Grocery Outlet Holding (GO) 6 Aug 242024 Q2 Earnings call transcript

Greetings, and welcome to Grocery Outlet Fiscal Second Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference over to your host, Christine Chen. Thank you.

You may begin.

to second call ending quarter XXXX. welcome results discuss June and the for for afternoon, Grocery to Outlet's financial XX, Good the period

from Chief Financial RJ and SVP will Executive Speaking and Officer today's Accounting. and Officer; Interim President Chief be Gray, Lindsay of on management Sheedy, call

Lindsay, from the will call for prepared remarks we Following questions. RJ and open

website. playback Please of will be recording live, and note a section that this Relations via conference on telephone call the Investor is company's being webcast the available

call materially forward-looking the operating, these factors statements the on be make of the release or as that found description of differ business forward-looking of the this are company's forward-looking within on All found this Participants periodic statements. to or laws. the on company's may statements SEC, uncertainties Relations are could the subject that meaning cause with statements the website sec.gov. company's Investor or performance A from reports federal afternoon's these financial expectations to in statements. actual filed all securities These well press and section be strategies various of can may results which future address or risks as

And it to now over I RJ. will turn

thank and Good afternoon, us. for everyone, you joining

progress though our even are made comp behind X late than now impact our earnings finishing this coming months, store expected. with softened We in with P&L June, second quarter, gross sales material pleased better good transition with the throughout continued Strong performance, quarter margins the and customer from work in count us. below We expectations. the and our systems over past slightly is

and of April very successfully openings store Grocery the work progressing We new schedule. nicely. X, is Outlet completed acquisition executing well and United are ahead on integration We

app we the well as launch excited private the personalization our as by ramping recent are of label of our program. adoption Finally,

comparable X-year XX%, grew sales quarter X.X%, a on while basis. represents XX% store growth increased second sales Our which

which was X% partially basket. quarter, increasing in remained average in strong X%, decrease a offset count Transaction the by

existing items customers we deliver treasure within combination Traffic to WOW! a continue as us increases a with be of to shopping new and compelling high-quality assortment an exciting more customers experience. hunt frequently of more continue

In to performance opened net UGO, and to in in ramp the XX recent stores new acquired we and we stores from quarter, the continues expectations. line addition XX vintage well with

XX.X% XXX about considering Gross impact, transition from in performance, as which basis a basis the a margin expected. of quarter. was and of points net was This was ahead XXX point came systems it residual expectations improvement XX strong first of very of basis points margin that

reflecting a basis Resulting our adjusted XXX and points was EBITDA the from a point first quarter. of basis improvement was This $XX margin. million, sequential expectations X% EBITDA ahead adjusted XX

are healthier very and with pleased in gross Altogether, levels. EBITDA returning margin our we to adjusted progress

our at August last disrupted the operationally reminder, has a since upgraded As our we calls. last on and inventory, end our business financial year, platforms. product, September and reporting we've of discussed transition as X financially This

back to remaining and issues returned levels we commission warehouse In the normal May, that support we program X resolved we system shrink operators had the impacting in for last and ended profit that our large March. had announced

discussed lower-than-expected poor in margins. also resulted data quarter had We first how visibility

on visibility healthy quarter, second to return time, our gross us business process enabled recently reporting to this. and the that for payables and and margin the of proud the I'm team are data had at was we execute Importantly, profit we management This levels improved restored future able forecasting. the how for to

with progress transition good make work. to ongoing continue systems We

optimizing the system is system Our on functionality focused effort visibility increasing efficiencies. to improving enhancing speed, additional currently operating data, for and

impact still new to what systems a and remains financial should aspects none operators, will challenging enhancements improve have material of results. of to these our that negative While are our employees future

additional on XX reporting bring Sandeep Chikkala. to hired has and continue development we and our in several brings SVP, of to efforts, Information Sandeep new transformations technology and operational Sandeep and COO, ] new management, years capabilities. resources experience Chief our [ and over Officer, led as in recently career, We these Ramesh Shilawat support experience Throughout business SAP. his developing, bring strong strategic and managing enterprise implementing technology platform including To strategy.

