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Operator
At this time I would like to welcome everyone to the Abercrombie & Fitch first quarter earnings conference call. (CALLER INSTRUCTIONS)
Thank you, Mr. Lennox [phonetic] you may begin your conference.
THOMAS LENNOX
Good day, and welcome to our first quarter conference call.
After the market closed, we emailed to your offices the first quarter sales and earnings release, balance sheet, income statement, and an updated financial history.
If you haven’t received these materials, please call Courtney Depp [phonetic] in [indiscernible] 614 283 6751, and she will forward them to you.
This call is being taped, it can be replayed by dialing 1800 642 1687; you will need to reference the conference ID number, 2426039 to access the replay.
You may also access the replay through the internet at www.abercrombie.com.
With me today are Mike Jeffries, our Chairman and CEO, Seth Johnson, Executive Vice President and COO, and Wes McDonald, Vice President and CFO.
After Seth reviews our financial results, Mike will have some comments, and then we’ll take your questions.
Before we begin I remind you that any forward-looking statements we may make today are subject to the Safe Harbor Statement [indiscernible] and our SEC filings, [indiscernible].
SETH JOHNSON
Good afternoon, we are pleased to report our 39th consecutive quarter of record earnings.
Total sales were 312.8 million, up 19 percent over last year’s first quarter sales of 263.7 million.
Comp store sales for the quarter decreased 6 percent.
By merchandise classification, comps for the quarter were as follows.
In the adult business, women’s comps were down in the low single digits, in men’s comps decreased in the high single digits.
The kids comp was slightly worse than the adult business, but improved relative to adults over the course of the quarter.
As we expected, girl’s comps are much stronger than boys and were flat for the quarter.
By region our comps were strongest in the Northeast and on the West Coast, and weakest in the Mid West.
The gross income rate for the quarter was 36.6 percent, down 50 basis points from last year’s rate of 37.1 percent.
The decrease in margin rates for the quarter was primarily due to an increase in buying and occupancy costs as a percent of sales.
We were unable to leverage these costs due to the comp store sales decrease.
The mark-down rate was also slightly higher for the quarter, due to the impact of our promotional strategies.
Average selling price for the quarter was 8 percent lower than last year in the adult business, and 12 percent lower in kids.
Initial mark-up for the quarter was higher than last year for all three of our businesses.
Continued improvements in sourcing have been critical in protecting our gross margin rate in the face of marked promotional activities.
We are especially pleased with the progress we made in sourcing Hollister [phonetic], and are on track with our plan to be at a similar initial mark-up to the A&F business in 2003.
The other major factor in protecting margins for the quarter was our continued tight control of inventory.
We were very cautious with inventory investment and ended the quarter with inventories down 19 percent per square foot, versus last year at cost.
This level is below our previous guidance due to sales and mark-downs exceeding plan in April, as well as the timing difference where some April deliveries slipped into May.
Our inventory plans for the balance of the season remain unchanged, and we expect to build inventories per square foot over the course of the second quarter to a level similar to or slightly up to last year.
The first quarter SG&A rate was 24.8 percent, a 10 basis point improvement versus last year’s 24.9 percent rate.
Our favorable SG&A performance reflect the continuing success of major expense control initiatives we have implemented over the past 2 years.
During the first quarter we reduced our store payroll hours by 7 percent per average Abercrombie & Fitch adult store, and realized savings in part-time hourly wage rates of one percent versus last year.
Reduction in hours in our kids stores for the quarter was 18 percent per average store, and we achieved the same rate reduction as in the adult stores.
Home office costs for the quarter were lower than last year as a percent of sale.
In the Home office we continue to add to headcount very judiciously and our payroll as a percent of sales was 20 basis points less than last year.
Distribution costs for the quarter were also below last year.
We continue to be extremely please with the performance of our new distribution center.
Productivity during the first quarter measured in units processed per labor hour, was over 50 percent higher than we achieved last year.
For the quarter we processed 50 percent more units than last year, with fewer labor hours.
Last year’s productivity was somewhat hindered by our move into our new facility last February, and we expect smaller productivity improvement for the balance of the year.
During the first quarter we successfully completed the transition to in-house fulfillment of our entire direct business.
Previously fulfillment for the adult A&F catalogue and e-commerce business was handled by a third party.
With e-commerce and retail inventory located and processed at our own distribution center, we will be able to fill orders more efficiently.
As a result we expect to see continued improvement in our costs per order and back-order rate.
For the first quarter our fulfillment costs per order were 7 percent below last year.
Net income for the quarter increased 13 percent, from 20.6 million to 23.3 million.
First quarter earnings per share on a fully diluted basis were 23 cents, versus 20 cents last year, an increase of 15 percent.
We opened 4 adult stores, 5 kids, and 10 Hollister stores during the first quarter, giving us a total of 311 adult stores, 153 kids stores, and 43 Hollister stores.
We closed 3 stores during the quarter, one adult store, one adult outlet and one Hollister outlet.
Both outlets were in Bellevue Center in Nashville Tennessee, a declining center where our lease had previously expired.
The adult store closing was at South Square [phonetic] Mall in Rally Durham, North Carolina.
This center has been effectively replaced by the New Streets at South Point Mall, and we exited South Square with no liability.
For fiscal 2002 we now plan to open 38 adult stores, 20 kids stores and 60 Hollister stores, a total of 118 stores.
Total square footage will grow 20 percent over last year.
We have reduced our square footage growth for this year slightly, versus our previous projection.
This [indiscernible] to cover a square footage at around a 20 percent annual rate, while continuing to demand very attractive real estate economics.
We continue to be pleased with the sales productivity generated by our new stores.
During the quarter, Abercrombie & Fitch adult stores opened during the past 12 months generated 90 percent of the sales per square foot of the existing store base.
This relationship has been fairly consistent over the past several years.
For Fiscal 2002 our planned capital expenditures will be between 95 and 105 million.
The vast majority of these expenditures relate to new store construction.
Although we are pleased with the first quarter profit results, we still have not seen a meaningful pickup in consumer spending.
We will continue to operate the business cautiously until we see evidence of an improved environment.
At this point we are comfortable in increasing our earnings guidance for the second quarter to 26 cents per diluted share, from our previous guidance of 24 cents per share.
Now Mike will talk about our results from a merchandising perspective.
MICHAEL JEFFRIES
Good afternoon.
Although our comp trend improved somewhat in the quarter, the first quarter in many ways was a continuation of the fourth quarter trend.
