Greetings, and welcome to the Dollar Tree Q2 2025 Earnings Call. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Bob LaFleur, Senior Vice President, Investor Relations. Bob, please go ahead.

Good morning, and thank you for joining us today to discuss Dollar Tree's Second Quarter fiscal 2025 results. With me today are Dollar Tree's CEO, Mike Creedon and CFO, Stewart Glendinning. Before we begin, I would like to remind everyone that some of the remarks that we will make today about the company's expectations, plans and future prospects are considered forward-looking statements under the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties, which could cause actual results to differ materially from those contemplated by our forward-looking statements. For information on the risks and uncertainties that could affect our actual results, please see the risk factors, business in Management's Discussion and Analysis of Financial Condition and Results of Operations section in our annual report on Form 10-K filed on March 26, 2025, our most recent press release in Form 8-K and other filings with the SEC. We caution against reliance on any forward-looking statements made today, and we disclaim any obligation to update any forward-looking statements, except as required by law. Also during this call, we will discuss certain non-GAAP financial measures. Reconciliations of these non-GAAP items to the most directly comparable GAAP financial measures are provided in today's earnings release available on the IR section of our website. These non-GAAP measures are not intended to be a substitute for GAAP results. Unless otherwise stated, we will refer to our financial results on a GAAP basis. Additionally, unless otherwise stated, all discussions today refer to our results from continuing operations and all comparisons discussed today for the second quarter of fiscal 2025 are against the same period a year ago. Please note that a supplemental slide deck outlining selected operating metrics is available on the IR section of our website. Following our prepared remarks, Mike and Stewart will take your questions. Given the number of callers who would like to participate in today's session, we ask that you limit yourself to one question. I'd now like to turn the call over to Mike.

Thanks, Bob. Good morning, everyone, and thank you for joining us today. With the closing of the Family Dollar sale, the second quarter represents an important milestone in the evolution of the Dollar Tree story. In addition to closing the sale, I'm proud to say we delivered another strong quarter with results exceeding the high end of our expectations and reflecting a high level of execution across the board. The timing of the impacts of tariffs and our mitigation activities played out differently than we originally anticipated, with some of the net positive benefits of our mitigation initiatives coming earlier in Q2 and the tariff impact shifting to later in the year. Having said that, we are pleased with our momentum and our team's ability to adapt to a rapidly changing landscape. The second quarter unfolded against a volatile backdrop for both the consumer and retail industry, as the economy continued to adjust to elevated tariffs, persistent cost pressures and a static labor market. In today's environment, customers are seeking value and convenience more than ever, and Dollar Tree is uniquely positioned to deliver both. Whether it's a mom stretching her grocery budget, a college student outfitting a dorm room or a higher income shopper attracted to an expanded assortment of everyday essentials. Our stores are increasingly the destination of choice. This context is important because our Q2 performance was not just about exceeding a set of earnings expectations. It was about gaining share, expanding our relevance to a broader base of customers and proving once again that Dollar Tree thrives when customers focus on value. So let's walk through the Q2 highlights. Net sales increased 12.3% to $4.6 billion, driven by a 6.5% comp sales growth, which is a solid result in a quarter without major traffic driving events…

Thanks, Mike, and good morning, everyone. Q2 comp sales increased 6.5% and adjusted EPS was $0.77. We recognize that this was substantially better than the outlook we provided last quarter, when we said we expected Q2 comp sales to be towards the higher end of our full year range of 3% to 5% and that adjusted EPS could be down by as much as half compared to the prior year. With respect to compound performance, our initial outlook took into account the relative lack of events and holidays in Q2. But as the quarter unfolded, we saw that the increasing relevance of our expanded assortment to a wider range of customers overpowered the lack of events and Q2 comps came in stronger than we expected. With respect to the EPS outperformance, our sales were higher than anticipated. Our pricing actions started earlier, the timing of how our mitigation efforts impacted COGS differed from our initial expectations, and we were able to leverage our payroll costs in SG&A. The COGS timing difference reflected tariff headwinds shifting from Q2 into Q3 and Q4 and the benefits of our mark on being higher than expected. While all of these factors will impact the cadence of our EPS in the back half of the year, on a full year basis, our outlook remains intact. With that, let's go through the details of our second quarter financial performance. For the quarter, net sales increased 12.3% to $4.6 billion. Comparable store sales increased 6.5%. Growth was balanced with increases of 3% in traffic and 3.4% in ticket. Meanwhile, the sales contribution from noncomp stores also exceeded our expectations based on strong results from new store openings and our $0.99 only conversions. Positive performance was broad-based across categories, with comp up 6.7% for consumables and 6.1% for…

