Greetings and welcome to the Grocery Outlet’s Fourth Quarter 2019 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joseph Pelland, Vice President of Investor Relations. Thank you. You may now begin.

Thank you. Good afternoon everyone and thank you for joining us on today's call to discuss Grocery Outlet’s fourth quarter and fiscal year 2019 results. Participants on this call will make forward-looking statements which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such items including our outlook for fiscal 2020 and future performance should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. A description of these factors can be found in this afternoon’s press release as well as in our latest perspective and periodical reports we file with the SEC, all of which may be found on our website at investors.groceryoutlet.com or sec.gov. We undertake no obligation to revise or update any forward-looking statements or information. During our call, we may 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 can be found in the supplemental financial tables included in this afternoon's press release and in our SEC filings. We reference non-GAAP measures in some of our financial discussions as we believe they more accurately represent the true operational performance and underlying results of our business. Presenting on today's call, will be Grocery Outlet’s, Chief Executive Officer, Eric Lindberg; President, RJ Sheedy and Chief Financial Officer, Charles Bracher. Following our prepared remarks, we will open the call for questions. With that, I'll turn it over to Eric.

Thank you, Joe and good afternoon, everyone. I hope that you well and safe. I want to let you know that as part of our social distancing efforts, Joe, Charles and RJ and I all in separate locations handling this call and the Q&A remotely. Bear with us as sound quality and coordination maybe a little less than optimal. In light of the coronavirus pandemic and current environment, the focus of our call today will be on how we are and our independent operators are supporting customers through this challenging and uncertain time. First, safe your men are number of priority. We continue to make numerous precautions with help and safety in mind. We are deemed essential businesses and communities and states that have issued short-term place mandates and stores remain open to serve our customers. Our IOS and their staff are in the front line and I want them to know how much we value their incredible efforts in helping the communities they serve. The ongoing safety and health of our corporate employees, the IOS, their staff, our vendor partners and our customers remains our top priority. And we are taking precautions to ensure their wellbeing. In that effort, we've enacted various safety measures including the cancellation of our Annual Supplier Meeting, the elimination of non-essential business travel, moving all employees who are able to work from home and maintaining a work environment according to the CDC guidelines for all those employees still needed in our offices. We will continue to stay vigilant on these activities according to the guidance from the World Health Organization, the CDC and local health organizations for as long as absolutely necessary. Due to our significantly higher customer demand, our buying organizations, supply chain teams and IOs are working around the clock to keep…

Thank you, Eric and good afternoon, everyone. Let me emphasize our top priority is the health and safety of the people in our Grocery Outlet family, our partner companies and the communities we serve. We have been working hard to keep people safe, while adjusting to meet the demands of the current environment. As Eric mentioned, our buying team is working in overdrive to source more product to meet the increased demand we are experiencing. On the everyday side, our focus has been on replenishing the need based products that have seen the largest spikes in sales. As for opportunistic, we continue to see healthy deal flow from suppliers. We will keep a close eye, however, on any impact that higher primary channel sales may have on surplus inventory in the future. As a reminder, supplied discontinuity it's a positive for our business in the long run. And this environment represents a high degree of supply chain disruption. We will continue to lean on our long-standing vendor relationships and work to develop new supplier partners to capture these opportunities as they become available. I'm extremely proud of the team's effort in support of buying these past few weeks . Turning to supply chain, we are working equally hard to get products through the warehouses and into stores. Our self managed distribution centers, third-party partners and transportation fleets are working around the clock to make this happen. We've made a number of adjustments to our real-time order guide, distribution system and warehouse operations to alleviate the strain on the system during this extraordinary situation. Our flexible systems and operations have allowed us to do this quickly. Although the sudden sales increases have created challenges, our team has risen to the occasion to best support our IOs and their customers. Turning next…

