Jennifer Black (Jennifer Black & Associates): How close are you to finding someone in the area of logistics?
Scott Edmonds: We have a strong candidate that is coming back for about the third time to look at real estate.
Jennifer Black (Jennifer Black & Associates): How much more can you reduce your choice count at the Chico’s brand?
Michele Cloutier: We as a brand have reduced our assortment year-over-year. This year down 10, last year I was down 30. So we continue to look for opportunities but we are weighing the wide assortment that our customer expects and enjoys from us and balancing depth on item growth. So we are still undergoing that, we are always in testing mode to see where we can reduce but we are where we are right now.
Jennifer Black (Jennifer Black & Associates): How many people received the Black Book Insiders survey and can you tell what the response ratio is?
Scott Edmonds: No, it is too soon. This is something that Elaine Boltz initiated along with the brand leaderships and we just rolled it out so we do not have any stats to report yet.
Jennifer Black (Jennifer Black & Associates): What is the response to the color red at White House | Black Market?
Donna Noce Colaco: Phenomenal. It exceeded anything that we expected and we went into it cautiously because we want to be sure that we protect the D and A of the brand but it was, the response has just been tremendous.
Liz Dunn (Thomas Weisel): What are the obstacles to turning the accessories business?
Michele Cloutier: I am going to speak specifically to jewelry because that is the driving force, the only area in accessories that is large for us itself, the jewelry business as we have been understanding where she is willing to go, because repeating old styles has not worked for us. So it still needed to be evolved and we have been in testing mode to understand where she will respond. We have kept our inventories very lean in order not to over invest and therefore create additional markdowns. We are getting some good reads right now on our jewelry in the past, I will call it three month’s worth, so we have started to increase our inventory investment as we approach the fourth quarter and we will see the returns.
Liz Dunn (Thomas Weisel): Are you able to comment on August month to date?
Scott Edmonds: No more then what we have put in the press release consolidated at 10.7 through Sunday and then some of my commentary on the response to the travelers initiative relaunch if you will in early August which we were more then pleased with. That is about all we are prepared to talk about relative to August.
Liz Dunn (Thomas Weisel): Can you update us on your thoughts on the environment for cost inflation?
Kent Kleeberger: I think that in each of the businesses we are beginning to see some pressures on costs, part was self-inflicted in terms of raising the quality and the level of piece goods in the White House | Black Market business in particular, but more importantly we source about 55% of our goods out of China. We are starting to see some significant cost pressures out of there. On the other hand we have huge opportunities to mitigate those cost pressures through the method of delivery which particularly in Chico’s we ship predominantly air versus ocean and so we have an opportunity to convert from air to ocean there as well as the opportunity to do more direct imports because we still have a substantial portion of our businesses in the aggregate on a landed duty paid basis. We see opportunities to more then mitigate the increase in cost on a go forward basis.
Adrienne Tennant (Friedman Billings Ramsey): What is the split on the amount of air versus ocean and where do you want to take it?
Kent Kleeberger: The Chico’s business is somewhere around 80% air and the White House | Black Market is closer to about 50% air. So and even the 50% is a nice improvement versus Chico’s. There is still some opportunity there but it is not a question about taking risk, it is just a question of adhering to the product calendar and trying to get the goods in and the lowest economical cost that we can achieve.
Adrienne Tennant (Friedman Billings Ramsey): What is the price differential from air to ocean and the time differential?
Kent Kleeberger: It could be anywhere in the order of magnitude from 80 cents to $2 a unit. So it is a huge opportunity.
Adrienne Tennant (Friedman Billings Ramsey): How much longer does it take?
Kent Kleeberger: If you go back to the comment about the in-transit inventory with respect to White House | Black Market they have more ocean penetration in their mix and therefore that is driving up the in-transit number. But it is all good news. From a balance sheet it looks like inventory was not as low as we wanted, on the other hand we are being cost effective in converting more deliveries to ocean.
Adrienne Tennant (Friedman Billings Ramsey): Would you talk about some of the passport metrics?
Scott Edmonds: Over the last six to 18 months we have pulled back on a lot of the passport information that we are sharing. We just thought that it was too critical from a competitive set to keep laying out there exactly what was going on with our database. I would tell you that if I have an area of concern right now is in this economic environment where we have looked to cut some of the spend in marketing is trying to drill for new customers and prospecting if you will, and that is starting to cause me some heartburn relevant to the number of prospects that we are signing up. But it is a direct relationship to the money we are spending and I am confident based on the sheer number of new customers we are seeing come into the business without the prospecting that once we dial back up the prospecting spend that we will start to fill the pipeline of preliminary customers again but that is the area that I have the greatest concern.
Adrienne Tennant (Friedman Billings Ramsey): Is the percentage of sales coming from the passport members significantly higher then it was because you are not spending to attract new customers?
Scott Edmonds: Not full passport members, no. It has been consistent on the percent of total spend by brand of the full membership, the full black book member and the full passport member has not changed dramatically. And what we are seeing is the prelims, we are just not bringing the same number of prelims in quarter to quarter that we have been. I will say that in the last few mailings, we have seen more prelim interest because the marketing is much more reflective of the brands, much more on brand if you will, and even without spending additional prospecting dollars, we are seeing the prelim pipe up.
Michelle Tan (Goldman Sachs): Where are sales per foot tracking year-over-year at both brands?
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