Good morning, and welcome to Spartan Stores' Third Quarter Fiscal 2012 Earnings Conference Call. By now, everyone should have access to the earnings release for the third quarter ended December 31, 2011.

For a copy of the release, please visit Spartan Stores' website at www.spartanstores.com under For Investors. This call is being webcast and the replay will be available on the company's website until February 23, 2012.

Before we begin, we'd like to remind everyone, comments made by management during today's call will contain forward-looking statements. These forward-looking statements discuss plans, expectations, estimates and projections that might 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 differences include, among others, competitive pressures among food, retail and distribution companies, the uncertainties inherent in implementing strategic plans and general economic and market conditions.

Additional information about risk factors and the uncertainties associated with Spartan Stores' forward-looking statements can be found in the company's third quarter earnings release and fiscal 2011 Annual Report on Form 10-K and the company's other filings with the SEC.

Because of these risks and uncertainties, investors should not place undue reliance on forward-looking statements. Spartan Stores disclaims any intention or obligation to update or revise any forward-looking statements.

This presentation will include non-GAAP financial measures as defined in Regulation G. A reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures and the other information required by Regulation G is included in the company's earnings release issued after market closed yesterday, which has been posted on the company's website.

It is now my pleasure to introduce Mr. Dennis Eidson, President and CEO of Spartan Stores for opening remarks.

Thanks, Katie. Good morning, and thank you for joining our Third Quarter Fiscal 2012 Earnings Conference Call.

And with me this morning are members of our team, including our Executive Vice President and CFO, Dave Staples; our Executive Vice President of Merchandising and Marketing, Alan Hartline; our Executive Vice President of Retail Operations, Ted Adornato; and our Executive Vice President of Wholesale Operations, Derek Jones; and our Executive Vice President, General Counsel and Secretary, Alex DeYonker.

I'll begin by providing you with a brief overview of our business and financial performance for the third quarter, and then Dave will share some more specific details about the third quarter financial results, as well as our outlook for the fourth quarter of fiscal '12. And finally, I'll provide some closing remarks, and we'll open up the call to take some questions.

I am pleased with our ability to increase our consolidated net sales and generate third quarter earnings in line with our expectations despite experiencing a more challenging sales environment than we originally had anticipated. Both the distribution and the retail segments contributed to our consolidated net sales growth.

In fact, this is the fifth consecutive quarter of year-over-year sales growth in the distribution segment. Our consolidated sales performance combined with productivity improvements in each segment and tight cost controls enabled us to report an increase in adjusted EBITDA as compared to the same period last year.

Now I'll focus on our distribution segment results for the quarter in a little bit more detail. Our distribution segment sales increased approximately 2% for the quarter as a result of new customer growth and improved pharmacy sales.

I am particularly pleased by our ability to continue to attract new business, and I believe that our sales performance demonstrates that independent retailers continue to appreciate our value-added model.

We continue to focus on delivering value on our distribution and retail segments, as the consumer is still experiencing a challenging economic environment. As you are aware, our private brand program continues to resonate with our consumers.

The continued acceptance of our existing private brand products, the evolution of our packaging design and the launch of 180 new items in the quarter has driven our year-to-date unit penetration at retail to 25%. This penetration rate exceeds the national average by over 150 basis points.

For the full year of fiscal 2012, we expect to introduce approximately 400 new private brand items, an increase of 33% from the 300 that we had previously anticipated. Our new product introductions further enhance the value offering to our distribution customers, while providing the entrance to a market with even more choices.

Going forward, our distribution team will continue working aggressively to increase our existing customer penetration and add new customers and adjacent markets, as well as enhance our value-added service offerings.

Net sales in our retail segment increased approximately 2% due to higher fuel retail prices and increased fuel volume. These gains were partially offset by a decline in comp store sales of 1.2% excluding fuel.

The decrease in our comp store sales was primarily due to a couple of factors in the quarter. First, unseasonably warm weather in Michigan has negatively impacted sales.

