Caleres (CAL) 21 Mar 192018 Q4 Earnings call transcript

Good day, ladies and gentlemen. My name is Ian, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter 2018 Caleres Earnings Call. All lines have been placed on mute to prevent any background noise. And after the speakers' remarks, there will be a question-and-answer session. Instructions]. [Operator you. Thank to Tharp. like call to over I'd turn Reilly Peggy now the Ma'am, you begin. may

factors for results other afternoon. and Good of and thank other discussed time. press risk Company XXXX factors disclosed online. for you. filings our more Peggy webcast. and Investor Caleres, fourth SEC but available A factors you could earnings to reports to Exchange contains due of in and impact US are call like are subject limited of which with the Thank I'd to refer I'm various XX-K slides and this and filings caleres.com. risks The tables statements, uncertainties. Securities information available any Relations at materially for President in Form on call detailed including, to, Reilly Copies Please factors update a forward-looking with which forward-looking release Commission. number these our quarter not statements. release the may information press be the any are risk financial both aware, Please to and joining obligation Actual undertakes today's Tharp, Company's no differ Vice and discussion at to today's

turn Joining to Chief the Chairman; Diane call Financial Sullivan. the call to would Sullivan, Hannah, like today over and and Officer. I Ken are CEO, President now And now Diane

joining today. for Thanks, thanks Peggy, and afternoon good us and

another I'll for significant is call you through going talk of our us to wrap-up progress our to lot a I'd and Ken strategic us. XXXX for to XXXX. with XXXX by have And then financials, the the was outlook on We year like start strategic progress. about. updating take

brand us in to strategic a Naturalizer. entire brands our vision brand’s of Sam new move remained sequence also of a more for array makes the once on few reach of is portfolio be Naturalizer this specifically performance consumer. the well the to the brands. out our gained of disciplined most our consumers. Edelman absolutely share portfolio, team deepened compete build brand few important product ensure delivered XXXX. year team delivered and include: and powerful great Jay our win rate market as and true connection expanding as and brand strategies consumers. the occasions wearing underpinning gains women’s delivered his of Caleres, delivered top and to and the and relevant footwear team’s market to with and Sam portfolio well product unchanged. to to the even the to calling the really that and ever, as was a development again The relevant And company across worth share best the consumer changing we broader categories But as and can XXXX it continued environment. The in And the off effectively brand accomplishment past all, and years market hardwork the what forward paid Caleres brand’s across We of of First ahead over

have XX new two I added growth the a also addition Blowfish based is with we strong it. and great loyalty women's with And to smaller in consumer acquired a we that Secondly, And it with and footwear proprietary upside on brands. dual technology Caleres now happy point Vionic of casual of market. gender the of am and brand consumer does view. Malibu, owns top brand brand six report more support lifestyle leadership California the specialized Vionic the for to the that

A for evident to remain essential in going growth are using becoming combination share differentiator capabilities, teams more product proficient which of will drive to we is gains. great Third, our sales our an these key ability strategy to replenish us in rapidly our the continue market season forward. speed through and and market in

facility these Finally, positions capabilities We to with of a completed The we is meet us expect in this The rapidly quickly did deliver approximately These the in the agility earnings together to adjusted we XXXX that. for brand significant and total moved fourth started this expect see put transition half successfully the the of half clearly this of behind to to needs running the and transition and new year. you accelerate the four own decision in position in-house up changing distribution of center areas facility our we complete we automation fulfillment And operating in XXXX this share future. our to first portfolio third-party certainly to a new center. just customers. can ensure to quarter to with grow us.

Footwear. team improvement will Famous did managing upgrade benefit brands Additionally, its manage great across and best in business. our sales e-commerce all same-store their comp last X.X%. Footwear SG&A a to up of digital of growth our launch e-com and gross including Famous we pressure continued including and margin expense continued promotional XXXX to the year year did our with capabilities in to new highly the a invest The And despite job marketplace delivered they also Xth the consecutive preparations This of platform. sales enterprise,

the fourth achieved fresh start further strategic took company XXXX. in a 'XX, accomplishments we as of also to quarter In could we in addition action so decisive we the

quarter. that entire certainly fourth This TV Allen the of Edmonds, we the that order branding equity this pressure. our report a for had the could When would quarter offset least in Consequently, level does at in were proactive and the level not its we XXXX Edmonds, assessment made effort consumer our not we way lower sales change evident reduce of a 'XX shoulder in made brand to Specifically appeal. reduce the impairment promotional in required to for third Allen or hoped the direct long-term. to provide equity it the in of the decision any to accounting promotional activity activity the strengthen response burden brand expectations. our non-cash promotional decision to means in reflect became and the We

you have taken new capacity XXXX. and we're already We around be positive think more from to action I'll actions that and matched later cost Ken expectations. But the production seeing is these business details really plans for good to some for the let results provide I'd in already now, our to back much the call. news The overall encouraged are structure XXXX greater walk around detail. financials I in through like

