Earnings Call: Q2 2014

Sep 10, 2013

Earnings release

Good day, ladies and gentlemen, and welcome to the Oxford Industries Incorporated Second Quarter 2013 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Anne Shoemaker, Treasurer. Please go ahead. Thank you, Keith, 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 operation 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 oxford inc.com. Also for comparative purposes, keep in mind that fiscal 2013 is a 52 week year, while fiscal 2012 was a 53 week year with the extra week in the Q4 of fiscal 2012. And now I'd like to introduce today's call participants. With me today are Tom Chubb, CEO and President Scott Grassmeyer, 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 Cho. Good afternoon and thank you for joining us to discuss our results. We are very pleased with our 2nd quarter results. Tommy Bahama and Lilly Pulitzer reported strong increases on both the top and bottom line. Our strategy to emphasize growth of their high margin direct to consumer distribution continues to pay off as these powerful brands once again comped at a high rate during the quarter. The results we are achieving further reinforce our belief that the opportunities for growth are long term and substantial. We have an excellent game plan for the all important holiday and resort selling seasons and are expecting a good half for our direct to consumer business. At the same time, we are aware of the challenges that are affecting many retailers and we have begun to see some softness in our wholesale business. Our second half order books came in slightly below our expectation and the in season reorders have been inconsistent. We have factored this into our forecast for the balance of the year and have made a modest downward revision to our 2013 guidance. Even with this revision, we believe fiscal 2013, particularly the 4th quarter will deliver strong top and bottom line results for our shareholders. I'd like to now turn the call over to Terry Pillow to discuss Tommy Bahama's results for the quarter and plans for the remainder of the year. Terry? Thank you, Tom. We are very pleased with our 2nd quarter performance. Sales increased 20% with a very strong comp store increase of 13%. We saw solid contributions for both our retail stores and our e comm business. Our global footprint grew in the quarter with addition of 9 stores in Canada, which we acquired from our former licensee and new stores in Sydney, Australia and 2 more stores in the United States, including our 4th store in Chicago and Chicago area. We also achieved a 26% growth in our full price direct consumer women's business with growth in all categories dresses, knits, swim and accessories. Our operating income grew over 40% compared to the Q2 of last year. This growth was driven by sales increases as well as higher gross margins, which were 100 basis points over last year. So far in the second half, our direct to consumer business has remained quite strong. But as Tom mentioned, we have seen some softness in our wholesale reorders and our second half bookings are slightly below our plan. It is important to remember that for us, 4th quarter volume significantly outweighs the 3rd quarter. With that said, we have continued our efforts to build more meaningful 3rd quarter business. And this year, we were able to create excitement with a series of events recognizing National Relaxation Day on August 15th. Our brand marketing team left no stone unturned. We served Hawaii and shaved ice to 1,000 in New York at Bryant Park and coordinated the ringing of the closing bell of the New York Stock Exchange. We generated close to 500 plus press placements, including major wins with the Today Show, Extra and Major League Baseball Band Cave, along with fantastic local TV coverage from coast to coast. We believe we can build on this success in the future years as we continue to develop our Q3 business. We expect a strong Q4 fiscal 2013. We will continue our second half marketing campaign with a fantastic first ever Tommy Bahama Magazine to distribute in stores to our customers in mid September. We will have a more comprehensive holiday gift guide and will support our resort season with a new non comp maver 10 days before Christmas. We have plans to strengthen our loyalty card program for the holiday season, increase the number of cards offered and improve our targeting to ensure high level of engagement from our guests. We have also expanded our product assortment to better address key seasonal items, including a broader offering of heavy hits and reversible second layered nets for both men and women. Tommy Bahama is a 12 month brand and we will capture this year round opportunity by continuing to evolve our geographic footprint, our merchandising assortment and our marketing programs. Now I'll turn the call over to Tom Chubb to discuss the results of the rest of our operating efforts. Tom? Thanks, Terry. I'll pick back up with Lilly Pulitzer. We were extremely pleased with Lilly Pulitzer's results for the Q2. A comp store sales increase of 19% fueled a 24% net sales increase for the Q2 and Lilly's operating margin remained very strong at 25%. Lilly remains predominantly a first half business. The 3rd quarter will benefit from additional sales from Lilly's e commerce end of season clearance event, which was held in mid