Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Christopher Kim - J.P. Morgan.
Christopher Kim - J.P. Morgan
Could you walk us through some of the expenses and costs, whether it’s cash or noncash, related to this expense savings initiative?
Alan Rosskamm
In terms of the planned $120 million to $125 million initiatives we are looking at a number of areas. As I mentioned in my comments it is across our entire expense structure so it goes well beyond SG&A. So let me just try to give a little more color on this, although I will say that we are in the midst of developing the full detail plan in conjunction with A.T. Kearney. But let me give a little color.
First we have a very significant initiative on the occupancy line. Of course our occupancy expense is net in our gross margin relative to a fairly extensive program to reduce rents in our store portfolio. Obviously we’re getting the benefit of our store closing program but we also have a significant imitative going on which of course would all be cash.
Let me comment to your opening remark. The majority of these expenses are targeted on cash expenses as opposed to other noncash expenses in terms of these initiatives.
We are taking a look at the entire corporate overhead as well as brand overhead and across all of the offices of the retail business. We are taking a look at all of our indirect expenses, looking at our current contracts for not-for-resale kinds of products that we purchase, contracts in the IT area, contracts that support our credit program, along with hundreds of millions of dollars of expenses that support our 2,300 stores across our three core brands.
We also are taking a hard look at supply chain related expenses. Some of those expenses roll up into our buying expense to the extent that they are costs associated with running our distribution network, both for our retail businesses as well as for our e-commerce business. Some of those will be in essence tracked in our cost of sales and margin due to they’re related to the transportation logistics and would show up in freight.
We’re taking a very hard look and see extensive cash savings in our marketing area. We talked in the past about our database of over 75 million names. That database is managed centrally, although by brand, and we are constantly mining that database to determine the optimum number of pieces of mail that should be part of each brand’s marketing programs. We have put in new software; we’ve upgraded some of the CRM, customer relation management, systems that have cleansed that file; and as a result of that we’re going to realize single millions of dollars of savings related to cleansing it and optimizing our direct mail campaign.
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