Thank you very much, Michelle, and good morning, everybody. Welcome to the Loblaw Companies Limited second quarter 2022 results conference call. As always, I'm joined here this morning by Galen Weston, our chairman, and by Richard Dufresne, our chief financial officer. Before we begin the call, I wanna remind you that today's discussion will include forward-looking statements, which may include, but are not limited to, statements with respect to Loblaw's anticipated future results and the impacts of the COVID-19 pandemic. These statements are based on assumptions and reflect management's current expectations. As such, they are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from our expectations. These results and uncertainties are discussed in the company's materials filed with the Canadian Securities Regulators. Any forward-looking statements speak only of, as of the date they're made, and the company disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, other than what's required by law. Also, certain non-GAAP financial measures may be discussed or referred to today. Please refer to our annual report and other materials filed with the Canadian Securities Regulators for a reconciliation of each of these measures to the most directly comparable GAAP financial measure. With that, I will turn the call over to Richard. Thank you, Roy, and good morning, everyone. I'm pleased to report that our performance in the second quarter continued to build on our positive momentum. Our business mix, as is well-positioned for the current environment and our focus on retail excellence, is delivering steady and consistent operational and financial performance. During the quarter, we delivered solid top and bottom-line performance. We continued to focus on delivering value to consumers and carefully managing our expenses, all part of retail excellence. On a consolidated basis, revenue grew by 2.9%, adjusted EBITDA increased by 9.3%, and adjusted earnings per share grew by 25.2% to CAD 1.69 a share. Our GAAP earnings reflect a charge of CAD 111 million associated with a recent tax court ruling relating to the deductibility of certain loyalty-related expenses over the last 13 years. We are planning to appeal the ruling. In drug retail, absolute sales increased 7%. Same-store sales were strong, up 5.6%, lapping an increase of 9.6% last year. Front store same-store sales grew by 5.2%. We continued to see an acceleration in sales growth in our higher-margin categories led by OTC and cosmetics. Sales in beauty and cosmetics are essentially back to pre-pandemic levels. Pharmacy same-store sales grew 6.1%. Although we are seeing an acceleration in both acute and chronic prescription volumes, we have not yet caught up to normal levels. Once again, growth in our pharmacy services business was strong, with all major categories showing double-digit growth. Pharmacy services now include our Lifemark business, which closed on May 10th, contributing CAD 40 million in sales. In food retail, absolute sales increased 1.2%, and same-store sales grew 0.9%. Performance in our discount banners continued to strengthen, reflecting an ongoing shift in favor of discount. As part of our store network optimization initiative, we now have five stores that have been converted from market to discount and have downsized one market store. We are pleased to report that all such projects are performing ahead of plans on sales and therefore are contributing to earnings. Our market banners remain strong and continue to perform well. A great in-store offer, enhanced by optimized promotion using our data, have led to positive traffic trends and solid sales. Online sales in the quarter decreased by 17.5%. However, our online business continued to operate at penetration levels well above pre-COVID rates. We are seeing consistent, stable operational performance and pickup and growth in delivery. We are delighted with our launch of PC Express Rapid Delivery through a collaboration with DoorDash. The service will launch in Q3 and will not represent a headwind to earnings. Retail gross margin in Q2 was 31.4%, up 50 basis points compared to last year, driven by our drug retail business. Higher margin front store categories, particularly cosmetics, grew substantially as customers returned to offices and social settings. Margins also benefited from growth in pharmacy services, with COVID-related services remaining strong. Gross margin performance in food retail was stable. Our unique data lets our merchants set more strategic pricing and promotion levels. With grocery inflation as it is, this is an important balancing act. As a result, today and for the last quarter show our businesses are doing well and remain profitable. They also show that this improved performance has resulted from the return of customers to our higher-margin beauty and drug businesses and the fact that increased pandemic costs are slowly going away. Retail SG&A as a percentage of sales was 19.9%, an improvement of 30 basis points compared to last year. We lapped higher COVID costs in the prior year and continued to benefit from sales leverage, food to drug sales mix, and operating efficiencies. This was partially offset by higher labor costs across the network. Adjusted retail EBITDA increased by CAD 129 million or 9.8% in the quarter, yielding a margin of 11.4%. We were pleased with PC Financial's performance in the quarter. Revenue was up CAD 25 million, driven by higher interchange and interest income, with