Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Michael Weinstein of JP Morgan.
Michael Weinstein-JP Morgan
I would like to start on gross margins and if I think back over the conversations we’ve had on these calls going back the last several quarters it seems like we keep inching downward on where margins are coming out and expected to come out going forward for Cooper Vision.
If we just look at this quarter, obviously there was the impact from your hedging contracts that even if we back that out and looked into that, what you’re saying going forward it just seems like margins keep inching their way lower to what you thought they would be 6 months ago, 12 months ago for that business. Part of that would be mix, but in this quarter what really surprised us versus a couple months ago about the mix of Dailie disposables, it seems like it’s more than just mix.
Robert Weiss
Well certainly this quarter it’s the two things, it ?s the 3% from the hedging, as well as mix , as well as the remnants of the call outs, but excluding the call outs the 57 to the 60 is the impact of the hedging on gross margin.
What we’re saying is that we expect to get to the sixties. You’re correct, our previous range was 61 to 63, we’re now saying in essence in around the low sixties. Quite frankly some of that is the substantial growth in the 1-day, 47% growth in 1-day for the quarter is a pretty quick shift. Longer-term will we get into the low sixties? Sixty is not an absolute, we’re saying roughly 60 and that could mean 62, 63. The things that push it up clearly are the same generators. We continue to improve cost of goods and certainly in all of our silicone hydrogel lenses. You double yields like we did with Avaira that’s a very positive impact, but I think we’re just being a little cautious on do we see 63 in the cards? I’m a little reluctant to say we’re going to move from 57 to 63.
Michael Weinstein-JP Morgan
So if it’s mix why aren’t you making it up on the SG&A line? If we looked at just year-over-year and adjusted for FX hedges, your gross margins are down 300 basis points, but your SG&A line is only down 100 basis points. If its mix, why aren’t you getting more leverage and how much of that is because of give aways, because of handouts?
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