Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Unidentified Analyst with William Blair & Company, L.L.C
Unidentified Analyst - William Blair & Company, L.L.C
Jerry, you had talked a little bit about the inventory being down 4% year-over-year. It looked like the payables on your balance sheet year-over-year also fell by a much greater amount, almost 19% I believe I calculated. Can you comment on what is taking place there and maybe it has something to do with the store closings, but if there is other color you can add.
Jerry Shore
Yes, Eric, it has to do with the store closings, but as large a factor is our product mix shift that we’re seeing and the drive to keep our inventories in stock on those WG items, the most popular items. It’s really driven towards the basic and consumables which have brought those payables down. It is partially a timing effect, but there is the effect of those two items.
Unidentified Analyst - William Blair & Company, L.L.C
It just sounds like this is something that we should continue to see on the balance sheet for the next couple of quarters, is see the payables down like that year-over-year.
Jerry Shore
Yes, I do believe to a certain extent we will continue to see that.
Unidentified Analyst - William Blair & Company, L.L.C
You think in the same magnitude as well, double-digits, or should it moderate?
Jerry Shore
It should moderate.
Unidentified Analyst - William Blair & Company, L.L.C
Mike if you could talk a little bit about where you think you guys stand in terms of the adjustments you made in the store in terms of labor an controlling other expenses. What ending do you think you guys are in? How much more runway is there for you guys to go down and continue to cut costs in addition to, outside of the planned store closings, I guess the other remaining stores that will be in the base, how much more room is there for continued improvement?
Michael Hayes
I’m going to let Bruce answer a key part of that, but one of the things that is happening as we’ve been driving store traffic, and we are seeing real high-end store traffic in the consumable sides. I think that the ability to cut the store labor significantly more, once we get to second and third quarter we’ll re-mitigate it. It’s not going to be one of our big upside potentials.
- To read the full transcript on Seeking Alpha, click here »
