Question-and-Answer Session
Operator
Thank you. (Operator Instructions) Your first question comes from Scot Ciccarelli - RBC Capital Markets.
Scot Ciccarelli - RBC Capital Markets
Can you guys describe the impact of inflation in 2008 and what the expectations are in terms of product inflation for 2009? Number one. Number two, I’m not sure who this question should be centered towards but you know in terms of trying to customize inventory at a store level, kind of where are we? I know you guys used to do regions and then districts but there’s so much variability at the store level, if you can just give us an idea of kind of where you are in that process I think that would be helpful. Thanks.
Kevin Freeland
In terms of inflation we roughly saw about a 3 to 5% inflation in our overall products last year which certainly pushed along the sales. We’re beginning to see some changes in categories and certainly the oil category would come first to mind as that has materially changed. And we’re beginning to see unit improvements as the price changes unfold. So I think that we’re going to monitor this very closely throughout the year; have not seen a material change in the trends but certainly we’ll stay very close to this. And what we don’t know is to what extent the change in the inflation rate will change the overall unit movement of the company to offset that.
As it relates to the custom mix, we are complete with the system that we’ll need to customize down to the individual store. What we actually do is essentially re-assort one section at a time, and this is done to manage labor. About two-thirds of the sections change out each year. About a third of the sections change out every other year. So it’ll be about 18 months before we see the full effect of the impact on the business.
But what we’ve done is gone through and completely re-assorted to markets to see what the overall impact was, and we’re extremely pleased as to what this does to drive overall business. Essentially they’re in stock on the things that customers want and pull out the products that weren’t selling in the past.
Scot Ciccarelli - RBC Capital Markets
And that’s two markets out of how many? How many do you break it into?
Kevin Freeland
Out of hundreds of divisions, so essentially it was a market test to see the impact of this. And then this will be a tailwind for us for about the next year-and-a-half.
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