G-III Apparel Group, Ltd. (GIII) Q1 2014 Earnings Report, Transcript and Summary

Welcome to the First Quarter Fiscal 2014 G-III Apparel Group Earnings Conference Call. My name is Larissa, and I'll be your operator for today's call. [Operator Instructions] Please note this conference is being recorded. I'll now turn the call over to Neal Nackman. Sir, you may begin.

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, which is a non-GAAP number. We have provided a reconciliation of adjusted EBITDA to 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 afternoon, and thank you for joining us to discuss our first quarter. With me today are Sammy Aaron, our Vice Chairman; Wayne Miller, our Chief Operating Officer; Neal Nackman, our Chief Financial Officer; and Jeff Goldfarb, our Director of Business Development. We had a very good first quarter. We shipped well, sold through well, built our order book and pushed forward on our growth initiatives. As a result, we remain confident in our plan, both operational and financial, for the full year. Here are the financial highlights from the first quarter. We grew sales by 19% to $273 million compared to last year's $229 million. A substantial majority of this growth was organic, highlighted by increased sales of Calvin Klein Better Sportswear, Performance wear, Women's Suits, handbags and Kensie sportswear, as well as a double-digit increase in comparable store sales by Wilsons. A portion of our growth in net sales resulted from the inclusion of sales by Vilebrequin, which was acquired last August. We continue to be very excited about the prospects of Vilebrequin, which I will discuss in a few moments. Operating profit increased to $3.4 million from $23,000 last year. Our gross margins were healthy. We saw gross margin improvements in our non-outerwear wholesale businesses and our Wilsons' retail operations. Our expenses were in line with our plan. And in general, we've continued to be mindful to control spending in some areas, while making the investments necessary to support growth in others. Our per share net income per diluted share for the first quarter was $0.05 compared to a net loss per share of $0.04 in the same quarter of last year. This is a good performance for the first quarter. This is the first time in at least 15 years that we've had a profitable first quarter. This speaks to the diversification we've achieved in the business. It also represents a strong start to the year. And our performance in the quarter gives us confidence in our full year guidance for earnings, which we've increased to a range between $3.20 to $3.30 of a net income per share -- net income per diluted share. In general, this was a very solid quarter with strength in our business across the board. We saw sales increases in nearly every major category. I'll now provide you with an overview with respect to each of our major categories. Let's begin with outerwear. As you know, the first quarter is essentially a clean-up quarter for outerwear. We finish the season, take whatever markdowns are necessary and do our best to make sure our retailers are satisfied with their performance for the season. We were successful in each of these areas. Our customers are positioned well in the coat classification. The cool weather from January to March helped sales of outerwear. The weather also had a positive impact on our Wilsons business. Our dress business had a good quarter despite the challenges posed by cool weather throughout the spring season. Our dress assortment continues to be led by Calvin Klein, the anchor brand for department stores, which is now in over 1,200 doors. Next month, we'll be opening department store shops for Jessica Simpson Dresses. Our Eliza J dress line was a standout with a strong performance, especially at Nordstrom's, where we're in all doors. We're looking forward to the launch of Ivanka Trump dresses in time for fall holiday season. We're also pleased to be seeing strength in Guess? dresses, as we look to build a significant presence with this brand. We believe that we will again have a very good year in our dress business, a classification we dominate in department stores. Sportswear, also anchored by Calvin Klein, had a strong first quarter. We experienced good results for our assortment in major department stores across the country. Calvin Klein Better Sportswear, which grew by more than 50% compared to last year, was especially strong. This growth, driven by great design and merchandising, has enabled us to capture both door expansion and deeper department penetration. Our Calvin Klein Better Sportswear collection is now in 800 doors compared to 600 at this time last year. Calvin Klein Performance, which is now in 800 doors compared to 400 at this time last year, continues to be a major growth opportunity. We believe offering Calvin Klein branded product in the active lifestyle category addresses an underserved segment for our department store customers. We plan on having, at least, 300 Calvin Klein Performance shops opened by the end of the year. Kensie contemporary sportswear got off to a good start with strong sales increases. This product is now in over 900 doors. Our Calvin Klein Women's Suit business continued its strong trend in the quarter, with suit separates leading the way. For some time, our Calvin Klein assortment has been one of the bright spots in the suit category. Consumer response to the suit separates category is strong, which will drive continued growth. We are the leader in the women's suits separates business with the Calvin Klein brand. Calvin Klein handbags posted sales gains for the quarter. We will have 10 to 12 Calvin Klein handbag shops opened by the end of the year. Overall, for our Calvin Klein business, we expect to have 750 fixtured shops and department stores by the end of the year. We are pleased with what we saw in the first quarter for each of our major wholesale businesses. We're also pleased with what we've experienced in our specialty retail operations. Wilsons posted a comparable store sale increase for the quarter of 12.4%. This is a strong performance, particularly, as it comes on top of last year's 6% comp increase. In addition to this growth in store level of productivity, we're continuing to open new stores. We expect to open at least 20 new locations over the course of the year with most of these leases already signed. These additions will include some full price Wilsons retail stores in addition to additional outlet stores. We're excited for our first full-price Wilsons stores. Wilsons was once a very successful national retail chain with a presence in malls across the country. If our new Wilsons full-price stores are successful, this could become a meaningful growth opportunity for us. When we acquired Wilsons in 2008, it was losing money and generating sales of $250 a square foot. The chain is significantly profitable with sales around $350 a square foot and still growing. I'd like to close by providing you with an update on Vilebrequin, our most recent acquisition, which we closed in August of last year. The business is performing well, and our integration has gone smoothly. We're confident that the business is capable of significant growth, both within their core categories of men's and boy's swim, but also in other resort-oriented categories. In particular, while it will start small, we're excited for our new women's swim collection, which will be in stores later this month. We believe this brand could be as strong with women as it is with men. We have new stores opening this year in the United States and overseas. We're working hard with our distribution partners, opening new Vilebrequin shops with our retail partners and are relaunching the Vilebrequin e-commerce site in the United States this summer. We're very pleased with the management team and the progress they're making and believe our strategy is going to yield good results and returns, particularly, next year as we start hitting our strides with respect to a variety of growth initiatives. I'll reserve some comments for closing, but I'll now turn the call over to Neal Nackman, our Chief Financial Officer.

