Steven Madden Ltd (SHOO) 2011 Q2 法說會逐字稿

Welcome to the Steven Madden second quarter 2011 earnings conference call.

Today's call is being recorded.

For opening remarks and introductions, I would like to turn the call over to Jean Fontana of ICR.

Please go ahead.

Thank you.

Good morning, everyone.

Thank you for joining us today for the discussion of Steven Madden's second quarter 2011 earnings results.

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

Such forward-looking statements involve risks and uncertainties and other unknown facts that could cause actual results of the Company to differ materially from historical results or any future results expressed or implied by such forward-looking statements.

The statements contained herein are also subject generally to other 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 the earnings release for more information on risk factors that could cause actual results to differ.

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

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

Thanks, Jean.

Good morning, everyone, and thank you for joining us.

I will begin today's call with some highlights from the quarter, followed by a review of our second quarter financial results and our updated outlook for 2011.

Our second quarter results reflect continued momentum across all segments of our business -- wholesale, retail, costs and licensing.

Our flagship brand, Steve Madden, was particularly strong in the quarter, as Steve and his design team delivered an outstanding assortment of on-trend merchandise that resonated with consumers.

The Steve Madden collection performed well in all major product categories, with particular success in wedges and pumps, and the result was double-digit net sales growth in Steve Madden women's wholesale and retail, andthe fifth consecutive quarter of greater than 507% growth in international.

Importantly, the strong sales gains in all of these divisions were also accompanied by improved gross margins versus the year ago period.

In addition to seeing strength in our core business, we continued to grow our newer brands.

One standout among the new brands has been Olsenboye, a licensed brand exclusive to JC Penney.

Olsenboye has strong sell-throughs at retail in both footwear and handbags, and based on this performance JC Penney placed more reorders than expected and has increased its plans for the brand going forward, including making a decision to roll out key items to all doors for Fall 2011.

We now expect to do approximately $15 million in net sales in 2011 in Olsenboye between shoes and bags, nearly double our budget heading into the year.

Another new brand that has been highlighted is Betsey Johnson.

Taking over the Betsey Johnson footwear business at the tail end of last year, we have changed the line dramatically and gotten an overwhelmingly positive response from our wholesale customers.

Whereas Betsey Johnson footwear was previously somewhat one-dimensional with a heavy focus on evening and special occasion footwear, we have introduced a balanced collection with representation in all major product categories.

We have already seen success in new categories including casual boots, ballet flats, and sandals.

Our approach has been to marry up the current footwear trends with the inimitable Betsey Johnson DNA, and so far we have been thrilled with the results.

Our two biggest customers so far, Nordstrom and Dillards, are each expanding the line to more doors for fall based on the success retail to date, with Nordstrom taking a couple key items to all doors.

Speaking of new brands and businesses, we also completed two acquisitions in the quarter.

On May 20, we acquired the Topline Corporation, which designs, produces and markets private-label and branded footwear.

Topline had net sales in 2010 of approximately $189 million.

Topline's private-label business is one of the best in our industry, and accounts for about three quarters of top line sales.

Importantly, it is highly complementary to our existing private-label footwear business in terms of customer base.

The balance of Topline sales comes from its branded business which Report, Report Signature and R-2 by Report.

These brands are currently experiencing strong growth, and we believe they represent excellent additions to our footwear brand portfolio.

Perhaps most exciting over the long-term, Topline also has a premier direct sourcing platform.

While we have historically sourced nearly all our footwear through agents, Topline sources 100% of its goods direct with the factories.

Going forward, we believe this direct sourcing capability will provide great benefits to our existing business, enabling us to get better pricing, improved quality, and more consistent deliveries for our merchandise.

The acquisition was completed for $55 million in cash plus an earnout provision.

It is expected to be approximately $0.05 to accretive in the first full year under our ownership.

We completed a second acquisition, Cejon, on May 25th.

Cejon is a market-leading designer and marketer of cold weather accessories, fashion scarves, wraps, and other trend accessories with net sales in 2010 of approximately $64 million.

Cejon sells its products to department stores, national chains, mass merchants and specialty stores, primarily under the Cejon brand name and private-labels.

In addition, Cejon has marketed products under the Steve Madden name as our licensee for cold weather and other selected fashion accessories since September 2006.