And second, we continue to be impacted by a cautious consumer discretionary spending trend. These headwinds were partially offset by the benefit of our Yes loyalty program rollout to the D&W Fresh Markets and Family Fare banners.

And while the Michigan economy continues to improve, overall consumer discretionary spending is still negatively pressured due to a slight decline, and the number of people employed in the state, higher fuel prices and an increase in food inflation. As we previously communicated, employment is a significant driver of our sales performance.

And therefore, while the current environment is still challenging, we do remain confident that a number of people employed in Michigan will begin to grow and Spartan Stores is well-positioned for increased sales.

As previously mentioned, we completed the rollout of our Yes loyalty program to the remainder of our chain, and it is now universally available at any of our banners across the state. To date, we are pleased with the approximately 800,000 households that are using the program and the nearly 450,000 active e-mail addresses.

In fact, over 80% of the transactions and 90% of supermarket sales were through the program in the third quarter. We believe this participation rate will grow in the coming months, as more households adopt our point-based reward program as an innovative approach to providing value and improving the overall shopping experience.

While it will likely be 12 to 18 months before we recognize the full benefits from the program, the insight we're gaining into our consumer preferences will be very beneficial to us along the way.

Our 66 pharmacies are becoming increasingly relevant to the customer, as they search for both convenience and value. We believe our pharmacy program combines both of these elements in a way that provides the consumer with the best overall program available in the marketplace.

Our 5.6% increase in script count for the quarter is a testament of the program's -- our program's strong acceptance thus far. In addition, our fuel rewards program, which we recently expanded across the state of Michigan through our enhanced Speedway partnership, allows us to provide a differentiated way to add value to both the end consumer and our distribution customers as we position Spartan Stores for increased long-term growth.

We will continue to focus on the Yes loyalty rewards, fuel rewards and pharmacy rewards initiatives for the remainder of fiscal 2012 and into fiscal 2013 as we strive to achieve further improvements in our retail segment.

Now I'll provide you with a brief update on our capital plan. During the third quarter, we completed 2 major remodels and opened one new fuel center.

We are very pleased with both remodels to date, as their sales were up double digits for the quarter. We also began to incorporate some of the aspects from our D&W Fresh Market format into other remodels where the demographics make sense.

For instance, we now have Starbucks coffee shops in several Family Fare and VG's locations. From a competitive perspective, we experienced no new supercenter openings in the third quarter and do not expect any openings to affect our retail locations during the remainder of fiscal '12 or in the next fiscal year.

But with that overview, I will now turn the call over to Dave for more detail on the third quarter financial results and the outlook for the fourth quarter of fiscal '12. Dave?

Thanks, Dennis. Good morning, everyone.

I will now provide you with more details about our third quarter financial results, as well as our guidance for the fourth quarter of fiscal 2012.

Consolidated net sales for the 16-week third quarter increased 1.9% to $797.2 million, compared to $782.3 million in the year-ago quarter. Both the distribution and retail segments reported increased sales during the quarter.

Distribution and fuel sales represented 44.4% and 6.8%, respectively, of consolidated net sales compared to 44.3% and 5.2%, respectively in last year's third quarter.

The consolidated gross profit margin for the third quarter decreased 70 basis points to 20.4% from 21.1% last year. The decline was primarily due to a higher mix of fuel sales and increased LIFO expense of approximately $1.8 million and a slightly lower fuel gross margin rate this year versus last year.

The increased LIFO expense was a result of higher inflation in this year's third quarter versus last year, and the cycling of a $700,000 LIFO inventory credit provision from lower inventory levels in last year's third quarter due to our warehouse operational improvements.

Third quarter operating expenses, excluding restructuring, asset impairment and other gains or losses, were $150.5 million, or 18.9% of net sales compared to $150.6 million, or 19.3% of net sales in the same period last year. Our expense leverage was improved by a shift in mix of sales towards fuel, productivity improvements in each segment, favorable health care expenses and general cost containment initiatives.

These improvements were partially offset by 2 previously communicated items which include higher incentive compensation of $1 million associated with the timing of the prior year's provision, and increased labor and marketing expense of $800,000 related to the launch of our Yes loyalty program during the quarter.

