Good afternoon, and welcome to the Ollie's Bargain Outlet Conference Call to discuss financial results for the fourth quarter and full year fiscal 2019. [Operator Instructions] Please be advised that the reproduction of this call in whole or in part is not permitted without written authorization from Ollie's. And as a reminder, this call is being recorded. On the call today from management are John Swygert, President and Chief Executive Officer; and Jay Stasz, Senior Vice President and Chief Financial Officer. I will turn the call over to Jean Fontana, Investor Relations, to get started. Please go ahead, ma'am.

Thank you, and good afternoon, everyone. A press release covering the company's fourth quarter and full year 2019 financial results was issued this afternoon, and a copy of that press release can be found in the Investor Relations section of the company's website. I want to remind everyone that management's remarks on this call may contain forward-looking statements, including, but not limited to, predictions, expectations or estimates and that actual results could differ materially from those mentioned on today's call. Any such items, including with respect to future performance, should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these forward-looking statements, which speak only as of today, and we undertake no obligation to update or revise them for any new information or future events. Factors that might affect future results may not be in our control and are discussed in our SEC filings. We encourage you to review these filings, including our annual report on Form 10-K and quarterly reports on Form 10-Q as well as our earnings release issued earlier today for more detailed description of these factors. We will be referring to certain non-GAAP financial measures on today's call such as adjusted operating income, adjusted EBITDA, adjusted net income and adjusted net income per diluted share, that we believe may be important to investors to assess our operating performance. Reconciliations to the most closely comparable GAAP financial measures to these non-GAAP financial measures are included in our earnings release. With that, I will turn the call over to John.

Thanks, Jean, and hello, everyone. Thanks for joining the call today. Before I begin, I would like to take a few -- make a few comments on the coronavirus situation. First, those have been impacted are in our thoughts and prayers. Our #1 priority is to ensure the safety of our associates and customers. Over 20% of our business falls into the essentials category, and our entire organization is focused on ensuring that we get these products and continue to offer great deals. We have seen consumers buying behavior shift towards essential products, and we will continue to leverage our business model to ensure our shelves are properly stocked. At this time, our stores are opened, and we are working hard to serve our customers. Beginning tomorrow, we will be operating with reduced hours, closing 1 hour earlier at 8:00 p.m., and our first hour of operation will be reserved for senior citizens and customers with underlying health concerns. That said, in recent days, we have seen increased pressure on our sales with the considerable uncertainty in the marketplace. Looking back on fourth quarter performance. This proved to be a more challenging sales period than we'd anticipated. We were pleased to successfully manage our gross margin and control our expenses during a difficult sales environment. For the fourth quarter, total sales increased 7.2% as a result of our new stores, with comps decreasing 4.9% as we lapped a very strong 5.4% increase in the prior year and a 9.8% 2-year stack. Following a very strong toy season last year, we leaned into this category again at the expense of other departments, including housewares and books. Had we been more balanced in our merchandise assortment, and had a longer holiday selling season, we believe it would have delivered a better comp.…

Thanks, John, and good afternoon, everyone. In the fourth quarter, net sales increased 7.2% to $422.4 million due to our new stores. Comparable store sales decreased 4.9% from a very strong 5.4% increase in the prior year. Comp store sales consisted of an increase in average basket, offset by a decrease in transactions. As John mentioned, we believe there was an adverse effect on the sales performance of other merchandise categories as a result of our outsized commitment to toys, which did not perform as expected. We had notable comp sales decreases in housewares, books and toys. Best-performing categories in the quarter included food, floor coverings and hardware. We ended the quarter with 345 stores in 25 states, a 13.9% year-over-year increase in store count, with a total of 40 new stores for the year. These stores are the engine of our growth, and we are very pleased with their productivity and ROI. Gross profit increased 5.6% to $165.5 million, and gross margin decreased 60 basis points to 39.2%, in line with our expectations for the quarter. The decrease in gross margin is due to higher supply chain costs as a percentage of net sales, partially offset by increased merchandise margin, driven by improved markup. SG&A expenses, excluding $500,000 of income related to a gain from an insurance settlement, increased to $95.4 million due to additional selling expenses from our new stores. Tight expense control, coupled with lower incentive and stock compensation expense, resulted in an SG&A rate flat to the prior year at 22.6% despite the drop in comp sales. Preopening expenses decreased to $2.2 million due to the comparative timing and number of new store openings in the quarter. As a percentage of net sales, preopening expenses decreased 20 basis points to 0.5%. Adjusted operating income, which excludes…

