Good day, everyone, and welcome to today's Whole Foods Third Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during a Q&A session. Please note this call is being recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Cindy McCann, Vice President of Investor Relations. Please go ahead.

Good afternoon and thank you for joining us. On today's call are John Mackey and Walter Robb, Co-Chief Executive Officers; A.C. Gallo, President; Glenda Flanagan, Executive Vice President and Chief Financial Officer; Jim Sud, Executive Vice President of Growth and Development; David Lannon and Ken Meyer, Executive Vice Presidents of Operations; and Jason Buechel, Executive Vice President and Chief Information Officer. As a reminder, all forward-looking statements on this call are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions discussed today. This may be due to a variety of factors including the risks outlined in our company's most recently filed Form 10-K. In addition, our remarks today include references to non-GAAP measures. For a reconciliation of our non-GAAP measures to the GAAP figures, please see the tables in our earnings release. Please note our press release and scripted remarks are available on our website. I will now turn the call over to Walter Robb. Walter Robb - Co-Chief Executive Officer & Director: Thanks, Cindy. Good afternoon, everybody. In the third quarter, we delivered record sales of $8.7 billion (sic) [$3.7 billion] (1:45). We produced $0.37 in diluted earnings per share, $189 million of operating cash flow, 8.8% EBITDA margin, and 13% adjusted return on invested capital. In keeping with our capital allocation strategy, we returned $239 million to our shareholders through dividends and share repurchases, ending the quarter with $1.1 billion in available capital. We opened 12 new stores, including our first 365 by Whole Foods Market. As we discussed last quarter, we expanded our produce price investments and launched weekly deep discount promotions in several categories. We supported our efforts with an enhanced ad campaign, which in addition to produce, featured weekly meat, seafood and prepared foods offers and…

Our first question comes from Edward Kelly with Credit Suisse. Please go ahead.

Operator, we could not hear that. Walter Robb - Co-Chief Executive Officer & Director: We have a little bit of a...

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Yes, we can hear you. Walter Robb - Co-Chief Executive Officer & Director: Now we can hear you now. Yeah, we weren't able to hear your statement though...

I'm so sorry. And our first question comes from Edward Kelly with Credit Suisse. Please go ahead. Your line is open. Edward J. Kelly - Credit Suisse Securities (USA) LLC (Broker): Yeah. Hi, guys. Good afternoon. Walter Robb - Co-Chief Executive Officer & Director: Good afternoon. Edward J. Kelly - Credit Suisse Securities (USA) LLC (Broker): Maybe just to start with the comps? Could you talk a little bit about cadences and what you saw throughout the quarter? I know you lapped the New York quality issues towards the end, but also there were some negative FDA headlines. And then, as we think about the quarter to-date, was there any noise within the numbers related to calendar? I know some investors have been talking about July 4 as some type of shift, although I'm not really sure how this impacted the results. So, any color there would be helpful. Walter Robb - Co-Chief Executive Officer & Director: Yeah. Great. Good questions. Thank you. There's really nothing from the FDA that I think has been successfully resolved or on its way to being successfully resolved. I think there is some noise around the July 4, just because there are some anecdotal thoughts about how folks are spending their time this summer. Whether it's happening a little earlier or later, it's hard to read through those numbers, but I think really the takeaways. Yes, we saw just a little bit of incremental improvement moving through these past three weeks. And Glenda, do you want to add to that? Glenda Jane Flanagan - Chief Financial Officer & Executive Vice President: No, Walter, that's pretty much it. The comps for the quarter as a whole were pretty stable from start to finish. We did see a little improvement as you said in the last 10 days. And then no significant changes into the – what we've seen in Q4 so far. Edward J. Kelly - Credit Suisse Securities (USA) LLC (Broker): Okay. And then just a quick follow-up here, as we think about 365. I mean, obviously the stores have gotten a lot of positive press, but if you take a step back and highlight some of the things that you've learned so far from the concept? What can be applied to the core, could you maybe elaborate that on a bit? Walter Robb - Co-Chief Executive Officer & Director: I love that question. And we'd be happy to do that. And Ken and David are going to roll with it.

