Laura Champine - Cowen & Company

Still pretty phenomenal performance on the, given the trends on AUR but is there, and you mentioned the mix shift, is there a mix towards the accessories or any sort of higher margin. Are tops typically higher margin than your suits and bottoms, or anything else I can think about the mix that it might be lower price but higher margin?

Kay L. Krill

Yes, let me just jump right in. As far as LOFT goes, their tops business as well as their casual business was stronger in full price and that helped their margin significantly because they did not invest very much in the refined and relaxed category. And in the Ann Taylor business I would say definitely tops is a higher gross margin business, as is dresses.

Laura Champine - Cowen & Company

Thank you.

Operator

Your next question comes from Adrienne Tennant, FBR.

Adrienne Tennant - Friedman, Billings, Ramsey

Good morning. Mike, I have a question on the gross margin, up 230 basis points, can you help us kind of with a break down of that, the deleverage versus the merch margin improvement. And then secondly, on IMU, can you give us a little color on IMU current quarter and then as we go through the back half of the year, we’re hearing a lot of people talk about IMU improvement from sourcing in the back half of the year. Thanks.

Michael J. Nicholson

So the first question, what I prefer to do, I’m happy to follow-up with you offline and provide you the perspective on merch margin versus other margin items after the call. In terms of IMU what I’d say is as we move into the second quarter our IMU rate is fairly consistent with Q1 and where we begin to see some benefits with respect to cost reduction is when we move into the third quarter and beyond.

Adrienne Tennant - Friedman, Billings, Ramsey

Okay, wonderful. And then Kay, you mentioned that the macro viewpoint was unfolding as you had expected, can you kind of give us a little of the macro backdrop that you’re working with for Q2 and then the back half, please.

Kay L. Krill

We’re really not expecting the macro environment to significantly get better for the second quarter or the back half and we’re really positioning our inventories still conservatively although as I said going into the second half of the year, the fall season, we did buy a little bit more because we are up against very depressed comp sales last year and we’re planning Ann Taylor to be more positive for the back half of the year. So our inventories are not as depressed as they were the first half.

Adrienne Tennant - Friedman, Billings, Ramsey

Okay, great. Thank you very much and good luck.

Operator

Your next question comes from Michelle Tan, Goldman Sachs.