The Men's Wearhouse (MW) Q1 2011 Earnings Call June 8, 2011 5:00 PM ET
Ladies and gentlemen, thank you for standing by, and welcome to The Men's Wearhouse First Quarter 2011 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Wednesday, June 8 of 2011. And I would now like to turn the conference over to Ken Dennard of DRG&L. Please go ahead, sir.
Thanks, and good afternoon, everyone, and welcome to The Men's Wearhouse First Quarter 2011 Earnings Call. Today the call -- management will cover the review of the first quarter results, outlook for the second quarter and full fiscal year of 2011 and then a Q&A session.
Please note that we will be making a number of forward-looking statements today, and all such statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations and assumptions mentioned today, due to a variety of factors that affect the company, including the risks specified in the most recently filed Form 10-K. This call is copyrighted material of The Men's Wearhouse and cannot be rebroadcast without our expressed written consent.
I now would like to turn the call over to George Zimmer, Chairman and Chief Executive Officer. George?
Thanks, Ken, and good afternoon, everybody. Well, this is my last conference call as CEO, so I hope you'll indulge me a personal reflection. After having been in business for 38 years, the last 19, we've been a public company. I think that it's clear that there is a relationship between the model that we've developed at The Men's Wearhouse and the very positive results that we've just reported today. This evolution applies to our Moores division as well, while at K&G and our uniformed businesses, things are tracking differently.
In 1973, I started a retail company that reflected important aspects of an emerging consciousness that centered on community, fairness and having fun. Translated to a retail business, this meant developing a work environment that emphasized creating teams of workers who treated each other and their customers fairly, while everyone had a good time. What made it successful was our focus on profitability as evidenced by our increasing market share over the years in this consolidating industry.
Our emphasis on providing a high quality work environment has resulted in a highly engaged, well-trained workforce which delivers great service, creating a loyal following of engaged customers who in turn, drive sustainable growth, real profit and the reason all of you are on this call today, increased shareholder value.
Our success over the years is, first and foremost, grounded in this strong employee-centric culture. I am often quoted as saying we are as much in the people business as the suit business. Since this company's start in the early '70s, we've been driven by identifying solutions to customers needs, which define the overarching mission of today's Men's Wearhouse.
We've been on a learning curve that leads to solutions, many times by trial and error, or by rules that are loosely defined. This flexibility has added great value. The long-term results speak for themselves.
We've added critical increases on both the top and bottom lines through the development of our Tuxedo Rental business. We've made strategic acquisitions and we're investing in an important online business. Most recently, we adapted our model to a new macroeconomic environment as we moved away from everyday low prices to a promotional model.
Today we estimate that we sell 1 out of every 5 suits sold and rent 1 out of every 3 tuxedo rentals in the United States. Those market leadership positions in the U.S. are similar in magnitude in Canada. Equally important is that we achieved these milestones and maintained a strong and liquid balance sheet and are well-positioned to pursue future opportunities.
As we've previously announced, the executive leadership of Men's Wearhouse will transition to Doug Ewert, CEO, effective next week, concurrent with our annual shareholder meeting. Doug is an extremely competent man who shares my values, has considerable business acumen and is a well-respected leader within our company. While I will leave the day-to-day running of the company to Doug, I will remain active as a participant as Executive Chairman in the maintenance of our corporate culture, our marketing and strategy development with an extremely talented group of friends who constitute Doug's leadership team.
I'm still the voice and face of Men's Wearhouse and I'm delighted to continue in that role, both inside and outside the company. Our employees like it, our customers like it, Doug and I like it. We're confident you'll like it too.
And now we'll hear from our Executive Vice President, Chief Financial Officer and Treasurer, Neill Davis.
Thanks, George, and good afternoon, everyone. Earlier today, we released results that not only substantially exceeded our initial expectations going into the quarter but also represented a doubling of earnings on a per share basis over the prior year quarter. This performance was driven by a double digit same-store sales growth rate at our core traditional stores, Men's Wearhouse; a 9% comp rate at our K&G stores; and a 6% comp rate at our Canadian business, Moores.
