Good afternoon and welcome to Shoe Carnival's Fourth Quarter Fiscal 2019 Earnings Conference Call. Today's conference is being recorded. It is also being broadcast via webcast. Any reproduction or rebroadcast of any portion of this call is expressly prohibited..

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

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

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

I'll now turn the call over to Mr. Cliff Sifford, Vice Chairman and CEO of Shoe Carnival, for opening comments. Mr. Sifford, you may begin. .

Thank you, and welcome to Shoe Carnival's 2019 Fourth Quarter and Full Year Earnings Conference Call. Joining me on the call today is Mark Worden, President and Chief Customer Officer; and Kerry Jackson, Senior Executive Vice President, Chief Financial and Administrative Officer.

On today's call, I'll provide an overview of our 2019 fiscal year and fourth quarter results as well as the ongoing COVID-19 pandemic. Mark will then update you on the progress we've made on our strategic initiatives, followed by Kerry, who will discuss the financial results in further detail. We'll then open the call for your questions..

Let me start with a business update on the impact of COVID-19. As you saw in our press release last week, we made the decision to temporarily close our stores until April 2. While this was not an easy decision, the health and safety of our employees, our customers and the communities we serve is our primary concern.

As noted, we will continue to pay our associates as scheduled during this time and serve our loyal customers through our website..

For e-commerce order fulfillment, we are allowing our managers to fulfill orders from our stores in locales where that -- where we are able. We are adhering to guidelines from the World Health Organization and the CDC as well as practicing social distancing.

We have also implemented enhanced cleaning and sanitation processes to ensure the safety of our employees today, and making sure our customers feel safe when we reopen our stores in the future..

The rapid spread of this virus has far-reaching implications for our global community. And while we anticipate that this pandemic will have an impact on our operations, today, we are thinking about those who have been affected by this deadly virus and the continued havoc it is causing within our communities.

Our store closures, we believe, are a necessary step for us to do our part to prevent the further spread of this virus. From an operational standpoint, we have been working closely with each of our vendors to determine the full impact to our supply chain, and we thank them for their collaboration as we navigate this unprecedented situation.

Our best-in-class merchant teams have been diligently managing inventories to ensure that we are keeping things at a controllable level..

Furthermore, we're working to control costs where possible, including reducing SG&A to preserve margin and capital expenditures to maintain our flexible -- our financial flexibility. Shoe Carnival has a long history of navigating through various difficult cycles, both good and bad.

Our team is incredibly disciplined and able to move quickly as conditions change. In addition, we have always maintained a very strong financial position and balance sheets for times just like these. At the end of February, we had $57 million in cash and ample liquidity with our $50 million credit facility.

While today, there are many unknowns, we are monitoring the situation closely, and we feel very well prepared to meet the needs of our stakeholders during this difficult time..

Now turning to our fiscal year 2019 results. We reported another record year for Shoe Carnival. Sales rose to $1.037 billion, while net income increased 13% to $42.9 million or $2.92 per diluted share, both exceeding our expectations.

At the same time, comparable store sales increased 1.9%, marking the 11th consecutive year of comparable store sales growth..

our CRM program, our brand and customer experience, online sales and store development..

To date, we have made tremendous progress on all fronts but I would like to take a few minutes and talk about the success of our loyalty membership program, Shoe Perks, which underscores the investments we have made in our CRM initiative.

In 2019, our loyalty program grew double digits, resulting in a sales growth of over $35 million versus the prior year and now exceeds 23 million members. This equates to a mid-single-digit sales growth for the program in 2019 compared to the -- to company comparable growth of low single digits for the same period.

Even more promising is the growth of our Gold tier, which posted double-digit membership growth and comparable sales. Mark will provide greater detail on this and our other initiatives in a moment. But suffice it to say, we are very encouraged with the success we have had thus far. .

Moving to our financial results for the fourth quarter of 2019, which capped off another strong year for Shoe Carnival. During the quarter, conversion, average transaction and units per transaction each grew low single digits, and we ended the fourth quarter with 392 stores in 35 states and Puerto Rico, closing 6 stores during the year..

Looking at comparable store sales by department for the quarter. Women's nonathletic was up mid-single digits, driven primarily by strong demand in women's dress shoes partially offset by declines in boots, which were negatively impacted by mild winter weather throughout the quarter.

