Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from [Ben Brownlow].
[Ben Brownlow]
I was hoping Lyn you could touch on the reimaged stores especially the 21 recent in Nashville and just what you’re seeing on early indications for what you’re seeing there?
Lynwood Gregory
The 21 that we reimaged in Nashville are all MAPCO branded and we did a little bit more of an extensive remodeling process on these as opposed to the first 51 which were primarily Major branded. To that extent, we totally renovated the floors, ceilings, bathrooms, countertops, exteriors, soffits, underneath the canopy lights and with all new graphics. They really look remarkable, all 21 of them look brand new. We’re very pleased with the early results. It’s definitely designed to pick up all various ages and it seems to be working very favorably for us.
Ezra Uzi Yemin
In regard to the results, one thing that we all need to remember is that the reimage project was going during the first quarter and the second quarter. That means that all of the stores suffered from less traffic while they were being renovated. We see early pick up but it’s a little early to talk about the results.
Lynwood Gregory
In addition to Uzi’s comments too, it was more of an extensive reimage program here where we actually put in new floors on the majority of them so we had two or three days of actual downtime on these facilities. But, things are going very well.
[Ben Brownlow]
The cigarette sales, can you break out if possible the impact to the gross margin and the comps?
Lynwood Gregory
Basically the effect on the margin percentage it’s affected us approximately 3/10ths of a percent. At the same time, the federal tax went in to effect the suppliers increased their prices to us approximately $7.10 a carton and we went ahead and increased them to $8.50 a carton. Therefore, our gross profit margin dropped as I previously stated but our gross profit dollars have continued to increase. At the same time this happened in April, the surrounding states of Tennessee, Arkansas, Kentucky and Mississippi raised their state excise tax up so we’re seeing a good positive trend on our carton sales as well as we’re seeing a good positive trend on our gross profit dollars in the category.
[Ben Brownlow]
So if you were to back out the cigarette sales and look at all the other merchandise within the store, what would the comp kind of run rate be for Q2? You kind of talked about an early pickup in July and I’m just wondering if you can give a little more color on that?
- To read the full transcript on Seeking Alpha, click here »
