Good morning. My name is Hope, and I will be your conference operator today. At this time, I would like to welcome everyone to the Dollar General Second Quarter 2016 Earnings Call. Today is Thursday, August 25, 2016. [Operator Instructions] This call is being recorded. [Operator Instructions] Now I would like to turn the conference over to Ms. Mary Winn Pilkington, Vice President of Investor Relations and Public Relations. Ms. Pilkington, you may begin your conference.

Thank you, Hope, and good morning, everyone. On the call today are Todd Vasos, our CEO; and John Garratt, our CFO. After our prepared remarks, we will open up the call for questions. Our earnings release issued today can be found on our website at dollargeneral.com under Investor Information, Press Releases. Let me caution you that today's comments will include forward-looking statements about our expectations, plans and other nonhistorical matters, including, but not limited to, our fiscal 2016 diluted EPS guidance, fiscal 2016 and '17 store growth initiatives, capital allocation strategy and related expectations, our long-term financial growth model and future economic trends or conditions. Forward-looking statements can be identified because they are not statements of historical facts and use words such as outlook, may, believe, anticipate, expect, looking ahead, estimate, forecast, goal or intend, and similar expressions that concern our strategy, plans, intentions or beliefs about future matters. Important factors that could cause actual results or events to differ materially from those projected by our forward-looking statements are included in our earnings release issued this morning, our 2015 10-K filed on March 22, 2016, and our most recent 10-Q filed today and in the comments that are made on this call. We encourage you to read these documents. You should not unduly rely on forward-looking statements, which speak only as of today's date. Dollar General disclaims any obligation to update or revise any information discussed in this call, except as may be otherwise required by law or as described under the heading, Financial Outlook Set Forth In Our Earnings Press Release Issued Today. Now it is my pleasure to turn the call over to Todd.

Thank you, Mary Winn, and welcome to everyone joining our call. For the second quarter, we are pleased with our double-digit earnings per share growth even as our same-store sales performance fell short of our expectations. I'm particularly proud of the team's ability to effectively manage our gross profit margin and leveraging our selling, general and administrative expense as a percent of sales in what proved to be a difficult sales environment. Key factors that negatively impacted our expected same-store sales performance included a greater-than-anticipated headwind from price deflation across key perishable items, with retail prices down about 8% for milk and over 50% for eggs, our 2 largest products within perishables; second, a reduction in both SNAP participation rates and benefit levels; third, an unseasonably mild spring; and lastly, an intensified promotional environment in select regions of the country. We estimate that the headwinds from price deflation and the reduction in SNAP benefits negatively impacted our same-store sales for the second quarter by approximately 60 to 70 basis points. As you will -- as I will discuss in more detail later in the call, we are taking aggressive action across merchandising and store operations to address these factors and help drive same-store sales, and we will continue to be very disciplined in our SG&A spending. I'm pleased with our overall financial performance and the team's ongoing focus on our long-term strategy despite the challenging retail environment. Highlights of the second quarter of 2016 as compared to the prior year's second quarter include: net sales increased 5.8% to $5.4 billion, and same-store sales grew at 0.7%. Same-store sales growth was positive for consumables, offset by a decline in nonconsumable category. Gross margin was 31.2%, an increase of 2 basis points. We leveraged selling, general and administrative expenses by 8 basis points as our zero-based budgeting initiatives continue to contribute to our results. Operating profit increased 7%, with operating profit margin expansion of 10 basis points. Net income in the second quarter increased 9% to $307 million. Diluted earnings per share increased 14% to $1.08. Year-to-date through the second quarter, diluted earnings per share was 18%. Cash from operations increased 36% year-to-date through the second quarter. During the quarter, we returned over $294 million to shareholders through the repurchase of 2.5 million shares of common stock and the payment of a quarterly dividend. We continued to grow market share as reported in syndicated share data for the quarter. In the most recent syndicated data, we experienced relatively consistent low single-digit to mid-single-digit growth in both units and dollar share for the 4-, 12-, 24- and 52-week periods. Now I'll turn the call over to John to go through more details of the quarter.

