Q1 earnings exceeded expectations, with EPS growing 12.4%, primarily driven by strong expansion in operating margins that offset the impact of adverse weather and fuel costs.

Net sales of $1.08 billion increased 3.4% year-over-year, same-store sales grew 2%, EPS $2.00 increased 12.4%, gross margin expanded 65 bps to 31.6%.

The Value Valley program same-store sales increased 18.4%, delivery contributed approximately 70 bps. Opened 190 new stores, completed 659 Renovate and 711 Elevate renovation projects, optimized over 1,200 SKUs. High-end customers (income over $100,000) grew the fastest.

Raised full-year EPS guidance to $7.20-$7.45 (previously $7.10-$7.35), same-store sales expected to grow 2.2%-2.7%, net sales growth of 3.7%-4.2%.

Positives: Accelerated inflow of high-end customers, delivery subscription program pilot in H2. Negatives: Core customers under pressure from fuel and inflation, management remains cautious about consumer behavior uncertainty.