a broad-based increase in customer spending. Contribution to adjusted EBITDA from the bank was flat as we lapped last year's gain related to reversal in expected credit losses reserves and saw higher points costs due to higher PC points redemption. On a consolidated basis, adjusted EBITDA margin was 11.7% in the quarter, up 70 basis points compared to last year. In Q2, we repurchased CAD 607 million worth of common shares, representing 5.4 million shares. This brings year-to-date purchases to CAD 755 million. Looking ahead, macro factors continue to make forecasting challenging. We are seeing signs that inflation has or will soon peak. As such, we expect inflation to moderate in the second half of the year as we begin to lap higher levels from last year. Commodity prices are coming off their highs, some freight costs are coming down, and supply chain issues are normalizing other than fuel costs, which remain high, but down from their peaks of last March. Finally, central banks are taking aggressive actions to tame inflation. Today, we announced an increase in our full-year outlook. Based on our year-to-date operating and financial performance and momentum exiting the second quarter, we now expect full-year adjusted earnings per share growth in the mid to high teens. We have just cycled the first quarter of our 2021 strategic reset. Delivering growth of 25% in EPS this quarter on top of 88% in the same quarter last year is beginning to demonstrate that our plan is working. Our focus on retail excellence is delivering strong and consistent financial results. While the environment remains volatile, Loblaw is well-positioned for what is expected going forward. I will now turn the call over to Galen. Thank you, Richard, and good morning. I'm pleased with our performance in the quarter during this period of global financial uncertainty, prolonged pandemic caution, and global inflation. As Richard noted, our retail revenue performance was strong and consistent, with earnings growth linked principally to our drugstore business. Shoppers Drug Mart had an excellent quarter, generating high-margin sales in beauty and cough and cold, while expanding pharmacy services created for Canadian patients. These services and the pharmacists who deliver them are becoming an increasingly critical part of our country's primary care delivery network by providing expanded access to basic medical assistance at low cost. As a matter of interest, as part of this evolution of our healthcare delivery strategy, last month, we opened Canada's first walk-in clinic staffed exclusively by pharmacists. In a neighborhood with a critical physician shortage, this has been met with an enthusiastic local response. Our food business also performed well in the quarter with good sales and stable gross margins. Our conventional market stores are competing well, consistently outperforming peers. This is in part driven by a strong relative price position and outstanding performance of several enhanced merchandising programs. The consumer shift to discount also continues and is substantially benefiting our hard discount formats, where we see new customers coming through the doors every day. As you know, inflation remains a significant external force shaping business performance. However, as Richard mentioned, we are seeing some signs of stabilization. Commodity costs are substantially off their highs and transport and freight rates are improving. Having said that, supplier costs are still high, putting sustained pressure on retail prices. We continue to work hard to reduce their effect for our customers. This includes operating two of the lowest price formats in the country with No Frills and Maxi, investing in our famous low-price private label brand, No Name, the second largest consumer brand in the country, and seeing historic growth. Not to mention the over CAD 1 billion of savings our customers will earn this year through our PC Optimum program. In fact, we just completed a piece of work which showed that customers who engage in the full benefits of the PC Optimum program are consistently saving as much as 10% on their grocery bill. Touching on one more retail trend, digital sales continue their retreat off pandemic highs, and we expect to return to e-commerce growth once we fully cycle the last of that COVID demand and continue to improve and expand our offer. Delivery is growing as part of our channel mix, and in Q2, we announced our partnership with DoorDash to serve as our primary last mile delivery solution. This relationship includes an exclusive presence on their marketplace and the introduction of a 30-minute rapid delivery service. We remain bullish on what's to come. Loblaw's purpose is to help Canadians live life well. As the country's largest private employer, we endeavor to do that every day through innovative products at great prices, convenient access to high-quality healthcare services, the country's best credit card, and high-quality apparel. It is often the smaller activities of our teams that can make the biggest difference, and I wanted to close my remarks with a particular example that stood out. At the start of the invasion of the Ukraine, a small group of colleagues stepped forward, interested in how we could contribute to the humanitarian response. As a company that marshals nearly CAD 100 million a year to give back to local communities, this group of colleagues started with the question: How can we better support those who are building a new life in Canada? They observed that the diversity of our business put us in a uniquely compelling position to do so. In the months since, our team has partnered with government, NGOs, and our customers, contributing and raising millions in support to provide the building blocks for families who have lost life's most basic ingredients, including jobs, food, wellness, clothing, and financial products. A near perfect manifestation of our purpose. At Loblaw, we continue to execute our strategy in the midst of a challenging period. We remain confident in our short-term outlook and our longer-term opportunities. Thank you. I'll now open the call for questions. Thank you, Galen. Michelle, could I ask you to remind the participants the protocol for asking a question? 