Thank you, Todd, and good morning, everyone. As Todd has taken you through the highlights of our second quarter, I'll share more details on the rest of the quarterly financial results starting with gross profit. Gross profit for the 2016 second quarter was $1.7 billion or 31.2% of sales, an increase of 2 basis points from last year's second quarter. As compared to the prior year's second quarter, higher additional markups on inventory purchases and lower transportation costs contributed to the gross profit rate increase, offset by higher markdowns, a greater proportion of sales growth in consumables, which carries a lower margin than nonconsumables and higher inventory shrink. SG&A expense decreased by 8 basis points over the 2015 quarter to $1.2 billion or 21.7% of sales in the second quarter. The majority of the SG&A percentage decrease was due to reductions in administrative payroll costs, advertising costs and incentive compensation expenses. Partially offsetting these items were our retail, labor and occupancy costs, each of which increased at a rate greater than the increase in net sales. Similar to last quarter, our zero-based budgeting initiatives were a key driver of our SG&A performance. The team continues to actively work on a pipeline of additional future savings opportunities across the company, leveraging process improvement, procurement and prioritization to remove costs that don't affect the customer experience. Moving down the income statement. Our effective tax rate for the quarter was 36.8% as compared to 38% in the second quarter last year. As in the first quarter, our effective tax rate was lower this quarter as compared to the 2015 quarter, primarily due to the recognition of the Work Opportunity Tax Credit in the quarter in which it is earned, given changes by Congress in December 2015. Looking at a few items on our…

Thank you, John. We have a track record of strong financial results and the team is taking steps designed to improve our sales performance, but it will take time for our initiatives to resonate with our consumer. As we have said consistently, we are committed to increasing market share by growing both item units and traffic, and we will invest, as we deem appropriate, to meet this objective. To that end, we are making aggressive pricing, labor and marketing investments in designated market areas that we see as opportunities to be proactive as we look to improve same-store sales and market share, all while providing our consumers with affordability, value and convenience at a time when they need us most. Our focus is on the consumable categories to drive traffic and units. For example, we have taken retail price reductions on average of 10% on about 450 of our best-selling SKUs across 2,200 stores, representing nearly 17% of our store base. We believe that these price reductions are meaningful and recognizable to our consumers. We are committed to further price moves, as appropriate, over time. We are being strategic as we look to proactively address our pricing actions across our store base. These targeted price investments are in high household penetration, fast-turning categories. At the same time, we are investing and communicating these price breaks to our consumers through incremental store signage, ad circulars, digital coupons, e-mail and digital media. While it is still very early in making these investments, the results are on track with where we would like for the performance to be on increasing units and traffic. We will continue to monitor our pricing actions and assess the opportunity for ongoing preemptive moves to enhance our competitive positioning. We anticipate refreshing these price investments across items and…

Sounds great. Hope, we'll take the first question, please.

Your first question comes from the line of John Heinbockel with Guggenheim.

So how did you come up with the 10% cut in price as well as the number of items? How do you think about elasticity at that level, right, in terms of kind of getting a payback? And then are there other items -- when you think about funding that, are there other items, be it consumable or discretionary, where maybe they're less so visible and prices go up, and that's partly a way to fund it?

Yes, John, as you know, we're very focused on price here at Dollar General. For our core consumer, price is everything, along with the convenience factor that we offer. And you also know from us that we don't do anything without fully testing it first. We've had tests in place in a couple hundred stores for a very long time with a subset of these 450 items and, in some cases, as much as 500 items depending on the stores. So we well tested these, and know that these are the items that will actually drive additional foot traffic into our stores. But more importantly, will give the value to our consumer that she needs in a very tough time. And then lastly, what we see by these items, it helps round out that basket with the nonconsumables once she gets in the store and we get her to pick up the consumables, that basket rounds out pretty nicely because of our compelling nonconsumable offering.

