Q4 2024 Empire Company Limited Earnings Call
Operator: Good morning, ladies and gentlemen, and welcome to the Empire Fourth Quarter 2020 conference call. Following the presentation, we will conduct. At any time during this call, you may disconnect at this time.
Good morning, ladies and gentlemen, and welcome to the Empire fourth quarter 2024 conference call. At this time all lines are in a listen only mode.
Following the presentation, we will conduct a question and answer session.
But any time during this call you need assistance. Please press star zero for the operator.
Operator: This call is being recorded on Thursday, June 20, 2024. I would now like to turn the conference over to Katie Brine. Thank you, Joanna.
Speaker Change: Call is being recorded on Thursday June 22024, I would now like to turn the conference over to Katie Bryan VP Investor Relations. Please go ahead. Thank.
Katie Brine: Good afternoon, and thank you all for joining us for our fourth quarter conference call. Today we will provide summary comments on our results and then open the call for questions. This call is being recorded, and the audio recording will be available on the company's website at empireco.ca.
Joanna: Thank you Joanna good afternoon, and thank you all for joining us for our fourth quarter conference call. Today, We will provide summary comments on our results and then open the call for questions. This call is being recorded and the audio recording will be available on the company's website at Empire co dossier.
Joanna: There is a short summary document outlining the points of our quarter available on our website join.
Katie Brine: There is a short summary document outlining the points of our quarter available on our website. Joining me on the call this afternoon are Michael Medline, President and Chief Executive Officer, Matt Reindel, Chief Financial Officer, Pierre St. Laurent, Chief Operating Officer, and Doug Nathanson, Chief Development Officer and General Counsel. Today's discussion includes four forward-looking statements. We caution that such statements are based on management's assumptions and beliefs and are subject to uncertainties and other factors that could cause actual results to differ materially. I refer you to our new release in MD&A for more information on these assumptions and factors. I will now turn the call over to Michael Medline. Thank you, Katie. Good afternoon, everyone.
Joanna: Joining me on the call. This afternoon are Michael Medline, President and Chief Executive Officer, Matt Ryan Bell Chief.
Joanna: Financial Officer peer St Mara Chief operating Officer, and Doug <unk>, Chief Development Officer, and General Counsel.
Speaker Change: Today's discussion includes forward looking statements, we caution that such statements are based on management's assumptions and beliefs and are subject to uncertainties and other factors that could cause actual results to differ materially I refer.
Speaker Change: For you to our news release and MD&A for more information on these assumptions factors I will now turn the call over to Michael Medline.
Michael Bennett Medline: Thanks, Katie and good afternoon, everyone.
Michael Bennett Medline: I am very pleased with the way our team is executing despite the currently inhospitable economic backdrop. We have become a disciplined, efficient grocer that is focused on delivering earnings growth. Our results this quarter demonstrate this, with strong gross margin control, capital discipline, and strong SG&A containment, driven by our productivity initiatives and restructuring. We are committed to driving profits and doing the right things for our shareholders. We trust that you will see that in the approach that we are taking with Voila and in our continued commitment to return capital to our investors.
Michael Bennett Medline: I am very pleased with the way our team is executing despite the currently and I spent a bowl economic backdrop, we have become a disciplined efficient grocer that is focused on delivering earnings growth.
Michael Bennett Medline: Our results this quarter demonstrate this with strong gross margin control capital discipline, and strong SG&A containment driven by our productivity initiatives and restructuring.
Michael Bennett Medline: We're committed to driving profits and doing the right things by our shareholders.
Michael Bennett Medline: Trust that you will see.
Michael Bennett Medline: And the approach that we're taking with falloff and then our continued commitment to return capital to our investors.
Michael Bennett Medline: The cost control and discipline we are delivering will pay off as we turn the corner on consumer sentiment, which will benefit our top line. Of course, everything we do comes down to our stores, and I am very pleased with how our operators and merchants are performing. I'm going to focus today on four topics, key market trends, our Q4 and Fiscal 24 results, an update on our strategic priorities, and commentary on capital allocation for Fiscal 25.
Michael Bennett Medline: The cost control and discipline, we are delivering will pay off as we turned the corner on consumer sentiment, which will benefit our top line.
Michael Bennett Medline: Of course, everything we do comes down to our stores and I am very pleased with how our operators and merchants or performance.
Michael Bennett Medline: I'm going to focus today on four topics key market trends, our Q4 and fiscal 'twenty four results an update on our strategic priorities and commentary on capital allocation for fiscal 'twenty five.
Michael Bennett Medline: First, market trends. In Q4, we saw a continuation of recent trends with consumer confidence remaining low due to the hangover of inflation and elevated interest rates. Food inflation continued its downward trend, remaining well below overall CPI and reaching a two-and-a-half-year low of 1.4% in April.
Michael Bennett Medline: First market trends in Q4, we saw continuation of recent trends with consumer confidence remaining low due to the hangover of inflation and elevated interest rates.
Michael Bennett Medline: Food inflation continued its downward trend remained well below overall, CPI and reaching a two and a half year low of one 4% in April.
Michael Bennett Medline: While we are pleased to see low food inflation, consumers remain very careful in their spending. With the interest rate reduction announced by the Bank of Canada earlier this month, we believe this represents the start of a turning point for improved customer sentiment. As rates continue to gradually decline and Canadians feel less pressure on their wallets, we expect to see customers adding more items to their baskets and trading up. That'll translate to increased sales momentum for Empire.
Michael Bennett Medline: While we are pleased to see low food inflation consumers remain very careful in their spending.
Michael Bennett Medline: The interest interest rates reduction in asks by the bank of Canada earlier. This month. We believe this represents the start of a turning point for improved customer sentiment.
Michael Bennett Medline: Rates continue to gradually decline.
Michael Bennett Medline: Indians feel less pressure on their wallets, we expect to see customers, adding more items in their basket and trading up.
Michael Bennett Medline: That will translate to increased sales momentum for Empire.
Michael Bennett Medline: We are currently more optimistic about the market and our prospects than we have been in a long time. We expect that improvements will be gradual but inevitable. Turning to the quarter, we delivered solid results in the context of this environment. When you remove other income and share of equity earnings, which is largely real estate-related income, Q4 was consistent with both the prior quarter and last year. Gross margins continued to improve this quarter, driven by operating efficiencies and a strong focus on executing with excellence in our stores. This wasn't driven by any one thing in particular, but several smaller but meaningful things.
Michael Bennett Medline: We are currently more optimistic about the market and our prospects than we have been in a long time, we expect that improvements will be gradual but inexorable.
Michael Bennett Medline: Turning to the quarter.
Michael Bennett Medline: We delivered solid results in the context of this environment.
Michael Bennett Medline: When you remove other income and share of equity earnings, which is largely real estate related income Q4 was consistent with both the prior quarter and last year.
Michael Bennett Medline: Gross margins continue to improve this quarter driven by operating efficiencies and a strong focus on executing with excellence in our stores.
Michael Bennett Medline: This wasn't driven by any one thing in particular, but several smaller but meaningful thing.
Michael Bennett Medline: For example, we reduced non-theft shrink through a focus initiative. We also improved space productivity. And we increased our supply chain efficiency, to name a few. In Q4 of Fiscal 24 and Q1 of Fiscal 25, we are comparing two strong quarters where we saw customers return to more pre-pandemic behaviors before they began to retrench again in late summer of last year. We are pleased to see that even in this environment, our customer base continues to grow. However, customers are continuing to trade down to less expensive items, but this phenomenon seems to be abating.
Michael Bennett Medline: For example, we reduced non theft shrank through a focused initiative.
Michael Bennett Medline: We improved space productivity, and we increased our supply chain efficiency to name a few.
Michael Bennett Medline: In Q4 fiscal 'twenty, four and Q1 of fiscal 'twenty five we're comping two strong quarters, where we saw customers returned to a more pre pandemic behaviors before they began to retrench again in late summer of last year.
Michael Bennett Medline: We are pleased to see that even in this environment. Our customer base continues to grow customers are continuing to trade down to less expensive items, but this phenomenon seems to be abating.
Michael Bennett Medline: All of this is reflected in our same store sales increase of 0.2% this quarter. Now for an update on some of our key customer and sales driving initiatives. First, I wanted to provide a comprehensive update on Voila. We remain extremely pleased with Voila and continue to believe that this is the best grocery e-commerce solution in Canada and that it will be attractively profitable in the medium and long term. Customers love the service and offering, the technology is best in class, and we are running the operations very efficiently.
Michael Bennett Medline: All of this is reflected in our same store sales increase of 2% this quarter.
Michael Bennett Medline: Now for an update on some of our key customer and sales driving initiatives.
I wanted to provide a comprehensive update on voila.
Michael Bennett Medline: We remain extremely pleased with Walmart and continue to believe that this is the best grocery E Commerce solution in Canada, and that will be attractively profitable in the medium and long term customers love the service offering the technology is best in class and we are running the operations very efficiently.
Michael Bennett Medline: Overall, I am more optimistic about Voila today than I have been in some time. In Q4 of this year, same store sales grew by 17.3%, and overall sales grew by 23.5% over last year, our highest ever. Walla is well-placed to win this growing channel, and we remain committed and confident about its future success. However, as we have stated several times over the past two years, the current size of the grocery e-commerce market in Canada is smaller than we, or anyone, for that matter, had anticipated.
Michael Bennett Medline: Overall, I am more optimistic about fall late fall out today than I have been in some time in Q4 same store sales grew by 17, 3% and overall sales grew by 23, 5% over last year, our highest ever.
Michael Bennett Medline: <unk> is well placed to win in this growing channel and we remain committed and confident about its future success.
Michael Bennett Medline: However.
Michael Bennett Medline: As we have stated several times over the past few years.
Michael Bennett Medline: The current size of the grocery e-commerce market in Canada is smaller than we or anyone for that matter had anticipated. Our business model included a phased CFC opening time line that was designed to protect empires profitability levels, while expanding quickly the plan wasn't the rapid growth in grocery e-commerce penetration with <unk>.
Michael Bennett Medline: Our business model included a phased CFC opening time line that was designed to protect Empire's profitability levels while expanding quickly. The plan was that the rapid growth in grocery e-commerce penetration would result in increased profitability at our active CFCs, and this would compensate for the initial operating losses from the newly opened CFCs. But due to the smaller overall market and the slower rate of growth, this has not been the case. So we're losing more money than we had initially estimated, and this is actually masking the strength of our bricks and mortar business. As a result, we are taking several immediate actions to address the higher-than-expected dilution from Wolak and quickly improve performance.
Michael Bennett Medline: <unk> increased profitability at our active Cfcs and this will compensate for the initial operating losses from the newly open cfcs, but.
Michael Bennett Medline: But due to the smaller overall market and the slow rate of growth. This has not been the case. So we're losing more money than we had initially estimated and this is actually masking.
Michael Bennett Medline: Masking the strength of our bricks and mortar business.
Michael Bennett Medline: As a result, we are taking several immediate actions to address the higher than expected dilution from Waller and quickly improve performance.
Michael Bennett Medline: First, we've decided to pause the opening of our fourth CFC in Vancouver. That's the right thing to do for our bottom line and for our investors. We want to focus on driving performance and volume on our three active CFCs before we open CFC four. Construction of the external building for the 4th EFC in Vancouver has been substantially completed, with internal work related to grid build and robot commissioning not yet started.
Michael Bennett Medline: First we've decided to pause the opening of our fourth CFC in Vancouver.
Michael Bennett Medline: That's the right thing to do for our bottom line and for our investors we want to focus on driving performance in volume on our three active csp's before we open CFC for.
Michael Bennett Medline: Construction of the external building for the for CFC Vancouver has been substantially completed with internal work relates to grid build in Rabat commissioning has not yet started.
Michael Bennett Medline: This pause will allow us to continue focusing our efforts on the strong momentum we are seeing with our active CFCs rather than the time-consuming activities associated with launching a new CFC. As soon as we see higher e-commerce penetration rates in Canada, we will be in a position to make a decision quickly on when we'll proceed with opening CFC4. Second, we are working with our partner, Ocado, to decrease our costs and provide us with increased flexibility to serve our customers more broadly, which includes ending our mutual exclusivity.
Michael Bennett Medline: This pause will allow us to continue focusing our efforts on the strong momentum we are seeing with our active <unk> rather than the time consuming activities associated with launching a new CFC as.
Michael Bennett Medline: As soon as we see higher e-commerce penetration rates in Canada, we will be in a position to make a decision quickly on when we will proceed with opening CFC for.
Michael Bennett Medline: Second we are working with our partner Ocado to decrease our cost and provide us with increased flexibility to serve our customers more broadly which includes ending our mutual exclusivity. Although it served all parties extremely well since the start of our relationship by removing yet we can pursue complementary growth opportunities in the March.
