Steven Madden Ltd (SHOO) 2016 Q1 法說會逐字稿

Good day, and welcome to the Steve Madden first-quarter 2016 earnings conference call.

Today's conference is being recorded.

At this time, it is my pleasure to turn the conference over to Megan Crudele.

Please go ahead.

Thank you.

Good morning, everyone.

Thank you for joining us today for the discussion of Steve Madden's first-quarter 2016 earnings results.

Before we begin, I would like to remind you that statements made on this conference call that are not statements of historical facts constitute forward-looking statements under the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements involve risks and uncertainties and other unknown factors that could cause actual results to differ materially from historical facts or any future results expressed or implied in forward-looking statements.

These statements contained herein are also subject to the risks and uncertainties as described from time to time in the Company's reports and registration statements filed with the SEC.

Also, please refer to earnings release for information on the factors that could cause actual results to differ.

Finally, please note that any forward-looking statements used on today's call cannot be relied upon as current after this date.

I will now turn the call over to Ed Rosenfeld, Chairman and CEO of Steve Madden.

Thanks, Megan.

Good morning, everyone, and thank you for joining us to review Steve Madden's first-quarter 2016 results.

With me to discuss the business is Derek Browe, the Company's Director of Finance and Investor Relations.

We were pleased to see a solid start to 2016, with first-quarter net sales increasing 1.7% and diluted EPS of $0.33 a share, up from $0.32 a share a year ago.

Our number one priority this year, as it is every year, is to maintain and build upon our fashion leadership position in our core Steve Madden women's footwear business.

And 2016 started strong on that front.

Steve and his design team created an outstanding, on-trend product offering with strong performing styles across a range of product categories, most notably, fashion sneakers and open dress shoes.

The trend-right merchandise assortment drove results for the flagship brand in both the retail and wholesale channels.

In retail, we had another great quarter, with same-store sales increasing 10.7% on top of an 11.6% gain in last year's first quarter.

We accomplished this while being less promotional than a year ago, resulting in a 140-basis point improvement in retail segment gross margin.

And importantly, we saw the strength in Steve Madden women's footwear translate into results in the wholesale channel as well, where our Steve Madden Women's division had its best quarter in the last two years, recording strong sales growth and increased gross margin compared to the prior year.

Improved performance in Steve Madden women's led the way of a return to growth in our organic wholesale footwear business -- the first time we've seen growth in wholesale footwear, excluding acquisitions, since Q1 2014.

Another highlight was the continued momentum in the Dolce Vita business.

Dolce Vita brand has followed an outstanding fall season with an equally strong spring to date, remaining a strong outperformer in terms of sell-through on the floor, which is in turn driving increased orders with its key wholesale customers.

We also had a very successful launch of the diffusion brand DV at Target.

Altogether, Dolce Vita division net sales grew more than 30% for the second quarter in a row.

And we're growing the business profitably.

We are pleased to report that, after the strong results in Dolce Vita in the first quarter, our trailing 12-month operating margin for the business was 11%, exceeding the 10% goal we had established well-ahead of our target date of the end of 2017.

On the other hand, our wholesale accessories business was, as expected, a drag on sales and earnings in the quarter, due to softer handbag sales.

The handbag industry has been tough overall, with significant excess inventory in the channel.

And we felt the negative effects in our branded value business, particularly in the off-price channel, where our customers pulled back on upfront orders from us for Q1.

Fortunately, we believe the worst is behind us here, and we are targeting second-quarter wholesale accessory sales to be down low single-digits compared to a year ago.

Overall, we are pleased with our first-quarter performance and the direction we're headed.

Our core business has good momentum, and we have seen strong sell-through performance at our key wholesale partners, and excellent results in our own retail stores.

That said, we remain cautious about the near-term outlook for growth.

In wholesale, we expect our customers to continue to order conservatively in the midst of a choppy retail environment and following a challenging 2015.

In retail we face an extremely challenging comparison in the second quarter, when our comp store sales increased 18.5% a year ago.

As we look out a bit farther however, we are a bit more sanguine about our prospects for growth, given the underlying strength we are seeing in our flagship Steve Madden brand, as well as the upward trajectory of our newer brands, Dolce Vita and Blondo.

