Good morning, ladies and gentlemen, and welcome to the Empire Fourth Quarter 2025 conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, June 19, 2025. I would now like to turn the conference over to Katie Brine, Vice President of Investor Relations. Please go ahead. Thank you, Joelle. Good morning, and thank you all for joining us for our fourth quarter conference call. Today, we will provide summary comments on our results and then open the call for questions. This call is being recorded, and the audio recording will be available on the company's website at empireco.ca. There is a short summary document outlining the points of our quarter available on our website. Joining me on the call this morning are Michael Medline, President and Chief Executive Officer; Costa Pefanis, our new Chief Financial Officer; Pierre St-Laurent, Chief Operating Officer; and Matt Reindel, our former Chief Financial Officer. Today's discussion includes forward-looking statements. We caution that such statements are based on management's assumptions and beliefs and are subject to uncertainties and other factors that could cause actual results to differ materially. I refer you to our news release and MD&A for more information on these assumptions and factors. I will now turn the call over to Michael Medline. Thanks, Katie. Good morning, everyone. This was a very strong quarter for Empire, and I am pleased with the way our team finished the fiscal year. We have become a disciplined grocer that is focused on delivering earnings growth. Our results this year have improved quarter after quarter as our hard work from prior years has enabled us to effectively navigate through the macroeconomic uncertainty in the latter half of our fiscal year. In Q4, we saw positive results across every major financial measure. We demonstrated strong gross margin control, capital discipline, and FG&A containment while delivering strong same-store sales growth. This was our fourth consecutive quarter of sequential same-store sales growth, and our momentum continued to build throughout the year. Altogether, this amounted to meeting our financial framework goals this year with annual growth of adjusted EPS of 8.8%. Our financial framework aims to grow our adjusted EPS at an average annual rate of 8%-11% over the long term. Today, I'll focus on three topics: our Q4 results, market trends, the current environment, and capital allocation. Starting with our fourth quarter, overall, we delivered an EPS of $0.74 this quarter. This translates to 17.5% EPS growth year over year. This was supported by strong same-store sales growth of 3.8%, which was driven by the continued strengthening of our full-service banners and sustained performance of our discount banner. We also gained market share this quarter. Over the last three quarters, we've been saying that we were seeing green shoots, or early indicators that customers are returning to more favorable and predictable shopping behaviors. What we're seeing in our customer behavior is tough to reconcile against published consumer sentiment, which is near its lowest level in many years. As one of our key suppliers recently said, we have to parse sentiment from behavior. In Q4, there is no doubt that our customers' behavior continued to improve. In Q4, we continued to see sales growth in our fresh department, which indicates customers are trading up from non-fresh to fresh products. Basket size continues to improve. We see customers shopping fewer stores than last year and a continued decline in promotional penetration. As well, our data from a trusted third party shows that there has been a shift of buying from U.S.-identified retailers to Canadian retailers. We believe that much of this customer shift will stick. Having said that, we continue to keep our eyes on the health of the Canadian consumer. These remain very volatile and unpredictable times for Canadians and the economy. As well, we are glad to see spring weather finally started over the last couple of weeks across much of the country as we're now into our busiest time of the year. Gross margin continued to improve this quarter, driven by operating efficiencies and a strong focus on executing with excellence in our stores. Margin improvement of 32 basis points was better than our medium-term expectations of growth of 10-20 basis points per year. In Q4, the increase was largely due to continued strong growth in full service, which has a stronger margin profile, the benefits of space productivity, and disciplined execution within our stores with enhanced tools and processes that enable us to continue to improve and focus on areas such as non-theft shrink. Now to FG&A. At first glance, our reported FG&A does not tell the whole story. In Q4, our stock price grew by an unprecedented amount, the highest market cap increase within a quarter in our history. This is great for our shareholders, and we would not want it any other way. Similar to Q3 and even more so in Q4, that contributed significantly to the non-cash accounting increase in total compensation expenses of $49 million over last year. Said another way, our EPS would have been an extra $0.15 this quarter without this. Excluding our incentive programs, our FG&A dollars grew by a reasonable 