Greetings, and welcome to the American Eagle Outfitters First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief Q&A session will follow the formal presentation. If you'd like to ask a question during that time, please press star one on your telephone keypad. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Judy Meehan. Thank you. You may begin. Good afternoon, everyone. Joining me today for our prepared remarks are Jay Schottenstein, Executive Chairman and Chief Executive Officer, Jen Foyle, President, Executive Creative Director for AE and Aerie, and Mike Mathias, Chief Financial Officer. Before we begin today's call, I need to remind you that we will make certain forward-looking statements. These statements are based upon information that represents the company's current expectations or beliefs. The results actually realized may differ materially based on risk factors included in our SEC filings. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Consistent with the retail calendar and the 53rd week last year, first quarter 2024 results and today's discussion are presented for the 13 weeks ending May 4, 2024, compared to 13 weeks ending April 29, 2023. Comparable sales metrics are presented for the 13 weeks ending May 4, 2024, compared to the 13 weeks ending May 6, 2023. Also, please note that during this call and in the accompanying press release, certain financial metrics are presented on both a GAAP and non-GAAP adjusted basis. Reconciliations of adjusted results to the GAAP results are available in the tables attached to the earnings release, which is posted on our corporate website at www.aeo-inc.com in the Investor Relations section. Here you can also find the first quarter investor presentation. Now I will turn the call over to Jay. Thanks, Judy, and good afternoon, everyone. I'm incredibly pleased with our first quarter results. We posted significant growth from last year and meaningfully exceeded our guidance. These results are a strong proof point that our strategic priorities are driving business momentum and solid profit flow through. This past March, we were excited to share our new strategy plan, Powering Profitable Growth. Charts a new path forward for the company and aims to deliver steady growth as we build to an operating margin target of 10% by 2026. AEO is a proven brand builder with distinct and undeniable strength. We have exceptional brands in American Eagle and Aerie, with powerful customer connection and tremendous growth potential. Our best-in-class operations bring our brilliant design team's creative vision to life at the highest level every day. Our shopping experiences across stores and digital is second to none, powered by decades of customer insights. Our new strategy magnifies these strengths to go after growth opportunities, and our focus on continuous operational improvements will set the business up to deliver consistent, profitable growth in the years ahead. As a reminder, our priorities are defined by three key strategic pillars. First, amplify our brands, second, optimize our operations, and third, execute with financial discipline. Jen and Mike will provide more detail on how we deliver against these pillars, but I want to underscore just how pleased I am with momentum out of the gate. The teams have wasted no time in attacking our priorities. Let me touch on a few highlights. First quarter revenue, $1.1 billion, reflected a new record for the company, driven by 7% comp growth. What's more notable is the strength we saw across brands and channels. American Eagle, Aerie, digital, and stores all experienced solid growth and healthy metrics. We saw meaningful increases across Aerie and OFFLINE's core categories, particularly in apparel, where expansion beyond Aerie's foundation intimates has seen strong success. As we reviewed Activewear under the OFFLINE banner and Aerie soft dress and dressing presents huge long-term growth opportunities. These are large categories with significant white space, and Aerie and OFFLINE bring a fresh take to the market that is body positive and fun. As we continue to build brand awareness and invest in our assortments, we're gaining momentum, and we have strong plans in place to continue to gain share. I also want to take a quick minute to celebrate the great progress we've made on the American Eagle brand. As we shared in March, there's renewed focus on driving growth by leveraging AE's powerful platform and amazing legacy to extend our dominance in casual wear. This presents a sizable growth opportunity, and as Jen will cover, early initiatives are delivering excellent results. We're gaining momentum and growing market share in a number of our focus categories. Strength was broad-based across channels, with growth in both digital and stores. Here, too, we saw recent initiatives aimed at improving KPIs deliver results. For example, more strategic and targeted customer tactics online led to a double-digit increase in digital revenue. Our first quarter financial results reflected strong early results on our priorities. We saw significant leverage across our cost base, fueled by a number of initiatives, action on as a part of our strategic priorities. Our strong cash position allowed us to fuel investments in the business. Additionally, we returned approximately $60 million in cash to shareholders through a combination of dividends and share repurchases. Our balance sheet is healthy, with $300 million in cash and no debt. With a solid start to the