And comparing Q1 to Q4, we saw a slight shift in sales to higher priced tiers which we attribute in part to the holidays and to a lesser degree to customers trading down less. We are still seeing strong redemption rates for coupons featured in our Whole Deal newsletter. Excluding LIFO, gross profit for quarter increased 84 basis points to 34.3% of sales.

We are continuing to see lower cost of goods sold, driven by better purchasing and distribution disciplines as well as improved store level execution, particularly, in terms of shrink control and inventory management. For the second quarter in a row, we saw year-over-year declines in inventory levels of approximately 5%, which drove improvements in inventory turns.

Year-over-year, the margin improvements more than offset slightly higher occupancy costs as a percentage of sales. Early last year, we made the shift from being fairly reactionary on pricing to being much more strategic. We have seen this strategy successfully play out over the last several quarters as we have produced strong year-over-year improvement in gross margin and comps.

While many of our competitors have gone back and forth on their pricing strategies, we are sticking with our goal of offering competitive prices on known value items day in and day out. Our internal benchmarking shows that we maintained our price competitiveness relative to our national competitors during the quarter.

We remain focused on continuing to strike the right balance between driving sales improving our value offerings and maintaining margin. We produced diluted earnings per share of $0.32. We beat our own internal forecast due primarily to higher than expected sales, driving better gross margin results in leverage of G&A expenses. There was still some conservatism in our spending in Q1, resulting in some new G&A expenses being pushed to Q2.

Our results included $10.1 million or $0.04 per diluted share in store closure reserve adjustments. During the quarter we opened six stores in San Francisco, California; Santa Barbara, California; Milford, Connecticut; Portland, Oregon; Plymouth Meeting, Pennsylvania and Seattle, Washington ranging in size from 25,000 to 50,000 square feet and we closed one former Wild Oats store.

Since the fourth quarter, we terminated two leases for stores in development and today announced three new leases averaging 40,000 square feet in size. We are committed to producing positive free cash flow on an annual basis, including sufficient cash flow to fund the 51 stores in our current development pipeline.

In other news, we were extremely pleased to move up four spots to number 18 on Fortune’s list of the 100 best companies to work for. To be of only 13, companies ranked 13 years in a row validates our commitment to our core value of supporting team member happiness and excellence.

We are very happy about this achievement and want to commend our regional and store leadership teams for the great job they did in staying focused on team member morale in what was a very challenging year last year. We also want to take a moment to thank our customers and team members for their generosity in the wake of the tragedy in Haiti.

Our customers donated $1.7 million toward the relief and rebuilding efforts in Haiti. And our team members contributed more than $93,000 to support our Haitian team members whose friends and family have been affected by the earthquake. Through the Whole Planet Foundation, Whole Foods Market has provided $1 million to a micro credit organization that is providing banking services to the people in Haiti, following the earthquake. While not surprised by the outpouring of cash donation, we are humbled and grateful our customers and team members contributed to help so many others in need right now.

Looking back on why we started this business over 30 years ago, one of the things we were most passionate about was the idea of providing customers with healthier alternatives to heavily processed foods produced through industrial agricultural and sold in conventional supermarkets. While we fulfill a part of our mission everyday through selling the highest quality natural and organic foods available, I believe, we have the opportunity and the obligation to do more in terms of educating our stake holders about the benefits of healthy lifestyle choices.

To underscore our renewed focus, we created a new core value last summer, promoting the health of our stake holders through healthy eating education. On January 20th, we announced the official companywide launch of our Health Starts Here Initiative, created to support this new core value. As part of this initiative, our stores are now offering free information, recipes in-store lectures, events and support groups with a selection of educational books and cookbooks offered along side materials from our two partner programs, Dr Joel Fuhrman’s Eat for Health Program and Rip Esselstyn’s, Engine 2 Diet.

In-store signage is focused on education about nutrients in foods through Dr Fuhrman’s aggregate nutrient density index or ANDI scores, including how to prepare and incorporate these foods into our everyday life. Our prepared foods teams are now offering a selection of specially branded health starts here items and the self serve food bars and chef [ph] cases which are generating considerable customer interest.

For more information, visit any of our stores, or check out the video on our website, featured on the front page of the press room. Our Health Starts Here Initiative includes two internal programs as well, The Team Member Healthy Discount Incentive where team members can earn a higher store discount for achieving certain biometric testing scores in the areas of nicotine, blood pressure, cholesterol and body mass index and the Total Health Immersion Program, a voluntary incentive health and wellness education program offered biannually at no cost to our higher health risk team members.

So far, we have had a tremendous response to these programs. We believe the upfront investments we are now making will deliver strong returns over time in terms of healthier team members and lower health care costs. We have a loyal core customer base that is aligned with our mission and core values.

We expect our Health Starts Here Initiative will grow and evolve over time to become a key competitive advantage for us. And by offering an informed approach to food as a source for improved health and vitality, we will help change many more lives for the better.

We believe our passion of support of causes and leadership in areas important to our customers reinforces our position as the authentic retailer of natural and organic foods making us the preferred choice for customers aspiring to a healthier life style. I will now turn to the rationale behind our raised outlook for the fiscal year.

Please refer to our press release for detailed guidance. Last quarter, we guided flat operating margins for fiscal year 2010 excluding unusual items last year. At that point, we had just reported 1.6% comps and 0.4% idents for the first five weeks of Q1. Our results for the last 11 weeks of Q1 were significantly better than this at 4.3% and 3.3% respectively.

We did not forecast this level of improvement and our first quarter results exceeded our own expectations on both the top and the bottom line. For three quarters, we have produced sequential improvement in comparable and identical store sale trends driven by improving transaction count trends. We are now seeing increasing transaction counts year-over-year and sequential improvement in identical store sales growth on a two year basis as well.

Second quarter to date, our results are better still at 7.0% and 6.0% respectively with 0.6% two year identical store sales growth. We are very pleased to see our comps moving closer to the ranges we produced prior to acquiring Wild Oats and the onset of the recession. And we believe there are many reasons to be bullish about our future results. It is relatively early in our recovery; however, and there is still a lot of uncertainty regarding where the economy, the consumer and competition go from here.