Rachel Schacter - ICR, Inc. John Schaefer - President and Chief Executive Officer Kevan Talbot - Chief Financial Officer.

Matthew Fassler - Goldman Sachs Seth Sigman - Credit Suisse Peter Keith - Piper Jaffray Matthew Larson - Robert W. Baird Andrew Burns - D.A. Davidson Omair Asif - Wells Fargo Securities.

Greetings and welcome to the Sportsman's Warehouse Third Quarter 2014 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce to you your host, Rachel Schacter of ICR. Thank you, Rachel. You may begin..

Thank you. Good afternoon, everyone. With me on the call is John Schaefer, President and Chief Executive Officer; and Kevan Talbot, Chief Financial Officer. Before we get started, I would like to remind you of the Company's Safe Harbor language, which I'm sure you're all familiar with.

The statements we make today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which includes statements regarding our expectations about our future results of operations, demand for our products and growth of our industry.

Actual future results may differ materially from those suggested in such statements due to a number of risks and uncertainties, including those described in the Company's 10-Q for the first fiscal quarter filed with the SEC on May 3, 2014. We will also disclose non-GAAP financial measures during today's call.

Reconciliations to the most directly comparable GAAP financial measures are provided as supplemental financial information in our press release included as Exhibit 99.1 to the Form 8-K we furnished to the SEC today, which is also available on the Investor Relations section of our website at investors.sportsmanswarehouse.com.

Now, I would like to turn the call over to John Schaefer, President and Chief Executive Officer of Sportsman's Warehouse..

Thank you, Rachel. Good afternoon everyone and thank you for joining us today. I will begin by discussing the highlights of our third quarter, current industry dynamics and the progress we are making against our strategic growth initiatives.

Kevan will then go over our financial results in more detail and review our outlook, after which we’ll open up the call to your questions. We are pleased with our third quarter results, which overall came in within our guidance. Net sales for the quarter were 182.5 million, reflecting an increase from the prior year of 4.2%.

Unit growth was 17% and same-store sales declined 6.2% versus in the third quarter of the prior year. We opened one store during the third quarter in Pocatello, Idaho. This completes our 2014 store openings.

All stores are performing as expected and we continue to believe our dual strategy of opening stores in smaller markets as well as neighborhood locations in larger markets is sound. For 2015, we plan to open eight or nine stores.

With the announcement of our new store in Show Low, Arizona earlier this week, we have now announced eight store openings for 2015. As a reminder, they are Spokane, Washington; Flagstaff, Arizona; Show Low, Arizona; Fresno, California; Heber City, Utah; Klamath Falls, Oregon; Sheridan, Colorado; and Williston, North Dakota.

Additionally, work on our 2016 class has already begun. Looking more closely at our comparable store sales for the quarter. In the third quarter, we continued to cycle the surge in demand in the firearm and ammunition categories that began in late 2012 and continued through much of 2013.

While overall comps were down 6.2%, we continue to see solid performance in our non-hunting and shooting product categories. This performance was despite the fact that weather affected some of our product categories in the third quarter.

The drought and unseasonably hot weather in the West prompted less outdoor sport participation and the delay in cold weather in certain areas of the country negatively impacted our sales of cold weather product.

Our clothing initiatives continue to gain traction, although the category was up against a strong third quarter last year during which we liquidated excess inventory obtained as part of our acquisition of 10 stores in the Pacific Northwest in March of 2013. We also benefited last year from some large onetime close-out buys in the camouflage business.

These onetime events temporarily inflated clothing sales in last year’s third quarter. While traffic on a same-store basis or more specifically customer frequency remained negative, conversion and average order size both improved year-over-year, continuing the trend we saw in Q2.

In addition, we are seeing improvement in overall same-store traffic quarter-to-quarter this year versus in the prior year and in line with our expectations. Now on to profitability. We have worked diligently on both margin maintenance and operating cost containment.

In total, our gross margin was up over the prior year by approximately 170 basis points. As expected, our loyalty program again negatively impacted gross margin by 20 basis points as we continue to see strong results and increased popularity of this new program.

From a product gross margin perspective, we were able to maintain, and in many cases improve, gross margin at the individual product level while also seeing overall margin improvements from a positive shift in sales mix as we continue to focus our efforts on making our stores a one stop shop for our customers.

