Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Tony Cristello of BB&T Capital Markets.
Tony Cristello – BB&T Capital Markets
I guess one question I had and it came up a few times during your commentary is Autopart International and Darren, maybe this is a question for Jim, but it appears that AI is certainly showing some better sales trends and have some modest positive contribution to gross margin and I understand that SG&A at AI is a bit higher. Can you update a little bit or discuss more on strategy now that you have for AI as it differs from the core commercial business with Advance. Any reason beyond perhaps parts availability in the commercial focus that could be behind the positive improvement and sales trends and then also, how does the profitability of that segment look right now versus how it has in the past?
Darren Jackson
Tony, why don’t we do this. Why don’t I have Jim talk a little bit about.. We’ve seen a wonderful turnaround in AI this year in terms of their business. You can see in their comps and their profitability, and I’ll have Jim just hum a few bars as to what’s different and what’s driving the business, and then I’ll come back and give you just a couple sentences on how we’re thinking about AI going forward because clearly three years into it how we see different opportunities with them and how it might shape our overall store portfolio going forward.
Jim Wade
Tony, when you look back at the roughly three years that we’ve owned AI, at the time we purchased the company they had about 60 stores and they were opening 2 or 3 or 4 or 5 stores a year and obviously as part of the acquisition we wanted to see the team there accelerate the openings and they did that and I think it took us a year or 18 months to get to a point where we had everything in place to be able to accelerate their growth and the great news, I think over the past year to 18 months is we’re now seeing the results of that.
If you look at their roughly 125 stores they have today, literally almost half of those have been opened in the last three years, so I think we’re at a point where the team has a very sound new store model in place. The expertise they have in foreign car parts which is obviously a part of the business that’s growing very quickly these days and they’re using that to drive much better performance. We’re excited about what the team there has accomplished and I think they’re positioned very well to help us grow our total commercial business as we go forward.
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