Good morning. My name is Thea, and I will be the conference operator today. At this time, I would like to welcome everyone to the Dollar General Third Quarter 2019 Earnings Conference Call. Today is Thursday, December 5, 2019. [Operator Instructions] This call is being recorded. Instructions for listening to the replay of the call are available in the company's earnings press release issued this morning. Now I would like to turn the conference over to Mr. Donny Lau, Vice President of Investor Relations and Corporate Strategy. Mr. Lau, you may begin your conference, sir.

Thank you, Thea, and good morning, everyone. On the call with me today are Todd Vasos, our CEO; and John Garratt, our CFO. And our earnings release issued today can be found on our website at investor.dollargeneral.com under News & Events. Let me caution you that today's comments include forward-looking statements defined in the Private Securities Litigation Reform Act of 1995, such as statements about our strategy, plans, initiatives, goals, financial guidance or beliefs about future matters. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These factors include, but are not limited to, those identified in our earnings release issued this morning under risk factors in our 2018 Form 10-K filed on March 22, 2019, and in the comments that are made on this call. 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 unless required by law. We also will reference certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures are included in this morning's earnings release, which, as I mentioned, is posted on investor.dollargeneral.com under News & Events. At the end of our prepared remarks, we will open the call up for your questions. [Operator Instructions] Now it's my pleasure to turn the call over to Todd.

Thank you, Donny, and welcome to everyone joining our call. We are pleased with our third quarter results, including same-store sales growth of 4.6% and strong performance across the business. The quarter was highlighted by our best customer traffic and same-store sales increases in nearly 5 years as well as double-digit growth in both operating profit and diluted EPS. As a result of our performance through Q3 and outlook for Q4, we are raising our full year guidance for 2019. John will provide these details during his remarks. In short, we are executing well against both our operating and strategic priorities, and we're confident in our plans to drive continued growth. On that note, I'm excited to share an update on some of these plans, which we believe will further differentiate Dollar General from the rest of the discount retail landscape. First, as you saw in our release, we plan to accelerate our pace of new store openings and remodels in 2020. In total, we expect to execute nearly 2,600 real estate projects next year, which represents an increase of more than 20% over 2019 as we continue to strengthen the foundation for future growth. In addition, given the sustained and positive performance of our nonconsumable initiative, or NCI, we plan to expand the offering to an additional 2,600 stores next year, bringing the total number of NCI stores to approximately 5,000 by the end of 2020, more than double the current store count. Finally, we now plan to begin shipping out of our fifth DG Fresh facility by as early as fiscal year-end 2019. I will discuss each of these updates in more detail later in the call. But first, let's recap some of the top line results for the quarter. Net sales increased 8.9% to $7 billion compared…

Thank you, Todd, and good morning, everyone. Now that Todd has taken you through a few highlights of the third quarter, let me take you through some of its important financial details. Unless I specifically note otherwise, all comparisons are year-over-year and all references to EPS refer to diluted earnings per share. As Todd already discussed sales, I will start with gross profit. Gross profit as a percentage of sales was 29.5% in the third quarter, an increase of 1 basis point. This increase was primarily attributable to higher initial markups on inventory purchases, a reduction in markdowns as a percentage of sales and a lower LIFO provision. Partially offsetting these items were: increased transportation and distribution costs; higher shrink, a greater proportion of sales coming from the consumables category; and sales of lower-margin products comprising a higher proportion of sales within the consumables category. SG&A as a percent of sales was 22.5% or a decrease of 13 basis points. The decrease was driven by a year-over-year reduction in hurricane-related expenses, a reduction in expenses for store supplies and lower retail labor costs as a percentage of sales. These items were partially offset by an increase in utilities costs. As previously discussed, we are investing in our 4 strategic initiatives this year. We are pleased with the continued progress on each and remain excited about the long-term transformative potential of these initiatives. Year-to-date through the third quarter, we have invested $33 million in SG&A expense attributable to our strategic initiatives. We continue to believe these investments position us well to deliver meaningful benefits to the business over both the intermediate and longer term. Moving down the income statement. Operating profit for the third quarter increased 11.1% to $491 million compared to $442 million in the third quarter of 2018. As…

