Hello, everyone, and welcome to the BJ's Wholesale Club Q1 2023 Earnings Conference Call. My name is Carla, and I will be coordinating your call today. After the speaker's remarks, there will be a question and answer session. To register a question, please press star followed by one on your telephone keypad. If you would like to revoke your question, you can press star followed by two. When preparing for your question, please ensure your phone is unmuted locally. I'll now pass the call over to your host, Cathy Park. Please go ahead. Good morning, thank you for joining BJ's Wholesale Club's First Quarter Fiscal 2023 Earnings Conference Call. On the call today are Bob Eddy, President and Chief Executive Officer, Laura Felice, Chief Financial Officer, Bill Werner, Executive Vice President, Strategy and Development. 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 sections of our most recent Form 10-K and Form 10-Q filed with the SEC for a description of those risks and uncertainties. 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 and the latest investor presentation posted on our IR site 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. Morning. Thank you for joining us today. It's a pleasure to be here today to discuss the results that we reported this morning. In the first quarter, our business continued to perform at a high level, demonstrating the power of our member-centric model and the warehouse club channel. At our Investor Day in March, we shared with you several significant milestones resulting from the company's incredible transformation, including a record 90% membership renewal rate, surpassing $1 billion in an adjusted EBITDA, and nearly tripling our adjusted EPS since fiscal 2018. We achieved these results by steadfastly focusing on value, driving market share gains. We have created a growing and profitable digital business. We have accelerated our footprint expansion. We built on these milestones in the first quarter with the launch of our co-brand credit card program. This program, underpinned by our strong value prop, is designed to drive higher member lifetime values, traffic, and market share gains. These initiatives, combined with a strong operational performance, enabled us to report a record first quarter in adjusted EBITDA. Merchandise comparable club sales, which exclude gas sales, were up 5.7% in the first quarter as our food and sundries businesses remained robust with comp sales up 8%. Our consistent focus on value once again resulted in strong growth in sales per member across each of our income cohorts. More than half of our merchandise comps were driven by growth in traffic. With value being top of mind for our members, our teams have worked diligently to solidify BJ's as the first choice for their weekly household needs. We are pleased to have grown market share across our core business in the first quarter, both on a year-over-year and a pre-COVID basis. As a reminder, our market share is about 50 basis points higher than it was pre-COVID. We recognize that in today's environment, consumers remain selective in their shopping behavior and members are more conscious as they continue to work to stretch their dollars. Additionally, unfavorable weather trends dampened seasonal demand in the first quarter. As a result, our general merchandise and services comp was down 8% year-over-year. Our merchandise gross margins improved dramatically in the quarter as supply chain headwinds that we faced last year became tailwinds this year, driven by declining diesel and ocean freight costs. Also recall that inflation was on the upswing in the first quarter of last year, causing us to invest in key items which further pressured our margins. We also gained share in our gasoline business in the first quarter with comp gallons up year-over-year compared to the broader market, which is still trending down in volumes. Though profit per gallon was not nearly at last year's levels, it was slightly higher than expected in the first quarter. The combination of our comp sales growth, merchandise margin improvement, and better than expected gas profits contributed to adjusted EBITDA growth of approximately 16% to a first quarter record of $257 million. We are very pleased with the strength of our operating performance this quarter. As we navigate choppiness in the near term, we remain confident in our longer-term growth prospects, fueled by our strategic priorities, which are improving member loyalty, driving an unbeatable shopping experience, delivering value conveniently through digital, and growing our footprint. Let me spend a moment on each. Membership is by far the most important product that we sell, and it's also our most valuable asset. We currently serve over 6.8 million members, and in the first quarter, we grew our member count by approximately 5% year-over-year. Our acquisition efforts across new and existing clubs, as well as growth in digital acquisition, have contributed to the increase. In addition to overall member growth, we are improving the quality of our membership. As many of you know, we launched our new program credit card on February 27th. I believe it's the best program in retail today. Remember when we launched our credit card program nine years ago, we committed to reinvesting all of the benefits back into member rewards. We took the same approach this time around, applying even better economics back into the program. We took that approach because our credit card members have almost two times greater lifetime values than members without a co-brand credit card. I think it's safe to say that they're worth the investment. We could not have asked for a better partner in Capital One. Our combined teams executed the transition very well, surpassing our admittedly high expectations. We're only about 90 days since launch, it's still early days. As we sit here today, we have successfully executed the conversion of our existing accounts and