G-III Apparel Group, Ltd. (GIII) Q2 2013 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the G-III Apparel Group Limited Second Quarter of Fiscal 2013 Earnings Conference Call. Today's call is being recorded. [Operator Instructions] I would now like to turn the conference over to Mr. Neal Nackman, Chief Financial Officer. Please go ahead, sir.

Thank you. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward-looking statements within the meaning of the Federal Securities laws. Forward-looking statements are not guarantees, and actual results may differ materially from those expressed or implied in forward-looking statements. Important factors that could cause actual results of operations or the financial condition of the company to differ are discussed in the documents filed by the company with the SEC. The company undertakes no duty to update any forward-looking statements. In addition, during the call, we will refer to adjusted EBITDA and non-GAAP net income per share, which are both non-GAAP financial measures. We have provided a reconciliation of non-GAAP net income per share and adjusted EBITDA to our net income per share and our net income according to GAAP in our press release and on our website. I will now turn the call over to our Chairman and Chief Executive Officer, Morris Goldfarb.

Good morning. With me today are Sammy Aaron, our Vice Chairman; Neal Nackman, our Chief Financial Officer; and Wayne Miller, our Chief Operating Officer. We had a very good second quarter. Across the board, our businesses are healthy. We met our revenue plan, exceeded profit goals and have booked well for our key fall season. We are positioned for a strong second half performance. We also acquired Vilebrequin, a leading luxury resort brand, which we believe is capable of significant expansion. Neal will run through the details in a few moments, but here are the financial highlights from the second quarter. We grew our revenues 9% to $251 million. This is right in line with our plan. I'll go through each major category in a moment, but the key drivers were dresses, sportswear, suits, handbags, team sports and our specialty retail operations, which had a strong double-digit comp performance in the quarter. Adjusted EPS was $0.13 per share, and GAAP earnings per share was $0.07 compared to prior year GAAP EPS of $0.08 per share. As you look at our GAAP numbers, bear in mind that there are $1.8 million of expenses related to the Vilebrequin acquisition included in this year's numbers. When taking these expenses into account, our earnings performance was better than we expected. While our key season is still ahead of us, our strong second quarter gives us comfort that we're in good shape to achieve our increased earnings per share guidance for the full year. Our acquisition of Vilebrequin, which is truly an outstanding luxury resort brand, was another significant accomplishment for us. We believe Vilebrequin, which we acquired on August 7, is going to prove capable of significant growth. We think the brand is powerful enough to go beyond the swim category and, because of its pricing power, will support the development of a high-margin, multi-category business. It immediately increases our diversification. While accretion is not expected to occur until next year, we're excited that we continue to grow our brand portfolio and have added to our exceptional management team. I'd like to now walk you through some of our major brands and businesses. I will start with Calvin Klein, which remains our most important and deepest strategic relationship. I'm pleased to report that this past quarter, we extended the term of many of our Calvin Klein licenses. Calvin Klein Dresses had a very good spring season and continues to be the leading dress resource for department stores across the country. We expect another strong year from this business. We're also pleased with our Calvin Klein sportswear business. Our margin improved in the second quarter, and selling is strong at retail. In the second half, we expect to see higher shipments to retailers as our order book has filled out quickly. We believe these improvements are the direct result in the change in senior managements for this division that we've made. Calvin Klein handbags also continues to expand. We're excited to be installing fixtured areas for the handbags with some of our retail partners. The business is growing both through addition of new doors and through increased penetration. I should also mention that our luggage business, which includes both Calvin Klein and Tommy Hilfiger, is growing and proceeding on plan. Our Calvin Klein Women's Suit and separates business also had a very good second quarter. We believe that our initiative in suit separates has the potential to revitalize the entire suit department. We've developed fixturing plans to build on this performance, and we will continue to ramp this business up as we go into the second half of the year. Our Calvin Klein Performance wholesale business in the United States is doing well. Our China joint venture for Calvin Klein Performance is expected to open its first few retail locations by October. We're excited about the potential for this initiative. Last, but certainly not least, our Calvin Klein men's and women's outerwear is expected to have a good season. Our team sports business, driven partly by our expanded deal with the NFL, also had a strong second quarter. It has booked well on top of a standout performance last year. Both women's and men's coats and knits continue to grow in many areas of this business. Jessica Simpson Dresses is now in almost 1,000 doors, up from 450 a year ago. We'll be working on a dress shop rollout for this upcoming spring season. Our new Jessica Simpson ladies outerwear has booked well for fall. Our Vince Camuto dress line is positioned to be a key growth business for us in the dress category. We're in approximately 450 doors with this product. We are also pleased with the further development of Jessica Howard, Eliza J, Guess?, Andrew Marc and Ellen Tracy dresses. Our Kensie Spring sportswear launch has gone well. We're now in 650 doors and plan to be in 850 for fall. We're shipping Kensie dresses this fall. The response to both lines has been quite good. We're pleased with the direction of our Kensie business. Our Wilsons outlet business had a great second quarter with comparable store sales up 12.7%. Handbags and accessories led the way for the quarter, but outerwear outpaced last year as well. We're ahead of plan and expect to carry this momentum into the second half. We continue to be pleased with our own Andrew Marc brand with its continued license development. In addition, we're introducing -- reintroducing Marc Moto, a luxury denim-inspired men's sportswear business for this fall. We're off to a good starting in shipping outerwear to our retail partners for the fall season. In addition to Calvin Klein outerwear, which we previously mentioned, we also expect a good year from our other outerwear brands, including Levi's, Kenneth Cole, Guess? and Cole Haan. Our strategic progress during the quarter is best reflected in our announcement just a few weeks ago that we've acquired Vilebrequin, an exciting global luxury resort brand. This is a good acquisition for G-III. We've already started to develop a long-term strategic plan. Roland Herlory, our new CEO of Vilebrequin, started officially on September 1 but is already very involved in the business and played an important role in our due diligence process prior to closing the deal. Roland is no stranger to luxury retailing. He spent the last 23 years contributing to the success of Hermès, one of the premier luxury brands in the world. Over time, we expect to leverage this brand. We have 60 company-owned stores and approximately 20 franchise partners around the world. Vilebrequin also has a select wholesale business with luxury retailers such as Bergdorf Goodman, Neiman Marcus, Saks, Barneys, Nordstrom’s, Bloomingdale's and other leading specialty stores. The Vilebrequin business is a high operating margin business, commensurative with other international luxury brands. While the brand is currently primarily focused on men's swimwear and resort wear, we believe we can expand it into other categories, as well as into the women's market. We have a strong management team at Vilebrequin, and I think the brand is much bigger than the current size of the business. We believe that Vilebrequin has strong growth potential both here in the United States, as well as throughout the world, particularly in markets such as China and Japan. I hope this all gives you a good sense of how well we're operating and that we're making good strategic progress. We're in a good position to have strong second quarter of the year -- second half of the year. I now ask Neal to run through the numbers and the guidance in detail.