year, we are on pace to deliver our full year guidance for revenue and operating income. This is an exciting time for American Eagle Outfitters. We feel very confident in our future. We have the right focus, a clear strategy, and a highly talented team that will carry us through as we unlock greater value for our shareholders. Now, over to Jen. Thanks, Jay, and good afternoon, everyone. It's great to see nice momentum across the business as we implement the strategic initiatives we reviewed with you last quarter. The teams have truly taken the task of amplifying our iconic brands. We are making great headway and fueling the significant opportunities we see across the assortment, while elevating our store and digital experience. I'm incredibly pleased with how we delivered the first quarter. We brought innovation to core collections as well as new adjacencies, driving growth across American Eagle and Aerie. We maintained inventory discipline and chased into winning ideas efficiently, fueling merchandise margin expansion. We also grew our customer file across brands, marrying strong products with exciting marketing activations and a winning shopping experience. Starting with American Eagle, I am particularly encouraged by the acceleration to 8% revenue growth, fueled by a 7% increase in comps. Key drivers of growth included women's overall, especially in tops, which, as I reviewed, is a major priority for us. I'll also highlight strength in dresses, skirts, and jeans. In these areas, we are seeing a positive customer response as we look to capture the social casual dressing occasion and a wider age demo. Both of these are key growth opportunities within our long-term plan. Men saw strength in pants, knit tees, sweaters, and outerwear. I'd also like to add that we are seeing nice momentum in AE 24/7, our men's Activewear collection. Across the AE brand, our ongoing focus on flow-through led to a 310 basis point improvement on the operating margin to 19%. Turning to other brand priorities, as you know, we are modernizing our stores and improving inventory allocation. We are seeing exciting results from action taking so far. The new Lived-In store design is a truly fresh and modern update, with remodeled stores continuing to outperform the balance of the fleet across several KPIs. Additionally, as I discussed last quarter, our focus on expanding availability of top-selling styles across our fleet is delivering a nice comp lift. Now, moving on to Aerie. We achieved yet another record revenue quarter, with brand revs up 4% to last year, fueled by a 6% increase in comps. Excluding swim, where trends have been challenging in the spring season, Aerie comps are up 11%, consistent with trends exiting last year. The operating margin increased 70 basis points to 16.5%. As Jay noted, we saw incredible strength across our core soft dressing and Activewear businesses. In intimates, we continue to see traction with new fabrications and styles, including our fan favorite SMOOTHEZ collection. Looking ahead, there remains significant untapped opportunity for Aerie and OFFLINE as we are confident in their growth trajectory. New Aerie and OFFLINE stores continue to come out of the gate positive to expectations. We are also testing a new Aerie store design in Tysons Corner that showcases our assortment in an exciting and unique way. We opened this location a few weeks ago, and early indications have been encouraging. As we made investments in our assortment and shopping experience, we also fueled customer engagement with exciting marketing activations. In the first quarter, we kicked off our celebration of the tenth anniversary of AerieREAL, showcasing our decade-long commitment to body positivity and women's empowerment that has forever transformed the retail industry. Throughout the quarter, we shared real-life testimonies from our customers on the life-changing impact Aerie has had on them in social and in-person events. This included the first event, an exciting multi-stop AerieREAL Tour, running through the country this year. American Eagle continues to be at the epicenter of popular culture. Promoting our spring denim collection and capitalizing on the Western trend, we leveraged influencers and organic content to build excitement across social channels. As we approach back to school, we look forward to the relaunch of the brand platform, celebrating AE's heritage of self-expression, individual style, acceptance, and of course, optimism. As we fuel growth, casual dressing remains a quintessential part of our customers' wardrobes, providing the natural tailwinds to our business. We are seeing exciting new trends emerge on the runway and on the streets. Two of the most beloved brands in the industry, American Eagle and Aerie, are well-positioned to continue to win. Before I turn the call over to Mike, I want to say a big thank you to the American Eagle and Aerie teams for their hard work and perseverance. We've had a lot to be proud of this quarter, yet the work continues. We are breaking new ground every day and forging ahead. With that, I'll turn the call over to Mike. Thanks, Jen, and good afternoon, everyone. As Jay and Jen reviewed, we're off to a strong start for 2024. Our new strategy is delivering great results, with healthy growth across brands coming hand in hand with meaningful profit and margin expansion. Our focus on optimizing our operations and executing with financial discipline contributed to strong gross margin expansion in the