Oxford Industries Inc (OXM) 2017 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Oxford First Quarter 2017 Earnings Conference Call.

Today's conference is being recorded.

At this time, I would like to turn the floor over to Ms. Anne Shoemaker for opening remarks and introductions.

Thank you, Denise, 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 section 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 operation 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 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 non-GAAP to GAAP financial measures in our press release issued earlier today, and in our December 6, 2016, press release, both of which are posted under the Investor Relations tab of our website at oxfordinc.com.

Please note that all financial results and outlook information discussed on this call, unless otherwise noted, are from continuing operations, and all per-share amounts are on a diluted basis.

As a reminder, the results from the Ben Sherman business are reflected as discontinued operations for all periods presented.

Also, on April 19, 2016, the company acquired Southern Tide, representing 2 weeks of Oxford's first quarter fiscal 2016.

Please also note that fiscal 2017, which ends February 3, 2018, is a 53-week year.

And now I'd like to introduce today's call participants.

With me today are: Tom Chubb, Chairman and CEO; and Scott Grassmyer, CFO.

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.

On our call on March 23, I spent a fair amount of time describing our view of the current retail environment, the trends we are seeing and how they are impacting our industry and Oxford.

We discussed the significant shift in consumer shopping patterns, from brick-and-mortar to e-commerce, fueled in large part by technological innovation and the rise of the digitally native millennial generation.

We also discussed the rapid growth of the outlet, off-priced and fast fashion channels of distribution as well as the impact of Amazon and its foray into fashion.

And finally, we elaborated on the pressure on traditional channels as department stores struggle and no longer pull traffic to themselves or the malls they anchor.

You only need to have been reading the headlines since our last call to know that these trends are continuing and possibly even accelerating.

I also pointed out that we believe Oxford, with our portfolio of exciting brands and clean distribution, is uniquely and well positioned to succeed.

We believe our brands: Tommy Bahama, Lilly Pulitzer and Southern Tide are very specific and definite in what they stand for and importantly, they remain true to their brand message in their communications, the beautiful products they create and where and how they choose to connect their products to their guests.

Against this backdrop, I am pleased to report Oxford's very solid first quarter results.

Our 6% sales increase reinforces the effectiveness of our strategy to manage a dynamic portfolio of brands.

The increase in sales came from several different and important initiatives, including the addition of Southern Tide to our portfolio, sales associated with new full price retail stores, increased sales in our restaurants and a 2% increase in comparable store sales.

These increases were partially offset by a decrease in the wholesale sales as we carefully managed and controlled our exposure to department stores, and our adjusted EPS exceeded our guidance for the first quarter at $1.12 per share.

I'll now spend just a minute or 2 on each of the brands in our portfolio.

This spring, Tommy Bahama released a fabulous 132-page catalog.

This fantastic marketing piece featured the breadth of the Tommy Bahama brand, including men's and women's apparel, accessories, our restaurants and other lifestyle products such as furniture, beach and home decor.

We know that the right combination of beautiful products supported by a strong marketing campaign can deliver great results, and Tommy Bahama's results were very strong with a 5%-comp increase, including positive comps in both e-commerce and our retail stores.

Tommy achieved 6% top line growth and expanded gross margin modestly, a real accomplishment in is highly promotional environment.

Tommy Bahama also delivered on operating margin expansion which increased over 100 basis points year-over-year.

The team at Tommy Bahama really pulled together and with a clear focus on priorities, delivered a great quarter.

Now I'll move to Lilly Pulitzer.

The focus at Lilly Pulitzer to run the cleanest, least promotional business possible.

We believe this is the best way for it to protect the exclusivity that is special and desirable to Lilly's customer base.

And the Lilly team is doing just that.

During the first quarter, Lilly delivered a modest expansion in gross margin and an impressive 28% operating margin on sales of $63 million.

While the margin performance was very strong, a combination of internal and external factors led to a slight decline in sales.

In the first quarter, the primary contributor to the year-over-year sales decline was in the wholesale, which was down $2.7 million over last year.

The team at Lilly is closely managing their exposure to department stores and, by design, reduced how much product would be carried this spring.

Again, the strategy is to ensure a high sell-through rate at full price to preserve margin and brand integrity.

While we never like to walk away from sales, our objective of delivering long-term shareholder value mandates that protecting brand integrity remains paramount.

Lilly's top line was also negatively affected by comps.