Operating income for the quarter was 18.6 million with adjusted earnings per share for the quarter of $0.21, above our guidance range and an increase of 23% compared to adjusted earnings per share of $0.17 in the comparable period of the prior year. Looking at industry dynamics for the third quarter.

A very important concept to keep in mind is that mix data is reported on a unit, not revenue basis. This is important since during the third quarter the adjusted mix numbers grew by 3% for the states in which we have stores.

On a unit basis, our firearms sold increased by 3.1% from Q3 of last year, allowing us to maintain, and in some cases grow, our market share.

While total firearm sales units increased, we recognized an overall decrease in net sales in firearms because unit pricing decreased with many firearms vendors as a result of increased promotional pricing from these vendors.

So, while total revenue decreased in firearms, the overall increase in unit sales and its corresponding impact on traffic continued to move in a positive direction. Regarding recent ammunition trends, we continue to see strong demand and tight supplies in the Rimfire category, but an overall normalization in most other calibers.

This has resulted in an overall increase in ammunition sales of more than 5% in units on a modest decline in average unit price as unit pricing continues to move toward historical levels, both at the vendor and retail level. Now let’s talk about competition. First, let me reiterate how we define competition.

We consider competition to be a national competitor opening a new store within a 30 minute drive time from one of our existing stores that is part of our same-store sales base.

We do not include stores outside that radius to be competitive as historically competitor stores more than 30 minutes from our stores have had virtually no impact on our store’s sales. In addition, we do not consider our new stores that have been opened less than one year that have a competitor within 30 minutes to be in the competitive store set.

We generally know when this dynamic will occur when planning to open a new store and therefore, we account for that competitive dynamic in our initial ROIC and budget calculation.

So, in the third quarter, we saw four of our stores enter the competitor open category for a total of 10 stores facing new competitors this year as of the end of the third quarter. Stores facing competition have once again performed better than planned during the quarter.

Our continued performance in competitive markets continues to underscore our premise of peaceful coexistence. In our opinion, we believe the ability to peacefully coexist with the other national players is driven by key attributes that differentiate us from our competition.

As a reminder, we are the largest outdoor specialty retailer in the Western U.S. partially as a result of our flexible store format that allows us to profitably service both small and large MSAs. Our low cost, no frill store concept represents a differentiated approach to servicing the outdoor sporting goods market.

We offer everyday low prices for localized and broad merchandise assortment and convenience for our customers. And as I’ve mentioned previously, we have outstanding customer service delivered by our passionate store associates. Our commitment to superior customer service has again been verified by independently published customer survey scores.

As we move forward, we remain focused on our strategic growth initiatives. I would like to spend a few moments reviewing these initiatives and the progress we have made. Our first initiative is to capitalize on the significant white space opportunity for new stores we see within existing and new markets.

We plan to continue to expand our store base at a unit growth rate of greater than 10% annually for the next few years as we believe there is potential for Sportsman’s Warehouse brand to grow nationally. Another key initiative as we look to open an increased number of smaller format stores is the success of our new fixturing strategy.

The fixturing in our newest 30,000 square foot store enables it to hold approximately 70,000 SKUs, the same number as our 42,000 plus square foot stores. As a result of this new fixturing strategy, we have been able to roll out our store within a store initiative to our entire store base as of the end of the third quarter.

As a reminder, our new stores generate attractive returns on invested capital of our 20% in the first year, which includes the cost of upfront inventory investment.

We also remain focused on enhancing operating margins to increase sales of our private label products while simultaneously expanding our programs in clothing and footwear with major brands.

For the third quarter of this year, sales of private label products represented over 2.4% of net sales, representing a more than 60 basis point increase from the third quarter of last year.

We continue to believe there is an opportunity to gradually increase our private label penetration overtime while still focusing on being a brand oriented company. And of course as we continue to grow, we anticipate leveraging our fixed cost over a large base of stores.

We continue to believe that our flexible store format, white space opportunity, margin improvement initiatives and go to market strategy all support our longer term outlook for top line growth of greater than 10%, EBITDA growth in the mid-teens and an income growth of 25%.

With respect to Q4, we expect the promotional pricing by dealers to continue into the holidays. We have seen a continuation of an elevated promotional cadence out of the mom-and-pop operators and the beginning of a somewhat more aggressive promotional environment from the national players.