August. The 4th quarter will have good gift opportunities and we are on track to open a store in Naples, Florida before the end of the year. We now operate 22 stores compared to 17 stores at the end of the second quarter last year. Together with continued expansion of our e commerce business, new Lilly store openings provide us with an excellent opportunity to grow while generating high returns on invested capital. In previous calls, we have mentioned that we plan to make significant capital in the SG and A investments in people, systems and infrastructure to ensure that Lilly has the platform to drive sustained profitable growth. During the first half, we made good on this commitment by making key hires in creative communications, retail, e commerce, IT and design among others. We believe these additions to our already strong team will enhance our ability to continue to grow. For example, we believe the creative communications department we have built will add significant muscle to our marketing efforts. You will see evidence of this during the Q4 when we will have a more robust holiday gifting campaign than Lilly has ever had in the past. The Lilly business continues to delight and excite consumers and we are confident this brand can deliver profitable growth for many years to come. Lanier closed business was good, though we did experience a shift in sales from the second to the third quarter that affected results on the top and bottom line. Net sales for Lanier closed were $22,000,000 in the Q2 compared to $25,000,000 in the Q2 of fiscal 2012 and operating income in the Q2 declined to $2,000,000 from $2,400,000 in the Q2 of fiscal 2012. Ben Sherman reported net sales of $16,000,000 for the Q2 compared to $20,000,000 in the Q2 of fiscal 20 12. Some of this is structural as we exited certain accounts in the U. K. And U. S. And some of the decline is timing as some deliveries shifted into the Q3. The lower volume as well as some pressure on gross margin and royalties, partially offset by reductions in SG and A, resulted in an operating loss of $3,800,000 in the 2nd quarter compared to an operating loss of $1,500,000 in the same period last year. We believe we have made the necessary changes in Ben Sherman's management team and and we have good forward bookings for springsummer 2014. The sales trend for U. K. Retail has also been positive and we believe they are on the right track. While we still have work to do, we believe the actions we have taken will deliver improvements in the back half of the year. Moving to corporate and other. For the Q2, higher sales at Oxford Gulf and decreased corporate SG and A reduced our adjusted operating loss to $3,500,000 compared to an adjusted operating loss of $4,900,000 in the Q2 of fiscal 2012. On a GAAP basis, corporate and other reported an operating loss of $3,900,000 compared to a loss of $4,600,000 in the Q2 of fiscal 2012. I'll now turn the call over to Scott Grassmeyer to discuss our consolidated highlights for the quarter. Scott? Thanks, Tom. For the Q2 of fiscal 2013, consolidated net sales grew 14% to $235,000,000 The 20% sales increase at Tommy Bahama and the 24% sales increase at Lilly Pulitzer were partially offset by decreases at Lanier Close and Ben Sherman. The mix shift towards our higher margin Tommy Bahama and Lilly Pulitzer businesses and a mix shift within those businesses towards direct to consumer drove an expansion in gross margin of 100 basis points in the 2nd quarter. Consolidate gross margin was 58.2% versus 57.2% last year and gross profit for the quarter increased 16%. We also achieved 100 basis points of SG and A leverage with SG and A at 48% of sales compared to 49% of sales in the Q2 of fiscal 2012. SG and A increased by $12,000,000 to $112,000,000 including $9,000,000 of incremental costs associated with operating additional retail stores and restaurants. Other incremental expenses supported the growth at Tommy and Lily. These additional expenses were partially offset by SG and A reductions at Ben Sherman, Lanier Close and Corporate and Other. For the Q2 of fiscal 2013, consolidated operating income was $28,000,000 compared to $20,000,000 in the Q2 of fiscal 2012. Interest expense for the Q2 fiscal 2013 declined 69 percent to $1,000,000 compared to $3,300,000 in the Q2 of fiscal 2012. The decrease was primarily due to the utilization of our revolving credit facility, which bears substantially lower interest rates than our previously outstanding senior notes. At the end of the second quarter, we had $125,000,000 of borrowings outstanding and $86,000,000 of unused availability under our U. S. And UK credit agreements. Our effective tax rate for the 2nd quarter was 40.7% compared to 36% in the Q2 of fiscal 2012, impacted by tax benefit for losses in foreign jurisdictions. The effective tax rate is expected to be approximately 42% for the fiscal year, with the rate in the 3rd quarter expected to be higher than the 4th quarter due to the impact of foreign losses on a smaller earnings base. Now on to the balance sheet. Total inventories at the close of the second quarter were $102,000,000 compared to $88,000,000 dollars at the close of the Q2 last year. The increase in inventory is primarily supporting retail and e commerce growth at Tommy Bahama and Lilly Pulitzer. In the first half of the fiscal year, capital expenditures were $1,000,000 as we and we expect capital expenditures for the full year to be approximately $45,000,000 In addition to the cost of operating of opening new retail stores, we will be doing some remodeling of selected retail stores and restaurants and we'll be making information technology investments, including e commerce enhancements. I'll note that we also announced that our Board of Directors has approved a cash dividend of $0.18 per share payable on November 1, 2013 to shareholders of record as of the close of business on October 18, 2013. We have paid dividends every quarter since we became publicly owned in 1960. Moving to our outlook for the remainder of the year. As Tom mentioned earlier, we are moderating our guidance to reflect softness at wholesale in the back half of the year. Our full year revenue expectation is now a range of $920,000,000 to $930,000,000 compared to our prior guidance of $930,000,000 to $940,000,000 We now expect adjusted earnings per share in a range of $2.90 to $3.05 a reduction of $0.10 to both the top and bottom of the range versus our prior guidance. However, this would still represent growth of between 11% percent 17% as compared to last year's adjusted EPS of $2.61 For the Q3, we expect net sales in a range of $195,000,000 to $205,000,000 and adjusted EPS in the range of $0.08 to $0.13 compared to $0.19 per share last year. For the Q4, we expect net sales in the range of $250,000,000 to $260,000,000 and adjusted EPS in a range of $0.99 to $1.09 compared to $0.65 per share last year. Thanks for your attention. And now I'll turn the call back over to Tom Shuck. Thank you, Scott. I'll return with some closing comments. But would now like to take any questions you may have. Keith, we're now ready for questions. Thank We'll take our first question from Ed Yruma with KeyBanc. Hi, guys. Good afternoon and thanks for taking my question. Hi, Ed. Your commentary on the reduction in guidance, I know you've obviously identified weaker wholesale sales. I guess, are you also planning for any kind of moderation in your DTC comps? We haven't changed our expectation for our DTC comps for the second half versus our previous guidance. The change is really in the wholesale business, not in what we're expecting for the DTC. And I guess as it relates to Ben Sherman, I know you identified some things that are beginning to work for the business. I guess when should we start to expect results of that business from a profitability perspective to improve year over year? 2nd half, I think on a combined basis for the 6 months, I think more so in the Q4 than the Q3, although we may see some modest improvement in the Q3. And it will be a combination of 2 things driving that Ed. 1 is that we're in the 1st two quarters we've seen pretty substantial sales declines. I think any sales declines in the back half will be more modest. And then the second thing is that the expense reductions that we've been working on, those really start to kick in and we've gotten a good level of expense reduction in each of the first two quarters versus the first two of the prior year. But in the back half, we'll get even greater year to year reductions in expenses. And that's not really any additional action that we have to take. It's just starting to get the full benefit of actions already taken. Got it. And my final question, I guess, given the moderation in wholesale orders, how do you feel about inventory levels that you have and I guess maybe orders that you have placed with your vendors? Thank you. We think our inventory levels are in good shape. As you know, we have very good clearance vehicles with our outlet stores at Tommy and our e commerce sales at Lilly. So anytime we have any excess inventory, we're able to clear it timely. And so we don't really carry over inventory from outside the clearance period for each season. So we're so we'll be going in clean into the holiday season. Great. Thanks so much. Thanks, Ed. We'll take our next question from Pamela Quintigliano with SunTrust. Hi, Pamela. Hi, Pamela. Hi, guys. And congrats on a great quarter. So just trying to understand a little bit more about the degradation on the wholesale side and the guidance. So is the guidance just assuming a continuation of the trends that you're currently seeing? And what do you attribute that weakness to among your wholesale partners? And then I have a few follow ups from there. Well, the reduction is based on what we can see at the moment. Of course, there's always the potential that the situation changes a bit. But whenever we give guidance, we always strive to give you our best estimate of what we think is going to happen. And I think the reduction in the wholesale or our expectation for a wholesale in the second half is a combination of a couple of things. It's bookings coming in a bit lighter in a number of cases than we thought they would. Some of that are bookings that we're just not going to get at all. Some of it is spring 2014 merchandise that we thought we'd ship in January earlier in the year and now we think it'll probably be February rather than January. So it will be next year. And then the last thing is some of our in season reorder business is just not as strong as we had previously forecasted that it might be. So it's sort of a grab bag. I would point out as you know Pam that our focus is very much on direct