Good morning. My name is Robert, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Dollar General's Third Quarter 2023 Earnings Conference Call. Today is Thursday, December 7th, 2023. All lines have been placed on mute to prevent any background noise. This call is being recorded. Instructions for listening to the replay of the call are available in the company's earnings press release issued this morning. Now, I'd like to turn the conference over to Mr. Kevin Walker, Vice President of Investor Relations. Kevin, you may now start your conference. Thank you, and good morning, everyone. On the call with me today are Todd Vasos, our CEO, and Kelly Dilts, our CFO. Our earnings release issued today can be found on our website at investor.dollargeneral.com under News and Events. Let me caution you that today's comments include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, such as statements about our financial guidance, strategy, initiatives, plans, goals, priorities, opportunities, expectations, or beliefs about future matters, and other statements that are not limited to historical fact. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These factors include, but are not limited to, those identified in our earnings release issued this morning under Risk Factors in our 2023 Form 10-K, filed on March 24, 2023, and any later filed periodic report, and in the comments that are made on this call. You should not unduly rely on forward-looking statements, which speak only as of today's date. Dollar General disclaims any obligation to update or revise any information discussed in this call unless required by law. At the end of our pre-prepared remarks, we will open the call up for your questions. To allow us to address as many questions as possible in the queue, please limit yourself to one question. Now, it is my pleasure to turn the call over to Todd. Thank you, Kevin, and welcome to everyone joining our call. Let me start by saying how excited I am to be back at Dollar General. I have a deep passion for this company and for the customers we are privileged to serve. I continue to believe in this model, our future growth prospects, and our ability to deliver value and convenience for our customers, a positive experience for our employees, and long-term value for our shareholders. We take our mission of serving others seriously and know that our customer is facing financial constraints, and communities are looking for strong partners in a tough macroeconomic environment. Historically, we've met those challenges head-on and delivered for our customer, and we believe that we are well-positioned to do so now. In retail, one of the best ways to diagnose the state of the business is by looking at it through the eyes of the customer, and we know that our customers rely on Dollar General to provide the products they need at great values in convenient, friendly, and easy-to-shop stores. We have spent the last several weeks taking a fresh look at all areas of our business, as well as the challenges and opportunities in front of us. We believe that we have a good understanding of what we need to do to address those challenges and opportunities, and we're already taking action. To be clear, this is not about rebuilding the team or organization, but about refocusing efforts already underway. This is where I want to spend the majority of our time today. I won't share all the details this morning, but I want to provide an overview to highlight our focus on getting back to the basics in our stores, in our supply chain, and within our merchandising. After that, Kelly and I will review our third-quarter performance. I want to start with our stores, where everything begins and ends for our customer. As we drive improvement across our store footprint, we are doing so through the lens of our customer. As we have previously announced, we are investing approximately $150 million in store labor hours this year. After review, we continue to believe this level of investment is appropriate. But as we do with every dollar we invest, we must ensure we are spending it to drive the greatest return, which means we are directly helping our store teams support our customers. With that in mind, we have made the decision to redeploy labor hours away from Smart Teams, and instead more directly to our store teams and a greater emphasis on customer service and store-level inventory management activities. To that end, I want to highlight two areas of focus we believe will drive the greatest improvement in our stores. First, we plan to increase the employee presence at the front end of our stores and in particular, the checkout area. While self-checkout has contributed to the convenient proposition for our customers in certain stores, it does not reduce the importance of a friendly, helpful employee who is there to greet customers and assist while the checkout process is happening. We have already begun by allocating more labor to front-end activities and clearly communicating our expectations around the visible presence of an associate at the front of our stores.... Second, we are re-emphasizing the role played by our store teams in our perpetual inventory management process, which we believe will positively impact our on-shelf availability, as well as our customers' convenience perception in our sales. To do this, we are reallocating some of our labor investments toward store-level inventory management processes, including an even greater focus on getting product onto our shelves more quickly. We are also reducing the span of control for our district managers, which will provide more opportunity for engagement with our store managers and their teams, and more consistency in execution across the store base. As we take these actions and focus on the basics in our stores, we believe we will see improved retention at the store manager level, where our turnover is currently higher than we'd like. We know from experience that when we stabilize the store manager position, the entire store and team benefit, which ultimately drives a more positive experience for our customers, as well as improved sales and shrink results. Overall, we believe these actions will drive improvements in customer satisfaction, including customer service, on-shelf availability, and convenience, as well as sales, while our focus on the front end should also reduce shrink. These efforts also should help us improve employee engagement and retention. Next, I wanna talk about our supply chain. We have made significant progress recovering from the distribution capacity constraints that we had discussed late last year. However, through the lens of the customer, we see additional opportunity for improvement, particularly when it comes to serving our stores. As we focus on getting back to the basics, the goal within our supply chain is for our truck deliveries to be On-T ime and In-F ull, or OTIF. As we continue to drive our OTIF rates higher, we simplify the work for our store teams, which again, results in a better overall experience for both our customers and associates, as well as an expectation of higher sales. I wanna briefly