Carlos Alberini - Chief Executive Officer Sandeep Reddy - Chief Financial Officer.

Good day everyone and welcome to the Guess, Third Quarter Fiscal 2020 Earnings Conference Call. On the call are Carlos Alberini, Chief Executive Officer; and Sandeep Reddy, Chief Financial Officer.

During today's call, the company will be making forward-looking statements, including comments regarding future plans, business and financial opportunities, strategic initiatives, capital allocation, and short and long-term financial outlook.

The company's actual results may differ materially from current expectations based on risk factors included in today's press release and the company's quarterly and annual reports filed with the SEC. Now, I would like to turn the call over to Carlos..

Heritage, Millennials and Generation Cs, primarily due to our highly differentiated approach. These customers are engaging with our brand at a deeper level and are very attractive to our company's future.

Last but not least, our company has a large sales base; however, our profitability is not a good representation of our business model and margin potential, and this is despite our adjusted operating profit growing over 30% annually in the last two years and our guidance for adjusted operating profit projected to grow above 25% this year.

I believe there is a lot more operating margin expansion opportunity here and it is in our control. We plan to discuss these topics in more depth next week, and hope you will leave the event with a clear understanding of our opportunity and our plan to attack it. I now want to pass the call to Sandeep, who is here in his last earnings call with us.

I want to thank Sandeep for all his contributions to our company during his last nine years with Guess. Sandeep leads a very strong team in all his areas of responsibility, and I know that we will not miss a beat during the transition. I also want to wish you the very best in your future Sandeep.

It has been great working together during the last few months. Thank you and please go ahead. .

Americas Retail revenues for the quarter finished down 5% in U.S. dollars and 4% in constant-currency. Comp sales for the quarter including e-commerce were down 3% in U.S. dollars and in constant-currency, finishing below our expectations.

The negative comps in the quarter were driven by negative traffic and AURs as our comp trends for the quarter deteriorated starting with the Labor Day weekend. E-commerce had an immaterial impact on comps for the quarter.

Americas Retail operating margins in the quarter contracted 110 basis points, breaking a sequence of eight consecutive quarters of operating margin expansion. The contraction in margins was driven by markdowns and deleverage from lower sales, partially offset by better IMUs. Moving to Americas wholesale, revenues grew 7% in U.S.

dollars and 8% in constant currency, and were driven by a continuing strong performance in our U.S. department store specialty and off-price business. The Americas wholesale operating margins in the quarter expanded 20 basis points. European revenues for the quarter grew versus last year by 9% in U.S.

dollars and 13% in constant currency and were driven by new store openings, growth in wholesale revenue and positive comps. Comps including e-commerce finished at 1% in U.S. dollars and up 5% in constant currency. E-commerce improved the comps for the quarter by three percentage points.

The comp increase marked the 17th consecutive quarter of constant currency positive comps for the European region. Our European wholesale business also continues to be very strong. We closed the order book for the spring-summer 2020 season during the quarter and recorded our sixth consecutive season of double-digit growth in the region.

European segment margin improved by 410 basis points due to higher IMUs, lower distribution costs, leverage and lower retail markdowns. We now expect lower European logistics cost to contribute at least 150 basis points to margin expansion in Europe for the year. Moving to Asia, third-quarter revenues were down 8% in U.S.

dollars and down 5% in constant currency. Comps including e-commerce were down 21% in U.S. dollars and down 19% in constant-currency. E-commerce decreased comps by two percentage points. Our performance in the region was significantly below our expectations as traffic trends into stores deteriorated during the second half of the quarter.

The weakness was consistent across all our major markets in Asia; that is Korea, China and Japan. Operating margin for the Asia segment contracted 520 basis points in the quarter, primarily due to higher markdowns and expense deleverage as a result of the negative comps. Moving on to the balance sheet.

Accounts receivable was $300 million, up 5% in U.S. dollars and 6% in constant currency. Inventories were $520 million, down 5% in U.S. dollars and down 4% in constant currency versus last year. This was another quarter of sequential improvement.

While we've made a lot of progress on inventory this year, we are still carrying some excess inventory from the end of last year and expect to continue to dispose of this inventory through a combination of selling it in our own retail outlet stores, as well as using stock liquidation channels, so we can end the year significantly healthier position than last year.

Free cash flow for the first nine months of the year was negative $79 million, an improvement of $43 million versus negative $122 million last year, driven by $26 million lower capital expenditures and $17 million of improvement in working capital.