have now transitioned to growing the program. Let me put a finer point on the success of the transition with some data. We transitioned about 1.5 million accounts to Capital One. To date, we have activated over three-quarters of those accounts, outperforming our expectations. Furthermore, we have added over 115,000 new credit card members since launch. We are excited to see our members experiencing more rewards from the program. As you know, in addition to the co-brand value proposition improvements, we also took the opportunity to provide additional benefits for Club+ members, too. That's our $110 membership fee without the credit card. The guest discount that we implemented as part of the credit card program back in 2014 has been so well received with our members that we now extended a $0.05 per gal discount to our Club+ members as well, making us the only club store with an instant gas discount across all higher-tier membership programs. This means about 40% of our gas gallons sold include a higher-tier member discount on top of our market-leading gas prices. We believe the new program will help drive continued growth in our higher-tier membership penetration, which in turn will yield greater member lifetime value. Over the course of the last year, we foreshadowed that we may experience a temporary decline in higher-tier membership penetration driven by the transition to the new co-brand credit card program. I'm pleased to report that despite the transition, our higher-tier penetration held steady at 38% in the first quarter. This was up about two points year-over-year, due in part to double-digit% growth in our $110 membership. Our dedication to growing membership in both size and quality resulted in several milestones last year, including a record renewal rate of 90%. This is the ultimate measure of member loyalty, and we expect to maintain the strength this year as members continue to seek value in their shopping. All of these efforts have translated to approximately 6% year-over-year membership fee income growth in the first quarter. Ensuring the best shopping experience for our members is crucial to how we strengthen membership loyalty. There are various elements to delivering a great shopping experience, and we believe that we differentiate ourselves by consistently showcasing unbeatable value to our members. Value is paramount in our business, and we are always striving to offer the best assortment to our members at the best prices. Last year, in a period of high inflation, we remained dedicated to this goal, making strategic investments to improve our pricing position by 130 basis points across our competitive set. We kept the investments coming in the first quarter of this year, particularly in our key value items such as our own Wellsley Farms Water, which we offer at about a 28% savings versus grocery and mass competitors. As this water example suggests, we are earning our members' trust through the quality and reliability of our own brands, Wellsley Farms and Berkley Jensen, which we offer at significant savings. We are pleased to be able to offer more affordable, high-quality alternatives for our members, especially in this current time when inflation, while moderating, remains elevated. In fact, our own brand sales growth in our sundries and grocery divisions more than doubled that of the overall market during the quarter, contributing about 1 point of growth in the first quarter own brand penetration year-over-year. We are well on our way to our goal of 30% penetration. Members who engage in our own brand spend more, visit us more often, and are therefore better members. Our third strategic priority is driving convenience through digital. Through our app and website, we have improved upon the ways in which members engage with us over the years, and members' preferences for these platforms continue to grow. During our March Investor Day, we mentioned that our digitally enabled members spend nearly 70% more on average than club-only members and are more loyal members, as indicated by higher re-renewal rates. Our digitally enabled comp sales grew 19% in the first quarter to approximately 10% of our net merchandise sales. This growth was led by the convenience of BOPIC and curbside, as well as the growing adoption of same-day delivery. The club business is structurally advantaged to win with digital, and we will lean into convenience initiatives that we believe will deliver outsized value to our members. Finally, we have dramatically accelerated our real estate plans and remain focused on sustaining this trajectory going forward. Our new club openings since fiscal 2016 have outperformed openings in prior years. For example, these new clubs on average have delivered double-digit percentage point increases in renewal rates and higher tier penetration in their first year. This year, we continue to expect to open around 11 new clubs. As you know, we opened two new clubs in the first quarter and expect to make our entry into our 19th state next month in the Nashville market. Our commitment to bringing unbeatable value to our members remains a powerful advantage in times like these. As a result, we believe we are well-positioned to continue growing our top line and gain market share, anchored by strength in our grocery businesses. Our newly launched credit card bolsters our already strong value prop. As part of our merchandising transformation, new general merchandise assortments will begin to arrive at our clubs in the back half of this year. Ultimately, we will be there for our members, reliably delivering the products and services that they want and need at a great value in order to deepen loyalty, reinforce our brand, and drive long-term growth. Before I wrap, I'd like to acknowledge and thank our team members for their dedication to serving our members and caring for the communities in which we operate. To our team members who are listening in today, thank you for your