Movado Group Inc (MOV) 2003 Q2 法說會逐字稿

Welcome to the Movado Group second quarter earnings conference. During the presentation all participants will be in a listen-only mode. Afterwards you will be invited to participate in a question-and-answer session. At that time if you have a question, you will press star 1 on your touch-tone phone to register for a question. As a reminder this, conference is being recorded on September 4, 2003. I will now turn the program over to Efraim Grinberg of Movado Group. Go ahead, please.

Good morning, and welcome to our second quarter conference call. Before we begin today's call, I am pleased to welcome Suzanne Michalek who recently joined our company as Director of Corporate Communications. In this newly created position, Suzanne will be responsible for investor relations and she will serve as the dedicated resource to the investment community. Suzanne was previously employed with Morgan Walk [ph] where she serviced the Movado account for several years and is already very familiar with our company and our strategies. Please join me in welcoming her to our organization. Now, let me turn the call over to Suzanne.

Thank you, Efraim. Good morning, everyone, and thank you for joining us today. In addition to Efraim Grinberg, President and Chief Executive Officer, with me today are Rick Cote, Chief Operating Officer, and Gene Karpovich, Chief Financial Officer. Before we begin, I would like to note that this conference call contains forward-looking statements which are made and pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Factors which could cause actual results to be materially different from any future results, expressed or implied, are discussed in our filings with the Securities and Exchange Commission. Such forward-looking statements include statements regarding Movado's performance for the remainder of fiscal 2004 and beyond. We currently expect to update estimates; however, the failure to update this information should not be taken as Movado's acceptance of these estimates on a continuing basis. Movado Group may also choose to discontinue presenting future estimates at any time.

Let me now outline the order of speakers and topics for today's conference call. Efraim will begin with the highlights of our second quarter, Gene will then review the financial details, and Rick will cover the progress we've made on our operating initiatives, as well as provide you with our outlook for the balance of our fiscal year 2004. We would then be glad to answer any questions you might have. I would now like to turn the call back over to Efraim.

Thank you, Suzanne. Today we are pleased to announce solid second quarter results with growth in both our sales and profits, slightly exceeding our expectations. During the second quarter the economic environment showed signs of improvement in the U.S.; however, our major international markets remain sluggish, reflecting continued weakness in European economies, the negative impact of SARS in Asia, and the residual effects of war in the Middle East. In the second quarter, despite this mixed environment, our sales grew by 6% to $76.5 million and by 4.4% on a constant dollar basis. Net income increased 7.1% to $5.8 million, and our earnings per share grew to 46 cents from 44 cents last year.

For the first six months of the year, sales increased 5.6% to a record $136.7 million. Net income for the first half of the year increased a strong 15.8% to $6.6 million while our earnings grew 13.4% to 53 cents per fully diluted share. Overall our brands in the second quarter showed positive trends as our largest brand, Movado, delivered high single-digit percentage growth led by an increase in our domestic business partially offset by decline in our international market. In addition to our strong Classic Museum product, we experience continue success with our Morosa [ph], a new Museum dial women's watch, as well as Gentry Sport, a heritage-inspired timepiece appealing to younger customers. Newness layered on top of core classic is what continues to drive our business.

As we enter the second half of this year, we will continue to build on this successful strategy with innovative new products across all of our brands led by our new automatic Museum watch. We will also continue to strongly support our most important asset, our brands of compelling advertising. This fall and holiday season, our campaigns will be prominently placed in widely circulated publications. The launch of the Movado Automatic will be supported by a national print advertising campaign featuring dramatic product photography that highlights the self-winding mechanical movement. You may have already seen the powerful back cover of the widely circulated September issue of Vogue Magazine featuring a winter white version of this timepiece. In addition to print, we will also run national television spots for the holiday season.

Turning to our Movado boutiques, we continue to build upon the Movado image as we evolve into a lifestyle brand through our boutique retail strategy. Specifically, we showed impressive growth in the second quarter with comparable store sales increasing 26.5%. Our sales growth continues to be driven by an improved jewelry assortment. Over the past two years we have increased the average jewelry sale by strengthening our product assortment. Our products continue to remain true to the Movado philosophy of clean, modern design. We will continue to build on this strategy in the fall with the introduction of our exclusive Movado-branded diamond. This proprietary design will feature 114 facets in our unique Moderna [ph] setting.

