Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Gary Giblen - Goldsmith & Harris.
Gary Giblen - Goldsmith & Harris
What are the factors behind inventory being up slightly more than sales, inventory up 41%, sales up 17%?
Joseph Baty
What are the factors?
Gary Giblen - Goldsmith & Harris
Yes
Joseph Baty
Well to summarize there are two or three fold, one of which is as you pickup from our comments, we are looking to build and have secured some additional private label business associated with there is a need to carry a little more in inventories. In addition, we’ve made reference to MegaRed and we’ve certainly have a little bit more of a build up in certain finished goods for our branded business, and in addition given the Olympics over in China and the fact that a lot of raw materials are sourced out of China, we certainly made a conscious decision to buy a little bit more forward on certain raw materials. So, we aren’t running into any issues with the Olympics over there.
Gary Giblen - Goldsmith & Harris
On gross margin, I understand that it’s a mix in raw materials. I have seen a pretty clear pick up in the amount of [bogoing] throughout the vitamin industry in the last three months or so, so is that a fact there in your gross margin as well, increased bogo expense, but with that at SNM not even your cost of goods
Joseph Baty
Well, I mean sure there is other factors besides the ones I noted. Let’s say for purpose of the range that we gave is currently forecast for roughly ’09. The key considerations are the fact that we do expect a little higher mix of private label sales in FY ’09 as compared to FY’08 and we have made certain assumptions regarding our raw material cost. To some degree, the potential for a little bit more higher promotional type cost will come into play, but as we see here today, the primary reasons for the margin decline or the higher raw material cost assumptions coupled with the change in mix.
Gary Giblen - Goldsmith & Harris
Okay and then finally with the change of management of Liner and so forth, I mean is that transition creating opportunities for you to get more private label business as well as Liner’s and..?
Joseph Baty
Yes, I mean the short answer is yes. Over the opportunities to secure some additional business from Liner so if it’s really started the four bounties acquisition of Liner and certainly we are looking and have secured some additional business from that and we’ll hope to a secure additional business going forward.
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