Oxford Industries Inc (OXM) 2013 Q4 法說會逐字稿

Good day and welcome to the Oxford Industries Incorporated fourth quarter and FY13 results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Anne Shoemaker, Treasurer. Please go ahead.

Thank you, Melissa and good afternoon, everyone. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward-looking statements within the meaning of the Federal Securities laws. Forward-looking statements are not guarantees and actual results may differ materially from those expressed or implied in the forward-looking statements.

Important factors that could cause actual results of operations or our financial condition to differ are discussed in the documents filed by us with the SEC. We undertake no duty to update any forward-looking statements.

During this call we will be discussing certain non-GAAP financial measures. You can find a reconciliation of GAAP financial measures to non-GAAP financial measures in our press release issued earlier today which is posted under the Investor Relations tab of our website at www.oxfordinc.com.

Also, for comparative purposes, keep in mind that FY13 was a 52 week year while FY12 was a 53 week year with the extra week in the fourth quarter of FY12. For purposes of this call, comparable store sales results are on a 52 week to 52 week basis and a 13 week to 13 week basis as applicable excluding the 14th week of FY12 fourth quarter.

And now I'd like to introduce today's call participants. With me today are Tom Chubb, CEO and President; Scott Grassmyer, CFO; Terry Pillow, CEO of Tommy Bahama; and Doug Wood, President of Tommy Bahama. Thank you for your attention and now I'd like to turn the call over to Tom Chubb.

Thank you, Anne and thank you for joining us this afternoon. FY13 was a successful year for Oxford.

Despite continuing weakness in the consumer marketplace, we achieved net sales growth of 7% and grew adjusted operating income and EPS by 8%. We also continued to make important investments that we believe will allow us to drive profitable growth and shareholder value over the long term.

Tommy Bahama, which accounts for close to two-thirds of Oxford's revenue, had a strong year with top line growth of 11% and growth in adjusted operating income of 7%. Tommy Bahama also posted an impressive comp store sales increase of 9% for the year with particular strength in eCommerce. The impact of the higher sales and a modest expansion in gross margin was partially offset by increases in SG&A to support ongoing growth.

A key component of our plans for Tommy's future is the development of its international business. This past year we opened two locations in Tokyo. One in a major regional mall and the other a street level island location in the Ginza district.

We also opened our sixth store in Australia on one of the principal shopping streets in downtown Sidney. In addition, we acquired the Tommy Bahama business of a former licensee in Canada and now operate nine stores as well as an eCommerce business in the Canadian market.

In general, we have been pleased with the presentation of the Tommy Bahama brand in the international arena but we are not yet achieving the financial results we believe are possible particularly in Japan. We are taking specific steps to improve our business and Terry will give more details later in the call. The international market represents a significant long term growth opportunity for the Tommy Bahama brand and we are committed to fine tuning our business model.

Like many of our peers, Tommy Bahama experienced an unexpected weather related slowdown in traffic beginning in January and only very recently have we seen some signs of improvement. That said, we remain confident about our product and our marketing plans for the all important spring, Mother's Day and Father's Day selling seasons and believe that with better weather, our business will pick up strength. Terry Pillow will join us to provide more color on Tommy Bahama after I give you an update on our other operating groups.

Lilly Pulitzer had another year of tremendous growth in 2013 with net sales growing 13% and an impressive operating margin of 19%. Lilly also continued to build the platform for future growth by adding significant new talent in communications and marketing, design, eCommerce, IT, and retail, among other key areas.

We also made important investments in fixed assets, including new stores, our new design center, and enhancements to our information systems. We have almost doubled the size of this business and tripled the operating profit since our acquisition in late 2010. The Lilly business generates a high level of cash flow and we will continue to invest in the infrastructure needed to support ongoing profitable growth.

Lilly Pulitzer is bucking some of the trends in the current retail environment and is very strong right now. We believe the strength is flowing directly from the powerful combination of the A plus product, A plus distribution, and A plus communications. This spring Lilly is clearly at the top of the class in all three areas and is delighting its customers.

