Good morning, ladies and gentlemen, and welcome to the Academy Sports + Outdoors First Quarter of Fiscal Year 2021 Earnings Conference Call. At this time, this call is being recorded [Operator Instructions] Questions will be limited to analysts and investors. [Operator Instructions] I will now turn the call over to Matt Hodges, Vice President of Investor Relations for Academy Sports + Outdoors. Matt, please go ahead.

Thanks, operator. Good morning, everyone, and thank you for joining the Academy Sports + Outdoors First Quarter 2021 Results Call today. Participating on the call are Ken Hicks, Chairman, President and CEO; Michael Mullican, Executive Vice President and CFO; and Steve Lawrence, Executive Vice President and Chief Merchandising Officer. For reference, the earnings release issued this morning is available at investors.academy.com. And as a reminder, statements in today's earnings release and the comments made by management during this call may be considered forward-looking statements and are intended to be covered by the safe harbor provisions under the federal securities laws. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the earnings release and in our filings with the SEC. The company undertakes no obligation to revise any forward-looking statements. Today's remarks refer to certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are included in today's earnings release, which is provided on our Investor Relations website. I will now turn the call over to Ken Hicks, CEO.

Thanks, Matt. Good morning, everyone. I'd like to start by thanking our Academy Sports + Outdoor team members for their hard work and commitment as we continue to navigate these challenging times. I remain extremely proud of our team as we pass the 1-year mark of being fully open and back to work in our stores, distribution centers and corporate offices. It is remarkable what we have been able to achieve in the last year. Our top priority remains customer and team member safety as we strive to be the best sports and outdoors retailer by providing fun for all through assortments, value and experience. Following the terrific fiscal 2020, fiscal 2021 is off to a strong start as we achieved another record quarter. Sales were $1.58 billion, a 39.1% increase over the prior year quarter. Comparable sales were 38.9%, and diluted earnings per share were $1.84. This is the seventh consecutive quarter of positive comparable sales and operating profit growth. We continue to see strong demand across all product categories and geographic regions. As we emerge from the pandemic, our customers are coming back more often and shopping more areas of the store as sports and outdoors remain a meaningful part of their lives. While sales did see a benefit from government-issued stimulus checks, we believe there are other important long-term drivers of our business such as: the strategic actions taken over the last few years to increase operational efficiencies and improve margin rates; a change in lifestyle that is driving a shift in consumer spending for sports and outdoor categories, including bikes, camping, fishing, grilling and backyard entertainment; existing customers shopping more often and discovering more products in new categories; introducing millions of new customers to our brand over the past year. Our customer base is strengthening as…

Thanks, Ken. Good morning, everyone. The first quarter exceeded our expectations as the demand we saw throughout 2020 continued and, in fact, accelerated into 2021. First, I want to highlight our record first quarter results, then I will discuss our 2021 guidance, which we are increasing based on the continued strength of our business. As Ken mentioned, first quarter net sales were $1.58 billion with comparable sales of 38.9% despite firearms and ammo sales being lower than expected due to continued inventory challenges. When compared to Q1 2019, sales increased 46.8%. Sales were strong across all product categories as well as across all markets. This is the second quarter in a row that all 4 merchandise divisions had double-digit comparable sales growth. Our e-commerce sales declined 21% over last year as we anniversary 405% growth in Q1 of 2020 when the COVID crisis began and customers shifted their buying preferences to digital channels. When measured against Q1 2019, our e-comm sales grew 300%, and the sales penetration rate increased to 7.4% versus 2.8%. Because buy online, pick up in store remains approximately 50% of total e-commerce sales, which reduces our overhead and shipping costs, we have been able to grow our e-commerce sales and our profitability. In fact, since 2019, the company's pretax income has increased 767% even as our Q1 e-comm sales have grown 300%, highlighting the fact that we have a profitable omnichannel platform. We believe there is even more room for growth and improvement as we continue to increase our investment in academy.com to create a seamless omnichannel experience. We are implementing solutions to improve our search and checkout capabilities to give our customers more personalized product recommendations and to provide them with more payment options like Apple Pay. During the first quarter, gross margin dollars increased…

