Good afternoon, and welcome to Shoe Carnival's Second Quarter Fiscal 2019 Earnings Conference Call. Today's conference is being recorded, and 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 discussion of risk factors included in the company's SEC filings and today's earnings press release. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today's date.

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

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

Thank you, and welcome to Shoe Carnival's Second Quarter 2019 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'll provide a brief overview of our second quarter operating highlights and sales results as well as review our fiscal 2019 outlook. Kerry will discuss the financial results in more detail. Then we'll open up the call to take your questions..

I am pleased to report comparable store sales for the quarter increased 1.4% on top of the 6.7% increase we had for the second quarter last year. This increase was driven by athletics early in the quarter and nonathletic as the quarter progressed to a warmer, drier seasonal weather pattern.

This demonstrates the strength of our model, which offers a broad assortment of footwear for any occasion or season for the entire family. I am also pleased to tell you that our back-to-school season is progressing nicely with August sales up 3.5% through yesterday.

This increase is being driven through both the athletic and nonathletic product categories. I believe that Shoe Carnival is the shoe store of choice during critical shoe-shopping periods. Our customers trust us to have a broad assortment of the best brands and the latest trends..

In addition, I am pleased with the very early results related to the initial implementation of our CRM program. I'll speak to this in more detail in a few minutes..

Traffic and average transaction for the quarter declined low single digits while conversion increased low single digits. Average units per transaction were down slightly. We ended the quarter with inventory up 2.3% on a per-store basis as we prepared for both the back-to-school selling period and early delivery of fall product. .

Merchandise margins were flat to last year. BD&O increased 60 basis points as a percentage of sales and SG&A decreased by 80 basis points. As a result, operating income increased by 20 basis points. EPS for the quarter was $0.80 per diluted share, an increase of 5.3% compared to second quarter last year. .

Focusing on the second quarter comparable store sales by department. Women's nonathletic was up low single digit on a comparable basis. We are particularly pleased with the performance of women's dress shoes and sport casuals, both of which produced mid-single-digit increases over a comparable basis. Additionally, sandals were up low single digits.

And with the wet and cold start to the second quarter, we experienced high single-digit comp store growth in women's boots. .

The men's nonathletic department continued with its strong performance posting a low single-digit comparable-store sales increase. Our broad selection of great brands of shoes and boots for any occasion makes Shoe Carnival a destination for men's shoes..

The children's shoe department posted a low single-digit increase for the quarter on a comparable basis. We produced mid-single-digit increase in nonathletic, driven primarily by our seasonal categories. Children's athletic produced a low single-digit increase on a comparable basis.

We continue to see a shift away from function and more towards fashion in children's athletic footwear. .

Adult athletic was down slightly on a comparable basis. Here, just like children's athletic, there has been a shift from performance categories to more casual categories..

Now to update you on the progress on our CRM initiative. We are happy with the continued progress on the CRM implementation, but we're also pleased with the early results. Sales to Shoe Perks members for the second quarter were up 5.5% versus last year. This is compared to our 1.4% comparable store sales increase we achieved for the quarter.

Gold membership for the year has grown 44% versus last year. This is a key point because a gold member's average order value is $17 higher than the average order value of our non-Gold members. Segmenting and marketing to members across channels with messaging targeted to specific customers has contributed to this growth..

Additionally, we expect that as we continue to implement our CRM capabilities, we'll continue to grow our active shopper file and convert additional members to Gold status. We have confidence that Shoe Carnival will continue to earn the loyalty of new customers searching for a large selection of footwear for the entire family at a compelling value. .

As we move forward, we expect our CRM system to be fully implemented by the end of the fiscal year. Through improved customer analytics, we'll expand our reach to new customers in new and existing markets that closely match the profile of our most loyal customers.

As a reminder, this fiscal year, we proactively made the strategic decision to slow store growth as we build our CRM capabilities. Our CRM analysts have begun to provide useful data to both our merchants and our real estate team.

With this insight, we fully expect to continue to drive profitable sales growth in our comp stores and once again begin to expand our brick-and-mortar footprint beginning in fiscal 2020. .

For the second quarter, we ended with 393 stores in 35 states and Puerto Rico. During the quarter, we closed 2 stores and had no new store openings. For the remainder of the year, there is 1 new store planned and 2 additional store closures..