Thanks, Stewart. Our second quarter results reinforce the unique position Dollar Tree holds in today's retail landscape. We delivered strong sales growth, margin outperformance and market share gains, all while navigating cost pressures in a dynamic consumer environment. With the Family Dollar divestiture complete, Dollar Tree is now a fully focused business. Every ounce of our leadership attention, capital investment and operating resources is now directed towards strengthening the core Dollar Tree brand. This sharper focus is already showing up in the pace of conversions, new openings, and faster decision-making on pricing, assortment and sourcing. Looking ahead, our strategic priorities remain clear: one, continue the rollout of our expanded assortment, which is driving higher traffic, ticket and discretionary penetration; two, manage costs with agility, use our 5 mitigation levers to protect margins while maintaining customer value; three, invest in the customer experience with compelling assortments, clean stores and well stocked shelves; and four, drive disciplined growth and returns, supported by a strong balance sheet, free cash flow and the proceeds from Family Dollar. We entered the back half of the year with strong momentum, healthy inventory, a clear strategy and the resources to execute. That gives me tremendous confidence in our ability to deliver for our customers, associates and shareholders, not just in the near term, but for the long run. Finally, as we mentioned last quarter, we'll be hosting an Investor Day in New York on October, 15 to share a refreshed long-term strategy and financial outlook for the stand-alone Dollar Tree business. This will be an important opportunity to show you how we intend to build on the momentum we've established and how we see the company evolving over time. Importantly, we will share more details about our updated strategic road map and financial framework. We look forward to showcasing the growth runway ahead, the earnings power of our expanded assortment and the operational improvements we are embedding across the business. And with that, we're ready to take your questions.

[Operator Instructions] Our first question is coming from Michael Lasser from UBS.

Guys, there's a perception out there that as you have more fully rolled out some of your tariff mitigation strategies, including raising price points across your assortment that the consumer has pushed back, your comps have slowed and the perception of relative value has decreased. And if this is the case, Dollar Tree's margins are going to be at risk over the long term as it will not have the levers to navigate through a higher cost environment. So why are those points wrong, especially in light of, what there's been a lot of moving pieces within your full year guidance suggesting that business does remain somewhat volatile?

Yes. Thanks, Michael. Michael, we're pleased with our customer response. If you look at mix on all levels of our customer, the traffic and ticket are balanced, our consumables and discretionary are balanced and across all income levels, Dollar Tree is resonating with our customer. You look at what we're adding last quarter. In Q1, 50% of the customers we added came from the higher $100,000 price point -- salary point. If you look this quarter, that was 2/3 of our customers. So we think we're resonating very well with the customer. And when you look at these comps, both 1-year and on a 2-year basis, these are incredibly strong comps that demonstrate the relevance that Dollar Tree holds. Our customers are walking in. And one of the things I love about small box is you get a feel for the whole store as soon as you walk in the door. They're walking in and they're seeing value. We still have 85% of our stores at $2 or less. Think about that. You walk in and you're finding value around every corner. We think our customer is really pleased with that.

Our next question is coming from Paul Lejuez from Citi.

Can you talk about the drivers of the higher ticket between AUR and UPT, maybe any more detail you gave about AUR and discretionary versus consumables? And just at a high level, just trying to understand what pricing actions were already taken in the second quarter versus what is still planned in the second half?

Yes, Paul. When we look at the drivers of it, first of all, that balance that I talked about between discretionary and consumables was really strong and then, of course, the balance in traffic and ticket. And even though we did take some price in Q2, units were still up. So that tells us that our customer is accepting, they're still finding value in our stores. And we look at their reaction and they'll continue to guide us. But as I mentioned in my prepared remarks, the unit performance was actually better than we expected. So those are the major drivers there in terms of the mix and what we've seen on units.

Next question is coming from Edward Kelly from Wells Fargo.

I wanted to follow up on guidance. Looking at your guidance for the back half of the year, it implies a fairly wide comp range of about 2% to 6%. And I was curious if you could, maybe talk a bit about why that range would be wide, given you have accelerating price you've mentioned lower-than-expected elasticity, which is obviously positive. I mean wouldn't a comp slowdown be a surprise given that? And then the second part of this is related to bottom line. And I was just curious if you could maybe quantify some of the new headwinds that sort of work their way in, whether it's incremental tariffs, liability claims or anything else?

