Good day, ladies and gentlemen. And welcome to the Petco's First Quarter Fiscal 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Kristy Moser, Vice President and Investor Relations Officer. Please go ahead, Kristy.

Thanks very much and welcome everybody to Petco's first quarter fiscal 2021 earnings conference call. We are webcasting live over the internet. To access the call on the internet, please go to Petco's website at petco.com and follow the links from there. In addition to the earnings release, there is a presentation available for download, summarizing our first quarter 2021 results and reconciling non-GAAP measures as discussed today with the most directly comparable GAAP measures as well as a financial supplement. On the call today with me are Mr. Ron Coughlin, Petco's Chairman and Chief Executive Officer; Mr. Mike Nuzzo, Petco's Chief Operating Officer and Chief Financial Officer; and Mr. Brian LaRose, Petco's SVP of Finance. In a moment, Ron and Mike will walk you through Petco's recent financial and operating performance for the quarter. Before we begin our remarks, I would like to remind you that in this call we will make forward-looking statements regarding our current beliefs, plans and expectations, which are not guarantees of future performance and are subject to a number of risks and uncertainties and other factors that could cause results to differ materially from results and events contemplated by such forward-looking statements. These risks and uncertainties include those set forth in our earnings release, and our filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof and except as required by law. We undertake no obligation to update or revise any of them, whether as a result of new information, future events or otherwise. In addition, today's presentation contains references to non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our earnings release, and our filings with the Securities and Exchange Commission. During the question-and-answer session of today's call, please limit yourself to one question and one follow-up. Now, let me turn it over to Ron.

Thanks, Kristy, and good morning, everyone. Thank you for joining us today. This quarter was remarkable one for Petco. Yes, it was an all-time record for quarterly revenue with strong profit flow through, but what's truly remarkable is the customer dynamics that promote sustained growth. We added almost 1.2 million net new customers in the quarter, the strongest gain in my nearly three years at Petco. Spend per pet was up 5% and we gained market share. We drove more and more of that spend into recurring revenue programs like Repeat Delivery and Vital Care. We launched our co-branded private label credit card this quarter, and the initial response is promising. And from a purpose standpoint, we continue to progress our mission to save pet lives, highlighted this quarter by a partnership with PetDx to launch OncoK9, a true breakthrough in pet cancer diagnostics. Cancer is the number one disease related cause of pet death and a passion topic for me, as my dog, Yummy, is a cancer survivor. Early detection will make a massive difference. This combination of purpose with performance is central to who we are as a company and guides us into the future. Double clicking into performance. Our team got off to a great start in 2021, driving record quarterly revenue of $1.4 billion, up 27% from Q1 last year with comparable sales growth of 28%. This marks the 10th consecutive quarter of comp growth. We delivered across all of our businesses. Pet Care Centers were a particular highlight delivering growth of 26%. Make no mistake about it. A sizable number of pet parents and their pets love coming into our Pet Care Centers and now feel safe to do so. At the same time, our digital sales exceeded expectations with 21% growth lapping very strong…

Thanks, Ron. Good morning, everyone. Yes, we are certainly off to a great start in 2021 building on the strong business momentum that Ron discussed, I am pleased to share a strong financial and operational results. We delivered record revenue of $1.4 billion in the first quarter, up 27% over Q1 2020 with comparable sales of 28% and 30% on a two-year comp basis, well ahead of our expectations with double-digit growth for each month of the quarter. We estimate that government stimulus payments contributed around seven to eight comp points of benefit in the quarter, meaning excluding stimulus, our two-year comp trend exceeded 20% an acceleration from Q3 and Q4 2020. Diving one level deeper, Q1 digital revenue was up 21% and 129% on a two-year stack. Services and Vet were up over 63% and 46% on a two-year stack and brick-and-mortar merchandise was up 26%, reflecting both the return of retail demand and our strategic initiatives. Both transactions and average basket trends were again strongly positive for the quarter. In Q1, the categories unprecedented and sustained surge in Vet merchandise demand created both added supply chain expense and vendor supply challenges. Petco is not immune to these dynamics, but we entered this year well inventory to support our strong sales momentum and vendors have indicated that they expect gradual improvement in supply as we move through 2021. And Petco's performance highlights our ability to successfully ship customers to alternative products in out of stock situations. In our financial outlook, we have incorporated both modest, rest of year elevated supply chain expenses, along with a level of gross profit favorability from select retail price adjustments to address input costs increases. Historically, higher product input costs have resulted in market price increases that have driven higher gross profit results. Our…

[Operator Instructions] And our first question today will come from Oliver Wintermantel with Evercore ISI. Please go ahead.