Thanks RJ and good afternoon, everyone. While our priority is across the business are focused on navigating through the uncertainty created by the coronavirus. I am pleased to report that our strong financial performance has continued and our liquidity position is strong. Following my overview of our fourth quarter performance, I will share our thoughts on where we stand today and our expectations for the remainder of the year. We were very pleased with the continued momentum we saw in the fourth quarter and the strength across all of our core financial metrics. Sales for the fourth quarter increased 12% to $655.5 million compared to the same period last year. This growth was the result of a 5.1% increase in comparable store sales, as well as the sales contribution from 31 net new stores open during fiscal 2019. We opened 10 new stores during the quarter with a balance of openings in mature and developing geographies. This was one more than we had anticipated as we were able to pull forward one of our plan 2020 openings into the fourth quarter. Fourth quarter gross profits increased 13.7% to $200.3 million compared to the fourth quarter of fiscal 2018. Our gross margin rate expanded 45 basis points to 30.6% in line with our expectations. Consistent with trends through the third quarter, this increase was a result of strong, opportunistic purchasing, as well as increased efficiencies and product delivery and inventory management. SG&A expense grew 19.3% to $167.9 million largely attributable to higher commissions resulting from gross margin dollar growth related to store expansion, strong and comparable store performance and gross margin rate improvement. Additionally SG&A increases were impacted by the adoption of ASC 842, the new lease accounting standard which moved approximately $3.2 million of previous amortization expense into non-cash rent.…

Thank you, Charles. Just want to wrap up with a few thoughts. In an environment like this, we really believe that the Grocery Outlet operating model offers several key advantages. Number one, our flexible purchasing supply chain and merchandising approach allows us to adapt to changing conditions. Number two, our independent operators are deeply connected to their local communities and can adjust the best meet their needs. Number three, because gross profit is shared through our commission model, our cost structure is largely variable meaning there's greater level of downside protection if trends were to change and finally number four, we generate excess cash and if needed we can modulate our capital spending. So as a reminder, we are all sitting in different locations today. We are going to move over to the Q&A session and just want to apologize in advance if you hear any overlap or delay during the questions. Now I'd like to open up the line for questions. Thank you.

[Operator Instructions] Our first question comes from the line of Randy Konik with Jefferies. Please proceed with your question.

Hey, guys. Thanks for taking my question. I wanted to talk about Eric, RJ, it sounds like and Charles, it sounds like this is a good problem to have. You're drinking through a firehose it sounds like would be the spike in demand. Give us some perspective on changes that are occurring on the DC side and how we should expect the mix of opportunistic versus everyday value mix in the business to kind of change, if at all over the near term as we kind of get through this corona spike, if you will? That's my first question.

RJ, why don't you take the mixed part and I'll comment on distribution.

Okay. Sure. So, hey, Randy. Thanks for the question. In regards to mix, we have seen biggest demand increases on some of our core categories. These are predominantly, we call everyday or NPO which would of course include sanitizer, so health products, paper, pasta beans, rice, canned foods et cetera, no different than what others are experiencing. So and as I said many of these are everyday items, so yes still have some degree of mix shift here in the short term. But I'll also say that customers that are coming into our stores have also been buying opportunistic. Opportunistic items in both these high demand categories. These categories are not exclusively every day and then of course categories throughout the store. The spike in demand that we've seen has been both the mix of traffic and basket and for customers that are coming in, you look at the composition of their basket and overall sales profile, it's pretty broad. It's not super concentrated I'll say in just everyday items. And so mix in the short term will simply be the result of where that demand is, what it looks like in the weeks ahead and then ultimately how we're able to source to replenish to this demand. And then Eric you want to take the DC.

