Oxford Industries Inc (OXM) 2014 Q4 法說會逐字稿

Good day and welcome to the Oxford Industries Incorporated fourth quarter and FY14 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Anne Shoemaker. Please go ahead, ma'am.

Thank you, Shannon, and good afternoon, everyone. Before we begin, I would like to remind participants 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 our press release issued earlier today and in documents filed by us with the SEC, including the risk factors contained in our FY14 form 10-K. 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 certain historical 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.

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.

Good afternoon and thank you for joining us. We have a lot to share with you this afternoon.

First, I want to highlight and underscore the very strong results that we were able to deliver for the fourth quarter of FY14, driven by our two principal brands, Tommy Bahama and Lilly Pulitzer. In both Tommy Bahama and Lilly Pulitzer, we believe we have cultivated a deep and powerful emotional connection with our customers. We renew and reinforce that bond with the consumer by offering fantastic on-brand product, operating beautiful stores and websites and supporting it all with a great communication strategy.

As you all know, the marketplace during the fourth quarter of 2014 was highly promotional with many observers defining a 30% to 40% discount as the table stakes needed to do business. We chose not to play that game. Instead, we stayed focused on our full price strategy and driving business through the power of our brands, rather than the depth of our discounts. And here's the report card. It worked.

At Tommy and Lilly, we delivered comp store sales increases of 8% and 9% respectively, which drove a 21% year-over-year increase in fourth-quarter earnings per share. Best of all, we did not sacrifice gross margin to achieve these results.

We believe our fourth quarter puts an exclamation point on the strength of our brands, the power of our strategies and the ability of our management team to execute. And for the full year, Oxford reported solid increases on the top and bottom lines. We believe that with brands like Tommy Bahama and Lilly Pulitzer in our portfolio, we are uniquely positioned for success.

Looking forward to 2015, we announced today a strategic decision to sell the Ben Sherman business. During 2013, this business was still in decline at both the top and bottom lines. But importantly, a strengthened management team laid the foundation for a turnaround and they build on that foundation in 2014 by delivering topline growth in all channels, strong comp store sales growth and a significant reduction in the operating loss. Ben Sherman left the year with lots of momentum and we believe will now be an attractive acquisition target. We are confident that we can find a buyer that will help the Ben Sherman business and team reach its full potential. Earlier today, we also issued our guidance for FY15 in which we have excluded Ben Sherman. We expect to deliver solid topline growth at Tommy Bahama and Lilly Pulitzer in the upcoming year and at the same time continue to build for future growth.

I'd like to take a moment to mention that coming up in April is Lilly Pulitzer's amazing collaboration with Target. Target will feature a limited time one shot delivery of over 250 Lilly products in 15 unique prints in all doors and on their e-commerce site. The media campaign is beginning as we speak and we believe this collaboration will give us tremendous brand exposure across the country and will generate a great deal of excitement around this wonderful brand.

While we don't believe this will have a meaningful impact on our financial results in FY15, we believe the national buzz created by the Target collaboration will generate brand awareness among new consumers and geographies that will provide growth opportunities in 2016 and beyond.

In conclusion, I would like to emphasize that our focus has been, and will always be, to deliver long-term growth and profitability to our shareholders. It is clear to me that both Tommy and Lilly are well positioned to do just that and Lanier Clothes, while facing some challenges to its topline in 2015, is a solidly profitable business.

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

Thanks, Tom. As we all know, the holiday season continued to challenge retailers. This year, the west coast port labor issue added to the challenge.

I have the to say that I couldn't be more pleased with how Tommy Bahama performed in the fourth quarter with 11% increases on both the top and bottom line. And as Tom mentioned, we stuck with our full price strategy and expanded our gross margin.

Much of our success in the fourth quarters was due to solid comp store sales increase of 8%, the strength of our holiday resort product and marketing campaigns and the strength of our new stores added in 2014. A tip of the hat certainly goes to our distribution and ops team who did a superb job juggling the timing of shipments and making judicious decisions regarding the use of air freight. We navigated the port situation with minimal disruptions in the flow of our goods to both our own stores and to our wholesale partners.

Turning to FY15, we have great plans for topline growth and are off to a good, strong start in the first quarter to date. We expect to open 8 to 10 new stores in 2015, including Waikiki.

