Ralph Lauren 4Q16 Earnings Call Notes

Ralph Lauren (RL) Q4 2016 Results

We have not focused enough on the core

“In short, we have not focused enough on nor evolved enough the core of what made us great in product, marketing and the shopping experience. In addition, our underlying business engines are not running at full speed. We also have an inefficient cost structure and an organization that’s not nimble enough in the marketplace.”

Dodgy response to whether or not Amazon is a distribution partner

“In parallel with that, we are expanding our direct-to-consumer channels, and out of those channels, the e-commerce is by far the most important to get back to strength and high performance. And overall when it comes to the channels in the U.S., we are working to make sure that we secure the high-quality distribution, right balance in the distribution between the different channels, and we’ll come back and give you more details in June.”

Pricing power is about having the best products

“Thanks, David. So when it comes to pricing, I believe that we’re in a world where the consumer decides today. So charging (32:58) a premium pricing comes back to having the best products, and that’s what our strategy is focused on, to go back to the core of who we are and where we come from and evolve that and make it current for today and have better authentic style, better quality and be more relevant, and that connects to the pricing. And when it comes to the actual product strategy, I look forward to sharing that more in detail when we see each other in June.”

Teased analyst day

“Yes. John, again, sorry to disappoint you. The in-depth sharing of this we’ll have to wait until June, but higher level I’m very excited when it comes to unlocking supply chain capabilities. And getting to know the business the way I’ve done over the last months and getting to know how our customers work, I see big opportunities in implementing a lot of the same best practice. And also excited by seeing that our wholesale partners are very excited and willing to dive into improving the supply chain together with us.”

Fossil 1Q16 Earnings Call Notes

Fossil Group (FOSL) Kosta N. Kartsotis on Q1 2016 Results

Challenging environment in the traditional watch category

“Specific to the first quarter, as we expected, results trailed last year, reflecting the challenging environment for the traditional watch category, foreign currency headwinds, and last year’s relatively strong first quarter performance in the multi-brand portfolio. As pressure on the traditional watch category intensified during the quarter, our wholesale partners, both in the U.S. and Europe, experienced a noticeable step-down in sales trends from the last few quarters, leading to conservative inventory management for the category in anticipation of technology products delivering later this year.”

Challenging environment will continue

“ we expect a challenging retail environment and pressure on the traditional watch category to persist. Given those pressures on the business, we will continue to be mindful of our areas of investment and prudently manage our expense structure in order to direct our resources to the areas of greatest opportunity and pull back where we see less compelling opportunity for immediate impact.”

Stores are very interested in wearables

“There’s so much consumer interest in wearables. It’s very top-of-mind. It brings a younger customer in their store. There’s a bunch of excitement around it. We think that there’s an opportunity to change the entire watch department from a typical watch department to a wearable technology department.”

There’s been an overall step down in traffic and consumer activity

“First of all, I’d say, overall, I think in the first quarter this year, there has been a step-down just in overall traffic and consumer activity. So that’s one thing.”

There’s also a malaise in watches

“In addition to that, I think especially in watches, I mean, we attribute this really to all the press and PR and excitement around wearables. I think there seems to be somewhat of a lack of interest in watches relative to last year…So I think there’s just kind of a malaise in watches.”

We want to put new technology in traditional watches

“Our biggest objective in all this technology stuff is really to disrupt the watch business. We think, as Greg mentioned, to put additional functionality in traditional watches. And as we’ve said before, our mission is to eventually we want to put connectivity in every watch we make without adding a lot of additional to the retail price. “

Gregory A. McKelvey – Executive Vice President, Chief Strategy Officer & Chief Digital Officer

Examples of new features

“So some of the features you’ll see this fall, the time will be automatically updated with time zone changes or daylight savings. You’ll have a feature we call Link, which is the ability to control the Internet of Things around you off of your device. So you’ll have a push button on your watch. You’ll be able to push it and it will ring your phone, so it’s a where’s-my-phone feature. We’re getting very strong initial feedback from our initial customer research on even that as a very valuable feature. In addition, activity tracking, sleep, smart notifications.”

