Question-and-Answer Session
Operator
(Operator Instructions) We have a question from the line of John Murphy of Merrill Lynch. Please go ahead.
John Murphy - Merrill Lynch
Good morning guys.
Mike Maroone
Good morning.
Mike Jackson
Good morning
John Murphy - Merrill Lynch
I was just wondering, if you could comment on the cadence of sales through the quarter in general, and maybe specifically in Florida and California and if you have seen any changes here so far in April?
Mike Maroone
John, its Mike Maroone. I would say that the year started very slowly. January and February were especially slow. We did see a pickup in the market in March, especially at the end of March.
There was a fair number of manufacture of what we call stairstep incentives that really give us some volume targets to go after, and the market seemed to respond well to those at the end of the quarter.
John Murphy - Merrill Lynch
And that is continuing into April generally?
Mike Maroone
I did not say that, and I would say that April is thus far probably a little more of a pace as the quarter as a whole as opposed to that spurt at the end of March.
Mike Jackson
It feels like overall like the first quarter.
John Murphy - Merrill Lynch
Okay. And then if we think more generally about your diversification strategy, maybe away from the Detroit 3, how is that going? And does that maybe expand into a little bit more of a geographic diversification also given the weakness in Florida and California? I mean some other dealers have dealerships up in the Northeast.
And you guys kind of shied away from those traditionally. But I am just wondering if there might be a further diversification into different geographies at this point.
Mike Jackson
We are very happy with our geographic footprint, primarily Sunbelt have no enthusiasm to move into the Northeast. We're big believers in Florida and California, their economies in the long-term.
These economies got overheated with interest rates too long, too low. A speculative real estate bubble developed and has now popped. We are going through an adjustment period. But both of those economies, California and Florida, long-term we're very optimistic about.
As far as our brand mix, as we have often discussed, we have shifted to where we are today with this quarter being about 35% domestic and the balance import. And I think with continued select divestitures and acquisitions, plus the overall share shift that is going on in the business.
Anyway, I would expect over the next year or two for that number to continue to shift away from domestic.
John Murphy - Merrill Lynch
And when we think of the acquisition environment and making acquisitions outside of the Detroit 3, is there anything that changed there or sort of more status quo? I mean there's no big change in multiples?
Mike Jackson
There is no big change in multiples even with the economic distress that we're talking about. Primarily because the other retailers see it the same as we do, what's going on in Florida and California is temporary, and it is not going to affect their valuations.
Overall, though things are pricey quite frankly, everybody wants to sell the same thing, everybody wants to buy the same thing. So you have to really work hard to get a deal that makes sense.
John Murphy - Merrill Lynch
And then just lastly, on the authorization on the share repurchase, the last one was 250, what was the authorization size before, and do you think the upsizing or the doubling of this authorization is just an endorsement by the Board of the stock?
Mike Jackson
Yes, I think that is what it is, we wanted to have the flexibility that is a significant buying opportunity developed to take full advantage of it. Our view is that the circumstances in Florida and California are temporary. Don't know how to define temporary, but we're absolutely convinced that they will change.
And in our judgment, that means that we could have a buying opportunity between now and then, and we want to take full advantage of it.
John Murphy - Merrill Lynch
Thank you very much.
Operator
We have a question from the line of Rick Nelson. Please go ahead.
Rick Nelson - Stephens
Thank you and good morning.
Mike Jackson
Good morning, Rick.
Rick Nelson - Stephens
Mike, or one of the Mike's, can you talk about regional performance outside of California and Florida where you are seeing strength and weakness and maybe brand strength and weakness, as well outside of those two markets?
Mike Jackson
This is Mike Jackson. I will give that to Mike Maroone. I would say overall I am satisfied with our operating discipline in the first quarter. If you consider the headwinds, the fact that during the quarter we were able to adjust inventories, keeping them in line at 52 days and move our variable costs, that we're still able to put up a very respectable operating result considering the environment is a good performance.
With that, though, to talk about regional differences, I give you Mike Maroone.
