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Dick's Sporting Goods (NYSE:DKS)
Q1 2018 Earnings Conference Call
May. 30, 2018 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, everyone, and welcome to the Dick's Sporting Goods' first-quarter conference call. All participants will be in a listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions.

[Operator Instructions]. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Mr. Steve West, vice president of investor relations. Sir, please go ahead.

Steve West -- Vice President of Investor Relations

Good morning, everyone, and thank you for joining us to discuss our first-quarter 2018 results. On today's call will be Ed Stack, our chairman and chief executive officer; Lauren Hobart, our president; and Lee Belitsky, our chief financial officer. A rebroadcast of today's call will be archived on the Investor Relations portion of our website, located at dicks.com for approximately 30 days.As a reminder, we will be making forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factor discussions in our filings with the SEC, including our last Annual Report on Form 10-K and cautionary statements made during this call.

We assume no obligation to update any of these forward-looking statements or information. Please refer to our Investor website at dicks.com to find the reconciliation of non-GAAP financial measures referenced in today's call. Now for a couple of admin items, please note we revised our earnings release schedule to more closely align with our SEC reporting calendar. Also for the second and third quarters, the timing of our quarterly dividend announcement will be consistent with that new calendar and we will announce any dividend in conjunction with our quarterly earnings release. And finally for your future scheduling purposes, we are tentatively planning to publish our second-quarter 2018 earnings release before the market opens on August 29, 2018, with our subsequent earnings call at 10 a.m. Eastern Standard Time. With that, I will now turn the call over to Ed.

Ed Stack -- Chairman and Chief Executive Officer

Thank you, Steve, and good morning, everyone. Before moving to the business review, I'd like to first formally interview -- introduce Steve West as our new head of investor relations. Additionally, I'd like to thank Nate Gilch for his outstanding work in IR over the past years. Nate's moving into a new leadership role within our finance organization supporting field operations.This morning, we're pleased to report earnings per diluted share of $0.59 and are raising our full-year earnings-per-diluted-share guidance to a range of $2.92 to $3.12 from $2.80 to $3.

First-quarter revenue grew 4.6% to approximately $1.9 billion. Adjusted for the calendar shift due to the 53 week last year, our consolidated same-store sales declined 2.5% and our e-commerce business increased 24%. As a percent of total net sales, our online business increased to approximately 11%, compared to approximately 9% in the same period last year.Merchandise margin rate increased across the majority of our business categories. This margin rate expansion is due to stronger innovation and newness from several of our key partners, as well as the higher penetration of our private brands.

Our refined assortment led to a healthier business with fewer promotions. During the quarter, we started to see the benefits of many of our strategies and investments.First, our private brand business is a source of strength that continues to accelerate. This business continues to outpace our Company average delivering double-digit growth again this quarter. Driving differentiation and exclusivity within our assortment is the top priority.We've expanded our Calia collection to new categories and given it premium space in our stores.

In the three short years since its launch, Calia has grown to be our No. 3 private brand in our portfolio and the number two brand in women's athletic apparel behind only Nike.This quarter, we also launched Tommy Armour Golf Clubs. These clubs were designed in partnership with the BMW Designworks and have received national recognition. We have significant momentum in our private brand business and believe it can reach $2 billion over a relatively short period of time. Second, we are seeing the positive impacts of our merchandising strategy we launched last year. Over the course of last year, we enhanced relationships with strategic partners, eliminated non-essential vendors, and removed complexity from our assortment and supply chain. As a result of these efforts, we have a more refined assortment, cleaner inventory, better in-stock positions, and fewer promotions compared to the last few quarters.

Importantly, during this first quarter, our inventory levels declined 3.8% year over year, compared to a 4.6% increase in sales. This reflects better execution and translates to better merchandising margin rates. We continue to work and optimizing our assortments and our vendor base.Our technology investments are continuing to show positive results. We are now more than a year past the launch of our proprietary e-commerce platform and our online customer experiences continue to improve.As we anniversary the launch of the website last year, we are very pleased with our 24% e-com growth of this past quarter.

I am extremely optimistic about the future of Dick's Sporting Goods, while we're pleased with the progress made during the quarter. We remain focused on our goal to build the best omnichannel experience for all athletes. Lauren will outline in more detail our strategy against this goal. Before I turn the call over to her, I'd like to thank our associates for their hardworking commitment to this company over the past year were driven by the shared belief that sports make people better and have the power to unify us.I'd now like to turn the call over to Lauren.

Lauren Hobart -- President

Thanks, Ed, and good morning everyone. Like Ed, I am very excited about the opportunities that we have in front of us to drive the competitive advantage and win with our customers, whom we call athletes. As we strive to build the best omnichannel experience for all athletes, we've built a strategic framework for achieving this goal.The first pillar of our strategy is the relentless improvement of our core execution to make our shopping experience the best in retail. We are working to make it frictionless for athletes to engage with us across all touch points of their journey regardless of when, where, or how they want to visit with us. There are two areas within the shopping path that are key priorities.

First, we are making it easier for athletes to find the best products to meet their needs by increasing our in-stock positions and our debt, presenting our products in powerful and impactful ways and continuing to offer our best price guarantees.Second, we are making it more convenient for athletes to complete transactions. This includes focusing on speed of checkout both in-stores and online. Our efforts to improve core functionality on our new web platform combined with overall better execution resulted in improvements in margin rates, conversion, and average order value in e-commerce during the quarter contributing to the 24% online growth.As part of improving the athlete's overall experience, we continue to invest in our supply chain to improve the speed and reliability of our online delivery. We are also continuously testing ways to improve the online pickup experience. This includes the recent pilot of Lockers near the entrance of select Dick's Sporting Goods stores, which conveniently allow people to place an order online and pick it up at a store within one hour without waiting for assistance.