Thank you, John. I'm very proud of the progress the team has made in advancing our key strategic initiatives, which we believe better position us for the long-term sustainable growth. Let us take you through some of the most recent highlights. Starting with our nonconsumable initiative or NCI. As a reminder, NCI consists of a new and expanded assortment in key nonconsumable categories, including home, domestics, housewares, party and occasion. The NCI offering was available in more than 2,100 stores at the end of the third quarter, and we remain on track to expand the offering to a total of approximately 2,400 stores by the end of 2019. We recently completed our sixth replenishment cycle, and I'm very pleased with the sustained positive sales and margin performance we are seeing across our enhanced product categories. We also continue to see a positive halo effect in consumable sales. Overall, this performance is contributing to improvements in both total sales and gross margin rate in these stores. These results reinforce our belief that NCI can be a meaningful sales and margin driver as we move forward. In fact, as I mentioned earlier, our plans include accelerating the rollout of NCI to a total of about 5,000 stores by the end of 2020 as we look to further complement our strong and growing consumable business. Turning now to DG Fresh, which is a strategic multi-phased shift to self-distribution of our frozen and refrigerated goods such as dairy, deli and frozen products. These goods currently represent approximately 8% of our total sales. The primary objective of DG Fresh is to reduce product cost on our frozen refrigerated items, thereby enhancing gross margin. And while still early, we are very pleased with the progress and product cost savings we are seeing. Three other important goals…

[Operator Instructions] The first question will come from Matthew Boss with JPMorgan.

Great. Congrats on a really nice quarter, guys.

Thank you, Matt.

Todd, maybe to start off, can you speak to the health of the low-income consumer and maybe how you'd handicap your top line strength that you're seeing today as we think about the industry backdrop versus your own offensive initiatives? Meaning, I guess, how confident are you that you can sustain the drivers of today's top line strength as we look ahead to next year and beyond?

First, Matt, I would tell you that our core consumer, we see her about where we have the last couple of quarters. She still has a little bit of extra money in her pocket, continues to be employed at a pretty high rate. But always remember, our core customer is always a little stretched and she looks to us to provide that value and convenience that she's come to known from Dollar General. And as I look into the future, whether it be this quarter or into next year, I would tell you that the continued strength we see in the top line sales results are really a combination of a good consumer. But I would tell you that our initiatives are really starting to work for us across the entire portfolio of businesses we have, both consumables and nonconsumables. So both our shorter-term initiatives around coolers, health and beauty, queue lines, et cetera. But also, you probably noticed, we've had some of our best nonconsumable results that we've had in many years. And a lot of that is coming from our longer-term strategic initiatives, mainly NCI, where we've taken a lot of our NCI learnings and not only have got them in the 2,100 stores that we've already launched it in but we've also flushed it back into the entire chain, many of those very successful planograms that we've set, we've actually put them inside of our 16,000 stores, which is really starting to help drive that top line. So we feel very good about the sustainability of our comps as we go forward.

Great. And then maybe just a follow-up for John on the gross margin. I guess, any difference between your gross margin performance versus internal plan this quarter, in the third quarter? And then with the acceleration of DG Fresh and NCI into next year, is there any reason why your gross margin expansion opportunity, as we think about next year, would not potentially be larger than the performance that we're seeing this year?

Thanks, Matt. I'll start by saying we feel very good about the balanced Q3 performance as we drove a strong top line, as Todd mentioned, while increasing our margin rate slightly. I will tell you that we still see the second half gross margin the same as we did on our last call. We continue to expect rate improvement, as we mentioned, in the second half to be roughly in line with Q2 compared on a year-over-year basis. And we see the same basic drivers there in play. As we said we would, we continue to be more targeted in promotional activity. And as you can see, we continue to drive very strong transaction growth, great balance in our sales and have been growing our share at an accelerating rate. We also expect to see and are seeing continued growth in benefits from initiatives like DG Fresh and NCI, as Todd mentioned. And as you look forward, I'm not going to comment specifically on 2020. We'll be talking about that in our next call. But just more broadly, as you look over the long term, there's always headwinds there, but we see ourselves in a position to expand our gross margin over the long term. We see growing impact continuing from initiatives like DG Fresh and NCI. We're really focused on our initiatives on the top line and the bottom line. We continue to see opportunity with category management. As we mentioned in our prepared comments, I see a lot of opportunity around foreign sourcing penetration, a lot of great things going on with private label to drive that penetration on the shrink side. We're incorporating EAS in the remainder of the stores this year as well as operational focus on that. It's the opportunity there over the long term. And the team has done a great job on the supply chain side, driving efficiencies. So we believe we're making the right investments, and we believe we have a lot of levers to improve operating margin over the long term, while reserving the right when needed to invest in the customer.

