SpartanNash Co (SPTN) 2024 Q2 法說會逐字稿

Welcome to the SpartanNash second-quarter 2024 earnings conference call. (Operator Instructions)

I would like to turn now the call over to Kayleigh Campbell, SpartanNash's Head of Investor Relations. Kayleigh?

Thank you and good morning. On the call today from the company are President and Chief Executive Officer, Tony Sarsam; and Executive Vice President and Chief Financial Officer, Jason Monaco. By now, everyone should have access to the earnings release, which was issued this morning at approximately 7:00 AM Eastern Time. For a copy of the earnings releases as well as the company's supplemental earnings presentation, please visit SpartanNash's website, spartannash.com/investors. This call is being recorded, and a replay will be available on the company's website.

Before we begin, the company would like to remind you that today's discussion will include a number of forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. If you will refer to SpartanNash's earnings release from this morning as well as the company's most recent SEC filings, you will see a discussion of factors that could cause the company's actual results to differ materially from these forward-looking statements.

Please remember that all forward-looking statements made today reflect our current expectations only, and SpartanNash [undergoes] no obligation to update or revise these forward-looking statements. The company will also make a number of references to non-GAAP financial measures. The company believes these measures provide investors with useful perspective on the underlying growth trends of the business and has included in the earnings release a full reconciliation of certain non-GAAP financial measures to the most comparable GAAP measures, which can be found on SpartanNash's website at spartannash.com/investors.

And now it is my pleasure to turn the call over to Tony.

Thank you, Kayleigh. And good morning, everyone. Glad to be here. I want to start today's call with a recent highlight from the year. Last month, we welcomed more than 1,500 suppliers and independent grocer customers at our annual Food Solutions Expo in Grand Rapids, Michigan. The event features suppliers and customers' awards ceremonies, retail discussion groups, and educational sessions. Of course, the food expo wouldn't be complete without a bunch of samples special deals and some live auctions.

Leaning into customer trends, our team introduced 400 new own brand products at the event. These compelling offers are value oriented and really appeal to consumers who are tightly managing their food budget. Our team also showcased 14 support services for independent grocers, including digital media, marketing, and technology.

Popular trends on the exhibit floor included dill-flavored products, ready-to-eat meal solutions, indulgent macaroni and cheese, grab-and-go fried sandwiches, and non-alcoholic beverages. After an incredible few days, we ended the expo with a donation of 30,000 meals to Feeding America here in West Michigan. All in all, it was a great event and brought together industry leaders who are passionate about elevating the grocery shopping experience. Thank you to all who attended, and a huge thank you to the associates and vendors whose hard work made this year's expo one of the best yet.

Before we jump into our recent results, I wanted to not just provide color on industry trends but also share what we are doing to win during challenging market dynamics. Food-at-home inflation and total US grocery sales have decelerated compared to 2023. The overall market growth was flat in Q2, and consumers have heightened their search for value.

According to our research, more than 50% of shoppers indicate they are seeking sales, and 21% are shopping multiple retailers in search of deals. Notably, 63% of lower-income households are extremely concerned about perceived price increases over last year. So those are the market dynamics we're facing. Although the headwinds are greater than the entire industry anticipated these last few years, SpartanNash has remained focused on our controllables.

Our transformational initiatives are delivering the benefits we expected ahead of schedule. These programs are helping offset the macro pressures, building a foundation for growth and creating long-term value. Specifically, we expect the larger investments we've made over the past two quarters to deliver $20 million in run rate benefits by the end of this year, with more flowing through in 2025.

Our merchandising transformation is helping us capture margin and create a platform for future growth. I'll now expand on three key programs within the merchandising transformation. The first program is enhanced category planning or ECP. We've been relentless in our efforts to help make grocery bills more affordable. One of several components of ECP leverages data from commodity markets and other industrial benchmarks to require justification for rising input costs. This cost policy continues to help our independent customers and retail stores remain price competitive.

The second program I want to touch on is our own brands. Shoppers continue to seek our private-label products, which deliver the value they're seeking without compromising quality. We are very pleased with the early results of our newest premium line, Finest Reserve. Finest Reserve has seen both dollar and unit penetration growth in every category. The ongoing success of our own brands gives us reason to believe that potential unit penetration will grow up to 300 basis points.

The third program I want to touch on in our merchandise and transformation is our customer value proposition or CVP. This store modernization program leverages the learnings from the success of our enhanced category planning, our remodeling program, and our recent retail acquisitions. CVP is differentiating us in competitive markets by blending innovation with the familiar neighborhood feel shoppers love about our stores. This transformation is informed by extensive shopper data and insights aimed at enhancing freshness, value, and convenience.