Adjusted EBITDA for the third quarter increased 1.1% to $26 million, or 3.3% of net sales, compared to $25.7 million, or 3.3% of net sales in last year's third quarter. Earnings from continuing operations, excluding certain items in the third quarters of fiscal 2012 and fiscal 2011, would have been $5.1 million, or $0.22 per diluted share compared to $6 million, or $0.26 per diluted share last year.

Excluded items for the third quarter of fiscal 2012 were a $400,000 after-tax gain on the sale of assets and the previously mentioned $500,000 after-tax expense associated with the swap agreement termination.

As a reminder, the third quarter of fiscal 2011 included a $1.5 million net after-tax benefit primarily associated with lease terminations and pension curtailment income, partially offset by asset impairment charges.

Third quarter earnings from continuing operations as reported were $5 million in fiscal 2012 and $7.5 million in fiscal 2011.

Turning to our operating segments, third quarter distribution net sales increased 2% to $353.8 million from $346.9 million last year. Distribution segment operating earnings were $10.9 million compared with $13.2 million last year, excluding a $2.2 million pretax benefit recorded in the third quarter last year.

The operating earnings decrease is principally due to $1.5 million increase in LIFO expense as a result of last year's inventory reduction, generating a credit provision and this year's higher inflation, as well as increased incentive compensation of $600,000 due to the timing of the quarterly provision last year.

Third quarter retail sales increased 1.9% to $443.5 million, compared to $435.4 million in the same period last year. Retail segment operating earnings for the quarter increased 77.8% to $1.6 million compared to $900,000 last year.

This improvement excludes this year's gain on the sale of assets of $600,000 on a pretax basis and the segment's $200,000 portion of last year's net pretax benefit.

The increase in operating earnings is primarily attributable to lower health care expense, higher fuel margin cents per gallon, labor productivity improvement and benefits from cost containment initiative. These items were partially offset by lower comparable store sales, as well as increases in LIFO expense of $300,000, incentive compensation of $400,000, and $800,000 of expenses associated with the Yes loyalty program rollout.

We continue to report strong levels of net cash provided by operating activities of $51.2 million for the year-to-date period ended December 31, 2011.

Total net long-term debt was down $25.6 million or 17% to $124.2 million versus $149.8 million at the end of the third quarter of fiscal 2011. As of today, we have no outstanding balance on our revolver, providing the company with significant capacity to execute our strategic priority.

I will now provide further detail on our outlook for the fourth quarter fiscal 2012. We believe our comparable store sales run rate will be negatively impacted in the fourth quarter by 1% to 2% due to cycling last year's fourth quarter benefit from the introduction of the Yes loyalty program at one of our banners, a slower start to the quarter due to the unseasonably warm weather in Michigan and a shift in the New Year's holiday calendar.

We actually had the first 2 days of the quarter impacted by the calendar shift, as the New Year's holiday moved to Sunday and the official observance moved to Monday. As a result, we expect earnings from continuing operations for the fourth quarter to approximate last year, excluding the 53rd week, and have unusual items that do not reflect the ongoing operating activities of the company.

As a reminder, this year's fourth quarter will include an extra week. We expect the extra week will contribute approximately $0.05 per share to our income from continuing operations in the fourth quarter.

For the full year of fiscal 2012, we expect capital expenditures to be in the range of $44 million to $46 million. The depreciation and amortization ranging from $37 million to $38 million, and total interest expense approximating $15 million including the swap termination charge.

This concludes our financial discussion, and I will now turn the call back to Dennis for his closing remarks. Dennis?

Thanks, Dave. Going forward, our fiscal 2012 and beyond, we believe our strong balance sheet provides us with financial strength to pursue strategic growth opportunities in both the distribution and retail business segments as we further position Spartan Stores to take advantage of improvements in the overall economic environment as they occur.

We remain intently focused on continuing to improve sales growth and profitability as we further enhance the value proposition to the consumer and achieve additional operating efficiencies, while managing the controllable aspects of our business.