Yes. Hey, Randy, how are you? Thanks for the question. We reacted very quickly, you started seeing this so the beginning of March, put the teams sort of on a heightened alert. We were able to make some very quick adjustments in the distribution center relative to the increase in volume. It's really unlike anything we've ever seen. Obviously, we're not able to keep up with all of the holes in the stores like every other retailer in the consumable business. We've got holes in the stores unfortunately but we came in with a really heavy or healthy inventory position. We were both at store level and DC, so that was able to get us through sort of the first push. We've seen an increase of inbound drivers wanting to come and drive for us that includes both third party and sole drivers that want to come. So that's been very helpful. We've had impacts and sort of had to work through the DSD side of things as volumes really spike the last couple weeks. But I would say, we've maintained it probably the toughest thing for us has been just at the DC level picking cases. So we've made some systems adjustments to sort of take the cases per line up a little bit to make it a little bit easier for every picker when they stop to pick more cases versus less. And obvious the volume could handle that and then secondarily, we repurposed a bunch of people from the office, from our set crew from a group we call SES really deals with all the equipment. Our inventory crew, all volunteers were willing to go out and get learn, get taught on the system and help pick cases. So it's been very much an all-hands-on-deck at every DC.

Thanks. Maybe just one quick follow-up is have you seen with this spike, have you seen a corresponding pick up in allow signups in terms of this unprecedented event kind of leading to more new customers kind of coming into the store through word-of-mouth or discovering et cetera just curious on anything you're seeing on that side of the fence.

Yes. Randy, we have. Maybe just a few quick comments on just customers and communications customers in general. We've shifted our strategy here in light of the current situation really in effort to improve products flow to help store operations and then adjust messaging in light of the information that customers are looking for now. And that has resulted in an uptick in sign-ups for our WOW! Alerts, sign-ups to be in the email database. Our focus from a marketing standpoint is around communicating inventory and items to customers that that's what they want to know where can I find these products. Where can I find inventory. The WOW! Alerts are a great vehicle for that in that they go out daily, their store and items specific and so customers have been have been signing up an increasing rate there. Our weekly store digital ads, again, those are also store and items specific is another great vehicle, all of our email database customers receive those as well. And then the last thing as it comes to digital marketing that I think has been working well and is appreciated by customers here is the activity on social media. We've adjusted call it company social media content of course as it relates to St Patrick's Day and other content we would have posted. We're not posting that content but what we have going on right now is the independent operators both on Facebook and Instagram, which are great platforms for this using those social media channels to communicate with customers. What items they have in stock? What their inventory looks like? What's on order literally walking up and down the aisles on Facebook live and is very much appreciated by customers. Beyond that messaging is simple and straightforward letting customers know that that we're here to help and that we're part of their communities and doing everything that we can to keep the stores filled with product.

Our next question comes from the line of Karen Short with Barclays. Please proceed with your question.

Hi. Thanks very much. I wanted to actually start I think at the end of the prepared remarks you made a comment that you've made a lot of changes based on the IOs suggestions. I was wondering if you could actually elaborate on that a little bit.

Yes. So, hey, Karen. It's Eric. We have a daily group that gets together. They're about 18 of us that join a Zoom call each day and have been doing that for about three weeks. And that group is taking all of the information we're gathering during the day from operators and from our systems and from just anything and putting it together for a 5 p.m. briefing that we get out to the stores. So we've been communicating a lot. So we've heard from operators as we've had these, you're trying to manage big crowds of people, runs on product at the same time it's trying to keep the stores safe and clean and healthy and orderly. So we've had everything from how to handle these special senior days to how do you a discount product for special groups of people to crowd control to how do you honor the six-foot distancing in stores to with the right way keep restrooms open the stores, not keep restrooms open, signage for limits on products, suggestions from operators on how to make changes to the real-time order guides so that product flows faster. Suggestions from operators on what they're doing internally for their employees for rest and safety. We have a lot of different ways to communicate. One is through our Service Now platform called iCare and our iCare communities' platform allows operators to sort of have an internal private blog amongst them that we can view and we can input on. So we identified sort of first week of March that if we are going to be a distributed workforce which we have been since the 10th, we are going to have to over communicate. So that's what we've done, and it's worked fairly well. Not every idea we get from operators is a good one, but we're filtering the ones and sharing best practices. And then lastly, I'd say that the district sales and merchandizing managers of which we have 13 or 14, they each have 25 or 30 stores. They're out in the field. They can't travel by airplane obviously so they're in their cars either visiting stores or talking to sources every single day. So it's really been quite refreshing to get all this bubbling up of best practices and then we can disseminate the best ideas without overloading them each day. So hopefully that helps.