This is just one example of a new agile approach we are taking to innovation through which we are rapidly experimenting to optimize our omnichannel experience, learning quickly and moving to solutions. This improved shopping experience will also become a core part of our marketing efforts going forward. In fact, today we launched a new TV campaign which emphasizes the benefits that we provide as an omnichannel retailer and highlights the many ways that athletes can shop with us. Marketing will continue to be a major priority as we raise awareness of our powerful omnichannel platform and deepen the emotional connection to our brand.The second pillar of our strategy is to leverage the power of our expertise in Sporting Goods to guide and inform athletes. In addition to providing the most compelling assortment of brands and categories in the industry, the expertise that we share with our athletes differentiates us as the premier omnichannel sporting goods retailer.

One example of this is through our [Inaudible] segments, which provide athletes with our advice on products and training as well as how-to guides. Another great example of this is our recent partnership with Nike to launch the new Epic React running shoe. Our significant access and depth in the product are an in-store and online presentation and our strong joint marketing efforts with Nike help to make us a leader in this launch which proved to be extremely successful. We are also differentiating ourselves via our ScoreCard loyalty program which is a tremendous asset.We have over 20 million active users in the program accounting for more than 70% of our sales. So the program is incredibly robust.

This data from the program is the engine of our digital and direct marketing efforts, enabling us to engage in more meaningful and effective one-to-one personalized communications. We also continue to test new ways to better award our most loyal ScoreCard members, including an expanded test of our ScoreCard Gold program. Our third strategic pillar is improving productivity in our business. We are highly disciplined in how we invest our time, resources, and capital to ensure we focus only on work that contributes to the strategic and financial objectives of the company. We are focused on driving efficiencies and processes and identifying savings from non-value added activities allowing us to reinvest in growing areas of our business.

This is a very exciting time for our company as we focus on driving excellence in our core business, creating differentiation in the marketplace, and delivering continuous productivity improvements. I will now turn the call over to Lee to speak more specifically about our financial results and outlook.

Lee Belitsky -- Chief Financial Officer

Thank you, Lauren, and good morning, everyone. Let's begin with a brief review of our first-quarter results. Consolidated sales increased 4.6% to approximately $1.91 billion. This included a benefit from the calendar shift of approximately $32 million or $0.10 per diluted share. Adjusted for the calendar shift due to the 53rd week last year, consolidated same-store sales declined 2.5%.

Transactions declined by 3.7%, which we believe was impacted by colder spring weather this year versus last, and average ticket increased by 1.2%. We continue to believe reporting the comp to reflect the calendar shift is the most meaningful indicator of our performance. However, given the confusion we've seen with some other retailers who have reported recently, we felt it was important to be as transparent as possible and report the comp both ways. Based on an unshifted calendar, consolidated same-store sales declined 0.9% for the quarter. Looking at our best-performing categories in the quarter, and these were all on a shifted basis, we saw strength in our fitness equipment and team sports businesses, license sales also comped positively benefiting from the Eagles Super Bowl win.

Additionally, we continue to drive double-digit comp sales growth in our private brands, which significantly outpace the company average driven by strong sales growth from Calia, Field & Stream, and Adidas, Team Sports as well as our new brands. Finally, our cold-weather businesses, such as outdoor apparel and boots, increased sharply. These areas of strength, however, were offset by declines in our hunt and electronics businesses. As expected, our firearms policy changes impacted our hunt business, which saw an accelerated decline in an already challenged category. Our electronics business, which is primarily fitness tracking, was down in the high double-digits as we are essentially exiting that business. As we said on the fourth-quarter call, we expect these businesses to remain under significant pressure throughout the remainder of the year and the headwinds are incorporated in our full-year outlook.

However, we are benefiting from a margin-rate perspective, as these categories tend to be lower-margin businesses. Moving on to margin, gross profit for the quarter was $560.4 million, or 29.3% of sales, a 35-basis-point decline versus last year. Within gross margin, our merchandise margins rate increased 18 basis points, driven by lower promotions and a favorable merchandise mix. This increase, however, was more than offset by higher shipping and fulfillment costs associated with the growth in our e-commerce business as well as occupancy expense deleverage. SG&A expenses were $470.3 million for the quarter, or 24.6% of net sales, deleveraging 56 basis points from the same period last year. This deleverage was primarily driven by higher brand building marketing expenses related to the Olympics, higher incentive compensation accruals, and investment in our growth initiatives to support our long-term strategy. The effective tax rate was approximately 28%, which was favorable to our guidance of a 30% tax rate in the first quarter due to a one-time state tax settlement.

This contributed approximately $0.01 to our first-quarter earnings. In total, we delivered first-quarter earnings per diluted share of $0.59 and there were no non-GAAP items during the quarter. Now looking to our balance sheet, we ended the first quarter with approximately $105 million of cash and cash-equivalents and $280 million on our revolving credit facility.Turning to our first-quarter capital allocation, net capital expenditures were $44 million. We also repurchased approximately 3.3 million shares for a $107.9 million at an average price of $32.33. Additionally, during the quarter, we paid approximately $24 million in quarterly dividends. Moving to our fiscal 2018 outlook, we are maintaining our same-store sales guidance at flat to down low single-digits.

Additionally, as Ed mentioned, we are raising our full-year earnings per diluted share outlook to a range of $2.92 to $3.12 from $2.80 to $3, primarily due to lower share account as well as higher margins and the lower tax rate in the first quarter. Before we take your questions, as we said on the fourth-quarter call, due to the calendar shift following the 53-week year last year, we expect their sales and earnings to be positively impacted in quarters one and two, and negatively impacted in quarters three and four for a net neutral impact on the year. We expect the impact on second-quarter sales and earnings to be similar to what we saw in the first quarter. For the third and fourth quarter, we expect the subsequent negative impact to offset the games in the first two quarters.,This concludes our prepared remarks. Thank you for your interest in Dick's Sporting Goods.

And, operator, you may now open the line for questions.

Questions and Answers:

Operator

[Operator Instructions]. Our first question today comes from Michael Lasser from UBS. Please go ahead with your question.

Michael Lasser -- UBS Investment Bank -- Analyst

Good morning. Thanks a lot for taking my question. Has the margin merchandise margin performance in the first quarter made you rethink at all about the flow and shape of the margin over the coming quarters, particularly in the back half of the year? When you're going to anniversary significant margin decline? So should we expect that this type of performance for the trajectory now is sustainable?

Lee Belitsky -- Chief Financial Officer

Michael, hi. It's Lee.

