Greg Pendy with Sidoti & Company. .

My question is, I think you mentioned as we kind of look out to the fourth quarter and we cycle now boot season, you mentioned that you were going to bring down, I guess, the inventory and the units.

Does that mean -- was there something this year in the data that made you think that or made you see that maybe you can get higher pricing? Was there mix going on within the boots season where the lower-priced footwear wasn't selling?.

No. I'd tell you, what happened was we planned -- we did not do a great job of planning our boot business. We thought boot was -- boots were going to be up, and as it turned out, that was not the case. So we were very promotional in the fourth quarter on boots and clear through.

And because that we were very promotional, as I mentioned earlier, even though we had a -- we sold -- we sold more units, we actually had a slight loss on sales.

So I truly feel like that if we plan the boots more cautiously, and I really don't want to tell you whether that's down or flat, but I can tell you that's not up, that we can -- we'll be able to -- we won't have to be as promotional as we were a year ago, which will then drop up our average unit retail and our margin. .

Our final question comes from Sam Poser with Susquehanna Financial Group. .

Okay, Cliff.

What percent of sales at this point in time was sort of touched by digital, in that they might have bought on the app, they might come into the store because of the app? Can you -- do you have any measurement of that right now and how that's impacting you?.

I don't -- from an app standpoint, I don't have a measurement of that. Here's what I can tell you, today, Sam, I don't think we have a single customer, it feels that way anyway, that's not walking around our store with a mobile phone in their hand comparing inventory, pricing or whatever and that -- or maybe even looking for coupons.

So whether they're doing that on our app or whether they're doing that through our website or through one of the affiliate marketers that we use, I just know that it’s happening more and more. .

All right. I got a couple more.

Number -- how many store closure -- how many stores do you plan to close this year and in the first quarter since you gave the store openings for Q1?.

We look at closing approximately 15 stores for the year, Sam, and 5 of them will be in Q1. .

And then the balance, primarily in the back half of the year like it normally is? Is that the way to think about it?.

No, it's spread fairly ratably the final 3 quarters. .

Okay. And then going back to the boots for a second, Cliff. When you said you're going to be planning the boots down or flat, and you said -- you said you weren’t going to plan the units up.

I mean, I guess, the question is how many units can you sell at a more normalized discount or regular price versus heavy promotions? So when you're thinking about units flat to down, I would think that, to avoid promotion, the units would be theoretically planned down a lot because a lot of your unit sales at the end were driven on very aggressive promotions, I would assume.

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I would tell you that you're probably correct. We are going to plan the units down aggressively. .

And then lastly, Cliff -- Kerry, do you expect earnings in Q1 to be up or flat? Could you give us some idea there? And also, does the guidance assume -- I assume -- the guidance, it sounds like it assumes an acceleration of sales in the next 5 weeks.

And I know you have Easter coming and Easter generally accelerates, is there -- are you planning any kind of -- I guess, in the guidance, is there any difference in the way you're expecting the acceleration to be this year versus other years or anything of that nature?.

The only acceleration -- I'll take the second part of that question, Sam, is the only acceleration that we expect to be different is the acceleration of the tax refunds. Otherwise, we expect Easter to be pretty much comp to last year. In fact, we expect it to be comp to last year. .

And then as far as earnings in the first quarter, Kerry?.

I'm sorry, I actually took a drink and started coughing and missed your first part. .

Earnings in Q1, is it up, down, flat with last year? I mean, how do we... .

We expect it to be up. .

It appears there are no further questions at this time. I'd like to turn the conference back over to Mr. Sifford for any additional or closing remarks. .

Thank you. And thank you for joining us on our call today, and we look forward to talking to you on our next conference call. Thanks again. .

Ladies and gentlemen, that does conclude today's presentation. Thank you for your participation. You may now disconnect..