The next question will come from Rupesh Parikh with Oppenheimer.

Congrats on a great quarter.

Thank you.

So I also wanted to ask a little bit more about your acceleration in your real estate plans for next year. So if you can maybe talk a little bit more about your thinking beyond the decision to accelerate your real estate projects and how you feel about the organizational capacity to handle both the acceleration on a real estate front and really all the initiatives that you continue to have underway.

Rupesh, thanks for the question. I would tell you, we have really, over the years, built the capability to execute against a very robust pipeline of real estate projects. But even beyond that, we have built the disciplines here and have proven over time that we can handle a lot of complex projects at one time. We have a great group of individuals that work for this company that work hard every day to make sure that we execute at a very, very high level. And that's what really gave us the notion to move a little faster here, knowing the success that we have seen in the recent past. But even more so than that, we want to make sure as we continue to take care of the mature store base of this company and touch every store every 7 to 10 years to make sure it's refreshed and has the best and brightest that we have available, we really need to start to accelerate our remodel programs to help facilitate that every 7- to 10-year touch. But again, we wouldn't be able to do that without all the great work that this team is able to produce in any given year.

Great. And then one quick follow-up question. So any initial thoughts in terms of the SNAP rules -- SNAP rule changes that are going to go into effect next year?

Yes. There's one that was in the news yesterday around able-bodied work requirements, which will take effect April 1, 2020. Based on what we know about this proposal, we don't see this as a material impact next year as we see it. This is something we continue to monitor closely. We've continued to see a long-term trend of reduced benefits over time gradually. But over that time, our share has grown as well. So we're still a little under 5% in terms of tender mix but are really focused on what we can control, and that's making sure we're prepared to serve those customers as they need us.

The next question is from Karen Short with Barclays.

I just wanted to follow up a little bit on the gross margin in general. So I know you've consistently said, and you've said it twice on this call, that second half gross margin will be similar to 2Q. So that implies kind of almost 30 basis point improvement in gross margin in the fourth quarter. So wondering if you could just provide a little color on why you'd see that improvement. And then you did call out shrink as a pressure point this quarter as well as distribution transportation, but can you elaborate a little bit on what was causing that? And has that got anything to do with the acceleration of the fresh initiative?

Sure. I'll start by talking about gross margin. You're correct in the way you're thinking about the second half, that would imply and that's what we expect, is increased gross margin expansion in Q4. The reason we see more gross margin expansion in Q4 versus Q3. The 2 main drivers I would point to is, one, the acceleration of our strategic initiatives. As fresh scales, as NCI scales, we see that playing a bigger and bigger role. The other piece is the promotional activity. We are lapping heightened promotional activity last year. It was targeted. It served its purpose, created a lot of momentum in the business, but we don't see a need to repeat that. And the team has done a really great job being very targeted in the promotional activity, really focused on what moves the needle, and we see ability to do less as a percent of sales this year. That's the 2 main things I would point to as well as just seeing other opportunities and the other levers that we mentioned there. In terms of shrink, we've reduced shrink quite a bit over the last 3 years. But as we've said, it's never a straight line to the top. In Q3, we were lapping a very challenging lap. At the time, that was the lowest shrink rate we've had in many years. What we've been trying to do this year is balance shrink with in-stock improvement levels. We really look to take our in-stock improvement to the next level, which is great in terms of driving sales, but it does present a little bit more shrink exposure. But we continue to see opportunity over the long-term to drive further shrink improvement. And with the incorporation of the EAS units in all the stores by the end of the year, that's been a big benefit to us and we would expect benefits from that as well as leveraging all the other tools and technology and process rigor to drive that down further over the long term.

So my follow-up would be then, as we look to 2020, just generally speaking, it would sound to me, barring anything unforeseen with respect to the competitive environment or the consumer, that the tailwind should be greater than the headwinds overall for next year. Is that fair?

I'm not going to comment specifically on 2020, I'll just speak to the longer term. And what I would say is we feel like we have a lot of catalysts in place to drive the top line. As we've mentioned, we feel like we have a lot of levers within gross margin and SG&A to flow that through. We're very pleased with where we're at this year, delivering double-digit operating profit growth and EPS growth this quarter while reinvesting in the business. And as we look forward, we'll continue to look at that. We want to make sure that we're delivering strong performance, but at the same time, reinvesting in the business to protect the long-term health and growth of the business. So I would look at it that way.