Michael Lasser -- UBS Investment Bank -- Analyst

Hi, Lee.

Lee Belitsky -- Chief Financial Officer

We're very pleased with the merchandise margin. We were able to deliver in the first quarter and we believe that we can sustain improved merchandise margins throughout the year.

Michael Lasser -- UBS Investment Bank -- Analyst

Sustain improved, so you expect your merchandise margin to be up year over year and maybe even grow more substawinterntially given that the comparison will get year over year, is that fair?

Lee Belitsky -- Chief Financial Officer

Well, so we do expect it to be up over last year. The comparisons in the fourth quarter, we are so dependent is most of who will follow. We're so dependent on the weather. So it depends on what happened in the cold weather category and if we need to promote that because the winter is too warm then there might be relatively even if it's a normal winter similar to what we had last year we would expect the margin rates to be up but it is weather dependent.

Michael Lasser -- UBS Investment Bank -- Analyst

And speaking to more of the weather, my follow-up question, how much do you think the weather impacted your same-store sales in the first quarter and how much of that you think you'll get back in the second quarter specifically we should factor into our comp expectations in the second quarter?

Ed Stack -- Chairman and Chief Executive Officer

Well, I think it impacted us a bit. We don't really know how much but I wouldn't factor in a whole lot of a change in that we're going to recoup an awful lot in the second quarter.

Michael Lasser -- UBS Investment Bank -- Analyst

OK. Thank you so much.

Operator

Our next question comes from Robby Ohmes from Bank of America Merrill Lynch. Please go ahead with your question.

Robby Ohmes -- Bank of America Merrill Lynch -- Analyst

Thanks for taking my question and congrats on a great quarter. Actually a couple of quick questions, Ed. The first, just I think you guys didn't call out branded athletics, footwear and apparel was one of the key drivers for the quarter, just curious how that did?

Ed Stack -- Chairman and Chief Executive Officer

We're pleased with our footwear business and our apparel business.

Robby Ohmes -- Bank of America Merrill Lynch -- Analyst

And anything that stood out within that category?

Ed Stack -- Chairman and Chief Executive Officer

Nothing really in particular that surprised us. Our private brands did very well. The Adidas brand continues to do very well. I think we'll see some acceleration in Nike going forward. And we had a meeting with Under Armour yesterday. We are really pleased with the content and the direction we're going to be going with them going forward. So all in all we're pretty pleased with what's going on there.

Robby Ohmes -- Bank of America Merrill Lynch -- Analyst

Thanks. And just one quick follow-up. When we think about your comps going forward on a shifted basis or apples-to-apples, where are we in the hunting and electronics being a pressure? Does that start to roll off and with the other things going on should we see you get back to positive comps maybe sooner rather than later?

Ed Stack -- Chairman and Chief Executive Officer

Robby, right now we maintained the guidance of low single digits to flat. The electronics business really will continue to be difficult through most of the fourth quarter. In the hunt business, we expect based on our firearm policy it's going to continue to be challenged through the balance of the year. So we don't see a big change. We do see this change in margin rates and we're really pleased and that's one of the reasons why we raised our guidance for the year going forward.

Robby Ohmes -- Bank of America Merrill Lynch -- Analyst

That's great. Thanks, Ed. Congrats again.

Operator

Our next question comes from Simeon Gutman from Morgan Stanley. Please go ahead with your question.

Simeon Gutman -- Morgan Stanley -- Analyst

Thanks. Good morning and a nice improvement. My question is the prior guidance had EBIT dollars down I think 20% for the year. First quarter looks like it was down 6% on a decently tough compare and if we have the guidance right for the full-year, the new guidance it looks like it's around mid-teens, that's down mid-teens. So I want to just clarify the earlier question about the trajectory. Does that mean I guess every quarter should be worse than the first quarter from here even though the compares get a little bit easier?

Lee Belitsky -- Chief Financial Officer

Well, I think the guidance referring to was back in November when we said that earnings could be down as much as 20% for the year. And I think that we kind of modified that a little bit in our year-end earnings call. We're pleased with the results coming out of the first quarter, as one year ahead of us still, so we baked in some improvement from the first quarter but we're largely sticking with the back part of the year the guidance that we issued for the full year back in March. At this point, we're not taking additional improvements in the business running off through the rest of the year.

Simeon Gutman -- Morgan Stanley -- Analyst

OK. And then my follow-up. Ed mentioned that it sounds like the electronics and firearms, it probably doesn't anticipate as a headwind to until next year on the comp line but can you tell us how much benefit you're getting on the margin line and just related to the response, Lee, just as far as the big investments and that 20%, there was some contingency as well as real investments that you're making. Does that mean that the biggest part of your investment curve is abating?

Ed Stack -- Chairman and Chief Executive Officer

No, we are continuing to invest. We got important margin pickup in the first quarter. Our expenses were very well-controlled in the first quarter as well that helped the earnings as well. And we expect to continue to invest in the business in a meaningful way throughout the year both from a capital perspective, which should accelerate as we get later in the year and from an expense perspective.

Simeon Gutman -- Morgan Stanley -- Analyst

And then just the margin lift that you're getting from those categories being a little bit less weight on the sales line?

Ed Stack -- Chairman and Chief Executive Officer

Yes. We haven't broken that out separately but it's helping. It is certainly helping our merchandise margin rates.

Lee Belitsky -- Chief Financial Officer

And we think that's something that we will continue throughout the balance of the year.

Ed Stack -- Chairman and Chief Executive Officer

Yes.

Simeon Gutman -- Morgan Stanley -- Analyst

Great. Thanks, Ed. Thanks, Lee.

Operator

Our next question comes from Christopher Horvers from J.P.Morgan. Please go ahead with your question.

[Silence]

Mr. Horvers, your line is open. Is it possible your phone is on mute?

[Silence]

Ed Stack -- Chairman and Chief Executive Officer

Well let's move on with our next question. If Chris shows up, we'll get him back in the queue.

Operator

Our next question comes from Brian Nagel from Oppenheimer. Please go ahead with your question.

