Welcome to the Advance Auto Parts fourth quarter 2008 conference call. Before we begin Judd Nystrom, Vice President, Finance and Investor Relations will make a brief statement concerning forward-looking statements that will be made on this call.

Good morning and thank you for joining us on today’s call. Certain statements made during this conference call will contain forward-looking statements and incorporate assumptions based on information currently available to the company. Any statements that are not related to historical fact are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks, uncertainties and assumptions, including those listed from time to time in the company’s annual reports on Form 10-K and its other filings with the SEC. If any of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, the company’s actual results may differ materially from the anticipated results discussed in these forward-looking statements. The company intends these forward-looking statements to speak only as of the time of the conference call and does not undertake to update or revise them as more information becomes available. Our results can be found in our press release and 8-K filings which are available on our website at www.advanceautoparts.com. For planning purposes our first quarter earnings release is scheduled for Wednesday, May 20 after market close and our quarterly conference call is scheduled for the morning of Thursday, May 21, 2009. To be notified of the dates of future earnings reports you can sign up through the Investor Relations section on our website. Finally, a replay of this call will be available on our website for one year. Now let me turn the call over to Darren Jackson our CEO, who will be followed by Jim Wade our President; Kevin Freeland, Chief Operating Officer and Mike Norona, EVP and Chief Financial Officer. Darren.

Thanks Judd. Good morning everyone. Welcome to our fourth quarter 2008 conference call. It’s an honor to share with you the terrific results that our 48,000 team members delivered in these extraordinarily challenging times. I want to thank our Advance family personally for an outstanding quarter and fiscal year. The first year or the first chapter of our transformation story is complete. There was considerable suspense and success as the chapter or year unfolded. I’m very pleased with our strategic and financial progress and the related accomplishments in fiscal 2008. I am energized with the revitalization of the values at Advance and our continued focus and commitment to our customers and team members. I am also very encouraged about our growth and earnings potential, yet I realize that our transformation is just starting to take hold, and it will take time to reach our full potential. Yet I am confident that we will get there. A year ago we embarked on a turnaround and transformation journey. We set out to define the state of the business and acknowledged that the turnaround of our business had to begin with a focus on the customer. I told you that we are going to embrace the turnaround mentality in terms of speed, simplicity and prioritization. We determined our strategy would be a simple focus on people; our customers and our team members. Specifically, our strategy would be guided by the DIY in commercial customer needs. Two-thousand-eight was the year focused on foundational change. We evaluated our portfolio of inventory, stores and initiatives. We retired our 2010 store format strategy. We introduced the commercial acceleration, DIY turnaround, availability excellence and superior experience strategies as the catalyst for our transformation. We are divesting of inventory and accessing stores that are not consistent with our future…

Thank you Darren and good morning. Let me start by saying I’m excited about the opportunity to lead our customer and sales driving functions, which include our DIY and commercial sales; marketing; customer insight and advertising; field and store operations; Autopart International and real estate. Now I’ll update you on our progress with our commercial acceleration and DIY transformation strategy. We’re pleased with the overall progress we made with our commercial acceleration strategy in the fourth quarter and for the year. We ended 2008 with our fourth consecutive quarter of double-digit comp growth with a 13.7% commercial comp for the fourth quarter, and 12.1% for the year. And we made good progress continuing to improve all of our team sales productivity methods. We also continued to gain market share in a business that is very fragmented and is still growing overall. I want to thank our store teams, our sales force and our support functions for the great job they did serving our customers and growing our commercial business in 2008. With our less than 3% commercial market share, we believe there is still much room for growth. We remain committed to aggressively growing the commercial business and despite the broader economic challenges, we believe we can continue to achieve double-digit comps in 2009. As we look into 2009 our primary focus will be to further accelerate our commercial business in the following three areas. We’ve developed a database to provide the full potential commercial sales for each store that is enabling us to aggressively invest in parts [credited] trucks and drivers in our stores and markets with the greatest potential, and with a proven track record of strong performance. We’ll continue to focus on building the basics of great customer service at each store. That means leveraging the increased…

