Sales Update

Sales UpdateMr. Randy Chandler

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Sales Thru 2nd Qtr Versus LY Versus Goal

+3.5%$2.86B +1.9%

DeCA Sales

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Transactions Thru 2nd Qtr

# Versus LY % Change

+275K45.8M +0.6%

DeCA Transactions

Eastern Region

SalesSales

$1.28B (+4.5%)

$.24B (-.3%)

$1.34B (+3.3%)

All Figures Thru 2nd Quarter

European Region

Western Region

Regional Results

Eastern Region

TransactionsTransactions

20.7M (+1.6%)

5.3M (-3.3%)

19.8M (+.6%)

All Figures Thru 2nd Quarter

European Region

Western Region

Regional Results

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Sales Up Prices Up* Real Growth

2.1%3.5% 1.4%

DeCA Middle InningsSavings Hold Steady

•Include produce and meat growth = 1.7%

•CONUS 6 month

Europe

Europe

Europe

Far East

Far East

Far East

West

West

West

East

East

East

The End of Cheap Food?Healthcare Costs

Oil Price Surge

Weak Dollar

Drought in Grain Areas

6 years of drought in Australia

Flooding in Argentina

Demand

Beef consumption in China has doubled since 1980

Impact of Ethanol

Water

It takes 450 lbs of

corn to produce enough

ethanol to fill an SUV gas tank

It takes 800

gallons of water per person per

day to produce

daily food intake

Corn

1,500 gls water = 1lb beef

7 lbs corn = 1lb beef

2.5 lbs corn = 1lb poultry

Sustainability

Consumer Impact

FMI Trend Reports

71% increase home cooking frequencyMeals up 4.9 per week

67% buying fewer luxury items

60% buying more store brands

Value Will Be Focus

Fewer Trips to Secondary Stores

Fewer Trips = STOCK UP

Sales Directorate (PS)Director Sales

PS

*PerishableDiv. PSP

Product Support Applications Div. PSA

Resale Contracting

Div. PSC

Special ProjectsDiv. PSS

Proposed New Name: Business Systems, Transportation and

Cataloguing Div. (PSV)

Semi-PerishableDiv. PSM

Produce Support Branch PSCP

Produce Cell Europe RDCE

Brand Name Resale Branch

PSCB

Resale Commodities Branch PSCC

Resale Service Support

Branch PSCS

Reset BranchLS PSSR

Change Pending: Move Distribution/OPP

Branch to PSS – Org Code Pending

Business Systems Branch

PSVS

Transportation Branch PSVT

Promotions Branch PSSP

Proposed New Guard/Reserve Branch –

Org Code Pending

Michelle Frost, Chief Semi-Perishable

Developing staff office for Guard/Reserve support

Serves as single POC for store support from HQ

Logistics

Human Resources

Communications/IT

Second destination transportation

Equipment

Develop a “Virtual” solution for guard sales

Internet ordering – on site payment first step

Develop total internet solution - include pre-payment

Expand Benefit Access G/R

Category Reviews

Six Reviews Completed YTD

Two Reviews Currently Underway

One More Scheduled

3 Reviews Pending

Currently Developing Next Years List

PromotionsTotal Items Published Reduced by 21%

Easier management at store

Increased SKU Performance

Dollars per SKU up 5%

Units per SKU up 7%

Increase Pallets/Shippers

Incorporate Club Packs

Averaging $6.8 million per month $2 million per month increase

Seasonal Sales + $9 million

Front End Racks

Fixtures Have Been Selected

Currently:

Developing Stock Assortment

Surveying Stores to Determine Type of Fixture

60 Days to Manufacturer Equipment

Phased Implementation Beginning September

Plan-o-gramsToday all store use standardized plan-o-grams

Based on historic sales patterns

Specific sets based on store class size

No factor included for lost sales

Plan-o-gram for the “Future”

Pre-position space for growth categories

Refine assortments in declining categories

Re-configure flow to maximize allocation efficiencies

Test concept at Ft Bragg North On track for early summer implementation

Measure incremental impacts

Analyze DataAnalyze Data Review SiteReview Site Build Store PlanBuild Store Plan

- Analyze demand - Adjust for volume sold

on display - Plan-o-gram specific

shelf objectives

- Analyze demand - Adjust for volume sold

on display - Plan-o-gram specific

shelf objectives

- Map flow of sales area

- Align categories tobuild affinities

- Assure growth can

- Map flow of sales area

- Align categories tobuild affinities

- Assure growth can

- Make needed adjustments - Plan/organize reset

- Measure results

- Make needed adjustments - Plan/organize reset

- Measure results

The Ft Bragg Project

• Environmental Initiatives (Retail)• Reusable grocery bags sold starting 10/30/2007

• Status: Over 1,007,000 sold thru 05/14/2008

• AFN Video on commissary reusable bags shown in Europe

• Compact fluorescent light (CFL) bulbs, FY 08 Goal: 1 Million

• Status: Over 733,000 sold FYTD – thru 05/14/2008

• Smart-Way Transport Program (EPA Partnership)• Status: 12 DeCA Transport Partners now participate

• Notice to Trade about program published 01/29/2008

Focused onFocused on “Green”“Green” EffortsEffortsFocused onFocused on “Green”“Green” EffortsEfforts

• Environmental Initiatives (Retail) -• Earth Friendly Days Promotion featuring Go Green products

• Status: April 17-30, 2008 Promotion implemented

• Coincides with Earth Day (April 22) and Arbor Day (April 25)

• Green Clean, Recycled and Biodegradable Products• Status: Number of items has almost tripled over last 12

months

• Organic Products• Status: Sales up 40% (Apr–Mar over prior year) 24.0m to

33.5m

• Selection up 39% in last 12 months – from 460 to 641

Focused onFocused on “Green”“Green” EffortsEffortsFocused onFocused on “Green”“Green” EffortsEfforts

NIB – People Helping People

NIB Sales Top $14M in Most Recent 52 Weeks

Traditional Skilcraft Brands - $9.0M

Impulse Programs Add $5.1M