Earnings Call: Q4 2014

Mar 27, 2014

Good day, and welcome to the Oxford Industries Incorporated 4th Quarter and Fiscal 2013 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ann Schumacher, Treasurer. Please go ahead. Thank you, Melissa, 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 the documents filed by us with the SEC. 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 non GAAP financial measures in our press release issued earlier today, which is posted under the Investor Relations tab of our website at oxfordinc.com. Also for comparative purposes, keep in mind that fiscal 2013 was a 52 week year, while fiscal 2012 was a 53 week year with the extra week in the Q4 of fiscal 2012. For purposes of this call, comparable store sales results are on a 52 week to 52 week basis and a 13 week to 13 week basis as applicable, excluding the 14 week of fiscal 20 twelve's 4th quarter. And now I'd like to introduce today's call participants. With me today are Tom Chubb, CEO and President Scott Grassmyer, CFO Terry Pillow, CEO of Tommy Bahama and Doug Wood, President of Tommy Bahama. Thank you for your attention. And now I'd like to turn the call over to Tom Chubb. Thank you, Ann, and thank you for joining us this afternoon. Fiscal 2013 was a successful year for Oxford. Despite continuing weakness in the consumer marketplace, we achieved net sales growth of 7% and grew adjusted operating income and EPS by 8%. We also continue to make important investments that we believe will allow us to drive profitable growth and shareholder value over the long term. Tommy Bahama, which accounts for close to twothree of Oxford's revenue, had a strong year with top line growth of 11% and growth and adjusted operating income of 7%. Tommy Bahama also posted an impressive comp store sales increase of 9% for the year with particular strength in e commerce. The impact of the higher sales and a modest expansion in gross margin was partially offset by increases in SG and A to support ongoing growth. A key component of our plans for Tommy's future is the development of its international business. This past year, we opened 2 locations in Tokyo, 1 in a major regional mall and the other, a street level island location in the Ginza District. We also opened our 6th store in Australia on one of the principal shopping streets in downtown Sydney. In addition, we acquired the Tommy Bahama business of a former licensee in Canada and now operate 9 stores as well as an e commerce business in the Canadian market. In general, we have been pleased with the presentation of the Tommy Bahama brand in the international arena, but we are not yet achieving the financial results we believe are possible, particularly in Japan. We are taking specific steps to improve our business, and Terry will give more details later in the call. The international market represents a significant long term growth opportunity for the Tommy Bahama brand, and we are committed to fine tuning our business model. Like many of our peers, Tommy Bahama experienced an unexpected weather related slowdown in traffic beginning in January and only very recently have we seen some signs of improvement. That said, we remain confident about our product and our marketing plans for the all important spring, Mother's Day and Father's Day selling seasons and believe that with better weather, our business will pick up strength. Terry Pillow will join us to provide more color on Tommy Bahama after I give you an update on our other operating groups. Lilly Pulitzer had another year of tremendous growth in 2013 with net sales growing 13% and an impressive operating margin of 19%. Lilly also continued to build the platform for future growth by adding significant new talent in communications and marketing, design, e commerce, IT and retail among other key areas. We also made important investments in fixed assets, including new stores, our new design center and enhancements to our information systems. We have almost doubled the size of this business and tripled the operating profit since our acquisition in late 2010. The Lilly business generates a high level of cash flow, and we will continue to invest in the infrastructure needed to support ongoing profitable growth. Lilly Pulitzer is bucking some of the trends in the current retail environment and is very strong right now. We believe this strength is flowing directly from the powerful combination of A plus product, A plus distribution and A plus communications. This spring, Lilly is clearly at the top of the class in all three areas and is delighting its customers. Our Lanier closed group continued to perform well in fiscal 2013, contributing almost $11,000,000 in operating income through disciplined execution and attention to detail. This was particularly noteworthy in light of the competitive challenges they face, a soft tailored clothing market and costing pressures. The team at Lanier Close continues to demonstrate their ability to be relevant to a broad range of customers from warehouse clubs to luxury retailers and to find new ways to deliver profitable growth for Oxford. In Ben Sherman, we