Caleres Inc (CAL) 2006 Q1 法說會逐字稿

Welcome to the Brown Shoe Company first-quarter 2006 financial results conference call.

This call is being made accessible to the public via webcast in accordance with the SEC regulation [SE].

Before we began, I'd like to remind you of the Company's Safe Harbor language.

During this conference call, the Company will make certain forward-looking statements to help you better understand its financial results and competitive outlook. (indiscernible) of the company's future plans and of the statements in this call that are not current or historical facts are forward-looking statements.

These involve known and unknown risks and uncertainties that could cause the actual results to materially differ from historical results or from any future results expressed or implied by any forward-looking statements.

Factors that could cause actual results to differ materially include those listed in our press release issued this morning and available on our 8-K filed prior to this call and other risk factors listed from time to time in the Company's SEC reports.

Copies of the Company's reports are available online and from the Company's investor relations department.

The Company does not undertake any obligation or plan to update these forward-looking statements, even though its situation may change.

And now I would like to turn the call over to Ron Fromm, Chairman and CEO of the Brown Shoe Company.

Joining Mr. Fromm are Brown Shoe's President and COO, Diane Sullivan; it's Chief Financial Officer Andy Rosen and Joe Wood, President of Brown Shoe's Famous Footwear division.

Please go ahead, Mr. Fromm.

Good morning.

Thank you for joining us to discuss our first-quarter 2006 results.

We are certainly pleased to report solid results for the first quarter, slightly exceeding our expectations.

First quarter sales rose by 10% to $575.5 million, above our guidance of 560 to $570 million as sales gained momentum throughout the quarter.

Diluted earnings per share were $0.35, again, ahead of our guidance.

Let me remind you, all per-share numbers that will give you today are adjusted for the 3 for 2 stock split.

This compares to $0.13 in the year-ago period on a GAAP basis, or $0.49 excluding the charges.

We attribute our better than expected results to a number of factors.

First is our continued focus on reducing inventory.

At quarter end, our inventories were 4.5% lower than last year, even as we increased sales by 10%.

Each of our businesses has benefited and will continue to benefit from this strategy which gives us additional flexibility to respond to trends and give the consumers new, fresh product on a continuous basis.

We expect this new business model to lead to higher sales and margins going forward.

Next, we continued our momentum at Famous Footwear reporting a comparable store sales increase of 1.9% on the strength of our compelling brand offering and our ability to rebalance our assortments, favoring the strong selling trends, like junior and sport fusion.

Joe will be filling you in more later on.

This led to an on-plan performance for Famous Footwear this quarter.

Third is the improved performance at our Specialty Retail Group which reported lower operating losses versus the first quarter last year as our program to improve the Naturalizer stores begins to meet its goals.

Finally, our efforts to improve speed to market, coupled with our increased investment in product design are improving our ability to consistently deliver differentiated and trend-right assortments, leading to higher sell-through rates for our wholesale brands.

In other words, we're doing a better job of meeting the consumers' immediate needs with that trend-right product.

Importantly, all of this positions us quite well as we begin our second quarter.

In fact, we're on track to report a first-half that is well ahead of last year.

Given current trends and the confidence we have in the year, we also have raised the lower end of our annual guidance range, as Andy will share.

We now fully expect full-year earnings between $2.25 and $2.30 per share, which includes about $0.15 in expense stock options.

Now I will turn the call over to Diane Sullivan who will review our first-quarter performance in more detail and give us some highlights of our key initiatives.

Thanks, Ron, and good morning everyone.

As Ron said, a solid quarter.

We were pleased with our continuing progress.

First, let me run down some of the key operating segment numbers for you.

At wholesale, first-quarter sales rose 19.6% to 216.8 million, which includes 48 million from the Bennett division.

This compares to 181.3 million last year when Bennett contributed 6 million over the nine days that we owned them.

Total wholesale operating earnings were 14.1 million as compared to 17.5 million last year.

As expected, the change in our Naturalizer operating model and the sales shift in our kid's business affected the quarter's results.

Looking to Q2, we will be anniversarying the Naturalizer business model when our new kid's licenses reach retail, so we fully anticipate that our wholesale performance will strengthen.

To give you a few of the highlights regarding some of our brand initiatives within our portfolio, during the quarter, we exceeded expectations at Naturalizer as the team beat its sales and earnings plan.

As you know, we have been working to build a new business model at Naturalizer that calls for a more continuous flow of delivery and tighter control of inventory.