In Concord, we were encouraged by low, single-digit increases experienced in our U.S. business during the second quarter with more accessible luxury price points resulting in continued improvement in sell-through. Overseas the Concord brand was impacted by a difficult luxury market, particularly in Asia and the Middle East. Looking to the fall season, we are excited by our new product introduction, including the new Saratoga chronograph. We will continue to support Concord with a comprehensive marketing program with the introduction of an all new point-of-sale program, packaging, and a beautiful new luxury catalog. ESQ recorded a low, single-digit sales decline in the first half of the year. We continue to strengthen our distribution in the United States and we look forward to new Iconic products being introduced this fall season, including the Ion, Centurion, and Quest families. These leadership products will provide the backbone for our ESQ beauty and and brains advertising campaign that will run this fall.

Our Coach brand delivered strong results for the first half of this year as we continue to benefit from the overall strength of the Coach brand and as we align ourselves closely with Coach in our new product introductions. This fall we will introduce Bridal Classic Charm, a beautiful colorsplash watch that will tie in perfectly with the Coach charm bracelet being introduced simultaneously this season. Tommy Hilfiger continued its trend of strong results led by good sell-through in the U.S. and strong growth overseas as we expanded into new markets and benefited from strong customer demand. Our Tommy Hilfiger business will continue to establish its leadership in the fashion category with new products for the fall including Pasadena and Bridge Hampton.

As we enter the second half of this year, we believe our company is well positioned for growth. Our continued focus on working capital enabled us to end the quarter with a 63% increase in cash on our balance sheet and virtually no debt. During the second quarter, we were pleased to have been one of the first companies to announce a significant increase in our dividend. Our strong cash flow and existing cash balance allowed us to double our annual cash dividend to 24 cents. This strong financial position enables us to fully support and develop our strongest assets, our brands, as well as continue to execute our growth initiatives. I would now like to turn the call over to Gene.

Thank you, Efraim, and good morning everyone. We are pleased with our financial performance in the second quarter, and for the six months ended July 31, 2003. We posted record second quarter net income of $5.8 million as compared to $5.4 million in the prior year. This resulted in fully diluted earnings per share of 46 cents, an increase of 4.5% over prior year's results. For the six-month period, net income increased by 15.8% to $6.6 million. This translated into fully diluted earnings per share of 53 cents, an increase of 13.4% over prior year's earnings of 47 cents. Increases in earnings per share for the second quarter and the first half were achieved on top of an increase in our diluted shares of 2.6% and 2.1%, respectively, primarily resulting from higher average stock price which increased the number of diluted shares outstanding.

Turning to our results for the second quarter, sales were $76.5 million versus last year's sales of $72.2 million. In constant dollars, sales were $75.4 million, reflecting an increase of 4.4%. Sales in our wholesale segment were $60.7 million versus last year's sales of $57.7 million. The domestic wholesale business was up 5.3% and was primarily driven by double-digit growth in our Movado and Coach brands. Our international wholesale business was above prior year by 4.9%, the result of favorable currency translation. In constant dollars, our international sales were 4.5% below prior year. Increases were recorded in our Tommy Hilfiger brand due to new market expansions in Europe and Asia and in our Coach brand due to strong sales in Japan. Our Concord and Movado brands were down double digits year-over-year as they were in the first quarter, reflecting the ongoing economic difficulties in Europe and continued softness in Asia.

Our retail business, which includes our Movado boutiques & company stores, posted a 9.3% sales increase over last year. This increase was driven by a 26.5% comparable store sales increase in our boutique business which was consistent with the 24.7% com store increase in the first quarter. Gross margin for the quarter increased $2.9 million from the prior year to 61.7%. The increase is due to higher unit sales volume, favorable product mix, and improved supply chain productivity. Our second quarter gross margin expansion reflects a more favorable than anticipated product mix than the first quarter. Operating expenses for the quarter increased $2.6 million, or 7.3% from last year to $38.4 million. The increase reflects planned investments in sales support and advertising to drive our customer and marketing initiatives, the rollout of our new boutiques, and unfavorable impact of currency. The investment initiatives are projected to result in similar to slightly higher operating expense increases in the second half of the year.

Operating income for the quarter was $8.8 million, or 3.1% above prior year of $8.5 million. To the six-month period, operating income rose to $10.8 million from $9.9 million in the prior year, an increase of 8.5%. Interest expense declined by 24% to .8 million. This is due to significantly reduced average borrowings. Our average debt for the quarter was $55.8 million, or 24% below prior year. Taxes were recorded at a 28% tax rate consistent with prior year.