Thank you, Morris. Net income was $1.1 million or $0.05 per diluted share compared to a net loss of $847,000 or $0.04 loss per share in last year's first quarter. Net sales for the quarter ended April 30, 2013 increased 19% to $272 million from $229 million in the same period last year. Net sales of licensed products increased to $180.5 million from $157 million, driven by increased sales of Calvin Klein licensed products, primarily in our women's suits and sportswear lines, as well as by an increase in sales of our Kensie sportswear line. Net sales of non-licensed products increased to $60.7 million this quarter from $47.3 million in the comparable quarter of the last year. This increase is attributable to the addition of net sales from our Vilebrequin business acquired in August 2012. Net sales of our retail operations increased to $45.3 million from $36.1 million in the prior year's first quarter, as a result of a combination of a higher store count as well as a comp store sales increase of 12.4%. Our gross margin percentage was 33.9% in the 3-month period ended April 30, 2013, as compared to 29.9% in the prior year's period. Gross margin percentage in our licensed product segment was 27.8% this quarter compared to 25.7% in the prior year. The increase is primarily attributable to improved gross margin of Calvin Klein Women's Suits, sportswear and handbags, as well as our Kensie sportswear. The gross margin percentage in our non-licensed product segment was 31.6% compared to 24.6% in the prior year, which is attributable to net sales of our new Vilebrequin business, which operates at a higher gross margin percentage than our historical non-licensed businesses. The gross margin percentage in our retail operation segment was 50.9% compared to 46.3% in the prior year, primarily attributable to a higher-margin product mix and less promotional activity. Total SG&A increased to $85.8 million in the quarter from $66.6 million in the same period last year. This increase is primarily attributable to increased personnel costs, facility costs, advertising costs and outside warehousing expenses associated with our new Vilebrequin business, both in sales and our increased retail store count. Regarding our balance sheet. Accounts receivable decreased to $152 million from $176 million at the end of the prior year's first quarter. Inventory increased approximately 16% to $242 million compared to $209 million at the end of the first quarter last year. Inventory increases are consistent with our forecasted sales growth. We are pleased that despite our cash expenditure of approximately $90 million in August 2012 in connection with the acquisition of Vilebrequin, our bank debt, less on hand cash balances, only increased $11 million and stands at approximately $55 million. We also have approximately $19 million in long-term debt relating to promissory notes issued as part of the consideration for the acquisition. We spent approximately $5 million on capital expenditures thus far and continue to expect our annual expenditure to be between $20 million and $25 million in fiscal 2014. That expenditure is primarily for retail store development at Wilsons and Vilebrequin and fixturing cost for department stores. Lastly, I would like to discuss our guidance for the full fiscal year and the second quarter. For the fiscal year ending January 31, 2014, we are now forecasting net sales of approximately $1.57 billion, up from our previous forecast of $1.55 billion. This resulted in an increase of approximately 13% from the $1.4 billion of net sales in fiscal 2013. We are increasing our forecasted net income to between $66 million and $68 million compared to our previous forecast of $64 million to $66 million. This results in an increase of between 17% and 20% compared to net income of $56.9 million in fiscal 2013. We are now forecasting earnings per share of between $3.20 and $3.30 per diluted share, up from our previous forecast range of $3.10 to $3.20. Our revised guidance compares to $2.80 per diluted share in fiscal 2013. The net income per diluted share for fiscal 2013 included the effective expenses and integration costs associated with the Vilebrequin acquisition equal to $0.12 per share. We are forecasting adjusted EBITDA to grow between 14% and 17% to between $129.5 million and $132.8 million compared to $114 million in fiscal 2013. With respect to our second quarter guidance, we are forecasting net sales to increase to approximately $287 million in this year's second quarter, an increase of 14% from the $251 million of net sales in the prior year. We are forecasting net income between $1.1 million and $2.1 million or between $0.06 and $0.10 per diluted share for the second quarter compared to net income of $1.4 million or $0.07 per diluted share in the previous year's second quarter. Net income per diluted share for last year's second quarter included the effect of expenses associated with the Vilebrequin acquisition equal to $0.06 per share. That concludes my comments. I will now turn the call back to Morris for closing remarks.

