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Oxford Industries Inc (OXM -1.40%)
Q3Â 2019 Earnings Call
Dec 11, 2019, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Greetings. Welcome to the Oxford Industries Incorporated Third Quarter Fiscal 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.
I will now turn the conference over to your host, Anne Shoemaker, Treasurer. Ms. Shoemaker, you may begin.
Anne M. Shoemaker -- Vice President, Capital Markets and Treasurer
Thank you and good afternoon. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward-looking statements within the meaning of the Federal Securities laws. Forward-looking statements are not guarantees and actual results may differ materially from those expressed or implied in the forward-looking statements.
Important factors that could cause actual results of operations or our financial condition to differ are discussed in our press release issued earlier today and in documents filed by us with the SEC, including the risk factors contained in our Form 10-K. We undertake no duty to update any forward-looking statements.
During this call we will be discussing certain non-financial GAAP measures -- non-GAAP financial measures. You can find a reconciliation of non-GAAP to GAAP financial measures in our press release issued earlier today, which is posted under the Investor Relations tab of our website at oxfordinc.com. Please note that all per share amounts discussed on this call are on a diluted basis. Our disclosures about comparable sales include sales from our full-price stores and e-commerce sites, and excludes sales associated with outlet stores and e-commerce flash clearance sales.
And now I'd like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO and Scott Grassmyer, CFO. Thank you for your attention and now I'd like to turn the call over to Tom Chubb.
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
Thank you for joining us this afternoon. I want to start today's call by reminding our listeners what Oxford represents. We are a portfolio of powerful lifestyle brands. Tommy Bahama, Lilly Pulitzer, Southern Tide and a collection of smaller brands like The Beaufort Bonnet Company, Duck Head and Oxford Golf.
Our amazing people develop fantastic differentiated products, create compelling and innovative brand messages and deliver incredible shopping experiences to our customers in our stores, bars, restaurants and online. And I couldn't be prouder of our people and the work they do to bring happiness to our customers.
As we reported, our third quarter generated solid results highlighted by a 6% positive comp on top of the 7% gain a year ago and earnings at the high end of our guidance range. While the third quarter remains our smallest quarter because of the seasonality of our largest lifestyle brands, there are a few items of note during the quarter that merit emphasis.
In September, Lilly Pulitzer held one of its semi-annual clearance events. With very limited opportunities to purchase Lilly on sale, this event continues to generate excitement for veteran Lilly lovers and those just aspiring to the brand. In just three days, we profitably cleared almost all of our end-of-season inventory. This year's after-party sale generated just over $30 million online with higher gross margin compared to the prior year.
In addition to the successful sale, Lilly Pulitzer opened a couple of stores during the quarter that represent potential new market opportunities for the brand. First, Lilly opened a store in Palm Desert, California as we continued to build Lilly's presence out West where the brand is still significantly underrepresented. We also believe there is an opportunity with the right store concept for Lilly Pulitzer to fill in some of the market opportunity in premium coastal communities with assortments that are curated precisely for the needs of our customer on vacation.
To test this potential opportunity at the end of the third quarter, Lilly opened its first beach shop in Siesta Key, a clean eight mile long island near Sarasota, Florida. This shop is smaller than our typical store and merchandise slightly differently with more casual and relaxed selections from the line. We are looking forward to seeing its performance as this region moves into its high season. Both of these stores have relatively short lease terms that allow us to test the market opportunity before committing to a long-term lease.
In the fourth quarter, we are continuing our investments in carefully selected retail locations. In November, we opened our first Company owned Southern Tide store in St. Johns Town Center in Jacksonville, Florida, and we have two other Southern Tide stores planned for the first half of 2020, Las Olas, Fort Lauderdale and Sandestin, Florida.
Tommy Bahama will continue its Marlin Bar rollout with locations in Dania Pointe, Florida and the relocation and conversion of our Las Olas, Fort Lauderdale store into a Marlin Bar. Both projects are slated for completion in January and we have four more Marlin Bars planned for fiscal 2020, St. Johns Town Center in Jacksonville, Fashion Valley in San Diego, Lahaina on Maui and Las Vegas, Town Center. As we noted in our press release earlier today, fourth quarter to date sales are tracking a bit behind our previous forecast which Scott will comment on in more detail in a moment.
