Steven Madden Ltd (SHOO) 2013 Q2 法說會逐字稿

Please stand by for real time transcript.

presentation.

Good day everyone and welcome to the Steve Madden second quarter 2013 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 IR.

Please go ahead.

Thank you.

Good morning everyone.

Thank you for joining us today for the discussion of Steve Madden's second quarter 2013 earnings results.

Before we again I would like to remind you that statements made in this conference call that are not statements of historical facts constitute forward-looking statements within the meaning of the Private Securities and 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 forward-looking statements.

The statements contained here in 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 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 today.

Our second quarter results reflect strong execution in a tough retail environment.

Net sales in the quarter rose 3.1%, gross margin expanded 110 basis points with increases in both the wholesale and retail businesses and we were able to keep SG&A flat as a percentage of sales despite a higher mix of retail.

The result was growth in net income of 7.6% to $29 million or $0.65 per diluted share.

Given the late spring and softness in overall traffic trends, we are pleased to have delivered second quarter profitability in line with our expectations, and to remain on track to meet our sales and earnings goals for 2013.

Before getting into the details of the financial results for the quarter, let me first make a few general comments about our second quarter performance.

In wholesale footwear the cold and wet weather that we experienced in Q1 and the first half of Q2 negatively impacted sandal sales early in the season which in turn had an adverse effect on second quarter re-orders.

However, as the weather warmed up our sandals performed well and the better sell-through and reduced close outs in that category compared to last year was a key driver of the gross margin increase we recorded in wholesale footwear.

We also had success in the dress shoe category where we believe we were outperforming the competition, and with wedges.

June boot shipments, however, were down compared to the prior year.

Whereas last year our wholesale customers looked to pull forward boot deliveries from July into late June this year the late start to spring meant that, in many cases, our customers elected to wait until July to take in boot product.

Nevertheless, we were pleased with the solid performance in a choppy environment, particularly the gross margin improvement.

Wholesale accessories, we had another good quarter with handbags once again leading the way on the strength of solid gains in the Steve Madden and Betsey Johnson brands.

We continue to see a lot run way ahead of us in the hand bag business.

With opportunity for additional door expansion as well as to expand the assortment in existing doors.

On the retail side we recorded a 2.5% comp increase and improved gross margins despite continued challenging traffic trends and a negative impact from the Easter shift.

As in first quarter we saw a robust increase in conversion which enabled us to overcome the lower traffic.

Finally, we also saw strong results from our newer brands, sales of Superga doubled in the second quarter versus last year, and Mad Love continues to exceed expectations at Target.

While these brands are small pieces of the over all business today, fostering new brands is an important part of our growth strategy and so we are pleased to see the progress we are making.

With that, let's turn to the details of the financial results for the quarter.

Consolidated net sales in Q2 grew 3.1% over the prior year period to $297.6 million including a double-digit percentage gain in retail and more modest growth in our wholesale business.

Wholesale net sales rose 1.3% in the quarter to $251.4 million compared to $248.1 million in the second quarter of last year.

Within wholesale, footwear net sales were $199.2 million, up slightly from $198.7 million in Q2, 2012.

We recorded strong growth in our Adesso Madden private label footwear business but this was offset by a sales decline at Topline resulting from the loss of two private label customers that compete with Steve Madden and elected not to go forward with Topline after we acquired the business as well as the discontinuation of the Big Buddha footwear business.

Wholesale accessories net sales were $52.2 million, a 5.6% increase over Q2 2012.

As previously mentioned, this was driven by continued the healthy growth in both Steve Madden and Betsey Johnson handbags.

Now our retail division, net sales increased 13.9% to $46.2 million.

Comparable store sales grew 2.5% for the quarter on top of a 6.8% increase in the prior year period.

We opened two Steve Madden full priced stores and one outlet store in the quarter bringing us to 113 company operated stores including 12 outlets and three Internet stores.

Stores opened for the 12 months ended June 30th, 2013 generated $909 in sales per square foot.

Turning to other income our commission and licensing income net of expenses was $3.7 million in Q2 versus $4.3 million in last year's second quarter.

First cost commission income net of expenses was $1.9 million in the quarter compared to $2.4 million in last year's second quarter.

The decrease was due to a decline with Kohl's and the loss of Bakers as a customer.

