Good day and welcome to the Michael Kors Holdings Limited Fourth Quarter 2016 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Krystyna Lack, Vice President, Treasurer. Please go ahead, ma'am.

Thank you. Good morning and thank you for joining us for our fiscal fourth quarter earnings call. Presenting on today's call are John Idol, Chairman and Chief Executive Officer, and Joe Parsons, Chief Financial and Chief Operating Officer. Before we begin, let me remind you that certain statements made on this call may constitute forward-looking statements which are subject to risks and uncertainties that could cause actual results to differ from those that we expect. Those risks and uncertainties are described in today's press release and in the company's SEC filings which are available on the company's Web site. Investors should not assume that the statements made during the call will remain operative at a later time and the company undertakes no obligation to update any information discussed on the call. I will now turn the call over to Michael Kors Chairman and Chief Executive Officer, Mr. John Idol.

Thank you, Krystyna. Good morning and welcome to Michael Kors' fourth quarter fiscal 2016 earnings call. Reflecting on fiscal 2016, we achieved another record year with total revenue growth of 8%, reaching $4.7 billion and an earnings per share increase of 4% to $4.44 per share. On a constant currency basis, total revenue and EPS grew 12% and 8% respectively. I'm proud of the entire Michael Kors team and what we have accomplished over the course of the year. Beyond delivering strong financial performance, we raised the level of fashion innovation and newness in our product assortments. Michael and the design team elevated our product offering with new trend leading silhouettes, textures, colors and materials, which were met with a positive response from our customers. Our North American digital flagship business more than doubled in fiscal 2017. We also launched our digital flagship in Canada and developed a global platform that will enable us to launch our digital flagships across international markets. We opened a net total of 142 retail stores globally, 47 in the Americas and 95 internationally. We also opened several flagship stores in renowned luxury retail locations across the globe, including the Xicheng District in Tokyo, Beijing and Stockholm with great success. More recently, we opened our largest flagship location in Europe on Regent Street in London, featuring our latest store design concept and plan to open our Singapore flagship later this year. We have developed a platform to support accelerated growth in Asia. First, we transitioned our South Korean license in-house in January and have successfully integrated the region into our business. We also established our Hong Kong wholesale distribution operations, which enable us to provide even greater service and support to our Asian customers. In addition, we are pleased to announce that we have completed…

Thank you, John and good morning everyone. We are pleased to report revenue and EPS results above our guidance. Total revenue grew 10.9% to $1.2 billion on a reported basis. On a constant currency basis, total revenue grew 11.7%, driven by increases across the Americas, Europe and Asia, 5.1%, 18.1%, and 212.1% respectively. As a reminder, our fiscal year 2016 is a 53-week period versus a 52-week period in the prior year. As such, the results of our fiscal 2016 fourth quarter and full year include approximately $34 million of additional retail sales. Comp sales calculations exclude the 53rd week. In our retail segment, net sales increased 22.0% on a reported basis. In constant currency, retail net sales increased 23.4%, driven primarily by the opening of 142 net new stores since the fourth quarter of last year and strong performance of our digital flagships. Comp sales increased 0.3% on a reported basis. In constant currency, comps sales increased 1.5%. The increase is attributable to the positive comps in Europe and Japan, partially offset by a slight decrease in North America. Our U.S. digital flagship sales contributed 380 basis points to our North American comp performance in the quarter on a constant currency basis. In our wholesale segment, net sales grew 3.5%. On a constant currency basis, wholesale sales increased 4.0%, driven primarily by our footwear and accessories category as well as men's and growth in international markets. In our licensing segment, revenue decreased 13.6% as expected, due to lower sales of watches as well as lower revenue related to eyewear as we anniversaried our launch with Luxottica in the final quarter of shipments from Marchon last year. Gross margin declined 20 basis points to 58.2%, which included a negative foreign currency transaction impact of approximately 100 basis points. The decline…