The combination of our marketing strategies and merchandise assortments, coupled with what appears to be a strong men's clothing replenishment cycle, drove high levels of conversion of customer traffic over the first half of our spring season. Before turning your attention to our outlook for the second quarter, I want to take you through a few details of our financial results of the first quarter.
Our retail clothing product sales increased 12.5% over the prior year quarter. We observed a high single to low double digit increase across all major geographic regions within the United States for the market areas supported by our traditional stores, Men's Wearhouse. As we have discussed numerous times on previous calls, the driver to this top line primarily is the result of a much more aggressive, promotional posture this quarter than in the prior year quarter.
Our retail merchandise margins declined 54 basis points. However, the decline was less than what we had expected and that was largely due to a higher mix of sales coming from suits. In addition, the strong unit increase in our tailored clothing offerings drove a 24% increase in alterations and other service gross margins. In addition, we experienced significant leverage of fixed occupancy costs in the quarter of a 193 basis points.
Rounding out our Retail segment results is a better-than-planned comp sales increase of our Tuxedo Rental business of 3.9% versus the planned 1% to 2% range stemming from the strongest prom season that we have experienced since the beginning -- since being in the rental business. In addition, we realized a higher Tuxedo Rental gross margin of 229 basis points due primarily to lower per unit rental cost.
Gross margins from our Corporate Apparel segment in the quarter were 27.8%, compared with 24.2% in the prior year. When compared to our Retail segment margins of 44.2%, we are experiencing a material negative mix shift due to the acquisition of Dimensions and Alexandra in the third quarter of fiscal 2010. Accordingly, that mix shift will continue to impact our results until we anniversary the acquisitions.
Adjusted selling, general and administrative expenses in absolute dollars increased 12.6% over the prior year quarter. Adjusted SG&A related to the acquired U.K. operations resulted in an 8% increase. The remaining 4.6% increase is primarily due to increased payroll-related costs and variable costs associated with the increased sales.
To recap [ph] our earnings performance. A 22.6% total net sales growth rate drove a 22.7% increase in gross profit dollars, coupled with significant operating expense leverage, produced a 301 basis point increase in our operating margin to 7.5%. From a balance sheet perspective, we have effectively managed ongoing working capital investments as total inventories, excluding our U.K. acquisitions, decreased 1.1%.
As you will recall, our Board of Directors approved an increase in our share repurchase authorization to a total of $150 million this past January. In light of existing liquidity of the company and strong flow-through of earnings to free cash flow, we affected a $49 million share repurchase of 1.8 million shares during the first quarter.
That wraps my -- some of my comments in the first quarter and we'll now turn to our second quarter and updated fiscal year financial outlook. In our press release, the second quarter and full year EPS guidance is provided on both a GAAP and adjusted basis. My comments to you today will be to our adjusted current year expected results and adjusted restated prior year actuals. Specific financial metrics of our forward guidance are outlined in detail in our press release issued earlier today, so I will limit my commentary today to a more qualitative perspective. I will start with an overview of the second quarter.
We expect adjusted diluted earnings per share in the range of $1.02 to $1.05, which represents a 20% to 24% increase over the prior year $0.85. As in the first quarter, the key drivers to this earnings growth outlook is a continuation of improvements in comparable store sales in our retail apparel lines of business at each of our retail brands: The Men's Wearhouse, K&G and Moores.
Our marketing and merchandising strategies are expected to drive continued gains and conversion of store traffic, albeit at a modestly slower pace than that experienced in the first quarter, as the second quarter is a seasonally slower paced quarter in our tailored clothing sales. However, this seasonally slower pace of apparel sales growth is expected to be partially offset by a stronger quarter-over-quarter performance from our Tuxedo Rental business, driven as indicated earlier by a robust prom rental season due in part to the calendar shift of Easter, which would positively impact the second quarter.
