G-III Apparel Group Ltd (GIII) 2009 Q1 法說會逐字稿

Welcome to the G-III Apparel Group Limited first quarter 2009 earnings conference call. Today's call is being recorded. (OPERATOR INSTRUCTIONS) Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. I would like to turn the conference over to Mr. Neal Nackman, Chief Financial Officer of G-III Apparel Group. Please go ahead, sir.

Thank you. Good afternoon everybody. Before we get started, I just want to remind you of the Company's Safe Harbor language. Some statements made today on the call are forward-looking statements as that term is defined under federal securities laws.

Forward-looking statements are subject to risks, uncertainties and factors, which include but are not limited to, reliance on licensed product; reliance on foreign manufacturers; the nature of the apparel industry, including changing customer demands and tastes; customer concentration; seasonality; customer acceptance of new products; the impact of competitive products and pricing; dependence upon existing management; possible business disruption from acquisitions; and general economic conditions; as well as other risks detailed in the Company's filings with the Securities and Exchange Commission.

The Company assumes no obligation to update information in this call. In addition, during the call, we will refer to EBITDA, a non-GAAP number. We have provided a reconciliation of our EBITDA numbers to our net income, according in GAAP, in our press release. I will now turn the call over to our Chairman and Chief Executive Officer, Morris Goldfarb.

Good afternoon and thank you for joining us. With me today are Wayne Miller, our Chief Operating Officer and Neal Nackman, our Chief Financial Officer. I'll start with the financial highlights from the first quarter, with Neal Nackman providing more details in a few minutes. Net sales for the quarter were at $75.4 million, well ahead of our forecasted net sales of $60 million. We outperformed our forecast primarily due to the excellent sales from our Calvin Klein and Jessica Howard dresses.

Our net loss for the quarter of $6.9 million was also better than we expected due to good profitability in the dress business. Our net loss per share was flat to the year ago level at $0.42, much better than our guidance for the quarter of a net loss between $0.47 and $0.51 per share. Our order book is in good shape. We're currently booked at about 75% to plan. In general, all of our businesses are tracking well right now. Calvin Klein, Kenneth Cole, Guess? and the sports business are all booking well. While we recognize the tough tenor retail environment, the strength of our brand and the products we're delivering are very much in demand in the marketplace.

I'm also pleased to say that our integration process for Andrew Marc is going well. We've eliminated about 20% of the head count, we've closed a redundant overseas office, systems are converted and our product expansion strategy is well underway. We continue to be excited about the potential of this business to become a significant brand in a number of categories well beyond outerwear. We're actively pursuing some licensing arrangements for the initial expansion of the effort. While we're not quite through the process, we have a number of excellent partnership opportunities and have good indications of support for these efforts from key retailers for the brand.

Because of the opportunity we have for the Andrew Marc brand, we're excited to be investing in the brand this year with a significant media print presence for the fall season. We believe our marketing initiates are well timed, they'll create value to the Andrew Marc outerwear business and will prime the market for new categories. In addition, to a good expectation for what Andrew Marc will contribute to our future, we remain opportunistic about the remainder of the year. We're fortunate to be aligned with some of the best brands in the marketplace. We're leveraging this with some exciting product that we think will play right into the prevailing fashion trends, give the consumer a compelling reason to purchase, regardless of the environment.

We're also working on some good new properties to augment our core business mix. A balance sheet remains strong and we continue to have a vote of confidence from our banking group, which recently extended our available lines of credit to $250 million from $195 million. Our asset to capital and strong balance sheet positions continues to be a strategic advantage. We continue to review acquisition opportunities that will help us grow the Company. And we're in a strong position to capitalize on what is becoming a more favorable buyers' market.

