掛毯 (TPR) 2015 Q4 法說會逐字稿

Good day and welcome to this Coach conference call. Today's call is being recorded.

At this time, for opening remarks and introductions, I would like to turn the call over to the Global Head of Investor Relations and Corporate Communications at Coach, Andrea Shaw Resnick.

Good morning and thank you for joining us.

With me today to discuss our quarterly and annual results are Victor Luis, Coach's Chief Executive of Officer, and Jane Nielsen, Coach's CFO.

Before begin, we must point out that this conference call will involve certain forward-looking statements, including projections for our business in the current or future quarters of fiscal years. These statements are based upon a number of continuing assumptions. Future results may differ materially from our current expectations based upon a number of important factors, including risks and uncertainties such as expected economic trends or our ability to anticipate consumer preferences, control cost, successfully execute our transformation initiatives, and growth strategies, or ability to achieve intended benefits, cost savings, and synergies from the acquisition.

Please refer to our latest annual report on Form 10-K, our quarterly reports on Form 10-Q for the quarterly periods ended December 27, 2014, and March 28, 2015, and our other filings with the Securities and Exchange Commission, for a complete list of risks and important factors. Please note that historical trends may not be indicative of future performance.

Also, certain financial information and metrics that will be discussed today will be presented on a non-GAAP basis, which you may identify by the terms non-GAAP, as adjusted, constant currency, or excluding transformation-related charges or acquisition costs. You may find the corresponding GAAP financial information or metrics, as well as the related reconciliation on our website www.coach.com/investor.com, and then viewing the earnings release posted today.

Now let me outline the speakers and topics for this conference call. Victor Luis will provide an overall summary of our fourth fiscal quarter and annual 2015 milestones and learnings, and will also discuss our progress on global initiatives. Jane Nielsen will follow with details on financial and operational results for the quarter and year, along with our outlook for FY16.

After that, we will hold a Q&A session where we will be joined by Andre Cohen, President, North America. This Q&A session will end shortly before 9:30 AM. Victor will then conclude with some brief summary comments.

I'd now like to turn the call over to Victor Luis, Coach's CEO.

Good morning. Thank you, Andrea, and welcome, everyone.

As noted in our press release, we are pleased with our fourth-quarter and full-year progress on the comprehensive plan we laid out a year ago to reinvigorate our business and brand. Our execution of these strategic initiatives and resulting performance has been consistent with our expectations, and underscores our confidence in the path we've chosen.

As we moved through FY15, we drove sequential improvement in our North America bricks-and-mortar business, while dramatically reducing the number of promotional impressions in the marketplace against the backdrop of heightened promotional activity. In addition, our international businesses posted moderate growth on a constant currency basis, highlighted by a double-digit increase in Europe and strong growth in China, where sales approached $600 million. Sales growth in China was driven entirely by the mainland, as Hong Kong and Macau continued to experience traffic declines from a decrease in PRC tourists.

We also took an important step in becoming a multi-brand Company with the acquisition of Stuart Weitzman, which will be an additional growth driver for the Company. As noted previously, we will develop each brand separately. Over the long term, we will learn from each other, driving synergies across our respective businesses.

Specifically, we will leverage Coach's international infrastructure and expertise in handbags and accessories to develop Stuart White's handbag and accessories business. And in turn, Coach will benefit from the Stuart Weitzman expertise in footwear development, where they are proven leaders in fashion and fit.

Though early days, we've been pleased with Stuart Weitzman's integration into the Coach Inc family, leveraging our shared core brand equities and common values. Similar to Coach, it is brand built on offering innovation, relevance, and value to a loyal customer base and is known for its craftsmanship and quality.

Now as has been our recent practice, I would like to share some of the actions we've taken to build momentum across our three key brand pillars of product, stores, and marketing, as well as our updated learnings. Starting with product: overall in FY15, we successfully re-platformed our offering with the introduction of Stuart Vevers product across all geographies, channels, and categories. This new product is innovative and authentic to Coach, and we are pleased with the reaction from both existing and new customers to Stuart's first seasons. In addition, through our successful Fashion Week presentations, we've started to engage in a rich dialogue with the fashion community, driving awareness, relevance, and credibility.

More specifically, Stuart Vevers's designs represented virtually all of our retail stores women's offering during the fourth quarter, led by our key Swagger family, which we expanded to include new colors and shapes and the recent launch of the carryall silhouette. The Swagger family is distinctively Coach, leveraging our signature, iconic turnlock hardware. We reaffirmed that fashion, when supported by marketing, drives high sell-throughs.

This has been the case with great success we've experienced with Swagger, and more recently, with our turnlock tie rucksack, which was the featured style worn by Chloe Grace Moretz in our spring ad campaign, and arrived in stores in June, significantly exceeding expectations. We were particularly pleased with the performance of some of our playful disruptive offerings, such as our Snoopy collection, which garnered global attention in social media and fashion press alike, driving engagement and traffic to stores.

In our outlet stores globally, Stuart's impact has expanded, with his product representing about half of our outlet stores women's assortment during the fourth quarter. Generally, our fashion-inspired product has been well received by outlet consumers, which speaks to the halo that retail is providing to the overall brand. A great example of this success is our Badlands print program, which has had higher-than-expected sell-throughs. We know our outlet consumer is fashionable, yet value conscious, and we are designing products for this customer that reinforces our overall brand aesthetic and modern luxury positioning.

In June, we presented our men's 2016 line at London Collection: Men's, and we are delighted with the presence from fashion influences in the editorial community, building on the positive buzz that was generated from our first show in January. And in September, we will have our first true runway show at New York Fashion Week, featuring the initial collection of our anniversary year, delivering in February 2016.

On stores, as you know, this year we launched and began the initial rollout of a new modern luxury store concept across retail and outlet channels globally. This design, which takes inspiration from our New York heritage, is compelling, warm, and inviting, differentiating us from the white glass and chrome boxes of our past that are now pervasive in the marketplace. This store concept is a key element of our transformation strategy, aimed at changing brand perception, and we have been thrilled with the performance of our renovated and new stores in this format where customer response has been positive, particularly in North America, where results have been ahead of internal projections.

More specifically, during the quarter, we renovated 84 stores globally, bringing the total to 108 for FY15. In North America, we had 66 renovations: 52 retail, including 45 full renovations and 7 light-touch warm-ups, as well as 14 outlets, consistent with our plan. In addition, we opened 26 new stores during the fourth quarter in the modern luxury concept for total of 42 for the year, including a handful in North America. Therefore, at year end, we had a total of 150 stores globally in the new design, 80 in international and 70 in North America, representing about 15% of our directly operated store base.

