Good day, and welcome to the Oxford Industries, Inc. First Quarter Fiscal 2012 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the call over to Ms. Anne Shoemaker, Treasurer. Please go ahead, ma'am.

Thank you, Melanie, and good afternoon, everyone. 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 the forward-looking statements. Important factors that could cause actual results of our operations or our financial condition to differ are discussed in the documents filed by us with the SEC. We undertake no duty to update any forward-looking statements. Also, during this call, we will be discussing certain non-GAAP financial measures. You can find a reconciliation of these non-GAAP financial measures to GAAP financial measures in our press release issued earlier today, which is posted under the News Room tab of our website at oxfordinc.com. And now, I'd like to introduce today's call participants. With me today are Hicks Lanier, Chairman and CEO; Tom Chubb, President; Scott Grassmyer, CFO; Terry Pillow, CEO of Tommy Bahama; and Doug Wood, President of Tommy Bahama. Thank you for your attention. And now, I'd like to turn the call over to Hicks Lanier. J. Lanier: Good afternoon, and thank you for joining us to discuss our first quarter results. We have begun fiscal 2012 on a strong note with an 11% increase in sales and with adjusted EPS ahead of our guidance at $1.12. These results were fueled by strength at both Tommy Bahama and Lilly Pulitzer, particularly in the direct-to-consumer businesses. At Lilly Pulitzer, we have begun our store rollout, our new right sized stores in Charlotte and Atlanta have been met with a great deal of excitement, and their performances are exceeding our expectations. We now have a lease signed at Towson Center outside of Baltimore and are actively working on securing additional leases. Tommy Bahama's global expansion is underway, with stores now open at Macau and Singapore, and additional stores slated for Hong Kong and Tokyo. In addition to Tommy Bahama's international expansion, we will operate approximately 11 additional stores in the U.S. by the end of 2012. The build out of the New York Fifth Avenue location with 2 bars, a restaurant and a store is in progress at NYSE [ph], and our Michigan Avenue store will open later this year. We continue to believe that our emphasis and investment in our direct-to-consumer businesses and international expansion is critical to driving long-term profitable growth. As always, we are mindful of the challenging economic environment. But to date, we are pleased with the way that we have positioned our company to navigate those challenges. And now I'd like to turn the call over to Terry Pillow to discuss Tommy Bahama's results for the quarter. Terry?

Thank you, Hicks. We couldn't be more pleased with our first quarter results. Tommy Bahama reported a 15% increase in net sales to $141.1 million for the first quarter of fiscal 2012. High single-digit comp store sales increases in our full-price stores, the contribution from new stores, significantly higher e-commerce sales and increases in our wholesale business drove the increase. Our operating income rose 8% to $25.6 million, driven by higher sales, but also reflecting the planned increase in SG&A from expenses associated with our international rollout and pre-opening costs for the New York store and costs associated with operating additional retail stores. Our first quarter saw strength in all categories of our business, and our performance in non-resort regions of the country such as the Midwest and West Coast was very strong. Women's performed exceptionally well this spring, with a nice run-up through May, reflecting significant Mother's Day sales. In the first quarter, our direct-to-consumer women's business grew 25% over last year. This performance further validates our strategy to continue to develop and grow Tommy Bahama women. To further enhance our women's business, we brought on a small development and sourcing team last year for women's accessories and have seen a positive result in scarfs, handbags, beach bags, jewelry and footwear. Our creative services team has been working to align our message in our stores, e-commerce site and our advertising mailers. This team has focused our look and feel to reflect the more aspirational and forward view of the brand. 250,000 Father's Day mailers were sent to targeted customers in the last week in May, and another 250,000 are being mailed this week. The early read is that we have very positive momentum leading to Father's Day as we are seeing a direct and immediate effect on traffic and sales, boding well for our second quarter. As Hicks mentioned, our international expansion is well underway and we are very pleased with our management team's execution. Both Macau, which opened in March, and Singapore, which has been open about 2 weeks, are reporting solid sales. These customers are embracing the island lifestyle message, which is a fresh new look at retail in these markets. Hong Kong and Tokyo are next. Our plans for international expansion have a long-term horizon, and we expect this to be another sales growth engine in the years to come. Now I'll turn the call over to Tom Chubb to discuss results for the rest of our operating groups.

