Oxford Industries, Inc. (OXM)

Investor Day 2013

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May 23, 2013

Okay. Welcome. Thank you very much to everybody for coming today. As you can see, we've brought some sort of island and resort type weather with us today to New York to get you in the appropriate mood for Tommy Bahama and Lilly and some of the rest of the stuff that we've got going here. Today is Investor Day for Oxford. Just quickly before we get going, the lawyers like us to point out our Safe Harbor statement there and you can read more about that on our website. I will not drag you through that now. And then the agenda for today, what we're going to try to do today, again, this is Investor Day and this is something that we've never done before. We do a lot of communications with The Street. It starts with our 10 ks, which of course we file annually. And if you haven't read our 10 ks, I would actually encourage you to do it. We provide a lot of detail, a lot of information. We really try to explain the company and the businesses that we're in and give you a lot of meaningful statistics and numbers that you can use to try to do your own analysis on the company. In addition to that, we do quarterly press releases, of course, and conference calls with Q and A. Scott Grassnier, our CFO and Ann Shoemaker, our Treasurer, are out on the road a lot at investor conferences and doing road shows and that type of thing. In addition, they're available pretty much any time by telephone or for meetings in person to help you understand the business and the company and the numbers and all that. We are not going to try to do that today. So for today, this is not really a model building day. This is a day where we want to try to explain the big picture sort of story to you from the total company perspective as well as each of our 4 primary businesses. And so what we'll do today is we'll start off with a little bit of an overview from myself. In my right hand, Scott Grassmeier, talking about the total company. Then we'll move through each of the 4 major businesses and we'll talk about 2 primary issues with respect to each business. The first being sort of what the magic is, what is it that makes this business special and makes it something that we want to have as part of our company. And the second is, what are the growth opportunities there? How do they take that magic? And what kind of growth opportunities does that magic formula, if you will, provide to them? For Tommy Bahama and Willie Pulitzer, it's very much the story of these great lifestyle brands that are functioning very well and it's just a matter of continuing that great lifestyle brand magic and applying it to the growth opportunities that lie out there. For Ben Sherman, there is also a lifestyle brand story there. Obviously, it's not working exactly as it needs to right now. And so we'll talk about what the brand story is, but also what the fixes are that need to happen so that it too can contribute to our success. And then Lanier Close is a slightly different story. It's more of a product category specialist that succeeds by providing high value added products and services to their customers and we'll talk about that as well. Then we'll end up with Q and A. We're going to ask you to hold your questions until the end of all the presentations and then we'll do a consolidated Q and A. And finally after that at about 4:20 any of those of you who are available to do it, we'll walk over to Batami Bahama Island, which is half a block away at 45th and 5th. We'll go upstairs there. We'll have some nice drinks. We will have some hors d'oeuvres. We'll have a little gift bag that will include some small gift items from several of our brands as well as a gift card from Tommy Bahama that you can use today if you would like to. So you'll have an opportunity to shop in the store and we'll give you a little head start there with the gift card. One reminder is that we are in a quiet period right now. Our earnings release for Q1 is in a couple of weeks on June 11. So we're really not going to talk about the Q1 today. It's a very awkward time. I think you guys will all understand for us to be talking about 1st quarter, we're in the middle of our close period. So we won't really be talking about that much today. Just to sort of put everything in perspective for you, as a company, this is always our North Star. This is the thing that we always go back to the single sort of litmus test that we try to judge all our decisions against and that's the objective of achieving and growing long term shareholder value. That's always what we focus on. And the way that we believe obviously that we can deliver long term shareholder value is by driving sustained growth in profitable sales. So we're trying to grow sales, but not just any sales. We want them to be profitable. And when we talk about profitable, we're always looking at it in terms of a return in excess of the cost of capital. So we do that at the corporate level and then we try to drive that through to the groups at the operating level, particularly in terms of what the way their bonuses are structured. Our strategy for delivering that growth in profitable sales is twofold. Our primary strategy is through lifestyle brands that build an emotional connection. That's what Tommy and Lilly are doing very well. That's what we'd like to see Ben Sherman do. And then our secondary strategy is high value added products and services. That's what Meniere does in the tailored clothing category and does quite well. Just to give you the breakdown of the business, you see Tommy and Lilly together are 3 quarters of the business. You throw in Lanier Close and you're at 90% of the business roughly. Ben Sherman for last year was 10% with the growth in the other businesses, it will be even less than that last year. And then we've got a tiny little golf business. The growth as you can see is coming largely from Tommy Bahama and Lilly Pulitzer, which is a good story. Three quarters of the business together and they're driving the growth. You see some very impressive growth numbers there from Tommy Bahama and some off the charts growth figures from Lilly Pulitzer. And here's a little breakdown on where the profit is coming from again. Tommy and Lilly, 3 quarters of the business delivering the lion's share of the profit. Lanier closed there in the light blue makes a nice contribution. Obviously, that orange block there Ben Sherman is not a good thing. That's a negative number there. Our focus is on reducing that significantly. And as you all know to the extent we can reduce that, it will add to the consolidated profit. And then the green piece is the unallocated corporate expense. That's public company expenses, the cost of Scott, Nann and myself and some other corporate staff, LIFO accounting, things like that. The consolidated highlights from last year, you're probably familiar with these. I won't drag you through them. I will highlight one item there though and that's just to remind you that the fiscal 2012 numbers include about $15,900,000 of operating losses tied to the expansion of our international effort in Tommy Bahama and the opening of the big Tommy Bahama Island on Fifth Avenue that we're going to go to later today. So those were some very deliberate expense investments that we made during fiscal 2012, because we believe they create a pathway for future growth. So we were happy to make them. We think they're the right thing to do to drive long term growth in earnings, but they did repress the growth in operating earnings somewhat last year. With that, I'll turn it over to Scott. All right. Thanks, Tom. We generate strong cash flow from operations and we're very fortunate to be in a position where we can take majority of that free cash flow and reinvest it into the business through growth opportunities. We've got Tommy Bahama U. S. Stores Tommy Bahama International Stores. We have Lilly U. S. Stores. And we also have things around e commerce whether it's through the technology side or if it's through call centers to support e commerce or distribution center enhancements to handle this additional volume through this rapidly growing channel. We also we spent about $61,000,000 in capital expenditures last year. That was a little bit higher than I think our normal run rate and we'll probably spend about $45,000,000 this year. And about roughly 70% of our capital expenditures are really right into the growth vehicles with the other 30% normally being whether it's store remodels or other maintenance type capital expenditure items. We pay dividends. It's something that's part of our culture, something we've done every quarter since we became public back in the 1960s. And while we don't have a formal stated payout ratio, it normally runs in the low 20% to right up around 30% of net income. We increased our dividend from $0.15 a share to $0.18 a share in the Q1 of this year. And then any excess cash flow we generate will reduce our revolver debt. We have a $235,000,000 revolver. We had about a low of $100,000,000 available under that at the end of last year. And we think that facility will support our capital expenditure needs, our working capital needs and also the ability to do small type acquisitions under that facility. For example, we purchased our Tommy Bahama Canadian license business this year and just we're able to fund that through the revolver. And if a good acquisition were to come along, we certainly think the capital markets will cooperate with us in helping us set up a structure that we could finance that. And it could mean increasing leverage at least temporarily, but usually we would expect to reduce that leverage fairly quickly. Okay. Next up will be Tommy Bahama and we'll give the overview there. That'll be done by Doug Wood, the President who's been with Tommy since several years before we bought Tommy, which is 10 years ago now. And then Terry Pillow, the CEO, who came in when the founding CEO, Tony Margolis, retired about 5 years ago. And together these two guys make an incredible team that's delivering incredible results for us. Thanks, Tom. Thank you all for joining us today to talk about Tommy Bahama. My father once told me that it's very easy and a lot of fun to talk about something you truly believe in and I can guarantee you Doug and I truly believe in this brand and the power of this brand. 2012 was a great year for Tommy Bahama. It was a year that we achieved many milestones in our company. Among them the first time it was the 1st year 2012 that we achieved over $500,000,000 in sales, which was big accomplishment for us. We also successfully opened a very exciting new market for us in Asia, which we're very happy with. It's well underway and performing well. And even despite Hurricane Sandy, we were able to open our island, as Tom mentioned, in New York and I'm very happy this afternoon to host you all over there. We're very proud of it and it's very exemplary of our brand message and we're very happy about that. As we look at our brand, there are many reasons that for the growth that we've experienced over the last few years. But clearly at the top of the list of the reasons that this brand is as successful as it is, is the clarity of our brand message. And it's a very important factor to us. And internally in the company, we spend a tremendous amount of time talking about this one simple statement. It's very encouraging to me as I walk around the office and Seattle and our other offices to see this pasted on the cubicles of people around. And it's a simple phrase, but it's one that's very loaded and it's one that everything we do at Tommy Bahama filters through this phrase. And we look at the world through one lens and we focus it enables us to focus clearly with what we do and everything we do with the products we design, the stores that we design where we house our product, the food that we serve in our restaurants. It's very, very important to us and I just want to take a few minutes to break it down for you. First of all, in that phrase island lifestyle, world lifestyle is a very frequently used term in our industry as brands refer to themselves as lifestyle brands. It's not so easy and it's a very subjective definition to the word lifestyle brand. But we clearly at Tommy Bahama are a lifestyle brand. And when asked, well, if you're a lifestyle brand, what is the lifestyle? We're crystal clear that we're an island lifestyle brand. And not to take island lifestyle literally that every product you buy from us you got to lay on a beach or go away, but it's more of an attitude, a state of mind, a place where people can go to get the feeling of what we do. But we use the definition island lifestyle to define what we do. Second word up here that's very important is we inspire the world to relax. We Tommy Bahama, we are an inspirational brand. We want people to come into our brand. We want to inspire people to come into our brand on their terms. Not we choose to look at our guests at eye level, not look down or up to them, but on their terms. They can come in and they can be inspired by what we do through our imagery and our products and want to be a part of what we do. We establish I often say the difference in a brand and a lifestyle brand is they establish an emotional connection with the consumer. The guest wants to become a bigger part of the brand. And the last word in this sentence is relax. And I guess if you had to have an elevator one word answer to describe your brand, there's no better word than that word relax because it defines everything the brand is all about and everything we do. I could sit here and talk about this line because we do sometimes day on day end. But as I always say a picture is worth a 1000 words. And over the last year and a half, we've been on 5 photo shoots to produce the marketing material that drives our catalog business and our e com business and imagery throughout the