Michael Bennett Medline: Although it has served all parties extremely well since the start of our relationship, by removing it, we can pursue complementary growth opportunities in the market, including by serving more types of customer trips and having access to a larger segment of the market, which we're very excited about. Ocado has and continues to be an outstanding partner to us, and this is a decision we made jointly to grow the business. In Q1, we will have a one-time charge related to exclusivity as a result of it ending earlier than we had initially planned. This charge will be approximately $12 million.
Michael Bennett Medline: Including by serving more types of customer trips and having access to a larger segment of the market, which we're very excited about ocado has and continues to be an outstanding partner to us and this is <expletive>.
Decision, we made jointly to grow the business.
Michael Bennett Medline: In Q1, we will have a one time charge relates to exclusivity as a result of it ending earlier than we had initially planned.
Michael Bennett Medline: This charge will be approximately $12 million, we anticipate this cost will be more than offset by the other operating improvements and savings we expect to achieve all of this to say there is a lot we are doing to improve the bottom line results from all of.
Michael Bennett Medline: We anticipate this cost will be more than offset by the other operating improvements and savings we expect to achieve. All this to say, there is a lot we are doing to improve the bottom line results of WOLA. These changes will have a significant impact on WOLA's profitability in Fiscal 25 and Fiscal 26.
Michael Bennett Medline: These changes will have a significant impact on <unk> profitability in fiscal 'twenty five in fiscal 'twenty six we've had great conversations with our partners that are.
Michael Bennett Medline: We've had great conversations with our partners at Ocado. We're very happy with the partnership, and our Q4 goal-out results are the best we've had since we launched in June 2020. Now for an update on SeamPlus. Q4 marks the first full year of SeamPlus being active in almost all Empire banners across Canada. SeamPlus program benefits are resonating with customers who are swiping their cards more than ever to earn points on their grocery shop, get additional savings with member pricing, and redeem points for free groceries.
Michael Bennett Medline: We're very happy with the partnership and our Q4 rollout results are the best we've had since we launched in June 2020.
Michael Bennett Medline: Now for an update on our fee plus Q4 marks the first full year of <unk> plus being active in almost all Empire banners across Canada, <unk> plus program benefits are resonating with customers, who are swiping their cards more than ever.
Michael Bennett Medline: To earn points on their grocery shop get additional savings with the member pricing and redeem points for free groceries. In fact since launch Canadians have redeemed over $270 million in points for free groceries across our stores.
Michael Bennett Medline: In fact, since launch, Canadians have redeemed over $270 million in points for free groceries across our stores. Theme plus performance is meeting and, in most cases, actually exceeding our key performance metrics, such as on-card sales penetration, active customers, and supplier engagement, where we have more than doubled the number of suppliers participating in ScenePlus. Program awareness and satisfaction also continue to grow nicely. ThemePlus now has over 15 million members, up 50% since the launch at Empire, which is fantastic, but having them active and engaged is critical.
Michael Bennett Medline: <unk> performance is meeting and in most cases.
Michael Bennett Medline: Actually exceeding our key performance metrics, such as auto card sales penetration active customers and supplier engagement, where we have more than doubled the number of suppliers participating in <unk> plus <unk>.
Michael Bennett Medline: Program awareness and satisfaction also continued to grow nicely themed plus now has over 15 million members up 50% since the launch at Empire, which is fantastic, but having a active and engaged is critical our focus on digital has allowed us to double the number of loyalty members, we were able to contact which is key as our digitally.
Michael Bennett Medline: Our focus on digital has allowed us to double the number of loyalty members we were able to contact, which is key, as our digitally engaged members spend 2.8 times more than our non-members. The partnership with Scotiabank and Cineplex continues to thrive, and we are extremely pleased with the Scotiabank acquisition campaigns that are bringing many new customers into our stores. We couldn't be more pleased with the full year, the first full year in action for Cineplex.
Michael Bennett Medline: <unk> engaged members spent two eight times more than non members the partnership with Scotiabank and Cineplex continues to thrive and we are extremely pleased with the Scotiabank acquisition campaigns that are bringing many new customers into our stores. We couldnt be more pleased we couldnt be more pleased with the full year.
Michael Bennett Medline: The first full year of action foreseen plus.
Michael Bennett Medline: Now on to an update on the farm board. This banner continues to thrive, with its same store sales performance highest in our network over the last two quarters. But in addition to their stand-alone performance, the Farm Boy team brings so much valuable experience and learning to the rest of our merchandising organization through several strategic initiatives. For example, this past quarter, we ran produce pilots in some of our Sobeys Ontario stores, leveraging the fresh sourcing assortment and operational excellence from Farm Boy to reinvent the customer experience in this department.
Michael Bennett Medline: Now on to an update off onboard. This banner continues to thrive with their same store sales performance highest in our network over the last two quarters.
Michael Bennett Medline: But in addition to their Standalone performance of farm Boy team brings so much valuable experience and learnings to the rest of our merchandising organization through several strategic initiatives.
Michael Bennett Medline: For example, this past quarter, we ran our produce pilots in some of our southeast, Ontario stores, leveraging the fresh sourcing assortment in operational excellence from farm boy to reinvent the customer experience in this department. There are several other exciting things in the pipeline between our merchants and operators of <unk> and our other banners to improve our stores and I look forward to sharing.
Michael Bennett Medline: More on how this great partnership is benefiting all of Empire.
Michael Bennett Medline: There are several other exciting things in the pipeline between our merchants and operators at Farm Boy and our other banners to improve our stores, and I look forward to sharing more about how this great partnership is benefiting all of Empire. Our Farm Boy banner also generates consistently strong returns and has been a great use of capital, and in fiscal 25, we plan to continue investing in this banner by opening another three stores.
Michael Bennett Medline: Our far by banner also generates consistently strong returns and this has been a great use of capital and in fiscal 'twenty five we plan to continue investing in this banner by opening another three stores.
Michael Bennett Medline: Now, before I turn this over to Matt, I want to talk about our capital allocation plans for fiscal 25. Our business is generating a healthy amount of cash, $1.5 billion of free cash flow before CapEx, and we will continue to invest your capital wisely. During our seven-year transformation, we needed to increase our capital investments to develop new businesses, tools, capabilities, and assets. In Fiscal 24, we started to bring our capital investments back down with a target of $775 million.
Matt: Now before I turn this over to Matt I want to talk about our capital allocation plans in fiscal 'twenty five.
Matt: Our business is generating a healthy amount of cash $1 $5 billion of free cash flow before capex and we will continue to invest your capital wisely.
Speaker Change: During our seven year transformation, we need to increase our capital investments develop new businesses tools capabilities and assets in fiscal 'twenty. Four we started to bring our capital investments back down with a target of $775 million.
Michael Bennett Medline: We actually finished the year at $720 million, excluding the Montreal purchase of land, which reflects the high cost of construction and our capital dissipation. Where capital projects didn't meet our hurdle rates, teams were sent back to the drawing board to bring down costs. This brought our capital spend in lower than initial expectations for the year, and for Fiscal 25, we estimate we'll invest $700 million.
Speaker Change: We actually finished the year at $720 million, excluding the Montreal purchase of land, which reflects the high cost of construction and our capital discipline, where.
Speaker Change: Our capital projects didn't meet our hurdle rates teams were sent back to the drawing board to bring down costs. This brought our capital spend and lower than initial expectations for the year and for fiscal 'twenty five we estimate will invest $700 million and Matt will give you more details on this shortly.
Matt Reindel: And Matt will give you more details on this shortly. Lastly, I'm very pleased to announce today a 9.6% increase in Empire's quarterly dividend per share, which brings our five-year dividend yield to approximately 11% and represents an increase in our dividends for the 29th year in a row. We also announced that we renewed our NCIB to repurchase approximately $400 million of shares in Fiscal 25, and you should know that this represents up to 12.8 million shares, which is about 10% of our public float.
Speaker Change: Lastly, I'm very pleased to announce today, a nine 6% increase in empires quarterly dividend per share, which brings our five year dividend CAGR to approximately 11% and represents an increase in our dividends for the 29th year in a row.
Speaker Change: We also announced that we've renewed our CIB to repurchase approximately $400 million of shares in fiscal 'twenty five and you should note that this represents up to <unk>.
Speaker Change: Up to $12 8 million shares, which is about 10% of our public float we.
Matt Reindel: We remain committed to returning free cash flow to our shareholders and are at the maximum limit set by the TSX that we're able to purchase under our NCIB. Now, with that, over to Matt. Thank you, Michael. Good afternoon, everyone.
Speaker Change: We remain committed to returning free cash flow to our shareholders and our app. The maximum limit set by the PSX that we're able to purchase under our CIB.
Matt: Now with that over to Matt.
Matt Reindel: I will speak to our Q4 financial performance and our fiscal 25 expectations before moving on to your questions. Our Q4 bottom line was almost exactly what we had communicated during our earnings call in March. Performance this quarter was very similar to both Q3 of this year and Q4 of last year. We delivered Q4 adjusted EPS of $0.63 compared to $0.62 in Q3. In Q4 last year, adjusted EPS was $0.72, but this included a higher contribution from other income and share of equity earnings.
Matt: Thank you Michael good afternoon, everyone.
Matt: I will speak to our Q4 financial performance and our fiscal 'twenty five expectations before moving on to your questions.
Matt: Our Q4 bottom line was almost exactly what we had communicated during our earnings call in March.
Matt: Performance. This quarter was very similar to that of Q3 of this year and Q4 of last year.
Matt: We delivered Q4 adjusted EPS of <unk> 63.
Matt: Compared to 62 cents in Q3.
Matt: In Q4 last year adjusted EPS was <unk> 72.
Matt: But this included a higher contribution from other income and share of accuracy earnings.
Matt Reindel: If you exclude this, adjusted EPS was flat with last year. Moving to the top line, we delivered same-store sales of 0.2% as we began to compare some stronger sales performance last year. And as a reminder, we'll also be comparing very strong same-store sales performance in Q1 of Fiscal 25. Even with food inflation returning to normal levels, it will take some time for consumer behavior to return to normal given these higher interest rates.
Matt: If you exclude this adjusted EPS was flat with last year.
Matt: Moving to the top line, we delivered same store sales of zero to 2% as we began to come some stronger sales performance last year and as a reminder, with also becoming very strong same store sales performance in Q1 of fiscal 'twenty five.
Matt: Even with food inflation, returning to normal levels. It will take some time for consumer behaviors to attend to normal given these high interest rates.
Matt Reindel: But the interest rate reduction earlier this month was a great step in the right direction, and we expect consumer sentiment to improve throughout Fiscal 25. Our gross margin rate, excluding fuel, grew by 68 basis points versus last year, reflecting continued momentum from Q3. The rate of expansion was greater than we had anticipated and wasn't due to any one specific item but reflected the combined impact of many actions we are taking to support margin performance.
Matt: But the interest rate reduction earlier. This month was a great step in the right direction, and we expect consumer sentiment to improve throughout fiscal 'twenty five.
Matt: Our gross margin rates, excluding fuel grew by 68 basis points versus last year.
Matt: <unk> continued momentum from Q3.
Matt: The range of expansion was greater than we had anticipated.
Matt: Wasn't due to any one specific item, but reflected the combined impact of many actions we are taking to support margin performance.
Matt Reindel: Some of these were improvements in space productivity, shrink, particularly in FRESH, efficiency initiatives in the supply chain, and business unit MIPS. When we look at SG&A, as expected, dollar spend grew year over year, largely reflecting business expansion, higher retail labor costs, and investments in our store network.
Matt: Some of these.
Matt: Movements in space productivity shrink, particularly in fresh.
Matt: Patiency initiatives in supply chain and business unit mix.
Matt Reindel: And similar to recent quarters, the SG&A rate also increased versus the prior year, with our SG&A growth outpacing sales growth as we continue to invest in the future. But our cost reduction initiatives and enhanced discipline are beginning to deliver. In Q4, when you exclude our adjusting items, such as restructuring costs, the cybersecurity adjustment, and grocery gateway integration costs.
Matt: When we look at SG&A as expected dollar spend grew year over year, largely reflecting business expansion higher retail labor costs and investments in our store network.
Matt: Similar to recent quarters.
Matt: G&A rates also increased versus the prior year without <unk> G&A growth outpacing sales growth as we continue to invest in the future.
But our cost reduction initiatives and enhanced discipline, all beginning to deliver in.
Matt: In Q4, when you exclude our adjusting items.
Matt: Structuring costs, the cybersecurity adjustment on grocery gateway integration costs.