This is David. Probably the first thing I would say is customers have really accepted kind of this new design. It's a fresh look. It's a fresh feel. They're kind of accepting it as a brand new brand. And just lots of kind of – even though it's a value brand, it's still a really fun place to shop. And I think in addition to that, we're finding that customers are readily accepting items that are full service at Whole Foods in the self-service environment at much lower prices in the 365. So, we're seeing our meat and seafood percentage of sales being very similar to what they are at Whole Foods even though they're 100% self-service. Ken?

And also, one of the big things is the way we set up the team structure there, we've learned a lot from that in terms of creating the leadership and the way the team members operate. And that's in the stores. It's significantly informing us on how we want to evolve Whole Foods. Also the way in which they're ordering. We're using the technology to help us order, actually, almost to the point where they're – the technology is ordering for the store, which is a huge advancement for us. Jason, do you want to add anything? Jason J. Buechel - Chief Information Officer & Executive VP: Yeah, I mean, the other aspects, we've got a lot of engaging technology for our customers. The digital experience. We've been able to test out a number of concepts, one of them that particularly of interest is a partnership we have with the company called Sage, which gives nutritional transparency for items that we're selling in the store, and we're looking forward to take many of these digital experiences that we've been working on and bring them back to Whole Foods as well.

And with just the two stores, every 365 will open with our new loyalty card program, Gimme 10, which is 10% off key items at the 365 stores. And in just six weeks, we've had over 16,000 sign-ups. Walter Robb - Co-Chief Executive Officer & Director: I think having the – this is Walter again – having the deadline of having that store open really allow us to push to get that rewards program up and going, and then we are able to pivot all those learnings into the broader affinity program that we're launching today in Dallas. So, I just think that what I've seen is the learnings that have come from this store have really – are rapidly moving through the rest of the company. And this team here has gone through the entire development pipeline as we mentioned in the script, and looked for opportunities to learn and apply in every single situation in a very vigorous manner. So, a lot of excitement about what we've learned through launching this format. Thanks for this question. Edward J. Kelly - Credit Suisse Securities (USA) LLC (Broker): Thank you.

Thank you. We'll go next to Vincent Sinisi with Morgan Stanley. Please go ahead. Your line is open. Vincent J. Sinisi - Morgan Stanley & Co. LLC: Hey, great. Good afternoon, guys. Thanks very much for taking my question. One question, two fast parts on 365. In terms of, Walter, I know you mentioned that you've already had a bit of a redesign, if you could elaborate on that? And the second part is, I know granted it's still early, only a couple months after the first store opening. But anything that you can see even qualitatively in terms of your closest core stores in that area if trends in either direction have changed? Walter Robb - Co-Chief Executive Officer & Director: Well, I'll answer the second part and then David and Ken or others can pick up the first part. But essentially, we are tracking really closely the impact – we're doing several experiments in the two different markets to sort of understand that. And we've got a pretty good handle on that. But it's too early for us to share data on what that looks like. I will say broadly that at least my view is that we're creating a new customer here. We're attracting a new customer. We are broadening the import and the effective Whole Foods Market in the marketplace through these stores. We're reaching customers that we historically have not reached. That's clearly what the data shows. And so David and Ken, over to you. Do you want to answer the first question?

Yeah, I mean – we're seeing the first three stores as tests and experiments. So, we're kind of adjusting all the time, but the big one was that we were busier than we thought. So, sort of like we had capacity issues with getting customers through our register systems. And also the big factor is that the baskets are much bigger. So, the kind of smaller, teller-style registers that we were using were not effective for the size of the baskets we were getting. So, we've adjusted the design for Lake Oswego. We're going back and adjusting for Silver Lake and then all the future designs. So, the great thing is with these first three stores, we are testing out a few product variations, a few layout variances, and with the idea being by the time we get to store four in Ohio, that we'll be kind of completely dialed in.