Thanks, Morris. Net sales for the quarter ended July 31, 2012, increased 9% to $251.5 million compared to $230 million in the year-ago period. Net sales of wholesale licensed product for the quarter grew 13% to $178.4 million compared to $158.1 million in the year-ago quarter. We saw increases in wholesale licensed product sales this quarter, primarily as a result of our new Kensie sportswear line, as well as increased sales of Calvin Klein product. Net sales in our wholesale non-licensed product segment decreased in the quarter to $48.3 million from $50.7 million in last year's comparable quarter. Net sales in our retail operations increased 16% to $32.9 million from $28.3 million in the year-ago quarter. Retail sales increases resulted from a combination of an increase in the number of stores and a comp store sales increase of approximately 13% in the quarter. Our gross margin percentage increased during the quarter to 29.8% from 28.5% in the prior year's quarter. The gross margin percentage in our wholesale licensed product segment increased to 26.2% from 25.5% and, in our wholesale non-licensed product segment, increased to 25.6% from 24.7%. The gross margin percentage in our retail segment was 48% this year compared to 45.1% in the prior year's quarter. Net income was $1.4 million for the quarter or $0.07 per diluted share compared to net income of $1.6 million or $0.08 per diluted share in the year-ago quarter. In the second quarter, we incurred approximately $1.8 million or $0.06 per diluted share of expenses related to the Vilebrequin acquisition. When we excluded these costs from our net income, our non-GAAP net income per diluted share was $0.13 for the quarter. Our net income per diluted share was $0.08 in the prior year's quarter. SG&A expenses increased to $69.5 million from $59.8 million in the year-ago quarter. The increase is primarily attributable to increases in personnel costs, professional fees and third-party warehousing. Personnel costs increased significantly as a result of the expansion of our Calvin Klein product lines, the staffing our new Kensie division and an increase in personnel to staff additional outlet stores in our retail division. Professional fees increased as a result of the costs relating to the Vilebrequin acquisition that was completed on August 7, 2012. Third-party warehousing costs increased as a result of our increased shipping volume, as well as storage costs resulting from our higher inventory levels compared to the same period last year. Regarding our balance sheet. Accounts receivable at July 31 were approximately $185 million compared to $172 million at July 31, 2011. Our bank debt at July 31, 2012, was $87 million compared to $142 million a year ago. Shortly after the quarter closed, we entered into a new revolving credit line facility that provides for aggregate borrowings of up to $450 million compared to $300 million under our prior financing agreement. In early August, we incurred borrowings under this facility to fund the $87 million cash portion of the purchase price for Vilebrequin. Inventory increased to $336 million at July 31, 2012, compared to $322 million in the prior year. With respect to our guidance. For the full fiscal year ending January 31, 2013, we are now forecasting net sales to increase approximately 15% to approximately $1.41 billion compared to $1.23 billion of net sales in fiscal 2012. We are expecting non-GAAP net income per diluted share to range between $2.74 and $2.84 as compared to our previous guidance of $2.62 to $2.72 per diluted share. We are forecasting adjusted EBITDA to grow between 17% and 21% to a range between approximately $108 million and $112 million compared to $92.4 million in fiscal 2012. Forecasted non-GAAP net income per share and adjusted EBITDA exclude expenses and integration costs related to the acquisition. With respect to our third quarter guidance, we are forecasting net sales of approximately $570 million in this year's third quarter compared to $510 million dollars in the comparable quarter in the prior year. We are forecasting net income to increase between 7% and 11% to between $46.4 million and $48.4 million or between $2.25 and $2.35 per diluted share for the third quarter compared to net income of $43.6 million or $2.16 per diluted share in last year's third quarter. Our third quarter forecast does not take into account any additional expenses or integration costs that may be incurred in the third quarter with respect to the Vilebrequin acquisition. That concludes my comments, and I'll now turn the call back to Morris for closing remarks.

