Good morning. Welcome to Albertsons Companies' Q3 2020 Earnings Conference Call, and thank you for standing by. All participants will be in a listen-only mode until the Q&A session. Please note this call is being recorded. I would now like to hand the call over to Melissa Plaisance, GVP, Treasury and Investor Relations. Please go ahead. Good morning, and thank you for joining us for the Albertsons Companies' Q3 2020 earnings conference call. With me today from the company are Vivek Sankaran, our President and CEO, and Bob Dimond, our CFO. Today, Vivek will share insight into our Q3 results and recent progress against our strategic priorities. Bob will then provide the financial details of our Q3 and share our full year outlook before handing it back over to Vivek for some closing remarks. After management comments, we will conduct a question-and-answer session. I would like to remind you that management may make statements during this call that include forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not limited to historical facts but contain information about future operating or financial performance. Forward-looking statements are based on our current expectations and assumptions and involve risks and uncertainties that could cause actual results or events to be materially different from those anticipated. These risks and uncertainties include those related to the COVID-19 pandemic. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements are and will be contained from time to time in our SEC filings, including Form 10-Q, 10-K, 8-K, and our prospectus dated 25 June 2020. Any forward-looking statements we make today are only as of today's date, and we undertake no obligation to update or revise any such statements as a result of new information, future events, or otherwise. Please keep in mind that included in the financial statements and management's prepared remarks are certain non-GAAP measures, and the historical financial information includes a reconciliation of net income to adjusted net income and adjusted EBITDA. And with that, I will hand the call over to Vivek. Thank you, Melissa, and good morning, everyone, and thank you for joining us today. At Albertsons, we continue to be focused on taking care of our customers, our associates, and the communities we serve. As a result of this, I am pleased to report another quarter of robust results. Our Q3 identical sales came in at 12.3%, with Adjusted EPS growth of 275% versus the prior year to $0.66 per share. Adjusted EBITDA increased 53% to $968 million, with robust flow-through. Our digital sales also grew 225% year- over- year. During the quarter, we continued to gain significant market share within both Food and MULO in both dollars and units and experienced strong growth across geographies, regardless of the level of COVID restrictions in place. This gives us confidence in the sustainability of our competitiveness in the future. We had over six million new households shopping with us this quarter, and we are retaining existing customers. Those who shopped with us last quarter have returned this quarter at a higher rate than in Q2. Customers continue to consolidate trips, and we continue to see fewer trips per household but larger baskets, and these households are spending more with us compared to last year. Our loyalty program continues to show strong growth. We now have 24.3 million registered users, an increase of 23.5% year-over-year, and these customers are spending 2.5 times more on average than non-registered customers. In addition, actively engaged households in our loyalty programs have increased 17.5% year-over-year and encompass nearly 40% of transactions and 50% of sales. These customers spend 4.1x more than non-active customers. The strong ID sales and EBITDA results year to date are also generating robust free cash flow, and we are delivering on our capital allocation priorities. We are continuing to reinvest in the business for growth in high-return projects. We have continued to pay down debt. We are returning cash to shareholders through our quarterly dividend and an active share repurchase program. The foundation of our four strategic priorities and the way we drive growth is guided by our constant focus on providing an excellent shopping experience to all our customers. This is anchored in the strength of our product assortment, our ability to engage and serve our customers across different platforms, our use of technology to enhance the customer experience, and the speed and flexibility of our nimble, locally focused operations. Our first priority is in-store excellence. Our stores remain the core of our business, and we are proud of our convenient locations and the broad assortment of products we offer to create a one-stop shopping experience for our customers. The quality, variety, and depth of our fresh and Own Brands offerings have been a key differentiator throughout the pandemic and will continue to be an advantage for us going forward. In fresh, we continue to see ID sales that are higher than our average, notably in seafood driven by service seafood and shrimp, as well as in meat driven by items such as bacon, beef, and chicken, and in floral as customers who are spending more time at home are enjoying fresh flowers more often. We are encouraged that customers who are spending more time at home are looking to us for the high-quality fresh product we offer. We believe that purchases of fresh product drive trips, as our loyal customers often stock up on shelf-stable items in one trip but come back frequently for fresh product. In Q3, our most loyal shoppers increased their average spend on fresh 200 basis points compared to the average in-store total spend the prior year and continued to visit our stores over two times a week, with nearly three out of four trips including fresh. Fresh has also been a catalyst in omnichannel as fresh items, including a high-quality meat introduced, have increased in the basket compared to pre-pandemic levels. And to further capitalize on the strength we see in fresh, we are expanding our portfolio with meal solutions: ready-to-eat, ready-to-heat, and ready-to-cook that are growing in popularity as alternatives to cooking from scratch, with plans to introduce these solutions more broadly in the weeks and months ahead. Our Own Brands portfolio also remains a competitive advantage for us, with $14 billion in sales across nine primary brands, four of which have over $1 billion in sales, and with over 12,000 items across over 500 categories, our broad product portfolio fits all customer segments and styles. We have recently seen improving trends in penetration of Own Brands sales as temporary supply issues have been abating. Our Own Brands penetration exceeded 25% in the last four-week period of the Q3, and we remain on track to reach 30% penetration in the next few years. We are driving growth by expanding these products in under-penetrated markets and continue to have substantial opportunity in markets such as Jewel, Shaw's, Southern, and Southern California. In