Thanks, Terry. Good afternoon, everyone, and thank you for joining us. I'll start with Lilly Pulitzer. While the spring selling season is traditionally the biggest of the year for Lilly, their results for the first quarter of 2012 were, nonetheless, nothing short of remarkable. Sales in the first quarter of fiscal 2012 rose 19% to $35.6 million. This growth was achieved with increases in comp store sales in the upper teens, the addition of the Charlotte retail store and continued dramatic growth in e-commerce sales. Lilly also saw a meaningful increase in its wholesale business year-over-year. With a healthy sales increase and a higher gross margin, Lilly reported a stellar 35% increase in adjusted operating income to $11.6 million for the first quarter of fiscal 2012. On the product front, Lilly continues to be fueled by strength in dresses. We have also been delighted to see some very good selling results in bottoms, particularly our elegant, light, bi-stretch twill trouser, colored denim, a 100% linen beach pant and the pippa pant, a printed drapey rayon pant that epitomizes Lilly's resort chic positioning. Lilly also recently launched the Island Polo, a cotton spandex performance PK that comes in 8 optimistic colors and has been well received by the consumer. At the end of May, we opened a Lilly store at Phipps Plaza in Atlanta. At 2,600 square feet, it is similar in size and design concept to the store we opened in February in Charlotte. Like Charlotte, the Atlanta store's off to a terrific start. We are delighted with the store and believe it is a highly scalable retail model that will provide excellent prospects for continued growth. Never comfortable resting on their laurels, the Lilly management team also continues to strengthen its already deep talent pool by adding key positions that should help drive future growth. Ben Sherman continues to be impacted by the very difficult economic conditions in the U.K. and Europe, where it operates approximately 70% of its business. Traffic year-over-year in our retail stores in these markets was down markedly with the resulting downward sales pressure being partially offset by significantly higher average unit retail prices. The higher retail prices are the result of our strategy to sell more elevated, special and a higher-priced product. Reduced traffic in these markets has also created a highly promotional environment, which together with the higher input cost, put pressure on gross margins for the quarter. For the first quarter, Ben Sherman reported net sales of $17.4 million compared to $19.4 million in the first quarter last year due to expected reductions in its U.K. and European wholesale business. The operating loss for the first quarter was $2.7 million compared to an operating loss of $800,000 from the first quarter of fiscal 2011, primarily due to gross margin erosion and lower wholesale sales. The impact of higher product costs on gross margin should abate in the second half of 2012. We have seen modest improvements in traffic early in the second quarter, but we remain very cautious and will continue to manage this business closely. Lanier Clothes reported sales at $33 million in the first quarter, flat with last year. Operating income declined to $4 million in the quarter from $4.7 million in the first quarter of fiscal 2011, primarily due to continued gross margin pressures. The team continues to execute very well, delivering a respectable 12% operating margin. The corporate and other operating loss for the first quarter of fiscal 2012 was $5.1 million compared to an operating loss of $4 million in the first quarter last year. The difference was primarily due to the impact of LIFO accounting, where we had a $600,000 LIFO credit in the first quarter last year and a $200,000 LIFO charge in the first quarter this year. I'll now hand the call over to Scott Grassmyer. K. Grassmyer: Thank you, Tom. I'll walk through our consolidated results. As Hicks mentioned, we reported a strong first quarter. Our consolidated net sales rose 11% to $231 million, and on an adjusted basis, earnings per diluted share from continuing operations increased 5% to $1.12. On a U.S. GAAP basis, earnings per diluted share from continuing operations rose $0.06 to $1.09 in the first quarter of fiscal 2012. As we anticipated, there were some gross margin pressures in the first quarter, particularly at Ben Sherman and Lanier Clothes, with higher cost of goods compared to last year flowing through cost of sales. Ben Sherman's gross margins were also impacted by the depressed economic conditions, affecting its U.K. and European businesses. Consolidated gross margins for the first quarter of fiscal 2012 decreased slightly to 55.9% from 56.5% in the first quarter of fiscal 2011. We expect these gross margin pressures to begin to ease in the