Steven Madden Ltd (SHOO) 2014 Q3 法說會逐字稿

Good day, and welcome to the Steven Madden, Ltd. Third Quarter 2014 Earnings Conference Call. Today's conference is being recorded. At this time I would like to turn the conference over to Jean Fontana of ICR. You may begin.

Thank you. Good morning, everyone. Thank you for joining us today for the discussion of the Steven Madden third quarter 2014 earnings results.

Before we begin, 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 factors 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.

These 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 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 on 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 Steven Madden.

Thanks, Jean. Good morning everyone, and thank you for joining us this morning to review Steven Madden's third quarter 2014 results. With me to discuss the business is Derek Browe, the Company's Director of Finance and Investor Relations.

Q3 was a tough quarter as we continue to face a difficult landscape for women's fashion footwear. As we have discussed the last couple of quarters, in the young trendy footwear space where we do most of our business there are relatively few significant fashion trends at the moment with the exception of sneakers, a category which is performing well for us but which represents a small percentage of our overall business. As in the first half of the year, this lack of fashion trends to capitalize on impacted us most acutely in our retail stores. We had a disappointing quarter in retail, with comps declining 7.4%, and gross margin contracting versus the prior year. The retail segment results were below our plan and were the primary driver of our overall earning results for Q3 coming in below forecast.

Wholesale segment performance was better than retail, but was also impacted by the lack of fashion newness. Overall wholesale net sales were down a little less than 1% compared to the prior year. But if we exclude the Dolce Vita business acquired in the quarter, wholesale sales were down approximately 5%. Given the soft top line performance in the quarter, it was extremely important to manage the business carefully and control inventory and operating expenses, and we are pleased with our execution on those fronts. Excluding Dolce Vita, inventory at the end of the quarter was down 4% versus the prior year, with decreases in both wholesale and retail. And operating expenses, excluding Dolce Vita, were up 3% compared with the prior year period, with the modest growth coming as a result of having 11 more Company operated stores in the U.S. and Canada than we had a year ago. Wholesale operating expenses, excluding Dolce Vita, were down 1% versus last year.

In addition to managing the business prudently in the quarter we also made important investments for the future. Most significantly we acquired Dolce Vita Holdings on August 13th for $60.3 million plus a earnout provision based on future financial performance. Dolce Vita specializes in the design and sale of branded and private label footwear, and had net sales in 2013 of approximately $111 million. Dolce Vita brand is one of the premier contemporary brands in the footwear industry, and is a strong complement to the remainder of our portfolio targeting a customer and a price point that we don't address with our other brands. We are particularly please that its founders, Van Lamprou and Nick Lucio, who are widely regarded as some of the most talented members of our industry, are staying on with the Company to lead Dolce Vita into its next stage of growth. We see significant opportunity to expand the business and improve its profitable by combining Dolce Vita strengths, which include an outstanding brand and superior design, with our proven business model and infrastructure. The transaction is expected to be $0.02 to $0.03 dilutive in 2014 and then to become accretive to EPS in fiscal 2015.

Adding strong brands to our portfolio, as we did with Dolce Vita, is an important part of our growth strategy. Another of our key growth initiatives is expanding our international business, and we also entered into two transactions in the third quarter which should position us for growth in key international markets. Most importantly on September 25th, we signed a definitive agreement to acquire our Mexican licensee, SM Mexico, from its parent company Grupo Dicanco for approximately $15 million plus repayment of a short term loan and an earnout provision based on future financial performance. SM Mexico has marketed the Steve Madden brand in Mexico since 2005. And had net sales for the 12 months ended July 31, 2014, of approximately $15.4 million. Currently distributes products in leading department stores as well as 21 Steve Madden branded retail store. Mexico is a strong and growing market for the Steven Madden brand, and we see great opportunity for continued growth through enhancing our presence in leading department stores, expanding into new wholesale accounts, growing our portfolio of Steven Madden retail stores and introducing certain of our other brands like Dolce Vita into the Mexican market. The transaction is expected to close in January 2015, and is expected to be accretive immediately contributing approximately $0.02 to $0.03 in diluted EPS in 2015.