[Operator Instructions] Our first question comes from Matthew Boss with JPMorgan.

John, maybe can you give us some color on comps you saw in February and early March, maybe before some of the more recent volatility? And even more specifically, just any trends you've seen outside of the geographies, which I know have faced higher cannibalization over the past year, I think would be helpful if you could segment that out.

Sure, Matt. With regards to the first 6 weeks of fiscal 2020, what we have seen to start the year, the year started out a little bit slow. Weather wasn't necessarily conducive to what we were trying to sell at that time. Tax returns were a little bit late, not too bad. But what we did see was the first 2 weeks of fiscal March, we did see a nice acceleration into the business, and we're very pleased with the momentum we started to pick up. And then just this past Saturday, things really started to slow down quite a bit with the increased heightened awareness of the coronavirus and the impacts to the overall workforce and people staying from home and all the fears we have today. So definitely, we have some nice momentum going, and we've seen a pretty good tail off post Saturday of this past week.

Great. And then maybe just a follow-up on the margin front. Any change to the 40% gross margin target? Or the 1% to 1.5% SG&A leverage point multiyear? And then just any nuances to consider as we think about this year?

I think if you back out the impact of the coronavirus, we would be on a more normalized margin for the full year and back to the normal operations of the business. As we had said previously, we still expected a little bit of headwinds in the first half of 2020 to annualize Toys "R" Us store openings and cannibalization, but we fully expect -- and expect it to be back at the 1% to 2% comp sales growth on the back half of this year and then the SG&A leverage profile has not changed either.

Yes. And Matt, this is Jay. Just to add a little additional color. To your point, again, we're not giving guidance and this -- anything we're talking about would exclude the impact from the virus. But from the margin standpoint, as you know, our long-term target on gross margin is the 40% this year. We've got that third DC coming online. So typically, right, we would expect that to be a 30 basis point headwind or so. So we would be closer to 39.7% on a normal full year annualized basis.

And our next question comes from Peter Keith with Ollie's.

With Piper Sandler, of course. Was curious on the potential for, call it, outsized closeout activity to emerge from this dramatic dislocation of consumer spending. I don't know if you could comment if there's been any phone calls that have already started in the last week, but maybe what I'm getting at is, what would be the delay effect? Would do you think like the calls will start picking up? And how long will it take for you guys to get potential pickup of close that inventory in the stores?

Yes, Peter, that's a hard question to answer in terms of exact timing, but I know our merchants definitely are expecting to see a nice pickup in the overall canceled orders from other retailers to their manufacturers. With the uncertainty of the coronavirus and how long it's going to last, I couldn't answer that question. But typically, a closeout does take a little bit of time to come about. So I would expect the delay, depending on what the product might be, could be anywhere from 3 months to 9 months that we would see a benefit there. But right now, I -- we couldn't give you a lot of color on that. We do expect, though, that we will see some benefits in the marketplace as it relates to canceled orders from other factors -- from other retailers of their factories.

Okay. That's helpful, John. And maybe just looking way back, investors are kind of looking at how businesses performed during the last recession. If you guys would have it, do you know the comp performance of Ollie's for 2008 and 2009?

