Good day. Welcome to the Oxford Industries, Inc. fourth 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 Anne Shoemaker, Treasurer. Please go ahead.
Thank you, Melissa. Good afternoon, everyone. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q&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 fourth quarter 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 14th week of fiscal 2012's fourth quarter. 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. Now I'd like to turn the call over to Tom Chubb.
Thank you, Anne. 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 continued 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 two-thirds of Oxford's revenue, had a strong year with top-line growth of 11% and growth in 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&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 two locations in Tokyo, one in a major regional mall and the other a street-level island location in the Ginza District. We also opened our sixth store in Australia on one of the principal shopping streets in downtown Sydney. We acquired the Tommy Bahama business of a former licensee in Canada and now operate nine stores as well as an e-commerce business in the Canadian market. 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, Terry will give more details later in the call.
The international market represents a significant long-term growth opportunity for the Tommy Bahama brand, 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, 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 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 2012. The business generates a high level of cash flow, 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 Clothes Group continued to perform well in fiscal 2013, contributing almost $11 million 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 Clothes 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. 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 2013 operating results reflected the downward path that Ben Sherman was on going into the year. In the second half of fiscal 2013, 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, we believe that Ben Sherman team has corrected the trajectory of this business, and that it can post additional improvements in fiscal 2014. Scott will provide you details in a few moments.
At a high level, looking ahead to 2014, we are expecting sales to increase to a range of $980 million-$1 billion, compared to $917 million in 2013, and adjusted EPS to increase to a range of $3-$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 first quarter. 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. 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 Asia Pacific initiatives. Our business in Australia is going very well, with six stores and a small wholesale business. Our newest store in Sydney opened in May last year, we are delighted with its 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 opportunities for Tommy Bahama. We are taking concrete steps to improve the situation. We've hired a highly experienced country manager who started in February, who's already making an impact with changes to our product assortment, merchandising, and marketing. We are very excited to be working on opening up two Tommy Bahama retail restaurant islands.
The first is in Jupiter, Florida, which we expect to open in the fourth quarter. This location is right on the Intracoastal Waterway. You'll be able to cruise up on your boat and join us at our first 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. I'll turn the call to Scott Grassmyer to discuss our consolidated highlights. Scott?
Thanks, Terry. I'd 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 fourth quarter and fiscal year and additional information about our outlook for fiscal 2014.
For fiscal 2013, consolidated net sales rose 7% to $917 million from $856 million 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&A was $448 million or 48.8% of net sales, compared to $411 million or 48.0% of net sales in the prior year. The increase was primarily due to $31 million of incremental SG&A associated with operating additional retail stores and restaurants, as well as other costs to support the growing Tommy Bahama and Lilly Pulitzer businesses, partially offset by SG&A reductions for the year in Ben Sherman and corporate and other, as well as reductions in incentive compensation of approximately $7 million.
Royalties and other income increased to $19 million in fiscal 2013 from $16 million in the previous year, primarily due to a $1.6 million gain on the sale of property, as well as increased royalty income. Our consolidated operating income in fiscal 2013 increased to $85 million compared to $69 million in fiscal 2012. Fiscal 2013 interest expense declined 53% to $4 million from $9 million 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 2012. 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. To the balance sheet.
Total inventories at February 1st, 2014, grew to $144 million compared to $110 million at February 2nd, 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 million as suppliers accelerated their shipments. As of February 1st, 2014, we had $142 million of borrowings outstanding and approximately $97 million 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 $43.4 million. We expect CapEx for fiscal 2014 to increase to approximately $55 million as we continue to open new stores, including the Jupiter, Florida retail restaurant island, begin construction on our Waikiki 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 2014. 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 million-$1 billion. This compares with adjusted EPS of $2.81 in fiscal 2013. On a GAAP basis, we expect EPS in a range of $2.88-$3.03 compared to $2.75 in the prior year. I'll discuss our fiscal 2014 plans for each of our operating groups. Tommy Bahama expects good growth in fiscal 2014.
Our percentage net sales increases in the high single digits driven by increases in our direct consumer business, partially offset by a modest decrease in wholesale sales. We expect some additional costs for incentive comp and for pre-opening expenses for the island locations that Terry described. As a result, Tommy Bahama's operating margin in fiscal 2014 is expected to be slightly lower than fiscal 2013. Lilly Pulitzer is expected to 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. Lanier Clothes 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 a lower cost structure, is expected to reduce the operating loss by $4 million-$6 million. The high single-digit percentage increase in sales is expected to come from improvements primarily in its direct consumer businesses. Finally, the operating loss in our corporate and other segment is expected to increase by approximately $4.5 million, primarily due to increases in incentive compensation and the change in insurance reserves that benefited 2013. On a consolidated SG&A to increase at a slightly higher rate than our sales growth. Operating margin is expected to expand slightly for the year.
We want to remind you of the impact of the seasonality of Tommy Bahama and Lilly Pulitzer sales on our third quarter earnings. Because the third quarter is a significantly smaller sales quarter than the first, second, fourth 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 $4.5 million 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 first quarter of fiscal 2014. We expect net sales to be in the range of $250 million to $260 million, compared to net sales of $234 million in the first quarter of fiscal 2013.