With that, I will now turn the call over to Derek to review our financial performance for the quarter in more detail.

Thanks, Ed, and good morning, everyone.

Turning to our financial results for the first quarter, consolidated net sales grew 1.7% to $329.4 million compared to the prior-year net sales of $323.9 million.

During the quarter, sales growth in both our wholesale footwear and retail businesses were partially offset by a decline in our wholesale accessories business.

Wholesale footwear net sales increased 2.7% to $228.9 million, led by strong increases in our Steve Madden Women's and Dolce Vita divisions.

Overall, our fashion sneaker and open dress offerings continued their strong performance, and both increased as a percentage of the total product category mix for the quarter.

In wholesale accessories, net sales were $46.9 million in Q1 compared to $53.3 million in the prior-year period.

The decline was primarily attributable to softness in our branded handbag business.

In our retail division, net sales increased 12.2% to $53.6 million.

As Ed mentioned, our comparable store sales for the quarter were 10.7%.

The earlier Easter holiday and the extra day in February benefited our comparable store sales by approximately 200 basis points.

During the quarter, we opened one full-price store in Mexico and one outlet location in the US.

We ended the quarter with 171 Company-operated retail stores, including 41 outlets and four e-commerce stores.

Turning to other income, our commission and licensing income net of expenses was $2.2 million in the quarter versus $3.9 million in last year's first quarter.

Commission income was down due to a reduction in first-cost business with certain private label footwear customers.

And royalty income declined due primarily to timing shifts and the discontinuation of the Steve Madden eye wear license.

Despite continued headwinds from the environment, we increased our consolidated gross margin by 90 basis points to 35.3% compared to 34.4% in the prior year, with increases in both wholesale and retail.

Also, gross margin increased to 31.2% from 30.8% last year, driven by improved gross margin in our Dolce Vita division.

Gross margins in the retail division increased to 56.2% compared to 54.8%, as strong product performance resulted in higher full-price selling and lower promotional activities compared to the prior year.

Operating expenses for the quarter were $88.5 million or 26.9% of net sales compared to operating expenses of $82.4 million or 25.4% of net sales in the same period last year.

Operating expenses in last year's first quarter included the benefit of $3 million related to the closure of the Fifth Avenue store location.

Excluding that benefit, operating expenses were $85.5 million in the prior year, or 26.4% of net sales.

Operating income for the quarter totaled $29.9 million or 9.1% of net sales compared to last year's first-quarter operating income of $29.8 million or 9.2% of net sales.

Operating income for the first quarter of 2015 included the aforementioned benefit for the Fifth Avenue store.

It also included a charge of $3 million related to the partial impairment of our Wild Pair trademark.

As these items offset, when excluded, operating income in prior year remained at $29.8 million.

Our effective tax rate for the quarter was 32% compared to 34.3% in the same period last year, as we have benefit from growing and investing in our international business.

Net income for the quarter was $20 million or $0.33 per share diluted compared to $19.8 million or $0.32 per share diluted in the first quarter of 2015.

Our balance sheet remains strong.

As of March 31, 2016, we had $192.9 million of cash and marketable securities, and no debt.

Inventory increased 5.7% to $80.4 million compared to $76 million in the prior year.

Our CapEx for the quarter was $4.4 million.

And during the quarter, we repurchased approximately 400,000 shares for approximately $14 million.

Now turning to guidance.

For the full-year 2016, we continue to expect that net sales will increase 2% to 4% over net sales in 2015.

Diluted EPS for the full-year 2016 is expected to be the range of $1.93 to $2.03.

With respect to Q2, we expect sales and EPS growth on a percentage basis compared to the prior year to be similar to the percentage growth we had in Q1.

Now I would like to turn it over to the operator for questions.

(Operator Instructions)

Jay Sole, Morgan Stanley.

Hi, good morning.

Good morning, Jay.

Hi.

I just want to follow up on the last point that Derek just made about the guidance for 2Q.

When you're saying the percentage change in sales and EPS will be similar to 1Q, I mean, that's roughly talking about, like, a low single-digit-type of increase.

Is that accurate?

