Q3 2023 G-III Apparel Group Ltd Earnings Call
Okay.
Good day, and thank you for standing by and welcome to the G. III apparel group third quarter fiscal 2023 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session you'll need to press star.
Our one one on your telephone please be advised that today's conference is being recorded I would now like to hand, the conference over to your Speaker Today Company C. E O Neal Nachman you may begin.
Good morning, and thank you for joining us before we begin I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward looking statements within the meaning of the federal Securities laws.
Forward looking statements are not guarantees and actual results may differ materially from those expressed or implied in forward looking statements.
Important factors that could cause actual results of operations or the financial condition of the company to differ are discussed in the documents filed by the company with the SEC.
The company undertakes no duty to update any forward looking statement.
In addition, during the call we will refer to non-GAAP net income non-GAAP net income per diluted share and adjusted EBITDA, which are all non-GAAP financial measures. We have provided reconciliations of these non-GAAP financial measures to GAAP measures in our press release, which is also available on our website.
<unk> disclosed in our press release for your reference a last year's GAAP to non-GAAP results by quarter.
I will now turn the call over to our chairman and Chief Executive Officer Morris Goldfarb.
Thank you Neil and thank you everyone for joining us.
In the third quarter, we delivered top line results that met our expectations. Our strategy continues to deliver on key priority is to drive profitable growth for our shareholders, despite increasing macroeconomic headwinds, which softened consumer demand as the quarter progressed.
Net sales for the third quarter or 1.8 billion, an increase of six 2% compared to last year's third quarter net sales of one point, though $2 billion non.
non-GAAP net income per diluted share was $1 35 in the current period compared to $2 18 says in the third quarter last year.
During the quarter.
Higher inventory levels were due to our accelerated production calendar, which was in anticipation of long supply chain lead times as these lead times improve we will continue to adjust our production and receipt calendars are inventory consistent with current purchases and as guided by.
Our order book as.
As expected our own.
<unk> inventory position is now enabling us to immediately service the reorders for coats dresses and other end demand categories.
During the quarter, our high higher inventory levels resulted in storage and processing complications within our distribution centers that were above our expectations.
This alongside with Port congestion resulted in significant one time charges of approximately <unk> 40 per diluted share in the third quarter.
These charges along with elevated warehousing costs contributed to our earnings being lower than our guidance for the quarter.
We have secured additional third party warehousing space, which should eliminate almost all of these charges in the future.
Currently third party warehouses makeup approximately 70% of our total warehousing space.
Now I'd like to discuss the extensions of our licensing agreements for the Calvin Klein and Tommy Hilfiger brands.
They are an important part of our business.
In our 8-K filed last night, we announced staggered extensions by category beginning in January of 2024, and continuing through December of 2027 for these brands.
Just to be clear, we do not expect significant reductions in sales net income and cash generation from these businesses for the next three years.
These agreements will allow us time to accelerate our long term strategic priorities and we will continue to direct our resources toward our growth areas, including.
Further leaning into building our own brands continuing to acquire new businesses, expanding our private label business and developing appropriate licensing opportunities.
Currently we have been pursuing a number of near term initiatives across our existing owned and licensed brands and private label business, including category expansion geographic growth focused on Europe and digital expansion.
We believe we can deliver growth because we've built a powerful foundation and have become a well diversified company with expertise across a range of global brands with a broad range of price points for a broad range of customers.
Multiple points of distribution with strong retail relationships in North America and around the world with partners that include department and specialty stores.
<unk> retailers wholesale clubs digital pure plays and marketplaces. In addition to our own omnichannel platforms.
Dominance in designing manufacturing and sourcing across a broad range of more than 20 categories, including apparel footwear and accessories for women and men of.
A strong and growing geographic presence with leadership and offices in eight countries across North America, Europe , and Asia and.
In our well developed flexible supply chain infrastructure with broad global sourcing relationships.