store. We've gone from Miami to the Mediterranean on these 5 photo shoots. And so we took all 5 of them and put them together in one video today and I thought I'd show it to you just to share the experience of the Tommy Bahama brand. Can't help from smiling. As many times as I've seen that video, every time I see it, I'm more amazed. When you talk about an inspirational brand, I want to be those people's friend. I want to join their club. I want to go I want to be a part of what they do. And that's the inspiration that the connection that we have with the guests. And it's because of that clear message is that Tommy Bahama is not exclusive to the United States. It's a global message, a very easy message through imagery to transmit. And that's the reason that we've successfully been able to open in Asia. I just thought today I'd show you, because it's fresh on my mind, it's 4 times been in Asia and it's only May. But this is the Tokyo store that we opened. It's as you'll see in New York, it's got 2 bars, a downstairs bar and an upstairs bar and a restaurant in the Ginza section of Tokyo, which is a very hip, exciting area. It's a very beautiful store. It's a new store concept that we've done called a Coastal Beach House and it's resonating quite well in Tokyo. In the strategy, we also wanted to open not only an urban area in Tokyo, but we also wanted to test a mall outside of Tokyo, Yokohama for those who don't know is about an hour outside of Tokyo. You'd blink your eyes and you'd think you're in any mall in the United States. So we opened a store there just to get a lay of the land to see where we need to go next. Next store we opened in Hong Kong, which is a beautiful neighborhood location. There's a bus that we still changing the imagery on runs right in front of our store. It's a location in Wan Chai Street location, neighborhood location, which we're very happy with. And this is another picture of the Hong Kong store. And Singapore, which is a fantastic market right now for us and a very explosive market. And one that Macau, which is in The Venetian, which we're very familiar with because of our presence in Las Vegas with our stores, has been a very good market for us in Macau. And the most recent one that we opened last week was in Sydney, in the downtown section of Sydney, which is the 1st urban store we've opened in Australia. So we're very excited about that, that we have a tremendous brand with tremendous growth opportunity in the future. And it's really because we've got a clear message, our products that we produce have never been better. Our marketing is focused. Our stores are current. So don't you see as the investor community is very easy. It's very simple. All you have to do is sit back and relax and watch the next chapter of future growth for our brand. Thank you very much. And I'll turn it over to my partner, Doug Wood. Thanks, Terry. I thought I'd start with just kind of give you a map or layout of our operations. And a couple of key points is our corporate options are up in Seattle where we have roughly 3.50 employees between design, retail where our distribution center is there and guest service is there. Some of the best people in the industry are up in our corporate offices in Seattle. Also have a design studio in Pasadena and we've got a licensing and our footwear group is up here in New York with a sales team. The real important dot in here is Atlanta. That's where Oxford is. And if you'd say for us putting your parent companies notice the distance you'd say you can't get farther away from each other than them in Atlanta and say, well, we go to Alaska. But now we'll say here in Seattle. But to just spend one second on this, 10 years ago next month, Oxford purchased Tommy Bahama. And if you want to say what are the success stories and I tell it to people all the time, we're a Harvard business case on how acquisitions should work. And the alignment of values, alignment of risk, reward, use of capital, you couldn't be in more alignment than we are with Oxford. And then the last ingredient is this consistency of management. I mean, Tom, Scott, myself, we worked together for 10 years now. And I know what they care about. They know what I care about. And we talk regularly. It's a four way conversation and that works. That really works. And from a you look at the company and the transitions we went through from a wholesale company to a direct to consumer that has wholesale, hey, those are some tough decisions about how to use capital and how to start aligning your business and has everything to do with our partnership with Oxford. Let me go to the next slide. I'm not going to go through all the stores we have. We now have over 100 stores in the United States. And as you can tell, it's pretty distributed. Used to be we used to be more in the Southern Tier. Now we've moved up in the Northeast, the Midwest up in the West very successfully I'd like to say. And up until March of last year, this was our world, one market, United States. And it looked like this. This is what our store layout was, e commerce and wholesale. And then March of last year, we'll go to next slide, international. And so now fast forward 15 months, we're not just operating for ourselves in one market, we're operating in 7 markets. We bought back our Australian license last July. We just bought back our Canadian license last month or beginning of this month. And now we're operating stores in Japan, Hong Kong, Macau, Singapore. So big shift. And the good news is that group in Seattle and also we have an operation in Hong Kong that has managed the supply chain, which is a big part of how we do things is rock solid execution, rock solid supply chain. And that has made it successful to be able to execute at a retail level. We also have a licensee up here in Dubai. He's been with us for about 8 years. He's opened up 3 new has 3 stores, I think going for a 4th, a little bit of wholesale, but a good partner up in Dubai. Terry went over the 2012 accomplishments. I'm not going to read through all of them. 2012 was a big year for us. One of the biggest things on that sheet is as a company having over $100,000,000 in women's sales and that's mostly through our own stores and e commerce. But one of the initiatives that when Terry came in the door was to build a women's business. And I'll say that not only are we on our way, but we are building a very healthy and important part of our business and that's our women's business and 2012 is a big year. 13, 13 we're 4 months into 2013. Can't really talk about it till release of our earnings. But we do have a couple of big things and that is 4 new stores we've opened up. Probably the one that we've already talked about the day a little bit is the one on Chicago on Michigan Avenue, which really is a great location for us. And also 2 outlets, the purchase back of the Canadian business. And we talked about these 7 markets. Well, we just opened Hong Kong, but that was January, that was last year, but Tokyo opening up in April with the 2 stores, big accomplishments for this year. Let's talk about 13 and beyond the growth opportunity for the business. And I think it's why we're in the room is talk about what's the future hold for Tommy Bahama. And the good news is it isn't just one strategy, but it's multiple strategies. And it's multiple strategies that we've been on for several years now. With regards to North America, we're still on pace to do 7 to 10 new stores each year. We see a lot of opportunity here. And especially as we open up stores like in Chicago and where we already have a Chicago store and you can say, wow, how many stores can you have there? There's opportunity there, multiple stores in multiple markets. E commerce, most important thing in the market today. And I struggled with having these 2 bullets separated, because at the end of the day, it's one guest for Tommy Bahama. We strategize. We talk about it all the time. The future of retail is talking about how do you message and deliver your message to the end guest. And if they choose to shop online, choose to shop in your store, it's the future and we're here. The future is already here and trying to link that together. That's what we are doing and have done. And e commerce has been explosive and you're even going to see more of that as we keep tying together the omni channel. Right with that is the guest database. For us, it's as many people and we talk about the fact that Tommy Bahama is our number one asset. Probably number 2 is our guest database being able to talk directly to our guests and deliver key messages and ensuring that those messages are cross channel every chance we get. And we think we have a differentiator too with the restaurant. We have that little extra piece that where we have a restaurant in the market, we can do be more than about apparel and accessories, We can be about that anniversary, that experience that you can have in our restaurant, which is different than other brands. If you go to the next slide, we talk about women's. Women's for us is critical for the growth of the company. We put a lot of effort into it, but we're getting a lot of success. And it's just not sportswear. We saw our first success in women's swimwear. Women's swimwear from a fit standpoint and a styling standpoint that gave us success in our own stores as well as wholesale. We're now into our footwear and we believe we've got footwear in house. We think that's a great opportunity as well as accessories. And with all of those product categories, wholesale is a big opportunity that we really have only started to try to get penetration there. Men's, we started out being a men's company and we still believe that that is critical to the success and the growth and expanding into a 4 season, which we've already done. 2 of our key items is a heavy knit and a jean in our top five of items. Wouldn't think that was Tommy Bahama. It's there. We have a new fit. Our modern island fit has been hugely received. And if you're over the store, you can talk to a sales associate and they'll show you. It's a trimmer fit that is bringing in different guests. I won't say younger, just a different guest. And then expanding also the footwear and accessories in this area. And then the last, we'll talk about international. Two markets specifically Japan and Australia. Australia we're farther ahead on because of the fact that we had a license there for about 6 years when we brought it back. There we had stores. We opened our 1st store by ourselves in Sydney last week. We're going to get traction there, but a smaller market. But we'll get traction there and have gotten traction quicker. Japan, Japan is a big opportunity for size of market. And the Japanese have been traveling to Hawaii for a long time, familiar with the brand, but not familiar with it directed towards them. So we see that as being a little bit longer of a build, but when we grab traction there we see that as a big opportunity for us. And then lastly, where do we go from here? Hong Kong, Macau and Singapore, it was a platform for the bigger play and the bigger play will be China, but you just don't run into China. You've got to build your brand. And we saw these markets because of its aspirational to travel there and to start to introduce our brand there. And also for us learn some things. You just don't run into a market and think you know what you're doing. You got to learn from these other entry points. And then as we get knowledge and we have success, then we'll have our plan to go into China, which we right now are thinking probably around 2015. So lots of opportunity, lots of success where we really have a lot of momentum right now more than I've ever seen in the company in my 12 years and excited about what we're going to be doing here in the future. So with that, I'll turn it back. Okay. Thanks a lot, Doug and Terry. And next up, we'll have the Lilly Pulitzer guys. We'll give them just a second to get up here on stage. And as they're shuffling up here, I'll give you a little bit of background on these 2 gentlemen. They worked together at a sweater company called Eagle's Eye that some of you may remember from many years ago. And then in 1993 and Jim will talk more about this in a minute, but they teamed up and basically took over the Lilly Pulitzer brand and have developed it over the last 20 years. We connected with these guys in 2010 and ended up buying Lilly Pulitzer at the end of 2010. So they've been with us now for a little about 2.5 years. And I have to tell you not only have they been a great addition in terms of what they've brought us with Lilly Pulitzer and their ongoing management and growth and development of that brand. But they've also been a great addition to the total company. We're really glad to have these guys not only as the 2 that run the company, but also as part of the senior management team at Oxford. On the right is Scott Beaumont, who is the CEO and then on my immediate right is Jim Bradbeer, who is the President. Those are their titles, CEO and President, but very much like Doug and Terry, these guys work together in partnership and all big decisions are really joint decisions made by the 2 of them. So with that, I'll turn it over to Jim. Thanks, Tom. Appreciate it. And Terry and Doug, tough act to follow. I always wanted an older brother. I didn't realize I would have to be the younger sister, but well done. Congratulations. It's really fun to be in the Oxford family and to be able to access some of their insights on building business. They've really done a wonderful job. Well, we're the new guys or girls. And we thought we would use this opportunity to tell you our story. Many of you have heard the Tommy Bahama story and know some of the background, but our story really matters knowing who we are, where we came from, where this brand came from is important because it informs so much of how we behave, how we view the market, how we view the opportunity. So in our