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`Under Armour's (UA) CEO Kevin Plank on Q2 2014 Results Earnings Call Transcript | Seeking Alpha
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`Seeking Alpha 0‘
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`Under Armour's (UA) CEO Kevin Plank on Q2 2014
`Results Earnings Call Transcript
`
`Under Armour (NYSE:%)
`
`Q2 2014 Earnings Call
`
`July 24, 2014 8:30 am ET
`
`Executives
`
`Thomas D. Shaw Director of investor Relations
`
`Kevin A. Plank Chairman, Chief Executive Officer, President and Founder
`
`Brad Dickerson Chief Financial Officer and Principal Accounting Officer
`
`Analysts
`
`Pamela Nagler Quintiliano SunTrust Robinson Humphrey, lnc., Research Division
`
`Faye l. Landes Cowen and Company, LLC, Research Division
`
`Omar Saad ISI Group inc, Research Division
`
`Randal J. Konik
`
`Jefferies LLC, Research Division
`
`Operator
`
`Good morning, ladies and gentlemen, and welcome to the Under Armour, inc. Second Quarter Earnings Webcast and
`Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn
`the call over to your host, Mr. Tom Shaw, Director of investor Relations. Mr. Shaw, you may begin.
`Thomas D. Shaw
`
`Thanks, and good morning to everyone joining us on today's second quarter conference call.
`
`During the course of this call, we'll be making projections or other fonivard looking statements regarding future events or
`the future financial performance of the company. We wish to caution that such statements are risks and
`are subject
`to risks and uncertainties that couid cause actual events or results to differ materially. These risks and uncertainties are
`described in our press release and in the Risk Factors section of our filings with the SEC. The company assumes no
`obligation to update forward looking statements to reflect events or circumstances after the date on which the
`statement is made or to reflect the occurrence of unanticipated events.
`
`Joining us on today's call will be Kevin Plank, Chairman and CEO; followed by Brad Dickerson, our Chief Financial
`Officer, who wili discuss the company's financial performance for the second quarter, followed by an update to our
`2014 outlook. After the prepared remarks, Kevin and Brad will be available for a Q&A session that will end at
`approximately 9:30 am.
`
`Finally, a replay of this teleconference will be available on our website at approximately 11 a.m. Eastern time today.
`
`And with that,
`
`I'll turn it over to Kevin Plank.
`
`Kevin A. Plank
`
`Thank you, Tom, and good morning, everyone. In our press release this morning, we raised our full year revenue
`guidance for 2014 to a range of $2.98 billion to $3 billion. That represents growth of 28% to 29% for the year, an
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`increase from our prior range of 24% to 25%. That's a great forecast of growth, strongly supported by the 34% revenue
`increase that we saw in the second quarter.
`
`But these numbers are not without precedent. Back in 2007, net revenues grew 41% forthe full year, and more
`recently,
`in 2011, revenues grew 38% for the full year. As we said previously on these calls, the growth opportunities
`for the Under Armour brand are abundant. What is, however, unprecedented is the source of our growth, the new
`dimension these revenue drivers are bringing to our brand, and most importantly, the confidence it provides that our
`strategy is right and positions us well for sustainable growth.
`
`To illustrate the breadth of the growth and help you understand the benefits for our investments, I want to discuss 5
`pieces of our business that are bringing diversity to our story: Footwear, Women's, Connected Fitness, Direct to
`Consumer and International. We've been investing in each of these growth drivers to varying degrees overthe past
`several years, empowered by the continued strong growth in our North American Apparel business. With Apparel
`growing 35% in Q2, our confidence in the strength of our core business is high, with strong revenue growth across both
`our wholesale and Direct to Consumer businesses.
`
`But as we reach the midpoint of our fiscal year, we believe we will all look back on 2014 as a pivotal year in our
`diversification, one where we built solid foundations in these newer businesses. So let me address these 5 growth
`drivers individually, beginning with Footwear.
`
`I said earlierthat the source of our revenue growth was unprecedented, and Footwear is a great example of that. in
`the first 6 months of 2014, our revenue number for Footwear was $223 million, just slightly less than the $239 million
`we did in the full year of 2012. So it took 6 months of this year to accomplish what we did for the full year in 2012.
`Those results are driven directly by taking what's in our DNA as performance leader in apparel and transferring that
`commitment to making all athletes better to our Footwear.