Our business in Australia continues to generate strength on both top and bottom line and we plan to add our ninth store there in 2015. And Japan will continue to be a focus for growth and we strongly believe that this will prove to be a great market for Tommy Bahama.

We began to rational eyes our Hong Kong support operations in 2014. We realized a $1.6 million improvement in the operating loss in 2014 in our Asia-Pacific operations and expect a similar improvement again in 2015.

Presenting a unified brand point of view is important to our future growth plans. We feel strongly that we need to get our design teams under one roof and are relocating our women's design team from Pasadena, California to Seattle.

In addition, the lease of our current Seattle office, where we have been for the last 11 years, expires this year. As a result, we will be moving to the new headquarters in Seattle later this year. While lease deals are quite a bit more expensive than in 2013 and our new larger space will require significant amount of investment, we believe this move is an important part of our future growth plans.

While operating margin in 2015 is expected to take a slight step backward due to the impact of approximately $2.2 million of pre-opening expense for Waikiki and approximately $2.6 million of expenses associated with the relocation of our headquarters, we believe that future years hold ample opportunity to deliver meaningful improvements in our operating margin.

I'll now turn the call over to Scott Grassmyer to discuss our consolidated highlights and plans for 2015. Scott?

Thanks, Terry. I'd like to walk you through a selection of highlights from our consolidated results for the fourth quarter of FY14 and our guidance for FY15. Please refer to our press release issued earlier today for complete results for the fourth quarter and full fiscal year and additional information about our outlook for FY15.

For our fourth quarter results reflect important positive trends in our business. For the fourth quarter FY14, consolidated net sales rose 10% to $274 million.

In the fourth quarter, consolidated gross margin on an adjusted basis improved slightly to 55.2%. And there was a modest SG&A leverage gained.

Royalties and other income as adjusted increased by $400,000 in the quarter, with increases at both Tommy Bahama and Lilly Pulitzer. Our consolidated operating margin as adjusted in the fourth quarter increased to 10.5% from 10.1% in the prior year period.

For the fourth quarter of FY14, interest expense declined to $700,000 from $1 million last year. Our effective tax rate in the quarter also declined to 36.8% from 40.9% in the same period of the prior year with the improvement primarily due to improved foreign results.

Adjusted EPS rose 21% to $1.08 ahead of our previous issued guidance. GAAP EPS increased 5% to $0.96.

Now to the balance sheet. Our balance sheet remains strong and we have a solid capital structure to support our planned growth. We were pleased with our inventory levels, which ended the year at $148 million compared to $144 million in the prior year.

As of January 31, 2015, we had $109 million of borrowings outstanding and approximately $128 million of unused availability under our US and UK revolving credit facilities. Our capital expenditures for FY14 were $50 million compared to $43 million in the prior year with expenditures primarily for new retail stores, IT initiatives, store remodeling and some investments in our facilities.

I'd now like to walk you through our projections for FY15 where we expect to deliver strong results with solid sales and earnings growth. We expect to sell Ben Sherman in FY15. Therefore, we have excluded Ben Sherman results from our outlook for 2015 and from the 2014 results presented for comparison in this part of the call.

For FY15, which ends on January 30, 2016, we currently expect net sales of $965 million to $980 million. Adjusted earnings per share are expected to be between $3.45 and $3.60. On a comparable basis, FY14 sales were $920 million and adjusted EPS was $3.46.

We expect interest expense in 2015 to be comparable to FY14 at $3.2 million. The effective tax rate for FY15 is expected to be approximately 39%. Capital expenditures are expected to be quite a bit higher in FY15 at approximately $70 million.

FY15 will include the typical expenditures associated with opening new retail stores and remodeling existing retail stores as well as initiatives in information technology. In addition, capital expenditures estimates for 2015 include the relocation of the Tommy Bahama headquarters, additional distribution facility space for Lilly Pulitzer and the Tommy Bahama Waikiki restaurant retail location.

Of the $70 million we are estimating for capital expenditures in 2015, we anticipate approximately $13 million will be funded by landlords through tenant improvement allowance reimbursements. Before any impact of the potential sale of Ben Sherman, we expect to remain fairly neutral on a cash flow basis with cash flow from operations funding the heavy CapEx pace, the $12.5 million final Lilly Pulitzer earn-out payment and dividends.

