Q4 2022 SpartanNash Co Earnings Call
As from this morning, as well as the Companys. Most recent SEC filings you will see a discussion of factors that could cause the company's actual results to differ materially from those forward looking statements. Please remember that all forward looking statements made today reflect our current expectations only and <unk> undertakes no.
Asian to update or revise these forward looking statements.
The company will also make a number of references to non-GAAP financial measures.
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Forward slash investors.
And now it is my pleasure to turn the call over to Tony.
Thank you Gary and good morning, everyone.
I was referring to was a transformational year at Spartan Nash, our corporate identity, which we call our winning recipe serve to align our associates executed on our strategic plans. Our success in 2022 was made possible by our talented and hardworking associates, who play to win speaking of our terrific associates before we dive into our.
<unk> 2022 results I wanted to take a moment to recognize a group of associates, who are special Olympic athletes.
We've had a companywide fundraiser in our stores to support Special Olympics, we've enjoyed a 39 year relationship with <unk> and we are proud to support our $60 shows associates.
We're actively training to compete in the upcoming summer games, we encourage anyone listening today to join us in supporting this great organization.
Alright, turning to our performance in the <unk>.
Dynamic operating environment, our team drove solid fourth quarter and fiscal 2022 results are.
Our full year topline results were squarely in line with our most recent guidance.
Having raised our expectations throughout the year and adjusted EBITDA came in at on the top end of our guidance. This is an increase of nearly 14% compared to last year.
I want to call out three of the many highlights from a pivotal year.
First we secured cost savings in connection with our supply chain transformation.
Part of this transformation involve optimizing our fleet mileage to the addition of a west coast distribution solutions of course, taking miles of the system also advanced our sustainability progress Adil.
Additionally, our fill rates continued to improve while throughput increased by 7% for the full year and by the end of the year, we secured more than $25 million and run rate cost savings our success in supply chain helped enable us to gain share in our wholesale segment.
We expect our supply chain transformation to make even greater strides in 2023, which includes custom operational plans for each distribution center, there are more savings and efficiencies to come as we strive to reduce footsteps in fingerprint and our process I want to extend my sincere thanks to all supply chain associates for their product.
Yes, and improving operational metrics in 2022, Thank you team.
The second highlight from the year is that we created additional consumer offerings through digital partnerships with door Dash Uber technologies and shipped we also leverage insights from our marketing innovation work to further our progress in owned brands to unlock opportunities within our retail segment.
Our comparable store sales remained strong increasing nine 1% for the quarter.
This was an increase of 110 basis points sequentially from Q3, we also continued to deliver unit share growth year over year fueled in part by our strong owned brands performance.
We're building on this momentum with investments and store renovations, we plan to renovate about a quarter of our stores by the end of 2025.
As a third highlight we launched and made meaningful progress on our merchandising transformation.
We are focused on creating enhanced offerings and value for our customers in store guests in several ways.
To start, we're making significant strides, making sales profitability and customer loyalty drivers across our wholesale and retail segments.
Secondly, we are leveraging insights to enhance our category management capabilities.
And we are improving our customer offerings.
We also remained focused on our cost policy capabilities, which protect customers from unjustified vendor cost increases based on underlying commodity markets.
And we are revamping our end to end fresh food offerings with an initial focus and produce finally, we are investing in wholesale deals and new retail promotions to offer more value for our customers in store guests.
Customer focused innovation is an important ingredient in our winning recipe we expect our merchandising transformation, we will have a meaningful impact to our business for years to come.
I want to pivot now to discuss our inorganic growth. The M&A framework, we shared on our Investor day is now deployed.
We finished the year strong by adding great Lakes foods, So our distribution network.
Loud to welcome our newest associates in Menominee, Michigan from I had the pleasure of visiting recently this acquisition brings a 100, new customers to our portfolio and allows us to further optimize our supply chain network throughout the Midwest. We're excited about the opportunities. This expansion provides.
As we look ahead our team is energized by the progress we've made.