Licensing royalty income net of expenses was flat at $1.8 million.

Consolidated gross margin for the quarter was 37.2% as compared to 36.1% in last year's second quarter with strong inventory management driving improvement in both the wholesale and retail segments.

Wholesale gross margin increased to 32.1% versus 31.6% in last year's second quarter due primarily to improvement in the Steve Madden women's wholesale footwear division.

Gross margin in the retail division was 64.7%, up from 63.7% in the second quarter of 2012 due to fewer markdowns particularly in the sandal category.

Operating expenses were $68.7 million in the second quarter compared to $66.7 million in the same period last year.

On a consolidated basis operating expense was flat as a percentage of sales at 23.1% despite a bigger portion of sales coming from our retail business which carries higher operating expenses as a percentage of sales than the wholesale segment.

Within each of wholesale and retail operating expenses as a percentage of sales were lower in Q2 2013 than in the prior year period.

Operating income totalled $45.6 million or 15.3% of net sales compared with operating income of $37.5 million or 13% of net sales in the same period of 2012.

Operating income in the second quarter of 2012 included a $2.5 million charge for a class action lawsuit related to unauthorized text messaging and a $1.8 million charge for impairment of a note receivable from the Company former licensee for Betsey Johnson retail apparel.

Excluding these charges operating income for the second quarter of 2012 was $41.8 million or 14.5% of net sales.

The effective tax rate in the quarter was 37.1% compared to 31.3% in the second quarter of last year due primarily to a tax benefit in the second quarter of last year of $2.8 million related to the year-to-date impact of a portion of earnings from foreign operations that were reinvested indefinitely.

Net income for Q2 was $29 million or $0.65 per diluted share compared to $26.9 million or $0.61 per diluted share in the second quarter of 2012.

Turning to our balance sheet as of June 30th, 2013 we had $290.1 million in cash and marketable securities and no debt.

Inventory continues to be well controlled.

We ended the quarter with inventory of $91.3 million essentially flat with last year's figure of $91 million.

Our consolidated inventory turn for the last 12 months was 10.5 times.

CapEX in Q2 was $6.4 million and during the quarter we repurchased approximately 456,000 shares for $21.6 million or an average price of $47.46 per share.

On June 18th our Board of Directors approved a continuation of the Company stock repurchase program for up to and additional $125 million in repurchases.

Now, turning to guidance for fiscal 2013 we continue to expect net sales to increase 6% to 8% compared to fiscal 2012.

We continue to expect diluted EPS to be in the range of $2.95 to $3.05.

Based on our current wholesale order book, and a number of orders that historical would have been shipped in September that we currently expect to go out in the first week of October, we expect sales and earnings to be more heavily weighted to Q4 this year compared to Q3.

In conclusion, we believe that our second quarter results reflect the strength of our business model.

In a choppy environment our quick turn model enabled us to be nimble and react quickly to changing trends and our execution a in controlling inventory and expenses drove solid profitability.

We remain on track to meet our top and bottom-line goals for 2013 and are well positioned to continue growing the business for years to come.

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

(Operator Instructions).

I will go first to Erinn Murphy, of Piper Jaffray.

Great, thank you.

Good morning, and thanks for taking my question.

Ed, I was curious, very good execution in a tough environment, could you share a little bit more about what you're seeing in the most recent period?

You talked about deferred shipments into July from June and then again from September into October but just talk a little bit more about the retail environment in general as we sit here in July.

Sure.

I think what you saw was that because of the very late break to spring, in other words, the spring selling period really got started late, that's pushing everything back a little bit so we saw some retailers that where as a year ago really wanted to take those boots in late June that wanted to get those boots in, they just started selling sandals basically a month and a half ago so they want to take the boots in a little bit later.

There's also a change in how the retailers calendar, the 4-5-4 calendar matches up with the calendar this year and that's pushing some shipments back about a week.

But in terms of the overall environment, July has continued to be a little choppy but we feel pretty good going into fall, we're very pleased with the results we have gotten out the Nordstrom anniversary sale.

You know that tends to be our first good look at how the customers responds to our new fall product and we have improved sell through in that sale this year versus last year and frankly last year was a pretty goods result as well so we feel good about our fall product.

And that's helpful.

