Operator: Good morning, and welcome to the Dick's Sporting Goods Fourth Quarter Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.
I would now like to turn the conference over to Anne-Marie Megela, Director of Investor Relations. Please go ahead.
Anne-Marie Megela - Director, IR: Thank you. Good morning. Thank you for joining us to discuss our fourth quarter 2012 financial results.
Please note that a rebroadcast of today's call will be archived on the Investor Relations portion of our website located at dickssportinggoods.com for approximately 30 days. In addition, as outlined in our press release, the dial-in replay will be available for approximately 30 days.
In order for us to take advantage of the Safe Harbor rules, I would like to remind you that today's discussions includes some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which includes, but are not limited to our views and expectations concerning our future results. Such statements relate to future events and expectations and involve known and unknown risks and uncertainties. Our actual results or actions may differ materially from those projected in the forward-looking statements.
For a summary of risk factors that could cause results to differ materially from those expressed in the forward-looking statements, please refer to our periodic reports filed within the SEC, including the Company's Annual Report on Form 10-K for the year ended January 28, 2012. We disclaim any obligations and do not intend to update these statements, except as required by the securities law.
We've also included some non-GAAP financial measures in our discussion today. Our presentation of the most directly comparable financial measures calculated in accordance with Generally Accepted Accounting Principles and related reconciliation can be found on the Investor Relations' portion of our website at dickssportinggoods.com.
Leading our call today will be Ed Stack, Chairman and Chief Executive Officer. Ed will review our fourth quarter and full year financial and operating results and discuss planned investments and guidance for 2013. Joe Schmidt, our President and Chief Operating Officer will then review our store development program and discuss recent and expected systems implementations, as well as provide insight into our new concept. After Joe's comments, Tim Kullman, our Executive Vice President of Finance, Administration and Chief Financial Officer, will provide greater detail regarding our financial results, investments and expectations. Ed will then provide some closing comments before opening the lines for Q&A.
I will now turn it over to Ed Stack.
Edward W. Stack - Chairman and CEO: Thank you, Anne-Marie. I'd like to thank all of you for joining us today. In the fourth quarter, we again generated record results with earnings per diluted share increasing 17% to $0.03. These earnings compared to our original guidance of $0.03 to $0.05. The fourth quarter included a 14-week, which contributed $0.03 per earnings in the quarter.
Sales increased 12% in the fourth quarter, driven by the growth of our store network, a 1.2% increase in consolidated same-store sales on the 13 to 13 week basis and the inclusion of 14-week. 1.2% increase in consolidated same-store sales compared to our comp expectation of 4%.
Same-store sales in the fourth quarter of 2012 for Dick's Sporting Goods were down 2.2%, Golf Galaxy sales were up 1.3% and eCommerce sales were up 54.2%, higher than anticipated sales in hunting were more than offset by significantly lower expected sales in outerwear and cold weather accessories as we experienced warmer weather relative to this year versus last year during peak selling periods as well as in fitness where we experienced a significant decline in the sales of ellipticals and treadmills.
To demonstrate the magnitude of this impact of these businesses our consolidated comps would have been 5.4% for the quarter excluding cold weather related categories in the fitness category. In December, the warm weather again this year with significantly reduced receipts of our partnership orders in winter outerwear and related accessories. The catalyst driving this decision was our intent not to carryover winter inventory for another year following two warm winters.
Compared to last year, our winter inventory is down 17% on a per square foot basis and our clearance inventory is down 14% per foot versus last year. This decision helped maintain our margin rates and allowed us to keep our inventory clean. Although we finally received cold weather along with snow in January, it had a negative effect on our store sales performance for the backend of Q4 and into Q1.
Looking to fitness, the sales decline was a result of lower large equipment sales as I mentioned treadmills and ellipticals. We understand the issue that contributes to this sales decline and are taking action to correct them. For the full-year 2012 and on a 53-week basis, we increased our non-GAAP earnings per diluted share by 25% through 12% sales growth operating margin expansion of 72 basis points we also opened up 38 new stores which are demonstrating solid productivity and our growth brought our total number of stores to 518. We also made several achievements that demonstrated our commitment to driving continuous improvement. For example, we opened up a number of new specialty shops in our stores with Nike, Under Armour, Adidas and North Face. We also brought two established brands during the year Top-Flite and Field & Stream which have great sales and margin growth potential.
Additionally, we invested in our True Runner retail concept and have opened a new concept store for our Golf Galaxy brand. We also made significant achievements with our omni-channel strategy. We have demonstrated that we can meaningfully grow our eCommerce business and a great add at an aggressive pace in a way that is both profitable and is increasing in profitability. We generated nearly 50% growth in our eCommerce business, rolled out ship from store capabilities, significantly enhanced our mobile site and launched a new mobile app which provides a mobile shopping platform and the ability for customers to look up and redeem their loyalty points.
Two extremely powerful and strategic assets that are making our progress with omni-channel possible; the first is our talented team of associates we have invested heavily in talent over the past couple of years building our knowledge base in many areas including site merchandising, website development, search engine optimization and analytics. We will continue to aggressively make these investments at eCommerce area. The second strategic asset is the distribution network that exists within out store base. We have 518 stores across the country and today each and every store is set up and running with ship from store capabilities.
We're very pleased with the progress we made this year, but we recognize we have a lot more to do. As a result we will be making meaningful investments in our business for the continued long-term benefit of the Company and our shareholders.
In 2013, these substantial investments include growing our omni-channel platform through advanced mobile capabilities, the piloting of pickup in store and growing our eCommerce team. We will also be remodeling existing stores, implementing new systems and developing our new concepts.
In total, we expect these investments to a $0.12 impact on earnings per diluted share in 2013, while building the capability for future sales and margin growth. Our 2013 guidance takes these investments into consideration.
I would also like to point out that because fiscal 2012 included 53 weeks, any comparison to the 2012 retail calendar will reflect a shift. This shift will not have a net effect on our total results for the full fiscal year, but will impact our quarterly results. Our reported comparable sales and earnings will be positively impacted in quarters one and two, but this will be offsetting quarters three and four.
For the first quarter of 2013, we anticipate consolidated earnings per diluted share of $0.47 to $0.49 compared with consolidated earnings per diluted share of $0.45 for the same period last year. Our earnings expectations include $0.02 impact from long-term growth investments, I just mentioned and a $0.05 benefit from the shifted calendar.
On a shifted basis, consolidated same-store sales are expected to be negative 2% to negative 1% on top of an 8.4% increase in the first quarter last year. On an unshifted basis, consolidated same-store sales are expected to be flat to positive 1%.
For the full year, we anticipate consolidated 2013 same-store sales will increase 2% to 3% on a 52 to 53 week basis on top of a 4.3% increase in 2012. We're anticipating consolidated earnings per diluted share between $2.84 to $2.86. This compares to non-GAAP earnings per diluted share of $2.53 in 2012, including the 53rd week and excluding the impairment charge from JJB.
Our guidance includes a $0.12 impact from our growth investments so even with the substantial investments we're making in the business in 2013, we expect to generate double-digit earnings growth and deliver operating margin expansion. In summary, we had a strong year with steady progress in growing all aspects of our business. We made several important investments in the future including adding locations, acquiring established brands, developing and testing retail concepts, launching eCommerce technologies and creating new marketing strategies.
