Gross profit for the third quarter was $569 million, or 14.2 percent of net sales, and included a $3 million pre-tax multi-employer pension plan withdrawal charge. When adjusted for this charge, gross profit for the third quarter was $572 million, or 14.3 percent of net sales. Last year’s third quarter gross profit was $530 million, or 13.1 percent of net sales. The increase in gross profit compared to last year was primarily driven by incremental fees earned under the TSA and the benefits of lower infrastructure costs.

Selling and administrative expenses in the third quarter were $464 million, or 11.6 percent of net sales, and included $1 million in net pre-tax charges primarily related to asset impairment and contract breakage costs partially offset by a gain from the sale of a property and reduction of previously accrued severance costs. When adjusted for these net charges, selling and administrative expenses were $463 million, or 11.6 percent of net sales. Selling and administrative expenses in last year’s third quarter were $500 million, or 12.4 percent of net sales, and included $2 million of net pre-tax charges primarily related to store closure charges and severance costs, offset in part by a gain related to a cash settlement from credit card companies. When adjusted for these net charges, last year’s third quarter selling and administrative expenses were $498 million, or 12.3 percent of net sales. The decline in selling and administrative expenses compared to last year was primarily driven by the benefits of cost reduction initiatives, including lower depreciation expense. Selling and administrative expenses in all periods no longer include a reduction attributable to TSA fees earned.

Net interest expense for the third quarter was $52 million compared to $63 million last year. The decrease in interest expense was primarily driven by lower average rates and lower outstanding balances on the Company’s senior notes.

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