SpartanNash Co (SPTN) 2006 Q2 法說會逐字稿

Greetings, ladies and gentlemen, and welcome to the Spartan Stores Inc. second-quarter fiscal 2006 earnings conference call. At this time all parties are in a listen-only mode and there will be brief question-and-answer session following the presentation. (OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Craig Sturken, President and Chief Executive Officer for Spartan Stores.

Good morning, everyone. And thank you for joining our fiscal 2006 second-quarter earnings conference call. With me this morning are members of our team, including the EVP and CFO, Dave Staples; EVP of Marketing and Merchandising, Dennis Eidson; our EVP of Retail Operations, Ted Adornato, and our ETP of support services, Mark Eriks. Before we begin I must remind you that our comments today will contain forward-looking statements. These forward-looking statements may contain plans, expectations, estimates and projections that involve significant risks and uncertainties. Actual results may differ materially from the results discussed in these forward-looking statements. Internal and external factors that might cause such a difference include, but are not limited to, competitive pressures among food retailing distribution companies, general economic and market conditions and other factors described in our earnings announcement and annual report on form 10-K and other filings with the SEC. Spartan Stores disclaims any intention or obligation to update or revise any forward-looking statements.

Our financial performance for the second quarter exceeded our expectation, and as you read in our press announcement, was comparable to the result reported in the second quarter last year. It is important to consider that our second-quarter operating earnings were stronger compared with last year than appears because of the $0.6 million in advisory fees recorded in conjunction with our strategic assessment process during this year's second quarter. And the $1 million non-recurring contract termination payment we received in last year's second-quarter that was recorded as a reduction to operating expense.

Key highlights for the second quarter include operating earnings of $12 million and net earnings from continuing operations of $7 million. This is a meaningful achievement considering the significant increase in the number of new super centers open during the past twelve months that compete directly with our corporately owned retail stores and our customer stores. I firmly believe that this demonstrates our ability to be an aggressive competitor in our markets and that our business model and strategies have proven to be effective.

Consolidated net sales were comparable for the prior year. Higher sales at our distribution segment were offset by lower sales at our retail segment. Distribution sales increased to both new and existing customers during the quarter; so far this year we have added a net of 10 new accounts and 27 stores to our distribution base, and we believe that our retail partners are well-positioned to capitalize on their dynamic market conditions in their trade area.

Lower retail sales for the quarter were the result of the sale of our retail joint venture in last year's third quarter and the closing of 2 underperforming Pharm stores this year as well as the competitive and economic market environment. These items were partially offset by incremental sales growth at our fuel centers and in-store pharmacies. The sales performance of our Pharm stores has now stabilized as the most significant impact of the UAW prescription mail-order mandate has been cycled. These stores also continued to show significant improvement at the store contribution level. We continue to have solid growth opportunities in the private-label area and during the second quarter finished converting our private-label health and beauty care products to Top Care and converted our Extreme Value label to Value Time. Although these initiatives are still in the completion stages, they have already shown very good results. The private label initiatives significantly increased our product offerings, lowered the cost to our retail stores and distribution customers and enabled both our distribution customers and retail stores to be more competitive.

Lastly, many of you may have read our recent press announcement related to our strategic review process. During a ten-month period beginning in December of last year we thoroughly assessed several strategic options with the potential to enhance long-term shareholder value. Our Board of Directors and management team were actively involved in evaluating these options along with a number of advisers. We thoroughly evaluated the possible sale of our Company. In addition, we pursued the acquisition of a significant retail operation. We have concluded that at this time it is the best long-term interest of our Company and shareholders to continue to build on the strong foundation that we have created.

I would like to remind you of some of the components of that foundation. We are the leading grocery distributor in Michigan. We are the leading conventional supermarket operator in northern Michigan and Grand Rapids, which is Michigan's second most populous metro area. We have a well maintained store base, very attractive locations and by the end of this fiscal year expect to have the majority of our upgrade investment completed. We have an award-winning private-label program. We have a very loyal and growing base of distribution customers. We have one of the lowest distribution customer attrition rates in the industry. We have a strong balance sheet that positions the Company to succeed in an increasingly competitive environment and to take advantage of the opportunities presented by that environment.

We have a focused and confident team of executives and associates. We have solid technology systems in both our retail and distribution segments. And most importantly, when we started our turnaround process, our stock price on March 31, 2003 was $2.34. As of the end of last week our stock price closed at $9.30 per share. That is a 297% return on investments during a 2.5-year period.