The economy remains weak, and all the competitors have become somewhat more disciplined in their inventory management.
The retail environment remains quite promotional.
Accordingly, our approach during this period has not changed.
We have successfully balanced inventories and expense management with selected brand consistent promotions to protect the bottom line.
I am very pleased -- in this environment I’m very please to have achieved 15 percent earnings growth for the first quarter.
Our women’s business continues to perform well.
We had very strong increases in shirts, knits, skits and denim.
Our accessories, underwear and swimwear business also performed well.
The business has momentum and should continue to comp better than men’s for the foreseeable future.
The fashion focus continues to be bare feminine and sexy.
Peasant tops, lace-ups and feminine keys continue to drive the business.
I am particularly pleased with the wovens business because our merchants reacted very early to the customer interest in the romantic Bohemian look, and we have a very strong assortment in this area.
In bottoms, denim skirts and active shorts are performing well.
I continue to be excited about our opportunity in lingerie and accessories.
During the first quarter our men’s business showed some improvement, although the gap between men’s and women’s has narrowed the business continues to be very difficult, and there still is no trend industry-wide.
We are seeing success in knit tops with our polo assortment, and in sleeveless tops.
Active shorts continue to perform well and our fresh fun assortment in underwear is responding favorably.
Although the men’s bottoms business overall remains difficult, the men’s cargo short is one of the biggest selling items in the business.
Out kids businesses performed very similar to the adult business, with girls showing solid improvement.
Girls was flat for the quarter with strength in denims, skirts, knits and accessories.
We are also pleased with the initial read of our girl’s personal care test.
Denim continues to sell well in boys.
Like the adult business we expect girls to outperform boys through the balance of summer and into fall.
Hollister continues to perform very well.
For the first quarter, sales per square foot in the Hollister stores were approximately 80 percent of the Abercrombie & Fitch adult stores in the same mall.
Hollister’s productivity remains consistent, without evidence of cannibalizing the A&F stores in the same centers.
Girls continues to be over 60 percent of the Hollister business.
Our e-commerce business continues to become a larger part of our business.
Internet sales in both the kids and adult businesses grew by over 60 percent during the first quarter, as compared to last year.
Overall, I’m enthusiastic about our prospects for summer.
I believe our stores look great, the fashion is right, and our organization has never been stronger.
Looking forward, our inventory is invested where we have trend, in women’s and girls.
We will continue to maintain a disciplined approach to managing the business, and we will continue to protect the two most critical components of our business, our brand and the bottom line.
Now we are available to take your questions.
Please limit yourself to one question so that we can speak with as many callers as possible.
After everyone has had a chance we will be happy to take follow-up questions.
Operator
(CALLER INSTRUCTIONS) Your first question comes from Dana Cohen of Banc of America.
DANA COHEN
Obviously the last two years -- I mean comps continue to be tough.
What do you see -- what do you think will be the engine to get the comps going, and as you now look into Q2 and into the back half, what are your latest thoughts on the business?
Do you think it’s just macro, is it competitive, is it fashion -- give us your latest thoughts here of what’s going to get the business going?
COMPANY REPRESENTATIVE
I honestly believe that we are very right for our target customer.
I don’t believe we’re missing business in any classification at this moment.
I think we’re operating very efficiently, we’re not chasing business at low margin, we are running a high margin business that’s related to the demand out there.
And I believe that as the economy strengthens our business will strengthen.
I don’t this it’s going to take any miraculous turnabout in any classifications, honestly.
I can’t tell you that I think that we’re missing business by classification, and I think the point that we are not chasing low margin promotional business is a very important part of our strategy, and one that says that when things get better the business will improve.
DANA COHEN
And your thoughts on the men’s business?
COMPANY REPRESENTATIVE
I think the men’s business is, as you know, difficult every place.
I don’t believe we’re missing anything in the business.
I think that’s a macro issue to, and I think as that business comes back we’ll come back with it.
The men’s business has got relatively better to the women’s over the last 3 months, and I think we will continue to improve, I think that’s again a macro issue.
DANA COHEN
Great, thanks.
Operator
Your next question comes from Bob Buchanan of A G Edwards.
ROBERT BUCHANAN
Good afternoon.
I just want to ask first of all for an update, Mike, on Hollister?
MICHAEL JEFFRIES
I’m really very pleased with Hollister, as I noted, our productivity is high, we’re opening new stores at that level of productivity.
I think as a brand, and I think many of you have been hearing this, it is already a widely accepted brand in the communities where we operate, and when we’re opening we come with some prior knowledge, which is very interesting to me.
The business is over 60 percent women’s, has opened that way and stayed that way, and I think that’s where it should be and I think that’s exactly where Abercrombie & Fitch and Little Abercrombie are going as well.
I’m very pleased with the business.
Obviously we’re pleased with where it’s going, because we’re opening 60 stores this year, and I see just better and better things happening in that business as we go forward.
ROBERT BUCHANAN
Mike, just one other question on the main business.
Last year you came in maybe a little bit early in Back to School with some of the cool weather products, so I just wanted [multiple speakers] -- What are you thinking this year on [indiscernible]
MICHAEL JEFFRIES
Well I’m really invested in Wear Now products, so expect some kind of a blizzard the third week of July.
We’ve really worked hard to be in Wear Now, but forward product, and I think it will pay off.
ROBERT BUCHANAN
Thanks.
Operator
Your next question comes from Jeff Klinefelter of US Bancorp Piper Jaffray
JEFFREY KLINEFELTER
First of all Mike, could you share a little bit on the trends of accessories, intimate -- I know you’ve talked about two more in the past.
I mean your basis, what percent of the business has that come from and to -- so what are the trends, how big is it becoming?
And then a quick follow-up on Hollister?
MICHAEL JEFFRIES
I think Seth can give us some percentage here.
Women’s accessories, it’s about 5 percent of the business now.
We anticipate taking it to 10.
Men’s accessories is about 7 percent, and I don’t anticipate that that figure is going to grow dramatically.
The accessories opportunity is in women’s.
We are going after that aggressively, we’re going after very aggressive belt business for Back to School.
We’re going after our version of a tote business, and we think we have big opportunities there.
The intimate apparel business is a very small one for us, we are currently really going after underwear and sleepwear.
The underwear business is there and it seems to offer us -- it will us the biggest growth for third quarter.
The sleepwear business will offer us the biggest opportunity for growth fourth quarter.
