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Operator
Good day, and welcome to today's Guess? conference call.
Today's call, including the question-and-answer portion, is being recorded and being made available to the public.
Statements made in this conference call, including but not limited to the Company's expected results of operations, are forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are only expectations, and involve known and unknown risks and uncertainties, which may cause actual results in future periods and other future events and certain and uncertainties to differ materially from what is currently anticipated.
Factors which may cause actual results in future periods to differ from current expectations include among other things -- the continued availability of sufficient working capital; the success integration of acquisitions and new stores into the existing operations; the continued desirability and customer acceptance of existing and future product lines -- including licensed product lines, possible cancellations of wholesale orders, the success of competitive products and availability of adequate sources of capital.
In addition to these factors, economic and other factors identified in the Company's most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2004, including but not limited to the risk factors discussed therein could affect the forward-looking statements made in this conference call and contained in the Company's other public documents.
At this time, for opening remarks and introductions, I would like to turn the conference call over to Carlos Alberini, President and Chief Operating Officer of the Company.
Please go ahead, sir.
Carlos Alberini - President, COO
Thank you.
Good afternoon, and thank you for joining us today to discuss Guess?'s 2005 second-quarter financial results.
Here with us are Maurice Marciano, Co-Chairman and Co-Chief Executive Officer, and Fred Silny, Senior Vice President and Chief Financial Officer of the Company.
I will begin with an overview of our second quarter, and then Fred will address our financial performance in more detail.
Maurice will update you on our current initiatives, and I will discuss our outlook for the balance of 2005.
We will then open the call for your questions.
We are very pleased to report that Guess? turned in a solid performance for the second quarter, achieving diluted earnings per share growth of 80% to $0.09 per share versus $0.05 per share in the year-ago period.
During the quarter, our overall Company revenues grew by almost 16% compared to the prior-year period.
Our retail, wholesale and European businesses all contributed to this growth.
In addition, our retail, wholesale and licensing operations all posted better operating results during the period.
We controlled expenses well and run the business with lower inventories in North America, which contributed to much improved margins in our wholesale segments.
Our retail business and licensing segments had good results, based on strong customer response to our product offering.
During the quarter, the Marciano line performed well ahead of plan in our stores.
We are also very pleased with the progress made with our European business and its integration.
And we believe that we are poised for strong expansion internationally.
We believe we are well-positioned for back-to-school and the holiday season, and we remain confident about our prospects for the balance of 2005.
Turning to our results by business, our retail segment, which includes full price and factory outlet stores in the U.S. and Canada and e-commerce, generated net sales of $132.9 million during the second quarter, an increase of 15.3% from 115.2 million in the prior year second quarter.
In the U.S. and Canada, the growth was driven by a comparable store sales increase of 4.2% and a larger store base, which represented a 9.5% increase in average square footage, as compared to the same period last year.
Earnings from operations for the retail segment for the quarter increased to $13.5 million from 12.5 million in the second quarter of 2004.
In terms of product performance, as I said earlier, the Marciano brand performed well ahead of our plans in both our Guess? and our Marciano stores, with strong sales growth in the period.
Most categories in the women's business performed well during the period, with denim bottoms and woven tops performing better than the other categories in our young contemporary line.
In our men's business, we saw good performance in our denim bottoms and knit tops.
Our accessories business continues to be a strong performer, with increases in most product categories, including handbags, belts, jewelry and eyewear.
As you know, we continue to move forward to take advantage of the excellent potential in the accessories business in our existing stores and in the new Guess? accessory stores.
Now, our licensing business, both our domestic and international licensees continued to deliver very strong performance.
For the period, the revenue growth for this group, excluding the European business that we acquired was 15.9%.
For reporting purposes, licensing revenues were reduced as a result of the acquisition of our European jeanswear licensee in January of 2005, since this sales are now classified as revenues for the European segment.
As a result, our reported licensing revenues were virtually flat for the period but ahead of plan.
Operating earnings in our licensing segment increased to $7.9 million this quarter from 7.1 million in last year's second-quarter.
Lower expenses contributed to the improved earnings in the period.
In the wholesale segment, which includes our wholesale operations in the U.S., Canada and internationally, excluding Europe, second-quarter 2005 revenues increased 3.5% to $26.1 million from 25.3 million in the same period at 2004.
Domestically, our products were sold in approximately 930 doors at the end of the second quarter of 2005 versus approximately 850 doors a year ago.
Earnings from operations for the wholesale segment in the second quarter of 2005 increased to a profit of $0.3 million from a loss of 4.8 million in this 2004 second quarter.
Sales to our department store customers increased in the quarter, and our clean inventory position resulted in a reduced sales in the off-price channel, contributing to a substantial margin improvement.
Lower expenses, including advertising, also contributed to a better operating performance.
In terms of product trends, our domestic wholesale business saw solid performance from denim and novel t-shirts in our young contemporary line.
The men's line achieved gains in the denim business, both fashion and basic, and in logo tees.
Regarding our domestic wholesale backlog, there has been a change in the way we operate our business for women's product.
Effective in 2005, the Company operated the women's wholesale business with give markets versus four in 2004.
As a result, last year's backlogs for orders of women's product reflected a longer shipping period than this year.
The change represented approximately one extra month of orders last year versus the same period this year.
We estimate that if we were to exclude the additional orders from the prior year backlog, then the current backlog would have been about flat as compared to last year.
Not taking into consideration the impact of this change, our domestic wholesale backlog as of July 23, 2005 was $40.9 million compared to 44.9 million as of July 24, 2004 or down 8.9%.
In our European segment, net revenue in the second quarter of 2005 increased $5.9 million to 9.9 million from 4 million in the same period last year.
As we anticipated, the loss from operations from our European segment increased to $4.9 million for the second quarter of 2005 from 0.5 million in the prior-year period.
As we have discussed in the past, this results relate to the seasonal nature of our European business.
Our European business is primarily a wholesale business and operates with two seasons -- the spring/summer season, which ships mostly in the first quarter of the year, and the fall/winter season, which ships mostly in the third quarter.
The second and fourth quarters are small sales quarters for us and Europe.
Our SG&A expenses in Europe were on plan for the quarter.
But due to the fixed nature of this expenses, profitability was impacted negatively in the period.
Let me now turn the call over to Fred to review the financial results in more detail and our financial position at quarter end.
Fred?
Fred Silny - SVP, CFO
Thank you, Carlos, and good afternoon.