Finally, we also expanded our partnership with House of Busby in South Africa in the quarter. Busby has been our distributor in South Africa since 2011, and has done an excellent job establishing the Steve Madden brand in the territory. There are now four Steve Madden retail stores in South Africa, and 20 Steve Madden stop and shops in the leading South African retailer Edgars. In September, we deepened our commitment to the country forming a joint venture with Busby in which we now own 50.1% of the South Africa business. We believe the joint venture model will enable us and Busby to better leverage our respective capabilities to grow the Steve Madden brand in this important market. Together we have established a strong growth plan that includes both wholesale and retail expansion. We currently expect to open three to four new retail stores in South Africa in 2015.

While it is undoubtedly a challenging time in the fashion footwear business and we are cognizant of the need to manage our existing business prudently we are not playing defense when it comes to investing in growth. Whether it is adding the premier contemporary brand like Dolce Vita to the portfolio or transitioning from a distribution model to an ownership model in Mexico and South Africa, we continue to move ahead with acquisitions and investments that will drive the business forward in 2015 and beyond. Now I would like to turn it over to Derek to walk you through the details of the financial performance for the quarter.

Thanks, Ed, and good morning, everyone. Our consolidated net sales for the quarter were $392 million compared to the prior year amount of $394.8 million, with sales in both our wholesale and retail segments down slightly. Our wholesales and net sales in the quarter were $343.3 million compared to $345.9 million in the prior year's third quarter. Wholesale footwear net sales were $273.2 million as compared to $272.7 million in Q3 of 2013. Excluding sales from Dolce Vita, sales for the wholesale segment were $259 million a 5% decline versus the prior year, with decreases from both branded and private label businesses.

In wholesale accessories, we recorded net sales of $70 million in Q3 compared to $73.3 million in the prior year period. During the quarter we saw solid gains in both our Betsey Johnson and private label handbag business which were more than offset by declines in Steven Madden, Big Buddha and cold weather accessory business. In our retail division net sales were $48.7 million compared to $48.9 million in last year's third quarter. Comparable store sales in the quarter decreased 7.4%. Our traffic trends were weak as they have been all year. Comparable stores were tough in both our full price and outlet bricks and mortar stores while our e-commerce business was approximately flat.

During the quarter we opened four outlet locations, we acquired the Dolce Vita website and through our newly formed JV acquired four stores in South Africa bringing us to 133 Company operated retail stores including 28 outlets and four e-commerce stores.

Turning to other income. Our commission and licensing income net of expenses was $5.1 million in the quarter versus $4.9 million in last year's third quarter. First Cost commission income and licensee royalty income net of expenses were each up modestly. Our consolidated gross margin in the quarter was 34.7% as compared to 35.4% in last year's third quarter. Our wholesale gross margin was 31.3% versus 31.9% due to the impact of Dolce Vita and increased mark-down allowances. Excluding the acquisition of Dolce Vita our wholesale gross margin would have been 31.6%. Gross margin in the retail division was 58.9% compared to 60.2% as a result of promotional activity increases versus the prior year.

Our operating expenses were $81.9 million in the third quarter or 20.9% of net sales compared to $76.5 million or 19.4% of net sales in the same period last year. Excluding Dolce Vita, operating expenses were $78.8 million. The increase as Ed mentioned, resulting from the impact of net 11 new stores for year-to-date 2014. Operating income in the quarter totaled $59.3 million or 15.1% of net sales compared to last year's third quarter operating income of $68.1 million or 17.2% of net sales. Our effective tax rate for the quarter was 35%. Net income for the quarter was $39.2 million or $0.62 per diluted share compared to $44 million or $0.66 per diluted share in third quarter of 2014.

