North West Q1 2025 Earnings Report

North West EPS Results

• Actual EPS: C$0.53
• Consensus EPS: C$0.54
• Beat/Miss: Missed by -C$0.01
• One Year Ago EPS: N/A

North West Revenue Results

• Actual Revenue: $617.52 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

North West Announcement Details

• Quarter: Q1 2025
• Date: 6/5/2024
• Time: N/A
• Conference Call Date: Wednesday, June 5, 2024
• Conference Call Time: 2:00PM ET

The North West (TSE:NWC) Co Inc is a Canada-based company that is principally engaged in retail business in underserved rural communities and urban neighborhoods. The company provides food, family apparel, housewares, appliances, and outdoor products, with food products accounting for the majority of the company's revenue. The company also offers services, including post offices, income tax return preparation, money transfers, commercial business sales, and others. Its geographical segment includes Canada and International. The company generates maximum revenue from Canada.

North West Q1 2025 Earnings Call Transcript

Key Takeaways

• Consolidated sales rose 4% and net earnings jumped 22.3% in Q1, driven by same‐store sales gains in both Canadian and international operations.
• Gross profit rate improved by 117 basis points year‐over‐year, leading to a 7.9% increase in gross profit dollars thanks to stronger cost inflation pass‐through and favorable sales blend.
• Selling, operating and administrative expenses climbed 5.7% (41 bps of sales) due to inflationary pressures, higher labor costs and new store depreciation, despite store‐level productivity initiatives.
• Inventory levels were ramped up—especially for ATVs, snow machines and home furnishings—in anticipation of First Nations water settlement payments expected to accelerate in H2 2024 and into 2025, although timing remains uncertain.
• The newly branded Next 100 program targets annualized incremental EBIT growth over the next three years through operational excellence, logistics enhancements and technology investments, with benefits beginning late 2024.

Presentation

[Operator]

Welcome to The North West Company Inc. First Quarter Results Conference Call. I would now like to turn the meeting over to Mr. Dan McConnell, President and Chief Executive Officer. Mr. McConnell, please go ahead.

[Dan McConnell, President and CEO at The North West Company]

Okay, thank you very much, and good afternoon and welcome to the North West Company First Quarter Conference Call. John King, our Chief Financial Officer, joins me today, and I'm gonna start off the meeting by asking John to read our disclosure statement.

[John King, EVP and CFO at The North West Company]

Thank you, Dan. Before we begin today, I remind you that certain information presented may constitute forward-looking statements. Such statements reflect North West's current expectations, estimates, projections, and assumptions. These forward-looking statements are not guarantees of future performance and are subject to certain risks, which could cause actual performance and financial results in the future to vary materially from those contemplated in the forward-looking statements. Any forward-looking statements are current as of only the date they're made, and the Company disclaims any intention or obligation to update or revise the forward-looking statements, whether as a result of new information, future results, or otherwise, other than what's required by law. For additional information on these risks, please see North West's annual information form and its MD&A under the heading Risk Factors.

[Dan McConnell, President and CEO at The North West Company]

All right, thanks, John. I will begin by providing a brief overview of this quarter's results, and then I'm gonna move on to provide some color on sales, starting with the Canadian and then the international operations. Then I'm going to expand on consolidated gross profit and expenses. I'll wrap the call up with a few comments on our outlook before opening the call up for some questions. Okay, we had a solid, solid start to the fiscal year. Consolidated sales for the quarter were up 4%, and net earnings, net earnings increased by 22.3%. Same-store sales gains in both Canadian operations and international operations drove our top-line performance.

[Dan McConnell, President and CEO at The North West Company]

Food same-store sales increased in both Canada and international, while general merchandise sales in the quarter were mixed, with strong same-store sales in Canada more than offsetting softer same-store sales in international. Top-line growth and 117 basis points improvement in the gross profit rate to sales compared to last year drove a 7.9% increase in GP dollars. On the other hand, selling, operating, and administrative expenses increased by 5.7%, largely driven by inflationary cost pressures. Overall, we are pleased with our results for the quarter, including a 17.9% increase in EBIT and a 22.3% increase in net earnings. All right, let's talk about sales in the Canadian operations. Sales in Canada were up 4% in the quarter and 4.7% on a same-store basis.

