DBI - Earnings call transcript Q1 2007

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Operator

Good morning. And welcome to a special conference to discuss our announcement of The Acquisition of Camuto Group. Please note that various remarks made about the future expectations, plans and prospects of the company constitute forward-looking statements. Results may differ materially due to various factors listed in today’s press release and our public filings with the SEC. And we assume no obligation to update any forward-looking statement. remind this to recorded is like slides. with would listeners conference that being I will on end be section presentation complete The available website call. dswinc.com conference of the on at this the of our Relations Investor

Joining us Executive Jared Chief Poff, Rawlins, Officer. Officer; and Financial are today Roger Chief

Now turn over to call me let Roger. the

Roger Rawlins

thank you And us morning. being with today. Good for

the growth points brand design X,XXX Footwear the the track that Group We’re announcement Camuto, of record of The today’s Vince a [ph]. thrilled through consumers of history. Camuto Vince Lucky sale a creative Jessica the DSW's Simpson has differentiated reach Group, Brand. With in genius and to of XX by discuss in highly an house, leading developing [Countries] Camuto the Camuto, plus footwear acquisition legendary important of founded milestone behind the

our Vince Our into points to vision footwear one transforms North to this committed preserving achieve of our sales. Camuto's enable resources heritage. reach and diverse to Camuto’s become of to of organization customers America us largest and to their in the welcome we’re reinforce across consumer franchise, franchises realizing to family partnership the together. vision Vince capabilities We look forward ability global with than This team

DSW wholesale, industry-leading network brand own international retail to of new Our owned and and our channel now franchising. direct-to-consumer, licensing

this to brought point. me us what Let share

solutions. division the a success doors Shoe to independent We’ve custom deep retail, valuable on its a third-party been ago. retailers franchise scale. Designer in and foundation we’re has retail of operate operating roots and also an for in consumer company since built DSW years international footwear Our the has Warehouse develop Today, XX opened first an serving solid

store focused been and a growing expansion the we’ve comp of combination fragmented market, time, in growth. sales primarily relying on some share For on

and Town share acquired North modest got Shoes the While new Canadian share, required. yielded position gains in we've recently, has our us subsidiary a has way successful our paved market America. this driven us won’t there. the market in market Most relatively it's what here for advanced investment get Canada share Limited, But which considering approach significant entry in

long-term And years, grow the as most so consumer. specifically because markets the strategically developing in share attractive a for the This the to is with growth we’ve vision been few prospects, past [indiscernible] retail important a like captured the retailers direct-to-consumer with increasing build changes ability share. fundamentally evolves landscape essentially are This strong brands brand. model who to have market the brands game the for DSW

to and proprietary journey our our brands good And competitive and progress. increase so a been own exclusive we’ve to develop differentiation on have made

in-house a However, to substantial and we expand the capabilities. business need way, top-notch design and in meaningful sourcing

build to now, competency. establish time been building several buy [indiscernible] journey these by capabilities. the factory options or began we’ve brand We going some evaluating directly and design For to

we the which relationship became with Next, provider large entity, developed reputable sole exclusive and our the the brands. sourcing design and of

understanding capabilities However, ultimately afforded process we're we partners, building, That very and to to evaluated associated delivering of organization. would significant brand that us securing record learning but activity. the sourcing options, quality of complex talent, the products the involving and for with company, capital and destiny. track many factory which it this solid engaging manufacturing finished organization, immediate investments brand materials, Authentic overseas benefit scratch. a the additional curve and gained we’ve and consider We successful standards, global our brand of require United own acquiring the is capture profitability Brands limited This product to and significant of Group managing sourcing, design Not opportunity Group, build Camuto would quality experience, of for multiple and such to partnered vendor our solution assurance given require as history scale and expenses, has management have and its to the it well as managing introduce Through own ourselves manufacturing, these acquire capability benefits, a to the back raw risk and by to only high to required million. transporting cost design marketing throughout Group and prior a let efforts We've approximately navigating distribution operating design its The would from a us logistics. reputation excited Camuto control $XXX into and with design, sourcing States. steep building relationships determined

expect to core e-commerce operations. purchase contribute We the $XXX and wholesale to million

design New the With is in Max Jessica acquisition to licensing transforms new with retailers in The category with DSW Camuto customer. our for company Simpson, developing Studio, business among the a growth created on gives largest support source Authentic stake Brands, of the rights to licensing capabilities global and distribution and also which new and new focus Jersey joint which XX% state-of-the-art other of distribution will transaction and other our in extensions venture different the The channels. brands. center Lucky newly to

