Ladies and gentlemen, thank you for standing by, and welcome to the BJ's Wholesale Club Q1 2021 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised this conference is being recorded. If you require any further assistance, please press star zero. I'd now like to turn the conference call over to Ms. Catherine Park. Please go ahead. Good morning, everyone. Thank you for joining BJ's Wholesale Club first quarter fiscal 2021 earnings conference call. Bob Eddy, President and Chief Executive Officer, Laura Felice, Chief Financial Officer, and Bill Werner, Executive Vice President, Strategy and Development, are on the call. Please remember that during this call, we may make forward-looking statements within the meaning of the federal securities laws. These statements are based on our current expectations and involve risks and uncertainties that could cause actual results to differ materially from our expectations described on this call. Please see the Risk Factors section of our most recent Form 10-K filed with the SEC for a description of those risks and uncertainties. Finally, please note that on today's call, we will refer to certain non-GAAP financial measures that we believe will provide useful information for investors. The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Please refer to today's press release posted on the Investors section of our website for a reconciliation of these non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP. With that, I'll turn the call over to Bob. Good morning, and thank you for joining us. I hope you all remain healthy and safe. We had another incredible quarter full of challenges overcome by our dedicated and talented team members. 2021 has felt a lot like 2020 many ways, but in one distinct way, it has become completely different. As you know, six weeks ago, we lost our leader and friend, Lee Delaney, in an unexpected fashion. He was fascinating and fun and will be deeply missed by our team. His legacy and vision remain ingrained in our culture and in how we will run our business for the future. Personally, I've been inspired by and grateful for the outpouring of love and support from our team and from all corners of the business world, including the investment community. Lee's first priority throughout last year was the safety and wellbeing of our team members, and communities. That has not changed on my watch. This past quarter, we maintained our investments in wages, enhanced benefits, and safety measures across all of our clubs, distribution centers, and home office. Our success has been driven by the hard work and dedication of our team members, and I continue to be extremely proud of their efforts. BJ's has transformed in many ways in the last decade, and the most impactful change has been our ability to grow our team and attract and invest in world-class talent. These investments, along with robust succession planning, enabled our board of directors to quickly make management changes in the wake of Lee's passing, moves which speak to the depth and strength of our leadership team. Our board's unwavering support and guidance have been instrumental to our success. I'm honored to be leading this growing company and great team as President and CEO. I've been asked many times lately whether I will change our strategy, and it's important for you to know that I developed the strategy in partnership with Chris and Lee. We worked hand in hand together for the past five years. While I may choose to alter the speed of certain actions, you will not see me alter our general course at this point. We have a sound strategy that should enable our continued growth. Moreover, I've successfully built fantastic teams of people throughout my career. Our new team is no different. It's comprised of seasoned and talented executives with a breadth of experience in retail and consumer industries. Let me provide background on key members of our leadership team. Shortly, you will hear from Laura Felice, our Chief Financial Officer. Laura has been an integral part of our leadership team since she joined the company in 2016, and I've known her for many years before that. She's played an instrumental role in driving our strategic priorities, most notably enhancing our balance sheet and being a trusted advisor to our team as they work to capitalize on investment opportunities to further our growth. She's an ideal leader to serve as our CFO, matching technical skills with strong strategic insight. Another key partner of mine is Paul Cichocki. Paul joined us back in April 2020 and now serves as our Chief Commercial Officer. In this role, he will oversee merchandising, membership, marketing, and analytics. Prior to BJ's, Paul Cichocki was a partner at Bain & Company, where he spent more than 20 years advising clients on a variety of strategic and operational matters across industries, including retail, consumer products, financial services, and food and beverage. His extensive experience in leading performance improvement and transformations make him instrumental as we continue to transform BJ's and build on our momentum and continue to drive profitable growth. Bill Werner, who you all know very well, is now Executive Vice President, Strategy and Development. In this new role, Bill will lead our real estate expansion efforts and key strategic initiatives, including our co-brand credit card program and financial services. Bill's intimate knowledge of the financial side of our business pairs well with his great vision and creativity. We've already made so much progress on initiatives led by Bill, and I can't wait to see what he and his team can do in a more focused manner. Along with Laura, Paul, and Bill in their new roles, Jeff Desroches continues to oversee our field operations across clubs, distribution centers, and gas stations as our Chief Operations Officer. Monica Schwartz, who joined the team late in 2020 as our Chief Digital Officer, will continue to drive our digital transformation strategy. Scott Kessler, our Chief Information Officer, continues to ensure that we have the right technology and systems to support our business and transformation. Lastly, our entire team is supported by Mark Griffin, our Chief Human Resources Officer, and Graham Luce, our General Counsel. I'm lucky to have such great partners with which to run this business. I've said before that we are a much stronger and better company today than we were at the time of our IPO in 2018, and I continue to firmly believe that. Let me cover our