Excluding boots, women's nonathletic was up double digit in the fourth quarter. Men's nonathletic was up low single digits, supported by mid-single-digit growth in casual shoes and seasonal boots, offset by declines in dress shoes.

Children's nonathletic, including sandals, casual and dress shoes continue to perform well, helping drive low single-digit comparable growth. Adult athletics overall were down modestly, driven by low single-digit growth in women's athletic, offset by men's athletic low single-digit declines..

For the fourth quarter of 2019, merchandise margins were up 70 basis points, while BD&O expenses were flat as a percentage of sales compared to the prior year. Even more importantly, for fiscal 2019, we delivered the fourth consecutive year of improvement in merchandise margins, driven by a favorable product mix of high-growth categories.

We are quite encouraged by these results as they demonstrate the capabilities of our merchant teams and leveraging our new CRM program to better identify seasonal trends, enhancing the product selection available to our customers..

I'd also like to provide an update on our capital allocation strategy. Over the long term, returning capital to stakeholders remain a top priority. However, as we are still working to determine the full impact of the COVID-19 pandemic on Shoe Carnival, we are focused on maintaining the financial strength and flexibility of our business.

With that being said, we do not currently plan to engage in any further share repurchases during fiscal year 2020 but will continue to re-evaluate the strategy on an ongoing basis. At this time, we do not anticipate any changes to our quarterly cash dividend policy..

Before I hand the call to Mark, I want to remind you that as we stated in our press release last week, we will not be providing guidance for fiscal year 2020, given the significant uncertainty created by COVID-19.

However, it is worth noting that as we began our fiscal year, comparable store sales through March 10 exceeded our expectations with comp store increase of 4.5% through that date.

From that point forward, we did see a significant decline in brick-and-mortar traffic, leading up to our decision to close our stores, but we were pleased to see e-commerce traffic and sales have grown significantly. Mark will discuss this more -- in a bit more in his remarks..

With that overview, I'd like to turn the call over to Mark Worden to provide an update on our strategic initiatives.

Mark?.

CRM, brand and customer experience, online sales and store development. We believe these 4 initiatives will drive long-term profitable growth for the business, strengthen our customer-centric organization and extend our leadership position in the family footwear channel..

We're very encouraged by our customers' response to our 2019 CRM initiative. We continue to see that insights captured by our customer analytics, coupled with our strategic marketing programs, our supporting strengthened customer loyalty, and ultimately, value creation for shareholders.

Information collected through the CRM provides our marketing, merchandising, analytics and real estate teams with a holistic view of our customer shopping behaviors, in turn, helping us to identify tomorrow's most valuable customers and deploy resources toward building long-lasting loyalty..

To put a finer point on this, loyalty member sales grew over $35 million this year with the average transaction value of members roughly $10 higher than that of nonmembers. I'm most encouraged by the rapid growth achieved with our Gold loyalty members whose transaction value was over $16 higher than nonmembers for the year.

And both sales and membership count grew double digit for the year..

Over the long term, our strategic priority remains centered on driving member sales to over 80% of total company revenue as it has the most effective customer reach as well as the highest ROI amongst our marketing channels.

During 2019, the first year of the CRM implementation, member sales as a percentage of total corporate revenue reached 70%, up from 68% in the prior year and exceeding our expectations..

Next, I'll touch on our overall brand and customer experience initiatives. We are very proud of the customer-centric experience we've continued to deliver. This, coupled with our broad product assortment for families were key drivers to achieving our 11th consecutive year of comparable store sales growth.

Store conversion growth was achieved every quarter of 2019 by our excellent store operators across 35 states and Puerto Rico, underscoring the effectiveness of our store operators and our merchants. .

Customer traffic during the fourth quarter and for the full year delivered growth exceeding our annual expectations with a double-digit increase of customers shopping within the Shoe Carnival omni-channel.

Continuing the trend from the prior quarter, customer traffic increased at both our bricks-and-mortar stores and through our e-commerce platform during the fourth quarter.

More specifically, customers' response to our marketing engagements during the core holiday shopping days was well above expectations as we saw strong omni-channel traffic results and sales..

We're also continuing to see rapid acceleration of consumer demand for our online shopping experience, which is our third initiative. Online sales grew over 15% during the year and exceeded 8% of annual total company revenues for the first time.