All of these investments have strengthened our foundation and position us for continued growth. We're optimistic about the outlook for the coming year and excited about our prospect for the future. We're also part of the people who continue to prove that focus and drive are key to staying on top of our game. I want to thank our entire team of associates for their hard work and commitment.
I'll now turn the call over to Joe.
Joseph H. Schmidt - President and COO: Thanks Ed. In 2012, we continued to grow our store base, augment supply chain efficiencies and support omnichannel initiatives. We opened 38 new Dick's Sporting Goods stores and relocated five Dick's Sporting Goods stores to preferred locations.
Our new Dick's Sporting Goods stores continue to perform well, with new store productivity of 93.5% in the fourth quarter of 2012, compared to 94.2% in the fourth quarter of 2011. The detailed calculation of new store productivity can be found in the table section of the press release we issued this morning. Looking to 2013 we expect to add more stores while increasing investments in our existing store base. On the real estate front our plan is to open approximately 40 new Dick's Sporting Goods stores and relocate one Dick's store to a preferred location.
In addition we will increase capital expenditures to further upgrade some of our existing stores to improve the shopping experience for our customers.
Keep in mind that we did not conduct any full store remodels in 2012 as we are finalizing our new store prototype.
In 2013 our plan is to complete approximately 4 full remodels as well as approximately 75 partial remodels. Our 2013 remodel plan is one step in a multi-year program which is expected to span across a significant portion of our store base.
The partial remodel's focused on strategic growth categories and when completed will feature Nike and Under Armour shops.
These vendor shops continue to perform well as they generate higher sales and margin while increasing product exclusivity. At the end of 2012 we had 171 Nike Fieldhouse shops, 97 Under Armour All American shops, 10 Under Armour Blue Chip shops and 91 North Face shops.
In 2013 we plan to accelerate the pace of these new vendor shops by adding approximately 100 Nike Fieldhouse shops, 70 Under Armour All American shops as well as 65 new brand shops with Adidas. We are working closely with the North Face to add new shops in conjunction with store remodels as well as elevate their branding in our seasonally expanded shops.
We continue to see strong financial results and positive customer feedback in stores with shared service footwear desks. As of 2012 year rent, they are featured in 174 Dick's locations. In 2013, shared service footwear desks are playing for all new and fully remodeled stores.
Given the anticipated investment, in our new stores, relocated stores, remodels and vendor shops, we plan to nearly double our CapEx spend on stores in 2013 over 2012. Our strategy from new store growth is expanding to smaller markets. Based on a research in smaller markets and considering the success of our smaller market format stores, we believe this strategy opens up a range of new expansion possibilities for us.
In the past we have stated that we believe there was an opportunity of at least 900 Dick's Sporting Goods stores in the U.S. This new growth strategy allows this ultimate goal to grow to over 1,100 stores.
In addition to our excitement surrounding our growth opportunities, we are beginning to see benefits of recent investments and our supply chain, such as freight savings generated by the opening of the new distribution center in Goodyear, Arizona this past January. These savings are expected to more than offset the related DC cost.
We were also pleased with the implementation of systemic solutions, such as merchandize assortment planning, which helps optimize inventory across categories by store size and by region. In size scaling and pack optimization which generates apparel-size combination based on the store-level sales data. Additionally, we are seeing positive results from testing and implementing other systems, including price management and optimization which maintains item pricing across channels and space planning which enables consistent and efficient execution in our stores by taking into account the subtle differences in fixtures and square footages across the chain. In 2013, we will continue to invest in these systems while we deploy additional mobile technology in our stores, implement merchandise demand forecasting capabilities and better align our stores associates with customers by utilizing our new workforce management system.
Moving to Golf Galaxy, we repositioned one store in the fourth quarter of 2012. This store is significantly larger than our current format and includes a greater focus on golf services and more experiential shopping with an increased presence of our key vendor brand shops. The initial reads on this store have been very encouraging.
We are planning to open one new store and relocate another store in 2013, both of which will be in the larger format. In 2012, we developed and tested a new concept running store, True Runner. These stores allow us to further connect with the enthusiast runners, giving us valuable insight that we can apply across our businesses. Our plans are to open two additional locations in 2013.
Finally, we plan to introduce an outdoor concept store in 2013. Our Field & Stream stores will be destinations for hunting, fishing and camping enthusiasts and will offer premium assortments with superior service levels. Our plans are to open two stores this year, the first of which is scheduled to open in Pittsburgh in the third quarter.
The planned investments in new stores, existing stores and supply chain combined with the continuing evolution of eCommerce outlined by Ed is evidenced by a powerful omnichannel platform that is taking hold, one that continues to drive sales, improve profitability and most importantly provide more choices and shopping options to our customers. I will now turn the call over to Tim to review our financial performance investments, outlook and greater detail.
Timothy E. Kullman - EVP Finance, Administration and CFO: Thanks Joe. Sales for the quarter of 2012 which was a 14-week quarter, increased by 12% to $1.8 billion compared with 13-week quarter a year ago. On a 13 week to 13 week comparative basis, same-store sales at Dick's Sporting Goods decreased 2.2%, Golf Galaxy increased 1.3% and our eCommerce business increased 54.2%. The decrease in same-store sales in the Dick's Sporting Goods stores was driven by a 3.2% increase in sales per transaction and by a 5.4% decrease in traffic.
I'd also like to remind everyone of the change in our disclosure policy for same-store sales in 2013. Beginning with the first quarter of 2013, we report same-store sales for our Dick's Sporting Goods stores eCommerce business together with the business for our stores. We will continue to provide the size of the eCommerce business as a percentage of total sales.
To provide an example, had we reported fourth quarter results with this new methodology, the comps would have been as follows, a 1.2% increase in consolidated same store sales, with same-store sales for Dick's Sporting Goods up 1.2% and Golf Galaxy up 1.3%. eCommerce penetration would be reported as 8.6% of total sales. We're making this reporting change because as we build out our omnichannel platform, it's becoming apparent that the traditional sales channels are overlapping the digital space and that providing comp sales on a combined basis will be more meaningful.
Now, looking to gross profit in the fourth quarter 2012 consolidate gross profit was $588.7 million or 32.61% of sales and was 79 basis points higher in the fourth quarter of 2011. This increase was driven by merchandise margin expansion of 46 basis points and occupancy leverage of 48 basis points, partially offset by freight and distribution deleverage, which was driven by the increase in eCommerce sales.
SG&A expense in the fourth quarter of 2012 was $375.8 million or 20.82% of sales compared to SG&A expenses of $326.6 million or 20.26% of sales in last year's fourth quarter. This deleverage of 56 basis points was due to increased administrative expenses, primarily related to payroll for IT and eCommerce as we continue to strengthen our omni-channel platform.
On the balance sheet we ended the fourth quarter 2012 with $345 million in cash and cash equivalents with no outstanding borrowings under our $500 million revolving credit facility. Last year, we ended the fourth quarter with $734 million in cash and cash equivalents and with no outstanding borrowing under the facility. Over the course of the past 12 months we've utilized capital to fund the $200 million share repurchase program, pay quarterly dividends, purchase our store support center, invest in JJB, acquire intellectual property rights to the Top-Flite and Field & Stream brands, build our new distribution center and fund a $246 million special dividend.