I will provide more detail about our future plans following Dave's review of our second-quarter financial statements. With that overview, Dave will now give you a more detailed account of the second quarter financial performance, and an outlook for the remainder of the year.

Thank you, Craig, and good morning everyone. Consolidated net sales for the second quarter were 485.5 million compared with 486.7 million in the second quarter last year. The sales performance as already discussed by Craig was the result of positive sales in our distribution business, which partially offset the sale and closure of operating units, as well as the competitive and economic environment in our retail segment.

Gross margins for the second quarter declined 20 basis points to 19.3% compared to 19.5% in last year's second quarter. This was due mainly to higher percentage of consolidated sales coming from the lower margin distribution segment. Distribution share consolidated sales was 54% in the second quarter compared with a 52% share in the same period last year. The second quarter operating expenses, including 600,000 in pretax expenses related to advisory fees for our strategic review declined 0.7% to 81.3 million from 81.8 million in last year's second quarter despite the prior year end customer termination fee. As a percentage of sales operating expenses decreased 10 basis points to 16.7% compared with 16.8% in the second quarter last year. The operating expense improvement was due primarily to better fixed cost leverage in our distribution segment and the continued improvement in store labor productivity.

Second-quarter operating earnings decreased to 12.2 million compared with 13.2 million in last year's second quarter. Net earnings for the quarter of 6.9 million were comparable to the same period last year. Second-quarter net earnings also included a loss from discontinued operations of 200,000, the decrease in operating earnings was due to the absence of the $1 million contract termination payment in this year's second quarter and the additional expenses related to our strategic review.

Net earnings were favorably affected by lower interest expense due to our continued debt reduction. Turning to our business segments, second-quarter retail sales were 221.9 million compared with 232.2 million in the same period last year. Total comparable store sales declined 2% representing a sequential improvement from our first quarter. Fuel sales contributed a positive 1.2% to comparable store sales during the quarter. As Craig mentioned we experienced a substantial improvement in Pharm stores sales trends during the second quarter. Comparable store sales at these stores declined just 0.4% compared with the decline of 6.4% in the first quarter of the initial impact of the UAW prescription mail-order mandate cycle.

The current comparable store sales rate has also been negatively influenced by the conversion to generic from branded drugs. This conversion significantly lowers sales per transaction but raises overall profitability due to better margin rates on generic formulations. We believe this transition has impacted the Pharm comparable sales by up to 2 to 3%. Second-quarter retail operating earnings of 6.5 million were comparable to the levels achieved in the second quarter last year. We believe this performance demonstrate our ability to remain profitable despite the eight supercenters and two Costco's that have opened during the past 12 months in markets that directly affect our retail stores.

Grocery distribution sales during the second quarter increased 3.6% to 263.7 million compared with 254.5 million in the same period last year. Second-quarter operating earnings in the distribution division, however, declined 5.7 million from 6.4 million in the second quarter last year due primarily to the previously mentioned contract termination payment received last year, as well as the strategic review advisory fees.

Turning to the balance sheet, long-term debt for the quarter including current maturities declined 14% to 81.5 million due to our continued strong profitability and use of a federal income tax net operating loss carryforward that reduced cash outflows. As of September 10, 2005 our long-term debt to total capital ratio was 0.38 to 1.

At this time I will discuss our outlook for the remainder of the year. We expect our distribution segment sales to remain strong compared with the year ago period because customers are well-positioned relative to weaker competitors in Michigan, and we expect to improve our sales penetration rate with certain key customers.

Turning to our retail division we do not anticipate any additional supercenter openings during the remainder of this fiscal year and next year based on our real estate activity intelligence. We will cycle one supercenter opening late in the upcoming third quarter and a Costco opening in the fourth quarter of this fiscal year. We will cycle the remaining supercenter and Costco openings during the first half of our next fiscal year.

We expect our retail division sales in the second half of fiscal 2006 to be affected by the competitive and economic market challenges, as well as the absence of the sales increase from the Easter holiday that will shift out of this year's fourth quarter. Considering these items, exclusive of the Easter holiday sales affects, we expect our retail sales trend to improve significantly but comparable store sales will be slightly negative for the remainder of the fiscal year.

