SpartanNash [SPTN] Conference call transcript for 2023 q3
2023-11-08 12:16:04
Fiscal: 2023 q3
Operator: Welcome to the SpartanNash Third Quarter 2023 Earnings Conference Call. At this time all participants will be in a listen-only mode. Later we will conduct a question-and-answer session. I would now like to turn the call over to Kayleigh Campbell, Head of Investor Relations. Please go ahead.
Kayleigh Campbell: Good morning and welcome to the SpartanNash company third quarter 2023 earnings conference call. On the call today from the company, our 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 at www.spartannash.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 www.spartannash.com/investors. And now it is my pleasure to turn the call over to Tony.
Tony Sarsam: Thank you, Kayleigh. Good morning, everyone. Glad to be here. To kick us off, I want to call out some highlights from our most recent ESG report that we published last month. We're still early in our sustainability journey and are making strides and I'm happy to share with you all today. From 2021 to 2022, we reduced fleet mileage by 12%, exceeding our 10% goal. We decreased DC ozone depleting emissions by a whopping 59%. We converted 85% of our retail stores and DCs to LED lighting, and we diverted more than 4 million pounds of food from landfills. On the governance side, we demonstrated our ongoing commitment to board refreshment, exemplified by the addition of three new directors in 2022 and one new director this past August. As a people first company, I'm incredibly proud of the team's continued focus on safety. Since 2020, one of our biggest accomplishments has been an improved safety record, including a 72% decrease in lost time incidents. Over the past year, our ESG committee and subcommittees have strategically embedded our 2025 ESG goals into our master action plan. We are committed to creating solutions and improve the lives of our associates and the communities we serve. We encourage all stakeholders to read the 2022 ESG report, which is available on the company website. We had the privilege of serving the U.S. military. As a grocery wholesaler we bring the taste of home to the men, women and families of the U.S. military around the world. This Veterans Day weekend, we honored those who have served the United States of America. Now turning to our Q3 results, consolidated net sales came in at $2.3 billion, a decrease of 1.4% from a year ago. During the last quarter we continued to experience a decrease in sales on our Amazon business. Outside of this impact, we observed positive sales trends and our wholesale segment as well as for the consolidated company. We continue to work closely with Amazon as they manage through changes in their grocery format. Adjusted EBITDA increased 6% improving 19 basis points compared to the prior year quarter. Our solid bottom-line performers amidst a challenging environment is attributable to the benefits from our transformational initiatives. Even in an environment where national brands volumes declined, our own brands portfolio held strong. Our new refresh own brands products are helping consumers across all income levels further stretch their dollars. Speaking of solutions to help our customers and retail shoppers, we have made huge strides since launching our merchandising transformation last year. As a food solutions company, we have been relentless on combating food inflation. For more than a year, our enhanced category planning has leveraged data from commodity markets and other industrial benchmarks to address rising input costs. Our methodical cost management has helped us capture share and provide additive value to our wholesale customers and retail shoppers. We continue to appreciate and grow with vendors who are collaborating with us to find creative solutions. We are now in the process of launching the next phase of our merchandising transformation through our compelling offer. This program is accelerating our customer led capabilities in the following areas. One, simplifying the assortment using advanced analytics; two, showcasing the power of our own brands; three, reducing costs of serving our warehouses and stores; four, improving in stocks for shoppers; and five, creating an easier to navigate planogram, all these actions lead to a better overall shopping experience. There are significant unlock potential within our retail stores and based on our learnings. We also plan to scale the program to independent customers to help them drive their business. Turning to our recently remodeled upmarket stores. We are growing at double the rate of the rest of our retail portfolio due to the store's innovative offerings. We continue to reinvest in our stores and are on target to renovate or refresh 25% of the base during the plan period from 2021 through 2025. Our retail team continues to find solutions. For example, we are currently implementing a cash and deposit automation program by significantly reducing administrative hours. The program enables our store associates to provide better customer service while optimizing our shopper experience. Our signature strength is to be the most customer focused, innovative food solutions company. Now that we're executing on our winning recipe, we're even attracting former customers. They have seen our momentum and are boomeranging back to SpartanNash. We're eagerly welcoming them back into our family. They see us as a long-term strategic partner as they focus on their next phase of growth. This is a true testament to the progress we have made over the past three years. We are winning with these customers because of our reliable service made possible through our optimized supply chain network. The benefits our merchandising transformation provides our wholesale customers and an aligned team of associates who are focused on helping our customers take their grocery business to the next level. In addition, we're winning new wholesale customers. This is due to our differentiated services and execution of our winning recipe. We look forward to growing our businesses together. Overall, we are seeing the labor market and applicant flow stabilize. Since last November we reduced our turnover rate by nearly 12%. With more mature onboarding and training and development investments, we are focused on hiring the right people, training them to do a great job and retain them for the long-term. I love recognizing associates for their hard work. Our leadership team recently honored our frontline associates throughout our supply chain retail, through our Circle of Excellence Program. Congrats to all those winners, thank you for all you do to deliver the ingredients for a better life. This past quarter, we hosted our annual leadership summit, and the theme was flying in formation. I'm already seeing the impact of that inspiring messaging throughout our company. Our team has fully embraced cross functional work. We are aligned, we are focused, and we are relentless in our pursuit of providing food solutions. Thank you again to our associates who are flying in formation. I will now turn things over to our CFO, Jason Monaco to share more details about our financials.
