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In discussions with our German partners, we have neutrally concluded that the venture as structured is not economically or strategically attractive. Based on these discussions, we have received a formal termination notice from our partners and are therefore moving to terminate the venture in February 2009 while evaluating the potential for more simple licensing arrangement with the third party for the use of the Eddie Bauer name in Germany. We're reviewing our investment of $3.8 million in a joint venture and will likely incur an impairment charge related to some or all of this investment in the first quarter of 2008..
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We are particularly pleased with the improvement in merchandise gross margin we realized in the quarter. For the quarter, merchandise gross margins increased 170 basis points, our second consecutive quarterly increase and the biggest increase we've seen in more than three years. The improvements were broad based as margins increased in 11 of 13 merchandise subcategories.
  
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