Despite our optimism, as you know, we tend to plan our business pretty conservatively. This has proven time and again to have been the right approach. We've seen some very challenging environments over the past couple of fall holiday seasons and we've achieved good growth despite this. Like everyone else in the industry, we're going to be working against pressures of the market, which include a generally hesitant consumer and increasing costs. We're comfortable that, once again this year, we have an opportunity to deliver topnotch product, from a variety of powerful brands and to show significant growth, both on the top and on bottom line. I'll now turn the call over to Neal Nackman, our Chief Financial Officer to review the quarter and provide you some details on our guidance.

Thanks, Morris. First, with respect to our first quarter's results, net sales for quarter ended April 30, 2008 were $75.4 million, compared to $35.1 million in the year ago first quarter. Our first quarter continues to be our lowest sales quarter. However, we did see nice increases in sales this quarter, primarily as a result of non-outerwear sales in both our licensed and non-licensed segments. The increases in sales of licensed apparel were primarily the result of increased sales of Calvin Klein dresses.

Sales of non-licensed apparel increased mostly from sales of our Jessica Howard and Eliza J. dresses. The Jessica Howard acquisition occurred during the second quarter of last year. And accordingly, their financial results were not included in our first quarter's results last year. We had a net worth of $6.9 million for the quarter or $0.42 per share, compared to a net loss of $6.4 million or $0.42 per share in the year ago quarter. As Morris mentioned earlier, these losses were significantly less than we forecasted. We expected larger losses due to acquisition of Andrew Marc, which is not expected to generate profits for us until the third fiscal quarter of this year.

While the loss incurred from the Andrew Marc business was as expected, much of this loss was offset by the strong performance of our dress businesses. Gross margin percentage increased during the quarter to 23.3% from 20.9% for the prior year's quarter, primarily as a result of higher margins achieved from dress sales. SG&A expenses increased to $27.3 million from $16.5 million for the year ago quarter. This increase is primarily attributable to expenses associated with the acquired Andrew Marc and Jessica Howard businesses and to a much lesser extent, expense increases associated with the Calvin Klein dress business.

Now, turning to guidance, we're expecting full year sales to be in the range of approximately $650 to $660 million or an increase of 25% to 27% compared to the prior year. EBITDA to be in the range of $50 to $51.5 million, which would result in an increase of 32% to 36% over the prior year. And net income per diluted share to be in the range of $1.25 to $1.30 per share or an increase of 19% to 24% over the prior year.

Regarding the second quarter, we are expecting sales of approximately $100 million this year, compared to $84 million in the comparable quarter in the prior year. And a net loss of approximately $3.6 million or $0.22 per share, compared to a loss of $884,000 or $0.05 per share in the prior year. The increase in our net loss is primarily attributable to the impact of the Andrew Marc acquisition, which as mentioned earlier, has a seasonality similar to the rest of our core outerwear business. That concludes my comments and I will now turn the call back to Morris for closing remarks.

Thank you, Neal. And thanks again to everyone for your interest in your Company. We're proud of the results we've reported for the first quarter and with the strategic progress we continue to make. Our core business is performing well, our initiative with Andrew Marc is proceeding well, and we're excited to take additional steps to continue our transformation of G-III into an all-season diversified apparel Company. Operator, we're now ready to take some questions.

(OPERATOR INSTRUCTIONS) And we'll go first to Jim Duffy with Thomas Weisel Partners.

Thank you. Nice quarter.

Thank you, Jim.

A couple of questions for you. First off, in the first quarter, how much of the business was dresses? Were you able to isolate that between Jessica Howard and Calvin Klein?

Jim, we haven't been breaking it out at that level. We've spoken about our total outerwear business for the year being 80% and that's going to be consistent again. Of course, the first quarter, it was more significantly dresses in the first quarter.

You're getting such a nice contribution from projects under the Calvin Klein brand. Are you prepared to break out what percentage of your revenue you expect to be under the Calvin Klein brand for the year?