hard work. Your efforts continue to make a significant impact on the success of our company. I will now turn it over to Laura to provide more details on our results and outlook for the rest of the year. Thank you, Bob. Before I begin, I'd like to reiterate Bob's gratitude for our team members across our clubs, club support center, and distribution centers. Thanks to their hard work and commitment at BJ's, we have maintained strong momentum in our first quarter results. Net sales for the first quarter were $4.6 billion, a 5% increase over the prior year. Our first quarter total comparable club sales increased 2% year-over-year. Stronger merchandise sales offset the decline in gas sales dollars. Despite growth in gas volumes over last year, average retail price per gallon fell in the low teen range. Merchandise comp sales, which exclude gas sales, increased by 5.7%, and more than half of this was driven by traffic. Our two-year comp stack was 9.8%, exhibiting slight growth on a sequential basis. The impact of inflation on our sales moderated through the quarter. As Bob mentioned earlier, our first quarter comp in our grocery, perishables, and sundries division grew by approximately 8% in the first quarter as our members continued to rely on BJ's to restock on household essentials. On a two-year stack, this division grew about 15% and accelerated from the fourth quarter, which grew just under 14% on a two-year stack. We gained market share year-over-year during the quarter, and our overall share remains well above pre-COVID levels. Our general merchandise and services comp decreased by 8% for the first quarter and was also down about 18% on a two-year stack. In general merchandise, the broader industry faced a slower and wetter start to the spring season amid an increasingly discerning consumer environment. That being said, we drove pockets of strength in areas such as apparel, where a cleaner and more relevant assortment was well-received by our members, resulting in a 5% comp in the quarter. Our digital offerings have made our members' shopping experience more convenient than ever. Digitally enabled comp sales in the first quarter grew 19% year-over-year, and approximately 90% of our digitally enabled sales were fulfilled by our clubs in the first quarter with services like BOPIC and same-day delivery. We remain committed to improving convenience by increasing our level of digital engagement with our members over time. In our gas business, our comp gallons grew slightly year-over-year in the first quarter. This was in line with our expectations as we continued to sustain and build upon our significant share gains from the past two years. Our gas profits, while lower year-over-year, marginally outperformed our internal plans, driven by slightly better than normal gas margins in the quarter. Membership Fee Income, or MFI, grew approximately 6% to $102.5 million in the first quarter. Continues to underscore the progress we have made improving our business. We are pleased with our membership trends atop the records we achieved last year, including higher-tier penetration, easy renewal, and first-year and tenured renewal rates. I also share Bob's enthusiasm for the attractive value proposition that our newly launched co-branded credit card program brings to our members and the growth opportunities that lie ahead. Moving on to gross margins, excluding the gasoline business, our merchandise gross margin rate improved by 100 basis points year-over-year, primarily due to a much-anticipated and welcome relief in supply chain costs that challenged our business last year. As Bob mentioned earlier, we also lapped the timing of price investments we made to combat accelerating inflation, which negatively impacted our margins last year. SG&A expenses for the quarter were $689.3 million. The year-over-year increase was primarily attributable to our new unit expansion and other continued investments to drive our strategic priorities. On unit expansion, I'd offer these two reminders. First, new clubs will continue to have a levering effect as they ramp and mature. Second, our growth profile this year is weighted to owned clubs, elevating our depreciation expense. We continue to expect our SG&A to delever slightly through the rest of the year. Our first quarter adjusted EBITDA grew by approximately 16% to a record first quarter of $257 million, largely reflecting our sales and merchandise gross margin growth. Finally, our adjusted EPS was $0.85, down approximately 2% year-over-year despite our strong operating performance. This was largely due to a $21.6 million unexpected tax expense, approximately half of which should have been applied in prior periods in immaterial amounts. This elevated our effective tax rate in the first quarter to 32.6% compared to 21.1% in the prior year quarter. Turning to our capital structure, we ended the first quarter with $848 million of debt and 0.8 times of net leverage, which is consistent with the fourth quarter of last year. We worked to fortify our balance sheet over the past five years and expect to maintain this strength in the future. As we allocate our capital going forward, we will continue to be flexible in our approach, but our priority remains growing our business. Investments to support membership, digital, and our real estate growth plans will be funded by our cash flows and enabled by our strong balance sheet. We continue to return excess cash to shareholders through share repurchases. In the first quarter, we bought back over 200,000 shares at approximately $15 million and have over $300 million remaining under our current authorization. Let me now touch on our current outlook for the year. The last time we spoke, I noted the uncertainty of the macro backdrop and its impact on the broader consumer demand. As we sit here today, we see a consumer that is continuing to visit and spend in our stores. On the margin, while they are spending more with us, they