Good day, and welcome to the Steven Madden, Ltd. Third Quarter 2014 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Jean Fontana of ICR. You may begin. .

Thank you. Good morning, everyone. Thank you for joining us today for the discussion of the Steve Madden Third Quarter 2014 Earnings Results..

Before we begin, I would like to remind you that statements made in this conference call that are not statements of historical facts constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements involve risks and uncertainties and other unknown factors that could cause actual results of the company to differ materially from historical results or any future results expressed or implied by forward-looking statements.

These statements contained herein are also subject generally to other risks and uncertainties as described from time-to-time in the company’s reports and registration statements filed with the SEC..

Also, please refer to the earnings release for information on risk factors that could cause actual results to differ. Finally, please note that any forward-looking statements used on today’s call cannot be relied upon as current after this date..

I would now like to turn the call over to Ed Rosenfeld, Chairman and CEO of the Steve Madden. .

Thanks, Jean. Good morning, everyone, and thank you for joining us this morning to review Steve Madden's Third Quarter 2014 Results. With me to discuss the business is Derek Browe, the company's Director of Finance and Investor Relations..

Q3 was a tough quarter as we continued to face a difficult landscape for women's fashion footwear.

As we have discussed the last couple quarters, in the young trendy footwear space, where we do most of our business, there are relatively few significant fashion trends at the moment, with the exception of sneakers, a category which is performing well for us, but which represents a small percentage of our overall business..

As in the first half of the year, this lack of fashion trends to capitalize on impacts us most acutely in our retail stores. We had a disappointing quarter in retail with comps declining 7.4% and gross margin contracting versus the prior year.

The retail segment results were below our plan and were the primary driver of our overall earnings results for Q3 coming in below forecast..

Wholesale segment performance was better than retail, but was also impacted by the lack of fashion newness. Overall, wholesale net sales were down a little less than 1% compared to the prior year. But if we exclude the Dolce Vita business acquired in the quarter, wholesale sales were down approximately 5%. .

Given the soft top line performance in the quarter, it was extremely important to manage the business carefully and control inventory and operating expenses, and we are pleased with our execution on those fronts..

Excluding Dolce Vita, inventory at the end of the quarter was down 4% versus the prior year, with decreases in both wholesale and retail. In the operating expenses, excluding Dolce Vita, were up 3% compared to the prior year period, with the modest growth coming as a result of having 11 more company-operated stores in the U.S.

and Canada than we had a year ago. Wholesale operating expenses, excluding Dolce Vita, were down 1% versus last year..

In addition to managing the business prudently in the quarter, we also made important investments for the future. Most significantly, we acquired Dolce Vita Holdings on August 13, for $60.3 million plus an earn-out provision based on future financial performance.

Dolce Vita specializes in the design and sale of branded and private label footwear and had net sales in 2013 of approximately $111 million.

Dolce Vita brand is one of the premier contemporary brands in the footwear industry and is a strong complement to the remainder of our portfolio, targeting a customer and a price point that we don't address with our other brands..

We're particularly pleased that its founders, Van Lamprou and Nick Lucio, who are widely regarded as some of the most talented members of our industry, are staying on with the company to lead Dolce Vita into its next stage of growth.

We see significant opportunity to expand the business and improve its profitability by combining Dolce Vita's strengths, which include an outstanding brand and superior design, with our proven business model and infrastructure. Transaction is expected to be $0.02 to $0.03 dilutive in 2014, and then to become accretive to EPS in fiscal 2015. .

Adding strong brands to our portfolio, as we did with Dolce Vita, is an important part of our growth strategy. Another of our key growth initiatives is expanding our international business. And we also entered into 2 transactions in the third quarter, which should position us for growth in key international markets. .

Most importantly, on September 25 we signed a definitive agreement to acquire our Mexican licensee, SM Mexico, from its parent company, Grupo Dicanco, for approximately $15 million plus repayment of a short-term loan and an earn-out provision based on future financial performance..

SM Mexico has marketed the Steve Madden brand in Mexico since 2005 and had net sales for the 12 months ended July 31, 2014, of approximately $15.4 million. Currently distributes products in leading department stores as well as 21 Steve Madden branded retail stores. .

