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Dick's Sporting Goods Inc (DKS -0.07%)
Q4 2019 Earnings Call
Mar 10, 2020, 10:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning and welcome to the DICK's Sporting Goods Fourth Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note this event is being recorded.
I would now like to turn the conference over to Nate Gilch, Director of Investor Relations. Please go ahead.
Nate Gilch -- Director of Investor Relations
Good morning, everyone, and thank you for joining us to discuss our fourth quarter 2019 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 playback of today's call will be archived on our Investor Relations website located at investors.dicks.com for approximately 12 months. As a reminder, we'll be making forward-looking statements, including 2020 outlook for sales and earnings, 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.
Today we will be discussing certain fourth quarter and full year 2019 financial measures on a non-GAAP basis. We will also be comparing these non-GAAP financial measures to the comparable GAAP financial measures from the prior period, because there were no non-GAAP items excluded during the prior period. We believe this comparison is helpful to evaluate the company's fourth quarter and full year performance relative to last year. Please refer to our Investor Relations website to find the reconciliation of any non-GAAP financial measures referenced in today's call.
And finally, for your future scheduling purposes, we are tentatively planning to publish our first quarter 2020 earnings release before the market opens on May 27, 2020, with our subsequent earnings call at 10:00 AM Eastern Time.
With that, I will now turn the call over to Ed.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Thanks, Nate. Good morning, everyone. As announced earlier this morning, we had a strong 2019 and we're very pleased to deliver full year non-GAAP earnings per diluted share of $3.69. This exceeded the high end of our guided range of $3.50 to $3.60 and represents a 14% increase over last year. For the full year, our consolidated same-store sales increased 3.7%, which also exceeded the high end of our guided range of 2.5% to 3% increase. For the fourth quarter, we delivered a 5.3% increase in consolidated same-store sales. Our strong Q4 comps were supported by increases in both average ticket and transactions as well as growth across each of our three primary categories of hardlines, apparel and footwear.
On a non-GAAP basis, our merchandise margin rate increased 14 basis points in the fourth quarter, reflecting a healthy business. In total, we delivered fourth quarter non-GAAP earnings per diluted share of $1.32, which represents a 23% increase over last year. It's clear our strategies are working, our vendor relationships have never been stronger. And we have tremendous momentum with a great foundation to build on for the future. During 2019, we made meaningful changes across our business fueling improved comp store sales results. We elevated the athlete experience in our stores through more differentiated and premium product. We improved in-stock positions and delivered stronger merchandise presentations. We also made our stores more experiential and reallocated floor space to regionally relevant and growing categories.
As we enter 2020, we remain enthusiastic about our business and are pleased with the start to our year. We will continue to focus on enhanced 2019 strategies, this includes optimizing our inventory and floor space, delivering differentiated merchandising and driving athlete engagement across all channels. Our financial outlook balances this enthusiasm with a degree of caution over the coronavirus and how it may impact our business. Lee will address our outlook in greater detail within his remarks.
As I've discussed on previous calls, over the past year we have been reallocating floor space to remove hunt and replace it with categories and products that can drive growth and better align with the needs of each market. To date, we have removed the hunt category from 135 DICK's stores and I'm pleased to announce these stores continue to generate positive comp sales in the fourth quarter, a noteworthy accomplishment during the peak hunting season. Building off the success, we'll remove the hunt department from approximately 140 additional DICK's stores during the first half of 2020, leaving it in only 12% of our stores.
As we do with all parts of our business, we will continue to monitor and evaluate all categories of business and make decisions that best serve our athletes. Additionally, we plan to build on the strong results delivered through our effective merchandising presentations. This strategy has been instrumental in the success of our premium full serve footwear decks among other important categories, including apparel and baseball.
In 2020, we plan to reconceptualize our soccer and golf businesses. We're going to follow the same playbook we used to attack the baseball category in 2019, which drove double-digit comp sales gains. We're optimistic that through more premium product, enhanced store experiences and exceptional service, we can better serve our soccer and golf athletes and drive stronger results in these categories.
Our largest and most exciting initiative this year will be focused on the female athlete, which Lauren will discuss in more detail.
In closing, 2020 is an important year in which we will build on the success to fuel long-term growth and further solidify our leadership position. I'd like to thank all our teammates for their hard work and commitment this past year and for their upcoming events -- efforts in 2020.
I would now like to turn the call over to Lauren.
Lauren R. Hobart -- President, Director
Thank you, Ed. And good morning everyone. I want to start by also acknowledging the dedication and efforts of our more than 40,000 talented teammates. We made it a priority to create an environment where passionate and skilled teammates thrive and where we recognize them for the impact they have on our business. Our strong 2019 results are directly attributable to these talented men and women, who are our key differentiator and a catalyst for growth.
As Ed discussed, for the fourth quarter, we delivered a 5.3% increase in consolidated same-store sales, which included positive brick-and-mortar store comps and strong online sales growth. This performance was driven by 2.4% increase in average ticket and a 2.9% increase in transactions. Beyond our merchandising initiatives and improved in-stock positions, our fourth quarter success is a direct reflection of our focus on improving service, experience, and marketing across all channels and in 2020 we will build on these efforts in these areas.
As you may remember, nearly one year ago, we assembled all of our store teammates across the country to rollout our new service standards. This was a landmark event for our company and the springboard from which we've developed strong momentum in our stores. This past year, our store teammates demonstrated that focusing on serving our athletes has a meaningful impact on sales.
During 2020, we are excited to continue driving positive results through an improved service and selling culture as we still see many opportunities ahead to delight our athletes. Our stores also contribute tremendously to our e-commerce growth through buy online pickup in store and ship from store, as the lines between in-store and online are becoming increasingly seamless. During the fourth quarter, we continued to see strong BOPIS growth in our DICK's stores. We also expanded BOPIS to each of our Golf Galaxy stores and we're pleased with the initial response from our athletes. And for this year, BOPIS grew more than twice the rate of the 15% sales growth we saw in our overall e-commerce business.
Additionally, we were pleased with the performance of our two new dedicated e-commerce fulfillment centers during the peak holiday period. These new fulfillment centers, along with our new strategic delivery partnership with FedEx have continued to reduce delivery times to our athletes.
Looking ahead, we will continue to improve our omnichannel experience through faster and more reliable delivery as well as improved functionality and performance of our website. In 2020, this will include providing shorter and more accurate estimated delivery dates earlier in athlete shopping funnel, expanding BOPIS to more items and delivering more localized website experiences as well as a faster and more convenient checkout. As part of our multifaceted women's initiative, we will deliver an expanded assortment across several key sports including basketball, dance, soccer and softball.
In addition, our marketing in early 2020 will amplify DICK's as the go-to destination for her. Last week, we launched our women's campaign featuring a TV spot that showcases the very surprising history of the sports bra and features Brandi Chastain. Additionally, we are celebrating CALIA's five year anniversary, which has grown into our second largest women's athletic apparel brand. This year we're excited to elevate the CALIA brand and assortment through new categories, more premium product, a refresh store experience and stronger marketing.