Now I'll move to our FY15 plans by operating group. Tommy Bahama expects good growth in FY15 with percentage net sales increases in the mid to high single digits driven by increases in our direct to consumer business. Gross margin is planned modestly higher and SG&A is expected to increase as a percentage of sales after absorbing the expenses Terry mentioned earlier. We expect Tommy Bahama's operating margin in FY15 to be slightly lower than FY14.

Lilly Pulitzer's expected to continue to deliver strong topline growth while maintaining a solid operating margin as they continue to invest in people, systems and stores. For FY15, Lilly is planning a percentage net sales increase of 11% to 13% and an operating margin comparable to FY14.

I'd like to turn your attention to Lanier Clothes. They delivered a good year in 2014 with a modest topline increase and an operating margin of 9.6%.

For FY15, as a result of a major customer's change in merchandising strategy, Lanier Clothes net sales are expected to be approximately $100 million and its operating margin is expected to decline to approximately 8.5%. Finally, the operating loss in our corporate and other segment is expected to increase by approximately $2 million.

This is a good time to remind you of the impact of seasonality of Tommy Bahama and Lilly Pulitzer sales on our third quarter earnings. Because this quarter is a significantly smaller quarter, 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. In addition, in FY15, the impact of both the Waikiki location and the new Tommy Bahama headquarters will be greatest in the third quarter.

That's a recap of our plans for the I'll full year. I'll now discuss some details for our plans for the first quarter of FY15.

For the first quarter of FY15 we currently expect net sales of $250 million to $260 million, adjusted earnings per share expected to be between $1.15 and $1.25. On a comparable basis, sales were $243 million in the first quarter of FY14and adjusted EPS was $1.19. As a reminder, these amounts exclude Ben Sherman.

Before we take questions, I also want to mention that our Board has declared a cash dividend of $0.25 per share representing a 19% increase from the dividend paid in the first quarter last year.

Shannon, we're now ready to take questions.

(Operator Instructions)

And we will take our first question from Ed Yruma with KeyBanc.

Hi. Congratulations on a good quarter, and on taking the strategic step to look at Ben Sherman.

I guess just a couple quick ones: First, on Tommy, I know you said that you're going to deleverage a little bit on SG&A. Would you have done that without Waikiki and the headquarters? And I know you mentioned that there's a strong operating margin option there longer term.

How should we think about the Asia drag? I know you said it's down, I think, $1.6 million in 2014. How much is it in aggregate, and how long until that business hits breakeven?

Okay. On the operating deleverage in Tommy Bahama, if I understand it, you're asking basically, if we add back the impact of Waikiki and the office move -- would we have deleveraged?

Yes, we would have had some slight deleverage. We're close to $5 million on those two -- just under $5 million on those two items. So, that is certainly putting some downward pressure there. But, yes, we would have, absent those.

Still would have had a slight deleverage.

We should -- we would have leveraged a little bit.

Yes, positive leveraging.

Got it.

And then the second question was about the extent of the Asia drag. And I think we finished 2014 at --

A little over $10 million --

A little over $10 million. And you've got another $1.5 million-plus that we expect to reduce it in 2015.

As to the long term for Asia, Ed, we're working hard on restructuring the Hong Kong infrastructure that we built at the beginning of that project. And we'll get some benefit from that in 2015, and then -- but because the leasehold commitments and other longer-term commitments, we won't be able to complete all that in 2015. And at the same time, we continue to focus on building the business in Asia.

And I'll let Terry and Doug comment a little further on that.

Yes, Ed, this is Terry. As we mentioned in the prepared remarks, we've been very pleased with Australia, and, quite honestly, we've always said that we were going to learn in Hong Kong market and the Japanese market. But I've got to tell you, we were very pleased with our fourth-quarter results, with the learning that we reacted to this year, that we saw a significant increase in fourth quarter, which gives us encouragement that, going forward, that this can be and will be a very good market for us, as I said, focusing on Japan primarily.

Got it. I think revenue's going to fall a little bit there, and margins as well. Is that kind of a permanent shift?

I know you did a big Lanier program in 2014. Was that customer that fell out -- or how do we think about that business longer term? Thank you.

Well, I think what we got in Lanier Clothes is you've got a number of -- handful of customers that are in the $10 million to $15 million in annual sales there. So, there are four or five customers that are pretty material to Lanier Clothes. And if those guys make a major change in their merchandising strategy, that can have an impact on Lanier Clothes. That's exactly what happened this year.

