Guess? Inc (NYSE:GES) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.
North American Retail
Betty Chen – Wedbush Securities: Congratulations on a great quarter in a tough environment. I also want to congratulate Michael and Sandeep for the new promotion. My question is regarding North America Retail, if I could; certainly, very nice improvement versus Q1. Could you give us a little bit more color? It sounds like some of the bias towards opening price points is resonating with that customer base on denim, dresses et cetera. If you can tell us a little bit more about that and if we should expect a penetration of opening price point items to continue into the back half? Then, also related to that, any sort of color by brand?
Russell Bowers – VP and CFO, North American Retail: Just to talk about why business got better in the quarter. I think that the big thing we did is we improved the assortment. We told a much clearer story within our stores and the inventory mix was focused on categories that were really trending well such as denim and dresses. Throughout the quarter, we kept our inventories clean, and we developed some targeted promotions that really paid for us and brought people into our stores. As far as the opening price points go, the changes we’ve made this month have been successful, and I say that especially with the denim, and I mean that, denim on the women’s side primarily. The customer really likes that product and we’ve seen overall denim sales really trend better in August than it did in the second quarter.
Market Structure Outlook
Erinn Murphy – Piper Jaffray: I have a two-part question for Paul and Sandeep really on Europe. I guess, Paul, from your perspective, it’s good to see some of the recent improvement as you commented on the quarter-do-date trends. Could you just maybe compare and contrast with how you’re seeing the early reads for spring thus far? I know for the back half, the low double-digit decline in wholesale bookings is back half focused, but just how should we think just the overall environment if we get closer to that spring/summer? Then the second piece of kind of European question for Sandeep, much better operating margins in the quarter relative to just where we were last year. Could you just help us think about how we should think about the margin structure over the next two to three years? I know when you were on the team there, you focused a lot on infrastructure and then just kind of curious about where we think that business ultimately can return to?
Sandeep Reddy – CFO: So, I think I will answer you first question on the spring/summer ’14 orders that are being taken right now. Where we are is the trends that we are seeing on fall/winter ’13 is declines in the low double-digits which we communicated to you previously. And so far for spring/summer ’14 the trends are consistent. However, we aren’t closed with the sales campaign yet. It closes at the end of September and we will have a better idea by the time we get to that point in time. On moving on to the next point on the operating margins for the quarter and looking-forward basis, I would say that for the current quarter, we definitely benefited a lot from expenses that we were anniversarying from last year. The first time on then was the bad debt charge on a Greek distributor that was $0.04 per share impact on our earnings last year and we anniversaried that. In addition, we benefited from the 30th anniversary marketing campaign – sales and marketing campaign from last year where we had significant investments in the quarter. As we roll forward, we really won’t have these easy compares into the third and fourth quarter, so you shouldn’t really expect to extrapolate from the second quarter. In terms of guidance further out into the next fiscal year, we are just currently looking into the current fiscal year at this time. So, this is where I would stop in terms of indicating operating margins.
Erinn Murphy – Piper Jaffray: Could I ask just a quick follow-up on the spring/summer book, is it shaping up? The question specifically is, are you seeing the regional trends similar to what you saw in the fall holiday book in that, kind of, your Italy, France worse than that double-digit decline whereas the other regions that you’ve highlighted positively Germany, maybe U.K. and Russia being positive? Just help us, kind of, think about the regional performance as we think about that backlog.
Sandeep Reddy – CFO: Yes. It is very consistent with fall/winter ’13.