Q4 2025 Empire Co Ltd Earnings Call

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[noise] good morning, ladies and gentlemen, and welcome to the Empire fourth quarter 2025 conference call. At this time all lines are in a listen only mode. Following the presentation. We will conduct a question and answer session. If at any time. During this call you required immediate assistance. Please press star.

Operator: Good morning, ladies and gentlemen, and welcome to the Empire fourth quarter 2025 conference call. At this time, all lines are in a listen only mode.

Operator: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.

Speaker Change: Or is there for the operator this call is being recorded on Thursday June 19th 2025, I would now like to turn the conference over to Katie O'brien, Vice President of Investor Relations. Please go ahead.

Operator: This call is being recorded on Thursday, June 19 2025.

Katie Brine: I would now like to turn the conference over to Katie Brine, Vice President of Investor Relations. Please go ahead. Thank you, Joelle.

Thank you Joelle good morning, 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 web site at Franco dossier.

Katie Brine: Good morning and thank you all for joining us for our fourth 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. There is a short summary document outlining the points of the quarter available on our website.

Speaker Change: The short summary document Atlanta pointed out quarter available on our website.

Katie Brine: Joining me on the call this morning are Michael Medline, President and Chief Executive Officer, Costa Pofanis, our new Chief Financial Officer, Pierre St.

Speaker Change: Joining me on the call. This morning are Michael <unk>, President and Chief Executive Officer car Superfan, that's our new Chief Financial Officer, PRC, Loretta Chief operating officer, and Matt <unk>, our former Chief Financial Officer.

Katie Brine: Laurent, Chief Operating Officer, and Matt Reindel, our former Chief Financial Officer. 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.

Speaker Change: 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.

Katie Brine: I refer you to our news release and MD&A for more information on these assumptions and factors.

Speaker Change: I refer you to our news release and MD&A for more information on these assumptions and factors I will now turn the call over to Michael.

Michael Medline: I will now turn the call over to Michael Medline. Thanks, Katie. Good morning, everyone. This was a very strong quarter for Empire, and I am pleased with the way our team finished the fiscal year. We have become a disciplined grocer that is focused on delivering earnings growth. Our results this year have improved quarter after quarter as our hard work from prior years has enabled us to effectively navigate through the macroeconomic uncertainty in the latter half of our fiscal year. In Q4, we saw positive results across every major financial measure. We demonstrated strong gross margin control, capital discipline, and ST&A containment while delivering strong same-store sales growth.

Michael: Thanks, Katie and good morning, everyone. This was a very strong quarter for Empire and I am pleased with the way our team finished the fiscal year.

Michael: We have become a disciplined grocer that is focused on delivering earnings growth.

Michael: Our results this year have improved quarter after quarter as our hard work from prior years has enabled us to effectively navigate through the macroeconomic uncertainty in the latter half of our fiscal year.

Michael: In Q4.

Michael: We saw positive results across every major financial measure, we demonstrated strong gross margin control capital discipline and SG&A came in while delivering strong same store sales growth.

Michael Medline: This was our fourth consecutive quarter of sequential same-store sales growth, and our momentum continued to build throughout the year. Altogether, this amounted to meeting our financial framework goals this year, with annual growth of adjusted EPS of 8.8%. Our financial framework aims to grow our adjusted EPS at an average annual rate of 8-11% over the long term.

Our fourth consecutive quarter of sequential same store sales growth and our momentum continued to build throughout the year.

Michael: Altogether this amount of meeting our financial framework falls this year with annual growth of adjusted EPS of eight 8%.

Michael: Our financial framework is to grow our adjusted EPS at an average annual rate of 8% to 11% over the long term.

Michael Medline: Today I'll focus on three topics, our Q4 results, the market trends, the current environment and capital allocation. Starting with our fourth quarter, overall we delivered an EPS of 74 cents this quarter. This translates to 17.5% EPS growth year over year. This was supported by strong Sainsbury's sales growth of 3.8%, which was driven by the continued strengthening of our full-service banners and sustained performance of our discount banner. We also gained market share this quarter. Over the last three quarters, we've been saying that we were seeing green shoots, or early indicators that customers are returning to more favorable and predictable shopping behaviors.

Michael: Today I'll focus on three topics, our Q4 results and market trends, the current environment and capital allocation, starting with our fourth quarter. Overall, we delivered an EPS of <unk> 74 cents. This quarter. This translates to 17.5% EPS growth year over year.

Michael: This was supported by strong same store sales growth of three 8%, which was driven by the continued strengthening of our full service bears a sustained performance of our gift care fabric. We also gained market share this quarter.

Michael: Over the last three quarters, we've been saying that we were seeing green shoots for early indicators of customers are returning to a more favorable and predictable shopping behaviors.

Michael Medline: What we're seeing in our customer behavior is tough to reconcile against published consumer sentiment, which is near its lowest level in many years. But, as one of our key suppliers recently said, we have to parse sentiment from behavior. In Q4, there's no doubt that our customers' behavior continued to improve. In Q4, we continue to see sales growth in our fresh department, which indicates customers are trading up from non-fresh to fresh products. Basket size continues to improve, we see customers shopping fewer stores than last year, and a continued decline in promotional penetration. As well, our data from a trusted third party shows that there has been a shift of buying from U.S.

Michael: As seen in our customer behavior is tough to reconcile I guess published consumer sentiment, which is near its lowest level in many years.

Michael: It's one of our key suppliers recently said, we have to parse sentiment from behavior.

Michael: In Q4, there is no doubt in our customer's behavior continues to improve.

Michael: In Q4, we continued to see sales growth in our fresh departments, which indicates customers are trading off from not a fresh or fresh products.

Michael: Basket size can chase, Joe proof, we see customers shopping fewer stores than last year and a continued decline in promotional penetration.

Michael: As well our data from a trusted third party shows that there has been a shift or buy from U S identified retailers pure Canadian retailers.

Michael Medline: identified retailers to Canadian retailers. We believe that much of this customer shift will stick. Having said that, we continue to keep our eyes on the health of Canadian consumers. These remain very volatile and unpredictable times for Canadians and the economy. As well, we are glad to see spring weather finally started over the last couple of weeks across much of the country as we're now into our busiest time of the year. Gross margin continues to improve this quarter, driven by operating efficiencies and a strong focus on executing with excellence in our stores. Margin improvement of 32 basis points was better than our medium term expectations of growth of 10 to 20 basis points per year.

Michael: We believe that much of this customer shift will stick.

Michael: Having said that we continue to keep our eyes on the health of Canadian consumer these remain very volatile and unpredictable times for Canadian Andy.

Michael: And the economy.

Michael: As well, we're glad to see spring weather finally started over the last couple of weeks across much of the country as we're now into our busiest time of the year.

Michael: Gross.

Michael: We continue to improve this quarter driven by operating efficiencies and a strong focus on executing with excellence in our stores.

Michael: Margin improvement of 32 basis points was better than our medium term expectations of growth of 10 to 20 basis points per year.

Michael Medline: In Q4, the increase was largely due to continued strong growth in full service, which has a stronger margin profile, the benefits of space productivity, and disciplined execution within our stores with enhanced tools and processes that enable us to continue to improve and focus on areas such as non-theft shrink.

Michael: In Q4, the increase was largely due to continued strong growth in full service, which has a stronger margin profile.

Michael: That's a space productivity and disciplined execution within our stores with enhanced tools and processes that enable us to continue to improve and focus on areas such as nonferrous shrink.

Michael Medline: Now to SG&A. At first glance, our reported SG&A does not tell the whole story. In Q4, our stock price grew by an unprecedented amount, the highest market cap increase within a quarter in our history. This is great for our shareholders, and we wouldn't want it any other way. But, similar to Q3 and even more so in Q4, that contributed significantly to the non-cash accounting increase in total compensation expenses of $49 million over last year. Said another way, our EPS would have been an extra $0.15 this quarter without this. Excluding our incentive programs, our SG&A dollars grew by a reasonable 2.9%.

Michael: No. That's G&A at first glance, our reported SG&A does not tell the whole story in Q4, our stock price grew by an unprecedented amount of the highest market sharp increase within a quarter in our history. This is great for our shareholders and we wouldn't want it any other way.

Michael: Similar to Q3, and even more so in Q4 that contributed significantly to the noncash accounting increase in total compensation expenses of $49 million over last year.

Michael: Another way our EPS would have been an extra 15 cents this quarter without excluding.

Michael: Excluding our incentive programs our SG&A dollars grew by a reason a whole two 9%.

Michael Medline: Now let's talk about what we're seeing in the current environment, because I know you want to hear about that. Let me be crystal clear. We are not seeing inflation in our business outside of historical norms. And Empire's price inflation has remained very stable. Our internal inflation this quarter was way under CPI food inflation purchased from stores and significantly below our same store sales. Looking ahead, we expect food inflation will remain in line with long-term averages. Over the last 25 years, CPI's food inflation purchased from stores has averaged 3%. And while there may be some ups and downs, we believe this trend will hold.

Michael: Now, let's talk about what we're seeing in the current environment cause I know you want to hear about that.

Michael: Let me be Crystal clear, we are not seeing inflation in our business outside of historical norms and amplifiers price inflation has remained very stable.

Michael: Our internal inflation this quarter west way under CPI food inflation purchasing stores and significantly below our same store sales.

Michael: Looking ahead, we expect food inflation will remain in line with long term averages over the last 25 years CPI food inflation purchase from stores that averaged 3% and while there may be some ups and downs. We believe this trend will hold all to say we are unable to reconcile.

