Designer Brands Inc (DBI) 2006 Q3 法說會逐字稿

Good afternoon.

Welcome to the Retail Ventures third quarter results, conference call. [OPERATOR INSTRUCTIONS].

At this time, I would like to turn the call to Jim McGrady, so that you may begin the call.

Go ahead, Jim.

Thank you.

Good evening, everybody and welcome to RVI's discussion of third quarter 2006 operating results.

Joining me today is Heywood Wilansky, our President and CEO.

As always, before proceeding, I would like to restate the Company's policy with respect to forward-looking information pursuant to the Private Securities Litigation Act, Reform Act of 1995.

Statements made in the course of this call that are not purely historical, such as statements regarding the Company's or Management's intentions, expectations or projections of the future are forward-looking statements.

Actual results could materially differ and from those forward-looking statements.

We encourage everybody to look at our SEC filings to update themselves with our policy towards forward-looking statements.

And the Company does not take any obligation to update any forward-looking statements made during the course of today's discussion.

As you see in the press release, that came out a little bit earlier this afternoon, today we announced the third quarter net loss of $34.1 million or $0.72 a share on a diluted basis compared with net income in last year's quarter of of $56.4 million or $0.92 per share.

For the nine months of 2006, we're reporting a net loss of of $115 million compared to the prior year net loss of of $112.3 million.

The loss per share for each of those respective periods is $2.59 and $2.94.

As we have stated in the past, the third quarter and year-to-date periods includes non-cash accounting charges.

They total $2.6 million and and $82.7 million related to the modification of warrants that occurred in earlier in 2005 compared to the 2005 quarter and year-to-date reduction of expenses, of $67 million and a non-cash accounting charge of $70.6 million.

Also as you know, we issued PIES, some debt during the third quarter this year and we recorded during the third quarter $28 million related to the change of value of the conversion feature of those debt instruments.

Again, remember that no tax benefit has been recognized in connection with any of these charges.

Kind of adjusting for these non-cash charges as we take a look at it on a non-GAAP basis the third quarter loss would have been $3.5 million and the loss per share would have been $0.07 and the year-to-date we would have had a $4.3 million loss and a loss per share of $0.09.

I won't go through last year's.

That's available to you in the release.

Total sales for the third quarter increased increased $41.5 million or 5.6% to to $787.6 million from the prior year's $746.1.

Value City sales decreased $500,000 to to $341.2 million.

During the quarter Value City operated one less store than in the prior year.

This store had sales of approximately $600,000 during the quarter.

The sales for comparable stores increased 1.4% and this is comprised basically of improvements in ladies and men's categories and we did see declines in the children's hard lines, intimate apparel and jewelry categories.

DSW sales were were $332.2 million which is a 9.9% increase and includes a net increase of 18 DSW stores and 14 non-affiliated shoe departments.

Comparable store sales for the quarter were 2.6%.

We saw improvement in the women's and athletic categories and some declines in the women's and accessory categories.

We did see most improvement in the women's category was in the casual line.

The decrease in accessories was due partly to the transition of some consignment for shoe care products that we had.

At Filene's Basement, we saw the sales increase $12 million or approximately 11.8% in the quarter to to $114.2 million and we had a comp store increase of 4.5%.

During the third quarter, Filene's Basement operated four new stores with net sales of $8.5 million.

Filene's Basement also closed one store during fiscal '06 that was operated in the previous year.

This store had sales of approximately $900,000 in the quarter of, in the third quarter of fiscal '05.

In the merchandise categories of men's, ladies and accessories, we had comp store increases and we saw, we did see again some decreases in the children's and jewelry lines there.

As we take a look towards the margin, the gross profit in the third quarter increased increased 31.8 million to $315.5 million.

In the third quarter, gross profit as a percentage of sales increased 210 basis points to 40.1% from 38% in the previous year's quarter.

The increase in over gross margin rate is attributable to a positive margin in all three segments.

Value City's overall gross profit increased from 35.4% in 2005's third quarter to 37% in the third quarter of '06.

