Deckers Outdoor Corp (DECK) 2006 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to the Deckers Outdoor Corporation first-quarter fiscal 2006 earnings conference call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for your questions. (OPERATOR INSTRUCTIONS) I would like to remind everyone that this conference is being recorded.

Before we begin, I would also like to remind everyone of the Company's Safe Harbor language. Please note that some of the information provided in this call will be forward-looking statements within the meaning of the securities laws. These statements concern Deckers' plans, expectations and objectives for future operations. The Company cautions you that a number of risks and uncertainties beyond its control could cause Deckers' actual results to differ materially from those described on this call.

Decker has explained some of these risks and uncertainties in the risk factors section of its annual report on Form 10-K and its other documents filed with the SEC. Among these risks is the fact that the Company's sales are highly sensitive to consumer preference, to general economic conditions, to the weather and to the choice of its customers to carry and promote its products.

Deckers intends that all of its forward-looking statements in this call will be protected by the Safe Harbor provisions of the Securities Exchange Act of 1934. Deckers is not obligated to update its forward-looking statements to reflect the impact of future events.

I would like to now turn the conference over the President and Chief Executive Officer, Angel Martinez. Please go ahead, sir.

Thank you. Well, good afternoon to all of you and thanks for joining us.

Before I begin, I would first like to publicly welcome Zohar Ziv to the Company. As you know, Zohar joined us as Chief Financial Officer and Executive Vice President of Finance and Administration in early March. Zohar has a very strong background, having served as Chief Financial Officer of several leading public and private companies, and we're very glad you have him onboard.

In addition, we are very pleased by our upcoming inclusion in the Standard & Poor's Small Cap 600 index. Now to our results.

We are very pleased with our start to the new year, which was driven by better-than-expected performances from each of our brands. Sales for the first quarter were $56 million, net earnings were $5.6 million, fully-diluted earnings per share were $0.44, and year-to-year, overall inventory was down by $14.2 million.

Beginning with Teva, our top line came in above our expectations, as we experienced good responses to several new models of footwear including the Dozer, the Terralux, and the Terra Fi 2. For the quarter, Teva net sales were $34.7 million compared to $39.4 million last year.

UGG delivered another strong quarter, driven by the successful debut of the brand's first true spring collection, coupled with the solid fill-in business of our fall and holiday footwear product, particularly classic, short and tall, ultra and ultimate boots, and Coquette and Tasmin slippers. Sales for the quarter were $17.8 million versus $22.5 million last year, which as you may remember included approximately $10 million of carryover business from the fourth quarter of '04, creating the challenging comparison this year.

Sales of Simple increased 49.6% to 3.5 million compared to 2.4 million in the corresponding period a year ago, as consumer reaction to our new Green Toe collection of environmentally friendly footwear has been extremely positive. In a very short period of time, Simple has become the leader in natural footwear, which has allowed us to broaden distribution for the brand into new channels, such as a whole foods and independent health food stores.

Shifting gears for a moment, it was just over a year ago that I joined Deckers as President and CEO. The past 12 months have been very exciting for both me and the Company. We've taken a number of important steps to create a more well-balanced organization, both operationally and financially, as well as implementing several key strategic initiatives in order to ensure we are positioned to maximize the many opportunities that still lie ahead for all three of our brands.

A year ago, I was struck by the potential of the brand in the Deckers portfolio. I felt, however, that all three brands were underdeveloped in the U.S., and especially worldwide. I saw an opportunity to revive Teva as an authentic performance outdoor brand, offering a complete assortment of sandals and closed-toe footwear for all seasons.

In UGG, I saw an opportunity to enhance the excellent foundation that had been built by developing a true spring collection, creating a viable and sustainable men's business and creating a premium luxury comfort brand through aspirational imagery.

Simple, in my mind, is the antidote to the world's overdose on overteched athletic footwear. And by returning to the brand's core values, we have revived the opportunity that we had with Simple a few years back.

After my first couple of months, I was impressed with the Company's development and sourcing capability, which I now consider a significant strategic advantage, as well as with the small but highly talented management team. I began to see beyond the potential of the brands and more clearly to the power inherent in each brand and the unique position each has in the marketplace. Each brand is authentic, each has a strong consumer franchise, and all offer great growth opportunities worldwide. As a management team, we all now clearly see the opportunities and have put plans in place to exploit them.

And so far, we appear to be getting some subtraction for our effort. Focusing on UGG, sell-through performance of the spring collection has been excellent, and has gone a long way toward the UGG brand emerging as a year-round brand, which as you know, is a key strategic initiative for us.