Along with the refresh decor and market style environment, the CVP pilot stores have expanded deli options with fresh grab-and-go meal solutions, $20 healthy and quick meal kits designed to feed a family of four, an open bakery that fills the store with aromas of fresh baked pastries along with artisan breads and desserts, market fresh buys at new lower prices with fresh-cut produce, a dedicated value wall showcasing market-destructive promotions, and improved competitive pricing based on analytics. In fact, the initial stores are lowering prices on more than 6,000 items. This provides more value that our shoppers are seeking today.

Although we are early in the process, we're excited about the initial results of the CVP project. Consistent with other remodeled stores, CVP is expected to deliver double-digit growth, but doing so at lower prices, more volume, and greater emphasis on fresh, which has a higher profit margin. Going forward, CVP will inform our retail renovation program, and we look forward to providing updates once we start a broader rollout.

To recap, we are focused on what we can control and not standing still in this environment. While the headwinds are greater than expected, our long-term strategic initiatives are helping us offset the challenging market conditions.

Okay, shifting gears to recap the second quarter. Our net sales decreased 3.5% to $2.23 billion. Our national accounts channel was the biggest driver of this decrease, which was largely impacted by Amazon. Conversely, the military channel has grown over the past 10 quarters when compared to prior year. This growth helped offset some of the pressure within the wholesale segment.

On the retail side, our comparable store sales were down 2.5%. Despite the macro pressures we face, we are pleased with the performance of our Michigan upmarket stores. In addition, the newly acquired Metcalfe business, which consists of premium banner high-volume stores, is expected to add $100 million in annual revenue.

As an added benefit, the Metcalfe stores were previously serviced by another distributor and are now serviced by SpartanNash. This successful acquisition gives us confidence that our M&A framework is working. And we are seeing a more active pipeline of inorganic opportunities in both our wholesale and retail segments.

Turning to profitability, our Q2 adjusted EBITDA decreased slightly from prior year to $64.5 million. We expect that we will capture the benefit from investments made in the first half of the year to support our transformational initiatives by the end of 2024. Notably, we grew adjusted EBITDA margin for the first half of the year, while others in the industry were maintaining or declining.

Before I turn the call over to Jason, I want to extend a heartfelt thanks to our associates. Their ingenuity and dedication are driving results in creating shareholder value. I want to thank them for their steadfast commitment to advancing our mission of delivering the ingredients for a better life. It is an honor to lead this talented team. Thank you all.

Now with that, I'll now turn the call over to Jason, who will walk through the quarterly financials in greater detail.

Thanks, Tony, and welcome to everyone joining us on today's call. Turning to our quarterly results, net sales in the quarter decreased 3.5% to $2.23 billion versus second-quarter 2023 sales of $2.31 billion. The decline versus the prior-year period was due to decreased unit volume in the wholesale and retail segments, which continue to reflect industry demand trends. Gross profit for the second quarter slightly increased to $353 million, or 15.8% of net sales, compared to $352 million, or 15.2% of net sales in the prior year's second quarter.

Our gross profit dollar increase was mostly offset by volume declines, while the 60-basis-point margin rate increase was driven by an accretive sales mix, a reduction in LIFO expense, and higher vendor funding. As a percent of sales, our reported operating expenses increased 96 basis points from the prior year. As I stated on our last call, the anticipated increase in SG&A expenses as a rate of sales was driven by the investments we made in the first half of the year. We expect returns from these investments to start by the end of this year.

Higher asset impairment charges and acquisition and integration expenses led to higher SG&A in the second quarter. These increases were, however, partially offset by benefits realized from both the merchandising transformation and go-to-market strategy, as well as lower incentive compensation. Interest expense increased $1.2 million compared to the prior-year quarter to $10.5 million.

Consolidated net earnings decreased by $8 million compared to the prior-year quarter to $11.5 million or $0.34 per diluted share compared to $0.56 a year ago. On an adjusted basis, net earnings decreased $2.5 million to $19.9 million or $0.59 per diluted share compared to $0.65 last year. Adjusted EBITDA decreased $1.6 million compared to the prior-year quarter to $64.5 million. Our net margin decreased slightly in the first six months. However, as Tony mentioned earlier, we grew adjusted EBITDA margin in the first half of the year.

