Hello and welcome to BJ's Wholesale Club Holdings Inc First Quarter Fiscal 2025 Earnings Conference Call. After the company's remarks, there will be a question and answer session. In fairness to all participants today, we ask you to limit yourself to one question and return to the queue for additional questions. I will now pass the call over to your host, Cathy Park, Vice President of Investor Relations. Please go ahead. Good morning and welcome to BJ's First Quarter Fiscal 2025 Earnings Call. With me today are Bob Eddy, Chairman and Chief Executive Officer, Laura Felice, Chief Financial Officer, and Bill Werner, Executive Vice President, Strategy and Development. Please remember that we may make forward-looking statements on this call that are based on our current expectations. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from what we say on this call. Please see the risk factor sections of our most recent SEC filings for a description of these risks and uncertainties. Please also refer to today's press release and latest investor presentation posted on our Investor Relations website for our cautionary statement regarding forward-looking statements and non-GAAP reconciliations. With that, I'll turn the call over to Bob. Good morning, everyone. Thank you for joining us. This morning, we reported a strong start to the year with our first quarter top and bottom line results exceeding expectations. We grew net sales by nearly 5%, and we managed the business well, resulting in operating income and net income growth of 27% and 35%, respectively. Our team continues to execute on our long-term strategic priorities as we work hard to take care of the families who depend on us. Consumers are always looking for value, but it's paramount in challenging times like these. Due to this, BJ's remains a leading destination for our members to find what they need and want at a great value. The drivers of our business remain strong. Membership continues to grow nicely. Our continued improvements in merchandising and digital convenience are driving traffic, and we're gaining share in our clubs and gas stations. Finally, we are accelerating our club openings to serve more families. We are excited about our momentum. Our comparable club sales, excluding gas sales, grew by 3.9% in the first quarter and were led by traffic and units once again. Traffic grew for the 13th consecutive quarter, contributing about 2.5 points to our comp in the quarter. Consumers across the country have digested meaningful inflation over the past few years, and the uncertain economic environment drove members to prioritize value in their purchases during the quarter. Members are consistently spending with us, especially in household essentials. Our perishables, grocery, and sundries division delivered more than 4% comp growth in the first quarter, with unit volumes increasing across all three divisions. Perishables remains the strongest driver of our growth as more and more members make us their weekly destination for produce, dairy, and meat. We also saw terrific growth in our own brands during the quarter. Our general merchandise and services division comps decreased slightly in the first quarter. We delivered positive comps in apparel and toys, where the combination of an elevated assortment, low price points, and compelling value have kept our members engaged. We also grew comps in consumer electronics, led by computer equipment such as laptops, desktops, and monitors. Unfavorable weather and pressures on consumer sentiment impacted big-ticket, highly discretionary categories such as patio sets, gazebos, and outdoor sheds in the quarter. That said, we are maintaining our momentum on our transformation strategy, and it's clear that members are responding well to an improving treasure hunt. Tariffs have been top of mind for companies and consumers alike in recent months. BJ's is less impacted by imports than many of our competitors, but tariffs aren't new to us, and we have a great team to help us find our way in an incredibly dynamic environment that's been changing by the day. We have strong capabilities in areas like analytics and input cost tracking, tools we've used in past disruptions, and are applying with discipline today. I'm so proud of our teams across merchandising, supply chain, finance, and analytics who have remained agile in navigating these challenges. This includes sourcing from alternative countries of origin, reassessing orders, and collaborating with our vendors, all to drive the best outcomes for our members. We're always leaning into our model to deliver value, and while upward pressure on costs may drive prices higher, we are doing everything possible to minimize the impact to our members. Moreover, we will invest for the long term as we should gain share in a market disrupted by rising prices. As we gain more clarity, our teams are ready to adapt and pivot, but our guiding principles will remain the same. Delivering great value is non-negotiable for BJ's, and we will always make the right decisions for our members. Our first quarter results underscore the progress we are making on our four strategic priorities. As a reminder, these priorities are improving member loyalty, giving our members an unbeatable shopping experience, delivering value conveniently, and growing our footprint. Our business starts and ends with our members. We are strengthening membership quarter after quarter. We're growing total member counts in new and existing clubs and upgrading more members into our premium tiers while keeping our renewal rate strong. Higher tier members spend more and are more likely to renew, driving greater lifetime value. Over the past couple of years, we enhanced our credit card program, invested in a gas discount for our Club Plus members, and in January, we added benefits for Plus members by giving them two free same-day deliveries every year. These investments in our value proposition are paying off. In the first quarter, higher tier membership penetration grew by over 100 basis points sequentially from the fourth quarter, surpassing 40% for the first time in our history. Our momentum in membership is a direct