And one of the bigger evolutions too is our Friends of component in the Portland stores included into the overall design versus it being a separate sort of experience. Versus in Silver Lake, it was by CHLOE, which is kind of off to the side, whereas now Next Level Burger is right within the concept of the store, which is a great design, too. And we see that whole approach of using the Friends of concept into Whole Foods. We really think that that's going to be a huge differentiator for us as we grow and evolve that into our Whole Foods model.

Yeah. Friends of 365 and Whole Foods is a great way to introduce young entrepreneurs like CHLOE with Next Level Burger. Sorry, Next Level Burger and CHLOE. And also has the big side – potential benefit or actual benefit of reducing our labor costs in our existing stores. Walter Robb - Co-Chief Executive Officer & Director: John, do you want to add something?

Yeah, thanks Walter. I think we'll have a lot more to say about 365 when we get into our Q4 call in November. We're very happy with the initial start of the first couple of stores. We're very happy with the way it came out. We think we've created a very successful new business model, which we're going to expand rapidly. And we'll have more information about that next quarter. One thing relevant is we're opening our third 365 store in Seattle area, in Belleview in September. And that's a very interesting opening for us, because we don't think the cannibalization from 365 to Whole Foods Market is particularly great. Because as Walter indicated, we think we're getting a new customer in there. Belleview will be a good test, because we're going up against one of our flagship stores there. And where, in both, our Lake Oswego in Portland and our Silver Lake store in L.A. area, the Whole Foods Market stores are not particularly close to it. So, Belleview's very close. So, that's going to be very interesting. We'll have more information when we do our Q4 report of what kind of cannibalization impact this is going to have. So, we're very excited about that. We're very excited about 365 and we look forward to better informing you as time goes on. Walter Robb - Co-Chief Executive Officer & Director: Yeah. And by the way, just a final punctuation on that is again once affinity is launched and we're actually tracking individual customers, what'll be very interesting for us to see – we have theories now, but we'll be able to see what individual customers are doing. We think they'll sometimes use the 365, sometimes they use the Whole Foods Market. And there may be distinct groups, and I think we'll be able to answer these questions in a relatively short period of time very, very clearly. But net-net, it looks like a) we've created a broader market for our company for our products, our standards, our experiences. That's what the information suggests. But as John mentioned, we'll be back with a lot more specifics around that in its future in November when we're back for the Q. So, thanks for the question. Vincent J. Sinisi - Morgan Stanley & Co. LLC: Very helpful color. Thanks guys. Good luck. Walter Robb - Co-Chief Executive Officer & Director: Thank you, Vinnie.

Thank you. We'll go next to Rupesh Parikh with Oppenheimer. Please go ahead. Rupesh Parikh - Oppenheimer & Co., Inc. (Broker): Thanks for taking my question. So, I guess the first area, I wanted to start with is your expenses. We saw again another strong quarter of expense control. And if my math is right, excluding D&A, I think your expenses are close to flat or up maybe 1% year-to-date even with about 7% square footage growth. And I know you're not giving guidance today, but as we look out to next year, is there any clarity you can help us provide in terms of, of the $300 million in savings, whether more of that hits this year or whether we should see more benefits in 2017? Glenda Jane Flanagan - Chief Financial Officer & Executive Vice President: Hi, Rupesh. This is Glenda. We certainly wanted to reiterate in our remarks today that our $300 million target remains intact, but we have never put a specific timeline on that. We have made measurable progress on it in 2016 with the large restructuring that we did at the beginning of the year. And with other initiatives that are ongoing at Whole Foods Market. So, we feel good about that. Obviously, it would be a lot easier for us to get there if we had higher sales and we didn't have this healthcare hurdle to overcome. But, we do have a lot underway, both in the way we're doing word processes at Whole Foods, with the way technology tools are being enhanced to help us reduce labor. For example, auto-replenishment is going to be a big one when we get to that, because we have a lot of people in the stores who are buyers and we have no buyers in the 365 stores. All the inventory is automatically ordered. So, that's a big one that's going to happen for us at some point. Walter Robb - Co-Chief Executive Officer & Director: Just the technology also enhances the customer experience. That's the other beautiful thing. It's a two for one deal. When you make these investments you're going to create something that the customers really enjoy experiencing. So, yeah.