Thanks, Michael. Now I'd like to give you a little more color around our first quarter performance. As we already mentioned, we met to deliver a 38.9% comp. Unlike many of our competitors, we never closed our stores last year. And as a result, this quarter's comp is on top of a 3.1% increase in 2020. The early part of this quarter was negatively impacted by store closures during the winter storms in February. Once we got past weather disruptions, we saw a strong rebound in March and April fueled by our merchandise initiatives, pent-up demand, consistently warm temperatures. And of course, the government stimulus did not hurt. Looking at the results by category. Apparel and footwear were our 2 strongest divisions, both with high double-digit comps during the quarter. These categories were the 2 hardest-hit businesses last year when most of the country went into lockdown so they're generally up against softer comps. Breaking it down by category. Apparel sales were up 80% versus 2020 and plus 38% versus 2019, while footwear was up 58% versus 2020 and plus 23% versus 2019. All of our key national brands, such as Nike, Adidas, Under Armour, Columbia and the North Face, had strong performances based on improving inventory positions and better content. We're pleased by the performance of our private brands with one of the key drivers being the launch of 2 new initiatives. In February, we launched our new women's athleisure brand called Freely, offering new products in both apparel and footwear and a focus on bridging function with comfort at an outstanding value. We also launched a better tier of Magellan Outdoors with Magellan Outdoors Pro focused on more technical fabrics and features. Both initiatives got us to a strong start and are tracking above plan. As a reminder,…

Thanks, Steve. Looking ahead, as the country continues to reopen, we are focused on winning the summer season, which started this past weekend with Memorial Day and will continue through Father's Day, the Fourth of July and the start of all team sports. We want to be top of mind for consumers as they continue their newly found recreational lifestyles and resume some of the fun activities they enjoy most, like hosting family and friends at backyard cookouts or celebrating live sporting events. In the coming months, we will continue to focus on executing our priorities, building a stronger omnichannel business, improving our shopping experience, continuing our power merchandising work, increasing our targeted marketing and strengthening our supply chain. These initiatives are instrumental to achieving our long-range goals and delivering fun for all as we work towards being the best sports and outdoors retailer in the country. Thank you, and we'll now open the call to questions.

[Operator Instructions] Our first question is with Robert Ohmes with Bank of America.

Terrific quarter, guys. My question is really on -- I was hoping you guys could speak a little bit to the second quarter and how we should think about puts and takes. Obviously, the comparisons should be a little bit harder in 2Q versus 1Q in apparel and footwear in a lot of these other categories. Maybe just some thoughts on how we should think about that? And then also, the inventory levels seem to be in really good position. Do you think you benefited from smaller competitors not being able to get inventory? And are you seeing signs of that coming back on? And is that why you guys are thinking about being thoughtfully more promotional? So a long question there, but really maybe some more color on the puts and takes on how we should think about 2Q and the rest of the year.

Yes, Robby. Thank you. We don't give out inter-quarter guidance. But I will say we are up against the biggest quarter of the year last year, up 27%. We are seeing -- what I will say is we're seeing on a 2-year stack basis a comparison -- a continued performance as we did in the first half of the -- or the first quarter. So our business continues to do well. With regard to inventory, we're in what I would call an acceptable level. We're not back to where we are, where we want to be. We're probably still about $100 million short. But overall, we are in a reasonable position. We've got a couple of areas that are still challenged that Steve mentioned in the call. And we got -- we don't have as the depth or the presentation quantities that we would like to have. But overall, it's an acceptable level, and it has allowed us to get the sales results that we've had. I think that the supply chain is still very challenged, and we're all working very hard. And Steve's team, along with Sherry Herman, our Head of Supply Chain, have done a terrific job to get us the inventory that we need. But it's a lot of work. I think that some of the smaller competitors may be having challenges. They also don't have some of the vendors that we have, and that is providing an opportunity. But all in all, we feel comfortable where we are, but not -- we know we have more room to go before we have the inventory where we would like it to be.