However, based on our recent experiences of the build rate of forward tuxedo rental reservations through the third quarter, we anticipate another shift in Tuxedo Rental revenues that will favor the third quarter and negatively impact the second quarter. This shift in pattern is a result of a key wedding rental date of September 10, 2011, or numerically referred to as 9/10/11. It has been our historical experience that unique dates such as this one, as well as others like 7/7/07 and 10/10/10, cause a shift in the timing of wedding rentals. Our current estimate of that shift on diluted earnings per share is in the range of $0.03 to $0.04.
From a gross margin perspective, we expect a continuation of dilution in merchandise margins, offset by improvements in Tuxedo Rental margins and occupancy costs leverage that would result in a quarter-over-quarter increase in gross margins from our retail apparel segment. The increase mix of our lower gross margin Corporate Apparel business as a result of our acquisitions last year of Dimensions and Alexandra is the primary driver to the expected decline and consolidated gross margins.
While we expect operating expense to leverage in the second quarter, we anticipated a muted level of leverage than that experienced in the first quarter due to an elevated level investments in store payroll to keep pace with a stronger-than-anticipated top line growth, increased incentive compensation and increases in non-store payroll levels targeted to our activities surrounding digital E-commerce activities.
Let's now turn to the highlights of our updated outlook for the fiscal year. We now expect adjusted diluted earnings per share in a range of $2.04 to $2.12, which represents the 39% to 44% increase over a $1.47 in adjusted diluted earnings per share for fiscal 2010. This is on top of the prior year growth rate of 31%. Based on our sales experience in the first quarter, we have modestly updated our comp sales outlook for the full year, which is largely driven by our retail apparel business.
While we remain cautious with the second half of the year due in large part to a weak macroeconomic outlook for domestic growth, we believe that our strategies position us to maximize whatever opportunities there are in our sector. We have a strong value message that drives a high average ticket for those customers who are in the market. Our updated selling, general and administrative expense guidance for the full year as a percentage of sales is higher than that initially guided to at the beginning of the year.
The primary drivers to the increase are related to several items: first, incentive compensation estimates were increased significantly in light of the strong first quarter performance and expectations of the near term from that strong start. Incentive compensation estimates included in our updated annual guidance approximate the equivalent of an incremental $0.09 negative impact to diluted earnings per share from estimates provided at the beginning of the year.
I would also add that approximately 70% of our annual bonus expense falls in the second half of the year. In addition, we have planned higher marketing costs in the back half of the year to build on the momentum we experienced in the first quarter.
Capital expenditures are still planned at $90 million to $100 million with the increase in spending driven primarily by a greater number of remodels at our Men's Wearhouse and branded stores. Also up to approximately 25 new stores on the Men's Wearhouse banner and an increased level of technology spending related to our online and E-commerce initiatives. In addition, we have planned closings of up to 32 Men's Wearhouse and Tux stores for the year, which would bring the total count, store count of MW and Tux stores to 356.
That concludes my financial remarks, and I will now turn the call to Doug Ewert.
Good afternoon, everyone. We are certainly off to a great start as the merchandising and marketing strategies we've implemented and refined over the past several years continue to deliver a positive trend at Men's Wearhouse and Moores and are beginning to positively impact results at K&G.
Current and forecasted macroeconomic conditions are clearly modest by historical standards and the drivers to new customer acquisition and conversion of existing customer traffic to enable sustainable growth is a challenge faced by everyone in the retail industry. We are no exception. Against the backdrop of our market leading position in men's business apparel and high unaided brand awareness, our goal is simple: to deliver a compelling value offering whether it is to support a customer's first suit purchase need, replenishment of an aging wardrobe or to update his wardrobe to current fashion trends or needs. While we're pleased with our recent quarterly results, we remain focused on building upon our experiences in customer needs in the quarters and years to come.
