Jeff Stein – Soleil Securities
Okay. Another subject. Now, there’s a difference between what you’re seeing and what you’re planning. On the fourth quarter in a real tough environment, your core craft business and your fabric business comped positively and now you’re indicating kind of negative comps here. So, I’m wondering are you just being conservative in your planning or has the environment deteriorated further from what we saw during Q4?
James Kerr
We hope we’re being more conservative with our planning. We’re not seeing anything that would suggest a significant change in trend. We think we would be foolish to plan very aggressively on sales in this environment.
Jeff Stein – Soleil Securities
Understand, okay. And wondering again, the fourth quarter kind of developed in to an Achilles heel for your company because still it seems that you still regardless of having dropped your seasonal inventory double digits for three consecutive years, still you’re seeing large declines, it’s almost like it’s too big a piece of the business to get out of yet there doesn’t seem to be any solution here in terms of how to address that. I’m wondering as you look ahead to 2009, I know it’s a long way off but how do you intend to manage your seasonal business in the fourth quarter this year?
Darrell Webb
Well, one way to look at it is two years ago the seasonal business in total over the course of an entire year accounted for well over 12% of our total sales. For last year it was less than 10% and we’ve planned it down again. So the magnitude of our overall business that it represents and the ability of that business to inflict pain on our overall results diminishes each year.
Jeff Stein – Soleil Securities
Okay. But, just kind of curious, what are you replacing this merchandise with because if you scale back your inventories and your selling space that you dedicate to this category I would imagine you want to replace it with something and clearly something that resonates with the customer over holiday.
Darrell Webb
Right. There’s not a single category or single answer to that question. There are a number of things that the merchants have brought in to help fill that space. Certainly, the food crafting area, the Wilton and cooking related products have done well so we’ve expanded that assortments and brought in more seasonally including cookbooks and related products. Crafting, seasonal craft products have been growing very nicely so we’ve been incorporating more seasonal craft-oriented items over into the seasonal space. That’s a couple of examples.
James Kerr
Especially in the same stores when we remodel we’re able to recapture that space with the remodel and as Darrell said that would primarily go to craft product and then stores that we haven’t been able to remodel we’ve done what we call store optimizations which we referred to on the last call in order to better utilize that space and again, it was primarily some of the higher performing craft categories that we put in there.
Jeff Stein – Soleil Securities
Got it. Final question, guys can you update us on any intelligence you’re gathering from Wal-Mart’s exit strategy on the fabric side of the business? How many doors have they pulled out of to date?
Darrell Webb
Sure. Last calendar year Wal-Mart removed fabric from 500 stores and through the end of December that would have been a total of 856 stores to date that they’ve removed fabric from. As we look at this New Year, they’ve released some information that says they will be remodeling 700 domestic stores this year. We don’t know if fabric would come out of all those stores or what percentage of them but that’s how many stores they will be addressing this year.
Jeff Stein – Soleil Securities
Thank you very much. |
