Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from the line of Chris Svezia with Susquehanna Financial Group.
Chris Svezia - Susquehanna Financial Group
Can you add any color with regard to given the 14% increase in inventory at the end of the quarter? Is that a reflection of the improvement in backlog and can you maybe clarify if there was any shift in product maybe retailers holding back a little bit at the end of the second quarter and that falling into the third quarter domestically?
David Weinberg
Shift is very difficult to define. I will tell you the increase in inventory is primarily due to a bigger backlog going into second quarter, which obviously the orders were in hand at the end of the second quarter, so if you say that could have shift, that’s probably true. It also has 40 more stores and significantly higher backlog in Europe where there is inventory as well and remember that includes work in process, so that’s everything coming for the quarter as well. So we think it’s inline with the backlogs, the stores Europe, Brazil, China and obviously we believe we’re going to have a stronger third quarter than there was in the second quarter.
Chris Svezia - Susquehanna Financial Group
Okay and so can you maybe clarify in terms of the improvement that you saw in the backlog. You mentioned that you saw during the second quarter, it accelerated at a double digit rate during the second quarter, was that domestically?
David Weinberg
It was both domestic and international. On an overall basis we were up double-digit on our incoming order rate. We had these conversations when we had the first quarter conference call as well and that Easter was earlier and people were trying to order later, so the fact that Easter had cleared in March and now people were ordering for back-to-school and trying to hold onto the last minute, that we didn’t see those order in February, March, couldn’t plan for it but certainly did see them in April, May and June and now coming into the third quarter on a stronger basis.
Chris Svezia - Susquehanna Financial Group
Okay. The so your trying to say that your third quarter is stronger than your fourth quarter in terms of how the order book looks right now.
David Weinberg
Yes, always stronger. I mean if you talk about it on a relative basis, but it’s certainly the bigger percentage is always for the third quarter.
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