Now I would like to discuss our balance sheet that continues to reflect a very strong financial condition. Accounts receivable of $99.2 million decreased by 2.9%. In constant dollars, our receivables are below prior year by 3.9% while our constant dollar sales increased by 3.6% above last year. Inventories of $125.3 million increased by $5.5 million from last year primarily due to the effect of the weaker U.S. dollar. In constant dollars, inventory was $121 million, or only 1% above prior year.

Our wholesale inventory decreased by $1.1 million while our boutique inventory decreased by $1.2 million reflecting our new store openings and expanded jewelry product assortment. Our debt as of July 31st was $49 million, a decrease of 32% from the prior year. Net debt as a of July 31st is $1.3 million versus prior year of $42.6 million. The net debt-to-capitalization ratio is less than 1% versus prior year of 20.5%. Our capital expenditures for the first half were $3.5 million, reflecting the investments in our new boutiques in addition to normal ongoing system hardware and software spent. Finally, we ended the period with cash and cash equivalents of $47.7 million and tangible net worth of $218.6 million. Now let me turn the call over to Rick.

Thank you, Gene. Good morning, everyone. We are pleased to have delivered solid increases in sales and profits in the second quarter, demonstrating our ability to maintain focus on our operating goals while delivering results on the bottom line. We continue to focus on our three main goals: Driving our accelerated growth initiatives, appropriately managing operating expenses, and improving the financial strength of the company by focusing on cash flow and working capital, even as we invest in our businesses to drive top-line growth.

First, let me discuss our accelerated growth businesses, Tommy Hilfiger and our Movado boutiques. During the first half of this fiscal year, sales of our Tommy Hilfiger product increased 33.6% over last year. International sales of Tommy Hilfiger watches continues to be strong and represented approximately 34% of the total Tommy Hilfiger watch sales in the second quarter. Retail or sell-through results also continued to be very strong, particularly overseas, and have exceeded our retail customers' plans.

New product introductions, including the Flagstaff family of watches and the Speed Metal Collection, helped fuel these positive retail trends along with global door expansion. Specifically, in North America and Latin America we've expanded our door presence by approximately 100 doors and ended the quarter with over 1100 doors in these regions. We've also continued to expand in Europe. We are now operating in over 750 doors in eight markets. We are building upon our recent entry into the Asian marketplace, specifically Taiwan and Hong Kong, and we look forward to increasing our presence in other areas of this region.

Now let's talk the Movado boutiques. This business delivered an excellent performance in the second quarter with a strong 26.5% comparable store sales increase. Our boutiques continue to enhance Movado's image as a lifestyle brand, and we remain focused on expanding this successful concept. We have signed an additional two leases since our last conference call and, as a result, we are pleased to announce that we plan to open five boutiques before year end. Our new boutique located in the Chestnut Hill Mall in Boston is scheduled to open later this month. The other four will open in time for the important holiday selling season bringing our total store base to 17 stores. Two of these locations will be in the Chicago market, specifically in the Woodfield and Northbrook Malls. We will also open up a boutique in Bellevue Square in Seattle and in the Valley Fair Mall in Santa Clara, California. Looking ahead, in the early part of 2004, we plan open an additional one to three boutiques in key mall locations within the United States.

Next, let me discuss our operating expense management initiative. We have spent the past few years successfully instituting companywide [Inaudible] initiatives that have resulted in enhanced levels of operating efficiency, significant cost savings, and enhancements in our supply chain. In the first half of this year, gross margins remain strong at 61.2% and operating expenses increased 4.7% to $72.9 million. Approximately half of the expense increase in the first half relates to increased support behind our core brands, while the balance reflects investments behind our Tommy Hilfiger and boutique businesses. We remain focused on appropriately managing our operating expense structure. With a much stronger operating platform now in place, along with a solid balance sheet, we believe the time is right to appropriately invest in our brands in support of driving top line growth.

These investments are broad-based and will benefit our retail partners, our core brands, Movado, Concord, ESQ, and Coach, as well as our accelerated growth initiatives, Tommy Hilfiger and Movado boutiques. Both our retail customers and core brands will benefit from increased selling professionals, selling support, and enhanced training. We are aligning ourselves better with our retail partners as we significantly increase our national account representation organization and provide increased levels of training on new product and features. As Efraim discussed a few moments ago, increased support will also come from strong advertising campaigns in both television and print, increasing customer awareness across all of our brands.