Jason Monaco: Thanks, Tony, and welcome to everyone joining us on today's call. I want to highlight some of our key successes from this past quarter before jumping into the detailed results. First, our adjusted EBITDA increased more than 6% to $60.9 million from $57.3 million last year. Our reported net earnings increased 17.6% to $11.1 million compared to net earnings of $9.5 million in Q3 of last year. And our cash flow and liquidity remained strong, giving us flexibility to support our strategic long-term plans, including both organic and inorganic investments. Year-to-date, we've generated nearly $96 million of cash from operating activities and returned almost $41 million to shareholders through share repurchases and dividends. Now turning to our quarterly results. Net sales for the third quarter decreased $32 million, or 1.4% to $2.26 billion compared to 2022 third quarter. Consistent with industry pressures, both segments were unfavorably impacted by volume headwinds. Gross profit for the quarter was $348 million, compared to $351 million in the prior year's third quarter. While the rate was relatively flat, the dollar decline was driven by lower unit volumes in both segments. On a sequential basis, the gross profit rate grew 11 basis points to 15.35% of net sales. I'll discuss additional segment variances momentarily. LIFO expense decreased $8 million or 36 basis points compared to the prior year quarter as inflation eased as we've expected. As a percentage of sales, our reported operating expenses improved 12 basis points from the prior year quarter. During the quarter efficiencies realized from our supply chain transformation help to offset industry-wide headwinds. The decrease in expenses was also due to lower incentive compensation compared to the prior year quarter. These expense reductions were partially offset by an increase in acquisition and integration charges and severance costs related to the previously announced organizational realignment. Interest expense increased $3.2 million compared to the prior year quarter to $9.3 million, due primarily to the higher rate environment. Other income for the third quarter included an $800,000 gain related to a previously terminated post-retirement plan. Now, turning to our segments. Net sales and wholesale decreased $28 million to $1.6 billion compared to the prior year quarter. The 1.7% decrease was due primarily to demand changes within the Amazon business. Moving to the bottom line, the wholesale segments quarterly adjusted EBITDA was $39 million, compared to $38.3 million during the same period last year. Despite cycling inflation related price gains of over $8 million in the prior year quarter. The segment's bottom-line increased due to benefits realized from the merchandising transformation, better leverage of operating expenses, which include the benefits of our supply chain transformation, and lower incentive compensation. Wholesale reported third quarter operating earnings were $18.2 million, compared to $14 million in the prior year period. Now, turning to our retail segment. Sales came in at $662 million for the quarter compared to $667 million in the third quarter of 2022. Our comparable store sales grew 1.2%. Continued reductions in EBT benefits offered to consumers in our retail geography adversely impacted same-store sales by approximately 3% this past quarter, a trend that has accelerated in the last six months. As Tony mentioned, our new and refreshed own brands products are helping consumers across all income levels, further stretch their dollars. Retail adjusted EBITDA increased $2.9 million to $21.9 million from 19 million in the prior year quarter. This increase was due to the ongoing success of our marketing innovation work, reduced incentive compensation, and a decrease in health care benefits expense. The increase was partially offset by industry wide volume pressure and lower pharmacy margins. Retail reported operating earnings were $4.9 million, compared to $5.3 million in 2022's third quarter. Moving to our balance sheet. Our leverage ratio of net long-term debt to adjusted EBITDA improved sequentially by 10 basis points to 2.1x compared to the second quarter of this year. Year-to-date, cash flow remained strong at nearly $96 million. Over the same period, we've paid more than $22 million in cash dividends equal to $0.645 per common share. We also bought back 765,000 shares for a total of $18.5 million. And as of the end of the third quarter, we have approximately $25 million remaining on our share repurchase authorizations. In total, the company has returned nearly $41 million to shareholders year-to-date. As our earnings release mentioned, we updated our full year guidance based on the current trends and market conditions we are observing. We lowered the top-end of our full year net sales guidance to $9.65 billion to $9.85 billion. We narrowed the range while affirming the same midpoint for our adjusted EBITDA, which we now expect will be between $253 million and $258 million. And we updated our adjusted EPS to be in the range of $2.20 to $2.28 per share, which reflects the ongoing elevated interest rate environment. Since 2021, we've made huge strides on our strategic plan. We have a highly scalable business model with a sustainable trajectory of profitable growth. Our winning recipe and benefits from our transformational initiatives continue to enhance value for our shareholders. And now, I'd like to turn the call back over to Tony.