Let me first describe the contents of the press release just issued.
In addition to the actual release on pages 1 and 2, page 3 contains the consolidated statements of operations for the second quarter and first 6 months of 2005 compared to the same period last year.
Page 4 contains segment data for our retail, wholesale, European and licensing operations.
Page 5 contains the comparative balance sheets.
Page 6 contains cash flow data, and page 7 provides retail store data.
As Carlos mentioned, we announced today that for the second quarter ended July 2, 2005, Guess? reported net earnings of $4.2 million or diluted earnings of $0.09 per share compared to net earnings of $2.1 million or diluted earnings of $0.05 per share for last year's second quarter.
Net revenues for the second quarter increased 15.7% to $178.2 million from $154.1 million in the 2004 second quarter.
Overall, gross profit for the 2005 second quarter increased 15% to $66.5 million from $57.8 million in the second quarter of 2004.
Gross profit margin was about flat compared to the same period of 2004, 37.3% versus 37.5% last year.
Our wholesale operations contributed positively to the change in the gross margin rate, while our retail operations contributed negatively.
Licensing also had a negative impact on the rate, as this high margin segment was a smaller percentage of the overall business as compared to a year ago, due primarily to the acquisition of our European jeanswear licensee in January 2005.
We reported that SG&A expenses for the second quarter were $58.7 million, an 11.7% increase from last year's $52.6 million.
SG&A expenses in our European operations increased by $6.2 million in the second quarter to $8.4 million from 2.2 million in the same 2004 period, primarily due to a recent acquisition, while SG&A expenses in the rest of the Company were about flat to the prior-year period.
The SG&A rate this quarter was 32.9% of net revenues, a 120 basis point decrease from our SG&A rate of 34.1% in the same quarter in 2004.
This lower SG&A rate reflected improved expense leverage on sales growth, lower expenses in the wholesale business, and lower advertising spending, partially offset by higher store selling expenses in retail to support the largest store base and increased costs in Europe.
Earnings from operations improved by $2.6 million to $7.8 million in the second quarter of 2005, compared with earnings from operations of $5.2 million in the 2004 period.
Net interest expense for the second quarter of 2005 was $1.1 million, compared to $1.5 million for the 2004 second quarter.
Increased interest income on a higher level of invested cash more than offset the increased interest on a higher average debt balance related to the European acquisition.
The end of the quarter was $91.5 million in cash and restricted cash versus $54.5 million a year ago.
Our debt levels increased to $87.9 million from $60.7 million at June 26, 2004.
The debt increase associated with our European business amounted to $38 million.
In addition, principal payments on our domestic long-term debt reduced the balance by $12.9 million.
Our debt in Europe was $18 million less at the end of the second quarter 2005 than at the end of the first quarter of this year.
Accounts Receivable will increase by $36.3 million from a year ago due to the growth of our European business.
Receivables for our European business totaled $40.7 million at July 2, 2005 versus $7.8 million a year ago, an increase of $32.9 million.
Of this amount, approximately one-third is subject to either a guarantee as part of the purchase of the European jeanswear licensee or is insured for collection purposes.
As a result of significant collections during the period, our receivables in Europe are $45.7 million less at the end of the second quarter than at the end of the first quarter of 2005.
We closed the quarter with $113.2 million of inventory compared to $96.8 million at the end of the 2004 second quarter, an increase of $16.4 million.
This change was attributable to our European business, where inventory increased by $25.2 million, partially offset by a reduction of inventories to support our North American business.
In retail, we ended the second quarter with a total of 301 stores in the U.S. and Canada -- of which 186 were full price retail; 94 were factory outlet stores; and 21 were new concept stores, which included 10 Marciano stores and 11 accessory stores.
This compares to 264 stores a year ago.
During the quarter, we opened 2 retail stores, 6 factory outlet stores, and 6 new concept stores, and closed 2 stores.
I would now like to turn the call over to Maurice, who will update you on the initiatives we have underway.
Maurice?
Maurice Marciano - Co-Chairman, Co-CEO
Thank you, Fred.
We continued to make good progress in several areas of our operation and with key initiatives to support our growth plans.
We remain focused on our core Guess? business and are confident about our prospect to continue to improve sales productivity and operating performance in 2005.
In addition, we believe the Company has a significant opportunity to accelerate its growth rate during the next few years to international business expansion, especially in Europe, with the recently acquired business.
We also believe the opening of the newly developed store concept, Marciano and Guess? accessories, can contribute to a higher rate of growth for Guess?
While we continued to refine both the Marciano and Guess? accessory concept, our results have been very positive to date.
The Marciano brand continues to enjoy strong customer response in both the stand-alone Marciano stores and in our Guess? stores that carry the line.
At the end of the second quarter, we have 10 Marciano stores in operation in U.S. and Canada.
We opened four Marciano stores in the second quarter and plan to open four additional stores in the second half of this year.
We also believe the Guess? accessory store concept has strong potential.
Overall, this product category continues to outperform in our stores.
At the end of the second quarter, we had 11 Guess? accessory stores in operation.
We opened 2 stores in the second quarter and plan to open 1 more store by year end.
As we indicated in the past, we plan to reassess our store expansion program by year end for 2006 and beyond, based on results of all these new concepts.
Regarding Europe, we are on target with our integration plans, and the business is on plan to meet our financial goals for the year.
The new fall/winter line is performing well, and the accessories business continues to grow versus the year-ago period.
There are several territories we have targeted to expand our distribution, including countries, such as England, France, Spain and Eastern Europe.
We are currently building a solid infrastructure to pursue this expansion.
We believe the Guess? brand is well-positioned to grow in North America and internationally, and we are strengthening our team to capitalize on this opportunity.
We just announced two new senior positions in this regard.
Bonita Inza, previously with the Williams-Sonoma organization, has joined our team as Senior Vice President, Retail Store Operation for all of our store concept in the U.S. and Canada.
Bonita primary focus will be the growth -- will be to grow same-store sales in the stores and improve our field operations.
Terence Tsang, Executive Vice President with the Ashworth organization, will be rejoining Guess? in the capacity of Senior Vice President, Corporate Business Development.
His main focus will be in international business development in key territories, including Asia and Latin America.
We really want to explore it, international growth, to its fullest potential.
Regarding product, we have also built strong team to run our Guess? retail stores, our factory outlet division, and our Marciano brand.
These teams are working hard to improve our assortment in the stores, capture the right trend, and improve sales productivity across the board.
