Earnings Call: Q2 2013

Aug 29, 2012

Earnings release

day, everyone, and welcome to the Oxford Industries Inc. 2nd Quarter Fiscal twenty twelve Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Anne Shoemaker, Treasurer. Please go ahead, ma'am. Thank you, Jamie, and good afternoon, everyone. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q and A session may constitute forward looking statements within the meaning of the federal securities laws. Forward looking statements are not guarantees and actual results may differ materially from those expressed or implied in the forward looking statements. Important factors that could cause actual results of operations or our financial condition to differ are discussed in the documents filed by us with the SEC. We undertake no duty to update any forward looking statements. Also during this call, we will be discussing certain non GAAP financial measures. You can find a reconciliation of these non GAAP financial measures to GAAP financial measures in our press release issued earlier today, which is posted under the Investor Relations tab of our website atoxfordinc.com. And now I'd like to introduce today's call participants. With me today are Hicks Lanier, Chairman and CEO Tom Chubb, President Scott Grassmyer, CFO Terry Pillow, CEO of Tommy Bahama and Doug Wood, President of Tommy Bahama. Thank you for your attention. And now I'd like to turn the call over to Hicks Lanier. Good afternoon and thank you for joining us to discuss our 2nd quarter results. We are pleased to report strong growth in both sales and earnings for the Q2, driven in particular by excellent performances in our Tommy Bahama and Lilly Pulitzer direct to consumer businesses. We achieved these results while at the same time making significant investments in the future growth of our company. Among other things, we signed a lease for a Tommy Bahama retail store that will open later this year in Hong Kong, bought the business of our Australian Tommy Bahama licensee and recruited a highly qualified executive to serve as Senior Managing Director of Tommy Bahama International. We also continue to expand the Lilly Pulitzer direct to consumer footprint by opening 3 stores so far this year and we expect to open a 4th in December. Finally, we were able to significantly improve our already strong balance sheet by completing the redemption of our senior secured notes and increasing our revolving credit facility to $235,000,000 We believe the amended revolver is very attractively priced and gives us ample financial capacity to execute our strategy. As we begin the second half, the health of our key growth brands is outstanding and our people are well prepared to complete a great year. I'll return with some closing comments before Q and A, but I'd like to now turn the call over to Terry Peller to discuss Tommy Bahama's results for the quarter. Terry? Thank you, Hicks. The strong momentum in the Tommy Bahama business continued through the Q2. Sales in the Q2 were fueled by the best Mother's Day we have ever had. We were fortunate to then head into a very strong Father's Day. Net sales for the Q2 of fiscal 2012 increased 16.8% to 127,500,000 dollars Comparable store sales in our full price stores were in the low double digits. We saw substantial increases in our e commerce channel of distribution. The fastest growing segment of our direct to consumer business was women's, which grew 29% over last year. The women's business was led by dresses and accessories and the men's continued to see growth in both knits and wovens. We also had a modest increase in our wholesale business for the quarter. At the end of the Q2, we operated 105 retail stores compared to 90 on July 30, 2011. We opened 4 new stores in the United States and 1 in Singapore in the Q2. In July, we also acquired our Australian license business and folded into our international operations. The licensee operated 4 small resort retail stores and one outlet as well as a limited wholesale distribution. We expect this to be a good market for Tommy Bahama with an opportunity for future growth in major Australian cities. We continue to build our international infrastructure with systems and staffing. During the Q2, we added a very experienced Hong Kong based Senior Managing Director of International to the Tommy Bahama team. SG and A increased in the quarter primarily ready to growth initiatives for the brand. In addition to costs associated with operating additional retail stores, the Q2 of fiscal 2012 included a negative impact to operating income of approximately $3,500,000 related to certain infrastructure, pre opening rent and other costs associated with Tommy Bahama's international expansion and upcoming New York store. This consisted of $4,000,000 of expenses, partially offset by $500,000 of gross margin from sales in our international stores. As a result, Tommy Bahama's operating income for the Q2 was $16,600,000 compared to $17,000,000 in the quarter of fiscal 2011. We are looking forward to November when we plan to roll out 3 high profile retail stores. During the quarter, we signed a lease and began a build out of our 5,000 square foot store in the Wan Chai District of Hong Kong. This is a very attractive street location giving us a major store in this important international gateway. Our plans are to open this store in early November. On the Bahamas sales into Manhattan