Pat Watson - IR, Corporate Communications Jeff Rosenthal - CEO Scott Bowman - SVP and CFO Jared Briskin - SVP of Merchandising Cathy Pryor - SVP of Store Operations

Dan Wewer - Raymond James Rafe Jadrosich - Bank of America Merrill Lynch David Magee - SunTrust Stephen Tanal - Goldman Sachs Peter Benedict - Robert W. Baird Camilo Lyon - Canaccord Genuity Jim Chartier - Monness, Crespi, Hardt & Co. Peter Keith - Piper Jaffray Rick Nelson - Stephens Sam Poser - Sterne, Agee Anthony Lebiedzinski - Sidoti Sean McGowan - Needham Seth Sigman - Credit Suisse

Ladies and gentlemen, thank you for standing by. Welcome to the Hibbett Sports Third Quarter Fiscal 2015 Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded today, Friday, November 21, 2014. I would now like to turn the conference over to Pat Watson of Corporate Communications. Please go ahead.

Thank you for joining Hibbett Sports this morning to review the company's financial and operating results for the third fiscal quarter ended November 1, 2014. Before we begin, I would like to remind everyone that management's comments in this conference call that are not based on historical facts are forward-looking statements. Management may make additional forward-looking statements in response to your questions. These statements, which reflect the company's current views with respect to future events and financial performance are made in reliance on the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, and are subject to uncertainties and risks. It should be noted that the company's future results may differ materially from those anticipated and discussed in the forward-looking statements. Some of the factors that could cause or contribute to such differences have been described in the news release issued earlier this morning, and the company's annual report on Form 10-K, and in other filings with the Securities and Exchange Commission. We refer you to these sources for more information. I'd now like to turn the call over to Jeff Rosenthal, Chief Executive Officer. Please go ahead, Jeff.

Thank you, and good morning, everyone. Welcome to the Hibbett Sports third quarter earnings call. I have with me this morning, Scott Bowman, Senior VP and CFO; Jared Briskin, Senior VP of Merchandising; as well as Cathy Pryor, Senior VP of Store Operations. Our third quarter comp was softer than we would have preferred, but improvement over second quarter. There are some positives that we see in those numbers in our current trend through the first few weeks of November. As a result, we're raising our guidance from the current year. As we enter into the month of October, our comp was trending over 2.5%. October was negatively impacted by warmer weather compared to last year, and the movement of particular launch dates on key products. As we move into November, both weather and product launches have been more favorable in comparison to last year. Our current November comp is positive low double-digits, which has more than made up for the comparable loss in October. During the quarter, we expanded two high-performing stores, closed seven stores, and opened 26 for a net total of 19, putting us at 969 locations across 31 states at the end of third quarter. Our new store performance continues to be strong and healthy, and we are on pace to net new store target by the end of the year. We have already begun to see some of the benefits from our new wholesale and logistics facility. It's still very early in the process, and the wins have been small, but we're very excited at the potential of this facility will have on assisting us getting the right product to the right stores at the right time. Some quick examples of these benefits are things like stadium chairs, which ran up 78% to last year during the quarter, and the McDavid single HexPads, basketball accessories that are running up over 70% for this month. Though we continue to have difficult margin comparison to third quarter, we did close the gap between this year and last year. : : I will now turn over to Jared Briskin, who will provide more insight around merchandising.