Mexico is a strong and growing market for the Steve Madden brand and we see great opportunity for continued growth through enhancing our presence in leading department stores, expanding into new wholesale accounts, growing our portfolio of Steve Madden retail stores and introducing certain of our other brands like Dolce Vita into the Mexican market.

The transaction is expected to close in January 2015 and is expected to be accretive immediately, contributing approximately $0.02 to $0.03 in diluted EPS in 2015..

Finally, we also expanded our partnership with House of Busby in South Africa in the quarter. Busby has been our distributor in South Africa since 2011 and has done an excellent job establishing the Steve Madden brand in the territory.

There are now 4 Steve Madden retail stores in South Africa and 20 Steve Madden shop in shops in the leading South African retailer, Edgars..

In September, we deepened our commitment to the country, forming a joint venture with Busby, in which we now own 50.1% of the South African business. We believe the joint venture model will enable us and Busby to better leverage our respected capabilities to grow the Steve Madden brand in this important market.

Together we have established a strong growth plan that includes both wholesale and retail expansion. We currently expect to open 3 to 4 new retail stores in South Africa in 2015..

And while it's undoubtedly a challenging time in the fashion footwear business and we are cognizant of the need to manage our existing business prudently, we are not playing defense when it comes to investing in growth, whether it's adding a premier contemporary brand like Dolce Vita to the portfolio or transitioning from a distribution model to an ownership model in Mexico and South Africa, we continue to move ahead with acquisitions and investments that will drive the business forward in 2015 and beyond..

Now I'd like to turn it over to Derek to walk you through the details of the financial performance for the quarter. .

Thanks, Ed, and good morning, everyone. Our consolidated net sales for the quarter were $392 million compared to the prior year amount of $394.8 million with sales in both our wholesale and retail segments down slightly. Our wholesale net sales in the quarter were $343.3 million compared to $345.9 million in the prior year's third quarter.

Wholesale footwear net sales were $273.2 million as compared to $272.7 million in Q3 of 2013..

Excluding sales from Dolce Vita, sales for the wholesale segment were $259 million, a 5% decline versus the prior year, with decreases from both branded and private label businesses. .

In wholesale accessories, we recorded net sales of $70 million in Q3 compared to $73.3 million in the prior year period. During the quarter, we saw solid gains in both our Betsey Johnson and private label handbag businesses, which were more than offset by declines in Steve Madden, Big Buddha and cold-weather accessories business..

In our retail division, net sales were $48.7 million compared to $48.9 million in last year's third quarter. Variable store sales in the quarter decreased 7.4%. Our traffic trends were weak, as they have been all year.

Variable stores were tough in both our full price and outlet bricks-and-mortar stores while our e-commerce business was approximately flat..

During the quarter, we opened 4 outlet locations, we acquired the Dolce Vita website and through our newly formed JV, acquired 4 stores in South Africa, bringing us to 133 company-operated retail stores, including 28 outlets and 4 e-commerce stores..

Turning to other income. Our commission and licensing income net of expenses was $5.1 million in the quarter versus $4.9 million in last year's third quarter. First cost commission income and licensing royalty income net of expenses were each up modestly..

Our consolidated gross margin in the quarter was 34.7% as compared to 35.4% in last year's third quarter. Our wholesale gross margin was 31.3% versus 31.9%, due to the impact of Dolce Vita and increased markdown allowances. Excluding the acquisition of Dolce Vita, our wholesale gross margin would have been 31.6%.

Gross margin in the retail division was 58.9% compared to 60.2% as a result of promotional activity increases versus prior year. .

Our operating expenses were $81.9 million in the third quarter or 20.9% of net sales compared to $76.5 million or 19.4% of net sales in the same period last year. Excluding Dolce Vita, operating expenses were $78.8 million, the increase, as Ed mentioned, resulting from the impact of net 11 new stores for year-to-date 2014..

Operating income in the quarter totaled $59.3 million or 15.1% of net sales compared to last year's third quarter operating income of $68.1 million or 17.2% of net sales. .

Our effective tax rate for the quarter was 35% and net income for the quarter was $39.2 million or 62% per diluted share compared to $44 million or $0.66 per diluted share in the third quarter of 2013..