We're not. We're prepared to tell you that our other brands are all posting nice increases as well. In many cases, they're double digit, better than low doubt digit increases. So, it's really not all about the Calvin Klein brand. We have a healthy business. Calvin Klein is a great driver for it but the Guess? brand is performing well. The Kenneth Cole brand is performing well. Sports licensed is performing well. Jessica Howard dresses was a major contributor to first quarter. So, it's a fairly well rounded business.

Okay. In your prepared remarks, you left out a lot of detail on each of those different businesses. We're no longer hearing from you about things like Exsto. How should we think about that and things like the Alyssa Milano business and the contribution that they made in this particularly quarter? Any color you could provide would be helpful. Thanks.

Well, I would say that you consider that kind of a one-off situation. We're proud to say that Exsto is a profitable business for us. It's not of the scale that we would have hoped it would be today. But I can comfortably tell you that the store count is increasing in the boy's business. And in the men's business, we have for the first time, I think, a July delivery is something that we're proud of.

We've been in a period of liquidation in that brand. Liquidating some of the early commitments made by Wal-Mart. We did not contribute very much to the markdown needed to move the product. That was a Wal-Mart liability. And it's been okay. The good news is, they're with us. They want to continue the brand. And we've eliminated some of the expense attached to managing that brand. We've integrated it into our sports licensed division and there's very little cost attached to running it. So it's a nice place to be.

It's not -- early on when we signed this agreement, we thought that we could hit -- I think we were talking about a dream of maybe $100 million in business over a period of time. Today, the good news is it's still a dream. It's not over. And it's -- we've stabilized it. It is profitable. On the -- and we don't speak about it or we have not spoken about it for first quarter because it was a very small piece of shipping for the first quarter. So we didn't touch on it.

We touched on Alyssa Milano, our bookings are very good. The partnership with JC Penney is important to us. The store count is increasing on the commitments made and it's still a relatively small business. It will -- I can comfortably tell you it will at least double in size this year comp to last year and it still doesn't hit the charts. So, it's certainly worth being engaged in. It brings us other licensed opportunities and Alyssa Milano is a great champion for the brand.

Okay. One more question on the portfolio and then I have a couple of questions on the numbers. Any update on the Calvin Klein activewear?

Yes. We've had one solid distribution of product. It was our first initiative at shipping. We were in -- actually, we've done kind of a nice job quickly. We're in 30 Macy's doors. We're in approximately 20 Lord & Taylor doors. We have 40 doors with Dillard's participating in it. The Bay in Canada has not received it yet but they're in -- they've given us distribution for 45 doors. We have approximately 24 specialty stores that are online. And we've got some nice initiatives we're working toward in the sporting goods arena. So, we're happy with it. We've just received a second cycle of shipping that looks absolutely great. And if you're in New York, I'd encourage you to stop by and see what the product looks like.

Okay, great. And then, Neal, a couple of questions on the guidance. First, Q1 to Q1, you had a $40 million year to year improvement in the numbers. And then Q2 to Q2, the guidance implies kind of $25 million year to year improvement. Is the difference there the Jessica Howard business or is there some shift in timing of shipments?

There's a little bit of both but it's significantly -- the Jessica Howard business was in the numbers pretty significantly in Q2. That acquisition was May 11 last year. So, we got all but the first 20 days of their shipping in our Q2. And then, we are still experiencing -- continuing to see some push-back in terms of the outerwear business and outerwear shipping going to Q3 from Q2.

Okay. And then, Morris, with regards to your bookings for outerwear, was it 75% that you said are now on hand?

No, what I basically said, is 75% of our plan, which encompasses pretty much the entire Company, is on hand. Which is -- for us, it's a big number and it is slightly ahead of last year as a percentage of bookings. So, it's a good place to be.

Okay.

And still being primarily a coat Company, we still have a long way to go.

Right but on a relative basis, you're kind of ahead of where you were last year at this point in time?

On a relative basis, the answer is yes.

Great. Thanks. I'll let someone else jump in.

