Question-and-Answer Session
Operator
(Operator Instructions) Your first question will be from the line of Joe Altobello - Oppenheimer & Co.
Joe Altobello Oppenheimer & Co.
I want to just drill down to sort what happened in ’07 to make you much more optimistic for ’08. How much was it you were too conservative on the consumer heading into the holiday season and how much was the very strong initial sales you are seeing in the Beat in early ’08?
Russell Greenberg
Well, I don’t really like to comment as to whether we were conservative in 2007. The reality is as we stated in the press release and in my remarks that going into the fourth quarter, we were hearing the same stories with respect to the market with which we operate. People not looking for a very successful holiday season so we were very cautious in entering that quarter and there were certain programs that we kind of trimmed out a little bit.
And this is one of the reasons that we exceeded our own guidance so handsomely at the end of 2007 but as we approached the fourth quarter and as we saw the final results in the fourth quarter, we also saw the impact that the new seasonality has with respect to our distribution joint ventures. And going into the early part of 2008 when we began to launch the Beat for Burberry, a launch that because Burberry is such a large percentage of our overall business it still represents around 52%, 53%, 54%.
A launch of that magnitude has a huge impact on our expectations for full year results and so far from what we’ve seen for the first two months and as Jean mentioned with respect to successes at certain retail locations, we are very optimistic and as a result that’s what led us to increase our guidance for 2008.
Joe Altobello
Moving on to 2008, as we sort of build the model here I am just, there are a number puts and takes, just want to make sure I've got them down. It seems that the gross margin expansion you saw this year obviously will not repeat, but I would think you would expect to see gross margins up in 2008.
And as for SG&A I would imagine you are going to start to see some type of leverage this year, where SG&A sales may be flat even slightly down in 2008?
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