Question-and-Answer Session
Operator
(Operator Instructions) Your first call comes from Evren Kopleman – J.P. Morgan.
Evren Kopleman – J.P. Morgan
I was looking at your SG&A expense management and it looks like you did a really good job and you touched on that a little bit. Can you talk about opportunities for next year, more opportunity with payroll management or corporate overhead? Basically what kind of SG&A growth rate can we expect for '09?
Bruce Smith
When we look at '09 and we're obviously in the middle of the budgeting process right now, there are some things that we are counting on next year; certain initiatives that we actually put into place mid year this year will have a benefit for the first half of next year.
Store payroll I think as we mentioned, has been very well managed. We have also carefully grown the overhead base just selectively adding positions where they were really critical and making sure we don't go overboard in terms of building infrastructure. We obviously have to do some of that as we continue to grow but we're doing it selectively and really placing emphasis on certain area.
We did mention the distribution center and that we expect our distribution center to gain some efficiency next year as we re-implement the system in the spring. And when you look at our expense base, the big areas are obviously store payroll, the distribution payroll and store rents. Ed mentioned that our store rents is an area that we are really driving a hard bargain on. We're not going to chase rents or store locations that are not within our parameters and we're going to continue to be very selective on which stores we do pick.
We do think there are some opportunities out there for us to pick up some good real estate over the next year or two.
Evren Kopleman – J.P. Morgan
And how about the depreciation expense for next year?
Bruce Smith
Depreciation expense will be about $17 million to $18 million next year.
Evren Kopleman – J.P. Morgan
Can you touch on new store productivity based on the current environment? You're seeing new store volumes. I'm not sure if you touched on that earlier in prepared remarks but is it in line with what you've been seeing for the past 12 to 18 months or is it weaker?
Bruce Smith
The request was on new productivity for the '08 leased stores is about what we've seen in previous years. The '08 stores are performing good as a group and are within a percent or two of last years results, so we're continuing to see good productivity from our new stores.
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