We bring further to in-house our new additional on to reliance our also continue third-party resources on decrease and consultants. increase capabilities

of to our new provide for this and growth implemented a system modern platform business We foundation future model. scalability

a our capabilities had also earnings enhance processes. business case and to technology strong in with We improvements business

believe and we we While merchandise fundamental the underwrote inventory systems to will GO efficiencies, ordering mix to we IOs. and implementation management, had provide has proven continue significantly all capabilities both more than for around the planned, and challenging the benefits that to be improvements business

While consumers food and are still with prices food inflation challenged been higher moderating, burdens. financial other has

savings customers compared retailers. continue saving grocery XX% to food, conventional WOW! the basket We to many offer on value XX% items at in best an more with or average

some to in to these pricing from making over-indexed key our value; customer business month adjustments, we increases on was softening effort healthy lapping buying well, last we result further end far be the in at to customers. provide reasons we we price, slight to continue believe return value value June, and While competitors, for in a year thus we the positioned particularly the an the of continued the were moderation comp to customers which first, our activities of second, experienced We in instances third, three promotional relative has quarter. comp is our margins, which pressure strong; softened impacted putting strongest we the sales this: are opportunistic as There to value. when our in currently are year-over-year

negotiating in model control our and dynamic been and the processes. our many and values returning through is manage everyday business metrics our We've targeted and buying flexible, are extremely continue the of value nimble WOW! the this value we weeks. and as business the This to experience able history we have coming instance by. are customer reinforce we Improving pricing costs shopping within our and in across And prices we we is our model. to sharpen that actively reaction adjusting long dynamics, days to competitive value in our given I'm that to to environments. competitive quickly navigating proposition track a we same changing pivot and quickly strengthen successfully will our and confident do

to the XX Our with months low show or important also visits a prices most and high. that as for Customers customer GO in Grocery same intent they search that value more surveys still to store next remain the spend continue and the high Outlet satisfaction value. criteria indicate remains for in

availability to continue all buying closeout also good categories, environment healthy. the remains and across product We see

geography. and were an size able growing make take in across partner Our more better scale even us as volume to a wider we variety

growth. now Turning store to

locations We XX store quarter, includes opening performing XXX schedule, the count of they to the stores was increasing new opened the quarter acquisition, XX are during during end. are plan. to ahead stores to network. This the our and second UGO net quarter, second stores adding at We new completed which

states. our first store market, Delaware are We we our opened into in with store operating second now and in entry XX and in Cincinnati the our Ohio

value are New proposition. market sales for the pleased several years. with new customer healthy, are stores store our and ramping of we over with and nice profit the market We've opened progress economics also seen past portability

openings we year. on are so now third quarter, end X track opened remaining and stores and in of additional the far between our have for We the the

approximately Given of schedule, acquisition. expect and XX% represents add XX growth new now range store over year, the including to store UGO of year. our stores health opening This between last we this XX the

to position Our robust, a future growth XX% and XXXX. store store is pipeline are great in deliver very in new we

Our are now organic real on estate store XXXX and activities openings. focused XXXX

a to We our growth continue real complement organic estate efforts. also evaluate to opportunistic as

lives potential realizing so touching and healthy are better. unbeatable expansion growth our value, through at offering in and affordable store We openings communities and food extensive the doing, for we and more are geographic

to acquisition. our integration The of recent UGO well. now is proceeding Turning

Our new of to integration and investing assortment, on marketing introducing year fixtures, Southeast the our this region. store some focus and the is programs refreshes in expanding

low-priced as coordinating recently as stores. have already opportunistic and new UGO into well incremental items everyday products buys begun the We added on

We on and product, sharing how forward with and teams are look accomplishments have improvements calls. sourcing integrated pleased future with we the our store to our

see at end the X% to Customer customer total response of been with the XXX,XXX engagement penetration personalization of with of sales levels app. strong our quarter, continue quarter. of over at and end first has up the high downloads X% We second so far from the

special treasure to to provide Our access deals their hunt customize to app offers early allows our and us communicate weekly customers, experience.

customer loyalty, increase be and are basket already our this app should app to with share trip pleased size and accelerate higher engagement high non-app wallet engagement consistently further see growth. We customer marketing. that will continues greater We that of transactions. to even lead We believe see to frequency which than

excited introduced to very the for recently are private label stores. launch our items program we our of first Finally, with

to The This hit affordable at is extremely food prices. GO. staples first brand represents brand our Simply stores high-quality

include categories & beverage, well for Home food followed is GO accessories. and used brands, will Pamper. Haven as This pet personal will pasta. & as X our categories. and & Home feature Paw & be dairy, care both GO Haven and baking GO Pamper by initial be additional household and GO Our Paw brand will pet essentials

track on SKUs this by the new private end approximately label remain year. XXX to We of introduce

and products operators. will customers, deliver inventory and value our better Outlet better to margin addition In Grocery initial consistency for for these

being their and I systems to and challenging what our of enjoyed regional initiatives thank our determination to roadshow updated all operators May, you business in year grit, to on together and annual their operators would listened for like with been support we our We through say personally issues solutions. during has owner them a our where feedback.