Within our Retail operating segment, most notable are our same-store sales growth rates at each of our Retail store brands, concurrent positive growth rates. From a product category perspective, suits, our largest category, approximately 40% of the retail sales mix, lead the way with many complementary categories close behind. This strength was mostly average ticket driven as our customers responded aggressively to the value and trend-right assortments offered during this spring selling season.
I do want to comment on the much stronger-than-expected results at K&G. Mary Beth Blake and her team effectively drove all 3 key components of same-store sales growth: increased average unit sales, driven by the strength in our suit category; increased units sold per transaction, driven by our merchandise efforts targeting the urban and fashion customer; and increases in transactions per store, driven by our marketing efforts and support of our merchandising initiatives. We believe these results are a reflection of our renewed focus on our core urban fashion customer.
While our Retail Apparel business was the key driver to our better-than-planned quarterly results, our Tuxedo Rental business also achieved a better-than-planned performance, registering a 3.9% same-store sales growth rate versus initial expectations of a 1% to 2% increase. We are confident with our second quarter outlook of a 6% to 7% same-store sales growth rate as we currently have 96% of our anticipated second quarter rentals under reservation. Our rental to retail business continues to be an area of leverage and growth. We are enjoying a 23% increase in first time retail customers who had a previous tuxedo rental.
Rounding out our Retail segment results is the growth in E-commerce of 137%, which came on top of 132% increase last year. This growth is attributed to an aggressive segmented e-mail strategy, a variety of online marketing initiatives, and expanded assortments, particularly in big and tall. In addition, we went live with an E-commerce site for K&G last month.
That said, these increases are coming off what we believe is a low base. However, these increases are occurring while we make significant changes in infrastructure and personnel that positions the online business to eventually make a meaningful overall contribution.
Our Corporate Apparel segment activities and results continue to be driven by Dimensions, our primary operations in the United Kingdom. Stabilization and rationalization of various aspects of Alexandra, our second U.K. -based corporate apparel brand, continues and remain on track. In addition, we continue to refine and build on our U.S. -based corporate apparel operations under the banner of TwinHill. Specifically a focus on leveraging the brand and operational strengths of Men's Wearhouse and the operating knowledge of the managed uniform program business of our recent acquisitions in the U.K. Combined, we're looking at approximately a $250 million from our Corporate Uniform sector this year.
In conclusion, I am personally very excited about the opportunity that George and the board have afforded me to lead a group of executives committed to our employees. We are equally committed to providing value to all of our stakeholders including our customers and you, our shareholders.
On behalf of the over 17,000 hardworking men and women, I thank you for your interest in our company, and we'll now turn this over to your questions.
[Operator Instructions] And our first question comes from the line of Brian Tunick with JP Morgan.
Ike Boruchow - JP Morgan Chase & Co
It's actually Ike, calling in for Brian. Couple of questions, I guess. The first one would be Neill. I think you said that you're now planning to increase the marketing spend a little bit relative to your prior expectations in the back half of the year to keep the comp momentum going. Could you give some color in terms of advertising dollars and how you're thinking about that? That would be helpful. And then just broadly speaking about the new promotional cadence of the business. What are you learning? What can you improve upon in the back half of the year within the Retail segment margins would be helpful.
Sure, Ike, this is Neill. As to your first question about more color on the marketing spend, most of the increment, it will be modest and it will fall primarily in the third quarter that may last in the fourth quarter. But it's not a significant ratchet up. And we tend to try to manage the spend in close proximity to what the top line is doing. So there's flexibility in terms of the spend of what we've put out. So it's going to be geared more toward the top line. And now I'll turn to Doug for the second part of your question.
Ike, as far as promotional activity, we're enjoying some nice success at Men's and Moores with the occasional buy one, get one free promotion, coupled with some interim promotions for single unit purchases in between those events. And at K&G, we've been having some nice success with a variety of different strategies. From a promotional standpoint, we have a buy one, get two free on a suit promotion that we're seeing some really nice success with.