Positive e-commerce comps were more than offset by negative comps in our bricks-and-mortar stores.

Stores in the Northeast, Mid-Atlantic and Midwest, which experienced a cold, wet spring, were the weakest, while our Florida Lilly stores were relatively strong.

In addition, bricks-and-mortar comps were negatively impacted by a lower level of markdown inventory in-store as well as a narrower offering of merchandise at lower entry price points.

We have deliberately reduced inventory in both of these areas in our effort to maintain a very clean business.

That said, we have always served an aspirational guests for whom these successful price points are very important, and in hindsight, we probably walked away from some sales.

The month of May was better and as we head into the all-important buy now, wear now summer selling season, we remain confident in our outlook for the year with top line growth in the high-single digits and maintaining an impressive operating margin above 20%.

In the first quarter, Southern Tide delivered a very solid 17% operating margin, fueled by strength in their e-commerce and at-once wholesale businesses.

With 3 signature stores already under their belt, they announced last week 3 additional stores, all in North Carolina.

Raleigh and Nashville are expected to open this summer, and Wilmington is expected to open this fall.

In addition, we are very excited about our Southern Tide shop-in-shop that we recently opened in Nantucket.

It is off to a great start, and demonstrates that while the brand's heritage and DNA are distinctly southern, its appeal is much broader.

Signature stores and shop-in-shops are a great way for us to partner with some of our key retailers to create a powerful mono brand presentation of Southern Tide to the consumer as this still young brand continues to grow and develop.

We are very pleased with how the Southern Tide team is executing against their plans for 2017, and are proud to have this business in our portfolio.

Lanier Apparel's performance in the first quarter was essentially as expected.

The struggle of department stores has a particularly strong impact on Lanier, yet they continue to be highly cash flow positive and are working hard to innovate and develop new initiatives for growth.

All in all, we have come out of the gate with a solid start to fiscal 2017.

We just completed May, and the trends we saw at Tommy Bahama and Southern Tide continue.

We are also pleased to see improved comps at Lilly Pulitzer in the month.

While we are still facing formidable challenges in the consumer marketplace, our portfolio of unique, compelling brands and our carefully controlled distribution positions us well to achieve continued success.

With that, I'll now turn the call over to Scott Grassmyer.

Thanks, Tom.

I'd like to walk you through a selection of highlights from our consolidated results for the first quarter, as well as our guidance for the second quarter and full year.

Please refer to our press release issued earlier today for additional information.

The first quarter 2017 net sales increased 6% to $272 million.

As Tom mentioned, Tommy Bahama had a very good quarter.

Their 6% sales increase came from all channels of distribution, with a 5% increase to comparable store sales, incremental sales from additional full price retail stores, increased sales at restaurants and higher off-price wholesale sales.

Importantly, Tommy's adjusted operating margin also improved year-over-year, increasing 110 basis points to 9.5%.

Lilly Pulitzer reported a modest sales decrease of $1.4 million or 2%.

As Tom mentioned, the primary driver on the sales decrease were lower wholesale sales, as Lilly continues to carefully manage its channel distribution.

Lilly Pulitzer's operating margin remained very strong at 28%.

Sales at Lanier Apparel were lower than last year, but essentially in line with what we had planned for the first quarter.

And last but certainly not least was the sales contribution made in the quarter by Southern Tide.

With good growth in their wholesale door count, Southern Tide contributed almost $13 million of sales in the quarter, an adjusted operating margin of 17% and it's historically strong this quarter of the year.

Our consolidated adjusted operating income in the first quarter was $32 million compared to $33 million in the same period of the prior year.

Adjusted EPS in the quarter was $1.12 compared to $1.26 in the first quarter of 2016.

As we mentioned in our call in March, our EPS in the first quarter was impacted by a meaningful increase in our effective tax rate.

The higher rate of 41% reflected the unfavorable impact of the accounting treatment for certain stock awards that vested in the first quarter.

Also, last year's rate of 36% benefited from our ability to use some operating loss carryforwards.

The impact of the change in tax rate was a reduction of EPS of $0.09 per share.

Now I'll move to the balance sheet.

Inventory decreased 12% to $127 million, reflecting lower inventories at Tommy Bahama, Lanier Apparel and Southern Tide, partially offset by a modest increase at Lilly Pulitzer.

We believe inventory levels at each of our operating groups are appropriate to support our future sales plans.