We are focused on running a clean business, emphasizing regular price setting.
During this quarter, inventories were lean, and our position at quarter end was significantly improved from the same period of last year.
In North America, we currently own approximately 35% less clearance units than a year ago.
I believe our back-to-school assortment are well balanced, and we are optimistic about our opportunities in the second half of the year.
We just launched the new Guess? fragrance, and the new line of shoes is shipping to stores for back to school.
As you know, these two product categories are developed by two licensees -- Parlux for the fragrance, and Marc Fisher for shoes.
Initial selling of the new product has been ahead of plan.
We continued to focus on our supply chain initiatives to reduce cost and increase speed in data mobility (ph).
At the core of these initiatives is the expansion and development of our Hong Kong office.
This will allow us overtime to shoes directly from factories and to move quality control and other function upstream.
Now, Carlos will provide our outlook for the remainder of 2005.
Carlos?
Carlos Alberini - President, COO
Thank you, Maurice.
The Company's July fiscal month began on July 3, 2005 and will end this coming Saturday, July 30, 2005.
We expect July comparable sales to increase in the low to mid-single digits on a percentage basis.
Due to our improved inventory position, regular price sales represented a larger part of our business, which should bode well for gross margin performance versus the year-ago period.
Based on this trend, we remain on plan and expect comparable store sales and our retail stores to increase in the low-single digits in the third quarter of 2005 and to increase in the mid to high-single digits on a percentage basis in the fourth quarter over the comparable 2004 period.
We expect total retail sales to increase in the mid-teens in the third and fourth quarters of 2005 on a percentage basis over the respective period of 2004.
Total retail sales include sales from the 38 new stores planned in the U.S. and Canada for 2005 and the contribution from the 34 stores opened in 2004.
Like most wholesalers in Europe, as we mentioned earlier, our European business is cyclical, with a focus on two seasons -- spring/summer and fall/winter.
For that reason, sales and profitability of this business is higher in the first and third quarters of the year and lower in the other two quarters.
We forecast revenues from the European segment to increase by about 3.5 times in the third quarter of 2005 and to double in the fourth quarter of 2005, as compared to the comparable periods of the prior year.
As we indicated, we currently have a clean inventory position.
As a result, we expect to have lower domestic off-price sales in 2005.
For for this reasons primarily, wholesale revenues in North America are expected to decrease in the low to mid-single digits on a percentage basis in the third quarter and to decrease in the mid to high-single digits on a percentage basis in the fourth quarter of 2005 versus the comparable quarters of 2004.
Concurrently, we expect margins in this business to continue improving.
We expect increased licensing revenue from the launch of our new shoe line and the launch of a new fragrance line, both in the second half of the year.
This increases, however, are not expected to fully offset the reclassification of revenues due to our recently acquired European jeanswear licensee.
Consequently, licensing revenue is planned to show a decrease in the low teens in the third quarter, and the mid to high-single digits in the fourth quarter -- all on a percentage basis as compared to the comparable 2004 period.
We are forecasting gross margins to be up about 240 basis points in the third quarter and up about 80 basis points in the fourth quarter versus the comparable prior-year periods.
This increases primarily reflect occupancy leverage and improved product margins in the retail business from last year's levels and a larger share of revenues coming from the higher margin in the European business, partially offset by a smaller share of revenues coming from the high-margin licensing business.
SG&A in 2005, as a percentage of revenues, is expected to be up about 230 basis points in the third quarter and down about 30 basis points in the fourth quarter in comparison to the respective periods in 2004.
The increase in the SG&A rate in the third quarter as compared to the prior year is due primarily to advertising investment in North America and the additional overhead in Europe necessary to support the seasonal strong sales quarter.
The SG&A expenses in dollars are expected to be up 25% for the full year 2005 compared to 2004, approximately two-thirds of which is due to our European business growth.
In order to support our European operation and the increase in stores and sales growth in the U.S. and Canada, we expect average inventory levels for the second half of 2005 to increase approximately 20% over 2004 levels.
Net interest expense is expected to be about $6 million in 2005, and our tax rate to be about 40% for the year, as reduction from the 41% that we had previously anticipated.
Lastly, we expect capital expenditures for 2005 to be approximately $47 million before lease incentives of about 7 million.
Capital expenditures have increased from the previously anticipated 42 million level in order to support additional projects, both new stores and our remodeling program.
Depreciation and amortization is planned at about 34 million for 2005.
Before we open the call up for questions, let me reiterate our excitement about the future opportunities for Guess?.
We feel good about the progress we are making and the strategic initiatives in place to drive future growth.
We remain confident in the outlook for 2005 that we have just shared with you.
As always, our team is focused on maintaining our fashion leadership and on executing our strategy effectively.
Our balance sheet remains strong, and we remain focused on financial prudence and discipline.
With that, I would now like to open the call for your questions.
Operator?
Operator
(OPERATOR INSTRUCTIONS).
Margaret Whitfield, Ryan Beck.
Margaret Whitfield - Analyst
Good afternoon, gentlemen.
I guess my first question is for Maurice.
There has been a lot of press about the "denim glut."
I take it your business is looking good at this early stage.
I am wondering what your assessment is of this glut industrywide and for Guess? itself?
Maurice Marciano - Co-Chairman, Co-CEO
Very simple -- for us, we have not seen any decrease, rather the opposite, in our denim business.
What we have to understand, though, which makes us different from a lot of other retailers, is that we really have a broad assortment of goods in the stores.
And you can see it easily when you go to the stores, which means that are our denim business is only a small part of our business.
It is approximately -- of our total sales in our stores, it is approximately 24% of our total sales.
So it is a big business.
It is a strong business.
And we continue to grow it, but it is not a dominant business for us.
We really have a lifestyle business of broad assortment of products -- that is what should be pointed out.
So we are really not concerned about the glut of denim because for us, rather the opposite.
We really believe that we can continue to grow our denim business (multiple speakers) in our stores because the penetration of denim is not very high in our stores.
Margaret Whitfield - Analyst
And I just wondered what you see in terms of the fashion cycle for back-to-school and holiday.
What do you see as key themes or drivers?
Maurice Marciano - Co-Chairman, Co-CEO
For us or for the general market?
Margaret Whitfield - Analyst
Both.
Maurice Marciano - Co-Chairman, Co-CEO
I tell you what -- the non-denim -- believe it or not -- the non-denim is coming back pretty strong.