highlight three areas of focus within our supply chain. First, we plan to better optimize the inventory within our distribution centers. As I will discuss in a moment, we are taking steps to reduce inventory, including SKU rationalization, which will allow for the more efficient movement of product for our distribution teams. Second, we are implementing productivity improvement initiatives within our distribution centers. While productivity rates have been impacted by both internal and external factors, we are working to mitigate or eliminate productivity impediments for our teams and control the things we can control. These efforts include standardizing system configurations and optimizing the product layout in our facilities, while providing clear communication on performance standards and expectations. Third, now that we're past the capacity constraints we experienced last year, we are reducing the number of temporary outside warehouse facilities being used to store product as inventory flows more effectively to and through our existing distribution centers. By better leveraging these existing distribution centers and taking advantage of the new permanent facilities we have opened over the last year and those we will open next year, we believe we can significantly reduce the amount of temporary warehouse space needed. As we've done historically, we likely will continue to maintain a few of these temporary facilities. However, we expect to transition out of many of them in Q4 and into next year. All of these actions within our supply chain should translate to lower distribution and transportation costs, better OTIF rates, and better customer experience, and all while improving sales results. Finally, I wanna speak to our focus on fundamentals in merchandising. Once again, we reflected on our approach through the eyes of our customer. For our merchants, there is no greater priority than offering great value of the products our customers want and need. Our customers are living paycheck to paycheck and continually tell us that value is the most important factor in their shopping decisions. I am pleased to note that we are in good shape when it comes to our everyday pricing, and we are right where we wanna be in our price gaps with our competitors and classes of trade. With that said, we are taking a hard look at what else we can do to drive value for our customers in this challenging economic environment, including highlighting private brands and other opportunities for savings, as well as maximizing the effectiveness of any promotional activity to drive traffic and share growth. Beyond these opportunities for our customers, we have also challenged our merchants to consider how they can drive simplification for our stores and supply chain as well, with meaningful SKU rationalization as one of the most immediate areas of focus. To that end, we have identified several opportunities to eliminate certain SKUs that have become less productive, first by moving them out of our DCs, and then ultimately to our stores to sell through. As our store teams have fewer SKUs to manage, we can lower our cost to serve, while driving higher inventory turns and higher sales of products that are most important to our customers. We believe these actions will help further reduce inventory and shrink, while simplifying operations in both DCs and stores to drive greater efficiencies over the longer term. We all know that driving traffic and market share are essential to long-term retail success, and while our results have been improving in these areas, we are still not satisfied with our current position. We believe we have identified actions that will pay dividends over both the short and long term, as we remain focused on driving profitable sales growth. In summary, we are getting back to the basics here at Dollar General, across all levels of the organization. Our desired results will not materialize overnight, but we believe we will see some early wins and continue to make progress towards executing on the fundamentals that have been foundational to our success over the past 85 years. As a result, we believe we will significantly enhance the customer experience while driving higher sales and increased profitability in our business. Now, before I turn the call over to Kelly, I want to briefly discuss some of our top-line results for Q3, as well as our 2024 real estate plans, which we announced earlier this morning. Net sales in the third quarter increased 2.4% to $9.7 billion, compared to net sales of $9.5 billion last year's third quarter. Within our net sales growth, we again grew market share in both dollars and units in highly consumable product sales, as well as in overall non-consumable product sales. Same-store sales decreased 1.3% in Q3, which was in line with our expectations. The decrease was driven by a decline in average transaction amount, primarily driven by units, and included declines in all four product categories. From an overall monthly cadence perspective, same-store sales growth was very similar in all three months of the quarter. However, I'm pleased to note that customer traffic was positive in Q3. After starting the quarter slightly negative, traffic turned positive in the middle period and improved sequentially each period of the quarter. Notably, customer traffic and same-store sales continued to improve in November, which, although early in the quarter, we believe reflects early traction from our work on getting back to the basics here at Dollar General. Turning to a quick update on our customer. During our most recent survey work, our customer continues to tell us they are feeling significant pressure on their spending, which is supported by what we see in their behavior. Based on these trends and what we see in the macroeconomic environment, we anticipate customer spending may continue to be constrained as we head into 2024, especially in discretionary categories. This further reinforces the importance of the work we're doing today, and we believe our unique value and convenience proposition is as relevant as ever in this marketplace. To that end, I want to discuss our plans for real estate growth next year as we look to extend our offering to many more communities. Real estate continues to be one of our core competencies, and we remain pleased with the performance of our real estate projects. As a reminder, we monitor the following five metrics of our new store portfolio, including performance against pro forma sales expectations, new store productivity compared to the mature store base, cannibalization, which overall has remained consistent and predictable, cash payback, which we continue to expect in 2 years or less, and new store returns, which we expect to be approximately 18% on average in 2024. I want to note that our expectations for new store returns, while still very strong, are down modestly from our historical target of 20%+. This change is being driven partially by higher new store openings and occupancy costs, which I will discuss in more detail in a moment. We also continue to see strong performance from our remodel stores, which