1- The instore sales rep force is largely a fixed cost and this cost will be spread over more sales $ as the new lines launch. Katz raised the breakeven point by adding to the fixed cost structure to add the instore reps after he said shortly after he came on board that the current infrastructure could take the company to $300 million in sales. Bottomline, he set an expectation that he did not meet but if you understand the change and what it means it is not the end of the world as they have sufficient upcoming licenses to generate nice profitability once these lines are rolled out and in their second year.

2- In the first and second (holiday) quarter when a new line launches, the advertising spend will eat up most or all of the gross margin as the new lines are a startup operation.

3- A new fragrance line will not get into the mass market for a minimum of 6-12 months due to contractual restrictions. Thus to claim in Q2 209 that JS mass market acceptance is not sufficient is premature as it is only 1 year from initial launch. Admittedly, I would like to see the JS line in additional outlets and this is well worth watching.

4- To a certain degree, kriketfot is right that eps will not grow wildly this year but it is because of 2 above. This shifts in year 2 when a new line contributes to profitability. He is looking at it saying the stock may only go to $3 (0.20 eps x 15 pe). The way in the near term for the stock to jump is to announce a Madonna signing. This would drive the pe ratio up - perhaps to 30 which takes the stock to $6. Realistically this may be an additional 6 month wait until that signing.

As I said to cheating the other day, the upside from here is very good. IMO, it will take 3 years at the longest. That said, 3 years is good for 5-6 times your money from here and those of us that are still holding the sub $1 shares could be VERY, VERY happy.