Our focus will be on a reasonable level of promotions and on generating profitable sales while maintaining margin and we've reflected this in the tighter full year earnings guidance range that we've provided today.

We believe our everyday value, high service levels and local shopping convenience continue to be distinguishing factors that drive our customer value proposition. With that, I’ll turn it over to Kevan to discuss the financials..

one, base stores; two, new stores or acquired stores that have been in the comp base for two years or less; and three, stores that were subject to competitive openings, which we define as new competitive entrants into a market within the past 18 months.

In the third quarter excluding the 10 stores in our comp base that were subject to competitive openings, our same-store sales decreased 3%. Our 22 base stores saw same-store sales declines of 5%. However, our 15 new stores saw same-store sales increase of 0.7%.

And our 10 stores that were subject to competitive openings experienced a same-store sales decline of 18%, which, as John mentioned, was better than our plan. Gross profit in the third quarter was $60.7 million compared to $55.2 million in the third quarter of fiscal 2013.

Gross margin as a percentage of net sales increased 170 basis points to 33.2% from the 31.5% in the corresponding period from last year.

The increase in gross margin as a percentage of net sales was driven by both sales mix from our continuing strategic initiatives as well as the impact of liquidation of excess inventory in the third quarter of fiscal 2013, primarily clothing and footwear which we acquired in the purchase of the 10 stores earlier in 2013.

The mix evolution accounted for an increase in gross margin of approximately 90 basis points, while the onetime liquidated accounted for approximately 70 basis points. As John mentioned, our loyalty program negatively impacted gross margin by 20 basis points as we continue to experience success in the adoption of the program.

The associated rewards for these transactions impacted gross margin compared to the prior year when we did not the loyalty program in place. During the quarter, our loyalty patrons increased by 38% to more than 365,000 members. Our loyalty program will experience its one year anniversary during the fourth quarter.

We continue to expect growth in the program across our customer base, generating more frequent customer visits overtime and higher average ticket along with the benefits that come from these metrics. SG&A expenses for the quarter of $42 million increased from $38.2 million in the third quarter of fiscal 2013.

As a percentage of sales, SG&A expenses increased to 23% from 21.8% in the corresponding quarter of 2013 primarily as a result of stock-based compensation expense and increased payroll, rent and other operating expenses from the new store locations.

Income from operations for the quarter increased 9.4% to $18.6 million as compared to income from operations of $17 million in the third quarter of fiscal 2013. The year-over-year increase was driven by higher gross margins, partially offset by increased SG&A as a result of the factors I just described.

Our net interest expense in the third quarter of 2014 was $4.1 million compared to $13.3 million of interest expense in the third quarter of 2013. During the third quarter of fiscal 2013, we refinanced our term loan and increased the amount to $135 million from $125 million.

In addition to the higher balance during the third quarter of fiscal 2013, we also expensed $8.1 million in deferred financing fees, a prepayment penalty and other costs associated with that refinance. Since that time, we've paid down a portion of this term loan with our IPO proceeds.

We are happy to announce that effective yesterday, we have successfully refinanced our term loan facility, resulting in substantial interest expense savings and increased flexibility from the expanded capacity on our revolving credit facility.

With this refinancing, we have combined the two tranches of the prior term loan into a single tranche and reduced the blended interest rate of the debt to 7.25% from 8.26%, a reduction of greater than 1%. We anticipate this refinancing will save us approximately $2 million in interest expense or approximately $0.03 per share after taxes annually.

We expect to incur a onetime pretax charge, the majority of which is non-cash during the fourth quarter as we write off the discount, deferred financing fees and the prepayment penalty associated with the old term loan.

More importantly, in connection with this refinance, we have increased the borrowing capacity of our line of credit to 135 million with the ability to increase to $150 million overtime from $105 million. Our line of credit now matures in December 2019 and our new term loan matures in December 2020.

All of the material terms of both of these new agreements remain consistent with our previous agreements. Our effective tax rate for the quarter was 38.5% compared to 39.6% in the corresponding quarter last year. We anticipate our effective tax rate for the fourth quarter to be approximately 38.5%.

This reduction is a result of a decrease in our effective state tax rate as we opened stores in states with no income tax. I will now discuss adjusted net income and adjusted earnings per share that is based on pro forma diluted weighted average shares for the quarter.