Now turning to our segments, compared to the prior-year quarter, net sales and wholesale decreased $78.7 million or 4.8%, primarily due to reduced volumes in the national accounts customer channel. Wholesale adjusted EBITDA was $41 million, slightly ahead of last year's $40.7 million. The improved results were driven by higher gross profit rate, benefits from the merchandising transformation initiative, and savings from changes in our go-to-market strategy, which more than offset the sales declines.

Full-sale reported second-quarter operating earnings were $22.1 million, compared to $21.5 million in the prior year's second quarter, which, in addition to the drivers mentioned earlier, also benefited from lower LIFO expense of $2.4 million. Now moving to the retail segment, sales slightly decreased to $676 million for the quarter compared to $679 million in the second quarter of 2023. Our comparable store sales declined 2.5% for the second quarter.

Incremental sales from our most recent retail acquisition, Metcalfe's, offset lower consumer demand trends in the rest of the retail business. In addition, our fuel sales were down $2.9 million or 6% compared to the prior-year quarter. Retail adjusted EBITDA was $23.5 million compared to $25.4 million in the prior year's quarter. The decrease was due to lower volume and higher store wage rates, partially offset by a higher gross profit rate. Retail operating earnings of $4.1 million compared to $14.2 million in the second quarter of 2023.

Turning to our balance sheet, we are very pleased with the results this quarter. Our leverage ratio of net long-term debt to adjusted EBITDA improved sequentially in the second quarter to 2.2x, despite acquiring Metcalfe's this quarter. In the first half of the year, we generated $132.1 million of cash from operating activities, an increase of more than 160% compared to the same period last year.

In the second quarter, cash from operating activities was $95.6 million, driven by continued focus on delivering strong cash flow. The increase was due primarily to ongoing working capital management initiatives. Our liquidity at the end of the second quarter is about $500 million, giving us capacity to fund our strategic plan.

As reported in our earnings release, we reaffirmed our full-year guidance based on our operating performance to date and the ongoing benefits we expect to realize from our transformational initiatives, partially offset by ongoing industry trends. Turning to the guidance ranges, as a reminder, we still expect sales to be $9.5 billion to $9.7 billion, adjusted EBITDA to be $255 million to $270 million, and adjusted EPS to be $1.85 to $2.10 per share.

And with that, I'd like to turn the call back over to Tony.

Thank you, Jason. Looking ahead, we are excited to continue our tradition of recognizing front-line hourly associates at our upcoming Circle of Excellence celebration. This year, we received hundreds of nominations. After much deliberation, we selected 50 winners deserving this prestigious award. These associates stood out for living our core behaviors, driving results, and contributing to the success of our long-term strategic plan. Congratulations to all the winners.

Before we close, I'd like to take a moment and welcome our newest Independent Board Member, Dorlisa Flur. Dorlisa brings extensive experience in grocery distribution, retail, warehousing, and logistics. We look forward to working with you, Dorlisa.

With that, I'd like to turn the call back over to the operator and open it up for your questions.

(Operator Instructions) Alex Slagle, Jefferies.

Thanks. Good morning. I want to ask on the customer value proposition pilot in retail segment. Just maybe a little more color just when that was rolled out to the pilot where and just initial plans around timing, broaden that out, and if there's an opportunity to roll that out to operate wholesale as well?

Great question. So we rolled out just really early in the pilot. It's been less than a month with our first store. Our second store will be coming online in about a month. So we'll have two of them running side by side, piloting the ideas that I mentioned earlier around focus; on fresh, convenience, and value; and how that works for the new shopper. And we are excited, very early returns. But so far, it's been well received in the community.

The sales and the mix are working approximately as we had hoped. So that will be coming as we learn more about that. We'll be certainly rolling that out to more stores and more aggressively in 2025. And we believe that these concepts are absolutely applicable in the wholesale business. We think the -- that what we learned -- this has been a long-term practice of ours. What we learn in our retail stores, we share directly with our customers, and we think it's got a great many of learnings from this CVP process. So I think all the things will work together.

I want to add just how important it is also, just another note, the shopper is always changing. That's why things like the CVP are so important because we want to learn about what are the shoppers looking for today, what are they likely to be looking for in that shopping experience in the future. You have to continue to sharpen that saw and understand your customers. And so we're really proud of what we're doing right now in the CVP, and we think it's going to have a great future.

Great. And on your own brand penetration, if you could give a little more color on that and the progress that you gave some thoughts on. I guess it was the Finest Reserve -- or I'm not sure if that was Finest Reserve overall. Private label and the opportunity to expand that penetration further, maybe a little more color on that.