Brian Nagel -- Oppenheimer & Company -- Analyst

Hi, good morning. Thanks for taking my question. Nice quarter. So a couple questions, first off with regard to the gross margins, maybe a follow-up to a couple of the prior questions, but I think, Ed, you mentioned less promotional activity. So the question I have there is, was that more specific to Dick's or are we seeing now less promotional activity within the sector and along those lines, any comments on what had been described before as kind of a glut of inventory within the channel?

Ed Stack -- Chairman and Chief Executive Officer

Well, Brian, a couple of things. I think the majority of the inventory has been cleaned up, which we talked a little bit about in the last call, so that's been cleaned up. I think there's been less promotional activity out in the marketplace from some of our competitors as they've got their inventory more in line. Also less from the brands on a direct basis they've gotten their inventories in line, and it's been less promotional from us as our team has done a really very good job of controlling the inventory, as you can see our inventory was down and our sales were up. So we've done that, it helped drive the margins positive and we expect that to continue through the balance of the year.

Brian Nagel -- Oppenheimer & Company -- Analyst

Got it. And then my follow-up question, different topic, so online continues to grow nicely for you, climbing to a higher percent of your sales. As the business has gotten or getting bigger, how should we think about the underlying profitability of that sales channel now versus the legacy business?

Lauren Hobart -- President

It's Lauren here. The profitability of the e-commerce channel has improved significantly since we've taken it in-house and we will continue to improve even further as we are able to leverage fixed expenses with growth. So we're very pleased with the profitability of the channel and expect to grow it significantly.

Brian Nagel -- Oppenheimer & Company -- Analyst

OK. Thank you.

Operator

Our next question comes from Seth Sigman from Credit Suisse. Please go ahead with your question.

Seth Sigman -- Credit Suisse

Great. Thanks for taking the question. My first question is on gross margin. Obviously, the performance was better than expected. You talked about mix, and you talked about less promotions, I am trying to understand some of the other factors that may have contributed. So thinking about the accounting change around the gift card breakage and then also was there any benefit from the week shift on gross margin as in theory to give you an opportunity to leverage some of the costs in there?

Lee Belitsky -- Chief Financial Officer

There was a small benefit from the week shift on gross margin as well. The first week of February is generally a pretty heavy clearance period for us while which we lost from this quarter and we picked up the quarter beginning of May which is a pretty good margin quarter. So there is a little bit of a benefit. And with respect to the change in revenue recognition, really didn't impact the gross margin.

Seth Sigman -- Credit Suisse

Got it. And then to clarify on the guidance as we think about the outlook, I think you previously talked about gross margin down slightly for the year. Are you basically now saying slightly positive?

Ed Stack -- Chairman and Chief Executive Officer

On the merchandise margin, we think it will be slightly positive.

Lee Belitsky -- Chief Financial Officer

Yes, we still think that the gross margin overall, including rent expense and shipping and fulfillment costs, will be down somewhat for the year.

Seth Sigman -- Credit Suisse

OK. And then my follow-up question is around the apparel business. Can you just speak about comp performance in that business through the quarter? And specifically, if you look at the private brand growth, I think you talked about up double-digits, obviously nice to see that progress. And then we're just trying to figure out how incremental is this growth versus what's coming from a share of shelf gains? Thank you.

Ed Stack -- Chairman and Chief Executive Officer

So for competitive reasons, we won't kind of talk specifically what's going on from apparel standpoint but we're pleased with the trajectory of the majority of the brands that we're doing business with. We think that it's going to continue to get better in our private brand. as we said comp double-digits. and we expect it will continue to outpace the company.

Seth Sigman -- Credit Suisse

Thank you.

Operator

Our next question comes from Steve Forbes from Guggenheim Securities. Please go ahead with your question.

Steve Forbes -- Guggenheim Securities, LLC -- Analyst

Good morning. Maybe a follow-up on that last one regarding private brands. How does the continued strength in the private brands themselves impact? How do you think about future space allocation decision across the product categories? Are you making significant changes today? I think you mentioned in the prepared remarks that Calia is getting more premium space. So can you just provide some color and expand on that?

Ed Stack -- Chairman and Chief Executive Officer

Well, Calia did get some additional premium space as we continue to drive these private brands. They will continue to get additional spaces. They outperform some of the other vendors that haven't performed nearly as well. We'll see that in our gulf apparel business, the Walter Hagen brand and Slazenger brand has continued to get additional space. Calia's continued to get additional space, and so we will continue to allocate space as needed as these brands continue to grow.

Steve Forbes -- Guggenheim Securities, LLC -- Analyst

And is there a roll-out plan in place where it is kind of evolving here, given the strength and to be determined on how fast you can roll it out over time here?

Ed Stack -- Chairman and Chief Executive Officer

Well, there's a roll-out plan, which we basically executed for this year and as we get further into the year we'll make plans of what we want to do next year as we continue to drive this business but with the space allocation is pretty much set for this year.

Steve Forbes -- Guggenheim Securities, LLC -- Analyst

And then just a follow-up regarding the premium footwear deck, I think we're now in Year 2 of the initial roll-out. So can you just touch on how those initial stores right looking back 24 months here on maturing relative to expectations, how they comping in footwear right first the chain average and just really how that performing in general?

Ed Stack -- Chairman and Chief Executive Officer

Well, we're not going to get that specific but we're very pleased with the premium footwear decks as can be evidenced by we continue to build them in the majority of the new stores.

Steve Forbes -- Guggenheim Securities, LLC -- Analyst

Thank you.

Operator

Our next question comes from Chris Horvers from J.P.Morgan. Please go ahead with your question.

Chris Horvers -- JP Morgan -- Analyst

Thanks, some technical difficulties there. Trying the cold weather question in a different way. You did have some other tailwinds in the quarter in terms of the Eagles and the Little League bat role would be fair to say that those tailwinds offset the headwinds from the late spring on the outdoor businesses?

Ed Stack -- Chairman and Chief Executive Officer

Yes, pretty much I would say that's fair.