2.9%. Now, let's talk about what we are seeing in the current environment, as I know you want to hear about that. Let me be crystal clear. We are not seeing inflation in our business outside of historical norms, and Empire's price inflation has remained very stable. Our internal inflation this quarter was way under CPI, food inflation, purchase from stores, and significantly below our same-store sales. Looking ahead, we expect food inflation will remain in line with long-term averages. Over the last 25 years, CPI, food inflation, purchase from stores has averaged 3%. While there may be some ups and downs, we believe this trend will hold. All to say, we are unable to reconcile what we are hearing or reading about inflation in the media, in food, or for some in the industry to what we are actually experiencing. Last quarter, we spoke about our approach to managing tariffs and protecting our customers. Our approach had three major components: elevating our local strategy, further tapping into non-U.S. alternate supply sources, and having tough discussions with suppliers on tariff-related cost increases. This quarter, we are confident that our approach was the right one for our business and our customers and has ultimately kept pricing and therefore inflation down. Let's dig into this in more detail. For this last quarter, we said we heard loud and clear from our customers that they want Canadian products. We have been actively doing our part, not just the last few months, but the last few years by moving to a more local Canadian supply. A trusted retail and consumer intelligence third party recently confirmed that we have the highest Canadian product assortment in our banners versus our competitors, and by a significant margin. It is clear that our customers are voting with their wallets as our sales of Canadian products continue to rise. Secondly, over the years, we have developed a much larger and diversified source of supply to proactively manage threats, and we have accelerated these efforts in recent months. Our sourcing of U.S. products has continued to drop, and we expect this number to continue to decline as we enter the growing season for produce in Canada. Finally, we continue to work with our suppliers to ensure that reactionary or unjustified costs are not passed on to our customers. We're committed to building long-term partnerships with our suppliers, and passing through tariff-related increases can lead to their products becoming uncompetitive versus other viable alternatives. While these are not always easy conversations, we strongly believe our approach is the right one. With this three-pronged approach to tariffs, we are protecting our customers and doing our part to keep food inflation down. Next, I want to talk about our capital allocation plans for fiscal 2026. Our business is generating a very healthy amount of cash, $1.5 billion of free cash flow before CapEx, and we will continue to invest your capital wisely. Through the transformation period spanning fiscal 2018 to fiscal 2023, we focused our investment on getting our store network back to a healthy state, largely through renovations. We're now in a place where we can bring an increased focus on new store growth, filling gaps in our network to gain market share in pockets where we don't have significant exposure, but our competitors certainly do. We expect to put up 24 new stores in fiscal 2026 compared to an average of eight per year through the six years of the transformation. We've increased our capital to account for this and estimate that we will invest $850 million, with half of this on our store network. Costa will give you more details on this shortly. Today, we announced a 10% increase in Empire's quarterly dividend per share, which brings our five-year dividend CAGR to 10.8% and represents an increase in our dividends for the 30th year in a row. We also announced that we renewed our NCIB to repurchase up to 11.5 million shares, representing about 10% of our public float. In fiscal 2026, we plan to repurchase up to $400 million of shares. We remain committed to returning free cash flow to our shareholders and continue to see this as a highly effective use of cash. As you heard when we kicked off the call, we have both Matt and Costa with us today, and the transition has gone swimmingly. Matt has been working closely with Costa the last two months and will be winding down next week. Matt will be staying on a few of our partner boards to represent us but has now stepped back from the day-to-day operations. With that, I'd like to say a final thanks to Matt for his hard work the last six years, as this will be his last conference call before retirement. I'd like to welcome Costa, and I'll pass the call over to him for his inaugural report as CFO of Empire Company. Thank you, Michael. Good morning, everyone. I'll start my remarks by providing some color on our Q4 performance before discussing our fiscal 2026 expectations and then opening it up for your questions. First, let me say how honored I am to join Empire's executive leadership team. I would also like to thank Matt for his support as I transitioned into the CFO role last month. In fiscal 2025, we delivered adjusted EPS growth of 8.8%, which was within