Russell Greenberg – Executive Vice President and Chief Financial Officer Jean Madar – Chairman and Chief Executive Officer.

Linda Bolton-Weiser – D.A. Davidson Joe Altobello – Raymond James Jason Gere – KeyBanc Capital Markets Frank Camma – Sidoti & Company Steph Wissink – Jefferies.

Greetings, and welcome to the Inter Parfums' Third Quarter 2017 Conference Call and Webcast. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now turn the call over to Russell Greenberg, Executive Vice President and Chief Financial Officer of Inter Parfums. Mr. Greenberg, you may begin..

Thank you, operator. Good morning and welcome to our 2017 third quarter conference call. As usual, I will begin the call with a financial overview and then Jean Madar, our Chairman and CEO, will discuss our current business, recent developments and upcoming plans. After that, we will take your questions.

Before proceeding further, I want to remind listeners that this conference call may contain forward-looking statements, which involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from projected results.

These factors include but are not limited to the risks and uncertainties discussed under the headings Forward-Looking Statements and Risk Factors in our annual report on Form 10-K and the reports we file from time-to-time with the Securities and Exchange Commission. We do not intend to, and undertake no duty, to update the information discussed.

In addition, Regulation G, codifications for the use of non-GAAP financial measures, prescribes the condition for use of non-GAAP financial information in public disclosures. We believe that the presentation of the non-GAAP financial information included in this discussion is an important supplemental measure of operating performance to investors.

The information required to be disclosed for the presentation of non-GAAP financial measures is disclosed in our September 30, 2017 quarterly report on Form 10-Q, which has been filed with the Securities and Exchange Commission. This information is available on our website at www.interparfumsinc.com.

When we refer to our European-based operations, we are primarily talking about sales of Prestige Fragrance products conducted through our 73%-owned French subsidiary, Interparfums SA.

When we discuss our United States based operations, we are primarily referring to sales of Prestige Fragrance products conducted through our wholly-owned domestic subsidiaries. In general, our third quarter is our strongest in terms of sales, due to shipments made to customers for the holiday season. This year’s third quarter fits that pattern.

Moving on to comparable third quarter results, net sales were $169.5 million, up 7.6% from $157.6 million. At comparable foreign currency exchange rates, net sales increased 5.5%. Net sales by European-based operations rose 9.1% to $134.6 million from $123.4 million.

Net sales by U.S.-based operations were $34.9 million, up 2%, compared to $34.2 million. Gross margin was 61% compared to 60.2% and SG&A expenses as a percentage of net sales were 41.5% compared to 39.7%. Operating income increased 2.7% to $33.2 million from $32.3 million.

Net income attributable to Inter Parfums Inc increased 5.2% to $17.1 million, compared to $16.2 million and net income attributable to Inter Parfums Inc per diluted share rose 5.8% to $0.55 from $0.52 in the prior year.

Our year-to-date net sales were up 14.3% to $441.7 million from $386.3 million, resulting in a net income attributable to Inter Parfums Inc of $37.2 million, or $1.19 per diluted share. And that compares to $29.4 million or $0.94 per diluted share one year earlier.

Excluding the effect of the 2016 settlement with the French Tax Authorities, net income attributable to Inter Parfums, Inc. for the first nine months of 2016 would have been $30.8 million, or $0.99 per diluted share. Jean will talk later about third quarter launches. So I will focus on some of the factors that impact this profitability.

But before I do, I'd like to mention that while other inputs may factor into the mix, in general, a weaker dollar has a favorable impact on our net sales and a negative impact on our gross margin.

And the reason for that is because approximately 45% of net sales by our European operations are denominated in dollars, while their costs are incurred in euro.

However, with the euro only gaining approximately 5%, against the dollar in the current third quarter our net sales and gross margin were only modestly impacted by this change in currency exchange rates. As noted the blended gross profit margin was 61%, compared to 60.2% in last year's third quarter.

With regard to European operations, the weaker dollar gave rise to a slight decrease in gross margin, but this was offset by the increase in sales made through our distribution subsidiaries, especially Rochas brand fragrances, where sales were concentrated in France and Spain, both of which are countries where we distribute directly to retailers.

So at the end of the day, European operations generated 65% gross profit margin, versus 64% in last year's third quarter. Gross profit margin by U.S. operations came in at 47% for both the current and prior year’s third quarter.

SG&A expense increased 12% from last year's third quarter and represented 41.5% of net sales for the current third quarter, which is up 39.7%, compared to the comparable 2017 period. For our European operations SG&A expense increased 16% and for U.S. operations they declined about 5%.