Diane, good Thank everyone. afternoon, and you,

dilution Vionic share acquisition. of excluding from the For XXXX, we reported adjusted earnings per $X.XX,

available help a Blowfish two reduced these for Washington trademark of and an some promotion We took centers. to brand was to and position Edmonds as some to during portfolio We actions moved meet the made pull in-house completed on demand. clearly year great transitioned a and continue and we of transition the brands. decision We increased discussed, of result XXXX at loss Allen to GAAP XXXX impacts. We number capacity down X share. Edmonds actions Vionic Port others in and per the our the articulate distribution and the Diane forward going goodwill Each to required additional a business back the the manufacturing caleres.com $X.XX direct-to-consumer for level of and We investments facility our to the acquired consumer two accordingly. facility Allen to beyond. Tennessee X us As company Page Lebanon, and provided and decisive our better to wrote occurring details and slides try fiscal adjustments, of made

Let me also briefly. walk them you through

recorded we expense. quarter impairment both $X.XX Edmonds for the trademark year and and related to Allen For and the goodwill restructuring

the $X.XX amortization the for Blowfish For inventory recorded and and expense we and year of Vionic transaction-related $X.XX quarter. adjustment for

distribution of expense and $X.XX both center the transition, quarter. our For the we for year recorded

restructuring. associated Tax We also the for the for benefit and And associated $X.XX quarter year and brand recorded other XXXX new finally, year recorded Cuts of reflecting for Jobs the $X.XX with a with the quarter, regulations interpretations and we $X.XX primarily and Act. exits

Including quarter the in items Vionic quarter acquisition. fourth reported the dilution I for share the share earnings For from excluding adjusted loss just $X.XX the per was at came net per discussed, the the $X.XX.

the adjustments quarter available the for outlined on slides specific mentioned and As amounts the earlier, the I we’ve caleres.com. at and year

full week million basis. XX the statement. income sales our Turning the of a million a Consolidated X.X%. X.X% of were $X,XXX.X quarter $XXX.X the of were on up remainder year for Sales on fourth to versus were up and XXXX sales X.X% for basis up XX-week

driven $X,XXX were million brand X% at year-over-year, strong gains sales up women's brands. For our market portfolio, top share by of our XXXX

Total X.X%. Vionic year XXXX at Famous year were up year's fourth the were the same-store million of quarter And $XXX.X At million. fourth in million. prior versus full Footwear Footwear Famous the were $X,XXX.X XX.X% sales sales up quarter. $XX.X For for contributed sales

$XXX.X were sales were down for last X.X% to quarter week. fewer up the the million doors total Footwear quarter For additionally, XX $XX.X expected XXrd and revenue at year's of and sales million same-store operated year-over-year we XXXX, related quarter of included as in as Famous

impacted to brand turn and our consolidated let’s overall margin, Now, in in and continued e-commerce gross profit portfolio. by were which strength growth our

XX.X% $X,XXX.X was was acquisition-related margin points inventory, excluding gross For exits. XX XXXX when gross of compared amortization to consolidated full year, down Adjusted and million. approximately brand the profit the basis

adjustment Blowfish and quarter million profit fourth gross of $XXX.X included of the million For nearly inventory $X Vionic amortization.

declined amortization approximately inventory, acquisition-related basis the adjusted and exits, XX.X% XXX the points year-over-year. margin of gross Excluding brand

Our basis XX.X% for Allen margin margin quarter, XX.X% of reflecting Edmonds. of of brand approximately increased portfolio points. adjusted promotion adjusted points, the levels was down XXX the fourth at basis XX full-year gross down approximately was gross And

the promotional our in in versus gross was Footwear Famous XXXX growth XXXX, XXX was across XX% the basis by margin sales space. increase compounded environment an as For approximately of points e-commerce footwear down

of approximately XXX basis fourth margin gross points in Our the quarter. was XX.X% down

into this release. and expense, accounting are to of like details pension I available our standard new in once everyone effective specific we Before the the get again remind would year

points. and costs overall job Our as expenses benefited XXXX facility from SG&A reduction was Footwear basis X%, up a of of full-year a did the reduction for less than at nearly XX great represented a and drove the restructuring. Famous field expense XX.X% leveraging we We sales, in

