Are there any other likely gains to be had from bond repurchases like lease gains or insurance gains, for either fourth quarter or possibly early next year?

These things come up from time to time. The firm always continues to look at opportunities to buy the bonds if the prices are favorable and of course the market can change. The firm is still working with its insurers to settle out their gaining claims related to the hurricanes, but it is hard to say when that might happen.

Why were payables down so much in the quarter?

It is a timing issue relating to the receipt of goods. The more Marquee goods that the firm has they require early receipts to prepare for the launches so that was a part of it. Also, it was due to general early receipting. But the firm expects that ratio by year end to be back more in line with its historical ratio of 28% to 30%.

How do you feel about inventory levels now in the core locker base?

The company’s inventory was slightly favorable to its plan at the end of the quarter but as the firm continues to get more launch product to receipt that goods, in many cases, it could be receipted and not be available because of a launch date for sale for as many as three to four weeks in some cases. The management is hopeful that by the end of the fourth quarter, it will be in the 4% range in terms of inventory increase over last year.

Should payables be more in line with last year?

Yes.

Can you comment on how dilutive do you expect the new Footquarters concept to be next year?

The firm is not expecting much of a dilution on it. As Europe has slowed down right now, it has six to eight new stores planned. This year, the new store count, absent the franchises, is about 16 to 18 new stores. Prior to that, the firm was opening approximately 50 to 60 new stores a year.

The firm will be taking a lot of capital that it should have spent in Europe and use it for the Footquarters concept. The firm is not going to win in Europe by promoting very aggressively. That''s not its game. They come to Foot Locker for fashion and excitement and this last quarter it was very encouraged that it was able to have a double-digit operating margin over there.

You mentioned that you expect more Marquee in the fourth quarter relative to third quarter. Could you comment a little more on the Marquee product?

The management thinks that the Marquee business is very strong for the firm right now. The firm has got hurt on the sales line is obviously in the business classics business that it had. The company is getting a significant amount more Marquee product. Foot Locker has a huge basketball business and a lot of people are not doing well in basketball. The firm had a good increase in its basketball business, and there is a lot of new exciting product out there. The firm launched yesterday the LA Braun floor shoe, $150 shoe at a very, exciting push and that is going to be another important addition into the Marquee category. The other product from the Nike that the firm is doing extremely well with is Shox. The firm continues to grow that business. It is a big piece of their business and it is going to become a larger part of Foot Locker’s business as well.

The firm is also beginning to sell Nike Shox basketball which got off to a rough start initially. But the management believes that that piece of the marquis business will continue to be a very important driver for next year. The firm will have that in more than 1,400 big stores in U.S. division.

Outside of Nike, are there any Marquee brands that you also see good outlook?

The firm has good business in the Adidas products, the giga rides and all those various different stores shoes of that type. The firm sells a lot of the high-end technical running shoes from Asics. It is a big program in most of the firm’s divisions but particularly in Foot Locker. The company sells a lot of $135 product in there. It is one of the firm’s fastest growing suppliers. Also, the new zip from New Balance did very well. The firm took a big hit in the classic category.

Is your classic inventory totally clear and clean at this point in time?

No. the management is still working on getting it under control. It is not a material problem, but it still has some clearing to do.

Can you talk a little bit about build out costs on the new stores versus what you have on the economics for the existing Foot Locker stores?

The build out costs are significantly lower, as the rents are lower. The management believes that the inventory turnover, because of the lack of the launch concept, will be much greater. Hence the working capital requirements will be lower.