reflection of the unbeatable shopping experience we provide at BJ's. Our merchandising strategies span our entire box and aim to deliver exceptional value to our members. That means having the right products at the right price, presented in the right way. Great pricing is foundational to our model. Our advantage structure allows us to consistently offer up to 25% off grocery store prices, and we are committed to maintaining this edge. Beyond pricing, we deliver value through our highly curated assortment, which we have dramatically improved over the past few years. We renovated our general merchandise business to regain credibility in our treasure hunt. We launched Fresh 2.0 to win our members' shop and grow trip frequency. We continuously elevate our own brands to deepen loyalty. The result is great member engagement and market share, as evidenced by our growth in traffic, comp sales, and, of course, in membership. I'd like to provide a little more color around our current work in Fresh. As you know, we launched our Fresh 2.0 initiative in produce last year based on the insight that perishables, especially produce, dictate our members' first weekly shop. We knew that if we won in produce, we would win trip frequency and wallet share. Since launching in the second quarter of last year, the program has driven quarterly produce comps of high single digit to low double digits. We're not only introducing new members into our produce category, but they are regularly re-engaging in produce as well. The success we've seen in produce has given us confidence to extend Fresh 2.0 to meat and seafood, which we piloted in Florida late last year and launched chain-wide this month. Similar to our early work in fresh produce, our meat and seafood initiatives are built on comprehensive market studies and competitive assessment. Our research determined that our biggest opportunity was in our assortment and presentation. First, we optimized our assortment to better reflect localized member preferences, adding items that members wanted and removing less relevant ones. Second, we added signage and dividers in our coolers for cleaner presentation and easier navigation reminiscent of our efforts in produce. We also reflowed our merchandise to reflect how our members shop meat. For example, we created a single destination for pre-seasoned and marinated proteins, making these ready-to-cook products easier to find. While these products comprise a small percentage of our protein sales today, the example illustrates how we're leveraging our understanding of shopper behavior to rethink all aspects of our business. As part of these efforts, we've also armed our field team members with better tools and reporting to track performance and reduce salvage. Our members love the improvements in Fresh, and we will continue to invest to drive trips, baskets, and member loyalty. Speaking of what members love, let's talk about our digital conveniences. Today, our members have multiple ways to save their time in addition to 25% lower grocery store prices through BOPIC, ExpressPay, curbside pickup, and same-day delivery. These have helped fuel double-digit growth in digitally enabled comp sales each year for the past four years. In the first quarter, digitally enabled comp sales grew by 35% year- over- year and 56% on a two-year stack. We're using technology to achieve greater labor efficiencies and accommodate the continued growth of our digital business. Consider our journey with digital order fulfillment. Today, BOPIC, curbside, and same-day delivery comprise the majority of our digitally enabled sales, and our team members are picking these orders in our clubs. Over the past 18 months, with the product location data provided by our autonomous inventory robots and the help of AI, we developed and rolled out tools that optimized order batches and pick routes. This has enabled us to reduce the time required to pick an item by over 45%. As more members adopt our digital conveniences and reward us with their spending and loyalty, we will continue investing to drive operational efficiencies and member lifetime value. Finally, we're making meaningful progress on our real estate strategy. We hit the ground running in the first quarter, opening five new clubs, including our very first club on Staten Island, as well as four gas stations. Our new clubs are performing well against our expectations, and our future growth pipeline is strong. We remain on track to open 25-30 new clubs over the next two years. As we continue to demonstrate the success of our new club playbook, we've also asked ourselves how we can bring the same level of premium experience to the existing chain. In the past several years, we've updated our clubs with the latest sign packages and invested to support our key growth initiatives, including digital and Fresh 2.0. We're also looking to identify relocation opportunities to better position our fleet for tomorrow. As part of this strategy, we expect to open a relocated club in the coming months in Mechanicsburg, Pennsylvania. We'll have more relocations planned over the next several years, including in Rotterdam, New York, next year. Stepping back and assessing the current state of the consumer, broader uncertainty in the marketplace continues to drive consumers toward value, and our members are relying on BJ's to provide it. Spending behavior remained solid across our membership in the first quarter as we drove healthy year-over-year growth in spend and trips across our high, mid, and low-income cohorts. Even in these uncertain times, some things remain constant, and here's what you can expect from us. You can expect us to stay committed to delivering the value our members rely on every time they shop with us. You can also expect us to remain focused on our long-term growth priorities. Our business model is built to win in both good times and times when consumers feel pressured. This especially holds true today as the investments we're making in the business are driving results. This year is turning out to be more dynamic than we all thought, and I'd like to thank our team members who continue to rise to the occasion and work