We have to get to scale in these products

“ scale matters a lot in these products. More so than our traditional business that’s highly depreciated asset base that supports it. So we’ve got to make a lot of upfront investments in engineering costs to get product to market. That requires for each major product line over 1 million units to really reach scale, we’re investing heavily on the supply side of our business to get our own captive manufacturing facilities to test, assemble, and bring these products to market. And then we’ve got a large fixed cost base in the engineering resources and the software platform we’ve acquired with Misfit. So on all three of those dimensions, we’ve got to get to scale to get to fully-loaded margins, but a really good margins.

Dennis R. Secor – Executive Vice President, Chief Financial Officer and Treasurer

Sales down 9%

“Overall, first quarter reported net sales decreased 9% to $660 million and on a constant currency basis declined 7%. Sales declined in each of our region which also reflects a relatively strong first quarter performance last year.”

Partners saw meaningful sustained deceleration in wholesale sell throughs

“During the first quarter, the data we received from our wholesale partners indicated a meaningful sustained deceleration in wholesale sell-throughs, not only in the United States, but also with wholesale partners in Europe. Mall traffic remains difficult, and many of our wholesale partners have announced transitions in their own businesses.”

Currency environment has not changed materially

“The currency environment has not changed materially from our initial guidance, so we are still expecting significant translation and margin headwinds as well as far fewer net currency contract gains. We now estimate the net impact of those items is roughly $0.87 per share. “

Under Armour 1Q16 Earnings Call Notes

Kevin A. Plank – Chairman & Chief Executive Officer

Grown topline above 20% for six straight years

“This means our top-line growth exceeded 20% for the 24th consecutive quarter, that’s six straight years above 20%. And we saw continued acceleration in both our Footwear and International businesses. These results are a great example of what happens when we execute at a high level and deliver compelling head-to-toe product for the consumer.”

Steph Curry’s ascent creates a once in a generation opportunity for our brand

“We recognize that Stephen’s ascent to the top of the basketball world creates a once-in-a-generation opportunity for our brand, and our team is laser focused on delivering against that potential.”

The Rock is new brand ambassador

“Last week, we released creative for UA HealthBox, starring our newest brand ambassador, Dwayne “The Rock” Johnson. It’s been a great start to the relationship as he is not only the voice for our HealthBox, but his initial launch of Project Rock Backpack has already sold out.”

Tough quarter for some partners in sporting goods

“it was obviously a tough quarter for some of our partners in sporting goods, as we saw Sports Authority and just recently Sport Chalet with some of the filings that have come out. And I guess, if there’s anything as we think about our business, the good news is that we’re not strictly a North American story anymore as this is a global company”

We don’t believe that retail is dead

“I want to be clear that we do not believe that retail is dead. We do believe that there is still an underlying very strong wholesale market out there and we expect to continue to be iconic, to be a destination.”

In order to compete in digital you have to be a good storyteller

“in order to compete in today’s market with what’s happening on the digital side, it needs to be experiential. And one of the things we pride ourselves on is being terrific storytellers, and we’ve got some amazing partners out there that you’ll see us continue to invest, and frankly reinvest in the places we’re already doing business today.”

Building new facility in Portland to bring in talent (from Nike)

“we’re incredibly excited about what we’re building in Portland, a new 100,000 square-foot headquarters that we’ll have there, based in Portland, that’ll really give us access to talent without having to uproot families and move them across the country. And so again, we’re going to go where the fish are there.”