Michael Medline: All to say, we are unable to reconcile what we are hearing or reading about inflation in the media, in food, or for some in the industry, to what we are actually experiencing.

Michael: What we are hearing or reading about inflation in the media in food orphan some in the industry.

Michael: We were actually experiencing.

Michael Medline: Last quarter we spoke about our approach to managing tariffs and protecting our customers. Our approach has three major components. Elevating our local strategy. further tapping into non-U.S. alternate supply sources. and having tough discussions with suppliers on tariff-related cost increases. This quarter, we are confident that our approach was the right one for our business and our customers and has ultimately kept pricing, and therefore inflation, down. Let's dig into this in more detail. For its last quarter, we said we heard loud and clear from our customers that they want Canadian products. We have been actively doing our part, not just the last few months, but the last few years by moving to a more local Canadian supply.

Michael: Last quarter, we spoke about our approach to managing tariffs and protecting our customers. Our approach has three major components elevating our local strategy.

Michael: Further tapping into non U S alternative supply sources.

Michael: And having tough discussions with suppliers on the tariff related cost increases this quarter. We are confident that our approach was the right one for our business and our customers and then ultimately cat pricing and therefore inflation down.

Michael: Let's dig into some more detail.

Michael: First last quarter, we said, we heard loud and clear for our customers that they want Canadian products, we have been actively doing our part not just the last few months, but the last few years by moving to a more local Canadian supply.

Michael Medline: A trusted retail and consumer intelligence third party recently confirmed that we have the highest Canadian product assortment in our banners versus our competitors, and by a significant margin. It is clear that our customers are voting with their wallets as our sales of Canadian products continue to rise. Secondly, over the years we have developed a much larger and diversified source of supply to proactively manage threats, and we have accelerated these efforts in recent months. Our sourcing of U.S. products has continued to drop, and we expect this number to continue to decline as we enter the growing season for produce in Canada.

Michael: Trusted retailer and consumer intelligence third party recently confirmed that we have the highest Canadian product assortment that our banners versus our competitors and by a significant margin.

Michael: It is clear that our customers are voting with their wallets as our sales of Canadian products continues to rise.

Michael: Secondly over the years, we have developed a much larger and diversified source of supply to proactively manage stress and we've accelerated these efforts in recent months our sourcing of products has continued to drop and we expect this number to continue to decline as we enter the growing season for producers in Canada.

Michael Medline: Finally, we continue to work with our suppliers to ensure that reactionary or unjustified costs are not passed on to our customers. We are committed to building long-term partnerships with our suppliers, and passing through tariff-related increases can lead to their products becoming uncompetitive versus other viable alternatives. While these are not always easy conversations, we strongly believe our approach is the right one. With this three-pronged approach to tariffs, we are protecting our customers and doing our part to keep food inflation down.

Michael: Finally, we continue to work with our suppliers to ensure they are reactionary or unjustified pass or not pass onto our customers. We're committed to building long term partnerships with our suppliers and passing through a tariff related increases can lead to their products, becoming uncompetitive versus other viable alternatives.

Michael: Well these are not always easy conversations we strongly believe our approaches the rifle.

Michael: With this three pronged approach to tariffs, we are protecting our customers and doing our part to keep food inflation down.

Michael Medline: Next I want to talk about our capital allocation plans for fiscal 2026. Our business is generating a very healthy amount of cash, $1.5 billion of free cash flow before CapEx, and we will continue to invest your capital wisely. Through the transformation period, spanning fiscal 18 to fiscal 23, we focused our investment on getting our store network back to a healthy state, largely through renovation. We're now in a place where we can bring an increased focus on new story growth, filling gaps in our network to gain market share in pockets where we don't have significant exposure, but our competitors certainly do.

Michael: Next I want to talk about our capital allocation plans for fiscal 2026.

Michael: Our business is generating a very healthy amount of cash $1 $5 billion of free cash flow before capex and we will continue to invest your capital wisely.

Michael: The transformation period, we spent in fiscal 18 to fiscal 'twenty three we focused our investment on getting our store network back to a healthy state largely through renovations.

Michael: We're now in a place where you can bring an increased focus on our new store growth filling gaps in our network to gain market share in pockets, where we don't have significant exposure, but our competitors certainly do.

Michael Medline: We expect to put up 24 new stores in fiscal 26 compared to an average of 8 per year through the six years of the transformation. We've increased our capital to account for this and estimate that we will invest $850 million with half of this on our store network.

Michael: We expect to put out 24, new stores in fiscal 'twenty six compared to an average of eight per year through the six years of the transformation.

Michael: We've increased our capital to account for this and estimate that we will invest $850 million with half of this on our store network because it will give you more details on this shortly.

Michael Medline: And Kosta will give you more details on this shortly.

Michael Medline: Today we announce a 10% increase in Empire's quarterly dividend per share, which brings our five-year dividend cater to 10.8% and represents an increase in our dividends for the 30th year in a row. We also announced that we renewed our NCIB to repurchase up to 11.5 million shares, representing about 10% of our public flow. In fiscal 2026, we plan to repurchase up to $400 million of shares. We remain committed to returning free cash flow to our shareholders and continue to see this as a highly effective use of cash.

Michael: Today, we announced a 10% increase in empires quarterly dividend per share, which brings our five year dividend CAGR to 10, 8% and represents an increase in our dividends for the third year in a row.

Michael: We also announced that we renewed our MTI ability to repurchase up to 11 5 million shares representing about 10% of our public float and.

Michael: In fiscal 2026, we plan to repurchase up to $400 million of shares.

Michael: We remain committed to returning free cash flow to our shareholders and continue to see this as a highly effective use of cash.

Michael Medline: And as you heard when we kicked off the call, we have both Matt and Kosta with us today and the transition has gone swimmingly. Matt has been working closely with COPS the last two months and will be winding down next week. Matt will be sitting on a few of our partner boards to represent us, but is now set back from the day-to-day operations.

Michael: And as you heard when we kicked off the call we have Matt and foster with US today and the transition has gone swimmingly.

Michael: Matt has been working closely with Costco last two months and we will be winding down next week.

Michael: Matt will be sitting on a few of our partner boards to represent US but has now stepped back from the day to day operations.

Michael Medline: With that, I'd like to say a final thanks to Matt for his hard work the last six years, as this will be his last conference call before retirement.

Michael: With that I'd like to say a final thing just a math for its hard work. The last six years and this will be his last conference call before retiring.

Costa Pofanis: And I'd like to welcome Kostas, and I'll pass the call over to him for his inaugural report as CFO of Empire Company. Thank you, Michael. Good morning, everyone. I'll start by my remarks by providing some color on our Q4 performance before discussing our fiscal 2026 expectations and then opening it up for your questions. But first, let me say how honored I am to join Empire's executive leadership team. I would also like to thank Matt for his support as I transitioned into the CFO role last month. In fiscal 2025, we delivered adjusted EPS growth of 8.8%, which was within our financial framework.

Costa: And I'd like to welcome Costa and I'll pass the call over to him for his inaugural report as CFO about fire company.

Costa: Thank you Michael Good morning, everyone I'll start by my remarks by providing some color on our Q4 performance before discussing our fiscal 2026 expectations and then opening it up for your questions, but first.

Speaker Change: Let me say, how honored I am to join Empire's executive leadership team I would also like to thank Matt for support as I transition into the CFO role last month.

Speaker Change: In fiscal 2025, we delivered adjusted EPS growth of eight 8%, which was within our financial framework. While this is a long term framework, it's great to see the progress we have made over the last year. We finished the year strong and delivered solid financial performance from same store sales all the way down to the bottom line.

Costa Pofanis: While this is a long term framework, it's great to see the progress we have made over the last year. We finished the year strong and delivered solid financial performance from safe store sales all the way down to the bottom line. Q4 adjusted EPS was 74 cents, which was 17.5% higher than last year. While our headline numbers were good, they do not paint a clear picture of how strong our financial performance actually was in Q4. SG&A expense was elevated in Q4 due to higher share-based compensation expenses. This was driven primarily by the significant increase in our share price.

Speaker Change: Q4, adjusted EPS was <unk> 74, which.

Speaker Change: Which was 17.5% higher than last year.

Speaker Change: While our headline numbers were good they.

Speaker Change: They do not paint a clearer picture of how strong our financial performance actually was in Q4 SG&A expense was elevated in Q4 due to higher share based compensation expenses. This was driven primarily by the significant increase in our share price.

Costa Pofanis: Compared to last year, the accounting of our long-term incentive program expense had a non-cash pre-tax impact of $49 million, or about $0.15 per share on an after-tax basis. Now moving to the top line, our food safe store sales was 3.8% in Q4, which was 360 basis points higher than last year and 120 basis points higher than Q3. Throughout Fiscal 2025, we delivered steady, sequential, same-store sales momentum, and more importantly, full service was a strong contributor to this improvement. Our gross margin rate, excluding fuel, increased by 32 basic points versus last year. This gross margin expansion stemmed from several key items, such as the continued discipline execution of targeted in-store efficiencies, including shrink improvement and benefits from supply chain initiatives.

Speaker Change: Last year, the accounting of our long term incentive program expense had a noncash pre tax impact of $49 million or about <unk> 15 per share on an after tax basis.

Speaker Change: Now moving to the bottom line our food same store sales was three 8% in Q4, which was 360 basis points higher than last year, and 120 basis points higher than Q3.