Inventory per square foot increased by 0.7% at the end of the fourth quarter this year compared to the end of the fourth quarter of last year. Now year-end current inventory was down 14% per square foot. Net capital expenditures were $51 million in the fourth quarter of 2012 or $62 million on a gross basis, compared with net capital expenditures of $36 million or $54 million on a gross basis in the fourth quarter of last year.
For the full-year, net capital expenditures were $187 million or $219 million on a gross basis compared with a net capital expenditures of $154 million or $202 million on a gross basis last year. Recall that 2012 includes CapEx related to our new distribution center.
Now looking to guidance, keep in mind that because fiscal 2012 includes 53 weeks any comparison to the 2012 retail calendar will reflect a shift. This shift will not have a net effect on our total results for the fiscal year but will impact our quarterly results. Our reported comparable sales and earnings will be positively impacted in quarters one and two, but this will be offsetting quarters three and four. Also keep in mind that our earnings guidance takes into consideration the impact of the substantial investments planned in 2013 in our omni-channel platform, stores information systems, and new concepts which are expected to have $0.12 impact on earnings per diluted share for the full-year. The impact of these growth investments in 2013 by quarter is expected to be $0.02 to $0.03 in the first quarter and $0.03 for quarter two, three and four.
For the first quarter of 2013, we anticipate consolidated earnings per diluted share of $0.47 to $0.49 compared with consolidated earnings per diluted share of $0.45 for the same period last year. Our earnings expectation includes a $0.02 to $0.03 impact from the growth investments and a $0.05 benefit from the shifted calendar.
Gross margin is expected to increase year-over-year driven by higher merchandise margins, partially offset by occupancy deleverage and an increase in freight and distribution costs as a percentage of sales. The occupancy deleverage is a result of an increase in new store costs. SG&A as a percentage of sales is expected to increase in the first quarter due to increased administrative expenses primarily as a result of payroll expenses related to IT and e-commerce as we continue to build out our omni-channel offering.
On a (shifted) basis, consolidated same-store sales in the first quarter of 2013 are expected to be negative 2% to negative 1% on top of an 8.4% increase in the first quarter of last year. On a shifted basis consolidated same-store sales are expected to be flat to 1% in the first quarter. For the full year, we are anticipating consolidated earnings per diluted share between $2.84 and $2.86. As we mentioned earlier, this guidance includes a $0.12 impact to the meaningful growth investments being made in 2013.
For the full-year, gross margin is expected to remain relatively flat in 2013, driven by merchandise margin expansion, primarily offset by an increase in occupancy costs. Occupancy is expected to deleverage in 2013 due to the increase in new store costs and store remodels. SG&A as a percent of sales is expected to leverage compared to 2012 even with the significant investments in e-commerce, IT and new concepts as we continue to build our omni-channel infrastructure and develop additional growth drivers.
Diluted shares outstanding are expected to be approximately 126 million for full year compared to the 126 million outstanding shares in 2012. We anticipate consolidated 2013 same-store sales will increase 2% to 3% on top of a 4.3% increase in 2012.
For the full year net capital expenditures are expected to be approximately $258 million or $299 million on a gross basis. Net capital expenditures for 2012 were $186 million or $219 million on a gross basis. The anticipated increase in capital expenditures from 2012 to 2013 is primarily the result of the planned growth investments in the business in 2013.
As we consider our capital allocation strategy for 2013, there are four main components. First is, investing the growth of our business. Second is, the quarterly dividend plan. Third is, the stock repurchase plan which was announced this morning. Fourth is, the consideration of opportunistic acquisitions that fit within our strategic plans.
As discussed, we will make substantial investments in the growth of our business by investing in our omnichannel strategy opening new stores, remodeling existing stores, implementing system enhancements and opening new store concepts, which includes the repositioning of two Gulf Galaxy stores, the addition of two new True Runner stores and the opening of our first two Field & Stream stores.
The second component, the quarter dividend plan was initiated as a declaration of an annual dividend in 2011 and subsequent quarterly dividends. On February 19 of this year, we announced that our Board declared a quarterly dividend of $0.125 per share payable in cash on March 29 to stockholders of record as of the close of business on March 8.
The third component is share repurchase authorization is a five-year $1 billion program. At a minimum this intended to be used to keep the share count flat, which is contemplated in our guidance. The last capital allocation component is the consideration of opportunistic acquisitions. We will evaluate those that are strategically important to our business.
I will now turn the call back to, Ed.
Edward W. Stack - Chairman and CEO: Thank you Tim. We see significant opportunity ahead and over the next five years we plan to make meaningful investments that will position us to capture it. Today we provided you with insight into our expectations for this year, including our planned growth investments. To discuss our long-term strategic growth opportunities and investment plans, we are hosting our first-ever Analyst Day this September. During this even we will explain how we're leveraging the focus and drive of our team to grow our company and continue to lead our industry. Our commentary will include an overview of our merchandising strategy, a discussion of the omni-channel opportunities we plan to pursue through e-commerce, our stores and marketing. We will also review our plans for technology advancements and review our longer-term capital investments. During the day we will offer guided tours of a nearby Dick's Sporting Goods store and our first Field & Stream store. It promises to be a great event, and we look forward to seeing you there.
This concludes our prepared remarks. We'd now be happy to answer any questions you may have.
Operator: Brian Nagel, Oppenheimer & Co.
Brian Nagel - Oppenheimer & Co.: I wanted to ask a question about your fitness equipment, you clearly called that out as one of your weaker spots during the quarter and it was reason for the drag in total sales. My question is and having followed Dick's for a while now, fitness equipment has had its issues. So did something else happen, (was there a) reason for incremental weakness here in Q4 and then going forward what sort of levers can you pull there to improve the performance of that category?
Edward W. Stack - Chairman and CEO: Fitness was a – we got thrown a curve ball here, with fitness, with the LIVESTRONG brand is a little bit more than 50% of our treadmill and ellipticals business. And unfortunately when the news come out about lapse and the issues that he had and that being confirmed, people has a very negative reaction to the LIVESTRONG unfortunately. Even the with Lance, he's no longer with the foundation. The foundation does great work. The customers had a very negative reaction to the LIVESTRONG brand in the business with LIVESTRONG treadmills and ellipticals which as I said were over 50% of our business just stopped. And as long as it takes to get product in we couldn’t get new products in, in order to offset that. We still have some of that inventory here which will be, we will get through, but there'll be some cost associated getting through it which are all baked into our guidance going forward. but that’s the biggest issue around the fitness business.
Brian Nagel - Oppenheimer & Co.: So to be clear on that in your stores now, you've started to significantly deemphasize LIVESTRONG brand in those categories?
Edward W. Stack - Chairman and CEO: We are marking that product down and attempting to clear that off the floor and make arrangements for other products to come in.
Operator: Michael Baker, Deutsche Bank.
Michael Baker - Deutsche Bank: Pace of business, can you sort of discuss what November, and December looks like relative to January and then even early February what's new guidance I think you can figure out, by the way you are talking about shift and non-shift at the end of January or early February was probably pretty bad for the weekend there, but then got better. Can you confirm that?