So I think, looking at the back half of the year, there's a lot of volatility in the marketplace. We can't say how the consumer will react to various price increases that are taking place in general. So far, in the first half of the year, we've had a very strong performance. We expect a strong performance in the back part of the year. But we want to be certain that we take account of volatility that consumers are faced with. So I think that's really the expectation. The answer to your question about the variability in the comp range. In terms of the costs -- increased costs that we're facing on the general liability side, this is not a problem with having more claims. This is something we're seeing across all industry, the cost of settling claims is getting higher. And therefore, while we haven't seen any increase in the rate of claims, we are seeing those claims come in more costly. And just so you understand, this is not the question of sort of million dollar claims. Most of the claims we have are very, very small, but it's the percentage cost change between settlement last year and the settlements we're seeing now. When you -- to put that into context, if you looked at last year versus this year, in the second quarter of last year, we had a big charge to catch up some of our general liability reserves. In this year, we didn't have that kind of big charge. We are keeping track as we go of the change in the settlement cost. But if you look at a total year-over-year our general liability costs this year are expected to be in line with last year despite the bigger increase. So that's a sense of that. On the other side, we have seen a slightly increased costs in both shrink, which we called out last quarter. And in markdowns also, we haven't quantified either of those.

Your next question is coming from Simeon Gutman from Morgan Stanley.

This is Zach on for Simeon. I was wondering if you could speak to perhaps what a normalized EPS for the full year '25 would be in the way you see it? Because it does seem like there's some onetime items. There's some noise with corporate and TSA as well as some of the general liability and other tariff impact. So in any way you can to kind of address that and the way you see it, what a normalized level of EPS could be in for the year?

Yes. I mean I think just as you look at the year itself, there are a lot of moving parts. And therefore, are the tariffs that we're facing right now, are they normal or not. So the real question here is sort of what you're normalizing for. I think the question, behind the question is, okay, what's that flow through look like for 2026? And maybe it's easier for me to answer your question using that lens. When you look at the factors that are driving this year, we had, first going into the tariffs much higher tariffs then those tariffs settle down a little bit. And then in the most recent realm of tariffs, there was some increase in the number of countries in which we source. So think about India or Vietnam. So they sort of had this unusual shift to tariffs during the year. But if you actually looked at our pricing strategies, those strategies were designed as we moved into that sort of second set of tariffs. As you look at the final set of tariffs, we've had some increase in this year. We did not take any further changes to address those tariffs, mainly because we felt like we had enough coverage coming through the actions that we had taken. And we had other cost benefits that were flowing through our P&L that we felt confident that we could keep the year intact. And that was really important for us. So think about the flow-through from a tariff perspective to next year, is one that we're sort of running our P&L in a way to maintain our gross margin. We may need some tweaks up and down as we see any further changes in tariffs or as we manage costs, but our 5 levers are…

Your next question today is coming from Matthew Boss from JPMorgan.

So I have a couple. Mike, maybe first on the sequential acceleration in same-store sales. Where are you seeing the largest gains by income demographic, if you broke it down. Second, on the initial pricing actions. Are there any categories where you've seen material pushback? And then last, any change in comps so far in the third quarter relative to the second quarter performance? Or just how best to think about third quarter versus fourth quarter comps?

Yes. In terms of the sequential acceleration, when we started and we had our call and we were one period in, you were kind of done with the holidays and the events. And so we looked out, and Q2, I always say periods 5, 6 and 7. So Q2 and the start of Q3 are the toughest times for Dollar Tree because you don't have those big drivers, the real reasons people go to Dollar Tree. And yet in Q2, we saw very strong performance, balanced ticket and traffic in those comps. And in terms of the drivers, where they come from income cohorts, yes, we saw the strongest performance from the higher income. But what was interesting was we still saw very strong performance from our lower income customer. So really, the pack sizes that we have, the ability to help them kind of stretch their budget and make it to that next paycheck, we saw that all strong. In terms, Matt, of how the Q3 started, I mean, we raised our guidance for the full year to 4% to 6%. P7, again, doesn't have those big holidays, you start to get the back-to-school in it towards the end of it. We're within that range, albeit we are at the lower end of that range, but we're within that range and feel confident about looking out in the year and raising guidance for the full year on the top line.

Next question is coming from Chuck Grom from Gordon Haskett.

As you guys gain more experience with multi-price, how is the buying team evolve in its purchasing decisions? How are you handling incremental markdowns with multi-price as we move forward? And then can you help us frame out where you are on the journey of moving higher on the $1.25 price point to $1.50, $1.75, $2 across the fleet?