Data is the new oil

“it’s this idea, is that data is the new oil. Like those who have the data, those who have the understanding of the consumer, we believe are the ones that are going to win. And for us, laying out, now having a Connected Fitness community of over 160 million with adding well over 100,000 new registrants every single day that are volunteering information to us, like how much they slept, how active they are, what they did when they exercised, how hard they exercise. And they’re doing things like using our gear tracker up to the tune of a million people that are asking us to tell them when they should buy a new shoe by evaluating the type of terrain they are running on and the distance they’re running on. The information we’re getting is extraordinary. But frankly, we’re still – we’re in the first inning of what’s happening in this world.”

Constantly invent

“at Under Armour, we really, we say the only thing that gets you fired at Under Armour is someone says, that’s the way we’ve always done it. And so we do believe we’re different company every six months”

DSW 4Q15 Earnings Call Notes

DSW’s (DSW) CEO Roger Rawlins on Q4 2015 Results

New CEO

“I’m excited to be here today, conducting my first call as CEO.”

Mary Meixelspeger

Got promotional to protect market share, sacrificed earnings

“As expected, the fourth quarter was a challenging retail environment. Rather than waiting to take clearance markdowns at the end of the season, we took aggressive action to drive the top line over the holidays, with a focus on growing market share. These actions resulted in a 0.7% comparable sales increase for the fourth quarter, on top of last year’s plus 7.6% comp growth. Our promotional activity allowed us to exit the quarter with clean inventories and acquire new customers, but came at a cost of substantially lower margin and earnings for the quarter. ‘

Disappointed by margin erosion but gained marketing insights

“Gross profit declined by 300 basis points, driven by higher markdowns we took to activate customers and drive traffic. We were disappointed with the margin erosion we experienced this holiday, but we gained new marketing insights that we will apply to drive profitable sales going forward.”

We’re disruptors

“we became one of the largest footwears in the United States because we have a special gene in our DNA. We’re disruptors. We were one of the first to offer a convenient, open selling model for footwear and every day value to our customers and to launch a rewards program, 24 million members strong today.”

rapid evolution demands that we operate at a different pace

“During the fourth quarter, stores fulfilled almost 30% of total digital orders. In order to take full advantage of this, we’re motivating our field and building tools to maximize these omni-channel capabilities when they engage with the customer. Now let’s talk about tempo. The rapid evolution in consumer behavior demands that we operate at a different pace.”

Kids business leads to adult

“And David, I would like to add a little bit more color regarding kids. Obviously, we’re doing it because we want to grab market share within the kids category, but it is also about adult footwear. I mean, we see that when a customer is a part of DSW and engaging with DSW before they have a child, we have a certain market share. Once they find their significant other, we sort of maintain that market share. When that child is born, our market share cuts significantly on the adult side and then when that child leaves the house, we get right back to where we were before they had a child”

Debbie Ferree

We took our eye off the ball

“In hindsight, we were disproportionately focused on organizational and system changes that took our eye off the ball, in terms of providing customers with the products they wanted. This year, we’re putting product back into singular focus.”

Athletic offers the most exciting products

“We will focus on three key initiatives, athletic, women, fashion and kids. First, the athletic and athletic [ph] leisure brands continue to offer some of the most exciting and innovative products in the footwear space. We believe the strength of athletic is part of a lifestyle shift that incorporates the customer’s desire for casual comfort, with sport inspired fashion.”

Urban Outfitters FY 4Q16 Earnings Call Notes

Richard A. Hayne – Chairman, President & Chief Executive Officer

Excessive markdowns began to subside last year

“Looking ahead, comparisons look favorable for the brand. Excessive markdowns began to subside last year as Q1 progressed. So as the brand begins to anniversary fewer promotions, I believe Urban comps could benefit from the regular price sales momentum that began in early FY16 and has continued to date.”

Fashion retailers had a difficult 2015

“Now, let me say a few words about the macro-environment. As all of you know, fashion retailers had a difficult 2015. The consumer’s appetite for fashion seemed to be inversely related to price. It’s relatively easy to list the many headwinds that might have caused such a phenomenon: anemic growth; stagnant household incomes; increased spending on non-discretionary items like healthcare, education, and shelter; increased competition from newer retailers, both traditional and online; stiff deflationary pressures; and continued competition from other trending categories like electronics and dining out.”