expertise independent highest We intend slowly, acquisition. our Cielo. the businesses have forward integrate Group maintaining business will of existing own leadership we XX the and its this organization for recently Vince that Alex to of in built preserving headquarters Canadian done from their Connecticut our our this maintain across most area, under for relationships standing and past wholesale years and with The and we remain operation, Recognizing the separate long Camuto as Camuto with Del and the affiliated retail CEO, look channel. line respect have the in established to as Group's growing the

essential area Camuto level. feel to is business are direct-to-consumer years, sustain created preserving healthy the and grow to Group last has continue An demand manage growth the committed care. great on distribution substantial of customer XX that the wholesale the and bring organization A over equity, to We we brand's we the we'll competency with space. to direct-to-consumer is its the

retail their direct-to-consumer our direct-to-consumer exciting expertise believe grows and to boost an As will best-in-class e-commerce we business, ability their deliver experience. Camuto

this implications of Let to discuss the turn financial transaction. me to now the floor Jared

Jared Poff

more excited We could our the about create top value for growth Roger. to not and Thanks, partnership accelerate new opportunities and company. and this bottom-line be

flexibility This acquisition, our and Authentic complete in $XXX the intellectual we the to Camuto's cash will announced of morning, venture Brands We million operational brands. As us contribute will press acquisition of from with related provide post a credit this cash ratio facility. conditions. the Group have to release with created us another which with in future Brands, agreement, for the XX% and with draw with Authentic remain upon own approximately to $XXX million agreed finance to newly balance. ownership Camuto this provides flow stake the of contribute acquisition the believe acquire earn will infrastructure pay and $XXX our project Camuto's debt closing a terms co-investor our million business, existing well will joint transaction within debt-to-EBITDA the customary while approximately our Brands the and property intend We years. within next will this under of down covenant, compliance DSW partnership existing Authentic in to our subject three

brand price Simpson, of additional Camuto apparel, into which business by total with men's Vince out himself, opening footwear you unexpected Tory me nine to the founded a third-party First, and expertise was years. along kids Camuto Vince business footwear years last of network rare decision Camuto earnings retail and this wholesale and grew led us for Camuto direct to [indiscernible] expanded direct-to-consumer brand handbag to generated of million, the has building The infrastructure. Let pressure our in a XXXX, Jersey XX% bring and significant retail and the for and on sale. of In Camuto with sale its it which as the comparable Camuto operational led of the brand-building [ph] sales accelerate that we center background up a expertise and footwear. jewelry, Burch, substantial and opportunity their Group family since The timing we revenues Group's What Group. liquidity need, acquire two out innovation $XXX the to design, sourcing for expansion categories Vince other an company ago, brand. over business. put New Jessica to capabilities to growth distribution business coupled a to the the the Group? company's created These, gave provide of mean close of passing such best-in-class with the the established BCBG The of sourcing Camuto does own like [ph] its

and Secondly, combined logistics create our distribution our create leverage expertise operating opportunities to will infrastructure efficiencies. and

consumers vital means generating provide a well-established We future our where acquired comes We vital exposure footwear. exclusive of new and lastly, reward design Camuto's are test differentiation Third, sourcing to we market. sourcing to it data growing DSW's And continued XX point distribution a growth, learn but infrastructure that for purchasing to establish provide portfolio addressable increase brand mean portfolio. product a operations greater market. of are property a we own What million company? is and members a channels our business. intellectual larger additional to with our and revenue does That development of also and to speed to scale inform with

brands brand-building And a million partnership brands and expand Brands with customers XXX aggregate the for and access to marketing followers category reach potential Camuto's and which an lifestyle and In Authentic addition, XX them entertainment allowed an online development. portfolio expertise, of has to expertise millennial we provides our shop future channels. who other finally, build for to

the increasing model royalties North outside retail revenues is grow business stores, adjacent gives model that our licensing to outside This Furthermore, investment to of income. play exposure regional and these by franchise. independent evolves our global a from digital pure moderate from boutiques, and department accessories diversifies as us exposure chain, their channel one on improve transformation with business XXX% it acquisition, the footwear Following marketplaces. new online markets focused brands and indirect American our to wholesale, also

one new relatively leaving to a venture Simpson we the to Jessica consideration strength with we over synergies allow These return profit to next creates revenue and exceed them more to the Group already on accretion profit is the to joint royalty a posture taking the of third-party recent enterprise DSW Brands between XX Camuto Lucky While and simply of the to and paid the be challenged bring that DSW. synergies fact largest recapture the to when has that firmly normalized the business sets XX over and the gross for significant supply-chain will Authentic the months. believe constraints path a transaction Group. resources into financial integrating the of believe this past, customers been Camuto We benefits footwear. the quick credit from The it come versus even we