our financial framework. While this is a long-term framework, it's great to see the progress we have made over the last year. We finished the year strong and delivered solid financial performance from same-store sales all the way down to the bottom line. Q4 adjusted EPS was $0.74, which was 17.5% higher than last year. While our headline numbers were good, they do not paint a clear picture of how strong our financial performance actually was in Q4. FG&A expense was elevated in Q4 due to higher share-based compensation expenses. This was driven primarily by the significant increase in our share price. Compared to last year, the accounting of our long-term incentive program expense had a non-cash pre-tax impact of $49 million, or about $0.15 per share on an after-tax basis. Now, moving to the top line, our food same-store sales was 3.8% in Q4, which was 360 basis points higher than last year and 120 basis points higher than Q3. Throughout fiscal 2025, we delivered steady sequential same-store sales momentum, and more importantly, full service was a strong contributor to this improvement. Our gross margin rate, excluding fuel, increased by 32 basis points versus last year. This gross margin expansion stemmed from several key items, such as the continued disciplined execution of targeted in-store efficiencies, including shrink improvement and benefits from supply chain initiatives. Our medium-term expectations continue to be delivering 10-20 basis points of gross margin expansion per year. Now, let's discuss FG&A. In Q4, after excluding elevated long-term incentive program costs and adjusting items, FG&A dollars grew by 2.9% year over year, slightly below our sales growth of 3%. The drivers of this increase were higher retail labor costs and continued investment in our business. Overall, I'm pleased with the cost control that has been delivered to close out the fiscal year. We started to see better leverage of our fixed costs, especially as we are now delivering better top-line growth. Moving forward, we are likely to continue to benefit from these efficiencies and cost control initiatives. Other income and share of earnings from equity investments came in as anticipated and were about $11 million higher than last year. When we exclude these two streams of income in both years, we delivered adjusted EPS growth of $0.07 compared to last year. Our effective tax rate for Q4 was 25.2%, which was lower than 28.4% last year. The tax rate in Q4 fiscal 2024 was unusually high due to revaluation of tax estimates. For fiscal 2026, excluding the effects of any unusual transactions or differential tax rates on property sales, we continue to estimate that our effective income tax rate will be between 25% and 27%. Now, I'll speak to some of our fiscal 2026 expectations. We will continue to provide guidance on other income and share of earnings from equity investments, which is largely our real estate income. We continue to believe that this has improved transparency for investors and analysts. In fiscal 2026, we expect pre-tax contribution from this income stream to be in the range of $120 million-$140 million. Based on our current visibility, we're expecting to trend towards the lower end of the range. The quarterly cadence will be about 25% in Q1, 20% in Q2, 25% in Q3, and 30% in Q4. As we noted in fiscal 2025, if there are shifts in timing of certain transactions, we will provide an update to this cadence throughout the fiscal year. With regards to capital allocation, our fiscal 2026 plans are supported by our strong balance sheet and the continued generation of our significant free cash flow. We announced a 10% increase in our dividend and also the renewal of our NCIB program, whereby we intend to repurchase up to CAD 400 million of our shares. In fiscal 2026, we anticipate CapEx of about CAD 850 million, with half of this allocated to our store network for renovations and new store expansion, a quarter towards IT initiatives and business development projects, and the balance towards items such as logistics. As we look forward, there is some volatility caused by the tariff and trade environment, plus the uncertainty with how this will continue to affect consumer confidence. Before joining Empire, I operated in a heavily tariffed environment for many years, so I understand how critical it is to continue to react with speed and agility, especially as we face a changing trade landscape. I'm very impressed with how our internal tariff task force is managing this ever-changing environment by keeping our loyal customers at the heart of our decision-making. With our improved execution over recent years, plus our increased focus on controlling what we can and taking costs out of our business, we expect to continue to deliver our long-term financial framework. With that, I'll hand the call back to Katie for your questions. Thank you, Costa. Joelle, you may open the line for questions at this time. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the poll process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Tamy Chen with BMO Capital Markets. Your line is now open. Hi, good morning. Thanks for the question. It sounds like your customers, their behavior has not retrenched or gone back towards trade down. I wanted to ask if the way they're shopping is they're cherry-picking less and going to multiple banners and stores less. I think at one point you alluded to you saw year-over-year traffic growth. I am wondering how you saw that if what you're seeing is customers are shopping less at multiple banners. Very good question. Thank you. The thing we're seeing is more back-to-normal behaviors compared to last year. Last year, people shopped multiple stores, more than usual, and this year we're seeing back-to-normal behavior. That means they're shopping less stores, and this is what we said that it's good for promo penetration because when people are shopping less banners, the promo penetration is going down. It was not natural for customers to shop that amount of banners in the past because of high inflation. We're really seeing back-to-normal behaviors, which is helpful for our business. This is why we're seeing basket size going up. Transactions remain very strong. We continue to see that in the positive. Units per basket is increasing. Like Michael said, we are seeing a trade-up compared to last year where people are shopping more fresh, where we're very strong yet. On the promotional penetration, how are you thinking about that going forward just because, for example, one of your competitors has recently announced rollback? I am just wondering if there might be any change to so far the improvement you have seen in your stores in promo penetration. Right now, we're back in a more normal situation. I think we're more stabilized now. We saw a decrease over the last couple of quarters. I think we're in a sweet spot right now to continue to navigate through different scenarios. Right now, I think the promo penetration level is pretty healthy and normal. My last question is, with respect to the buy Canadian trend, specifically the preference for Canadian retailers, certainly that's been going on. I'm just curious if, as the months recently have gone past, are you seeing that settling out or waning in any way? Thank you. Yeah, so it's Michael. Thanks for the good question, Ken. I got to be—I got to always stay. Katie always reminds me, and so does the general counsel. I got to stay on the—I can't talk about this quarter we're in because we're in a quarter, and I don't want to disclose anything. I can't say that we did not see that waning up until the end of the last quarter. I'm not commenting on what we saw after that. I think from what I said in my script, I said that we believe that much of this behavior is becoming sticky. We are really—and on these—it doesn't take a lot of people changing behavior to make a real difference in retail, especially in the grocery business. There are people who have changed their behaviors, will not go back. We're doing our utmost to make them very happy at our banners. We think much of it will stick. We shall see. I mean, we don't have a crystal ball. We don't know what's going to happen. I don't think that the mindset of Canadians is switching very quickly away from how they felt at the beginning of the year. Thank you. Thank you. Your next question comes from Mark Petrie with CIBC. Your line is now open. Yeah, good morning. Thanks. Just to follow up on the topic of sort of the consumer and competitive environment, I wanted to ask specifically about Quebec again. Any comments about all of the metrics that you were discussing earlier, if that's sort of more accentuated in Quebec, or if there's any difference versus the other regions of the country? We're seeing the exact same behavior in Quebec. People are shopping less banner. Basket size is increasing. There's some obviously variation across the country, very, very little. We're seeing the exact same trend across the country right now. Not something different in Quebec. Thanks, Pierre. Any comment on the sort of competitive activity across the country? Are there any regions that are more competitive than others, or is it all relatively rational and stable? I will say what I always say, and it has not changed. This is contrary to some people's belief. This is an unbelievably competitive industry. One of the most competitive grocery markets in the world, if not the most. I think it has been competitive, and other than some blips here and there, the same competitively since I joined the company eight and a half years ago. Honestly, I have not changed my mind on that. We are not seeing anything out of the ordinary right now. We have to be sharp because our competitors are sharp. Yeah, okay. I guess—sorry, just to follow up on that. I think previously you had commented about trying to close some price gaps, specifically in Quebec. I am just—so I am sort of hearing that you think this is done and this is stable. Is that a fair interpretation? We're watching our indexes, both regular and effective. Quebec remains very, very competitive on both indexes, like every single region in the country. There is no more gap by region. Quebec is a very strong banner. IGA is a very strong banner, very strong on fresh. Sometimes the perception is different, but the pricing itself, we're addressing pricing the same exact way, and we're addressing pricing indexes in every single region. We're following the same process, and our