Over the course of the past year, one of the drivers of the increased same-store sales growth and increased gross margin has been these more on-trend products which have allowed you to increase the price points. What are your thought how much more room you have to continue increasing pricing?

Those designers would have to be on about triple mark-down to get to $12.60. The firm has studied about what marketplace pricing is by category, by gender, and by end use and it continues to see an opportunity over the next few years for it to continue to move its pricing up in excess of the amount that it will have to invest in its cost of goods in order to both add quality and to obtain leverage against that.

Also, the company is moving from being a private-label provider to being a branded provider, and it is doing that vertically and therefore the price/value relationship to the customer goes up. Abaete is designer product to the customers and the firm is learning on how to market those things and its customers are telling that they like the new brands that the firm is bringing in.

How do stock buybacks play into current thinking? At what speed do you think the new $250 million program occurs?

It occurs at basically the rate that the firm’s indentures allow it to. The company has a $200 million note and that note has certain covenants around it that allow it to buyback at certain rates and it is buying back to the limit currently of those rates.

What is the firm’s thought to taking advantage of the current bond in the loan market to remove those restrictions?

The management looks at those possibilities periodically. At this point, the company has not made any decisions along those lines.

How many Hot Zones stores or conversions or openings you plan on doing in 2007?

In total, the firm will be opening 125 gross stores, of which 115 will be Hot Zones stores. In addition, the firm will be remodeling a total of 73 stores and 68 of those are going to be Hot Zones.

Does that include closings as well or is that separate?

The closings will be about 64, a net decrease in store count of about 14.

The Collective International continued to operate as an independent company and continued to do what they’re doing in terms of licensing these brands, working with retailers. Do you see any opportunities to work with some of these existing brands to bring them in house to Payless, or will those existing brands that Collective International has completely be independent of Payless?

No, they will be independent from Payless, and run as brands and they will find the correct retail distribution, and whether that’s with the wholesale partner or whether that’s with a direct retail partner. Payless is here to facilitate that and it has some brand properties at Payless that they could help with internationally and in other places as well.

What will it take for you to accelerate the remodel program of putting more Hot Zones out there in the store base?

The company has put a new dual distribution center model in and is working on many other things in terms of rolling out its new register system and new scanners in the stores. The firm has cross functional teams put together to operationalize these stores so that they can be run as efficiently and effectively as its current rack system. The management does not want to over gulp and take on too much at once and so it is going to cadence this for one more year so it works out all the kinks.

When you back out the bonus, would you have leverage in SG&A?

Yes. Between the bonus and the share based compensation, the firm would have clearly leveraged the SG&A.