Island, our marketing plans for holiday include a well integrated approach using mailers, our website and an extensive pre opening marketing campaign in New York. A new barricade wrap will be at our New York site in the next few weeks, reflecting this holiday marketing campaign and we expect to open both our New York flagship and our Michigan Avenue store in Chicago in mid November. We clearly have a lot of important brand growing initiatives and we believe that this is along with a fantastic product and exciting integrated marketing campaign sets us up well for the holiday season. Now, I will turn the call over to Tom Chubb to discuss results for the rest of our operating groups. Thanks, Terry. Good afternoon, everyone, and thank you for joining us. Lilly Pulitzer reported a net sales increase of 24.5 percent to $30,900,000 for the quarter. All channels of distribution reported increases. We saw high single digit comparable store sales increases and significant increases in both e commerce and wholesale. We saw growth in all product categories with particular strength in sportswear. As a result of increased sales and gross margins, Lilly Pulitzer's operating income increased 32% to $7,400,000 from $5,600,000 in the Q2 of fiscal 2011. Operating margins were a very strong 24%. Lilly Pulitzer has opened 3 stores in 2012, South Park in Charlotte, Phipps Plaza in Atlanta and Towson Town Center in Baltimore. Each of these stores represents our smaller store model and we couldn't be more delighted with their performance. A 4th store is planned for December in Tysons Galleria in Suburban Washington, D. C. And we are filling the pipeline quickly. E commerce also continues to impress with dramatic growth. E commerce is well established as a full price vehicle. In addition, our semi annual e commerce sales are proving to be a very effective clearance channel, while at the same time creating tremendous excitement among diehard Lilly fans, as well as introducing new customers to the brand. Fall will remain our smallest season by far. That said, our fall collection is selling well and we will be well positioned for the upcoming resort holiday season. We saw modest but important progress at Benschirm in this quarter, notwithstanding a very difficult consumer climate in the UK and Europe. Ben Sherman reported slightly lower sales of $20,100,000 for the 2nd quarter compared to $20,900,000 in the Q2 of fiscal 2011, but improved operating results with an operating loss of $1,500,000 compared to an operating loss of $1,800,000 in the same period last year. The improvement in operating results was primarily due to higher gross margins, partially offset by the lower sales and decreased royalty income. Net sales for linear close increased 8.1% to $24,800,000 in the Q2 of fiscal 20 12. Operating income in the Q2 was $2,400,000 slightly ahead of last year's operating income of $2,300,000 With an operating margin of 9.7 percent, Lanier continues to make solid contributions to our business. Corporate and other reported an operating loss of $4,600,000 for the Q2 of fiscal 2012 compared to an operating loss of $5,400,000 in the Q2 of fiscal 2011 with the improved results reflecting the favorable impact of LIFO accounting. I'll now hand the call over to Scott Grassmayer to comment on our consolidated financial results. Thanks, Tom. I'll now walk through our consolidated results. As Vic mentioned, we had a strong sales increase over last year. And as a result, earnings from continuing operations on an adjusted basis increased to $0.65 per share compared to $0.57 per share last year. On a U. S. GAAP basis, earnings from continuing operations per diluted share were $0.30 in the Q2 of fiscal 2012 compared to $0.21 in the same period of the prior year. Adjusted earnings per share for both periods excludes charges related to the repurchase of senior secured notes, a change in the fair value of contingent consideration and LIFO accounting adjustments. Consolidated gross margins increased modestly to 57.2% of sales compared to 57% in the Q2 of fiscal 2011, reflecting the favorable impact of LIFO accounting. SG and A for the Q2 of fiscal 2012 was 100,700,000 dollars or 48.7 percent of net sales compared to $88,600,000 or 49.1 percent of net sales in the Q2 of fiscal 2011. The company achieved this modest leveraging of SG and A while making investments of approximately $4,000,000 in the Tommy Bahama International expansion in New York store. We continue to incur pre opening rent expense as we build out New York, Tokyo and now our store in Hong Kong. The increase in SG and A dollars was primarily due to the above mentioned investments, the cost of operating additional retail stores and other SG and A expenses to support the growing Tommy Bahama and Lilly Pulitzer Businesses. Royalties and other operating income for the Q2 of fiscal 2012 were $3,300,000 compared to $4,000,000 in the Q2 of fiscal 2011. The decrease primarily due to lower royalty income in Ben Sherman due to the impact of macroeconomic conditions on international licensees and transitions between certain licensees. We are very pleased with the 14.7% increase in operating income for the quarter to $20,300,000 Interest expense for the Q2 of fiscal 2012 was 3,300,000 compared to 4,300,000 in the Q2 of fiscal 2011. The decrease in interest expense was primarily due to the repurchase of 45,000,000 of our 11.3eight percent