[Dan McConnell, President and CEO at The North West Company]

There are three key services to highlight. First, our strong in-stock position, particularly on key staples in our assortment. As I mentioned in my AGM remarks, we are laser-focused on operational excellence and execution as we aim to ensure we are in stock on the key items that our customers are looking for. Second, we are seeing increased consumer demand driven by inflation relief payments and First Nations Drinking Water Settlement payments issued to the individuals. However, it is important to note that the volume of these settlement payments in the first quarter relative to the total settlement remains low, and while there continues to be uncertainty regarding the timing of the payments, we expect to see the payments spread throughout the year with a higher weighting in the back half of the year and on into 2025.

[Dan McConnell, President and CEO at The North West Company]

Third, food inflation continued to be a factor, but to a lesser degree than in previous years. In our international operations, sales results were driven by gains in same-store food sales, which mitigated softer performance in general merchandise. International sales increased by 4.2% in total and by 2.5% on a same-store basis, which is an overall improvement in trend compared to 2023. There are a few puts and takes in international operations, which are netting out to overall positive results. For example, a soft fishing season is negatively impacting certain Alaskan communities. On the upside, we have been observing better performance in certain Caribbean tourist economies, such as BVI.

[Dan McConnell, President and CEO at The North West Company]

From a more macro view, we are also seeing the ongoing impact of inflation, which has resulted in consumers continuing to shift their spending from general merchandise and over to food. This shift in spending was a key factor that contributed to a same-store food sales increase of 3.1% and a decrease in general merchandise same-store sales of 4.3%. All right, let's transition and talk about the consolidated gross profit results. As previously noted, our gross profit rate increased by 117 basis points in the quarter. This rate improvement is largely a result of two key factors. First, a greater pass-through of cost inflation in retail prices compared to last year. Inflationary cost pressure has started to moderate, particularly when compared to the significant ramp-up in prior years.

[Dan McConnell, President and CEO at The North West Company]

This change in trend, combined with competitive pricing actions, has enabled a greater pass-through of inflationary costs compared to last year. Although competitors in our markets are passing through more inflation, our local key value items are being actively monitored to ensure we have the most compelling offering for our customers. Our retail pricing philosophy has remained consistent. We continue to challenge cost increases from suppliers, and when cost increases do occur, we aim to take a balanced approach to passing through these supplier cost increases while keeping in mind the impact on our customers and providing the best value that we can. The second factor that impacted our gross profit rate is a shift in sales blend, including the impact of lower wholesale food sales. In order to maintain our margins, it is instrumental that we have strong inventory management. Let me expand on this briefly.

[Dan McConnell, President and CEO at The North West Company]

As mentioned during previous calls, product availability is a top priority for our organization. This is a challenge for all retailers, but even more so for us, given the remoteness of our stores and our role as a provider of essential food and general merchandise. In order to improve product availability, we have revisited our transport mix to find better ways to make our logistics costs more productive. As a result, we have increased sealift and winter road inventory to leverage lower freight costs in order to improve our in-stock levels on the most relevant assortment for our customers. We have also increased our inventory position on key items such as snow machines, ATVs, boats and motors, and home furnishings, in anticipation of increased consumer demand from water settlement payments.

[Dan McConnell, President and CEO at The North West Company]

Given the durability and relevance of these items in the communities we serve, we expect good sell-through of this merchandise. All right, let's take a limited moment here, and just I'm going to talk about some expenses. Our teams continue to focus on controllables as much as possible, without compromising customer and employee experience. During the quarter, expenses increased 5.7% and were up 41 basis points as a percentage of sales. This increase was mainly driven by inflationary headwinds and labor costs, new store expenses, and an increase in depreciation. These factors were partially offset by lower share-based compensation costs due to changes in the company's share price. We have been very intentional with our efforts to control expenses at the store level, making sure they are tied to productivity.

[Dan McConnell, President and CEO at The North West Company]

For example, we are reviewing our store resources and launching initiatives to optimize labor scheduling using a data-driven approach, making sure that it is aligned with customer demand. As a result, the net impact of these factors is helping to offset the inflationary cost pressures that I referred to. Okay, to wrap up, I'd like to briefly mention two macro trends that are relevant for our outlook this year before speaking about our Next 100 program. First, we expect the merchandise and freight inflation will continue to moderate for the remainder of 2024. And second, we expect an increase in consumer demand arising from the First Nations Drinking Water Settlement payments in Canada.