Turning to our third operating goal, we remain focused on working capital management and driving increased cash flow from operations. Our balance sheet remains strong and reflects our efforts. Trade receivables at quarter end decreased 2.9% from last year even as our sales increased 6% in the period. At the end of the quarter, inventory was $125.3 million, an increase of $5.5 million from last year; however, inventory increased only $1.1 million on a constant dollar basis. Boutique inventory increased by $2.3 million reflecting our new store openings and expanded jewelry product assortment, while our wholesale inventory decreased by $1.1 million. Our cash balances increased 63% over last year to $47.7 million, and we have virtually no net debt.

Now let me provide with you some guidance on our financial outlook for the remainder of fiscal year 2004. We believe the market is poised for a recovery and current selling trends are encouraging. Our investments in our brands and wholesale customer selling initiatives will fuel our top line growth. For the full year, our plans continue to call for sales growth in the 6% to 8% range with earnings per share growing at a similar 6% to 8% range. This translates into fully diluted earnings per share in the $1.75 to $1.78 range.

Our second half plans call for 6% to 8% sales growth in both the third and fourth quarter with profits slightly up from the respective year-ago periods. This reflects our growth initiative investments focused on the key holiday season. Our gross margins continue to be pressured by the weak U.S. dollar. Nevertheless, we expect to maintain strong gross margins for the balance of the year at the 60% to 61% level given the combination of our currency hedging program, continued improvements in purchasing ability, and selective price increases. As mentioned earlier, operating expenses should grow in line with sales this fiscal year at approximately 6% to 8% excluding the addition of new boutiques. Our plans also anticipate continued strong cash flow generation from operations commensurate with profit. We would now like to open the conference call for your questions.

At this time if you would like to ask a question, press the star 1 on your touch-tone phone. Once again, if you would like to ask a question, press the star 1 at this time. Once again, if you would like to ask a question press the star 1 on your touch-tone phone at this time. At this time, it looks as though we have no questions. Okay. We do after question from David Taylor with David P. Taylor and Company. Go ahead, please.

I have several questions about the retail operation. You've had two quarters back to back of better than 20% same-store sales increases, which is remarkable. Any thoughts to accelerating the opening plan in that very successful division?

Well, thanks. That's a good question, David. I think this year you will see a total of five stores to six stores being opened; and so that is for us an accelerated number, given the last few years. And that's really within our plans as to open between three and five stores a year. And beyond that, I think it would not be a prudent move on our part in terms of how fast we can open them and open them up correctly and execute them correctly; because that's as important in terms of staffing them, building them out, inventorying them, and everything else as well.

As we've said before, our plans are that over the next two years to be at approximately 30 stores; and that is a pretty sizeable growth from the 12 that we started the year off with.

I gather from your statements that the company store operation is down in the quarter; is that correct?

The outlet performance for the quarter was -- for the first half of the year was flat despite traffic being down in the outlet malls. And one of the things that we've continued to focus in on with our outlet business is not only, obviously, controlled sales but also managing our margins to make sure that we maintain strong margins in our outlet business, and we have been able to do that.

What are the price points on the new diamonds, Moderna?

It's really a very high quality diamond. So we're talking diamonds that will be in the $3,000 to $30,000 price range depending, obviously, on size and quality. But we're dealing in only high-quality diamonds. And, for example, a one-karat diamond will go anywhere from $8,000 to $10,000.

And I have an accounting question: How do you transfer watches from wholesale to boutique and from wholesale to company store?

David, it's Gene Karpovich. We handle that as an inventory transfer and there is no gross margins or profits recognized.

I understand that but what's the quote/unquote cost to the store in each instance? Is it Movado's manufacturing cost?

No.

The cost to all of our -- whether it's the wholesale business, our internal and wholesale business, or our retail business -- it's at product cost, which is product cost coming from our suppliers. The organization in Europe, obviously, with Movado and Concord.

Okay. So that when you sell a watch at retail you book both the wholesale and the retail markup, then?

In essence, that's correct, yes.

Okay. Thank you.

Thank you. We'll take our next question from Richard Fiori [ph] with Delphi Management. Go ahead, please.

Can you give us an update on how your sales in the duty-free channel are going?

We have two parts of the duty-free channel, and the first part is travel/retail in the Far East and in airports around the world. And that part has been challenging through the first half of the year, based on reduced tourist travel and, basically, having to do with both SARS and the war in the Middle East. And then we also have Caribbean retailing, duty-free channel for us. And that has been very strong over really the last 18 months, and we believe that part of that is the strength of our brands in the region and part of that is also that people continue to travel to the Caribbean.

