(Operator Instructions) Welcome to the BJ’s Wholesale Club, Inc. Third Quarter Earnings Results Conference Call. At this time I would like to turn the call over to Ms. Cathy Maloney, Vice President Investor Relations.

Welcome to the BJ’s Wholesale Club Third Quarter Earnings Conference Call. With me this morning are Herb Zarkin, Chairman and Chief Executive Officer, Laura Sen, President and Chief Operating Officer, and Frank Forward, Chief Financial Officer. Before we begin let me remind you that the information presented and discussed today includes forward looking statements which are made under the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from these forward looking statements. The risks and uncertainties related to such statements include levels of gas profitability, levels of customer demand, economic and weather conditions and other factors detailed in our fiscal 2008 10-K and subsequent 10-Q for fiscal 2009. While the company may elect to update its forward looking statements, the company specifically disclaims any obligation to do so even if the company’s estimates change. During this call we will be referring to non-GAAP financial measures that are not prepared in accordance with generally accepted accounting principles. Reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in our press release with is posted on our investor relations website at www.BJSInvestor.com. With that I’ll turn the call over to Frank Forward.

For the third quarter ended November 1, 2008, net income was $28.2 million or $0.48 per diluted share. Net income results included post tax expense of $0.5 million or $0.01 per diluted share related to club closing costs which were included in the discontinued operations line. Comparably for last year’s third quarter ended November 30, 2007, net income was $22.7 million or $0.35 per diluted share. Adjusting for the unusual items this year on a non-GAAP basis EPS was $0.49 per share this year versus $0.35 last year a 40% increase. Net income was $28.8 million this year versus $22.7 million last year an increase of 26.7%. In summary, the third quarter reflects extremely strong gasoline income, stronger than planned merchandise margin rates, continued strength in our perishable business and strong expense control. These factors more than offset some unplanned expenses and below plan general merchandise sales. Non-GAAP third quarter results of $0.49 per share were $0.11 above the midpoint of our August guidance of $0.36 to $0.40 per share. The $0.49 per share included a net $0.10 of income not reflected in our guidance, composed of significantly stronger than planned gasoline income, offset by certain unplanned expenses. Adjusting for the unplanned $0.10 per share our Q3 non-GAAP results were $0.39 versus the $0.38 guidance. In Q3 we beat our gasoline plan by about $0.17 per share due to unprecedented conditions in the gasoline market. However, partly offsetting this were $0.07 of unplanned expenses composed of $0.04 per share of costs related to severance and state sales tax audit reserve adjustments and $0.03 per share in higher than planned bonus accruals due to the above planned earnings. For the first nine months of 2008 net income was $81.9 million versus $72.6 million in 2007 an increase of 12.8%. TS is 2008 was $1.38 per share versus $1.11 per share in 2007 an increase of 24.3%. Now let me go through the sales details. Total sales for the third quarter increased 13.4% to $2.40 billion compared with $2.12 billion last year. Third quarter comparable club sales increased by 11.9% which included a contribution from gasoline sales of 5.3%. Merchandise sales excluding gasoline increased by 6.6% which was at the lower end of our guidance range of 6.5% to 8.5% due in part to below planned general merchandise sales. Next I’ll break out club sales by major market including the impact from sales of gasoline. I’ll begin with the region and then read across four columns beginning with Q3 comps and Q3 gas impact then October year to date comps then October year to date gas impact. Q3 Comps Q3 Gas October October Impact Year to Date Year to Date Gas Impact New England 9.0% 4.2% 9.3% 4.5% Up State New York 18.5% 10.7% 18.6% 10.6% Metro New York 9.1% 1.8% 9.3% 1.6% Mid Atlantic 11.0% 6.0% 12.3% 6.6% Southeast 13.9% 7.0% 15.0% 9.0% Total Comps 11.9% 5.3% 12.3% 5.8% Excluding the sales of gasoline Q3 traffic increased by approximately 5% and the average transaction increased by approximately 2%. October year to date traffic increased by approximately 4% and the average transaction increased by approximately 2%. We estimate the negative impact on comparable club sales from new competition and self cannibalization was worth approximately 1% in the third quarter. Regarding the impact of inflation on sales we’re still estimating that it was worth about 2% to 4% in Q3. Price increases from CPG companies did slow significantly in the third quarter. During the third quarter and October year to date respectively comp sales of food increased by approximately 11% and 10%. General merchandise sales decreased by approximately 1% in Q3 and increased 1% year to date. Departments with strong third quarter sales included breakfast needs, candy, coffee, computers, fresh meat, dairy, frozen, foils, paper products, pet food, prepared meals, produce, salty snacks, small appliances and video games. Departments with weaker third quarter sales included cigarettes, electronics, furniture, jewelry, pre-recorded video, storage, seasonal, television and water. Before I go into the income statement detail I want to mention that we made some reclassifications to our P&L which we disclosed in the 8-K filing this morning. These reclassifications have no impact on net income for EPS. We made these reclassifications to provide investors with a better understanding of our financial data. We have now broken out membership fee income onto a separate P&L line and created a new line called other revenue. The other revenue line includes a number of miscellaneous revenues that we do not include in sales such as propane, food court, tire installation income and some in club marketing income. Formerly some of these revenues were reflected as offsets in SG&A. In this mornings 8-K filing we have provided revised historical information which reflects these reclassifications as well as the impact of discontinued operations from the closed clubs. Now let me go through some of the third quarter income statement detail. MFI increased by 0.4% versus last year, other revenue increased 6.7%. Cost of sales decreased by 53 basis points, SG&A expense increased by 14 basis points and pre-opening expense was pretty much flat to last year. For MFI the Q3 MFI dollars increased 0.4% versus last year. The modest MFI growth primarily reflects both the timing and lack of new club openings. It also reflects a decision to invest in lower membership fees in our underperforming Atlanta market as part of our effort to drive sales. This initiative has helped contribute to a significant lift to Atlanta sales. Despite this modest MFI growth we still see encouraging signs in membership fundamentals. Membership renewals in Q3 were on plan. Our full year plan assumed an increase in renewal rate of about 0.5% to 1% and we are still tracking to that range or maybe even slightly higher. In Q3 we also saw good comp increases versus last year in both paid new in a circle and business member sign ups. Other revenue in Q3 increased 6.7% versus last year which primarily reflected an increase in propane revenue. Due to its components the other revenue line can be somewhat volatile from quarter to quarter as you can see from our revised quarterly history. Cost of sales as a percent of sales decreased by 63 basis points versus last year as compared to our guidance of an increase of 3 to 13 basis points. This was due principally to three factors; the extraordinarily strong gasoline income, increased merchandise margin rates and good leveraging of buying and occupancy expense. The impact of gasoline on our margin in Q3 was 21 basis points favorable to last year as compared to our guidance of 40 to 50 basis points unfavorable. As most of you know return on gasoline inventories on a daily basis, much faster than most everyone else. As gasoline prices steadily plummeted throughout Q3 it allowed us to offer a tremendous value on gasoline to our members relative to our competition, while at the same time achieving unprecedented gasoline margins. Because of the tremendous value it also resulted in significant increases in gallons sold. I should mention that since we started selling gasoline in 1998 we have never seen such market conditions. Merchandise margins excluding gasoline increased by about 20 basis points versus last year. This was driven by stronger than planned sales of high margin perishables which created a favorable mix impact which more than offset below planned sales of general merchandise and we were favorable to plan on shrink expense reflecting benefits from a number of shrink reduction activities and initiatives we implemented. Buying and occupancy expense as a percent of sales decreased 23 basis points versus last year due primarily to expense leveraging for the strong increases in both merchandise and gasoline sales. Moving to SG&A expense, in Q3 it increased 14 basis points versus last year; this is due to the following. As previously mentioned we incurred about $0.04 per share in unplanned expenses for severance and an adjustment to our sales tax reserve. This added about 18 basis points to SG&A. Bonus accruals increased about 12 basis points or about $0.04 per share versus last year due to strong profitability in the quarter. As we discussed in our call Q3 SG&A expense also included about $0.03 per share in road map and other investments. This added about 11 basis points versus last year. On the list we continued to see good expense control and favorable leveraging from strong sales growth. For example, in Q3 clubs payroll expense decreased 17 basis points versus last year reflecting an 8.2% increase in club payroll dollars being leveraged by the 13.4% sales increased. Another way to look at it, SG&A expense increased 15.2% in Q3 as compared to an increase of a little over 9% in the first half of this year. However, the severance sales tax bonus and investment items counted for about 6% of this growth. Excluding these items the growth in SG&A was essentially in line with the first half. Pre-opening expense was $1 million this year versus $0.9 million last year. Interest income $0.2 million this year versus $1 million last year much lower due to a combination of lower interest rates and the impact of a $223 million of share repurchases made over the past 12 months. The income tax rate for the third quarter was 39.8% versus 40.5% last year. Discontinued operations of $0.8 million included a $0.5 million post tax reserve for the closing of a club in South Carolina. Moving to the balance sheet, inventories were in very good shape at the end of the quarter with the average inventory of a club about 2.9% above last year which is slightly less than half of our merchandise comp sales increase. This does reflect some extra inventory from buy ins and some inventory build up for Q4 new club openings. I should mention that we have been cautious in our general merchandise inventory. At this time we do not see any significant markdown exposure in our inventory. Accounts payable inventory ratio at the end of the third quarter was flat to last year. In Q3 we repurchased about 700,000 shares of common stock at an average cost of $35.14 per share for a total expenditure of approximately $26 million. During the first nine months we repurchased 3.1 million shares of common stock at an average cost of $35.26 per share for a total expenditure of approximately $109 million. We now have about $266 million available for share repurchases under our current authorization. Now I’ll turn the call over to Laura Sen.

