Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Jeffrey Stein - Soleil-Stein Research.
Jeffrey Stein - Soleil-Stein Research
Could you talk a little bit about your expectations for SG&A in dollars in the fourth quarter? It looks to me like you did a pretty good job of controlling your expenses even with the incremental training costs, so with that behind you would you expect SG&A, in dollars, to be flat or possibly even down in the fourth quarter?
James Kerr
We won’t speak specifically to SG&A dollars. At this point, though, don’t expect SG&A leverage to be positive. With negative same store sales expected in Q4, as well as we are starting to cycle savings initiatives from last year, if you look back to last year in Q4 we had a 130 basis point improvement in SG&A so we will continue to do the things we have been doing all year to manage expenses and do the best we can but we are going to be up against a challenge with negative sales.
Jeffrey Stein - Soleil-Stein Research
Just based upon the weighting of the fourth quarter comp, you’re estimating that the full year will be relatively flat, so what would that imply for fourth quarter comps?
James Kerr
It implies fourth quarter comps will be negative and that they would be more negative than the 1.5 that we saw in Q3. You get a range depending on whether we are slightly positive or slightly negative, but at this point we expect Q4 to be negative comps and worse than the 1.5 that we had in Q3.
Jeffrey Stein - Soleil-Stein Research
So would 3 to 4 be a reasonable expectation to get you to zero? Roughly.
James Kerr
You can do the math and get to a number that you think is reasonable. Like I said, depending on whether we are slightly positive or slightly negative, you get to a slightly different range.
Jeffrey Stein - Soleil-Stein Research
Yesterday one of your competitors discussed the fact that they believe that the pricing environment was rational and I’m just wondering if you agree with that statement.
Darrell Webb
I would say that the promotional and pricing environment is rational but it is a bit more promotional than a year ago. We are seeing peers and competitors take deeper and earlier discounts on seasonal goods. We have seen a little more couponing activity this year with a little more aggressive discounts on those coupons. So rational but certainly a bit more promotional than last year.
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