Okay. And then, secondly, so you talked about the Walmart Expresses and having fresh meat and produce, so where does that take you going forward? You're already testing produce in some of the DGs. And do the DGs -- more into DG market, is DG market kind of dead as a growth vehicle? Or does that come back at some point where you could actually expand that more aggressively?

Yes, as you look at retail, in general, it's dynamic, right? And the great thing here at Dollar General is that we're very flexible, and we look at every way we can to maximize our opportunities that lie out there, at the same time, in making sure that we service our consumers the way they need to be serviced in certain demographics and areas of the country. In saying that, we see an opportunity, especially with our millennial group, but even our core customer on some more fresh opportunities and offerings for her, not only in fruits and vegetables, some fresh meats, that makes sense, but also, as I indicated, in some of our better-for-you lines that we're now starting to put out. Our core consumer is starting to gravitate to that, and our next level up, our "Best Friends Forever" group in that millennial segment really resonate with it. So I think this is a springboard, quite frankly, in the more to come as we look to what Dollar General store -- our basic Dollar General store looks like in the future.

[Operator Instructions] Your next question comes from the line of Scott Mushkin with Wolfe Research.

So, I mean, the elephant in the room, obviously, Walmart's investing in price. We were down in North Carolina, and we actually didn't see your price investments that you're referencing. We saw about a 13% gap in price between DG and Walmart. So I guess the question is what's the appropriate gap for you guys? And if Walmart continues on their path and now we've seen Delhaize follow suit and it will, obviously, up their consumable -- aggressiveness in consumables. Target has referenced it. We have Albertsons-Safeway being pretty aggressive in certain markets. I guess take me forward in how you see this rolling through DG's numbers, how it ends well for most people that are selling consumables, because everyone is saying the same thing, "We got to get aggressive. We got to drive the traffic." But it seems like we're just descending into a price war.

Yes, the way we look at this is we look at it a little differently in that, first of all, the retail landscape is very aggressive right now. There is no doubt about it. But you know what? Retail is always aggressive, and there's always folks doing different things, and we compete and have competed for many, many years with many retailers. In saying that, the way we look at this is being proactive. So what we are looking at in our 2,200 stores that we've reduced prices on average of 10%, what we have done is a proactive approach to it, not necessarily chasing anybody but, actually, putting price where we believe will best serve our consumer and best be able to capture market share. And as we continue to move forward and expand that, whether it be other markets and/or other items, we'll take that same tack on being proactive and not reactive. Because you're right, if everyone is reactive then, in fact, sometimes, it doesn't end well. Lastly, the great thing about Dollar General is that we have the wherewithal to do this. We have the wherewithal to do it within our P&L and others may or may not have that same luxury. So we see it as a real advantage for Dollar General. But we see it mostly as being there for our core consumer because she needs us the most right now.

Your next question comes from the line of Paul Trussell with Deutsche Bank.

So I believe a quarter ago, as we thought about the full year guidance, it was indicated to be towards the higher end of the range, whereas today, I think it's just more kind of within the range. Is it just the adjustments from the labor expense being added into the fourth quarter and the kind of bad rent [ph] and expenses associated with the stores that you acquired or maybe you can just walk us through other puts and takes as we think about the full year? In particular, what is the comp guidance for the second half?