are You you. and partners, I all appreciate amazing

Outlet to people team I'm to enable and this are entire their thank also amazing partners the day Grocery support and the Outlet would by which humbled our I of us IO and perseverance, inspired Grocery family. every customers. dedication part like that for

what Hunger turning our let campaign. most: lives matters the for call mission completed to just from over Independence We Lindsay, better. touching me of our with annual the finish Before

to need time critical local at most. it event, partner when the this our their IOs During year with food they of to communities nonprofits provide resources

supplier XX local benefiting on $X.X the a contribute partners we million with our this raised approximately organizations. events new Our year, and XXX collaborating share very food that over also record reached of and donating I'm meals million equivalent by proud to IOs.

million ability history confident I We $XX very our and are near- the our XX-year in over WOW! In potential. a equally of of that long-term over fundamentals our That's growth we've realize this business raised program. to proud remain closing, the and

Our be of continue the our and growth. proposition to drivers differentiated value model sales

a high with sales growth. history We specialty long unique line a discount of top consistently retailer are

communities new us space look of to aggressively forward in operating are as over and introducing expand. U.S., in We X,XXX we we of pursuing tremendous stores front our to the white the brand

would I like to it now And our to over financials. discuss Lindsay to turn

Thanks, RJ, afternoon, everyone. and good

Net $X.XX X.X% sales increased on and growth quarter XX.X% due increase store represents which comparable to the sales, second in a to XX% billion X-year store basis. a sales new during

Comp average transaction a X.X% by X.X% of was partially offset basket. decline in our growth

XXX net with UGO We ending during stores locations, quarter, new including opened the XX the acquisition.

with and mentioned, we RJ new schedule. As ahead track openings to of pleased the store stores, performance continue of remain

Gross Our residual came gross increased our X.X% transition, basis of XX basis expected. This in of XXX impact million. of points margin rate XX.X% expectations. which second quarter ahead points includes profit as approximately was from to systems $XXX.X

came $XXX.X interest million interest which a versus higher rates in million XX.X% $X.X $X.X Net of to This higher borrowings million by and the residual second increased year. the increased impact includes XX.X% driven to XXXX. prior net to expense quarter expected. as from commission expense systems-related SG&A support, compared

GAAP per Our $X.XX XX.X%. $XX during was quarter tax income effective was million share. net rate the GAAP quarter or second for the

million Adjusted EBITDA Adjusted EBITDA the points was and million XX or share. was income $XX.X our for sales, quarter of quarter, per ahead net our diluted $X.XX $XX.X X.X% the adjusted was of for basis margin expectations.

end to Turning was end the at at ended with sheet. $XX.X million. second Inventory debt balance of $XXX.X quarter million the net the of leverage of X.Xx. $XXX.X our the about million Total We of quarter the cash. with totaled quarter

million $XX $XX.XX. X.X million repurchased we stock, at quarter, an shares second of of average price totaling the During

to guidance. on Now

we year, full the comp of growth store For approximately now expect sales X.X%.

a sales XX the includes expect comp We to XX be United from quarter stores Outlet year, XX this In in the net billion well XX to We growth XXXX to XX. expect add approximately Grocery we Grocery new third to net of This to up new XX billion. expect continue X.X%. to total now stores. acquired total, XX newly Outlet to as $X.X as fiscal between $X.XX stores

approximately full gross we the to For year, XX.X%. fiscal expect margin continue of

of quarter third the for margin approximately gross expect XX.X%. We

adjusted expect to year, the to fiscal of we million. to For range million full EBITDA $XXX be continue in the $XXX

third of expect X.X%. We EBITDA approximately margin adjusted quarter

D&A expect on continue the we basis. year, For a to percentage the in mid-XXs grow to

expect is approximately to approximately We be million. $XX million. anticipated continue of expense $XX share-based to Net interest still compensation

now forecasting million, of share-based due down expect to are about approximately XXX.X to primarily tenant diluted We this average new rate We compensation a expense. nondeductible higher $XXX We due lower share from of reflecting CapEx, normalized shares million XXX XX% million, now XXXX. repurchases. store tax share growth year and from $XXX million, expect for up of now higher count approximately of both allowances, net outstanding from

of to diluted continue share. to $X.XX We per EPS full expect year $X.XX adjusted

to have In done to are growth. for to our well thank we positioned the that Outlet would support continuing all independent and strong, continue for as to want and systems closing, the and thank team big I basis IOs underlying A challenging our operators you mission reiterate our transition lives do to execute to of for year. customers on better. during and like touching remains also a Grocery for you business a long-term that well support daily I

now up open questions. the will to We Operator? your call

comes first with Krisztina question Deutsche [Operator Katai from Instructions] Bank. Our

saw issues see to wanted behind you I are to us. in systems about EPS upside ask the Great the the integration quarter. finally that