Q3, we also saw strong growth in categories that have been popular while customers are spending more time cooking at home, such as ingredient cheese, convenience salads, baking items, and nuts. We're also continuing to innovate and expand the portfolio. We've launched over 1,000 new items through Q3, exceeding our stated goal of 800-plus new items this fiscal year. Our innovation is tailored to contemporary customer needs. In addition to our Value Corner brand at a lower opening price point, we have expanded the selection of family packs with items such as Waterfront Bistro frozen fish line that help stretch the family budget. In mainstream items, which include our Signature Select line, we continue to innovate to save time for our customers and recently introduced Signature Select Frozen Egg Bites that provide a quick and healthy breakfast ready in just over a minute. And we continue to expand the portfolio and innovate in the premium category and recently introduced Signature Reserve Brut Sparkling Wine in time for the holidays. Our lifestyle brands, O Organics and Open Nature, which appeal to customers looking for organic and better-for-you brands, saw continued growth, strong growth of 12% on a combined basis this quarter. Finally, we continue to invest in our stores. In October, we allocated an incremental $200 million of store-related capital to accelerate and pull forward priority projects. In addition to remodels, we are using some of the additional capital to accelerate the rollout of our module program, which are discreet high-return initiatives focused on customer checkout and new merchandising offerings, and we're accelerating replacement of unproductive self-serve features such as salad bars with additional refrigerated cases in preparation for the rollout of our meals program. Moving to our second priority, the rapid acceleration of our digital and omnichannel capability, we continue to provide our customers with an easy and convenient customer experience, whether that is shopping in our stores, using curbside pickup, or delivery. Digital continues to be a key growth driver for us as we achieved our third straight quarter of over 200% sales growth, up 225% in Q3. Drive Up and Go grew over 800% as we launched 231 new DUG locations during the quarter. DUG is now available in 1,181 stores. This puts us ahead of our schedule, and we expect to have DUG in more than 1,400 locations by the end of this fiscal year, as well as more than 1,800 locations by the end of fiscal year 2021. We firmly believe some consumer behaviors adopted during the pandemic will continue post-pandemic, and we believe increased use of digital offerings will be one of the key behaviors that sticks. To capitalize on this trend, we are investing over $300 million in CapEx and OpEx to accelerate our offerings in this area during fiscal year 2020 to launch new capabilities that build on our strengths as well as drive scale and profitability. For instance, we rolled out zero-touch payments capabilities to all our stores in October, allowing in-store customers to enter their loyalty credentials for discounts and rewards and pay for their groceries from their phone without touching the PIN pad. We also set up the ability to accept SNAP for online payment on DUG orders in 199 stores and plan to expand to additional stores and to delivery orders in early fiscal 2021. From a customer experience and convenience perspective, we have made noticeable improvements to our app, which have resulted in increased usage, and are piloting a number of Walk Up and Go options in select stores in Chicago and Northern California involving walk-up counters, lockers, and standalone kiosks in our parking lots. In addition to improving the customer experience, we have continued to reduce operational costs and improve overall profitability. For instance, we have further reduced picking costs as a result of labor planning and process improvements driven in part by the new software that has simplified workflows. We're also planning on adding seven additional MFCs by the end of fiscal 2021. Finally, we continue to leverage our large and growing customer database through our Just for U loyalty program, an increasingly valuable asset, which allows us to utilize data insights to target customized promotions such as personalized coupons and offers on new products that can increase basket size and deepen engagement with our customers. Our third strategic priority is driving productivity to help offset inflation that naturally occurs in things such as wages and benefits and to support reinvestment in the business. We remain on track to deliver anticipated savings this year and to achieve our $1 billion in gross savings by the end of fiscal year 2022. We also continue to identify additional opportunities. Some examples of savings include aggressively partnering with vendors to reduce both indirect spend and the cost of Own Brands goods. For example, by partnering with suppliers in Own Brands and using comparative data and analysis, we were able to secure substantial savings in the procurement of Own Brands deli meat and paper goods in Q3. Expanding our sourcing efforts around capital procurement, including equipment and items related to store models, and continuing to drive our ongoing energy efficiency projects, which save an estimated $14 million in Q3 while also reducing our carbon footprint. Our fourth priority is strengthening our talent and culture and strengthening the communities we serve. We are guided by diversity and inclusion throughout our operations and recruiting efforts and have continued to add impressive talent to our team. We also continue to put our customers and associates first when it comes to safety and have now completed the implementation of contactless temperature and health screening for our associates across all our facilities. In addition, we continue to value the contribution of our associates on the front lines and awarded another $45 million in discretionary appreciation bonuses during the quarter. We're also partnering with the Department of Health and Human Services to administer free COVID-19 vaccines in the communities in which we operate. We have begun to deliver doses of the vaccine in many of our market areas and plan to hire more than 800 pharmacists and pharmacy technicians to ensure our pharmacies meet the demand for vaccinations. At the same time, we continue to support the communities we serve and are proud that our foundation helped generate record-breaking numbers for childhood hunger relief in September, with $9.3 million in customer donations at our check stands that enabled 37.5 million healthy breakfasts for kids in our communities. Year to date, our combined company and customer donations have now topped $110 million. Importantly, we continue to focus on sustainability. We are proud to win the Sustained Excellence Award for our commitment to energy efficiency in our Arizona stores from the annual Salt River Project Champions of Energy Efficiency Awards. By leveraging the utilities