Thank you, Joe. Our business model remains strong and we remain focused on delivering the luxury fashion product and exceptional shopping experience that customers have come to expect from Michael Kors, both online and in our stores. While we expect fiscal 2017 to be a challenging year, we will manage our business prudently through this period and we will continue to execute on our multiple growth strategies. We have enormous potential to build our Asia business with the acquisition of our Greater China license in addition to the expansion in South Korea, Japan and Southeast Asia, which combined represents a $1 billion market opportunity. We are extremely pleased with the growing momentum of our men's business and remain confident that this has the long-term potential to be a $1 billion business. We look forward to a successful launch of our wearable technology, Michael Kors Access and we believe we are well positioned to capitalize on the tremendous growth in this category. In addition, we will continue to expand our retail business, both domestically and internationally, through our global digital flagships and retail stores. Overall, we remain confident that we will continue to expand the Michael Kors business worldwide and as our new $1 billion stock repurchase authorization demonstrates, we remain committed to driving earnings per share growth and delivering shareholder value over the long-term. With that, I will now open the call for questions.

Thank you. [Operator Instructions] And we'll go first to Kimberly Greenberger with Morgan Stanley.

Great. Thank you. Good morning and congratulations on a very solid finish to the year here, John.

Thank you.

I wanted to ask about your wholesale strategy. Obviously there's a lot of detailed information in the outlook. Could you just let us know what does the negative high teens global wholesale guidance for the upcoming year, what does that imply for North America? And I noticed you started delivering some exclusively ours product into our stores here over the last month or two. It seems like you're also working to differentiate product between your retail channel and your wholesale channel. Could you just expand on that strategy and your thinking there? And then lastly, looking at the China acquisition, how are you feeling about the composition and location of stores? Are you generally happy with the number of stores and the current locations or do you think there might be an opportunity to reposition some of the stores by area within Greater China? Thanks so much.

First off, thank you, Kimberly. And again, for the broader group, I know we scheduled this call to be an hour and-a-half and I think you can understand why now with the acquisition of China and year-end and a lot of strategic changes we're making, so I thought it was a good idea to give the full-time for people to ask questions. Kimberly, on your first question regarding our wholesale strategy, the majority of the wholesale decline will happen in North America. As Joe indicated before, I think it's about $63 million of the wholesale decline belongs to the acquisition of China and so you have to kind of factor that into the numbers. And let me just explain to you what our thinking is. Again, first off, we have built a very solid business with department stores, not only domestically but internationally. We think the channel is a very strong channel across the world, great banners that we operate our brand inside of and we support them 100% in good times and in difficult times. That being said, what has happened in North America in particular and you're starting to see a little bit of it in Europe, is that as mall traffic has declined, stores have taken an aggressive position on promotional activity to generate volume and traffic into their buildings. And we have seen that magnify over the last 12 months. And we believe that that long-term is not healthy for the Michael Kors brand. And as I've said to you before, and we us just said in the script, we grew our handbag business globally. So our customer -- that's in dollars. Our customer continues to respond to the brand. I see constant communication from various press related things about the brand is dead or losing…

Great. Thank you so much, John.

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

Great. Thanks. Good morning. I guess just following up on Kimberly's question on wholesale, could you maybe parse out a little bit more in North America what you're seeing in terms of the account base. Are you closing doors or is it just a strict pullback across several categories? And then, if you could just maybe speak a little bit more in detail on the wholesale side, what are you assuming in terms of some of the category dispatch. Should we assume that watches is maybe greater than some of the other categories or is it fairly smooth across the various categories?