With a lot of holiday selling still ahead of us and the all-important resort season beginning in a few days, we are confident that we can deliver a solid fourth quarter. That said, we believe it was prudent to modestly trim the top end of our earnings outlook. We remain confident that our strategy of operating a powerful portfolio of lifestyle brands like Tommy Bahama, Lilly Pulitzer and Southern Tide, and emphasizing full price direct to consumer channels will drive increased shareholder value over the near and long term.
I'll now turn the call over to Scott Grassmyer for more details on our results and plans for the rest of 2019.
K. Scott Grassmyer -- Executive Vice President-Finance, Chief Financial Officer and Controller
Thanks, Tom. As Tom mentioned, our full-price direct business continues to grow at a healthy pace. Tommy Bahama and Lilly Pulitzer each posted a 6% comp gain in the quarter with positive comps in both stores and e-commerce. On a consolidated basis, this was our 11th consecutive quarter of positive comps, speaking to the strength of our brand portfolio and the great execution by our teams.
Our gross margin held well in the third quarter. Gross margin at Lilly Pulitzer expanded at both direct to consumer and wholesale. This was offset by a decrease at Tommy Bahama, primarily due to sales mix with all price wholesale sales representing a greater proportion of sales in the quarter. SG&A as a percent of sales increased 50 basis points in the third quarter, primarily due to increased marketing spend. Operating income came in slightly better than planned at $2.7 million, resulting in earnings at the high end of our range for the quarter.
Moving to our balance sheet. Our cash flow remains strong and as of November 2nd, we had no borrowings under our $325 million credit facility and $22 million in cash, compared to borrowings of $32 million and cash of $7 million as of November 3, 2018. At the end of the third quarter, our inventory increased to $154 million from $138 million last year. On a FIFO basis, after adding back our $62 million LIFO reserve to both years, the increase was 8%, which reflects additional inventory to support key items at Tommy Bahama, anticipated sales growth and new retail stores in Marlin Bars. Our balance sheet and capital structure remain solid underpinnings for Oxford's future growth and investment.
Turning to our outlook. As Tom mentioned, we are tracking a bit behind our earlier plans for the fourth quarter and I'd like to give you some more detail on what we're seeing quarter-to-date. The calendar shift with a later Thanksgiving and six fewer shopping days have made planning and forecasting more challenging. On a consolidated basis, we went into the quarter with a plan for a mid-single digit comp increase, which we have now moderated to a low single-digit comp increase. In our direct to consumer channels quarter-to-date, we are seeing strength at Lilly Pulitzer, but Tommy Bahama is lagging our earlier expectations in their existing stores and online. We have also had delays in Marlin Bar openings.
We're still rolling out great product and marketing and are confident we will gain traction at Tommy Bahama over the remainder of the holiday and resort season. In our wholesale channel, Lanier Apparel's replenishment business is softer than anticipated and Tommy Bahama's wholesale business is lower than our earlier plan. So putting that all together for the fourth quarter, we now expect sales to range from $300 million to $310 million, slightly higher than last year and adjusted earnings per share of $1.01 to $1.16 compared with $1.08 in the fourth quarter of 2018.
For the full year, we now expect net sales to grow between $1.125 billion and $1.135 billion compared to $1.107 billion last year. Adjusted earnings per share are now expected to be between $4.25 and $4.40 compared to $4.32 per share last year. Capital expenditures in fiscal 2019, including $27 million in the first nine months, are expected to be approximately $40 million, primarily reflecting investments in information technology initiatives, new retail stores in Marlin Bars and investments to remodel existing retail stores and restaurants.
Free cash flow for fiscal 2019 is expected to exceed $50 million. Our sourcing and merchandising teams continue to make very good progress on our initiatives to mitigate the impact of punitive tariffs on our business by reducing our exposure to China, negotiating price concessions and making selected price increases. We expect the impact of the punitive tariffs to be fully mitigated by the second half of fiscal 2020.
Finally, our Board of Directors has approved a quarterly cash dividend of $0.37 per share. Oxford has paid a dividend every quarter since becoming a public company in 1960.
Now, Omar [Phonetic], we are now ready for questions.
Questions and Answers:
Operator
[Operator Instructions] Our first question is from Susan Anderson, B. Riley FBR. Please proceed with your question.
Susan Anderson -- B. Riley FBR -- Analyst
Hi, good evening. Nice job on the quarter. Thanks for taking the question.