Over the past five years, we've leveraged our strong balance sheet to focus on our brand acquisition strategy, which has evolved our portfolio to a significantly higher penetration of brand ownership.
These brands are our most profitable sales.
Because we do not pay royalty fees and they provide highly accretive licensing royalty income.
Three of our recently acquired are launched brands DKNY, Karl Lagerfeld, Paris in North America, and the remaining global Karl Lagerfeld business have added a $1 billion in annual sales to our business.
Yeah.
We see even greater growth ahead, with these businesses and the rest of our own portfolio, including Donna Karan.
<unk>, Ken is Sonya Ricky al.
Our proven track record and diversified foundation has and continues to enable us to acquire or license and quickly scaled brands by leveraging the resources that already exist in this company.
We're confident in our ability to drive profitable growth and maximize shareholder value in the future and we look forward to keeping you updated on our progress.
Now I'll briefly update you on the progress, we're making against our strategic priorities.
Our first priority is to drive our power brands across categories, we're especially focused on driving our owned brands.
From a category perspective, we continue to see strength across all of our divisions.
With full ownership brands.
We can now leverage leverage newly created categories.
Our Lagerfeld Europe for example, just introduced a full jeans category into their collection and we plan on expanding the business by introducing it into North America and next fall.
Additionally, we've also been able to drive higher AUR, as which help offset significant inflationary pressures this year.
Our second priority is to expand our portfolio through ownership of brands and drive their licensing opportunities.
Our current owned brands are led by DKNY, Donna Karan, Karl Lagerfeld, Belger, ICANN and Sonya Ricky al.
With full end to end control of these brands, we have and continue to grow them by developing new categories, increasing distribution in digital penetration.
We've also built strong marketing capabilities that continue to develop awareness and global recognition.
Our own brands combined they are expected to represent annual revenues of greater than $2 $5 billion over time, while January is generating higher operating margins and the company's historic average.
As brand owners, we have the ability to license out our brand names to best in class partners in categories that we do not produce.
These agreements, bringing our revenue stream that is highly accretive to us.
Our profit.
Currently generating $65 million annually.
We are always actively work with our licensees to build bigger and better businesses.
Companies that operate exclusively under a license. So our model are valued based on a low teens multiple of their revenue stream with our own brands. We have created a strong licensing revenue stream already and powerful opportunity to continue to build this profit center and enhanced value.
For our shareholders.
Our top island brands DKNY, Karl Lagerfeld, Paris in North America, and Deborah can also with the purchase of the entire Karl Lagerfeld brand demonstrate our proven track record of building our own portfolio.
As we look to the future. We continue to believe there is significant growth potential in the brands that we own.
Yes.
Our current <unk>.
<unk> financial position will enable us to acquire additional brands, we continue to prioritize the expansion of our revenues and profits through brand ownership.
Our next priority is to extend our global reach by expanding our European based brand portfolio.
Yes.
After Dan bass, Karl Lagerfeld, Europe continues to perform well having launched the jeans category as I previously mentioned, we are planning on bringing it to North America.
We also made progress on key digital initiatives and are on track to open 12 company and partner operated stores and shop in shops this fiscal year.
Saint-tropez founded jailbroken as status swimwear brands robust momentum continues with another quarter of strong double digit growth and remains on track to register a record year of sales and profitability.
It continues unique collaborations to address a range of customer segments, including Street wear brand based lack and previously with Palm Angels and off Hawaii <unk>.
Additionally, the brand is as began eliminated edition capsule collections featuring the artwork of acclaimed contemporary audits.
Their latest collection is currently being exhibited in the Miami Art Basel.
We completed the acquisition of the restaurant and Beach club in the South of France and are currently rebranding it to the <unk> law applies.
The brand is also opening its first Cabana club in new retail location and the totally renovated bulker bulk of return Beach club this winter.
Both advanced Millbrook has leading luxury swimwear position by touching all aspects of beach lows and created an immersive customer experience and brand recognition.
Yes.