Sure. Thank you, Erinn. Let me start with your first question, which is the doors. As you know, most of the locations that we're in today in our department store partners are shop-in-shops, and there are no shop-in-shop closings. So we are highly productive, just like our free-standing stores where we're top 10 in almost every single mall around the world in terms of our productivity per square foot, we're in the same position and obviously in certain categories we're number one in terms of -- in department stores, we're number one in terms of sales per square foot in those various departments. So that's not an issue at all. The real issue for us is analyzing the amount of inventory that is being sold on sale versus full price. That's what we have to look at and we believe that selling more product at full price is better for our brand image and better for our margins long-term. So again, as Joe indicated earlier, this is a reset for us that will take probably 12, maybe a little bit longer than that, 15 months to get through. But, we ultimately believe that as a luxury fashion led brand, we don't want it to be about price. We want it to be about new product introduction. And in terms of you asked about categories, I would say the predominant reduction will be coming from our accessories category. That's where we see as I said to you earlier, just too many units moving into the marketplace. Now, while we love the fact that consumers are responding to our product and buying more of it by a lot. And, again, all of our consumer research shows that the brand engagement and the brand loyalty is at highest levels that it's ever been. And your analysis that you do annually indicated the same thing. So we just -- we don't like the amount of product that's ending up out in the marketplace. So this is not an issue of doors or anything like that. This is really more an issue of having the right amount of product, given where we want to get back to in terms of full price selling versus promotional selling.

Got it. Thank you for that. And then I just have two follow-ups. One maybe John for you on Europe. There was a pickup in comps this quarter from mid single to. Could you break out maybe trends by regions? And then Joe, for you, two clarifications on the guidance for fiscal 2017. Are you assuming any incremental buybacks in the guide for the year? And then with gross margins being up, could you maybe parse out how that looks retail versus wholesale and if there's any residual FX headwinds given just transactional piece of the FX. Thanks.

Erinn, obviously we had a good quarter from a comp store standpoint I think globally, compared to many of our competitors. I think we were close to best in class. Because again, remember, many of the European competitors are reporting on a reported basis. But, when you look at the constant currency, I think in Europe in particular, we did better than most. That being said, we're definitely seeing the business stronger in -- as I mentioned in the last quarter, Italy and Spain and certain of the Eastern European markets, our business is for example in Russia is outstanding. That's not in our comp, but I'm just telling you it's very, very strong there. On the other hand, we're seeing as many luxury companies have reported our business in France after the terrorist attacks has been very difficult and continues to decline, given the tourism decline in that marketplace. We have had difficulty in the U.K. that was driven primarily -- initially by currency changes. That's now kind of changed a little bit, given that we've got some issues that people are thinking about with Brexit, et cetera. So our business remains a bit challenged there. I would tell you overall in Europe, and I've seen some other luxury goods companies report this as well, we do see headwinds. Tourism into Europe is declining. There's a lot of macro issues in Europe. There was another terrorism alert that came out yesterday. So we believe that Europe, while it's still a growth opportunity for us as Joe indicated in terms of region, it's going to be a bumpy road in 2017 until there's some issues settled politically. We're not exactly sure where the FX is going to end up for the year. And so we're going to stay very close to that. Again, growth market for us but I think there's going to be a few bump as we get through the year.

In terms of the gross margin, you should be thinking of the margins being essentially flat for the different segments and the real improvement is driven again, similar to what you saw for fourth quarter, is due to both geographic and segment mix as both international and retail is growing faster than the U.S. domestic business. Or I should say the North American business. In terms of buyback, we really don't guide in terms of what we do. As you know, we tell you what the authorized shares or what the authorized amount is. We basically are opportunistically buying and so we have never provided guidance as to when and how much we're going to buy.

But, I would add to that, Erinn. You know how strongly I've stated this in past calls, that the Board of Directors and the management of this company, we know that this stock is significantly undervalued where we trade versus the peer group. We also understand that even our operating margins, even at 21.5% I think are the third best in the luxury category of any luxury retailer in the world. We have a powerful business model that's generating tremendous amount of cash and we have multiple growth opportunities and as long as the stock remains in our opinion, and it's just our opinion, significantly undervalued, we will be aggressively in the marketplace over the next year, taking advantage. We've taken out 15% of our shares and we're going to keep going. We have the balance sheet and the cash flow to continue to do that. So you can be very sure that we're going to be returning value to our shareholders, particularly at this time and we think that's going to bear a lot of fruit when people understand that Michael Kors is here to stay, powerful business model, one of the most profitable companies in the market and we will continue to deliver great results. Thank you, Erinn.

Thank you.

And we'll go next to Randy Konik with Jefferies.

