Earnings Call: Q3 2016

Dec 8, 2015

Earnings release

Good day, ladies and gentlemen, and welcome to the Oxford Industries Third Quarter Fiscal 2015 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the floor over to Ms. Anne Shoemaker for opening remarks and introductions. Thank you, Catherine, 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 2014 Form 10 ks and our Q2 fiscal 2015 Form 10 Q. 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. And now, I'd like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO Scott Grassmeyer, CFO Terry Tillow, CEO of Tommy Bahama and Doug Wood, President and CEO-elect of Tommy Bahama. 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. We are generally pleased with our results for the Q3, which due to the seasonality of our brands is our smallest quarter. Our bottom line loss of $0.08 per share was at the top end of our forecast. Across the company, we went into the quarter with the inventories in excellent shape and that combined with good execution allowed us to leave the quarter with inventory still in excellent shape while driving a gross margin expansion. Lilly Pulitzer had another outstanding quarter. Sales were excellent as the customer responded well to our Resort 365 strategy and its ample offering of buy now, wear now product during the Q3. Lilly was able to deliver growth of 22% driven by an amazing comp store sales increase of 27%, while at the same time expanding gross margin. We have opened 6 Lilly stores this year, including our Coconut Point location north of Naples, which we opened in September. We are delighted that all of these stores are exceeding our that all of these stores are exceeding our expectations to date. As you no doubt recall, our twice a year e commerce flash sale in Lilly in January August is our primary vehicle within the brand for clearing residual inventory. The August sale has historically been a 3 day event, but this year we shortened it to 2 days, delivered a record $13,400,000 of sales and fundamentally cleaned our inventories out at a solid gross margin. Not only is the flash sale an excellent clearance mechanism, but we believe it also helps actually reinforce our connection with our loyal consumer by creating a high level of excitement in social media chatter. There were many positive developments at Tommy Bahama during the quarter, but with its broader footprint, the Tommy Bahama business was not immune to the impact of the softness in the consumer marketplace this fall. Tommy's 5% comp store sales decline during the quarter was highly correlated with the decline in traffic in our retail stores. That said, we were pleased to return to solid positive comps in November and to date in December. We are also encouraged by our spring order book where we are seeing increases over last year. Important highlights for Tommy Bahama during the Q3 were the move to Tommy's new office space in Seattle and the completion of the long awaited Waikiki retail restaurant island. While both of these items had a heavy impact on expenses, we believe they will help fuel growth in the brand going forward. The new office space gives Tommy Bahama much needed additional space, allows departments that partner frequently such as marketing and e commerce to be adjacent to each other and provides our design team a highly functional space that will allow it to work more cohesively across men's, women's and all other product categories. We believe this will help us in our efforts to build a bigger and stronger business, particularly helping to fuel growth in women's. The new Waikiki retail and restaurant island is absolutely gorgeous. This is a major location for us and an incredible tourist destination. We believe we will do a lot of business here and it should generate excellent returns for us while also being an excellent brand builder for the hoards of tourists that visit Waikiki every year from around the world. Moving to our Lanier Close Group, as we expected sales for the quarter were quite a bit lower compared to last year as 20 fourteen's Q3 included significant shipments to a warehouse club customer, which we did not anniversary at the same level. Excellent expense control and gross margin expansion due to the mix of business combined to help Lanier deliver a more than 200 basis point improvement in year over year operating margin for the quarter. The team at Lanier continues to execute at a very high level. I'd like to make a few comments regarding 2 very important announcements that we recently made. The 3 elements of success in our business are excellent strategy, excellent people and excellent execution. I want to talk to you for just a minute about the people element of our business. Since our last call in September, we have announced 2 major leadership transitions. First, in Tommy Bahama, Terry Pillow will be handing the reins over to Doug Wood at the end of the fiscal year, while in Lilly Pulitzer, Jim Bradbeer and Scott Beaumont will be passing the baton to Michelle Kelly at the end of March. Terry, Jim and Scott have all been terrific leaders of their respective businesses, great contributors to the broader success of the overall enterprise and excellent partners to me. I would like to thank them each both personally and on behalf of the corporation and say how much I genuinely wish them well and look forward to working with them in an advisory capacity going forward. Among their many successes, perhaps their greatest accomplishment