financial performance for the quarter at a high level. Our first quarter results were quite impressive. We continued to see elevated consumer spending, most notably in general merchandise, retain 2020's market share gains, and enjoy benefits from government stimulus payments. We delivered two-year stack comp sales growth of 22%, adjusted EBITDA of $202 million, adjusted EPS of $0.72, free cash flow of $191 million, and we ended the quarter with a leverage ratio of 1 times. In addition to our strong performance, we made progress on each long-term strategic pillar. Our pillars remain growing and retaining our members, delivering value with merchandising and marketing, improving convenience with digital, and strategically expanding our footprint. I'll provide a little more detail about each. Membership is the bedrock of our business and where our transformation takes root. Two qualities matter most in membership, size and quality. Let's first address the size of our membership. We entered the year with the largest membership count in our history and a plan to keep total member count flat while lapping the highest member growth period in our history. I'm very happy to say that we grew our membership base by 8% during the first quarter compared to the prior year. This growth was driven primarily by record renewals, as well as growth from new clubs. We're very pleased with our results as we experienced the highest rates of renewal in our history on the largest class of member renewals in our history. This year, in a way like no other year, renewal is acquisition. Renewing members is far more valuable as they have higher MFI versus newly acquired members that typically join through a discounted offer. We also have individual data to leverage on these renewing members, allowing us to increase their engagement over time. As we continue to renew last year's large class of members, we have an incredible opportunity, and we intend to take advantage of it by differentially investing in engagement and renewal. I should note that although the renewal data is incredibly encouraging, these are very early measurements. Several factors could influence the renewal rates we ultimately disclose at year-end, such as timing and behavior differences. We also continue to improve the quality of our membership base. We are making progress with higher tier penetration, which is at 31% for the quarter. Compared to the year of our IPO, the number of higher tier members in our chain has doubled. In addition, more than 72% of our members are now enrolled in Easy Renewal. We've eliminated trial membership from our acquisition strategy. The improvement in membership quality is most evident in the growth we are seeing in MFI per member. The progress we're making in membership in terms of growth, renewal, and quality of members will help power our revised long-term algorithm. Assortment optimization is key to continue to deliver unbeatable value to our members. Our strategy is to simplify our current assortment in order to enable expansion into new high-demand categories and flex our space to meet evolving member demand. New categories performing well include fitness equipment and connected home. Under Paul's leadership, marketing, membership, and analytics will be integrated within merchandising, which should further accelerate our work and drive results. This quarter, we made great progress in growing our own brands as penetration increased to 22%. This increase was driven by strong growth in summer seasonal, furniture, and other home-related categories, as well as frozen and perishables. Our services business remains a key priority. We have a tremendous opportunity to elevate the value of our membership and deliver growth by creating an ecosystem of services that provide demonstrable value to our members. We began investing in expanding our services portfolio prior to the pandemic by bringing our optical business in-house and by launching a cellular offering with AT&T. We were pleased with the early success as we saw our new brands in optical and our strong value resonate with members. Given the high contact nature of services, the pandemic delayed our efforts to scale these businesses, but they are both now open and growing nicely. Additionally, we have continued to steadily enhance the portfolio with new and exciting services. We identified several long-term growth segments, including financial, health, and home services. We upgraded and further digitally enhanced our offerings in optical, home improvement, major appliances, and financial services. This past quarter, the business began ramping back up, and we saw strong growth across the portfolio, particularly in optical and in major appliances. As we progress throughout this year and into next, we expect the services business to be a meaningful growth driver for our business. Our digital business allows us to offer convenient access to the tremendous value that we provide every day. Our digitally enabled sales grew by 31% this quarter and 381% on a stack basis, surpassing our elevated expectations. We are more relevant than we have ever been in the digital space, and engagement among our members is most evident through the increased use of our app, which has been downloaded over 5 million times. Approximately a third of our members use our app regularly. On a scale-adjusted basis, our app engagement remains ahead of many of our competitors as we continue to make shopping meaningfully easier and faster. Our expanded digital fulfillment options continue to resonate with members as more than half of our BOPIC orders were delivered curbside this past quarter. Our plan to enable members to use EBT payments when shopping on bjs.com for in-club pickup and curbside pickup remains on track. Pending state approval, we expect digital EBT payments to become available in all eligible locations in the next few months. Our efforts to expand our footprint remain encouraging. With the support and hard work of our talented team, I'm confident that we will open six new clubs this year and as many as 10 more new clubs in 2022. Our 2021 clubs are expected to open in the latter part of the year, including new locations in Seabrook, New Hampshire, Port Charlotte, Florida, Commack, New York, Lansing, Michigan and two clubs in Pittsburgh, Pennsylvania, which is a new market for us. We also expect to open nine gas stations in 2021, followed by a dozen or more gas stations in 2022, which means three-quarters of our clubs will have gas stations