Our Lanier Clothes group continued to perform well in FY13, contributing almost $11 million in operating income through disciplined execution and attention to detail. This was particularly noteworthy in light of the competitive challenges they face, a soft tailored clothing market and costing pressures. The team at Lanier Clothes continues to demonstrate their ability to be relevant to a broad range of customers from warehouse clubs to luxury retailers and to find new ways to deliver profitable growth for Oxford.

In Ben Sherman we started the year with a business that was on the wrong track with sales and operating profit on a downward trajectory. During FY13, we appointed a new CEO, refocused the business on its core consumer, cut operating expenses, and improved the operation of our bricks and mortar retail stores. Our first half 2013 operating results reflected the downward path that Ben Sherman was on going into the year.

In the second half of FY13, the team at Ben Sherman was able to post meaningful improvements compared to the second half of the prior year. Much work remains to be done but we believe that Ben Sherman team has corrected the trajectory of this business and that it can post additional improvements in FY14.

Scott will provide you details in a few moments, but at a high level, looking ahead to 2014, we are expecting sales to increase to a range of $980 million to $1 billion compared to $917 million in 2013 and adjusted EPS to increase to a range of $3 to $3.15 in 2014 compared to adjusted earnings of $2.81 in FY13. I should note that while we were expecting a nice increase in both sales and earnings in 2014, our guidance does take into account the fact that like many of our peers, we have experienced a relatively soft beginning to our first quarter.

I'd like to now turn the call over to Terry Pillow to give more insights on Tommy Bahama. Terry?

Thanks, Tom. Where the sun is shining in places like Naples, Florida, Scottsdale, Arizona, and Palm Desert, California our business is very good. Although, as Tom mentioned, we experienced a slowdown in traffic at Tommy Bahama due to extreme weather in many parts of the country early in the year. We believe that when the weather turns in the rest of the country we will see our business take off.

We have a great product offering and marketing plans in place for 2014. Right now one of the biggest trends in our industry is tropical prints and we have never been more on target with our mens and women's product.

We will also be communicating with our customers several times between now and Father's Day with fantastic mailers and loyalty cards inspired by our Jamaican photo shoot. These direct marketing pieces have proven to be very effective, particularly with our loyal customers.

I'd like to take a minute to give you an update on our Asian Pacific initiatives. Our business in Australia is going very well with six stores at a small wholesale business. Our newest store in Sydney opened in May last year and we are delighted with its performance.

The stores we opened in Tokyo last April got off to a good start but struggled during fall holiday. We believe this is a market that has tremendous opportunity for Tommy Bahama. We are taking concrete steps to improve the situation.

We've hired a highly experienced country manager who started in February. He's already making an impact with changes to our product assortment, merchandising and marketing.

We are very excited to be working on opening up two Tommy Bahama retail restaurant islands. The first is in Jupiter, Florida which we expect to open in the fourth quarter.

This location is right on the Intracoastal Waterway. You'll be able to cruise up on your boat and join us at our first Eastern Florida island.

The second is in Waikiki which will open in 2015. Waikiki will provide a great brand awareness and context for our Japanese customers as over 90% of the Japanese tourists visiting Hawaii head to Oahu.

Now I'll turn it over to Scott Grassmyer to discuss our consolidated highlights. Scott?

Thanks, Terry. I'd like to walk you through a selection of highlights from our consolidated results for FY13 and our guidance for FY14. Please refer to our press release issued earlier today for the complete results for the fourth quarter and fiscal year and additional information about our outlook for FY14.

For FY13 consolidated net sales rose 7% to $917 million, from $856 million in FY12, driven by sales increases at Tommy Bahama and Lilly Pulitzer. Consolidated gross margins increased 110 basis points to 56%, primarily due to the impact of LIFO accounting and a change in sales mix towards direct-to-consumer sales.

For FY13, SG&A was $448 million or 48.8% of net sales compared to $411 million or 48% of net sales in the prior year. The increase was primarily due to $31 million of incremental SG&A associated with operating additional retail stores and restaurants as well as other costs to support the growing Tommy Bahama and Lilly Pulitzer businesses. Partially offset by SG&A reductions for the year in Ben Sherman and corporate and other, as well as reductions in incentive compensation of approximately $7 million.