Yes. Robby, it's Michael. From a guidance standpoint, I think first off, as the management team, we want to do what we say we're going to do. We want to make sure we can do that. As you called out, we're up against not only a big quarter next quarter, but really 3 pretty large quarters in the back half of the year, 3 quarters that came up roughly to a 20% comp last year. It's still a tough environment to read. There's a lot of uncertainty in the environment. There's more competition for customers' wallet. As you called out, the supply chain is still a challenge. The labor pool is becoming more challenging. The guidance that we provided contemplates those risks along with potential for more promotions. We believe we can achieve it. And if we do our job, we believe we can exceed it.

Yes. The situation right now, there's some big headwinds, as Michael called out, and there are some tailwinds: back-to-school, back to sport, people continuing with their hobbies, the teams playing again and people getting out. But the uncertainty in the environment makes us continue to be cautious. But we've got confidence that we will continue to do well.

Our next question is from Chris Horvers with JPMorgan.

So I had a follow-up to that question. So as a reminder, I think July was pretty weak relative to the rest of the quarter last year given that many school systems went back later in Texas and there was this delayed back-to-school. Is that fair to say that May and June were tougher months -- better months last year than July?

Yes. I would say that's fair. I mean, certainly, we saw a lot of our markets back-to-school either moving out or not happening. For us in a lot of our markets, the back-to-school time period starts in the late July time period. So we certainly did see softer comps in the back half of the quarter versus the front half of the quarter last year.

That said, when you're up 27 per quarter, every month on a more normalized basis was pretty good, but the front half was stronger than the back half of the quarter.

So when we think about going forward, when we talk about things that give us a little optimism going forward, I think that's one of the things Ken mentioned is -- certainly, we think back-to-school is going to be more normalized. We're in better inventory position than we've been in probably in a year. We think and see people returning to sports. We saw baseball get off to a fast start this year. That gives us optimism about the football season as we round the corner. We've got over 5 million new customers. We got all the new past times and hobbies that our existing customers have picked up and are cross-shopping more across our categories. So there's a lot of reasons to be optimistic despite some of the big comps that we're up against.

Understood. And then maybe could you break down the gross margin expansion? Give us some sense on sort of the buckets of it. And then longer term, how are you thinking about the margin potential of the business? I mean, clearly, promotions will eventually normalize. But you're a much better retailer and you have the supply chain initiative coming as well.

Yes. From a gross margin standpoint, the big driver there was merch margins. But literally, all elements of our gross margin were up with the exception of those related to freight in the supply chain. And obviously, the merch margin performance more than offset that.

So from a merch margin, just jumping in, obviously, we had a favorable mix within the quarter. We talked a lot about how last year, we had a negative or a mix where we're getting mix down because outdoor and sports and rec were bigger business, they're bigger contributions in the first half of the year. That reversed this year with apparel and footwear. So that certainly was a tailwind for us from a merged margin perspective. We talked about coming into the quarter with less clearance. We talked about having less promotionality. We do expect that the promotional environment will normalize going forward, and we're going to have to thoughtfully add those things back in. But we have a lot of initiatives that we talked about in terms of better markdown optimization, better ready to replace optimization, better inventory flow and management. And we believe that those should give us some tailwinds to kind of offset some of those headwinds we're going to be facing and still expect to see some margin expansion, certainly not at the level we experienced though in Q1.

One point of clarification there, just to be clear, we saw a more favorable mix shift compared to Q1 of last year, but we still believe there's an opportunity to have margin uplift from this.

Yes. The other thing, and you called it out, Chris, was we are just -- literally just starting the supply chain opportunities that we have. We're doing the road map now, and we'll begin those projects and we expect those to support. And I will also say that as -- the company has developed a culture in making sure that we manage our expenses thoughtfully, and we will work hard. While the first quarter was quite impressive and maybe long term a bit of a stretch, we see continued opportunity for development of our margin over time.

