Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Sharon Zackfia - William Blair & Company, LLC.
Sharon Zackfia - William Blair & Company, LLC
On merchandising it sounds like you’re worried about some of your higher average ticket items. I’m wondering if you have an opportunity as we go into the holiday season to try to minimize the exposure at the higher price point items or what basically you can do on the fly at this point?
Richard M. Brooks
You did hear that correctly as it relates particularly to the snow hard goods business. As we addressed in our comments we are concerned about it. We’re doing a couple of things. We’re doing the things you would expect us to do.
The first is we’re obviously working very closely with our suppliers on the condition of this business at this point in time, the snow hard goods business. We’re also being more aggressive from a price perspective and trying to drive product out the door with price promotions. I think you have probably seen that in our stores already. Those are really the two things we’re doing. We’re working closely with our vendors and driving it from a price perspective and trying to move the product out the door.
Trevor S. Lang
Just to follow up on that. The guidance that we gave a couple of weeks ago obviously intimated that we were planning our product margins to be down pretty substantially, probably more than they have certainly ever been down since being a public company. The marching orders are very clear to our teams that we are to end this season clean in inventory. The team has done an amazing job over the last five years under Lynn’s leadership to keep inventories clean both in the good times and even in the tough times that we’ve been in for now for a year.
If you look at the level of inventory that’s aged over four months, it’s a pretty low percentage. If you look at the flexibility we think we’ve given ourselves based on the guidance we’ve given and the orders that we are marching to from a merchandising perspective, our expectation is that even though we’re not happy about the environment we’re in and snow is an important piece of what we’re doing, our goal is to get cleaner inventory.
Again we think we’ve given ourselves enough room and been conservative as we see the world today enough that we will execute against that goal when we get the year-end inventory.
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