We believe Cejon is a great addition to our existing accessories business.

We have market leader in cold weather and other fashion accessories to go along with our growing handbag and belt business.

The acquisition was completed for $30 million in cash plus certain earnout provisions and is expected to be approximately $0.07 to $0.09 accretive in the first full year under our ownership.

Before I turn to our financial results for the quarter, I would like to touch on the progress we made in our retail division.

We lost money in that division in both 2008 and 2009, but we have executed a major turnaround in that business over the last couple years.

We ended the second quarter with trailing 12-month operating income and retail of $14.2 million or 10% of net sales.

We did this by proactively closing underperforming locations, making personnel upgrades in key management positions, implementing a new merchandising allocation and planning system, cutting and controlling expenses at the stores, in the field and at corporate headquarters, and of course delivering a great merchandise assortment.

As we look ahead, we see continued room for improvement in our full-price stores and are also optimistic about the growth prospects for our new outlet business which we began testing late last year.

We opened one outlet in Houston in the quarter, bringing our total to five.

Thus far the outlets continue to perform ahead of sales and profitability expectations.

We have one more outlet opening planned this year.

Now let's turn to the financial results for the quarter.

Consolidated net sales for the quarter grew 31.8% over the prior year to $209.2 million.

Wholesale net sales increased 35.6% to $175.2 million compared to $129.2 million in the second quarter of last year, with increases in our footwear and accessories wholesale businesses.

Wholesale footwear net sales were $148.5 million, a 42.6% gain versus Q2 2010.

The increase was driven by strong gains in Steve Madden women's and our international business, as well as the inclusion of sales from Topline acquired in May 2011 and our Target, private-label, and Olsenboye footwear business which transitioned this year from the buying agency model to the wholesale model.

Wholesale accessories net sales were $26.6 million, a 6.5% increase driven by growth in private-label handbags as well as the inclusion of $1.1 million in sales from Cejon, acquired in May 2011.

Turning to retail, we continue to see strong performance in that business, with net sales up 15.3% to $34 million in the second quarter.

We had our fourth consecutive quarter of double-digit comp store sales increases in Q2.

Comps increased 11.6% which is on top of a 7.4% increase in the second quarter of last year, as our strong product assortment across categories drove improved conversion.

Doors opened for the twelve months ended June 30, 2011, generated $796 in sales per square foot, up from $690 in sales per square foot a year ago.

We opened one full price store and one outlet store, acquired one Report store in the Topline acquisition and closed three full-price stores in the quarter, ending Q2 with 83 company-owned retail locations, including the Company's internet store.

Turning to other income, our commission and licensing income net of expenses was $4.4 million in Q2 versus $5.2 million last year.

First cost commission income net of expenses was $2.6 million in the quarter, down from $4.6 million in last year's second quarter.

The decline was a result of the transition of the Target, private-label and Olsenboye footwear businesses to a wholesale model and into the top line.

Excluding those transitions, first cost commission income net of expenses was up 20% year-over-year.

Licensing royalty income, net of expenses, was $1.8 million in the quarter, compared to $800,000 in the second quarter of 2010, a 123% increase.

The growth was driven mainly by the inclusion of royalty income from the Betsey Johnson brand, which we acquired in October 2010.

Consolidated gross margin for the quarter was 40.2%, as compared to 43.4% in last year's second quarter.

The decline was due to a decrease in the wholesale gross margin to 35.4% from 38.7% in the same period last year.

As expected, wholesale gross margin was negatively impacted by three shifts in sales mix.

One, the inclusion of sales from newly acquired Topline, which is primarily private-label, and therefore carries a gross margin that is lower than our wholesale average.

Two, the inclusion of our Target private-label business in the sales line, and, three, the strong growth of the international business.

Combined, these factors diluted wholesale gross margin by approximately 480 basis points, so excluding these mix shifts, wholesale gross margin would have been up year-over-year.

Gross margin in the retail division expanded to 64.8% in the quarter, compared to 63.9% in the second quarter of 2010, due to more full priced selling and less promotional activity.

Operating expenses were 51.3 million in the second quarter, or 24.5% of net sales, compared to 42 million, or 26.5% of net sales, a year ago, a 200 basis points improvement due mainly to leverage on increased sales.