Turning to our balance sheet. As of September 30, 2014, we had $189.5 million in cash and marketable securities and no debt. We ended the quarter with inventory of $103.2 million excluding inventory associated with Dolce Vita inventory totaled $95.4 million compared to $99.7 million in the prior year. Consolidated inventory turn for the last 12 months was 10.6 times versus 10.3 times in the prior year. CapEx in the quarter was $4.7 million, and during the quarter we repurchased 1.1 million shares for approximately $36.1 million, bringing our total repurchases since the beginning of our 2013 to approximately 6 million shares for $203.9 million.

As previously announced, factoring in the recent acquisition of Dolce Vita and current expectations for the remainder of the year for fiscal year 2014, the Company expects that net sales will increase 1% to 2% over net sales in 2013. Diluted EPS for fiscal year 2014 is expected to be in the range of $1.81 to $1.86.

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

Thank you. (Operator Instructions). And we will take our first question from Camilo Lyon with Canaccord Genuity.

Thanks. Good morning guys. Ed, I was hoping you could give us a little color on what is happening right now in the wholesale channel. In previous quarters you guys were gaining share from the smaller less capitalized brands. Is that still the case, or are the department stores constricting some of the open to buy dollars and shifting those open to buy dollars to other categories until demand picks up?

Good morning, Camilo. Yes, I think essentially what has happened is clearly our segment of the market that we play in as we talked about that young trendy space is tough this year. There is really a lack of trends there with the exception of course of sneakers which continue to do very well. And while I think certainly none of our direct competitors are performing better than us, we certainly are not using share to anybody that does the types of footwear that we do. I think we are sort of in line with the department this season. In spring I think our sell-throughs were a little better than the department. I would say right now we are in line to maybe a little bit better, very modestly better though. If we've lost share to anybody it is certainly to the sneaker guys because they have allocated more dollars, the retailers are allocating more dollars to the sneaker players. But in the brown shoe segment or the fashion footwear guys like us, non-sneaker guys, I think we are maintaining share at this point.

Okay. So it is reasonable to think that once the fashion does turn more favorable then you are in a pretty descent position to capitalize on that market share holding or gaining that you have been able to manage?

Yes, we believe so.

Okay. And then can you talk about any divergences or are there any divergences by channel whether it is the department store channel that is outperforming the discount channel or vice versa or anything that is differentiated between the segments you operate in?

At this point it is really something we are seeing across the board that Junior space, that young space is challenged in all tiers of distribution.

Okay. And then just finally on the Dolce Vita. I think it is a breakeven business today when you bought. Can you talk about the magnitude of the EBIT margin opportunity and the pace of improvement in that EBIT margin structure that we can expect to see next year?

Sure. As you point out Dolce Vita at this point is basically breakeven on an annual basis in terms of profitability. We believe that over time we can get this to a 10% EBIT margin business. We are not going to put a timetable on it yet. We are certainly not going to get there in 2015, although we do expect the business to be profitable in 2015. We see quite a lot of opportunities to improve the profitability of that business. Both their gross margins in comparable divisions to those we have at Steve Madden are running significantly below the Steve Madden division. In some cases 800 basis points to 1,000 basis points below, so we think there is a lot we can do to impact that. And we also think that the operating expense structure was a little bloated for the size of the business, so we are working diligently on reducing the operating expenses as well.

Those sound to be more like blocking and tackling initiatives that can fairly quickly turn favorable. Is that the right way to think about it?

I think that is right. Keep in mind the gross margin initiatives in particular are something you aren't going to impact as significantly until fall of 2015.

Got it. I will get back into queue. Thanks, Ed.

We will take our next question from Jay Sole with Morgan Stanley.

Good morning.

Good morning.

I wanted to follow up on Dolce Vita. You talk about some of the ways that margins are going to improve or you can improve the margins there. Can you talk about the integration and the process, can you walk us through the steps you will take to integrate it and how much time of yours is this going to absorb and how you are going to manage the people and the different aspects of that business as you bring it in, in-house?