In North America, the 45 fully renovated retail stores generated positive comps in aggregate in the fourth quarter, representing a significant inflection in trends post-renovation and out-performance versus the balance of retail stores. Generally, the sales improvement has been driven by a lift in traffic, while conversion and ticket comps also outpaced the balance of chain. In outlet, though very early days with nearly all renovations occurring in late June, we've seen a significant improvement compared to the balance of fleet in the period post-renovation.

Internationally, we are also very pleased with the performance of our modern luxury doors, which similar to North America, are outperforming the balance of locations. We are encouraged by the results we are seeing we are seeing across geographies and channels in both new and renovated locations.

Moving forward, we are accelerating our modern luxury store opening and renovation plans for FY16, and expect to complete about 60 renovations in North America and about 100 internationally, including the projects that shifted from FY15, as previously announced. In addition, we expect to open 60 to 70 new stores during the year; therefore, by the end of FY16, we would expect roughly 40% of our store base to be in the modern luxury concept.

We are also pleased to share that as part of our global flagship strategy, in addition to our previously announced Paris location, we are finalizing negotiations for a store on Fifth Avenue to open in calendar 2016. Our intention is to create a true Coach House, celebrating Coach's heritage and history of craftsmanship. With a Bespoke facade and modern luxury interior, it will provide an appropriate showcase for the full expression of our women's and men's collections, including bags, small leather goods, footwear, and ready-to-wear, in addition to offering a full range of customization and leather services.

In addition, based on our learnings in North America, we will no longer be doing light-touch warm-ups, as we found that these changes are not disruptive enough to drive a true inflection. Importantly, we have identified opportunities to cost-engineer more extensive renovations for a cost not much greater than the warm-ups.

As you know, the second part of our two-prong store strategy is fleet optimization. For the year, in keeping with our plan, we closed 75 North American retail locations. In addition, we closed 14 outlet stores, including 11 men's-only outlet locations, which we folded into existing stores, leveraging the team and cross-shopping opportunity. And as noted in our previous calls, in January, we closed two outlet stores identified as part of our learning agenda, which I will discuss in more detail later during the call.

In North American department stores, we completed 300 case line to open sell conversions, in line with our plan, which has enhanced the shopping experience and elevated brand presentation in this channel. We also introduced a shop manager program in the wholesale channel, hiring approximately 30 shop managers in FY15. This is below our goal of 50 for the year, as we are maximizing the program's effectiveness on an individual location basis; therefore, some of the hires have shifted into FY16.

Importantly, moving forward, we are taking the learnings from our successful renovations in directly operated stores and are using them to inform the development of the modern luxury concept for our North America wholesale channel. We expect to renovate over 50 doors in this new format in FY16. On the marketing front, during the year and in keeping with our strategy, we made significant strides in building positive impressions, amplifying our brand voice across platforms, while at the same time, dramatically reducing promotional messages in the marketplace.

Starting with our comprehensive marketing strategy, during the fourth quarter, we continued to build and our Dreamers campaign, featuring Chloe Grace Moretz and Kid Cudi, which complemented our fashion campaign from the prior quarter. We expanded our social media presence in Q4, launching on two new social channels: Snapchat and Line, a major platform in Japan and other Asian markets. Both new platforms allow us to reach new audiences with unique content. We've also seen increasing engagements on existing social platforms, such as Instagram, where follower growth increased over 65% and engagement rose over 100% from the third quarter.

We were amongst the first brands to periscope our men's spring presentation at London Collection: Men's, coupled with other social media amplification, driving 4 times the impression that we saw from our fall presentation in the prior half. Most recently, in June, we began to launch our #Coachpups campaign, which featured celebrity dogs with new Coach bags photographed by the iconic Stephen Mizell. As of last week, the campaign has generated over 1 billion impressions globally, including the most successful film launch to date on YouTube.

In June, we hosted our unique 2015 Summer Party on the High Line, celebrating the creative energy of New York City and our Company support of the High Line, driving significant social buzz on Instagram and Twitter. Finally on marketing, in celebration of our New York roots and heritage in glove tanned leather, we launched a partnership as the official luxury accessories brand of the New York Yankees to further drive brand awareness amongst male consumers. Marketing activities include in-stadium advertising, events, and player initiatives.

On the customer experience front, as we enter into the new fiscal year, we are very pleased with the progress that we have made in elevating our overall store customer experience. While we have long been known for great customer service, our elevated modern luxury approach provides our sales associates with the tools needed to enhance meaningful and authentic customer relationships, driven through knowledge and clienteling. In addition, in the next couple of months, we will introduce a new modern luxury uniform to our sales associates globally, signaling them as trusted brand ambassadors. We will also introduce a craftsmanship bar in select stores globally, providing monogramming and bag treatment services.

And as we increased our positive brand impressions, we've also pulled back our North American promotional activity. Consistent with our previously announced strategy, during the fourth quarter, we reduced the cadence of invitation-only EOS flash sales from three a week last year to about two a month this quarter. This is consistent with the prior quarter and our goal to be down to about two events per month by the end of the fiscal year. In addition, and as previously announced, we held our summer semiannual sale event, which began around Memorial Day and ended shortly after July 4th. This was as planned and allowed us to take advantage of the higher traffic during these holidays.

Also in keeping with our plan, there were no Coach Day events in North American department stores during the fourth quarter, as compared to an average of approximately 30 days across wholesale accounts in the fourth quarter of 2014. And as a result of these efforts, we have seen progress with consumers. Our annual North America brand tracking survey fielded in late May and June showed an improvement among the broad premium market that Coach is perceived as less promotional, while our brand affinities are strong overall. So while we understand this is a journey, we are pleased with all that we have accomplished this past year and will continue to update you on these initiatives as we move forward.

Turning now to a discussion of global category trends. Overall for the year, we estimate that growth in the North American premium women's market, excluding moderate brands with an average handbag price point below $100, grew at a mid-single-digit rates, approaching $12 billion, as bags and accessories continue to represent a growing portion of her wardrobing spend. The premium men's market in North America demonstrated solid growth, also rising at a mid-single-digit pace to over $1 billion. Therefore, the combined North American premium women's and men's market rose at about 6% in FY15 to approximately $13 billion, with Coach representing a combined market share of about 17%.

