Gross margin for 2009 was 57.3 percent as compared to 54.0 percent in 2008. The gross margin for 2008 was negatively impacted by $13.2 million in stock based compensation expense relating to the award of approximately 1.9 million shares of stock to manufacturing employees during the third quarter of 2008, granted pursuant to the 2007 merger between American Apparel, Inc. (formerly Endeavor Acquisition Corp.) and American Apparel Inc., a California corporation (“Old American Apparel”). The net impact of the stock based compensation expense was to negatively impact gross margin in 2008 by approximately 240 basis points. Gross margin for 2009 was favorably impacted by a shift in mix from wholesale to retail sales, as retail increased from 62.6 percent of total net sales in 2008 to 67.9 percent of total net sales in 2009. The favorable impact from the shift in mix was partially offset by the negative impact of the appreciation of the U.S. dollar versus foreign currencies for the full year 2009 relative to the full year 2008. Additionally, gross margin was also negatively impacted by lower capacity utilization of the company’s manufacturing facilities in the first half of 2009, and the substantial reduction in manufacturing efficiency experienced in the fourth quarter of 2009 at the company’s production facilities.