I’d like to begin by acknowledging our team members for their tremendous efforts to deliver wonderful member experience in the clubs. During the third quarter we were rewarded for those efforts with strong sales and profitability despite weaker sales of discretionary general merchandise items. I’d like to share with you some of the highlights of my experience traveling around the chain during the third quarter. I was very pleased with what I saw and heard. In my experience our clubs never looked better. During the third quarter the clubs completed an electronics reset creating impressive and impactful displays of LCD televisions, GPS, cameras and video, computers, printer ink and video games. We continued to upgrade refrigeration cases to improve presentation and holding capacity. Most strikingly the spotless condition and fresh and exciting merchandise are providing our members with a wonderful shopping experience. Every general manager and manager on duty I walked with credited their hard working teams for the clean and inviting club conditions. Our recent emphasis on hiring, training, coaching and developing people came through loud and clear. Attention to each and every team member to their daily experience and to their development is the most important work we can do. Team members pointed out the accelerating growth in their perishable departments and proudly shared with me comp sales increases and improved shrink and salvage numbers. These are significant successes and are the results of the clubs continued attention to improving ordering and stocking yielding both better freshness and a much better member experience. The back of the club is a very important part of our recent comp sales increases. With Thanksgiving and Christmas around the corner we will rely on the clubs constant attention to perishables to satisfy our members everyday and holiday needs. I’m very proud of all that our team members have accomplished this year to improve our members overall shopping experience. Now let me review some of the highlights of our third quarter performance. As Frank mentioned, strong merchandise comp sales of 6.6% reflected even stronger momentum in sales of food than we reported for the first half of the year. The comp club sales increase of 11% was the highest in 15 quarters and exceeded comp sales increases of 8% and 10% in the first and second quarters respectively. Comp sales of perishables increased by 14% following comp sales increases of 10% and 12% for the first and second quarters respectively. The strongest growth departments within perishables included bakery, dairy, frozen, meat, prepared foods, and produce. In contrast with many food retailers our sales of organic and natural foods continued to grow, increasing by approximately 46% versus last years third quarter. It is clear that we are capturing a bigger share of our member’s grocery budget and we believe that we are benefiting from a decline in casual restaurant dining. Our higher than expected increase in sales of food more than made up for the decrease in sales of general merchandise. The biggest hit to general merchandise in the quarter was the decrease in television sales. Other than TVs the largest declines in general merchandise sales were in jewelry, DVDs and electronics. While we are not planning for positive general merchandise comps during the fourth quarter I should mention that there are a few bright spots including notebook computers, small appliances, house wares, GPS and video games. With supermarkets reporting that consumers are increasingly trading down from national brands to store brands in order to save money we are often asked whether we see the same trend in our business. I think it’s worth taking a minute to review our private brand strategy which differs from most of our retail food competition. First of all BJ’s prices for national brand items are priced from 20% to 40% below supermarket. So our members who tend to be very brand loyal can continue to enjoy their favorite items by shifting more of their food budget from supermarkets to BJ’s. Second, our fundamental goal for private label is to provide quality and value that is equal to and in some cases better than the competing national brands. Ideally they should be better or best quality destination items. Over the last 18 months or so we conducted a comprehensive review of our private brand items and eliminated those that didn’t fit with our strategy. As a result, we had about 25% fewer private brand items at the end of this year’s third quarter than we did a year ago. I’m happy to say that our 12% sales penetration for the quarter was within 1% of where it was this time last year. In sum, it shows that the skus we maintained are working harder and producing more. Turning now to club operations and real estate, so far this year we have completed four major club renovations and have made good progress in upgrading and/or replacing refrigeration cases as well as remodeling restrooms. We expect to open three clubs during the fourth quarter, Richmond, Virginia and Millsboro, Delaware are scheduled to open before Christmas and Riviera, Massachusetts is scheduled to open in January bringing the total to four new clubs for the year. Next year we plan to open six to eight new clubs and six to eight gas stations. I should mention that with so much uncertainty in the credit markets our construction and development partners may experience restricted access to financing. We may be more cautious with our share repurchase activity next year in order to ensure that we have the capital we need to fund future chain expansion as needed. Turning now to the fourth quarter, we expect that reduced consumer spending power triggered by higher unemployment, declining asset values and restricted access to credit will have a significantly negative impact on discretionary spending. On that basis we are planning for negative comp sales of general merchandise and managing our inventories accordingly. Then again there are certain items and departments where we expect comp sales increases such as GPS, notebook computers, video games and certain parts of seasonal. With regard to food and consumables, we expect that our strong sales momentum will carry over into the fourth quarter and more than offset weaker general merchandise sales. For BJ’s four of the most important food occasions of the year fall in the fourth quarter; Thanksgiving, Christmas, New Year, and the Super Bowl. Our merchants have done an outstanding job of finding exciting new items for home entertaining and the clubs are doing an equally good job of presenting them. I’d like to give you some examples. Refrigeration cases with glass doors that serve as end caps at the back of the club feature brand new assortments of high end appetizers and finger foods. In fresh bakery we introduced a line of very high quality cakes and tarts in family friendly sizes as well as smaller versions of our usual holiday pies. We’ve invested a lot of time preparing our team members to handle increased demand as our continued flawless club execution will be critical drivers of our sales. Next I’d like to address a couple of topics that frequently come up in our meetings with investors. I’ll begin with the prospect of commodity deflation and potential negative impact on member spending. With regard to gasoline as one example our experience during the third quarter told us that if we offer great value we will sell more gallons whether the price is $4.00 a gallon or $2.00 a gallon. The same holds true for other commodities such as milk and cooking oils. Once a member experiences the satisfaction of saving 20% to 40% on a basket of groceries that member is reluctant to return a more expensive channel. The second topic is the outlook for general merchandise. Let me say that we always have markdowns during the fourth quarter and this year will be no exception. If the question is whether those markdowns will be significantly higher than last year the answer is no based on our current sales forecast and an overall reduction in seasonal inventory versus last year. In summary, our first priority at all levels of the organization is to continue to improve the BJ’s member experience. So with that I want to thank all of you for joining us today and I wish you all a safe and happy holiday season.