Before moving on, I did want to touch on some recent category trends. During the fourth quarter and specifically in the month of June, by our estimation, we did see a further moderation in category growth from the March quarter's mid-single-digit rate. Growth was primarily impacted by a slowdown among some top players. Importantly, against this backdrop, Coach's sales of women's bags and accessories, while still negative, actually improved sequentially in North America.

Moving forward, we have long said and history shows that times of inflection in the category in North America and globally have been driven by innovation and differentiation. Simply put, consumers are looking to be inspired and delighted, and our transformation is focused on doing just that, creating desires through differentiation, great quality products that our consumers covet, and building brand residents by sharing our rich and unique brand story.

We continue to believe that there is no better place to be in fashion than handbags and accessories, with long-term growth potential in both developed and developing markets, and have tremendous confidence in our team's proven ability to execute our vision globally. Therefore, while category trends may continue to be volatile in North America and globally in the near term, due in part to changing tourist flows and currency movements, especially the US dollar and the euro, we are focused on capitalizing on the opportunity in front of us.

More specifically, we remain confident in our ability to drive continued improvement in our business, with a return to positive comps in North America by the end of FY16. And of course, as a lifestyle and multi-brand Company, we also participate in categories outside of women's bags and accessories. We have consistently referred to men's as a growth driver for Coach, and I've already mentioned some of our initiatives to raise awareness through our global fashion presentations and collaborations. In FY15, as expected, our global men's business was approximately $700 million and represented 17% of Coach brand sales.

We continue to be bullish about the prospects for our global men's category and are continuing to target $1 billion in sales in calendar 2017. We also remain focused on building Coach Inc's market share, within the fragmented $27-billion global premium footwear category, which is growing at a mid-single-digit pace.

Looking ahead, we see significant growth opportunities for the Stuart Weitzman and Coach brands. For context, Coach and the Stuart Weitzman brands combined so approximately $800 million in global women's footwear sales at retail today, representing approximately 4% of the global premium women's $18-billion category, and 8% of the $7 billion North American women's premium footwear category.

While Jane will provide additional details on sales in both FY15 and FY16 distribution by geography, I did want to touch on some current trends and strategies by market. Starting with North America, as you read in our release, for both the quarter and year, our total sales in North America were down 20%, impacted by our deliberate actions to curtail promotions and elevate brand perception. For the quarter, in aggregate and as planned, our total store comp was down at negative 10% in Q4, with higher ticket offset by a decline in traffic, which was hurt in part by the overall weak mall trends, as well as lower conversion.

Our total comp was pressured an additional 9 points by EOS, as we pulled back from three flash sales events a week in last year's fourth quarter to about two events a month, in line with the third quarter and plan. Looking at results sequentially, both average transaction size and conversion comp improved, driving the comp uptick in our bricks-and-mortar stores, as elevated fashion and compelling novelty styles drove improved handbag performance.

I know many of you are also interested to hear an update on the impact of the 75 retail store closures on revenue, and in turn, sales transfer to the existing fleet. As a reminder and as noted in our Analyst Day presentation last June and on our calls, these were the least productive stores in our fleet, so their impact to overall revenues and operating income is very small. Similarly, the sales transfer and impact to comp in those markets where other retail stores were present was also expected to be small.

Since January, when the bulk of these stores closed, the results have been inconsistent across markets. In some cases, such as Miami, Southern California, and North, Texas, we have seen a lift, notably in traffic. In other areas, such as Chicago and Georgia, we haven't seen any noticeable change yet, though we will continue to monitor overall results moving forward.

As mentioned, we also closed 11 men's outlet stores, which were successfully folded into women's locations in the same malls, as well as 2 core outlet stores as part of our learning agenda, originally discussed at our Analyst Day last year. As a reminder, these closures were executed to better understand the crossover between outlet and retail stores.

To provide additional detail, we chose one store that was largely a tourist destination and one that had a higher penetration of local customers who primarily shop at this location. Consistent with our expectation, customers shopping in the tourist store had a return rate that was similar to the balance of outlet stores, meaning these customers did return to other Coach outlet stores. However, in the case of the local store, we saw a customer return rate that was about half the balance of chain, meaning these customers did not transfer to other Coach outlet stores. These results are consistent with our early findings and our expectations.

We continue to see customers remain dedicated to their preferred channel, and if we close the customer's primary outlet store, we simply lose a substantial portion of the business. Of course, we will continue to analyze shopping behaviors over a longer time period to see if these early takeaways remains valid.

Now, drilling down a bit more and our retail performance and the metrics we traditionally share, the above $400 price bucket continued to grow in penetration, saw another positive comp on the sales and unit basis, and represented nearly 30% of handbag sales versus just over 20% last year. Leather continued to outpace logo across all channels, and we are designing into this trend. It is both a shift that favors Coach long term, giving our heritage in leather goods, and elevates our impressions in the marketplace.

In the fourth quarter, logo across all categories represented less than 5% of retail sales, and in outlet, logo was roughly one-third of sales, down year over year in both channels. And as expected, we continued to see relative out performance in the 12 MSAs in North America where we are most focused and where we are distorting our attention.

As you know, over the last 15 months, we have changed our approach to customer events in the retail channel, moving to a semi-annual open sale model, while significantly reducing the number of targeted or closed customer events focused on our best customers, formerly known as PCEs. As a result of these strategic changes, the number of days and dollars associated with promotion decreased significantly on a year-over-year basis in FY15. In terms of learning, we have found that our semi-annual open sales have served as a recruitment vehicle for new customers.

As result, in FY16, we plan to test two short-duration open sale events over key periods, such as Black Friday, with the intent of attracting new retail customers. At the same time, we plan to adjust the cadence and further reduce our closed targeted customer events to two a year, the next of which is scheduled to begin this September. Importantly, we continue to evolve and optimize the timing and type of events. Our goal is to further reduce the number of days on promotion in our retail channel in FY16.

Moving on to international. Most generally and similarly to North America, we are distorting our focus in developed markets towards maximizing productivity. We are taking a portfolio approach to our store base, investing in our best locations where we will see the biggest return and culling where appropriate. While in developing markets we are continuing to open stores, taking advantage of the real estate opportunities. In all markets, we are increasing marketing and investment in the modern luxury store experience, using such elements as craftsmanship bars to underscore our heritage and history of authenticity.