And we'll take our next question from Jody Kane of Sidoti & Company.

Hi, thank you. Neal, just looking at the EPS for the first quarter, it kind of being flat year over year but then seeing a bigger decline in the second quarter of EPS. Is that just primarily the addition of Andrew Marc?

That's right. And again, just a little bit of what Jim was asking before. In Q1, we had -- the additional dress business is all new business. So we don't have that lift in Q2 to offset those Andrew Marc losses.

All right. And then, looking at the guidance for revenue, the high end is almost 27% gross. Why is the EPS growth not in line with that revenue growth?

If you look at our net income in this table, you'll see that our net income growth is in line with that. We've had a little bit of dilution that takes the EPS down a little bit from that. And last year, if you'll recall, we did the follow-on offering. That is only impacting my share counts starting in March and April.

All right. And then, just with the Calvin Klein business, the activewear, the newer lines that you're sending to stores right now, is there any reason why a consumer wouldn't look at Calvin Klein and say; "Keep Calvin Klein for sportswear and wear sports clothes for doing activities?"

I'm sorry, I didn't understand the question, Jody.

Sure. I'm just trying to figure out why the consumer would buy Calving Klein activewear, as opposed to a Nike or Under Armour and not just keep the Calvin Klein business -- I mean the Calvin Klein products for going out. What's the intent? Why would they buy this and why do you think it's a good line?

Well, the line is -- it actually is a great line. And it's a line that maybe you'd consider a little less functional than Under Armour. It's created to dress the woman early in the morning and she's got the ability of wearing this as she works out. She can go shopping with -- wearing the pants and the shirt. And there's a layering pieces and outerwear piece that coordinates with it. So, it is not strictly a work-out fabrication. It's not -- to maybe clarify it, it could be classified a little bit more as sort of day wear. And we're showing the consumer that designers can also create this product. It's not all about function. Some prefer a little bit of creativity, other than functional fabrics and we're on it. We've got some great designers, which is why I invite you to come up and see where the product is headed toward.

Great. I'll jump back in. Thanks.

Thank you, Jody.

And we'll take our next question from Eric Beder with Brean Murray.

Could you -- you talked a little bit about the market for M&A getting better. Could you kind of give a little color on that on what you're seeing in terms of -- I know the last time you talked, you said multiples were a little too high. Have multiples started to come down in terms of what people are asking for in terms of deals?

I think it's dependent on the properties that you look at. There is a concern because of the retail climate. The consolidation of stores is very obviously. The instability of the retail world is also very concerning to many people. And financing businesses, as we all know, has become virtually impossible to accompany not-of-scale and not able to mandate retail prices on the floor. So, we seem to have that. We have the attention of management. We have a retail presence.

When I say retail presence, our product is clearly occupying significant space. When we get the attention of management to take in additional brand. We're doing that. We're levering a lot of what we have to grow Andrew Marc. We have the ability to finance it. We have the talent pool to support it. And we have the attention of the management teams at retail venues to support it. So that's a good example of the type of acquisition we believe we can add value to and find appropriate deals that don't trade at a very high multiple.

And the format in which we have traditionally bought companies, if they're entrepreneurial, we have a component that is an earn-out component. So the founders and the operators of the business have an opportunity to prosper alongside of us. So, that bodes well for this Company.

Okay. And in terms of Andrew Marc, what kind of -- you already have a handbag license. What's kind of the next round of licenses do you want to have? And when do you think we'll start to see that kind of stuff?

Well, we do not have a handbag license. We manufacture the handbags in-house. That business is growing quite nicely since our involvement. The -- we are in discussions with two very logical companies of size. And hopefully, we'll be able to secure at least one license within the next 30 days. And post that, we think we'll be -- on the tails of that, we'll have another license to announce and that's a wonderful thing. We've been on the paying side. It would be great to promote a brand and collect some revenue for our efforts. So, we're excited by that. And we're very select on the caliber of licensee that we would sign on. This isn't about just creating a royalty stream with inappropriate licensees. So, it's calculated and we are truly looking for valid partnerships.