With that said from a profitability perspective it is important to understand that the prior years' second half financials include several non-recurring items related to a favorable vendor agreement settlement, a favorable tax audit settlement and a gain on the sale of a retail store joint venture partially offset by a write-off of fees related to our debt refinancing. These items netted to $3 million on an after-tax basis. We expect gross margin rates to be lower than last year in the second half of fiscal 2006 due to the non-recurring vendor contract settlement and an increasing mix of lower margin distribution and fuel sales. The lower gross margins however should be partially offset by slightly lower operating expenses as a percentage of sales.

We expect an overall profitability benefit from a third quarter gain on the sale of real estate, partially offset by additional fees associated with our strategic assessment which should result in a net after-tax benefit of between 500,000 to 700,000. We also expect interest expense to be lower than last year during the second half of the fiscal year due to lower borrowings.

Annual capital expenditures are anticipated to range from 25 to 30 million with interest and depreciation expense of approximately 8 million and 21 million, respectively. I will now turn the call back to Craig.

Thank you. Our goal is to become a larger, more profitable and more competitive organization with a dominant market share among conventional supermarket operators in our markets. We will continue to aggressively pursue sales and profit growth by executing internal growth strategies that include improving category management, constructing new and replacement retail grocery stores, expanding existing stores and strategically leveraging convenience by adding more fuel centers and in-store pharmacies.

We will continue to aggressively pursue new distribution customers and seek to expand sales whether existing and loyal customer base. External growth strategies will include evaluating acquisitions of both customer and noncustomer stores that fit our strategic acquisition criteria and help solidify or expand our market share position initiative. These acquisitions must have the strong potential to improve sales growth and profitability.

I will say that due to the dynamic and competitive grocery industry market conditions our opportunities in this regard have never been more favorable. But we will only consider retail stores that have a strong potential to enhance the long-term value of Spartan Stores. I want to make one last point very clear. Although we have ended the formal strategic review process, we have not eliminated any strategies that have the potential to improve long-term shareholder value. Our industry environment continued to change rapidly, and it is our fiduciary responsibility to continually evaluate the options available to enhance the long-term value of our Company, and we take that responsibility seriously.

As Dave mentioned, we believe that the majority of supercenter openings in our markets where we own stores have already occurred. That does not mean that additional openings will not take place in the future, but the pace of these store openings has subsided for the remainder of this year and next fiscal year. We will continue to stay squarely focused on our strategy designed around customer convenience. During the remainder of fiscal 2006 we plan to open up to 2 in-store pharmacies and 3 fuel centers. We also remain on track to complete 10 to 13 remodels and to re-merchandise resets for the remainder of the year. This leaves our store base in significantly better condition than when we began our program 2.5 years ago and by the end of this fiscal year, we expect to have a significant percentage of the investment in the existing store base completed.

We will also continue our perimeter store merchandise, private-label and retail store market positioning initiatives. Our market positioning initiatives include new store signage, new service offerings, customer service enhancements and advertising campaigns designed around healthy living habits and wellness. On the distribution side we will continue to aggressively seek new customers and to increase our sales penetration with our existing customers. As many of you know, business conditions in our markets continue to rapidly evolve and some of our distribution customers are very well positioned to capitalize on the current market conditions. Consequently, growth opportunities in our distribution operations have not been this favorable in many years.

In summary, we remain optimistic about our future growth opportunities and are firmly committed to the long-term success of Spartan Stores. We will now open the call for your questions.

(OPERATOR INSTRUCTIONS) Stephen Weiss (ph).

Thank you very much; first of all Craig congratulations on improving our shareholder value for the past three years. Kudos to year. A couple of things I have a question on. There is a general trend right now moving the supply base to China and other low-cost sources overseas for certain kinds of general merchandise items. Are you taking advantage of these low-cost sources? And if so, how are you guys advertising the complexities around international sourcing and supply chain environment?

We do in some ways. Remember we are relying on other people in the supply chain to provide product to us. But we do have a joint venture with Copco (ph) and they really are the point man on this initiative. Yes, we are taking advantage.

And also how your logistics folks looking at the most optimal sourcing solutions from a logistics standpoint to keep your freight costs as low as possible?

Well, I mean, from a logistics standpoint the challenge today of course is energy costs. And we are really embarking on an initiative right now to be sure that we have the right equipment in place. As a matter-of-fact, we have an order for some additional power units in our distribution fleet that will give us the best and most optimal efficiencies available today.