Thank you, Jeff. Good morning. Branded apparel and footwear comped positive for the quarter, while this was offset by negative comps in license products and equipment. Branded apparel was very strong during August and September comping up low double-digits. The warm October offset this increase leading to a low single-digit increase for the quarter. For the quarter, the men's business was flat, women's was up low single-digits, and the kids' business was up mid-single digits. Accessories were up low single-digits. Nike and Under Armour, both performed well during the quarter. We remain confident on our assortment as we're seeing strong performances during cooler weather periods. The footwear business was up low single-digits. Men's business was up low single-digits. Women's was down mid singles, and kids' was up mid-single digits. The traditional running business was soft during the quarter as the business continues to shift to lifestyle offerings. The basketball business continues to be the driver for us achieving double-digit growth for the quarter. Jordan, as well as signature basketball products from Nike, such as KD, LeBron and Kobe continued to drive business. Although the basketball business was a significant driver for us, the delayed launch of the LeBron XII and the change in the Jordan launch calendar as compared to last year hurt results during October. The license business was down low single-digits. Our college business was up low single-digits, led by strong women's results and an excellent job overall by the team chasing excitement in the state of Mississippi. Our pro business was down mid-single digits due to continued challenges in headwear. Double-digit gains in soccer drove the team's sports category for the quarter as the emphasis on the World Cup led to continued momentum. Football business was flat with cleats outperforming equipment. Products used for flag football showed growth, but we're offset by product specific to tackle football and cold weather items. Overall, our composition of aged inventory has improved and we feel our assortment is well positioned for the fourth quarter. I'll now turn the call over to Scott Bowman to review our financials.

Thanks, Jared, and good morning everyone. For the first quarter, total sales increased 10.4 million to 218.3 million, an increase of 5% over prior year. Comp sales increased 0.6%. By month comps were 1.8% in August, 4% in September, and negative 5.7% in October. Gross profit rate decreased 53 basis points in the quarter. Product margin decreased 26 basis points mainly due to markdowns associated with managing our inventory. Store occupancy and logistics costs increased 27 basis points as a percent of sales, which was due to de-leverage of these expenses associated with lower comp sales. SG&A expenses increased 5.9% in the quarter, and increased 20 basis points as a percent of sales. The increase as a percent of sales was mainly due to de-leverage associated with lower comp sales. Depreciation and amortization increased 18 basis points as the percent of sales in the quarter. This mainly reflects the capitalization of our new wholesale and logistics facility, but also includes an increased number of new stores. The income tax rate for the quarter was 36.8%, which was slightly lower than the last year's rate of 37%. Operating income of 26.8 million decreased 2.3% from last year, and was 12.3% of sales versus 13.2% last year, a decrease of 91 basis points. Diluted earnings per share came in as $0.67 per share versus $0.66 last year, an increase of 1.5%. From a balance sheet perspective, the company ended the quarter with 71.5 million in cash versus 69.9 million last year with no bank debt. Inventories increased 5.5% over last year, and were 1.6% lower on a per store basis. We spent 4.8 million in CapEx for the quarter. Also for the quarter, the company bought back 372,000 shares for a total of $16.7 million. At quarter end, we had approximately 180 million remaining under the existing purchase authorization. Looking ahead to fiscal 2016, I'd also like to give you some initial guidance on our IT investments, and their estimated impact to our diluted earnings per share. During the year, we'll be developing a new point-of-sales system that will eventually be rolled out to all stores. This upgrade will benefit our overall business and will provide foundational elements needed to execute future phases of our long-term strategy. This initiative is estimated to have an impact of $0.5 to $0.6 per diluted share, which is against our annual EPS target of low double-digit growth. With that review, operator we're now ready for questions.

Thank you. [Operator Instructions] And our first question comes from the line of Dan Wewer with Raymond James. Please proceed.

Thanks. Jeff, in looking at the same store sales, they have been relatively weak, I guess, going back to last March -- I know you have had a few months that are better than others, but relatively weak since last March. And compared to some other competitors -- let's say Dick's, if you exclude their golf and hunting business or Footlocker, Hibbett's probably running four to five points below competitors. Have you been able to figure out what's accounting for the gap? And then also what's the game plan for rejuvenating the sales growth? A - Jeff Rosenthal: Sure. For us -- and I'll let Jared add to that from a product standpoint, but really from back-to-school we had a pretty good August and September. So we were right on that pace, and then some of the weather things hit us, but we feel very confident on our assortments for holiday that even though November we had some shifts from favorable weather and favorable launches that we're well-positioned really to get back to a Hibbett type run rates in the fourth quarter.