Chris Horvers -- J.P.Morgan -- Analyst

OK. And then can you comment on the overall levels of inventory in the athletic marketplace? I mean clearly seasonal inventory should be pretty clean at least exiting winter as of the market fully cleaned and related to that you mentioned in encouraging conversation with UA about the content pipeline? What's your current expectation on when you might see a differentiated product in Dick's stores? Do you think it could be in time for the holiday or do you still think that's next year?

Ed Stack -- Chairman and Chief Executive Officer

Well, I think it depends on who we're talking about. We're not going to get that granular with brands but there will be some differentiated key product that we'll have going into the back-to-school season and holiday, and some of it is not differentiated from the entire marketplace but differentiated into the majority of the marketplace are kind of differentiated for us in a few other retailers that will have the product.And then some other brands will be a bit more into next year. Our private brands we continue to drive, we've got an outdoor brand that will be launching this year from a private brand standpoint. Calia continues to grow.

We continue to feel good about the Field & Stream product that we're putting out from an apparel standpoint. So all-in-all, we're feeling pretty good about our business.

Chris Horvers -- J.P.Morgan -- Analyst

And then last just some quick numerical questions. Any sense on what the occupancy deleverage was and what the incentive compensation headwinds were for the quarter?

Lee Belitsky -- Chief Financial Officer

We haven't disclosed those specific percentages at this point.

Chris Horvers -- J.P.Morgan -- Analyst

Understood. Thanks very much.

Operator

Our next question comes from Matt McClintock from Barclays. Please go ahead with your question.

Matt McClintock -- Barclays -- Analyst

Hi. Yes, good morning, everyone. Ed, I was wondering if you could talk private label just following up on Steve's question, thinking about what you're doing in the physical store to drive the growth of the private label business like giving Calia more premium space. And then trying to think about the penetration of private label in your store versus online, what I'm trying to figure out is, it seems like you have a better ability to drive the private label business in the physical store by doing things like giving premium space but what are you doing online to drive that business and are the penetration rate similar? Thanks.

Ed Stack -- Chairman and Chief Executive Officer

So the penetration rates are a bit lower online than they are in the store right now and we're looking at ways that we can help grow that from a marketing standpoint what we're doing online. And we do think that as we continue to grow this in-store it will help the online business.

Lauren Hobart -- President

Yes. I would just add that some of our private brands actually have strong penetration online those that have a big social following, Calia is one of them that it's a mixed bag they do penetrate well there as well.

Lee Belitsky -- Chief Financial Officer

And generally, more of the opening price point programs have lower penetration online in the areas where we are building brands have higher penetration online.

Matt McClintock -- Barclays -- Analyst

Perfect. Thank you so much for that color.

Operator

Our next question comes from Mike Baker from Deutsche Bank. Please go ahead with your question.

Mike Baker -- Deutsche Bank

Hi. Your guidance implies that the first quarter will be about 19% to 20% of your full-year earnings, it's really never been higher than like 18.5%, I think is the highest and it averages about 17%, including 1Q 2013 when you have the same calendar shift it was like less than 18%. Any reason why it should be a bigger percent of the year versus what it's been historically again lost of those calendar shifts, it wasn't quite as high either?

Lee Belitsky -- Chief Financial Officer

To be honest, we didn't look at it that way. We've just taken a look at our quarterly results and what we feel is going to be for the balance of the year. And we don't look at it that way. I couldn't even begin to answer it.

Mike Baker -- Deutsche Bank

All right. Let me ask it this way if I could. I guess I'm trying to understand, it seems like you did bump up your guidance, I guess, did you bump it up just by the beat in the first quarter or are you also flowing through some expectation perhaps from better merchandise margins?

Lee Belitsky -- Chief Financial Officer

We have largely unchanged our internal expectations other than share count going forward.

Mike Baker -- Deutsche Bank

OK. Understood. Thank you. That's helpful.

Couple more follow-ups, the $0.10 benefit from the extra week, again going back a lot of time you have this calendar shift, it seems largely similar to the impact in 1Q 2013 when you adjusted the tax rate etc. So I guess the question is, is that $0.10 about in line with your plan for the extra week?

Lee Belitsky -- Chief Financial Officer

Yes.

Mike Baker -- Deutsche Bank

OK. Thank you. One more clarification and maybe you do not want to answer this but in the press release you did specifically call out a delayed start to the outdoor sports because of the weather yet earlier in the Q&A session here, you seem to downplay that and so you're not really expecting much of a pickup. I'm just trying to reconcile those two ideas if you did, in fact, see a delay as written in the press release why wouldn't we expect a recouping of those sales?

Ed Stack -- Chairman and Chief Executive Officer

Team Sports was late getting started, some of the water sports, paddle sports where we don't know the timing of that if they're going to come back to buy that or they're just going to use since it's kind of getting more toward the end of the season, they're not going to upgrade that equipment or make a change. We're not sure about that.

Mike Baker -- Deutsche Bank

So you haven't put any of that in the guidance obviously because your guidance is unchanged. OK, understood. Thank you.

Ed Stack -- Chairman and Chief Executive Officer

Correct.

Operator

Our next question comes from Sam Poser from Susquehanna. Please go ahead with your question.

Sam Poser -- Sterne Agee -- Analyst

Thank you for taking my questions. I've got a couple things. No. 1, I mean your e-commerce, I guess how much of your overall business is being touched by digital right now? I mean sort of would you regard as omnichannel versus the pure e-commerce business that you're reporting in your numbers?

Ed Stack -- Chairman and Chief Executive Officer

I'm not sure I understand the question.

Lauren Hobart -- President

Do you mean that our people researching and using the website for beyond just purchasing how big, is that the question?

Sam Poser -- Sterne Agee -- Analyst

I mean are you able to see like with the mobile apps are coming into the store, they're looking on the mobile app and then how much interaction are your consumers having with the digital part of the omnichannel experience?

Ed Stack -- Chairman and Chief Executive Officer

What I'm going to talk about, specifically what that is but it's very significant. I mean most people's purchase decisions start online and the app is very well-used, they are coming to our site. A very significant part of our business is done because of the app or site.

Sam Poser -- Sterne Agee -- Analyst

Two other things. Are you going to be adding any kind of geo-tracking that you can then talk to your loyalty customers like specifically when they're in a store, near store saying you might like this while they're in the neighborhood kind of thing?

