Question-and-Answer Session
Operator
(Operator instructions) Our first question comes from the line of Christopher Glynn of Oppenheimer. Please proceed.
Christopher Glynn – Oppenheimer
Good afternoon. So the gross margin burst in a few years and sounds like you are guiding up sequentially, did I hear that correct?
Bill McCartney
We don’t provide guidance. We are explaining that the margin was up and why it was up. I mean if you look at the reasons we talked about the inclusion of Blucher and Blucher will be here for the foreseeable future and we will not buyback our Chinese business unit. Operating improvements at WPT are (inaudible) guys are doing a nice job and the cost reductions are holding. I mean it’s – and I don’t want to say we are giving guidance on that, but we do – we are pleased with our margin performance.
Christopher Glynn – Oppenheimer
Okay. And just more talking about the directional trends, hopefully this can be taken outside the – straight I’d have asked for guidance. But directionally from the second quarter, you are seeing seasonality, it sounds like sequentially softening in the US non-res. But overall, what would you characterize the impact of the economy on seasonality you are seeing through the months?
Pat O’Keefe
Well you have the impact of the non-res, which is big negative impact. We have the retail probably being a push from quarter to quarter in terms of the environment there in terms of retail. In Europe, you probably have sequential, some softness going forward due to the fact that Europe in general has trended one quarter behind the US. And I would say you also have ongoing issues with regard to absorption, because we are managing for cash and that as a result, we are only building inventory when it's required. But you are going to have continued overhead absorption issues going into the next couple of quarters.
Christopher Glynn – Oppenheimer
The inventory is down nicely. Do you have a target inventory level or assuming sort of static business levels?
Pat O’Keefe
Yes, we have inventory turns established for each and every one of our businesses. In terms of how they rollup, I don’t have that number in front of me. But we are expecting that continue to manage inventories very constructively throughout the year.
Christopher Glynn – Oppenheimer
Okay. And last one, just the placement of the legal gains; you pick it as a reduction to SG&A?
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