rebate program, we saved energy and reduced peak demand in this region. Now I would like to ask Bob to cover the details of our Q3 financial results. Thanks, Vivek, and hello, everyone. I am pleased to provide details on our strong Q3 results. Total sales were $15.4 billion during the Q3 compared to $14.1 billion during the Q3 last year. This increase in sales was primarily driven by our 12.3% increase in identical sales, partially offset by lower fuel sales. Our gross profit margin increased to 29.3% compared to 28.3% in Q3 last year. Excluding the impact of fuel, our gross profit margin increased 25 basis points. The increase in gross profit margin was primarily driven by continued improvements in shrink expense and sales leverage on advertising and supply chain costs, partially offset by expenses related to driving growth in digital and select investments in price, which supported top line and overall market share gains. Turning to sales and administrative expenses, we saw significant sales leverage and cost control throughout the Q3, excluding the $286 million charge associated with the previously announced National Pension Fund settlement. Overall, the improved sales leverage, including strong cost control, more than offset incremental COVID-19-related costs, totaling approximately $105 million, excluding the $45 million in discretionary appreciation bonuses during the Q3. We continue to seek efficiencies around procedures and procurement of PPE and cleaning supplies to further optimize these costs as we go forward. Interest expense was $115.9 million during the Q3 of fiscal 2020 compared to $154.8 million during the same quarter last year. This $38.9 million decrease in interest expense is primarily attributable to lower average interest rates and outstanding borrowings compared to last year. The weighted average interest rate decreased 80 basis points to 5.5% compared to Q3 last year, which is a testament to some of the recent refinancings we've completed at very attractive long-term borrowing rates. Adjusted EBITDA was $968 million compared to $634 million during Q3 last year. The 53% growth in Adjusted EBITDA represents a flow-through of approximately 20%, excluding fuel. Adjusted net income was $387 million, and Adjusted EPS grew 275% to $0.66 per share compared to $142 million or $0.24 per share during the Q3 last year. Turning to capital allocation, our capital expenditures were approximately $1.1 billion during the first three quarters of the year, and we completed 225 remodels. We continue to accelerate technology-related investments, including those in digital and e-commerce. As the result of longer-than-expected ordering lead times and some construction backlogs, we now expect to spend approximately $1.65 to 1.75 billion in total capital expenditures during fiscal 2020 versus our prior guidance of $1.9 billion, with approximately $200 million of incremental capital spend shifting into early fiscal 2021. As we outlined last quarter, these high-return projects include both in-store and productivity initiatives in manufacturing and supply chain, in merchandising to expand our meals program, as well as in digital and e-commerce, including incremental DUG rollout and other technology initiatives intended to drive efficiencies and future productivity. We have successfully executed sale-leasebacks and asset sales in recent years, and during the Q3, we have had the opportunity to sell a distribution center that was recently closed for proceeds of approximately $92 million, and together with other surplus properties, we have generated approximately $144 million of asset sale proceeds to date. Even after this activity, we continue to have a significant real estate portfolio appraised at approximately $11 billion. Our strong results have generated very robust operating free cash flow of $1.9 billion year to date. Our capital allocation priorities remain unchanged and include reinvestment to drive profitable growth, continued deleveraging, and returns to shareholders through our $0.40 per share annual dividend, and we will continue our methodical approach to share repurchase and intend to continue actively buying back undervalued shares. We were pleased to get credit rating upgrades after our Q2 results were announced based on our strong performance and debt reduction. On 22 December 2020, we completed a $600 million addition to our 3.5% 2029 notes, the proceeds from which were used to refinance our 5.75% 2025 notes. At the same time, we announced the paydown of an incremental $200 million of the 2025 notes with cash on hand. These actions will save the company approximately $25 million in annualized pre-tax interest expense, and combined with the refinancing and debt reduction from the Q2, we've achieved approximately $77 million in annualized interest savings this year. Given these actions and the strength of our cash flows, our net debt to Adjusted EBITDA is now 1.5x on an LTM basis. In line with our $0.40 per share annual dividend, we paid our first quarterly dividend of $0.10 per share on November 10th, and earlier this morning, we announced the next payment date of our $0.10 per share quarterly dividend will be on February 10th, and under our current $300 million share repurchase authorization, we actively repurchased 6.8 million shares we viewed as undervalued during the Q3, which were at an average price of $15.10 per share for approximately $102.7 million. Turning to the outlook for the remainder of fiscal 2020, we continue to generate strong outperformance and illustrate the power of sales leverage on our P&L during the Q3. As a result, we are increasing our outlook for the full fiscal 2020 as follows: Identical Sales in fiscal 2020 to be approximately 16.5% versus prior guidance of at least 15.5%. Adjusted EPS in the range of $3.05 to 3.15 per share versus previous expectations of $2.75 to 2.85 per share. Adjusted EBITDA in the range of $4.4 To 4.5 billion versus $4.15 to 4.25 billion previously. And an effective tax rate of approximately 25% before discrete items, unchanged from our prior outlook. The implied growth in sales and related flow-through to EBITDA based on this guidance continues to be industry-leading. And as you saw during the quarter, these results also include the impact of investments we are making in the business to drive our goal of long-term sustainable growth. And now, Vivek will provide some closing remarks. Thank you, Bob. As we enter the new calendar year, we are in the throes of the third wave of the pandemic. Our hearts go out to the many who have been impacted by the disease. The promise of the vaccine is exciting, and we will do our part to dispense the vaccine and help the communities in which we operate. Yet, we realize this is no time to relax. We remain relentlessly focused on the safety of our associates and our customers. Despite the uncertainty we still have around the recovery from the pandemic, we see evidence that consumers will not revert to pre-COVID food consumption patterns anytime soon. For instance, several large companies