CALIA is also integral to our broader private brand strategy. Collectively our private brands represent our second largest brands behind only Nike and drive differentiation and exclusivity within our assortment. In addition to CALIA, we remain very enthusiastic about DSG, which we launched last year and expect to surpass Field & Stream to become our largest private brand by the end of the year.
Finally, in support of our pledge to provide access to sports for 1 million additional young athletes, last year the DICK's Foundation made grants of approximately $7 million to used sports programs across the country. Importantly, this funding helped nearly 200,000 underserved kids play sports. Building on this momentum and aligning with our Women's Initiative, in February, DICK's and the DICK's Foundation hosted a Here for Her Summit in New York City, a focused effort to champion women and girls in sports and fitness. As part of this, we announced our foundations commitment to young female athletes with a three-year $5 million grant to the US Soccer Foundation's United for Girls initiative. This grant will be used to create safe places to play from coaching and training opportunities and support soccer programs in underserved communities across the country.
In closing, we remain very enthusiastic about our business and confident that the continued execution of our strategies will strengthen our leadership position in the marketplace.
I'll now turn the call over to Lee to review our financial results and outlook in more detail.
Lee J. Belitsky -- Executive Vice President-Chief Financial Officer
Thank you Lauren, and good morning everyone. In 2019, we had a strong year from both the sales and earnings perspective. Consolidated same-store sales increased 3.7% with momentum building throughout the year. Within this, we delivered a 16% increase in our e-commerce business and posted positive brick-and-mortar store comps. On a non-GAAP basis, gross profit margin expanded 44 basis points and as part of our focus on increasing productivity, we eliminated over $40 million of expenses across many areas of our business. We expanded non-GAAP EBT margin in the second half of the year and for the full year delivered non-GAAP earnings per diluted share of $3.69, a 14% increase over 2018.
Now turning to our fourth quarter results. Consolidated sales increased 4.7% to approximately $2.61 billion. Consolidated same-store sales increased 5.3%, driven by growth across each of our three primary categories of hardlines, apparel and footwear. We saw continued strength in our stores, posting our third consecutive quarter of positive brick-and-mortar store comps. Our e-commerce sales increased 15% and as a percent of total net sales, our online business increased to 25% compared to 23% last year.
Notably, we delivered these strong sales results despite the compressed holiday selling season and challenging weather that negatively impacted sales in important cold weather categories. Additionally, as Ed mentioned, we continue to be pleased with the results of our space optimization efforts. While removal of hunt from 125 stores contributed to a meaningful sales decline in that category, these stores comped positively overall during the peak hunt selling season.
On a non-GAAP basis, gross profit in the fourth quarter was $746.2 million or 28.6% of net sales, a 73 basis point improvement compared to last year. This improvement was driven by leverage on occupancy costs of 62 basis points and merchandise margin rate expansion of 14 basis points. As expected, this was partially offset by costs associated with the opening of our two new dedicated e-commerce fulfillment centers.
Non-GAAP SG&A expenses were $598.1 million or 22.93% of net sales, up 77 basis points from the same period last year. 36 basis points are attributable to expense recognition associated with the change in value of our deferred comp plans, resulting from the increasing overall equity markets during the fourth quarter. This expense is fully offset in other income and has no impact on earnings. The balance of the deleverage was primarily due to higher marketing expenses related to our successful multichannel holiday campaign as well as higher incentive compensation expenses due to our strong fourth quarter results. Driven by strong sales and gross profit margin, non-GAAP EBT was $148.6 million or 5.7% of net sales, up $12.3 million or 23 basis points from the same period last year. In total, we delivered fourth quarter non-GAAP earnings per diluted share of $1.32, compared to earnings per diluted share of $1.07 last year, which represents a 23% year-over-year increase.
On a GAAP basis, our earnings per diluted share were $0.81. This included a pre-tax -- pre-tax restructuring charges of $48.8 million related to our decision to remove hunt from over 400 stores in 2020. This includes a $35.7 million non-cash impairment of trademark and store assets as well as $13.1 million writedown of hunt inventory in these stores. For additional details on this, you can refer to the non-GAAP reconciliation tables of our press release that we issued this morning.
Now moving to inventory. As we planned, our year-end inventory levels increased 21% compared to the end of 2018. Looking ahead, our inventory is well positioned as a result of our investments in this past year. And for 2020, we expect inventory to grow by a high single-digit rate at the end of the first quarter, with further moderation at the end of the second quarter and third quarter. And by the end of 2020, we expect inventory levels to be approximately even with 2019.
Turning to our fourth quarter capital allocation. Net capital expenditures were $39 million. We paid approximately $24 million in quarterly dividends and today announced an increase in our quarterly dividend of 13.6% to $0.3125 per share or $1.25 on an annualized basis. During the quarter, we also repurchased 759,000 shares for $36.1 million at an average price of $47.53. During the trailing four quarters, we returned over $500 million to shareholders through share repurchases and quarterly dividends. These activities were funded through cash from operations and borrowings under our revolving credit facility and we have approximately $1 billion remaining under our share repurchase programs. We ended the fourth quarter with approximately $69 million of cash and cash equivalents and $224 million outstanding on our $1.6 billion line of credit.
Now let me move to our fiscal 2020 outlook for sales and earnings. As Ed mentioned, our outlook balances the enthusiasm we have for our business with the rapidly evolving coronavirus event. As part of this, the low end of our outlook includes some conservatism around supply chain disruption potentially impacting our sales and earnings starting in Q2. At this time, our outlook does not include an impact from slowing consumer demand should the coronavirus spread considerably in the United States. Additionally, based on what we know today, we are not forecasting any significant impact to sales or earnings in Q1 and we have been pleased with our sales trend so far this year. That said we are actively managing our supply chain and working closely with our vendor partners to ensure the best possible outcome for our business.
All this considered for 2020, we anticipate earnings per diluted share to be in the range of $3.60 to $4.00 and consolidated same-store sales to be approximately flat to up 2%. EBT margin is expected to be down approximately 30 basis points at the low end of the range and up slightly at the high-end when compared to non-GAAP EBT margin in 2019, within this gross margin rate is expected to be approximately flat at the high end, while SG&A expense is expected to leverage at both ends of the range. Our earnings guidance assumes an effective tax rate of 25.5% and is based on 85.5 million average diluted shares outstanding, which only includes the expectation of share repurchases to fully offset dilution from stock compensation plans.
Net capital expenditures are expected to be in the range of $235 to $295 million. The high end of the range contemplates improvements in existing stores, including stronger merchandise presentations within footwear, soccer and CALIA, as well as hunt space optimization over 400 stores as well as technology and store design investments to enhance the fitting and less experience in our Golf Galaxy stores. This also includes ongoing investments in technology as well as nine new DICK's stores, six new Golf Galaxy stores and 17 relocations.