Sure, Paul. And I'll reiterate what we said at the beginning of the call is that -- and we've stated this previously and it was in our earnings release that we were talking to the 10% to 15% range, and are still forecasting to be within that range for full year EPS, but not otherwise updating any specific aspects of the guidance today, but -- and what I also want to reiterate is that this team has a strong track record of managing all the business levers to deliver profit and cash growth and feel good about the first half performance at 14 -- 18% year-to-date EPS growth and 14% in Q2 as well as the strong cash growth. But what I will tell you is that we have headwinds in the second half. We mentioned the charge associated with the 42 newly acquired stores. That will be about $0.02 to $0.03 earnings per share impact. We also have the implementation of FLSA, which is about $0.03 to $0.04 impact in Q4. And I think it's important to note there that even though that's only over 2 months, you can't extrapolate that over the course of next year, given that we have a 53rd week in -- at the end of the year as well as many of the actions that help mitigate that cost next year won't be fully implemented until next year. But those 2 will have impacts on the balance of the year. And then again, bear in mind, we're focused on the long term here and making the right decision to be there for our customer when she needs us the most and, with an eye on the long term, are making investments that we talked about earlier in the call. But again, the business fundamentals, I will stress, remain unchanged with -- we're very excited about opening 900 new units this year, on track for 1,000 next year. As Todd mentioned, pipeline is 80% full, and we're still seeing the same compelling great unit level economics since we opened the stores with the same productivity and the same great returns over 20%.

Okay, I guess, just going back to the comp, just wanted to -- so no guidance in terms of the comp over the balance of the year. Could you maybe just speak to the cadence of comps during the second quarter and the impact that you mentioned of 60 to 70 basis points from deflation and SNAP. Do you expect that -- a similar impact to be ongoing?

Yes, Paul. I would tell you that all periods in the second quarter were positive. So we're very happy to have seen that. As I look forward to the back half of the year, I believe many, if not, most all of the same headwinds we saw in the sales line continue to be there in the back half of the year. Deflation, as well as SNAP, that 60 to 70 basis points -- the headwind that is not going to go away. Now trying to counter that obviously will be our price investments. Now as you know, though, price investments take time to resonate with the consumer. And while we're very, very confident that it will drive units and traffic, it'll take a little time for that initiative to take hold. So we're doing everything possible here to ensure that we're giving the consumer the deal that she needs, so that we can continue to have her come into our store and for us to continue to capture market share.

Your next question comes from the line of Dan Wewer with Raymond James & Associates.

Todd, I wanted to ask about the payback from the -- I think, it was 21,000 coolers that you've added to mature stores. And to whether or not whether you're seeing any diminishing returns from the additional coolers, and perhaps, you could peg that to your experience with the DG Plus cooler set?

Yes. That's a great question. Everything we do here has a return attached to it and the cooler program is no different. We track it each and every week because it is a big initiative for us. Those 21,000, 22,000 cooler doors that we have put in are doing exactly what we had thought they would do, and actually, in many cases, exceeding our expectations. But because of the headwinds we're seeing and deflation, mainly in those perishable categories of milk and eggs, it's diluting that -- those effects a little bit. But I could tell you, for the long term, and that's how we look at this business for the long term, it is the exact right thing to do. And we're confident in that because, and you mentioned it, our Dollar General Plus and market stores, these are just segments that were already proven in those stores to be very successful that we've moved into our traditional stores. So we're very confident over time that those will pay big dividends to us.

And just one other follow-up. The drop in customer transactions per store, I believe that's the first time that's happened since the buyout back in 2008. Where do you think that, that business shifted? Is it -- was it to the mass merchants and, perhaps, they're able to take advantage of the lower gasoline pricing and their customers becoming more mobile as a result?

