Good morning all and thank you for joining us for BJ's Wholesale Club Q2 2025 Earnings Conference C all. My name is Carly and I'll be coordinating today's call. If you'd like to register a question during the call, you can do so by pressing star followed by one on your telephone keypad. To remove yourself from the line of questioning, press star followed by two. I'd now like to hand over to our host Anj Singh to begin. The floor is yours. Good morning and welcome to BJ's Second Quarter Fiscal 2025 Earnings Call. Joining 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 b ased on our current expectations, forward-looking statements are subject to risks and uncertainties that can cause actual results to differ materially from what we say on this call. Please see the Risk Factors sections of our most recent SEC filings for a description of these risks and uncertainties. Please also refer to today's press release and t he latest investor presentation is posted on our Investor Relations website for our cautionary statement regarding forward-looking statements and non-GAAP reconciliations. Now I'll turn the call over to Bob. Good morning everyone. Thanks for joining us today to discuss our second quarter results. Our business delivered solid results in Q2 as we continued to provide our members unbeatable value along with exceptional convenience in an environment that remains very dynamic. Our commitment to taking care of the families who depend on us is more than just a slogan, and we view the performance this quarter as demonstrable proof of the power and relevance of our business model in a volatile backdrop. Now more than ever, we will maintain an unwavering focus on the priorities that will drive value for our members both now and into the future. Our Q2 results included comparable club sales, excluding gas, of 2.3%, led by our 14th consecutive quarter of traffic growth and our 11th consecutive quarter of market share growth. Our membership base continues to grow, and I'm happy to announce that we reached the 8 million-member milestone this quarter, representing 55% growth in our membership base since our IPO seven years ago. Our digital business continues to shine and represents a generational unlock for us as we deliver value to our members how and where they want. This business grew 34% during the quarter. These results were solid in the face of a market environment influenced by both macro uncertainty as well as the unseasonably wet and cold weather to start the quarter, especially in our core Northeast and Mid-Atlantic markets. We saw our business accelerate as the weather improved. Our perishables, grocery, and sundries division led our Q2 performance with healthy 3% comp growth and a two-year stack that held steady with Q1. The investments we've made in both Fresh 2.0 and our category management process have driven continued share gains across our consumables franchise. We saw the most strength in perishable categories like dairy, meat, and fresh produce. The investments we've made in our Fresh 2.0 capabilities continue to deliver value for the company and our members, and we're building on these gains as we expand our efforts through our meat and seafood franchises. Our GM and services business declined 2.2% on a comp basis in the quarter, with the results being impacted by both the weather and macro factors that I noted earlier. Certain higher ticket discretionary categories in GM such as recreation and lawn and garden experienced double-digit declines in comp sales. Our team was quick to react to these early quarter trends, and we aggressively managed orders and markdowns to ensure we exited the quarter in a prudent inventory position. I'll share more about our inventory results and strategy later in the call. Our GM business did show bright spots, validating the fruits of our transformation efforts. For example, our apparel business grew comp in the low single digits despite the weather headwinds and further built on the positive trend in this business with a two-year comp stack in the high single digits. As we step out of the discrete quarterly results and evaluate the state of our membership base more broadly, we did see members across all income levels turn a bit more cautious during the quarter, driven by the uncertain macroeconomic environment. Despite this change in consumer sentiment, our members continue to count on BJ’s, and total spending increased in total and on a per member basis, with low income households demonstrating incredible loyalty. This is clear validation of our value proposition at a time when families are under seemingly endless cost pressure in what is an exceptionally dynamic environment. I'm proud of how our teams are laser focused on controlling what we can control and continuing to execute our strategy with discipline. We are improving member loyalty, giving our members an unbeatable shopping experience, delivering value conveniently, and growing our footprint. These are the pillars that will drive long-term value creation, and we made further progress this quarter. Let me now take a minute to provide an update on each. We continue to put up robust results in membership, growing total member counts, all while maintaining our strong renewal rates. Reaching the 8 million member milestone this quarter is a significant achievement, with growth coming not only from the new clubs that we've added to our chain, but also from our legacy comp clubs. Growing the number of members and retaining them at high levels is an impressive feat, but we are also improving the member mix, signing up a greater percentage of higher tier members who qualify for our best-in-class rewards both in the club and at the pump. In the second quarter, higher tier membership penetration continued to set records, improving 50 basis points sequentially to an all-time high of 41%, and we continue to see more upside going forward. Our membership growth is the result of our focus on delivering unbeatable shopping experience. Our merchandising transformation is focused on offering the right products at the right price. A fantastic example of this is the sustained success of Fresh 2.0, which we rolled out to win our members, shop, and grow frequency of trips. As a proof point to the sustainable nature of this effort, I'm pleased to report that our Fresh 2.0 pilot clubs, now in their second year, are continuing to see perishables comp at chain levels. It's clear that this transformation has driven a significant and durable improvement in these members' behavior. We're now taking our lessons learned and applying this data-driven approach to our meat and seafood categories. Let me talk a little about what we are doing in