And there is one trend, which just started again I will say 2 months ago, not even 2 months ago.
And it is -- believe it or not -- the cargo is coming back very strong.
The cargo pants are coming back very strong, both in pants, in capris.
And this is going to be mostly in non-denim, rather than denim.
So I see that the knitwear business is really very, very strong.
And the other thing, which is going to be -- for us -- the other category, which is very strong is the -- especially for this time of the year, is going to be the corduroy.
We really believe in corduroy, mostly for women in stretch.
And the other thing that we believe in is for bottoms, we are going to see a lot of ornamented bottoms -- like with embroidery, with studs, with rhinestones.
We are going to see a lot of that.
Margaret Whitfield - Analyst
A question for, I guess, Fred or Carlos.
Could you elaborate as to why your retail gross profit margins were negative?
I assume it might have something to do with the startup costs and the new concepts.
Carlos Alberini - President, COO
Yes, that is partially true.
We did have a lot of store openings that did impact profitability.
Also, we invested in additional selling help during the quarter.
We enjoyed a healthy business in terms of comps; we were up over 4%.
And we did leverage occupancy accordingly, but that shows in margin.
You know, in terms of the overall profitability, you know that the most sensitive part for the retail business is in the second half.
And I think we have opportunities in that time of the year for increased income.
We carry all the fixed costs in both first and second quarters of all the new stores.
And that, obviously, puts some pressure on profitability in the first half of the year, just because the productivity of the stores is not as high.
We opened a lot of stores, and also we remodeled a lot of stores.
We also kept an eye on inventories, as you know.
We have dealt with much lower level of inventory of clearance items, and this happens throughout the second quarter.
That, I think, puts some pressure on sales because we are up against some promotional activity from last year.
But I am very glad that the regular-priced business was able to pick up and overcompensate that lower inventory level.
Margaret Whitfield - Analyst
One final question -- with the excessive heat in some parts of the country and your limited clearance, could you comment as to how the weather could have limited your comp in July so far?
Carlos Alberini - President, COO
Well, you know, we are pretty much on track with July sales.
And it has been building, which is a great thing in terms of setting the tone for back-to-school.
Our full price selling in our regular-priced stores has been very, very strong.
And we think that that is a good thing going forward.
In terms of the heat wave, I think we had a lot of wear-now product as well, and that helped us.
I think that the assortment is very well balanced, and we are pretty much looking forward to what is coming.
In obviously, July, there is still a lot of clearance activity.
We think that many of our competitors are very promotional right now.
But we like how we are positioned.
Margaret Whitfield - Analyst
Thank you, and congratulations.
Operator
Jeff Klinefelter, Piper Jaffray.
Jeff Klinefelter - Analyst
Congratulations to everyone on a great second quarter.
A couple things -- one, maybe, Carlos, could we just clarify, if you would, the backlog -- the change year-over-year again to explain the two different numbers?
I might just not have caught it.
And then a couple of questions for you.
Europe, considering the largely independent specialty store structure of most of the European markets, at this point, what do you consider to be the best growth opportunity in those markets?
Is it expanding the assortment and extending the category within your existing distribution?
Are there some key accounts that you can get into that you are not currently in?
Maybe some thoughts on that.
And then lastly, just any difference in early back-to-school or the southern markets versus the northern markets that you can pick up on yet?
Carlos Alberini - President, COO
Let me start with the backlog question, Jeff, and then Maurice will address the European question.
This year, we are operating the women's business with five markets.
That means that we go and show five times during the year.
And as a result of that, one of those periods has one less month than it did a year ago because we were showing only two months instead of three.
As a result, the backlog that we have currently, of course, does not include that extra third month as it was included a year ago when we were showing only four times a year.
So once you exclude the effect of that extra month, which happened to be December of 2004, you exclude that, the backlog is about flat to last year.
And that is a true apples-for-apples comparison.
Now, if you are looking at the pure number, that for 2005 and the backlog versus a year ago, then the backlog is down about 8.9%.
But again, if you do that, you are not comparing apples with apples.
Is that clear?
Jeff Klinefelter - Analyst
Yes, that's clear.
Thank you.
Maurice Marciano - Co-Chairman, Co-CEO
(multiple speakers) Should I address European?
In Europe, we have tremendous potential.
First of all, we have several countries where we are really underpenetrated, like mostly in Germany, in England, and even Spain -- it is pretty low right now.
We are taking a new distributor in Spain.
In England, we are opening our own showroom.
Instead of going through a distributor, we are opening our own showroom, and so we are going to do that ourselves.
We are opening our own store in Covent Garden in London.
And then we have one retailer, who is going to open a first store this year on Kings Road, and who committed to open eight stores in England over a short period of time.
And what we are doing in Europe more and more is we are really doing some strategic alliances with big retailers there, who have already owned real estate, which is the most important thing.
They own the stores in Europe, which is kind of difficult to have.
And they are really eager to switch these stores with which they have with other brands, which are not doing very well.
But they have great location, and they are really looking up to us to switch these stores into Guess? stores.
This is already in process.
We have opened already six like that in Italy, and the result have been great.
So now, the -- and this is with two groups in Italy, two different group.
There is a third group coming into the picture.
These group are committed to open anywhere between 8 to 30 stores each.
So it is going to be quite a bit of retail stores opening in the next 2 to 3 years all over Europe.
So this is what we are looking at really, we are expanding our wholesale business in certain countries.
But in other countries, we are really going after alliances with existing retailers to have stand-alone stores, Guess? stores, captive distribution like that.
So that is our -- and now, I forgot -- something very, very important also -- a big part of the European expansion is Eastern Europe.
We are opening with -- same thing with an alliance there.
When I say an alliance, we are not partnered with them, you know.
We are basically making an agreement with them to give them exclusive retail distribution.
But they are opening stores, so we are opening two right now for the back-to-school in Russia.
And there is two or three opening in Turkey.
There is another one in Greece.
Then, there is one or two in -- there is too many -- either Romania or Yugoslavia.
I'm getting lost in these;
I am sorry.
It is Paul, who is really on top of that.
And right now, he is in Europe.
Jeff Klinefelter - Analyst
Just as a follow-up, in terms of the European business growing, maybe a quick update, Fred, in terms of how you're handling the euro hedging within your business?
And then Carlos, in terms of your retail business in the way that it blends out with wholesale to get to your margin, a lot of specialty retail businesses run somewhere in the low double to mid-teen or even higher operating margins.
