Question-and-Answer Session
Operator
Your first question comes from Ian Corydon – B. Riley & Company, Inc.
Ian Corydon – B. Riley & Company, Inc.
Thanks, just a couple of questions, did you see any difference in performance between the remodel set stores and the rest of the store base?
James Litwak
We saw that the remodeled prototype stores performed slightly better than the core stores that were not affected in the remodel.
Ian Corydon – B. Riley & Company, Inc.
Okay, and could you just give a little detail on how you came up with the 138 store-closing figure; what were the criteria for closing stores?
Robert Higgins
Basically we look at a number of criteria, first of all is natural lease expiration in a store that is not profitable today and if we can’t work out a go-forward deal on those stores that allow us to get a model that makes it a rent concession that makes it profitable, we would close the store. That is really the major amount of stores. The stores that are closing would be non-performing. We do have a small group of stores that were profitable stores that we could not reach terms that were acceptable to continue to be a profitable store on a go-forward basis with the landlord and once in a great while you’d run into a situation that the landlord might not even want you to renew in a particular space because they wanted it for a different use.
Ian Corydon – B. Riley & Company, Inc.
Okay, and last question, on the stores that you’re closing, what do you typically recover of the inventory in those stores. I guess you would liquidate some, give some back to the vendors, I’m trying to get a sense for ?.
Robert Higgins
Well basically in our business, music that is not sold is returnable or we can reprocess it so we can return product with a very, very slight penalty with the music vendors. With the video vendors, with the studios, it’s returnable on DVD and that’s without penalty and so we get full credit on that. On our two major categories, we do get credit. On Games and the other categories, the majority of them we take markdowns and get rid of the merchandise, or we reuse it. If its merchandise that’s very saleable merchandise, we transfer it to other stores or to our distributions centers for use.
- To read the full transcript on Seeking Alpha, click here »
