Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Paul Trussell - J.P. Morgan.
Paul Trussell - J.P. Morgan
First I just wanted to touch on the comp guidance for the fourth quarter. Can you speak to the trend you saw in the last couple of weeks and what makes you a bit more cautious looking over the next three months?
Jerry A. Shore
Starting out the month of November we’ve really been on our plan. The first two weeks everything has been fine. We always start our month because of the shift with a higher number so not to mislead but we were in the mid singles in our comps.
Now going to the rest of the month November is so influenced by the Black Friday or as we refer to it the Green Friday sales. My guidance had been flat for the month of November. Flat for the remainder of the quarter is primarily based on the fact that the fourth quarter is not as heavily basic and consumable in our mix as it is in the other quarters. That’s primarily the reason. Bruce, any other comments on that? It was really the mix that brought that.
Bruce A. Efird
We’re continuing to see pressure on our core customer relative to their discretionary spending that we anticipate throughout the fourth quarter.
Paul Trussell - J.P. Morgan
In regards to gross margin, I know obviously the product mix shift was offset by the move to generics and pharmacy but by itself what was the negative mix impact to gross margin?
Jerry A. Shore
The negative mix to the margin overall, all departments, is in the range of 100 basis points on our margin. We were able to then make that up by higher pharmacy margins and controlling our margin.
Paul Trussell - J.P. Morgan
In regards to pharmacy offsetting this mix shift, could you just speak a little bit to where we are in that cycle? In regards to the move from branded to generics, how many are on tap for next year? How long can you potentially receive this benefit to your gross margin?
Rick A. Chambers
As we look at 2009 in terms of the generic picture, for planning purposes we did back off slightly from where we have seen historical trends. We don’t see the blockbuster drugs that we’ve historically seen back in ’06, ’07 and the first part of ’08. So we did back off of that in terms of planning.
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