Krisztina Katai

Krisztina Katai inquired about Sprouts' planned SKU launches for attribute-based products in 2026, focusing on price points to deliver value and the extent of necessary assortment changes within stores.

Answer

President and COO Nick Konat expressed confidence in Sprouts' current assortment mix across key health attributes but identified an opportunity to improve access to these attributes at more price points, including entry-level options. He stated that innovation and launches will continue to focus on attributes, with no plans to change the core offerings. Sprouts expects to launch 6,000-7,000 new items in 2026, including hundreds of new Sprouts Brand items focused on customer-driven innovation, not national brand comparisons. He also highlighted successful partnerships with brands like Tractor and Elevate, indicating a strategy to double down on bigger launches.

Krisztina Katai inquired about Sprouts' planned SKU launches for 2026, particularly within attribute-based products, and how price points are being considered to deliver value. She also asked about the current assortment mix and the extent of necessary changes.

Answer

President and COO Nick Konat expressed confidence in the current assortment mix across key health attributes but identified an opportunity to improve access to these offerings at more diverse price points, ensuring better balance for customer needs. He stated that innovation and launches will continue to focus on attributes, with plans to introduce 6,000-7,000 new items in 2026, including hundreds of new Sprouts Brand items that focus on customer-driven innovation rather than national brand comparisons. He also highlighted plans for stronger marketing and merchandising support for key brands like Haymaker and Elevate.

Krisztina Katai asked about the momentum in attribute-based products, including planned SKU launches for 2025 and leveraging the Sprouts brand. She also inquired about the company's view on competitors potentially reformulating products. As a follow-up, she asked about the sustainability of gross margin upside and its potential ceiling.

Answer

CEO Jack Sinclair stated that Sprouts is well ahead of competitors on clean ingredients, noting the Sprouts brand has grown from 16% to 24% of sales by focusing on attributes like organic and gluten-free, making its go-to-market strategy robust. CFO Curtis Valentine addressed the margin question, explaining that while the business is still maturing and has opportunities for improvement in areas like inventory management, he expects margin gains to moderate in the second half of the year. These gains fuel long-term investments.

Krisztina Katai asked about the impact of social media and influencer marketing on customer metrics, the penetration of attribute-based products, and the early learnings from the expanded loyalty program pilot.

Answer

President and COO Nick Konat highlighted that differentiated marketing and authentic storytelling are driving traffic and customer growth. CEO Jack Sinclair noted that approximately 70% of products are now differentiated. CFO Curtis Valentine reported that early loyalty program metrics like sign-ups and scan rates are exceeding expectations, providing confidence for the national rollout.

Krisztina Katai asked about the key drivers behind the strong new store performance and how newer customer households are performing in terms of frequency and wallet share.

Answer

CEO Jack Sinclair attributed strong new store openings to honed-in marketing, better site selection analytics, and strong execution by opening teams. CFO Curtis Valentine added that market density and the smaller store format also boost productivity metrics. Regarding new customers, Curtis noted increased frequency with smaller baskets and strong growth in the 18-34 age cohort, which Jack attributed to a growing interest in health-focused products.

Krisztina Katai asked about the performance of Casey's private label brands and opportunities within its evolving tiered offering. She also requested an update on the 'Fuel 3.0' initiative for upstream fuel purchasing and the integration of the Fikes fuel team.

Answer

CEO Darren Rebelez explained that Casey's is evolving its private label strategy from a single 'national brand equivalent' to a tiered approach with premium, mid-tier, and value-oriented products. Regarding fuel, he stated the 'Fuel 3.0' plan is progressing well, with the experienced Fikes team now integrated. In the quarter, about 3% of the fuel supply was sourced through this upstream initiative, with plans to grow this over time.

Krisztina Katai inquired about the performance and strategy for Casey's private label brands, including the development of a tiered offering. She also asked for an update on the 'Fuel 3.0' upstream sourcing initiative and the integration of the FICS fuel team.