Matt Reindel: Our SG&A dollars increased by 2.5% versus last year, which is notably lower than the 4.1% increase we saw in Q3. Similarly, when you look at SG&A rates, our Q4 rate increased by 55 basis points versus last year, which is notably lower than the 90 basis points increase we saw in Q3. So, we're happy with our SG&A progress, and this will set us up for success when sales improve, and we can generate better leverage of our fixed costs.
Matt: G&A dollars increased by two 5% versus last year, which is notably lower than the four 1% increase we saw in Q3.
Matt: Similarly, when you look for SG&A rate.
Matt: Q4 rates increased by 65 basis points versus last year, which is notably lower than the 90 basis points increase we saw in Q3.
Matt: So we're happy with our SG&A progress and this will set us up for success when sales improve we can generate a better leverage of our fixed costs.
Matt Reindel: The contribution from other income and share of equity earnings in Q4 was about $31 million lower than last year, largely reflecting the large capital gain we generated from the sale of a property last year. Now I'm going to come back to this real estate-related income later in my remarks when we discuss Fiscal 25. Our effective income tax rate was 28.3% in Q4, which was 300 basis points higher than last year, mostly due to the revaluation of tax estimates. For Fiscal 25, excluding the effects of any unusual transactions or differential tax rates on property sales, we estimate that our effective income tax rate will be between 25 and 27%.
Matt: The contribution from other income and share of efficacy earnings in Q4 was about $31 million lower than last year, largely reflecting the large capital gain we generated from the sale of a processing last year.
Matt: I am going to come back to this real estate related income later in my remarks, when we discuss fiscal 'twenty five.
Matt: Our effective income tax rate was 28, 3% in Q4, which is 300 basis points higher than last year, mostly due to the revaluation of tax estimates.
Matt: Fiscal 'twenty five excluding the effects of any unusual transactions will differential tax rates on property sales, we estimate that our effective income tax rate will be between 25 and 27%.
Matt Reindel: Finally, on our Q4 numbers, let me give you an update on our adjusting items. There's nothing new this quarter. First, we excluded restructuring expenses of 15 million after tax, or six cents of earnings per share. Secondly, after completing our cyber insurance claims, we excluded net recoveries of 10 million after tax, or 4 cents of earnings per share.
Matt: Finally on our Q4 numbers, let me give you an update on our adjusting items is.
Matt: Nothing new this quarter, firstly, we excluded restructuring expenses of $15 million after tax or <unk> <unk> of earnings per share.
Matt: Secondly, after completing our cyber insurance claims we excluded net recoveries of $10 million after tax or four cents of earnings per share.
Matt Reindel: These two adjustments reconcile our reported EPS of 61 cents to our adjusted EPS of 63 cents. Now, let's turn to Fiscal 25, and I'll start with Wallach. As Michael said earlier, we remain very confident in Voila as our medium and long-term solution for grocery e-commerce. However, with lower e-commerce grocery penetration than we had initially forecasted, we needed to take immediate action to improve short-term financial performance and to protect against additional unforecasted losses.
Matt: These two adjusting these two adjustments reconcile our reported EPS of <unk> 61.
Matt: To our adjusted EPS of <unk> 63.
Now, let's turn to fiscal 2005, and I'll start with block.
Matt: As Michael said earlier, we remain very confident in <unk> as a medium and long term solution for the rise through e-commerce, Although we'd love a great E Commerce Garner suite penetration than we had initially forecasted we needed to take immediate action to improve short term financial performance and to protect against additional on forecasted losses.
Matt Reindel: While we do not provide specific information on Alcoala businesses or on our individual CFCs, we will enhance our path to profitability by pausing the opening of CFC4 while we focus on our three active CFCs, and by working with our partners, Ocado, to increase flexibility and decrease costs, and by exploring other business development opportunities. With regard to capital allocation, our plans are supported by a strong balance sheet and our ability to deliver significant free cash flow.
Matt: While we do not provide specific information on all of our businesses on a floor on our individual cfcs, we will enhance our path to profitability by closing the opening of <unk>, while we focus on our three active <unk> bye.
By working with our partners Ocado to increase flexibility and decrease costs and by exploring other business development opportunities.
Matt: With regard to capital allocation.
Matt: Our plans are supported by a strong balance sheet and our ability to deliver significant free cash flow.
Matt Reindel: Firstly, we announced today a 9.6% increase in our dividend, and secondly, we announced the renewal of our NCIB program to repurchase approximately 400 million shares in fiscal 25. Thirdly, but most importantly, we plan to reinvest approximately 700 million in CapEx in fiscal 25, with about half of this allocated to renovations and new stores, and about a quarter to IT and business development projects, and the remainder to the combination of logistics, sustainability, and e-commerce.
Matt: Firstly, we announced today, a nine 6% increase in our dividend.
Matt: Currently we announced the renewal of our <unk> program to repurchase approximately $400 million of shares in fiscal 'twenty five.
Matt: But most importantly, we plan to reinvest approximately $700 million of Capex in fiscal 2005 with about half of this allocated to renovations and new stores.
Matt: And about quarter to ICM business development projects and the remainder due to a combination of logistics sustainability on E Commerce.
Matt Reindel: As we have said in the past, capital discipline is paramount, and we were extremely disciplined in Fiscal 24. If we exclude the land that was purchased in Q4, Catholics was approximately 720 million, which was well below our original guidance of 775 million.
As we've said in the past capital discipline is Paramount and we were extremely disciplined in fiscal 'twenty four.
Matt: If you exclude the land that was purchased in Q4, Capex was approximately $720 million, which is well below our original guidance of $775 million.
Matt Reindel: As Michael said earlier, if proposed capital investments don't generate the right level of return, they are rejected. Now, let me return to other sources of income. To provide further clarity on the performance of our core grocery business, we will begin to share an outlook on the combination of our other income and share of equity earnings, which is mainly our real estate-related income. For Fiscal 25, we expect the pre-tax aggregate contribution from these two line items to be in the range of $135 to $155 million, which is largely in line with Fiscal 24, if you exclude the gain on the sale of the Western Canada fuel business.
Michael Bennett Medline: And as Michael said earlier that the proposed capital investments that generate the right level of return.
Speaker Change: <unk> projected.
Speaker Change: Now, let me return to other income.
Speaker Change: To provide further clarity on the performance of our core grocery business, we will begin to share an outlook on the combination of other income and share of accuracy earnings which is mainly on real estate related income.
Speaker Change: In fiscal 2005, we expect the pre tax aggregate contribution from these two line items to be in the range of $135 million to $155 million, which is largely in line with fiscal 'twenty four.
Speaker Change: The gain on the sale of the Western Canada, Canada fuel business.
Matt Reindel: We expect this to be realized with the following quarterly cadence, about 35% in Q1, 10% in both Q2 and Q3, and then 45% in Q4. The 35% that I noted in Q1 includes a pre-tax gain of $39 million related to a sale in leaseback transactions that we recently completed in June and is disclosed in our MD&A. And, let me reiterate, we have always viewed this other income to be a part of our normal course of operation. Before we move on to your questions, I have a few final thoughts from me to leave you with.
We expect this to be realized with the following quarterly cadence about 35% in Q1.
Speaker Change: 10% in both Q2 and Q3 and then 45% in Q4.
The 35% the I know you said in Q1 includes the pretax gain of $59 million related to a sale and leaseback transactions that we recently completed in June and as disclosed in our MD&A.
Speaker Change: And let me reiterate we have always viewed this other income to be a part of our normal course of operations.
Speaker Change: Before we move onto your questions a few final thoughts from me to leave you with.
Matt Reindel: Over the past two years, we've demonstrated our resilience and our ability to effectively execute in a challenging economic environment that has been adversely impacted by extended periods of high inflation, elevated interest rates, and tight consumer spending. Throughout this period, we've protected the fundamentals of the business, resisted empty calorie sales, grown our gross margins, and proactively managed costs. These cost control initiatives, including our restructuring program, non-merch procurement initiatives, and supply chain projects, are beginning to produce benefits. And our proactive approach to improve profitability at Voila! will also begin to generate benefits in Fiscal 25.
Speaker Change: Over the past two years, we've demonstrated our resilience and our ability to effectively execute in a challenging economic environment that has been adversely impacted by extended periods of high inflation elevated interest rate.
Speaker Change: Consumer spending.
Speaker Change: Throughout this period, we've protected the fundamentals of the business resisted empty calories sales grown our gross margins and proactively manage costs and.
Speaker Change: These cost control initiatives, including a restructuring program non merch procurement initiatives and supply chain projects are beginning to produce benefit.
Unknown Executive: and our proactive approach to improve profitability at WALR will also begin to generate benefits in fiscal 25.
Speaker Change: And our proactive approach to improve profitability at Golar will also begin to generate benefits in fiscal 'twenty five.
Matt Reindel: So we're really looking forward to fiscal 25. Because as interest rates continue to come down, we believe that consumer behavior will begin to normalize, and in turn, support our top line growth. This will enable us to drive more leverage into our business, especially now with an optimized cost structure. And ultimately, we will grow our EPS in line with the long-term targets as stated within our financial framework. And with that, I'll hand the call back to Katie for your question. Great. Thank you, Matt.
Michael Medline: So we're really looking forward to fiscal 25, because as interest rates come, continue to come down, we believe a consumer behaviour will begin to normalise and in turn support our top line growth. This will enable us to drive more leverage into our business, especially now with an optimized cost structure, and ultimately we will grow our EPS in line with a long-term target associated within our financial framework.
Speaker Change: So we're really looking forward to fiscal two on spot because.
Speaker Change: Because as interest rates continue to come down we believe that consumer behavior will begin to normalize and intend to pull our topline growth.
Speaker Change: This will enable us to drive more leverage into our business, especially now with an optimized cost structure and ultimately we will grow our EPS in line with the long term target of spaces within our financial framework.
Katie Brine: And with that, I'll hand the call back to Katie for your questions.
Speaker Change: And with that I'll hand, the call back to Casey with your questions.
Katie Brine: Joanna, you may open the line for questions at this time. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the number on your touch screen. You will hear a three-tone prompt acknowledging your question. If you are using a speakerphone, please lift the headset before pressing the button.
Casey: Great. Thank you, Matt Joanna you May open the line for questions at this time.
Joanna: Joanna, you may open the line for questions at this time. Thank you. Ladies and gentlemen, we won't now begin the question-and-answer session. Should you have a question, please press the star, followed by the one on your touch tone phone. You will hear us a return prompt of acknowledging a request.
Casey: Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one on your Touchtone phone you will hear my speech on Pompe acknowledging your request.
Operator: If you are using a speaker phone, please lift the headset before pressing any keys.
Speaker Change: Speaker phone please lift the handset before pressing.
Speaker Change: Sure.
Speaker Change: Yeah.
Chris Lee: First question comes from Chris Lee at Daesharden. Please go ahead. Oh, good afternoon everyone.
Speaker Change: First question comes from Chris Lee I think Jordan. Please go ahead.
Christopher Li: The question comes from Chris Lee at Desjardins. Oh, good afternoon, everyone. Um, Michael, I know I asked you this last time as well, but, you know, in light of today's announcement, I was just wondering if you have any updated views on two things. Number one is, you know, what do you think are the key factors that are limiting e-commerce adoption in Canada? And number two, how long do you think it will take before penetration reaches a level that will allow Walla to be profitable? I'm sorry, I know, I know, this is a big crystal ball question.
Speaker Change: Hello, Good afternoon, everyone. Michael I know I asked you this last time as well but.
Chris Lee: Michael, I know I asked you this last time as well, but you know, in light of today's announcement, just wondering if you're having any updated views on two things.
Speaker Change: Todays announcement I'm just wondering if you have any updated views on two things number one is what do you think are the key factors that are limiting e-commerce adoption in Canada and number two is how long do you think it will take this fall penetration reaches a level that will allow us to allow it to be profitable.
Christopher Li: Number one is, you know, what do you think of the key factors that are limiting e-commerce adoption in Canada? And number two is, how long do you think it will take before penetration reaches a level that will allow for a lot to be profitable? Sorry, I know this is a big, crystal ball question.
Speaker Change: As a big Crystal ball question.
Michael Medline: You know, it's a good question. Let me do the penetration on first, which is currently e-commerce penetration. Just you know, and the demographics are, you know, favor on this one as well.
Michael Bennett Medline: No, that's a good question. Let me do the penetration one first, which is currently e-commerce penetration has gone up recently, just so you know, and the demographics are in our favor on this one as well. But it's at 4%. We would have expected it to be 6% to 7% penetration of groceries at this time. At the same time, that wasn't a breakeven.
Speaker Change: Yes.
Speaker Change: Good question.
