Financial Data and Key Metrics Changes - Net sales increased by 4.6% to $10.6 billion in Q3 compared to $10.2 billion in the same quarter last year [6] - Same-store sales rose by 2.5%, driven by increased customer traffic, while average basket size remained flat [6][7] - Gross profit as a percentage of sales was 29.9%, an increase of 107 basis points, attributed to higher inventory markups and lower shrink [14] - Operating profit increased by 31.5% to $425.9 million, with operating profit margin improving by 82 basis points to 4% [15] - EPS for the quarter rose by 43.8% to $1.28, exceeding internal expectations [15] Business Line Data and Key Metrics Changes - Positive comp sales growth was observed across all categories: consumables, seasonal, home, and apparel [7] - Non-consumable sales growth outpaced consumable sales growth, indicating a shift in consumer preferences [7] - The Value Valley offering, with over 500 SKUs at the $1 price point, achieved same-store sales growth of 7.6% [9] Market Data and Key Metrics Changes - Market share grew in both consumable and non-consumable product sales, reflecting improved execution and broader customer appeal [6] - Customer count increased, particularly among higher-income households, indicating a successful strategy to attract diverse income brackets [8] Company Strategy and Development Direction - The company is focused on enhancing its real estate footprint, with plans for 4,885 projects in 2025, including 575 new store openings in the U.S. and up to 15 in Mexico [19][24] - Digital initiatives are being expanded, including partnerships with DoorDash and Uber Eats to enhance delivery capabilities [28][29] - The company aims to strengthen its non-consumable growth strategy through brand partnerships and improved store layouts [31][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term financial framework and the ability to deliver sustainable growth despite potential consumer behavior uncertainties [18][20] - The low- and middle-income consumer remains pressured, but the company's value proposition is resonating well, as evidenced by traffic growth [55] - Management anticipates continued gross margin expansion, driven by improvements in shrink and operational efficiencies [39][78] Other Important Information - The company redeemed $600 million of senior notes ahead of schedule, strengthening its balance sheet [16] - A dividend of $0.59 per share was paid during the quarter, totaling approximately $130 million [17] - The company is committed to maintaining a balance between investing in growth and returning cash to shareholders [17] Q&A Session Summary Question: Insights on gross margin for Q4 and long-term improvements - Management noted a 107 basis point expansion in Q3 gross margin and expects continued improvement in Q4, despite some headwinds from LIFO [38][39] Question: Real estate growth opportunities in light of competition - Management expressed confidence in the remodel program and the potential for long-term growth, citing 11,000 opportunities for new stores in the U.S. [51][52] Question: Assessment of low to middle-income customer health - Management indicated that the low- and middle-income consumer is being mindful of spending, but the company's value offerings are resonating well [55] Question: Comp growth sustainability and promotional strategies - Management is confident in maintaining a 2.5% comp growth without needing to increase promotional activities significantly [73][74] Question: Digital initiatives and their impact on business economics - Management highlighted high incrementality rates from digital initiatives, with over 70% of digital orders delivered within an hour [64][66]

Financial Data and Key Metrics Changes - Net sales increased by 4.6% to $10.6 billion in Q3 compared to $10.2 billion in the same quarter last year [5] - Same-store sales rose by 2.5%, driven by increased customer traffic, while average basket size remained flat [5] - Gross profit as a percentage of sales was 29.9%, an increase of 107 basis points, attributed to higher inventory markups and lower shrink [12] - Operating profit increased by 31.5% to $425.9 million, with operating profit margin improving by 82 basis points to 4% [13] - EPS for the quarter increased by 43.8% to $1.28, exceeding internal expectations [14] Business Line Data and Key Metrics Changes - Positive comp sales growth was observed across all categories: consumables, seasonal, home, and apparel [6] - Non-consumable sales growth outpaced consumable sales growth, indicating a strong performance in non-consumable categories [6] - The Value Valley offering, with over 500 rotating SKUs at the $1 price point, achieved same-store sales growth of 7.6% [8] Market Data and Key Metrics Changes - Market share grew in both consumable and non-consumable product sales, reflecting improved execution and broader customer appeal [5] - Customer count increased, with growth coming from higher-income households, indicating a shift in customer demographics [7] Company Strategy and Development Direction - The company is focused on expanding its real estate footprint, with plans for approximately 4,730 projects in 2026, including 450 new store openings in the U.S. [23] - Digital initiatives are being enhanced, including partnerships with DoorDash and Uber Eats to expand delivery capabilities [26][27] - The company aims to strengthen its non-consumable growth strategy through brand partnerships and improved store layouts [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term financial framework and highlighted the importance of retaining new customers from higher-income brackets [9][19] - The company anticipates net sales growth of approximately 4.7%-4.9% and same-store sales growth of approximately 2.5%-2.7% for fiscal 2025 [17] - Management noted that the low- and middle-income consumer remains pressured but is responding positively to the company's value offerings [45] Other Important Information - The company redeemed $600 million of senior notes ahead of schedule, strengthening its balance sheet [15] - A dividend of $0.59 per common share was paid during the quarter, totaling approximately $130 million [16] - The company is committed to maintaining a leverage ratio below three times adjusted debt to adjusted EBITDA [16] Q&A Session Summary Question: Insights on gross margin for Q4 and long-term improvements - Management noted expectations for continued gross margin expansion in Q4, driven by improvements in shrink and other initiatives [34][35] Question: Real estate growth opportunities in light of competition - Management expressed confidence in the remodel program and the potential for new store openings, citing 11,000 opportunities in the U.S. [40][44] Question: Health of low to middle-income customers and traffic dynamics - Management indicated that the low- and middle-income consumer is being cautious but is responding well to the company's value proposition [45] Question: Contribution of digital initiatives to overall growth - Management highlighted high incrementality rates from digital offerings, with significant growth in basket sizes and customer engagement [49][51]