Question-and-Answer Session
Operator
(Operator Instructions) The first question comes from the line of Robby Ohmes – Bank of America Merrill Lynch.
Robby Ohmes – Bank of America Merrill Lynch
When you think about the inventory reductions you achieved in the fourth quarter and then also looking at further inventory reductions for 2009 can you give us more detail on how you are managing that from a couple of perspectives? One would be sort of hard lines versus apparel and footwear. Also from the price point perspective are you doing more at lower price points? You mentioned this value approach in your release this morning. Then maybe put that in the context of brands, focusing on the more expensive brands like Nike versus bringing in lower cost brands. Then also related to that inventory question is how are you thinking about out of stock levels in this environment? I know that historically in better economic environments you always did a great job of being in stock. I know that is a lot of questions but all revolving around inventory management.
Joe Schmidt
First of all on the inventory level we really look at inventory across the board as to where we could rationalize our inventory and our SKU’s. Our merchandising group and our planning group all did a great job of identifying where inventory wasn’t needed, SKU’s that could be taken out of the mix and they really did a terrific job. It was across all categories of merchandise. A couple of categories that I would say would be an exception to that would be the firearms and ammunition business as that business has been very, very good. We are actually struggling to keep up with inventory in those categories because of the business being as robust as it has been.
As far as brands go we didn’t do anything to reduce in any meaningful way our primary brands of Nike, Under Armour, Titlist, Callaway, those types of brands. Those brands are still very effective in the store and we are very pleased with those. It was some of the tertiary brands that just didn’t have the traction that we scaled back. As far as out of stocks go our merchandising group and our planning and allocation group have done a terrific job of making sure that we are in stock in those key items. Have there been a few mistakes here and there? Yes. When you cut the inventory to this level there can be a few out of stocks but we have gotten that?they were fewer than we would have anticipated with inventory coming down this level and we are really in very, very good shape on those key items and we don’t see any issues there.
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