OXM
#We think it's got great, lots of white space in front of it, <UNK>.
If you look at the brand, the message of the brand is classic Southern and Coastal, and that's a message that really resonates pretty broadly.
A lot of people from all over the country vacation on the Southern Coastal regions in places like Charleston and Savannah and Ponte Vedra and throughout the South, and that represents a happy memory for them.
If they like the brand, they like the logo.
It's very appealing, and so we think it can be strong not only in the Southeast, but throughout the country.
And when you look at the updated classic point of view, that's one that can resonate with a very broad section of the population.
The price point, being the premium or affordable luxury price point, is a great place to be right now.
So we think it's got lots and lots of white space in front of it.
Yes, I think I'll take the second part of that first.
And I think on the currency situation, it certainly at this point doesn't look like year-to-year it's going to be worse in the back half for us than it was last year.
So I don't know whether it will be a tailwind or not, but at least it shouldn't be an increasing headwind, if that makes sense.
So that should help a little bit in the year-to-year second half.
Then on the first part of the question, about what we're doing in tourist markets to try to combat some of the negative factors at work there, well, obviously there are certain parts of that that are beyond our control.
But there are a lot of things that are within our control, and there are a lot of things that we're doing in terms of in-market, marketing activities, trying to establish good ties with tourist groups and tour companies within those regions, hotel concierges, all that type of stuff.
We're not just sitting back and accepting the fact that it's going to be tougher to do business.
We're very active locally in marketing these destinations and trying to do what we can to improve the situation.
First of all, I would tell you, our timing on opening Waikiki was obviously not great.
I mean, it was many, many years in the works and we opened it as soon as we could get open.
But the Hawaiian market has been tough, and you can hear that not only from us, but there are plenty of official statistics on tourist spending there and that kind of thing that you can read and understand that it's not been a great time for upper end retailers in Hawaii.
All that said, I would tell you that we're very happy with Waikiki.
Again, we didn't open in the greatest time in the marketplace, but we're happy.
It's a beautiful store and restaurant combination that represents the brand beautifully.
We're seeing all kinds of guests there.
We're doing good business, and we do believe that it is having some positive impact in Japan.
Our Japanese business, and it's not solely due to Waikiki, obviously, but has actually been comping up really nicely this year so far.
At Southern Tide.
So let me start with the first part of that question and what it is that we like about Southern Tide.
I think if you know what the other key brands we own are in <UNK>my Bahama and Lilly Pulitzer, Southern Tide is a very natural extension.
It's got a very clear and strong brand position.
Again, being classic Southern Coastal, it's very clear in its positioning.
It's a happy brand about happy times and the happy places, which is similar to <UNK>my and Lilly, and we believe that those types of brands elicit the kind of emotional connection from the guest that we believe is part of the formula for success.
Then if you look at it from a distribution standpoint, we've always talked about the fact that we like brands that have wholesale distribution, that's specialty store driven and in the department store world is sort of Nordstrom and up kind of distribution.
And Southern Tide exactly fits the bill there.
Their distribution outside of their own website is specialty store, and then they sell at Nordstrom and Von Mauer, which is just terrific distribution, from our point of view.
From a price point perspective, they're in that affordable luxury or premium space, with similar pricing to what you see in a <UNK>my Bahama or a Peter Millar, and that's a great place, in our mind, to se\\it in the marketplace.
And then last but not least is the people at Southern Tide.
We don't have a lot of access, executives here that we can parachute in to an acquisition and take over, so having people in place in the business that are culturally aligned with us, have the same values and principles in the way that they operate the business and the same vision about how to run and build a brand is very important to us.
And the team at Southern Tide absolutely fits the bill on that mark, too.
So it was a really good fit for us all the way around and we're happy to add it to our Company.
In terms of their channels and path for growth, they've got their existing wholesale channels, which there's room to grow there, both by adding doors, geographics expansion, and very importantly, by doing more business within existing doors by really managing the business better for higher sell through and throughput.
So some good growth opportunities there.
Secondly, they have their e-commerce website, which I believe is last year was a little less than 20% of the business.
They're off to a really good start there, but we think there's lots of runway for e-commerce.
Then most recently, they've started focusing on shop-in-shops within some of their existing wholesale customers, and they've got several of those going that have the impact of both presenting the brand better and more strongly to the marketplace, but they also, when you do a shop-in-shop, you tend to see an uplift in sales within that door.
And then they've got a couple of signature stores going that are very similar to the signature store concept in Lilly Pulitzer.
So they're third-party retailers that are basically licensed to run a Southern Tide store, and we think that's a great channel for them that's really in its infancy, at this point.
And then somewhere down the road, and I'm not prepared yet to put an exact time frame on it, but we believe this brand can absolutely support company-owned retail and will at some point in the future.
Good.
Thanks for being on.
You mean in the sell through at retail amongst the wholesale customers.