Now I’ll provide you with the detailed guidance for the fourth quarter and full year. However, let me caution you that our guidance is subject to a greater than usual degree of uncertainty given the weak economy it’s affecting consumer spending and the volatility of gasoline prices. After that I’ll also give you some preliminary guidance for next year but recognize that we are still in the early stages of next year’s budget process. As usual in our March conference call we’ll provide a more detailed update on guidance for next year. For the benefit of your P&L modeling in the fourth quarter we are planning on total sales to increase approximately 6% to 7%, comp sales to increase in the range of 4.5% to 5.5% including an unfavorable impact from gasoline sales of 1.5% to 2% due to gasoline prices now being planned to be lower than last year. For comp merchandise sales excluding gasoline we are planning an increase of 5.5% to 7.5%. This is unchanged from our prior guidance despite soft general merchandise sales trends. We believe that strong perishable sales trends will offset the weakness in general merchandise. However, comp sales by month will be affected by calendar shifts in the Thanksgiving and Christmas holidays. Thanksgiving moves to the fourth week of November versus the third week last year. December this year reflects 25 days before Christmas as compared to 23 days last year. This will unfavorably affect November and benefit December. We are planning for merchandise comps excluding gas to be about 2% to 3% November, 7.5% to 8.5% in December and 7% to 8% in January. November also faces a tough comparison to a strong black Friday last year. Membership fee income to increase about 0.6% in dollars, other revenues to increase 7% to 8% in dollars. Cost of sales to decrease by 28 to 38 basis points. The mix impact of gasoline on cost of sales is planned to be about 18 basis points favorable to last year. This assumes Q4 gasoline income will be about flat to last year and gasoline sales will be below last year. Obviously sales and income from gasoline is very difficult to project. Merchandise margin rates are planned to be up eight to 18 basis points versus last year. This reflects the mixed benefit from strong sales of higher margin perishables more than offsetting the unfavorable mix impact from the soft sales of higher margin general merchandise. We also expect to see about zero to five basis points of leveraging of buying and occupancy expense. This is lower than previous quarters due primarily to planned lower gasoline sales. SG&A expense as a percent of sales is also planned to increase 33 to 43 basis points and to increase about 11% to 12% in dollars versus last year. This reflects the road map technology and other investments that I discussed earlier. We estimate there worth in Q4 about $0.03 per share and at about 1.5% to the growth in SG&A versus last year. Reopening expense of about $2 million versus $1.2 million last year due to the planning of three new club openings this year versus two new club openings last year. An income tax rate of 40.7% versus last years 41.3% rate. Interest income of $0.1 million versus $1.4 million last year due to significantly lower interest rates and the cash invested in share repurchases over the last 12 months last year. Finally, we are planning for Q4 earnings on a GAAP basis of $0.86 to $0.90 per share and net income of $50 to $52 million. This compares to earnings of $0.80 per share and net income of $50.2 million last year. At the mid point of our guidance it equates to an increase versus last year of about 10% in EPS and about 2% for net income. Based on the factors I just outlined our full year guidance is as follows; total sales to increase 12% to 12.5%, comp sales to increase 9.5% to 10.5% including about a 350 basis point favorable impact from gasoline sales, and comp merchandise sales excluding gasoline to increase 6% to 7%. Membership fee income to increase about 1% in dollars, other revenue to increase about 2%, cost of sales percent to decrease 15 to 20 basis points, SG&A as a percent to sales to decrease five to 11 basis points and SG&A dollars to increase about 11% to 11.5%. Pre-opening expense to be about $3.5 to $4 million, interest income to be about $0.8 to $1 million and an income tax rate of 39.6% which includes the benefit from some sales income tax audit settlements principally in Q2, without these items the underlying tax rate is about 40.6% for the year. We are planning capital expenditures for the full year of $140 to $160 million and to repurchase $130 to $150 million of common stock. We expect to be capital self sufficient in 2008 and generate net cash from operating activities of about $250 to $270 million. Earnings on a GAAP basis of $2.20 to $2.30 per diluted share and net income of $131 to $135 million, this is $0.10 per share higher than our prior guidance of $2.10 to $2.20 per share reflecting the above guidance results for the third quarter. The 2008 full year GAAP EPS forecast includes income of $0.03 per share from state income tax audit settlements from Q2 and expense of $0.01 per share from the club closing reserve. 2007 full year GAAP EPS of $1.90 per diluted share included $0.10 per share of income from unusual items comprised of $0.05 per share of favorable income tax audit settlements, $0.04 per share for pro-foods lease reserve adjustments and $0.01 per share from the sale of pharmacy assets. Adjusting for the unusual items that I just discussed on a non-GAAP basis the mid point of our 2008 full year guidance will be $2.23 per share versus $1.80 per share in 2007 a 24% increase and net income of about $131.4 million versus $116.3 million in 2007 an increase of about 13%. This guidance also includes about $0.08 per share of expense from the road map and other investments that I discussed in our last conference call and it also includes about $0.10 of earnings from the third quarter that we don’t expect to repeat next year; namely the extraordinary gasoline income net of the expense severance, sales tax and bonus. Now, as we usually do at this time of year we will provide some preliminary earnings guidance for 2009. As usual we also plan to update the 2009 guidance in March during our year end conference call. For the full year 2009 we are projecting comp merchandise sales excluding gasoline to grow 5% to 7%. At this time it would appear likely that gasoline would negatively affect comps in 2009 given the run off in gas prices in 2008. We will wait until March to provide you with more specific guidance for total comps and the impact of gasoline. In terms of our earnings model we anticipate modest increases in merchandise margin rates due to a favorable sales mix since we expect perishable sales growth to continue to run stronger than the overall comps percent. However, we also feel it is prudent to plan gasoline income to return to more normal levels in 2009 as compared to the unprecedented level in 2008 particularly in Q3. This will unfavorably affect cost of sales and net income growth. We also expect to incur another $0.05 to $0.07 per share in expense above this year’s levels for the next phase the road map bringing the total road map expense next year to about $0.10 to $0.12 per share. In 2009 we plan on opening about seven new clubs all in existing markets versus the four clubs we are opening this year. This will add about $0.03 per share of incremental pre-opening costs. In 2009 our initial plan assumes we will generate net cash flow from operating activities of about $250 to $270 million. We’re also planning for capital expenditures of about $200 million. This assumes normal availability of financing for the developers of BJ’s new club locations. We have tentatively planned for $100 million of share repurchases. However, as Laura mentioned we would like to see how events unfold in the credit markets before we give you final guidance on capital spending and share repurchases and any affect that may have on EPS. With those assumptions we are projecting EPS in the range of $2.27 to $2.39 per share and net income in the range of $129 to $136 million. To help understand this guidance here is how we are thinking about it. Start with the mid point of the 2008 non-GAAP guidance excluding unusual times of $2.23 per share and adjust it by the $0.10 per share of income from Q3 that we don’t expect to repeat next year that leaves a non-GAAP normalized if you will income of about $2.13 in 2008. The $2.33 per share mid point of next year’s guidance would be about a 9% increase from the $2.13 per share. On the same basis it also equates to about a 5.5% increase in net income dollars. Considering that this also funds the additional $0.05 to $0.07 of road map investment in 2009 we’re comfortable that as the first pass for next years plan especially given expected difficult macro environment. With that I’ll now turn it over to Herb for closing remarks.