Yes, Peter, this is Jay. And like we've said before, we're not recession proof, but we are certainly -- we feel like recession resistant. In 2008, we had about a flat comp. We did see people kind of trading down to maybe try Ollie's. And then what we realized in 2009 is that those people stuck around, and we had a strong comp. Our comp was about 7.9% positive in 2009.

And I think, Peter, what that goes to is the point that it takes times for closeouts to sometimes materialize. And when things got tough in 2008, we started to see that flow pick up in the tail end of '08, and we saw the big benefit really in 2009 to our overall sales impact. And then the big thing was that we always talked about as we held on to those customers in the out years, and that really was a nice thing to see.

Our next question comes from Brad Thomas with KeyBanc Capital Markets.

My question is around the quality of your inventory today. Clearly, there's a focus by the consumer to go out and buy those essentials. And I noticed that you had changed some of your marketing in your most recent e-mail, trying to highlight some of the essentials that you do have. At the start of the year, there had been some concerns that the U.S. wasn't importing enough products from China. So I guess, could you talk about what the inventory looks like today and your ability to capitalize on how consumers are looking to shop right now?

Sure, Brad. The -- Our inventory position, I think, we're in great shape. I think the merchants have done a great job getting this in a great position for the spring selling season and coming out of the holiday pretty clean. With regards to what we're chasing now, obviously, the -- what I'll call the essentials, whether it be food, clean supplies, personal hygiene, all the consumables that consumers are currently demanding, we're in good shape with those categories. Those categories are moving very, very rapidly. Merchant, right now, is chasing the business in order to get more goods in for the consumer because that's what they're buying today. So we're currently evaluating our Open-To-Buy in our inventory position and potentially making some additional further adjustments to -- towards the essentials as we look at the next 4 to 8 weeks. But the merchant is chasing the business right now, and we're doing a great job getting the inventory in for the customer.

Okay. That's helpful. And if I could ask a follow-up around potentially closing stores. We're seeing a lot of other retailers closed stores for 2 weeks or longer. Can you just talk about your assessment of your ability to keep stores open at this time?

Yes. Right now, Brad, we are fully open. We believe we have a very strong reason to be open. We are -- we have the great assortment of product at great values to customers who need to save money, and we believe it's our responsibility to do our best to try to service those customers. We do plan on keeping our stores open and keeping our supply chain working. There -- we don't foresee the closure of any stores at this point in time. But if things do change, things get worse, something happens in a certain geographical area where we can't get employees to work the store or whatever may occur, we would consider closures at that time. But right now, we believe we are serving a great need for our customers, and they're responding to what we have in the stores, and we're seeing a huge pickup in those categories.

And our next question comes from Scot Ciccarelli with RBC Capital Markets.

Scot Ciccarelli. So I guess my first question is you guys are seeing such demand in essentials like the food and cleaning products, which are, obviously, very popular for a lot of retailers. But I guess, that would technically translate to not a lot of closeout inventory for those types of goods. So I guess the question is, where is that kind of product coming from in today's environment?

Typically, Scot, the closeout market is trailing the current environment. So what you're seeing today has nothing to do with the close that's -- we have in our pipeline or that we already have in our stores. Those items that we're typically getting are package changes or short-dated product that the retailer is no longer carrying in their stores. So today, there's plenty of closeout product that's available. Your question probably leads us to more down, 6 to 9 months down the road. Those essentials, where there'll be less closeouts available as we move through more product today in the, I'll call it, the first quality or current environment line. That may be a bigger question to have, where we don't have as many essentials 6 to 9 months down the road. But today, there's not a shortfall, yes.

That's really helpful. And I guess, just a clarification on your prior comments. That I guess Jay made regarding your historical algorithm. So before March 10, what kind of guidance were you guys planning on providing to The Street? If you guys, can you kind of help us understand kind of what the original vision was?