This model has generated improved sell-through rates and lower markdowns and allowances.

And for the consumer, she has been seeing fresher product and we have benefited from an increase in regular price sales.

In addition, Naturalizer's new brand marketing, together with our emphasis on fresh, relevant product design launched at retail this spring.

We believe these initiatives will continue to lead to higher sales and profitability for the brand going forward, and in fact, was actually the number one women's fashion brand in department stores for March and April according to [NPD], and what's more, our inventory at quarter end was down 39% at Naturalizer, which provides us with tremendous flexibility to deliver strong selling new styles during the second quarter of this year.

Turning to LifeStride for a minute, it also had a solid quarter.

Across the country, it has performed, selling through well and we confirmed that the brand will be carried in most Federated doors.

Also, we expect to benefit from higher average unit retail as we upgrade our product offering for Federated, a strategy that has been proven successful with a number of other retailers.

Let me turn for a minute to the better brands in our portfolio.

We have several opportunities for Franco Sarto, Carlos and Via Spiga as we move into the fall season, but first I wanted to bring you up-to-date regarding the planned retirement of Bruce Ginsberg, who as you know, is our President of Bennett Footwear.

Bruce has decided to retire on June 30 of this year.

Frankly, this was not unexpected and a search is currently underway for a new division president.

To ensure that there is a smooth transition and a system leadership continuity, Bruce will continue to serve as a consultant for the remainder of the fiscal year and I will take even a more active role.

And as you know, we bought Bennett for its wonderful brand in the better and [bridge], and over the past year, we have been delighted to find a strong, talented and dedicated team there.

We have full confidence in their abilities and continue to believe the acquisition gives us significant strategic opportunities for expansion.

Now turning to the brands for a minute, fall is absolutely the key selling season for Franco Sarto and we will be increasing our assortment of core tailored footwear versus seasonal product, a move that should give us additional volume opportunity.

Also, the trend towards tailored and casual and the strong category of boots that Franco Sarto has historically been very good in should give us some wind at our backs as we move through the year.

For Via Spiga, we are continuing to push the model to reflect our company's philosophy there, and that is to deliver a continuous flow of new products so the consumer sees fresh styles.

And in the case of Via Spiga, we're talking about really fashion-forward fresh styles on a monthly basis.

Looking at the brand's performance so far this spring, I think it's no doubt that the division delivered too much opened up footwear too early and we have paid a little bit of that with markdowns, a situation that this new model is going to address.

And again, it's all about lower inventory, faster sell-through to the consumer and better margins.

And at Carlos, speaking of that, we've been improving the price value of our products and we are flowing inventory a little better and maintaining higher margins as a result.

This is expected to continue this fall.

At Bass, our women's business posted sales gains.

Once more, the team again was recognized by Target with a vendor of the year award.

This makes four of the last six years we have received this award, and that is great kudos for the team.

And in children's as anticipated, sales were down due to the timing of licenses this year.

The Cars movie products under our license with Disney and Pixar has been at retail for two weeks now and reports, although very early, are looking at little promising and product from our new license agreement with Nickelodeon delivers in Q3.

While these actions should improve this business during the latter half of the year, our expectations continue to be conservative, and this is reflected in our guidance.

Now turning to our 312-store specialty retail division, which includes Naturalizer, Via Spiga and now our Franco Sarto store, as well as our shoes.com e-commerce business.

Sales for this segment totaled 56.4 million in the quarter, up 5.9% from 53.3 million in the first quarter last year.

Combined comp store sales were 0.6% as compared to flat for the first quarter of last year.

You should note that we do not include shoes.com in this comp number.

And as Ron mentioned, we've reduced our operating loss for the specialty retail segment to 2.9 million this quarter versus a loss of 3.5 million in the year-ago quarter as we executed well against our Naturalizer retail store strategy.

As you know we, closed 95 underperforming stores last July.

While it's still early, we're beginning to see the benefits of this move, especially in our Naturalizer concept stores where performance is meeting our new expectations.

Inventories are down, turns are up, the consumer's reacting well to our assortment, most categories are healthy.

And as you know, we launched Natural Sport, and this product has been a top seller in the chain for this spring so far.

And at Famous Footwear, we met our goals, and as Joe will indicate in a minute, we're in great inventory position and ready to capitalize on the upcoming back to school season.