When we look at it, the headwind of SNAP for us really was a big deal. And also, our core consumer continues to be under a lot of pressure. I know that when we look at, globally, the overall U.S. population, it's seemingly -- it seems like things are getting better. But when you really start breaking it down and you look at that core consumer that we serve on the lower economic scale that's out there, that demographic, things have not gotten any better for her, and arguably, they're worse. And they're worse because rents are accelerating. Health care is accelerating on her at a very, very rapid clip. And now you couple that in upwards of 20 states where they have reduced or eliminated the SNAP benefit, and it has really put a toll on her. That SNAP benefit reduction and/or elimination happened in April, right? That was the kickoff, and you could see it immediately in the numbers. So I believe that those are the things that are affecting her today, again, our core customer. And by the way, we've seen this play out before. If you dial the clock back to October of '13 and coming into November of 2013 when the last large SNAP benefit reduction happened, it happened almost exactly the same way on our comps and how we saw traffic. Obviously, we were up at a little higher level at that time, but rest assured that our traffic slowed tremendously then, very similar as it did now. The difference here is we're going to take aggressive price action to get that consumer back in the store. She needs a little motivation to get back in. We need to help her stretch her budget for a time period until she figures it out. Our core customer's very resilient. They'll figure it out over time, but they need a little help as they tend to now try to figure out how to make ends meet with less money during the month.

Your next question comes from the line of Peter Keith with Piper Jaffray.

Was curious on the price investment. I presume that it's probably going to expand to more stores than the base, I think, you said 17%. How should we think about that dynamic on gross margin, going forward?

Expansion that -- well, that's -- with the pricing, that's something that we are assessing as we go. And as Todd mentioned previously, we test and learn with everything that we do, and we are seeing benefits from the pricing actions that we have taken. Bear in mind that this does take time to fully take traction with our consumers. So really, we'll control what we can control, monitor the environment and take pricing on an as-needed basis to make sure we're there for our customer when she needs us, and to make sure we're making the right decision for the long-term health of the business. Now that will, of course, have an impact on margin as we do that. But again, we're focused on the long-term payback from that.

Okay. And then maybe just a follow-up question on the discretionary categories. So it looked like home and basic clothing were 2 areas of weakness, and those had been historically a little bit better. I wouldn't think those were impacted by the spring dynamic. So maybe could you comment on what's going on there and any initiatives to improve those higher-margin categories?

Yes, the great thing about our nonconsumable categories is that the team has done a fabulous job, the buying team, over the many years that we've been working on this. Up until this quarter, we've had 9 consecutive quarters of growth in our nonconsumables. And I would tell you that the slowdown there is directly correlated to that traffic slowdown that we've seen, which is really, I believe, consumable based. And that's why we're taking the actions on price that we are and other things to ensure that we get that traffic back in the store as we move through the quarters to come. Once that happens, we are confident. We are confident in our nonconsumable merchandising and our pricing there, and we've always said that consumables will drive the traffic and nonconsumables will round out the basket, and we see it no different as we move forward.

Your next question comes from the line of Michael Lasser with UBS.

In the areas where you saw greater competitive NC [ph], did your comp underperform the total and by how much?

I can tell you that we did not see an underperformance in any measurable amount in areas that we know that there's been some competition heating some things up. We have not seen that. We are very confident in our overall pricing strategy and structure, to be honest with you. Our consumers give us a tremendous amount of credit for pricing and the value that we offer. How we are looking at these recently announced price reductions, they're more proactive in nature in areas that we see we have opportunity to capture additional market share. In areas that we may not be quite as good, if you will, from a traffic standpoint as we are in other parts of the country, and so we're proactively taking steps to ensure that we bolster those areas. And then as we expand this program over time, it'll be, once again, proactive in nature where we think the opportunity to steal share is best achieved, as well as where our consumer needs us most, and a lot of them are within these 20 states that have recently cut SNAP.

So to reconcile some of this, so you're not seeing the stores in areas that are more competitive underperforming, but are those the same places that you're going to be investing in price? And how do you expect to fund those price investments? Will that be on your P&L or do you expect to share that burden with your vendors?

There may be some overlap where there may be some other retailers doing some price initiatives as we speak. But again, we're not focused on chasing any one competitor. We're more focused on what we can control, and that is looking in areas that we know that we can expand our market share in. So while there'll be some overlap, that isn't the driving factor or force behind where we go. The other thing to keep in mind here is that we do have the wherewithal to do this, as I mentioned earlier. And we have great relationships with our vendor partners. And rest assured that they're working with us hand in hand as we continue to drive units and traffic into our stores and into their brands.

