Question-and-Answer Session
Operator
(Operator Instructions) Our first question is from Brian J. Tunick – JP Morgan.
Brian J. Tunick – JP Morgan
Maybe George share with us your thoughts about what’s the right amount of time that this BOGO event will go on in the first half of the year just so that we understand and then maybe Neill give us a little more color on the low single digit decrease in the occupancy side, what’s happening there and should we expect that to continue in the back half?
George A. Zimmer
The BOGO event, Brian, is being reconstituted so that it can run indefinitely and what I mean by that is that we’re making 30 second commercials which have a nice story with the BOGO message being just a part of the overall message. So we’re actually planning on running this on a regular basis.
Neill P. Davis
Brian, as to your question on occupancy we do expect a continuation of occupancy dollars to decline in the back half but just remember that as we get into fourth quarter we’ll be beginning to anniversary some of our initiatives to lower that cost.
Brian J. Tunick – JP Morgan
So if you guys become a BOGO everyday kind of business obviously that should have a permanent impairment on the merchandise margins. Is that how we should think about it or are you buying different now?
George A. Zimmer
It’s too early to say I would say. We’re anticipating that there will be some merchandise margin degradation but it’s all a function of volume and right now we’re hopeful.
Operator
Our next question is from Richard E. Jaffe – Stifel Nicolaus.
Richard E. Jaffe – Stifel Nicolaus
I’m wondering what your visibility is on two levels, one is the guy coming back in to refresh his wardrobe and obviously you’re getting some of that business through the BOGO and then visibility into the second quarter and the wedding reservations, I guess they’d be called, for tuxedos, how you think that business could play out, the tuxedo inventories up significantly, do you expect the tuxedo rentals to be up a commiserate amount?
George A. Zimmer
We are continuing to run tuxedo rental commercials on television. Neill do you have the exact numbers on advance reservations?
Neill P. Davis
I do but the numbers continue to build week to week, month to month. Richard what I would suggest for you is that the 7% to 9% increase in our comps for the rentals business for the first half underlying that is some visibility into the number and we feel very confident in that at this junction.
- To read the full transcript on Seeking Alpha, click here »
