Thank you. Ladies and gentlemen, if there are additional questions at this time, please press the “*” followed by the “1”. As a reminder, if you are using speaker equipment you will need to lift the handset before making your selection. And our next question comes from the line of Laura Champine. Please state your company followed by your question.
Laura Champine – Cowen & Company
Hi. It’s Laura Champine from Cowen. I had a question, just wanted to make sure I interpreted this sentence right, Neill, in the press release. You’re talking about SG&A expenses ex ad costs and then you say that the rate of reduction in those expenses will enable expense leverage. Does that mean that you expect to leverage total SG&A expense for the first half?
Neill P. Davis
Yes.
Laura Champine – Cowen & Company
Okay, got it. And then I just had more of a macro question, I’m surprised to see the growth in the tux rental business given the kind of overall environment that we’re in. What do you think is driving that? Is that a massive share gain or is the tuxedo rental industry just really holding up that much better than consumer spending overall?
George A. Zimmer
I would say that it’s probably some of both. I think that the bridal industry does hold up better than the men’s tailored clothing industry but I also think that many of the investments in infrastructure and marketing that we initiated last year are paying increased dividends this year. We’re very optimistic about not just this year but the long term trend here.
Operator
Thank you. Our next question is a follow up from the line of Janet Kloppenburg. Please state your company name followed by your question.
Janet Kloppenburg – JJK Research
George or Neill, a couple of questions, on the tuxedo rental business, the range you gave us, 7% to 9%, is that what you want us to think as the rate of growth for the first half or is that the current rate of growth and could we see an acceleration as we get into the spring season? I know you have a way to monitor that because of the bookings and the forward order. So, I was wondering if you could give us an idea of what timeframe we’re talking about there on that and I was also wondering if you could talk, George, a little bit about the new denim in the stores and how successful your new strategy to target a younger customer has been? Thank you.
George A. Zimmer
Well, let me just comment on that first part. Neill may have more specifics but I think the 7% to 9% range might be the answer you’re looking for. On the denim, denim is something that we’ve dabbled in for many, many years and never taken a significant stand. We didn’t think it was consistent with the rest of our product. Now that we’re in the tux rental business as we are where the customers are predominantly younger people, we feel that denim is a significant opportunity. Without mentioning brands, denim is probably the best part of this new sportswear program. Denim is actually as we all know bought by almost everybody in the country. So the bigger our selection grows the better our denim business seems to get.
Neill P. Davis
Janet, I would add to the first question on the growth rate of tuxedo rentals for the first half, George is correct, 7% to 9% is for the six months but I would also advise you that the second quarter will be toward the higher end of that range and the first quarter towards the lower end of that range. That primarily has to do with the seasonality and particularly the fact that a big part of our business in the first half is prom related and it occurs in the month of May which is in our second quarter.
Operator
Thank you. Our next question is also a follow up from the line of David Mann. Please state your company name followed by your question.
David Mann – Johnson Rice & Company, L.L.C. |