As venture to the joint will this were brand risk. this and will build receive immediate believe anticipated partners, accretion execution from deliver with we this and benefits earnings significant less existing if to income from income up ground much synergies, generates new investment we These new capabilities and equity transaction returns royalty from licensing Based sooner, long-term. we these investment. on generate on

We quarter conference call close detailed will quarter. fiscal our more expect close, during in transaction financial in fourth this December. we third provide the expectations to Pending our

some the now, integrate for with year. to a business, And roadmap outlook you and Roger. develop to we back enterprise, long-term time which we entire we the As strategic hope financial will share next

Roger Rawlins

believe licensees is and for and ensure organization. the customers, growth vital shareholders, and associates, vendors as change our to manufacturing as our new This exciting We well Jared. big a associates, day is long-term an our partners. of opportunity, it's wholesale partners, this Thanks,

Group's upholding are business partners. We honored everyday wholesale that of standards we set Camuto build tirelessly they this the with come relationship And to to intend design expect. upon quality and to by earn exceptional have

to We’re adding partners that talent growth organization associates powerhouse fuel organization earning our brand welcome your to trust particularly family, summary, a our new going this excited shared continue acquisition And new and to I’m creates the and In our pledge our to opportunities. the future every in about will we’re today. and day.

continued The position Camuto growth. disciplined profitable brand We’re to strategic sustainable achieve approach confident Group and will loyalty our and leadership

of take to questions. any your happy now We’re

Operator

now question session. from comes Camilo question-and-answer will We today’s begin [Operator Instructions] Lyon the with And Canaccord first Genuity.

Camilo Lyon

questions. Number your do the materialize? Very to what at you or that when start paid what And interesting give perspective? how long-term Could EBITDA actual we end you think prior meaning to the company How this details the about should long-term multiples on at business? is close? of And remarks accretion. accretion about just -- was talked you of some on A few clarifying just what the transaction. the Jared, one, of prepared Congratulations. really does

Jared Poff

Sure, Camilo.

So, valuation. looking how first the I stage guess, I want to the sort were set of at we

opportunistic they years, it had that, shutter would issues as for gave to performance that as we've at Roger an buy valuation. With a some over been then price. lot opportunistically into to So look while had portfolio of the really at opened have quite through private our we the certainly And prior that, of try online of has to well as and we retail infrastructure our a a chance that this transactions a for some in looking of mentioned, diligence and history had our from given brand their distributions transaction us and through problems, liquidity last something building out new Camuto buy I they in as say, done bring as few up versus and ran build and building. this kind is

a so, you, past, you look we from it. rate what we lot -- they're it dilutive What more a standpoint looked to at From to bring strength see, strong we’re standpoint, in from really sales at value untapped areas EBITDA would to has paying certainly business. a margins, of -- have a are some stabilize you standpoint, what enterprise for when one when transaction. sales right And a slightly things lot seem their are, they stabilized want with a more that And to look perspective. liquidity. have we we at tell in healthy do where very EBITDA priced I they potential or that still of on they is from what be sales line certainly accretion, versus to business, to well when that to there stressed timeframe something the relatively that And standpoint been some but

understand supply-chains from quality of we So a their factory are, some are can making I what is freed largest That a make up. credit that that on who the But their mentioned so we’re there sure benefit. that things are they part my that that partners call. and Simpson are sure just standpoint, And our already Footwear. Jessica in naturally move we into recorded customers bringing we slip to that that joint start profit then organization versus as allows apparel business with right within letting to are now outside gross our ABG, one but returns then royalties on going also ownership lines. a what earn paying, and And the good the ancillary royalties portion venture that retaining other the healthy us will our well Camuto. to stake we XX% was the of as Lucky

-- say we to stabilize is accessibly long-term we sure on I the get want wouldn’t but and footing. make do back good business So long, it

Camilo Lyon

just just Got dose I of questions. have it. a -- Again, healthy

actually over with distribution and they’ve supply skis up profit gotten their business commentary were following costs was it was that the to spoke the that about retail my dresses some it's production the that, and the and from footwear that issues glean you chain that around just costs that the and of on? only of So part understanding the business on piece unprofitable. -- Was generating

Jared Poff

recent issues that very under I XX something to our they strain though, months, months the what last that, really is say in the that is I you’re absolutely correct. footwear footwear think i.e Overall return ownership. ran past would from XX on – a business not expect a into profitability business put the where liquidity. that’s certainly is to to their the profitable would something and we Their hearing very, was

Camilo Lyon

then one just different which generating wholesale. of talked And the you Okay. revenue is about streams

speak expect the now for that should any we the partners Group first be could going talk of customers relationship prior And of business. transaction? that label So that to the large or with -- conceivable private did is Camuto this disruption the question product is, there Maybe of sort a why the you has is wholesale of its Camuto to a one also competitor announcement to sourcing you customers?