Speaker Change: Throughout fiscal 2025, we delivered steady sequential same store sales momentum and more importantly, full service was a strong contributor to this improvement.

Speaker Change: Our gross margin rate, excluding fuel increased by 32 basis points versus last year.

Speaker Change: This gross margin expansion stem from several key items, such as a continued disciplined execution of targeted any store efficiencies, including shrink improvement and benefits from supply chain initiatives.

Costa Pofanis: Our medium-term expectations continues to be delivering 10 to 20 biggest points of gross margin expansion per year.

Speaker Change: Our medium term expectations continues to be delivering a 10 to 20 basis points of gross margin expansion per year.

Costa Pofanis: Now let's discuss SG&A. In Q4, after excluding elevated long-term incentive program costs and adjusting items, SG&A dollars grew by 2.9% year-over-year, slightly below our sales growth of 3%. The drivers of this increase were higher retail labor costs and continued investment in our business. Overall, I'm pleased with the cost control that has been delivered to close out the fiscal year. We started to see better leverage of our fixed costs, especially as we are now delivering better top-line growth. And moving forward, we are likely to continue to benefit from these efficiencies and cost control initiatives. Other income and share of earnings from equity investments came in as anticipated, and were about $11 million higher than last year.

Speaker Change: Now, let's discuss SG&A in Q4.

Speaker Change: The elevated long term incentive program costs and adjusting items SG&A dollars grew by two 9% year over year slightly below our sales growth of 3%.

Speaker Change: Drivers of this increase were higher higher retail labor costs and continued investment in our business.

Speaker Change: Overall I am pleased with the cost control that has been delivered to close out the fiscal year <unk>.

Speaker Change: We started to see better leverage of our fixed costs, especially as we are now delivering better top line growth.

Speaker Change: Moving forward, we are likely to continue to benefit from these efficiencies and cost control initiatives.

Speaker Change: Other income and share of earnings from equity investments came in as anticipated and worry about $11 million higher than last year.

Costa Pofanis: When we exclude these two streams of income in both years, we deliver an adjusted EPS growth of $0.07 compared to last year. Our effective tax rate for Q4 was 25.2%, which was lower than 28.4% last year. The tax rate in Q4 fiscal 24 was unusually high due to revaluation of tax estimates. For Fiscal 26, excluding the effects of any unusual transactions or differential tax rates on property sales, we continue to estimate that our effective income tax rate will be between 25% and 27%.

Speaker Change: When we exclude these two streams of income in both years, we delivered adjusted EPS growth of seven cents compared to last year.

Speaker Change: Our effective tax rate for Q4 was 25, 2%, which was lower than 28, 4% last year. The tax rate in Q4 fiscal 'twenty four was unusually high due to revaluation of tax estimates.

Speaker Change: For fiscal 2006, excluding the effects of any unusual transactions or differential tax rates on property sales. We continue to estimate that our effective income tax rate will be between 25% and 27%.

Costa Pofanis: Now, I'll speak to some of our fiscal 2026 expectations. We will continue to provide guidance on other income and share of earnings from equity investments, which is largely our real estate income. We continue to believe that this has improved transparency for investors and analysts. In fiscal 2026, we expect pre-tax contributions from this income stream to be in the range of $120 million to $140 million. Based on our current visibility, we're expecting to trend towards the lower end of the range. The quarterly cadence will be about 25% in Q1. 20% in Q2. 25% in Q3 and 30% in Q4.

Speaker Change: Now I'll speak to some of our fiscal 2026 expectations.

Speaker Change: We will continue to provide guidance on other income and share of earnings from equity investments, which is largely our real estate income.

Speaker Change: We continue to believe that this is a great transparency for investors and analysts in fiscal 2026, we expect pre tax contribution from its income stream to be in the range of 120 millions of $140 million.

Speaker Change: Based on our current visibility we are expecting to trend towards the lower end of the range the quarterly cadence will be about 25% in Q1.

Speaker Change: 20% in Q2.

Speaker Change: 25% in Q3 and 30% in Q4.

Costa Pofanis: And as we noted in fiscal 2025, if there are shifts in timing of certain transactions, we will provide an update to this cadence throughout the fiscal year.

Speaker Change: As we noted in fiscal 2025, if there are shifts in timing of certain transactions, we will provide an update to this cadence throughout the fiscal year.

Costa Pofanis: With regards to capital allocation, our fiscal 2026 plans are supported by our strong balance sheet and the continued generation of our significant free cash flow. We announced a 10% increase in our dividend and also the renewal of our NCIB program, whereby we intend to repurchase up to 400 million of our shares. In fiscal 2026, we anticipate CapEx of about $850 million, with half of this allocated to our store network for renovations and new store expansion, a quarter towards IT initiatives and business development projects, and the balance towards items such as logistics.

Speaker Change: With regards to capital allocation, our fiscal 2026 plans are supported by our strong balance sheet and the continued generation of significant free cash flow.

Speaker Change: We announced a 10% increase in our dividend and also where you can also the renewal of our NCI program, whereby we intend to repurchase up to $400 million of our shares.

Speaker Change: In fiscal 2026, we anticipate capex of about $850 million with half of it is allocated to our store network for venerate renovations and new store expansion a quarter toward it initiatives and business development projects and the balance towards items such as logistics.

Costa Pofanis: As we look forward, there is some volatility caused by tariff and trade environment, plus the uncertainty with how this will continue to affect consumer confidence. Before joining Empire, I operated in a heavily tariffed environment for many years, so I understand how critical it is to continue to react with speed and agility, especially as we face a changing trade landscape. I'm very impressed with how our Internal Tariff Task Force is managing this ever-changing environment by keeping our local, loyal customers at the heart of our decision-making. With our improved execution over recent years, plus our increased focus on controlling what we can and taking costs out of our business, we expect to continue to deliver our long-term financial framework.

Speaker Change: As we look forward there is some volatility caused by tariffs and trade environment.

Speaker Change: Plus the uncertainty with how this will continue to affect consumer confidence.

Speaker Change: Before joining empire I operated in a heavily tariff environment for many years. So I understand how critical it is to get financial reacted with speed and agility, especially as we face a changing trade landscape I'm very impressed with our internal tariff task force is managing this ever changing environment by keeping our local loyal customer.

Speaker Change: At the heart of our decision making.

Speaker Change: With our improved execution over recent years, plus our increased focus on controlling what we can and taking costs out of our business. We expect to continue to live to deliver our long term financial framework.

Costa Pofanis: And with that, I'll hand the call back to Katie for your questions. Thank you, Costa.

Speaker Change: And with that I'll hand, the call back to Katie for your questions. Thank you Joelle you may open the lines for questions at this time.

Operator: Joelle, 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 star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing it.

Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone.

Speaker Change: We'll hear from Johan has been raised should you wish to decline from the pull that process. Please press star followed by the Q.

Speaker Change: And your speakerphone, please advance have before pressing any keith.

Tamy Chen: Your first question comes from Tamy Chen with BMO Capital Markets. Your line is now open. Hi, good morning. Thanks for the question. So it sounds like your customers, you know, their behavior has not retrenched or gone back towards trade down. I wanted to ask if the way they're shopping is they're cherry picking less and going to multiple banners and stores less. I think at one point you alluded to you saw you over your traffic growth. So I'm wondering how you saw that if if what you're seeing is customers are shopping less at multiple banners. So the thing we're seeing is more back-to-normal behaviors compared to last year.

Speaker Change: Your first question comes from Tami Chen with BMO capital markets. Your line is now open.

Tami Chen: Hi, good morning, Thanks for the question.

Speaker Change: So it sounds like your customers.

Speaker Change: Teva has retrenched or gone back towards trade down.

Speaker Change: Wanted to ask if the way they're shopping is they're cherry picking last thing going to multiple banners and store it flat.

Speaker Change: I think at one point you alluded to you saw year over year traffic growth. So I'm wondering how you feel about it.

Speaker Change: Customers that are shopping less at multiple banners.

Speaker Change: Very good question and thank you. So the thing we're seeing is that.

Speaker Change: It's more back to normal behaviors compared to last year last year people shop multiple stores more than usual and this year, we're seeing back to normal view. So that means they are shopping less stores and this is what we said.

Michael Medline: Last year, people shopped multiple stores, more than usual, and this year we're seeing back-to-normal behaviors. So that means they're shopping less stores, and this is what we said that it's good for promo penetration, because when people are shopping less banners, the promo penetration is going down, and it was not natural for customers to shop that amount of banners in the past because of high inflation. So we're really seeing back-to-normal behaviors, which is helpful for our business. And this is why we're seeing basket size going up. Transactions remain very strong. We continue to see that in the positive.

Speaker Change: It's good for promo penetration because when people are shopping less banners.

Speaker Change: Penetration is going down and it was natural for customers to shop.

Speaker Change: Banners in the past because inflation. So we're really seeing is actually normal and behaviors, which is helpful for our business.

Speaker Change: This is why we are seeing.

Speaker Change: Basket size going up transaction remains very strong we continue to see that to the positive units per basket is increasing and like Michael said, we are seeing a trade up.

Michael Medline: Unit per basket is increasing. And like Michael said, we're seeing a trade-off. compared to last year where people are shopping more fresh, where we're very strong.

Speaker Change: Compared to last year, where people are shopping more fresh where we're very strong here.