Before we open the call up for questions I’d just like to say that I’m extremely proud of BJ’s third quarter performance. It was a remarkable achievement by a remarkable team. BJ’s industry leading traffic increases showed how our members shopped us more frequently and our increased transactions size showed they spent very freely on every visit. I think it’s important to recognize that this strong third quarter performance was not a one time phenomenon. It was a continuation of a trend that has been building and gaining momentum over the last seven quarters. In early 2007 we laid out a strategy for improving our sales and earnings. Among our top priorities we wanted to lower prices on key items to provide members with better value expand and improve our fresh food business in order to drive frequency, improve team member retention by investing in training and development and improve the overall shopping experience by upgrading and renovating clubs. When investors ask us how they should gauge our progress on these initiatives we said that the best measure of our success would be increased traffic so here we are nearly two years later with a more challenging macro economy than we could have ever imagined and yet by that measure and many others our business has never been in better shape. When I look back to BJ’s over two years ago nothing is more gratifying to me personally than the way the BJ’s senior leadership under Laura Sen’s overview demonstrated the team coming together to bring about changes in our business today. I particularly want to recognize our merchant organization led by Chris Neppl and our operations group led by Tom Gallagher for their ability to react and adapt to constant external changes and challenges this year including unprecedented levels of food inflation and dramatic shifts in consumer purchasing power. In closing, Frank has provided a very detailed explanation of our outlook for the fourth quarter and for next year. Understand that the business assumptions and the projections he discussed were mirrored against the background of unprecedented macro economic volatility and uncertainty as well as limited visibility into the future. We hope that our earnings projections prove to be conservative. We certainly have the potential to do better if the economy improves. With that we’ll open it up for questions.