Well, look, we don't have perfect information about it, but as you know, the majors, almost to a store, had a tough spring.
So you're in a very tough climate when you're selling within those stores.
That said, we believe we generally held our own at worst and did well at best within those environments.
So in some of them, our selling was really pretty strong; in others, it held its own within the climate.
But I don't think there's anywhere where we really think we're lagging behind what the overall business of the store was.
Yes.
So as you know, <UNK>, and you've seen, and probably most people on the call know, we have worked over the last several years to really build a much stronger Women's effort.
This spring was the first season where we really had what I'm going to call the new Women's product out there.
We did generate a lot of newness.
So I know that you shop and you saw what it looked like.
And Women's, there was a lot of newness there this spring.
We, through that newness, we created an awful lot of excitement in our stores and among our consumer base.
From a selling perspective, some of it worked well, some of it didn't work as well as we hoped.
And from that, we're learning a lot from a fit, a fabrication standpoint, a price point standpoint, and a merchandising standpoint.
And this is exactly what we had hoped would happen was that we would gain a lot of good learnings out of spring 2016, and that's happened and we'll incorporate those learnings into future seasons as quickly as we can, and we're convinced that we're on the right path with Women's.
In terms of whether it moved the needle or not this spring, the answer is it didn't.
We didn't increase our percentage of Women's.
And in fact, I think we probably went backwards slightly, and that is a result of it being somewhat hit and miss.
And I think also, in fairness to the Women's effort, it's very difficult when the environment's as tough as it was the spring, it's going to be hard to really push on a new initiative like that and see as much success as you'd want to.
So bottom line, <UNK>, again, it didn't move the needle, but it did accomplish an awful lot of what we were looking for it to accomplish this spring.
And as you know from talking to us over the last several years, we're very, very committed to the Women's effort.
We think we've got the right team in place, and we think they're headed in the right direction.
The design and merchandising team spent a lot of time in market, key markets this spring.
So places like Newport Beach, I think, and <UNK>sdale and Palm Desert, actually on the floor watching guests shop the line and talking to guests, so that they were firsthand getting the input and are able to incorporate that.
And then of course, we're aggregating that information otherwise for them, as well.
We're executing our plan quite well this year.
The Australian business is performing nicely.
The Japanese business is comping quite nicely.
We're continuing our overhead reduction efforts there and are exploring the possibility of licensing some of the markets.
So I think we're, that part of the business is tracking very well to achieve its objectives for the year.
I know we just opened three in Lilly in May, and we've got another two coming in Lilly in the balance of the year, I believe.
And then we had a net of zero in the first quarter, is that right, in Lilly.
So it will be five total for the year.
And we'll open eight at <UNK>my.
Eight at <UNK>my.
Thanks a lot, <UNK>.
Yes, so in e-commerce in general, I would say that we, the big takeaway to me is that for the year, we still expect e-commerce to be a strong driver of growth.
And in the first quarter, we saw some turbulence there and going into May, especially in Lilly Pulitzer, where you didn't have all the excitement that Target created last year.
You didn't have that this year.
But e-commerce is still going to drive more than its share of growth.
And then your other question, I think was about omni channel.
Yes, I think it's a big focus of our investment, both from a capital perspective and a people perspective.
So we mentioned in our prepared comments that a very significant portion of our CapEx for the year is dedicated to IT initiatives which, for the most part, are centered around helping to build our omni channel presence in the various brands.
And that's a change from the past.
So the proportion of our CapEx that's being dedicated to e-comm and omni channel initiatives is growing.
And we think that's important.
We think to build for the future that we need to do that.
Then from a people perspective, we are continuing to dedicate a lot of our new hiring to people that live within that world.
So that includes people focused on social media and other digital forms of communication, people in the e-commerce world, people in the IT world that are dedicated to supporting some of those initiatives.
Does that help.
Restaurants had some challenges in the first quarter, too.
Their traffic, I think, was down a little bit less than what we saw in non-restaurant locations, but they were not totally immune to what was going on in the broader marketplace and within the other parts of our business.
All that said, we're still very bullish about our restaurants and our island locations.
As we move into the new age of retail and branded and fashion apparel world, we really think that those island locations are a huge asset to us.
They give us a point of distinction and a way of communicating our brands to consumers that is fairly unique.
And you can see, <UNK>, out there in the marketplace that a lot of people are actually trying to play catch-up with us.
But I will tell them and tell you, it's not the easiest thing to do, and we're glad that we've been at it in <UNK>my Bahama for 20 years now, because we know how to run and operate a restaurant business.
And again, we think that combined with the retail that's at those locations gives us a distinct and relatively unique way to get our brand message across in an environment where it's harder and harder to do that.
Okay.
Thanks a lot, <UNK>.
Thank you very much for your attention today.
We appreciate your support, and we look forward to speaking to you again in a couple of months.