Okay.

Dan, it's Jared, how are you?

Good.

I think we certainly have some opportunities to make some investments in some categories that are driving business for us. I think that if you look from a category perspective on some of the results, category-by-category you're pretty similar. We have some opportunities to leverage some of those categories a little better, and we look to take advantage of that. Q – Dan Wewer: So what, implying a bigger investment in basketball? Will that be an example?

Basketball and some other footwear categories in general, women's apparel, kids' apparel, and there are certainly others as well. Q – Dan Wewer: And Jared, I also wanted to ask you about the markdown optimization software and how that's initially impacting margin? It sounds like, I guess, initially, it's a headwind, because you are taking markdowns sooner. Perhaps I'm wrong, but if you could elaborate on that. And then when do you think that it would begin to -- you would get a payback in terms of a higher margin rate on clearance?

Yes, I think we'll start to see the payback here pretty soon. We're starting to see some benefits. I think the initial margin expectation from the rollout of the system, there was some expectation from a rate standpoint, but I think some of that was compounded with our aged inventory position. I think as we've seen our aged inventory composition improve over time, that combined with the benefits that we're starting to see from a disciplined standpoint with regard to MDO I think, because we combine those two factors, we're starting to look to see some rate expansion over time. Q – Dan Wewer: Okay. And then finally, Scott, a question for you; in looking at the fourth quarter outlook, which is -- I think you are probably more bullish than where investors had been prior to the release. Can you talk about what you are seeing in terms of gross margin potential? In 4Q, if that will be lower or higher year-over-year?

Yes, I think we have more opportunity in gross margin in Q4, just kind of piggybacking on Jared's comments, from a product margin standpoint we've been down all year and fourth quarter kind of as we mentioned on the last call, we think there's good opportunity in the fourth quarter to be flat to slightly positive on product margin. And so, I think that's definitely a benefit for us. It will certainly help to have less aged inventory than we had in the past. And then, from a sales standpoint I think we're really well positioned for holiday, and we do have an opportunity in January with the negative 10 comp we had last year. So you couple all of that together that should give us some opportunity to have a better market. Q – Dan Wewer: Okay, great. Thank you.

Yes.

Our next question comes from the line of Rafe Jadrosich with Bank of America Merrill Lynch. Please proceed.

Hi, good morning. Thanks for taking my question. Can you guys talk about the traffic and maybe the ticket during the quarter?

Yes. This is Scott, really similar trend to what we've seen in the last several quarters that most of the comp was driven by ticket. So as basketball remains hot and some of the apparel people are really responding to -- generally has a little bit higher ticket than some of the accessories and other items. So similar trend is what we've seen over the last few quarters.

And have you seen any change in the promotional cadence by any of your competitors that it's still relatively kind of a non-promotional environment in athletic?

We're not seeing a lot of change.

Got it. And then just a last question -- just any -- what have been categories kind of quarter to date, can you just give some color in terms of what has picked up? Is it just basketball because of the launch schedule, have you seen an uptick in apparel as well?

Yes. We've actually seen it across all categories. We've seen it across apparel, footwear, and equipment as we've gotten into November. Usually that first cold spell in -- we have really over the last couple of years, shifted from September to October, and this year it's really October to November, but it just drives a lot of traffic to your stores when the weather changes, because you have to get that new hoodie or new jacket or those type things. So we really have seen it really across the board for the first few weeks.

Got it. And then in terms of just the 4Q outlook, what are sort of the category drivers for the better comps? Is it -- do you feel like your allocations are improving or is it just you are going to buy deeper in the categories that are working better?

We continue to work with all our suppliers on allocations, which we do continue to get more as we continue to grow. We really feel good about fleece in general, especially hoodies and pants. We see that as being key item drivers for the fourth quarter.

Got it, thank you.

Our next question comes from the line of David Magee with SunTrust. Please proceed.

