I am very pleased with our execution to date and I’m confident that our customers will appreciate the changes we are making to improve the shopping experience. While our aggressive pace will pressure our near-term results, these investments will position us for longer-term sustainable growth as we improve the in-store shopping experience, build stronger customer loyalty, and drive greater market share gains.

Now I’d like to turn the call over to Ken for a discussion of the third quarter financials and our outlook for the fourth quarter.

Kenneth T. Smith

Thanks, Howard. This morning we reported results for the third quarter. For the fifth consecutive quarter we reported double-digit earnings per share growth and an expansion of our operating margin. We also increased fourth quarter guidance which is impacted by the anniversarying of last year’s stimulus.

We’ll flush out the fourth quarter in more detail in a moment, but let’s first review our third quarter performance. Earnings for the third quarter increased 35% to $0.62 per diluted share compared with $0.46 per diluted share in the third quarter last year. Strong top line growth and better than expected gross margin performance resulted in approximately 160 basis points of expansion of operating margin during the quarter.

As we reported a few weeks ago, net sales for the quarter increased 8.3% and comp sales increased 6.2%. While consumables continued to be the primary driver of sales during the quarter, increasing approximately 11% on a comp basis, we also saw improving trends in more discretionary categories. Sales of home products continued to strengthen and sales of apparel while still negative, improved from the trends we saw in the first half of the year.

From a mix standpoint, consumables increased to approximately 65% of sales as compared to approximately 63% of sales last year. Despite this significant mix shift, gross profit as a percentage of sales increased approximately 160 basis points in the quarter as compared with the third quarter last year.

The improvement in gross margin was driven primarily by lower freight expense, lower inventory shrinkage, and higher purchase markups. These improvements more than offset the margin effect of higher sales of lower margin consumables.

SG&A expense in the quarter as a percentage of sales was flat compared with the third quarter last year, reflecting the effect of the 6.2% comp in the quarter and our continued focus on expense control, most expenses including store labor and occupancy costs, were leveraged in the quarter.

Offsetting these improvements, incentive compensation and insurance expense again pressured SG&A deleveraging by about 50 basis points for the quarter. Now let’s take a look at the balance sheet, at the end of the third quarter merchandise inventories were 3% higher than inventories at the end of the third quarter last year.

Average inventory per store increased approximately 1% as compared with last year. Although average inventory per store was slightly higher at the end of the third quarter, we continued to improve GMROI and inventory turns. As Howard indicated, we are making selective investments in traffic-driving consumable categories to meet growing customer demand.

As a result consumable inventory levels at the end of the third quarter this year were higher than consumable inventories last year. Highly consumable merchandise often has terms which include payment discounts. The taking of these discounts combined with the timing of these receipts late in the quarter resulted in a temporary reduction of our accounts payable leverage at the end of the quarter.

Reflecting our continued focus on managing risk, inventory levels in more discretionary categories were lower at the end of the third quarter this year as compared with the third quarter of fiscal 2008. We continue to maintain a strong liquidity position. Through the first three quarters of fiscal 2009, we generated more than $323 million in operating cash flow; more than adequate to fund approximately $103 million in capital expenditures and approximately $54 million in dividend payments.

As of May 30, 2009, cash and cash equivalents were approximately $296 million as compared with approximately $84 million as of May 31, 2008. Reflecting our expectations for the continued rollout of our store technology platform, as well as investments in the fourth quarter to support our expanded consumable assortment and related space changes, we expect that capital expenditures for the year will be between $160 million and $180 million.

Finally, during the third quarter we purchased 1.2 million shares of our common stock at a cost of $38.5 million. As of May 30, 2009 we had outstanding authorizations to purchase a total of $94.6 million of our common stock.

Now let’s turn to our outlook for the fourth quarter. Starting with sales, we expect that consumables will continue to drive comps in the fourth quarter, driven by both our expansion of key traffic driving categories as well as continued consumer focus on basic needs.

However, as we have indicated in prior conference calls, our overall comp results will be impacted in the fourth quarter as we anniversary last year’s stimulus package. Of course this year our customers are also benefiting from a government stimulus, but the impact is somewhat different from a timing standpoint.

Last year’s stimulus program benefited most of our customers with a single lump payment distributed primarily in June and July. While favorable weather and incremental advertising certainly impacted our fourth quarter comp last year, we also saw a benefit particularly in more discretionary categories as consumers spent their stimulus checks.

This year, the federal stimulus package is intended to provide assistance to low income families for the rest of 2009 through tax credits, an expansion of the food stamp program, and increased unemployment benefits. All of these programs should benefit our customers but over a prolonged period.

In addition the minimum wage increase which will be effective later this month could also provide customers with additional income. The June period just ended and I am pleased to report that we cycled last year’s 8% comp well. We estimate that comps for the June period increased approximately 2% which on a two-year basis, represents one of our strongest performances this year.