Is there any reason structurally that with your business going more and more that direction, that overtime, you could get there?
Carlos Alberini - President, COO
Jeff, let me just address those two questions, and then you want to talk about the currency?
Jeff Klinefelter - Analyst
Yes.
Carlos Alberini - President, COO
Jeff, you asked before about the back-to-school -- early back-to-school reads.
And let me just tell you -- and this is something you have to keep in mind -- we have a very different inventory position today than we did a year ago, okay?
Because of being up against that promotional activity I mentioned before.
But our West Coast has done significantly better than some of the other regions.
And our North -- the Northeast and Florida have done also significantly better than the rest of the regions.
Midwest has been a little more challenging for us.
But overall, we think that all of those states that go into an earlier back-to-school, I think has been showing very good signs, which I think it speaks well for the assortment.
In terms of the question about margin, I don't see anything that structurally would prevent the Company from being at par or better than many of our competitors.
We know that the point of leverage here are in sales productivity in our stores, and we are putting a lot of time and effort to really increase the sales productivity.
That is what makes the profitability of this business high -- also margins.
I think we are definitely addressing margins.
I think we are running the Company much more efficiently in terms of inventory ownership and also expenses in the store.
So I feel that double-digit margins for the Company, especially with the component of licensing that we have, royalties, is definitely something that we can go back to.
Fred Silny - SVP, CFO
And Jeff, on your question about currency hedges, we really use two tools -- either we use currency contracts, where we go out in the forward market, or we use debt.
Our two major exposures are either in Canada, where the functional currency is the Canadian dollar, or of course in Europe, where the functional currency is the euro.
Concurrently, the way we're hedging is in Canada, we are using currency contracts, and in Europe, we are using debt.
In Europe, we are long in terms of receivables and inventory, and then we have some bank debt offsetting that.
And right now, the rate in Europe on bank debt is really very attractive.
And this is something that we monitor all the time.
Jeff Klinefelter - Analyst
So maybe in summary, Fred, how effectively would you say you're currently hedged to the European business, given fluctuations in the euro to the dollar?
How far out, or how much of that business is hedged away?
Fred Silny - SVP, CFO
The effect on us is really very, very minor -- very, very, very minor.
Maurice Marciano - Co-Chairman, Co-CEO
Do you understand why, Jeff?
Jeff Klinefelter - Analyst
Yes, basically but --
Maurice Marciano - Co-Chairman, Co-CEO
We are using the revenue, the cash from revenues there, we are using it to pay debt in Europe.
So there is no impact on our cash flow here.
Fred Silny - SVP, CFO
Really, Jeff, it is very, very small.
Carlos Alberini - President, COO
The asset exposure is very, very small.
It is minimized.
And also, we are looking at maintaining those levels.
As you can see, we had a significant collection of receivables during the quarter, as Fred said.
And we were able to pay down the debt according to -- use a lot of that money to pay down the debt.
Also, the business -- because it is a wholesale business -- essentially, it should generate very healthy cash flow.
So we are going to have an opportunity to continue to delever the Company.
And then at that point, then we will consider to -- going into hedging if we feel that that is required.
But right now, it is very well balanced.
Jeff Klinefelter - Analyst
Thanks.
That is really helpful.
Good luck with back-to-school.
Operator
John Rouleau, Wachovia Securities.
John Rouleau - Analyst
Nice quarter.
I want to go back to the wholesale business a little bit and maybe the backlog number.
Aside from this issue of five markets this year and four markets last year, we're hearing that retailers are being a little bit more cautious in the back half of the year.
And we also know that they are buying less inventory upfront and doing more business on a replenishment cycle.
I am just wondering if you could talk to those two a little bit, and maybe how the backlog shapes up in that sort of environment.
And with a flat-type backlog, it would seem to make sense that that business could still be up in the back half of the year.
But maybe just talk about around those other paradigm shifts in the backlog?
Carlos Alberini - President, COO
We are not counting on business being up in the back half of the year.
I think what you mentioned before is absolutely correct; that is our expanse experience as well, John.
We are doing a lot of business of replenishment.
We have put some initiatives in place to be able to support that business effectively.
So we do have some inventory in the back to support, and it has proven very effective.
With respect to how the retailers are behaving, we see -- and we have said this even when we gave guidance for the full year -- that the retailers are trying to really improve their inventory turns.
Maurice Marciano - Co-Chairman, Co-CEO
Which we are too.
Carlos Alberini - President, COO
Right.
Maurice Marciano - Co-Chairman, Co-CEO
We are doing the same thing.
Carlos Alberini - President, COO
But, that, resulted in our revenues to be somewhat flat to a year ago, even when -- or even done in some cases -- even when we are in the same number of doors or even more doors than we were a year ago.
That is only because they are trying to really run a healthier business, the same that (multiple speakers) --
John Rouleau - Analyst
And it is healthier for everybody in the long run.
Maurice Marciano - Co-Chairman, Co-CEO
And the other thing that we are doing, also, in order to address this thing about replenishment is basically, what we are doing is we are taking position on some key fabric for us -- obviously, in denim but even in non-denim and even in knitwear.
And so like that, we can have a very quick turnaround.
But not that much from Asia because it is difficult from there but mostly from Mexico and from South America.
And we address the replenishment this way, the quick turnaround, this way.
Because now, we are dealing with existing style, which are already in production.
So we will place reorders -- this fabric that we are taking position on are absolutely no liability because these are fabrics that we use season after season.
But having the fabric ready allows us to really turn around very quickly.
John Rouleau - Analyst
Okay.
I got to ask about the cargos because, Maurice, you went there a little bit.
The Cargo Cadet was a pants that was just a huge homerun and very good for you a few years ago when it got hot.
Maurice Marciano - Co-Chairman, Co-CEO
Two years ago.
John Rouleau - Analyst
Yes.
Is that something that you've got in the line this year, or can you take--?
Maurice Marciano - Co-Chairman, Co-CEO
It's coming.
It's coming very soon in the stores.
You are going to be able see it in the -- I have just a capri right now in the store, okay, which is growing out.
But it is coming very, very -- I am the first one to have been surprised by that;
I have to tell you.
I didn't expect it to come back that early.
And it came back, and I really believe that both in pants and in capris, it is going to do very well again very, very quickly, okay?
John Rouleau - Analyst
Okay, and then last question, and then I will let somebody else have a chance.
Regarding quotas, the embargo situation -- and I guess the revaluation of the yuan -- just any commentary there and how you are positioned in the back half?