few minutes together, we're going to kind of focus. We're really going to do it in 3 parts because Lilly is a brand with a history. Lilly is the real deal. But it has chapters as all kind of great brands have a story. Ours is a great story in multiple vignettes. We want to take you through the original story, the birth of Lilly from 1959 ish, which you'll learn in her world is just about right, through 1984, through the closing of the business in 1984. I don't know how many people know that, but the business was completely out of the marketplace for almost a 10 year period. I want to tell you a little bit about what we did and bringing it back, who we are and what we did to bring it back. And then I'll turn it over to Scott because the one thing Lilly taught us and was very relentless on, she said everybody is going to want to talk about vintage in the past, but the most important thing is the future. It's all about tomorrow. It's never about yesterday. So we'll give you a little bit of history. We'll give you a little bit of yesterday to put it in perspective. But then what Scott will take you through is always our priority. We don't live in the past, we live in the future. Okay? Everybody good? Off we go. So 1959 ish to 1984, this is Lilly's story. This is Lilly Pulitzer, the woman, and we called it kind of the birth of an American icon. It is something that we manage in every day, that we were responsible for a business that really is iconic. She was an iconic woman and she created an iconic business and her story is an interesting one. So let's start by meeting Lilly. And I think many of you are aware, and it was in the press pretty thoroughly. Unfortunately, just now a couple of weeks ago, at age 82, she passed away in a great place, had lived a very full life. I was very fortunate to get to know both of us. Had a great meeting with her on Valentine's Day, where I knew probably we both knew it would be the last time we'd see each other, but she was something special. And let me tell you a little about her. She's a New Yorker, born and raised on the Upper East Side into affluence. Her mother, she was born in McKim, but she married into the Phipps family. So she lived a life of pretty highfalutin, as she would say. A lot of summering in the right place and wintering in a place called Palm Beach, where when she was on her one of her wintering missions, she ran across a fellas who she thought was pretty cute named Peter Pulitzer. And Peter was the grandson of Joe Pulitzer, who was the founder of the Pulitzer Prize. And prior to the big days of investment banks doing deals, families did deals and the Pulitzers and the Phippses and the McKim's all got together and they had a wedding. It was an alopeche, I'll tell you, and they did. And Peter and Lilly fell madly in love, got married, got together, immediately started having kids. And then as is the case in all, great stories, right, the highs and the lows, and she'll tell you this, and I always have to watch my crowd when I tell this, but she said things weren't going so well. And today they deal with it sometimes with little blue pills. In those days, they encouraged her to go to Bloomingdale's for a little time to just sort of get herself pulled together, which she did. And she came out of Bloomingdale's and the doctor gave her very clear marching orders. And the marching orders were from this young woman who'd been raised in the Upper East Side and gone to all the right schools, she was to get a job. She was to get a job, get to work. That's what will fix all these little issues you're having. And so she did. And so in our world, we use the phrase that sort of grounds us forever because it all started with the juice stand. What everybody in this room doesn't know about the Pulitzers is they were very good at publishing. They also had a lot of orange groves, lots and lots of them down in Florida. And young Peter, the grandson was chosen to run the family's orange juice business in Florida. And so while musing on the direction they were given from the leaders of Bloomingdale's as to what to do, she said, I got it. We'll open up a juice stand right here in Palm Beach. It'll be great. We'll put it right where we all like to go, right there, right off of Worth Avenue, too expensive to be in Worth Avenue. We're going to do it right in the vias. And so she did. She opened up the juice stand. And Lilly was a beloved figure in Palm Beach. She was someone that the girls all love. She had something. She had that charisma. She was from affluence, but she had a tremendous rebellious streak in her. She always wanted to be different. She always she never quite got comfortable with that world. And so she set up shop and they came and they came to buy her juice. But then she had that great moment that all great entrepreneurs have, the moment of crisis because she was in her juice stand and she was juicing and she would show this in those days. She would say, Brad, we're juicing and we're juicing and we're juicing. And what happened? She spilled on herself and she was making a mess and she hated the fact that she was ruining dresses in the juice stand. So she said, what I need, I need a dress that I can wear in the juice stand that when I spill on myself, no one will notice. Peak to my right, we didn't get a shift here, but and so has created the Lilly shift. She had her in home seamstress run down to Woolworths, pick up some fabric that was brightly colored, think of the colors, right? Your citrus, right? Your pinks, your greens, your lemons, right? Put that on, cut it. She was a beautiful woman, wanted to be something she could throw on. So it was sort of sleeveless, sort of short. She was feeling good about things. And so it's created the shift that she wore in the juice stand. And it's all great entrepreneurs know. The people came in, they said, Lilly, we love your juice, but more than that, we love your shift. How about making us a few of those shifts? And so she did. Now, one of the advantages of being from the Upper East Side and having gone to Chapin and then to Miss Porter's was she had some friends come to visit her and this is 1960 ish as she would say. And one of her friends was that pretty lady sitting up in the top right corner. Her friend Jackie Kennedy brought her daughter and said, Lily, I hear you have this great thing going. This is so exciting. Why don't you make me a couple of those shifts? And so on the cover of Life Magazine appear Jackie Kennedy and Lilly Pulitzer's, one of Lilly Pulitzer's shift and everybody came and everybody came to see Lilly, right? We don't have enough time. This can usually go on for hours. I'll save you. So we'll jump ahead. From there, from a business perspective, this woman with no design background, no business background, but as she always said a tremendous eye, One of the few times she was the most self deprecating, low key, but when you absolutely pinned her down and said, what do you have? She understood the lifestyle and she had an eye. She also had a tremendous passion for doing what she did and she wanted control of it. So Lilly Pulitzer built a business that was completely vertically integrated. Everybody today wants to talk about going direct. Lilly was like, of course, I kiss the box coming out of the factory, it arrives in the store, the customer gets it, that's how we have to do it. She owned everything from the printing factory in Key West all the way through to the retail store. She built a very complex business because she also wanted to I don't think she knew it, but she wanted to build a business that would sustain and would be defensible and it was. She also built a business that it is the most overused phrase that is the right phrase, but only for a view. And you're actually sitting in a room with 1, a brand that truly is a lifestyle brand, Tommy Bahama, but arguably the 1st lifestyle brand, which was Lilly Pulitzer. Because the lifestyle brand by definition is one that starts with a vision of the way you live as opposed to a vision of a product category in which you can dominate. And the industry was built by people who owned it were good at shirts or good at pants or good at sweaters. That was the makeup of our industry. And then stores would aggregate them. Lilly was like that's just too complicated. I see the way I live. I see the kind of clothes I want to wear. I'm going to do that. And so she did. And that's such an important thing because that informs the way we think about the business and always have. That's what she communicated to us. She built a vertically integrated lifestyle brand. And she also did something that all great entrepreneurs do is, she created something that didn't exist before. She created a thing that we call, she would never be, she would hate that we're talking about it this way and she would hate that we even would give her these kind of kudos, but she created American Resortwear. We're very proud to hear that on June 3 at the CFDA award dinner that they do every year that Lilly is going to be honored and that CFDA thought it was important to recognize her contribution to fashion because she's truly a unique American icon. She created a look that Isaac Mizrahi delivered in a speech couple of years ago at a thing, we don't go to many, but when we did, he said, great fashion is when whether you're in Kiev, Russia or Palm Beach, Florida, when you see a piece of Lilly, you instantly recognize it. All great designers wish that they could design product that's instantly recognizable. And she did. She created American Resortwear. These pictures from Slim Aaron's in 'seventy two, they captured her time. She didn't want to do it, I don't think. I think she did what she liked. I think she had fun doing it, but she really created something unique. In an American fashion, she is a pioneer and an icon. But then the story changes because I'm a guy working in a women's business, so I get to use sports analogies virtually not at all, but she did something that really matters, which is really unique to our story, which is she retired at her peak. I only know this because my mom ran the Lilly store in La Jolla and I was in college in 1984 they closed. I got the tearful phone call like 8 in the morning on a Sunday, which isn't a good time to call a college kid. Yes, what mom? But she closed. Her business was fine, but she's done it for 25 years, which in apparel, it's kind of like dog years, that's a lot of years, right? And she just closed. One day she said, we've had it. She told us, said the day I didn't jump out of bed to go to work is the day we decided to shut down. And so she did. And so the myth began, right? Tom talks about the magic. To get magic, you need to do things like that. Nobody in our industry quits when things are going. What do we do? We sell it off, we trade it down, we market and we get a diffusion, all that stuff, not Lily, she just closed. And so was born the thing that kind of got ours as we move to the next chapter. So for 10 years, the business lay fallow. For the legal the lawyers in the room, if you don't actively mark and trademark after 7 years, you lose the right to that mark. It falls into public domain. She didn't want that. And she was clever to have lawyers who said, hey, listen you need to deal with this, 'eighty four, 'ninety one you need to do something. So the long story short is that through secondary connections, Scott and I who were working for a company called Eagles Eye, working for a guy named Chris Birch, who we used to say that didn't really mean anything to anybody. Now apparently that sort of resonates out there. Chris is a pretty smart guy. But we work for him and we actually brought this idea to him. He didn't think that was a good idea. So we left and we started a business over her pool. We launched it. I'm sorry, I don't have a picture of that. We weren't savvy enough to be taking pictures in those days. But this is a picture from an opening party with Lilly and we actually had a 3rd partner when we started in 1993. And we launched with a vision of rebuilding this incredible brand that she had built that we felt belonged back in the market. There were a couple of things just on the macro that we want to share. There were fundamentals. We believe there was an opportunity. We didn't think there were many brands in our industry. We also there were some tremendous demographics going on in 1993 that continue today. The world is getting older, richer and moving south. All you need to do is go and who was somebody that was talking about Palm Beach Gardens Mall. If you remember what that looked like in 1993, it was like tumbleweeds up and down the aisles and now you can barely squeeze by. It's really fundamental change. And that will continue as the baby boomers go through their period. But we had a belief that there was an opportunity to bring this brand back to greatness and it belonged. We thought there was a dramatic void in the market. So they ask us what so what did you do? And what was it that was mystical about what you did? And I actually think that there's a ton of work, but there was a simplicity to what we did. We've positioned as American Resort Ware. That's a benefit. And in all products and all consumer products, the key to positioning is the benefit. What does Lilly do? It brings happiness back. Lilly is a happy brand. She said that to us. She was very simple. She's a great parent, right? The great parents don't tell you the 11,000 things you should do. They tell you the 3 big ones. She was always good on the big ones. She's like, we sell happy prints. That's what we do. We make people feel good. In an industry that doesn't, this industry is pretty serious. I don't want to you all can flip through your magazines. It's pretty serious and we're not. We're about the best in times. We're about things that make you feel good, right? Her prints are about that. They're about lifting your spirits. They're about taking you to that place