Question-and-Answer Session
Operator
(Operator instructions) We will take our first question from Derek Leckow with Barrington Research.
Derek Leckow – Barrington Research
Thank you. Good morning
Martin Hanaka
Good morning.
Derek Leckow – Barrington Research
I just had a question on direct business being down 24.8%. I understand you guys did reduce circulation. Is the percentage decrease in costs in the direct business about the same?
Martin Hanaka
No, our cost savings is greater than that, and the reinvestment in retail paid off and into the Web, search engine, key word purchases and so forth. So if you look at our business, Derek, 79% of it has basically been retail. Retail has been getting just a little over 50% of the spent. We feel our share of voice in many markets, and in certain times of the year it’s been inadequate. And when we spend more we look really hard at clubmaking and catalog and the returns there and it’s a better decision for us to reinvest. So we would expect to continue this throughout the year. We are managing it closely. But our inspection of our first quarter results says this is the right path to follow.
Derek Leckow – Barrington Research
What I was trying to get at was when you’ve reduced the catalog spend, there is probably a corresponding impact on store comps because you are shipping catalogs to people presumably who are also near a store. And so I am trying to gauge, is this the new level of sales within the direct channel? Is this kind of what you are thinking it will remain or –?
Martin Hanaka
No. We don’t think it will necessarily remain at this level because we still are mailing into the catalog markets, which are not a complete overlap with our retail trade areas. So it’s not a 100% overlap. There are many markets where done [ph] catalog where there are no retail stores. We are going to keep communicating with those guests all throughout the year. And the retail guests who may have got the catalog are definitely going to be getting some type of mail or communication from us. In fact, over the course of the year, we expect that we will increase our retail circulation, let’s put it that way, by 50%.
Derek Leckow – Barrington Research
So that circulation goes up quite a bit –
Martin Hanaka
It goes up quite a bit.
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