Operator: Good morning/good afternoon. My name is Jennifer and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Kohl’s Quarter One 2010 Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions).
Statements made on this call including projected financial results are forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in such forward-looking statements. Such risks and uncertainties include those that are described in item 1A in Kohl’s Annual Report on Form 10-K and as may be supplemented from time-to-time in Kohl’s other filings with the SEC, all of which are expressly incorporated herein by reference.
Also please note that replays of this call will be available for 30 days, but this recording will not be updated. So if you’re listening after June 14th, it is possible that the information discussed is no longer current. At this time, I would like to turn the call over to your host, Mr. Wes McDonald.
Wes McDonald - CFO: Thank you. With me today is Kevin Mansell, Chairman, CEO and President. I’ll talk about our financial performance and then Kevin will walk through our progress in merchandising, marketing, inventory management, and the in-store experience; and then I’ll follow-up with our earnings guidance detail for both the second quarter and the fiscal year.
Total sales for the first quarter were approximately $4 billion, up 10.9% from last year. Comp sales for the quarter increased 7.4%, driven by an 8.8% increase in transactions per store. Units per transaction increased 0.4%, but were more than offset by a 1.8% decrease in average unit retail. All regions and all lines of business reported positive comp sales results for the quarter, led by the southeast and west regions, and the footwear and home businesses.
Our e-commerce business also generated significant growth achieving a 50% increase in sales for the quarter and contributing 110 basis points to our comp sales. Our credit share was 47.7 for the quarter, an increase of approximately 270 basis points over the first quarter of 2009. Our gross margin rate for the quarter was 38.1, up 48 basis points from last year. We improved our gross margin through strong inventory management and successful private and exclusive brand strategies. We would expect gross margin to increase 20 to 40 basis points for the second quarter.
Moving on to SG&A, SG&A increased 7.3% for the quarter in line with our increase in sales over our previous expectations. Store payroll, advertising, and corporate expenses leveraged for the quarter. Distribution centers did not leverage due to initial expenses related to the purchase of our second e-commerce fulfillment center, and higher than expected e-commerce sales. Credit expenses did not leverage for the quarter due to cost incurred to prepare the portfolio for additional legislative changes effective in the first quarter of 2010, as well as a reduction in late fee revenue. IT expenses did not leverage for the quarter due to our increased e-commerce investment. We would expect SG&A expenses to increase 10% to 11% in the second quarter due to timing of investments in our e-commerce business, both in our fulfillment center and IT infrastructure. In addition, we expect to incur additional costs to notify our customers as additional legislation related to our credit card portfolio is finalized, most likely in the second quarter.