Greetings and welcome to the Dollar Tree Q4 2024 earnings call. At this time, all participants are in a listen only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. Our question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. In the interest of time we ask you, please ask one question, then return to the queue. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Bob LaFleur, Senior Vice President, Investor Relations. Bob, please go. Good morning. Thank you for joining us today. To discuss Dollar Tree's fourth quarter fiscal 2024 results. With me today are Dollar Tree. CEO Mike Creedon, CFO Jeff Davis, and. Chief Transformation Officer Stewart Glendinning. Before we begin, I would like to remind everyone that some of the. Remarks that we will make today about. The company's expectations, plans and future prospects are considered forward looking statements under the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties which could cause actual results to differ materially from those contemplated by our forward looking statements. For information on the risks and uncertainties that could affect our actual results, please see the Risk Factors, Business and Management's Discussion and Analysis of Financial Condition and Results of Operations section in our annual report on Form 10-K to be filed on or about March 26, 2025, our most recent press release and Form 8-K and other filings with the SEC. We caution against reliance on any forward looking statements made today and we disclaim any obligation to update any forward looking statements except as required by law. Also, during this call we will discuss certain non-GAAP financial measures. Reconciliations of these non-GAAP items to the most directly comparable GAAP financial measures are provided in today's earnings release available on the IR section of our website. These non-GAAP measures are not intended to be a substitute for GAAP results. Unless otherwise stated, we will refer to our financial results on a GAAP basis. Additionally, unless otherwise stated, all comparisons discussed today for the fourth quarter of fiscal 2024 are against the same period a year ago. Please note that a supplemental slide deck outlining selected operating metrics is available on the IR section of our website. Following our prepared remarks, Mike, Jeff, and Stewart will take your questions. Given the number of callers who would like to participate in today's session, we ask that you limit yourself to one question. I'd like to now turn the call over to. Mike. Thanks, Bob. Good morning everyone and thank you for joining our call today. Today is a very exciting day for our company. As I'm sure most of you saw this morning, we announced that Brigade Macellum will acquire our Family Dollar business for a total price of just over $1 billion. After a thorough review of our strategic alternatives, the company determined that a sale of Family Dollar is the best way to achieve our value creation goals. Dollar Tree and Family Dollar are two different businesses with limited synergies and each is at a very different stage of its journey. Separating them will enable each banner to be led and managed by a dedicated team that can focus exclusively on that banner's distinct needs and on realizing each banner's full potential. Separating will also enable investors to own a business they value more without also having to own a business they value less or that may not fit in their investment profile. It should also make it easier for the market to properly value each business. Under the terms of the deal, subject to certain closing adjustments, Dollar Tree will receive just over $800 million in cash proceeds. The deal should close in about 90 days and Family Dollar will remain headquartered here in Chesapeake. In the fourth quarter, our team was focused on achieving three distinct objectives. Successfully closing out the year, bringing the strategic review to a favorable conclusion, and setting Dollar Tree on a path to realize its full potential and create long-term value for our associates, customers and shareholders. With a strong finish to 2024 and the sale of Family Dollar set to close later this year, my leadership team and I will fully dedicate ourselves to Dollar Tree's long-term growth, profitability, and returns on capital. Our focus and energy will be devoted to growing sales and profits at this iconic and powerful retail brand. Dollar Tree offers customers incredible value, convenience, and discovery. Our world-class merchants consistently provide our shoppers with an unparalleled and ever-changing assortment of discretionary and consumable products. No other retailer or e-commerce platform can reproduce the immediacy and thrill of that signature Dollar Tree treasure hunt. This is our heritage and this is our future. One of our founders, Macon Brock, always spoke of running clean, bright, and inviting stores that exceed our customers' expectations. With Dollar Tree as our sole focus, we can remain true to that vision and return to our roots while still competing and innovating in the marketplace in new and better ways than we could before. With value, convenience and discovery, Dollar Tree offers just what the customer needs in today's value seeking environment. By delivering on the fundamentals, we can drive the sales productivity and profitability necessary to create long term value for our associates, customers and shareholders. With that, let's now turn to our results. 2024 ended strong as Dollar Tree's Multi-P rice journey continued to build momentum and improvements in store standards and operational efficiency are creating the foundation for sustainable growth and value creation. Fourth quarter results reflect the positive impact of our expanded assortment with our newest Multi-P rice offerings especially in holiday categories driving strong year end sell through. In the current economic landscape, we continue to see value-seeking behavior across all customer groups. In recent weeks, many retailers reported that customers, particularly middle income customers, are shifting towards alternatives that present value. Dollar Tree is also seeing middle income shoppers, who make up about half of our customer base, focusing more on value. At the same time, we are seeing stronger demand from higher income customers who increasingly see Dollar Tree as a cost-effective source for an expanding range of products. This trade-in has helped to offset other headwinds. We believe our ability to continue gaining market share amid such challenging market conditions shows that consumers appreciate the discovery aspect of our unique assortment and our compelling value proposition. Dollar Tree's Q4 comp was 2%. The quarter got off to a slow start with the late Thanksgiving, but our merchandising teams delivered across the broader holiday season as customers responded positively to our expanded Multi-Price holiday assortment. We are particularly gratified