For both prior basis of and including represented points expense at versus XX quarter. sales, $XXX nearly the was the the fourth quarter, million, down XX.X% fourth of flat and year's Vionic SG&A addition Blowfish

the versus the of million we amortization X.X% expect was to prior for of to million approximately year. amortization and depreciation down $XX acquisitions. see XXXX, Our related in And $XX.X full-year

fourth was due same our X.X% amortization up the related amortization our acquisition. addition million and depreciation of to trademark quarter Vionic versus primarily For $XX.X XXXX, of period XXXX, the in the of to

million Our full-year adjusted operating or earnings sales. were X.X% of $XXX

reported quarter sales. Including an of operating presented reported X.X% $XX.X discussed million we on for $XXX,XXX, earnings which X Our or and adjusted XXXX of the the operating operating are loss fourth were and were items million. $XX.X slides earnings X, earlier,

of For the were and expense, Reported operating impacted fourth portfolio, quarter, was the year operating down basis of were $XX.X the adjusted Allen earnings including fourth adjusted our million, operating for operating for non-cash down X.X% margin Edmonds. XXXX At was XXX negatively Famous of points approximately basis primarily earnings of XX quarter by sales. approximately the and brand X.X% full-year In sales acquisition year-over-year. impairment accounting sales, Footwear were adjusted margin X.X% for points.

expense interest $XX.X for was year-over-year. up of net $X the Our million million full-year

acquisition both of fourth used the finance XXXX as and quarter increases were credit million $X.X approximately $X.X Vionic year the we expense the October interest of for expense The to quarter net last our million. facility expect of quarter million year. we the revolving the brand. fourth was In For $XX interest for up of versus the

effective Our XXXX, an between In XX% basis. XX%. rate expect and X.X% tax on was and to we XXXX on of XX.X% basis GAAP tax for rate an adjusted fiscal have a

decision capital portfolio expenditures up brand million million, for our center our reflecting in-house. XXXX, $XX.X distribution to were bring Our $XX nearly

under changing mentioned going made years strategic for fulfillment. and several position new Diane the many We sheet. ended balance credit our end, the demands. acquisition is beat over us growth this forward to and our of allow due direct-to-consumer million to brands of cash and us will revolving past of at to investments us Vionic. the the equivalents be and to owning strength able a it also usability and As one of increased the facility we’ve were year with demand portfolio, consumer October This future earlier, meet to borrowings to cost-effectively will add to the thanks advantage $XXX year of outstanding $XX.X to the million We

inventory the position the was consolidated year at $XXX.X million. Our end of

we our the primarily decision due For to Year to an up in able XXXX. and acquisitions, throughout brand to we earlier our with Footwear, the meet X% Vionic XXXX the portfolio, part customer in and deliveries demands Famous with the saw after increase but XXX to We also in doors year. related New year inventory, ended pull closing doors opening Famous Chinese year-over-year. and be Blowfish to Footwear XX approximately inventory ended XX early At forward

closed our at For portfolio, XXXX in doors us year end. XX, brand doors we leaving and with opened XXX seven

Our and operating continues for to it our to we enables brand from our was and invest XXXX, cash us Famous In shareholders program. than from returned million a business the through in grow Footwear year. be specifically to flow than dividends improvement operations Famous more more $XXX.X delivered our contributor consistent to $XX share continue and in portfolio. and overall million and XX% an repurchase cash XXXX Footwear flow of solid and

and financial our maintained also invested infrastructure. in our We flexibility

this the Allen center call start impacted to transition Diane. believe our over well however, and like our in-house put I back behind to decision quarter, and on And that, the beyond. reduction a long-term with activity with our for in us, performance XXXX we would turn Edmonds remain promotional to we're to focused distribution at and year to fourth Our positioned

as against entire theme on need our market page investments across our Thanks, expectations. organization. and to this the we excellence certainly year and for remain our operational year embraced is XXXX, know turn distractions that to again And we dynamic We make superior our this the execution to already is has expected to deliver Ken. sure been And focus. the our made to this starve be and once and we focused we’ve leverage to feed

external results Year actions even of expectations we and year. by the array help growth all start this focus more Well So for drive our a winning internal XXXX into us and first we to portfolio. intensifying our with to let’s an brand winning resources again the taking and extend have New consumer of deliver will more outcome our

also in our in XXXX will help drive and development to We're consumers drive We to out our deliver be it going insight to design, to investment also more even digital relevance. when comes sales. capabilities into first product higher

trends speed continue strategy. respond And share season to market our by we're will and We rapidly our to women's drive brands. maximizing to finally, gains to existing top emerging for going

Naturalizer seeing signature help perfectly curated have great drive you give those introduced expect couple we Edit, already of we’re me continued Let gains. a At consumer and XX examples styles that a will response. of premium we collection

recently offering the also designed Naturalizer flagship opened We brand two specifically stores ultimate the with consumer in and experience. mind