second half of fiscal 2012. This, along with the anticipated increasing proportion of the higher gross margin Tommy Bahama and Lilly Pulitzer businesses relative to the prior year, is expected to result in consolidated gross margin expansion for the year. SG&A for the first quarter of fiscal 2012 was $100.8 million or 43.6% of net sales, compared to $91.1 million or 43.8% of net sales in the first quarter of fiscal 2011. Some leveraging of SG&A was achieved despite the $2.4 million of cost in the first quarter associated with the Tommy Bahama international rollout and the New York store. Our New York location will have an unusually long build-out period. We took possession of our New York location earlier in the year and plan to open the store late this year. As a result, we will have rent expense flowing through our P&L for most of the year without the benefit of meaningful revenue. Interest expense for the first quarter of fiscal 2012 decreased 25% to $3.6 million as a result of our repurchase of $45 million of our 11 3/8 senior secured notes in fiscal 2011. As we have previously announced, we intend to redeem the remaining $105 million of notes in July of 2012. To refinance the redemption of the notes and ensure adequate liquidity, we expect to amend and restate our existing $175 million U.S. revolving credit facility to, among other things, increase the size of the facility and extend the maturity date. This is anticipated to reduce interest expense for 2012 to approximately $9.5 million, which is lower than our previous estimate of $11 million. In the second half of fiscal 2012, interest expense is expected to be approximately $2.6 million. The effective tax rate for the first quarter of fiscal 2012 was significantly higher than last year at 38.3% compared to 34.2%. The effective tax rate for the first quarter of fiscal 2012 is more indicative of the anticipated effective rate for the future periods as last year's rate benefited from certain favorable prominent differences and discrete items. Inventory increased to $86 million at the end of the first quarter from the $62.8 million at the end of the first quarter last year. The increase was supportive of our anticipated sales growth across all channels of distribution and the operation of additional stores. Our inventory levels were also impacted by increased product costs and early receipts from vendors. At the end of the first quarter, we had very good liquidity with approximately $159 million available under our U.S. revolving credit facility. In the quarter, we had $9.6 million of capital expenditures and continue to expect capital expenditures to approach $60 million for the year. For our outlook for fiscal 2012, we are pleased to raise our full year guidance for adjusted earnings per share to a range of $2.85 to $2.95, compared to $2.41 per share in fiscal 2011. The increase is supported by the continued positive momentum in Tommy and Lilly, as well as the impact on interest expense from the refinancing of the Senior Secured Notes, partially offset by the higher anticipated tax rate. We also have increased our full year outlook for sales to a range of $850 million to $865 million, compared to sales of $759 million in fiscal 2011. The adjusted earnings per share excludes the impact of approximately $9 million in charges associated with the expected refinancing of the Senior Secured Notes and approximately $2.4 million associated with a change in fair value of contingent consideration. On a U.S. GAAP basis, diluted -- earnings per diluted share from continuing operations for fiscal 2012 are now expected to be between $2.40 and $2.50, compared to $1.77 in 2011. The second quarter, ending on July 28, 2012, the company anticipates net sales in the range of $200 million to $210 million, compared to net sales of $180.6 million in the second quarter of fiscal 2011. Adjusted earnings per share are expected to be between $0.60 to $0.65 compared to adjusted earnings per diluted share of $0.57 in the second quarter of fiscal 2011. On a U.S. GAAP basis, earnings per diluted share for the second quarter are expected to be between $0.23 and $0.28, which includes the impact of approximately $9 million in charges associated with the expected refinancing of the Senior Secured Notes in July 2012 and a $600,000 charge associated with the fair value of contingent consideration. The earnings estimates for the year include the impact of approximately $12 million of expenses associated with the Tommy Bahama International rollout in the New York store, with approximately $3.1 million of these costs expected to occur in the second quarter. Thanks for your attention, and now I'll turn the call back over to Hicks Lanier for some closing comments. J. Lanier: Thanks, Scott. Melanie, we are ready for questions now if there are any.