Promotion and advertising included in SG&A aggregated $26.2 million or 15% of net sales for the 2017 third quarter, as compared to $20.8 million or 13% of net sales for that period a year earlier. The increase is the result of expenditures occurred within our European operations in connection with new product launches.

During the final quarter of this year, we have significant promotion and advertising programs underway. And we anticipate that promotion and advertising will approximate 21% of net sales for the full-year. Operating income rose 2.7% and our operating margin in the current third quarter was 19.6%, compared to 20.5% one year earlier.

Also of note, our effective tax rate was 33% in both the current and prior year’s third quarter. We closed the quarter with working capital of $377 million, including approximately $231 million in cash, cash equivalents and short-term investments.

We had a working capital ratio of 3.4 to 1 and only $65.6 million of long-term debt, including current maturities. And that was incurred in connection with the 2015 Rochas brand acquisition. As we reported yesterday, we raised our full-year 2017 guidance for net income attributable to Inter Parfums, Inc. to between $1.27 and $1.29 per diluted share.

And last month, we increased our sales guidance range to between $575 million and $580 million. On Monday, November 13, after the close of the market, we will announce our initial 2018 sales and earnings guidance.

And finally, we also announced yesterday that our Board authorized 24% increase in the annual dividend to $0.84 per share annually or $0.21 per share quarterly. Jean, please continue..

Thank you Russ, and good morning everyone. Once again, all regions in which we do business have produced sales gains thus far this year. North America and Western Europe were our largest markets, each representing approximately 27% of sales.

For the first nine month of the year, North America and Western Europe grew sales by 15% and 6% respectively, while sales to Asia, our third largest market grew by 14%. Ranked by size, our next three markets Central and South America, the Middle East and Eastern Europe achieved sales growth of 21%, 23% and 42% respectively.

Within those regions, there are differences in way fragrance is sold. For example, our business in Europe is dominated by chains of perfumeries, while in the U.S., our business is primarily traditional department store and to a lesser extent was growing specialty stores such as ALTA and Sephor.

I should also mention travelretail, which has been strong for us in all regions of the world. Now for some recent developments, the major product launch of the third quarter was Coach for men and it's an unqualified hit thus far. The rollout continues and by January, the new scent should be in 17,000 to 15,000 doors worldwide.

For the [indiscernible] the ad features actor James Franco leaning against a vintage car with the New York City skyline in the background. The third Legend pillar from MontBlanc called Legend Night began shipping this summer and was limited to the third quarter.

For example, we are exclusive in [indiscernible] front, broader distribution planned with a hard making international roll out planned for next year. Among our niche brands was the jewel for Karl Lagerfeld called Les Parfums Matieres featuring Fleur De Peche for women and Bois De Vetiver for men.

In September, we began shipping Dunhill Icon Racing, a new fragrance for Dunhill and Fantasia by Anna Sui, the newest Anna Sui fragrance.

Following a [indiscernible] that began in mid-September, Icon Racing distribution continues throughout the specifically in Asia and Africa, and much of South and Central America with new Dunhill scent debut in scent debut in the U.S. next spring.

As we reported also last quarter, Front Asia by NSV targeted to a greater Asian market, including Japan, Korea, Taiwan, Hong Kong and also the U.K. The launch in China will happen in 2018, because of the long registration period that is required. We are supporting the growth of our fragrance brand.

We focused on effective advertising and promotion as Rus mentioned in 2017 where we spent about 21% of our net sales on advertising and promotion, and this is not all as our global network of distributors are contractually obligated to advertise and promote our products in their respective markets as well.

So not surprisingly more advertising and promotion resources are being earmarked for digital advertising, television and billboards. Next year we'll be stimulating growth of our three largest brand with new products. As I mentioned the wider geographic fall out of MontBlanc Legend Night takes in 2018.

We have also the question of Jimmy Choo Woman signature scent in the pipeline along with our new interpretation of our superheat Eclat d'Arpegeand new Modern Princess by Lanvin [ph].

The Coach signature scents for men and women will welcome new family members next year and we're also growing the Van Cleef & Arpels' Collection Extraordinaire family as well as our multi-scent Boucheron collection.

Moving on to 2018 plans for U.S operation, for Oscar de la Renta we have the women's scent called Bella Blanca as we hit the market in the spring of 2018. For Dunhill we have Century, a new fragrance family debuting in the summer of 2018.