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 three-tone prompt acknowledging your request. Your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Mark Petrie of CIBC. Please go ahead. Yeah, good morning. I wanted to ask about the retail gross margin. I know generally you've been talking about sort of stable trading or stable gross margin, but mix is clearly a pretty favorable tailwind. You also have media as another tailwind as it becomes more material in the coming years. Can you give us a sense of the magnitude of the mix impact and sort of your implied medium-term outlook across channels? Is there an overall number that kind of makes sense to shoot for just understanding that mix piece? I mean, 32% would seem like a good target. Just sort of wondering how we should sort of think about a longer-term kind of margin outlook. Good morning, Mark. No, we don't have a specific target as to where we want gross margin to go. We're just trying to manage our business the best way we can. We do feel good about our gross margin position now and then going forward. Okay. Perhaps you could just talk a little bit about some of the bigger picture opportunities for that margin. I mean, as a, you know, media is one that's come up, and I can't imagine you're gonna give specific disclosure on that, but directionally, anything would be helpful. Then also, the puts and takes in the Shoppers' business, because clearly, you know, the recovery in the front store is helpful, but the pharmacy services is presumably gonna be somewhat of a headwind in the second half of the year. Just sort of curious how you're thinking about the margin opportunity at Shoppers. Yeah. The key driver of gross margin going forward that will continue to be retail excellence and running our retail business as best we can. Talking about Shoppers specifically, like, obviously mix has helped. We're gonna see growth taper a bit because if you look at services, they were starting to grow at this time last year and accelerated in Q3 and Q4. So we're not gonna see the same trend this year, but we do feel very good about our services business for the overall of the year. Therefore, like, we should not see significant increase in margin as we've seen so far. It's gonna start to slow down. Okay. If I could just on one more, it was another good quarter in terms of OpEx management, particularly in the cost of inflation. But given the nature of your labor contracts and the longer duration of those contracts, how do you think about the outlook for SG&A over the medium- term? I mean, should we be expecting above average inflation to be stickier in OpEx and potentially last longer than in other parts of your operations? Yeah. I think the organization has done a good job at managing SG&A so far. It's important to point out that last year at this time, we were still in lockdowns, so a big improvement in SG&A in this quarter has to do with just slashing those costs. We're gonna come into a more normal environment going forward, but we do feel good about our ability to manage SG&A going forward. Okay, thanks for the comments. I'll pass the line. All the best. Thank you. The next question comes from Irene Nattel, RBC Capital Markets. Please go ahead. Thanks, good morning, everyone. I'd like to spend just a few minutes talking about the same-store sales number, because with inflation at 9.6%, I think we were all expecting a slightly stronger same-store sales number. Of course, the offset is channel shifts and mix shifts. Can you please talk about what you're seeing, you know, how you view same-store sales, what consumer behavior is and how that all comes together? Good question, Irene. I think it's important to reflect on what's been happening more last year than this year. Like, first of all, we're very pleased with our sales trajectory as it's going right now. If we go back last year, at this time, we were in Q2, we were in full lockdown, okay? Unit counts when we were in lockdown benefited. When we get into July of next year, like, that's when essentially all restrictions got lifted. People essentially started to go out significantly. We saw a marked drop in our unit count starting last summer, which has continued throughout this year. As we move into Q3, we're gonna be cycling these unit counts, and you're gonna see a marked shift in same-store performance, which does not mean anything other than what happened last year, because we don't see a change in our sales trajectory going forward. Does that help? Yeah, that helps. Just to make sure that I'm clear, it's not so much that your revenue run rate is changing Q3, it's just that on a year-over-year basis, the growth looks better. Is that the way to think about