I think it's clear from our results in the first quarter and, in fact, from the last several quarters and several years that we have a winning strategy to grow our company. We've built some powerful capabilities, category by category, to transform our business and give us a wide range of opportunities in the market. Some of this has been developed organically and, in some cases, we've accelerated our development by acquiring expertise and infrastructure capabilities that we can then extend across our wider range of brands. As an example, our new strategic relationship with Ivanka Trump extends to many categories, including dresses, suits, sportswear and swimwear. The ability to do a comprehensive multi-category launch makes us a valuable partner and gives us a powerful growth opportunity. We expect this launch to have scale and to be in over 200 doors within the first year. What underpins our success is the base of strong relationships. Over the years, G-III has become known as a true partner. We understand how to make great products, protect and enhance the brands we're entrusted with and enable our customers to build meaningful and profitable businesses. While we are fortunate to have several very meaningful relationships, it's clear that none rise to the level of importance of the partnership that has developed between G-III and the Calvin Klein organization and its parent, PVH. Calvin Klein is one of the world's great brands. Brand value is tremendously important, particularly as we contemplate entering new categories. Much of what we have accomplished has developed from this partnership. We're always selective in choosing the specific business we enter. But at this point, I'm comfortable in claiming that, as an organization, we believe we can do nearly anything we set our minds to. What we've accomplished in a relatively short time in the dress business is a great illustration of how powerful the next phase of our evolution can be. To illustrate that, we began to deliver dresses in fiscal 2008, and we shipped approximately $30 million in that fiscal year as one of the many companies doing business in the dress category. Even as many suppliers, even premier companies, fell away. By fiscal 2013, we've grown to over $300 million of dresses, more than tenfold over the last 5 years. Our dresses can be found in over 1,200 department stores across the country. We take a collaborative, thoughtful approach to everything we do. We make decisions carefully. We weigh the risks and then we proceed only when we reach a level of confidence that gives us that kind of comfort. I think our careful decision-making process is part of what, for our shareholders, makes us a superior company. We care a great deal about creating value, about mitigating risk and about growing our business. I think we're off to a great start for the year ahead. Thank you. And, operator, I think we're now ready for some questions.

[Operator Instructions] The first question comes from Ed Yruma from KeyBanc.