Mike Maroone
We've already called out California and Florida as being tougher markets. We did see a very good market in Texas, and our performance in Texas we were real pleased with. We also felt our performance in Colorado, and Denver specifically, where we moved to a new brand, we are very satisfied with that. We performed very well.
But we also saw some strength in the Midwest, in Cleveland and Chicago, where the brands that we sell there got a little bit stronger. I would also put Memphis in that same category.
So we did have some markets that performed well. Certainly our weighting in Florida and California drove the results that you have seen.
Rick Nelson - Stephens Inc.
Thanks for that and how about on the expense side, particularly in some of these more challenging markets? I know you've made a lot of headway with variable expenses there, but how much more opportunity is there I guess to call expenses adjust?
Mike Jackson
Rick this is Mike Jackson. I would answer it this way. One, you have the things that are controllable in the short-term that you react to the velocity of the business and that would be inventory commissions and advertising. And I think this was really a tough test in the first quarter, and I think we passed it.
On our longer-term efforts on cost and expenses, that goes on, but that's not something that we can accelerate just because business is difficult at the moment. So in principal restructuring has been done, we're lean, we are efficient.
We are adaptable to the velocity of the marketplace. We're making long-term investments that will improve our productivity, but there is no major short-term action that we can take beyond adjusting the variable cost structure.
Rick Nelson - Stephens Inc.
Thank you.
Operator
We have a question from the line of Edward Yruma of J.P. Morgan.
Edward Yruma - J.P. Morgan
Thanks for taking my question. Can you give us a quick update on both Smart Choice and your shared services center?
Mike Jackson
Mike Maroone will take Smart Choice, and Mike Short will take shared services.
Mike Maroone
Edward, Smart Choice continues to be a success for us, and we have rolled it into a number of other markets. We started, as you know or you may know, in South Florida. We've now expanded it into North Florida. We expanded it into the Denver market and are beginning to do work in the Phoenix market as well.
Our necks will be up into what we call our East Central, which will be Memphis. So we're moving rapidly, and we're really pleased with both our associates' acceptance of it and our customer's acceptance of it. Mike Short?
Mike Short
Yes, on the shared services center, we continue to have momentum there as well, continuing the ADP conversions, and we have about 87% of our stores complete with that now, largely complete with that program by the end of the year and the core conversions into the SSC.
The rest of the stores are right now at about 61%, and we have good momentum there as well.
Edward Yruma - J.P. Morgan
Got you. And in terms of the year's performance, how much of the weakness there is really due to lower foot traffic due to the weakness on the new side of the business?
Mike Maroone
I think that there is two things. One is lower traffic, especially in our two key markets, and second is our less trade-ins from less volume. So our used business was better than our new business, our used to new ratios continue to improve, but certainly the economic distress we found in our two key markets cascaded into the used business as well.
Edward Yruma - J.P. Morgan
Okay. Thank you very much.
Operator
We have a question from the line of Matt Nemer of Thomas Weisel Partners. Please go ahead.
Matt Nemer - Thomas Weisel Partners
Hi, good morning guys, just one quick question. As you look at your D3 stores, clearly I think from a market-wide standpoint these stores are becoming less profitable either on a per store basis or a per square foot basis.
Is there something else that you can do with that space either by maybe branding a separate used car side of the store or a quick lube lane or someway to improve the productivity of those stores beyond what you are already doing?
Mike Jackson
Yeah, I would describe that the domestic stores that we are enthusiastic about long-term, basically fit the profile of being a great location with high throughput, and there the economies of scale still work and those stores are very competitive with import stores as far as the profitability.
What's on the bubble are the domestic stores that do not have economies of scale, and there is despite whatever you do, its difficult for those stores to make sense in our business model.
That's not to say they don't make sense for somebody else, but they don't make sense for us. And we're able to sell those and get our money out of the real estate, working capital and some degree of blue sky.
Now, as far as what we're doing in all of our volume stores to enhance the performance, Mike?
Mike Maroone
Well, we continue to look at all of our real estate and look to optimize it, I don't think there is one solution such as a branded used car outlet. Well, I think there's a number of solutions, and it is really a store by store analysis.