This is David, I also say we really want to appreciate all of our team members in our regional presence for the real hard work that they're doing on this restructuring. And they realize the competitive nature of what's happening and the need for us to reduce expenses. And they're all collaborating and working really hard to do it. And then all of our regional presidents have gone and seen the 365 stores and are kind of electrified by some of the labor savings and some of the structural changes that we've done there. And they're already starting to go back and figure out ways to put some of those pieces in place at the Whole Foods Market stores. Walter Robb - Co-Chief Executive Officer & Director: I'd say we just have so many things we're working on to really create this transformation of the company. And appreciate them for being able to help us work through so many things at the same time making our way forward. So, thank you for the question. Rupesh Parikh - Oppenheimer & Co., Inc. (Broker): Thank you.

Thank you. We'll go next to Shane Higgins with Deutsche Bank. Please go ahead.

Yeah. Good afternoon. Thanks for taking the questions. Walter, you mentioned the traffic trends in produce were actually improving a bit. Could you just elaborate on that a little bit? And just give some context around where your price investments have been focused and the kind of response that you've seen. Walter Robb - Co-Chief Executive Officer & Director: I'll just say quickly and then A.C. is going to give you the substance of it. Basically, yeah, that's right. We've seen a positive variance to store traffic there. I think that's directly attributed the results we're doing in produce. A.C., will give you the details. A.C. Gallo - President & Chief Operating Officer: Hi. We've made ongoing and significant investments in produce this year, and kind of on a region-by-region basis. And we expected when we made these investments that initially we would see a drop in sales as well as margin. But, we've been slowly seeing a nice pick up in average produce items in a basket, and that's helped to offset part of the investment. And we're definitely seeing a positive trend. We did a lot of investment the last six weeks or so with summer fruit, with cherries and blueberries and strawberries and things like that. And so, really nice – really we move a ton of product. And so, we're seeing a nice trend in that area. In our experience, I mean, produce is an extremely competitive area. And in our experience, it's hard to turnaround a trend in produce, but we feel like we really have. And we're going to continue to invest in that area and continue to see a nice pick-up in items per basket.

This is David. I'd also say we're about six weeks into our national flier. So, first time in our company's history where customers are actually seeing these produce sales across all channels across the whole company at the same time. So, we hope that that's having an effect as well. Thank you.

And do you have plans to add these – to make some more investments across other categories? Are you going to roll those out in the next couple of quarters, or how should we think about that? Walter Robb - Co-Chief Executive Officer & Director: What we've said broadly is that we kind of gave you the goal of lowering our gross margins by 200 basis points over two years and we kind of sketched out a sequential decline quarter-to-quarter as we continue to make those, but we're not revealing any further details beyond that in term of we're going to do what it takes to be competitive. So, that's where we'll leave it.

All right. Thanks.

Thank you. We'll go next to Mark Wiltamuth with Jefferies. Please go ahead.

Hi. You mentioned some disinflation. Could you talk about the categories where you're seeing it, and did you see any down-step in the produce as the quarter played out? A.C. Gallo - President & Chief Operating Officer: Hi. A.C. here. Absolutely. I'd say overall, we were pretty flat to slight deflation in costs this quarter. And where we saw the most deflation in terms of our retail prices were in produce. As we mentioned, that's where our biggest investments have been. In meat, we saw a little bit of deflation as well. A little bit of deflation in beef costs and a little deflation in our actual retail prices mainly due to an expanded promotion strategy that we were doing. Those are the two biggest areas. I'd say we've definitely seen also a little deflation in our bulk products, things like almonds and other prices like that really dropped off the cliff and we've lowered our prices pretty significantly in a couple of major commodities there, too.

