We expect first-quarter EPS to fall below consensus of $2.97, with a likely range of $2.86-$2.92. Street sales growth consensus of 5%, implying 9% growth in March, looks too high. Although March will benefit from the calendar shift of Good Friday, and weather has been more favorable, 9% growth from 3% growth in January and February looks aggressive.

Analysts forecast 6% ADS growth in March and 6.5% for April. The comparison in March eases 300 basis points, so anything less than 6% would be really disappointing. Softer-thanexpected sales combined with continued growth investment should mute operating leverage. Management guided to 30 basis points of year-over-year gross margin erosion.

However, it is our impression that pricing has not been as strong as anticipated and gross margin could fall below the guided range. Regarding operating expenses, management planned an incremental $41 million of growth spending for the period. Although spending could have been tempered, it is unlikely spending was materially reduced since weather-related weakness should be viewed as temporary.