pitch. You're good to go? All right. We're gonna go ahead and get started. My name's Kelly Bania, the food retail analyst here at BMO. Really happy to have Sprouts Farmers Market join us this year. We have CEO Jack Sinclair and CFO Curtis Valentine up here. We also have Susannah Livingston and Nick Konat. Susannah runs the IR team, and Nick is the President and COO over here. We're just gonna do a fireside chat for the next 40 minutes. For those of you that don't know, Sprouts operates over 480 stores across the country. They generate almost $9 billion in sales, $1.4 billion of which is digital. The company's on pace to open 40 stores per year and has really become a trusted partner for innovative product launches in the natural and organic space. Where I wanted to start was just on the loyalty program. That's been a big initiative over the last year. It kind of rolled out, I think, really in earnest in late Q4. Just wondering, you know, if you can just start with, what are some of the key insights that you've learned so far? It's maybe early days, are there any surprises or key learnings that you're getting from this as you get to know your customer better? Sure. Yeah, I think since launch in November, I think three things. On the, on the first side, really good response from the customer, and credit to our store teams, a really incredible job they did talking up the program, engaging customers in the program. We saw, you know, a better-than-expected response from a sign-ups perspective. It was a really good start and really encouraging. I think what we've seen, on the, on the positive front, we've also seen as members of or as folks have jumped into the membership, you know, we can see that they were customers with us through credit card data once we get their first party data. We've seen a really nice response from that cohort, spending more, coming in more often. You know, we're seeing them step change their annual spend at Sprouts. We're seeing the existing kind of customers, the core customer of Sprouts has been really solid as well, right, spending about the same, coming in about the same amount of time. Then, you know, we're also able to more clearly see now a little bit of this challenge with the less engaged customer. That has been a piece that we haven't been able to move quite as well, and has been a bit more of a challenge, and we've kind of talked about that on our last couple of calls. somebody new into the program or somebody that's been a low-frequency customer before. Trying to get them to spend a little bit more with us has been a challenge. Some of that may be affordability, then some of that, I just think we have opportunity to continue to get better in this space as far as how we stimulate demand. We're doing a lot of test and learn right now around the ways we can do that, and we've seen some really encouraging pieces in that as well. Things like, hey, at 10 o'clock in the morning. Yeah send the right customer a notification talking about our $5 sandwiches, our $5 sushi, our $10 wellness bowls, and we see an immediate response at lunchtime that day of folks coming in and transacting with us. Some encouraging signs early, and now we've just got to keep that flywheel moving, and we've got to get those programs to scale, and we've just got to go a little bit faster in that test and learn cycle to find more and more winning programs. I'd also just add, Kelly, if this is a fireside chat. Some of these- 'cause it is- It's very cold in here. I'm looking around. They're like, "What? We'd get the fire going any minute now. We need some hot tea maybe. That would be outstanding. I agree. On the loyalty thing, I think surprise on the upside's the number of signups that we got. Sure. The stores did a really good job at getting signups to it, so we've got more and more data than we ever thought we were going to get. I think the opportunity now for us is in we've got more opportunity ahead on loyalty. Yeah We've had, than we're sitting on at the moment. We're excited by some of the tests that we've been doing, and those tests and scaling those tests, maybe the surprise on the downside's been the challenge of scaling, how to get yourself to the point where you can automate the scale of the responses so that you can get to more customers quickly, and that's gonna be one of the upsides for us going forward. We do believe that the long term, there's gonna be some fairly significant opportunities for us to engage with our target customers better than we've ever done before, and understanding when we launch new products, how we can introduce them to the right customer in a personalized way. This personalization journey, we're only just getting started, and that's something that's gonna drive, I think, a lot of upside for us in the, in the future. Okay. Couple follow-ups there. I guess on that low frequency customer, have you developed a kind of a profile about who that is and what they're looking for more? I think it was a couple quarters ago where you talked about they were maybe a little bit of a younger cohort. What else have you kind of identified, you know, as you kind of drill down on that cohort? Yeah. I think the early learnings were a little bit younger. They a little bit lower income, and a little bit, Hispanic was the other piece that we kind of demographically we saw. a little bit over index with the group that we were kind of struggling