Abercrombie, we have also several brand extension including two for men in the first quarter and one for women in the summer.

We also have Free Wave, a brand extension for the Hollister Wave collection coming to market early in the year and a completely new Hollister family fragrance launching in stores this summer, both our fragrance duos in men and women. And lastly we have Fantasia flanker for Anna Sui debuting in the summer.

I want to mention that we are feeding the markets for acquisitions, acquisitions of license, of entire brand and whole companies, but anything contemplated must be compatible with our business model, which is to offer good growth potential and deep share returns.

To conclude, we control the rich and diverse portfolio of brand and we are well positioned to drive organic growth. We have this firm balance sheet, should the right deal cross our path.

Our global distribution network is exceptional, comprised of organizations with their product placement in the right, direct our undertaking and promotional program in their territory and optimize sales into more than 100 countries where our products are sold.

I know I mentioned this in our last conference call, but in case it skipped your mind, we are reaching a special milestone in our corporate history on February 14, 2018, where we mark our 30th year on NASDAQ as a public company and will be ringing the closing bell.

So before we move on to questions, Russell and I would like to wish you a very happy holiday season and always thanks for this New Year. So now, operator, you can open the floor for questions..

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Linda Bolton-Weiser with D.A. Davidson. Please proceed with your question..

Thank you. So I'm just trying to think about the different factors affecting growth, and you often have gift sets in the third quarter shipments and usually it looks like the growth margin is higher in the fourth quarter versus the third quarter.

So I'm just wondering, is that something that is expected this year, that the fourth quarter gross margin would be higher or as the euro situation going to make that so that the gross margin is actually lower in the fourth quarter?.

Well, I think as happened so far in the third quarter, the euro has had a slight effect on the gross margin. I can't predict exactly where it's going to be as far as the average for the quarter, so it's very difficult to comment on that.

But typically, because of the higher sales volume and higher level of gift sets and promotional type items that are sold during third quarter, our history has shown that the fourth quarter margin is slightly higher..

Okay, thanks.

And then, I didn't quite catch – I know you spoke about the details of 2018, can you just – so Montblanc Legend Night will extend over into the first half of 2018? When is the major Jimmy Choo launch, in the first half or the second half of 2018?.

I don't want to point to – in three days we kind of go with the press release on 2018. So we're going to go into more details of what brands will have what launch, I appreciate you wait – we just have to wait three more days and we'll give you this information if you don't mind Linda..

Yes, the whole idea is that we always announce our guidance of the following year in mid-November, because we have finalized our launch calendar. We are still putting the final touches on that launch calendar, so I think Jean is just being cautious. He doesn't want to say something that might change within the next couple days..

And maybe just a longer-term question, if you had to think over the next three years, which of your top brands or product lines, do you think has the most growth potential in the next three years?.

While many times, we think that first, the brands like Montblanc, Jimmy Choo L'Eau are some of the largest. Some have reached already a certain level of sales, but we think that there is still a lot of growth potential for Montblanc, Jimmy Choo if we come up with the right products.

What is very, very interesting is Coach has been able to reach wide range of customers, not only in the U.S. but also in Asia. So we see a good potential with Coach.

As far as our American brands, we think that Anna Sui, especially with a new product that we launched, the first result that we have are very good and China is coming back, the market is reopening. We saw it immediately in the third quarter and we're going to see it even more in the fourth quarter. Our sales China are very, very strong.

So we think that Anna Sui's geared for – will grow for the next two to three years.

Russ, you want to add something?.

No, I think you pretty much covered. The only one I guess you left out was Rochas, which has been performing a little bit better than we had originally expected and we think there's some good potential there as well..

Okay. Thanks very much..

Thank you, Linda..

Thank you..

Thank you. Our next question comes from the line of Joe Altobello with Raymond James. Please proceed with your questions..

Thanks. Hey, guys, good morning. So first question, I want to go back to the guide for this year. And I guess if you use the midpoint of both top and bottom line, it implies sales were up modestly and EPS is down in the fourth quarter.

Given that the momentum you guys have seen so far this year, why would that be? And sort of a related question, what's the early read that you guys have on the holiday season this year?.

As you said going through, whether you use the midpoint or the high level, you are looking at sales up around 5% to 6%. Earnings are almost breakeven, maybe down very, very slightly.

And the reason that model is that way is because of the very high spend on promotion and advertising that's required in the fourth quarter in connection to global launches that we have. I don't think that that's unreasonable, based upon how this year ended.