Before concluding, I'll take just a moment to highlight some upcoming changes to our same-store sales reporting practices. Beginning in Q1 2020, we will continue to provide consolidated same-store sales results, while moving away from providing e-commerce sales growth and e-commerce sales penetration metrics. Our athletes are increasingly shopping across multiple channels and on the same transaction -- to attribute the sale to one channel or the other can be quite arbitrary. We believe the single view of the consumer, best represents our omnichannel approach, which centers around serving our athletes whenever wherever and however they want to shop.
This concludes our prepared comments. Thank you for your interest in DICK's Sporting Goods. Operator, you may now open the line for questions.
Questions and Answers:
Operator
We will now begin the question-and-answer session. [Operator Instructions] Our first question today will come from Robby Ohmes of Bank of America Merrill Lynch. Please go ahead.
Alex Pernokas -- BofA Securities -- Analyst
This is Alex Pernokas on for Robby. Congrats on a great quarter. Just first, can you give us some more color on your plans for the hunt business with your announcement to replace merchandise in 415 stores? I guess specifically what categories of merchandise, are you replacing there? And then what type of margin uplift, are you seeing as you replace hunt with other categories? And then just last on that, can you give us an update on how those remerchandised stores are performing versus the chain average? Thanks.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
So on the categories that we're going to replace the hunt, depends on the store, depends on what -- what store the markets in and categories that are most important to those stores, but team sports, baseball, reengineering our soccer business are all parts of those, those categories. We expect to increase in stores our youth apparel and footwear business along with the women's initiative that we've talked about. So depending on what the store is, what part of the country will depend on where we're -- what we're putting in there. And we're not going to get to a -- give you such granular information of how they're performing to the rest of the chain. It was in the key hunt time so it's difficult to compare those stores with the other stores that have already taken hunt out, but we're very pleased with the response we got, they comp positively. And as I said, we're very pleased, or we would -- we might be rethinking this whole -- the whole idea here.
Alex Pernokas -- BofA Securities -- Analyst
Great, that's very helpful. And then just second, just when you say the coronavirus supply chain disruption impacting the business in the second quarter, is there a certain category that is more likely to be disrupted? And then I guess just off that, do you expect to have your sort of seasonal back to school or fall '20 product on hand? And then I think you alluded to this, but have you seen any impact to traffic trends in the US yet since the outbreak? Thanks.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
We're very pleased with the start of our year as we've indicated. Where some issues in the supply chain may come from. We haven't seen anything significant yet, but it's a pretty fluid situation, as you know. So we're trying to be conservative of what that supply chain and all those issues might be, but we haven't seen anything significant yet, but that doesn't mean that it can't happen because I think everybody is scrambling to see what -- what shape there supply chain is in.
Alex Pernokas -- BofA Securities -- Analyst
It's very helpful. Best of luck going forward.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Thank you.
Operator
Our next question comes from Michael Lasser of UBS. Please go ahead.
Michael Lasser -- UBS -- Analyst
Good morning. Thanks a lot for taking my question. And when you mentioned you're pleased with the start to the year, have you seen any variability in your sales by market. So if you look at the Pacific Northwest, where some of the concerns have grown a little bit more intense, has that impacted those locations there?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Surprisingly no.
Michael Lasser -- UBS -- Analyst
And separately, when you think about your shape of the year and I think we mentioned that your gross margin at the high end is expected to be flat, it did appear that you had some extra seasonal clearance inventory to start the year. So how should we think about how the gross margin is going to flow over the course of the year and from a upside/downside perspective, what -- what are you factoring in at the low end in terms of the margin performance for each line?
Lee J. Belitsky -- Executive Vice President-Chief Financial Officer
Earlier -- earlier in the year we're working through some of the hunt clearance in 400 stores, o that should have kind of a modest impact -- unfavorable impact in the first half and we also have to anniversary the two extra distribution centers in the first half of the year as well. So we'll anniversary that as we get into the third quarter and fourth quarter. So the gross margin is going to be I'd say a little bit more pressured in the first half than in the second half.
Michael Lasser -- UBS -- Analyst
You know last question is, as you move away from the hunt category in these 440 stores, how are you going to ensure that the customer doesn't look at DICK's Sporting Good more like a department store, that you're going to skew much more heavily into the apparel and footwear categories and the differentiation may be a little bit less than it's been in the past?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Michael, I don't think there is any concern about that whatsoever. We've -- we've taken it out of 140 some stores. It's -- there are some stores that we opened up, didn't put it in. So there is a couple of 100 stores we don't have hunt in that we've tested this and we're going to be focusing on the female athlete. As we said the footwear business is very strong, but we've also been very clear on our target for the -- that high school athlete, our baseball business, we're going to restructure our -- our golf business, restructuring our soccer business. So I don't think there will be any confusion that we are in the sports and fitness business as opposed to a department store.
Michael Lasser -- UBS -- Analyst
That's very helpful. Thank you very much.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Sure.
Operator
Our next question comes from Kate McShane of Goldman Sachs. Please go ahead.
Kate McShane -- Goldman Sachs -- Analyst
Hi, thanks, good morning. Is there a way to measure what fourth quarter would have been without some of the headwinds you experienced? And if you could quantify at all the share you were able to take?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
I'm not sure what the share is we were able to take. You can take a look at other people's comps, then take a look at our comps which were among some of the best in retail. And what it would have been had we not had some of the headwinds, it's really difficult to put forth what theoretically that may have happened. So if the weather was colder our outerwear business would have been better, but some other areas of the business might not been as good. So it's -- I think our team did a great job managing through the difficult weather pattern for our business. They did a great job from an inventory standpoint, they did a great job from a sales, the marketing that we put out in the fourth quarter was extremely well received and differentiated and really had a stand out in the -- in the marketplace and I think all of those things contributed to the terrific results that we had in the fourth quarter.
Lee J. Belitsky -- Executive Vice President-Chief Financial Officer
Kate, in addition to that we made a conscious effort this year to stay in stock in some of the warmer weather products throughout the chain. So our baseball business, our apparel business stayed in better stock, in footwear -- in footwear positions our inventory levels were up, but that improved inventory position allowed us to capitalize on the more favorable warm weather trends, which helped us offset some of the lost cold weather business. And it's also positioned us well going into Q1 from an inventory perspective.
Kate McShane -- Goldman Sachs -- Analyst
Okay, thank you. And then my follow-up question is just about SG&A leverage in 2020. Can you talk a little bit about where that's coming from and I think in 2019 you did find some areas for cost savings. Are there any opportunities for cost savings in 2020 or is that included in in the guidance?
