Good day ladies and gentlemen and welcome to the Tandy Leather Factory Inc. Q2 2016 Earnings Call. At this time all participants are in a listen only mode. Later we will conduct a question and answer session and instructions will follow at that time. [Operator Instructions]. As a reminder, the conference is being recorded. I would now like to introduce your host for today’s conference, Shannon Greene, CEO. Ma'am, you may begin.

Thank you. Good morning everyone and welcome to our second quarter 2016 earnings conference call. I am Shannon Greene, Chief Executive Officer. Mark Angus, our President who is normally on the call is traveling this week, so he will not be joining us. Before we get started, let me remind you that the earnings release and related SEC filings are available on our Investor Relations section of our website and a replay of this webcast will be available later today. I need to remind everyone that there may be forward looking statements on the call today. Statement would include words like expect, believe, anticipate, plan, intend, target or words of similar meaning and are based on our beliefs and expectations and are subject to certain risks and uncertainties that may cause the actual results to differ materially from our forward looking statement about those results. These risks are detailed in our various filings with the SEC such as the most recent Form 10-K and 10-Q as well as the news releases and other communications. We do not undertake to update or revise any forward looking statements which speak only as of the time they are made. So we had a good second quarter despite weak sales. Our gross profit margin improved over last year’s second quarter and our operating expenses dropped significantly. So while we wish sales were better, we feel we have made the most of the quarter by increasing earnings by almost 21%. We'll take that over a sales gain most days. I'm sure I sound like a broken record but I'm going to say it again. We think that for whatever reason consumers are being very cautious with their discretionary spending despite the low fuel prices and I haven't heard anyone suggest a reason for the cautiousness…

[Operator Instructions] And I am showing no questions at this time. Well, actually I'm sorry, it looks like you do have a question from Robert Balkman [ph] with Central Square.

Hi guys. Thanks for taking the question. Just one quick one on the gross margin, it’s nice to see the improvement in the quarter. Can you just provide a little more color on what drove this sequential and year on year change? Was that mix or just what are you doing on the gross margin side?

Yeah, hi Robert. And yes, so it's a matter of -- generally always mix. As I said in the prepared remarks, there really -- simply stated, there are two things that affect margins: retail sales -- sales to retail customers versus sales to wholesale and business customers, because obviously the margins are higher on -- if you're selling to a retail customer, just strictly based on selling price. And then the other thing is leather is our lowest margin item of everything that we sell. So if we've got a product shift, selling more leather this quarter than a year ago or flip with the other way it affects margins. Last year second quarter, if you go back and look at the history we were selling a lot more leather in the first – particularly the first half of last year because of – well, couple things, that the easiest one was the West Coast port issues. We weren't getting product in from Asia and the Pacific RIM because of the bottleneck in Long Beach. And so therefore we didn't have our normal supply of non-leather items. So last year second quarter was much more heavily weighted selling leather than selling non-leather. And as a result, then it pulled margins down simply because of the gross profit on leather sales in general. This quarter the product mix has shifted back a little bit more normally. And on top of that the margins on the leather that we sold in the second quarter was better than it was a year ago. So that you put those two things together and that pretty much explains what's going on with margin second quarter this year compared to last year. As far as customer mix, not a whole lot of different. All the customer groups seem to be struggling and so there wasn't a real big shift one way or the other in terms of retail customer sales versus non-retail customer sales. So it was really in the mix of products sold and then picking up a little bit of a bump in the gross margin on the leather itself. End of Q&A

[Operator Instructions] I'm showing no further questions at this time.

Very good. You guys have been awfully easy on me. Thank you for participating in our earnings conference call today. We look forward to speaking with you again next quarter. Have a great day.