Question-and-Answer Session
Operator
(Operator Instructions) We’ll take our first question from Matt Hickey with Janco Partners.
Matt Hickey - Janco Partners
Thanks for taking my questions. Two -- on the -- you guys have started a digital initiative and you have hired Chris Petrovich. I was just curious if you could give us some more color on what you guys are doing there.
And then on the used side, Paul I think you said that the used margin quota today is back up to the 48% to 50% range, and I’m curious on the low-end of your guidance for Q3 if you are assuming a sub of 48% gross margin from used.
Daniel A. DeMatteo
Okay, two questions here -- I’ll have Tony Bartel take the first one. Tony.
Tony D. Bartel
Chris is obviously a seasoned veteran in terms of the digital media space and we understand that the gaming arena is growing in new areas and much of that growth is being driven on the West Coast, so we opened an office with Chris leading that office. He wanted to be close to the growth in innovation and investment that is happening in this digital space. Our primary focus and Chris’ primary focus is going to be on using our vast distribution and education channel that we have in brick and mortar to become the world’s largest digital aggregator.
Daniel A. DeMatteo
Thanks, Tony. And then Dave, do you want to take the question on the margin rate?
David W. Carlson
Sure. Our third quarter guidance actually has our used margins at the 40% to 50% at the high-end and it does assume that we use some promotional activities to drive the used business at the low-end, so as always, our used business runs in the 48% to 50% but if we decide that we need to drive traffic, it’s a very good traffic driver and so we could use it in the third quarter but we haven’t made that decision yet.
Matt Hickey - Janco Partners
Okay. Thanks, guys.
Operator
We’ll take our next question from David Magee with Suntrust Robinson Humphrey.
David Magee - Suntrust Robinson Humphrey
Good morning. Could you talk a little bit about the international performance? That’s question one. And then the second question I have is just what are your thoughts about the impact of other digital downloads for smartphones, whether games or apps, whether that’s having some kind of a [inaudible] impact on the [sector] that we haven’t really measured yet.
- To read the full transcript on Seeking Alpha, click here »
