Question-and-Answer Session
Operator
(Operator Instructions) We’ll have our first question from John Heinbockel – Goldman Sachs.
John Heinbockel – Goldman Sachs
A couple of things, at this point what do you have to do to start to get the C&S savings flowing into the P&L and when do you think that will be? Is it six months off? A year off? Do you have a sense of timing?
Eric Claus
I think that we’re already in a mode where it’s certainly helping us to attain what our targets are. I think there’s some long term more strategic initiatives that can happen over time but we didn’t build a lot of additional synergies into our model and have basically built our whole business plan around a more aggressive sales income and just a stronger P&L going forward and a lot of that is predicated on the fact that we can operate the way we should have been operating with C&S which now if our centrally aligned procurement, the way in which we manage our distribution centers on a cost plus basis means that we’re working to bring down costs which will probably just mitigate some of the things such as higher fuel. So we haven’t built a whole lot of upside into this. There might be a little bit more upside than what you think, hopefully there is but I wouldn’t bank on that for now. We’re sort of saying let’s use this to just get to the place that we want to be and mitigate some of the downsides such as the cost of fuel.
John Heinbockel – Goldman Sachs
When you’re talking about deploying those savings, those numbers are not in the $150 million. Is there a thought that you might want to take more of whatever the savings end up being, putting it back into the market in terms of pricing or promotion to drive market share? Is that a good use of those dollars and is the market share out there to be had today?
Eric Claus
If I understand your question correctly, John, you’re basically saying if we over-achieve on synergies are we going to invest that into our pricing and into the market. Is that correct?
John Heinbockel – Goldman Sachs
Yes.
Eric Claus
It’s a complicated question because I think you’ve got to invest based on how everyone else is reacting in the market. We definitely have a plan and we have a plan to attain a certain sales per square foot which by definition will change our market share and we will do whatever we need to get there while at the same time making sure the mix allows us to be profitable. You might see some of the additional, if there are additional synergy savings, be reinvested in the business to ensure that we get to where we need to be. Because certainly this deal is not about increasing margin percents, our margin percentages are already one of the highest in the industry. So I think this is about getting our costs in line, becoming much more efficient in driving the top line and that probably will require some investment.
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