But I think the most significant figure is that we’re looking to move women’s accessories from 5 percent to 10 percent of the business over some period of time.
The second part of the question was, Hollister?
JEFFREY KLINEFELTER
Yes, on Hollister, just out of curiosity, one kind of clerical questions, when will you -- or will you report comps for Hollister separately from the chain?
And then secondly, in the last year, as you’ve had success and a strong reception in terms of the brand, any changes in terms of the product assortment, in terms of how you feel you’re positioned?
Are your price points appropriate, etc?
MICHAEL JEFFRIES
Okay, let Seth answer the question about the comps.
SETH JOHNSON
I think our intent would be to start announcing that when it comes a significant part of the business, and the Hollister comp really makes a significant impact on the total.
At this point I don’t know exactly when that will be, it will depend on how fast we continue to rollout the Hollister stores.
MICHAEL JEFFRIES
The second part of the question in terms of positioning of Hollister, I think we’re exactly where we need to be in terms of retail prices, which are roughly 70 percent of Abercrombie & Fitch, and I think the most exciting news that we revealed today is that for 2003 we will be on track to have an initial mark-up percentage that’s roughly that of Abercrombie & Fitch, so the profit model would look closer to A&F’s.
I think the change in merchandise that you will see is just faster fashion.
We’re able to sell through huge quantities of items very quickly in Hollister, and we’re looking -- as we’ve talked about in A&F for faster flow, which has resulted -- which we’ve seen in the women’s business has resulted in success.
Even faster flow of new items in Hollister, hitting the items pretty big and fast and then moving on.
So that’s what we’re devoting ourselves to.
Interestingly enough, in both the men’s -- the guys and the girls business in Hollister.
JEFFREY KLINEFELTER
Great, thank you.
Operator
Your next question comes from Amy Koslof [phonetic] of Sandford Burnstein.
AMY KOSLOF
Good afternoon.
Can you give us some more color on your promotional activity with your mailers etc?
Are you pleased with the results and plan to continue it; are you getting any findings from it that are helpful?
And related to this, if women’s is the stronger business, are there any plans to tailor some marketing to women to continue maximizing the business, if men’s continues to suffer?
COMPANY REPRESENTATIVE
The answer to the last part of the question is no.
The face of the business is masculine and will continue to be during good times and bad times, because that’s the draw of our business.
So the promotions are done across sexes.
We’ve been successful with direct mail efforts, that we’ve learned.
We’re still learning a lot about the business, but the most important message is that we’re containing the promotions, and while they are contained today when the economy gets better, we would hope to even cut back some.
We’re not -- we have to handle promotions very carefully in this business because we have to maintain the cool nature of our brand.
It could be hurt by too much promotion.
AMY KOSLOF
Are you noticing anything, though, about the transactions when you use the promotions; are you able to track any extra data on them?
COMPANY REPRESENTATIVE
I don’t think we want to give out a lot of information about how our promotions are working in detail.
We’re obviously finding them to be effective because we continue to employ some of them.
People do tend to spend more when you give them percent off coupons, but we’re learning more every time we do something and we’ll see what happens in the future.
AMY KOSLOF
Thanks.
Operator
Your next question comes from Barbara Wyckoff of Buckingham Research.
BARBARA WYCKOFF
Good afternoon.
Are you going to be investing -- you know you talked about women’s maybe becoming 60 percent of the total, are you going to be investing, you know, funding it to that level, or are you going to still be at that sort of 55, 45 level, or where are you going to be?
COMPANY REPRESENTATIVE
You mean investing in inventory or space?
BARBARA WYCKOFF
Inventory.
COMPANY REPRESENTATIVE
We continue to increase the women’s inventory.
We have more inventory in women’s this year than last in men’s, so they’re getting a bigger percentage.
We alter that on a weekly basis.
But clearly that’s where we’ve invested the inventory at this moment, and we will continue to do so.
BARBARA WYCKOFF
Okay, and then the inventory levels came in, you know, a lot lower than I expected.
You had goods that you pushed into May, or they were late, or what?
COMPANY REPRESENTATIVE
Well obviously inventory levels are something that are at a specific point in time, so things can always straddle a weekend by a few days either way, and it’s not anything unusual or problematic, that’s pretty much what happened this month.
It didn’t signal any specific strategy to push things out.
We did exceed our sales plan in April, which took the inventory down somewhat, and we did take some more mark-down.
So it’s those three factors, but it didn’t really reflect any change in our strategy.
BARBARA WYCKOFF
Okay, thanks.
Operator
Your next question comes from Mark Friedman of Merrill Lynch.
MARK FRIEDMAN
Hey Mike, talk a little bit more about the Hollister IMU’s, is this significantly ahead of plan, and is this just all from working with your various third parties, or is there something new here that’s kind of elevated this earlier than schedule?
MICHAEL JEFFRIES
No, it’s really on schedule Mark.
We had identified this as the time that we would be at similar IMU’s to A&F and we’re on track to do so, but we really established this very early on in the timeline of the business.
It’s satisfying because we’re working -- it’s not that we have to start with all new vendors next year to achieve that, these are vendors that we’ve built, and through scale we’re just able to buy better with this factory structure.
So we’re very pleased about that.
MARK FRIEDMAN
And on store construction costs, is there still opportunity there, or do you think you’ve got that down to a level where you’re pretty pleased?
SETH JOHNSON
Mark, the Hollister construction costs, it’s still somewhat higher than the Abercrombie & Fitch stores.
It’s come down fairly significant, but we’re still in the process of working to reduce those costs further.
Some of it will happen just through volume of stores being built and in [indiscernible] in the purchasing, but the rest of it will come from really figuring out how to get the same look to the store with some different materials in some ways.
But we’re -- again we’re pleased with where we are right now.
MARK FRIEDMAN
Great.
Thanks Seth, thanks, Mike.
Operator
Your next question comes from Stacy Pak of Prudential Securities.
STACY PAK
Hi, thanks.
Mike, do you think that the spring break shift pretty much explains the slow-down in the women’s comp in April?
Would you expect that to therefore pick up in May?
And then also, can you comment on how long you see this Bohemian, romantic trend continuing?
Does it go into next year, what are your thoughts there?
MICHAEL JEFFRIES
To answer the first part, I think the Easter shift definitely accounted for the slow-down in women’s volume.
It was a difficult month to project, but clearly it was our expectation that what happened to the volume would happen, and we said that at the beginning of the month.
