Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Omar Saad - Credit Suisse
Omar Saad - Credit Suisse
Very nice quarter, could you go into a little bit more detail and help explain the mechanics of some of the supply chain initiatives and how you expect that to work out, use some anecdotes to explain how that’s going to translate to higher gross margin. Obviously the gross margin this quarter was phenomenal.
Tracey Travis
Thanks, yes, there are a number of different initiatives and we actually started talking about these a little bit last year at a very high level, calling out the fact that we were working on supply chain initiatives. Those being really trying to consolidate our orders overseas at the factory base so we could benefit from pooling of shipments and therefore saving freight savings.
We talked about the fact that we are trying to in our planning calendar and have been successful at improving the planning calendar which allows us to receive goods from factories earlier and [boat] those goods as opposed to shipping those goods and a variety of other things that have really manifested themselves in terms of benefits this year as it relates to margin.
So, with the evolution of our brand and the fact that we now control more of our brands, this really has been beneficial to us in terms of pooling of resources, pooling of inventory and allowing us to realize some good savings in this area.
Roger Farah
I think I’m going to add to Tracey’s remarks because I think its an important issue and it obviously comes through the P&L in a variety of ways here, as Tracey said we have a very complicated manufacturing and global distribution system that allows us to manufacture product in 45 countries and turn around and ship it to 80 countries and so the classic thought around distribution and logistics I don’t think has really been looked at the way we’ve developed.
And if you look at a three month delivery window for fall, so that’s usually June, July and August, usually that first month which is the heaviest piece is historically air shipped because you have the shortest time from design to manufacturing and then the ratio of air to boat turns a little bit different in the second month and the third month.
We set up really what’s an air traffic controller concept in Asia so that at the last minute we can decide depending on need and depending on what stage of manufacturing we’re in, whether to get the savings off of boat or whether air shipments are needed and it allowed us to shave dramatic costs out of the transit line of the margin.
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