So Paris based Sonya Ricky al the European team relaunched with core categories and established a physical presence in Paris, and New York.
We also opened a major department stores, including <unk>, Paris Court and less in <unk> and <unk> and Tokyo.
Since at Karl Lagerfeld acquisition, our existing European management teams are working to develop synergies to strengthen our European operations overall.
Areas. We're focused on include leveraging their vendor base and creating a unified backend structure for all of our digital businesses.
Ultimately this new infrastructure further develops our European platform and will allow us to continue expansion with any brand.
Our next priority is to maximize the omnichannel opportunities and leverage data.
We've expanded our pure play presence and developed strong capabilities to drive demand on our retail partners' digital platforms with strong double digit sales growth led by Amazon and our largest retail partners Macy's.
We've also increased sales lids, Alonso fanatics, nordstroms and Hudson Bay.
We've started to develop our vendor direct shipping capabilities, which provide additional opportunities to grow our digital business.
The digital businesses of our own brands that are in their infancy. They present, a tremendous opportunity and we believe that these businesses can grow to become significant contributors to our overall business over time.
And our own retail operations, Karl Lagerfeld, Paris had another solid quarter in North America with a significant rebound in traffic fueling strong double digit growth.
DKNY remained challenged mostly driven by the lack of tourists primarily from China in our European stores.
We are well positioned across both businesses to capitalize on holiday demand. During this key selling period and remain focused on driving omnichannel growth wherever the consumer chooses to shop.
In conclusion.
<unk> met top line expectations for the quarter, we made progress on all of our priorities, we experienced some onetime logistical challenges that negatively impacted our results in the third quarter, which we believe are mostly behind us.
As a bottom line net income per diluted share was below our guidance and with some uncertainties ahead, we're adjusting our order book for the first fourth quarter and full year.
I'll now pass the call to Neal for a discussion of our third quarter financial results as well as guidance for our fourth quarter and a fully full fiscal 2023 year.
Thank you Mark.
Net sales for the third quarter ended October 31, 2022 increased approximately 6% to $1 8 billion from $1 2 billion for the same period last year <unk>.
Included in our sales for this quarter were $55 million and sales of the Karl Lagerfeld business, which became a wholly owned subsidiary on May 31, 2022 Accordingly.
Accordingly, the results of the Karl Lagerfeld business were included in our results for the entire third quarter.
Net sales of our wholesale segment increased approximately five 5% to $1 7 billion from $1 1 billion last year.
Net sales of our retail segment were $29 million for the third quarter compared to net sales of $26 million in last year's third quarter.
Our gross margin percentage was 32% in the third quarter of fiscal 2023 compared to 34, 2% in the previous year's third quarter.
The reduction in gross margin percentage is attributable to the decrease in the gross margin percentage in our wholesale segment.
The wholesale segment gross margin percentage was 37% compared to 33% in last year's comparable quarter.
Our elevated inventory levels resulted in storage and processing capacity pressures within our distribution centers.
We had been seeking and have now procured additional third party warehouse capacity to handle our higher inventory levels.
Going into the third quarter, we were not able to secure additional warehouse space in the timeframe we had planned.
Several negotiations took longer than expected and in certain situations. We did not want to enter into expensive long term commitments for such capacity.
The lack of additional space in our warehouses, along with port congestion and the logistical challenges related to trucking all contributed to us incurring approximately $27 million.
The mirrors charges in the third fiscal quarter, resulting in a one time 250 basis point negative impact to our gross margin percentage.
<unk> charges are paid to steamship carriers for delays in picking up freight from their terminals and where the most significant contributor to the decrease in our gross margin percentage for the quarter.
We expect that the additional warehousing space, we've now secured should eliminate almost all of the <unk> charges in the future.
The gross margin percentage in our retail operation segment was 54, 9% compared to 49, 8% in the prior year's quarter.
SG&A expenses were $240 million or 22, 2% compared to $182 million or 18% of net sales in last year's third quarter.