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
Hi Susan.
Susan Anderson -- B. Riley FBR -- Analyst
Hi. I guess just a follow-up on the lighter sales so far for fourth quarter. It sounds like it's mainly within wholesale, is that correct? And then also maybe if you could talk a little bit about what you're seeing in your resort locations, particularly Hawaii and if there's been any kind of change in performance in any of those also? Thanks.
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
Yeah, the sales moderation is both the combination of Tommy Bahama direct to consumer and the wholesale at both Tommy and at Lanier. And as we mentioned we have moderated our comp assumption. We had a mid single-digit comp assumption before and we've moderated that to a low-single digit in our direct businesses and that's mostly coming from the Tommy side.
Lilly has off to -- been off to a good start and been consistently strong. So we feel good there. As we mentioned, this has been a really difficult holiday to plan. The calendar shift does create some havoc as we have six days less. So whats really -- you're not really on a true comp basis when you look at today.
Susan Anderson -- B. Riley FBR -- Analyst
Yeah.
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
And so we do -- we feel good about Tommy's business. We think we'll make up some ground. But we are moderating and hopefully, we're just being prudent to doing that.
K. Scott Grassmyer -- Executive Vice President-Finance, Chief Financial Officer and Controller
And then on the Hawaii question, Susan, I think we've seen good things in Hawaii and we're expecting more there. At this time last year people have been kind of scared off by the volcano issues and so I think we'll see a nice rebound there. And then in other resort locations, particularly Florida, which is a huge state for us in Tommy and Lilly, the business has really been good, consistently good there for quite a while now. So good to see all that.
Susan Anderson -- B. Riley FBR -- Analyst
Great. That sounds good. And I guess at Tommy then are you seeing the lighter sales across both men's and women's or are there any product categories specifically you could point to or it's kind of just really across the board?
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
It's really -- actually women's has been performing very, very nicely and has been really tracking, I think, a little bit above what our expectation would have been. Men's is lagging a little bit and that actually, we believe we're going to make that up in large part. I think when we look back at the '12, '13 calendars, which is the last time we had this exact same calendar shift in the way that the business built then, it really ramps up in the week or two before Christmas. And I think that's what's going to happen again this year. We've done what we think is prudent to the guidance, but we're also very excited about the opportunity that we have in front of us. And then as we always remind people resorts very important tour [Phonetic] brands as well, and we'll be starting to do some of that resort-type business in the next couple of days, really. We've gotten Tommy a wonderful women's resort mailer that should be hitting homes, including hopefully yours this week and it's beautiful and we've got great product to support that.
Susan Anderson -- B. Riley FBR -- Analyst
Great. I'll look for that. And then I guess, finally, just on the gross margin, maybe you could talk about a little bit the puts and takes for the fourth quarter, but then also for Tommy, is there still opportunity, particularly [Indecipherable] to continue to grow that margin?
K. Scott Grassmyer -- Executive Vice President-Finance, Chief Financial Officer and Controller
Yeah, I think there is certainly opportunities at Tommy. But the gross margin, we -- at Tommy, we were a little bit lighter, but that was in third quarter, but that was really the wholesale mix where our wholesale business had more all price sales, which is extremely low margins which weighed that down. Fourth quarter, I think we'll be a little bit closer year-over-year. But we need direct to consumer to have a good holiday and I think it will.
Susan Anderson -- B. Riley FBR -- Analyst
Great. That's helpful. Thanks so much. Good luck for holidays.
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
Thanks, Susan. Happy holidays to you.
Operator
Our next question is from Paul Lejuez, Citigroup. Please proceed with your question.
Tracy Kogan -- Citigroup -- Analyst
Thanks, everyone. This is Tracy filling in for Paul. I had two questions. I was hoping in your DTC businesses for the third quarter, you could tell us what the drivers were of the comp between AUR, traffic, UPT, etc.? And then also how that's looking fourth quarter to-date. I guess, really at the Tommy business, what's changed there? Is it traffic conversion, etc.? And then I have a follow-up. Thank you.
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
Yeah, I would say, Tracy, the big driver on the comp is really conversion that's the story, I think, is getting better conversion out on the traffic that we're getting. I don't think there's big movement at AUR, ADT so much. It's really the conversion that's driving it.