And we are United in our commitment to our winning recipe. It goes without saying that all businesses are evolving in this dynamic operating environment, we must stay focused on delivering value to our customers in store guests alike to remain competitive.
This morning, we provided our 2023 guidance and raised our 2025 long term sales target to $10 5 billion.
We remain committed to achieving adjusted EBITDA of more than $300 million.
Which is an increase of at least 40% since 2021, we are confident in our ability to achieve this aggressive target as we continue firing on all cylinders to advance our mission of delivering the ingredients for a better life.
Alright, I will now turn the call over to Jason to walk you through the financials in greater detail.
Thanks, Tony and welcome to everyone joining us on today's call, let's jump into the detailed results.
Net sales for the fourth quarter increased more than 10% to $2 3 billion.
Versus 2021 fourth quarter sales of $2 1 billion.
The growth versus prior year was driven by both the wholesale and retail segments, each of which were favorably impacted by inflation.
Gross profit for the fourth quarter was $341 million or 14, 8% of net sales compared to $323 million or 15, 4% of net sales in the prior year's fourth quarter.
The gross profit dollar increase was driven by higher sales, while the rate decline was driven by cycling the higher inflation related price gains in the prior year and an increase in LIFO expense of $5 7 million or 21 basis points.
As a percentage of sales our reported operating expenses increased 58 basis points from prior year.
Primarily due to cycling the transition impact of the paid time off policy change in the prior year from a grant based time off policy to an accrual based policy.
The transition resulted in a $21 $4 million reduction in our balance sheet accrual and a corresponding onetime gain in the prior year.
Also contributing to the increase in expenses as a rate of sales were higher corporate administrative costs in the current year, which included upfront investments and the merchandising transformation initiatives.
The increases in expenses were partially offset by a reduction in the supply chain expenses, driven by our supply chain transformation initiatives as well as lower health care insurance costs.
Our reported fourth quarter net earnings were $7 million, representing a 97% decrease compared to net earnings of $22 2 million in.
In the prior year's fourth quarter.
Net earnings reflected a steep increase in interest rates, which represented a $5 $1 million increase in expense drag of 11 on both reported and adjusted EPS.
Overall, we delivered $47 2 million and adjusted EBITDA for the quarter, representing a nearly 10% increase compared to $43 million and.
In the prior year's fourth quarter.
Turning to our segments in the fourth quarter net sales in wholesale increased $151 million to $1 63 billion.
An increase of 10, 2% when compared to the prior year's fourth quarter.
This increase was due primarily to the inflationary impact on pricing, which increased net sales by 11, 8% compared to the prior year.
Although sales volumes were down modestly by one 6% for the segment compared to prior year, they were up and our military channel over 6% due to continued strong demand.
The wholesale segment adjusted operating earnings totaled $13 6 million in the quarter versus 2021 fourth quarter adjusted operating earnings of $7 million.
Reported fourth quarter operating earnings of $1 3 million compared.
Compared to operating earnings of $10 1 million in the prior year's fourth quarter.
The decrease in reported operating earnings was due to cycling.
$10 1 million transition impacts related to the PTO policy change in the prior year.
Lower gross profit rate, primarily driven by a $6 $3 million increase in LIFO expense.
And increases in corporate administrative costs.
The increase in expenses were partially offset by reduced supply chain expenses.
Retail sales came in at $678 million for the quarter compared to $613 million in the fourth quarter of 2021, an increase of 10, 5% or.
Our comparable store sales momentum remained strong increasing to nine 1% for the fourth quarter.
Our comparable store sales increased by 11, 2% due to inflation, partially offset by a two 1% decline in unit volumes.
Our fourth quarter retail adjusted operating earnings were $8 $5 million.
Compared to $13 6 million in 2021 fourth quarter.
Reported operating earnings in the retail segment were $8 5 million compared to $23 3 million in the prior year's fourth quarter.
The decrease was due to cycling and $11 $3 million transition impact related to the PTO policy change in the prior year.
The lower gross profit rate and increased corporate administrative costs.
Our reported fiscal 2022 net earnings were $34 5 million a decrease of over 50% compared to $73 8 million in the prior fiscal year.