Apparel was the outlier because there hasn’t been a change in fashion to drive spend

“why then was apparel the outlier? To me, the answer is simple: fashion, or more accurately, the lack thereof. The last major fashion shift was ten years ago when the skinny bottom returned to popularity. Since then we’ve had all varieties of skinny: low-rise, high-rise, color, black, white and print; washed, sanded, sliced and destroyed; yoga and active; leggings, jeggings and stretch.

Today, the customer has a closet full of various skinny bottoms and she has many, many long tops and sweaters to go over them. Without a fashion need to drive her purchases, the customer can easily defer her apparel spend. Surely, a major fashion shift is the cure for the current apparel malaise. I am not predicting exactly when that change will come, but I am certain it will. Meanwhile, the good news is I see more fashion excitement this spring than I’ve seen in quite a few years.”

The death of the retail store has been greatly exaggerated

“To paraphrase Mark Twain, the death of the retail store has been greatly exaggerated. Granted, North America is over-stored and many retailer’s underperforming units will have to close, and it certainly is true that the role of the store in the digital age is changing, but I envision the brick and mortar store as an equal partner with the virtual store in this new omni-channel world. There’s no better proof of this than the current rush by most pure-play retailers to open their own retail stores.”

It’s pretty clear that fashion is going through a change right now

“As far as the fashion lull, I think it’s pretty clear that the fashion is going through a change right now, and I think it’s a fashion silhouette change. We’ve been with big over a little now for the better part of 10 years. And I think it’s nearing the end of its lifecycle. And when that happens, there is often a lot of staleness or slowness in the innovation in the fashion world. People lack sort of excitement and inspiration because a number of people are still with the old fashion as Meg talked about, some people are with the new fashion and some people just sort of check out altogether because they don’t know what to do. I think that that is always a predictable – what happens predicatively at the bottom of the cycle. As a new fashion is born and starts to catch on, there is a point at which the innovation starts to ramp up and there is tremendous amount of excitement that surrounds the newness.”

Francis John Conforti – Chief Financial Officer

Direct to consumer outperforming stores

“Within our retail segment comp, the direct-to-consumer channel continued to outperform stores, posting a double digit sales increase, driven by increases in sessions, and conversion rate, which more than offset a slight decrease in average order value. Negative comp store sales resulted from decreased transactions and average unit selling price, while units per transaction were flat. The negative transactions could have been affected by traffic, which was down at each of our brands’ comp stores during the quarter. “

JC Penney 4Q15 Earnings Call Notes

J. C. Penney (JCP) Marvin R. Ellison on Q4 2015 Results

4.1% comp

“Comparable sales were up 4.1% in the quarter and accelerated to a two-year stack of 8.5%. In fact, this represents our ninth consecutive quarter of growth, when you take into account that our flat comp from Q3 of last year was positive.”

Regaining market share lost form 2011 through 2013

“we’re regaining market share from that was lost from 2011 through 2013. Our intense focus on value is bringing these customers back to JCPenney.”

Have invested in better data processes

“And fifth, we’re using data to our advantage. Although many results will cite big data as a growth vehicle, I would argue that no modern retailer was as far behind with using data as JCPenney between 2011 and 2014. In the first half of 2015: our store assortments and pricing were not localized; our credit penetration was at an industry low; and our marketing strategy was outdated, which resulted in a low return on ad spend. Therefore, we recruited talented leaders in 2015 and began taking steps in the fall season to modernize our approach to customer and pricing data.”

Mid tier consumer has continued growth possibilities

“Before discussing 2016, I’d like to take a moment to discuss the moderate and mid-tier consumer. This is the U.S. consumer with a household income of approximately $60,000 per year, and a very important customer to JCPenney. Contrary to some of the negative macro data that’s been discussed in the marketplace, our data shows that this mid-tier consumer has continued growth possibilities in 2016.”