A reconciliation of GAAP net income and earnings per share to these adjusted numbers on a pro forma weighted share basis as well as a reconciliation of the other non-GAAP measures we reference can be found in the financial tables included in our earnings press release issued today.

Net income for the quarter was $8.9 million or $0.21 per share based upon 41.9 million diluted weighted average shares outstanding as compared to adjusted net income of $7.1 million or $0.17 per share based on 41.9 million adjusted diluted weighted average shares outstanding in the third quarter of fiscal 2013.

Adjusted EBITDA for the third quarter of fiscal 2014 was $21.8 million compared to adjusted EBITDA of $19.2 million in the prior year period.

We ended the third quarter of fiscal 2014 with $1.7 million in cash and cash equivalents on our balance sheet and $62.9 million in outstanding borrowings with $24 million in borrowing availability under our credit facility. Ending inventory was $230.6 million as compared to $208.5 million in inventory as of the end of the third quarter of 2013.

However, on a per-store basis, inventory decreased by 5.5% as we focus on having the right product at the right place and the right time. As we enter the fourth quarter, we are very pleased with the quantity and quality of our inventory. Turning to our outlook.

We expect to see the same unit pricing dynamic persist into the fourth quarter and as a result, our outlook includes fourth quarter revenue to be in the range of $185 million to $190 million and adjusted diluted earnings per share of $0.20 to $0.22 on a weighted average of approximately 42 million estimated common shares outstanding.

For the full fiscal 2014, we expect revenue of $660 million to $665 million and adjusted earnings per diluted share of $0.48 per share to $0.50 per share on a weighted average of approximately 42 million estimated common shares outstanding.

Regarding our net income guidance for fiscal 2014, I want to remind you that our guidance includes stock-based compensation expense for the restricted stock units that were granted to certain employees in the fourth quarter of fiscal year 2013.

In the third quarter, our stock-based compensation expense was approximately $500,000 and we expect our stock-based compensation expense to be approximately $500,000 in Q4 for a full year total of approximately $3.2 million.

This amount compares against $400,000 of stock-based compensation expense in fiscal 2013, all of which was recognized in the fourth quarter.

As mentioned on our first quarter earnings call, in fiscal 2014 we will incur incremental costs, including additional payroll and professional fees associated with being a public company, representing roughly $1.5 million with approximately $400,000 of this total expected to be incurred in the fourth quarter.

We have now opened all eight of our new stores in fiscal year 2014. In opening these stores and other planned capital expenditures, we have incurred approximately $22.8 million in capital expenditures through the end of the third quarter. We will now turn our focus to our 2015 class of stores.

Given our ability to get a head start on our 2015 store class, we have begun the construction on these locations.

As a result, we expect to incur $5 million to $7 million in capital expenditures related to the 2015 stores during the fourth quarter of fiscal 2014, of course depending upon the construction progress that is able to be made during this time period.

And with that, I will now turn the call back over to the operator as we open up the call to questions..

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions) Our first question comes from the line of Matthew Fassler with Goldman Sachs. Please go ahead with your question..

I guess I would ask on the firearms piece.

What your expectations are for the timing of this inventory situation that so many independent dealers and the promotional situation to get resolved, your judgment on how many days or weeks or months of inventory they have and whether there is a seasonal element that would lead to this getting resolved by year end or whether you think it has legs beyond that point in time?.

Matt, I think as I noted in our third quarter call, the pace at which the mom and pop operators, which again represent about 65% of this industry, are moving product and the price at which they’re selling it, has been relatively aggressive. And we have continued to see, working with our vendors, some opportunities exists.

So to answer your question, I think I’ll answer consistent with what I said in Q3 which I think it will probably go into the first quarter of next year on a unit basis to get this stuff through the mom and pop portion.

That said, I think as I’ve mentioned a number of times, I think all the national players are in a good to very good position as it relates to firearms. And we’ll continue to be able to take advantage of opportunities with vendors as we go forward..

And then I guess in that context, it looks like the sales outlook for the fourth quarter might be a little lower than we previously would have thought. So, you may have alluded to this last quarter, there's an element that I guess was tougher.

Is it the national guys responding which you intimated you have started to see? Or is it the depth of the promotions and the magnitude of the cuts?.

Well, I think there is two things going on here, Matt. Number one, as it relates to firearms, our long guns category, and I am not going to really talk about this a whole lot, but just as an example, increased by almost 11% in units, but decreased by almost 11% price per unit.

