There has been quite a bit of focus and I think that comes with us as a business culturally thinking of customers first. With the heightened level of focus on customers we are going to assort our stores.

In Banana Republic, we can not do 450 different assortments; that would be chaos for us. But we can certainly break it down in a much deeper way and a much more fragmented way than we do today, which could be three or four different assortments.

So that work is under way. Banana Republic, Gap, Old Navy, and outlet will enjoy the benefit of that throughout the year. But we are big believers that we should have been doing this a long time ago.

Our customers have certainly demanded it. We now have the technology that we made the investment to allow us to do it very easily, and it is going to be something we are going to get some benefit in the future.

Jeff Black (Barclays Capital): Do you think this spring is the kind of product that justifies the kind of spending you are going to do for marketing?

Glenn Murphy: In Old Navy, we have a good enough comfort level to justify the marketing that we are putting in place.

This is the end result of the product we are going to have in terms of its brand appropriateness, its styling, its fashionability, its final value position. They are going to continue to work that product over.

But it has made a fairly significant leap forward, and the March product you are going to see is going to be coming into our stores a little bit this week and fully next week.

When we look at the February product in there right now and the March product that is coming, we feel confident enough in it to spend the money on marketing.

Now we have run a one day only special a few times before at Old Navy, to try to get a whole bunch of traffic to come in on a Saturday. As we look at the marketing will start to get traction, to start it on February 26th and to have it run in parallel course with our product improving. And this is, the beginning of a long sustained campaign.

We certainly do not want to be irresponsible. The product is improving, the store presentation, execution is improving, and we get the right marketing message that we will take those three and test it and decide whether to spend the money.


In order for us to do this starting tonight, all three of those tests were passed, but we know the product at Old Navy needs to continuously get better. So it is not where we want to end up, but it is in a position we feel comfortable enough to spend this money.

Jeff Black (Barclays Capital): As we get through the year, do we look at operating expenses that are higher or lower, given marketing spend and these other investments?

Sabrina Simmons: About 50% of our operating expense structure is store related, and a big chunk of that varies with sales. So it depends where the view ends on sales on that store related piece of where the expenses goes.

On the non-store related expenses, we are absolutely committed to tightly managing those and, where appropriate, decreasing those. We have built some credibility in that area during 2008 and we are going to continue on that path.

Then the other bucket is marketing. We are committed to driving traffic and using marketing as one vehicle to do that so long as we feel like we are getting a return.

We will be monitoring that closely, including this campaign that is running in the first quarter, to determine how much we will continue investing in marketing as the year goes on.

Stacy Peck (Espy Research): Is the level of SG&A reduction you are achieving in the first quarter the same type of reduction you would be able to achieve for the year, assuming that sales kind of stay as is?

Sabrina Simmons: On the store-related sales, we are going to do our very best not to deleverage store payroll, store other expense. We have been successful in 2008.

It gets harder because the fixed piece will become larger relative to the variable piece as sales have come down, but our objective is to continue to manage those expenses so they stay in line with sales.