And our next question comes from the line of John Kernan with Cowen and Company.
John Kernan - Cowen and Company, LLC
What -- where are we in terms of seeing improvement in the Corporate Apparel profitability? I know we've talked long term about a double digit operating margin in that business. And then I know, Ed Doran is -- has there any been initiatives out of him for building part of the U.S. Corporate Apparel business back up? And I got a follow up question in terms of unit costs.
As it relates to the latter part of that question, Ed Doran and our domestic business, Ed is -- focus is clearly operating and fine-tuning the operations of what we have today in our existing book of business. Looking to organically grow what we do have, but the same time he's considering opportunities for M&A. And those M&A-type opportunities are clearly that; they're very difficult to identify when they would materialize. But we certainly have an interest in adding to TwinHill domestically as those opportunities make themselves known. As it relates to the profitability of the overall Corporate Apparel segment and kind of where we are in the game, so to speak to your question, we're in year 2 of a 3-year process of moving the initial business from a low single-digit operating margin to a high single-digit operating margin and we're generally on track.
John Kernan - Cowen and Company, LLC
Okay. And then if we could shift gears towards -- I guess, you guys turn inventory pretty slow, just being the nature of the suit business. What are you looking at in terms of unit cost flowing through the P&L in the -- as we go into 2012? Obviously, cotton and wool are now still up significantly year-over-year. And as we look out, given you guys turn a little bit slower, I mean, is that when we'll start to see some of the higher unit costs flow through your P&L in the first half of next year?
Well, we're experiencing -- John, we're experiencing cost increases now. They're accelerating as we get deeper into fall. And then we're seeing -- the visibility we have on 2012 is that costs and wool products will continue to rise. We've actually seen cotton and poly come down. It peaked in March and April and cotton and poly now are starting to come down. But you're going to see that work its way through our inventory position throughout the balance of this year and certainly into next year. And I will tell you that we have a number of initiatives under way to deal with that. One of them is to slightly shift the balance between branded and private-labeled products at Men's and Moores. And in fact, that's actually a little more accelerated than we thought it was going to be. We thought we would end the year at roughly 50-50, a blend between branded and private label, and we're actually at that point right now. We're also doing a number of -- a bunch of consolidating of our supplier base that's giving us some purchasing leverage. And then we will be -- we will be raising retail prices, but it's our strategy to do so and remain below our competitors on like items across the board even after price increases.
And our next question comes from the line of David Mann with Johnson Rice.
David Mann - Johnson Rice & Company, L.L.C.
A couple of quick questions. On K&G, the growth rate going forward seems to be a little bit slower than what you did in the first quarter. Can you just explain the rationale behind that?
Well, we're moving into the seasonal slow point of tailor clothing sales as we move through the summer and in the back half of the year. We anniversary the more aggressive price promotions that we ran and I would also say that Easter is an uncommonly important part of K&G's business and we had a phenomenal Easter at K&G.
John Kernan - Cowen and Company, LLC
Okay. And then, Neill, in terms of the guidance you gave for the year, it looks like if we took your previous guidance and added on the out-performance in the first quarter, that you still sort of raised the back -- the Q2 through Q4 expectation. Can you just walk through what were the drivers of that change and the guidance for the rest of the year?
That modest increase in upside, as you articulated, is related to increased same store sales in the U.S. in our apparel business. We believe that the traction we're getting in the first quarter that we continue to experience into the second quarter has a little more momentum into it in the back half. However, at the same time, I would also remind everyone that we anniversary our current promotional profile in September of this year, so the back half of this year's comp outlook is certainly going to be more muted than the first half. But nevertheless, we feel very good with the results so far in the first quarter and into the second that we're comfortable extending that modestly into the back half of the year.
