This was also a quarter of unprecedented swings in commodities like I’ve never seen. Framing lumber reached its lowest level since 1990 and copper and oil prices fell over 50% from the beginning of the quarter. Despite this and the softer sales, our new processes and tools allowed us to better manage the business, deliver a solid gross margin and inventory performance in the U.S.

We are confident that our merchandising strategy is working, as evidenced by our unit share gains in nine out of our 13 departments during the quarter. Based on independent third-party tracking of our consumer activity, we saw strong unit share gains in several key merchandising classes -- carpet, hand tools, power tools, blinds, windows and doors, to name a few.

We feel good as we head into the spring in this challenging environment. We utilized our assortment of management tools to refine our seasonal assortments and to strengthen our value segments at the opening and middle price points. In the fourth quarter, we saw some customers purchase top-of-the-line snow removal product as they traded in their third-party service contracts and opted to do it themselves. We are prepared to provide customers with the necessary products in lawn equipment, chemicals, and fertilizer categories should this trend continue into the spring businesses.

2009 is going to be another tough year, but we are focused on merchandising fundamentals and we are well-positioned to execute. And now I would like to turn the call over to Carol.

Carol B. Tome

Thank you, Craig and hello, everyone. Our financial results for the quarter and year are distorted by a few factors that I would like to discuss and get out of the way before I cover our results.

For the fourth quarter and the year, we will be comparing our results against an extra week, as fiscal 2007 was a 53-week year. The extra week in 2007 added approximately $1.1 billion to sales and approximately $0.04 to earnings per share. We had several strategic charges in fiscal 2008, which we have highlighted on an exhibit to our press release.

For the year, the charges totaled $951 million, representing a $564 million store rationalization charge related to the closing of 15 under-performing stores and the removal of 50 stores from our new store opening pipeline, and a $387 million charge taken in the fourth quarter in connection with the closing of our EXPO businesses and support staff reductions. For the purpose of this call, we will refer to these charges as the business rationalization charge.

Finally, earnings from continuing operations were impacted by a $163 million write-down of our investment in HD Supply, which is reflected in other expense, and we reported a $52 million loss net of taxes from discontinued operations related to the settlement of an HD Supply working capital matter.

So with that, in the fourth quarter, sales were $14.6 billion, a 17.3% decrease from last year. For the year, our sales declined by 7.8% to $71.3 billion. Excluding last year’s extra week, sales were down 12% for the quarter and 6.5% for the year.

Comp or same-store sales were negative 13% for the quarter, with negative comps up 12.6% in November, negative 17.4% in December, and negative 9.2% in January. The monthly comps are distorted because last year’s extra week shifted our fiscal calendar. On a like-for-like basis, for the fourth quarter comps were negative 11.5%. Now like-for-like comps for our U.S. stores were a negative 9.2%.

Roughly 10% of our sales are from outside of the U.S. In the fourth quarter, we saw significant strengthening of the U.S. dollar against all currencies. Foreign exchange rate fluctuations negatively impacted total company comps by 190 basis points in the quarter.

For the year, comp sales were negative 8.7%. Neither the calendar shift or foreign exchange had a meaningful impact to comps for the year.

Excluding the fourth quarter business rationalization charge and the HD Supply write-downs, adjusted earnings per share from continuing operations were $0.19 for the fourth quarter. For the year, earnings per share from continuing operations were $1.37.

On an adjusted basis, earnings per share from continuing operations were $1.78, down 21.6%, slightly better than our most recent guidance.

In the fourth quarter, our gross margin was 34%, a decrease of 32 basis points from last year, reflecting the following factors. First, our U.S. retail business reported five basis points of margin expansion in the quarter, due primarily to better shrink results than last year. Through our focused bay portfolio approach, our merchants are driving new lower prices while maintaining overall gross margin. This gross margin expansion was offset by 14 basis points, or $20 million, related to markdowns taken in connection with the closing of the EXPO businesses.

Second, we realized 23 basis points of margin contraction, primarily related to our Canadian business, reflecting the impact of a weaker Canadian dollar, a promotional December, and inventory adjustments related to our score or SAP conversion.

For the year, our gross margin was 33.7%, up four basis points from last year. Excluding the markdowns associated with the business rationalization charge, our gross margin increased by eight basis points from last year.

In the fourth quarter, operating expenses increased by 493 basis points to 32.1% of sales. Excluding the business rationalization charge, operating expense increased by 241 basis points to 29.6%. Our expense deleverage reflects the impact of negative sales, where we expect to deleverage expenses for every point of negative comp by about 20 basis points.

In the fourth quarter, our expense deleverage per point of negative comp was about 18 basis points, including the cost of private label credit. Throughout the year, we had been experiencing additional expense deleverage due to rising costs associated with our private label credit program. In the fourth quarter, and as expected, the expense pressure from our private label credit card moderated.