So investment in we ahead basis of XX margin we what XX.X% year, competitive might might much to that that second allowed follow-up. have the how be or a versus And then gross about the as you for should in the make that in think price? margin were And points GO think conservatism plan? reiterated seen quarter the about any how I have gross to environment of is anything better have

take Krisztina, Yes. this that. I can Lindsay. is

as and some we environment. the mentioned, bit play, at few that, have some upside quarter. one, we RJ EPS factors few definitely coming play so the strong price, on few during of first is to strong at a mentioned, a mentioned and as in, over-indexing RJ margins there, So strong things factors A little which margin a definitely a other lending

that some EPS. down through and then margin decent down. So flowed SG&A definitely well, to leverage as there different Healthy

the where upside quarter. in that EPS So was we the saw

the and full and our second XX.X% But comp. XX% we're reflect full for in year at at drive when guidance year gross for to be making look investments to you we're the guidance and guidance that XX.X% price of QX the half holding, then year holding the of traffic margin we'll in

this, expectations the with the comp had. of adjusted and So roughly that kind combined quarter the second EBITDA lower in offsets EPS we upside

reminder, et a through reinvesting in And value. as so IO allocating, find we margin ordering, buying, prioritize we improvements as cetera,

sort it XX.X% that the how tracks the through for of So to year.

can saw but came a quarter my Maybe strong then really softness transactions in just on. later you follow-up the note did And is second that you in you some bit talk some just trends you comp investments. set price relative GO implied and environment, a more potentially about how back-half more August positioned? July and early to is Again, in X.X% competitive that

about magnitude? think we should how Just the

to well. take as that happy Yes,

were but of at and May, with intra-quarterly April comps soften the we the So saw usually trends, don't end comment pleased quarter. we we on and

July as a looking just so we're impact. September And healthy and last against systems August, is on basis, the we're from we as really lapping and some when go-forward start the pretty year comping levels reminder, then

our baked into And all is our comp for and QX. guide so forecast that

TD with Chen comes question Oliver Cowen. next from Our

your quarter, also RJ do you commentary happen opportunistic regarding and promotions out points. might and Lauren And in the comments on gave will in How (sic) helpful XQ? in [ that comparisons the What on Lindsay And as you would the your softening ], three look? continue? XQ negative, the be trend for love thoughts about our that your your comp basket for? price, average what in will think as calls with being to just Is guidance as we line well of control that forecast. over-indexing what expected those

if Lastly, heard new challenging. you I it are still mentioned, systems correctly,

what risk you getting systems. You're mean factors you new acquainted to with add And the that will did What see unfolding? there?

for the question. question it, basket. I'll of Lindsay ask then to Oliver, your a take Sure. couple thanks address I'll about

on my I of just in We about more than anticipated. that the mentioned always I'll manage the three dynamic and, comp made challenging that with factors confluence have as In terms time shifts the internally was value and daily these what to comments of months. say, of a unique It period these in softness, happening think do balance was this to It's we basis. short margin. such over very the case externally few past a

healthy a on is count, XX%. the and of business at Important customer to XX% really which count customer comp, stack X% even you is X-year that so note X.X% more when basis, X-year look healthy:

health really feel the good underlying we about the of So business.

mentioned confident, making, customer We already really to to even return that also level as increase the are of and been the adjustments value levels we've excitement. in the deeper

June close to around. current turn promotional customer prices with notice July. levels this everyday May, negative from been healthy our of concerning comp overly about aggressive count. we to some lowering seen where promotional more are discount retailers and also activity Competitors to volume Overall, so customer have their great through We've rational. promotional back activity increased and excitement we they recently. offer were of an drive The the did though, to activity, to and to some ability nothing and value in now count into rest us They're promotions continue move year, then and forward level the continue as XXXX, of

as P&L to a certain the in support data, noted cases talked of on in any will the enhancements, fixes, with around will working in that challenges and growth we're looking impacts functionality operators. expect of and we We're have as We excited more enhancing for then manual why things additional recent begin this still the the And are quarter we to of to further we're out continue. speed, yes, others. as for introduce comments as roll This most work these realize enhance some benefits what past here platform new part as to negative them team to operating workarounds of well were don't about, some increasing these be go, the improve harder, challenging, we've part system back and impact. work that that new I those far areas initial system my underwriting As still many and capabilities. modern well. those does on bringing

on Lindsay, with And Oliver's basket. question the

Oliver, Yes. Lindsay. it's

So basket. about a talk you the can little to bit I

UPT strength X.X% the down, within lower pleased and both then basket, Ring So frequency due X.X%. units give but in just transactions, obviously, positive continued just year-over-year. that with up just was still not increased AUR of just trip was sequentially. to you flavor is And kind the and accelerated down our and year-over-year there. directly AUR and to that extra comparable UPT changing due assortment, are recall AUR to higher

follow-up. Last Okay.