That is a result of I think vendors keeping manufacturing going and the ability of the national players to purchase the product from. That has an impact on sales, but it doesn’t have an impact on margin because I think everybody is keeping margin the same. So that’s the reason for our slight reduction in sales for the fourth quarter.

The second question you’re alluding to is the promotional environment, the promotional cadence. I think other players have talked about and we’ve seen increased marketing efforts in the fourth quarter. We’re doing some increased marketing efforts.

But I have yet to see, at least on an anecdotal basis, anybody giving up -- any national player really giving up a whole lot of margin in that. It’s more an effort on all of our parts to continue the beginnings of a trend of increased traffic to all of our stores and I think that’s really the case as we go into Q4..

Thank you. Our next question comes from the line of Seth Sigman with Credit Suisse. Please go ahead with your question..

Just a question on general view on the state of the firearms business, more from a demand perspective. I think we’ve all been a little surprised that it seems to have stabilized when you look at the mix data at a very elevated level. And I was just wondering what your view is on that.

Where do we go from here and if you feel like some of the promotions that we’re seeing in the industry right now is keeping those sales elevated? Just any thoughts on that would be helpful..

Well, Seth, I certainly think that as vendors bring opportunities to us and other national players and we pass those opportunities on to the customer that the customer is seeing those opportunities and taking advantage at an elevated level. I think that’s probably part of the increase at the end of Q3.

A broader answer to your question in terms of where firearms are going, remember, that peak was so high in Q4 2012 and the bottom, as we talked about the mix data a couple of quarters ago or last quarter, the trough on the mix data wasn’t nearly as low as we expected.

And as we mentioned again last quarter, I think what that translates to is it translates to a recurrence to historical levels, the 2012 levels eventually, but I think it might take a little longer. And I think the data you’re seeing in terms of September, October and now November in the mix data is kind of supporting that premise..

And if I could just clarify a comment that you said you're seeing a sequential improvement in traffic each quarter.

Does that include what you’re seeing in the fourth quarter, I mean as somewhat implied in the guidance?.

We don’t speak to monthly data going forward, but we are seeing improved traffic headcount through the door which we are very pleased with..

And then just one last one for me, just in terms of the outlook for the competitive overlap next year. I think you probably have better visibility now on your stores and some of the competitive openings. Any color there would be helpful..

From what we’ve seen and heard from our competitors, we are aware of announced openings that are going to impact four of our stores, four of our markets based upon what we believe is their opening timeframes.

There is one that may push into 2016 or 2015, we’re not exactly sure yet, so that may become five depending on the construction of that announced competitive opening. As of right now, there is a confirmed three competitors opening that impact four of our locations..

Thank you. Our next question comes from the line of Peter Keith from Piper Jaffray. Please go ahead with your question..

I wanted to just ask if you could provide a high level overview on your mix initiative. You did see some nice gross margin benefit.

Is it as simple as the push to apparel and private label or was there anything specific to Q3 that we should be aware that will be continuing?.

I don’t think there was any push, anything specific in Q3 that is outside the norm this year. We had a couple onetime things going on last year. It is in the clothing and footwear area mainly, it is with brands but it is also with private label.

As we talked about private label several months ago, we anticipated starting to ramp up in Q4 as we get into the colder weather product and the initiatives we started about a year ago start getting a little bit of traction in terms of being able to get through the entire private label process, which I think everybody realizes is somewhere between 9 and 18 months depending on what you’re trying to do.

So I think the initiatives continue to be in clothing and footwear, although we’re trying some other things.

And the initiatives continue to be in getting a broader assortment of the major brands products, especially in the active wear, as well as putting our own private label product in where we have these third tier vendors where we can make greater margin at the price points that fill out our product offering in both those categories..

Just some additional color. Our sales mix in our hunting department specifically, the third quarter of last year we were at 49.7%, this year we’re at 47.3%. So that 2.4% decrease shifted from our lowest margin category into the rest of our categories.

We saw increases in the mix in the rest of our categories which all have higher margins than our hunting category. So we’re continuing to see the benefit not only in clothing and footwear, as John mentioned, but in these other categories as well as the mix shifts away from the lower margin hunting and firearms..

And I guess now you’ve been able to do the expanded store in store apparel in all stores, including the smaller ones.