Turning to our balance sheet. As of September 30, 2014, we had $189.5 million in cash and marketable securities and no debt. We ended the quarter with inventory of $103.2 million. Excluding inventory associated with Dolce Vita, inventory totaled $95.4 million compared to $99.7 million in the prior year.

Consolidated inventory turn for the last 12 months was 10.6x versus 10.3x in the prior year. CapEx in the quarter was $4.7 million and during the quarter, we repurchased 1.1 million shares for approximately $36.1 million, bringing our total repurchases since the beginning of our 2013 to approximately 6 million shares for $203.9 million..

As previously announced, factoring in the recent acquisition of Dolce Vita, and current expectations for the remainder of the year for fiscal year 2014, the company expects that net sales will increase 1% to 2% over net sales in 2013. Diluted EPS for fiscal year 2014 is expected to be in the range of $1.81 to $1.86..

Now I'd like to turn the call over to the operator for questions. .

[Operator Instructions] And we'll take our first question from Camilo Lyon with Canaccord Genuity. .

Ed, I was hoping you could give us just a little color on what's happening right now in the wholesale channel. In previous quarters, you guys were gaining share from the smaller, less capitalized brands.

Is that still the case? Or are the department stores constricting some of the open-to-buy dollars and shifting those open-to-buy dollars to other categories until demand picks up?.

Camilo, yes, I mean, I think that essentially what's happened is clearly our segment of the market that we play in, as we talked about, that young trendy space, is tough this year. There's really a lack of trend there with the exception, of course, of sneakers, which continue to do very well.

And well, I think, certainly none of our direct competitors are performing better than us. So we're certainly not losing share to anybody that does the types of footwear that we do. I think that we're sort of in line with the department this season. In spring, I think we -- our sell-throughs were a little bit better than the department.

I would say right now, we're in line to maybe a little bit better or very modestly better though. We -- if we've lost share to anybody, it's certainly to the sneaker guys because they have allocated more dollars -- the reasons are allocating more dollars to the sneaker players.

But in the brown shoe segment or the fashion footwear guys like us, non-sneaker guys, I think we're sort of maintaining share at this point. .

Okay.

So then it's reasonable to think that once the fashion does turn more favorable, then you're in a pretty decent position to capitalize on that market share, holding or gaining that you've been able to manage?.

Yes. We believe so. .

Okay.

And then can you talk about any divergences? Or are there any divergences by channel, whether it's the department store channel that's outperforming the discount channel or vice versa or anything that's differentiated between the segments that you operate in?.

At this point, it's really something that we're seeing across the board. That junior space, that young space is challenged in all tiers of distribution. .

Okay. And then just finally on Dolce Vita. I think it's a breakeven business today when you bought it.

Can you talk about the magnitude of the EBIT margin opportunity and the pace of improvement in that EBIT margin structure that we can expect to see next year?.

Sure, yes. As you point out, Dolce Vita at this point is basically breakeven on an annual basis in terms of profitability. We believe that over time, we can get this to a 10% EBIT margin business. We're not going to put a timetable on it yet. We're certainly not going to get there in 2015, although we do expect the business to be profitable in 2015.

But we see quite a lot of opportunity to improve the profitability of that business. Their -- both -- their gross margins and comparable divisions to those we have at Steve Madden are running significantly below the Steve Madden divisions. In some cases, 800 to 1,000 basis points below. So we think there's a lot we can do to impact that.

And we also think that the operating expense structure was a little bloated for the size of the business. So we're working diligently on reducing the operating expenses as well. .

So those sound like to -- those sound to be more like blocking and tackling sort of initiatives that can fairly quickly turn favorable.

Is that the right way to think about it?.

I think that's right. I mean, just keep in mind that something -- the gross margin initiatives in particular are something that you -- aren't going to impact us significantly until fall of '15. .

And we'll take our next question from Jay Sole with Morgan Stanley. .

I wanted to follow up on Dolce Vita. You talked about some of the ways the margins are going to improve or you're going to improve the margins there.

Can you talk about the integration and the process, some of this -- can you walk us through the steps you'll take to integrate it? How much time of yours is this going to absorb? And how are you going to manage the people in the different aspects of that business as you bring it in-house?.