that our comp growth was balanced with traffic up 0.7% and ticket up 1.3%. Not only were both positive measures, but ticket actually grew faster than traffic for the first time since Q4 of 2022 during the tail end of the anniversary impact from breaking the dollar. We are encouraged by the deceleration in consumables mix shift this quarter, which was supported by the strong performance of our expanded holiday assortment. Q4 consumables mix increased 60 basis points to 45.2%, which is an improvement over the average per quarter mix shift of roughly 200 basis points we have seen recently. Consumables comp was 4.2% which was on top of a 10.8% comp last year. Discretionary comp was 0.4%, its first positive reading since Q4 of last year. Multi-Price clearly provided a boost to our Q4 performance and while we are still in the early stages of this journey, I'm pleased with the progress so far and excited about the opportunity still ahead. With that, let me share some highlights of how our expanded assortment boosted our Q4 results. First, as a reminder, our 3.0 stores are new or converted stores that offer our expanded Multi-Price assortment throughout the store. Other formats include 2.0 which have a smaller Multi-Price assortment that is concentrated in a single aisle we call the Valley and our 1.0 stores which are over 95% of the items are still at $1.25. In Q4, our inline 3.0 stores saw a 220 basis point comp lift compared to other formats including a 40 basis point consumables lift and a 290 basis point discretionary lift. Compared to other formats, 3.0 stores also saw a 20 basis point traffic lift and more importantly a 200 basis point ticket lift. Our merchandising team worked tirelessly to improve and refine execution around our expanded assortment, especially in holiday categories. Across seasonal merchandise broadly, our 3.0 stores saw a 10 percentage point comp lift over other formats including 30 points in Thanksgiving and 15 points in Christmas. In everyday categories like textiles, electronics, apparel and toys, we saw comp lifts in the low to mid teens. Toys in particular was a big winner this season and even in underperforming categories like books, beauty and food that was more by design as we cut. Space allocations for these items to make. Way for more productive categories. We finished the year with approximately 2,900 3.0 format stores including roughly 2,600 conversions and 300 new stores. While the number of 3.0 conversions this year fell a bit short of target, we continue to believe it is better to not rush and get them done right with the least amount of disruption for our customers and associates. To that end, we are targeting approximately 5,200 3.0 stores by the end of 2025, including 2,000 new conversions and 300 new stores. In summary, we're pleased with the first year performance of our expanded assortment and our 3.0 stores. The traffic, ticket, and sales lift that we saw is validating the investments we're making in our expanded assortment. Before I wrap up the Q4 results, I should note that with the decision to sell Family Dollar from an accounting perspective, our Dollar Tree and corporate segments are now reported as continuing operations and Family Dollar results are reported as discontinued operations. Net sales from continuing operations increased 0.7% to $5 billion, reflecting the solid comp performance and strong revenue contribution from non comp stores, including the former 99 Cents Only portfolio offset by lapping the 53rd week of last year. Net sales from discontinued operations decreased 11.2% to $3.3 billion, reflecting Family Dollar's 1.3% comp, the impact of store closings and the lapping of last year's 53rd week. Therefore, on a consolidated basis, net sales were $8.3 billion, which was at the high end of our $8.1billion-$8.3 billion outlook. Range. I'd like to take a few. Minutes to talk about tariffs and give you a quick supply chain update. As a large retailer and significant importer, we have years of experience dealing with global trade variability. As discussed last quarter, we have multiple contingencies in place to address a variety of tariff scenarios and mitigate the earnings impact of higher tariffs. These include negotiating supplier cost concessions, changing product specs, dropping non economical items, moving country of origin, and lastly exercising the flexibility Multi-Price gives us. While we are focused on limiting the financial impact of any new tariffs, we are equally committed to continuously delivering value and market leadership on the items we offer our customers and differentiating ourselves from our competitors across the retail landscape. Our strategies to diversify country of origin sourcing have been in place for some time now. We intend to remain flexible and nimble, focusing our efforts on sourcing products via channels that deliver the lowest landed cost to us in order to maintain value continuity for our customers. This includes the optionality to shift sourcing to and from different countries within a relatively short time frame. For example, given our anticipated 2025 imports, the expected net impact of the 10% China tariff that was announced on February 4th prior to any mitigation efforts would have been about $15 million-$20 million per month. Based on our mitigation efforts to date, we have offset more than 90% of this incremental cost, which is reflected in our current 2025 outlook. With respect to the additional tariffs proposed in March, which included an additional 10% on goods from China and 25% on goods from Canada and Mexico, we believe our potential pre mitigation exposure is approximately $20 million per month. As we speak, our merchants are working to mitigate the impact of this latest round of tariffs. On top of that, we are evaluating the potential impact of any additional tariffs that can materialize and impact our sourcing efforts. We have not reflected the impact of this second round of tariffs in our 2025 outlook as the net impact will depend on the eventual policy and the degree, scope and timing of our mitigation efforts. The imposition of this year's tariffs has introduced uncertainty and volatility, but over the long term we believe that our mitigation efforts can help us prevent sustained margin erosion. Finally, concerning our supply chain operations, we will be replacing the DC capacity we lost in Marietta, Oklahoma and will communicate our plans to you once they are finalized. In the interim, we will continue incurring additional stem mile and other related costs until a replacement is up and running as an immediate step to help ease some of our current network pressure and support our growing store base. Prior to the closing of the sale, we plan to convert the Family Dollar distribution center in Odessa, Texas to a Dollar Tree distribution. Center. In sum, we finished 2024 on. A high note with strong execution at Dollar Tree. Our results reflected sales momentum