senior secured notes last year. This July, we redeemed the remaining $105,000,000 outstanding notes, which will result in further decreases in interest expense going forward. We anticipate that interest expense for each of the 3rd and 4th quarters of fiscal 2012 will be approximately $1,100,000 The effective tax rate for the Q2 of fiscal 2012 was 36%, higher than last year's rate of 32.2%. The effective tax rate in both periods benefited from certain discrete items. Total inventories at the close of the Q2 of fiscal 2012 were $96,100,000 at the close of the Q2 of fiscal 2011. Our increased inventory levels reflect the anticipated sales growth and the operation of additional retail stores by Tommy Bahama and Lilly Pulitzer. As 6 mentioned in the Q2 of fiscal 2012, we made important changes in our capital structure. In June 2012, we amended and restated our U. S. Revolving credit facility new credit agreement. The facility increased from $175,000,000 to $235,000,000 with additional borrowing capacity provided by the inclusion of certain trademarks as collateral. In July 2012, we redeemed all of our outstanding 11.38 percent senior secured notes, which were $105,000,000 in notes resulted in a $9,100,000 charge comprised of a $6,000,000 premium payment and the write off of approximately $3,100,000 of unamortized deferred financing cost and unamortized bond discount. Redemption of the notes was funded through borrowings under our U. S. Revolving credit agreement and cash on hand. As of July 28, 2012, we had $95,200,000 of borrowings outstanding and $95,100,000 of unused availability under this credit agreement. As we continue to make investments in our brands, capital expenditures for fiscal 2012, including $27,300,000 incurred during the first half of fiscal twenty twelve are expected to be approximately $60,000,000 These expenditures consist primarily of costs associated with opening new retail stores in the U. S. And Asia, information technology investments, retail store remodeling and distribution center enhancements. For fiscal 2012, we affirmed our previously issued guidance of adjusted earnings from continuing operations per diluted share in a range of $2.85 to $2.95 and net sales of $850,000,000 to $865,000,000 I'd note that we were able to affirm our previously issued guidance despite the increased impact of expenses associated with the Tommy Bahama International rollout in the New York store. The earnings estimates for the year include a negative impact to operating income of approximately $14,000,000 compared to our early estimate of $12,000,000 The increase is primarily due to pre opening expenses associated with the high profile store in Hong Kong, the addition of a senior Managing Director of International and costs associated with the acquisition of Tommy Bahama's Australian license business. We have already incurred $5,900,000 of the estimated $14,000,000 during the first half of the year. For the Q3 ending on October 27, 2012, the company anticipates net sales in a range from 100 and $75,000,000 to $185,000,000 and adjusted earnings from continuing operations per diluted share of $0.18 to $0.23 For the seasonality of the Tommy Bahama and Lilly Pulitzer businesses and their significance to our results, the 3rd quarter is a small sales quarter. This, along with the fixed expense structure of our retail businesses, results in a lower operating margin compared to other quarters. Our Board of Directors has approved a cash dividend of $0.15 per share. Oxford has paid dividends every quarter since it became publicly owned in 1960. Thanks for your attention. And now I'll turn the call back over to Hicks Lanier. Thank you, Scott. Thanks for your attention today. And I believe we're now ready to take your questions. Jamie? Thank you, And we'll take our first question from Edward Yruma with KeyBanc Capital Markets. Hi, thanks very much for taking my question and congrats on a good quarter. You guys gave some interesting statistics around the growth of the women's business. We've noticed that you've increased the amount of square footage that women's has received in a number of stores. Can you talk about the difference in performance in the women's business when you've added an incremental square footage and if that's been a meaningful lift to your results? Terry, you want to take that? Yes. Ed, this is Terry. I'm glad you noticed. We have been as our product has gotten better, which it has over the last few seasons in the last few years, we have started allocating a bit more floor space, especially in some of the new stores that we're opening. And I can tell you that it's proportionately performing quite well. And even where we haven't increased the percentage of floor space, we're seeing increases as well. So it's not just the increases we're seeing in women's, because we've allocated more space to them. It's organic all the way through our women's business. So it's coming from both, but in some of these stores, we were just in one the other day. And clearly, we have a breadth of product right now that when we were able to show that in the stores, clearly, the guest responds to it. So it's coming from both ankles. Got you. And how should we think about the opportunity for the Tommy Bahama women's product in the wholesale channel other than swim, which you guys seem to have a pretty wide distribution of? We do have a very good