Finally, I'd like to give you an update on our financial expectations for fiscal 2019. As I've said earlier, back-to-school has gotten off to a good start with August sales month-to-date up 3.5% versus the same time period last year. Comparable store sales for the past 2 years in August have increased 7% and 6.5%, respectively.

This August will represent the 17th consecutive year with positive comparable store growth for the month. I'm happy to share that our August comparable store sales increase is being driven across all channels and all major product categories. I am especially pleased with the increase in traffic our brick-and-mortar stores are experiencing.

Our customers count on us for an unparallel shopping experience. Shoe Carnival combines a fun store environment with the latest brands, trends and key styles at a compelling value. .

Based on our performance year-to-date, we feel comfortable maintaining the high end of our annual diluted earnings per share guidance of $2.83 and raising the lower end of the range to $2.77. This compares to diluted earnings per share of $2.45 in the prior fiscal year.

With the first half of the year complete, we are refining our net sales estimates while maintaining our comparable store guidance for the year of a low single-digit increase. Total sales for the full fiscal year are expected to be in the range of $1.028 billion to $1.033 billion..

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

Thank you, Cliff. .

Our net sales for the second quarter ended August 3, 2019, of $268.2 million were essentially consistent with the prior year's second quarter. Our comparable store sales increase of 1.4% contributed $3.6 million to net sales, and $1.2 million was attributable to the 3 new stores opened since the beginning of the second quarter of fiscal 2018.

These increases were offset by a loss in sales of $3.7 million from the 15 stores closed over the same period and a loss in sales of $1.2 million attributable to other noncomp stores relating primarily to hurricane-impacted stores. .

Our gross profit margin for the quarter was 30.6% compared to 31.2% in the second quarter last year. Our merchandise margin was flat for the quarter, while buying, distribution and occupancy expenses increased 60 basis points as a percentage of net sales.

The increase in buying, distribution and occupancy expenses as a percent of net sales was primarily a result of lower occupancy expense in Q2 of last year.

This was due primarily to a $1 million lease termination benefit in that prior year quarter for 2 stores in Puerto Rico where the landlord could not make contractually required repairs within the allotted time. Also contributing to the deleveraging of expenses was a slight decline in sales for Q2 against higher expenses..

SG&A expenses decreased $2.4 million in the second quarter fiscal 2019 to $66.4 million. As a percentage of net sales, these expenses decreased to 24.8% compared to 25.6% in the second quarter of fiscal 2018. The decline in our SG&A expense in Q2 was due to lower equity and incentive compensation.

In Q2 last year, we tripled our quarterly earnings, resulting in an increase in incentive and equity compensation expense of $4.8 million. A more moderate increase in Q2 earnings this year resulted in a $3.9 million reduction in incentive and equity compensation expense as compared to the prior year period. .

Other significant changes in SG&A for the second quarter of fiscal 2019 included a $1.2 million decrease in depreciation expense and a $0.8 million decrease in expense for stores that have closed or are closing net of new store expenses.

These decreases were offset by a $1.6 million increase in payroll expense and a $1.4 million increase in advertising expense. .

The effective income tax rate for the second quarter of fiscal 2019 was 24.5% compared to 21.6% for the same period last year. For the full year of fiscal 2019, we expect our tax rate to be approximately 21% compared to 24.3% last year.

The reduction in the annual tax rate this year was a result of a $1.9 million tax benefit related to vesting of equity-based compensation in Q1 this year..

Net income for the second quarter was even with last year at $11.8 million, or earnings per diluted share for Q2 increased $0.04 to $0.80 per diluted share. Weighted average diluted shares outstanding for Q2 this year decreased 4.1%..

Now turning to our cash position and information affecting cash flow. Depreciation expense was $4.1 million in the second quarter. Depreciation expense is projected to be approximately $16 million for the full fiscal year.

Capital expenditures for fiscal 2019, including actual expenditures during the first half of the year, are expected to be between $21 million and $22 million, with approximately $16 million to be used for new stores, relocation, remodels and the purchase of our corporate headquarters.

The remaining capital expenditures are expected to be incurred for various other store improvements, normal asset replacement activities and continued investment in technology. .

Similar to Q2 last year, we did not repurchase any of our common stock during the second quarter this year. We continue to expect diluted weighted average shares outstanding for the fiscal year to be approximately 14.7 million shares. We currently have $36 million remaining under -- available under our $50 million share repurchase authorization..