So, we should expect at least two licenses this year?

Well, at least one, possibly two.

Okay. All right. Thank you.

Thank you, Eric.

(OPERATOR INSTRUCTIONS) And we'll take our next question with Todd Slater with Lazard Capital Markets.

A follow-up on Andrew Marc versus -- and then, I'll ask some other questions. Is there an international component there? And also, is there potential on the sportswear side?

The answer to both is, yes. And I'll deal with each one individually. The international component, we're working on very quickly. We believe it's a great brand for the Russian market. We're there today, quite honestly, trying to form an alliance that will appropriately market the brand in Russia. And then, we'll work at the European market a little bit later. We do have some representation in Europe. We're reviewing it. Our team in Europe is coming to New York toward the end of this month to review the possibility of going a little bit more global with Andrew Marc.

As far as the sportswear component goes with Andrew Marc, we're not ready to deal with that right now. There's a strong possibility that we would do a capsule group of dresses before the year is out to service the Neiman Marcus, Sacks, Bloomingdale's sector. We have the talent pool to create it. We've got the resource structure to support it and I think we have the appetite of the retailers to market it. So, we believe that you'll see some dresses before you see the sportswear.

Okay. That's interesting. Moving on to just getting a sense of the inventory levels that you're planning this year sort of, could you just talk about, directionally,y where you see them by major classification, outerwear, dresses on an apples-to-apples? If you could look at those -- well actually, you're now cycling the acquisitions. But how you're sort of planning inventory for the rest of the year?

We're planning our inventory -- actually, if you look at it on -- as it relates to auto-book, we're planning it very tight. The environment doesn't give us the comfort that this would be the year to bet the ranch on inventory ownership. What you might see is, we'll have a fair amount of inventory for second quarter that is planned. We're looking at what is going on in all parts of the world, as far as production, as far as shipping, as far as the Olympics. And our strategy, I think we might have spoken about this six months ago, our strategy was to book our production very early, get it out of the way of all the stuff that generally happens in difficult environments. So, our lenders lenders understood it well. They worked with us to support our needs. So, we're comfortable that we have the money to fund. We have the warehouse and distribution facilities to house it. And we have the orders to ship it. So what might get skewed is, when we report, you might see our inventory levels a little bit higher than you might expect for second quarter but that's strategic.

Okay. That's good to know ahead of time. When you say that you're a little ahead of last year in bookings, I just want to make sure I understand if that's in dollars, in units, or a percent that you own relative to plan or sort of how do we look at that?

We look at it in pure dollars.

Okay.

We measure our business in dollars. We look at how we manage our distribution by units. But it's -- clearly, our accounts are always in dollars.

Is there anything on the sourcing side that we need to be aware of in terms of cost pressures and geographies, things like that?

No, I think that's why people choose to invest in G-III, is that our core competency, we source well. We plan our business. We partner with the right factories and providers from all parts of the world. So, I would say that there's normal economic impediments that generally force you to pay a little bit more year after year. Now, currency is not working our way on the buying side. And unfortunately, we don't have a sector of our business that supports a lot of European business. So, we're trading in dollars and doing fine. There's a sector of the business, which is the leather business, the skin prices have gone up dramatically and that's hurt some of the leather business. And we've seemed to have fixed that by concentrating on the areas of our business that we could market well. Our wool business is excellent. Our down business is great. There's -- the only real pressure that we see in pricing is the leather business for the moment, the skin price on leathers.

So, there's some cost pressures being offset by other strategic mix shifts. And overall, on the whole portfolio, costs are going up, balanced, how would you describe it?