In the process of localization

“we are in the early stages of what I call localization, from a true assortment plan that is customized from a pricing and from a locale. We put some structure in place. We have leaders on board that’s kind of been there, done it before, that will work for our existing team.’

Digital is more efficient way to communicate with customers

“Mary Beth West and her team have done a really nice job of taking us from a more traditional, not very modern, view of how we market and talk to customers to shifting to more one-to-one communication with more digital advertising, more focus on social media, paid search, direct mail, et cetera. And, as we all know, that a more efficient way to communicate and it’s less costly than traditional print or TV.”

Price competition online is very competitive

“I think you are very well aware that the most aggressive pricing environment in retail exists online, because of all the dynamic price scraping that exists and the numerous times, specifically pure-play e-commerce sites can change prices throughout the day. ”

We think private brands gives us an advantage online

“The good news for us is that, as we talk about private brands and the importance of private brands, we believe that it gives us a tremendous advantage of going up against pure-play e-commerce competition because we are going to be exclusive sellers of certain categories. And as we ramp that up, and we are aggressive online, we’re not going to face the same pricing pressure that other retailers will face. So we’re excited about it. We have a lot of work to do, and we’re going to be really focused on that.”

Edward J. Record – Chief Financial Officer & Executive Vice President

Don’t need to pay Visa or Mastercard for our credit customer

“Credit is a huge driver of both profitability and sales for us. As I mentioned, our credit customer spends about two and a half times more than our non-credit customer. They attrite half as much. They like us twice as much as the non-credit customer. And obviously, we get revenue from it and we don’t have to pay Visa or MasterCard for that transaction. So it is really a win-win-win for us, so we continue to be focused on driving our penetration. We know we lag the industry. We’re slightly under 40% and the industry is high 40%s to low 50%s, depending on who you want to benchmark.”

Macys 4Q15 Earnings Call Notes

Karen M. Hoguet – Chief Financial Officer

Decline in tourist sales did not lessen

“Unfortunately, the decline in international tourist sales did not lessen during the fourth quarter and hurt our comp performance by approximately one point. This was less of an impact than experienced in the third quarter, but that is because international tourism is less important for us in the holiday period.”

Closely monitoring a rise in delinquency levels

“Going forward, we are closely monitoring a rise in delinquency levels that could generate some increase in losses in 2016, as I’ll discuss later.”

Credit profitability expected to decline

“Credit profitability is expected to decline slightly in 2016 from 2015 as sales decline and the profitability of our portfolio stabilizes at a historic high rate or possibly declines slightly with higher interest rates and potentially higher delinquency trends.”

Store base and supply chain are competitive advantages vs. Amazon in apparel

“Well, I think a lot of it is, as I said is the store base and having the ability for customers to interact with us in different ways. The second, I think is our talent in the whole fashion arena, from picking, editing the assortments, presenting it, and the vendor relationships. I think that is a huge competitive advantage to date, vis-à-vis, Amazon. But I think it starts with the store base, and our understanding of the fashion customer, which is different.”

Should have some benefit from anniversarying west coast port

“Well, we have factored in some improvement in the first half as a result of the receipt disruption last year with the port strike. So we’ll see if, in fact, that happens. But we have thought about that. And in terms of the impact of the restructure, that was something that we believe we felt through the whole year. So it wasn’t just a first-half disruption.”

Weather was a standout issue but energy not great either

“in terms of the energy markets, they were not as weak on the West Coast, but obviously weather was less of a factor there. So weather was a standout for us, but we didn’t do great in the energy markets either.”