Lee J. Belitsky -- Executive Vice President-Chief Financial Officer
Yeah, there are few big chunks in SG&A -- in SG&A. One is we pay -- that we are planning to pay very significant incentive compensation in 2019 and for 2020 our plan is for more normalized incentive compensation. So we've got a pickup there. We also have the kind of the valuation of deferred comp plans that was a significant run-up in the stock market. This year we have to revalue our deferred comp plans that gets offset in other expense, has no impact on earnings, but will pick up leverage on the SG&A line there. I would say those are the two biggest pieces. We're also planning to continue with more meaningful expense savings in 2020 as well. So we've got a lot of levers to pull, we've got structural advantages, I would say on the incentive comp side as well.
Kate McShane -- Goldman Sachs -- Analyst
Thank you.
Operator
Our next question comes from Simeon Gutman of Morgan Stanley. Please go ahead.
Simeon Gutman -- Morgan Stanley -- Analyst
Good morning. My first question is on the top line guidance, zero to two which seems prudent and to clarify, it sounds like that's ex corona. In other words, there is no demand impact into the zero to two. And so my question is, in which -- in what scenario would you end up doing closer to the low end of that range given all the good things that are happening in the business today?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Simeon, we did bake-in some demand reduction relates coronavirus, but it's really related to the supply chain that potentially we may not get some of the products that we had expected to get or we may not get them in a timely basis. So we did pull down the low end of our sales related to supply chain disruption, but we haven't pulled it down assuming that there'd be a widespread kind of demand disruption due to quarantines or isolation or whatever it may be in the US.
Simeon Gutman -- Morgan Stanley -- Analyst
Got it. That's helpful. Have you quantified or can you quantify what you -- is it 50 bps of an impact? Is it a point?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
We haven't quantified it.
Simeon Gutman -- Morgan Stanley -- Analyst
No worries. Okay. My follow-up is these investments that you're making to the stores and assortment you're adding premium product and I think the mix of private label is picking up slowly. So two questions to that, is there a naturally higher rate -- run rate of gross margin and is there some way to dimensionalize that? And then moving a little bit more to premium, you're seeing a good response. How do you feel about the balance of value and differentiation in the store?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
We feel that we've got the right balance of between value and differentiated in premium product, which is the DSG brand that we introduced last year is that more intro opening price point product at a great value, great style, which as Lauren indicated in her comments, has done great, will be our largest private brand after one year, this year. And then with what we've got in the premium product, whether it's the premium baseball bats, premium baseball gloves, what we're doing from a soccer boot category, we think we've got the ability to service the beginner, intermediate and the enthusiast in these -- the sports that we're focused on.
Simeon Gutman -- Morgan Stanley -- Analyst
Thanks Ed.
Operator
Our next question comes from Adrienne Yih of Barclays. Please go ahead.
Adrienne Yih -- Barclays -- Analyst
Good morning, great quarter. My first question is at the beginning of the quarter, there was this notion that it would be a highly promotional quarter. I think the kind of mid-point of the guidance was on sort of a flat promotional environment to the prior year. So I guess I'm curious outside of hunt, how did you manage your cold weather categories with the controlled promotional activity? And then my second question is on the supply chain. How much is direct sourced of your private label? And then as an estimate sort of on the brand side sort of indirectly sourced from China? Thank you very much.
Lee J. Belitsky -- Executive Vice President-Chief Financial Officer
I think one of the ways we're able to manage the promotional environment out there is that we really had differentiated product from many others in the marketplace between not only our private brands, but whether that be some special make ups we got from the brands and how we have sorted of our business. We manage our inventory quite well there. We've been able to clear some of that merchandise out. We've also taken some go forward product that we will have next year, some basic product and we've packed that away. So we didn't go and promote that we'll buy -- we're in the process of buying around that next year. So that helped the margin rates. And as far as where our brands, what the total amount of business that sourced from the brands overseas, I don't really know. They're changing factories, all the time and where they want their supply chain to come from so I can't answer that question.
Adrienne Yih -- Barclays -- Analyst
Okay. And then just last follow-up, you talked about quarter-to-date trends or year-to-date trends being pleased with those. Does that imply similar to the fourth quarter or higher than the current Q1 comp guidance, any color there would be very helpful? Thank you.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
I'd just like to stick with -- we're pleased with the results that we've got so far this quarter and we're not seeing an impact really from the coronavirus.
Adrienne Yih -- Barclays -- Analyst
Fair enough. Best of luck. Thank you.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Thanks.
Operator
Our next question comes from Chris Horvers of JPMorgan. Please go ahead.
Chris Horvers -- JPMorgan -- Analyst
Thanks, good morning everybody. So wanted to follow up on the gross margin, if we assume 10% of sales you're exiting that in half the stores and then you'd called out 1700 [Phonetic] basis point GAAP versus the company average from a margin perspective. The quick math is just about a 70 basis point annualized benefit, the margin for this change, is this in the zip code or are there any assumptions that we're using here that are off base?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
So I think it could be heavy on the -- on the penetration on the hunt side. There that business has come down quite a bit over the last few years.
Chris Horvers -- JPMorgan -- Analyst
Got it, OK. So I guess that understood, given that your private label continues to grow. The occupancy of dollar savings have been really substantial and you still have a lot of renewals coming up and you have the DC, which should be relatively small to the annual picture and then you do have the mix shift from hunt how could gross margin be flat at the high end? What are you assuming are the offsets that would flatten this out for the year?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
So again, we've got, we've got to work through some of this hunt inventory that we've got in the 400 stores in the spring season. So we've got that -- we have that in our plans. We did take a charge for it, but the way that works you only -- you only take a charge for the stuff that you sell below cost, but selling at depressed margin rates to move through it at above cost, you can't take the charge for. So that's going to hit the P&L over the course of the -- over the first six months of the year. So that's a piece and we end having these extra two facilities for the first six months of the year is a drag on us -- will be a drag as well and those are the two main pieces. You know as we get through last fall, season last fall wasn't particularly promotional for us we even said Q3 was very lightly promotional. And so we're not up we're up against a relatively light promotional period in the back half of the year. And similarly, the last part is we've got a fair amount of capex coming. Most of that capex is attributable to two stores coming up in depreciation expense associated with that capex, whether it'd be around the golf business, the hunt business, CALIA and so on. Most of that depreciation expense, falls into the gross margin line and that will -- that will hit more heavily in the back half of the year as well.
Chris Horvers -- JPMorgan -- Analyst
Excellent, thanks very much. Have a great spring.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Thanks.
Operator
Our next question comes from Joe Feldman of Telsey Advisory Group. Please go ahead.
Joe Feldman -- Telsey Advisory Group -- Analyst
Hi, thanks for taking the question guys. Good morning. First, I wanted to ask, I think Lauren, you talked about doing some work with the selling culture for the 2020 and could you maybe talk a little bit more about that and what you're thinking to help improve the selling culture?