to consumer. That's been the fastest growing part of the business for a number of years now. It's well over half of our business and it's our strategic priority. And while we love the wholesale business and are never happy to see any wobble there, I think we're still fair feel very good about our overall position and our strategies. Which is that's why I was trying to figure out because the product is the same product and it is resonating with the customer on the DTC side. And we've been hearing from a lot of other retailers out there just a general weakness in mall traffic and the strength isn't there. So it's from your perspective, it's purely the wholesale, not there's no issues with the product that you're seeing thus far with the customer not responding to it? That's right. That's right. Okay. And then just one follow-up. International, just how does that perform versus your plan? And are there any changes going forward to your plans for international growth? Why don't I let Terry and Doug start off with that one and then we'll follow-up with any additional comments. Hi, Pablo. This is Terry at Tom at Bahama. We're very pleased with the progress we're making on our international initiatives. As a matter of fact, we're going over with Tom and Hicks later this month to visit all of the stores that we've opened. We're very encouraged by the progress, the comp stores that we've opened, which are in Macao and Singapore, which have been open a year We're showing nice year over year growth. We're encouraged by what we see in the Genesys store in Tokyo and in Yokohama. And but as we said, when we've gotten into these are new businesses and new countries and we're in it for the long term and looking to assess how we go forward when we're over there after this trip and look at it. But I can tell you that the acceptance to the brand and to the product and to the size of adjustments that we've made for that market and everything and how our team has performed in executing in 4 new countries in a year is amazing. And we're very pleased with the acceptance we've had in the product and we look forward to the future that we have in these markets. So I have to say on a basis, we're very pleased with it. And however, the one piece that opened up the new restaurant over there might have some learning to still get some learning there. That's been the one piece that hasn't been quite as encouraging as we would like, but we see it steadily increasing and we'll get that right too. And just to follow-up on that, Tim, I think as a result of the restaurant in Ginza being a little slower than we had hoped. I think our expectation for the international loss is a little bit higher than what we had previously estimated for the year. But that doesn't change our commitment at all to the international strategy or our belief that ultimately we can build a very successful business over there. Okay. Thank you so much again for taking my questions and best of luck. Thank you, Pam. We'll take our next question from Eric Beder with Green Capital. Afternoon. Congratulations. I'll follow-up on Q2. Thank you, Eric. Could you talk a little bit about the split between men's and women's at Tahnee Bahama and how that did? And what are your indications here for the New York City and the Chicago flags? How are those doing? I'll let Terry and Doug jump in. Thanks, Eric. This is Terry. Let me go with the second one first. We just finished we had our Board of Directors meeting in New York this week and we had our whole Board and Tom and Nick's everybody was here and we had an opportunity to show off our New York, but we couldn't be happier with performance New York being a new store in July. It was our number one store and in August it was our number 2 store to a very vetted store that we have the company. So we're still we have a lot of learning to do, but to come out of the in July August with New York store being that positive is very encouraging. And as you know, we have just opened the store at the end of the year last year. So we're very encouraged with July August about what the Q4 holiday is going to look like. We think we'll be in a good shape to capture that. On Chicago, same story. It's a smaller store as you know than the New York store and there's no restaurant attached. But this being our 4th store in Chicago, we're committed to that market. And the Michigan Avenue store has been good, but also in Chicago, as you know, we opened a store in Oak Brook, which is an existing mall that has a new wing and we're very excited about that store too. And having 4 stores in Chicago and one in New York really justifies our 12 month strategy that we can do well in those locations. As far as the women's business, it achieved I talked about in my opening comments, the result is a 27% increase. So year over year, it's achieved over 30% of our total sales, which we're very encouraged with. We're on track. Every time I talk to you all, I talk about I want to get it to 50%, we're well on our way. The problem is men's keeps growing. So we're very, very pleased with we're starting to see the accessory piece of the business really take fire in addition to some shoes, since we brought shoes in house. So thanks for asking those questions, Eric, because all of them are good news. In terms of Lilly Pulitzer, you're really ramping up the infrastructure