We are pleased with the progress we've made so far and look forward to the fall collection arriving at retail, supported by our new advertising. Retailer confidence is high and there is consensus that the brand has turned an important corner. We are now selling successfully in the spring season to enhance the historically strong sell-through of our fall collection.

We have opened our first retail outlet store in Camarillo, California, and will open our second store in the Wrentham Premium Outlet Mall in Massachusetts by the end of second quarter. In addition, we anticipate our first concept store in the U.S., which will open in New York City before year end, as we are currently scouting suitable locations.

We have also solidified our relationships and enhanced communication with our licensees, which will yield better product and tighter coordination of marketing and distribution efforts.

Our investment in rejuvenating our Teva brand image through advertising and enhanced retail presence is having impact at retail. We recently tagged key retail partners such as REI, Nordstrom, EMS, Dillards and The Walking Company in our advertising, and we've seen positive impact on sell-through on the products featured.

In addition, as of April 14th, we have achieved over 60% of our goal to remerchandise 500 retail partners by the end of April. The new retail merchandising kit is extensive, but includes mush racks, of which 1050 have been placed so far; pro towers, 270 of them have been placed so far; wall signs, 1300 have been placed so far; and table risers, which we have placed 480 so far.

We have remerchandised 75 EMS stores, 80 REI locations, 44 Nordstrom doors, just to name a few. And we have before and after photos that show a huge improvement, as evidenced by improved sell-through.

So while cold wet weather has definitely hampered March sandal sales in the West, sell-throughs have improved steadily over the last three weeks. I attribute this to the work our merchandising teams and sales organization are doing out in the market at the point of sale. Generally, the brand's performance as a whole has improved at retail, with some new items like the Dozer and Cross Terra performing well as the weather continues to improve.

As I had have made clear, our goal in this transitional year for Teva is to stop the erosion of our market share in the sport sandal category through targeting a younger consumer, improved product and better point-of-sale presentation. So far, we feel that our strategy is working, even though it is still early in the sandal selling season.

We have a lot of work to do, however, and we continue to drive our strategy aggressively, with our goal of making Teva the brand of choice for the new outdoor athlete.

You may recall on the last earnings call that I talked about the Green Toe collection as the world leader in natural footwear, while it seems that Simple has jumped out in front of the right parade with Green Toe. As gas prices move past $3.50 per gallon, conservation and environmental issues loom top of mind with the consumer. As I said, the environment is a trend, not a fad, and global warming, energy resource management and global pollution all represent issues of lasting concern for the next several generations.

We see Simple and the Simple consumer as expressing their concern in part by wearing Green Toe products. We've hired a new street team to create buzz for Green Toe in markets like Los Angeles, Orange County, San Diego, Santa Barbara, San Francisco, Boulder, Austin, Chicago, to name but a few. We've launched regional print campaigns in these same markets. In addition, we attended the Natural Products West Expo in Anaheim and the Natural Products Expo in London to outstanding response.

Whole Foods has given us a new opportunity for distribution. Over the last two months, we have launched Green Toe in La Jolla, Redondo Beach, Torrance, West Hollywood and Glendale, with good sell-through. We see the health and wellness distribution channel as an opportunity. There are, for example, 172 Whole Foods stores in the U.S. and over 500 health food stores in the state of California alone. And I might remind those of you who remember these things that Birkenstock began in the U.S. by distributing in the health and wellness stores.

So the focus on Green Toe for the first half of 2006 is succeeding in bringing attention to Simple as a brand with a unique position in the market and a good opportunity for retailers.

On the international front, we received our first orders from our new UGG distributors in France and Germany. Both distributors are launching at retail this fall. The initial response from both French and German retailers has been positive, but our biggest challenge is in educating the retail and consumer market to think beyond the original classic line of UGG products.

Fortunately the Fall '06 collection will go a long way toward meeting that challenge, as will the new advertising. We will be working strategically with all our distributors to showcase the breadth of the line for men, women and kids in every market, replicating as rapidly as possible successes achieved in the U.S. market.

I also attended our first Teva Asia-Pacific regional meeting in March to share our plans for product and marketing for the Spring '07 season, with the goal to allow our distributors sufficient time to effectively plan and prepare for what will be a crucial season for the Teva brand. We now have 32 distributors across all three brands worldwide and expect to add more as the international division develops.

