Question-and-Answer Session
Operator
(Operator instructions) We’ll have our first question from Paul Lejuez from Credit Suisse.
Tracy Kogan – Credit Suisse
Thanks. It’s Tracy Kogan filling in for Paul. Just a couple questions. First on the gross margin, if you could talk a little bit more about the components there. I was surprised given that you said there was a slowdown in firearms, surprised to see that the gross margin wasn’t there. So maybe can you give us more color on those other categories with some of that more promotional driven than you expected in those higher margin categories? And the second question is on SG&A. Can you just talk about what the big areas -- I know you’ve talked about some of them. What are the big areas remaining that you can take expenses out? And what’s that looking like for the fourth quarter as you go up against the big decrease last year? Thanks.
Tommy Millner
Well, great. Good morning. First, your question on merchandise margins, as you know, for well over a year, as we recognized strength in guns and ammunitions, those are lower margin categories, which naturally had a suppressing effect on margin and we saw that continue into the third quarter. We were also a little more promotional in the third quarter in our efforts to improve the quality of our inventory. And that was also an impact on gross margin in the quarter, as we noted.
Tracy Kogan – Credit Suisse
Could you say which categories you were more promotional in? Was it one specific category or was it across the board?
Tommy Millner
In soft goods.
Tracy Kogan – Credit Suisse
Okay.
Tommy Millner
To your question on SG&A, as I said in our prior call, I’m a believer in continuous improvement as is our organization. So, as a matter of philosophy, I never accept the fact that you find all the savings in a company. I continue to believe that we have opportunities to improve direct marketing cost, improve labor utilization, do more with less, and be more efficient in advertising and promotions. So, as I look across the enterprise, I think we have a long runway ahead of us for continuous improvement to lower cost.
Tracy Kogan – Credit Suisse
And one last question. What was the impairment charge? You had a small impairment charge. What was that related to?
Ralph Castner
Well, it was just -- we actually had a contract to sell our plane in the quarter. It’s the loss in the sale of a plane.
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