tirelessly to take care of the families who depend on us. I'm confident in our ability to execute through the near term together and more convinced than ever that we're set up for long-term sustainable growth. I'll now turn it over to Laura to provide more details on our results and outlook. Thanks, Bob. First, I'd like to echo Bob's gratitude for our team members across our clubs, supply chain, and club support center, whose dedication to BJ's led to another strong quarter. Net sales in the first quarter were $5 billion, increasing 4.7% year- over- year. Merchandise comp sales, which exclude gas sales, increased by 3.9% year- over- year, led by traffic and units as our value prop continues to resonate with our members. Our performance was consistently strong in February and April, with the later Easter shift impacting March. Total comparable club sales in the first quarter, including gas sales, grew 1.6% year over year. Lower year-over-year retail gas prices partially offset our market share gains at our pumps. First quarter comp gallons rose about 2% year- over- year, with total volume growing even faster due to new stations coming online. This compares to continued year-over-year volume declines across the broader industry in the U.S. Digitally enabled comp sales in the quarter grew 35% year- over- year, contributing significantly to our overall sales growth. Members who use our digital conveniences are better members with greater spend and higher MPS scores than members who only shop in club. As a result, we will continue to invest in enhancing our digital conveniences in the future. Membership fee income, or MFI, grew 8.1% to approximately $120.4 million in the first quarter, led by strong membership acquisition and retention across the chain. MFI also benefited from a fee increase that went into effect on January 1st, 2025. First quarter merchandise gross margins increased by approximately 30 basis points year- over- year, with minimal tariff-related impacts in the quarter. We continue to manage our margins prudently, and our category management process is yielding profitable growth across the broader assortment. SG&A expenses in the first quarter were approximately $760.9 million, resulting in approximately 10 basis points of year-over-year deleverage as a percentage of net sales. This was primarily driven by our continued investments to drive our strategic priorities and, more specifically, in outsized growth in depreciation as we accelerate new club openings. In our fuel business, first quarter profit per gallon ran above last year's levels and slightly higher than our expectations, resulting in year-over-year growth in gas profits. All in, we reported first quarter earnings per share of $1.13 and adjusted earnings per share of $1.14. Our first quarter performance reflects our strong membership and traffic, merchandising improvements, and digital conveniences, all reinforced by our investments in the business to drive long-term growth. Our effective tax rate of 22.2% was driven by higher-than-anticipated tax windfall. Let's move to our balance sheet. We ended the first quarter with absolute inventory levels down 2% on a per-club basis. In stocks also improved by 30 basis points year- over- year, thanks to the team's great work in allocating the right amount of product to the right clubs at the right time. Our capital allocation strategy is consistent with our historical framework as we continue to take a disciplined approach to maximize shareholder value. We believe the best use of cash is applying it towards profitably growing the business. As such, investments to support membership, merchandising, digital, and real estate initiatives continued to be funded entirely by our cash flows in the first quarter, and our capital expenditures were approximately $140.5 million. Our strong balance sheet provides meaningful flexibility, allowing us to look past the short-term noise and continue pursuing our long-term growth agenda. We ended the first quarter with less than half a turn of net leverage. In light of these priorities, our share repurchases were lower than our typical ranges in the first quarter. Our overall philosophy around buybacks has not changed, and we will continue to return excess cash to shareholders this year. Turning to our outlook for fiscal 2025, we are operating in uncertain times. Despite the greater level of unpredictability, we are confident in our team, our positioning in the marketplace, and the growth drivers that are within our control. We will stay focused on our long-term priorities to drive continued traffic and market share gains. In terms of our financial outlook, the range of potential outcomes has become wider since we issued our annual guidance. We expect the current environment to increasingly influence costs and consumer spending patterns, which may ultimately impact our financial performance. Based on what we know today, we are keeping our initial full-year guidance unchanged, which, as a reminder, was 2%-3.5% comp sales growth, excluding gas, and $4.10-$4.30 in adjusted earnings per share. We will continue to evaluate this guidance as the year progresses. With these caveats in mind, here's how we're broadly thinking about the year. On the top line, please remember from our last call that we expect our first half comps, ex gas, to be a little bit better than the back half. In other words, we expect our first quarter comps, ex gas, to be the high watermark for the year. On the margin side, we will continue to exercise strong cost discipline while investing in our value proposition for the long term. This becomes especially important in a rising cost environment. We remain confident in the underlying strength of our company, and we believe we're well positioned to deliver sustainable growth to maximize shareholder value. Bob, back over to you. Thanks, Laura. We've made tremendous progress transforming our business, investing in the right talent, sharpening our strategic focus, and delivering more value and convenience to our members. Membership is at record levels, and we're launching exciting merchandising initiatives to drive even stronger performance. Our