Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Robert Drbul - Barclays Capital
Robert Drbul - Barclays Capital
Can you address the timing of your decision to initiate a dividend, why did you choose to do this today and I guess the second question that I have is, when you talk about the pricing strategy that you’re undertaking, do you believe you’ve found the appropriate level with the SKUs and the timing of it and is the part that you’re talking about, is that the product that will be designed for those price points between $200 and $300?
Lew Frankfort
Let me take your second question first, the answer is yes to both. We understand through our pilots and our consumer research that there is a sweet spot in $200 to $300 range that, where we have been under represented in the last year or two and it is that area which we’re looking to distort by rebalancing our assortment and putting at least 50% of our SKUs in handbags at those price points and what we understand from consumers, in addition to great product they want exceptional value and they need to really feel when they pick up the product in addition to feeling great about it, that it represents a great value.
From our testing and our experience we believe that that is the right place to be. In terms of our FY10 starting with Poppy, we have engineered our collections into these price points and we’re excited to see Poppy’s arrival at the end of June and we do believe its going to be a very successful introduction.
I might add one other thing, we’re in the midst of a pilot with Poppy and its actually running at about 16% in pilot which we feel really good about because its one of the highest results we’ve achieved in a pilot.
Getting to the timing of the dividend, we thought that there was no better time then during a period of great economic uncertainty to send a clear and strong signal to investors that our business model is healthy, vibrant, and we feel excellent about our prospects for the future.
Michael Devine
If I could just build on Lew’s comment too for the financial modelers out there around the price points, because it may seem a bit counterintuitive, but this ultimately is designed to improve productivity. What we’ve seen over recent quarters as the consumer spending has been challenged, is our handbag penetration has declined over time and as a result its negatively impacted average ticket.
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