Yes, so the -- overall, our performance on private -- on own brands was great and Finest Reserve was a big part of that. I would link this back to what we just talked about on the CVP. This is learning about what the shopper -- what is important to the shopper. So what's important broadly is around fresh, convenient value -- convenience and value. And I would lump together also -- it's called indulgence. They're looking for more indulgent experiences. And so that links directly up with our entire portfolio of what we offer with our own brands, particularly with the work on our family brand.

So we have core items that provide great quality products at a more affordable price. That's kind of the value piece to that. And we're exploring ways to offer greater indulgence and really sort of a high end of that expression with the Finest Reserve. So we rolled that out in a number of categories. And so far, everywhere we've taken the Finest Reserve idea is actually performing quite well and is growing within that category.

So we think this is actually just another representation where the shopper's headed in terms of what they want. They want aggressive values on those things. They're kind of everyday items. They're looking for indulgence. And if we can offer indulgence at a better price, then we think we win overall. So that's sort of the story and it's been working.

All right. Thank you.

Kelly Bania, BMO Capital.

Hi, good morning. This is Ben Wood on for Kelly. Thank you for taking our questions. And thanks for the additional color on the macro. We were just hoping first you could walk us through the cadence within the quarter and maybe quarter to date from a sales volume, inflation, and promotional perspective.

Hey, Ben. This is Jason. Good morning, and thanks for joining. Kind of walking through the various elements of the cadence, our promotional intensity was relatively stable throughout the quarter. The revenue profile was outside of the ups and downs around holidays, what was pretty stable. I think the only thing to point out, perhaps, is we had the tail end of the EBT or the SNAP benefits that were fading away in the early part of the quarter.

And that was a drag on comps early during the quarter, but it's largely flatlined by the end of the quarter. Otherwise, nothing of a particular note with respect to performance in the quarter, other than the bottom-line results and the performance of the promotions as we deployed them.

Thank you. That's helpful. And then with respect to the promotional environment, are you guys seeing the same uptick in volumes you would have expected given the level of promotions that -- where we are? And do you feel the vendors are providing the right types of promotions needed to kind of drive upticks in volumes?

Our promo investments, both from the vendor community and to an extent, as we've thought about promotions that we fund ourselves, that we'd expect will deliver long-term gains. The promotions themselves are delivering effectively. We're kind of back to where we were pre-COVID with respect to promotional rates around about that level. We've been running a couple of percentage points higher in promo rate than we did last year. So kind of getting to that level of pre-COVID.

Our performance in our ads -- and we continue to refine this as part of our merchandising transformation and our retail execution. Our performance in our ads has been quite good with better performance than we've seen over the last couple of years. And we're getting a nice return on those promo investments. That being said, the consumer remains a challenge in the space, and we want to make sure that we capture those consumers and drive that traffic into our stores. And that remains a primary focus of our work on the promotional side.

And just one more, if I may, here. As I'm looking at your sales guidance, it seems like second-half sales growth accelerates. It's implied to accelerate significantly towards kind of the flattish range, maybe from the down low to mid single that we tracked in the first half. Can you just break down the drivers of that? I know a component must be the Amazon headwinds lapping, but what are you guys expecting from a volume uptick from inflation contribution to that as well.

Sure. Absolutely. And we didn't talk inflation earlier, so apologies if I missed that one. Inflation has continued to track about as we expected. It's been a kind of a slow step down throughout the quarter. When you think about inflation generally, it started around 2% and it's been tracking slowly down into the kind of mid -- kind of 1.5% to 1.75% range. in the business.

So when you think about the progression during the quarter, I know you asked about that earlier, it's a slight downward trend. But given the kind of the max and min there, it's not a whole lot of impact on total revenues. Going into the back half of the year, we expect inflation to continue to be relatively modest through the end of the year.

We expect our national accounts business driven by that Amazon business to be continued to show declines, but to flatten out a bit. as we're lapping some of the larger steps down in demand. On the flip side, we expect our military business to continue to grow. As Tony highlighted, we've got more than 10 quarters in a row of growth in that business.

That's great. Thank you very much.

Scott Mushkin, R5 Capital.

Hey, guys. Thanks for taking my questions. So I guess I want to go back to the revenue growth line and just kind of explore maybe not this quarter, next quarter, but just generally speaking, through main and environment that's quite tough, [keeping that line] going, whether it be retail or wholesale. Does it have to come through acquisitions, or is there -- I know you talked about some experimentation with what you're doing at the store basis, but is there a way to get back to maybe taking a little share?