these key categories. We're using our internal member data along with demographic data and competitive insights to inform complex fresh meat and seafood assortment decisions, providing members more of what they want and making it easier for them to shop these categories. We're also looking to be more regionally relevant to our members as we align offerings with trade area intelligence, focusing on ethnic and cultural preferences, all while we continue to deliver outstanding value and quality. In early days, we're seeing exciting results with substantial improvements in sales and salvage expense for these categories. Our focus on convenience is shown in our digital results with growth of 34% this quarter and 56% on a two-year stack basis, driven by consistently robust BOPIC and same-day delivery expansion and rapidly increasing penetration of Express Pay. Our digital adoption sets new records every quarter, and our app usage continues to grow, with more than half of our active members now regularly using the mobile app. When we can leverage the convenience of digital to unlock the value of our club, the value creation opportunity for both our company and our members is tremendous. And l ast but not least, our new club footprint expansion. We started off fiscal year 2025 strong, opening five clubs in the first quarter. This quarter we completed our first relocation since our IPO, opening our new club in Mechanicsburg, Pennsylvania on August 1st. Our teams did an amazing job executing the transition plan, and early feedback is that our members love their brand new home. Mechanicsburg joins a class of new clubs that continue to exceed expectations, with the clubs on the maturity curve comping about 3x the rate of the tenured base. Looking forward to the rest of the year, we plan to open eight more clubs, with our club in Warner Robins, Georgia in early September and seven more clubs in Q4. As we look out to 2026 and beyond, o ur pipeline of clubs remains stronger than it has been in years, and the team is hard at work both building our pipeline and planning for our future openings, including our entry into the Dallas-Fort Worth market early next year. We remain on track to add 25- 30 new clubs in two years as we look forward to the rest of the year and especially the external factors that will impact our business. The tariff situation and its impact on the broader macro environment and consumer mindset continues to be ever changing in a difficult backdrop for all parties. We believe that our business becomes increasingly relevant to consumers, and we are better insulated from the impact of imports than most of our competitors. We're proud of our team members helping us chart through a turbulent environment and allowing us to stand tall for our members as we extend our value proposition. More specifically, our teams are running a playbook that we've successfully used in the past to navigate inflation, and we are dynamically changing our sourcing according to the fluid situation. We took a deep look at our buys for the back half, we repointed the country of origin where applicable, and then we right sized our orders to balance the impact on our business while still standing tall for our members. I'd be remiss if I did not call out that these decisions likely limit our upside versus original expectations for the year, but we always want to sell more, and buying less may hamper that ability if consumer sentiment improves rapidly. We believe prudence is the better part of valor in this constantly changing, risky environment. Despite some of the uncertainties I've highlighted today, as we look towards the back half of this year, we do so with confidence. We have record high membership metrics, and we're building on that strength every quarter. We're steadily gaining share against our competitors even as volatility remains pervasive. We're entering the fall season with healthy inventory levels and do not anticipate any markdown risk of significance. Our teams are energized, and we are focused on carrying our momentum into the fall and holiday seasons, being there for our members when they need us most. Before I turn it over to Laura, I want to thank our team members across the organization for their continued commitment to serving our members and delivering unbeatable value while living our purpose day- in and day- out. Thanks, Bob. I want to begin by expressing my appreciation for the incredible team members in our Clubs, Club Support Center, and Distribution Centers. Your commitment to our company and the communities we serve has helped deliver another solid quarter, showing sustained momentum towards our long-term story. Let's now review our second quarter results. Net sales in the quarter were approximately $5.3 billion, growing 3.2% over the prior year. Total comparable club sales in the second quarter, including gas sales, decreased 0.3% year-over-year as the average price of gas declined low double digits year-over-year. Merchandise comp sales, which exclude gas sales, increased by 2.3% year-over-year and by 4.7% on a two-year stack. We were pleased to grow both traffic and units in the quarter. Our second quarter comp in our grocery, perishables, and sundry division grew 3% year-over-year, driven primarily by strength in comp units which outpaced the broader market. Our general merchandise and services division comp decreased 2.2% in the second quarter, with general merchandise driving the decline and services about flat for the period. Digitally enabled comp sales in the second quarter grew 34% year-over-year and 56% on a two-year stack. Over 90% of our digital sales are fulfilled by our clubs with services like BOPIC, Express Pay, or same-day delivery. All of our digital offerings are intended to deliver value by maximizing convenience. Members who engage with us digitally have a better and more convenient shopping experience, and they in turn become some of our best members. We will continue to focus on augmenting our digital capabilities to increase convenience for our members. Membership Fee Income, or MFI, grew 9% to approximately $123.3 million in the second quarter on strong membership acquisition and retention across the chain. We also continue to benefit from the recent fee increase, which went into effect at the beginning of the year. While the fee increase is certainly a component of growing MFI, we are also improving the quality of our member base, improving the mix as well as the size of our member base while keeping retention rates at high levels. We see upside on all of these levers to drive more MFI growth in the future. Moving on to gross margins, excluding the gasoline business, our merchandise gross margin