Yes. First of all, our merchant team is incredible. The amount of complexity that exists for them in a highly volatile environment. If you look at our 5 levers, and you go out and you say, okay, 30% for China, 10% for rest of the world, you start negotiating with our suppliers. You look at country of origin, they're re-specing product. There are some SKUs, they're just not going to carry anymore. And then they're deciding what could go into the expanded assortment and have a higher price. And then halfway through the quarter, you're doing that and all of a sudden, in India or Vietnam or somebody goes to not 10%, but in India's case, 50%. So I give our merchants just a ton of credit for the work that they're doing. It's remarkable. And not just our merchants -- our global sourcing team, how our supply chain then handles that. And then, of course, in store, they are at the end of that whipsaw having to adjust. So the teams have done a great job in navigating that. And what I do like, you never want this chaos, but I love the agility that it's created at the company. Every one of our teams that I've mentioned is far more nimble now than they ever have been and really looking at ways to have that lowest landed cost so that we can deliver a great value for our customer. And so what does it look like going forward? The $1.25 is still the $1.25. I mentioned that 85% of the store is still $2 or less. That's what we are, that's who we are. But we also believe there's an opportunity to expand the assortment and provide value that quick convenient shop. And then with that expanded assortment really doubled down on that thrill of the hunt, discovery that you come into Dollar Tree, you're not exactly sure what you needed, and by the end of the first aisle, there's a basket there because you got more than you thought you would. That's the Dollar Tree magic. That hasn't changed. That will not change, and that's who we are. So that's where we'll continue to be.

Our next question today is coming from Rupesh Parikh from Oppenheimer.

So two on just on pricing. Just given the current tariff backdrop, what inning do you think we are in terms of enacted pricing increases? And then if you look at the increase that you've already taken and plan on taking, just how do you feel about your price gaps?

So in terms of what inning we're in, it's a little different for us because of the way the holidays work. So we've taken our price that we are going to take. So in that respect, I'll give you the -- closure is not in yet, but the setup man is in. And so -- but when you look out on Q3 and Q4, as a new holiday comes in and replenishment comes in, there is that opportunity on restickering, re-signage. So we've taken the price we're going to take. Our team knows what they're doing, late inning on that, setup man is in, and we still have work to do because every time you get replenished from the DC or you take something out of a packaway, you are faced with that restickering and re-signage. In terms of how it's been received, very well. We really look at what our customer tells us every day and their traffic, they vote with their feet and their ticket, they vote with their wallet, and we like what we see from them.

Next question today is coming from John Heinbockel from Guggenheim Partners.

Mike, two questions, somewhat related. When you think about the basket and consumable and discretionary items in the basket. So I mean how much are you getting a significant very high percentage of baskets with both -- and then how do you think about sort of chicken and the egg. Does treasure hunt drive traffic for consumables, does consumable repetition drive traffic for discretionary. And then lastly, we've talked in the past about this zone pricing. And it sounds like your -- it just sounds to me like you're less interested in that today maybe than you were. Is that just because of the macro backdrop and timing?

Great questions, John. The first, the basket, it really is both in terms of the traffic drivers, consumables, and maybe there's a bit nuance by income cohort. So if I look at our traditional lower-income customer, they're driven by kind of everyday essentials. They're driven by pack sizes. They're trying to stretch a budget between paychecks. So they're coming in for that purpose and finding the back-to-school find that just wows them. That $5 backpack that saves them a trip to a large mass merchant at a better price. And then you have that thrill of the hunt discovery customer that tends to skew more higher income. They're coming into our stores, they're targeting the seasons, the holiday, the back-to-school, all that. And they're saying, wow, I can't get over that I can get Dixie plates for $3. I mean, it's just incredible. They didn't know they could find that. And so really, it's a very complementary ticket and traffic across all income cohorts. And then zone pricing. It is not that we've lost our interest in this. Think of it as priorities. If it was something we really wanted to test at the beginning of the year, when we were faced with the inflationary cost environment, the tariffs, et cetera, we really had to pivot to our tariff mitigation strategy. And that has put zone pricing a little bit down the priority, but it's still something we want to look at. We're all about delivering an incredible relative value. And as you can imagine, that relative value in California or New York may be different than that relative value in other parts of the country. So maybe a little down the priority, but still something that we will lean into at some point.

Your next question is coming from Seth Sigman from Barclays.