Speaker Change: Let me do the penetration of <unk>, which is currently e-commerce penetration has gone up.
Speaker Change: Just the demographics are in our favor on this one as well, but it's at 4% we would have expected it to be.
Michael Medline: But if it's 4%, we would have expected it to be 6% to 7% penetration of grocery at this time. At the same time, that wasn't a break even; that was better than that, what we expected for 6 and 7%.
Speaker Change: 6% to 70% penetration of grocery at this time.
Speaker Change: At the same time that wasn't a breakeven that was better than what.
Michael Bennett Medline: Better than that, what we expected for six and seven. So I'm not going to tell you when and where, but it's somewhere between four and those numbers that we need to get at. Now, at the same time, as you can see in all these places, we're not waiting for the economy, we're not waiting for everything, we are doing all sorts of things to make e-commerce more profitable for us and not just waiting for that. But that will come. The solution is fantastic, the customers love it, and we'll do well. But we can't wait for that.
Speaker Change: What we expect it to sort of six and seven so I'm not going to tell you.
Michael Medline: So I'm not going to tell you when and when and where, but it's summer between 4 and those numbers, so that we need to get at it. Now, at the same time, as you can see, in all these places, we're not reading for the time; we're not reading for everything. We are doing all sorts of things to make e-commerce more profitable for us, and not just waiting for that; but that will come. The solution fantastic customers love it and we'll do well, but we can't wait for that.
Speaker Change: When when and where but.
Speaker Change: Somewhere between four and those numbers so.
Speaker Change: We need to get at the same time.
Michael Bennett Medline: We owe it to our investors to become much more profitable year after year and then make this one of our best businesses in terms of returns. So that's where we're aiming. In terms of... You know, in terms of my own theory behind why e-commerce hasn't caught on in grocery as it has, perhaps, in other goods or soft goods in Canada, and below that of countries like the U.K. and the U.S., it's, I think, two-fold. We have great competition and bricks and mortar stores in this country, and they serve our customers well. And maybe that's better than what others find where they live.
As you can see in all of these places we're not waiting for the economy, we're not waiting for everything we are doing all sorts of things to make ecommerce more profitable for us.
Speaker Change: And not just waiting for that but that will come.
Speaker Change: The solution fantastic customers love It we will do well.
Speaker Change: But we can't wait for that we are to our investors to become.
Michael Medline: We all turn investors to become much more profitable year after year and then make this in one of our best businesses in terms of returns. So that's where naming us. And in terms of, you know, in terms of my own theory, behind why e-commerce hasn't caught on in grocery, as it has perhaps another in our goods or soccer at the Canada. And below that of countries like the UK and the US, it's a big two-fold. One is that we have great competition and bricks-and-mortar stores in this country, and they serve our customers well, and maybe that's better than what others find and where they list.
Much more profitable year after year and that makes us.
One of our best businesses in terms of returns. So that's we're aiming at.
Speaker Change: In terms of.
Speaker Change: In terms of.
Speaker Change: My own theory.
Speaker Change: Behind why.
Speaker Change: E Commerce hasn't caught on in grocery as it has perhaps.
Speaker Change: And hard goods soft goods in Canada.
Speaker Change: And below that of <unk>.
Speaker Change: Countries like the UK and the U S.
Speaker Change: Twofold.
Speaker Change: One is.
Speaker Change: That.
Speaker Change: We have great competition in bricks and mortar stores in this country.
Speaker Change: And <unk>.
Serve our customers well.
Speaker Change: And maybe that's better than what others find and wherever they live that's one theory.
Michael Medline: That's one theory.
Michael Medline: The other theory in one eye subscribed to, but it's open to debate, is when Canadians really needed to count on. Chris Reed, Thomas, during the worst days of the pandemic. It's stuck, right? Most of the offerings of their were terrible, with terrible substitutions and not on time because people are just trying to get food to people in crisis, and I understand that. But I think that hurt the brand of all eat a cumbersome grocery, but what we're saying is you try while you're sticking with it. It has our highest NPS scores by a mile. Even I earn a farm boy, and in customers' luck, we just need more people trying it, which they are now doing, as you seem.
Michael Bennett Medline: That's one theory. The other theory, and one I subscribe to, but it's open to debate, is when Canadians really needed to count on grocery e-commerce during the worst days of the pandemic. It's stuck, right?
Speaker Change: The third one I subscribe to.
Speaker Change: It's open to debate is when Canadians really needed to count on.
Speaker Change: Grocery e-commerce during the worst days of the pandemic.
Michael Bennett Medline: Most of the offerings out there were terrible, with terrible substitutions and not on time because people were just trying to get food to people in crisis, and I understand that. But I think that hurt the brand of overall e-commerce and grocery. But what we're seeing is that you try it, and voila, you're sticking with it. It has our highest NPS scores by a mile, even higher than Farm Boy, and customers love it. We just need more people trying it, which they are now doing, as you've seen.
Speaker Change: Stock right.
Speaker Change: Most of the offerings out there were terrible terrible substitutions and not on time because people were just trying to get food to people with crisis and I understand that but I think that hurt the.
Speaker Change: Brand of apparel.
Speaker Change: Commerce and grocery.
Speaker Change: But what we're seeing if you tried.
You're sticking with it.
Speaker Change: It has our highest NPS scores by a mile even higher than farm boy.
Speaker Change: And customers love It we just need more people trying at which they are now doing as you've seen.
Michael Bennett Medline: And we are becoming much more confident in the industry growing. Part of that will be the industry growing, and part of that is that we're going to grow the industry. So, a little more confidence, but it's below where anyone thought it would be. Matt, you might want to add something to that.
Michael Bennett Medline: And we are becoming much more expensive, and we're going to grow the industry.
Speaker Change: And we are.
Speaker Change: Becoming much more confident.
Speaker Change: And the industry growing.
Speaker Change: Part of that will be the interest growing in part because we're going to grow the industry. So.
Michael Bennett Medline: A little more confidence, but it's below where anyone thought it would be.
Speaker Change: A little more confidence, but it's below where anyone thought it would be.
Matt Reindel: Matt, you will pay me a mic. I'll get to ask something on to that. Yeah, I'll just answer that.
Speaker Change: Matthew will take me Mike.
Speaker Change: Alright coming onto our yes, I'll just I'll just ask the question about CIC for Chris So.
Matt Reindel: Yeah, I'll just add to your question about CFC4, Chris. So we haven't set a specific target as to what penetration needs to be before we launch CFC4. The key really is the point of the announcement today is we're going to focus our minds now on running the three CFCs we have with X. So you can imagine that over the past four years, the teams have been focused on opening a CFC to opening a CFC to opening a CFC.
Matt Reindel: You question about CSE4 Chris. So we haven't set a specific target at the what penetration needs to be before we launch CSE4. The key really is the point of getting out some today is we're going to focus on minds now on running the three CSEs we have with excellence. So you're going to imagine over the past four years, the teams have been focused on opening a CSE to opening CSE to opening CSE. So now, with this poll, this enables them to really focus on running their CSEs excellently. So it's going to be a combination of e-commerce penetration growing, and our profitability growing across all of the CSEs.
Speaker Change: So we haven't set a specific.
Target is to wall penetration needs to be before we go on CFC for the key really is the point of the announcement today is we're going to focus our minds now on running the <unk>, we have with excellent. So you can imagine over the past four years. The teams have been focused on opening.
Matt Reindel: So now, with this pause, this enables them to really focus on running those CFCs excellently. So it's going to be a combination of e-commerce penetration growing and our profitability growing across all of the CFCs. We made this decision and have been discussing it internally, and the notable improvement that we're already seeing in those three SCCs is quite clear, as you can see from the almost 25% growth in Q4. So we're very pleased with how that's progressing, and when those two metrics move in our favor, then we'll make an announcement about CSC4, and we can quickly get that CSC up and running. No, thanks for that.
Speaker Change: CSC to opening CFC to opening a CFC. So now with this polar this enables them to really focus on running those cfcs excellently.
So it's going to be a combination of e-commerce penetration growing and our profitability growing across all of the CFC.
Matt Reindel: We made this decision, you know, I'm just discussing it internally, and the notable improvement that we're already seeing in those three CSEs is quite clear, as you can see from almost 25% growth in Q4. So we're very pleased with how that's progressing. And when those two metrics move in our basis, then we'll make an announcement about CSE4, and we can quickly get that CSE up and running.
Speaker Change: We made this decision.
Speaker Change: And have been discussing it internally.
Speaker Change: A notable improvement that we're already seeing in those <unk> is quite clear as you can see from almost 25% growth in Q4. So we're very pleased with how thats progressing.
Speaker Change: Those two metrics move in our favor then we'll make an announcement about CSC for them, we can quickly get that CST up and running.
Chris Lee: Okay, you know, thanks for that. Maybe a follow-up on that is, you know, appreciate the color so far.
Matt Reindel: Maybe a follow-up on that is, you know, appreciate the color so far. And when you mentioned that you expect a significant improvement in profitability as a result of some of these actions you announced today, can you help us understand or size it up for us? What, how much of this, like, what's the size of this improvement that we can expect over the next year or two? Yeah, so I'll share what I can, Chris.
Speaker Change: Okay. Thanks for that and maybe a follow up on that.
I appreciate all the color so far and when you mentioned that you expect a significant improvement in profitability as a result of some of these actions we announced today.
Christopher Li: And when you mentioned that you expect a significant improvement in profitability as a result of some of these actions you announced today, can you help us understand or size it up for us? How much of these, like, was the size of this improvement that we can expect all the next year or two?
Can you help us understand or size that up for us what how much of that you said.
Speaker Change: Maybe just the size of this improvement that we can expect over the next year or two.
Matt Reindel: So, as you know, we stopped talking specifically about Voila profitability two years ago. But, you know, what we've been saying for basically the past two years is that with lower grocery ecom and lower growth, we've been making more losses than we had initially planned. So that's really the reason that we had to move as quickly as we did to protect short-term profitability, and that's clearly what our shareholders have been expecting from us.
Michael Medline: Yeah, I'll show what I can, Chris. So, as you know, we stopped talking specifically about, well, our profitability two years ago. But, you know, what we've been saying for the basically the past two years is that with lower rates of e-commerce and lower growth, and we've been making more losses than we had initially planned. So that's really the reason that we had to move as quickly as we did to protect short-sum profitability, and that clearly why our shareholders have been expecting from us. So, look, when we look to fiscal 25, we have now a, we will have a full year of CSE3 in our numbers.
Christopher Li: Yeah, So I'll sure I'll say, well I can Chris So as you know we stopped talking specifically about what our profitability two years ago.
Speaker Change: But.
Speaker Change: What we've been saying for the basically the past two years is that with lower grocery E comm and load growth and we've been making more losses than we had initially planned. So that's really the reason that we had to move as quickly as we did.
Speaker Change: To protect short term profitability and that's clearly where our shareholders have been expecting from us.
Matt Reindel: Look, when we look to Fiscal 25, we will have a full year of CFC 3 in our numbers. And as you know, in the early years, it is when we make the most losses before CFC ramps up.
Speaker Change: When we look to fiscal 'twenty five.
Speaker Change: We have now we will have a full year of <unk> three and <unk>.
Michael Bennett Medline: And as you know, in the early years, when we make the most losses before the CSE4 answer. So what our goal is for fiscal 25, including a full year of CSE3, is to make sure that our losses are no more than what we had in fiscal 25. So that's our goal. We're close. We have still some work to do, but Pierre and the team are working hard on this. That's our goal. No more additional loss.
Speaker Change: And as you know.
Speaker Change: Early years is when we make the most losses before the CFC ramped up so what our goal is for fiscal 'twenty five including a full year of <unk> three is to make sure that our losses on no more than what we had in fiscal <unk>.
Speaker Change: So thats our goal were close we have still somewhat to do PR and the team are working hard on this NASA.
Speaker Change: NASA will no more additional losses.
Christopher Li: So our goal for Fiscal 25, including a full year of CFC 3, is to make sure that our losses are no more than what we had in Fiscal 24. So that's our goal. Great, thank you. I'll get back into the queue, and all the best.
Speaker Change: Great. Thank you I'll get back into the queue and Autodesk.
Tamy Chen: The next question comes from Tamy Chen at BMO Capital. Hi, thanks for the question. I'm sticking with Wallah here for a second.
Speaker Change: Hi, Chris.
Speaker Change: Thank you next question comes from Jimmy Chen of BMO Capital markets. Please go ahead.
Michael Bennett Medline: Can you talk just a bit about the three different CSCs? Like, is the first CSC, the one in the GTA, relatively profitable or utilized there relatively, you know, the best, and the third is the lowest? Or among these three, is it a bit of a tighter band in terms of utilization and profitability? Are all three, at this point, not profitable, or maybe one is getting close to that? I don't know if you can give a bit more color about that.