Sure. The interesting thing about this transaction is that Dolce Vita is a business that has a lot of parallels to our existing business. It is one we know very well. I don't think there's -- there's certainly nothing we have ever done before where there is quite so much knowledge based in-house and transferable skills already here to help them. So I think it fits in pretty well and it is not quite as complicated of an integration as some other transactions might be. The one thing we want to do though is we want to retain what makes Dolce Vita special. And so in terms of the front of the house and by that we mean design and sales, we really want to leave that structure in place. But what we are working on now which is already in place and will be -- is already in motion, excuse me, is integrating the back office structure and making sure we help them with operational efficiencies, some of the things that I think were frankly not their forte and we can impact pretty quickly. So that is already in process. I think by the middle of next year that will be mostly complete and I would say really by fall of 2015 they will be fully on our -- up and running on our platform.

Now does what you have experienced so far in this integration process change the way you think about future acquisitions? Do you feel like the Company has capacity to do this more or is it such a big undertaking that it's really a one-time situation?

No. I think we clearly have the (Inaudible) and the capability to do additional acquisitions if we find the right opportunities.

And is that something you are actively working on or is the strategy to pursue it or seek them out or is it something that is just ad hoc, if it comes up, you will, but if not, that is okay too?

We are actively looking at acquisition. Again we don't feel compelled to do anything unless we think it makes sense, so we are going to continue to be opportunistic. But, yes, we are in constant process of looking at and evaluating additional acquisitions.

All right. Thanks so much.

And we will go next to Kate McShane with Citi Research.

Hi, good morning. It is [Cory Vandergen] on for Kate. I was hoping you guys could talk about the state of your inventory at the wholesale accounts, and have you seen or are you anticipating any cancellation of orders?

I think the inventory in the channel is relatively in line maybe a little high in certain places, but for the most part that has been managed pretty well. In terms of cancellations, I don't think we are going to be -- no, we don't expect to take a lot of cancellations. We have said it is going to be much more challenging to get reorders than we are accustomed to. In some cases we are working with folks if they want to get out of a certain product, cancel it, then we are moving them into something else. In terms of taking cancellation with no replacement, we are not terribly concerned about that.

Okay, great. And then could you talk about any regional difference you might be seeing in either your retail or wholesale business either in the quarter or quarter to date?

We're not seeing real dramatic regional differences. I would say in our retail stores in Q3 for instance California was a relatively better performer. The Midwest and the Mid Atlantic were relatively weaker. But frankly none of the regions were what we would consider satisfactory.

Okay. Thank you.

Thanks, Cory.

We will go next to Erinn Murphy with Piper Jaffray.

Thank you guys and good morning. Just to follow up on the Q4 wholesale kind of reorder pattern. Just as you think about the early challenges you guys have seen so, I mean as you think out as you get into the first quarter and it is typically a sell end quarter are there any ramifications you envision or how are you thinking about that potential sell in quarter given the conversations you are having currently with retailers?

I think that given the challenge that everybody has seen in this space this year and in the fall season so far I do think you have to expect the retailers to be pretty cautious heading into next year. So we are expecting spring orders not to be gangbusters let's put it that way. But so far what we have seen has been relatively encouraging. We are sort of in line with where we were a year ago for spring.

Okay, that is helpful. And then just back on the retail comp for the quarter. Were there any major differences between the month of July, August and September as we look at the negative 7% range?

Yes, actually August and September were weaker than July particularly as we look at it on a two year stacked basis. On a one year comparison they were only modestly weaker, but the comparisons did get easier throughout the quarter and the performance did not improve on a year-over-year basis. So on a two year stack basis we got a little bit weaker as the quarter went.

Okay, that is helpful. Weather has obviously been a little bit of a wild card here. As it started to get a little bit more seasonal are you see any inflexion in your tall shafted boots or your bootie business thus far?

Tall shaft boots overall have been disappointed so far. Booties have performed I would say pretty well. But we were hopeful that tall shaft boots were going to perform a little bit better than they have so far.

That is helpful. And then just the last question for me is I think about a quarter ago as you initially had revised down the guidance it was related to your expectations for the second half of the year being a little bit more promotional from the peer set within accessories. Now that we are in the fall has that played out as planned, or how are you thinking about your accessory business given the environment there?