`
`With the success of our SpeedForm Apollo running shoe launch, supported by our first Brand Holiday, we believe we've
`made a strong impression with runners looking for great tech footwear.
`
`Equally important is that we are well positioned to capitaiize this momentum in running and build a broad platform in
`this key Footwear category. Our initial SpeedForm Apollo shoe established a foothold, but we believe our next shoe in
`the line, the SpeedForm Gemini that will start to hit retail early in 2015, has the potential to validate our technical
`credentials with an even broader base of running consumers.
`
`When we entered the market with football cleats, we knew that in order to be viewed as a truly global athletic brand,
`we would need to find authentic footwear solutions for athletes. Our breakthrough product of 2013, the Highlight Cleat,
`continues to lead both sales and innovation in the football market at $130. We were able to take the price of a
`Highlight up to $130 from just $110 a year ago because we brought a new level of innovation to this game changing
`cleat with the introduction of ClutchFit, our revolutionary second skin upper material that flexes under pressure, locking
`the athlete in with a superior fit and, of course, feel.
`
`is an
`This constant flow of product innovation which we're seeing in both SpeedForm and Highlight, to name a few,
`outgrowth of the category strategies we have developed, ones that are built with a focus on consistently exceeding
`athletes’ expectations. We are investing in these category strategies with a long term focus and believe we will look
`back on 2014 as the year we transition from a company learning how to make great shoes into a truly disruptive voice
`in the global footwear market.
`
`Disruption is also our goal with our upcoming Holiday 2 campaign that, for the first time, will be focused on a dialogue
`Under Armour will be having with women. For a long time, athletic brands have recognized women as athletes and
`celebrated their exploits in the playing field, with tennis, basketball and volleyball court, and we built an incredibly
`successful $500 million plus business by doing just that, focusing on meeting the needs of the female athlete where
`she plays.
`
`As we reach out to our female consumer to better understand their fitness and performance needs, there's a ton of
`conversation about the diversity of activities they do to reach their fitness goals: running with their friend, bar classes,
`kickboxing, spin, Kung Fu, pilates, yoga, Tough Mudder, mountain biking, et cetera. The list of activities is exhausting,
`and fortunately for us, they are all athletic pursuits where a woman expects a level of performance in her product that
`matches the effort she's putting into her fitness level.
`
`Our holiday 2 campaign will debut next week, and we're excited about the conversation that we'll be having with both
`the consumer who sees herself as a female athlete and the one who describes herself as an athletic female.
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`‘The initial TV spot in this campaign features Misty Copeland, principal dancer with the American Ballet Theatre. The
`story of how Misty willed her way to this position in the dance community is compelling and 100% reflective of our
`brand DNA. Her athleticism is ovenrvhelming, and we'll communicate that in a fully integrated way, including an online
`presence markedly different from what we've done in the past, So yes, it's a ballerina in an Under Armour ad, but I
`would challenge anyone who describes anything she does in the spot as not being the moves of an athlete, an
`incredible athlete.
`
`We've built a large Women's business and look at this next phase as a great opportunity to bring dimension to our
`brand outside of our core Men's apparel business, just as we did in Holiday One with SpeedForm footwear.
`
`Part of which you'll see with our Women's campaign in holiday 2 is an outgrowth of the opportunities resulting from our
`acquisition last fali of MapMyFitness. it's become abundantly clear to us that the MMF platform brings to Under
`Armour a myriad of applications and potential platform that can provide great user experiences for our consumer.
`
`MapMyFitness, the third leg in today's diversification agenda, is a powerful vehicle with greatest potential to help make
`all athletes better.
`
`What the MMF acquisition is teaching us about today's athletic consumer is way ahead of our expectations, and
`consumers are engaging with the platform at a level beyond what we anticipated when we partnered with Robin
`Thurston and his team tate last year.
`
`More importantly, our acquisition of MMF has given us a platform to get deeper into the conversation with potential
`technology partners around the intersection of proactive health and wearable technologies. And a key part of what
`makes UA a potentially attractive partner is the rate at which we continue to add new users. in fact, we added over 1
`million new users every month in O2 to the MapMyFitness platform and are well on our way to adding over 10 million
`new registered users in 2014.
`
`We continue to enhance the core MapMyFitness platform, adding capabilities in tracking, analysis, content and
`commerce. But as i mentioned with the Women's campaign, this platform enables us to talk in a really authentic and
`personal way to our consumer.