Can you put any numbers on the strengths and weaknesses of those two segments you've described?

It's hard to because it varies across different brands, okay?

Right.

So we don't really disclose those numbers, but we have five brands that operate in each of those different markets.

Right. And is the Caribbean bit the majority of that business, of the duty-free?

The Caribbean is by far our biggest part of our duty-free business.

I see. And can you just update us on your currency hedging?

Again, our position from a currency hedging standpoint is we generally try to lock in anywhere from a 12- to 18-month period. Our purchases that are coming from Switzerland and, obviously, as the dollar is declining our currency hedging program locks us into rates that are a little bit better than where they are today; but clearly that gives us time to be able to implement price increases and/or price reductions, cost reductions, as the case may dictate out in the marketplace. So clearly we're seeing, as the dollar has gone down, we're not getting that full impact. Because it went from $1.60 to $1.30, in that range, which is a sizeable drop, we're not feeling all of that impact this year. But, obviously, as each quarter goes along we're feeling a little bit more of that impact. And what we're doing is we basically have, again, 12 to 15 months before we'll feel the full impact of that and that allows us to manage prices accordingly.

All right. Is the hedging just in the Swiss purchases or is it on other aspects of the business as well?

Hedging is just [Inaudible] Swiss purchases. We have a national hedge with our Asian purchases.

Okay. Thank you very much.

Thank you. We will take our next question from Arnold Breeze [ph] with Goldsmith and Harris. Go ahead, please.

Given your emphasis on operating expenses and the improvement in the sales growth, you would expect to see some leverage on margins. Are you -- I'm not sure. I think you implied that you were reinvesting that leverage in advertising marketing support, but I'm not sure. Could you elaborate a little bit on that?

Well, it's two things. We will continue to invest in our new initiatives, which are Tommy Hilfiger and our Movado boutiques with new store openings, as well as stronger marketing efforts and selling efforts in the second half. I think Rick also delineated that we also intend on supporting our wholesale customers with stronger sales support as well.

Yeah, so we've taken expenses down quite a bit over the last three years. Obviously, with the economy improving out there we've taken the opportunity of further investing, and this is a year where we will actually have expenses growing at about the same level as our sales growth. We don't expect that on an ongoing basis, but clearly this is the year we felt that that was appropriate and have those initiatives in place. Also the margins are being impacted a bit as a result of the currency declines that have taken place out there. So when we're done, if you look over a three- to five-year horizon, clearly we will be significantly leveraging our operating expenses. Over the last three years we've taken those down quite a bit. This year we're reinvesting a part of those because this is the time where we believe we can get accelerated top line growth.

Thank you.

Thank you. Once again, if you'd like to ask a question, you may press the star 1 on your touch-tone phone. Once again, to ask a question you may press the star 1 at this time. We'll take our next question from Paula Colondia [ph] with Wells Fargo Securities. Go ahead, please.

Good morning.

Morning.

Hi. My first question is regarding advertising. Does it look like for the full year the advertising is going to trend higher than, say, 17% of sales?

No. We would expect that advertising for the full year will be around 17% to sales, which is how we've been accruing that for the first half of the year. That is an increase in dollars year-over-year, yet it is a relatively consistent percent to sales over the last two years.

Okay. And, then, my other question is regarding the new Movado watch, the automatic one. I feel like this is a really big deal, but I don't really understand why; and I was wondering if you could give us a little more information about the significance of this watch?

Well, it's our first Museum automatic watch. We also believe that it's a Museum watch that appeals to a higher-end customer since the retails for a strap watch range from $800 up to $1,000. And it's really a very status oriented and prestige oriented event for the Movado brand and gives us unique positioning for our Museum watch it hasn't had before, both domestically and internationally where there's a larger appeal for mechanical watches.

Are there any other brands of watches in your price range that are doing automatic?

Really at this price range, I think it gives us a fairly unique proposition in terms of an automatic at a price point of below $1,000. There are smaller brands doing things like this but not really any major brands.

Okay. Thank you.

Thank you. We'll take our next question from Elizabeth Montgomery [ph] with SG Cowen. Go ahead, please.

Hi, guys. Congratulations. I have two quick questions. The first is, if we could get more color on the holiday advertising plans, specifically of television advertising, something you guys have done before. And will that actually be cooperative advertising with your retail partners, or is that going to be directing consumers to the Movado boutiques?