are also being more choosy with their dollars and allocating those dollars in favor of necessities. That said, I have also previously expressed our confidence in our advantage business model, execution of strategic priorities, and commitment to delivering value, which should all contribute to continued growth in our core business. These sentiments still ring true today. As such, we continue to expect our fiscal 2023 comparable club sales, excluding gas, to grow in the 4%-5% range towards the lower end, with strength in our food business offsetting a more conservative view around general merchandise performance. We continue to expect inflation to moderate through the rest of the year. We are also confident in the ongoing transformation of our merchandising. We currently see the second quarter merchandise comps in the low double-digit range, and we expect comps in the back half of the year to be slightly stronger than the second quarter. Moving down the P&L, our outlook on MFI and margin for the remainder of the year are unchanged. We expect that our Q1 year-over-year MFI growth rate will be the highest in the year. On merchandise gross margins, we believe our rate of improvement will moderate meaningfully as we progress through the year. In our gas business, we continue to expect slight growth in comp gallons for the full year. As for profitability, we continue to believe that we will settle to more normalized and structurally more profitable gas margins as compared to prior years. Our assumptions have clearly materialized in the first quarter, but with profit per gallon to date running a touch better than what we had contemplated as normal at the start of the year. We are becoming more optimistic about fiscal 2023's profitability running slightly higher than we originally expected. We will still face our toughest comparisons in gas prices, volumes, and margin across the second and third quarters of this year. A quick note on our tax rate. While first quarter taxes were higher than we anticipated at the start of the year, we expect our tax rate to return to more normal levels in the 27% range for the remainder of the year. All in, we continue to expect our in-club sales growth and merchandise gross margin improvements to offset normalizing gas profitability. We maintain our view that fiscal 2023 EPS will be approximately flat year-over-year, with EPS in the second quarter expected to be slightly higher than Q1. Before turning it back to Bob, I'd like to reiterate our confidence in the strength of our business and the transformation we have made in our company. We believe we are well-positioned to deliver sustainable growth longer term. With that, I will turn it back over to Bob for final remarks. Thanks, Laura. We're very proud of our team for the great quarterly results in the first quarter. Our members continue to reward us for the structural improvements in our membership, our merchandising, our digital capabilities, and even how we expand our footprint. These are further amplified by the advantages inherent in our warehouse club model and our differentiated approach to the channel itself. Moreover, we have an incredibly talented leadership team that, together with our passionate team members across our clubs, distribution centers, and club support center, is executing on our strategic priorities. I firmly believe that these powerful elements combined will allow us to continue to profitably grow this business, maximize sustainable long-term shareholder value, and build an even stronger future for our company. With that, I will now turn it back over to the operator to take your questions. Thank you. We will now start the Q&A session. In fairness to all participants, please limit your questions to one question and one follow-up. Our first question comes from the line of Kate McShane from Goldman Sachs. Your line is now open. Hi. Good morning. Thanks for taking our question. I just wondered if you could talk a little bit about the cadence of both MFI and gross margins. I think you mentioned in the prepared comments that you expected Q1 to be the strongest with regards to MFI. We wondered why that was the case and what you face for the rest of the year in terms of compares. With gross margin, kind of the same question. I think you say that it's expected to moderate. How should we think about that for the rest of the year? Good morning, Kate. Thanks for the question. You know, Laura's gonna fill in the gaps here, but let me take them one at a time. We had a pretty good quarter from a Membership Fee Income perspective. We continue to grow the size and the quality of our membership, with about a 6% MFI growth and about 5% of that coming from bodies. You know, as we continue to grow the company and look for ways to innovate, we've been offering different types of membership offers, and some of those have different accounting treatments. We're, you know, we're lapping some of those things this year that we tried last year. We'll try some new stuff this year. That informs sort of the pacing of MFI growth as we go through this year. We aren't anticipating, you know, slowing down our membership growth. It really is sort of just how the numbers work out. From a margin perspective, we had an outstanding quarter in the first quarter. Our merchants did a great job managing through the economic circumstances and lapping what happened last year and taking advantage of the tailwinds this year as the cost of distribution declined with diesel costs and ocean freight and a few other odds and ends. I would say as we get through the rest of the year, those tailwinds just lessen. We do expect this to be our highest quarter of the year from a gross margin perspective. You know, not knowing what's coming in any of the inputs to gross margin. Certainly as we sit here today, feels like Q1 should be the highest for us. Yeah. I think, Kate, the only thing I would add, Bob covered off MFI well. The only thing I