Tamy Chen: Hi, Thanks for the question.
Speaker Change: Sticking with go along here for a second.
Speaker Change: Can you talk just directionally a bit about the different the three different yes, he's like it.
That's first DSP, the wining and Betsy.
Speaker Change: The profitability of utilization there relatively you know the best.
Speaker Change: And the third.
Lola: Lola sure. Among these three it's a bit of a tighter band in terms of the utilization and profitability at all three at this point I'm not profitable or maybe one getting close to that I hope you can give a bit more color about that Ed and Michael did I hear you say that it is overall grocery E penetration was.
Michael Bennett Medline: And, and Michael, did I hear you say that if overall grocery penetration was more than 4%, closer to that six to 7%, the entire Wallah would break even? Well, let me answer the first part about the individual CFC. So again, what I can tell you, Tamy, is that as each of our CFCs continues to ramp up and grow volume, they get closer to profitability. So that was always the model. That's what's happening. So CFC one continues to move in the right direction, and CFC 2 continues to move in the right direction.
Speaker Change: More than 4% closer to that 67% the entire wall out would be breakeven.
Speaker Change: Well, let me let me answer the first.
Speaker Change: How about the individuals CFC so again.
Speaker Change: What I can tell you Tommy is.
Speaker Change: As each of our CFC continues to ramp up and grow volume they get closer to profitability. So that was always the model that's what's happening so CSC won.
Speaker Change: <unk> continues to move in the right direction CFC to continues to move in the right direction <unk> III is in launch mode, and so that losses are increasing.
Matt Reindel: CSC3 is in launch mode, right, so their losses are increasing as we get to a full year of run rate. So to answer your question, all three are still losing money. That's absolutely in our expectations. But they're all heading in the right direction.
Speaker Change: As we get to a full year of run rate.
Speaker Change: So to answer your question, yes. They are all three are still losing money that's absolutely in our expectations.
Speaker Change: They're all heading in the right direction, but they are losing money I would tell you that.
Matt Reindel: But they are losing money. I would say that CFC1 is above the overall same store sales because it's been in the market longer and now in Quebec. So it's all time.
Speaker Change: CFT one is above the overall same store sales because it's been in the market longer now in Quebec. So its all timing to your second question. Good question.
Michael Bennett Medline: To your second question, good question. It's not exactly what I said, by the way, but I'll be very clear on what I say here. Not at 4%, but let me just put it this way. At 6% to 7%, we're all going to be happy, us and our shareholders. Very happy.
Speaker Change: Exactly what I said, but I do I saw but I'll be very clear on what I figure.
Speaker Change: Not a 4%, but let me just put it this way at 6% to 7%, we're all going to be happy us and our shareholders.
Speaker Change: Very happy.
Michael Bennett Medline: So as we move about inches up, and we continue to operate better, and we're seeing these sort of same-store sales. Okay, understood. And potential partnerships. So as I understand it, as you've ended the exclusivity here, you're able to now look more into these partnerships. Is there any more you can say about that?
So as we move our guidance shows up and we continue to operate better and we've seen these sort of same store sales.
Speaker Change: It's going to look very good.
Speaker Change: Okay understood.
I mean potential partnership so sorry, if I understand that you.
Speaker Change: And did the exclusivity here Youre able to now look more into the partnership is there any way you can say about that how you're thinking of it. So should we interpret that as essentially other various retailers that you offer ecommerce it would be the.
Michael Bennett Medline: How are you thinking of it? So should we interpret that as essentially, other various retailers that do or offer e-commerce would be to lean on the infrastructure of the wall on the PCSC? Is that essentially what you're getting at? Thank you.
Speaker Change: Sure.
Speaker Change: Well I'm sure he is that essentially what you're getting at thank you.
Michael Bennett Medline: No, that could be something we do, but that's not what I was trying to get at. What we're talking about here, and I'm not going to get into too many details, but I think you're smart, and everyone on this call is really smart. You'll know what I'm talking about.
Speaker Change: No that could be something we do but thats not what I was trying to get at.
Speaker Change: We're talking about here and I'm not going to get into too many details, but I think youre spot.
Speaker Change: And everyone on this call is really smart you're going to know what I'm talking about by ending exclusivity that's going to allow us the opportunity to pursue complementary growth opportunities in the market, including my surgery more types of customer trips and having access to a larger segment of the market in a big moneymaker in the medium and long term are these big basket shops out of la.
Michael Bennett Medline: By ending exclusivity, this is going to allow us the opportunity to pursue complementary growth opportunities in the market, including by serving more types of customer trips and having access to a larger segment of the market. And the big money maker in the medium and long term will be these big basket shops as well. But what we're seeing is that we also have to fulfill other missions in terms of satisfying customers to grow this business, and they've got to be profitable missions for it.
<unk>.
Speaker Change: But what we're seeing is that we.
Speaker Change: Also have to fulfill other missions.
Speaker Change: In terms of satisfying customers to grow this business and we've got to be profitable emissions honestly.
Michael Bennett Medline: And so right now, we're in conversations with partners outside of the Walla, Universe to be able to compete in other ways, not just through our CFCs. At the same time, we also believe that we'll be able to bring some of these customers into the Voila! environment as well because it's such a great service as well.
Speaker Change: So right now we're in a.
Speaker Change: Conversations with partners.
Speaker Change:
Speaker Change: Outside of the wall.
Speaker Change: Universe.
Speaker Change: Two.
Speaker Change: To be able to compete in other ways not just through our cfcs.
Speaker Change: At the same time, we also believe that we'll be able to bring some of these customers into the flow environment.
Tamy Chen: And so I think in the next couple of quarters, you're going to hear more about that. Okay, thank you. Thank you. The next question comes from Mark Petrie at CIBC. Yeah, thanks. I think the comments on Bola have been very clear and helpful.
Speaker Change: Because it's such a waste service as well and so I think in the next couple of quarters Youre going to hear more about that.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you. Your next question comes from Mark Petrie at CIBC. Please go ahead.
Mark Robert Petrie: Yes. Thanks.
Speaker Change: I think.
Speaker Change: Comments on <unk> have been very clear and helpful. One just broader question with regards to sort of your e-commerce offering and I guess specific to western Canada, given that the Vancouver, CFC will be postponed whats the offering to the western Canada.
Mark Robert Petrie: One just a broader question with regard to sort of your e-commerce offering, and I guess specific to Western Canada, given that the Vancouver CFC will be postponed, what's the offering to the Western Canada customer today, you know, with regard to click and collect? Is that something you expect to ramp up? in the coming months. Yeah, we're going to wrap that up to fill in for the time period before we go forward with CFC 4.
Speaker Change: Customer today with regards to click and collect and.
Is that something you expect to ramp up in the coming months.
Mark Robert Petrie: But right now, I'll just give you a flavor of it. The BC market is served through 28 curbside pickup locations. And as you know, Mark, our thrifty food banner continues its online delivery. It started over 20 years ago serving Victoria in the lower mainland.
Speaker Change: Yes, we're going to we're going to wrap that up as to fill in for the.
Speaker Change: The time period before we.
Mark Robert Petrie: We go forward with CFC for right now I'll, just give you a flavor of the BC market is served through 2008 curbside pickup locations and as you know Mark our Thrifty banner tricky food banner continues its online delivery. It started over 20 years ago, serving Victoria in the lower mainland. So we have coverage there.
Mark Robert Petrie: It will be better when we open up the CSC in terms of coverage.
Michael Bennett Medline: So we have coverage there. I mean, it'll be better when we open up the CFC in terms of coverage, but we have made plans as well to make sure that we have a strong presence there. And pursuant to the last question, as well. We're going to have other ways to serve this market that will grow our market share but also be profitable. Yeah, okay. Understood. Thanks for that.
Mark Robert Petrie: We have made plans as well to make sure that we have a strong presence there and pursuant to the last.
Mark Robert Petrie: <unk> is well we're going to have other ways to serve this market that will be we will grow our market share, but also be profitable.
Yeah, Okay understood thanks for that.
Mark Robert Petrie: Yeah, and I guess two just sort of together on the margin lines, you know, the gross margin improvement, as you said, was a little bit better than you kind of signaled last quarter, where you talked about sort of a normalization in the improvements that you've been seeing. Could you just talk about the outlook there for fiscal 25? And then similarly on SG&A, you know, a pretty modest increase, all things considered.
Speaker Change: Yes and.
Speaker Change: But I guess to just sort of together on on the margin lines. The gross margin improvement as you said was it was a little bit better than you kind of signaled last quarter, where you talked about a.
Speaker Change: Sort of a normalization in the in the improvements that you've been seeing could you just talk about sort of the outlook there for fiscal 'twenty five and then similarly on SG&A.
Speaker Change: A pretty modest increase all things considered and do you think that's a reasonable run rate that two 5%.
Matt Reindel: And do you think that's a reasonable run rate, that two and a half percent that you delivered in Q4 normalized? Is that a reasonable run rate, you know, barring any material change in sales trends? Sure, let me answer both of those.
Speaker Change: You delivered in Q4 normalized is that a reasonable run rate.
Barring any material change in sales trends.
Matt Reindel: So yeah, well, I mean, we're really happy with both of those line items in Q4 and as we look forward to fiscal 25. But let me start with margin. Yeah, as I said in my script, really, this comes down now to operational excellence. And that's what's really kind of pleasing about our margin performance. There's nothing major in there like there was maybe a few years ago with promotional optimization, which was driving 80 basis points in a quarter. This is a series of smaller initiatives that are all positively contributing.
Speaker Change: Sure.
Speaker Change: Demand for both of them say, yes, well I mean.
Speaker Change: We're really happy with both of those line items in Q4, and as we look forward to fiscal 'twenty five, but let me start with margin.
Speaker Change: Yes, as I said in my script.
Speaker Change: Really this comes down now to operational excellence and that's what's really kind of pleasing about.
Performance, there's nothing there's nothing major in that.
Speaker Change: There, maybe a few years ago with promotional optimization, which is driving 80 basis points in a quarter. This is a series of smaller initiatives are all positively contributing.
Matt Reindel: We've talked about space productivity before. We've talked about supply chain initiatives before. And we've talked about the mix before.
Speaker Change: Talked about space productivity before we talked about supply chain initiatives before we've talked about mixed before.
Matt Reindel: The one that's new this quarter, which we're very pleased about, is strength. So I would categorize that as non-theft shrink, but our operators are really making great progress on this and will continue to do so. So in terms of looking forward to fiscal 25, you know, I think I've said consistently that over the next three, four years, we're targeting 10 to 20 basis points of margin expansion per year. That might be a little bit bumpy quarter to quarter, depending on what we delivered in the prior year, but that's what our expectations are.
Speaker Change: The one this new this quarter, which we're very pleased about is shrink.
Speaker Change: So I would categorize that as non snapped shrink.
Speaker Change: But our operators are really making great progress on this and we'll continue to do so.
Speaker Change: So.
Speaker Change: In terms of looking forward to fiscal 'twenty five.
Speaker Change: Yes.
Speaker Change: Instantly that over the next three or four years with targeting 10 to 20 basis points of margin expansion for the year.
Speaker Change: That might be a little bit bumpy quarter to quarter.
Speaker Change: Depending on what we delivered in the prior year, but thats, what our expectations are.
And we have enough tailwind with improved shrink performance mix.
Matt Reindel: And we have enough tailwinds with improved shrink performance, mix, space productivity, and how we run the business in order to generate that margin increase. And, to be clear, just in case there's any doubt, none of this is coming from price. So that's really what's happening with margin performance. So I would bank 10 to 20 basis points for you. Very good with that, or do you want to add anything?
Speaker Change: Space productivity.
Speaker Change: And how we run the business.
Speaker Change: Just a general generate that margin increase and to be clear. This in case, there's any doubt none of this is coming from pricing.
Speaker Change: That's really how it whats happening with margin performance either by 10 to 20 basis points of view very good with that or do you want out of it.
Matt Reindel: Maybe the only thing is because inflation is going down because customer behavior remains fairly steady compared to a year ago. The business is more predictable than it was a year ago, and it's easier to manage. So procurement, replenishment, and production are more manageable and predictable. That's very helpful to manage Chromomix, and shrink.
Yes.
Speaker Change: Maybe the only thing is.
Speaker Change: Because inflation is going down because customer behavior remain.
Speaker Change: At least if you compare a year ago.
Speaker Change: The business is more predictable than it was a year ago and ETE or to manage so.
Speaker Change: Procurement replenishment production.
Speaker Change: Or more.