I think the accessory performance is really right in line with where we expected it to be on the last call.

Okay. So you are not seeing an incrementally promotional from when you had previously intended it to be?

We are not, no.

Okay. That is helpful. Thank you guys.

Thank you.

And we will go next to Ed Yruma with KeyBanc Capital Market.

Hi, good morning. Thanks for taking my question. I guess first Ed, now that you started to see some weakness in wholesale are you seeing any change in posture around mark down money? Are retailers coming back to you for more support given the promotions they have been running?

Yes, we definitely are seeing our mark down allowances as percentage of sales go up and that is something that is baked into our guidance.

Got it. And given that your own comp trends have been kind of weak throughout the balance of the year, obviously malls have had a tough year but is there anything you can do to stimulate traffic or to drive interest into your stores or are you really just subject to weak mall traffic trends?

There are a lot of things we experimenting with in terms of local marketing initiatives and other things. I think the thing we feel pretty strongly about though and it is something we have talked about on a previous call I believe, was increasing the amount of product that is exclusive to the Steve Madden retail stores and Steve Madden e-commerce, so i.e., a product that is not in the wholesale channel. And we have ramped that up pretty dramatically recently and we are going to continue to increase the percentage of our Steve Madden stores that is exclusive that isn't carrying wholesale and we are hopeful that is going to draw some more traffic in to our stores. So far we feel pretty good about the results we are seeing there particularly online.

Got it. My final question, I think you spoke somewhat constructively about the dress category last call. I guess any observations there or any other areas where you are seeing some relative strength? Thanks.

Dress was a category that has been a little bit disappointing for us. We saw that category building throughout the year and I think we expected the momentum to continue to build and it sort of plateau a bit. I still feel like if we have the right dress shoes that it is a category that can be important for us. But it definitely did not perform to expectations in third quarter. In terms of the categories that are relative pockets of strength, number one, of course, is sneakers. We are doing very well with our fashion sneakers. And then booties. Booties are performing pretty well, which we have a headwind in that category because we are going up against the performance of the Troopa last year, which was, as we've said before, sort of a once in a decade kind of item. Excluding Troopa, the bootie performance is pretty good.

Great. Thanks so much.

Thank you.

We will go next to Jeff Van Sinderen with B Riley.

Good morning. Ed, let me ask you this is kind of a tough question but what is your sense of where you think we are in this fashion cycle with the lack of trends to drive your business? Do you think we are somewhere in the middle of it? I guess I'm trying to get a sense of when you think the wholesale business could start to stabilize overall versus easier comparison when your retail comps might kind of hit bottom. Any thoughts there?

I am certainly hopeful that beginning of 2015 we are going to see some improvement. I think that we expect the balance of this year to be challenging. We do feel like we have seen some encouraging signs for spring. Not going to talk specifically about what those trends are for obvious competitive reason. But I think folks in the industry believe there is more newness this spring than there was last spring. There are some things happening in Europe which really haven't taken off in mainstream U.S. yet, but we feel optimistic about. Of course we are delivery a lot of products right now into places like Miami for tests and that will tell us a lot over the next month or two about the things that we want to go after more significantly for spring. But we do feel like there is some more newness in spring. The one caveat I will provide though is that we also expect sneakers to continue to be very good in spring. And while we are doing well in the sneaker category, we have got some very good products in that category and we are going to be expanding the percentage of our assortment devoted to sneakers for spring, we are also cognizant of the fact when that category is good that there are some traditional sneaker companies that pose pretty stiff competition, folks like Converse and Vans. That will probably remain a bit of a headwind in spring.

Okay, understood. And then relevant to sort of the markdowns and the promotional levels that you have been experiencing, I guess I'm trying to get a sense of do you think you have to be sequentially more promotional in Q4? Do you think we are sort of at status quo at this point versus how you were in Q3? Just wondering if you think we are getting that maybe we get to a point where it doesn't get a whole lot worse in terms of markdowns and promotions and so forth and then maybe the comparisons get easier obviously they do get easier as you get into 2015, but how you think about that?