it? That's exactly the way to look at it. In Q2, it was the first quarter that we essentially had no lockdown restrictions at all, okay? We were comparing it to a quarter last year where we were all stuck home. That's why you see like a same-store sales figure that is lower. As we get to Q3, you're gonna start to see a sales performance that reflects like people starting to go out. You're gonna see a marked increase in comp performance starting Q3. We're in Q3 now and we're seeing it. That's what I think the Street needs to appreciate. That's helpful. Richard, can you talk, or Galen, can you talk a little bit about what you're seeing in terms of consumer response to inflation? You know, the magnitude of the channel shift, how much trade down are we seeing, and, you know, just in terms of branded private label, but also, you know, just among categories. Anything that you can provide would be very helpful. Yeah, Irene, I know you ask this question every quarter, and I think I give largely the same answer. The trends today are essentially the same as they were in Q1, which is that shift to discount you know continues at pace. Price sensitivity is growing. You know, promotional intensity is a little bit higher. We are, as I mentioned in my remarks, we're seeing control brand you know growth across the board, both at President's Choice and at No Name you know continuing to accelerate. Then we are seeing you know what I'd call kind of volatility in how people are trading you know protein depending on the price you know you know in any given period. There's really not much more to say than that. Those are the trends. It might be a little bit more meaningful today than it was in Q1, but the trends are largely directionally all identical. Then maybe I'd add just one more incremental bit of context. You know, we do through our financial services business so have a pretty good indication of the health of our consumer. You know, payment rates remain at historic high levels, which suggests that at least with a large subset of our customers, you know, they're still in reasonably good financial shape. That is a call it a buffering effect on inflation. That's helpful. Thank you. Just one final one, sticking with consumer behavior. Obviously, you know, Walmart shook up the market earlier this week, you know, around their commentary. Anything you can share with us on what you're seeing in the right-hand side of the store, whether it's Joe or just the general merchandise more broadly defined? Yeah, I mean, a couple of highlights. Joe Fresh business was positive in the quarter, although, you know, we are starting to see a little bit of softening in that, you know, as we look forward. The right-hand side outside of apparel was notably down. It was definitely had a drag on our overall comp sales results. The key you know in this circumstance is inventory, you know. The question is, how do you feel about inventory, and do you have aggressive markdowns that you need to put through to clear that inventory? The answer is, we feel good about inventory, and we don't see any meaningful margin risk associated with you know clearing what's left. That's great. Thank you. Thank you. The next question comes from Michael Van Aelst of TD Securities. Please go ahead. Great. Thank you. Just going back to Irene's questions around trade down and shift to discount and private label penetration increasing. How do those factors impact your same store sales? Is it like when you calculate your inflation and comment on your inflation, is it on a just a unit-by-unit basis, or does that inflation take into consideration the trade down in proteins and the shift to discount and things like that? Inflation captures everything, Michael. Like, I think it's tough to answer your question, but like, it's prevalent throughout our business. We're seeing a bit less in private label than in other categories. On the commodity stuff, it fluctuates like it has always done. Yeah. Simply put, we use an internal proxy. We look at CPI, and then we look at our version of that basket, you know, to calculate our internal inflation. In that respect, it wouldn't take into account the mix shift. We also look at a series of what I'd call kind of supporting metrics, you know, to triangulate the number, which are much more inclusive, and would capture, you know, a portion of the mix shift, for sure. Does that help answer the question? Well, I understand, and it's clear. The inflation is capturing the actual unit price changes, but your trade down, you know, in proteins and private label, that's more being captured, I guess, within the de facto tonnage number that everybody calculates. Yeah. I mean, think about the, you know, looking at the average article price across the entire enterprise and what's happening in terms of its change. You know, it's not specifically weighted for volume, if you understand what we're saying. Yeah. Okay. All right. That's helpful. Can you guys give us a, an indication of how much inflation is impacting the front store pharmacy? Yeah, it's about the same. I mean, there's not as much inflation in health and beauty, but certainly we see the same inflationary pressures in all the consumable goods in the front shop of Shoppers Drug Mart. That's a positive contributor for sure. If front store is 5.2% total same store sales growth, are you getting tonnage growth or unit count growth? Well, we are because we're seeing substantial growth in key categories that are all driven by