Linda Tsai - MKM Partners
Yes, hi. With 940 stores right now, looking out over the next several years, what kind of store base size are you comfortable with? Is a 940 store base about the size you are comfortable with or you will just open and close doors to more possible locations, or do you see the store base changing much from here?
Michael L. Henry
Well, we’ve said on several occasions that we will be closing 30 to 40 stores a year in the natural course, as we look at lease expirations, lease renewals, kick-out clauses and what have you. So I think as you look at our aggregate square footage of about $3.6 million, it’s likely to decline about 2% per year over the next couple of years and as you think about 30 stores a year closing over the next three years, that means close to probably 100 stores comes out of the total mix and we are somewhere in the 800 to 850 range, and I think that’s where we are feeling that’s the appropriate size.
Linda Tsai - MKM Partners
And then in your prepared remarks, you mentioned accessories aren’t at a level that you are comfortable with inventory wise. Can you just give us some more detail on that?
Sally Frame Kasaks
No, it wasn’t inventory, but the sales levels weren’t what we expected. I think there is a distortion that I do want to call out. Part of our accessory business has been what we would call dorm wear and we -- that was rolled into our accessory plan. It didn’t meet our expectations and in fact we are moving out of that category, so I think as we begin to come up -- as we go into spring it will be really more about accessories as we know it -- scarves, perhaps some jewelry, some hats, sunglasses, handbags. It was somewhat distorted this year by the dorm wear this year, last year basis. So we feel reasonably good that accessories will be somewhere about 15% of the business, 12 to 15. We are just going to better manage it in spring.
Linda Tsai - MKM Partners
What percentage was dorm wear?
Sally Frame Kasaks
It was about -- I could give a lot of numbers but it was probably -- I don’t know, give or take 20% for the back half of the year, somewhere in that number. Directionally correct, so it’s not the biggest part of the business but it does become part of the comp drain as it didn’t happen and we are pulling out of it.
Linda Tsai - MKM Partners
Okay, and then just one final question -- have you seen any increases in shrinkage with the economy being worse and maybe potentially having lower sales coverage?
Michael L. Henry
We haven’t seen anything dramatic. We take a full physical inventory every January so we will get our final answer when we take our full chain in January as to whether anything has changed significantly but we haven’t noticed anything that is so prevalent that convinces us that our aggregate shrink rate has moved very far, if at all.
Linda Tsai - MKM Partners
Great. Thanks and good luck.
Sally Frame Kasaks
Thank you. |