to move around a bit. I think now the benefit of the first party data is being able to get a little bit more into the basket. What are they buying? What are others that are maybe moving up the ladder, you know, buying versus the ones that are just coming in a couple of times a year, a couple of times a quarter. I think those are the pieces we're still kind of sifting through and trying to learn from now that we can connect, you know, the old credit card data we had with the- Right individual first party person and have a little bit more clarity on frequency and engagement. Continuing to learn really in real time about what they buy, what stimulates demand, running a you know, a battery of those tests around trying to get them to engage a little bit more deeply and, you know, winners, losers, and trying to find different options to kind of move that customer. Okay. Another big focus area for investors, I know has been just the vendor participation in this program. Maybe you can help us understand where you are on that journey and is, you know, a lot of your suppliers are kind of small, you know, innovative brands. Are they, you know, used to this kind of program where they might need to kind of, you know, participate in funding some of these promotions? Is Sprouts kind of bringing this and educating them or how familiar are they with this and the uptake? I guess there's a lot of questions on that. Well, as you identify, these vendors that we work with tend to be much smaller, and it's not the traditional retail media network dialogue. Yeah that's going on from the big players switching marketing spend from 1 space to the other and working. We've got this opportunity of this personalized health enthusiast customer who we can bring to, whether it be gluten-free or grass-fed or the vegan, vegetarian. We can take the information about the customer and join the dots with the smaller vendor. It actually gives them an access to be able to spend some money in marketing a level that allows them to really target the customer they've got the best opportunity of engaging with. We're at very early stages in this technology. We've put the technology in place to get this done now, and I'm excited actually the reaction to it. Increasingly, the vendors that we're working with and the smaller vendors that we're working with are looking for ways to get to their target customers. This is the first time we've been able to really put in front of them, not just have a promotion across the board. Let's have a promotion that really works directly introducing new products to people that are appropriate to them. 'Cause we're doing 7,500 new products every year. Pretty remarkable number of products. Majority of these are new products from small suppliers and increasingly the personalization journey from loyalty will be able to join the dots from the 7,500 vendors, 7,500 products to the individual customers. From a financial point of view, we think it'll actually help us not spend as much money on big across the board promotions. Right Start to spend much more targeted. It's better for the vendor, better for the loyalty, the customer, and probably better for us in terms of how the economics work. I wanted to just talk about kind of trends. I mean, you guys are typically at the forefront of the trends that are happening in food. I think protein and fiber is a big one. What are you seeing there? But also you mentioned some new trends in vitamins and supplements. Can you educate us on what you're seeing, across the board maybe and what will be coming down the pipeline? Well, you allude to proteins. If someone had said to me five years ago, we'd be excited about launching a protein soda called Proda, people would have said, "You, you must be crazy." The world's changed fast in terms of protein. GLP-1s had a big influence on that. The MAHA agenda is having a big influence on how people think about what's in their food and how they eat and what's in the ingredients. I think we're pretty well placed in terms of being clean product that's not got additives and colorings in the middle of the product. That's something that we've always been strong at. Other people are chasing after it, but we're kind of got the reputation with our customer of being clean. You allude to how important vitamins and supplements are to our customer. Wellness, health and wellness, the wellness agenda is straying into sleep and how brain health and the health of well-being. A lot of our supplement people, the people we've got working in our supplement department, Kelly, really inspire me in terms of if you go and talk to them and ask them for advice about sleep and if you ask them for advice about how to get your mental well-being, where they're really, really strong in terms of new ingredients coming through, new vendors coming through. Increasingly, it's a world where it's very difficult to be good online at this. It's a world that we've got that differentiation by having talent inside the store who can guide customers to different solutions in terms of how they're thinking about what they eat and how they eat and thinking about how their wellbeing goes forward. Lots of trends going on behind the scenes in this. Seed oil is a big thing that we're getting ahead of. Lots of trends on ingredients that are making a big difference for our customer. I think aging and longevity is another one. Yeah. You're just up and