indexes are very competitive compared to peers. We're pleased with that. Again, we're always focusing on the value proposition. Value is the right term. We're focusing on value, and pricing is one element of the value proposition. Our value proposition in every single banner is very strong. When we talk about assortment, where we are located, close to every community we serve, service is an important component in the value proposition. We are very strong in the value proposition. Pricing is one element, but indexes are very strong right now. We are pleased with that. We make progress, gradual progress. We are following what is happening in the market, and we remain very competitive. Okay. Thanks for all those comments. Sorry to go so long on that. I did want to also ask just about the acceleration in square footage growth in your business and the implications to maybe the margin lines pressure that you think that might have on gross margin or SG&A. You talked about the 10-20. Are there other initiatives in the business that could offset that for fiscal 2026, or is that a reasonable expectation for next year knowing that you do not give guidance on a specific year? Yeah, that's a great question. Costa, Matt, do you want to take it? I can add on if there's anything I think that's necessary. Yeah, sure. I think when we look at the expansion and the new store initiatives that we had, I mean, we always model that out on the basis of achieving a certain return on capital. So the expectation around sales volume and margin typically would be in line with that modeling. But one of the major initiatives that would help combat any margin degradation would be initiatives like shrink, minimization of shrink on our overall network, which we've seen. I mean, part of the reason why 32 basis point improvement in Q4 was due to our continued focus on minimizing our shrink. Yeah, I think that's a good example of what we do. I mean, as you can imagine, we have a pretty robust budgeting process, so we understand the implications of new stores going in and accelerating that. We were doing a lot of renovations before too. I think that it's not that big a difference in terms of we're just spending more money taking advantage of places where we can grab market share in our estimation. We have the long-term goal of 8-11%. Everything has to fit together when we're putting together the budget. This year, we just felt we were seeing some very good opportunities and more confidence in our business going forward, especially our ability to control capital per store, but also get returns from those stores. We switched from the rentals being the key, as I said in my script, to the new stores. I think we're setting ourselves up for good growth in the future while at the same time being able to deliver the bottom line for our owners, our shareholders. Yeah. Okay. Appreciate all the color. Thanks for answering all the questions. Thanks, Mark. Thank you. Your next question comes from Michael Van Aelst with TD Cowen. Your line is now open. Thank you. Just quickly to start on the CapEx side. Your budget, I think last year was $700 million. I think it came in at $777 million. Now you're guiding to $850 million for this coming year. What's the incremental spend being allocated to? Yeah. Is it for new stores or is it supply chain or what is it? The most of the incremental are to the stores, to new stores, some to supply chain, a little bit on the technology side as we're becoming more efficient. We're putting in some systems that are going to make us more efficient. That's where most of it is. Okay. All right. Thank you. And then just getting back on the discount versus full-service commentary. It is clear that you're saying that full-service banners are doing well and doing better. Are your full-service banners growing faster than your discount banners, or are you just narrowing that gap? I guess that would be part A, and then I'll come back to the second part of that. The same store sales growth in our full-service banners have been extremely strong in the last quarter. We're very pleased with that. We're gaining market share in every single format. We're pleased with the discount performance. Discount into the discount channel is gaining share. Full-service into the full-service channel is gaining market share. In total, we're gaining market share. We are operating in different regions. We did invest a lot of capital in new stores and new conversion in Western Canada. We're very, very pleased with the results in Western Canada with the discount store. Overall, we're seeing the same strong trend in full-service. Yes, the gap is narrowing. In some regions, it's the same. We have the same store sales growth in both discount and full-service. The gap is narrowing. Full-service is performing well. We're pleased with both channels in their respective channel. Okay. That's interesting. Thank you. I guess the follow-up to that is I'm trying to reconcile those comments and that performance, I guess, with what Scotiabank said on their credit card data where on their last call, they said that they're seeing a shift to discount grocery. Do you think they were talking about private label, like lower-priced grocery items, or do you think they