by the end of 2022. We're excited about our expansion efforts, and our confidence is underpinned by the strong performance we are seeing in our new clubs, particularly in terms of membership gains and renewal rates. In our Michigan clubs and in Pensacola, Florida, first-year retention rates are well above chain-wide averages. This furthers our confidence in our expansion efforts as it demonstrates that our brand resonates in new markets. Overall, we are incredibly proud of the progress we've made. Looking ahead, we continue to face uncertainties driven by market factors outside our control, most notably the trajectory of food-at-home consumption and the overall macroeconomic environment. In fiscal 2020, we experienced historically high comp sales, and a sizable portion of our performance was driven by pandemic-related shopping, particularly the need to buy in bulk and eat at home. As the pandemic fades and consumer behavior evolves, we would expect to give up some of those sales gains that resulted from increased food-at-home consumption. While our return towards normal creates some noise in the remainder of this year and into the next, we expect our membership trends, optimized and expanded assortment, robust digital business, and expansion progress will power a revised algorithm that includes mid-single-digit top-line growth in the future. Our confidence is reinforced by our belief that macro trends will work in our favor. We believe that at-home food consumption will reset a level higher than historical levels, as consumers will likely consume food at home more than they did prior to the pandemic. Economic uncertainty will continue to increase the focus on value, and demand for convenience will likely remain relevant. Therefore, we expect our unbeatable offering of value and convenience will be a winning formula. Lastly, our higher unit growth rates will allow us to tap into a considerably expanded addressable market and continue to grow share. Let me turn the call over to Laura to give a bit more color on our results and view of the future. Laura? Thank you, Bob, and good morning, everyone. I'm honored to be here this morning and grateful for the opportunity to continue to partner with the team to transform BJ's Wholesale Club. Our strong financial performance and the acceleration of our strategic priorities are powered by the dedication and hard work of our team members who continue to execute at the highest levels. I'm very thankful and proud of their efforts. In my new role as CFO, I will continue to execute on the priorities that we previously laid out, which include driving profitable growth, executing on our long-term strategy to maximize our potential, and enhancing our balance sheet and capital allocation plans to create shareholder value. Our company has enjoyed a collaborative relationship with analysts and investors over the last few years, and this engagement will remain essential to our long-term success. Working with Bob Eddy and the team, I look forward to partnering with you over the continuing months. Let me now turn to the results for the first quarter. Net sales for Q1 were $3.8 billion. Merchandise comp sales, which excludes sales of gasoline, reflecting a positive 22% two-year stacked comp. Let me give you some color on the comp cadence for the quarter relative to our internal plans. In February, comps were slightly behind our internal plan. We saw an acceleration in March and April relative to our expectations as we benefited from stimulus payments, strong member retention, and elevated sales in general merchandise categories. Our digitally enabled sales grew by approximately 31% and 381% on a two-year stacked basis and drove about seven percentage points of our 22% stacked merchandise comp. On a stacked basis, we saw robust and strong growth across all of our digital channels, particularly in BOPIC, curbside pickup, and same-day delivery. As you know, our digital business is economically advantaged compared to many of our peers, and the bulk of our growth in digital is fulfilled through our clubs. Furthermore, we operate in a warehouse environment with limited number of SKUs and a higher average ticket, enabling us to be more efficient. BOPIC and curbside sales tend to skew towards bigger baskets, and same-day delivery sales have the same margins as traditional sales in our clubs. Most importantly, growth across our digital channels highlights our relevance. Digitally engaged members have higher average baskets and make more trips per year than members who shop in club only. As we've said before, generally, the more a member shops and spends, the more likely they are to renew. Comps in our grocery division were 23% stacked, reflecting a negative 10% comp for the current quarter and a 33% comp in the prior year. As expected, we saw a decline in our grocery and sundries division as we lacked the heightened demand for paper products, cleaning essentials, packaged goods, and beverage driven by the onset of the pandemic last March. On a two-year stacked basis, we saw robust growth across all divisions, particularly in perishables, where stacked comps were in the mid 20% range, and we saw growth in fresh meat, frozen meals, and fresh produce. Our general merchandise and services division saw a comp growth of 32%, reflecting a 29% stacked comp. Recall that our general merchandise and services division saw a comp decline of about 3% in the prior year as sales of apparel decreased and we turned off our services businesses. Our robust growth in the quarter, driven by strong sales in seasonal categories such as patio sets, apparel, and home-related categories such as furniture and consumer electronics. We also saw strong growth across our services portfolio relative to the prior year and also sequentially. Although services represents a small portion of our business, we expect to continue to invest behind it and expect these investments to fuel future growth. In our gasoline business, we continue to gain shares. Gallons sold at comp clubs in the first quarter grew by approximately 29%, significantly outpacing overall market performance. Membership fee income, or MFI, grew by 9% during the first quarter to $86 million. Our MFI growth was driven primarily by strong member renewals and improved membership mix. As Bob noted, this quarter, we lacked the heights of our new member acquisition back in March and April of last year. Renewal rates for these members outpaced our expectations, and their elevated shopping behavior