Our online platform surpassed multiple engagement milestones, setting records throughout key shopping days throughout 2019..

In light of the current macro environment and our stores being temporarily closed, we are shifting resources and marketing initiatives from brick-and-mortar to e-commerce to further accelerate our online growth trends.

While these are very early days, I'm encouraged by the exceptional team effort to respond to the external challenges we are facing today. Online traffic has exceeded our expectations over the past year. But over the past week, we've seen a steep acceleration of customer engagement online, driving triple-digit order increases..

Turning to our fourth initiative, store development. We opened 1 store and closed 6 in 2019. While long-term strategic new store growth remains a priority for us, we are reevaluating our 2020 and 2021 store plans in light of the uncertainty that exists today.

With that said, our strategy remains consistent, to open and operate stores within our existing 35-state footprint to maximize value creation and customer loyalty..

Finally, we're working closely across the organization from our corporate team to our store operators and employees to ensure we are once again able to serve our clients in person as soon as we can safely reopen our stores.

We believe the initiatives we are executing are deepening our customer relationships, strengthening our brand and positioning Shoe Carnival for success over the long term. While we are very cognizant of heightened uncertainty that exists today, we believe we are taking the necessary steps to mitigate the impact near term..

With that, let me now turn the call over to Kerry Jackson to provide more insight into our financial performance. .

Thank you, Mark. Our net sales for the fourth quarter ended February 1, 2020, increased $5.2 million to $239.9 million compared to the fourth quarter of last year.

This increase in net sales was attributable to a 3.2% increase in comparable store sales and a $720,000 increase attributed to the 4 new stores opened since October 2018, partially offset by a loss in sales of $3.3 million attributable to the 11 stores closed over the same time period..

Our gross profit margin for Q4 was 29.1% compared to 28.4% in Q4 of last year. Our merchandise margins increased 70 basis points, while buying, distribution and occupancy expense was flat as a percentage of sales.

The increase in the merchandise margin was primarily the result of being less promotional in Q4 other than the boot category and realized margin increases in our women's dress and casual, children's shoes and adult athletics..

SG&A expenses decreased slightly in Q4 to $65.1 million. As a percentage of net sales, these expenses decreased to 21 -- 27.1% compared to 27.8% in Q4 of last year, primarily due to leveraging effect of higher sales.

Significant changes in SG&A for Q4 included increases in wages and employee benefits, which were offset by decreases in advertising, depreciation and operating fewer stores during the quarter..

The effective income tax rate for Q4 was 28.8% compared to 25.1% in the same period last year. For the full year of 2019, the effective income tax rate was 21.6% compared to 24.3% in the full year of 2018.

Our effective income tax rate decreased in 2019 primarily due to a $1.9 million tax benefit related to the vesting of stock-based compensation recognized in Q1..

Net income for the fourth quarter was $3.5 million compared to net income of $1.4 million last year. Earnings per diluted share for the fourth quarter increased by $0.15 to $0.24 per diluted share. Weighted average diluted shares outstanding for Q4 this year decreased 7.2%..

Now turning to information affecting cash flow. Depreciation expense was $4.3 million in Q4 and $17.0 million for the full year compared to $5.3 million in Q4 last year and $21.8 million for the full year last year.

Capital expenditures for fiscal 2019 were $18.5 million, with approximately $10.4 million used for new stores, relocations, remodels and the purchase of our corporate headquarters..

In the fourth quarter of this year, we repurchased 184,000 shares of our common stock at a total cost of $6.9 million. In total, for the fiscal year, we repurchased approximately 1.1 million shares of our common stock for a total cost of $37.8 million..

In addition, for fiscal 2019, we returned $5.7 million to the shareholders through our quarterly cash dividends. To reiterate Cliff's comments, we were comfortable with our current level of liquidity.

Our cash on hand, along with access to an additional $50 million from our line of credit, offers us the financial flexibility to run our business in this uncertain operating environment..

My last comment today is to remind our analysts and listeners that we won't be able to address any questions that relate to fiscal 2020 quarterly or annual sales, earnings, margins, expenses or inventory positions in any greater detail than we have discussed in our prepared remarks..

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

[Operator Instructions] We'll take our first question from Mitch Kummetz with Pivotal Research. .