Overall for the full year, our adjusted EBITDA was $243 million compared to $214 million in the prior year.
Turning to the balance sheet, our leverage ratio remained strong increasing slightly to two times compared to one eight times at the prior year end.
This includes higher long term debt and finance lease liabilities of $98 million for the year.
The increase was due primarily to funding acquisitions during fiscal 2022 totaling $41 5 million as well as changes to working capital.
For the full year, we generated $110 million of cash from operating activities compared to $161 million in the prior year.
The decrease was due primarily to changes in working capital just mentioned.
In fiscal 2022, we paid $29 $7 million in cash dividends equal to 84 per common share.
We also bought back more than a 1 million shares of the company stock for a total of $32 $5 million.
In total we returned more than $62 million to shareholders during the fiscal year.
To ensure strong ongoing liquidity. This past November we entered into an amendment to our credit agreement.
The principal changes of the amendment included an extension of the maturity date of our loans from December 18th 2023 to November 17 2027.
Also reset certain advance rates for the borrowing base.
As covered in today's press release, we are providing our initial guidance for fiscal 2023, which incorporates both the elements of our long term strategy and current expectations for the 2023 supply chain and grocery environment.
Overall, we expect the strong results from this past year to continue into 2023 with net sales expected to increase from fiscal 2022 within a range of nine 9% to $10 2 billion.
In wholesale we expect sales to grow between 4% and 7% inclusive of net sales from Great Lakes foods.
We are projecting that trends in our independent customer base will be similar to that of our corporate retail segment.
We also expect to see growth within other areas of our portfolio.
In retail we believe sales will continue to increase resulting in an expected comparable sales growth range of 2% to 5%.
Our guidance includes an anticipated increase in our profitability over the prior year.
Fiscal 2023, adjusted EBITDA to be in the range of $248 million to $263 million.
Compared to 2020 twos, adjusted EBITDA of $243 million.
Interest expense is expected to continue to increase significantly in fiscal 2023.
And our expectations for the higher rate environment are fully incorporated into our results.
We currently anticipate interest expense to range from $37 million to $42 million this year.
Our fiscal 2023 guidance reflects total planned capital expenditures in the range of $130 million to $145 million for the fiscal year, which includes investments in both our core operations as well as our growth initiatives.
We also wanted to give you some color on our expectations when looking at the cadence of our adjusted EBITDA throughout the year.
In addition to our continued commitment to investing in our business to support future growth, we will be lapping a few notable impacts from Q1 of last year.
During the first quarter of 2023, we will cycle significant inflation related price change benefits.
Known as forward buy of nearly $10 million.
In addition, we will also be cycling $4 million in retail wage investments that were implemented at the end of first quarter last year.
We expect that our supply chain and merchandising transformation initiatives will offset some but not all of these headwinds in the first quarter of 2023.
We anticipate we will begin realizing benefits from our merchandising transformation in late Q1.
These benefits along with continued cost savings from our supply chain transformation give us confidence that we will reach our adjusted EBITDA range. This year and remains solidly on the path to achieving our long term targets.
Looking ahead, we remain focused on our mission to deliver the ingredients for a better life.
Despite uncertainties in the broader market, we built a strong foundation and continue to execute on our winning recipe.
The actions, we're taking through our supply chain transformation merchandising transformation and other key initiatives are positioning us to effectively manage through this volatility.
We look forward to building on our momentum in 2023 and beyond to further drive results and grow sustainable shareholder value.
And now I'd like to turn the call back over to Tony.
Thank you Jason in addition to reporting earnings today, we're also wrapping up a successful virtual customer Expo, we look forward to seeing our customers and vendors during our upcoming in person Expo This summer and Grand Rapids.
And this year, we're inviting our sell side analysts to the event and we can provide your teams with more detail.
Before we open the call to questions I want to take a moment to recognize and impactful cultural shift.
The people first company, we prioritize our associate safety.
Our recent actions remote safety include more accountability and executive level review of all what climate incidence.
And additional safety training, we run each associated to return home safely to their loved ones every day.