In China, consistent with what we and other brands have reported throughout the year, we are seeing significant volatility in results. Hong Kong and Macau continue to be impacted by the dramatic slowdown in inbound tourist traffic, notably from the mainland. As noted, our business declined there in the fourth quarter and we expected continued pressure in the near term. On the mainland, we continue to see strong results driven by both distribution and comp.

Despite some macro slowdown, we remain optimistic on the prospects of this market over time, as the long-term drivers we've consistently mentioned remain intact. As shared, we met our greater China goal for FY15 at nearly $595 million, and are targeting modest sale gains in FY16 of about 5%, similar to our growth in the fourth quarter to about $625 million, reflecting the current market conditions.

It is important to note that we do see the Chinese tourist as an increasingly large part of our business globally, and we have experienced strengthening in Chinese tourist spending and provide -- in other locations. We are staffing into this trend, increasing the number of Mandarin-speaking associates in geographies such as Japan and Europe.

Japan remains a mature market, and we are distorting investment to our high-profile Tokyo location stores and flagships while optimizing our fleet. Our constant currency sales increase in the fourth quarter reflected the anniversarying of the consumption tax increase and the rise in mainland Chinese tourists, as I mentioned. The response to our new modern luxury stores from the Chinese -- from the Japanese has been positive, seen most notably in conversion in these locations.

In Europe, our brand is growing rapidly. We generated significant double-digit sales growth in the quarter and year, driven both by distribution and comp, and met our target of $90 million in sales for FY15. We continue to believe that Europe represents a significant long-term opportunity for Coach, with domestic shoppers and the international tourist, notably in key European cities where the affordable luxury segment is outperforming traditional luxury.

We have taken a dual-pronged approach to the region, growing our directly operated store base in key European capitals and rapidly growing our brand through wholesale distribution, both department stores and multi-band locations to raise awareness with the local consumer. We are especially excited about the opening of our first Paris flagship on Rue Saint-Honore this fall. Overall, we expect that FY16 will be another year of very strong growth, with sales growing to about $125 million. Over our planning horizon, our goal is to achieve over a half a billion in sales at retail, representing a mid-single-digit share of the premium men's and women's bag and accessory market.

In our other directly operated Asian markets outside of China and Japan, namely South Korea, Taiwan, Singapore, and Malaysia, which total over $200 million, our sales gains in aggregate have been modest, impacting by changing tourist flows, partially in response to country-specific issues, with MERS in Korea having a significant impact in the fourth quarter. Here, to, we are focused on driving productivity through our transformation initiatives.

Looking ahead, we are excited about our FY16 product introductions, which are focused on two primary initiatives, taking product learnings from FY15. First, resetting essentials, our core assortment. The Turnlock Tote, available in cross-grain leather at a compelling $295 price point, incorporates customer feedback around the tax veto of fall 2014, by adding function and distinctive Coach elements differentiating it from the competitive set. Stanton, which arrived in July, an everyday chic carryall with the effortless style of downtown New York street it was named for, and expanding and updating our Edie family with additional sizes, including the Edie 31 and Edie 28, and in a new color palette.

We are finding our learnings from last year. During the holiday quarter specifically, our goal is to be bold -- to be a bolder destination for gifting, with a balanced assortment and broader offering at opening price points, incorporating seasonal fashion elements, such as shearling and shine.

Second, we shall further develop our fashion families. Building on the success of Swagger, we are further animating the success of this silhouette with color-block and patchwork options and new shapes throughout the year. We are adding Mercer for spring, a new satchel offered in two sizes with a downtown attitude. And we are bringing in newness with Ace and Nomad, which were features of our fall of 2015 New York Fashion Week presentation. Both silhouettes, offered in glove tanned leather, speak to our history.

We are also looking forward to celebrating Coach's 75th anniversary in 2016, where we will fuse our brand heritage and legacy of craftsmanship with product innovation to reinforce our positioning as the original American house of leather. Without giving too much away, through this year-long celebration, you can expect a series of brands and product campaigns and events in support of our reimaged iconic products, whimsical play concepts, and Coach as a fashion-relevant lifestyle brand. Activities kick off this September, where we will present our collection of calendar 2016 at our first ever full runway show during New York Fashion Week

Now I will turn it over to Jane for details on our financial results and guidance for the years ahead. Jane?

Thank you, Victor.

Following Victor's overview of the highlights of the quarter and the year, as well as our transformation progress and learnings, I would just like to add that one year in, we are very much on track from an investment and restructuring perspective. We have taken the majority of our total expected transformation-related charges over the last five quarters, totaling about $275 million, including right-sizing our inventory levels.

We expect to incur the balance of these charges, around $50 million by the end of FY16, primarily related to global store closures and organization effectiveness, bringing the total multi-year charge to about $325 million. We have invested in replatforming our stores and wholesale doors, so the timing of some projects has moved from FY15 into FY16, as we have noted previously. We have been able to cost-engineer our new modern luxury concept, enabling us to do more extensive renovations at a lower overall cost. Therefore, we now expect to spend about $450 million to renovate our global fleet, down from previous guidance of $570 million.

We have realized cost savings in our initiatives around restructuring and organization efficiency sooner than we expected, achieving about $100 million in FY15, and expect an incremental $50 million in FY16, for an annualized rate of $150 million. And we have exceeded our -- we have exceeded the financial targets we set out for the Coach brand for the full year on a non-GAAP constant currency basis.

As you may remember, we expected to land FY15 at a low double-digit decline in revenues on a constant currency basis, and for the Coach brand, sales were down 12% for the year on this basis. Four North American comps, we originally expected store sales to be down high teens, given the pull back in promotion, with a significant reduction in e-outlet, or EOS events, pressuring comp by an additional 10 points, yielding an aggregate of down in the high 20s.

For FY15, store comps were down 15%, with sequential improvement each quarter, while total comps declined 22%. We targeted a gross margin of 69% to 70% for the Coach brand for the year, and came in at 69.7% on a non-GAAP basis. We targeted growth of low to mid-single digits in SG&A dollars for the Coach brand, but were actually down 1% on a non-GAAP basis, in part, due to lower occupancy and depreciation expenses related to renovation and flagship store timing, the benefit of the stronger dollar, and the realization of cost savings faster than anticipated. And we guided to a high teens operating margin, which actualized at a non-GAAP rate of 18.9% for the Coach brand.

Finally, we originally expected CapEx to total about $350 million to $400 million, excluding our headquarter spent in FY15, and actualized at about $200 million with some shift into FY16, primarily associated with project timing, including some key flagship locations. Consistent with this shift, in total, our distribution growth for the year was flat across all channels and geographies.