would add on gross margins is, Q1 was about 100 basis points of growth. I would expect it will trail off meaningfully as we head into Q2 and kind of trail over the course of the year. The growth rate will certainly moderate quarter by quarter. Thank you. Thank you. Our next question comes line of Edward Kelly from Wells Fargo. Your line is now open. Hi, guys. Good morning. Nice quarter. Hey, Ed. I wanted to ask you about the comp guidance and the cadence of the comp guidance. Laura, I think you said, back half slightly stronger than Q2. You know, we will see, I think, inflation decelerate pretty meaningfully. I'm hoping that you could give us a little bit more color around that cadence, you know, what your inflation expectation is in that, how we should be thinking about, you know, the gen merch comp, and then as part of that, maybe you could help us, you know, with how you're running so far in Q2? Yes. Thanks, Ed. Good morning. For the remainder of the year, I think comp will moderate, but it will be relatively balanced. You have it right that we think the inflation levels will decelerate across the remainder of the year. You know, I would remind you for Investor Day, we talked about our general merchandise business. We've talked about that for quite some time, and the transformation we have underway there. So we think that piece of the business, specifically in the back half of the year as we get towards holiday, will comp better than GM did in the first quarter. Yeah. Maybe, Ed, I'll talk for a minute too. I think, you know, Q1 is a bit of a microcosm of some of the things we'll see the rest of the year too, right? We've certainly seen some deflation or disinflation, whatever you like to call it. You know, our inflation in Q4 was double digits. It was meaningfully lower than that in the first quarter. I expect that will continue. I don't know that we've changed our sort of global inflation input for the year, but I do think it's receding a little faster than we had in our model. I think Laura's on the right point. We had, as we noted, you know, a bright spot in general merchandise in Q1 was apparel. That is a business for us that our new merchant team has had, you know, great influence on for the back half, and I would say moderate influence for Q1. You know, we saw a nice positive comp in that refreshed assortment. I'm, you know, I'm looking at that as green shoots on what they can and will do later in the year, and I've certainly seen some of the new assortments, and I'm excited to see how our members react to it. You know, as we sit here in Q2, I don't wanna talk too much about it, but, you know, Q1 suffered from, you know, some deflation and suffered from certainly not breaking any new ground talking about weather. As you've heard it from everybody else, that was certainly a thing. As we sit here in Boston today, it's still not very warm. You know, that informs our view that the general merchandise business will not be robust in the second quarter and informs that low single digit Q2 comp. We do believe the business will come back and our consumer's holding in there very nicely. We'll get through the next few weeks here and talk to you at the end of Q2 and tell you more about the back half. Great. Just a quick follow-up. You know, you had pretty sizable tax headwind in Q1 that was unanticipated. You know, you maintained a full year, but now you sound, you know, I think maybe even a bit more optimistic around that. Is that really just around the operational aspects of Q2 coming in, you know, above plan? No, I mean, it doesn't really have much to do with Q2, Ed. I think we're optimistic on the business overall in the long term. There are certainly some macro headwinds out there for the full year, as we've talked about with inflation and the consumer health and the economy and the debt ceiling and everything everybody's worried about. Q2 has some odd things to lap, right? We're, we're going to lap the highest gas prices of the year in the next couple of weeks. You know, gas is an important part of our offering and our value to our membership, and I'm sure $5 gas drove some trips that we'll lap. You know, we sit here, you know, looking at the trends in Q1 were pretty good. We thought it was a great operational quarter despite the tax item that you pointed out. You know, we're bullish for the long term of this business, and we'll kind of work on the year one quarter at a time. Thank you. Thank you. Our next question comes from Chuck Grom from Gordon Haskett. Your line is now open. Thanks. Good morning. Just a question on the second quarter guidance, Bob, I think you're saying a little bit higher than the first quarter of $0.85. Is that on an absolute basis, or is that on a year-over-year basis? As a follow-up to that, can you help us think about the margin component and the building blocks to get to that number in the second quarter? Yeah, sure. Good morning, Ed. Why don't I let Laura handle that since it's guidance related? Morning. The slightly better than Q1 is on an absolute basis, Chuck. From a margin perspective, you know, I talked a little about it already. We think the inflation levels will moderate as we head into the quarter and travel through the quarter month by month. You know, I think we talked about there were a lot of underlying things that we lapped in Q1, diesel costs, markdowns, high inventory levels from last year. We expect Kind of as we think about those heading into Q2 that we, you know, those won't be as meaningful from a base perspective. You know, as we look at our inventory levels and where we sit today, I would tell you, as we head into Q2, we feel comfortable with where we are, specifically from a gen merch perspective. We will continue to watch it very closely through the quarter. Okay. This is Bob. I'm not sure if you touched on this, but can you talk about the cadence of the comp in the quarter? I guess, you know, May month to date, are you guys