Simeon Gutman : Hi, everyone. Hey, Todd, I wanted to ask you something that kind of puts together some of the comments you made as well as what Kelly said. I wanted to ask what’s gone well since you joined, what’s sort of taking longer. You mentioned some things need a little more attention. And is the construct of getting back to seven-plus margins — I think we talked about it theoretically by ’25. Is that something that’s still achievable? And listening to the finer points and some of what Kelly spoke about, like promotions being a little bit higher, it seems like shrink is about where you thought it would be. I don’t know if you were trying to signal that it’s a little worse that you’re taking more action, but those type of puts and takes sort of what’s gone well, what’s not, and then something around the 7% in the future. Thanks.
Todd Vasos : Yeah, Simeon, thank you for the question. I’ll start and then pass it over to Kelly for that second piece. So I just covered a few of those what went well. But again, we feel good about those sales driving activities and customer satisfaction activities that we’ve taken in our Back to Basics work. I believe that if you look at outside of shrink, and I’ll get to that in a moment, here’s how I would characterize where we are in getting back to the basics. I think this is a fundamental way to think about it. When we started this journey in middle October of last year, I’d say, unfortunately, we were about our own 10-yard line if you think about a football analogy. I’d say that as we exited Q4 and now entering Q1, we’re just crossing the 35-yard line, our own 35-yard line.
I feel that we are on the right track to cross over the 50-yard line as we move through Q1 and into Q2 and start to really look at how we drive further into ’24 and into ’25 in and get into our own red zone, if you will. So that’s how I’m looking at this. So some things are manifesting themselves and happening in real time very quickly at the store and through our customers’ lens. Some will take a little longer. Now one of those things is shrink that’s going to take a little longer. As you know, we take physical inventories once a year in our stores. So anything we started to do as of October of last year will take a year to manifest itself within the financials and, by the way, a little longer in some instances as things take hold, some quicker on the shrink side, some take a little longer.
The great thing on the shrink side is that we know how to control this. We’ve done this before. Matter of fact, the individual that is in charge of operations now — store operations, Steve Decker, Steve ran our shrink program for years here at Dollar General years ago and got it down to some of the lowest levels that — historical lowest levels that we’ve seen in Dollar General pre-pandemic. We are squarely focused as we move through ’25 and into ’26 to get back to those pre-pandemic levels of shrink here at Dollar General. It’s just going to take us a little time. But I’d tell you, when you look at what were — the actions we’re taking and, I would say, decisive actions, especially around self-checkout, taking self-checkout, if you will, the ability of self-checkout out of 9,000 of our stores immediately and turning them to assisted-check stands is really going to benefit us.
We spent a little bit of money in Q4, and we looked at an AI solution. We brought a team in. The team was called Everseen, and it’s an AI solution that monitors thousands — hundreds of thousands of our self-checkout transactions. And we were able to see through AI, what has transpired over the course of many months of transaction data at self-checkout. And what we’re able to see was how much shrink — true shrink we’ve had, both purpose shrink, unfortunately, and inadvertent shrink by items not being scanned properly or thinking they scanned it and didn’t. Long story here to say, we’ve made decisions based on that AI activity to pull out in 9,000 stores and go to that assisted-check stand. That should immediately do a lot for us. Putting somebody at the front end of the store, we did in October immediate will help our shrink.
And then lastly, inventory control is going to help our shrink tremendously. I’m an own operator, going way back into the ’80s as a system manager, store manager, district manager, VP of Operations. And I would tell you that any time you have too much inventory in the store, you’ve got too much shrinking and damages. And damages, by the way, is just known shrink. And so more to come. I believe we’re getting our arms around everything and feel very confident about where we’re going. And Kelly?
Kelly Dilts: Yeah. No, I think Todd told you all the reasons that we really believe that we’re strengthening our foundation for long-term growth. And we really believe that this business is going to return to 10% to 10% plus EPS growth on an adjusted basis over the long-term. As we move past some of the significant headwinds that Todd just talked about and getting back to all the mitigating actions that we’re doing to combat those headwinds, we still have a lot of really good fundamentals in this business even with where we are, and they’re only going to get better. We’re seeing momentum and growing share. We’re growing traffic. We’re starting to see healthy comps again, all the while, we’ve been generating a lot of cash flow.