This is really attributable to an increase in markup on goods available for sale and a decrease in our markdown rate.

The gross profit at DSW increased $18.9 million to to $145.3 million and increased as a percent of sales from 41.8% last year to 43.7% this year.

Filene's Basement gross profit increased by $7.4 million from 2005 and as a percentage of sales from 35.6% to 38.4% in the current year's quarter.

Again, this increase is also attributable to an increase in the IMU and a lower markdown as a percent of sales.

For the third quarter, our total SG&A expenses increased by by $11.5 million to $301.9 million and as a percentage of sales decreased from 38.9% to 38.3%.

Value City's SG&A expense decreased $6.8 million or about 2% as a percent of sales compared to the prior year.

The decrease in SG&A at Value City was a result of leverage and the fixed costs on sales and salaries in the current period.

DSW's SG&A increased increased $11.9 million or about 0.3% of sales in the three months of this year compared to the three months of the prior year.

DSW's SG&A, excluding pre-opening costs for DSW stores and Lee's shoe departments opened subsequent to October 29th of last year was $5.4 million for the three months in October 28, '06.

Pre-opening costs which are expenses incurred decreased approximately $600,000 to $3 million during the three months ended October 28th of '06 compared to the three months of '05.

These decreases were offset by increases in advertising and home office and corporate expenses of about $1.1 and $3.7 million over the prior year.

Filene's Basement SG&A expenses increased $6.6 million and $1.9 million as a percent of sales for the three months of October, ending October 28th of '06.

These SG&A expenses increased as a percent of sales that are a result of the pre-opening expenses for the new stores opened during the period offset by improvement in personnel and occupancy expenses as a percent of sales.

Pre-opening expenses increased in the Basement by approximately $2.5 million during the third quarter of '06 compared with the third quarter of '05.

As we take a look at our SG&a expenses as a percent of sales, we see that Value City is 40.7% this year, DSW is 36.3%, Filene's Basement is 38.9% and as I mentioned before, overall 38.3% compared and for the year at 38.5%.

As we take a look at our interest expense for the quarter , it increased $6.7 million to $10 million.

This is primarily due to the make whole provision that was associated when we paid off the $49.5 million of the non-convertible loans and that totaled about $3.9 million.

We did see a decrease in our weighted average borrowing rate of about 0.3% while we did have an increase in the average borrowings during the quarter.

Interest income increased $1.9 million over the same period last year.

Our effective tax rate for the three months is, excuse me, reflects the tax expense of $3.4 million, which is a negative 13.8% effective tax rate compared to the negative 3.1% last year.

This reflects the negative impact of the change in the value of the warrants and the PIES accounting that I again reiterate that before we have no tax benefit recognized for.

As we turn to our balance sheet, our inventory totaled $644 million this year versus versus $617.9 million last year.

Net working capital was was $363.6 million compared to $185 million in the prior year and our current ratios were 1.5 and 1.3 respectively.

Net cash paid for property and equipment was approximately $33.3 million in the year-to-date period compared to about about $33.4 million in the prior year, and this excludes the impact of capital expenditures at accounts payable again in an accounting requirement.

During fiscal '06, capital expenditures included about $18.7 million for new stores, $11.8 million for improvements in existing stores, and the balance of it is for improvements in office and warehousing and information technology.

EBITDA in the third quarter was a negative $5.2 million compared to a positive $72.2 in the last year's quarter.

Again if we were to adjust for these derivative charges that we have, the EBITDA for the quarter would have been a positive $25.4 million and a positive $5.2 million in the prior year.

EBITDA for the 39 weeks, excuse me, for the 39 weeks, EBITDA would have been a positive $71.5 million and would have been $23.5 million for the 39 weeks ended last year.

Excuse me for that correction.

Availability under our secured revolving credit facility was $253.9 million and outstanding letters of credit totaled approximately $17.3 million and $15.8 million for RVI and DSW respectively.

Consolidated availability is $246 million which is comprised of $108.2 million under the revolver, RVI revolver and $138.2 million under the DSW revolver.

