Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Heather Boksen – Sidoti & Company
Heather Boksen – Sidoti & Company
I was curious, the gross margin in the quarter seems to be at least a little stronger then I was expecting, can you talk about, maybe go into a little greater detail about the components and what was supporting that as far as I think you said the product and channel mix, and is that something that we should see continuing in the remainder of the year.
John Crimmins
Well the key components you just recapped them, we did see some kind of upward product cost pressure that was offset by changes in product and channel mix. The product mix for us is a little bit, we’ve talked about our footwear result and within that result some strength in boots particularly in Europe and Asia.
It’s a little bit more of a mix in overall towards some higher margin product. Also if you compare to the first quarter of last year we were in the midst of closing a number of retail stores last year so we had retail sales at lower margins then normal because we were going through closure sales.
So that had some of the impact. And I think we see, looking forward on gross margin there will be a number of factors. FX continues to be a significant component, a lot of variability and volatility in the different product cost components, and then how revenue, how our revenue mix works across the next several quarters, its just not clear enough for us to make the call.
Heather Boksen – Sidoti & Company
Also can you, I don’t know if you can talk to this, but I know the inventory level at least on your books looks good, what’s it look like in channels.
Jeffrey Swartz
We watch it very carefully in channel, on a global basis, and I would say qualitatively if we had a concern to rack and stack, I would say I’m concerned about two things. I see in our China business, I see more inventory in store broadly, right, it’s a new business, relatively new start-up business, a lot of new stores, they’re not turning their inventory as fast as I’d like to see them turn it.
Working very hard on [inaudible] that. We have first quality stores up not TFO’s up and so we have growing pains there, its not an issue of substance, I’m just telling you at the level of detail at which we watch channel inventory. So I’m talking about inventory in third party stores in China.
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