Operating income for the second quarter of 2011 increased to $37.2 million, or 17.8%, of net sales compared to $32.1 million, or 20.2% of net sales in last year's second quarter.

Net income increased 20.1% to $23.8 million, or $0.55 per diluted share, compared to 19.8 million, or $0.47 per diluted share, in the prior year's second quarter, adjusted for the three for two stock split in May.

Turning to our balance sheet, as of June 30, 2011, we had $132.2 million in cash and marketable securities, and no debt.

We ended the second quarter with inventory of $67.3 million versus $44.5 million in the second quarter of last year.

Of the $22.9 million increase in inventory, $19.1 million was Topline and Cejon inventory.

Excluding these acquisitions, inventory was up 8.5% compared to the year ago period of time.

CapEx for the quarter was $2.3 million.

Before I update you on our sales and earnings guidance, I would like to provide some additional information on some of the factors impacting gross margin.

We're still seeing approximately 5% to 8% increases in our cost of goods from southern China.

We continue to work to mitigate these increases by moving production more north in China, where costs remain lower, and to a lesser extent by shifting some production to other countries, such as Mexico.

Our acquisition of Topline helps with this effort, as Topline is well established in more northern areas of China, with offices in Putian and Wenzhou, and years of experience sourcing product there.

We also continue to raise our prices selectively and so far have not experienced resistance to these price increases.

The net impact to gross margin from all of these changes was negligible in Q2, and we continue to target a net neutral impact to gross margin from all these changes for the full year 2011.

We continue to expect overall 2000 [sic] gross margin to be down due to mix shifts related to, one, inclusion of the Target private-label footwear business in the sales line, two, the growth of the international business, three, the growth of the private-label accessories business, and, four, the recent acquisitions of Topline and Cejon.

Overall, these mix shifts are expected to dilute gross margin by approximately 650 basis points this year.

Excluding these mix shifts, however, we continue to believe we can be flat to modestly up compared to last year, so we currently expect consolidated gross margin for 2011 to be approximately 550 to 650 basis points lower than 2010.

Turning to our sales and earnings guidance, for fiscal 2011 we now expect consolidated net sales to increase 47% to 49% compared to fiscal 2010.

Excluding Topline and Cejon, consolidated net sales are expected to be up 21% to 23% which compares to our previous guidance of 20% to 22% growth.

Diluted EPS for 2011 is now expected to be in the range of $2.15 to $2.20 compared to previous guidance of diluted EPS in the range of $2.03 to $2.10.

Now I would like to turn it over for any questions that you may have.

Thank you.

The question and answer session will be conducted electronically.

(Operator Instructions) We'll take our first question from Scott Krasik with BB&T Capital Markets.

Good morning, Ed.

Good morning, Scott.

So it looks like you have momentum in Betsey and Olsenboye.

I'm just trying to understand the increase in your core sales guidance.

Is that coming from those other brands?

Your view on boots coming in I think has been pretty conservative.

You have good early reads.

What's your latest thoughts on the boots in the guidance as well?

Yes.

You're right.

Some of the raise in the existing sales guidance comes from Olsenboye.

I think we also have taken up Steve Madden women's a little bit based on the strong performance we have been seeing.

In terms of boots, we do feel increasingly good about that category.

We got some very, very good selling in the Nordstrom anniversary sale on boots, which as you know tends to be a bellwether for the fall season.

And it looks like boots and booties are going to be very good again this year.

At least relative to you having flat to down prior, is that still the expectation or could it be a little better than that?

I think now we would say we think it is going to be about as good as it was last year, as good as it was.

Okay.

And then a little more color on the international, maybe an update on some of the distributor relationships and what the opportunity is there?

Yes.

That business continues to be our fastest growing business.

We were up about 68% year-over-year in net sales international.

We were really pleased, we launched in the United Arab Emirates with the Landmark Group -- obviously, Dubai being the most important part of that territory.

And we're off to a really, really strong start there, actually contributed about $1 million in Q2 which was their first full quarter.

So that was great.

We're also getting nice growth in obviously Mexico and Canada.

Israel had a big increase.

China continues to do well.

So this business we remain very excited about.

We are launching in India very soon.