that makes you feel good. Whether you're in Palm Beach, Tom Bahama goes, it's not about having to be in Palm Beach to wear this. It's about having that tough day when you live somewhere else and a woman goes to her closet to find something, it takes her there. And that's our job. And that's a meaningful market opportunity. And so we brought back happy clothes or we sure tried. And the other big thing before I turn it over to the future is that the thing that we're most proud of and most excited by and most intrigued by when people ask, what's the biggest surprise over the 20 years of kind of going at this is that the fascination is that we were able to have the great granddaughters and granddaughters love the product the way their mothers and grandmothers loved it. There's a passion. This is the Kennedys. The Kennedy mother and daughter and then that's I think that's Robert's grandkids who all wear and love the brand. The aesthetic, the feeling, the essence, the things that it stood for, all those good things, those happy things, those positive things really have translated throughout time. And that's been an incredible part of our ability to bring back this iconic brand and return it to relevance. Enough about the past. Scott will tell us what we've got next. Well, looking at that picture, a couple of pictures ago when we founded the business when I had a lot of dark brown hair, I was really hoping that in this 20 year period, I was really hoping that my complexion would have cleared before I turned gray, but that just didn't happen that way. And I was hoping for a little better feeling on that. So our strategy and let's turn to the next to the brand vision. What we did kind of the key for our brand vision and in an aspirational brand, it's important to have all the elements of the marketing mix consistently aligned. And we'll talk about the elements of the marketing mix, keeping those aligned and also to have competitive advantages. But aligning the elements of the marketing mix, the customer, the positioning of the brand, we'll talk about that product, pricing, distribution and communications, keeping those key elements of the marketing mix properly aligned. And we also need to have competitive advantages. And the 3 competitive advantages for Lilly Pulitzer are print, authentic resort and emotional connection. And the reason that you have to have competitive advantages is our whole business primarily our growth rates are forecast higher than industry growth rates. So we need to gain market share. We either need to convince customers who are currently buying something to buy us instead or we need to be so compelling that in our sub segment we have products that are so good that it actually expands the size of that market. And you can only do that through having competitive advantages. And we have free print, authentic resort and emotional connection. Let's talk about some of the elements of the marketing mix. First, let's talk about customers. Our customer is multi generational. Our customer we actually have a girls line that starts with girls who are 3 and 4, 5 and then through high school, college and what we and the mothers with young children and then the true empty nest resort lifestyle. And by the way, I happen to be empty this. You're actually not empty nest unless your kids are paying their own cell phone bills. Just because they've moved out of the house and have their own job, but until they're paying their own cell phone bills and EZ Pass is charged to their credit cards, that's when you're actually emptying that. So but we're multi generational and we also have the life cycle of Lilly that you see that a lot of people are introduced with the brand as a child. And then when they're in their late teens, they kind of wear it again. And then when they're a mother with young children, they're wearing it, children have it. Or maybe then the grandmother is participating in the brand by buying for the children. And this life cycle of the brand and the multi generational characteristics, we think are why the brand has had a 55 year history and is still viewed as kind of a young brand on the move. And we're often asked like what about this Lilly fad? When is this Lilly fad finally going to be over? Well, I think 55 years kind of gets you beyond the fad element. And when Brad was talking about the juice stand, I think Lilly really started by kind of quenching thirst through happy close and that's something that isn't a fad. I think there will always be a need for the happy close that we do. In terms of our positioning, our positioning is resort chic. It's also important to have clear positioning in the brand. And our positioning is resort chic. Positioning is the reason why you exist. That's why people buy from you rather than from someone else. And in Resort Chic people always ask, well, isn't that narrow? Isn't that too small? Can you really build a business based on that? 75% of America but if you consider the Great Lakes as beach and those who live near the Great Lakes consider it as beach, 75% of the United States lives within a 90 minute drive of beach. So that is not niche. Having something that's resort based, resort chic is not niche when 75% are within a 90 minute drive that makes it accessible. And the other thing about clear positioning that's so important and we've been very disciplined on this is that consumers buy like their number one choice. Like if they're looking at 4 things, they don't say, hey, this is my 4th favorite, this is what I'll buy. They actually buy their favorite. So it's important to be the 1st choice to some rather than the 4th choice of many and clear positioning helps with that. We have a video that shows a little bit of what Resort Chic is. That's a visual of what we mean by resort chic. The of course, one of the hypocrisies in the business, Terry has the same thing, is we actually work too hard to be able to live the lifestyle we sell to, but we'll get around that. So in terms of elements of the marketing mix product and certainly Versailles product is a very important part of the marketing mix and maybe the most important. We are our products focus on women's apparel and accessories and women's apparel is the overwhelming majority of the company. We do some children's business that's really girls, but we are primarily a women's apparel brand with some accessories. We have in terms of the product categories by shape design, we have dresses, women's sportswear, some limited accessories. But at Lilly Pulitzer, we also measure our business by print, pattern and solid, the way that we think of our business. Our product strategies are we create innovative designs that delight our customers, have high retail sell through and contribute to the profitable growth of the company. And I won't dissect all those, but to create innovative designs, we are design led, we innovate first, protect later. We have keywords like fashion design vision, key looks by delivery, newness and inspiration are words that are important for us in terms of shaping our product strategies. One of the questions with the brand is really what's the balance between focus, diversification, we are the number of product ideas we have been presented with over a 20 year period is extraordinarily broad, but you need to have market superior product to grow at rates faster than the industry growth. And to do that, we've actually found by focusing on the core and staying close to the core, markets end up being a little bigger than you think when you have market superior products. So we've been a little more on the focus than the diversify. Let me talk about pricing. Still on the elements of the marketing mix, our pricing is designer at better. It's good positioning for us. We also have a broad range in our price continuum and that fits with the multi generational customer. We have some entry level price points and some more premium. We are we have full price integrity in the brand and that allows for a high margin business that's sustainable. So that's linked all the parts of the marketing mix we link. Let me talk about the distribution. And our distribution is multi channel. We are both wholesale and retail. Our retail has e commerce and our own stores. Our wholesale has a concept called signature stores, which are independent retailers who have carry a lot of Lilly and can call themselves Lilly Pulitzer Signature stores and some major store business. Our model has been moving much more to the direct channels. E commerce is an important part of the business. High growth, we approach that with a full price model in terms of pricing that provides a very good umbrella of communication of full price and allows us to do full price business and really not have conflict channel issues. Our communications is primarily now it's digital and direct to consumer are the main things going on. These are metrics that we didn't talk about too much 5 years ago, but we'll have over 15,000,000 visits to our website. Those are people who are seeking us out. We issued over 150 e mails this year and more than 30% of those are opened. So in terms of our way to get messages, we have statistics in terms of Facebook fans, e mail names, things like Pinterest, collecting the data for the customer. Doug had mentioned earlier that the database of guests is really one of the important intangible assets for companies like ours. I wanted we are going to show a video now on I want to get to our competitive advantages of print and let me show you how we do print. This also is a way that we can communicate digitally because this has been on our e commerce site. When I was designing ChaCha, I loved the way coral and seaweeds looked underwater, where it's so bright, it almost doesn't look real. And when the waves go over it, they almost kind of dance. And I always like a lot of colors in my prints. We worked really hard to get those neons extra, extra bright. So that's how we named it LipChaCha. Prints, we mentioned in the beginning the brand vision that prints are our number one competitive advantage. They're all done in house. They're custom. They all have the name Lilly cleverly incorporated in them. That makes them defensible and sustainable. They have a very certain look, which were recognizable. We do a high assortment of print, more than most in the industry that is a sustainable competitive advantage for us. It's important. The authentic resort as our 2nd competitive advantage, partner Brad talked a lot about this that we Lilly is from Palm Beach. It is a true lifestyle brand. What Lilly did is from the lifestyle that she saw. She saw people going to the beach, having lunch, entertaining. She developed clothes that fit that lifestyle and they were appropriate, but easy and accessible. And Lilly Pulitzer truly is the 1st lifestyle brands with an authentic resort heritage that we understand. And then the last of the competitive advantages is emotional connection. A lot of brands talk about this very few truly have it. Lilly pull ups where the emotional connection is extremely high. If you go to our website and look at the photo gallery, you'll see it. This is a wedding on the beach, people happy running afterwards. On the next slide, this is somebody playing tennis spelling out the word Lily with tennis balls. This is emotional connection. This is more than just buying product. And dogs, somebody making that's with dogs. We have in terms of emotional connection, we had one of our key customers came to us was telling us how she has 2 dogs, one named Lily, one named Pulitzer, one's dyed green, one's dyed pink and she got a certain species of dog whose fur was so white that when you dyed it was exactly the tone of green and think they want. This is emotional connection. It might be something else as well, but it's certainly emotional connection. But so those are the competitive advantages. And then after 55 years, we're just getting started. Thank you very much. Thank you, Scott and Jim. Very much appreciate that. Next up is Lanier Close and we've got the President of Lanier Close, Wesley Howard there. Just briefly before Wesley starts, I'll tell you that Lanier and Wes is going to talk a bit more about this is more than 40 years old. Wes has been with Lanier for 20 plus years. He represents a very important transition in Lanier and I think this will be reflected in his presentation today. For almost all of its history, Lanier very much viewed itself as a manufacturer. The leadership of the company was always manufacturing guys And they very much approached it is that the reason customers existed and sales teams existed was to create demand to keep their factories full. Wesley represents a transition in that he grew up completely on the marketing and sales side of the business and his approach to the business is a very healthy attitude of what does the market need from us in the tailored clothing category. And then we're going to figure out a way to profitably meet that need. And that change in mindset, I think, has a tremendous amount to do with the huge amount of success that we've had in Lanier over the last couple of years. So with that, I'll turn it over to Wesley Howard. That was actually almost an upset. Thanks for listening here today. I want to first take you through a short video, which will really introduce you to us in a more tangible manner rather than might just give you some words. So if we can take a look at that. Jim. So as you can see, we're a tailored clothing company. We make men's suits, men's sport coats and men's pants. We're the we own some brands, we license brands and we still do a little of the private branded business as well. We're the 2nd largest tailored clothing company in North America. And as Tom said, we're over 40 years old, 42 years old now with a very consistent record of profitability. Next couple of minutes, I'll kind of give you the explanation as why I think that's been the case. It starts really with the