Yes, Scot, this is Jay. And I'll talk high level to some points. I'm not going to go through all of it. But as we had mentioned before, we kind of had the cannibalization and the reverse waterfall impact that was occurring in the back half of last year. We expected that to continue through kind of the first half of this year. So we expected a little bit of softness in the first half of this year, call it, a negative 1 to a 1 comp maybe. And then as we anniversary and got back to more normal footing again in a normal environment for back half and beyond, we would have expected to get back to the normal long-term algorithm from that point forward. So maybe that back half comp was a 1% to a 2%. If you blend that all together, we probably would have had an annual outlook with a 0% to 2% comp range.

Our next question comes from Jason Haas of Bank of America.

So can you walk us through how the holiday played out? I think, on the prior call, you said that you're pleased with quarter-to-date trends, but presumably, things started to fall off a bit. And then maybe, say like, if that causes you to rethink any of your strategy at all in terms of maybe doing more online or maybe using promotions a little bit more to drive the comp and situations like that that would be really helpful?

Sure, Jason. This is John. With regards to the holiday, as you know, there was a very short condensed selling season, I think, 6 less days this year than last year, and there was a big change in the timing of Thanksgiving from this year to last year. So the holiday was a little bit difficult to read until after we cleared Ollie's Army Night, which was until the middle of December. So we felt pretty good after Black Friday. When you look at Black Friday, the Black Friday, and we felt that the trends were pretty good there, but we didn't see the business accelerate as we expected on the weekend after Black Friday. We just didn't see a lot of business get traction from that perspective. As we had said in the script, we felt that we probably leaned a little bit too heavily in the toys and took away other categories and the merchandise assortment for the customer and that didn't help the overall business with a shorter selling period. So we did see a better sales period in post-holiday in January than what we saw leading up to the holiday period. So we got a little bit of benefit there. With regards to our marketing strategy and changes, I don't think anything was wrong with our marketing campaigns and what we do. We do TV and radio and what we call digital during the fourth quarter campaigns. We plan on doing very similar advertising as we had done this year in the fourth quarter of 2020. So we are looking at other means to attract new customers, which we'll give more color on here in the near future, but getting a little more into the digital world, but we're not there yet to even have that discussion with anybody, but we're pretty comfortable that our marketing is working. We're definitely still having an online play. We have no interest of being on the Internet. So that's not a strategy that, we believe, messes with a close-out retailer. So we're not going to be changing or looking into that as well. But overall, we just felt that the toy business didn't come the way we'd hoped, and we probably had a little bit lean -- too much lean in the assortment there. So we'll adjust in 2020 to get back more to normalized.

Got it. That's really helpful. And then I also wanted to ask, just trying to think about like a worst-case scenario, if you did have to close stores, how are you thinking about your cost structure and what costs could be cut? And I know you don't have debt, but maybe you could just speak to kind of how much liquidity is available from your revolver? And if there's any like covenants there or just anything that we should be thinking about there?

Yes, Jason, this is Jay. I'll start, and then John may want to chime in. But again, our goal is to keep these stores open and continue to service the customer. We have seen a softening in trends of late, and we're certainly -- we're doing some modeling, some worst case scenarios. And I think when we look at our P&L, obviously, the cost of goods sold section is largely variable. When we get down to the SG&A section, because we run so lean to start, I would say about 70% of those costs are fixed. So maybe not as much variability as you might think. But again, that's kind of on the basis of operating stores. I think if we ended up having to or chose to close our stores, we would be able to decrease costs there, certainly on the payroll, certainly on the marketing so that that 70% could go lower. We feel like, if we close stores given the fact that we've got about over $100 million of cash today, we had $90 million at year-end, but now we've got north of $100 million, we've got $100 million of availability on our line of credit is virtually covenant light, covenant free, depending how high we borrow into that line. And then beyond that, if we needed to, there's another $150 million of loan that we could tap into. But we haven't had to think about that. But even just taking the cash on hand and the line of credit of $100 million, we think, with our stores closed and, obviously, managing our capital and our expenses, we have liquidity, I would say, 8 to 12 months without a whole lot of effort on it.