Are you still seeing that similar 10% lift in the smaller stores that you've experienced historically?.

The third quarter is difficult to measure because of the onetime events that John described, the liquidation sale and the onetime buys that we had in the camouflage arena. So the data in the third quarter is a little muddy. We’ll look at this on an annual basis in the fourth quarter as we get to back to more normal data that's there..

And last question on the apparel then.

Kevan, are you able to quantify the negative comp impact on the apparel from the onetime buys and liquidation inventory from last year?.

We didn’t do that. As we quantify the impact there, we looked on an all store basis, we didn’t look at that specifically at just the comp store base. So I don’t know that I can speak to that. I know overall it was about a 70 basis points impact to our gross margin. So I don’t know the impact just specifically on the same-store sales decline..

Thank you. Our next question comes from the line of Peter Benedict from Baird. Please go ahead with your question..

It's Matthew Larson on for Pete.

Just wanted to start off still in the clothing space, how have sales trended since the weather has gotten more seasonal in that category? I know you said it started off maybe a bit slower, but have things picked up since?.

Clearly you don’t live in the West, Matt. It's 61 degrees here in Utah. The weather in the West in unseasonably warm and as a result, the cold weather gear is still waiting for the weather to catch up with it..

Changing gears to operating margin. Your performance in the third quarter was encouraging, up pretty in a healthy manner year-over-year after the first half performance.

As you’re looking to '15, what level of comp or sales growth would you need to be able to just hold your operating margins?.

We’ll talk about 2015 I think when we finalize our opening schedule for new stores and finalize our fixturing strategy and all those other things. I think it’s a little premature to talk about sales and comp store sales probably at this point in time..

Thank you. Our next question comes from the line of Andrew Burns with D.A. Davidson. Please go ahead with your question..

I guess a bit of a follow up, but in terms of your thinking about 2015. You guys do have a long-term financial targets slide in your presentation, about 10% revenue growth and equating to 25% net income growth as an annual target. It seems like, you’re more or less on plan from an earnings standpoint narrowing the range of guidance.

Has anything materially changed in that formula in terms of the competitive environment, promotional cadence that is truly disruptive to that earnings growth formula?.

We have seen nothing in terms of promotional cadence that would tell us there is going to be any impact on margins. So I think the answer to that part of your question is no.

As it relates to the other part of our questions, I think we would say we are, as we sit here today, we are comfortable with our initial guidance and at the appropriate time we will provide new and more specific guidance as it relates to 2015 and beyond..

And then with the CapEx flowing here into the fourth quarter, I was just curious, the timing of openings in terms of the eight stores throughout the year, is that accelerating relative to your initial expectations or just any color around the timing of those eight stores for '15?.

A lot of it’s going to depend on weather and construction. So, we haven’t planned for anything to accelerate as far as openings go. Once the construction happens and we get a building turned over to us, then we’ll talk to specific timings of openings. But as of right now, we don’t have any additional information as far as acceleration of openings..

Thank you. Our next question comes from the line of Matt Nemer from Wells Fargo Securities. Please go ahead with your question..

This is Omair on for Matt. Gross margins improved nicely in the quarter and you mentioned some of the year-over-year items that helped out.

But do you feel you are fully participating in the promotional environment you spoke to? And if not, did that maybe hurt the top-line slightly?.

Are you talking about Q3?.

Q3, yes..

There really wasn’t -- I mean other than from the mom and pops, we didn’t see any real increase in promotional cadence. What we saw was we saw opportunities to reduce prices on certain firearms by passing along price reductions from our vendors..

And then just a follow-up. We saw that a large national competitor had a 20% blanket offer off on all firearms for Black Friday and we read that as a step up in the cadence of the promotional environment and something that we haven’t seen in the past and you hinted to national competitors maybe getting a little bit more involved.

Just how are you interpreting that offer? Is it more a step to reduce inventories, to drive traffic or is there something else?.

I don’t know that I’m in a position to answer that as an uninformed observer. I would tend to think that that was an initiative to increase foot traffic..

Thank you. Ladies and gentlemen, there are no further questions at this time. I would now like to turn the floor back over to management for closing remarks..

Well, I want to thank everyone for joining us today. We look forward to speaking with you when we report the fourth quarter results. Thanks everyone..

Thank you, ladies and gentlemen. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day..