Tracy Kogan -- Citigroup -- Analyst
Does AUR up for the quarter at both brands for the major brands?
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
Hang on just a second. It was down slightly at Tommy, I believe, but I want to confirm that and up slightly at Lilly but not big movements and some of that bounces around from year to year. I don't think we saw anything to earth shattering there where we're -- again, where we're seeing bigger movements really in conversion.
Tracy Kogan -- Citigroup -- Analyst
I mean, is that the issue in fourth quarter where I think you said that Tommy comp had slowed on the retail side a little bit? Is it -- did conversion just fall off a little bit?
K. Scott Grassmyer -- Executive Vice President-Finance, Chief Financial Officer and Controller
Well, the problem is, I don't -- you're really not comp with the calendar. That's the difficult thing about it right now. So -- but, so we're really having to compare it back to our plan and our plan maybe was a little front-end loaded, more front-end loaded than it should be when we really study history. But still we are all for earlier plan by a little bit. We want to be prudent there, but you really -- I don't think you're going to be able to really conclude a comp until you get through the whole holiday season.
Tracy Kogan -- Citigroup -- Analyst
Got it. And then my follow-up is, I was just wondering if you could update us on some of your omni channel initiatives like buy online, pickup in store? Thanks.
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
Yeah, great question, Tracy. Thank you for asking. We've got some really exciting things going on there. We recently, in Tommy Bahama went live in all stores with our enterprise order management system, which allows you to go into your local store and if they don't have the particular item you're looking for, your size in stock, they can in the same transaction with the other merchandise that you're purchasing, they can bring it up, same transaction, one receipt, automatically gets routed to the best store for that to ship to and you have it basically the next day. And that's something that we've always been able to do, but it required a lot of labor and a lot of work to get there and a separate transaction. In lot of cases this is a single transaction for the guest, single receipt. Much easier and quicker for the store associate, which means that they can get you checked out quickly and then move on to helping the next guest. And then in Lilly Pulitzer something that we've got going on that's really exciting is that we've got a curbside pickup option this time around, which is great. So you can get your order and for our very, very busy Lilly customer, we got legitimate gift wrapping not just to give box, but we wrap it for you in the store in beautiful wrapping paper with a ribbon and a bow and then you can pick it up at curbside. So there are lots and lots of ways that we're using technology to really enhance our relationship and interaction with guest and we're excited about those and think that they're going to be meaningful contributors to our fourth quarter business.
Tracy Kogan -- Citigroup -- Analyst
Great. Thank you, guys and good luck for holidays.
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
Thank you, Tracy. Happy holidays.
Tracy Kogan -- Citigroup -- Analyst
Thank you. You too.
Operator
Our next question is from Edward Yruma, KeyBanc Capital Markets. Please proceed with your question.
Edward Yruma -- KeyBanc Capital Markets -- Analyst
Hey, good afternoon, guys and thanks for taking the question. I guess first on promotion.
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
Hi, Ed.
Edward Yruma -- KeyBanc Capital Markets -- Analyst
Hey, how are you? You guys have tried a little bit of a different strategy this year [Indecipherable] within Tommy Bahama with key item pricing and I notice you also ran a Lilly Pulitzer promo that I think was [Indecipherable] seen in a while. I guess, how would you score the efficiency of those promos and did they perform as you would have expected? Thank you.
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
Thank you, Ed. Good question and you know the key to all of that is, as you know, during that Cyber 5 or whatever you want to call it that Thanksgiving weekend through Monday, as you know, the market is very noisy. There is lots going on, everybody has got a deal and an offer. And so what we want to do in our brands is make it simple for our customers. Some of our typical marketing activities are a little bit complicated. Our customer understands them well. But during that very busy time of year, we wanted to offer them something that's simple, respectful of their time during that very busy time of year and it worked. We loved the results that we got and to go to the $20 for every $100 you spend in Lilly Pulitzer that actually we don't think on a net margin basis that was any worse.
And in fact, I think there's a chance it ends up being better than what we did last year with our gift with purchase program. So in Lilly, that was for Sunday and Monday of Thanksgiving weekend and Thursday, Friday, Saturday, they had a stackable ornament gift with purchase offer and that was very simple, I believe it was $75, every $75 you spend, you get another Christmas tree ornament. And again very simple, customer doesn't have to spend a lot of time thinking about it. They can spend what they want to spend and they get a nice little treat for every $75 that. And those worked really quite well and I think with very minimal margin dilution.
