Michelle Clark – Morgan Stanley
Q: Your fourth quarter earnings per share outlook does not include incremental share buybacks in the fourth quarter. What is your buy back appetite in the fourth quarter?
Karen M. Hoguet – CFO responded: We are going buy some for the holiday season, but not a lot. This is consistent with what we sell in the third quarter and so we could buy back a little. I think we’re going to hold off in any significant way until we see have we have and the cash-in from the holiday season.
Todd Duvick – Bank of America Merrill Lynch
Q: Now that you’re met your leverage and credit target ratios, it seems that your free cash flow is not going to be deployed towards debt reduction going forward. What are you expecting in terms of free cash flow deployment in 2012 and beyond? Is that something the Board will decide on after the end of the fiscal year?
Hoguet responded: Yes, we’ll look at once we see how this year ends, but with our credit ratios where they are, there will be more cash used for things like buybacks or dividends. I expect, we’ll continue reducing our debt but not with 100 percent of the cash flow going to debt.
I think we’ll continue to be balanced.
Paul Swinand – Morningstar Investment Services
Q: With the strong online business increases–lapping prior year increases–is this more of conversion thing or are you extending the reach and frequency of your online advertising to keep online sales going?
Hoguet responded: Yes, while we’re finding very strong online business, our store business is stronger than ever; they are actually working in tandem. Many people worried would it not be an incremental business, but what we’re finding that the (Army) channel customers spends more with this.
In some cases, they will look at something online, try it on in the store or sometimes vice versa; they’ll buy it online, return it in the store, buy other things. It’s turning out to be far better in terms of generating sales growth than we thought it would.
Q: Does the online customer buy as much private and exclusive label or is there a different mix online versus store sales?
Hoguet responded: I’ve never looked at that. It has to do with our online offerings but my guess is it’s similar. We’re not finding huge differences if this is your question between our online customers and our in-store customer.