digital capabilities are playing a key role in our growth, and we're scaling our new club playbook to expand our footprint profitably. Our long-term strategies remain crystal clear. We will continue to invest for the future and do the right thing for our members, team members, and communities in order to take care of the families that depend on us. Thanks again for joining us today and for your support of BJ's Wholesale Club. We will now take your questions. We will now start the Q&A session. As a reminder, we ask all participants to limit themselves to one question and return to the queue for any follow-ups. Our first question comes from the line of Peter Benedict from Baird. Oh, hey, guys. Good morning. The line is open. Thanks for taking the question. Hey, guys. Can you hear me? Yep, we got you. All right. Great. Yeah, good morning. Yeah, thanks for taking the question. I guess I'm just going to ask about the real estate strategy. Can you just remind us kind of how you think about locations as you kind of accelerate the pace of club openings here? How do you think about the target markets, the competitive considerations, the pool of potential members in a market? Just kind of curious kind of for an update on that as you're going to accelerate these club openings in the next couple of years. Thank you. Yeah, thanks for the question. Maybe I'll start off and hand it over to Bill. You've seen us in the last few years get pretty aggressive from a real estate perspective, given the success of the effort and the new clubs that we've been able to open to serve members around our geography and into new geographies. The success of those clubs has given us the confidence to continue to do that and push into new markets while opportunistically expanding existing markets. As that success has built in the last couple of years, we continue to put pressure on Bill and team to go even faster. I think we're at a place where discount retail in the club sector is winning, and we're trying to go as fast as we can. We're really excited about what we've seen so far in our real estate portfolio, and the pipeline is as big as it's ever been. We are very pleased with the team's work. Maybe I'll hand it over to Bill, and he can tackle some of your specific points. Yeah, thanks, Bob. Peter, I would say that we are more excited about our real estate progress than any time in the company's history that I've been here. I think certainly for people who've been here a long time, it's probably the most exciting point in time maybe since the company was founded. It really starts with the share gains that we've seen across the portfolio. As we gain share, that opens up the models for more and more opportunities for us to continue to build new clubs. We talked about year-end accelerating the transformation to 25-30 clubs over the next two years. We continue to put our foot on the gas in terms of opportunities both in new and existing markets. We've seen broad-based success across both some of our core infill clubs. We just opened up our first club here in Staten Island this quarter, which was a great win for the team. That club's off to an amazing start, as well as new markets. We just opened up in Myrtle Beach and Southern Pines, both clubs in the Carolinas. The response of the community has been amazing so far to us coming to town. All the proof points we have are great. We continue to be pretty aggressive in terms of getting to market and trying to get the clubs on the ground. We will continue to do that going forward. Great. Thanks so much, guys. Good luck. Thanks, Peter. Next question is from Kate McShane from Goldman Sachs. Hi, good morning. Thanks for taking our question. We wanted to ask a longer-term question with regards to the longer-term algorithm. Just as you see the continued strength in membership, is there anything we should be considering that could change in the longer-term algorithm? Should we still be thinking of a three-year maturity ramp for new customers, or has anything changed there as you enter new markets with new stores? Morning, Kate. Thanks for the question. We're very pleased with what's going on in membership, for sure. We continue to build the size and the quality of the membership, as we've talked about for many quarters now. Our ability to attract new members, our ability to renew them at all-time high rates, our ability to engage them and push them up into the premium tiers. We talked about a new all-time high there this morning as well. Our next opportunity really is to continue to figure out how to better activate and engage these members. To the degree that we're able to make progress doing that, I think you might see your way forward to changing certain components of the algorithm. As we sit here today, for the past few years, we've been working towards that economic algorithm that we put forward a couple of years ago on our investor day. This quarter was nice progress towards that, and we do not necessarily see that changing all that much at this point in time, particularly given the level of uncertainty out there in the market. Anything to add, Laura? No, I think you covered it all, Bob. I think, Kate, I'll just maybe pick up on your second point about the membership, the maturity of our members. Similar to Bob's commentary on acquisition of members and how they're shopping, I think that has not changed either from what we're seeing right now. We will continue to watch that, but that plays into how we're thinking about the long-term algo and leaving it as is right now. Thank you. Thanks, Kate. Next question comes from the line of Robby Ohmes from Bank of America. Hey, good morning, guys. I want to follow up on Laura's commentary at the end there before Q&A, the high watermark of the comps, but also the margin investments that you mentioned. On the margin investment side, is that the fresh impact? Is that the meat and seafood launch that you're thinking about, or is it tariffs, or is it competition, or signs of the consumer weakening? Maybe more color on how you guys are thinking about margin investments for the rest of the year, and also a little more color on why the comps could fade