Tony Sarsam: Thank you, Jason. To echo Jason's last comment, we have made huge progress on our long-term plan. Since 2021, we have been building a people first culture, recruiting a talented team of leaders, developing and executing on a long-term strategic plan and implementing key transformational initiatives. We continue to be energized about how the plan incorporates long-term value creation through our transformational initiatives and related margin expansion opportunities. It's no secret our industry is facing substantial headwinds. Instead of seeing a mountain to climb, we see the ample opportunities this dynamic environment has created. With a strong foundation from the execution against our long-term strategic plan, we are well positioned to actively pursue opportunities to further grow share, drive, improved results, and maximize shareholder value. The holiday season ahead of us, I want to express my gratitude to our entire team, many of them serving on the front lines, but we're helping ensure we are delivering the ingredients for a better life. With that, I'd like to turn the call back over to the operator to open it up for your questions.
Operator: [Operator Instructions] And our first question comes from Andrew Wolf of CL King. Your line is open.
Andrew Wolf: Thank you. Good morning. Just had a couple of questions. First is on market share. What is your sense of your adjusted volume if we take out the Amazon business, how it's trending and how you think you're trending versus the market?
Jason Monaco: Hey, Andrew. This is Jason. Good morning. Thanks for the question. If you strip out the Amazon business, we would have seen net growth. And from a market share standpoint, we've seen growth in our retail business and solid growth in wholesale. Overall, the Amazon is the primary driver of a negative revenue profile in business.
Andrew Wolf: Kind of related as a follow up, is the same-store sales number that your retail division produces? Is that similar to what you're seeing from your -- on average, obviously, I'm sure there's a range. But on average, is that similar to what you're seeing from the wholesale customers?
Jason Monaco: Yes. So it's a similar profile excluding the impact our pharmacy business, which obviously a different mix profiles between our independent customers and our own retail stores.
Andrew Wolf: Okay. Got it. And just, if you could just sort of dive into maybe a little more on your outlook. Not really a guidance question. I don't think as much as something that's topical, just on inflation and deflation and/or deflation and how you think that could impact your two segments as we kind of look out for the longer term.
Tony Sarsam: Yes. So it's Tony. And the inflation is coming down, as we've all seen empirically in food as they are kind of each month is down a little bit more than it was the previous month. We expect that trend to continue. We're not actually breaking out the crystal ball and said we're going to have deflation but we have seen a pretty steady trend of inflation coming back down to sort of normal levels for the food right now.
Andrew Wolf: Just a follow up, do you think you've sort of moved beyond the sort of the big swings and holding games that impact this quarter? Or is it already sort of cycled out?
Jason Monaco: Yes, Andrew. Definitely, we're moving past the heaviest part of that -- those gains versus last year, we lapped about $8 million of benefits from last year versus this year. Inflation on the whole -- and our wholesale segment, finished the quarter in the kind of low single digits, think about it around 3%. And we're seeing that benefit fade as we expected.
Operator: Thank you. Our next question comes from Rob Dickerson from Jefferies. Your line is open.
