Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from William Armstrong - C. L. King & Associates Inc.
William Armstrong - C. L. King & Associates Inc.
You mentioned real estate opportunities and you’re increasing the number of stores you’re going to open this year. Could you elaborate a little bit on what types of real estate opportunities you’re seeing out there? And also I noticed that despite a higher store opening schedule you haven’t changed your cap ex budget.
James Kerr
In terms of the cap ex we haven’t changed the overall range. We think we’ll operate towards the higher end of that range given the increased number of store openings. We’ll continue to monitor that and if we think it needs to go up we’ll address that as part of our Q2 guidance. In terms of the opportunities right now is the market is pretty good if you’re out there looking to open stores. Our real estate team has been in the field and has identified some opportunities that we think are compelling and we took our store count up because of that.
William Armstrong - C. L. King & Associates Inc.
Are there particular types of shopping centers or malls that you’re finding these opportunities or particular areas of the country?
James Kerr
Nothing specific at this point that we’d want to get into.
William Armstrong - C. L. King & Associates Inc.
I missed a little bit about the store labor cost savings that you mentioned in your opening comments. I was wondering if you could elaborate a little bit on that also?
Darrell Webb
Several things that Ken Haverkost and his team have been working on, one has to do with how we project weekly sales and then allocate store labor based on those sales projections. We had a tendency to be a little optimistic in the past on some of those forecasts so we put some new methodology in place to make sure we’re more accurate and therefore don’t waste labor hours.
Secondly, some major changes in the way we handle back stock inventory at store level. Instead of reserving that inventory on high shelves and needing ladders to get up and down to pull down that stock and replenish the shelves, we’re converting to a process where we keep that on rolling racks in the back room and we can more readily refill the shelves. Then thirdly, just on changes in the way we allocate hours for physical inventory preparation. Historically, we allocated a significant number of hours to clean up the stores and prepare for physical inventories and the way we’re running our stores on a day-to-day basis now that was wasted labor hours that we didn’t need to allocate so we’ve taken that out.
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