And how about dairy? Anything going on there? A.C. Gallo - President & Chief Operating Officer: You know, dairy, it varies a bit in dairy. We know eggs are kind of in excess around the country, so egg prices are flat to deflationary. Milk prices, for us, have been fairly steady. In select markets, we have lowered milk prices in a few areas, in select markets. So, certainly the prices aren't going up.

Okay. A.C. Gallo - President & Chief Operating Officer: In dairy.

And then for Walter, are you having more competitive openings versus a year ago? Maybe you could talk about that, because I know you've talked a little bit about cannibalization, but what's going on with competitive openings versus your base? Walter Robb - Co-Chief Executive Officer & Director: Let's see, I don't know that we have those numbers, and I don't know that we share them with the group here, but I'm going to say look, the competitive – the shift in the marketplace around just a tremendous amount of competitors opening all around as people rush into this space continues. I think it might be flat to slightly up in terms of the Q-to-Q thing that if I looked – if I remembered the numbers correctly. So, I think you're – let see here. We just saw the numbers. Yeah, I'd say it's up slightly this quarter in terms of the competitive impact, and cannibalization effects down slightly. Perhaps those are – I mean, it's just – it's very, very competitive out there right now. And as A.C. mentions, there's deflation in a number of categories that you work in headwinds. And in addition to that, we're pushing aggressively into our value efforts, so all those things create the sort of combination I think that brings us the results.

It's David, I can also say it's actually been a lot of fun and really exciting to open our 365 stores against all of our competitors. So, it's definitely a very exciting time. Walter Robb - Co-Chief Executive Officer & Director: Well, it's also exciting like in Chicago to start cycling over. We opened seven stores last year in that metro and then this year we're coming back around cycling on those and it's wonderful to see those things really start to bloom. But generally, it remains a very, very competitive market out there. I wonder at some point whether some of them will rationalize and close as we saw happen with at least one of the competitors in the last number of months. But that's the world we're in and customers have lots of choices and we're sharing with you kind of our thoughts about how we continue to push Whole Foods Market forward.

Lapping out of cannibalization is certainly helping your year-agos, but you've had some significant drops in your year-ago comparison and the two-year stack is now negative. Do you think that's mostly just the price investments coming through? Or what do you think is the primary factor for the two year stack going down? Walter Robb - Co-Chief Executive Officer & Director: John, do you want to get that one?

Well, it's a number factors. Certainly, the cannibalization remains a factor, but that's possibly slightly lessening as we anniversary some of the Chicago openings. Yeah, competition, I mean it's not a big secret, is it? There's a lot more competitors in the marketplace and there's a lot of new formats in the marketplace, from home meal replacement to meal kits, fast casual restaurant growth. More entrants in the natural and organic food space. The mainstreaming of natural organic, which has been well reported. These are all factors. Whole Foods Market being the leader, having very high sales per square foot. We probably feel the brunt of it, as there's a bit of a regression to the mean as we lose customers from a convenience standpoint. People don't drive as far as they used to drive, because there's good enough alternatives in many cases close by to them. So people may not be driving as frequently as far as they used to, because they can stop by a Kroger or an HEB or a Wegmans to get products that they can use to only be able to get Whole Foods. Now there's some overlap in our product base and other competitors. So, I think there's no sense in denying it. Competition is bigger and we're responding to it as we think an intelligent measured way. And we still remain very bullish about our future prospects. Walter Robb - Co-Chief Executive Officer & Director: We did mention in the script again, we got a nice little tailwind of 100 and some odd basis points over the next nine week, which we hope to see if we can take advantage of. But we'll see how it all goes.

I mean, one thing's probably continues to be underreported is we keep opening a lot of great stores. Just yesterday, we opened up two flagship stores that are just kicking butt. They're just amazing stores. They're awesome stores that are doing huge sales and they're going to be very profitable for us. Walter Robb - Co-Chief Executive Officer & Director: Yeah, again, that's in Brooklyn and Santa Clara, California, are the two flagships John's mentioning. Thank you for the question.