are extending work-from-home policies, and some are committing to flexible work weeks or permanent work-from-home plans going forward. We believe that this will continue to drive more breakfasts and lunches at home. For example, during the pandemic, we've seen large increases in sales of breakfast items such as cereal, eggs, and bacon as people are eating a full breakfast at home rather than grabbing breakfast on the go. In addition, sales of items such as sandwich, cheese, and convenience salads have increased as well, as lunches are largely consumed at home. Many consumers have also rediscovered their passion for cooking. We anticipate the consumption patterns we are seeing now will continue well into 2021 and should continue to favor us. As I mentioned in our last earnings call, we are a significantly stronger company coming out of the pandemic than we were going into it. Yet, we are only in the early innings of our transformation. We have so much more performance headroom and the wherewithal to invest behind it. I believe that we will sustain our share gains and improve customer growth and stickiness going forward for a number of reasons. Our customers are closer to us, spending more with us, shopping more of our store, and consolidating trips with us. Our customers are engaging more with us digitally. As a result, we also have more data on our customers than ever before, allowing us to personalize our offers to them, tailor assortment even better, and further improve our loyalty program. Our omnichannel business is at scale, and our capabilities have achieved a step change, making shopping with us easier than ever. Yet, we have so much more headroom for growth, as we mentioned earlier in our rollout plans for Drive Up and Go. Our productivity programs are in full flight and are yielding what we had imagined and will be a strong offset to inflation and support future investment and growth. Our technology programs are also in full flight, modernizing our technology infrastructure and moving to the public cloud, making us faster, nimbler, and smarter with more prolific use of data and automation, and we're deploying capital prudently while at the same time making our balance sheets stronger. We're investing in growth, such as our fleet of stores, our merchandising, especially meals, our omnichannel capacity and capabilities, and in our ability to personalize solutions for customers. We're investing to drive more productivity, such as tools to improve promotions management, product ordering, labor scheduling, automation in stores and in DCs. We're investing in our technology backbone to support our growth and productivity agenda. We continue to prudently evaluate strategic tuck-in and other M&A opportunities. Our balance sheet is strong, with a net debt to EBITDA of one and a half times, giving us ample flexibility to invest in the business to drive growth. At the same time, we have found opportunities to refinance our debt, extending maturities at better rates, and plan to pay down incremental debt over time, and we continue to return capital to shareholders through our dividend and share repurchase program. We believe we are well positioned to continue to drive growth and emerge from the pandemic stronger, more resilient, and more competitive than ever, delivering industry-leading performance. We believe that the behavioral impact of this crisis will be long-lasting. Our job as a management team is to emerge from this crisis with a strong omnichannel relationship with the customer that will have long-lasting benefit to them, our business, and all of our stakeholders, even as the pandemic subsides. This backdrop gives us confidence that we will beat the recent consensus estimates for fiscal year 2021 and provide an even stronger earnings baseline that we can continue to grow based on all of the operating initiatives we've shared with you. We remain steadfastly focused on executing our long-term strategy with the unanimous support of our sponsors and our board to the benefit of all stakeholders. Our sponsors have indicated they have no intention to sell additional shares at current market prices, even as the underwriters' lockup expired in December. Finally, I would like to close by thanking all of our associates in stores and backstage for their relentless focus on serving our customers and making a difference in the communities we operate in. We would now be happy to begin the question and answer session. Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. To allow for as many questions as possible, we ask that you each keep to one question and one follow-up. Our first question comes from the line of Edward Kelly with Wells Fargo. Please proceed with your question. Yeah. Hi, guys. Good morning. I wanted to start just on the IDs, and I was hoping that you'd provide a bit more color around the cadence of the IDs through the quarter, particularly given that some restrictions around dining out and that type of stuff began to accelerate. And then could you comment on what you're seeing so far in Q4? And geographically, maybe just provide a bit more color around what you're seeing given that some of your markets have much more tighter restrictions. Yeah. Ed, hey, good morning. It's Vivek here. Let me give you a couple of perspectives. First, what was surprising this quarter is that we saw pretty similar IDs across the quarter, okay, and a little more of a lift around Thanksgiving, which you would expect. And I think a lot more people stayed at home at Thanksgiving. So we saw that, and so that's good. And then when we think about this quarter, we're still in the low double-digit number as we look at the last few weeks of the quarter. So we feel good about that trend, which is why it gives me some confidence that I ask myself, if you think of the next six to nine months in 2021, is it going to look more like the last six months, or is it going to look more like 2019? And my bias is it's going to look more like the last six months and the pattern that we have seen there. Ed, what was the second part of your question? Well, geographically and weather, things are very different. \Yeah. I've said this before. I look very hard at whether we see patterns with any particular market where the crisis is worse or better and if the sales change. What I see in our marketplace across everything in aggregate is that it seems to go up and down more with the national sentiment than anything that's happening in a particular market. And we see that again and again and again. And as I mentioned earlier, we are seeing that where COVID's not that strong or at least less severe, let me put it but everywhere, less severe, we still see pretty strong sales. Okay. And then just to follow up on the gross margin, just kind of curious how holiday went from a promotional standpoint? How we should be thinking about the gross margin in the Q4 related to that? And then as we look out into next year, how would you encourage us to think about the gross margin? Obviously, you've given some comment on how to think about