Roger Rawlins

talk had chance a how Yes. I slightly is can guess yes, lens to we’ve Roger. our that. different This described our of just that question. partners. you all And to than And, is I take

retail the we've aware XX our sales for If affiliate footwear are years other last you group. done business within partners actually that through

would we between wall operated. other what business we history Warehouse have I brand the So Shoe keeping the group brand affiliated is Designer a say actually of is as well a what that as

So, am our history. partners. think, what I really we I excited footwear that But to experts we have when is we something it are can about comes our bring And space to in retail.

have we do folks do How And Dillard's? a sales, those with customer partners, the So affiliate fact we footwear? base Nordstrom? it our how we're do take business we've driving as can Macy's? help help when from, help we we we how How help box. done market that in do whole we learn actually the and drives significant grow How share do that just group we footwear

And to are running that other with there day and thing, day out we there And same doing have capabilities out so in retails, that's come are this the using the that people lens we're also work wholesale. that with this. running same

like So this down go the path. it's we're first to people not

is in be a So do right we growing good what's should going the if very, both my place because what's right in big retail very partners, we Camuto view our and for by way. brand be a to we're do

Camilo Lyon

And then, guess final Got my I it. question. just

of the the these kind about reading you of assets Just you going from that an the sourcing the Group, right, Camuto agent talking are the back correct infrastructure, to the Jersey, physical my China the that so with -- you asset. office talking and about -- is actual just operations -- running Is purchasing that when assets buying in in along you of as are the New have capital release inventory Those -- are and buying? really understanding distribution new that are understanding agent as my and terms of are well Brazil, working in that in right? a center

Jared Poff

for And the for that little break you to that at is for to of is very just $XXX capital, which a again those of transaction. a closing due the we've a We half million -- although certainly -- roughly brand new, actually this adjustments distribution feel of on. which $XXX the integration you. is down some that. and scrubbed When expertise million, look center, into done amount and there The so a remaining million forth, fees fair about participation and can also is we've it's $XXX Yes, so we good million, of into but make had oiled-machine diligence we operation. almost of issues, $XX efficient got and are they help that easily something our property quite approximately, turn in more them in it working and think that the subject well then an intellectual

do never that. existing just kind the pretty it that we have it's able of it's And to men's private They to brand had. and done we let that alone of that has this you if that we've So the basically we're years infrastructure were over what very our business, high to to we to office there. those, something felt that over and as part at do experience. certainly said, those due where are is going perfected over they a degree years two been diligence knowhow business, buying something And of of anything China, at with strip And to out. execution proprietary about, ourselves, women's like growing build even an the side away good I've spent they We substantial where talking were risk a given something time have scale build the we be things, shoes. our else on that's infrastructure looking see it as is high-quality of we that

Camilo Lyon

Are piece you the Got that. on within it. retail being there Is -- stores And on this then taking no those just shuttered? -- retail are the transaction? last stores is also

Jared Poff

shuttered. already They’re

leases, they are remaining have. no on three going but retail there So operations than

[indiscernible] no stores franchise seven ABG, retail by the overseas. that’s but its will managed And think but that that of that operations is brands is be -- anymore. there business part I

Roger Rawlins

I in which we one digital take that is I retail retail say or are the Camilo experience there but the have two number of in would we see give, stores, as sales number think incredible what an -- opportunity DSW, no data the to which market I game we have in because only footwear. we share digital are are can we

much bigger We have ability to life for way. that to these the a bring brands in

So lens having there help our the to this really of expertise going company customer grow. is I think that

Operator

question Rick Needham Patel the And Company. comes with next and from

Rick Patel

on operating is currently question the both near-term about to that have is margins Is potential from come little just could finance I contributing a Camuto deal? this. clear want dilution Or this. a primarily taking bit negative? coming on crystal to that from that to it Or be of I that? of because debt are

Jared Poff

We anything say posturing. There wouldn’t bit for make just little I Yes, conservatively of a both. wanted is were sure. sure we

is incremental infrastructure, of is them there some now. So integration right some make potential the that they in normally costs, have sure able and in being There bringing the wouldn’t to financing that with had. of of have to which perform all orders we they that over rest able We been of to their that their constraints make this they out customers. the placed that sure to the want liquidity our get are year

they there ensure problem. going now very So season. good to And from is We that is the be holiday as expense. on there should right distribution of just added made that the then still But some that underutilized kind manpower deliveries that standpoint, center, airfreighting get we efficiency is time. are on -- some bring there a feel an to additional not through

up months -- our free efficiencies easy first are see are as we the the that And areas conservative go in as well a up full think liquidity relatively Again, through getting fraying of we of DC things up to that I those operating wanted XX to wheelhouse we layered and posture ownership. standpoint. have we way. from the been think to that able just So being in as