Again, as I think everybody is aware, that we did do a transaction earlier on that the green shoe was exercised and we sold approximately $143.8 million of what's known as PIES which are 6.625% mandatory exchangeable notes due in September 2011.

We used the net proceeds of the offering to repay approximately $49.7 million of an intercompany note that was due to Value City and Value City used the proceeds to pre-pay about $49.5 million of the outstanding principal of the non-convertible loan together with fees and expenses.

The balance of the net proceeds was applied for general corporate purposes, which included approximately $36.5 million pre-paid under the Value City revolving line.

And that really concludes the review of the balance sheet.

As we take a look to the balance of the year, we anticipate that four Filene's Basement and Value City that our comp store sales will be slightly negative.

Again, that's for the year, and our operating profit will be somewhere of a negative 1%.

It's difficult to go any further than that at this point in time because, as you know, it's very difficult to make the estimation of the change in the value of the warrants which also have influences our tax rates as we take a look at this.

At this time, I would like to take the opportunity to turn the call over to Heywood Wilansky.

Thanks, Jim.

We're going to kind of just take some of Jim's information and break it down a little further.

DSW, we're not going to comment on.

They had their call last Wednesday where they went through their numbers and their businesses.

We're going to talk about Value City and Filene's Basement and first we'll talk about Value City.

As we have done in the last couple of calls, we kind of talked about how the stores and regions are working and so we'll start with that.

So, of the 113 stores that Value City operates, we had positive comps for the third quarter in 73 of them, we had comps of between 0 and negative 1% in five stores, we had comps of between negative 1 and negative 2 in eight stores and we have comps of worse than negative 2 in 27 stores.

That led to about a 1.4% comp for the quarter.

We also track regions and we tracked 24 different regions and we had 20 of the 24 regions having a positive comp.

We had two of the regions having a comp of between 0 and negative 1 and two regions had comp sales of worse than negative 2 %.

So, as you can see, the preponderance of regions and stores have comped positive for the third quarter and for the year-to-date as well.

In terms of some merchandise breakdowns for Value City, all of softlines, the third quarter had positive comps of 2.9% while home furnishings hard lines had negative 3.6% comps.

Men's in total had positive comps of 6.6%.

Ladies accessories and hosieries had comps of almost 13%.

Ladies in total had comps of approaching 5%.

Intimate apparel had negative comps of about 2.7%.

Cosmetics and fragrance is a business that we really exploited this year had positive comps of 40%.

Children's which is a problem business now for quite some time had negative comps of 7%.

Domestics were positive plus 6.1%.

Housewares were negative 9.6%.

Seasonal was negative 48%.

Toys and electronics were negative 7.5%.

Jewelry was negative 9.4% and footwear was positive 4.2%.

Again, rolling up to a positive 1.4% comp for the third quarter.

As you can see, we've had problems in home furnishings, intimate apparel and children's for quite some time.

We're still working on it, but as of now, we still have not turned the corner in those businesses.

In Filene's Basement, when we look at their comps for the third quarter, which we said was around 4.5% comps for the quarter, that included our downtown Boston store, which as all of you know, is being impacted by the closing of Filene's and the potential redevelopment of that building.

Without downtown Boston, the comps for the quarter would have been positive 7% and as we go forward, we will highlight those comps both with and without downtown Boston.

Of the 26 comp stores that Filene's Basement operates, 14 of them had comps greater than 5% for the third quarter, three of them had comps of between 3 and 5%, two of them had comps between 0 and plus 3%, and three stores had between 0 and negative 3% and four stores which included downtown Boston, were worse than negative 3% comps.

From a region point of view, we break out Filene's Basement into nine regions and three of the nine regions had comps of greater than 5%, four of the regions had comps between 0 and plus 3, and two of the regions had comps of worse than negative 3%.

When we look at the individual business breakdowns at Filene's Basement, we've had some very good results in several areas.

Ladies hosiery was up over 20% for the quarter.