Speaker Change: Manageable and predictable that's very helpful to manage global mix.
Matt Reindel: So I think with the level of inflation we have right now and some improvement in customer sentiments, we feel good about how we can deliver better and have good control on all components of the market. And then to answer the question about SG&A, Mark. So, yeah, we're very pleased with how SG&A looked in Q4, for the reasons I said earlier with the cost control initiatives. When we plan out Fiscal 25, our SG&A rate is slightly higher than at F24, but our goal is that we want to be close to having a flat SG&A margin next year. That's an adjusted SG&A margin, to be clear, but that's what our goal is. We're going to be close, but that's what we're targeting.
Speaker Change: And shrink so.
Speaker Change: I think with the level of inflation, we have right now and some improvement in customer sentiments, we feel good about.
Speaker Change: We can deliver better and good control on all aspect of all components of the margin.
And then to answer your question about SG&A Mark So yeah.
Speaker Change: Yes.
Speaker Change: Very pleased with how SG&A looked in Q4.
Speaker Change: For the reasons I said earlier with the cost control initiatives.
Speaker Change: When we plan out fiscal 'twenty five SG&A rate is slightly higher than our F. 'twenty four but our goal.
Is that we want to be close to having a flat SG&A margin next year unadjusted SG&A margin to be clear.
Speaker Change: But thats what our goal is we're going to be close.
Speaker Change: But that's what we're targeting.
Speaker Change: Okay I appreciate all the comments on all of us.
Mark Robert Petrie: Thanks Mark.
Mark Robert Petrie: Okay, I appreciate all the comments and wish you all the best. Thank you. The next question comes from Michael Van Elst at TD Securities. Good morning.
Speaker Change: Thank you next question comes from Michael Vranos at TD Securities. Please go ahead.
Michael Van Aelst: So I wanted to circle back on Michael's earlier comments about consumer optimism. And I understand how with rates coming down, that should be some help, and inflation coming down, that should help. But how do you balance that out versus, you know, the significant pressures from, you know, a large component of mortgage holders that are going to see their rates go up substantially over the next two years?
Michael Vranos: Hi, good morning.
Speaker Change: So I wanted to circle back on Michael's earlier comments about.
Speaker Change: Consumer optimism.
Speaker Change: And I understand how with rates coming down.
Speaker Change: That should be some help inflate.
Speaker Change: Inflation coming down that should help but.
Speaker Change: But how do you balance that out versus the significant pressures from.
Speaker Change: A large component of mortgage holders that are going to see their rate their mortgage.
Speaker Change: <unk> go up substantially over the next two years.
Michael Van Aelst: How do you, I guess, what else are you seeing from the consumer that makes you confident that you are going to see some improvement in consumer health over the next four quarters? Yeah, I think it's a great question.
Speaker Change: How do you I guess what else are you seeing.
Speaker Change: From the consumer that makes you makes you confident that yes.
Speaker Change: We're going to see some improvement in the consumer health over the next.
Speaker Change: Four quarters.
Michael Bennett Medline: And what we're seeing from external studies on consumer sentiment and in our own business is that, as I said, it's going to be gradual, but we believe it's now proving that we're out of the abyss, and that we believe, even though Canadians remain, you know, under pressure, as I said, because of housing costs and all sorts of other costs coming at them and mortgage renewals, rent increases, everything. This is still a trepidatious consumer. What we're seeing is them coming out of the trough.
Speaker Change: Yes, I think it's a great question.
Speaker Change: What we're saying from external studies on consumer sentiment and in our own business.
Speaker Change: As I said, it's going to be gradual, but we believe it's now improving that were out of the Abyss.
Speaker Change: And that we believe even though Canadians remain.
Speaker Change: Under pressure as I said because of.
Speaker Change: Shelter costs and all sorts of other other costs coming up in more different hurdles rent increases over.
Speaker Change: This is still a trepidation.
Speaker Change: The consumer and what we're seeing is them coming off the trough.
Michael Bennett Medline: We're seeing early indications of that throughout our business, even though it's still not – I mean, these are not heady days, but we believe this is the early changes. We'd like to see, obviously, stronger consumer sentiment, which will come from lower interest rates and some other things happening, but we believe in our business that we've seen, stop growing and get better. We're also seeing one of the things we see, but you can look up the consumer sentiment yourself, but one of the things we're also seeing is this quarter a further shrink between the difference between full serve and discount same-source sales as well.
Speaker Change: Over the trough and we're seeing that we're seeing early indications that throughout our business, even though it is still a lot I mean these are not heavy days, but we believe this is the early changes we'd like to see obviously.
Speaker Change: Consumer sentiment, which will come from lower interest rates and some other things happening.
Speaker Change: But we believe in our business that we've seen.
Speaker Change: Okay.
Speaker Change: The problems.
Speaker Change: Stop growing and get better.
Speaker Change: We're also seeing a on one of the things we see but you can look at you can look up the consumer sentiment yourself, but one of the things. We're also seeing is this quarter.
Speaker Change: A further.
Speaker Change: Shrink between the difference between full serve and discounts to same store sales as well.
Michael Bennett Medline: Yeah, I would just add to that, I think Pierre alluded to it earlier, that the stabilization of consumer behavior is what gives us confidence, right? Because we see this kind of gradual improvement in all of our metrics across our entire business, but in promotional effectiveness, in margin control, in how we manage our stores, that stabilization of consumer behavior really plays into our hands. So, I have always used the word gradual.
Speaker Change: Yes, I would just the only thing I would add to that I think Pierre alluded to.
Speaker Change: The stabilization of consumer behavior.
Speaker Change: Is what gives us confidence because.
Speaker Change: We see this kind of gradual improvement in all of our metrics across our entire business not just in size.
Speaker Change: But in promotional effectiveness and margin control and how we manage our stores a stabilization of consumer behavior.
Speaker Change: It really plays into our hands.
Speaker Change: I have always used the word gradual.
Matt Reindel: I expect gradual improvement throughout the year, but there is gradual improvement everywhere, and that's what gives us our optimism. Okay, that's helpful. And you reiterated your 8 to 11% long-term EPS Geiger. It's a forecast or guidance that you put in place last year, and you've seen your earnings down a couple of percent in a tough environment, obviously. So, that would mean that you need to get above 8% to 10% at some point over the next few years to get back into that. How do you feel? Do you feel you can actually get into that range this year?
Speaker Change: Gradual improvement throughout the year, but it is gradual improvement everywhere and that's what gives us optimism.
Speaker Change: Okay. That's helpful.
Speaker Change: And you reiterated your 8% to 11%.
Speaker Change: Long term EPS CAGR.
Speaker Change: It's a forecast.
Speaker Change: <unk> forecast or guidance that you put in place.
Speaker Change: Last year and you've seen your earnings down a couple of percent in a tough environment.
Speaker Change: Obviously.
Speaker Change: So.
Speaker Change: That would mean that you'd need to get above 8% to 10% at some point over the next few years to get back into that.
Speaker Change: How do you feel like do you feel you can actually get into that range. This year.
Speaker Change: Yes.
Michael Van Aelst: Yeah. Okay, and that would have to be if you're. That would have to come, I'd assume, from some top line growth, some more meaningful top line growth in the back half of the year. We hope for some top line growth. We do.
Speaker Change: Okay and that would have to be.
Speaker Change: Now I would have to come I would assume from some topline growth.
Speaker Change: Some more meaningful top line growth in the back half of the year.
Speaker Change: We hope for from top line growth, we do well.
Speaker Change: We are not planning for ridiculous topline growth to make that target.
Okay.
Speaker Change: Yes.
Michael Bennett Medline: But we are not planning for ridiculous top-line growth to make that target. Very great. And then, just finally, on your capital program, Matt talked about cutting back the budget to $700M. I think originally we were thinking more like $800M. What projects are generating good returns? I'd assume Farm Boy is one of them.
Speaker Change: Alright, Great and then just finally on your capital program.
Speaker Change: Hey, Matt.
Speaker Change: Matt talked about cutting back to the budget to $700 million.
Speaker Change: I think originally you were.
Speaker Change: I think we're thinking more like $800 million so.
Speaker Change: Yes.
Speaker Change: What projects are generating good returns I would assume farm farm boys one of them.
Speaker Change: What what projects that you're most happy with it youre continuing with and then where are you cutting back.
Michael Bennett Medline: What projects are you most happy with and you're continuing with, and then where are you cutting back? That's a great question. So we have a lot of detail on this because we're so focused on returns and benchmarks. But look, over the past three to five years, almost anything we've done in real estate has had fantastic returns. That's becoming a little bit more challenging now because of the physical cost of capital.
Speaker Change: That's a great question so the.
Yes.
Speaker Change: We have a lot of detail on this because we're so focused on returns and benchmarks.
Speaker Change: Over the past three to five years almost anything we've done in real estate has had a fantastic return.
Speaker Change: Yes, thats, becoming a little bit more challenging now because of the cost of the physical cost of capital.
Michael Bennett Medline: But even within that space, the work we're doing on Farm Boy, on Longos, and the new stores all generate a very healthy rate of return. So that's why we still allocate 50% of that capital to stores. So that reinvestment in the stores will remain strong. In terms of other areas, the work we do on business projects, so when you think about space productivity, for example, the work that we do in stores, all have a very strong rate of return.
But even within that.
Speaker Change: That space.
On farm Boy on long does the new stores.
Speaker Change: We will generate a very healthy rate of return.
Speaker Change: So that's why we still generate.
Speaker Change: Alright, still allocate 50% of that capital to stores.
Speaker Change: Our reinvestment in the stores will remain strong.
Speaker Change: In terms of other areas. So the work we do on business projects. So when you think about space productivity for example.
Speaker Change: With that we do in stores.
Speaker Change: They all have a very strong rate of return.
Michael Bennett Medline: The reason for the reduction really is trimming across the board. So in previous years, we had a larger investment in e-commerce. Now, of course, that's coming to an end now that our CFC Thor building is complete.
Speaker Change: The reason for the reduction really is it's trimming across the board. So in prior years, we had.
Speaker Change: Larger investment in e-commerce.
Speaker Change: Now of course is coming to an end now that CFC. So building is complete.
Matt Reindel: And that will translate a little bit into logistics. So we'll move some of that investment into logistics, which has more of a long-term but very positive IRR. So it's a little bit of reallocation between spend buckets and just trimming. But 700 is a healthy number for us for fiscal 25. All right.
Speaker Change: And that will just translate a little bit into logistics. So we'll move some of that investment into logistics, which has more of a long term, but a very positive IRR. So it's a little bit of.
Speaker Change: Patients between spend buckets I'm just trimming.
Speaker Change: But 700 is a healthy number for us this full fiscal 'twenty five.
Speaker Change: Alright, thank you.
Michael Van Aelst: Thank you. Thank you. The next question comes from Irene Nattel at RBC Capital. Thanks and good morning, everyone.
Speaker Change: Thank you next question comes from Irina.
Speaker Change: RBC capital markets. Please go ahead.
Irene Ora Nattel: A couple of follow-up questions, please. First of all, following on Mike's question and your answer, Matt, you called current borrowing rates or the cost of capital a factor. If we, in fact, we do see rates coming down over calendar 24 and early 25, should we be expecting that CapEx number to go up again for F26-27? It's a great question. I think the answer to that is no.
Speaker Change: Thanks, and good morning, everyone. A couple of follow up questions. Please so first of all following up on Mike's question and your answer Matt.
Speaker Change: Sure.
Current borrowing rates, our cost of capital as being a factor if we if in fact, we do see rates coming down over calendar 'twenty for an early buy should we be expecting that capex number to go up again for F. 'twenty six 'twenty seven.
Matt Reindel: We've worked very hard to make sure we have really strong capital discipline in place. I think you know my focus on return on capital and making sure we deliver a good return to our shareholders. So we are, if anything, improving our hurdle rates and making sure that we deliver really strong returns on our capital. So, No, I wouldn't bank on an increased assumption. I think that 700 million number is good for a couple of years.
Speaker Change: It's a great question I think the answer to that is not.
Speaker Change: Yes.
Speaker Change: We've worked very hard to make sure we have really strong capital discipline in place.
Speaker Change: I think my focus on return on capital and making sure we deliver a good return to our shareholders. So yes if.
Speaker Change: If anything.
Speaker Change: Improving our hurdle rates and making sure that we deliver really strong returns on our capital so.
Speaker Change: No I Wouldnt bank.
Speaker Change: An increased assumption nothing out 700 million number is good for a couple of years.
Irene Ora Nattel: And then going back to the discussion about consumer spending, are we to understand that, let's say, on a sequential basis, and I'd also be interested in commentary, Q1 to date, that sort of private label trade down, promotional intensity, you know, sort of trading up, trading down, and package sizes. Are we seeing that behavior finally stabilize?
