NACS

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• NACS
• 2007 State of the Industry
• Retailer Concerns
• John Eichberger
• Vice President, Government Relations

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• Motor Fuel Sales
• Driving Revenue, Traffic and Heart Burn,
• But Not Profit

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Industry SalesSales Continue to Climb
569.4 Billion
71.3
Source 2007 NACS State of the Industry Survey
powered by CSX
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Total Industry Summary
Source Nielsen, 2007 NACS State of the Industry
Survey powered by CSX
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(No Transcript)
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Credit Card CompaniesProfiting on the Backs of
Retailers
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Credit Card Costs to the Industry
6.6 billion
5.4 billion
3.8 billion
3.2 billion
Source 2007 NACS State of the Industry Survey
powered by CSX
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Total Industry Summary
Source Nielsen, 2007 NACS State of the Industry
Survey powered by CSX
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Credit Cards and Convenience

• Cards and banks make more than stores
• Secretive operating rules
• Market power abuses
• NACS Fighting Back
• Merchants Payments Coalition
• Class Action Litigation
• Congressional Oversight

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2007 In-Store PerformanceThe Source of Income
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Total Industry Preview
Source Nielsen, 2007 NACS State of the Industry
Survey powered by CSX
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Top Ten Categories
Percent of In-Store Sales
Top 10 88.49
All Others 11.51
Source 2007 NACS State of the Industry Survey
powered by CSX
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Top Ten GM Contributors
All Others 18.7
Top 10 81.3
Across all stores, including those not selling
beer
Source 2007 NACS State of the Industry Survey
powered by CSX
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Major CategoriesGross Margins
Source 2007 NACS State of the Industry Survey
powered by CSX
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Key CategoryGross Margin Dollar Performance(In
Billions)
Source 2007 NACS State of the Industry Survey
powered by CSX
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Foodservice

• Gross Margin Percent is 49.81 down 0.15 pts

NACS Category Definitions v6.0
Source 2007 NACS State of the Industry Survey
powered by CSX
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Cigarettes

• Gross Margin Percent is 18.00 down 0.72 pts

Sub-generic 6.05
Fourth Tier 0.77
Branded Discount 10.93
Premium 82.25
Source 2007 NACS State of the Industry Survey
powered by CSX
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Other Tobacco Products

• Gross Margin Percent is 28.39 up 2.92 pts

Pipe/Cig Tobacco 1.79
Papers 2.36
Pipes Other 1.60
Cigars 29.79
Smokeless 64.49
Category Definitions Nielsen NACS Category
Def. v6.0
Source 2007 NACS State of the Industry Survey
powered by CSX
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Packaged Beverages

• Gross Margin Percent is 35.94 up 0.81 pts

Other 2.90
Alternative 15.44
Sports 9.01
Carbonated Soft Drinks 47.01
Bottled Water 12.62
Juice Juice Drinks 8.12
Category Definitions Nielsen NACS Category
Def. v6.0
Iced Tea 4.90
Source 2007 NACS State of the Industry Survey
powered by CSX
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Candy

• Gross Margin Percent is 45.03 up 0.26 pts

Change Makers 0.71
Novelties 1.71
Other 1.99
Bagged 6.55
Gum 27.73
Non-Choc Bars/Packs 15.34
Chocolate Bars/Packs 38.76
Rolls, Mints Drops 7.21
Category Definitions Nielsen NACS Category
Def. v6.0
Source 2007 NACS State of the Industry Survey
powered by CSX
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General Merchandise

• Gross Margin Percent is 38.72 down 1.39 pts

Seasonal 8.35
Greeting, Gift, Novelty Toys 9.72
Film/Photo 6.64
Batteries 14.47
Apparel 6.92
All Other 24.45
Smoking Accessories 26.04
Floral 1.49
Hardware 1.92
Category Definitions Nielsen NACS Category
Def. v6.0
Source 2007 NACS State of the Industry Survey
powered by CSX
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Tobacco Under Fire

• Tobacco in the cross-hairs of Congress
• FDA Regulation
• Federal excise tax
• NACS seeking level playing field
• Remote sales of tobacco
• Equitable tax collection
• Age verification

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Summary

• Sales UP, Profits DOWN
• Tobacco reigns inside the store, but foodservice
  is coming on strong
• Credit cards are a parasite on the industry
• Leading categories under attack
• Motor Fuels
• Tobacco

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Thank you!

• John Eichberger
• Vice President, Government Relations
• NACS
• 1600 Duke Street
• Alexandria, VA 22314
• Direct 703/518-4247
• Email jeichberger_at_nacsonline.com