My final comments today will focus on adding a little color on our earnings expectations for the third quarter this year. At the high end of our annual earnings guidance, we expect Q3 comparable store sales to increase low single digits. Our merchandise margin is expected to be flat to slightly up.

Buying, distribution and occupancy expense should leverage moderately due to lower distribution costs, and SG&A is expected to be flat to slightly up as a percentage of sales..

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 Pivotal Research. .

Cliff, could you elaborate a little bit on the athletic business? It sounds like for the quarter, it was maybe better early than late, and that just does look counterintuitive to me just given that your biggest athletic vendor was flowing a lot of new product late in the quarter.

And also, you made some comments about there's a shift in athletic to more casual, which again seems to kind of go against what I would think would be the benefit of that vendor flowing in that newer product. So just a little more color on athletic, I think, would be helpful. .

Yes. No problem, Mitch. You are right that the -- our largest athletic vendor did flow in new product as we went through the quarter. But that -- most of that product came in toward the tail end of the quarter. So it didn't have a major effect on the -- as a whole in the second quarter.

I'll talk about -- I think you know what I'm talking about when I mentioned casual athletic that has been a major contributor for the quarter. Everyone knows what's going on with skate category right now. .

And then curious -- go ahead. .

I will add this that as we moved into back-to-school, we saw increases happened, and I mentioned this in my prepared remarks, throughout all product -- most major product categories, and very happy with that.

So we've been getting a lot of sales from women's canvas product, women's -- men's canvas product, skate and out of the regular, what you would consider to be, true athletic product. .

Okay. That's helpful. And then, Kerry, on the sales guide, so you've taken on the sales guide for the year. No change in the comp outlook. It looks like you're closing fewer stores.

So is the reason the sales guide comes down because you're now -- not expecting a lot of volume from liquidating those stores? Is that really the difference on the sales guide?.

No. The difference really came out of the first half when -- now that we've actually gone through it, and we can adjust to actual -- the annual guidance we had at the beginning of the year against where we are midyear. That's why we adjusted the earnings or the sales down on that.

But we still feel confident in our earnings expectations as we've been able to make adjustments throughout the year to compensate for a little lower sales than we originally expected. .

And then maybe lastly, Cliff, on Payless. I think the thinking going into the quarter was sort of net neutral for the quarter, maybe a little bit of a drag early, but then a benefit late.

I was -- I'm hoping you could maybe speak to kind of what you saw in those stores that overlap with Payless in the quarter?.

We have not seen a lot of change in those stores from a -- and overall, they've comped pretty close from what the company comped. If you had to remember, there are a lot of shoes that were liquidated early in the quarter through -- at least through the first half of June.

And that took up a lot of these -- a lot of the open-to-buy, customers open-to-buy, so to speak. And I think we'll see the benefit of Payless going away as we move through the third quarter. .

And our next question comes from Sam Poser. .

Can you just tell us what you're -- the comps -- like what you were up against by months and last year in the first -- in the second quarter? And then what you're up against by month? You mentioned 7.5% in August of '18.

Can you just -- and then tell us what September and October look like?.

Yes. Kerry is getting that for you now, Sam. We had a -- as you'll remember, we had a strong second quarter last year. .

Sam, last year, the second quarter ended -- we started May up in the low teens. And then June was up high singles, and then July was down low singles. .

And then September, October or August, September and October?.

August, we've talked about, was up 6.5% last year. And then we saw both September and October being up low singles. .

And then -- so when you think about no Payless and your overall product mix, how do you view -- do you view Q3 being a better -- like a bigger number than Q4 as far as the comp increase? Is that -- I mean, is that how we should think about it? Or do you think they're looking fairly aligned as far as the comp increase given the good start?.

I think they look fairly aligned given the -- even given the good start as we move through the third quarter and fourth quarter. .

And I assume based on the start that you have and no Payless that you would anticipate the back half of -- the comp in Q3 and Q4 to be better than the comp in Q2?.

Yes. That is correct. I think that's a fair statement. .

And then in -- your sandal business was a little different than somebody else recently.

Could you talk to us about what kind of things worked in sandals? What type of product worked and maybe didn't work in your sandal category?.

Well, we had -- it wasn't surprising. We mentioned in the last call that we felt we were going to get comp store growth out of sandals. So we weren't surprised by that. But we did see continuing improvement in footbed sandals as we moved through the quarter and wedges as we moved through the quarter, low wedges as we moved through.