as you move through the year. Hey, Robby, good morning. Thanks for the question. Maybe I'll start with your second point on margin investments. Nothing has changed how we think about the business, and value continues to be our North Star. We're always looking at pricing and making sure we're delivering the best value to our members every day. That's how we'll continue to think about it as the year progresses. As you know, it's a dynamic environment. I think value, if we continue to stay with that, that is what our members are rewarding us with as they continue to show up in our clubs and shop and thrive their baskets. Your second question on comp cadence for the year, it's a similar answer to when we set out our guidance in Q4. In looking at the year, we thought that the first half would be stronger than the second half from a cadence perspective. That is unchanged as we see the environment right now. Some of that is laps of last year, and some of it is how we're thinking about Fresh 2.0 and other points of our business. I think nothing new to report there, but we will continue to watch it as we go through the year. Just to clarify, Fresh 2.0 and then the meat and seafood launch, are they kind of a significant headwind to margin or not so much? Hey, Robby, good morning. I think what we'd say is, and you'll remember this because we've talked about it so much, that the gross margin rates across our four divisions are about the same. The contribution margin rates might differ, with perishables being lower given the increased labor associated with them. From a gross margin perspective, they're all within striking distance of one another. Mixing towards perishables doesn't necessarily help or hurt gross margin all that much, provided we don't mess up from a salvage perspective. What it does do is drive the engagement of our members, right? That was the entire thesis behind Fresh 2.0, right? How can we get people? We know our best members are involved in produce in particular and meat as well. How do we get more of our members to engage with us in those categories? Even though that takes some effort and it takes some investment, particularly in places below gross margin, as I talked about, the more people we can get into those categories, the better off we are. We certainly saw that from a produce perspective in the first innings of Fresh 2.0, and now in the middle innings, we're sort of taking those lessons that we learned and that same thesis towards meat and seafood, and we'll ultimately take it to bakery and dairy and the other disciplines within the perishables complex. It's the same thesis that arguably, hopefully, will be the same result. If we can continue to make our clubs a weekly shopping destination for our members, that augers towards all sorts of good things: participation in other categories, growth in general merchandise, more trips, more traffic, more renewal rate, all the things that we hope to prove out. We have certainly seen great results in produce, and we're hoping for the same type of a thing to be seen in meat. It shouldn't be a margin story if we do things right. It should be a sales story and a membership story. Sounds great. Thank you. Thanks. Next question comes from the line of Mikel Baker from D.A. Davidson. That Fresh 2.0 question with a couple of just digging in a little bit deeper. You said you're seeing high single-digit to low double-digit growth in produce from that initiative. If you said it, I missed it, but can you tell us what kind of—I'm just saying it's early innings—what kind of lift are you seeing in meat and seafood? And then can you sort of quantify the relative size of the opportunity in meat and seafood and then dairy and bakery to come relative to the size of the produce business? Thanks. Hi, Mike. Good morning. Thanks for the question. I guess what I would say is, individually, produce and meat are about the same size from a category perspective. They're not exactly the same, but they're somewhat comparable. Obviously, produce helped drive our business all last year. We did talk about high single-digit to low double-digit unit movement in produce. That's certainly something we continue to see in the first quarter. We would anticipate a similar result in meat. The thing that we don't yet understand and hopefully occurs is sort of a building reaction to that, right? Meaning one plus one equals three. If people are shopping heavily in produce and in meat, it should really change their member profile and their number of trips and their renewal rates. We've seen good results in meat so far. That was certainly a category that we liked the result of in the first quarter. It's way too early to see how it might drive trips in total or how it might be that multiplier effect with produce, given it's only been out in the wild for a few weeks now. We are excited about what we're seeing. We're excited about the member engagement, and we'll continue to invest in these categories. We haven't quite flushed out really anything yet from bakery and dairy and other categories yet. We've been focusing on meat this year. I think what you should take away from this conversation is it's a big opportunity for us. If we do it right, it could materially change our business for the long term. We'll continue to really invest heavily in getting this stuff right. Hopefully, it works out for our members first and foremost, because if it works out for them, it will work out for us. Excellent. Great. Thank you. I'll pass it along. Great. Thanks, Mike. Next question comes from Chuck Grom from Gordon Haskett. Hey, good morning. Congrats on a great quarter. Laura, on the guide and the expectation for a wider range of outcomes, I think we can all appreciate that given where we are. Is there a way to think about how much you exceeded your internal first-quarter plan by to assess some of that conservatism? One near-term question, just curious how May sales are running relative to April strength. Hey, good morning, Chuck. Thanks for the question. Look, I think, as you can appreciate and you alluded to, it's a dynamic environment and very fluid right now. That is kind of a piece of what we took