is in succession planning. Both Daga Tommy Bahama and Michelle Lilly Pulitzer have been with the company for more than 10 years. Each was identified early on as a potential leader of their respective businesses and each has been groomed over a multiyear period in preparation for their new roles. In them, we have 2 strong and forward thinking leaders and I am highly confident that they are ready and capable together with the teams that they have helped build to lead us forward to future success in these two great brands. The strength of Tommy Bahama and Lilly Pulitzer is evident in the results that they are posting so far for the Q4. Both brands comped up in November and have continued to post positive comps into December. While we are pleased with these results, we still have a long way to go and are cognizant about the market conditions facing all retailers this holiday season with decreased mall traffic and a highly promotional environment. Because of this, we moderated our guidance for the full year and are now expecting adjusted EPS for the year in a range of $3.53 to $3.63 While the environment is no doubt quite rocky, we have differentiated ourselves with 2 of the most distinctive brands in the marketplace that connect with their consumers extremely well. It is important to note that with Tommy's Island Relax positioning and Lilly's resort seat positioning, both brands are offering their consumer not only innovative differentiated product, but product that provides a tangible connection with and reminder of happy experiences in happy places. More and more, we believe these are the kind of brand experiences that customers are looking for. Thanks for your attention and I will now turn the call over to Scott Grassner to discuss our consolidated results. Thanks, Tom. As Tom mentioned, our Q3 is our smallest sales quarter and as planned, we reported a modest loss for the quarter. I'll walk you through some more detail on sales, gross margin and SG and A, but please refer to our press release for the complete results by group and for the company as a whole. Consolidated net sales were $199,000,000 compared to $201,000,000 last year. Lilly had a remarkable quarter and increased sales by $8,000,000 with increases in all channels of distribution. This was offset by a $9,700,000 sales decrease at Lanier Close with a year over year decrease coming primarily from the private label business. Tommy Bahama sales declined 1% in the quarter with a decrease in wholesale sales, primarily due to lower all price sales than last year. For the reduction in traffic in our retail stores, we saw Tommy comp store sales declined by 5%. On a consolidated basis, our gross margin expanded over 2 60 basis points with improvements in all operating groups. Lilly Pulitzer, which has higher gross margin than our other operating groups, represented a greater proportion of sales in the quarter. But Tommy Bahama and Lilly Pulitzer had a change in sales mix towards full price direct to consumer sales. For Lanier Close, the change in sales mix reflected a higher proportion of branded sales. In the 3rd quarter, SG and A as adjusted was 112,000,000 dollars compared to $102,000,000 last year. The increase in SG and A was primarily due to incremental cost associated with operating additional retail locations. For reference, in the quarter, there was $1,300,000 of pre opening expenses associated with Tommy Bahama's Waukeke retail restaurant location. The increase in occupancy costs associated with Tommy Bahama's move to new office space in the quarter was 1,600,000 dollars For the quarter, interest expense decreased to $449,000 from $730,000 last year. We also recognized a tax benefit of 13.9% against our pre tax loss. The resulting net loss was $0.08 per share in line with our previously issued guidance. We continue to see strength in our balance sheet. As Tom mentioned, our inventories at $121,000,000 are very clean and at the right level to support our 4th quarter sales plans. We have a solid capital structure to support our growth plans and ended the 3rd quarter with over $160,000,000 of availability under our revolving credit facility. Our capital expenditures for fiscal 2015, including $63,200,000 incurred during the 1st 9 months are now expected to approach $75,000,000 4th quarter capital expenditures are tracking slightly higher than our original plan due to the timing of certain IT initiatives. Of the $75,000,000 of capital expenditures, approximately $13,000,000 is expected to be funded by landlords through tenant improvement allowances. Looking ahead, as Tom mentioned, we revised our prior guidance for the fiscal year. We now expect adjusted earnings per share in a range of $3.53 to $3.63 on net sales in a range of $970,000,000 to 985,000,000 dollars On a comparable basis, fiscal 2014 sales were $920,000,000 and earnings per share were $3.46 on an adjusted basis. The effective tax rate for fiscal 2015 is expected to be approximately 38%. Thank you for your attention this afternoon. Catherine, we are now ready for questions. Thank We'll go to Ed Romer with KeyBanc Capital Markets. Hi, good afternoon. Thanks for taking my questions. I guess, first, on the guidance revision, I'm just trying to dissect a little bit on where 4Q may be coming in softer to plan. So you ended 3Q with earnings that were in line or ahead. 