The next question is from Ed Kelly with Wells Fargo.

This is Anthony on for Ed. Congrats on a solid quarter. So clearly, you guys continue to accelerate your share gains given the comp performance and your initial remarks. Can you just talk about what you're seeing right now in the competitive landscape? And then is there any specific channel that you think this is coming from? Or would you say it's been more broad-based?

Yes. Let me start with the second piece. First is, I would say that it is more broad-based when you look at the share gains that we've seen. And our core consumer continues to be, again, a little bit healthy and that she has a bit more money in her pocket. But I would tell you that as we look out there, a lot of our initiatives are really the key driver behind these share gains and outsized share gains at that and accelerating. And you can really see it in many of the categories that we've really got the emphasis on health and beauty being one; our food and perishable initiatives, you can really see the initiatives really resonating with the consumer, and she's voting with her wallet on where she shops. And it's great to see. Now our goal is to continue to be a fill-in, and that is exactly how our consumers continue to look to us. But with expanding assortments and fabulous prices, we feel that we give her the opportunity to be able to fill in with confidence.

The next question is from Michael Lasser with UBS.

My question is going to be a little bit of a devil's advocate on the fourth quarter implied gross margin. You've got a pretty easy compare. As you mentioned, you engage in some promotional activities in the year ago period that you're not going to repeat. You've got all these really good gross margin drivers like DG Fresh and the NCI initiative but yet you're only guiding for 30 basis points of gross margin expansion in 4Q to get to like a 31.5% gross margin, which would be below where you've been over the last few years, excluding 2018. So why wouldn't it be better than that?

Yes. What I would say, Michael, is as you look at the squeeze on Q4 that, as Karen pointed out, that end point is a pretty healthy gross margin. But what I would tell you is that, one, there are some headwinds. We're overcoming tariffs. The team has done a phenomenal job mitigating that, such that it's not a material impact. It wasn't a surprise to us. But still, it is a pressure. And there's other pressures as well, as well as reinvesting in the business. That's the way we look at it, if we can deliver double-digit EPS growth, which is what our guidance implies, 10% to 11%, while reinvesting in the business to put more catalyst in place for long-term growth. We think that's a healthy balance between the 2.

Okay. And my follow-up question is, it's very not -- very much not apparent from the financial performance that you've reported, but given all that you do have going on, have there been any hiccups with opening any of these new fresh DCs or engaging in NCI or opening new stores that we should be mindful about as you get further into executing some of these strategies over the next few quarters?

Michael, this is Todd. I would tell you that the team has done a phenomenal job across the board on each of those initiatives you just talked about. And I would tell you that we have seen no show-stoppers. Obviously, there's always going to be a bump or 2, but they were very, very manageable. We learn from those and kept moving down the road. And I think it's a real testament to your question here is our notion that we're able to accelerate both our nonconsumable initiative into next year, of course, accelerating our -- and growing the Fresh initiative into next year with up to 5 different new facilities as we go into 2020. So I would tell you that there's been some learnings. But more -- a whole lot more wins than anything else that we've seen and has given us great confidence to move forward.

The next question is from Simeon Gutman with Morgan Stanley.

This is Xian Siew on for Simeon. I just wanted to dig in a little bit more on the top line momentum. Is there any kind of update on maybe basket size or the number of trips? And then, I guess, within that, you mentioned transactions are growing nicely. So are you gaining new customers? Or is it kind of the existing customer just coming more frequently?

Yes. Thank you. Yes, I would tell you that our top line was very balanced. A very good mix of both traffic and ticket. And I would tell you that the average basket size has upticked a little bit over the last quarter or 2 as we continue to refine our offering and give our customers more choices, as we roll out DG Fresh to more stores. That also enables, again, an extra item in the basket, if you will. So we're very pleased with both traffic and ticket as we see it. As it relates to the consumer, we continue to see that our fastest-growing category of consumer, if you will, is that consumer making $50,000 or above, and we continue to believe that she's shopping more often because of all the work that we've done to refine that box and give her an offering at a great compelling price and she's liking what she sees when she tries us, and she's sticking with us even after the first few trials. So we're really excited about that. It gives us great confidence as we move into 2020 and beyond, that we can drive that top line.