And I guess on the Nordstrom anniversary sale because I was curious on that seems like you have a much broader representation this year in terms of different lifestyle categories.

Could you talk about kind of the handbag versus the footwear performance there and then, secondly, as I was going through and comparing year-over-year pricing within the Nordstrom anniversary sale it did seem that pricing including the sale pricing was slightly lower this year on like-for-like product.

Are you seeing more units or could you maybe talk about that as the dynamic versus price versus volume at that sale?

Sure.

In terms of the other categories, yes, we've been pleased that we've started to get some of the other categories that not only that we do in-house here like the handbags and some of our licensees have also gotten product in the Nordstrom anniversary sale that goes for Steve Madden as well as for Betsey Johnson.

In terms of the pricing that's a dynamic that's been happening over the last couple of years and I think that's been a strategy on Nordstrom's part and so we're essentially trying to align ourselves with what they're trying to do in pricing in certain categories.

Okay.

And then just a last question for me.

On the two private label customers that you reference can you just help us parse out the impact specifically in Q2 and then how we should think about that for the balance of the year as we're working through the last couple of quarters and into the first?

Sure.

Yes.

Those two customers did about, Topline did about $7 million with those two customers in Q2 of 2012.

Fortunately, we've just about anniversaried that impact.

I think there is a very modest impact, a couple million dollars maybe in Q3, and then that will be behind us.

Okay.

Great.

Thank you very much.

We'll go next to Camilo Lyon, of Canaccord Genuity.

Thanks and good morning, Ed.

Morning.

I want to focus a little bit digging into the Nordstrom anniversary sale, you talked about positive reads.

Maybe if you could just highlight some of the categories.

What are you seeing on beauty side that's a good indicator for fall interest and then maybe talk also about the dress category and how that could reflect positively around some of the other brands, particularly Betsey.

Sure.

Yes.

So boots and booties is the biggest category for us in that sale and we've gotten very good reads on both boots and booties.

Within the booty category one of the things that we're pleased to see is that whereas last year within booties it was really all about flat booties.

This year flat booties are performing and heeled booties so we have both things working.

We've also have a very successful tall shaft boot in the Nordstrom anniversary sale with superior sell-through and I think there's some new trends within that category.

We're really seeing any kind of ankle interest is performing very well so what I mean by that is anything with belts or buckles or straps around the ankle is really performing.

And then, as you highlighted, another positive trend is what we're seeing in the dress categories.

You know that was a tough category for the industry and for us last year and we have really seen that pick up and, again, here it's really anything with ankle interest is performing very well.

Thanks.

So if you take all that together, how does that formula worked out from and ASP perspective year-over-year for the back half?

Is that I positive ASP dynamic?

Yes.

There is a lot of puts and takes there, but I'm really expecting ASP AUR to be up low singles in the back half.

Got it.

And then could you speak to us on the acquisition environment?

It seems like you've stepped up on your buy back program.

How should we take that for what you are seeing in the brand acquisition environment?

We continue to look for things, for M&A opportunities, we obviously haven't gotten anything done in the last almost 18-months now.

We continue to evaluate a lot of different opportunities as we've talked about in the past.

There's been a limited universe of things that we've been interested in and when we were interested, in every case, we couldn't get to the price with the seller so I don't think there's any major change there and as you point out in the absence of M&A we have resumed the share repurchase program about $11 million in Q1 and we did almost twice that in Q2.

Okay.

Great.

And just lastly on the gross margin side of the equation, can you update us on what you see from and input cost perspective whether it's raw materials or labor and what you're able to do to work through that and mitigate some of those pressures?

Yes.

We're actually not seeing a ton of pressure from those two elements.

I would say that what's more impactful right now has been the appreciation of the R&B.

I think it's up about 5% in the last six months or so and so that is going to put a little bit of pressure on pricing.

We're trying use every trick in the book to keep the prices down and to utilize our leverage with the factories, but we will also be trying to pass that through in certain to the consumer.

Got it.

Nice job on the quarter and good luck for the rest of the year.

Thanks.

Thanks, Camilo.

We'll go complex to Jeff Van Sinderen of B. Riley & Company.

Good morning.

Can you hear me?

Yes.

Good morning.

Okay.

Great.

So I guess just a follow-up on what you're seeing in recent business trends.