No, that's helpful. And then I just I mean the questions that we've received obviously on the supply of opportunistic buys just looking many months forward like whether it's three months or nine months. I know you mentioned obviously disruption benefits, but how are you thinking about the potential that there may be a little less supply from an opportunistic perspective just even if it's temporary in a couple quarters. And I guess on that same note, how do obviously you're all hands on deck right now but how do you think about like what you're thinking through for say the fall when strategically when hopefully things are a little more back to normal like how do you pivot or how are you pivoting to that strategically?

Hi, Karen. I'll take the first part of your question. I think we all could chime in on the second part. As far as opportunistic supply goes and continue to see healthy deal flow as we said in the remarks from our traditional suppliers. Just looking back at last week sort of in the midst of everything going on. The team here wrote a lot of opportunistic purchase orders to support the increased demand we're seeing. And I'll say that this was even in some of the highest demand categories such as rice and water and some others where we continue to see surplus inventory what we call opportunistic. Point to the strong relationships that we have with our partners continues to be an advantage for us. We continue to be a solution provider for them even in these times. Also point to our diversified supplier base. We have a long list of suppliers that we do business with. We're not heavily concentrated with any one supplier. No supplier representing more than 5% of purchases or sales and so that's to our benefit as well. I'll also say that we have been contacted recently here by many what I'll call non traditional suppliers. So many, many companies now that need to move product as their primary retail partners have closed and just to give you a flavor for what this looks like. Few examples, I point to foodservice of course with all of the restaurants and other food service retailers being closed. Many of them contacting us asking if we can buy product. We've had some instances with health and supplements suppliers these would be that sale to gyms and other fitness based retailers reaching out to us with surplus inventory and then on the hardline side with all of…

Yes. I was coming at it a bit from the angle that you're obviously going to get a lot of new customers that are seeing you with fresh eyes. And it would just seem that it opens the door potentially for entire unit growth. Keeping in mind you don't want to stretch the organization going forward, but obviously you have an appealing format that I think you'll find a lot of customers want to actually return to with higher degree of frequency than you've ever seen.

Yes. We agree.

Our next question comes from the line of Michael Lasser with UBS. Please proceed with your question.

Good evening. Thanks for taking my question. So I want to touch on the availability that was a great answer, RJ, a lot of detail. I want to push on it a little further. Do you expect the availability of your core opportunistic buys to increase, stay the same or reduce in the next beyond, in the coming months? With the thought being that manufacturers are going to be shifting more of their production to these core categories that are in heavy demand. They may be less willing to expand into new SKUs, which may or may not have been successful and could comprise some of the opportunistic by market in the past.

Yes. Hey, Michael. Thanks for the question. Hard to say, I, everything's pretty fluid right now. And not think any of us have a crystal ball for perfect clarity on what the future holds. All I will say, again, though is so far we've continued to see plenty of product and we have leaned into more product because of the demand. And so feel really good about that, but yes, sure, look we are mindful of potential disruption that primary channel sales may have an opportunistic whether it's your changes to manufacturing or you may be constrained from a transportation standpoint. There are certainly plenty other factors at play here. But we've been able to buy increased volume those we're looking to continue to replenish the stores and then again I would say to the extent that we and it may be within certain suppliers see some contraction there. I would point to the diversification that we have within our supplier base. The continued acquisition of new supplier partners and these additional suppliers now that are reaching out to us, I think if anything there may be smaller blips more specific in nature and hard to say, hard to quantify that but just given some of the outreach that we've seen looking forward, we're extremely bullish from an opportunistic standpoint in light of the amount of disruption that's having there. So not overly concerned but of course something that we're keeping close on; something that we're partnering very closely with our suppliers on. We have really strong relationships that we are super thankful for and just in the past week, two weeks while we always take care to have a personal touch and open communication with them. I'd say that's even intensified further, always placing phone calls not just writing POS and so just staying very close to the challenges that they're facing and making sure we're the best partner we possibly can be in these challenging times.