And if I could just add a follow-up, Todd. Understood the issues with SNAP and deflation, but is there a piece of this that's just related to the consumer jobs' labor market getting better, so the consumer spending a little bit better and they're trading up? Is that not possible?

I'm not going to say it's not possible, but we have not seen that in our data. Once again, remember that over 60% to 65% of our sales and consumer base is on that lower demographic area that -- of the economic scale. And when you keep that in mind, her life hasn't gotten any better. And that's really that customer that we're serving the most and that we're intent on making sure has enough money and enough products inside her house to be able to feed her families.

Your next question comes from the line of Dan Binder of Jefferies.

Just on the same topic of price competition. Can you be a little bit clearer in terms of which channel you're seeing the most activity out of? Is it the discount channel? Is it the supermarkets? Is it the dollar stores, as Family Dollar does things under the Dollar Tree ownership? Any color you can provide on that? And particularly on the regions that you mentioned, any particular that stand out?

Yes, I think that some of the price reductions taken by other retailers have been fleshed out pretty good out in the press. So I believe everyone knows some of the retailers that are working price right now. But as I mentioned earlier, we've seen that over the years and over time. And we compete very well with mass merchant retailers, grocery and drug retailers. And then the only thing is we -- again, our consumers give us a lot of credit for where our prices are today. We're some of the lowest in the marketplace with nearly being at parity with mass, 20% on average lower than grocery and 40% plus lower everyday than drug on the shelf. And when you think about it in those terms, we feel very confident that our pricing structure is well intact, and this is all about everyday low price for our consumer. She needs to have the confidence that if she walks in, she has an everyday low price. She doesn't have to wonder whether it's on sale or if she has to buy 5 or 10 at a time to get the deal. She know she can walk in, buy one and get the deal that she needs.

And then just as a follow-up, you cited some pressure with the consumer. If we maybe look forward a couple of quarters or even a year, if the comp store sales don't get back to 3% at some point and we kind of linger here in that 1% to 2% range, does that impact the way you think about square footage growth. I know you've got the 1,000 store plan here set, and that's probably likely to get executed, but as you think beyond next year?

When we look at our new store program, it is doing exactly what it has been doing, and what we thought it would do over time. We are very happy with that. We don't see that slowing down. It is still opening -- the stores are still opening at 80% to 85% of our mature store base. The returns are 20% plus on these new store locations, and we have seen no difference this year than any other year in our new store openings. As a matter of fact, we're indexing over 101% right now on our portfolio for 2016. So when you look at all those dynamics and that low cost to operate and low cost to build, I can't think of a better place for us to reinvest our money than in that first, in the business, and then returning to shareholders, second.

Your next question comes from the line of Vinny Sinisi of Morgan Stanley.

I wanted to ask, I appreciate all the color you gave us around the details supporting the sales number. I know you typically kind of rank order the factors in your release, and just a couple of quick points of clarification. Within the food deflation part of that, which was listed first, can you give any further color around kind of how much of that was strictly from the commodity price changes versus kind of increased competition within? And also this might just be my own paranoia, but I know it was kind of a separate sentence where you talked about the competitive environment. So with the kind of expectations you had for the quarter, is it safe to say that, that being kind of in the second sentence, is kind of the last in rank order as well?

Yes, I think that is correct, first of all. Once again, we just don't see that competitive nature being the largest factor here. What we see again is that SNAP reduction and that deflation being some of the biggest headwind, and then second -- third after that being just the overall macro environment for our core consumer. When you look at the deflation, it is primarily due to commodity price reductions, so cost reductions to us, which we then pass on to the consumer at lower retails. Predominantly, that's what we're talking about here, and it's in big categories for us, right, in milk and eggs. Remember, we don't have the breadth and depth that mass or grocery has in our perishable and food businesses. So when that deflation hits in some of these key categories, it hits us a little harder, so in those 2. But also beyond that in dry grocery, we still see sugar, grain, cereals, coffee, so some of our largest categories being affected by cost decreases, which then, in turn, become retail decreases. And as we all know, the consumers don't consume that much more just because the price is a little less expensive. So that is really the impetus behind what we see as some of those headwinds. And as I said before, those headwinds, we anticipate seeing with us through the back half of the year.