I think our first store opens in Mumbai within a couple weeks, and we're planning to have five stores open in India by the end of 2011, so we continue to plug away here and feel good about the progress we made.

Okay.

And then just moving onto gross margin, thank you for the color there.

Beyond -- should we assume that in wholesale, that 650 basis points decline year-over-year as we move into an anniversary target in the first half of next year, can you pull out the impact maybe from Topline or Cejon on the issues that didn't impact the first half of last year?

The 650 basis points was for the overall company, not wholesale.

Okay.

If you want to think about that in rough terms it was about 250 basis points from stuff that we had talked about prior to the acquisitions, that being Target shift, international, and growth in private-label accessories, and then about 400 basis points from Topline and Cejon.

And I think you can expect there is going to be sort of another 200 basis points of drag next year from having the first five and-a-half months of Topline and Cejon.

Okay.

Thanks very much.

Great.

We'll move onto Jeff Van Sinderen with B.

Riley.

Good morning.

I wonder if you can talk a little bit about your men's business and also the Madden Girl business, what you're seeing in terms of Madden Girl strength in product and where you are seeing strength in the distribution channel there?

And then also, anything in terms of outlook for back-to-school?

Okay.

What was the first one, men's?

Yes.

Yes.

Men's is doing okay.

We had a little bit of a pullback in the quarter because some of our casuals are not performing the way they were.

We're still doing very well with our fashion dress shoes, but some of the casual slowed up in the quarter.

When that happens, we tend to still do well in the end of the mall retailers like Nordstroms, Dillards, Macy's, but we struggle in the middle of the mall guys, for instance, Journey's or Buckle.

So that's a piece that we have to get straightened out.

The good news on the men's side we're doing a very nice job of growing that new Madden brand which as you know is our more moderately priced men's brand and we continue to have -- we almost doubled that from the year ago period in the quarter so that was a positive.

In terms of Madden Girl, that business just keeps plugging away.

We were up about 8% in that business year-over-year, and we're almost to $90 million on a trailing twelve month basis in Madden Girl, so that's a real juggernaut.

And one of the things we're particularly pleased about is looks like Macy's planned us up in Madden Girl kind of mid-teens for the back half.

That really was important because as you know that was an important part of our strategy as we pulled Steve Madden out of the bottom Macy's stores and we really wanted to be able to grow Madden Girl and replace that volume with Madden Girl in those stores, and it looks like that's working out for us.

What was the third part of your question?

Just wondering if you had any thoughts on what your outlook is for back-to-school as that might relate to Madden Girl and any of your other businesses?

I mean, yes, I think we feel good.

As I said, I think coming out of the real strong success we had in Nordstrom anniversary and particularly the success we had with boots, it really gave us more confidence heading into the back-to-school season.

Okay.

Great.

And then anything you can share on the monthly progression in your retail stores during the quarter?

Anything you saw month to month?

Any anomalies there?

And then maybe you can just touch on promotional cadence, expectations for the next quarter in your retail business and, well, we'll start with that.

Okay.

Yes.

In terms of the monthly progression, April was certainly the strongest month.

We had the benefit of the Easter shift this April, so that was certainly the best comp performance, but we still had nice gains in each of May and June and running up nicely this month to date or in July, this quarter to date I should say as well.

In terms of promotions in the stores, we have been pleased.

We have been able to be a little bit less promotional this year.

Our inventory has been a little cleaner, and because of the strong selling and the great assortment we have been able to -- we've had less clearance and had to be less aggressive in terms of promoting.

So you have seen that benefit to the gross margin, and so far this quarter we have had an improved gross margin over last year as well for that same reason.

Okay.

Great to hear.

And then finally, just wanted to touch on the acquisition front, what you're seeing there, if you are taking a breather from that or if you are still pushing forward looking at other things?

No.

We're still actively evaluating acquisitions.

There is nothing imminent, but there are certainly a couple things that we have our eye on and that we're working on, and we'll see if we can't get something else done.

Very good.

Great job.

Good luck for this quarter.

Thanks very much.

Thanks, Jeff.

We're moving onto Steve Marotta with CL King & Associates.

Good morning, Ed.

Good morning.