were talking about a shift to discount stores? Yeah. I don't know. I remember reading that, but you'd have to ask them. I didn't go into any detail on that. If they said what you said, I have trouble reconciling to our numbers. We only represent, well, not only. We're a big part of the market, but we're part of the market. We'd have to see what our competitors are doing as well. It's not what we're seeing. I just thought with their affiliation with Sobeys Inc. that it would be a bit more representative of what you were seeing, but. I don't think it would be because of SIEN that they were looking at that data. I don't think so. It would be more general, I think. You'd have to check with them. If you get a good answer, give me a call, and we can discuss it more. Okay. And then just finally, getting back to your commentary around the incremental LTIP costs that were $0.15 a share. And the majority of that seems to be tied to the higher share price. So I mean, if we just did some back-of-the-envelope math and said, "Okay, well, $0.10 of that $0.15 is due to the higher share price. And if we use a stable tax rate and stable other income, we'd probably be around 25% EPS growth." So it seems like your momentum is good. But are you suggesting that if things continue to perform the way they are this quarter, that in the next few quarters, we could still see that 25%-type EPS growth? You're right on. This was a good quarter. There's a lot of, and it wasn't, these things don't fall from heaven, right? You earn them. It's not me. It's the team that did all this work to get there. I'm not going to talk about future quarters. Basically, we push for as high as we can get, and we just go for it. I'm not going to speak for future quarters. I think 25% is a pretty darn good number. I don't think we could do that for the next 20 years. We'd be in good shape. My successor will have to worry about that. I don't want to talk about the rest of the year, but we've said that what we're aiming for is to meet our long-term financial target. Okay. Is there anything in that, anything that composed that rough 25% that you would consider not necessarily repeatable? When we have a 3.8% same-store sales, when we grow our margin by 30 basis points, when we have good control on cost, it's a volume business. When we're growing at that size, this is the type of results we should expect. Okay. Great. Thanks. Great quarter. Chris Li with Digital Bank. Your line is now open. Oh, good morning, everyone. My first question may be just to maybe use a baseball analogy. Just in terms of your reduction in non-theft shrink, what inning, roughly, do you think you are at on that journey? You know I can't resist boring questions, right? So I'm going to answer. Yes. I think middle of the game here, as long as it doesn't go to SG&A, like fourth or fifth inning, I think there's still a lot of opportunity here. At the same time, I'm proud of what the team's accomplished. Okay. That's helpful, Michael. Thank you. And then just on SG&A expenses, maybe just a higher-level question. As we look about fiscal 2026, I mean, roughly speaking, is it fair to assume we should think about SG&A expenses growing more or less in line with the revenue growth, or should we expect that to actually outpace revenue growth a little bit, at least in the near term, as you accelerate the new store openings this year? I think as we continue to look at our cost containment, I mean, one of the big focuses for me as new in the role is to look at our SG&A leverage, our fixed costs, our ability to have the comments that Pierre made specifically speak to our ability to see results on good sales volume, top-line growth. The translation of that in every quarter is going to be dependent on that growth. That is the focus. Thank you for that. Getting the leverage we want off of our fixed cost base. Okay. Got it. Okay. Thanks. Maybe my last question, just in terms of your capital allocation framework. It wasn't mentioned in the press release, but I want to just touch base on where does inorganic or M&A fit in in terms of your capital allocation philosophy in the future? Yeah. We are always looking for opportunities if it profits our owners, our shareholders. I personally have a reputation for doing deals if they are great and not doing them and doing them very rarely, but they have to be great. We do not plan for that or put it in the budget or anything. If we see something that is extraordinary, like Farm Boy or Lagos or a couple others I did in another company, then we would do it. I just, we have experienced, I have never experienced a really bad one. I do not really want to do a really bad one. Very, very picky and slim pickings. Okay. Thanks. Matt, just want to say, again, best wishes to you and your family, and you'll definitely be missed. Thank you, Chris. Appreciate it. Your next question comes from Vishal Shreedhar with National Bank. Your line is now open. Hi. Thanks for taking my questions. With respect to the CapEx, the 850, my understanding was previously that a good long-term number to use was 700. Does this 850 reflect higher building costs or an expectation of higher CapEx in the future, given more opportunities? How should we think about the longer-term interest in