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コーチ (COH) 2017Q2 カンファレンスコール

                          f:id:stockbh:20170221123225p:plain

 Coach,Inc. (NYSE:COH)  Q2 2017 Earnings Conference Call

January 31, 2017 8:30 am ET

 

Executives

Christina Colone - Senior Director, Investor Relations

Victor Luis - CEO

 

Andre Cohen - President, North America and Global Marketing

Andrea Resnick - Interim CFO

 

Analysts

Robert Drbul - Guggenheim Securities

Ike Boruchow - Wells Fargo Securities

David Schick - Consumer Edge Research

Erinn Murphy - Piper Jaffray

Oliver Chen - Cowen & Co.

Anna Andreeva - Oppenheimer

Michael Binetti - UBS Securities

Mark Altschwager - Robert W. Baird

Brian Tunick - Royal Bank of Canada

 

 

〇 Victor Luis (CEO)

・ホリデーシーズンでは全てのセグメントで売上成長した

・とりわけ北米既存店売上の成長がポイント

・今後はヨーロッパや中国本土でも積極展開していく

・NYとロンドンで、コーチ・ハウスの旗艦店を出店

・モダンラグジュアリーとクラフツマンシップの融合を目指す

・Q2では2桁の利益成長

・スチュワート・ワイツマンも良かった(直営も卸しも良好、上半期も二桁売上成長、通期でも二桁売上成長を見込む)

・コーチブランドの改革も引き続き継続していく

・歌手のセレーナ・ゴメスと提携

・新CFOとして Kevin Wills

・新設した chief marketing officerとして Carlos Becil

・二年前からの改革の成果:モダンファッションデザインハウス、ヘリテージギフト、男女ともに向けたギフトストラテジー、伝統的レザーと新しいデザインとの融合

・新ライン Coach 1941

・アウトレットでの業績も良かった

・アウトレット限定のパックマンコラボ

・アウトレットの熊プリント商品

・男性向けは、アウトレットでの売り上げの20%を、男性向けが占めるように目標をたてる

・計46店舗の改装と新規出店

・年度末までに700店舗の改装、新規出店を目指す

・店内でのエクスペリエンスの革新

・ホリデーシーズンのmystery shopper scoresが、昨年度比で75%から85%に改善

・イニシャル刻印のモノグラミングサービス、レザーコンディショニングサービスも好評

・Kuala Lumpur Pavilion flagship in Malaysia、first flagship in Milan, Italyの出店

・北米で1941スタイルを新規出店する

・北米で旧スタイルの250店舗(販売区画)の削減(25%の削減)を計画し実行中で、すでに120店舗を閉鎖済み

・レザーを軸にしたモダンデザインとの融合

・セール(events)を減らしたことより、安売り(promotional)していると認知される率が低下

・レザーとアクセサリーのスペシャリティブランドから、真のファッションデザインハウスへの変革の途中

・今回のホリデーシーズンでの、全体での北米のプレミアムバッグ・アクセサリー売上は、フラットか数パーセントの上昇にとどまるであろう。デパートでの販売不振に影響されているからだ。

 

〇 Andre Cohen

・北米のコーチブランドの売上は 2% 上昇(店舗閉鎖分の影響も含めて)

・直営店は 5% の上昇

・これで北米では3Q連続で、前年度比を上回っている。

・北米で小売店での売り上げは4%アップした。

トラフィックはわずかにダウンしている。

・Eコマースで、ブランド価値回復のためセールを減らした影響で、全体では3%の売り上げ増となっている。

・外国人旅行者よりも、国内の顧客によるギフト需要が存在感を増している。

・1941ラインの売り上げが、主要店のハンドバッグ売り上げの3分の1を占めるようになってきたが、計画どおりだ

 ・ハンドバッグで$400以上の商品がの販売比率が 50% を越えてきた。去年は30%であった。これにより、売り上げと単価で前年比で好調を維持している。

・小売りでの各カテゴリーを通じた gifting assortment も好調(アイコンである Dinky bag at $295などなど)

・ブラック・フライデーでもセール(events marketing)を行ったが、1941ラインはほぼセール除外とした。

・次に winter sale.3月にはクローズドなイベントを開催予定

・通年でギフト需要を取り込めるように、ラインアップの見直し、ストア体験の改革を継続していく。

・ディズニーコラボ

 