Final question. What are some of the challenges or concerning to you (indiscernible) regarding reducing costs with your supplier base? And how are you planning to accomplish those?

Maybe I would hand that one off to Dennis Eidson who is our EVP of merchandise.

Yes, Dennis, if you could enlighten us, that would be great.

Sure. Actually we have -- we are completing an activity based costing initiative here, and the results are just coming out. And it's giving us some tremendous insight into individual vendors and how efficiently we are able to handle them in our supply chain. We are going to be validating that model with some of our large suppliers here in the next 60 days, and we expect to come out of that planning session with some very strong and meaningful changes to those supply chains. I think we can lower costs, not only coming into the facility from our suppliers, but also going out to the customer base, as well.

When you are talking to your suppliers are you scorecarding them to make sure they are meeting your quality standards? What are you guys doing?

Yes, we will be implementing a new scorecard as the result of the ABC initiative. And we've got one tentatively but we have not yet collaborated with our suppliers to efficiently put a stake in the ground on a new scorecard.

So in about sixty days out we can expect to hear a lot more from your Company regarding some of these initiatives?

Within the next sixty days we will be meeting with our suppliers to collaborate on that topic and I'm not sure exactly when we will have benefits in place. But certainly we don't expect them to be too much further down the line.

Great, congratulations on a great quarter. Good luck down the road.

Chuck Cerankosky of Key McDonalds.

Craig, could you talk about how the consumer is behaving right now apart from the competitive elements that you've got these higher fuel prices, what is that doing to the way they are approaching their shop at your store, kind of give us insight into traffic versus average ticket. And if they are still willing to trade up or is it energy costs affecting what they're spending their money on?

Chuck, we continue to see an increase in our sales per transaction and a softening in the customer account, which by the way is an industry situation. It is not -- we are not unique there. In addition, we are seeing a very nice improvement in our private-label business. We feel that there is some trading going on from national brand to private-label, and we have a very, very attractive trend in private-label right now.

Do you think that is due, Craig, to some of the merchandising you've done, largely, or is it energy prices pushing that along?

I think it is a little bit of both. There is no question that energy prices are going to affect our business and our industry. You cannot have 2.75 a gallon fuel prices, particularly in areas where we operate where distances are a factor. In a metro area it is a different situation; you know Boston, New York that might be one thing. But here in Michigan where we have customers that travel 15 miles, 20 miles to shop in one of our stores, there's no question it has to be a factor.

Chuck, the private-label penetration has really been a pleasant improvement for us. We spoke about it in the script, but we launched full circle as a new private-label line, which is the natural organic line. We've got top tier on the HBC side which is new in value time on the lower tier. And our corporate stores private-label penetration is tracked by Nielsen for this fiscal year, is now exceeding the national penetration for private-label. We are over 22% on a unit basis. I think the nation is running somewhere around 20, and it is that as well as the redesigned Spartan brand packaging that I think has really elevated the private-label performance. We are really pleased. And I might add the distribution customer base is experiencing similar gains in private-label penetration.

Quick question. The full circle come from Copco?

Yes.

Question about relative impacts of new competition. How would you describe the impact of a Costco (ph) versus the supercenter, not only in terms of what departments are affected but how many stores each might impact.

There's quite a difference in the way a club store affects us versus a supercenter. First of all, on the supercenter side of the impact of the media day one, where on a club side the impact is over time; it probably takes a year for you to really feel the full impact. And that is really sort of what we're experiencing here in Grand Rapids. I wouldn't consider the two Copco's here to be like world-class, record-setting stores for them. Sam's wholesale, Sam's Club stores were here first. People in West Michigan are prone to make changes like that slower than maybe in other markets. It's a very traditional marketplace. But Costco is somebody to be reckoned with. We have tremendous respect for Costco. They run very very good stores. And the number one item in Costco is boneless chicken breast. And that's the number one dollar item in the Costco stores so you have to respect Costco for their penetration in the food area.

Troy Houghtenstein (ph) of Radcliffe Funds.

Two questions actually. Can you give me a sense on going forward the next couple of years what CapEx may look like giving you have been doing a lot of remodeling that's probably going to drop down I would have to imagine below the 25 to 35 level? And then secondarily any kind of outlook you've been continuing to do a great job on the margins on the retail side, many kind of long-term goals you can help me out with there would be great.