started the year with a business that was on the wrong track with sales and operating profit on a downward trajectory. During fiscal 2013, we appointed a new CEO, refocused the business on its core consumer, cut operating expenses and improved the operation of our bricks and mortar retail stores. Our first half twenty thirteen operating results reflected the downward path that Ben Sherman was on going into the year. In the second half of fiscal twenty thirteen, the team at Ben Sherman was able to post meaningful improvements compared to the second half of the prior year. Much work remains to be done, but we believe that Ben Sherman team has corrected the trajectory of this business and that Aitken post additional improvements in fiscal 2014. Scott will provide you details in a few moments, but at a high level, looking ahead to 2014, we are expecting sales to increase to a range of 9 $80,000,000 to $1,000,000,000 compared to $917,000,000 in 20.13 and adjusted EPS to increase to a range of $3 to $3.15 in 2014 compared to adjusted earnings of $2.81 in fiscal 2013. I should note that while we were expecting a nice increase in both sales and earnings in 2014, our guidance does take into account the fact that like many of our peers, we have experienced a relatively soft beginning to our Q1. I'd like to now turn the call over to Terry Pillow to give more insights on Tommy Bahama. Terry? Thanks, Tom. Where the sun is shining in places like Naples, Florida, Scottsdale, Arizona and Palm Desert, California, our business is very good. Although, as Tom mentioned, we experienced a slowdown in traffic at Tommy Bahama due to extreme weather in many parts of the country early in the year. We believe that when the weather turns in the rest of the country, we will see our business take off. We have a great product offering and marketing plans in place for 2014. Right now, one of the biggest trends in our industry is tropical prints and we have never been more on target with our men's and women's product. We will also be communicating with our customers several times between now and Father's Day with fantastic mailers and loyalty cards inspired by our Jamaican photo shoot. These direct marketing pieces have proven to be very effective, particularly with our loyal customers. I'd like to take a minute to give you an update on our Asian Pacific initiatives. Our business in Australia is going very well with 6 stores and a small wholesale business. Our newest store in Sydney opened in May last year and we are delighted with this performance. The stores we opened in Tokyo last April got off to a good start but struggled during fall holiday. We believe this is a market that has tremendous opportunity for Tommy Bahama. So we are taking concrete steps to improve the situation. We've hired a highly experienced country manager who started in February. He's already making an impact with changes to our product assortment, merchandising and marketing. We are very excited to be working on opening up 2 Tommy Bahama retail restaurant islands. The first is in Jupiter, Florida, which we expect to open in the Q4. This location is right on the intercoastal waterway. You'll be able to cruise up on your boat and join us at our 1st Eastern Florida island. The second is in Waikiki, which will open in 2015. Waikiki will provide a great brand awareness and context for our Japanese customers as over 90% of the Japanese tourists visiting Hawaii head to Oahu. Now I'll turn the call to Scott Grassmeyer to discuss our consolidated highlights. Scott? Thanks, Terry. Like to walk you through a selection of highlights from our consolidated results for fiscal 2013 and our guidance for fiscal 2014. Please refer to our press release issued earlier today for the complete results for the Q4 fiscal year and additional information about our outlook for fiscal 2014. For fiscal 2013, consolidated net sales rose 7% to $917,000,000 from 8 $1,000,000 in fiscal 2012 driven by sales increases at Tommy Bahama and Lilly Pulitzer. Consolidated gross margins increased 110 basis points to 56% primarily due to the impact of LIFO accounting and a change in sales mix towards direct to consumer sales. For fiscal 2013, SG and A was $448,000,000 or 48.8 percent of net sales compared to 4 $11,000,000 or 48.0 percent of net sales in the prior year. The increase was primarily due to $31,000,000 of incremental SG and A associated with operating additional retail stores and restaurants as well as other costs to support the growing Tommy Bahama and Lloyd Pulitzer businesses, partially offset by SG and A reductions for the year in Ben Sherman and Corporate and Other as well as reductions in incentive compensation of approximately $7,000,000 Royalties and other income increased to $19,000,000 in fiscal 2013 from $16,000,000 in the previous year, primarily due to a $1,600,000 gain on the sale of property as well as increased royalty income. Our consolidated operating income in fiscal 2013 increased to $85,000,000 compared to $69,000,000 in fiscal 2012. Fiscal 2013 interest expense declined 53 percent to $4,000,000 from $9,000,000 in fiscal 