Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Jennifer Black - Jennifer Black & Associates
Jennifer Black - Jennifer Black & Associates
Can you talk about White Label; you have not spoken about the White Label stores?
Emanuel Chirico
We have 10 stores open as of today that was our plan to open 10 Calvin Klein specialty stores. This year the openings this year have outperformed our prior year openings. The five stores we opened this year, three of those stores on the West Coast, one store is in Miami, and one store is in Las Vegas. We believe the quality of the real estate on the second tier of stores is better, positioning in the mall is better. This year’s stores are slightly smaller. They average close to 8,500 square feet which we believe is more or less the right size for the stores. We’ve seen some improvement in the stores particularly in the second quarter of this year. They are averaging close to all in the 10 stores about $400; they’re trending towards $400 in sales per square foot.
We’re still underperforming our original pro forma but we’re learning a lot. We think the stores are really presenting the White Label merchandise and really providing us with a showcase for the brand and we believe as we go forward that we’ll see continued comp store ramp up. So at this point we’re feeling good about those stores. Our plan calls for us to potentially open five stores next year. We’re being very cautious about that in this environment.
And we will look only at some of the best real estate in America before we do that. I would think that we’re probably more inline that we will open one to three stores next year and continue experimenting and understanding that format. We think it’s a format that long-term will work for us and we think it’s terrific for the brand to have that presence at regular retail.
Jennifer Black - Jennifer Black & Associates
How long will it take for you to do the conversion of the Geoffrey Beene stores to Calvin Klein, what’s realistic and are there other stores in the heritage businesses that you could do the same thing with?
Emanuel Chirico
We will be converting the 25 stores all in the fourth quarter, about four of those stores will convert early fourth quarter, balance will convert in the end of January in order to efficiently move through Geoffrey Beene inventory and get the most value for the liquidation. It’s best to be in a position with the stores through the Christmas holiday selling season. So we’re right on target, right on plan but from a profit opportunity you really have to look at those stores as a 2009 event as we go forward.
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