Got it. That makes sense. And just as a follow-up, I guess, you're lapping this year in this quarter, the hurricane-related expenses you mentioned. And -- so you had some leverage, but maybe if you ex that out, I mean, there's not as much leverage on the SG&A. With comps came in so much stronger, I guess, why shouldn't we see more leverage on that?

What I would say is that we're proud of the Q3 and year-to-date cost control that we've put in place while driving strong top line and investing in our strategic initiatives. Year-to-date, we've invested $33 million in our strategic initiatives yet in Q3 and year-to-date, leveraged on an adjusted basis. We're laser-focused on cost control, make me no mistake, but we're looking more broadly in operating profit and willing to make those trade-offs that deliver the bottom line. So we're pleased with delivering double-digit operating profit growth and delivering the double-digit rate increase making those trade-offs. But as you invest in things like DG Fresh, there is a trade-off between gross margin and SG&A. You have to spend a little bit more on SG&A to save a lot more on gross margin. And when you're at the front end of these initiatives, there's more upfront cost. But as these grow over time and scale, we see these having great returns. We mentioned in the call, we see DG Fresh as being accretive from a rate and dollar standpoint next year. So we believe that we're making the right trade-offs here and believe that if we could deliver that kind of leverage while investing in the business, that's the right trade-off for the long term. And we believe these types of investments is what positions us well to be double-digit EPS growers on an adjusted basis over the long term.

The next question is from Scot Ciccarelli with RBC Capital Markets.

John, I know you've bounced around this topic quite a bit today, but these all fell on margins. I guess, just kind of taking a step back, we have seen a fairly consistent pattern of the company making pretty sizable investments in the business over the last several years, whether it was price or training, labor initiatives, et cetera. And while there's been a nice payoff on the sales growth, these investments have weighed on profit growth and flow-through. So I guess what I'm wondering is, are there any areas, as you kind of sit here today, that seem ripe for incremental investments?

Well, as we look ahead, I would tell you that there's nothing specific we see on the time horizon, which would be a substantial increase in investment. I think we've got 4 really good investments before us. Now those are going to scale. And as we grow those, more money will be spent on those. But as we've said, we see those hitting a tipping point: See DG Fresh hitting a tipping point where it's accretive next year; we're already seeing accretion from NCI; we're investing in digital; and we're investing in Fast Track. Fast Track on the labor side, we're seeing benefits there already with what we're doing with making it easier to stock the shelves. We're investing in self-checkout, which we see as a great return over the long term, but we're just starting there. So we're pleased with what we're seeing with that test right now in terms of adoption and customer feedback and see that returning over the long term. So these are various phases, but we see all of these providing catalysts to the top line but also helping the bottom line, helping that margin rate. And I would tell you, we're not giving any specific guidance for next year, but don't see any major investments on the horizon beyond continuing down the path we're on, which is working very well for us.

That's very helpful. And then just a quick follow-up here. You had seasonal goods that were up the same amount as consumables from a growth rate perspective. Just curious if there was something specific that drove that this particular quarter? Or is it a function of NCI program? Any kind of guidance on that? Because, obviously, it helped you sell a richer mix of goods.

Yes. Sure. I would tell you that the team has done a great job in our seasonal programs. Not only seasonal, but many of our home categories are doing very well. And I would tell you that NCI has given us a nice shot in the arm as it relates to the overall top line. It's even gotten us to look at our everyday 16,000 stores a little differently as we continue to scale NCI. So I would tell you that that's really been the catalyst behind it, and we're very proud of the team's performance and our store team's performance in our nonconsumable categories. And the other note is apparel did very well, even in a downsizing mode that we're in, in apparel. We've made that even more productive. As we expand out on other categories, apparel is still important to our customers in certain areas, and we're capitalizing very well on that.

The next question will come from John Heinbockel with Guggenheim Securities.

Todd, let me start with good-for-you assortment, right? Where does that stand now in terms of number of items? Where does that go, do you think, over the next year or 2? And is that helping you broaden out your demographic appeal?