We believe that programs like our Yes loyalty rewards, pharmacy rewards and fuel rewards will continue to help improve our consumer relationship and long-term top line results as we deliver consistent value and convenience. We will continue to differentiate our go-to-market strategy from our competitors and strengthen our value-added partnership with our distribution customers to increasingly position Spartan Stores as the leading grocery distributor.

We remain confident in our long-term business strategy and we will seek prudent growth opportunities in our existing or other markets. Our experienced management team's focus on disciplined and balanced growth has Spartan Stores well-positioned for increased success in the long-term.

And with that, we'll now open up the call for any questions.

Dave, a real quick question, to start off with the real estate gain, where in the P&L did that appear? What line item?

That's the SG&A line.

SG&A, all right, great. Dennis, how do you look at inflation right now, and not only for the final quarter of the year, but all of 2012?

Now the -- I think as we look at where we finished the third quarter, we think we may have reached the top and are starting to come down a little bit on inflation in total. It's a mixed bag.

Some departments are continuing to show some inflation. Center store is a little more inflationary than it has been.

Produce is a category that's gone from inflationary to basically no inflation, and early in the fourth quarter, significantly deflationary. So I think on balance we see the fourth quarter maybe a little softer inflation than we've had in the third quarter.

And then the balance of the year, I think we're going to see it continue to come off. I think the USDA has forecasted 2.5% to 3.5% for the full year, and I think that's about what we're thinking.

Okay. And where would you put your number at for the third quarter?

The third quarter, we were around 5%.

Okay. Can you talk about how the consumer was behaving around the Christmas holidays, the big eating holidays?

Yes, I think the cautious consumer was with us the whole quarter. Frankly, we -- as my earlier remarks said, despite a more challenging economic environment than we thought, if you look at what's going on in our market -- we're primarily Michigan.

We have some distribution volume in Indiana and Ohio. But when you see the unemployment rate in the state of Michigan get published at -- from a year ago in December to this year, went from 11.1% down to 9.3%.

That's a 1.8% improvement, you get pretty excited about that. But the fact of the matter is, that if you actually look at the number of jobs in the state of Michigan, December '10 to December '11, there are actually less jobs.

Not a lot less, but a few less jobs, and the reason for that is, there's some 100,000 people that have come out of the workforce as they reported in the unemployment statistics. So I don't think it's surprising that we're not getting the benefit of what we believe is an improving economy because we're challenged a little bit with the unemployment.

And I think the consumer continues to reflect that, trying to save every penny. And the percentage of product that we sell at regular retail is reduced from what it was a year ago.

When I think that just tells you she's looking for value, whether it's in something we're doing around the loyalty program with the points-based or deep features, we're selling more promotional product than we have before.

That's very interesting. How about organics and natural foods?

Whole Foods as you probably saw, reported a very strong quarter yesterday, and I was wondering now if any of that type of strength was reflected, say, in your D&W stores or some of the Glen's units?

Yes, we have a proprietary private brand on natural organic called Full Circle, and actually, our volume in Full Circle year-over-year for the quarter is negative and year-to-date is also negative. I think the demographic profile for the majority of our business is very much unlike what Wholefoods is experiencing with their demographic profile.

Having said that, D&W Fresh Markets, which are stores located in the best demographic in our marketplace, continued to be the best-performing brand and comped positive in the quarter. So I think there's some resilience -- continues to be some resilience with that consumer.

Do you think you're going to have a challenge growing distribution sales going forward?

Chuck, 5 consecutive quarters, we've been positive. And I'm not sure there are a lot of our competitive set that are experiencing that similar trend.

So we're feeling pretty good about that. We've been able to add new business.

I think there are some 17 new distribution locations in place at this year's third quarter compared to the same time frame a year ago. And congratulations to not only our business development team, but I think to the -- for the strategy of the company that we go to market a little differently than some of the competitors, and with value-added service model.

And so I think there's still more to get, but it is challenging. It is a significant decision for an independent retailer to change wholesalers, which makes it even more impressive that we've been able to do that over the last several years.

So we continue to see growth for new business on the horizon.