Yes, hi, good morning.

Good morning, Dave.

Good morning.

Just a couple of questions; one, obviously, November seems like is going very well and there is a huge opportunity in January. How are you feeling about December relative to last year? Are there any opportunities or risks that are worth making a comment about?

I'd say we feel pretty good about it, really going against last December. I know we have -- I think that was our second largest comp for the quarter. Yes, it was about four comps, but we feel we are well positioned in fleece than some other key items and tights and footwears that we should be fine in December. So, there is no reason or no anomalies that we know of today.

Thanks, Jeff. And then with regard to the wholesale facility, can you talk about which category stands to benefit the most and sort of how that works out to your benefit in terms of maybe improving conversion? Any additional color there would be interesting.

Yes. This is Jared. I think over time as we continue to build the products that we're going to service out of the facility I think we'll see improvement across all categories, but we definitely feel where we get the biggest improvements is on the footwear category certainly as it relates to sizing.

: Do you think that that's where e-commerce has maybe had some impact and that if you've been sort of out of stock on something, then that person is making a purchase online right away?

We do not. We feel like there are some other categories where it could potentially have hurt us more in looking at some of the share of that from the e-commerce standpoint that it's picking up. We do see a conversation opportunity from a sizing standpoint that we know we can improve upon and utilizing that facility.

Thank you. And then lastly, is there a fashion shift going on? I may be the last person who is aware of this, but -- away from denim, jeans and denim towards athletic apparel, casual athletic apparel. Is that something that you are seeing at all in your business?

There is. The fleece bottom category in particular is very strong. So there is a slight shift away from denim. The denim category is still very important, but certainly the fleece bottom category in particular, the banded bottom category or what's called the jogger in the industry, very popular and suddenly lend itself to strong footwear business because it shows the shoe. So certainly that is a high-performing category, yes.

Great. Thank you, and good luck.

Thank you, David.

Our next question comes from the line of Stephen Tanal with Goldman Sachs. Please proceed.

Thanks a lot, guys. Quick one on the new POS system for next year. I'm wondering is that sort of the extent of the investments within the framework of the omnichannel roadmap that you will see next year?

Yes, Stephen. That's really the major one that I'd call out. There are some other ones that pick within our model, but yes, that will basically give new functionality from a transaction standpoint. It will give us visibility of inventory across our chain. And so that will be a great first start down the path that we're going. And so we've already started to do some early work on that. And we'll make a lot of progress this year in getting that in place.

Got it. Okay. And expense control was pretty solid in the quarter and I was sort of curious what enabled that and whether there were any investments that you'd break out this quarter or how to think about that line?

Yes. Of course there is always some investments that are baked into those numbers, but as far as the favorability this past quarter, couple of things I'd point to, one, our benefit costs were little bit favorable, those fluctuate up and down. It just so happens that they were favorable. I'd point out that last year in the third quarter the costs were little bit abnormally high. So that was part of that reason. But the other part of it was the store operations group really did a solid job of managing labor and other expenses in the stores. So that was a big part of it as well.

Okay. Finally for me, just on same store sort sales here, could you talk about the difference in comps, to the extent there is one, between your mature stores and your younger stores?

Actually if you look at some of our matured stores that are ten years old, and more, lot of those stores will give us best comps. It's a situation where those stores are pretty well embedded in the community. We made some adjustments to those stores over time, and they really have a good mix in a lot of cases, and also do a lot of volume. So in general, we're seeing really good comps in some of those over stores.

Okay. Good to hear. And then lastly, just to clarify an earlier question on traffic, you said similar to recent trends. That's sort of down low to mid singles -- is that kind of the right way to think about that?

That's right.

Got it. Okay, thanks.

Thank you.

Thank you.

Our next question comes from the line of Peter Benedict with Robert W. Baird.

Hi, guys. Thanks. A couple questions for Scott, just to clarify; you said for next year, low double digit growth on earnings. And then the $0.05 to $0.06 -- we should net out the $0.05 to $0.06 from that low double digits, is that what you are saying?