XXth Xth State Street have If obviously we'd to love on find Xth stop-by. on between you in New or Chicago, and you in yourself York Street

brand attention brand his brand the and way Our team’s messaging remains in just unmatched in momentum in consistency his exceptional. is and roll. details Sam a is marketplace. unwavering that and really The Sam’s consistency to on the telling brand Edelman of authentic story

our to new are doors overall For we our also expand continue Circus XXXX, brands. Vionic leveraging flagship the place already existing Sam’s the team energy assortment by with brands’ product team and strong distribution sourcing for the expand to on early and build we working brand at Caleres’ awareness the maximize phases opportunities. And the will in for is and to adding of in

a little that's what on the you could a of portfolio. So sampling brand expect bit

evaluated and continue once Famous how growth innovate to XXXX. turn let’s deliver in team to consistent and sustainable Footwear, best the and have and assessed where tested Molly Now to again

the -- this that’s share As a impossible long-term the Caleres. few the year company on at capture operations investments let but me continued movers from for It's and 'XX. absolutely most growth fuels of of critical really these Ken to the going Famous needle funds are important all cash said, few Famous across entire to

improved assortments consumers partners. our related for our First also YOU our our two growth rebranded Phase our deepening reduction of be and SKUs a importantly, Rewards. products forward also going called deepening all we are in of refresh brands the and our with Famously program an we elevating with We're and to We're of also relationship flow they iconic partners. vendor vendor positive X AURs. this new growth most and our year to a to today of an consumers drive We're to a introduced to and going and by top give looking return relationships drive improvement in rewards love

leading our to new Our they of we launching longstanding to we’re be e-commerce values it reach consumers further where we and innovating and to the matter no are, program a and realizes a feel around and and platform Rewards want When connection. consumer to rewarded connection legacy Famously And not and YOU e-commerce differently this have stopping. our are new comes consumer. deepens consumers embraces this designed

strong Vice again last XXXX. evolution part marketing, new a month. added us of and also with Marketing all message We growth as branding opportunities we’re lots mediums. when our We’ve President Marci And are digital exploring focused presenting also, Grebstein of in the leadership targeting across joined resonates newer agency of new relevant we that on engaged Senior of consumers as

We’re make during marketplace even to Footwear highly competitive approaches you further should this back-to-school Famous differentiate see and looking many new season. to upcoming and expect

forward little in bit what So business. across to that’s we’re our XXXX a looking about

our do company adjusted to $X.XX starve committed we understanding between of As must in the that us absolutely per focus. deliver our is We right operating $X.XX I the earlier, have excellence we what need and earnings and what’s this mentioned of with execute share with entire and front to feed and year. distractions

as what direction had is remain earlier for relevant call, and I had that turn convinced both fact a to unchanged. portfolio footwear made the our we’ve and is time have and our now with There of remain powerful no picking sound a would us call in be over I strategic Caleres of about focus which we’re proud vision said doubt we’re and accomplished for I the And operator our of to while the that, quite our to some As pace brands team. what underpinnings in we the like up XXXX. Q&A.

[Operator Instructions].

from of first Laurent Macquarie. question the line comes Our Vasilescu from

I guide teens grow mid want for on to to XXXX. low revenue up follow the brand to

acquisition. revenues. is you now about to million Vionic think $XXX of I out if much would the the license was imply big think Can trying that months through because incremental to figure to down just of be weigh couple expected million DVF then take on you Edmonds number $XXX take how I Vionic, on a and us a that walk is and business about I’m Allen give revenues?

or $XX had little tried so there I give bit we’ve that to of so overall bit what was consideration, room really Edmonds. when a to a with Allen think plan is room full go to down kind it’s promotion. brand and really continue to we million pull their Yes, was DVF XX%, of of the got to weren’t do at we we’re pretty chase got little we’re we -- them small. forced so sales portfolio, continue of back sequential give about to trying to that we’ve look the -- at level on try took and to to of kind incremental and in Vionic added of them And as associated fourth into and then they and we take Laurent, quarter in off not back the the year a

Small.

about build think the count let’s reversal blocks midpoint anything called you the to that’s FYXX. third-party in $X.XX $X.XX, X-K, Vionic to Is get on that say then in fair building wanted it share so to guys that then way that’s else inclusive that logistics of follow of contributed out Is to reduction the the missing? guidance right and or the I the $X.XX. I there say of EPS about of blocks $X.XX to And for all $X.XX, is December million X the am up

you asking appreciate question it Laurent. great I a are That’s and

done couple one a further. Number the revolver paying things. of so actually exactly, even we was not buyback had share lieu is So the of down in that

some incremental buy shares to that the assuming from back when it were talking about be we down. was used odd to million that Vionic use XX accretion we pay going was to So that, revolver

offset benefit, higher in So -- there share it's XXXX expense. but repurchase least that is yes by interest a at a little is

to a the to going the guided I So center, alone the add. $XX it's distribution if that's of goes we the year. in million, And not $X think then automation in, be approximately the quarter first had so so in direct on up million middle

complete in center. get year, adding so terms a get high little don't of of that. back a you're of so you're a the of we bit and what And about only distribution We half full-year in terms the benefit