Yes. And Chris, just to tag on that a little bit, we're in this for the long term. And our plan is certainly to hit that double-digit EBIT margins on a long-term basis and sustain that. And the things that we look at, first, are we taking share? If we look at NPD data, which I think is probably the best source, and we can see that we are getting a bigger piece of a bigger pie. Two, are our investments working? Certainly, from a power merch perspective, a credit card, buy online, pickup in store, we've had great growth in our dotcom business over a 2-year basis, the ROIC that we're delivering, we feel good that our investments are performing. Third, are we leveraging? If you work your way down the P&L on the 39% comp, we delivered margin expansion of 89% increase, net income up almost 2,000%. So we're getting the leverage that we want to get. Fourth, are our customers coming back? We continue to see existing customers shop new categories and come back to those categories more and more. So we're happy there. And then lastly, are we positioned to grow? Are we building the platform to grow and resume the brick-and-mortar growth and continue to invest in dotcom? And we feel like all of those things, when we look at them, we're happy with our progress.

Our next question is from Daniel Imbro with Stephens Inc.

Congrats on the quarter. This is Andrew on for Daniel. Ken, I have one for you. I want to ask one on firearms. Obviously, guns and ammo have been really strong for almost a year now. Do you think that was a onetime bump? Is that sustainable? And how is the team handling buying inventory for that category as we get into the back half?

Yes. That has not been a huge driver for us because of the supply situation. I mean it's in line with the performance of the store. But the supply situation has been and probably will continue to be challenged. Historically, as a company, we would be dependent on one element to drive the business. That is not the case now. Our strong performers, as Steve said, were footwear and apparel. And we did have good performance in outdoor, but it did not overwhelm where we were. So I don't want people to think that, that was a driver for what we had. We -- our goal is to be the most responsible person -- retailer in the firearms area, and we will continue to do that. And we will make sure that we are in the business and support the business, but not take it beyond where it should be.

Great. I got a follow-up to you. On the supply chain side, can you talk about how you're handling this inflationary freight backdrop? Like what's the headwind? And yes, how are you able to pass these through.

I will tell you that within the supply chain right now, and you've probably heard this from everybody, there probably is not an element of it that's not under pressure, starting from overseas, to the docks overseas, to the ships, to the truckers here. And we are managing, we are working with our partners, looking at how -- what we can do to ensure that we get delivery, that is first and foremost, and that we get fair pricing while we do that. And so our team is working hard to manage the cost as best as we can within the current environment. And we also are looking at other areas at this point to offset how we can do that. For example, one of the things that we're doing is within our distribution centers, where we can control, we're actually getting more productivity. We put in a pay-for-performance element, and that is showing dividends. And our productivity in our DCs has actually improved and helping offset some of those costs.

Our next question is from Michael Lasser with UBS.

Ken, you're on pace to have a 25% increase in your sales per square foot or sales per store this year compared to where it was in 2019. So coming in and as you and the team have established our transformational road map, clearly, you did not expect to witness the pandemic and all this sharp increase in the demand for sporting goods. So as you look at this increase in productivity that Academy has already achieved, how much of it -- is there any way that you could dimension how much of it has come from the transformation that's already been achieved by Academy? And what is left on the horizon, such that even if demand in the marketplace flows, Academy can still make progress because of what it has in front of it?

Yes. One of the things that I've looked at in prior opportunities that I've had and I've brought to Academy is that in retail, there is really 3 main levers: your inventory, your real estate and your people. And to increase the productivity of all of those is very important. And our strategy that we put forward 3 years ago really targeted efforts against all 3 of those. And so I would say more of what we've done and seen in terms of productivity, for example, in our real estate, our sales per square foot were from initiatives. We got out of some businesses. We reallocated space in the store. We improved the presentation. We changed the way that we stock the stores to make sure that we had a better flow of merchandise to allow for more productivity. We did a lot of things to make the productivity of the stores better. We set a goal of -- a long-term goal of $350 a foot in the 5 years. And I -- if you go back in time and look at both Foot Locker and Pennies, we did the same thing. And then we reset the goal because we found that we could get the productivity up by driving traffic, by making the space more useful and more thoughtful. We're doing the same thing with store labor. We are not planning to reduce the hours that face the customer, but we take out other tasks. We give our team members tools, such as handheld electronic devices so that they can better serve the customer and make themselves more productive. The flow of merchandise helps our team members to be able to satisfy the customer. It also helps us get better use of our inventory. We don't have trapped inventory. So the initiatives that we've got against all 3 of our biggest assets, I think, are really what's making it. And we have -- as Robert Cross said, "We have miles ago before we reach our goal." And we've got a long way to go. We're early in the second shocker. And so I've got a lot of confidence that we can continue to grow all 3, the productivity measures.