modeling? Yeah. I mean, I always thought in the past, 750-800 was a good place to be. When we've looked at the when we see where we're situated right now and we know that we can be on our front foot, we're going to take advantage of that where we can really grow this company and grow the sales and grow our market share and the bottom line. I think we're not talking a ton more CapEx. I'm not saying we're going to do this every year, but we've seen the opportunity as we've strengthened our real estate and our business to be strong in our food. We still have a lot of room to improve our top and bottom line. I don't think we're not saying that this is going to be the new number. This year, we thought this was the time to invest in stores. Okay. With respect to the Buy Canada, with respect to the Buy Canada comments that you indicated earlier, where you're saying you're seeing it sticky, was that with respect to the actual banners, the Canadian banners versus the U.S. grocery banners, or was that also with respect to the products within the store and the Canadian-produced products versus the U.S.-produced products? Both. I see. And so you're not seeing a waning of sentiment with regard to either of those trends? I'm not going to talk about future quarters, but no. Okay. With respect to the shrink that you're seeing in the improvement, is that in part due to the accelerating sales growth and presumably even faster sales growth in fresh, given the comments that you made at the top, and less associated spoilage, or is that due to more concrete measures that you've implemented in the org to offset that shrink? Both. We're working on initiatives like we did in the previous quarters. When we have higher sales, it's easier to manage shrink. Both are providing better results on shrink. This is why we need to continue to work on initiatives and sales growth. It's easier to manage. Okay. With respect to the gross margin, I'm just trying to tease out if we're trying to assess what percentage of the improvement, which was very, very solid, was due to the shrink benefit and the variety of initiatives that Empire has been working on, space productivity, analytics, etc., is there any rule of thumb or course help you can give us in terms of how to think about that? It's multiple things. Retail is detailed. And our supply chain did a lot of good stuff. The promo mix management by our merch team is phenomenal. Shrink improvement. We heard things about promo penetration is helpful. The mix is helping our gross margin as well because we're selling more fresh food, and fresh food is more profitable in general when it's well managed at low shrink. Yeah. So it's a combination of multiple factors that drove the performance of the gross margin. Okay. Thanks very much. Congrats on the quarter. Thanks, Vishal. Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from John Zamparo with Scotiabank. Your line is now open. Thank you very much. Welcome to you, Costa, and all the best to you, Matt. I wanted to ask about private label penetration. And based on your disclosure, it seems like this is growing well above the pace of overall sales growth. I wonder if you could talk more about that. Is that primarily from the increase in SKU count? Is it doing better with particular hero SKUs? Any color you can add there would be helpful. Yeah. We are seeing continuous improvement on penetration. As I said before, penetration is not the only metric I'm looking for. It needs to be relevant. It is a different strategy category by category. In some categories, private label is playing a more important role and in some other categories less. It is very important that we have a lower retail. It is very important that private label continues to generate better penny profit. These are the golden rules we are using all the time. The appetite from customers on private label products is growing. We are pleased because we have a very strong assortment. We did major improvement in our assortment over the last year. It is a continuous improvement. It is a continuous improvement in penetration and in all the golden rules I just mentioned. Okay. Got it. I want to move to square footage growth and on the 1.5% guide for this year. I know you're not going to guide beyond this year. When you talk about a gap versus competitors in certain markets, do you think about that more as a one-time initiative to address certain regions or certain markets? Is the increase more you think you have momentum with your brands, you think you have the store network in a good place, and you're resonating with customers, and you want to take up the more normal course store growth over the medium term? It's a good question. It's definitely the latter. We think we have momentum, and I don't think this is a one-year flip. We will continue to assess at all times, as we always do for our shareholders. Okay. Thank you for that. One more on square footage growth. When you think about the entire market, we've seen multiple grocers expand targets on this. I wonder if you could talk about the quality or availability of real estate opportunities that you're seeing. There's obviously a finite number of sites. I'm wondering, does that mean higher leasing costs? Does it alter the