XXXX, about them. two then think at Famous reengaging for strategic key talked And vendors I you with

was overall introducing business the thoughts XX% at I from -- think Famous. Nike at for on your sales said like It of Nike Nike your XX-Ks style just year prior Famous new looks it the Any Footwear. XXXX?

so seen is really improve happy again its Nike the trend across seems to Yes, pace -- The seen Laurent, see. landscape. we're as picking-up but spring back business getting business our with figuratively in yesterday in very and actually as the to we’re continue be seems we've kind it year it sandal or we be Nike of now which we've not the to very encouraged literally here to right only

more which be to five amazing an actually into vendors a about thing would little growth 'XX. position encouraged are we put those So really two top outstanding that an of us for would returning

comps maybe months thoughts for by performed lastly, sounds and about thoughts quarter are the here because commentary high it is And but finally you level? any spring the like any just any how encouraged then just,

pressure some you've heard of I in everybody the obviously Well, with February. so has February in that's and weather, about month there the the talked think certainly difficulty

certainly of still weather because pressure The was half related some March of again first issues.

assess marketing there is our hopeful around at as well. of and as we again But expect be Sam like our the Easter April will latter business and the to so Naturalizer we at later launch quarter, which as a that business have We we’re the a doing of looking able program also some out be most rewards the look first well. we’re really part in to combination people March early --

from And the of question from King you're is and Marotta CL line Associates. next Steve

the the question, distribution guide increased the you to slower possible don’t know basis? But bit first that finer start point a comparison expense, second your interest on tiny quarters putting the the quarterly. automation center negative yet, on, given given last and is Furthering on are a I given quarter, it year-over-year EPS on the

I And with Steve. what talked we about the Laurent’s QX just to think bit it and new product. Yes, in question also some goes little of a just around

And incremental to that expectations so starts likely I mean got in we've build as now year. from X flat year-over-year alone. the per it’s be -- of that share, go earnings our the with And acquisition about right are down will we just an interest throughout then QX million to

really second the quarter back nicely. down be to only So expecting first quarter and then the bounces

fourth occur at the Just Did headwind that finer repositioning. expect Allen on beginning another next there margin and should the the the of quarters? to Edmonds’ point quarter gross for three put we

late into really we could ultimately question. store Steve out brand quarter that how year we customers Good that really quarter in that every I Yes. third into but was honestly last had to mean decision. top to figure almost and quite to were we way bring tried decrease make the promotional more we that cadence, call forced the as a fourth and were No, going

and last And have and good them hoped look had and sure teams we according action took to and XXXX a allow quick XX% half at February We that thinking -- to are than build was in feeling the to to through making decisive the early quickly. a done job very as about going we entered thing business we and that to very of much decision the I things we bold for already, what do frankly had right make position think March of really we top-line expected. were as we’re right fourth less So be the in like to we where XX% that again the really it’s really the but first year brand that long-term. quarter

same year. from margin that last So see a the perspective don’t had of really headwinds seen kind we

…. Steve know, You

And the then pressure by sales pressure, go but not way, ahead. market

through, to the could the sales front the back first of Well, all more it’s evolves. probably half primarily. just a the than see the way little would way really year Yes. pressure, because -- really the promotional be throughout We -- going half cadence the you in

going I to do comment brand what trademark, so nothing to continue wrote we and unfortunately down was sales to so had was be really the profitability. the to was Steve of earnings. been that to just accretive sales, level it tied we really is expectations about which This has with and will

treat Allen So we it long-lived brand really the the is Edmonds had because about around accounted a as had a the for to that asset. way it originally transaction been for such long we time,

validate we’ve it’s up when trajectory bought that been to the value books. the accounting the back the we’ve was simply business that put is and the of Edmonds Vionic that and put year so Allen trademark on evaluate about to amortization, present talking a on have sales non-amortizing, And we every we valuation to unlike and a then

than with to unfortunately business. face the have value bought were some rise interest those into so lower write-down sales are very in when going today much the we to And just and had level present were different we rates rates of because of the the

to because different impact years. a invest for and little ahead expectations it and with address on trademark. So ourselves of figured time pretty just a good of a we A and up significant accounting the it grow had the five go that activity, what in around brand. way four to that level the overall promotional ‘XX we kind to had been had set only the seen continue was and it's valued reduction combination we in to with But Vionic

million And $XX million so were $X of amortization to every year. going to see

there an time, that's of effective value trademark. write-down is over So, the Vionic the occurring amortize naturally as you

also is, could from bit My will primary the the talk you operations, debt year expectations given stock cash, more a where current and the little that flow is, Ken can down that a paying aggressively or last for different calculus? be cash you of about fiscal uses question be

with going in the to direction. moving outlook see hopefully Well, Yes. stock that the different we're