and digital engagement is encouraging. We're focused on retaining these members and moving as many of them as we can into our tenured base. In addition to our tenured members are renewing at higher rates, and we continue to improve the quality of our membership base through growth in our higher tier penetration and Easy Renewal program. Let's now move to our gross margins. Excluding the gasoline business, our merchandise gross margin rate increased by 80 basis points, driven by a mix of general merchandise sales, CPI initiatives, and private label penetration. As a reminder, in Q1 of the prior year, our gross margins were impacted by markdowns we took on our apparel inventory and significant inflation in some commodities like eggs, where we invested meaningfully in price. SG&A expenses for the quarter were $600 million, compared to $590 million in the prior year, and included a couple of 1x costs. We incurred approximately $17 million of stock compensation expense related to the accelerated vesting of Lee's stock awards. In addition, included within SG&A is a $2 million charge of severance that resulted from the realignment of our field operations. Our adjusted EBITDA grew by 4% to $202 million and reflects continued margin expansion and disciplined cost management. Interest expense for the quarter was $19 million and included a $5 million charge related to the partial paydown of our first lien debt. Adjusted net income for the first quarter was $100 million or $0.72 per share and reflects a 4% year-on-year growth on a per share basis. Our earnings growth highlights our strength of our business, reduced interest expense as we continue to enhance our balance sheet. Please note the adjusted earnings in Q1 excludes 1x costs I mentioned earlier, Lee's accelerated stock compensation expense, severance costs, and pay down of debt charges. As a result of our solid performance, we generated $191 million in free cash flow. In addition, we paid down $150 million in debt and bought back $14 million worth of shares. As Bob noted, we ended the quarter with 1x funded leverage. This reduced level of debt will increase our flexibility to continue to invest in the future. Looking ahead, our capital allocation strategy remains consistent. Above all else, our top priority is to invest and grow our business, particularly investments to support membership, digital, and our real estate growth plan. We will look to opportunistically enhance our balance sheet even further, and as we plan to continue to return capital to shareholders through our share repurchase program. Ultimately, our goal is to ensure we have the appropriate capital structure that enables the company to succeed in the long term while maximizing shareholder returns. Let me now touch on the outlook for this year and provide some perspective on our long-term algorithm. 2021 remains difficult to forecast, given the number of uncertainties, most notably related to the timing and size of the shift of our consumer behavior away from food at home. As a result, we will continue to refrain from providing formal guidance. That being said, I will share with you our best high-level view at this point. Looking at our top line and based on our current assumptions, we would expect comps for the remainder of the fiscal year to be in the negative 10% range, implying a two-year stacked comp in the low teens. Our assumptions are based on expected deceleration in food-at-home consumption as consumer spending reverts back to normalized levels. From a membership standpoint, we continue to expect total member count to be flat or better during 2021, and for full year MFI growth to be in line with historical years. MFI growth will be weighted more towards the front half of the given year, the way renewal flows should happen. While we expect to continue to enhance our membership base with new members and renewals, these drivers will have a more significant benefit beyond 2021. From a gross margin perspective, while we expect to continue to benefit from CPI initiatives and private label growth, we do not believe that Q1's merchandise margin rate improvement will recur. First, we are mindful of the easy compares against last year's numbers. Next, we are conscious of the current inflationary environment. As we have said, we always invest in price to maintain and enhance our unbelievable value to our members, so we may see margin headwinds in future quarters. Finally, the availability of general merchandise inventory could have an impact on our margins, particularly in the second quarter and potentially in the remaining quarters of the year as well. It's difficult to guide with great specificity here, but we are confident we are able to manage these headwinds and continue to drive profitable growth. We expect to continue to incur COVID-related costs for the foreseeable future, associated mainly with safety and sanitation. We expect these costs will be roughly in line with Q1, and they will vary accordingly to the situation in each quarter. Know that we will continue to invest in our business and our team, particularly in membership, digital, and geographical expansion. While external factors are impacting our near-term results, it's important to reinforce that our performance for 2021 continues to be ahead of historical plans, and that our confidence in the long-term health of our business remains the same. We continue to expect membership trends, our assortment and digital initiatives, and geographic expansion to power our revised algorithm that includes mid-single-digit top-line growth in the future. At this point, I'll hand it back to Bob to close. Bob? Thanks, Laura. I'd like to leave you with a few key messages. First, BJ's Wholesale Club is a much different and better company today compared to 12 months ago, and we are poised for more growth. We have significantly more members, and our membership is of vastly better quality. We are intent on investing heavily to retain these new members and have done a great job executing on that so far. We have a relevant and growing digital business, which continues to resonate with our members, and on a scale-adjusted basis is ahead of many of our peers. We accelerated our geographic expansion efforts. We will open six new clubs this year, and we see a path to 10 new clubs in 2020 and beyond. Importantly, our brand is resonating in new markets, and we are seeing robust membership growth and strong renewals in new clubs. We've generated nearly $1 billion in free cash flow over the