〇 Victor Luis

・インターナショナル・コーチブランド全体の売り上げは3%増

・中国本土は米ドル換算で横ばい、既存店売上高は6%アップ

・香港、マカオでは大きく改善

・日本では米ドル換算で9%アップも、コンスタント通貨ベース(現地通貨ベース)では、2%の減少

・中国観光客の爆買いの反動によるもの

・ヨーロッパでは2ケタ成長している。新規開店と既存店の両方が好調

・とりわけ通貨安の恩恵をうけるイギリスでは好調

・パリでは旅行客の減少により苦戦している。

・日本と中国以外のアジア地域では、韓国で苦戦しているものの、その他の地域ではそれなりに良好

 

〇 Andrea Resnick(財務担当)

・セールスが好調にもかかわらず、グロスマージンが改善した。

・純利益でも二桁成長した。北米で卸を絞り込み、また強いドルによる逆風があったにもかかわらずだ。

・BSは強固だ。

・Coach, Inc.'s 全体のの売上はQ2では $1.32 billion( 4% 増)including a positive impact of 40 basis points related to currency translation

・セールの取りやめと不採算店の閉鎖で、今Qで100 basis points 売上マイナス要因となった。

・Coach ブランドでの売り上げは約 2%増だった。

・スチュアートワイツマンの売り上げは 26% 増であった。

・連結粗利益は $906 millionで、前年同Q比で 6% アップである。

・連結粗利率が 110 basis points 改善し、68.8%となった。

・Coachブランドの粗利は 4% 増加し、粗利率は 130 basis points 改善し 69% となった。その中の0.3%増の部分は通貨要因による

・北米での粗利も改善した、直営店では粗利と粗利率も改善した。

・インターナショナルでは、粗利がドルベースでも、現地通貨ベースでも前年比で改善した。

・Stuart Weitzmanブランドは、粗利が 26% アップした。粗利率は横ばい。

 

・全体のSG&A expenses は 7% 増えて、$612 million となった。

・それが売り上げの中に占める比率は、46.3% であり、前年の 45.1% から上昇してしまっている。為替の影響と、スチュワートワイツマンへの投資の影響によるものだ。前年度比でマーケティングにもコストをかけたことも影響している。

Coach brand SG&A expenses increased 4% and represented 46.5% of sales compared to 45.4% in the year ago period. Stuart Weitzman brand SG&A expenses were $53 million compared to $38 million a year ago due to an increase in store occupancy costs associated with new openings, the timing of marketing expenses as well as the company's strategic investments in team and infrastructure.

Coach, Inc. operating income rose 3% to $294 million while operating margin was 22.3% essentially even with prior year’s 22.4%. Coach brand operating income increased 3% while operating margin increased 20 basis points over prior year to 22.5%. Stuart Weitzman brand operating income was $23 million or 19.8% of sales versus $22 million or 23.6% of sales in the prior year, reflecting key investments to support long term multi category growth as discussed.

Net interest expense was $5 million in the quarter as compared to $6 million in the year ago period. Total net income for the quarter increased 12% to $211 million with earnings per diluted share of $0.75, up 11% versus prior year.

Now moving to global distribution. In total we opened a net of eight Coach brand locations globally in the second quarter to end the period with 960 directly operated locations worldwide. In addition we opened five net Stuart Weitzman directly operated stores to the end the quarter with 82 locations. In FY’17 we continue to expect our Coach brand directly operated square footage to grow low single digits globally. This guidance assumes that Coach brand directly operated square footage in North America will decline slightly with net store closures in both our retail and outlet channels. Internationally we expect a mid single digit increase in square footage led by significant growth in Europe and a mid single digit increase in mainland China, partially offset by a low double digit square footage decline in Japan, as well as a modest unit decrease in Hong Kong and Macau. In our other directly operated businesses in Asia, we expect a little change in both unit and square footage.

Finally, turning to Stuart Weitzman distribution. Year-to-date we've opened a total of seven net new locations and do not expect any additional openings for the balance of the fiscal year.

Moving on, net cash from operating activities in the second quarter was $366 million compared to $302 million the prior year. Our CapEx spending was $54 million in Q2 versus $106 million last year. Free cash flow in the quarter was an inflow of $312 million versus $196 million in the same period last year. As expected during the quarter we received approximately $125 million in net proceeds related to the sale of our previous headquarter buildings.