Yes, great question. So I think the answer is your question is yes, we have to do both. And I think we put all of our hope into M&A. That's obviously a well trodden path that hasn't always worked out for folks. And at the same time, we're in a relatively low growth industry. And taking shares is going to be critically important, but it won't be the whole solution to how we want our business to grow. So we look pretty aggressively at both.

CVP is all about growing share. It's all about having a different identity for our stores and one that is more attractive to shoppers and how the formulation of these new shoppers are bringing into our stores and making them more loyal shoppers. And that's how you get share overall we have, and we had nice run of some share gains last couple years up until the beginning this year. And we think we can get back in that with these new ideas. And then M&A will also play a prominent part in how we think about growth as well. So I think both those things have to play together.

Yes, Scott. Building on that, I think I'd be remiss if I didn't say that the long-term strategy here has been to focus on building out our margin-enhancing programs, reinforcing the base, and strengthening this business, and then leveraging that as a foundation for growth. And you've heard Tony talk a couple of times already today about the CVP or the value proposition.

We're piloting it. We expect to learn from what works and what doesn't. And we expect to deploy those learnings going forward, but we had to get the base of the business right first so that we had a sustainable investable business, which we do now. And we're on a terrific trajectory. Our adjusted EBITDA margin in the quarter is 2.9%. We've seen a significant lift in that since the transformation began a few years ago from the kind of high ones, low twos, now up to the mid to high twos. And we're seeing our work pay off, but it's really the foundation for growth going forward.

That's great. That's good color. If I could follow up just a little bit, obviously, we heard from Walmart today, gaining a lot of share. But it seems to me if you look at your base of business, maybe outside of Amazon, there are opportunities maybe in the dollar store space where you've got somebody opening up more and more stores that include not just produce but meat. I mean, how do you attack those types of opportunities on the wholesale side to make sure -- it's just not about retail, but maybe grow that business too outside of military.

Well, I mentioned earlier that we think the work we're doing with this overall view of what the new shoppers are evolving to is something that we want to port into the wholesale. So I think about our independent grocers. We want to make sure we provide the insights and the services that allow them to win in the same way that we believe we'll be winning share in our retail stores. So that's a piece for that group, and that group represents the lion's share of our wholesale business.

So that's sort of the headline there, and it's the core of our business. We believe that's how you get back. But it has to come from all those things. We have to get -- you have to have the right offering for freshness, you have the right convenient offering overall, and then the value has to work. So all those things have to work in concert.

And again, I think we port the CVP things, ideas over to our independent grocers. Their communities will differ. They have different types of banners that are serving communities from core banners at more upscale customers. But as they find their way and find that right mix, I think that's how you get at it.

And the value pieces, there's no small numbers. You heard earlier, we're talking about taking a significant number of items down in value that we think will compete appropriately when married with the things that we can do better than Walmart and better than some of those deep discounts.

We can do better. We do better on the service. We do better on -- we believe we can do better on freshness. We can do better on the overall quality experience in our stores, and we need to be price competitive. And that's why those things have to work in concert.

And Scott, I wouldn't overlook the parcel business as well. We've got a terrific parcel business, more than $1 billion in revenue in there, a capability that's unique and provides a nationwide network access. We see real growth opportunities there. And we're seeing some early green shoots with our national account customers in new product category. So to date, we're pleased with where we are but also excited about what's in front of us as another growth vector.

Perfect, guys. Thanks for all the color.

(Operator Instructions) Andrew Wolf, C.L. King.

Hi, good morning. Thank you. I just wanted to ask on the wholesale sales dollar growth slowing sequentially. Within national retailers, would you include dollar stores? I think other distributors have also, well, have said that dollar store sales have -- also sluggish. Or would you say it's all on the Amazon side? Or most of it on the Amazon side?

Yes, Andrew. I'd say it's largely driven by Amazon.

And within -- I mean, you said within that segment, military is staying strong. I mean, independents were -- sales were down last quarter. Were they down similarly this quarter when your Q comes out, or do they also sort of have a sequential slowing?

Yes, the way I think about the independent business is that it oftentimes looks pretty similar to our own retail business. So on a like-for-like basis, we saw similar performance. Obviously, there's no comp measure in that independent business, but the underlying performance has been relatively similar. We think that our retail solutions are on the leading edge of what we can do and how we can deploy it.