As it relates to the change in guidance for sales you gave that, ex acquisition, it was 20% to 22% and now it is 21% to 23% up.

Can you do the same delta in EPS?Seems like you upped EPS guidance by $0.10 to $0.12.

How much is acquisition-related and how much is organic?

About $0.07 to $0.08 is related to the acquisitions.

Okay.

Can you also talk a little bit about the growth strategy at Topline and Cejon?

And what you expect, say, in 2012?

Yes.

We'll start with Topline.

I think -- as we said, they have this branded business only about 25% of their overall mix, but they experienced some real nice growth there over the last twelve months, and we want to just continue down that path.

I don't think we're -- we're certainly not making wholesale changes there, although we think we can help them because we're obviously -- we think we're pretty good at that branded footwear business.

In terms of the private-label, I think they're going to get some benefit from having access to all the Steve Madden information and all of our styling and what's been working in our various brands, and that they can use that to help grow some of their private-label businesses, and so we're pretty excited about that in terms of a growth prospect for that business.

And then Cejon, there is a lot of opportunity where we're of course going to start doing using all of our brands or doing cold weather and other fashion accessories they do for all of our brands, not only Steve Madden but Betsey Johnson and Big Buddha, and we think that as we go forward we'll be able to take on additional licenses and get control of additional brands whereas before we would get the shoes and the bags and now of course we'll try to get the shoes, the bags and this cold weather and fashion accessories piece.

I think there is a lot we can do to help to grow that business.

Great.

And lastly, concerning Topline's, sourcing platform, I realize that core Steve Madden will always be agent-weighted, but when you think about 2012 and 2013 and how much you may start direct sourcing from the core business, can you talk a little bit to that?

Yes.

I would like to be sort of by the end of the first year up to 10% to 15% of our products going direct.

And then, eventually, we would like to get to 50% or 60%.

Whether that's four or five years down the road, it's a little too early to say, but we're already placing a lot of goods direct through our Topline platform as we speak.

We're doing products in Material Girl and Olsenboye and Madden Girl and kids and our private-label business already.

So far so good on that front.

We're pretty excited about it.

Dynamite.

Thank you very much.

Thanks.

Clair Gallacher with Capstone Investments has the next question.

Good morning, Ed.

Good morning.

Could you maybe talk about the growth rate for the business, excluding the accounting shift and the acquisition?

Can we just get a sense of what your core business, how that grew in the quarter?

If you take out all the acquisitions, Target, and you take out Olsenboye, we were up about 8% in net sales.

And then just a clarification.

So you talked about gross margins being down about 200 basis points next year?

Was that just for the first half or are you talking full year?

That's the full-year impact of what you will see in first half.

Okay.

Got it.

And then just lastly, for the back half of this year, you have provided us with gross margin guidance and with the sales guidance, but is there any kind of seasonality between the third and fourth quarter that we need to know about with these new businesses?

No.

I don't think there is anything terribly out of the ordinary.

We'll probably be a little bit more fourth quarter weighted than we were a year ago based on the cold weather business from Cejon, but it is not dramatic.

Okay.

I think that's all I got.

Thanks, Ed.

Thanks.

Sam Poser with Sterne, Agee.

Good morning, Ed.

Good morning.

I want to ask you a little bit about the SG&A.

You haven't included in any of your numbers nor have you discussed any of sort of like the nonrecurring costs that happened within the acquisitions that you have made.

Can you give us some idea how much that is so as we look forward?

And I would assume that some of those costs are going to come out of Q3 and Q4 that were in Q2.

Yes.

We had about $1 million of fees and expenses associated with the acquisitions, but we also had an accounting reversal of an over-reserve that we had for a lawsuit this quarter, so I think those really kind of wash each other out.

I don't think you need to try to back anything out of the quarters.

And I know when you think about -- when we think about the operating expenses on like a year-over-year growth rate or something, how should we be thinking about that going forward?

You're opening a couple -- you may open one or two more stores, right, this year?

I think you and I have talked on the last couple calls about roughly a $200 million number for SG&A, and I think that's still a pretty reasonable number excluding the acquisitions, and that represents kind of maybe around 13% growth year-over-year.

Topline and Cejon are obviously going to add another real rough number $30 million to the operating expenses this year.

How much do they add in the second quarter?