Rob Dickerson: Great. Thanks so much. I just wanted to ask kind of about the vendor side and know historically, you've spoken to potentially seeing some or the expectation of some increased vendor promotional activity. So I'm just curious kind of how that's playing out so far, kind of what the perspective is, as you know, we move into '24. And then just secondly, I may have missed it. But I don't think I heard kind of how the private label part of the business is trending relative to kind of the overall business. Thanks.
Tony Sarsam: Great questions. So first of all, our own brands performance has been very strong, we've grown, both our penetration as well as our overall performance versus national brands. Units are up substantially versus the national brands and the sales are also up, even in light of the fact that we've done some pretty significant discounting, to try to kind of bring people in and give them better price points, as a lot of our shoppers, of course, are seeking deals in the broader inflationary times. So your first question, was -- one real quick?
Rob Dickerson: Yes. It was more around the promotional activity and kind of visibility as we --
Tony Sarsam: Perfect. So yes, so that's sort of core to the overall ECP and the merchandising work that our team has done. So we've had a really, really great run and great participation with our key suppliers. And we've seen a really nice turn around in terms of getting some great price points out there gaining some great promotional deals. And we're roughly on track to deliver what we had forecasted early in the year in terms of the overall benefit to our shoppers and to our customers.
Jason Monaco: Yes, Rob. This is Jason. On the merge transformation, we were committed to $25 million to $35 million of benefit annually, we're tracking well to that we're right around $20 million year-to-date, and we expect to be right in the strike zone of that target by year end.
Rob Dickerson: All right. Super. And then maybe just quickly, on kind of channel dynamics, we've heard number of months, there seems to be fairly well documented, shift into, let's say, certain kind of more math or clubs from dollar shopping occasions. I'm just curious kind of in your regions, and kind of on the wholesale part of the business. Have you kind of felt that to a certain extent, or do you feel like maybe so far, you've been a bit more inflated, just maybe given geographic locale? Thanks. That's all.
Tony Sarsam: Yes. We're seeing some of that. The numbers in our area don't match up perfectly against the national numbers, we're seeing -- I can give you an example. So foot traffic overall, is down, it's down across the board. Our foot traffic is, is down to kind of think about what -- kind of 1% to 1.5% overall. And that's roughly half of the foot traffic decline, we're seeing most of our competitors at the same time. We are seeing shifts to deep discounters. If you've hinted out there, so some of the deep discounters are actually getting both better foot traffic and better sales in our area. And I think that's strictly a function of people are settling in now and trying to find the best deals, and are certainly settling into the place where they can find them. Also, we've mentioned that one element that has colored the overall performance of our businesses that pretty dramatic decline in EBT benefits for folks. And EBT was down, in the 40-ish percent range for us in the quarter versus last year, getting down kind of close to the pre-pandemic, again for in our mix and that's had a big impact on our overall business.
Rob Dickerson: All right. Super. Thanks so much.
Jason Monaco: Building on Tony's comments, Rob, I think there's one other thing I mentioned, that I think is important to know is, when you think about foot traffic, taking that foot traffic and transforming it into revenue growth is really important. So when I kind of give you some color on our retail stores and our retail operations. As we've started to build out and transform our retail execution, some of the things we're seeing are significant improvements in consumers pointing at SpartanNash is having the best meat, the best produce, the best local offerings. Those are all part of our retail strategy, and we're seeing it play out in our results. So despite some of the challenges with the channel headwinds, our performance, as Tony alluded to is outperforming the market and foot traffic. And then, the work we're doing in the store is beginning to transform the consumers experience and in our profile performance.
Operator: Our next question comes from Kelly Bania from BMO Capital Markets. Your line is open.
BenPham: Hi. Good morning, guys. This is Ben on for Kelly. Thank you for taking our questions. So to start, would you guys provide the inflation at wholesale and retail for the quarter? And then, can you provide just any color on the monthly cadence of sales inflation volume, just trying to get a sense of how volume is reacting to lower inflation? And if you guys are seeing any improvements there, either on the retail side or the wholesale side?
Jason Monaco: Yes. Hey, Ben. This is Jason. From a volume standpoint, the pricing and inflation has decelerated, we've seen unit volumes improve or the impact on unit volumes improve. From a cadence standpoint, we've seen inflation step downs throughout the quarter. And we ended, I think I mentioned earlier, we ended around 3% on the wholesale side from an inbound cost standpoint, both to our stores and to our wholesale customers.