[Dan McConnell, President and CEO at The North West Company]

However, it is very important to note that the number and amount of settlement payments received by claimants in the first quarter is low compared to the overall amount of the settlement. The period for filing claims was extended to March of 2024, and we do expect water settlement payments to be issued throughout 2024 and on into 2025. Looking forward, these are exciting times for our company, and we continue to focus on driving operational excellence, expanding our capabilities, and relentlessly pursuing value for our customers, our employees, and our shareholders. In my keynote remarks, I noted that collectively we have framed this as the Next 100. The Next 100 program aims to drive annualized incremental EBIT over the next three years, while ensuring sustainable investment back into our core operations.

[Dan McConnell, President and CEO at The North West Company]

The benefits are expected to begin ramping up later this year and continue to accelerate through 2025 and 2026 as our initiatives reach maturity. As we lay the groundwork for these improvements, we anticipate incurring some one-time costs and making investments in technology, and we'll share more details on these impacts in future updates. The scope of the Next 100 is comprehensive and touches every aspect of our business. We are refining what we sell to ensure our product assortment meets the evolving needs of our customers and enables us to offer even more value. We are building on our logistics operations and enhancing our forecasting and replenishment capabilities to reduce costs while improving product availability and freshness for our customers. We're improving processes and employing new technologies to streamline operations across all of our teams.

[Dan McConnell, President and CEO at The North West Company]

This is more than just a traditional business project that is focused on reducing costs. The Next 100 is a tangible program to improve the value that we offer to the communities we serve and setting a foundation for sustained growth, sorry, that benefits all of our stakeholders, including customers, employees, and shareholders. The whole organization is energized and excited about this journey, and I look forward to updating you on our progress. Thank you, and I will now open it up for any questions.

[Operator]

Thank you. We'll now take questions from the telephone lines. If you have a question and you're using a speakerphone, please lift your handset before making your selection. If you have a question, please press star one on your device's keypad. You may cancel your question at any time by pressing star two. Please press star one at this time if you have a question. There will be a pause while participants register for questions. Thank you for your patience. First question is from Michael Van Aelst from TD Cowen. Your line is open.

[Michael Van Aelst, Managing Director at TD Cowen]

Hi, good afternoon. Thank you. First off, I was wondering if you could give me a sense as to what percentage of sales these 30 communities account for, that it will be impacted or benefit from the water infrastructure settlement payments?

[Dan McConnell, President and CEO at The North West Company]

No, we wouldn't disclose that level of information, Michael. Sorry.

[Michael Van Aelst, Managing Director at TD Cowen]

Okay, so I guess, is it-- Do you consider it a meaningful portion of that CAD 2 billion is gonna be spent in your... Like, is it-

[Dan McConnell, President and CEO at The North West Company]

No.

[Michael Van Aelst, Managing Director at TD Cowen]

Is a majority of that gonna be spent in your communities?

[Dan McConnell, President and CEO at The North West Company]

No, I wouldn't, I wouldn't say, no.

[Michael Van Aelst, Managing Director at TD Cowen]

Okay, so when I look at the inventory that you've built up and, you know, ATVs and snow machines, some of these are pretty high-priced items.

[Dan McConnell, President and CEO at The North West Company]

Yeah.

[Michael Van Aelst, Managing Director at TD Cowen]

You know, I'm wondering, is, if you're not in those areas, if you're not getting a good chunk of those payments, and, you know, when you look at the payments per individual-... Do they really have enough money to pay for an ATV or a snowmobile or, and things like that?

[Dan McConnell, President and CEO at The North West Company]

Oh, yeah, absolutely. And we've, I mean, this isn't our first rodeo with these types of settlement payments. If you remember, the residential school and the payment was it was another one. The thing is, the payments that are coming on us now are actually bigger than what they have been in the past. And so I can tell you that, we've aligned the information and the knowledge that we've gained over the last number of years and through the different events that we've had, to align our inventory levels to our sales expectations. So we're, we're very comfortable that, you know, that the inventory will meet the demands of our customers once they receive those settlement payments.