distribution of swim. And on the wholesale side in women's, it's as we do most things, it's a crawl, walk, run. We're just starting to get some traction in wholesale and sportswear for us. But we wanted to make sure that we got it right and we now do think we have it right and then we'll start pursuing our wholesale business, but it will come in due time. Great. And a final question on Lilly Pulitzer. I know you guys have talked about success with your recent store remodel or your store size. If we think about this longer term, what do you think the right store opening cadence is for this business a couple of years out? Thank you. Ed, growth is obviously important to us and what we're looking for is sustained profitable growth. And as you know, Lilly has really exceeded our plans in the 1st 2 years that we've had it. We've been very pleased with the pace. Obviously, it's growing at more than 20% a year. That's a good pace. They went from opening no stores for the several years before we bought them and no stores during the 1st year we owned them to having opened 3 this year and a 4th planned for later in the year. At present, we think it's at least 3 to 4 next year, but there are things going on where we're adding infrastructure within the business to support retail store growth. And like Terry commented on the women's wholesale for Tommy, we're going to take a crawl, walk, run approach and make sure we don't get it out in front of ourselves. But I think the store opening pace will pick up as the years go by. But I would still think in the 3% to 4% range for next year. Got you. Thanks so much. And we'll keep updating you quarterly on that. Super. Thank you. We'll take our next question from Eric Beder with Berenberg. Murray. Congratulations on a solid quarter. Thanks. For Lilly Pulitzer, could you talk about I know Lilly Pulitzer has done very well at dresses, now we're entering fall where it's not as strong. What should be kind of the you've talked about white pants and other key items, what are the kind of key items for fall aside from dresses for Lilly Pulitzer? Well, I think the first delivery of fall for Lilly Pulitzer, Eric, they basically have 3, 725, 825, 925. The 725 delivery was knit dresses, which were in Lilly Pulitzer colors, but all sort of lily pellets or colors. And if you go on the website, you can see them. There are a lot of sort of beautiful what they call jewel tone colors. And I think they worked well for lily. So that was the key look for 725. We've been pleased with the selling results. The 825 delivery, which has only been out there roughly a week, not even a week yet, but it's printed tops and colored bottoms. And the initial selling on that has been quite good. And again, these are this is something that's not too big of a stretch for Lilly, but at the same time, it is legitimate fall product. And then the $925,000,000 delivery is party dresses that are in, again, sort of fall fabrications and colors, but still consistent with the Lilly Pulitzer DNA. And I think that they everybody in the business feels very good about them. 3rd quarter is a very small quarter for us, Eric, and it's 3rd and 4th are both small. That's probably going to continue to stay that way. But we are seeing some success in what we're doing there. Okay. And in time of Hohang Women's, you said before you're about 30% of sales is Women's. Is that still about the number or has it gone up a little bit? It's hedging up, but you're pretty on with the 30% number that but as I've always said, Eric, our goal is to get it towards half our business and it's grown nicely over the last couple of years. We're encouraged by the growth that we see. The good news about that is the reason we're having a hard time getting it over 30%, the men's business keeps growing, which is kind of a high quality problem to have, but it makes it a little bit harder to get to that. We're still charging that. Okay. And how should we think you took over the Australian distributorship. How should we think about the impact of that, I guess, on this year and going forward? I'll let Doug would handle that. We're excited about Australia, but it's a really small business today and underdeveloped. We're looking at next year of adding at least one store possibly in Sydney and to try to grow more of the wholesale business there. But overall, it's still going to be a very small business for us. And I guess the question is well, last question to you. Did any of the Chicago's or any of your store openings get pushed out from Q3 into Q4 and get pushed back in Q3 to kind of make it a little more Q4 weighted than we on the street had? No, no. We were always these are the target dates we've had on these stores that we've had Chicago and New York. I think we would have loved to open New York in the end of October, but it's just we're not going to push it. These are stores that are very high profile stores. We need to get them right and we will. Okay, great. We look forward to visiting New York store. Thanks, Eric. And we'll take our next question from Robin Murchison with SunTrust. Hi, good afternoon. I've got a question for everybody here. Let me start out with Lilly Pulitzer and kind of piggybacking off of Eric's questions. In terms of the Q3, is there a tick up in SKU count? I mean, I've seen the new product and it strikes me as a tick up, but just wondering if there's an expansion there? I