Inventory levels at quarter end were $465 million compared to an ending inventory of $438 million a year ago. At the end of the fiscal quarter, cash and short term investments stood at $1.8 billion as compared to $1.3 billion a year ago.

Our total borrowings outstanding were approximately $600 million at the end of the fiscal second quarter compared to approximately $900 million a year ago, reflecting the pay-down of our term loan in the first quarter as previously discussed.

Turning to our capital allocation policy, which has not changed. Our first priority is to continue to invest in our brands 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 there is nothing imminent, we want to have the flexibility to act if and when it's in the best interest of Coach Inc. and our shareholders.

And, third, capital returns. We are committed to our dividend, expect our dividend to grow at least in line with prior year’s operational net income growth as our transformation gains further momentum.

As always, underpinning all of these priorities are our guardrails for allocating capital effectively, maintaining strategic flexibility, strong liquidity and access to the capital markets.

Now turning to our outlook for fiscal 2017 on a non-GAAP 52-week versus 52-week basis. We are maintaining our operational outlook for FY’17 while adjusting our revenue guidance based solely on current exchange rates. As you know our previous fiscal 2017 revenue guidance was for an increase of low to mid single digits, including an expected benefit from foreign currency of approximately 100 to 150 basis points. Given the significant strengthening of the U.S. dollar we are now projecting revenue to increase at a low single digit rate including an expected negative impact from foreign currency of 50 basis points for the full year, therefore representing a 150 to 200 basis point swing from previous guidance. This implies that currency will pressure top line results by over 100 basis points in the second half of the fiscal year based on current exchange rates.

This guidance continues to assume a positive low single digit comp for the Coach brand in North America for the year and in each quarter. We also continue to project double digit revenue growth for Stuart Weitzman for the year.

As an aside for you modelers out there, while we're projecting overall low single digit revenue growth in the second half of the year, we're forecasting topline variability by quarter. Specifically our nominal revenue is expected to decline in the third quarter based on: first, the negative currency impact of about 100 basis points; second, calendar shift in North America, including the later timing of Easter which falls into the fourth quarter this year versus the third quarter last year; third, our strategic North America wholesale initiatives with a continued reduction in promotions and the next tranche of door closures planned for 3Q; and finally, an expected shift in Coach international wholesale shipment timing from the third quarter into the fourth quarter based on our visibility into second half orders. Offsetting this, we're projecting strong topline growth in Q4 benefiting in part from those identified calendar and shipment timing shifts and despite an expected negative impact from currency of over 200 basis points.

Most importantly we are maintaining our operating margin forecast for Coach Inc., of between 18.5% and 19% for fiscal 2017. This guidance incorporates the negative impact of both Stuart Weitzman and the strategic decision to elevate the Coach brand’s positioning in the North American wholesale channel.

We continue to expect interest expense to be in the area of $25 million for the year. The full year of fiscal 2017 tax rate is now projected at about 26% with a significantly lower tax rate forecasted in 3Q versus 4Q consistent with our typical cadence based on the anticipated of expiration of statutes in the third quarter. And we expect our average weighted diluted shares outstanding for the year to be in the area of 283 million.

So taken together we're still projecting double digit growth in both net income and earnings per share for the fiscal year and we continue to expect CapEx for Coach Inc. to be in the area of $325 million.

 

 

Q&Aセッション

Q① Robert Drbul(Guggenheim Securities.)

北米での今Qのチャンネル毎の比較と、Q3Q4のガイダンスについて

 

Victor Luis

北米では直販チャンネルは好調だ。マージンも増えている。Q1では売上2%増だったが、Q2では売上4%増に増えている。Coach 1941 のモダンラグジュアリーというコンセプトも好評だ。アウトレットでも、デザインチームがいい仕事をしている。

 

Andrea Resnick

In terms of our third versus fourth quarter guidance, I think the first thing I'd point out is we maintained our operational outlook for the year, including the expectation of a low single digit North America comps in both 3Q and 4Q. Obviously as we discussed we expect some variability between the quarters along with pressure from FX in the second half.