I am proud to report that the investments we have made in this critical initiative has decreased our lost time incidents by 72% since 2020.
Associate safety will continue to be a main area of focus and we have plans to roll out more initiatives in 2023.
I want to take one more opportunity to thank our associates, who continue to execute with operational excellence.
As part of our people first culture, we believe are meaningful recognition for their hard work over the past two years, we have implemented programs that recognize our associates and their ashish.
Again, thank you to all of our associates and congratulations for an outstanding year.
With that I'd like to turn the call back over to the operator and open it up for your questions.
If you would like to ask a question. Please press star one on your telephone keypad now.
You will be placed into the queue in the order received.
These be prepared to ask your question when prompted.
Once again, if you have a question. Please press star one on your phone now.
And our first question comes from Spencer Hanus from Wolfe Wolfe Research your.
Your line is open.
Good morning, Thanks for taking the question.
Really helpful disclosure on the unit performance during the quarter, but can you talk about how that trended versus <unk> results and then as you look to 2023, how are you thinking about the contribution from both units and then also inflation.
Hey, Spencer. Good morning. This is this is Jason thanks for joining and for the question.
Thinking about about unit volumes themselves and the trends.
Last couple of quarters, we've seen similar trends in unit volumes in the in the business.
When I think about the go forward.
And you may be picked us up a little bit in the the cadence commentary.
In the earlier remarks, we're coming off of a record Q1 last year that Q1 included.
Some of the kind of continued COVID-19 bump from last year as well as significant price change in inventory related benefits are oftentimes, what we call forward buy.
So we're projecting that we that our Q1 will be down kind of high single digits from an EBITDA standpoint.
And that's really reflective of the broader environment coming off of a record year end and frankly some of the uncertainty in the market at the same time, we feel really good about our long term plans, we feel good about where we're headed this year and this year is a great stepping stone as we've talked about in our investor day towards that that $300 million EBITDA growth.
Okay. So do you expect units to be down next year and then most of the growth can be driven by inflation or just how are you thinking about sort of those things next year.
Yes in 2023, our guidance reflects continued inflation, albeit moderating through the year and continued weakness in in unit volume Importantly, our unit volume has outperformed the market and we've we've grown share in that space.
Throughout that throughout the year, we've had some nice share.
Share performance and we expect that similar trend of.
Slightly down volumes and.
And stronger revenues to continue to play out however.
At the same time, when you think about the consumer and consumer sentiment.
We see this is an uncertain time and we want to plan accordingly.
Okay got it and then just one more on the long term guide you raised the top line by about 5%, but you reiterated the EBITDA target. So just curious sort of what led to that decision around EBITDA and greater the reiteration there. Thanks.
Sure Great question. So on the top line, we wanted to be.
Respectful that that inflation is frankly played a role and in the revenue profile and that we're still committed to driving organic growth in the business we took the.
Range of revenue up as a result of that and as a result of our our successes thus far in excess of our expectations for growth going forward. When you think about the margin profile or the EBITDA piece what.
What we've seen is really really strong margin per unit increases, but not necessarily margin percent increases because the young.
The nature of this business doesn't necessarily.
So it doesn't necessarily drive margin percent in a highly inflationary environment. So we continue to drive dollar growth, which we think creates long term shareholder value and and performance for our investors.
Our next question comes from Andrew Wolf of C. L King.
Your line is open.
Hi, good morning, congratulations on landing.
Such year so solidly.
So I wanted to ask about the acquisition of Great Lakes Foods.
I might have missed this but.
Get a sense of the sales contribution.
Sort of if I did a pro rata based on the 100 customers they have.
Versus the wholesale ex militaries.
Over 2000 customers.
Yes.
I thought the sales were about the same would be something over $200 million is that.
Roughly.
Close to the contribution or did you actually have an 8-K filing or something.
Maybe Mr.
Yes.
<unk> Hi, this is Tony.
We picked up that business.
Ever Peninsula.
And sort of eastern Wisconsin.
Great Great business for us great folks overall, roughly 100 customers and roughly kind of a $90 million to $100 million, so theyre going to be smaller and smaller customers.