Rick Patel

you the opportunities help we licensing can and in Camuto's and as And acquiring? market? you're the us about of compelling understand think DTC growth helpful. terms assets you about think brands What's going as most opportunities, on wholesale, That's across growth

Roger Rawlins

Rick, Roger. this is

think, is I how truly I four it. would buckets describe

Number do business. again, side, wholesale the their team help partners obviously, help think, When the grow private private ensure DSW about around Camuto can represents our brand We that today fact organization First, We we two, drive total is how our enterprise. it's you all for that our sales. think XX% that Macy's, Dillard's, can brand of the Nordstrom, think we roughly number. a the low of that.

So much, Company, in Town larger we Shoe of we of our is Shoe brand, Warehouse, retail DSW the to remember growing just not DSW across way brand. -- see the that of a other have acquisition now we outlets private Shoes, with but much grow that all our opportunity enterprise the brand, we the But that manage.

And XX% then think have Third, the of respect, we they grow ABG a a is is of for obviously, which I we with we to one able licensing these stake. into us, had mentioned a going history direct-to-consumer the took that front, And being that's ownership brands. that relationship opportunity this before. fourth on the why kind huge

And seven last penetration over And of Camuto market overall we our in gains in help we with the here, direct-to-consumer. footwear, space, majority hasn't expertise big going below gains happened from years in that the that. the when vast come have grow fact digital share the that market we our is two again, our at think the can look significantly six brands or think I Amazon a really at market. and way places, share

strategy, I team listening, So well buckets on as to, Camuto months. after partners we certain team, going build going not really get to We're from the as the Camuto successful. we're that we’re folks what as going in wholesale lot ensure a learn getting organization, then we But, that those aggressive of the are are growth. expect our move they business of XX big four have we that as very forward we the to are know, the we’re to said, first Jared make as and going that so our very, we our

done from -- learn a be digested can things that move in we've ensure we some to enterprises. by at to going this We’re pace past both that

Rick Patel

how on think from of we Camuto's points distribution? of DSW as context comes X,XXX business sales stores much about in Any those

Roger Rawlins

whole taking goal I Yes, to you we're tell when plan this that together in the get next talk of the our get with months to around yet. several then, message can in prefer can can to strategy be bigger game would not that about we not but our we where would to We able that that you this be communicate. of we -- front Rick, we

Jared Poff

customer, on big not one brands. Yes, big the -- And a business for of and Macy's both as of only at business, are It's itself, that's all. actually well. product the very different where and the us brands this the a and much thing Camuto of has Lucky that’s Dillard's we really Nordstrom of I a customer. brand those the Vince would on But a if add, mentioned has business, -- from and different top we and the then call is Jessica one or not if not

that think standpoint. from is interesting we some a there there portfolio So differentiation

Roger Rawlins

we Rick, to we is point, that keep as is think, wholesale that I reinforce business little commitment here. Yes, is today a made in as the a go And said that there our channels to our DSW. going brand intent those That’s has we’re to in big. very forward through done that Camuto partners

had conversation the part retail that's with partners. of again, So our we've

Operator

from you. Thank Telsey the Advisory Group. Telsey And question with Dana last

Dana Telsey

Hi, congratulations on the transaction.

holiday see and positioned the categories be you’re As you about the that DSW, yours that will any you think you new think margins both get about the even levels And higher? that inventory speaking was lower Camuto integration Group you. when What margin? with And own season there how your into with moves currently for to upcoming do of Thank normalized of basis. margin you the mentioned a than businesses? on EBITDA Camuto

Roger Rawlins

is is what They categories, Picking to I our have a play how that, footwear of to experience in. first It core part of retailer. we So, types with the into frankly, up take that Dana. we entered not know other that's relationship not categories why ABG. do those as will us in things,

the all and we of Jared, the do want you there, licensing ownership of to about? apparel the business. could took on talk in So, the side why growth those side areas, that’s the come stake that

Jared Poff

that have from sourcing company, normalized we’ve inventory this to inventory an standpoint, his one able a worked one what learned obligation. but a inventory is extensively was They organization very Alex Del be lean to still is things carrying the Yes, Cielo, meet actually to to understand with wanted yet and of that. that level, understand we

without getting somewhat looking going the -- inventory into Camuto that’s is we feels I And too would south many $XXX little what So, somewhere organization million. at of be say, details, only their months, are that’s good couple of but next for few working future. a them continue be able be to to not able the next months, in also level to needs to, really meet holiday the in

good today. inventory that feel So, stand feels good, they we about the Alex levels

good is place, some make earlier, to we being but that’s added accounted in And those expense the sure inventory. mentioned that about I As feel there are for.

