Philip L. Francis

Dan, this is Phil. It''ll be less leverage than might have been at $150 a barrel oil, but it''s still going to be leverage compared to what we put in the pro forma when we needed the CapEx to bill it to begin with.

Dan Wewer – Raymond James & Associates

And as I recall your freight costs are capitalized in inventory?

Lawrence P. Molloy

That would be true.

Dan Wewer – Raymond James & Associates

Do we''ll really begin to see the benefits of the drop in diesel fuel prices probably in the second quarter of next year?

Lawrence P. Molloy

We will but bear in mind that our entire cost to run, the cost of fuel for us runs about $19 million so all in it''s a very small piece of our entire cost structure.

Operator

Your next question comes from Brian Nagel – UBS.

Brian Nagel – UBS

So the first question that I have, with respect to, and I''m looking the fourth quarter comp guidance and it does suggest somewhat moderating from trends in Q3. As you think about the business as we go into Q4, how much more discretionary do sales become from Q3?

Philip L. Francis

A couple things go different directions. I think the hard goods business goes up in Q4, but what underlies all of Q4 for us is cold weather, Brian. Pets eat more food when it''s cold out. You sell heated bowls in Q4 because it''s cold, not because it''s Christmas. You sell a new bed because it''s cold, not because it''s Christmas. You sell a sweater because it''s cold, not because it''s Christmas. And so when Bob says things like January is a good month, first it''s true, but it''s because it''s cold and our Q4 is good because it''s Christmas and it''s cold and I mean our, oftentimes our third quarter is the softest because it''s hot. And pets tend to get a bath or even if the frequency is reduced, everybody''s going to get a groom in the two and a half weeks before Christmas, and we''re still going to sell a lot of training classes in January with three holidays in six weeks kind of takes a pause in December but it does very well in January as well because of new pets. So the hard goods is discretionary but some of it is just cold weather-related and that''s still, that''s not going to be impacted.

Brian Nagel – UBS

That’s helpful and then the second question that I had, with respect to the PetsHotel and the boarding, to what extent have you experimented with different pricing schedules, given the weaker macro environment?

Philip L. Francis

We have experimented and we have raised some prices. We''ve also sent, I mean, it costs more to stay in the PetsHotel the 15th of January to the 7th of December than it does the rest of the year and that wasn''t always true. And we''ve now done some more localized pricing based upon competitive checks and some tests that we''ve done, and so our price points have risen in ''08 from what they would have been in ''06 or ''07. We haven''t raised many in the last 90 or 120 days because we think that the sensitivity is probably raised, but in terms of the structuring kinds of things people were talking to us about 18 months ago; do you charge more here than there and do you charge more at holiday times, we put that in place before this holiday season so our prices have been pretty stable for 90 days.