quarter, and we remain on track to begin leveraging SG&A in the second quarter as additional work streams come into effect. Expanding on a few highlights. Consolidated revenue of $1.1 billion was up 6% to last year, driven by a 7% increase in comparable sales growth. As discussed last quarter, the shift in the retail calendar contributed approximately $15 million to revenue, reflecting the capture of a higher volume spring week. Operating income was $78 million. This represents a 76% increase to last year's adjusted operating income of $44 million. The operating margin rose 270 basis points to 6.8% against an adjusted operating margin last year. Gross profit dollars of $464 million increased 12%. Gross margin expanded 240 basis points to a rate of 40.6%. This was our second highest rate since 2008, which really speaks to the structural improvements we're making to our business. Strong inventory management and our shift to a more profitable clearance model, initiated the second quarter of last year, contributed to gross margin expansion. Lower product and transportation costs also had a favorable impact to margin. As in every the past several quarters, our focus on reducing costs across the business continued to deliver results. Operating expenses within the gross margin leverage, including 90 basis points of leverage on BOW costs, driven by rent, delivery, and distribution and warehousing costs. SG&A expense of $333 million was up 7% to last year and roughly in line with sales growth, consistent with our guidance. As noted in March, SG&A is a big focus for us. We have work streams that are continually addressing 85% of our expense base, with focus areas being store and corporate compensation, professional fees and services, and optimization of marketing spend. We're making good progress across the board and remain on track to begin leveraging SG&A in the second quarter. Depreciation was down slightly year-over-year, leveraging 60 basis points. The first quarter tax rate benefited from discrete items. We expect the tax rate to be in the mid- to high 20s for the remainder of the year. Earnings per share for the first quarter was $0.34 per share, and this rose 98% to last year's adjusted earnings. Consolidated ending inventory at cost was up 9% year-over-year, with units up 10%. This includes higher end-of-season merchandise due to our shift to a more profitable clearance strategy, which will anniversary next quarter. Inventory levels remain healthy and in line with demand trends across brands as we maintain buying discipline and continue to chase. We ended the quarter with a strong balance sheet, holding approximately $300 million in cash and over $900 million of total liquidity, including our revolver. CapEx totaled $36 million, and we continue to expect full year spend to be in the range of $200 million-$250 million. As we discussed, the strategic plan is driving great results. There's a new mindset across the organization, with every team decision now incorporating an end-to-end assessment of its ability to power healthy top and bottom line growth. This is a permanent cultural shift across the business that is optimizing how we operate every day and allowing us to maintain strong financial discipline. Importantly, as we discussed in March, the work is ongoing. We have formalized this new mindset and rigor into an office of continuous improvement to identify incremental efficiencies and drive accountability and results. Now on to our outlook. We are making steady progress across our strategic pillars. As Jay noted, we're on pace to achieve our full year operating income guidance of $445 million-$465 million. This reflects revenue growth in the range of 2%-4%, including an approximately 1-point negative impact from one less selling week. As we control expenses, we continue to expect full year SG&A dollars to be flat at the low end of our revenue outlook. Additionally, D&A is still expected to be approximately $220 million, and our projections for weighted average share count remains in the high 190s. As I discussed last quarter, we expect total revenue and profit growth to be skewed to the first half of the year, reflecting easier year-over-year comparison, the impact of the retail calendar shift, and one less selling week in the fourth quarter. As noted last quarter, this implies a low single-digit comp assumption in the back half of the year. Quarter to date, we feel really good about the pace of the business, with strength continuing into the second quarter. We're guiding operating income in the range of $95 million-$100 million, with revenue up in the high single digits. As a reminder, this includes a $55 million positive impact to the top line from the shift in the retail calendar as we pick up a week of back to school, which are some of our busiest weeks of the year. Before I open up for questions, I want to underscore our confidence in the direction of the business. With our strategy and priorities aligned towards delivering consistent, profitable growth, we have a solid plan in place that is already unlocking significant value across the company. The teams are focused and driving to our long-term plans. With that, we'll open up for questions. Thank you. We will now be conducting a Q&A session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue, and you may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Thank you. Our first question comes from the line of Matthew Boss with JP Morgan. Please proceed with your