I know you said July was choppy, but is there any sort of normalization with the weather getting warmer, anything along those lines to speak to or I guess also what is your outlook as far as the environment for the current quarter?

Yes.

So obviously, we and others have talked quite about the impact of weather in the first part of the year and some of the negative traffic trends that people were seeing.

We did see a nice improvement in the trend in May and June.

That doesn't mean it was positive year-over-year, but it means it was considerably better than what we saw in the first four months, but July traffic has been choppy.

Going forward we have not assumed any material improvement in the overall environment so we believe we can make our guidance if things stay the way they are.

If they get a lot better, that would be potential upside.

Okay.

Good.

And then just in terms of the wholesale order book, is there anything that stands out in terms of categories or is it more just sort of a general weather-related season timing pushout you think in terms of orders being weighted more, I guess, in Q4, is what it sounds like?

The only thing I would point to is in Cejon, our cold weather accessories business, we have seen retailers get considerably more cautious this year.

You have to remember that the last two fourth quarters have been unusually warm and a lot of retailers have gotten hurt in the cold weather accessories category so we have seen some people more cautious in that category.

Okay.

Does that mean anything as far as how you're looking at long shot boots as we get into second half and the order there is there anything to read into?

I don't think so.

I mean right now as I said particularly from the anniversary sale, the reads on tall shaft boots are good.

Okay.

Good to hear.

And then on the acquisition front I know you obviously have been looking at things and nothing has come to fruition, but I guess I'm wondering if part of that is just that prices have moved up, that potential sellers are asking more?

Is that part of the issue?

Yes.

Absolutely.

Valuation has been a challenge.

Okay.

And so suffice to say you're not going to over pay?

We're not planning on it.

Okay.

Good to hear.

Thanks very much and good luck this quarter.

Thanks, Jeff.

I'll go next to Steve Marotta of CL King & Associates.

Good morning, Ed.

Can you please quantify the 110 basis point gross margin gain in Q2, what was a result of direct sourcing, obviously that's a legacy product, post Topline acquisition?

Yes.

I think that was about 30 basis points in the quarter.

Okay.

And can you remind us where you are right now as a percent of penetration and where you expect to be in the direct sourcing initiative in the coming quarters/years?

Sure.

We're essentially right on track with what we outlined when we did the deal which was to do about 10% of the legacy footwear business a year.

It's been a couple years and we're at about 20% right now.

Okay.

You mentioned about late boot deliveries and you already spoke about it a couple times and I'm pretty sure the answer to the question is yes, but do you expect a similar percent of boots and booties in the mix in the second half of this year than you realized last year?

Yes.

We're planning that flat as a percentage of the total right now.

Okay.

As it relates to the International sales, could you go over those very briefly and also is there a tax benefit associated with International gaining as a percent of sales for the balance of the year and next year?

Sure.

So our International sales overall were up about 12.5% in the quarter.

Now, that's a little bit slower than we've been growing.

I think that we've talked about a 25% target for the year.

We still believe that's achievable.

There was a change in timing of shipments to a couple of our big distributors, which caused that number to be a little bit lower than how we've been running but, again I think the 25% is reasonable.

And no, because of the distributor model in which we operate there's not a material impact on our tax rate from the improvement in International.

The growth in International.

Lastly, do you have $125 million left on the repurchase?

Is that accurate based on what the Board approved about 30 to 45 days ago?

No.

There's been some repurchase since then.

I don't have the number off the top of my head.

Okay.

That's fine.

Thank you very much.

Thanks, Steve.

I will next to Scott Krasik of BB&T Capital Markets.

Yes.

Good morning.

Good morning.

What is the retail comp quarter to date and what's the retail comp implied in the full year guidance?

I don't think I'm going to tell you that.

We usually don't disclose either of those things.

I will tell you about the full year that I think that in line with where we've been is a reasonable assumption.

Okay.

That's helpful.

You kept the sales guidance the same although we're light relative to our expectations for this quarter and sneaker wedges as a category has definitely tailed off base on our check so which parts of the business do you expect to be stronger relative to maybe when you spoke to us last quarters and gave the sales guidance?

Sure.

Yes.

You're absolutely right that the sneaker wedge category has been a little disappointing and currently is not performing the way we had all hoped and not only for Steve Madden but for the industry as a whole.

