Neely J.N. Tamminga (Piper Jaffray): On your direct business, can you talk about any potential trend you may be seeing in terms of returns?
Michael G. Koppel: We do track all activities between both channels, direct and the stores, and know the return levels. Overall in the company both in the stores and direct, we have seen an increase in return levels.
Deborah Weinswig (Citigroup): How should we think about planning of the marketing calendar for 2009, especially in light of the fact that the competition has been so aggressive?
Erik B. Nordstrom: The changes that we have made so far have been with our rewards program. We had some enhanced i.e. the triple rewards twice a year and those have been very successful for us.
We are not planning on repeating that for next year but it is something that we can roll out pretty quickly if need be, and clearly these are uncertain times and we need to be responsive to what is going on and we will do that.
Deborah Weinswig (Citigroup): With regard to the significant out-performance of the Rack division, can you go through some of the initiatives, et cetera, that are working there to drive that performance?
Peter E. Nordstrom: Our focus for the last several years has really been trying to leverage the kind of brands that customers would expect to see in a full line store and offer it at a discounted environment, and we have got great vendor relationships, so we are able to get their distressed goods and sell it there on the racks.
When we made that transition to really the type of brands you would see in the full line stores is when our business really started to improve.
It is driven largely by our ability to be able to buy these clearance distressed goods from the vendor directly, and then we also are trying to move merchandise through our full line stores as quickly as possible, and having to keep our inventories fresh in the full line, they have got a good supply of goods coming from that channel as well.
Dana Cohen (Banc of America Securities): In terms of bringing down these prices through lower IMU, how do you convey that to the customer?
Peter E. Nordstrom: In some cases, the price has just been changed and our experience is the customers are smart, they are savvy, and they know what they are looking for and they can recognize a good value on a good item.
We have been able to lower the mark-up on some items that were really outstanding sellers for us in the first place, and one of the examples, we have a [tissue eight] cashmere scarf, just as an example. It’s been a great ongoing item for us and we were able to significantly lower the mark-up on that and increase the value and it didn’t require a big campaign.
There are some places where we have some black line prices and there is some signing that goes with that but most of it is making sure our sales people are well-informed as to what is going on to give them some great talking points to the customers.
Dana Cohen (Banc of America Securities): Could you talk a little bit more about the expense initiatives?
Michael G. Koppel: Our sales per square foot is going to come down in roughly the $350 per square foot range, which is probably around where we were roughly 2004. What we have been trying to do as a company and overall is to right-size the business based on those levels of productivity.
Ours is a model that is definitely driven by productivity on a sales per square foot basis and so we have been going back and adjusting our investments and our expenses to align with those levels of business and I think that’s been pretty consistent in 2008 and when we come in February to talk to you about our plans for 2009, we will share more specifics on that at that time.
Jennifer Black (Jennifer Black & Associates): With business being tough, do you feel that your FTEs are in alignment with your business strategies?
Erik B. Nordstrom: Our FTEs are aligned and really have been aligned all year. This has been a tough year but our expense management has been one of the positives and of our stores out there, our biggest grouping of employees are our sales people and our selling costs have been well-managed throughout this year and even as the top line has been very unstable, our stores have the discipline and the tools to adjust their staffing really naturally to the flow of business, so we are in good shape on FTEs.
Jennifer Black (Jennifer Black & Associates): Will you be raising your rates on your credit cards?
Michael G. Koppel: We had a mailing that went out at the end of October that communicated to our card holders that we were raising the ATRs. That increase is effective November 15th and we should see that start to flow through to our results some time toward the middle of December and beyond.
Lorraine Maikis (Merrill Lynch): How are you planning your 2009 inventory receipts and also just touch on if there is any opportunity to adjust these levels to reflect the current environment?
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