Thanks Jim and good morning. I would also like to express my excitement about the opportunity to lead the company’s day-to-day operational functions including merchandising; inventory management; supply chain; store operations support; e-commerce; and information technology. I’d like to update you on the execution of our availability excellence and superior experience strategies. Availability excellence enables us to serve our customers better than anyone else by redefining the standards of breadth, depth and speed of delivery of parts. I want to congratulate the team for significantly increasing our parts availability in 2008. I would like to provide visibility to the key areas that will drive long term value. We will continue to invest in merchandising capabilities, invest in parts and reduce our net owned inventory. The transition toward our integrated operating model in merchandising is complete and our eight category teams are in place and engaged under this new model. We will continue to roll out our new category management process and are on track to improve the category’s performance in 2009. We recently launched the company’s global sourcing capability and private brand strategy. We have begun staffing teams in the states as well as overseas. In 2009 we plan to begin directly sourcing specific products to create competitive positions on the opening price point portion of our DIY assortment. We will also continue the rollout of our price optimization process which favorably impacted our Q4 growth margins. In 2008, we continued to upgrade inventory selections. For the year, we added over $100 million in hard parts including the addition of Lewis and Wagner and inventory upgrades in approximately 1,000 stores. We completed a new custom mix process that will produce higher sales and gross margins with no incremental inventory investment. Our custom mix system began it’s national rollout in the…

Thanks Kevin and good morning everyone. I’d like to start by personally thanking all of our talented and dedicated team members for the results we achieved this quarter. We’re in one of the most challenging and unprecedented economic environments ever, yet our team members found a way to take care of customers, accelerate our turnarounds, and deliver a strong financial quarter. I plan to cover the following topics with you this morning; one, provide some financial highlights for 2008 fourth quarter and annual results; two, put our 2008 annual results into perspective with our turnarounds, including sharing actions we took and are taking to position us for success in 2009 and beyond; and three, provide our annual financial outlook for 2009. Turning to our fourth quarter, our results include the impact of both the 53rd week and non-cash inventory adjustment resulting from a change in inventory management and related accounting policy change. I plan to share some insights on both of these items and then speak about our results on both a 12 week and 52 week comparable basis, as that provides a more transparent and relevant comparison to 2007. We have also included this in our press release. Our operating performance during the fourth quarter including the 53rd week but excluding the non-cash inventory adjustments was $0.51 diluted EPS versus the first call consensus estimates of $0.37 and $0.35 for last year. The 53rd week added approximately $0.10 to our fourth quarter results and came in higher than the $0.07 we had estimated. The favorability was driven by better than expected sales and a higher gross profit rate. As Kevin shared, we also made a non-cash inventory adjustment of $37.5 million which reduced EPS by $0.25 in the quarter. This adjustment resulted from a change in inventory management and…

Thank you. (Operator Instructions) Your first question comes from Scot Ciccarelli - RBC Capital Markets.

Can you guys describe the impact of inflation in 2008 and what the expectations are in terms of product inflation for 2009? Number one. Number two, I’m not sure who this question should be centered towards but you know in terms of trying to customize inventory at a store level, kind of where are we? I know you guys used to do regions and then districts but there’s so much variability at the store level, if you can just give us an idea of kind of where you are in that process I think that would be helpful. Thanks.

In terms of inflation we roughly saw about a 3 to 5% inflation in our overall products last year which certainly pushed along the sales. We’re beginning to see some changes in categories and certainly the oil category would come first to mind as that has materially changed. And we’re beginning to see unit improvements as the price changes unfold. So I think that we’re going to monitor this very closely throughout the year; have not seen a material change in the trends but certainly we’ll stay very close to this. And what we don’t know is to what extent the change in the inflation rate will change the overall unit movement of the company to offset that. As it relates to the custom mix, we are complete with the system that we’ll need to customize down to the individual store. What we actually do is essentially re-assort one section at a time, and this is done to manage labor. About two-thirds of the sections change out each year. About a third of the sections change out every other year. So it’ll be about 18 months before we see the full effect of the impact on the business. But what we’ve done is gone through and completely re-assorted to markets to see what the overall impact was, and we’re extremely pleased as to what this does to drive overall business. Essentially they’re in stock on the things that customers want and pull out the products that weren’t selling in the past.