Fossil 4Q15 Earnings Call Notes

Kosta N. Kartsotis – Chairman & Chief Executive Officer

At the epicenter of fashion/tech convergence

“We find ourselves at the epicenter of the convergence of fashion and technology and are focused on continued innovation in the space. Our branding and design capabilities combined with our production and global distribution network have enabled us to become a category leader in traditional watches. Now, combined with our efforts this past year in launching Fossil Q and acquiring Misfit, we have differentiated ourselves from the competition and further enhanced our competitive advantages. ”

Last year felt like a perfect storm for us

“In some ways, this past year felt like the year of a perfect storm given the headwinds and challenges we faced. Unfortunately, those headwinds don’t simply disappear with the start of a new year. In fact, some of those macro challenges appear to have increased with the onset of the new year. However, we operate with a little more visibility into these challenges and a better tool set with which to respond.”

Must have fashion trend of the year is technology

“We face new entrants coming into the watch space with the must-have fashion trend of the year, proving to be technology. This is proving to be a good thing, drawing more and more attention to the accessories category and consumers are now having more options to choose from than ever before, but it was clearly a headwind for us prior to the launch of our connected accessories.”

Wearables are now a 10-15b market

“recent research we’ve seen shows that the watch business actually declined last year by probably about 3%. But in addition to that, we saw the explosion of wearable technology last year and it’s probably anywhere from $10 billion to $15 billion on top of the regular $65 billion that’s in watches. So clearly, there’s a huge amount of consumer interest to this, all the things we’ve been talking about. ”

Lack of technology has been a fashion miss

“Well, the way we look at the watch business in the channel globally is that watch business is relatively soft; and from our perspective, because we have a fashion miss, we don’t have enough technology.”

China obviously very difficult

“Obviously, the China market is very difficult. We not only have stores there and operations in China, but also it’s affecting Macau and Hong Kong as well. So, having said that, we still are operating over there. We have a great team, they’re on a great strategy, we’re continuing to be active in the market in setting up distribution, et cetera. The fact remains that still there’s going to be hundreds of millions of people that join the middle-class at some point. So, we’re continuing to move forward and do the best we can.”

Dennis R. Secor – Executive Vice President, Chief Financial Officer and Treasurer

Hedging gains or losses are recorded below operating income

“hedging gains or losses. These are recorded below operating income and generally move opposite to the translation and margin effects, but do not completely offset them because we do not hedge 100% of our transactions.”

Hedging only delays effects of currency moves

“While we have mitigated some of that decline through hedging, hedging only delays the EPS impact, but does nothing to mitigate margin. And even if and when currencies stabilize completely, there will always be the following year EPS challenge of anniversarying non-operating hedge gain. ”

The Euro has been stable but other currencies have not

“So, the euro actually has been fairly stable, but what we saw at the end of the fourth quarter is the U.S. dollar strengthening against a number of other currencies, a lot of Asian currencies, Canadian dollar, Mexican peso, South African rand. So while you’re right, if we were only impacted by the euro, you’re assumptions would likely be correct, but it’s the larger portfolio of currencies that we operate with.”

Under Armour 4Q15 Earnings Call Notes

The next generation entering the workforce doesn’t know a world in which we didn’t exist

“This year, 2016, is Under Armour’s 20th year in business. It is an incredible milestone for any Company and for us, it means a few things. It means that the next generation entering the workforce doesn’t know a world where Under Armour didn’t exist. This generation doesn’t recognize us as the underdogs but as the always was. It means that we’re not a passing fad or a flavor of the month. The interlocking UA logo has become a globally recognized symbol for being aggressive, young and fearless.”

We’re just starting to see what partnering with an athlete like Steph Curry can do

“The sell-through on the Curry Two was like nothing we’ve ever seen before. The same words that people tend to say after watching Stephan play live. We’re just beginning to see what partnering with the right athlete, like Stephen Curry, can do for our business. It is difficult to underestimate the power of having the best sell-through of any signature basketball shoe this past season. It clearly lifted our brand in the mall channel and positioned us for aggressive growth, not only in signature but overall with this most important consumer base.”