Royalties and other income increased to $19 million in FY13 from $16 million in the previous year primarily due to a $1.6 million gain on the sale of property, as well as increased royalty income. Our consolidated operating income in FY13 increased to $85 million compared to $69 million in FY12.

FY13 interest expense declined 53% to $4 million from $9 million in FY12. The improvement was primarily due to the redemption of our senior secured notes in FY12.

Our effective tax rate rose to 43.7% in FY13 compared to 38.5% in FY12. Our tax rate in both years was negatively impacted by our inability to recognize the tax benefit for losses in certain foreign jurisdictions while FY12 benefited from certain favorable items.

Now to the balance sheet. Total inventories at February 1, 2014 grew to $144 million compared to $110 million at February 2, 2013. While the increase in inventory was primarily to support anticipated sales growth, we also felt the impact of the earlier Chinese New Year. Our in transit inventory increased $13 million as suppliers accelerated their shipments.

As of February 1, 2014, we had $142 million of borrowings outstanding and approximately $97 million of unused availability under our US and UK revolving credit facilities. We believe our capital structure positions us well to support our growth plans.

Our capital expenditures for FY13 were $43.4 million. We expect CapEx for FY14 to increase to approximately $55 million as we continue to open new stores including the Jupiter, Florida retail restaurant island, begin construction on our Waikiki location and remodel some of our existing stores. We will also continue to invest in information technology which include eCommerce enhancements and investments in our facilities.

I'd now like to walk you through our projections for FY14. We expect to deliver strong results with continued sales growth, a moderate expansion of our operating margin and significant growth in earnings.

As Tom mentioned, for the year we expect EPS to be in the range of $3 to $3.15 on sales in a range of $980 million and $1 billion. This compares with adjusted EPS of $2.81 in FY13. On a GAAP basis we expect EPS in a range of $2.88 to $3.03 compared to $2.75 in the prior year.

I'll discuss our FY14 plans for each of our operating groups. Tommy Bahama expects good growth in FY14 with percentage net sales increases in the high single digits driven by increases in our direct-to-consumer business, partially offset by a modest decrease in wholesale sales. We expect some additional costs for incentive comp and for pre-opening expenses for the island locations that Terry described, and as a result, Tommy Bahama's operating margin in FY14 is expected to be slightly lower than FY13.

Lilly Pulitzer is expected to continue to deliver strong top line growth while maintaining a solid operating margin as they continue to invest in people, systems and stores. For FY14, Lilly is planning a percentage net sales increase in the mid-teens and an operating margin comparable to FY13.

Lanier Clothing, Lanier Clothes is planning a solid year with a top line increase in the low single digits. Operating margin is expected to decrease slightly due to the lower margin structure of certain new programs and is planned in the high single digits.

For FY14, Ben Sherman's plan for top line improvement coupled with the lower cost structure is expected to reduce the operating loss by $4 million to $6 million. The high single digit percentage increase in sales is expected to come from improvements primarily in its direct-to-consumer businesses.

Finally, the operating loss in our corporate and other segment is expected to increase by approximately $4.5 million primarily due to increases in incentive compensation and the change in an insurance reserve that benefited 2013. On a consolidated basis we expect a modest improvement in gross margin and SG&A to increase at a slightly higher rate than our sales growth.

Our operating margin is expected to expand slightly for the year. I want to remind you of the impact of the seasonality of Tommy Bahama and Lilly Pulitzer sales on our third quarter earnings. Because the third quarter is a significantly smaller sales quarter than the first, second, and fourth quarters, the fixed expense structure of our retail businesses results in a lower operating margin compared to other quarters.

Interest expense is estimated to be approximately $4.5 million in FY14. Effective tax rate for FY14 is expected to be approximately 42.5%. That's the recap for our plans for the full year.

Moving on to details for our plans for the first quarter of FY14. We expect net sales to be in the range of $250 million to $260 million compared to net sales of $334 million in the first quarter of FY13.