is What And encouraging. there? seeing is levels growth? can underlying growth and what the or share any the for new also, are you're rationale regarding outlook productivity store store New on thinking store there new you raising details

The been We've dealt in really has that able opened on the caused with well. time slippage. to many get some stores issues Yes, team of the sure. we've been executing has address that and past

and seeing markets. results developing several those expectations all guidance mentioned, stores feeling opened for are with in good is as to over we're in both ramping we're this and opened our And new XX% increase forward, go with and, and that that able target. expectations line that's which the number over stores and past And we've infill XXXX the for expectations. years and getting Same that of year. So underwriting good this well opening, therefore, the

comes with Robby question Our Bank of next Ohmes from America.

comps and want and in there. the to follow guidance you on the just back for the half how acceleration I up RJ, get

more and impact more balance negative get plays how get to traffic, negative? like won't average or and the transaction will but on have that running you the promotional just traffic of you going in you're the transaction that that's as out drive ticket help acceleration already and So stronger comp? promotional understand drive Can a basket

one. Yes, sure. that I'll take

set just value those investing and excitement we're in to while also is price in we some and So sharpening targeted those that are underway maintaining the how into to positive delivering already treasure healthy values areas, prices best that the activities to highlight costs adjustments, we're the see started and making deliver We've We're to customers customers. to margins. leading hunt marketing activities indicators. negotiate leaning

these the have making confident will been impact for sales. we've I'm positive in and our As this the adjustments, stores

for the doing Reflected customer quarter. which, to through in into the and factored Lindsay in we're result mentioned, and carried course, work from we systems Also some to forward it the excitement our the how expectation September, our guidance, sales is of of and guidance a or implementation, the that anniversary sales. translate fourth standpoint will start the impacts from

delivering see impact will as the to then embedded in we year we together our those margins comps work with ongoing, healthy again, to of guidance so and impact year. for half we're the then that's what comps, anniversary-ing value And have in the this the second always positive maintaining

how RJ, managing can just more see some because of follow-up, through much us these Kind the remind out me, you, changes independently went the price, And so of competitors how pricing walk of that with? are of are over-indexing IOs IOs they higher responding Are centralized? price when target normal prices than then my you changes.

Right. it's Yes, both.

and their set locally. want items percentage in centrally, adjust a prices they'll and the stores. activities move and depending that quantities autonomy operators that to they situations, but small down the to on merchandised have we some how and of up competitive current prices then pricing Their that they've promote then pricing are ordered and pricing So it do at and local assortment, also time they've overall things

and that each to of changes blend and the gives making in operators those way, both store local pricing each in us think, market. I a most specific it's the So us sharpest,

comes from Our question with Tarlowe next Jefferies. Corey

that on you the up RJ, saw follow that well. to and in as just quarter-to-date trends the trends highlighted June you've

we that Or easiest these do you factors really three your to it? you're you the you it about And As seeing do traffic are see is Where in? dynamics? impacting more? ways think the what delta that you are the seeing think that basket outlined, address

hear It's Corey, bit from impact little from mix units. frequently. traffic then less and of been some customers both. be you. It's bit a from Nice to a shopping The of more traffic Yes. a us basket would

base, really them We well. of stores have many most broad are cross-shopping and customer a other as

So units we're in we And slightly less well, think softened seeing which the the customers last that traffic. be then per item versus some same time transaction dynamic for would as one year.

And so relative both year-over-year of them, result point slight moderation value as mentioned, tracking to on this of again year really a we're basis. the last as in a customer

delivering activities. And aware marketing then better our before, pricing sharpening what just of that's the activities efforts, and make that address and as and mentioned that. our buying are or really sharpening we opportunities, that through the customers excitement the normal this, to value pricing, then sure things how of negotiate I part done. always And are they It's even we've

manage period on to we've And in healthier how past, business that done more so consistent over we've day-to-day that able confident the long with to we're the a to able do that. returned margin therefore, of now time that a a we're levels, it basis,

model. a we and is nature quickly. nimble the Due we're buy flexible to product, dynamic very to able of business pivot This how

trends. the we'll customer resulting stores, with already we've show and behaviors even the case, value. results those see leading then out as so count to started sales And indicators of some better see mentioned, in and as those to I this customer flow And

and I And you've market color maybe in a with going to little That's just first you as brands follow-up private then you're Could of showcasing the planning be names these really you're time this is more a these think to sort the label, how told go lines. us provide around to bit on helpful. how stores.

national value I to nuances or that but product around how think terms your the customers of any so showcasing going be in partners. a have for in you're to than perhaps way XXX and way you the or same different they're brand units, communicating

Yes.

items on a items stores we have It's we you still. just part So the out been for just these and We, in for now. better the very to out. going working happening further the few of speak. right have as be initial excited back know, We're as past year this

strategy see now exciting groundwork lot operators So of of all the us, a to the and to hitting is of that results very stores included.