And our next question comes from Judah Frommer with Crédit Suisse.

I just wanted to circle back on the update to the white space opportunity, kind of what went into that? And does it change your thinking on your mix of closeout inventory versus private label? Any updates on kind of the size of the closeout market and your potential share there?

Yes, Judah, this is John. With regards to the overall changes to our overall footprint opportunity going from 950 to 1,050, not a lot of stores, but 100 stores is 100 stores. So we're excited about it. I think what went into it was the additional expansion we've had and the increase to our demographic profile has opened up the space a little bit to have more store opportunities. With regards to sites in the United States, we do think there's probably a little bit bigger footprint than the 1,050, but that's far enough -- that's a big enough number for us to continue to focus on getting to that, and then we'll see where we go after we get to there. It has not changed our overall thought process to close outs. Our thought process for closeouts has remained the same. We want to be ideally 70% closeouts, 30% everyday value in imports. We would think, as we said previously, at 500 to 600 stores, we might have a slight decrease in our overall closeout mix. But I think the consumer probably would not notice that we do it each and every day, and we know how to mix in a closeout versus a noncloseout. We have to import product, that's important to us. So we plan on doing the same exact execution from a merchant side and in overall store opening cadence and the number of stores we're going to open, that would not change our annual opening cadence as well. We would still open in the mid-teens. And once we hit 50 to 55 stores a year, it may be just a pure number that we open.

Okay, got it. And just a follow-up on that. Have you seen any change in the competitive environment for closing? I mean you see headlines or retailers talk from time to time about potentially leaning into that channel. But are there any big competitors on your radar? Has availability changed at all?

Not seeing a material change at all. There is an abundance of closeouts for our merchants to capitalize on. So competition wise, no one's really stepping in that's on a large front that's caused us any type of problem.

Our next question comes from Paul Lejuez with Citi Research.

Paul Lejuez. Just wanted to touch on that larger store count target as well. It follows a year that you did have some supply chain and cannibalization issues. So just wanted to see how you get comfortable with the supply chain necessary to support a store fleet that size? Maybe if you could talk about distribution center needs over time? What the plan is there? And I am curious, present situation aside, I am curious about how you do think about the cannibalization as you grow stores and you increase your penetration in certain markets, how do you plan for cannibalization?

Sure, Paul. With regards to the overall supply chain, last year's issues that we came across, I would say, are -- were mainly self-inflicted. Where we got a little bit heavy on the Open-To-Buy, we didn't appreciate the significance of the new store openings that were required in Q1 with the heavy front load of the Toys "R" Us sites. So that doesn't give us any hesitation to get to 1,050 stores on a go-forward basis. As we had said, we opened up our third DC in the Fort Worth area here in February, which is another channel that just opens us up -- wide up from a servicing perspective. And the ability to service the stores is there, and that's not a problem for us. We do see, nationally, that we'll probably have anywhere from 5 to 6 DCs when it's all said all done to service our stores. But the supply chain and servicing the stores, as we grow to 1,050, will not be an issue from our perspective. With regards to the cannibalization, I'll take part of it and let Jay finish it. But we do believe that the cannibalization impact of our growth, and as we backfill, and as we continue to grow in the white space, will be very much more normalized to how it had been prior to opening up all the TRU sites from last year. And we believe we'll navigate right through that, and that will not present a problem for us to be able to deliver the 1% to 2% comp on a long-term algorithm basis. Jay, do you have anything to add to it?

No.

Okay.

Our next question comes from Simeon Gutman with Morgan Stanley.

You mentioned the business is more recently under some pressure. Can you share what that run rate is? I know it may not be very telling. And then related to it, what is your base case? I realize you can't really talk numbers since there's no guidance, but that do you expect it to get worse? For how many weeks? And at what point are you expecting in your base case for trends to normalize?