powered by growing consumer acceptance of our expanded assortment. With the pending sale of Family Dollar, I am excited at the opportunity to return to Dollar Tree's roots and begin to unlock the full potential of this iconic retail brand. Before I turn the call over to Jeff to go through the details of our Q4 results, I'd like to welcome Stewart Glendinning to our team. We recently announced that Stewart will take over as CFO at the end of March. Stewart joined the company earlier this year as our Chief Transformation Officer, where he has been heavily immersed in the Family Dollar sale process and charting the future course for Dollar Tree as a standalone organization. After Jeff's Q4 recap, I've asked Stewart to share our 2025 outlook. Finally, I want to thank Jeff Davis for his partnership these past two and a half years and for helping to ensure a smooth transition as Stewart assumes his new role. With that, I'll turn the call over to Jeff. Thank you Mike and good morning. I also want to extend my congratulations to Stewart. Having had the opportunity to work with Stewart over the past few months, I want to echo Mike's comments regarding what has been a smooth transition. Let me start with an overview of the changes in our financial reporting this quarter. Last June we initiated a formal review of strategic alternatives for Family Dollar which ultimately resulted in the transaction we announced today. That process officially ended in the fourth quarter with the company's decision to pursue a sale, and accordingly, Family Dollar was classified as discontinued operations. As such, our fourth quarter and full year 2024 results are reported on a continuing operations basis, which includes the results of the Dollar Tree segment and corporate support and other Family Dollar results are reported as discontinued operations. In our earnings release this morning, we provided schedules of our 2024 quarterly and annual GAAP and non-GAAP results on a continuing, discontinued, and consolidated basis. Unless otherwise stated, my comments today reference our adjusted results from continuing operations. Also, for comparability purposes, please keep in mind that Q4 and FY 2023 included a 53rd week which positively impacted revenue by approximately $560 million and adjusted EPS by approximately $0.35. Fourth quarter adjusted EPS was $2.11 from continuing operations and $0.18 from discontinued operations for total adjusted enterprise EPS of $2.29, which compares to our outlook range of $2.10-$2.30. Enterprise results include a $19 million, or $0.07 per share, benefit from a Mastercard settlement in Discontinued Ops and a $25 million, or $0.09 per share, charge for an anti-dumping duty recorded in continuing operations. Neither of these items were contemplated in our fourth quarter outlook. After netting both items, enterprise adjusted EPS would have been a penny above the high end of our outlook range. Turning to results from continuing operations, adjusted operating income was $628 million, a 15% decrease from last year. Adjusted operating margin declined 230 basis points as gross margin declined 130 basis points and adjusted SG&A rate increased 100 basis points. Our adjusted effective tax rate was 24.8% compared to 23.8% reflecting higher non deductible expenses for executive compensation and lower Work Opportunity Tax Credits. In the current year, adjusted net income was $455 million compared to $544 million. Adjusted EPS from continuing operations was $2.11 which includes the $0.09 impact from the anti- dumping duty. Now let me move to our fourth quarter results for the Dollar Tree segment. Adjusted operating income declined 12.1% to $768 million. Adjusted operating margin declined by approximately 220 basis points reflecting a 130 basis point decline in gross margin and a 90 basis point increase in adjusted SG&A rate. Gross margin declined primarily from the loss of sales leverage, lower mark on and higher shrink, distribution and markdown costs, partially offset by lower freight. Also note that Q4 cost of sales included the $25 million anti-dumping duty. Adjusted SG&A rate rose principally from higher depreciation and utilities expense and the loss of sales leverage, which was partially offset by lower general liability claims adjustments. Moving on to the balance sheet and free cash flow on a continuing operations basis, total inventory increased $176 million to $2.7 billion on higher mark on and inventory receipts as we expanded our Multi-Price assortment. We ended the year with $1.3 billion in cash and cash equivalents on the cash flow statement for continuing operations. On a full year basis, we generated $2.2 billion in cash from operating activities at capital expenditures of $1.3 billion and delivered $893 million of free cash flow. We ended the year with no borrowings under our revolver, no commercial paper outstanding and bank defined leverage below 2 1/2x. Last week we extended the maturity of our $1.5 billion long term revolving credit facility to 2030 from 2026. Additionally, we closed on a new $1 billion 364 day revolver ahead of the May maturity of our $1 billion 4% senior notes. We believe we have ample funding capacity between cash on hand and availability under these credit facilities to meet our near term debt obligations and provide for the ongoing capital needs of the business. We did not repurchase any shares in the fourth quarter. For the full year we repurchased approximately 3.3 million shares of common stock for approximately $404 million including excise tax. At the end of the year we had approximately $952 million remaining under our existing share repurchase program and now let me turn the call over to Stewart thank you. Jeff. Now let me provide our current perspective on fiscal 2025. With the pending sale of Family Dollar, 2025 will be a transitional year for Dollar Tree. As a standalone business, we will be working to separate Family Dollar while simultaneously focusing on driving growth and operating improvements in Dollar Tree prior to the closing of the sale. Continuing operations, or what we are calling RemainCo, will be burdened with the full cost of corporate shared services. After the sale closes, which we expect will be in June 2025, a Transition Services Agreement or TSA will go into effect. This agreement will help offset the shared cost burden until such time as these costs are fully transitioned to the new owners, a process which should unfold throughout 2025 and into 2026. Looking forward to fiscal year 2025, we expect strong top line growth from the Dollar Tree banner with sales being positively impacted by multi price expansion, operating improvements in our stores, new store growth and the continuing ramp up of our recently opened stores, especially the former 99 Cents Only Stores portfolio. Taking all this into consideration, we expect fiscal year 2025 sales will be in the range of $18.5 billion-$19.1 billion. Based on comparable