Just so -- back to this asset gain, that was included in your reported $0.22, right?

It was excluded from the $0.22. If you would have -- if you want to adjust it, what ends up happening, Karen, is we have the $600,000 gain and then you have an $800,000 charge for the swap.

Those are both in our reported number, which is slightly lower than the $0.22. But the $0.22 was our adjusted.

Okay, got it. Okay.

And what was the fuel -- what was the gas margin this quarter? And what was the benefit to earnings?

Well, the benefit was probably a $0.015 and we usually don't disclose the margin. So we believe we had about $0.015 improvement to our earnings because of fuel.

And our last year was probably closer to $0.02. So while it improved the year-over-year numbers, actually probably a little less help year-over-year this year than last year.

I think we have that in the color event [ph]. The margin was up.

Sure...

$0.025 -- $0.024 a gallon from last year's third quarter. So the margin was up, Karen, on a cents per gallon by about $0.024.

So of course, the retail was up, too. So retail was up $0.44 a gallon.

So also isn't helping that consumer that's stretched a bit with the price of gas continuing to go up. And our gallons were positive.

We're again and we are positive 1.9% on gallons for the quarter, despite the fact that we continue to see miles driven decline across the country.

Right. Okay.

And then just looking at the comp a little bit. I mean it seemed like when you were on the third quarter call, that you felt that things were kind of improving a little bit -- I'm sorry, in the second quarter call, things were starting to look a little bit better in terms of sales trends.

And I guess, obviously, that didn't pan out this quarter and you called out some things that -- maybe can you talk about the cadence of sales in the quarter?

Yes, I think you're right. You're reading it right, and when we started -- when I started today, I said I was pleased that we got to our expected profitability despite a more challenged sales environment than we originally anticipated, and we've talked about a couple of them.

But the snow thing, and I -- you know what? I hate talking about the weather to be quite honest with you, but weather for us impacts us in a number of different ways, particularly snow.

So if you are familiar with our northern Michigan marketplace, those are mostly resort areas, resort communities, and they're dependent in the winter on snow, whether it's skiing or snowmobiling, which is a big sport here. We, basically, there's no snow on the ground in northern Michigan, and we haven't had any snow to speak of.

And the same thing with the marketplace in general. And although it doesn't have that same tourist impact in the balance of our portfolio, as it has at Glen's, if you've got a snow forecast that we're going to get 3, 4 or 5, or 10 or more inches of snow, we get a significant rush of volume.

And I say we, the industry. I mean, if you're operating a food store, that's what happens.

We just haven't had it. And those can be million-dollar events, Karen.

So that's a big part of it. And again, I think as we are looking at the second quarter -- after the second quarter, and it's a 16-week third quarter, so it's a longer view, we really felt like we were going to have a better jobs environment, and it just hasn't come to fruition.

It's going to come. I mean, there's no question in our mind.

It's going to get better. The auto forecast call for now, it seemed more like a 14 million unit kind of forecast.

We will get better. But at the moment, we're not getting better.

And so we're treading more water than we would have hoped we were -- we're going to have to tread. So what we're feeling, a little cautious, and I think, on balance, we've been a lot more transparent with our expectations with you folks over the last several quarters than maybe we had in the past because it is a pretty dynamic environment and we're trying to give you the proper guidance.

Right. And so I guess, 2 other questions on the comp, could you give some color -- are D&W's comps positive?

D&Ws are comping positive, and D&Ws have been comping positive for -- because I'm looking at a trend here. For at least, I can tell you, 6 quarters in a row, and I think it's more.

Okay. And then I'm just wondering, in terms of the strong prescription trends, what do you think the driver of that is?

Is there any fallout from the Walgreen Express ropes? Or what do you think is?

[indiscernible] you don't really have...

There is no -- I don't believe there's [indiscernible] a fallout in our third quarter from e-script. That was a January event for Walgreen, although there was some noise around it in December.

And so our quarter ended December. Just to remind you, and we didn't -- in the call here with the script, it's part of the Yes launch.