[Operator Instructions] And we will go first to Edward Yruma with KeyBanc.

Given the success that you reported with these new format Lilly Pulitzer stores, I believe you indicated you signed one additional lease. But how does this success make you think about the longer term growth opportunity for Lilly, particularly as it relates to store count?

Well, definitely it has us pretty excited about direct-to-consumer and bricks-and-mortar retail in this 2,500 square foot or so format that we've settled into. We think we've really hit the right size for Lilly Pulitzer and what we found with the early results in Charlotte and Phipps is that we're in -- when we're in the right locations in that size box, it works really well. As we've told you on several occasions before, Ed, the Lilly team had not really opened any new stores for several years before we bought them. Charlotte, at the beginning of the quarter, was the first that they'd open. Now they've opened Phipps, we've got one more lease signed. We're going to be very disciplined in site selection and size. There's also some infrastructure building that needs to be done in terms of the team to support new store openings. So for right now, I think that number we've given you of sort of 3 to 4 a year is the right number to be thinking about, although we -- our enthusiasm for retail is definitely increasing.

Great. And I know you called out some success with Lilly Pulitzer, wholesale as well. Can you give us an update as to whether that's existing doors and if there is an incremental of wholesale door opportunity?

There is -- I don't think there was any meaningful increase in distribution, Ed, and our distribution strategy for Lilly Pulitzer is the same as it's been, which is that we are delighted when we can find customers that have the same idea about how to present the brand and how to manage the brand and where those opportunities, where we find those, we will, of course, be delighted to sell those accounts. But where we can't do that, we will stay focused really on just growing the direct-to-consumer business. And direct-to-consumer is really where we're focused on growth.

Great. And the final question, I know that you've taken a lot of steps to stabilize and improve the underlying Ben Sherman business. But given the macro weakness in Europe, does it give you any more thought about strategic alternatives for the business?

Obviously, the results in Ben Sherman were not good. We expected to have a tough first quarter this year and it didn't disappoint at all. The macro conditions over there made it extremely tough, and I think if we didn't believe that the macro conditions were making it so hard for us, we would probably be thinking more quickly about what our alternatives might be. We do think that the strategy that Ben Sherman has settled on is the correct strategy for them and it's really just become quite difficult to get the results as the right -- as the result of the macro conditions. J. Lanier: Yes, just an add-on to that, Ed. We spent a good deal of time in the U.K. and on the continent. And we would compare the current conditions very similarly to what we had in '09, '08 and '09 here. And if you can turn the clock back and remember what that was like, it was pretty tough. So we're hoping we're going to see improvement there. But if not, we'll do what we have to do.

We'll go next to Eric Beder with Brean Murray.

Could you -- what is driving -- I'm sorry, I missed it. What is driving interest expense reduction for the back half, is that just lower cost of debt sort of replacement? K. Grassmyer: Yes, we're more favorable structure of replacing the debt. We are looking at amending our existing revolver. And so we will anticipate more and more of the revolver rates, of which are materially lower.

Okay. In terms of you've had some great brands here. In terms of the essential to -- what do you think in our pricing here over this year -- I know last year raised by some both Ben Sherman and Lilly, what's the thought process in those brands for this year in terms of pricing?

For price increases, the prices at Ben Sherman are up materially this year as I mentioned in my comments. That's not like-for-like product necessarily. But, as you know, Eric, we try to really elevate the whole brand. I think elsewhere within the business, the other 3 operating groups, it was really more selected price increases where we thought the -- there was room to do that.

Great. And in terms of Tommy Bahama Women's, as you -- what categories are really driving that and where, I made mention accessory, though, but are there other alternative or other opportunities to drive it even higher?

Yes, Eric. This is Terry. The big categories are not dissimilar to the Lilly business. Yes, it had been the big winner for us in Tommy Bahama, which is good news story for us because it's the most feminine category and it's the category that we've seen rapid growth. We -- there are, as I mentioned, we're very excited about this accessory business for us to get in the bag business, women and shoes is a big opportunity for us. But just generally, we're seeing great business. You can't get these increases that we're seeing in women's just by one category. So it's being led by dresses, but overall, just the acceptance to the product that we're putting out there has been overwhelmingly positive.

And in terms of the category, you've talked before about 30% at the stores, is it still about that level, what -- how much is it by increasing, I guess, as a percentage in the own stores?

