Question-and-Answer Session
Operator
(Operator Instructions) We’ll go first to Elizabeth Montgomery with Cowen.
Elizabeth Montgomery – Cowen & Co.
Hi guys, hopefully you can hear me okay.
R. Edward Anderson
Yeah, hi Elizabeth, how are you.
Elizabeth Montgomery – Cowen & Co.
Okay. A couple of question, I guess first its good to see progress on the operational initiatives but, I wondered if you guys had any sense of what the thought process behind your customers slowing down was aside from the macro economics factors. Do you have the ability to reach out to them in any way to try to drive additional traffic into the store, number one? And then, second question on the inventory I know you said you still have too much inventory, too much of it marked down, I’m wondering how George feels about the 80% increase in the pack and hold inventory year-over-year and if he feels like that is a good strategy to continue with longer term or if that might not be part of the problem behind maybe some of the lack of freshness in the stores? And, I apologize for how I sound.
R. Edward Anderson
Beth, we understood you well and I think I had the same bad cold that you sound as if you may have as well.
Elizabeth Montgomery – Cowen & Co.
Yes, I do.
R. Edward Anderson
On customer slow down and traffic that we saw during the third quarter and actually we’re seeing it as we begin the fourth quarter from our perspective, in fact, most of the sales change in the third quarter was due to less transactions and from our perspective lower transactions. We think the macro issues still, you know, the sub prime lending and gas prices have probably still not affected our customers as we expect maybe some other people because of our customers resilience towards apparel buying. But, we clearly have a more negative outlook for our customers spending as we’ve gone through the third quarter and now heading toward the fourth quarter. Something is causing the slowdown out there and we all read the same thing you all do, the economy clearly is not in as good as shape top to bottom as it was before and so we’re a little anxious about the fourth quarter and that is why we’ve trimmed our estimates back for the fourth quarter down to flat to slightly positive sales. If you scroll back a quarter from before we were looking at 5-6% comps for both the third and fourth quarter so we’ve definitely pulled back.
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