last five quarters. We've transformed our balance sheet, and we will use the resulting flexibility to invest in future growth. Next, we have a world-class team leading this company with more growth on the horizon. I could not be more proud to work with all of my partners on our executive team. They're phenomenal executives, and my success is due to their efforts. Finally, I'll end where I began. Our recent past has been full of challenges, but we've seen more progress and transformation in the last year than in any year of my tenure. While the next few quarters will bring headwinds that temporarily mask these long-term gains, we will reset at a higher base and a faster growth rate. I'd like to thank our entire team for getting us through the last few weeks and for continuing to push us forward. Now, I'll turn the call back over to the operator to begin the Q&A session. First question comes from Robert Ohmes with Bank of America. Oh, hey, good morning. Great quarter. I think, really two questions. Bob, in the opening comments, you mentioned that you may alter the speed of strategy. I was wondering if you could talk a little bit more about that. Would that be accelerating general merchandise strategies? Could store growth be more than you're saying? Maybe a little color there. Then for Laura, I would love to get a little more detail on the second quarter gross margin pressures related to the input cost inflation and also what you're seeing on procuring merchandise. Yeah. Hey, Robbie. Good morning. Thanks for the questions. Listen, I'm incredibly humbled to lead this great company. We've got tons of growth ahead of us. As I said in the prepared remarks, I don't envision at this point really changing the overall strategy of the company. Lee and Chris and I developed it together. I think it's clearly working, if you look at really any of our results over the past few years. That gives me tremendous confidence in the strategy overall. I think every new quarter brings something different. That may cause us to change one thing or another. I'll give you a couple of examples. We're certainly seeing more inflation of late, getting into your second question. That might cause me to press the accelerator on our assortment changes a little bit, right? Rationalize some SKUs that might be inflating a little bit more than we think they should, for instance. Certainly, real estate is a big one of mine as well, and putting Bill in charge of that in a more permanent basis with his team would indicate that we have tremendous confidence there. What we're seeing in the membership data in Michigan and in Pensacola certainly reinforce that. We know that we would like to grow our unit count as fast as possible. We'll take it one quarter at a time and make the decisions that we think we need to make, but our strategy is sound. Our results have shown that it's working. We're incredibly pleased with how this quarter worked out. If you want to talk a little bit about inflation, we didn't see too much of it in the first quarter. We are starting to see a bit of it in the second quarter. It's important to think about inflation as potentially a good thing. It gets a bit of a bad rap on a headline, but in our business, it can actually, when managed appropriately, can widen price gaps and make us look a little bit better. It can certainly pressure consumers' wallets, and any time consumers' budgets are pressured, they come to our channel and they come to us. We've got a great toolkit to deal with inflation, although it's been a long time since we've seen this much inflation. We've got a great toolkit to deal with it, and CPI is at the center of that. We can certainly, as I said earlier, choose to rationalize SKUs a little bit faster. We can buy in inventory ahead of price increases. We can do a number of different things. We have a cohesive plan under Paul's leadership with our merchants to do just that. We'll go forward and deal with whatever inflationary environment brings us, but it's not necessarily a bad thing to our company. We may choose to invest in price as we go ahead. We have typically done that in the past, and it's important to continue to show tremendous value to our members. Overall, as long as the inflation is rational and reasonable, it's not a problem at all. Got it. Thanks so much, Bob. Sure. Next question comes from Peter Benedict with Baird. Oh, hey, guys. Thanks for taking the question. I guess maybe a little bit of the inflation and the mixed factors on merch margin, and obviously that first quarter trend not expected to continue. Do you think you could see outright declines in merch margins as you look over the balance of the year, or is it just maybe we're talking more flattish as opposed to the big gains you saw in one Q? That's my first question. Yeah. Hey, Peter. Good morning. It's difficult to predict what we'll see through the rest of the quarter, so I'd hate to give an actual number about it. We are seeing more inflation, as I just said. We will invest in price to maintain price gaps or to widen price gaps. We'll see what actually happens. I think, ignoring inflation, the general merchandise sales have been wonderful, and they've been at higher rates, so there's a bit of a mixed benefit there. The services business is starting to ramp back up again, and that's pretty margin-dense business as well. We've certainly got some tailwinds to think about that might offset any inflationary headwinds. We looked at the 80 basis points in Q1 knowing that roughly half of it was due to easy comparison last year, and we didn't want anybody to take that and extrapolate it through the full year. It's not our expectation that would occur again. We do think margins will continue to be good. No, fair enough. That makes sense, Bob. Thanks. I don't know if you guys have made an effort to try to even size the stimulus benefit there in the first quarter. If you did, just any more color around that, and the go forward merch comp view, I just want to make sure, did we hear that is the expectation low teens two-year stack, is the way you're thinking about merch comps over the balance of the year, or just maybe clarify that? Thank you. Peter, it's terribly difficult to size the stimulus benefit. Throughout the quarter, we certainly enjoyed the benefit. We could tell immediately when the checks started going out. It just so happens it was at the time where we started to see the great renewal data that we've been seeing all quarter at the same time. If I look at the Q1 