It's increasing as a percentage of our total direct-to-consumer business in our stores and on the e-commerce business. It is still growing consistently with where we said. And as you said, it's running approximately 30% of our total business. But the problem with that, Eric, is that as a percentage, we would love for it to be higher. But we -- our men's business is growing fast too. So it's kind of hard to outpace that, which is [indiscernible] high quality problem, right?

That's a very high quality problem. Just last question on e-commerce. E-commerce is a big push for you, where do you see that going? And I know that you view like only big and tall on the Tommy Bahama side, are there opportunities like that to create niches for the e-commerce that you don't see at the stores?

Scott? K. Grassmyer: Yes, there is -- the e-commerce has so many different baskets, big and tall again is the business that we don't have in stores. Just last week, we tested a product with Major League Baseball, where basically put a shirt out there and pick your team and we embroider it here and so it's almost made-to-order for whatever team you want to have. Immediately that was our number one item on the site that day. So there's certain businesses, opportunities you can do online that you just can't do in the stores. So it's just a pretty amazing channel.

We'll go next to Robin Murchison with SunTrust.

I want to ask you, let me start with Tommy. The comps that were mentioned in the full-price stores, is there anything to say about the comps in the outlet stores?

Yes, Robin. I mean, our outlet stores comp sales, are -- we're very pleased with them, consistent with our -- actually slightly better than we're reporting in full-price stores. So we're very -- it's a significantly less number of doors that we have out there in outlets, but we're very pleased with the comp increase. As you know, we use that as a disposition channel to make sure that we maintain a full-price strategy in our full-price stores. However, it's always nice to see when they're working. And also, the gross margin, not only did the comp sales increase in those stores significant, but also our gross margin in the outlet stores improved greatly. So we couldn't be more pleased with the performance of both full-price and outlet retail.

Sounds good. I just wondered if I needed to be worried about the omission of comp reference to the outlet stores?

No. don't worry.

Okay. All right. Let me -- so let me move on with Lilly. It's interesting, in 2 natural markets, Charlotte and Atlanta, for Lilly Pulitzer and undoubtedly, some interesting competition or at least you've got to have competition with some signature stores or product placements. So that's commendable what you're doing as well on your own stores, that you get the full breadth of assortment with those 2 new Lilly stores. What about -- can you give us an update about West Coast Lilly, West Coast demand, as that seems to be such a wide open space for you guys in terms of signature and company-owned stores?

Well, it's the 2 guys that run Lilly Pulitzer for us, Scott Beaumont and Jim Bradbeer, say anything west of the Mississippi is international for them. And I think that's still very much the case. I mean, it's very much in the East Coast brand at this point. They're really focused on the East Coast as they say they want to sort of color in the map on a contiguous basis. They feel like there's a lot of white space still on the East Coast, and that's where they're going to focus first and foremost. But longer term, we certainly believe that there's an opportunity to move west. And there is some wholesale business that's done out on the West Coast. That's not huge at all, but there is some that's done out there.

What about...

At 6 points out, the e-commerce, we also see demand from there. And California is typically one of our top states in e-commerce. Of course, it's a big state with a lot of population. But nonetheless, we do generate a lot of e-commerce business from there.

Okay. Just in terms of keeping up with sort of watching Lilly on the web, and watching the emails and so forth and so on, it seems to me -- and you talked about new categories in Tommy Bahama, but it seems like you've expanded the assortment in shoes and maybe some other non-apparel categories but even in apparel, am I right in thinking that you guys are adding a number of new prints and silhouettes and just upping the ante in terms of the SKU count?

I'm not sure that the SKU count really moved all that much year-to-year, it was probably a little bit bigger this spring, summer. But there's -- I think we actually want to manage the SKU count, not let it get too big. They are trying to develop in some sportswear categories that they haven't been as strong in before. And the sportswear portion of the business is growing at a pretty rapid rate at this point. Of course, dresses are growing, too. It's sort of like Terry's analysis of men's and women's in Tommy Bahama. We're sort of growing in all parts, which is a good thing.

Is there anything, Tom, to talk about in terms of additional opportunity for Lilly in the second half of the year, which is traditionally not seasonally strong for Lilly in maybe some initiatives?