Yes, thanks very much, and good morning. I was looking at the guidance for EBITDA and it looks like – it's by the midpoint of the guide is about 10%. I was just wondering if that is, how you think about that longer term, is that a pull forward from your longer term guide or do you think your longer term guide is shifting up.

Thanks for the question, Oliver. We're going to let Brian LaRose take that question.

Oliver thanks for the question. First let me comment a little bit on guidance overall, Oliver. So as you saw in the increased guide, we – our EBITDA flow through on the increased guide did result in what you said. So an increase of about 20 basis points at the midpoint to 10%. I'm not sure I characterize that as a pull forward, but more a characterization of what we see for the balance of the year. So if you look at our revenue guidance update, we feel confident in what we're seeing so far in Q2, which gave us the confidence to raise revenue for the full year. And as Mike reflected in his prepared remarks, if you look at the balance of revenue for the year, it implies about a low 20-ish percent two-year comp for Q2 to Q4 in terms of what that means for our EBITDA, we've got modest supply chain costs that we're working through with some modest price – product input inflation and related pricing actions. But we feel good about the EBITDA flow through that we have put in the guidance for the balance of the year. And it's more a characterization of what we see for FY2021. We're not going to comment on any further long-term guidance at this point. With that, I'll turn it over to Ron to see if he has anything to add on to that.

Yes. The only thing I'd say is, we have confidence in the guide. The first thing that gives us confidence is what's happening with our customers, right? We added 1.2 million in the quarter on the back of nearly a million in the prior two quarters each and there are spend per customer is up, our retention is up and that's going to power us through Q2 in the back of the year and into 2022. So we feel confident in the guide.

Thanks, Ron. And just to follow-up on what you just said about the acquisition of customers. There's some articles out there saying that people returning their pets to the shelter now that the economy is opening up again. But I think in your prepared remarks, you mentioned that that's not a trend that you're seeing, just wondering what the details are there.

Yes. We were alarmed by that information as well, and I would characterize it as misinformation, through Petco Love, our foundation, we work with all the majority 4,000 shelters and rescues around the country and the data from a tracking service that works with all of those shows that they're actually down 25% from comparable months, year-over-year and down versus 2019. So the good news is because we're in the business of eliminating euthanasia, the good news is the relinquishments are actually down. We want to make sure it stays that way. So we actually launched the, bring your pet to work initiative. We're working with employers on making pet friendly offices, which we have here. My dog Yummy comes to work with me and people joke that she's the Chief Dog Officer that goes so. It's down and we want to make sure it stays that way. Thanks for the question, Oliver.

Thanks very much and good luck.

And our next question will come from Kate McShane with Goldman Sachs. Please go ahead.

Good morning. Thanks for taking my question. I have wondered about your same day fulfillment option through DoorDash. Can you just confirm that's rolled out to all stores? And can you tell us how much it is as a part of the mix at this point digital mix? And then finally, in the same vein, just how much of your merchandise is being offered through DoorDash at this time and how will it be rolled out over time?

Yes. So, Kate, thanks for the question. So same day is offered through all of our locations, which implicitly highlights the competitive advantage that it provides, our same day offer gets to the customer faster and lower costs than DC shipped product. You think about a DC-shipped bag of 40-ton bag of dog food going across from UPS or FedEx versus it going in the back of a DoorDash over the same cost as a tennis ball. It is an absolute competitive advantage. We're pleased with what percent of our business it is. And actually 30% of customers are saying they prefer same day. We are actively trying to ship, shift the expectation towards same day because our online competitors would have a difficult time replicating that on a national basis. And as we go forward, one of the categories that we are super excited about is fresh food via same day delivery. I cited that on the call and you think about the dynamics of fresh food same day, it is perfect for that. And that gives us another competitive advantage in the fastest growing part of the food – pet food industry. And sorry, I didn't cover your assortment question. Basically nearly all the assortment goes through - is available via same day. The only stuff that wouldn't would be some of the long-tail type offers that aren't stocked in stores, but I would say 97% of volume SKUs would be available through same day.