Lauren Hobart -- President

Yes, we do have some capabilities. We think that's an untapped opportunity that we can drive into more significantly as we develop the app further.

Sam Poser -- Sterne Agee -- Analyst

Thank you. And lastly, Lee just to clarify the week-to-week comp compare was based on the same weeks this year versus same weeks last year was down 0.9% is that correct?

Lee Belitsky -- Chief Financial Officer

No.

Sam Poser -- Sterne Agee -- Analyst

Or is it the 13 weeks ending the last day of fiscal Q1 this year was down 2.8%.

Lee Belitsky -- Chief Financial Officer

2.5%.

Sam Poser -- Sterne Agee -- Analyst

2.5% excuse me.

Lee Belitsky -- Chief Financial Officer

Yes. Shifted calendar comparable weeks was down 2.5%, unshifted was down 0.9%.

Sam Poser -- Sterne Agee -- Analyst

So thank you very much and continued success.

Operator

Our next question comes from Peter Benedict from Baird. Please go ahead with your question.

Peter Benedict -- Robert W. Baird & Company -- Analyst

Hey guys, thanks for taking the question. Could you maybe elaborate a little bit more on what you're doing in the area of the supply chain to enhance speed and efficiency? Just curious a little more detail on what's going on there?

Ed Stack -- Chairman and Chief Executive Officer

Sure. Right now we are building out our e-commerce facility in the Northeast, our e-commerce fulfillment facility in Upstate New York. That will be operational next year. I think that will get us closer to the customer from a centralized fulfillment perspective.

Currently, we are fulfilling everything out of Louisville, Kentucky. All of our centralized fulfillment at Louisville in addition to our store fulfillment. So we believe we can hit all of the northeast within a day from our New York facility and we believe that we've got better execution really from our centralized fulfillment center that we do from the stores, so that should improve that. We're also beginning work to look at a West Coast fulfillment center, a centralized fulfillment center that will be working on for next year as well. Once again, those customers, they're serviced on the central perspective out of Louisville, Kentucky, as well.

So we're looking at both of those facilities for launch next year.

Peter Benedict -- Robert W. Baird & Company -- Analyst

That's helpful. The West Coast would launch as well next year?

Ed Stack -- Chairman and Chief Executive Officer

Yes.

Peter Benedict -- Robert W. Baird & Company -- Analyst

OK. And when you launch those types of things, do you get kind of some initial margin headwind just because of capacity and start-up expenses things like that and then they start to leverage maybe a year out? Is that how the cadence works?

Ed Stack -- Chairman and Chief Executive Officer

We haven't modeled it out but that's typically what we see when we built regional fulfillment centers. So that's probably a reasonable expectation for next year but we haven't worked through all the math on those yet.

Peter Benedict -- Robert W. Baird & Company -- Analyst

All right. Now understood. Thank you. The BOPIS locker test, just curious how broad that is and when we could see an expansion of that? Is that something we could see more broadly across your store base in time for the holiday?

Lauren Hobart -- President

So it's a very small test right now, just a few stores, and it's more of an operational test than anything else to make sure that we could do it. Our next part of this innovation cycle will be to actually see how important the locker is versus getting the inventory into the front of the store so that we make a positive economic decision in terms of this investment. So I do not think you'll see a full roll out by holiday but we will continue to make improvements to the BOPIS experience, and we are doing that in many stores.

Peter Benedict -- Robert W. Baird & Company -- Analyst

OK. Thank you. And then just last questions, No. 1, on the other income expense line that tends to show income but I guess this quarter it was an expense. So just curious if there's anything changing there and how we should think about that going forward? Thank you.

Ed Stack -- Chairman and Chief Executive Officer

Yes, that primarily has to do with the valuation of the long-term compensation investments and if the stock market goes down that value will go down has to flow through their income and if the stock market goes up that number will be a positive number.

Peter Benedict -- Robert W. Baird & Company -- Analyst

OK. Thanks so much, guys.

Operator

Our next question comes from Omar Saad from Evercore ISI. Please go ahead with your question.

Omar Saad -- Evercore ISI -- Analyst

Thank you for taking my question. Good morning. I was hoping you guys could maybe give us an update on the price-matching policy, what you're seeing, are a lot of customers taking advantage of that or is it going to be more of a non-event, as you've incorporated that in your customer experience and value proposition?

Lauren Hobart -- President

So the best-price guarantee has actually become a very big core part of our marketing communications if you go into one of our stores. Now you'll see it's all over the front doors. It's all over the store and it provides people with a lot of assurance that they are getting the best prices. They don't have to leave the store to go find a better price.The fact of the matter is it has been more of a marketing vehicle than anything that's been hurting our margin, because we were doing a lot of price-matching before without taking credit for it and without assuring the customers that would be the case that we were creating some stress at the transaction level that has been eliminated, it's a very positive customer experience. It has not been very dilutive to margin.

Omar Saad -- Evercore ISI -- Analyst

Thanks. That's helpful and then just one quick follow-up. Maybe you could just expand a little bit more on the effects of the gun policy change. I know it will be a little bit a headwind for those kind of passionate firearm consumers, but is there been any kind of positive effects of your decision to take that policy?

Ed Stack -- Chairman and Chief Executive Officer

Well there has, there's been a number of people who have started shopping us or so they're going to shop us more because of the policy. So I guess overall there's definitely been some benefit of people who have joined us, so to speak, because of the policy.

Omar Saad -- Evercore ISI -- Analyst

Thanks, Ed. Good luck, guys.

Operator

Our next question comes from Camilo Lyon from Canaccord Genuity. Please go ahead with your question.

Camilo Lyon -- Canaccord Genuity -- Analyst

Thanks. Good morning. Ed, you're clearly doing very well with Calia continue to expand square footage to that brand that you just seems to also be doing well. I was wondering if you could just give us an update on Second Skin. I think you said that you would engage that brand to some reformatting and redesign for this year.

Ed Stack -- Chairman and Chief Executive Officer

Right.

Camilo Lyon -- Canaccord Genuity -- Analyst

And was also wondering if you feel that you need to associate that brand with either an athlete or social influence or like you did with Calia to drive greater awareness?