`
`There are multiple opportunities across all of our categories to use the MapMyFitness platform as a vehicle to engage
`consumers. And that opportunity is not only in the U.S. as we anticipate that by year end, we will have over 30 million
`registered users, with about 1/3 of them coming from outside of the United States. That's a big number.
`
`The fourth piece I want to talk to you today about is our Direct to Consumer business, and the opportunity is giving us
`to bring the UA brand to a new consumer. Our U.S. wholesale business remains a key driver of our growth, and our
`key retail partnerships have never been bigger or stronger. We look at Direct to Consumer as not only a source of
`revenue growth, but as our best opportunity to bring the UA brand to a new consumer, whetherthat's a 25 year old
`athletic female in our Soho store or a 14 year old future Premier League player, which just happens to live now in
`London, Sao Paulo or Singapore. We're being strategic about this enormous opportunity to bring the UA brand to a
`much more diverse consumer.
`
`Based on the amount of traffic we are seeing on our mobile site, it's clear that the opportunity to sell to our core young
`consumer through his or her device will be a huge part of our strategy going forward.
`
`in the US, we can use physical retail space to showcase the full breadth of our products and attack business
`opportunities through expanded and differentiated presentations. The strong initial performance of our Women's
`product in our new Soho store and Footwear in both our U.S. and international doors are great examples of this. And
`when we open our store on Michigan Avenue in Chicago next year, we'll be able to tell great product stories about
`locally relevant partners like Northwestern and our newest powerhouse, the University of Notre Dame.
`
`Our ability to control the merchandising and flow of product in our own doors is also enabling us to test elevated
`product offerings. So whether it's our Women's Studio caprice and harem pants or Footwear like the SpeedForm
`Apollo or the Anatomix worn by Stephen Curry, we are able to get immediate reads from our consumer, and the
`results, especially as it's related to pricing, have been very, very encouraging. The equity we've built as a performance
`brand and the innovation we're bringing to our consumer is enabling us to be successful with pricing at levels well
`beyond the norm to other parts of our business. Outside the United States, one of our primary goals is to use Under
`Armour retail to bring our brand to consumers or challenge to find it. We are also focused on ensuring that the
`presentation of our brand in that retail space, whether it's UA owned or through a strategic partner, reflects the
`premium nature of our product and position.
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`Our Direct to Consumer process is very much about a global strategy. So when you walk through our New York store to
`see the breadth of our products, understand that it's the only new Brand House store we'll be opening in the U.S. this
`year.
`In reality, 80% of the Brand House square footage we are opening in 2014 will come from outside the United
`States, with the majority being in China.
`
`We recently opened doors in Panama City, the Philippines and Singapore, and it's important to understand that the
`vast majority of these new doors are through partnerships where we are able to control the presentation without the
`capital outlay and that we believe these partnerships can play a critical role in building our brand awareness outside the
`United States.
`
`That brings me to the fifth and final part of the diversification, and that's the opportunity in our global business. i gave
`you a stat earlier about how fast we are growing our Footwear business, so here's a similar one for international.
`
`We surpassed $100 million in international revenues for the first 6 months of this year. post the $108 million we did in
`the full year of 2012.
`i just addressed how we are growing brand awareness outside the US. through an elevated
`consumer experience at retail. We're also growing a roster of locally relevant assets in global football with Cruz Azul
`and Toluca in Mexico and Colo Colo in Chile to go along with our partnership with Tottenham Hotspur who are
`presently touring North America, including a game against Seattle last Saturday that drew over 50,000 fans.
`
`One key factor in our international growth story is our ability to bring a broader mix of products to these new markets
`than we could have done 3 to 4 years ago. Because just as we are over indexing our sales philosophy in Women's at
`our Soho store, we are selling more footwearthan we had anticipated as we open our retail doors outside the United
`States. This will help ensure a more balanced sales mix as International becomes a bigger percentage of our overall
`business.
`
`In summary, we've been talking on these calls for some time about how we will use North American growth engine to
`fuel our global growth story. As I've outlined today, there are many elements to the investments we make, and they all
`connect to help grow the overall pie.
`
`Connected Fitness will help drive our Women's business. Footwear will help drive our DTC business, and all 4 of these
`growth drivers will contribute to our overall global growth.