We continue to generate strong cash flow from operations and reduce our outstanding debt.

In the last 12 months, we reduced borrowings by $50 million.

We ended the quarter with $93 million of borrowings and $194 million of unused availability under our revolving credit facility.

I'll now walk you through our outlook for our second quarter and full year.

Earlier today, we initiated guidance for the second quarter of fiscal 2017, which ends on July 29, 2017.

We expect net sales to be in a range from $285 million to $295 million, and adjusted earnings per share to be between $1.35 and $1.45.

On a comparable basis, sales were $283 million in the second quarter of fiscal 2016, and adjusted EPS was $1.48.

Looking further ahead, a couple factors are shifting some of our business towards the third quarter this year.

First, Tommy Bahama's Friends and Family event is shifting from the second quarter of last year to the third quarter this year.

We also believe that due to the lower in-store markdown approach taken by Lilly Pulitzer, the end-of-season flash sale, which takes place in the third quarter, will be larger than last year.

Finally, we anticipate Lanier's third quarter to increase year-over-year on both the top and bottom line.

Put it all together, we expect to be modestly profitable in the third quarter compared to a loss of $0.07 per share last year.

We are also pleased to affirm our adjusted EPS outlook for the full year.

Adjusted earnings per share are expected to be between $3.50 to $3.70, which compares to adjusted earnings of $3.30 per share in fiscal 2016.

We now expect net sales to grow between $1.09 billion to $1.11 billion as compared to fiscal 2016 net sales of $1.023 billion.

Our effective tax rate for fiscal 2017 is expected to be approximately 39% compared to 37% in the full 2016 fiscal year, with the increase reflecting the items I just mentioned.

Full year interest expense is now estimated to be approximately $3.5 million.

Capital expenditures for fiscal 2017 are expected to be in a range of $50 million to $55 million.

We will be investing in information technology initiatives, new retail stores, Tommy Bahama's newest retail restaurant locations in Plano, Texas and Palm Springs, as well as investments to remodel and relocate existing retail stores.

Denise, we are now ready for questions.

(Operator Instructions) Our first question comes from Ed Yruma with KeyBanc Capital Markets.

This is Matt on for Ed.

So you've issued some new Tommy product with higher price points.

Have you had any success there?

And are these new customers or customers trading up?

Yes, we have had success there.

It's – they're price points that we've been at them in the past, they're not entirely new to us.

And I think it would generally be the same customer base that's just willing to pay more for a product that's got more.

Okay.

And on Tommy women's, obviously, you took the write-down last quarter to clean up inventory.

How has the more focused assortment been performing?

And what's working?

What hasn't?

And we just heard in the industry that dresses are outperforming pretty much everything else in women's versus last year.

Can you comment on dresses at Tommy and Lilly, and how you think you're positioned there for the rest of the year?

Yes.

Well, first of all, women's performed well during the quarter.

It was -- men's performed well and Tommy women's performed even better.

That was led by our swim category which is a particular strength of Tommy Bahama and it did incredibly well during the quarter.

But the rest of women's, the sportswear portion of the line, including dresses, did well also.

We've always done a nice job in dresses at Tommy Bahama and that continued this spring, and I expect will continue through the balance of the year.

And the same is really true at Lilly Pulitzer.

I mean, Lilly is known for its dresses, always has been and I expect always will be.

Our next question comes from Corinna Van der Ghinst with Citi Research.

I have a few questions from my end.

Just first, on the 2% decline at Lilly Pulitzer.

First, on the wholesale decline, you gave some interesting color on the brand this quarter.

Could you give us a little bit more color on what's happening on the wholesale side, though?

Did you actually exit any doors in the quarter?

Or really, was it just a pullback in the shipments?

And then also, it sounds like you're maintaining your top line guidance for the brand for the year, but should we expect the rest of the year to be impacted by this pullback that you guys are talking about?

Well, on the Lilly first quarter wholesale scenario, that was really pretty much as planned.

That was mostly within majors, so think department stores where the reduction came in.

And we did exit a few doors as we always do, door counts are always a little bit dynamic.

They're not static with us, and we add and subtract depending on performance and opportunity and that kind of thing.

But the more important reduction in that, the wholesale sales to majors, was really as a result of our letting them buy to their full price selling plans and trying to avoid selling them merchandise that was just going to end up on an end-of-season clearance sale.

