Question-and-Answer Session
Operator
(Operator instructions) Our first question comes from the line of Ben Brownlow with Morgan Keegan.
Ben Brownlow – Morgan Keegan
Hi, good afternoon, guys. Can you give a little color on the refinery upgrade projects? It sounds like you are pulling back CapEx this year. What are the thoughts on this upgrade projects for Q1 ’09?
Uzi Yemin
Fred, do you want to take that?
Fred Green
Sure. Ben, what we’ve done is basically delay our refinery turnaround activities that were originally scheduled for October of this year and January/February of next year, pushed those back into the September/October timeframe next year. That was the schedule for our original four-year turnaround cycle. By doing that, we are able to push some of that capital out a little forward. We’ve still – obviously we’ve purchased all the long lead equipment, and really all we’ve pushed off is the construction effort for the projects.
Ben Brownlow – Morgan Keegan
And then on the retail side, can you discuss a little the gross margin improvement, what your outlook there is?
Uzi Yemin
Are you talking about fuel or merchandise?
Ben Brownlow – Morgan Keegan
I’m sorry, the merchandise.
Uzi Yemin
Well, merchandise is primarily due to better pricing. Obviously the private label continuing – enjoying better contract with vendors. Do you want to add anything to that, Lyn?
Lyn Gregory
Yes. In addition, we decided not to really promote our soft drinks as heavily as we did in the past, and in the same way on our case water. And again, this year wasn’t quite as hard as last year, so we really didn’t see the need. So we kind of – we picked up 50 basis points on our margin and at the same time, we do have a continued margin focus. Our private label business now is up to 1.69%. The Belly Bubble introduction, it’s in our juice category, is 30% of that sub-category, doing extremely well. And as we mentioned on the last call, our Bodytonics [ph], which is our sports drink, which is a no sugar, no carb drink, is 15% of our isotonic sub-category.
Ben Brownlow – Morgan Keegan
Great. And then you had stated that traffic was improving as oil prices are coming down or that you expect the traffic to improve. Can you give a little color on what you are seeing through October, whether that’s kind of in the flattish range or where that is, and then just CapEx thoughts – initial CapEx thoughts for 2009?
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