rate increased by approximately 10 basis points year-over-year, led by disciplined cost management and continued execution of our long-term initiatives. SG&A expenses for the quarter were approximately $786.4 million and deleveraged slightly as a percent of net sales year-over-year. This was primarily attributable to our new unit growth and other investments to drive our strategic priorities. As Bob mentioned earlier, we continue to gain share in our gas business. Our comp gallons in the quarter were flat year-over-year, significantly outpacing the industry which declined low single digits on a comp basis over that same time frame. A reminder that gas gallons can also be affected by wet and colder weather at the beginning of the quarter as people curtail their driving patterns. Elevated market volatility in June contributed to overall gas profits that slightly exceeded our expectations in the quarter. Our second quarter adjusted EBITDA grew approximately 8% year-over-year to $303.9 million, reflecting our growing top line, increase in merchandise margins, and membership trends that remain robust. The growth here underscores the durability and consistency of our business and financial model. Our second quarter effective tax rate was 26.9%, slightly lower than our statutory tax rate of approximately 28%. All in, our second quarter adjusted earnings per share of $1.14 increased 4.6% year-over-year. Moving to our balance sheet, we ended the second quarter with absolute inventory levels down about 2% year-over-year and down 6% year-over-year on a per club basis. Note that we are operating 11 more clubs in our chain today compared to a year ago. While some of this decrease relates to tighter inventory buys for the back half, most of it is us doing a much better job allocating inventory for our members. Despite the inventory declines, our in-stock rates improved by approximately 50 basis points over the same period last year and are at the highest levels we've seen in some time. For some longer term perspective, if we look at the growth in inventory levels versus net sales since pre-pandemic times, we have seen our inventories grow approximately 45% with net sales having grown by roughly 60%. Said another way, we are managing our inventories as well as we ever have. This great result is a testament to our investments in our supply chain team and the systems that support our efficient operating model. Our capital allocation strategy remains consistent. We believe the best use of our cash is applying it towards profitably growing the business as such investments should support membership, m erchandising, digital, and real estate initiatives will continue to be funded by our cash flows and enabled by our strong balance sheet. We ended the second quarter with net leverage of 0.4x. Share buybacks are an integral part of our capital allocation framework, and in Q2 we repurchased approximately 375,000 shares for $41.2 million. As of quarter end, we have approximately $953 million remaining under our recently renewed repurchase authorization. We will continue to take a disciplined and balanced approach to deploying our capital to maximize shareholder value. Looking ahead to the back half, we are maintaining our balanced and thoughtful approach to guidance. The uncertainty and volatility in the macro environment remains elevated, and we expect it to influence costs and consumer spending patterns. We also remain confident in the underlying strength of our business and our ability to deliver sustained growth. We will continue to be focused on the things that we can control while executing towards our long-term priorities. More specifically, as it relates to top line guidance, while we had contemplated the lack of the port strike in Q3 and the strong general merchandise performance in Q4 when we initially set guidance, we had not anticipated the tariff-related macro volatility. We believe these to be headwinds versus our original expectations for our full year outcome, we do not anticipate them impacting us in delivering towards the ranges shared earlier. As it relates to earnings, we similarly expect there could be some volatility as we manage investments through the back half, but our year-to-date earnings performance allows us to approach those investments from a position of strength while also increasing our full year earnings guidance. The result is we are maintaining our guidance of comp sales growth excluding gas to be in the range of 2%- 3.5% for the full year. We are also updating our adjusted earnings per share guide to be in the range of $4.20- $4.35. It is admittedly challenging to provide guidance as the headlines have been changing rapidly. As we go through the rest of the year, know that we will do the right thing for our franchise for the long- term, which likely means investing in the short-term. Our efforts to deliver sustainable growth at elevated levels are generating results, and our longer-term vision is on track. We remain confident in the underlying strength of our business and believe we are well positioned to build on our momentum and maximize shareholder value in the future. Bob, back over to you. Thanks, Laura. In closing, I wanted to remark on the undeniable momentum in our business as we evaluate progress against our strategic objectives. We are improving the quality of our membership base while growing it to an ever larger scale. We are making our merchandise increasingly more compelling in terms of both the product and price. Our digital capabilities are improving the convenience of shopping our clubs, and we are well on our path to growing our footprint at an elevated pace in attractive high growth markets. As we continue to execute on our long-term priorities, we will continue to remain focused on taking care of the families that depend on us as well as our members, our teams, and our communities. Thanks again for joining us today and for your support of BJ’s Wholesale Club. We will now take your questions. We'd now like to open the lines for Q& A. If you would like to ask a question, please signal by pressing star followed by one on your telephone keypad. To remove yourself from the queue, press star followed by two. Our first question comes from Peter Benedict from Baird. Incorporated. Peter, your line is now open. All right, good morning guys. Thank you for taking the question. I guess maybe just two questions here. First, just to give us a sense of maybe how the second quarter played out. It sounded like obviously the first half o f the quarter, maybe how you exited w ould be kind of an interesting view t o get for you guys what that w eather impact was overall. As you think about the back half, 3Q, 