(Operator Instructions) Your first question comes from Charles Grom – JP Morgan

Can you just remind us what the buckets are for the road map expenses for 2009 and when you get to 2010 do you still think it will be as big a headwind as we’ve faced this year and into next year?

When you mean the buckets if you’re talking about the different things that we’re doing within the road map. The big things that we’re working on right now is we’re going to be changing our payroll system, adding in new software HR system, we’re starting to work to replace all our registers in the clubs, and we’re doing fairly significant amount of work to change mainframe data provider. That’s the big things that we’re working on right now. Next year the $0.05 to $0.07 is our best first pass guess how it’s looking for next year. We’ve got a lot of work to do. I’m not comfortable saying right now where we’re going to be the year afterwards but its certainly obviously the important question that we need to answer what that next year looks like. We’re certainly hoping that we’re not going to see another incremental pop up but we’ve got a bunch of work to do particularly over the next couple weeks and we’ll have an update on that at the March call.

Your traffic trends have been some of the best in retail 4% to 6%, can you talk to how much you think, it’s probably hard to quantify, just your perspective on how much you think is trade down out of the supermarkets and how much could be lower gas prices and then lastly the initiatives that you guys have had in place now for a year.

I would think that certain in order of magnitude the first would be a shift in channels from supermarkets to us. I would add to that the casual dining fall out has driven people to prepare food at home and buy foods for eating at home. In terms of the benefit from gasoline as you know that’s only in 100 clubs but it is powerful and meaningful. As we pointed out in the section about how deflation affects demand it certainly hasn’t affected our gasoline demand and I think it has been a contributor to our value image. I don’t think that we’ve ever really been able to put a number to what its worth. The trial program is certainly performing well for the second half. It is definitely the combination of factors. I would not leave out the pure execution of the business from the clubs and the merchants.

The conversation always goes on in these kinds of meetings and reports about the concept of trading down. I object violently with that conversation. The quality of our products are the same if not better than the quality of products, the brands are the same if not better than the supermarkets have, the experience the consumer gets and is fed back to us saving the money on the exact same kind of product is quite dramatic so we think there is definitely a shift to wholesale club business because there is an opportunity to have a better quality or at least better quality experience at a lot less money. Yes, our buildings are not as attractive as the supermarkets so if you want to say that’s trading down I guess you could say that but in terms of the quality our products are every bit as good if not better.

When you look at the clubs that have the gas stations the 100 clubs could is there a big disparity in the comp performance or the traffic performance between those clubs and clubs without a gas station?

Our metro New York clubs have no gas stations for all intents and purposes. Their performance is every bit as good if not slightly better than the clubs that do have gas stations. It’s a very hard thing to measure. Metro New York is a competitive marketplace as well. In some places we think the gas has been a real good leader for us to bring people to us and get memberships in. It’s a benefit today but it’s harder to measure because the noise that comes in on a regular basis year over year.

Given your comments on the economy, any color on membership retention rates in the quarter and your outlook over the next four to five quarters?

We’re feeling pretty pleased as we said on the call with how the renewal rates have been coming in. We had a plan for this current year to be up about 0.5% to 1%. Right now it actually looks like we’ll be a little bit better than that for the full year. Again, we’ve been pretty pleased with how the membership has been going.

Your next question comes from Bob Drbul – Barclay’s Capital

The challenges that you have in general merchandise are there opportunities for continued sku reduction in that area, can you sort of make some changes around and cut back if you need to? The mix of general merchandise from the third quarter to the fourth quarter can you maybe talk a little bit about how much more important general merchandise does get in the fourth quarter?

I’m not quite sure why you’re asking about sku reduction in general merchandise relative to the performance of the business. If you’re asking whether we might devote less space to that over time versus more to perishables and edible foods and consumables we have been down that road and it wasn’t particularly a great cause for us to go do. I think we’ll be judicious in how we re-merchandise the club over time. At this point our seasonal assortments are set, they’re fixed and I don’t really anticipate cutting that area back in any dramatic way. It is cyclical and it will come back. The whole general merchandise arena is what distinguishes us from the grocery store and that is not what we want to be. Relative to the third quarter versus fourth quarter let me give that to Frank.

Generally we have a seasonality business just like everybody else. We generally talk about the differences within the K for the full year we run 62%, 63% food, 37%, 38% give or take non-food. That number jumps up 3, 4 percentage points that type of level in the fourth quarter.

We don’t have a curve that reflects what you’d see in a specialty store.

Our food business is pretty strong in the fourth quarter between Thanksgiving, Christmas, New Year and Super Bowl.

