Question-and-Answer Session
Operator
Thank you at this time we’re ready to begin the question and answer session. If you would like to ask a question please press star one at this time. To withdraw your request, you may press star two. Again to ask a question, please press star one at this time. Our first question is from Jennifer Black of Jennifer Black & Associates.
Jennifer Black – Jennifer Black & Associates
Good morning, I wondered if you could talk a little bit about cost inflation, how you’re dealing with it? Are you raising prices and just sourcing in general, thank you.
Tom Katzenmeyer
Thanks Jennifer, we’re going to go to Martyn Redgrave with that question.
Martyn Redgrave
One of the interesting phenomenas for us given our kind of global supply chain capabilities and the way we relate to our manufacturing partners is that we’re really not seeing a lot of cost pressures across our supply chain. Obviously fuel prices and other things in the transportation logistics side of the business are significant variables, we are seeing pressures there obviously. But in terms of average unit cost coming out of manufacturing facilities and because of the relationships that we have, we’re not experiencing a lot of cost pressures that we’re having to react to or would think about reacting to from a price point of view.
Tom Katzenmeyer
Great, thanks, let’s take our next question.
Operator
Jeff Black of Lehman Brothers, you may ask your question.
Jeff Black – Lehman Brothers
Thanks a lot, hello folks, I guess a question for Sharen. Talk about your, you know the bra business in general you know we’ve got a lot of new entrants or seemingly new entrants, what are your thoughts about being competitive across more price points or more competitive across a range of price points, what might that mean to the product offering and the inclusion of some SKUs in the business with potentially lower prices and also ultimately what that means for AUR, thanks.
Sharen Turney
Sure, first of all within the bra business as we’re looking at it from a strategic point of view, we do believe there’s an opportunity in our tiering the price. One of the reasons we were very interested in our partnership with Intimissimi, it is a fabulous opening price point from the fashion perspective, so in terms of looking at $19.00 everyday bras and as now that we’re rolling that out to approximately 250 stores and we’re learning a lot and being able to see the unit velocity, we do believe that there’s an opportunity to continue to tier it, not only from a lower price point but also on the higher end in terms of true higher end fashion quality bras. So I think that one of our strategic initiatives as we move forward is to have the good, better, best pricing strategy even more than what you see it today.
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