drive comp sales lifts between 8%-11% for our DGTP format, and average returns, which continue to be greater than what we see from our new stores. With this consistently strong performance, we continue to see real estate projects as one of our best uses of capital. In fiscal 2024, we plan to execute approximately 2,385 projects, including 800 new openings, 1,500 remodels, and 85 relocations. While this is a significant number of projects, I want to acknowledge it's a smaller number than we have opened in the recent years, due primarily to a couple of considerations. First, we want to ensure that our teams across the company are focused on getting back to the basics, and the efforts I discussed a few moments ago. Second, the capital required to execute these projects has increased significantly. For example, the initial opening of our 8,500 sq ft store has increased more than 30% since we began rolling out the larger format in 2022. Additionally, non-residential construction costs have increased significantly since pre-COVID. Our team has a number of efforts underway to reduce these costs, including engineering costs out of the projects, and we believe over time we will be able to mitigate some of the impact we have seen from inflation. With that said, our pipeline remains robust. We continue to see more than 12,000 opportunities for Dollar General bannered stores in the United States. And as we've said before, for a variety of reasons, we will not capture each of these opportunities, but we are pleased that the overall number of opportunities remains high. We continue to innovate on store formats as an important element of our real estate strategy, and I want to take a moment to provide some additional color on our plans for 2024. We are placing a heavier emphasis on rural stores in 2024, with more than 80% of our new stores planned in rural communities, where we believe we can have the most significant and positive impact for our customers. In addition, more than 90% of our new stores and relocations will be in one of our larger store formats, which continues to drive increased sales productivity per sq ft as compared to our traditional 7,300 sq ft box. These larger stores also provide additional opportunities to serve our customers, including expanded cooler offerings, to help them build meals to feed their families, more health and beauty products, and fresh produce in many stores. Also included within our store plans are approximately 30 new pOpshelf locations as we continue to move at a measured pace with this concept in a softer discretionary sales environment. Finally, we've been very pleased with our initial entry into Mexico, and our new store plans for 2024 also include approximately 15 new Mi Súper Dollar General stores in Mexico. Turning to remodels, nearly 70% are planned to be in our DGTP format, which will provide the opportunity for significant increase in cooler count, as well as the potential to add fresh produce in many of these stores. We are excited about our real estate plans for 2024 as we continue to grow the number of communities we are serving, particularly in rural America. In closing, we have tremendous growth opportunities in front of us, which we are uniquely well-positioned to capture. We are working diligently on getting back to the basics, and we are laser-focused on serving our customers while providing meaningful opportunity for our employees and creating long-term value for our shareholders. With that, I'll now would like to turn the call over to Kelly. Thank you, Todd, and good morning, everyone. Now that Todd has taken you through a few highlights of the quarter, let me take you through some of the important financial details. Unless we specifically note otherwise, all comparisons are year-over-year. All references to EPS refer to diluted earnings per share, and all years noted refer to the corresponding fiscal year. For third quarter, gross profit as a percentage of sales was 29%, a decrease of 147 basis points. This decrease was primarily attributable to an increase in shrink, lower inventory markups, and increased markdowns. These were partially offset by decreases in LIFO and transportation costs. Turning to SG&A, which was 24.5% of sales, an increase of 183 basis points. This increase was driven by retail labor, including approximately $29 million of our targeted labor investment, as well as depreciation and amortization, repairs and maintenance, rent, professional fees, other services purchased, including debit and credit card transaction fees. These were partially offset by a decrease in incentive compensation. Moving down the income statement, operating profit for the third quarter decreased 41.1% to $433.5 million. As a percentage of sales, operating profit was 4.5%, a decrease of 330 basis points. Interest expense for the quarter increased to $82 million, compared to $54 million in last year's third quarter, driven by higher average borrowings and higher interest rates. Our effective tax rate for the quarter was 21.3% and compares to 22.8% in the third quarter of last year. This lower rate is primarily due to increased benefits from federal employment tax credits and an increased benefit from rate-impacting items caused by lower earnings before taxes for the third quarter. These benefits were partially offset by a higher state effective tax rate. Finally, EPS for the quarter decreased 45.9% to $1.26. Turning now to our balance sheet and cash flow. Merchandise inventories were $7.4 billion at the end of the quarter, an increase of 3% compared to last year, and a decrease of 1.8% on a per store basis. In addition, total non-consumable inventory decreased approximately 15% compared to last year and decreased 19% on a per store basis. While the inventory growth rate has significantly moderated from its peak in the third quarter last year, and the quality of our inventory remains good, we continue to believe there is opportunity to optimize and reduce our inventory levels. We continue to review our markdown plans related to the previously announced $95 million investment, including associated cost, to ensure we are maximizing the impact of these actions. We are focused on optimizing our overall inventory position to better support our customers, stores, distribution centers, and growth plans. Year-to-date, through Q3, the business generated cash flows from operations of $1.4 billion, an increase of 15.5%. Total capital expenditures through Q3 were $1.2 billion, and it included our planned investments in new stores, remodels and relocations, distribution and transportation projects, and spending related to our strategic initiatives. During the quarter, we paid a quarterly dividend of 59 cents per common share outstanding, for a total payout of $129.5 million. As planned, we did not repurchase shares this quarter. Now, I wanna take a moment to provide an update on our financial outlook. We continue to expect the following for fiscal year 2023. First, net sales growth in the range of 1.5%-2.5%. Next, same-store sales in the range of a decline of approximately -1% to flat, and EPS in the range of $7.10-$7.60, or