Edward W. Stack - Chairman and CEO: We've never talked about kind of what's going on in the particular quarter. We've indicated that with the cold weather not coming again in December we made a decision to cancel the partnership orders that we have in that product and we didn't want to have two years of inventory backed up as we did last year. Last year was – we're able to get through this and last year was fine, but they have two years of this. We made the decision to cancel those partnership orders. It didn't look like winter was going to come again. Then when we did get some of the colder weather, we didn't have enough inventory to really support those sales and as we said in the prepared remarks, that had an impact on Q4 sales and that had an impact going into Q1. If we had the decision to do over again at the time that we made the decision, we probably make the same decision, because we wanted to have this inventory clean and we didn't want to have two years of cold weather merchandize back up on us.
Michael Baker - Deutsche Bank: Let me as in another way, just the terminology shifted and non-shifted is a little confusing. Were you talking about your shifted comps? What weeks are you looking at this year versus last year? Is that sort of looking at the weeks ending May 4, 2013, which I think is when you're quarter is going to end versus April 28th last year or – how exactly? If you could give us those dates, we can probably figure it out from there.
Edward W. Stack - Chairman and CEO: I don't have those dates right off the top of my head, but the quarter ends a week later this year, because there was 53 weeks unfortunately in the retail calendar. Every number of six years there is a 53rd week. So that pushes everything out a quarter, between – which means…
Michael Baker - Deutsche Bank: I think we understand that, it's just the shift when you say shifted or non-shift, so non-shift means you're going back to the same weeks that you had in your fourth quarter last year, is that the non-shifted part?
Edward W. Stack - Chairman and CEO: No, the non-shifted or unshifted as I reported. The shifted is being more comparable to the prior year weeks, correct.
Operator: Matthew Fassler, Goldman Sachs.
Matthew Fassler - Goldman Sachs: I've got one question on investment then just a quick follow-up on store growth. On the investments you invest money every year what makes this $0.12 incremental him and then as to P&L geography it was a little surprising that it sounds like the expenses would lever anyway, even with this. So, what's happened into the so-called core expenses above and beyond these $0.12?
Timothy E. Kullman - EVP Finance, Administration and CFO: A couple of these are pretty billion investment Matt that haven't been in the normal course of business. So, one is around eCommerce. We know what we're looking to do from an eCommerce standpoint and the traction we have here we're going to continue to make additional investments in our eCommerce business around infrastructure of people to make sure we've got the right people in place here. Were in the process of building out our own – a new roll platform that we haven't done in the past and we think that in order to be truly relevant going forward, we need to be very well event from an eCommerce standpoint and omnichannel standpoint. So this is different than what we've done in the past. As we continue to take a look at what our growth opportunities are going to be going forward, we want to have the ability to have growth outside of Dick's Sporting Goods when the tail – when the growth of Dick's Sporting Goods, starts to slow down as we kind of hit that end of the runway of the number of stores that we would have. We think that the outdoor category is extremely important and a great growth opportunity for us. We're making meaningful investments in that channel. There is also a difference in the competitive dynamics out there in the outdoor category with what Cabelas has done with the next generation stores, in their 80,000 to 100,000 square feet stores and their 40,000 to 50,000 square feet stores and the real estate strategy that they're going to employ. So we really feel that it's important for us to have a competitive answer to those – to that (indiscernible). We're also going to be doing some meaningful remodeling of our stores of, which we haven't done in the past where we're going to be taking the Nike shop, the Under Armor shops, the North Face shops and the (indiscernible) and making meaningful investment in roughly 75 additional stores that are above and beyond what has been our normal run rate. With the investments that we've made in these shops, we've seen meaningful increase in sales and margin rate. Because those products have a higher margin rate, we think that this is really a terrific investment to have and we've got a couple – we have several hundred stores that don’t these shops in here and we've decided to really distance ourselves from our competitors; it's important to do this. So I know this is somewhat painful – is the only word I can think of – it is somewhat painful from an investment standpoint to swallow, but we're really taking a look and making these investments for the long-term benefit of the Company and that's just trying to manage the business quarter to quarter and I know that that's difficult. A lot of people really articulate that that's the way a business should be run until you run it that way and then there is some pain associated with it, but we feel that these are absolutely the right things to do for the company going forward.
Matthew Fassler - Goldman Sachs: If I can flip in second part of my question.
Timothy E. Kullman - EVP Finance, Administration and CFO: Sure.
Matthew Fassler - Goldman Sachs: From an ROI perspective clearly you are doing well in eCommerce and that business is growing. Your store growth continues a phase as well and presumably if you look at your traffic trends and where the growth is coming from more other business is going to done online as a proportion of the overall on an ongoing basis. Talk to us about how you think about ROI on the box itself and how essential it is they have that unit growth to ultimately capture that revenue?
Timothy E. Kullman - EVP Finance, Administration and CFO: Well, we think that the ROI that we look at it or IRR that we look at from the real estate standpoint has not changed. We still expect to have that same IRR with our new stores going forward. We're excited about a couple of these concepts that we tested in the smaller markets that have done extremely well. So, we still think we've got meaningful growth opportunity in the Dicks Sporting Goods stores and that isn't going to change. We will open up next year north of 40 stores again.
Matthew Fassler - Goldman Sachs: That IIR is reflective of some of the earnings from online or is it purely for sales that are coming through the retail channel?
Timothy E. Kullman - EVP Finance, Administration and CFO: That's strictly coming through the retail channel. But we do know that -- we have seen as we've opened up stores that eCommerce business that we get from that geography increases pretty substantially as we open up stores in those markets.
Operator: Camilo Lyon, Canaccord Genuity.
Camilo Lyon - Canaccord Genuity: Joe, I was hoping you could shed a little bit more light on the definition of the smaller markets that you referenced and how that's enabling you to extend your long-term square footage growth runway?
Joseph H. Schmidt - President and COO: Sure, over the last couple of years, we've experimented opening some of the smaller markets stores, these stores that are reduced in square footage and those stores range anywhere from 35,000 to 45,000 square feet and we've had very good success in some of these smaller markets and based on that success, we have done some additional studies that tell us we have the opportunity to grow an additional 200 stores across the country.
Camilo Lyon - Canaccord Genuity: Those smaller markets how would you define that?
Joseph H. Schmidt - President and COO: With define, you mean like what are some of those markets?
Camilo Lyon - Canaccord Genuity: Yes, so population sizes of 100,000 people, 200,000 people or whatever measure is it at use?
Joseph H. Schmidt - President and COO: Less than 200.
Camilo Lyon - Canaccord Genuity: How should we look at or think about the mix of the smallest stores or the smaller market opportunities versus your normal bigger box opportunities.
Joseph H. Schmidt - President and COO: I think you can think about 15% to 20% of our stores on an annual basis will be below 45,000 square feet.
Camilo Lyon - Canaccord Genuity: Then just shifting to the shop-in-shops you mentioned, I think to-date most if not all of the Under Armour shop-in-shops are in stores that have a Nike Fieldhouse concept in them. With respect to the Adidas shops you will be opening, are those Adidas shops will they be also be in stores that have both Under Armour and Nike shops in them or is Adidas going to be housing a non-competitive store.
Joseph H. Schmidt - President and COO: No, you can think about the shops that we will add for Adidas will be in those stores that currently have Nike and Under Armour shops today.
Operator: Chris Horvers, JPMorgan.
Christopher Horvers - JPMorgan: Just wanted to parse out some of the impact, so the 400 basis point hit from fitness and weather, would you say that was roughly evenly split or was the cold weather categories more – and also, did you see any impact from Sandy in the quarter?