And then can you explain -- you know, the trend seemed really strong.

You talked about open-toed shoes and different fashion trends that are really working.

It seems like that there -- white has seen some more momentum than you had anticipated on the last call.

If you could just talk about those two things, that would be helpful.

Yes, in terms of the first part of your question, yes.

I think we were up low-singles in sales and between 4% and 5% in EPS in Q1.

And that's what Derek was indicating -- that we were expecting similar -- a year-over-year growth in Q2.

In terms of the momentum, yes, we do continue to feel really good about the product.

And if we focus on Steve Madden for a minute, I think this is the best we've felt about our assortment in a few years, and our performance on the floor.

Our performance in our own retail stores continues to be very strong.

But our wholesale sell-throughs are also better than they've been in a number of seasons.

And we're really seeing strength across a range of product categories.

We've called out opened-up dress shoes and fashion sneakers as being the biggest drivers of growth, but it's really the most balanced collection that I've seen in Steve Madden in some time, in terms of strength across categories.

Because in addition to that, we've got some really strong items in the flat sandal category, in what we call city sandals, on block and stacked heels.

We've got a couple of really strong products in the closed-up, casual category.

So overall, feel really good but the merchandise assortment, and we are really outperforming on the floor with our key wholesale customers.

We are, believe, the leader in our price grid in our department.

Challenge is, however, that the wholesale customers continue to be pretty darned cautious.

And it's still challenging, even with the types of sell-throughs that we have, to turn that into a lot of re-orders and a lot of increased open-to-buy from the wholesale customers.

Now, just on inventory, I don't know if you mentioned this in the script.

Do you feel like there's a little bit too much inventory in the balance sheet?

Is it the right size, just with all the moving parts, with some of the recent acquisitions and new lines and things like that?

Where do you feel like your inventory stands?

I feel very good about our inventory position.

It was 5.7% at the end of the quarter.

You've seen that over the last few quarters continue to become more in line with sales growth, and still a little bit ahead of sales.

If you break it down by division, however, each of wholesale footwear and retail is either in line or below sales growth.

Wholesale accessories is a little ahead.

And that's really a function of increasing the business that we do on replenishment with Walmart, on a private-label basis.

And obviously when you do replenishment business, it requires you to hold inventory.

So we had some increased inventory just for that business at the end of March.

But it was -- we got those orders in April.

So it was good inventory and had a home.

So overall, feel very good about the composition and the amount of our inventory.

Got it.

And then, Ed, if I can ask you one more.

Just in this environment where retailers have maybe more inventory than they feel comfortable with, is it important to try and maybe get those orders placed with you earlier rather than later, as normally is the case, to make sure you hit those open-to-buy dollars while they are still there?

Have you had to do that in this environment?

Or can you still make sure that they are leaving enough room for you when it comes to your turn to place orders?

Well, the thing about that is, it is even more challenging to do that now in terms of getting those upfront orders.

Because when the retailers are this cautious, what they are trying to do, not only with us, but with everybody, is to place fewer orders upfront, and to try to chase more in-season, so that they can take less risk and essentially push some of the inventory risk onto the brands.

So we are pushing very hard to get those orders upfront, but it is challenging to do so right now.

Got it.

All right, thanks so much.

Thanks, Jay.

Corinna Van der Ghinst, Citi.

Hi, good morning.

Hi, Ed, hi, Derek.

Hey, Corinna.

I was just wondering, as a follow-on to your previous comments, could you give us a little bit more color on your category penetration this spring, or this year to date?

How much are the fashion sneakers as a percentage of your sales versus last year?

And how do the dress shoes compare?

They seem to be getting more on-trend again.

Yes, the fashion sneakers are in the low-double-digits as a percentage of our Steve Madden women's footwear business.

And they are running, let's say, 300 to 400 basis points higher than they were a year ago, as a percentage of the total.

The dress shoes were higher in first quarter.

You're talking roughly a-third of the business, a little bit more in wholesale.

And that was up over last year, although we were already starting to -- particularly in Q2, I think it will be more in line with last year.

Because we were really starting to see the dress shoes pick up in Q2 last year.

Okay, and then I think -- I know you guys don't give guidance on retail comps.