Speaker Change: That's really helpful. Thank you and then going back to the discussion.
Speaker Change: Consumer spending.
Speaker Change: Are we to understand that on a sequential basis and I'd also be interested in commentary Q1 to date that.
Speaker Change: Sort of.
Speaker Change: Private label trade down promotional intensity.
Sir trading up trading down and package sizes are we seeing that behavior finally stabilize.
Pierre St: Yes, absolutely. And, So over the last quarter, we continue to see customers buying more in promotion, our TPR measurement, but it's stable compared to the previous quarter for years. Customers continue to shut more stores, we continue to shut our stores, our transactions are up across every single banner, and we are seeing an increase in interest in the private table. So our sales and private table continue to perform very well, penetrations are going up, and profitability through private table is going up. It's another good contributor.
Speaker Change: Yes, absolutely.
So over the last quarter.
We.
We continue to see customer buying more in promotion or <unk> measurement, but it's stable compared to previous quarter and years.
Speaker Change: Our customer continues to shop more stores continue to shop, our stores our transaction all up across every single banners.
Speaker Change: And.
Speaker Change: We are seeing an increase.
Speaker Change: Interest and to the private label, so lower sales in private label continuing to perform very well for nutrition is going up and profitability through private label is growing up.
Speaker Change: Another good contributor to our margin performance. So it's stable it's predictable it's easier to manage and we are seeing into this quarter in.
Pierre St: So it's stable, it's predictable, it's easier to manage, and we are seeing into this quarter, in some weeks, some relief on the TPR on the permanent penetration, which is encouraging. That's not from you changing it, it's from the consumer. Yeah, exactly. Understood, thank you.
In some weeks.
Speaker Change: Some relief.
Speaker Change: The CPR on the.
Speaker Change: <unk> penetration, so which is encouraging.
Speaker Change: So we got from you changing it gets from the concern yes exactly yes.
Irene Ora Nattel: And on private label penetration, so are we kind of stable in that low 20s, low to mid 20s level? We, as I said many times before, it's improving. Remote penetration is an indicator, but it's not the only one.
Speaker Change: Understood. Thank you and on the private label penetration. So are we kind of stable in that low twenties low to mid twenty's level.
Speaker Change: As I've said many times before.
Speaker Change: It's improving.
Speaker Change: For an open nutrition is an indicator, but its not the only one that we need to make sure that.
Pierre St: We need to make sure that every single item in every single category is relevant to the category. So I'm not a big fan of measuring performance by performance, but more by relevancy to the category. And you need to play a specific role in the category at a good margin expansion compared to national. So it's improving, which is good. And I think you're close to our number in your assumption. That's great. Thank you. Finally, and I swear, this is the last question.
Speaker Change: Every single item in every single category, our relevant into the category. So I'm not a big fan of measuring performance related tables by performance, but more by relevancy into the category and they need to play.
Speaker Change: A specific road into the category that the good margin expansion compared to the national breadth, so but it is improving.
Speaker Change: Good.
Speaker Change: And I think.
Speaker Change #100: Youre close to our number and your assumptions.
Irene Ora Nattel: You noted that these are all just little tag follow-ups. You noted that that sort of business was up across all banners. So are you saying things for sales were up across all banners in all regions, and that Longos and Farm Boy were the strongest? Customer accounts are up in every single bank.
Speaker Change #101: That's great. Thank you finally, and just I swear this is the last question.
Note that.
Speaker Change #101: These are all just one follow up you noted that.
Speaker Change #102: That's your business with Apple across all banners. So are you, saying same store sales was up across all banners in all regions and logos and farm boy were the strongest.
Speaker Change #103: I think you said customer count.
Speaker Change #103: Customer counts are up in every single day.
Pierre St: So, okay, because people are shopping more stores. First of all, and people continue to shop at our stores. So people are not shifting 100% of their purchase from one store to another one.
Speaker Change #104: So okay, because because people are shopping more stores.
Speaker Change #105: First of all and people.
Speaker Change #105: One of our stores. So people are shifting under a percent of their purchase from one store to another one just shopping multiple stores and they continue to visit our stores.
Pierre St: They're just shopping in multiple stores, and they continue to visit our stores. So that's the good news. And just to be clear, Irene, we don't have positive comps in all of our banners in all of our regions.
Speaker Change #106: That's a good news and just to be clear are and so we don't have positive comps in all of our partners and all of our regions again.
Matt Reindel: Again, as we start to lap some of those stronger comps from the prior year, both in Q4 and in Q1. But having said that, our sales trend is improving across the board. So that's what we're really encouraging. And the next thing, that's a great point that Pierre makes, a good question, thanks, I mean, but if we were losing a lot of customers, I'd be more worried. What we, so we don't, you know, as things continue to get better, we're going to see that we don't need to go out and get a lot of new customers.
Speaker Change #106: As we start to lap some of those stronger comps from prior year, but in Q4 and Q1.
Speaker Change #106: But having said that our sales trend.
Is improving across the board. So that's what we're really encouraged by that.
Speaker Change #107: That's a great point of pure makes some good questions asked already but.
Speaker Change #107: If we were losing customers I'd be more worried.
Speaker Change #107: So.
Speaker Change #107: And as things continue to get better.
Speaker Change #107: We're going to see.
Speaker Change #107: We don't need to go out and get a lot of new customers when they come that's great.
Matt Reindel: When they come, that's great. I just want one more item in the basket. You get one more item, and then two more items, and we're flying. And that's not just the economy. I'm looking at Pierre right now.
Speaker Change #107: One more item in the basket.
Speaker Change #107: You got one more item and then two more items, we're flying and so we've just got it and that's just off the economy looking at peer right.
Speaker Change #107: He and his team continue to improve there.
Speaker Change #107: Okay. So a lot of things we don't talk about on these calls, but I'm seeing improvement in terms of operations and merchandising across the board.
Speaker Change #107: And we have a lot of good initiatives underway to do that so.
Michael Bennett Medline: That he and his team continue to improve like they are. There are a lot of things we don't talk about on these calls, but I'm seeing improvement in terms of operations and merchandising across the board, and we have a lot of good initiatives underway to do that. So, you know, customers are still there; we just need them to stop cheating on us a little bit and go home to where they really like to shop, and just leave one more thing in the basket. And that's what we go for. Is that fair enough, Pierre?
Speaker Change #107: Our customers still there, we just need them to stop.
Speaker Change #107: Cheating on us a little bit and come home to where they really like to shop, and just say one more thing in the basket and that's why we go forward.
Speaker Change #108: Fair enough.
Pierre St: Yeah, and the only thing we'd like to add is the investment we've made in... data, where the last couple of years are very useful right now. So the team is using data like never before. So they know exactly customer behaviors where we have opportunities. So the team is leveraging data more than ever to make sure that we remain very promotionally relevant. So I'm very confident that the team is having the right tools to continue to drive growth going forward with those indicators and with this data usage. That's very helpful.
Speaker Change #107: Yes.
Speaker Change #109: You wanted to add is the investment we've made in.
Speaker Change #110: In data over the last couple of years are very useful right now so the team is using data like never before.
Speaker Change #109: So it would be no exactly customer behaviors, where we have opportunities. So the team is leveraging the data of more than ever to make sure that we remain.
Speaker Change #109: Very promotional irrelevant, so I'm very confident that the team is adding the right tools to.
Speaker Change #109: To continue to drive growth going forward with those indicators and.
Speaker Change #109: Data.
Speaker Change #109: Rich.
That's very helpful. Thank you.
Pierre St: Thank you. Thank you. The next question comes from Vishal Shreedhar from the National Bank of Venezuela.
Speaker Change #111: Thank you next question comes from Vishal <unk> from National Bank Financial. Please go ahead.
Vishal Shreedhar: Hi, thanks for taking my questions. Once, you know, several years ago, Empire suggested that the Voila business could generate EBITDA margins comparable to the bricks-and-mortar business. And since that period of time, the bricks-and-mortar business has improved. And obviously, on this call, despite deferring the CFC in Vancouver, management seems to express enthusiasm about Voila. So maybe you can give us some guidelines, help us understand what the potential of the business is and some parameters. I know you said six to seven would be very happy, but I'd like to know what that means in some numerical terms.
Speaker Change #112: Hi, Thanks for taking my questions.
Speaker Change #112: Once.
Speaker Change #113: Several years ago.
Speaker Change #114: Empire suggested that the boiler business could generate EBITDA margins comparable to the bricks and mortar business and since that period of time that bricks and mortar business has improved and obviously in.
In this call despite deferring the CFC.
Speaker Change #114: In Vancouver.
Speaker Change #114: Management seems to express.
Speaker Change #115: And through the ads and blah blah blah. So maybe you can give us some some bookends help us understand.
Speaker Change #115: And what the potential of the businesses in <unk> and <unk>.
Speaker Change #115: And and some parameters I know you said six to seven would be very happy but I.
Speaker Change #116: I'd like to know what that means in some numerical terms. So if you can give us some indications of what underpins your confidence in ball to reorient tests that would be helpful.
Michael Bennett Medline: So if you can give us some indications of what underpins your confidence in Voila to reorient us, that would be helpful. Yeah, thanks. Thanks, Vishal. We're probably not going to disappoint you a little bit by not giving you every number, but we're going to try here to help you out. But I did say that this is, at scale. Voila.
Vishal: Thanks, Thanks Vishal.
Speaker Change #118: We're probably going to disappoint, you a little bit by market every number but we're going to try here.
Speaker Change #119: But what I did say that.
Speaker Change #119: At scale.
Speaker Change #119: <unk>.
Matt Reindel: We expect to have a better EBITDA margin than bricks and mortar, and that makes sense. At scale, you have all sorts of scale advantages, even given delivery and all that. And that's it. But not at scale; it doesn't have that EBITDA margin, obviously. So we got to get that closer to that six or seven number to get that kind of scale and have this as a good and then better EBITDA margin.
Speaker Change #119: We expect to have better EBITDA margin than bricks and mortar and that makes sense at scale Europe, all sorts of scale advantages.
Speaker Change #119: Even given delivery of all of that.
Speaker Change #119: That's justified.
Speaker Change #119: But not at scale it doesn't have that EBITDA margin. Obviously, so we got to get we got to get that closer to that six or seven number to get to that kind of scale.
Speaker Change #119: That's good and then better in EBITDA margin and I stick to that.
Matt Reindel: And I stick to that. The only thing I would add to that is, even theoretically, when people look at an e-commerce model versus a bricks-and-mortar model, they think, well, if price points are approximately the same, then how can you generate as much profit in e-commerce when you have an additional distribution expense?
Speaker Change #119: Yes.
Speaker Change #119: Yes.
Speaker Change #120: Thanks for taking my question.
Speaker Change #121: The other thing I would add to that is even theoretically.
Speaker Change #122: When people look at an e-commerce model versus the bricks and mortar model I think well if <unk>.
Speaker Change #122: Price points are approximately the same.
Speaker Change #122: Then how can you generate as much profit in e-commerce when you have it.
Matt Reindel: Well, there are a couple of reasons for that. First of all, we charge for that distribution expense, so we get to recover some of that. But the second biggest reason, the difference between bricks-and-mortar and e-commerce, is we get to monetize the data.
Speaker Change #122: Additional distribution expense well, there's a couple of reasons and the festival.
Speaker Change #122: We charge for that distribution expense, so we get to recover some of that for the second biggest reason.
Speaker Change #122: Currently in bricks and mortar and e-commerce.
Speaker Change #122: To monetize the data.
Speaker Change #122: With time.
Speaker Change #122: But through retail media and other channels, we will be able to monetize that data.
Speaker Change #123: In the long term, there's no reason as Michael said.
Speaker Change #124: Blood, all comp be at or even better EBITDA margin than bricks and mortar.
Vishal Shreedhar: So over time, both through retail media and other channels, we'll be able to monetize that data. So in the long term, there's no reason, as Michael said, that Voila can't be at or even better EBITDA margin than bricks-and-mortar. Okay, thank you for that. That was helpful. I wanted to get back to that traffic point, which I found to be interesting.
Speaker Change #125: Okay. Thank you for that tells helpful.
Speaker Change #124: <unk>.
I wanted to get back to that traffic point, which I found to be interesting. So I have I have two questions and I think one of them you partially answered but my first question is.
Michael Bennett Medline: So, I have two questions, and I think one of them you have partially answered. But my first question is, and I'll ask them both together. My first question is, is the traffic that you're seeing in aggregate across your banners, is that stronger than population growth? And related to that, I know management said they're prioritizing profitability over empty calorie sales, which makes sense. But at what point does management get worried that some of these traffic patterns that these customers are creating as they entertain other banners stick, and they lose those customers, more so for a longer period of time?