So I guess we would say we have begun the year solidly, reporting results that were slightly ahead of our expectations and believe we can continue this momentum by making sure we continue to focus on the core strategies that Ron spoke of, that we continue to focus with a relentlessness on superior execution in this time of retail consolidation and that our commitment to building partnerships, a core value at Brown, partnerships that are win-win were we and our retail partners and vendors that supply Famous Footwear all succeed in building our brands with the consumer.

So now I would like to turn the call over to Joe, who will discuss Famous Footwear's performance.

Thanks, Diane, and good morning everyone.

Famous Footwear results were on target with our expectations for the first quarter.

We reported sales of 302.3 million, a 4.7% increase from 288.7 million in the first quarter last year.

As mentioned, comp store sales increased by 1.9% compared to 1.5% comp store increase last year.

We believe the consumer continues to give us good marks as we recorded our sixth straight quarter of comp store sales increases, confirming the effectiveness of our ongoing strategic initiatives that reposition Famous Footwear toward marking brand-name trend-right product at a value versus footwear at a price.

Our operating earnings for the first quarter were on plan at 15.9 million, or 5.3% of sales compared to 16.5 million, or 5.7% of sales in the same period last year.

As a result of our stringent inventory management guidelines and consistent with our early planning, operating income declined for the first quarter.

We took the opportunity during the first quarter this year to further reduce our carryover product to make room for current additional seasonal assortments, and this did prove very successful as we ended the quarter with inventories $5 million lower than a year ago, [so are] operating 25 additional stores.

Our inventory is in great shape and we believe Famous is positioned well for positive margin opportunities in the coming quarters.

We were pleased with other key metrics in the quarter.

Even though store traffic showed a slight decrease, our pairs per transaction, average unit retails and customer conversion ratio all had increases over the prior year's first quarter on a store-for-store comparison.

We opened a total of 10 new Famous stores and closed 11, ending the quarter with 952 total locations, up from 927 stores at the end of the first quarter last year.

And we remain on target to open a total of 90 new locations for the current fiscal year while closing approximately 40.

(indiscernible) summarize the statistical end of the business, let's quickly review our performance during the quarter by major categories.

Our women's business led our results with strong double-digit increases over last year.

All categories contributed to this increase, led by junior and missy casuals.

We continue to expect capitalize on these trends in the coming quarters.

The men's business experienced a strong growth again this quarter, and as with women's across all categories, with sandal classification being the biggest contributor.

Our focus on our children's business continues to pay dividends where we experienced double-digit increases over last year, led by sandals and casual footwear.

We believe the strength in this product [category] continues to tell us that mom continues to be successful for fulfilling her children's shoe needs at Famous Footwear.

In athletics, Famous comped slightly down for the quarter.

As you know, athletics is currently experiencing a soft sales trend across all retail channels.

We expect athletic sales to remain challenging through some of the second quarter.

But on a more positive note, we feel good about the newness in our athletics, especially as we start to enter back to school season in a couple months.

We've been changing our inventories to more closely reflect the consumer preference for street inspired and low profile athletic footwear.

And as new and more product is delivered, we see better results and expect the back of half of Q2 and our back to school season reflect this continuing change, and in addition, a more focused inventory position around technical product, firmly being driven by Nike and Asics will keep us relevant to the customers looking for this type of product.

Nike introduces for the first time allocated product to the mid-tier.

React, which hits our sales floor end of July, is expected to be a big deal for us and hopefully will be the start of creating a type of traffic and sales created in the special channel by this type of product launch.

Finally, we are positive about our business.

Even though athletics has been a little soft, we do have the ability to quickly change our assortments to address the consumer needs and capitalize on new footwear trends, such as low-profile, skate and fusion styles.

Our stores are not limited to one category of business, so we continue to enjoy the flexibility afforded the Famous concept to address such.

We have and will continue to do so.

In total, we delivered a quarter that was in-line with our expectations and believe our inventory, our assortments and marketing strategies have us poised to report comp sales and operating income growth during the balance of the year.

So with that, I would like to turn the call over to Andy to review the financials.

Thank you Joe, good morning everyone.

As you have heard this morning, we're pleased to begin our year solidly.

Beginning with a review of the income statement for the first quarter, consolidated net sales totaled $575.5 million, increasing 52.2 million, or 10%, from $523.3 million during the first quarter of last year.

Gross profit margin was 38.7% versus 40.2% last year.

This decrease primarily reflects our commitment to maintaining current and lean inventory levels, resulting in the clearance of inventory at Famous Footwear.

In addition this year, our mix of business is more heavily weighted to wholesale, which carries a lower gross profit rate than retail.

And within wholesale, we had a higher mix of first [comps] business.