I wanted to follow up on the performance across price points. Is there any way to quantify the overall lift to comps from that new multi-price point product. And then specifically on the $1.25, Mike, to your point, obviously, that's still a bulk of the product, but with more variations on that now. I'm just curious, like how is the consumer responding to that? How is that part of the assortment performing?

Thanks, Seth. We really see across the entire envelope of offering, strong performance. We look at the balance that we're seeing in the basket. We look at the discretionary and the consumables and we look across all different price points. And really, our customer continues to find value. And so their basket is fairly balanced. We do see a higher basket in multi-price. It does skew higher, but -- and there's -- it's got a good item flow in it. But there's no real breakout of how the different pieces determining their price point perform. We don't really see that across the entire basket, we see strong performance.

Yes. Maybe one other thing just to add, Mike. And that is to say that actually, if you look at the departments where we have had a change in merchandising strategy, i.e., the assortment has gotten broader, we have increased price points. There's very clear data to show that those departments are performing well and use hardware as an example of that. We had $1.25 hammers before, we couldn't sell them. We've got $5 hammers now, we can't keep those in stock. And so think about those kinds of items is just creating more interest for consumers in a way that is very positive to the shopping experience and also to our revenue line.

Our next question today is coming from Scot Ciccarelli from Truist.

You seem to be making increasingly cautious comments on the consumer. Can you provide more color or maybe some examples of what you're seeing at the consumer level that's making it more challenging and volatile than before? And then just a housekeeping item, hopefully, what's driving the change to your TSA outlook?

The commentary around the consumer, I've been doing this a long time. I really look to say that there's a lot of unknown right now. If you look at how the world is developing? I mean, yes, it's been very strong so far. But you're coming up on a time, back-to-school time, you're coming up on holidays and seasons. And we started the year -- we had incredible holidays. We'd like to think that will continue, but we're still cautious because if you look past over the last 4 or 5 years, prices have increased significantly across the entire retail landscape. Things cost more for families. And so as a result of that, we're cautious. We still don't know the full impact of tariffs. We still don't know exactly, take China, we won't know until November where it ends up. Is it 30%? Is it something different? It's a very volatile time, Scot. And so that just leads us to be a bit cautious. We love the traffic we're seeing, the ticket -- I mean, that discretionary comp in Q2 is absolutely incredible. So we're very pleased with how our business is responding. But if you look at the lower income consumer and you look at the challenges that they're facing every day just across their entire life, in terms of what things cost, it's just -- it's a cause for caution on our part. We think it's the right posture. But let me finish by saying, no matter where this goes and where the consumer strength lands, we're very confident in the Dollar Tree solution to the problem. We think we are attractive to lower income. We think we're attractive to middle and then our thrill of the hunt just scores well with higher income. So I really do think we have the answer for Dollar Tree. But as you look out on that broader landscape, it's just -- it's a cautious environment we're in.

Yes. I think also we'll get through this next quarter, we'll have a much better view to some of the tariff items to what's going on with the consumer. And the bottom line is, I mean, we've delivered a terrific comp this year. And even if you look at the back half of the year, no matter where we end up, it's a very, very powerful -- it's a powerful outcome given the range we've put out there. Let me take up on the TSA item for a second. You raised TSA with the expectation that TSA is slightly lower. I mean, the TSA income is something that's negotiated ultimately with the buyer. In this case, the buyer decided they needed fewer services than we thought they would need. But the good news is we gave guidance relative to our expectations for SG&A. We're going to hit that guidance for this year. So despite the fact that the TSA will come in a little bit light, we've got other cost savings that we've deployed for this year that will bring us in at the number. I think, if you look at '26, that leaves us with a gap in '26, but we've got plenty of runway now between now and then to solve for the SG&A in 2026. So we're really pleased actually with the way that's worked out.

Our next question today is coming from Zhihan Ma from Bernstein.

So my question is on the store side of things with Q2 performance clearly coming in ahead of your expectations. How do you feel about the service level, the in-stock levels in store? Will you need additional investments to sustain the momentum into the back half of the year?

