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Here's what Red Envelope had to say about its business in Q4:

Most of the products designed in-house command higher margins than those not designed and sourced by RedEnvelope. And we will continue to build our in-house design expertise in order to maximize our assortment of up-scale, unique products in all categories.

Our percentage conversion rate held steady versus the prior year…

We had relatively few promotions and markdowns during the season, the effect of which can be seen in our improved gross margins.

The affordable luxury category was one of the strongest categories in general in retailing for the holiday season. And that is -- I think we are very -- we are placed in a very strong position in that group. And I do believe that there is room for us to continue to grow.

We continue to focus though on the $50 to $100 range, which is where most people feel comfortable purchasing multiple gifts, although we do have an assortment of products that are a bit more expensive… I think the real growth for us in going to come in our margins and not so much on raising price points, as we continue to improve our overseas sourcing.

(Quotes from the CCBN StreetEvents transcript.)

Source: Red Envelope (REDE) on luxury e-tailing (quotes from the conf call)