Lauren R. Hobart -- President, Director
Yeah. It's an effort that we did start about a year ago when we rolled out new service standards that really focused on engaging athletes and giving confidence for their purchases. And we also rolled out last year as recognition program that really focused on rewarding people for when they are delivering great service. And this year we intend -- this is obviously a multi-year journey, we have a lot of opportunity still. So we intend to really redefine several aspects of our service model specifically women's will be redefined, golf will be redefined, more elevating footwear, and we are working on training and hiring and coaching, so that we just keep improving the momentum that we've seen in the stores.
Joe Feldman -- Telsey Advisory Group -- Analyst
Got it, thanks. And then just a follow-up with such a strong fourth quarter and it seems like maybe with the warmer weather, you must get a jump on some of the spring sales. Is there a pull forward historically when you have this type of scenario or does the demand kind of sustain itself through the spring as kids are out playing baseball and softball and such?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
It's hard to tell. We actually -- we were very pleased with the start of our -- of our year as we indicated. We think some of that could be a pull forward, but that's kind of all baked into our guidance going forward. So we're pleased right now, we don't know what's going to happen with the coronavirus, but as of right now, we're pleased.
Joe Feldman -- Telsey Advisory Group -- Analyst
Great, thanks. Good luck with this quarter.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Thank you.
Operator
Our next question comes from Steven Forbes of Guggenheim Securities. Please go ahead.
Steven Forbes -- Guggenheim -- Analyst
Good morning. Maybe just continuing on the unrelated I guess liquidation plan, it sounds like you plan on selling the inventory through the stores in the spring. So I don't know if you can either quantify or give us some color on the anticipated comp and gross margin impact in the first quarter, second quarter and/or maybe if you want to keep it high level, talk about the decision on why not use a third-party liquidator or accelerate the liquidation and move up the pace of the resets, right, as you sort of think about what you're seeing in 135 stores that you've done so far?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
This is a pretty quick move that we're doing this -- to better sell the inventory down. Then you've got to reallocate the space, we think this is, this is pretty quick. And to use a third-party I don't know why we'd use -- we've got some advice from a third-party, but I don't know why we would use a third-party when we can liquidate it a higher price ourself. We are pretty good retailer.
Steven Forbes -- Guggenheim -- Analyst
And then maybe just to follow-up on that, right. it's still early days, maybe with us being able to fully appreciate the return profile of this move where you think the space allocation changes, but any sort of comment on maybe the payback period of the space allocation changes and/or the return profile associated with them?
Lee J. Belitsky -- Executive Vice President-Chief Financial Officer
I think we're pleased with the results. We said that we went through the peak hunt season in the fall with removing hunt from 125 stores. We comped positively in those stores, margin rates were also better in those stores as well. And this is just to move that we're looking to make -- I don't think it's 100% driven by with the return on investment from what we're putting in there. We want to -- we want to go into categories that are -- that we are committed -- that we're committed to that are growing and the hunt business is a low return business for us and we're looking to move on from that.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
The hunt business is the, if you follow the story, the hunt business is the lowest -- probably the lowest turning, lowest margin category we have. As we started to go through this a couple of years ago and started to test this, we felt -- we knew that we could make a lot more money, turn the inventory faster at a higher margin than what we can do from the gun standpoint. I think we indicated that the, that the hunt business was roughly 1300 basis points or 1400 basis points below the company average and it was 1700 basis points below the company average and we've indicated that the hunt business has been, has declined significantly over the last couple of years, it declined significantly in the fourth quarter and we still printed a 5.3% comp gain. So that's pretty clear that this is the right decision to make.
Steven Forbes -- Guggenheim -- Analyst
Thank you.
Operator
Our next question comes from Seth Sigman of Credit Suisse. Please go ahead.
Seth Sigman -- Credit Suisse -- Analyst
Hey guys, thanks for taking the question and good morning. I'd want to first start with the supply chain risk that you highlighted potentially into the second quarter. I guess the low end of the comps range considers that I realize you're not seeing it yet, but in that scenario, based on what you know about how the inventory flows and how the imports flow, would that impact be isolated to the second quarter or would you expect to see some lingering effect into the back half?
Lee J. Belitsky -- Executive Vice President-Chief Financial Officer
So I mean we saw with our -- with our own private brands a slow down of shipments in -- coming out of China in February. And we've seen that pick up pretty meaningfully here in early March. So we think that as we -- as we get to latter part of April some of the receipt levels will be down in our stores. We don't think it will be significant and that's in our private brands. With regard to our national brands, we've heard from most of the major national brands that they don't see a significant impact, that there is some isolated impacts along the way, but they don't see significant impacts to their supply chains. So we think that there could be a little bit of an impact going into Q2 just because we have visibility to some slowdowns in shipments in February, but it seems our suppliers seem to be coming back online pretty quickly. And I would expect that with our brands suppliers are coming back online pretty quickly there as well. So I don't see a long-term impact on supply chain at this point. So I think that's about all I can say we're not hearing much from the brands that they -- we do not -- they're not indicating that there is a meaningful issue out there with their supply chains.
Seth Sigman -- Credit Suisse -- Analyst
Okay. Okay, that's helpful. Thank you. And then just back on the demand backdrop, obviously you're pleased with what you're seeing so far in the year, you're not assuming there is going to be demand issue. I guess the question would be you look back to past case studies when there was some sort of level of uncertainty for the consumer like this and maybe we never really seen anything quite like this, but is there something that gives you confidence when you flip back historically that I guess demand won't drop off at some point over the next couple of weeks or months, just given the uncertainty that's out there? Thanks.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
We really have no -- like everyone else, we really have no idea. I don't think we've ever seen anything like this and in a very, very long time. So we're like everybody else. We're -- we're hoping for the best, but we know that it's very uncertain out there and we can't predict what's going to happen.
Seth Sigman -- Credit Suisse -- Analyst
Okay, thank you.
Operator
Our next question comes from Warren Cheng of Evercore. Please go ahead.
Warren Cheng -- Evercore ISI -- Analyst
Hi, good morning. Thanks for taking my question. Your offerings at both the premium end and the value end of the spectrum have really gotten a lot better over the last couple of years. First, are there -- are these sales going to existing customers or are you seeing new customers come in as a result of expanded offering? And then second, following up on Simeon's question, how much of a gross margin lift are you getting at the company level as you flipped from the prior Reebok apparel to DSG?
Lauren R. Hobart -- President, Director
So on the first question regarding new or existing customers, a lot of our strategy is actually are either bringing in new customers or adding an occasion to current customers, both things are happening. In the case of some of the higher-end assortment, we think we're getting back customers that perhaps were going elsewhere. In the opening price point products, we did feel that there were gaps in our -- consumers were coming in and perhaps filling that need at other competitive channels. So it's really both and it's been effective from both perspective.
The second part of the question.
Warren Cheng -- Evercore ISI -- Analyst
Differentiation and margin rate between DSG and Reebok.
Lee J. Belitsky -- Executive Vice President-Chief Financial Officer
DSG margin rate we expect will be a little bit better. We're putting a bit better quality in that product but there is no royalty payment associated with it. So there is a bit of an offset there and we've -- one of the reasons why we think this has done so well as we've built better product and taken some of that royalty payment and put it into the -- into the better product -- into the marketing of it. So we couldn't be happier with how the team executed and brought to market the DSG brand.