Tamy Chen: And on the promotional penetration, how are you thinking about that going forward? Just because you know for example one of your competitors has recently announced rollback So I'm just wondering if you know there might be any change to so far the the improvement You've seen in your stores is promo penetration Right now, we're back in a more normal situation. I think we're more stabilized now. We saw a decrease over the last couple of quarters. I think we're in a sweet spot right now to continue to navigate through different scenarios. But right now, I think the promopenetration level is pretty healthy and normal.

Speaker Change: And on the promotional penetration how are you thinking about that going forward.

Speaker Change: Just because you know for example, one of your competitors.

Speaker Change: Announced rollbacks I'm just wondering.

Speaker Change: You know there might be any change so far that's been proven that useful in your stores and e-commerce penetration.

Speaker Change: Right.

Speaker Change: Back to more normal situation I think.

Speaker Change: We're more stabilized now we saw a decrease over the last couple of quarters I think we're in a sweet spot right now to continue to navigate through different scenarios, but right now I think this.

Speaker Change: From a penetration level is pretty healthy.

Speaker Change: Normal.

Tamy Chen: And my last question is, with respect to the Buy Canadian trend, specifically the preference for Canadian retailers, certainly that's been going on, but I'm just curious if as the months recently have gone past, are you seeing that settling out or waning in any way? Thank you.

Speaker Change: And my last question is.

Speaker Change: With respect to the by Canadian churn, specifically the preference for Canadian retailers.

Speaker Change: Certainly that's been going on but I'm just curious if.

Speaker Change: As the months, we certainly have gone past are you seeing that settling out of waning in any way. Thank you.

Michael Medline: Yeah, so it's Michael. Thanks for the good question, Tamy.

Speaker Change: Yes, it's Michael Thanks for the good questions here.

Michael Medline: Um, so I gotta, I gotta be, um, I gotta always say, Katie always reminds me, and so does the General Counsel, I gotta stay on the, uh, I can't talk about this quarter random because we're in a quarter and I don't want to just close it in. But, uh, I can't say that we did not see that waning up until the end of the last quarter, and I'm not commenting on what we saw after that. But I think from what I said in my script, I said that, uh, we believe that, uh, much of this behavior is becoming sticky.

Speaker Change: I got it.

Speaker Change: I got to always take CAGR was largely a sort of a general counsel I got to stay on the.

Speaker Change: <unk> talked about this quarter, Randy because we're in a quarter and I don't want to disclose that.

Speaker Change: I can't say that we did not see that waning up until the end of the last quarter, but I'm not commenting on what we saw after that.

Speaker Change: I think from what I said in my script I said that we believe that much of this behavior is becoming sticky we are really Jeff.

Michael Medline: We are really, um, you know, I mean, there's, it doesn't take a lot of people changing behavior to make a real difference in retail and assessing the grocery business. And there are people who have changed their behaviors, will not go back, and we're doing our utmost to make them very happy at our banners, so we think much of it will stick. But we shall see. I mean, we don't have a crystal ball, we don't know what's going to happen, but, you know, I don't think that the mindset of Canadians is switching very quickly away from how they felt.

Speaker Change: Neither is it doesn't take a lot of people changing behavior can make a real difference in retail, especially in the grocery business.

Speaker Change: And there are people who have changed their behaviors.

Speaker Change: Well I'll go back and we're doing our utmost to make him a very happy and our vendors. So we think much of it will stick, but we shall see I mean, we don't have a crystal ball, we don't know what's going to happen.

Speaker Change: Phil.

Phil: Thanks Dennis.

Speaker Change: The mindset of Canadians as switching very quickly away from how we felt.

Michael Medline: at the beginning of the year.

Phil: At the beginning of the year.

Phil: Thank you.

Phil: Thank you.

Mark Petrie: Your next question comes from Mark Petrie with CIBC, your line is now open. Good morning, thanks.

Mark Petrie: Your next question comes from Mark Petrie with CIBC. Your line is now open.

Speaker Change: Yes. Good morning, Thanks, just to follow up on the topic of sort of the consumer and competitive environment I wanted to ask specifically about Quebec.

Michael Medline: Just to follow up on the topic of sort of the consumer and competitive environment, I wanted to ask specifically about Quebec again, and any comments about all of the metrics that you were discussing earlier, if that's sort of more accentuated in Quebec, or if there's any difference versus other regions? We're seeing the exact same behavior in Quebec. about people are shopping less banner, basket size is increasing. There's some, obviously, variation across the country, but very, very little. But we're seeing the exact same trend across the country right now, not something different in Canada.

Mark Petrie: Again and.

Mark Petrie: And and any comments about all of the metrics that you were discussing earlier.

Mark Petrie: If that's a if if that's sort of more accentuated in Quebec, or if theres any difference versus the other regions of the country.

Mark Petrie: We're seeing the exact same theater in Quebec.

Mark Petrie: About people are shopping less banner.

Mark Petrie: That gets size is increasing.

Mark Petrie: Since there is some obviously <unk> across the country, but very very little.

Mark Petrie: Seeing the exact same trend across the country right now.

Mark Petrie: That's.

Mark Petrie: Something differently.

Pierre St: Thank you, Pierre. And any comment on the sort of competitive activity across the country? Are there any regions that are... more competitive than others, or is it all relatively rational and stable? Well, I'll say what I always say, which is that it hasn't changed, and it isn't Contrary to some people's belief, this is an unbelievably competitive industry. One of the most competitive grocery markets in the world, if not the most. And I think it's been competitive, and other than some blips here and there, the same competitively since I joined the company eight and a half years ago, honestly, I haven't changed my mind on that.

Speaker Change: Thanks, Perry and any comment on the sort of competitive activity across the country are there any regions that are.

Speaker Change: More competitive than others or is it all relatively rational and stable.

Mark Petrie: Well, I'll say, what I always say, which that hasnt changed.

Mark Petrie: Yes. It is.

Mark Petrie: Yeah.

Mark Petrie: Contrary to some People's belief this is an unbelievably competitive industry.

Mark Petrie:

Mark Petrie: One of the most competitive grocery markets in the world if not the most.

Mark Petrie: And I think it's been competitive.

Mark Petrie: And other than some blips here and there the same competitively since I joined the company a few years ago honestly I haven't changed my mind on that so we're not seeing anything.

Pierre St: So we're not seeing anything... Out of the Ordinary right now, but we've got to be sharp because our competitors are sharp. Yeah, okay. And I guess...

Mark Petrie: Out of the ordinary right now and but we got to be sharp because our competitors are sharp.

Mark Petrie: Yeah, Okay, and I guess I guess.

Pierre St: Sorry, just to follow up on that, I think previously you had commented about trying to close the price gap. specifically in Quebec and I'm just so I'm sort of hearing that you think this is done and this is stable is that a fair We are watching our indexes, so both regular and effective, and Quebec remains very, very competitive on both indexes, like every single region in the country. So there's no more gap by region. Quebec is a very strong banner, the IG is a very strong banner, a very strong on fresh. So sometimes the perception is different, but the pricing itself, we're addressing pricing the same exactly and we're addressing pricing indexes in every single region.

Speaker Change: Sorry, just to follow up on that I think previously you guys commented about trying to close the price gaps.

Speaker Change: Specifically in Quebec, and I'm, just so I'm sort of hearing that you think this is done and this is stable is that a fair interpretation.

Speaker Change:

Speaker Change: Yeah.

Speaker Change: Our.

Speaker Change: Watching over indexes.

Speaker Change: Both regular and effective.

Speaker Change: <unk>.

Speaker Change: It remains very very competitive on both indexes.

Speaker Change: Every single region in the country. So there's no more gap by region.

Speaker Change: Quebec is a very strong that it is a very strong diner very strong on fresh.

Speaker Change: So sometimes the perception is.

Speaker Change: Current.

Speaker Change: The pricing itself.

Speaker Change: We're addressing pricing the same exactly and we're addressing pricing indexes.

Speaker Change: Every single region. So we're following the same process in our indexes are very competitive compared to peers and we're pleased with that.

Pierre St: So we're following the same process and our indexes are very competitive compared to peers. But again, we're always focusing on the value proposition. So value is the right term. So we're focusing on value. And pricing is one element of the value proposition. Our value proposition in every single banner is very strong. When we talk about assortment, where we are located, close to every community we serve, service is an important component in the value proposition. So we're very strong in the value proposition. And again, pricing is one element, but indexes are very strong right now. We're pleased with that.

Speaker Change: But again, we're always focusing on the value proposition. So value is the right term so we're focusing on value.

Speaker Change: And pricing is one element of the value proposition.

Mark Petrie: Our value proposition and every single vendor is very strong when we talk about the assortment.

Mark Petrie: Where we are located close to the communities we serve.

Mark Petrie: There is service is an important component into that acquisition.

Mark Petrie: We're very strong in the medical condition.

Mark Petrie: Again pricing is when Hammond with indexes are very strong right now we're pleased with that as we make progress.

Pierre St: We make progress. a gradual progress, we're following what's happening in the market and we remain very competitive. Okay, thanks for all those comments, sorry to go so long on that.

Mark Petrie: Gradual progress following.

Mark Petrie: What's happening in the market and we will be very good.

Mark Petrie: Yes.

Mark Petrie: Okay. Thanks for all of those comments I sort of it sort of goes along on that I did want to also ask just about the acceleration in square footage growth.

Mark Petrie: I did want to also ask just about the acceleration in square footage growth in your business. And the implications to maybe the margin lines, pressure that you might, you think that might have on gross margin or SG&A, and you talked about the 10 to 20, are there other initiatives in the business that could offset that for fiscal 26, or is that a reasonable expectation for next year, knowing that you don't give guidance on a... Yeah, that's a great question.