EBITDA, but just curious given what you're going to be lapping on that line item. Yeah. Let me provide you a point of view on promotions, Ed, because some others might have the same question, and then, Bob, I'll let you take the gross margin question, right, so if you look at the industry overall, promotions have stepped up from Q1 to Q2 to Q3, at least our Q1, Q3, so since the start of the pandemic, but it's still not at the 2019 levels. I think what we, at least our priority, is to be smarter about it, not quantity but quality of promotions going forward, and we've got the tools and capabilities to do that, and the second theme you're going to see from us is more personalized promotions. We've got a great vehicle to do that. We've got a lot of customers registered to do that, and we're going to put more and more energy towards that so that it's high-quality targeted promotions. Bob, can you comment on the gross margins? Sure. And we have not given definitive guidance yet for next year, but generally, what we would say on gross margins is we'll look at the prior year gross margin and wouldn't look to be building gross margin materially year-over-year. And we do generate some tailwinds in our gross margin. Some of that's driven by continued margin mix improvements that favor us. But what we try to do is to reinvest some of that back into the top line so that we drive our bottom line as well. But hopefully, that gives you a sense for when we break it out a little bit further next quarter, that it will be probably relatively flat to this year. Great. Thank you. Thank you. Our next question comes from the line of Rupesh Parikh with Oppenheimer. Please proceed with your question. Good morning. This is actually Erica Eiler on for Rupesh. Thanks for taking our questions. So I guess I wanted to start off talking about your market share. And it doesn't sound like this is the case, but as you look at your recent share gains, are you seeing any differences in where your share gains are coming from this quarter versus prior quarter? It sounded like it was pretty consistent to me, but I just want to confirm that. And then if we think about moving beyond the pandemic and into a post-COVID world, as you look at the share gains in recent quarters, where does your team believe you could see more permanent gains post-pandemic from a category perspective? Yeah. So the market share gains, the way we track it is we track dollars and units, and we compare it to food retailers and MULO, which includes the whole universe. And the consistent story throughout the last since the pandemic has been that we are gaining both dollar share and unit share. We're gaining it both versus food and versus the overall channel MULO, which includes everybody outside of typical food grocery retailers. And the share gains are higher versus MULO, right? So that pattern has continued. And if you look at where we're gaining share, the share gains are higher in some of those fresh categories that I talked about earlier. And my sense is people have gotten used to if people stay at home and cook at home, which I believe they will. I just think some of this behavior is going to stick and remote work is going to stick. And so as that happens, you'll end up with people spending more on fresh, and we have an advantage there. So I suspect we will continue to gain share on those categories. Okay. That's helpful. And then you mentioned your expectations for people cooking at home more. And so with the robust comp growth you've seen so far this fiscal year, can you talk about how you're thinking about lapping the more difficult comparisons in fiscal 2021 at this point? Just some of the puts and takes there, maybe, that you haven't necessarily touched on previously. Yeah, so first of all, I think you're right. We love positive comps, right, so looking at any next year, it won't be positive comps, but we are going to think about a two-year stack, and we'll talk to you about a two-year stack. That's how we're thinking about modeling next year's business, and at the end of the day, a lot of things we're doing are about driving growth, so if you think about it from pure dollars, our intent would be to drive growth versus and on a two-year stack for it to be healthier than what would have been pre-pandemic levels. That's how we're thinking about that. And I think a lot of the initiatives are continued investment in fresh, the continued expansion of e-commerce, and you're seeing it, right? And we know it's incremental. Our continued expansion into meals, all of those are things that will continue to drive growth. And we're even putting money as we speak. I shared with you the investments we made in e-commerce that are part of the OpEx and CapEx that you're still seeing from us. But we're also putting energy and money into retaining customers, right? So we're doing a lot of things to ensure the growth next year. Okay. Great. That's helpful. I'll pass it on. Thank you so much. Thank you. Thank you. Our next question comes from the line of Ken Goldman with J.P. Morgan. Please proceed with your question. Hi. Good morning, everybody. Morning, Ken. Morning. Vivek, I wanted to circle back a little bit toward pricing. You've said in the past, I think pretty strongly, that you don't have much desire to accept and pass on manufacturers' price increases right now. But since you last reported, corn, wheat, freight, a number of other inputs have spiked. Last week, Conagra highlighted accelerating inflation as soon as the current quarter. So I'm just curious if you're still as sort of adamant about pushing back on vendor price hikes because it seems to me like now is the best time in decades to push through some of these higher prices. You may never get this kind of inelastic consumer demand again. So I just wanted to get your updated thoughts on that, please. Yeah. Ken, first, good morning. Yes. My philosophy will always be to push back on it, right? I think we should be doing what's right for the customer, and we will always have the philosophy of pushing back on it. That said, we're always managing a basket too, right? So if you look at price per volume and you look at the market, the price per volume in the market has gone up a little bit. It's not as high as it was in Q1, Q2, by the way. So it has come down from Q1, Q2, Q3 overall in the market, and we've done a little better than that. So yeah, so we will push through inflation when it comes through, no question about it. But on the other hand, there's a healthy tension we will maintain with our suppliers and make sure that everything is truly justified. Thank you for that. And then for my follow-up, San Francisco and LA have proposed mandated $5 Hero Pay for grocery workers. I don't think either of these have been formally adopted yet, but if they do get approved and if more California counties do take this on, how do you plan on sort of adopting this or pushing back in any way? $5 is obviously a lot more than what many companies are paying right now per hour in addition to typical wages. Yeah. Ken, it