And we've continue to look at all of our real estate and look to optimize it. I don't think there is one solution, such as a branded used car outlet. I think there is a number of solutions and it's really a store-by-store analysis, and we've continued to look at those to invest prudently in those facilities and all-in-all, there is a real shortage of properly zoned commercial real estate in the major metro markets.
And we continue to look at our locations as being a strong asset, but it's a store-by-store analysis, not a blanket one.
Matt Nemer - Thomas Weisel Partners
Okay, that's helpful, and just a follow-up to the geographic data that you provided. Can you make any comment regarding your performance at metro stores versus suburban stores or those that are, maybe a bit more rural, to the extent that you have any of those?
Mike Jackson
I don't think we have any rural stores. It's just not our thing and Mike, I don't really have any...
Mike Maroone
I don't think we split the business that way, and Mike's point, we do not have any rural stores. And so I think, that they're all major metro markets and I don't see any way to split that performance out.
Matt Nemer - Thomas Weisel Partners
Okay. Thank you.
Operator
We have a question from the line of Jonathan Steinmetz from Morgan Stanley. Please go ahead.
Jonathan Steinmetz - Morgan Stanley
All right, thanks. Your gross profit per vehicle retail, I think on a comp basis, was about flat. How did that look if you were to break it out D3 mainline, import and luxury?
Mike Maroone
I would -- Jonathan, it's Mike Maroone. I didn't see any major margin deterioration in any of the three buckets. They were relatively in line with the Group. I think if you add in the F&I performance, we look at our aggregate gross profit per vehicle retailed as being up slightly.
I think it's up like $47, but we didn't see any abrupt changes in any of the three buckets. Certainly, on the luxury side, the S-Class launch of the Mercedes a year ago, pushed that number up a little bit, but besides that, I'd say it was fairly constant.
Jonathan Steinmetz - Morgan Stanley
Okay, and on the F&I. I came in a little late, so while -- if you've covered this up, I'll look at the transcript, but did you give a walk at all on the year-over-year increase and did you get a lot from the preferred lender and the service contract unwind, so to speak or the benefits on the service contract as you did in the fourth quarter? Or was this more warranty penetration and finance fee?
Mike Maroone
No. I think it was both preferred lender network, it was certainly the retro performance on our warranty portfolios with the OEMs. In addition, we have put a greater emphasis on warranty and prepaid maintenance sales. Where we're not putting emphasis is on the rate side of it.
So we increased, on a total store basis, $72, on a same-store basis, $80. We're real pleased with the team and the process, the compliance, all the pieces to that are really in good shape.
Jonathan Steinmetz - Morgan Stanley
Okay, and lastly, with the added authorization on the buyback and the remaining, I guess, $42 million on the current program, will you guys take on added financial leverage near-term to enact a buyback? Or is this just used free cash flow as it, sort of comes in to buy back stock?
Mike Short
Our expectation is to fund it out of the free cash flow and coming out of the business. We're not anticipating levering up to do this.
Jonathan Steinmetz - Morgan Stanley
Would you rethink that if the stock price declined or you saw it as more attractive?
Mike Short
Of course.
Jonathan Steinmetz - Morgan Stanley
Okay.
Mike Short
Or if we had an attractive acquisition, we wouldn't hesitate.
Jonathan Steinmetz - Morgan Stanley
Okay. Thank you.
Operator
We have a question from the line of Mike Geoghegan of Bear Stearns. Please go ahead.
Mike Geoghegan - Bear Stearns
Good morning. Thank you. If you had to carve it up, could you tell us how much of the sales decline is due to an issue of credit availability versus, sort of affordability and consumer confidence? Is it a small -- is it 20/80? Is it 70/30? What do you say?
Mike Jackson
I think it's more on the lines of the psychological impact of housing being so uncertain. It's probably the primary factor here, so you have to sort of break it into segments. Pickup truck sales have definitely been impacted by a cancellation of so much construction, and pickup truck sales are not really going to recover until new construction resumes.