Average versus kind of the broader portfolio.
Got it okay, great. Thank you very helpful.
Similar on the.
If I took out military from the case count.
Just on the traditional non military business, mainly independent supermarkets. It seemed that would obviously be down somewhat more is it more close to what the market.
The grocery market at large is down sort of low to mid <unk> mid single digits and cases.
Yes, thanks Neil.
Yes X the military channel unit volumes are down kind of mid single digits.
In that space.
Military our military business I'd be remiss, if I didn't highlight continues to perform very well we delivered.
Single digit mid single digit growth unit volume growth in that business, that's coming off a mid single digit growth in in the prior quarter and low single digit in the second quarter, we've seen a really nice momentum change there as we've turned the business around but also really focused on getting the right solutions for patrons working together with deca and ensuring.
Those solutions are in place to drive to drive performance. So we're really pleased with the trajectory there and really energized to continue to serve our veterans active active duty military and all of our patrons.
Got it if I can.
To ask maybe one or two more on labor.
Labor inflation.
It's trending up for you last quarter at least and I'm sure it's still up.
Do you have a sense of like how you're feeling about normalization in wage rates.
Particularly is there some normalization on the horizon or is it.
Too soon to call that.
Yeah, I think it's I don't think it's too soon to call. Some normal days, it's Tony again, so we're seeing.
Better applicant flow right now based on the wage actions in 13.
'twenty, one and 'twenty two.
Turnover rate is it's still not where we'd like it to be but stabilizing gets any better we actually hit our our glide path of our turnover goals for most of the second half of last year. So we see good positive trends there.
And.
I think theres going to be some spot adjustments will have to make to where they were.
More difficult more difficult hotspots like drivers for example.
I see it moderating this year and coming back maybe closer to where we would have seen.
The $3 four a year ago timeframe.
Okay. Thank you very much I'll get back in the queue.
Thank you.
Our next question comes from Kelly Bania of BMO capital markets.
Your line is open.
Hi, Good morning. This is Ben wood on for Kelly. Thank you for taking our questions.
First can you just walk us through any consumer behavior, you are seeing in your stores or hearing from customers any incremental trading down or increase in private label penetration or share shifts that may have happened over the quarter.
And then kind of related on the supplier side of that is any new learnings from the merchandise initiatives do price increases appear to be abating any insights there would be helpful.
Great. This is Tony I'll take a crack at that so.
So a couple of things so for the.
For the quarter, we had.
The overall basket the basket size is up.
About eight 5%.
A little better than it was the previous couple of quarters, we saw our traffic continued to be better than a year ago about one 5% for the quarter.
And items that were also just a wee bit better than they were.
In Q2 and Q3.
So the.
Overall trips or trips or op units are down of course, as Jason mentioned a moment ago.
<unk>.
Overall people are looking for that mix of value that I talked about in our last earnings call, where you see a lot of folks are looking for.
Getting getting a great deal of getting great cost on like items.
And then once in a while it's bordering on on something unique. So I'll give you a couple of examples. So we're seeing still seeing a movement in the meat for example to more grind and chicken, which is sort of expected so our pounds or pounds are strong, but the but the overall.
The cost per pound people are looking for ways to get to a.
Reasonable deals on protein and so we saw more growth on hamburger and chicken during this during the quarter again.
We.
We're also seeing really strong growth on our owned brands our own brands.
<unk> had a great quarter overall grew by 18, 5% penetration of our own brands was up it was up for the year and up in the quarter.
That growth rate is about roughly two five times.
The growth rate of the National brands, we see people, who are finding owned brands as a solid replacement good quality product at a lower price and we saw that in every quarter of last year and it was particularly strong in the fourth quarter.
And I think again, it's quite yet to Craig's question about supply, but also I'll address that quickly. So we saw we saw obviously an extraordinary amount of pricing all throughout 2022 that was it wasn't any different than that but I would say there was the strongest in the fourth quarter.
We are I would say we are seeing a reduction in the price request.
We finished up the year.