It's not sort of the new customer. This is a customer that we've had for a long time. And I wouldn't say we lost the customer, but they have shifted their focus, and that's going to have a very significant impact on us in 2015.

And the task for us in Lanier is to take the terrific skills they have in merchandising, design, product development, and then execution, and find those places in the market where we can add value. We've got a lot of things in work, but we don't think that we're going to see the benefit of those in 2015. So, I think it's still a healthy business, and we're not thrilled about having a downturn in sales. But I don't think it's a long-term trend.

Got it. Thanks so much. Best of luck, guys.

Thanks a lot, Ed.

Thanks, Ed.

We'll take our next question from Rick Patel with Stephens, Inc.

Good afternoon, everyone, and I'll add my congrats on the terrific end to the year.

Thanks, Rick.

Can you update us on the west coast port issues? I know this is something that impacted numbers in the fourth quarter. But do you expect that will continue as we think about the first quarter and spring, as some of those backlogs are worked on?

And then secondly, can you just talk about the trend within Tommy Bahama by month throughout the fourth quarter? Terry, you mentioned that you had a strong start to the spring as well. Any way to put that into context?

Well, I'll make a comment first about the west coast port situation, Rick, and then let Terry and Doug elaborate on that further. But to the extent there's any impact on the first quarter, we've obviously baked that into our guidance. And if you want a little more detail -- Doug, maybe you can fill him in. But whatever it's doing to us, it's in our guidance.

Yes, I think that the advantage we had, Rick, was that a lot of my operations team had been here 12 years ago when it happened before, and took a lot of the corrective action that got us through fourth quarter -- not unscathed, we had to move a lot of product around. But also prepared us for first quarter real well.

We don't expect to have any impact to first quarter, and slight impact a little bit to the beginning of February and March just getting product in. But overall, our business was able to flow, basically without any impact.

And then, Rick, jumping back to the fourth-quarter and first-quarter questions -- we're glad you brought those up because, as we said in our prepared comments, we were really proud of what we were able to accomplish as a Company in the fourth quarter. And we think it's really worth focusing on, because it proves the strength of our business model, where we're focused on driving business through the power of our brands, not through sort of promotional and discounting strategies.

And if you look at what happened again, we had great comps in Tommy and Lilly, while expanding gross margins, and drove a 21% increase in year-over-year EPS. So, we really think that's worth bearing in on because that sort of model is a sustainable, profitable growth model that can endure for a long, long time, and makes us feel very good about our future prospects. So, it was a great fourth quarter.

As Terry mentioned in Tommy Bahama, that's continued into the first quarter. [And I'll maybe let Terry give us in a minute a little flavor on some of the products] that are working. But it's really been pretty steady since day one of the quarter, and really through the fourth quarter and into the first, business has been steadily strong at Tommy.

Now, we still -- we're only halfway through the quarter. We've got a ways to go, and a lot of business to do. But we feel good about where we are.

Terry, you want to maybe comment on some of the things that seem to be working well?

Yes, Rick, going into the fourth quarter, we knew that there was going to be some discounting, as we talked about. We changed a lot of things about how we handle fourth quarter, and our cadence of our marketing material.

But when you have a quarter like that, you can't really point to one thing. I think you'd have to point to a lot of things that we did right that -- first, the products that we shipped, and mirroring the marketing to that and the in-store visuals. All of that mix seemed to come together very, very good in the fourth quarter to achieve those results.

And as far as the first quarter, we did very similar marketing campaigns and everything, but then we've got some new products. We've got a new shoe initiative with men's and women's that we have right now in our windows right now, which we couldn't be more pleased. And that's additional business for us. We've had footwear, but we haven't really put a focus on marketing.

We just mailed a footwear exclusive mailer to our customers. And that gives us encouragement. When we focus on a category -- and there's a lot of other categories that we have businesses in right now that we haven't really gotten to, and women's accessories is another one. So, the Business, coming out of fourth quarter, we were very happy with coming out of it, and even more happy when we saw the results that we're achieving right now, and even this week as we continue to move along.

So, as Tom said, we've got a long way to go, but the team did a great job. We've got great product, great marketing, and great store visuals to get it done. So, we're feeling pretty good right now.

That's great. Thanks for all the details.

And then, for Lilly Pulitzer, you put up a very healthy comp for Lilly, despite going up against a pretty difficult compare. So, what's your degree of confidence that that momentum can continue, as you still face some pretty tough compares in the first half of the year?