Dana Telsey

a And co-investor know doesn’t been with Who earlier is there fee Group. Is another transaction. I there Camuto things. transaction earlier Two an quick if breakup had mentioned last that? this fee go breakup with transaction through? this was you in there

Jared Poff

Yes.

and privately Ariel. line Camuto then that’s which Chaus ourselves, the are This there been Chaus, currently Ariel was Inc., Chaus of no ABG, investors the Bernard -- who organization The share, negotiated. back owned, to So fees. out spun CEO entirely is is wholly the breakup

also he participating. So is been

Dana Telsey

brands timeframes the of And there? what's that longer Camuto those license the -- how the licensing length licensing the -- the much does with licensing has,

Jared Poff

I’m received consents. you I if mentioning those have tell what will are now, not is sure right are. we we What

-- go So as the problem change making those of the be close. already controls of are met the that, with are that forward. we condition we’ve holders that and with not feel license should a But

Operator

next the from And William comes Blair. with Dylan Carden question

Dylan Carden

say largest quickly, comment of you couple made you But just I the you wondered, a questions. Two Was were Roger, the minutes of footwear? retailer digital that ago? did

Roger Rawlins

one. That's

Dylan Carden

even for? once you back rates, kind the means for sort that margin is, this means DSW want to What of you broadly here what you health? label steady-state looking of that speaking, Okay. maybe business the of Inc Thanks. what mentioned private kind are business, And that horizon for penetration what kind guess, you means I profile? get of my to this grow whole longer-term question

Roger Rawlins

Thanks, Dylan.

like lies. in of some customer. job a customer think right I retail As are around they which the least as Katie, But and earlier, Kelly we Warehouse have XX% done majority of that think our industry, be who careful fantastic when they brand. with brand look organization, Shoe is support other opportunity that’s be but at got and think how will they you extremely of does Company, target that think now should in where again, partners' They're of the our of. the Shoe that, where -- And a penetration. I again, underpenetrated put the just of range see to real we our think, Anything would you in XX%-ish north brand & I that But, is, not brand brand. said experts, And DSW, double a at we sit and private with We at that. that the ability vast brand. we right private especially the our to we help together it, Camuto know kind

Dylan Carden

get the should there? Great. And profile, margin you

Roger Rawlins

partners this is, from Significantly and example provides competitors. better significant to And mean but brand that with. is we've standpoint margin And what of what we how by can much -- I is, essentially just there XXX than Dylan, from how on versus for we best extracting have footwear private the a we think our is us current it I DSW. people a is share brand, not building that profile I work margins DSW Camuto learned a roughly opportunity, products transaction to our healthy sold are through margin think

this from is of there think, going to ultimately we're can to So we information, impact the be that think a lot enterprise. I entire extract margins of the able

Jared Poff

points. versus you, differential think, the to private shared One, with of brand that And when past, we add I our assortment. our it to I rest Dylan, would two in have comes historical

of that and just growing bit brands we building we actual brand to grow than probably that labels do the that into brands, standalone more be However, a we there as that little want an these brand. that is think as margin actual reinvest to

with brands of is So to would although these our think, it that I want little might component them footwear become a do highly one label you not private Also are be have XX, assortment, what very brands. it the than accretive own, excited we're with Brands out because to I things highly, secondly, be now. partnership they they of that is which will of from a still balance our bit about less they seeing to Authentic other have we today point many just

with to about, a those or of operation wholesale and to something to quite them partner are different make frankly being wholesale, the So we partner across Brands different even through those one here. exclusive DSW decided able retail at in to excited we the brands Authentic reasons way with

Roger Rawlins

and would opportunity Yes, we to they the encourage brands footwear and that's be look those again footwear proud that build or at portfolio the Dylan, go very wholesale, partnership. it's for exclusive site I brands either mean, product to -- would I ABG's an through to a this hold. you brands

Operator

Nikic you. Wells the question Fargo. comes Thank And from Tom next with

Tom Nikic

trying all you're of that in acquisition be new I and addition well somewhat core then kind kind have was to just that ability and going have and juggle simultaneously of acquisition wondering these and would sort you. in now grow some of to to insourcing just you kind initiatives Thanks. and on Canada you quite business, this results the channels of a wondering from. you sort to that of bit on about execute organization. of some there different Any The I'm of to which, insight just the into kind your gets drive integration, your obviously, all helpful. greatly

