BIG
#I think first off from an inventory standpoint and gross margin standpoint, as we mentioned, gross margin was right on our mark for the quarter.
We continue to see real strong and predictable performance from the merchants in terms of understanding what IMU looks like.
We continue to take markdowns where it\
Sure, <UNK>.
Thanks.
No, it's an exciting time for the Company and obviously, the three executives are thrilled with the opportunity to step up and take on bigger, broader responsibilities.
But specifically as to Lisa, as you well know, she has been with the Company I think 12 or 13 years, something like that and she's been running ---+ she built out the planning and allocation and replenishment systems in this Company and has had a broad range of responsibility, including stores and DCs.
I saw it as an opportunity to move us to the next level.
We've done a lot of blocking and tackling over the last two years and a lot of investment in disciplines and processes for our merchants and planning team to improve on how we buy and how we get product to Jennifer quicker.
But the whole idea here is to take it to the next level of a strategic approach over the next five years to merchandising, big ideas and product assortments that are next to none.
And where Lisa comes in from the standpoint of clearly understanding that, she gets it and more importantly, over the last two plus years as I've worked closely with her side-by-side, we are very much aligned and as many of you know, when you have a Chief Merchant that's the CEO of a company, it can be very challenging for folks to manage somebody who has a very strong point of view.
And in this situation, we are just going to be able to take it to the next level, and Lisa is going to be the key driver of that.
Her team is very excited underneath her to answer that question.
We have a very strong team of general merchandise managers, as I mentioned earlier.
Trey in Food and Consumables, Martha in Furniture and Home and Michelle in Accessories and Lawn and Garden and Seasonal.
All three of them are pros, and this just allows us to really sharpen the saw and take it to the next level.
And again, in Global Sourcing, we have a strong team there and Lisa, TJ, and I were over in Asia last month and spent a week over in Shanghai and learned that we've made tremendous progress.
So again, as I said in my prepared remarks, it's always advantageous to make changes that can take the Company to the next level when you are in a position of strength and we've got momentum, we've got strength, we've got a powerful team in place and this is just another way to take it to the next level.
I'll start and then ask <UNK> to chime in.
From a numbers standpoint, Halloween actually falls within our third quarter.
It's different by a day in terms of where it falls.
It falls on a Saturday versus Friday last year, I believe.
So no great shakes for the quarter.
There is a shift of Labor Day being a week later than last year, but obviously all within the quarter.
So when we think about and talk about third quarter and setting guidance, obviously we are looking at a number of different factors, but the most important one is what were our results in second quarter, what were our trends coming out of July and what were the results of the business really in the first three weeks of August.
And all of those pointed to the range of 2% to 3%.
So I think we feel very good about how the business is positioned, not just from an inventory standpoint, but from a trend standpoint as we head into the bulk of the quarter.
And I will defer to <UNK> on the merchandising pieces of that.
Yes, <UNK>, I would tell you that the exciting part ---+ and as always, I am pleased to hear that you are in the stores seeing what we are doing, by the way ---+ deliveries were similar to last year, but the difference is it is candidly QBFV and the quality in there and the tastefulness of the assortments and the reduction in some categories like Floral and increases in other more novelty items are actually early indications that both Harvest and Halloween on a comp store basis have been positive, and sellthroughs have improved significantly over last year.
And lastly, I would add to that, there's a couple of what I call novelty items where the price point, the guys had the courage to step up and increase the price point significantly over last year and Jennifer is voting, and we're actually probably going to sell out of that product probably 30 days prior to when we originally planned.
So excited about the content, the improved taste level and the sellthroughs are improved significantly.
Yes, I think, <UNK>, one thing that might be registering with you that makes it feel like it's new and different and/or earlier than last year is the presentation in stores, which has been greatly enhanced.
So <UNK> and Rebecca and the Marketing team, along with our merchants and Michelle and Steve, the presentation of that product is much different, a little more bold and as <UNK> said, the quality of brand, fashion, and value is elevated.
