Oxford Industries, Inc. (OXM)

Earnings Call: Q1 2017

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Jun 7, 2016

Good day, ladies and gentlemen, and welcome to the Oxford Industries Inc. First Quarter 2016 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the floor over to Ms. Anne Shoemaker for opening remarks and introductions. Thank you, Stephanie, and good afternoon, everyone. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q and A session may constitute forward looking statements within the meaning of the federal securities laws. Forward looking statements are not guarantees and actual results may differ materially from those expressed or implied in the forward looking statements. Important factors that could cause actual results of operations or our financial condition to differ are discussed in our press release issued earlier today and in documents filed by us with the SEC, including the risk factors contained in our fiscal 2015 Form 10 ks. We undertake no duty to update any forward looking statements. During this call, we will be discussing certain non GAAP financial measures. You can find a reconciliation of GAAP financial measures to certain non GAAP financial measures in our press release issued earlier today, which is posted under the Investor Relations tab of our website atoxfordinc.com. Please note that all financial results and outlook information discussed on this call, unless otherwise noted, are from continuing operations and all per share amounts are on a diluted basis. As a reminder, the results from the Ben Sherman business are reflected as discontinued operations for all periods presented. Also, on April 19, 2016, the company acquired Southern Tide, which is presented as a separate operating group. And now I'd like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO and Scott Grassmyer, CFO. Thank you for your attention. And now I'd like to turn the call over to Tom Chubb. Good afternoon and thank you for joining us. Our consolidated results for the Q1 fell short of our expectations, driven primarily by a sales shortfall at Tommy Bahama, our largest operating group. The miss came in 2 ways. 1st, like other fashion retailers, we saw weak traffic in our stores and online throughout the quarter, but it got significantly worse late March and all of April. Secondly, we underestimated the impact of a shift in timing of an important loyalty card promotion from April to May. Since May, when our loyalty card program kicked in, we have seen strong conversion and a return to positive comps at Tommy Bahama. Although traffic remains sluggish, we expect significant improvement in the Q2 with a high single digit increase on the top line compared to last year. Lilly's contributions to Oxford continue to be a highlight. We were very pleased with Lilly Pulitzer's Q1 performance as our Lilly customer continued to respond to our products and marketing. As you likely remember, last spring included the April 19 Lilly collaboration with Target that resulted in an unprecedented response from the marketplace and drove consumers to our stores and website. This helped drive year over year sales increases of 17% and 39% in the 1st and second quarters of 2015. While we have top line growth planned for the Q2 this year, we expect it to moderate to the low single digits against this very tough compare from last year. Another important highlight of the Q1 was our acquisition of Southern Tide. This small but fast growing lifestyle brand is a great addition to our portfolio as it evolves and redefines the boundaries of a classic Southern brand. This business, which we have known well for quite some time, came to us with a fantastic management team in place. As a relatively small business, we expect Southern Tide to realize meaningful benefits from being on our platform. For example, we are migrating from a 3rd party distribution center to our more efficient, high service Lyons, Georgia facility, which has already begun shipping Southern Tide product. The team is continuing to implement their plans for growth and we expect to see them leverage existing channels of distribution, wholesale and e commerce and to develop new channels such as their signature store concept, we are very excited about having Southern Tide as part of our company. We expect Lanier Apparel to deliver very modest top line growth for the year. Although the Q1 sales were down, an improved sales mix during the quarter drove a 3 40 basis point gross margin expansion. We also realized some SG and A efficiency. For the quarter, this resulted in an 11% operating margin contribution and an increase in operating profit to $2,900,000 from $1,800,000 last year. We are proud of this accomplishment and look forward to another good year from this legacy business. That covers our business by operating group. I'd like to turn your attention for just a moment to some broader issues impacting our industry. The evolution of the retail apparel market is accelerating. The broadening adoption and improvement of the Internet and mobile device retail technology is disrupting traditional fashion retailing. Consumers continue to have increasing access to multiple responsive