If we exclude the impact of the $46 million EU Commission fine paid earlier this year, our free cash flows improved by $89 million versus last year. As Carlos mentioned, during the quarter we completed the $170 million ASR that we entered into during the first quarter of this year.

A total of 5.4 million shares were delivered to us in September to close out the ASR. As a reminder, 5.2 million additional shares were already delivered to us against the ASR during the first quarter of this year.

Including open-market purchases and the $170 million ASR, we have repurchased a total of 16.4 million shares at a cost of $281 million this year, resulting in an average price per share of $17.13. We ended the quarter with cash and cash equivalents of $110 million compared to last year's $139 million.

Cash less debt at the end of the quarter was negative $207 million compared to $99 million last year. Moving onto the guidance, I should point out that our outlook for the fourth quarter and full-year of fiscal 2020 does not assume any asset impairment charges.

Also, guidance for revenues and comp sales for the total company and by segment is included in a supplemental table attached to our earnings release. For the fourth quarter of fiscal 2020, we expect revenues for the quarter to be up 2.5% to 3.5% in constant-currency.

At prevailing exchange rates, we estimate that currency will be roughly a 1.5 percentage point headwind on consolidated revenue growth for the quarter. Our gross margin is expected to be up due to IMU improvement from our supply chain initiatives, as well as lower markdowns and obsolescence expense due to a cleaner inventory position than last year.

The SG&A rate is expected to be down slightly to up slightly compared to last year. We are planning an operating margin for the quarter between 11.5% and 12% with a 20 basis point unfavorable impact from currency.

The adjusted earnings per share is planned in the range of a $1.07 per share and a $1.12 per share including $0.05 of headwind due to currency. The earnings per share guidance includes $0.21 in accretion due to the impact of the convert transaction and share repurchases.

Our adjusted EPS guidance includes an assumption of $1.7 million of cash interest expense and amortization of loan fees related to the convertible debt transaction. Our tax rate for the quarter is estimated to be 21%. We expect consolidated revenues for the year to be up between 5.7% and 6% in constant currency.

At prevailing exchange rates, we estimate currency to have a 3% negative impact on consolidated revenue growth for the year. For the full year, we expect gross margins to be up due to improved IMUs in both the Americas and Europe as well as lower logistics and distribution costs in Europe.

The adjusted SG&A rate is expected to be up for the year due to an increase in performance-based compensation. Our adjusted tax rate for the year is estimated to be 25%.

We are planning an adjusted operating margin between 5.45% and 5.6% with a 10 basis point negative currency impact on operating margin and our guidance assumes that foreign currencies will remain roughly at prevailing rates. Adjusted earnings per share is planned in the range of $1.31 and $1.36 with a $0.06 headwind from currency.

As a reminder, our prior guidance for the year was $1.28 to $1.36, so we have raised the low end of our guidance by $0.03 and maintained the high end. The guidance includes $0.13 in estimated accretion due to the share repurchases and convert transaction, and includes an assumption of $5.3 million of cash interest and loan amortization expense.

The high-end of our new guidance represents a 39% increase over last year's adjusted EPS. CapEx for the year is expected to range from $63 million to $68 million to support store openings, key store remodels and investments in our technology infrastructure to support long-term growth. Please note that this is down from $108 million in the prior year.

As I mentioned earlier on the call, excluding the impact of the $46 million EU Commission fine, our free cash flow has improved over last year-to-date by $89 million. This was driven by improvements in inventory and working capital management, in addition to lower capital expenditures.

We expect to see further improvement in free cash flow in the final quarter of the year and to finish with a $90 million improvement in free cash flow for the year, which is $136 million excluding the impact of the EU Commission fine due to continued benefits from working capital management and lower capital expenditures.

In the current quarter, the board of directors has improved a quarterly dividend of $0.1125 per share payable to shareholders of record at the close of business on December 11, 2019. Before I close the prepared remarks, I would like to take the opportunity to say that it's been a privilege to work at Guess for the past nine years.

It has been an incredible journey for me, both personally and professionally. I would like to thank my finance team for their support over the years and I'm so proud of them for the way they've evolved the function.

Finally, I would like to thank Carlos, Paul and Maurice Marciano, The Board and all the associates I’ve worked with for their partnership and wish the company continued success in the future. With that, I will conclude the company's remarks and open the call up for your questions. .

Thank you. [Operator Instructions] Our first question comes from Susan Anderson from B. Riley FBR, your line is now open..