It gives us a better result when we started with, when we issued our initial guidance last year. We've increased our earnings guidance twice already this year, actually 3 times and sales guidance twice. So I think we are looking for a very, very successful 2017.

The last part of your question, Jean you want to touch on that?.

Yes, we are now beginning of November. What I can tell you is that we have shipped all of our gift sets worldwide little bit early to tell you full, we monitor it on a daily basis, but we do not expect any – we don't see any problem. We see some very good business coming from Asia, stronger – much stronger than expected.

As I said before, from Korea, from China, from Japan and several retails, we think that we will have some good surprises in this part of the world. That’s all I can tell you right now is for Christmas..

Okay. Thank you, guys. And then secondly, I guess a question for you Russ, this is typically a quarter where you guys see a pretty big draw down in inventory.

It was up pretty significantly year-over-year, maybe a little more color on why that is, is it timing related?.

Yes, our inventory levels are always predicated on our launch schedules. I don't think that this year is any different. I think that by the time we get into the end of Q4, you going to see a significant upturn from the standpoint of use of cash for operating activities.

I expect our receivables to be down significantly, I expect inventories to be down and I think we are going to see a very, very positive cash flow from operations at the end of December, which is usually typical of the cycle with which our business is in..

Okay, great and just one more quick one if I could, is 21% of sales to be right level of A&P spending going forward, you said this has been rising for the last two years or three years here?.

For me and I think that Jean has said several times before, we need to constantly make investments in our brands..

21% is a high number, its definitely high for us, wishing that in the environment that we are today with the competition that we have, this is where we have to be. I will not expect this number to go down, if we want to take market share. So we forecast a similar number for the next years to come..

Yes, our goal is to try to gain leverage in our operating margin and I think we have done that successfully and slowly over the last three years or four years. This year we’re going to probably end up somewhere very close to a 14%, this not even a little bit more.

A lot of the gains that we make on the gross margin side is being reinvested in this promotion and advertising and we see that as a need in order to take market share and to continue to grow the business..

Okay, great. Thank you guys..

Thank you, Jeff..

Thank you. [Operator Instructions] Our next question comes from the line of Jason Gere with KeyBanc Capital Markets. Please proceed with your question..

Thanks. I guess maybe I’ll kind of continue with the last question.

When you are talking about the upside on the gross margin reinvesting back into A&P, what do you would other than I guess maybe the change in the euro, what do you see as the biggest risk out there that could lend to more modest gross margin growth ahead and would you I know probably the goal is to obviously drive as much top lines, so you can leverage your fixed costs.

But just wondering what would be kind of a downside scenario where you would see basically flattish margins kind of come through, I’m just wondering if you can kind of flush that out a little bit?.

Well Jason, just really quickly, I think that the gross margin expansion that we’ve seen over the last three years or four years has really come from a couple of different places. One being the exchange rates, which is completely without – not within our control.

The other point has been the shift of products and that is more product that is sold directly through our own distribution channels. I think that is probably going to level off as time goes on. So we are really not looking at gross margin expanding at this point in time.

I think it will be – if you take out the effect of currency, I think that it will be flattish. And that is what we are projecting and what we are planning for the future. So we are not looking to be able to expand that gross margin much beyond the 63%-some-odd where we are now..

Absolutely..

So on that same point, obviously if you continue to step up the A&P, obviously what type of return are you looking for in terms of driving further top line to get the leverage in the SG&A, because I don’t suspect that you want your operating margins to contract, but just trying to even keep operating margins maybe where they are pretty steady, but obviously growing the top line and I know you’re starting to go up against what I would say is maybe the law of large numbers, you’ve had two great years of double-digit organic sales growth, good pipeline coming out, but what’s the breakeven that – you look at the A&P spend and say maybe we don’t step it up that much more, because we have to consider the balance between top line and profitability..

What I think as Jean said, we are at 21% of sales in A&P that’s kind of at least today the right number. So assuming no expansion of gross margin and to maintain of somewhere around between 20% and 21% of sales on promotion and advertising, you should be able to leverage the remaining fixed costs that are included in the SG&A line.

And if you can do that the idea would be to get our operating margin to the 15% level, which is where we think it should be long-term..

Okay. Sorry, go ahead..

Well thus far from the – as I said in my remarks, we are actively looking for new license, some would be brands that have no fragrance, some would be brands that have an existing business.

Let’s not forget that if we add $50 million or $100 million of sales, we have enough G&A, what I mean – the actual G&A, we can handle this extra $50 million or $100 million. So we could be see much better leverage if we bring one or two new license in 2018 or 2019..