management team, the associates teams that we've had really I think the best in the business today for sure, whether it's in our sales, our design, our sourcing, it's a pretty complex business. So we bring the best to the table here. Beyond that everything for us starts with product. We know that for us to have sustainably profitable growth, which is really our mantra, we have to make a product that sells through our retail customer and that is our channel. The second very important part that we're involved with and that we think is important is the integrity that we have. And that's kind of a big news phrase over the years. But for us, it really represents what we do with in having long term relationships. So we're 42 years old. We have relationships to go back that far with our customer base. And I think in any industry that you're in, whether it's the Financial or our business, I think you find that those long term relationships are also among the more profitable relationships that you have, because you do have an understanding of each other. And that's what we're about whether it's the customer side or the vendor side. Financial management, another key ingredient to the long term success that we've had. We wake up every day and we know how to control our expenses and how to control the financial workings of our business. It starts with expense management. We spend on things that help us grow our business profitably, whether that's our people, whether that's our brands, whether that's our product, whether that's our customers. I mean, if it doesn't really apply to that framework, we don't spend money on it. The next part of our financial management, very important part for our kind of business is the work is the management of our working capital. And our key goal here is to keep as minimal a working capital footprint as we can possibly do. And for us that means managing our business with a very lean inventory, turning it as fast as we can and not disrupting anything that we any of our customers' business or our own and maintain a healthy go forward. Execution, nothing works for us without execution. I don't think anything works for anybody without execution. Our resources are really allocated to ensure that we do execute as flawlessly as we can. This begins with selling the right product to the right customer. Tom made a comment about how we really go after what sells and what does our customer needs as opposed to what do we need to do to fill the factory next week or last week. It also extends itself to sourcing the product through our global network, which includes Italy, Mexico, Asia, really with an eye towards high quality product, which we do produce and high margin driving values planning and shipping our clothing to the customers when they want it and then finally managing our inventories again to make to enable us to have that minimal footprint that we need to have in order to have a sustainable business, a sustainably profitable business in a high growth manner. Brand diversity, we as I said, we own brands, we license brands and we still do private label as well. Each brand that we've got each segment that we grab, we have a focused reason for why we do it. We also have skill sets that apply to that as well. We've got our business broken up into 3 different segments opening price point, which is really about selling the JCPenney's, the Kohl's, the Sears that were opening priced $99 $119 suit. It also extends to our private label business as well, which includes some of the brands like the Lands' End and Sears and also Joseph A. Banks. The next part of our business is the moderate business more of the department stores that you would recognize Macy's, Men's Warehouse, Lord and Taylor stores are top plus some regional department stores. And then most recently we've extended ourselves into the upper tier of the business really, really I guess exemplified by business. So we've just started with Saks Fifth Avenue. This is a look at some of our key customers not entirely our largest customers though they were out there, but also some strategically very important customers for us. We'll spend the next couple minutes just kind of giving you a 10000 foot, 15000 foot view I guess of some of the brands. Dockers is the first brand we have. This is in the opening price point segment. It's one of the more well known brands out there. It's one of the things that appeals to us about the brand. Likewise, what appeals to us is the fact we've been able to license and this is important for us as we go forward, been able to license the Dockers trouser as a dress pant for us as we go forward. You can see some of the key customers. Billy London is a brand that we started, we own, has broad distribution also down in the opening price point arena. It's a brand that serves the younger customer, more fashion driven customer. Generally, very often, this is 1st suit. Private brands, I mentioned we still have a segment of our business that is there. Really this is about taking advantage of our skill sets in design and sourcing and in logistics and distribution, which we do for very large customers. You see some of these listed here. Importantly with this, if you'd have asked me or asked anybody up here 4, 5, 6 years ago, this would have represented 45% to 50% of our total volume for Lanier Close. Today, it represents 25% or less of our business. It's been a strategic decision for us. I think Tom alluded to that to move more into a branded mix for a lot of reasons, not the least of which are the ability to grow profitably. Next and very exciting brand for us Kenneth Cole. This is a very modern brand focused on a young fashion guy. It's particularly important for us because it gives us the opportunity in our distribution channels which the Macy's and the Men's Wearhouse listed up here of having with a very strong Diffusion brand Kenneth Cole Reaction, 2 different price points on the same floor in stores which is not something that happens less early in our industry. So it's really been able to help us magnify our volume and our ability to grow. And likewise, this is one of and I'll say one of because I actually feel more strongly about it than this, but I think maybe the best selling brand in this marketplace today in tailored clothing. It's really on fire and it's been that way for us for the last couple of years. Jeffrey Bean, a more mature brand, also broad distribution for a more mature guy in the 40 to 60 year old range. Arnold Brandt is a brand that we own. This resonates more in Canada. That's really where the distribution is more focused more as of Canada. This is our foray into some of the better or accessible luxury. We will call it $695,000,000 to $795,000,000 for a suit. And you see Ben Sherman, British iconic as we call it, it's a very modern brand, very fashion driven brand for that younger guy who's a little more affluent in the $5.95 to $6.95 range. And then Ike Behar our most recent brand and this Ira Coriant, it's a true luxury. This is a brand that we've just launched at Saks Fifth Avenue a few months ago for this season. This is a $1200 suit among some other items that are in their stores made in Italy, which is a relative value in Saks Fifth Avenue and performing very well. All of my guys are telling me that it's the best launch they've had in this, but we certainly feel like it's a very strong launch right now. Certainly the indications are that. Back up on the last thing is that here also we have a diffusion brand or Ike Behar has a diffusion brand Ike by Ike Behar which we will also launch later this year at Lord and Taylor. So I've spoken to some of this and design we talked about is important for us. How do we succeed? What do we do as we go forward? And how do we grow? It is to what Tom had mentioned. It's finding the white space, finding those opportunities for us. And it's something that we focus a lot of attention on whether it's our sales teams, our merchandising teams, myself, whoever where you look at and you look for opportunities to do business and to grow profitably with your with our customer base. It's important to find that white space for us. The white space operating as a void means when you find it you're the first one there. When you're the first one there you've got a much better opportunity to grow and grow bigger. And the other element about that that is particularly important to us as we find and have found for a number of over a number of products that we've been able to do this with is we have much greater pricing power. I mean, first is there. Everyone else comes in to take space away from it. It's generally there with a deal or some sort of an incentive where we represent authenticity when we're able to do that. That's very strong. The next part of it is really patent handle this is the ability to help our customers grow their gross profit dollars. That in turn obviously helps us do that and expand our footprint within their store. So what are our white spaces? Well, besides the incremental growth that we've seen in some of our brands, really the first white space that I would talk about for us is a big effort we've made in the last within the last 12 months of developing a much larger pant business or developing a large pant business. We see opportunities. We're taking advantage of those opportunities now with Kenneth Cole successfully at this point, Dockers, Ike Bey Heart as well as some private label initiatives. And lastly, we see some new channels of distribution that we've not taken advantage of to the fullest extent over the last several years. First would be clubs. It's not necessarily glamorous, but it represents big volume falls into some of our wheelhouse big volume with fast turn, fast logistics businesses and it meets with what some meets with the skills that we have. Next and I referenced this a moment ago was Ike Behar. We see that luxury channel as a big opportunity for us. It's not a very big segment in terms of volume of the clothing market like it not unlike the other markets, but it does represent a volume of business for us that does give us good profitable volume, but with much higher margins and the ability to maintain some pricing power and considerably less price pressure. So with that, I'm going to close. Thank you, but we're going to show you a Ike Veyhar video that was taken a few months ago, 2 or 3 months ago with the new store openings, actually their first store opening in Charleston, South Carolina for this brand. It's been very successful to this point. And I'm also happy to say that really one of the driving forces in the success that they've had to this point has been our product, which I think took them by surprise. So thank you. Okay. Last up is Ben Sherman. And as many of you know, we alluded to this at the beginning. Ben Sherman has struggled financially over the last couple of years. We've taken some very positive steps to address that and try to right the ship at Ben Sherman. One of the key steps there has been some changes in management there. We had the departure of the former CEO last November. And then just last month, we appointed a new CEO, who was a guy who'd been within the business, but we elevated him to the CEO role. He's 1 month into his job now. We've made a couple of other promotions there. The new team are very focused on doing the things that need to happen in order to correct Ben Sherman and get it on the right path. They're very focused on doing that. 1 month in, I think they're doing a great job. What I didn't want to do was take them out of the business for 3 days to fly them over from London to be here today and go back tomorrow. So for Ben Schuman, what we've opted to do here is we've got a slightly longer, it's about 3 minutes long, a video that will explain what the brand is and what it stands for and hopefully give you a flavor of the opportunity that Ben Sherman can build on. And then I will walk you through some of the key points of the turnaround plan for 2013 that the management team in London is focused on. Okay. So that's the sort of brand story on Ben Sherman. Hopefully, you can see it's not quite as good as having somebody in person to deliver the message the way these guys did or Terry and Doug did. But the elements, the raw material of having a great lifestyle brand is there. There's no reason that Ben Sherman cannot be successful. However, over the last couple of years, our execution in Ben Sherman has been abysmal. We've failed to pull all those elements together well and have them synced up as Scott and Jim talked about so eloquently. And as a result, we've had some very poor financial results. There are a couple of key things that we're doing in 2013 to try to remedy that. First is restructuring and strengthening the management team, which I touched on at the beginning of the Ben Sherman discussion. We had a CEO exit. We elevated an internal guy to be CEO. We elevated another internal guy to be Chief Operating Officer and then we brought in a couple of key people. Most importantly, a very strong Head of Retail, who started with us about 6 weeks ago. So that's the first part of the plan for 13. The second part of the plan is expense reduction. Ben Sherman's expense structure is much bigger than a business this size can support. In order to be successful in Ben Sherman, the expenses must be reduced. We've got a plan to significantly reduce expenses in 2013. We'll get a lot of the benefit of that in 2013 and then that will fully annualize in 2014. And there's no reason that we can't achieve that. That doesn't depend on external factors at all. That depends on us. The team is very focused on achieving those expense reductions. And so that's the second key element. The 3rd key element is what we're calling here distribution control. That's sort of a polite way of saying that we had some relationships with some of our wholesale accounts that were set up in such a way that we had no chance of being profitable