Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Erin Moloney.
Erin Moloney – Merriman Curhan Ford & Co.
First of all just following up Barry on your last comments on the first quarter specifically on the gross margins, are there any reasons after you’re done kind of clearing through this excess inventory that you couldn’t see gross margins levels the rest of the year similar to historical levels?
Barry Erdos
It’s still early to tell, the macro environment as you know does not seem to be getting any better but we feel good about the quality of our inventory flow and we will market and price the inventory according to those external factors.
Melissa Payner
The only thing I would add to that is what would cause a shift is the mix. For example the more designer merchandise that we sell, the designer accessories that are impacted by the Euros that will have an impact on the margin percent, but the margin dollars are higher because they’re such high ticket items. It’s hard to say today what the year will look like.
Erin Moloney – Merriman Curhan Ford & Co.
And assuming, I guess sales trends stay as you have planned going forward the excess inventory you have now coming out of the last year should be all cleaned up by the end of the current quarter, here?
Barry Erdos
Yes.
Erin Moloney – Merriman Curhan Ford & Co.
Great, okay. And then, looking at your marketing, where is your marketing expense plan for 2008? Usually you guys talk about that a little bit and I didn’t hear that on the call this time.
Barry Erdos
Sure, in 08 we see a major shift to online spend versus offline so, where as we ended 07 with 54% of our spend offline and 46% online we will be at 44% offline in 08 and 56% online. The focus is really to spend where we get proven payback in search and affiliate programs and we’ve narrowed the focus of our offline advertising. Really Runway has been a tremendous success for us and we are looking to repeat those types of relationships versus a broader advertising approach.
Erin Moloney – Merriman Curhan Ford & Co.
Should it end up a kind of similar rate? So kind of switching offline versus online percentages it sounds like. And then, should it be a similar dollar amount to what you saw in 07?
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