Question-and-Answer Session
Operator
I certainly can. Thank you. (Operator Instructions) Your first question comes from Liz Dunn - Thomas Weisel Partners.
Liz Dunn - Thomas Weisel Partners
I guess just a little bit more clarification on the retail business. What was your gross margin experience in the quarter? I mean obviously it was down but if you could share the magnitude. And what’s been your philosophy on how to manage that business markdowns in the retail business both full price and the factory business? Thanks.
Roger Farah
Liz, this is obviously Roger. We said on the script that the trend going into third quarter was plus 5 comp and obviously the trend in the third quarter itself was down. So the slowdown in consumer spending was quite rapid in the later part of September and then through the balance of the holiday shopping.
I think what we would say to that is at the highest level of price point as you certainly saw with other retailers, the customer was the most reluctant. And then as you worked down through different merchandise price points and different product categories some of that hesitancy was moderated.
So as we looked at the October, November, December period our belief is that there are customers still looking for our products at full price. And so we attempted to manage through the inventory challenges and the sell through challenges by an item and classification level, as we worked through each of the formats whether it’s Ralph Lauren Stores, the factory stores, or whether it’s RalphLauren.com.
The other fact to that is embedded in those numbers was a dramatic fall off in the international shopper coming into gateway cities against last year’s very high amount of international shoppers. So as we were dealing with both the domestic fall off and the tourist fall off, I think we tried to manage the margins; the markdown cadence appropriately to end the quarter clean which is what we’ve done.
So obviously merchandise margins were down as a function of more markdowns. But somewhat less than they might have been if we didn’t have the full [pull out] of supply chain initiatives that we had in place to mitigate some of it. So with that kind of deceleration in sales and 18 point trend change, I think there’s no doubt you end up with more merchandise than the customer wants and that’s what we had to clear through before the end of the quarter.
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