The customer is responding.
You are correct to pick up on that though, because again, this is a difference in the new Big Lots to prior years.
Halloween and Harvest have been a little more inconsistent as to what ---+ how the customer voted.
Early indications are positive this year and she's recognizing the changes we've made.
Let me start for the first part, <UNK>, and thank you for the good question.
We certainly are razor-focused on ensuring we hit the road to 6%.
But to your earlier question on the SPP and how do I feel about being halfway in it, I feel very good.
The team embraced this and as I\
Thanks, <UNK>.
<UNK>, I think about it this way, and I'm sure this is a question that others have as well.
If you look at the guidance and start playing with the numbers that we gave you, I think you'll quickly get to, at the high end of our guidance, we are going to be around about 5% operating profit rate this year and that compares to 4.3% last year, so 70 basis points of improvement year-over-year at the high end of our guidance for third and fourth quarter.
That's meaningful improvement on a low single digit comp.
What's left is 100 basis points from there or outperforming this year.
Tall task.
We believe we have a path to get there.
A lot of things have to go right for us.
We knew that when we started this and introduced it over a year ago.
The things that have to go right ---+ sales have to be towards the higher end of the range that we gave you and that was a 2% to 3% comp for 2016, so start there.
Sales need to be towards the higher end of the range.
Additionally, the initiatives that I talked about in that meeting a year ago from an operating efficiency standpoint where we have to save money, and it has to be transparent to Jennifer that we are saving money.
We would not want to impede the shopping experience or the great progress that they are making in the Store Revolution whatsoever by saving costs or cutting costs.
So the things that we talked about back in that meeting, <UNK>, you will recall were things like our protection initiatives in stores.
Those are proceeding as planned.
The asset protection team has done a great job working with our store partners and our IT group in terms of rolling out EAS.
That is now complete.
We have EAS capabilities in all stores.
We have other initiatives around store-level markdowns, returns, etc.
We have technology today that we've never had before and many probably don't have even today, so I feel very good about the progress and where we sit.
The results are ahead of us, and we don't have a crystal ball, but we know that they are going to add value to the bottom line.
I think secondarily we talked about the Store Revolution and the investments we are making this year.
2016 and 2017, as <UNK> said, are the, I will say, the harvest periods from a leverage standpoint.
The training will be done, particularly Furniture sales training, as well as backroom training and the labor scheduling piece, putting the people in the right time of day and days of week to drive not only sales, but a more efficient schedule, so that I feel very good about and is well underway.
From an inventory standpoint, as <UNK> mentioned, we have three very strong GMMs.
Everybody is focused on delivering results to their inventory plan and inventory turnover, looking forward, will be one of the key drivers of leverage.
We know that, the teams know that.
It's not just a cash flow metric.
It's going to make us more efficient in DCs and in stores.
And there's a number of other I'll say singles and doubles that do not drive as many dollars, but support the culture that we are trying to enhance around leverage point has to be low.
We can't sacrifice the customer experience in order to get there, so a little bit of color for you on what we are talking about and thinking and <UNK> is right, we talk about it as an executive team if not every week, every other week, on are we on the path to get there this quarter, this season, next year.
Very much a focus.
When we get to the end next year and assume that we get to our goal, 170 basis points of leverage in a two-year period on a $5 billion business is a monumental task.
It's going to take a monumental effort and it's something we are 100% focused on.
So, hopefully that helps everybody on the call think about how we are thinking.
The last thing I would say in this regard, and again, hopefully I'm addressing some of the questions yet to come, for us, and I'll speak from my perspective having been here almost 15 years now, the exciting part about where we are as a business and as a team is we did the hard work early and we set a strategy.
The strategy is working, which allows the leadership team to be more focused on the future and not on whether we are ---+ what sales were yesterday or what they are going to be tomorrow or how are things looking for the quarter.
We are confident in the direction we are going, the strategy is working, and we're thinking much further out than August or September.
