Jennifer Black – Jennifer Black & Associates asked: You have a significant cash position. Would you consider making an acquisition of an established competitor with somebody like Jack Wills?
Jonathan E. Ramsden – EVP and CFO responded: We think we’ve got a long runway with our current strategy.
We think the return on investment by investing our own growth is going to be greatest return we can get for our capital, certainly in the foreseeable future.
Domestic Flagships: Performance and Closures
Anna Andreeva – FBR asked: Could you talk about performance of your flagships domestically? Are you seeing any change versus the second quarter? Could you also address the performance of your tourist stores in the U.S? Have you seen a softer environment?
Jonathan E. Ramsden – EVP and CFO responded: The tourist stores held up very well during the quarter.
However, we saw a little softening in Fifth, but not as much as what we’ve seen in the European flagship stores. In general, the U.S. tourist stores held up very well from a comp basis and from a profitability standpoint.
We’ve talked about this in the past but if you look our top tranche of stores, they have generally outperformed the chain stores consistently over time. They have remained very profitable and comparable to the profitability we’ve seen in Europe; there is no change to that overall picture.
Anna Andreeva – FBR followed up with the question: Could you also talk about the impact from the store closures that you are seeing domestically? It’s that understanding this has minimally impacted four walls, but you are seeing productivity at adjacent stores improve? Is there opportunity to accelerate some store closures into 2012?
Jonathan E. Ramsden – EVP and CFO responded: For the first part of the question, we closed 65 stores last year that had an average volume of about one million.
Depending on where those stores were, we’ve now have a decent data read on how much of that volume transfers to other stores in either the same mall or to nearby stores of the same brand. That’s information we’re looking at for potential store closures.
For the second part, we alluded in our comments that we are looking at the potential for additional closures beyond the natural lease expirations. This is in the 55 to 60 range.