As you've now had a little bit more time to kind of digest and understand the capabilities of Vilebrequin, I guess, how should we think about the longer-term extension opportunity? I know you just talked about women's. I guess, how rapidly could women's grow in the wholesale channel? And are other categories you could look at as you look to build that brand out?

Sure. Thanks, Ed. The acquisition was made with a mindset of expanding the brand capabilities. It was a pure brand, well respected and had great consumer awareness. And in record time, I think we're doing a good job of bringing additional product to market. There's an element of footwear that will hit the market this year. There is suntan lotions that are hitting the shelves of our own stores, I believe, in mid-July, and we have women's swim that is being delivered also some time in July. We've had conversations with retailers, as well as classification producers that are anxious to license this brand for product extensions that would do merit to wholesale. We are thinking carefully. The moment you sign a license, you're kind of bound to your commitment to the license. And we're not certain the time is right. We're working through it. Right now, our focus is really the retail business. Retail is where the bulk of our income comes from. So our stores currently are too small to expand in too broad of a product mix. So the intent for the short term is to perfect the retail model and then move on to classification extensions at wholesale. So it will happen, but it won't happen this year.

Got it. And just trying to -- maybe one other follow-up, as we think about weather in the quarter, obviously, the cooler weather helped your outerwear business, and you cited that. I guess, did it have any negative impact on the dress business? I know you said that the dress business was strong for you in the quarter. Could the business have been stronger had the weather cooperated? And how do you feel about dress inventory in the channel?

Clearly, dresses would have been better if the weather cooperated, but there is always a winner, and the winner happened to be Calvin Klein. If you polled the retail community, they would tell you that their business in Calvin for spring was excellent. Some of our other brands didn't prosper quite as well. They were okay. We don't have a troubled area in dresses. But clearly, the reference that's made into performance for spring is driven by Calvin Klein, a little bit of Eliza J but Calvin Klein lead the pack. Fortunately for us, the Calvin Klein business is about 60% of our overall dress business. So inventory levels at retail are in check. At wholesale, our Calvin inventory is down. It's well managed. We managed to address some of our inventory levels over last year. So our inventory is much more current than it had been historically. The other areas have a little bit of pressure. Whether it's Jessica Simpson or Eliza J, they're working through their inventory, but there is no crisis on our side and, clearly, no crisis on the retailer side. And we've identified some strong direction in our dress business going forward. So we are doing well there and anticipate Ivanka Trump as being another stellar brand for us in dresses. The line, the collections were both strong. And visually, I reviewed them earlier today. The dresses look amazing. So we look for another brand to complement our business and further dominate the dress department. Did I get it all, Ed, or was there a piece that I missed?

The next question comes from Erinn Murphy from Piper Jaffray.

I guess, one question, really. First is on the gross margin in the first quarter, much better than I was anticipating, could you maybe just walk through how should we be thinking about the flow of gross margin as you progress throughout the year, particularly in the back half as we start to see a potential for a normalized winter? And then also, how should we be leering on at the investments that you're making as we think about the SG&A cadence throughout the balance of the year?

Sure, Erinn. The -- I think the surprise in the first quarter was really the Wilsons business was certainly stronger than we would have been planning it. Our wholesale business has also performed stronger than we had planned them as well. For the entire year, we're really looking essentially on a historical business that have just slight gross margin improvement. Of course, as we layer in the Vilebrequin business, we'll get a lift that will be in the first, second and third quarter because we really don't have the comps of having a Vilebrequin in our numbers. We picked them up starting in August, so there's probably 2 months in the third quarter and then will be normalized for the fourth. In terms of SG&A and investment spending, the story this year is a little bit better than last year, where we expected to have significant SG&A de-leveraged this year. Absent the Vilebrequin business, we're probably slight -- flat to slightly de-levered on the wholesale side of the business, and I would expect that, that would roll out pretty evenly throughout the year, again with the exception of the Vilebrequin business being new for us in the first and second quarter significantly.

That was really helpful. And then, Morris, for you, just a follow-up on the Vilebrequin. Last quarter, you talked about some work needed in the international franchisee locations. Could you just provide us with an update of how that's been going and what are the biggest opportunities as we kind of think beyond this year in terms of international distribution?