Warehouse costs increased significantly as a result of our higher inventory levels and the timing of receipts.
SG&A also grew by approximately $30 million as a result of the inclusion of the acquired Karl Lagerfeld business and our results for the quarter.
Looking ahead, we expect to continue to have elevated warehouse costs associated with higher inventory levels due to the second quarter of next year.
We also expect that the addition of the coil lagerfeld business in our results of operations will increase the percentage of net sales represented by SG&A expenses as the Karl Lagerfeld business model includes a higher amount of direct to consumer business, which has a higher SG&A rate.
GAAP net income for the third quarter was $61 million or $1 26 per diluted share compared to $106 million or $2 16 per diluted share in last year's third quarter.
non-GAAP net income for the third quarter was $65 million or $1 35 per diluted share compared to $108 million or $2 18 per diluted share in last year's third quarter.
Net income per share was negatively impacted by higher than anticipated. The mirrors course equal to approximately <unk> 40 per diluted share.
These charges along with elevated warehousing costs contributed to our net income per share being lower than forecasted.
A full reconciliation of our GAAP to non-GAAP results are included in our press release issued last night.
Turning to the balance sheet, our inventory was about two times last year's third quarter levels, which was a historical low base due to the supply chain issues and strong consumer demand that occurred last year.
Better comparison would be to consider comparable wholesale inventory levels to the pre pandemic third quarter in which we are up approximately 60%.
Inventories are up primarily as a result of the increased shipping times higher freight costs and the pull forward of the production calendar.
Our inventory increases are all from current purchases and will be viable into next year.
We have already and will continue to temper our buying into next year.
Also take account of our inventory levels.
We ended the quarter in a net debt position of $728 million compared to $238 million in the prior year.
This increase is predominantly related to the Karl Lagerfeld acquisition, which we funded with cash on hand, as well as the increase in our inventory position.
We had cash and availability under our credit agreement approximately $440 million at the close of the quarter.
We believe that our liquidity and financial position provide us the flexibility to take advantage of acquisition opportunities and invest in our future growth.
We expect our availability to grow significantly as we normalized inventory levels.
As for our guidance for the full fiscal year 2023, we now expect net sales of approximately $3 5 billion and net income of between $147 million and $152 million or between $3 <unk> per diluted share.
This compares to net sales of $2 77 billion and net income of $200 million were $4 <unk> per diluted share last year.
On a non-GAAP basis, we expect net income for the full fiscal year of 2023 of between 142 and $147 million or between $2 90, and $3 per diluted share.
This guidance compares to non-GAAP net income of $208 million or $4 20 per diluted share for fiscal 2022.
Full year fiscal 2023, adjusted EBITDA is expected to be between 265 and $270 million this compared to adjusted EBITDA of $350 million in fiscal 2022.
Let me add some context around modeling of the line items as a result of our third quarter results. We are now expecting that our full fiscal year 2023 gross margin percentage will be lower than fiscal 2022.
For the upcoming fourth quarter, we continue to expect that our gross margin percentage will exceed the prior years fourth quarter.
For the full year, we expect SG&A to Delever, primarily as a result of the inclusion of the acquired Karl Lagerfeld business and higher warehousing costs were.
We are anticipating interest expense to be approximately $55 million, which includes approximately $7 million of noncash imputed interest.
We are estimating a tax rate of 24, 5% after the inclusion of some discrete items during the year.
We have now we have not anticipated any potential share repurchases in our guidance.
That concludes my comments I will now turn the call back to Morris for closing remarks.
Thank you Neil and thank you all for joining us today.
Our team remains steadfast in its focus on executing our strategy for long term value creation.
We continue to actively work on new initiatives to evolve our business for the future and as always deliver for our shareholders.
Our diversification is a testament to the stable business model and solid foundation, we've created enabling us to navigate any environment.
As we continue in the fourth quarter. Our order book is strong and we are delivering on the balance of the holiday season.
I'd like to thank our entire G III reorganization and all our stakeholders for their continued support and wish everyone a happy holiday season.