So that means existing housing inventory has to be rebalanced before that happens. As far as nonprime credit for autos, it's still very available, and we don't see a lot of distress there so far for the following reasons.
One, we didn't have adjustable-rate mortgages -- adjustable rate loans in automotive, the principal amount is lower and we had pretty good discipline from the lenders for the last few years. So, that -- it all sort of goes together with different drivers for different facets, but I would say the overall malaise, if you will, is people coming to terms with higher payments for their homes and not sure what their home is worth.
Mike Geoghegan - Bear Stearns
Okay, that is helpful. So my follow-up question there is -- and I recognize you're not in the business of forecasting real estate values, but if the dealers you're talking to, if valuation multiples have not come in, because potential targets are looking at things the same way you are, what's the overall sentiment as far as how long this correction might last?
Mike Jackson
Yeah, I've traveled both these markets extensively and asked people in all of the -- experts who have lived in them for decades and I get all kinds of answers. The best insight I could give you at the moment is, it's not getting worse, but it's not getting better.
So, it sort of feels like we're bumping along the bottom. But how long we're going to be bumping along down here is hard to say.
Mike Geoghegan - Bear Stearns
Okay.
Mike Jackson
And Mr. Maroone has spent decades here in Florida. Mike, you want to weigh in here?
Mike Maroone
I'm not sure my crystal ball is any clearer. I -- with long-term, we've got tremendous confidence in both the markets. But to Mike's point, we just haven't seen the recovery yet. It's a stable but not satisfactory situation, and I think that we're just going to take some time to work through it.
I agree with Mike, especially on the pickup truck answer, that until new housing starts get moving, I don't see the pickup truck business growing at the same rate that it was or being the same chunk of our business that it was.
Mike Geoghegan - Bear Stearns
Okay. And finally, I heard you say that there's no short-term fix for cost restructuring, but does that include -- I mean, is there any staff reductions going on at the store level?
Mike Jackson
There is no significant new initiative for staff reduction. Now, so first, I need to be clear. The operating discipline in the first quarter to adjust inventories, advertising rates, compensation, variable -- make sure the compensation is variable, with this degree of slowdown in these big markets is already quite some operating discipline. To say that, there is structural costs that we can rapidly take out would be misleading. I don't see it.
Mike Geoghegan - Bear Stearns
Okay. Thank you very much.
Operator
We have a question from the line of Darren Kennedy of Goldman Sachs. Please go ahead.
Darren Kennedy - Goldman Sachs
Hi there. It's Darren Kennedy here with Matt Fassler. Your last comment's pretty interesting to me. Talking about, you're clearly undergoing some clear significant operating challenges today.
There was a time when you talked about removing structural costs and extracting ex number of basis points of SG&A out of your cost structure over a period of years and then, Mike Short, with you coming in as CFO, understandably you wanted to get acclimated and understand the numbers and make your own targets. Is there a time in the future when we might be having these conversations again?
Mike Jackson
Now, all that is still underway. I don't want to mislead you
Darren Kennedy - Goldman Sachs
Okay.
Mike Jackson
But there's nothing that can be accelerated because of the temporary situation in Florida and California.
Darren Kennedy - Goldman Sachs
Okay.
Mike Jackson
So all of that is still underway. Mike, you want to add to it?
Mike Short
Yeah, they're absolutely -- let me echo Mike's earlier comments, we're quite happy with the operating and cost performance that we extracted out of Q1. Variable costs came down with volume, despite normal inflationary cost increases that you would have in salaries and things like that, they did come down with the reduction in gross, and fixed costs were actually down in dollar terms on a year-to-year basis. So they absorbed inflation in a difficult environment.
The reason that you're -- I think there's a lot of focus on this particular discussion, is that you're not seeing the reduction in the basis points that we have talked in -- over the last couple of quarters, and I think that's just a fact with the gross coming down, the costs are not going to come down as rapidly.
Darren Kennedy - Goldman Sachs
Understandable, and that sort of -- yes, I understand that we won't be seeing as much of leverage until you get through this environment.