Similarly, our fourth-quarter performance for the Coach brand was in line with expectations, shared in our April call and in keeping with our annual guidance on a non-GAAP basis. For the Coach brand, our quarterly revenues declined 15% with North America down 20% and international down 5%. On a constant currency basis, Coach brand revenues decreased 12% overall, with North America sales down 19% and international sales up 3%, reflecting the impact of the strong dollar, notably on the Canadian dollar and the yen.

Our gross margin for the Coach brand was 69.5% in the fourth quarter on a non-GAAP basis. The year-over-year increase in gross margin in Q4 was due to channel mix, driven by international sales outpacing North America, as well as a significant decline in disposition sales, partially offset by a negative production variance impact as expected.

SG&A expenses as a percent of net sales totaled 56.4% compared to 49% in the year-ago quarter, all on a non-GAAP basis. Therefore, taken together, the Coach brand and non-GAAP operating margin was 12.7% in Q4. And on the Coach Inc non-GAAP basis, the acquisition of Stuart Weitzman in early May contributed $45 million -- $43 million to fourth-quarter and full-year revenue.

Therefore, on a consolidated Coach Inc basis, sales declined 12% for the quarter, or 8% in constant currency, and declined 13% for the year, or 11% in constant currency. Excluding transformation-related charges and acquisition cost, Coach Inc net income for the quarter totaled $85 million, with earnings per diluted share of $0.31. Stuart Weitzman contributed $3 million and $0.01 to the quarter.

Now turning to GAAP metrics, during the fourth quarter of FY15, we recorded charges of $66 million under our multi-year transformation plan. These charges consisted primarily of accelerated depreciation for renovations, lease termination costs related to store closures, and organizational efficiency costs. In addition, we recorded costs of approximately $21 million associated with the acquisition of Stuart Weitzman. These actions taken together increased the SG&A expense by about $83 million and cost of sales by about $5 million, negatively impacting net income by $73 million after tax, or about $0.21 per diluted share in the fourth quarter.

As a reminder, during the fourth quarter of FY14, we recorded charges of approximately $130 million for transformation and other related actions. These charges consisted primarily of the realignment of inventory, impairment charges, and a portion of the cost related to store closures.

In aggregate, these actions increased our COGS by $82 million and SG&A expenses by $49 million in the period, negatively impacting net income by $88 million after tax, or $0.31 per diluted share. Therefore, including these charges, reported net income for the fourth quarter of FY15 totaled $12 million, with earnings per diluted share of $0.04, bringing the total year net income to $402 million and earnings per diluted share of $1.45. This compares to FY14 fourth-quarter net income of $75 million, with earnings per diluted share of $0.27, which brought the total year FY14 net income to $781 million and earnings per share of $2.79 on a GAAP basis.

Now taking a deeper dive into the drivers of our fourth-quarter and full-year sales by geography, including distribution growth and starting with our domestic businesses. As you read in our release, our FY15 sales in North America decreased 20%. North American direct sales also declined 20% for the years, with comps down 22%, including the impact of reduced e-outlet events, which pressured total comps by 7 percentage points. At POS, sales in North American department stores declined about 20% from prior year, while shipments into this channel also declined similarly, as planned.

For the fourth quarter, North American sales fell 20%; comparable store sales decreased 19%, reflecting a 10% decline in-store comps with an additional 9 percentage point of pressure from the decrease in EOS events. At POS, sales in North American department stores declined at mid-20%s versus prior year, as expected, reflecting the elimination of Coach-specific promotional events from the prior year, while shipments into department stores declined somewhat less.

During the fourth quarter, we closed 19 North America retail stores, taking us to a net closure of 74 retail stores for the year. We also closed 1 and opened 4 outlet stores in the fourth quarter, taking us to a net closure total of 3 for the year, with 14 closures and 11 openings. We expanded a total of 6 stores during the year, 2 retail stores and 4 outlets. In total, our square footage in North America declined 6% for the year.

In FY16, we would expect to close an additional 10 to 15 more retail stores, as well as fold our 3 remaining men's retail stores into existing locations. We also expect to close a few outlet stores on a net basis. Taken together, with a number of relocations and expansions, we expect our directly operated Coach brand square footage in North America to be essentially unchanged in FY16. On the North America department store front, we opened about 20 new doors for the year, taking us to about 975 locations. In FY16, we expect to convert for most of the remaining 200 case lines, as well as opening 10 additional doors.

Moving to China, in FY15, our sales approached $595 million, up about 9% from prior year and in line with our guidance. Our fourth-quarter sales rose 5%, with strong growth on the mainland more than offsetting weak results in Hong Kong and Macau. During the fourth quarter, we opened a total of 7 new stores, all on the mainland, and closed 1 in Hong Kong.

For the full year, as expected, we opened 21 new locations but closed only 3 locations, for a total of 18 net new locations, taking us to 171 in total. Some of the targeted closures have moved into FY16. Our square footage grew 22% for the year. In FY16, we expect to open about 20 to 25 new locations, closing about 5 to 10, with square footage growth of about 12% to 15%.

In Japan, sales for the year were down mid-single digit on a constant currency basis, as expected, impacted by the overhang of the April 2014 consumption tax increase. On a dollar basis, sales declined 17%, reflecting the weaker yen. For the fourth quarter, sales in Japan rose 2% in constant yen, as we anniversaried the tax increase in saw increased tourist flows from the mainland Chinese, while sales in dollars declined 15%. We have had a net decline of two locations in Japan for FY15 and for the fourth quarter, but a 1% increase in square footage, given the opening of the Shinjuku flagship.

In FY16, we will focus on our modern luxury renovations, notably in stores in and around Tokyo. At the same time, we expect to close about 5 to 10 net locations, as we take a portfolio approach to optimizing our store base. In total, our square footage should decline 5% to 10% for the year.

In Europe, sales rose nearly 50% to $90 million for FY14 -- FY15, excuse me, while fourth-quarter sales were up sharply, as well. During the fourth quarter, we added 3 directly operated locations, taking us to 34 for the year. We also added over 100 wholesale locations during the year, taking us to over 200. In FY16, we expect to open 5 to 10 directly operated stores, for square footage growth of 40%. In addition, we plan to expand the number of both wholesale and multi-brand locations.

