For our next question we go to Brian Tunick with JP Morgan.

Brian Tunick – JP Morgan

Thanks good morning. Mike, you talked about these meaningful pricing changes, just wondering if you could sort of drill down between Abercrombie and Hollister. When we visit the stores we see things that are higher price points and lower price points, maybe just talk about that. And then any learnings from the clearance events that have obviously a lot of people talking about.

Mike Jeffries

We constantly review price detail. As I said, the customer is extraordinarily price-sensitive. We are reducing AURs in all the brands but primarily Hollister and Kids. Let me talk about how we''re going to continue to do it. There will be some additional opening price points in Hollister and Kids and we will continue to reduce the AUR with ongoing clearance. The important thing to note here is that we are, and we''re saying they are meaningful reductions but clearly more meaningful in Hollister and Kids. The important thing to note is that we are going to buy for our initial level, our traditional level, high level of initial markup percentage. We are going to maintain quality in the merchandise. This is really a critical factor. We are not taking anything out of the quality of the merchandise, which obviously leads you to the way we are going to achieve this is through lower average unit cost. And we can achieve that because that''s the kind of environment in which we live. But clearly the formula is high IMU, high quality, reducing our AURs with reduced average unit costs. We are achieving it and will continue to do so.

Operator

And we go next to Liz Dunn with Thomas Weisel Partners

Liz Dunn - Thomas Weisel Partners

Hi good morning. I would like to ask a question on the fashion. You called out that you missed some female fashion and certainly we have seen a bit more color in a couple of dresses in the stores recently. Can you sort of talk about what''s brand-appropriate versus what we''re seeing right now? Because I think in the past you have said dresses aren''t appropriate and I think there''s been some unwillingness to do certain colors and that sort of thing. So how are you thinking about brand positioning in fashion and what should we see in the stores as we move forward, just directionally, big picture comments?

Mike Jeffries

As I have always said, we have to protect the handwriting of the brand because we missed dresses first quarter and it was a major miss for us and we were wrong; I was wrong. You will see dresses being delivered into the stores aggressively this quarter. There will be more as we get into June and July. It was a miss. Our other major miss was print and pattern. As you can see what''s happening out there is highly decorated goods seem to be selling. We have to put that trend into our handwriting. We are and have. I think the color issue has not been an issue. But clearly we missed dresses and clearly we weren''t as aggressive with print and pattern as we should have been. We were wrong; I was wrong and we''re correcting this as we go forward.

Operator

And we go next to Michele Tan with Goldman Sachs.

Michele Tan – Goldman Sachs

Great thank you. Just a couple of questions, one can you refresh us on the level of incremental pre-opening expense that you are expecting in the second half of the year versus last year? And then also, any sense of how we should think about the magnitude of gross margin pressure? Obviously the inventories are a lot leaner but there is some potential pressure from the pricing strategy and some of the ongoing clearance activity that you are expecting to do, so any sense of that relative to first quarter would be helpful.

Jonathan Ramsden

Brian, do you want to answer that?

Brian Logan

Sure, Michele as far as pre-opening rent is concerned I think maybe it''s easier if we probably give you a forecast of what we think the total pre-opening rent for the year is expected to be. We expect pre-opening rent for the full year of 2009 to be approximately $35.0 million, which is primarily made up of flagship and international, which is about $31.0 million to $32.0 million of that, and then the rest is domestic. Versus last year, we had pre-opening rent of about $30.0 million, which was made up of, a larger part of it was domestic so we have had a reduction, but there was also, some international. The incremental impact of pre-opening rent this year has come down from our previous projections primarily because of the Kids Fifth Avenue store. We are going to be taking possession later in the year. And also some of the more favorable lease terms are affecting, some of the pre-opening rents. So hopefully that makes it a little bit clearer as to where we''re going to be for the year.

Jonathan Ramsden