Sure. Well, the interesting thing about this transaction is that Dolce Vita is a business that has a lot of parallels to our existing business. It's one that we know very well. I don't think there's certainly nothing that we've ever done before that where there's quite so much knowledge base in-house and transferable skills already here to help them.

So I think it fits in pretty well and it's not quite as complicated of an integration as some other transactions might be. The one thing we want to do, though, is we want to retain what makes Dolce Vita special. And so in terms of the front of the house, and by that we mean design and sales, we really want to leave that structure in place.

But what we're working on now, and which is already in place and will be -- what's already in motion, excuse me, is integrating the back office structure and making sure that we help them with the sort of operational efficiencies. Some of the things that, frankly, I think we're not, therefore, saying that we can impact it pretty quickly.

So that's already in process. I think by the middle of next year, that will be mostly complete. And I would say by, really by fall of '15, they'll be fully on our -- up and running on our platform. .

Now does what you've experienced so far in this integration process change the way you think about future acquisitions? I mean, do you feel like the company has capacity to do this more? Or is it kind of such a big undertaking that it's really kind of a onetime situation?.

No, I think we clearly have the wherewithal and the capability to do additional acquisitions if we find the right opportunities. .

And is that something you're actively working on? Or is the strategy to kind of pursue it or seek them out? Or is it something that is just ad hoc and if it comes up, you will; but if not, that's okay, too?.

We're actively looking at acquisitions. We -- again, we don't feel compelled to do anything unless it -- we think it makes sense. So we're going to continue to be opportunistic. But yes, we are in constant process of looking at and evaluating additional acquisitions. .

And we'll go next to Kate McShane with Citi Research. .

It's Corinna Van der Ghinst on for Kate. I was hoping you guys could talk about the state of your inventory at the wholesale accounts.

And have you guys seen or are you anticipating any cancellations of orders?.

I think that the inventory in the channel is relatively in line, maybe a little high in certain places, but for the most part, that's been managed pretty well. In terms of cancellations, I don't think we're going to be -- no, we don't expect a lot -- to take a lot of cancellations.

We have said that it's going to be much more challenging to get reorders than we're accustomed to. In some cases, we're working with folks, if they want to get out of a certain product, you cancel it, then we're moving them into something else. But in terms of taking cancellations with no replacement, we're not terribly concerned about that. .

Okay, great.

And then could you talk about any regional differences that you might be seeing in either your retail or your wholesale business either in the quarter or quarter to date?.

We're not seeing real dramatic regional differences. There are some -- I would say, in our retail stores in Q3, for instance, California was a relatively better performer, the Midwest and the Mid-Atlantic were relatively weaker. But, frankly, none of the regions were what we would consider satisfactory. .

We'll go next to Erinn Murphy with Piper Jaffray. .

Just to follow-up on the Q4 wholesale kind of reorder pattern.

Just as you think about the early challenges you guys have seen so far, I mean, as you think out as we get into the first quarter and that's typically a sell-in quarter, are there any ramifications that you envisioned? Or how are you kind of thinking about that potential sell-in quarters just given the conversations you're having currently with retailers?.

No, I think that given the challenge that everybody has seen in this space this year and in the fall season so far, I do think you have to expect the retailers to be pretty cautious heading into next year. And so we are expecting spring orders to be -- not to be gangbusters, let's put it that way.

But so far, what we've seen has been relatively encouraging. We're sort of in line with where we were a year ago for spring. .

Okay, that's helpful.

And then just back on the retail comp for the quarter, were there any major differences between the months of July, August and September as we look at that negative 7% range?.

Yes. Actually, August and September were weaker than July, particularly as we look at it on a 2-year stacked basis. On a 1-year comparison, they were only modestly weaker, but the comparisons did get easier throughout the quarter and the performance did not improve on a year-over-year basis.

So on a 2-year stack basis, we got a little bit weaker as the quarter went. .

Okay, that's helpful. And then, I guess, is weather -- I mean, weather has obviously been a little bit of a wildcard here.

I mean, has it started to get a little bit more seasonal? Are you seeing any inflection in your tall shafted boots or your bootie business thus far?.

Tall shaft boots overall have been disappointing so far. Booties have performed, I would say, pretty well. But we were hopeful that tall shaft boots were going to perform a little bit better than they have so far. .