2012. The improvement was primarily due to the redemption of our senior secured notes in fiscal 2012. Our effective tax rate rose to 43.7% in fiscal 2013 compared to 38.5% in fiscal 20 12. Our tax rate in both years was negatively impacted by our inability to recognize a tax benefit for losses in certain foreign jurisdictions, while fiscal 2012 benefited from certain favorable items. Now to the balance sheet. Total inventories at February 1, 2014 grew to $144,000,000 compared to $110,000,000 at February 2, 2013. While the increase in inventory was primarily to support anticipated sales growth, we also felt the impact of the earlier Chinese New Year. Our in transit inventory increased $13,000,000 as suppliers accelerated their shipments. As of February 1, 2014, we had $142,000,000 of borrowings outstanding and approximately $97,000,000 of unused availability under our U. S. And U. K. Revolving credit facilities. We believe our capital structure positions us well to support our growth plans. Our capital expenditures for fiscal 2013 were $43,400,000 We expect CapEx for fiscal 2014 to increase to approximately $55,000,000 as we continue to open new stores including the Jupiter Florida retail restaurant Island, begin construction on our Waukeke location and remodel some of our existing stores. We will also continue to invest in information technology, which include e commerce enhancements and investments in our facilities. I'd now like to walk you through our projections for fiscal 14. We expect to deliver strong results with continued sales growth, a moderate expansion of our operating margin and significant growth in earnings. As Tom mentioned, for the year we expect EPS to be in the range of $3.3.15 on sales in a range of $980,000,000 $1,000,000,000 This compares with adjusted EPS of $2.81 in fiscal 2013. On a GAAP basis, we expect EPS in a range of $2.88 to $3.03 compared to $2.75 in the prior year. I'll discuss our fiscal 2014 plans for each of our operating groups. Tommy Baham spends good growth in fiscal 2014. A percentage net sales increase is in the high single digits driven by increases in our direct to consumer business, partially offset by a modest decrease in wholesale sales. We expect some additional costs for incentive comp and for preopening expenses for the Island locations that Terry described. And as a result, Tommy Bahama's operating margin in fiscal 2014 is expected to be slightly lower than fiscal 2013. Lilly Pulitzer is expected continue to deliver strong top line growth while maintaining a solid operating margin as they continue to invest in people, systems and stores. For fiscal 2014, Lilly is planning a percentage net sales increase in the mid teens and an operating margin comparable to fiscal 2013. Linear Close is planning a solid year with a top line increase in the low single digits. Operating margin is expected to decrease slightly due to the lower margin structure of certain new programs and is planned in the high single digits. For fiscal 2014, Ben Sherman's plan for top line improvement coupled with the lower cost structure is expected to reduce the operating loss by $4,000,000 to $6,000,000 The high single digit percentage increase in sales is expected to come from improvements primarily in its direct to consumer businesses. Finally, the operating loss in our Corporate and Other segment is expected to increase by approximately $4,500,000 primarily due to increases in incentive compensation and the change in insurance reserves that benefited 2013. On a consolidated basis, we expect a modest improvement in gross margin and SG and A to increase at a slightly higher rate than our sales growth. Our operating margin is expected to expand slightly for the year. I want to remind you of the impact of the seasonality of Tommy Bahama and Willy Pulitzer sales on our Q3 earnings. Because the 3rd quarter was a significantly smaller sales quarter than the first, second, 4th quarters, the fixed expense structure of our retail businesses results in a lower operating margin compared to other quarters. Interest expense is estimated to be approximately $4,500,000 in fiscal 2014. Effective tax rate for fiscal 2014 is expected to be approximately 42.5%. That's the recap for our plans for the full year. Moving on to details for our plans for the Q1 of fiscal 2014. We expect net sales to be in the range of $250,000,000 to $260,000,000 compared to net sales of $234,000,000 in the Q1 of fiscal 2013. Earnings per share for the quarter are expected to be in a range of $0.80 $0.90 on an adjusted basis and $0.77 $0.87 on a GAAP basis. This compares with Q1 fiscal 2013 EPS of $0.82 on both an adjusted and GAAP basis. I'll walk you through what we expect for the Q1 by operating group. At Tommy Bahama, we're expecting traffic to improve in April and based on this assumption, expect percentage sales increase in the mid single digits and slightly lower operating income compared to the Q1 last year. For Lilly Pulitzer, we're expecting a percentage sales and operating income increase in excess of 20%. Lanier Close is expecting percentage sales increase in the high single