down the age spectrum, you know, across income spectrums. There's a lot of people focusing on all those different topics in a variety of ways. I remember last year, I had to look it up, the Sea Moss. There's these trends that go viral. Is comping any of those? You know, or were some of those just bigger last year that drove some outsized, you know, comp? Do you wanna do the baseball? Do you wanna do the. Sea Moss still? No. Yeah. Here we go. we're having fun with the last couple days 'cause we've been out. We were in Boston yesterday and having some of these similar conversations. Actually the one of the gentlemen we met had a good analogy. He's talking about baseball, I hope this we had some baseball fans that'll land for that crowd. It's over my head from the get-go. Yeah. We had our Scottish CEO- he's trying to catch up on all this, but, you know, they're talking about batting average versus slugging percentage. The difference being a hit is a hit, and that counts to your batting average, but a home run is worth more to the slugging percentage. What we had- I hope you're listening to Curtis when he's explaining that because I won't blame you. Jack turned that into the next meeting. He said, "I like that, I like that analogy." He said, "Well, last year we had more sluggers. Everybody kind of looked around and went, "I'm not sure I know what that means." Yes, to your point, to your question, we had a few home runs last year. Sea Moss took off, it went viral, and we had it on the shelf already, and so people come flooding in and we're out of Sea Moss for a week or two, but we've got the relationship in place and we're quickly back in stock. Same thing with Coconut Cult on our shelves, takes off on TikTok and we're well-suited to kind of capture those trends. Haven't had as many of those, you know, this year as we had going in that window of time. There's some other one-timers in there. Eggs was another big factor at the time. You know, conventional eggs were. $12 a dozen. Because of our relationships, because of our sourcing, you know, we had cage-free eggs at $5.99 a dozen. Chose not to gouge from a consumer perspective, and we saw a lot of traffic come our way and extra trips and extra items in the basket as the customer was just trying to figure out how to get eggs. There was a, you know, a strike at a competitor, at a regional competitor. There was a cyber incident with one of the bigger distributors. Right you know, we have less exposure to. We had a few things going on all in that kind of nine-month window, Q4 of 2024 to Q2 of 2025, that gave us even outsized gains above and beyond the things that we were doing well from a strategy and from a, from a health and wellness tailwind perspective. Specifically to the Sea Moss, the kind of the viral When Kim Kardashian says something, it's kind of amazing how the viral impact, just dramatic changes in sales very, very quickly. The fact that we had it in stock, and available and everyone else didn't, that gives us confidence. If something like that happens, I think it's hard for us to manipulate those things, they happen. If you're launching 7,500 new products every year, you've probably got a good chance of catching whatever comes virally going forward. However, however it comes to the market. We think we're well-placed to take advantage of when these opportunities come along. We've got a lot of new, different products in front of the customer. That should be the kind of plus opportunity above and beyond. Yeah a two to four algorithm that we're thinking about on a kind of quarter-to-quarter basis. Those, you know, those are the items that hopefully will add to what we can deliver on a, on a regular basis. I never thought Kim Kardashian would come up in a fireside chat. Here we are. Well- I guess. Here we are. In terms of kind of customer traffic, that kind of less engaged customer, what do you think is happening to them right now? Are they just cutting their basket size? Are they replacing that at a conventional? Yeah maybe, I think it's often a produce item. Do you have a sense or are you getting a sense more with the data of like what's really happening? I think, well, one is I think we really look back at last year as, oh, there was an extra trip, right? There was an extra item in the basket, just repeating that, you know, certainly the eggs example's the easiest one. If they have eggs at a regular price everywhere, there's gonna be, it's easier access to those eggs and maybe a couple less trips to Sprouts as a result. What we are seeing pretty clearly, even up and down into the core and existing customers, is that last item in the basket. As the macro changes, as fuel prices go up, as the consumer is challenged, it's what we saw pretty clearly in 2022 and 2023 when inflation was a big storyline and what we've started to see a little bit again late last year, early this year, is a little bit of pressure on units per basket. For us, that tends to be a produce item because that's a big part of our basket and a lot of units in our 10-unit basket. The customer starts thinking about whether they can really get through three or four units worth of fresh produce or whether they're gonna have to throw it away. They start thinking about their household shrink and whether they should buy that last unit. We typically see our customer manage around the end of the basket. We don't see a lot of trade down or trade