Operator

Your next question comes from the line of Liz Dunn with Thomas Weisel.

Liz Dunn – Thomas Weisel Partners LLC

Good afternoon. I guess in relation to your comment that a 100 leases per year are coming up for renewal in each of the next three years and you expect to close 35 to 50 stores per year, does that suggest that you think 35% to 50% of your real estate are stores that might not be something you want to be in go forward? I mean, how do we just sort of think about that?

Sally Frame Kasaks

This will probably be two part because Mike is somewhat closer to some of this in the more recent weeks. As we looked at our portfolio out there we do a very robust store-by-store evaluation. We started this a couple of years ago. As we looked at these we’ve looked at volume, merch margins, term of lease, it’s not necessarily that we believe a percentage is not productive but there are certain very specific locations that in the course of business become less important over time and that’s really how we’ve approached it and it’s a very detailed sort of an evaluation. So, as we look at it the 35 to 50 is probably the center of gravity. Now, certainly there are renegotiations going on, it’s almost a placeholder. Certainly there are negotiations, there’s discussion with landlords on any given basis but clearly there are some that just over time the volume levels are just not going to grow sufficiently to meet our models. They’re certainly our much lower volume stores that we would be considering exiting.

Michael L. Henry

Right. Just to kind of take off of that Liz, we did just recently go through our annual store-by-store process and we discussed each and every store that we have and discussed the merits of the market, what’s going on with maybe other properties as it opened, since we started the lease 10 years ago looking at kick outs, all manner of things, should we refresh a store, should we not refresh a store. So the whole range of possible actions on stores were discussed with each and every store and we have targeted what we expect to do with each and every store over the next three years.

So, most directly to your question I think the broad answer is yes to some extent that we’ve identified 35 to 50 stores over the next three to four years that absent renegotiations with landlords or some other actions that we would probably walk away from.

Now, the other follow on to that that sometimes gets asked and I’ll just cover it here, is that why don’t you just go out and close 100 now or close 150 now? We have studied that from a cash flow perspective and it just does not make any sense. When you consider what we would have to pay in terms of lease terminations to get out of a lease any earlier than what is contractually allowed to us by a natural lease termination, expiration I guess I should say or a kick out and you line that up against the cash flow of even our worse stores, it just doesn’t make any sense. I think there is one store in our most recent look of this that it would make any sense for us to try and close earlier than contractually allowed.

Liz Dunn – Thomas Weisel Partners, LLC

Okay that makes sense and just one follow up if I may, are there any sort of quantitative metrics you can share with us for the value stores? Has the cash flow improved or the four wall profitability of those value stores since you’ve converted them to more that format?

Sally Frame Kasaks

This has sort of been an evolutionary process so I’ll let Mike speak to some of that and in some of these we did see some improved margins and this isn’t like a grand curtain up reopening of a bunch of stores. I just want to make sure everyone understands this is under the current fleet. We’re just adjusting inventories within these stores because we did find there was greater price sensitivity and the fact they are good liquidation points to some extent to some excess inventory in the chain. Mike, would you like to --

Michael L. Henry

It hasn’t been anything dramatic to this point Liz because understand that part of this was going on while we were liquidating footwear and certainly in the last two quarters that was done at minimal to no margin, even at a loss towards the end. So, there is a little bit of a tough read there but on average we did see around 150 to 200 basis points of improvement in gross margin productivity out of these stores and did see a sales lift out of these stores that is consistent with that.

Liz Dunn – Thomas Weisel Partners, LLC

Okay, great. Best of luck.

Sally Frame Kasaks

Thank you.