Neal Nackman: And Noah, with respect to the warehousing and logistical challenges, just to give you a little more color throughout the last year and just sort of re-explain what happened last year. Again, the single largest hit we had really was in the third quarter of last year. And that had to deal with the demurrage expenses we described which was getting inventory off the ports in the situation where we really had significant inventories in our existing warehouses. So, that item should prove to be a pretty good boost for us as we don’t incur those costs again in this current third quarter. With respect to the other parts of having higher inventory, it really impacts us both in cost of goods sold as well as in SG&A. We run what’s been designed as a flexible warehousing scenario where we use third-party warehouse providers.
Those expenses we put into the SG&A line item. We do run about one-third of our own warehousing. Those expenses we put into our cost of goods sold. And to the extent that inventory levels are high. And so, it’s reached very high level within existing building that we run, you really run into operational efficiencies in all aspects of the operation receiving shipping as well as picking in the warehouse operation. In addition to that, you run into additional storage cost. So, what we expect as we go into next year is that we will still have high inventory levels for the first quarter. Still have somewhat high inventories in the second. We really don’t start to eat into those — the inventory carry over levels until the third quarter. And so, we’ll have additional charges in the first-half of the year as it relates to these warehousing expenses.
And then, of course, in the third quarter, we’ll start to see that mitigate and get the benefit of not having those demurrage charges. Fourth quarter should be a much more normalized event for us.
Noah Zatzkin: Got it. Very helpful. Thanks.
Operator: Thank you. And our last question — one moment. Our last question comes from Dana Telsey from Telsey Group. Your line is open.
Dana Telsey: Hi, good morning, everyone. Morris, as you think about the portfolio that you have at G-III and the next evolution of the business, what do you think out there in terms of attracting whether it’s new licensing opportunities, new brand partners? The mix of whether it’s international or domestic? What are you seeing out there? I know it’s only been — what is it? Three months so since we heard the news about Tommy and Calvin. But if you architect the next evolution, what’s coming your way? What do you think that’s in the portfolio structure that continues to drive sales and margins? Thank you.
Morris Goldfarb: Great question. Thank you — thanks, Dana. Number one, it’s only been three months. And then, it’s not as if we — it was a planned event. It came a little bit as a last minute shocker as one might say. But again, as I described, G-III format, I guess we move on. And we move quickly. You might imagine that when the industry realized that we had a couple of open lanes coming, we got some amazing calls and amazing opportunities. Some of them are still under consideration. Some are eliminated because they don’t fit our profile. Some just don’t work in our eyes. So, take that as one lane of opportunity. And the other, we have been taking about expanding our global reach by aggressively building our business globally.
So, the minute this occurred we retooled — we went to Dubai. We went to Eastern Europe. We made different alliances or additional alliances than we have had historically. They don’t all come to prosperity overnight. It takes little while. But as we mentioned in a scripted form, there are 25 new stores planned for Europe. That’s an aggressive number for franchising and pretty much a new initiative, a new focus. So, there will be many hundreds of additional stores opened. We have spoken about opportunities that we found in licensing, hotels, and communities that are going to be important to us as we go forward. The names that we have are well-suited for luxury housing or luxury hospitality. And we have been sold out. And we have made three deals with fourth coming onboard as well; all in different parts of the world, all with a good deal of money behind them.
So, we’re happy with what’s opening up for us. And, there is a long way to go. As I said, this is not defense time. This is offense. We’ve got — we are sighting opportunities. We have support of our retail community. We are pretty good vendor who — our retailers have prospered with our efforts. And, I think a brand is part of what you buy when you make an acquisition of product. And the other is the integrity and the quality of product and design of product that’s delivered. So, I think our retailers are comfortable that we provide sufficient comfort that what we take on will prosper. It’s worth an opportunity. So, we have that opportunity. And we think we can grow significantly in our world in coming years.
Dana Telsey: Thank you.
Morris Goldfarb: Thank you, Dana. Thanks for your question.
Morris Goldfarb: So, with that, I wish you all a great day, and thanks for speaking with us, and more to come.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
