SpartanNash Company (NASDAQ:SPTN) Q3 2024 Earnings Call Transcript

SpartanNash Company (NASDAQ:SPTN) Q3 2024 Earnings Call Transcript November 7, 2024

Operator: Welcome to the SpartanNash Third Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. I would like to now turn the call over to Kayleigh Campbell, SpartanNash’s, Head of investor relations. Kayleigh?

Kayleigh Campbell : Thank you and good morning. On the call today from the company are President and Chief Executive Officer, Tony Sarsam; and Executive Vice President and Chief Financial Officer, Jason Monaco. By now, everyone should have access to the earnings release, which was issued this morning at approximately 7 a.m. Eastern Time. For a copy of the earnings release as well as the company’s supplemental earnings presentation, please visit SpartanNash’s website, www.spartanash.com/investors. This call is being recorded and a replay will be available on the company’s website. Before we begin, the company would like to remind you that today’s discussion will include a number of forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements.

If you will refer to SpartanNash’s earnings release from this morning as well as the company’s most recent SEC filings, you will see a discussion of factors that could cause the company’s actual results to differ materially from these forward-looking statements. Please remember that all forward-looking statements made today reflect our current expectations only, and SpartanNash undertakes no obligation to update or revise these forward looking statements. The company will also make a number of references to non-GAAP financial measures. The company believes these measures provide investors with useful perspective on the underlying growth trends of the business, and it has included in the earnings release a full reconciliation of certain non-GAAP financial measures to the most comparable GAAP measures, which can be found on SpartanNash’s website at spartanash.com/investors.

And now, it is my pleasure to turn the call over to Tony.

Tony Sarsam : Thanks, Kayleigh, and good morning, everyone. Glad to be here. I want to start today’s call with a focus on our people first culture. We recently celebrated our frontline hourly associates with our annual Circle of Excellence Awards. These associates walked the SpartanNash green carpet, while the company’s senior leaders cheered them on. We have now inducted more than 200 associates into this highly coveted Circle of Excellence. The Circle of Excellence is one of several recognition programs we have implemented in the past few years that are helping us to move the needle with associate engagement and retention. In fact, our total company retention rate has improved by nearly 20% since we launched our strategic plan.

Turning to other recent news, I wanted to speak for a moment about the acquisition announcements we made in October. I’m pleased to say that we are on track to close the Fresh Encounter deal this month. The acquisition will add 49 stores to our retail portfolio, which expands our footprint in Ohio and Indiana and allows us to begin serving Kentucky. In addition to expanding our retail footprint, we are also winning in wholesale by capturing new sales from Fresh and Counter’s other distributors. Additionally, last week we announced the acquisition of Markham Enterprises, which consists of three fuel centers and convenience stores in Michigan. We are energized by the opportunities within the C store space, especially due to the channel’s stable demand.

This transaction is expected to close by the end of this year and we look forward to welcoming the Markham team members into our family of associates. Looking ahead, we are continuing to evaluate M&A opportunities based on our disciplined M&A framework, which is designed to maximize shareholder value. Before we jump into recent results, I want to provide some color on the grocery industry and provide an update on our outlook. According to syndicated data, the markets where we operate grew only 40 basis points during the past quarter compared to Q3 of 2023, while total U.S. Grocery was up about 1.1%. The slower market growth in our other geographies has weighed on both the retail and wholesale segments. Okay. So what does this mean for SpartanNash?

As we announced today in our earnings release, we are updating our 2024 guidance and also giving an early read into next year. Jason will dive into the details in a moment, but first I want to provide some context. So, while we are pleased to see that our transformational initiatives are outperforming our expectations, We expect these headwinds to persist into 2025 impacting our previously communicated targets in our long-range plan. We are taking a practical and methodical approach in mitigating macro pressures and we are steadfast in our commitment to driving results and growing shareholder value. Okay. Shifting gears to recap the third quarter. Our consolidated net sales decreased 60 basis points to $2.25 million. Lower volume in the Wholesale segment was partially offset by higher volume in our Retail segment.