Timothy E. Kullman - EVP Finance, Administration and CFO: It was relatively even between the two categories, and we're not going to break out Sandy's impact. I mean some of the stores around there were hardest hit, yeah, but in a meaningful aspect, no meaningful issue around Hurricane Sandy.
Christopher Horvers - JPMorgan: Then, on the fitness equipment, do you think that you'll get through that inventory here in the first quarter, and can you talk about perhaps the seasonality of that business, fourth quarter versus the first half?
Timothy E. Kullman - EVP Finance, Administration and CFO: Well, the fourth quarter and the first quarter are the two key fitness quarters, so we are kind of in that – and it's really the first part of the first quarter, so we're kind of coming out of the back half of this. The team has done a nice job starting to reduce that inventory, but we still have some work to go but it's all planned in the guidance and there's shouldn't be an earnings impact from markdowns.
Christopher Horvers - JPMorgan: Then, in terms of the investments that you're making in the step-up, the $0.12. I was just curious, I mean how much of that is really on the system side, the e-commerce side versus the store remodel program?
Timothy E. Kullman - EVP Finance, Administration and CFO: Let me give you a rough breakdown, Chris. As Ed mentioned, e-commerce is really leading the pack, that's about $0.04 of that investment. The new concepts, as we build those, will be about $0.03. The IT impact in systems that Joe has mentioned is about $0.03, and then the additional depreciation for these remodels as well as the 75 store or so remodels, will be about $0.02.
Christopher Horvers - JPMorgan: That depreciation - just an accounting question, does that go through cost of goods or does that go through SG&A?
Joseph H. Schmidt - President and COO: The $0.02 that I just spoke off goes through cost of goods.
Christopher Horvers - JPMorgan: Then finally just a follow-up on Michael's question. What you will report for the first quarter for the period that started February 3, that is zero to plus 1? That's your guide for that.
Joseph H. Schmidt - President and COO: Yes.
Operator: Sean Naughton, Piper Jaffray.
Sean Naughton - Piper Jaffray: Just on the hunting category, this has obviously been a relatively interesting here from a demand perspective over the last several months. Just curious if you could talk about any supply constraints in this particular department as well as potentially any changes you're making in terms of the product assortment in that particular area of the store?
Edward W. Stack - Chairman and CEO: The inventory has certainly been a struggle as it relates to ammunition. On the hardlines aspect of it, we haven't seen as much, you may or may not know we don't sell handguns and haven't sold handguns for 20 years. So, we are not experiencing any issues around handguns, but the ammunition has been very difficult to keep in stock. We actually have people who call the store every morning and find out if we got ammunition. They come in and buy it, but we don't expect the ammunition supply to be fixed anytime soon.
Sean Naughton - Piper Jaffray: So, there was no changes in the types of long guns that you're carrying in the store than at this point in time?
Edward W. Stack - Chairman and CEO: We focus on the Hunter. We suspended the sale of MSRs after the tragedy at Sandy Hook and we have not put those back in the store, but we don’t expect any other modifications to what we sell. We focus our products primarily on the sportsmen and the hunter.
Sean Naughton - Piper Jaffray: Then, just a follow-up on the systems implementations you are working on, it seems to be, this has been going on for a number of years now, but maybe you can just give us an idea of where we are in the assortment planning and price optimization process and when we should start seeing some of the benefits from those systems come into play.
Edward W. Stack - Chairman and CEO: Where we stand today is those systems were implemented in 2012, but keep in mind, as you implement those systems, there's six to nine months' worth of beginning to understand how they work and getting them up to full capacity. So, late 2013 is where we expect to see some results from those systems implementations.
Sean Naughton - Piper Jaffray: So, really on the full year, maybe 2014, we'll start to see the full benefit from…?
Edward W. Stack - Chairman and CEO: That's correct.
Operator: Rick Nelson, Stephens.
N. Richard Nelson - Stephens Inc: I'd like to ask you about the gun and ammo sales, how that affected your comp in the period and how you're planning that business for the remainder of 2013?
Edward W. Stack - Chairman and CEO: It had a positive impact. We don't call out specifically category by category, but it was certainly a positive impact. We think it's relatively neutral, maybe down a little bit as we go into '13, just because of the lack of inventory from an ammunition standpoint.
N. Richard Nelson - Stephens Inc: The size of these Field & Stream stores, what have you been talking about here?
Edward W. Stack - Chairman and CEO: Could you repeat that?
N. Richard Nelson - Stephens Inc: The size of the Field & Stream stores…?
Edward W. Stack - Chairman and CEO: Yeah, so the first two Field & Stream stores will be 50,000 square feet, and that's we think, the research that we've done. We think we can get everything we need to do in roughly 50,000 square feet.
Operator: Robby Ohmes, Bank of America Merrill Lynch.
Robby Ohmes - Bank of America Merrill Lynch: Ed, I was hoping you could comment, you don’t want replace it good momentum which we call out in apparel and footwear, could you just talk a little more about what was working in those categories in the fourth quarter and maybe help us understand how you are thinking about maintaining that momentum in 2013 and some examples of things that could keep it going? Thanks.
Edward W. Stack - Chairman and CEO: The athletic apparel business was really very good, products was very good the women's athletic piece was really very good and the footwear business as we indicated was good for us, and what we are seeing is some other people are a resurgence in the basketball business. So the basketball silhouette has been very good and we will be taking a much more aggressive stance in basketball going forward into 2013.
Operator: Paul Swinand, Morningstar.
Paul Swinand - Morningstar: I guess the first question is maybe a tough one, but retailers have been dealing with weather problems for as long as they have been around, but is there any new technology that you think will help this type of problem, my visit to the stores definitely showed stuff sold out in January just when the weather turns and I think gives you guys too much of soft ball, but is there anything that’s going to be different next year, or…
Edward W. Stack - Chairman and CEO: I don’t think there's going to be anything different. We look at plan analytics to try to get some sense of what's going to happen, we can kind of predict based on the weather. Starting in November, the fourth quarter is through probably middle of April, based on the temperature, we can pretty much predict on a day by day basis, what our business is going to do. The issue is we can't influence the temperature. This next week, we're going to be on average I was just talking to our team today on average, next week sales are going to be – temperature is going to be 15 degrees colder than it was last year, which was one of the things that helped drive that 8% gain we had last year. As we take a look at this in outerwear standpoint, we continue to -- we think the outerwear business is still really very good and an important business for us and I've said this a hundred times, when it's been colder, we've had a lot of snow. I've indicated to the street, we're not as smart as we look the weather was helpful to our business. When the weather isn't helpful to our business, we're not as dumb as we look. But what we can do to change, how to predict the weather and how sales are going to be based on the weather, I don't see anything different next year than this year and I don't see anything different five years from now than this year.
Paul Swinand - Morningstar: Does the customer exhibit any learning behavior, like buying earlier instead of waiting or have you ever seen that in your experience?
Edward W. Stack - Chairman and CEO: No, I don't. Well I shouldn't that – there are some of the fashion items, colors, some hot products that might sell out earlier in the season that people want, but for the most part, most of the time, people buy very close to need. When the snow storm is coming or cold weather is coming or when it's here is when they buy it.
Paul Swinand - Morningstar: Then a quick question on the ellipticals and treadmills versus the apparel in the LIVESTRONG brand, it seems like you've got a lot of apparel still. Is that still doing pretty well?
