Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Samantha Panella – Raymond James.
Samantha Panella – Raymond James
Any regional differences that you’re seeing in terms of the same store sales trends at the end of October early November?
Robert E. Bernard
No Sam, not specifically.
Samantha Panella – Raymond James
It does seem like we’re hearing from a lot of teen retailers sort of a similar trend. Any read that you’re getting from your customer in terms of needing an event such as back-to-school or holiday to drive the business? How has I guess these traffic trends been throughout the year up until this point?
Robert E. Bernard
Clearly, we’ve seen our traffic as we reported all year down we’re guessing double digit. We don’t have an actual traffic counter from the year before but in looking at transactions we’ve had to counter act this traffic decline in gross in average dollar sales and unit transactions which we’ve successfully done through the first three quarters with top line growth and margin improvement. In this fourth quarter we continue to see this same traffic malaise by the consumer and we went in to the fourth quarter knowing or expecting that it would again be very promotional or very competitive.
Samantha Panella – Raymond James
Did the recent trends change your thinking in terms of how you approach Black Friday and the holiday season?
Robert E. Bernard
No. We’re going to continue to be very aggressive meaning we believe that it isn’t just one day, Black Friday, the need to be very in front of your customer with value and great fashion every week of the year even more so during the key traffic weeks. But, we think the customer in today’s changed environment wants a deal every day.
Samantha Panella – Raymond James
In terms of the third quarter, what drove the merchandise margin improvement at retail and how should we be thinking about gross margin in the fourth quarter with respect to those retail and direct?
Robert E. Bernard
Well we continued through our sourcing efforts and our key sourcing partners to be able to not only improve our time to market meaning being able to buy closer to market but also being able to get better margins by working with multinational based sourcing partners now that we’re a store group of over 100 stores. So, it’s across the board in most of our categories, most everyone that we’ve seen increased margins from our sourcing efforts which gets passed on to the consumer but also translates to the bottom line. This will continue in the fourth quarter and we look to even more improvements next year.
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