4Q, you said you're comping positive in both brands. I guess, with the reduction in guidance, is it a top line weakness you are embedding? Are you anticipating or are you observing that margins are coming in weaker than you would have hoped? A little bit of color there would be helpful. Hi, Ed. Thanks for your call today. And I think our concern really is just that we see risk to the top line as we stated in the call or in the prepared remarks. Our comps have been good so far. We were pleased with what we saw in comps in November and it's continued into December. Our concern really stems from what we see happening in the external environment just with some of the traffic issues that are being reported, the amount of promotion and discounting that's going on in the marketplace, and then some of the reports that you see of people getting backed up on the inventory, which is going to to the consumer, could end up impacting our to the consumer could end up impacting our top line a bit. And so it's really the external factors, not really so much what we're currently seeing in our business. Got it. And on the promotional environment, I guess what's your openness to execute on promotional contingencies should maybe some retailers that sell your product to execute those? And then I guess as a follow-up, in terms of wholesale inventory or inventory and channel of both Tommy and Lilly, how would you gauge it maybe versus where it was this time last year? Thank you. Ed, with respect to the first part of it, as you know, we're very committed to our full price selling strategy. We do some marketing all year long and particularly during the holiday season that's designed to spur sales. But in terms of us going to 30 off the whole store or something like that, as you see with a lot of other retailers, I just don't see it happening. With respect to performance at wholesale, I think we're all seeing the same reports from some of the big retailers of 3rd party brands, department stores and others. And I think those guys have had some difficult times compared to a year ago, but it is still relatively early. And I think time will tell. If you know, we're not overly dependent on that channel distribution in either brand. Great. Best of luck for the balance of this holiday season. Thanks a lot, Ed. Thank you. Our next question comes from Rick Patel with Stephens. Hi. Thank you. Good afternoon, everyone, and very nice momentum at Lilly. Can you give us I guess, just a follow-up on Ed's earlier question on the guidance. Can you give us some general context as to how much of your quarterly sales have already occurred for the Q4 to date? I figure we are almost halfway through the quarter here, so I am wondering if the bulk of your sales have already happened or if they are still ahead of you as we think about that positive comp in November December and how much weight that should carry from a modeling perspective? I don't know that we have the exact number handy for you, Rick. It's a good question, but I would be I think we'd be fairly safe in assuming that we still have more than half to go? Yes, we do. And remember, we've got the important resort travel business. So our holiday rolls right into a really strong peer for us, which is resort. So it's a much more impute. The post holiday shopping is much more important to us than it is to many of our competitors. So I think we have I don't think we're halfway through yet. I think we've got more ahead of us than behind us. And can you update us on Tommy Women's, perhaps a little more color there on the performance relative to your expectations? And any initial reads on the spring product based on what you're seeing in your order book given some of the merchandising efforts there? Yes, I'll let maybe Doug elaborate on this a little bit. And look, it's really early. The resort product that's on the floor now is really the first product that's been designed by our new women's design team, but we're seeing some positive things there. And then of course in spring, we'll have a good dose of it and I think get a lot more insights. But Doug may want to elaborate on that a little. Yes. The first two deliveries of Holiday were really our new design team. That's actually getting out of retail and it's been successful and there's some directional things, especially it's about ready to hit the floor for December, it's going to tell us what's going to happen in the spring. With regard to the order book for spring, our women's sportswear business is still pretty small, and we did book the product well. But until it gets on the floor in retail, that will be something that we'll be watching in spring. Overall, women's has been actually performing very well in November and beginning in December. Great. And then a question on gross margins also. It seems like a number of positive factors came together in the Q3 with the sales mix outperforming at Lilly and retail being a bigger piece of the pie. Should we expect those same elements to stay in place in the 4th quarter as we think about the gross margin potential? Or is it safe to assume that things will moderate a little bit versus the Q3 given the promotional environment out there and just the choppiness in same store sales? Well, I think you had the factors that you cited, Rick. You also had a meaningful decrease in off price wholesale at Tommy Bahama during Q3. And then you had a shift in Lanier margins as a result of their mix that also helped with the gross margin. So I don't think we're looking for deterioration in Q4, but I think they're more flat to last year as opposed to