Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Alexia Howard – Sanford Bernstein
Alexia Howard – Sanford Bernstein
On the outlook for margins for the rest of the fiscal year, I think on the last conference call you were talking about flat gross margin for the full year. It seems as though on an underlying basis they were down about 60 basis points this quarter, do you feel as though we’re getting towards the turning point as we get into the second half, are you seeing a bit of relief on commodity cost inflation or is it that pricing and productivity might come through a bit more strongly. How are you feeling about that.
Douglas Conant
We do still feel that we’ll be about flat for the full year. We’re not seeing much relief on inflation particularly given the commodity hedges that we have in place but as you say we would expect to see pricing come through more strongly in the second half and recognize that we’ll be cycling from last year somewhat higher inflation rates in cost of sales.
Alexia Howard – Sanford Bernstein
It looks as though the price realization overseas and the international segment wasn’t as high as in most of the other domestic areas, is that because of difficulty in Europe or Australia or might we expect to see a stronger price realization in the back half of the year?
Anthony DiSilvestro
I think the challenges have been primarily in Europe and given the competitive environment there its difficult to realize significant price although we have been more successful in Australia.
Operator
Your next question comes from the line of Christopher Growe - Stifel Nicolaus
Christopher Growe - Stifel Nicolaus
On shipments versus consumption again you had very strong US soup growth and we know [IRI] has not been as good a predictor of that recently but I wondered if you could talk about and I know you control a lot of the inventory just what you see on the inventory front and how shipments compare to consumption in the quarter.
Douglas Conant
Obviously we don’t comment on consumption but our tracking of inventory shows that there’s no material change and so we believe our sales are finding their way through to retail.
Christopher Growe - Stifel Nicolaus
In this quarter we saw that promotions had ticked up and also some of the pricing is that more of a short-term phenomenon or is that something you expect to continue?
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