Hi Crystal.
Crystal Kallik - D. A. Davidson & Co.
Hi there. I was hoping you could walk us through, I know it’s difficult to look past the macro environment but you still have had this dramatic shift out of footwear into apparel, which I presume has still been a pretty notable improvement to the merchandise margin and I think you were thinking about 100 basis point this year. Is that still playing out to about where you thought?
Michael L. Henry
I’m not sure I understand the question.
Sally Frame Kasaks
I guess I’m trying to understand, yeah. Are you asking are we getting the margins out of apparel that we would have expected?
Crystal Kallik - D. A. Davidson & Co.
Right, I mean, as you --
Sally Frame Kasaks
Yeah, I think -- yeah, on balance we are but I -- the slowdown, you know, some of this promotional activity that we are going to be engaged in will probably not permit us to reach the higher end of what we would have thought we could do but the issue is not footwear versus apparel; it’s just better managing our apparel inventories and some of the promotional cadence we put into action for the quarter.
Michael L. Henry
Well I think, if your question is more to in a normalized environment, what could we expect and I would say the answer to that would be yes, certainly the shift away from footwear and into apparel would certainly drive a very nice improvement in merchandise margin and absent all the regional noise and anything else going on out there, just the shift between non-apparel to apparel that we have accomplished this year should mean as we go through ’09, absent something else that’s out of our control, there should be good merchandise margin growth next year under any condition, just because of that shift that we’ve made away from those more under-productive categories.
Crystal Kallik - D. A. Davidson & Co.
Okay, great. And then you just started to touch on the inventory management. You have put a lot of new systems in place over the past couple of quarters, so could you walk us through where you are in that process and what else will be coming up?
Sally Frame Kasaks
I don’t think we’ve talked about putting a lot of new systems in place. I think internally we have -- there has been some information improvement, yes. I just think that we have been able to better align our on-order with some of the sales trends we’ve seen. Again, I think going -- coming out of August, again -- and I think the teen space, we felt it all much earlier -- we had to start adapting and adjusting when those two weeks in August didn’t happen, Crystal, and we’ve had to adjust and adapt since then. So beyond that, I don’t think we can comment much further.
Michael L. Henry
What you may be thinking of is one of the things that we have been talking about that we believe we do need to do relates to our core merchandising system. The system that we are running on is the same system we have had for 20 years, so there are enhancements that need to be made to that and some of that is what is in our capital plan for next year.
Crystal Kallik - D. A. Davidson & Co. |