Well, I think I wrote down three things there.
So let me try to start and <UNK> can certainly chime in.
From a traffic standpoint, I would just remind everybody that with completing the EAS rollout, we now have traffic by store.
We don't necessarily have traffic by store for last year, so we are really looking at it week to week, month to month and developing an understanding of where the opportunities might be, and as we look forward, how we might use that information to work with our stores and make sure that we are comfortable and happy with how we are converting customers to transactions and basket.
Transactions have been a challenge; we know that.
Candidly, from our perspective, we believe ---+ we do not believe we need positive transactions in the back half of the year to deliver our guidance.
I think that's real important for everyone to understand.
From our perspective, it's broader than a single metric and what I mean by that is, and <UNK> can expand on this, our business is changing, we know that.
Our mix is changing.
The amount of footage that we've allocated to certain categories has changed and will continue to change in the future.
That does produce a different level of basket, which is a positive and can potentially impact transactions, which might work against that basket.
But when we come up to 30,000 feet, and we talk to our customer, she likes what we are doing.
We've enhanced the consistency, and she's rewarding us for that.
We have enhanced the quality of our product, and she's rewarding us for that.
And some of the key winnable, ownable categories where we think we can clearly differentiate our strategy to the competition, she's recognizing that.
So we feel very confident about our ability to drive comps into the future.
Anything you want to add.
On that piece, I was going to wait until we got to the third question, which was Furniture and the Home comps versus Easy Leasing.
I think his second question was on Food and fFod percent transactions in the basket.
I don't have that number in front of me, TJ; I don't know if you do either.
But if we move past that because, <UNK>, I don't know ---+ I certainly think that we do measure that number on what percent of ---+ measure what's in the basket, but I don't have it in front of me, so maybe that's something that <UNK> can take off-line with you later.
But your third question, and I think TJ has probably got the numbers on what percent of Furniture sales are being driven by the Easy Leasing program, but it certainly isn't the entire comp, that's for sure.
So you might want to take that and then I'll talk to him a little bit about content and strategy in those Home areas and in Furniture.
Yes, I think, <UNK>, let me just circle back on Food.
The amount of transactions that have the cooler and freezer product in it, if I put a range around it, it's low single digits.
It might creep up in the mid-single digits.
I think the efforts around putting coolers and freezers into our stores were executed very well.
Our customer is responding.
We are now able to put it in our advertising, which is clearly a positive.
And maybe the best data point that we have to share is, in recent weeks, Trey and his team have been very focused on kind of breaking down that business and working with our supplier partners and in some of those key markets where we are now in year two, we are seeing positive comps in that program.
So markets that were early like California and Florida, as an example, we are seeing positive comps on top of positive comps.
So that is very important to understand.
That's probably the key ---+ biggest key metric that we look at when we think about Food and Consumables and particularly the coolers.
The Furniture piece in Easy Leasing, I think at a real high level, Easy Leasing is roughly low double-digits to mid-teens, so in that 13%, 14%, 15% range of our Furniture business, full stop, which means the other 85% plus of the business obviously has to be performing quite well also.
It's all about quality, brand, fashion, value, how that product ---+ how we differentiate to our competitors, which I know <UNK> loves to help people understand.
And then the last piece, on the Home product, <UNK>, it is a very small piece of our business, very small piece of our business today that is Home-related product in Easy Leasing.
When I say very small, I'm talking about low single digits, maybe.
It's still very new for us in offering Soft Home in particular on Easy Leasing.
It is absolutely not what is driving comps in Home.
Martha, Kevin, <UNK>, the whole team over there in Soft Home has done an excellent job improving the quality of our product, the fashion of the product, and they are creating it themselves with their vendor partners and not relying on closeouts.
So I hope that is clear to everybody.
It is a portion of the growth in Furniture and it is a much, much smaller portion of the growth in Home, but an opportunity.
So let me just finish with that, <UNK>.