Cam Newton is our guy too

“with the Super Bowl just over a week away, we will see yet another UA MVP, Cam Newton, compete at the highest level his sport while representing our brand. Cam has been a critical driver of our footwear success, with the Highlight Cleat. The Super Bowl will introduce him to a brand new set of consumers. It is a platform where companies pay $5 million to air a simple 30-second TV spot during the broadcast, while our guy will wear his UA cleats throughout the entire three plus hours of the game.”

Record equipped shoe

“Finally, we launched our first smart shoe, with the Gemini 2 RE which stands for record equipped. This shoe tracks every step and uploads data including time, date, duration and distance directly into our platforms. This cutting edge footwear provides an untethered experience and allows the athlete to run device free. There is no start or stop button. When the shoes are on your feet, it is ready and tracking. One of the coolest features of this shoe is that it tracks it’s own lifespan and will send a notification when it is time for a new pair.”

Partnering with IBM to help generate insights on health data

“we announced our partnership with IBM and their Watson platform to help build the insights capability for Under Armour Record. Wearables have been effective in telling you how many steps you took or the hours you slept, but they haven’t been effective in giving you proactive information on how to utilize that data to make your life better. Put simply, there was no call to action until now.”

We focus on creating products you don’t know you need

“At Under Armour, we focus on creating products you don’t know you need yet; but once you have it, you won’t remember how you lived without it”

Relentless pursuit of innovation

“Our relentless pursuit of innovation is just that, relentless. It never stops. When I first began Under Armour 20 years ago, I didn’t set out to make just another t-shirt. I set out to make a better t-shirt, one that solves a problem and gives whoever wears it an advantage. With our Connected Fitness business, we’re not releasing just another fitness app or tracking device, we’re building a complete ecosystem to manage your health and fitness with actual insights to make you better.”

Our largest competitor has 24k points of distribution, we have 11k

“So let me take a second and just talk about North America. I want to level set the context of how our distribution is aligned. So often, we’re compared to our competition. Well, our largest competitor in North America has approximately 24,000 points of distribution just in North America. At Under Armour, we have 11,000. We have the ability to expand that but we haven’t. We have stayed committed to our sporting goods, to our mall, to our department stores channel.”

Burberry FY 3Q16 Trading Update Notes

Carol Fairweather

A tougher external environment for luxury than we were expecting

“In a tougher external environment for luxury than we were expecting, retail revenue for the third quarter was up 1% underlying. Comparable sales were unchanged year-on-year, an improvement from Q2 but below our internal functions considering Hong Kong and the United States. The trading pattern throughout the quarter was uneven with a very late Christmas.”

Mainland China returned to growth but Hong Kong and Macao down by over 20%

“Mainland China and Korea both returned to growth and our relatively small business in Japan once again posted exceptional growth. Hong Kong and Macao again still comparable sales decline by over 20% with the continuation of very weak foothold for us and to the sector.”

I think the events in Paris affected the traveling luxury consumer globally

“I think when we spoke to you in November that was — we said that the world remained very uncertain out there. But what happened subsequently was clearly the events in Paris which I think affected consumer sentiment and the traveling luxury consumer globally.”

The US was another area where we were impacted

“We talked about the U.S. being very uneven and that persisted throughout the quarter and we’ll report in terms of what we’re seeing in terms of U.S. wholesale accounts. So the U.S. was another area where perhaps we were impacted…The U.S. remained uneven possibly impacted by unseasonably warm weather and consumer sentiment”

We’re pleased with the return to growth in China

“”in terms of China we’re pleased that returned to growth. There is an improvement both in footfall and conversion and I think it’s really down just to all the initiatives that we’ve had in place over festive in terms of soft tracking, using our customer insight best in that market. I don’t think we’re brave enough to say it’s necessarily on an improving trend, but we’re certainly pleased with the end to the third quarter performance. And clearly as we look into the fourth quarter it’s all eyes down for Lunar New Year where we’ve got lots of exciting initiatives as well.”