Thank you, Neal. This should be a very good year for G-III. More importantly, we continue to build the business across a number of paths that lead to sustainable growth. We are deepening our penetration in important categories. As we did with outerwear, our dress business has become a dominant player in the market with a wide number of brands across many tiers of distribution. Over time, we expect to push our sportswear and handbag business in the same direction, adding brands and carefully expanding distribution. Another path to growth and our continued ability to leverage our leadership position and access to capital build the business through acquisition. Vilebrequin is an outstanding brand with a world-class team. I'm excited about the future of this brand. While there is nothing to report today, we do not expect this to be the last deal we do to accelerate our growth. Through both of these paths to revenue growth, we can create leverage and improve efficiency. We're managing and integrating our businesses with a careful eye on overhead, shared services, working capital management and selective infrastructure development. It is our intention to show you a strong second half and full year performance and to also set the stage to achieve strong growth next year. Thank you, and I'll now open the call to questions.

[Operator Instructions] And we'll go first to Edward Yruma of KeyBanc.

Morris, can you talk a little bit about any early reads you might be seeing in the outerwear season? I know that you’ve mentioned at times the anniversary sale at Nordstrom might be a good read. Kind of how do you feel about some of these early reads that you're seeing, again, acknowledging that it's very early in the season? And then, two, how do you feel about the industry inventory levels for outerwear?

The early reads, Ed, are, as you stated, the Nordstrom's anniversary sale was exceptionally good for us and, I believe, for the industry. We had the #1 selling item in the catalog in outerwear and, I believe, the #3 best-selling item, and the performance was far better than last year. We received reorders. The feel is that we'll have a very strong year with Nordstrom's and specifically outerwear. Macy's, the coat business on the men's side opened up fairly strong. We've gotten very good reads and several reorders, as well as new sales on items that they had passed on originally, and they circled back and rethought the process and bought in additional SKUs, which is a great indication of their feel for the future. It's a little early to respond on the women's area. It seems as if we shifted a little bit later. The product is just reaching the floor. The product looks good. We shopped it actually yesterday. We've been shopping it every day since it's on the floor. We're quite pleased with the way it looks, and it appears that sales should be good. We have some great selling at JCPenney with Levi's. It seems as if Levi's business, I think it's one of the first shops that has been created at JCPenney. The sales at Levi's are significantly ahead of last year's pace. As for its license business, it's been good at JCPenney. And I guess the best read that we have is our own retail stores, which are Wilsons. Our business has been up pretty much every month for the entire year, and they're up low double digits throughout, and a good part of it is outerwear. So we're feeling good about the outerwear business. In response to your question on industry levels of inventory, I don't think levels of inventory are high. Actually, I believe they are low, and maybe good news, some of the factories in China are quite late on delivery. Their anticipated orders were less than what actually did occur, and they were not prepared to manufacture what orders they had, and there were a quite a few delays, and that is eating into the inventory levels that exist in our industry today. So I think inventory levels should be low in the coat area.