About $4.5 million, $4.4 million.

And so it is going to be that much more the last two quarters?

Well, remember, we only had them since May 20th and May 25th.

That was only about five or six weeks for each acquisition.

So that would be 10, so is it -- so we're looking like an additional $10 million a quarter?

A little bit more than that.

Got you.

And then just to clarify, it sounded like what Scott asked about the boots -- so you're sort of shifting from saying it was flat to down slightly to basically flat boot business on a year-over-year basis right now?

I think that the nuance here that we've had trouble communicating is I never said it was going to be flat.

We said it was going to be -- down, I mean a smaller percentage of the mix, and now we think it is going to be roughly similar percentage of the mix, so because we thought our business was going to be growing, we never actually thought it was going to be down in dollars.

Well, when you say boots as a percentage of the mix, that includes all of these new businesses you have, too, so that would make the business probably up significantly.

At any rate now we think it will be a similar part of the mix as opposed to before when we said we thought it might be a smaller percentage of the mix.

What percent of the mix was it in the back half of last year?

Very different for wholesale and retail.

I mean, wholesale -- I might have that number for you.

It was about 59% in Q3, 64% in Q4 and retail was about 33% in Q3 and 67% in Q4.

That's just on the women's side obviously.

I am excluding men's.

Right.

I see, not out of the total-total, that's just out of women's.

Yes, women's.

All right.

Thanks very much and continued success.

Thank you.

(Operator Instructions).

We'll move onto Oliver Chen with Citi.

Hi, Ed, thanks.

I have a question related to our inventory and how you're thinking about it for the back half.

Looks like it was up ex acquisitions 8%, and it seems like you said that that was what the core business was running, too.

So how are you planning it for the back half?

And has there been any air freight this quarter and do you see that happening?

Yes, in terms of the inventory, I think that it is going to grow roughly in relation to sales.

I think that that's going to be sort of similar to as it did in Q2.

That's a good way to think about it going forward.

In terms of air freight, there was a little bit.

There is always a little bit, but nothing out of the ordinary.

Do you feel like you have enough inventory currently, relative to how you're seeing trends going?

Yes, we do.

We certainly feel that we can meet the demand and we have the inventory that we need to meet our guidance that we put out today.

Okay.

And then looking forward to 2012, and thinking about the wholesale division gross margins, is it logical to expect a return to year-on-year growth in gross margins and at the wholesale division in the back half of 2012?

Or is that aggressive, given the continued potential pressure from international?

I think we're going to have a pretty good shot in the back half to grow gross margin, improve them.

And it looks like have you done a great job improving the retail store productivity over time.

Where do you think the gross margins will get to over time?

They have showed steady increase to the 61% level.

What's kind of possible as you expand sales productivity further?

Well, just keep in mind that our gross margins, we don't get a real benefit when we increase the productivity because these are true merchandise margins, so we don't have occupancy or some of these other expenses that other companies show in that line.

Nevertheless, I do think there is some continued room for improvement there, and I think there is probably another couple hundred basis points of potential, 100 to 200 basis points of potential in the retail gross margin.

And the new EPS guidance implies that retail continues to be above versus last year?

It does.

Finally, could you just share with us any further information related to the pricing environment?

Have you noticed any trends or noticeable interests between kind of what the pricing models you're pursuing in retail versus what the wholesalers, what your wholesale customers are doing and customer response?

It feels like across the industry the back half is going to experience a greater sequential magnitude of price increases, and the jury might still be out in terms of consumer acceptance of that.

Correct.

Yes.

First of all, I want to say in terms of the price increases that we're seeing out of southern China, that has stabilized recently, which we have been pleased about.

For a while it looked like it was going up inexorably.

But we have been talking about that 5% to 8% number for a while, and I still think that's the right number.

You're right.

We continue to layer on additional price increases throughout the year.

So far we really have not seen resistance to that.

The wholesalers certainly are accepting of these price increases.

Of course we still have to see there is some we're pushing through that we're still waiting on consumer acceptance, but so far we feel pretty good about that.

Okay.

In the southern China inflection rate -- was that in line with your expectations or sounds like it was incrementally encouraging that the prices have stabilized there.

Does that imply that ultimately margins may inflect for there to be a benefit as costs don't go up but your prices did?