Yes. One more thing, Michael. The line we have, certainly in the finance department, is good fortune favors the prepared. And we feel like we were working on all the right things prior to the pandemic. And if you go back and look at our performance before the pandemic, all of the indicators were pointing in the right direction based on the initiatives. So COVID was really the accelerant to that. We did learn a lot through COVID, as Ken said. But We feel like all of the efficiencies, we can hang on to those.

And Mike, that's helpful, and it's a lead into my follow-up question, which is your stock prices is having a pretty muted reaction to these results, suggesting that market is questioning the sustainability of it. You have offered a lot of confidence on this call that you think the margin performance can continue to improve, noting that you think you can have a double-digit operating margin, you can get some gross margin expansion from here. Is it going to move in a linear path? Or should we expect that as we're modeling out the next few quarters, that as you return to promotions, that there may be step back before you're able to get a step forward? And as part of this discussion, how are you thinking about redeploying some of the ample cash you have on your balance sheet and buying back stock?

I'll start, Michael. No tree grows straight to the sky. And there will be some ups and downs, but we feel that -- as you said, we've got good confidence. We've got programs in place to allow us to grow and continue to grow the productivity measures, which will result in the profitability. We don't -- do not think that this is anywhere near done. But we know that -- the things that the team is working on, and we've got a very strong team here, will allow us to continue to see growth. It may not be exactly linear, but they're -- we've planned in, for example, our plan for promotions and -- if there are promotions. And if there are not, we can handle that. If there are, we can handle that. But our goal is to plan for the contingencies and think about the what ifs and be prepared for them. So that when they happen, we don't panic and overreact, we take thoughtful action against what we may face and drive it forward. And I think that's the history that this team has demonstrated and will continue to demonstrate. I'll let Michael talk to the other part of your question.

Not much to add on that. I mean we are, in my opinion, really scratching the surface on what we can achieve. We have large initiatives that we are just now starting to tap into. Targeted marketing is a certain example of that, the supply chain work that Ken discussed. So I certainly feel like there's a lot more that we can work on and do. And a lot of it's foundational. We're still in that phase of operating the business. With respect to the cash, I'll reiterate what we said in the past: our priority is stability, managing through that in uncertain times, making sure we're stable. Second is to fund our growth initiatives. And then lastly, we'll look at ways to return the value back. Obviously, we were opportunistic last quarter. We were able to participate on secondary offering and get the underwriting discount, which if you look at the way the stock has performed, was a good decision. And then we used $100 million to help reduce our interest on our term loans. So we'll continue to look at those opportunities.

And our next question is from John Heinbockel with Guggenheim.

Let me start with the higher AUVs, right, over the last year, 1.5 years. Has that changed the new store model maturation curve, in your opinion? And does it now open up real estate opportunities that might not have existed 2 years or more ago?

Well, the higher AUV is really a function of mix. Again, the more outdoor products that we're selling, that's most of it. And of course, there's been some price increases that we've taken in certain categories. But most of it is mix-related. Steve, I don't know if you want to...

In terms of the higher AUVs?

Yes. Yes.

Yes. It is mix-related. But as Michael said, we did have some cost pressures. That was one of the questions earlier that we passed along. But if you go back when we were doing the road show, we were talking about the mix of our business traditionally has been about 50-50, soft goods-hard goods. If you look at where we ended last year, it was more like 57-43 hard goods. A lot of big-ticket things in there like kayak [indiscernible], things like that, that have driven that up.

And in terms of the real estate strategy, I mean, look, we're not starving for places to grow. I mean we're only in 16 states, so we've got a lot of opportunity. Our challenge is making sure we sequence it the right way and in a responsible way. But we're not an organization that's going to struggle to find good locations.

Within our existing markets and new markets.