On the Wholesale side, a 1.6% decrease was due to lower volumes, inclusive of a 2.9% headwind within the segment from our Amazon business. One of the continued bright spots within the Wholesale segment is our military business. Compared to prior year quarters, the military channel has grown sales over the past 11 consecutive quarters and continues to bolster our growth. Now turning to our Retail segment. Our Retail business grew 1.9% bolstered by incremental sales from the recently acquired Metcalf Stores. From a comp standpoint, we are starting to see some positive trends. Although our comparable store sales were down 70 basis points, our same-store sales improved sequentially each period during the past quarter, and we had the 3 best periods of the year so far in Q3.

Turning to profitability, our Q3 adjusted EBITDA was $60.5 million while adjusted EBITDA margin of 2.7% was flat compared to last year’s third quarter. So, as we previously discussed, our transformational initiatives have delivered benefits an entire year ahead of schedule. All of these benefits are helping to partially offset the headwinds I discussed earlier, and we plan to capture more benefits from the 2024 investments by the end of this year. This includes our shrink production and non-product procurement initiatives expected to generate $20 million in run-rate savings by year-end. Before I turn the call over to Jason, I want to thank our team for their steadfast commitment in executing our long-term strategic plan. Since its inception in 2021, we have made significant progress.

This progress has improved associate safety and retention, helped us to win new business, expanded operating productivity, increased our margins and captured cost savings, enabled us to further collaborate with suppliers, delivered value-add products and outstanding service to our wholesale customers and retail shoppers, and allowed us to make increased investments in our people. We expect these initiatives to continue generating benefits into 2025 and beyond. All of these elements have also built a solid foundation for organic and inorganic growth, supporting our effort to drive results and grow shareholder value. And with that, I’ll now turn the call over to Jason to walk you through the quarterly financials in greater detail.

Jason Monaco : Thanks, Tony, and welcome to everyone joining us on today’s call. Turning to our quarterly results. Net sales in the quarter decreased by 0.6% to $2.25 billion versus third quarter 2023 sales of $2.26 billion. As Tony mentioned, lower volume in the Wholesale segment was partially offset by higher volume in our Retail segment. Gross profit for the quarter increased to $355 million or 15.8% of net sales compared to $348 million or 15.3% of net sales in the prior year’s third quarter. Our gross profit dollar increase was somewhat offset by volume declines, while the 50 basis point margin increase was driven by an accretive sales mix, higher vendor funding, and a reduction in LIFO expense. As a percent of sales, our reported operating expenses increased 32 basis points from the prior year.

Higher restructuring charges as well as retail store labor and healthcare costs led to higher SG&A in the third quarter. These increases were, however, partially offset by lower corporate administrative costs and benefits realized from the merchandising transformation. We expect returns from the investments we’ve made in 2024 to materialize by the end of this year. Compared to the prior year quarter, interest expense increased $600,000 to $9.9 million Consolidated net earnings decreased by $200,000 to $10.9 million while EPS was flat to last year at $0.32 per diluted share. Net margin of 0.49% was flat compared to the prior-year quarter. On an adjusted basis, net earnings decreased $2.3 million to $16.5 million or $0.48 per diluted share compared to $0.54 last year.

Adjusted EBITDA decreased by $400,000 compared to the prior year quarter to $60.5 million. Now turning to our segments. Compared to the prior year quarter, net sales in Wholesale decreased $25.9 million or 1.6%, primarily due to reduced case volumes with independent retailers and one national account customer, partially offset by growth in other national account customers and the military channel. Wholesale adjusted EBITDA was $44.8 million an increase of 14.8% compared to last year’s $39 million. The improved results were driven by a higher gross profit rate, lower corporate administrative costs, and benefits from the merchandising transformation initiative, which more than offset the sales declines. Wholesale reported third quarter operating earnings were $21.1 million compared to $18.2 million in the prior year’s third quarter.

The favorability was partially offset by higher restructuring charges in the current quarter. Now moving to the Retail segment. While our comp store sales were off 0.7% for the quarter, we saw segment sales grow 1.9% to $675 million versus the prior year quarter due to contributions from Metcalfe’s, as Tony mentioned earlier. And our supermarkets, ex-fuel centers were up 2.9% compared to the prior-year quarter. Retail adjusted EBITDA was $15.7 million compared to $21.9 million in the prior year’s quarter. About half of the change was due to higher health care costs with the remainder driven by higher store wage rates and a lower gross profit rate. These increases were partially offset by higher sales volume and lower corporate administrative expenses.