Congrats on the quarter. I'm afraid that some of these might violate what Kerry was just saying, but let me try anyways. So you guys are -- I think you're on day 7 of this 14-day closure period. It sounds like digital is doing really well. If I heard you correctly, maybe it's up triple digits since you closed the stores.

But is there any way you could give us some sense as to what the impact on sales and EBIT looks like during this period of closed stores? Like the first 5 or 6 days.

Is there any way you can sort of frame that for us?.

Mitch, we're not going to comment at all on any forward-looking activity in fiscal 2020. We won't be addressing any sales, margins, inventory positions. It's just not foreseeable right now, so we're not going to be addressing it on the call. .

Sure. All right. Let me try another one. I'm going to ask it maybe in a different way. So you're probably not going to tell me if you're going to open stores after April 2.

But can you at least say what you're looking at in order to inform that decision? Is that kind of based on CDC guidelines, what's being said at the state and federal level? I'm sure it's something you're going to have to make that call. And I'm just kind of curious what's maybe going into your thinking. .

Mitch, the -- as you know, each state, not every state, but each state has come out and issued a statement that stores must be closed, not every state, but most. I think at some point, the government will make the decision to allow us or, as you heard last night, the President wants to get back to business as quickly as possible.

But the health and safety of our employees and our customers and our communities really are our primary concern. So we are going to stay closed until April 2. And then we'll continue to follow guidance from the local and federal officials, whatever they say. And as you know, situation is incredibly fluid.

And as soon as we know something, we'll let you guys know. .

And then maybe just the last one, what can you say about leases? What recourse do you have? I know that Simon and some of the other landlords have shut down centers. I don't know if that's impacting you whatsoever. But do you have any recourse if a center is closed or if there's a cotenancy clause that's been violated? I know April rent's due soon.

Are you guys going to pay rent? How are you thinking about leases? And is this going to end up in the hands of the lawyers as you kind of work through this so that you get some rent relief? Or how are you thinking about that side? That's obviously a big expense for you guys. .

Mitch, that deal is directly with what the results would be for 2020 and how we'd operate within it, and we really can't give you any guidance on that at this point in time. .

We'll take our next question from Sam Poser with Susquehanna. .

So I'm going to ask you a few sort of what ifs, and then I've got some other things.

One, if you are forced to -- if you decide to keep the stores closed longer than April 2, which seems like it's going to be longer, have you thought about how you're going to compensate your employees and yourselves for that matter? Some companies have come out today and say they're reducing some C-suite salaries for the year and so on and so forth.

And then it seems like they're using that to help their people. So can you give us some thought process on how you're thinking about that? I mean I don't know what happened in Indiana, but I know like in Alabama, a week ago, Monday, the cases in Alabama were 11 and now there's 280.

So that's like a -- I mean goodness who knows how big an increase that is in a very short period of time. So -- and I can do the math. But just how you're thinking about all that. .

?.

Yes. Sam, as we stated last week, we'll continue to pay our store associates as scheduled through April 2. And as you know, this is really a rapidly unfolding situation, and we'll provide any updates as appropriate on a go-forward basis. But that's as far as I can go with that at this point. .

Okay and -- All right. And your e-commerce business, you said, I believe, that the e-commerce was 8% of total sales last year.

Can you give us a little more color on how that was sort of more recently, let's say, in the fourth quarter and how that performed? Did it get stronger throughout the year? Could you give us some color on that, that's not forward-looking?.

Yes, Sam, it's Mark. We've definitely seen significant increases in online traffic, especially more recently once we announced the store closures.

But in the fourth quarter, we outperformed our expectations with very strong results during the peak holiday periods, as I said, both through the Thanksgiving through Cyber Monday as well as during the core holiday season. We are very happy with the acceleration we saw.

And then over the last week of course, we've seen the acceleration and it has been a triple-digit acceleration since we've closed the stores. .

I understand that but my question really was to its 8% of total sales for the year, did it run at, let's say, 10% or 12% in the fourth quarter? Was it ramping as a percent of total sales? I mean you do more -- I'm just trying to get a feel for that. That will help sort of... .

Sam, historically, our fourth quarter e-comm sales have been the strongest quarter of the year for us. And this year was no different. So you're right in line. .

Okay. And then a couple of things, just housekeeping.

