Question-and-Answer Session
Operator
(Operator Instructions) The first question comes from the line of Jeff Stein - Soleil Securities.
Jeff Stein - Soleil Securities
First of all how should we think about managing the average unit retail at the Payless division going into the new year given the fact that the consumer has been certainly more budget minded?
Matthew Rubel
Let me kind of walk you through it and sequence you into it. I think you will see continued increase actually in average price out the door. That is partially due to kind of increased costs that are flowing through, product costs that are flowing through from December and January and February receipts. What you will see is that we are actually; this is a non-promotional environment meaning you are not as promotional in the first quarter as you are kind of at the end of the fourth quarter and people’s inventories are much more managed so actually relative to the competition we are seeing that is a very positive trend. As we kind of get into second quarter and third quarter we are going to slow the price increases because number one we don’t have to based on what is happening in terms of our supply chain and costs coming out of China. In the second and third quarter as you get into second quarter and into third quarter you will start to see us gaining leverage again on our cost of goods and our margins.
Jeff Stein - Soleil Securities
Related to cost of goods, should we actually see lower cost of goods year-over-year or just lower relative to third and fourth quarter of last year? Should we expect to see SG&A or can you hold your SG&A dollars flat or bring them down year-over-year for the full year?
Douglas Treff
We don’t provide specific guidance on the SG&A. Certainly given that SG&A on a comparable basis was down $16 million and the rate was improved year-over-year is our intent to continue to drive SG&A expenses lower in a way that will improve the returns on our business and expand our margins longer term. Going back to cost of goods sold, I would reiterate some of the comments we made that we anticipate seeing that prices from China will continue to increase in the first quarter year-over-year. Less so in the second quarter and naturally be favorable in the third and fourth quarter.
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