Okay. On the television advertising, it's really launching the Museum automatic watch. It will be on national cable, network cable. So it really is -- it's not cooperative and it's not directing. It's really introducing the new watch which will be available at our major customers as well as at the Movado boutiques, but we don't direct anyone to purchase it anywhere. All we're really doing is introducing what we believe is a fabulous new product, highlighting both the beauty of the product as well as the movement, which can be seen through a sapphire glass back of the watch.

Okay. Thank you. The second question is the Moderna diamond. Is that targeting an engagement ring buyer or is that just more of a diamond ring?

It's both an engagement ring and a solitaire so it is -- and especially since we're selling finer diamonds we believe that it appeals to both somebody buying their second diamond as well as an engagement ring because they are, again, on the higher end of the spectrum.

And do you have any specific marketing plan for that?

That will be launched in our Movado boutiques beginning in October and will be featured in our advertising and support of our boutiques as well as our windows.

So that will be in print advertising?

In print advertising.

Okay. Thank you.

Thank you. We will take our next question from Mike DeBernardis [ph] with Systematic Financial. Go ahead, please.

Can you tell us how much Tommy Hilfiger contributed to sales in the quarter?

The Tommy Hilfiger business for the quarter was $3.5 million.

Okay. Are you still adding doors there or you build an existing door base?

No, we're adding doors. As I mentioned in my comments, in North America and Latin America we basically expanded from 1,000 to about 1100 doors. In Europe we've grown to 750 doors. We're in eight markets. We've just started to launch in Asia and Taiwan and Hong Kong; and I would expect that over the next certainly 12 to 24 months we will see continued door expansion, particularly it will get much heavier in the Asian part of the world. Europeans still have some good sizeable growth both in markets and doors; and, obviously, North America, which is the market we'll be launching earlier on, will have a smaller number of doors increasing. So we're almost at a mature status there in doors. And sell-through continues very strong throughout the world.

Okay. Thank you.

We'll take our next question from Arnold Breeze [ph] with Goldsmith and Harris. Go ahead, please.

Two questions. One, could you break out the amount of sales that you expect for this year, of your total sales from Tommy Hilfiger, Coach, and your boutiques? I don't know if you break them out individually or not. I forget. But if you don't, could you just give us some idea of what percent of total sales your three growth initiatives are now accounting for? And, secondly, with the comp stores that you're getting in the boutiques and openings now at the higher end of the expected range, has your timetable for profitability changed on the boutiques?

Let me answer your second question first. We expect that the boutiques will begin to be profitable as a consolidated entity at about 25 stores. So that would take us into, not next year but the year after.

Could I just respond to that? I mean, that's the guidance you've been giving, but the comps are so much higher than I think you could have projected, seemingly that level of sales that you're going to get when you're at 25 stores must be higher than you were expecting.

We're also continuing to invest in the infrastructure to support our boutiques as well as the merchandising effort and marketing efforts. So we still believe that it will still be around 25 stores. It's not material enough in a total dollar volume on the comps that it will accelerate the profitability of those stores.

What level of sales are you expect when you're at 25 stores?

Well, basically, as we've said in the past, that when we open a store we basically are in the $700 per square foot range and, basically, expect to grow that to around $1,000 a square foot in our fourth full year of operation. So when we look at that, that's basically getting into the range of $2 million to $2.2 million per store when they're on a more mature basis. Also you have to remember that two quarters of comp growth that we have, those are very large numbers and those are not numbers that we expect to continue to pace at. So we believe we've got plans that call for solid comp door growth but certainly not on an ongoing basis of 25%.

Okay. The other question?

Okay. And on the other question, we don't normally disclose sales by brand. We have in the past disclosed our Tommy Hilfiger sales because it is one of our new brands, and we do expect that that business will be about a 16 to 17 million dollar business this year, which would be about a 50% to 60% increase over last year.

You wouldn't disclose all three as a total as a percent of sales?

We don't. We don't do that.

Okay.

Thank you. Once again, if you would like to ask a question at this time, press the star 1 on your touch-tone phone. Once again, if you would like to ask a question, press the star 1 at this time. It looks as though we have no further questions.

I would like to thank all of you for participating today. We're looking forward to the second half of the year, and we remain very focused on ensuring that our brands remain strong in the marketplace and we will continue to invest in our brands. Again, I would like to thank all of you for participating. Have a very nice day.

This does conclude today's teleconference. Thank you for participating. You may now disconnect your line.