Joseph Parkhill – Morgan Stanley

Hi, good morning. I was just wondering if you’ve looked past fourth quarter when a lot of the benefits from lower diesel prices presumably fall off and gross margin comparisons get a little more difficult, like what comp do you think you need to lever SG&A going forward.

Kenneth T. Smith

Well, Joe, as we plan, we haven’t put specifics to next year obviously and are in the planning stages of that as we evaluate various investment opportunities. Our core, we still continue to begin with our core expense rate from a break-even perspective around that 3% level. Now that can be, that’s kind of the core baseline that we begin with and as we look at investments and the pacing of those strategic investments from a quarter-to-quarter basis, obviously you can see some fluctuations from that number.

And other factors impact it as well. A strong comp can certainly impact the actual SG&A number. So we begin our core planning with that 3-ish percent number and then what we’re very pleased with is in the current environment, we’re very pleased with our efforts to manage costs and control those costs that we’ve embarked on this year.

So we’re looking to take advantage of this unique opportunity and our financial strength to be strategic in our investments and we’ll plan that investment agenda with our core expense rate as we look forward.

Joseph Parkhill – Morgan Stanley

Okay, that was helpful. Thank you. And then also just for your guidance of 2% to 4% comp, do you expect the acceleration just because June would be the most difficult overlap with respect to stimulus, or are there other factors that you think will cause sales to accelerate.

Howard R. Levine

Just to provide a little color on the quarter from last year directionally, last year as we entered in the Memorial Day holiday we had not seen summer open up yet. So one of the big issues and benefits was the opening up of the summer season as we finished May and went into June. The other big benefit was the peaking of the distribution of the stimulus checks to our customers.

I know that there’s data out there that indicates that some of that started going out in early spring. I think most of that was electronic filers that benefited from that so most of our customers received those checks within the first half of the fourth quarter. Once we got through the first half of the fourth quarter we did see things begin to get back to more normalized levels and would expect that the comparisons in the second half of the quarter would also as a result of that, be a little bit easier.

Right now we’re facing some pretty heavy headwinds but do see them softening as we get through the quarter.

R. James Kelly

As a reminder, the cadence last year of comps was 8% in June, 5% in July, and roughly 3% in August. So again, if you just focus on the underlying trends and the two-year stack you see an opportunity or a suggestion that the current year comp should improve through the quarter which is what is being implied with the 2% to 4% guidance.

We also have a lot of underlying momentum. We have significantly more store of the future stores operating in the fourth quarter this year versus last year. We have successfully reallocated space in 1,500 of our stores and we think just those two items alone will help position us to continue with solid sales results during the fourth quarter.

Joseph Parkhill – Morgan Stanley

Okay, thank you very much and congratulations.

Operator

I think our next question comes from Patrick McKeever with MKM Partners.

Patrick McKeever – MKM Partners LLC