Question · Q1 2026
Ariana Warden asked for insights into the merchandise margin performance for the quarter and the outlook for the fiscal year. She also sought clarification on when same-SKU inflation is expected to peak in Q3 as it accelerates sequentially.
Answer
CFO Jamere Jackson reported strong merchandise margin performance, with underlying gross margin up nine basis points excluding LIFO, as merchant actions offset a 34 basis point drag from the faster-growing commercial business. He stated that while a specific peak date for same-SKU inflation wouldn't be provided, continued inflation from vendors and tariffs could add another 1-2 points over the next couple of quarters, impacting same-SKU and average tickets.
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