But the double-digit comps were clearly very strong.

Could you just talk little bit more about what's working at retail, aside from better merchandising?

Is there something going on with maybe your regional penetration?

Or are you seeing any pricing increases this year at retail, aside from the promotions that have gone away every year?

Really, I do really think that it is really about the product.

In terms of, if we dig a little bit deeper into the metrics, the AUR actually was down modestly, and the traffic is down.

So we are really doing it through converting a higher percentage of people that walk into the door.

And I think that's really a function of the strong product assortment, and as I said, a well-balanced product assortment, with strength across a number of categories.

Another highlight that I should point out was e-commerce.

We saw a strong acceleration in that business, and we're really pleased with what we're seeing on SteveMadden.com.

And any updates on Amazon initiatives, on the e-commerce side?

Yes, obviously that continues to be a focus for us, and we had a breakout performance by a customer.

But we had very strong growth selling to Amazon in first quarter, and we expect that to continue going forward.

Great, thank you.

Camilo Lyon, Canaccord Genuity.

Hi, good morning, guys, this is [Fallo] on for Camilo.

Thanks for taking our questions.

My first question, Ed, is, you mentioned that the retail performance has been great and the product looks great.

But the wholesale customers still remain cautious.

In your opinion, what can you do, or what more do you think it will take, for demand to increase in that channel?

And are there any other alternate avenues of growth that you are looking at?

Sure, it is a good question.

I think that what we need to do is keep doing what we're doing, which is delivering a great product that is selling through on the floor.

I think if we continue to do that, that's going to translate into increased orders from our wholesale customers.

And we also do need to try to focus on the customers where the purse strings aren't quite so tight.

So we want to focus on growing with folks like Amazon, for instance, or some of the other pure-play e-commerce players, where the open-to-buy dollars are a little bit easier to come by.

Great.

And just as a follow-up, in terms of re-orders, have you have seen any -- did you have any re-orders in Q1?

And you talked about the wholesale partners being cautious in terms of placing more orders upfront.

Is that leading to any kind of shift, in terms of timing or delivery of product?

In answer to your first question, yes, we did have re-orders in Q1.

We felt actually pretty good about the level of re-order activity in Q1.

In terms of going forward, I don't really see it changing.

It changes more when we get the orders, more than when we actually deliver the goods.

So I don't see a major change in the timing of shipments.

The only thing I would call out for people in terms of timing is that, based on what happened in the boot and bootie category last year, we are seeing retailers elect to take boots and booties in later this year.

So a lot of those boot and bootie shipments that went out 6/25 last year, which is the end of Q2, retailers elected to take those in, in Q3 of this year.

Got it.

Thank you so much.

Good luck.

Thank you.

Erinn Murphy, Piper Jaffray.

Great, thanks, good morning.

I was hoping you could talk a little bit more about your SG&A in the quarter.

It seemed a little bit higher than we anticipated.

So we have two questions.

Are there any major buckets just to call out there, or was there any pull-forward in Q1?

And then as we think about the cadence of sales for the year of 2% to 4% growth, it seems a little more backend-weighted.

How should we just think about that SG&A line throughout the year?

Sure.

Derek, do you want to address that?

Yes, I think the SG&A actually was in line with where we expecting.

We talked about our SG&A growth this year being on the historical 4% to 5% growth rate.

So we came in about 3.7% for Q1.

But as we look at the year, we expect to be up that 4%, probably closer to a 5% rate.

We always have a little bit of shifting between the quarters.

But I don't think we are seeing anything, as we look out the year, that's going to change any one quarter drastically.

Okay.

So, think about in that 5% growth rate for the year?

Yes.

Okay, got it.

And then can you just help us think about -- I know you're up against a much tougher comp in Q2, as you cautioned us.

You said that Easter benefited you in Q1, or earlier Easter, as well as the extra day in February, with a 200-basis point benefit.

So target area, a piece of that's going to roll off in Q2 because of the -- what had been a later Easter last year.

Is there any other cadence from the months perspective of April, May and June that we need to be mindful of as we build our models out for the year?

Definitely the Easter shift is going to cost about 100 basis points.

