Question-and-Answer Session
Operator
Your first question comes from the line of Michael Cox - Piper Jaffray.
Michael Cox - Piper Jaffray
My first question is what you are seeing thus far in the month of July. I know you commented the 3Q sales decline will be similar to that of 2Q but with weather transferring a little bit more favorable I just was curious what you are seeing now.
Mark Joslin
In the first month of the quarter, it’s really trending very similar to the 13% that we saw for the second quarter overall so.
Michael Cox - Piper Jaffray
Okay. On the gross margin side I know you commented that the gains are going to be slowing here. I was just wondering if you could just talk a little bit about some of the dynamics there.
Mark Joslin
Well two elements. First as you can well imagine a number of competitors are having higher levels of stress and as they do that some have a greater urgency to convert some of that inventory to cash. We surely want to protect the profitable market share but we are not going to chase every deal that’s out there. So there is going to be situations where there’s going to be some level of guess that we have to make but on the other hand we will very judicious on how we do that.
Michael Cox - Piper Jaffray
Okay that’s helpful and my last question is just prioritizing cash flow. You have done a great job of bringing the debt balances down. As you look forward and obviously still an uncertain market but seems to be showing some signs of improvement here. How do you prioritize the use of cash on a go forward basis here?
Mark Joslin
Well Michael it’s a good question and really fundamentally the first priorities are intact and that those being certainly investing in our business internally for organic opportunities whether it be product line expansion which is more of an opportunity currently I’ll say than necessarily facility expansion but internal opportunities is always number one.
Acquisitions to further expand our reach in network has been and continues to be number two, then we have a dividend commitments to shareholders and that is point number three and then the last two which should be either debt repayment or share buyback, we’ve kind of sliced back and forth.
Given our current debt levels and everything else we probably would still keep debt repayment ahead of share buyback but certainly when we deliver a bit more, that quarter may shift and share repurchase may come back. But we are not talking in the near term; we are talking out sometime in the future.
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