a decline of -34% to -29%. Our EPS guidance continues to assume an effective tax rate of approximately 22.5%. Finally, we expect capital spending in the range of $1.6 billion-$1.7 billion and no share repurchase activity. Let me now provide some additional context as it relates to our outlook for the rest of 2023. While we continue to see a more constrained consumer and softer sales trends than we expected coming into the year, those trends were anticipated when we provided our guidance update in October. We have always been an all-weather brand, and aided by the actions that Todd outlined earlier, we are poised and ready to serve our customer in this challenging economic environment. In the near term, we expect continued overall pressure on the sales line, particularly in the non-consumable categories. Within gross margin, in addition to sales mix pressure and our previously announced markdowns, shrink has continued to be a sizable headwind, and we expect this will remain with us into next year, as any shrink improvement typically takes at least a year from a store's most recent count to show up in our financial results. Partially offsetting these challenges, we expect benefits from greater distribution center capacity and performance, lower carrier rates, our private tractor fleet, and other distribution and transportation efficiencies. We also continue to expect realizing benefits from our initiatives, including DG Fresh and the DG Media Network. Turning to SG&A, we plan to make the remaining $50 million of our planned total labor investment of approximately $150 million in our stores during Q4. Overall, the investments we have previously discussed in retail labor, markdowns, and other areas to better support our customers, stores, and distribution centers, are expected to total up to $270 million in 2023, which is consistent with our previous expectations. We are reviewing every aspect of these investments to ensure we maximize their impact for our customers and stores while driving the greatest return moving forward. Our capital allocation priorities continue to serve us well and guide us today. Our first priority is investing in our business, including our existing store base, as well as high-return organic growth opportunities, such as new store expansion and our strategic initiatives. Next, we return cash to shareholders through a quarterly dividend payment, and finally, over time and when appropriate, share repurchases. Although our leverage ratio is currently above our target of approximately 3 times adjusted debt to adjusted EBITDAR, we are focused on improving our debt metrics in order to support our commitment to our current investment-grade credit ratings, which, as a reminder, are BB B and Baa2. With all of that said, cash generation is very important, particularly in this environment, and we are focused on maintaining and improving strong cash flow as we head into 2024. In summary, we remain committed to maintaining our discipline in how we manage expenses and capital as a low-cost operator, with the goal of delivering consistent, strong financial performance while strategically investing for the long term. We are confident in our business model and our ongoing long-term financial priorities to drive profitable same-store sales growth, healthy new store returns, strong free cash flow, and long-term shareholder value. With that, I will turn the call back over to Todd. Thank you, Kelly. As we wrap up, let me just say again that we're laser-focused on getting back to the basics. As I mentioned in my earlier remarks, some of these actions will take a little bit more time to deliver the desired results, but we expect to demonstrate significant progress over the coming months and look forward to sharing more with you in the quarters ahead. This team is energized, and we are confident in the actions we're taking to drive operational excellence for our customers and employees, and long-term value creation for our shareholders. I want to thank our approximately 185,000 employees for their commitment to doing the work necessary to serve our customers and communities every day. I'm proud of this team and look forward to serving our customers together as we move through this busy holiday season. With that, operator, we'd now like to open the lines for questions. Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. As a reminder, we ask that you please limit to one question. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Our first question comes from Rupesh Parikh with Oppenheimer. Please proceed with your question. Good morning, and thanks for taking my question. Also welcome back, Todd. I wanted to kick it off just with longer-term operating margins. Do you feel that you can sustain a 6%+ operating margin level longer term? And do you think you can get back to 8%+, where you have historically operated? And then to get to that 8%+, you know, where do you see potentially the bigger buckets of opportunity going forward? Yeah, thanks for the question. I'll take the second part of that and then pass it over to Kelly. You know, we here at Dollar General have gone back to the basics. You heard that in my prepared remarks. And I have to say, it has truly energized this company at all different levels. You know, everything starts and stops at the store with the customer. And what we've done is actually, again, nothing rocket science here. We've actually gone in and looked at every element of our business that touches our consumer from the lens of the consumer. You know, it's again, you would think that that is always an ongoing piece, but sometimes it's good to remind yourself and remind your organization, so we've done that. And with that, and I won't go through all that because you saw a lot of it in my prepared remarks, but really getting back to the basics, making sure that the labor that we've already have deployed in our stores and yet to come in the fourth quarter, the $150 million of additional labor, is spent in the proper way. And again, that redeployment of money from the Smart Teams directly into our store, where it touches our customer each and every day, immediately, is so important, and that's exactly what we're gonna do. And, you know, as we do that, and I think it's very important to point out, it also helps the front end of that store, and it helps on the sales line because we got somebody to meet, greet, and ring up the customer. It also helps on the shrink line because you've got somebody at the front end of the store that is always there to monitor the front end of the store. And also, it, it helps on the convenience side because we, we had relied and started to rely too much this year on self-checkout in our stores. We, we should be using self-checkout as a secondary, checkout vehicle, not a primary. And so with all that, it's really gonna help. And then when you focus in on our, our supply chain, getting the right product at the right time to our stores on OTIF in full and on time, I will tell you that that's gonna make a world of difference. Again, being an old operator that I am, there's nothing more disruptive in a store of