But I think the bigger issue is just how difficult the compare is, and obviously doing an 18.5% last year.

If you look at the two-year stacked compare, I think it's 1,500 or 1,600 basis points more challenging in Q2.

So we just want people to keep that in mind.

Okay, fair enough.

And then could you talk maybe a little bit more about the comp performance [slice] in your more tourist-[rated stores versus your non-tourist stores?

Is there any deviation there?

Are you still seeing pressure in the New York City area, or are you starting to see that abate?

Yes, it is a good question, and we are still feeling that impact.

So our weakest -- New York was again a weaker region compared to the rest of the chain.

So we still are, unfortunately, seeing the negative impact of reduced tourist traffic and spending.

Is there any way to quantify the delta between that?

Whether it is New York or -- I don't know, if you look at your Florida stores, if you've been seeing a hit there.

I'm just trying to aggregate how incremental that headwind could have been?

It was a little bit better this time.

In a couple of the past quarters, New York has been 1,000 basis points below the rest of the chain.

This time, maybe it was 700 -- in there.

Okay, got it.

And then just last question, on the promotional cadence.

It's been impressive that have been able to keep that pretty tight despite that broader macro headwind.

Are you planning second quarter and the balance of year to be less promotional, like you saw in the first quarter, at this point?

Well, it was really second quarter last year when we were able to start to really pull back the promotions in our own retail store.

So I think that at this point, we are going to assume that we're going to be more in line with what we did a year ago.

Q1 we were still a little bit more promotional last year.

And so we were able to pull back on that this year.

But going forward, I would say in the US, it's going to be in line with last year.

Okay, got it.

Thank you, and best of luck.

Thank you.

Scott Krasik, Buckingham Research.

Hey, good morning.

Good morning, Scott.

Ed, you said in your prepared remarks you're sanguine about some of the things coming up.

First of all, I had to look that up, so thanks for that.

But maybe talk about, elaborate on what some of this optimism or positivity is towards?

Sure.

Yes, Scott, we just wanted to help you expand your vocabulary beyond the letter word (laughter).

I think the point that we are making is that the brand momentum is very strong in our most important brands, Steve Madden and Dolce Vita.

And that we have great product assortments, and that we are getting good sell-throughs at our wholesale customers.

Our retail stores are performing.

So those are really the underlying fundamentals of our business, and we feel good about the direction we're headed.

So one thing that has been a recurring issue has been some of the traditional wholesale being conservative.

And I forget who asked before, but they specifically said Amazon.

But maybe collectively, can you talk about detailing and how aggressively you are hitting that channel, and what type of opportunity it is?

And when the impact from some of the older, non-growing parts of your wholesale distribution could be less impactful?

Well, I don't how to answer that with specifics, other than that, yes, that's a major focus for us.

We've built a dedicated team here.

We focus not only on our own retail e-commerce, which is clearly a priority as well.

But if we talk about wholesale e-commerce, we've built a dedicated team here that's focused on driving that business.

We've got an ex-senior executive from Zappos that runs that, and some other employees with backgrounds in that space.

And it is a real focus area.

Amazon, in particular, is something that we're putting a lot of energy behind.

We're participating in some new programs with them.

One is called Strategic Vendor Services, just a program where we put someone in their building that's sole job is to help us maximize our business and take advantage of everything they have to offer.

We're participating in this hybrid program with them, where in addition to selling them wholesale, we also display some of our retail-exclusive styles -- or previously retail-exclusive styles -- on their website, and then drop-ship them.

So we've got a lot of initiatives in place to try to grow that business.

And it is going to continue to be a focus for us.

Awesome.

And then just last, I think consensus is looking for maybe a negative two or three comp for this quarter.

You're obviously talking about self-comparisons.

Is that in the neighborhood?

I don't think we are going to -- we're going to continue with our practice of not providing comp guidance.

Helpful.

Okay, thanks.

Taposh Bari, Goldman Sachs.

Good morning.

So on the 2Q comp -- I guess I'll just try to ask the question differently.

Are you expecting it to be positive, or could it actually go negative?

(laughter) I think we are not going to say any more about it.

Okay, just wanted to double-check.

Okay.

Ed, question on the first-quarter business.

