Grocery Outlet Holding Corp.

Greetings and welcome to Grocery First Quarter 2021 Earnings Results Conference Call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Joseph Pellin, Vice President of Investor Relations. Thank you. You may begin.

Thank you. Good afternoon and thank you for joining us on today's call to discuss Grocery Outlet's first quarter 2021 financial results. Joining me on today's call are Grocery Outlet's Chief Executive Officer, Eric Lindberg, President, RJ Sheedy, and Chief Financial Officer, Charles Brocker. Following our prepared remarks, we will open the call for questions. This conference call is being webcast live and a recording will be available via telephone playback for approximately two weeks. It will also be archived in the Investors section of our website. Participants on this call will make forward-looking statements, including our outlook for fiscal 2021 and future performance. These forward-looking statements are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. A description of these factors can be found in this afternoon's press release, as well as in our periodic reports we file with the SEC, all of which may be found on our website at investors.groceryallet.com or on sec.gov. We undertake no obligation to revise or update any forward-looking statements or information. These statements are estimates only and not a guarantee of future performance. During our call, we will also reference certain non-GAAP financial information, including adjusted items. Reconciliations of GAAP to non-GAAP measures, as well as the description, limitations, and rationale for using each measure, may be found in the supplemental financial tables included in this afternoon's press release and our SEC filings in the Investors tab of our website. With that, I'll turn it over to Eric.

Thanks, Joe. Good afternoon and thank you for joining us for our discussion of our first quarter results. We are pleased to have delivered on our expectations in the first quarter as we've begun to lap the onset of the pandemic last year. Our ability to consistently execute this high level would not have been possible without the hard work and dedication of our corporate and IO teams. I want to thank them once again for their commitment to our customers, local communities, and to our mission of touching lives for the better. Their combined efforts drove continued strong first quarter financial performance. Comp sales decreased 8.2% following a 17.4% increase in the same period last year. New stores continued to perform in line with their expectations, contribute meaningfully to total sales volume, which was down a modest 1%. Profitability remains strong with adjusted EBITDA margin above 2019 levels. We attribute our continued strong performance to the steadfast execution of our differentiated business model. Our value proposition is as strong as ever, and our ability to deliver extreme savings, a treasure hunt experience, and a locally curated assortment in a friendly environment continues to resonate with customers. This was reaffirmed by our recent survey work, which shows that our customers continue to rate value as the most important criteria in determining where to shop. Our customers remain extremely satisfied with the value Grocery Outlet consistently provides. We are confident in our ability to continue delivering industry-leading value as we have throughout our 75-year history. Turning to a few operational highlights from our first quarter, our purchasing team does an exceptional job of working with suppliers to ensure we are the preferred partner for opportunistic product. Flexibility of our buying model and our buyers' expertise enables us to consistently provide the balanced assortment of opportunistic and everyday products that creates the wow shopping experience. At store level, our IOs remain committed to helping their respective communities, their customers, and each other. They consistently keep customers up to date on the latest deals on brand name products and maintain a clean and safe shopping environment. Many of our corporate team members, myself included, have been fortunate this year to spend much more time in the stores of the IOs. These visits are always a positive experience as we get to see firsthand the true commitment of our operators. While uncertainty and challenges remain, the morale of our IOs is very high and their outlook is positive. On the real estate front, we continue to balance our openings between mature and developing markets to build our brand awareness and reach new customers. During the first quarter, we opened 10 new stores, closing one, bringing our quarter-end store count to 389. So far in the second quarter, we've opened six additional locations and continue to see new stores perform well across geographies. Within the next few months, we will be opening our 400th store in Haley, Idaho, a town just south of the Sun Valley Ski Resort and east of Boise. In addition to creating local job opportunities, we look forward to becoming an integral part in the Haley community. Consistent with our 10% annual target, we remain on track to open between 36 and 38 stores in 2021. Three to five of these stores will be in the east, including the two that we've opened already year to date. As we continue to open stores, we also maintain a disciplined approach to reinvesting back into our existing store base. For these investments, we continually evaluate potential layout and fixturing updates to enhance the customer experience and support merchandising. Some recent tests include moving our produce section to the front of store and moving Nosh, one of our highest performing categories, into the first aisle. In addition, we continue to make in-store fixture investments to support purchasing and basket growth, including produce scales, new freestanding refrigerated fixtures, and new produce tables that will enable IOs to better highlight our fresh offering. Ultimately, we want our stores to provide the optimal experience for customers, And this evolution is just one of the many ways we look to to continuously enhance the customer shopping environment. Before turning the call over to RJ, I would like to take a moment to discuss the positive impact we have with respect to the environmental, social, and governance considerations outlined in our recent proxy filing. Our ESG focus reflects our commitment to our mission of touching lives for the better and to best serve the interests of all of our stakeholders. Having a positive impact on all of those we touch has been part of our history and culture at Grocery Outlet for 75 years and continues to be a guiding principle as we grow our business. Our business model drives a number of positive environmental and social outcomes, from reducing food waste through our opportunistic purchasing, to providing healthy, affordable nutrition to all members of our communities, to the opportunity for the IOs to achieve financial freedom while serving their local communities. We're proud of the positive influence we've had throughout our long history, and we continue to focus on building our business to expand our impact in the future. Of course, it all starts with our talented team, which includes company employees as well as independent operators. They are the heart of who we are and what we do. We remain committed to their health, safety, and wellness, and believe it is vitally important that we create and foster a culture of inclusion and belonging that makes each of our employees and IOs feel engaged, empowered, and safe. In conclusion, we believe that our commitment to our business model, philosophy of reinvestment and growth, and strong execution are behind the consistency of our financial performance. While we continue to navigate through COVID, we are encouraged by the health of our business, the enduring strength of our value proposition, the dedication of our independent operators and employees. We are excited by the long runway for growth as we expand our presence and remain committed to making the right long-term investments as we move forward. With that, I will turn the call over to RJ.