So we’re revolver. and hoping pay to take cash the the aggressively continue flow down to

Chinese think from the this incremental about look was of of so early a in cash brought And New if I where timing payables impacted $XX it of out bunch the operations by and the inventory of just million inventory just because the you with year, Year. we net our

cash and paying So be million we from borrowings. down then think the XXXX, we in operations will we outstanding aggressively generate of another will $XXX

And line Patel Needham our next of is Rick question from Company. and from

a question, in call. Laurent’s the on I EPS the follow-up lock-up had earlier

So to our incremental incurred half about that understanding a Can think earnings just I believe. you that's the that XX the DC was year? back we might flows first is guess expenses this worth related through little to benefit need $X.XX as why timing? million you bit dig I to to investments about as that out in anything for deeper the flow call half duplicative it make. there you to won't versus of the fully And how through

Yes.

rent year started through paying the and third-party So had of half facility. also into walk go then where and facility you duplicative. on were In product the the let me first we the back our moving we

then on made when we that initial accelerate exit, to When time the XXX,XXX and paying plan ahead so the XXXX, in we recall rent looking was some were until everything of move it another it. having of to to the we at that get we issues third the go we overall seeing And and were both quarter, fully automated up were of around decision at took leave the could The and running, we rest square out you was out places. So everything operate the cost and foot the if in there the third-party. third-party. we were

made to bring and a that that decision into of we action So XXXX. accelerate all

Vionic and and have our to point absorb acquisition. next into all incremental we and So the needed Vionic square-footage to we be at integrate now some eventually able that inventory hopefully of

about those duplicative of now we than last with costs. when actually we’re larger the year So a at were talking beginning we were footprint

in the some was there So right rent was campus. paying square on that exit happened and available facilities, two of we a context that our be different incremental was but accelerated to on took footage, the building for

we able facility. so everything on get into our and take And to were that

know outlook talk a of also pieces I lot the margins? you here. there for Can moving is about

the curious margins and SG&A to get segments, Famous and it we the think outlook on your So brand about thoughts for portfolio? by gross as

Yes.

that's really I we Famous the that, is that are I are the for seeing generally their being is that offset outlook they gains e-commerce margins you the to over business. tell year that and their that of roughly -- think on be of the course would and expect the what growth based

standpoint margin of amount their in seeing we’re are they more by mean improvements bringing so the that profitable down. product sheer expenses, show that business. Footwear good growth a seeing on there getting is can offset of gross So margin I mix the but lower obviously Famous that that's

we I refine are and pricing improve to mean costing think to we opportunities our continue our XXX and continue portfolio, there so balance. to got there to continue roughly basis brand expecting the up to I we to be see that work points, On that.

generally, what So expecting. we’re of kind that's

may. talking Famous to looking are to talked categories last certain Diane color reduce one opportunity just AUR. on or play productive as you one the a brands tail little how you as will be you I SKUs that Can deemphasize? to about are of long improve about if out? perhaps want I’m you are aren't curious there and you that give them And more the that -- on

primarily really job building We’ve have. a pretty sort the the smart of assortment SKUs more our done tail biggest we it long decent It’s the of is that Rick around core of a than vendors. vendors Yes.

yes sure So we SKU we’re will probably make base deepening the there.

are so across is We think genders, across in there see we that so run you going you what see brand. actually make not in sure we Vans, that we will will to more categories, other -- that unlike

XX you to to a and we about want across men’s, a and expect want reason there in But under period bit different than that. opportunity really somewhere get XX kid’s, in the there so it SKU over base of think to do little for women’s do, is it to some will kinds XX% an trim of and XX% we there. range months will opportunities we So while to our that be a we with more that once little Every expand make efficient more sure a that keep to tends we testing that control. the all of

to and that. to the months XX that think XX% we staying like focused on it’s pretty next probably XX over something So XX%

from of is our line the Champine Loop next from Laura question And Capital.