digits. Operating margin is expected to be to modestly expand year over year on the higher sales. Lines compared to the Q1 of last year. Our effective tax rate for the Q1 of fiscal 2014 is currently expected to be approximately 46%, which is comparable with the Q1 of fiscal 2013. Before we take questions, I also want to mention that our Board has declared a cash dividend of $0.21 per share representing a 17% increase. Melissa, we're now ready for questions. Thank you. And we'll take our first question from Edward Yruma from KeyBanc. Hi. Thanks very much and good afternoon. Hi, Edward. Within the Hi, Edward. Hi. Within the guidance you've provided, I know you're making you made a couple of key changes in Asia. How should we think about the kind of operating drag through this year from Asia and kind of the sequencing of margin improvement there? Ed, I think that the operating drag will be reduced this year. It's not going to go away altogether, but I think we do expect to see some progress. I'll let Scott maybe comment a little bit on how that will roll out through the course of the year. Yes. In 2013, the loss in Asia was roughly $12,000,000 And as Tom mentioned, we do expect some modest improvement and we should see some improvement in the Q1. We should start seeing some of that improvement. So hopefully we'll see improvement every quarter throughout the year beginning with the Q1. But the improvement is going to be modest, probably $1,000,000 $1,500,000 improvement is what we have in the plan right now. And we do have comps planned up, but things are the economy is okay over there, but it's not great, but we think we can make we made some improvements that will help us. Got it. And one follow-up, if I may. You're planning Tommy Bahama Wholesale to be down. I know that you kind of had a little bit of weakness there in 2013. Just any discussion on the dynamics in wholesale? Are you losing slotting? And if you expect longer term for that trend to reverse? Thanks a lot. Ed, as we talked about before, we like the wholesale business. We're committed to it. But we're also working very hard to manage those channels to make sure that they're consistent with the way that we run our own direct to consumer businesses, our brick and mortar stores and e commerce site. And so in some cases, we may have to take a step back in the wholesale. But for the long term, we're committed to it and still think we can grow it over the long term. Terry or Doug, do you want to add anything to Yes. Ed, this is Terry. The decrease in wholesales come primarily from men's and primarily that's the specialty stores that you know traditionally we've got a very strong business to specialty stores around the country and they're still struggling a bit. Having said that, it's being offset by some new distribution have in women's, especially in department stores that is very good and the relaunch of our footwear business that we took in house from a license is showing promise and we'll start shipping those products fall. So we're getting a little benefit of Valens, but the struggle is primarily on the men's side and primarily specialty. Got it. Thanks so much, guys. Thank you. We'll take our next question from Rick Patel with Stephens. Good afternoon, everyone. Thanks for taking the question. Hi, Rick. Hey, Tom. Can you give us a little bit more detail about the performance of Tommy warmer weather markets? Just how big of a disparity is there in the comp trend between those warm markets versus the chain average? And then secondly, I know it's early and Terry touched on this, but can you give us a little bit more detail about the performance that you're seeing that gives you confidence that things will pick up once the weather does get warmer? Well, I'll comment on it a bit and then turn it over to Terry and Doug to elaborate. But Rick, as you know, the weather issues have really been quite widespread this year. There's almost no part of the country, which through the 1st 3 months of the year hasn't experienced a fair dose of unusually inclement weather, whether it be heavy rains or snow and ice or extreme cold or whatever. So we have had issues really sort of almost everywhere. That said, there's no question that they've been more pronounced in places like the Northeast and the Midwest where it's been extremely cold and lots of snow and ice. So on a relative basis, the places that you would expect to be worse have been worse. At the same time, there's almost nowhere that has been exempt altogether. I think the thing that we think is most encouraging to us is the way that we've performed in places that are really key locations for Tommy Bahama. Being a warm weather resort, island oriented brand, Our most important locations are really locations like the 3 that Terry mentioned, Naples, Florida, Palm Desert, California, Scottsdale, Arizona. We do huge businesses in those places and those places are really the heart and soul of the Tommy Bahama brand and happily, we're actually performing quite nicely in those places year to date. And that, I think, is one of the key factors that gives us reassurance