Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Ian Corydon - B. Riley & Company.
Ian Corydon - B. Riley & Company
Could you just talk about how you feel about your inventory position now? Are there any pockets of aging inventory or is it [inaudible]?
Edward (?Eddie?) J. Fadel - President
We feel the mix of our inventory is greatly improved. And so there still is some out of season inventory, but that’s greatly reduced. I think we came out approximately, it’s like a three-month supply, and it all went to our outlet stores. So we’re not overburdened with that. The inventory mix in these markets, the inventory mix changes, the reason I feel good about it is our improved products, more of an emphasis on core products that better serve us through retail and golf markets in the future and with less risk to the company.
Ian Corydon - B. Riley & Company
And gross margin has been pretty volatile. Have you reached a point in your sales and with your inventory that we should see gross margins above 40% here in the next few quarters?
Greg W. Slack
I would tell you that they have been volatile in the past, and part of it’s related to the EDC, the embroidery distribution center in Carlsbad. And we have implemented an initiative to look at that and make it more efficient as far as the cost structure that we’re dealing with today. In May we went to a single shift structure through our slower periods in order to accommodate the embroidery plans that we have for the rest of the year.
And so, when we look at our margin, where we see continued increased benefits, our decrease in our overhead costs related to the labor over there. We expect that to improve throughout the rest of this year and into the next part of the year. We also saw an improvement in our starting margins, our net sales increased as our average selling price per unit improved, and outpaced the increased cost that we were seeing.
Also when we’re moving from, as Eddie had talked about before, moving more to a cotton-based product from the technical side, or the polyester, you’re going to also see improved pricing there, whereas the polyester with the oil and everything else because it’s a petroleum-based product, is getting more expensive in the marketplace.
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