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58TOBACCOOUTLETBUSINESSJULYAUGUST2009onitx1dheexplains.Teaddedbonus0orUhlex19shesaysisthatx1cnowevena0terthetaxeswentupwewerepleasantlysurprisedx14therearestillaloto0RYOcustomersouttherex1dhesays.Steinbockwhopreviouslythoughthex19dbeouto0theRYObusinessi0SCHIPwentthroughisstillringingupsaleswithx1cabout25percento0theRYOMYOvolumeIhadbe0orex14itcertainlyisnx19tasbigasitwasbe0oreSCHIPbutitx19scomingback.x1dOtherretailers0ullyexpectedtomaintainacertainclienteleo0RYOcus-tomers.In0actthatx19sparto0thereasonDarrenCollettownero0CollettEn-terprisesaSmokerFriendlyauthorizeddealerwith18storesbasedinsouthernIndianatookadvantageo0hismultiplelocationstocare0ullymanagethemixratherthanlettinginventorygettoolowtooquicklyinanyonestore.x1cWe0ocusedandreallyconcentratedonourinventorylevelsbutIdonx19twanttosaywedidamassreductiono0inven-torybecausewewantedtomakesurewehadmucho0whatourcustomersneed-edx1dhesays.x1cAnyexcessinventorywewouldmove0romlocationtolocation.x1dParto0Collettx19smanagementplaninvolvedadisciplinedapproachtothex3oortaxcalculationsx14completedtheverynighto0theSCHIPtaxratechangeover.x1cA0terweclosedourlastdooronMarch31wehadourtaxre-turndonex1dhestates.x1cWehadallthetaxescalculatedandthe0ormsdoneat1115thatnight.x1dSimilartootherdisciplinedretailersColletthashadthetaxmoneyowedx1csittinginamoneymarketaccountx14andwex19llutilizeituntiltheduedatex1dhesays.CashControlTeprox2trealizedthroughearlypriceincreasesgavetobaccooutletsanopportunitytoputtaxmoneyasidex14i0theythoughtahead.x1cAsdix1cultasitwasinMarchwhenpriceincreaseshitthroughouteverytobaccocategorythatgaveusanopportunitytotakesomex3oor-stockprice-increaseprox2tx1dsayserryGallagherpresidento0SmokerFriendlyandTeCigaretteStoreCorp.whichistheNo.1tobaccooutletontheTOB50.x1cWewerebuildinginventoriesinanticipationo0April1thenwhenpriceincreaseshitinMarchitgaveustheopportunitytogetthewind0allouto0thatinventory.Wex19vesetasidethoseprox2tdollarstomakethatpayment.x1dO0coursenoteverytobaccoretailerhashadasgoodahandleontheirin-ventoryasthesebest-in-classretailers.x1cSomedidnx19tunderstandhowimpor-tantitwastomanageitthiswayandnoteverybodywasabletogettheirsupplierstoworkwiththemx1dKersteinstates.x1cTerewilldex2nitelybethosewhowonx19tbeabletopaythex3oortaxonJuly31.x1dFortobaccooutletbusinessesthatcanx19tmaketheirrequiredpaymentGal-lagheradvisesx1cx2linganywayx1donJuly31.x1cAtleastthattakesthe0ailure-to-x2lepieceoftheirshouldersx1dhenotesadd-ingthatitx19sunclearhowandi0theBwillnegotiateandadvisestroubledre-tailerstotalktotheirCPAsortoomBrianttheexecutivedirectoro0NAO0oradvice.DistributorDilemmaButeventobaccooutletownersabletopaytheirx3oortaxeshaveindustryconcerns.x1cIx19mworriedaboutthedis-tributorsx1dKersteinadmits.x1cMypre-dictionisthatwewillseeanumbero0distributorsgoingouto0businessinACleanSweepsChiPx19sshaPingeffeCtWhileitx19stooearlytocarveanytrendsinstoneleadingtobaccoretailershavehomedinonsomepreliminarychangesinproductandmarketsharemove-mentsinceSCHIPx19staxeswentintoefectnamelycustomersaremakingfewercartonpurchasesandmorefrequentpackpur-chasescustomerswhousedtocomeinonceaweekorlessarecominginasmuchasthreetimesaweeknowRYOtobaccoisnowmorevalue-orientedandpackagedinsmallersizessalesoflteredlittlecigarsareontherisetheyhaveaheavierweightandthere0orearenotsubjecttothex1clittlecigarx1dhighertaxesretailersarefocusingmoreonpremiumcigarswhichareholdingstrongwithcurrentcustomersandattractingnewcustomersandretailersaregainingcoretobaccocustomersfromchannelsthathavex1closttobaccox1dincludingdrugstoresandevenc-stores.DarrenCollettownerofCollettEnterprises