out around the attributes. They continue to buy the attributes, continue to come to the store to look for their dietary needs. It's really that last item in the basket that you can tell they're managing a little bit. Okay, that's helpful. I remember last summer you explained to me that you guys have a differentiation score that you track, which I thought was very interesting, and something maybe we could just touch on. What is the methodology that goes into kind of tracking that and creating that? What are you seeing? Are you seeing conventional kind of react any differently? Is, you know, they're kind of searching for growth in this backdrop? Or is that pretty steady and there's no change? I feel like that's a big investor question, just kind of what's happening. Clearly, people are getting more interested in the space that we are in, this health and wellness space, and there's clearly a lot of really interesting entrepreneurs. America is a great place for having entrepreneurial spirit, bringing products and new products to the, to the fore, and that's clearly having a lot of dialogue, not just with us across the board. We use SPINS. We've got a percentage on SPINS that shows if something's being sold somewhere else. What we do is we pick products. Our foraging team pick products for the Innovation Center that haven't been sold anywhere else in the country. If you go into our store now, there's something called a "Forager Finds" table, which has got 20 or 30 items, which rotates every month or so. Those products are not being sold anywhere else. They're totally unique to our business. We've been finding that that has become more and more productive as every quarter goes by, as our customers get more excited about it. Our customers are very discerning. When you look at customers in our stores, they pick products up and read the labels and read the ingredients more so than you would see in a traditional grocery store where people are kind of pretty mechanical about how they buy and what they buy. We've got certainly those customers who are interested in it. Certainly we had 65,000 applications for products to sell in our store, so picking 7,500 out of 65,000 has been one of the challenges. Our challenge isn't can we get enough? Our challenge is how do we pick the right ones. That, the methodology, Kelly, to your question, is how do we ascertain that these products? Yeah aren't being sold anywhere else? We've been pretty consistent about working that one through. The fact that we're doing so many products, 7,500, gives us the right and, I think, the credibility with the small vendors to say, "This is where I should start my product journey." If I'm going to move from DTC or my idea and I want to get into a store, we're certainly feeling that Sprouts is being seen as a place where it would be a good place to start, and we've seen products, when you think of what happened to Olipop, which started with us and then ends up everywhere. A lot of our products migrate through the channels. They go into the conventional, then they go into mass, and it's something that we're positioning ourselves as the place to launch innovative, different products. We'll be as good as we are at that, and it'll be a very big determinant in our success going forward, being really good. The one thing I do know is that whatever else, whoever else is doing, they're not gonna launch 7,500 'cause it's really difficult to launch. It creates a load of challenges operationally. You know, we've got people that have worked in other places like myself. The idea of launching 7,500 and exiting 7,500 creates so many problems for your planograms, your replenishment, your back rooms re- replenishment from the back to the front of the store. Those challenges make us a little inefficient, but they give us that differentiation, and that inefficiency's something that people are reluctant despite the point that you're making that other people are looking at the opportunity there. We've got the way of understanding that nobody else is selling it. We're trying to position ourselves as the place to come if you've got innovative, different products, come and talk to us ’cause we'll be the best place to launch it. As we evolve, develop this, that muscle, that's gonna be an important part of our business. The grocery industry is changing fast, and the big, old, monolithic CPG companies, if I can say that politely, have got themselves in a place where they're having to move fast, and they're finding it difficult to do that, and we certainly see ourselves as a pioneer in that movement. Couple questions on that. 65,000 new products are trying to get in your stores. Yeah. You getting about 7,500, what are those other brands doing? Are they, you know, going to third-party marketplaces and launching on that, and is that, you know, become a different area where your customer can find kind of even those super niche brands, or is that not really a competitive Do you see that as a competitive dynamic? I think they will. They'll clearly try and find a way into the marketplace. Right marketplaces. The challenge when you've got products that people don't know about. Yeah They don't know about it's hard to go if you don't, you don't know what you don't know. The opportunity we've got is that when we launch it in our products, people can get access and try it. If you just go on a marketplace, you gotta do pretty hard work