[Michael Van Aelst, Managing Director at TD Cowen]

Okay. And what are the risks about, like, the age of this inventory? You know, you've been holding this inventory for a little while now, and if they only get the money payments in late this year and sometime next year, is there a risk that, you know, what you have in stock is old models, and they want the new models, and you have to discount?

[Dan McConnell, President and CEO at The North West Company]

Oh, sorry, Michael, I didn't mean to interrupt you. No, there's not a risk there. I mean, we, the technology in these machines, particularly over the last number of years, the last one or two years, has not changed that significantly, if at all. And, it's, that's not something that we're concerned about.

[Michael Van Aelst, Managing Director at TD Cowen]

Okay. All right. And then, sorry, on the First Nations Child and Family Services Settlement, do you know if those payments that are, that you're saying are likely to come late 2025 or 2026, do you know if these are one-time payments, if they're gonna be spread out over a number of years? Because that's, that's a heck of a lot of money being paid out at, if, if they're one-time payments.

[Dan McConnell, President and CEO at The North West Company]

It is. Some of it will be one-time payments, but there's also infrastructure money in there. There's Jordan's Principle money, and this has got more of a long tail effect to it, because if you can appreciate, they're building infrastructure, they're building programs within communities. So that will create more of a stimulus for their local economies, which is also beneficial for us.

[Michael Van Aelst, Managing Director at TD Cowen]

Right. But the individual payment, payments to individuals is CAD 23 billion, and then the payments to the communities is CAD 20 billion. Is that correct?

[Dan McConnell, President and CEO at The North West Company]

You got it.

[Michael Van Aelst, Managing Director at TD Cowen]

So those payments to individuals, you believe are going to be lump sums?

[Dan McConnell, President and CEO at The North West Company]

That's the way I understand it today, yes.

[Michael Van Aelst, Managing Director at TD Cowen]

Wow. Okay, that's great. And then-

[Dan McConnell, President and CEO at The North West Company]

So the hit, we'll be ready.

[Michael Van Aelst, Managing Director at TD Cowen]

Yeah. And then finally, on North Star Air, you mentioned lower sales there. Is that in passenger or in freight?

[Dan McConnell, President and CEO at The North West Company]

It was a little bit of both, actually.

[Michael Van Aelst, Managing Director at TD Cowen]

So, are we at a point where there is, you're kind of near full capacity on third-party freight, and we're just gonna see a bad trend, plus or minus?

[Dan McConnell, President and CEO at The North West Company]

Yeah, I would say so.

[Michael Van Aelst, Managing Director at TD Cowen]

Okay. Great. Thanks very much.

[Dan McConnell, President and CEO at The North West Company]

Thanks.

[Michael Van Aelst, Managing Director at TD Cowen]

Actually, let me just ask a follow-up on that then.

[Dan McConnell, President and CEO at The North West Company]

Sure.

[Michael Van Aelst, Managing Director at TD Cowen]

Are you considering another plane?

[Dan McConnell, President and CEO at The North West Company]

That, that's a good question, because some of our metal is, like, our, our capacity is there. We don't think it's a lack of, a lack of demand. It's just more about, you know, some of the usage of our planes, obviously, with the, the C-checks and, some of the maintenance calls that have been in. We didn't have the capacity to fulfill the demand. If we thought the demand got to a place, and there was a security there and, and a wise investment to make an investment in another plane, then we would do that. But currently, we, we think there's opportunity just getting some of our metal healthy, that was, again, scheduled maintenance calls this year.

[Michael Van Aelst, Managing Director at TD Cowen]

Perfect.

[Dan McConnell, President and CEO at The North West Company]

In the first quarter.

[Michael Van Aelst, Managing Director at TD Cowen]

Thank you.

[Dan McConnell, President and CEO at The North West Company]

Thanks, Michael.

[Operator]

The next question is from Mark Petrie, from CIBC. Your line's open. Go ahead.

[Mark Petrie, Equity Research Analyst at CIBC Capital Markets]

Yeah, thanks, and good afternoon. I wanted to just follow up on the inventory first, and is the right way to think about it just, you know, the entire increase from last year is sort of positioning for the payments flowing through and the increased demand you expect, or are there other moving parts in that inventory that we should be aware of?