But dress shoes have really accelerate and are doing far better than we anticipated when we came into the year, and we also now have real good initial reads on boots and booties so we feel increasingly good about that category as well.

Okay.

That's great.

And then just last on the bags, you had some really hyper growth rate where we're actually seeing more Steve Madden bags at Nordstrom and do you have the potential to elevate the Steve Madden hand bag business the way you did with footwear and gain that shelf space or is it just too crowded with too many good brands in bags?

Yes.

I think we still have a lot of opportunity with the Steve Madden bag business.

A lot of run way as we said earlier a head of us so that's certainly the goal and we want to continue to stay in our lane.

We're not going to try to move up and go after Coach and those guys.

We think that we have a real solid niche and that hundred dollars bag area is where we should be playing.

And Big Buddha bags?

Big Buddha is a little tough right now.

Steve Madden and Betsey Johnson are both performing very well and Big Buddha is struggling a little bit.

We've lost a little bit of business in the specialty boutique channel but we've actually just hired somebody new to run that business who is going to be joining us in about a month so, hopefully, we will get that turned around.

Okay.

Good luck.

Thanks.

Thanks, Scott.

We'll go next to Jane Thorn Leeson of KeyBanc.

Hello?

Hi, Jane.

Oh, hi.

Sorry.

Congratulations on a good quarter.

I just had a quick question on the promotional environment.

It seems like the promotional environment wasn't as bad as you specifically had feared.

Is that right?

And do you feel like the aggressive level overall will lighten up in the fall as compared to what it was like the first half?

Yes.

I think you're right.

In April we were forced to get a little bit more promotional than we otherwise would have liked to remain competitive with some of the other people in the mall, but when the weather turned our sandals really sold through very well and so we were able to be a little bit less promotional than we had feared as you point out and that's why we saw that nice gross margin improvement.

A lot of which was really driven by the June month when a year ago we were pretty aggressively promoting sandals and this year we were selling through at a better price.

Going into the back half we certainly hope so.

As you know, the promotional environment in spring was driven by how the weather really wreaked havoc on the season and so as we move into fall we hope that's not repeated.

Okay.

And, I just have a follow-up on that.

I started to see 30% off fall styles on email promos, is that typical timing for fall right now?

Yes.

That's something we call sneak peek.

That's a pre season sale that we do.

It's, sort of analogy would be the Nordstrom Anniversary sale where we bring in new fall product and run a sale for a limited time to try to create some excitement around the fall.

Okay.

And then my last question was just on the outlook or particular drivers for Steve Madden women's footwear in the second half.

Do you expect acceleration from the first half in terms of how that performed?

We expect to do better in the first half.

We haven't put super aggressive forecasts into our model relative to last year because we have very tough comparisons in the back half of Steve Madden Women's I think we were up 15% in Q3 and 19% in Q4, or thereabouts.

So we've been cognisant of that and have taken a relatively conservative look but we it feel good about the product and the brand strength at the retailers.

Okay.

Good.

Thank you.

We'll go next to Taposh Bari, of Goldman Sachs.

Good morning.

Nice job.

Morning.

Do you mind elaborating on the reordered environment?

How retailers are managing inventories, what the level of inventories look like at retail now?

It's not only the last six months that have been unfavorable for weather but really the last two winters so just trying to get a better handle on how retailers or managing flow and inventories.

Yes.

In terms of what they're doing for fall, we are seeing everything push-back a little bit, as we talked about, because of the late break to spring.

Other than that cold weather accessories category that I talked about we're not seeing any dramatic changes in up front ordering patterns.

Here and there are people trying to say let's orders a little bit less up front and try to fill more in season, yes, there's not any dramatic change compared to a year ago.

Okay.

And then just on the competitive environment, you have a got some of the more of the traditional cold weather companies in light of what you just mentioned, trying to get more into this transitional fall period.

Coach is beefing up their footwear category in a bigger way.

Does that have any real material impact on your business?

We don't think that.

We've had a lot of tough competitors pretty consistently over the last handful of years.

I don't see any meaningful change in the competitive environment certainly not the guys that you're speaking about.

Okay.

And last one I have for you is just on capital allocation.

There was a lot of questions on M&A, but what's your view on a dividend?

I know there as history here of special dividends.

Quarterly or special dividends going out into the future, what's your view on leverage?