don't think there's a material increase in SKUs for the Q3. I can't state that with absolute certainty, but getting over assorted is never a great thing in our business, and it's an area of focus for the management team at Lilly. They try to keep the line from getting too big, and I don't believe we've got a material uptick for Q3. Okay. Thanks, Tom. Having visited the 5th Lilly store, it's the personalization and the nice touches of the store looks fabulous. But then I have to admit in my analyst mind, I'm thinking, good gracious, how much did this cost to build out? Can you just is that the prototype going forward? There's a lot of individual hand painted and personalized stuff going on in the store more than I usually see in specialty stores? That's a great question. And what Robin is referring to for those of you who haven't been in one of the newer Lilly Pellets or stores is that the a lot of the decoration is individualized and sort of tailored to the locality. So the Atlanta store includes a lot of sort of Georgia references, peach flowers and peaches and magnolias and magnolia blossoms and that kind of thing. As to the cost of it, Robin, it turns out it's actually fairly economical for us to do that. The build out that we see in Lilly Pulitzer per square foot is currently is comparable to what we see in Tommy Bahama where we're opening a lot of stores. And it's a very manageable expense. That painting is actually done by our print design team. They sort of they plan out what they're going to do. The creative team up in King of Prussia, and then they actually fly down for a couple of days, sort of the week before store opening and do that painting by hand. In fact, I believe you can go to the website right now and there should be a video on there of the decoration process at the new store that opened recently in Towson, Maryland. It's quite entertaining to watch, but also would help answer your question. All the ladies you see in that video are part of the print team from Lilly. Well, it's a beautiful store, and as you do with all of your stores. Will you comment on the Lilly web crash? And I mean, I think that your sale, the first day, it was down at least seemed to be down half the day. And I know you did extend the sale a day or so. Are you able to were you able to kind of correct it so the next time that doesn't happen? Or what can you tell us about that? Did you were you able to get what you wanted out of the sale? And how did it all shake out? Basically, Robin, it was what our Chairman, Hicks Lanier, your good friend would call a high class problem. The demand so far exceeded our wildest expectations that even though we prepared for and tested for very high volume, it just went so far by our even our upside expectations that it did crash for most of the 1st day. So we did extend the sale and it absolutely blew away our expectations. Obviously, a little bit of frustration for customers, but fortunately, they were willing to stick with us and we just did a massive amount of business. So it was a very effective clearance channel for us. And at the same time, we think it created actually created a lot of excitement. As you know, the Lilly consumer tends to be quite enthusiastic about the brand and it's a party basically. Two more if I may, and we'll switch gears for a second. Ben Sherman, I just you're obviously coming up against some easing average unit cost. But can we just hear also what you're thinking in terms we've all waited so long sort of for some sort of a turn in this business. How are you feeling about the brand now? Is there anything to say coming out of some of the menswear shows either in Italy or more recently Magic that you can share with us on that division? And then for Tommy, just relative to the Asian performance and the on again, off again slowdown that we continue to hear regarding Asia, any changes there in expectations? Thanks. Okay. Robin, I'll handle the first one about Ben Sherman and then flip it over to Terry and Doug to talk about Tommy Bahama maybe. But with regard to Ben Sherman, I think Robin, as you know, we've been in this painful process of trying to reposition the brand upwards. I think we've had some success with that. It's been more difficult than we would have hoped. I think a lot of that has to do with the economic situation in the UK, which is by far our biggest market into a lesser degree in Continental Europe. That said, coming out of the menswear shows, both the Pitti show in Italy and then the Las Vegas shows as well as sort of selling in the UK, we're in the middle of booking springsummer 2013. Where we are now, we project that we will have a nice increase versus springsummer 'twelve, but we still have some work to be done before we have secured all the bookings. And then I think most importantly, we expect that well, really two things. I think that our the proportion of better product that we're booking versus the old legacy type product will be much higher for this spring than last spring. So we are making progress in the repositioning. And then the second thing is that the gross margins are in much, much better shape. In fact, that even showed up some this quarter, although it you can't fully see it, but we've started to see very meaningful improvement in gross margins there. Whereas, Ben Sherman probably got hit the hardest by some of the cost issues of any of our businesses, but