Well, they've definitely done some things in fall, and resort, which are they're weakest seasons, the third and fourth quarter really for them are the weak part of the year, and they've definitely done some things to try to capture some of the fall-type business where, for example, the 725 delivery is heavy on knit dresses, and Lilly colors but fall-friendly colors. And that's sort of a good transitional fabric for a lot of their markets, the knits are -- that they hope to build on the fall business. It still will not be their strong season, but they're doing some things there. And then as you get into resort and holiday time, they're trying to make sure they have plenty of giftable type items, as well as some sort of unique items. They have a puffer vest they've done for this resort season. It comes in several Lilly colors. And then a print version as well, the solid colors have print lining and then there's one that's print on the outside. They've also done a very plush sort of polar fleece-type jacket, again, in Lilly colors. That's quite nice-looking. And both of those booked quite well. So they're definitely doing some things to try to enhance the second half business.

[Operator Instructions] We'll go next to Susan Sansbury with Miller Tabak.

Sticking with Lilly. You -- Tom, you mentioned that there are going to be some talent pool additions, new talent pool additions. Can you elaborate on that? And is this part of this infrastructure build in front of rolling out more than 2, 3 to 4 stores a year?

Well, it is. It's part of that, although it's not limited to that. But Lilly's experienced some pretty significant growth over the last couple of years, going from somewhere in the mid 70s 2 years ago to 110-ish this year. So that's a lot of growth to sustain in what was a fairly small business. So they're adding people in the design area. They're adding people in the marketing area, in the e-commerce area, which continues to grow very rapidly in information technology, places like that. Retail, of course, all areas where we need capable people to help us capture the growth opportunities. And some of that has already happened and some of it is yet to come.

Sticking with Lilly, you said in e-commerce, in the press release or the prepared remarks, I don't remember which, you used the word or adjective, dramatic increase in e-commerce for Lilly. What is -- how big is dramatic? Is there a number associated with that?

It's more than the comp store sales increase that we saw in our retail stores, which I think we said was in the upper teens. That's more...

And so the penetration rate has moved up to -- I think is was high teens at year end, so is it 20% now?

You mean at what percentage of the total business it is?

Right.

I think we reported that at the end of each of the previous 2 years and we'll probably do that again this year. But we're getting great growth in e-commerce.

Switching to Ben Sherman, I hate to bring it up, but I think given the macro environment in Europe, presumably, the plan for Ben Sherman has come down. Can you share with us what the outlook for Ben Sherman is for the year at this point? And then Tom, is there a plan B? I mean, are you prepared if Europe gets into a real tizzy, are you prepared to cut costs or do something more -- a little bit more dramatic than just plan conservatively?

Yes, I think at the beginning of the year, we said that we expected Ben Sherman sales to be roughly flat with last year, and that we thought they would make a little bit of money this year. The way that Ben Sherman business flows, it was always the case that the first half was not going to make money, it was going to lose money and then we'd make some in the second half. With the economy there being worse than we anticipated, I think we now expect sales to actually be down a bit to last year, sort of mid single digits percentage-wise, down to last year. And I think Ben Sherman will have to work hard to get to the breakeven. And that would be a first quarter loss. Hopefully, a smaller second quarter loss and then some profitability in Qs 3 and 4. And then as to plan B, Susan, you've known us for a long time, and you know that from sort of a corporate perspective, we're in this to make money for our shareholders and we're patient, long-term guys, but we're not afraid of making bold moves if those become the right thing to do for the shareholders.

Okay. Great to hear. Just a question for Scott, then I'll get off. Scott, you said gross margins for the year was going to be up. Is -- are you still at liberty to quantify what the -- what that gross margin improvement might be in terms of bps? K. Grassmyer: Hopefully, we will be at least 100 basis points up. But it's really going to depend on the direct-to-consumer momentum and how well it continues, but I think that's a reasonable expectation.

Okay. And then finally, are you -- what are -- you didn't talk about the structure of this new financing yet so I guess it hasn't been put to bed or can you discuss the structure? K. Grassmyer: It's a basically a restatement -- amendment and restatement of current facility with an upsize. And we're not ready to give the exact details because as you said, it has not closed but we're still highly confident it will and what it will provide is ample liquidity and enable us to take the notes out without having to go to the term market to do so. Certainly, conservatively more favorable interest expense picture than our original guidance for the year.