Thank you. And then my follow-up question. So just on gross margins in the back half of the year, I know in Mike’s prepared comments, you still flagged the next pressure, but that you're working on some offsets. Could you maybe walk through those as we get through the rest of the year?

Yes. Kate, it's Brian, I'll take this one. So I'm not going to get into quarterly guidance on gross margin and but I'll reiterate some of what Mike said that, we did see in Q1 slightly better brick-and-mortar mix than we anticipated, which helped gross margin in Q1. We expect that mix to flip in the Q2 to Q4, as we have relative strength in our Digital, Vet and Services businesses. Now we do expect to continue to work on great gross margin improvements across multiple variables in the business, things like own brands and premium offerings, driving higher AOV through customer engagement, strategies, productivity enhancements. So while we expect some modest mixed pressure Q2 to Q4, we do have vehicles to help mitigate that mixed pressure. That's about as deep as I can go, Kate, I don't want to get into quarterly gross margin dynamics.

Got it. Thank you. That's helpful.

And our next question will come from John Heinbockel with Guggenheim. Please go ahead.

So Ron, I wanted to start Just Food for Dogs, right? Just remind us frequency of purchase for that customer, maybe relative to a non-customer and an overall spend. And then going from 300 – I saw the 300 to 600, right in one quarter, ultimately, where does – it cannot be in every or the vast majority of the Pet Care Centers and how quickly?

Yes. So let me – at the macro level fresh food is roughly $1 billion now, we see it going to $3 billion to $4 billion the next few years. So a rocket ship of a sub-category, super premium prices, highest price in the Pet Care Center. And the frequency of purchase is significantly higher than your normal kibble. Not only does that mean they're buying that more, but they're also means that we're getting ancillary basket items on those trips. So we love Just Food for Dogs. We also love it, the e-commerce because we think it's a competitive advantage because we do have this distributed inventory through our micro distribution strategy. We are accelerating it and just to be clear, we accelerated it from what we talked about on the Q1 call. We accelerated from what we talked about on our road show. So this is an acceleration based upon the trends that we're seeing in those locations, where we've been there for more than one to two years. In many of those locations is now our number one selling food, which is just incredible at that price point. But the best news is, in our view, it's one of the healthiest products you could give to the pet. We can see it across our Pet Care Centers. It would take different forms. In some locations like our Union Square, you'll see a gorgeous kitchen where we're actually preparing the food in front of customers. In others, we have what we call pantries, which are not smaller and others, we have a run, which is a much smaller from that. And then we have cooler execution. So we'll customize the execution based upon the throughput of the location.

Okay, thanks. So then there is the second non-related right. So the service – with the vet lift, right to comp or attachment rate, right. So that was like 631, right, first three years? In any sense of, is it modestly better than that? Or so for you saying, is it materially better than that?

Mike, you want to handle that one.

Yes. John, good morning. Yes, the lift is consistent. And what we're seeing in our own vet models is that it's a little better. And again, you can attribute that to everything that we're talking about in terms of that synergy between the Pet Care Center team and the vet hospital, it's strong across the board. It gets a little stronger with the own vet model.

Okay. Thank you.

Yes. Just to clarify, one thing on Just Food for Dogs, actually the trip frequency is 2X kibble, so very attractive.

Thank you.

And our next question will come from Michael Lasser with UBS. Please go ahead.

Good morning. Thanks a lot for taking my question. What drove into the 5% increase in spending per pet in the quarter? Was it more items in the basket, trading up and inflation benefit, how do you break that down?

Yes and yes on the first two items that you suggested. Our basket is increasing and has been increasing. The premiumization is a trend that's been going on in this category for years. Whether it's premiumization of food, we've moved our premium mix by about 10 points over the last three years. And we see significant headroom to move that further as evidenced by the conversation on Just Food for Dogs or even Honest Kitchen, which is a super premium human grade food that we rolled out towards the end of last year, that's doing well. So we see both of those as factors on the spend per pet. The other piece that we had is the comeback of our services. They were impinged upon due to COVID regulations. We actually had to shut down our group training as we said on the call, our training had the best quarter it's ever had. Our grooming response and there's more demand than supply, which we're addressing right now, the addition of our vets. So we're seeing basket trend, we're seeing AOV increase and we see those as long-term. The other longer term dynamic is looking back on the 11 million. I said, 11 million or over 10 million pets in 2020. The majority of those went to millennials and Gen Zers. Millennials and Gen Zers spend more per pet. So that is another tailwind on the spend per pet at the category level.