Ed Stack -- Chairman and Chief Executive Officer

What we're looking at all those, do we want to have an influence or who would that be? How would we go about doing that? But the Second Skin line is being reconceptualized and will be launched probably sometime toward the end of 2019 beginning of 2020 is where we stand on that. We made some mistakes on that that we've talked about and we don't want to make those mistakes again. So we're going to take our time and make sure we do it right the same way as we did with Calia.

Camilo Lyon -- Canaccord Genuity -- Analyst

Got it. And then I think you just -- but just wanted to confirm, your views on allocating square footage to the brands that are performing, typically how frequently does that change? So I think you said that floor set for Calia and some of the other private-label brands are increasing, those are set for this year? Does that come up for discussion again as to how you plan those planograms next year? And at what point do you start to feel like if a better sense of increased or decreased space allocation to your private label brands?

Ed Stack -- Chairman and Chief Executive Officer

Well, we've got clear, where we want clear for this year. We can make these changes at any time that we see that there's an issue. You'll see some changes in the front-end of our store in a number of stores as we try to be more seasonally relevant if you will. We did a test last year putting outerwear, bringing to the front of the store, in the front couple of pads which are worked out very well.

We're going to test that in a few more stores this year. So you will see some changes but you want to see anything significant don't have anything significantly planned other than what we've done so far this year and what we've got planned in the front of the store.

Camilo Lyon -- Canaccord Genuity -- Analyst

OK, great. And then just lastly, you did mention that you said this is so far too you have private-label brand coming in the outerwear space, presumably for this fall, winter of 2018 season. From a merchandising perspective, are you thinking about having a good, better, best solution and this private label being your good option, and if so, does that impact, how should we think about the impact to the existing brands that have been in that category? So will you exit the brands or pulling back on the allocation of that square footage to some of your mainstay brands that have occupied that good level of category pricing?

Ed Stack -- Chairman and Chief Executive Officer

Well, I think how we look at this, some brands will be in the good and better level, some will be in the better and best level. I would put Calia in the better and best level. This outdoor brand we're talking about is really going to be in the good level, kind of more of the opening price point product, and really isn't going to impact any major vendor. We think it's white space that we hadn't covered in the past that we plan to cover with this brand.

Camilo Lyon -- Canaccord Genuity -- Analyst

Right. Good luck. Thanks for the comment here.

Operator

Our next question comes from Scot Ciccarelli from RBC. Please go ahead with your question.

Beth Reid -- RBC Capital Markets -- Analyst

Hey, good morning. It's Beth Reid on for Scot. Just wondering if you can comment on the pace of the business throughout the quarter, presume in April was the most challenge from a weather perspective, but just wondering how it compared to earlier in the quarter of February and March?

Ed Stack -- Chairman and Chief Executive Officer

We don't talk about kind of how it happened with the quarter. We've laid out the what our comps were for the quarter on a both shifted and unshifted basis and what our earnings were, but we won't get any more granular on a quarter-by-quarter basis.

Beth Reid -- RBC Capital Markets -- Analyst

OK. And then just one more. It seems like your store comps are still tracking in the negative low- to mid-single-digit range. In your guidance have you baked in any improvement from here?

Ed Stack -- Chairman and Chief Executive Officer

We've laid the guidance out exactly what we had done for the year.

Beth Reid -- RBC Capital Markets -- Analyst

Thank you.

Operator

Our next question comes from Jim Duffy from Stifel. Please go ahead with your question.

Jim Duffy -- Stifel Financial Corp. -- Analyst

Thanks. Good morning. So as I isolate some of the variables, you guys did see positive trends in ticket, inventories are clean, which I presume should help ticket going forward, transaction was really the headwind in the quarter. As you look out any visibility to stabilization or positive inflection in traffic or transactions?

Ed Stack -- Chairman and Chief Executive Officer

Well, we kind of laid it out kind of the way that it is right now. We've got some headwinds in the firearms business and in the electronics business and as we said, we don't think those are going to mitigate through the balance of this year. So they're going to be with us for the balance of this year. So we hope for some improvement, but we haven't baked anything in.

Jim Duffy -- Stifel Financial Corp. -- Analyst

OK. And then, Ed, I had a question for you on the licensed sports business. Any thoughts you have to share on the impact of the larger role of fanatics in some of the bigger leagues?

Ed Stack -- Chairman and Chief Executive Officer

Now it'll be interesting to see how this plays out. Our license business has continued to be pretty good. We've been pleased with it and we'll see how this whole thing plays out as we work through this through the balance of the year and into next year.

Jim Duffy -- Stifel Financial Corp. -- Analyst

And then last one, Lee, quickly just the shift impact on the e-commerce growth rate?

Lee Belitsky -- Chief Financial Officer

No meaningful impact, it's about the same shift and unshifted.

Jim Duffy -- Stifel Financial Corp. -- Analyst

Very good. Thank you, guys.

Operator

Our next question comes from John Kernan from Cowen. Please go ahead with your question.

John Kernan -- Cowen & Company -- Analyst

Hey, good morning. Thanks for taking my question. Congrats on the progress.

Ed Stack -- Chairman and Chief Executive Officer

Thank you.

John Kernan -- Cowen & Company -- Analyst

Just wanted to go to the SG&A line, I think SG&A dollars were up 7% in the first quarter, just wondering how much a trend as the year goes on? And then my follow-up is, could you talk to the categories that drove the improvement in the e-commerce business? I think it was the best year-over-year growth you've reported in that business since 2016. So just expand a little bit on that on the big change in trend there from the fourth quarter? Thank you.

Ed Stack -- Chairman and Chief Executive Officer

Well, with respect to SG&A, I mean again we're not changing how we look at the rest of the year. So we're effectively maintaining our guidance, the balance of the year-round sales margin and SG&A expense as well. So whatever you guys had baked into your models you can retain that. With respect to the e-commerce business, Lauren you want to take ... ?

Lee Belitsky -- Chief Financial Officer

The e-commerce business, for the most part, you would say within a tolerance range kind of mirrors what happened in the stores, so what you kind of see happening in the stores is what's happening from an online standpoint.