is brands the that mentioned. are food brand, X the initial GO have of as part Simply We introduction.

across be many categories, that will brand & have little that's So and later. household then then GO products our personal care. coming for Home Haven a And food prominent pet we bit

the You won't pet see in and phase-in of products accessories. food that for initial

these will in marketing. We items feature our prominently

do replacing also they the we in mentioned in that, represent, As items than past, I've them, for and these us and the items for healthier as many they're operators. will introduce everyday corresponding value better margins cases, and

will that private with label noticing that available be our merchandising them of win store of course. digital, operators of be values merchandising, they'll to in So it's through featuring the items make offering. other part a And that that great all them. are new a manage managing be from it. and around. We'll we'll messaging are marketing much in-store supporting activities, standpoint. then the The feature signage And so all customers They of and is sure our these

of Best luck.

you. Thank

Advisory Our next question with from comes Joe Feldman Group. Telsey

just wanted I there And better be learning, than app helpful. be, off the like what more to Can little color and start performing your are others a opinion? interacting would app. little a with why on are may customers like that you with which maybe how the in color and markets more share you're

Yes. Sure.

about they're It from that. quarter, using is compared Customers basket sales both X%, downloads. excited adoption a we've X% that increased again, a store. seen So the are to so of shopping XXX,XXX driver and At really, the over the really second adoption the of traffic builder. end it nice as

way bring to great access in inventory, to customers the inventory a stores So in. is real-time the

seeing using customers wouldn't shop So other them in are in it aisle down that then store, it And wouldn't maybe they have they're it seen and the we're categories they're in walked looking when or the as they're have the in an app. store. maybe seeing if app, but and they triggers the to the app at

about So love all aspects it. those

early are way quite front And are yet us. transactions able to Too which much early talk in seeing we point them customized than at is than is basket implemented, we're buying to what all what I a be those the Joe, they and they're to by still the buying. still, haven't on still based bit. to higher this And will and in this also big about from mentioned average then communicate this, in not the win opportunities a of too what be

So shopping for and more a contribute customers to, their of this bigger they are building our loyal still. and again, store the in more frequency basket trip increasing to look

said. So a lot of opportunity, as I

That's That's to good hear. great. really

gears stores? terms or which out Just on in couple a Obviously, real little topic, a change more of of seeing you good. bit side, to another these you accelerating what is share availability are days are more of the and the opportunistic, in stores can year seeing shift there this estate any market to seems availability cost? But you

maybe There's as Big a stores and Vegas a located. only number entirely. We market opportunities a benefit us, with consider the available, stores, that few are There a those that, downsized a Yes. is there of so lot Definitely well. where in a have of of there. estate Rite other There's of out of closing from or that. $X.XX is retailers for available. lot ended Las lot the up Aids closed lot are seeing real when you others Lots

geographic our for for those we're select, but They expansion through from we within, of so the that opening all we making also in, to support the and filter go availability a the looking those, So same sure infrastructure that love real the staying all estate strategy are standpoint, and disciplined there. have stores opportunities. we geographies is process the

a From been challenges is earlier getting a open. us point, standpoint, of construction those those well lot really, still that But to are my there. in team the have really with executing

operator recruiting stores on in what mindful count. of successfully parallel, expansion real be of as sure been and past make and that of we plans grows store the absolute as within that you've pipeline be ready and then are so to us for fits we're that got to open of together total with that year basis the in the of opening operators estate high-caliber resources And increases combination have geographic stores an this next but training XX% to available capacity adding will step-up a managing continued with ahead our

geography overall, over as but it. progressing we opportunity again, and to talk are now early The growth of well innings our activities And here working support But about teams a opportunity, we're the really the well. the XXX story, lot together. thousands for still stores are

Good great. quarter. That's with luck this

Joe. Thanks,

Our next Heinbockel question Partners. from John Guggenheim with comes

It's value the hunt, you right? just of it's guess, hunt that There's better RJ, time a on products of that there to that talk over-indexing just respond. much those Is a that to more if need treasure about second they'll a Or It's treasure you when day? with passing sharper through or for as consumer. I question, is benefit occurred. need no every price, the Then the it's on you're buy? at a not reinforce price, of items, got the period you've reinforce. not is such get short

saving the That's to basis, the absolute with right. value, offer XX% basket. on reinforcing still always great We're continue do value On customer. we customers an

or WOW! them stores We throughout items have that our many save XX% more.