We have always had in our pharmacy program a $4 and $10 generic prescription drug plan, $4 for a 30-day, $10 for a 90-day. We've been doing that for -- I mean you guys know how long.

Alan, do you know?

Six years. [indiscernible]

It seems Wal-Mart made that in vogue some time ago. With the launch of Yes, we, on top of that, now offer free prenatal vitamins, free antibiotics and free diabetic medications, which is really the big one.

Because that's a maintenance drug. So when you put those 2 together, we clearly have the best offer in the marketplace unequivocally, and it really is resonating.

And again, when you talk about customers looking for value, they're going to come for that value, and we believe that, that pharmacy customer is core and critical to our long-term success. It is the most valuable customer in terms of loyalty that you have in your store, and it also ties in specifically with our health and wellness initiative, and we've talked about that in the past.

And our nutrition guide along -- tie that in with the pharmacy, and more recently, what we're doing along with the industry on facts upfront with our private label packaging, and I think we begin to build up more comprehensive health and wellness platform to build off of. So it's a tactic, but it's also very strategic for us to try and build that pharmacy script volume.

Okay, and that's helpful. And any change in the competitive environment?

No, not really. We're all feeling a little of that, that 5% inflation's I think probably a little more uncomfortable than the industry would like.

And it's been that way for a while, so I think we're in a spot where there has been, and continues to be, a little lag in passing on of some key pricing. But nothing unusual.

I'd say margins are probably a little more pressured than they were a year ago, but nothing really crazy. It's just -- in our marketplace anyway, because of the dynamics I expressed around employment, and et cetera, that I think everybody is just playing for more tonnage.

It is a tough environment.

Right, okay. And then I guess the last question, given that it is tough, I know you've talked about this in the past.

Obviously, your competitors are feeling the same kind of pain. Anything on the horizon or anything that might be a little more imminent in terms of an acquisition?

We are, as you know, committed to growing the company long-term, and we have demonstrated our ability to grow the company through acquisition. That is our strategy and will continue to be our strategy.

But to really try and put in more color on that, Kate -- Karen, would really -- it's difficult. Hopefully, we'll be able to move that ball down the road some time.

But you would have the appetite, depending on the asset?

Yes.

I know you've shared before kind of what you think is going on with your market share. And I was wondering if you had any thoughts with the cost being a little bit more negative than you thought, if you think you can maintain your share with that?

Or did you think you lost a little in this quarter?

That share is such a hard thing because it depends on what you're measuring, right? And we're measuring the Food Channel.

And you're measuring food drug mass. You're putting in Dollar Store.

And I don't know. We do have a schedule that we look at, and I'm not sure that I have all of the confidence in the world in it, but I would say that, what it would suggest to me that of the 4 primary competitors in the space here in the market, there's probably one that is growing a little bit of share, and the balance are not.

And we're getting some leakage into the alternative sector valor, and probably a little bit in limited assortment. So I'd say, honestly, I think we probably lost a little bit of share.

But I don't think we're unique in that regard.

Okay. And then I know we've talked about the current environment.

I don't want to beat it to death. But I don't think we've really talked about what you've seen so far in January.

The data doesn't look -- actually it's worse for some reason, even though the macro data seems to be improving, the Food and Home Channel seems to be struggling, maybe except for Whole Foods. So what are you -- when you look at it, even though we know there's very strong -- our squares [ph] to employment, I think you referenced that employment is really the key factor here.

Now what do you think about January? Do you think it's really just weather and some other factors?

And are you seeing the same trend in your business for January? Or is it really just tough?

Yes, it's lumpy for a number of reasons. Dave articulated the shift in the holiday.

And that is -- that's real. And then so anybody who started a quarter with that same calendar is going to feel that, or the formal holiday shifted to Monday this year and dumped into the fourth quarter.

That's a big number, so that's impacting things. In our case, the weather is a big factor as well.

And in January and the early February -- last year, for example, now I've been here almost 10 years. And last year -- last week, we essentially closed the office because of a big snow event here in West Michigan.

Well, plus that's a big impact. As I said, we can have these snow effects that exceed over $1 million a week, right?