The recent additions Zohar Ziv and Peter Worley have greatly enhanced our management team. I recognize, however, that we will need to continue to augment our management team as our business grows by both recruiting experienced and proven individuals from outside the Company and through implementing a succession planning process to identify and develop internal candidates.

So in summary, our first-quarter results reflect the early success of the strategies we've put in place to grow each of our brands. The Teva brand is maintaining its market share position, and new product, although more limited than it will be for spring of next year, is doing well. The new advertising appears to be driving our business and increased confidence from our retail partners, and we have made significant progress in improving our presentation at retail through the merchandising and POP enhancements.

UGG's spring collection is off to a great start, which bodes well for success in Spring of '07. Our Q1 fill-in business in core styles has been a plus for our retailers, and we've had an excellent response to our new advertising for Fall and the Fall '06 collection from the retailers that we've shown it to.

Simple has generated significant buzz in the market, both around Green Toe and the Fall '06 line, and this has given us the opportunity to open new accounts and distribution channels. And we anticipate solid double-digit growth for the brand in 2006. So while there is still much work to be done, we are encouraged by our initial results across the board.

I will now turn the call over to Zohar to discuss our financial performance and our updated outlook for the remainder of the year.

Thanks, Angel, and thank you for the nice introduction. Let me begin by saying how excited I am to be here at Deckers. I joined the Company a little less than two months ago and in that short of a time, I have been very impressed with the entire organization, both the people and the systems and processes currently in place.

However, there are opportunities for improvements and required upgrades. Angel and his team have done a tremendous job over the past year creating the framework for a long-term strategy that I believe will best serve the Company and its shareholders. In order to ensure we are able to maximize the full potential of our strategy, it is important to provide the necessary platform of support.

In addition to being the CFO, my role as Executive President of Finance and Administration includes over seeing human resources, our distribution operations, as well as our IT department. It is very important that we continue to invest in our people, and therefore, I will concentrate on providing training programs, improving benefits and developing a succession planning program. as Angel mentioned.

At the same time, I will be focusing on making the appropriate upgrades to better leverage our distribution capabilities and information systems, and to make certain we are well equipped to take advantage of the opportunities we create in the marketplace.

Again, I'm thrilled to be here and I look forward to getting to know our shareholders better over the coming months. Now to the numbers.

For the first quarter of 2006, our net sales were $56 million versus $64.3 million for the first quarter of last year. Including sales from the wholesale division, as well as the consumer direct business, our net sales of Teva decreased 12% to $34.7 million in the first quarter compared to $39.4 million in the corresponding period of 2005.

Net sales of UGG decreased 21% to $17.8 million versus $22.5 million for the first quarter last year. Again, the first quarter of 2005 included roughly $10 million of holiday orders that carried over from the fourth quarter of 2004.

Simple net sales increased 49.6% to $3.5 million for the quarter versus $2.4 million in the same period last year. Included in these numbers are consumer direct sales for all three brands of $6.5 million in the first quarter of 2006 compared to $5 million in the first quarter a year ago.

International sales for all three brands decreased 18.2% to $12.3 million compared to $15.1 million in the first quarter of last year.

Product order, domestic sales decreased 11.2% to $43.7 million compared to $49.2 million in 2005.

Our gross margin for the current quarter decreased to 44.1% compared to 46% in the first quarter of last year, reflecting higher closeout and inventory write-downs. Our SG&A expenses for the quarter were $15.8 million, or 28.2% of net sales, compared to $15.2 million, or 23.6% of net sales, a year ago.

The increase in SG&A expenses in the first quarter is primarily due to the $2 million increase in our marketing, R&D and infrastructure budget as part of our strategic initiative to support future growth of our brand, especially at Teva, for which $9 million is scheduled to be spent in 2006 for all the brands. And it was partly offset by lower commission and bad debt expense. As a result, our operating margin for the first quarter of 2006 was 15.9% of net sales compared to 22.4% last year.

Our net interest income was approximately $580,000 in the first quarter compared to last year's first-quarter interest income of $69,000. This increase was a result of higher excess cash balances and higher investment return rates.

Tax rate for the quarter was 40.5% compared to 38.6% a year ago. This increase was due to higher expected domestic pretax income for fiscal 2006 compared to fiscal 2005.

Net earnings for the quarter were $5.6 million, or $0.44 per diluted share, compared to $8.9 million, or $0.69 per diluted share, in the first quarter of last year.