In my follow-up question is it's going to be probably in two parts. Recognizing that you don't want to provide too much guidance because there's so much uncertainty in the current time. We could read that a lot of different ways. We could read that to say that things are going to be so good because consumers rely on Grocery Outlet during tough times. And so a; do you -- during the last recession how do the business perform and how should we think about any parallels? And b, if that is right that you might see accelerated comp growth for the coming periods. How should we think about the flow through on that? You mentioned that your same store sales are up mid-teens in the current quarter to date. You're one week left, so how should we be modeling flow through in earnings for this current period? Thank you very much.

Hey, Michael. It's Eric. Good to speak with you. I'll take part A and let Charles talk a little bit about some of the modeling. Look, we did perform really well in the last recession. We enjoyed really robust comps. Comps came in both customer count and ticket and they were broad across all of our departments. So that's sort of setting the stage, if this leads to recession we think this will be a pretty unique situation. We don't have like no one crystal ball how that plays out but we do think people will reset again to value. We think Grocery Outlet because of the model will be really well placed to take advantage of that. We've seen a lot of new customers in last few weeks and we think we'll keep them just because the simplicity of the model, the hard hitting values that we have then layer on top of that the independent operator touch. And we're so thankful that we've had very, very caring independent operators out of these communities working overtime and taking extra special care. So we think a lot of that will stick. Our priorities will remain very much the same as you've heard in the past deliver a lot of value and we think we win. We don't know how long this lasts but the last time this happened we sort of reset to a new normal. And we think we kept a lot of those customers from sort of 2010 to now. So if we model that step up, we are pretty bullish that those customers will continue to find the values super compelling in Grocery Outlet.

Yes, Michael, it's Charles. Just to add to that really our decision not to provide formal guidance as just as a result for the fact that the environment is so fluid right now. It's just really hard to say how things are going to play out over the next several quarters here and beyond. As you think about the comp impact of that, so obviously as we talked about in March elevated customer demand is shoppers are in the store stocking up their pantries. Ostensibly, those trends will moderate at some point as again their refrigerators and pantries are full and then on the back side of that there could be a negative impact as the shoppers work through all that inventory they've got the home. So I'd say particularly the mid term it's just hard to predict how things play out longer-term as Eric reference, I think there are some potential tailwind for us that could be positive with respect to a longer term ship potentially towards more food at home spending, as well as just again more focus on value on behalf of the customers. So regardless of exactly how it plays out, we feel like we've got the flexibility in the model and we can adjust. We continue to orient around over the long term once again the back side of this our longer-term comp algorithm of 1% to 3%. Is it relates to flow through? Again, probably a short term, long term answer here. Over the short term, yes, absolutely could have some flow through as we do have, our cost model is more variable in nature, but there are fixed cost elements as it relates to occupancy, corporate G&A and marketing. So you could have some flow through over the short term. Keep in mind, however, that we do expect that there will be some offsetting costs related to the coronavirus that we really can't quantify right now whether those are cleaning prevention costs, all the cost with a workforce working from home. A lot of different impacts of, we're just uncertain about it at this time. And then layering on top of that just so we don't lose sight of the fact that we do have public company cost of $9 million hitting us this year. So you could see long winded answer to say, you could see some short term positive flows through. Over the longer term, we continue to think about managing business for SG&A margin stability. As RJ referenced, we haven't lost sight of everything we're doing to continue to reinvest in the business in pursuit of our growth objectives.

Our next question comes from the line of Oliver Chen with Cowen and Company. Please proceed with your question.