in those accounts. That was not the fault of the accounts. That's our fault. We did that to ourselves, but there's no point in spending time and energy focusing on relationships that at the end of the day are going to make no contribution to the bottom line. So we have exited those relationships. The final area that we're focusing on in 2013 is to improve and grow on areas of potential profitability. First and foremost is improving the performance of our own retail stores and e commerce. We've got the stores. We've made the investment. We need to have them perform better. We're doing a lot of things to try to make that happen, including 1st and foremost having the appropriate leadership for the retail operation. Aaron, as I mentioned, we brought in a new highly qualified Head of Retail in London about 6 weeks ago now and he's off to a terrific start. Second thing we can do is manage inventories better to eliminate some of the very large markdowns that we took last year. And again, this is something that should be largely within our control and we should be able to execute that. And then finally is growing profitable wholesale accounts. While we did have some accounts that we've sort of stacked the deck against ourselves and didn't have much of a chance to get any contribution from them. We've also got some great wholesale accounts where the brand and product are working well. It's working for us. It's working for the customer. And what we need to do there obviously is do everything we can to nurture those relationships and those businesses and grow those accounts. So that's the what we're trying to do in Ben Sherman in 2013. Just to round out the discussion in case anybody is trying to make all the pieces of the puzzle add up, we have one tiny little additional business and that's Oxford Golf. They sell golf product. Obviously, it's branded as Oxford Golf and their distribution is really on course pro shops and resort shops. They have a big business just as an example with the gift shops at the Ritz Carlton chain of hotels. That business is about $15,000,000 in sales. They're marginally profitable. The thing they need to do to be more profitable and ultimately successful is to grow sales a bit. I'm happy to report after a couple of very tough years in the golf industry during the economic meltdown, things have really started to pick up and they've got some good sales momentum. And I think they can make a small but meaningful contribution to our bottom line. Then last, just to recap, today what we've tried to do is to present you a high level view of some of the sort of magic that exists within our four businesses and how it is that they create the opportunities that we need to grow. We heard from Terry and Doug on Ben Sherman, from Jim and Scott, on Lilly Pulitzer, from West on Lanier Close and then I tried to add a little color on Ben Sherman. I think we covered all the bullet points out there today and I think those are all very important. I would add one more to that list and that's the people. In this business, nothing happens. There's never success without having the right people. And as the leader of this company, I've never felt better about the team that we have running the operating businesses than I do today. Hopefully, you've got a good taste of that today in the presentations and share my enthusiasm for the management team that we have in place and for how well that bodes for our future. Last comment, just a reminder, Q1 earnings release is June 11. We are in a quiet period. As much as possible, I would like you to try to channel your questions to the sort of high level kind of discussion that we've tried to have today and avoid digging into the Q1 too much because we are going to have to politely evade any such questions. So with that, I'll open it up for 2 and a half. We'll get Terry and Doug just a minute. Yes. You got it. You got it. You got it. It looks like I did that over here. No, no, no. You're good, right? Hi, Eddie Rimmel with KeyBanc. So I know you're not going to touch on the current quarter, but Should we take the buyback? I think on the last call that you said that the headwind from Asia expenses should be roughly comparable this year as it was last year. I guess from a longer term perspective, how should we think about the profitability ramp for your Asian businesses, particularly if you decide to expand to China in 2015? Scott, do you want to lead off on that one? Yes. We mentioned that we lost about $10,400,000 in Asia last year. We expect to lose about the same amount this year, but the run rate will be we'll exit the year at a lower run rate. As far as the future of us, it's going to depend on how aggressive will we open stores and the nature of those stores. We think the infrastructure expenses are there, but when you open new stores there can be a big load and we just don't have the four wall contribution yet to make it profitable. But we believe it will. Just as that timing is kind of early to tell. And Terry and Doug, you might want to add a little color on just generally how you're thinking about the progress and We the plan we wrote when we went into Asia, we're executing it on schedule. We always said that we wanted to we executing it on schedule. We always said that we wanted to we didn't know what we didn't know and we wanted to get in this market and find out what we were dealing with and then gauge our strategy after we took a look at that. And we're on that strategy. We're looking at every day and analyzing the business door by door to see what we need to do and to gauge how fast and where we go next. But I can just say we're pleased at what we see with very little marketing in these markets. When you go in to a brand new market, with very little marketing where your business that you're doing is based on sheer on the product offering that you're putting in front of the customer and they're coming in, they like what they see and they're buying. So, so far so good. And maybe one follow-up on store growth. I think you addressed the Tommy Bahama 7 to 10 domestic stores, but I guess a 2 part question. First, on Lilly, how should we think about longer term store progress now that you have kind of a refined store prototype? And I guess with Tommy, is there an opportunity and should we think about a women's only door? Thank you. Let me start on that one for a minute by calling out the comment that Doug had a slide on and he made some remarks on it that I thought were quite on point and that's that, first of all, I think you really need to look at the total direct consumer business together, so retail and ecom, because at the end of the day, it's one product line, it's one brand and it's really one customer. So distinguishing too much between how much growth is going to come from ecom and how much is going to come from bricks and mortar, I think, is a little bit dangerous. Our intent is to grow the total direct business and we'll give you some thoughts on how stores and e comm play into that. But the big picture is really that total channel and that total customer experience. Doug or Terry do you want? Well, in terms of Loyola Plus store growth and Tom says often that we're really targeting 4 year in terms of our store growth. And we opened 4 new doors in 2012. They're successful. We that's the plan for 2013. This year we opened in Riverside. We opened in Kenwood. Our next opening will be Streets of Southpointe. That'll be about June 25. And we recently have a fully executed lease at Waterside Shops in Naples that we're anticipating to be open by November 1. So those will be our 4. And that's the pace that we see. And we will only do those if they are terms that work and locations that work and size that works. But those are our plans. On the women's question, it's a good question on the women's only store. We right now I've talked to you all on the phone about it. I set a goal that we were going to be 50% women's and we're well on our way. As a total right now, we're well over 30%. Some of the stores that we've recently opened, we've opened those stores with the proportion of women's greater than we've had in the past and it's working quite well. You'll see tonight when you go over to the New York store, it's approximately fifty-fifty right now on the floor set and working quite well. The answer is no. We are not considering opening women's only store because we've talked about in the presentation today a lifestyle brand. We think we have the ability to tell that lifestyle like we did in the video and through our stores with home product and other products. So today the answer is we haven't thought about a women's store. That's the real answer. But who knows? This business as Scott said changes daily and who knows what it looked like down the past. But we're I can say we're very pleased with our women's business and the performance and strides that we've made in women's. It's a bigger share of the market and we're happy that our guest is embracing our women's offering more and more every day. Yes. Hi, Mike Richardson from Sidoti. Just with Tommy and Lilly doing so well, have you given any thought to accelerating the store openings? And if not, I guess, why not? Let me again, I'm going to turn it over to the guys who know the real answer. But let me remind you again that I think the way we're really trying to look at it is the total direct business and not yet too fixated on the number of stores, bricks and mortar stores, because from the customer's perspective, they're buying Tommy product or Lilly product, whether they're buying it online or in a store, it's somewhat indifferent to some of them. So making sure that we've got the right proposition for stores in the right locations is very critical. And we are going to open more stores. But again, we're really trying to look at the total picture of all the direct to consumer not just the bricks and mortar. The goal in opening these stores is not to open the number of stores, open the right stores. And it's not easy. You think that Doug and I made a commitment that we won't open a door unless we've visited the site numerous times to look at the space, look at the mall. It takes time to find these locations, the right locations. And even doing all that, we've had some that have been less do less business than we'd like. So we need to as we look, 7 in a year might not sound like a lot, but it's a lot of work. And we spend a lot of time in designing the stores. We don't just throw them up, one cookie cutter format to all locations. We try to act locally when we go into some of these markets to build just like we did in New York. That's a brand new format, which we call an urban resort. It fits better. We didn't have a format when we decided to go in New York. It worked in New York. We didn't have a format of beach location 3 years ago, 4 years ago and went into Laguna Beach. So we have to come up with something from an architectural standpoint. It's not so easy. I think 2 and you all follow retail right now. There's crazy dynamics going on between brick and mortar and e commerce and things that we wouldn't have thought of 3 years ago now we've discussed at every one of our real estate committee meetings. With regards to now I can look at an e commerce map of where our guest is and say, why don't I have a store in Ohio? And because I've got guests there. And there are certain things that we're at the same time we're seeing mall traffic down, but business up and business up. I think that they said it best is we're in an economy that isn't growing, but we're grabbing more market share. We're also in malls where traffic can be declining, but our traffic will be up. And that's because we're grabbing that female guest that probably we didn't have 3 years ago. So there's a lot of dynamics going on. And the last thing that Terry said is just absolutely right. I challenge anybody to find 7 to 10. I mean that's getting out there and really scratching looking because it's just like the old rule in real estate location, location, location. Same thing in retail. You can be in the right mall in the wrong spot and you're not going to do business there. And so that's hard and you work at it all the time. So we have a good pace going right now. Scott, do you want to? Yes. Look, I mean, they're great questions. And I think the Fred, look, clearly, in terms of distribution strategy, the movement towards more direct is part of it. I think the big question is what's the appropriate mix between e commerce and stores? And that continues to shake out. I remember when e commerce started catalogs, I think, were never more than 6% of the business. In Women's Apparel, I think catalogs were never more than 6% of distribution. And when e commerce started, it's like, well, that's just going to replace catalog business. It can never be more than 6%. Better Women's Apparel more than 20% was sold through e commerce in the last year. So people keep kind of busting barriers on that. I think it can go pretty far. When we look at the Lilly business, 2 megatrends that have occurred the past few years that are ideal for the Lilly business are e commerce and social, because the Lilly customer is very much on the move, a little bit pocketed, so e commerce is good and Lilly Pulitzer really has been a social media brand forever. And we don't need to make preemptive go long in stores to grow this business well. We will grow it, but it could be that the rate of growth in e commerce is a more compelling place for the business model, and we're managing that. And I guess kind of another piece of that, as we've grown kind of elements of the marketing mix, sequencing those matter. We're really focused on product. And then in the past couple of years, we're really focused on distribution. The next leg of the stool for us is really getting our communication strategy. And we've been a little quieter there than you might think. And that will be a focus for us in terms of