On the capital front we think that the 25 to $30 million would be sort of a consistent number because you know we haven't built any new stores in the last two years. And we see new stores on a short-term horizon primarily replacement and fill in stores. But we see that, and we are in a position to be able to do it. And it's an important part of our defense arsenal to be able to build new stores. So I think that the 25 to $30 million is something that you will see for the next couple of years.

How much of that would you think would be maintenance kind of capital expenditures versus expansionary stuff that you've talked about?

I am going to say 15 to $20 million would be in the maintenance side and (multiple speakers) would be expansion in the form of enlargements in new stores.

Great. Thank you; that's perfect.

You asked the question too about grocery margin.

Yes, on the margins on the retail side, maybe on the EBIT line, what your sense was going forward if you think you have some longer-term goals that you continue to move those up or not.

I think when you consider the fact that between Meyer and Wal-Mart there is always going to be pressure on our gross margins, that I wouldn't expect to see any significant increase in gross margin. Other than the benefit of the private-label enhancement, which really does have a tremendous benefit to our gross margins. But you know when you're competing with Wal-Mart supercenters, it is hard to say that or project that you would have a margin improvement.

So like EBIT margins around the 3% level seem kind of reasonable to you again?

Yes.

Karen Short, Fulcrum.

Just a couple questions here. I know that other distributor retailer combinations are kind of talking about how the -- on the distribution channels from the hurricane. And obviously that is something that was felt immediately and I'm just wondering if you are still seeing the impact or if you had seen an impact in your quarter? Of if you could maybe talk about that a little bit and I have a couple of other questions.

We did see the impact on the availability of transportation. A lot of the long haul truckers in the United States really became over utilized in the support of the hurricane issue. So we did have some kind of softening of availability and it really did affect some product that was coming particularly from the Southeast. However, that has really subsided and right now our service levels and inbound freight -- we really don't have a problem right now.

And just following on the fuel costs, how quickly can you guys pass on the higher fuel costs from your distribution to your customers?

About a year and a half ago we put in a fuel adjustment in our transportation charges to our retailers. So we are able to modify our fuel adjustment every period. So 13 times a year we look at that fuel surcharge, and so we are staying right with it, and thank goodness that we had the vision a year and a half ago to institute such a program.

Just out of curiosity I don't know if you have give this number -- if you have talked about it but what is your rate of attrition in your distribution today? Maybe if you don't have one you're doing well.

I will put it single digits, less than 10%.

Okay. And I guess this is the last question, I know that there was a lot of talk (ph) obviously you issued a press release relating to deciding not to make a larger scale acquisition. I'm just wondering if you could go through how you evaluated a potential acquisition, what kind of criteria you were looking at? Because I guess I would tend to think that there would have been significant synergies that would have been accretive. So I'm just curious as to how you went through the process.

Any acquisition process would of course require that it would be accretive to our earnings. But you have to look at the risk and reward relationship whenever you go into an acquisition. And we just felt that in this particular case that the risk was a little bit greater than what we thought we should take. And we determined to back out.

That's great. Thanks a lot.

Blaine Marder, Loeb Partners.

Yes, good morning. Can you talk about the stand-alone economics of putting a gas station into a store? What kind of investment are you talking about, and what is the payback? Maybe talk about the pharmacy, as well.

Talk about a gas station first. You are talking 850 to $900,000 as a cash output. The real benefit of a gas station is the increase in supermarket sales that you get when you put the gas station into your environment. By the way, Kroger five years ago had no gas stations. Today they have 600 gas stations. And that is because of the increase in supermarket business that you get when you put gas station in a lot. It is a phenomenon that by the way, we up until a year ago didn't really have a good understanding of. But we had heard that that was the benefit. So we did our experiments, and we deployed the initiative, and it has turned out to generate for us exactly what we had heard it does. So when you look at the gas station its not just the profit improvement from the gas station itself, which by the way is profitable, but it really is the combination of the increase in comparable sales in the supermarket that makes the investment fly.

Okay, and the pharmacy, what is the cash outlay for a pharmacy?

