AEO
#Okay.
Sure.
And thank you.
We're really excited about the swimwear business.
In fact, that business has been a growth category for us.
And that's the other position of strength with Aerie.
We do have other categories.
We believe obviously in our core categories of intimates and that's our maintained margin business, so to speak.
But when we think about swimwear, we got pretty aggressive in that business prior to any competition exiting the business.
And on top of getting aggressive, we really distorted the right trend and stood for the correct trend, which was one pieces.
And we really went after that trend.
And we've seen strong results in that category.
So we're really excited about swim.
And our Chill Play Move, that has been an outstanding launch for us.
We launched back in September.
And the innovation in that category has been phenomenal.
The design team did a great job really building the legging business for us, which is really dominating that category.
And in thinking of that business, what's also nice is we've tied it into our platform as well.
So about being Aerie, being healthy, living life, enjoying life, it really, it's everything we believe in being part of AerieREAL.
So another natural adjacency for the business.
And to your question on the impact of the 53rd week, so the 53rd week represents about a little less than $50 million in sales and will have an approximate $0.03 impact on EPS.
Thanks.
Yes.
So, the businesses that we're looking to potentially change our business model or our business in the UK where we have three retail locations, Hong Kong where we have six and within China where we have 10.
And all three of those markets and those businesses are currently unprofitable.
And we feel as though that we've got a much better chance of success proven by our existing franchisee or licensing models and relationships that we enjoy in other markets, that we're better off with a larger ---+ a few larger partners that have a proven track record, that understand the market.
They know the real estate, they have access to the real estate, they know the target customer, they're in tune with fashion trends, local fashion trends, et cetera.
So we feel as though we have got a better opportunity partnering up with the right people.
Relative to Canada and Mexico, both of those businesses represent our most profitable international businesses.
We're early days in international digital.
To be honest with you, it represents about 5% of our total digital business.
But it is an area that we're focusing on continuing to grow and improve going forward.
Thank you.
Sure, So, taking the men's question, we have already pulled back CC's in men's.
In the total box, we've actually pulled back some CC's trying to drive higher productivity and really make sure that we have the depth of inventory and in-stocks that we need to have.
We might ---+ as time goes on, we might pull CC's back a little bit further in men's.
We have expanded starting the spring season, we've given some more floor space to women's apparel in the store.
But we want to make sure that we continue to look strong in both genders as we move forward.
So, as we've said, we've pulled back slightly in men's already.
And I don't anticipate this year really pulling men's CC's back much further.
In fact, hopefully, as we get men's returning to growth, there won't be any demand to do that.
As for the new stores, we have some ---+ we're working on the prototype now.
We hope to have a prototype store open by the end of this year.
We will definitely keep you informed as to where it's going to be and hopefully we can take people through it.
The idea is really to modernize the shopping experience for the customer.
We've talked a lot about channel shift.
We've talked about the shift to mobile.
I think the way customers experience stores today is different than the way they've experienced stores in the past.
It's going to be more modern, a little more open, but really also leverage and emphasize our leadership in volume.
So you walk in our store today and we have a huge market share leadership in bottoms.
But I don't really feel like you feel that as much as you could in the store.
So we're looking to emphasize that, to have a new experience for the customer and really make it ---+ make the brand resonate more strongly through this new store and the new store experience.
I think with all the omni-channel capabilities we have, I think it becomes even more important for the stores to be a way to feel ---+ to experience the brands in person, to learn about the product and for us to have positive outreach for the customer.
So we will keep people informed and we will hopefully be able to take people through that store when it opens.
And, <UNK>, we've seen double-digit increases pretty steadily as far as customer acquisition in Aerie.
And I would like to call out the marketing team.
They've been doing an amazing job just tirelessly reaching out to our customer in new and innovative ways.
For instance, we just opened up in December a pop-up store in Soho, a pop-up shop, which is very experiential and it's an entirely different experience for Aerie but it calls to, again, the DNA of our brand and what we stand for.
So ideas like that we continue to generate.
And it's really helping us with the customer acquisition as well as, <UNK>, leveraging the AE brand, our big brother, I like to say, or big sister.
We are ---+ we're on the ---+ we share the NAV.
And that's certainly introduced Aerie to millions of new young women who are excited about the brand.
So I wouldn't go as high as the 12% range for FY17.
But it's clearly one of our long-term strategies for sure.
And that's in line with some of our historical highs.
Yes, we do believe that we'll be able to improve both gross margin rate and operating margin rate for the year.
A significant portion of that is going to come from increased IMUs, which has really been an area that we've demonstrated we can deliver on and is probably the single biggest contributor to our gross margin expansion on the year for 2016.
That also affords us the opportunity to be a little more promotional in certain of these categories, like men's and women's tops as we talked about, really getting in deeper into men's and women's bottoms so that we've got an every day pricing strategy that is really enticing to the customer coupled with product innovation, product quality, et cetera.
So increased IMU, cost reductions is going to be the biggest contributor to that.
And then in addition to that, another contributor to operating improvement is really, we're very focused on disciplined expense management.
I feel, and I know the team feels, we have additional opportunity to be more efficient and effective with where we spend our money, how and how much.
It's something that we challenge and look at every day.
So, those things combined are what make us feel very comfortable that we'll be able to drive overall margin improvement.
Well, it's pretty simple, <UNK>.
And when you think about the Aerie business, we were well underpenetrated our file, when we began this journey on the AerieREAL campaign.
So to put it in perspective, now we're more in line with where we sit from a sales penetration to the AE business.
So it has grown nicely, like I said, double-digits year-over-year.
And as <UNK> mentioned, we have amazing analytics around our customer and who she is and where she lives and what she buys.
And so, of course, we're digging in every day and looking at that girl and speaking to her in new ways.
And as I mentioned earlier, she literally can go through and be introduced to our brand through the AE channel.
We exist on the AE page.
We have ---+ and, like I said, we share the NAV.
So it's really just leveraging these analytics and speaking to her more and with social media today, you have to think about that as we build our awareness through that channel, that's exponential.
So it's really through those (multiple speakers) ---+
I would just add to that, <UNK>, that with the increased penetration of multiple on-site and that trend is going to continue, it's just another opportunity for us to capture new customer and new customers names for the file.
As advanced as our customer analytics, CRM analytics are and we've gotten confirmation from some outside organizations that have been very impressed with that, I think we still have additional analytic capabilities to harness that even more.
So as good as we are, I think we could be and get even better.
So, <UNK>, I just want to jump in on this one.
The AE file, you asked about that specifically, has undergone some transition over the past few years.
As we've increased the product, the strength of the product and as we've reduced promotions, we've transitioned that file.
We've shrunken the size of the total file and some of the bargain hunters have fallen out.
But overall the file today is healthier than it's been.
We have more omni customers who are spending more money and that is what's really allowed us to grow.
But right now, we are in a position where we really feel like we have got a healthier file and we're going to focus on acquisition and on retention.
That's ---+ we have Kyle Andrew on board now, and that's one of our highest priorities for the year.
And part of that's going to be our loyalty program that's going to roll out in Q2.
We have a very high percentage of our customers participate in loyalty today.
But our program is outdated, if not digital.
We think some of the perks that are in it are not as compelling as they could be.
So for AE, we are looking to focus on acquisition and retention and we think our loyalty program is going to be a really great benefit there.
And Aerie is participating in that program as well.
Yes, it's an AE, Inc loyalty program.