question. Great. Thanks. So Jen, could you elaborate, maybe on current demand trends, what you've seen in May, maybe what you're seeing across your product assortments, across brands into the back half of the year? Just your confidence in comping that comp, you know, as we move through the year. And then, Mike, just on the SG&A, maybe how things came in during the first quarter relative to plan, and then drivers of the inflection to leverage that you cited in the second quarter and back half of the year. Sure. Okay. Thanks, Matt. And thinking about American Eagle first, you know, as I said back in March, we're really up to amplifying not only American Eagle, but both brands. And as I think about, Mike, you just said it well, we really did deliver on the strategy. You know, we continued to dominate in jeans. I believe there will be tailwinds there. We're seeing early trends, particularly in women's, and the assortments look great for back to school and onward. And completing the outfit, that's been something so important on the American Eagle side. We were very single-noted, and it was time to rebuild that lifestyle that the customer was demanding for us, from us, and wow, those results have been, better than expected. And so we're gonna continue to expand in those adjacencies, Matt. And then thinking about our fleet, we have a new store design, Lived-In, that is getting an incredible response from the customers. So again, we're gonna continue to deliver on that. As I think just more so with the product and how we're set up for back-to-school, look, the tailwinds are there in denim. I just said that. We're gonna round out the assortment in men's, more so with the early reads that we've seen in the business, which are great categories. We just need to dominate more, and we need to distort more into these categories that did win in men's. Women's, we're on a great trajectory, so we're gonna continue to drive the early trends and get back into those businesses. We leave open to buy, so we can really, you know, course correct as we build out into the back half. Aerie, look, the comps outside of swim were powerful. We were right in line where we left in Q4, and those businesses continue, and actually, we build on them in Q3 and Q4. So I think you're gonna see, you know, a nice change in pace in that business as well as we lead into the back-to-school season, soft dressing, and some new categories. We love what we're seeing in some of these new offerings that, our customer has not really seen from us, one being sleep. There's some really fun ideas around that category. We're gonna continue to innovate on our, you know, core categories. Even in some of the slowdown in intimates, we held our position and our market share, and we have new surprises in that category. So lots in store for back to school, not only just with the product offerings, but also our marketing. We're gonna re-pitch the American Eagle brand. I think you're gonna be really excited with what you see. It's getting back to our roots, our heritage. The campaign looks phenomenal and same for Aerie. So lots in store. And on, Matt, on SG&A, Q1 result for SG&A was right in line with our guidance. Dollars were up 7%, exactly in line with our comp result of +7%. Second quarter, we're looking at SG&A growth in the mid-single digits on high single-digit revenue growth. That includes the impact of that $55 million shift of revenue into the quarter from the retail calendar shift. And the SG&A up mid-single includes some variable expense shift with that revenue. Then the back half of the year, SG&A dollars are planned down. So, from here, we are structured to leverage, I think, really pleased and proud of the expense leverage we saw in the first quarter across the P&L, a lot of which was in gross margin and then depreciation. From here, we're really looking to and excited the fact that SG&A is where we'll see a lot—a significant amount of leverage from the second quarter on. Great color. Best of luck. Thank you. Our next question comes from the line of Adrienne Yih with Barclays. Please proceed with your question. Great. Thank you very much. My first question is basically the reiteration of the full year. Does that have anything to do with sort of visibility or macro? If you can just speak to that. Jen, can you go over the percentage sales that swim contributes? Obviously, it was tough to sell swimwear when it's 50 degrees, but wondering, does that impact, does it have—do you have, like, a calculated impact on the second quarter? And then, my last one is on the inventory. Mike, can you just clarify the ending inventory? How much—I think there's some confusion. How much of that is that you are holding that inventory on your balance sheet rather than liquidating it with third party? I think that would be helpful, too. Thank you. Sure. Thanks, Adrienne. I can talk—start with the reiteration of the full-year guide. I think we're very pleased with our Q1 results, as we said. We exceeded expectations and guidance both on top line and our, you know, operating income range of $65-$70, so exceeded nicely on both revenue and income. The reiteration of the year is really we're on plan. We're slightly ahead of our plans for the first half. It's really more of a cautious guide for the back half of the year as we lapse some—the better results that started with back to school last year. July and August are a proof point for us in terms of what we should expect. It's always a proof point for what we would