is in certain pockets, certain counties have put such a proposal on the table, and it is more towards grocery, not non-grocers, and so on. So it's not clean by any means, right? And obviously, we wouldn't agree with a philosophy like that. So we're working through it. If it came down to it, there's many ways to manage it. I'll give you a perspective. A large part of our retail workforce is part-time labor, okay? So we've got many ways to manage cost improvements, not just from that cost increase, not just from that kind of a proposal, but overall wage management. So we've got many levers to do it, and we'll continue to do it, but that's a very small pocket, Ken, just to be clear that we are hearing that. Thank you, Vivek. Of course, Ken. Thank you. Our next question comes from the line of Robbie Ohmes with Bank of America. Please proceed with your question. Hey, good morning and congrats on another great quarter. Thank you, Robbie. Hey, Vivek, I was hoping you could talk first a little more about digital. Could you give us some color on where you think digital penetration is going to end up for the year as a% of sales? And then within that, how big is delivery as a% of digital versus DUG? And then maybe you could comment on you guys moving over to DoorDash and the strategy on delivery. Yeah. So let me start with the last one, Robbie. In our press release when we did that, we didn't say that we are stopping delivery and going to DoorDash. That was picked up. It was interpreted that way by some news, and that picked up some steam. So here's the bottom line on that. There are markets where we believe delivery works, and there are markets where we don't believe delivery, our first-party delivery works the way we've designed it. And we think there are other options that we should continue to explore. And you should be ready that you'll always hear news from us that are trying different things. It's a locker in Chicago, right? So there are always different means and mechanisms that we're going to get things to the customer. So that's there. Now, from an e-commerce mix standpoint, the fastest growing piece for us is DUG. And if you do the math, you'll see that the rate of growth is faster than the rate of expansion, right, of our DUG center. So we know that the customer is sticky. They like DUG in our markets. And so we're going to continue to double down on that. And that is soon becoming a bigger portion than our own delivery of the business. And from a mix standpoint, I've told you before, we're a notch lower than others, and we have some catch-up to do, but that's where we are. We are accelerating it as we roll out DUG and start getting more and more customers into the franchise, which, by the way, when they come into the franchise, they spend a lot more with us. We'll get to market levels, but we are a notch below that. That's helpful. And then maybe my follow-up, and maybe this will end up being more for Bob, but can we get a little more color on what the digital impact was on gross margin in the quarter? You had that 75 basis point fuel benefit. Any help on what kind of drag that was? And then when we look to next year, how should we think about some of the fuel benefit margins and what kind of pressures you could see if that goes the other direction? Bob, can you take that? Yeah. Let me give you a little color there. So you're right. At X Fuel, our margins were up 25 basis points, as we indicated in our earnings release. So when you kind of break that apart into kind of two big pieces, between the improvements in shrink and the sales leverage on advertising and supply chain costs, that comes to roughly a 70 basis point improvement. So that was offset by expenses, including digital and select price investments, by roughly the difference, that 45 basis points. So I don't have a solid breakout between those, but maybe roughly 50/50. That's very helpful. And just any thoughts on fuel outlook for next year in terms of impact on gross margin? Yeah. As you know, fuel can be a tricky one to try to estimate. This year has certainly been a boon to everyone. I mean, on one hand, volumes are way down, but then on the flip side, the margins are a little higher. We would expect next year that the volumes will probably start returning a little bit as some people start going back to work. But at the same time, we're anticipating that some of the peaks of the spikes in gross margin and fuel might kind of moderate just a little bit. Gotcha. That's helpful. Thanks again, guys, and congrats. Thank you, Robbie. See you back. Thank you. Our next question comes from the line of John Heinbockel with Guggenheim Partners. Please proceed with your question. Hey, Vivek, I want to start with behavior of new customers, right? So you said six million new households for the quarter. I don't know how many for the year, but what percent of those are registered loyalty members, roughly, and what percent active members? And then how is their spend ramping as new customers? How is that ramping relative to the legacy base? Yeah. So John, there you go. So the 6 million came in, right? And so after 6 million, about 900,000, say a million or so registered on our Just For U, which is great because they come in, they like the program. And in some markets, like on the East Coast, where we have not had card for price, we've just introduced Just For U, and bang, it picks up. I think the customers, because they're shopping more in a store, spending more on grocery, just see more value in those rewards. So that part of it is working. And when they engage, they start spending a lot more. I mean, our most loyal customers are 4x more. Think could spend $20,000 a year with us at the top tier, and then we break it into different tiers, and then the third tier, just as an added side note, right, where we call them they're occasional, but loyal but occasional. When they engage in e-commerce, they spend 3x with us. It jumps 3x, so that's why we find this nice ecosystem of e-commerce and the loyalty program starting to work together. And then maybe secondly, you guys talk about the 20% flow-through, right, on sort of an incremental comp. Maybe talk about how that works on a comp decline, right, compared to that 20%, assuming sort of a normal gross margin environment, and are there tweaks, right, you can make on labor and so forth to maybe keep it to around 20%? Yeah, so John, it's not a linear curve, right? So there's a certain step change above which you get a lot of flow-through. So as an example, we are not adding store directors. We're not adding department managers, etc. So there's a part of it that's very fixed. And so, as the volume threshold next year, I suspect, will be above that, that minimum threshold. Then let's talk about the part that's variable. It's primarily things like labor, right? And the labor in a store, we can manage hours. There's a lot of part-time labor in our store. So we can manage hours, and we've got a lot of initiatives that are aimed at reducing hours, making the hours more productive. And that's