[Operator Instructions] And our next question comes from the line of Richard Jaffe with Stifel, Nicolaus.
Richard Jaffe - Stifel, Nicolaus & Co., Inc.
I guess, Neill, just a couple of follow-ons. Obviously great results but -- and I appreciate the use of additional advertising. But we had hoped, I guess, that as the success of this more intense promotional activity would stay up favorably that you might actually be able to cut advertising or reduce the advertising spend. Maybe you could just help us understand the change in your thinking there. Is it the weaker environment? Or just don't mess with success? And then if you could perhaps provide a little bit more color on the success of K&G, sort of the fairly rapid turnarounds here.
Absolutely. I'll take the first, Richard, and then turn it to Doug for the broader perspective at K&G. We still will be producing a significant reduction in marketing spend year-over-year across all of our businesses. My comment as to increased marketing spend is primarily focused on K&G and particularly in light of our experiences in the first quarter. So to your comment about not messing with things that are working, we certainly aren't at The Men's Wearhouse and our elevated investments in marketing are more oriented towards K&G.
Well, as far as K&G, I'll remind you that over the last couple of years, we embarked on some new initiatives to try to expand the demographic profile of K&G beyond our core customer, and we're not pleased with the results of those initiatives. And last year, we wrapped those up and liquidated out of some inventory positions. And we focused back on our core customer at K&G, making sure that we're delivering trend-right merchandise for the fashion urban customer. We have refocused our marketing initiatives to be directed on that core customer. We're seeing some really nice results out of some radio that we're now using which we haven't used in many years. And when you look at what is selling and what is moving well at K&G, it is these core categories of fashion urban products, which is really the business that K&G was built on. And we're just kind of getting back to basics, so to speak, at K&G.
Richard Jaffe - Stifel, Nicolaus & Co., Inc.
Now I've lost track of where Women's stands. It doesn't sound like -- if you're going back to the core of K&G, that Women's is part of that story. Should we anticipate a rollback?
Absolutely. Women's is about 20% of the business at K&G. A year ago, we were trying to aggressively push that to a much higher number. The inventory got ahead of the sales and we've had to recalibrate it back, but Women's is definitely an important part of K&G. It is comping positively. It's just not going to be the dramatic growth vehicle that we had hoped it had been a year or so ago. I would also point out that the Children's business is nice, running constant in the high teens in our Children's business and has so for a couple of years. So that is a nice emerging business for us at K&G.
And our next question comes from the line of Betty Chen with Wedbush Securities.
Betty Chen - Wedbush Securities Inc.
Neill, I believe earlier you had mentioned that part of the strong Q1 results is driven by the replenishment cycle. Could you give us a sense of where we are in that cycle? I think in the past you had talked about that perhaps being maybe about 3 years in duration, just curious where you think we are in that process. And then following up on the K&G question, guys, I was wondering, can you give us a sense of the current margin profile, K&G relative to Men's Wearhouse and Moores? And where can we see that, given the early success so far in Q1 and Q2? And also within K&G, what is the mix between branded and private label? Because I believe in the past, part of the initiative in driving up margins at K&G had been to also shift gradually towards more of the private label merchandise.
Well, as far as the replenishment cycle, what we're absolutely seeing in our business is a dramatic increase in the number of suit units that we're selling. We're seeing double-digit unit comp increases in the suit units that we're selling in all 3 of our Retail divisions. So I think that there was some people shopping out of their closet, so to speak, when the recession started and what seeing is customers coming back now and replenishing their inventory. As far as where we are in that cycle, it's really hard to tell. It would just be a guess. But we're certainly pleased with how our customers are responding to our assortments and our value. And then, as far as K&G, the margins are -- it's definitely an off-price chain. It's a lower margin profile than Men's and Moores. Men's and Moores have a very similar margin profile. And the branded penetration is higher at K&G than it is at Men's. Brands are more important to that customer and help differentiate the value. And so we're not necessarily driving margin at K&G by shifting any massive shifts in branded versus private label penetration. It's essentially trying to buy the right products for these customers at the right time.