SG&A totaled 204.4 million, or 35.5% of net sales versus 187.5 million, or 35.8% of net sales last year.

We did a solid job of managing our expenses, achieving a 30 basis point improvement in SG&A as a percent of sales.

This reflects the elimination of costs associated with closed Naturalizer retail stores, but was partially offset by higher costs related to stock option expense.

This brought consolidated operating income to 18.6 million, or 3.2% of net sales, versus 23.1 million, or 4.4% of net sales, last year.

Net interest expense totaled 4.2 million in the first quarter compared to 3 million last year.

The increase in interest expense was due to the senior notes we issued in conjunction with the Bennett acquisition.

For the year, we continue to expect interest expense to approximate $19 million.

Net earnings for the quarter were $10 million, or $0.35 per diluted share, inclusive of $0.03 per diluted share in stock option expense.

This compares to net earnings of 3.8 million, or $0.13 of per diluted share in the year-ago quarter.

Again, let me remind you, all per-share numbers have been adjusted for our 3 for 2 stock split effective April 3.

First quarter 2005 net earnings reflected charges of 10.2 million, or $0.36 per diluted share, for taxes related to the repatriation of foreign earnings and for a bridge loan fee, all of which were outlined in schedule 4 of our press release.

So on an apples-to-apples basis adjusted for noncomparable expenses and charges, we recorded $0.38 per diluted share this year versus $0.49 per diluted share in the first quarter of last year.

Turning to the balance sheet, total inventory levels at the end of the first quarter were $404.6 million, decreasing 4.5% from 423.7 million in the prior-year quarter.

Our inventory management strategies are contributing to our earnings efficiency.

We are running our business on less inventory, improving working capital, gaining increased flexibility, while always maintaining a consumer-centric approach.

We were also successful in continuing to bring down total debt.

To this end, total debt decreased by 79.5 million to 200 million compared to 279.5 million in the first quarter last year.

As a result, at quarter end, debt to total capitalization was 30.6%, improving from 41.5% at quarter end last year.

Capital expenditures totaled 8.3 million and for fiscal 2006, we are planning capital expenditures of approximately $50 million.

As to forward guidance, for the second quarter, we continue to expect net sales in the range of 580 to 590 million as compared to 551.5 million in the second quarter last year, representing an increase of approximately 6% at the midpoint of our range.

We expect this gain to be primarily driven by Famous Footwear, e-commerce and to a lesser extent, by our Naturalizer business.

Second quarter net earnings per diluted share continue to be estimated in the range of $0.37 to $0.43, reflecting our 3 for 2 stock split and inclusive of $0.04 per share related to stock option expense.

This compares favorably to actual second quarter fiscal 2005 net earnings per diluted share of $0.14 adjusted for split.

As you are aware, the second quarter last year includes restructuring charges for Naturalizer retail store closings of $0.06 per diluted share.

A detailed summary is included as schedule 5 in the press release released this morning.

For fiscal 2006, we are raising the lower end of our guidance by $0.02 per diluted share and now expect diluted EPS to be the range of $2.25 to $2.30 on a post-split basis, which includes $0.15 of stock option expense.

This guidance is predicated on a store-for-store sales increase of 2 to 3% for Famous Footwear for the full year (indiscernible) around the expectation of normalized order flow to the consolidated department store channel in the second half.

On an adjusted basis, again, as displayed on schedule 5, diluted earnings per share post-split are estimated to be $2.40 to $2.45 for fiscal 2006 as compared to adjusted diluted earnings per share post-split of $2.22 in 2005.

Fiscal 2006 net sales are currently estimated at 2.48 billion versus fiscal 2005 net sales of 2.3 billion.

And now we will turn the call back to the operator to take questions.

(Operator Instructions).

John Shanley, Susquehanna Financial.

Thank you and morning, folks.

Joe, can you give us an approximate breakdown of the merchandise sales by major product category in the quarter?

And also, can you tell us if you include lifestyle products, like Skechers and Puma in athletic, or is that a part of your casual product area either for men's or women's nonathletic?

Thanks.

John, it hasn't changed that much.

Athletic was off -- I said it was off -- we've comped down slightly, so now our business has always been slightly less athletic, slightly less than 50%.

It remains there.

It wasn't down that far and it was really driven by some business that went from athletic canvas into some other categories.

So it remained at about 50% athletic, a little bit less.

Our women's business again is very strong.

So if you take (indiscernible) -- our kid's business is about 12%, our men's and women's business is kind of split there [as a] balance.

