Good morning, ladies and gentlemen, welcome to the Academy Sports and Outdoors Third Quarter Fiscal 2022 Results Conference Call. At this time, this call is being recorded and all participants are in a listen-only mode. Following the prepared remarks, there will be a brief question and answer session. Questions will be limited to analysts and investors. Please limit yourself to one question and one follow-up. To ask your question during the call, please press star one. If you require any operator assistance during the call, please press star zero. I will now turn the call over to Matt Hodges, Vice President of Investor Relations for Academy Sports and Outdoors. Matt, please go ahead. Good morning, everyone, and thank you for joining the Academy Sports and Outdoors third quarter 2022 financial results call. Participating on the call are Ken Hicks, Chairman, President, and CEO, Michael Mullican, Executive Vice President and CFO, and Steve Lawrence, Executive Vice President and Chief Merchandising Officer. As a reminder, statements in today's earnings release and the comments made by management during this call may be considered forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the earnings release and in our SEC filings. The company undertakes no obligation to revise any forward-looking statements. Today's remarks also refer to certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures are included in today's earnings release, which is available at investors.academy.com. Unless otherwise noted, comparisons are to 2021, with 2019 comparisons also provided where appropriate to benchmark performance given the impact of the pandemic in 2020 and 2021. I will now turn the call over to our CEO, Ken Hicks. Thank you, Matt. Good morning, and thank you all for joining us today. As we anniversary our second year as a public company, I'm proud of the operational and organizational initiatives we've undertaken that have transformed the company and helped drive our solid financial performance. Our talented team of retail leaders have improved every aspect of our company when compared to pre-IPO Academy, including improving our merchandise planning and allocation processes, building an outstanding assortment of good, better, best products for our customers while maintaining our focus on value, significantly enhancing our e-commerce capabilities, increasing customer loyalty through the launch of the Academy credit card, modernizing our marketing along with our store experience, and meaningfully improving our financial stability. We are in excellent financial health, capable of self-funding all of our capital priorities, which include new store expansion, omni-channel growth, technology enhancements, increasing supply chain capacity, and rewarding shareholders through share repurchase and dividends. The third quarter was challenging, our reported net sales of $1.49 billion and -7.2% comparable sales were below our expectations. We saw sales increases in footwear and apparel, but experienced sales decline in outdoors and sports and recreation. Steve will discuss our sales results in more detail later in the call. When comparing third quarter sales to 2019, we maintained a 30% growth trend, which is in line with what we have seen year-to-date. We believe this is a strong indicator that our business has baselined at a much higher level post-pandemic, and there is ongoing durable consumer demand for the sports and outdoors category. Looking at our third quarter profitability, adjusted earnings per share were $1.69, which is below last year but in line with our expectations. We maintained a 35% gross margin rate with an improved mix of products, increasing merchandise margin rates, and controlling cost. We also held a double-digit EBIT margin and for the second year in a row, expect to end the fiscal year with an annualized EBIT margin rate above 10%, which was one of our long-term financial goals. The freshness and in-stock position of our inventory across most of our categories is in very good shape. We believe we have the right amount of product from key partners like Nike, Adidas, and Under Armour to offer customers what they are looking for this holiday. There will likely be more promotional activity in the marketplace this holiday season. We are prepared to be competitive with our own planned promotions as well as our everyday value positioning, which is in our plans. We know that our customers have been under inflationary pressure and do not have the stimulus money they had last year, they are still focused on health and wellness, pursuing their hobbies, and wanting their kids to participate in their sports and activities. Our good, better, best assortment of top national brands and strong private brands available at everyday value prices allows them to continue to do that at an affordable price. As a reminder, the majority of our customers are in the middle three quintiles, ranging from $50,000- $150,000 in annual household income. There's also an ongoing population migration to our base in the South and Southeastern United States. We currently operate in some of the fastest-growing markets in the country, such as Austin, Texas, Atlanta, Georgia, and Raleigh, North Carolina. We are uniquely positioned to benefit from this shift and intend to capitalize on it by executing our growth plan of opening 80- 100 new stores between 2022 and the end of 2026. During Q3, we opened four stores in Richmond, Virginia, Atlanta, Georgia, Lexington, Kentucky, and Jeffersonville, Indiana. We have also opened three stores in Q4, one here in Houston, one in Tampa Bay, Florida, and one in a new state for us, Barboursville, West Virginia. These store openings were a mix of locations in existing, adjacent, and new markets. We are measuring and analyzing the different market types and all aspects of the opening process: marketing, merchandising, localization, seasonality, and staffing to gain a better understanding of our approach and optimize our process as we open even more stores in 2023 and beyond. I wanna give a big thanks to all of the team members who helped execute these successful store openings. The Academy team remains focused on executing our priorities to achieve our vision to become the best sports and outdoors retailer in the country while providing fun for all through assortment, value, and by delivering a great experience for our customers and creating value for our stakeholders. I will now turn the call over to Michael to provide more detail on our third quarter financial results, new stores, and provide an update on our 2022 guidance. Michael? Thanks, Ken, and good morning, everyone. Academy delivered another profitable quarter for shareholders despite ongoing macroeconomic headwinds by prudently managing inventory, expanding merchandise margins, and