And that’s two markets out of how many? How many do you break it into?

Out of hundreds of divisions, so essentially it was a market test to see the impact of this. And then this will be a tailwind for us for about the next year-and-a-half.

Your next question comes from Kate McShane – Citigroup. Kate McShane – Citigroup: I was wondering if you could walk through and possibly quantify some of the puts and takes in your SG&A guidance for 2009. And has your guidance changed on what comps can leverage SG&A or has it always been 3%?

Yes. Hi Kate. It’s Mike Norona. We haven’t specifically given details around our SG&A but let me hum a few bars. So first of all I think our trajectory has changed. I think we came out of Q3 and I think we said we’d leverage at around 2.5. And 2009 is going to be another year where we balance investments and growth. And if you’ve been following the story the last year, we’re in a turnaround. And we’re looking at all the fundamental parts of our business, all structural parts of our business, to move ourselves to – move our assets to higher performing basis. And a couple of examples I would share is the inventory adjustment we made in Q4, where we’ve taken unproductive inventory out of the system to clear up shelf space and Kevin can hum a few bars on that – clear up shelf space for more productive inventory. Also the moves we’re making with our store divestitures. So we’ve taken a hard look at our store portfolio and we have stores that are under-producing, either from a profit standpoint or from the strategic standpoint. And what we believe is that by looking at all parts of our portfolio we can move our assets to more productive uses. So we believe next year we’re going to leverage our SG&A at roughly about a 3%. So maybe the last thing I would tell you is you know we’ve made some moves. I think we made some moves last year around things like less advertising, more trucks, more parts pros. So just an example of feeding our strategies with – and they come with some costs up front.

Three percent has about been our historical run rate. Last year it was a little lower due to some of the expense takeout. And Kate, just to be clear we – I mean, more trucks, more parts pros, more driver hours, less money being spent on television. More money being spent on commercial account managers next year. So philosophically what we’re staying committed to is how do we continue to build this integrated operating model through our focus on and our investments in the commercial space; through the investments in the right inventory, we did 1,000 upgrades last year. We’ll do another 1,000 upgrades this year to continue to build on this momentum in terms of re-architecting our model in the places that we think have the longer – are showing to have short term immediate benefits and longer term sustainable operating model benefits. Kate McShane – Citigroup: If I could follow-up with one other question on the do-it-yourself business, have you seen since one of your objectives and strategy is to increase attachment rates, have you seen any up-tick in attachment rates yet and do you think this is possible in 2009 when things are so difficult with the environment and unemployment?

Yes, Kate, this is Jim. We have seen some improvement on the attachment rate. I think we still have quite a bit of work to do as we continue to look at how do we best serve our customers from the standpoint of solution selling and make sure that they have everything they need to do a complete job. We are focusing a lot of attention on customer average, the average transaction that the customer has when they complete their visit to our store. We are seeing progress in that measure and I think in many ways it’s a broader look at the progress we’re making as opposed to just the attachment rate.

Your next question comes from Dan Wewer - Raymond James.

Darren, your commercial sales obviously substantially stronger than that of NAPA. We saw that from O’Reilly last month as well. I know that in the past when you were asked a question of whether or not you had taken share from NAPA, you would say it’s probably coming from the jobbers. But given the extent of your improvement are you reconsidering who perhaps you are taking share from nowadays?

Yes. I’ll have Jim and Donna talk to you about that, Dan, because they’re closer to it.