So it's about running a very well-controlled, full price, high sell-through, quick-turning business, which is what we want to do.

So the wholesale piece of Lilly's performance for the quarter again was really pretty close to what we expected.

And that's mostly pronounced in the first quarter.

The other quarters -- some quarters will be up a little and some kind of flattish.

So it's primarily a first quarter issue.

Okay, great.

And then just my follow-up on the Lilly question would just be on the lack of opening price point items that you called out in the brick-and-mortar stores.

Have you made the immediate adjustments that drove the improvement into May in the assortment?

Or how quickly can those actually be adjusted?

Well, some of those -- they are 2 things that we talked about, we talked about having less markdown inventory in-store and that's something that can be adjusted really almost immediately.

And then the second thing are items where the initial price is really what we're talking about is items less than $50.

So these are the things like water bottles, iPhone covers, makeup, bags, cups, those type – sunglass straps, those types of little items that can be $18, $28, $38, price points like that.

And of those, it really will take us a little bit of time to have those back in the store.

I think we will have them in resort in more abundance than we've had.

But Cori, obviously, we've factored all that into the guidance.

Okay.

And just to that point also, were there more promotional pressures on your direct-to-consumer business this quarter coming from the wholesale channel at all?

You mean directly or indirectly?

In other words, from people that are carrying our brands or just general marketplace condition?

Both, I guess.

Well, I mean, obviously from a -- on the direct basis, people that carry our brands, the answer is not really, and that's why we control our distribution and how much we sell these guys so tightly.

On an indirect basis, yes, there is a lot of discounting going on in the marketplace, a tremendous amount.

Some of it on an unsustainable basis, as people are going out of business and liquidating, but that's clearly a headwind out there.

All that said, as we noted, we actually increased gross margin in both Tommy Bahama and Lilly Pulitzer during the quarter.

Okay.

And then my second question is just on the (inaudible)...

So when you look at the results, Cori, I think you've got to take account of that, Tommy not only posted the results they did, but they enhanced their gross margin at the same time.

And that flowed through to operating margin.

And then Lilly Pulitzer, while we didn't have a very modest sales decline, we fully hung onto our gross margin and still posted a 28% operating margin.

And then a lot of our other KPIs and goals that we set out to achieve during the quarter about being even less promotional than the very unpromotional Lilly that's always existed, we achieved -- our customer account is up year-over-year.

We're selling each customer more merchandise, there are many, many positives.

This is a very strong business, and I think what you're seeing are signs of strength, not really weakness there.

Okay, great.

That's helpful color.

And then my second question was just -- is it looks like you raised the low end of your top line guidance for the year.

Is that just due to Tommy and/or Southern Tide being better than you were expecting the last time we spoke with you?

I think it's really the result of everything being on track and then our -- probably, our earlier forecast didn't take full account on some of the inventory clearance that we're doing.

So you saw that Tommy's inventory number for the first quarter was way down, and that was because they did an incredibly good job of getting after really clearing out pretty much any and all aged inventory that we had.

Scott, anything you'd add?

Yes, that's right.

The -- I don't think we fully baked in the liquidation sales, as Tom mentioned.

And we did, we made great progress in Q1, I think by the time Q2's over, we should -- all that inventory write-down at year-end should be out the door.

And I would, again, draw your attention to the inventory and cash flow numbers, because we think it's a very, very strong story in a marketplace that is admittedly a tough market, but we think we accomplished a lot in the quarter, apart from just the sales and earnings.

Okay, great.

And then the inventories did look extremely clean, and you called out Tommy and Lanier.

And you did mention you feel comfortable with the inventories at Lilly.

But could you give a little bit more color on why those inventories might look higher, and how you're feeling about the inventory for all the brands in the wholesale channel right now?

Well, the inventories in Lilly, they're growing, and they've got more stores than they did a year ago.

And the inventories are only up slightly.

And Lilly's inventory was up about $1 million, so pretty insignificant considering the additional store count we have.

And as we mentioned, the flash sale, it would've been less promotional in our full price stores in the first quarter, and we will have a little bit more to clear in the flash sale, but nothing to be concerned about.

We'll take our next question from Jeff Van Sinderen from B. Riley.

Great work at Tommy, by the way, especially good to see improvement at women's there.

Just wanted to drill down a little bit more on the drivers for the Lilly comp store sales.

Was it mostly weather, do you think?