units. Think about flu, cold medications. We're seeing major unit growth in cosmetics, substantial unit growth, all things that were essentially, you know, declining categories last year. Yeah, COVID brought so much volatility in front of store and pharmacy that it's tough to look at it like we look at it at food. Like, these categories are coming back. Right now, cough and cold, it's like we're in the middle of winter right now. This is sort of an unusual phenomenon. Okay, great. Just finally, on the network optimization, I think you had 17 stores originally identified for either banner changes or downsizing. You mentioned five at the start of the quarter. I can't remember what you might have had in Q1, if at all. What's left to do this year? Based on what you've been seeing kind of the results, where do you see this number being in the future years or even, you know, do you have any plans to expand that shorter- term? Yeah, Mike, it's probably like a little bit less than 10 for the rest of the year. We're going at pace. Obviously, it takes time to get all these projects going, but now they're well on their way. Over the next few months, we're gonna be reopening a few every month. That's progressing nicely. If you think about network optimization as a general strategic principle, just keep in mind, it's about adding new stores where there's high population growth and high potential for incremental sales. It's about converting, you know, banners to more optimal formats. It's about downsizing stores and productively making use of the downsized space. Yeah. Since Galen Weston is expanding, I'm just gonna add one more thing to it too. Like, new stores takes a little bit more time to get going. You're gonna see more new stores than typical more next year. Same for downsizing. Takes more work to get to agree to a downsizing. Like, where are you gonna do the downsizing? Who's gonna come in in the extra space? Those are also getting momentum. This year, you're seeing way more conversion 'cause those are easier to affect. That's what the bulk of what you're gonna see until till the end of this year. All right. Thank you. Thank you. The next question comes from Patricia Baker of Scotiabank. Please go ahead. Yeah. Good morning, everyone. I just wanna come back to the discussion on the retail gross margin. You know, obviously, Shoppers mix had a very nice impact in the quarter. You indicated that the food retail margin was stable or flat year-over-year. That's been a trend that we've been seeing over the last several quarters, which is quite nice because we've had, you know, years of you talking about wanting to stabilize that margin. So when we think about and you think about the food gross margin, do you think that the food gross margin is where you want it to be and that we should think about, you know, that it will just remain in a stable range? Patricia, we feel very good about our gross margin in general in both our food and drug segment. I don't wanna comment more than that at this point. Okay. You know, maybe I'll add just. You know, we did a lot of work over the last 18 months to, we've talked about this, to remove wasted investment in our kinda margin structure. That's been very helpful as a driver of growth in food margin. Mm-hmm. Going forward, it's about optimization. You know, we talk a lot about data. You know, we are still you know call it the middle innings of that journey. There is opportunity to continue to get more efficient, but it will be at the margin, you know, more so than fundamental changes. Okay. That makes perfect sense. Just in your discussion of the network optimization, are you in a position, Richard, to give us a sense of what square footage growth you'd be looking for next year when you're opening new stores? Not yet, love. I'll have a good sense of that, like, probably around Q4, Patricia. Okay. Our plans are sort of being put together as we speak. Okay, fair enough. Just the last, Galen, I am intrigued by the walk-in clinic staffed entirely by pharmacists. I think that's a really interesting idea. I assume at this point that's a pilot project, but you probably see opportunities to, you know, depending on how it performs, to roll out more of these at some point in time. Can you just talk a little bit about what sorts of services those pharmacists are providing in that location? Yeah. Starting with the principle of increasing, call it, basic primary care delivery, pharmacists, you know, the biggest potential for that is within our pharmacies. Yeah. The biggest potential for that is within Shoppers Drug Mart pharmacies. Mm-hmm. What we're doing in this town with this dedicated clinic is we are taking over excess space inside a superstore, and we are testing an expanded service experience. We have four consultation rooms, we have four pharmacists, and we are seeing patients on a very frequent basis. The way to think about the future is, you know, as the provinces get more confident in expanding the scope of practice for pharmacists, we see an opportunity to have selective dedicated locations, you know, that can provide a health clinic-like service delivered by pharmacists. In terms of the types of services that they are delivering, it's the same things, you know, that you have heard us talk about before. It's minor ailment prescribing, you know, cold sore medications, strep throat, UTIs, and travel vaccinations, you know, all the sort of the basic levels of care that pharmacists are trained to administer