happening. That was pre-COVID, and it's continuing through COVID. And they're working well, John. That's the nice thing. You saw some. We had good shrink numbers, better shrink numbers, right? And Bob talks about it in the gross margin. We've rolled out tools that are production management tools, production scheduling tools that optimize labor while it also helps shrink because they're producing the right quantities. So those are types of things we're doing to also reduce it and keep that kind of flow-through. Okay. Thank you. Thank you. Our next question comes from line for Paul Trussell with Deutsche Bank. Please proceed with your question. Hi. Good morning. This is Krisztina Katai on for Paul. Thank you for taking our questions. I wanted to ask about digital grocery economics. You did mention that you saw a reduction in picking costs that was driven by technology. So is there anything additional that you can provide of profitability of the channel? And secondly, how do you expect it to trend once DUG becomes a larger portion of that e-commerce buy? Yeah. Actually, we're more excited when DUG becomes a larger portion of our e-commerce portfolio. So think of it this way. Let me give you a sense for how we think about the math of the e-commerce business. First, if you were to take all e-commerce transactions, the entire e-commerce team, put it all together in a P&L, our own e-commerce business, which is our own pickup, delivery, and all of that, is a break-even business, okay? But I want you to think about that. It's a break-even business at a time where stockouts are higher than normal. Callouts, labor callouts, so somebody gets sick and can't come, those things are higher than normal, okay? The demand patterns are more variable than normal. So it's a break-even business in that kind, and we're investing to make sure that it's a high-quality experience. So in that, and then in that same P&L, we've got initiatives that are improving picking efficiency. We've got the MFC coming. So we feel excited about it, about the core business itself. And the DUG is the more profitable side of it, and that's growing faster, so we're good. Take a different lens. Take a customer lens to it. And on a customer lens, it's even more exciting because, as I said earlier, John, some of our less engaged customers, when they pick up e-commerce, spend more with us. I know it's coming from somewhere else. It's leveraging the same store, and our e-commerce is store-based. It's leveraging all of the same assets. So in essence, there's more marginal profit from that, with a lot of upside on improving profitability as we think about it. Got it. That's really helpful. And secondly, I just wanted to touch on fresh. I mean, you talked about fresh being a differentiator for Albertsons, and it is driving the market share gain. So to what degree do you think it sets you apart from your competition? And perhaps what are some of the areas and categories where you can improve your offering or service levels? We're always going to continue to improve our offering and service levels, right? I mean, we're never going to be satisfied by that. So as an example, we think that meals programs, rolling that out will be a big upside. And we've seen that work where we've rolled it out, and we're continuing to expand that. So it is not just ingredients, but having solutions for you so that you may not feel like cooking at home tonight, and you still have a great meal that feels like it was cooked at home, right? So that kind of thing, we'll continue to improve. Some of the reason we have our fresh advantage is we invest in the labor in the store. So we have butchers in our store, right? We have bakers in our store. You can get a cake baked the way you want it. You can get a piece of steak cut the way you want it. You miss it at the restaurant, you get it in our store. So there's a level of investment in labor. There's a level of investment in the choices we make on our product. And those things, under normal times, would have been a marginal advantage. Under times like this, when people are eating a lot more at home, it's a bigger advantage. Great. Thank you so much, and congrats on a great quarter. Thank you so much. Thank you. Our next question comes from the line of Paul Lejuez with Citi. Please proceed with your question. Hey, everyone. This is Brian Cheatham on for Paul. Thanks for taking our question. I was just wondering if you could talk a little bit about some of the technology improvements that you're investing in. I think last time you mentioned the on-demand planning system was in 800 stores. I was just wondering how that rollout is going, if you're seeing any margin improvement in stores that have that versus stores that don't, and if that contributed to the better shrink this quarter. Yeah, Brandon, about 30% of our capital goes towards technology, right? And so let me just parse that out a little bit for you. A good bit of it goes towards improving our infrastructure. So migrating to the cloud, making sure that our systems can ramp up very quickly. It was fantastic to our e-commerce businesses on the cloud, and when we did that, we saw very little disruption, even when we saw the spikes and such, so that's part of our IT. It gives us better data, consolidated data. That's one part of the expense. We'll drive that for the next couple of years, and we'll have most of that done. The other part of it is going to improving growth, which is applications, customer-facing applications that we're doing. It could be around the automated lockers you're seeing, etc., so there's types of things that we're doing to drive growth, and then there's a bunch going towards productivity. It's in-store productivity. It's DC productivity, and in-store, the particular things you asked about are ordering systems, rolling it out. It's been fantastic. My test is going into a store and asking the people in the store how the system is helping them with dairy or frozen. And when they say it's great, it really is great. Otherwise, they don't use it. And yes, we're seeing improvements. Production systems that we're putting into all our fresh, where we cut our fruit and make the cakes and everything else, all of that is helping. That's why you're seeing both labor benefits, shrink benefits, and all of these things. You also see sales benefits because you're better in stock. Understood. And on the Own Brands, are you facing headwinds with stockouts? Has that kind of gotten easier as we've gotten through the pandemic? Better and better. So our own brand penetration in the last four weeks of the quarter crossed 25%. So remember, we were 25.4% when we finished 2019, and then it had dropped. It had dropped about a point and a half, and it's come right back to 25%. So we feel good about coming up in stock. And then the other thing that the team is doing very nicely is filling in gaps. So when I was saying we want to be more in, we're getting into the value packs and so on. So we're getting into filling in gaps or identifying new needs that the customer