running in that low single digit range over the past few weeks? you know, certainly, again, not gonna break any new ground here either. February is the strongest month for us and the other two months were lower. I don't wanna get too much into Q2 'cause we're sort of just into it now. Certainly, I think you can read into that the low single digit is certainly lower than where we were in Q1. Again. Okay ... we're very bullish on the long term. We feel like there's some Q2 dynamics we need to get through, and then the back half should be better. Makes sense. Thanks. Thanks, Chuck. Thank you. Our next question comes from Simeon Gutman from Morgan Stanley. Please go ahead. Follow up in this in this one part, and then I'll yield. The first question is, did you have any markets in which weather wasn't problematic? Can you talk about the general merchandise trends there? The second part is gallon growth and the fact that you're taking market share. Are you approaching cents per gallon any different in terms of managing your competitive spread versus other gasoline operators? Thank you. Hey, Simeon. Good morning. You know, there wasn't a tremendous difference in the overall geography of general merchandise sales. If you do look at sort of weather sensitive categories like patio sets might be a good example, the Southeast did perform better than the Northeast. There certainly is a weather component embedded in there. However, I would tell you the biggest thing that we're seeing is members being much more reticent about almost anything big ticket. If you look at patio sets and structures, if you look at televisions and sort of high dollar electronics, you know, it's a very picky consumer out there at this point from a high ticket perspective. You know, weather plus the economy plays into it. You know, the gas business has been a tremendous source of, you know, profitability for us over the past couple of years, for sure. Frankly, as we talked about it on our Investor Day, we don't run that business for profit. We run it for price image and for lifetime value. It has certainly been something our team has done a great job at, not only figuring out how to be a little bit more structurally profitable in that business, but to show fantastic value every day, provide great service to our members, which is driving those market share gains you referenced. You know, we haven't talked at all about the co-brand card so far in the Q&A session, certainly the gas business is a huge piece of that for us as well, right? It's, it is one of the bigger pieces of the benefits that you get from being a cardholder with as much as a $0.15 difference. Effectively, we get a member's entire gas business when they become a cardholder. We'll continue to price our gasoline more sharply and try and continue to gain those trips and that market share. We'll also try and build on build on the discounts that we give through our co-brand program and then our higher tier program altogether. As you know, we added a $0.05 discount for our rewards members as well. Really been a great business for us in the long term and, certainly something that's resonating well with our members. Thanks. Good luck. Thanks, Simeon. Our next question comes from Robbie Ohmes from Bank of America. Guys. Your line is now open. Oh, hi. Can you hear me okay? Yep, we got you. Good morning. How are you, Robbie? Okay. Terrific. Terrific. I'm good, thanks. Yeah, two quick questions. I think, Bob, can you just talk about the competitive environment? I'd be curious about the Sam's Club membership discounting. You know, maybe remind us, what the overlap is and, you know, what kind of impact you expect from their membership discounting. If there are other upticks in promotions in grocery, competitively or anything like that going on that you can highlight for us. Sure. It's a good question. Certainly, the competitive environment is fierce. It always has been. You know, we have the joy of competing against the best retailers in the world. You know, so we see what they do. We try and emulate the great stuff that they do. Certainly our warehouse club competitors have some good stuff to emulate. Sam's has been more and more aggressive from a membership perspective. You know, their results are to be admired. Certainly we've tried to take some lessons from what they're doing and tried to, you know, think up our own great ideas as well and have our own great results to point at. I think, you know, what you'll continue to see is everybody trying to innovate to get their businesses to be better. That's, that's what our jobs are, and that's what we're trying to do here at BJ's, is find the right offer to attract the right member and then the right engagement strategies to retain those members. I would argue our last few years of performance would say we're doing a pretty good job of that. In Q1, certainly, you know, getting away from membership and getting into sales, Q1, I would tell you was a little bit more promotional, and I would expect Q2 to be as well than in the past few quarters. I think that's just, you know, to be expected when everybody's clawing for sales and market share. Whether it's in the general merchandise business for sure, is more promotional. Certainly everybody is trying to show value to their consumers. We try and do that every day as a core function of what we do. I would argue we're a little bit more promotional, and our competitors are too. That's helpful. Just a quick follow-up. At the beginning of the call, I think you guys mentioned that you're gaining with, I think, all cohorts, but is there anything you can highlight or call out on, is there, you know, are you seeing more strength with, you know, your better income or, you know, are you seeing the low income relying for you more? Any, any kind of color you can give? Yeah, look, I, you know, we've grown trips per member and sales for with each of our cohorts that we track and disclose to you