Got it. My follow-up question is it was helpful that Mike quantified the impact from stimulus spending of seven to eight points during the quarter. Presumably, a lot of that went into hard goods. So how did it unfold between hard good and consumables? And then as an unrelated follow-up, how are you using these period of strength as an opportunity to double down on some of your advertising, which presumably will help customer acquisition and continue to drive the funnel that seems to be influencing the business?

Hey, Michael, I'll take the first part of your question on stimulus. As far as the composition of the spend, it was really across the board. So we had strong trends in all of our categories, for all the reasons that we're talking about. We also feel good about the estimate of the seven to eight comp points. It's not an exact science, but I think our teams did a really good job, really looking at our daily and weekly trend changes associated with the precise timing of stimulus payments really as they've landed at household. So we feel good about the estimate. Again, it was really across the board a reflection of all the strong trends that we had in the quarter. And I'll turn it over to Ron for the…

Actually, yes. So one of the things on your advertising question, that's been just so phenomenal for the business. As we started pulling out of the initial lockdown, probably around Q3 of last year, we really started getting the growth flywheel going and getting into this virtuous cycle of increased marketing investment, increased marketing return, and the business kept accelerating. We've had that flywheel going now since probably September of last year. I'll let Brian elaborate.

Yes. On advertising, so in Mike's prepared remarks, he mentioned that in the quarter, we more than doubled year-over-year our advertising investment. We continue to like the ROI we're getting there. On our advertising spend, we took the opportunity in the first quarter to lean into that advertising to fuel that flywheel. Even with those incremental investments in SG&A, we got 160 basis points of leverage in terms of SG&A as a percentage of revenue while continuing to fuel that advertising vehicle for future growth. And that ROI by the way is 2x industry benchmarks on that ad spend.

Great. Thank you so much.

And our next question will come from Steven Zaccone with Citi Research. Please go ahead.

Great. Good morning, guys. Thanks for taking my question. I actually wanted to follow-up on the advertising. And I was curious, how do you feel about your broader brand awareness in light of this increased advertising spend? Is there more work to be done and I guess, specifically you cited strong adoption trend among younger demographics like millennials and Gen Z. How do you feel about your positioning with that younger demographic?

Yes. Hi, Steven, thanks for the question. Our advertising spend, if I look at the chapters, we really focus on customer acquisition and performance marketing got really good at that and you see the customer acquisition trends. So that was working. What we supplemented within Q1 is our new ad campaign, which is all about treating your pet. As you treat yourself, we're getting phenomenal feedback and initial results are very positive on that amongst both older demos, as well as younger demos. Petco is a strong brand. It was dormant two, three years ago, we really reactivated it. And I think the addition, the combination of performance marketing plus this broader brand building campaign is going to be very powerful and the results speak for themselves. April was a very strong month. And as we said, that momentum continues into May and that's when the campaign launched in end of March. So thanks for the question.

Great. Thanks very much.

And our next question will come from Liz Suzuki with Bank of America. Please go ahead.

Great. Thank you. On new customer acquisition, do you have any data you can share about where your new customers are coming from? Are they mostly new pet owners or people who already had pets are choosing Petco over other retailers?

Thanks for the question, Liz. We were really pleased with those acquisition trends and what's nice is these customers are shopping across channels. 39% of customers want to be omni-channel customers. And that's where we believe our value proposition is most powerful. In 2020, as I said earlier, the industry game more than 10 million new pets with continued adoptions. As I said, forecast continued to go up in terms of number of new pets, backlogs at breeders, et cetera. And we're getting more than our fair share. In terms of sources, first, there's a lot of new pets coming to the category. Second, we're seeing industry consolidation, for example, pet value closed in December, and we've seen significant customer acquisition in their former geographies. And anywhere we put a new vet, which is what Mike talked about. That's a new customer for Petco. From a marketing standpoint, we talked about the campaign. We're also deploying enhanced CRM, analytics, segmentation and as Brian said, marketing ROIs are double the industry benchmark. So we have that marketing flywheel going. With the story within the story that I really like, and it's nascent, but it's impactful is the Vital Care and recurring revenue story. We increased our recurring revenue customers by 50% in Q1 year-over-year, 50% increase in recurring revenue. And that's behind programs like our Vital Care membership program, our PupBox, our Insurance, and needless to say, our Repeat Delivery. So that gives us stickiness of revenues from Q2 through the second half of the year.

