Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Steven Kron – Goldman Sachs.
Steven Kron – Goldman Sachs
A question on the margin line, this quarter very nice quarter of margin expansion. It seems as though embedded in your fourth quarter and into 2010 pretty big deceleration in the margin expected. Can you drill down a little bit in the cost of sales? What do you think the benefit has been from category management versus the commodity basket being down and what that’s going to look like on a go forward basis?
Jeffrey Kip
I think you’re talking about a smaller basis point improvement year over year so I think it’s a deceleration of the magnitude of improvement. I think you’re going to see a stable to improved operating margin at the level it’s at now.
And in terms of category management versus cost improvements, I think you’re looking at a relatively even split the last couple of quarters and something comparable next year.
Operator
Your next question comes from Jake for Matthew Difrisco – Oppenheimer.
Jake for Matthew Difrisco – Oppenheimer
I had a question about marketing. I know you’re spending or planning to spend more in the second half in 2009 than in the first half. I was wondering what you can tell us about 4Q, whether the delta is similar. I know you don’t have as many product launches to support. And if you could talk about 2010 as a percentage of sales your marketing spend versus 2009.
Jeffrey Kip
I would start and say to you in terms of marketing spend, I think we’re going to be very cautious about now trying to indicate individual marketing spends by quarter, percentage versus the prior year. It may be more detailed than as a rule we’re prepared to give and is productive.
I will say to you that relative to marketing spend year over year in 2009 I think that it is back loaded. It was more heavily back loaded. It was more heavy year over year in the third quarter than in the fourth quarter, but still moderately higher in Q4 in 2009 over 2008.
I would say to you that again next year we’re still making our plans so I can’t tell you specifically what it will be but we fully expect our marketing expenditures to be up modestly, moderately. With more stores out there and with better buying, the cost per impression is going down so I think that will be more impact.
- To read the full transcript on Seeking Alpha, click here »