controlling expenses. Since going public more than two years ago, we have consistently demonstrated that we have achieved the material step-up of our earnings potential and free cash flow generation compared to years past. In the third quarter, net sales were $1.49 billion, with comparable sales down 7.2% as we anniversaried a strong Q3 2021 comp of 17.9%. The sales decline was a result of lighter traffic and fewer transactions compared to last year, but overall, we have maintained the market share gained over the last two years in each of our merchandise divisions. We saw share gains this quarter in apparel and footwear, resulting in our sales mix being more balanced between hard and soft goods compared to recent quarters. Our e-commerce sales increased 10.5%, marking the fifth consecutive quarter of double-digit growth and represented 9.5% of merchandise sales. When compared to Q3 2019, our e-commerce business has grown 173%, and the penetration rate has more than doubled. As we have stated before, we believe academy.com is a competitive differentiator for us and a very meaningful part of our future growth that we intend to invest in for the foreseeable future. As Ken said, we have completed all nine of our planned store openings for 2022. Academy stores have the highest store productivity in our peer group, making our new stores an effective use of our capital with a high return on investment. During Q3, our existing store productivity was once again best in class. Trailing 12-month sales per square foot were $351 per foot, and trailing 12-month operating income per store was $3.2 million. Gross margin dollars during the quarter were $522.5 million with a rate of 35%, only 20 basis points below last year's record third quarter of 35.2%. As Steve will tell you more about in a minute, we increased our merchandise margins compared to last year despite various external pressures as our refined merchandise planning and allocation processes continued to generate margin opportunities. We also saw a shift in our sales mix towards soft goods. These margin gains were partially offset by an increase in e-commerce shipping costs and shrink during the quarter. Since the pandemic, we have over-indexed on the hard goods side of the business, but as our mix shifts back to soft goods, our gross margin rate should benefit. SG&A expenses were 23% of sales, a 140 basis point increase compared to last year. The change was primarily a result of fixed cost deleverage from the decline in sales and additional pre-opening expenses associated with opening new stores. Operating income for the quarter was $179.5 million or 12% of sales. Academy has now delivered double-digit operating margins for seven straight quarters. Through the first three quarters of this year, we have generated over $640 million of operating income, which is more than the company earned in all of fiscal 2019 and 2020 combined. This is a clear indicator that the operational and organizational improvements made over the past few years have structurally changed and enhanced the earnings power of Academy. Third quarter GAAP diluted earnings per share were $1.62 per share compared to $1.72 per share last year. Adjusted diluted earnings per share were $1.69 per share compared to $1.75 per share last year. Looking at the balance sheet, Academy ended the quarter with $318 million in cash and had no outstanding borrowings on our billion-dollar credit facility. Our positive cash flow generation remained strong as we delivered $50.8 million in net cash from operating activities. During the third quarter, we executed on our capital allocation plan, in part by investing in the following: opening four new stores, repurchasing 2.2 million shares for approximately $100 million, paying out $6 million in dividends, investing in supply chain and technology enhancements, and lastly, maintaining a healthy cash balance. In addition, the board recently declared a dividend of $0.075 per share payable on January 13, 2023 to stockholders of record as of December 20, 2022. Looking at our inventory, our ending inventory balance was $1.5 billion, a 12.8% increase compared to Q3 2021. When compared to Q3 of 2019, inventory dollars were up 12.3%, while units declined by 10% on the 30% sales increase. This demonstrates that we have effectively managed our inventory while experiencing significant sales growth. To illustrate, when comparing revenue versus inventory per square foot this quarter to Q3 2019, revenue per square foot has increased 28%, while inventory per square foot has only increased 10%. Lastly, based on our year-to-date results and current trends, we are narrowing our sales and earnings guidance and raising our full year 2022 earnings per share forecast as follows. Comparable sales are expected to range from down 6% to down 5%. GAAP income before taxes is expected to range from $790 million- $810 million with an expected gross margin rate of 34% to 34 and a half%. GAAP net income of between $610 million and $620 million. GAAP diluted earnings per share of $7.25 per share to $7.40 per share. Adjusted diluted earnings per share, which excludes certain estimated expenses such as stock compensation and store pre-opening expenses, are now expected to range from $7.50 per share to $7.65 per share. The earnings per share estimates are calculated on an updated share count of 84 million diluted weighted average shares outstanding for the full year and do not include any potential repurchase activity using our remaining $400 million authorization. We remain confident that our business model, driven by our transformed retail capabilities and the everyday value of our products, positions us well to navigate this uncertain environment and to win this holiday season, but also to drive long-term sales and profits. With that, I will now turn the call over to Steve, who will give you more details around our merchandising and operations performance. Steve? Thanks, Michael. As you heard earlier, our Q3 sales came in at $1.49 billion, which was a 7.2% comp decline versus 2021. Up 30% versus our 2019 baseline. This was a little lower than the first two quarters, which were up 36% versus 2019. We're pleased that we continue to hold on to the large majority of the gains from the past couple of years despite a more challenging macroeconomic environment. It was also good to see three of our four divisions show an improvement in the trend versus last year during the third quarter. Footwear was our best performing division in the quarter, with sales coming in at up 5.1% versus last year and up 32% versus 2019. We got off to a strong start during back to school in footwear and saw the momentum carry throughout the quarter. As you'd expect, a lot of the categories that spiked during back to school, such as kids' shoes and cleats, were