Fashion accessories were about 8%.

Children's, that has also been a problem of late for Filene's Basement was negative 1.2%, intimate apparel was almost positive 11% and ladies handbags were positive 13% for the quarter.

The home furnishings business is also difficult at Filene's Basement and they had negative 1% comps for the third quarter.

In the men's area, in total, we had positive comps of 5.7% with men's furnishings being 8.6% of that number and men's clothing, including suits, was negative 1.7% with suits being the only negative in that category.

Outerwear, sport coats and dress trousers were all positive comps.

In our retail stock business which is the business that we do primarily either direct from Europe or buyouts of major stores domestically in the United States, we had positive comps of 5.5%.

On the ladies side of the business, missy coats had over 20% increase over the quarter, missy suits were up over 5%, juniors were up over 3% comps, and the total of missy sportswear business was ahead 8.9% in sportswear and total ready to wear was plus 4.4%.

In our footwear business, we were plus 2.8% for the quarter, and we've had some issues in jewelry here as well and jewelry was negative 5% for the quarter.

All totaling up to about a 4.5% comp for the quarter.

The positive elements to look at are that in both businesses, the average unit retail continues to grow.

The average basket grows even though transactions are slightly down, the average units are carrying today, Value City had an average unit retail increase of about 7% for the quarter, 7 to 8%, Filene's Basement was between 4 and 5% for the quarter and those changes really are the direction the companies are going in, and of course, that increased price point has effected transactions but have still yielded positive comps.

So, with that, Jim, I would open this up for any questions that anybody might have.

Okay. [OPERATOR INSTRUCTIONS].

Thank you.

And our first question is from John Emerich.

Go ahead, John.

Your comment about the 3.9 million make whole, what period it was in and where it's located in the P & L?

Yes, it's actually located in the interest expense line.

For the quarter?

Yes.

And what was that associated with?

When we paid off the non-convertible debt that we had which was the old convertible debt, there was a make whole provision in there in order to be able to pay that and it had a form that put it into our present value.

Got you.

And so if I take that out and I use 6 million, and look at that relative to your average balances, that would correlate closer to the weighted average coupon, if you will, that you also referred to in the introduction?

That's correct, yes.

Thank you.

Our next question is from [Sam Kidson.] Go ahead, Sam.

Yes, hi guys.

Just a couple of quick housekeeping points here.

First of all, could you update us on the number of warrants that are currently outstanding?

Right now, there's approximately, there's obviously two different types that are outstanding.

If we take a look at term loan warrants, there's approximately 3 million of those that are outstanding and about 9.7 million of convertible warrants that are still outstanding but there's also a provision in there, a kicker that's worth about $1.5 million, so if we take a look at that 9-7, 12-7, plus 1.5, so you are probably looking somewhere around 13.7 in outstanding warrants.

Okay, and as just to clarify, as these, some of the warrants which are convertible in the DSW are exercised, you guys actually just hand over shares that you own; correct?

That's correct.

Okay and so what's the updated count on the number of DSW shares owned by RVI?

We own 27.7 million shares.

Our ownership has not changed since the IPO.

Okay.

Now, we do have the PIES that will be, that they are convertible into shares of DSW at the term of five years.

Okay.

And you mentioned earlier on the call that you changed the conversion future of the PIES?

No, all we did was account for the, we didn't change the conversion feature for it.

What we did was account for -- the financial accounting of it requires that we recognize some expense similar to what we did under the warrants.

Oh, okay.

I misheard then.

And then could you just give me the total pre-opening expenses at the Basement this quarter?

I think that it's about $2.2 million if I'm not mistaken.

Okay.

So there was basically none last -- no pre-opening expenses last year in this quarter?

Nope.

Okay.

And then just finally, could you guys comment on sales and traffic patterns this quarter to date?

Right now, we're not making any comment on the fourth quarter.

At this point in time, we've taken, we always just project out what we think the year is going to be on an annual basis.

Okay, thank you very much.

All right

Okay, our next question is from Mr. [Tommy Campbell.] Go ahead, Tommy.