Roger Rawlins

question. When brand, team well. we leadership Board in as Well, our and on we've our conversation Canada I the focus would Warehouse. up of a a that mean needs standpoint, there's that Town is thanks, from made back decisions in office away walk because to integration, what had was of Shoe opportunity done we part pretty essentially Tom. look, job said, a not with the And It's It's great you to ton lien, look the good Shoe that we've say really and a from Company, I any team space. in that business Canada there. at

that's team Bill there Jordan that So lead from to we why effort. our up sent

got Shoe our place business. feel a for Shoe are going figure that we've in team North business good what to across longer-term like up that marrying going So out and there Company is and the And in we pretty we America. place drive Warehouse strategy to

essentially other quarter to at over or you fact this I basis. we has people as What DSW this XX And you Simon, I very is it our focused I I three proud and this get think have transaction, And rolling our history. engaged course do. the that's get DSW that the and but think, we place. and in stayed at through were what gone team in in I'm we six And transaction, highest or mean, engaged, of that So a looking transaction best wasn’t the very, opportunities. months, the brand, XX when to is rolling the at there Jared, posted really just love look last I my stayed leadership obviously, they team, on EPS on but months

that. and a don’t this the So about we our to can they operate And we've and their that what from after think on the or team ago in I were talent And Roger we go day-in we when best thought three built engagement at team, day-out, our we DSW, that the talked that had years own. we strong was done are talent, industry. they going going need from fact to we ensure Jared

I we job with be far done and DSW tempo think that about a and have of that day-out focused, as positioning So play day-in talk team pace. to good that as of we the very level

to over we we with and to mindset these it's Alex and the Canada, get apply learn But let's XX team Our that place Alex leader the synergies take Phil. through go team months, all to about to XX this. in got be our and the organization mentioned think, where help the it's I that's this up from Mary are. business, next going right And and Camuto go months -- and in same to there earlier have going understand that that right with why now I Simon let's

way jeopardize big just those family don’t them. Alex, whatever our And four at that Nordstrom with of do you, book the We we we described we ideas and these business. delivering and Macy's are we that a existing have products and in to We the ensures how have pace Dillard folks the we make certain to happy enterprise, Camuto to the are do.

than, to everyone my are So be but I to, take. at That’s going it the will approach pace that again, see head. is how will a that’s slower want that’s delivered. going in we to it. And perhaps, And move

to So your we don’t on create that get based the potential can you question. conflict also

Jared Poff

Camuto, sale, we they robust or things around why actually is the many quite on very for been which hollow. bankruptcy. wounded been of were of had based at many options, export they some And attracted we for are reason They and was it Tom, them one had of another, opportunities, not retail functioning one relatively that Camuto organization different were just looking And missteps in other and they healthy their were was well, distribution a with for to center. the integration that very had not

is some here out distraction still selective Alex an organization producing this that and there. gets, the for standpoint that most Del still mentioned, is a customers that of the as that and one Roger from Cielo organization are running So

fill-in So of a they that the should not are core help. needing lot limit our distraction business on because

Operator

Wedbush. And the next Chris with question Svezia comes from

Chris Svezia

-- just wanted revenue understand the breakout, first to just that. just guess, I to understand

joint Jessica be how So are to the think that XX% we actually So be -- be brand. just Vince -- from you from Is the and seeing shrink. going other brand, Camuto through costs royalty is should -- P&L, but about a think from you see the distribution should and the the income going to receiving flow then we as revenues that the DSW? center how Simpson, and Lucky about? Correct? venture and on the operating not the other related EBIT the ownership, royalty sourcing, to will You will also

Jared Poff

now for what accounting equity that in Town. that investment believe had we will We Yes. similar right is in be to

Here you’re going below the from to us line, to investment see back income venture. coming from joint the equity

bit the paid to little below where understand going exactly to portion because geography equity But P&L to out you of gross see honest, this above margin then have be will going And and income quite I to through. the investment. that see of to will be So match, royalties to joint it’s work need a either going come in SG&A. the the line the coming you’re royalty will to back us we’re as be line. come venture controller And to our with -- from the income of

Chris Svezia

will be $XXX that and Or Okay. to Are how you point? attributable that willing how to at of million least think at talk that's about we DSW? to this should DSW that number much attributable about

Jared Poff

we the can strategic bringing when more together we'd with I some our maybe share overall enterprise, But would rather rather now, rather back now, I not -- of -- we right those think we'd of details. not. I view right think, --

Chris Svezia

private Any previously your you're sourcing is you label this quickly with or are? still Aldo, that I brand at transaction, assume How the can quickly Camuto still that. transition agent color because point? to Vince how And about

Jared Poff

Yes.