Hi. Thank you. Regarding the trends that you're seeing in the past month, what are your thoughts on how the week to week cadence is looking, as well as you look at regional trends? And how it's been trending regionally versus a more correlated? I would also love your thoughts on digital options whether you think about options like buy-online-pick-up in store curbside pickup, and if those have become more or less attractive or interesting just in light of everything that's evolving. Thank you.

Hey, Oliver. It's Charles. Let me tackle the first part as it relates to March and then pass it over to RJ. But what we've seen in March, I would say it's been across the board, across regions we've seen significant increases that have come from a combination of customer traffic and ticket. We are, of course, very closely looking at the transit and trying to dissect them to glean more information about what to expect, but I'd say at this point don't think it's instructive for us to dive too much into those details is that again the environment continues to be just incredibly fluid.

Hey, Oliver, regarding digital curbside pickup, yes, look, in light of the current environment we have started to explore some curbside pickup options. This is an effort to help those that are higher risk or just don't feel safe coming into the stores. And time goes on this may be more people, so we'll see how things evolved but want to help get food to folks in any way possible. Also mention on this topic that a couple of stores have begun to pilot a few different options here. And you have a great example of entrepreneurship of the IO on display which we of course love. So I think those efforts together with our own thinking will evaluate and decide if we've got a solution here in the near term to roll out more widely. That said I'll also say thinking long term, we haven't changed our position on e-commerce and still believe strongly in the model. The store treasure-hunt experience delivering best value to customers, the independent operator and connection with customers and everything that they represent and deliver from a while shopping experience standpoint. So very much an immediate term solution that we're looking for and ultimately when customers return to stores, we know that we still have these compelling differentiators and e-commerce wouldn't be a high priority relative to other things that we're investing in.

Okay and just a follow-up regarding the comps and what you're seeing, there's been some limitations on the number of people that can be in stores, as well as some of the quantity limitations. How would you characterize the demand profile versus supply versus relative to constraints that are in the shopping experience and the nature of the comp? Is it, would it be much higher under if there weren't these other factors just curious about how do you contextualize it?

Yes. Hey, Oliver. Yes, we've had some opportunities on products that just weren't there. The demand was pretty extreme and came from out of nowhere. So I don't think there's a retailer in the consumable business that wouldn't say the same thing. That said we were able to pivot fairly quickly. One of the differences that we did notice was having an operator sort of in the store 24/7 with the ability to live order versus the algorithmic ordering, I think that many retailers employ I think was a difference maker for resupplying relative to limitations on customers in the stores, we had a few cases downtown San Francisco mission store that you've shopped at before. We had to sort of limit the number of people in the store just to be safe, but those were all localized and again we were able to publish best practices and keep operators reasonable with the number of people in the stores. We had many cases where we just didn't have baskets for people to shop and that was self-limiting. So we work through those over the first few days and again, recovery has been has been really strong. So hopefully that answers your question.

Our next question comes from the line of Simeon Gutman with Morgan Stanley. Please proceed with your question.

Thanks. Good afternoon. My first question on gross margin. I think the way you described it is you left it open-ended we'll see how it goes which is fair. Can you give us a sense it doesn't sound like there's any difference in sourcing near-term but give us a sense on how it's going thus far in a surge environment? And I forget if you've ever given us a rule of thumb for every percentage increase in every day versus opportunistic. What could happen to the gross margin movement over time?