In the third quarter, as I enumerated our top line is being negatively affected by a number of timing items, including the shift of Easter into the fourth quarter as well as our international wholesale shipments which in turn are being driven by the change in our delivery to better match the fashion calendar. In addition, while not a comp impact our third quarter of last year ‘16 included the post-Christmas week. This year, due to the calendar shift that fell into 2Q and will not be included in 3Q. Of course in North America wholesale we're closing that next tranche of doors to get us over to 250 this quarter and in the fourth quarter where we started to pull back last year will begin to anniversary that impact of those strategic actions, so less of an impact on the year over year basis. Therefore projecting very strong topline growth in Q4 benefiting in part from these calendar and shipment timing shifts and despite a negative impact from currency which will -- if current rates hold, impact us by about 200 basis points, so a very strong fourth quarter.

 

Q②  Ike Boruchow(Wells Fargo)

Good morning everyone. Congrats on a nice quarter. So just taking a step back focusing on the Coach brand’s profitability. So I imagine high 60s gross margins are probably not planned to move much higher from here over time. So I just kind of wanted to ask a big picture, where you see the Coach brand margin longer term and kind of how do we get there -- I don't think anyone expects 30% margins again. But how high is high today and I'm just asking because you deleveraged SG&A this quarter and I think you did in Q1 as well within the Coach segment. And I'm just wondering how you're planning out the investments needed to drive the top line of the Coach brand versus your goal of taking the operating margins higher over time?

 

Andrea Resnick

Sure, sure. I think you're absolutely right there. In terms of gross margin, when you look back to 2014 when we originally gave our guidance we absolutely assumed that our gross margin would stay in 69% 70% ex-currency impact. And the real question is, at the time was the SG&A leverage and as we said as we try to positive comps, we’ll will begin to overall leverage that SG&A spend which we absolutely accept that. I think since 2014, the necessity to invest in our brand, higher overall occupancy costs etc for all brands, has probably brought down the upper end of that best in class profitability. But we're still focused on driving our profitability from these levels. We're very comfortable with it. We've shown the ability to lever as we would see the top line growth. So we do expect our operating margin to continue to move higher from here and we're very comfortable with that guidance.

 

Q③

〇   David Schick(Consumer Edge Research)

house of fashion design, you’ve done less distribution, you’re having great success at the higher price points. I guess what I am trying to say is your vision for Coach in 2020 and beyond, there is a lot of street focus constantly on the category, should we think less about the category and more about your core competencies of what you are doing across categories? How should we think about that, not margin but what Coach is now really great at and how that drives the long term future?

 

〇 Victor Luis

Yeah, well, obviously we're really great in our core category and that will remain a core competency going forward, David. We don't see ourselves becoming an apparel play, if you will. Obviously we've also talked about layering on other categories and we've made a very important acquisition in Stuart Weitzman, that has made us a very significant player both here in the U.S. and increasingly internationally in footwear. We're going to be leveraging that know-how of course for the Coach brand as well, especially as we take back our license later this calendar year and begin both the development design and production of shoes in house to have footwear become an increasingly important part of the Coach brand go forward.

As well, we do see outerwear as an area of growth for us. If you look at what we're doing with all of our runway shows and anything that you see within our stores you will see that outerwear plays a very important part of our apparel play, if you will, of what we're doing in terms of giving context to the Coach woman and the Coach man much more so than I would say a standard tops and bottoms T shirt and jeans type of business. We're not interested in getting into a basics business. So those three categories combined represent an $80 billion global opportunity and today at $4.5 billion, we obviously have a very small stake in that and so within both the Stuart Weitzman brand where you will see us add with our new creative director, handbag business and then within the Coach brand as we add footwear and outerwear you will see us take an increasingly large share of those three pieces of the pie.

 

Q④ Erinn Murphy(Piper Jaffray)

Good morning. You guys as you’ve elevated the brand, can you talk a little bit more about what you're finding about the consumer who have been purchasing that 1941 collection? And then I think you said that you'd be introducing this spring a Rogue at $695, I think it's a little bit of a sharper price point than you've seen in the balance about Rogue collection, but who do you view as the incremental consumer there? Thanks.

 

〇 Andre Cohen

Sure. So we’re really seeing two groups of consumers responding to 1941. The first one, as we expected, is new consumers who hadn't really connected with the brand in the past and who find that they’re sort of more fashion forward, a bit understated aesthetic 1941 really works for them. But what was more surprising for is is that we’re finding a lot of lapse consumers returning to the brand because -- consumers who lapsed in our sort of logo heyday who were coming back because of the leather -- on the leather static of 1941. So that was, I’d say, a positive surprise for us.