What we've done with the franchisees is we've offered some incentives for them to buy more current goods. They've responded, and sales have picked up. Their inventory levels were higher than they should have been, and there was not enough open-to-buy to generate excitement in the stores. As new inventory came in, it enhanced both the current sales of new product and the inventory that was there a period of time also started to sell. So that initiative is working. We are meeting much more frequently with our franchisees than ever before. It's not about just taking an order, it's about trying to ensure that the franchisee is successful. That piece of the business is improving. Our own retail stores is showing increases that we're quite proud of. The piece that we're most excited about for the moment -- I said earlier that the focus is really our own retail and franchises. But the piece that will be most evident are the department store build-outs. If you went into Saks on Fifth Avenue and saw the build-out that they just did, it looks amazing. And performance there is about 70% better than it was last year, same time. The -- we just did a build-out in Galeries Lafayette. Actually, there are 6 points of sale within that 1 store that has just great marketing and great product mix available to the consumer. We just opened a shop in shop in Printemps. Harrods has a great shop. So all the -- we just opened something in Punta del Este that is done with the department store. So the presence is very -- the new presence and the new management team is very evident. If you saw this, The Sunday Times, there was -- we've got a really nice call-out on Vilebrequin. And at the same time, Bloomingdale's dropped a catalog and on the front of the cover was a Vilebrequin swimsuit. So we're getting a lot of attention, we're getting good sales and we're very happy with this acquisition.

That's really helpful. And then, just real last, if I may. On the Guess? dresses, you've highlighted that a couple of quarters now as being particularly strong. Has there be any change in terms of how you've managed that license? And then, are there other kind of longer-term potential to partner further with this brand in other categories?

There's a little bit of difficulty in partnering with Guess? I'm going to answer your last question first. Most of the categories are taken, and they're fairly protective of their own retail channel and their own retail distribution. So for the moment, we have dresses, and we have the coat side of the business that we've had for years. Should there be an opportunity, I'd be glad to talk to them about more. But currently, it seems as if most of their classifications are taken -- or the ones that we have capabilities in. The dress business is growing. We expect to see better than a 20% growth in our Guess? dress business. And the growth comes out of better placement in the department store area, a little better marketing, more of an influence on additional design talent that's been added. And basically, it follows the same pattern as most of our dress initiatives, starts off a little weak, we make the corrections whether they're fit or design. We always have the attention of our retail partners, and we're always given the opportunity to improve. So we're getting much better at the Guess? brand. The product looks sensational. It's a little younger than most of what we do, and it stands out in our showrooms. So we're looking for some really good things there.

The next question comes from John Kernan from Cowen.

So helpful color on the Calvin Klein, some of the categories there. Can you frame the long-term opportunities of the handbag business? I know the team at PVH is excited about your partnership with them. Trying to understand what the total top line opportunity for that category is for you guys.

When we signed this license, this is our third year. This is -- we'll be going into our third year of business with the Calvin Klein brand. And we've -- I stated, when we signed this brand, that it would be a $200 million brand within several years. We are close to halfway there. So it's been successful. We're doing some store build-outs. Again, design, product, there's -- this is a classification that we've really never addressed on the wholesale side. This is our first initiative. And with the confidence of PVH, they gave us the ability of taking this brand and marketing the brand at wholesale. We've taken the price point up quite honestly, not down. We've bettered the quality of the product. The marketing at the store level has improved dramatically. So I have no problems staying with that $200 million number as a good number, and there's potential to do better than that. We're now doing build-outs. As I said earlier, we'll have 10 to 12 shops this year. They'll be fairly comprehensive. They mandate a good amount of space. They're expensive build-outs, but the return is quite good. So it's an exciting area for us as it is for PVH.

That's helpful. And switching gears a little bit back to Wilsons, what gives you the confidence that, that brand expansion and more to a full-price channel makes sense at this point?

Wilsons, several years ago, was a full-price channel retailer. That's where they came from. They had 600 full-line stores, pretty much in all of the malls. Their business is a strong business. This is a company that, at one time independent of anything else, had about $1-billion market cap, not too far from $1 billion market cap. We bought it, G-III bought it, as sort of a distressed asset with real estate that we knew we could succeed with. And the initiative we have now is in test mode. We currently have 3 stores that are open -- full-line stores that are doing well. They're performing mildly better than our outlet stores, and we are planning on an additional 20 stores that will be opened within the next 12 months. A lot of those leases are signed already, and we believe that it's the right approach. History tells us it is. We're comfortable with management's capability. We're comfortable with the product that we can create that is somewhat different from the outlet concept, and it is no longer just a leather outerwear chain. The breadth of products that is now bought at Wilsons balances the business even better than it was at its peak. So we're comfortable that this can be a strong business for us. It is a strong business for us. Going to be a stronger business.

