Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Alice Longley - Buckingham Research.
Alice Longley - Buckingham Research
My question is about shipments in North America through fiscal 2010, after the first quarter. And I’m asking because of the comparisons in fiscal ’09. In other words, in the December quarter I believe your sales at retail and department stores in North America were down about 7% but your shipments were down something like 19%. And that would lead me to think that starting this year, even if your sales at retail were down again, your shipments could be up just against that comparison, without inventory re-stocking at retail your shipments could be up. Is that the right way to think about? Should there be a disconnect in your favor starting in the December quarter in terms of shipments versus sell through at retail?
William P. Lauder
I think, Alice, I wouldn’t necessarily make that leap on the math and the flows, because don’t forget the flows of inventory in December are anticipated replacements for the sell through in the December period of time, for January, February demand. If the retailers which are historically the lowest demand months of the 12 months. So historically the retailers might not be too aggressive in replacement of full inventory if they’re not seeing aggressive sell through.
As Rick mentioned, we’re anticipating a flat calendar fourth quarter holiday period of time, which would indicate that at the base bottom level, and at that sell through rate and restocking rate I wouldn’t want to make a leap of faith to say oh, there’s going to be some brilliant shipment numbers. Nor would I say there may not be. It all depends on the general macro environment as well as the active sell through numbers through the fourth quarter and the retailers confidence for consumer demand in January and February.
Alice Longley - Buckingham Research
So I should just assume shipments will be roughly in line with sell through for most of the fiscal year?
William P. Lauder
Yes. Given the way we work with our North American retailers, I want you to always assume that. As an assumption, and obviously we have exceptions to those rules on either side.
Alice Longley - Buckingham Research
Now your press release cited something about expected further destocking through this coming year. How do I work that into what you just said?
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