Retail reported operating earnings were $3.9 million compared to $4.9 million in the third quarter of 2023. Now turning to our balance sheet. Our leverage ratio of net long-term debt to adjusted EBITDA increased in the third quarter to 2.4 times compared to 2.2 times at the end of the second quarter. Year-to-date, we generated $123.3 million of cash from operating activities, an increase of more than 28% compared to the same period last year. The increase was due largely to ongoing earnings and our efforts to improve our working capital position. Our liquidity at the end of the third quarter is about $500 million giving us capacity to fund our strategic plan and M&A. As reported in our earnings release, we updated and narrowed our full-year guidance based on current market conditions, which have been partially offset by our operating performance to date and the ongoing benefits we expect to realize from our transformational initiatives.

Turning to the guidance ranges, we still expect net sales to be $9.5 billion to $9.7 billion. Adjusted EBITDA is now expected to be $252 million to $257 million with the midpoint of the new guidance about the bottom of the prior range and adjusted EPS is now expected to be $1.85 to $1.95 per diluted share within the previous guidance range. Based on our spending to date, we also narrowed our CapEx guidance and expect it to be in the range of $135 million to $140 million. We also continue to expect food inflation to be about 1% for the fiscal year. As a reminder, our full year guidance includes the benefits of tuck in acquisitions. Before I turn the call back over to Tony, I wanted to provide more color on his comments about next year. For your reference, we still plan to give our typical full-year guidance during our next earnings report for Q4.

As Tony mentioned earlier, the industry has been operating in a dynamic environment. When we met with many of you in late 2022 at our Investor Day, our team set long-term targets based on the market conditions and trends at that time, resulting in our growth to $10 billion in revenue and $300 million in adjusted EBITDA. Since 2022, the market conditions have been more volatile than the industry expected. While softer market conditions have manifested recently in our geographies, we remain focused on the controllables. This includes the execution of our margin-enhancing transformational initiatives, which are outperforming our expectations. Circling back around, in fiscal 2025, we expect low single-digit top-line growth and mid-single-digit adjusted EBITDA growth compared to the updated 2024 guidance ranges.

Achieving this outlook would deliver a compound annual growth rate of approximately 7% versus 2019. Included in our 2025 expectations are the benefits of two tuck-in acquisitions. First, Fresh Encounter is expected to contribute more than $350 million in retail segment sales or about $225 million on a total company basis after wholesale eliminations. As Tony mentioned, our wholesale business is also benefiting from this transaction since we will be picking up volume from other distributors, which contributes to the return for this investment. We are making progress on the deal and expect Fresh Encounter to close this month. The second acquisition that we announced, Markham, is expected to add more than $20 million in net sales on an annual basis.

This deal is on track to close by the end of this year. In aggregate, on an annual basis, we expect these acquisitions to add more than $10 million in adjusted EBITDA. We’re funding both of these acquisitions through our existing credit line and expect them to be accretive in 2025. And with that, I’d like to turn the call back over to Tony.

Tony Sarsam : Thank you, Jason. We are really pleased with the progress we are making. Our strategic initiatives are providing a strong foundation for growth. Furthermore, we are leveraging that progress and our core capabilities to pursue deals that fit into our M&A criteria. One key area of growth is within our retail business and I’m pleased to announce that we recently welcomed Djouma Barry as our new Senior Vice President and Chief Retail Officer. Djouma is stepping into this position preceded by our Executive Vice President, Corporate Retail, Tom Swanson, as Tom will depart the organization and work to support the company through a smooth transition. Djouma will oversee retail strategy and operations across SpartanNash’s growing retail footprint.

I’d like to offer Djouma a warm welcome to SpartanNash and offer our thanks to Tom for his contributions to the company throughout the years. All right. Before we open the call for Q&A, I would like to take a moment to thank our veterans. SpartanNash has the privilege of serving active military members and veterans by distributing groceries to more than a 160 commissaries and for 100 exchanges worldwide. This Monday on Veterans Day, we honor veterans and their families who sacrificed so much so we can live freely. With gratitude, I want to extend my heartfelt thanks to all of our veterans, including the 100 of SpartanNash associates who are veterans. With that, I’d like to turn the call back over to the operator and open it up for your questions.

Operator: Thank you. [Operator Instructions] first question comes from Chuck Cerankosky from Northcoast Research. Please ask your question.