expect in the back half of the year. So I think it's just kinda maintaining the strategic path, executing on our plans, and you know, as we see the back half of the second quarter into back to school, we can update our expectations for the year. I can hit inventory quickly. So on inventory, yeah, we have +9 in inventory, which was in line with sales or with our brand demand. And yes, Adrienne, there's a few points around three. We would have been mid-single-digit inventory without the impact of carrying clearance and selling it ourselves profitably now versus our previous sell-off strategy. That will anniversary here in the second quarter. So at second quarter ending inventory and then back half inventory will be more apples to apples. Right now, we are carrying more inventory as we clear it ourselves. Super helpful. And the impact of swim is for Aerie, specifically, high single-digit impact on the front half, and then not material at all on the back half. As I mentioned, other core categories that we, you know, will then double down on as we get into Q3, Q4, we're really excited about, and we've seen nice wins there. Great. Thank you very much. Best of luck. Thank you. Our next question comes from the line of Dana Telsey with Telsey Advisory Group. Please proceed with your question. Hi, good afternoon, everyone, and nice to see you with the results. As you look at the channel sales of stores and digital, difference between Aerie and American Eagle, what you saw traffic-wise or transaction-wise in unbundling the comp, by channel, and any change to your new store openings for this year and how you're looking at it? Thank you. Yeah. Thanks, thanks, Dana. The channel specifics for the brands were Aerie stores and digital were pretty close to, you know, both mid-single. So Aerie's comp was +6%. Digital and stores were pretty close in terms of that +6%. Swim has a bigger impact on digital. So as we talk about the Aerie comp being +11% without swim, you know, that impacted the digital comp more than stores. AE stores were slightly positive, and digital was high teens growth. So that's, you know, AE brand +7% comp was a mix of stores being slightly positive, digital high teens, Aerie +6%, both channels were similar. Got it. And then store plans continue to be 25-30 Aerie OFFLINE new stores and kind of a net 20 or so, 20, 25 closures for AE, but that's something we're looking at even more closely. We expect that number to continue to come down as we look to reposition more locations. And because of the success that we're seeing or early success in our remodel program with the results of those stores. Got it. Just one follow-up, Jen, on the category of denim. How did denim do? How is pricing and with some of the new styles? You mentioned tops being a key, a key call-out. Sounds like it's helping the tops business, too. Is that driving margins also? Thank you. Absolutely. We've really taken that category back. We're winning, definitely in women's. Some early learnings in men's, as I mentioned, that we're gonna. You'll see more of that, those learnings in Q3. We remain very nimble in that category, but we're definitely more balanced than we had been in the past, where we can chase the right fashion, not over a sort either, but make sure that we are at a, you know, in a better balanced situation. As we get into Q3, you'll see more new fits, new learnings. We've had a bunch of tests out there that will drive the assortment, and I like what I see. I definitely feel like there's tailwinds. I mentioned it earlier. I think we're about to head into a cycle, which is obviously a winning category for us. It's our dominant category, and we dominate in it. Like I said, women's in particular, already is, are seeing these trends, and we will continue to drive those trends. Thank you. Our next question comes from the line of Paul Lejuez with Citi. Please proceed with your question. Hey, thanks, guys. If I'm seeing this right, Aerie comps were up 6. I think total revenue is up 4. Why the negative spread on the Aerie business? And then curious if you could talk about what you saw by month throughout the quarter, by brand, and if you saw any weather impact. Thanks. Hi, Paul. Yeah, the difference in the Aerie +6% comp versus +4% total revenue is fully an impact from sell-off revenue last year. So last year in the first quarter, we had not made the operational change around selling our own clearance profitably versus sell-offs. So we did book sell-off revenue in the first quarter last year at a loss. So that differential this year impacted Aerie more last year in the first quarter, which is driving that differential this year. We'd expect that to normalize as we anniversary that in the second quarter, and you won't have that impact go forward. We still expect Aerie's spread to be about one point directionally for the rest of the year. And then I think by month, to answer that question, yeah, I think it's, it's always a little rocky when you've got, the spring break and Easter calendar shifts. Definitely a couple rocky weeks there in terms of weather, but, it's always a March, April phenomenon. We're pleased with the total quarter result, coming in above our expectations. And then May, you know, 2Q to date, anything you can talk about by brand? Yeah, continuing momentum, similar to what we've been seeing. You know, pretty commensurate with the first quarter trend, so we're very pleased with that. Coming into the second quarter, our guidance is based on