Earnings per share for the quarter expected to be in a range of $0.80 to $0.90 on an adjusted basis and $0.77 and $0.87 on a GAAP basis. This compares with first quarter FY13 EPS of $0.82 on both an adjusted and GAAP basis.

I'll walk you through what we expect for the first quarter by operating group. At Tommy Bahama, we are expecting traffic to improve in April, and based on this assumption, expect percentage sales to increase in the mid single digits and slightly lower operating income compared to the first quarter of last year. For Lilly Pulitzer we are expecting a percent of sales and operating income increase in excess of 20%.

Lanier Clothes is expecting percentage sales increase in the high single digits, operating margin is expected to modestly expand year over year on the higher sales. Ben Sherman's first quarter, which historically is its smallest quarter, is planned flat on the top and bottom lines compared to the first quarter of last year. Our effective tax rate for the first quarter of FY14 is currently expected to be approximately 46%, which is comparable with the first quarter of FY13.

Before we take questions I also want to mention that our Board has declared a cash dividend of $0.21 per share representing a 17% increase. Melissa, we're now ready for questions.

Thank you.

(Operator Instructions)

Edward Yruma from KeyBanc.

Within the guidance you've provided I know you made a couple key changes in Asia. How should we think about the kind of operating drag through this year from Asia and kind of the sequencing of margin improvement there?

Ed, I think that the operating drag will be reduced this year. It's not going to go away altogether but I think we do expect to see some progress. I'll let Scott maybe comment a little bit on how that will rollout through the course of the year.

Yes, in 2013, the loss in Asia was roughly $12 million, and as Tom mentioned, we do expect some modest improvement and we should see some improvement. In the first quarter we should start seeing some of that improvement. So hopefully we'll see improvement every quarter throughout the year beginning with the first quarter, but the improvement is going to be modest, probably $1 million, $1.5 million improvement is what we have in the plan right now. And we do have comps planned up but things are, the economy is okay over there, but it's not great, but we think we can make, we've made some improvements that will help us.

Got it, and one follow-up if I may. You're planning Tommy Bahama wholesale to be down. I know that you kind of had a little bit of weakness there in 2013. Just any discussion on the dynamics in wholesale, are you losing slotting and if you expect longer term for that trend to reverse. Thanks a lot.

Ed, as we talked about before, we like the wholesale business. We're committed to it but we're also working very hard to manage those channels to make sure that they're consistent with the way that we run our own direct-to-consumer businesses, our brick and mortar stores and eCommerce site. And so in some cases, we may have to take a step back in the wholesale, but for the long term, we're committed to it and still think we can grow it over the long term.

Terry or Doug? Do you want to add anything to that?

Yes, Ed, this is Terry. The decrease in wholesale is coming primarily from mens and primarily that's the specialty stores that, traditionally we've got a very strong business in specialty stores around the country and they are still struggling a bit.

Having said that, it's being offset by some new distribution we have in women's, not only in specialty and department stores that is very good. And the relaunch of our footwear business that we took in house from a license is showing promise and we'll start shipping those products in fall. So we're getting a little benefit of balance but the struggle is primarily on the mens side and primarily specialty.

Got it. Thanks so much guys.

Rick Patel with Stephens.

Can you give us a little bit more detail about the performance of Tommy in warmer weather markets? Just how big of a disparity is there in the comp trend between those warmer markets versus the chain average? And secondly, I know it's early and Terry touched on this, but can you give us a little bit more detail about the performance that you're seeing that gives you confidence that things will pick up once the weather does get warmer?

Well I'll comment on it a bit and then turn it over to Terry and Doug to elaborate, but Rick as you know the weather issues have really been quite widespread this year. There's almost no part of the country which through the first three months of the year hasn't experienced a fair dose of unusually inclement weather, whether it be heavy rains or snow and ice or extreme cold or whatever, so we have had issues really sort of almost everywhere.

That said, there's no question that they've been more pronounced in places like the Northeast and the Midwest where its been extremely cold and lots of snow and ice, so on a relative basis, the places that you would expect to be worse have been worse. At the same time there's almost nowhere that has been exempt altogether.