cares about today. Got it. So it sounds like Own Brands kind of has accelerated through the year, and now you're back to where you were. Yeah. I think that Own Brands was. There's two things in Own Brands you should know. One is a supply challenge. And the second thing is if you have a shelf of, let's say, five national brands and an own brand, on a normal course of business, the two national brands that are sold a lot and the Own Brands that are sold a lot, when you clean out the whole shelf, by definition, your mix comes down. Right. Got it. Thank you. Appreciate it. Good luck. Thank you. Thank you. Our next question comes from the line of Robert Moskow with Credit Suisse. Please proceed with your question. Hi. Thanks for the question. Vivek you've talked a lot about improving the selection of ready-to-eat, ready-to-heat offerings. You've also talked about removing the salad bar in place of refrigerated space. And I was thinking about that this is probably one of the bigger merchandising changes that you're doing in your store in response to COVID and the consumer need for more simple meals that they can just pick up and replicate, prepared at home, prepared from scratch. But I'm having trouble figuring out exactly how widespread it is across your chain, how many of your sub-chains are doing this. Is there any way to quantify all this and give us a sense of how significant of a merchandising shift it is in terms of more convenient meal solutions? Yeah. So let me describe the merchandising, Robert. First, think of it as a few refrigerated units around the deli counter of a deli area of a store, all right? And the size of those refrigerated units vary depending on the size of the store. So from a merchandising standpoint, it's very focused and targeted. We think of these as modules, and it's doable. So it's not we don't have to remodel the store. We don't think restaurants or anything like that. Now, the bigger challenge is how to make sure that the production is done right and at a high quality. What is the right architecture? What can be produced in the store has to be produced outside the store. And that varies market by market. And that's what we're working through and deploying. It is not at any scale that we would be proud of, but that's the direction we're going. We have it in three markets right now. And in one market, it's expanding fast. In a couple of other markets, we are in experimental stage. But that's going to be a big emphasis as we think about the next two to three years. We think there's a substantial amount of growth here. What about salad bars? Are those still in the vast majority of your stores, or are they slowly coming out? Yes. They are. But look, in many areas, they're not operational because it's just not safe yet. Some areas, they are. But what you should know about salad bars is they don't always give you the greatest return in all markets. There are going to be places where it matters a lot, where you're near an office complex and you're going to have a lot of lunch business, and a salad bar works very well. There are other markets where it doesn't. And you always wondered about what is the alternative to it. Now we have one. Yeah. Great. Thank you. Thank you. Our next question comes from the line of Scott Mushkin with R5 Capital. Please proceed with your question. Hey, guys. Thanks for letting the call go a little long here, and thanks for taking my questions. So I wanted to ask, obviously, this year has been just tremendous, kind of a windfall. And how do you guys think of accelerating some of your growth initiatives to, I guess, accelerate share gains and also enhance the customer experience? Obviously, the customer is changing quite a bit on what their expectations are. So I was wondering if you could talk about how do you accelerate share gains and what are you going to do with the customer experience? Yeah, Scott. So number one, first, hi. Second, the share gain focus for us continues to be around e-commerce, all right, and then continuing to anchor it on fresh. Those are the two areas that we're putting more and more of our energy into. On e-commerce, it's about the expansion of DUG. It's continuing to invest into the front-end experience the customer has on the apps and such. I'll give you an example. We talked about Drive Up and Go, well, there are markets where the parking lot's really small, and you can't really set aside parking spots for it, but people are living in tall buildings around you, so we have a locker there or a service where somebody can come in, pick up two bags, and leave, and so we're trying to find different ways to serve that customer and improve her experience while she shops. When you get to the fresh, I can't say enough. It's about things that we're already doing, but also providing these meal solutions and such so that we can continue to give customers ease and convenience, yet not having to compromise the quality of what they get in our stores, right, for a meal at home. Those are the types of things that we're doing. And then running great stores every day, Scott. There's no substitute for that. Everything we're doing is about getting better everyday execution in our stores, and hopefully, you see that. So as a follow-up, is it possible to accelerate CapEx into productivity enhancing on the e-com? I know you guys are experimenting, obviously, with micro-fulfillment. But is there an opportunity to accelerate that investment? Any comments you guys have on some of the Amazon stores that have been opening up against you, and then I'll yield. Thanks. Yeah. Scott, about expanding, if I stay with MFCs for a second, we're going to have seven next year, and what we're trying to do is to figure out what might be different archetypes that we can use across the markets. We have one archetype now, which is connected to a store and such. We are exploring with different archetypes of an MFC, which we'll do in 2021, and then we'll be able to start expanding it more rapidly, so that's from an MFC standpoint. On capital that we deploy in stores, such as capital to improve ordering systems or capital to improve customer experiences, such as the self-checkouts and those types of things, we're experimenting there too. It typically doesn't end up being the rate at which you can deploy capital. It ends up being the rate at which you can manage change. And so what you don't want to do is to deploy these systems and get orders wrong or deploy these systems and have a lousy experience for the customer. That's usually more of the governor when you think of that. Thanks, guys. Really appreciate it. Thank you. Ladies and gentlemen, this concludes our time allowed for questions. I'll turn the floor back to Ms. Plaisance for any final comments. I apologize, but we ran out of time here. There are several people that we didn't get to, but we Cody and I will be available for the balance of the day. And we look forward to speaking with all of you. Thank you for participating, and have a great day. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.