4Q, recognizing that there's a lot of puts and takes there, just how would you level in terms of comps and earnings? Digital color you can give on that. You've got the port strike collapsed in 3Q. You've also got the legal benefit. Just want to make sure we're a ll on the same page as we're thinking about the back half of the year. Thank you. Hey Peter, good morning, it's Bob. Thanks for your question. Thanks to everybody listening today. Happy to talk about our good Q2 results this morning. I think the second quarter comp that you pointed out was a little bit interesting to look at given the tough start from a weather perspective and notably better weather in the back half. Certainly we saw the quarter strengthening as we went through it. May was a pretty weak month and June got better as well as July. Much of that I think we think relates to that weather. I think we had 14 or 15 consecutive rainy weekends here in Boston. You're not out there shopping for cookouts or Little League games or buying patio sets or whatever you do when it's warm. To some degree that stuff doesn't sell if you don't sell it early in the season. I think our team did a phenomenal job navigating through the quarter and ending where we did from an inventory perspective. They took action early and often to try and, number one, motivate our members to shop. Number two, make sure we ended in a clean inventory position. I think our inventory is in the best shape it's been in five years or so. We talked a little bit about that in the prepared remarks w ith Perk Club inventory down about 6% while raising in-stock levels 50 basis points, that's a huge achievement. It's a great testament to our planning and allocation team and our supply chain team to make sure that we're doing the right thing every single day for our members and obviously has financial benefits as we go forward. I think we're in good shape. It was sort of an interesting quarter to wade through from a sales cadence perspective. As to your second question, maybe I'll let Laura comment on some of the puts and takes in the back half. I think you summarized them nicely in the third quarter. We've got Ford strike and we've got some other stuff in fourth quarter. Let me hand that over to Laura. Hey, good morning, Peter. You know, Bob hit the big pieces as we enter into the back half and we're looking at the business. I think, you know, in Q3 we've got the port strike that you called out in Q4. Remember, we had very strong results that we were proud of from our general merchandise transformation last year. We are thinking about those things as well as the legal settlements that you raised on earnings. I think Bob's comments that he said earlier on the comp cadence in the quarter and as weather improved gives us confidence as we enter into the back half. We will continue to watch it and make the right decisions for our member to make sure we're offering them value and getting them into our clubs and shopping digitally. I think, you know, all of that said and all that put together, we are confident as we head. Into the back half. That's great. Thanks. My follow-up is around membership, really encouraging ads in terms of new member ads. Seems like that pace in the first h alf of the year, I guess, even historically has been. Just curious, kind of where you're. Sourcing these new members. What's the profile there? As you think about membership fee i Income over the balance of the year. Just level set us w here you think you can end the year in terms of your membership fee income. Thank you. Yeah, it's a good question. That's another bright spot for the quarter, for the year- to- date period, Peter. Thank you for bringing that up. We're very proud of our membership results over the past quarter, the past two quarters, the past few years. Certainly we continue to grow it nicely. We were very pleased to tip over the 8 million member threshold this quarter, and we thought it was fun to look at how fast we achieved that versus hitting the last 500,000 member threshold. We achieved it a lot faster this time, and a lot of that is obviously opening new clubs at a faster pace that I'm sure we'll talk about today. It's also the good work that our teams are doing from an acquisition perspective and from a renewal perspective. We've got, you know, continuing to have very high renewal rates in our franchise. It obviously is among the most important financial statistics, and our team continues to iterate to figure out new ways to acquire members and our comp clubs as well. We had the fee increase this year that has gone through really still two quarters in here. No surprises to think about on how that has rolled through. That's played out almost exactly the way the team modeled it. We're very grateful for that one as well. The last bright spot to talk about there is higher tier, right. 41%. That's the highest we've ever seen from that penetration perspective. Grew at 50 bps this quarter. That continues to be a goal of ours. We know some of our competitors have higher numbers than that, and we've got a lot of work to do to get to where they are. We're pleased that our members are hearing the value from us at the desk and in the communications that we send out, and they're reacting to that and signing up for those higher tier memberships. We now have to make sure that we show them that value every day and we convert them to spend into those higher tier memberships in the way that they should. It's a great initial vote of confidence from our new members and those existing members that are upgrading into the higher tier memberships. Yeah, I think I'd just add on a quarter-by-quarter basis we expect the rate of growth to accelerate through the year. That is largely the fee increase coming in. It's also coupled with all the things Bob touched on, the great work that the team's doing from an acquisition and retention perspective. All right, thanks, guys. Good luck. Thanks, Peter. Thank you very much. Our next question comes from Kate McShane from Goldman Sachs. Kate, your line is now open. Hi, good morning. Thanks for taking our question. I just wanted to ask a little bit more about your comment on the change in consumer behavior that you saw during the quarter. I think you mentioned it was in each income cohort. Obviously, there's been a lot with regards to inflation and other items that are impacting the consumer, but wondered if you had any additional insight there. What are you exactly seeing when it comes to the behavior? Good morning, Kate. I think we're seeing overall a pretty resilient consumer in the face of everything going on with the tariffs and the news cycle and the resulting inflation that's come through. As a