For our directly operated businesses in Asia, outside of China and Japan, sales rose slightly on a local currency and declined slightly in dollars for the year. During the fourth quarter, sales were essentially flat in local currency and declined at a mid-single-digit rate in dollars, impacted by the MERS outbreak and related slowdown in tourist traffic in Korea. During the fourth quarter, we opened 1 location, taking us to 5 net new openings for the year and ending FY15 with 102 locations in Korea, Malaysia, Singapore, and Taiwan.

As noted previously, we are focused on developing our current store bases in these countries and don't expect additional openings or square footage growth. Taken together, in FY16, we would expect our global brand for print for Coach across channels and geographies to be up low single digits in square footage.

Moving on to the balance sheet. Inventory levels at quarter end were $485 million, including $33 million of inventory associated with the acquisition of Stuart Weitzman. This compared to ending inventory of $526 million for the Coach brand in FY14. Therefore, inventory declined 8% on a Coach Inc consolidated basis and declined 14% for the Coach brand, in line with sales.

Cash and short-term investments stood at $1.5 billion, as compared with $869 million a year ago. Given our debt issuance in the third quarter and the subsequent closure of the acquisition during the quarter, our total borrowings outstanding were approximately $900 million at the end of the fiscal year. As previously shared, we expect to use these proceeds to cover our working capital needs, in light of investments in our business, and the new corporate headquarters.

As noted in our press release, the Board declared a quarterly cash dividend of $0.3375 per common share, payable in late September, maintaining our annual rate of $1.35. We remain strongly committed to our dividend, and as our transformation takes hold, we expect to resume increasing our dividend at least in line with net income growth. Net cash from operating activities in the fourth quarter was $186 million compared to $316 million last year during Q4. Free cash flow in the fourth quarter was an inflow of $111 million versus $254 million in the same period last year.

Our CapEx spending was $75 million versus $62 million in the same quarter a year ago. For the FY15, net cash from operating activities was $937 million compared to $985 million a year ago. Free cash flow in the FY15 was an inflow of $738 million versus $766 million in the FY14. CapEx spending totaled $199 million for the year, compared to $220 million in the prior year. The decline from previous guidance related to the shift in timing of retail store and wholesale remodels and openings into FY16 and related vendor payments.

Turning now to our financial outlook for the Coach brand, on a standalone 52-week basis in FY16, which we included in our press release. First, on Coach brand sales, we still expect to deliver a low single-digit increase in constant currency in FY16. Based on current exchange rates, currency headwinds are expected to have an approximate 200-basis-point negative impact on annual revenue growth, disproportionately impacting the first half, and most notably, the first quarter.

We are projecting a low single-digit aggregate comp decline in North America, with EOS pressuring comp in the first half, as we continue to run about two events a month versus 13 events in last year's first quarter and 10 events in last year's second quarter. As previously noted, we would expect comp to improve throughout the year, with the most significant inflection occurring in 2Q, driven by product innovation, renovated modern luxury stores, and our 75th anniversary marketing initiatives. We expect to reach positive comps in the fourth quarter.

Gross margin is expected to be in the area of 70% on a constant currency basis, with negative foreign currency expected to impact gross margin by 80 to 100 basis points. SG&A expenses net of savings are expected to grow at a mid-single-digit rate in constant currency, somewhat less in dollars, and ahead of sales, reflective of our increased marketing spend, transformation initiatives, and a higher occupancy and depreciation expense related to store renovation and flagship project timing shift from FY15 to FY16.

We continue to expect at least $50 million in incremental cost savings from our transformation and restructuring initiatives. When modeling the year, keep in mind SG&A expenses are expected to grow faster in the first half, driven by investments in marketing spend associated with the 75th anniversary and partially -- and in part, offset by currency. Taken together, we would expect operating margin to be in the mid to high teens. Interest expense for the year is expected to be in the range of $30 million to $35 million.

And finally, our tax rate is expected to be in the area of 28% for the year. We expect our rate to be lower in FY16, primarily attributable to geographic mix of earnings, the anticipated closure of certain audits, the expiration of statutes in the FY16, and the ongoing benefit of available foreign tax credits.

In addition, we are forecasting Stuart Weitzman brand sales in the area of $335 million on a dollar basis for FY16, an increase of about 10% from FY15 driving Coach Inc consolidated revenue growth of high single digits and adding about $0.09 to earnings per diluted share, excluding financing, transaction costs, and short-term purchase accounting adjustments.

It should be noted that Stuart Weitzman's gross margin is well below Coach brand, and as is the Company's operating margin. Over time, we believe there is an opportunity to drive both higher as we increase efficiencies and drive international expansion.

As a reminder, FY16 will include a 53rd week, which is expected to contribute about $75 million to $80 million in incremental revenue and $0.06 in earnings per diluted share. We expect CapEx for FY16 for Coach Inc to be in the area of $300 million, excluding the capital cost associated with the new headquarters, which are now expected to be approximately $185 million in FY16.

Over the next few years, our first priority is to continue to invest in our business, as we have a compelling opportunity to drive sustainable growth and value creation and we're putting our capital against this opportunity. Our second priority, strategic acquisitions, is also about growth. While we have nothing planned imminently, we want to have the flexibility to act if and when it is in the best interest of Coach and our shareholders.

Third, capital returns: as I've stated before, as our transformation takes hold, we expect to resume growing our dividend at least in line with net income growth. Underpinning all three, all of these priorities, our guard rails for allocating capital effectively are maintaining strategic flexibility, strong liquidity, and access to capital markets.

In closing, our transformation requires substantial investment and focused execution. We have a clear strategy and a well-articulated implementation plan for FY16, building on the early successes we saw in FY15. We expect to realize a positive impact on the top line in constant currency, beginning in FY16, with FY17 being the year we return to growth across the financials, leveraging top-line growth that we expect to be in line with the category at least a mid-single-digit rate, and driving operating margin to the 20% area.

We have the resources to fund our plan, while maintaining our dividend during our heavy investment period. Ultimately, our objective is to drive operating income dollar growth and restore Coach to a place of best-in-class profitability, which reflecting the changing market dynamics, will now likely be in the mid to high 20s given the required SG&A investments in marketing, customer experience, and stores in the more competitive.

I would now like to open it up to Q&A.

(Operator Instructions)

Please not also, that we will go obviously beyond the 9:30 timeframe in order to give analysts and investors a chance to answer questions. Operator, you may open the call up now.

Bob Drbul, Nomura

Hi, good morning.

Good morning, Bob.

Good morning, Bob.