store sales growth of 3%-5%. We expect a modest improvement in gross margin based on the mitigation actions we've taken to date on implemented tariffs. That said, the tariff situation remains volatile and any additional tariffs or unforeseen waterfall effects from the already announced tariffs could affect this assumption. Keep in mind Mike's comments about our ability to mitigate those tariffs over time. Outside of tariffs, we're forecasting favorability in mark on markdown and freight with a partial offset from higher distribution costs related to incremental D&A from our supply chain investments and additional stem mile and other costs from losing the Marietta DC. Our freight cost outlook is positive across ocean and both inbound and outbound ground. For SG&A, I'll talk about Dollar Tree segments separately from corporate support and other. Dollar Tree's adjusted SG&A rate in 2024 was 23.8%. In 2025 we expect deleverage of approximately 50 basis points-80 basis points. This is coming from higher store payroll related to our investments in additional hours and state mandated minimum wage increases, management incentive compensation, D&A related to our elevated 2024 and 2025 CapEx investments as well as repair and maintenance as we continue to improve store standards. Our corporate adjusted SG&A in 2024 was approximately $550 million. We expect this to grow by approximately 20% in 2025. The largest contributor to the year-over-year increase is IT spending as we move systems off legacy platforms and onto the cloud, followed by payroll from merit increases and incentive comp and DNA. Under the TSA that I mentioned earlier, we expect to receive approximately $95 million in the last six months of 2024 for services provided to Family Dollar over the second half of the year and a similar amount next year. While we will receive TSA income in connection with the cost of supporting Family Dollar for the second half of the year, we will incur these costs over the entire year. This negatively impacts our adjusted EPS by approximately $0.30-$0.35, given the expected timing of the deal closing on a normalized basis. Had we received TSA payments for the full year, our net corporate costs at RemainCo would be lower and our adjusted EPS would be $0.30-$0.35 higher than the outlook we are providing over the next several years. We expect absolute corporate SG&A dollars will go down as overhead costs permanently shift to Family Dollar's new owners. Our corporate infrastructure adjusts to the level needed to properly support a single banner, stranded costs go away and the TSA runs its course. We are targeting a reduction in our adjusted corporate SG&A rate of approximately 100 basis points over the medium term. Finishing out the P& L. We expect net interest and other income of approximately $115 million, an effective tax rate of approximately 25.2% and 216 million shares outstanding, which does not reflect any share repurchases. Adjusted EPS from continuing operations is expected to be in the range of $5-$5.50, which compares to last year's $5.10. Capital expenditures are expected to be in the range of $1.2-$1.3 billion including approximately 400 new Dollar Tree store openings. With respect to cash, we started the year with $1.3 billion on the balance sheet and expect to receive approximately $800 million of net proceeds from the Family Dollar sale. On top of this, we expect tax benefits from losses on the sale to be approximately $350 million accretive on a cash flow. Basis, our capital allocation. Priorities remain investing and growing the business, then returning excess cash to shareholders. With our preferred vehicle to date having been share repurchase, it is reasonable to assume that we will be back in the market repurchasing shares this year. Our balance sheet is strong. For this reason, we expect to come to market with a new debt offering following our May debt maturity and the closing of the Family Dollar sale. In the near term, we expect first quarter net sales to be in the range of $4.5 billion-$4.6 billion based on comparable net sales growth in the 3%-5% range and adjusted diluted earnings per share in the range of $1.10-$1.25. In summary, 2025 is going to be a transitional year. With the sale of Family Dollar, we can fully focus on unlocking value at Dollar Tree. We had a solid 2024 and we feel good about many parts of our business heading into 2025. We're optimistic about the top line and we're addressing cost pressures on several fronts with tariffs being at the top of that list. We feel great about our cash position and our ability to generate meaningful levels of cash going forward. With a solid balance sheet and prudent CapEx commitments, we should have the ability to return a substantial amount of capital to shareholders this year and into the future. With that, I'll turn the call back over to. Mike. Thanks Stewart. This is a pivotal time at Dollar. Tree. We are shifting our long term. Operational focus away from an integrated two banner model. With the sale of Family Dollar, our leadership team can focus all our energy and resources on growing Dollar Tree. I strongly believe selling Family Dollar and returning to our roots with an expanded assortment at Dollar Tree has created material value. Dollar Tree remains one of the best growth stories in retail and the separation of the two businesses will allow us to move forward with the single minded focus of driving growth and profitability. As Stewart indicated, 2025 is going to be a transition year. As we pivot to operating Dollar Tree as a standalone entity after 2025 on a go forward basis, we will drive top line results by growing comp and opening new stores. We expect increased sales productivity will allow us to expand gross margin, begin leveraging SG&A, and grow EPS. Most importantly, by returning a meaningful level of cash to our shareholders, we can leverage that EPS growth even more. I would like to close with a shout out to the entirety of the Dollar Tree and Family Dollar teams. They have worked masterfully and tirelessly on behalf of our shareholders and our customers. I could not be more honored to count myself among them. With that, we are ready to take your questions. Questions. Thank you. We will now be conducting a question and answer session. If you would like to be placed into the question queue, please press star one on your telephone keypad. As a reminder, please limit yourselves to one question, then return to the queue. If you would like to remove yourself from the queue, please press star two. Once again, that is star one to be placed in the question queue. Please limit yourselves to one question. Our first question is coming from Edward Kelly from Wells Fargo. Your line is now l ive. Hi. Good morning, everyone. I wanted to start with just the tariff side and mitigation. You know, it sounds like $20 million a month or about $0.85 a share is not in guidance. Can you talk about the potential mitigation