seeing sequential gross margin improvement. But we think in this environment flattish is a pretty good story. Great. And then just one last one, if I may. Leadership changes going on at both Tommy Ann, Billy Ann. And I know that Doug and Michelle understand these businesses extremely well. But as we think about 2016, is there any potential for either of these concepts to undergo a change in strategy versus what we've seen in the past? Or do you think they both continue to head down the right strategic path? Yes. We very much believe in the strategies that we have in place in these businesses. The strategies will evolve each year as they always have. But part of the attraction of Michelle and Doug as leaders is that they understand the strategies, they understand the businesses, they know and understand the people in the business, the customer and they've been a big part of building the teams. And given that these are 2 highly successful businesses, what we're looking for is continuity and an ability to continue to adapt to changes in the market and the environment. And then Doug and Michelle, we think we've got the best leaders we could possibly have for each of those businesses. We feel really good about that. Thanks very much. Have a great holiday. Okay. Thanks a lot, Rick. We'll go on to Eric Binder with Wondering. Good afternoon. Hi, Eric. Hey. Could you give us an update on Asia and how that market has been evolving now in Q3 and how it's looking at the holiday season? Yes, I'll comment on it briefly and let Doug elaborate on it. But of course, it's still very small and of course, we still have the issue which we're focused on of an oversized infrastructure. But against that backdrop, we did make year over year improvement by about $400,000 in the quarter. And we've actually been comping quite nicely over there. The performance of the business at a store level over there year to year has been very encouraging. And Doug can give a little more color on that. Eric, it hadn't gone away as an issue for us, but there are a lot of things we like about what's happening over there right now. Yes. The only thing I would add and it really because we're talking about Japan and Australia, 2 different markets, but 2 markets that on a 4 wall basis, we are seeing some nice growth. And specifically in Japan, we've got some products that are signed in Japan that for this for cold weather that's been outerwear that has really driven those sales. So the localization piece that we knew was an issue when we started this that's really coming together and really helping our results. And then on Australia, that has been just a real success for us this year. It's still though still a pretty small part of our overall mix. Great. And when you look at Lilly Pulitzer, you had a fantastic year at Lilly. What do you look at next year in terms of store expansion potential? Where is like the next level here for Lilly Pulitzer? I think, Eric, as you've heard from us before, we love what's happened in Lilly Pulitzer since we bought it almost 5 years ago. It's basically tripled in sales and close to 5x I think in operating profit. So a pretty impressive record in our view over the last 5 years and we think there's a lot of runway ahead of it. We expect to grow again next year. I don't want to get into giving guidance before we're ready to give guidance. But we think Lilly can keep going for sure. And it will be driven by direct to consumer, so it will be driven by e commerce and retail, but wholesale will continue to be an important part of the Lilly Pulitzer world as well. And speaking of and last question, speaking of wholesale for Tommy Bahama, I know women's has not been a big piece of that business. Given that you're upgrading the women's line significantly, how should we start thinking about women's potential to be more wholesale driven than it has been historically? Thank you. Eric, I'm going to take that one and tell you that I think we that's something where that we need to be patient with. Tommy Bahama has been around as a brand for over 20 years and has been known, as you know, more as a men's brand than a women's brand. And we do think there's a great wholesale opportunity for women's out there, but it just won't happen overnight. People are going to want to see results in our own stores as well as in the existing wholesale business that we have. So I think it's going to take a while for women's wholesale to ramp up. But I do think the opportunity is there over the longer term. You won't see it in spring. Okay. Congratulations, and good luck on the holiday. Thank you very much, Eric. We'll go to Pamela Quintiliano with SunTrust. Hey, guys. Congratulations on executing a very balanced count environment. So few questions. I'm going back to guidance, just a point of clarification. With Tommy and Lilly both comping positive, is that in line above, below your internal expectations for this point in the quarter? And can you also remind us the cadence of the quarter last year as it progressed? And then lastly, just how you've planned inventories for both divisions for year end? Okay. So starting with the first one about where we are in terms of our expectations for the quarter, I think broadly speaking, we're happy with where we are at the moment. Our concern is just whether the environment deteriorates further the external environment and makes it difficult for us to maintain the level of performance that we've had thus far in the