Yes. Thanks a lot. Appreciate it. I guess John, just to think about the wholesale strategy, I think it's a very good strategy in terms of just getting more full price kind of arena. Do you think about in that reduction strategy, is it more just unit based or is there a SKU count reduction kind of philosophy that we should be thinking about there and kind of parsing out those SKUs between wholesale and retail to make them even more differentiated. And I guess the second question is you kind of mentioned units up pretty strong. It sounded like AUR down. Was there any AUR differential by channel and if you could give us some comments on your outlook for AUR in whole and by channel, that would be super helpful. And then I guess lastly, when you think about the long-term nature of the business from a retail/wholesale split, do you think about where it is today even recognizing the pullback in the U.S. market but the growth in international markets, should we've think about the total business having a similar wholesale to retail mix as it stands today or how should we be thinking about the changes there? Thanks.

Let me see if I can get all that, Randy. So let me take the last one first. When we took this company public and you've heard me say this many, many times, we said to you that North America would grow. It would eventually reach maturity and that as that happened, Europe would come on and then as that happened, Asia would come on. And I think all of those things have played out as we had laid them out with the exception of what's really happened in mall traffic in North America. I don't think any of us had the crystal ball to see that coming and obviously part of that's driven by the digital shift in the consumer behavior and the other part of that's driven by, our case, and I know in some of our very, very valued department store partners cases. And by the way when I use that word department stores it's not just North America. Because I know everyone on this call is focused on North America wholesale, but we have a lot of business around the world. Department stores in Europe are facing many challenges with traffic from tourism as well. So and the second thing we said when we went public was that this company ultimately would be 70%, 75% retail versus wholesale. Wholesale just grew faster than we had ever anticipated. And we enjoyed that. And we think that's terrific and we're going to continue to enjoy that. But we ultimately first and foremost are retailers. Ultimately we believe that our store network, which will get to some 1,000 stores worldwide, will the cornerstone of our development and growth. And it will be somewhere between 65% and 75% retail and the balance will be wholesale. And as you look at…

Just if I could, if I may, could you just clarify how you think about AUR going forward by channel? That's all. Thank you.

Sorry. I think AUR's actually going to increase and we told you -- again, I apologize, I don't remember if you were in the showroom walk-through or not. We said that that AUR, we are actually focused on that and we're doing that through kind of three things. First, we believe that by reducing the amount of inventory at retail that's available for sale, it's going to raise the AUR. Secondly, we are taking the smaller bags and we're offering more fashion design into those products and actually offering higher price points. It was a strategy that Michael personally really came up with and we think it's a brilliant strategy because it's not just the price that she's interested in the smaller bags, it's the size. So we believe that we've probably actually been slightly undercharging and slightly under designing in terms of where -- she'll definitely pay somewhere between $200 and $300 for a cross-body. Why can't we have more of them at a higher price point. You'll be seeing that coming to bear in the stores. And then also, we believe that one of the reasons why the predominant amount of handbags that many of us are selling are in that $300 to $350 range is because we really haven't been providing enough design to get the customer excited for higher price point product. And so that's coming and so that will actually raise the AUR for fall season on the floor inside the stores. So we feel very good about that strategy. Reduce units, get AURs up, still being very competitive price points. Because I don't want you to think we're having a complete shift in pricing. But, we think that's the right thing to do and we think the customer's going to respond to that because she's going to see the value in the design of the product.

That's very helpful. Thank you.

We'll go next to Matthew Boss with JPMorgan.

Thanks. So on bottom line profitability, EBIT margins moved from high 20s two years back to low 20s this year, is it best to think of this as the trough and then just the best way to think about SG&A dollar growth versus sales growth as we move beyond this year.