Okay, that's helpful, Todd. And maybe just a quick follow-up, and this is more just kind of top -- top look at the group and the consumer. But like you said today, you're maybe even seeing some increased pressure on the low-end consumer. And I think most of us on the phone kind of thought it was not a fantastic low-end consumer, but more or less of a steady state. So maybe if any kind of anecdotes from what you're seeing specifically in the baskets or how folks might be responding when you are proactively getting more aggressive. How should we kind of think about the overall low end in your opinion as we go forward here?

Yes, you know that consumer is a real special consumer. We spend a lot of time in the stores. I'm out a couple of times a month with our head merchant, our head operator, and we see first-hand this consumer each and every time we're out. And this core consumer, I tell you, has gotten no better as far as her economic well-being. As a matter of fact, she tells us, while we're out in the stores or even through all of our panel data that we do, that while things haven't gotten a lot worse as far as income coming in, other than the recent SNAP decrease, I -- my expenditures are going up at a very rapid rate. Health care is one of the big ones because most of our consumers, while she may be working, doesn't have health care, and we all know that she's having to now pay for this health care or be taxed on it, right? So that is starting to really play against that low-end consumer right now, and it will continue to play against her. You couple that with those rents that we talked about, those increased rents are real. And in any many parts of where we serve our customer, the affordability and availability of rental units are getting more and more scarce, which is driving up prices, and we're seeing that because most of our core customers cannot and do not own their own homes. And when we're out in the stores and we drop prices like we do, I can tell you, I've been out in stores in the middle of the aisle, and heard customers come up to our store manager in tears and thanking them for being there and thanking them for the prices that we offer in a real convenient nature for her where we can she can walk to the store because she can afford anything else. When you hear that, that really brings home where this core customer is.

Your next question comes from the line of Stephen Grambling with Goldman Sachs.

Just one quick follow-up. On your long-term guidance, I think you'd outlined opportunities for margin expansion across both gross margin and SG&A. I guess as we think about the price investments and those building blocks, do those change and are there other offsets whether that's through, I think, the earlier question on vendor funds, shrink or other areas?

Sure. So as we've said, we're really focused on looking at margin, on SG&A in tandem and continue to see opportunity over the long term. This team has done a phenomenal job over the years managing the multiple levers within gross margin and you've seen that with 6 straight quarters of margin expansion. And it continues to be the same levers in terms of shrink, which we continue to see as an improvement opportunity over time. We continue to drive expense control and efficiencies around DC and trans, and the team continues to effectively manage the levers of category management, private label and foreign sourcing, and we also work with our vendors to make sure that we can hit those price points. On the SG&A side, as you saw, we had tremendous performance over the last 2 periods with zero-based budgeting. We've always had a history of lean cost management and zero-based budgeting has really taken hold and helped us get to that next level of savings. And you've see that in the results, and the team is working on a pipeline of future savings focused on noncustomer-facing areas, and the rigor is really becoming ingrained. So we will continue to work those 2 over time. As we've said, not every quarter is created the same and there's some headwinds in the near term. But we continue to see opportunity over the longer term, managing all these levers, as we have in the past.

Hope, that will now conclude our call since we've hit the top of the hour. I know we're leaving a few people in the queue, but I'm around and Matt's around if we can help with any questions. But thank you very much for being on the call today. So Hope, you can wrap the call up.

Thank you. This does conclude today's conference call. You may now disconnect.