Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Budd Bugatch - Raymond James & Associates.
Budd Bugatch - Raymond James & Associates
Forgive me, I’m in an airport so never fail that the announcement always happens when I start talking. The first question would be the store base as you go forward. I know you’re planning to close six stores in the quarter. Can you give us an indication of where you think the stores, what looks forward after in 2010.
Jim Raabe
Sure, as you said about six stores, we’ll end the year with just over 400 stores. We would expect some reduction in the store base [Audio Gap] so I would expect 2010 will be in that 390, 380 range from the total store count.
Budd Bugatch - Raymond James & Associates
They will close kind of prorate during the year. Will you kind of ratchet down quarter by quarter.
Jim Raabe
That is probably half of the store closures will happen very close to the end of the fiscal year as we have looked at the stores that we see as opportunities to kind of improve the overall store base and the rest of more prorate over the course of the year.
Budd Bugatch - Raymond James & Associates
At the end of this fiscal year or next fiscal year?
Jim Raabe
Next fiscal year, about half we will be closing towards the end of next year.
Budd Bugatch - Raymond James & Associates
I know that the retail partner program is now I think been terminated, I think you have gotten like a 140 partners or something like that if I remember I read it right. Can you give us an indication of what the fourth quarter last year those retail partners might have accounted for in terms of retail sales versus 10 times of sales and maybe gross margin?
Jim Raabe
From a sales standpoint, it would have been in the range of three to 4% of our total sales, and the margins on those sales are roughly two thirds of what the retail stores are from a gross margin standpoint.
Budd Bugatch - Raymond James & Associates
So that’s what’s confusing me why the fourth quarter margin would be down there year over year because you are going to have less retail partners sales, so it would seem to me that the mix would be stronger towards the retail where sales have higher margin.
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