[Dan McConnell, President and CEO at The North West Company]

There's some inflation in the inventory as well. So I'd say there's some inflation, but it's a lot of it is, it's the getting ready for business as this a lot of these large sums of money are just around the corner. Like I said, we have a trickle now, and we expect it to be flowing, I'd say any day now. Because of the extended dates that I mentioned in my call of being March 2024 for their ability to do the application, we do anticipate, though, that this mark will flow into the beginning half of 2025.

[Mark Petrie, Equity Research Analyst at CIBC Capital Markets]

Yeah, understood. Okay. And how should we expect your inventories to grow in the coming quarters, just from a working capital perspective?

[Dan McConnell, President and CEO at The North West Company]

From a working capital, I don't expect them to grow. I think, they'll grow in regular trajectory with, like, with our cycles of buying over the next, call it three months, similar to that of last three months. But also, with the Next 100, we are looking at doing rationalization, and that is something we'll be able to give you more direction as we kind of land on the proper level of inventories that we think we need in order to maximize our business. So being more efficient with the right inventory at the right time in order to basically increase our GMROI and bring down our overall inventory carry. Something that's a work in progress, but it's definitely on our radar.

[Dan McConnell, President and CEO at The North West Company]

And we'll, as soon as I can give you more information on that, Mark, or, sorry, information on that, Mark, I will.

[Mark Petrie, Equity Research Analyst at CIBC Capital Markets]

Yeah, understood. Okay. Thank you. And I'm just curious, you know, like, when you think about sort of the demand that you expect to see, you know, is this demand that you need to have inventory on hand for? Or is some of it, you know, demand that you think, you know, someone will come in and be like, "I wanna place an order for this," and then you can sort of flow that through your supply chain, so not necessarily reflected in the inventory? Like, how would you balance those two opportunities?

[Dan McConnell, President and CEO at The North West Company]

Well, I think what you're asking is, is it necessary for us to hold all this inventory, or could we set up some type of, a solution whereby people put in an order, we don't hold the inventory, and it's kind of factory to customer? Is that—am I right on?

[Mark Petrie, Equity Research Analyst at CIBC Capital Markets]

Yeah. Yeah, essentially.

[Dan McConnell, President and CEO at The North West Company]

Yeah.

[Mark Petrie, Equity Research Analyst at CIBC Capital Markets]

Yeah, or if you think that-

[Dan McConnell, President and CEO at The North West Company]

You know what? That-

[Mark Petrie, Equity Research Analyst at CIBC Capital Markets]

Even if you think that opportunity exists.

[Dan McConnell, President and CEO at The North West Company]

You know what? We've learned in the past that it's, it really helps to be in stock with the right products at the right time. People, you know, they, they often, when they get the money, they want the product right away. So that's, that's why we've gone the route where we have. We don't wanna miss any sales opportunities. So we think it's really important to have, the inventory to the best of our forecast, there for them to touch it, feel it, and, it, it enhances and increases the probability of them buying it.

[Mark Petrie, Equity Research Analyst at CIBC Capital Markets]

Yeah, understood. Okay. And how are you communicating with your customers around this sort of in-stock position and this opportunity in general? Have you adjusted your marketing at all, your in-market marketing?

[Dan McConnell, President and CEO at The North West Company]

Well, definitely. I mean, the products are they're... In most of the markets, the products are visible, and it's not a matter of if the money comes. Let's just say that the anticipation is when it comes, there's a nice, let's say, quick pace to the store to make sure that they're getting the products that they want before anybody else can get them.

[Mark Petrie, Equity Research Analyst at CIBC Capital Markets]

Yeah. Yeah, for sure. Okay. And, I see you acquired a powersports dealership in Alaska. I know-

[Dan McConnell, President and CEO at The North West Company]

Yeah

[Mark Petrie, Equity Research Analyst at CIBC Capital Markets]

... these types of deals are very opportunistic, but is the right way to think about it, that it's just sort of a one-off? Or how would you characterize your perspective on those types of deals today versus a few years ago or pre-pandemic? Are you more open to them? Are you less open to them? What's your sort of thinking?