Thanks.

Thank you. We'll go next to Ken Goldman with JPMorgan. Please go ahead.

Hi, thanks so much. I just wanted to follow-up on the July 4 answer you gave. I wasn't quite sure what you said. I know it's very hard to measure. But it almost sounded to me like you were suggesting potentially the calendar shift was a negative for the fourth quarter to-date number. Did I hear that right or did I completely make that up? Glenda Jane Flanagan - Chief Financial Officer & Executive Vice President: No. The impact on both Q3 and Q4 of the July 4 shift was completely insignificant. Walter Robb - Co-Chief Executive Officer & Director: It's just not meaningful either way.

Perfect. Walter Robb - Co-Chief Executive Officer & Director: It didn't really help us in Q3 and it's not really going to hurt us in Q4 or help us in Q4. However, it's not that big a deal. We didn't see that much of change. Niff, niff.

Okay. No, that's perfect. And then if I can quickly follow-up. Typically, Whole Foods will provide a pretty specific outlook for the coming quarter. This time there was a little bit of a change. The guidance was more about what will happen if trends don't change. I'm just curious is this a structural change in how the company's going to provide guidance from here? Or there's more maybe a one-off decision just given some of the uncertainty today? Glenda Jane Flanagan - Chief Financial Officer & Executive Vice President: Well, it is just for one quarter. So, we simplified the guidance for that reason. But, we have typically, in many cases said if current trends continue this is what we would see in the quarter or in the period ahead, because until trends change, unless there's some specific event or reason for them to be different than the best thing that we have to go on is the current trends.

Okay. Thank you. Glenda Jane Flanagan - Chief Financial Officer & Executive Vice President: So, we did not reiterate our prior 2016 targets, but we did give specific guidance for the quarter. Walter Robb - Co-Chief Executive Officer & Director: I mean, we hoped our two-year stack comps would stabilize, and that's not happened yet.

Yeah. Walter Robb - Co-Chief Executive Officer & Director: So, until that happens it's just hard for us to give too much confident guidance. So, better to hedge a bit, better to give a range, and all the analysts are very smart people, so they can draw their own conclusions.

We'd all like to be further along. I think just the responsible thing is just to be conservative and make sure that we've got the boundaries clearly defined with you have the information that we now have about what we see, as Glenda said. So, thank you for that question.

Thank you. We'll go next to Zach Fadem with Wells Fargo. Please go ahead.

Hi. Thanks. On the quarter to-date trends, any change in traffic versus ticket data versus Q3? And are there any plans for incremental price investments in Q4 relative to Q3? Glenda Jane Flanagan - Chief Financial Officer & Executive Vice President: There were no significant differences in the trends in Q4 so far compared to Q3. Walter Robb - Co-Chief Executive Officer & Director: And with respect to price investments, they will continue, but we're not going to provide any further detail beyond what A.C. said earlier, because just for competitive reasons.

Okay. That's fine. And I know it's early, but do you have any initial feedback that you can provide on the mobile coupons, as far as downloads, usage, percent usage? Any sort of data you can share? Walter Robb - Co-Chief Executive Officer & Director: Jason? Jason J. Buechel - Chief Information Officer & Executive VP: Yeah, we've actually had a lot of customers use them. We'll be nearing a million total redemptions to-date very shortly. And right now, we're actually seeing a huge increase in our app being downloaded, which is heavily being driven by our digital coupons. As mentioned in the script, it's actually the number one feature that our customers are using. And we've been seeing close to a 50% increase in the app sessions between Q2 and Q3. And we think it's heavily driven because of the digital coupon offerings that we now have within the app.

Great. And if I could sneak in one more question. You mention meal kits is a competitive factor. Any interest in getting into this business? Walter Robb - Co-Chief Executive Officer & Director: Huge interest in this, right, Ken?