We'll go next to Erinn Murphy of Piper Jaffray.

Morris, I was hoping you could maybe help us understand just -- as you're thinking about the Vilebrequin acquisition, maybe talk about 1 or 2 of those attributes of that brand that were most attractive to you during the vetting process there. And then also given that this is your first major global acquisition, if you could just maybe give us an update on how some of those markets are performing. I think you indexed a little bit higher in France and Italy, and obviously the U.S. is a big market for that brand as well.

Thank you for the question, Erinn. Vilebrequin is a brand that the management team at G-III has been familiar with for years. It's clearly an untainted luxury brand in troubled environments, in troubled economies, the brand has stayed pure at a very high tier. It's very focused on men's bathing trunks. There's a ready-to-wear component to it. There's some accessories that have been developed for it, and all of them have been developed with gentle loving care. It's at a very high degree of quality and integrity and design. So we've been conscious of this brand for quite a while. It's a brand that is affordable for us. And our diligence with our retailers, we found that this is a brand that can expand into many other classifications, and they can expand aggressively into the female gender. It seems that as many women are familiar with the brand as men. It's a great gift-giving item. Bathing trunks has historically -- at least this bathing trunk, has been historically a great gift that a woman has chosen for both her husband and her child. And in doing our research, we found that globally, there's a major awareness for this brand, giving us the ability to expand on it both with existing classifications, as well as new classifications. The global penetration really exists in France and Italy for the most part. The stores in France are doing quite well. The stores in parts of Italy are not comping what they should, but that's the sign of economic times. We've upgraded or we're in the process of upgrading some of our real estate in Italy. We believe that's going to make a major difference in performance. We're focusing on updating some of our designs. And again, everything that I've described gives us opportunities globally to prosper with this brand. There's virtually no distribution in Mainland China or Japan. And as we all know, if you're looking for opportunities for the future, those are markets you need to address. We're in the process of formulating a plan that should bring us into these markets for, if not 2013, it will certainly be 2014. We're in no rush. This is a legacy brand that has purity. It's European-inspired. We're not going to change that. It's based in Geneva, design is in the South of France, and the feel is very European, and we'll continue with that, and the fact that it is a European feel is also a major attraction for the global market. And the piece that I haven't addressed really is Latin America, and we're focusing on -- there is distribution in Latin America. We have concessionaires or franchises in Latin America that are doing -- they’re doing well with the brand. We need to expand on the door count throughout Latin America to prosper additionally. And in the United States, we do well. We have a retail -- this is driven primarily by company-owned retail stores. The opportunity in the United States, I believe, is wholesale distribution, and that is -- that's our core competency. We have relationships with all the stores that we need to carry this brand, and we're in the process of meeting with them, presenting appropriate store build-outs or department build-outs for them, and we see this as a great brand for the company.

I guess just, Morris, just 2 quick follow-up questions. You mentioned Italy. Parts of it were still weak. Have you seen anything sequentially improve? Or is it still just a kind of challenged macro environment there? And then secondly, when you referenced some of the potential longer-term to be in both China and Japan for the brands, what are you seeing from a tourist flow perspective from the Chinese tourists or the Japanese tourists in your European stores right now? Is there brand awareness of that brand already?