Sounds good. And one more question. I guess back to Vilebrequin. What do you think -- embedded in your numbers, what's the expectations for operating profit generated by Vilebrequin this year?

John, we had -- we mentioned on the last call that we were now looking for significant accretion. So really close to a breakeven type operation for this year.

[Operator Instructions] The next question comes from Joan Payson from Barclays.

I guess, starting off, could you talk a little more about you fall holiday bookings by category and what's changed there since April?

Yes. We -- our total order book at this point is about 75% of the year. That's up slightly from where we were at last year. So it gives us a lot of comfort, that a lot of work is behind us. But certainly, with 25% to go, there's still plenty ahead of us. And one of the things that certainly has changed in our business over time is that we -- as we move into the different categories, we have a pretty strong start to the spring business in the December, January timeframe. So that part of the year, we don't see a very strong order book board just yet, and that is consistent with where we were last year as well.

Okay. Great. And could you also provide some more color on the growth of the sportswear business? Just how that performed compared to your expectations this quarter and what the weather sensitivity is there as well?

It grew beyond our expectations. We had a design change, and that design change meant a lot to the sportswear business. The product sold through well. The margins were better both for us and for the retailer, and the retailer's margin is always important to us. The growth of the business going forward, that could be one of our largest growth opportunities. And we've -- we're now on track, both on a management side, design side and the collaboration of the retailer, coupled with the rollout of shops should guarantee some very strong sales and some dominance in that segment of our business.

Okay. Great. And in terms of the Andrew Marc brand specifically, could you talk about some of the steps you're taking this year just to expand that business?

The first step we did is we had a leadership change. So we've got somebody that is quite confident that has had a little bit of a history with G-III, Stephen Budd worked at G-III years ago. He had a leadership spot at BCBG and then at Elie Tahari. And we convinced him to come here and spearhead this initiative. Stephen's been here for 6 weeks or so, and we can see an immediate impact. The stores have revisited the collection, designers have done what they could to correct a little bit of the go-forward product. Holidays changed somewhat, and we believe that the year will be okay, that's not one of our stellar performance brands this year. But I would say going forward, it's going to be a very important brand in many different classifications. We do well with the brand. It hasn't grown to the level that I had anticipated. We're very proud to have it in our portfolio. It does generate significant or fair profits for our business, and the future in that is actually better than the current outlook for the business -- the short-term outlook for the business.

The next question comes from Mike Richardson from Sidoti. Michael Richardson - Sidoti & Company, LLC: I'm just wondering, have you guys opened any new Vilebrequin stores yet? And if you could remind us how many you're planning on opening this year?

We've opened about 8 new stores, several in the United States. We opened Tysons Corner last week. We opened Greenwich. We opened Short Hills. We opened -- we moved into Rome Airport. We just opened something in Milan. We opened something in Verona. We have several pop-ups, 1 in East Hampton. So it is growing. Some of the leases were done before we acquired the company. Greenwich was done before we acquired it. Short Hills was as well. The rest are under our watch, and they're all doing okay. So a little early to tell. The weather hasn't really worked for us here. And in spite of it, we're showing some nice comp increases. Our expectations are a little bit better than the comp increases that we're getting right now. Michael Richardson - Sidoti & Company, LLC: Okay. Great. And the women's swimwear, that's going to be rolled out, I guess, you said in July, how many doors is that going into?

It's going to go into about 25 doors, and I believe all those doors for the moment are retail doors, our own retail. Michael Richardson - Sidoti & Company, LLC: Okay. And just last one. In terms of outerwear inventory, are you planning that up year-over-year?

Our inventory? No. Our inventory levels have come down year-over-year. Michael Richardson - Sidoti & Company, LLC: For outerwear?

For outerwear, yes.

[Operator Instructions] And we have no further questions. I'll now turn the call over to Morris Goldfarb. Sir?

Thank you, all, for spending time with us this afternoon, and we hope to deliver continued results for you. Thank you. Have a good night.