[Dan McConnell, President and CEO at The North West Company]

Well, we're more open to them, as you see, and as I talked to you about our inventory levels and what comprises of some of those increases in inventory. Big ticket motorized is something that we don't just kind of move around the perimeter, like, we're well into it. So it's more of a hub and spoke model. Not every community is big enough to house its own motorized, like, motorized shop.

[Mark Petrie, Equity Research Analyst at CIBC Capital Markets]

Sure.

[Dan McConnell, President and CEO at The North West Company]

But the ones that we do think can kind of do a hub and spoke and deliver service to the community within and the surrounding areas, that's where we're strategically looking at placing these types of operations. But I don't see it as... You know, I don't think that we're gonna do 30 or 40 or even 20, but they're strategically placed, and it's to be able to add some service to the existing community and surrounding community and just carry more inventory and be more on top of what the customers need.

[Mark Petrie, Equity Research Analyst at CIBC Capital Markets]

Okay, but typically-

[Dan McConnell, President and CEO at The North West Company]

It is a lifestyle in these communities, so it's definitely been a strong business for us.

[Mark Petrie, Equity Research Analyst at CIBC Capital Markets]

Yeah. Okay, I got that. But this one was in Alaska, so this is separate from sort of the inventory investment in Canada.

[Dan McConnell, President and CEO at The North West Company]

Yeah.

[Mark Petrie, Equity Research Analyst at CIBC Capital Markets]

This is just holistically, you wanna be in this business?

[Dan McConnell, President and CEO at The North West Company]

Yeah, absolutely.

[Mark Petrie, Equity Research Analyst at CIBC Capital Markets]

Yeah. Okay. Okay, understood. And sorry, just to clarify, I just didn't catch it, but when you're referring to the Next 100, is that sort of a specific financial target or what is that? What is the context of that specifically? Is that an EBIT number over the next three years, or what is that?

[Dan McConnell, President and CEO at The North West Company]

No, I'll be more direct with you in the future, Mark. It's really just about getting the teams to enjoy, be proud of the legacy of the company, and just think about setting it up and looking more into the future so we get more strategic, build more capability to definitely generate stronger returns over the next number of years. So it's kind of a play. It's just, again, living off... We're fortunate that we can live off of a pretty long, you know, number of centuries, legacy. So it's just about, you know, identifying with the employees and letting them know they're part of something special in the future.

[Mark Petrie, Equity Research Analyst at CIBC Capital Markets]

Yeah. Okay, understood. I appreciate that context.

[Dan McConnell, President and CEO at The North West Company]

Yeah.

[Mark Petrie, Equity Research Analyst at CIBC Capital Markets]

Okay, thanks a lot, and all the best.

[Dan McConnell, President and CEO at The North West Company]

Thanks, Mark. See you.

[Operator]

Thank you. The next question is from Sean Regan. If you can announce your company, your line is open.

[Sean Regan, Senior Director at Veritas]

Hey there, with Veritas. Done a lot of looking into your, the benefits of the settlement here. Obviously, with the water settlements, pretty good confidence that you'll get a large catch of that, given the locations of the claims and the locations of your stores. But when you look at the FN CFS settlements, it's a bit more vague who's gonna be receiving those claims. Do you imagine you'll get a similar chunk of the pie out of that CAD 23 billion, as you will from the CAD 8 billion?

[Dan McConnell, President and CEO at The North West Company]

No. Like, there's gonna be more spread. Like, so we talked about 30 communities being involved in the settlement, just 30 of our communities. So with the other, with the childcare benefit, that will probably be in all of our communities, all of the First Nations communities.

[Sean Regan, Senior Director at Veritas]

Mm-hmm.

[Dan McConnell, President and CEO at The North West Company]

Much greater number of stores.

[Sean Regan, Senior Director at Veritas]

Okay, great. Thank you.

[Dan McConnell, President and CEO at The North West Company]

Thanks for the question.

[Operator]

Thank you. Once again, please press star one on your device's keypad if you have a question. Next question is from Stephen MacLeod from BMO Capital Markets. Your line's open.

[Stephen MacLeod, Managing Director at BMO Capital Markets]

... Thank you. Good afternoon, guys.

[Dan McConnell, President and CEO at The North West Company]

Good afternoon.