I think the thing that we think is most encouraging to us is the way that we've performed in places that are really key locations for Tommy Bahama, being a warm weather resort island-oriented brand, our most important locations are really locations like the three that Terry mentioned, Naples, Florida, Palm Desert, California, Scottsdale, Arizona. We do huge businesses in those places and those places are really the heart and soul of the Tommy Bahama brand. And happily we're actually performing quite nicely in those places year-to-date and that I think is one of the key factors that gives us reassurance that as weather normalizes and warms up, we'll be just fine really all over the place. Terry do you want to add to that?

Yes, Rick, we are operating currently 88 full priced retail stores in North America, and when you get to 88 stores that are in pretty diverse parts of the country, that's the reason, as Tom said, I called out Naples, Scottsdale and Palm Desert. In our business we take advantage of our business model because we make a hard turn in January and February in resort spring merchandise and some years we take advantage of that. It's a very positive thing for us but when the weather in parts of the country like the Northeast and when the weather doesn't cooperate, we've already placed our bets on inventory. We don't get that bump as soon as we can.

But we will historically when the weather turns in our favor of those other locations as I said that we historically do well when the weather turns, I feel confident that our assortments are good and our marketing is good. We'll see that turn when the weather turns.

Can you talk about the outlook for Lilly Pulitzer just given the momentum that you're seeing? Are you allocating more resources to help support growth for that brand and then can you also update us on what your real estate plans are for Lilly, both over the near term and long term?

Well, Lilly continues to perform very well. They had a good year last year. This year has started off as a terrific year.

Lilly Pulitzer as the Lilly folks say is very much a first half team. They are more skewed towards the first half of the year even than Tommy Bahama, so if you have a good first quarter it's a very good sign for how the year is going to unfold.

In terms of resources that we're dedicating to them, as you know, we've invested a lot in sort of P&L infrastructure there, mostly in the form of people in key areas. As I mentioned in the prepared comments, the business is basically doubled in size in the last three years and what happens when you grow that fast is that they really had outgrown the size of the team, so during 2013 it was important that we add a lot of talent to the team and we did that. We're really pleased with what we were able to achieve in that regard.

And more from a CapEx perspective we're investing in systems, we're investing in the distribution center, those things support retail and eCommerce and we're opening new stores. In terms of the pace of store growth, it's the same, four to six a year. We actually think that eCommerce will continue to grow at a much faster pace than retail will for the Lilly brand because we think it's particularly well suited to eComm, and we actually anticipate eComm eclipsing our own bricks and mortar retail in size in the next couple of years. So we would see the growth, the pace of growth continuing at more or less the level that we have over the last several years with a heavy emphasis on eComm.

Thanks very much and good luck this spring.

Okay, thanks a lot.

Pamela Quintiliano of SunTrust.

Congrats on executing in a really challenging environment. So when I think about Tommy and Lilly and the Tommy performance versus Lilly, and even quarter to date that you were commenting on, is it just geography or is there something else going on, or a way to think about it in terms of is the Tommy guy just more aware now while she's shopping when she is inspired and feels like she has to snap up the collection, otherwise it's not going to be there? And then also when I think about the progression of the quarter and the late Easter this season, what's that impact, I guess for both, but really for Lilly?

I think that in terms of the differences there, there are geographic differences as you point out. Lilly Pulitzer is heavily Southeast and the East Coast in its distribution and its own store footprint.

The second thing -- difference that I think is pretty relevant is that Lilly is still much smaller at this point, Tommy Bahama is a big brand at $600 million. At less than $150 million, Lilly is much smaller, and just as a rule of thumb you tend to be a little less subject to general market conditions when you're smaller, you have more room to grow in a way.

The third thing I would point out, and this is not to take away from the strength and momentum that Lilly is exhibiting this spring, but their comparison is somewhat easier because their comp in the first quarter last year got impacted by the weather and they were in the low single digits in their comp. Whereas if I remember right I think Tommy had a double digit comp in the first quarter, so there's a difference there.