not getting your truck on time and be able to get all the truck up onto the shelf when it comes in. And by the way, having the right items when, when you do put it on the shelf. And then lastly, really honing in this merchandising piece. We've got probably one of the best merchant groups in all of consumable retailing, but at times you have to step back and look at what brought you to the party may not, always be exactly what you need to do to go forward. Sometimes you got to step back to go forward. And I would tell you, that's the case, here on a couple levels. One being the number of SKUs we're carrying. SKU rationalization is always an ongoing piece at Dollar General, but I believe that it's time to really step back and energize that even more in 2024. We've already actually gone deep here, turned off a lot of SKUs. There's gonna be a lot more to come. And the idea here is turning off or eliminating SKUs that are more in the secondary or tertiary type of line. So think about a mayonnaise, as example. We may have five or six different variants of mayonnaise on the shelf today. We can easily drop one or two of those. The consumer is not gonna know the difference. Actually, it's gonna make her life a little simpler when she goes to the shelf. Gonna make the store's life simpler to put product on the shelf. And also what it's gonna do is help our warehouses, actually eliminate a lot of holding slots. So, a lot of benefit to what we're gonna do in SKU rationalization and all of this, which is fabulous, and I'll pass it over to Kelly, will actually start to move down to the bottom line, some faster than others. But, again, being an old-line retailer that I am, I know that these actions will fall to the bottom line and also help increase our top line as we go into 2024. Kelly? Yeah. No, thanks, Todd. And, and just so everybody knows, our goal is certainly to get back to the historic levels of operating margin and profit that, that we're used to. While we're not gonna give guidance, obviously, for 2024 today, I do wanna give a little bit of color of 2024, just around some near term headwinds that, that we're seeing. The first of those is around lapping really significantly reduced incentive compensation, as well as stock-based compensation. And so that'll just be a near term headwind as we think about 2024. The other thing that we're looking at right now is we're expecting a higher effective tax rate, and that's really due to lower benefits around the stock-based compensation piece, as well as, as we've seen historically, just some higher state effective tax rates as we have moved through the last few years. So those are near-term headwinds, certainly not anything long term that we need to worry about. The other thing is around shrink, and so, as you know, shrink has been pretty significant for us for a while, and it's definitely gonna carry into 2024. As I talked about in the prepared remarks, it just takes a while to start showing up in your financial results. Just to give you a little bit more color of, of kind of where we are with shrink on a year to date basis, shrink is actually a 100 basis point headwind for us. As we moved into Q3, it's actually running just a little bit higher than that, and so certainly a pressure near term for us. Something that we're looking to, to hopefully we're mitigating along the way, and it'll show up in the financial results later in 2024. Then as we think about, you know, just our, our underserved customers, we're just making sure that we're watching her and, and whether she stays gainfully employed. All the actions that Todd just noted and getting back to the basics is certainly gonna set us up nicely to be able to serve others in any economic environment. We've always been an all-weather brand, and we certainly will continue to be so as we move forward. So that's a little bit of color on 2024. We're gonna give you a lot more color in March and give you a little bit more holistic view there. But what I'll say is, overall, the fundamentals of this business are absolutely unchanged, and this model remains strong. And on a longer-term basis, we believe that we're gonna get back to the historic levels that this model is accustomed to delivering. Our next question is from Simeon Gutman with Morgan Stanley. Please proceed with your question. Good morning, and welcome back, Todd. Thank you. When you rejoined. Thanks. When you rejoined, you talked about you having an opportunity to revisit, the financial profile of the business, and if there was a time to look back and reset and invest deeper, that you could take that opportunity. As the business looks to be forming a bottom in margin, and thinking about getting to 7% or plus in a reasonable timeframe, do you have any updated thoughts on that? Does it make sense to lean in so that when you start building back, it builds back sustainably? Do you think the business needs a little more investment than you thought, you know, a month and a half ago? Yeah. Thank you for the question, and you're 100% right. The first few weeks back on the deck here, I did take a holistic view across, not only our operations, but as you heard, our supply chain, our merchandising areas. Looked at everything holistically, and I'll just click off a few. But first, let me say, before I click it off, that I believe that the investments that have been already talked about this year are $100 million and $150 million, in totality, in labor investments, were the exact right thing to do. I don't believe at this point that I see a need that we need to make any other larger outsized investments as we move into 2024. I believe, as I indicated, that the right thing to do is make sure that the $150 million is being used appropriately and in the right areas that touches the consumer and helps our stores be able to better serve our consumer each and every day. That's exactly what we've done now over the last few weeks, and that's why I believe taking the Smart Teams out of the equation, taking that whole bunch of labor that was dedicated to that, putting it directly in our stores to cover the front end of our stores more effectively each and every day, 100% of the time, tethered to the front end for customer service and ringing up our customers. And then also one of the first for Dollar General, quite frankly, and that is deploying some of that labor into a work that ensures that we keep our perpetual inventory correct and ongoingly correct each and every day. Because once again, if the system doesn't realize you need product, it won't send you product. And unfortunately, over the last year or so, our perpetual inventory numbers have gotten further and further out of whack, quite frankly, and we are now in the midst of bringing those back. We've seen a lot of great traction, but the redeployment of hours of this $50 million coming out of the Smart Teams will really benefit. Again, this is a first for Dollar General, so it'll be great to see that as well. And then, as I looked into other areas of the company, I feel fabulous about our pricing. The great thing when I step back in, our everyday pricing across all channels