So it is more about the customer environment, it is not really about the competitive environment.
Robert Drubel (Barclays Capital): When you look at the inventory and the levels that you guys are running at now, how much more room do you think you have to take inventories down throughout this year?
Kevin Mansell: We are essentially planning to flow receipts appropriately in line with sales and we are not going to simply cut inventories. Our inventories are going to be lower, but they are going to be lower because we are more effectively flowing receipts to the sales demand.
The firm made cuts proactively last year in advance of the demand weakening and it served us well. They are actually down further than our actual sales performance. We entered the quarter with 9% plus less inventory per store in a quarter in which we expect sales to be down 5% to 8%.
We are well positioned and we are going to flow receipts based on sales demand. That’s really what we’re saying and hopefully make more effective use of the inventory.
Wesley S. McDonald: We are making an investment in basics which has very little markdown risk and our clearance inventories are down 30% on a per store basis and we expect to continue to have clearance inventories down to last year each quarter.
Robert Drubel (Barclays Capital): When you look at a conservative outlook for 2009 where do you think you are being most conservative in your outlook across the board?
Kevin Mansell: The run rate of the business on a comp store basis was down 7% so we have guided 5% to 8%. We think that’s reasonable and rational.
The run rate of the margin was actually 44 basis points, 50 in the fourth quarter. We are only guiding flat to 10 but we want to have a lot of flexibility to drive demand because the customer has told that her budget is smaller than it used to.
Therefore if we are going to do more sales, we have got to get more share.
From an expense perspective, we are guiding 3% to 4% increase in SG&A. We are being conservative from the perspective of just the overall snapshot because we have exceeded our estimates before, it pretty much matches up to what we are experiencing in 2008 including the fourth quarter.
Uda Werner (Bernstein): Could you comment on the store renovations in terms of how much cap ex per store that might take?
R. Lawrence Montgomery: We spent about $2.3 million in remodels on a per store basis last year, 51 remodels this year.
That has been a huge reduction over the last two years, we have become more efficient as well shortened the duration.
That is important because during the disruption and the construction period you are losing sales because people are trying to find out where everything has been relocated to.
So the shorter duration, the more chance you have to pick up sales after the construction when we do the re-grand openings.
Uda Werner (Bernstein): Could you be more specific about these innovations that you are seeing through the course of the year?
Kevin Mansell:I If you look at past history over the course of the last three years we have had a pretty consistent roll out of legitimate new brands each and every year and we intend to have some this year as well and there will be a couple this spring.
Uda Werner (Bernstein]); Could you comment on new store productivity and also how the Internet has been doing?
R. Lawrence Montgomery: New store productivity for the year is in the mid 60 range.
|
