Sandy Douglas: Well, the company is not immune from — and our customer base is not immune from the general industry trends. Obviously, the economy is slowing down. There’s a lot of focus on value and the value position retailers and number of whom we do not serve are gaining share. I think what makes up our top line as a wholesaler is customer gains, expansion in categories and then the underlying performance of our customer base. So you’d see some of our strategy as a wholesaler playing into the results. You’d see some of the underlying performance. The only other color I’d offer is that, we serve a large number of retailers and many of them are winning strongly. And innovating in their very agile independents or that way. And our focus besides earning new business is to make sure that we’re doing everything possible to help our customers succeed and compete. And I think that’s one of the reasons why we’re earning new business.
Andrew Wolf: Thank you.
Operator: We’ll take our next question from Leah Jordan at Goldman Sachs.
Leah Jordan: Thank you. Good morning. I was wondering if you could provide some more detail on unit volumes, how they’ve trended in the quarter versus the industry on a sequential basis and year over year? And also how are you thinking about volume trends for the balance of the year when you look down among your different segments?
Sandy Douglas: Sure. So I think we probably all have the same syndicated facts. Food stores running about minus three, total measured channels down minus two or some of the big discounters are improving that number. And in our numbers, we reported down mid-single digit, which is really in line with the kind of customer base we serve. That’s being driven, obviously, by hyperinflation and price elasticity. A little better share loss to the big formats, which is why we’re so focused on helping our customers be more competitive. As we look ahead, obviously, we don’t claim to be expert accountants, but what we can see and is driving our performance is that, there are significantly less price increases taking place and that should lead to lower inflation, lower inflation should result in units bouncing back and exactly how and when that happens is anybody’s guess, but we would expect inflation to moderate as the year goes on and units hopefully to improve slightly.
Leah Jordan: Great. Thank you. And I just had a follow-up on your private label strategy. Just seeing if you could provide an update on that. How did growth in that category kind of track versus the industry, as well as your internal expectations? And where are you tracking to your longer term goal of potentially doubling that business?
Sandy Douglas: Our private brands performance in the quarter was very strong. As I mentioned earlier, it grew double digit. We recently skilled up and put a very talented leader on top of that business. We’re overhauling our strategy by kind of sharpening our brand positions and improving our (ph) execution. There’s a lot of collaboration going on with leading retailers in our system. And I would say six months into the new plan that we’re pleased about the results. There’s a lot of opportunity for us to continue to give our retailers a competitive edge with very well positioned brands and the early performance of the new team is very good.
Operator: We’ll go next to Peter Saleh at BTIG.
Peter Saleh: Great. Thanks for taking the question. I want to ask about the vendor promotions. I think you guys mentioned you’re expecting those to increase in the back end of the year. Did I hear that correctly? And are you starting to see evidence of that and is that embedded in the back end of the year guidance?
Sandy Douglas: Yes. This is Sandy. We are seeing a slight uptick in vendor promotions. We expect that to continue. We’re still well below pre COVID levels, but in conversations with vendors at a couple of major conferences over the last 30 days, they indicate that they’re going to become more promotional, but it’s gradual as the way I would describe it.
Peter Saleh: Great. And then just on the inflation, Can you just remind us again what the inflation was in 2Q 2023 and what your expectations are for the back end of the year?
John Howard: Yes, I’ll take that one. This is John. So for the second quarter this year, our overall inflation impact to the overall company was just below 11%, which is compared to Q2 last year was little over 11%. So just to give you that sense. And while we’re expecting inflation will moderate as we go through the back half of the year, which is in our forecast, we haven’t provided specific guidance around that number just that we expect it’s going to moderate.
Peter Saleh: Great. Thank you very much.
Operator: We’ll go next to Krisztina Katai at Deutsche Bank.
Unidentified Participant: Good morning. This is Jessica on for Krisztina. I just wanted to follow-up on your comments on improving fill rates. So just can you give us a few more details on what you’re seeing there? And if there’s any intricacies that we should think about? Thank you.
Sandy Douglas: Yeah. Krisztina, this is Sandy. Fill rates are about 12 percentage points better. This in the second quarter than they were last year, which is a significant improvement. There continue to be categories that are stressed and parts of categories that are stressed. And we’re still a ways away from where we were pre COVID, but we certainly see them improve year over year and sequentially from the first quarter.
Unidentified Participant: Thank you.
Operator: We’ll move next to Kelly Bania at BMO Capital Markets.
Ben Wood: Hi, good morning, guys. This is Ben Wood on for Kelly Bania. Thanks for taking our questions. I wanted to step back and just look a little bigger picture at the inventory gains. Do you believe that the significant inventory gain headwinds is something that’s being felt across the broader distributor landscape and among your competitors? And is there any risk that this kind of lower profitability reset spurs a less rational competitive dynamic?
Sandy Douglas: Yes, Ben. Specifically to the inventory gain, that was a second quarter issue last year for us that impacted about two tenths of one percent of our inventory and we have not seen it repeat since. So I wouldn’t think that’s a broader issue. It just was a function of the supply chain volatility in the quarter. And really the broader picture here is a kind of analytical miss on our part as hyperinflation began last year without the experience of that scenario before we missed the cause of it going up. And therefore we just didn’t have the right forecast for this year. The competitive environment, obviously, is very competitive, but it doesn’t — and it hasn’t increased or decreased and really if you look at Slide 6 of our deck, what you see is that, our operating margins as we sort of head out of the COVID era are right on what they were beforehand.
We just enjoyed a lot of growth, which we both earned and also seen as a part of inflation. So I wouldn’t describe the competitive environment in a really different way than it has been and we would expect it to be.