I'm very pleased with our stores. It's certainly a journey. But Jocy Konrad and her team have done a really good job on our -- what we call it our road to gold which is grand opening look daily. And as we score our stores and look at their relative performance, the improvements, the more stores scoring higher, the customer lens what they see when they walk in the door. We continue to be pleased with that progress. She would tell you I have a long way to go. She's got a high bar for the team. And so do I, but we're very pleased. And then Roxanne Weng who runs our supply chain, she would tell you that this is the best position our DCs have been in, in recent memory. This is our peak as we flow product to the stores for the upcoming holiday season and the position our DCs are in and the corresponding position on the shelf is very strong, and in fact, the best we've seen in a number of years. So the customer is going to walk in that door, they're going to find stock shelves. They're going to find great value as they always do. And we're confident that they're seeing an improving shopping experience. We've started talking to our customer a lot more through customer insights, some third parties we've engaged, surveys, receipt-based surveys, and we like what our customer is telling us.

Next question is coming from Peter Keith from Piper Sandler.

Mike, I just want to follow up on the Uber Eats with just a couple of questions on that topic. So is that going out to all stores? And is there any maybe quantifiable lift that you've seen in early tests? And finally, are you a stand-alone offering? Or is it more part of their multi-store initiative?

Yes. As you probably heard in my comments, I'm very excited about this Uber Eats. When you look at kind of digital e-com, Dollar Tree is really an infant when it comes to digital and e-com. It is just not something we've ever really done. It's not been a focus area. And when I started in this journey as CEO, there were a couple of things I focused on, and one of them was, "I want to talk to my customer more in terms of customer insights and I want to look at opportunity to meet our customers where they are." Uber Eats is a perfect opportunity to do this. 25 million customers that they access. And for us, it's a customer that is very incremental. When we look at the kind of age of the demographic, it skews younger, and they had not been or heard of Dollar Tree to the vast majority of them. So we're really excited about that. It will go to -- it's not quite all the stores, but it's 8,500 stores. And some of that is just, you've got lease restrictions. There's reasons it won't get to 91, 48 or whatever we're at now. But it's basically all the stores, it's large. And then we haven't even started the marketing for it. The kind of grand opening, it had a soft opening. And we're pretty floored at the numbers coming in and the number of orders. So they're literally just finding us in their app, not through anything we're doing, and the volume flow is really exciting. So yes, I think it's a great offering to our customer. It really accents convenience. We say value, convenience and discovery, convenience and Uber Eats just are synonymous.

Our next question is coming from Kelly Bania from BMO Capital Markets.

Just wanted to ask about gross margin, so your outlook now for 50 basis points of expansion. Can you just walk through some of the key factors that are driving that is a little bit lower than your prior outlook. I'm guessing maybe that's just the incremental tariffs. But can you just parse out the impact from pricing actions you've taken, other factors such as freight or any of the other needle movers on the gross margin line this year? .

Yes, happy to pick up on that. As I mentioned in my commentary earlier, there are a lot of moving parts here, especially as it relates to the freight and how that's running through it. You also need to keep in mind my commentary around the accounting impacts of the revaluation of the inventory that's moving through. These things are depend on the mix of goods that are sold, the rate of those good things sold, et cetera. So there's a small bit of movement there. I think if you look at other outstanding factors on the positive side, we continue to have a freight benefit, which we called out last quarter. And in this quarter, we pointed to higher markdowns, which are offsetting in the other direction. I think those are the main factors. The broad picture I would take is that we are managing very, very closely here to maintain a strong gross margin. And I think if you look back at sort of our forecast, there was sort of an expectation that you would see some costs from some of the one-off stuff in the tariffs and not as much mark-on benefit coming in that second quarter. Now with that shifting to the third and fourth quarter, that's also a little bit of a drag. The reason I made the commentary earlier about driving for maintenance of gross margin because that's how we're driving the business. That's what the 5 levers are intended to do, and we'll manage with tariffs and other costs in a way so as to keep the P&L whole.

Our final question today is coming from Michael Montani from Evercore ISI.

One thing I wanted to clarify was just last quarter, we had talked about, I think, $0.30 to $0.35 of impact from Family Dollar in the first half of the year. Did that -- can you just share where that ended up coming out?

I think you might be referring to the impact of TSA benefit. We were expecting about $95 million in the back half of the year. So that would be that sort of $0.30 you're talking about. I'd say, could just go back to the question I answered earlier, which is the TSA is coming in a little bit -- little bit lower than expected. We gave guidance, $55 million to $60 million for the year, sort of $0.20. But we've got other savings that are coming through in stock compensation and payroll that are helping us to offset that. And then looking forward to 2026, we had a similar amount estimated for that year, and we'll have a little bit of a shortfall because of the new estimates for the TSAs, but we have plenty of runway between now and next year to work on the GAAP closing items to solve for that.

We've reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

Thanks, everybody, for the call. Have a great day.

Thank you. That does conclude today's teleconference. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.