I’d rather not comment on the Bohemian thing, because I think that it’s -- honestly Stacy I don’t want to be giving any advice to our competitors.
I think it’s a very interesting fashion time, it’s moving very quickly, and we have our strategies that I’d rather keep to myself.
STACY PAK
Okay.
Then can I ask something else instead?
In terms of the inventories, are you pretty much flatish now, and would you comment at all on the level in men’s versus women’s, other than up and down?
MICHAEL JEFFRIES
Seth do you want to talk on that?
SETH JOHNSON
Well we’re not flat about now, and we don’t really want to start giving out this month’s inventories, but we were down 19 at the end of last month, and we’ll be gaining in inventory as we go through the quarter, as we said before.
We are being much more invested in women’s and girls, than men’s and boys, and that’s really where we see the business going right now.
If men’s and boys start performing better than the current trends we’ll give that business more inventory too.
MICHAEL JEFFRIES
Stock to sales in both businesses are where we want them to be.
STACY PAK
Okay, thank you.
Operator
Your next question comes from Maura Byrne of Salomon Smith Barney.
MAURA BYRNE
A question for Seth regarding the real estate, three-store spill out, and any comments on the fallout as they move into ‘03?
And any comments about real estate growth in ’03?
SETH JOHNSON
Well in ’03 we expect to target to continue to grow at around a 20 percent rate in square footage growth, that’s always been our objective.
We’ve grown faster in recent years, but we continue to just be very targeted on getting a real estate economics that we think we need.
And sometimes that causes us to pass on some deals that others might take.
There are always a few stores here and there where you don’t get possession of the space as soon as you were told you would, and sometimes those stores fall into the next year.
This year we’re not really chasing after those kinds of things, we’re satisfied with growing 20 percent this year.
And so we may have a few more that have gone into the next year, this year, than we had in the past.
MAURA BYRNE
Okay, great.
And then a follow-up question.
Mike you made a comment about Hollister’s margins being similar to -- eventually similar to an Abercrombie adult store, were you referring to the four wall margins?
MICHAEL JEFFRIES
No I was talking about initial mark-up percentage.
The initial mark-up percentage in 2003 we stated would be similar to Abercrombie & Fitch’s.
MAURA BYRNE
Okay, so no comment then yet?
MICHAEL JEFFRIES
No, on the four wall operating margin, no we’re not talking about that yet.
Seth do you want to --
SETH JOHNSON
Yes, Maura, are you asking about four wall profit margin or gross margin?
MAURA BYRNE
Four wall operating margins.
SETH JOHNSON
Yes, we’re not -- it’s hard to talk about that at this point because we have so few stores that have really anniversary’d into life stores.
MAURA BYRNE
Do you mean other ways the stores that have anniversary’s are -- where are they versus your original prototype?
SETH JOHNSON
Well again that one’s a hard thing to read off because those are the original test stores which had much higher store costs because they were the initial build and a lot of things got changed during the process, so those were never intended to be representative, but really the four wall profit as we target it, once Hollister’s productivity gets to Abercrombie & Fitch is first quarter [indiscernible], and we see no reason why Hollister should be any less.
MICHAEL JEFFRIES
And that’s what we’re targeting, and we’re pretty comfortable that we’re on that trajectory.
MAURA BYRNE
Great, thanks.
Operator
Your next question comes from Kindra Devaney Fulcrom Global.
KINDRA DEVANEY
How will the inventory flow over the course of the quarter?
I mean you said the end of Q2 was going to be about even maybe a little higher than last year, but slowly build, will it be, kind of by the end of this next month be up to last year?
COMPANY REPRESENTATIVE
Kindra I can’t give you it specifically by time period, I don’t want to start getting into monthly guidance and inventory levels.
But I think it will build as we go through the quarter.
We will try and build more significantly when we receive a Back to School delivery, but say in terms of summer merchandise, we’ll probably be a little down to last year on a cost basis as we go through the quarter.
KINDRA DEVANEY
Okay.
So you are pleased with the strategy of kind of flowing in from all fashion flows every couple of weeks?
COMPANY REPRESENTATIVE
Yes.
And we’re gaining momentum in terms of that.
I think what we’re finding Kindra, honestly, is that we can sell fresh fashion in big quantities and then kill it off and go to the next thing, bigger quantities than we had initially anticipated.
KINDRA DEVANEY
It looks like your inventory trends are benefiting, is that at Abercrombie, or is that more in the Hollister during the higher turn?
COMPANY REPRESENTATIVE
We’re doing it in both places.
KINDRA DEVANEY
And does that give you additional gross margin leverage over the next few quarters?
COMPANY REPRESENTATIVE
We’re not planning on it.
KINDRA DEVANEY
But the potential is there maybe?
COMPANY REPRESENTATIVE
Well I think the potential is for more volume, truthfully.
KINDRA DEVANEY
Okay, great.
Thanks very much.
Operator
Your next question comes from John Morris of Gerard Lauer Mattison.
JOHN MORRIS
Hi guys.
Not to beat a dead horse here, but just a couple more details on the inventory with the slip into May, how much of it was a slip into May and what was the cause or reason for the slip into May?
And then I’ve got a follow-up.
COMPANY REPRESENTATIVE
Okay, well I don’t really think it’s meaningful to start breaking out the --
JOHN MORRIS
Well I mean just was it one of the bigger components, or was there just a very small component of the three that you mentioned?
COMPANY REPRESENTATIVE
I don’t really want to get into the specifics of that, I don’t really think it’s important for the how the business goes forward.
As I said inventory is always a point in time thing, and we’re managing the business for the quarter over the full 13-week period, so I think people tend to over-emphasize these point in time numbers.
We’re not dissatisfied with where the inventory came in, we did a little better in sales in April, and we’re able to afford to take some additional mark-down.
So those were very good things as we see them, and I think that puts us in just a better position going forward through second quarter.
JOHN MORRIS
Okay, fair enough.
And then just a couple of maintenance questions.
Can you give us ending square footage numbers?
Also it looks like the tax rate was about 38.5 percent, is that the go-forward rate?
And then also, to the extent that you can give us a sense for where you’re planning that interest for the year, that would be helpful.
COMPANY REPRESENTATIVE
I can say the tax rate is really a function.
We started to invest more in tax exempt securities because of the commercial paper drying out.
I would expect you could use that tax rate maybe for the next quarter.
A lot of it will depend in the back half of the year as to how much cash we have on hand, because it’s really deducted from your paper tax rate, which is 39 percent.