So I'm happy that -- now they were up low singles, so I can't tell you we blew the doors off. But I'm very happy with the fact that sandals comped positive in the second quarter. .

But I mean that was probably the story of like mid-single digits down at the beginning and then better than mid-single-digit comps in the back half. .

That's exactly -- Sam, that's exactly what happened is that we started the quarter down, and we had faith that as we move through the quarter, we'd see increases, and we did. And by the way, I just want to reiterate that we saw those increases. Our margin for the quarter in the sandals improved over last year.

So it wasn't the fact that we're clearing through... .

I know that you don't like to talk about brands, but can -- I mean, one of the big brands and one of your biggest brands was Nike. And you talked about -- there's been a lot of talk in the athletic space about the improvement of the Nike products for your channel.

Can you sort of give us some idea of how that's shaping up? And how you see that overall sort of through the balance of the year, maybe even next year now that you've seen the product? And then lastly, you haven't mentioned the tariffs at all.

Could you give us some view of sort of any impact of the tariffs that you built into your guidance, or how you're thinking about all that?.

All right. I'm going to live with my commitment not to talk about brands on the call. So I'm going to skip that question. I will tell you that, as I said on the last call, and I still believe that, is that the product has gotten better as we've moved through the second half of the year.

And we expect that to continue to [ tweak ] all the product we've seen as we move through the rest of the year, we are happy with. And that's the extent of which I'm going to talk about brands. .

From a tariff standpoint, we don't -- we built whatever tariffs we felt were going to hit us into our guidance. However, we don't believe that we're going to -- about 10% of the product that we're importing on our own will be affected by the 09/01 tariffs, so very small portion.

As you know, we only build up 20% of our women's business and about 30 -- no, less than that. About 10% of our kids business are direct imports. Kids is driven so strong by athletic. So very small percentage of our receipts for September are going to be affected.

The rest for the 12/15 tariffs, we have arranged to have most of that product, a vast majority of that product, delivered prior to 12/15. So we don't see any and very, very little impact to our margin for this year on tariffs, Sam. .

And what about the brands, I mean, and how they're handling it? And how you may be seeing pricing for next year? I heard with the large accounts in kids that they -- that we've already started to hear that there's some price increases going on in kids. .

I can tell you that as of today, we have not seen any price increases in kids or in adults. .

And our next question comes from Chris Svezia with Wedbush. .

So I want to go to the revenue outlook. Kerry, could you just walk through that one more time? What has changed in your view to kind of walk back a little bit the revenue outlook as either just -- I don't know, just add a little more color about why that changed.

What you saw relative to your plan that changed that revenue outlook?.

Well, it was primarily just truing up our expectations to the first and second quarter actual results. If you remember, in Q1, we talked about we had a difficult February, and our comps were down high single digits. We were expecting a little bit of a rebound.

And why we didn't true up our sales effect at that point in time when we announced our Q1, it appears that whatever happened in February never rebounded on us. If you remember, we came back with a decent Easter. And on a combined March and April together was up high -- low single digits, which was comparable to last year.

So that effect, we did a truing that up. We also had a little bit difficulty during the Mother Day area in May. And that -- those 2 factors were the primary factors of truing up what our original expectations in the first half were to what we now expect.

We really have not adjusted our second quarter outlook from what we originally expected for the year. This was just truing up to actual. .

Okay. Got it. That's helpful. And then just I want to go to your guidance that you've given, kind of preliminary walk through here for the third quarter. Based on rough math, that would imply, call it, the upper end of a range somewhere in the $0.12 to $0.14 for the fourth quarter.

Maybe just walk through some of your thought processes to sort of the acceleration or the material improvement in earnings for that period. Just remind us what some of the puts or takes, maybe closing fewer stores, less liquidation sales, just on a thought process to kind of get to that number. .

Well, if you really look at it, it is going to be an increase in sales.

We're -- and you're really talking about the fourth quarter, I think you're saying, right?.

Right. .

A slight decline in the gross profit margin, and we'll leverage our expenses fairly significantly because we won't have as large of an expense for incentive and equity compensation. Similar to what we saw in Q2, we're going to see a savings in our overall SG&A.

I would expect that -- to see less SG&A expense for the quarter -- in fourth quarter this year versus fourth quarter last year. That would lead you to the increase on a year-over-year basis. .