That's correct.

Okay. And how much of the comp so far in November can you attribute to Lebron and the Jordan shoe? I know those have a big impact, but just trying to understand maybe what the underlying trend is, if you could …

Yes, Peter, we really don't give that out.

Okay. No problem, Jeff. Scott, on the D&A, can you help give us a sense, since that's been building but it grew a little slower this quarter year over year, what kind of dollars numbers were you thinking about this year and even perhaps as we are planning for next year? Just where do you see the D&A coming in? A – Scott Bowman: Yes, I think DNA was a little bit favorable in the quarter. And I think that's the function of timing of some of our project as they are capitalized. But it also includes some larger items that fall off over time. If you think about some of the investments we made several years ago with JDA and some of other bigger system investments some of those are starting to fall off. So that does offset some of the increases with some of the new initiatives.

Okay. Last question, just a lot of talk now about the declining gas prices, everybody's customer benefits, just can you talk about maybe the historical impact you guys have seen in your business? Whether it could be from transportation side or from a customer demand side? Thank you. A – Scott Bowman: Yes, I think that might from the transportation side; I mean we predominantly use our own private fleet. And so that naturally it will help a little bit. Form a consumer standpoint it's really hard to draw a really good correlation between our sales and gas prices. I think you need time to that more money is put in our consumers pocket definitely helps. Although in the past it's been a little difficult to draw a real tight correlation to that.

Okay, fair enough. Thanks, guys. A – Scott Bowman: Thank you.

Thank you.

Our next question comes the line of Camilo Lyon with Canaccord Genuity. Please proceed.

Thanks, good morning guys.

Good morning.

Thanks. Good morning, guys. The first question I had was on your cold-weather assortment. I think you typically better stock in the fleece and you've called that out in the fleece category. But I think if temperatures are dipping abnormally flow down in the southern region, I was wondering if you are seeing an incremental consumer seeking kind of interest in colder weather product and if you are assorting to that environment?

We are. When we look at it certainly, year-over-year as the weather patterns continue to change, and we're seeing some cooler weather certainly creep further south year-over-year, we're certainly looking at those opportunities, certainly at a trend in particular from a younger consumer continues to be fleece and certainly fleece is worn as outerwear in a lot of cases with that consumers. So there's a balance there. But we do look at those opportunities every year, and try and balance that risk with the opportunities as well.

So should abnormally colder weather, if it does materialize down in the southern markets, is that an incremental risk to not having the inventory -- or you do have the inventory to meet what that would require from a storeroom perspective?

Yes. We have the inventory to meet that requirement.

Okay, great. And then Scott, just in thinking about the roadmap for omni in your strategy there and the things you need to build out and invest in to build up this part of your business, can you just talk about the cadence next year and if there are any other investments in the forward year, in 2016, that we should be contemplating as you further enhance and build out, really, this e-commerce in a more omni-based platform? A – Scott Bowman: .:

Okay. But just in thinking about the steps -- the POS upgrade will be the step that precedes a more kind of built out e-commerce platform, right? A – Scott Bowman: That's right. So I think the important thing is that a lot of the work that we're going to be doing this year on the POS, it does have a lot of that foundational components that would eventually need for an e-commerce type of platform.

Okay, great. And just finally, are there any sort of macro influences that we should contemplate over the next quarter or so that could impact your consumers' ability to spend, outside of gas prices?

Not really, the only thing once we get into February there could be some tax refund with healthcare act. So that could have a little bit of an impact, but other than that, no.

Okay, perfect guys. Good luck in the holiday season.

Thank you. A – Scott Bowman: Thank you.

Our next question comes from the line of Jim Chartier with Monness, Crespi, Hardt & Co. Please proceed.