And then the last thing I would call out is exactly what you called out, Pam, which is that the Tommy or the Lilly product being women's, it tends to move quite quickly. And when we have a new delivery in it looks a lot different than the last delivery, and when it's very strong as it is now, there is a bit of a feeding frenzy to snap it up before it's gone.

Pam, one other thing on that point. Tommy Bahama, their direct-to-consumer business the second quarter is a much more important quarter than the first and April is a much more important month than February and March. So not that we are, yes, retail is slow right now, but at least it's not in our strongest direct-to-consumer months. The second quarter is, we really catch momentum in direct-to-consumer and I think the odds of the weather being better in the second quarter are much higher.

And then Pam you also asked about the impact of a late Easter for Lilly, and we think that it's a good thing. It makes a Lilly dress even more appropriate for Easter wear. If Easter is really early and it's still cold and dreary out, it may not be as enticing to buy a Lilly dress for Easter, but if you've got a later Easter, the weather's turned, it just enhances our ability to sell an Easter dress I think.

And do you tweak the timing of flows because Easter and Mother's Day are closer this year for Lilly?

We definitely, I mean the date on which holidays occur definitely impacts our thinking about how we plan the seasons I think in all our brands from both a product standpoint and a marketing standpoint.

And if I could follow-up just a few more. Just in the prepared commentary I believe, or I'm sorry it actually may have been a response to Q&A, there was something about Tommy women's and new distribution? I was wondering if you --

Yes, we do have some -- it's very small at this point but we have some exciting new wholesale distribution that I'll let Terry tell you a little bit more about.

Pamela, we did an eight door full collection, not select items but a full collection, launch at Dillard's which we have not had in women's, and that this shipped this month, so we're early in the selling of that. And we also have some limited distribution in Neiman Marcus on their website which they felt that our category of product is right for their business and we're looking forward to growing both of those businesses.

As we've always said in the women's that we know when we get it right and in our stores and direct-to-consumer business, we'll be expanding the wholesale and we're just embarking on that right now. And where we've had product for several years in specialty stores within women's and we've always had some successes, but of recent we've seen that business sell-through with our women's specialty stores be very healthy on product.

So the other thing that we're excited about is, as I mentioned earlier in the remarks about footwear. The women's piece of footwear is significant and we're getting some distribution in women's footwear which we're also very excited about as well. So looking forward to that.

That's great. And then just the last question I have, Ben Sherman, just can you update us on wholesale bookings and any information you can provide on how that's going for the fall and then just how you're strategically viewing Ben now?

Yes, the wholesale bookings for fall, autumn, winter 2014 are in. They're basically complete at this point and we have a very healthy year-over-year increase there, as we did for spring and for autumn/winter 2013 so we're very pleased with the trend in wholesale bookings.

We're also generally very pleased with the way our bricks and mortar retail stores are performing at this point. They are not where they need to be but the relative performance to last year, the way they're comping in the various KPIs are all trending very positively. So what I would say at Ben Sherman is really what I said in the prepared comments is that we are certainly a long way from having the business to where we think it can be and where it needs to be, but the trajectory is correct now, which is upward both in sales and bottom line.

Great, thanks so much for taking my questions. Best of luck.

Okay, thank you.

Eric Beder with Brean Capital.

Congratulations.

Thank you, Eric.

Could you talk about what is the increase in the store count you're looking for for this year in terms of Tommy and Lilly?

For Lilly I believe we've got 5 and for Tommy, it's 12 I think? Terry, do you want to correct me if I'm wrong there?

We're still looking.

[There was] a shift a little Eric.

Eric, we're always looking for great locations, but right now in the books we have six full price and two outlet stores. However, it's still early and we're always looking for opportunities.

Sure, in terms of the New York City flagship, can we get an update on that and how that is doing? Yes, how is that doing?

Terry, why don't you update Eric.

It's doing great. It would be better if you'd go there more for lunch, Eric, but it's been really growing, the restaurant and the retail have been great. We're seeing nice growth in both, and I said we're watching the business and we've been doing great lunch business there but the dinner ended kind of early and we're seeing that stretch out now and go longer and I think when we catch some weather, those customers that are eating in the restaurant will go down.