one What down Ken just like tricky unallocated looks corporate way expenses Ken. your year-on-year. change? were of is This that for drove kind a it

the Most is to that be reduction a of in incentive. going overall

we So of way tied our lower our was compared compensation. I so initial obviously and works that bit our -- we year A provided to based our around it’s to mean little that’s our it stock just guidance of then incentive mark-to-market most prior, took the this had down the payout that what is. on

stock and up the more down goes two of Those when of pieces the less. So primary that. then really little obviously a there goes charge little it when a are there is bit is a

next from our is Wedbush. Svezia Chris And of from question line

fell guess you back it the you QX, back of was curious did where step stepped range business, branded just at Famous. whether Edmonds, of just promotions side, on $X.XX, portfolio to more whether $X.XX. the when I’m some things was I the short, it $X.XX first aggressive Allen

what quarter? there through fell and the walk short back step Just in

$X.XX let’s and So those go I and $X.XX at to on separating came $X.XX. by I apples-to-apples would in year, basis to we start guess took that --

lower we additional Famous that, have range drove to lower end some money a distribution center, margin some to -- to really move change on products. biggest accelerate actually not we was the pressure bit the there was some and did that the the the Footwear spend accepted little to margin to of at So and goods, us move

saw had that dilution standpoint. being up from So we that number we of biggest and And was made that’s to from $X.XX decision the a ended that driver of closer the and really bought the and by some originally went and initial we piece anticipated Vionic we then $X.XX. And back down big down a revolver when pay dip than rather purchased Vionic million, we saw to went stock. the $XX million we we after reaction $XX in stock

Vionic had impact an with transaction. the the dilution that So on associated obviously

two there’s there. pieces So of that

I was the Vionic separate Vionic on think in -- rest terms expenses. clearly of end them I we would dilution that's on just then of how were and lower excluding at $X.XX range of was the additional it the

cetera, for for Tennessee guiding Edmonds settlement. $X.XX $XX center to in Allen separate from additional distribution you guidance the ‘XX. the Lebanon, for the roughly And et XPL in facility, costs to it That’s million transition $XX call million were that

final all then exit. right, and that agreement into $X.XX to simply then the out and a the of do agreement settlement we what third-party actually we Edmonds is with settlement moving we when Allen is so have tied there That’s entered that to the to that exit out did called close final

it just you’re you you’re you Basically And talked us see now facility up the about the telling that’s and on about going right and earlier. facility the we half running you're into get some about to cost, place that to automated. why in cost that as it? anniversarying that be back reason you still to the is should can back first bit the in I that center think half. call Okay. the what is kind have That’s that of think costs when guess have and in that you automation is little distribution claw opened you using starts how addition moderate ‘XX I another a of heightened and I guess then

with takes we’re look way significantly goods go the receiving at for into everything what forward fact consideration believe the business. benefit going I doesn’t that the back that ability is effect is year of and and it the we of until demand shipping obviously our is see roughly half working and The there the The associated throughput that distribution as to up goods would into year-over-year Yes. $X.XX to think our we we’re going the automation planned. we automation pick generally and improves direct-to-consumer serve and

for ability to capabilities continue our our partners. So provide drop to ship

that. of mix that’s the So

you’ve starts case fact we basis shipping continue the So got cost. on basis SG&A is out improvements. processing, and sold, the comes of in to out is pair the is where offset of an a there last year-over-year couple and that’s because The distribution we than that that manual more where fact to ship our some pairs cost think cost the loose on the I calls, the significantly warehousing packs, a all cost in business apples-to-apples per there higher which different is which matter and expense it cost talked is, natural coming is shifting lie, these companies loose incremental put the our other it as pair so more automation that's of of through mean in more to that of a goods of variable than I

distribution that's our we coming as growing is pairs shipping business cost So and more of an incremental through. there are

about. So as a fixed cost, duplicative talked we’re significantly we eating into costs those

the middle with the variable year. be model costly comes that in automation more on variable will is addressed the the of a cost, As a distribution that

it QX of is would switching that sort low single-digit acceleration Okay, to the that trajectory, right given fair of in thinking in that’s QX, scenario sort flattish QX, confidence to mid the comp, would I QX, the a this say of that’s Famous, acceleration just kind a pre guess that I imply and case? am about to if material

correct. would be That

And the confidence that? in

Yes.

I into and think we with have good move third Famous second, and planned quarter. pretty fourth what feel about Chris, we we as business the

put We assortments really the vendors that things is the some really going top in mentioned, and expecting elevating that place. to have two, those return and have are that’s happen that we’re three top teams those on. that believe lots team to assortments. of We been As that working the growth there I

the the improve. are year, the belief performance is course the continue and go all indications through of will So to -- we you see our our that as

the at bogey. two when hit is, the kind been $X.XX, Okay, final just step $X.XX, that you it’s back process at to look of past tough guess I I thought the years thereabouts you’ve or and given if guidance look

revise I outlook or in think being you guess just to the being have in do So outlook don’t am want conservative thought are is, conservative how you saying what how you process? whereby how you the to are this lower, aggressive