What's important is that, even though athletic may have been down slightly, we did not take, for instance, our longest -- our biggest nonathletic company -- Skechers -- which drives that low-profile street athletic inspired business.

That is not in athletic.

It's in the junior area.

Okay, that is really what I was getting to.

So some of that business obviously moved into those other categories.

Yea, John, so whatever we fell a little bit short in athletic, you don't like to see that.

But the good news is, that consumer just went over and picked it up in a junior category.

Do you see Nike offering more products like React down the road?

Is this something where they're paying more attention to the family sector than they may have in the past?

Yes, definitely I think so, John.

Nike is like every other company; they are looking for growth.

This is the first introduction.

There are fall introductions also.

We have not seen spring, so we expect to see other categories to be introduced in October as we get into basketball season.

So I think this is the first entry into our business from Nike in [launch] products, so I think this is just the beginning.

Diane, I had a question on the wholesale business.

Excluding Bennett, if I'm correct in the statistics, you gave us 48 million in sales for Bennett.

That would mean that the balance of the wholesale business had about a 7 or $8 million sales decline quarter over quarter.

Can you give us an idea of where that sales shortfall may have been?

Was it across the board, or was there certain product categories that were impacted a little bit more in the first quarter this year versus last year?

It was really in the Naturalizer primarily and in the kid's business a little bit.

As we've refine that Naturalizer model so that we're not shipping in as many goods and we're looking for increased turn and higher margin rates, we deliberately, as we had said at the end of last year that we were going to be revising that model.

And also, we have fewer stores as well that we're shipping to.

So it was primarily on the Naturalizer side and a little bit on kid's.

And as we turn to the second quarter, we see that improving.

And margin rates and turn have been outstanding.

And our inventories are very low too, John, out there, so we really think second quarter, we'll be able to take advantage of consumer demand in the right way.

That's great to hear.

Do you anticipate naming a new president for the Bennett Group to replace Bruce, or will the management of that information be folded into the rest of the wholesale business?

We absolutely believe that we need to put in a president of Bennett Footwear.

That has been a critical part of our business.

We're in the process right now of looking at a number of candidates and expect that I would think in 30 to 60 days that we would have that addressed.

Lastly, can you give us an update on Bass, what is happening with that brand, where do you see it going as get into the back half of the year?

As you know, it hasn't met our expectations over the last couple of years.

We are -- the license is up at the end of this year.

First quarter it about hit expectations, so that was good news.

But we continue to evaluate what we think the right prospects are for us and for that brand.

Fair enough.

Thank you very much.

Sam Poser, Mosaic Research.

Good morning.

Can you talk -- can you give me little more color on how you view the Federated stores rolling out?

You've mentioned that in the

Sure, hi Sam.

We actually are right pretty much on target with our expectations for all of our brands at Federated and May right now where we believe we're getting our fair share, very much in line with the way that we planned it.

It's an ongoing process as you know though and we really will an not know the complete outcome until certainly later in this year.

But as of right now, it looks like we're very much on target.

And again as I said, the thing that we really wanted to make sure that we did was manage our inventories smartly at both wholesale and retail, so it gave us a lot of flexibility and how we could respond and make sure we manage margins well.

So it looks like it's right about where we planned it.

Okay, thanks.

And then can you also, Diane, talk a little bit about how you see the trends, how the trends seem to be evolving on the women's side right now as far as what the woman is wearing and what that girl is wearing, how that might be helping or hurting you?

Yes.

Well I think in many ways, hoping us.

We see -- it has been a very strong run of dress and embellishments and that has continued a little bit in the first quarter of this year.

But we're seeing now a bit of the shift toward more tailored casual and casual kinds of products.

And you probably have talked to a number of people who have said in the first quarter of this year, there was a little bit of a shift there from sandals to that kind of a look.

And as we go into fall, a lot more cleaned-up look and it continues to expect a good, strong boot season, but more balance across more lifestyle categories in boots.

So we think it's working pretty well and if we look at the Famous Footwear business as Joe said, the low profile athletic-inspired, fusion-inspired product seems to be helping really drive business on the junior side of it as well.

And to that point, you don't have -- the one thing that you don't have in your collection of brands is a true, true junior brand right now.

Is that something that you're looking for or something that you might be thinking of doing something like let's say with the Carlos brand to spin off a junior (indiscernible) type of --?

I would tell you on Natural Sport, not that that's junior, but with Natural Sport, was really an attempt to really extend that brand into sort of more this athletic-inspired, sport-inspired kind of product, and that is retailing well.