What is sort of a normalized tax rate without that thing that happened last year? What would the -- I mean, if we're thinking -- I know it's a 2020 question, but I mean, if we're thinking about a normalized tax rate, it's like 23%, 24%?.

Well, we're not going to talk about 2020, but I would tell you that if you backed out the $1.9 million in our tax rate that actually occurred in 2019, our tax rate would have been about 25.1%. So I would say that somewhere between 24.5% and 25% would be a range that you can look at for the prior year on a normalized basis. .

Okay. And then also, I know your share count -- your average share count was at 14.3 million, but you bought back a bunch of stock. So with this no guidance, but what is sort of the starting share count for the year? Because it's lower than 14.3 million because that was an average.

So can you give us sort of where the actual share count is that you won't be buying back from?.

So the outstanding shares you're asking at the end of the year is closer -- going to be about 14.2 million. .

And then given the situation and given sort of the fluidity and questioning how long is it all going to last, are vendors starting to give you -- are you getting dating on orders? And are you getting back dating on orders that came in for the extend payment terms with the -- with your vendor partners?.

Sam, we've always had a policy that we don't talk about any negotiations with the vendors. I will tell you this, that the vendors have been incredible to us. And it shows -- it tells me how important we are to them and how we've treated them in the past. So the vendors have been very cooperative. .

Well, one vendor that will remain nameless went out and sent out a note apparently saying for orders that came in x to x, we're extending the dating by 60 days. And if you write orders between now and June 30 or something, we're going to give you an additional 60 days dating. And they sent that out in a general letter to people.

So I'm not asking you for specifics on what the extension is or what companies are doing what.

But I mean can we assume that you've gotten your payables stretched to be able to reflect the time closed for the reason that you mentioned, in general sense?.

We hate to keep referring back to this, but we're not going to reference anything about the cash flow, sales, earnings, inventory positions of fiscal 2020 until we have better clarity on how the year is going to play out. .

The only thing I'll add to that -- Sam, the only thing I'll add to that is I'm incredibly proud of the relationships that Shoe Carnival has been able to build with the vendor community, so that as we navigate anything, good or bad, we know they have our back. And that's as far as I'm going to go with that. .

Okay. And then lastly, and I just might have missed this, if you didn't say, could you give us what your same-store sales by month were? November, December, January. You can give us into February and March, if you want, because it's current, and we'd like to know that anyway. .

Sam, directionally, we were slightly negative, low single-digit negative in November because of the shift of Cyber Monday sales. We were up mid-single digits in December and high singles in January. .

But what was it that drove that high single-digit increase in January?.

Well, we had a very strong sales in women's shoes in January. Believe it or not, we drove it without boots. Boots were slightly negative in the month of January. But our women's business was very strong. Our kids business was very strong, and I was very happy with our men's nonathletic product as well. .

We'll take our next question from Chris Svezia with Wedbush. .

I'll ask you about the weather since you're not going to answer anything else.

So how's the weather suiting you guys?.

Actually, it's beautiful here in Evansville today. .

Very nice. I'm kidding. So actually, I've got questions. And Kerry, this is way too easy for you. I'm just kidding, just in terms of defaulting to that statement. Anyway, in all seriousness, so you commented about the comp momentum up until March 10.

And in any way you want to talk about it, what was driving that? I know you're just -- in reference to Sam's questions, you're answering the women's business, the kids business.

Did athletic improve? What else was going on in the business up until that point that you feel comfortable enough you can comment or add some color about?.

Well, we were -- we continued to see our women's business perform in the month of early February or through February. Tax refunds were actually out earlier this year, I really believe that, than they were last year. You remember, there was -- we felt there was a delay in tax refunds last year into the March time period.

So we think that they got out to the customers in February because the business actually accelerated as we got toward the end of February and then to the first 7 or 8 days of March. So that usually signals to be what we call Taxmas here. But we were selling -- again, women's shoes, our kids shoe business was very, very strong during that time period.

And we did see some acceleration in the athletic area. However, not as much acceleration there as we saw in the nonathletic categories. .

Okay. And in the women's nonboot category, you referenced this before. Just -- you're picking up market share, I assume. There's been comments about Payless, the competitive environment.

Is that still -- or was that still the case and the reason why that category was improving?.