And then, as a follow-up, I know some of the initial ads with Target are kind of hitting right now. Are you seeing any lift to the business, whether it's in stores or eCommerce, as you see some of those advertisements go out there?

Well, a couple of comments on Lilly. First of all, it was a terrific year for Lilly Pulitzer. It was one -- and even though the comparison, as you say, was relatively soft, it's still a very, very healthy comp that they posted, both for the fourth quarter and the full year. And again, that was done with expanding gross margins, and we really think that shows the strength of that brand. This is a full-price brand that drives business based on that connection that they have with the consumer, and a great year for them.

As we moved into FY15, February was actually a little bit soft for them, and the first week or two of March was a bit soft. But then as we got into the middle of March, second week or so, we had a couple items hit that were sort of truly spring, pink and blue, sort of great prints. And then last week we got into a big delivery that had lots of very spring colors and prints.

And we had our annual Lunch at Lilly event, which is a -- on this past Saturday -- big gift with purchase event. And it was the best Lunch at Lilly event we'd ever had. It was a record sales day for us on the eCom, other than the flash sale days. And it was our first ever $1-million retail day in Lilly Pulitzer.

So, like Tommy, got a long way to go, but we're feeling pretty good about the quarter right now. And the softness that we saw in February is obviously baked into our guidance at this point.

Thanks very much, and all the best with Ben Sherman.

Okay. Thanks a lot, Rick.

We'll take our next question from Eric Beder with Wunderlich.

Good afternoon.

Hi, Eric.

Hi. I don't know if I -- maybe I missed this. Did you say how many stores you're going to open for Lilly this year?

We -- I can't remember whether we said or not. It's about six this year, is what we're expecting.

Okay. That's pretty high. Do you expect to kind of -- (multiple speakers)

That's a little bit higher than where we've been, but we're excited about those.

In terms of Tommy Bahama, what are going to be some of the advantages of moving the women's business into Seattle, in terms of what you can leverage that through? And how is the outlets business doing for Tommy Bahama? How did that do in Q4?

Well, I'll let Terry and Doug amplify these comments in a second. But in my mind, this women's move is pretty pivotal, and it's actually part of a bigger move.

Eric, I think you are well aware that we hired a first ever Head of Design for all of Tommy Bahama product during 2014. And we feel very strongly that, as we have become a direct-to-consumer-led brand, we still do wholesale, but our primary business is retail and our own eCommerce sites. And it's very important, as Terry said, that we present a unified point of view. So, part of that is having this single Head of Design that's running men's design, women's, footwear, accessories, the whole thing.

And the second piece of it is that you need to get those teams co-located. And the big piece that was missing from Seattle was the women's team. So, we had a good opportunity, and the timing was right, and we're in the process of moving that to Seattle.

Terry, you want to amplify that a bit maybe?

Yes. Absolutely. Thanks, Eric.

Tom mentioned we hired a Head of Design for the total Company -- men's business, women's, everything. We also hired a Head of Women's Design recently. When we did that -- we've always known that having that women's group down in Pasadena, it was very difficult to keep a total point of view to both of the collections. Plus, as far as leveraging the print library, we've got a tremendous amount of asset in just art work, and the art department is here in Seattle, and communication back and forth between Pasadena was just more cumbersome than it needed to be.

So, this is a -- the leverage we're going to get, and we're already getting because we've already relocated some of these positions to Seattle, is already showing great results, and it will continue to do it. As we've all said, too, that our Business right now is approximately 30% women's, and we've got a goal to get it to 50%. We just thought that we'd be better served getting it here where we could focus on it, and not have to run back and forth to Pasadena to do it.

On the outlet question, Eric, I'm going to let Doug talk a little bit about that.

Well, Eric, you know we use our outlets to dispose of our unsold inventory. It comes out of our full-price stores and also out of eCom. And our outlet business is where we want it to be right now.

We're actually not even looking to expand outlet stores this year. And the reason why we're not doing that is that we changed some of our strategy on our buying tactics, but also we've been able to leverage our flash site sales site that we did a couple times in 2014, and we're going to do again in 2015 to get through any of the unsold inventory that we've had. So, right now, we're happy with where we are in the outlets.

And staying on -- in terms of the (inaudible) -- so, when you look at the -- okay, of course, I just completely lost my poor train of thought. Okay. Thank you.

(laughter) Thanks, Eric.