that as weather normalizes and warms up, we'll be just fine really all over the place. Terry, do you want to add to that? Yes. Rick, we're operating currently 88 full price retail stores in North America. And when you get to 88 stores, they're in pretty diverse parts of the country, it's the reason, as Tom said, I called out Naples, Scottsdale and Palm Desert. And in our business, we take advantage of our business model because we make a hard turn in January February to resort spring merchandise and some years we take advantage of that. We get we're merchandise and some years we take advantage of that. We get it's a very positive thing for us. But when the weather in parts of the country like the Northeast and when the weather doesn't cooperate, we've already placed our bets on inventory. We don't get that bump as soon as we can, but we will historically when the weather turns in our favor of those other locations, as I said, that we historically do well when the weather turns. I'm confident that our assortments are good and our marketing is good. We'll see that turn when the weather turns. Can you talk about the outlook for Lilly Pulitzer, just given the momentum that you're seeing? Are you allocating more resources to help support growth for that brand? And then can you also update us on what your real estate plans are for Lilly both over the near term and long term? Well, Lilly continues to perform very well. They had a good year last year. This year has started off as a terrific year. Lilly Pulitzer, as the Lilly folks say, is very much a first half team. They're more skewed towards the first half of the year even than Tommy Bahama. So if you have a good first quarter, it's a very good sign for how the year is going to unfold. In terms of resources that we're dedicating to them, as you know, we've invested a lot in sort of P and L infrastructure there, mostly in the form of people in key areas. As I mentioned in the prepared comments, the business has basically doubled in size in the last three years. And what happens when you grow that fast is that they really have outgrown the size of the team. So during 2013, it was important that we add a lot of talent to the team and we did that. We're really pleased with what we were able to achieve in that regard. Then more from a CapEx perspective, we're investing in systems, we're investing in the distribution center, those things support retail and e commerce and we're opening new stores. In terms of the pace of of store growth, it's the same, 4 to 6 a year. We actually think that e commerce will continue to grow at a much faster pace than retail will for the Lilly brand because we think it's particularly well suited to e com. And we actually anticipate e com eclipsing our own bricks and mortar retail and size in the next couple of years. So we would see the growth, the pace of growth continuing at more or less the level that we have over the last several years with a heavy emphasis on e comm. Thanks very much and good luck this spring. Okay. Thanks a lot. And we'll take our next question from Pamela Quintigliano with SunTrust. Great. Thanks so much for taking my question guys and congrats on executing in really challenging environment. So when I think about Tommy and Lilly and the Tommy performance versus the Lilly and even quarter to date that you were commenting on, is it just geography? Or is there something else going on or a way to think about it in terms of is the Tommy guy just more aware now while she's shopping when she is inspired and feels like she has to snap up the collection, otherwise it's not going to be there? And then also when I think about the progression of the quarter in the late Easter this season, what's that impact, I guess, for both but really for Lilly? I think that in terms of the differences there, there are geographic differences. As you point out, Lilly Pulitzer is heavily Southeast in it's and East Coast in its distribution and its own store footprint. The second thing difference that I think is pretty relevant is that Lilly is still much smaller at this point. Tommy Bahama is a big brand at $600,000,000 at less than $150,000,000 Lilly is much smaller. And just as a rule of thumb, you tend to be a little less subject to general market conditions. When you're smaller, you have more room to grow in a way. The third thing I would point out and this is not to take away from the strength and momentum that Lilly is exhibiting this spring, but their comparison is somewhat easier because their comp in the Q1 last year got impacted by the weather and they were in the low single digits in their comp whereas if I remember right, I think, Tommy, you had a double digit comp in the Q1. So there's a difference there. And then the last thing I would call out is exactly what you called out, Tim, which is that the tummy or the Lilly product being women's, it tends to move quite quickly. And when we have a new delivery in, it looks a lot different than the last delivery. And when it's very strong as it is now, there is a bit of a feeding frenzy to snap it up before it's gone. And just in terms