to get people to understand it, and that's, sorry, again, when you look at marketplaces that are a distribution solution rather than assortment or a curation solution. That's kind of where we're at in the journey. We'd like to be that curator of it. We'll learn a little bit from DTC. If some of those 65,000 products that we're not or 58,000 products that we don't take, if some of them end up on DTC and start selling, we'll probably be thinking maybe we should have that in our business so we can watch that. Increasingly, tools to understand that, AI tools to help us understand the pace at which things are changing online, linking to the trends, the foraging team are working pretty hard at that, thinking how best to navigate our way through those challenges. I guess on the other side, so you mentioned, so if you're gonna add 7,500 new items, you've gotta take 7,500 out. How challenging is that? You have presumably customers that are, like those products, maybe they're not the most popular, but you've got to pull them out, and then you have a customer that comes back and says, "This brand here that I was just getting- Exactly you know, accustomed to, it's not here anymore." How hard is that to manage? It's kind of a great question to ask someone that's been a grocer for as long as I have. Yeah It's the big kind of dilemma that you have in changing an assortment for any grocer. You take it out, somebody's gonna be upset. The reality for our customer and why our customers are so different, they kind of accept, whereas they wouldn't accept it at many places, they kind of accept that if they've taken something out, they've brought something in, and that something in will replace what I would have. They're comfortable in navigating their way through. Oh, they've brought new things in. That's something very unique about our cus-. We always talk one of our values is love and being different. Our customer base is different, and it's in that limited space. Increasingly as we've done this, as I said earlier, these foraging tables that we've got just continue to do better and better, and the migration, it's interesting, the migration from the foraging table, only 30% of them make it onto the main. 70% fail. That opportunity of customers seeing things, trying things, and then now something new comes in seems to be accepted by our customers. Yeah. On the financial side of it, Kelly, it's embedded in our business, right? It's been the way we've always operated. We can just make it better by getting more efficient in the way we manage the in and out of SKUs, the way we manage inventory, and some of the conversation we've had over the last couple years around shrink reductions. Yeah markdown improvements, you know, that inventory management conversation we've been having has been in, you know, that's been one of the pieces, and it's one of the reasons we still feel like we have room to go and room to get better as we continue to improve the end-to-end supply chain, the relationship with the suppliers, the tools and the analytics and the process that we go about moving those 7,000 products through. That's where our upside is, 'cause it's inherently embedded, and it creates a challenge for someone else trying to figure out how to get into it. Right 'cause it's an investment for them. For us, it's an opportunity from a financial perspective. Does this cycle of products in and out, does that happen any, you know, to a greater degree at any time in the year, or is it just kind of always happening? Probably just seasonally. Yeah. Like, some of that is the in and out natural-. Right seasonal programming we run. Yeah. Maybe the holiday timeframe would be certainly a heavier time of year. Around that, though, we've got mechanisms, be it the Innovation Center, which turns over on a regular cadence, our category release program, which is on an annual cadence, and then the teams have also done a nice job developing speed-to-shelf processes where if something really great is out there, you don't have to wait for your next category release. You just cut it in and bring in a smaller piece of the set. The category managers have multiple options for how to bring that innovation in. you know, we try to be pretty nimble in how we think about it, you know, for obvious reasons when there's so many options. Right So many SKUs that we're moving through. The private brand team have done a really nice job around seasonal events to try and get ahead of the seasonal event, holiday events. We've done a summer sweet and heat event across a lot of categories that are under the Sprouts Brand. We've done lemon events which try to straddle across different categories linked to seasons, that's been quite in and out process. around some private brand work as well. I'm glad you mentioned the private brands because, so your private brand penetration has continued to go up, but you started talking about this affordability kind of dynamic in the past couple quarters, and you would kind of think the private label really is a solution to that. How do we think about private label's role in kind of addressing the affordability dynamics that you want to address versus anything else that you're doing on that front in terms of tests? Is it mostly a private label thing, or is it a broader- It's much broader than the private label thing. Just specifically to the private label, Kelly, our the way we think about private