elements of the marketing mix. And it could be that that's something else that provides greater synergies with e commerce. And we're there's a lot of stuff moving fast. And so that's how we're thinking about it. Just one quick follow-up and then I'll pass it on to somebody else. What do you think the biggest opportunity at Tommy is on the women's side of the business? Dresses, dresses and dresses. It seems to be as we've been working with and growing the women's business, there's a lot of opportunities. But that's the category that we've seen the most explosive growth recently. And that's a good thing for us because the most feminine category that she's embracing all kinds of dresses from us and we're constantly introducing new textile and new ideas all the time, but that's a big growth area for us. To piggyback the e commerce question, I'm just curious what your observations are of e commerce in New York City and some of these locations where you've added a marquee location. And then as you go around to the next iteration of maybe future stores in New York City, how the e commerce impact of the original stores plays into your return assumptions as you plan your real estate go forward? So one of the reasons why we're in New York City is because of e commerce and being able to see the map of the number of guests that we've got in this the tri state area here and knowing that we're underserving from a brick and mortar standpoint. But from a model that's a great question because we're trying to get at a model right now where I can say, okay, after I go into a market that's underserved, what does that have to do with my overall business, which encompasses that e commerce guest? So give you an example, I gave Ohio. Ohio is my favorite example right now, because we didn't have anything in Ohio until 6 months ago. We opened up an Eastern Town Center in Columbus. Had everything to do with e commerce guests and we saw a huge map of saying, well, we've got a guest there, drop a store and my guess is I'm going to get not just brick and mortar dollars, but also e commerce dollars that basically tie into what's the overall profitability of that center. And when we went in, we built the entire financial model around just brick and mortar. And we don't have we're not to the point where I'd say, okay, I would ever go into a spot where I'd say, you know what, it's going to be acceptable that brick and mortar doesn't deliver return because I'm going to pick up the e commerce piece. We don't do it that way. We go in 1st and foremost, the brick and mortar of the capital has to deliver profitability. And if I get the halo effect of e commerce on top of it even better. I think that as we go keep going moving down the road, the models start to crystallize around both. So you'll have great data where you can say because you think about what we're doing right now, I'm really not moving into a lot of New York is a good model, Easton Town Center where we haven't had stores before. So it's going to take a while 12, 18 months to see what that growth of e com business will be as we go into a new market. But there's definitely a halo effect. But just to be clear, if we're sitting here and I ask the same question 3 years from now, you're still going to be looking for whatever it is a 15% hurdle on your brick and mortar location. I wish Oxnard would give me a 15% hurdle. Yes. I think that it's one of those things where, as I said in an earlier comment, boy, we're talking about a very dynamic space right now. It's like we look at two numbers every day. We look at our what we did yesterday in retail and then we have to wait about 2 hours because the product that we shipped to our guests that the orders that were taken inside the store from the previous day get against that retail store because those are orders that basically are comp store orders, because we generated them inside the brick and mortar. And it's meaningful. It's the difference between making plan and missing plan. And that's what's going on inside the store. It didn't have anything to do with what's going on, on e com that where we're dropping emails and businesses coming through. It's really blurring the lines between what the two are. Just a follow-up. Accessories is a huge opportunity across portfolio here. And I'm just curious, A, where is accessories in your pecking order priorities right now from an executive standpoint at each of the brands? And then B, how do you manage it strategically? Because I think I've heard it before. I've heard it from Mickey Drexler in the past where it takes away from the focus potentially that's making the brands function as well as they do. So I'm just curious if you've been thinking about that at this point? Terry, why don't you lead off or I don't consider it a distraction at all. I mean the synergy and you're right. It's a good question. Accessories, if you look at the landscape of companies that are doing well right now accessories, handbags, especially in women's, We're focusing on it. We're in the early stages of it. We brought somebody in to concentrate it on in house. We're taking a look at each category by category and choosing to do those ourselves, because we think the opportunity is there versus licensing those categories. We just brought in footwear in house. It was previously licensed, because we felt that it was an opportunity for us to grow both men's and women's footwear. So we're looking at you're right on. I mean it's a big area for us. And just like the women's area, when we decided we want to grow the women's business, we started focusing on it. And with the power of the brand, if we execute the right product and deliver the right product at the right price and the right design, our customer will give us credit for it and respond. So it's clearly a category. It's not a big category today in our own stores and on income, but growing very, very nicely. Brad? We think about it. It's very simple for us. If we can make a product that is better than what the market currently offers, if we see a gap or a hole or a weak competitor or a space that fits under our umbrella, where we can make something better than the market, then we attack it as a product opportunity. We have been down the road. We've been doing this as a private company for a lot of years and we went down the road of chasing a lot of, oh, you should try and Lily Lampshades, why not, right? It's really a dangerous thing. Unless you're convinced you can bring something in the market that the market doesn't have. We launched a printed scarf in the middle of the downturn. It was one of the key turning points in the business. We made a better product than it was in the market. The customer reacted to it, recognized and it became a major piece of business for us. So accessories, you're right. If you can win, it's a big game, but you could the people you're playing play aggressively and are good. And if you can't see a gap or hole, we won't. So do we look? We look all the time. It's done with the brand. The brand level. And we talk about this a lot, but they drive that. Yes. It's one of the great advantages even having Tommy Bahama as a brother company. There's you're able to have conversations that are really meaningful. They've seen some things that we haven't seen that we can share and it's really helpful. Hi. Craig Bernstein from McAllen Capital. Ed wanted me to ask a question about the Q1, but I refuse on principle. I would never do that. A question for Scott. I think we're trying to a few people have asked a question about store growth for Lilly and should it be faster and bigger etcetera. But and I kind of agree that e commerce and stores are kind of merging and you don't think about it in any one channel. But maybe taking the broader view, I think a lot of us would agree that the Lilly brand and what it stands for and what it means and just the brand recognition is I think a lot bigger than the sales base of $100 ish $130,000,000 And so maybe just without getting into channel, thinking about a bigger term, in the longer term rather, how big do you think it can be? Do you pattern if you look at other brands and pattern the potential against that? And how high is high, I guess, is ultimately the question? Thanks. Well, I appreciate the question. We've been told so many times that the company should be bigger than it is. We've concluded that our ineptitude is actually the main constraint because we've been told that a lot. The brand continues to have meaningful growth opportunity for several years. There are other competitors in the space who are companies who have gained market share. Certainly Kate Spade has done a very good job. Unquestionably Vera Bradley has done a very good job. Tory Burch has done a very good job. Don't do all your models now by the way. By the way, when we said no model, there were questions on models and I think people meant the models in our catalogs that they wanted rather than the niche model. But the we believe that the company has good runway. The brand has also done best when that growth hasn't been pushed beyond equilibrium. And we like to we think that there will we're never going to be the biggest. There will never be a day when everybody wears Lilly Pulitzer. There will never even be a day when the Lilly lovers wear it all the time, every piece of clothing, every day. So we're not going to be the biggest. We want to maintain a very profitable model, maintain the full price integrity and we grow in measured ways to make sure that we sustain those. And we think we can continue to do it for a few more years. Hi. I want to ask the little people about the franchise network that you have. It's somewhat unique. Where does that go longer term as you roll out your own stores and as you roll out your online strategy? How does that fit into the mix? Do you want me to take it? Well, the first thing is, it is not a franchise strategy. The first thing I want to clarify and have that, we do have agreements with these independent retailers. They're not franchises and their responsibility is to present the brand effectively. And in the absence of that there would be non renewal. So these are not franchises. But I want to let you take in terms of how it fits. It's a we're a resort brand. So we have our job on distribution again, we think about distribution simply. It's about matching supply and demand. It's about putting the product where the customer wants to receive it. We have customers in Duck, North Carolina. Major store doesn't get it done there. E commerce does at some level, although that customer isn't necessarily online when they're on vacation. So we found the Signature model to be an incredibly effective way to distribute our product in a way that was profitable both for ourselves and for the specialty store operators. We think it's an important part of what we do. We see it growing modestly. Our direct will grow faster. But it's really it's one of the mechanisms we have for delighting the customer. Everything we're driven around this notion of delighting the customer. And if you go to Duck, North Carolina or Pawleys Island, our Signature store there is a very good answer. Boca Grande, Florida. Let me just add to that, Eric. I think it's important to look at Signature for what it is, which is not a replacement for company owned retail. It's wholesale distribution and it's very high quality brand appropriate wholesale distribution to Brad's point, in the places where the customer wants to see the product. And Duck, North Carolina is always my favorite example. I'm glad to do that. Beautiful little coastal village out on towards the Outer Banks in North Carolina. No majors to deal with there. Never going to have a company owned store there. But why just sell to a specialty store that's going to have a mishmash bin with a bunch of other brands that may or may not be great adjacencies for it. Why not sell in that sort of controlled, very brand appropriate, really, Pulitzer environment there? And oh, by the way, the financial model on Signature is phenomenal. The contribution we get on a dollar of sales through the Signature channel is just phenomenal. It's very, very lucrative with very minimal capital investment from us. So when we get back to that idea of earning a return on our capital, Signature is one of the best vehicles we've got for doing that while still controlling the presentation of the brand in a very brand appropriate way. Just in a related vein, we were down at Chico Lodge in Florida. In the cheese. Yes. And there's a store there that's about 90%, Tommy and Lilly. I presume that's an independent store. Is that something you're looking to do more of co branding or co marketing? You guys do one of them first. We have a number of retailers in the wholesale side specialty retailers that buy a a tremendous amount of product for us. And we don't have a formalized agreement. They're just a good wholesale account that we do business with. It was their idea. They thought they saw us do this and reached out and said, what do you think? And we said, yes, great. And I think their business is pretty good. I don't know specifically, but I think it's been quite good. And the answer is that as opposed to a real deliberate plan, I think it has to do with the quality and the positioning in the in the two brands and just somebody like Tika Lodge would want to naturally want to have these 2 great brands there. Hi. This is Scott Craseck from BB and T. Doug, I think it was you who said earlier when you were talking about the new fit for Tommy that you've introduced, you were very quick to say, but it's not a younger customer. Do you worry about going sort of the Talvis route? And how do you get younger customers because of I don't think I'd say exactly it's not it's a state of mind versus targeted at a younger customer. If I didn't say that, Terry you should have hit me. That's what I meant to say. Because candidly, it's we have 2 fits for a very