When you think about the Home area, as I talked to you guys two plus years ago, and the taste level in there, and I said on a call, don't buy ugly.
Well, we don't buy ugly anymore, and the guys have done an incredible job of positioning us in those businesses and not only just in the Fashion Bedding has <UNK> done a great job, but the Utility side of the business and the Towel side, the textile side of the business.
Across the board, Kevin and the buying team, along with Martha's direction, have just improved the taste level and the value proposition, and she responded to it big time.
Typically, on a daily basis, you are seeing double-digit increases.
So again, in my 35 plus years in retail, I don't care what your credit card program is, if you don't have the right content, nothing else matters.
So from a content point of view, we have fixed that business and we will continue ---+ we are not perfect and that's the good news about my team is they know that complacency is not something in our DNA.
But, I'm going to take on the Furniture piece with you as well too because this is a powerful team, and we have a new hire in there that just joined us, Robert, as a divisional merchandise manager in there.
But more importantly, we have four seasoned buyers that know what the hell they are doing and what they needed from us along with the Allocation team in there is a commitment from the senior management team to give them what they needed to drive the business whether that was the receipts behind it, or the marketing behind it, or the distribution of the product and how quickly we could get it to the stores.
And then, of course, the execution on Nick's team to make it happen.
But, I would say one of the biggest changes in there is how we have orchestrated what I call top to top meetings with the big guns.
So when you think about it, every quarter, the CEO of Serta has been in my office, and we have a strategy, a three-year strategy in front of us to double down on that business, and we currently are working closely with the CEO of Ashley, as well as United, which is under the Simmons brand.
These are huge companies that strategically we never sat down and hammered out strategies together as partners on how do we get there.
They are investing heavily in Big Lots.
They believe in us.
They know where the opportunity is.
They get the buy it today, pick it up, take it home today strategy.
So, the comps that are coming out of there are not just driven by ---+ and I love the guys at Progressive, so don't get me wrong, but this is about content and us supporting the business and figuring out how to get that inventory into the stores.
And again, as we navigate and figure out in the back half of 2016 or whenever it lands to be, this area is going to be the biggest growth area in the Company from a buy online, pick up in store strategy.
We think we are going to get a lot of incremental volume in the next three years because of that.
Sure, <UNK>.
When we have certain legal activity or claims, this one happens to be merchandise-related, so product that was sold in our stores a handful of years ago where it was less-than-perfect, or there were some claims or settlements around a design defect in some of the original manufacturer's work on the product.
We've been working with our insurance companies back and forth for I'll say a number of quarters to try to resolve the issue.
So we clearly view it as one-time in nature and it relates to prior years.
When we have charges like that, we tend to carve them out for you and non-GAAP them, so to speak, because what we really want you to understand is what's going on in the current operations of the business so that you can have a good way of judging are we on task or on track or not.
So this is one-time in nature.
It relates to a product liability design from years ago on a product where there were some defective parts to it, and we thought it was appropriate to carve out in a separate item.
Thanks for recognizing the improvement in the quality and again, remember that QBFV, there's the quality, brand, fashion and the last word is value.
And not to beat a dead horse, but there's the famous saying out there of price is what you pay, value is what you get.
And in the surveys that we've done, she is more focused on value for her money than she is on what the price is.
And the old model of compare to or the high/low thing, she's a much savvier shopper in what she tells us and candidly, we still have a lot of work to do to dig deeper into talking to her.
We do spend a lot of time in <UNK>'s world and Marketing speaking to Jennifer and doing surveys, but she gives us a lot more credit for value.
Candidly, we still have to win back the Jennifers who walked away from us for quality, but the current Jennifer that we have, she's thrilled with the quality and the value versus the price because she wants to be able to know that she can come in and buy things whether it's in those four or five key businesses we talk about all the time.
And again, I don't want to beat a dead horse, but certainly price is important.