brand is very different to how you would traditionally take a branded product, replace it- Yeah sell it much cheaper, and try and match the quality. We're trying to differentiate ourselves. All of our private brand growth, which has gone from 16%-26% without any we don't start off by saying, "Let's get a higher percentage of private brand." Our margins on private brand are in line with the category, so it's not a margin enhancing. What we're trying to do is reinforce those opportunities in the marketplace around attributes, so a lot of strength in gluten-free, in organic, in those kind of initiatives. That, and that's part of bringing people value in terms of giving them attribute-based products at the right price. The broader affordability initiatives are around our customers our customers tend to say they really like us. The feedback we've had from a lot of customers is, "Look, can you just help us a little bit in the current scenario where we're at with gas pricing and the pressure on healthcare costs and the pressure on rent costs?" That broader affordability challenge that everybody's facing, our customers are saying, "We want to continue to eat healthy. We want to continue to access your products. Can you help us make it a little bit more affordable?" We've looked at some of those items that are prevalent in our basket, and our basket's different to a traditional grocery basket, and looked at those items, whether it be organic sour, sourdough bread or whether it be organic coffee, whether it be frozen organic fruit. Those items that are prevalent in our basket, we've looked at doing some specific tests on those kind of products to see what kind of elasticity we can get from that. We're not looking at other people's prices. We're looking at our own prices and saying, "How can we help our customer a little bit more in this affordability journey?" How that's going to play out over the next few months, who knows. The reality for us is we've got to take care of trying to be as effective as we are at passing affordability. Initiatives going on, that broader initiative's been important. Going back to what Curtis was talking about on loyalty and personalization, it does give us an opportunity to pick out how we can support particular issues for particular customers, and we're doing some tests on that as well. Yeah, it'll reshape how we think about promotions, obviously. Yeah The loyalty personalization. Right. One place private label can play a role, the other piece that we're thinking about from an affordability perspective is the assortment itself. When we talk about wellness bowls, which we've touched on in the last couple calls, phenomenal ingredients, NAE chicken, grass-fed beef, really good flavors, unique flavors. We have a chef in-house that's part of our foraging team that develops these recipes. We've got that bowl priced under $10. Mealtime solution, it's good healthy portion, and it's been great. We've seen it, when we get it right, healthy attributes, great price point, like our, you know, targeted customer and what they're looking for, it flies off the shelves. That we would consider kind of Sprouts Brand too, and some of the. Right organic offerings we have. I mean, those are places where it can absolutely play a role, in developing the type of products that our customer responds to and also show great value. You know, You know, we've already got the $5 sushi, the $5 sandwiches. We just launched some yogurt parfaits, which are right on trend, again with some really good ingredients that are doing well. Those are the places that when we get it right, the customer responds. We're looking to do more of that as we look ahead and we think about how we build out that private label roadmap, where we can find more of those types of solutions. The deli team have done a really nice job within the context of a marketplace where potentially with gas pricing and people are more likely to eat at home than eat out of home. Is that a positive opportunity for us? Certainly the alignment that Nick's been working on around the marketing, the operations, and the merchandising team to bring to the market the kind of things that Curtis was talking about. We'll do more of that as we double down on our deli. That requires some investment as well in product, but also investment in people and having the right hours in place to produce the right products at the right time. Of course. You've had a lot of success in deli. I've seen the family meals too. I just saw an ad for that, looks really interesting. In light of all that, you've had a lot of progress on shrink. You touched on that a little bit, Curtis. You've kind of suggested there's still more upside on the shrink front. Help me understand kind of where are you? Yeah Can you share a benchmark or anything? It's kind of amazing that there's still more opportunity on shrink, I guess. Well, I think, yeah, the lion's share, you know, we've gotten big gains over the last four or five years. I don't know that we've got another kind of step change that way left to go. I see my CEO nodding his disapproval there. He'll have a higher aspiration. I do think, you know, there is, again, the inventory complexity, the supply chain complexity. Yeah The in and out of the SKU base, I mean, those are still opportunities for us. There's an inherent, you know, cost to the business, shrink in the business from those things, and