Hi, good evening. Nice job on the quarter. I guess I would like to maybe get a little ….

Hi Susan..

Hi, how is it going? A little bit more color on the Americas retail comp and kind of a step back that we're seeing taken and then into the fourth quarter as well as the operating margin.

You know what are your thoughts, I guess around the store base, given now the slower comp and then also that deleverage on the operating margin front, and do you think you can get the comp back positive? Thanks..

Thank you, Susan. This is Carlos, good afternoon. I – you know just what we saw during the third quarter was primarily driven by traffic and AUR.

Traffic has been negative for the early part of the year, first quarter and second quarter; however, what we saw in the first and second quarter was we were able to more than offset the traffic declines with conversion and UPT improvements.

So during the third quarter, our conversion and UPT was better than a year ago, was not as positive as it was earlier in the year to be able to more than compensate the traffic declines and the AUR declines as well. We – as we mentioned in the prepared remarks, we're also light in very specific key categories where we like breadth and depth.

I think that might have impacted conversion to certain extent and even when conversion was a tailwind, as I indicated, it was not as strong as it has been. We do expect this trend to continue into Q4, even when we are making changes to our inventory position as fast as we can to really strengthen those categories that were what we would like.

With respect to the comps going forward, while we see that pressure in the fourth quarter, we were up against you know healthy comps in the third quarter and we are up against even healthier comps in the fourth quarter from last year.

So while we see that pressure impacting us, we think that going into the New Year things are going to be very different and of course, we are correcting the inventory position that we go into next year with, we definitely have time to be able to adjust. I think that your question was also about the store base and the deleveraging.

I just – we are pleased with the stores and the portfolio that we have. Obviously, we continue to look at opportunities to improve on occupancy cost structure, and as we have many stores that are coming to lease expiration, we take every single opportunity to try to improve on that.

And if the numbers don't look compelling, we do what we have always done, which is we exit the location if we cannot achieve a reasonable deal. Every store has to stand on its own. .

And I think as you asked also said about operating margin and the cadence going into Q4 Susan, so I think obviously with the comp guidance for Q4 down mid-single digits to down low- single digits, which is a bit of a deceleration against Q3, there is going to be a pressure on operating margins into the fourth quarter as well.

But as Carlos mentioned, we're taking a lot of actions to actually remediate that as we go into the end of the year and into next year. So, I think we are fully expecting to start recovering as those initiatives take hold. .

One more thing I would say is, you know just during the quarter we saw tourist locations underperforming the non-tourist locations. Obviously, this is a global brand and we are impacted by how tourists react and how they are shopping. Also weather was not ideal because it was warmer.

It wasn't conducive too for cold weather products, and this is a key classification both in inside the third quarter and also impacting fourth quarter.

We have, I think, a terrific assortment of product that is conducive for cold weather and obviously the weather in the fourth quarter could be a major permanent factor to really move both the level of business and also AUR. .

Got it. And then if I could just add a follow up on Asia. It looks a little bit worse there also. I know that's been a tough geography for a lot of people given the macro issues.

Are you seeing any stability at all with some of the initiatives you're working on in terms of fit and adjusting the product and marketing, and maybe if you could talk about what else you are doing to kind of try and get that back on track?.

Yes, thank you. Well, you know definitely the softness in Asia has been now with us for a few quarters. We saw a very sudden change in trends as you know at the beginning of the year and it was just after Chinese New Year, we experienced softness in our three major markets.

I'm talking about Greater China, Japan, and Korea, and those trends got even softer during the Q3 as you indicated.

The changes; you know when you look at what happened and how it happened, these changes lead us to believe that there is something that is playing out at a macro level and we know that there is a lot that is impacting the region that is completely outside our control, like the Hong Kong situation, the China-U.S.

trade war; also Korea and Japan trade war, unusual weather. There were a lot of things that happened during this quarter. I don't know if those are the reason why the softness accelerated. But what we do know is that the retail environment is challenging and our customer traffic is down across all markets.

There is not that much that we can do on that, but we see significant opportunities to improve internally, and many of those things start with product and you referred to that. We believe that the product requirements for the region are very specific.

In Korea and Japan, we are developing a specific product and we have been for several years, but we do not do that in China at the moment. So, we do have an opportunity to better address the customer needs in terms of product styling, sizing, and fit.

And also, we think that as we study the flow of our inventory, we believe that we have been impacted by insufficient newness in our inventory position, especially in Greater China.