K. Scott Grassmyer -- Executive Vice President-Finance, Chief Financial Officer and Controller
Also, Ed, [Speech Overlap] promotion that [Indecipherable] the same number of days. So it wasn't additional days, it was just mixing the promos up during those same days. So it wasn't more days on promo, it was just gift with purchase part of the time and then the $20 off $100 part of the time where last year it was gift with purchase in the four, [Phonetic] five days.
Edward Yruma -- KeyBanc Capital Markets -- Analyst
Great. And one just follow-up, if I may, on inventory. I guess how do you feel about the quality of inventory and how do you plan to exit the quarter, given that the comps are a little bit maybe softer than you initially planned? Thanks very much. Happy holidays to you and your family.
K. Scott Grassmyer -- Executive Vice President-Finance, Chief Financial Officer and Controller
Yeah, thanks. We feel good about the inventory. Tommy -- we're up 8% year-over-year and the lion's share of that is at Tommy and most of it is really being in stock of key items. And that's one thing we feel good going into holiday where last year we were starting to break in some key items. We are well stocked in things like the Boracay, the Newport Coast, long sleeve woven, some of those key items that become very important in holiday we are in stock, where last year we weren't quite stock properly. So I think this adjustment in inventory is appropriate. Last quarter we were up 16% year-over-year. So now we're up 8% year-over-year, which I feel is about the right running rate for us.
Edward Yruma -- KeyBanc Capital Markets -- Analyst
Thanks again, guys.
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
Thanks, Ed. Happy holidays.
Operator
[Operator Instructions] Our next question is from Rick Patel, Needham & Company. Please proceed with your question.
Rick Patel -- Needham & Company -- Analyst
Hey, good afternoon, guys. Congrats on the strong third-quarter performance.
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
Thanks, Rick.
Rick Patel -- Needham & Company -- Analyst
I'm hoping you can help us understand what's embedded in the updated guidance. Tom, you talked about expecting to see a bounce back into Christmas. Is that improvement reflected in your current guidance right now or are you assuming that the weakness persists?
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
So we have some improvement baked in. We believe there is opportunity for improvement above what we have baked in. But we do have some improvement baked in. And just looking, studying the calendar, studying the last time this calendar existed, that's exactly what happened. We are -- and again the planning is difficult here. I think there is a lot of shopping days and some key shopping days which -- so we do have -- we do have some improvement baked in, but we believe there is opportunity for improvement above what we've baked in.
K. Scott Grassmyer -- Executive Vice President-Finance, Chief Financial Officer and Controller
And I would add to that, Rick, that our stores have never been better prepared to do a lot of business over the next couple of weeks. I think in both brands, we've got the right items in stock, our staffs are better than they've ever been before. They've always been terrific, but they're better than they've ever been before. And we've got the tools like the enterprise order management that I mentioned to you, a clienteling tool that we have in Lilly Pulitzer. So we're giving them lots of tools to enhance the relationship and the interaction with the customer. And again as Scott mentioned you look back to the '12, '13 calendar shift, we are actually tracking a little bit better than the way that one unfolded. So hopefully that same curve will continue and we think we're ready to get our share of the action for sure.
Rick Patel -- Needham & Company -- Analyst
Got it. And can you also provide some color on your new store test for Lilly? Maybe compare and contrast that smaller format location with your legacy stores and if the test does go well, what's the longer-term opportunity you see for these smaller format locations?
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
So it's kind of a nooks and crannies strategy, if you're familiar with Siesta Key it's our store in Sarasota, one of them. We've got a couple of them, but one of them is on Saint Armands Circle which is actually on, I believe it's called Lido Key. And the next island below that is Siesta Key. And it's a beautiful, Florida, West coast of Florida beach plays where people have second homes and go and stay in rentals and other places. And the idea is that a lot of people that go to Siesta and other places like that once they get there, they really don't want to leave even to go the couple of miles up to Saint Armands Circle. So what we're offering them is on that island in a very small storefront, I think it's 1,100 feet or something, it's a casual beachy kind of Lilly Pulitzer store that's got a very casual and relaxed assortment. It's all out of the line, but we've just sorted at a little bit differently. And there are two things that that store can do for us, I think. And one is, we can do some incremental business because we're serving it right there where she is, a walk or a bike ride from her house and we can get her that cover-up or a pair of shorts or whatever it is she forgot to pack and do some incremental business.