Good morning. Thanks for taking my question. My first question on the running business, it sounds like your competitors have talked about kind of mid- to high-single digit comps the last couple of quarters in the running business, even in spite of the shift away from the technical products. So were you guys late to this shift? Is this an opportunity for you guys going forward? Can you just kind of talk about maybe why you have lagged the competition recently?

I think from a category perspective, I think it depends on how you look at the running business. When we talk about the running business, we talk about that traditional running business. We have running shoes. We manage the category that we consider fashion and our lifestyle business. When we look at all running so well together, our running business is performing. It's a traditional running business more on the performance side that's lagging. And the fashion running business is performing well. I think it really depends on how you look at the running business whether you look at it holistically or whether you look at it from a performance aspect.

Okay.

We look at it more from a traditional running standpoint on the performance side. Our fashion business in the running –- in running silhouettes is quite healthy.

So if you combine those two, would you say you are performing in line with the competition in the industry, then?

Absolutely.

Great. And then on the commentary on earnings growth for next year, one, does kind of the low double digit EPS expectation include a continuation of share repurchases at the current rate of 200,000 to 300,000 shares per quarter?

That's correct.

Okay. And then how should we think about anniversaring the $0.10, $0.11 of the DC impact this year as we think about next year? How much of the $0.11 was kind of one time-ish in nature as you ran two facilities? And then do you just kind of start to leverage the remainder of those costs over time?

I think the way to look at it is as we go into next year, we'll have the full year effective the new facility and then we'll have to be drop off of the duplicate expenses we're seeing with the old facility this year. So you put that together it's barely flat. And so, I think next year what you'll see is as we continue to grow then we'll gain that opportunity again to start leveraging those expenses.

Great, thanks and best of luck.

Thank you.

Thank you.

Our next question comes from the line of Peter Keith with Piper Jaffray. Please proceed. Q – Peter Keith: Good morning, everyone. Just a follow-up on the last question regarding the leverage opportunity with the new DC; I think you've historically talked about back half of next year. As that DC's getting ramped up, has that timeframe been pulled forward or when do you think there might be some type of inflection point of gross margin or margin benefit overall?

Yes, I think the inflection point or the margin benefit would definitely be a little bit more back-half weighted. I think what you'll see is we'll continue to ramp up the volume that's going through that facility for those quick replenishment opportunities and yes, we'll continue to make sure that we optimize the mix of those replenishment items to get the biggest benefit. So definitely I think it will be a little bit more backend weighted. Q – Peter Keith: Okay. Thanks. And then Scott, as a follow-up to you on the POS system implementation, should we think about that as a two-year process for 2015 and 2016? Maybe even is it more front-end weighted with next year?

I think for next year what you'll see is we'll get most of the heavy lifting done and by the end of the year, we should be fairly complete on configuring the system and pilot and everything and so, shortly after that late in the year, early next year, we'll be ready for full deployment. Q – Peter Keith: Okay. Great. Last question, so directly to Jared, so congratulations on the promotion; I was wondering in your elevated role, if you are thinking about approaching the merchandising business any differently or have other initiatives that you'd like to implement?

I guess -- first thank you, without getting into specifics I think first and foremost, I've been here for quite a while, certainly understand our consumer, understand our system I had managed every category here that we do business. Certainly I see a lot of opportunities and certainly excited to be in the role and look forward to try and take advantage of them. As I mentioned earlier, there are certainly some categories today that I feel we have opportunities and have opportunities to leverage. Those are the ones that I'll certainly look to take advantage of in the short-term. Q – Peter Keith: Okay, that's great, guys. Thanks a lot. Good luck over the holiday.

Thank you.

Our next question comes from the line of Rick Nelson with Stephens. Please proceed. Q – Rick Nelson: Thanks. Good morning. Jeff, would you size up the real estate environment today -- what you are saying in terms of development versus maybe a year or two ago?