The composition of the product offering has been impacted by the high level of older season inventory that we came into with, and as we work through the current inventory and all that exits, you know we are ensuring that we are very careful with how we buy the future product and we do incorporate newness.

We think that there is also an opportunity on prices. We have been analyzing our price points by products and compared to some other brands that have become relevant in the market, and we think that these brands have been aggressive with fast development and also very sharp pricing, so we are adjusting to that.

And then with respect to the specific product as you asked, you know we think that is going to take some time.

We are really trying to analyze whether our existing lines from Korea and Japan can serve that purpose to a great degree, but we still think that there is a need for a very specific, more localized market product strategy, and that's what we are doing. We are building the team to be able to do that.

You know you didn't ask about marketing, but we think that marketing is a big factor here too. We think that there is an opportunity to enhance the – how we collaborate with partnerships with music bands, celebrities and influencers and we have now proven that working with the groups that have high local relevancy is very effective.

A great example of this is Generations that we used in Japan about a year ago. We did a big collaboration and it was super successful, and when we go with groups that are not as relevant to the local markets, we don't see the same level of success.

So for that reason we are redoing another collaboration with Generations in Japan this coming Q1 and we're excited about that.

You know at the end of the day, the key thing here is when we look at the region, it’s the long-term potential for Guess in Asia and I am very convinced that this potential remains very compelling and represents a great example of what I call asymmetrical risk.

What does that mean? It means that the business is relatively small compared to our overall business. We have a relatively variable expense structure, especially when you think about the stores and flexible rents that we have there or short leases and kick-out clauses, and the opportunity for growth is incredible, you know especially with our brand.

The brand is well-known; it resonates with the Asian consumer. We have done it before and I think that we’ll do it again.

So when I look at this obviously, it’s somewhat disappointing to have to go through the current slowness, but when you think about you know the size of the market that we're talking about, you know we're talking about roughly a $13 trillion economy in Greater China. That is a huge. The middle class is the biggest middle-class in the world.

So we see a lot of opportunity and we think that we are protecting the downside and we have a business model that can really navigate through the challenging times, especially considering that the size of the business is not that big compared to the total company.

So we are going to talk more about this when we see you on Tuesday, but I think that the opportunity remains very, very powerful and a great one for Guess..

Great! That's very helpful. Good luck this holiday and Sandeep, I wish you all the best. .

Thank you, thank you Susan. .

Thank you..

Our next question comes from Janine Stichter from Jefferies & Co. Your line is now open. .

Hi, good afternoon. I want to switch gears a little bit and talk about Europe. You saw some nice margin improvement there. It seems like your beating your own internal forecast of what you can do to improve the European, some logistics costs on that side of the business.

Can you talk a little bit about what's going on there; how you're driving that improvement and then ultimately what the timeline looks like for recapturing some of that headwind that you saw last year from the DC transition?.

Sure Janine, thank you. You know we are obviously super, super excited about the business in Europe. We have seen strength across the board, across countries, across channels, so we couldn't be more pleased. When you think about – you know I think Sandeep mentioned how strong our wholesale business is too.

We have seen several years now of significant improvement on growth in our wholesale business; that's not easy to do and I think it speaks about the strength of the brand and how good the product is and how well perceived you know our business and our relationships are, so very excited there.

With respect to the retail business, there are some major differences to what we see in other parts of the world and it starts with traffic. Our traffic in the retail stores is positive and we also see a similar type of momentum online. So the momentum overall is very positive.

I think that that also enabled us to really move very quickly through the inventory, you know just changes that we wanted to make.

As you may remember, we ended last year with some excess inventory in Europe and we had a plan to really dispose of that through both internal channels like our outlet stores and also using the off-price channel and we have been able to move quicker as – you know just as we navigated those inventory parts, which really also contributed to giving us more ability to invest in newness and really have a very good inventory position already.

So overall, I think that the business is doing very well. With respect to the operating side, obviously we are expecting and we're guiding to a major operating margin expansion in Europe this year, and we feel that that is something that is definitely happening, but it still leaves a lot of opportunity for continued growth of operating margin.

You mentioned logistics and distribution. We're going to talk more about that next week. But we do have a plan to continue to improve on that as we look at what's happening with the other businesses that are similar to ours, and the kind of logistics and distribution costs that those businesses consume.

We know that there is a big opportunity for us to do better and we have a plan to do so..

And I just want to add something to that Janine. I think for the for the margin recapture that you talked about, I think for the first nine months we're already over 400 basis points in margin improvement for Europe.