Earnings per share for the quarter are expected to be in a range of $0.80 and $0.90 on an adjusted basis, and $0.77 and $0.87 on a GAAP basis. This compares with first quarter fiscal 2013 EPS of $0.82 on both an adjusted and GAAP basis. I'll walk you through what we expect for the first quarter 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 first quarter last year. For Lilly Pulitzer, we're expecting a percentage sales and operating income increase in excess of 20%. Lanier Clothes is expecting percentage sales increase in the high single digits. Operating margin is expected to modestly expand year-over-year on the higher sales.
Ben Sherman's first quarter, which historically is its smallest quarter, is planned flat on the top and bottom lines compared to the first quarter of last year. Our effective tax rate for the first quarter of fiscal 2014 is currently expected to be approximately 46%, which is comparable with the first quarter 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. If you would like to ask a question, please signal by pressing *1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. If you have a question, please press *1. We'll take our first question from Edward Yruma from KeyBanc.
Hi, thanks very much and good afternoon.
Hi, Ed.
Hi. Within the guidance you've provided, I know you made a couple key changes in Asia. How should we think about the operating drag through this year from Asia and 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 come in a little bit on how that'll roll out through the course of the year. Yeah. In 2013, the loss in Asia was roughly $12 million. As Tom mentioned, we do expect some modest improvement. We should see some improvement in the first quarter. We should start seeing some of that improvement. Hopefully we'll see improvement every quarter throughout the year beginning with the first quarter. The improvement's going to be modest. Probably a million and a half dollar improvement is what we have in the plan right now, and we do have comps planned up.
The economy's okay over there, but it's not great. We think we've made some improvements that will help us.
Got it. One follow-up, if I may. You're planning Tommy Bahama wholesale to be down. I know that you had a little bit of weakness there in 2013. Just any discussion on the dynamics in wholesale, are you losing slotting? 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. 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. In some cases, we may have to take a step back in the wholesale. 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?
Yeah. Ed, this is Terry. The decrease in wholesales comes 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 we have in women's, especially in department stores, that is very good. The relaunch of our footwear business that we took in-house from a license is showing promise, and we'll start shipping those products in fall. We're getting a little benefit of balance, the struggle is primarily on the men's side and primarily specialty.
Thank you. We'll take our next question from Rakesh Patel with Stephens.
Good afternoon, everyone. Thanks for taking the question.
Thank you.
Hey, Tom. Can you give us a little bit more detail about the performance of Tommy in warmer weather markets? Just how big of a disparity is there in the comp trend between those warm markets versus the chain average? 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. 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 first three 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. 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. 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 three 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. Happily, we're actually performing quite nicely in those places year-to-date. 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?
Yeah, Rick. We're operating currently 88 full-price retail stores in North America. When you get to 88 stores that are in pretty diverse parts of the country, it's the reason, as Tom said, I called out Naples, Scottsdale, and Palm Desert. In our business, we take advantage of our business model because we make a hard turn in January and February to resort spring merchandise. Some years, we take advantage of that. It's a very positive thing for us. 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. We will. Historically, when the weather turns in our favor, those other locations, as I said, that we historically do well when the weather turns.
I'm real 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? 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. 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&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. What happens when you grow that fast is that they really had outgrown the size of the team.
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. More from a CapEx perspective, we're investing in systems, we're investing in the distribution center, those things that support retail and e-commerce, and we're opening new stores. In terms of the pace of store growth, it's the same, four to six a year. We actually think that e-commerce will continue to grow Retail will for the Lilly brand, because we think it's particularly well-suited to e-com. We actually anticipate e-com eclipsing our own bricks and mortar retail in size in the next couple of years. We would see 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-com.
Thanks very much, good luck this spring.
Okay, thanks a lot.
We'll take our next question from Pamela Quintiliano with SunTrust.
Great. Thanks so much for taking my question, guys, and congrats on executing in a really challenging environment. 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's inspired and feels like she has to snap up the collection, otherwise it's not going to be there? 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 are geographic differences. As you point out, Lilly Pulitzer is heavily Southeast and the East Coast in its distribution and its own store footprint. The second 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 million. At less than $150 million, Lilly is much smaller. 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, this is not to take away from the strength and momentum that Lilly is exhibiting this spring, their comparison is somewhat easier because their comp in the first quarter 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 had a double-digit comp in the first quarter. There's a difference there. The last thing I would call out is exactly what you called out, Pam, which is that the Lilly product being women's, it tends to move quite quickly. When we have a new delivery in, it looks a lot different than the last delivery. 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.
Just in terms of.
Pam, one other thing on that point. Tommy Bahama, their direct-to-consumer business, the second quarter is a much more important quarter than the first, April is a much more important month than February and March. Not that we aren't 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, I think the odds of the weather being better in the second quarter are much higher. Then, Pam, you also asked about the impact of a late Easter for Lilly, we think it's a good thing. It makes a 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.