And so there's oftentimes a little bit of a lag as we deploy those into our independent customers. So we want to make sure that we're sharing learnings on our retail side with our independent customers. And of course, events like the expo are opportunities for us to learn from our independents and see what's working well for them and to deploy it back into our own retail channels. So broadly, similar trends to what we had in our own retail business, but there are going to be some pluses and minuses that are outside of the comp as well.

Sure. I wanted to ask about the value part, really, on the 6,000, the lower pricing, and grocery products. Are there any areas or things that you could mention that are specific, whether it's center store versus perimeter or certain categories where you got to get -- you want to be more competitive, or is it more of a generalized thing?

And lastly, how do you make your -- what kind of process do you have to -- and strategically, as you're looking at elasticity expectations to kind of -- what is the strategy at this juncture? Is it to hold share or gain share? I mean, given the dynamics of the market, so that's sort of the question. Where are you focusing product wise, and what are you looking for out of elasticity?

To the end of your question about the hold share, we believe this will turn into a share gain proposition for us. So we're looking -- we're absolutely looking to gain share with this. And there's a mix piece here that I also mentioned is that I talked about fresh and convenient.

And so as you think about that whole shopping experience, we believe that we will get -- we have better offerings in fresh. We're bringing a lot of new ideas into our bakeries and our delis. And those ideas are right for the shopper today, and that's what they're looking for. And those ideas have better margins.

So as we think about the -- how this thing works overall, we're going to have -- we'll have a better offering in those -- in that perimeter in the fresh offerings. Those items, then the mix -- there's a mix shift there. We shift at a higher margin. That actually helps fund some of the better pricing we can do in the center of the store.

And so the center store cuts our -- the number of SKUs are pretty significant. And we'll look for -- as always, we're going to look for things that make more -- resonate more with people or more important items to make sure those prices are right, first and foremost. So that's sort of a high-level view of how we think about that pricing.

Okay, that's really helpful. Thanks. And just the last thing, Tony, I guess, because you mentioned the M&A opportunity might be a little better. Do you think the quality of what you might be seeing or going to see is better? Or is it sort of folks in this environment who are just hoping somebody might come along and help them out, either with their bank situation or give them some equity?

I'm actually really optimistic about the M&A prospects in the future. I think it's been a little sluggish here in terms of opportunities last year, plus for reasons that everybody's quite familiar with in terms of the capital markets. But I think we're going to see more.

We are seeing more right now. We're seeing more ideas out there. And I think we'll have some great options. I think there's going to be a number of ways that we can pivot to both change the physics of our business and then make it strong in the places where we can then leverage greater scale. So we're looking at a lot of different types of opportunities and I'm bullish.

That's great to hear. Is there any more of a feeling that could come on the wholesale versus retail, or any preference for you guys?

Well, I had a question recently about, do I think the mix of wholesale and retail will change. And the answer is of course. So we're going to do -- we're looking for opportunities in both spaces. And so -- I mean, how the mix change is a matter of the absolute fit of those opportunities as they come about. So we're looking at whatever again makes this company great, makes it stronger, and allows us to grow and prosper in the future. I think there's going to be opportunities, both in wholesale and in retail. And so we're open to both. But again, it's about finding that right fit for our company.

Okay. That's it for me. Thank you.

Scott Mushkin, R5 Capital.

Hey guys. I just want to follow up on one thing I was asking and also something Andrew -- Andy Wolf went on, on the dollar store channel. I asked it already, but I wasn't sure if it got through with the length of the question. It's basically the opportunity with that channel. I mean, obviously, you guys have been playing in that channel for a while, but some of that business has gone away as it's been internalized.

I guess what I'm wondering is, is there an opportunity the other way, given the way they're pushing their businesses to maybe gain some share back, particularly in the fresh categories here from them? (Multiple speakers)

Yes, I think what you said is precisely correct. And we are -- we're growing right now with our dollar channel for us. So we are seeing growth there. And I think it's coming about because as they think about their model and the types of things they need to offer to their shoppers, we are well positioned to help support that growth. So we also remain bullish on the dollar channel.

Thanks for the clarification, guys.

Thanks, Scott.

There are no other questions at this time. I will now turn the call back over to Tony Sarsam for closing remarks.

All right, well, I want to thank everybody for all your participation on today's call. A lot of great questions, so we certainly appreciate your interest in SpartanNash. And with that, from our family to yours, we'd like to wish you all a very pleasant good day

This concludes today's conference call. Thank you for attending.