And ending square footage, are you talking about for the quarter?
JOHN MORRIS
Yes, if you’ve got it, can you give it to us by concept?
COMPANY REPRESENTATIVE
It’s 3772 for total.
By concept it’s about 2800 in adults, 700 in kids and 275 in Hollister.
JOHN MORRIS
And net interest, where are you planning that for the year?
COMPANY REPRESENTATIVE
That’s pretty difficult to say, depending on the interest rate.
I would say it’s probably going to be about half of what it was last year, given where the interest rates are.
JOHN MORRIS
Fair enough, okay.
Good luck for the fall.
Operator
Your next question comes from Richard Baum of CSFB.
RICHARD BAUM
Afternoon everybody.
I have a question on your selling expenses.
I know Seth you said the [indiscernible] payroll was down 7 percent per store.
I want to go back --
SETH JOHNSON
Store hours.
RICHARD BAUM
But also, if you take the SG&A and look at SG&A for store it’s been steadily coming down for like 9, 10, 11 quarters.
I guess the question is, how much farther can you go, what level do you need to be at in terms of SG&A per store, and have you seen any change in terms of service levels?
I don’t know how you measure those or how you look at it, but I see a lot of lines in the stores when I go in, which is usually a good thing, but you’ve been putting up negative comps so I question how good is it really?
SETH JOHNSON
Those are very good questions.
I think the answer is that we have cut a lot of store expense out over the last several years.
We are limited in how much further those kinds of cuts can go, in particular in the kids stores, we’ve made very dramatic cuts in payroll hours.
There is a certain base level of staffing you have to have to run a store properly, and the way we measure that is really how do the stores look.
And we’re out in the stores on a weekly basis to evaluate how we are doing, but I think we all believe that as we go forward we need to start generating more tip-line volume and there’s a limit to further expense initiatives that can be taken.
RICHARD BAUM
Is there a -- I guess the question is, it looks like on this metric that I look at, that you can do something in the second quarter, but then when you come to the back half of the year you seem to be at a level that’s about where you need to be just to be able to run sales through at a reasonable rate, and that is it fair to say in the second half you’re really posting positive comps in order to get additional SG&A leverage?
SETH JOHNSON
Well there are a few different questions there.
I think you’re probably right that the expense initiatives will be much more difficult once we hit third and fourth quarter, because that’s where volume dropped significantly last year.
And we had to be much more disciplined in cutting things.
I think to get to expect SG&A leverage in the fall I think you’re right, I think we need to have plus comps to get expense leverage.
RICHARD BAUM
Okay, great, thanks Seth.
Operator
Your next question comes from Jennifer Black of Wells Fargo Securities.
JENNIFER BLACK
You guys have been so agile in the way you’ve controlled your inventories, and I wondered if you could tell us what your sourcing times are and where do you think your lead times are going?
Are you shortening them, and it probably depends on category etc?
COMPANY REPRESENTATIVE
It does depend on category, Jennifer, it’s shorter for cut and sew knitwear than for woven bottoms.
But we do position base piece goods -- we don’t own the fabrics, but the factories buy them for us so that we can respond very quickly.
And one of the keys to our business -- one of the things we’ve built into the culture of this business, is that we do respond quickly, and always have.
I wouldn’t say that lead times are getting shorter, they’re staying where they have really been established in the business.
But we can move cut and sew knitwear into the warehouse within 30 to 45 days, and woven bottoms, 45 to 60 days.
JENNIFER BLACK
And then just one other question in relationship to that, and that’s great.
Do you -- are you benefiting also from the excess capacity around the world in the factories?
COMPANY REPRESENTATIVE
I think absolutely.
And the fact that there’s continued factory expansion into underdeveloped countries.
So there is no question that people want business out there.
JENNIFER BLACK
Okay.
Thank you.
Operator
Your next question comes from Lauren Levitan of Robertson Stephens.
LAUREN LEVITAN
Thanks.
When you take the guidance our for the second quarter to 26 cents, can you give us some sense of whether or not there’s an anticipation of accelerated comps and if that’s what the intended build in inventory is also assuming?
And then also, I know you’re still in a very experimental phase with respect to testing the appropriate level of promotion, but with some [indiscernible] you’ve already achieved, can you give us a sense of what you think the potential long-term operating model looks like in a more normalized selling environment?
Thanks very much.
COMPANY REPRESENTATIVE
Okay, the first question related to comp expectations for the second quarter that relates to our guidance, we -- as most of you know we don’t really give comps guidance, we don’t find that that’s productive, because we run a business to produce on the bottom line.
Since we’ve given out 26 cents I think it’s realistic to assume that we feel we can maintain that profit rate at business that’s similar to the level we’re doing right now, and that we did in the first quarter.
But beyond that we’re not giving comps guidance.
I wonder if you could repeat the second questions.
LAUREN LEVITAN
Sure.
I understand that you’re still experimenting with what kind of promotional activity your customer responds to best, and in what types of environment you would want to be increasing the promotional rhythm.
But now that you’ve had a couple of seasons with more promotional activity out there, can you give us some sense of what you think or a long-term basis, what the impact of that might be on operating margins?
And do you think that there’s opportunity to go back to operating margins that you achieved in prior years, or do you think that that’s unnecessary and that this promotional cadence is more appropriate for driving profits in the business?
COMPANY REPRESENTATIVE
First of all we’re not convinced that the promotional activities that have gone on in the last 6 months or so are necessarily permanent characteristics in the environment.
We don’t know how long they’ll last, and that’s what customers are responding to and what they require right now, it doesn’t mean it lasts forever.
I don’t think those things have necessarily impacted our ability to generate operating margins.
Operating margins reflect how [indiscernible] and strategic you are in all the different elements of your business.
So if you’re being more promotional in some ways, you have to try to get it back other places.
So I think it’s premature to look at the recent activity and make long-term conclusions about that.
We don’t really think we need to do that right now.
LAUREN LEVITAN
Thanks, that’s helpful.
Operator
Your next question comes from Marsha Aaron of Pacific Growth Equities.
MARSHA AARON
Yes.
Good afternoon.
Can you talk a little bit more about the Bohemian look.
It sounded to me that you were not going to -- as least you hadn’t made a heavy investment at this point for holiday, is that right?
COMPANY REPRESENTATIVE
No, I didn’t say that at all, I said I didn’t want to comment about what I was going to do.