Much less, 200,000, $250,000; depends upon whether you have a drive-through opportunity or not. Same kind of upside. And by the way the pharmacy customer is the most loyal customer that you have. When people embrace the pharmacist they tend to stay with it. And it's very hard to get a person to move to another pharmacy. As you will notice when someone builds a new pharmacy the amount of money that they spend to transfer people from one environment to another is huge. We are very fortunate because we have a customer count in our store of 10 to 20,000 customers per week. So the opportunity to get that customer to move to us and work and shop our pharmacy is much greater.

And then are you able to quantify the square footage increase or decrease this year? And then what are you thinking about for next year?

Our square footage increased this year is diminimus. So we have, we actually have two stores that we closed, which would probably be a reduction of 50,000 square feet. And we have an additional one building that is going to be around 10,000 square feet. So actually on a net basis our square footage is not changed very much.

And then next year will you be closing more Pharm stores, or do you see your square footage increase next year?

We do not see any store closures in the horizon.

Okay, and then -- let me see here -- on the inventory, and I guess this is a question for Dave; I see the inventory moving up a little bit. Is that in anticipation of the new distribution customers in the second half?

Its multiple things. There is some of that. Certainly we have added a number of new distribution customers. Secondly there was timing on our fall canned goods sale. We moved that up approximately a week or so. And so distribution shifts even higher than that so we ended up having actually inventory in our warehouse related to the fall sale that we had this year that we didn't have last year. So those are really the two primary drivers.

Okay, and then Dave, what were you saying about the NOLs and using NOLs and the benefit and where did that come through?

What happens is from a cash-flow perspective, when you look at our P&L you see we still provide a provision for federal income taxes. But from a tax perspective, because of losses we generated a few years ago, we are able to carry those losses forward so we don't actually have to pay the federal income taxes. You use up that deferred tax asset. The NOL carryforward goes away, and that is what generates incremental cash flow. So we are able to not have to pay our provision for taxes this year. Where in normal years you would be paying that out in estimated tax payments.

What is the level of NOLs that you have remaining?

We believe we have enough to carry us at least through the remainder of this year and maybe somewhat into next year.

And what tax rate are you using in terms of the provision?

Well, we typically use about a 35% rate on average. It is a little lower this quarter because we had some, sort of onetime permanent differences with our restricted stock is handled between book and pass (ph).

Okay, and then what was the contribution of Easter in last year's fourth quarter?

It is roughly about -- you can usually count on about a 1.5%. It is roughly 3 million-ish on the retail group and 3 to 4 million-ish on the distribution group in sales.

That's helpful. And then you said in the release about the retail, you said you closed the two store closures and the JV with 7 million? That was $7 million for both the JV and the store closures?

Right, yes, the JV was about 4.7.

Okay, the JV was 4.7. Okay, great. Thank you very much.

(OPERATOR INSTRUCTIONS) Karen Short, Fulcrum.

I just had a follow-up. Given your sales (ph) with your conventional supermarkets how many of those have the zoning ability from a zoning perspective to add fuel centers to them?

I think we looked at there were about 20 stores -- of the 75 supermarket facilities that we operate there were about 20 stores that fit the criteria for us, where we thought that there might be zoning approval and there might be the access egress, the square footage, the curb cuts, all of that. And then we did research. We had -- we hired a consultant to look at our what we thought were the 10 most important and the 10 best opportunities and the consultants gave us gallonage estimates based on traffic and competition, and we started at the top of the list, and we are working our way down. I'm going to guess that we probably have as -- it would be single digits as to the number of possibilities that we have with the existing inventory of stores we own.

Okay.

By the way one other point, we do have retailer interest in this scheme from a customer people; we are actually assisting them in putting together programs because they've seen the kind of success that we've had.

So how you are helping them -- just help me understand how that would benefit them (multiple speakers)

Well it benefits us, because if their sales go up and we have the benefit of shipping them more groceries.

Right. I got it. And then the only other thing I just want to ask there, the 0.6 million advisory fees, is that -- when I just look at your segment data you give the retail operating earnings and the distribution operating earnings. Is it in distribution operating earnings?

Yes, it is in the distribution side.

Blaine Marder, of Loeb Partners.

She just asked it. Thank you very much.

There are no further questions at this time. Do you have any closing comments?

I guess if there are no more questions I just want to thank you on behalf of all of the people at Spartan Stores. And we look forward to the third quarter conference call later on this fiscal year. Thank you.

Thank you, ladies and gentlemen for your participation in today's teleconference. You may disconnect your lines at this time, and have a wonderful day.