Or was it mostly opening price point?

And then are there any other things to consider about marketing or anything else that may have had an impact, in any categories, I guess, that may have also swayed with the weather or such?

Just trying to get a sense, I guess, how much was overall traffic and then also, thinking about Lilly for Q2, just wondering what sort of comp level we should be looking to, given the shift in the flash sale timing?

Yes.

So I think it's pretty straightforward in terms of the comp story in Q1 in that, Jeff, we did a couple of things that were all about making sure that we're maintaining the very pristine and pure nature of this brand.

So we put less merchandise out at markdown, that was a very deliberate strategy and we had, as a result, less sales at markdown in-stores during the quarter.

Then as we mentioned, we also had a big reduction in the amount of opening price merchandise, especially in that under $50 category.

And then to your question about marketing support, we did do a little bit less in the way of promotional type marketing support, particularly gift with purchase events.

So we dialed those back a bit, and then as you know, those are a big part of the Lilly equation, we did less of that in the first quarter.

We don't want to overdo the gift-with-purchase events, and so as compared to the prior year, there were less of those.

And when you combine that, and you're doing those things in a quarter in which the overall market traffic trends are not great, and then they're sort of exacerbated by a cold, wet spring through most of our Lilly Pulitzer footprint, this wasn't a great combination of the factors and it led to a little bit of a comp store sales decline.

We did comp up nicely in e-com, but bricks-and-mortar were down a bit.

But we think it's a pretty straightforward and understandable scenario.

Okay.

And then if we can maybe shift over to the restaurants, just wondering, I guess, what you're seeing there.

I know you said they were positive.

Anything, I guess, any other color you can give us on Marlin Bar, how that might evolve for the future rollout.

I think you're working on, maybe a kind of a new concept that might have been little bit more of a hybrid, maybe you can touch on that.

So restaurants were strong during the quarter.

We were very pleased with the way they performed and the stores that are connected with the restaurant comped a little bit higher than the regular stores.

So our whole strategy of leveraging off those restaurants to help bring the brand to life, I think, was successful in the quarter as it has been for a long time, but particularly in the first quarter of this year.

And then the Marlin Bar down in Coconut Point, Florida, continues to perform very well for us.

We continue to be excited about that concept and we're taking what we're learning there, and we're going to apply that, really in any future restaurant that we do.

So we've got a couple upcoming that won't be exactly like Coconut Point, but they will incorporate some of the learnings that we've had there.

And then in the future, I expect we'll have some that look even more like Coconut Point.

Okay, good.

And then just, if I could squeeze one more in, on Southern Tide.

Just wondering how we should think about the growth there, it seems to be progressing pretty well, and then also, we should think about operating margin which, frankly, was really strong, based on what you're seeing.

Yes.

So we're very happy with Southern Tide, obviously.

They're like everybody else, the market out there is tough but they're performing very, very nicely.

We're just now obviously entering our comp period, so quarters 2, 3, 4 we'll be comping against next year, and we're expecting good growth and a good operating margin.

I'll let Scott elaborate a little more on that.

Yes.

We still, yes -- at the beginning of the year, we set a low teen operating margin, and the first quarter is the strongest operating margin, it's the initial spring shipments.

So that's '17.

I don't think we'll hold it quite that high a level, but we still expect Qs 2 to 4, some good year-over-year growth.

Our next question is from Eric Beder, Wunderlich.

Could you talk a little bit about – I know last conference call, you talked about a number of changes you were making in the Tommy Bahama outlet business, to make it more competitive and more kind of better able to hold pricing.

Could you talk about what's happened there and how you aim -- to plan on doing, to that part of the channel?

Well, a big part of that overall plan was to figure out a lot of sort of excess inventory that we had and we've really been focused on that and a lot of that inventory drop that you saw the first quarter, and that Scott mentioned that we're going to see in the second quarter is really us getting rid of sort of the over-inventoried position that we had.

So I think that's the first step, is doing -- getting those inventory levels in line, so that outlook stores can function the way that they are supposed to function.

So I think we're on a great path there.

I think Scott and I feel good about that.

Great.

And could you give us an update on what's going on with the international operations?

Yes.

We're seeing nice comps in Japan, which is very encouraging.

The goal for this year was to take a couple million out of that loss, and we're on track to do that.

We -- Hong Kong, we still are operating that store, and it does lose money, so hopefully, early next year, we'll be able to exit that store.