But still there was still significantly higher than what we would've seen maybe two or three years ago. So while the.
The pricing requests in the absolute pricing.
Isn't at its peak level, it's still higher than we prefer the reason why it right as we talked in the last call about this merchandising transformation.
Holding our suppliers accountable for.
Sure.
They all have a right to take pricing.
We want to make sure that that the that we're protective of our customers and our shoppers at the same time and we're not seeing extraordinary.
Pricing that may be out of line and justified versus the cost inputs that theyre seeing and.
We're looking for partnerships that can allow us to win with those suppliers and win for our customers and we're getting really really good response overall, so I think we're finding folks who want to win and want to look for opportunities to provide more deals sort of stabilizer really extraordinary inflation that our shoppers and customers have seen in the last year or so.
Collectively this is Jason collectively I think it's we can't reinforce enough.
The momentum that we're building in our owned brand portfolio and Tony alluded to this before earlier in the comments in the quarter, our sales and our own Brandon and our retail operations were more than double the growth that we saw across all of our retail business and that included not just dollars, but unit growth. So we.
And feel like we're bringing a terrific offering.
Bringing it to to consumers and meeting them, where they are with respect to their pocketbooks, providing the right value and ensuring that we build as much stickiness as possible. So that they continue shopping our stores.
Great. Thank you and then just one one question longer term.
Guys called out in your analyst day, and your long term targets kind of looking at a $250 million to 100 or 125 million to $150 million.
In supply chain and merchandising transformation initiative benefits.
And then it sounds like you did 25. This year are there any explicit targets you have for the year ahead or how do we think about the breakdown of that remaining.
Supply chain and merchandize transformation initiative benefits in the long term guide.
Yes, Ben where we continue to progress both the supply chain and merchandising transformation work, they're both tracking.
Consistent with our plan that we shared at the Investor Day, and we expect the merchandising transformation will begin driving performance here by the end of the first quarter and we expect continued momentum and additional savings savings in the supply chain both of those.
Both of those are in this year's guidance and reflective of the long term plan and you mentioned the.
And our supply chain performance, thus far we exited the year with.
$25 million of performance on that we expect that to be a strong base to <unk>.
Next year or to this year's plan.
Great. Thank you.
And as a reminder.
Do have a question. Please press star one on your Touchtone keypad now.
And our next question comes from Chuck Cerankosky.
Northcoast research.
Your line is open.
Good morning, everyone.
Could you comment please on the store remodeling.
Object since I think you said, 25% of the store base by 2025, what are sort of the priorities. There are there any geographic areas or banners that especially in these slides.
Renovation.
Well how much of this is going to be.
A significant remodeling versus just.
Stores sort of thing.
What level of relocations might be involved in that please.
Okay great.
Great question Chuck This is Tony.
Couple of points so.
As far as the relocations and the more we.
We don't have any relocations that are planned in that in that mix.
So and the Remodels will be.
It won't be it will be won't be just paint the store type of stuff. We would we do some of that but those are those are sort of low end sort of a maintenance type of.
Remodels or just kind of housekeeping. So so it needs to be more substantial than that just the simple refreshed, but they'll run the gamut, we know some of them will be.
Some of them will be in the high hundreds of thousands of dollars don't be multimillion dollar remodels as well so it depends on the needs of the store and as we assess what the value of that remodel it can be.
Were running sort of run the gamut so.
We have a we did a handful of dsw's here in the Grand Rapids area.
This past year and the performance has been really strong so we had.
For a remodel you did here are growing at about twice the rate of the balance of our of our stores in similar markets. So about 17% plus growth in those stores, we're seeing a good return in terms of.
The customers embraced it what we've done with it with the remodel which is a little bit of a hint about where we're going to be focused probably a little bit more on the upmarket.
Doors early on so.
Those are higher volume stores.
Greater opportunity for return those stores, but we also see that we haven't we have a need to make sure that all of our stores stay current and relevant with the shopper base.
So.
By 2025, and we recorded a story, we'll keep marching out to that I want to make sure we have a predictable cadence.