Maurice Marciano - Co-Chairman, Co-CEO
What we have done is we have protected ourselves in terms of inventory.
And we had to move just by precaution.
Without knowing if the embargo was going to go or not, we started already anticipating if it was going to happen -- what will we do?
Where we could move some of the merchandise and do some OPA (ph) -- I think it is called.
And everything that has been on schedule, and knock on wood, you know, we have not experienced any disruption.
And we do not anticipate any disruption.
Carlos Alberini - President, COO
We are in very good position.
Our production actually has been more on-time than a year ago.
This has allowed us to transition into back-to-school more effectively.
So we feel pretty good about it.
And like Maurice said, we put a lot of effort on the planning.
We were conservative, but I think it is paying off.
Maurice Marciano - Co-Chairman, Co-CEO
And I must say in that regard, that our office in Hong Kong has helped tremendously.
John Rouleau - Analyst
Keep it up.
Thanks, guys.
Operator
Dorothy Lakner, CIBC World Markets.
Dorothy Lakner - Analyst
Going back to denim for a second, I just wondered if you could talk a little bit about pricing and what is doing best?
You seem to have come up with some styles, particularly embroidered ones, which are very attractively priced relative to some of the really super-premium denim in department stores.
So I just wondered, both on the retail side and the wholesale side, what is selling best?
Is everything selling?
Just give us a little bit more color there.
And then talking about the cargos coming back, you said that denim was about 24% of your business.
I wondered what bottoms as a total would be, just to kind of get an idea what the balance is between denim and non-denim?
And then a question on Europe -- I just wondered -- with the retailers that you are forming alliances with who are going to be opening stores, will these be Guess? stores?
And is it a question of requiring them to have a certain percent of their inventory in Guess? merchandise, or will they be all Guess? merchandise?
And then just lastly, on Europe again, how many stores actually will be opening in the current year?
Maurice Marciano - Co-Chairman, Co-CEO
That was pretty long.
I am going to try to remember everything you say.
Dorothy Lakner - Analyst
I will remind you if you don't.
Maurice Marciano - Co-Chairman, Co-CEO
Okay, first addressing the denim because that was your first question.
The denim, we have basically a two-pronged strategy there.
One strategy is what we call the opening price point, which for us is around 69, $79 for the jeans.
And this is where we have our basic jeans, and this is doing very well.
And then we have the premium denim, which starts at $108 and up, up to 168.
And sometime, we had even some --
Dorothy Lakner - Analyst
The 98, I think?
Maurice Marciano - Co-Chairman, Co-CEO
$248, and these, on the sell-through basis, have been doing very well.
Now, on total door, obviously, the lower priced denim -- let's call it the medium-priced denim, which is around 70 to $80.
In total dollar, it is producing much more volume than the premium.
But the premium is very, very well-received, and it is crucial to our business.
I mentioned earlier in our conference that I really believe strongly;
I am convinced that the premium denim, which is all the jeans above $100, are here to stay.
It is a matter of fact.
Should I go on?
Okay.
What is the next question?
Operator
Holly Guthrie, Morgan Keegan.
Holly Guthrie - Analyst
I don't think she was finished.
Congratulations, everybody, great quarter.
My question for you, with fashion, it looks to me like some of the -- there is a lot of change in fashion for the fall, moving towards more structure.
And I think that your cargo comment is an interesting one.
But I guess I know Guess? to have a little bit different type of fashion.
What can we -- are you looking forward to a little bit more structure, a little bit more, I guess, Edwardian-type garment in the line for this fall?
Maurice Marciano - Co-Chairman, Co-CEO
Not for us though.
You know, we can have a little bit of that in the Marciano line.
But not in -- in the Guess? line, even though -- and you will see that coming later on -- some of -- the cargoes that we are bringing back are going to be also on ornamented with embroidery and all that.
It is not going to be exactly the same cargo as we had 2 years ago.
It will have to be reinvented.
Guess? by definition, Guess? is a sexy line.
And everything has to be sexy.
Everything has to be feminine.
So even when we do a cargo, we have to do it in a feminine way.
So you will see that coming forward.
And don't forget, we are still in this cycle of all Indian influence, which mean with a lot of ornament at all that.
And it is -- when you put these with the cargos, then you give completely a different perception, you know?
A different image of the cargo, okay?
It is not going to be just cargo; don't get me wrong.
I am just saying that the cargo is coming back, but it is not going to be all about cargo, okay?
Holly Guthrie - Analyst
And a question on receivables for Fred.
Fred, I thought you had talked about that the European receivables, which were guaranteed, would be paid off.
I thought you said 100% by the end of the second quarter.
So I just wanted to get -- I just wondered if you could clarify why I guess about a third of them are still outstanding, and then what is the time period where they will be paid off?
Fred Silny - SVP, CFO
Sure.
We got a fairly large collection in July for most of the balance.
And then for a small amount, we defer the guarantee until September.
And so that is really the story on the guarantee.
Holly Guthrie - Analyst
And then, do you feel -- do you have the allowance?
Because that was one of the issues also at the end of the quarter -- last quarter.
Do you know the change in the allowance for the out-doubtful (ph) accounts?
Carlos Alberini - President, COO
Yes, Holly, we have -- as we always do, we have done an evaluation of the bad debt at the end of the quarter.
And we are very comfortable with its bad debt allowance that we have recorded.
We did this in a couple of ways based on history and historical performance of the portfolio.
And also, we went through account by account to establish if there was any collections deficiency, especially considering the two factors that Fred mentioned before.
One is this guarantee, and the second thing is whether the account was insured or not.
So we just finished the audit over there.
It is not a full audit but the review.
Our auditors have been in Europe as well to make sure that we are absolutely valuing the -- both receivables and everything else in the balance sheet, including inventories and accruals and so forth appropriately.
Fred Silny - SVP, CFO
And Holly, the specific amount of the reserve at the end of the quarter was $8.9 million.
Holly Guthrie - Analyst
A quick question on wholesale -- I have noticed a couple of the men's Guess? denim jeans in the specialties -- in some of the specialty stores.
And I know late '99, when you guys were at your peak in selling, you had a lot in specialty stores.
I was wondering, is this a new market for you?
Are you seeing a good acceptance by some of the specialty stores?
And is this part of your guidance?
Or is specialty stores something new?
Carlos Alberini - President, COO
The business in specialty stores has been growing, but it is not a tremendous growth.