Yes. John, I would tell you that right now, we see our Better For You offering in about 5,400 stores. We see an opportunity to probably double that over time, and eventually into the majority of our stores. But everything we do here, as you know, it's through the lens of the consumer. And as the consumer continues to change and her preferences continue to change, and also as we start to see a little bit more of a millennial customer showing up, which we have, Better For You continues to grow with our customer base, and we're going to grow with it. The great thing is that we've got upwards of 20 feet worth of product today. The majority of that in our Better For You, Good & Smart label, which is our private brand label, which makes that very, very accretive for us. But I would tell you that as we continue to scale our fresh initiative, that more and more introductions into frozen, dairy, and deli will also fall into some Better For You-type categories and sales opportunities. And I agree with you fully, and what we've seen in our data shows it is expanding the reach of consumers that we have today and we'll continue to get into the future.

All right. And secondly, I know the high-capacity coolers, right, 45% more holding capacity. When you think about the productivity, right, but the revenue or the volume that a high capacity cooler can do versus a non, is it similarly, 40%, 50% can do that much more business? Or it's really a function -- you've got to keep it stocked, so maybe it's not that high?

Yes. I think that's the way to look at it. It does give us more revenue. I would tell you that for sure. Not at a 40% rate. But this is really being done twofold reasons. Number one, we are ensuring that we're in stock as we roll out our new Fresh initiative. We would rather have it in the cooler on the sales floor than any back stock in the back room in a cooler waiting to be stocked. That's number one. But it does give us 25% more item capability, and that's where you're going to see the increase in sales come from in this initiative. And I'm happy to say that the majority of the stores that we put in the ground new next year as well as our remodel and relos will have those higher-capacity coolers in them. So we feel real good, John, about where this is going to take us.

The next question will come from Chuck Grom with Gordon Haskett.

Just, Todd, can we dig a little bit into NCI a little bit more? Just maybe the number of SKUs you're adding by store? What the lift you're seeing in, say, an individual store? And it seems like the gross margins are starting to nicely contribute. Maybe just sort of unpack that for us a little bit more? Because obviously, it's pretty important. You talk about the remodel look historically, but it sounds like NCI is something that we maybe could start to quantify?

Yes. I would tell you that, Chuck, that we plan to quantify this a little bit more as we move into next year. But let me try to shape it up a little bit by saying that it is a complete redo of our nonconsumable categories in general. And I would tell you that the mix is vastly different in those stores than what you see in our traditional stores. On top of that, it gets refreshed multiple times a year in many of the areas of NCI, where our planograms are static, if you will, outside of season in our traditional stores. So it gives something fresh and new to the consumer every time she comes in. And again, she's been gravitating and resonating to that very, very well. I would tell you that it has been accretive to our remodel sales. Again, we'll quantify that probably a little deeper as we move forward. But both on the sales line and the gross margin rate line, we've seen benefits from this. And as that continues to grow, it will start to benefit the entire company as we continue to grow that. But the one point that I did want to again make is that we're taking some of those best of the best planogram learnings and rolling them back into the 16,000 store base, and that's really what's given us some of that strength that you've seen over the last quarter to 2 in our nonconsumable category. So we feel very good about where it's headed. And we're only in the third inning here of build to roll this out.

Okay. That's helpful. And then just a follow-up. Along with the potential margin savings from eliminating the middleman, one of the benefits from bringing fresh distribution in-house was, I believe, the ability to get better access to brands. So just wondering if you could elaborate on progress on that front and anything we should expect over the next couple of years. Maybe any specific brands that you've been able to bring in recently.

Yes. Chuck, as we continue to scale fresh, it is a goal of ours to expand the brand offering in areas that our customers are looking for. A lot of it in the deli and frozen areas of the store. And the one big area that we see opportunities to move forward as well is even in our own private brand offering, which we were excluded to really play in any significant way in, and that would include Better For You as we continue to move forward. So that -- while that is a very important piece of the fresh initiative, the most important piece right now is getting the stores up and running seamlessly, making sure we're in stock for the consumer driving that in-stock rate, which will drive our sales higher, and we've already seen that. And then as we master that within the next upcoming year or more, we'll start to put in these new brands, which will also then help accelerate that top line in the fresh initiative. So we believe we've got a multiyear pronged approach to this that should drive that top line.

And just a quick follow-up. I think you said 5,500 stores. But anyhow, did you say how many you expect to be in by the end of 2020?

Well, I think what we've said, Chuck, is that the pace of rollout is going to be very similar. We'll probably expand that a little bit more, but we plan to be in close to 12,000 or more stores by the time we leave 2020.

And gentlemen, we have reached the top of the hour. At this time, this does conclude today's conference call. You may now disconnect.