Re models that allow us to present.
The shopper, what they want and they need it.
Those needs change so youll see more of them even after 2025.
Yes Chuck.
I would add to that.
In addition to the major Remodels, we're doing and we talked about this at the Investor day.
We're going through banner consolidations and included in those those banner consolidations are not simply a change of the name on the front of the store or just some paint on the walls, but we're reintroducing loyalty programs doing the <unk> 360 marketing program at those stores and reinvigorating the surrounding markets around those those locales.
So I think for us it's.
It's not just.
Yes, reconstruct the store for the sake of doing it.
Or just simply putting a new badge on it but ensuring that we've got the right brand promise to our shoppers and our consumers and then we bring that brand and that brand promise to those consumers through loyalty and other and other means and Youll also see those as part of the part of the capital plan and even in 2023.
Thank you.
Thanks, Chuck next.
Our next question comes from Cristina <unk> from Deutsche Bank Your.
Your line is open.
Good morning. This is Jessica Taylor on for Christina Thanks for taking our question.
Wanted to ask about your sell rates and whether they're at a level that you would have seen pre pandemic are a place where.
You are happy with him and to follow along with that are.
Are you seeing that the promotional environment remains rationale are you seeing that.
Up on promotion are you able to pick up promotion based on that our salary.
Thank you.
Yes, great Great question, So a cup.
Thanks, Tom.
Yes.
The fill rates are nowhere near what they were pre pandemic there are much better than they were last year, but to give you some perspective.
As we have.
We finished up.
2021 for example, and into the early 2022, we're seeing fill rates in the high Fifty's 50 550, 657%.
We're now seeing fill rates that are in the low seventies and they are and by the way those fill rates from a year ago.
Are the lowest bill rates, we had in the in the pandemic are lower than they were a win win and people got the original shocks right after that right after the shutdown.
So they continue they spent.
Between the <unk>.
Spring of 2020 and the in the early part of 2022.
The fill rates from food suppliers continue.
To go down.
Picked up picked up in the back half of the year.
Q4 was a pretty big improvement over the previous Q4.
And so we're now as I mentioned earlier, we're sort of into <unk>.
Low to mid 70% fill rates for those those fill rates would've been in the mid nineties.
Pre pandemic like the week before the pandemic and so we're seeing we are seeing more liability. We're seeing some some food suppliers are still really struggling.
And dragging that number down but the overall, we are seeing improvement there we believe.
And the work we're doing right now with the combination of emerged transformation and then as those folks see the realities of the limits to which they can continue to take pricing that the next adventure for the food.
Broader community is going to be how do we get back on track and how do we get back and for the CPG companies, how do you get back and growing share.
So our belief is that we're seeing some early signs of that now and we're seeing that they are opening up and running longer doing the changeover is required to make sure. They can meet supplied need that we have in our shoppers expect.
And I think we'll see this year.
Very significant improvement on fill rates as the as that.
CPG community.
Okay sure again.
It will come with I believe it'll come with more promotions to them and those are some of the discussions we're having with folks.
Right now.
Thank you, maybe maybe pivoting to promotional landscape just to kind of close out that piece.
Overall on the kind of on the year, we saw <unk>.
Promotional product count pick up early in the fourth quarter, but then it eased by the end of the quarter. So im not sure Theres a whole lot to read into that.
Yet.
More kind of if you kind of take a look at the whole year.
The number of products that were promoted was was more limited and not surprisingly given the comments Tony described with respect to the supply chain. So more kind of more focused promotional products and when we think about the environment itself and how we participated in played.
<unk> has has aligned with.
From the standpoint of frequency and depth with with our primary competitors.
We continue to do so.
Thank you.
There are no other questions at this time I will now turn the call back over to Tony <unk> for closing remarks.
Alright, well, thank you and thank you all for your participation in today's call. We look forward to updating you on our continued progress throughout the year and with that from our family of yours, we'd like to wish you all a very pleasant good morning.
Okay.
That concludes today's conference call. Thank you for joining and have a pleasant day.
Okay.
The host has ended this call goodbye.