of that? You know, what are the efforts that you currently have on deck in order to see, you know, to mitigate that? Your confidence level around your ability to offset it. As part of this, Mike, you know, it does seem like, you know, you have new price points on deck. Just from what we can see, $1.50, $1.75. I do not know if that is a test or not, but how important could that be, you know, to offsetting this as well? Just curious as to, you know, how you put all this together and you view your opportunity to mitigate what potentially could be. Yes. Thanks, Ed. Good morning. If you look at the tariffs, the first round, our team has been working our tariff strategy for a while now. We went through the round one of tariffs several years ago, and really we put actions in place as soon as November to start mitigating the first round of tariffs. As we said, we were able to offset, you know, 90% of those first round. With the second round, we continue to leverage the tools that we have, those big five that I talk about in terms of, you know, if we have to change the spec, negotiate really, really well with our suppliers, eliminate the product if we have to, and of course, what Multi-Price has opened up for us and given us the ability to mitigate. If you look at the second round, the 10 on top of 10 and the 25 for Mexico and the 25 for Canada, there's still a great deal of uncertainty as to what completely hits, how those change. April 2nd is a big day in terms of what happens with reciprocal tariffs. Our teams are actively looking to mitigate, but given the level of uncertainty, we wanted to go with what we knew and then we continue to run our plays and our mitigation strategies to offset any other tariffs that come. I think we've demonstrated that when we've got the time, we can mitigate these tariffs and that's what the team will continue to do. In terms of the different price points. We look at that value, we look at convenience and we look at discovery and we say where can we offer that and maybe move on some pricing as part of just not just tariffs but an inflationary cost environment that we have got to mitigate. That is where you are seeing that work, where it makes sense. I think, you know, we are positioned better than we ever have before to manage what is a very uncertain and volatile arena that we are. Thank you. Next question is coming from Michael Lasser from UBS. Your line is now. Live. Good. Morning. Thank you so much for taking my question. Mike, I think the fact. That Dollar Tree quantified the 90% mitigation of the first 10% from China and the fact that the second 10% from China is currently being collected is being assumed by the market that that a cost that should be embedded in the P& L for this year. A, is that wrong? B, can you give us a sense of what your overall sourcing portfolio looks like right now such that when the reciprocal tariffs do come out, if they do, we can get a sense for the exposures for the core Dollar Tree and that would help us understand the potential financial impact on. To what extent is Dollar Tree willing to use its balance sheet and all the cash that it has on its balance sheet, especially as the Family Dollar sale is consummated, to offset the potential margin implications of these tariffs and support the EPS outlook from here? Thank you very much. Yeah, thanks, Michael. The first idea is, is no, I mean we have included the first round of tariffs, our mitigation strategy, and so if you look at the uncovered 10%, if you will, that is in our 2025 forecast, it was premature given the uncertainty and the April 2nd reciprocal tariffs and some of the back and forth that we've seen for us to include the second. The March 4 tariffs, we call them, to include the second round of tariffs in our outlook. We will continue to look to mitigate those. We've got to see what materializes there. We did dimensionalize it, though, to talk about how it would impact us per month on an unmitigated basis, and that's the $20 million per month if unmitigated. I think we've demonstrated as a company that we've been doing this a long time with our China Plus One strategy coming out of 2017, 2018. We're in a good position to manage that over time, and we'll continue to do that. As far as the balance sheet, Stewart, why don't you take the balance sheet to offset any margin impact? Yeah. Great. Michael, can you just help us? In what ways are you thinking about us using our balance sheet to offset. Margin? A lot of financial flexibility too. Return excess cash to shareholders. Okay, good. Yeah, no, certainly. Look, let me address both of those. First of all, there's actually one, you know, one hidden benefit in our balance sheet. We are carrying a level of inventory that potentially is not tariffed yet. Of course, we'll be able to use that. There's a sort of, there's a baked-in benefit in our P&L, understand that. Just want to reinforce what Mike said. We have baked in all the first round tariffs. The second round tariffs, we gave you a sense of the run rate, so at least you could decide what that looks like as we see the tariffs unfold. That $20 million we're still working on mitigating with respect to using our balance sheet to return cash to shareholders. In my prepared remarks, I mentioned that you should expect to see us back in the market repurchasing shares. I mean, outside of the tariffs, we are in a place where our balance sheet is very healthy. We have an attractive stock price, and the reality is we are sitting on a lot of cash that we will need to do something. With. Thank. You. Next question is coming from Simeon Gutman from Morgan Stanley. Your line is now. Good morning, everyone. Congratulations on the Family Dollar sale. Mike, I wanted to ask you the, I guess, philosophy of how you're going to run the business over the next few years. You have a fresh start now with one asset, and if you look back, inflation has been pretty challenging for dollar stores. You still have to navigate tariffs. I wanted to ask how you think about margins for the business. Do you invest during the next several years? You know, keeping margin down to reinvest back in the company. You know you have your competitors, your biggest one is reinvesting in itself. Not sure what Family Dollar's plans will be but curious, do you let margins run up or do you have to keep a lot of ammunition and firepower given the pretty uncertain backdrop that the dollar stores have been navigating for the last several. Years? Yeah, I'm excited about the opportunities of Dollar Tree on its own on a standalone basis. If the ability to open stores every year. You look at the great work that our merchants have done, you look at the clarity of message that we can deliver from a Dollar Tree only scenario. We believe that there is a very attractive algorithm over time that has strong margins. When you look, we've been in investment mode for the last several years as you can see from our CapEx, you