“Yes, there's probably 2 dynamics. I'll take 2026 and the long term. So 2026, yes, you should expect gross margin expansion because we're lapping -- the costs that we're lapping last year primarily sit in gross margin because those were tariff-related costs and the inventory adjustment costs, markdowns and clearance”

In context

“And so we get excited to be able to arm those stores with the right resources to support a food business that we know has even more potential than we've let them unleash. John Hulbert: All right. Let's go to Peter Keith here. Peter Keith: Nice presentation today. Peter Keith with Piper Sandler. Just following up on -- a little bit on mix, but broadly on gross margin. How should we think about gross margin in 2026? It sounds like there's some tariff lapping that might help. And then longer term, how should we think about gross margin? Could we see Roundel, Target Plus drive expansion? Or should we think about gross margin flattish as you invest in price? Michael Fiddelke: Yes, your question hits on a lot of the variables we're watching. Jim, you want to talk about margin? James Lee: Sure. Yes, there's probably 2 dynamics. I'll take 2026 and the long term. So 2026, yes, you should expect gross margin expansion because we're lapping -- the costs that we're lapping last year primarily sit in gross margin because those were tariff-related costs and the inventory adjustment costs, markdowns and clearance, as -- whereas the investments we're making, a lot of that sits in SG&A, when you think about stores, technology and marketing. So there's a bit of a dynamic that's happening in 2026. On an ongoing basis, I think you hit on the right points, which is including merchandising, mix management and expansion, we should have positive tailwinds from things like Roundel for sure. And then as you scale, as we say, growth drives scale, that drives a lot of productivity through our supply chain, which sits in the gross margin line as well. John Hulbert: Let's go to Joe Feldman in the front row here. Joseph Feldman: Joe Feldman, Telsey Advisory Group. I wanted to ask, you guys talked so much about merchandising and everything. What -- on the supply chain side, how are we thinking about that in terms”