Trudy Sullivan

Jennifer, we’re not going to comment on the sale of J. Jill. We announced that with our sales release several weeks ago and when we have something to report, we’ll report it.

Operator

Your next question comes from Marni Shapiro with The Retail Tracker.

Marni Shapiro - The Retail Tracker

In 2008 the stores really look great.

Trudy Sullivan

Thanks Marni.

Marni Shapiro - The Retail Tracker

Can you talk a little bit about different trends and traffic between stores in malls versus non-malls, parts of the country and also your direct business versus the stores, traffic wise?

Trudy Sullivan

Yes, it’s really interesting. I would say, the traffic trends are pretty consistent across store types, with the exception that some of our stores that are in the most upscale malls are having the highest traffic issues and so it could be reflective of what’s happening in that class of trade, but its pretty consistent across the board. Interestingly stores that are non-mall, town center stores are having the least problem with the negative traffic trend. Also in terms of the catalog, as Ed and I both noted, our catalog business isn’t very good. Our Internet business is increasing as a percentage of our overall direct business. We did shift that book out of the third quarter and into the fourth quarter strategically; actually added pages and made it a big holiday book and as we said in our opening remarks, we think this will have a definite benefit to the direct business in the fourth quarter. So, we are seeing good and steady reaction to the book and the actual reaction to create it has been very good. As I said earlier, we invested in prospecting and reactivation in the book that were mailed in September, October, November and we’re quite pleased with the response on the reactivation mailings.

Operator

We have a follow up question from Kimberly Greenberger with Citigroup.

Kimberly Greenberger – Citigroup

Thanks. On the gross margin line we’ve seen total gross margin down 400 and the merchandise margin up 100, that’s 500 basis point differential. Is that all de-leveraging on occupancy and buying or is there something else in there?

Ed Larsen

It’s about 100 basis point improvement on operating gross margin, its 100 going the other way on marked down reserves and its 400 on de-leverage on buying and occupancy.

Operator

We also have a follow up question from Adrienne Tennant with FBR.