Chuck Cerankosky

Chuck Cerankosky of Northcoast Research noted the Q2 tax rate of 26% versus the full-year guidance of 24% and asked about the potential for Sprouts to achieve a lower long-term tax rate.

Answer

CFO Curtis Valentine explained that the tax team is consistently exploring opportunities, such as tax credits related to food waste diversion. However, he indicated that the 25% to 26% range has been fairly consistent for the company, outside of Q1 impacts from stock-based compensation.

Chuck Cerankosky asked about the significance of investor activity in buying and rehabbing houses for Sherwin-Williams contractors within the residential repaint market, and how this trend is reflected in housing numbers.

Answer

Heidi Petz, President and CEO, acknowledged that remodeling activity is 'more favorable' than new residential construction, but the overall market remains choppy. She believed this subsegment is likely 'not enough to offset the core of the residential repaint contractor in general.' Al Mistysyn, SVP of Finance and CFO, added that this activity falls within the residential repaint segment, which is their largest and fastest-growing opportunity, where they are aggressively pursuing new accounts and share of wallet.

Chuck Cerankosky asked about the activity of investors buying and rehabbing houses for resale, how it flows through housing numbers, and its significance for Sherwin-Williams contractors.

Answer

President and CEO Heidi Petz acknowledged that remodeling activity is more favorable than new residential construction, with increasing activity, but noted the overall market remains choppy. She believes this subsegment is not large enough to offset the core residential repaint contractor market. SVP of Finance and CFO Al Mistysyn added that this activity falls within the residential repaint segment, which is the company's largest and fastest-growing segment, and a key focus for new account and share of wallet growth.

Chuck Cerankosky from Northcoast Research asked about the role of product pricing in the company's strategy to gain market share and drive volume growth across its various end markets.

Answer

SVP of Finance & CFO Al Mestyshin stated that the company does not lead with price to win new business. He emphasized that for painting contractors, price ranks lower in importance than factors like consistent quality, service, and the knowledge of sales reps. The strategy is centered on a value proposition that helps customers become more efficient and profitable.

Chuck Cerankosky of Northcoast Research asked about the role that product pricing plays in the company's strategy to gain market share and drive volume growth across its various end markets.

Answer

CFO Allen Mistysyn emphasized that Sherwin-Williams does not lead with price to win new accounts. He stated that according to third-party surveys, price ranks fourth or fifth in importance for painting contractors, behind factors like consistent quality, service, and the knowledge of sales reps, which help contractors be more profitable.

Chuck Cerankosky asked about consumer behavior, specifically how cautious spending and a trend towards healthier eating influence their market basket choices (branded, fresh, private label) and, in turn, UNFI's operations and approach to product suppliers.

Answer

CEO Sandy Douglas explained that consumers are generally eating more healthily, driving growth in natural, organic, and fresh categories. He noted that while health is a trend, cost matters in every category due to guarded spending. UNFI is focused on optimizing the overall cost picture for its customers to help them compete effectively against discounters, ensuring the right assortment for each retailer's strategy to maximize growth. He confirmed UNFI is investing in improving its merchandising capability to better meet customer needs.

Chuck Cerankosky asked about consumer behavior, specifically how cautious spending and a desire for healthier eating influence their market basket choices (branded, fresh, private label) and UNFI's operations and supplier relations. He also asked if UNFI is working with vendors to create optimized programs for retailers based on their business style and purchase volume.

Answer

CEO Sandy Douglas explained that consumers are generally eating healthier, driving growth in natural, organic, and fresh categories. He noted that cost matters in every category due to guarded spending, and UNFI focuses on helping customers manage costs to compete effectively. He confirmed that UNFI is investing in capabilities to improve merchandising and create optimized programs for retailers, viewing it as a major priority with a long runway of opportunity.

Chuck Cerankosky from Northcoast Research asked about the source of new business gains and the outlook for the conventional business volume given the current economic pressures on consumers.

Answer

CEO Sandy Douglas explained that most gains come from expanding relationships with existing customers, primarily by adding natural and specialty products. He noted that while some conventional retailers are performing well, centrally positioned retailers face challenges differentiating from discounters, which is an area of focus for the industry.

Chuck Cerankosky from Northcoast Research asked for an overview of Kroger's store strategy, including details on store closures, new openings, favored formats, and the geographic focus, particularly in the context of the competitive landscape.