Q&A Session

Chuck Cerankosky: Good morning, everyone. Looking at the Markham acquisition and the fuel side of it, can you talk about what you’re doing there, the strategic importance of being in the fuel distribution business? And how much kind of cost savings does that bring to SpartanNash?

Tony Sarsam: Good morning, Jack. So, yes, sure. As I mentioned on the call, there’s we run them right now or previously we ran about 36 of those fuel centers. And we find that the stability of that product for shoppers and for folks fueling up is actually something that’s really attractive. The margins are good and the overall revenue is consistent and good as well. So we think that’s a place where as we’re looking for opportunities to change and grow our footprint, we’ll have an eye toward those types of things. This one came up and looked a really attractive deal for us. So we jumped in and we think that’s possible. We’ll actually do more of those as we look for ways to expand what we do and we do well.

Jason Monaco: Yeah. Chuck, this is Jason. The only thing I’d add here is these are three kind of traditional fuel stations and convenience stores. They’re relatively co-located to existing supermarkets that we have in the market here in Michigan. And we see not just opportunities in the C store space, which is huge, but we also see opportunities in the synergy between our supermarkets, the loyalty programs that exist, and those stores based on their location. So we’re excited about the Markham acquisition. We’re excited about fuel and convenience stores, and you should expect to see us continue to invest both organically and inorganically in that space.

Chuck Cerankosky: And switching to another subject, private label, how did that do in the quarter and what might you be doing there that’s different from your competitors?

Jason Monaco: Chuck, it’s Jason again. We had a stable quarter this quarter. Our penetration on owned brands has remained very strong in the high 20%, and we continue to see strength in not just our primary private label offering of our family or primary brand of our family, but also we’ve seen really nice progress in our finest reserve brand extension that we launched about a year ago now. And we’re excited about the prospects going forward. So to me, it’s a continuation of meeting consumers where they’re at, giving them an opportunity whether they’re looking for a premium offering with Finest Reserve or looking for a discounted offering in today’s environment where we want to make sure groceries aren’t breaking the bank. We want to make sure that we give consumers what they need and we’ve been pleased with our family and our brands offering as it’s helped us improve the flow of traffic into our stores.

We still have work to do on traffic, but we’ve seen sequential improvement in foot traffic and we attribute that to continuing to be competitive in our entire value offering, which includes private label.

Chuck Cerankosky: Thank you.

Operator: Our next question comes from Alex Slagle from Jefferies. Please ask your question.

Alex Slagle: All right. Thanks. Good morning. I guess, high level, just two acquisitions in a fairly short period. I’m wondering what changed, whether it was specific opportunities that became available or maybe the valuations are better or really kind of reached that ideal time for Spartan to make this kind of move? Just high level thoughts on that and the timing.

Tony Sarsa: Yeah. You bet. This is Tony again. So, it’s and what you said, sort of all of what you said, we as we’ve mentioned a number of times in these calls, we’re always going to be sort of vigilant for opportunities to grow through M&A in ways that actually support our overall growth strategy. And what you said is precisely correct is that these are two opportunities that the time was right for the previous owners and there are folks that we know well, particularly in case of Fresh Encounter, we have served them for I believe 58 years. So we have a very deep relationship with that organization with those stores. And if you link the sort of I said earlier about overall growth that is sort of at the baseline in this industry, I think you have to be looking for ways to expand and we’re going to look for ways to expand geographically if that makes sense and with ways to expand even within the density of our current geography.

So we’re always going to be vigilant and I think we’ll be looking for these types of opportunities on an ongoing basis.

Alex Slagle: Great. And the Amazon Fresh business, any sense we’re closer to getting back on track there with the formatting changes and start to reaccelerate that as we look ahead? And I’m not sure if you assume any of that in the initial ‘25 outlook or/and how you’re setting the stage on that.

Tony Sarsa: Yeah, I think we’re getting to a place of greater stability there. It’s been a couple of years of declines we’ve talked about quite a bit on these calls as well. And we’re working with Amazon on the current reality of that business and finding ways to grow and be more productive way for both us and for our customer. We’re not counting on a lot of growth there, Canopy. In the future, we’re counting on having a great relationship with Amazon and moving our businesses forward together in this partnership we’ve talked about over the years.

Alex Slagle: All right. Thanks for the update.