they have started to recover nicely from at least that issue. Still plenty of challenges, but the gross margin picture is looking a lot better. Hey, Robin. This is Terry. I'll answer your question on international. As you know, we've got 2 stores opened, Macau, which both stores are very encouraging, quite honestly. The Macau store where it's in the Venetian and Macau is we're finding and we're learning in both of these stores that's primarily a mainland Chinese customer without a whole lot of marketing, the acceptance they've shown toward the brand is very, very encouraging. And the sizing that we have we've opened this with an international fit and it's being accepted very, very well. The Singapore store is in on Orchard Road in a mall and the mall is still under construction. They're going to have a grand opening in the next few weeks. And I think we'll get a truer read on exactly what Singapore is going to look like. But it's a mix. It's a mix of expats and local Singapore people. And so we'll see on that. But these two stores that we've opened are based with both mall stores. The next 2 Hong Kong on Wan Chai is a street location and Tokyo is a street location with a bar and restaurant. So we wanted to in the initial international expansion get as many diverse kind of stores open so that we could get a read on what the future is and how where we start the expansion and how we go forward and open more stores over there. But I got to tell you, everything that we plan to do and everything we plan for these stores to do, they're doing and we're very encouraged about what we're seeing. So looking forward to continue bringing you up to speed on our international expansion. Thank you for your time. We'll go next to Susan Sainsbury with Miller Tabak. Hi, yes. I guess, keeping on the international or Asian theme, If the Australian well, okay, why did you buy the Australian license? And if it's so small and maybe some of the valuation metrics or cash purchase price? 2nd question is, you just hired a Senior VP in charge of international. Does he have a name? And can you tell us his background about his background a little bit? And then I have a third one. Yes. Susan, this is Terry. His name is Raymond. And the reason I didn't mention his name, I can't pronounce it. He's a Frenchman. Mal Harvey, I think is the best. Every time I mentioned it, he says I don't quite have it right. He's been living in that market for 20 plus years, comes from a very great background in a lot of different businesses. Ferragamo, he ran Ferragamo's Asian business. L'Ansell, he ran early in his career Chanel in the cosmetic side early on in his career. So he was living in Shanghai and he since relocated to Hong Kong because that's where we're basically running business out of, but a highly seasoned executive that's really going to help us in understanding that market. So we couldn't be happier about that. And on the Australian question, I'll let Doug. Doug was heavily involved in the acquisition and I'll let Doug talk about that. I don't want to say that we're not excited about it. And when I compare the size, it really comes down to the materiality of how big of an impact to our sales. When you look at Australia as a market, the entire country, the market is about the size of Southern California. And you've got today, we've got these 4 really small resort stores that opened up over the last 5 years. When we went to the license 5 years ago, we didn't have the infrastructure that we've now set up in Hong Kong to support an Asian store rollout. So really, it became a situation where we see an opportunity in Australia. We think we can actually grow the market to be much bigger than what it is today. It isn't an international fit in Australia. It's actually a U. S. Fit in Australia. So there's a lot of good things that we can immediately get some economies of scale going there. So it's a growth opportunity. It's actually a business we know and that's already got some infrastructure. So it just really made business sense, financial sense, but also branding sense. And even though we said this is Terry again. So even though we said the stores are small, they're absolutely beautiful. This partner we had over there really understood the brand and really opened very brand appropriate stores and very brand appropriate locations. So we've got a great history there and an infrastructure or history that bodes well for the brand. Does the partner and or the management team store team stay with you? And just in terms of timing, was the license up or was he running out of money or? We've actually we're still we bought back the assets. We kept the people. The licensee is actually going to is now my wholesale rep and is we actually have a presence in David Jones in Australia and he has the relationship there. But mainly a men's wholesale licensee and we are really underdeveloped in women's swim, women's sportswear. We just see a lot of opportunity there. And it's a market that Australians travel as a group. There's just a lot of good reasons why it made sense. And it allows us to now go into some markets that I don't know if our licensee really had the capital to really expand the brand the way they needed to. Okay. We got the name of the CVC. All right. My I have other two other questions and I'll be really quick. I was in the Westchester Mall in White Plains and noticed that