and to deliver. The single, you know, regulatory barrier to that happening on a provincial level is working with the government to expand the scope of practice for those pharmacists. As I think we've also mentioned, we're expecting to see 12 new expanded practices coming to Ontario before the end of the year. You know, there's, we believe, some runway ahead to help improve substantially access to care for Canadians by leveraging what pharmacists are already trained to do. Okay. Thank you very much. Sounds really interesting. Thank you. Your next question comes from Vishal Shreedhar from National Bank Financial. Please go ahead. I was hoping you could give us some perspective on the food market share between restaurants and grocery stores. Do you anticipate the restaurant industry to take more share and take more share back, or is that largely stabilized similar to the cosmetic trends that you called out earlier in the quarter? Well, maybe I'll comment directionally as opposed to with specifics, because these things are all moving with multiple forces sort of putting pressure on them. Without question, when the world opened up, you saw a flood of customers going into restaurants. That has a natural dampening effect on retail grocery sales. Of course, as prices go up, prices are going up higher in restaurants, higher and faster in restaurants than they are in grocery stores. That you know has the opposite effect, which is it starts to push people back into the supermarkets, where they are looking for a value-added equivalent to a restaurant meal. One of those merchandising programs that Richard and I touched on in relation to our market division has been the sustained and accelerating success of our entire value-added meal program. We've done a lot of work in that space and are really, really pleased with the results. One of the things we think is driving that is that you can get you know, a fresh prepared you know, salmon dinner that can serve four for CAD 15, and you'll never get that at a restaurant. That is you know, a big part of where we see opportunity for customers as food prices continue to go up. Okay. Just changing gears here. As you look at your in-stock positions and labor position, and labor staffing in stores, are they at adequate levels now? Well, they should always be better. Yes, they've improved substantially over the last three or four months. You know, we are always focused on in-stock positions, but it's no longer what we would consider a critical issue for the enterprise, which is a good sign. It's not back to pre-COVID levels, and that's a function of you know, the continued disruption in manufacturing that's out there, but the teams are managing pretty well. When it comes to labor availability, that is a material pressure. We've talked about it before. It tends to be in pockets rather than you know, sort of system-wide. Certainly this summer it's been a challenge in our distribution centers in certain parts of the country, and we're working hard to you know, to backstop that. At the moment, we don't see labor availability as a material disruptor to our ability to do business. Okay. You commented on the conventional banners. Is it fair to say that conventional banner performance was negative? How is that trending most recently? How does management feel its performance of conventional banners is versus peers? I know you indicated some color on them in your disclosure. Yeah. Well, there's no question that volume is shifting out of the market segment, the conventional segment and into the discount segment that is impacting our business. We look at our performance relative to peers, as you ask, and we're very comfortable. In fact, very pleased with the way that our market division is performing in that context. Again, it's hard to comment on what whether we're positive or negative because, as Richard mentioned, how you cycle through last year's volatility has a very meaningful impact on what your sales growth actually looks like. So it's been both negative and positive. You know, that's the. Yes. Matter. As Richard said, the actual sales dollar rate has been pretty consistent. With respect to how the customers have gone back to discounts similar to pre-pandemic levels, do you anticipate that trend is going to be sticky or the customers in that segment have won, or do you anticipate there could be a return back to elevated levels of consumption? Oh, I think, you know, it moves. You know, remember, we've got extraordinary forces, you know, out there. We've got unprecedented levels of inflation. We have all kinds of different, you know, things going on in terms of the economic confidence and, you know, the money that, people have in their pockets. But the macro trend, you know, if you look back over the last 10 years, is that the discount segment has been growing largely faster than the market division. I would say that trend is likely to continue if you were to fast-forward over the next 10 years. Thank you for the color. Thank you. The next question comes from Chris Li, Desjardins. Please go ahead. Oh, hi, good morning. Galen, just maybe a follow-up to the last question. When you mentioned that conventional is outperforming your peers, just curious, what data are you basing that on? Is that the Nielsen data? Then secondly, can you call out some of the initiatives that are helping you drive that outperformance? Is it mostly in your strong own brand portfolio and your loyalty program? Thank you. Yeah, I