Well, we also have higher margin brands that can offset some of the higher costs. A lot of what we do is -- if we're in a coat business, we're in a competitive environment. And with a superior brand, so that can offset some of the additional costs that we incur. On the Cole Haan business or the Andrew Marc business, it's a lesser issue because the tier of distribution that we have can afford a couple of dollars more. And I don't look at prices being the issue this year at all. That's not been one of our hot buttons. Our hot button is getting the product right. Getting it in, being prepared to ship it and ensuring ourselves that the sell-throughs are going to be appropriate. In the past, my heritage brings me to buying the best, producing the others and producing the most in classifications. That's not the school of thought any longer. The school of thought is to get it right. Pay a little bit more if you need to and manage your margins. And we're operating on a totally different regimen than the Company had been accustomed to. We've been working toward that for years. Part of how we've shored up our systems and our financial reporting internally within our divisions has schooled our merchants to operate in difficult times.

Todd, this is Neal. Just to add some flavor in terms of modeling. While we haven't given out -- we traditionally don't give out any of the detail at the gross margin or SG&A level, we are still expecting, this year, to have some gross profit margin increases in the business. So, just to help you in terms of modeling and understanding the portfolio in total.

Okay. Any color on the Dockers part of the Andrew Marc acquisition?

Yes, we have the full year plan in, as far as bookings are concerned. There is one minor concern and, putting it on the table, it's called Mervyn's. But not a major concern. So, that business is good. Our entire year's plan is in-house.

Okay. And Mervyn's is -- what percent of the business is Mervyn's?

Not enough to really be concerned with.

Okay. And lastly, since the Celtics are about to beat L.A. is that a good upside in the sports licensing business this year?

Not enough. Our classifications in NBA are not significant to move the needle.

You never know.

I don't know.

It hasn't been green in a long time in the NBA.

It hasn't. But it was blue for Super Bowl.

Anyway, congrats and best of luck.

Thank you, Todd. Thanks for your questions.

And we'll take a follow-up from Jody Kane with Sidoti & Company.

Just a couple of quick follow-ups. The advertising that you're doing for the Andrew Marc business, is that affecting Q2?

No, it's not affecting Q2. It will affect Q3 to some degree and a little bit of Q4.

All right, terrific. Has the new Calvin Klein business, is that going to offset some of the outerwear business in the second quarter or is it not up to scale to overdo that yet?

The performance piece?

Yes.

No. If we make our plan, which we will, it's a very small plan and there's really -- we should have no concern on the performance business for this year. It's a very small plan. It should not be a problem at all.

All right. And just finally, what about the integration costs and just taking costs out of the business, is that going to continue from the first quarter into the second quarter?

If we see opportunities, it will continue. What we've done is worked well at moving quickly on the Andrew Marc component. We saw opportunities when we were negotiating for the Company. That's part of the reason that we acquired it. And we took a stand right out of the box. We consolidated some real estate overseas. We eliminated an office. We reduced our head count by about 20%. And now, we're working on the domestic side, as far as real estate is concerned. We're moving one of our divisions nearby. And we are still a growth Company. And to tell you that we're going to eliminate costs to a major degree for the year, I'd say probably not.

All right. Great. Thank you.

Thank you, Jody.

And we'll take another follow-up from Jim Duffy Thomas Weisel Partners.

Thanks. Neal, you mentioned that some of your retailers are taking receipt of the outerwear product closer to need. What are some other things that are different in your conversations with retailers this year that may change how you're managing the business?

Well, there's a greater dependence on us to deliver product to the floor. We've become a major supplier to Macy's, to Dillard's, to Nordstrom. And the fact that they would suffer a shortage of inventory if we didn't deliver, kind of necessitates some level of cooperation and we're getting that. But the mantra has been for the last couple of years to take your product in as close to need as you can possibly do it. So, we balance that, as far as production, distribution and shipping is concerned. It's not an easy juggle. And this year, we decided that it was necessary for us to take the receipts a little bit earlier than our shipping would be. We know -- we believe that the orders are secure. It gives us the opportunity to inspect, evaluate and maybe in many cases, not be at risk of erring product in. So, the net of it, we calculate, is a win.