strategy at all of what Empire is looking for in terms of real estate? How is this impacting your real estate strategy? Yeah. It's always a tight market getting good real estate. I think that our team has never been stronger at doing that. So we're really pleased with, obviously, with where we're putting sites right now. I'd say that I used to say the bigger bang was on renovations and new stores. I think that has changed with both our execution and also the cost of renovation compared to new stores. They've gotten closer in terms of cost. It's always a competitive market out there. We're lucky. There's openings here and openings for us to grow and put some pressure on some others. Okay. I appreciate the color. I'll leave it there. Thank you. Thanks, John. Your next question comes from Mark Petrie with CIBC. Your line is now open. Mark, your line is open. Sorry, I was struggling with the mute there. Following up on the square footage growth a little bit further, could you just give a bit of color with regards to sort of the channels that you might be versus your current penetration, the channels where you might be growing, the regions, sort of rural, urban, any color you can provide with regards to sort of the mix and how this might skew the portfolio? I would love to do so, but I don't want to make it easier for our competitors. Although they're pretty smart. They're probably figuring out what we're doing like we figure out where they may be going. I would rather not do that. We do target certain markets where we think there's more opportunity for us and the banners where we believe we'll be more successful and where we have a unique proposition to win. Yeah. Okay. Understood. I mean, similar topic, I guess, but a separate line of questioning. On Farm Boy, you guys have played around with the store size for that format. I am just curious if your thinking has evolved over time, if you are still sort of targeting that sort of low mid-20s kind of square footage size, or if you think the larger format is a better fit. That's a great question because I think our thinking has evolved or more likely John Luise and Sean Minton's thinking has evolved over the last while because nobody knows their business better than them. They can be successful pretty well in any good boxes. They're very picky about where they go in. Once they make that move, they are highly successful. They can make it work in any size. I think if we change anything, we believe that they can be even more successful in larger boxes than maybe even we originally thought and that we're very, very pleased with some of the conversions and the stores where they have more square footage. They know what they're doing. They can be successful anywhere. I've never seen a store banner like it, actually, in my career. We like the new stores because we can have a more full offering for customers. We thought it would take a little more time. That's been a home run. Early days, but a home run. All right. Appreciate the color. Thanks. Thank you, Mark. Your next question comes from Chris Li with Desjardins. Your line is now open. Oh, thanks for the follow-up. Just on Voilà, as you look back at the last fiscal year, how did it perform relative to your internal expectations? We continue to make improvement in all CFCs. The decision we've made to focus on the existing three is paying off right now. Year over year, we're able to continue to make progress. We continue to see double-digit growth in Voilà, and performance is improving. Very pleased with the progress we've made over the last year. We'll continue to move in this direction. The new partnership we have with Uber and Instacart is having no impact on Voilà. Very different customer profile, immediacy versus planned trip. Uber and Instacart are a younger crowd, so it's very complementary. Okay. That's helpful. Are there any sort of new cost reduction or margin enhancement initiatives that you're planning for this year for Voilà specifically? Oh. Efficiencies. Same type of thing we're doing in brick-and-mortar business. How can we optimize promo mix, promo management? How can we bring a new assortment that would help to grow the basket? It is a multiple same type of thing that we're doing in brick-and-mortar, but specifically to e-commerce profile, which is our basket size. There is always opportunity to grow on, there is always optimization possible in both margin, cost, and sales. Okay. Last one, I know it's been, I guess, a year since you announced the pause in rolling out Voilà in Vancouver. It might still be too early to ask, but when do you think you'll make a decision on whether to proceed or not? We'll let you know when we decide. Okay. That's not very helpful to you, but that's the answer, really. I'm not being flippant. We will let you know when we decide. Okay. Great. Thank you. There are no further questions at this time. I'll now turn the call over to Katie for closing remarks. Thank you, Joelle. We appreciate your continued interest in Empire. If there are any unanswered questions, please contact me by phone or email. We look forward to having you join us for our first quarter fiscal 2026 conference call on September 11. Talk soon. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.