Question-and-Answer Session
Operator
(Operator Instructions). Your first question is from David Tarantino – Robert Baird.
David Tarantino – Robert Baird
Sue, I know you don't want to make any bold predictions about 2009, but just wondering if you could give us some direction on the earnings sensitivity to the various levels of comps, and in particular maybe if you extrapolate that down 5% or 6% for the rest of the year, kind of what the ballpark range might be?
Susan Collyns
I think what we're prepared to do right now, David, is really just reflect on the first quarter and pull from some of the comments I made as well as some of the comments Rick made. Right now in January we're tracking a rather negative 3.3, but that also includes the impact of these stores, these 10 weeks that we're losing from remodels which are costing us around 0.7%. So on a normalized basis January look disproportionately solid but that's because of the significant sales numbers in the first week of 2009. So if you normalize that as Rick said, we're tracking a January number that's closer to around 5.3%.
I think it's really in terms of a broader amount by quarter we're not really in a position to say. I think it depends on a number of factors in the economy; the unemployment rate stabilizing, inflation moving back to a level that we understand and not moving into a deflationary environment and the housing market stabilizing. So at this point we're really only prepared to talk about Q1 and feel reasonably comfortable that a negative 5.5% to negative 6.5% comp number is the right place to refer to.
David Tarantino – Robert Baird
And just so I understand the comp guidance, in terms of why would you project something for the balance of the quarter that's worse than what you've seen already on a normalized basis? I guess it has to get even much worse given that the positive first week's in there. Is there something about the comparison that you're worried about or is this just general conservatism?
Susan Collyns
Well, I think we obviously see the events of the month of February unfolding and if January normalizes out to a negative 5.2%, we also have a lot of gift card redemptions occurring in the month of January and that's consistent with prior years' experience. And so February is tracking less well at this point than January but nothing that's concerning. And again, within that negative 5.5% to negative 6.5% range is where we think things will settle out.
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