In which area did the 7% inventory buildup take place?

The 7% inventory buildup took place in the U.S.

Is there a possibility of a decline in the average selling price in the U.S. in the second half of the year as a result of growth in the proportion of lower priced fusion style product?

There isn''t a possibility of decline in the average selling price in the U.S. in the second half of the year because the company is selling a great deal of the fusion style product at regular price. Some of the fusion style merchandise is in high demand and the prices are going up against classics, which were much lower priced. The company expects to see an increase in the average unit price.

What is the company''s strategy to increase sales in Europe?

Low profile products are more in demand in Europe and Foot Locker''s strategy is to sell more of the low profile products in Europe. Last year at the same time the company had about 18% to 20% of inventory in low profile footwear. At the present time, the low profile footwear inventory is over 40%. For the first time in a long time, Foot Locker''s footwear business is running high single digits ahead in Europe. The plan is to have approximately 50% of offerings in Europe in low profile footwear. In terms of average unit sale, last year the company was in a total clearance mode for a good part of the year trying to get the inventories in line because the high-end stuff was not selling.

The company plans to modify the apparel business in Europe. There is a major emerging trend in street wear, which is considered to be a key catalyst in driving business.

What is the current footwear trend in the U.S.?

The company has strengthened its performance in marquee athletic for the fall season in the U.S. The basketball business was flat in the second quarter and had an increase in the U.S. in the first quarter. The company hopes to resurrect that business with new products. The iPod shoe is a phenomenon and the company sold lot of those shoes recently. It could be a good catalyst for the fall season.

Does the company need to have the high level of inventory, which it presently has?

The company''s inventory turnovers are among the highest in the industry. There was a big sales miss in the quarter, which affected the inventory level. The present level of inventory needs to be reduced.

Could you comment on the competitive landscape by major markets in Europe?

U.K. remains the most challenging market. It is highly promotional. They are promoting a lot of the high-end marquee products at very deep discounts.

France, which is very important to the company, has promoted very aggressively over the last year and a half. The economy is not the greatest over there. Most of Foot Locker''s competitors in France do not make a profit. Foot Locker makes a good profit. The company has undertaken a remodeling program to be sure that it is ahead of the curve. The company plans to introduce new and exciting merchandise in France.

Germany has been a good market, one of the reasons is it had a very good World Cup. Italy and Spain have been profitable markets with the least promotional landscape. The company is doing well in Northern Europe and Benelux.

Do you consider the current trend of athletic fusion and slow down of traditional athletic footwear in U.S. a risk to your business?

The management thinks that the current fusion trend in U.S. will begin to slow down and does not think that it is a risk to the business of Foot Locker.