Answer

Interim CEO & Chairman Ronald Sargent explained that the plan to close approximately 60 stores over 18 months is a catch-up effort after pausing closures during the merger process, with minimal financial impact. He emphasized that new store openings are the primary driver of market share and that Kroger will accelerate openings beyond the 30 planned for 2025, focusing on high-growth geographies and utilizing various formats, including the successful Marketplace store.

Chuck Cerankosky of Northcoast Research asked for an overview of Kroger's store strategy, including details on store closures, new openings, favored formats, and how this strategy considers the competitive landscape and the roles of pharmacy and fuel.

Answer

Interim CEO & Chairman Ronald Sargent explained that the plan to close approximately 60 stores over 18 months is part of resuming the annual store review process, which was paused during the merger. He emphasized that new store openings are the biggest driver of market share and that Kroger will accelerate openings, favoring high-growth geographies and a variety of formats, with the Marketplace store being a particularly successful one.

Chuck Cerankosky asked about the pace of kitchen installations at the acquired CEFCO stores and the timeline for these conversions. He also requested details on CEFCO's existing supply contract, including its expiration and the plan for conversion to Casey's self-distribution.

Answer

CEO Darren Rebelez stated that no kitchen conversions are built into the fiscal 2026 assumptions, as the company is still assessing the existing food program to develop the right remodel scope. He noted that permitting timelines will also dictate the pace, with the bulk of activity likely occurring in the two years following FY26. He clarified that the incumbent supply contract for CEFCO expires at the end of calendar year 2026.

Chuck Cerankosky asked about the expected pace of kitchen installations in the acquired CEFCO stores and for clarification on the timeline for converting these stores to Casey's self-distribution network.

Answer

President and CEO Darren Rebelez stated that no material kitchen conversions are planned for FY26 due to permitting lead times and a deliberate assessment process, with the bulk of remodels expected in the following two years. He also clarified that the inherited supply contract for the CEFCO stores expires at the end of calendar year 2026.

Chuck Cerankosky of Northcoast Research inquired about SpartanNash's Hispanic store format, asking about its geographic concentration, plans for expansion into new markets like Michigan, and the projected store count over the next few years.

Answer

President and CEO Tony Sarsam explained that the company recently opened its fourth Super Mercado Nuestra Familia in Omaha and plans to aggressively open two to three more stores in the Midwest this year, with at least one or two more in Q1 of next year. He confirmed they are looking at moving into Michigan and that expansion will involve converting existing stores, not necessarily their own, in communities they can best serve.

Chuck Cerankosky of Northcoast Research inquired about the growth strategy for SpartanNash's Hispanic store format, asking about its current concentration, plans for expansion into new markets, and the projected store count over the next few years.

Answer

President and CEO Tony Sarsam explained that the company recently opened its fourth Super Mercado store in Omaha and plans to aggressively expand the format. He detailed plans to open two to three more stores in the Midwest this year and another one or two in Q1 of next year, which will involve converting existing retail locations in communities that can be best served by the format.

Chuck Cerankosky of Northcoast Research inquired about the expansion plans for SpartanNash's Hispanic store format, asking about its current concentration, potential for new markets like Michigan, and the expected store count in the coming years.

Answer

President and CEO Tony Sarsam explained that the company recently opened its fourth Super Mercado store in Omaha and plans to accelerate growth by opening several more stores in the Midwest through the remainder of the current year and into Q1 of the next. He confirmed these would be a mix of conversions, not necessarily of existing SpartanNash stores, and that expansion into markets like Michigan is being considered.

Chuck Cerankosky of Northcoast Research inquired about the expansion strategy for SpartanNash's Hispanic store format, Super Mercado Nuestra Familia, asking about its current concentration, plans for new markets like Michigan, and projected store count growth over the next few years.

Answer

President and CEO Tony Sarsam detailed that the company recently opened its fourth Super Mercado in Omaha and plans to aggressively expand with two to three more stores in the Midwest this year and another one or two in Q1 of next year. He confirmed they are considering expansion into Michigan, utilizing conversions of existing retail spaces to serve target communities.

Chuck Cerankosky asked about the practicality of moving production, particularly for apparel, to avoid tariffs and whether such moves simply result in higher costs from new locations.

Answer

EVP, Chief Merchandising Officer Seth Estep explained that the company has been aggressively diversifying its sourcing away from China for three years. He noted that for their private brand apparel, production has already been fully moved out of China. A task force is actively assessing all programs for alternative and domestic supply opportunities.