Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Jeff Blaeser - Morgan Joseph.
Jeff Blaeser - Morgan Joseph
Good morning. Thank you for taking my question. First one I guess comes to your guidance. It looks like you maintained the guidance that you had going into the quarter, yet exceeded internal Q1 expectations. Did something shift into Q1 or out of Q1, or is it more just being conservative going into the rest of the year?
Efraim Grinberg
Jeff, there are several things that go into it, and part of it is that less sales shifted out of the first quarter than we originally anticipated, so that enabled the quarter to be better than originally anticipated. But also I think with rising gas prices and uncertainties in the second half of the year, I think we just feel comfortable with where our guidance currently remains.
Jeff Blaeser - Morgan Joseph
Okay, fair enough. I think you mentioned in your comments that you expect the retail buying pattern to affect Q2. Could you explain that a little bit more?
Rick Cote
Well, under the retail calendar for some of our institutional doors that follow it, their first and second quarters end late into the following month. So it has moved some of our shipments from the first quarter into the second, and we believe also from the second into the third.
Jeff Blaeser - Morgan Joseph
Finally just one more question on the gross margin and discontinued sales. Do you expect to be completed in this fiscal year? Or obviously it's difficult to give a specific time frame, but is a 62.9%-63% gross margin reasonable in the out year?
Rick Cote
Well, yes, we would expect that the discontinued excess inventory sales would wrap this year in fiscal 2008, and obviously as we said in our guidance that we would expect our gross margins to be consistent with where they were last year excluding the discontinued, which was 62.5%. As you know, our strategy down the road is growing operating margin and a key factor to that is growing our gross margins to a higher level than where they are today. So we certainly would expect improvements in gross margin over the next couple of years.
Operator
Your next question comes from Kristine Koerber - JMP Securities.
Kristine Koerber - JMP Securities
Hi, congratulations on a good quarter. Can you quantify the sales shift Q1 from quarter to quarter, basically, and the impact on earnings?
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