Warren Cheng -- Evercore ISI -- Analyst
Thanks, that's helpful. And my follow-up was just on -- a question on e-comm. Can you talk about the trend you're seeing in basket online as you've improved your website and shipping speed?
Lauren R. Hobart -- President, Director
That is not a level of detail that we typically provide, but I can just tell you that the e-commerce channel is doing great across all metrics.
Warren Cheng -- Evercore ISI -- Analyst
Okay, thank you.
Operator
Our next question comes from Brian Nagel of Oppenheimer. Please go ahead.
Brian Nagel -- Oppenheimer -- Analyst
Hi, good morning. Thanks for taking my questions. Most of my question has been asked, but a couple I guess maybe just follow-ups. First, with regard to the weather in the fourth quarter, particularly the warmer temperatures, on balance was that -- you think that was more of a positive or negative --?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
No, definitely no.
Brian Nagel -- Oppenheimer -- Analyst
It was not a positive. Okay. [Speech Overlap] Good to hear that. And then the second question, again recognizing that the coronavirus crisis is extraordinarily fluid at this point, there has been some talk about this -- the crisis leading to the postponement or even I guess postponement of the Olympics, to what extent is some of your vendor partners have talked about this as a potential disruption, to what extent as you look through 2020 are the Olympics expected to be a driver of your business. Is there anything in your guidance and how would you, how would you see it any type of disruption at Olympics affecting your business?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
There is nothing in our guidance about the Olympics. The Olympics surprisingly is not a big part of our business. There is some, it's a little bit accretive, but if we had the Olympics or don't have the Olympics, you won't see it in our results actually and I've talked about this before, the World Cup is more of an impact on our business than the Olympics does. If this was the World Cup year and we're having the World Cup was going to be canceled, that would be a bigger impact to our business than the Olympics.
Brian Nagel -- Oppenheimer -- Analyst
Got it. Thanks, Ed. Appreciate it.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Sure.
Operator
Our next question comes from Scot Ciccarelli of RBC. Please go ahead.
Scot Ciccarelli -- RBC Capital Markets -- Analyst
Good morning, guys. Scot Ciccarelli. Given let's call it 22% increase in inventory kind of per square foot, how much do you feel you've benefited from -- on the topline from those higher inventory levels? And secondly or related to that I guess what categories is that extra inventory really concentrated at this point? Thanks.
Lee J. Belitsky -- Executive Vice President-Chief Financial Officer
I think it had a significant impact on our -- on our sales and it was, it was focused on what we characterized as the attack categories going forward, which was athletic apparel, athletic footwear, baseball in golf.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
And due to the weather trends we had in Q4 those categories were favorably and were favorably impacted being in a better inventory position helped us in those.
Lauren R. Hobart -- President, Director
Also helped us [Speech Overlap] than just a better brand presentation in the stores.
Scot Ciccarelli -- RBC Capital Markets -- Analyst
Yeah, that all makes sense. I guess what, my question would be is if you're expecting inventory levels to kind of moderate as we move through calendar 2020, what kind of negative impact, could we potentially see? Because obviously you had a big surge in inventory kind of throughout the course of the year and then as you guys just talked about it obviously helps sales, but as that growth rate of the inventory starts to moderate, I guess I'm wondering what kind of potential adverse impact could we see on sales as we move through 2020?
Lee J. Belitsky -- Executive Vice President-Chief Financial Officer
We don't see -- we don't see any real impact there. We think we get back to appropriate inventory levels. We were very clear last year and toward the end of the previous year that we let our inventories get too low. And we got ourselves back to the appropriate inventory levels where we could service the athlete, whether that was a baseball player, softball player, golfer, runner, and we get back to appropriate levels to be able to service them. So we don't see any -- we don't see any meaningful difference in our -- in from what we've done from a guidance standpoint based on moderating our inventory. We think it's appropriate to moderate our inventory from a cash position. Inventory turnover margin rates going forward. We're very pleased with what we did, we feel that we will moderate these through the year and will have no impact on our, on our sales.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
We still see a lot of opportunities, internally as we look at ways to make the inventory more productive. So even as the inventory levels off, we think we can continue to drive positive comps.
Scot Ciccarelli -- RBC Capital Markets -- Analyst
Got it. Okay, thanks guys.
Operator
Our next question comes from Sam Poser of Susquehanna. Please go ahead.
Will -- Susquehanna Financial Group -- Analyst
Hey guys, sorry, this is Will [Phonetic] on for Sam. Just a quick question on private brand, how much -- how much does that comp -- comp, how much of that does it make up of your total revenue now, private brands business?
Lee J. Belitsky -- Executive Vice President-Chief Financial Officer
Around 14%.
Will -- Susquehanna Financial Group -- Analyst
And then switching topics. What is the tariff impact look like for FY20 for you guys on gross margin?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
We've been able to kind of negotiate our way through a lot of these tariffs and the overall tariff impact on us on our cost has been pretty modest. We don't see it having a meaningful impact on our gross margin rates for next year.
Will -- Susquehanna Financial Group -- Analyst
And then -- then last one, so how much -- how much, I know you guys have talked a bunch of others, but how much of that inventory -- how much of your inventory now is comprised of hunt and cold weather?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Hunt and cold, I mean we haven't gotten to that granular disclosure, but I mean our hunt inventory has continued to come down every quarter for the last eight quarters. Our hunt, our outerwear, our cold weather inventory is higher than it was last year because we decided to pack up fair amount of the go forward merchandise. So merchandise we're going to buy again black gloves and black ski pants certain jackets that are going to go forward that are not that are not going to go out of style, from a sales standpoint or color standpoint we pack those up and we're buying around those next year. So some of our receipts will be down in those categories. Next year.
Will -- Susquehanna Financial Group -- Analyst
Thank you. That's all from me, good luck.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Sure. Thank you.
Operator
Our next question comes from Tom Nikic of Wells Fargo. Please go ahead.
Tom Nikic -- Wells Fargo Securities -- Analyst
Hey, good morning. Thanks for taking my question. So I wanted to ask, you're obviously pulling hunt out of the vast majority of your stores and I think you said, by the time this is done you will only have hunt in about 12% of your stores. I'm just kind of curious like what are those 12% of stores just places where hunt is so important like you have to keep it in there or why not just kind of exit the category completely?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Well there are areas -- there are stores in more rural areas where hunting is an important part of people's lives to feed themselves, if you will, it's -- they hunt not just for sport, but they hunt to actually feed their families and as we've taken a look at that and we think that that's important to continue to provide that. It is going to be just primarily hunting product is all that we are, we're going to be carrying there.