[Stephen MacLeod, Managing Director at BMO Capital Markets]

Mike, hi. Lots of great color so far, but I just wanted to follow up on a couple things. Just with respect to the water settlement, I mean, you've emphasized a number of times that, you know, Q1 represents a sort of small, small proportion of the actual volume of claims. And, you know, you saw gross general merchandise same-store sales up nicely in Canada and that in Q1. So I'm just curious, I mean, is there a way to think about how that general merchandise growth could evolve through the back half of the year and into fiscal 2025 that you'd be able to share?

[Dan McConnell, President and CEO at The North West Company]

Well, it's tough, Stephen, and the reason being is, you know, we thought we would've thought that this money would've dropped a lot sooner. So it's really tough to forecast when this money is gonna fall. I think we're pretty safe. I would think we're pretty safe in the projections we gave you, saying latter half of 2024 and early parts of 2025. But as far as what... How that quantum would enter would impact sales, I think I would just say you've seen the inventory levels that we have, and we anticipate a pretty strong sell-through on that inventory once the money comes through.

[Stephen MacLeod, Managing Director at BMO Capital Markets]

Yeah. Okay. Okay, that's helpful. And then just with respect to, like, if you think about the child welfare settlement, and, you know, moving beyond the individual payments, do you have visibility into, 'cause I, you know, couldn't find it myself, but don't know if it's been communicated, but do you have visibility into sort of when the investments come through to the communities?

[Dan McConnell, President and CEO at The North West Company]

We will before they happen.

[Stephen MacLeod, Managing Director at BMO Capital Markets]

Mm-hmm.

[Dan McConnell, President and CEO at The North West Company]

Sorry.

[Stephen MacLeod, Managing Director at BMO Capital Markets]

Yeah.

[Dan McConnell, President and CEO at The North West Company]

Sorry, did I cut you off? Sorry, Steve.

[Stephen MacLeod, Managing Director at BMO Capital Markets]

No, no, it's good.

[Dan McConnell, President and CEO at The North West Company]

I think we will before they happen, but we don't have it right now. I mean, it's, there's a couple... There's programs that come out, and, I'd say we're pretty... Our, our ear is pretty close, to the market in that respect. But no, I don't know the full script of, what the, what the scheduled, investments will be by market at this point.

[Stephen MacLeod, Managing Director at BMO Capital Markets]

Yeah. Okay. You know, that's, that's great. And then just following up on the Next 100 program. You know, is this like in previous quarters, you've had these strategic priorities listed, but is the Next 100 entirely new-

[Dan McConnell, President and CEO at The North West Company]

No

[Stephen MacLeod, Managing Director at BMO Capital Markets]

-when you turn the page to fiscal 2024?

[Dan McConnell, President and CEO at The North West Company]

No, no, this has been-

[Stephen MacLeod, Managing Director at BMO Capital Markets]

Just assigned a name to it.

[Dan McConnell, President and CEO at The North West Company]

Yeah. Well, it's really like, it's been a pretty... It's a pretty strict program. Like, we've been working on it over the last number of months, on a number of quarters. We've had the Next 100. It's basically, we've made it public. We've put a name to it, but it's just to show you the vigor, the, the discipline is not to be undersold, I would say, because it's something that we're very engaged in because we think it's worth it for, again, the customers and, and for, for our shareholders, for sure.

[Stephen MacLeod, Managing Director at BMO Capital Markets]

Right. Okay, perfect. That's great. Thanks, Dan. Appreciate it.

[Dan McConnell, President and CEO at The North West Company]

All right, thank you. Have a good night, night.

[Operator]

Thank you. There are no further questions registered at this time. I would like now to turn the meeting back over to Mr. Daniel McConnell.

[Dan McConnell, President and CEO at The North West Company]

Okay. Well, thank you, operator, and I appreciate everybody attending our Q1 call, and we look forward to chatting with you next quarter.

[Operator]

Thank you. The conference is now ended. Please disconnect your lines at this time, and thank you for your participation.

Participants

Executives

• Dan McConnell, President and CEO
• John King, EVP and CFO

Analysts

• Mark Petrie, Equity Research Analyst at CIBC Capital Markets
• Michael Van Aelst, Managing Director at TD Cowen
• Sean Regan, Senior Director at Veritas
• Stephen MacLeod, Managing Director at BMO Capital Markets