In terms of gross margin for the year, as we''ve said, we do anticipate there will be continued pressure this year due to markdowns. Over time, our intent is that will alleviate, we will be able to get lower product costing and are able to get to lower AURs while maintaining quality but protecting our IMU. But that''s something that will work its way in over time rather than something that is going to be an overnight accomplishment. 26:08

Operator

We go next to Jeff Black with Barclays Capital.

Jeff Black – Barclays Capital

Hey thanks good morning. How do we understand how you guys are frame working the MG&A and stores and distribution expense, just on a per-square-foot basis? It seems like we''re not back to full size levels yet on your guidance. Is there some per-square-foot number you guys are looking to, although you would like to drive those expenses down over time? Any color on that would be helpful and also if you could just address what have Gilly and RUEHL been costing over the past couple of years? Thanks.

Jonathan Ramsden

With regard to our MG&A Jeff, the perspective we have taken is to look at where we were sort of three or four years ago and to look at what it would take to get back to those kind of levels and we feel that we have made pretty good progress in MG&A. We haven''t specifically looked at that on a per-square-foot basis, or at least that isn''t the specific metric we have used in terms of how we''ve been managing it. We have looked at it more in terms of when we go back in time, when we look at the level of the domestic business, what were the MG&A we needed at that point. Over time mostly there is some incremental MG&A associated with international expansion, but as we have said, we don''t expect that to be a very significant component. On the stores and distribution side, clearly we have had a significant de-leveraging effect, particularly because of the occupancy costs. In the first quarter there was this 5% de-leveraging on other stores and distribution costs and we are working on all of those. But I think it''s partly a function of the abruptness of the decline and clearly we have added stores cumulatively and we''ve added CapEx and we''re still cycling through the effects of that. So on the occupancy piece of it, it''s going to take a little longer to realign that with sales levels. On the stores and distribution piece, we have implemented a significant number of savings initiatives and we have more in the pipeline, but there is also some de-leveraging effect of sales there but we think we can aggressively mitigate that and then hopefully we will have a sales recovery which will also help with that.

Operator

And we go next to Paul Lejeuz with Credit Suisse.

Paul Lejeuz - Credit Suisse

Hey guys thanks. Two questions, just a follow-up on AUR, Mike, can you share with us the average AUR reduction that we are likely to see, either overall or by brand would be more helpful. And then just looking at the inventory, can you give us a sense of how much of the inventory decrease was a function of lower costs that you are already seeing on product. How much was from just taking markdown hits currently, in the first quarter, versus the pure clearing of units. So I guess maybe it''s helpful to know what the decline would have been in units and maybe what percent of inventory on hand is marked down versus last year. Thanks.

Mike Jeffries

Paul I would love to give you that figure. I cannot. I am told I cannot. But it is a figure that we think is meaningful and I think that''s where we have to leave that. Brian can you address the second part of the question?

Brian Logan

Yeah Paul, the reduction in units was somewhat less than the reduction in costs because of some of the higher markdown rate and lower AURs that you alluded to. The reduction on a unit basis was down approximately 22%. And that''s on a per-gross-square-foot basis.

Mike Jeffries

We can say Paul that the AUR reduction will be greater in Hollister and Kids than Abercrombie & Fitch.

Operator

Our next question will go to Janet Kloppenburg with JJK Research.

Janet Kloppenburg - JJK Research