Operator: Our next question comes from Ben Wood from BMO Capital Markets. Please go ahead.

Ben Wood: Hi, good morning. This is Ben on for Kelly here. Wanted to can you talk us through the cadence of the quarter and maybe how any update on quarter to date as far as like sales volumes. It seems like maybe you got some volume improvement on the retail side, inflation, and promotional perspective. Anything incremental you’re seeing happening with consumer behavior?

Tony Sarsam: Sure. I think one other specific one though kind of working backwards. We are — and we’ll talk we can talk more about this. I mentioned I have more questions about what we’re doing in stores on our consumer customer value proposition. And one of those things you mentioned just a minute ago is finding the price points and sort of the overall price value that makes sense for shoppers. And so as we’re thinking about that and testing ideas, we are testing both doing more deals and doing a little bit more stuff sold on deal as well as looking for the depth that actually speaks to our shoppers. So in this last quarter, we did some work in some of our geographies and go into more depth and looking for again whether it’s something resonates with shoppers and that types of deals they’re looking for. So be looking at that as a tool for how we grow our business organically.

Jason Monaco: Yeah, Ben, this is Jason. I think that Tony alluded to the cadence earlier in the call. We had sequential improvement throughout the quarter, finished the comps at minus 0.7%. Overall, our growth in retail was just under 2%. Our supermarkets were a little north of 2%. And I don’t want to lose sight of the wholesale business. We talked a little bit earlier about Amazon and its impact. In our wholesale business, we were up nearly 3% ex-Amazon. So we’ve been pleased with elements of our growth and pleased that we’re continuing to drive performance. Obviously, we’ve got some headwinds we’ve been working through in the past with Amazon and that’s starting to stabilize. And we’re looking forward to really building on that the growth thus far and that’s why you see us focusing on programs like CBP where we’ve had some really nice early successes and we’re learning and building on that growth, particularly in our fresh space and that gave us the confidence to come out and say we see next year in a kind of low single-digit growth despite our markets growing at 0.4%.

And we see bottom-line growth continuing to drive operating leverage with mid-single-digit EBITDA growth. So together, we feel good about where we’re at and we want to continue to drive the margin-enhancing programs, the growth initiatives that we’ve got underway to continue to build on the success despite the recent challenges in the marketplace. So we control what we can control and then focus on delivering bottom-line value for shareholders.

Ben Wood: Okay, great. That’s helpful. And then just wanted to switch gears here and talk about maybe kind of the value-added services. And then in particular kind of digital and where your independent customers stand with digital, I think, in the space. We’ve seen tremendous digital growth from some of the national peers. So wanted to know what you’re hearing from that. Are you hearing that there’s demand for more of that, that the customers looking for more of that omnichannel? Just any commentary or learnings that you’re seeing, anything you’re digging in on the digital front?

Tony Sarsam: We are we have a team that is doing great work on growing our overall digital capability for our stores and what we can offer to our wholesale customers as well. We have — I think some of the stuff that we see anyway folks are really exploiting digital are either the well, mostly it’s a combination of general merchandise and grocery. Our stores are going to be typically our customer stores are typically smaller, typically more rural. They probably will not be given to the types of growth you’ve seen sort of the big metro folks can combine that with soft goods and general merchandise. But there’s a desire for that. We’re growing it. We’re growing in our stores and we are providing some of those services to our customers as well.

Jason Monaco: Yeah. Great question. Maybe I’ll take a half a step back then. Our value proposition with our customers includes an entire suite of services and that suite of services is something where we bring value not just because they individually create value but as a package and the skills and capabilities we have as a retailer can come to bear and help our independent customers grow and develop and make them win in their business spaces. Now specifically, as it relates to the digital space more broadly, maybe a couple of things I’ll call out. We’ve had a lot more interest from our customers in electronic shelf labels, and we’ve been rolling those out beginning to roll those out with certain customers. We’ve had some work around enhanced media and the digital media space.

So more broadly, when you think about digital — I think you were alluding to digital or online ordering, but more broadly the ecosystem that we play in, and we’re providing services and offering those to our customers in a way that helps build an entire package of value. So kind of early phases, but enhanced media, electronic shelf tags, and helping our customers reach people in new digital ways.

Ben Wood: Okay. Great. Thank you very much.