Great. Thank you.

And our next question will come from Seth Basham with Wedbush Securities. Please go ahead.

Thanks a lot and good morning. My questions around the vet hospital business and your tuck-in acquisitions there, that's a little bit different strategy you used in the past. If I'm not mistaken, can you give us some more color as to why you're going out and acquiring vets rather than going fully organic with the growth?

Let me just – I'll start and then turn it over to Mike. It's not that we're not organically building. That is our primary strategy. The acquisition is a supplemental strategy, but I'll let Mike elaborate.

Yes, Seth, thanks for the question. We like this opportunity. I would tell you, we're going to give you a lot more updates as we go along with this. And we're in sort of a test and learn with this, but as we looked at the market, there is still many, many small one, two vet practices out there that typically don't get consolidated. And those are actually a perfect fit for our model. So, as Ron said, the primary focus is recruiting. We're seeing a lot of success for that, but we like the idea of this taking an existing vet practice, moving it into our Pet Care Center hospital. You start with a mature vet hospital, and it gives you a way to accelerate the model. So again, we'll give more updates on it. We liked the opportunity. We think the financials will be really attractive on it, and that's how we're measuring each potential acquisition. But again, it is a supplement to what has been a really strong recruiting part of the business.

Understood. Thank you. And as a follow-up question, in the quarter, you guys reported $9.3 million of non-recurring costs. I think you had guide to zero for that. What should we be expecting going forward and what was in that non-recurring cost for the quarter?

Yes. Hey Seth, it's Brian. I can take that one. So the vast majority of that line item was a legal settlement this quarter. Going forward, I would stick with what we said in the past, which those will be small and modest amounts, but this quarter we did have a singular item that took up the vast majority of that line.

Thank you.

Thanks Seth.

And our next question will come from Zach Fadem with Wells Fargo. Please go ahead.

Good morning, guys. Can you talk about your spend per customer and how an in-store only customer compares to a digital or a multi-channel customer? Given that your total spend per customer is roughly half of that of your online pure play competitor. How should we think about new customer adds versus spend per customer trajectory as they move through the year and into the future?

Yes. Thanks for the question, Zach. So as I said, we gained 1.2 million customers in Q1, nearly, 1 million – nearly 1 million in Q4, nearly 1 million in Q3. We’ve been focused on performance marketing to drive that. Our customer acquisition costs in Q1 and into May are down versus Q4. So we see it as a favorable market to acquire customers. And we’re seeing a lot of traction. Now we tend to focus only on digital, where we believe our customer acquisition costs are either lower or are competitive with our main online competitor. But one of the other important parts is on our services business, where we compete with mom and pop. So if you think about a trainer, if you think about a groom or think about a vet the customer acquisition costs because we have traffic in those locations is a fraction of our competitive set. So not only we’re competitive on the digital side, not only is our customer acquisition costs lower, and we’re adding marketing at our high ROI, but our customer acquisition in our services end of our business is a fraction of our competitors. If you think about things like Google Local, a mom and pop rumor isn’t going to be deploying tools like that. So we have the traffic advantage from the pet care center, plus we have the performance marketing advantages. And overall what’s enabling the flywheel is growth in our LTV. So it’s a good story on both sides, customer acquisition and LTV.

Got it. And then on the impact of inflation, what was the contribution to average ticket and comps in the quarter? And you mentioned some select price increases in response. Maybe you could update us on price competitiveness versus peers and how you expect that to trend?

Yes. Zach, thanks for the question. Not much of an impact in Q1. We at the end of Q1 obviously had some cost increases that we pushed through retails. Today, we haven’t seen any slowdown in demand. I think the team’s doing a really good job managing the whole input cost situation. As we’ve said, historically, input cost inflation in food and consumables has been passed along in higher retails, which has generated net better margin. I would highlight on the supply side, we got ahead of this last year. We anticipated and we’re starting to see some higher import and freight costs and we built those into the margin structure on our scaled own brands portfolio, which as you know, you’ve got to get out in front of a little bit. So that’s been a positive for us. And then obviously having a strong own brand infrastructure helps with product availability and flow. So it’s a good thing. And so I think we feel pretty good about our ability to manage the margin aspect of the whole product input cost situation.