The -- we're seeing -- we're not seeing aggressive movement in Italy. As a matter fact, I just -- I came back from Italy 2 days ago and spent some time in Rome where we have a couple of locations and in Milan. There's a great deal of business that's done with the Russian community. There’s major awareness there. The Chinese community is aware of the brand to some degree. There are locations in Macau and in Hong Kong. There are no locations in Mainland China. And if our information is right, the biggest growth area in yacht building and yacht acquisitions is throughout China. Those people on yachts are going to like this apparel. So as we make it available for them in cities like Shanghai and Beijing and places like Qingdao, where there is a shipbuilding -- a luxury shipbuilding environment, I believe the awareness will grow very, very quickly.

And then just if I may, Neal, just a quick question for you on the gross margin. Very encouraging to see that improvement so early on this season. And as we walk through the back half of the year, if you could just maybe refresh us on kind of how you're thinking about product costs for the both third and fourth quarter. And then also, I guess, in the second quarter, what were the major puts or -- and takes for the margin? Was it a balance between both lower markdown, allowances as well as product costs? Or what did we really see drive that strength incrementally in the second quarter?

Sure, Erinn. So with respect to product costs and where the gross margins are going, we've spoken before and it's still the case that, that certainly has moderated for us this year and that we do anticipate in the back half of the year, predominately in Q4, to continue to see improved gross margins. Our Q3 margins last year were fairly strong. We’ve got -- we certainly will achieve those. I don't know how much of a beat we'll have on the Q3 margins, but Q4 looks strong, and we expect that, that will continue. In terms of Q2 performance, just to give you a little bit more color, it was really our sportswear part of our business was very positive. The Kensie business was new and operated at a higher gross margin. Our Calvin Klein sportswear and Calvin Klein Performance businesses performed very well. We retailed well. As I said, we had the benefit of some product issues, and those were kind of the main drivers as far as the wholesale margins. Of course, the Wilsons was really one of the standout businesses for us in the quarter. While still making -- still losing money in the quarter, it is -- it performed better than we had expected, and their margins were strong. They really had strength across all the categories, the men's and women's outerwear. But as Morris mentioned, it was really kind of led by the handbags and accessories business.

And our next question comes from Diana Katz of Lazard Capital Markets.

Morris, I was hoping you could update us on Calvin Klein Performance stores, how those are performing, as well as at wholesale and how you continue to view this opportunity?

The 2 retail stores that we have opened are doing okay. They opened strong. And for the summer season, I would tell you that we're a little disappointed in Scottsdale, but that may be a product of the fact that we're learning the environment a little bit. It's over 100 degrees in the summer. We're in an outdoor center, and traffic is down for the entire center. So I'm not sure that its outperformance is the performance of the center, and we're learning our way in San Francisco in a unique location as well. Our wholesale business is off the charts. We're doing extremely well with performance. The -- we're doing department build-outs in some of our retail stores. The sell-throughs that we're experiencing are far better than we anticipated. We've added another dimension to it. We're doing women sizes, and women sizes are a new area for some of the department stores in performance apparel. And in a conversation I had yesterday, I learned that the women size business is also performing at a level that was unanticipated. So we're very happy being in this business. We see great growth potential, and we're measuring how quickly we'll open up additional locations. We have leases that we've looked at and negotiated. We’ve not signed additional leases, and we will learn about the 2 stores that we currently have. And if we feel that there's an aggressive rollout, we'll do it. If not, we'll have 2 stores and do the best that we can. Our rollout in China begins actually in 2 weeks. So by the end of the year, we should have at least 4 stores opened, and we'll learn from that experience as well. So the product's great. The retail price points are great, and the customer that's buying it is coming back in the door to replenish her needs, so it’s positioned well.

Great. And then a small question on 2Q. What led to the sales decline in the non-licensed segment?

It was really pretty minor. There's probably no individual call-out on that, Diana.

Okay. And on the Vilebrequin, you gave, I guess, the overall accretion for next year of around $0.23. Are you prepared maybe to help us more on the breakout between gross margins and SG&A for our models?

Yes, the -- just to be clear, we have not given any EPS guidance on it other than to say that in the current year, we're expecting it to be neutral. As we said in the prepared remarks, it's a high operating margin business, and we do expect it to be accretive for us next year.

Okay. And then just finally for the model, any help on SG&A increase for 3Q?

Only -- just to repeat kind of what we've said before, Diana, which is that we do not anticipate levering, and in fact, we expect some slight delevering of the SG&A, for the balance of the year. Of course, Vilebrequin will also add to that -- the delevering situation on the SG&A.

[Operator Instructions] And we will go next to Jim Duffy of Stifel, Nicolaus.