mid-single. So again, no, you know, early in the quarter, three and a half weeks in. Yeah, it's early in the year in general, so both the second quarter guide and the full year, we still got a long way to go. Some big, big kind of summer and back-to-school weeks coming in the second quarter, and then obviously, you know, our bigger time of year is back to school and holiday. So, very pleased with the start of the year. A lot of business ahead of us. Thanks, good luck. Our next question comes from the line of Jonna Kim with TD Cowen. Please proceed with your question. Thank you for taking my question. Just curious on the promotion side, if you saw any more uptick this year versus last year, and AUR that you've seen this quarter and what your expectations are for the remainder of the year? It looks like you have a lot of exciting marketing initiatives. Just any color around the spend, if you're looking to increase spend year-and-year, and how are you allocating by channel? Thank you so much. Yeah, on promotions, I think our gross margin result is a testament to our strategies and our plans. We have 240 basis points of gross margin expansion, and that came from multiple facets within gross margin. Product margin and initial IMUs were healthy, with controlled freight and transportation costs and, you know, our sourcing strategies at work. That structural change in clearance, as much as we didn't book that revenue, that was actually a benefit to gross margin in the quarter because of selling through clearance profitably versus selling off those goods historically at a loss. And then we leveraged the expenses in gross margin by 90 basis points. So very pleased with that result in the first quarter. Promotions are still very much in check. Those are structural changes we've made that we've talked about that we do not plan to revert, which are, you know, changes to, you know, our day in, day out, you know, no BOGO on jeans like we were running for, for a long time. We've made changes to our loyalty program, where we're not giving away free jeans or free bras anymore. And then this clearance change that has a structural benefit to markdowns as well, within the gross margin. All those things are permanent and, you know, happy with the results we've seen from all those changes. In marketing spend, we have spent more. We do plan to spend more. I've talked about advertising dollars and marketing expense not being a place that we're looking to reduce spend. It's actually a place as we're looking to reduce or leverage in other places that we'd want to continue to fund marketing as we've gotten better and better at spending our marketing dollars effectively and measuring the return from that spend. It is, you know, in the media space, kind of digital media, performance marketing, and then brand in general. So we're seeing great results, kind of, across the disbursement of that spend, and we'll continue to, you know, to look at ways to spend advertising dollars where we're generating a return. All right. Thank you so much. Thank you. The next question comes from the line of Chris Nardone with Bank of America. Please proceed with your question. Thanks, and good afternoon, guys. Mike, just a follow-up on SG&A. How should we think about the outlook for SG&A dollar growth for the full year if you guys are approaching the upper end of your sales guidance? And then in the back half, I think you alluded to SG&A dollars down. Can you walk through some of the specific drivers of where you're seeing savings versus last year? Sure. Yeah, look, I think we're entering a period now where SG&A leverage will be the contribution to operating rate improvement. We're structured to leverage from here, as we said. You know, we're talking about mid-single-digit growth in the second quarter on high single-digit revenue expectations. That'll produce significant leverage in the second quarter. Third quarter dollars are down slightly on a low single-digit, both basically a low single-digit assumption for the back half in both quarters. SG&A dollars are down, so we're actually looking to leverage SG&A on low single-digit comp. And then a reminder that with the retail calendar shift, we actually have kind of flat total revenue dollars on that assumption in Q3, and then total revenue would actually be down slightly in fourth quarter off that assumption. So the exciting part about that for me is we are structured to leverage every comp point of upside from there. Knowing that the revenue, you know, the revenue expectation right now is cautious until we see a few more months of business here. So yeah, Chris, we're looking to leverage SG&A significantly for the rest of the year across the remaining three quarters. Got it. Then, at the high end of revenue guide, we would just expect a healthy flow through onto the bottom line from expense leverage. Got it. And then just a quick one on the back half comp expectations of up, low single digits. Is that uniform across both brands, or are you expecting different trends between Eagle and Aerie in the back half? We'd expect Aerie to be on the higher end. Again, the comp in Q1 was +11 when you back out the impact of Swim. We're seeing that continue into the second quarter. Swim becomes less of a contribution to the brand as we pass through the second quarter. Like last year, we saw some pressure on Aerie's comp through the first half because of Swim. It went right back to double-digit comps in the back half. So there's no reason to expect we