Your next question comes from Dan Binder – Jefferies

On the guidance of $2.20 to $2.30 if you earned $1.36 from operations year to date that gets me to $0.84 to $0.94 on the fourth quarter but I think in your comments you said it was unchanged from what you had previously can you walk me through how you’re calculating it.

If you started with the total, we can go through this offline if you want. Basically we’re adjusting for what we call unusual items particularly in the second quarter for sales tax adjustments. You can see our comp sales before we had said a mid point of $0.88 before and we’re holding to that $0.88 mid point for the fourth quarter in this guidance.

On the membership income I understand you’re making some investments in the Atlanta market but if I look at the growth rate sequentially its been decelerating and I’m trying to understand if what would be causing that exactly if you’re cannibalizing your clubs to some extent by building more clubs in existing markets I understand that as well but it just seems like we’re well into this turnaround in the accrual process behind accounting for membership should have allowed the membership growth to get better not worse? Can you help me understand that?

The lack of new clubs and the fact that all the new clubs up until now have been cannibalizing existing locations. We haven’t opened up any in the last couple years that hasn’t really had a big impact on existing clubs in terms of membership issues is one factor. That should change I think over the next year or two. I think we should, as I told you, I’ll give the same comment I made before. A couple years ago we talked about measure us by comp sales growth; measures by customer traffic, the average transaction. Don’t measure us by membership income because we’re driving more out of each one of our members and we’re cannibalizing ourselves and the competition is coming to some of these markets this will change as we enter calendar 2009 because we are opening a couple clubs in the metropolitan New York area that will be quite separated away from current clubs i.e. we’re opening a club in Bronx Terminal Market up by Yankee Stadium that’s going to be a very large volume club. We’re opening a club in Pala Manner which buts up against Westchester County. Those are the kind of clubs that are huge volume clubs and will produce big incremental memberships over a period of time and we’re planning to do more of that into the greater New York area and other places as well but we still do plan to also open up clubs that fill in for us an have some modest impact on our current trading area and some other markets. We expect that our membership will start to pick up again when we get the growth rate up to seven, eight, nine clubs a year over a couple two year period of time you’ll start to see that happen. Until that time it won’t grow much because we cycle through the $5.00 raise which built us up over a couple year period of time and the price of memberships. You’re just going to have to bear with us. I know all of you like to focus on this number but it’s not the biggest metric to us right now.

You mentioned that based on your current plans you didn’t see a severe markdown risk. Can you share with us what a margin neutral impact would be year over year in terms of what kind of sales plan you would have to hit, how much can general merchandise be down to be margin neutral?

We don’t break our plans by merchandise division. Suffice it to say that we’ve seen this coming for a long time and we plan to take our commitments down and take some orders off the table and adjust our deliveries accordingly and what we can see at least now from our trend in the inventories that we own are in line with our financial plan.

Your next question comes from Adrianne Shapira – Goldman Sachs

On the comp it sounded like we should be expecting, perhaps help us understand the spread between food and general merchandise it sounds like we should expect continuation of negative general merchandise comps but if you could give us a sense is that spread widening going forward?

We’re expecting general merchandise to be comp down probably a little bit more than what we saw in the third quarter.

In the mid single digit range?

Something like that maybe not quite that bad but something like that.

As far as the comps, when we think about the monthly progression you had called out the calendar shift from November to December obviously you’re looking for a big step up into December if you can help us quantify that calendar shift.

We tried to give you the numbers by month, in the month of November we have 2% to 3% in November, 7.5% to 8.5% in December and 7% to 8% in January. The little higher number in January is because we have a higher percentage generally in November of food which obviously we’re seeing strength. That kind of takes into account our best modeling what that calendar shift is worth. Am I answering your question?

I guess we could talk offline in terms of how much its swaying in terms of the later Thanksgiving what that means from shifting November to December. Getting back on the MFI it sounds like Sam’s has gotten a lot more aggressive on their efforts in terms of driving membership. I’m wondering how much of what’s happening in Atlanta how much is related to the competition out there as Sam’s does get more aggressive 10 weeks for $10 that we’re hearing.

They’re aggressive everyplace, they’re running those ads in Boston and everyplace it’s not just a unique thing. They’re very aggressive, they’re running a whole bunch of other public promotions, direct mail, newspaper; radio so there’s a different deal different place all the time. In Atlanta we made the decision over a year ago to dramatically, we were the third guy in and we got in a very poor way. We opened with free memberships and then went to paid memberships but we never really built a base and we put a lot of effort into putting better quality merchandise and making sure in stock, better talent running the clubs, giving them the better payrolls, doing some more marketing. One of the key ingredients we felt was appropriate was to have a $30 price membership for their and that’s what we did do and we’ve seen a good reaction getting more members in, more traffic in, we’re starting to see the sales pick up and go. Sam’s effort has got nothing to do with Atlanta; they’re doing it across the board. They’ve said publicly that they’re very unhappy with their membership so they’re trying all kinds of different things.

Are you seeing anything in other markets beyond Atlanta given their stepped up efforts?

They’re doing it everyplace that we see. What we’re seeing in Atlanta we’re seeing everyplace we function up and down the East coast. Sam’s is going these kinds of activities.

It’s hard for us certainly to see the impact on us. As you saw our comps in October were better than what we saw in September. It’s hard for us to see much of an impact on us.

Do you have a competitive response to their efforts?

Just keep on doing exactly what we’re doing and doing it well. The customers experience coming into the club is the number one reason people will tell their friends to join our club and we’re very pleased what the club is doing there. We cannot possibly get into a food fight, if you would, with anybody on every single thing that they decide to try to do. Years ago Sears and Roebuck would do something it would be the dumbest thing in the world, everybody would follow it and find out it didn’t work. We’ll let Sam’s do what they want to do no matter how well they did. If it makes sense we’ll emulate it. We’re not proud if they do a good thing on something that makes sense to us we’ll emulate it if it doesn’t we won’t do it. Right now we’re not interested in discounting our memberships like that at all.