Our men's line has been doing very well.
In fact, that is not limited to specialty stores.
It has been doing very well in the majors as well.
Maurice Marciano - Co-Chairman, Co-CEO
But you are absolutely right that our specialty store business has grown lately, and we are looking into increase that, specifically regarding the high-end denim.
So that is what we are looking after.
Operator
Elissa Otto (ph), DE (ph) Research.
Elissa Otto - Analyst
Just a question around Europe.
I want to try to get a little bit more color on how your competitive positioning is fleshing itself out.
And there is some pretty tough competition in Europe -- H&M, Inditex.
And I was just wondering how you are going to go up against some of these guys in the market?
Maurice Marciano - Co-Chairman, Co-CEO
We are already in the market, and we are doing very well.
The brands there, Guess?, is very high positioned.
And basically, H&M is not the competition, neither is Zara for us.
The real competition for us are the brand like Diesel and Replay and Miss Sixty and should really, really -- we are in high-end specialty stores there.
And our stores, the retail stores that we have in Europe, are really doing well.
And that is why we are looking into expanding all these stores.
And the Guess? by Marciano, which is like the Marciano line for Europe, is growing very, very well in Europe.
It is doing extremely well.
So that has a very high growth rate.
Carlos Alberini - President, COO
And then on top of that, our accessories business there has been growing in a very, very fast way.
That business doubled in a period of 2 years between 2002 and 2004.
And even this first quarter, it doubled again from a year ago.
So a lot of the accessories that are in the line have been extended very, very rapidly.
And we continue to see significant growth and also opportunities to continue to develop different countries like Maurice said before.
We know that the product offering is being very successful (technical difficulty).
Elissa Otto - Analyst
Just a follow-up question on the strategic partners in Europe, you mention that the strategic partners want to make better use of the real estate, and that the Guess? stores will be replacing stores.
What stores will you be replacing?
Do you have any intelligence around that?
Maurice Marciano - Co-Chairman, Co-CEO
That, I cannot disclose.
I am sorry.
Because that will be basically a prejudice for the other brands.
So I cannot talk about.
Elissa Otto - Analyst
I understand.
And just a technical question for Fred -- noticed that your overhead costs as a percentage of sales -- about 110 basis points jump quarter over quarter -- and was just wondering if that will be sustainable for the third and fourth quarters of this year, or if it will come back down?
Fred Silny - SVP, CFO
Our guidance for SG&A for the quarters of this year, we are saying that we expect it to be up about 230 basis points in the third quarter and then down about 30 basis points in the fourth quarter.
Elissa Otto - Analyst
Yes, I was just wondering if you could maybe break it out for the overhead costs.
Carlos Alberini - President, COO
Oh, are you talking about the fixed overhead?
Elissa Otto - Analyst
Exactly right, yes.
So that line appears below the margin that you break out -- I am just kind of curious (multiple speakers).
It was about 5% of sales for this quarter, and it was about 4% last quarter.
Carlos Alberini - President, COO
Oh, you are talking about the corporate pull --
Elissa Otto - Analyst
Overhead exactly.
Carlos Alberini - President, COO
No, we see that number -- we have been performing better than a year ago relative to targets -- financial targets and so forth.
There may be some change in that line, but we have been holding those numbers pretty steady relative to the rest of the expense rate.
And we see that that will continue.
We don't see significant changes in that line for the remainder of the year.
We have been able to leverage that set of expenses.
It is what we call the corporate backpack here, but it is not allocated to the specifically (ph) reach of the businesses.
Elissa Otto - Analyst
So it is going to stay around the 4% level or around the 5% level?
Carlos Alberini - President, COO
No, no, I am talking about the dollar (multiple speakers).
Elissa Otto - Analyst
Oh, okay, I understand.
So as a whole.
Carlos Alberini - President, COO
Because those are fixed costs (multiple speakers) that we use to run the operation, and it is primarily corporate overhead type of expenses.
Operator
Christine Chen, Pacific Growth Equities.
Christine Chen - Analyst
Congratulations on a great quarter, guys.
I wanted to ask about the tax rate.
It looks like it way down to 38% for this quarter, and then you are guiding to 40 for the year.
What is sort of the rationale behind the decrease?
We'd all like to pay lower taxes, obviously.
Fred Silny - SVP, CFO
Sure.
Let me say, Christine, that we evaluate the tax rate for the year on an ongoing basis.
So this is something that we look at every quarter.
And we had been anticipating a 41% rate for the year.
We reevaluated it now at the second quarter, and we think that it is going to be 40% for the year.
So of course, because we were accruing taxes of 41% in the first quarter, there was a little bit of a catch-up in the second quarter that drove the rate down to 38%.
The dollar impact of going from 41% to 38% for the quarter is really only a couple $100,000 in taxes.
The dollars are very, very small.
But the point is that now, we think that the rate for the year, for the entire year, will be 40%.
Christine Chen - Analyst
Okay, and then, for the number of wholesale doors, it has been at 930 for the last couple of quarters.
Is that a number that you are happy with in either direction?
Carlos Alberini - President, COO
Well, we have been pleased with the way this whole process has been approached by our partners and even internally.
We want them to run a very clean business because we think that that contributes to a healthy partnership.
And so we have been very proactive in keeping a good portfolio of doors.
Now you asked me if we are happy.
Of course, this is something that we would like to grow the business and at par (ph), we want to do it in the right way.
Operator
Brian O'Ronick (ph), BLR (ph) Capital Partners.
Brian O'Ronick - Analyst
Unbelievable quarter.
Just keep up the great work.
I have got a couple of quick questions.
Fred, on the share count going forward, Q3/Q4, can you give me a little guidance there?
Fred Silny - SVP, CFO
I think -- if you look at us going from quarter to quarter, there is just a very modest increase in the number of shares each quarter.
And I think that that trend will continue, but it's very modest.
Brian O'Ronick - Analyst
Okay, great. 8 million in interest expense for the year, I guess that is down from your guidance of 7 million before?
Carlos Alberini - President, COO
No, no, we said 6 million. (multiple speakers) for the year.
Fred Silny - SVP, CFO
6 million net is our current guidance.
Brian O'Ronick - Analyst
6 million net including the offset on the interest income?
Fred Silny - SVP, CFO
Right.
That is our current guidance.
Brian O'Ronick - Analyst
Okay, so it is 6 million total for the year?
Maurice Marciano - Co-Chairman, Co-CEO
Net.