`
`As l've said earlier, we hope to look back on 2014 as the year where we transform from being just a great U.S. apparel
`brand to truly establishing ourselves as players in both the Footwear and International market. That confidence stems
`from the investments we've made in past years in these areas and reinforces our strategy of investing in our brand for
`the long term.
`
`Some of the investments we made in 2010 were designed to help us become a $3 billion brand someday. The
`investments we're making today will be critical to our becoming a $5 billion, and eventually, a $10 billion brand. We
`have a number of key initiatives going on at this point, and our responsibility is to strive to build an integrated,
`operationally excellent global company, while continuing to deliver great results for our shareholders. 17 consecutive
`quarters of growing revenues 20 plus percent, more than 4 years, that's a metric of which we are incredibly proud.
`
`More importantly than those numbers is the diversity we are bringing to UA, diversity in the makeup of revenues,
`diversity in whom our brand is speaking to and diversity on how we connect with our consumers.
`
`With that, I'll turn it over to Brad.
`
`Brad Dickerson
`
`Thanks, Kevin. I'd now like to spend some time discussing our second quarter 2014 financial results, followed by our
`updated outlook for 2014.
`
`Our net revenues for the second quarter of 2014 increased 34% to $610 million. Growth again was balanced across
`many parts of our business during the North America wholesale, Direct to Consumer and International channels, as
`well as our
`as across our Apparel and Footwear categories.
`
`Areas that contributed to upside from our original plan during the quarter included positive trends in our International
`and Footwear businesses, a desire from our wholesale partners for earlier delivery of back to school product and
`outperformance in both our Factory House and E Commerce channels.
`
`Taking a look at Apparel, we grew this category 35% during the quarter to $420 million compared to $310 million in the
`prior year. in general, we continue to see success where we drive newness and excitement for the consumer, including
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`innovation stories like Anriourvent, as well as enhanced design elements through products such as Alter Ego, UA Tech
`and graphic tees. Specifically,
`in Men's, the first quarter momentum we experienced in Golf and Outdoor continued to
`drive results during the second quarter.
`
`In Women's, we sawstrong growth in both the Running and Studio category; and in Youth, Training and Golf were the
`big stories.
`
`Building on our first quarter success, second quarter Footwear net revenues increased 34% to $110 million from $82
`million in the prior year, representing approximately 18% of net revenues for the period. We continue to offer more
`balanced running price points across our sporting goods distribution and remain encouraged by the early success of our
`SpeedForrn platform. Our momentum is also continuing our cleated business where we are increasing market share in
`both baseball and football this year.
`
`Following on the relaunch of our bags business in the prior year period, our Accessories net revenues during the
`second quarter increased 18% to $60 million from $51 million last year. Growth during the quarter was primarily driven
`by headwear.
`
`Our Direct to Consumer net revenues increased 38% for the quarter, representing approximately 31% of net revenues.
`While Kevin walked you through some of the early progress we are making in International markets,
`it's important to
`note the vast majority of our current Direct to Consumer revenues are concentrated in North America.
`in our North
`America retail business, square footage in our Factory House channel grew 22% year over year. This growth reflects a
`total of 118 Factory House stores at the end of the quarter, up 12% from the second quarter of 2013, as well as the
`upsizing of some existing doors. On the full price side, we now have 5 Brand House stores in North America, following
`the April opening of our Soho location in New York City.
`
`in E Commerce, strong traffic gains continued to drive our business during the quarter, and we remain focused on key
`second half initiatives, including responsive design for mobile, consumer marketing segmentation and Connected
`Fitness engagement.
`
`Continuing the success from the first quarter, International net revenues increased 80% to $46 million in the second
`quarter and represented 8% of total net revenue.
`
`In Europe, strong results continue to be driven by higher brand awareness and a more focused in country strategy
`around 3 key markets of the UK., Germany and France.
`
`In Asia, we are in the process of accelerating our partner store model in China, while also building both wholesale and
`distributor relationships across the region.
`
`in Latin America, our business benefited from the conversion of our Mexico distributor to an Under Armour
`Finally,
`subsidiary at the beginning of 2014, as well as our market entry into Brazil.