Answer

President and CEO Darren Rebelez explained that Casey's is evolving its private label program from a single 'national brand equivalent' to a tiered approach with premium, mid-tier, and value offerings. Regarding fuel, he confirmed the 'Fuel 3.0' initiative is progressing as planned, with the experienced Fikes team now integrated. This initiative accounted for about 3% of fuel supply in the quarter.

Krisztina Katai asked how product innovation is driving market share, where the greatest untapped opportunities are, and for confirmation that March sales trends have improved.

Answer

CEO Darren Rebelez confirmed that innovation is a more significant growth driver than promotions, citing the sustained double-digit growth in hot sandwiches and the success of specialty pizzas and limited-time cookies. He stated that March sales are improving when the weather cooperates, suggesting a return to normalized growth as adverse weather subsides.

Krisztina Katai inquired about the opportunity to apply Casey's successful labor-saving initiatives to the newly acquired Fikes stores and the potential timeline for these improvements. She also asked for more detail on the joint planning process with prepared food suppliers.

Answer

CEO Darren Rebelez expressed confidence in the opportunity to implement OpEx efficiencies at Fikes stores, though he noted it would take time and benefits wouldn't be significant in the current fiscal year. Regarding joint planning, Rebelez explained it's a newer process for prepared foods but is already yielding results in innovation and cost improvements, citing the new hot sandwich platform as a key example of successful collaboration with ingredient suppliers.

Krisztina Katai asked about recent retail price adjustments in grocery, Casey's value proposition against competitors like dollar stores, and the role of its loyalty program and private label in reinforcing value.

Answer

CEO Darren Rebelez explained that most grocery pricing actions are pass-throughs of tobacco cost increases, and Casey's overall grocery pricing has risen less than CPI over the last four years. He expressed low concern about dollar store competition due to different product assortments and stated the company leverages its merchandising and private label to maintain a strong value proposition.

Krisztina Katai from Deutsche Bank asked about the CEO's vision for brand curation and personalization, and how the UB Media network helps Ulta stand out with its brand partners in a competitive environment.

Answer

President & CEO Kecia Steelman outlined a strategy focused on ~20 high-potential exclusive brands, balanced with established partners. For personalization, she highlighted a new partnership with Adobe to leverage their 45 million loyalty members. Regarding UB Media, she said the focus is on providing better reporting for brands, offering enhanced ad products like connected TV, and expanding reach to non-endemic partners, all of which are showing good progress.

Krisztina Katai asked for learnings from the company's market share strategy, specifically where the biggest gains in member engagement are occurring. She also questioned if the worst of the competitive opening pressures are over and if there is a timeline for returning to market share gains.

Answer

CEO Dave Kimbell highlighted strong engagement from elite Platinum and Diamond members and noted the overall loyalty program grew 5% through new member acquisition, reactivation of lapsed members, and strong retention. Regarding competition, he stated it's difficult to predict a precise timeline for a full recovery due to the unprecedented scale of new openings. While Ulta made progress in Q3, he would not declare that the pressure is completely behind them.

Krisztina Katai asked for learnings from the market share strategy, the primary sources of member engagement gains, and whether the worst of the competitive opening pressures might be over.

Answer

CEO Dave Kimbell noted strong engagement from elite (Platinum and Diamond) members and a 5% overall growth in the loyalty program, driven by new member acquisition, reactivation, and strong retention. Regarding competition, he stated that while Q3 showed progress, it is difficult to predict an end to the disruption due to its unprecedented scale, and he would not say the company is '100% through it.'

Krisztina Katai asked about the strategic priorities for Walmart's Marketplace, including seller additions and assortment, and how the company is thinking about price elasticity for general merchandise given potential tariffs.

Answer

Walmart U.S. CEO John Furner outlined three priorities for Marketplace: expanding assortment, providing a strong suite of seller services like WFS, and offering data-driven advertising through Walmart Connect. He noted they are watching elasticity closely with improved tools. International CEO Kathryn McLay added that international marketplace GMV grew over 30%, with significant new seller additions in Mexico and Canada.

Krisztina Katai asked a multi-part question about the strength in e-commerce, including its sustainable growth rate, the contribution from marketplace expansion, and what newness management is most excited about for the holiday season.

