Francis Blake
Deborah, I would say we’re really in the early innings of that, so just starting but Craig, why don’t you address that?
Craig Menear
Yeah, Deborah, I think it would be fair to say that we are probably at this stage maybe a quarter of the way through the process, or even maybe slightly just a little less than that. So we have a lot of work to still do.
Deborah Weinswig – Citigroup
Okay, and then we’ll sneak one more question in. On the RDCs, I think it was said on the call it was the best in-stock rate that you had experienced in five years. Can you compare your RDC serve stores and non-RDC serve stores?
Francis Blake
So at this point, Deborah, they are roughly the same. We have seen a little bit better performance from our RDC supported stores but to tell you the truth, the supply chain as a whole, along with our store operations team and our merchandise team, have just done an excellent job on the in-stock rate, so that improvement reflects improvement across the company, not just in the RDC supported stores.
Deborah Weinswig – Citigroup
Great. Thanks so much. Keep up the great work and best of luck.
Francis Blake
Thank you.
Operator
Our next question will come from Colin McGranahan with Bernstein.
Colin McGranahan - Sanford C. Bernstein & Co.
Good morning. Focusing back on the RDCs for a second here, it sounds like that by the end of next year, or nearly half of the store base will be served by an RDC. I know Mark had talked about initially some obviously inventory benefits, some supply chain cost benefits, operating margin benefits. I think it was 30 or 40 basis points. How are you thinking about those benefits now that you have five of these open, and how is that impacting your outlook for inventory at the end of next year, inventory turnover and the potential margin benefits that could accrue in ’09 from the supply chain improvements?
Francis Blake
I would say first, and then Mark is here and he’ll address your question in more detail, Colin, but I would say we are still very pleased with the results and counting on those results as we go forward. In 2009, it’s not yet at critical mass in terms of whether we see the benefit on inventory turnover. We are immediately seeing the benefit on transportation on the freight cost but less so on the in-stock and inventory turn. Mark, do you want to --
Mark Holifield
Sure, a bit more detail on RDC. As Frank said, we opened our fifth this quarter. That opened in Allentown, Pennsylvania. We had about five weeks of operation there and all of our KPIs, key performance indicators are looking good there and meeting our expectations. The four other RDCs are progressing well against their KPIs as well, and we are on track to achieve the original business case for the RDCs. We expect to be serving about half of our stores by the end of 2009, and by the end of 2010 serving all of them. |