But we had a terrific December and December was a comp month for us from the year ago so we saw December being a very good month in that store and very promising for us. We're very happy with it. And we've always talked about it. We open these stores to make money and we hope to make money in New York but it's a great visibility for the brand to have that store on the corner of Fifth Avenue.

And finally, you opened I saw this year, you rolled out at least online, some dog items for Tommy Bahama. How did those do and kind of what do you think about that as a category for the product?

We're always looking for categories that we think our guest is part of their lifestyle and Tommy guests have pets. So it's not something you're going to see us do in a big way and we now have it online. We're going to keep looking for what are those unique things that our guest is always going to want to turn to Tommy Bahama and see what our take is on it.

Great, thank you, and again congratulations on a solid quarter and --

Thanks, Eric.

Thanks, Eric.

(Operator Instructions)

Mike Richardson with Sidoti.

I just had actually a quick follow-up from an earlier question regarding store openings for Tommy Bahama. Are those all domestic stores or going to be opening any in Asia? And just wondering the guidance for the first quarter what kind of comp you're assuming at Tommy Bahama.

Yes, they are all domestic, Mike at this point. And then in terms of comp, what we talked about in the prepared comments was that we're assuming that we get a pick up in April but with the slow start that we've had through February and March, you would have a flat to down slightly comp for the first quarter.

Okay, thanks. Just one more with regard to Ben Sherman. Should we be anticipating some sequential improvement as the year progresses? How should we be thinking about that for the year?

Yes, generally speaking the first quarter is flat and that mainly has to do with it being our smallest quarter in Ben Sherman. Ben Sherman is sort of the reverse of Lilly Pulitzer, and to some extent Tommy, in that it's very much a second half autumn/winter business as opposed to a spring/summer business. And as the quarters get bigger in sales, both the bottom line results and the year-over-year improvement get bigger.

Okay, thanks. Best of luck this year.

Thank you.

Wayne Archambo with Monarch Partners.

Just on the Ben Sherman, with the order book up for the fall orders, do you view this as marking the bottom for Ben Sherman from a sales standpoint?

Yes, we certainly think so. We think the $67 million that we did last year is the bottom that will as we said get sort of a upper single -- mid to upper single digits increase in sales this year.

There is some non-comp stuff in both years which makes it a little cloudy, but if you look at the continuing business, it's clearly headed up, and yes, we think the bottom has been hit and that we're headed back up in top line, and really that is the key to turning this thing around fully at this point is growing top line. We think we've got the expense structure kind of where it can be appropriately for the business model that we have and it's really about building top line at this point.

And do you think there's something from a secular standpoint that's changed in that business that you're -- just the business overall is just not the same business it was five years ago, and if that's the case, is this strategically fit into your long term portfolio of brands?

Well yes, we're very focused on acquiring lifestyle brands, or owning lifestyle brands that can generate sustained profitable growth and we don't see any reason why Ben Sherman can't be one of those. It's not at the moment, and hasn't been for the last several years, but with what they're doing at the brand now and the results that they're getting, still a lot of work to be done, but it's clearly headed in the right direction.

May I, just as an observation in owning retail stocks over the last 20 years I would just make an observation that some time these lagging businesses can be very distracting for management. We've seen it with many other companies and you folks should be focusing on all of the positives going on with Lilly and Tommy and I'm sure this is a bit of a distraction for all of you and its been going on for a number of years. So it just concerns us as shareholders that when I look back at your comments from the last couple years it seems like this has been a continual disappointing part of your business which is over time a distraction for management.

Well, there's no question there is that risk. I think we've balanced it appropriately to date. As the business hopefully continues to improve that risk diminishes but certainly not going to argue with you that there is a risk of it being a distraction.

Very good, thank you.

It appears there are no further questions at this time. Mr. Chubb, I'd like to turn the conference back to you for any additional or closing remarks.

Thank you very much for being with us today. We appreciate your time, attention and support, and will look forward to speaking to you again in a couple of months.