some of the leading performers during the quarter. We also continue to see strong sales in key brands such as Brooks, Crocs, and Skechers, along with a very successful launch of Hey Dude across all of our stores. Apparel sales also rebounded in Q3 with an increase of up 0.5% versus last year, which was a dramatic improvement versus our spring trend. Like footwear, we continue to run double-digit comps versus our 2019 baseline of up 24%. Back to school results were also strong in apparel. The momentum that started early on carried forward into the remainder of the quarter. This momentum, coupled with an improved inventory position in top brands such as Nike, Columbia, and Carhartt versus last year, helped spark selling in fall seasonal categories such as fleece and outerwear. While our sports and rec business in Q3 was down 4% to last year, it was also an improvement versus our spring trend and was up 40% versus 2019. We continue to see solid gains in our sporting goods business with a strength across key categories such as football, baseball, and golf. The softest category in this area remains the Home fitness business, which declined double digits versus last year, but has stabilized to up over 25% versus our 2019 baseline. Our biggest challenge during Q3 was our outdoor business, which posted an 18.3% decline, and it was the only category where Q3 sales softened versus the first half trend. It's also important to note that we continue to hold on to the majority of the gains we've picked up over the past couple years in outdoor, with this business still running up 30% versus 2019. The softest category was hunting, where we struggled to anniversary high double-digit comps and ammunition from last year. We're up against a sales spike driven by larger seats that were helping us get back in stock during Q3 of 2021. Broadly speaking, the overall inventory levels in ammunition have stabilized across the industry over the past year. We've started to see a lot of the stock-up surge activity by consumers drop off, which has resulted in slowing demand. While running negative comps versus last year, the ammunition business continues to run up triple digits year to date versus 2019. We saw the declines versus 2021 start to lessen as we got deeper into the quarter. To sum it up, the missing outdoor, largely driven by ammunition, comprise over 100% of our drop for the company. Stabilizing this business is a clear priority for us. Shifting to margins. As planned, we held on to most of the gains we've made over the past couple of years. Gross margin rate for Q3 came in at 35%, which is a 20 basis point decline versus 21. Was up 340 basis points versus 2019. Similar to the last couple of quarters, beneath the surface, our merchandise margin was up 60 basis points versus last year and continues to run well ahead of 2019 levels. We attribute the continued strength in gross margin to a combination of the hard work the teams have done over the past couple of years around improved buying and planning and allocation disciplines, coupled with a favorable mix of sales in the higher margin categories of apparel and footwear. As we finish out the year, we've built in a well-thought-out promotional calendar for this Q4. This cadence is more aggressive than the past two holiday seasons and is focused on driving traffic to our stores by providing our customers with outstanding deals on giftable items. These additional promotions are accounted for in the guidance Michael discussed earlier. Our expectation is that despite this uptick in discounting, we will continue to hold on to most of the margin gains from the past couple of years. We also believe that our everyday value pricing, coupled with our thoughtful promotional strategy, will allow us to maintain our position as the value leader in our space and gain market share during Q4. In terms of inventory, our teams continued to do an outstanding job in managing through a challenging environment. We ended the third quarter with inventory up 13% versus last year, which is lower than the 17% increase we entered the quarter with. Our inventory levels and content are in the best position they've been in over the past couple of fourth quarters, putting us in prime position to take advantage of the holiday traffic surge. Another sales driver for us is continuing to lean into new initiatives and brands that resonate with our core target customers. A couple of fun new ideas that we put in place for this holiday, including launching Christmas-themed Magellan Outdoors apparel, expanding into gas-powered ride-ons from Coleman, along with adding Ukiah and BioLite fire pits into our outdoor heating. All of these ideas should help reinforce Academy as the gift destination for all things sports and outdoors. The team has worked hard to get back in stock and ensure that our inventory is much better balanced and positioned, and the key brands and categories will drive customers into our stores for this holiday. Our everyday value pricing, coupled with a strong, well-thought-out promotional cadence, will allow us to deliver a strong value proposition this holiday. When you combine that with our broad assortment of the most desirable brands and our strong in-store experience, we believe that we have a winning formula to continue to pick up market share. Finally, we also continue to lean into more digitally targeted advertising while reducing our reliance on traditional broadcast and print. This shift helps improve our overall marketing reach and effectiveness, while also allowing us to be much more nimble in reacting to pricing and promotions. In closing, we believe that we have the proper strategies in place and are well positioned to drive the business and continue to gain market share during the very important Q4 timeframe and beyond. Now I'd like to turn the call back over to Ken for some closing comments. Ken? Thank you, Steve. Despite the challenging macro environment, we've delivered a solid operational and financial performance this year. We've made significant improvements over the past several years, resulting in our profitability being materially higher than just a few years ago. This is the result of our dedicated team working diligently toward our vision of becoming the best sports and outdoors retailer in the country. Academy is well positioned to have a successful holiday season. This past Black Friday was the largest sales day in the history of the company, and we are maintaining the 30%+ sales trend compared to 2019. That being said, we still have the biggest three weeks of the year ahead of us, but we are confident in our plan. Academy has enormous future potential growth opportunities, from opening new stores, expanding omnichannel, improving existing stores, and from operational improvements. There's a lot to be excited about, and we are prepared to execute to achieve our near and long-term goals. I'd like to close by thanking all of the Academy Sports and Outdoors team members and wishing everyone a joyful holiday season. We'll now open up the call for your questions. Thank you. Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. If you'd like to ask a question, you may press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. 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 key. Please limit yourself to one question and one follow-up so we may get to everyone's questions. Our first question comes from the line of John Heinbockel with Guggenheim. Please proceed with your question. Hey, guys. I wanted to start with, you know, as you think about the fourth quarter, right, the implied comp, right, the midpoint's down two. That's sort of, you know, same trend line. Not a multi-year improvement. When you think about the four categories or the four divisions, and you think about the prospect for improvement, right, sequentially in each of those four, where do you see the biggest opportunities, right? Based on merchandise content and the behavior of your customer. Hi, John. Thanks for the question. We obviously have seen good strength in our soft lines apparel and footwear categories, and they continue to provide an opportunity, as well as team sports, which has been a very good business with us. Those are three of the businesses that I think, we have, you know, have good opportunities with. That said, there's still challenges out there in some of the outdoor areas. I'll let Steve provide a little more color. Yeah. If you go back to a year ago, the supply chain was still pretty much in disarray. When you look at where we're sitting today in terms of our ownership and seasonal categories, cold weather goods, giftable items for Christmas, we're in a way better shape than we were a year ago. We feel pretty confident about our inventory composition there. We feel like our inventory is under control, and that it's well-balanced across all the areas. You know, the one category called out as being challenging for us was the outdoor category, and beneath that, its ammo is really the biggest challenge there. The good news is, you know, we're starting to see the trend line versus LY, get a little better. It's still negative, but it's less negative than it was early in the quarter, and we're starting to see that business stabilize. You know, that's gonna probably be a challenge for us throughout the remainder of this year. We do feel like we're seeing strength in the other categories, which is helping offset some of that. John, a couple more points in addition to the categories. We expect to have a good finish to December. The guidance that we provided implies that we're gonna be up 30% to 2019, which is consistent with recent trends. That's in line with our quarterly and monthly builds, which are usually a pretty reliable indicator of performance. In addition to being better in stock in key holiday programs, as Steve mentioned, we're looking at the consumer and how they're behaving. We have some planned traffic-driving promotions, and we were not in position to do that last year because we didn't have the inventory. If you recall, last year, there was a scarcity of goods in the market, which led to a lot of early purchasing. This year, there's an abundance of goods. We think that, coupled with a favorable calendar, there's an extra Saturday this year before Christmas, we'll probably see some late shopping. You know, the weather hasn't been terribly helpful to sales. It's been a pretty warm start to the holiday season. We think the last couple weeks we'll see a lot of sales coming late. And as a reminder, we've invested a lot in our buy online, pickup in store business. Our customers are leaning into that, and we're gonna be in a good spot to deliver for them down the stretch. Then maybe as a follow-up, right, on supply chain. You know, you've had this distribution initiative, for a little bit. Where do we sit on that? Then when you think about capacity, I know you've got capacity for the time being, but as you look out, capacity in the three DCs, and then at some point, I guess, you know, you'll need a fourth DC, I guess further north. How do you think about the network, over the next three or four years? Yeah. You're correct. At some point, we'll need a fourth DC, and then we'll need a fifth. As we grow to reach the potential of the company, we'll probably need a sixth at some point. For the next several years, we're in good shape. We've got plenty of capacity. As we think about the next five years of the business, we will start to incur costs and frankly, think about adding a fourth distribution facility. We'll be in a position to speak more about that later. For the next several years, probably until 2025, 2026, we're in a good position. Okay, thank you. Thanks, John. Our next question comes from the line of Daniel Imbro with Stephens. Please proceed with your question. Yep. Hey, thanks for taking the questions, guys. Good morning. Congrats. I want to start on the top line, maybe following up on the last line of questioning. You kind of implied, you know, continuation of 30% growth versus pre-COVID in the fourth quarter. I know it's early to think about 2023, but I guess maybe could you qualitatively talk about how you're thinking about next year? I mean, if you execute on your merchandising initiatives that, Steve, you laid out with the new brands, I mean, can you grow on this new base? Have we rebased to a point where growth is possible as we look out to next year? I think what one of the things that we're pretty confident in is that we have rebased line at a higher level. You know, if you go back each quarter this year, it's been in that low to mid 30s in terms of the performance versus 2019. We do feel like we're gonna be building off of a higher base. That being said, it's still too early for us, I think, to give guidance for 2023 at this point in time. Yeah, Steve said, not prepared to provide guidance for 2023 at this time. I will say, look, we have a few categories that, in this quarter, comprised 100% of the drop. You know, they're namely hunting categories, outdoor categories. Those categories are considerably stronger to 2019, and frankly, we expect most to maintain most of that gain to 2019 this year and beyond. We've got some categories that were really strong during COVID, and you know, people call them COVID categories, COVID winners. Many of those actually haven't reverted to 2019. A great example would be outdoor cooking and outdoor furniture, which collectively, in the quarter, were higher than they were last year. The rest of the business, and the business as a whole, is exceptionally healthy. We took share in soft goods this