Aldo. we partnership a I with mean, So, certainly still have

We of also one with couple two a partnership labels. have Camuto different providers, was other on a which

we’re of over still growing new something is pump And to think of that still lot that's also talking want we we we strategy it enterprise do fully of now. support existing, and baked, honest, being we But, right think makes be some our sense. So additional how healthy perfectly it before have that's to be to I is Camuto something. XXXX. on a could may line. the To certainly perfectly along we’re probably much anything, honest, be the mean, But developing even somewhere

So we a Camuto done been the infrastructure. on owned floor that’s DSW from something see

Chris Svezia

understand add world kind just prior Okay. regard in last things, what EBITDA something just tariffs one, or about mean the to two see EBITDA in clarify Camuto to Any some you sourcing you you that. just issues to in you DSW to dilutive some of the Vince trying with of your in about good. -- And with the Can made And terms remarks, lastly, about in color you comments of good having sourcing. that your what slightly then of to then of we’re said, Inc. where you want regard terms just to as prepared that thoughts clarify today with these stand can -- comment? context that

Jared Poff

what of And little with incurring got this that missteps and a word I kind was of was that is performance -- what experimenting Yes. because costs. into and excluding some these really exact XXXX basically your mentioning even retail I I and I remember they two before, don't were the bit kind an used. hit I XX But as saying I of

some margin So a is but you out noise DSW -- below a EBITDA not healthy basis. we is, three dramatically normalized more relatively what kind that traditionally They on of a what -- have slightly that little are. below, below take

Chris Svezia

about tariffs, handbag how those color that? you on or anything that And any lines? just Right. Or think about

Jared Poff

have this our procurement is there footwear. operations, with President. largest especially we some label one we the has we we some that wide transaction, of be us aggressively less learn over pain private Unfortunately once vendor even vendor not involved lobbying, Yes, to of to the does it's wholesale our and the this some then sole largest, we infrastructure, From control. base start else. putting adjustment some paying going very, we partners. operation, which business watch our which we'll it's discretion From – lot border one something certainly share of this the we to. lobby it’s give retail But, that of been at have one in because maybe have tax, with will their everyone -- And pass attention to before that the certainly be we’re very along to think close unlike of the organizations have of influence even and can some were that our -- not opportunity negotiations of a we

answer. So our to, there. an of costing that again, in that space And leverage it's see. not and -- give that wait not mean, with hopefully, a of sure but more anyone have has it's I’m any something can I us we answer

happens. We’re all to each of watching what kind other and going be watching

Operator

question MKM Thank the McKeever comes And with Partners. next from Patrick you.

Patrick McKeever

morning, everyone. Good Thanks.

you outside things at? give a were of potential at did some DSW this then is, Just color opportunistic this more situation exploring you’ve store that does else look of have nail all features growing you Was things, associated store sounds store And stores. the a and and here what you on options, Maybe question the brand want and store base, realm question. out you shift to lab the mentioned what to first call into things. on specifically in it, like or question store looking and or of Does that in with of wholesale whatever and been a some acquisition little that you lab area? it other my the the was distressed it of base, strategy it those retrofit second potential bar the longer-term, other remodel lab you’re program Or that? So and some implications terms the types there or any doing acquisitions? just for could other mostly little that’s with

Roger Rawlins

Yes. the first part. take I’ll

going are impact second This -- will form or We nail there. we services. in way, plan bar. shape now We our continue not, our just any to going after game launched recently

next We have results in near-term. -- very will And getting excited four the really there. coming we’re or about the we’re be five that more

we those sufficient in So, think go meaningful if a wouldn’t return brought didn’t again, a it we investment. way after on

if in we for different brands different shops you we like that new present for do our versus this could don’t opportunity those a created we our those think have would of the this our in And about we have form we to private brands, brands how Nike, longer-term meaning impact build if services. shape light we display anyway as the that warehouses. way box into we’ve perhaps pop-up space in have private see other So and flexible stores play the we’ve created, the out

where we’re itself services creating actually the I more could So, and actually experience actually to transaction. for value with we’re this think, the lend headed new driving

is previous as at would we’ve a things, far what I As lot say. looked

for, of the looking wholesale been All at around year. last what this it about space. we’ve frankly footwear That’s

Operator

for Thank any return at closing to for you. And present. time the comments. would this is all the like we have questions the floor I to management

Roger Rawlins

Thanks And China, a and to time New with our in we're the York, and rest taking our this here share everybody to both Hong of short call. teams participate news for notice in excited now on Kong, Toronto Columbus. the Connecticut,

thanks So everybody.

Operator

concluded. you attending now is today’s conference Thank The you. Thank for presentation.

You may lines. disconnect now your

Designer Brands (DBI) 10 Oct 182007 Q1 Earnings call transcript