So this past quarter it seems like it's pretty much as bad as it can get and yet you managed SG&A very well and inventories well so do you feel like this is a business that could take on leverage at some point down the road?

I think we do believe that we could take on leverage and it's something that we have been talking about at the Board level and we'll continue to evaluate.

But certainly there is a long way from where we are to there right now because we've got $290 million in cash on the balance sheet and we're generating a lot of cash so, the interim step may be to utilize more of the cash whether it be through share repurchase or, as you mentioned, there's obviously the opportunity to do a dividend.

But yes, certainly this he is a company that could support leverage.

Okay.

Thanks a lot and good luck.

Thanks,.

We'll go next to Sam Poser, of Stern Agee.

Good morning.

Thanks for taking my call.

Just on your guidance, you said that it's going to be more back end weighted and it sounds like a lot of that might be a one week shift from the calendar from the issues of the retailers and I guess at the end of September going into October versus last year.

But how should we think about it?

Are we looking for like mid-single digit increase in Q3 and then like low doubles in Q4 kind of thing?

Is that how we should think about it a little bit better in the third quarter?

You know what, Sam, we're not going to provide any more detail.

Our policy has really been to provide annual guidance and not to provide quarterly guidance.

We wanted to give you a little directional color that we think that Q4 is going to grow faster than Q3, but I don't think we're going to give any more detail beyond that.

Okay.

Alright.

Just to follow up on the question about how the retailers are acting, you guys have the benefit of being closer to need than many of your competitors, but even there it sounds like things are moving around a bit.

Are you having to speed it up at all or what are you doing as the retailers are looking to buy more stuff closer to need?

Well, as you know, speed has always been a focus for us and I think one of our strong suits so we're really just continuing to do what we do.

One of the things that we are doing, though, is that we continue to ramp-up the production in Mexico which enables us to be even faster and to work even closer to need and so we continue to think that when the retailers are operating that way that in many ways it plays to our strengths because we feel that we are faster than most of our competitors.

Thanks.

Then lastly your commission income how should we think about that?

Let's say on an annual basis versus last year, how should we be thinking about that because it was a lighter than what we thought it was going to be this quarter.

Yes.

I think you should definitely plan that down modestly versus last year, make down about a million bucks, somewhere in there on and annual basis and, again, that's something that because of the way the timing of the orders that we have in-house is going to be weaker in Q3 and stronger in Q4.

Thanks very much.

Good luck.

Thank you.

We'll go next to Danielle McCoy, of Brean Capital.

Good morning, guys.

Congrats on a great quarter.

I was just wondering if you can give us an update on the repositioning of Steve Madden at Macy's.

Was there any more door expansion?

Any more color on that?

Sure.

Well, it continues to go well.

The sell-throughs continue to be improved in Steve Madden and as we've talked about it's also helping the Madden Girl business in the junior department which has remained in the junior department to grow there as well.

So we're on track to expand doors for fall again.

We're adding about 30 more table doors for fall.

We will be up to about 260 table doors and then, as you know, we have another 225 doors where we're shipping Steve Madden product that are non table doors.

So that's working really as we expected and we're very pleased about it.

Alright.

Great.

Thank you, guys.

Thanks, Danielle.

And we'll go next to Mike Richardson, of Sidoti & Company.

Most of my questions have been answered but if you can just, Ed give is a quick update on the Steve Madden jewelry and watches, I would appreciate it.

Thanks.

Sure.

So as you know we're doing those under license with our partner Haskell Jewels.

The jewelry is going to be hitting stores this month in the next couple weeks it will be in-store and then the watches will be hitting stores in Q4 and we've gotten real good reaction to it.

It's going to be in the similar distribution to where we distribute the shoes so the better department stores and specialty stores.

We're also going to put the product in about 20 of our retail doors starting in about a month and we feel good about it.

Can you give us the price point for each of those?

Yes.

The watches are about $65 and the jewelry, most of it's between $25 and $30.

Great.

Thanks, Ed.

Good luck.

Thanks, Mike.

We have no first questions.

Mr. Rosenfeld, I would like to turn the call back over to you for any additional or closing comments.

Great.

Well, thanks very much for joining us on the call and we look forward to speaking with you on the third quarter call.

That does conclude today's conference.

We want to thank you for your participation.