into consideration as we maintained our guidance for the full year. The teams are working diligently to make sure that we continue to deliver value to our members, and we are doing it in the right places across the business. That is kind of how we are thinking about the year as we go forward. Your question on May sales, we do not really comment on current trends. Maybe I will leave that for now. We were really happy with the first quarter. I think that 3.9% comp was fantastic and proves the strength of our membership and continued momentum of the business. Next question is from Edward Kelly. Sorry. Next question is from Edward Kelly from Wells Fargo. Hi. Good morning, everyone. I wanted to follow up on the subject of tariffs. Curious, just to start, if you think about the guidance that you provided and reiterated today, I'm assuming that the guidance includes your best estimate of the current tariff rates and the impact that that might have on you. If you could just confirm what's in guidance related to that. The second part of the question is just related to how you're thinking about pricing and elasticities on the items that you have that are impacted, and then how you're planning inventory against that uncertainty just to ensure that you don't have markdown issues as it relates to the consumer response. Thank you. All right. Good morning. I appreciate the nature of the question. It's certainly an uncertain market out there. It's something we're all really trying to figure out. While it's hard to quantify the impacts given that uncertainty, what I would tell you is, first, we import less than many of our competitors, so we will likely be a bit less affected than others. With that said, even for us, this is a large, complex problem to figure out. We have significant muscle around dealing with inflation and cost changes. We've been employing all sorts of tactics, none of which will surprise you, to blunt the impact, including resourcing items from different countries, changing items, even eliminating items from our assortment where the elasticity might not make any sense for our members. Certainly, we're spending a ton of time with our supplier partners working the problem collaboratively. I guess, finally, what I would say, we'll act according to our purpose in taking care of the families that depend on us. These actions might differ day to day, but our performance in the past quarters and years has all been centered around that powerful idea of doing the right thing for our members. We would expect to invest for the long term as much as possible within the framework of our economic structure. For example, during the first quarter, we invested heavily in eggs and gas prices that have come down meaningfully as well. We would expect to, and we're looking to gain market share in these times of disruption. When consumers are challenged, they come towards value, and we're a great place to come for them to achieve that goal. We'll have to be agile because the answer seems to change by the hour or by the day. You can expect steadfast support of our members as we go through whatever's coming in the next few weeks. We've tried to run a range of scenarios. Obviously, today's tariff situation and maybe whatever could happen tomorrow, all of that is sort of embedded in our guidance ranges. That could obviously change. We don't know what's coming tomorrow. We try to make our best guesses. As we've talked about in the prepared remarks, our inventory is in very good shape. Our team has done pretty remarkable work over the past couple of quarters, both increasing in stock, which is obviously incredibly important to running a great business for our members, and reducing inventory levels overall down 2% on a per club basis. We are trying to be very judicious from a buying perspective. We're trying to do the right thing for our members, and hopefully, that gets us through this period of disruption. Great. Thank you. You bet. Next question comes from Simeon Gutman from Morgan Stanley. Good morning, everyone. Good quarter. I wanted to ask and make it two parts. First, share gains. Food retail clearly continues, and it's going well. It seems like you kind of bent the curve on other categories' discretionary, which are taking share. We can't see, given the markets, how granular that share gain looks like. Curious how you feel or you would assess your share gain in non-food categories. And then, is there visibility on where that higher tier penetration can get to? Are there leading indicators in how a member is spending such that that penetration rate can keep going north of 40%? Thanks. Yeah. Thanks. Good questions. We're pretty happy with our share gains in the past quarter, in the past few quarters. We continue to grow it in both food and non-food. The general merchandise share is a bit harder to measure. As we look across Circana data and other sources of data that we have, certainly, we're building in the grocery business quarter after quarter after quarter. In the GM business, even though those comps were slightly negative during the quarter, we still took share in categories. We're doing the same things that we've been doing in the past few quarters to make it work, right? Putting the right stuff on the shelf, being sensitive to what the right value is, what the right price is, how we're displaying it as we transform general merchandise. That's helping us gain share. Electronics is a great example. This quarter, we had great share in electronics. We've built share in a number of GM categories. Even if we look back longer term, Circana data all the way back through the pandemic has gone up in all four of our big businesses. One important thing outside the club, obviously, from a share perspective, is fuel. We continue to gain tremendous amounts of share with positive gallon growth quarter in, quarter out, while the market continues to go backwards from a gallon perspective. We're gaining tremendous amounts of share. That dovetails nicely into the higher tier penetration question that you put forward. We're gaining share in fuel not just because of our fantastic everyday pricing, where on average, we're about $0.20 