Your next question comes from Deborah Weinswig – Citigroup

You went through some comp inventory numbers up 2.9% for club which was obviously less than half the rate of comp growth. Can you talk about your inventory targets and obviously price of inventory management in the quarter can you go through a little bit more in the details?

The targets, the rule of thumb that we like to have is about for the average inventory so we take the total inventories and divide it by the number of clubs, pretty simplistic measure. That increase shouldn’t be any more than one half of the merchandise comp sales increase. Generally over the course of the last year we’ve been able to do much better than that and last year if you’ll recall it was sort of a correction year we really brought it down quite a bit. Most months we were about flat to last year, some months even being below the LY. I think we brought our inventories down to a nice area. Merchants are always continuing to look at skus and justifying skus all the time. I think Laura; I don’t want to speak for her but, feels pretty comfortable with where we are with inventory levels right now. They’re up a little bit right now at the end of the quarter because of some buy ins that we brought in. We talked about how we typically bring in some buy ins to help the margin a little bit.

Along those lines you talked about changes in mix in the general merchandise side, based on your fourth quarter outlook how would those be different maybe year over year or as a result of some of the buy ins?

I wouldn’t say that we’ve done a lot of buy ins in general merchandise. It’s typically more around the food price increases and the consumable and food side of the business. Basically I think that we obviously try and put our inventories where we believe the sales are going to happen so you see that in global positioning system and computers and video games, those are areas that we see the members increasing demand and interest in the products we have. Obviously we’re looking for the fastest turning items to suit our model. I spoke of our electronics resets in the clubs we gave a lot of the key categories better exposure on the main aisle there. I would say those are the areas we made the investment.

Impressive performance on shrink, is that more around processes or new technologies that have been put in place?

All around processes.

I think that we’ve got a really strong team in loss prevention and I think they’re executing in a very high level. I think the clubs are doing a wonderful job of keeping to our controls and being very disciplined, the results have been impressive.

Your next question comes from Joe Parkhill – Morgan Stanley

I was wondering if you saw any change in credit card usage during the quarter particularly in the month of October.

The credit card was up a little bit. If you look at our receivables you’ll see its up a little bit over last year that’s what’s driving that is the credit cards, the usage by consumer is up a little bit, not huge but up some.

Have you seen a mix shift towards smaller package sizes versus bulk for any change in that?

We’ve actually added some more small package sizes recognizing that we are going after the retail consumer recognizing that a good deal of our demographic is the empty nester, baby boomer, if you will, and that our food merchants, particularly Bruce Graham has really emphasized that we need to make sure we’re taking care of both ends of the spectrum and that works very nicely.

You have seen an increase in?

It’s been strategic to provide certain packages particularly in bakery area some of the cakes and pies and so on which are just more friendly for a household versus a special occasion.

I want to confirm, did you comments suggest that you’re able to widen your pricing gap on gas with local competitors given the rapid decline in oil prices?

As the prices drop down we’ve started to lower our prices obviously and the competitors were slower at coming down this time then we’ve ever seen in the past. That enabled us to have probably a better margin than we would have normally had. Although we came down they didn’t seem to come down very rapidly. Everybody was trying to make money on gas at that particular six week period of time so that we saw the lapse of the gas market.

Your next question comes from Peter Benedict – Wachovia

The 5% to 7% merchandise comp plan that you laid out for 2009 I appreciate the uncertainty surrounding this at this point but can you speak maybe to what your assumptions are at least at this point in terms of inflation what role that will play and then maybe the spread between food and general merchandise.

We have inflation that we’re still cycling and will continue to cycle through I think the first nine months of next year. That will take its toll over time. We have a plan that reflects our current trends which is a very high increase in our fresh foods and perishables, strong increases in grocery and consumables and probably about flattish in general merchandise till we can see a little consumer recovery.

If we think about November the 2% to 3% on the core merchandise front how about the gas impact given what you’ve seen so far this month you guys have visibility now into the price and the gallons that you’re seeing. What’s your sense at this point what the gas impact might be on the November comp.

We expect it to be negative.

The price is so much lower than they were so they’ll have a negative impact unless there’s a dramatic change in the marketplace. We can’t make any comment beyond that because I think people finally got to the pricing that they should have had based upon what the cost of gasoline is today. I was driving around last night in the Boston area I saw gas for $1.89 a bunch of different places for regular gas which is the lowest price I’ve seen in a long time.

On the road map IT spending remind me what the dollar spend is for this year and then what it is for next year I didn’t track exactly what you guys were saying on that front.

We haven’t broken out; we’ve talked about it sort of a number of different investments a total of about $0.08 a share. Well more than the majority of it relates to the road map. Again it’s a program that we’ve been talking about the last few quarters that we’re starting up and starting to make some pretty good progress. Again the pieces are around, we’re going to be changing out our payroll provider, changing our human resources systems, going to doing work to put in new EPoX registers, POS registers in the clubs and switching provider of our data supply processing for mainframe processing which we still have a number of systems on mainframe processing. Those are the major pieces and we’re in the throws of getting all those pieces done.

Your next question comes from Wayne Hood – BMO Capital

Because fresh is so important would you be a little bit more specific about the initiatives for ’09 that you’re undertaking to build in sustainability in that business as we go into ’09 and ’10 what impact that’s having on your frozen business and is that cannibalizing or eating up some of the frozen business where you can shrink that space?

We missed the first two words of your statement, are you talking about the perishables versus the frozen?

The first part of the question was what are you doing to build sustainability in the fresh area than what you’ve already done and then the impact that’s having on your frozen business and could you shrink that business if it is having an impact?

The sustainability comes from our operators. The education that we’ve done around the operation of that business and the metrics. When I talked about walking around the club and them having literally the numbers in their pockets about how well they were doing in produce and meat and prepared foods and so on and that their year over year shrink and salvage results were top of mind and clearly metrics that they were proud of that they were following every week and training on how to achieve those is why we’re doing so well. The sustainability is coming from the consistency of operations, the focus and the educated team members.