side note, the inflation that's come through wasn't all that much yet in the quarter. It was about 1% inflation, very similar to what you've heard from our competitors that have reported this week. I do think you're seeing a consumer that is really frustrated by the whole thing. When we look at the economic cohorts that we talked to you all about, the high, medium, and low segments, all of them look like they're a little bit concerned about what they're seeing out there and what they're hearing. Although total spending increased in each of those cohorts and on a per member basis within each of those cohorts, you could definitely see behaviors that indicate that they're on the lookout for value. Their propensity to use coupons or to react to deals is a bit higher. Certainly looking at private label a little bit more than they have in the past, which may be good for us in the long-term, but it could be an indication of consumer stress out there. Discretionary categories were more impacted than the non-discretionary, which again, was not too much different from the first quarter. All these are indications of a consumer that's a little bit more choosy with their dollars. It's what I think we'll see for the remainder of the year until we get through this cycle. This is what we do, right? Our whole business is taking care of the members that depend on us and requires us to put the right thing in front of them at the right value. Our teams are working very hard to do that. I'm extremely proud of our merchant team and our general merchandise team in particular. They've had a heck of a time trying to figure out how to source their way through this past couple of months. We're confident in this posture with which we go into the back half. The consumer is a little bit more challenged at this point. We'll have to make sure that the offers that we have out there are on point to make sure that we do our jobs and take care of the members. Thank you. We just wanted to ask a quick follow up question. Is there any way to measure what kind of impact weather had on the general merchandise category during the quarter? There are a bunch of different ways to measure it. I don't know that any of them are wonderful. The best way that we looked at it is really the simplest way, sort of the beginning half of the quarter and the back half of the quarter, and it was pretty noticeable. We've looked at it sort of north versus south as well, as the Southern Clubs did better than the Northern Clubs. It's important to note, it doesn't just impact the general merchandise business. When you have that continuous rainy cold cycle, it impacted our whole traffic trend. I think that was about half of the difference between where we thought we would land and where we ended up landing. Certainly, I think we tried to do our best to operate through it, but there's only so much you can do when it's 20 degrees colder than it should have been in June. We'll take that as it comes. Some years it's great, some years it's bad. Certainly, there was a plus and minus during the quarter because we went from terrible weather to pretty great weather in July. It's a difficult thing to really measure it with any terrific accuracy. Thank you. Thank you very much. As a reminder, to raise a question, we'll be star followed by one. Our next question comes from Edward Kelly from Wells Fargo. Edward, your line is now open. Hi, good morning everyone. I wanted to ask you about, I guess just a follow up on comp and the back half guidance. The range is, it looks a little wide. I mean, I guess if you rounded it, it's sort of like 1%- 4%. I get that there's uncertainty and some tougher compares, but zooming out, you're taking share, you've got a big grocery offering, there's inflation out there and sort of like both sides of the business, which seems like it might accelerate. I'm just kind of curious as to how you're thinking about the back half and maybe what it would take for you to be at the high end versus the low end. I guess, probably most importantly, where are you running today versus that range? Good morning, Ed. Thanks for your question. It's certainly a good one. It's one that we think a lot about. I think you highlighted a lot of the things that we think about. Certainly there are tougher compares as we go through the rest of the year. We highlighted that in the guidance, you know, initially for the year. I don't think any of that's changed, obviously. As we go forward through the year, I do think you'll see more inflation as more suppliers pass on increasing tariff costs and some of that makes its way to the consumer. I do think, as I've said all along, building on your comment of our growing market share, as times get tougher, the relevance of our channel increases. I think you'll see consumers come to us. We have to do our jobs and make sure that we're taking care of those members and investing behind the prices and promotions and things that we show them. I think that we have the right plan. We're in the right segment of retail and our team is doing good things. We left the range alone, really, because we still think we'll fall within the range. To your point, it's a fairly wide range at this point. Given the level of uncertainty out there, we thought that that was prudent. I think we've got a lot of places to go and to win. This year of all years, I think was probably the right move to just leave it as a pretty wide range. Okay. Laura, could you expand on your commentary around the potential for, I think you said, maybe even likely second half investment and what that potentially means for the second half gross margin, and what are the factors that would dictate the level of investment that you're contemplating? Yeah. Hey, good morning, Ed. You hit it. My commentary was really on the margin part of the story. We consistently talk about delivering the right price and value to our members and making sure we are in the business of taking care of the families that depend on us. They pay to show up at our clubs and shop. Delivering them great value is important every day and continues to be important. As we think about the uncertainty that Bob touched on a little bit earlier as we head into the back half and some of the behaviors we're seeing from our cohorts that we talked about earlier and some sensitivity, I think that that's really all we're getting at. We will potentially make short-term investments, but that is important for the long-term health of the business and for our membership. Maybe I'll just. Okay, thank you. Add a little bit of color. I think, you know, with the complexion of the guidance that we've put forward this quarter, I think should indicate a little bit of