When you see our -- the 12...

On the positive side, is that correct? They tend to be positive events for you guys?

Or are they negative?

Right. So a year ago it would have been a positive event, so you're cycling a positive event with not the same activity, right?

Right.

So that -- so weather is a problem. Like I said before I even start, I hate talking about the weather.

I hate that, but it is reality for us. In terms of the core consumer sentiment, I still think it's tough here.

I think that she is still struggling. And take the Fresh Market stores out, because they continue to perform well.

But she's still struggling to stretch that nickel, and so we feel that it's probably going to continue to be tough, and we gave you some guidance about it's going to be a little tougher. Partly a bit about the weather and the calendar, but it doesn't feel good, to be honest with you.

It's still tough.

So as we look beyond, I actually have some questions about the [indiscernible]. I was unfortunately, when David was going through that, [indiscernible] in that -- and I'm just trying to understand if there's the changes there.

But before I get there, I just wanted to -- as we look though at those -- the scene that one of the auto companies are, at least headlines saying they're going to increase the number of jobs, those are good paying jobs. I mean, do you anticipate once we get through this period in the fourth quarter, it's going to be a little bit difficult.

As we get into next year and we actually do see this job growth that your business -- I mean I hear you're cautious very near-term, but it seems like underlying that, maybe some cautious optimism as well? Or am I misreading that?

I think you're reading it exactly right.

Okay. And then, I'm sorry to do this, but I just want to make sure I understood what you said about the fourth quarter.

And I don't know, if you could just maybe summarize it in 30 seconds. Is there any change there, or is it -- or not?

You're talking in our comp run rate?

Or just the guidance overall. And then I [indiscernible].

So in the comp run rate, I guess we're saying that we would -- our run rate will change by 1% to 2%. We'll be negatively impacted by 1% to 2%, so that would be a change.

And then our earnings guidance was that we will approximate the prior year, excluding the 53rd week and any of the unusual items that are normally in our, what we would consider normal operating issue. And then we...

And that's unchanged, right?

What's that?

That's unchanged, the approximate -- the prior year?

No, that's probably a little lower than what we'd given last quarter.

I just wanted to follow-up on I think this earlier question about inflation trends. And I think that as you confirm that you're seeing some moderation in inflationary pressures.

But just as a related question, can you confirm your outlook for LIFO in the fourth quarter? And I'm sorry if you may have already covered that in your prepared comments, but is there any way to quantify that would be great.

For our overall LIFO layout? Actually you're looking for a dollar amount?

Yes, yes. A coarse $20 amount.

I think what we're figuring here is that we're going to still see a LIFO environment because we still are going to have inflation over the prior year because -- so we will still have a charge, I think, that's greater than the prior year, but maybe not quite to the same significance as we had in this quarter. And we've kind of given that guidance before.

So we're looking for, probably with this quarter, it was about $1.8 million of an incremental charge to the prior year. The fourth quarter is probably going to be in that $1 million range for an incremental charge over the prior year.

Okay. That's really helpful.

And then, I just wanted to follow-up with a question about the general volume weakness for the industry that we've all sort of heard about. Are you seeing any significantly high levels of vendor support from manufacturers as they're dealing with their own volume pressures?

Can you comment at all on the impact from incremental levels of vendor support? And if you are seeing any increases in this area, would your inclination be to reinvest that vendor income and lower prices, or not necessarily?

We are not seeing a significant change in vendor participation. But I can tell you we are consistently trying to find ways to deliver more value to the end consumer.

And we're certainly not reluctant to reinvest margin back into the business to drive that growth.

Okay. And just one final question on fuel.

Are you seeing anything of any significance in the current quarter in terms of profitability? Just I guess specifically on both the gallons and cents per gallon basis, are you seeing any change in the fourth quarter based on year-over-year comparisons?

And is there any significant change in those metrics sequentially?

We have -- third quarter was very good. As we talked about a little bit earlier.

And we're tuned to the fourth quarter here. I think the number is maybe a little bit softer, but not enough to say that, that's where it's going to land.