That's helpful. And then just the last question for me is I think about a quarter ago, as you initially had revised down the guidance, it was related to your expectation for the second half of the year being a little bit more promotional from the tier set within accessories.

Has that, in other words, in the fall, has that played out as planned? Or how are you thinking about your accessory business just given the environment there?.

Yes. I think the accessories performance is really right in line with where we expected it to be on the last call. .

Okay.

So you're not being incrementally promotional from when you had previously intended it to be?.

We are not. No. .

And we'll go next to Ed Yruma with KeyBanc Capital Markets. .

I guess, first, Ed, you've -- now that you start to see some weakness in the wholesale, are you seeing any change in posture around markdown money? Are retailers kind of coming back here for more support, given the promotions that they've been running?.

Yes. I mean, we definitely are seeing our markdown allowances as a percentage of sales go up and that's something that's baked into our guidance. .

Got it.

And given that your own comp trends have been kind of weak throughout the balance of the year, obviously, malls have had a tough year, but is there anything you can do to stimulate traffic or to drive interest into your stores? Or are you really just subject to weak mall traffic trends?.

Yes, there's a lot of things that we're experimenting with in terms of local marketing initiatives and other things.

I think that the thing that we feel pretty strongly about, though, and it's something we talked about on a previous call, I believe, was increasing the amount of product that's exclusive to the Steve Madden retail stores and the Steve Madden e-commerce. So i.e. product that is not in the wholesale channel.

And we have ramped that up pretty dramatically recently and we're going to continue to increase the percentage of our Steve Madden stores that is exclusive, that is incurring wholesale and we're hopeful that that's going to draw some more traffic into our stores. So far, we feel pretty good about the results we're seeing there, particularly online. .

Got it. My final question, I think you spoke somewhat constructively about the dress category last call.

I guess, any observations there or any other areas where you're seeing some relative strength?.

Yes, dress was a category that's been a little bit disappointing for us. We saw that category building throughout the year and I think we expected the momentum to continue to build and it sort of plateaued a bit. I still feel like if we have the right dress shoes, that it's a category that can be important for us.

But it definitely did not perform to expectations in third quarter. In terms of the categories that are relative pockets of strength, number one, of course, is sneakers. We're doing very well with our fashion sneakers. And then booties, booties are performing pretty well.

Of course, we have a headwind in that category because we're going up against the performance of the TROOPA last year, which is, as we've said before, sort of a once-in-a-decade kind of item. But excluding TROOPA, the bootie performed just pretty good. .

And we'll go next to Jeff Van Sinderen with B. Riley. .

Ed, let me ask you, this is kind of a tough question, but what's your sense of where you think we are in sort of this fashion cycle with the lack of trends to drive your business? Do you think we're somewhere in the middle of it? I guess I'm just trying to get a sense of when you think that maybe the wholesale business could start to stabilize overall versus easier comparisons, when your retail comps might kind of hit bottom.

Any thoughts there?.

Well, I'm certainly hopeful that the beginning of 2015, we're going to see some improvement. I think that we're -- we expect to remain -- the balance of this year to be challenging. We do feel like we've seen some encouraging signs for spring.

I'm not going to talk specifically about what those trends are for obvious competitive reasons, but there are some -- I think that folks in the industry believe that there's more newness this spring than there was last spring.

There are some things happening in Europe, which haven't really taken off in mainstream, the U.S., yet but that we feel optimistic about. Of course, we're delivering a lot of products right now into places like Miami for tests. And that will tell us a lot over the next month or 2 about the things that we want to go after more significantly for spring.

But we do feel like there's some more newness in spring. But the 1 caveat I'll provide, though, is that we also expect sneakers to continue to be very good in spring.

And while we're doing well in the sneaker category, we've got some very good products in that category and we're going to be expanding the percentage of our assortment devoted to sneakers for spring.

We also have to -- we're also cognizant of the fact that there are -- that when that category is good, that there are some traditional sneaker companies that post pretty stiff competition, folks like Converse and Vans. So that will probably remain a bit of a headwind in spring. .

Okay, understood.

And then relevant to sort of the markdown and promotional levels that you've been experiencing, I guess I'm just trying to get a sense of do you think that you have to be sequentially more promotional in Q4? Do you think we're sort of at status quo at this point versus how you were in Q3? Just wondering if you think that we're getting -- I guess that maybe it just doesn't get -- we get to a point where it doesn't get a whole lot worse in terms of markdowns and promotions and so forth.