And maybe then as a follow-up to that, right. So assuming the -- right, the higher productivity holds for the most part, the only change, right, in profitability would be normalization in promotions. And would your point be that if I think about the supply chain opportunity, which sounds like it could be 50 to 100 basis points maybe, that that would equal or exceed whatever you gave back on normalization and promotion. Is that a fair thought?

Well, I'd say there's a couple of other puts and takes in there. I mean, obviously, we're talking about adding back in promotionality, whatever we would do would be thoughtful and probably wouldn't be going all the way back to where we were a year or 2 years ago. At the same time, there are cost pressures out there. I mean we talked about some supply chain challenges, there's raw material shortages, et cetera. Those are also creating certain margin headwinds. We believe, though, that the initiatives that we have in place in terms of better planning allocation disciplines, better allocation of goods, better markdown management, better sales-driving initiatives that are increased productivity of our stores and our inventory, all those things are going to be offsets to that increased promotionality should give us some margin headwinds. We just want to be careful and not set the expectation we're going to pick up 950 basis points in the next couple of quarters. That's probably not going to happen.

Yes. And again, you still have the offset where we expect the merchandise mix to normalize over time. We're still a little heavy in the hard goods side of the business right now.

And our next question is from Greg Melich with Evercore ISI.

I had 2 questions. First on top line. If you look back 2 years, you're up, I guess, 42%. Is it fair to say that ticket and traffic both helped that strongly? Or was there one that really dominated it?

It's a combination of both. Both average ticket and traffic were up. And the actual number on a tier basis is up 47%.

Yes. All basket metrics are up.

All the metrics are up. I imagine transaction counts are also up double digit versus a few years ago?

Yes. Transaction counts are up.

Yes.

Okay. So -- but it was more average basket was a bigger part of the 47% growth?

We haven't gone into the detail of breaking it up.

Yes. We haven't broken it out like that publicly. But we had -- as Michael said, all of our measures were up and performing strongly. Again, to get that kind of increase, it takes -- you got to hit on all 6, and you got to hit on all 6 hard. So -- and I actually would have said 8 years ago, but nobody has an 8 cylinder anymore. So...

So my second question is, I think we got a lot of gross margin. It sounds like there's a lot here that's foundational still to come, but the promotions is the biggest thing to go away. So I guess I want to go on SG&A a little bit. If you think about the flow-through you got there, if you go back versus 2 years ago, I have SG&A dollars up around 8%. Is that a fair kind of benchmark to think? And is there a scenario where SG&A dollars could be up 10% or 12% versus 2019? Or is 8% about as high as it goes?

No. I think on the SG&A side, there's nothing really there that's -- look, we're benefiting from the leverage on the increased sales. And then we're benefiting, I think, from being a lot smarter with our labor scheduling in the stores. And both of those things, we feel good can stick around.

Yes. We're making investments to continue to make our expenses more productive, if you will, a labor scheduling system that we've put in place that will make our store labor more productive. I talked about the pay for productivity in our distribution centers, the effort that we're putting in place with our road map to improve the efficiency of our supply chain. We are -- the move that we're making in targeted marketing to make our marketing more efficient and effective. And so as we look at our expenses, we do not see the expenses growing as fast as our sales because we're going to make them more productive as we're investing in them.

Yes. And another great example our cost per unit to move things to the DC is down pretty significantly, and that's not happenstance. That's a function of the initiatives that we're working on there. So that stuff should stick around.

And continue to improve because we're not through with it yet.

Our next question is from Lavesh Hemnani with Credit Suisse.

I had a follow-up on the gross margin for the balance of the year. So understanding that there are some supply chain initiatives that are just underway. Can you share some update on the timing of these key initiatives through the year, especially as you lap all of these -- or not lap, in fact, actually, consider all of these incremental headwinds that are basically persisting on the supply chain side?

Yes. We are -- as I said, we are just now finishing up the road map and starting to put in place some of -- some actions against that. We will see some early results, but we will not see a lot of impact from the project this year. We'll start to see it -- more of it next year and the following year.

I would jump in, though, and say that we were further along on a lot of the merchandising initiatives around better planning, better allocation. And we do think that those impacts will definitely be help this year and have been being held over the past 1.5, 2 years.