Fred Silny - SVP, CFO
Well, no, no, no.
Not total but it is interest expense, net of interest income, is 6 million for the year.
Brian O'Ronick - Analyst
So that would include Qs 1 and 2 that have already passed?
Carlos Alberini - President, COO
Exactly.
Fred Silny - SVP, CFO
Exactly.
Brian O'Ronick - Analyst
Fair enough.
That is what I wanted to make sure of.
Europe, it looks like you guys have guided up 350%, which gets my number to around 77.9.
Is that about right off of last year's 17.3 million?
Carlos Alberini - President, COO
I am sorry.
Say that again, Brian.
Brian O'Ronick - Analyst
My understanding from before was your guidance on Europe was up.
I think it was about 250 basis points, and now you have raised it to 350 basis points.
Carlos Alberini - President, COO
Right.
Well, we said that we expected growth to be 3.5 times.
Fred Silny - SVP, CFO
Brian, I think you are talking about our guidance --
Brian O'Ronick - Analyst
Actually, it would be 3,500.
Fred Silny - SVP, CFO
On revenues from Europe.
Brian O'Ronick - Analyst
Correct.
Fred Silny - SVP, CFO
And it wasn't -- for the third quarter, it is not 350%.
It is 3.5 times over the prior year.
And then in the fourth quarter, it is doubled.
Brian O'Ronick - Analyst
So third quarter, it is about 77.9 million?
Do I have that number right?
Carlos Alberini - President, COO
No.
I think that last year, the third quarter, we had revenues of $17.3 million in Europe, okay?
If you do that times 3.5, it would put you at $60.5 million.
Brian O'Ronick - Analyst
Okay, so it is the same.
I am sorry.
When I look at inventory at retail, you guys have broken out in the past?
Carlos Alberini - President, COO
No, we haven't done that in the past.
Brian O'Ronick - Analyst
I thought you gave last quarter retail inventory was 52.2 million, total inventory was 95.6?
Maurice Marciano - Co-Chairman, Co-CEO
(multiple speakers) No, we didn't.
We always talk about total inventory.
Fred Silny - SVP, CFO
(multiple speakers) In our Q, we do break out finished goods for retail, and I can give you that number.
Just one second.
This is finished goods for retail at the end of the second quarter -- 58.6 million.
Brian O'Ronick - Analyst
Do you have that for last year Q2?
Fred Silny - SVP, CFO
Not in front of the me. (multiple speakers)
Brian O'Ronick - Analyst
I can look it up.
Fred Silny - SVP, CFO
I have the year-end number, but that is not comparable.
Brian O'Ronick - Analyst
No big deal.
Carlos Alberini - President, COO
But I can tell you that inventories in the stores were running about flat down -- slightly down on a comparable basis.
But flat to last year because we have additional stores.
Brian O'Ronick - Analyst
Fair enough; that is superb.
Regarding China, more so industrywide then may affect your business, I noticed you said that you guys are in good shape going forward.
Am I assuming that your imports out of China, like regarding junior sweaters, which is coming up, that may be restricted as of August 1?
You guys don't import a lot of sweaters out of China?
Maurice Marciano - Co-Chairman, Co-CEO
We do. (multiple speakers) We do, but then, same thing -- you can do some OPA, okay?
So which mean you finish the garments, either in Hong Kong or in Macau, or in -- and you can do it this way.
Or you can move some of the production to other countries, like Malaysia or Singapore.
You just have to be proactive.
Brian O'Ronick - Analyst
When you are moving the inventory production to maybe some of these other countries, are you seeing benefits or hindrances in terms of lead-times?
Maurice Marciano - Co-Chairman, Co-CEO
No, in terms of lead-times, of course, you are going to add probably 1 week or sometimes 2 weeks to it.
But because we plan our production way in advance, specifically in sweaters, then we are basically covered.
Brian O'Ronick - Analyst
And have you not really done much in the way of imports for women's and men's denim out of China?
Is most of it domestic because of complications--?
Maurice Marciano - Co-Chairman, Co-CEO
Denim?
No.
Denim is mostly for the premium.
It is only in L.A.
But the big part of it is in Mexico.
And only when it's like labor-intensive and all that, then we do it out of China.
Carlos Alberini - President, COO
But it is very small.
Maurice Marciano - Co-Chairman, Co-CEO
Very small, it is a small part of the business.
Brian O'Ronick - Analyst
Thank you very much.
Keep up the great work.
Operator
Dorothy Lakner, CIBC World Markets.
Dorothy Lakner - Analyst
Most of my questions have been answered by now.
But just so -- the question about Europe, Maurice, in the retailers that you are forming alliances with, when they open a Guess? store, is it that you will have a--?
Maurice Marciano - Co-Chairman, Co-CEO
I have your answer.
Basically, these retailers, it all depends where the location of the store is.
There is a particular store that we open, and it is only the Guess? by Marciano, which is like the Marciano.
And where they will bring only a little bit of denim to complement the line of Guess?, okay?
Now most of the stores that will be Guess?, and there is a mixture of Guess? jeans;
Guess? by Marciano, which is Marciano; and accessories.
Okay?
Now the mix really depends on every single store.
Because depending -- they make their own mix with only (multiple speakers) --
Dorothy Lakner - Analyst
And can they carry other brands?
Maurice Marciano - Co-Chairman, Co-CEO
No, no, no, no, no.
Dorothy Lakner - Analyst
Okay, so it will be all Guess?
Maurice Marciano - Co-Chairman, Co-CEO
These are all Guess? stores.
Our mono brand, no, no, no absolutely. (multiple speakers) Which is great because it is like having a billboard on every street.
Carlos Alberini - President, COO
Okay, and probably one of the questions you asked was the percentage of denim/non-denim (multiple speakers).
And you know, this is just for the second quarter, but the non-denim business represented about 21% -- this is just the young contemporary line, right?
Denim business represented about like Maurice said, almost 25.
It goes back to what Maurice said before, that really, we are obviously very well known for the denim.
But we have a very diversified merchandise bet, which is great.
Maurice Marciano - Co-Chairman, Co-CEO
That's it?
Operator
Yes, there is no further questions.
Maurice Marciano - Co-Chairman, Co-CEO
Okay, so thank you for your interest in Guess?.
And we look forward to keeping you updated on our progress in the very near future.
Thank you very much, everybody.
Operator
This concludes today's teleconference.
You may disconnect at any time.