distribution platforms. They are also gaining an unprecedented ability to communicate directly with brands, retailers and other consumers. This greater degree of information access and coordination, particularly for the coming of age of the millennial generation is revolutionizing the way that consumers shop for fashion and other goods. The evidence is increasingly apparent in the market weakness of mall based retailers and department stores as well as in the strong growth in Internet purchases. This evolution in the fashion retail industry is a tremendous opportunity for brands and retailers, but it presents significant risks, especially for traditional retailers who fail or are unable to adapt. Our businesses have attributes that are true competitive advantages in this new retailing paradigm. We are embracing and leveraging technology to serve our customers when and where they want to be served. We are building channels and methods of communication so that our consumers can reach us when and how they want. Much of our capital commitment in 2016 is focused on continuing to develop Oxford's omnichannel capabilities, and we have continued to increase our investment in talent to achieve this objective. As we evaluate, build and develop our people, an understanding of and a skill set for the new retail economy is essential. We believe the brands that will be successful going forward are those like Tommy, Lilly and Southern Tide. Each brand is specific and definite in what it stands for. Each brand will remain committed to that position. Each brand will leverage that identity to continue to be meaningful to its consumers. We have worked hard to ensure that Oxford is well positioned in the marketplace in this way. At the same time, there are core business disciplines that are no less important than embracing this new retail economy. We have also, for instance, carefully controlled discretionary costs in the inventory levels. As a result of our actions, we remain strong and our opportunities for growth are intact and aligned with the larger trends in our industry, both for the remainder of this year and more importantly, well into the future. With that, I will now turn the call over to Scott Grassmeier to discuss our consolidated highlights and plans for the remainder of the year. Scott? Thanks, Tom. Please refer to a press release issued earlier today for complete results for the Q1 of 2016. I'll now walk you through a selection of highlights from the Q1 as well as our guidance for the Q2 and full fiscal 2016. In the Q1 of 2016, consolidated net sales were $256,000,000 compared to $260,000,000 in the Q1 of 2015. Decreases at Tommy Bahama and Lanier Apparel were partially offset by a 10% increase in sales at Lilly Pulitzer. The Q1 also included 12 days of sales from our newly acquired Southern Tide business. Consolidated gross margin in the quarter expanded slightly over the prior year period with Lilly Pulitzer representing a greater proportion of net sales. SG and A increased primarily due to incremental costs associated with operating additional retail stores and restaurants and the inclusion of Southern Tide transaction in operating expenses. This was partially offset by lower incentive compensation expense. Our consolidated operating income in the Q1 was $32,000,000 compared to $35,500,000 in the Q1 of 2015. Our earnings per share were $1.21 compared to $1.29 per share in the same period of the prior year and adjusted EPS was $1.26 compared to $1.30 in the Q1 of 2015. Now to the balance sheet. Our balance sheet remains strong. The increase in our inventory balance at the end of the quarter reflects the addition of Southern Tide and inventory to support anticipated sales growth in our other businesses in the Q2 of 2016. We ended the quarter with $153,000,000 of borrowings outstanding and $78,000,000 of availability under our revolving credit facility. On May 24, 2016, we amended and restated the facility, increasing its size to $325,000,000 The new agreement has a maturity date of May 2021 and includes other favorable modifications. And now I'd like to walk you through our projections for the Q2 and full year. For the Q2 of 2016, we currently expect net sales of $275,000,000 to 285,000,000 dollars and earnings per share between $1.27 $1.37 On an adjusted basis, we expect EPS to be in a range of $1.35 to $1.45 This compares with 2nd quarter 2015 sales of $251,000,000 earnings per share of $1.27 and adjusted earnings per share of $1.32 We revised our outlook for the full year 2016 and now expect sales in the $1,030,000,000 to $1,050,000,000 range and earnings per share in the range of $3.40 to $3.55 dollars On an adjusted basis, we expect earnings per share in a range of $3.65 to $3.80 This compares with 2015 net sales of 969,000,000 dollars and earnings per share of $3.54 and $3.64 on an adjusted basis. For the full year, interest expense is expected to be approximately $3,500,000 and our effective tax rate is expected to be around 36%. Capital expenditures for 2016 are expected to be approximately $55,000,000 primarily related to information technology initiatives, including additional omni channel capabilities, new