Yeah, I mean with the creation of our culinary team led by Tien Ho, he's now put together a really great group of leaders for us in the company. And it's part of what we're looking at with what we call our meal solution spectrum, which we're really excited about because it's going to address all aspects in which we want to bring food to our customers. And we obviously study and see all the trends out there around how that's changing. And we know that we have a long history of leading in the food/culinary side, and we're going to continue that with what we're doing around looking at the option of meal solutions and the ways in which we want to do that. We're not going to announce anything today. But, we will say that we are committed to this category. We think we have a good strategy for it. It will be revealed. Jason J. Buechel - Chief Information Officer & Executive VP: I would say there's a lot of people in the Willy Wonka laboratory working on this thing, right, Ken?

We've been tasting a lot of food. And we're really excited about some of the stuff we're going to be bringing out. Walter Robb - Co-Chief Executive Officer & Director: And I think too, world-class. For the first time in the history of the company, have a world-class person from the restaurant/hospitality business reporting directly to David and Ken that's crafted this roadmap for this group. I mean, we're going to have a lot to say about this area. And we think we've got some good credentials to do that. I think you've seen the two flagship stores open today like they did in Brooklyn and Santa Clara. Based on what I'm talking to the regional presidents, the food service experience is huge in that in terms of creating community and correction. So we're going to have a lot to say about this area. Thank you.

Great. Looking forward. Appreciate the time. Walter Robb - Co-Chief Executive Officer & Director: Thank you.

Thank you. We'll go next to Joe Edelstein with Stephens. Please go ahead.

Hi. Good afternoon, everyone. Walter Robb - Co-Chief Executive Officer & Director: Good afternoon. We're here. Glenda Jane Flanagan - Chief Financial Officer & Executive Vice President: Hi.

Sorry. Was a gap there.

Just wanted to clarify something quickly on the produce comments given earlier, and then I had a separate question. But, you did say that the items per basket in the produce category have been picking up, but I just wanted to confirm that you also said that the actual transaction count – the customer count was also growing there.

Yeah. That is correct.

Okay. Great. And then the second question, you did detail kind of expectations for a 6% square footage growth next year, the fiscal 2017 year? Is that really just tied into opening the smaller footprint 365 stores, or perhaps you could just split out for us how you're looking at flagship openings versus your expected number of 365 openings. And even within that, if there's any delay in the flagship openings that may have caused a little bit slower footage growth?

Yeah, John here. We're going to stick with the 6%. We're going to give you more color next quarter. When we do the Q4 announcement, we'll give you more color, we're going to give you a break-out of Whole Foods and 365. We'll give more detailed information in Q4, but right now we're just staying with the 6%. It's a little bit in flux right now. Walter Robb - Co-Chief Executive Officer & Director: But the message I think we wanted to get to you is just that we are being thoughtful about our growth and looking at it carefully to determine what the right rate of growth is, given the performance and the complement and where we'd like it to be, so...

This is David. Also, for those stores we're also, again, studying all the capital savings that we're seeing at the 365 stores. And, again, making some adjustments in the capital spend. No details, but we are focusing on ways that are cost savings.

Well said, David. Thank you for that question. Yeah.

Okay. That's helpful. We'll look for more detail next time. Thanks.

Yes. That's good.

Thank you. We'll go next to Bill Kirk with RBC Capital Markets. Please go ahead.