In terms of price points, really 1941 stretches from $295 for a Dinky back which has been one of our top sellers especially across the holidays all the way up to $1500 for a Rogue bag in exotics. So we don't see it as being purely a high high price point collection, it doesn't drive the above $400 comp clearly but it's not just that, it spreads across a wide range.

 

 

Q⑤ Oliver Chen(Cowen & Co)

Hi congratulates on really solid results. Victor, we had a question regarding the long term path and strategic acquisitions. What are your thoughts about Coach in the future in terms of being a multi brand modern luxury house? You've done a great job but sort of I am just curious about your general thoughts around that framework, and on the gross margin line which is very impressive, what should we model or think about going forward in terms of the Coach brand gross margin it was really impressive this quarter? Just curious about some more details of the drivers. Thank you.

 

〇 Victor Luis

Sure. Andrea will answer the gross margin question in a minute. In terms of how we think of Coach and go forward, I believe that before the Stuart Weitzman acquisition we've been clear that we see Coach Inc. being larger than just the Coach brand. Obviously we've made our very first and significant acquisition with Stuart Weitzman, we're really pleased with the results there. The team has done an amazing job, we’re continuing to drive that business and obviously we have continued to invest both in managements and into design talents and I'm very excited about the opportunity for Stuart Weitzman and I would say before thinking about the larger vision beyond those two brands that our team is very focused on executing in our core business and organic business and doing a terrific job and driving both the transformation of the Coach brand as well as in driving the Stuart Weitzman brand which we see moving beyond footwear into handbags and accessories player as well in the years ahead.

So as we think about acquisitions beyond Stuart Weitzman, Oliver, we've been very very consistent for years now in terms of our capital allocation strategy. Obviously we've been very excited about thinking of the three categories as I touched upon earlier that we believe are the closest to us and the most branded in the fashion space, handbags and accessories, footwear and outerwear especially and that would be obviously part of our consideration set, we're not interested in turnaround plays, we're very interested in brands that are great brands and that growth potential where we can leverage both our skill set, our structure, our systems, our infrastructure, supply chain and know how that we have in helping great brands develop global.

 

〇 Andrea Resnick

In terms the Coach brand gross margin in the second quarter which was up 130 basis points including about 30 basis points from currency. We once again had a benefit from channel mix in there. Probably the most significant was the ongoing lower product costs which were somewhat offset but not completely offset by our ability to pass that along to lower prices to our customers, the product cost a big positive impact forward. As we move forward through the balance of the year we would expect in the second half for our gross margin for the Coach brand continue to be expanding on a year over year basis most notably in the third quarter. Again we would expect channel mix to actually be in a slightly really bigger benefit in the third quarter, ongoing benefit from product costs as well as the end of the day continued source margin expansion for the close poach brands in the second have notably in third quarter.

 

Q⑥ Anna Andreeva(Oppenheimer)

Great thanks so much. And congrats guys on that navigating the environment really well. A question was on remodels and the outlet channel, specifically I think you had mentioned that the recent ROI was better than when they initially. Can you maybe provide some color on that? How many stores have been remodeled currently and how should we think about the opportunity down the road and then secondly just quickly the flash sale impact moderated this past quarter. How do we think about that headwind going forward?

 

〇Andre Cohen

Sure. Good morning. So we mentioned I think last call we've been doing research both through our consumer insights group and field teams to try and understand how consumers react to this new remodel. There are few actions we took based on those findings, a few months ago that is starting to pay off where we are seeing improved results, so larger rooms, not so much segmentation within the stores, more tables to make the products more accessible. We've got a new findings we are now acting on, particularly that’s a signage in the stores, more visible Windows that are being implemented as we speak. And we've seen strong performance actually, these outlets are more luxury remodels. Overall we’ve remodeled so far 69.

 

〇Victor Luis

In terms of the flash sales -- our EOS impact as we call it internally are e-outlet store which is as you call the flash sales model, the impact in the second quarter was really a slight bump versus previous performance of around Black Friday, gifting in general. Overall as we have stated in the past we are not actively recruiting new consumers into the database, we’re only mailing those who shop within our outlet channel. And so I would again expect the database to continue to shrink and its performance to consume shrink as well.