quarter. On the cadence of events during the quarter last year, I think we were pretty strong through the whole quarter, if I remember right. I'm looking at Scott, maybe you can Yes, we were. But the Thanksgiving weekend is not quite as important to us. It's important, but not as important to us to some retailers. And I think when you get further December, it's very, very important. And again, when you get into later December early January, we still have some really, really important weeks. So we still have a whole lot of holiday ahead of us, counting the resort as part of that. So we're like Tom said, we're pleased with the comps right now, but we've got a long way to go. And on the inventories, plans for year end? Inventories are in great shape. I think we're only up 2% on a consolidated basis and that's on a much bigger business. So I know Tommy, both the full price stores and the outlets have lower inventories on a comp basis, which means that even if there was a little backup, if Holiday went south, there's room to move goods. And Lilly's inventories are in excellent shape and Lanier's are also. So we're very pleased that we went into the Q3 with inventory in very good shape. We did not have to be overly promotional the way a lot of people are having to be, and we exited the quarter with good gross margins and inventories in very good shape. So we're very, very pleased with the way our inventory is sitting right now. And just to be clear, and you being conservative with your approach as we think about for year end with inventories, Even though you were having good quarters, it's not as though you made lofty assumptions for year end with your inventory commitments? Right. But we have I mean, we have the inventory to do business. We have very good clearance channels and we're not we're really not worried that we're going to somehow overstock that we've got to have that we would have any kind of inventory problem. Okay. And then, just a few follow ups. If you could give any granularity on performance wholesale, retail, e comm, I know that's something that's been doing very well for you guys, particularly Lilly. And then Waikiki, anything you could share with us about how it's going so far? I know it's still early days, but you guys have been very excited about it. Yes. I'll start with the first part first and then let Doug elaborate a little on Waikiki because he and Terry have recently been over there. But in terms of wholesale, retail and e commerce, I think our retail has performed well quarter to date. E commerce has performed better quarter to date, which is sort of the story that's been the case for the last several years. And then in the wholesale channel, as we talked about in response to an earlier question, the what you read out there suggests that some people, some of the retailers may be having a tougher quarter so far, but it is still early for them. So they've got a long way to go to. Okay. And as far as Waikiki? Doug, do you want to give us a high spot? Yes. The great thing about Waikiki anytime you have a facility that kind of expectations are first, hey, did it meet your expectations overall? Did it architecture? Did it get built correctly? Is it delivering the brand message? And the answer is, we don't have a more beautiful facility than Waikiki. And then the next thing is, are the staff ready? Are you ready to do business? And on the first day, we look like we've been open for years and the staff was ready to greet. And then the last and most important thing, hey, are we doing business? And we're doing a lot of business. And so, so far, we're a little bit over the moon over Waikiki and it's really, really early because this facility, we're expectation not to just be talking to North American Gas, but International Gas and be doing corporate business out of there. So I think Terry and I both can say that this has really exceeded our expectations for all three areas and we're looking forward to some good things. Pamela, it's Terry. And you know how excited I have about New York and I see you all in New York and show off that. Doug and I just got back from Wacker Key when I walked in there. I mean, it is a drop your jaw when you walk in, it's quite incredible to see what we've built there and how much business is doing. I'm just happy the guest is in that environment. So it's a crowning achievement for us for sure. And have you guys been seeing a new customer coming in? Can you tell you others that the customer is familiar with Tommy already? The answer is, we're seeing our biggest surprise is the number of locals we're seeing, because especially on Kawa Kawa is right down in the heart of it. It's a little bit like New York City, if you don't work down on Fifth Avenue, you don't really go down there and shop. A little bit like that in Hawaii, but from a local standpoint, we're going to allow locals that are coming in for dinner and spending time at the top of the bar. We are seeing a new guest, the younger guest in that area that's quite exciting. And it's the cadence of Waikiki. It's a time period where the Japanese aren't necessarily heavy into Waikiki as they at the same time, we've already are reaching out and we've got some Japanese wedding parties coming in, which is important for the restaurant. So there's a lot it's such a crossroads of people that we're touching. So you're getting a little bit of everything. And then just very last question, I promise on this. So I know you're seeing similar