Good afternoon, gentlemen.

A couple of questions if I might.

If your AUR is up 7 to 8% at Value City, the presumption then is that your traffic count is down; is that correct?

That's correct.

Could you give us a sense of how much the traffic count was down in the quarter?

I can talk to you about the nine months, where the transactions are down by 5.8% for the nine month period and for the nine month period the average retail is actually up over 13%.

The customer basket is up 6.9%.

The number of units in the basket decreased by 5.7% and that was part in parcel of the theory or the strategy of trying to upgrade the product mix, moving out of the lowest tier of retail into more of a mid to low-mid tier player.

Okay, I guess the second question, because it seems looking at the trend of the numbers, it seems reasonably positive and since you have gone and given us an excruciating detail the number of stores that are still sort of not doing well, at what point do we start closing stores, these non-performers?

How much more time are we going to give these non-performers I guess would be my question.

That's a difficult question to address.

I'd have to say that definitely we're going to take a real hard look once we get through the fourth quarter at how all of the stores have performed on an annual basis and make some assessments as to whether there's a change in the local demographics that maybe we didn't or if it was some self- inflicted pain from a store manager or frankly some mix allocation issues that we faced, but I think after the end of the fourth quarter we'll be taking a look at what we see, but again, I would say that all of our stores on a overall basis are frankly positive.

Okay.

Thank you.

Our next question is Mr. Ben Strom.

Go ahead, Ben.

Thank you.

Can you update us, Jim, on the NOL situation and outlooks going forward?

Yes.

Right now, the Company has about a $40 million federal NOL carry forward that was created in the past year, and obviously we'll have to wait and see what the results are of this year, but that's about it.

We have a pretty significant State NOL carry forward that we've put some reserves up against, but the NOL is out there.

Okay, 40 million.

Can you give any more color or details on the stores that were down this quarter, the 27 I guess at Value City that were below negative 2%?

Just seemed like an easy comparison with the Home category up against 3Q '05.

Just was there any commonalities or is it just a --

It's almost if you look at it, with 27 stores being worse than negative 2%, you would suspect that more regions would be down.

Yes.

But if you look at the regions, 20 out of the 24 regions were positive and only two regions were negative 2% or worse comp which tells you that in a region that has four or five stores there's a few stores that are down but a bunch that are up and maybe shifting buying.

Some of the stores might not be in the place where consumers are choosing to shop at this moment that the traffic and demographics may have changed but the total region is still positive.

It's nothing to do intentionally I'll tell you that much.

Sure.

How is the progress at private label coming along in Value City into what percent do you think you're ending '06 in?

I think that we'll do for the year around $60 million worth of sales in 2006 in private label, not counting home products, just the soft lines private label and that's up from basically 0 two years ago.

And our target was to be in excess of of 100 million on a go forward basis and long term we had hoped to do even much more than that and we're working on it.

It's a work in progress.

What categories are you seeing the most resistance to I guess in adding private label or with some of the significant price increases?

It's not so much resistance because frankly, if you look at the three primary categories which are men's, ladies and kids, that you would do private label direct, import in, where we've done programs in virtually all of them with I think I can only think of one exception of one category that performed poorly, the others have all done very very well.

The only one that has not done well is in men's outerwear, outer coats, not short coats but long coats but all of the ladies programs whether it be career or casual, all of the kid's which are primarily casual, and in the men's as well where we do career which includes men's suits and casual which is also men's sportswear, they've all performed very well.

It's just a question of gearing up from nothing and trying to get the confidence to buy it big enough to raise the number.

Sure.

Margins are sure looking improved.

I guess just lastly, for the fourth quarter, any plans you can -- any color you can give just on the promotional schedule, any Direct Marketing or anything on how it compares to last year for competitive reasons, I understand --

What can we say?

We can say that last year, we used television, radio, direct mail, and newspaper.

We have not eliminated any of those medias.

We're doing them all.

The Marketing calendar in terms of spend is pretty similar to that.