quarter, you know, despite being up against a lot of clearance in the market. Our inventory position is very healthy. We haven't had to take drastic and dramatic measures to clear inventory, like others, retailers in the space have. We've got best in sector free cash flow generation. We continue to deliver best in sector store productivity, and our EBIT net income rates are higher than many in the sector. I think we're in a good position to finish this year strong, enter next year strong as we think about the plan for next year and beyond. That's really helpful color. Then I guess just to follow up on that, you know, Michael, I know you guys were private during the Great Recession, but could you provide any color of just a case study of the kind of benefit you saw from the trade down? It sounds like you guys are bullish that you'd see your everyday value offering maybe help take share. Can you help quantify what you've seen during past downturns or the data you have on that? No doubt. None of these economic cycles look exactly like the other one, you try to draw some parallels from it. 2008, 2009, and 2010 were collectively very strong comp years for the company, those were some tough years. This is a little bit a different cycle in that consumer balance sheets are still relatively healthy. That won't last for a heck of a lot longer if inflation rates continue to rise and obviously go into recession. If that occurs, we are in a great position to pick up market share because we're the value player. I think what we've shown is our team, our customers, and our business are incredibly resilient through a variety of economic cycles. Great. I appreciate all the color and best of luck. Thanks. Thanks, Dan. Our next question comes from the line of Christopher Horvers with JP Morgan. Please proceed with your question. Hi, it's Megan Alexander on for Chris. Thanks for taking our question. You know, maybe just wanted to follow up as well on an earlier question. You know, that three-year trend of 30% versus 2019, has that at all improved throughout, you know, the quarter in November and into December? You mentioned weather or not being helpful. It's gotten a little bit colder, and then it does seem like there's a more normal cadence of holiday shopping this year. I'm just trying to understand, did that three-year, you know, get any better, especially as you move through Black Friday, which you mentioned was strong? The 30% trend has been pretty consistent in the, you know, the low to mid 30s for the past actually all this year. We have not seen a big shift. The one thing I will say is this holiday calendar, having lived through it multiple times, is one that you need to have somewhat of a lead stomach for because we are shifting from, as Michael said, where people last year shopped early because of scarcity, and they're moving back to a later purchase pattern. We're in line with that purchase pattern right now with our trends so far this quarter. You know, I think, you know, that trend for this year probably should continue. You know, the first part of next year, you know, as Michael said, the economy's still in a lot of turmoil. You know, will be a challenging time. We should be able to perform well, at the higher base as Steve talked about, you know, and continue to develop the business so that we can start growth, you know, at some point in the near future. Got it. That's really helpful. Then, you know, maybe a follow-up for Michael. How are you thinking about working capital and free cash flow generation for the fourth quarter? You know, one would think based on the seasonality that cash should become a source of funds in the fourth quarter. You know, how should we think about a minimum cash balance as we think more about the potential for additional share repo in fourth quarter? Yeah. No, no, great question. I think I'll have one little nitpick before I get going here. We've got a business that's been performing so well, you know, we should generate cash in every quarter, and that, you know, hasn't been the case, I think for a lot of other retailers and certainly us historically. You know, in the third quarter, which is typically not a source of cash, it was for us why we were able to invest in the business. Correct. Fourth quarter, we should improve on that and grow the cash balance, and then we'll have to make some decisions like we've been saying. There's no change to our approach. We generated enough cash, we can fund our initiatives, and we can take a portfolio approach to capital allocation, either through repurchases or potentially even retiring some debt if we felt that was the right thing to do given where interest rates are headed. Great. Really helpful. Best of luck. Thank you. Our next question comes from the line of Kate Fitzsimons with Wells Fargo. Please proceed with your question. Yes. Hi. Thank you for taking my questions. I wanted to switch gears to margins. You raised the full-year gross margin outlook. Just as we're thinking about puts and takes on the gross margin into next year, you know, how should we think about some of the drivers, you know, between mix, supply chain, promotions? Then Michael, just, any updated views on maybe the longer term gross margin opportunity versus that 32.5%-33% range you've spoken to previously, just given how well the business has held on to some of its margin gains? Thank you. I'll take the first part, and then I'm sure Michael will jump in on some later parts. You know, so far, we're pretty pleased with our gross margin performance and our ability to hold on to the higher margins we generated over the past couple of years. We attributed a lot of that to just being better planners and managers of the business. That being said, you know, we do expect the margin will decline a little bit versus last year in Q4, which is accounted for in our guidance. That's based off of we think it's gonna be a more promotional holiday. We're already seeing it be a more promotional holiday, so we baked that in. Just to be clear, we're still gonna hold on to the vast majority of those gains. We think those gains are coming from a couple different places. We already mentioned the planning and allocation disciplines that we put in place in terms of better management of how we flow goods and allocate goods. We don't have the inventory overhang that I think a lot of other people out there have. That certainly is not gonna be, you know, a pressure for us or headwind for us. You know, one of the things that's happened to us during the pandemic was the hard goods business, which has a lower margin profile, had become a bigger percentage of total. As that mix starts to normalize more back to a 50/50 soft goods to hard goods, that's definitely a tailwind for us as well. You know, those are all probably the tailwinds. You