can see some of the pressures we've put on ourselves through wage increases, through hours investments. While 2025 is a bit of a year where we have half of a TSA, we have to close the deal on the work with Family Dollar. I look out multi year and say this is a very strong business, one that we can manage through even in an inflationary environment in a large part because of the investments we've made over the past couple of years in our stores, in our distribution centers and what we've done in terms of the ability to provide an assortment, an expanded assortment as a result of our Multi-Price. When I look at the multiyear algorithm, I think it's a very compelling business that we feel we can manage well from multiple. Very long. Time. Thank. You. Our next question today is coming from Matthew Boss from JP Morgan. Your line is now. Live. Great. Thanks. Mike, could you elaborate on. Trends you're seeing from higher income versus middle and. Lower? I thought that was interesting in your prepared remarks. Maybe just drivers of three to five comps in the first quarter. Relative to the 2% comp that you. Did in the fourth. Quarter. Have you seen acceleration so? Far? Quarter to date. Is it traffic or. Ticket? Yeah, let me hit the comp builders first. As I look out over 2025 there's this, you know, there's a couple things going on. One, you have a large pool of NSOs, I'm sorry, new store openings that will become part of our comp including the 99 Cents Only Stores. And if you recall from last quarter, opening two 99 Cents Only Stores or converting them to is the equivalent of opening three Dollar Trees. So last year we had a significant headwind from the self inflicted cannibalization of our new store openings. Without the maturing of year two, year three, year four of a new store opening. We start to get that tailwind this year, which is exciting. Multi-Price continues to mature. I was very encouraged in Q4. You kind of saw the true strength of Multi-Price in Q4 with that discretionary growth, significant discretionary growth. It is the new conversions this year to Multi-Price. It is also the maturing of the ones we have done in the past. When I look by cohort, the Q1 conversions, the Q2 conversions, the Q3 conversions, every single one of those strengthened in Q4 versus Q3. The longer you are on Multi-Price, you get the real benefit of that expanded. Assortment. Then, you. know, last year we lived through the worst holiday calendar there is. I mean, there were eight fewer days at Easter, there were five fewer days at Christmas. That is in the rearview mirror for another seven years, I think. When you look at that improved holiday calendar, that's a boost. Finally, it's store standards, it's blocking and tackling and improving our stores. We've made some investments in hours, we've made investments in wages, and we believe that'll help position us. The comp I feel good about, I really like to see how the holidays unfold for us coming off the strength of a very strong Christmas. That is kind of the strength I feel there. The consumer behavior, what's interesting is you came out of COVID and you very much had what they called a K-s haped recovery. Wealthy people were doing well, they had low interest rates, stock market was going up. Lower income folks were really, really hurting. Dollar Tree has done very well in recessions, in pure recessions. Right now what we're seeing is that lower income shopper needs us for pack size, they need us for a fill in. They need basically to make their wallet go farther in between paychecks. That middle income person, that's our bread and butter. 50% of our customers, middle income, they need us to live and celebrate their lives. What's been most interesting is this time around this inflationary environment, all shoppers across all income cohorts, including the higher income, is finding Dollar Tree as part of their solution. We see in growing ticket, we see in growing share as well, that is, and of course traffic. I'm encouraged by seeing that across all income cohorts, we believe, you know, it doesn't matter how much money you make, everybody's hurting right now. The good news is Dollar Tree and Family Dollar are a big part of that answer to what. Hurts. Thank you. Next question today is coming from John Heinbockel from Guggenheim Securities. Your line is now. Live. Hey Mike, two related things. What are your product. Priorities? Right. When I think about discretionary, particularly around seasonal because you did a lot of new stuff with holiday last year. Priorities there, priorities with regard to Multi-Price point cooler expansion, and then when you think about comp getting better by maybe 200 basis points, do you think it's equal between discretionary and consumable? Each go up by an equal amount or is there a difference? Yeah. We're trying to exceed our customers' expectations at every turn. We believe that you saw in Q4 the real power of our assortment in Christmas and in what we call harvest or Thanksgiving. The holidays are what drives Dollar Tree. I don't care what your income is. There's no better place to celebrate the holidays or celebrate in general than Dollar Tree. No one should go anywhere else because we offer the best value, we've got the convenience. You walk in there and our associates do it first. They can't believe what we can bring in at the price points we bring in. That discovery is so important, so we will be balanced. We know we have to be there for what the customer needs, which has shifted the mix a bit to consumables over the last couple of years. We know what really is the D&A of Dollar Tree and it's discretionary. Look, we'll continue to provide what the customer needs. Our focus is how do we wow them at the seasons, how do we wow them into holidays? That is a huge focus when you look at the expanded assortment. Last year in Multi-Price we talked about we had to bring in what we could get in quickly. That meant domestic, that meant consumables over time. You saw in Q4 what we can do when we bring in the discretionary and really have time to buy. We buy a season a year in advance. To be able to really fuel that discretionary business with an expanded assortment, I'm excited about that. Go. Forward. Thank you. Next question today is coming from Rupesh Parikh from Oppenheimer. Your line is now. Good morning and thanks for taking my question. Just going back to 3.0 format store, just any positive or negative surprises you're seeing with that format. As you look forward, what are the bigger opportunities to further optimize the performance. Yeah, Rupesh, it's the 3.0s. Continue to perform. The longer you're on it, the program, the better off you are, the better you perform. Remember, we don't do a lot of marketing, if any. Our customers need to discover us, and when they come into the store, they need to discover Multi-Price. It is very encouraging to see that the Q1 conversions remain our strongest performer. Every