I mean we -- it could change overnight. So not a -- no step change here that we see so far.

Okay. And is that softness that you ordered to, is that on the fuel margin specifically?

Cents per gallon. We don't look at margin rate in fuel.

It's just because the price per gallon just distorts that.

Yes, I'm just wondering on your last call, you mentioned that you'd extended the union -- well, the union negotiations were still ongoing. I'm just wondering if there's an update on the status of that?

I think what we hopefully said last time is that we had extended the union contract for one full year. So that contract expires on October of this calendar year, 2012.

So we'll be sitting down with the union sometime later this calendar year.

Dennis, could you talk a little bit about fiscal 2013 store development?

2013, what development?

Store developments. New stores remodel, what you're thinking about at this point?

Yes, Chuck. This is Dave.

So yes, we'll have a pretty solid capital program. I think it will be in line, probably from a spend perspective, where we are this year.

We have a relocations -- a relocation underway that will open very early in the year. So it will be a ground-up store relocating an existing store in our Family Fare banner.

And we will be in that $8 million range for significant remodels. And I would say a fairly similar capital plan to what you saw this year.

How about gas stations?

And we'll still be looking at a couple.

I just wanted to get back to the volume questions and the inflation, and it has been very controversial in the industry. In your judgment, if the high-end rates of inflation been hurting your volume?

And then as we move through next year, let's just say we do decelerate to the 2% to 3% level, in your experience, you guys have been in the industry a long time, is that helpful to the business? Especially if we get employment growth kicking in?

Or do you -- or how do you view it?

I do believe that you've got it right again. I do think that there's been some pushback with inflation.

The 5% -- even though that's maybe a little -- 5% inflation is maybe a little bit more uncomfortable than where we wanted to be. That's -- it's an average, right?

So that isn't really telling a story. When you get into categories like beef and pork, where you're getting double-digit, it's like 10% inflation, and we look at add features that are $1 or $2 a pound more than they were a year ago on key items, I think there's resistance from the consumer.

And then she just backs off of that. So I do believe it has a negative impact in some categories on tonnage.

And I think the industry is living with that, and well, that was kind of one of the topics that after my last week was living in a negative tonnage world. And it's tough.

So I think the flip of that is also true, and particularly if you combine that with job growth and more consumer confidence, that I think we can see tonnage show some positive trends.

And that's great. And so I mean in your estimation, I know this was controversial, too, to some degree, when your core consumer is shopping you, forget D&W for a second, do you believe that person comes to the store with a certain amount of money to spend per week?

And so if inflation goes up, does that mean they make adjustments? Or do you think, particularly in a no job growth environment, that they're willing to step up and pay the inflation?

Or kind of what's your take on your core consumer?

Yes, it's funny. Alan and I were having this conversation this morning.

And it just about feels that way, Scott. And it's like I have got that $57 and that's what I'm going to spend, and I have got to make it stretch.

Now that's just anecdotal, I don't -- I can't prove that. But it is the sense that we have that there is just a limit to how much she's going to spend, and we're fighting for our fair share of that tonnage with a lot of different places these days, right?

Whether they're home improvement stores, like Maynard's or the Dollar guys, and everybody who is selling what we used to affectionately call our stuff. There's not a lot bigger world where you can find our stuff.

Okay. So then obviously, employment kicks in, that gives more money in people's pockets, more money in more people's pockets, inflation comes down, that benefits your business as we move through '13, it's kind of a -- to bring this full circle?

I think that's absolutely true. And I will just throw a caveat at you that the price of gas plays into that equation.

So I mean if we're in some kind of crisis and we're looking at gas at over $4, I think all bets are off, because that's discretionary income that I think is in that food bucket, where they're both necessities, and I've got to get to work, I've got to pay for the gas. And if it goes there, it probably less inclined to come to the supermarket.

Thanks, Maureen. And just in closing, I'd like to thank all of our valued consumers, our retailers, our associates, supply holders and our shareholders for their continued support.

And going forward, our executive team remains focused on managing the business to report improved financial results over the long term. Thank you.