I don't anticipate it getting significantly more promotional than it has been, but it has been promotional. And we all know that in fourth quarter and holiday the pattern over the last few years has been for the market to be very promotional. We expect that to continue. But do I think there is another leg down, no, that is not what we are anticipating.

Okay. Good to hear. Thanks very much and good luck.

Thanks, Jeff.

And we will go next to Scott Krasik with Buckingham Research.

Hi, Ed. How is it going?

Good morning, Scott.

Just one quick one on Dolce Vita. When you gave the original announcement, you said it would be modestly accretive in 2015. Are you more positive or more confident in that, less confident just given the industry and what you have down from an integration perspective as a whole?

I think that is still the right way to look at is, modest accretion for 2015.

Okay. And then just in terms of looking back at the first quarter, I think it is very encouraging that you are seeing sort of a flat order book given that your wholesale footwear sales were up 16% in 1Q last year. How much of that 16% increase was Troopa or lace-up booties that are trending significantly down and that you have to cycle again?

I would say that look in Q1 was not a huge percentage of the business. You are talking about a couple percent of the business.

Okay, that is very good. In terms of pricing, you have taken -- you have that quilted sneaker that is at $59 I think. You have some of the older Ecentrics at that same price. How do you look at pricing for athletic for the spring?

That is one of the challenges that athletic tends to be a lower AUR item. So we feel very good about those products. The velocity of sell-through is excellent on them, but on a relative basis they are somewhat lower AUR compared to the rest of the mix.

Okay. And then sort of longer term, you have given back a couple hundred basis points in wholesale footwear margin absent this cycle. How do you view -- are you building product are your IMU going in at the same or higher than when in 2011, 2012? Can you get back to similar wholesale gross margins once we get a hit or two?

The IMUs are similar. There is a mix difference from the periods you are talking about because the private label did grow over that period. Keep in mind at this point Dolce Vita is mix negative. We are going to hope over time get those margins up inline with our existing business or legacy business. But yes, we do believe there is some gross margin opportunity once the trend environment improves and we have some more meatier trends to capitalize on just by virtue of reducing mark down allowances and some closeouts. Although we have done a pretty good job of keeping the closeouts to a minimum.

Okay. Just lastly now you have your foot in the Women's department so to speak with Dolce Vita. Are you seeing different traffic trends with your better department store customers in Women's versus Junior's, and what do you ascribe that to if so?

Definitely the Women's business is better than the Junior's business overall. Anything that targets a some what more mature customer is performing better. And even if you look at our own portfolio at the sell-throughs, we are seeing better sell-through in brands like Freebird in Steven in Superga which of course is sneakers and has a sort of crossover customer base, those brands tend to be selling through better. And I think that is sort of in line with what is happening in the overall market that the Women's brands are selling better than the Junior's brands.

Do you think that is just because the pure athletic doesn't play as well for them, or they are buying less accessories --

I think for that Junior customer there is not a lot of trend she is excited about other than sneakers, so she is buying a lot of sneakers.

Okay. Thanks and good luck.

We will go next to Mike Richardson with Sidoti.

Good morning. Just a couple of quick ones. First, obviously you guys bought in a couple of licensee over the last year and a half or so. Can you talk about the opportunity to buy an additional licensees going forward and will that be where a lot of the International growth comes from?

We did the first one a couple of years ago with Canada that has been a very successful transaction for us, and now we just signed up Mexico which we expect to close at the beginning of 2015, and we've also entered this joint venture in South Africa. Long-term I do think that is part of the strategy. In the very near term I think we have a lot on our plate with Mexico and South Africa, so the first order of business is to make those transactions successful and that will be our focus over the next year or so. And then we will -- provided those work out, we will look for the next one.

Okay. Just last question, I just wondering been reading a lot about potential delays at the port in L.A. and Long Beach, just wondering if any of your shipments have been impacted by anything going on out there?

Yes, that has been a challenge recently. And it is something that everybody in the industry is dealing with.

