Grocery Outlet Holding Corp. (NASDAQ:GO) Q3 2023 Earnings Call Transcript

Charles Bracher: Great. Oliver, it’s Charles. Let me tackle the first part of your question, then I will kick it over to RJ. So with respect to comp composition, we are really pleased with the health of the comp that we are driving, as you can see, continues to come from strong transaction growth. Customers clearly responded to the values and treasure hunt and love that we are seeing both increased visits from existing and new customers with high satisfaction. As it relates to the comp headwind as a result of the systems transition, that really did impact ticket. So ring, as you saw, was down a little less than 2% for the quarter, really coming from lower units and that’s both as a result of higher trip frequency. But, yes, lighter inventory levels and variety is a result of the system transition.

AUR is still positive, but moderating very much as we expected, as we are lapping higher year-over-year inflation levels. And so, yeah, looking forward, from our perspective, it really is the same basket dynamics that we expect to continue. Just recall, for us, the impact of inflation, of deflation on the way down, it’s more muted because of our buying model. And then that AUR units in the basket dynamic isn’t necessarily directly comparable due to the changing nature of our assortment.

RJ Sheedy: And on the — your question around the systems upgrades, Oliver, as I mentioned before, we have addressed the bigger issues that we faced earlier on around inventory issue — around inventory visibility issues, as well as product flow challenges, both into the warehouse and also from the warehouse to the stores. So that progress feels really good. And as a result, we have returned to more, I will call them, more normalized store ordering practices, and then together with that, healthier warehouse and store inventory levels at a really important time. So feeling good about the progress that we have made in support of the holiday shopping period that we are in the middle of right now. We are still adapting to other parts of the new systems.

There are a lot of new processes, new functionality that comes with these new systems and then together with that, working our way back to what we would consider to be optimized inventory levels along with how we manage the business and total margin and operations included. Given the progress that we have made and the daily progress that we continue to make, we do feel confident in being able to resolve these outstanding issues to the point where the impact is then largely behind us by the end of the year. And then to your third question around new store performance, feeling good there, continue to see really nice performance from new stores across all geographies. And then I think you were also asking about acquisitions and supply chain footprint.

As we continue to grow our stores, whether it’s through organic growth or opportunistic list or perhaps acquisitions, of course, infrastructure is a really important part of supporting that growth and we have always made those investments ahead of the store count that follows or that is part of our longer term growth plan. So it wouldn’t be any different as we think about those opportunities and back to my comments around wanting to center around this 10% annual growth number because of infrastructure investments that we want to make sure that we are growing at a healthy rate.

Oliver Chen: Thank you. Best regards.

RJ Sheedy: Thanks, Oliver.

Charles Bracher: Thanks.

Operator: [Operator Instructions] Our next question comes from Robby Ohmes with Bank of America. Please proceed.

Robby Ohmes: Oh! Hey. Thanks for taking my question. Is the system — the technology platform disruptions, does that change the time line for e-commerce initiatives like launching your app, I think, the plan was for 2024?