confidence to you. Right. We raised the bottom line into a fairly choppy environment and we've had two pretty profitable quarters here. We're pretty bullish from a bottom line perspective. In spite of those investments, we will, and we do have plans to make more investments in the back half than we did in the front half. We're going to try and be aggressive and lean into those things that we talked to you about and gaining share and the relevance of our model and speaking to our members in a way that better illustrates that because I do think this is the time for club. You know, what we do is to try and save our members money. That requires us to put really sharp price points on things. In an inflationary environment, that's tough. It requires investment. It's no different than what we saw in 2022, which we navigated very, very effectively. We know what to do. We've just got to go out and do it. That's what's gotten us here from 2022. We're going to continue to do that going forward because it will drive us into the future. Thank you. Thank you very much. Our next question comes from Robbie Owens from Bank of America. Robbie, your line is now open. Hi, this is Maddie on for Robbie. Thanks for taking our questions. Your Fresh 2.0 initiative in meat and seafood launched in May. How did meat and seafood perform versus your expectations? Now that you've fully lapped the rollout of Fresh 2.0 in produce and recognizing it's still early days, are you seeing signs of a multiplier effect of members shopping you for more of both produce and meat? Thank you. Hi, Maddie. Good morning. Thanks for the question. You know, Fresh 2.0 is perhaps the best illustration of our transformation in the past couple of years. It really was a true 360 degree program where we looked at our entire produce business and tried to say, how do we make this thing the best we can? Obviously, we've talked to you about it before. We made changes across the business in terms of the spec and quality of what we provided, how we merchandise, how we talk to our members about the value, how we promote it, how we train our team members, where we located in the clubs. All sorts of different things changed. I would call it an overwhelming success in the first year. We find ourselves now, as you say, starting to lap that. We still see perishables driving the business, which is fantastic. Grocery had a good quarter for us with a 3% comp. Perishables led that and was roughly double that comp. It was a tremendous unit growth story embedded in there that was really driven by the Fresh 2.0 initiative in large degree. As I talked about in my prepared remarks, I think the really cool proof point is to look at our Florida clubs, which were our pilot clubs a couple of years ago, and to see what's happening there. They're still comping at the chain level. They're doing the same thing in year two that they did in year one, which tells you it has that multiplier effect within the perishables, the produce business particularly. We believe it's driving trips in those clubs as well. As we move forward in the meat and seafood, we're sort of in the early innings of those changes. We've redesigned assortments. We're still testing a few things here and there, but we are seeing benefits. Our meat business was great during the quarter. Our seafood business improved. We're seeing units move. The whole idea behind this is if we can stack a bunch of these categories one on top of the other, that are real important weekly shop categories, they will benefit us in the long-term to member engagement and trips and overall spend and then obviously renewal rates. We're really pleased with Fresh 2.0 overall. Earlier results on meat and seafood are good, but they're early. We need to continue to iterate on that and make sure that we continue to build on the power of this program going forward. Thank you very much. Our next question comes from Chuck Grom from Gordon Haskett. Chuck, your line is not open. Hey, guys, this is Ryan Bulger on for Chuck here. Thanks for taking the question. I did want to ask about your. General merchandise outlook for the back half of the year. I know you guys gave us some c olor on some of the categories in 2Q, just how you're thinking about i t overall and then both on a category basis. Any color you could provide there would be great. Thanks very much. Morning. Look, you know, GM lost a little bit of ground in the second quarter, but into some really tough headwinds that we've talked about. I still think our transformation is underway and on track. I think that the GM team has done a nice job both to manage through the quarter and to prepare for the back half. We talked a little bit about how we're thinking about managing through the tariffs and resourcing things and repointing to different countries of origin. I think our team has done a great job doing that and I think they've taken a prudent stance from an inventory buying perspective. We're certainly in a low margin business, so we need to be careful from an inventory perspective, particularly when prices rise in a considerable way, because you need to understand the elasticity of those categories and some of the tariffs could put changes on prices that would be tough to understand from an elasticity perspective. I think we've chosen to be conservative in some categories that we think are more discretionary, but other categories we're being very aggressive in. You saw a little bit of that in Q2. Despite the fact that we had overall headwinds on the GM business, you still saw apparel do incredibly well. That's a great mark of our continuing relevance to our consumer and general merchandise. Obviously the first category. I know we've talked about this a few times. The first category we started from a transformation perspective and it continues to grow q uarter- in, quarter- out. We're putting the right stuff on the shelf in a clean assortment with great values. That resonates with our members. We need to continue to do that category- by- category going through the back half and hopefully our members react to it. Great, thanks. Thank you very much. As a reminder, to raise a question, it will be star followed by one. Our next question comes from Michael Baker from D.A. Davidson. Michael, your line is now open. Great, thanks. Just wanted to follow up. It seems like in some ways you keep talking about being aggressive and going after share, but it also feels like inventory ordering is a little bit more cautious. I guess my question is this. Are you a bit more cautious today in terms of back half inventory in your ordering than you were three months ago? How do you square that with, you know, again, it sounds like the quarter