But in general we continue to look at opportunities to get into new categories of business, but nothing right now planned on the horizon for that.

Okay, great.

Thanks very much.

Deena Friedman, Brean Murray.

Good morning, very nice quarter.

A question for you.

In terms of Franco Sarto retail test that you have going on, could you give us some initial color on what you're seeing with that and what your thoughts are?

Yes.

It is in Embarcadero Center in San Francisco; we actually converted a Naturalizer store.

We selected the store because it had -- actually looked at the demographics that are very strong career-oriented female population and work population around it.

So far, the reaction has been very good from consumers.

It's very early, it has been barely 60 days.

And so it's kind of hard to tell yet.

But in general, we love the way that it looks, love the way that the consumers are responding to it and performance was a little early for us to really judge long-term how it is going to do.

One other question.

In terms of backlogs in the wholesale division, can you give me a sense of how that is trending?

I think in general, our backlog right now, total wholesale is about flat with last year.

And we look at the way that everybody is buying closer to need and inventory and turn expectations are higher.

It's about where we expected it to be.

I would add, it's pretty much reflected in our guidance at this current level.

Great, thanks a lot, good look on the next quarter.

Heather Moxon, Sidoti & Co.

Good morning, guys.

A lot of my questions have been answered, but I just wanted to touch a little bit on Naturalizer, the retail stores here.

It sounds like you guys are pretty happy now with the progress there post -- after all these closures.

What's the goals, what do you have to do there now to get that division profitable?

I would say, we are -- happy would be too strong of a word.

I think we are pleased with the progress that we have made so far.

Our first quarter results showed a nice improvement in terms of the operating earnings -- loss or reduction of the loss in the first quarter.

Our inventory on a store for store basis is down about 10%, our turns were up substantially.

We have new product categories in the store which we think are going to help long-term with our performance there.

But I think it really is all about continuing to drive to all of the things that we were talking about on the call today, making sure we manage those inventories, manage the flow.

And in addition to that, we really believe this about getting also extending the brands into other categories.

So it's adding Natural Sport, adding other types of product as we go into the back half of the year we think is going to help our business there.

So it's I guess a part of really a 12- to 18-month process of really getting that business back where we feel good about it.

But so far, so good.

And all-in, we look really at Naturalizer all-in, both wholesale and retail.

And we are pleased with the operating margin when we look at both wholesale and retail together somewhere north of 7% or so.

So we're making significant progress there but still have a lot of work to do.

And you didn't touch anything on this, but I know you were remodeling some of those Naturalizer retail stores.

Any update there on how those stores are performing, any plans to roll that out across the chain?

You know, I think that the stores, I would have to go back and double-check though, I don't want to quote anything there.

I would tell you that we're not going to be converting a lot of the stores to that new format wherever it's appropriate, and we need to remodel, we're doing it.

I don't think we've seen anything that compelling yet that says that that's the right way to invest the capital.

So I think we're trying to be very smart about that.

Alright, thanks guys.

(Operator Instructions).

Susan Sansbury, Miller Tabak.

All of my questions have been answered, but I just wanted to say that I'm very pleased with the progress that you have made and I hope you continue to work hard so we can be pleasantly surprised on a go-forward basis.

Thanks very much.

Thanks, Susan.

At this time, there are no further questions.

I would like to turn the call back to Mr. Ronald Fromm.

Thank you, everybody, for joining us today.

You know I would just like to reiterate our optimism based on the momentum we have generated from the four key areas that continue to coincide with the enterprise-wide strategies that we have talked about often.

First, differentiating our product offerings, continue to focus design and offer trend-right footwear for each of the brands in each of the segments that are specific to their consumers both at the wholesale level and at the retail level at Famous Footwear.

Secondly, the emphasis on improving the flow of merchandise, we continue to need to see the successful efforts there pay off, offering smaller deliveries, more frequently, thereby creating a sense of urgency to shop as there is less merchandise on the selling floor.

Third, we continue to be proud of our inventory management practices and we continue to focus on improving our performance there as well, leading to higher margins and lower cost as we manage our business with less inventory.

And fourth, continue to expand our portfolio.

Certainly, we remain pleased with our Bennett acquisition and we continue to work to ensure that our portfolio of brands is relevant for today's consumer.

We look forward to speaking to you next quarter.

Thanks a lot.

Thank you.

This does conclude today's call.

We'd like to thank you for your participation and have a wonderful day.