We expect to see this continuing trend, and if we actually get to that, we get very close to double-digit margins because last year we were 5.4% in operating margins. And so I think the thing about this is it's extremely powerful in terms of the total company business model as well.

And as Carlos spoke to it, as a diversified business model the strength of the European business has been able to offset the weakness that we saw in the Americas retail and Asia business, and this is really critical in actually the 120 basis-point improvement that we're talking about for the current year despite this softness, and it’s much more to that we can actually go forward, because operating efficiencies also have contributed in the current year, but there's a lot more that we'll talk about next week in New York.

So I think it's really exciting to see that even with this softness, we've been able to drive so much of margin expansion. .

That’s really helpful color. And then I just had a quick one also on the Americas Wholesale business. You saw a nice growth this quarter, and you have been seeing nice growth and it looks like you're guiding to a decline in the fourth quarter.

Is there anything there with timing or are you seeing anything in terms of sell-throughs changing with your wholesale partners?.

You know it's – actually I think a better way to look at this is more on an annualized basis. I mean obviously we did have some timing issues that impacted both second quarter and third quarter and now fourth quarter.

We still consider that the business is very healthy and we shouldn't think about the negative number in the fourth quarter to represent anything other than a timing issue. We think that our partners are really doing very well and we are – we have a very strong relationship.

Obviously we continue to see growth and that is very unique considering what's happening in the markets out there. So I think it speaks about the brand and the strength of the product. .

Okay, thank you so much. .

Thank you, Janine. .

Our next question comes from John Kernan from Cowen & Company. Your line is now open. .

Hey, good afternoon, and thanks for taking my questions. .

Hi John. [Cross Talk].

Hey Sandeep, while we have you on the call on last time just wanted to grill you a little bit on the fourth-quarter guidance. It seems like there's a fair amount of operating margin expansion embedded in the outlook, are guiding to negative comps in North America and slower comps in Europe.

I think they are guided up low-singles on a constant currency. So just wanted to drill down on the SG&A leverage assumption that seems to be implied in the EPS guidance. Can you talk about the dynamic between gross margin and SG&A in the fourth quarter? Obviously Europe being a very strong region right now, there's a lot of margin expansion.

I’m just trying to balance that against other areas. .

Sure John. I think when you look at what happened last year in our cadence in terms of gross margin performance, we actually had gross margin expansion in all of the first three quarters and the only quarter last year where gross margins declined was the fourth quarter.

And the reason it decline in the fourth quarter last year is because we went into the fourth quarter, into having an inventory position, had to take markdowns during the quarter and we had to take inventory reserves during the fourth quarter as well, by the end of the fourth quarter.

This year, in contrast we are entering the fourth quarter in a very good position relative to where we were last year and we expect to be even cleaner by the end of the year, and so the assumption that's embedded from a gross margin perspective is definitely to be significantly better.

And if you look at the guidance, we are saying that SG&A basically is roughly flat with last year. So almost all of the gross, of the operating margin improvement that the are talking about for the company is coming from gross margin, and it's been very consistent in the first nine months of the year.

And it's driven by all the initiatives that we have talked about, the IMU improvement, the fact that especially in Europe have been a lot less promotional on a pretty significant business.

All of those things are able to offset some of the weakness that we've talked about in Asia and Americas and the logistics costs are very material because of the size of the European business, and that's also contributing in a big way in the gross margin line.

So, you put all that together, that's why we're pretty comfortable with the operating margin guidance that we provided, but it really ties back to the gross margin cadence. .

Got it, that makes sense. Thanks. And then just maybe a follow-up on Europe. You obviously have a lot of detail on – at the Investor Day on this, but can you - when you think about the whitespace in Europe, can you talk to us on you know how you feel about the dynamic between wholesale and retail, both have worked well in tandem together this year.

But I'm just, how are you viewing those channels as we head into the fourth quarter and beyond and any update on the backlog going into next year would be helpful too. Thank you. .

Yes, thank you John. Well let me start that you know during the last few years the company invested considerably to expand the store base and – in Europe I'm talking about, but also in other regions. But I feel that we have a great platform right now and I think that we have an opportunity here to continue to build productivity in those stores.

Many of those stores are very new obviously and we feel that there is an opportunity to continue to build the retail business through them and same-store sales growth. With respect to the wholesale business, I think what we have done, the company has done a great job in looking at the different distribution that we had by country.