Dan, I think from an overall standpoint we would probably repeat pretty much what we’ve said for some time now that you know we’re in a commercial market that is still very fragmented. And we’ve got – there’s an awful lot of suppliers of auto parts in every market that are supplying the garage customers. And so as we are focusing on what we are focusing on, which is providing the best customer service that we can, I think we’re taking some share on an overall basis for sure. I suspect that a bigger portion of that is coming from the local market which is typically what happens. But we’re pleased with where we are. We’re pleased with the progress we’re making and we’re not so much focused on where it’s coming as opposed to just continuing to grow it and do what our customers are telling us is most important to them.

As a follow-up there, in the beginning of your comments you noted that lower gasoline prices could change driving behavior in 2009. I thought it was remarkable your sales were as strong as they were given the miles driven dropped 5% in November. Do you ever ask yourself, you know, the credibility of the miles driven data from the DOT? And based on your sales results and your competitors, perhaps it’s not as bad as what they’re reporting.

Dan, I ask myself a lot of questions. The way I think about it is there are many different factors driving consumer behavior right now. And if we reflected on it and I meant it that there is a lot of pain out there. And I think that there were a lot of consumers that frankly went to the dealer to get their car repaired and now the corner garage is just fine. And that corner garage used to just be fine for a number of people. And that change in the DIY behavior, I think, is reflective of people moving down. It’s probably not unlike what McDonald’s is experiencing. And that’s not to diminish what our team members are doing or the inventory upgrades or getting all those things right. But I think it is indicative of the environment and I think miles driven to your point is only one ingredient. I think our value proposition today, how we’re focused particularly in our commercial business and you know we have seen an up-tick in the DIY business, make no doubt about that. And I think it’s part of the holistic system, miles driven just being part of it. You can’t fight with the historical data in gas prices because the correlation is very strong, but I don’t know that the historical data even in recession periods tends to show this sector tends to do a little bit better. So we think we’re in a terrific spot in terms of the environment and we’re going to continue as Mike said to make sure that we’re putting the investments in terms of where customers are willing to pay us for it at this point of the journey.

And then just real quickly can you just defend how you’re lowering shrink in this kind of an economy.

We essentially changed the way that we audit our stores. And essentially went from a cycle count process where you go one section at a time throughout a calendar of the year to doing whole audits of the stores using an outside third party. And essentially what we’re seeing is that this new process is giving us probably a year of positive results as we get to a new plane and anniversary the change between the two. We have also announced a four-point program to improve it systemically. And we’ll attempt to use this year to ingrain that process for probably a longer term benefit for the company.

And the other thing I would say is Mike Marolt. So we were fortunate Mike led Best Buy’s efforts years ago when they were well north of one. I think even today they probably enjoy a shrink that’s less than a half a percent. And I think leadership is critical in a lot of spaces. And I think it’s not just – I mean he’s bringing a lot of practices that helped that organization. He’s bringing leadership and focus and building a team that I think we’re just starting to enjoy it in one part of our business. Shrink is one area. You know we’ve had tremendous improvement in places like workers comp this year. That used to be a difficult area for us. You know we see opportunities in the future with our partnership that we’re talking about with some of our vendors in the battery area. So I think it starts with leadership and then it can grow into other parts of the business as well.

Your next question comes from Alan Rifkin - Bank of America-Merrill Lynch.

Darren, with respect to the rent negotiations other than the expenses associated with the possible 40 to 55 store closures, what do you think is the potential long-term occupancy savings on renegotiated rents for stores that will remain open?

Alan, you have another question as well?

I do. I could ask you that as well. If I heard you correctly you said that you leveraged DIY labor. Is that correct?

Yes that’s correct.

So you leveraged DIY labor with a negative 1.1 comp and certainly you folks have made a lot of strides on the DIY side of the business. Why then are you raising the threshold for comp necessary to leveraged labor since DIY is still 70% of revenues? And then secondly, given the strides that you’ve made, the positive strides, why is your outlook for DIY comps still to be negative in ’09?