you're about to open a store there, which I think is great. Can you just refresh me in terms of the Tommy Bahama new store opening program for the balance of the year and beyond Westchester in this New York City metro region, what else is going to open? We just opened this year, knowing that we were going to open New York, it seemed to make sense. We've opened Garden State Mall. We've opened a store there. We've opened a King of Prussia. We've opened this and these are all in Q2. So, it's in Easton Towne Center in Columbus, Ohio. We've just opened a store in St. Louis in the Galleria and we booked in Houston Galleria in the quarter. Westchester, in the balance of the year, it will be Westchester, Chicago, Michigan Avenue, New York and then Hong Kong. We are excited that the store in Westchester is a bit of a smaller build out, but it's still very ample to for us to represent men's and women's appropriately and we're very excited. We've looked at that mall for years, couldn't find the right space and we were able to take all divided up a couple of spaces there. You saw that, you know who was in there and they've made room for us and we think we're a natural fit for that center. We think it's going to be good. Having said all of the new stores, we're very encouraged with the new stores that we've opened this year. They've opened with very little marketing that we do in these towns to great success. So we're very happy about it. And then looking forward, we're looking at new stores every day that we're trying to look at for 2013 and 2014. But rather than just look for spaces to look for space, we're trying to make sure that we get the right space because we're in this for the long term. Okay. Summit or Short Hills is on the agenda or are you still that's on the wish list? We've been wishing for 20 years to get in Short Hills. In the 5 years I've been here, we've had 2 spaces and we haven't been able to put it together. But we needed a bigger space in Short Hills and the spaces that we've been offered in Short Hills just haven't been. That's one mall where we think we can be very, very successful, but we need space to really show women's and accessories and men's to do the whole thing there. But we will get there. We're constantly talking to those people about getting to Short Hills. That's a natural for us. All right. I know people are waiting. Just one final question. I'll let me pull it. I may be wrong, but I think comp slowed down in the Q2 from the first. Is that a compare was that a comparison issue, assortment issue or traffic issue or am I totally wrong? The comp increase was smaller in the second than in the first? Are you talking about the comp stores or the total sales? Well, I'm talking about comps, but also total sales, same comment. I don't think they were materially lower, Susan. The business has been extremely strong, as we said, across all channels. That's wholesale, retail and Well, my expectations may have been too high. I'm just asking. Yes. No, and you may be right, maybe retail, the bricks and mortars were slightly higher in the Q1 of the comps, but they were still quite robust in the second quarter and the ecom, which is part of the total direct to consumer has been very strong all year. I think we're very pleased with the results. And the new store openings have well exceeded our plan. Absolutely excellent point. Okay. All right. Best of luck for the upcoming run up well for the back half and great job. Talk to you later. Thank you. And we'll take our next question from Mike Richardson with Sidoti. Yes. Hi, good afternoon. Actually, most of my questions have been answered, but I do have just one quick one on Ben Sherman. You talked about seeing some gross margin improvement there. And I apologize if I missed this. I'm just wondering how you're thinking about sales there for the year. I think on the last call you had mentioned you were sort of planning them down mid single digits. I think that's right. They'll be somewhere down just slightly couple of points, I think, for the year, Mike. And that's the net impact of adding slightly less good distribution than the bad distribution that we're subtracting. It's a bit of a give and take where you're trying to move up the ladder and you're moving away from some less desirable distribution at the same time you're trying to add better distribution. So we're actually growing in some areas including direct to consumer where we're growing in both bricks and mortar stores and in e commerce, which we only had for a couple of months last year. We'll have for the full year this year. And then we're growing in some better wholesale distribution, but shrinking in some less desirable wholesale distribution. So you add all that up and the net is probably slightly down for the year. Okay. That's helpful. Thank you very much. Okay. And at this time, I'm showing no further questions. I'd like to turn the call back to management for any additional or closing remarks. Thank you, Jamie. In closing, I'd just like to say that our investment in our brands is significant, planned and purposeful. We are confident that we will execute our long term strategy effectively and as a result deliver meaningful rewards to our shareholders. Thanks for your time and interest today and we'll look forward to our next call. And again, that does conclude today's conference. We do thank you for your participation.