I was just going to ask, internally as you discussed that and again going back to the great performance how you’ve been outperforming the category for quite some time, do you feel the need or the pressure to make an acquisition for a new license because getting more of the top line growth obviously leverages the fixed costs and gets that operating margin close to the 15%.

Do you feel that with that with – because you’ve done so well that you might need to do a little bit more on the M&A side now than maybe what you thought a year ago when you had some really big innovation pipelines launches..

Yes, I don’t think that there’s anymore – that the company is anymore aggressive today than it has been in the past. We are always in the market, the history of Inter Parfums through acquisitions or new licensing opportunities that is one of the ways we grow the business.

It has always been like that, it’s been that way for 30 years that we’ve been in business. So I don’t think we’re under any pressure. I think that the environment today is actually amenable. I think there are a few different things that we are or have been looking at and are looking at.

But as far as pressure, no I don’t see any more pressure today than we’ve ever had in the past with respect to looking at acquisition opportunities..

Okay. And then I just have easy questions. One, I think last quarter Jean, you were saying that the U.S., you were anticipating in the second half the U.S. shipments to kind of pick up and that for the year U.S.

would still be positive, is that still the case?.

Absolutely. We started already, as we can see in the third quarter and it will continue into the fourth quarter, absolutely..

Okay. And then the last question I have and then I will – I promise to jump off….

This was an easy question. Thank you..

That was an easy question. This is even easier one. I know you guys just gave us a great update on how things are through November.

I guess at this point with the spending that you’re doing, do you get incremental reorders during this December quarter or you basically done by this point all the gifts and everything is out there and kind of the spending really kind of just will probably benefit you more into the first quarter.

I am just trying to wonder like where you are now and then what’s the likelihood that you could get incremental orders before the end of the year, just around Christmas time?.

That’s not an easy question. It’s an interesting question. It’s true that in certain market and for certain brands, we are shipping very, very fast. We are shipping by air to certain countries. Especially in Asia, we are seeing some very, very stronger reorders for certain brands, for Coach, for Anna Sui, for Jimmy Choo.

So I would say that selling was not huge, which is always good for us, which means that we made not a lot of inventories in – at store level. So we’ve seen a very strong end of October. The month of October was maybe one of our biggest.

November also – the first week of November was very strong and we anticipate to ship – to continue to ship for Christmas until the end of November, the Thanksgiving Day, and then it will slow down..

Thank you very much, guys..

Okay, thank you..

Our next question comes from the line of Frank Camma with Sidoti & Company. Please proceed with your question..

Hey, good morning guys..

Good morning..

Real quick easy one for us.

On the French tax issue, does that mean going forward we can – since they’ve changed the rule there, you no longer have sort of distorted tax rate, typically in the second quarter?.

That is correct. That is what the French Government is looking to do – is to eliminate that 3% tax on dividends and since we paid a dividend in the third quarter, it should eliminate that going forward.

For those who on the call that don’t know what Frank is talking about, in October, the French Government declared that tax on dividends is unconstitutional, and therefore, we filed a refund claim of €2.8 million. The French, Government is still figuring out exactly how they’re going to repay it.

Therefore we did not record this gain in the September financials, more likely we recorded as a one-time item in the year-end financial statements, but it will eliminate the future 3% tax on dividends on a go-forward basis. Thank you, Frank for asking that..

Yes. My other question is more on and I apologize if I missed this in the beginning is on – specifically on Abercrombie & Fitch and Hollister. Obviously, I realize that they had pretty good sell-in last year. So maybe that might be the issue.

Is that more of a comparison year-over-year from the sell-in, like with the sort of slowdown there, or do you feel that maybe you’ve reached penetration there is, and if you just make some comments on that on why you think that obviously there was a little bit weakness on those two brands?.

Thank you. Yes, the weakness comes really from comparison of quarter-by-quarter. We see strong business for Hollister after two businesses up. Abercrombie alsom, we do not anticipate in issues with this brand. But we have to tough competition with couple of launches last year..

Okay. Thanks guys..

Thank you, Frank..

Thank you. Our next question comes from the line of Steph Wissink with Jefferies. Please proceed with your question..

Hi, good morning guys.

Just a couple of quick ones for us too, Russ, if you could just run us through the tally of your major direct versus distributor markets, you called out France and Spain, but could you just give us maybe your top 5 to 8, that you think about in the next couple of quarters?.

United States is of course one of the largest. United States, France, Spain, Italy and Germany..