`
`Moving on to margins. Second quarter gross margins expanded approximately 90 basis points to 49.2% compared with
`48.3% in the prior years quarter. Two factors were the primary contributors to the improvement this quarter: first, we
`had a favorable year over year sales mix. As part of our inventory management process, there can be quarterly shifts in
`the timing of our excess inventory liquidation sale. Some Footwear liquidations from the second quarter shifted into the
`third quarter, positively impacting the second quarter gross margins by approximately 40 basis points; secondly, we
`experienced favorable product margins, primarily in our in line Footwear business, contributing approximately 30 basis
`points for the quarter.
`
`Selling, general and administrative expenses as a percentage of net revenues deleveraged 230 basis points to 43.5%
`in the second quarter of 2014 from 41.2% in the prior year's period. Details around our 4 SG&A buckets are as follows:
`first, marketing costs increased to 11.6% of net revenues for the quarter from 10.7% in the prior year period, primarily
`driven by higher year over year sports marketing sponsorships in both our North American and International businesses;
`second, selling costs increased to 11.5% of net revenues forthe quarter from 11.3% in the prior year period, primarily
`driven by the overall growth of our Direct to Consumer business, including increased investments to support our Factory
`House and Brand House stores strategy; third, product innovation and supply chain costs increased to 11.4% of net
`revenues for the quarter from 10.2% in the prior year period, primarily driven by higher product innovation costs,
`including our Connected Fitness efforts; finally, corporate services remained unchanged at 9% of net revenues for the
`quanen
`
`Operating income for the second quarter increased 7% to $35 million compared with $32 million in the prior year
`period. Operating margin contracted 140 basis points during the quarter to 5.7% compared to 7.1% in the prior year
`
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`period, largely driven by the timing of planned investments in product innovation and marketing.
`
`Our second quartertax rate of 47.5% was unfavorable to the 43% rate last year, primarily driven by increased
`investment in our Latin American businesses.
`
`Our second quarter net income and earnings per share were unchanged year overyear at $18 million and $0.08,
`respectively.
`
`On the balance sheet, total cash and cash equivalents for the quarter increased 34% to $300 million compared with
`$224 million at June 30, 2013.
`
`Long term debt increased to $197 million from $55 million at June 30, 2013. In May 2014, we closed on a $150 million
`term loan and paid off $100 million drawn on our line of credit in connection with the funding of our December 2013
`purchase of lVlapMyFitness.
`
`Switching over to inventory. As planned, we delivered inventory growth roughly in line with net revenue growth.
`inventory at quarter end increased 35% to $662 million compared to $491 million at June 30, 2013.
`
`Our investment in capital expenditures was approximately $29 million for the second quarter compared with $22 million
`in the prior year period. We continue to plan 2014 capital expenditures of approximately $150 million, primarily driven
`by incremental investments to support our Direct to Consumer and International businesses, further develop and
`expand our global office footprint and increase capacity at our distribution centers.
`
`Now moving on to our updated outlook for 2014. Based on current visibility, we expect 2014 net revenues of $2.98
`billion to $3 billion, representing growth of 28% to 29%; and 2014 operating income of $343 million to $345 million,
`representing growth of 29% to 30%. Both expected growth rates are outpacing the long term growth rates laid out at
`our Investor Day in June 2013.
`
`Below operating results, we continue to anticipate moderately higher interest expense in 2014, primarily reflecting the
`new $150 million term loan. We expect a full year effective tax rate of approximately 40.5%, ahead of last year's 37.8%
`rate given investments to support our International expansion.
`
`Given these updated full year parameters, we would like to provide a few more details on how we currently see the
`second half of the year playing out.
`
`First, on net revenues. We are increasing the top end of our full year guidance by $90 million, driven in large part by
`our increased confidence in both our International and Footwear businesses, where we have seen strong execution and
`consumer response during the front half of 2014.
`
`As far as cadence, our story is consistent with prior guidance with a somewhat higher growth rate expected during the
`third quarter relative to the fourth quarter. We continue to take a more balanced approach in planning the business
`around weather expectations for the fourth quarter as compared to last year, especially in our Direct to Consumer
`business, which represented approximately 40% of ourtotal business during the fourth quarter last year.
`
`Next, on gross margins, where we continue to expect a modest overall gain for the full year following the 48.7% level
`achieved in 2013. From a cadence standpoint, we continue to expect year over year rates to be up during the third
`quarter and down in the fourth quarter.