retail stores, the relocation and remodeling of certain retail locations and the remodeling of our Tommy Bahama restaurant in Scottsdale, Arizona. Now I'll move to our fiscal 2016 plans by operating group. At Tommy Bahama, we expect to see good improvement in the Q2, which will benefit from the year over year shift in our loyalty card event and a strong Father's Day marketing campaign. As Tom mentioned, we've seen a good move in this direction thus far in the Q2. For the year, we expect Tommy's top line to grow in the mid single digits. The bottom line, however, is planned a bit down from last year due to the miss in Q1. As Tom mentioned, despite the tough environment, Lilly had a great Q1. I do want to point out that in the Q2, Lilly is up against some very tough comp comparisons, a remarkable 41% comp in Q2 of 2015 on top of 19% comps in the Q2 of both 20142013. Against these difficult compares, we are planning for comps to be negative in Q2. For the full year, we expect Lilly to deliver a high single digit sales increase compared to 2015 and operating margin once again in the 20% range. The expected results for Southern Tide have been included in our outlook for the year. For the 41 weeks that Southern Tide will be included in our results, sales are expected to be in a range of $30,000,000 to $35,000,000 with an adjusted operating margin in the high teens. On a GAAP basis, which includes the impact of purchase accounting charges, the operating margin is expected to be in the mid single digits. Finally, for Lanier Apparel, we are expecting low single digit percentage increases on both the top and bottom lines. Stephanie, we are now ready for questions. Thank you. And we go first to Rick Patel with Stephens. Thank you. Good afternoon, everyone. Thanks for taking my question. Hi, Rick. Hey, Tom. I apologize if I missed this, but in your opening remarks, did you talk about Tommy Bahama being up high single digits and Lilly up low single digits? And if that was the case, were you referring to 2Q sales or was it same store sales system help there? I think that was referring to the Q2 sales projection, Rick. Correct. That Tommy would be up high singles and Lilly up low single digits in sales. Yes, because we're expecting a negative comp in Q2 at Lilly due to the rough compares from really the last 3 years. That's really helpful. Thank you. And can you talk about your underlying assumptions for Tommy as we think about the rest of the year? I know what your top line guidance is for, it looks like it's up mid single digits. Do you still think you can achieve positive comps for the year or have you pared back your assumptions for the back half given some of the weakness that you saw earlier this year? Well, we have as we always do, we've certainly re forecasted, but based on the latest information we have and the latest trends in the business, we do expect Tommy to be able to post a very modestly positive comp. It's not going to be it's going to be a lower comp than we probably had in a number of years, but we do think that they'll be modestly positive for the year. And can you also talk about the levers for Tommy from a merchandising perspective? I guess what's working, what's not? And as your customers become a bit more sensitive to perhaps the macro conditions, is there any way for you to augment your assortment to capture customers in this new environment, perhaps things like focusing on more entry level items, things of that nature? Well, I think what we're mainly focused on is making sure that our best guests and this is true in both Tommy and Lilly that we're activating them, getting them into the stores, satisfying their needs and doing some business. So a lot of the marketing focus in Tommy and Lily has been on getting that loyal guest into the store and you can see evidence of that and how that's worked in Tommy Bahama as we talked about in the opening comments and we referred to it in the press release, we had sort of an annual loyalty card promotion that shifted fundamentally from April to May this year and that negatively impacted April more than we expected, but it really worked quite well in May and May was actually better than we had initially expected it to be. So those are the things that we're focused on. And Rick, I don't think the issue is that our guests can't afford the product. I think it's just that they're not in a spending mood right now as much as we'd like them to be. And last one for me, can you provide some context on how stores performed in tourist markets versus the rest of the chain, any deviations from prior quarter trends there? We definitely in Tommy Bahama saw some challenges in markets, particularly those that are big with Canadian consumers and travelers. So Hawaii, which is a very large market for us, I believe it's our number 3 state and gets a lot of Hawaiian or excuse me, Canadian tourists. We saw a pretty severe negative impact and that really goes back to the back half of last year and then certainly in the Q1 of this year. There are less Canadians traveling to places like Hawaii and Florida and Arizona and when they go, they're spending significantly less money than they would in the