And we have a follow-up question from the line of David Mann with Johnson Rice.
David Mann - Johnson Rice & Company, L.L.C.
Just to clarify, in light of the recent low change in unemployment, sort of the lack of employment growth, I mean, what kind of concerns might you have about the sustainability of the replenishment cycle? I mean, that seems to be the question that a lot of folks are asking us about your business model.
Well, I would say that the unemployment rate has been at this level now for a while and we're -- but in spite of that, we're enjoying some really nice unit increases. So normally, we would say that it would take a return of jobs to really drive any significant growth. But we think we have -- we've figured out a formula for each one of our 3 Retail divisions that is working in this economy with this current unemployment profile, and we're certainly pleased with that.
And I would also add, David, I mean our business began to soften in late 2007, well before the tipping point and the collapse in late 2008. So the downturn has been certainly elongated. And as a result, I think the male consumer, as Doug mentioned earlier, has been shopping out of his closet. And I think we've got a number of years to run purely on a replenishment cycle, at least that's the sense that we have right now. So any gradual modest increase in employment I think would only be additive to the outlook.
David Mann - Johnson Rice & Company, L.L.C.
And then if you could clarify on pricing, have you taken any prices up yet? I mean, I know one of your competitors -- a specialty competitor, has taken prices up on shirts and some other cotton product. Have you done that or have you seen any of your department store competitors take up price? And when should we expect that?
We've seen some of our competitors take some prices up. We have taken some and I would characterize it as a modest level of programs up and our strategy is to make sure that the competition is moving in the direction that we anticipate them to move and that we will then adjust our prices and still will be well below them.
David Mann - Johnson Rice & Company, L.L.C.
And can we assume with the strength in your performance that the price increases have taken fine?
I'm sorry, I didn't...
David Mann - Johnson Rice & Company, L.L.C.
That the customer reaction to the price increases -- there hasn't been a degradation in demand or units of orders on these items?
Oh, not at all. We've -- absolutely on everything that has experienced a price increase, it has not negatively impacted the business so far.
[Operator Instructions] And we have another follow-up question from the line of Betty Chen with Wedbush Securities.
Betty Chen - Wedbush Securities Inc.
I was wondering, Neill, I think you mentioned that there was a timing shift as some wedding business has shifted to the September date. Is that kind of what you're seeing in your bookings pipeline? Or are you just kind of assuming that's what happened in the past based upon some historical trends? And then related to the Tux business, have you seen any competition, whether it's from a pricing perspective or new entrants into the marketplace? Anything of that type?
Betty, we have about -- a little bit over 70% of our reservations for the entire year currently under reservation, so we have a fair amount of visibility. But we can see the trends by month on how it's shaping up, and September is looking to be an uncommonly large month, as Neill mentioned in his comments. And as far as competitors entering, we haven't -- with the kind of increases that we're running this year and anticipate running on top of the increases that we ran last year, we haven't noticed or felt any impact from competitors and all of our information on how our prices stack up against any of our competitors, we feel very good about.
And we have another follow-up question from the line of John Kernan with Cowen and Company.
John Kernan - Cowen and Company, LLC
And just a clarification on the private label stuff. Does that seem to be tracking -- given that the mix of that has increased pretty rapidly, that seems to have -- I guess that would imply that the comps that those -- that, that product would be in line with the branded label stuff.
Yes, we believe that our assortments are being very well received by our customers.
And at this time, I'm showing no further questions in my queue. I'd like to turn the conference back over to management.
Well we thank you very much for your interest in our company and we look forward to talking to you next quarter.
Ladies and gentlemen, this does conclude our conference for today. This conference will be available for replay until the 15th of June at midnight. You may access the replay system at anytime by dialing (303) 590-3030. We thank you for your participation. And you may now disconnect.
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