Yes. Thank you, Matt. That's a very good question. Matt, as you know we publicly said we thought we'd be kind of between 23 and 24. We're lower than that where we are now at 21 and I want to acknowledge that. We believe that this is, from what our three year planning cycle looks like, that looks about where we're going to land. And really the key to that is going to be SG&A will start to level out in next fiscal year. It actually would have looked that way. We would have made the kind of projection that we talked about, the 23, 24, had we not made this decision to reduce the wholesale inventories. We would have been kind of right there. So we made the decision that we're in this for the long-term as we've told everyone since we started this journey. We're building, as Joe mentioned before, our new distribution center in Venlo. We're developing a CRM team and systems here that are going to be world class in our opinion. We're building out a web -- our ecommerce capabilities on platforms that we own, quite frankly. These are not platforms that we're paying fees on, et cetera. So we've decided to go the long-term route on all of our investments into this company, because we think it's obviously one of the greatest fashion luxury companies in the world and we'd rather do it the right way than to do it short-term to create an extra basis point, 100 basis points in operating margin. That being said, we do believe that next year we kind of level out and I believe that for your modeling, you should be assuming that that's about where we're going to land on a go forward basis.

Okay. Great. And then, can you just talk about drivers of the negative same-store sales this year, any update on larger picture industry growth? And just is there anything structurally preventing you guys from returning the positive comps in the back half of the year?

Sure. Very good questions. Let me start with the industry. We believe that the North American handbag business is flat to down low single digits in total. I know that that's different from what some other people have reported but that's just our belief. So we believe that the North American business, handbag business, is about flat to down low single digits and that's I think primarily because of the promoting that's going on. Obviously units are up double digits and I think it's for most of us. And by the way, that includes luxury players too. Because I know many times we have these conversations, there's only two other competitors that are referred to but we see the same thing happening with multiple luxury companies, obviously with the exclusion of Vuitton who doesn't operate in a sale environment. But, many other companies, the amount that they're selling on sale is higher than the amount they're selling at regular price this year versus last year. We believe the macro handbag, luxury handbag market is relatively flat on a global basis, possibly up a point or two. And we believe that's going to be sort of the trend on a macro basis for the next year at least. And of course, you've seen that in the recent Altagamma Bain luxury report which echoed the same exact issues with the exception of our point of you view on the North American handbag market. We believe that there's softening that's continuing in mall traffic. We've actually seen an acceleration of softening in mall traffic and this is not just our stores. This is what we see from ShopperTrak, which is a company that we use that looks at our -- that looks at not only ours, but other retailers' numbers. So we compare…

Best of luck.

Thank you.

And we'll go next to Oliver Chen with Cowen & Company.

Hi, thank you. Solid results in an environment that's not easy. John, what is your thoughts from an industry and a company specific strategy-wise regarding the reality of price matching? And also how mobile is really changing how the consumer shops and how the path to purchase works in terms of multiple channels and thinking about mobile. And then also John, I know we've been following a lot of the luxury companies and there's been a pretty sharp divergence between Hong Kong, Macau, versus Mainland. Is that something you're seeing and how are your thoughts on the real estate in terms of what you're thinking about as a lot of people are focused on real productivity per point of store in Asia versus distribution growth? Thank you.

Sure. I'm going to start with the price matching. My opinion of price matching is that it's a race to the bottom. So I believe that those people who want to participate in that as a general rule will ultimately see their business decline and I also know that many people think that that's a way to protect their relationship with their customer. I think it's a way to devalue the relationship, just basically means that they don't believe in when they do have a sale or offering for their customer that it's legitimate. They just offer anything at any time. So my personal opinion is it's a race to the bottom. I think mobile has definitely changed consumer shopping behavior. Everything from the way that people shop, which is obviously hurting mall traffic because people -- we know they're beginning their journey online and ultimately we're still doing 90 plus percent of our business in North America in stores. So stores are still real. And while one day I publicly said we'll get to 25%, 30% of our business in ecommerce. We're nowhere near that today. That being said, we have to be very cognizant that consumer is starting and definitely creating her path to purchase on mobile and we better be a part of that and be good at it and be influencing her through that journey. I want to note that we don't do the price matching thing and our comps are quite frankly better than a lot of other people's comps who are doing all these types of things. So you can't continue to build your business especially with the mobile view that says to your customer it's all about price, because that will ultimately just drive the AUR down which will ultimately -- you can't…

John, you've said this to us in meetings that your company could be also viewed as a media company in terms of how you've embraced a lot of the formats. What are your thoughts on generation Z and the millennials in terms of how you're transforming how you interact with the customer and how the customer has really changed permanently?