we still have room to get better there. That's where our kind of belief comes from. Is it gonna be 50s and 100 from a basis point perspective? No. I think is there another 10 every year that we could go get in that space? Certainly that's something we think we can do and, you know, our head of operations believes it as well. You know, we're putting technology and process and data investments into place this year to kind of continue to take that next step in the journey and continue to figure that out. I think the way we order, I mean, right up and down the line, we've made step changes. Yeah. We're by no means, you know, at Walmart levels of productivity as it relates to how we move product through the ecosystem. There's just still room to grow and mature as a company, and that's kinda where that kind of statement comes from about continued opportunity. Okay. I should have mentioned too, there is an app if you wanna submit questions. I can try to loop it in. I have like a million, so we'll just keep going. If you wanna submit, go ahead. I guess, you know, let's switch maybe to real estate. You've really been ramping up the square footage growth over the years. We should be at 40 stores this year. That's a lot of stores. How's the organization handling, you know, this ramp? Can you just talk about the quality of the locations that you feel like you're getting- Yeah which is obviously gonna be important as we move through the next couple of years. Yeah. Well, you know, tons of white space, right? As we think about where we're going, the last five years, you know, Florida, the Mid-Atlantic, kinda East Coast has been our newer markets that we've gone into. As we look ahead, those markets are performing well. You know, we kinda consider them graduated at this point, into a more established market. We look ahead to the Midwest of, you know, Chicago as the center point, the greater New York area, where we've just opened in Long Island recently, and then ultimately up into Boston and New England to kinda complete the Northeast. You know, quality of locations, I mean, it's complete blank slate, right? We get to go in and choose the absolute best of the best. You know, we use our real estate process, where it's, you know, analytically driven at the start, where we have pins in the map that's at cross street level, not just three-mile ring level. That's been a change that's been really helpful for dialing in. You know, the further our teams get away from that cross street, the lower the sales projection they get, which makes it hard for our directors of real estate to pencil a pro forma. So they're incentivized to get tight to that, you know, optimal location that we've kinda determined through the math of it. Then we've got our operators engaged in that process too. If we say we are gonna do 300 a week at a certain location, you know, the operator's there going, "Well, the site's down in a hole, it's behind a tree, you can't turn right into the site. Like, I don't. You can't do 300 in this location." On they go to the next one, right? There's a real healthy tension in the process that kind of eliminates, you know, the quality concern around it. You've seen where we've tried to get, you know, we've been chasing 10% unit growth since the beginning of the strategy. As we have, as we always will, we'll choose quality over quantity. We've definitely yet to sign off a lousy site in real estate committee, one that we said, "This isn't gonna go well," and we've signed it off anyways. Yeah. We continue to reject those. I think the quality's gonna continue to be good, and what we've seen the last few years is really good results, better than we anticipated. That's continued here into 2026 with the early openings so far. The 2024 and 2025 intros continue to comp well. They're positive comps even though the broader business is struggling, and it's a piece that gives us, you know, confidence as we look ahead and talk about the return to the algorithm from a comp perspective. You know, that's a proof point for sure that we look at and go, well, the proposition's still resonating. When we open a new community, we get a great response. We're building a lot of confidence around the new store program, and excited to get to, hopefully get to 10% next year as we start thinking about 2027. The thing that gives us a lot of confidence is that the format seems to be in really well. The format was very intentional. One of the strengths of what the guys that created Sprouts was having low profile stores. that you could see produce at the back of the store. Very unique grocery store in terms of how it comes together. Low profile. You can see the whole store when you walk into the store, and you can see produce as the main feature at the back of the store. That at 23,000 sq ft, we were drifting to bigger stores at 32,000. Yeah square feet with a lot of investment. The cost of building a store at 23,000 is a lot less than 32. The cost of running the store is a lot less than 32. The cost of rent and all. The economics that we envisaged here was, let's sell the same as we would in a 32,000 square foot store, in a 23,000 square foot store. That's giving us a lot of confidence as this plays out in terms of the returns that Curtis would talk about, but also in terms of the way the customer's reacting to it. They like the format, that's as we take it to new markets, we were in New York at Centereach, at the store we opened in Long Island, it surprises. They think they're going into a grocery store. When they go in they go, "Well, this is different. You can feel the kind of energy when people see something different and something new. 