past and it has everything to do with the currency and the devaluation of the Canadian dollar versus the U. S. Dollar. Thanks very much and all the best for the rest of the year. Okay. Thanks a lot, Rick. We will go now to Ed Yruma with KeyBanc Capital Markets. Hi, Ed. Hi, Ed. Thanks for taking my hey, how are you? I guess first on inventory, I know that there is obviously a build in anticipation of the loyalty card shifting to the 2nd quarter. But I guess how would you characterize kind of your overall inventory levels? And I guess within the revised guidance you provided, how should we think about markdowns either both in your stores or at your wholesale partners for the balance of the year? Well, we feel very good about inventory and if you look at the increase, about half that's coming from the addition of Southern Tide. And then outside of Southern Tide on a GAAP basis, we're up 11 percent, I believe, and on a FIFO basis, 8%. So given the environment, everything that's going on, we actually feel really good about the inventory levels. If you look specifically at Tommy Bahama, which is the biggest pool of inventory, we're actually only up 4% year over year there. So we feel like we're in really, really good shape on inventory and that we're in terms of our own business, I don't think we're looking at big markdown exposure. No, I think Tom has done a great job of keeping pace in their outlets on keeping the goods moving. And Lilly, of course, has their flash sale, which might be a little bigger flash sale if we don't hit our comp numbers and but they can move the goods. So I think they move the good margin. So I think we're in really good shape inventory wise and don't expect a major gross margin erosion due to more tons. Got it. As it relates to Southern Tide, I think you talked a little bit about being able to use your existing distribution capabilities to improve service levels. I know historically you've kept kind of the brands in a very discreet. I guess is there an opportunity or you contemplate an opportunity in this kind of omni channel environment to potentially consolidating some of the back office functions of your different brands? Well, Southern Tide came to us smaller in earlier stage than Tommy or Lilly did. So, they were both significantly bigger, significant the businesses had been around longer and they were significantly more developed and evolved when we bought them. So with Southern Tide being smaller in earlier stage, I definitely think that there are the opportunity for them to benefit from being part of Oxford is greater. So if you start on the supply chain area, things like physical distribution and fulfillment, as I mentioned in my opening comments, we're literally in the process of moving that. As we speak. We're probably about 90% complete on that move and we're actually already shipping product out of our distribution center in Lyons, Georgia and that's a highly engineered, very efficient and very high service DC that we've had down there a long time. So that should improve service and save them money over the long term. And very importantly, we're able to do that without them having to really do a lot of thinking or work to get there. So all they had to do is become part of our company. And then there's obviously work involved in the move, but it's a whole lot easier than developing that capability over a long time. We expect to do similar things for them in the shipping area. So we have contracts for ocean freight shipping, FedEx and UPS that benefit from our scale. We believe we'll be able to roll Southern Tide into those and help them on rates, but also do it in a way that doesn't require a whole lot of work or effort on their part. Then when you get into some of the things, Ed, like e commerce and where they have a nice e commerce business already, but retail where they don't have any of their own company owned stores at this point, Those are all areas where I don't know that we're going to directly roll them into one of the other brand platforms, but they certainly will benefit a lot from all the knowledge and expertise that we have in those other operating groups. So long winded way of saying, yes, I think Southern Tide will benefit significantly from being on our platform. And a lot of it is their efficiency and cost savings, but a lot of it is really just putting them in a better position to grow without having to develop certain capabilities on their own. Great. And one final follow-up, if I may. I know it's been some time since you did Lilly and certainly quite a while since you did the acquisition of Tommy. As you sit and look at Southern Tide, I know it was a smaller business than either of those 2 when you acquired them, but how would you think about the white space for it in the longer term opportunity as you kind of think about the business? Thank you. We think it's got great lots of white space in front of it. And if you look at the brand, it's the sort of the message of the brand is classic Southern and Coastal and that's a message that really resonates pretty broadly. A lot of people from all over the country vacation on the Southern coastal regions in places like