results, February was a little bit behind our plan, March and April were way over our plan, and those two months certainly benefited from stimulus and from the membership benefit. It's just a little difficult to pull those two things apart. Maybe I'll let Laura talk a bit about the guidance, and we can go from there. Hey, Peter. like we talked about in the prepared remarks, I think we're continuing to see a strong business, and are happy with the direction it's going in. We'll refrain from providing longer term comp guidance. we generally think that kind of the direction we're going is healthy. Yeah. Maybe I'll add a bit of texture to it. You think about the headwinds and the tailwinds as we go through the rest of the year. We have tremendous tailwinds to think about, member flows, shopping habits, inflation, easier compares. We also, I think, will have some headwinds to think about, and the biggest one to think about there is food at home. We took tremendous sales gains last year and tremendous share gains last year, as a result of Americans eating more food at home. I would think that as the world opens up again, people get back into their offices, and they go back into restaurants. That means that food at home retracts. I don't think it retracts all the way to where it was pre-pandemic, because people have gotten used to eating a ton at home. I do think that causes a headwind as we go through the year. You have the stimulus rolling off, you have some of the pantry de-loading we saw in our sundries business in the first quarter. You've got some meaningful headwinds to think about. All of that gets to the guidance that we put forward. None of us really knows what's going to happen, and we wanted to make sure we put something out there we were reasonably comfortable with. That's why we gave that number. No, that's totally fair. My last question, I'll turn it over. Just on the leverage 1x, there were some comments around looking for opportunities to enhance further, and it's already pretty attractive right now. But just latest thoughts on where you would like to see leverage, let's say, a year from now or what would you be comfortable operating at? Just kind of that's my last question, and then I'll turn it over. Thanks, guys. Yeah, Peter, I'll take that. I think we're happy with where we are right now. Certainly better than what we expected, I think a year ago or even going back further. We've made tremendous progress from a leverage standpoint. We will certainly continue to invest in the business, specifically our strategic priorities. I think we'll look to go after the share repurchase program, like we've set out with our board. Continue discussions on where we go from there. Okay. Thanks so much, guys. Good luck. Thanks, Peter. Next question comes from Michael Baker with D.A. Davidson. All right. Hi, guys. A couple. One again on the comps. Low teen stacks, that suggests progressively that's just down 12 in the second quarter. Is that what you're currently seeing? A follow-up to that would be, how does the current outlook today compare to when you talked in the fourth quarter? The discussion there was about high teens in the first half, which I think is consistent. If you do 22 in the first quarter and low teens in the second quarter, that's about consistent, but I just wanted to see how your thoughts are now versus three months ago. Yeah. Michael, they haven't really changed all that much. I don't want to get into dissecting quarters. We tried to give a little bit more in terms of color this quarter, just as we looked at what was out there for consensus in the back half. Not a tremendous amount has changed. A lot of the rest of the year will depend on what happens from a food at home perspective. We're incredibly pleased with what we saw in Q1. I wouldn't take the guidance and read into the early part of Q2 has been tough. I wouldn't really think about it that way. I would just think about we are just trying to be honest about what we think might happen as the world starts to open up again. The change from three months ago is really the speed with which we've gotten people vaccinated, the speed with which we are no longer wearing masks. The four of us are sitting here in our conference room here without masks for the first time in a year and a half. We think that may speed people's behavior change along a little bit. I don't think that's a giant change from what we said just a couple of months ago. I think the most important point in this discussion is please don't confuse the short term with the long term. The short term is going to have bumps in it. It's going to be more about what happens with food at home as the world reopens. Once we get through this noisy period, all of those tailwinds that I talked about with Peter's question come into play. The membership alone should power us to have much better comps than we did pre-pandemic. You layer in the real estate growth that Bill Werner and team are putting up, that should power even more comp growth. Once we sort of re-baseline, we feel like this company grows at a much faster comp rate than it did pre-pandemic, so that we can leverage the business better, that we generate more EBITDA, that we can buy back more shares because we are much more cash generative today than we were just a year ago. All of that powers incredible financial results as we get into the future. Yeah. That's very helpful. Thank you. One follow-up. On the renewal of members who signed up last, it was probably last March and April, I suppose, is what we're looking at. You said it was better than expectations, but I guess the question is, what were the expectations? More simply, can you talk about the renewal rates of that cohort relative to the historical first-year renewal rates, which are usually in the 50%-60% range? Yeah. Thanks, Mike. We had fantastic membership results in Q1. There's really no other way to play it. You point out where we were historically. We went into the quarter thinking we would do much better than that. The setup was pretty optimal to renew that giant class of members, where we were still in the teeth of the pandemic. The stimulus dollars came in exactly when we started to renew those folks. The setup couldn't have gotten any better. Frankly, the data that we're seeing couldn't get much better either. It was very good. It is very early as well. We just want to temper our own enthusiasm and maybe yours, hopefully yours, with that point that it's a bit early. We're looking at what we call