Mark Petrie: On your business and any implications you to maybe the margin lines pressure that you might do you think that might have on gross margin or SG&A and you talked about the 10% to 20.

Mark Petrie: Are there other initiatives in the business that could offset that.

Mark Petrie: Or for fiscal 'twenty, six or is that a reasonable expectation for next year, knowing that you don't give.

Mark Petrie: On a specific year.

Mark Petrie: Yeah, that's a great question.

Matt Reindel: Dr. Matt, do you want to take it, and then I can add on if there's anything I think that's necessary. Yeah, sure. I think, you know, when we look at the expansion and the new store initiatives that we had, I mean, we always model it out on the basis of achieving a certain return on capital. So the expectation around sales volume and margin typically would be in line with that modeling. But one of the major initiatives that would help combat any market margin degradation would be initiatives like shrink, minimization of shrink on our overall network.

Mark Petrie: Lastly, I want to say it but I can add on if there's anything.

Mark Petrie: Thats necessary.

Speaker Change: Yes, sure I think when we look at the expansion in the new store initiatives that we had I mean, we always model it out on the basis of achieving a certain return on capital.

Mark Petrie: So the expectation around sales volume and margin typically would it be in line with that modeling.

Mark Petrie: But one of the major initiatives that would help combat any market margin degradation would be initiatives like shrink.

Mark Petrie: Minimization of shrink.

Mark Petrie: Overall network.

Michael Medline: Which you know, we've seen I mean part of the reason why 32 basis point improvement in Q4 was due to our continued focus on minimizing our shrink. Yeah, I think that's a good example of what we do, and I mean, as you can imagine, we have a pretty robust budgeting process, so we understand the implications of new stores going in and accelerating that. But we were doing a lot of renovations before, too, and I think that it's not that big a difference in terms of we're just spending more money, taking advantage of places where we can grab market share in our estimation.

Mark Petrie: Which we've seen I mean part of the reason why 32 basis point improvement in Q4 was.

Mark Petrie: Due to our continued focus on minimizing our shrink.

Mark Petrie: Yes.

Mark Petrie: Sure.

Mark Petrie: A good example of what we do and I mean as you can imagine we.

Mark Petrie: I have a pretty robust budgeting process. So we understand the implications.

Mark Petrie: Of new stores going into accelerating that but we.

Mark Petrie: We're doing a lot of renovations before too and I think.

Mark Petrie: It's not that big a difference in terms of we're just spending more money taking advantage of places, where we can grab market share.

Mark Petrie: Our estimation.

Michael Medline: And, you know, we have the long-term goal of, you know, maybe to 11%, and so everything has to fit together when we're putting together a budget. But this year, we just felt we were seeing some very good opportunities and more confidence in our business going forward, especially our ability to control capital per store, but also get returns from those stores. So we switched from the rentals being the key, as I said in my script, to the new stores, and so I think we're setting ourselves up for good growth in the future, while at the same time being able to deliver the bottom line for our owners, our shareholders.

Mark Petrie: We have the we.

Mark Petrie: We have the long term goal.

Speaker Change: Uh huh.

Mark Petrie: To 11% and so everything has to fit together and.

Speaker Change: Putting together the budget for this year, we just felt we were seeing some very good opportunities and more confidence in our business going forward, especially our ability to two.

Mark Petrie: Cole capital per store, but also get returns from those stores sure. We switch from the rentals being the key as I said in my script to the new stores and so I think I think we're setting ourselves up for good growth in the future while at the same time be able to deliver the bottom line for <unk>.

Mark Petrie: Our owners our shareholders.

Mark Petrie: Okay, I appreciate all the color. Thanks for answering all the questions.

Speaker Change: Okay I appreciate all the color.

Mark Petrie: Great question.

Mark Petrie: Thanks, Mark Thank you.

Michael Vannies: Your next question comes from Michael Vannies with TD Cowan. Your line is now open. Thank you. Just quickly to start on the CapEx side, so your budget I think last year was $700 million. You did, I think it came in at $7.77 and now you're guiding to $8.50 for this coming year. What's the incremental spend being, Alex? Yeah, no, they got new stores or is it or is it supply chain or what? Most of the incremental are to the stores, to new stores, some to supply chain. A little bit on the technology side as we're becoming more efficient.

Speaker Change: Your next question comes from Michael Van <unk> with TD Cowen. Your line is now open.

Michael Van: Alright. Thank you just quickly to start on the Capex side. So your budget I think last year was 700 million.

Michael Van: You did I think it came in at 777 and now Youre.

Michael Van: Guiding to 850 for this coming year whats the incorrect incremental spend being allocated to.

Michael Van: Yes.

Michael Van: Yes.

Michael Van: New stores or is it or is it supply chain or what is it.

Michael Van: Yes.

Michael Van: Most of the incremental or to the stores to new stores.

Michael Van: Some of the supply chain.

Michael Van: On the technology side, as we're becoming more efficient we're putting in some system failure to make us more efficient that's where most of it is.

Michael Vannies: We're putting in some systems that are going to make us more efficient. So that's where most of it is.

Michael Vannies: Okay, all right, thank you.

Michael Van: Okay Alright.

Michael Van: Alright, Thank you and then.

Michael Vannies: And then just getting back on the discount versus full service commentary. So it's clear that you're saying that full service banners are doing well and doing better. Are your full service banners growing faster than your discount banners, or are you just narrowing that gap? I guess that'd be part A, and then I'll come back to the second. So the same story, sales growth and outflow service with banners in Extremely Strong and Alaska Water. We're very pleased with that. We're gaining market share in every single format, so we're pleased with the discount performance, discount into the discount channel is gaining share, full service into the full service channel is gaining market share, and in total, we're gaining market share.

Speaker Change: Just getting back on the discount versus full service commentary, so it's clear that you're saying that full.

Speaker Change: Full service banners are doing well and doing better.

Speaker Change: Are your full service banners growing faster than your discount banners or are you just narrowing that gap.

Speaker Change: I guess that'd be part a and then I'll come back to the second part of that.

Speaker Change: So the same store sales growth in local services.

Speaker Change: <unk> strong.

Speaker Change: Last quarter, we're very pleased with that.

Speaker Change: And we're gaining market share in every single format. So we can so we're pleased with the discount performance.

Speaker Change: Count into the discount channel is gaining share.

Speaker Change: Service.

Speaker Change: Into the full service channel is gaining market share and in total we're gaining market share.

Michael Vannies: So, again, we are operating in different regions, we did invest a lot of capital of new stores and new conversions in Western Canada, we're very, very pleased. The results in Western Canada with the discount store, but overall, we're seeing the same. a strong trend with the full service. Yes, the gap is narrowing and in some regions it's the same. We have the same source sales growth and quotes discounted for service. So, the gap is narrowing, full service is performing well and we're pleased with Bo Channel and their respective channels.

Speaker Change: No.

Speaker Change: Again, we are operating in different region.

Speaker Change: We did invest a lot of capital of new stores in new countries penetration in Western Canada, We're very very pleased with.

Speaker Change: The results in Western Canada, with the discount store, but overall, we're seeing the same.

Speaker Change: Strong trend in full service and yes, the gap is narrowing and in some region is.

Speaker Change: If the fleet we'd have the same same store sales growth.

Speaker Change: Both discounts into service. So the gap is narrowing full services is performing well.

Speaker Change: We're pleased with both.

Speaker Change: <unk> channel in their respective channels.

Michael Vannies: Okay, that's interesting. Thank you.

Speaker Change: Okay. That's interesting thank you and I guess the follow up to that is.

Michael Vannies: And, and I guess the follow up to that is, I'm trying to reconcile those comments and that, that, those, those that performance, I guess, with at www.thevenusproject.com So do you think they were talking about like private label, like lower price grocery items, or do you think they were talking about a shift to discount? I don't know, I remember reading that, but you'd have to ask them, I didn't go into any detail on that. If they said what you said, I have trouble reconciling it to our numbers, but we only represent, well not only, we're a big part of the market, but we're part of the market so we'd have to see what our competitors are doing as well, but it's not what we're I just thought with their affiliation with Seen that it would be a bit more representative of what you were seeing.

Speaker Change: I'm trying to reconcile those comments that.

Speaker Change: Those are <unk>.

Speaker Change: That performance I guess with.

Speaker Change: What Scotiabank said on there.

Speaker Change: Credit card data or are they on their last call. They said that they are seeing a shift to discounting discount grocery. So do you think they are talking about.

Speaker Change: Mike.

Speaker Change: Label, and lower price grocery items or do you think they are talking about a shift of discount stores.

Speaker Change: Yes.

Speaker Change: Don't know.

Speaker Change: I remember reading that and you'd have to ask them I didn't go into any detail on that.

Speaker Change: In fact, as I said, what he said I have trouble reconciling to our numbers, but we only represent not only were big part of the market, but where.

Speaker Change: We're part of the market so we'd have to see what the what.

Speaker Change: What our competitors are doing as well, but so what we're seeing yes, I just thought with our affiliation obscene.

Speaker Change: That would be represented a bit more representative of what you were seeing but.

Michael Vannies: No, I don't think it would be because of Seen that they were looking at that data. I don't think so. It would be more general, I think. So you'd have to check with them.

Speaker Change: I don't think it would be because I've seen that they were looking at that.