all. I thought Q1 was a very good quarter from that perspective. It's clear that, you know, that there's pressure out there, and as you would expect, the folks in the lower economic strata are feeling more pressure than those at the high end. With that said, we offer them tremendous value, so their business has hung in there nicely with us. So again, their trips and sales grew, as did the folks at the higher end. You know, I think that's just the psyche of the consumer at the higher end, right? Everybody wants to save money. Everybody feels like it's a bumpy economy out there. We're a great place to find value in all of your everyday needs and essentials as well as some great general merchandise as well. I would expect as we get through the rest of the year, you'll see that same type of a thing where, you know, as the economy gets tougher, we become a greater place to go. That's helpful. Thanks. Thanks, Robbie. Our next question is from Pete Benedict from Baird. Please go ahead. Yeah, good morning, guys. Just wanted to follow up on just pricing and particularly on the grocery side, you talked about inflation moderating, maybe a little faster than you thought. Sounds like the full year is still how you see it or how you were seeing it. Just curious, like what you're seeing from competitors in terms of pricing on grocery. Are you getting to a point where you're seeing any deflation? Or if you do get to that point, just curious what the playbook is, Bob, kind of how you think about managing the business in the event that, you know, we're in a deflationary environment, not just disinflation. Yeah. Good morning, Pete. Thanks for the question. It's a really good one. We've certainly seen disinflation across the business. In certain commodities we've seen deflation. I mean, eggs and chicken and some dairy stuff come to mind. You know, I think our playbook honestly is to always offer the right value to our members. That is what is paramount. That's why they buy memberships. That's why they come to see us. You know, as pricing gets more and more important, we'll continue to play offense on that. We, you know, we told you in March, we made huge investments last year to improve our pricing. Those investments have continued here in the first quarter. You know, I don't think that'll stop, right? We wanna make sure we are priced right every day on the commodities that matter most to our members. Certainly that might put some pressure on margin. Obviously investments cost money. The good thing I would tell you is we have that CPI muscle that you know about from years ago that we've sort of embedded into our merchandising culture where, you know, we know how to buy much better today than we did seven or eight years ago. We have a process by which we can do that. You know, I think it'll continue to be a thing we spend a lot of time on, meaning pricing and value. Our team is pretty good at managing margin too. Yeah, no, that's helpful. I just to follow up on the second half view with general merchandise or opportunities around general merchandise. You mentioned apparel, kind of an early proof point here. I think toys was called out at the, at the Investor Day. Just remind us the other categories that you see particular opportunity in to kind of improve that general merch or support the general merchandise business later this year? Yeah, look, I mean, you know the story. We're trying to really reinvent the general merchandising business over time. You know, the team has sort of been in place for about a year at this point, which, you know, now you're starting to see the fruits of their labor in apparel and some other stuff here over the summer and more, even more into the back half. Categories are very long lead times to buy. You know, you're buying next year's patio sets, I don't know, about a month ago, actually, probably. You know, the team has done a great job in picking and choosing the things that they need to work on first. That's why we talked to you about toys. It's certainly, you know, a category that we have underperformed in for years. I would tell you, it's assortment related, right? We had a very transactional focus with our suppliers. We didn't have a great relationship with many of our suppliers in that category. We had zero relationship with some of the most key players in that assortment. First and foremost, the team has been out building relationships and understanding what we need to put on the shelves and making sure that we can get access to those things. You know, we have great businesses that, you know, we've been successful in for a long time, like televisions and electronics that we have good relationships with. We have the right assortment and they're off trying to figure out what we might do from an assortment promotion standpoint, pricing standpoint, in the back half to really make those businesses stronger too. You know, I like what they've done so far. It hasn't yet, the members haven't seen it yet. I kind of reserve judgment. I'm very optimistic on what they can do over the long term. I say that recognizing that we still face a choppy economy for the rest of the year too. I can't imagine in spite of anything brilliant that they might do from a television business perspective, I'm not sure that business is gonna be great given the large ticket that comes along with it. I am optimistic for toys and apparel and some of the other key businesses that they've already just kind of put their stamp on. You know, we'll see how it goes in the next few weeks and months and quarters, and we'll continue to iterate and get better. Sounds good. Thanks so much. The next question is from Mike Baker from D.A. Davidson. Your line is open. Apologies. We've lost Mike. Just reconnecting him. Hello? Hi, Mike. Hey, Mike. Apologies. Your line is open now. Okay. Geez, I don't know what happened there. I wanted to bring Bill Werner into the conversation and ask about a couple quarters ago, you