the a we the items and, tweaks we just this which of over-indexing are track, and they items opportunistic in always short period number pretty adjusting over information just do. all the we of to unique And way more those price of making were here of in, was on We're more so come really value it's return managing frame getting back and for this we on a all as on basis, all happened time items that always data normally feel visibility, point, about and on seeing are, was at out. happened it daily So flowing good as we we've ways come and but that those been just with us. have, so still the a this in and more they there. through, it time The driving

in those and And operator they how product, they then all the everything our how get featured of merchandise. activities order does, marketing

organically. a it of lot So happens

also price items. targeted we that, addition on everyday investments In are making some to

reinforce see that happening they building great it's is already So are stores we've and inventory. the not those the in trips in sure and are a that into to marketing their we that all there and leaning make well those. make that they're and them drive implemented to just we're those leaning values communicate standpoint The example organically as where a the adjustments for but app these tweaks as our customers marketing basket. forward, sure that We're through go prominent others making vehicles from

look and slightly not be, implied a X-year would follow-up stack, slightly guide XQ The at your but if lot stronger fourth right, in the quarter, stronger. the right, you the XQ,

the a and chalk basically, significant the you're little that out assuming up you a bit, GO, consumer to to would not And price investments. underlying improvement engagement flesh with improvement, sort in slight of so that a

Right. Yes.

stack got very, performing the the there still, X healthy factored X-year at And the at have basis be a then implies that would year, lot you price of where making we've in investments So dynamic pretty But on these been we're you speaking, a again. looking you've well. as you generally dynamics very yes, look levels guidance stack, at that history. for consistent look of

we'll in how it's as the it being of all pay a where we to And competitive forward. then, when back of now, And attention that. course, mindful and factor might environment, is right environment react mentioned, looking really dynamic promotional was just change close XXXX, to in that right, I

changing standpoint we're trends, just the macroeconomic so reflecting but world the doing, trying from work that well. us, competitively in also but then as not a just overall, guidance And just to prudent around the current be

deliver good that through think be move got as solid I to so And we able year. end we've a here we'll the number to of the

to And Yes. a add John, that bit. just I'll on

for a further just bit little perspective. So

and modest now right Our a stack X-year on September in RJ dynamic going But in in July. just lot said, our there's of assumes August comps versus as guidance environment. obviously, deceleration the macro

our we the we September, saw deceleration comp a pricing, sharpening without on. transition have our systems a bit so little trend, to see when But definitely noise reminder, we expect just live. but of going improving And went just

some definitely month-to-month. in fluctuations there's So

from comes question Mark with Carden UBS. next Our

price So Coast hard? differing aggressively competition got and trends it another are how investing has stores. hitting You've Are your been balanced? in in your you're regions both Or curious seeing any some pretty price, if comp particularly pretty competitors the differences East seeing one any on so national comp, just West Coast geographically? you and regional

balanced. been it's differences. No No,

just the from Or in various much Great. Are customers into how of you pretty Okay. pressures end when is little your comp much the a seeing you then dig any also income across terms lower the quarter? And customer variation incremental your cohorts? are bit, seeing towards it of between board? you

segments. spend across consistent That's trends well the the still different segments, board. intend I'd mentioned customer then and other, satisfaction. of some our Majority things I more. and that that customer the consistent to I more call one across of nothing same Pretty customer to dynamics as the already No. versus out different customers mentioned shop say for across healthy. And it's

comes with Our next Bonadio question from Wells Fargo. Anthony

that of ultimately some initial units then that be gap close you productivity level thinking the with UGO. just ask are to performance about may stores? And how those your asset, you've the quickly wanted required? the Can you and just in talk had the now ability just I to those time about investment about of

do integration progress expectations. team well, running The team performing there. good a in there with nice with our the the business. partnership is with plans, We're UGO in continues job line to making

of some on planning starting for of some We'll and with the the now, here the the some done work do stores refreshing to work experience. product, verge both then starting right of opportunistic between mentioned, customer everyday. fixtures, in as here. fixtures, to opportunities and we're middle in other marketing near-term have excited that but the updated as for those of Some the so integration been months collaboration enhancements couple teams next We're nice the And actual of that. the We're of we've well.

remains plan same. term the Longer

more after, with so really but the be We business. until that's rebrand will year some going to pleased integrate eventually out, time won't the the fully next and years progress be the stores, and far. That

the thinking that the you're you're And there? then have to seeing expecting tough we deal guys just compares closeout pipeline. you a know speak trend quality, August, that and just about a just follow-up, flow compare in of right to as but now, I be can you ask magnitude I wanted about mentioned how to should how

are of see. of We availability closeout the everything good relationships Yes, see across we categories. only remains good. buy variety. strong. fraction product environment a still and that We It's buying Supplier healthy