Charleston and Savannah and Ponte Vedra and throughout the South and that represents a happy memory for them. They like the brand. They like the logo. It's very appealing. And so we think it can be strong not only in the Southeast, but throughout the country. And when you look at the sort of the updated classic point of view, that's one that can resonate with a very broad section of the population. The price point being sort of the premium or affordable luxury price point is a great place to be right now. So we think it's got lots and lots of white space in front of it. Great. Thanks so much guys. And we go now to Pam Quintiliano with SunTrust Robinson and Humphrey. Hi, Pam. Hi, this is actually Nick Hyatt we're just wondering if there's anything you're doing to combat the weakness there. And also on that same topic, just wondering if you think the potential or the recent improvement in some of the currencies could be a tailwind maybe in the back half or further down the road? Yes, I think I'll take the second part of that first. And I think on the currency situation, it certainly at this point doesn't look like year to year it's going to be worse in the back half for us than it was last year. So it should if it's I don't know whether it will be a tailwind or not, but at least it shouldn't be an increasing headwind, if that makes sense. So that should help a little bit in the year to year second half. Then on the first part of the question about what we're doing in tourist markets to try to combat the some of the negative factors at work there, well, obviously, there's certain parts of that, that are beyond our control, but there are a lot of things that are within our control and there are a lot of things that we're doing in terms of in the market marketing activities, trying to establish good ties with tourist groups and tour companies within those regions, hotel concierges, all that type of stuff. We're not just sitting back and accepting the fact that it's going to be tougher to do business. We're very active locally in marketing these destinations and trying to do what we can to improve the situation. Got you. Thanks. That's very helpful. Next question I have for you is just wondering if you can talk a little bit about Waikiki and how performance is going there? And if you can if you've been able to gauge if there's been an impact on Japan from Waikiki? Well, first of all, I would tell you our timing on opening Waikiki was obviously not great. I mean, it was many, many years in the works and we opened it as soon as we could get open. But the Hawaiian market has been tough and you can hear that not only from us, but there are plenty of official statistics on tourist spending there and that kind of thing that you can read and understand that it's not been a great time for upper end retailers in Hawaii. All that said, I would tell you that we're very happy with Waikiki. Again, we didn't open in the greatest time in the marketplace, but we're happy. It's a beautiful store and restaurant combination that represents the brand beautifully. We're seeing all kinds of guests there. We're doing good business and we do believe that it is having some positive impact in Japan. Our Japanese business and it's not solely due to Waikiki obviously, but has actually been comping up really nicely this year so far. Wonderful. Well, thanks. That's helpful as well. And one other question we have for you is just around Southern Tide. I just want to say congrats on the transaction there. Thank you. No problem. And just wondering if you can first just talk us through a little more on what motivated your decision to pursue Southern Tide? I know you've talked about it a little bit, if you can just give us some more details there. And then if you could talk about some of the things you mentioned around new channels and maybe give us an idea of the timing that you could see there, if you have an idea of that, so in terms of improving e commerce and retail stores? And lastly, if you can just, sorry, give us anything else in terms of what you think you could do to move the needle? At Southern Tide? At Southern Tide, yes. Yes. So, let me start with the first part of that question and what it is that we like about Southern Tide. I think if you know what the other key brands we own are in Tommy Bahama and Lilly Pulitzer, Southern Tide is a very natural extension. It's got a very clear and strong brand position, again being classic Southern Coastal. It's very clear in its positioning. It's a happy brand about happy times and the happy places, which is similar to Tommy and Lily, and we believe that those types of brands elicit the kind of emotional connection from the guests that we believe is part of the formula for success. Then if you look at it from a distribution standpoint, we've always talked about the fact that we like brands that have wholesale distribution that's specialty store driven and in the department store world is sort of Nordstrom and up kind of distribution and Southern Tide exactly fits the bill there. Their distribution outside of their own website is specialty store and then they sell Nordstrom and Von Maur, which is just terrific