Answer

CEO Doug McMillon responded by emphasizing the long-term opportunity in e-commerce, given Walmart's relatively low market share. He described a reinforcing cycle where e-commerce growth fuels higher-margin businesses like advertising and membership. For the holidays, he expressed excitement for the product assortment, including hot toys and a lower-priced Thanksgiving meal, and the convenience offered to customers.

Krisztina Katai of Deutsche Bank questioned how Skechers is thinking about the trade-off between raising prices to offset tariffs and the potential negative impact on unit elasticity. She also asked about any potential margin offsets from other areas, such as favorable domestic transportation or ocean freight costs.

Answer

Executive John Vandemore reiterated that raising prices is not the primary objective and would only be a response to extraordinary costs, with a willingness to absorb short-term pain for long-term brand health. His bias is to protect gross profit dollars over margin percentage in the medium term. Executive David Weinberg added that recent ocean freight contract negotiations appeared stable and were not expected to cause near-term cost disruptions.

Krisztina Katai of Deutsche Bank asked for details on the 26% increase in inventory, its composition, and the strategy to move inventory more quickly.

Answer

John Vandemore (executive) explained the inventory is healthy, with the increase primarily driven by elevated in-transit merchandise, especially to Europe due to longer shipping times from the Suez Canal closure. He noted the strategy in China involves accelerating inventory movement to make room for new products and comfort technologies after a disappointing Singles' Day. David Weinberg (executive) added that the inventory build was a specific decision to get product to EMEA early for its largest quarter.

Krisztina Katai asked about the outlook for Average Selling Prices (ASPs) and industry promotions in Q4, and also requested an update on the local sourcing strategy and capacity in India.

Answer

CFO John Vandemore stated that promotionality is stable and effective, with Q4 growth expected to be driven by volume rather than price. Regarding India, both he and David Weinberg explained that while they have a meaningful and growing local production base, it does not yet cover the full breadth of their product line, necessitating a continued mix of imports. They see a long-term margin benefit but no significant impact in the immediate future.

Krisztina Katai inquired about the drivers of the strong 14% growth in EMEA, any changes in consumer behavior there, early reads on back-to-school performance, and the current domestic promotional environment.

Answer

Executive David Weinberg and CFO John Vandemore attributed the strong EMEA performance primarily to the direct-to-consumer business, where product is resonating and both retail and e-commerce are performing well. Vandemore added that timing of inventory availability can cause shifts between DTC and wholesale strength. Regarding the U.S., Weinberg stated it was too early for a meaningful read on back-to-school and characterized the promotional environment as largely unchanged from recent quarters.

Krisztina Katai inquired about the key qualifications sought in the new Chief Marketing Officer and asked for an assessment of where Five Below currently stands in educating customers about its 'crystal clear value' proposition.

Answer

CEO Winnie Park explained they sought a CMO with a deep understanding of extreme value retail and omnichannel experience to connect the digital and physical customer journey. She described customer education as a 'tremendous opportunity,' noting that brand awareness often begins at the store entrance. The goal is to use marketing to drive traffic by highlighting newness and value before the visit.

Krisztina Katai inquired about the 2025 plans for Kroger's 'Our Brands' portfolio, including the expected volume of new products, the mix between value and premium tiers, and its anticipated contribution to gross margin.

Answer

Interim CFO Todd Foley indicated that the pace of innovation would remain high, similar to the 900 new items launched in 2024. He explained that the product mix is determined by ongoing, category-by-category deep dives. He confirmed that Our Brands will continue to be a key differentiator and an important contributor to gross margin in 2025.

Krisztina Katai asked for more detail on the drivers behind the improvement in ladies' apparel and whether that momentum can continue into 2025.

Answer

CEO James Conroy attributed the progress to achieving targeted levels of branded goods and strong assortment content. While noting there are always opportunities for improvement across classifications, he expressed confidence in the strategies the team has in place for the upcoming seasons.

Krisztina Katai of Deutsche Bank AG asked for context on the level of product newness planned for 2025 compared to prior years, citing the expansion of Everyday Luxuries and collaborations.