BenPham: Great. And then just kind of following up on the EBT conversation. I think you said it accelerated -- the headwinds accelerated in the last six months. Wondering why you guys think that is and how should we think about that going forward. And then, this somewhat related, you also mentioned X pharmacy, you're seeing consistent trends between wholesale and retail comps. Just wondering what your estimated pharmacy impact was?
Jason Monaco: Yes. Great question, Ben. So broadly, the benefits from pharmacy, particularly GLP-1s are offsetting or close to offsetting the headwinds from EBT. That's actually a slight net negative carry right now. Our core comp in the highest single -- high ones is, is a pretty clean number when you strip out EBT and pharmacy between the two of them. So overall, a solid result. From an EBT phasing standpoint, I think you had asked about the timing. The some of it is the jurisdictions we operate in. In Michigan in particular, there was a decline in EBT funding that started about six months ago. And we're seeing that in the portion of our business that operates in Michigan, there's less of an impact outside of that geography.
Ben Pham: Great. Thank you. And then just one more, if I may, on kind of the operating expenses. Just wondering how 3Q operating expenses tracked really, to your internal plan, how labor rates and hours looking especially kind of post your realignment?
Jason Monaco: Yes. So maybe I'll start with the labor and hours. And kind of before we get into the realignment, so the labor and hours, we saw 4% improvement or drove a 4% improvement in throughput on our supply chain. That's a great result, especially in the context or the backdrop of some of the volume declines we mentioned earlier in our national accounts business. As far as the go-to-market changes, we've deployed those changes here in the third quarter and we're off and running and our expense load is consistent with what we expected.
Operator: [Operator Instructions] And our next question comes from Scott Mushkin from R5 Capital. Your line is open.
Scott Mushkin: Thanks. Hey, guys. Sorry about the voice, it's hoarse right now. [Indiscernible] increases next year, I know you said labor is a little bit easier to get or stabilized, how should we look at labor rates as we move into '24?
Tom Sarsam: Yes. Great question, Scott. So as we mentioned on the opening here that we've seen good stabilization overall on the flow of applicants on turnover, which has been improved for us as well. And so I think some of the course, the larger course, corrections that we had to make, in terms of compensation are behind us. But we are in a normal phase right now we're looking at data to for this year, kind of in the back half this year, it says in our competitive set, pay increase is still kind of around 4, a little bit north of 4%. So that would be a wee bit higher than would have been sort of pre-pandemic. So we're seeing something between kind of a normal range of pay and maybe even a slightly elevated pay increases as we move forward from this year into '24.
Scott Mushkin: Perfect. And then, as we think about '24, obviously, inflation continues to step down, promotional activity continues to step up. Some of its CPG sponsor, but not all of it. So as we frame this into '24, there has been talk of flat inflation or maybe outright deflation. How should we think about your guidance business as we potentially move into that environment? And is that something you guys are contemplating?
Jason Monaco: Hey, Scott. This is Jason. We will give guidance on '24 next quarter. Broadly, on the promotional environment, we have seen an uptick in promotions. And as you said, it's been largely funded by the vendor community. So as inflation has eased or disinflation has occurred, what we've seen is an easing of the impact on unit volumes. And we'll continue to evaluate that and optimize our business going forward, we'll share more about what we think '24 looks like next time around.
Scott Mushkin: And that's actually a good segue into my last question. You guys have talked about volume getting a little bit better. Our data is not necessarily hugely supportive of that, do you think you're tracking a little bit different than the industry? Or are we talking volume is getting a little bit better on the margins, but really isn't the elasticities aren't really reacting as much as maybe you would think at this juncture?
Jason Monaco: Yes. Our revenue growth would have been 1.6% X Amazon, so we feel like we're in a solid spot from a revenue growth standpoint. And obviously, it's a dynamic environment out there with inflation, we saw 40-year high inflation, we saw it for 18 to 24 months. And now that's winding back, but the consumer is still paying for two years of double-digit inflation back-to-back. And so what we're doing is leveraging the insights that we bring to bear and bring to the market both in our retail and our wholesale businesses, so that we can ensure that we've got the right solution for our consumers and our customers along the way. And as we've said before, a bit of a test and learn organization, we're going to try this out, test it, see what works and make sure we've got winning propositions for consumers, and so that we can meet them where they are with their budget.
