VSI
#Good morning.
Yes.
I think were talking about, <UNK>, two different things, but you're absolutely right.
First of all, we feel very comfortable with the guidance that we've given on the loyalty program upgrade.
We continue to think that, that's going to be a very important part of our customer experience moving forward.
Separately, we're putting more focus on local market acquisition through our stores as part of our overall focus this year on store performance.
We basically provided a toolkit to our health enthusiasts at the store level, which allows them to be more aggressive in what they're doing in their local community.
That might be sponsoring various different types of sports activities, marathons, linking with various different wellness folks in the market that can help them to make referrals, bringing more programs into the stores where that make sense as well.
Part of that program was to ask our stores to make sure that they're focusing on healthier awards acquisitions, as in signing up new people to the program.
And we found that's been a very, very successful program for us in the first quarter and we're going to continue to move forward with that type of program as we go through the year.
As you asked, do we offer discounts on it.
We have started to put into play some sign-up bonuses as part of that program so that we can incentivize consumers and make it easier for our store health enthusiasts to be able to get people signed up.
We're seeing strong response to those.
Yes, the negative comp was primarily driven by traffic.
Ticket was generally flat to slightly positive year over year.
So it is really traffic.
As we look to the comp guidance going forward, we really do think that the driver of the change in trends will be traffic and not as much ticket.
Yes, <UNK>, even though the sales have been down a bit versus a year ago, we are actually seeing that the pipeline and the open orders is actually increasing with Nutri-Force.
We think it's going to start to reflect through in the numbers.
Realize that part of this is we were going through a fairly substantial level of change with Nutri-Force over the first year since we acquired the business.
We're now seeing the business settle in.
We're getting more reliable on how the business is operating and it's putting the team down there in a much better position to actually sell against our capacity.
We're seeing very good interest in the market.
We expect to see continued strength in that area in the back end of the year.
Thank you.
Okay, so with respect to new-store productivity, as we look at the returns of our new-store program and we look at now the stores that have been open for a year or more, we're continuing to see performance that would result in returns well above our cost of capital.
So, we're continued to be pleased with the overall value that the new-store program is contributing.
Having said that, we have reduced our new-store expectations for the year from our historical trends of $50 million to $60 million a year, down to $30 million as we are evaluating new formats and we'll continue to test the returns associated with this relative to other investments.
With respect to the waterfall on the new stores, it's consistent with what we've seen in the past where that second year of stores open generally we see comps that are in the high 20% and then the following year, it's in the mid to high teens and then down to the high single digits until it reaches maturity generally after 4 to 5 years.
With respect to buybacks, we spent a total of $42 million during the year.
I'm sorry during the quarter.
Our free cash flow, the Q will be coming out shortly, so you'll get the details of our cash flow statement.
But let me just quickly look that up for you.
Free cash flow was $31 million for the quarter.
You're welcome.
I would say as we look at overall performance, where we are seeing weaker performance would generally be in the mature stores.
And specifically, stores that are quite mature, much older.
As we are evaluating capital going forward, we are very focused on what's the right balance of capital and what can we do to make investments in those older stores to drive high return.
That's right.
I think <UNK>, the question was asked earlier about the overall store format work that we're doing and it's important to note that a large piece of that work on new format is really about refreshing the experience in the stores.
Our hope would be that we're going to see good returns from those refreshes that we're doing which will then give us a very, very clear road map for what we need to do to start to address some of the weaker comps that we're seeing in our more mature stores.
Yes, store-level comps generally we would start to see occupancy leverage once we hit approximately 3% on store-level comps.
We've said back in February, and we will confirm again, that we believe that the first-quarter comps would be our lowest rate of comps.
So we do expect an improvement in trend in the second quarter.
We have not specifically said whether we expect that the second quarter will be positive, but we will say that we expect a significant improvement.
Sure.
Yes.
I'd say that what we're seeing online, like a lot of retailers are seeing online, is it's certainly a competitive market.
I think we feel actually pretty good about our pricing.
There's been a variety of different pricing surveys that have been done recently.
We do our own.
We are quite sharp in the terms of the way that we look at pricing and price gaps versus relevant competition.
I think the biggest challenge that goes on online is its a just by nature of the beast, it's a kind of area where you can see a lot of promotions that are flash promotions.
Rapid ones where you see volume sometimes move towards.
That being said, I think we feel really comfortable in the last few quarters of impact on our online business continues to show that we're making steady progress in that.
And it's not just the pricing game.
Part of that's also overall a customer acquisition game and making sure that we're using the best tools and the best approach in that particular area.
I think we're happy with the steady progress that we're making in that area.
We're going to continue to make it a major area of focus.
I mentioned in some of my remarks <UNK>, that I think one of the other big tools that we've not had up until this past quarter, has been buy online, pick up in store.
From the standpoint of a customer looking for a fairly immediate level of satisfaction, that's a pretty significant tool.
We've been quite pleased by without a high degree of promotion or marketing behind it, have been quite pleased by the response we've seen in the market around that.
And we think that the combination of leveraging our bricks and mortar and leveraging our online presence gives us an advantage in the market that we're planning on taking advantage of as move forward.
In terms of leverage or in terms of share repurchases.
We should offline maybe compare our math on leverage because my calculation is about 1 times less than your calculation.
So we can have that conversation.
I think we are pleased about how the month of April went.
I think it's ---+ we don't give out very specific information, but I think the combination of much better execution behind the BOGO program this year, we were in much better in stock position, our stores were ready, execution was just across the board more positive, and we had the benefit of a quarterly loyalty program kicking into gear.
We were happy with how we started the quarter.
That being said, we've still got two months in front of us, so we're taking this one step at a time.
I'm sorry.
Did you say wage.
As we look at payroll, I did mention that we had payroll deleverage in the quarter.
We are seeing an increase in average hourly wage above the standard 2% or so that you would expect to see.
We have embedded more of that trend in our guidance for the rest of the year.
No, I'm sorry.
It's more than 2%.
What we've seen is closer to a 3% close to 4% increase in average hourly wage.
It's not meaningful.
It's not a meaningful change.
It's actually a more efficient program.
But it's not really meaningful either way.
I would say it is an area of strategic focus for us as a team.
I think we want to make sure that we're positioning the Company so that we can do well in tough times as well as in good times.
I think that we feel that there's an opportunity to try take this south of the current number at that.
We are working with AlixPartners in some of those areas.
That being said, I don't have a silver bullet right now that makes it real clear on how to solve that.
But I expect you're going to see some improvement in that over the next few years.
That's a great question, <UNK>.
That's one that I consistently think about as we're going through the job.
First of all, I'd say it's a cyclical category.
I've been in and around the wellness business for 20-plus years and there are periods where there's a fair of degree of innovation and new things that happen.
And there are periods of time where there are less.
We're in one of those troughs right now.
I think it's incumbent on every specialty retailer to make sure that your experience remains special.
I think that one of the challenges that we have right now is, over the last few years, there have certainly been a lot of mass players and online players that have taken notice of this very strong category and the strong customers that shop this category and have taken steps to try to improve their position in it.
We spent a lot of time last fall really doing our research and doing our homework to make sure that in terms of both our customer experience and in our product assortment, we can do a better job of raising our game.
We feel we've got a pretty good line of sight for how we're going to do that over the next couple of years.
I think what you're seeing frankly, is just a critical need to continue to stay competitive in this marketplace.
If anything, what we need to do is we just need to accelerate some of our focus in those particular areas and we think we're going to get rewarded by the customer.
So I want to thank everybody for joining us again this morning.
We look forward to continuing to speak with you and we will speak with you next quarter.
