Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Gregory Badishkanian - Citigroup
Gregory Badishkanian - Citigroup
Just a few questions, first is over the last month or two have you noticed any changes in terms of consumer demand from either new customers reactivations and also marketing effectiveness then maybe you saw at the beginning of the quarter or even towards the end of last year.
Joe Redling
We saw, as we walked into the Easter period we had what we would typically call an improvement in demand and volume. It was below what we expected for the period. Last year we saw a much bigger ramp up even though Easter was earlier. So we saw some efficiency there but nothing that would indicate that there is a improved environment for consumer spending.
So we’ve been managing our marketing spend accordingly, again as we always do focusing on profitability but kind of the only change coming from March to April was really a seasonal increase in volume that you would typically see. So we really couldn’t isolate any improvements in consumer sentiment.
Gregory Badishkanian - Citigroup
And also looking at the cost side of the business, in terms of your cost of goods sold, commodity costs have come down, you also have contracts so I’m just wondering when would you expect to see sort of the big benefits from the cost of goods sold due to the declining commodity cost deflation.
David Clark
I think a couple of things, first of all we did announce that we renegotiated our UPS contract in the first quarter of this year and we are starting to see the benefits of that contract savings. The food costs really go on schedule of when we’re actually doing our buying so we will probably start to see some food cost improvement in the second half of the year, but obviously the key savings are achieved when we do our year end build in anticipation of the seasonal first quarter lift.
So we’re projecting some improvement but some of the key initiatives in the supply chain are continued efforts around food and packaging but also all the efforts around fulfillment that I mentioned earlier on. And as I said we have an RFP process going on for our fulfillment services right now.
Gregory Badishkanian - Citigroup
Also just on new kitchen, maybe a little bit on how you think that’s doing and potential to kind of roll that out outside of New York City.
- To read the full transcript on Seeking Alpha, click here »