Now turning to the balance sheet, at March 31st, 2006, our overall inventory decreased to $31.3 million versus $45.4 million at March 31st, 2005. By brand, our inventory was down 40% to $15.6 million this year compared to $26.1 million a year ago.

Teva inventories decreased 29.6% to $11.9 million at March 31, 2006, from $16.9 million at March 31st, 2005, and our Simple inventory increased to $3.7 million as of March 31, 2006 compared to $2.4 million at the end of the first quarter of 2005.

In addition, we ended the first quarter of 2006 with cash, cash equivalents and short-term investments totaling $65.3 million compared to $17.6 million this time last year. And accounts receivables improved to $28.2 million versus $39.2 million at March 31, 2005.

With regard to guidance, based on the strength of the first quarter, we are increasing our guidance for the full year. We now expect revenues to be in the range of $268 million to $276 million, and earnings per diluted share of $2.21 to $2.29. This is compared to our previous full-year guidance of sales between $260 million to $270 million, and earnings per diluted share of $2.05 to $2.15.

For the second quarter, we continue to expect net sales $38 million to $40 million. However, due to a change in sales mix which is expected to result in lower gross profit margin sales and a shift of certain expenses from the first quarter into the second quarter, the Company now expects earnings per diluted share in the range of $0.03 to $0.05.

For the second half of 2006, we remain comfortable with our previously announced guidance of net sales of between $174 million to $180 million, and earnings per diluted share of $1.74 to $1.80.

As a reminder, our fiscal 2006 guidance includes approximately $700,000 of additional stock compensation related to the adoption of the new accounting requirement for stock options, bringing our total equity compensation to $2.1 million for 2006.

Based on our first-quarter results and the current trends in our business, we now expect this year's UGG sales to be up slightly and Teva sales to be flat to slightly down. We continue to expect double-digit growth in Simple for 2006.

I will now to the call back to Angel for some closing remarks.

Thank you, Zohar. So as you can see by our comments here today, we are as bullish as ever about the power of the brands and the prospects they hold for long-term growth, domestically and internationally. We must, however, continue to invest in product design and development, marketing and advertising, international and the infrastructure to maximize the opportunity in front of us.

As I have said, our goal is to grow total revenues to approximately $600 million over the next four to six years. We will achieve this by doubling our UGG and Teva businesses and growing Simple to $75 million. We are very focused on achieving these long-term goals, while at the same time being dedicated to successfully executing against our near-term objectives.

Now I'd like to open it up for questions.

(OPERATOR INSTRUCTIONS) Todd Slater with Lazard.

Thanks very much. Good afternoon. Awesome numbers, guys.

Thank you.

Nice and clean, and inventories down 31%. I guess my first question is surrounding the inventory levels, driven by UGG, which is down 40%. Was this decline expected or a function of conservative planning, combined with maybe some stronger sales trends? And what are sort of the possibilities to chase that business and get back into some more inventory or is it just too far out?

The reduction in inventory, first of all, it's a result of buying closer to the market, which resulted in lower inventory. And also, especially in UGG, it has to do with -- as you remember, last year we had the $10 million carryover from 2004 to 2005. So that resulted in the higher inventory level and that corresponding reduction in 2006.

And your ability to chase some of this business?

Our business for Spring pretty much is baked. I mean, we've been chasing as much as we could; we are just running out of time. I think success of Spring product does bode well, as I said, for Spring of '07. Generally speaking, most retailers have been very pleasantly surprised at the rate of sale on the Spring UGG line. And the response I get all the time is we wish we had ordered more product from you.

So and as Fall lines up, we're feeling pretty good about the response of the Fall '06 line, and we're in good position to drive that business from an inventory perspective.

Okay. And then I just had a quick question on the second quarter. If you could just talk about the sales mix issue that will hurt the margin. And just the expense issues -- any more detail of the expenses that got pushed forward from 1Q to 2Q?

Yes. Todd, as to the top line, what we see change in the sales mix, more UGG versus Teva. And as you know, Teva carries a higher gross profit margin. So that resulted some lower margin sales in the mix.

And as to the expenses, it is mainly shift of some expenditure that did not take place in Q1 that shifted to Q2, mainly some of the marketing expenses that we have talked about, and there was some sliding consulting expenses.

The staging up POP, for example, and the construction of some of the new point-of-purchase displays, some of these got moved into second quarter just from a production point of view -- can't build them fast enough. So that is what is happening there.

Okay. Zohar, did you comment on the tax rate? It was a little higher, about 40%, versus what we had expected, 38.5, and the tax rate going forth?