Oliver, I think that we all have to acknowledge that digital has changed the way that everyone is living their lives today. And what we believe is, is that we've got to stimulate our customer and I was just looking at some stats. Our Instagram following is up 95% in the quarter, 95%. It's incredible. And I know that people think that the Michael Kors brand is whatever, and when we look at the engagement and the following, it's driven by Michael's voice, first and foremost. I think people are so engaged with the -- whether it's Michael and Nina Agdal and the glamour games that we put up or whether it's the whole new campaign that we just shot in Mexico for summer and all the different videos, or if it's the Mother's Day campaign which was a huge success for us with Alessandra Ambrosio or whether it's Lily Aldrich doing a whole sneaker campaign for us. So I think we're really good as a company and our teams are excellent at developing content that is engaging and that's exciting the customer and keeping them engaged with the brand. They may not actually shop from us but I think they love being a part of the Michael Kors family and so I think in today's world you have to be there. Look at our major competitors in Europe and everyone's upping the game, whether it's fashion shows in Rio or Blenheim Castle or whatever the palace, excuse me, whatever the things are, you have to understand that we're in the business of exciting people. And that's fun, quite frankly. That's the fun part of what we get up do here every day, products first but quite frankly marketing and brand and exciting and engaging the customer second. So, thank you, Oliver.

Thank you. Best regards.

And we'll go next to Lorraine Hutchinson with Bank of America.

Thank you. Good morning. I was hoping that you could discuss any divergence that you saw in trends between your retail stores and your outlets. And then, also just wanted to follow up on the decline in the tax rate for 2017 and reasons for that.

Sure. Thank you, Lorraine. I'll take the first one. Traffic in outlets, while it is down, is down very small amount as opposed to the -- our full price stores. And again, we believe that that is just an issue that we don't obviously offer our outlet products online. And unlike many of our competitors, who still offer flash Web site sales, even though they are reduced, they're still doing something that in our opinion is basically an outlet store online. We do not do that. So we think that we've been able to maintain a direction of saying to our customer come to an outlet store, that's really product that's end of season or maybe a couple years old that we've reproduced for the outlets and if you want to come there and shop, we love you. We love those customers as much as we love the customers who go in our full price stores. But, we believe that that channel is seeing traffic issues and I think that's been acknowledged by some other people as well.

In terms of tax rates, it's very consistent with -- you should think of it very consistent with what we've seen in history. As we grow outside of North America, the tax rates are going to be lower. That's going to drive down the effective tax rate.

Thank you, Lorraine.

And we'll go next to Omar Saad with Evercore ISI.

Thanks. Thanks for all the information, guys. Wanted to ask about, following up on the channel exposure, department stores, malls, outlets, tourist city locations, sounds like your conversion is good. You've got a lot of new, innovative products, more coming, but traffic is the issue which is obviously not a company specific issue. But one that you're dealing with nonetheless. Talk through how you really looking ahead, how you plan to drive traffic, how you keep traffic coming to the stores or your Web site, are you going to ramp up marketing spend? Help us understand how you think about that, because that sound like it's the one kind of missing piece here.

First off, Omar, thank you for your questions and thank you for your one comment that it is true, our -- the traffic issue is not a Michael Kors issue, this is an issue -- I don't know one retailer that I speak to who isn't seeing this happening. And Omar, I would first start by calling the traffic thing a behavioral change. And again, I think many times we're the first company or the most honest company to come out and say these traffic trends you're starting to see in other places in the world. So mall traffic is declining in Europe now. It's declining in the U.K. in particular. And I would tell you that in the most sophisticated digital markets is where you see the most mall traffic slowing. So we start out -- and this is just our theory and just our hypothesis -- that consumers who have high levels of digital product availability are shopping less in shopping malls. The U.K. is a perfect example. As Harrods and Selfridges and House of Fraser and John Lewis all got better with ecommerce, there's just more business going there and we know that because we do business with them. We see how much percentage-wise. The U.K. for us has some of the highest levels of penetration with our department store partners than anywhere else in the world, so somewhere between 25% and 35% of our business with those retailers comes from online. And they're the most sophisticated at click and collect. They're the most sophisticated at same day delivery service. They do it better than any department store in the world, in the U.K. But that's affecting mall traffic. So we think that's only going to continue on because people are just going to get better. We'll…