She wants to understand the value she's getting for her money and when you put quality product on the table in front of her and it's a good-looking product and you have a great value, she gives you huge credit for it.
No, it's totally the closeout piece.
So if you really look ---+ and again, we've talked very transparently about this.
The closeouts in Food and Consumables can fluctuate anywhere from 40% to 50% to 60% depending on the quarter or the month, the time of the year, but we have tremendous relationships with the big food companies.
I can't get into the details of how our food truck works, but we buy a lot of closeouts in there in canned goods, salty snacks, cereal, and our pricing is better than the bulk of the discounter on that product.
Now when you come into the NVO part of Food and Consumables more so probably in Food is we are not going to be as competitive as the big guys you are referring to because we don't buy it as big, but it is a convenience play and it's working, but we are not going to be priced below.
We might be at in some cases or slightly above and that is how we've designed that business and she has responded very well.
When you think about in Consumables ---+ and Consumables kind of a complicated area candidly when you look at it because you've got everything in there from Storage, to Pet, to HBC, so it's a lot of moving parts, Paper and Chemicals.
So when we make big buys with a P&G, as an example, you know the brand portfolio, and our pricing on those categories, is without a doubt, lower than the big guys because it just is the nature of how you buy it.
But on a day in and day out business, again in the Never Out program, <UNK>, we are not going to be below.
We will be at or slightly above.
<UNK>, I'm not sure we can put a pencil to lost sales, so to speak, for weather.
I'm sure the group in Planning and Allocation on Lisa's team would have a pretty good point of view.
I think from our perspective the way we think about it is it limited our upside to the quarter.
Having said that, Lawn and Garden and Summer both comped up low single digits during the second quarter, so there was opportunity missed there.
In performance by region, we monitor it actually closer than that.
We actually price and glide product by store in terms of understanding their inventory levels and their sellthrough rates.
That's not unusual for us.
So I don't know that we saw the same level of disparity, for instance, in Texas, which I know some people have talked about for different reasons than weather.
I don't know we saw that level of disparity in our business.
I think where we might have saw some variance by region would be more attributable to rollout of initiatives, so to speak.
So those stores that are in their first year of coolers and freezers, or those stores that in the quarter were still in their first year of Furniture financing, as an example.
That's a bigger driver of disparity in performance by store than probably trying to pick out the weather.
But I think at a real high level, the strength in those big winnable, ownable categories and the consistency of them allows us to absorb a little bit better when weather conditions aren't perfect.
So I think that's ---+ you know this from following the Company for a very long time ---+ when we have 80% or 85% of our business working and 10% or 15% comping down for more strategic reasons than if they are working or not, that's when we are at our best.
That's a good question.
I would tell you two things.
One is, you're right and you and I have talked about this and obviously TJ for the last couple of years about the prior strategy in here was like an all or nothing.
So our advertising strategy would be the entire print ad would be all in Lawn and Garden, and I remember that like it was yesterday because I got here right in front of a Memorial Day weekend and the entire ad was outdoor and we had horrible weather, tons of rain.
So I introduced what I call weatherproofing your marketing strategy.
So that is one significant change in how we manage the total Company is we don't go all or nothing and that's where TJ is talking about how ---+ let's be candid.
There's no question that everybody in the country had difficult outdoor furniture ---+ outdoor living categories were tough during May and June because of that and I'm sure, like he said, our planning department has that number to quantify it.
But more importantly it's how you manage the mix of your business.
And because of the razor- focus we have on categories like Home and Furniture, we were able to offset those negative sales drops, but at the same time how we flow that product early in the warm markets continued to comp positive while the markets that were having the unseasonable cold or wet weather comped negative.
But the strategy as far as questioning accelerating spring markdowns, there is no question that when you have the momentum we have and the positive comps, we were able to take some markdowns that we had planned to take in August we took them in July on some of the outdoor living categories, but nothing significant enough to have a major impact on the margin.
As you can see, the total margin rate was not impacted.