Rick, we see that the real estate is pretty good out there. We're seeing some new store construction continue get a little bit better. So there's definitely shortage of real estate out there that is available to do deals. And I know two or three or four years ago, it was little bit tougher. But we have been finding lots of real estate and plenty of places to go. Q – Rick Nelson: Sounds good. Also I'd like to add, the per-store inventory is down again year over year. Is that benefits you are seeing from the distribution center? And also, are you seeing any supply constraints or disruptions related to the West Coast port challenges?

We feel like from an inventory standpoint, we're actually where we needed to be, potentially even a little bit heavier. We were a little over inventory historically. So I feel like we are where we need to be from a west coast stand point, we're working with our suppliers daily to ensure that there aren't disruptions. So far we have not seen delays, the negative inventory from a porter end stand point was a planned inventory, it was not as a result of any west coast disruptions. Q – Rick Nelson: All right, thanks a lot and good luck.

Thanks, Rick.

Our next question comes from the line of Sam Poser with Sterne Agee. Please proceed. Q – Sam Poser: Good morning. How is everybody …

Morning. Q – Sam Poser: Good morning. All right, real quick, I just wanted to know, the traffic problem has been sort of ongoing. So can you talk a little bit about what you think is contributing to that lower traffic? And how and what you are going to do sort of in the short term to potentially to drive some more traffic to the stores? Because when the customers are coming in, it sounds like they are spending the money.

Yes. Sam, we continue to work on how we communicate to consumers through social media and we've been working on letting them know about launches and other things. So that's one way that we are driving traffic. And then we are also -- really, the opportunity that we see, too, is just some of the conversions with the DC and some of the things that we are doing internally, we think that will increase traffic so that we are more in stock than we are not. So between the marketing pieces and some of the internal things we are doing to make sure that we get the conversion right, we think over time, we'll be driving some more traffic. Q – Sam Poser: What about the short-term, is there something like you could do an app or anything like that? Could you get an app that may not be able to drive -- that may not be able to drive commerce but could drive just communications maybe to your reward customers so and so forth?

Sam, we're working on some things and certainly looking at trying to utilize our all the good channels and social channels that we have currently, whether it be through an app or what we're using now to make sure that our focus is on driving traffic to the source. And we definitely think that there's more of an opportunity there. I think I sort of want to we need to make sure we stay focused on the conversion piece also, where we believe that there's a significant piece of the business that's been looking at our unit selling. We feel like we can do a better job in staying and stop. We believe that some of the traffic that we do have coming in we may not be servicing today. We definitely feel it's a two-pronged opportunity without question, we do need to drive more traffic but we also need to make sure that we're servicing the traffic that we have today, in particular on tee items that they're coming to us for. Q – Sam Poser: Thank you. And then, Jared, congratulations also.

Thank you. Q – Sam Poser: Just in stepping into this role -- I know you've been with the Company a long time. When you -- what kind of fingerprint do you want to put on the business that you think -- or you think you can be at -- really additive, where you can really step it up and be really additive, based on your knowledge of the company and where you've been?

I mean I really think from a product standpoint in particular, I think just moving us forward a little faster from a product standpoint would be my primary objective and really getting after some trends faster. I think that would be my primary focus at this point. Secondarily, leveraging the system that we made all these investments in very familiar with our systems involved in the implementation in all of them and understands all of them. Being able to work with our staff on how we leverage each other within the buying process I think is the major opportunity to try and track growth. So those will be the two major things that I would say stand out right now for me. Q – Sam Poser: Thank you very much and good luck. Have a great holiday.

Thank you.

.:

Yes, good morning. I just wanted to follow up about 2015 guidance. Just curious as to if you could give us a little bit color as to what you expect for store openings, perhaps for next year, any kind of ideas for your same store sales expectations?

Anthony, we would hope to pick it up a little bit from this year. We have -- we'll give particular guidance in March.

Okay. And as far as the store openings for next year, would you say the bulk of them would be in existing markets or new markets? Just if you could give us some better understanding as to how you are thinking about growing the store base?