I do believe that one of the reasons that product category is improving is because we have less competition with Payless being gone.

However, I think it's really important that I give credit to the merchant team who reacted to the fact that Payless was no longer around by beefing up our women's dress shoe area and our women's casual area, so that the customers that have been buying that product from Payless knew that they could get it from Shoe Carnival. .

Okay. Got it. I want to go to stores and store openings after April 2. Would -- I know you mentioned that you're sort of watching what the CDC has to say and the government.

Would you do anything local by local market, depending on what those local agencies, those states are indicating as to whether or not you can open up stores? Or would you just think nationally if all stores are closed, all stores are closed? Or would you go state by state depending on what's going on? I'm just curious how you think about that flexibility when you step into post-April 2.

.

I will tell you that if states or local communities give the go-ahead to open retail, our stores will be open. That might be the only forward-looking statement I'm going to give. But we are ready, willing and able to open our stores when they are given the go-ahead by any government agency. .

Chris, paramount to us first is going to be the health and safety of our employees and our customers. And when we perceive it to be safe, that's when we can look at it on a regional basis if there's different levels of safety across country. .

Got it. Okay. That's helpful.

E-commerce, just so I understand something 8% of sales, what do the margin dynamics look like now on that segment of business? Are they comparable to the corporate average? Are they above? Just where does that stand right now?.

Chris, we're very pleased to say they're still comparable with where the profitability was throughout the fiscal year and comparable when you get down to bottom line profitability with the rest of our business, roughly. .

Okay. Thank you, Mark. And it's fair to say that, in fact, you're doing and have seen acceleration, triple-digit increases.

Does that improve the leverageability and profitability of that segment as you go through this period?.

We believe it has the ability to -- as we move towards our midterm objectives to grow from below 8% last year to above 10% of company revenue, we'll continue to get some leverage. And we believe we'll be able to translate that into higher profitability through those transactions. .

Got it. SG&A, Cliff, you mentioned you're looking at expenses, you're looking at CapEx. I guess what are you looking at? Where -- just -- I don't know, Kerry, if you gave a CapEx number or if that has anything to do, I guess, with 2020 guidance and you don't, but curious where you're looking at SG&A expense savings.

Any color about that you can provide on CapEx?.

Chris, like we said at the beginning of the call, we're not going to be able to provide any guidance on 2020 on how we're operating within this environment, how we're looking at SG&A. We won't be able to answer that question. .

Okay. Last thing, I guess, I got is you referenced $57 million in cash as of -- I don't remember the exact date, and you said $50 million on the revolver. You haven't drawn anything on the revolver at this point.

Correct?.

We have not drawn anything on the revolver at the end of the year, and we're not able to upgrade -- update you on that. I guess we gave you a number of cash on hand at the end of our fiscal February. At that point in time, we could say we didn't have any borrowings on that because we had significant cash, obviously, on hand at that point in time. .

And we'll take our next question from Mitch Kummetz with Pivotal Research. .

I've got a few more. So on the digital, I hope this is fair game because you guys said in your prepared remarks that digital was up triple digits of late.

I'm just curious, do you think that's a natural migration as the stores are closed? Or is that a function of certain strategies that you guys have employed? And then in addition to that, actually, I guess, along the same lines, how are you leveraging those 23 million Shoe Perks members in order to encourage traffic and conversion? Can you maybe speak to some of the strategies and how you think those will work?.

Sure. It's Mark. It's both. It's -- there is a natural consumer shift now that our store base is closed. But we're also shifting our marketing investments to accelerating new traffic and new ways to come into our online channel. It is really the CRM program and the knowledge that we've gained about our 23 million-plus members.

And we're able to tap into that in moments like these times and try to leverage in ways with high profitability and high effectiveness we've seen over this first 7 days in this volatile marketplace. We're really pleased with the response we've seen. .

Like I said, we're seeing a triple-digit increase in orders, and we're seeing an acceleration. And as we learn more and more through our rich analytics, we're continuing to invest to bring more and more of those consumers into our base.

So we're really pleased with how our teams are responding, how they're rapidly getting new vehicles out there to consumers and how we're able to still satisfy some of the demand in the marketplace during these unprecedented times. .

And then you also mentioned that you guys are fulfilling from stores where you're able to do that.