And I don’t.
But that was a good try Marsha.
MARSHA AARON
All right, let’s try something different.
How much are you flying good in now, and what sort of contingencies have you set up in case things get slowed through the West Coast ports with the Long Beach situation?
COMPANY REPRESENTATIVE
I think the strike date they’ve targeted is July first.
Majority of our Back to School set goods will be in then.
We have identified PO’s that may have trouble with a few updates that we’re doing in July, we’re watching them and trying to move the deliveries up.
Having said all that, we are a pretty heavy user of air-freight, so I’m very confident that our import guys will be able to secure space should be need it to air the goods in here.
COMPANY REPRESENTATIVE
And as important we have built into our plans the air costs for deliveries during that time, so that we’re prepared.
COMPANY REPRESENTATIVE
Yes, I think we’re right, it’s not going to be an issue.
MARSHA AARON
And can you talk -- I know sweaters were an issue last year industry-wide.
When do you -- are you going to bring that -- I know you’re going to have the product but are you going to bring it in later this year, or what’s the thought on sweaters?
COMPANY REPRESENTATIVE
Two issues.
One, the total size of the business, and two, the yarns.
We’re in much more wear-now sweater classification for Back to School than last year.
We’re primarily cotton this year, we were wool last year.
And I think that should help the business.
Having said that, I still think the sweater business is not an up-trending business at this point.
So we’re approaching it two ways, one, cautious on the whole classification, and two, making it more of a wear-now business.
MARSHA AARON
And is there something of a similar price points that you’ll be able to replace it with?
COMPANY REPRESENTATIVE
Well that’s a really good question.
The answer is that it has to be made up in knitwear, which is a lower retail, so we are in fact grappling with that, because we have to sell more units to make up for it.
I think that’s everybody’s dilemma.
But I don’t anticipate the business to be -- I really anticipate the sweater business to be all right, not drastically off last year because of our current strategy.
MARSHA AARON
Right, thanks.
Operator
Your next question comes from Steve Curncault [phonetic] of Burman [phonetic] Capital.
STEPHEN CURNCAULT
Hi guys.
Most of the questions have been asked already, but I have two questions that I could ask.
One it seems that with the phenomenal number you have on Hollister, are you going to be accelerating the rollout of that, and maybe de-emphasizing the kids business?
And I guess the second question is, in terms of your business, a lot of questions were asked on inventory; given that the second quarter is a problematic quarter for a lot of apparel retailers, and that it’s a short season for Back to School, is it safe to assume that your inventory of summer merchandise will be significantly below last year, similar to where you are now, and you’re not going to get the build up to even until they Back to School merchandise comes in, in the middle of July?
COMPANY REPRESENTATIVE
A couple of questions there.
The first on the Hollister rollout strategy.
We are rolling it out very fast, just evidenced by opening 60 stores this year, and a phase that we’re [indiscernible] in the 30’s.
At this point I think you probably expect more than 60 next year, so we are rolling it out very fast.
And this year, with just a little less than 100 stores, then it’s becoming very significant business.
So we’re rolling it out as fast as we prudently can.
The second question about the second quarter inventory --
STEPHEN CURNCAULT
Are you rolling it out -- you’re rolling it out at a fast pace, but are you at all becoming a little less enamored with the kids business?
COMPANY REPRESENTATIVE
I don’t think it’s really a question of becoming less enamored with the kids business, it’s really more just wanting to limit out overall growth to roughly 20 percent level and getting Hollister to a critical mass.
We continue to feel very optimistic about the future of the kids business.
For the second question about the second quarter inventory levels.
You’re exactly right, the second quarter is a very treacherous period.
The whole business goes on sale around father’s day, and so much of the quarter is promotional until you get to Back to School.
So I think our inventories in summer will build to more than they are right now.
I think the minus 18 percent was a little aberrational at the point in time, as you look at the whole quarter.
But you’re right, more of the build will be in the Back to School deliveries that position us for Back to School selling in July.
STEPHEN CURNCAULT
Great, thanks a lot.
Operator
Your next question comes from Dorothy Lakner of CIBC World Markets.
DOROTHY LAKNER
Thanks, good afternoon everyone.
Mike you mentioned that the men’s business while it’s been difficult for you, the gap has narrowed between the men’s and the women’s business.
With the successes that you had in the past quarter, can you build on those, and assuming nothing else changes, can you continue to narrow the gap between men’s and girls -- or women’s, sorry?
MICHAEL JEFFRIES
I don’t know, Dorothy, I think it really depends, as I said in the beginning, it’s kind of a macro thing in terms of men spending.
I think we’re well positioned in all the classifications in the men’s business, as well as -- I can imagine it can be done.
And I think that as the economy improves the men’s business will improve at a faster rate than the women’s.
I think that’s the scenario, so I can’t see around that corner, that’s kind of a macro question.
But I can say that I feel very good about how we’re positioned in each men’s classification, and we have been first quarter, second quarter, going into third quarter, we’re turning the inventory quite well, we’re running a very high margin, fast turning business there, and I don’t think we’re [indiscernible]
DOROTHY LAKNER
Okay, so from a fashion standpoint you’re doing everything you can, it’s just really a question of the environment.
But you also have to use your comparisons as the year goes by as well, and that should help you a bit, shouldn’t it?
MICHAEL JEFFRIES
I never count on that.
It always turns around and bites you in the rear end.
DOROTHY LAKNER
Okay, thank you.
Operator
Your next question comes from Josh Schwartz of Columbia Partners.
JOSH SCHWARTZ
[SILENCE]
Operator
Okay, your next question comes from Jeff Stinson of Midwest Research.
JEFFREY STINSON
Good afternoon guys.
Two questions for you.
One is, as you look at the cash you got on the balance sheet, I was wondering what your thoughts may be as far as usage of that going forward?
And then the follow-up, just your thoughts on the third party advertising in the [indiscernible] and what that may add?
COMPANY REPRESENTATIVE
On the cash.
We like having cash, we’re conservative people by nature, and I think we’re going into the second quarter where our cash tends to dip to its lowest point.
We want to make sure that we’re covered there.
I think from time to time you guys always ask about share re-purchase, and when we think it’s prudent to do that we will be in the market.
COMPANY REPRESENTATIVE
The second part of the question about selling advertising space in the quarterly, it’s not an aggressive strategy, we really sold to people who came to us.
And it’s not a major revenue producer, nor will it be, it adds a little texture to the magazine from my point of view.