Timothy E. Kullman - EVP Finance, Administration and CFO: The apparel had – didn't do as well either. We had a hit from the apparel standpoint also.
Operator: Peter Benedict, Robert W. Baird.
Peter Benedict - Robert W. Baird: Couple of questions. First, if you think about the e-commerce business, obviously the penetration was big this year and it was as high as 8.6% in the fourth quarter. When you think about next year's fourth quarter, are there any merchandising strategy adjustments you have to make recognizing that, I mean, eCommerce being around 4% of sales, Q1 to Q3, but then more of a doubling in that – in the fourth quarter? Can you talk about maybe how that changes your thinking going forward about the fourth quarter?
Timothy E. Kullman - EVP Finance, Administration and CFO: Well, a couple of the things that helped our fourth quarter was the, earlier in the year, we didn't have as much setup from ship-from-store, so having ship-from-store being as fully robust as it was in the fourth quarter was certainly helpful. With that being said, we think that fourth quarter will be the highest penetration of e-commerce business versus the other quarters. Yeah, we take a look at where those products sold, where we think that the trend is going to be and make sure that we have those products in place. Some of the things that we'll do from – to try to do a better job in next year's fourth quarter is on the marketing front, we won't be as outerwear focused. We were really enthusiastic about the outerwear business. We probably overinvested from a marketing standpoint in outerwear, both online and in the stores, and we will modify that to be more balanced next year than we were this year.
Peter Benedict - Robert W. Baird: Then, if we look at the square footage growth of this last couple years running around 7% or so. You talked about the new smaller market opportunity. As we think about making our way towards the 1100 store target, should we think about a square footage growth backdrop that's somewhere around that 7%? Do you still think you can get that closer to 9%, 10% or should we think 7% is the number or less?
Timothy E. Kullman - EVP Finance, Administration and CFO: I think you can think about 7% to 8% in 2013, but we think we can move that up to 9%, maybe 10% in the coming years. So we do think there will be an opportunity to increase that slightly over the next couple of years once we get through '13?
Peter Benedict - Robert W. Baird: And then just lastly a clarification. The $0.12 investment expense that's coming this year, clearly it's a step-up, but we're not to think of this as being a one-time. It's kind of a new level of expenses and it will probably persist as we go forward. Is that the right way to think about it?
Timothy E. Kullman - EVP Finance, Administration and CFO: You should consider this part of the infrastructure.
Operator: Dan Wewer, Raymond James.
Dan Wewer - Raymond James: Ed, I know that golf category becomes significantly more important in the next two quarters. Given the late start to spring, I think you alluded to it's going to be 15 degrees colder (next week). I was unaware of that. But is that one of the reasons why you're guiding conservatively on 1Q that you would expect golf to get off to a slower start?
Edward W. Stack - Chairman and CEO: Yeah, I think everything in the spring is going to get off to a little bit slower start this year, so it's – what I looked at from a forecast standpoint is 15 degrees colder next week that has an impact. Now what I will tell you, though, as I think between the first quarter and second quarter, it will even out. We talked about last year that in the first quarter we moved business from the second quarter to the first quarter. I think this year it's going to be more normalized and when we take a look at the two quarters combined, we anticipate that it's going to be fine, but it's just going to be big difference between the first and second quarter. Somebody ask me one-time about a year ago what Wall Street doesn't understand about our business is that our customers don't understand the concept of quarters. They don't understand what they begin and end but season-wise as we go into the two – first and second quarter combined I think it's going to be fine. We're really pretty enthusiastic. We think the golf – there is some great new technology out there from a golf standpoint, TaylorMade RocketBallz Stage 2, TR1 from TaylorMade, the New Nike Covert drivers doing very well, the Callaway products are doing very well. This is a great product cycle from a golf standpoint right now.
Dan Wewer - Raymond James: You've talked about maybe into the large store format for Golf Galaxy, but I think there is only one relocation and one opening this year, but what makes your large store format difference and PGA Tour Superstore more different than the new Golfsmith format?
Edward W. Stack - Chairman and CEO: Well, it's still smaller than PGA Superstore and as you take a look at what we are going to do there, they will be a fitting somewhere to what you get it at PGA Superstores what we really be a big differentiating factor with us is going to be the apparel expect we have in the store and when you take a look into – we're not going to talk about it right here, when you take a look at some of the services and the way we are going to provide some of the services and it's going to see much more like what happens on tour than what happens when somebody kind of goes into the backroom and takes care of your club. We're going to provide much more of a tour experience in our store than you will find any place else.
Operator: Kate McShane, Citigroup.
Kate McShane - Citi: Most of my questions have been answered, but with regards to the commercial real estate opportunity, I wondered if you could update us on if you are seeing any improvement in the build out or availability and what costs are like just based on your mentioning of the deleveraging on occupancy in 2013?
Edward W. Stack - Chairman and CEO: We are not seeing a significant change in new construction of shopping centers, what we are seeing is that REITS are buying more property from department stores, they are repurposing small shops based vacant departments stores, movie theatres, junior anchors. Obviously, Sears what’s going on with Sears, we are seeing some opportunity there to repurpose some of those properties, and then with what’s going on with Best Buy, Barnes & Noble, Office Depot, Office Max potential store closures there. As you would expect we are looking at all of those opportunity as we become aware of those. New growth has been pretty consistent over the last couple of years where we have been 50% new construction versus repurposing existing boxes, and I think you can expect to see 2013 pretty similar in that regard. As far as prices, we are seeing prices escalate a little bit in some of the major match, so as you think about Chicago, New York, LA and some of the major match across the country, we are starting to see some increases there, but elsewhere around the country I think you would see pretty consistent pricing over the last couple of years and expect it to be pretty similar moving forward.
Kate McShane - Citi: My second question is just a follow-up with regards to real estate. How are you viewing, how is Dick's viewing the natural market opportunity for this 1100 door strategy?
Edward W. Stack - Chairman and CEO: We think there is an opportunity there. We'll test that – we have tested some close to urban settings, but this year I think we're going to add couple of stores in the urban area of Chicago. So, we think there is an opportunity there to expand some store growth as well.
Operator: Sam Poser, Sterne, Agee.
Sam Poser - Sterne, Agee: Can you talk about week 53 specifically and if you were impacted by the delay of the tax refunds and how that's all working into the story right now?
Edward W. Stack - Chairman and CEO: The refund Sam, I have no idea. We haven't tracked that. Some people have talked that that's been an impact and maybe it is somewhat of an impact, because people aren't getting their checks back early enough, but we can't quantify that. So, we can't really make a comment.
Sam Poser - Sterne, Agee: Can I ask you this some larger boxes, if not competitors but commented on January when they gave their January same-store sales, basically it saw a significant fall off in the week five of January even though it wasn't in their comp, the comps were okay. So, did you see a similar kind of thing I mean did week five live up to your expectations even though it made – you made the guidance of the EPS addition, did it do what you expected it to do or was it disappointing?
Edward W. Stack - Chairman and CEO: Well, we had always indicated that we thought the 53 week was going to be approximately $0.03 in earnings impact and that's exactly what it came in at.
Sam Poser - Sterne, Agee: Then just to confirm you're saying that week's one – quarters' one and two will be helped by the calendar shift. So, the revenue – the responding revenue, but you're saying that your – but your reported or your comp sales on a fiscal basis are going to be down, but your comp stores on a calendar basis will be flat to up. Doesn't that say that there's a negative impact in the first quarter and that should be the other way around in Q2 and Q4, I would say.