'Cause grocery stores are pretty homogeneous across the country, that differentiation is something that gives us a lot of excitement in terms of what it can do for us going forward. We think there's 1,200 places we could have one within the context of what Curtis was talking about. The idea of bringing a new format to a new market, it's actually, fires us all up. It's quite exciting to be part of seeing all these stores getting built all over the place and going into new markets and seeing people kind of excited by the idea of something new. Well, same for our team members too. Yeah. Yeah. The opportunity ahead, you know? Right. You know you can come into Sprouts and really grow a career and grow it rapidly. We're promoting, you know, north of 20% of our team members the last several years, just on the back of all the store growth, and it's not, you know Yeah, you've also got to go backwards and staff the replacements, 'cause we're trying to move Sprouties from stores that have existed into, especially these new markets, it's gonna be really important that we open with folks that have been in a Sprouts and other locations that understand our customer, understand our assortment, understand how we operate differently, so that they can provide that experience to the target customer in those new markets and Dustin and Timmi, our head of stores and our head of HR, have been working, you know, again, years out, thinking about Chicago and how are we gonna staff there? How are we preparing the next level of leaders? We've invested in training and development, and our talent engine, as we call it, to make sure that we're ready when we get there. We're already talking about, you know, who's willing to move to Chicago and help us open those stores when we get there. The teams are fired up, 'cause they see the opportunity, and they're excited about all the things that Jack just mentioned, and the customer response and being a part of what we're doing. It's a fun place to be. Lots to do, lots to work on, lots to get better at, but it's certainly a lot of fun. We have one minute left. Two questions that I wanted to fit in. Rapid fire. which I'm running out of time. Right. Let's go. Uh, was- Bonus round. Yeah, I wanted to touch on e-commerce, because the growth has been huge there. You know, I guess what are you able to kind of loop in your data with that and really learn more about what's driving that? Is that a new customer? Is that penetration? Are you getting smarter with kind of your data to integrate that and go, "Here's what we're really growing in e-commerce," and what the potential is from here? We're getting much better at linking the data. Yeah with the Instacart, DoorDash, and Uber Eats solution, which is what we use. Our e-com business is now 16% of our sales. It went up to that level in COVID. It's kind of stayed the same, which is unusual. Yeah. There are a lot of grocers that went back down again. We believe with, and we know that our customers are omni-channel customers. Most of the customers that are operating in that e-com space are also in our stores, so they kind of understand both of it. We like e-com 'cause the basket's bigger, so the cash profit, the margin's down, or rate's a little bit lower, but the cash profit's much higher, and we've got very close relationships with our partners to make sure that we're getting better at that data question that you're asking. It's an access point for our customer. They don't, if they can't get to the store, because maybe they're 25, 30 minutes away, and a 50, 60-minute round trip is too much for a handful of their items, they've got an option now. When we open up a trade area, 10 to 15 minutes brick and mortar, but 30 minutes from an e-com perspective, and we know that helps with frequency, engagement, and access for the target customer. Awesome. There was one more question. Have we not got time? I was gonna. Have we run out of time? We're out of time. I was going to ask, just how Based on what you're seeing in the data, comparisons change dramatically in the back half. How confident are you in the back half outlook? Yeah as it stands today? I'll let you build on that. The numbers are pretty clear in terms of math thing. We're not sitting here waiting for the lapping to come through. The lapping will come through just with the math. If you're looking, unless something macro happens, which is clearly an opportunity for us, we're doubling down on what we can do. Curtis is creating the space for us to, in terms of not be compromising our margin, and do the right things on affordability, the right things on deli, the right things in terms of loyalty and personalization, the right things on data. The right things on our marketing investment around space, around media work. There's a lot of really good things happening that would be on top of just the math number. I think what we talked about, we're really confident in our business, partly because the new stores have been so successful. Yeah we've had real success in our new stores, and that gives us a lot of confidence. Okay. Perfect. We have to wrap it up there. Thank you so much. This has been great. Thank you very much.