zero-day renewal rates. On-time renewal rates. My membership expires on March 1st. I renew on March 1st. Those are the best renewal rates we've ever seen in our history. We typically disclose at year-end on a different metric, which is a lagged metric. It's a six-month post view of the year. What we disclose at January year-end is what happens to folks that were due to renew by July, lagged all the way to January. That sort of evens out any timing differences or behavior changes or what have you. This is incredibly encouraging data, but it's very early data, and we don't want to get out over our skis on it. As I said on the prepared remarks, best renewal rates we've ever seen on the biggest class of members we've ever seen. That's first year. 10-year renewal rates were great as well. Member behavior was great as well throughout the quarter. Lots to anticipate and to be happy about. Again, it's a bit early. I appreciate all the color. Thank you. Sure. Next question comes from Chuck Grom with Gordon Haskett. Hey, good morning, Bob. Hope you guys and the team are doing well and hanging in there. Just a couple of questions from me. One clarification and one bigger picture. First one on the clarification. For MFI, you said consistent with historical levels. That's around 3.5%. Just wanted to see if that number makes sense. Then again, on the guide, just wanted to make sure. You guys are saying that down 10% on the core for the remaining quarters, and then for the full year, the two-year stack would be in the low teens. Just wanted to clarify that. That's my first question. Hey, Chuck Grom. Thanks for the question. MFI, we've guided to 4% for the year, a little bit higher than historical growth. A bit front-loaded as well. You saw the 9% growth here in Q1. That's just really the member flows and the renewal flows being front-loaded given what happened last year. Certainly already a bit above historical. Hopefully, as we get through the year and we see more great MFI results, we can give you even better numbers as we go. You're exactly correct on the guidance. -10 for the remaining three quarters and the high teens stack for the full year. Got it. Okay, great. Second question and bigger picture. As you guys have reinvigorated comps and are starting to expand units over the next few years, just curious how your conversations with vendors have changed. If you think back, Costco will tell you that as they start to build out over the past 15 years, the vendors that would never deal with them are dealing with them now, and that's given them access to a lot of product. I think that's really the opportunities set for you guys. Just a question on vendors and where you guys are at this point. Yeah, sure. We're supported by a great group of suppliers. They're great partners in our business, and they've been incredibly supportive over the past six weeks as well. If any of them are listening, thank you for all of your support. I think the way the industry really works is you get more support from vendors if you're growing, if you're big and you're profitable, and you're growing. Obviously the more real estate growth we have, the more attention we'll get from our suppliers. I anticipate as we go forward, we will see them support the specific idea of real estate growth through getting newer, better products into our new clubs. I would imagine they'll support us with more promotional and trade funding as well as we continue to put up great comps. Great. Thank you. Next question comes from Edward Kelly with Wells Fargo. Yeah. Hi, good morning, guys. I wanted to just go back to the comp guidance that you provided for the rest of the year. Particularly the down 10% as you get into the back half. If we start thinking about two year stacks on that's mid, high single digit two year stacks in the back half. Which is better than probably what it would have been if COVID never happened. It's probably not as good as what we would've all thought, given all the members that you've gained during the period. I'm just curious as to the disconnect between the number of members that you brought in and how much the actual box comp versus what that back half two year stack looks like. Thanks, Ed. I guess I would almost repeat what I said earlier, right? The whole story to us is about what happens from a food at home perspective. We are tremendously confident from a member flow perspective. We've seen great shopping habits. We've maintained our market share through Q1. The inflation will certainly be helpful to top line comps if it continues. If people stop eating every meal at home, I don't think there's any other way to think about it than comps go down at some point. I think they have to. Then you have the stimulus rolling off, unless there's another package as well. So, this may prove to be conservative guidance. In fact, we hope it does. For now, we wanted to put something out there we were comfortable with. Again, as I said to Michael Baker, the most important thing to me is that you don't worry about the short term. The long term of this company is what we're focused on, and the long term future of this company is incredibly bright. The membership data alone, before you get into assortment and digital and real estate, all the wonderful things happening in this company, the membership data alone portends great things for this company. It's just going to be weird over the next couple of quarters. Once we get into next year and everything normalizes, I think we'll be doing great things. Just as a follow up to that, Bob. Your member growth in Q1 was up eight. You obviously had member growth last quarter. How much are members actually up now relative to the end of 2019? Boy, I'm not sure I have that number at my fingertips. It's pretty considerable. We ended 2019 with somewhere about 5 million members, right? We're six and change at this point, so it's got to be almost 20% member growth. The new members that you've brought in, the spending levels on those members are similar to your member base, better, or worse? Well, remember Edward, member spending seasons over time, right? They come in at a lower level and over usually about three years, they get up to average member spending. The fact that we have a ton of new members, first year members last year are now getting into their second year, is a little bit of a comp benefit in a normal year. The members came in at a pretty high level of first year spending last year. It may actually not be a great source of comp in the