wouldn't see kind of Aerie's comp exceed AE. But the flip side of that is we're seeing momentum in the AE brand as well. So I think there's reasons why that guide in the back half is cautious. It's early in the year. We've got momentum across the brands. The strategies we've got in place to grow the brands are working. So you know, I think to answer the question, on average, you think AE would be a little below Aerie based on that, but, you know, we've got momentum in both, both brands, which is exciting. Very clear. Thank you. Our next question comes from the line of Marni Shapiro with Retail Tracker. Please proceed with your question. Hey, everybody. Jen, congrats. The stores have looked really beautiful. The tops are amazing. I wanted to talk a little bit about something you said about broadening or widening, widening the age range for the Eagle customer. I wasn't sure if that was Eagle and Aerie or the combination of the two. Are you seeing an older shopper, a non-high school teen shopper, stay longer or come into OFFLINE? Or is it kind of a reflection. You know, I've noticed in some of your media posts and things like that, that the teens look a little bit older, and there's a feeling out there that the teens are going from, like, I wouldn't make myself sound like an old person, but that they're going from, like, 12 to 18 today. They're skipping that whole in between. Could you just talk a little bit about where your head is at with this widening of the age? Sure. Marni, welcome to my world. I have a 17-year-old. So- Oh, my God, she's, like, 34, right? Right. Just going back to our strategy, you know, we are staying the course, and I love what I'm seeing. Look, we will always dedicate to our core customer, and we'll make sure that we always have offerings to serve that customer so that they can enter with us. I think our focus is now: how do they stay with us? Mm-hmm. Thinking back to, you know, our strategy that we put forth, we wanna offer new occasions, core occasions, social casual, men's active, everyday casual. And I think as we brought in those assortments, customers are gonna stay with us, and we're seeing that. We're actually seeing the next bracket of age, of the age group actually increase slightly. So they are sticking around, and that has been an initiative, for us because in the past, they did dump out at a- Yeah C ertain age. And the more we focus on this, and like I said, brought in our assortments, I think the more they will stay with us, and that's, like... And it's working. So you'll see more offerings around this, as we head into, you know, future assortments and, and quarters. I think you'll like what you'll see. Will the marketing stay very reflective of the younger shopper and just the product assortment will expand a little bit? Product will expand, and I think you're gonna see a more balanced age demo as we continue to offer these other occasions. And of course, denim is ageless. Right Our core competency business. As we offer new fits, we're getting customers, new customers, because we were so focused on one fit in the past, particularly- Mm I n women. I think now that we've brought in that assortment, we're getting more and more customers. And you know, they love our jeans. They're just for all the reasons that we know, between price, value, quality, wash, our innovation there, you know. So I like that we might be having some tailwinds in this category. We're seeing it because I think that will bode well for this brand. Fantastic. Thanks. Best of luck for summer. Thank you. Our next question comes from the line of Janet Kloppenburg with JJK Research. Please proceed with your question. Hi, hi, everybody, and congratulations on a great quarter. Jen, I know you work hard on every aspect of your business, but weather has hurt you in the swim area for a couple of years in a row now. You know, I just wonder about the time and focus you put into it and how you'll think about that category going forward. Also wanted to hear what you're thinking about the progress in the men's business and in the social occasion business. Mike, I think you said that SG&A would be up mid-single digits in the second quarter and down, I presume, on dollars in the back half. Maybe you could give us an idea of how much, but that we should have leverage even in the fourth quarter with sales up modestly. You know, I think that's what you're guiding to, very modest fourth quarter. So, thanks for all your help. Yeah, great call. Certainly, we dedicate the time that's appropriate for that category. We have a new team in place, new eyeballs on it, new ideas. I just went through their strategies for next year. I like what I'm seeing. And we will course correct as we continue into 2025. I saw the assortments, and again, we have new categories that we're offering in Aerie that you will see expanded not only digitally, but in stores as well. So that'll also be a great win for the brand next year. And as we continue. Actually, you know, starting in Q3. Men's, look, we have some great wins in men's. I think it was just really more about the distorting into those wins that we saw early on. 24/7 is doing great out of the gate. Select knit categories, outerwear, I mentioned them in on, you know, my script there. And look, it's really now about getting the investment behind the new wins that we're seeing. I think you can see in the marketing, you'll see more trend-right categories on the go forward, and we will be leaning in there. Thank