`
`During the third quarter, the primary consideration is higher U.S. import duties, which negatively impacted the year ago
`period by 90 basis points. A shift in Footwear liquidations from the second quarter to the third quarter discussed earlier
`will partially offset some of the year over year gains from the import duty comparison.
`
`For the fourth quarter, our forecast for lower year over year gross margins reflects a higher mix impact of our
`International business, which is more weighted toward lower margin distributor businesses during the period, as well as
`our previously mentioned approach to planning our fourth quarter business.
`
`Moving on to SG&A. We continue to plan for modest deleverage for the full year. During the third quarter, we expect
`overall SG&A spending will remain elevated with overall deleverage planned near the same levels as the 230 basis
`points experienced during the second quarter.
`
`Specific areas of investment include increased marketing around our Brand Holiday campaign, higher selling costs tied
`to our Brand House and E Commerce initiatives and overall innovation spending in areas like Connected Fitness. In
`addition, we expect deleverage due to a higher incentive compensation expense during the period.
`
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`During the fourth quarter, we continue to see significant leverage of SG&A, particularly in corporate services, primarily
`given elevated spending in the prior year around incentive compensation expenses and MapMyFitness deal related
`costs.
`
`Finally, on the balance sheet, we expect inventory growth to remain relatively in line with net revenue growth, both the
`third and fourth quarters.
`
`We'd now like to open the call for your questions. [Operator instructions] Operator’?
`
`Question and Answer Session
`
`Operator
`
`[Operator Instructions] And ourfirst question is from Pamela Quintiliano with SunTrust.
`
`Pamela Nagler Quintiliano SunTrust Robinson Humphrey, Inc., Research Division
`
`You gave a lot of info on DTC, and I was hoping you could just talk a little bit more about stores and what type of
`learnings you have from the newer locations, particularly Soho. I know you mentioned Women's, but anything else
`there? And does it make you approach any aspects of the store build out differently? And then just in line with that, the
`tourism component. I'm sure it's very high. Are you able to collect data there? is that impacting your future build out
`domestically or internationally?
`
`Kevin A. Plank
`
`Yes. Thanks very much, Pam. I think as we look at the opportunity, we've built an incredible learning center for us.
`Number one, getting close to the consumer and the things we found out. We've had a great relationship, and I want to
`reiterate. We are very much a wholesale distributor and have incredible partners. And so our business there is very
`strong, very healthy and something that we continue to see additional growth. As we learned though from retail, 2 real
`key learnings: number one is probably Women's; and number two is Footwear. The layout and
`it's difficult because I
`don't want all those to sort of lead to the store that we have in Soho, but we've learned a lot of things from that.
`Number one, when you walk in there, I think you're probably overwhelmed with the breadth of Women's products, the
`amount of color, the size, the diversity, probably sophistication that people
`a lot of people didn't expect from us with
`our brand, And it's really allowed us to elevate ourselves and take it to a place and reinforce the theory that we had
`that we can be a viable Women's business and that someday, Women's can be as large,
`if not bigger, than our Men's
`business. As you take or look at the what that's meant for us, it's taken us to a different place. And secondly, our
`sales there are in front of any place they are across our wholesale distribution or any other aspect of our business. But
`when we present it the right way, we know we've got the right product and then we think with doubling down on, for
`instance, the Women's campaign, I'll talk about that a little bit later, we think there's a bigger opportunity there,
`Secondly, Footwear for us, really highlighting the Footwear presentation, has elevated Footwear. As we've said,
`typically in our wholesale distribution, Footwear is anywhere between 11% to 14% in a traditional sporting goods store,
`and that's something we're working with our key partners to try things to get that percentage up. But in our own retail,
`that percentage is up 20% to 25% of store sales on Footwear. And oddly enough or probably surprisingly or excitingly
`enough,
`is that when we go to our International doors, we're finding that Footwear is representing somewhere between
`35% to 40% of our velocity. And I just got back from a trip from Asia and found that we're realty seeing that
`consistently. So what we ended up doing is introduce ourselves, not reintroduce ourselves, but introduce ourselves as a
`Footwear brand, as a Women's brand. More importantly, as a comprehensive athletic brand, we're seeing a lot of, lot
`of excitement. As far as Soho specifically goes, it's interesting because we just got this stat that 22% of our sales
`coming out of Soho are actually from international credit cards, and we're finding out that they're actually doing 40%
`more business than the plastic [ph] people. So what this is telling us is that high street retail is something that will work
`for