Obviously things seem like they are performing well, and it sounded like the comp benefited from a couple of exogenous factors in the quarter.

But generally speaking, across the entire portfolio, do you think that weather played a role at all, given the fact that it was pretty mild in the month of February?

I'm trying to figure out if there was any kind of pull-forward, in your view of demand, as you look at the cadence throughout the quarter?

Yes, I do think that weather was helpful, particularly in February and early March.

Hard to segregate exactly what that impact was, but certainly I do think that was helpful for some early spring selling.

Okay.

Can you comment on the First Cost business?

I know it's a small part of your Business, but the decline was pretty meaningful.

Trying to get a better sense for whether that was anomalous to this quarter, or if there's a bigger trend we should be aware of there.

Yes, I think that is going to continue to be a little bit of a drag for the balance of this year.

Don't want to talk about the performance by any specific customer.

But I will tell you that the largest customers that come in on that line, the commission income line, as opposed to the sales line, are, on the private-label basis, are Kohl's, Sears and Kmart.

So you could probability assume that is going to continue to be a little bit tougher business for us.

Okay.

Thanks.

Talk to you later.

Jeff Van Sinderen, B. Riley.

Good morning.

I wonder if you could give us any more color on what you think the picture looks like relative to inventory in the channel, the domestic channel, with your retail partners?

Just wondering if you think it is getting better?

I think last quarter, you felt like maybe it was moving in the right direction.

Do you still think it is?

Or any change there?

Yes, if we think about the inventory in the channel, with what we call the first tier, which includes the department stores.

I think it is, relatively speaking, in line.

They obviously came out of fall with some excess inventory, but I think that they've gotten rid of that now.

If you go to the mid-tier and down, that's the group that probably packed away more inventory, and so there may be a little bit more inventory in that channel.

Okay.

And just to clarify, you're speaking about just general inventory, not inventory in Steve Madden product -- correct?

Yes, thank you for that clarification.

I'm talking about the overall inventory in the industry.

In fact, our Steve Madden inventory in the channel is very healthy.

On a stock-to-sales basis, we're very healthy.

In fact, we might be a little under-inventoried in a number of cases.

That's good to hear.

And then maybe if you could just update us on what you are seeing in men's?

I know that was a call-out last quarter.

And then if I could just throw in one follow-up, if you could touch on international -- what you are seeing there?

Yes, men's is tough.

Men's was down in the quarter, and I think it is going to be a little bit of a drag over the next quarter or two.

Our Steve Madden men's business is hanging in there pretty well, but our diffusion brand Madden is down at the moment.

And there's a couple categories that have been important to that business, namely, basic dress shoes and boat shoes, which have really down-trended.

And we're feeling that in the Madden business.

Can you remind me what the second part of the question was?

Yes, I just wanted to see if there was anything to call out on developments in international?

Yes.

We continue to work on some new things there.

We are hoping to have something to tell you about a new structure in parts of Europe.

On this call, we're not quite there yet, but we hope to be able to talk about that on the next call.

Of course, one of the things that we are confronted with in our international business right now is that exchange rates have moved against us.

So our overall International sales in US dollars were actually flat in the quarter.

We were up 10% in constant currency, but that growth was lost in translation.

Got it, okay, that's helpful.

Thanks much, and best of luck for the rest of the quarter.

Thank you.

Eddie Plank, Jefferies.

Thanks, good morning.

Thanks for taking the question.

On the gross margin, it looks like maybe it was a little bit better than expected in the first quarter.

Is the expectation for the year still up modestly, or should we think about that a little differently now?

I still think that's the right way to think about the full year.

Okay, that's helpful.

And then I know the handbag business has been pretty tough.

But maybe any specific comments around Betsey Johnson, if that's outperforming relative to the rest of the group, or to Steve Madden in particular?

I would say, Betsey is performing a little bit better than Steve, but both saw pressure in the first quarter.

Okay.

And then just lastly -- maybe you touched on this; I apologize if I missed it.

But are you seeing any diversions across the different wholesale channels in terms of where the momentum is building, or is it just really broad-based at this point?

I think it is pretty broad-based.

It is -- overall, we are seeing pretty good performance across the channels.