of trade, including our cheap competitor, looks very good and in great position. Matter of fact, our gaps are right where we would like to see them, compared to historical levels, so very good there. Our promotional activity, while I still believe I would call it semi-rational across the spectrum, we have seen an uptick in recent weeks on promotional activity. We're watching that carefully. Is that because we're moving into the holidays, or is that something that will sustain as we move into 2024? So we're watching that carefully, but you know us pretty well, Simeon. We're going to take whatever action is needed, we're gonna take it quickly, and we'll make sure that our pricing stays exactly where it needs to be to service our customers. But at this point, I don't see a need to reinvest any large sums of money in margin to do anything there. But again, we always reserve the right to be able to do it if that time arises. So right now, I think the investments we've already talked about over this past year are in the system. I believe they're appropriate. They're now being used, I believe, very appropriately in all areas and are deployed the proper way. Now it's time for execution, and that's what we're doing. We're already starting to see a little bit of benefit, especially as we moved into November on some of our top-line results, both in consumables and non-consumables, quite frankly, as we move through November. So it's great to see, but again, caution, it's very early in the quarter and it's very early in this new look at how Dollar General is gonna go to market. But rest assured, as Kelly indicated, we feel very good about the long-term prospects of getting back to historical levels here at Dollar General. Our next question is from Matthew Boss with JP Morgan. Please proceed with your question. Great, thanks. Maybe Todd, at higher level, could you just help elaborate on some of the recent changes in behavior that you're seeing from the low-end consumer? The traffic versus ticket trends that you cited, I think are interesting. But maybe asked a different way, traffic's improving, what's constraining the comp through the third quarter? Did comps actually turn positive in November, tied to some of these initiatives? And then just lastly, on the new stores and the mindset shift to maybe downshift a bit, could you just elaborate on some of those pieces that you walked through, occupancy costs, and some of the other moving parts? And just what you're seeing on the new store return to maybe just take a pause here. Okay, sure. Yeah, you know, as we look at our results as we move through the quarter, as we indicated, you know, each of the periods were very similar, but we did see a continued uptick in our traffic, as we moved through the quarter and then into November. Now, I'm not gonna give you a lot of color in November, but to say that we did see a change in trajectory on our comp as well, as we moved into November. So, it was great to see, and I would tell you that, again, it was both on the consumable and the non-consumable side of the equation. Now, you know, one would say, "Well, well, where, where is it, you know, in the comp?" Well, I would tell you the comp, actually was much better as we moved through the end of October into November. But we still have a lot of work to do, Matt, to get back to some historical comp type rates here at Dollar General. I believe the back-to-basic work that we're doing is gonna help us get there faster as we move into the back half of Q4 and into Q1 of 2024. Making sure our stores are stocked each and every day when the consumer walks in the store, be able to find what they need, is gonna be very, very important. So more to come. We've already started to see that. We've actually have seen our in-stock rates markedly improve over the last few weeks. We check it and watch it each and every week, and I believe that has added to some of that betterment in comp that I talked about in November. So more to come. I believe the macro still has an effect on us as well as others. But you know what? We've always been and prided ourselves on control, what you can control here at Dollar General, and we're doing just that with back to basics. And we believe that we can help overcome some of those shortcomings in the macro environment with being able to control what and what the consumer feels and sees when she's in the store. So more to come. We feel like, we're on the right track here, but, but we got a lot of work yet to do, but I feel good about that. As far as our new stores, as you noted, we did take a little bit of a step back, this year. Again, this is one of the areas that I, I cracked open as soon as I walked in the door. Again, we looked at. There was no sacred cows. We looked at every single piece of this business. One of the things that I, I do, here with the team, every line of that P&L is scrutinized, every single line, including our investments in, in capital. As I looked at our new stores, while still wildly the best use of our capital across the board, it. I felt it was a prudent decision to take a step back. Now, some people would say, "Boy, still building 800 stores, that's not too big of a step back. That's still a large commitment." And it is, Matt. But, you know, it was a prudent decision for a couple of reasons. One, we talked about the increased cost to build a store today. You know, the interest rates are up, the cost to build a store is up. I feel very good about the work the team has done. They've mitigated some of those costs, but we still have a lot of work to do yet to mitigate even further some of these costs. So why not take a little bit of a step back in new store development, give our teams the opportunity to also get a lower cost to put these buildings in? So we're doing that as we speak, and I believe that it's exactly the right thing to do. And then as you then step a little bit further back when you look at some of the work we have to do just internally, it's probably a prudent thing to do to step back a little bit as well, so we can go forward faster in the outer years. Now, I believe that, you know, this while this may or may not be a one-year phenomenon, I would tell you that the way we're looking at it right now, we're not here to give guidance past 2024, is that we don't see any reason why we can't up our new store openings as we continue to move forward. We love what we see. Still 12,000 opportunities to put a Dollar General out in the continental United States, and we've always prided ourselves on being very quick and first to market to capture the majority and at least the oversized portion of those 12,000 opportunities. So nothing yet that we see stands in the way of that. And, Kelly, you may wanna just touch on the returns just really quickly. Yeah, no, absolutely. And so, you know, an 18% return in this environment is fabulous, and, and Todd noted it. It's still a great use of capital. The new unit economics are still very strong as we move in, into 2024, and it has a great payback period still of, of less than two years. And the other thing that we haven't seen is any change in the