Tom Nikic -- Wells Fargo Securities -- Analyst
Understood. And Lee, quick question for you. The capex is moving up this year, higher than what you've seen in the last couple of years, is this kind of a sort of one-time investment year or would you say that this $330 million or $390 million on a gross basis is kind of the a normalized capex rate?
Lee J. Belitsky -- Executive Vice President-Chief Financial Officer
We have an elevated level of investment in our stores this year. And yeah -- and the stores we're investing in are Golf departments, our women's business, transitioning our hunt department. So I'd expect that this year's level investment in stores is higher than what we'll have going forward. And we don't see at this point looking out into next couple of years any significant needs for fulfillment operations next couple of years. So I would expect this year to be elevated somewhat over what we've got for the next year or two after that.
Tom Nikic -- Wells Fargo Securities -- Analyst
All right, that's helpful. Thanks and best of luck this year.
Operator
Our next question comes from Paul Lejuez of Citi Research. Please go ahead.
Paul Lejuez -- Citigroup -- Analyst
Thanks guys. Curious if you could share the percent of sales that hunt represents in the 440 additional stores where you'll be removing that category? And how does that compare to what hunt represented as a percent of sales in the original group of stores where the categories were already removed?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
We're not going to get to that level of granularity as we indicated earlier, but I can tell you that it is meaningfully less than it was a year ago, which was meaningfully less than it was the year before. So this is getting to be a much smaller part of our overall mix. And as we indicated in all the stores that we've taken out, they've continued to comp positively.
Paul Lejuez -- Citigroup -- Analyst
Got it. And then just given your confidence in your ability to replace those sales with new categories, do you actually view removing hunt as a headwind to comps, is it neutral? Is it a tailwind? I mean any quantification you can provide there.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Yeah, I would say for this year, it's a slight headwind to comps. However, from an earnings perspective, we think we can, we believe that we can cover the majority of that or nearly all of that. The issue is timing and that we're going through a transition spring when the hunt business is low. And then the transition will happen in the fall were hunt is high. So it's a little bit of an impact on earnings and sales for this year, which are both embedded within our guidance.
Lee J. Belitsky -- Executive Vice President-Chief Financial Officer
But if you take a full year -- if you take a full year when we're done with all of this, it would be accretive to -- accretive to earnings as we go forward.
Paul Lejuez -- Citigroup -- Analyst
So are you able to make up for the gross profit dollars completely if it's a little bit of headwind on comps and you're replacing with higher margin categories or gross profit dollars is it actually higher by the time you are through with this?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Yeah, not for this year but going forward, yes, we believe we can do that.
Lee J. Belitsky -- Executive Vice President-Chief Financial Officer
We have to clean up the -- we have to clean up this inventory this year.
Paul Lejuez -- Citigroup -- Analyst
Got you. Thank you. Good luck.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Thank you.
Operator
Our next question comes from Peter Benedict of Baird. Please go ahead.
Peter Benedict -- Robert W. Baird -- Analyst
Hi guys, thanks for sneaking me in here. Just a couple. Firstly, just trying to understand kind of the outlook for D&A growth as you think about 2020, I think last year was probably up around 5% if you adjust for charges and whatnot. Just trying to see with the stepped-up capex, how fast do you think the D&A is going to grow in 2020? And kind of similar question on the occupancy, which was down almost 2% I guess in the fourth quarter, is that a good run rate as we think about 2020? That's my first question.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
I'd say D&A probably slightly faster growth rate in D&A and occupancy I think you'll see similar trends to what you saw -- to what we've had this year.
Peter Benedict -- Robert W. Baird -- Analyst
Okay, perfect. Thanks. And then I think there was a comment that there were more items that we're going to get added to the BOPIS assortment in 2020. Can you give us a sense for maybe what was the magnitude, how much will be available on BOPIS this time a year from now versus today. And then maybe what categories are getting out of there?
Lauren R. Hobart -- President, Director
We're not going to provide that level of detail, but we are focused on expanding our assortment for BOPIS and some of these inventory investments will actually help with that as we have more confidence that the product is actually in the store and we can write these things up online for people to pick up that day. We've expanded to Galaxy and we just are putting a huge focus behind buy online pickup in store in general. But we're not, we're not going to show the category levels or the growth rates.
Peter Benedict -- Robert W. Baird -- Analyst
Okay, fair enough. And then just last question just on the golf business, I know a few years ago, there was an investment that was kind of pulled out of the golf business, it sounds like there is a little bit more that's going to put back in. So just maybe talk to us about kind of your thoughts around golf and what you hope to capitalize on here over the next -- next couple of years?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
As the -- as the Golf Galaxy -- as the golf category has consolidated over the last couple of years we've seen the golf business accelerate. We're pleased with the golf business, we think there is an opportunity there. We think the smaller independent golf operators are going to continue to have a difficult time and struggle. So there is an opportunity for market share. We see that golf we think is in a really good place right now with the -- with the guys on tour. We think that the brands have brought terrific product cycles to the market right now. And with the majority of these investments that we're going to be making are going to be in our specialty channel of Golf Galaxy, which we're very pleased with the results we've been getting out of Golf Galaxy over the last 18 months to 24 months as the golf category consolidated.
Peter Benedict -- Robert W. Baird -- Analyst
Got you. That's helpful. Okay, thanks so much guys.
Operator
Our next question comes from Michael Baker of Nomura. Please go ahead.
Michael Baker -- Nomura Instinet -- Analyst
Okay, thanks. Two please, two questions. One, can you give us the relative size and opportunity of golf and soccer versus baseball? I know baseball is very high. I know from personal experience, very high ticket, for those [Indecipherable] I don't think there's anything quite like that soccer, but perhaps golf there is. So the relative opportunity to replicate what you did in baseball in those two categories. And then a quick one at the end, any impact from the Patriots not winning the Super Bowl i.e. the Chiefs winning the Super Bowl? Thanks.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Well, I don't even know if I'm going to answer the second question. But from the soccer is not as big as baseball, although there are some big ticket items in soccer. The boots can get very expensive. We've brought in some of the $250, $275 soccer boots are doing very well. So soccer is not as big as baseball. Golf is bigger than baseball.
And if your question was serious about the Patriots and the Chiefs [Speech Overlap] we were very pleased to have a new winner of the Super Bowl and provide to provide Super Bowl merchandise to a market that hasn't had in 50 years in Kansas City supported it very well. They were really excited that they won and we were pleased with our results.
Michael Baker -- Nomura Instinet -- Analyst
And now it would be a first quarter event, right, because those sales come after close of the fourth quarter?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
First of all, -- leading up to it -- it was part in the -- in the fourth quarter leading up to the Super Bowl the pre-sales before the before the game.
Lauren R. Hobart -- President, Director
It wasn't meaningful to the entire quarter comp and won't be.
Michael Baker -- Nomura Instinet -- Analyst
Okay, understood. Thanks for the color. Appreciate it.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Thanks.
Operator
Our next question comes from Chris Svezia of Wedbush. Please go ahead.