We've also added and continue to grow more significant e-mail opportunities as we've grown our e-mail base and as we've grown our V-club, the members of our V-club in there to a bigger number, I guess now it's north of a million and a half people at this point in time which two years ago was zero, and of those people, we probably only have maybe 7 or 8% e-mails out of that category, so we use that addition to the direct mail techniques.

We've adjusted where we thought we were spending too much in a particular area, we've shifted to another, but the total Marketing program is probably pretty similar.

In terms of total spend and total reach out to the consumer.

Fair enough.

Thanks a lot.

Okay, our next question is Mr. [Palmer Skehtall].

Hi, how are you doing?

I think he just left us.

Next question is Mr. David Mann.

Go ahead, David.

Yes, thank you, good afternoon.

Wondering if you could talk a little bit about Filene's Basement, in terms of the few new stores you've just opened, any comment on how they've opened and then also what does the pipeline look in terms of 2007 growth?

We opened four new stores in the quarter.

Of the four, two are doing so-so.

Not terrible but maybe not quite up to our expectations and two are vastly exceeding expectations.

On balance, you would say that the four combined are equal to or slightly better than our expectations for the four as a quartet.

The exciting store we opened in downtown Boston has done very well and we opened into a new market in Cleveland, a market we've never been in before and that has also met with very good early success.

In terms of the, and then we opened another new store in the fourth quarter which we will talk about at the next conference call where we can discuss the fourth quarter, but we did get all of the stores opened this year as we had talked about.

David, as far as new store openings for next year, I think really I'd like to defer that until we've had an opportunity to sit down with our Board and go through and get finalization into next year's plans.

I'd hate to be out in front of something that would not be accurate at this point in time.

But it is is accurate to say that we're aggressively looking at new store opportunities.

Yes, definitely.

And from your standpoint, Heywood, are there a good number of markets with real estate availability that it's just a matter of executing in terms of getting some open?

Yes.

We're very close in the number of stores and I guess we'll make that announcement at the next time around, but we're very close -- we've had lots of new markets and fill in markets presented to us and there's no shortage of opportunities at this point in time.

Okay, great.

And then in terms of Value City, can you delve a little deeper into what you think is going on in the hard lines business?

Given I think a lot of us thought that things might pick up in the third quarter?

Well, you can put me with you in we would expect that we would have done better in the third quarter with the hard lines than we have done, and we're still working on it.

There's lots of little internal things we could point to.

Let's just say they are working on it and we expect it to be better than it is at this point in time and it's not and we're not happy about it and we're working on it.

Textiles, domestics has come along pretty well but the seasonal businesses and the electronics toy business and the housewares businesses have not kept pace.

Some of that might relate to some later deliveries, out of the orient that we had hoped to get which may have pushed us back a little, but even with that, I would say that we're not happy with the results at this point in time.

Okay, and then Jim, in terms of your fourth quarter guidance, it sounds like it's a little more cautious in terms of the EBIT guidance than it had been.

Can you just clarify that?

No, it is.

It's a little more cautious than perhaps I was as we entered the third quarter, and I think that's just the nature of the Company and Heywood and I.

But if we were to think about where that's coming from, is it, are you expecting a little more pressure on the gross margin than you had before, sales issue, or how should we think about it?

I actually think yes.

The answer to that would be yes.

To both sales and gross margin?

Yes.

Okay.

Thank you.

Okay, our next question is from Ms. [Julie McClean].

Go ahead, Julie.

Hi.

It's Julie Macklowe.

How are you guys?

A few quick questions for you, Number one, I guess I was hoping you guys could follow-up on David's question and give a little bit of the reason behind why you guys are being what seems like extremely cautious with your comp guidance?

That would be my first question for you.

Well, obviously, Julie, I won't comment on the fourth quarter.

I can't do that, but I mean, that's just our expectations for the year as we take a look at these businesses and I think you're just going to have to accept that from us at this point in time.

Is there a specific reason though why the trend would be changing so much from what it's been?