A lot of the countries are doing extremely well with expanding distribution and is not necessarily more accounts, though we do have more accounts, but also more productivity with different accounts that we have been doing business with.

And I think all this and expanding in different product categories has really fueled the kind of growth that we have experienced doing so many years. So I think the balance is pretty significant and I think that is synergistic for the brand.

And the third big piece that we'll talk more also during next week is about e-com, we believe and e-com has been growing at a very fast clip and we see that as we equipped the business with sales force and additional capabilities, we can do even better and significantly faster. So, we are very excited about that initiative.

We will share more about how we are approaching it next week. But you put it all together and you think about some of the whitespace that we had in Europe.

When I was here nine, 10 years ago, our presence in Europe was very limited and it was limited to the southern countries, and now when you see how much the company has done to really expand, north and to the east and it has done it so successfully.

I think it speaks very, very strongly about the more opportunities that we have to continue to grow in the region..

And John you asked about the backlog, I think as we mentioned on the prepared remarks, the Spring-Summer ‘20 backlog is up in the double-digits and that's the sixth consecutive season which is about three-years’ worth of double-digit growth that we're seeing in the wholesale business.

And just as a reminder that Spring-Summer ‘20 product ships in the fourth quarter of this year and first quarter of next year. We're in the process of collecting orders for the Fall/Winter ‘20 season which is coming next year, and typically we update during the March call on that cadence, and so we'll have more on that at that point..

Excellent! Thank you. Looking forward to next week. .

Thank you, John. We'll see then. .

[Operator Instructions] Our next question comes from Dana Telsey from Telsey Advisory Group. Your line is now open. .

Good afternoon everyone.

Hi Carlos!.

Hi! How are you Dana?.

Hi! Good, how are you?.

Good..

Excellent! As you think about the wholesale business both in America and in Europe, what are you seeing there in terms of order patterns? What are you seeing there in terms of pricing and promotion and how are you working with the wholesale distribution channel? Thank you.

Well. So we – our business in Americas and the business in Europe at wholesale are very different.

In Americas we have a business that is concentrated on a few accounts and you have some within that, you know have company like Macy's which definitely represents a big, big partner for us, and then we have some distribution with other retail chains such as Urban and Pacific Sunwear, I’m sorry.

That represents a very significant opportunity for us to deal with product that is somewhat different and caters to a consumer that is younger. We have talked about the Generation C opportunity here.

I think when you look at Europe, Europe is much more fragmented business, we have in excess of 8,000 accounts throughout the region, and I think that obviously there is a very, you know just diversified base of businesses depending on where these accounts are located and what kind of countries they are just participating in.

The order flow has been very in-line with what we have seen in the past. I think that's just the – Sandeep just talked about Europe and how the different seasons are extended into – you know each season is a six-month season and what we see in the flow, there is a campaign that is relatively rigorous in terms of times and the weeks that this takes.

And what we see is that those order patterns have been pretty much consistent with the past and exciting to see the growth that we have seen. And the business in the Americas I think has also been traditional in terms of how the orders have been placed. I think that we are very pleased with the distribution model that we have.

We're very pleased with our partners and we see opportunities to continue to grow together. .

Thank you.

And the promotional environment as we go into the fourth quarter, how do you think it'll be different than last year?.

You know it's very hard to say. You will probably know more about what is the inventory situation foremost. The only thing that we know is what we see and what we hear obviously. We have a big change here in calendars and obviously that is impacting how the business is behaving.

We saw some level of promotional activity even before Thanksgiving, which is more unusual in the past, but considering that the calendar is significantly more compressed, just kind of makes sense.

So we are happy with where we are in terms of inventory position, and I think we are – like we said, we are targeting to end the year with inventories down about in double-digits, which will be a significant accomplishment for us..

Thank you.

Have a great holiday!.

Thank you, Dana.

Happy Holiday!.

[Operator Instructions] Presenters, at this time I show no further questions in queue, and I would now like to turn the call over to Carlos for closing remarks. .

In closing, I want to thank you all for your participation today. We had a good third quarter and we are well-positioned to have a strong fourth quarter and close a terrific year with strong top-line growth and significant profit improvement.

We look forward to reporting on our progress and we certainly hope to see you next week at our Investor Day event; we are really looking forward to that. Sandeep, good luck to you and your future and thanks again for all you have done. Happy Thanksgiving to everyone and enjoy your time with your family. Thank you again. .

Thank you ladies and gentlemen. This concludes today's conference call. Thank you for your participation. You may now disconnect..