Okay, so we should assume that the rest of the markets worldwide are through distributors?.

Yes, that’s correct..

And then just second tactical question, I think you called out strength in travel retail, you also mentioned Specialty retail, not a lot of conversation about e-commerce, so I’m just curious that group of channel travels specialty and online, can you give us some sense of the performance delta relative to your mainline perfumery business in Europe as well as the department store business in the U.S.? What is the performance range of growth range difference between the different channels?.

We’ve never really spelt it out. I think the best way to answer that question is that travel retail historically has been around 15% of our overall business. Today that to gone to as almost 20% of the overall business and of course that’s a very profitable business.

So we have more brands that have been sold within the travel retail and I think that’s one of the reasons why we’re seeing some growth there. With respect to the dotcom, Jean do you want to….

Yes, for the dotcom, we sell through website that belongs to our retailers. So we are on [indiscernible], we are on macys.com, but the business which is done, for instance done on Amazon is not responsive – significant as we would say..

Okay. And then the final question. I think you were asked earlier about M&A, but just more specifically give your competitors in the Prestige Fragrance area, have focused in on the personal fragrance category.

I’m curious if you’re thinking about diversifying into – you maybe slightly higher price point a bit more customized, personalized are you looking at anything in that area that you known might augment some of your license business?.

I cannot say that we are not so keen, but is definitely a trend of a niche artisanal fragrance is definitely growing. A lot of our competitors are jumping into that. We are cautiously looking at it. We like to have a diverse portfolio.

So we have in our portfolio very exclusive brands like Boucheron and Van Cleef, very democratic brands like Hollister and Abercrombie. I will not be against having new license or new business with niche artisanal high end perfumery. But we'll also continue to look at very recognizable brands with worldwide recognition..

Thank you, gentlemen..

Our next question comes from the line of Hamed Khorsand with BWS Financial. Please proceed with your question..

Good morning. Just a couple of questions here.

First off, what is the mix of gifts sets this year versus what you saw last year?.

Very similar, almost all of the same. From a percentage standpoint, I don't think if there is any major fluctuation at all..

And then as far as the revenue you reported, how much of it, I don't know if you are able to measure or not, but how much of is sell through as far as just basic demand that you've been seeing all year versus stocking up for the holiday season? It's very difficult to break that out.

It's a combination, it depends on the country, it depends on the product lines. You are not necessarily doing gift set for every single product line that you have. It's very difficult to break that out..

Sorry, I got to interrupt you.

I didn't mean gift set, I mean general at the revenue that you reported in Q3?.

I don't think I understood the question.

Can you repeat slowly?.

$169.5 million that you reported in Q3, I'm trying to figure out, how much of it was general demand of sell-through from the consumer versus inventory stocking at the retailer for the holiday season?.

Probably it's just not something that we can measure, we invoice either of our distributors or retailers, $169 million in the month of July, August and September. How much of this is going to be sold through.

I think, if you just look at it at the end of the year, where usually all the retailers and all the distributors give us their on hand inventory. The trend we try to answer, the trend is for our distributors and our retailer to have the minimum amount of inventory, that's why we are opening finishing very frequently.

I do not have any information that we have the higher inventories in not small. So we expect normal sell-through for this season..

What I'm trying to get to is, your ad spend year-to-date, it's been very efficient. It's lead to increased revenue ahead of your expectations and then you're planning on the increase – the seasonal increase in Q4.

So I'm just trying to figure out how much of the increase will that provide because it's been efficient so far, and try to measure that and try to see if there is – how much upside can there be given your ad spend so far this year?.

It’s not an easy question for us to answer because a good portion of our sales are through a third-party distributor. So part of our sales are sold wholesale, part of our sales are sold at ex-factory.

You're asking a question that would require an analysis as to what the sell-through is at the distributor level and we're not really prepared to answer that at this time..

Okay.

And so last question on – are you doing anything different with the advertising this year that's providing the increase in sales versus prior years?.

We are increasing our presence in the digital for sure, while decreasing our presence in the classic media, while increasing in certain markets our TV advertising, Middle East and Russia, while pushing TV advertising, with other latest transitions..

Okay. Thank you..

Well, there no further questions. Therefore, my last point, I just want to mention is that I will be presenting at the KeyBanc Investor Conference in New York City on December 5. I hope to see some of you at this conference.

And thank you for turning into our conference call and as usual, if you have any further questions please contact me at my office. Have a great day and thank you very much. You may all disconnect your line..