MIK
#Steve, this is <UNK> <UNK>.
I can help answer that question.
As had <UNK> communicated on the call, we are lapping $4 million of legal fees from Q1 of last year, which is a good news item for this particular quarter that we just closed.
We also got some reimbursement against those legal fees in Q1.
Finally, as you mentioned, in our Fuel for Growth world, we do continue to make strides there across our P&L to help things.
We did see a bit of an offset to some of those savings.
That savings was really a shift in our advertising expense in Q1.
It was a little larger than what we would have spent in Q1 last year, which was in support of our TV campaign.
So that was part of the trade-off of what we invested in.
The full-year number has not changed.
Q2 this year is a little lighter in store openings than what we would have saw in Q2 last year.
We ramp back up in Q3.
That's really due to available real estate timing for when we can get into the store.
So no change for the year.
Good morning.
So <UNK>, it's <UNK>.
We are basing it off of the 2.2% to 2.7%.
That is the core number that I would be looking at.
When we look at the back half and our full-year guidance, we would still be within the top end of our range.
Firstly, our direct sourcing is a small portion of our business today.
We're not going to quantify that.
Secondly, over the past few years, we have been working on a lot of things.
We did know that sourcing likely provided an opportunity for us over time.
Part of the attractiveness of the Lamrite deal, when we looked at them about the acquisition, was the fact they had an infrastructure in China that would allow us to scale our direct sourcing capability faster than we would have on our own.
So since the day I walked in here 3 1/2 years ago, this has been on the road map.
It's just a question of when we could get to it, to do it successfully.
There is a lot of work.
There is investment that needs to be made to do it successfully.
Lamrite gives us an opportunity to accelerate that.
And additionally, again, back to the road map.
We didn't talk about it publicly necessarily, but the sourcing opportunity of, again, becoming a bit more sophisticated in our sourcing process and breaking out commodity costs and doing bottom-up cost building ---+ that has always been on the road map.
But it's taken some development of internal skill sets that we may not have had before.
So we're getting to it now.
And the timing is appropriate for us, because we've made a lot of progress on some of our customer-facing efforts.
Still more to be done.
But now there is opportunity to ---+ and we believe it's material opportunity ---+ to improve our product costing.
Which again, given our scale and our size in the industry, will give us an opportunity to both flex our muscle a bit more with customers, we think, in providing really good values to them, in addition to providing additional value to shareholders.
Yes, guys, I'm not sure we're prepared to give a third versus fourth quarter.
We're not going to get into that habit of breaking out the quarters.
I think what we've said so far is to the extent we're going to comment right now.
On a cost basis.
On a per-store basis.
And the retail value of them ---+ we are a cost inventory Company ---+ but the retail value on that would be higher.
But the cost on our books, in fact, is lower, due to the sourcing initiative.
Sure.
Candace, I think we have time for one more question.
<UNK>, I'm going to cut you short on it a little bit.
It's too early to comment on the Pat Catan's stores.
We've had them for a few months.
They have 30-odd stores.
They are a different box than ours, so there are learnings that we are getting from them at Michaels, and there are Michaels learnings that are benefiting Pat Catan's.
I'm sure we'll talk about that more.
On the TV advertising, some of the TV advertising we have done has been incremental spend that's been funded through our Fuel for Growth effort.
We do believe long term there is potentially an opportunity for us to reinvest some of the Fuel for Growth savings, to communicate with the customer in a more aggressive way than we have before.
So that's what I would say on that.
Thanks, <UNK>, I appreciate it.
I'm going to wrap us up, since we are running a minute or two over.
Let me thank everyone for participating today.
Also I want to be sure to thank our 55,000 team members across all of our brands, our distribution centers and support centers, for working together to deliver this quarter for our customers, our team members and our shareholders.
We are the leader in this industry, and we will continue to remain focused on connecting and inspiring with the customer in new ways, as we work to achieve our Vision 2020 strategy.
Again, I appreciate everybody joining us today, and we will look forward to talking to you later this year on our second-quarter call.
Thank you.