Right. The comment that we mentioned that is going to be impacting the rate for the rest of the year is the shift of anticipating a higher domestic sales versus international sales. As you know, international sales carry lower tax rate. So the higher domestic sales increase our tax rate accordingly.

So as the international piece ramps up in '07, would you expect that to shift back?

It should be. And especially, as I think we indicated before, we're implementing a tax planning that is being delayed by a few months this year. We are expecting in [2000] to be in place and to impact it positively.

Agreed. Okay. Well, thanks very much, guys.

Stephanie Wissink with Piper Jaffray.

Just want you to talk a bit more about your successes with your improvements at your specific retailers, maybe some more visibility on how the UGG business is doing, as well as Teva in those retailers.

Well, we tend not to comment specifically on sell-through rates on individual retailers; they are not happy when we do that. But across the board, we are seeing if you look at UGG, those retailers who have really supported the brand and done a great job with it over the years stepped up and bought the Spring line.

And again, when they bought that line -- I remind people -- they bought that line back in August, September and October of last year -- that was prior to seeing the results they would have seen in the fourth quarter. Many retailers were somewhat conservative in buying Spring '06 from us for UGG. And generally, those that did step up and buy it, based on success that we've had with the brand in their stores, have been very pleased.

Those who were reticent to bring in Spring, not understanding that we were going to succeed in our effort to make it a year-round brand, I think they are now saying next '07, Spring '07, we are not going to miss out. We're looking forward to seeing that product line. So I think it bodes well for what is coming in ensuing years.

On the Teva front, all of this enhanced point of sale visibility for the brand just sort of revives the brand at retail. We've got color in the brand, there is a better consolidation of the product assortment, so you don't look at just an assortment of navy, black and gray from our brand. And that is all bringing the attention of the consumer to the product line, and combined with some fresh product, it is just coming across as the new Teva.

Great. Just one more -- if you could talk a bit more about the UGG product assortment, and maybe what styles. You did mention some that stood out to you, but any percentage breakdown in that business based on the different styles?

I'm sorry, I don't have the percentage breakdown. But I can -- the Layback, which is a sandal style that has done very well in all colors. The driving mocs we did, including the Tie Bow, have done very well. We've had a very good fill-in business on what was historically holiday Q4 product.

This is really the first year that we've had inventory to even understand what our fill-in business could be in Q1. And we're finding that the classic business, for example -- and we suspected this -- but the classic business is a year-round business. Because we've had very good fill-ins on classic short and on Ultra. So that has been good.

Do you expect a similar dynamic in the Fall as you've seen here in the spring?

Well, the Fall line was very well received by retailers, pretty much across the board. And we're pretty satisfied with the response they've given us and we anticipate that the Fall will meet our expectations.

Great, thank you.

Melissa Otto with DE Investment Research.

I was just wanted to get some more color around the strategy for the SG&A that we're going to be expecting to ramp up in over the next couple of months to a year and a half around some -- the Teva brands. Would you just give us a little bit more granularity in terms of what products, how it will be displayed in the distribution channels, etc.?

Sure. You are referring to the $9 million that we talked about --

Exactly.

-- over the last few calls. Essentially, the number one goal there was to revive the Teva brand, make it relevant to a younger consumer. And so the advertising that's rolling out throughout this year in print, especially in vertical magazines like Outside, for example, showcase a younger consumer and a more performance-oriented Teva product.

We're taking that same imagery and we're interpreting it at retail with revived point of purchase displays and more new product that's rolling in as the year progresses. I mentioned on the call the Dozer, which has been very successful, in many different colors, men's, women's and kids. So that bodes well so far, so early in the year especially.

The Yampa collection, which is the cork midsole leather sandals that we've done, that have been well-received, particularly in the department store channels. And as we move into Fall, closed footwear, that we've never had -- and to the extent that we now have it, we've taken some of our core technologies, the mush footbed, for example, from our flip-flops, and put that into closed footwear so that the closed footwear feels like just your flip-flops and they mold to your foot just super comfortable. And we will be advertising that product as we roll into Fall.

Great, thank you very much. That is very helpful.

(OPERATOR INSTRUCTIONS) Adam Comora with EnTrust Capital.

Just a couple of quick questions. Can you just -- I'm sorry - repeat it -- somehow I missed it -- the first-quarter '06 UGG sales versus last year's first-quarter?

Yes. UGG sales for this quarter were $17.8 million versus $22.5 million last year.