I just had a couple questions. The first one is when you consider the moderation in the North American bag and accessory category growth, driven by the deceleration you mentioned among major players, do you think this presents a challenge or an opportunity for Coach? Bob, in the short answer, it's is clearly an opportunity. What we're seeing, of course, in the short term is an overhand in the luxury market that is being driven by the macro issues and the extreme exchange rate volatility that we've discussed that is obviously impacting tourist flows. But we also do strongly believe that the consumer is simply waiting for more innovation. And clearly, there's an opportunity for Coach to drive market share and category growth by driving innovation in the marketplace and providing relevant brand experience, as we have in the past. I had the pleasure of driving our business in Japan in what was a very mature market where we grew by taking market share. So this is not a new experience for us.

We have long said, and history shows, that times of inflection in our category and in North America and indeed globally are driven by innovation and, simply put, consumers are looking to be inspired and delighted. And our transformation is very focused on doing just that: creating desire through innovative products, differentiated experiences that our customers are looking for and covet. And we strongly believe that at the end of the day, there is no better place in the fashion space to be than the handbag and accessory space. And with great execution, the traffic team that we have, we remain confident in our ability to drive positive comps by the end of FY16. Great. If I could just ask a follow-up. When you reiterated this morning, I think the return to positive comps, return to growth in the fourth quarter and the return to growth in FY17, when you look at all the noise in the marketplace and all the noise in the category, is there one or two main factors that continue to provide your confidence in this return to growth?

For me, it really comes down to, Bob, as I mentioned, our ability to execute and all of the investment that we are putting behind our transformation and our confidence in our strategy. It really comes down to, first and foremost as we mentioned, the inflection that we are seeing in these 45 doors here in North America. We have 150, or approximately 15%, of our global fleet now in the new concept. By the end of this fiscal year, we will have closer to 40% of the fleet. And we're really excited about the programs that we have ahead of us through product, through marketing, as we celebrate our 75th anniversary, kicking off from September.

Great, thank you very much. Good luck.

Thank you.

Joan Payson, Barclays.

Hi, good morning, everyone.

Good morning.

Good morning.

Victor, I think you mentioned a positive consumer response to the new products that you put into those North American factory stores. Could you just provide a little more color on what you have been seeing in the outlets really? Any change in traffic or ticket trends?

Sure, I will ask Andre to step in and provide some context on that. As I did mention, just to highlight, approximately 50% of the SKUs now in our outlet channel are new designs from Stuart. Andre?

Yes, good morning. We've basically seen an increase in average ticket in factory over the last few quarters, which are we are pleased wit. A lot of it driven by Stuart's new product, which has been outperforming compared to the balance of our assortment. We have seen storytelling work really well in outlet. So collections such as Badlands, which we launched in April/May, did terrifically. It was about 100% above our expectations, above our plans, sold through completely. So where we've taken [our bets] in terms of more innovative products, more design, more make in the product, it's really resonated with consumers.

Great, thank you.

Anna Andreeva, Oppenheimer.

Hi, good morning. It's Janet Lynn on for Anna. Congratulations on seeing sequential improvement in the business.

Thank you.

So we were hoping with the category be more choppy in June, if you had been seeing more consistent performance in July? And what kind of category growth you have embedded for 2016 guidance?

Overall, as we stated in our notes, we're looking at category growth into the medium term of mid-single digits. We remain confident in that 5% to 6% range. In terms of July, we're very consistent with the guidance that we have just given, so no real change.

Okay. And one quick follow-up to Jane on the FX impact. Could we expect those to be more translational or transactional? And looking to 2017, should we expect the headwind to continue in the out-year if rates stay at current levels?

Well certainly the impact on revenue is translational. There is some impact in -- that we called out in gross margin that relates to our hedging activities and impacts largely related to inventories.

Great, thank you so much.

David Schick, Stifel.

Hi, good morning.

Good morning.

Thank you. Just to put it together, you talked about the category incrementally worsening of late, but your business having a little more traction of June. How should we put those two together? What are the things -- obviously there's been a little more time with the retouched stores. But if you could just put together what you think is impacting your relative delta for June. And then second as a second question, how should we think about net advertising expense around the 75th anniversary for the year?

Sure. First, in terms of the first part of your question, David, there isn't really one thing. We have been very consistent in sharing the fact that we believe it is really all of the multitude of actions that we are taking around product, around our stores, and around our marketing, whether it be traditional print or recent activities around social media and across channels, not just specific to any one channel. We have been very consistent about that and trying to be as focused as possible in these 12 major North American markets so that we can drive towards an inflection point for the total brand. Obviously, look, the clearest sign that we have of our strategy, is as we mentioned during our notes and have been very consistent with, we couldn't be happier with the doors that we've renovated. We are doing everything possible to move ahead at a further and quicker pace with those. What we've done in the last six months with 150 locations new and renovated is pretty unprecedented in our space globally for a luxury brand. So pleased with that, and by the end of this fiscal year, we will have another 40 -- about 40%.

In terms of the investment in marketing, we are going to increase our marketing spend by another $25 million has been a plan this fiscal year, and we're very focused on that. And it will be across a multitude of different areas from, of course, investments in our fashion show to the follow-up work across social media, and as well, of course, everything related to what we're doing in partnerships and events, especially with Coach backstage and music and the like to drive relevance across different consumer groups.

David, just to add, just in aggregate over the last two years, we are very much in line with the guidance we put out, which was a $50-million increase by the end of FY16 in total advertising. You will see it in our release this year, and then we expect to continue next year.

To be clear, in total marketing, which will be a mixture of advertising, social media, events, and the like.

Thank you.

Erinn Murphy, Piper Jaffray.

Great, thank you, good morning. I'm sorry if I missed this, but could you just help us bridge the gap between how you've guided FY16 with that FY17 operating margin guidance I think you gave at the analyst day. I think you said 20% to 25%. I'm assuming it gets a little bit lower than that, just given the broader category issues of late. But just any context around that bridge would be very helpful.

That's right, so right now, we are guiding for FY17 in the range of 20%. It is a little bit of tightening based on the category dynamics.

Okay, great, thank you. And then just a quick follow-up on just the June overall category growth, recognizing it was slow, particularly in the June quarter -- June month, excuse me. But was the overall category, was it flat to low single, low to mid-single? Just any context around what that category grew, just given, it sounds like some of your competitors have a little bit more of a tough time of late, that would be helpful, thank you.

We don't provide it for the month. We're really looking at, obviously, results where we're taking it from public sources, as well as our internal panel, and in general, as we said we had a slowdown from the previous quarter, mid-single to low single digits for the quarter.