So maybe Alan what I’ll do is I’ll hit the first one in terms of real estate and then I’ll turn it over to Jim. You know, this is a – the environment has changed significantly in terms of commercial real estate. And I think you’ve heard us say last year one of the areas that we are just un-competitive on is our occupancy costs. So there’s two dimensions. One is we’d look at our store portfolio and we’ve determined that we’re going to close an incremental 40 to 55 stores this year because of profitability – primarily profitability and strategic fit. One of the reasons we give a range is because the largest driver of being unprofitable is occupancy. So our real estate team is going to work with our landlord partners and where we can be successful will be in the lower end of that range. Where we aren’t successful we’ll be at the higher end of the range. So that’s how occupancy plays into the divestitures. Generally across our portfolio, though, the market has actually changed. And we are actually – over the next number of years we have 800 stores that their leases come up for renewals. And I think everywhere you read right now, there’s probably not a retailer out there that’s not doing the same thing. So we think there’s anywhere from a 5 to 25% opportunity. And I give you a big range because that’s what it is. And I think we are a good, strong credit tenant in a market wherer a lot of places are going dark. So we think there’s opportunities there. And I think that’s more a market position as well. Maybe I’ll turn it to Jim on the DIY.

Yes, Alan, this is Jim. Just as far as how we’re looking at DIY currently, I think as you heard us talk about it in our comments earlier, we’re certainly encouraged by what we’re seeing in DIY. We saw the fourth quarter certainly improve from the third quarter and we’re encouraged by what we’re seeing so far this year. But I think where we are in terms of our guidance is that if you look at the last couple years, we’ve had negative comps in DIY. And we’ve got to earn the right to – our team has to earn the right to be able to forecast something more than that. We’re going to be working really hard this year to change that trend. But that is where we are today in spite of the improvement we saw in the fourth quarter. I think your other question is somewhat related to that in that we’re balancing 2008 and as we go into 2009 a rapidly growing commercial business with DIY business that was negative. And so within the store we’re balancing that staffing matrix. And Kevin mentioned earlier we’re doing some things to test and pilot some different mixes of staffing to help us manage that total labor better as we grow the business, but certainly a positive DIY certainly changes the ramifications of how we run the stores. So we’re working very hard on increasing the DIY business but we’re forecasting based on what we’re seeing in 2008.

Alan, I just want to add one thing. Your comment on de-leveraging SG&A, one of the other reasons we’re de-leveraging SG&A is not just primarily labor. It’s the investments we’re making in other parts of our business, whether it’s our new merchandising systems; as Kevin said, PDQ’s; and some of the transformation things that we do typically has some upfront costs but they have great MVP’s and drive good long-term value. So that’s what causing some of that SG&A de-leverage.

So in other words if you weren’t conscientious in making those additional investments beyond things really at the store level, what would then the threshold be for SG&A leverage? Would it be considerably lower than the 3%? Because it sounds like you guys have voluntarily [inaudible] ending on a number of things and that’s the only reason why the threshold is rising. Is that fair takeaway?

Alan, I think it would be lower. But I wouldn’t take it to sub-two because keep in mind you have medical inflation. You know, every year we do give raises. We’ve been fortunate to have some good performance and just inflation in the system, whether it’s on occupancy and other areas. That’s why I said historically even in good times the breakeven was about 3%. I think to Mike’s point what you don’t see is we’re in there aggressively taking costs out, whether it’s through some of our – we just recently outsourced the trucks as Kevin said. We’ll have some severance this year that goes with that. But on the other hand going forward you know we’re going to have some nice savings with it. So this year there’ll probably be no leverage from that transaction but next year and the following year there will be. And so we’re going across the business where we can to make sure that we’re taking costs out where we can improve capabilities over the long term. There might be a little short term preying in SG&A. So then we can focus on the parts of the business we want to grow going forward.

Your next question comes from Matthew Fassler - Goldman Sachs.

I’d like to ask a question about merchandising systems, the Oracle system that you’re putting in place. You’ve talked a lot about store level inventory, customization and the impact that that’s had where you’re implementing it on a small scale. How well the rollout of your – of the new system further impact or improve your ability to execute on that front? And if you can differentiate the advantages that you expect to recognize when this system is rolled out from the work you’ve already been able to do.