Answer

CEO Gina Boswell affirmed that newness remains the 'lifeblood' of the brand and that the company is leaning into it. She highlighted that platforms like Everyday Luxuries, collaborations, and adjacencies like Lip (with planned quarterly launches) allow for a continuous stream of high-quality, on-trend innovation to serve both existing and new customers.

Krisztina Katai inquired about the company's plans to leverage its recent launch on TikTok Shop to reach younger demographics during the holiday season and the key metrics used to measure campaign effectiveness.

Answer

CEO Gina Boswell confirmed that the TikTok Shop is a key part of the holiday marketing plan to connect with younger customers, complemented by strategies on other social platforms like Instagram and YouTube. She explained that the company is very disciplined in measuring success, using metrics like return on ad spend (ROAS) and customer demographic data, and only continues to invest when specific performance thresholds are met.

Krisztina Katai of Deutsche Bank inquired about the 'good, better, best' strategy amid accelerating value-seeking behavior. She also asked what marketing efforts are proving effective and how loyalty program data is being used to enhance marketing ROI.

Answer

CEO Gina Boswell stated the 'good, better, best' assortment allows them to meet customers at any price point and emphasized their focus on communicating value through quality and experience. She highlighted that the new full-funnel marketing is successfully increasing brand awareness and familiarity, with collaborations like Stranger Things and the use of TikTok driving significant engagement and reaching younger customers.

Krisztina Katai of Deutsche Bank inquired about the motivations for the new leadership appointments, the reconciliation between the 2025 adjusted EBITDA and EPS outlooks, and whether the narrowed focus on new store openings signals a change in the long-term growth algorithm.

Answer

CEO Jason Potter discussed his attraction to Grocery Outlet's differentiated model and culture. CFO Chris Miller explained that higher depreciation, amortization, and interest expense are driving the difference between EBITDA and EPS growth, noting restructuring charges are excluded from adjusted EPS. Chairman Eric Lindberg clarified that the reduced store opening pace for 2025 is a strategic move to address executional challenges and improve new store performance, not necessarily a permanent change to the long-term algorithm.

Krisztina Katai asked about the drivers behind the reduced Q4 sales outlook, Eric Lindberg's initial priorities for improving execution, and the expected timeline for fully resolving the SAP system integration issues.

Answer

Interim President and CEO Eric Lindberg stated his priorities are to double down on value, support independent operators with better tools, and put the systems transition issues in the past. Interim CFO Lindsay Gray added that the Q4 guidance is prudent, reflecting difficult year-over-year comparisons and the ongoing work to sharpen their value proposition amidst price competition.

Krisztina Katai asked for quantification of the SG&A deleverage from depreciation and temporary labor for the 3.0 rollout, when those costs might normalize, and the long-term SG&A leverage opportunity.

Answer

CFO Jeff Davis explained that temporary labor costs will decline over the next 18-24 months as the rollout completes, and depreciation growth should moderate as CapEx levels off. He reiterated that a low-single-digit-plus comp is needed to leverage SG&A. Interim CEO Mike Creedon added that the benefits of these investments accrue over time and driving sales per store is the key to leverage.

Krisztina Katai asked if the challenging consumer environment is prompting a reassessment of incremental investments in areas like labor and store standards. She also inquired about Dollar Tree's value proposition and its evolution in the second half of the year, especially with peers increasing markdown activity.

Answer

CFO Jeff Davis responded that the company is managing for the long term and that current consumer pressures do not change its core transformation strategy. He emphasized that investments in store standards and the multi-price rollout are fundamental to delivering a great customer experience and long-term value, and the company will remain disciplined but committed to these initiatives.

Krisztina Katai asked if the challenging consumer environment necessitates incremental investments in value, labor, or store standards, and how Dollar Tree's value proposition is evolving given increased markdown activity from peers.

Answer

CFO Jeff Davis emphasized that the company is managing for the long term and that current consumer pressures do not alter their core transformation strategy. He stated that investments in store standards and the multi-price rollout remain fundamental to delivering value and a positive customer experience, and they intend to remain disciplined and true to that long-term plan.