cannibalization rate. The other thing I'd point out, and, and, you know, Dollar General is just fantastic at this. Our, our real estate group is, is pretty amazing, and we have an extremely high hit rate of success. And, and you've seen that over the years. So we feel really good about the projects, we feel good about the 18% return, and of course, as Todd noted, you know, while we're pleased with all of that, in typical Dollar General fashion, we're gonna work to improve it as we go through 2024. Our next question is from Seth Sigman with Barclays. Please proceed with your question. Hey, good morning, everyone. I wanted to talk about inventory a little bit, just in terms of the progress, right-sizing your inventory position. Can you just give us a little bit more perspective on where you sit today with consumables versus non-consumables? And then, is it your expectation to exit the year clean, or do you feel like you're gonna still need some incremental actions into next year? And then I'll just add a second part to the question around the top line. When you look at the improving trends the last few months, to what extent has that been influenced by markdowns and clearance activity? Thank you. Yeah. No, thanks for the question, and inventory reduction is absolutely a priority of ours this year, and it'll be a priority as we move into next year. I think the good news for us is that the quality of our inventory is good, but, you know, we've talked a lot in the past about the benefits of inventory reduction and just what that does as you reduce the complexities in both the stores and the distribution centers. So I would say our progress is on track in our reduction efforts, and you saw a little bit of that in the numbers today. So total inventory increase was 3% on a year-over-year basis, but if you look at it on a per store basis, we're down 1.8%. I think the real story here is, is around the non-consumable piece, and so we're down 15% on a year-over-year basis there, and we're down 19% on a per store basis. I think the other important thing to call out, and we've been calling it out every quarter, but this one is even more significant, is we've seen a 58% decrease in our import receipts. And again, that's us buying around that product and making sure that we're selling through it. And so we feel good about where we're headed for, for the end of the year. Just a little bit longer term, I'd say we have several work streams in place that are working on inventory reduction, but just as important, and, and this kind of goes to the top line, is inventory optimization and making sure that we're going where the customer wants us to go. And so I would say with all of these things in place, we should feel pretty good about where we're landing at the end of 2023, but we're gonna feel even better as we see continued improvement in the inventory levels as we move through 2024. Yeah. Thanks, Kelly. And, you know, as you look at our results in Q3 and how that relates to, you know, any activity around clearing this inventory, I would tell you that, you know, I feel very good about the balance here. While there was some activity there, you know, actually, some of the bigger activity is really slated for Q4, if needed, and a lot of that will be, you know, centered around our sell-through of holiday. So we're watching that very closely, but again, early results would say, you know, it's right in line where we thought it would be, right now. And actually, in some areas, a little bit better. So we're watching that carefully, but I would also say, you know, as we continue to move forward, what we like and what I've seen since I've been back, is I believe we've done exactly the right thing on moving through some of this inventory. But as I look at the quality of our inventory, it is in very good shape. And actually, as Kelly just indicated, you know, a lot of what we have right now to deal with on a overstock basis, is actually more in our core everyday goods. And this isn't about a bunch of screwdrivers and hammers or fashion-type items for holiday that we have to move through. This is about having, you know, a little bit too much of some basic paper, cleaning, food-type items, things like that that will move through the system pretty naturally, as long as we do the right thing with our supply chain and our stores, and that's exactly what back to the basics is meant to address. So feel very good about that, and very good about what we see going into the back half of this year in 2024. Our next question is from Michael Lasser with UBS. Please proceed with your question. Good morning. Thank you so much for taking my question, and welcome back, Todd. Given everything- Thank you ... that you outlined this morning, when is it realistic for us as outsiders to hold the team accountable to getting back to consistently producing a double-digit EPS growth algorithm like Dollar General has done in the past. And as part of that, Kelly pointed to a few factors that are going to weigh on Dollar General's profitability in 2024. Could you give more texture and timing around how large those factors are, like incentive compensation and shrink? Thank you very much. Thank you, Michael. As both Kelly and I have both said, I don't see anything that gets in the way longer term to getting back to some of our historical ways that we return to our shareholders and our customers. We feel that we're on the right track with our back-to-basics moves here, both in our labor investments, in our inventory investments, as well as in our supply chain and merchandising. So we feel like we've taken the right appropriate actions now, and we're moving with speed and intent. As I said in my prepared remarks, some of it will occur and manifest itself faster, and some will take a little bit more time. But rest assured, we're hitting every single item, and we're monitoring every single item every week here to make sure it's on the right track. And if it happens not to move the way we want, we will then make an adjustment to ensure that it does. We are squarely focused on getting this company back to its historical returns that everyone is accustomed to seeing, and most importantly, our customer is used to seeing at store level. Now, as Kelly indicated, there are some near-term headwinds. As much as I would love, Michael, to give you more color right now, we're not here to give 2024 guidance. We wanted to, though, make sure that you can contextualize at least some of those headwinds as we start to move into 2024. But, rest assured, we're going to give you more than you need in the components when we come back and give you the guidance for 2024, to make sure that you can build the models out the proper way. But again, I want to make sure you also understand, though, that we're not going to wait till 2024. We're taking action now to continue to modify and also continue to ensure that we're addressing any of the gaps that are out there that are well in our control. There'll just be a few things that may not be fully in our control in 2024, that are-- that will probably be more of a one time in nature that we'll address