single conversion cohort, Q1, Q2, Q3, also grew significantly over the prior quarter, which tells us our customers are finding us. When you bring in that expanded assortment around the seasons and around the holidays, you really see the power of Multi-Price. I believe that there's some really good learnings there as we circle back around. We talk about converting stores, introducing new stores, but the maturing of the stores and going back around to the assortment. One of the things that Rick McNeely and his team does, I think better than anybody, is they are constantly learning from what worked and what did not work and circling back around and changing that assortment. We may take a certain section and say we're going to add four feet to that section, or we may take a section and reduce the SKUs in it based on what's working and what's not working. We are so early in this game. Last year, somebody asked me, what inning are we in? I said, we're on the on deck circle. This year, let's call it. We're in the first inning of the Multi-Price evolution, and I look forward to really continuing to learn from it. Where you say, where are the opportunities to learn the most? It is still in the operations. Getting that store set up right to begin with and making sure that's both the third party folks that help us set up and managing that better, which we will do in 2025. Also, how ready is a store to be converted? One of the biggest findings we had from 2024 is that you can't just muscle your way through a store and convert it because it just goes. Back to its poor performance. It must be ready to. You can't have a store manager vacancy. You've got to have a strong assistant store manager that manages the freight in the back room. We do those things well. The results are incredible. When we don't do those things well, we're disappointed. That's our focus for 2025 in terms of areas of. Improvement. Thank. You. Next question is coming from Chuck Grom, from Gordon Haskett. Your line is now live. Thanks very much. Good morning, everybody. On the Multi-Price, I think you guys said 220 basis points of an uptick. I believe in the second and third quarter, the numbers were higher. Just wondering if you could just speak to that directional change for us. And then on the 2025 outlook, on a 3%-5% comp, you're expecting 50 basis points-80 basis points of deleverage. Can you just speak to the factors that are going against you? You think you get a little bit more leverage on such a great comp. Thank. Yeah, I'll take the first one, Chuck, and then Stewart will address the 50 basis points- 80 basis points. First of all, the change in Multi-Price performance. If you look at the starting point and the ending point of what we're converting, the Q1 conversions we did, it was 80% of them were going from what we call 1.0 to 3.0. They hadn't been touched by the value yet. It was all about taking the single $1.25 price point and introducing Multi-Price. In Q2, we were kind of on balance there, roughly 50/ 50. In Q3, it switched, and it was only 20%, 1.0 to 3.0, and 80% going from the value to adding the assortment. One of the things we've done for 2025 is to get back on balance with the conversions. You'll see a slightly smaller number than we did last year. We're targeting about 2,000 conversions this year. We look at that and say we've achieved by going with that, achieved a more balanced approach, which helps us perform as we learn. Finally, I would just say we had talked about absolute comps in Q1, Q2 and Q3. We really are focusing on lift now. As you get through more of the chain, some of the stores we're hitting may be significantly negative comping stores. If I took a negative 10 comping store and turned it into a negative five with Multi-Price, you might look at it and say, hey, I don't like that negative five comp. You love the lift versus where it was. You get more of that as we evolve the. Program. All right, let me pick up. On. Sorry. I'll just pick up on the second part of the question, which is, why do we not get the leverage? I think you need to take into a couple of things into account here. First, at the segment level, of course, you are seeing the leverage. As I shared in my prepared remarks, because of the sale of Family Dollar, you will see that all of the corporate costs now are being borne by the segment and so you get automatically some deleverage from that. That is helped by some of the TSA. We only get that in the second half of the year. I think the third thing is to point out that from a corporate SG&A perspective, we did share that we're going to see some increases in corporate SG&A this year. That is related to some investments we're making in IT. There are also influences there for costs which were previously being carried by Family Dollar which now are coming back into the corporate segment. Think about dark stores and think about some allocated costs that were going into Family Dollar. Between the IT and the dark stores and the allocation, that really comprises the 20% we spoke to in SG&A. It might be easier for you if I just sort of wrap up those comments by describing the shape of the year for you. If you looked at the shape of EPS for the year, you will see a higher backloading this year from an earnings perspective because of two essential elements. The first one is the TSA. I spoke of that $95 million kicking in to offset SG&A costs in the second half of the year and then the five days of Christmas which Mike spoke to which we're expecting to have a meaningful impact on the fourth quarter in our earnings. Hopefully that's helpful. Thank you. You. Next question is coming from Kate McShane from Goldman Sachs. Line is now. Good morning. Thanks for taking our question. Can you remind us how many combo stores you have with Family Dollar and Dollar Tree and how that unwind might look? Just as a follow up to all the tariff you mentioned that you can mitigate 90%, I think of the first round of tariffs, does that mean that the remaining 10% is going to be mitigated with higher. Prices? Sure. Kate, thanks. This is a clean deal. There are roughly 1,000 combo stores that will go to the new owner. There are what we call full combo, roughly 60, just under 60. That will stay with Dollar Tree. There is a little bit of that. Those will be rebranded Dollar Tree only. Going forward the combo stores will be rebranded just Family Dollar and will convey in the deal. In terms of the 90% mitigation, the 10% is in our forecast. We never stop trying to offset tariffs using every single one of the tools in our toolkit. There are some items that we will not sell and eliminate because we're not able to mitigate it and maintain the margins we want to maintain. There will be other cases where in round two and round three of negotiations we get that final 10%. Look, we'll look at country of origin. We'll decide to make something somewhere else if it fits, you know, our profile. Then yes, finally