Operator, we're now ready to take some questions and thank you as a reminder to ask a question you will need to press star one one on your telephone please standby, while we compile the Q&A roster and once again that is star one one to ask a question and one moment for your first question.
And our first question comes from Edward <unk> from Piper Sandler Your line is now open.
Hey, good morning, guys. Thanks for taking the question I guess first Morris on the quarter in terms of some of the demurrage costs. Just so we understand all that better.
Was there any impact of quality of inventory.
Were there any flow issues associated with it.
And then I guess the broader longer term question Mark how do you think Michele how should we think about the longer term organic growth profile and profitability profile of the remaining businesses. Once the PBF licenses are completely thank you.
Thank you Ed Thanks for your question.
The.
The demurrage and supply chain issues and quality of the inventory certainly deserves.
Solid response.
If anything our inventory is in tremendous shape.
We implemented new quality control systems overseas that further enhanced our quality of product.
We in difficult times Covid times.
We found it difficult to transport inspectors from one location to another which were normally done pre COVID-19 and we put on the ground solid inspectors to make sure that we got what we bought.
At the very least in most cases better than what we.
We anticipated so no issue on quality.
The integrity of the inventory number one it's it's all new.
It's a freshly produced.
It's freshly delivered its draft and ready to go and it was anticipated on.
Arriving early.
With no with no interference.
On the container space Transportation times.
And anticipated delays at the port So it worked better than we had anticipated what it occurred is we missed planned.
Our warehousing capacity.
The search for warehouses for the better part of six months, either warehouses that we would take controllers or partnered with third party providers.
There are several deals no less than four deals that were at the finish line ready to be signed that fell apart unique situations in different parts of the country.
So the lack of capacity cause some unexpected tremendous amount of unexpected demurrage.
And container charges.
So that is that's really the inventory issue its storage its not the scale of the inventory the inventory was bought with good and appropriate intent.
It flowed.
Load faster than anticipated.
The time on the water.
Accelerated which further exacerbated our situation, but it's all.
It's all great inventory that was anticipated for this time period there is.
Early spring inventory that sits there thats ready to go in the doors open at our retailers there as well.
All current inventory levels of data inventory inventory thats greater than the euro is at a record low. So there is not troubled inventory this isn't inventory thats sitting in the store.
That is anticipated to only when it's marked down this is full price great quality anticipated unplanned inventory.
I'm more disappointed in our mis and planning housing and moving the inventory than I am at the inventory level.
And.
The young children with respect to the operating margin going forward look we've commented on this before the brand the brand that we own traditionally will will run an operating margin that we would expect to be in the 15% to 20% zone.
Our blend is down in the high in the low double digits around 10% and of course, that's after we pay a royalty.
So to the extent that we can continue to move the portfolio into brands that we own we will continue to have elevated operating margins and certainly.
About a third of the portfolio today is owned so we're getting we're seeing.
That benefit we still have some more room to go with the recent acquisition of the Karl Lagerfeld European business I think we'll continue to see elevated operating margins on that business as we go forward.
And that's where we stand so so coupled with that addressing the organic.
Opportunities as you know, we bought DKNY and Donna Karan.
We bought we.
We brought <unk>.
<unk> to market.
In record time.
One of the most relevant brands to our sector today.
Bought it.
And in 2016, 2016, and with virtually no distribution in North America and created just an amazing brand out of it are reinforced the presence.
Earlier presence of the brand what we have on the shelf that we are now activating as Donna Karan.
Donna Karan there are very few brands in.
In North America, certainly there.
That are known by their first name there is Ralph these Calvin Tommy and Theres, Donna and there's not very much more so donna is an incredibly well recognized brand.
We were not certain where we would market that brand and this.
Current situation has brought us to bringing Donna Karan to market.
In the same sector that we best operate in.
So you'll have more news to follow this is the situation that just was signed on Tuesday negotiation started over two years ago.
And not our doing but.