Okay, terrific. My other question on UGGs is clearly it sounds like we're having some success on these new styles and new SKUs, and it sounds like the core UGG boot is still performing well at retail. So I'm just curious the guidance of UGG sales just being up slightly for 2006, because I would be under the impression that all of these newer styles and newer categories would be incremental sales. So I'm just trying to understand why we wouldn't be seeing better than just up slightly for UGGs?

Anytime you take a product line like UGG and expand the assortment to the degree that we have -- and this year my guesstimation -- I don't have it nailed down exactly at the moment -- but it is probably about 30% or so of the line is new as we move into Fall '06. Particularly in the men's area, there's a whole new collection of men's product.

Reasonableness sort of says that you be very conservative in terms of what your expectations are. We are not buying new product as aggressively as we would have if we had history with that product. We tend to look at the assortments in the first season out with an eye toward understanding what is going to now graduate to core product. And that is really the way the business is most successfully operated.

And so that sort of rolls into the conservative nature of our expectation. A year from now, when we have history on these products, we understand what the men's business did at retail, how it performed, how it sold through, I think we will be a little bit more aggressive in that we'll have more insight. So that is just being in the business a long time and kind of understanding how to best sort of project expectations.

Okay. How much of that UGG business is done at once versus future orders?

Well, we project our retailers' needs, sitting down with them, planning their business forward. Our business is not future order driven in the same context or the way in which athletic is. So we don't get hard POs five months out as a non-cancelable future order.

But we do tend to work very closely with our retailers to understand what their demands are, what their needs might be. And we work with them to very carefully plan the business. Which that says to us that they really want to build the line or build the brand from a core assortment basis forward, and we work very closely with them to do that.

Are we expanding distribution to any new doors this year versus last year -- any new customers? Or is it just still building the brand and just expanding shelf space within your existing partners?

Generally, we are building the brand from existing distributions. We are obviously increasing the spread and assortment of the brand at retail. There is some additional doors inside existing retail distribution that we will be opening as our capacity has improved, and we are more able to guarantee that we will be delivering product on time. But, no, we are not really going out and opening up a lot of new points of distribution.

Okay. Last question. How should we think about longer-term growth, as we look into '07 and '08 for UGG? How quickly do we ramp international, how big is that opportunity, how should we think about some of the longer-term growth rates?

Well, I have said in four to six years we expect to double the size of our UGG business worldwide. And in that mix, it's really about 30% of the business in four to six years should be expected to come from international. So I think that that bodes well for the future.

One of the things I want to be careful of is the positioning of this brand is a premium brand; it is a premium, luxury brand. And because of the price points we operate in and the kind of product that we make, I think it's important to keep our brand in appropriate distribution, surrounded by similar kinds of brands and products. Because I've said this to many people -- if it's just about driving a top line, an irresponsible approach might be to just sort of sell the product to anybody.

And we're interested in long-term partnerships with our retailers and we're really supporting the ones who have supported us in the past.

Okay, terrific. Thanks a lot.

Stephanie Wissink with Piper Jaffray.

The 30% of the assortment that you mentioned for UGG that will be new for the Fall, can you speak to what influence the Italy design center had on the assortment for the Fall and maybe a little bit on the price points?

We did a very limited collection out of the design effort from Italy. I would say it is just very small. Probably of that 30%, it is maybe 5%, it's not very many styles. But the price points are between 3 and $400 on average. And there, we have just testing the brand's ability to sell at the higher price points, which we are very confident in, especially as the product -- by comparison to other products in those price points, we still offer a tremendous price-value relationship.

So it sort of dovetails into our whole reproach that UGG is a luxury brand, but it's an accessible luxury brand. And my goal is to compare our high-end product to anyone else's high-end, but at a more accessible price.

And any change in that 30% --or I guess the 25% that is non high-priced premium, but more your classic category of pricing -- any change there?

Change in pricing?

Yes.

No, we generally are consistent with our price strategy that we've had over the last couple of years. The mix itself, obviously boots are more expensive than shoes, so. But no, our men's product is going to be right there with competitor brands like Cole Haan. So we are pretty consistent.

Okay, thank you, gentlemen.

And there are no further questions. I'll turn the call back over to you gentlemen for any closing remarks or comments.

Thank you very much. I appreciate you all joining us today and anticipate that we will be having follow-up conversations with some of you over the next few days. Thank you.

And that does conclude our conference call. Thank you everyone for your participation and we wish you a great day.