Second Half Profit Recovery
Q: How confident are you in driving second-half profit acceleration?
A: Management is confident that their Back to Basics initiatives will fuel strong top and bottom-line growth in the back half, reiterating full-year guidance.

Margin Outlook
Q: Are current margins appropriate given reinvestments and challenges?
A: They believe operating margins can improve from here, aiming for a return to 10%+ EPS growth over the longer term, balancing investments with opportunities in cost control and margin drivers.

Shrink Impact
Q: Is shrink worse than expected, and how are you offsetting it?
A: Shrink was worse than anticipated in Q1 but shows positive indicators for improvement in H2 and into 2025. They're offsetting risks with drivers like DG Media Network, private brands, global sourcing, and supply chain efficiencies.

Promotional Environment
Q: How do increased promotions affect margins and pricing strategy?
A: The promotional environment is as expected, similar to pre-COVID levels. They balance everyday value with promotions, feel good about their pricing, and mitigate margin risks through strong category management.

Consumer Behavior
Q: How are customers behaving between consumables and discretionary, and progress on Back to Basics?
A: Consumers are cautious, focusing on essentials but spending on discretionary items during important times. Back to Basics initiatives have crossed the halfway mark, with improvements seen in supply chain, merchandising, and store operations.

Inventory Reduction
Q: Will inventory reductions continue, and how are in-stocks and supply chain?
A: Reducing inventory remains a priority to simplify operations and improve cash flow. In-stocks are improving, and supply chain stability is increasing with new distribution centers enhancing product flow.

Non-Consumables Outlook
Q: What's the outlook for non-consumable sales and assumptions for the year?
A: The non-consumable business is active, with consumers making trade-offs. A strong holiday lineup and balanced promotions are expected to strengthen discretionary sales in the back half.

Real Estate Plans
Q: Why change the real estate plan, shifting toward remodels over new stores?
A: They're reducing new stores by about 70 this year, reallocating capital to increase remodels, particularly in mature stores. Deferred stores are moved into 2025, and they're excited about this reallocation.

Balancing Consumables and Discretionary
Q: How will you balance consumables and discretionary growth to mitigate margin pressure?
A: They don't believe the shift to consumables is permanent, going where the consumer wants. They'll foster discretionary sales with more options and value as consumers are ready to spend more freely.

Investments to Address Shrink
Q: Are investments to address shrink fully accounted for, or will costs rise?
A: Confident that investments made are appropriate, including $150 million in wage increases and adding 120 district managers. They see positive signs indicating shrink improvements, with expenses factored into guidance.

Feedback on Remodels
Q: Have store remodels and removing self-checkout made a difference?
A: Positive customer feedback received; customers appreciate staff interaction at checkout. Having someone at the front is expected to help with shrink, and these actions should pay dividends moving forward.