A combination.
Yes.
Got done on Tuesday.
And in a form that.
Was acceptable for us for the period of time.
We have transition time as I stated there is no concern about the next three years.
We're responsive company and.
We signed on Tuesday, and Wednesday, we started to work and get everything into play. So you can expect quick movement.
You can expect marketing.
We don't have challenges.
Talent, we have the best talent in the industry housed here, we do not expect to make any changes. This is this is the operating army that we have that knows what to do.
We execute quickly.
We take on challenges and we pivoted when the World tells us.
So this is pivoted time this is the.
The troops are armed and ready to go.
Thanks, so much.
And thank you.
And if you'd like to ask a question that is star one one again, if you'd like to ask a question that is star one one and one moment for our next question.
And our next question comes from will Gardner from Wells Fargo. Your line is now open.
Hey, guys. Good morning, Thanks for taking my question.
Just a quick one can you guys remind us.
On the split of Carl wholesale versus retail what that split is.
Well on the acquired business, where about 60% DTC, so thats full priced outlets and the E com business.
That's where the European based business runs domestically, we are probably one third of the business.
Forecasted would be would be our outlet business.
Got you.
If this plan.
Slipped that you might be asking for as regions geographic regions.
Equally split pretty much from Europe , and North America.
Got you.
Just.
The license is rolling off over the next couple of years, how are you thinking about investment in those license.
And in production and all of that how does that sort of.
Can you just frame out how you're thinking about that over the next couple of years.
So it's business as usual.
These are brands that.
We are a challenge to protect and.
Reinforce retail presence in and we knew we plan on doing that so what's essential in protecting the positioning.
We will absolutely do we have been guardians.
The brand for over 15 years, we've done a flawless job in building it.
It's something that this team is extremely proud of.
Deservedly so.
We will we will not.
We will not do damage to the brand as we transition the brand.
Fair enough I'll pass it on thank you.
And thank you.
And one moment for our next question.
Yeah.
And our next question comes from Jay sole from UBS. Your line is now open.
Hi, Good morning, this is mauricio.
On behalf of Jason and thanks for taking our question.
I wanted to ask about Karl Lagerfeld, the performance in the third quarter, you called out $55 million in revenue and just was wondering if that was within your expectation or was that actually above that and also the number that you mentioned $30 million.
Incremental SG&A is that or the quarter or the year just wanted to make sure I understood that and lastly, if you could remind us.
Roughly how much to carbon Klein and Tommy Hilfiger represent of your EBITDA will be very helpful. Thank you.
Sure. Thanks, Steve. Thank you for your question.
Karl Lagerfeld European business operated slightly ahead of our expectations are more bottom line than top line their op margins are right around the 10% level at this point.
And we see that with some good potential to improve go forward. The SG&A that I called out the $30 million that was just in the third quarter.
And then with respect to the Calvin businesses.
And the Tommy business is it's about $1 billion $5, a total business and we really view that as an operating margin at about 10%.
Got it thank you very much.
And thank you.
And one moment for our next question.
And our next question comes from Paul Kearney from Barclays. Your line is now open.
Hey, guys. Thanks for taking my question.
Two parts. So can you just talk about the cadence of the license will expire so we have a multi year period.
Paul.
You're not coming through the plant sorry can you hear me.
Yes, that's much better please.
Sorry about that.
Can you talk about the cadence of licensing exploration. So we have.
The dates.
In terms of sales size is it equally weighted or is it more.
Weighted towards the end, that's one and then two.
If you were looking to potentially.
Still that business with new license agreements is that something that you have capacity to do before those expire or should we be looking at that.
You have to kind of.
We bring on new business as the other ones go out.
Thanks.
So the earliest.
Call It retirement date.
As.
Denim license with Tommy Hilfiger, which is insignificant in scale.
And we haven't replaced.
Our ability to replace brands through license or acquisition.
Is pretty vast.
There are.
Several noncompete.
We have agreed to.
That.