Speaker Change: I don't think so it would be more general effect, so you'd have to check with them to get a good answer give me a call at all we can discuss it more.

Michael Vannies: And if you get a good answer, give me a call and we can discuss it.

Michael Vannies: And then just finally, getting back to your commentary around the LTIP incremental LTIP costs that were 15 cents a share, and the majority of that seems to be tied to the higher share price. So, I mean, if we just did some back of the envelope math and tried to said okay well 10 of that 15 cents is due to the higher share price and if we use a stable tax rate and stable other income we'd probably be around 25% EPS growth so you know you're it seems like your momentum is good but is that are you suggesting that like if things continue to perform the way they are this quarter that that in the next few quarters we could still we could see that 25% type EPS So, while you're right on, this was a good quarter, and there's a lot of, and it wasn't, these things don't fall from heaven, right?

Speaker Change: And then just finally getting back to your commentary around the L tip.

Speaker Change: Incremental <unk> costs that were.

Speaker Change: <unk> 15, a share and the majority of that seems to be tied to the higher share price. So if we just did some back of the envelope math and tried to.

Speaker Change: And said, Okay, well 10 of that 15 is due to the higher share price.

Speaker Change: And if we use a stable tax rate and stable other income, we'd probably be around 25% EPS growth. So yes. It seems like your momentum is good.

Speaker Change: But is that are you, suggesting that if things continue to perform the way. They are this quarter that that in the next few quarters. We can still we could see that 25% EPS growth.

Speaker Change: Yes.

Speaker Change: Youre right.

Speaker Change: So it was a good quarter and Theres a lot of any one of them.

Speaker Change: Thanks, I'll follow up from Kevin <unk>.

Michael Medline: You earn them. And so, you know, and it's not me, it's the team that did all this work to get there. And I'm not going to talk about future quarters. We pushed for it as a team. Basically, we push for as high as we can get and we just go for it. But I'm not going to speak for future quarters, but I think 25% is a pretty darn good number. And I don't think we can do that for the next 20 years. We'd be in good shape. My successor will have to worry about that.

Speaker Change: No.

Speaker Change: It's the team that did all this work to get there.

Speaker Change: And I'm not going to talk about in future quarters, we push for US basically we push for as high as we can get and we just go for it.

Speaker Change: But I'm not going to speak for future quarters, but I think 25% a pretty darn good number.

Speaker Change: I don't think we can.

Speaker Change: After 20 years would be in good shape my successor will have to worry about that.

Michael Medline: But I don't want to talk about the rest of the year. But we've said that what we're aiming for is to meet our financial long-term financial needs. Is there anything in that, anything that composed that rough 25% that you would consider not necessarily repeatable? When do we have a 3.8% same-store sales? When do we grow our margin by 30 BPS? When we have good control on cost, it's a bombing business, and when we're growing at that size, this is the type of results we should expect.

Speaker Change: So, but I don't want to talk about the rest of the year, but we said that we're what we're aiming for is to meet our financial long term financial targets.

Speaker Change: Is there anything in that.

Speaker Change: The compose that that roughly 25% debt.

Speaker Change: That you are getting that are not necessarily repeatable.

Speaker Change: When do we have a three 8% same store sales when we grow our margin by 30 bps.

Speaker Change: We have good control over cost among business and when we're growing at that site is the type of results we should expect.

Michael Medline: Thanks. Great quarter.

Speaker Change: Okay, great. Thanks, Greg.

Chris Lee: Transcription by CastingWords Chris Lee with Dijon Bank, your line is now open. Oh, good morning, everyone.

Speaker Change: Chris Lee with <unk>. Your line is now open.

Chris Lee: Hello. Good morning, everyone. My first question, maybe just maybe use a baseball analogy in terms of your reduction in <unk>.

Michael Medline: My first question, maybe just to maybe use a baseball analogy, just in terms of your non reduction in non theft shrink, what what inning roughly do you think you are at on that journey? You know, I can't you know, I can't resist four questions, right? So I'm going to answer. Yes. And I think middle of the game here, as long as it doesn't go to extra innings, like the 4th or 5th inning. I think there's still a lot of opportunity here.

Speaker Change: Shrink what inning roughly do you think you are at.

Chris Lee: On that journey.

Chris Lee: Okay.

Chris Lee: No I can't resist or questions.

Chris Lee: Yes.

Chris Lee: Yes.

Chris Lee: Yes.

Bill: Alright, Thanks, Bill again here as long as it doesn't go to Australia or quantify that for fourth or fifth inning.

Bill: There's still a lot of opportunity here at the same time I'm proud of what the teams accomplished.

Michael Medline: At the same time, I'm proud of what the team's accomplished. Okay, that's helpful, Michael. Thank you.

Bill: Okay. That's helpful. Michael. Thank you and then just on SG&A expenses, maybe just a high level question as we look about fiscal 'twenty six.

Michael Medline: And then just on SG&E expenses, maybe just a higher level question. As we look about Cisco 26, I mean, roughly speaking, is it fair to assume we should think about SG&E expenses growing more or less in line with the revenue growth? Or should we expect that to actually outpace revenue growth a little bit, at least in the near term, as you accelerate the new store openings this year? I think as we continue to look at our cost containment, one of the big focuses for me as And the role is to look at our SG&A leverage, our fixed costs, our ability to have a Comments that Pierre made specifically speak to our ability to see results on good sales volume top line growth.

Bill: Roughly speaking is it fair to assume.

Speaker Change: Should think about SG&A expenses growing more or less in line with the revenue growth or should we expect that to actually outpaced revenue growth a little bit at least in the near term as you accelerate.

Bill: The new store openings this year.

Bill: I think as we as we continue to look at our cost containment I mean, one of the big focuses for me.

Bill: New in the role is to look at our SG&A leverage.

Bill: Fixed costs our ability to.

Bill: <unk>.

Bill: The comments that Pierre made specifically speak to our ability to see results on good sales volume top line growth. So the translation of that every quarter is going to be dependent on that growth, but that's that's the focus.

Michael Medline: So the translation of that in every quarter is going to be dependent on that growth. But that's the focus. Thank you for that. Okay, got it. Okay, thanks.

Bill: Thank you for that getting the leverage we want off of our fixed cost base.

Bill: Okay got it okay. Thanks, and maybe my last question just in terms of your capital allocation framework.

Michael Medline: And maybe my last question, just in terms of your capital allocation framework. It wasn't mentioned in the press release, so I want to just touch base on where does inorganic or M&A fit in in terms of your capital allocation philosophy in the future? We don't, we don't, we don't. We're always looking for opportunities if it profits our owners or shareholders. And I personally have a reputation for doing deals if they're great and doing them very rarely, but they have to be great. So, you know, we don't plan for that or put it in the budget or anything, but if we see something that is extraordinary, like Farboy or Lago, or a couple others, I did another company, then we would do it.

Bill: It wasn't mentioned in the press release I wanted to just touch base on where it is inorganic or M&A fit in in terms of your capital allocation philosophy.

Bill: And in the future.

Bill: Yes.

Bill: Both.

Bill: We don't we don't.

Bill: We're always looking for opportunities if it if.

Bill: If it profits our owners our shareholders.

Bill: And I personally have a.

Bill: Reputation for for doing deals if they are if they are great and they're not doing that and.

Bill: During a very rarely but they have to be great.

Bill: So we.

Bill: We don't plan for that or put it into the budget or anything, but if we see something that is extraordinary.

Bill: Flex onboard or Lagos.

Bill: Or a couple of others I did another company then we would we would do it but just we've.

Michael Medline: But I just, you know, we've experienced, you know, I've never experienced a really bad one. I don't really want to do a really bad one. So very, very picky and slim picking. Okay.

Bill: I've never experienced a really bad, but I don't really want to do a really bad ones. So very very picky.

Bill: And flip events.

Speaker Change: Okay. Thanks, and Matt just wanted to say again best wishes to you to you and your family.

Michael Medline: Thanks. And Matt, I just want to say again, best wishes to you and your family, and you'll definitely be missed. Thank you Chris, appreciate it.

Bill: Yes.

Bill: Thank you Greg I appreciate it.

Vishal Shreedhar: Your next question comes from Vishal Shreedhar with National Bank. Your line is now open. Hi, thanks for taking my questions. With respect to the CapEx, the $850, you know, my understanding was previously that a good long-term number to use was $700. Does this $850 reflect, you know, higher building costs or an expectation of higher CapEx in the future, given more opportunities? How should we think about the longer term? Yeah, I mean, I would... And I always thought, you know, in the past, 750, 800 was a good place to be. When we looked at the, um...

Speaker Change: Your next question comes from Vishal <unk> with National Bank. Your line is now open.

Vishal: Hi, Thanks for taking my questions with respect to the Capex the $8 50.

Speaker Change: My understanding was previously that good long term number to use.

Vishal: 700.

Vishal: Does this $8 50 reflects.

Vishal: Higher building costs are an expectation of.

Vishal: Higher capex in the future given more opportunities how should we think about the longer term in terms of modeling.

Vishal: Yes.

Vishal: Yes.

Vishal: Over the past 750, 800 was a good place to be when we've looked at the.

Vishal Shreedhar: When we see where we're situated right now, and we know that we can be on our front foot, we're going to take advantage of that where we can really grow this company and grow the sales and grow our market share in the bottom line. So I think we're, you know, we're not talking a ton more CapEx. And I'm not saying we're going to do this every year. But we've seen an opportunity as we strengthen our real estate and our business to To be strong in our food, and we still have a lot of room to improve are top and bottom line.