Chris Svezia -- Wedbush Securities -- Analyst
Good morning and thanks for taking my questions. Congrats on the comp. I guess, first just on the comp guidance for a moment, flat to up to -- your comments about Q1 we're kind of pleased with how it's running, would assume obviously reasonably positive. I guess what I'm curious about if you point out at back half of the year, did you have some of your more difficult comps that we've seen in some time? So I guess what's your confidence level or how are you thinking about that cost trajectory as you go into the back half of the year. Are there enough for product drivers, initiatives to still drive positive comps in the back half or are you thinking so sort of flattish given some of the unknown. Just curious how you're thinking about that.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
We haven't -- we're not giving quarterly guidance, but I think at least we're -- the first half is going to be, we're not going to say anything you don't already know, first half is going to be easier than the second half, but I -- so I'm not going to go out and say that we're going to have comps in every quarter, but we're very confident with our overall guidance.
Chris Svezia -- Wedbush Securities -- Analyst
Okay. I guess, follow-up on all those just on the SG&A side for a moment. I know you mentioned that there are some material offset from incentive comp etc. where are you making investments still in the business whether in store and labor or you've walked to e-commerce you made investments there, you make investments in fulfillment, just what are the worthy investment areas on the SG&A side for this year, how should we think about that?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Well, we're continuing to invest in store labor. We are maintaining hours, notwithstanding the fact that there is some pretty meaningful wage rate inflation and source, which we expect to continue into this year, but we're really working hard to maintain that service experience that we have in the stores. Right now we're continuing to invest in technology as we've transformed to the agile development methodology that we've got. We've built up our product teams and we're moving quickly to further develop our e-commerce business and our in-store experiences from a technology perspective so there is significant investments coming on in those two areas. But we do have -- we do have the tailwind coming from incentive comp to offset it, from deferred comp plans offsetting that as well. So we still feel good about being able to leverage SG&A expense this year.
Chris Svezia -- Wedbush Securities -- Analyst
Okay. Final thing just for me. As I just go back to my first question I guess let me ask you this way, what do you most encouraged excited about whether it's in footwear, apparel, hardlines as you think about the balance of the year? I know you got private label initiative and they have women's, just where do you feel like there is the biggest opportunity to support comp growth as you move through the year and some of those major categories?
Lee J. Belitsky -- Executive Vice President-Chief Financial Officer
We think baseball can still comp, we're excited about continuing to grow our baseball business. We're very excited about what we're doing from a soccer standpoint. We're positive on the athletic apparel piece effort footwear. We are ex what's happening in the world today, we're pretty positive about our business across virtually all categories with the exception of the hunt business that we are exiting, but other than that we're pretty positive across hardlines, apparel and footwear in our business right now.
Chris Svezia -- Wedbush Securities -- Analyst
Got it. Okay, sounds good. I wish you all the best. Thank you.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Thank you.
Lee J. Belitsky -- Executive Vice President-Chief Financial Officer
Thank you.
Operator
Our next question comes from Carson Barnes of Consumer Edge. Please go ahead.
Carson Barnes -- Consumer Edge Research -- Analyst
Good morning, thanks for the question. I have two, both related to hunt. First, it sounds like the decision to remove hunt was largely margin related. But can you give any more detail on other data that drove the decision in terms of customer preferences or opportunities in existing categories or new categories? And then second, with the Field & Stream brand continuing to be a strong brand for you, is that largely a function of fishing and other categories outside of hunt? Or will you be continuing to carry some hunting clothing and footwear in the stores, just not firearms? Thanks.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
In the stores we're exiting the hunt business. We'll be exiting the hunt apparel also. As far as category -- repeat the first question please.
Carson Barnes -- Consumer Edge Research -- Analyst
Sure. Just curious if there was any additional data, other than kind of the margin related data, that gave you -- that drove the decision to exit hunt. Any new categories or -- that you'll be looking at?
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
It's just not, it's just not margin category, the demand for other categories as we look through this was very high. So the demand of what we could do in the baseball business, what we can do in the soccer business, we'll take a look next year at what the next sport is that we're going to take a look at probably going to be lacrosse, that there is a big demand for product that we aren't able to service these athletes with the space allocated to the hunt area and as we took a look at this, there is a sales upside we believe and we think there is a margin rate upside to these other categories and they're growing where the hunt business is not growing.
Carson Barnes -- Consumer Edge Research -- Analyst
Okay. Thanks.
Operator
Our next question comes from Matt McClintock of Raymond James. Please go ahead.
Matt McClintock -- Raymond James -- Analyst
Yes, good morning everyone. Thanks for fitting me in. Just one clarification question, Ed. I think you said and rightfully so that you can't keep track of where your manufactures or your vendors are manufacturing the product. But for DSG, did you actually talk about where DSG is being manufactured? Thank you.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
We've got different places that DSG is being manufactured, different places that other private brands are being manufactured. We're more tied to China on the hardlines than we are on the softlines. But, as Lee said, seeing some factories that we're running behind, they're getting up to capacity right now. This is a fluid situation. We look at it virtually every single day. But we're -- from a supply chain standpoint, we're confident in the guidance that we provided.
Matt McClintock -- Raymond James -- Analyst
Thank you very much for that.
Operator
This concludes our question-and-answer session. I would like to turn the conference back over to Ed Stack for any closing remarks.
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
I'd like to thank everyone for joining us on our fourth quarter call, and we'll look forward to talk to you again in May when we announce our first quarter results. Thank you.
Operator
[Operator Closing Remarks]
Duration: 71 minutes
Call participants:
Nate Gilch -- Director of Investor Relations
Edward W. Stack -- Chief Executive Officer, Chairman of the Board
Lauren R. Hobart -- President, Director
Lee J. Belitsky -- Executive Vice President-Chief Financial Officer
Alex Pernokas -- BofA Securities -- Analyst
Michael Lasser -- UBS -- Analyst
Kate McShane -- Goldman Sachs -- Analyst
Simeon Gutman -- Morgan Stanley -- Analyst
Adrienne Yih -- Barclays -- Analyst
Chris Horvers -- JPMorgan -- Analyst
Joe Feldman -- Telsey Advisory Group -- Analyst
Steven Forbes -- Guggenheim -- Analyst
Seth Sigman -- Credit Suisse -- Analyst
Warren Cheng -- Evercore ISI -- Analyst
Brian Nagel -- Oppenheimer -- Analyst
Scot Ciccarelli -- RBC Capital Markets -- Analyst
Will -- Susquehanna Financial Group -- Analyst
Tom Nikic -- Wells Fargo Securities -- Analyst
Paul Lejuez -- Citigroup -- Analyst
Peter Benedict -- Robert W. Baird -- Analyst
Michael Baker -- Nomura Instinet -- Analyst
Chris Svezia -- Wedbush Securities -- Analyst
Carson Barnes -- Consumer Edge Research -- Analyst
Matt McClintock -- Raymond James -- Analyst