Neal, the Wilsons store performance, tracking quite well. What is the run rate sales per square foot trajectory you see those stores on?

Yes, we closed last year, Jim, around between 3.10 and 3.15 and expected this year to get to about 3.45.

Okay. So you're making some nice progress there.

Yes.

And then with respect to what's contemplated in the guidance, if you mentioned it, I missed it. Did you speak to the sales contribution of Vilebrequin in third quarter in the year?

We did not. We talked about it being a $60 million business annually. That was the run rate prior to us. So we'll be picking it up on the date of acquisition and expect something pretty normal relative to that for the balance of the year.

Yes, so I'm trying to get my arms specifically around the seasonality of that. Is it more weighted to a 2Q sell in? Or is third quarter still a large contributor because of retail contribution?

Right. So it's got a wholesale and a retail piece to the business, and interestingly enough, it really is fairly strong for our Q2, 3 and 4, with its stronger quarter being in the second quarter, but it's got some decent strength throughout. Its only weak quarter, really, will be the first quarter.

I see. So there's a decent resort season business to it. And then I was very impressed with the progress on the inventory. Can you speak to where you sit with respect to carryover inventory from calendar 2011?

Yes. I think we mentioned it on the previous call that we have it. Obviously, our inventory levels have actually comped very nicely to last year. So we still got some carryover inventory. But our order book looks strong, strong enough anyway to get us through our inventory levels, and we're expecting that actually even at the end of Q3, I’ll probably still have increases that are sort of comparable to sales growth prospectively. So right now, inventory levels have kind of come into shape nicely.

Very good. And then with respect to the back half of the year, it sounds like the fourth quarter is perhaps your best opportunity to exceed the guidance range. What are the factors that would have to come into play for that to be the case?

Clearly, in my opinion, it would be weather. Last year, Q4 was very difficult. That's where we took a hit. There was no coat season. So if we have just a moderately cold winter, we should have a really good season.

We'll go next to Eric Beder of Brean Murray.

Could you talk a little bit about the sports business, how that is expanding? And how should we think about luggage as it expands in terms -- I don't know, doors or revenue? How should we think about those 2 businesses?

The sports business is expanding because of the additional rights that we had in NFL properties. We have the ability of selling the mid-tier today. Our women's business in sports is doing well. We're even doing an initiative that's addressing the fashion retailer in women's. That seems to be working. We've shifted a couple of programs. We're in the process of our second program to -- actually, Forever 21, which is a unique situation for us, and it's brought interest from other fast fashion retailers to us. The sell-throughs or the beginning of some sell-throughs at JCPenney, have been quite good, and JCPenney has actually called in some product early. We -- many suppliers, we had some concerns. So I'd say that sports is going to have a good year. There's added door count with added classifications. We have the sporting good channel and the mass tier, as I spoke to. We've shored up our design. We're sourcing a little bit differently than we have historically. So we've got opportunities in margin, opportunities in door count, opportunities in classifications we didn't have in the past. So that feels like it will be a very good business for us. The luggage business is kind of an area that survives in a more controlled environment. We're doing well with it, both Calvin and Tommy Hilfiger, but it's hard to gain access to retail space. There are limited brands and limited retailers to sell to, but we're -- we seem to be finding our way. We seem to be growing both brands for the future, and we have some of the product in our own Wilson stores, and that product is doing well. So we're not unhappy with the luggage business. In a sense, we're blending it in a way with our handbag and accessory business.

Let’s talk about the handbag business. So you've done really well with that. Would you like to add additional licensees for that? I know you've added some of the Andrew Marc business in handbags, and what do you want to do with the handbags? Is it bigger than just Calvin Klein?

Yes, it is. We're launching Andrew Marc, so we're busy with that initiative. To undertake -- as we're positioning Calvin Klein to be a mega brand and as we're launching Andrew Marc as a second brand and we're incubating a little bit of Kensie, it is not the time for us to reach out and just haphazardly take on other brands. We haven't mastered the 3 that we have on the charts yet, but it will be a big business for us. We've stayed consistent with what we've stated over the last, I guess, almost 2 years that this will be a $200 million business for us.

[Operator Instructions] And with no further questions in queue, I'd like to turn the conference back over for any additional or closing remarks.

Thank you all for paying attention and being part of our world this morning. Have a good day.

This does conclude today's conference. We appreciate everyone's participation today.