Vishal: When we are seeing where we're situated right now and we know that we can be on our front foot, we're going to take advantage of that where we can really grow this company and grow sales and grow our market share in the bottom line. So I think we're.

Vishal: We're not talking.

Vishal: One more capex and I'm, not saying, we're going to do this every year, but we are seeing opportunity efforts strengthened our real estate our business too.

Vishal: To be strong in our food and we still have a lot of room to improve.

Vishal: Our top and bottom line so.

Vishal Shreedhar: So I don't think we're not saying that this is going to be the new number.

Vishal Shreedhar: I don't think were not saying that this is going to be the new number.

Vishal Shreedhar: But this year, we thought this was the time to invest.

Vishal: But.

Vishal: This year, we thought this was the time to invest in stores.

Vishal Shreedhar: And with respect to the bi-candidate... With respect to the Buy Canada comments that you indicated earlier, where you're saying you're seeing it sticky, was that with respect to the actual banners, the Canadian banners versus the U.S. grocery banners? Or was that also with respect to the products within the store and the Canadian produced products versus the U.S. produced products? I see. So and so you're not seeing a waning of sentiment with regard to to either of those. Well, I'm not going to talk about future quarters, but no.

Vishal: Okay, and with respect to the by Canada.

Vishal: With respect to the by Canada comments that you've indicated earlier, where youre seeing youre seeing it sticky was that with respect to the actual banners with the Canadian banners versus the U S grocery banners or was that also with respect to the products within the store and the Canadian produced products for the U S produced products.

Vishal: Both.

Vishal: So and so youre not seeing.

Vishal: A waning of sentiment with regard to to either of those trends.

Vishal: Well I'm not going to talk about future quarters, but.

Vishal: No.

Vishal Shreedhar: Okay, and with respect to the shrink. that you're seeing in the improvement. Is that in part due to the accelerating sales growth and presumably even faster sales growth in fresh given the comments that you made at the top? less associated spoilage or is that due to more concrete measures that you've implemented in the in the org to offset that? We're working on initiatives like we did in the previous quarters, but again, when we have higher sales, it's easier to manage. And both are. Providing better results. and this is why we want to continue to work on initiatives and sales growth.

Speaker Change: Okay and with respect to the shrink.

Speaker Change: What youre seeing in the improvement is that in part due to the.

Speaker Change: The accelerating sales growth and and presumably even faster sales growth in fresh given the comments that you made at the top and less associated spoilage or is that due to more concrete measures that you've implemented in the initial in york to offset that shrink.

Speaker Change: Both.

Speaker Change: We are working on initiatives like we did in the previous quarters, but again, when we have higher sales.

Speaker Change: Easier to manage shrink and both are.

Speaker Change: Providing better results on shrink.

Speaker Change: It is why we are working on.

Speaker Change: Initiatives and sales growth.

Vishal Shreedhar: It's Easier To Manage.

Speaker Change: Year to manage.

Vishal Shreedhar: Okay, and with respect to the gross margin, I'm just trying to tease out what, if we're trying to assess what percentage of the improvement, which was, you know, very, very solid, was due to the shrink benefit and, and the variety of initiatives that Empire has been working on space productivity, analytics, etc. Is there any rule of thumb or course help you can give us in terms of how to think about It's multiple things. Retail is detailed and our supply chain did a lot of good stuff. The promo mix management by our merch team is phenomenal.

Speaker Change: Okay and with respect to the gross margin I'm, just trying to tease out what.

Speaker Change: If you if we're trying to assess what percentage of the improvement which was very very solid was due to the shrink benefit.

Speaker Change: And a variety of initiatives.

Vishal Shreedhar: Empire has been working on space productivity analytics et cetera is there any rule of thumb or course help you can give us in terms of how to think about that.

Speaker Change: It's multiple things retail these details.

Speaker Change: Our supply chain did a lot of good stuff.

Speaker Change: The promo mix management, our merch team is phenomenal.

Vishal Shreedhar: Shrink improvement, we heard things about promo penetration is helpful. is helping our gross margin as well because we're selling more fresh food and fresh food is... In general, when it's well-managed at low shrink, yes, so it's a combination of multiple factors.

Speaker Change: <unk> improvement.

Speaker Change: We heard things about Brazil penetration results.

Speaker Change: Helpful.

Speaker Change: Mix is helping our gross margin as well because we're selling more fresh food and fresh food.

Vishal Shreedhar: Profitable in general when its well managed at low shrink.

Speaker Change: Yes, so it's a combination of multiple factors.

Speaker Change: Drove the performance on the gross margin.

Vishal Shreedhar: Okay, thanks very much, congrats on the quarter. Thanks, Vishal.

Speaker Change: Okay. Thanks, very much congrats on the quarter.

Speaker Change: Thanks Michelle.

Operator: Ladies and gentlemen, as a reminder, should you have a question, please press star 1.

Speaker Change: Ladies and gentlemen, as a reminder, should you have a question. Please press star one youre.

John Zamparo: Your next question comes from John Zamparo with Scotiabank. Your line is now open. Thank you very much.

Speaker Change: Your next question comes from Jon <unk> with Scotia Bank. Your line is now open.

Speaker Change: Thanks, very much welcome to your <unk> costs and all the best to you mats.

John Zamparo: Welcome to you, Costa, and all the best to you, Matt. I wanted to ask about private label penetration and based on your disclosure, it seems like this is growing well above the pace of overall sales growth. I wonder if you could talk more about that. Is that primarily from the increase in skew count? Is it doing better with particular hero skews? Any color you can add there? And we're seeing continuous improvement on penetration. And as I said before, penetration is not the only matrix I'm looking for, need to be relevant. And it's a different strategy, category by category.

Speaker Change: I wanted to ask about private label penetration and based on your disclosure. It seems like this is growing well above the pace of overall sales growth I Wonder if you could talk more about that as is that primarily from the increase in SKU count is it doing better with <unk>.

Speaker Change: Particular hero Skus.

John Zamparo: Any color you can add there would be helpful.

Speaker Change: Yes, we are seeing continuous improvement on the nutrition and as I said before.

Speaker Change: In nutrition is not the only metrics I'm looking for and need to be relevant.

Speaker Change: <unk> strategy.

Speaker Change: Good evening.

John Zamparo: Some categories, private label is getting more important loan, and some other category less, but it's very important that we have a lower retail, and it's very important that private label continues to generate better penny profit. This is the golden rules we are using all the time, but the appetite from customers on private label products is growing, and we're pleased because we have a very strong assortment. We did major improvement in our assortment over the last year, so it's a continuous improvement and it's a continuous Improvement in Penetration, and then all the golden rules I've just mentioned.

John Zamparo: Okay.

Speaker Change: The field is getting more important loaded similar to catch it would be less but it's very important that we have a lower retail and very important in that private label continues to generate benefits profit.

Speaker Change: Golden rules, we are using all the time.

Speaker Change: But the FSA from customers on our private label products.

Speaker Change: <unk> is growing.

Speaker Change: And we're pleased because we have very strong assortment.

Speaker Change: We did a major improvement in our assortment over the last year. So it's a continuous improvement and it's a continuous.

Speaker Change: Improvement in penetration and all the Golden rule as I've just mentioned.

John Zamparo: Okay, got it.

Speaker Change: Okay got it and then I want to move to square footage growth.

John Zamparo: And then I want to move to square footage growth and on the 1.5% guide for this year. I know you're not going to guide beyond this year, but when you talk about a gap versus competitors in certain markets, do you think about that more as a one-time initiative to address certain regions or certain markets, or is the increase more you think you have momentum with your brands, you think you have the store network in a good place, and you're resonating with customers, and you want to take up the more normal course store growth over the medium?

Speaker Change: On the one 5%.

Speaker Change: For this year I know youre not going to guide beyond this year. So when you talk about it a gap versus competitors in certain markets.

Speaker Change: Think about that more as a one time initiatives to address certain regions or certain markets or.

Speaker Change: The increase more do you think you have momentum with the brand do you think you have the store network in a good place and you are resonating with customers.

Speaker Change: Want to take up the more normal course store growth over the medium term.

Speaker Change: Yes.

John Zamparo: It's a good question. It's definitely the latter. We think we have momentum and I don't think this is a one-year. Black, and we'll continue to assess at all times as we always do first. Okay, thank you for that.

Speaker Change: Good question.

Speaker Change: Definitely the latter.

Speaker Change: So we think we have momentum and I don't think this is a one year.

Speaker Change: And we will start we will continue to assess alternatives, but as we always do for our shareholders.

Speaker Change: Okay. Thank you for that and one more on square footage growth.

John Zamparo: And one more on square footage growth. When you think about the entire market, we've seen multiple grocers expand targets on this. I wonder if you could talk about the quality or availability of real estate opportunities that you're seeing. There's obviously a finite number of sites. I'm wondering, does that mean higher leasing costs? Does it alter the strategy at all of what Empire is looking for in terms of real estate? How is this impacting your real estate? You know, it's always a tight market getting good real estate. I think that our team... has never been stronger at doing that, so we're really pleased with where we're putting the science right now.

Speaker Change: When you.

Speaker Change: Think about the entire market, we've seen multiple grocers expand targets on this I wonder if you could talk about the quality or availability of real estate opportunities that youre seeing there.

Speaker Change: Obviously, a finite number of sites I'm wondering does that mean higher leasing cost does it alter the strategy at all of what Empire is looking for in terms of real estate. How is this impacting your real estate strategy.