Matt, this is Kevin. I’d like to have Charles Tyson assist me on that. But essentially the program will roll out in three phases starting in third quarter of this year. And the first thing that we’ll see in terms of the tangible benefit on the company is our ability to price product more essentially effect to a closer local demand and what we see in terms of competitive reactions around the stores. And as we go into fourth quarter and first quarter of next year other advantages including our ability to tighten up what we’re doing in category management and inventory management, but I’ll turn it over to Charles.

Thank you Kevin. Good morning. So I think certainly the advantages of getting a lot more granular on the way that we’re going to be able to manage our inventory, specifically at the category level and our ability to get to custom mix in the front room is going to be very significant for our merchants. I think the second one as Kevin said is our ability to drive zone pricing to a much more granular level will drive benefit through the end of ’09 and into ‘010. So we see the investments having material effect on both our merchandising and replenishment team’s ability to drive improved performance.

My second question is a follow-up on the inflation team and it relates to hard parts. You discussed trends that you had seen in some of the commodity areas like oil and some of the other chemicals and there’s been some elasticity I guess that’s helped defray whatever kind of fading inflation there is. To what degree has inflation been a factor in the hard parts area which is harder for us to see as we shop up your stores and what kind of trend would you anticipate in ’09?

Well, certainly in ’08 if you look to metal pricing, commodity pricing there was an impact driving inflation up. And you have visibility to what happened to commodity pricing over the last six months as being a worldwide industrial slowdown. So we are seeing some of the benefits in the reduction in commodity pricing flowing through to benefit us today.

And I would imagine that given the lack of transparency of pricing to consumers, there’s probably less risk of prices coming down in those areas? That is sale prices?

I think that’s a good comment.

One other comment, when Jim was talking one of the things that we’ve been working on is attachment selling and trying to drive the overall basket and as he mentioned we’re not as far along on that as we would hope but that the customer average or the average ticket is rising. And part of that is a second activity that we’re engaged in which is many of our key products have a good, better, best assortment to it and we’re seeing more progress quite frankly in stepping the customer into some of the premium products than we are in our ability to manage the overall attachment rate.

And finally as it relates to the trajectory of earnings growth over the course of the year, you alluded to a slower growth in the first half and then perhaps bigger expectations presumably adjusted for the 53rd week in the second half. How should we think about that in the context of the shrink benefit that you captured in the fourth quarter which obviously seems quite legit but would also seem to create a tough bar for you to cycle on the gross margin side? Should we infer that the expense investment should be highest in the first half and then recede in the second half of the year? Or do you think that you can cycle the gross margin benefit that you saw with unfettered momentum?

Yes, a couple of things. In terms of the shrink and I think that Kevin and Darren alluded to it, because we’re starting from a - you know, we think we have a lot of opportunity in shrink. So we continue to see shrink as being a tailwind for us as we go forward. So we think there’s the opportunity. And I think, Matt, what we’re not going to do is – I think what we’re going to do this year and I think I said it in the script we’re better operators than we are predictors of the future. This is an unprecedented environment. What we shared with you in the script is really what we know. We know last year we had the stimulus, which will be a little bit of a headwind for us. We know we annualized some savings last year. And we know we’re making some investments. And we’ll be making investments throughout the year. I think what changes, though, is there’s an expectation that those investments start to give us a return. And we should see some of those start in the latter part of 2009.

Your next question comes from Brian Nagel – UBS. Brian Nagel – UBS: First, I also wanted to look at gross margins more closely. And as I look at my model Advance Auto Parts has shown a nice increase in gross margin for a few quarters now, but that rate of improvement clearly stepped up in Q4. So I guess the question I want to ask there is what were the factors that really helped to drive that rate of improvement higher? And as you think about in 2009 and you gave guidance for modest gross margin, how should we think about the sustainability then of those factors that drove the gross margin in Q4?