Hi. Simeon. Thanks for the question. Yes, just so few comments on gross margin; really a number of puts and takes here. We talk about product mix for opportunistic and every day, mentioned a little bit on that earlier. Just a reminder here not all everyday products are lower margin or below average margin. And, in fact, some of the high velocity items that we're currently seeing are at higher margin. And so to the second part of your question, no, we haven't given any guidelines for percentage mix shift and impact on margin largely for that reason. It is quite a range of margin. So it's really down to the item level in terms of how that impacts margin. The other, another factor that's that we're mindful of is inflation deflation and certainly timeframes associated with this inflation probably more in the near term, started to see some of this already eggs being the most recent example and then you think about deflation in the longer term. And then I'd also point to opportunistic product that is expected to come from channel disruption, already talked about that. Probably the last point on this is to the extent that there is some margin fluctuation from a percent standpoint and as it relates to mix as a result of increased demand. This, of course, would drive gross profit dollar and so while there may be some short-term fluctuation from a rate standpoint still feel pretty good about driving profit and of course long-term despite any short-term fluctuations, we see would expect it to normalize as things rebalance back to steady state.

Okay. Thank you. My follow-up is on the IOs. Can you talk broadly how they're doing? I think I saw Costco maybe limiting their GMs to 4-day work weeks now. How well do they, how well they managing their own expenses and their own labor? And then back to that flow through a question, could, I mean have you ever changed your own policy of percentage play out of the model making sure that they're taking care of as well?

Hey, it's Eric. Yes model is model. We wouldn't change. We think these are going to be temporary circumstances. Operators are doing well. They're tired. They're energized. They're excited to be on the front lines. They've never seen anything like this. I would say the operators realized that this is way bigger than just selling more products. This is a time about being open, being safe and being an anchor in the community. And I would say, they're all leading into that. We talked about the countless examples of sort of best practice sharing and they're sort of feeding off of one another. We're not dictating a whole lot to them unless it's around brand standards and safety. Otherwise we're letting them be flexible and use the best of kind of this operator model to the benefit in this situation. So they are doing great. RJ and I hosted a call yesterday with all the operators. We did a live Zoom Q&A for about an hour yesterday afternoon just a sort of touch base and answer questions. And I would say they were very positive, very supportive and very excited.

Our next question comes from the line of Paul Trussell with Deutsche Bank. Please proceed with your question.

Hey, guys. This is actually Krisztina Katai on for Paul. I guess I just wanted to ask about some of your bigger picture goals for the year put in coronavirus impact aside. And do you thing that your assortment will evolve at all? And do you find the need to expand in some certain categories?

Yes. Hi, Krisztina. It's RJ. So I think consistent with what we've said before we will continue to look for opportunities from a certain standpoint. We've mostly filled in what I've called gaps before at the category level and seafood is one. We've had in our source for quite a while now but a more recent one that was a gap that we've introduced and it has seen nice benefit from. And beyond that those opportunities really live at the item level. So as we continue to go deeper from everyday specialization standpoint, we identify those opportunities and take advantage of them opportunistically as well. So that would really be the, probably the biggest impact or area for improvement from an assortment standpoint looking forward.

Our next question comes from the line of Joe Feldman with Telsey Advisory Group. Please proceed with your question.

Yes. Hi, guys. Good afternoon. Wanted to follow up, are you guys seeing any issues with labor whether it's pushback from employees that don't feel comfortable showing up to work or conversely just not enough needing more employees and trying to hire more people? I think you mentioned something with a lot of drivers looking for jobs, but any comments around labor would be helpful.

Yes. No, and quite the opposite. Operators are reporting a lot of fresh faces knocking on the door looking for employment. People that have been let go in the service sector. Relative to DCs, we've also seen a fresh number of people coming in. So today it's been the opposite. We've had no sort of pushback. We've given people that feel at all uncomfortable some folks that we have working for us over the age of 60, we've been very, very careful just to make sure they feel safe and protected and not pushing them beyond their bounds. Internally in the corporate office, we have roughly 300 people working from home. So that just requires the technology and new practices and that's worked really well as well. End of Q&A

Ladies and gentlemen, we have run out of time for questions. This does conclude the Q&A session. I'd like to hand it back to management for closing remarks.

Hey, guys. Thanks so much. Look forward to following up with you in the coming days on follow-up calls. Appreciate you jumping on listening, appreciate all your questions. And we'll look forward to catching up with you soon. Thanks.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time. And have a wonderful day.