valid reason. I got a young guest that likes the traditional fit and we have a guest who's a traditional guy who wants to go to a trim or fit and it's working both ways for us. So direct to your question and Terry this is yours. You jump on this because we're not this used to be a concern several years ago. We're not having the issue with an agent of a customer or a guest right now. No. And we've had this fit in products before in the last few years on the floor. Our denim products have had this fit. So it's in some ways it's not a new fit. We've decided to tag it and we call it Island Modern fit. So we have inventory in our stores that there's certain products that say Island Modern Fit. I don't want to confuse it with that being a trim fit shirt. It's just trimmer than our regular fit. It's still quite a bit larger than somebody else's young men's or trim fit shirt. I mean that's not for our business. But fit is a funny thing. I was looking at a catalog I just got in the mail from a very young vertical retailer and just last week and I was looking through the models and they're moving back to big giant fits on these young men, these 18, 20 year old business fashion that they're trying to project. So it's kind of all over the place, but we just need to be diversified enough in our fit assortment that we have something for both plus then the Asian equation required us to do yet another whole fit for the Asian market, which is another another fit altogether. But we didn't run to the other side and flip the boat over with changing everything. And we have this crawl walk around and we'll do it methodically. And as Doug said, it's working quite well. So maybe we got lucky on this one. Let me add to that, Scott, that you asked a question about how do you avoid the Talbot syndrome. And I think for as long as we've been associated with Tommy, I've always said that the core customer was kind of 35 to 55. They have customers younger than that and older than that, but that's kind of the core. And to me and I've seen Terry and Doug do this really well, the way you avoid being tablets is not by going after younger customer, it's just making sure that you're getting that new crop of 35 year olds in and you're not kind of aging with your customer base, which is what happened with tablets is that they just started moving with every time their customer base had a birthday, they got a year older as their target customer. And I think Terry is the Chief Merchant at Tommy Bahama has done a good job of making sure that we have product that's relevant every season to the latest crop of 35 year olds, not that there's really a magic time when they become a common customer, but I think that's how you avoid being Talbot. That's helpful. Thanks. And then just Tom to follow-up, I think I was at the 2,005 maybe the Ben Sherman showroom where you were relaunching the brand. And so at the time, I think may have made a little money or lost a little money. Since then it's lost a lot. It's actually making a lot. So maybe just go through the 2 or 3 specific biggest mistakes that have been made and why you feel confident that now is the time to improve upon them? Well, I think I don't want to drag you through 8 years of history, which is how long we've owned Venservin now. But I think in the last year, the 3 key mistakes that we made in Scott's slide, if you remember where he's got the circle in the middle and he's got the little circles all around it and he talks about the key elements of the brand and how they all need to be in sync. And the key elements are the product, the positioning, the pricing, the distribution, the communication. And I think where we got out of WACC and Ben Sherman was principally in the distribution, the pricing where we had it's not so much that our price range was wrong. It's that we had way too much of our product line at the top end of the price line or price range and not enough at the sort of core part of the price range. The classic merchandising pyramid is a pyramid with a little bit of super expensive stuff at the top and then you've got the meat of the range down here in the fat part of the pyramid. Well, Ben got upside down on that. And then I think the marketing communication got out of sync with who the customer really was. And those are a lot of the things that we're focusing on fixing. There were other problems, but those are the biggest problems. And the pricing piece of it was probably the single biggest negative impact on the last 12 months other than external factors. And we don't want to attribute all of our problems to the environment in Europe, because that would be disingenuous and the bigger problem is our own execution. But it is not a great consumer climate over there either. And that is a sort of an additional challenge for Ben. Just staying with Ben Sherman for a little bit longer. Tom, you mentioned that you just hired a new head of retail and it sounded like you were very excited about him. Who is he? His name is Scott Wakefield. He came from Calvin Klein and he was running a major part of their European retail operations. After they got bought by PVH, they reorganized things. He had an opportunity to continue with them, but it was going to require a move on his part. He's got kids who's a, I don't know, late '30s guy. He's got a family. Didn't really want to move out of the London area. So that created an opportunity for us. He came to Ben Sherman. This is the guy that had a lot of options. He came to Ben because he thought he had an opportunity to make a big positive impact. We feel very lucky to have gotten him on board because it's not a brand at the moment that has been financially successful and sometimes that's an impediment to getting talented guys in. I guess it's too early to ask this question, but I will. Has his arrival changed your thinking about what you really want to do with Bren Sherman in the short term, which is restore it to breakeven her profitability and then reassess? Or do you think this guy is so neat that you're thinking about? Well, I think he enhances our chances to return it to To profitability. To breakeven or profitability. I think he's that's one of the key things that we need to do. And if you remember from the discussion, the key things we were focused on in Ben Sherman and a big part of it's improving our own retail and e comm. We don't need some kind of crazy kind of improvement to achieve our plan for the year. It's very I'm not going to say it's easy because when you have a business that's not functioning well, nothing comes easily. But it's not like we're looking for 25% or 30% comp growth in retail. It's modest improvements there, can go a long way. And I think he enhances our chances of doing that. He's very focused on it. We don't have time for me to go through it today, but he's got a very detailed plan for how he's going to do it. And these are things some of which have already happened, some will happen over the next couple of months. Great. Appreciate it. Thank you. Just a quick question on your omnichannel capabilities. Have you fully built out omnichannel amongst all the brands that will be done on a shared services basis? No, it will not be done on a shared services basis. We are trying to foster a lot of thought sharing among the groups. And a couple of months ago, the Lilly guys were nice enough to host at their office in Kingopressa a company wide omnichannel summit we called it that had Lilly folks there, Tommy folks, Lanier, Ben Sherman and Ebonox for golf were there and they shared thoughts on best how to achieve the sort of omni channel dream. Because these brands grew up independently, they have separate systems, they're geographically disparate. So we're not trying to get there the same way, but they're all focused on the same goal and they're all sharing ideas about how you do that. And when we say omnichannel, we're talking about one view of the product and one view of the customer is really how we define that. And that requires a lot of foundational systems work. They're in different stages of completing some of that foundational systems work, but they're all doing it. We're actually that's a good bit of that 40 something 1,000,000 dollars of CapEx for this year is really devoted to IT investments that build the foundation to allow us to really have that omni channel. Jack Oliver, RBA and Company. You mentioned acquisitions. And I'm just curious if you can highlight a little bit more about how you think about acquisitions at corporate in a sense that you've had in the last 10 years you're batting 2 for 3 and 2 were not hits or grand slams and we've talked about the 3rd. So given what great attractive internal growth opportunities you have, why are acquisitions still part of the pie? And if you were to proceed with 1, part 2 of the question is regarding the balance sheet, how do we make sure we're in a better position for the next 100 year storm, so we don't experience the 2,009 experience with what the capital markets did to the balance sheet? It's a good question. And I think our priorities line up with what you would think they probably ought to be, which is our number one priority is supporting the growth, particularly in Tommy and Lilly where there's some very direct and linear paths we can take to growth. In Lanier Close. There are growth opportunities. They're much more opportunistic and they don't require a lot of investment. It's typically just a little incremental working capital. So that is the priority is exploiting those organic growth opportunities. The next priority is really resolving the Ben Sherman situation. It's obviously a drag right now. We need to get that on the right path. And for us this year, what we've said is sort of the objective or goal is a significant reduction in the GAAP accounting loss there. And from a cash flow perspective, getting it to breakeven to maybe even slightly positive. And if we can achieve that in this year, we feel like we will have made good progress and then we want to take it a step beyond that in the next year. We're not actively looking for acquisitions in the way that we were when we bought both Tommy and Willie where we really wanted to do a deal. But we are open to the possibility of an acquisition. Sometimes a really great property comes along and you don't have your you don't always get to pick your timing. I think we've got the wherewithal both financially and from a management standpoint to handle it. But again to your question that's not at the top of the list of what we're trying to do over the next year or 2. It's really the organic growth resolving Ben Sherman and acquisitions would really be sort of a tertiary consideration. And I'll pass it right over to you. Pam Quigiano from SunTrust. A few quick questions on Tommy. Just the wholesale opportunity in terms of distribution on the women's side, especially at Nordstrom, if there's any update there? And then just how we think about women's international performance versus domestic? Okay. I'll ask these guys to answer fairly quickly, let Steve ask his quick questions. Will need to rack up. The international women's performance has been a bright spot in the international. So where you open up in a market where you have no history whatsoever, we all say and we said in our presentation, we started as a men's brand domestically. And so therefore, you have to work at turning that around. And the international market has been out of the gates. Very close to fifty-fifty men's and women's. As far as the wholesale opportunity, we needed to make sure that we saw the growth in our own stores and e comm and that means that we get the product right for women's. And we think we have it right now and we're pursuing the wholesale opportunity. You've mentioned the account that obviously would be the first the target for us. But there are other opportunities beyond Nordstrom. But we've had some inroads and we've had some good success on a limited basis with Nordstrom and Women's in the last 2 years, but nothing significant. But we're on that path to pursuing that. And we think as Doug said in his presentation, it's a big opportunity. Okay. I just have it's getting back to Ben Sherman. You guys have been blessed with great success with Tommy Baham and Lilly Pulitzer. But again, it's a question of what the central office does, the corporate headquarters does and what you let the divisions do, where clearly Ben Sherman is a case where I mean how involved are you guys getting in from the corporate center and say doing this? Or is it just get new management and give them the flexibility to do what they want to do? Well, Steve, I would analogize to a family situation. That if you've got 4 kids and 3 of them are taking all the honors classes and they're on the honor role and playing varsity sports, you don't mess with them too much. If you've got one who's failing geometry and hanging out with the rolling crowd, you focus on them a bit more. You guys have had an intervention. You give them tutors and Yeah. I mean, if my only job was to manage these guys in West, I'd be playing golf. So that's the nature of the beast. And my job really for each of the groups is to make sure that we've got the right strategy, the right operating plan and execution and the right people to do it all. And in these groups, we've got all that. In Ben Sherman, we haven't had all that. We're well on the path to getting there, I believe, but that's required a lot of my time over the last year or so. That is diminishing now and that's a good thing. But that's the way it works and that's the way Oxford has always operated. We've always been a collection of acquired companies. There's no business we have that was organic. Everything we have we bought somewhere. Even Lanier way back when was a tailored plant we bought. And so we've always had this scenario and you deal with the sick child and let the healthy children just do their thing. Okay. We're going to wrap up now.