JEFFREY STINSON
Thanks guys.
Operator
Your next questions comes from Josh Schwarz of Columbia Partners.
JOSH SCHWARTZ
Can you hear me now?
Sorry about that.
I just wanted a follow-up on the issue Mike with the Abercrombie kids business.
You guys are saying -- I mean you want to get Hollister up to a critical mass, and right now, there’s no reason you think to change your view on -- in terms of -- in the past you’ve said sales per foot can go higher in the kids business and the adults.
Do you think that’s still long-term -- it’s a possibility?
MICHAEL JEFFRIES
I think to get it to the adult business is going to be a good trick.
JOSH SCHWARTZ
So what do you think you need to do to -- what’s going on --
MICHAEL JEFFRIES
Our strategy there is really driving the girls business, because the girls business was more underdeveloped than the boys business.
So our strategy is really to push the girls business as hard as we can, and the strategy for the second half is to push the girls’ tops business.
So we’re making a major investment in girls’ tops, and we’re going to invest in a broader assortment, and in fact turn it faster.
That’s the key to the increased productivity in the kids business, and that’s our strategy.
I think we’ll get to the adult level of productivity, it’s taking me a little longer than I thought it would.
JOSH SCHWARTZ
Do you think -- has there been more of a focus on your part specifically in term of trying to understand that customer differently than maybe you have in the past?
MICHAEL JEFFRIES
Yes.
We’ve really spent a lot of time on it, and I think that that customer is different from who we thought it was when we established the business.
She’s faster, she’s more fashion savvy, she’s in that store every week.
She’s faster than the A&F customer in terms of fashion, how she puts herself together and looks.
And it takes -- we’ve made investments in merchandising and design staff to kind of get ahead of her.
The business was probably too much of a take-down women’s business, which is exactly not right for that customer.
So as you look at that business I think you’re going to see -- you’re seeing now our assortments are looking very different from women’s, they will look not only very different but even turn faster, and be more assorted as you get into the Back to School season.
JOSH SCHWARTZ
Okay, let me just ask you one other thing, a little softer.
There’s a lot of noise this quarter with respect to the company and the marketing etc, can you just discuss a little bit about how you view all this and how you specifically -- I know you’re very focused on whether or not you’re hurting the brand -- how do you think about things when this stuff occurs, what goes through your head in terms of deciding whether or not it’s important to the brand?
MICHAEL JEFFRIES
I think that the brand has a personality, and it’s targeted to an 18 to 22 year old college student.
And it’s focused on what that guy and girl are going through in college, and it’s an experimental time for that person, it’s a time of intense fun, and I want the brand to represent that.
And it’s not for -- the notion of the brand isn’t for a kid you stays in the library 24 hours a day.
The brand has a personality and there’s kind of a mischievous naughtiness to that kid, and that’s a part of the brand.
And we like doing things that are kind of mischievous at times.
And that I think is a real positive, and for whatever kind of criticism we get, we’re not afraid, we have the confidence of a self-confident person with a personality, and more importantly with a sense of humor.
It’s all about laughing and not taking yourself too seriously.
O0
57:53 JOSHUA SCHWARTZ: I understand, I guess I’m just trying to -- in your head from, you know in terms of -- I’m trying to understand why you’re running the company -- you know, there was a -- you feel -- I would guess from listening to what you just said, you feel, with respect to the [indiscernible] it’s quite targeted to the customer that you want it to be targeted to?
So with the T-shirt stuff, is there something that you said maybe the customer we’re targeting could get upset by this and we’re just going to -- we don’t want to do that?
Is that accurate?
I’m just trying to understand the difference in your head?
MICHAEL JEFFRIES
I’m saying that the things that happen, that if I had to look at it again about the T-shirt proposition, I said we took them off sale and were sorry if we offended anybody.
But you know, we’ll make mistakes again in the future, very candidly, we’re kind of a young, rebellious group of people here, and having a great time of it.
JOSH SCHWARTZ
Okay, thanks a lot.
Good, keep doing it.
Operator
Your next question comes from Joe Teklits of Wachlovia Securities.
JOSEPH TEKLITS
Thanks, hi guys.
I have a follow-up question to everybody else’s inventory questions.
And it may put this to bed hopefully, but in the progression of things, I think at the end of the last quarter you were saying inventory [indiscernible] would be flat, and then at the end of the February -- when you reported February comps I think you said inventory would be flat to slightly up by the end of the first quarter.
And now you’re kind of saying that you’re looking at flat to up for the Back to School set, and I’m just curious if you’ve seen anything between reporting that February comp and the end of the quarter that maybe made you change your mind a little bit about the summer inventory, or made you pull back on it a little bit?
SETH JOHNSON
Well obviously since the end of February, as you combine March and April, the comp has remained negative, it’s improved a little bit from February, and somewhat from fourth quarter, but it’s still a negative number.
So we have to continue to be very careful and we don’t believe in taking a plunge in inventory just because we think things might improve in the future.
So we are being cautious at the same time.
We’re not really looking at the Back to School business any differently that we looked at it a few months ago, we still have a very good assortment.
We can’t say when the comp will turn positive, but we think it will in the future, and we want to be positioned for that.
We can’t sell through an empty store, and we think we’ve pushed the inventories down to a level where it’s hard to be positive.
So we want to give ourselves some upside potential going forward, and still allow us to manage and protect the downside.
JOSEPH TEKLITS
And since Back to School or Fall is totally new season for which you really won’t have much visibility when you enter it, is there less chance then that you will come to the Back to School season, to the end of the July quarter and kind of have -- and kind of see the same think where you initially guided to flat to up, but then you end the quarter down?
Is there less chance of that risk, if I look at it as a risk?
SETH JOHNSON
Well that’s a difficult question, I don’t think we have any intention of being down 18 percent ending the second quarter, but you have to differentiate between a strategy change and the delivery falling a week later versus a week earlier.
Some of those things are just things that happen as opposed to strategic changes.
MICHAEL JEFFRIES
I just have to jump in here because we’ve been talking about this inventory all the time, and I’d refer everybody to a conference call we had this exact same month 3 years ago.
We were 20 percent over what we said we were going to be for exactly the same reason, it’s very difficult to pinpoint this a day in time.
It’s a flow issue.
And Seth’s been saying that, but I had to jump in again, because it happens both ways, guys, there is no strategy change here.