And then I think the second thing it does for us is it reinforces our positioning as a true resort brand because we're right there in the place with her. And finally, it gives us some exposures to some eyeballs that might not otherwise noice us. And whether they shop while they are there or maybe when they get back home to wherever that came from, they get online and check us out a little bit further. So -- and we can make money doing this. This is not -- it's not just a marketing exercise. The rent on these types of locations is not much and we think we can make money. And so if it works, we think there are a number of these places, there are probably four or five of them just on the West Coast to Florida where you can fill in with a little store like this. So it's not -- at end of the day, it's not going to be the biggest thing that ever happened at Lilly Pulitzer, but we think it's a nice addition.
Rick Patel -- Needham & Company -- Analyst
Thanks very much. Have a great holiday.
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
Okay. Thanks, Rick. Our next question is from Steve Marotta, CL King & Associates. Please proceed with your question.
Steve Marotta -- CL King & Associates -- Analyst
Good afternoon, everybody. Scott, as far as the quantitative impact of tariffs next year, I understand clear and what the mitigating factors are, but I believe you said that it wouldn't be until mid next year that they'd be fully offset. Can you talk a little bit about obviously without giving specific guide into next year, what would be a normalized impact of unmitigated tariffs or partially mitigated tariffs for half of the year?
K. Scott Grassmyer -- Executive Vice President-Finance, Chief Financial Officer and Controller
Yeah, we think it's probably going to be similar to the second half of this year, which will be in kind of that 15% to 20% range. We think right now that next year we'll probably be something in that ballpark and a lot of the way goods flow and exactly when they flow out. But we do have -- we're really happy with the actions our teams have taken working with vendors, moving sourcing and we've made some really good progress. So we feel good about it and we feel very confident that the second half of the year, this is going to be a non-event, so even if tariffs are in [Phonetic] we're going to have done what we've had to do. It just takes some time to get a foot place given the long product development cycle. But we are -- we started to work on this a long time ago and we've made some good progress.
Steve Marotta -- CL King & Associates -- Analyst
Okay, as far as the Marlin Bars that were opened this year, are they all tracking on plan? And can you talk about how long those delayed Marlin Bars were delayed?
Susan Anderson -- B. Riley FBR -- Analyst
None have opened this year. We opened...
Steve Marotta -- CL King & Associates -- Analyst
I mean the ones that are open.
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
Yeah, the two that opened have been Coconut Point just continues to do fantastic and Palm Springs is doing well, that area is still being developed. So it's not at full production, but it's in a money-making mode and we feel good about it. The ones we're going to open, those have kind of delayed a little bit just permitting and getting possession of the space. There is just a lot of things but we're going to get two open late this year and those are in construction now and we've got four slotted for next year. So we really believe this pipeline is there and we're hoping that we were going to get three opened this year and that they were going to be early in the fourth quarter. Now we're going to get two opened and they're going to be toward the end of the fourth quarter. So we're not going to get much impacted at all this year from the two that opened, but next year, we'll go into the beginning of the year with two up and running and another one coming relatively early in the year and then the rest will be spread out during the year. So we -- it always takes a little long then we would like, but we've got it coming.
Steve Marotta -- CL King & Associates -- Analyst
Very helpful, thank you.
K. Scott Grassmyer -- Executive Vice President-Finance, Chief Financial Officer and Controller
Thanks, Steve.
Operator
We have reached the end of the question-and-answer session. Now I will now turn the call back over to Tom Chubb for closing remarks.
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
Okay, thank you very much for your interest and all the best to you and your families for a very happy holiday season.
Operator
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
Duration: 35 minutes
Call participants:
Anne M. Shoemaker -- Vice President, Capital Markets and Treasurer
Thomas C. Chubb III -- Chairman, Chief Executive Officer and President
K. Scott Grassmyer -- Executive Vice President-Finance, Chief Financial Officer and Controller
Susan Anderson -- B. Riley FBR -- Analyst
Tracy Kogan -- Citigroup -- Analyst
Edward Yruma -- KeyBanc Capital Markets -- Analyst
Rick Patel -- Needham & Company -- Analyst
Steve Marotta -- CL King & Associates -- Analyst