Got it. Appreciate the time.

Thanks, Zach.

And our next question will come from Lavesh Hemnani with Credit Suisse. Please go ahead.

Hi, everyone. Thank you for squeezing me in here. So two quick follow-ups on the margin. So firstly on gross margin, I guess is the message that despite the pressure that you are seeing through the year, you have enough offset in the P&L where pricing actions and other stuff on the cost improvement side, you should be able to offset that. And secondly, on the SG&A side, given that you had significant COVID expenses in 2021, what is the outlook for that and the balance of the year? I believe you guys prepaid like an appreciation bonus in Q1. Thank you.

All right, I think Brian will take that one.

Yes. Lavesh, let me reiterate a couple of things. As I mentioned in the gross – earlier gross margin question, we do expect some mixed dynamics in revenue Q2 to Q4, and we have vehicles to help offset that. I’ll couple your question on SG&A with the guidance reminder on the balance of the year, our incremental EBITDA guide relative to the incremental revenue guide showed very strong EBITDA flow through Q2 to Q4, which we feel good about. I know you mentioned COVID costs for the balance of the year. I’d also remind you that particularly in March, April last year, and then into Q2, we also had some significant meaningful COVID savings from some of the way we navigated through the early part of the pandemic, which a lot of retailers and other companies also did. So there are lots of dynamics at play. I’d sort of point you to the EBITDA flow through on the incremental revenue and the confidence that we’ve given in the guide.

Thanks, Lavesh.

Got it. Thank you.

And our last question will come from Peter Benedict with Baird. Please go ahead.

Hey guys, thank you. It’s Justin Kleber on for Pete. Ron, I wanted to follow-up on one of your comments about the 39% of customers that want to be omni-channel. You guys mentioned in the script double digit growth in the multi-channel customers. Just curious what percentage of your active customers today are multi-channel? Can you give a sense how that penetration has changed versus last year and how much runway you think you guys have to drive that penetration higher?

Yes. So just reiterating, just to reground everybody. Thanks for the question. Reground everyone. We said double digit growth in multi-channel customers, which is our third consecutive double digit growth in multichannel. Why does that matter? Because multi-channel customers have an exponential spend, these are customers that might shop at a pet care center, as well as e-commerce, who might buy food as well as grooming. So that double digit growth is strategic and generates more revenue. The good news is, there’s two pieces of good news. One is we’re growing and the second is what just under 4 million out of our 22 million-ish customers who are multi-channel customers. So we have a lot of headroom to continue to drive that. And we’re proving that we can do that. I would just highlight, we just started this view in Q2 – of 2020, so we’re just getting started and we continue to have momentum in driving that. And a great example of this is vital care, right? We went from zero to 70,000 members of vital care where you get your check-ups, vaccinations discounts on food, grooming, et cetera. And we’re up to 70,000 of the vital care customers roughly 19% of them are new to food and over 30% are new to services. So the strategy was to gain share of wallet amongst these customers, and it is working. Our vital care customers are spending 2.5 times more than our average customer. So it’s just an example of the multichannel embodied in an initiative. So very strategic for us. Thanks for the question, Justin.

And this will conclude the question-and-answer session. I’d like to turn the conference back over to Ron Coughlin for any closing remarks.

So thank you for your questions. Our results in revised guidance are a testament to the strength of our team and our unique health and wellness ecosystem that continues to set Petco apart. Our customer acquisition engine is in high gear, while we spend some loyalty, gain share and delivered a differentiated offering of premium products and services all with a great customer experience and a digital platform with competitive advantages. And as we’re demonstrating, Petco is striving to be a different kind of company, one grounded and purpose-driven performance. Saving and improving pet lives every single day, and improving our pack of partners lives, all while executing to the highest degree of excellence, elements which come together to create long-term value for our stakeholders. We know your time is valuable and we appreciate you sharing it with us today. Thank you very much.

That concludes Petco’s first quarter 2021 earnings conference call. Investor relations will be available after the call if you have any follow-up questions.

And ladies and gentlemen, this concludes today’s conference call. Thank you all for attending today’s presentation. And you may now disconnect.