distribution from our point of view. From a price point perspective, they're in that sort of affordable luxury or premium space with similar pricing to what you see in a Tommy Bahama or a Peter Millar and that's a great place in our mind to sit in the marketplace. And then last but not least is the people at Southern Tide. We don't have a lot of access executives here that we can parachute into an acquisition and take over. So having people in place in a business that are culturally aligned with us have the same values and principles in the way that they operate the business and the same vision about how to run and build a brand is very important to us and the team at Southern Tide absolutely fits the bill on that, Mark, too. So it was a really good fit for us all the way around and we're happy to add it to our company. In terms of their channels and sort of path for growth, they've got their existing wholesale channels, which there's room to grow there both by adding doors, geographic expansion and very importantly by doing more business within existing doors by really managing the business better for higher sell through and throughput. So some good growth opportunities there. Secondly, they have their e commerce website, which I believe is last year was a little less than 20% of the business. They're off to a really good start there, but we think there's lots of runway for e commerce. Then most recently, they've started focusing on shop in shops within some of their existing wholesale customers and they've got several of those going that have the impact of both presenting the brand better and more strongly to the marketplace, but they also when you do a shop in shop, you tend to see an uplift in sales within that door. And then they've got a couple of signature stores going that are very similar to the signature store concept in Lilly Pulitzer. So they're 3rd party retailers that are basically licensed to run a Southern Tide store and we think that's a great channel for them that's really in its infancy at this point. And then somewhere down the road, and I'm not prepared yet to put an exact timeframe on it, but we believe this brand can absolutely support company owned retail and will at some point in the future. Perfect. Well, that answers all my questions. Thanks for your time and good luck on the quarter. Okay. Thanks a lot, Nick. Thank you. And we go now to Eric Beder with Wunderlich Securities. Hey, Eric. Good afternoon. Hey, how are you doing? Good. Thanks for being on. No problem. Can you talk a little bit about the wholesale side for Tommy Bahama? Did it mirror kind of the comps you saw off or was it better or worse? How does that look? You mean in the sell through at retail amongst the wholesale customers? Well, look, we don't have perfect information about it, but as you know, the majors almost to a store had a tough spring. So you're in a very tough climate when you're selling within those stores. That said, we believe we generally held our own at worst and did well at best within those environments. So in some of them, our selling was really pretty strong and others, it sort of held its own within the climate. But I don't think there's anywhere where we really think we're lagging behind what the overall business of the store was. Great. And I know that this year you rolled out more aggressively with this Italia Bahama women's product. What has been the response to that? Have you seen significant changes in that percentage of product as it was the year before? Yes. So, as you know, Eric, and you've seen and probably most people on the call know, we have worked over the last several years to really build a much stronger women's effort. This spring was the 1st season where we really had what I'm going to call the new women's product out there. We did generate a lot of newness. So, I know that you shop and you saw what it looked like in women's was there was a lot of newness there this spring. We through that newness, we created an awful lot of excitement in our stores and among our consumer base. From a selling perspective, Some of it worked well, some of it didn't work as well as we hoped. And from that, we're learning a lot from a fabrication standpoint, a price point standpoint and a merchandising standpoint. This is exactly what we had hoped would happen was that we gained a lot of good learnings out of spring 'sixteen and that's happened and we'll incorporate those learnings into future seasons as quickly as we can and we're convinced that we're on the right path with women's. In terms of whether it moved the needle or not this spring, the answer is it didn't. We didn't increase our percentage of women's. And in fact, I think we probably went backwards slightly and that is a result of it being somewhat hit and miss. And I think also in fairness to the women's effort, it's very difficult when the environment is as tough as it was this spring, it's going to be hard to really push on a new initiative like that and see as much success as you'd want to. So bottom line, Eric, again, it didn't move the needle, but it did accomplish an awful lot of what we were looking for it to accomplish this spring. And as you