We our always the partner continue in preferred to be is which objective. first call,

stores healthy do great forward, have go item at then suppliers product with the plenty them support to always growth. customers. definition, You, just course, to by variety. the some fluctuation are in We're the year-over-year to showing of good again, to category at out and of help an level, of job team standpoint a continues partnering on pass level. inventory and there savings sometimes a place degree still from But overall, And

comes Simeon from Our with Morgan Stanley. next question Gutman

so ask time. multipart, I in just it one do I'll

your was unrelated, whack? about just when margins about prices the And the saw of totally couple national, can first gross may quarter like share where back happen competitive what of call lost that and this second you to, for it, come have that thinking out pricing talked been know from where then part, quarters, The high one, categories too the was in this it regional, prices last we've having, on if were And is then temporarily? benefit I mentioned. any got there it's Can then that traction? particular the you

our categories some general in comp just more then that impact, so notable, geography of a across nothing results in and softening there. value was It pricing, or Simeon, by note there. we result competitive in the of The for on nothing saw

to Lindsay? margins, wanted you then talk about And

Yes.

Simeon, So question. for the thanks

just So the XX.X%. for at full on year margin, is guide the the

balance So right working margin between to comps. strike we're and the

our And achieve continue algorithm the to look XX.X%. at so healthy we to long-term margins of

and of pulling margin. visibility on We the of return haven't been we've adjustments some following impact one on That's as quantified making factor, levers. pricing strong definitely margin. the several RJ the the But mentioned,

is And manage can flexible the volume this. so to we our do model, pricing thing good and with

margins only not the healthy we're So term definitely we year then reflective that long although XX.X% achieving full the that next company, quarter, well. we higher feel as year for here for margin, some this and of is healthy have but of

with from question next comes Baker Michael D.A. Davidson. Our

get You win are war? then might history back in So competitors and room, your sure two not questions. again. or the One, elephant if competitors gotten to on you're price any this respond? I going you share, data you some see to but mean a have so sharper sharper guys times have is sharper but where do in in going you the I'm get pricing, this, your maybe

what the So stores any? past when what if of gotten the And already you've maybe in from $X.XX just question, both then gains, price. in you've not, wondering second only you've but seen sharper are going in benefits terms buying maybe a away, related, and seen share

of from values of about the and treasure Think that provide, that, comes a opportunistic. it lot we deep Yes. hunt the the most excitement, values

while And so it right, are part quantities. lasts. items important that, buy Turns special these out, in are an it of buys, and limited

than items, different everyday driving prices It's conventional, with the not conventional, static where us. the were down. case so that And it's very just

XX%, why many are we've XX%, Those excitement. the basket, it's XX%, we a of really over lot many, so things been this that drive then well, different one, in offering tremendous savings XX%, years, And successful ways. measure the on but

at this conventional and there's in store. we least because And price so day, pivot do it, the business speak, basis. so as don't as and give customers the items quickly about a every war, And into thinking arriving new to you're does respond well, on

dynamic a than you're different maybe So thinking it. about think just I

so continuing $X.XX, recently good We're opportunity nice stores, market. real estate us And Vegas out, build that entered the few as we mentioned, as to Las for a I there. then for

surplus in We They a inventory space. some surplus have opportunities. the seen buyer inventory of big were

the over seen having are operators directed And a maybe as We've in conversations. too, stores future been well were those us. proximity those that that's employees, level, to to of benefit some some So at then for store close $X.XX.

it. several there So of benefit we're areas that seeing from are

Our with next Craig-Hallum. question Jeremy comes Hamblin from

to positive of categories, if and maybe that and the in does think just slowdown ask price see and competing to see trends wanted of here as on some terms down to aggressive the impact some then bit food of players your you a long So material QX? seeing of softening traffic? to more mass larger how some significantly And In of a terms just on in I make traffic traffic, are related, and before just overall could trends gets it start environment it in have more still actions follow-up, start as clarify, terms the discretionary you compete? merchant in do with of inflation also challenging type a those environment, pricing in

are at promotional regular once, to magnitude I'll a still pricing. offering different place just on managing back few Still positive of than again, a will, you basis, was we're competitive of impact happening we've The inflation, on pricing confluence concerned. things previously, number, customer then everyday and softer here pricing the it. we a And if value. the so more count, it But seen We're responding not the at off great X%. coming to where and high a timing of say for and

regardless differently. or that. business of we'll to always us business, how is we based got grow that impacts as us not the as of Inflation, well. We've something improve deliver the and not great And overly have we deflationary economy to expand and believe the The value regardless regardless. and If concerns our a for grow doing disinflation. on environment, reach, we inflation we'll to continue continue and customer to move key it business our is experience

question-and-answer turn call over We the reached back I'd comments. like of management end the the session. for have to to now closing

Thanks, care. everyone, you soon. forward to with time for Take look again the and talking

conference. today's concludes This

time, this may and You participation. for disconnect at your your you lines we thank