And then maybe the comparisons get easier.

Obviously, they do get easier as you get into 2015, but how do you think about that?.

Yes. I mean, I don't anticipate it getting significantly more promotional than it's been, but it's been very promotional. And we all know that in fourth quarter and holiday, the pattern over the last few years has been relative for the market to be very promotional. We expect that to continue.

But do I think there's another leg down? That's not what we're anticipating. .

And we'll go next to Scott Krasik with Buckingham Research. .

So just one quick one on Dolce Vita. When you gave the original announcement, you said that it would be modestly accretive, I think, in '15.

I mean, are you more positive or more confident in that, less confident, just given the industry and what you've done from an integration perspective as a whole?.

Okay. I think that's still the right way to look at it, modest accretion for '15. .

Okay. And then just in terms of looking back at the first quarter, I think it's very encouraging that you're seeing sort of a flat order book, given that your wholesale footwear sales were up 16% in 1Q last year.

How much of that 16% increase was TROOPA or lace-up booties that are trending significantly down and they have to cycle again?.

I would say that look in Q1 was not a huge percentage of the business. You're talking about a couple percent of the business. .

Okay, that's very good. In terms of pricing, you've taken -- or you have that quilted sneaker. That's at $59, I think.

You have some of the other -- the older eccentrics at that same price, how do you look at pricing for athletic for the spring?.

That is one of the challenges that athletic tends to be a lower AUR item. So we feel very good about those products. The velocity of sell-through is excellent on them, but they -- on a relative basis, they are somewhat lower AUR compared to the rest of the mix. .

Okay. And then sort of longer term, you've given back a couple hundred basis points in wholesale footwear margin absent this cycle.

How do you view? Are you building products or your IMUs going in at the same or higher than when in 2011, 2012? Can you get back to similar wholesale gross margins once we get a hit or 2?.

The IMUs are similar. There is a mix difference from the period that you're talking about because the private label did grow over that period. And keep in mind that at this point, Dolce Vita is a mix negative. We're going to hope to, over time, get those margins up in line with our existing business or our legacy business.

But yes, we do believe there's some gross margin opportunity once we -- once the trend environment improves and we have some more meatier trends to capitalize on just by virtue of reducing markdown allowances and some closeouts, although we've done a pretty good job of keeping the closeouts to a minimum. .

Okay.

Just lastly, now that you have your foot in the women's department, so to speak, with Dolce Vita, are you seeing different traffic trends with your better department store customers in women's versus juniors? And what do you ascribe that to, if so?.

Well, definitely though, the women's business is better than the Junior business overall. Anything that targets a somewhat more mature customer is doing -- is performing better.

And even if you look at our own portfolio at the sell-throughs, we're seeing better sell-throughs in brands like Freebird, in Steven, in Superga, which of course, is sneakers and has a sort of crossover customer base.

Those brands tend to be selling through better and I think that's sort of in line with what's happening in the overall market that the women's brands are selling better than the Junior brands. .

Do you think that's just because the pure athletic doesn't play as well for them? Or they're buying less accessories for [indiscernible]. .

Yes, I think for that junior customer, there's not a lot of trend that she's excited about other than sneakers. So she's buying a lot of sneakers. .

And we'll go next to Mike Richardson with Sidoti. .

Just a couple of quick ones. First, obviously, you guys bought in a couple of licensees over the last 1.5 years or so.

Can you talk about the opportunity to buy in additional licensees going forward? And will that be where a lot of the international growth comes from?.

Yes, we did the first one a couple of years ago with Canada. That's been a very successful transaction for us and now we've just signed up Mexico, which we expect to close at the beginning of '15, and we've also entered this joint venture in South Africa. Long term, I do think that that's part of the strategy.

In the very near term, I think that we've got a lot on our plate with Mexico and South Africa. And so the first order of business is to make those transactions successful and that will be our focus over the next year or so, and then we'll provide you -- if those work out, we'll look for the next one. .

Okay. Just the last question. I'm just wondering, reading a lot about potential delays at the port in L.A. and Long Beach.