Yes, so maybe I’ll tell you where we saw the big drivers and then I’ll have Kevin comment on 2009. I think the three drivers that we alluded to one was shrink and that was over 50% of the increase we saw in Q4; the second was more effective pricing; and the third is a higher mix of business from Autopart International which typically has a higher gross profit rate. Kevin.

Yes, Brian, we rolled out a new price optimization program in fourth quarter and it was only partially complete by the end of the year. That will have its full impact as we go into next year and we were expecting a significant improvement. One of the things that was commented also is that what we refer to as margin drainers, so shrink would be an example of a margin drainer. Darren mentioned in terms of battery returns. It’s a hit on the margins in that large category. All of those things should have a positive impact as we move into next year. We mentioned the global sourcing and our ability to essentially private label a larger portion of our assortment should begin to positively affect us at the tail end of this year. But at the same token, we’re beginning to get some momentum behind sales. We’re getting very focused on the competitiveness of the opening price point portion of our overall pricing strategy. And those things will be somewhat of headwinds as we go into the year for margin, but should be tailwinds as it relates to overall sales growth. Brian Nagel – UBS: The non-cash inventory adjustment you took in the fourth quarter, does that include a markdown of goods? And if so, will the flow of those goods be a positive for gross margins over the next few quarters?

Brian, no, essentially this was an operational change that we made that then led to an accounting change. But we historically had taken products that were essentially for older cars that had grown to a five year supply and focused our return privileges on those products. What we have moved to and it’s a part of the rollout of the new custom mix tool is essentially early model parts at two years of supply is the new standard. And we have created what we refer to as the neutral zone which is two to four years where essentially we will discontinue all replenishment, any sale in a store that occurs will just go out of stock on that slow moving merchandise. Any sales that occur in local stores, because our stores share inventory, we’ll transfer it to that store and again not replenish it. And we’ll focus the lion’s share of our vendor returns in that neutral zone. And so this intent is to take products that are four years of supply and greater and we’ll take this charge. And our intent would be to prevent the reoccurrence of this by this focus in what we refer to as the neutral zone. And those products that we had, $37 million were generating about $5 million of sales per year, which is about a two-tenths of a turn. The product that we would be replacing on the shelves because our stockrooms are full today as we get these products out of the shelves and replace them with more saleable products, the actual sales rate that we would see would be a tenfold increase.

And just to be clear, what we did with the adjustment wasn’t a markdown. It was actually taking that full amount as we now have a different definition of obsolete inventory that’s anything greater than four years. And it was the adjustment to take – to write off that inventory. And that’s a net adjustment of not only writing off the inventory but what we’ll get from the sale of that and moving the inventory and so on. It’s a net adjustment.

So when you connect both of those, Mike and Kevin, so Brian if you go back to the custom mix and what we’ve learned in the custom mix and what’s selling in those two markets what we learned is we’ve got to create shelf space. And so we might as well yank inventory off the shelf that’s turning at point two and look to put the tailored merchandise or the tailored mix into those stores that are turning closer to two. And we thought that this is – essentially, it’s a no brainer because we’re cleaning up part of the portfolio that’s part of the issue we have in terms of sales productivity and replacing it with things that work in those communities, not unlike the change we’re making in the store portfolio. Mike, I think you would say the stores that we’re divesting are probably doing $100 a foot. And so we’re willing to relocate and find better locations in order to solve the bigger opportunity which is getting sales per square foot moving again. This is part of a year long process to be honest where we said, “Where do we have to go in and clean up some of the legacy issues that we have so we can position the business to grow more effectively, support our team members and the stores with the products that they’re looking for, and get better positioned in the right markets?”

Wendy?

Yes?

I think at this stage we are past our 10:00 Central conference call so thank you everyone for joining us on today’s call. If you have additional questions please contact Joshua Moore at 952-715-5076. Reporters please contact Shelly Whitaker at 540-561-8452. That concludes our call. Thank you.

Thank you. That concludes our call today. You may now disconnect and thank you for joining us.