Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Betty Chen - Wedbush Morgan Securities
Betty Chen - Wedbush Morgan Securities
I was wondering if you can speak a little more about Q3 and also the implied Q4 guidance, it had appeared that from the second quarter the core tailor business at TMW and even K&G, were stabilizing so I was curious to hear why we’re assuming a more conservative viewpoint for those two divisions in the back half and then I know you’ve also said that for Canada we should assume some modest declines because of the currency strengthening for the US dollar, how should we think about that for next year as well?
Neill Davis
As it relates to the third quarter and fourth quarter guidance and my comments concerning a more conservative posture with our clothing business, its not a reflection of any deepening trend that we’ve seen develop its just that there’s a belief that with the economic backdrop that exists and its just taking a more conservative posture, its not significant but its just slightly more conservative.
I will tell you that a fair amount of the earnings guidance or the difference referred to earlier, those three points, a third of it relates to the currency. We have before going into the second half of the year, been considering a currency on parody that is Canadian dollar to the US dollar, and we have taken that down 6%. That can have close to a $0.03 to $0.04 impact on the bottom line on an annualized basis.
And what we’ll do is update our perspective and where we are at the end of this year and we’ll extrapolate that on a go forward basis and of course we’d take guidance and advice from our financial banks that we do business with as to what forward rates look like and what’s developing. So it’s essentially updated on a quarter by quarter basis.
That’s what I would offer to you in terms of the guidance.
Operator
Your next question comes from the line of Richard Jaffe - Stifel Nicolaus
Richard Jaffe - Stifel Nicolaus
It obviously tough out there and you’re playing decent defense but looking at a couple of opportunities, the sourcing opportunity that we’ve talked about for awhile where you’re going further offshore and shifting the mix to be more globally sources in the tailored clothing category, and with tuxedos, does that opportunity still exist? Is there still some initial margin opportunity or is the sourcing opportunity nearly maximized both for tuxedos and for suits?
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