Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Mark Miller - William Blair & Company
Mark Miller - William Blair & Company
Can you discuss Family Dollar’s marketing strategy in an environment where we can expect that promotions probably only going to increase and particularly as we head into the holidays, and intensive ad circulars could be forthcoming on Black Friday, in the past that’s sometimes been difficult for Family Dollar to compete in this environment, but can you talk about what’s worked in the past and what incremental you might be able to do this year?
Howard Levine
No question the promotional environment has intensified over the last 18 months to two years, and we certainly expect that to continue into the holiday season this year. The way we thought about our advertising and promotional plans as we looked at what was going on in the world with the consolidation of [Trip] we felt that it would be necessary to do something to drive traffic to our stores for a couple of reasons.
Number one to reinforce the value proposition that we offer along with the convenience and some of the other seasonal categories that we offer. We’re going to continue that type of approach into this next fiscal year with primary focus on driving traffic and trying to impact what we’re seeing with the [Trip] consolidation. As we look at the traffic through the year that we just completed, the first half showed a slight decline. We did see some stabilization in the third quarter and in the fourth quarter we actually saw an increase in traffic.
So from a success standpoint we’re pretty pleased with what we’ve done but we’ll continue to tweak and learn and test new ideas to be more affective and efficient in the way we spend those dollars.
Mark Miller - William Blair & Company
Regarding share repurchase, you didn’t buy any stock back in the quarter despite having very good free cash flow in the period, can you talk about how the status of the auction rate securities might have impacted the way you proceed and then how should we think about uses of free cash flow in the year ahead also as it relates to dividend, debt to pay down, other opportunities in this environment?
Kenneth Smith
To speak to the auction rate securities specifically they remain illiquid, there is some activity you might have read about with various settlements that various of the issuers are settling with individuals but to date nothing real definitive from a corporate perspective.
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