But right now, we're on track with what we thought at the beginning of the year, and Japan seems to be getting better and we're -- we'd still like to find a good partner.

Our next question comes from Andrew Burns with D.A. Davidson.

On the Live the Island Life catalog, given the success, how are you thinking about larger, full brand catalogs as a marketing push going forward, perhaps more than 1 a year?

And on that, do you think that it was a store traffic driver for a sustained period, or really just around mailing?

So Andrew, with respect to the first question, will we do it again?

I think the answer is absolutely.

And I think we're working on one for the December holiday selling period that will be similar in concept, I think, in terms of being a broad sort of exposition of the brand.

And then I would guess, although I don't know that we've nailed this down completely, that our cadence on these will probably end up being sort of 2 a year, one in the spring and one in the holiday time period, but it's very exciting.

And then in terms of the impact it had, obviously, it had a big impact around that time of the mailing, but we believe that it continued for quite a while and I'm not sure but we're done reaping the full benefit of that catalog because I believe you got a copy of it, and it is the kind of thing that people are less inclined to throw away and maybe keep hanging around on the coffee table for a while, and going back to it.

And so we're not sure that it's fully burned off at this point.

Great.

And then on Lilly, could you, Scott, maybe clarify commentary on the flash sale?

I think exiting last quarter, you were planning that down year-over-year, but now it sounds a bit larger.

Did I understand that correctly?

And is that primarily...

That is correct.

The initial plan was it was going to be kind of flattish to even down just a little bit.

Now we're planning it to be up a little bit.

And part of that is we did not put much on sale, and we did comp negative in Q1, so there's a little bit more inventory.

So those 2 things together, leaving the opportunity to have a bigger flash sale, and that'll be in Q3.

(Operator Instructions) We'll take our next question from Pam Quintiliano with SunTrust.

So had a quick one on Tommy.

I know we've -- there's been a lot of questions already on it.

But just Hawaii, could you touch upon performance in Hawaii and if you're pleased with that, and what's going on tourism-wise there?

And if you think that also benefited Japan?

And then the women's business, are you attracting a new customer do you think there?

Or is your existing customer just happier with the assortments and buying more?

On the Hawaii question, I think we were pleased with the way Hawaii performed during the quarter.

They did their part to contribute to the success in the quarter.

And I think that the data would indicate that maybe the tourist situation is not fully recovered there, but it sure seems like they're more willing to spend a little money than maybe they were a year or 18 months ago.

So Hawaii seems to be headed in the right direction.

I think we talked about it on the last call or 2, but we've definitely seen a connection between our Hawaiian operation and our efforts in Japan, particularly with the Waikiki store, which has gotten a lot of publicity in Japan and from Japanese media.

So that's a positive as well.

And then on the women's business, I believe that's more about giving our existing female guest what she expects to have from Tommy Bahama.

So we've always been strong in swim, we sort of doubled down on that for this spring and really did some things to try to drive the women's swim business, including the swim cabana that we put in the New York store that hopefully, Pam, you've seen at this point.

And it worked.

And then from that, we also did very, very well in what I would call easy-to-wear, breezy, sort of quintessentially Tommy Bahama style.

So some -- we had a linen shift that did extremely well.

We had a number -- a little linen, sort of jacket that did really well.

There were styles that, a T-shirt dress or 2 that did really well and they were, again, easy to wear, breezy, things that are the type of items that come to mind, I believe, when somebody thinks about Tommy Bahama women's.

Very helpful.

And then I guess just online, can you provide any additional color, and I apologize, if I missed this, just growth by concept.

Was it what you expected?

Were there any surprises?

And any updated thoughts on the ultimate penetration of online, especially just given what's going on overall in wholesale?

I think online and don't think we were disappointed anywhere in the business with our results for the quarter.

I think we met or exceeded our objectives in online.

So we were very happy with that.

In terms of the long-term penetration of online, I'm not sure what the limit is.

I think some in the industry have suggested that at some point, it might be a 50-50 proposition, and that doesn't seem crazy to me, but we've still got a ways to go before we get there.

And then I guess just last question on (inaudible) malls.

We've heard a lot of commentary that the premium centers seem to be doing better, but we've also heard from a few folks that there's more opportunity to get in some centers now, specifically with everything going on in all the disruption out there.

