Zack Fadim

Zack Fadim asked for details on the average ticket growth, differentiating between commodities and same-skew inflation, and inquired about Q3 promotional activity and the expected promotional environment for Q4. He also followed up on GMS, asking for clarification on one-time operating expenses in Q3 and Q4, and details on inventory growth, specifically the contribution from GMS, underlying volume, and pricing.

Answer

Billy Bastek, EVP of Merchandising, stated that the modest increase in average ticket primarily reflected customers trading up for innovation, with no significant trade-down observed. He added that promotional activity in Q3 and the outlook for Q4 remained consistent year-over-year. Richard McPhail, EVP and CFO, specified GMS transaction fees as about 5 basis points of margin impact for the year, with 15 basis points in Q3, totaling approximately $0.05 EPS for the year, all occurring in Q3. He explained inventory increases were due to GMS inclusion and investments in speed and reliability of delivery.

Zack Fadim asked for insights into the average ticket performance, differentiating between commodities and same-skew inflation, and sought clarification on promotional activity in Q3 and expectations for Q4 across the industry.

Answer

Billy Bastek, Executive Vice President of Merchandising, stated that the modest increase in average ticket primarily reflected customers trading up for innovative products, with no significant trade-down observed. He confirmed that promotional activity in Q3 was consistent year-over-year and expected a similar environment for Q4. Billy Bastek also clarified that GMS transaction fees amounted to about 5 basis points of margin for the year, with approximately 15 basis points impacting Q3, and that inventory increases were mainly due to GMS inclusion and strategic investments in delivery speed and reliability.