Oct 28, 2026 earnings call — Pricing investments to drive traffic
Company cut full-year comps to approximately negative 1.7% and set Q4 comps at negative 2% to negative 4%, with Q4 EPS $0.47–$0.51.
Revenue $2.3B (est $2.3B) · EPS $1.21 (est $1.23)
Key quotes
"This means making more meaningful price investments across a broader range of products."
"E-commerce was another bright spot in the quarter, with sales growing 12% and representing more than 16% of total sales."
"Technology will also be another critical enabler. Modernizing our systems and selectively applying AI will help us connect data across the business, move faster, and scale more efficiently."
Analyst Q&A 12
Why big margin cuts now
Q (Seth Sigman · Barclays): Why did you cut gross margin guidance so aggressively for Q4? What tests or case studies give you confidence to act now, and how will you fund the investments?
A: Management said affordability is the main issue and customers have told them current actions were not enough. They believe early initiatives showed promise but were not broad or deep enough, so they will act now to bring customers back. They also noted shrink and fuel are additional near-term challenges.
"As we look at what's happening in business right now, as I mentioned in the call, we are focused right now on getting our customer back in our stores and driving sales and transactions." — Nick Konat (CEO)
Store growth and traffic tests
Q (Rupesh Parikh · Oppenheimer): Will you slow store openings to protect profitability? Are you seeing any early traffic improvements from current initiatives?
A: Management said new stores remain high-return and will be part of the plan, but they must balance new openings with other business needs. They see some positive results from pricing and product affordability tests, but the gains were not broad or deep enough yet, so they will continue investing to grow traffic.
"What we've seen is some of our efforts that we've made across either pricing affordability investments or affordability investments in the product side have seen some fruit." — Nick Konat (CEO)
Breadth vs depth of pricing moves
Q (John Heinbockel · Guggenheim): Which matters more: being broader or deeper with price cuts? Are core or engaged customers weakening too?
A: Management said breadth means affordable entry points, trust-building everyday items, and key items that drive choice, while depth will vary by market. They said the less engaged customer drove most of the traffic decline, but they are beginning to see some softening even among core customers, which prompted action.
"The less engaged customer has been the biggest driver of our traffic decline and footsteps into the store." — Nick Konat (CEO)
Timing of price tests and January plan
Q (Thomas Palmer · JPMorgan): Is Q4 the margin low point and will you launch bigger changes in January? What are you testing now vs January?
A: Management said Q4 is typically the lowest quarter but this Q4 has unique challenges; they do not expect it to set the shape of Q1. They are testing pricing elements now to learn and preparing to launch a rebuilt pricing strategy in January while also taking immediate actions for holiday essentials.
"we are rebuilding a pricing strategy, and we are putting some of those elements into market now, to help us kind of learn to be prepared for January overall." — Nick Konat (CEO)
Which income groups are leaving
Q (Mark Carden · UBS): Is the traffic decline concentrated in lower-income shoppers or broader across incomes? How are competitors affecting customer shifts?
A: Management said leakage is largest among the less engaged customers and somewhat larger with slightly lower income, but they are also seeing some impact on core customers. They see competition accelerating across channels and customers migrating to value channels, and they plan to invest in affordability while focusing on their store innovation and experience.
"What we are seeing, what has not changed at all is that the less engaged customer is still where we are seeing the biggest leakage." — Nick Konat (CEO)
How much of Q4 margin hit is price
Q (Kelly Bania · BMO): How much of the Q4 gross margin hit is price versus shrink or fuel? Can you maintain EBIT above 5% and where might gross margins settle?
A: Management said the lion's share of the P&L impact will come through gross margin as they invest in affordability, with some SG&A and capital for technology and supply chain. They have room now to make these investments and will watch customer response to pace timing and scale, using self-help levers over time as optional offsets.
"So the investments we will make here between the holiday activity and the January pricing, then we will see how the customer responds." — Curtis Valentine (CFO)
Test results and assortment scope
Q (Krisztina Katai · Deutsche Bank): Did test stores show higher transactions and incremental units? How much of the assortment must you change to lift trips?
A: Management said tests moved items and categories but were not broad enough to increase overall store traffic or clearly tell customers about the investments. They will now invest across a much more substantial part of the assortment focused on entry points, trust builders, and key items for target customers, which informed the margin guidance.
"we weren't broad enough in the number of items that we needed to focus on, and it wasn't broad enough to make an impact on the overall customer traffic to store." — Nick Konat (CEO)
Marketing and cyclospora impact
Q (Robert Ohmes · BofA): How will marketing communicate pricing changes to drive traffic? How big is the cyclospora headwind to comps?
A: Management said the January affordability investment and pricing work will be part of their Q1 go-to-market and marketing story, and they plan to leverage customer data to unlock retail media and acquisition. On cyclospora, they quantified a 60 bps impact in the quarter that peaked in August/early September and said it is improving but remains a slight headwind quarter to date.
"It's still a slight headwind as we sit here today, quarter to date for the fourth quarter, but we are seeing it start to improve." — Curtis Valentine (CFO)
Loyalty program and department impacts
Q (Scott Marks · Jefferies): Where is the loyalty program now and how are you using its data? Which store departments are most challenged by affordability?
A: Management said the loyalty program is about one year old; they have useful data and capabilities but have only begun to tap them and will use the data more to understand need states and drive merchandising, media, and personalization. They said innovation wins across categories, while produce and meat are specific areas with opportunity to improve affordability and access.
"We are now at a place we've got a good set of data and talent capabilities to then start to bring that into the organization in a bigger way." — Nick Konat (CEO)
E-commerce growth and new store learnings
Q (Greg Melich · Evercore): How is e-commerce growing and what lessons from new stores can be applied to older stores?
A: Management said e-commerce is a growth driver, now 16% of sales, with larger baskets and low penetration among customers, so they see opportunity to grow omni-channel. They are testing ways to refresh legacy stores to bring merchandise, discovery, and freshness highlights from new stores into the core fleet and using customer data to target weaker pockets.
"While it's 16% of our sales, it's still a relatively low penetration on the number of our customers." — Nick Konat (CEO)
Agentic shopping and data quality
Q (Samuel Barton · Melius): Is agentic shopping reducing human traffic and harming the quality of your data for retail media?
A: Management said they have reviewed the trend and have not seen any negative impact from agentic shopping; instead they see ways to use it to help customers find need-state solutions. They also said getting data in the right place is critical for future AI uses and will be a technology investment area.
"We have not seen anything to indicate that agentic shopping is having a negative impact on us." — Nick Konat (CEO)
Produce pricing and execution
Q (Scott Mushkin · R5 Capital): Will competitive pressure in produce persist and have you accounted for it? How will you fix execution inconsistencies in produce?
A: Management said produce remains a business strength and core to the value proposition; competition and affordability pressure exist but teams are working to balance conventional and organic and source costs to pass savings to customers. They expect higher unit velocity from better pricing will improve freshness and the customer experience, and they are simplifying assortment and execution to maintain leadership in produce.
"I look at produce, again, as a business of strength for us." — Nick Konat (CEO)