 

 

Q⑦ Michael Binetti(UBS Securities)

Hey guys, good morning, great quarter. I think your answer is, I was hoping over from another call. But I just want to get a little bit more -- a little more detail on the margin outlook. I mean I think you guys have done a really nice job of helping us think about the longer term outlook as I look through your Power Point from 2014 here. So a lot of that thinking was obviously at a time when the category is growing a lot faster. So I guess we know that prior peaks for your business aren't the best North star for models on the operating margin opportunity but we've talked about the opportunity for the brand to return to mid twenty's over time. And Andrea, I think you just said it was chime in that, the best in class number that you gave at the Analyst Day changed a little bit. Given what you know about the category and your growth rates today, is mid-20s still an appropriate rate to think about over the next few years? And if so, what do you think are the biggest sources of leverage is at the top line trajectory we see today?

 

〇Andrea Resnick

Michael, I think I gave that answer to Ike I but I don't mind this is happening later year. I think the biggest point of leverage is obviously the returns to positive growth and positive comp. And so you've already seen that come through in our results, we backed to continue to come through in our results. Our target has always assumed continued sales growth for Coach, stable gross margins and leverage in expenses. While we're going to continue to invest in our business and those items really haven't changed. And that's what we're going to maintain going forward and you've seen that leverages come through already. So I think the path -- the trajectory remains positive and as I already mentioned to Ike.

 

Q⑧ Mark Altschwager(Robert W. Baird)

Good morning and thanks for taking the question. I was hoping you could provide a bit more detail on your current growth outlook for China. It's encouraging to hear the pressure has eased in Hong Kong, Macau. So I guess what inning are you in with right sizing your footprint in that region and do you have a view on when it can return to growth? And then looking at the mainland just any current thoughts on where the store fleet stands today and how you're thinking about balancing brick and mortar versus digital growth longer term, just, what is the growth algorithm we should think about for mainland China medium to longer term? Thank you.

 

〇 Victor Luis

Yes, there may be some confusion because you mentioned return to growth, we've been growing very strongly in China since we took that business back in 2008, I believe it was, and have grown it from what was approximately a $30 million business to over $600 million today. Team has done an amazing job in driving our distribution there. Today we're at approximately across Greater China which would include Hong Kong, Macau and mainland China, 191 doors, we have 172 doors in China, still very much opportunity for growth in second and third tier cities. As you may know, China has approximately 200 or more cities with a population of a million or more and given more accessible price points we believe we're going to be seeing continued opportunity for us to develop distribution beyond what the traditional luxury brands have and have tremendous opportunity of course to continue to grow within same stores there as the middle class continues to evolve in that markets and as we continue to see of course the population urbanizing. So the long term story within mainland China is very very exciting indeed.

In terms of Hong Kong and Macau we've seen a much better performance over the last quarter. And that is very a significant for us, it's a very important market of course especially for PRC tourists and it's been 18 to 24 months since we saw the first protests from Occupy Central and I think all of us in retail and luxury retail especially are very happy to see that market’s stabilized and hopefully in the future become a source of growth.

 

 

Q⑨ Brian Tunick(Royal Bank of Canada)

Pretty tough environment. I guess wanted to hear more about the factory channel perspective, did you guys feel like the holiday overall was more promotional in the factory channel when you looked at your competition? Can you maybe talk about from a product perspective what percentage today is Stuart design and the halo, you've talked about in the full priced stores? And as we think about the comp improvement at the factory channel, how much it come from AUR versus conversion over the next couple of quarters? Thanks very much.

 

〇 Andre Cohen

Good morning. The factory channel was very promotional this Q2, we saw our competition go deeper than they've ever gone. So the environment itself was deeply promotional. We were driven really by innovation as Victor mentioned earlier, a couple of really impactful new launches. The PacMan was one of them and then we had our Bears collection around Christmas that were highly highly successful. So I think we navigated the promotional environment, focusing more on innovation really than just deep discounting. Most of the product today in factories is designed by Stuart. We have a small share of retail leads that end up in factory but it's primarily new designs and I think we talked about a year ago about the factory outlet. There was -- aimed to a fast tracking innovation, we're seeing the results of that over the last few months and very pleased with this. Traffic continues to be challenging in general in the channel. So we are counting on both conversion and higher ADTs, average tickets to drive growth and productivity.

 

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