Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Jeff Black - Barclays Capital.
Jeff Black - Barclays Capital
On the expense initiative can you help us out with how to think about occupancy deleverage in the back half of the year. are you still going to delever on occupancy so we see maybe the 2 comp?
And could you give us a quick update on Home, what we see there? Is there any progress? It looks like the last quarter was very tough in the home business.
Carol M. Meyrowitz
I’m going to take it first. I’ll talk to you a little bit about Homes. We definitely had a tough Homes business in the fourth quarter and I think we have made a lot of changes in the strategy going forward and we are already seeing some very positive signs.
I will talk to you generally about HomeGoods. We have really changed up our strategy there. Obviously across all divisions everybody is looking at cost reduction. But more importantly, we think we’ve brought tremendous value into our home business, especially in HomeGoods and HomeSense. Much better value than we had in the past. Much leaner, we have a completely different strategy in terms of freshness, a new marketing campaign and I can you that we are really seeing a change and I’m very excited about going into February in terms of the home businesses.
We are also seeing where, you know the way it is in HomeGoods, and Linens and Things has closed, we are seeing some very substantial comp increases in those stores. So again, we think the landscape is going to change and I think I’m feeling a lot better about our home business going into this year.
Jeffrey G. Naylor
As to your question on the buying and occupancy deleverage, clearly we would anticipate buying and occupancy deleverage in the first quarter on a minus 2 to a minus 4 comp. and that’s partially offset by increased merchandise margins. But we are seeing buying and occupancy deleverage. It’s really hard, there are a number cost elements in buying and occupancy expense which are fixed on a short-term basis, so it’s awfully difficult to get leverage when you have a negative comp.
In terms of the back half, it all depends on the comp. I would estimate we would need about somewhere a 2% to 3% comp to leverage buying and occupancy. We will leverage SG&A at a much, much lower comp, given some of the expense cuts that we have made.
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