KSS
#On the buy online, pick up in store that's an easy one.
It's on average it's been about 25%.
It was actually more during holiday.
On loyalty we obviously had a lot more dollars since we had a lot more customers bounce back in January.
We did see a slight deterioration in the response rate.
One thing I probably made a mistake on is when you double the size of your file not everybody loves Kohl's equally.
As you add the later adopters to loyalty they are not going to respond as quickly.
So that's some learning we will do a better job of planning in 2016 because of that.
Most of it's because $7 million comes out because of the store closures.
Well we spent, last year we spent $934 million, what I'd I say $940 million for this year.
So it's a little bit of a rise.
We've been spending a boatload of money on IT for a number of years so we're starting to cycle through that.
The average life of an IT project ranges from three to five years but I would say more and more we're using three years just because the innovation cycle is so short.
Well from my perspective again the store closures help them.
We said it was $44 million, $45 million, so you can take a portion of that for the year depending on when we close the store in June, that's embedded in the guidance.
Store payroll is going to grow.
We're seeing the wage pressure.
We're not immune to it.
Other people who have reported said it's a pressure.
In this quarter it is going to be a pressure this year.
It's more than a third of our overall SG&A so that's going up.
I think we can be more efficient as I mentioned in ship from store and BOPUS.
That will help mitigate that.
We actually experienced healthcare deflation this year.
We had a tremendous year in terms of that.
Knock on wood we were lucky we didn't have a ton of large claims which can really from swing it one way or the other.
But we've made a lot plan changes in wellness initiative.
We have a relatively young population, that helps as well.
But we're going to cut advertising.
I think <UNK> asked we spent $1.011 billion this year.
We wanted to spend $1 billion.
The goal is to spend $1 billion this year, so maybe we will spend even a little bit less than that.
We can get more efficient in the E-Commerce Fulfillment Centers.
And we're going to get more efficient in corporate with the reorganization that we had.
And we have to be smarter about when positions open up not filling them and just increasing speed across the organization.
I think that will be a big help but those are kind of the buckets we're going to try to do to offset.
IT expenses also going to go up.
I mean we're spending a bunch on IT.
So IT and stores are going up.
Everything else pretty much has to go down somehow.
The 35% to 40% of our expense that is essentially store payroll, that's going up.
So we're planning it to go up, that's just a fact.
Things like the reorganization, things across the Company in the other 65% we've been working on.
This is not something we're starting last week.
We've been working on reducing those forward-looking expenses.
And one of the things that's going to big component part of that that you sort of alluded to but I think honestly has a big impact is lower inventory level.
Lower inventory level is less material handling, it's less distribution expense, it's significantly less workload in the store and that has a big impact in a positive way on store payroll.
So our average hourly wage is going up but if we're putting a lot less inventory in the store there's a lot less work to do on the store's part to handle it.
We haven't gotten there ---+
We planned the fall season.
But I mean there's not a Star Wars movie to my knowledge so we won't have to spend money on that.
Honestly I wouldn't think I think Wes just said we spent $1.011 billion or $1.012 billion in marketing this past year.
I wouldn't think about, I wouldn't take away from this discussion hey, they are going to dramatically lower the amount of marketing they spend.
We're talking about on the ledges.
We're talking about reducing it by $10 million on a $1 billion base.
The more important thing for us that we just touched on with the caller or two ago is we've got to make that $1 billion work harder through personalization.
That's really the win and then the other things become savings.
All about cold weather merchandise.
Yes, this is all about liquidating and getting out of our holiday cold weather inventories through the early part of the first quarter and repositioning our inventories at a lower level going forward.
I mean it's always been relatively fairly tight.
What happens is regionally each quarter, I hate to use the word weather, but the facts are weather can positively influence a quarter's results in a region and negatively influence another quarter's results.
So the West Coast got better results because they had better weather and the Midwest or Mid-Atlantic got lower results.
But the spectrum across from a store comp perspective, I mean it's not like there's a dramatic difference.
The sales, the comp sales really aren't driving the closure decisions.
It's really about the fixed cost and our ability to manage the other lines of expenses to make them more positive.
And then the biggest thing that changed honestly in the first quarter is our digital orders grew 30% on a very large base ---+ in the fourth quarter, sorry.
And that was something that was unexpected.
We far exceeded our plan on digital for the fourth quarter.
So that was really sort of the aha moment if you want to say that about how to take a look at the store base with a more critical eye.
They are not in the markets in which we are closing.
But that's a good thought.
And frankly we did that intentionally because we didn't want to make the results of these stores driven by anything else that was happening in that market.
But having said that I still think the biggest opportunity for the small store pilot will be as we review our overall store portfolio, as leases become up over time, if we're able to prove successful in this much smaller store and leverage the digital growth in our business I think that could be a major change for us in terms of our expense structure and our fixed cost as Wes just alluded to.
And it doesn't have to be a 35,000, we have plenty of 64,000 and 55,000.
So it's more about having the toolbox to better rightsize the store base as we move forward.
All right, thank you.
Thanks everybody.