Okay, thanks.

Best of luck.

Thank you.

Jessica Schmidt, KeyBanc Capital Markets.

Hi, thanks for taking my question.

Just given that your wholesale partners are still cautious, even with some of the improvements it sounds like they are seeing, how should we think about your re-order business?

Particularly given some of the weakness in last 2Q related to the West Coast [work release]?

Yes, I think that's what we have been talking about.

Which is that we've got good sell-through and got good product, which is what you need to generate re-orders.

So we're going to get some.

But the challenge is, at the moment, we are finding it a little bit challenging to get as many as we think that we should get, based on the caution of the retailers.

Okay, great.

I will pass it along.

Corinna Freedman, BB&T.

Hi, good morning.

Great comp.

I wanted to dig in a little on your comment, Ed, about the wholesale accessories business, particularly in the all-price channel.

Should we expect that pressure to continue for the balance of year, or are there any other strategies that you are putting in place to make up that lost volume on the accessories front?

Yes, we are seeing those retailers start to come back to us for the tail-end of Q2 and going forward.

So we do think that, as I said earlier, that the worst is behind us here.

And that we are targeting getting to down just low-singles in Q2 in wholesale accessories, versus the down 12 that we had in Q1.

Okay, thanks very much.

Thank you.

Steve Marotta, CL King & Associates.

Good morning, Ed and Derek.

One quick question.

As it pertains to the open-to-buy dollars in the wholesale channel, you've spoken on previous calls about the first half being challenged -- first half of 2016, that is.

Can you comment at all about trends, and what you are hearing from an order basis, with open-to-buy dollar budgets for the back half of year?

Yes, I would say so far we are seeing a cautious approach from the retailers towards fall, as well.

Keep in mind, most of these retailers did not have a good fall last year.

Most of them got hurt in the boot category; they had excess inventory.

In some cases, they packed away inventory, but we are seeing a pretty conservative approach so far.

And I would say that the majority of retailers are planning the boot and bootie business down versus 2015.

Okay.

And one follow-up.

Just extrapolating from the comments, I assume that the second-quarter guidance that you've offered supposes an acceleration of business in May and June?

No, it does not.

It does not?

April is basically what you feel you would run in May and June?

Well, there are -- I guess you've got Easter shift, and all sorts of stuff like that.

But I think the overall health of business, we have not expected.

We have not assumed any change.

Obviously we take into account seasonality and holiday weeks moving around, and stuff like that.

Sam Poser, Sterne, Agee.

Good morning.

Hi, Ed and Derek, thanks for taking my call.

I just want to clarify.

In your big wholesale accounts, you are outperforming.

Is this a matter of them getting over the hangover from last fall, and then you potentially gaining share once they get themselves in order and realize that there might be 10 vendors?

And they are going to go to eight and then plan it down, but you get disproportionally more?

Is there going to be a potential share gain there, but they are still suffering from the hangover from last fall?

Is that a good way to think about it?

I think that's reasonable, yes.

And also, just to follow up on an earlier question, your ability to turn good -- to get goods within 12 weeks really is an advantage to you with -- especially with the Steve Madden line.

Correct?

Yes, I think that remains an advantage.

But again, (multiple speakers).

Go ahead.

We like to have forward orders just as much as everybody else.

Right, but the point is though, that if their business opens up, you will be one of the first people to go to.

That's right.

I'm going to go back and -- can you give us any idea of -- the e-commerce is in your same-store sales.

Can you give us any form of differentiation, given that the New York area stores in some of the tourist areas were weak?

Any differentiation between how strong that e-commerce business was relative to the brick and mortar?

Yes, e-commerce was up almost 30% in the quarter, on a comp basis.

And brick-and-mortar?

I don't have that in front of me, but I think that it added almost four points to the comp.

Something like that.

All right, well, thank you very much, and continued success.

Thanks, Sam.

That does conclude today's question-and-answer session.

I'd like to turn the conference back over to Ed Rosenfeld for any additional or closing remarks.

Great, well, thanks so much for joining us on today's call, and we look forward to speaking to you after Q2.

Have a great day.

That does conclude today's conference.

We thank you all for your participation.