DSW Earnings Call Nuggets: Weather As a Material Factor and Sandal & Shoe Concentration in the Business
Weather As a Material Factor
Steven Marotta – C.L. King & Associates: Can you comment a little bit more the first six weeks? You mentioned that you believe weather is a factor, but not the only factor. Can you talk about what would lend you to believe that weather is a material factor? Are there warm weather markets that are outperforming cold weather pockets or patterns that you’re seeing at all?
Michael R. MacDonald – President and CEO: Steve, I think the reasons why – the primary reason why I can’t say, it’s only weather is because we haven’t had enough good weather on a consistent basis to really measure the underlying sales trend when it is good. I’ll give you a couple of stabs. We have seen a material decline in our traffic and it started almost at the onset of the fiscal year, and of course that can be weather or it could be other factors. But here is an interesting stat, last week, we had reasonably good weather in the West, and as a consequence our customer traffic was up a little more than 1%. We had a comparable sales increase in the West last week of about 12.5%. The interesting thing is, if you look at seasonal sandals which is kind of the poster child for categories that are affected by weather, seasonal sandals in the West last week were up 30%. In our weakest region, seasonal sandals were down 60%, so there is a 90 point swing from top to bottom. So, it’s clear that categories that are affected by weather, sandals, any kind of opened up product in Women’s, athletic to some extent, they are disproportionately affected. It’s also clear that the regions like the Northeast, the Mid-Atlantic and the Midwest that have had less favorable weather and larger weather swings from the prior year, their business has been much more severely impacted than the south and the west. So, again if we get some decent stretchers of seasonal weather, it doesn’t have to be as good as last year, it’s just seasonal. I think we will get a better and stronger read as to the strength of our business but I think this week, it’s not going to get out of the 30s in Columbus, it’s 15 to 20 degrees cooler than normal and last year was call it 10 degrees warmer than normal. So, the swing is pretty phenomenal. So, hopefully that kind of inflate helps you understand what we are dealing with, Steve.
Steven Marotta – C.L. King & Associates: And sort of further along that train of thought you are managing receipts, so I assume that you are slowing the supply of goods in, have you done anything either quarter-to-date or at least planning for the quarter accelerating promotions either from a markdown standpoint or additional coupon or the direct marketing that you do. Can you talk a little bit, has there been a change in that cadence from your plans at the beginning of the fiscal year?
Michael R. MacDonald – President and CEO: Yes, I’d, it’s right now material change. As you know we are basically not a promotional business. The way we promote is we manage sell-through rates on a stall by stall basis and periodically move goods from regular price which is already a terrific price in the clearance and that typically goes in at 30 and then it moves to 40, 50, 70 and out the door. So, we are going to continue to monitor our sell-through rates and our inventory levels and continue to make those moves into clearance based on those statistics. You probably will see in the next few weeks that we are going to append our TV advertising with some value messaging, because we think that perhaps – not so much – I guess I have to say the competition appears to be a little more in your face with promotions and as we look at ourselves we need to respond to that. So we need to reemphasize not newer, lower prices but the already great values that DSW offers on a day-in and day-out basis. So you will see that on some TV advertising and you will probably see stronger messaging in our email and direct mail communication with the customers…