Simeon, this is Jay, and I'll start with that. And like we said, I mean just late last week, and the first part of this week, we have seen trends change, and it has been a very volatile environment. We've seen negative 10 comp days. We've seen negative 20. So I would say recent trend is negative 10% to 20% comp. And kind of getting -- the good news for us is that, because our stores are so profitable and because we run so lean, if we start to kind of do Doomsday scenarios, we can handle a pretty sizable decrease in our comp and still generate cash and still be in a good position from a liquidity standpoint. As far as how long this is going to last or really what the bottom looks like, I don't think anybody can predict that. That's virtually impossible. I think, like John has said, we carry essentials, we meet the definitions that we've seen out -- put out by the states in regard to food, in regard to cleaning supplies, in regard to over-the-counter medicines. So we're comfortable from that standpoint, we can continue to operate. And as John said, if -- we obviously want to take care of our employees and the customers, and if they're willing to come in and we can do that and everybody is healthy, we're going to continue forward.

Yes. And I think, Simeon, I think what the professionals are saying is probably 6 to 8 weeks to clear this. So that would be my suspicion, and what we'll see things getting more back to normal. I think every day, we'll get more and more back to normal after we hit the peak, whatever that may be. But I think we're poised to take advantage of it. And we'll be ready to go when the customer comes back and life gets back to normalcy.

Yes, that's all reasonable. And then I think someone asked about expenses and toggling them in a different environment. Did you share, or was it asked about the mix of variable versus fixed? And if you can share that with us?

Yes. We did say that on the call earlier. I mean the cost of goods sold is largely variable. We've got a small portion of our DCs in there for the leases that would be fixed, but a very small piece of that, call it, 3% to 4%. And then on the SG&A, our fixed piece is a little higher than most people would think just because we run lean already. So I would call it 70% initially as we operate stores. But if we had to peel the onion, if we stopped operating stores, certainly, I think there's cuts that we could do to drive that percentage down maybe to the 50%, 60% range.

Our next question comes from Edward Kelly with Wells Fargo.

Just wanted to come back on to the store footprint and the decision to raise the target. Could you give a little more color on the challenges? And how -- I guess, really kind of how things change as the business sort of scales over time? I know you talked about the closeout mix not changing as much on a per-store basis, but does the complexity of merchandising change? Can you source closeout product consists -- so that the stores can be merchandised consistently across the entire store base? Or would things look differently store to store?

I think, Ed, we've covered this a few times. I would tell you, I think that we feel pretty comfortable that the amount of closeout merchandise that's out there in the marketplace and the overall size of the market, which I think is north of $60 billion. With our company size, even at full maturity, would be, call it, a $4.5 billion chain. I don't foresee a problem finding the closeouts and keeping a consistent assortment. What we've learned as we've grown our store base, the major manufacturers have their own distribution centers throughout the United States. So as we grow, we line up more into their distribution centers, and we're able to get more and more of their product into our stores to have a consistent assortment. So we've learned that as we've gotten bigger, it's actually become a little easier to have consistency throughout the stores. We do feel a 500 to 600 stores, there might be a little break there to where we have to augment a little bit, but that's more on a category basis. We do think there's a lot of continuity even as a store base gets larger, even closer to 1,000. We just don't -- we don't see -- well we're focused right now in the 500 to 600 continue to push through that. But I don't see a big change in the overall assortment and consistency in the stores as we continue to expand.

Okay. And then just a follow-up. As we think about infrastructure, systems, technology, sort of support, can you just talk about the investment over time necessary to support the business as it grows? Does anything really need to change? And then you've been leveraging SG&A with it, I don't know, flat to 1 comp. Can that continue as you continue to grow? Or does that edge up over time? Just sort of thoughts there? And how we should be thinking about it?