Okay --

We also know, Erinn, as reported by the Shopper Track, the market intelligent comp actually showed weakening in mall traffic in the month of June too. That was one of our inputs when we looked at the overall category.

Okay, thank you, Andrea, that's helpful.

(Operator Instructions)

Michael Binetti, UBS.

Good morning, guys. Congratulations on some of the improvements in the quarter. Victor, could you clarify for us some comments on the renovated stores? Is your conversion in the renovated stores outpacing expectations at this point? I know you highlighted a traffic inflect, but I didn't quite understand the comment on conversion being better.

Good morning, Michael. So conversion improved sequentially across the entire chain, and particularly so in the renovated stores. Overall, it has been a mixed bag of metrics improvements in the renovated stores. Traffic has been the most consistent one, but we've see improvements in virtually every renovated store. Next is average ticket that's improved also disproportionately. Conversion has been mixed; in some cases it's been up, it other cases not. But overall, all metrics have moved positively in these 45 renovated stores.

Okay. Then would you mind commenting on the June trend? I'm trying to sort out whether there was a shift in sales in June from moving the semiannual sale.

We have the semi-annual sale, Michael, as you'll remember, in both June and we were you were not speaking only about us; we were talking about the overall category. And as I referenced, as well as weaker traffic into malls in the month of June. Obviously, there were a lot of reports of other companies yet to come for us to provide a better analysis of what specifically happened in June. But again, we did call out what we believe is a deceleration. I know a number of the other analysts on the call have also put out in their research and their [handbag] results.

Okay. Is there any way you can help us think about -- I know you gave us some of the cadence with the inflection, Jane, in the second quarter in the comp. Is there anyway you can help us think about the trend in the first quarter and put some during dimensions around the inflection in a second quarter and through the year? Thank you.

I think Michael, what I will say is as we come out of -- we expect the most significant inflection to be in the second quarter. We will have a significant -- we'll have an increase in our modern luxury door renovations. You'll see our new product flows, as well as 75th anniversary marketing initiatives. So as you're thinking about comp, the most significant inflection comes in Q2. But really we're thinking about it as a sequential progression through the year, getting to positive in that fourth quarter in North America. And it is probably worth noting, obviously our 1Q comp guidance, our overall guidance for the trend over the year does incorporate what we are seeing in the market most recently in the June numbers. Can I also ask, I won't wait for the operator to do this, that you limit yourself to one question. Thank you.

Matthew Boss, JPMorgan Chase.

Good morning, guys. Thinking longer term with the slowing in the (inaudible) rate here currently, is there any way to think about any signs of stabilization? And then, are you seeing any changes in the promotional cadence across the landscape, as a result of some of the slower growth?

I think there's been a lot of comment, Matthew, in the markets about just the promotional environment in general, whether it be in department stores, the full price malls, or the outlet channel having picked up across various categories, not just handbags and accessories, but fashion in general. And certainly what we are seeing go forward in terms of how to think about a stabilization in the category, as I mentioned, I think there's two or three things here. There's first and foremost, the macro trends that we're seeing, and especially in the luxury sector. Handbags and accessories we know are very much driven as well by tourists in major markets. So I think that that is one key impact that we will see. And then secondly, it's going to be innovation. It is going to be brands coming forward and driving relevance and creating desire within, obviously, the various consumer segments. We are very focused on that with what we are doing, and really looking forward to obviously driving forward with both our product and marketing and store initiatives in the months and quarters ahead.

Just quick clarification, is the 28% tax rate this year, is that sustainable beyond this year? Or how should we think about it?

We see it as our go-forward tax rate for the period of our planning horizon.

Okay, great. Best of luck, guys.

Thank you.

Oliver Chen, Cowen and Company.

Hi, thank you. Congratulations on the solid innovation we are seeing. In our checks, we are noticing that you're couponing less in outlets, and you've also done a great job value engineering into high-quality product at compelling prices. Should we expect to continue to see no couponing in the outlet channel? And on the modern luxury renovation, as you have been experiencing these nice lifts in traffic, is that because of the store displays? I'm curious about linking that to the positive -- the window displays.

We try to focus more on our outlet channel as a brand-building channel, as we believe it is. It's got a distinct consumer who doesn't really shop across channels, and that's resulted in some more experimenting with different promotional strategy. Overall, our discount rates have reduced in outlets over the past few months. And it's a mix of what we call variable pricing, so no couponing and focusing on different price points and discount rates within the store, and the occasional couponing to drive -- to surprise consumers and drive incremental sales. So that's one part of it. The other piece is going back to my earlier comments that we are trying to market in a more deliberate way to that consumer, so we have been focusing on specific windows in outlet, and really trying to deliver more value through improved product, more storytelling, delivering a higher customer experience within our stores as well.

Oliver, I would say that just as you look at that, that really reflects what we are continuing to call for in terms of our gross margin outlook, which is really investing in the product, investing in higher quality, balanced by pull back in promotion with the FX being a toggle over time. But continued benefit to gross margin of our international growth.

Oliver, to your question I think specifically on the traffic and the modern luxury doors, which is across channels, not just the outlet, part of the answer would be, as you suggest of course, the window program which we are really pleased with, helps to differentiate us. But also in general, what we hear from our sales associates is just word of mouth, as consumers come in and experience the location, sharing it with others, and driving increased interest in the location and in the brand.

Thank you all, that concludes our Q&A. I will now turn it over to Victor Luis for concluding remarks, Victor.

Thank you, Andrea. I just want to close by thanking you all again for joining us. With the first year of our transformation fully behind us, I certainly could not be prouder of our team. The continued commitment and courage they are demonstrating in executing our plans. We have a unique opportunity, a brand with a unique heritage, as America's original house of leather, and we fully plan to leverage that as we celebrate our 75 years as a brand by taking a very bold step forward to finding a modern Coach with our first full runway presentation this September.

In addition, with the acquisition of the Stuart Weitzman brand, I believe that as a Company, we are much better positioned to capitalize on the growth outside of handbags and accessories. In short, we are committed to our strategies. We're going to be steadfast in our investments that we've outlined behind our products, stores, and marketing as we drive growth and relevance for both our brands over the long term. We have a firm belief that we will return to best-in-class, and we look forward in the months and quarters ahead to sharing our 75th anniversary with you. Thank you all.

This does conclude the Coach earnings conference. We thank you for your participation.