know from talking to us over the last several years, we're very, very committed to the women's effort. We think we've got the right team in place and we think they're headed in the right direction. The design and merchandising team spent a lot of time in market key markets this spring. So places like Newport Beach, I think, and Scotts Dale and Palm Desert actually on the floor watching guests shop the line and talking to guests so that they were firsthand getting the input and are able to incorporate that. And then of course, we're aggregating that information otherwise for them as well. Okay. And sounds good. And Oxford, I think we had time behind international, what's going on there? I know you talked about positive I'd say we're executing our plan quite well this year. The Australian business is performing nicely. The Japanese business is comping quite nicely. We're continuing our sort of overhead reduction efforts there and are exploring the possibility of licensing some of the markets. So, I think we're that part of the business is tracking very well to achieve its objectives for the year. Okay. And finally, just remind us, how many stores do you plan on opening at Tommy's this year? And what's the amount of openings you're expecting for Lilly in terms of store openings this year? Well, I know we just opened 3 in Lilly in May, and we've got another 2 coming in Lilly in the balance of the year, I believe. And then we had a net of 0 in the Q1, is that right, in Lilly. So it will be 5 total for the year. And we will open 8 at Tommy. 8 at Tommy. Great. Thank you and good luck the rest of the year. Thanks a lot, Eric. And we go now to Jeff Van Sinderen with B. Riley and Company. Good afternoon. Most of my questions have been answered, but I did have a question on e commerce. Any more color maybe you could share there what you're seeing at each brand? And then maybe you could just touch a little bit more on some of the omnichannel initiatives that you're working on? Yes. So, in e commerce in general, I would say that we the big takeaway to me is that for the year, we still expect e commerce to be a strong driver of growth. And in the Q1, we saw some turbulence there and going into May, especially in Lilly Pulitzer where you didn't have the all the excitement that Target created last year, you didn't have that this year, but e commerce is still going to drive more than a share of growth. Okay. And then your other question, I think, was about omni channel. Yes. Just wondering maybe if there I know you mentioned that you were hiring, you're bringing on talent to work on some of those things and just thought maybe there were some new things to share in terms of focus there? Yes, I think it's a big focus of our investment both from a capital perspective and a people perspective. So we mentioned in our prepared comments that a very significant portion of our CapEx for the year is dedicated to IT initiatives, which for the most part are centered around helping to build our omnichannel presence in the various brands. And that's a change from the past. So the proportion of our CapEx that's being dedicated to e comm and omnichannel initiatives is growing. And we think that's important, we think, to build for the future that we need to do that. From then from a people perspective, we are continuing to dedicate a lot of our new hiring to people that live within that world. So that includes people focused on social media and other digital forms of communication, people in the e commerce world, people in the IT world that are dedicated to supporting some of those initiatives. Does that help? Yes, that definitely helps. And I know it's a small part of the whole pie for you, but just wondering if there's anything to share on your restaurants, what you're seeing there? Yes. Well, restaurants had some challenges in the Q1 too. Their traffic, I think, was down a little bit less than what we saw in non restaurant locations, but they were not totally immune to what was going on in the broader marketplace and within the other parts of our business. All that said, we're still very bullish about our restaurants and our island locations as we move into the sort of new age of retail and sort of branded and fashion apparel world, we really think that those island locations are a huge asset to us. They give us a point of distinction in a way of communicating our brands to consumers that is fairly unique and you can see Jeff out there in the marketplace that a lot of people are actually trying to play catch up with us. But I'll tell them and tell you it's not the easiest thing to do. And we're glad that we've been added in Tommy Bahama for 20 years now because we know how to run and operate a restaurant business. And again, we think that combined with the retail that's at those locations gives us a distinctive relatively unique way to get our brand message across in an environment where it's harder and harder to do that. Yes. You certainly seem to have that model figured out pretty well. I appreciate you answering my questions and best of luck for the rest of the quarter. Okay. Thanks a lot, Jeff.

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