guys talked about your BJ's Market concept, with, you know, the customer so focused on needs versus wants. You know, that becomes maybe more interesting. Can you just update us on that concept, what you've seen in that initial test and how we should think about that maybe going forward? Hey, Mike. Good morning. Yeah, no, we've made great progress with BJ's Market. We talked about it as a pilot as a way to see just another innovative approach of how to bring the club closer to the members. We've seen good results so far. I think as we talked about in the Analyst Day, we're continuing to look at ways of how to expand on what we're learning down in that club. As we think about the overall portfolio of how we get more convenient, right? It's the broad picture of different formats, continuing to lean into our omni capabilities that had such great growth during the quarter through both pick and same-day delivery, and then also the new club growth in total. The two clubs that we opened up in the first quarter, in Davenport and McDonough are off to a great start. The membership there is substantially higher than our initial projections. We're really happy that we've seen the continued momentum in the early clubs of this year that we've seen over the past couple of years. As we think about the new club, you know, vertical in general and how we expand the footprint, we remain really bullish and all eyes are focused on our first club in the state of Tennessee, in La Vergne, which is just outside Nashville here in the second quarter. Got it. All right. Since I asked one longer term question, let me ask a short term question if I could. It wasn't mentioned at all on the call, but do you think lower tax refunds impacted you guys at all with all your data? Any way to tell, you know, which of your customers may have been impacted by that and how much of a headwind that may or may not have been in the first quarter? Thanks. Hey, Mike. look, we don't have tremendous data on this. We've never had a great model to measure it. It does feel like there was an impact, particularly in those big-ticket businesses, where, you know, you might use a tax refund check to buy a patio set or a mattress or something. I'd be lying to you if I told you we had a wonderful model to predict that. Okay. Fair enough. I appreciate the candor. You bet. Our next question comes from Mark Carden from UBS. Please go ahead. Good morning. Thanks so much for taking my questions. A number of your mass merchant and general merchandise competitors have been calling out increasing pressures from shrink. Have you seen much of an uptick on this front or does your model just insulate you a bit better from some of these headwinds? Hey, Mark. That's. It's a great question. You know, I do think. Let me start by saying organized retail crime is definitely a thing, and we see it in our business. I talk to my counterparts across the retail industry, they are definitely seeing it in their businesses. Your point on our format is a relevant one, we, although we see it, and it is, it is material, we benefit from the fact that our we have a membership business. You need a card to get in. Our stuff is largely in bigger pack sizes, it's harder to pilfer. Our team has done really wonderful work, sort of keeping track of all of our inventory, keeping our shrink as low as possible and, most importantly, keeping our members and our team members safe every day. You know, I think you'll continue to hear it across the industry. You know, one of the other reasons why ours might be lower than some is, although shrink is a problem in many, if not most markets, it is a much more pointed problem in certain places, particularly on the West Coast or places like Chicago or Albuquerque that have, you know, blue state or local blue governments that don't really feel like prosecuting crime. You know, my view is the government's first obligation is to provide a safe environment for people to do their daily business. In some places, that's not happening. Politics aside, I think you'll continue to see this be a problem that the retail industry as a whole needs to work on. We spend a ton of time with our partners in the industry, trying to mitigate our own losses and help our competitors mitigate their losses. You know, it's an unfortunate part of the society that we live in today. You know, long story short, it's a less material problem for us than it might be for some of our competitors. Makes sense. Then you're seeing some pretty strong momentum in your new markets. What are you seeing on the membership acquisition front in your legacy markets, and has there been many shifts in trajectory there? Not really. We've had, you know, we've had great membership results for a while now in both new and existing markets. Our team has been pretty successful in acquiring new members, regardless of new or existing markets. We've made a tremendous shift towards digital acquisition over the years that's been very successful. As we've talked about, you know, we've iterated on the different types of offers that we use out in the market. You know, we're pretty pleased with the team and the results that they've been able to provide. A lot of it is us running a better business. A lot of it is putting better things in front of our members, having great offerings like our BJ's One Mastercard that, you know, we transitioned to Capital One this quarter. It's all about value, it's all about service and convenience and, you know, we're doing a much better job on each one of those axes to, you know, show to our members and prospective members that we're a place to go. Thanks so much and good luck. Great. Thanks, Mark. I think that was our last question. I wanted to thank everybody for your attention and for your support of our company. We will get in touch with you over the summer and tell you how we did in Q2. Thank you very much. This completes today's call. You may now disconnect your lines.