Krisztina Katai: Thank you. And just a quick follow-up. The sales transaction with C&S this morning acquiring 413 stores, what is the confidence level in that number? And I think there was a comment that they would be willing to buy up to 650. Can you just maybe talk about the likelihood that it could potentially be that high versus the 413 in today’s release? Thank you.
Gary Millerchip: Sure. Yes, thanks for the question. So we feel very good about the plan. We think the plan is very well thought through. As Rodney shared in prepared comments, we spent almost 10 months now really working with different potential buyers and pulling together both the plan around how we make sure we find the right buyer that will be able to continue to grow those stores successfully in the future and putting an overall structure around the plan with the number of stores that provide that right concentration for a successful model going forward and providing all the infrastructure to support it. So we feel very good about the plan we’ve announced. We did include in the agreement, as you mentioned, you may recall when we announced the deal originally that our agreement with Albertsons has a sort of a break point, if you like, of where Kroger would have the option to not move forward with the transaction if we reach 650 stores as potential divestitures.
So what you saw in the announcement today was that we essentially wanted to make sure we align the agreements between Albertsons and C&S and ourselves to make sure that there is a commitment there to be able to flex up if that was something that was needed. But we feel very good about the plan that we announced today.
Rodney McMullen: And the announcement today also, no more work will be done in terms of the SpinCo. That’s not something that’s part of the solution going forward.
Krisztina Katai: Great. Thank you very much. Best of luck.
Rodney McMullen: Thank you.
Gary Millerchip: Thank you.
Operator: Thank you, Krisztina. Our next question comes from Michael Lasser from UBS. Michael, your line is now open. Please go ahead.
Michael Lasser: Good morning. Thank you so much for taking my question. Given the announcement with C&S today and the flexibility that it offers to divest the number of stores that would be consistent with your agreement with Albertsons, what other basis or push back could the regulators have to blessing this merger? And what actions or steps are you taking today to potentially address those potential concerns?
Rodney McMullen: Michael, it’s a great question. And obviously, we feel incredibly excited about C&S and what they bring to the table, and they’ll be an incredibly fierce competitors. So if you look at the commitments that we made in October last year when we announced the transaction and if you look at selling the stores to C&S, we’ve been able to check off every one of those boxes. And we’re also including seven distribution centers, two regional offices, five private label brands in addition to the store. So this is going to be an amazing great business for C&S that we’ll be able to operate and grow from an incredible base with incredible talented people. So for us, we think we’ve addressed all the things and questions the FTC would have.
We also were able to accomplish all the commitments we made in October of last year and found a buyer that would recognize the labor contracts as well. So we feel like all those things that you would have a checkoff list, we’ve met all of those and exceeded it as well. I don’t know, Gary, anything you want to add to that because you and Christine did majority of the work.
Gary Millerchip: No, I think you said it well, Rodney. I mean this has been very well thought through. We’ve had great advisers to help us on the journey, and we’re excited now to talk to the FTC about the plan.
Rodney McMullen: Thanks, Michael.
Michael Lasser: Your top-line annual growth rate. I’m here. Can you hear me? Can you hear me, Rodney?
Rodney McMullen: Yes. You cut out. So if you were asking a question, we can hear you now, but you were cutting off so we couldn’t hear what you said.
Michael Lasser: All right. Sorry about that. Sorry. My question is, if we look at your guidance, for IDs for the back half of the year, which imply slightly negative IDs, is that would translate to four-year geometric stacks that are relatively consistent with what you experienced in the second quarter despite what is likely to be less of an inflation benefit in the third and the fourth quarter? So inherently, either your volume is going to have to pick up or your market share is going to need to improve, presumably both. So a) to what degree are you going to need to see an improvement in volumes in order for you to achieve the implied guidance? And b) how hard and how — to what degree are you going to need to push the other parts of your P&L? How much price investment are you going to need to make in order to drive that volume improvement in those share gains? Thank you.
Gary Millerchip: Hi, Michael. Thanks for the question. I think as we mentioned in the prepared comments, we do expect inflation to continue to decelerate. But we are sort of coming through, we think, the largest part of that deceleration. If you look at the number that I mentioned for Q2, it’s down 3.5% from the start of the quarter to the end of the quarter. And then my comment about we’re expecting to be between the 1% and 2% by the end of the year, we would expect there to be a slowdown in the deceleration rate in inflation impacting our results. And then as you mentioned, if you look at our second quarter results, we saw a sort of a slight decline from being maybe slightly above the 1% that we achieved in Q2 in the first period to being slightly positive in the final period of the quarter.
And I shared that because the slowdown in growth in sales would have been less than the inflation decline, which is really pointing to your point that we are seeing an improvement in unit trends. And we expect that to continue by leaning into some of the things that are working really well for us around growing households, driving digital sales and then also continuing to execute our plan of delivering more promotions for customers and continuing to execute on the strategy to support that lower-income customer and a budget around accelerating Smart Way, private label products and continuing to deliver those merchandising strategies that connect with that customer in the store as well.
