Question-and-Answer Session
Thank you. The question-and-answer session will be conducted electronically. [Operator Instructions]. And we'll go for Jim Duffy with Thomas Weisel.
Jim Duffy - Thomas Weisel
Thanks. Hello, everyone.
Kevin A. Plank - President, Chief Executive Officer and Chairman of the Board
Good morning, Jim.
Brad Dickerson - Chief Financial Officer
Good morning, Jim
Jim Duffy - Thomas Weisel
Can you guys help me out and kind of itemize the factors that are resulting in change of the gross margin guidance? As I hear you're talking about your outlet revenue being higher margin and increasingly, the number of outlets that you are having kind of countering into the gross margins are going in the opposite way?
Brad Dickerson - Chief Financial Officer
Yes. I think... Jim, this is Brad. As what you've said, two things really are causing that. One was the first quarter results. And two on the outlet side it was more or less what we anticipated the outlet margins to be in our original outlook compared to our change in strategy a little bit to push more units through the outlet at a lower margin. So it's not more or less the year-over-year outlook on the outlet business as much it is a change what we expected.
Jim Duffy - Thomas Weisel
Okay. And Brad, can you detail what the write-down on the gloves was, and where do you see the inventory reserves at the end of the first quarter?
Brad Dickerson - Chief Financial Officer
Sure, on the excess glove issue, Wayne talked about some of the initiatives that we are working through to fix our processes going forward, to improve our processes going forward. And a lot of these improvements are going to have positive effects on some of these issues, like the excess gloves. But in this issue is really around the fact that there was some capacity issues at our factories that manufactured these gloves, and what that did is it caused us to have to order these gloves to a sales forecast. It really didn’t have bookings behind at that time because in the capacity issues, we are ordering low demand. As we have more visibility into the sales number and bookings, that sales forecasts came down after a lot of the items were built already. That really caused us to have some excess gloves over and above what our sales forecast was a better visibility. Typically, we would use our outlet strategy to liquidate some of this excess inventory, but this is a kind of item. It doesn’t move very well through outlet. So we'll continue to attempt to work the balance of these items down through a normal channel going forward.
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