Got it. Okay. And I want to go back to -- I want to go back just to comp drivers for a moment. I know you don't want to talk about brands. But let me ask it this way.

Could you get to a 3.5% comp in August without your largest brand comping positive?.

That is terrific. Chris, that is a terrific question, which I'm not going to answer. .

You can't pass on that, come on.

And the answer is?.

I'm sorry, I must have not heard your question.

What was -- when I said I wasn't going to answer the question, what did you ask?.

Oh, you're not going to answer my question then, even if I ask it that way or something?.

No. If I answered that, it really goes against my policy of talking about brands. And I -- we're up -- the story of the day is that we're up 3.5% for the month of August. And to me, that all is driven by the fact that our merchants have done an incredible job of delivering great product to our stores.

Our stores have done a terrific job of selling that product. And I'm -- I just don't want to get involved in talking about individual brands. And so I'd like to leave it at that. .

Okay. I tried. I want to ask you about boots.

Since I guess a couple of months ago versus today, any change in your thought process about the fashion boot business as it plays out into the back half of the year?.

We actually feel pretty good about the boot business as it plays out in the second half. And I believe we'll see a strong bootie component early. And I don't -- really don't want to talk too much about the way -- the types of products I think we'll sell in the fourth quarter from -- just from a competitive environment standpoint.

But we feel pretty good about boots. .

Okay.

So you feel better than you did, call it, 3 months ago?.

Three months ago, I didn't see the entire selection. Since that time, the buyers have walked both Carl and I through that program. We've taken -- we know what the advertising cadence is. We know -- so yes, I feel better today about our boot opportunity than I did 3 months ago mainly because I'm more educated on it than I was 3 months ago. .

Well, that's good to know that you're better educated on it. The last thing I have here is just on the buyback. So Kerry, just give me your thought process.

I know you initially had said you bought back what you thought you would have, I think, in the first quarter for that period, or there was some logic about the planning of the buyback and you had done more than you had thought or planned to earlier.

Just thoughts why then buy back stocks here? Was it just the inventory commitments for back-to-school, et cetera? And just any color you can add about how we should think about it for balance of the year? I know you threw out 14.7 million shares, but just any thoughts around it would be helpful. .

When do we feel that there is a value in our stock that we'd want to buy it back; and secondly, we'd monitor, when we always do it, only through excess cash.

Q2, because we're building up our inventories and at the end of Q2, we always have the highest -- typically always have the highest inventory levels of the year, so we're building up our inventories throughout the quarter, which is -- takes a lot of capital commitment. Typically, that's the lowest free cash available during the quarter.

So those are the factors that we play into when we decide to buy back or not. .

Okay. So in the balance of the year, the outlook, you're just assuming no additional share repurchases, though should the opportunity present itself, you would obviously be more aggressive in buying stock.

Is that fair?.

No. We actually -- we get very cash-flow rich at back-to-school because August is such a large quarter. We liquidate those inventories, and we don't have a large inventory build throughout the rest of the year. So we have factored in purchases in our guidance through -- in the second half.

So I see it less of an issue of free cash flow being an issue that would restrict what quarter we buy back, but it'd be dependent on the price and if it represented a value. .

[Operator Instructions] We'll take our next question from Greg Pendy with Sidoti. .

I just wanted to dig into the trimmed store closure count. And if you can kind of give us any color on maybe what was behind that? Was that lease -- more attractive lease opportunities? You said earlier you completed your CRM project.

Kind of any insights there? Was it just kind of reduced competition? Just any color on what kind of brought that down a bit?.

Well, we always work with our landlords, and we look at the current -- the most recent trends with the store. And if a store is improving and we can get some relief on the cost structure, we can extend stores to -- into future periods. And that's what -- that's basically what we did.

We were able to find -- have a store to meet metrics that would meet our criteria for keeping it and maybe extending a year or 2 while it continues to -- see if we can continue that positive sales trend we saw prior to the extension. .

Okay. That's helpful. And then just on that subject, just one final one.

Are you still planning to pivot to net store growth in the following year?.

Yes, we are. It's going to be a very moderate net store growth based on our outlook. Now that outlook could change as we -- with the economy right now, the big talk in all the financial press is a recession.

If we see a recessionary environment where we saw the consumer pull back, we would adjust our thought process as going forward on that, and in fact, might slow down the amount of stores we might open. And it may require us to increase the number of stores we close.