here at Lilly. What should we expect you're opening about 4, 5 stores this year. Is there a potential now that you created this infrastructure to ramp up the Lilly growth? Obviously, the comps are doing really well, take advantage of that. How do you think about that? Well, I think in Lilly Pulitzer, as you know, the e commerce business has grown dramatically as has the retail business. And I think that the opportunity for growth on both parts of the direct to consumer are terrific. They're long term and I think they're substantial and we're focused on both. We will open more stores, but we're also very focused on continuing to grow the e commerce business at a very rapid rate. And for the next couple of years, I think we're probably going to stick with 4 or 5 stores a year, but we'll continue to grow e com and invest in e com at a high rate also, all of which will combine for a very attractive growth rate in Lilly Pulitzer. Great. Thank you. We'll take our next question from Rick Patel with Stephens. Good afternoon, everyone, and congratulations on the very impressive retail comps. I just had a follow-up question on the wholesale side of the business. Just based on conversations that you've had with key customers, does your gut tell you that this is just conservative planning on their part? Or do you think there's market shifts going market share shifts going on at the floor level? I'm asking because given your strong performance at the retail level, I would think that demand for your brand is holding up pretty strongly, but I'd like to get your thoughts on that. Terry, you want to lead off on that? Yes. Yes, Rick. We've seen our sell throughs with our wholesale customers have been quite strong. And you pointed to a lot of the retailers are focusing on higher turns. Therefore, they're buying less inventory upfront. So it's several trends like that, but I can't really call it as you put it shifts, see the shifts in that. It's just a generally a general climate out there where everybody is looking hard at their business and planning their businesses. And as a supplier, we can only do so much and I think acceptance of our product is great. We love the wholesale business, but we're still creating great products and shipping them on time and we hope this situation corrects itself. But right now, as Tom said earlier in his remarks, that's what we see. And we're hoping that as fast as it goes one way, it can go the other and it can turn on us. And we hope that our customers' business gets better. But we're just seeing a little slowdown in it. But our sell throughs are quite good with our customer. And then a question on your own Tommy Bahama stores. Can you talk about just the level of promotional and clearance activity within these locations? I'm curious if you did anything above and beyond what you did last year and how the margins within your stores held up? Good. Thanks. I'm going to let Doug Wood talk about that. If you look at the Q2, we both have a Mother's Day and Father's Day in there. And from a loyalty standpoint, we did have more loyalty cards that we sent out because our databases are growing, because our stores are growing and our e commerce business is growing. So we did do some more of that this year, business is growing. So we did do some more of that this year. However, when you look at our total gross margin for the quarter overall for the business, we're still maintaining or actually going up from a gross margin standpoint. Great. And then just a last question on Tommy's women's assortment. It seems like you're doing a terrific job there and you have much more product on the website than you've had on the past. Can you just talk to us about what you've learned from a merchandising perspective as you've scaled the women's business and what your strategy will be going into holiday? Thanks for noticing, Rick. We've not only on the website, but in our stores, we've get a prominence. We've moved it up based on the result we keep fueling it. We've learned a lot that I guess will accept a lot more from us than we originally thought in women's. It's a very feminine side of the business that she's responding to. Our dress business continues to fuel the business. I mentioned earlier that our accessory business has finally gotten serious about that business and we're seeing big growth in accessories and in footwear. So I think we're just getting our rhythm. We've been in the women's business for some time. We've stuck a stake in the ground about 2 or 3 years ago and said that we're really going to focus on it and we have and the team has done a terrific job and showing up that way we're constantly getting in our direct to consumer through our retail stores and our e commerce business. It's very, very encouraging what we're seeing. Thank you and best of luck in the back half. Thanks, Greg. We'll take our next question from Mike Richardson with Sidoti. Yes. Hi, good afternoon. Thanks for taking my call. On Ben Sherman, I was wondering, are you guys where you thought you would be with regard to expense reduction sales and clearing inventory? And I'm wondering if you're seeing any improvement in the U. K. Marketplace? We are definitely on track with expense reduction. We're very happy with what the team's done in that regard. And actually the U. K. Retail at least in our own stores has picked up pretty