ended great and the beginning of this quarter is strong. Why take what seems like a more cautious approach to the second half of the year? Yeah, Mike, look, I think it's two issues you're talking about. Certainly we want to be aggressive and we are being aggressive to continue to gain market share. To me, that's more of a pricing question than anything. It's an overall value question. We'll continue to do the things that we've always done and hold prices as long as we can and make sure that our members understand that we're trying to do the right thing for them. That's how we've operated for the past few years. That's how we'll continue to operate for the next few years. That may get bigger or smaller from an investment perspective going forward, but that's the North Star in our business. We need to present the right value to our members every single day. I think you're right that we're being a bit cautious from an inventory perspective, but only in those categories that we think are really discretionary and that have higher tariffs associated with them. A good category to think about might be seasonal, you know, holiday decor, where the vast, vast majority of that stuff is built in China and obviously comes with a steep tariff on it. Maybe a little less of a tariff today than we thought a couple of months ago when you're really placing those orders. Regardless, I think the prices are going to rise on things like that. We'll still be there. We'll have a great assortment for our members. We have ordered less units this year than we have in the past. The math there is really simple to think about given the low margins at which we operate. You need to sell four or five units at full price to pay off one that you mark down to zero. We're just trying to better balance the economic equation in our business. I don't think it's an issue of really being cautious from our members not liking what we have, or they're not going to come in and see us or they don't like us anymore. We're just really trying to understand and to some degree, guess what their reaction to any inflation that comes down the pipe might be. We want to make sure that we meet our promise to our members every day. We have to provide that value. We have to provide good products and great brands. We also understand we have responsibility to the bottom line of the company. We're trying to make the right decisions on both of those and mix out the business the way that we think is best. Good luck. Sounds challenging. Can I ask one other question? Just as it relates to trade down from lower income customers, in this kind of environment, it makes sense if the low income customer is stressed in a way that hurts your customer. Could it also drive increased traffic as shoppers who weren't necessarily BJ's members now look to BJ's because they need to save money? Have you seen that in the past? Yeah, it's a good point, Mike. Certainly lower income consumers are, I think, a bit more stressed than higher income consumers. That obviously makes sense given their economic position. The interesting thing we saw during the quarter, and we've seen for the past few now, is those lower income consumers for us are performing a little bit better than we would have thought in a long view of our company's history. You know, the lower income consumer went up or went down based on the economy or based on federal EBT budgets, and that hasn't been happening for us lately, which tells me that we've done a nice job convincing them of our value. We're showing them what they want to see from a brand and quality perspective, and we're delivering a great service. Importantly, we haven't talked about digital yet, but we're delivering it conveniently. I think those folks obviously have less money than everybody else, but that makes us even more relevant to them, to your point. I do think what we're seeing portends good things from that consumer. I think the ones that we have will continue to shop us, and hopefully they'll tell their friends and we can get more of those consumers into our business. Fair enough. Appreciate the color. Thanks Mike. Thank you very much. Our next question comes from Steven Zaccone from Citi. Steven, your line is now open. Great. Good morning. Thanks very much for taking my question on general merchandise. We've talked a lot about the second half, but can you just help us understand the bigger picture opportunity here for gen merch? You know, what inning are we in? When it comes to driving stronger growth from that side of the business? Good morning, Steve. This is Bob. Good question. I like the fact that you pulled it back to the overall transformation question, which is the most important thing. We all focus on quarter- by- quarter stuff. When I think about where our company needs to go, we need to continue to build on the success of our grocery business and doing things like Fresh 2.0. We need to do it conveniently with our digital business and we need to be more relevant to our consumer from a general merchandise perspective. If we look at our competitors, that's what they're able to do and some of them do it the reverse way that we do it. Meaning I would argue that our members come in for the weekly grocery shop and sometimes shop general merchandise. Some of our competitors have the opposite happen. Their consumers are coming in for general merchandise and maybe buying some grocery items when they're there. I think we're seeking a better balance from that perspective. We have over a long period of time not done a wonderful job building the relevance of our general merchandise business. In the last couple of years, that's been the goal, going through systematically, category- by- category and making sure that we have the best brands at a great value presented the right way and letting people know that we should be a destination for these categories. The only category that I can think of that has been a consistent destination for us over a long period of time is consumer electronics. That business did okay for us in Q2 and consumers know that we're a great place to get a great price on television as an example. When you think about other key categories like seasonal goods, small appliances, home, and there are a bunch of others, we had huge opportunities. When we looked at what our competitors were doing and what our members were telling us they wanted, five years ago they were walking past our general merchandise assortment and going to buy their groceries. In the last few quarters we've seen increasing engagement with our members in our general merchandise business. That again is just quarter- after- quarter trying to turn the crank a little bit and get better brands