So it's hard to predict at this point in time, but we are in line with what we said in previous quarters that we see small net store growth. .

And we will take a follow-up question from Sam Poser with Susquehanna. .

I just want to follow up on Chris' question. Let me rephrase it. Can you hit a 3.5% comp in the quarter without athletic being up as a whole because that is your biggest chunk of business? I mean, it's over 50% of your business. So can you do that? Can 54% of your business be down and you'd still be comping at 3.5%.

Is that reasonable given the trends?.

That -- it's reasonable to assume that we -- if athletic were comping down, we would have a tough time hitting the 3.5% comp. .

And since this unknown vendor is the largest part of athletic, it would be unlikely that, that business is down to get you to the 3.5% comp, if we follow the logic.

Am I following the incorrect logic?.

You need a comp in athletic. You need to have positive comps in athletic to post a 3.5% comp. .

And then, Kerry, just to the store question.

If you -- if there -- if this chatter about a recession is true, wouldn't that also lower the -- theoretically lower the rents and lower the leases and give you sort of a big opportunity to step in and open stores for when the dust settles and to renegotiate leases to better rates that could keep more stores open now that you're doing all this -- now with the CRM and all this other stuff rolling out that should make your business more efficient sort of in the larger picture?.

Well, Sam, that's a very logical way of looking at it. What we've seen in the past is that it didn't actually happen that way. Prior to the last recession, we had that same thought process that we would be getting a lot of opportunity for store growth because there'll be more boxes available, the rents would be much more cost-effective.

What in practice we saw is that the landlords had so many retailers coming back to them asking for rent relief, that it really hardened and that the negotiation -- and that unless you had a lease event where you could actually say, "I'm going to kick out of this lease or I'm not going to renew it," they wouldn't even talk to you.

So they were having to prioritize who they talk to. So we're going in -- we're -- we won't go into any type of tough retail environment or economic environment with that thought process again. If it turns out to be different this time, we could reevaluate. But based on past history, those opportunities aren't available. .

And what percent of your store base is on lease that would be on lease expiration or kickouts next year?.

Up until recently, we've been a fairly ratable grower on a year-over-year basis. So 10% or greater of our leases would come up each year. .

One is the increasing sales and that the stores begin to perform; two, we were able to get better deals through the landlords, and thus the stores became more profitable for us. So we continue -- we work on that almost every day. So it -- and that's the reason why the expectation on the store closures have continually gone down. .

I understand. I mean, I guess the question is, though, that you've got no more Payless, which is a whole tons of stores. Then -- and you have your CRM and your communication, which apparently is improving and making more Gold customers and so on. And your net opening next year is -- I mean, it's not going to be very much.

So why give -- sort of the offset of Payless and the internal improvements, why would -- I mean, I don't even -- I mean, why would you go from small net openings to net closings in a situation like that when you take into account those other factors? Or is this just you're being prudent in the way you're asking the question just in case you get to net closings next year?.

Well, there is a significant amount of time for us to evaluate that for what you're saying about the CRM coming online, getting the usage of it, understanding how much of a benefit that's going to be, how immediate that's going to be. We typically don't set the out-year goals at this stage beyond what we have visibility on.

And right now, that's what we have visibility on. There may be greater opportunity, and we could capitalize on it. But at this point in time, we don't see that. .

One thing we should say also is that we're not going to be going into any new markets, which -- so for the next several years or more, we have opportunities to backfill the markets we have to make them more productive, where we already have brand awareness or where we can continue to build additional brand awareness.

So that would be the prudent way for us to grow and by -- that by itself will limit opportunities. .

And do you have any leases signed for next year yet or is that all work in progress for these new locations?.

We have several that if they're not signed, they are near. So I couldn't say for sure. .

And I assume that that's more stores, whatever are near, is more stores than you were planning to open this year based on what you -- based on your current numbers?.

That is correct. .

Yes. Our belief -- we only believe we'll open 1 store this year. .

And it appears that is all the time we have for question and answers for today. Mr. Sifford, I would like to turn the conference back to you for any additional or closing remarks. .

Thank you. And thank you for joining us today. And we hope you have a very enjoyable Labor Day weekend. And we look forward to talking to you about our third quarter results in November. .

And this does conclude today's call. Thank you so much for your participation. You may now disconnect..