Well, I don't know that the trend is necessarily changed that much from what it's been.

I mean, it may be that frankly, we've had a little bit more time to take a look at it than what we had in the past and have got a narrower scope right now and I think that really, as we take a look at the business, our goals and expectations as we go forward are really not going to change that much from where we've always been.

So but this year is rapidly approaching an end and this is where we think that our best estimate is of the year at this point in time.

Okay, moving on.

Could you give us an idea of what your EPS number would have been excluding the pipe since I would look at that more as a one-time charge?

Excluding the PIES?

The charges related with the pipe and the trust expense related to that?

Okay, that's -- I mean I think that's actually in the press release.

It's on the --

The $0.07, is that the number?

Yes.

Okay.

And then also, and this is a question more for Heywood, obviously could you guys talk a little bit about Filene's Basement in longer term kind of what your plans are and intents are and kind of how you look at that?

Will it be a stand alone at some point, etc?

Well, we're not going to comment about any potential transaction for Filene's Basement today.

I suffice to say that Filene's Basement has been a three and a half year or so project to rebuild the Company, reposition the Company, and then grow the Company and I think that we have, we've rebuilt it, we repositioned it and now we're in the I would say somewhat early stages of regrowing the Company and we think we have met with some reasonable success and giving us encouragement to continue on that way.

What the long term potential is of the Company?

I don't know, how high is up, Julie?

That's hard to tell, but we think there's a lot of upside to that particular business over time.

If you had to look at the valuation of Filene's Basement today though, Heywood, is it fair to assume that's worth a few hundred million dollars, just given where kind of the pair group trades?

Are you going to write the check?

I'll take it.

I wish I had it.

I think that it is clear that Filene's Basement has some value and you'll have to tell me what it's worth.

Okay.

Perfect.

And then has there been any change to your longer term operating goals and I think this goes back to another question about your stores and at what point you closed them.

I mean, I've been following this for quite some time now and I guess there is the question of what point do you guys start deciding whether or not to change where your stores are located and where are you in terms of your longer term goals?

In terms of Filene's Basement --

And Value City as well.

All of those stores we feel pretty good about.

That's not the issue.

In terms of Value City as Jim said, at the end of the year, we're going to reevaluate the performance of individual stores or groups of stores, clusters, whatever, and try to make some good decisions and between now and then, we'll go to work on it.

Great.

Well wishing you guys luck with everything.

Thank you.

Thanks, Julie.

Mr. [David Marcus] has the next question.

Go ahead, David.

Thanks, my questions has been answered.

Oh, okay, thanks.

Okay, our next question is from Mr. Michael Rosenthal.

Go ahead.

Hi, you just answered my questions as well, thanks.

Great.

And the last question is from Mr. Paul Morris.

Go ahead, Paul.

Heywood, it's actually [Steve Arico].

Can you hear me?

Yes.

Can you just give me the EBITDA for Filene's and Value City without the DSW component?

For the quarter?

I actually don't have that number with me at this point in time, but I'll be glad to do that actually, I think it's in the 10-Q that we're going to file.

I apologize.

I just don't have it with me right now.

Okay, thank you.

Okay, I just got one more question and it's from John Emerich.

Go ahead, John.

One clarification and one follow-up.

The clarification of the earlier comment, two callers ago, the $0.07 loss includes the impact of of the $3.9 million --

No, it doesn't, no.

I mean, it's in the loss, yes.

It has not been excluded.

That's what I mean, right.

The only thing that's been excluded is the actual --

Warrant value.

In the warrant, right.

Okay and then what were the pre-opening expenses for the quarter again?

It was about $2.2 million, and that was all at Filene's Basement.

And as Heywood said, there were none in the prior year essentially.

Right and that's in SG&A?

Yes, it is.

Great.

Thank you very much.

Okay, at this time there are no further questions.

Thank you.

Thank you.

And I want to say thank you, everybody, for joining us, and if I don't have the opportunity, everybody have a good holiday.

Have a good holiday, thank you.

This call has been concluded.

Thank you.