That's very helpful. And then, one quick question for Joe on the gross margin. 1Q down, full year up nicely, actually. Just help us understand the level of visibility you have into kind of seeing that trend reverse enough to really post what looks like you're guiding to a very healthy gross margin at the end of the year.

As John indicated, we've got a lot of positives for the second half of the year and we think that will actually be positive for gross margin. As you know, the environment is difficult right now. So we do have some concerns about Q1. The other thing that you should be thinking about is that China will only have one month in for Q1 but will be in there for a full year. It's not a huge number relative to our total revenues but China has very, very healthy gross margins that will have a positive impact on our gross margin.

We're going to take one more phone call and then end the call for the day.

And we'll go next to Lindsay Drucker Mann with Goldman Sachs.

Thanks for squeezing me in, guys. Good morning. I wanted to ask about North American square footage. You had talked about the opportunity to expand a number of your stores in North America because they were still pretty small and some legacy stores. I was wondering how you were thinking about the opportunity even as you sort of limit the number of openings to continue store expansion in this market. And then, could you also give some more specifics on your store plans for outlet versus full price in North America? Thanks.

Sure. Lindsay, great question, by the way and thank you. Lindsay, I tell about all the things we really did well and I'm going to tell you about something that didn't work well for us. And expanding the stores, we did a handful of them. It really hasn't been a great return for us. So I would tell you that we're not going to do that. That's kind of over with. There will be a handful of select locations where we'll do that but you'll be able to count those on your two hands and they'll be more flagshippy type things. We just did it in London and which happens to be working, thank God. Where we did them in more regional locations it really didn't provide the uplift from our profitability standpoint that we were anticipating. So unless we see something changing on that, that will not be part of our strategy going forward. And in terms of outlets in North America, we're basically done at this point. I think there's one or two more that we're going to open and it's over with. And that's pretty much worldwide also. There will be a handful that will open in a couple locations but we're pretty much finished out on that. And then over the next two years, maybe three years, we'll be finished with our global store expansion. I want to mention one other thing too that, again, we remain a very highly productive on a sales per square foot basis, again, top usually most centers, usually in the top five, but let's call it top 10 in the world. So stores are extremely profitable for us and we'll continue to open them where they make sense.

Just a follow-on on your ship from store comment from before. Do you have a time line for when you plan to roll that out?

Our goal is for around the holiday season. We can ship from store today but we're talking same day service and obviously we'll start it in New York, there's nothing highly secretive about that. And we're just putting together the final touches on that. I can't give you the exact dates that's going to start, but we'll see how that works. We'll see what that does. And we'll see if it really provides a lift to the business that will generate profitability. Because we can do a lot of things to generate lift. But we have to generate profitability and as you know, we've always been focused on that as an organization.

Great. Thanks so much.

So, thanks. I want to thank everybody for being on this extended call. Look forward to speaking to you in the next call. I want to remind you all one thing we did not talk about is that Michael Kors has an extremely strong balance sheet and cash flow. We did say in our last call that we are going to look in the future at acquisitions and the company had said that we would focus on acquisitions of certain licenses that we thought were most imperative in front of us. Now that that is complete, we will selectively be looking at other companies as we move forward. There is no time line to when and if we will do anything but Michael Kors does have the ability to use its balance sheet to not only reduce shares outstanding but also to look at acquisitions in the future. So we look forward to talking to you at the next call. Thank you very much.

This does conclude today's conference. We thank you for your participation. You may now disconnect.