Scott Mushkin: Any thoughts on the volume? Any elasticities?
Jason Monaco: Yes. I think it's probably too early to call the specific elasticity, but we're seeing as inflation is declining or disinflating, we're seeing units respond. I think one of the most important things to highlight is our own brands performance. And we've invested in known brands and began that investment journey a couple of years ago. We talked about the work that we were putting in and that we were building a portfolio of products that we're going to win now. We didn't necessarily expect to have two years of double-digit inflation. But consumers are responding very favorably to our own brands portfolio and it's helping to drive unit volume performance in our business and with our customers. Our family brands are performing well and consistently outperforming the national brands.
Operator: Our next question comes from Krisztina Katai from Deutsche Bank.
Jessica Taylor: Good morning. This is Jessica Taylor on for Krisztina. Thanks for taking our question. I just wanted to go back to the reductions with the Amazon account and just get your thoughts on like how you're planning for that go forward. Do you think that business is gone for good and are you looking to drive other accounts in order to replace that volume? Or is that something that you see coming back in 2024? Thank you.
Tony Sarsam: Great. Thanks, Jessica. So a couple of things to think about. One, I guess this is probably not a lot of additional information out there, other than what Amazon has shared directly. Amazon is very committed to this business. They're committed to food, they're committed to their grocery business, and their fresh business. And they're working through some changes right now. And those changes have manifested in our volume being down. But we think they've got a plan that they're putting together to get on track and get that business growing again. We've met with him a handful of times recently to kind of figure out and kind of work through our strategy with them. We have a lot of confidence in the Amazon team, and that they'll get this business in the right place. And we're going to be there partnering with them all the way. So in terms of your question, are we looking for other business, we're always looking for other businesses, where we have a much of a growth mentality here, both in our retail stores, as well as wholesale. And we think we have a lot to offer. So we have a lot of great irons in the fire in terms of the types of businesses that we can bring back in. I mentioned in my opening comments, we've had a number of customers who may have left in quite some time ago, who are now coming back and taking advantage of the great services that we can provide. So we were very optimistic about growth in the future, both for Amazon as well as for our broader business.
Jessica Taylor: Great. Thank you for that. And just as a follow-up, can you talk a little bit about the drivers for your operating margin on the retail side and how we should think about the puts and takes of that into the fourth quarter?
Jason Monaco: Hey, Jessica. This is Jason. Yes. We've seen solid performance and I mentioned before the mix between pricing or disinflation and unit volume. So as we built our retail business operating plan we've been focusing on not just the near term of securing that volumes coming out of that price elasticity of disinflation, but also really focusing on the long term value creating opportunities that we have in retail. And I mentioned before that consumers are voting with their feet, Tony talked about the foot traffic outperforming the market significantly outperforming the market and outperforming -- significant major mass market players in our marketplaces. And so we're getting shoppers in our store. And not only are we getting shoppers in our store, but we're outperforming in, in really key areas where we focused our strategic efforts around execution whether it's meat, produce, local, bakeries, and service in the stores with high service helpful employees. So we were winning in those spaces and we're proud of that and that's help to drive both mix paired together with our own brand offerings, and service to deliver a really nice package of a performance where we're at or above the market norm from a comp standpoint.
Operator: And our next question is from Peter Saleh from BTIG. Your line is open.
Peter Saleh: Great. Thanks. Jason, you mentioned the GLP-1s and the benefit there. Can you quantify how big that benefit was on the pharmacy? And then are you also I'm assuming you're seeing some correlation between folks that are buying these GLP-1s and lower calorie consumption? Just any color around that would be helpful. Thank you.
Jason Monaco: Yes, GLP-1 was the majority of growth in our pharmacies, overall. Pharmacies were net overall up about 20, I think about 25% to 27%. And then the majority of that growth came from GLP-1. We haven't seen a step down and consumption as a result of that. I know there have been some other players who have mentioned that. We haven't seen it explicitly in our stores. So something we're monitoring of course, but I wouldn't call it out as a driver.
Operator: I'm seeing no further questions. I'll turn the call back over to our hosts.
Tony Sarsam: All right. Well, thank you all for your participation on today's call. We certainly appreciate your interest in SpartanNash. And from our family to yours, we'd like to wish you all very pleasant Thanksgiving holiday season.
Operator: The meeting has now concluded. Thank you for joining and have a pleasant day.