Just wondering if any of your shipments had been impacted by anything going on out there?.

Yes, that has been a challenge recently and it's something that everybody in the industry is dealing with. .

And we'll go next to Steve Marotta with CL King & Associates. .

Has there been any change in your company-owned comp October to date versus what we saw in the third quarter?.

No. .

And as it pertains to department store handbags, last time you updated The Street, the handbags within the department store channel were very heavied up or high promotions. They were migrating open-to-buy dollars away from the category.

Has there been any delta there over the last 3 months? Either -- even if it pertains to the channel cleaning up a little bit as it pertains -- as opposed to open-to-buy dollars migrating back in. .

I think it's definitely -- yes, it has sort of cleaned up a bit and it's stabilized. But if anything, we feel incrementally a little bit better about the category than we did 3 months ago. It's still challenging. And we continue to feel very good about our Betsey Johnson brand in that category.

They really -- well, it has been a declining EVC category in the department stores. Betsey Johnson has really been an outperformer. I would say probably the best brand in that space in the industry, and so we're pleased about that. .

That's helpful.

And one last question, is there any reason for investors to believe that you would slow down the pace of share repurchases in 2015?.

Derek will take that. .

Yes, yes. No, the remainder of the year, I think all things consistent, you could expect us to continue on that same pace, which has now been $30 million to $35 million a quarter. .

In 2015, not just for the quarter. .

Yes, yes. I mean, well, we're going to update on '15 later. But again, to Derek's point, I think that absent anything unforeseen, it's likely we'll continue. .

And we'll go next to Danielle McCoy with Wunderlich Securities. .

I was wondering if you could just talk about a little what you're seeing in men's in terms of trends.

How the men's products doing at your own retail doors? And if there's -- what you guys are seeing at wholesale and if there's any room for expansion there?.

Sure, yes. Men's is definitely a bright spot. Men's -- the trends in the men's category are a lot better than they are in the women's. Our men's business in wholesale was up mid-singles in Q3 over the prior year.

Although, frankly, that was a little slower than our pace has been due to some timing issues and it's going to -- it should reaccelerate in the fourth quarter. We're still looking at up high teens in the men's business for the whole year. I mean, we're growing in our retail stores as well.

Although the growth isn't quite as dramatic as it is in wholesale. So that's a category we feel good about. In terms of products, boots have really picked up in that category. The Chukka boots continue to be very good and we're seeing some improvement in casuals as well. So we're pleased about that. So men's, we feel very good about.

Kids is also something that we feel very good about. It's really the women's that's challenging right now. .

Okay, great.

And is there any update on the B by Brian Atwood brand that you can talk about?.

Yes. We've -- we're pushing B Brian Atwood back to fall of '15. As you recall, we were initially planning on launching for spring. I think that we only get one chance to relaunch the brand and we want it to be just right.

And particularly given the sort of challenges that -- in the fashion footwear space right now, we felt like we weren't losing a lot to delay, get the product exactly right and launch for fall of '15. .

And we'll go next to Sam Poser with Sterne Agee. .

It's Ben Shamsian for Sam.

Given the disappointment in the tall shafted boots, can you talk about your ASPs both in the third quarter and how you're seeing that play out in the next couple of quarters?.

Yes. ASP in wholesale was up about 1% in Q3. In retail, our AURs were down modestly. I think that at retail, we expect them to be down again modestly in Q4 and wholesale to be relatively flat.

Tall shaft boots -- Ben, I just want to highlight on that, tall shaft boots are still making up a bigger percentage of the overall mix than they did a year ago, just not quite as strong as we anticipated. .

Got it. Okay, I appreciate that. And then you talked about taking in some of the distributors.

But how about your thoughts on sort of acquisitions such as that of Dolce? Anything sort of sizable that you have on your radar screen?.

Well, there's nothing to report on that front right now. We'll -- we continue to look for acquisitions, but -- and we'll promise you'll be the first to know when we find one. .

That concludes today's question-and-answer session. I would now like to turn the conference back over to Mr. Ed Rosenfeld for any closing remarks. .

Okay. Well, thanks very much for joining us for today's call. We look forward to speaking with you on the fourth quarter call. Have a good day. .

That concludes today's conference. Thank you for your participation..