Question-and-Answer Session
Operator
Thank you. (Operator Instructions) Your first question comes from Paul Lejuez - Credit Suisse.
Paul Lejuez - Credit Suisse
Just wondering, in terms of inventory it seems like you’ve been very conservative with your inventory management but there is still significant gross margin pressure. And I’m wondering if it’s a function of having too much of the wrong merchandise or not enough of the right merchandise. And then second, Gary, I’m just wondering if you have any thoughts about how you merchandise your core versus value stores in terms of the mix between branded and private label merchandise. Thanks.
Gary H. Schoenfeld
Okay. To the first part of your question, you know it’s not a simple answer in terms of right versus wrong merchandise per se. I think its been talked about on previous calls. There are certainly certain categories in the second quarter that significantly under performed around shorts and swim and I think we’re doing some of the right things to address those opportunities as we look ahead to those categories which are important for us as we look ahead to 2010.
As to the second part of your question in terms of merchandising between core and value, I think we’re doing a better job and will continue to do a better job as I say starting with the view of who is our customer and what’s different about a customer shopping in the core stores and the value stores. I can’t tell you that we have nailed all of that discussion as of yet, but I think that is a important component as we look at that store group. I feel very good about the direction we’re headed in our product assortments as it relates to core. Similarly I think that with subject to some fine tuning I think the value piece is getting better. But as I said in my comments, we’re looking at all aspects of the value store execution so I think in subsequent calls probably be in a better position to comment more specifically on that.
Paul Lejuez - Credit Suisse
But does your gut feel that branded merchandise is going to become a larger or smaller piece of the mix in core and value?
Gary H. Schoenfeld
You know I think if you could sense from my comments, I think that certainly from a projection standpoint we need to make the brands the bigger part of what we do in PacSun and I think as a critical point of difference. I think it’s too soon for me to say percentage wise how that might affect the business. I wouldn’t say I’m looking for a dramatic shift one way or the other, because I like what I see on the horizon in our proprietary products but at the same time I see opportunities in the branded piece. So I’m less focused on the percentage of sharing between brands and proprietary and I’d say the same thing internally, you know the mix between girls and guys, I want to grow all of it.
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