Mike Short
Exactly, right.
Darren Kennedy - Goldman Sachs
Okay. And just switching gears to your mix, which, Mike, when we spoke recently, we -- everybody, we spoke about how you really wanted to continue to move away from the Big Three and change your mix, and I thought it was the shift of size of your ship, that it would be hard to really turn it.
And then, I looked at your mix, and from 1/2/04, 50% Big Three down to 36%, and luxury, 17% goes to 25%, and imports over that same period, 33% to 40%. Is there somewhere where we could see these settling if you just kind of focus big picture on Big Three, luxury and import, if you have a target mix?
Mike Short
You know, I think when we are talking about this two years from now for the big three, we'll be somewhere in the 20.
Darren Kennedy - Goldman Sachs
Somewhere in the 20's. Okay. Thank you.
Operator
(Operator Instructions). We have a question from the line of Mark Warnsman of Prudential. Please go ahead.
Mark Warnsman - Prudential
Yes, good morning. Reference was made to the decline in warranty related to service revenue. I'm curious particularly as Ford today in their report cited warranty experience as a key causal factor for them reducing their warranty reserves. Do you see an acceleration in the decline of warranty-related service revenue, one?
And the second part of the question is, what are the key steps you're taking within your business model to offset those declines?
Mike Jackson
This is Mike Jackson. We're seeing two factors. One, certain manufacturers that lag the industry in quality have clearly taken steps to close the gap between themselves and everyone else. And to the extent that you had that acceleration, that's reflected in our numbers.
And what I expect to happen, though, is then when everybody, when those gaps close, then you will have a more modest trend-line of overall quality improvement that matches the industry trend-line. So right now we're dealing with two factors. One, the overall trend-line, which is very manageable, and a closing of the gap from certain manufacturers who had, shall we say, an opportunity on the quality side.
Mark Warnsman - Prudential
And how are you, would you say that your service capacity is structured consistent with the post-gap closure, or are you taking specific steps as some of those manufacturers close those gaps?
Mike Maroone
It is Mike Maroone. I believe that our capacity is fine. We do not -- we have made significant investments in our import and luxury stores where we might have had some capacity constraints. We will make some additional investments, but I think we're in pretty good shape.
We're really focusing on our customer pay business, both on driving more traffic, working hard on our pricing and really focused on our process, and we actually have put a new process in all of our stores.
We measure it. We train to it. We certify to it. We're really pleased with our efforts there on the customer pay. And I think, as you see the leveling out of the trendline as Mike Jackson spoke about, I think you will see some more topline growth out of our fixed operations.
Mark Warnsman - Prudential
Thank you.
Mike Jackson
We have time for one more question.
Operator
Thank you. We have a question from the line of Susan Jansen of Lehman Brothers. Please go ahead.
Lee Mahern - Lehman Brothers
Hi, this is Lee Mahern on behalf of Susan. I had two brief questions. The first one is around inventory controls. Given the kind of falloff in new vehicle sales, you would have expected I think new day supply to be down and not, I mean up instead of down. How did you guys actually manage to get that number down?
What were the specifics? Did you see this coming and cut back orders? And going forward, where do you see supplies if this weakness in Florida and California persists?
Mike Maroone
Hi, Lee, this is Mike Maroone. Your statement is correct that when you see a falloff in sales, typically day supply goes up. We were very proud that our day supply was down two days. We have made some significant investments in technology and process and been working really hard on not just bringing the inventories down, but bringing them down and getting into even better mix of product. And we're really pleased with those efforts.
I think that our current inventory levels are appropriate. We will always work harder and harder on the mix to be sure that our mix is reflective of customer demand. All-in-all we have dropped our inventories about 15% or 11,000 units.
There was a dramatic decline in our domestic inventories, but all-in-all we're really pleased with where we are. The work did not happen just in this quarter; it has really been going on in the last six months.
Lee Mahern - Lehman Brothers
Thanks a lot.
Mike Jackson
Thank you, everyone, for joining us today. We very much appreciate it.
Operator
Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference Service. You may now disconnect.
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