Speaker Change: It's always a tight market getting good real estate I think that our team.

Speaker Change: It's never been stronger doing that so we're really pleased.

Speaker Change: Obviously with.

Speaker Change: With where we're putting the science right now.

John Zamparo: I'd say that the, I used to say the bigger bang was on renovations and new stores. I think that has changed with both our execution and also the cost of renovation compared to new stores. They've gotten closer in terms of cost. But it's always a competitive market out there, but we're looking. There's openings here, and openings for us to grow. and put some pressure on some others. Okay, I appreciate the color.

Speaker Change: I would say that the I used to say the bigger bang with on renovations and new stores I think that has changed with.

Speaker Change: Both our execution and also the cost of renovation compared to new stores, they've gotten closer in terms of cost.

Speaker Change: But it's always a competitive market out there.

Speaker Change: But where we're looking.

Speaker Change: Theres openings here and.

John Zamparo: Opening for us to grow in.

Speaker Change: And put some pressure on some others.

John Zamparo: Okay I appreciate the color I'll leave it there. Thank you thanks, Jeff.

Mark Petrie: I'll leave it there. Thank you.

Mark Petrie: Your next question comes from Mark Petrie with CIBC. Your line is now open. Mark, your line is open.

Speaker Change: Your next question comes from Mark Petrie with CIBC. Your line is now open.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Mark Your line is open.

Speaker Change: Oh, sorry, I was struggling with mute there.

Mark Petrie: Following up on the square footage growth a little bit further, could you just give a bit of color with regards to sort of the channels versus your current penetration, the channels where you might be growing, the regions, sort of rural, urban, anything, any color you can provide with regards to sort of the mix and how this might skew the portfolio? I would love to do so, but I don't want to make it easier for our competitors. Although they're pretty smart, they're probably figuring out what we're doing, like we figure out where they may be going.

Speaker Change: Following up on the square footage growth a little bit further could you just give a bit of color with regards to sort of the channels that you might be versus your current penetration the channels, where you might be growing the regions.

Speaker Change: Rural.

Speaker Change: Ben.

Speaker Change: Any color you can provide with the with.

Speaker Change: With regards to sort of the mix and how this might skew of the portfolio.

Speaker Change: I would.

Speaker Change: <unk>.

Speaker Change: Lots to do so, but I don't want to make it easier for our competitors or the other three slides are probably sitting there where we're doing that if we trigger where they may be going.

Mark Petrie: So I'd rather not do that, but it's...

Speaker Change: They're not do that but it's.

Mark Petrie: We do target certain markets where we think there's more opportunity for us and the banners where we believe we'll be more successful and where we have a unique proposition to win. Yeah, okay, understood.

Speaker Change: We do target certain markets, where we expect there is more opportunity for us and the banners.

Mark Petrie: Where we believe we will be more successful and where we have.

Speaker Change: The proposition to women.

Speaker Change: Yeah, Okay understood and then a separate.

Mark Petrie: And then a separate, I mean, similar topic, I guess, but a separate line of questioning. On Farm Boy, you guys have played around with the store size for that format. And I'm just curious if how you're thinking has evolved over time, if you're still sort of targeting that sort of, you know, low mid-20s kind of square footage size, or if you think the larger format is a better fit.

Speaker Change: Similar topic, I guess, but a separate line of questioning on farm Boy you guys have played around with the store size.

Speaker Change: For that for that format and I'm, just curious if youre thinking how youre thinking has evolved over time.

Mark Petrie: Youre still sort of targeting targeting that sort of low mid twenty's kind of square footage growth square footage size or.

Speaker Change: If you think the larger format.

Speaker Change: Is a better fit.

Mark Petrie: That's a great question, because I think our thinking has evolved, or more likely, Jean-Louis and Sean Linton's thinking has evolved over the last while, because nobody knows their business better than them. They can be successful. it pretty well in any good box, and they're very picky about where they go in, but once they make that move, they are highly successful, and they can make it work in any size. I think if... If we change anything that we believe that they can be even more successful in larger boxes than maybe even we originally thought. and that we're very, very pleased with some of the conversions and new stores where they have more square footage.

Speaker Change: That's a great question, because I think our thinking has evolved or more likely Charles Louisiana Charlatans thinking has evolved over the last while nobody thought their business better than them.

Speaker Change: They can be successful.

Speaker Change: It pretty well.

Speaker Change: Any good boxes and they are very picky about where they go in but once they make that move they are highly successful and they can make it work in any size I think.

Speaker Change: If we've changed anything that we believe that.

Speaker Change: It can be even more successful in larger boxes that.

Speaker Change: And then maybe than we originally thought.

Speaker Change: And that we're very very pleased with some of the conversions and new stores, where they have more square footage.

Mark Petrie: But they know what they're doing, and they can be successful anywhere. I've never seen them.

Speaker Change: But.

Speaker Change: I didn't know what theyre doing and that can be successfully where we're seeing.

Mark Petrie: I've never seen a store banner like it, actually, in my career. But we like the new stores because we can have a more full offering for customers. And that is, we thought it would take a little more time. That's been a home run, early days, but a home run.

Speaker Change: We are seeing.

Mark Petrie: The store banner.

Speaker Change: Early in my career.

Mark Petrie: But we like the new stores, because we can have a more full offerings for customers and that is.

Speaker Change: We thought it would take a little more time that's been.

Mark Petrie: It's been a home run early days are over.

Mark Petrie: All right, appreciate the color, thanks.

Speaker Change: Alright I appreciate the I appreciate the color. Thanks, Thank you Mark.

Chris Lee: Thank you, Mark.

Chris Lee: Your next question comes from Chris Lee with Desjardins. Your line is now open. Thanks for the follow-up. Just on Vola, as you look back at the last fiscal year, how did it perform relative to your internal expectations? We continue to make improvement in all CFCs, and the decision we've made to focus on the existing three is paying off right now, so year over year we continue to make progress. We continue to see double-digit growth in Voila, and performance is improving. Very pleased with the progress we've made over the last year, and we will continue to move in this direction.

Speaker Change: Your next question comes from Chris Li with Deutsche Bank. Your line is now open.

Chris Li: Thanks for the follow up just on <unk>.

Chris Li: If you look back at the last fiscal year.

Speaker Change: How did it perform relative to your internal expectations.

Speaker Change: Yeah.

Chris Lee: We continue to make improvement in all CFT and decision we've made to focus on the existing three as being up right now.

Speaker Change: We will continue to make progress we continue to see double digit growth in went up and.

Chris Lee: <unk> is improving.

Chris Lee: With the progress we've made over the last year, we will continue to move in this direction.

Chris Lee: And the new partnership we have with Uber and Instacart having no impact on Voila, very different customer profile, immediacy versus planned trip, Uber and Instacart younger crowd, so it's very complementary. Okay, that's helpful.

Chris Lee: And the new partnership we have with Hubert and Sungard.

Speaker Change: No impact on with very different customer profiles immediacy versus planned trip.

Speaker Change: You were in the Sahara and younger crowd, so it's very complementary.

Speaker Change: Okay. That's helpful.

Chris Lee: And are there any sort of new cost reduction or margin enhancement initiatives that you're planning for this year, for Huala specifically? Efficiencies, same type of thing we're doing in brick and mortar. How can we optimize promo mix, promo management? How can we? Green Empire.

Speaker Change: Are there any sort of new cost reduction or margin enhancement initiatives that you're planning for this year.

Speaker Change: Specifically.

Speaker Change: Hello.

Speaker Change: Efficiencies.

Speaker Change: Same type of thing we are doing in brick and mortar business.

Chris Lee: We optimized <unk> management can we have.

Speaker Change: Bringing new assortment that would be.

Speaker Change: That would help to grow the basket. So it's multiple the same type of thing that we're doing in brick and mortar, but specific to ecommerce profile, which desire or appetite and there's always opportunity to grow.

Speaker Change: There's always optimization possibilities, both margin cost and sales.

Chris Lee: Okay, and last one is just I know it's been I guess a year since you announced the polls, the polls in rolling out while I'm in Vancouver might still be still early to ask, but when do you think you'll make a decision on whether to proceed or not? We'll let you know when we decide. That's not very helpful to you, but that's the answer really. Sorry, I'm not being flippant. We will let you know when we're done. Okay, great. Thank you.

Speaker Change: Okay and last one is just I know, it's been I guess a year since you announced the pulse the policy enrolling now while in Vancouver. It may still be still early to ask but when do you think you'll make a decision on whether to proceed or not.

Chris Lee: Yeah.

Chris Lee: We'll let you know when we decide.

Chris Lee: Okay.

Speaker Change: Very helpful to you, but thats the answer.

Chris Lee: Not being flip it we will.

Speaker Change: Okay.

Speaker Change: Okay. Thank you.

Operator: There are no further questions at this time. I will now turn the call over to Katie for closing remarks. Thank you, Joelle. 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 2026 conference call on September 11th. Talk soon. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line.

Speaker Change: There are no further questions at this time I will now turn the call over to Katie for closing remarks.

Katie O'brien: Thank you all we appreciate your continued interest in <unk>.

Katie O'brien: Is there any unanswered questions. Please contact me by phone or E. Mail, we look forward to having you join us for our first quarter fiscal 2026 conference call temporary 11 tuck ins.

Operator: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask you. Please disconnect your lines.

Operator: Okay.

Katie O'brien: Okay.