Okay. So effectively, you're taking the inventory in earlier. There will be stages of delivery, I presume, to the customers or is there just one large shipment, which goes closer to need?

There are stages and it's a process of negotiating. We'd like to ship the product earlier. They want to take it as late as possible. There's -- we're talking about outerwear that generally starts to sell in August, September, our desire is to ship in July. We negotiated and we believe that what we're forecasting for you is a fair assessment of the lay of the land.

Morris, put another way, are the retailers asking you to take more of the inventory risk?

No, no. I don't know. In dealing in this retail climate for years, you do take an inventory risk. The orders are in a sense inventory. They receive the orders. They -- if the sell-throughs are not appropriate, then they come back for markdown money but we are not buying uncommitted inventory. We're not we're not taking back product. We're not -- well, that's not a fair statement. But there are situations that may force us to take it back but we're buying what we need. There is no further risk. The reason that we have this inflow of product is purely because we're concerned that if we don't take it in early, we simply won't have it. The Olympics will get in our way. We're all aware of the capabilities of the Chinese community. They can decide at the drop of a hat that; "We're not going to let containers flow for two weeks in July." I don't want to be at the mercy of a political event.

That makes some sense.

Well, it's been our strategy for the last six months. And it's part of why we negotiated a really good deal with the financial community. They saw it, they support it. And they've reviewed with us, our forecast and our needs. And they're very much in line with, just what we believe is, the appropriate strategy for today's time.

Okay. And then within the portfolio, if you parse apart those components which were acquired within the last year and look at organic growth of the business, what type of growth rates would you be seeing in your plan for the year?

Well, I'll tell you, Jim, that it's really pretty consistent with where we were last year. I think when we stripped out the acquisitions last year, we were in the -- around the 12%. And we're probably in the low double digits when you strip out the acquisitions this year, as well.

So, that's pretty strong, given the current environment. And then final question, you have been very active on the acquisition front, which has presented you with tremendous opportunity to be realized in future periods here. Why at this point, not sit back and just operate those businesses, which you've acquired and focus on realizing some of those opportunities? Why does it still make sense to be out looking for additional properties?

Well, we're looking at properties and formats that are not invasive of our time, our human resources. They come with management. It's the appropriate time for this Company to enter into certain businesses. As we prepare to disclose a situation, I think you'll understand the merit of it. This isn't wholesale shopping for any acquisition. To layer on pieces of business that integrate well with what we have, is a wonderful thing. These opportunities are not brought to you in normal times.

Jim, it's Wayne. I also think that we really balance it out. We're very careful on one side, with the integration process, to make sure that we're adjusting properly. And on the other side, we continue to pursue acquisitions. So, we make sure that there are -- all the appropriate teams are in place to run and manage the businesses. And it works well for us.

Clearly. Very good. Well, keep it up.

And we'll also take another follow-up from Eric Beder with Brean Murray.

Yes, just a quickie. What's happening with Ellen Tracy in terms of that rollout? I know it was kind of pushed back with the acquisition. What's going on with Ellen Tracy, now?

As far as the rollout, you have as much information as we have. Our business in Ellen Tracy is actually good. Our co-business is up doubt digits. Our dress business is doing okay. It's making some money, it's not bleeding. And we hesitate to make a major commitment to it because we don't know where it is. We don't know where the current ownership is positioning it. So, we're operating, it's prosperous. And if the day comes that we don't agree with the strategy of the current ownership and it goes away, it's not the end of the world either. So, we're in a very, very good place with this brand.

Okay. Thank you.

Thank you.

And there are no further questions at this time. I'd like to turn the call back over to management for any additional or closing remarks.

I thank you all for your time and wish you a very, very good day. Thank you.

And that does conclude today's conference. We appreciate your participation. You may now disconnect.