lower than what the average market price would be. As you know, we've done a tremendous job trying to integrate gas into our membership offering, where every tier of our members, our higher tier members now, has a gas discount, whether you have a credit card or not. All the way up to $0.15 a gallon for our highest tier members. That is on top of that great opening price point gas that is $0.20 lower than the market. We are also having some fun with our team members. We are running $0.25 off a gallon on top of all the other things that they can get too. We are trying to get those team members even more involved in the fuel game so that they can tell our members about it. I think the overriding goal for higher tier membership is somewhere over 50%. That is where our club competitors are. We ended the quarter right around 41. We still have tremendous amounts of headroom to do that. We need to make sure that we are putting the right offer out there for people. We are making sure that they are engaged in the business and getting the rewards associated with doing that. That will sort of build momentum by itself. I thought this was a cool quarter to look at because with a fee increase out there, there could have been, there probably was, some pressure to not grow higher tier penetration. To grow it at the fastest rate that we have grown it in a while, where we were up well over 100 basis points sequentially, was impressive to me and to us. The team did a nice job figuring out the right offers to put out there. The team in the field at the desk, the membership desk, did a nice job converting people. Our digital team did a great job getting in front of people when they're on the website or playing on the app. We are excited about it. We think it's a great road to grow the franchise, to grow the lifetime value of our membership. We will continue to invest to do that in the future. Okay. Thanks. Good luck. Thanks, Ziming. Next question comes from Oliver Chen from TD Cowen. Hi. Good morning. It's Tom Nass on for Oliver. I wanted to ask on digital convenience. Seems to be trending quite impressively. Is there any color you could give on the impact that may or may not have on margins for the business overall? And then as a follow-up, it'd be great to hear your outlook for the year on the general merchandise category. And then related to that, how private label fits into the equation with any opportunities or developments planned there? Thanks. Yeah. Tom, thanks for the question. Digital has been more and more important over the past several years. We're trying to save our members time in addition to 25% off their groceries. What they're telling us is they love what we're doing. It grows week in, week out, quarter in, quarter out. Two-year stock and digital sales well over 50% again this quarter. What we're doing is clearly resonating. The predominance of that business, you'll remember, is in food pick and curbside and same-day delivery. As we fulfill those orders, obviously, they cost a little bit more. They can cost a little bit more because our team members are doing the picking for our members. And even in the case of curbside, putting it in their basket, but their car. Member shopping behavior tends to increase the more engaged people get in these digital conveniences. That incrementality tends to pay the bill for the increased cost. Those costs are largely below gross margin. Just specifically to your margin question, it's not really a gross margin story. Again, from a contribution margin perspective, these sales will be slightly less accretive. Certainly, the incrementality is what we're looking for. We're trying to grow lifetime value. We're trying to grow engagement in the business. Our members are telling us every day that these conveniences are incredibly helpful. We also made nice gains inside the club in another element of our digital sales, which is ExpressPay, the ability to check out using your phone. Once upon a time, that was an incredibly small part of our business. It is growing every day there too. General merchandise, a little bit softer in the first quarter. All of that was in discretionary high-ticket goods. I think what you are seeing is the consumer confidence playing out in there and some weather, quite honestly. I mean, it is pouring here today in front of Memorial Day weekend. Not a great incentive to go buy a patio set or lawn fertilizer at this point. I think as we go forward, the consumer will ebb and flow with whatever happens from an economic standpoint. Certainly, in other less discretionary or smaller ticket businesses within GM, we saw some strength. We did well in apparel. We did well in electronics. I think what you're seeing is people hewing more towards need categories than want categories until there's greater certainty about what's going to happen in the economy. I would expect that situation to persist for as long as that uncertainty persists. Your final question on private label, another all-time record in private label penetration. That's, I think, owing to two things. One, the continuing search for value for members. You're definitely seeing members be a little bit more promotionally sensitive. You're definitely seeing them look at own brands a little bit more. Our team is doing a phenomenal job creating own brands products that are great, of great quality, of great value. Now we're even, in some cases, displaying them more prominently in the clubs. We're changing packaging and doing all sorts of other things to really put those in a more robust way. I would anticipate the consumer continuing to search for value, as we've talked about, which would highlight some own brands. We will try and exercise some self-help as well and continue to improve our own brands business. It's incredibly important, as you know, from a margin story perspective as well as from a loyalty perspective. Even if it comes with a little bit of top-line degradation, we'll take the margin on the loyalty all day long. Next question comes from Steven Zaccone from Citi. Great. Good morning. Thanks very much for taking my question. I was going to ask two in one. The first is just really strong