IPAR
#Thank you for the question.
Yes, Russ, you want to.
I think it's a trend that has been going on for the last several years.
We've reached for our ---+ included in our SG&A was around 19% of our sales was spent on promotion and advertising compared to 17.9%, just a little under 18% the prior year.
As <UNK> mentioned, just two minutes ago, with launching new product into countries like China, or where the markets are relatively weak, or even to support the brands in most of the major markets around the world, we really have to support it, with promotion and advertising.
And even though we see in our in our numbers 19%, there's also a significant amount of dollars that are spent by our distributors in local markets in connection with promotion and advertising.
This is part of our business.
This is the way we drive the business.
It's the way brands grow and gain the name recognition that we need in order to keep these trends moving along.
So 19% is very reasonable.
I wouldn't be shocked if it grew a little bit, and went to almost 20%.
I think that's the trend that we are on, at least over the last several years.
Absolutely.
I will say last year, between what we spent and what our distributors spent, 25%, 20% at least of the budget was spent on digital.
And to go back to what Russ said, we should keep ---+ very important to support our brands, there to continue to grow the market.
We could make more money if we were short sighted, we could make ---+ we could be more profitable by cutting a point or two of advertising, but it would be a very bad mistake.
We need to support all of our brands.
Coach is new, and we are overspending, much more than our obligation, our contractual obligation on Coach.
We are overspending much more than our average of 20% on Rochas.
We are also overspending on Jimmy Choo, and we want to continue like that.
Let's not forget that we have to fight against a larger company who are launching also a lot of new products.
In order to be competitive, we continue the spending.
Absolutely.
I mean I don't have numbers, but we could add $50 million or $100 million of business with new license.
Without changing anything in our G&A.
Russ, do you agree.
Yes, certainly without any significant changes, absolutely.
It's a little bit early, but I can tell you that we are over budget, and for Japan, we launched also in Singapore, which was quite good.
We continue ---+ 2017 is really the rollout of Coach.
You know that Coach, besides being a very strong American brand in America, is a very strong brand in Asia.
So Asia is, is a major, major market for Coach.
So we are ---+ what I can tell you without disclosing very a precise number, is Coach is over our target in all the countries that it has been launched.
Then we continue with the men's line.
In August or September ---+ I would say August, we will start shipping the men's line in all the markets.
So we'll have even a stronger presence when we get to the Christmas season.
On Rochas, we will be launching the new Rochas in 12 countries next month.
Definitely Spain and France, which are the two very important countries for Rochas.
We continue with, with the rest of Europe, Belgium, Switzerland, Portugal.
Then we will launch in the Middle East.
Saudi Arabia, Dubai, Kuwait.
And of course, South America, Argentina and Brazil.
We will have a second wave towards July, August with the rest of the countries.
As you know, Rochas is not a license.
It's a brand that we own.
So of course we do not have to pay royalty.
So we are able to put more money into advertising.
And I think that it will help the launch of the new fragrance.
Russ.
Well I mean today, the sales that you see in any big-box stores is really coming through diversion, for the most part.
Other than, if there were lines that are being closed out, or discontinued, you might find them.
But otherwise, it comes through diversion, and we take it very seriously.
This is a problem that has been in our industry, as you know, for many, many years.
There are new techniques that we are looking into, with respect to inventory tracking.
And for where it makes sense to do that from a monetary standpoint, to protect some of our brands, we will do what we need to do to protect the brands.
But our business is not geared for big-box stores or Walmart-type stores.
So I would say 95% or 98% of that is coming through diversion.
That's great.
Thank you, operator.
One last point before we say goodbye, I just want to mention that I will be presenting at the B.
Riley investor conference, which runs from May 24 through May 25 in Santa Monica, California.
Two other conferences that are in New York in June, I will be at the Citi Small and Mid-Cap Conference which runs from June 8 to June 9, as well as the Piper Jaffray Consumer Conference, which runs from June 13 to June 14.
We should have more precise dates when we announce our first-quarter results in early May, and I hope to see some of you at these events.
Once again, thank you for your participation on this call, whether you are live or listening via webcast, and as always, if anyone has additional questions, I am available to take your calls.
Thank you, and have a great day.