Thank you. So, there's a lot of new learning and tech initiatives including I believe a partnership with Nielsen. For that one in particular, what will that allow you to do that you previously couldn't? Walter Robb - Co-Chief Executive Officer & Director: A.C., go ahead. A.C. or Jason? A.C. Gallo - President & Chief Operating Officer: Yeah, I'll start and then Jason can add on. Well, the partnership with Nielsen is going to give us a tremendous amount of consumer data that we haven't had before. As we move into doing more globally managed category management within our stores, we really need this consumer information in order to properly set up the categories and know where to do our promotions and know how to price the different categories. So, that's a lot of information that we haven't had. Mostly, what we've had is our own information. So, we're looking at ourselves and this allows us to look much more carefully at the whole industry, all our competitors, and what we need to do to be more competitive. Jason J. Buechel - Chief Information Officer & Executive VP: Yeah, just to add on, as you've heard us talk about many times, we operate a lot of our regional structure side of things very autonomously. And this is allowing us to also unify our data to help support some of our other large programs, like the N4 program we've talked about, which is helping us revolutionize the supply chain and purchasing side of our business. And so that will play a very important role in data there. It'll also help us collaborate more with our suppliers, so we'll have one source of the truth as far as how we'll be looking at talking with them about sales and collaboration in our planning processes. A.C. Gallo - President & Chief Operating Officer: Yeah, that's a very important point. Our suppliers are very excited that we are now working with Nielsen. Because they'll now have much better data on our categories and on their sales with us so that they can help us manage their products better.

Thank you. That's great. That's very useful. The other question I had was on the testing of Imperfect Produce in California. I know it's early, but how have customers received that so far? Walter Robb - Co-Chief Executive Officer & Director: Well, it's early like today early. Walter Robb - Co-Chief Executive Officer & Director: Breaking news, right? Walter Robb - Co-Chief Executive Officer & Director: So Karen Christensen is one of our strongest purchasing persons in North Cal really has been a champion of this. And she has a really strong produce background. So it has piqued the interest of other regions almost immediately. So, we think that there's definitely some legs to it. So, we'll be happy to give you guys more info next quarter.

Thank you. Walter Robb - Co-Chief Executive Officer & Director: Yeah, I mean, given the broader focus on food waste in the world, I think this is one of the really proactive responsive ideas around how to respond to that, so see how it turns out. Yeah. Thank you for that question. Anymore?

We'll take our final question from Phil Terpolilli with Wedbush. Please go ahead.

Yes. Thanks for squeezing me in. Just a quick one. I appreciate all the comments earlier around sort of increased convenience for consumers. Some of the meal kit commentary. I don't think you mentioned Instacart earlier. It's something you've talked about in the past. So, if I could just sort of get an update there as to what you're seeing with that part of the business? Walter Robb - Co-Chief Executive Officer & Director: As you know, we re-upped that thing and extended it and deepened that. And we feel really good about the partnership with Instacart and the results we're seeing. Week-over-week it continues to grow. In fact, I think we've set a new report every week with the sales. David, do you want to add any more color to that, or Jason? Jason J. Buechel - Chief Information Officer & Executive VP: Yeah, I mean, as Walter said, we're continuing to see growth in that space. One of the things that we're really focused on is being able to bring this to more customers. So, we're expanding geographically as far as introducing new markets as well as expanding existing markets, and furthering some of the zip codes. Since the last time we talked, we've also experimented with sort of a new model for click and collect as well for customers to be able to order online and be able to pick up their goods. And so that's something we're going to continue to look at into this particular partnership. So thus far, things have been great.

And just last thing that I would say is that we've really worked in partnership with Instacart on reducing our out-of-stocks. Which, again, is beneficial with both our in-store shoppers and our digital shoppers. So, we're seeing the biggest reductions I would say I've ever seen at Whole Foods in our out-of-stock rate, which again is a winner for sales.

Yeah, and remember you can go to wholefoodsmarket.com now and order directly off our website via White Label experience we've co-created with them. Walter Robb - Co-Chief Executive Officer & Director: I was going to say the same thing. I'm glad you said that. You can go to wholefoodsmarket.com and get it done. All right, so it'll take you right there. Walter Robb - Co-Chief Executive Officer & Director: Okay. Well thank you everybody. Thank you for that question. And we are excited to tell you about where we are with Instacart. Thanks a lot everybody for listening in. We look forward to updating you on our progress and some of the details that we all talked about during the call today on our Q4 earnings call, which will be in early November. Thanks, everybody. Have a good day.

This does conclude today's conference. We appreciate your participation. You may disconnect at any time, and have a great day.