Operator: [Operator Instructions] Our next question comes from Scott Mushkin from R5 Capital. Please ask your question.

Scott Mushkin: Hey, Tony. Hey, Jason. Thanks for taking my questions. So I kind of had two. I guess the first thing is you look at the industry, there’s definitely some trends emerging where one is just growth in the broad line companies, Walmart, Amazon, outside the Amazon Fresh. And then two is kind of organic and specialty. So I guess my question is, how do you combat/address these trends with your business as it currently sits? And then how do you think about these trends with M&A, future M&A?

Tony Sarsam: Great question. And I think I’ll offer a couple of thoughts here. So as we think about both our consumer value proposition as well as the acquisition, we’re looking at we have a hard eye toward, or keen eye toward looking for those types of products that our shoppers are looking for, particularly local is a big thing in our market. So as we think about how these stores again, which are going to be skewed toward more suburban rural, we’re bringing in more and more local products and those that have that same kind of specialty impact, if you will, and they’re specialized for that market and often very unique products. So we’re seeing more and more take on that. Even if you think about what we did with the Metcalfe for example, that acquisition has a very significant focus on the local and sort of specialty type items in that community really wants.

So we think that’s actually going to be really part of our future as we think about the overall customer value proposition in our stores, making sure those kind of fresh, healthy and local options and exploring those boundaries more and more because we’re seeing the same thing that you just articulated around that desire and it will be something we’ll have an eye toward as we think about acquisitions as well and think about how we actually get more learnings and more types of elements of our overall portfolio that speak to that.

Scott Mushkin: Okay, thanks. My second question, so our research would say that there’s probably a lot more further step up in promotions coming from CPG. I don’t know if that’s what you’re thinking as we look at ‘25. And how should we if you agree with me, how should we think of it in relation to your business as we get into ‘25?

Tony Sarsam : Yeah. As I mentioned a little bit ago, we are looking at ideas around having more and more differentiated items as well as differentiated price points. And we have the same basic desire for growth as our suppliers do. So we’re actually working in lockstep with them to find ways to find those deals, find the right way to merchandise them, and find those price points that speak to consumers. So we’re looking at more ideas around bundling, around multiple items around the kind of buy 1 get 1, buy 3 get 2 those kinds of things and we’re seeing that actually starting to resonate with some of our shoppers and some of our communities. So I think what you I would say likely see what you see from us anyways, you’re going to see us doing more of that.

And we’ve had sequentially more depth over the course of this year as we’re exploring those ideas and trying to get the right value for the people coming to our stores. And of course, as you said is precisely right. The food manufacturers are also keenly desirous of finding those right price points as well. So I think you’ll see more of that.

Jason Monaco: Yes, Scott. This is right up our alley with the merchant — hey, Scott. Sorry about that. It’s right up our alley with the merchant transformation. We’ve been focused on this for the last few years, building out capabilities with respect to our engagement and our vendor relationships and really building on those relationships. And you’ve heard us say this before, but we think when our consumers win, our customers will win, will win and our vendors will win and that’s the way we think about it across the entire supply chain. We want to make sure we bring the best value to our shoppers. And along the way, our suppliers will win as well. In this tighter volume environment across the United States and particularly in our geographies, I’d expect continued promotional activity and investments from the vendors along the way so that we all continue to win together.

Scott Mushkin: And is that hey, Jason. Is that your thoughts in ‘25 part of why you think EBITDA growth will be there? Is it the vendor funding will continue to accelerate as they try to get their volumes back on track?

Jason Monaco: Yes. Scott, we’re counting on our programs, particularly around the margin enhancing activities continuing to deliver value. We also recognize it’s on the backdrop of an environment where, in our geographies, the market growth is less than the national market growth. And that’s why we want to come out and be transparent now with the kind of the latest or most recent changes in market conditions and say we believe that our programs work. They think we believe they create long term value. We’re just building it off a lower base with the starting point coming out of 2024.

Scott Mushkin: All right. Perfect. Thanks, guys.

Operator: There are no other questions at this time. I will now turn the call back over to Tony Sarsam for closing remarks.

Tony Sarsam : All right. Well, thank you, and thank you all for your participation in today’s call. We certainly appreciate your interest in SpartanNash. And from our family to yours, we’d like to wish you all a very pleasant good day.

Operator: This concludes today’s conference call. Thank you for attending.