types of conversion in New York. It seems like people come in, they have a cocktail, they like walking around the stores, sometimes it inspires them to spend when they're in the stores, higher than they would in the standalone. Are you seeing similar types of conversion thus far? You actually see if we were to the good news about Waikiki is that to get to the restaurant, you got to walk right through the middle of the store. So that's their conversion better than what we have in New York and we're happy with what we have in New York. It's just anytime you have a restaurant where coming and going, you're pretty much forced to go in between what we're selling is always what we prefer. Well, that sounds great. Thanks so much for all the detail and best of luck this quarter. Thanks. Pam, you need to get out there and see it in person. You need to do an Analyst Day out there. All right. Happy holidays to you. You too. Thank you. And we'll go to Raghav Nayar with Sidoti. Hi, everyone. Nice job at Lilly. Thanks, raghav. Sure. My first question is, I know you can't give guidance about 2016, but first going to Tommy Bahama Women's, how should we think about the changes that you made to the set assortment in full price stores as it relates to comp and gross margin, one really more important than the other here strategically? Doug, do you want to answer that question? Well, specifically how we're looking at it in 'sixteen is we're first focused on the if you look at our stores right now and why we put so much emphasis on women's is that we haven't been happy with the sell through and the performance in our full price stores and we haven't been necessarily happy with what we're getting online. So we're being very conservative in our 16 projections and just really focused on first sell through in our stores. And so I wouldn't say that we're doing anything in 2016 other than really expectation wise being fairly conservative, but at the same time knowing that what we're putting up for should sell through better than what I've ever had before. Okay, great. And just also on Hawaii, just talk to us in general about this market. How does poor productivity compare versus your other warm weather location for Bahama? Tom, you want me to take that? Yes. And you're Raghav, you're speaking Hawaii in general? Right. Hawaii in general, yes. Yes. I'll tell you that Hawaii is a terrific market for us and some of our best stores are really in Hawaii. And Doug, I don't know if you want to comment more on productivity levels versus other warm weather markets. I think we got a lot of our warm weather markets tend to be very strong markets for us as you would expect. But Doug, I don't know if you've got Yes, I mean Yes, I think the only thing I would add that makes Hawaii special to all other markets is that we're always talking about our women's initiative and what we're focused on is sportswear, where we have a very strong women's swimwear business. And in Hawaii, you're in the women's swimwear business 12 months a year. So just the fact that we can sell women's swim around the year in Hawaii makes all of our stores more productive than what I typically can do in the U. S. And if anything, it also led us to be probably over as we really push on sportswear is that confidence of what we're seeing going on with swimwear in Hawaii is that, look, we can sell women's sportswear as well, and this is the type of impact it can have on your business. Great. And my last question is on Lilly. Could you just talk about, in general, the marketing strategy in Q3 what you did and then lastly in Q4 and what you have on deck for the spring? Anything that you could share with us would be helpful. Well, I think the big thing in the third quarter that drove a lot of the business, I mean the communication and marketing throughout the year has been outstanding, product throughout the year has been outstanding. I think the key to the Q3 in Lilly Pulitzer was this year, we did what we call resort fall as opposed to just fall. So it's really fundamentally resort product offered during the fall selling period. And while sort of traditional fall product is not a strength for Lilly Pulitzer resort product very much is. And then when you think of the timeframe that that product is actually on the floor hitting in July, August, September, in much of the country, it's still quite warm, including Lilly's key markets. So what happened was the customer responded very well to it. It's almost like it's an extension of the spring summer season, but it's a time of year when that product can still be worn sort of buy now, wear now type of product. And it really worked as you can see in the results. It's still a small quarter for Lilly, but when you compare it year to year, the sell through that we got on fall 2015 product was significantly better than what we got on fall 'fourteen product. And I think that's really the product strategy as much as anything that drove that. Great. Thank you and the best of luck for holiday. Okay. Thanks a lot, Rigatti. Thank you. And with no additional questions in the queue, I'd like to turn the floor back over to Tom Cheb. Thank you again for your time this afternoon. We're looking forward to an exciting holiday and resort season. Appreciate your interest in our company and look forward to speaking to you again next year. Thank you. And ladies and gentlemen, again, that does conclude today's conference. Thank you all again for your participation.