American Eagle Outfitters (NYSE:AEO) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.
Betty Chen – Wedbush Morgan Securities: Robert and then I have a question for Roger as well. I think in the beginning the team obviously still managed quite well. But I thought in the beginning in your prepared remarks you thought that execution may not have been up to your historical standards. I was wondering, if you can clarify that a little bit? Then I think you have mentioned that the summer collection just dropped a week ago, along with some better weather in certain parts of the country. Can you give us a sense on some initial reaction to that and how is the team thinking about any potential pent-up demand that could help the second quarter? Then I have another question for Roger after that.
Robert L. Hanson – CEO: I think what we will do is I’m going to answer your question about execution and then we actually have Tana answer the question that you asked about product and then you can ask the follow-up question to Roger. So, in terms of execution, we just executed on all cylinders throughout 2012, as we entered what was a fairly volatile first quarter, again with unpredictable macroeconomic environment and really cold weather. In addition to that, we obviously transitioned to warmer weather looks (indiscernible), shorts, more bareless in women’s dresses, skirts, sooner than the customer was willing to show up for obviously. In addition to that, we did have a few points of production fallout that we had to work hard to get back on top of. Because of the very competitive environment in the first quarter there was a really strong promotional cadence. I said consistently we will compete to make sure we maintain or grow our market share, and as we did in the first quarter that obviously turned our famous four categories faster so we have to respond to get back into inventory position in some of those categories more effectively during the quarter. I think the team did a great job of responding and as a result we have entered the second quarter balanced and in a good inventory position in a 95% in-stock position particularly in our core famous four categories. So, those are the kinds of things we have been thinking about.
Tana Ward – CMO, AEO Corporation: The summer did hit this weekend and I hope all of you have had a chance to actually see the floor set. We’re very excited about how it looks. It’s very early in the season. It’s funny to be saying that, it’s just time, but it is early in the summer season and we are seeing some very good indication. First, fashion is resonating on both men’s and women’s. Our current trends, the current trend’s out in the marketplace really lean in to AEs strength and we’re maximizing that. Some of our best sellers today are styles we reacted to in the month of March. Robert had referred to 40 choices in women’s and we had some great selling in some of those early styles. Second, across all markets knits is continuing to gain moment. When I say knits, that means, bare, tees and graphics. We have some great early signs in this category. Third, in other seasonal categories, where markets have seen weather improve for more than a couple of days, we’ve seen some pops in the seasonal category. We’re very excited about some of the early selling that we’re seeing and we look forward to the rest of the season…
Robert L. Hanson – CEO: Betty, a quick follow-up for Roger?
Betty Chen – Wedbush Morgan Securities: Yes. I guess, in terms of the advisory role Roger, how should we think about that? Then my last question if I could squeeze it in is, the supply chain efficiency you mentioned in Q1. Should we expect some of that to continue through the year?
Roger S. Markfield – VC and Executive Creative Director: Betty, you know that I love this brand and I really do believe that the future of this brand is stronger than ever, as we enter the global stage and the results we’re seeing are amazing and I will be available to Robert and team as requested.
Robert L. Hanson – CEO: Betty, just quickly, Fred’s here and maybe later we can answer more questions on it, but he’s led a really strong initiative to increase our cycles from 4 to 6, that’s matched with differentiated supply process for core, core fashion and fashion which are enabling us to respond more effectively and increase our inventory turns and you’ll see a linear improvement in that performance throughout the year. So we will come back a bit later.
Judy Meehan – IR: I’d like to remind everyone to just limit yourselves to one question so we can get as many people on the call as possible.
Tom Filandro – Susquehanna Financial Group: I would also like to say congrats on managing in a very tough environment and Roger bittersweet you are a gem my friend. Robert, can you expand a little bit on this fast tracking comment of these 40 choices? Can you kind of give us an understanding of what, is that – how many choices do you typically see and how should we think about that kind of strategy impacting the financials go forward? Since I am only allowed to ask one, I will stop there…
Robert L. Hanson – CEO: Tom I am going to actually have Fred talk briefly about the improvements we’ve made in the overall process of moving some more cycle times and that’s given us the opportunity to keep more customer choices open as we enter each season. Then Tom I can talk specifically about how we are testing and then fast tracking and reacting to selling. Fred?
Fredrick W. Grover – EVP, AEO Corporation: When we talk about fortify, I mean we have been working throughout the year with the entire team on what that means from our production cycles and specifically to your question we do want to leave opportunities open. We talk about fast tracking, that’s something that comes available with in a design cycle that we potentially didn’t have in the last, because we do talk about fast tracking versus chase. Chase is what we do and there is something already in the line doing well. We want to go after it more aggressively. Fast tracking is starting from scratch. We have a plan in place now where we can limit our time to market up anywhere from 45 to 60 days. This takes advantage of having these goods in place and using what we call air direct to ship product directly from the factory or forwarder to the stores. So, it cuts out a lot of the middlemen. There is an expense there, but the savings – this is a product that we feel good about, some of the products that have (with asset) and you save the mark downs.
Tana Ward – CMO, AEO Corporation: The only think that I would actually add to that just in addition, is that we have a testing process for our core. We have a testing process for our core fashion, and then we leave ourselves open to quickly react to trends within fashion that is not tested, new trends that hit the market that we quickly react to. So a lot of the 40 choices that Robert had referred to, really fall into all of those categories. So, we have some early great reads and we’re able to move within 45 to 80 days is the fastest we’ve been leaving.
Fredrick W. Grover – EVP, AEO Corporation: Along with that too Tom, we have calendarized four total floor set extracts a year. This is something Roger instituted 20 years ago and it’s back on track. That gives us amazing information, how that season’s going to roll out and how we can fast track and/or chasing the product.