Possibly.

In terms of whether or not that's marginally better, I think it is only insofar as that earlier in the year, we said 5 to 8%, but we were expecting the back half we were going to be more towards the top of that range -- in other words, they were going to continue to rise and because it is stabilized a little bit we're still at the 5% to 8%.

How much price we're going to be able to take over and above that, that's unclear.

Thanks a lot for your time.

Thanks, Oliver.

We'll take a follow-up from Scott Krasik.

Ed, just a couple clarifications.

The 8% revenue growth, did that exclude the Target and Kohl's shift as well?

Yes.

Target and Olsenboye, yeah, Target and JC Penney.

So what was the Topline revenue contribution in the quarter?

Topline, the company, you mean, the acquisition?

Correct.

About $20 million, $20.1 million.

$20.1 million.

Just general seasonality of that business first half versus second half?

Topline is actually a bigger business in the first half.

They're very strong in sandals, so they have a bigger sort of spring business.

Cejon is much more back half weighted because of the cold weather component.

Okay.

And then any contribution?

You mentioned the Betsey Johnson contribution licensing.

What about jewelry or bedding?

Have you started to see the benefit from those things, and are there any other licensing opportunities near term?

Yes.

Steve Madden also had nice growth in the quarter, our biggest grower actually was our sunglasses with our licensee colors and objects, and we continue to work on additional licensing agreements for Betsey.

We're looking at luggage deal, and for Steve Madden we're looking at intimate apparel deal right now, so hopefully we'll get at least one of those done sometime this year.

Will jewelry include watches sometime soon?

Jewelry -- we're doing watches for Betsey Johnson.

In fact, we're just -- I believe we just started shipping with our licensee Haskell, and they have a very nice order file right off the bat in watches, so we're really pleased about that.

Haskell is our jewelry licensee for Betsey Johnson, the most successful license that we have, and they do almost $20 million annually, and now we have given them watches and they're off to an extremely strong start with Betsey Johnson watches.

And then just a couple of smaller brands, I don't think you really mentioned, Material Girl and also Big Buddha for footwear or bag growth?

Yes.

So Material Girl is still doing well at Macy's.

They're taking a couple key items all doors for fall.

It has been a little bit challenging for -- I think Macy's is happy, but it has been a little challenging for us to get the gross margin that we're accustomed to because of the model that they're trying to work on in terms of IMU and maintain margin at these very sharp price points.

But we're working through that, and it looks like that business may go first cost next year which should make that formula a little easier for us.

In terms of Big Buddha footwear, we continued to grow that business as well.

We're doing quite well at the higher end accounts where we're shipping that, Nordstroms, Dillards, Belks, Von Maurs, and it has been a little tougher at some places like Bakers and Bon Ton but we'll figure that out.

Is that a meaningful number yet, the sales from the footwear?

No.

I mean it was $1.8 million in the quarter, still relatively small.

Okay.

Thanks.

We'll move on to Sam Poser with Sterne, Agee.

Couple more questions.

The deal you made that you bought into Bakers a couple years ago.

How are they progressing and how is that investment paying off for you, number one?

They're doing well.

We're very pleased with it.

They remain an important customer of ours, and they also remain an important partner in terms of the information that we share in terms of styling, and if the information that we're able to utilize to benefit our wholesale business, so it is essentially almost like an extension of our test and react model to Bakers' 240 stores.

So we're very pleased with that, and we're glad we did it.

Okay.

Two more questions.

Number one, how many stores are you planning on opening and closing for the balance of the year?

You mentioned the one outlet that's going to open, but --

We're also going to open I think it is three full-priced stores in Q4, a couple in California and one in New Jersey, so that's four more openings for the balance of the year.

And closings?

We're going to close at least one and possibly one more.

So to one to two closings.

Okay.

And then what was the international contribution in Q1?

I think you said that already but I missed it.

In Q1?

Yes, Q2 I mean, sorry.

$13.4 million, yes.

Okay.

Thanks.

Good luck again.

Thanks.

We have no further questions at this time.

Great.

Thanks very much for joining us.

We look forward to talking to you on the next call.

Ladies and gentlemen, that does conclude today's conference.

We thank you for your participation.

Have a great day.