and get better values and put them out there for people to see. We knew this was not going to be an overnight build. It was going to be a long build. You know, no transformation goes in a straight line. Certainly there's been some waviness in our line to think about, but I think that's more due to the outside forces than what we're doing internally. I still think we have a ton of opportunity to improve our general merchandise assortment. We have our folks hard at work doing that every day. We're optimistic that showing our members better assortment and better value day- after- day, month- after- month, quarter- after- quarter, over a long period of time, will grow that franchise to be much bigger than it is today and grow our relevance to our members overall. Great, thanks for that detail. Then, Laura, just to follow up on Ed's question, earlier merchandise margin expectations in the second half of the year, is there any differences to be mindful of third quarter versus fourth quarter? Just given your comments about, you know, general merchandise. Thanks. Yeah. Hey, good morning. You'd remember we didn't specifically give any guidance this year on merch margin. As we think about the back half, it's the same story as I talked about a little bit earlier, which is less focus on the absolute rate, more on making sure we're delivering the right value to our members every day. We may make some investments in the short-term to stay true to that. We think that's important. We will continue to manage the bottom line and make sure we're delivering overall results. Okay, thanks very much. Thank you very much. As a reminder, to ask a question will be star one. Our next question comes from Rupesh Parikh from Oppenheimer. Rupesh, your line is now open. Good morning. Thanks for taking my question. I just wanted to go to expenses. You guys had a really strong performance during Q2. Just curious if there's anything unsustainable in that performance, especially, you know, with the s trong unit growth out there. You guys did control expenses extremely well. Thank you. Hey, good morning, Rupesh. Thanks for the question. As we step back from the quarter, we are really proud of the work we did on controlling expenses and the results we delivered. I don't think there's anything unique in that in the quarter other than as we continue to expand on our footprint and add more clubs in the back half, that will likely put a little bit of incremental pressure on the cost base. We've talked about that before as slight deleverage from the footprint. We think that's the right decision for the long-term of the business. I think what you'll see us do in the back half is continue to manage that and make sure we're delivering results. Right. Just a quick follow-up on the inventory front. Given some of the tariff dynamics out there, have you guys had to make any meaningful changes to assortment? It sounds like you're definitely cut back on the amount of ordering in GM, but just curious if that's led to a meaningful change in the GM assortment. Hey, Rupesh, I don't know that it's made a huge difference in what we're ordering. It's more about the quantities in which we're ordering it at this point. Okay, great. Thank you. You bet. Thank you very much. Our next question comes from Mark Carden from UBS. Mark, your line is now open. Thanks so much for taking the question. It sounds like another solid quarter on gasoline gallon market share, which is encouraging, especially as gas prices have come down a bit recently. Just curious, in weeks where gas prices were lowest, did you see any meaningful changes in the frequency in which customers are driving to your stations to fill up? Did the customers become any less likely to travel further to save on gas, and by extension, do you see any impacts to club traffic in those weeks? Hey Mark, why don't I let Bill talk about gas since he runs that division for us? Yeah, hey Mark, thanks for the question. I would say in terms of the correlation to gas traffic to club traffic, we've seen pretty consistent performance across the quarter, and as we look back in total, we've seen flat gallons at our comp stations, which is probably a couple hundred basis points above what's going on out there in the market. We continue to gain share in gas. As we pull the lens back a little bit more, our total gas gallons were up about 7%. That's attributable to both the stations that we've added at our new clubs as well as some of our existing clubs, as we've continued to increase the gas penetration across our franchise. As we think about gas as a way to add value, we're saving our members about $0.20 on average on a gallon of gas out there. As we grow the gallon base, it's just more and more value that we're delivering back out there to our members. As we think about the +7% total gallon growth in total, that's a lot more money in our members' pocket. We're proud of that aspect of it. Makes sense. That's helpful. As a follow up, just on the back of some of the tariff questions, you talked about buying less in certain tariff-impacted categories like holiday decor. Just curious, are there any categories where you've been buying more aggressively just in light of, you know, some changing customer demand? Nothing comes to mind. Mark, I think certainly every category is a little dynamic where we 're going through this transformation within general merchandise. You know, it's a category- by- category rebuild as I talked about. I'm sure there are a few in there that we're buying more than we have in the past, but there are a few that we're buying less given the tariff exposure. Great. Thanks so much. Good luck, guys. Thanks, Mark. Thank you very much. We currently have no further questions, so I'd like to hand to Bob Eddy for any further remarks. Thanks everybody for your attention this morning. I appreciate your support of our company, and I'd just like to note that one thing we didn't talk about is our digital business and the strength there. I wanted to thank that team for the fantastic performance. With a +34% comp and a two-year stack over 50%, that is a huge mark of relevance to our member. It's been a ton of work for that team, and I want to thank the field team who obviously picks all those digital orders and delivers them to our members as well. We will continue to do the right thing for our members for the rest of the year and each quarter in and out. I'm c onfident that we will see good results from our members as we go through the back half of the year. Thank you for your attention, appreciate your support, and we'll talk to you next quarter. As we conclude today's call, we'd like to thank everyone for joining. Now, disconnect your lines.