of are realistic being in what in landscape. terms we’re think the I challenges the changing

to needs centers and that we is fourth attention think brand all appropriate to we well well. our clear fact business and bit where in just we’re I and record taken. maybe into and of to I set was that to of he make that think quarter with objectives what what to the be be and saying those expectations little done But portfolio, that shoes, distribution position deal corner that that have of two center, was really realistic think every really say very we had ship we I turn strategically work right we focused to this work that set would the that of year specific we herculean be, up Ken well I'd opened in that the a think -- 'XX sure actually a 'XX. the very all and particular a ourselves of move articulated need us corner need done aspect was for actions to the really 'XX every everything for about assumptions on very we was our the as had to add on

like year. lot parts of there feel moving were year last I last So -- was a

tremendous this we add a expect and well, I going to well, do really of with all was and it we drive stable bit year. up, operations guess what year a excellence much that we're that see to drive again them ability -- I You there amount little outstand. This really so more our so do our we more

Samuel And Poser of our the from line from International Susquehanna next question comes Group.

a that basis, on and how housekeeping. work that on? few free of couple The from loyalty you do with got program cost shipping you I've so our cost shipping, do that the in a offset how new

Yes, in well cost and imagine a we’ve that net year us a we've guided. all way makes anything neutral that one other programs you as work place around actually have this put in the for lot can and well we've -- basically of that we in Sam that’s that reflected done that's that forward going

then me stores? and year you can the openings next for have store said fourth And and give just this, closings quarter walking through you might be --

Sure.

XX, Famous at approximately and opening a are we closing XX so production. net XX so Yes,

And I missed year? then you past this this I'm sorry year it said when -- it.

a Yes, we closed net XX ended and XX XX opening reduction. so up

the can for then what Famous lastly, year percent both and the fourth quarter, in for of And quarter gross reduction and margin as gross sales and you brand us by give a dollars margins the margin, portfolio adjusted was or the full for SG&A?

quarter…? Yes, fourth the for

but the and in went Yes, with if through -- sales earnings provided I'll financials, there’s go adjusted. X we a we we and share through segment where look of Schedule we showed have that the did with by kind

And at XX.X% the was for it reported of as quarter. regular. the then period Famous, was that to So so gross the profit gross the XX.X%. And XX.X% profit versus XX.X% the from a compares brand year was the XX.X% the same portfolio ago adjusted at same it it

the on then And SG&A?

through you earnings Edmonds obviously write-down operating roll brand when the been SG&A, for have standpoint XX.X%. Allen an would negative X.X% to the compared was The portfolio a from adjusted

And then on Famous?

On was difference. point only Famous a it a tenth of

So X.X reported, adjusted. X.X

X.X% or...?

Yes, X.X%.

to having the that’s is, Famous -- promote accelerate going it guess comp I without question the drive turn mean is I have what this the to I going to Famous year? that’s comp to

things guarantee It’s a Well, couple as maybe know that never we but again. Sam of there’s we mention I a a think things. of couple that think there’s I

believe with program re-launching we significant that We it added February. we while -- updated in we’re and marketing, for we’re and we rewards had program we haven’t years, XX test all this of supporting launched that a in soft tested. quite we’ve rewards First

sales are expectations good that our connections about have one expect we for would our really to so pretty we the sense number do So and a what our obviously it. consumer. be in help it And drive

in data XX today more. that and million build the customers base have we to that -- So

our penetration over will of and that number growing we we nicely help one. believe been top-line. e-com that’s our continue So years drive We've think to the couple last

digital were launching name So that that’s that our platform and and a we doing to are assortments things we times vendors was going of areas that top as you space all for to We think new I’ve and be now, doing. think Quite a a it. difference. been we the We that doing the going improvement. mentioned the we in all the heck of couple in e-com weren’t lot think two make honestly work we’re year. that five there of not there opportunity growing last And should have a

We begin and more have in is We and been those the looks and that’s opportunity that there think need do believe expect Mike relevancy business. turn there around develop to like assortment Michelle certainly that to to to more that doing them happening. to our bring trends the going teams and work Molly all women’s they build I and that and

Our and generally kid’s business plan been I has compelling a underperforming had and the there. team assortment think

We’re going to be AURs. driving

We’re be going SKUs. rationalizing to

lot our within So the that of that doing change think control frankly we’re to we trend I what there’s a things have. are of

be of to would feel things with Famous. I some respect So about those that confident the

closing showing I'm comments. for time, turn back further that any have you no Presenters, the to I’ll at And call questions. we

late to will at we much in XX very next this back the be you Thank look joining afternoon. for to We seeing XX days Take forward us care. you over and May. you

your for you today. thank we gentlemen, and participation Ladies

may You now disconnect.