Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Nick Genova - B. Riley & Company, Inc.
Nick Genova - B. Riley & Company, Inc.
Hi guys. Thanks for taking my call. Just a couple of questions. First, on the kind of the promotional levels and how that will play out for the rest of the year, can you give us an idea of how promotional you guys were on the branded business during Q2 and then how that will play out over Q3 and Q4, if you have any visibility into that?
Joseph W. Baty
We’re continually promoting. I mean, if your question is in regards to promotional support for the second half as compared to promotional support for the first half, is that the gist of your question?
Nick Genova - B. Riley & Company, Inc.
Yes, and just I guess at the level of looking at the retailer level as well, how they were pushing your product as well and how that will compare in Q2 to Q3 and Q4.
Joseph W. Baty
Well, just again looking back to the information that I provided, we do expect our selling and marketing costs in the second half to be above where they were for the first half, given that noted that overall for the year we’re currently forecasting them to be in the 18 to 19% range and they’re below 18% say for the first half. So and that’s from an overall standpoint which includes some additional TV and consumer support for both Move Free and MegaRed. That’s the promotional support from the company.
In regards to the retail accounts, we believe overall that there will be relatively consistent promotions playing out in food, drug mass. We do anticipate there may be less promotional support or what we refer to as [pellet] programs in certain warehouse clubs in the second half, and that will clearly impact and leads to potentially some reduction in customer inventory levels.
Nick Genova - B. Riley & Company, Inc.
And then on the inventory side, that was a pretty significant increase and I would have expected a lot of that build-up for at least the private label side to have already occurred in Q1 or Q4 of last year. Can you kind of give us an idea of what was the dominant factor in that increase? Was it higher prices on the raw material? Was it because you guys keep getting more private label wins, can you give me an idea what that is?
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