Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Mitch Kummetz - Robert W. Baird & Co., Inc.
Analyst for Mitch Kummetz - Robert W. Baird & Co., Inc.
This is actually Kevin Kent calling in for Mitch. A couple questions here. First, you mentioned on the wholesale side that retailers are operating with leaner inventory levels. Do you guys expect that trend to continue into the second half here?
Mike Brooks
We think they will for the short term until their business improves, yes.
Analyst for Mitch Kummetz - Robert W. Baird & Co., Inc.
As far as backlog, I know you mentioned at the end of Q1 that it was up. Is that still up in the second half and how has that changed since you guys reported your Q1 earnings?
Mike Brooks
I believe the backlog to be? When we said that in Q1, we were focused on futures that had been booked for third quarter shipping and that was up against last year so historically over three quarters, we’re pretty much selling shoes every day and in our hunting category, those would be backlogged in futures and that’s really what we’re referring to. So to answer your question, backlog is no greater than it was the first three to six months of the year. They’re still playing it very tight to the vent, expecting us to have inventory upon their beck and call.
Analyst for Mitch Kummetz - Robert W. Baird & Co., Inc.
On the retail side, when do you expect to anniversary the transition from mobile stores to internet?
Mike Brooks
We really started the transition in October, November of last year in earnest.
Analyst for Mitch Kummetz - Robert W. Baird & Co., Inc.
As far as guidance, what’s expected in the second half sales trends to reach the improved profitability levels that you guys mentioned? How does that break down within the wholesale and the retail business? Also, should we be assuming a stronger SG&A decline in Q3 then in Q4 given the easier comparisons?
Jim McDonald
I think from the top line standpoint, we see sales being down in the back half of the year similar to where they were in the front half, maybe a little bit less only from the standpoint from the decline really started last year, particularly in fourth quarter in the sales. So both wholesale and retail, we look at those to be down year-over-year in the back half of the year. From a gross margin standpoint, we feel like we’ve got these increased costs behind us and we should be able to anniversary our gross margins in the back half of the year, both in third and fourth quarter and from SG&A we’ll see the declines we believe will still be relatively significant but you’re right, as we start to anniversary, they will not be as strong as they were in the first and second quarters.
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