So really from a strategy point of view, to be honest with you, one of the biggest things that's happening in there and will continue to happen is Edit to Amplify.
As good as we are at Seasonal, we still over-assort and Randy and Steve and Michelle have done a great job of being open to listen and working hard with our partners in Asia to reduce the number of vendors and buy deeper and be in stock on the most wanted categories.
And quite honestly, <UNK>, when we were over there in Asia last month and spent time with the largest gazebo manufacturer in the U.S. who does business with every major retailer in the U.S., we have a 14% share in that business and even with difficult weather, people are buying those because it can actually allow them to be outside even in the rain.
It might sound crazy, but that business comped positive during that time period.
It's more the other Lawn and Garden areas that people don't get out and use.
So again, it's a very focused, well-balanced mix of product that makes a lot of sense and then again a healthy Food and Consumables, Home and Furniture business helps us offset that.
And if you look at our ads of years past, and I know you know this, we don't just put that on the cover.
So we may have Food and Consumables or Food on the cover, along with Furniture and Patio.
That's the strategy.
It is to not be one-dimensional and it's working.
I think just one last comment to put a bow on it.
Again, I'll remind ---+ Lawn and Garden and Summer both comped positive and actually for the spring season and the second quarter, their margin performance was actually better than last year.
So I think that speaks to our ability, enhanced ability, of all the GMMs and buyers and how they are managing their inventory levels and giving us the confidence, as <UNK> said, if we want to take a mark early on a certain classification or a product, we can do it and do it well within our plans and within our budget.
So a much, much improved process for us and clearly the stores and the customer benefit.
Let me just ---+ again, I know we are running long on the call, but these are all good questions.
I'll talk about three key metrics and guidance, not just the two you asked about.
From a sales perspective, a 1% to 2% comp, we expect the trends from second and third quarter to continue into fourth quarter with the exception of two key things.
First off, last year's fourth quarter comp was our highest comp performance of the year, at a 2.9%, so we are up against that.
Second and probably more important is acknowledging the fact that we believe it's going to be a very competitive holiday season and we will not be online selling product.
That was the plan; nothing has changed there.
But what we don't know from an external standpoint is what that environment is going to look like online, and since we won't be participating, we think it's appropriate to plan the business with that in mind.
Second, on the margin piece, I am comfortable with margins flat year-over-year in the fourth quarter regardless of the significant increase in the prior year.
I would just remind everyone that the significant increase in margin rate in Q4 of 2014 came off of the beginning of Edit to Amplify, which was a significant margin decrease in the fourth quarter of 2013.
So it was somewhat of an easy compare last year.
We delivered on it, and now we think that's a reasonable margin rate for the fourth quarter of fiscal 2015.
So I am very comfortable there as well.
From an expense standpoint, Matt, there were a couple unusual items in the fourth quarter last year and we detailed those out.
Obviously, we get to go up against those, but the bigger picture and the bigger driver is what I mentioned a little while ago when <UNK> asked the question on the long-term model.
We are seeing very good performance in our stores group as they will complete the Store Revolution activity in third quarter and they will be fully ramped up and eager to perform in fourth quarter with Labor Scheduling, Dock-to-Stock, Furniture Sales Training, Roles and Responsibilities all rolled out and understood.
That's step one.
Step two, from a distribution and transportation standpoint, you may recall last year we rolled out new warehouse management systems to three of our distribution centers.
Obviously, there was some rampup in some training that went along with that.
That impacted our performance from an expense and productivity standpoint in the back half and in the fourth quarter of last year.
Obviously, we are a year into it and we are much more productive.
From an advertising standpoint, we've been doing a lot of testing this year, and we think there's an opportunity to provide, albeit a smaller amount than stores in distribution, some opportunities to potentially leverage there.
And then from an insurance standpoint, when we think about healthcare, when we think about our participant count, when we think about workers' comp and general liability, there's been a very major focus on the part of the stores team and the asset protection team as we think about claims and safety in our stores and distribution centers.