If you've got a later Easter, the weather's turned, it just enhances our ability to sell an Easter dress, I think.
Do you tweak the timing of flows because Easter and Mother's Day are closer this year for Lilly?
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.
If I could follow up just a few more, just on the prepared commentary, I believe, or I'm sorry, it actually may have been a response to Q&A. There was something about Tommy Women's and new distribution. I just wondering if you could-
Yeah, 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.
Pamela. We did an eight-door full collection, not select items, but a full collection launch at Dillard's, which we have not had in women's, and that just shipped this month. We're early in the selling of that. We also have some limited distribution in Neiman Marcus on their website, which they felt that our category product is right for their business. We're looking forward to 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. 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 product.
The other thing that we're excited is, as I mentioned earlier in the remarks about footwear. The women's piece of footwear is significant, we're getting some distribution in women's footwear, which we're also excited about as well. Looking forward to that.
That's great. Just the last question I have, Ben Sherman, just can you update us on wholesale bookings and any information you can provide on how that's going for the fall and then just how you're strategically viewing Ben now?
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 autumn/winter 2013. 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. What I would say in Ben 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. The trajectory is correct now, which is upward, both in sales and bottom line.
Great. Thanks so much for taking my questions. Best of luck.
Okay. Thank you.
Our next question is from Eric Beder with Brean Capital.
Good afternoon. Congratulations.
Thank you, Eric.
Could you talk about what is the increase in the store counts you're looking for this year in terms of Tommy and Lilly?
For Lilly, I believe we've got five, and for Tommy it's 12, I think. Terry, do you want to correct me if I'm wrong there?
We're still looking.
Tommy has shifted a little, Eric.
Eric, we're always looking for great locations, but right now in the books, we have six full price and two outlet stores. However, it's still early, and we're always looking for opportunities.
Sure. In terms of the New York City flagship, can we get an update on that and how that is doing? Yeah, how's that doing?
Yeah. Terry, why don't you update Eric?
It's doing great. It'd be better if you'd go there more for lunch, Eric. No, it's been really growing. The restaurant and the retail have been great. We're seeing nice growth in both. As I said, we're watching the business, and we've been doing great lunch business there, but the dinner ended early, and we're seeing that stretch out now and go longer. I think when we catch some weather, those customers that are eating in the restaurant will go down. We had a terrific December, and December was a comp month for us from a year ago. We saw December being a very good month in that store and very promising for us. We're very happy with it. 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.
Finally, you opened, I saw this year you rolled out at least online, some dog items for Tommy Bahama. How did those do, and what do you think about that as a category for the product?
We're always looking for categories that we think that our guests, as part of their lifestyle, and the Tommy guest has a pet. So it's not something you're going to see us do in a big way. We now have it online. We're going to keep looking for, hey, what are those unique things that our guest is always going to want to turn to Tommy Bahama and see what our take is on it.
Great. Thank you. Congratulations on a solid quarter.
Thanks, Eric.
Thanks, Eric.
As a reminder, if you have a question, please press star one. Again, star one if you have a question. 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? Just wondering the guidance for the first quarter, what kind of comp you're assuming at Tommy Bahama.
All domestic. Yeah, they are all domestic, Mike, at this point. In terms of comp, prepared comments was that we're assuming that we get a pickup in April. With the slow start that we've had through February and March, you would have a flat to down slightly comp for the first quarter.
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?
Yeah. Generally speaking, the first quarter's flat. That mainly has to do with it being our smallest quarter in Ben Sherman. Ben Sherman is sort of the reverse of Lilly Pulitzer, to some extent, Tommy, in that it's very much a second half, autumn/winter business as opposed to a spring/summer business. As the quarters get bigger in sales, both the bottom line results and the year-over-year improvement get bigger.
Okay, thanks. Best of luck this year.
Thank you.
Thank you. 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, do you view this as marking the bottom for Ben Sherman from a sales standpoint?
Yeah, we certainly think so. We think the $67 million that we did last year is the bottom that will, as we said, get 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. If you look at the continuing business, it's clearly headed up. Yes, we think the bottom has been hit, and that we're headed back up in top line. Really, that is the key to turning this thing around fully at this point, is growing top line. We think we got the expense structure where it can be appropriately for the business model that we have, it's really about building top line at this point.
Do you think there's something from a secular standpoint that's changed in that business, that the business overall is just not the same business it was five years ago? If that's the case, is this strategically fit into your long-term portfolio of brands?
Well, yeah. We're very focused on acquiring lifestyle brand or owning lifestyle brands that can generate sustained profitable growth, 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. 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.
All right. Just as an observation, owning retail stocks over the last 20 years, I would just make an observation that sometimes these lagging businesses can be very distracting for management. We've seen it with many other companies, you folks should be focusing on all the positives going on with Lilly and Tommy, I'm sure this is a bit of a distraction for all of you, it's been going on for a number of years. 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.
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. certainly not going to argue with you that there is a risk of it being a distraction.
Very 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.