Sure, we've really kept our strategy being a two drive distance from one another. It's especially for supervision and understanding price, needs and want so that really isn't changing. We're hitting on some new stages because of how far we've grown. We've hit Pennsylvania this year. We're looking around New Jersey and Minnesota and some of these other type markets just because we're within a two hours distance. Our strategy really hasn't changed. So we're not really getting away from our strategy, it's just that now we're within two hours of lot of other state. That's what we'll do but there's still a lot of infills within the markets that we're operating that we can put stores.

Okay. Thanks very much.

Thanks, Anthony.

Our next question comes from the line of Sean McGowan with Needham & Company. Please proceed.

Thank you. Couple of housekeeping-type questions; Scott, on the tax rate; is the tax rate year to date indicative of what you would expect for the full year and is that a rate we should use for next year as well? A – Scott Bowman: The idea -- the tax rate in fourth quarter should be a little bit higher than what we saw in the third quarter. In third quarter we settled a state tax issue that we had out there for a while and it turned out to be a favorable for us. And so, I gave us more of a one-time benefit so I'd expect the rate in the fourth quarter to be a bit higher. And then as we look into next year, it should be close to 3675 [ph] kind of range -- just preliminarily and go up from that number up on the next call.

Right. Okay. And then looking at the $0.05 to $0.06 investment in the POS system, what can you say at this point about how that will flow over the year? Will that be pretty even or backend or front-end loaded?

What I'd expect is that you'll probably see a little bit of an impact in the first quarter and then as we get into second, third and fourth quarter you'll see a little bit more impacts. So I think during the year, you'll see a little bit of an escalation in this cost as we get closer to running the pilot then getting ready for deployment.

Okay. Great. Thank you very much.

Thank you.

Our next question comes from the line of Seth Sigman with Credit Suisse. Please proceed.

Okay. Thanks very much. If I could just follow up on the real estate question, could you just tell us how many stores you plan to close this year? And I'll just follow up on that.

Sure, we'll close around 18. We've said 15-20, so still a few that we're not sure on yet, but it will be around 18.

Okay. And could you just remind us the rationale behind some of those closures -- if those are leases just coming up for renewals, the market is changing -- any competitive dynamics? How should we be thinking about that?

Sure. Sometimes there is really a few reasons that we do close stores, sometimes the real estate just gets bad, sometimes the landlords just not reasonable, and once they raise the rent to certain levels, we don't hit our hurdle rates. And then, sometimes maybe we didn't do a good job operationally or from a merchandise standpoint, but there is various reasons, there's not one specific reason that we closed stores. The only specific reason that we used is just we're not hitting the hurdle rates that we expect.

Okay, I understood. And then as you look at the operating margins of this business, historically, you've discussed getting to some sort of mid-teens type of rate. With some of the investments we've seen over the last year and expected to see next year, how do you think about the ability to get to that mid-teens level in the timeframe? Where should we see that improvement come from? Potentially, is it more from gross margin or SG&A? How should we be thinking about that?

Yes. I think if you look at your long-term, and this base model of our business, I mean they can deliver pretty nice improvement in operating margin year-over-year. So I think that, kind of it's a base level model, just keep in mind, and then as I give further guidance on the major initiatives that will change that, I think as you layer on that top, then that gets you a little bit picture, but I think what you'll see over the next several years is that we'll continue to make investments to really improve our long-term growth potential. And so, I think that will be a combination of sales improvement with some of the things that Jared has talked about, but also gross margin as well, with markdown optimization that's one of those systems that you can continue to refine for a few years down the road and still get some benefit out of that. And so, I think that will show some improvement as well. So really I would point to sales and margin improvement over the next few years and then that in turn will give us good opportunity to level expenses.

Okay, thanks.

Thank you.

Mr. Rosenthal, there are no more questions in queue. Are you ready for me to turn the call back to you for your closing remarks?

Yes, I want to thank everyone for being on the call. We look forward to talking to you again in March.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation, and ask that you please disconnect your lines.