For for strategic reasons, I prefer not to disclose but there is there is a.
Huge world out there and the limitation is.
No more than three three or four.
Brands.
The capability.
That we have.
Can bring on brands immediately in the deal that we have is we can operate them simultaneously.
<unk> deemed to be competitive.
The ones that are competitive.
The situation is we can we can agree to them and we can launch them as we exit the the PVH is.
The PVH deal.
And.
Neil the opportunity to respond.
The depth of.
The calendar and the influence that.
Visits so.
So Paul Thanks for the question.
Sure.
The 8-K that was filed indicate all of the specific dates that falloff, we've mentioned that for the next three years, we're essentially intact.
And you can see which businesses fall off.
And then you can see the periods.
Sure.
Our plan is to replace these businesses, so rather than get into the specifics of how much dollars is going to fall off when that's really not the way. We're looking at it just yet so I'd rather not be focused on that our concept is to replace these these sales.
Thank you.
And thank you.
And one moment.
Next question.
And our last question is going to come from no was asking from Keybanc capital markets. Your line is now open.
Hi, Thanks for taking my questions I guess first just how do you see the promotional environment playing out relative.
Three months ago, when Youre looking out versus your expectations then.
And then if you could just provide a little bit of color around around the order book.
And then lastly, just on the license explorations just to dig in a bit more if we think about the business in 'twenty four 'twenty five 'twenty six.
Are you are you planning the business for.
Steady growth continuing through 2003 onwards via replacement and owned opportunities or.
Are you contemplating kind of Choppiness.
As the licenses rollout just any color on the kind of trajectory over the next five years or so it would be helpful. Thank you.
So let me let me try to respond to your questions as.
As far as promotions.
There are far less promotions and promotional activity than we anticipated.
The retail sell throughs.
Pretty strong surprisingly.
The.
Retailers are holding price in our sector and there are no major giveaways.
We are in the.
Mid tier department store business and not.
A major provider too.
To the next tier of business.
So promotions are not aggressive.
As far as.
Leave weren't open for Neil, but let me respond to the Choppiness.
The license.
I can give you a story is there.
It really relates to my last response.
We can operate multiple brands in classifications, so while we're exiting it.
It wouldn't be unique.
For us to sign on other brands or deliver other situations that would not grow our business for the next three four years.
The question is the bigger question is the permanence and how effectively we replaced the scale of the business that.
We will be giving up and were pretty comfortable that we have a replacement formula.
Which will disclose to the marketplace in the coming months.
As I said.
This is all this.
This is all new not totally unexpected.
So formulating our strategy is a work in progress that we will bring to you.
In the coming coming months.
But where we're energized as I said before we're ready to go.
We have found the most difficult.
Component in building a new brand is finding the right people.
We have that done we have the right people theres not one bit of change that needs to be made scouting for talent in this environment Thats acclimated to the culture that we have that will remain the same and it will be reinforced with brand owner.
Sure we have a tremendous advantage was much more difficult and in creating.
And blending of culture, when we acquired DKNY. This one believe it or not this is an easier process.
Talent, our capital everything we need is in place to just March forward in.
And do well do well for ourselves and for the shareholder and certainly for our employees have been incredibly loyal to our company. So we're armed and ready.
No with respect to the order book, it's coming along certainly the fourth quarter is very much intact. Our first quarter Spring book, We're actively working we are seeing that retailers.
Appetite again continued to be closer to buy time. So there is certainly some pressure there in.
And candidly if you look at the past few years now you have got some very hard compares with respect to Covid, the turn on and off of ordering cycles, but we're very comfortable with what's being developed now and we will continue to develop that spring order book.
Into summer.
Thank you thanks for your question.
Yes.
Thank you Anna.
I am showing no further questions.
Thank you operator, and thank you for being part of our call and hopefully we've explained some of the sensitivity in our business.
And wishing you a happy holiday. Thank you all.
This concludes today's conference call. Thank you for participating you may now disconnect.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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