Got it. One other quick follow-up on working capital. The payables leverage has been pretty steady in that 80% range. So if I look at the balance of the year and into next year, what is like sort of the right number to think about going forward?

I'm sorry, could you repeat your question? We couldn't -- we lost you there for a second.

Sorry, I'll repeat. So my question is on working capital, especially on the payables leverage, has been around that 80 percent-ish range for the last 4 quarters now. I mean going forward into the back half of this year and into next year, what's sort of the right number to look at there?

Yes. We wouldn't expect any, frankly, change to the payables -- anything as substantial change.

Substantial change, yes.

Our next and last question is from John Zolidis with Quo Innovative Capital (sic) [ Quo Vadis Capital ].

I was just going to -- I have 2 questions. The first one is a clarification question. I'm estimating that sales per square foot on a 2-year basis were up 44% in the first quarter. And I think you mentioned 47% for comps. Did you mean to tell us that the second quarter is running at a similar rate to the first quarter 2-year?

So what we -- when I said 47%, that's a 2-year comparison to 2019. So that's comparing '21 sales against 2019. In Ken's comment -- we try not to -- don't give commentary inter-quarter around what's happening. We are anchoring this year candidly off in 2019. When we talked about how we plan this year, we talked about using the shape of 2019 because it's more normalized sales curve and distribution with the size from 2020. So when we go back and look at comparisons against 2019, we've seen strong trends through Q1. And looking back in that same sort of lens, we see those trends continuing.

Okay. And then My second question is longer term in nature. If you think about the change in the consumer and also your financial position relative to 18 months ago, does this unlock any objectives or plans for the business that you wouldn't have considered previously? And what might those things be?

I'll jump in with one. First, from a vendor perspective, you think about the vendor relationships that we have today versus where we were several years ago, the -- you talked about the improved financial strength of the company, that's certainly unlocked a lot of doors for vendors with us. And I would say that our partnership is probably the best that it's ever been. We see this manifested in a couple of different ways. From an availability of product perspective, we're getting better product offerings from our vendors. We're getting new brands that are coming into the space for us. We're seeing the vendors want to invest mutually in building a better in-store presentation along with a better digital footprint on our site. We're getting better allocation of inventories. That certainly helped us build our inventories up this year. And in some cases, we're getting better terms. So I would certainly say that's been a pretty big impact of the performance.

Yes. The other one would be, certainly, with the ROIC, we're getting our investments in the way that our new markets -- newer markets have performed. I think next year, we're committed to the 8 to 10 new stores. But after that, we are certainly rethinking our ability to grow a little faster and accelerate that.

Yes. And our ability to invest in the opportunities to continue to invest in improving our dotcom capabilities, our ability to invest in the supply chain to make it stronger, obviously, it's managed the growth that we've had. But what we think is coming, we will need more capability there. The other thing, I think, that's important is one of the -- one of our power merchandising objectives was to do more, better and best. And we are stepping up in team sports with better balls and bats. In our vendor structure, things like Nike yoga putting in North Face in all stores, North Face camping. I was in a store the other day, and a couple were in there looking at the North Face sleeping bags. And they said, "Yes. We've started camping now, and we bought some of your Magellan bags. But now that we're going to be more active in camping, we thought that North Face might be a better bag for us." So we're seeing significant opportunities from the success that we've had and appreciate the customer. As they've come to us and new customers have come to us, what they want is that assortment that we offer from beginner to enthusiast, and the great value that we offer with those items.

And we have reached the end of our question-and-answer session. And I'll now turn it back to Ken.

Okay. Yes. I'd just like to recap and thank everybody for participating on the call and the interest. I think we had a good set of questions. We are very proud of what we've done, and the team has done a terrific job in the first quarter. But we have much more ahead of us and significant opportunity to grow and develop in all of our aspects in terms of our real estate, in terms of our dotcom, in terms of our operational effectiveness. And it's not always going to go straight up to the sky, but we're in the early phases. And we appreciate all those who are -- shareholders who are participating with us as we move the business ahead and feel confident that we've got the team, we've got the strategy and we have the capabilities to really become the best in the business. And I want to thank all of you for your support.

And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.