of And one other thing on that point. Tommy Bahama there for direct to consumer business, the second quarter is a much more important quarter than the first and April is a much more important month than February March. So not that we are yet as retail is slow right now, but at least it's not in our strongest direct to consumer months. The second quarter is we really catch momentum in direct to consumer and I think the odds of the weather being better in the Q2 are much higher. And then, Pam, you also asked about the impact of the late Easter for Lilly and we think it's a good thing. It makes Lilly dress even more appropriate for Easter wear. If Easter is really early and it's still cold and dreary out, it may not be as enticing to buy a Lilly dress for Easter. But if it's you've got later Easter, the weather has turned, it just enhances our ability to sell an Easter dress, I think. And do you tweak the timing of flows because Easter and Mother's Day are closer this year? We definitely I mean, the date on which holidays occur definitely impacts our thinking about how we plan the seasons, I think, in all our brands from both a product standpoint and a marketing standpoint. And if I could follow-up just a few more. Just in the prepared commentary, I believe or I'm sorry, it actually may have been a response to Q and A. There was something about Tommy Women's and new distribution. Yes. We do have some it's very small at this point, but we have some exciting new wholesale distribution that I'll let Terry tell you a little bit more about. Yes, Pamela, we did an 8 door full collection, not select items, but a full collection launch at dealers, which we have not had in women's and that is shipped this month. So we're early in the selling of that and we also have some limited distribution in Neiman Marcus on their website, which they felt that our category product is right for their business and we're looking forward to growing both of those businesses. As we've always said in the women's that we know when we get it right in our stores and direct to consumer business, we'll be expanding the wholesale and we're just embarking on that right now. And where we've had product for several years in specialty stores within women's and we've always had some successes, but of recent, we've seen that business sell through with our women's specialty stores be very healthy on products. So the other thing that we're excited about is, as I mentioned earlier in the remarks about footwear, the women's piece of footwear is significant and we're getting some distribution in women's footwear, which we're also excited about as well. So, looking forward to that. That's great. And then just the last question, I have Ben Sherman. Just can you update us on, well, wholesale bookings and any information you could provide on how that's going for the fall? And then just how you're strategically viewing Ben now? Yes. The wholesale bookings for fall, autumn, winter 2014 are in. They're basically complete at this point and we have a very healthy year over year increase there as we did for spring and for autumnwinter 2013. So we're very pleased with the trend in the wholesale bookings. We're also generally very pleased with the way our bricks and mortar retail stores are performing at this point. They're not where they need to be, but the relative performance to last year, the way they're comping and the various KPIs are all trending very positively. So what I would say and then Sherman is really what I said in the prepared comments is that we are certainly a long way from having the business to where we think it can be and where it needs to be. But the trajectory is correct now, which is upward both in sales and bottom line. Our next question is from Eric Beder with Breen Capital. Good afternoon. Congratulations. Thank you, Eric. Could you talk about what is the increase in the store counts you're looking for, for this year in terms of Tommy and Lilly? For Lilly, I believe we've got 5 and for Tommy, it's 12, I think. Terry, do you want to correct me if I'm wrong there? We're still looking. We're still looking. We just have a shift a little there. Eric, we're always looking for great locations. But right now, on the books, we have 6 full price and 2 outlet stores. However, it's still early and we're always looking for opportunities. Sure. In terms of the New York City flagship, how can we get an update on that and how that is doing? Yes, how is that doing? Yes, Terry, why don't you update? It's doing great. It'd be better if you'd go there more for lunch, Eric. But no, it's been really growing. The restaurant and the retail have have been great. We're seeing nice growth in both. And as I said, we're watching the business and we've been doing great lunch business there, but the dinner ended kind of early and we're seeing that stretch out now and go longer. And I think when we catch some weather, those customers that are eating in the restaurant will go down. But we had a terrific December. December was a comp month for us from a year ago. So, we saw December being a very, very good month in that store