know, certainly the supply chain is getting better, but there's still some disruption in that, and I think that's something that could be a headwind for us. I think as, you know, business seems to be moving back to more kind of the cadence or trend, you know, pre-pandemic, I think we're gonna see more promotions creep into the marketplace. Those would certainly be a little bit of a headwind. We feel really good about our ability to navigate through those and that we're gonna hold on to the vast majority of the margin gains we've picked up over this past couple of years. Kate, first, welcome back. Good to have you on the call again. I wanna tell you that, look, Steve answered that one pretty well. I don't have a lot to add. Merchandise margins have been the hero as we continue to harvest the fruit from the initiatives and the groundwork we laid many, many years ago, and continue to do that. One thing I would say, shrink has been a little higher than planned. There has been a lot of organized crime in retail. We're experiencing that along with everybody else. We're working with our law enforcement partners, who are great partners, in part because they really like the stuff that we sell, and they love shopping our stores. We think we have an opportunity to improve that going forward. As far as the long-term algorithm, I'd stick with what you have, and largely because we wanna preserve flexibility. If we need to become more promotional, we wanna preserve that flexibility. Yes. Two adds, Kate. One is, you know, we want to continue our value proposition. We do not wanna, you know, forfeit growth for margin. We will work to maintain that value proposition that's we've worked very hard to get and the customer views us within the market. The other thing I think that is different when we talk about promotions, I think one, you know, we talk about seeing more, it is more rational and thoughtful for a couple of reasons. One, you know, the people are in a better position and can afford to be more thoughtful about the promotions they had and add the ones back in that make the most sense to drive traffic. Two, the vendors, what the vendors have done, some of the key vendors have done over the past several years, and it's not just in apparel, but it's in other places, and how they've cut back on their distribution and our positioning as a favored retailer for them have helped to maintain some of the sensibility in the market and also support some of the margin improvements that we've seen in addition to the operational and process improvements that we put in place. One more thing to add, just as a reminder, we are just embarking on a multi-year initiative to improve the efficiency and the effectiveness of our supply chain. That work is really getting underway. So I think from a market perspective, hopefully the environment normalizes from a logistics and a supply chain perspective. We have things to work on at our end too, that should provide a margin benefit in the out years. I think for now, you've got a good number to work with and we've provided in the past, and I think that's a good one to run with. Great. I'll let others kick it up in the queue, but happy holidays, guys. Okay. Thanks. Thank you. You too, Kate. Our next question comes from the line of Robert Holmes with Bank of America. Please proceed with your question. Hey, good morning. Just a couple of quick follow-ups. Just on the guidance, how are you thinking about transaction expectations in the fourth quarter, kind of similar to the third quarter? And is the, you know, some of the confidence is you just with hunting not being less of a drag in the third quarter, you know, helps the visibility the fourth quarter? And the kind of follow-up question, which you've somewhat answered, but just the, you know, you guys see promotions, you know, potentially coming back on and transactions have been down. You know, how... That usually is a hard environment to get gross margins, you know, up or flat versus all-time highs. You know, what's the, you know, what's the risk of promotions come back on and you're not able to maintain the sort of gross margin expectations you guys have put out there? Yeah, I'll start and then let Steve pick up on the second part. Our transactions have been off, you know, the part of it is what's happening in the consumer environment. Part of it is also, and it's actually a significant part, of actions that we took last year. As we said, there were limitations on ammunition. While we sold a lot, we had limits on how many people could buy, and we had a lot of customers coming in multiple times in a day and, you know, literally lining up, coming in every day. We aren't seeing that now because we've taken those limits off. That makes the transaction number a little bit more difficult to read, year- to- year because we had created some artificial, high transaction levels, because of those limits that we had put on, and we no longer have those. Yeah. To the point on promotions, you know, I think Ken was alluding to it. When you go back and you look at some of the promotions that we used to run, pre the current management team being here, I mean, they were, in some cases, irrational promotions. I think you've heard us talk about those over time where, you know, we'd be selling something like a big bulky item, like a trampoline close to cost, and then on top of that, providing free shipping. They didn't make a ton of sense. I think one of the things that's happened over the past couple of years is, not only for us, but for the whole industry, is the promotional landscape has kind of been benign. It's allowed us to kinda clear the decks, and it's really allowed us to be thoughtful about where and when and how we're layering in those promotions. You also have, you know, a lot of the vendors out there having much better control over their MAPs, I think that kinda keeps them in check. I think it's the combination of us having rational promotions that we're not up against, that we don't feel compelled to anniversary that drove top line but maybe not bottom line, coupled with, you know, a better controlled distribution out there. I think those two things allow us to know that we're gonna see more promotions certainly this year than we did last year, but that we're still gonna be able to hold on to the majority of the margin gains. Just a quick follow-up. In the average transaction size, are you seeing, you know, more items, you know, per basket, or are you seeing, you know, bigger ticket purchases? Is there any... Or have the vendors raised price on somewhat like items, so you're seeing, you know, inflation in certain categories like fleece or things like that are supporting same store sales? Robbie, I would just say that we generally don't give the basket detail. I'll give you a little bit