significantly year to date and particularly in the Q2 and moving into the Q3, we've been really happy with what we've seen in our own stores in the U. K. The market generally over there still is not terrific, But I think within our own stores, we're really happy with what we're seeing. And we're performing well in the wholesale accounts over there also. Okay, great. And then with regard to international, any difference you're seeing in international consumer versus the domestic consumer with regard to mix and sort of what's resonating with the customer? Interesting, Mike, that how much that it's mirroring. You take a look at the women's business and men's business. It went we're seeing getting much more acceptance to women's than we thought we would be. We're already achieving almost 50% of the business in women's in all those markets. So that's one that we're very encouraged with. But as far as classifications within men's and women's, it's amazing how closely it's mirroring our business domestically. As we mentioned though that we have changed the size spec in that market. So we've seen that being very well accepted. But generally speaking, they're accepting the brand very much like very much the same way that in America. Okay. Thanks. Just one last one and then I'll jump out. Can you just give an update on new store openings for the balance of the year and what your thoughts are there? Thanks. We are opening at the time of the month, we're opening one full price store in an app, opening at the top of the pond, we're opening 1 full price store in Annapolis, the back half of the year and 3 outlet stores, which gets our ratio of outlets and full price where we like it to be where less than 30% of our stores are outlet stores, which is a formula that we use to keep our regular price strategy in our retail stores where we Scott mentioned earlier, where we can take full care of any inventory issues that we have in the outlet stores and we think that that seventy-thirty full price to so we're running 87 full price stores and we're not outlet stores. So that's our store strategy. And then beyond that Mike, as we mentioned in the prepared remarks, Lilly is planning on opening a store in Naples, Florida before the end of the year and I think that would sort of complete our store opening plans for the year. Okay. Thanks. Best of luck. Thanks a lot, Mike. We'll take our next question from Susan Sainsbury with Miller Tabak. Please go ahead. Hi, thanks. Just want to probe a little bit more on this weakness that's developed on the wholesale side. Can you make any comments about whether this is the order book is also weakened within the Lilly Pulitzer Signature stores? And any insights into Lanier would be helpful. Yes. On Lilly pellet, well, first of all, it's there are pockets of it everywhere. We're seeing most of it versus our earlier forecast in Tommy and Lilly. And in Lilly, it is sort of it's across their customer base. So some of it's in Signature store, some of it's with majors and some of it is with specialty stores. Okay. And is the weakness any greater in Lilly than it is at that? Can you give us an idea of the mix of the order book Lilly versus Tommy versus Lanier? Yes. I'm sorry. I left out Lanier before actually in the second half. They have a pretty good half forecast. And I think actually on a year over year basis, they're likely to be up in the second half. So Lanier is holding up okay. They did have some orders that shifted out from Q2 to Q3. And sometimes that's indicative of a slowdown in the business that could mean things shift out a little more. But I think Lanier has held up okay. As to Tommy and Lilly, it's sort of equal in magnitude roughly. Okay. And both Compared to what our earlier expectation was, it's pretty consistent what they're seeing in the two businesses. Okay. And So strong results in our own direct to consumer and a little bit of weakening in the wholesale channels. But the sell through wholesale remain positive strong as they are in direct to consumer or full price retail? Well, I don't think they're as strong as they've been in our direct to consumer business, because you see the kinds of comps that we're getting and obviously that's driven by some good sell throughs. And I think that as a general comment, it's probably not as strong at wholesale, but I don't think the issue is so much an issue of the sell through of our products as it is what's going on in the retailer's overall business. As you know, we're one of many brands in most of these stores and their decisions about what they're going to buy and at what level they're going to purchase are strictly limited to what's going on in your brand, but what's going on in their total business. Appreciate it. Thanks, John. Thank you. Ladies and gentlemen, this does conclude today's question and answer session. For closing remarks, I'd like to turn the conference over to Mr. Tom Chubb. Thank you, Keith. Our strategy is to focus on lifestyle brands in the direct consumer channel of business continue to be reinforced by the strong results we achieved with Tommy and Lilly Pulitzer. We're very optimistic that there's tremendous well as to pursue other growth initiatives. Thank you again for your support and your time this afternoon. Ladies and gentlemen, this concludes today's conference. We appreciate your participation.