Can you maybe just sort of walk through the strategy behind that? Is there a reason that you're doing that? So just going out of a DC? And is there a certain number of stores within certain regions that you've kept open with some people and staff in order to do this?.

Sure. Our ongoing e-comm fulfillment strategy has been to utilize our store base because we still believe that's the most effective way to have our inventory ready to be purchased in our 392 stores or fulfilled to the constituents closest to those respective stores both from a supply chain effectiveness and cost efficiency.

So in this moment, where government officials are allowing us to, we're continuing to use our stores to fulfill e-commerce orders.

In addition, we're using our DC so that we've got dual capabilities to fulfill both from a distribution center as more stores have closed as well as from around the country where governors are allowing us to our local officials. .

If I can add to that. A lot of the states, the governors have come out and said that the stores have to be closed. However, fulfillment, and that's a keyword, fulfillment can still take place as long as you're recognizing the 6-foot separation. .

Got it. And then a follow-up to one of Sam's questions. He was asking about e-commerce percentage. You guys said it was 8% for the year. I get it that it's higher in Q4 because of the holiday. But can you say what it is and what it was in Q1 last year? I assume it was under the 8%. .

We're not currently breaking out our e-commerce results, and it is the first for us to share our aggregate numbers. But again, really delighted to get it to climb over 8%.

And we see a runway despite what's currently going on, our strategic plan had us get north of 10% in the next 1 to 2 years, despite the acceleration we're going to naturally get right now. .

Okay. I got a couple more. One, is there any way you guys could characterize what percent of your Q1 inventory is seasonal? I know it's bigger in Q2 than Q1, but I'll just -- and whether it's what you just call sandal seasonal, if there's other things that you consider to be seasonal. .

Mitch, we're not going to address anything related to our inventory positions that we currently have. .

Okay. And then last one, maybe for you, Kerry. I know that rent and store payroll are 2 of your bigger SG&A line items.

Can you maybe address some of the other ones, like T&E or marketing, other line items on the SG&A side and just sort of frame them? And are they -- is marketing a few hundred basis points as a percent of sales? Is T&E 100? Can you just give us some sense as to -- because those are some of the line items that you would maybe have the most flexibility to trim?.

We're not going to -- like I said, we're not going to get into 2020 guidance. And even historical numbers, we wouldn't get into that level of detail of deciphering our business like that. So I'm not going to be able to address that question directly. .

Can you say what marketing is? I don't know if you've given marketing before, but that's kind of a number that a lot of people do give. .

Typically, it's disclosed in our K. We run approximately around 4% of sales. Some years, a little higher; some years, a little bit lower. But generally, it's around 4%. .

We do have a follow-up question from Sam Poser. .

I'm going to sort of pile on with Mitch. The -- I understand that you're very pleased with your e-commerce business and how it's going. However -- and normally, you don't talk about a lot of things. And since you're not giving us guidance, these are extraordinary times.

So that being said, we recognize your e-commerce business is really good and growing, but as a percent of sales in Q1 2019, what was the e-commerce as a percent of sales? So we have a framework, so we cannot put out totally ridiculous numbers with our 1Q estimate that we will do. .

Sam, we're not going to give an exact number. If we were 8% for the full year, and we have a higher percent in Q4, so Q1 was under the average. So you see that Q1, 2 and 3 were under the average as a percent, and Q4 would be over the average as a percent. .

How much was Q4 over? How much was Q4 over? I mean was it over -- it had to be over a whole lot.

I mean was it like 12 and then everything else was 6 or 7? Is that directionally correct?.

We aren't going to break down the specifics at this time. I'll just have to leave it at that, but we do have -- with Cyber Monday and the holiday sales, e-commerce is very strong in the fourth quarter. And so that's what drives it through -- as a higher percent of the overall, where you see Q1, 2 and 3 will be a more consistent percent of the total. .

So I think Mitch and I would arguably say the source is taken care of. Success and -- throughout all this situation. .

Thank you, Sam. .

And at this time, I'm showing no further questions. I'll now turn it back to our presenters for closing remarks. .

I want to thank you for participating in our conference call, and your continued interest in Shoe Carnival. We do look forward to talking to you again in May as we report our first quarter results. .

Ladies and gentlemen, this concludes today's call. Thank you for your participation, and you may now disconnect your phone lines..