of color. Last year, if you remember, we were up against a tremendous surge in demand for ammunition, and that drove a lot of units. There's a little bit of noise kind of internally. That'll provide you a little color about our basket. we are seeing some ADR increases just based off of cost increases that we've seen out there. Got it. Terrific. Thanks so much. Thank you. Thanks, Robbie. Our next question comes from the line of Anthony Chukumba with Loop Capital Markets. Please proceed with your question. Good morning. Thank you so much for taking my question. I'm glad to hear that my equipment's working. I tried to get in on an earlier call. They didn't take my question, so I thought maybe it was a problem on my end. Anyway, neither here nor there. Yeah, so I had a question actually about your new store openings. I know it's, you know, fairly early, but, you know, these are the first new stores you've opened in quite some time. Just wanted to see if you... You know, any early reads on how those stores are performing relative to your expectations? Thanks. Anthony, if you couldn't ask the question on the last call, we'll let you ask us two. You can ask us two. We're happy to. Thank you. New stores. I would say this year is really about capability building and test and learn. We have all nine stores open this year. We tried different formats, different markets. We did urban stores. We did takeover spaces. We did traditional build to suits, and we tested a lot, and we learned a lot, and we built the capability. All nine stores are open. We're happy with the performance as a whole, overall. There's always things when you're testing and learning that you wanna do different and do better, and we'll apply those learnings next year. We opened four new stores in Q3, two more in Q4. We haven't announced our targets next year, but it'll be more than we did this year. One thing, Anthony, I think that's important, as Michael said, we are pleased with the overall performance, and we have some really good winners. We have, you know, a store that we would like for it to be better, and it's a good learning store. One of the things that's actually, you know, really pleasing for us is some of the new markets that we've entered, both that were adjacent or completely new markets, we've seen some very good results there. We're getting some. We're pleased with our ability to enter places where people might not be as familiar with us. The last store, one of the last two we just opened in Barboursville, West Virginia, not only a new market, it's a new state. I gotta tell you, line around the block in the snow. I'm sure, you know, if you followed us a little bit on social media, you've seen some of that. That is exciting and shows the potential of not only, you know, ability to grow in that market but in that region where there's a lot of white space for Mid-Atlantic. Got it. Very helpful. Once again, thanks for allowing me to ask a second question to make up for the fact that I wasn't able to ask any question in the earlier call. Yeah, just a real quick one. You know, you mentioned supply chain and, you know, some of the improvements you're gonna be making there. Michael, if I recall correctly, you know, when we had last spoken, you said that you thought that the warehouse management system would be installed in 2023. I just wanted to confirm if that was still the case or what your thought was there. Yeah, that's gonna be a multiyear, but, yes, I think towards the end of 2023, we'll start to bring that online. Okay. Very helpful. Thanks. just to keep-. keep up the good-. Anthony, one more- Go ahead. Sorry. I just want to make sure. We will phase that in across all of our DCs, so we're not doing, you know, anything all at once. We'll start at the end of 2023 and then roll it out to other distribution facilities. Got it. Thanks so much. Keep up the good work, guys. Thank you. Thank you. Thanks, Thanks, Anthony. Our next question comes from the line of Brian Nagel with Oppenheimer. Please proceed with your question. Hi, this is Andrew Chasanoff on for Brian Nagel. I just have two quick questions. One is shorter term in nature, and the other one's longer. The near term, can you call out any specific trends in the Black Friday, Cyber Monday, specifically, how you describe the brick-and-mortar traffic trends versus pre-COVID? Longer term in nature, as the pandemic dynamics decided, has your thinking towards a longer term growth outlook of ASO changed at all? Thank you. I'll take the first part. I'll give the second part to Michael. You know, one of the things we've seen this Christmas, candidly, that started in early November and bled into Black Friday week, is kind of a return to pre-pandemic shopping patterns. What we mean by that is if you go back, you know, pre-pandemic, customers really waited until Black Friday week to kick off. The last two years, we've seen pull forward a demand early in the month, particularly in some of the bigger ticket categories where there was scarcity of supply. We've seen that kind of revert back this year. Softer demand for big ticket early in the month. When we got into Black Friday week, another thing we've seen is people over the past couple of years were really trying to avoid large crowds on Black Friday itself. They tended to shop earlier in the week, and then we saw a little bit softer trend over the weekend, and that's reverted back to where the weekend was much more important this year. As Ken mentioned already, it was the largest day in our company's history from a sales perspective. You know, I would say the biggest thing we've seen is kind of reversion early on back to more of the soft goods business. We've seen it shift back to their shopping on the big days, more pre-pandemic than where they have been. We also believe that that's gonna drive the big ticket sales closer in which we've seen pre-pandemic as well. One of the other things we did see, though, was the customer was willing for the right item, you know, to buy the big ticket to, you know. This is not, it was not, Black Friday was not just driven by apparel. We did very well in that, but we also saw a number of our big ticket items, some of the categories that Michael called out, like, outdoor cooking, sports, and the like, also performed very well during the event. Where we had great value. Where we had good value. With respect to the long-term growth algorithm, no changes there. We were still planning low single-digit comp growth overall throughout the long range plan. Total sales growth of high single-digits, EBITDA growth at high single-digits, and net income growth in the high teens. We will do that through the addition of 80- 100 new stores, investing in our dot-com business, which is on a real growth run here, continuing to grow at double-digits quarter-over-quarter