think you've answered the question. We use Nielsen to measure our share and our relative share performance. The merchandising programs include what I mentioned, which is the value-added food program. It's very effective activation of PC Optimum in our market stores. You know, certainly, you know, we would say, and I would say, given my own exposure to our stores, you know, our operating conditions today are more consistent, you know, than they have been in the past, which is, you know, contributing very positively. Then control brand. I mean, I don't know the last time you went into one of our stores. We have a big No Name program running in the supermarkets, the conventional business today. It's been a terrific success for us. Yep. No, that's helpful. Another question maybe on Shoppers. You know, you mentioned earlier that the sales of the higher margin front-store categories are now pretty much back to pre-pandemic level. Is that also true for the gross margin level for the Shoppers' business overall? Has it also returned to pre-pandemic level, or is it still below? Yeah. Gross margin on front of store is back to normal. Pharmacy, that we still have some work to do. Okay. The last question is maybe a longer-term question. You know, as we look out to next year, you know, there's maybe a potential for some deflation. When I look back at the last deflationary period in late 2016 and first half of 2017, Loblaw actually, I think, managed to achieve very solid earnings growth supported by tonnage growth, effective promotions, and good expense control. I know you don't have a crystal ball, but just wondering, do you expect this to be the case again this time, especially with some of the retail excellent initiatives that are in progress right now? For us, like, we're always thinking about building solid plans for the years coming, and that's what we're working on right now. The team is all aligned so that we can deliver on our financial framework for 2023. Yeah, I think, Chris. Historically, we've had a good track record of performance in deflationary or low inflation periods. I think that may be partly because we have such a big discount business, and it's very good at managing SG&A and leveraging volume. In terms of predicting what inflation's gonna look like next year, that, you know, is still hard for us to get a grip of. If it were deflationary, you know, we're not concerned about our ability to deliver in that environment. Okay. Thank you. Thank you. Your next question comes from Kenric Tyghe, ATB Capital Markets. Please go ahead. Thank you and good morning. Galen, focusing for a minute on the beauty business, you called out the strength in the recovery in beauty and cosmetics. Can you just sort of speak to the supply chain and how supply is actually responding given the pace of that recovery and that it's not a recovery unique to Loblaw but the broader market? Is there any risk there with respect to the beauty business that you know you end up sitting in a position in the back half of this year where suppliers are simply unable to keep up with the pace of that recovery? Are you comfortable with, you know, sort of supply conversations in beauty and cosmetics given how important they are to the margin profile and what a lift they provide in the first half? Yeah, today, we're not concerned. Look, the availability of the product is not perfect, and you know, because the beauty vendors are struggling with a lot of the same general supply chain issues that the rest of the market is. We don't see a shortage, if that's the question you're asking, materializing here. This is a return. Well, it's for the most part a return to normal, as opposed to, you know, a major demand surge. It just fell so far, you know, during the COVID period. The one place that just anecdotally, you know, we've been mystified with is that there's tremendous strength in fragrances and we are kind of wondering what, you know, what people are doing with all of those perfumes. That's the only place where, you know, it might be running a little ahead of that return to normal. Thank you, Galen Weston. Short version, grocers and retailers are much better at managing a return to normal than airlines. Apparently, they weren't caught quite as off guard is what I'm hearing. Fair comment? Well, look, we believe so. Fair enough. Just one more quick one for me. Richard, I heard you calling out that, you know, the higher PC points redemption in quarter. You know, how material was that in terms of the underlying or sort of fundamental shift in behavior? How do you think about the not just the evolution of that through the back half, but managing elevated points redemptions through the back half? Yeah, the elevated redemption starts with us issuing more points. Like, our merchandising team throughout the organization are beginning to see more traction and more benefits of using loyalty, so they're using it more. We saw a marked increase in the issuance. Because of the current environment with inflation, it's also affecting redemption. This is something that we're really happy about, and we hope to see more of it going forward. We expect to be issuing even more points in 2023 than we have planned for 2022. Great. Thank you. I'll leave it there. Thank you. The next question comes from Peter Sklar of BMO Capital Markets. Please go ahead. Yeah, good morning. Back on the consumer. Your basket is down despite, you know, the basket inflating 9.5%. Now, Richard, in your comments, you