Edward W. Stack - Chairman and CEO: Sam, let's back up on a fiscal year basis, there is no change.
Sam Poser - Sterne, Agee: Understood.
Edward W. Stack - Chairman and CEO: Alright, but as we get on a reported basis, we have to report as the weeks fall out. From a reported basis, we get a $0.05 benefit in the first quarter as we indicated. We get a little bit less than that in the second quarter and then it completely turns around in Q3 and Q4. So, if you look at how we guided our comp for example, our reported or un-shifted comp is flat to 1%, whereas the shifted comp is negative 2% to negative 1%. So, you understand that with the positive comp we get better earnings. With the negative comp we have lesser earnings. The shift is really taking a look at, if I can explain, this does get confusing, and a number of retailers are going through this right now, but Q1 – we replaced the first week of Q1 with the last week of Q1. So last year, the first week of Q1 would have been the first fiscal week of February, this year, it's the second week of February which gets offset with a week in April which was really the first week of May and we do a lot more business in the first week of May than we do in the first week of February. If that makes it any clearer, Sam, I hope it does.
Sam Poser - Sterne, Agee: It does. A lot of other companies do more business at first week of February than the first week of May, so the shift is different because of that.
Edward W. Stack - Chairman and CEO: We do a lot more business the first week of May than we do the first week of February.
Sam Poser - Sterne, Agee: Most of that I would assume comes from our active outside equipment stuff, camping and all the stuff that people do outside versus a lot of the athletic footwear guys and so on that sell a lot more basketball and that kind of stuff earlier as a percent of your total business.
Edward W. Stack - Chairman and CEO: We just do a lot of stuff that we do outside, so you've got people who are buying running shoes. You've got people who're buying apparel to run, our golf business, baseball business, hunting business, camping business, all of that probably when people start to get outdoors in the spring, that we do a lot more business.
Sam Poser - Sterne, Agee: Then in Q3, you basically lose a big week of back-to-school and you gain a smaller week at the end of October?
Edward W. Stack - Chairman and CEO: That's exactly correct.
Operator: Matt Nemer, Wells Fargo Securities.
Matt Nemer - Wells Fargo Securities: I just want to sneak in two questions. The first is, the competitive response to Cabela's next generation in small market store that you mentioned, have you seen an impact in your stores whether it's geographic overlap to these concepts. Then secondly, I know it's early, but can you comment on the volume that you're pushing through ship from store, and then any impact that you've seen in terms of shipping speed to the customer and margins?
Edward W. Stack - Chairman and CEO: With the Cabela's stores any time a competitor opens up, there's always some impact, and I have to give the guys – Cabela's credit, they've done a really nice job with these stores. So, we do see an impact and we'll take a look at what we're going to do from a competitive standpoint. We think testing these stores is the appropriate course of action. We're really very excited about it and it's in an expertise area that we have. As far as shift from store capabilities or volume, we are not going to comment at that granular level, we kind of laid out to what our total eCommerce penetration was. Shift from stores is certainly a meaningful part of that and one of the things that we look at is that we have 500 distribution centers around the country, very close to the customers. So we can get product to people, very quickly and that relatively, and expensively from a shipping standpoint by having these shifts, the ability to shift from store.
Matt Nemer - Wells Fargo Securities: Is the goal of that program primarily to increase shipping speed or is it more around rebalancing inventory and reducing markdowns?
Edward W. Stack - Chairman and CEO: Well the primary objective is not to rebalance inventory although as we get more sophisticated. I think that we'll be able to do that, but the primary objective is to provide the customer with the best service possible and get them their products as quickly as we as can.
Operator: John Zolidis, Buckingham Research Group.
John Zolidis - Buckingham Research Group: A big picture question, we've got True Runner concept you are opening, you are doing another concept with the Field & Stream where we are looking at the smaller markets, now when we take all that together from a strategic standpoint, does that, should that tell us anything about how you feel about the core concept, I would suggest that maybe your somewhat less enthusiastic about the core concept? Thank you.
Edward W. Stack - Chairman and CEO: Good question, but the answer is not even close. We are extremely enthusiastic about the core business and one of the ways that you – one of the dots you connect to say how enthusiastic we are about this is that we're renovating 75 stores, reporting in 75 of these Nike Concept Shops, Under Armour, Adidas, North Face – the stores are doing extremely well. Still the vast majority of our earnings are coming from those stores and we're very enthusiastic about it going forward. What we want to do is we think from a competitive standpoint it gives us another part of competitive arsenal force with the Field & Stream concept, with the Golf Galaxy concept, and with the True Runner concept. We are looking for an area to grow the business, once that tail slows with the Dick's Stores. We're going to hit that particular number of stores, that growth curve is going to be more difficult for us and at that point, the Street will be asking us why don't you have anything in your back-pocket to grow. We've looked in a lot of other retailers who have not really positioned themselves for that day. We want to position ourselves for that day.
John Zolidis - Buckingham Research Group: One, just follow-up. How do you ensure that you don't get – management doesn't get distracted by the smaller new concepts with the ongoing challenges that you would face in the course of ordinary business and the core business?
Edward W. Stack - Chairman and CEO: The best way to do that is hire great talent to run them, which is what we anticipate, which is why part of the $0.12 is for talent infrastructure. But the best way to make sure that our present management isn't distracted and the new management has the best chance of success is to hire great talent.
Operator: Michael Lasser, UBS.
Michael Lasser - UBS: Just one. Ed, you've dealt with product cycles, weather in the past. As you become a bigger organization, is it more difficult to manage through those types of issues than you were a smaller company?
Edward W. Stack - Chairman and CEO: Is it more difficult, I think it's more complex. I don't think it's necessarily more difficult. When we were a smaller organization, we didn't have the talent we have today, we didn't have systemic solutions we have today, so I don't think it's more difficult. I just think it's more complex, and I think we have the resources at our disposal to work through those complex issues.
Michael Lasser - UBS: So does it lead to greater volatility in sales because you can manage through it?
Edward W. Stack - Chairman and CEO: I think we can manage through it at the end of the day. We guided to $1.03 to $1.05. We wish we had been at $1.05 instead of $1.03, but we still got within our guidance, and when you take a look at the original guidance we provided for 2012, the high end of that guidance was $2.41, so we beat the original guidance by a pretty wide margin. I wish we'd had a better fourth quarter. Some of the things were beyond our control, some of them weren't beyond our control. We could have held a little tougher on the – reducing the incoming cold weather accessories; that was a decision I made. I didn't want to have that inventory backed up again. Should I've had made a different decision? You could say that, but we continue to manage through these with still pretty good earnings, although not what we had anticipated, which is disappointing to us.
Operator: David Gober, Morgan Stanley.
Shaun Kolnick - Morgan Stanley: This is Shaun on for Dave. Just wondered on new store rollouts in particular in the south with the four Oklahoma opening and one in Louisiana this quarter, what are you seeing in those markets and how do you describe the competitive dynamics maybe relative to your existing markets.
Timothy E. Kullman - EVP Finance, Administration and CFO: We don't give specific information by market, but you can expect that we're pleased with how the business has gone in Oklahoma, and in the south in particular we're very pleased with how business has gone, which you can see in our new store productivity numbers.