Okay, thanks. Best of luck for holiday.

Thanks, Mike.

We will go next to Steve Marotta with CL King & Associates.

Good morning, Ed. Has there been any change in your Company owned comp October to date versus what we saw in the third quarter?

No.

And as it pertains to department store handbag, last time you updated the street, the handbags within the department store channel were very heaved up, were high promotions, they were migrating open to buy dollars away from the category. Has there been any delta there over the last three months either even if it pertains to the channel cleaning up a little bit as opposed to open to buy dollars migrating back in?

I think it definitely -- yes, it has sort oft cleaned up a bit and it has stabilized a bit. If anything we feel incrementally a little bit better about the category than we did three months ago. It is still challenging and we continue to feel very good about our Betsey Johnson brand in that category. They really -- while it has been a declining EBC category in the department stores Betsey Johnson has really been an out performer. I would say probably the best brand in that space in that industry, so we are pleased about that.

That is helpful. And one last question. Is there any reason for investors to believe you would slow down the pace of share repurchases in 2015?

No, remainder of the year I think all things consistent you would expect us to continue on that same pace which has now been $30 million to $35 million a quarter.

In 2015 not just fourth quarter?

We are going to update on 2015 later, but again to Derek's point I think absent anything unforeseen it is likely we will continue.

Great. Very helpful. Thanks so much.

And we will go next to Danielle McCoy with Wunderlich Securities.

Hi, good morning guys. I was wondering if you could just talk about a little what you are seeing in Men's in terms of trends, how the Men's product is doing at your own retail doors and what you guys are seeing at wholesale and if there is any room for expansion there?

Sure. Men's is definitely a bright spot. The trends in the Men's category are a lot better than they are in the Women. Our Men's business in wholesale was up mid singles in Q3 over the prior year. Although frankly, that was a little slower than our pace has been due to timing issues. It should reaccelerate in the fourth quarter. We are still looking at up high teens in the Men's business for the whole year. And we are growing in our retail stores as well, although the growth isn't quite as dramatic as it is in wholesale. That is a category we feel good about. In terms of products, boots have really pick up in that category, the Chukka boots continue to be very good. And we are seeing some improvement in casuals as well, so we are pleased about that. So Men's we feel very good about. Kid's is also something that we feel very good about. It is really Women's that is challenging right now.

Okay. Great. And is there any update on the B by Brian Atwood brand that you can talk about?

Yes, we are pushing B Brian Atwood back to fall of 2015. As you recall we were initially planning on launching for spring. We only get one chance to relaunch the brand and we want it to be just right. And particularly given the sort of challenges in the fashion footwear space right now we felt like we weren't losing a lot to delay, get the product exactly right and launch for fall of 2015.

Okay, great. Thanks guys. Good luck.

Thanks.

And we will go next to Sam Poser with Sterne, Agee.

Hi, it is Ben Shamsian in for Sam. Thanks for taking my call. Given the disappointment in the tall shafted boots, can you talk about your ASPs both in the third quarter and how you see that playing out in the next couple of quarters?

Yes, in ASP in wholesale was up about 1% in Q3. In retail our AURs were down modestly. I think that in retail we expect them to be down again modestly in Q4 and wholesale to be relatively flat.

Great.

I just wanted to highlight on that tall shaft boots are still making up a bigger percentage of the overall mix than they did a year ago just not as quite as strong as we anticipated.

Got it. Okay. I appreciate that. And then you talked about taking in some of the distributors but how about your thoughts on acquisitions such as that of Dolce, anything sort of sizable that you have on your radar screen?

There is nothing to report on that front right now. We continue to look for acquisitions, and we promise you'll be the first to know when we find one.

All right. Thank you very much. Best of luck.

Thanks, Ben.

That concludes today's question-and-answer session. I will turn the conference back over to Mr. Ed Rosenfeld for any closing remarks.

Okay. Thanks very much for joining us for today's call. We look forward to speaking with you on the fourth quarter call. Have a good day.

That concludes today's conference. Thank you for your participation.