So yes, I'll start. I think from a comp standpoint, I mean our expectation is that as we continue to grow, that we would be able to leverage at that same 1% to 2% comp. There'll be some investments along the way for leadership or people, but nothing's material. I think from a systems standpoint, our typical capital spend, when we're not putting in a DC, is, call it, 1.8% to 2% of revenues. About 65% of that is related to the new stores that we're building. And there's not a whole lot that goes into our IT infrastructure. Really, we're pretty well set from the infrastructure standpoint, both from a DC standpoint and a store POS system standpoint. We run JDA, which is world-class, for inventory management, and we utilize that across our supply chain as well as back of house for our ERP as well as for POS. And then inside the DCs, people don't realize that we're pretty state-of-the-art with the machinery and the conveyors that we've got in those as well.

And our largest investment that we'll probably be always focused on the distribution center and supply chain because that -- as we continue to grow and add those strategic assets, that's going to be a big amount of capital as we do those.

Our next question comes from Anthony Chukumba with Loop Capital Markets.

Sorry, I had myself on mute. Just wanted to see if we can get just a little bit more color in terms of the, I guess, the merchandising issue with a decision to line -- to lean so much into toys at the expense of housewares and books. And I just want to get some more color in terms of how you came to that decision? And what you might do differently or what went wrong relative to what your expectations were when you made that decision?

Sure, Anthony. As most of us know, 2018 was a record year for toy sales for, not only us, probably for every other retailer who carry toys with the bankruptcy of Toys "R" Us. So we had a great comp. We came out of a 5.4% comp for that season. And we really felt that we could lap those sales and Mark and the merchants invested very heavily into the toy category in 2018. And when all the dust settled, and you look back on it, and you're able to evaluate it. We probably leaned in a little bit too heavily for what the market was going to buy from us, and we didn't have as many customers as we did back in 2018 buying the toys. So that took away footprint in the store, which, obviously, are other departments. So on a go-forward basis, we're going to, of course, correct that action, and we're going to back toys, back down to more of a normalized number, that we're used to seeing and continue to invest in categories for the holiday season that will move the needle as we round the corner here in 2020. So that's a lesson learned. Not a -- nothing was real, wasn't terrible, but we just missed it by a little bit. So we'll correct it, and we won't expect that toys will be stronger in 2020 than it was in 2018. So we feel pretty good where we're standing right now.

And we have a follow-up question from Jason Haas with Bank of America.

I was curious for 4Q, if you could. In the past, you've been pretty helpful about breaking out some of the headwinds to comps in terms of cannibalization and reverse waterfall. So I was curious if you're able to give us any indication of the kind of the magnitude of the 6 selling days versus lapping into toys versus the cannibalization of reverse waterfall would be helpful to understand.

Yes, Jason, this is Jay. And really, the peaceful split out for you a little bit is the cannibalization and the reverse waterfall. We had talked previously of that being approximately 150 to 200 basis points. We did see it lessen a little bit in the fourth quarter, not a ton, but it's probably in the range of 100 to 150 basis points, just because those -- a lot of those stores were a little mature, and we were getting past some of the stores coming into the comp base. So for Q4, that's what we experienced. And as we -- the first half, until we get through all the anniversaries, especially on the Toys "R" Us sites in the first half of this year, we would expect that same level, 100 to 150. And really our goal, and I think John maybe mentioned this on a earlier call is that, once we get to the back half of next year, I mean it's something we've got to deal with. We understand that from a cannibalization standpoint, of course. And from a reverse waterfall standpoint, if we open strong new stores, that's a problem we're willing to live with when they come in the comp base. But it's part of a growing company, and our goal is really not to be talking a whole lot about it on a go-forward basis once we get past this first half.

And I'm showing no further questions in the queue at this time. I'd like to turn the call back to John for any closing remarks.

Thank you, operator. Thanks, everyone, for your participation and continued support. We look forward to sharing our first quarter results with you on our call in early June.

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude your program, and you may now disconnect.