Thanks.

Thanks, Eric.

(Operator Instructions)

We'll take our next question from Pamela Quintiliano with SunTrust.

Guys, congratulations on really great execution in a really challenging environment.

Thank you, Pam.

So, I have a few questions as well. Starting I guess with just some housekeeping: When I think about FX, just how do I think about that with 4Q and into 1Q and for the full year?

Scott, you want to field that one?

Yes. It kind of balances out. We are losing money in most of our foreign jurisdictions. So, the earnings translation piece actually -- it can help you a little bit when the dollar's getting stronger.

However, in those foreign markets, the goods are purchased in US dollars. So, it tends -- you have to increase your purchase price in that local market to keep your same margin. And that puts -- can put a little strain on the top line. So, I think we kind of neutralize out to where it's not a big impact on a net basis to us, especially compared to some peers in our industry who have much bigger and much stronger international businesses right now.

Okay. And then, when I think about your commentary on Lilly and the softness there, and weather has obviously been an issue for a lot of retailers out there, and a big topic this earnings season -- was part of that due to weather? And can you talk, also, even though Tommy, it sounds like, has had a great start to the quarter, do you think there was any weather impact there as well?

Well, I think the short answer is yes in both cases. Tommy's business overall has been very strong through the first part of the first quarter. But I think they gave up some business as the result of weather. I mean, we had days where stores were closed -- a fair number of them.

So, on the one hand, business has been good even with the weather. On the other hand, I do think there's been some impact.

As to Lilly Pulitzer, the team there, like the team at Tommy, doesn't like to complain about the weather. They like to focus on the controllables. And you ask anybody at Lilly, you'll never get them whining about the weather as being a story. But when you look at their store footprint, where they're heavily concentrated on the east coast, with a lot of their stores in the mid-Atlantic and north, I don't think there's any question that they've been impacted by weather. And I do think that was part of the February softness.

But the key to us is really that, as we get into this Lunch at Lilly time, which was last Saturday, and then head into Easter and graduation time and Mother's Day and those types of events, that's really when we want to see the business strong. And from what we've seen over the last couple of weeks, we're feeling pretty optimistic.

It's like I said, Lunch at Lilly last Saturday was absolutely terrific -- just off the charts good. And it's continued into this week. They've been strong. In fact, the day after Lunch at Lilly, on Sunday, when there was no gift with purchase going on, and you would think there might be sort of a hangover, they actually had a really strong day on Sunday as well.

So, that's great to hear. And so, it sounds like the inventories for you, given the life of your product, it's not as much an issue necessarily that we should be concerned about, right?

Oh, no.

With the weather.

We're feeling --

Yes, and we went in very clean.

Yes.

We've entered FY15 in very good inventory shape also.

Yes. And Lilly is just terrific at managing inventory, and they've got good -- a little bit of residue that they end up with. They've got excellent vehicles for clearing -- primarily the flash sale that you're familiar with.

Okay. And then, just a few other questions for you. Actually, for Terry, can you talk more about Japan, and what's driving the improvement there? And then, just a little bit about 4Q -- the womens' performance there and how you felt it went?

When we went over last year, Pamela, and looked at the market, we've always said that we're going to get learning from what we do. And we clearly made weight adjustments in our inventory over there.

The Japanese markets make very hard turns to spring, and they make very hard turns to fall. And basically -- so, we beefed up, made some products specifically -- probably about 30% to 40% of the inventory that we had going in, in both men's and women's in Japan, in the fourth quarter was products that we did just because we knew that -- and it worked. And the good news is -- we can't just assume that what works in America -- you just can't -- it's a different market, and we've got great merchants over there now. We hired a new head merchant that's helping us with that.

And we'll get -- that's the reason I said in the comments that it's going to be a strong market. We're going to figure this out. And we saw, in third quarter, beginning, and into fourth quarter, we saw the results of what we've done. So, we're feeling pretty -- very good about Japan right now.

And I'm sorry, your other question, Pamela -- ?

Women's -- just how -- the women's in 4Q. We spent a lot of time talking about the move with women's, and consolidating under one roof. But I was talking about 4Q performance.

We're continuing to be very pleased with our women's business. Dresses were very strong as we started early into the quarter. And so far, with the new Head of Design that we've brought on, and the new Head of Total Design, the products that we're working on in-house, and you'll start to see that in fall and holiday this year. We're very pleased.