merchandise margin strength in the first quarter. Maybe how should we think about that over the course of the year? Because the comparison got a little bit tougher, but just help us understand your outlook there. Then follow-up on Chuck's question earlier. I guess what I was curious on is the commentary around the wider range of outcomes while still maintaining the guidance. Is that just acknowledging the macro has gotten much more uncertain? It does not sound like anything you are seeing in the business has changed, right? Seems like still pretty good momentum from your specific business. Look, good morning. We are quite pleased with the margin strength during the quarter. It was a little bit of probably our easiest comparator in the year. We had some stuff going on last year as we launched Fresh 2.0 that we were able to sort of clean up this quarter. Look, we have a bunch of different irons in the fire to grow margins over time that we've talked about. We just talked about private label on the last question. That's a good one. CMPs, category management process, as we continue to figure out how to put the right brands and products on the shelves at the right value. We're also trying to figure out what the right margin mix is in each category as well. That should hopefully let us auger margin rates north. There are a few other ones around the business, working better with salvage, changing what we do from a transportation perspective, doing retail media advertising. Those things are all not transformationally large, but they're all individually important. We'll continue to work on all those things. I would hope that margins continue to perform well during the year. The big question mark, obviously, is what happens from a cost-based perspective. As I said in the response to Ed's question about tariffs, we will go forward and invest to gain market share and do the right thing for our members, almost no matter what happens within the economic structure of what we can afford. While we do see some daylight from a margin perspective, we also anticipate investing more as we go through the year. That is really why we left the guidance unchanged for the year. It is certainly a dynamic environment. Nobody really knows what is going to happen. We will control what we can control on the operational side and the merchandising side. We will invest for the future of the business, even if that means margins suffer a bit. I think that answers your question on the wider range as well. It does. Yeah. Thank you very much. Next question comes from Rupesh Parikh from Oppenheimer. Good morning. And thanks for taking my question. I guess just going back to your relocation commentary, I guess as you look at your store breaks, do you see a number of opportunities there? And then as you think of relocation opportunities, would this be incremental to what you typically would open in a typical year for stores? Hi Rupesh. Let me pass it over to Bill. Yeah. Hey, Rupesh. We talked a little bit about the relocations in the script. And we have a couple right now in the pipeline. I think what you can expect of us is to continue to look at the markets and the communities that we serve and look for opportunities within our existing store base where we have opportunities to serve more members in the instance where either the retail landscape in the market has changed or the population in the market has changed. As we think about the real estate program broadly, like I said, in my first response, the models are changing pretty quickly, probably quicker than they've ever had in terms of population changes as well as our share growth. I think our investor base should expect us to play offense and look for these very opportunistic opportunities that become available to us to reposition for the future. We should absolutely go take advantage of them when it makes sense for our members and the company. Great. Thank you. Next question comes from Mark Carden from UBS. Good morning. Thanks so much for taking the question. So another one on real estate. Just as you think about store growth, how are you thinking about the potential impact from higher materials costs just related to tariffs? Do you see it providing much of a risk impacting the timing of your new store in DC growth? Does it impact how you think about prioritizing new market entry versus, say, boosting store counts in your existing markets? Is it an opportunity to play offense? Just any color there. Yeah. Hey, Mark. And thanks for bringing up the point about the DC. We have not talked about that much, but the construction of our new DC is going great. We are making tremendous progress with that. We'll be very excited for us to get that online here in the coming year or so. In terms of the costs, obviously, we've seen some impact of cost within the construction portfolio. As we think about that over the long term, right, these are 20, 40 year investments that we're making in new buildings. We're certainly working as we would with any other product that we buy, whether it's our products for merchandise resale in our clubs or our construction costs, to leverage our scale, given the number of projects that we have in the pipeline right now to deliver the savings where we can and get these things built as efficiently as possible. As we step back, we feel really great about the overall investment envelope of a new club and the returns that we've generated. We're going to keep going. Great. Thanks so much. Good luck, guys. Thanks, Mark. Thank you. That is all the time we have left for questions. I will now turn it back over to Bob Eddy for closing remarks. Thanks, everybody, for your attention this morning. Thank you for your support of our company. We have got a lot going for us. We have had great results over the past couple of quarters. Certainly, a more dynamic environment that we face today than maybe we have ever faced. We will continue to do the right things to take care of the families that depend on us. That will power our growth going forward. We wish you a great summer. We will talk to you at the end of the next quarter. This concludes today's conference call. You may now disconnect.