Okay. So there won't be any term loan, it will just be revolver? I'm sorry... K. Grassmyer: It will be revolver, correct.

And one, the $9.5 million -- what was your actual interest expense last year or is this $9.5 million net of interest income? K. Grassmyer: No, there's no interest income to speak of with the range now, but we're -- last year, we're at $16.2 million.

That was interest expense? K. Grassmyer: That was interest expense last year. And remember, we had $150 million of bonds outstanding until we bought a chunk back in Q2 and a chunk back and a smaller chunk back in Q3. So that picture was a moving throughout the year, then we open this year at $105 million of the bonds. And should in much more favorable interest in foreign rates.

We'll go next to James Ragan with Crowell, Weeden.

I do have one question on Tommy Bahama. Terry, you had mentioned growth in the wholesale segment. Can you just talk little bit more about are you getting more product placement this year? Anymore floor space maybe just a little color on that.

We -- thanks for asking. We're just -- we're looking at today -- last week, as we move into the Father's Day season, and with all our big major accounts, we've had a terrific couple of weeks on the selling side of the business to the consumer. Our forward bookings are up for the back half of the year. We'll be opening our spring line, but our holiday bookings are up. So we feel good. Listen, we talk a lot about direct-to-consumer and that's clearly where we've got a lot of focus, but our wholesale partners, it's still a significant piece of the business for us, and right now, it's tracking nicely in our accounts that -- important accounts that -- retailing to product is great. And also, the mix of products that they're retailing, it's -- we've gotten a lot of attraction outside of short-sleeved shirts, which was traditionally this time of year, our big business. Long sleeves is a big push in that business, so we're very happy and very pleased with the performance of wholesale business. I appreciate you asking.

Okay. Great. That's good to hear. And then looking at just the overall inventory position, pretty typical decrease from the fourth quarter, but you had a bit of an increase year-over-year. Could you just talk a little bit about that? Is that fairly balanced across the different segments? J. Lanier: Why don't you take that one. K. Grassmyer: Yes, I mean, Tommy Bahama is the biggest piece, but with the growth, their experience and there's inventory support, the future sales growth and also with the number of doors increase year-over-year. There is inventory associated with that. And we also have some little bit earlier shipments from vendors, which is nice when your business is so good to have the inventory in a little early, it gives you a lot more flexibility. So we're very happy with our inventory levels. But Tommy Bahama, our growth businesses, are the main places.

Okay. And a related question on the inventory, related to Ben Sherman. Hicks, you had mentioned a bit of a comparison to the '08, '09 period that we had here domestically. And one of the things you did then was to give up sales at the expense of keeping the inventory fairly clean. I mean, are you doing that type of thing at Ben Sherman now? J. Lanier: We're very conservative and pragmatic there. So...

Yes, okay. And then, going to the international. Sorry? J. Lanier: I haven't fully answered your question. Obviously, with the sales not hitting our targets for the first quarter, we have some excess inventory and that's built into the margin discussion we've had with the margin being a little lower. But it is a manageable issue. We certainly don't have major disaster on our hands.

Right. Yes, it's a fairly small percentage of the inventory anyway. J. Lanier: That's correct.

Okay. Sorry for interrupting you there. And then the last question is having to do with the new stores in international stores for Tommy Bahama. I guess, at this point, the only one you really have experience with is in Macau. Anything in the early stages that you're able to learn and perhaps apply to Singapore, Hong Kong, or eventually, Tokyo as you're getting ready to open those? I guess, Singapore just opened, but anything that you're learning from Macau that might help you with the other stores?