seem to attribute that, you know, to the pantry loading that was going on last year when everyone was shut in. I'm just wondering if you could also comment on, you know, the health of the consumer that's being squeezed by, you know, high food and fuel prices and just general overall inflation and has less in their wallet. I mean, would you attribute some of that to the weakness of the consumer? If you could just elaborate there, I'd appreciate it. The thing we're clearly seeing is new customers. Visits and number of transactions are up. If you go to our stores, like you'll talk to store managers, they're seeing clients they've not seen in their stores for a long time. I think that's what's happening. That's the more prevalent factor that's driving those metrics. Like, if your basket is down, though it's inflating 9.5%, your item count must be down dramatically. Isn't that true? Item count is. I'm not sure how that relates to new customers. Yeah. Item count has been down since July of last year. Okay. There's a significant shift in item count as quarter three begins because we're cycling what was like a lockdown last year. Right. Okay. Yeah. We're not seeing significant change in trends on sales and tonnage like going into sort of Q3 and in Q2. But it's like to what you're comparing it with that sort of creates all of this noise. Yeah. I think what you're saying, you've now in Q3, you would have lapped the pantry loading, so it's gonna be more of a cleaner quarter. Yes. Towards the end of that quarter, we're gonna start to cycle the beginning of inflation. You're gonna start to see that effect. Now we're starting to see the cycling of the unit count, and a month or two from now we're gonna be cycling the beginning of inflation. Those are gonna all be reflected in our comp, and we're gonna have to explain what's happening specifically to understand what's going on. The major point is that we're pleased with the trajectory of our sales at this point. Okay, got it. Just last question on e-commerce that was down 17.5%. Assuming that you captured most of that decline and converted them to in-store shoppers at Loblaw banners, I assume that's a positive because, I mean, you have less people running around picking and delivering to people's cars in the parking lots. Would that have had a noticeable positive impact on margins or other operating parameters, or is it just something small at the margin? It's small at the margin, but your first assertion is true. We actually track the customers who have moved from online to in store and like essentially the large majority of them are back in store. You're right, like it's not a significant impact on our margin. Okay, great. Thank you. Thank you. Once again, ladies and gentlemen, if you do have a question, please press star one at this time. Our next question comes from Irene Nattel of RBC Capital Markets. Please go ahead. Thanks. At the risk of, like, really beating this horse, coming back to the whole issue of item count and item pricing, I just wanna be very clear. If we take peanut butter, if I trade down from, let's say, Kraft to No Name, let's just say it's a 10% lower unit cost. Now, that unit cost may be higher year-over-year, but overall it's a headwind to your same-store sales, is it not? Yes. We look at. Okay. Yes. Do you think that again, Galen Weston, obviously what we're all trying to do is triangulate the 9.6% and the 0.9% to really understand it. I think we get that the comp is tougher in Q2. I think what everyone's just trying to understand is whether you're losing share or not. Yeah. No. It's kind of the bottom line. I think Richard did a very nice job trying to bring it back to the sort of the fundamental premise, which is there's a ton of comp noise and that noise is impacting the read of the results. We see it even more acutely because the opposite is the case right now in the way that the business is performing. It's not a function in any meaningful change in the trend, it's just a function of noise on the comparables. You know, we'll all be happier when we get through all of this cycling, and we'll be able to you know see you know the numbers cleanly. But the underlying performance from our perspective, we are very satisfied with. That's the key message, you know. We expect that outlook to remain through the balance of the year. That's great. Just one final subject, one final question on that subject. Again, coming back to the Walmart commentary. Based on your numbers, do you think you guys are losing market share to Walmart in Canada? Well, on an overall market share basis, you know, we are very confident about the trajectory that we're on. Certainly, you know, Walmart, we're watching carefully. They've had some very strong quarters in terms of sales performance in their discount business. When we look at our discount business performance today, Maxi and No Frills are particular highlights, you know, in terms of their performance. If I put it this way, we're less concerned about that gap today than we were, say, two months ago. That's great. Thank you. Thank you. There are no further questions at this time. Please continue. Great. Thanks, Michelle. Thank you, everybody, for your time this morning. We'll be around waiting for your calls this afternoon. You can mark your calendars for November 15th, when we'll be releasing our Q3 results. Thanks again, and have a great day. Ladies and gentlemen, this does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.