Although we’ve done a really good job in some of those perishable areas it’s certainly not the end game there at all. We have a big opportunity in the frozen part of our business as well we’re starting to put that same kind of effort into our frozen business so we would think over a period of next year or so we should see some substantial growth in that category. Then when we get all through every single one of the categories to the back of the club we’ll start all over again that’s just the nature of retailing. You’re never done. As we improve ourselves in one category it absolutely says hey we’ve got a big opportunity over here to do the same kind of thing in the next category. We think the back of the club is the biggest and most important part of our business and opportunity to get traffic on a consistent basis and make that customer regular member shopping on a regular basis which is the most important thing we can do for the sustainability of the company as a whole. That’s our primary goal and has been from the day we started this procedure two years ago. There’s no less emphasis on it, there’s not a club that doesn’t pay attention to another buyer that’s not well aware of it’s the whole organization that understands what has to be done.

Sitting here in Atlanta there’s a discussion about Sam’s being a factor but it seems to me more that its Publix, its Kroger with their fresh format, it’s the two for one or giving away private brands all the things that are just mucking up the market here more than even Sam’s is doing. How do you show value or how do you cut through the clutter with that with every weekend the circulars that these guys are putting out and it seems to me if you can make it work here in Atlanta you can probably make it work anywhere.

We think our problem isn’t the current problem that’s going on in the market the craziness may or may not being going on in the marketplace at any given time. We got off to a very bad start in Atlanta. We were self inflicted, I’m not suggesting anybody else had anything to do with this, it was self inflicted by our own approach to the marketplace. It’s very hard to change an image. We’re doing a number of things that we’ve talked about already and we’re doing more things in terms of marketing ideas, things that we can find ways to reach out to our consumer on a direct basis and talk to her or him on an ongoing basis. A lot of that is unfortunately is not something we want to talk about right now. We face these buy one get one free, we see 10 items for $10 at Stop and Shop up here in Boston this is not uncommon to see. It may be more aggressive in Atlanta than maybe up here in Boston or in other places. Up till now the effort that the team is putting in, in Atlanta has produced a very, very solid growth rate which if we could sustain it for a reasonable period of time we will have certainly profitable stores and clubs that we will be proud of. It’s just the first year at it and we have to work on it.

We are EDLT and the member does understand that they don’t have to run around to 16 stores to get the best price on soda or peanut butter, whatever it is and that they’re going to find it with us everyday. That’s a sophisticated consumer and clearly by our comp increases there they understand that.

Your next question comes from Dan Binder – Jefferies

I wanted to follow up on your TV comment you said it was the toughest category in general merchandise I was just curious if you could give us a little bit more color on how that comped and what you’re seeing in the channel from an inventory standpoint are the vendors cutting back inventory fast enough to avoid major price compression over the next 60 days and lastly is it creating buying opportunities for you as a result?

There’s going to be price compaction in the next 60 days, black Friday, Christmas, the end of the year, holiday selling that’s just going to happen, it happens every year at this time right through January we’ll be very aggressive. Our TVs last year were quite powerful we never published how powerful they were but the changes that we made were quite impactful in the business and we had huge, huge activity. What I guess I’m saying is that in this year we thought that demand would be equally great because the “switch over” in February we’re going to see probably there’s a lot more selling of smaller units the 22”, 26”, 32” TVs rather than the 50”, 60” that we sold very freely last year. Units we’ll probably sell more but the actual sales will be less.

I have to say that the sales declines and clearly you’ve heard from other retailers that I shall not name have been coming around faster than anyone would have guessed. The inventories start to back up prices fall that is the dynamic. Without a soft environment electronics prices fall on a regular basis anyway as you know that’s the way the industry works. I do expect we’ll see a much more dramatic price compression more quickly due to the current environment.

Any thoughts on magnitude in terms of the year over year decline you might expect to see in the fourth quarter.

I think that we’ll see a huge black Friday demand. I do think that the change in technology that is to say the switch over in ’09 will be a driver. It certainly will help us sell through some more products probably last minute. It’s unfortunate but the consumer just doesn’t have the confidence right now to spend a couple thousand dollars for a TV.

On the topic of management succession it’s been no secret Herb that you came in to fix this business you’ve done an architect of a turnaround it’s really gone your way. I’m curious what your plans are over the next six months in terms of your involvement with BJ’s and staying on as CEO.

I would imagine there will be changes there always are. If I’m lucky it’ll happen tomorrow morning if I’m not so lucky it’ll happen a few months from now. No. We built the organization with Laura to run the company; it’s no secret she’s going to take over. It’s just a question of when. I don’t want to preempt the Board from making that decision when they feel comfortable but I’m sure that the Board is moving to that direction. Since Laura sits on the Board and I sit on the Board as well we feel pretty comfortable there will be a change. I expect to be still involved in the business but certainly not at the level or intensity that I am today as the CEO. As the Chairman and a fairly active Chairman is where I think I can still help the company a lot and Laura feels that I could help here in certain kinds of businesses which we’ll probably talk about sometime in the future. I think it will be a smooth transition whenever it takes place. If its one month, six months who knows when it s going to be but it’s in the planning stages. The whole organization has developed a succession planning for everybody at every level so it’s not just to replace me but it’s to make sure we have somebody to replace everybody and have a strong management team right down the line. It’s been a fun year the last couple years working with Laura especially in this particular year where she’s been much more active as the COO. We’ve spent more time together then I think we’ve spent in the last 20 years and we’ve spent a lot of time together. It will be a nice smooth transition the organization respects her and gets along well with her and she respects the organization so whenever it takes place it will be fine. We’ll thank everybody very much and wish you all happy holidays.

This concludes the BJ’s Wholesale Club Inc. third quarter earnings results conference call thank you everyone for joining you may now disconnect.