Shaun Kolnick - Morgan Stanley: Just one more follow-up on the incremental SG&A spend. Given that those investments are going to be ongoing in nature, do you think there's going to be any impact on your operating margin goal long-term or how long it might take to get there?
Edward W. Stack - Chairman and CEO: You know what I don't think so and although these expenses are ongoing, what we're doing is we're building the infrastructure ahead of the sales. So we'll talk more about this at the Analyst Day, but we're building the infrastructure for the new concept, we're building the infrastructure for the e-commerce business, which we know have a lot of that done through GSI, but we're building this infrastructure ahead of what the sales are.
Operator: Joe Feldman, Telsey Advisory.
Joe Feldman - Telsey Advisory: I'll try to be brief as well. E-commerce, just wanted to drill down a little bit. Can you talk about the profitability that you're seeing in eCommerce these days relative to the stores? I know there's a lot of investment going on, so not to say that – and I know what the game plan has been with eCommerce, but just wanted to better understand that, because it is growing pretty rapidly and it's now 8% or 9% of sales and just kind of wanted to go down that path with you?
Edward W. Stack - Chairman and CEO: We think that eCommerce business is going to continue to be an important part of our business. We think that there is a lot of opportunities out there from an eCommerce standpoint, and we want to go capture that. We expect to do the same thing from an eCommerce standpoint as we have with the Dicks Sporting Goods stores.
Joe Feldman - Telsey Advisory: Then just one more question. The remodels that you guys are doing this year, how much of it – I guess what's different than what you've done before? Is it mainly just that you're adding the vendor shops and I guess I was wondering if you could talk about the split between your cost and vendor shop versus the vendors themselves and what kind of lift you would expect, because with the 2% to 3% comp lift, it seems a pretty conservative number given that you are adding some of these new in-store shops with the remodels?
Edward W. Stack - Chairman and CEO: Well, these in-store shops haven't been added yet. So, we are doing this during the year, and kind of the cost split between us and the vendors we haven't talked with them about kind of articulating what that is. So, we're not going to articulate that, but we think that this is going to have an impact on our business going forward, but these shops won't be fully done until roughly halfway through the year.
Joe Feldman - Telsey Advisory: Is that the bulk of what's going on in the remodel, just the in-store shop and the shared footwear model or are there other things?
Edward W. Stack - Chairman and CEO: Understand that it's not just as simple as adding the shop. We are basically taking the center part of the store – both sides of the center part of the store and rebuilding it. So, yeah, the simple answer is putting the shops in, but there is a lot more to it than just dropping a shop in there. We've got to build the infrastructure, the walls to house these shops, we've got a different traffic pattern that will go into the store, different lighting, different graphics, there is a lot that goes into these really from the front of the store, all the way back to footwear. So, it's really not as simple as it sounds.
Operator: David Magee, SunTrust.
David Magee - SunTrust: Just two quick questions; first on the, the renovations, are they going to be ticking on the comp full during the construction period?
Edward W. Stack - Chairman and CEO: They are not.
David Magee - SunTrust: Then secondly, with regard to the eCommerce business, have you said what your ultimate penetration goal would be there as to your point which should become little bit alarming to you, given that's growing so fast?
Edward W. Stack - Chairman and CEO: We haven't provided guidance as to what we think it would long-term. We think it will be meaningfully better than it is today, but we are not going to go out on a limb and give you that guidance.
David Magee - SunTrust: Is a big part of this coming from areas that don't have stores right now?
Edward W. Stack - Chairman and CEO: It's mixed, but as I said earlier the as we opened up stores and new markets our eCommerce penetration goes up pretty dramatically.
Operator: Sam Poser, Sterne, Agee.
Sam Poser - Sterne, Agee: Just a quick follow-up, you talked about the new smaller market stores, can you tell us what tow markets the current test stores are in, so we can get some idea of the kind of actual market it is?
Edward W. Stack - Chairman and CEO: Oneonta, New York is one of them and we have done a couple here outside of – outside Pittsburgh, we did one in Washington, Pennsylvania few years back.
Joseph H. Schmidt - President and COO: We just opened one in Holy Springs down in North Carolina which would be a good example of that as well.
Operator: Chris Svezia, Susquehanna Financial Group.
Chris Svezia - Susquehanna Financial Group: Tim for you, just I'm curious on the gross margin outlook in the fourth quarter you leveraged some occupancy I was assuming that's some truing up of – I'm just curious you said for the year you wouldn't do it, but in the fourth quarter you did on a pretty low comp so just maybe talk about that for a sec?
Timothy E. Kullman - EVP Finance, Administration and CFO: I think you also have to look at the high comp that we had on the eCommerce side. So, that helped a great deal on the leverage on the occupancy.
Chris Svezia - Susquehanna Financial Group: You don't anticipate that as much in 2013 given the store remodels and store growth?
Timothy E. Kullman - EVP Finance, Administration and CFO: That is correct.
Chris Svezia - Susquehanna Financial Group: Just lastly on as you guys think about competitive environment particularly in Outdoor and Fish as both have already continued to deemphasize those categories, I mean what are you seeing in those markets, are you picking up that market share opportunity as they continue to deemphasize those categories?
Timothy E. Kullman - EVP Finance, Administration and CFO: I think they talk about deemphasizing those categories but I don't think they had much market share in the first place. So, I don't think it's a big impact.
Operator: Matthew Fassler, Goldman Sachs.
Matthew Fassler - Goldman Sachs: Just two modeling questions that hopefully will be of broader interest. First of all can you talk about or can you size the sales shift by quarter associated with the number of (weeks)?
Edward W. Stack - Chairman and CEO: Yeah, we can do that, I mean – Matt we've never gone that granular before, I mean we've laid out what the shifted basis is and unshifted basis which we think kind of gives you a sense of where the business is at.
Matthew Fassler - Goldman Sachs: I guess, I am asking you for Q1, if you figure it out, but then there is a piece for Q2, I'm not sure that's bigger or smaller than the Q1 shift and then it's the payback in the second half it's plenty of delay than they are just a portion of when it's one quarter there, given that also these helpful opportunity in the quarters to figure it out?
Edward W. Stack - Chairman and CEO: What we can do Matt is much like we did in the press release that we laid out, now the consolidated comps when we include eCommerce. We could give you an idea of what the difference is in the comp guidance on a quarterly basis as we get through the next quarter.
Matthew Fassler - Goldman Sachs: Then secondly, just coming back to the notion of the gross margin guide versus the SG&A guidance. You cited the store remodel effort as weighing an occupancy cost and if that's your sense, that's up 7 basis points gross margin and your gross margin rate has run kind of up 40 bps or better with some continuity. So, I am not sure if giving back the leverage associated with the extra week in the first quarter of last year. Is it a decisive factor or if you are modeling a much lower merch margin improvement than you to-date? Just trying to figure out why occupancy with two to three comp it should be okay, is that much of the way for you?
Edward W. Stack - Chairman and CEO: Well, there was two components that outlined, Matt. It was the impact of the remodels, but we also have the carryover impact of the 2012 stores coming on line.
Operator: That will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Edward Stack for his closing remarks.
Edward W. Stack - Chairman and CEO: I like to thank everyone for joining us today in the call to discuss our fourth quarter earnings and we look forward to talking to everybody about the first quarter. Thank you.
Operator: Ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.