second year here. They came in great. They continue to look like they're behaving very well. I would expect them to continue to season. It's just going to be lumpy and weird given how high they came in relative to other first year cohorts, and then what happens with food at home. Got it. Okay, thank you. Yep. Thanks, Ed. Next question comes from Karen Short with Barclays. Thanks very much. Sorry to harp on this membership commentary, but you said you grew the membership base by 8% in 1Q, and I think the exact words was that was a function of record renewals and new clubs. I guess my first question is, I'm still not sure I understand why renewals would impact that, but are we using your ending 2020 greater than 6 million members as a base of which to grow that 8%? Are we using a number that would've been in the first quarter of last year, which I think would've been somewhere between 5.5 million and 6 million? Yeah. Good morning, Karen. That 8% was against last year's first quarter. Members grew sequentially against Q4 of last year as well, but at a lower level than the 8%. Okay. I'm right in saying you are somewhere, I think you ended 2019 at greater than 5.5, then in 2Q, you updated that number to be 6 million. It would've been a growth rate somewhere between those two, right? I think that's right. Bill calculated the actual growth rate to the earlier question. It was 17%. Okay. In terms of the actual renewals for the March, April, May cohort, I know you've said better than it ever has been, but I think the first-year renewals have always been in the 50-ish range, right? Right. Are you willing to give us some number in terms of, is it 60? Is it 70? Is there any metric that you can give that's a little more granular? Yeah. Over a long historical basis, they were in the 50s. We talked last year that they were just over 60. I think the actual number was 62. What we saw in the first quarter was meaningfully better than 62. Much higher than what we thought it would be. We'll see what happens with the calculation as we go through the year, given all the lag data that I talked about earlier. We were very pleased to see the initial numbers coming in way ahead of what we have seen in the past. Okay. I just want to switch gears in terms of the SKU optimization, specifically in food. I know that was supposed to be planned to be more aggressively completed in 2020, and the pandemic, I think, basically put that to a halt a little bit just because behavior was so abnormal in terms of what people were buying. Can you just give an update on where you're at with that and how to think about that throughout 2021 in terms of. Yeah. just the food optimize? Yeah. That's a good question. Take a category like soup. At the beginning of the food SKU optimization project, we were really going to skinny down canned soup. We have, I think about 10x the assortment that Costco carries. In some months of the year, like the summer, Costco doesn't carry any canned soup. We certainly have some, what we would call unnecessary choice in our assortment in canned soup. Turns out when you have a pandemic, everybody and their brother wants canned soup. We kept that in the assortment and paused that and things like that. As we ease our way out of the pandemic, we will get right back to where we wanted to go on categories like canned soup. Probably the other thing we should talk about is private label. Our own brands are doing phenomenally well. We got up to 22% penetration during the quarter. That will be an increasing focus for our team as well. As Paul and I talk to the merchants, it's certainly something we want to do for the long-term health of the company. 22% should be 30% easily, 35% maybe. That will show its teeth in the food business. Certainly, in Q1, we made some moves that will show up in Q2 and later. We also saw great own brands performance in the general merchandise side of the business, and I talked about that in the prepared remarks. You're absolutely right to think SKU optimization slowed down during the pandemic, and it will ramp back up again as we get out. Okay, great. Thank you. Yep. Last question comes from Robert Moskow with Credit Suisse. Hi, thanks for the question. It may sound like a familiar question. Regarding the guidance, it kind of implies a growth rate below what Target has provided. It's below what consensus is for Walmart on a two-year stack basis. It looks more like what the pure-play grocers are guiding to. I thought of BJ's as being more like Because of your general merchandise, you'd have a stronger growth rate and also just because your momentum. Really, the question is about market share. Do you expect to continue to take market share for the rest of the year over other grocers? If so, would that be upside to your guide? Good morning, Robert. Look, I don't want to comment specifically on Target or Walmart. They know their companies better than I do. I don't think we're a grocer. I think we are a much different company than a grocer. I think we're somewhere in the middle, quite honestly. Your market share point is a good one. We took tremendous amounts of market share last year. I think it came from two places, quite honestly. One, we were doing a much better job at running our business, being in stock, giving our members tremendous value, doing all the things we needed to do. Frankly, I think we did it better than anyone last year. Sure. You have the food at home thing that added excess market share, I guess, is how I might think about it. As we've talked about, almost everybody's asked this question. We don't know what's going to happen with food at home. We think logically it should go down, and while we didn't see that happen in Q1, we maintained our market shares. I've got to think it happens. Maybe our guidance is conservative. That's what we wanted to put out there, conservative guidance that we were comfortable with. We'll see what happens as we go through the year. Yeah. That would be my perception is that your shares are going to remain strong, and you'll outperform the other grocers. Thank you. Yeah. Pardon me one second. I'll turn the call over to Mr. Eddy. Great. Thank you very much for all of your time and attention and your questions and for your support of our company during the last six weeks, most particularly. We'd like to thank our team for the wonderful results in Q1, and we look forward to the bright future that we see for our business. Thanks very much. This concludes today's conference call. You may now disconnect.