What led to the rise in SG&A? How do you plan to contain it?

Stock options accounted for about 16 basis points increase which was not a significant amount. The company has tightened expenses but this is a short-term effect. As new growth initiatives are taken, there will be a little bit of de-leveraging. The company is trying to mitigate that as much as possible and still focus on growth.

What is the outlook for the second quarter?

The company was reasonably aggressive in the first quarter. It will be less aggressive in the second. It is hard to say how the quarter will come out but the outlook is certainly cautious.

What are the initiatives you are doing this year?

The company is planning to launch an initiative that will sort of rearrange, redefine the production department and the relationship with overseas manufacturers and agents. The purpose of this is to decrease both the cost to the company and to decrease the time necessary to get products from inception to the stores. It will be a multiple year initiative and will take time to pay returns.

How was the performance of the Europe business?

On a comparable store basis, Europe business was up 6% last year and it was up 11% this quarter. It built nicely in April and the same continues in May. The only area of disappointment was the accessories section. Accessories aren''t as heavily penetrated in the UK business. However, the fashion offering was more synchronized to what customers wanted. That helped a good quarter.

Can you detail on the catalogue circulation?

The catalogue circulations in both brands were up in the 40% range. With Free People it was up a couple of hundred percent, but they are worth processing. Urban didn’t have a lot done last year, so Urban is up 40%. Free People is just in the process of building the circulation and building the customer base, so they were up fairly dramatically. In the second quarter, it is expected to go up by 20%.

What was the number of reorders?

The business continues to do well, but the company expects the increases to mitigate, as the base gets bigger.

Do you plan to accelerate the number of shop-in-shops like the ones in Bloomingdale’s?

The group is continuing to build the shop-within-shop business at Bloomingdale’s but the bulk of the growth has come from doing more business in existing accounts. It has been very careful with distribution.

What will be the effect on SG&A from moving the headquarters in late-July early-August?

The impact will be less than a tenth a cent. Almost insignificant.

What has been the impact of the merchandise shift?

It is affecting every aspect of what women buy. It has had a dramatic impact on apparel, accessories and shoes. Typically the men’s area is 9 months to 12 months behind the women''s. Hence, by next holiday or early spring next year, there will probably be some kind of shift in the men’s business as well. The effect has been dramatic and pervasive.

How did the home business do at both divisions? How is men’s apparel at core Urban trending?

The home business was stronger at Anthropologie than it was at Urban. There have been a lot of shifts that have happened in the calendar, the Easter shift, the Mother’s Day shift, which have caused pretty significant distortion.