The fact that I mentioned earlier, the shoe thing we've done that are in the window right now, and I encourage all of you to go get a pair of these Relaxology shoes. They're very comfortable. But we've seen not only the men's and -- but women's has been strong, or as strong as the men's. So, we know that when we deliver the correct product for women, that she responds to it.

So, we've got a lot of work to do, and we're going to get it done, and continue to see -- and a lot of the business we're seeing in the first part of first quarter is being driven by another very strong women's assortment delivery. And as we look forward to Mother's Day and Easter, you're right, the weather has been a little bit difficult, but if it's been that strong so far, we're really looking forward to what's going to happen when the weather turns for us.

That's great to hear. And then, I'm going to try to squeeze in a last one, and I don't know if you're going to answer or not. (laughter) I'm warning you in advance with it.

Why now with the decision to sell Ben? Obviously, it's been talked about for a while. And then, just what does that imply about your appetite for potential acquisitions going forward?

Well, the reason for now is that the work that the team at Ben Sherman did, sort of starting in 2013, and then they executed in 2014, and we saw significant improvement in the business at all levels, top line, bottom line, comp-store sales -- came into 2015 with good momentum. And we think that makes Ben Sherman now an attractive acquisition target, where a year ago, 18 months ago, it simply wasn't. So, the reason for now is because we think it's an attractive acquisition target.

And when you look at it, Tommy and Lilly have set a high bar -- sort of high bar for expectations within our Company. And we think that it makes sense strategically for us to sell Ben Sherman. We think we'll be able to find a good pool of potential buyers, and find a good partner for them going forward. And it does create some bandwidth for us. It opens up some space for us.

Thank you for answering all my questions. A lot of excitement going on; so, best of luck.

Thanks, Pamela.

Thank you, Pam.

We'll take our follow-up from Eric Beder with Wunderlich.

Sorry, now I remember the question I want to ask.

Okay. No worries. (laughter)

It's been a long week.

On the wholesale business -- so, last year, if I remember correctly, you had one of your customers in Q1 cut back in the [bid near] wholesale business after a very aggressive rollout of it. What is going on in wholesale right now for Tommy Bahama and Lilly?

Well, I'll let Terry and Doug comment on Tommy in just a second. But overall, Eric, as a Company, at Oxford, our strategy is to focus on our direct-to-consumer businesses first, and then support them with strategic wholesale. So, where it makes sense within our overall brand strategies to do wholesale, we're going to do it. It's still a great vehicle for getting some incremental contribution, and it's a great customer acquisition vehicle.

So, we like wholesale, but we never want to do it when it's inconsistent with our core brand strategies. And what that means is that it's not going to be a big growth vehicle for us. We're not walking away from it, by any stretch. But it's also not going to be the big driver of growth.

So, with that said, I think in Lilly Pulitzer we're planning sort of flat wholesale this year, and Tommy Bahama -- I'll let Doug and Terry fill you in.

Eric, as you well know, majority of our wholesale business is men's. And we've got half a year of those bookings in right now, and we're opening up our holiday line in a couple of weeks. But we're looking at that men's business as flat to slightly maybe up as we go into the holiday season.

But the categories that we haven't been in the wholesale business -- Tom said that we like the wholesale business, but I mentioned the success we're having in footwear. That's not only in our own stores, but that's a new business for us that we've gotten a little bit of traction early. And it's not going to be significant in 2015, but we think, beyond that, can be, and also in women's.

We're getting some wholesale traction -- new customers that are coming to us that we've had significant men's businesses with over the years that are coming to us and saying -- Wow, we have a Tommy Bahama customer in our store, and can we -- and as Tom said, we're going to crawl, walk, run. And we're going to pursue that women's sportswear business judiciously.

But we have the opportunity. The wholesale business has been a great business for us. And we've got great wholesale partners, as you well know. So, we're not trying to make the wholesale business (inaudible - background noise)

Great. Thank you.

Thanks, Eric.

Ladies and gentlemen, with no further questions in queue, I would like to turn the conference back over to Mr. Tom Chubb for any closing remarks.

Thank you, again, for your time this afternoon. We very much appreciate your interest. We're excited about our business opportunities for FY15 and beyond, and we'll talk to you in a couple of months. Thanks.

And ladies and gentlemen, that does conclude today's conference. We do thank you for your participation. You may now disconnect. Have a great rest of your day.