We actually talked about that back at the investor conference well over a year ago, so nothing has changed.
This is us entering into the period in time in the strategic plan here.
You saw it in the second quarter and we are guiding to it in third and fourth quarter, that our operating margin dollars are growing, our operating margin rate is expanding and the leverage point will stay low.
That's been the plan all along, and we see nothing in the results that tells us that we are off track in those regards.
So we feel very good about the components going into the fall season.
You know what, I'll start on process, <UNK>, and then <UNK> can certainly explain merchandising and everything else that we are trying to do and strategically.
From a process standpoint, we have, gosh, I don't know 20, 30, 40, 50 people in the building working extremely hard, all disciplines in the business and Stew and <UNK> and Lisa are kind of leading that charge, and we've got a number of consultants externally who have been adding a lot of value to the process.
From a process standpoint, we are in the first cycle of testing in the site, and we are learning a lot about what we are doing really well and we are learning a lot about what we need to work on going forward and/or potentially change.
There will be two more cycles of testing that come after this, and then we will have a much clearer picture on specifics of timing of when we will actually start to sell product online.
I think reminding everybody from a financial standpoint there's roughly a nickel drag in the EPS guidance for 2015 related to expenses for e-commerce and by the time we are done with going online, our forecasting guidance would include roughly $40 million of CapEx between last year and this year.
So it's a significant investment for the business, very focused on it, excited about the opportunities.
And from a process standpoint, we continue to walk down our timeline and we are making progress.
From a testing standpoint, it's still early, but we are learning a lot about what our capabilities are and how we need to potentially adjust going forward.
Yes, <UNK>, the only thing I would add to that, to what TJ said is we are early in the cycle one of testing and we\
Sure, <UNK> and thanks for recognizing the improvements in the stores; I appreciate that callout.
Listen, as I said earlier in the prepared remarks, these type of decisions aren't taken lightly and you certainly just don't wake up in the morning and make that decision early on.
But candidly, there is never a good time in any type of high-level executive change in any business and as you guys know, in the space we are in, there's other big players out there, much bigger than us who are making lots of changes in the merchandising world.
This is truly really about strengthening our leadership team and taking the opportunity when you've done what I've been able to do with the team and get ourselves positioned and the team embracing.
I always talk to the guys about what great leaders do and it's to me, it's a very simple ---+ my answer to you is going to be leaders relentlessly upgrade their team and they use every opportunity to evaluate and coach.
So I saw the opportunity to do this and rather than wait and then have to talk to you guys about it later, I felt like this was the time to make the change and let you know that Lisa and Mike and TJ are very solid senior executives and you should have all the confidence in them, as well as the trust in me that this type of a decision is never taken lightly.
It's always well thought out and it's the right thing to do to move us forward.
And I think I used the word strategic and as we move forward now back to blocking and tackling and implementing structure and processes and disciplines is one thing, but being able to take the strategic thinking in where we are going to lead the Company from a merchandising point of view, Lisa and I are highly capable of doing that together with the support of TJ and the rest of the team.
<UNK>, one last thing I would add, and I'm not just trying to kiss up to my boss because he is sitting here, but the teams take a tremendous amount of direction from <UNK>.
They have and they will continue to.
If I were to put you in front of all three of the general merchandise managers or any of the divisional merchandise managers, they will tell you that over the last 2.5 years, they've learned a tremendous amount from him.
He set the strategy (inaudible) and those aspects of merchandising very early on before we had many of the merchants (inaudible).
He's highly, highly responsible for the strategic direction of the merchandising that you are seeing the results of in the stores.
So I think that's really important for everybody to understand.
<UNK>'s not just the CEO.
He's out there in stores and working with the merchant teams, maybe not as much as he would like, but they take a tremendous amount of direction from him and that's what you are seeing in the stores really resonate with the customer.
Thank you, everyone.
Chris, will you please close the call with replay instructions.