Lauren Hobart -- President

Yes. We've had very strong success with athletic footwear and apparel in the online business all year, and that was truing up in the quarter.

Ed Stack -- Chairman and Chief Executive Officer

I think we've obviously got better business online than we do in the stores at this point. I think it's really driven by better execution that we've had this year versus last year across a number of metrics that we track. So we're really excited about that.

John Kernan -- Cowen & Company -- Analyst

Great. Thank you.

Operator

Our next question comes from Tom Nikic from Wells Fargo. Please go ahead with your question.

Tom Nikic -- Wells Fargo Securities -- Analyst

Hey, good morning, everyone. Thanks for taking my question. Just a couple of quick balance-sheet items, I think you had more borrowed on the revolver than you sort of have at any time I can see at the end of Q1. I was just wondering what drove that. And then just secondly, I think you said earlier that inventories were down, sales were up, and you kind of expect that to continue going forward. Are you sort of explicitly saying you expect inventory levels to be down year over year the remainder of the year? Thanks.

Ed Stack -- Chairman and Chief Executive Officer

We didn't specifically say that. We said the sales. We kind of guided from a sales standpoint and we think we can continue to keep inventory down, but we haven't said that. And then the cash piece is really as part of the buyback. We bought back a bunch of stock.

Lee Belitsky -- Chief Financial Officer

We've been buying back shares and I think there's a couple of timing issues around that calendar shift on when we pay the rent. The rent got paid before the end of the quarter this year. The monthly rent last year hadn't got paid. So there are just some timing things associated with calendar shift.

Tom Nikic -- Wells Fargo Securities -- Analyst

All right. Thanks. Thanks for the clarification. Best of luck the rest of the year.

Operator

And ladies and gentlemen, our last question today comes from Patrick McKeever from MKM Partners. Please go ahead with your question.

Patrick McKeever -- MKM Partners, LLC -- Analyst

Thank you. Good morning, everyone. I know you didn't quantify the negative impact on firearm sales from the changes in selling, in your sales policy that you made earlier this year and some of the changes in the assortment, but I guess since that announcement you've also had Mossberg discontinue, I guess, its relationship with you. And then there was the NSSF thing as well. So my question is, I mean, are those incrementally negative to what you were originally thinking about with firearms for the year? And then have you had any additional fallout from any of your other manufacturers that you do business with in that area and how are your relationships with some of the other firearms manufacturers?

Ed Stack -- Chairman and Chief Executive Officer

Well, we don't have the best relationship with the firearms manufacturers right now. And Mossberg did indicate that they weren't going to sell us on a direct basis. If we want, we can still buy that product from a distributor to have that in the assortment, if products that they sell fit into our assortment. We're not sure we're going to do that but we have the ability to do that. As far as the National Shooting Sports Federation expelling us, we didn't have a whole lot to do with them. They primarily run the shot show. We would go to the shot show. So we don't go to the shot show now. It's really not that big of a deal.

Patrick McKeever -- MKM Partners, LLC -- Analyst

Right. OK. And then just looking at your hunting business excluding firearms and also perhaps adjusting for some of the impact from the weather, how is that trending? How would you expect that to look through the balance of the year?

Ed Stack -- Chairman and Chief Executive Officer

Well, the hunt business is going to continue. It's been a challenging business for the last several years, as you know, based on what some of the manufacturers have reported, they've had a very difficult time over the last couple of years. Our hunt business is going to continue to be challenged because that same consumer who is buying firearms is buying hunting boots and hunting apparel, and all of that is baked into our guidance, and we think that the whole category is going to continue to be challenged through the balance of the year.

Patrick McKeever -- MKM Partners, LLC -- Analyst

OK.

Ed Stack -- Chairman and Chief Executive Officer

And like I said, it's all baked into the guidance.

Patrick McKeever -- MKM Partners, LLC -- Analyst

And then just within the Dick's stores, I mean, how committed are you to firearms and hunt longer term?

Ed Stack -- Chairman and Chief Executive Officer

Well, that depends on a lot of things that have to be determined yet, and that is how the business plays out, how the manufacturers decide that they want to do business together. There's a number of things that are yet to be determined. The one thing that we do know is that it's continued to be challenged, but as we reallocate some marketing dollars, as we reallocate expenses to some other categories, we think it will continue to be margin-accretive to us.

Patrick McKeever -- MKM Partners, LLC -- Analyst

OK. Thanks, Ed.

Operator

And ladies and gentlemen, at this time we'll conclude today's question-and-answer session. I'd like to turn the conference call back over to Mr. Ed Stack for any closing remarks.

Ed Stack -- Chairman and Chief Executive Officer

I would like to thank everyone for joining us on our earnings call and we'll look forward to talking to everyone with our second-quarter results. Thank you.

Operator

[Operator signofff]

Duration: 59 minutes

Call Participants:

Steve West -- Vice President of Investor Relations

Ed Stack -- Chairman and Chief Executive Officer

Lauren Hobart -- President

Lee Belitsky -- Chief Financial Officer

Michael Lasser -- UBS Investment Bank -- Analyst

Robby Ohmes -- Bank of America Merrill Lynch -- Analyst

Simeon Gutman -- Morgan Stanley -- Analyst

Brian Nagel -- Oppenheimer & Company -- Analyst

Seth Sigman -- Credit Suisse -- Analyst

Steve Forbes -- Guggenheim Securities, LLC -- Analyst

Chris Horvers -- J.P.Morgan -- Analyst

Matt McClintock -- Barclays -- Analyst

Mike Baker -- Deutsche Bank -- Analyst

Sam Poser -- Sterne Agee -- Analyst

Peter Benedict -- Robert W. Baird & Co. -- Analyst

Omar Saad -- Evercore ISI -- Analyst

Camilo Lyon -- Canaccord Genuity -- Analyst

Beth Reid -- RBC Capital Markets -- Analyst

Jim Duffy -- Stifel Financial Corp. -- Analyst

John Kernan -- Cowen & Company -- Analyst

Tom Nikic -- Wells Fargo Securities -- Analyst

Patrick McKeever -- MKM Partners -- Analyst

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