As you think about your methodical store gross, are you seeing any changes in the opportunity or any centers that you would then dying to get into, but couldn't get the exact spot you wanted, where there's some flexibility recently?

Well, I think the -- obviously, with our small footprint of stores, 42, I think in Lilly Pulitzer at this point, and I think we've got 110 or so full-priced domestic Tommy Bahama stores.

And so out of that 152, only half or less are really in malls.

Our exposure to malls is quite small.

It's all in the very best malls.

And I think, Pam, overall, the best malls are still the best malls, and they're the ones that people are still fighting to get into.

So we're happy with the stores that we have, but I don't know that it's gotten a whole lot easier yet to get into the best malls.

Our next question comes from Danielle McCoy with Telsey Advisory Group.

So in terms of Southern Tide, can you talk about some of the wholesale door growth you're seeing?

Is it new accounts or existing accounts?

And then on the retail side of things, can you talk about some of the learnings from the 3 initial signature stores, and what gives you confidence to open more of those locations?

And how many there could possibly be, over time?

Okay.

So on the wholesale door count growth, I mean, some of it's with existing customers that have multiple doors, obviously.

And then some of it is new doors, it's a little bit of both.

But I think we're being very, very deliberate and strategic in the way that we're growing the wholesale business, and it's building up very nicely.

We've got primarily, an independent specialty store count base that we're filling in certain geographies where there's good opportunity and a good fit with some of the very best department store operators in the country.

But doing it in a very, again deliberate and strategic way and building a very nice distribution network.

Then on the signature stores, they 00 obviously we've got 3 in place.

There was 1 that was -- existed before we bought the brand.

So I think it's been around about 2 years now, and then 2 that we've added since we've owned the brand and they're working.

They're still early stage but they are working.

We know this model really well, and the combination of the fact that the ones we have are working, and our familiarity with the model and knowledge about the Southern Tide brand is why we believe it will work going forward.

So as we mentioned, we've got 3 more signed up to open later this year, and are continuing to work on additional opportunities.

And we'll take our last question from Rick Patel with Needham & Company.

I have a question on e-commerce.

So you have a very strong platform through Lilly, and I think a lot of that stems from your social media efforts and your success in being able to really engage that customer.

To what extent do the brand teams share best practices that can be applied to other concepts?

I'm asking because I'm curious if there's opportunity for Tommy and Southern Tide to benefit from those best practices, or if it's apples and oranges, given they target different customers?

Well, first of all, I would say that yes, Lilly does have a very strong e-commerce platform.

But I would say that Tommy does also.

I mean they're doing over $100 million on e-commerce, and it's a very large and important part of their business.

And Southern Tide, I think, in '16 for the period that we owned them, it was 23% of their business.

So they've all got strong e-commerce businesses and platforms, as well as great teams that are the people that are behind them and running them.

All that said, there is opportunity for them to learn from each other and it's not all one direction, they all have different things that they're doing, that they're trying, experimenting with, et cetera.

So there's a good deal of communicating and sharing that goes on amongst and between them.

Some of that facilitated by me or someone else in the corporate office, and some of it on an informal basis, just between the folks running those businesses.

So definitely, a lot of opportunity there.

And definitely, a good bit of that happens, including a meeting this week, where some of the folks from the different groups are getting together to compare notes.

And can you update us on your thoughts for acquisitions?

I guess, where does this fall on your list of priorities?

And given that we are in a rapidly changing retail landscape towards digital, has your thinking changed about the right type of concept that would be appropriate for your portfolio?

So we're -- as you know, Rick, I think since you've known us, we've always been looking for acquisitions.

We've fully digested the Southern Tide acquisition at this point from a management standpoint.

And from a financial standpoint, we've almost paid for it with cash flow at this point.

But even apart from that, we've got the financial wherewithal to do acquisitions.

And we're looking all the time.

In terms of the target, what a target might look like, I don't think it's changed drastically.

It's still about having a highly differentiated and very specific and strong brand that's at the top of the list and I think that's, if anything, more important than it's ever been before.

So brands like Tommy, Lilly and Southern Tide are still the types of things that we're looking for.

With no more questions in the queue, I turn the conference back over to Mr. Tom Chubb for any additional or closing remarks.

Thank you again for your time this afternoon, everyone.

We appreciate your interest and look forward to speaking to you again in August.

That does conclude today's presentation.

Thank you for your participation.

You may now disconnect.