I'll ask them. Both together my first question is is the traffic that you're seeing in aggregate across your banners is that is that stronger than population growth and and and related to that.
Speaker Change #124: I know management said, they're prioritizing profitability over empty calories sales, which makes sense, but at what point does management get worried that some of these traffic patterns that these customers are creating.
Speaker Change #124: Entertain other banners.
Speaker Change #124: Nick.
Speaker Change #126: You lose those customers more so.
Speaker Change #126: For a longer period of time.
Michael Bennett Medline: Maybe I'll do the last one and then I'll try to tackle that population one. Yeah, I mean, we have seen, we have, Customer Surveys that show us that people want to shop. They don't want to shop this way. They don't want to go to...
Speaker Change #126: Maybe I'll do the last one of that at all.
Speaker Change #126: I'll try to tackle that population with DARPA.
Speaker Change #126: <unk>.
Speaker Change #127: Yes, I mean, we have seen.
Speaker Change #127: We.
Speaker Change #127: We have.
Speaker Change #127: Customer surveys that show us that people want to shop, they don't want to shop. This way they don't want to go to five stores.
Vishal Shreedhar: They want to go to the store they like. And let's take it and go back. Yeah. We've also seen that in different times, even in this cycle, including last year, Q1, that we had 4.1% comps because customers were feeling a little better, and then they hit kind of an interest rate wall in late August or middle of August, and we saw that through the economy, and we saw that in almost every business that that happened. A B D C I M M M M M M M M M, 10 things in the basket here.
Speaker Change #128: Wanted to go to historically Mike.
Speaker Change #127:
Speaker Change #129: Let's take in Quebec ECM.
Speaker Change #127: Great.
Speaker Change #127: <unk>.
Speaker Change #130: We've also seen that in different times, even in this cycle, including last year in Q1, we had four 1% comps because customers are feeling a little better and then they hit kind of an interest rate wall in late August or middle of August and we saw that through the economy and we saw that in almost every business has that happened.
Speaker Change #130: Some people change their behaviors maybe few.
Speaker Change #131: But as you point out there's more population.
Speaker Change #131: But we believe and we saw it at Christmas and we see a different times that we're not.
Speaker Change #131: All we need is one more thing in the basket, it's not like we need to.
Ken: Ken things in the basket here so.
Michael Bennett Medline: So, people do not want to shop this way due to, you know, exigencies out of their control. It's going to be tough. It's going to be tough times. But as things get better, we'll be the biggest recipient of things changing. And we'll be happy because that will put Canadians in a better spot.
Ken: People do not want to shop this way due.
Speaker Change #133: You too.
Speaker Change #133: Digital fees out of their control.
Speaker Change #134: Thank you.
Speaker Change #134: It's tough task.
Speaker Change #134: If things get better we'll be the biggest recipient of things changing.
And we'll be happy because that will mean Canadians in a better spot.
Michael Bennett Medline: In terms of the other question, I don't know if we have time for that. Well, I would just add in terms of the comparison of population growth, as we've said this whole period, our customer numbers are what gave us the confidence that when sentiment returns, we would benefit, and we'll be well placed because our customers are still in our stores, and now we're beginning to see the benefits of that. Population growth isn't the only way we get new customers. So, you know, when you think about how we're growing our customer base, the work we're doing on the scene, the work that we're doing with the assortment, and our experience in stores, all of those things, we're attracting new customers to our banners. So it's not just population growth.
Speaker Change #134: In terms of the other question I don't know if we have an accurate.
Speaker Change #135: I would just add in terms of the composite is population growth.
Speaker Change #135: We've set this whole period customer numbers are well gave us the confidence that when sentiment returns that we will benefit and we will be well placed because our customers are still in our stores and that we're beginning to see the benefits of that pulp.
Speaker Change #135: Population growth isn't the only way, we get new customers.
Matt Reindel: So just to add to that, that's part of the reason that our customer numbers are as strong as they are. Thank you very much. Thank you. In the interest of time, we do ask that you limit yourself to one question. Okay, well, I had a few follow-ups. I have to pick a good one, I guess.
Speaker Change #136: So what do you think about how we're growing our customer base.
Speaker Change #136: What we're doing on scene.
Speaker Change #136: What we're doing with our assortment and our experience in stores all of those things, we're attracting new customers to our partners. So it's not just population growth.
Speaker Change #137: Just to add to that.
Speaker Change #137: The reason our customer numbers are the strongest style.
Speaker Change #138: Thank you very much.
Speaker Change #138: Okay.
Speaker Change #139: Thank you and the interest of time, we do ask that you limit yourself to one question coming from Chris Li on for Dan.
Speaker Change #140: Please go ahead.
Vishal Shreedhar: So maybe just to sum it up, like, I think, Michael, in answer to Mike's question earlier, he asked you, like, you know, you're going to achieve 8 to 11% in PS growth this year. And I think you sounded fairly direct and confident that the answer was yes. Just from everything that I've heard you say so far, is part of your confidence really predicated on things that are within your control, you know, in terms of how you're managing voli, in terms of all the other initiatives that you're doing? Is that kind of the way we should think about it? That it is? That's what you're sort of confident about? Or is it really still dependent on market factors?
Speaker Change #141: Available I had a few follow ups I had to pick a good way for you guys.
Speaker Change #140: Okay.
Speaker Change #142: So maybe just to sum it up I think Michael in answer to Mike's question earlier.
Speaker Change #140: Yes.
You're going to achieve 11% EPS growth this year, and I think incentives fairly direct and constant that the answer is yes, just from everything that I heard you say so far is part of your confidence is really predicated on things that are within your control in terms of how are we managing fallout in terms of all the other initiatives that you're doing is that kind of the way we should think about it is.
Speaker Change #143: That's what your sort of confidence or is it dependent on bill you still market factors.
Michael Bennett Medline: So, great follow-up. Thank you. Thanks for asking a follow-up question. So, our plan is to be, this year, in that range. As I intimated, but I'll be clear here that it is, Predicated on the market getting a little better, but not great. This year, but not not a lot better because, you know, it gets better than actually cheering on top of Sunday.
Speaker Change #144: Great follow up thank you thanks for asking a follow up question.
Speaker Change #145: So our plan is to be this year in that range.
Speaker Change #146: As I intimated, but I'll be clear that.
Speaker Change #146:
Speaker Change #146: It is.
Speaker Change #146: Predicated on the market getting a little better but not.
Speaker Change #146: Great this year, but not not a lot better because.
Speaker Change #146: If it gets better then that's like Cherry on top of Sunday.
Michael Bennett Medline: Okay. What we've done this year and will be part of it is we put together a plan that we should be able to be in that range given a slightly, slightly better market this year. And, you know, and as you know, part of that will, a big part of that will be an increase in internet earnings, and a big part will be the NCIB, like, like, most companies are today in retail and what they're doing. We don't like to put in high sales numbers because we like that to be an addition to it.
Speaker Change #146: What we've done this year and will be part of it is we've put together a plan.
Speaker Change #146: We should be able to be in that range given.
Speaker Change #146: Yeah.
Speaker Change #146: Given.
Speaker Change #146: Slightly slightly better market in this year.
Speaker Change #146: And.
Speaker Change #146: As you know.
Speaker Change #146: Part of that will a big part of that will be an increase in our net earnings and the big part will be the CIB.
Speaker Change #146: Most companies today in retail and what they're doing.
Speaker Change #146: But we know we.
We don't like to put high sales numbers, because we like that could be an addition to what.
Michael Bennett Medline: This is what we're doing. So this is, in other ways, the initiatives under Altitude that we're doing. [inaudible] And if we get outside sales gains, we're not counting on that to be a bone. And if we don't see a good economy, we'll make changes to make sure that we do everything we can to try to fit into that.
Speaker Change #146: What we're doing so this is this is an other way for the initiatives under altitude that we're doing.
Speaker Change #146: Some.
Speaker Change #146: Aggressive actions that we're taking in addition to what our strategy is that we're not ready to talk about right now but.
Speaker Change #146: That's the kind of thing we're talking about here because we want to we want to make our shareholders happy and because it's been a couple of years.
And if we get outside sales gains were not counting on it that will be a bonus.
Speaker Change #146: And if we don't see as good an economy will make changes to make sure that we do everything we can to try to fit into the tool.
Got it okay. Thank you that's our expectations.
Vishal Shreedhar: Okay, thank you. Thank you. And the last question comes from Mark Petrie at CIP. Yeah, thanks. Just a quick one. Matt, I think I heard a comment where you said sales trends are improving across the board. Was that something specific to like private label penetration or something like that? Or was that a broad comment just about the business overall?
Speaker Change #147: Thank you and our last question comes from Mark Petrie at CIBC. Please go ahead.
Mark Robert Petrie: Yes. Thanks, just a quick one Matt I think I heard a comment.
Mark Robert Petrie: Were you said sales trends are improving across the board is that was that something specific to.
Mark Robert Petrie: Like private label penetration or something like that or was that a broad comment just about the business overall.
Mark Robert Petrie: It's really a broad comment across the board. I don't like making massive generalizations, but we are seeing that pretty much so broadly across the use of all of our banners and all of our reach. Yeah, okay. Thanks. And since I was quick, I'll squeeze one more, which is the dividend increase, which obviously outpaced the EPS growth. How do you guys think about that? Should we be thinking about that as sort of a stable payout ratio from here? Or what's the right way to think about it?
Matt: It's really a broad comment.
Matt: Across the book.
Matt: Making massive generalizations, but we are seeing that pretty much broadly across the.
Use of all of our banners and all of our regions.
Speaker Change #148: Okay. Thanks, and since I was quick I'll squeeze one more which is the dividend increase obviously that outpaced the EPS growth. How do you guys think about that should we be thinking about that as sort of a stable payout ratio from.
Speaker Change #148: From here or what's the right way to think about it.
Matt Reindel: Well, I'm not going to comment on future years, but I think our trend and our past experience have been very, very stable in this. We do kind of like those dividend increases of 8% to 10%. Sometimes it's a little bit higher.
Michael Bennett Medline: Well, I'm not going to come on for you two years, but I think I've trained as our past experiences in very, very stable. In this, we do kind of like those dividend increases, or you know, eight to ten percent. Sometimes it's a little bit higher. I think many years now, Katie, we've got dividend increase, twenty-nine, so I don't think it would be unreasonable for you to expect that we'll have a similar increase next year. Okay, thanks for that.
Speaker Change #149: I'm not going to comment on future years, but I think it's I think our trend is.
Speaker Change #150: Our past experience has been very very stable and this we did kind of like those dividend increases of 8% to 10%, sometimes its a little bit higher.
Katie Brine: I think, how many years now, Katie, have we had dividend increases? Twenty-nine. Twenty-nine.
Casey: And I think how many years now Casey dividend in June 2020.
Katie Brine: So, I don't think it would be unreasonable for you to expect that we'll have a similar increase next year. Okay, thanks for that. Thank you. Thanks, Mark. Thank you at this time, ladies and gentlemen. I will turn the call back over to Katie Brine for closing. Thank you, Joanna. We appreciate your continued interest in Empire. If there are any unanswered questions, please contact me by phone or email. We look forward to having you join us for our first quarter fiscal 2025 conference call on September 12th. Talk soon. Ladies and gentlemen, this concludes your conference for today. We thank you for participating, and we ask that you please disconnect your lines.
Speaker Change #150: 29.
Speaker Change #150: I don't think it would be unreasonable.
Speaker Change #151: Do you expect that will have a similar increase next year.
Speaker Change #152: Okay. Thanks for that.
Unknown Executive: Thank you. Thanks very much.
Speaker Change #153: Thank you thanks Carla.
Katie Brine: Thank you at this time, ladies and gentlemen. I will turn up the help back over to Katie, Brian, for closing comments. Thank you, Joanna. We appreciate your continued and just an empire. If there are any answers or questions, please contact me by phone or email.
Speaker Change #154: Thank you at this time, ladies and gentlemen, now I will turn the call back over to Katie O'brien for closing comments.
Katie O'brien: Thank you Joanna we appreciate your continued interest in Empire. If there are any unanswered questions. Please contact me by phone or E. Mail, we look forward to having you join us for our first quarter fiscal 2025 conference call in September time.
Katie Brine: We look forward to having you join us for our first quarter fiscal 2025 conference call on September 12th. Talk to ladies and gentlemen.
Speaker Change #156: Talk to you.
Speaker Change #157: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and we ask that you. Please disconnect your lines.
Operator: This concludes your conference today. We thank you for participating, and we ask that you please disconnect your lines.