Every day, James. And then I will say that big things that we wanted to learn, these first 2 stores were relatively small stores. We wanted to get them opened and the key thing, as we've talked about before, we initiated a brand-new size spec for that market. And the good news is it's overwhelmingly being received positively, the close fit, which is something that we're very happy about. And also just the acceptance. I mean, we opened kind of quietly, we didn't a whole lot of marketing dollars over there, but the acceptance to the brand and the brand message I mentioned in my prepared remarks is we look different in that market. We're not competing with -- for price. We're competing in the lifestyle business and our lifestyle approach and even though the stores we opened were small, we didn't skimp on building out very aspirational build outs over there. So the learning in the 2 stores in Macau and Singapore, not only did we learn that sizing works but the business is I said has been very good. With our expectations have been met. The next 2, Hong Kong, which is slightly quite a bit larger, almost double the size of those 2, is going to be very interesting. And then as we move into Tokyo, where we're going to open an island, where we're going to have a restaurant and a bar, we're very excited about those 2. Again, that's a much larger location. So all the things we wanted to learn with the 2 new stores in Macau and Singapore, we have learned and its positive and we're looking forward to continuing the strategy.

And what do the timing look like on the Hong Kong store?

Hong Kong looks like October, November. And then looks like right now, we're going to push Tokyo because we're getting our legs on the restaurant and the bar there. It's look like we're going to push that into next year.

We'll go back to Susan Sansbury for a follow-up.

Yes, a question for Terry. You mentioned that you're broadening the accessories assortments at Tommy Bahama Women, is that correct?

Yes.

We're those -- are you bringing license in-house or are you licensing or can you just clarify what you are actually doing here?

Right now, Susan, what we did as I mentioned, we brought on an in-house group of development design and sourcing people to take those categories right now to see where we get traction. We were buying some product from the market just to keep those categories going. But now, we're doing our own development, not licensed, the bags and beach bags and women's bags and scarfs and the things that I mentioned, and we think that the early read on it is where we're acceptance with the product. It's small and we're doing it just for our stores, we're not wholesaling those products but we're learning a tremendous amount, and we're learning that the acceptance is good. So we're not opposed to licensing. As some of these categories we get up and running with international -- with the business we need these categories to tell our lifestyle brand and if one of them emerges into a category that we could think about licensing, we're not going to rule that out. But right now, we're trying get in those businesses on our own, and so far, we've -- the team has done a great job even with the small quantities of getting those product sourced at very respectable gross margins, so we're very happy about it.

Okay. And then within the U.S. license product category, has there been any major changes? I mean, I remember furniture being the single largest license category but that may be -- I may be woefully out of date, this is prerecession.

Our furniture is still a very nice business. As a matter of fact, we're opening a furniture store in Newport Beach, freestanding Tommy Bahama furniture store in Newport Beach, the license is. We're not -- that's not our store, but we're working with them very closely on that store because it's a Tommy Bahama store. The only big difference in licensing is we have fragrance. We have just entered into a new agreement on fragrance, home fragrance, that we're very excited about, we'll be launching in the holiday season and small -- and a soft launch and really launching into the spring, but we're very excited about that. It's always been a very important piece of our business. We've got a great new partner. But other than that, all our licensing business seem to be quite strong.

Is the agreement signed? Can you reveal who your new fragrance partner is?

We'll be announcing it. It's a done deal, but I'd rather wait on that.

Okay. No, no, I'm -- just analysts are nosy. So I understand. Are you still doing rum?

We are not doing rum. We discontinued the license with rum, but we are exploring a new license. We are talking to someone about a new rum. We like the rum business as a license, and we have enough from the license to continue in our stores right now but we're in active talks with someone about a new and better and more improved rum distribution agreement.

Okay. Royalty income is trailing the performance of Tommy Bahama per se, why is that? Or am I not interpreting the numbers correctly? The growth in royalty income is not as good as... J. Lanier: Royalty, is I guess for all brands, not just Tommy.

So who's down? J. Lanier: Ben Sherman will be down.

That concludes today's question-and-answer session. At this time, I will turn the conference over to Hicks Lanier for any additional or closing remarks. J. Lanier: Okay. Thank you, Melanie. As I think you can grasp from the conversation today, continued growth in our direct-to-consumer business and development of an international business are critical elements of our strategy to drive long-term profitable growth and deliver value to our shareholders. We are delighted with the progress our management teams are making on both fronts and believe our future prospects are very promising. Thanks for your interest and attention today, and we look forward to our next communications in about 3 months.

That concludes today's conference. We thank you for your participation.