Question-and-Answer Session
Operator
Thank you. (Operator Instructions) Your first question comes from Elizabeth Pierce - Roth Capital Partners, LLC.
Elizabeth Pierce - Roth Capital Partners, LLC
So it just seems to me on November 3, when you came out with kind of the pre-announcement, I guess I’m struggling to understand since you hadn’t closed the books, didn’t have a chance – I mean I understand the return part, but maybe help me understand some of the detail that led to such a kind of a different result. And further, what does that mean in terms of Q4? I realize you said $20 million in savings on SG&A and then what about – how low does the level of the river get on cost as we look at ’09?
Tim Martin
Okay. That’s kind of a multi-part question and I’ll take the first part. In looking at sort of the change versus what we had thought we were guiding to, I’m sure you can appreciate not only is this a very challenging and extraordinarily unique environment to operate a business in, but it’s also quite frankly a very challenging environment to forecast business in. As Dan said we had three sort of major areas where we had discrepancies versus our guidance. One was in sales returns coming in substantially better than we had anticipated and seeing.
I think that’s attributable to quality and the product acceptance. The second answer is we had better results in our retail labor. And I think on that front we need to be able to tighten up our process to be able to look at that information. We are chasing cost savings quite in an unprecedented manner as an organization. Every employee in this company is dedicated to saving money and delivering on cost savings initiatives. And we need to tighten up our forecast process to be able to pick up on that.
And I think overall, what this shows is that in [highlating] the challenge of forecasting in this environment is a large part of the reason why we haven’t given guidance for Q4. It’s just the unbelievable uncertainty. We have a significant effort underway under cost savings and trying to stay on top of that. We need to sharpen up our pencils and be a little bit more proactive there, but also the uncertainties in the environment are quite challenging.
I think to look at the fourth quarter, what we talked about is a $20 million SG&A savings versus the prior year. We’ve given you past guidance on where we think we’re going to end up with that perspective and where we think total inventories are going to go. Beyond that, we do believe there are still incremental savings for 2009 and are comfortable that we will deliver those as well as we are in the middle of our budgeting process at this point in time. I think Dan had some thought as well.
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