JOSEPH TEKLITS
Okay, [multiple speakers]
SETH JOHNSON
I think the risk is to have too much inventory and then take too many mark-downs and then make your earnings.
JOSEPH TEKLITS
I understand, you’re managing for earnings, I’m just trying to understand the psychology.
When is Back to School set this year?
MICHAEL JEFFRIES
At the beginning of July.
JOSEPH TEKLITS
Okay, thanks very much.
Operator
The next question comes from Brian Tunick of Bear Stearns.
BRIAN TUNICK
Just on a bigger picture basis first, you’ve clearly pioneered the whole Madalogue [phonetic] hysteria with the Abercrombie customer, what’s your thinking on direct marketing, or brand building initiatives like that at Hollister, how many stores do you guys think you need, what kind of run rate before you would spend whatever, it’s one or 3 percent of sales on marketing?
That’s my first question.
COMPANY REPRESENTATIVE
Okay, I really don’t want to reveal that.
We’ve got pretty detailed plans that we’re working on, but we’ll be marketing Hollister differently from Abercrombie & Fitch.
I don’t want to talk about when we’re going to spend that kind of percentage.
BRIAN TUNICK
Okay.
My second question is, you know, you gave us the ASP’s can you give us the transactions per average store and the UPT’s?
COMPANY REPRESENTATIVE
Yes, transactions per store per week were down 2, and the UPT’s were up 2.
BRIAN TUNICK
Okay, and my list question is, there’s been a lot of questions about Abercrombie brand, expanding it to Canada, certainly Roots [phonetic] is a pretty good competitor there, the Eagles there, is that something we could hear from you guys in the next year or two?
COMPANY REPRESENTATIVE
It’s possible.
We’ve been evaluating Canada as well as some other countries.
We think there is a level of business to be done there.
But we’re very cautious about adding complexity and distraction to the business.
So I don’t know that you’ll be seeing anything imminently.
BRIAN TUNICK
Okay, thanks very much.
Operator
Your next question comes from Jennifer Lamers [phonetic] of Lamers Equity Research.
JENNIFER LAMERS
Hi, thanks, just a few questions on Back to School, What you’re willing to share at this point.
I’m curious about the denim collections for fall, should we look for the same percentage commitment in denim, particularly on the men’s side, and are you seeing any change in Silhouette?
COMPANY REPRESENTATIVE
You know, I’d love to answer your question, but I really don’t want to tip my hat at this point?
JENNIFER LAMERS
Any change in price point, merchandise margins?
COMPANY REPRESENTATIVE
There will be some denim.
JENNIFER LAMERS
Okay, I tried, thanks.
Operator
You have a follow-up question from Kindra Devaney of Fulcrom Global.
KINDRA DEVANEY
My question has been answered, thank you.
Operator
You also have a follow-up question from Stacy Pak of Prudential Securities.
STACY PAK
Thanks, I was just wondering if you would comment on your comfort with third and fourth quarter consensus estimates, and/or, whether the reduction in square footage causes any reduction in your own earnings per share projections?
COMPANY REPRESENTATIVE
First of all, no we’re not ready to comment on third and fourth quarter consensus right now, we think it’s too early to make projections for that period.
So we’re just commenting about second quarter right now.
The square footage growth changes won’t have any impact on our profit expectations for the balance of this year.
STACY PAK
Okay, thank you.
Operator
Your next question comes from Don Widdowson [phonetic] of DCW Incorporated.
0l
06:44 DON WIDDOWSON: I’m a private investor and I’ve been participating in your calls for a couple of years now.
Can you comment on, has the company participated in a buy-back program this quarter?
COMPANY REPRESENTATIVE
Now we didn’t buy back any shares this quarter.
DON WIDDOWSON
Okay, and then concept four, is there currently a design come in place for this?
COMPANY REPRESENTATIVE
Not yet.
DON WIDDOWSON
Okay, that’s it, thank you.
Operator
The next question comes from Ellen Schlossberg of William Blair & Co.
ELLEN SCHLOSSBERG
I hope you don’t mind if I don’t ask you about inventory.
With respect to the Back to School season and your wear-now strategy that you’re taking versus last year, you talked a bit about flutters, but just overall with across classifications, can you comment on how that strategy is going to change average price points for the season?
COMPANY REPRESENTATIVE
We anticipate that the average price points will be down slightly, not markedly.
But in our classification shifts it creates a mixed difference, but the net results of that will be a slight -- we’re projecting a slight reduction in AUR.
ELLEN SCHLOSSBERG
So slight single digits?
COMPANY REPRESENTATIVE
Yes.
ELLEN SCHLOSSBERG
Okay, and then just some housekeeping.
Can you -- you’ve switched the [indiscernible] store guidance, can you give us that by quarter, by division?
COMPANY REPRESENTATIVE
Adult should be 6 in the second quarter, 11 in the third quarter, 17 in the fourth quarter.
Kids, yes, 4, 2 and 9.
Hollister, 16, 11 and 23.
Just remember when you’re modeling that we tend to open things towards the end of the quarter, and we don’t open in sales period, so you got a -- so you want to sort of wait for the backend of the second and third quarter, and then the fourth quarter [indiscernible] will open in early November.
ELLEN SCHLOSSBERG
Any change to square footage in Hollister?
COMPANY REPRESENTATIVE
In average store size, no it’s running very consistently.
ELLEN SCHLOSSBERG
And then can you give us CAPEX in D&A for the quarter?
COMPANY REPRESENTATIVE
CAPEX was 30 million, D&A was about 12 million.
ELLEN SCHLOSSBERG
Okay, thanks.
Operator
You have a follow-up question from Brian Tunick of Bear Stearns.
BRIAN TUNICK
It’s for Seth, can you help us think about profit contributions from Hollister or the kids business, or even a change in direction of operating margins by those concepts?
I know historically you haven’t given that out, but is that something as both those businesses grow that you’d be willing to share with the street?
SETH JOHNSON
Well, Brian, we’re not sharing that right now.
I think it’s safe to say that until the dips to the productivity per square footage in the adult business, operating margins won’t be as high in those businesses.
So it’s really a productivity issue, and scale of the business issues, and we think we’re making progress in both of those areas, at which time we want to give that out I can’t say.
BRIAN TUNICK
Okay, thanks.
Operator
At this time there are no further questions.
COMPANY REPRESENTATIVE
Thank you.
Thank you everybody.
Operator
Thanks you for participating in today’s Abercrombie & Fitch first quarter earnings conference call.
You may now all disconnect.