you, Jen. Okay, Jen, on SG&A, let me just be specific on SG&A. So yes, again, dollars up mid-single digit in the second quarter on high single-digit revenue. Both the revenue, revenue and SG&A dollars being impacted by the retail calendar shift with the $55 million dollar benefit second quarter. Q3, we'd expect SG&A dollars to be down slightly on, yes, what I think is a cautious, low single-digit comp. But again, with the retail calendar shift impact, there's a negative $45 million dollar impact in Q3. So in that kind of comp expectation, total revenue would be relatively flat. So we'd be set to leverage. O n top of that, with dollars being slightly down in the third quarter. Fourth quarter, same, kind of on the low end of the revenue guide and low single-digit comps. Dollars being down pretty significant in the fourth quarter, actually, could be kind of high single- to 10% range in terms of SG&A dollars being down at the low end of that guide. Again, both quarters and the whole back half set to leverage on revenue, above and beyond that expectation. Hopefully, that's more specific and helpful for you. The only way that doesn't happen is if the sales numbers disappoint? Correct. So that's how we're structured on the low end of our revenue guide of 2%. Okay. And then we're structured to leverage significantly on every comp point above that expectation. And just, Michael, some brands are seeing an uptick in their transportation costs right now, their freight. What's going on with you guys? We're not seeing that. Again, first quarter gross margin results were kind of a mix of benefits across the board from initial markup, including freight and transportation costs- Yeah. Well-controlled inventory and promotions, then in leveraging our expenses and gross margin. Line of sight for the rest of the year is, you know, no headwinds from freight and transportation costs, and we're expecting initial markup benefit in future quarters. Great. Thanks so much. Our next question comes from the line of Alex Straton with Morgan Stanley. Please proceed with your question. Perfect. Thanks a lot. I've just got two for you here. First, just on SG&A, can you elaborate qualitatively on what exactly is happening in the back half that enables you to pull back on the spend there, just so we can understand the drivers? And then secondly, just on the Aerie intimate weakness that I believe you all highlighted, can you just remind us how much of the business that comprises, as well as provide any color on how that market is trending or what you're seeing in intimates? That'd be super helpful. Thanks a lot. Yeah, so the drivers of SG&A, we talked about really for a year now as we kicked off our profit improvement initiative last year and started to see, you know, the expenses in gross margin, the benefits of work around rent, delivery, distribution, supply chain costs coming through our gross margin, the whole back half of last year. We talked about those being the priorities with SG&A coming later. So as we landed our plans for this year, you know, the work across 85% of our expense base, across the P&L in general, with the line items in SG&A that we talked about being store labor, corporate compensation, related incentives, services, kind of optimizing our advertising dollars, reducing and leveraging supplies and repairs. A lot of that work is taking hold, some of it in the first quarter, but then a large majority of the benefits really starting here in the second quarter and for the rest of the year, including compensation in general, and incentives being in that pool. So I think that's the continuous improvement office we've established, continuing to work on those work streams. 85% of our SG&A base continuing to find efficiencies to control costs, and those benefits really coming through, kind of starting here in the second quarter and the rest of the year. And Nari, you know, roughly it's about a third of the business. But as I mentioned, we're not forgetting about these core competency businesses that we launched and we owned. The SMOOTHEZ category, you're gonna see newness there. Really excited about where we're taking the intimates business. And really, what's changed a little bit is the customer has, has pivoted. If you think about our OFFLINE business, which has done incredibly well this quarter, sports bras are amazing. So, thinking about that category as well, and it gives us the ability to leverage, you know, both businesses, Aerie and OFFLINE, on where the customer is going, and we certainly did that. The sports bra business has been amazing. In fact, we rank fairly high at market share in that category and also in leggings. We gained over two points of market share in the leggings category, in this quarter. So really excited about that business. And again, it's a natural as we head into Q3 and Q4. You know, we're really happy about the Aerie business. And, you know, again, going back to our strategy, we want to win in intimates and in soft apparel. We're seeing that happen, particularly in apparel, growing off the OFFLINE business, and we definitely want to be the new authority in Activewear. So I'm very excited about all these other areas that we are diving into and owning and winning at. So lots of expansion opportunity there. So, really excited for more to come as we build out the rest of this year. Okay, great. Thanks, Jen. So, that completes our call for this afternoon. Thanks, everyone, for your participation, and we appreciate your interest.