in very strategic and surgical ways, we will look at. Pricing. Thank. Next question today is coming from Paul Lejuez from Citigroup. Your line is now. Live. Hey, thanks guys. I think you already started to take some prices up. I'm curious if that was driven by the tariffs, if that was what was driving that decision. I am just going back to Matt Boss's question, what do you assume in that 3%-5% comp from a traffic versus ticket perspective? I'm not sure if I heard the answer there and just how much are recent price moves a driver of [audio distortion] and ticket. Just last, when is there a clean break from the TSA and are there any guarantees of the leases on the Family Dollar stores by Dollar Tree. Thanks. Sure. Thanks, Paul. We've been in an inflationary cost environment for a while now. The targeted actions we've taken, there are some products that we know we're the destination for the customer. We know that that customer needs our product. It's not something we really want to eliminate. We say we don't have to have anything. We can have everything. In some cases there are places where we're significantly below the market. We have an offering and we want to continue to offer that for our customers. Very targeted prayer candles. We're the best destination for prayer candles. They're made in Mexico. We want to make sure we can still offer them. We will look at targeted pricing on things like that. Tariffs are a part of it. We've been in an inflationary cost environment. State minimum mandated wages, just market wage adjustments, investments, all those things have created an inflationary environment. We are looking at our full. Toolkit that the merchants have to address. Those the 3%-5% comp you know we really want we love when we can expand ticket and traffic. I always love to grow traffic. More importantly I love to take share. The strength in ticket in Q4 we believe really showed the power of multiple price and especially showed the power of the holidays and the seasons to Dollar Tree. As you look forward we will look to both we want to make sure we're growing both ticket and traffic. Finally this is a clean deal in terms of how we convey we have the dark stores from the first round of closures that we did, roughly 300 dark stores. Other than that, this is a clean deal where everything. Thank you. Our next question today is coming from Karen Short from Melius Research. Her line is now. Hi. Thanks very much. Congratulations on something that has been long awaited by many in the investment community. I had two questions. One is what is the right run rate to think about for Dollar Tree banner on operating margin once we get past transition in 2025? The second question I had was anything to call out with respect to a breakup fee in this transaction. If there's anything to point out. In terms of the run rate. I think this company, given the right amount of time, has been able to maintain a very healthy gross margin. We know we have opportunity in an elevated inflationary cost environment to manage our cost better. You heard Stewart talk about that in his prepared remarks. You get a little bit in 2025 where it's uneven because you're bearing full corporate shared costs with only six months of a TSA. When we look out over the multi year and I start to look at that algorithm of opening new stores where we can comp and where we can keep our margins, I really like how that plays out over the multi year. Given the right amount of time, we believe we can put this business in a very attractive position over the long haul and then deal. Specific. Maybe you look just a couple of comments here, but I think just structurally the operating margin of the business changes as soon as you sell Family Dollar because that had a lot of revenue with a much smaller operating margin. You will see a pickup immediately. Obviously, the carrying of the full costs in the short run is going to work against the operating margin despite the pickup. It will be net positive, but you will have some pressure from that carrying that total cost. If you looked at the supplemental slides we shared, you'll see in there a chart that shows how we are planning to work down those corporate costs even before we start talking about improvements in the banner. You will see with our corporate costs coming down over time, we're talking about 100 basis points. All that's going to be flowing down into our operating margin. It is reasonable to expect a fairly meaningful improvement in our operating margin. We will share more in upcoming call and potentially at an investor day later this year where we will give you more benefit of the knowledge of what this going forward algorithm will look like and you will get more detail at that. Thank you. Our final question today is coming from Seth Sigman from Barclays. Your line is now. Live. Great. Thanks for taking the. Question. Good morning. Everyone. I wanted to focus on the gross. Margin. The guidance is for a modest improvement in 2025. Now obviously you said that you mitigated the first 10% tariffs here. I just want to clarify that. Means that there's no impact on the gross. Margin. I think that's how the commentary implied, but just wanted to clarify. That. There should be some tailwinds. I'm just curious, what are some of the other offsets to gross margin this. Year? If you give us the puts. That would be. Helpful. Thanks. Yeah, that's. Stewart, maybe just look, picking up on gross margin. Keep in mind the comments that we made in the prepared remarks. We have obviously considered that first round of tariffs in our gross margin. The second round is not included in there, which is why we gave you the $20 million a month run rate. That's. I think that's the first thing. Look, from a tailwind perspective, I don't think there's anything meaningful in our gross margin that will be affecting our tailwinds. You'll have taken obviously the benefits that Mike talks about on an ongoing basis seeing the benefits of, of Multi-Price coming through. That's not going to look dramatically different than what we saw last year as we bring through new Multi-Price this year. We talked about freight being seeing some modest benefit in freight. I wouldn't necessarily call that a tailwind. I think there's a market benefit that's coming through there. When you start talking about SG&A down in SG&A, we will of course lap the benefit from the charge you took last year related to general liabilities. But you have other offsetting one-t imes that we had last. We also will see higher depreciation based on the CapEx we put through last year offsetting that. I'm not sure on a net basis from an SG&A standpoint that there's any real one-time upside that you should consider in your model for this. Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further or closing. Comments. Thank you all for joining us this morning and have a great day. Day. Thank. Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.