and very promising for us that we're very happy with. And we've always talked about it. We opened these stores to make money and we hope to make money in New York, but it's a great visibility for the brand to have that store on the corner of Fifth Avenue. And finally, you opened I saw this year you rolled out a at least online some dog items for Tommy Bahama. How did those do and kind of what do you think about that as a category for the product? We're always looking for categories that we think that are guests as part of their lifestyle and Tommy Guest has a pet. And so it's not something you're going to see us do in a big way. And we've now have it online. We're going to keep looking for, hey, what are those unique things that our guests are going to always going to want to turn to Tahbohama and see what our take is on it. Great. Thank you and congratulations on a solid quarter. Thanks, Eric. Thanks, Eric. And we'll take our next question from Mike Richardson with Sidoti. Good afternoon. Thanks for taking my call. I just had actually a quick follow-up from an earlier question regarding store openings for Tommy Bahama. Are those all domestic stores or are you going to be opening any in Asia? And just wondering the guidance for the Q1, what kind of comp you're assuming at Tommy Bahama? All domestic? Yes, they are all domestic, Mike, at this point. And in terms of comp, what we talked about in the prepared comments was that we're assuming that we get a pickup in April. But with the slow start that we've had through February March, you would have a flat to down slightly comp for the Q1. Okay, thanks. Just one more with regard to Ben Sherman. Should we be anticipating sequential improvement as the year progresses? How should we be thinking about that for the year? Yes. Generally speaking, the Q1 is flat and that mainly has to do with it being our smallest quarter in Ben Sherman. Ben Sherman is sort of the reverse of Lilly Pulitzer and to some extent, Tommy, in that it's very much a second half autumn winter business as opposed to a springsummer business. And as the quarters get bigger in sales, both the bottom line results and the year over year improvement got bigger. We'll take our next question from Wayne Archambault with Monarch Partners. Yes. Just on the Ben Sherman, with the order book up for the fall orders, I mean, do you view this as marking the bottom for Ben Sherman from a sales standpoint? Yes, we certainly think so. We think the $67,000,000 that we did last year is the bottom that will, as we said, get sort of upper single mid to upper single digits increase in sales This year, there is some non comp stuff in both years, which makes it a little cloudy. But if you look at the continuing business, it's clearly headed up. And yes, we think the bottom has been hit and that we're headed back up in top line. And really, that is the key to turning this thing around fully at this point is growing top line. We think we've got the expense structure kind of where it can be appropriately for the business model that we have and it's really about building top line at this point. And do you think there's something from a secular standpoint that's changed in that business that you're they just the business overall is just not the same business it was 5 years ago. And if that's the case, is this strategically fit into your long term portfolio of brands? Well, yes, we're very focused on acquiring lifestyle or owning lifestyle brands that can generate sustained profitable growth and we don't see any reason why Ben Sherman can't be one of those. It's not at the moment and hasn't been for the last several years. But with what they're doing at the brand now and the results that they're getting, still a lot of work to be done, but it's clearly headed in the right direction. Just as an observation and owning retail stocks over the last 20 years, I would just make an observation that sometime these lagging businesses can be very distracting for management. We've seen it with many other companies. And you folks should be focusing on all the positives going on with Lilly and Tommy. And I'm sure this is a bit of a distraction for all of you. And it's been going on for a number of years. So it just concerns us as shareholders that when I look back at your comments from the last couple of years, it seems like this has been a continual disappointing part of your business, which is, over time, a distraction for management. Well, there's no question there is that risk. I think we've balanced it appropriately to date as the business hopefully continues to improve that risk diminishes, but certainly not going to argue with you that there is a risk of it being a distraction. All right, good. Thank you. It appears there are no further questions at this time. Mr. Chubb, I'd like to turn the conference back to you for any additional or closing remarks. Thank you very much for being with us today. We appreciate your time, attention and support, and we'll look forward to speaking to you again in a couple of months. That concludes today's conference and thank you for your participation.