at the right time. Our next question comes from Kate McShane with Goldman Sachs. Please proceed with your question. Hi, good morning. Thanks for taking our question. We were wondering how you would frame the risk of deflation across your box into next year, and how do you think about the puts and takes across the P&L as a result? Yeah, that's a good question, and, you know, there's been, you know, a lot written up, in certain areas on deflation. You know, we've seen some deflationary pieces starting to show up, especially in our non-consumable, discretionary type areas. Nothing that alarms us, at this point as we move into 2024. How we're looking at it is we see some real opportunity to reduce initial costs, especially in our import-related goods, not only from the factory, but also for the transportation side. So ocean freight, fuel costs, bunker fuel costs, and such, have moderated greatly over the last year. So there's some opportunity to pull costs out. Some of that we will definitely pass on to the consumer, as we continue to watch, especially in those commodity areas of the import side of the business or... because there's always some, some good, even in our non- consumable areas, there, there's some good, commodity-type items in there. From a consumable perspective, you know, while there, there's always, there's always movement in those areas of commodities, you know, milk, dairy type areas, oils, wheat, we watch that very carefully. We have component pricing here at Dollar General, for not only our national brands, but our private brands. We watch that very, very closely, and, and we monitor that. Now, in saying that, we haven't seen in center of store, if you will, dry grocery, chemical, paper, a very, very little deflationary pressures. A little bit on those commodities in dairy, as I indicated, some meat items which we are not a huge player in. Produce, we're a little bit of a player there, in what we've done. There's some deflation there. But again, I would tell you, in totality, nothing that alarms us or believes that it will adversely affect the top line, as we move into 2024. At least nothing at this point, shows that. Our final question is from Chuck Grom with Gordon Haskett. Please proceed with your question. Hey, thanks, good morning, and welcome back, Todd, as well. Thank you. Can you talk a little bit about the out-of-stock issue and perhaps quantify the drag that it's been to comps over the past few quarters? I believe it's probably pretty sizable, and the measures you're taking to improve that issue. And then on the SKU rationalization, that's interesting. I was just wondering if you could speak to the number of SKUs you have in an average store today, say, relative to back in 2019, and how big of an opportunity that can be, and how long do you think you'll take to get back to an optimal level? Thanks. Yeah, sure. You know, I would tell you that the amount of out-of-stocks we have in our store are probably some of the largest that I've seen, you know, in the 15+ years I've been here. In saying that, there's so many work streams that are now underway, Chuck, that you know, I feel good about where we're headed. As I just indicated a few moments ago, we saw a meaningful change over the last two weeks in our in-stock rates at store level. And these are not just on our perpetual inventory system, but this is actually counted inventory from our inventory, our Washington Inventory Service that takes our yearly fiscal inventory. So we're, these are, these are real counts, if you will, real out of stocks, and not just out of stocks on the shelf, but out of stocks in the backroom, too. So meaning it is not in the system for the consumer at all. So we saw a meaningful drop in that, meaning more available to the consumer. We believe, as we move through the rest of this quarter and into the first, we're gonna make even further meaningful advances. Why? We're putting hours toward the inventory specialist role that I mentioned earlier. This is a first for Dollar General, to go in and ensure that we keep our on-hand or our perpetual inventories more accurate than we have in the past. We've done this activity in the past, but we have, we have come up with, and we are teaching and training individuals to do this in a little bit of a different way, taking a fresh look at it, a fresh approach at it, doing more areas of the store on a weekly basis at a time to ensure that we touch every SKU. And by the way, touching every department of the store at least once a month, and the higher velocity areas, more than once a month. So we feel good about the direction. We feel good about how we will be able to quickly pivot and make some adjustments here. Now, on the SKU rationalization side, I would tell you that, you know, and we've said this in the past, we, we've got between 11,000 and 12,000 total SKUs in our store today, depending on the format, right? We've got some larger formats, as you know, than our smaller ones. But we believe we have an opportunity to take out a meaningful number of SKUs. I'm not gonna give you the number right now. We're still in the midst of looking at that. And how we're looking at it, again, is from that secondary and tertiary type areas that I talked about earlier. We're also, though, taking a fresh approach look to it from a standpoint of return, right? And so not only a general look at it, but also looking at it from the standpoint of shrink and other areas of components that go into a SKU. And is it still profitable, with shrink being elevated? So a lot of it in our control, some not in our control. There may be SKUs, and by the way, there are SKUs that we'll be dropping due to the amount of shrink that is in our store as well. So it's gonna be a fresh look across the portfolio SKUs we carry, with the consumer in mind first, but also profitability in mind throughout the entire supply chain through our stores. So more to come. I think we can give you a little bit more color as we go into Q1 of next year on both our progress, as well as maybe contextualize how meaningful we're talking about here. But rest assured, I wouldn't talk about it on this if I didn't believe it was gonna be a meaningful number of SKUs, and a meaningful impact to the simplification efforts within our stores. We have reached the end of the question and answer session. I'd now like to turn the call back over to Todd Vasos for closing comments. Now, thank you, and thanks for all the questions and your kind words for welcoming me back. As I said last year, that serving this team at Dollar General has been the highlight of my professional career, and I feel the same sense of honor today. As you heard this morning, we have some hard work yet ahead of us, but we know what to do. We've done it before, and we are absolutely set on doing it again, as quickly as possible. I'm excited about the opportunities in front of us and all that we've accomplished together over the years, and will continue to do so for our customers, associates, and shareholders. Thank you for listening, and I hope you have a great day. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.