and improving our existing operations. Great. Thank you so much. Thanks, Andrew. Our last question comes from the line of John Zolidis with Quo Vadis Capital. Please proceed with your question. Hi, guys. Thanks for taking my question. I have two questions, but I'll just stick with one here, since it's the last one. You can ask two. Okay, thank you. All right, here's my two questions then. First question is on average unit sales. For the full year, we're looking at just under, I believe, $25 million per average store. That's down about from a little over $26 million the previous year. The first question is, for the new units that are coming on, what do you expect those to annualize in their first year? John, I'm sorry, I missed the last piece of your question. Sure. The newer stores that you're opening up, we've got nine open year to date, as you've mentioned. They haven't been open a full year yet. As we think about the sales contribution from the new stores, what should they be annualizing at in their first year? We underwrite them on average of around $16 million into year one sales. We do expect them to be EBITDA accretive after year one. Again, some of these just opened, the first four collectively as a whole were accretive to earnings even, you know, just a few months into the year as they were opening. obviously they ramp up on an ongoing basis to get closer. Yeah, significantly higher than a typical store. Okay, thanks. We will monitor that. The second question relates to something you talked about was pandemic winner categories. You mentioned that a number of these, even though they might be down a little bit, are still dramatically higher than pre-COVID levels. In particular, for example, ammunition is still up triple digits. I think a more cautious view might suggest, hey, you know, these are still performing okay, but what we really just haven't seen the reversion or in the demand for these categories yet. As we go into next year and potentially a less favorable consumer environment, that's where you're gonna see this kind of continued downward pressure. Obviously we can't predict what's gonna happen. My question is, how are you positioned? How are you able to manage inventory if that were to occur? Well, I think we've demonstrated that over the past several years, to be honest with you. You know, we certainly build contingency plans into our buying process. We have trigger dates that we activate depending upon where we see demand happening. We have great partnerships with our vendor partners. You know, I think on both sides of it, as inventory was scarce and we had to chase it, I think we definitely outperformed a lot of our competitors in terms of getting supply of goods, which I think was reflected in sales trend that we drove in 2020 and 2021. I think this year, as the supply chain has gotten a lot better and, you know, actually a lot of the vendors caught up, you know, some people have been caught the other way with inventory ballooning for them. I don't think we've seen that happen. I think we've got a very nimble team who's got good partnerships and relationships, a strong planning and allocation basis, strong open to buy management, and that's really allowed us to manage on both sides of it. I don't see that changing if we see slowdown next year. What I would say is, you know, one of the things that gives us confidence, and I think Michael hit on this, is, you know, these search categories, we track them. You know, you mentioned several of them, and we talked about ammo being one or fitness being another, you know, or cooking or things like that. You know, they're all stabilizing at these higher levels, in a lot of cases higher than the 30% trend the company performed at. You know, we're seeing the volume stabilize at those levels. That's, that's another thing we're looking at, not just the trend versus last year, but the average weekly volume, the average monthly volume. That's giving us Confidence that this is kind of the new baseline that we're building off of because they've been maintaining at those consistent levels for, you know, multiple quarters in a row. Two other things that I think are very important about this category and the inventory. First, as Steve mentioned, I think we have absolutely demonstrated we can manage inventory as well, if not better than most anybody in the space. The categories where, you know, if you take a bearish view and you predict a demand drop off, the inventory doesn't go bad. It's not seasonal in nature. It doesn't become toxic, you know, like seasonal apparel inventory does. Secondly, in these categories, while if you believe they're gonna be demand-challenged, they shouldn't be share-challenged because a lot of folks in this space have walked away for it, and they don't support it like they used to. So we should continue to take share, even if the category becomes demand-challenged. Again, the inventory will remain healthy because it's not subject to fashion or seasonality or those types of things. Yeah, my line is, they're not bananas. One of the key things here, John, or two key things. One is what Steve mentioned, that these, the team has demonstrated the ability in multiple scenarios to manage the inventory, not put us in a position. We haven't announced as other retailers have, that we've got an inventory problem and we're having to take excess markdowns. We are managing carefully where we are, both on the up and down side. The second thing is we've also demonstrated that we are able to maintain at those higher levels. One of the comments that Michael just made was about the even some of those categories are declining. Our share continues to improve in many of those categories. We're able to, while in a declining market or in a declining situation, pick up share, and hold at that higher level, either because competition has pulled back or the value and assortment that we've offered. Our team has done an excellent job over the past couple of years, putting us in a good place with our good, better, best strong brand assortments, in multiple categories. That is one of the things that gives us confidence as we go forward, that yes, we're in tough times. Yes, you know, the first part of next year is gonna be, you know, a challenging time for not just retail, but the entire economy. But we will be positioned for growth both with our existing stores and online, but also as we enter new markets. You know, we feel very confident about our position going forward, and we're excited about the future for Academy. Thanks very much and happy holidays to everyone and your families. Thank you, John. You too. Thanks, John. Thank you. Okay. That was our last question. We're ending right on time. Appreciate everybody's participation on the call. Thank you very much. Appreciate everybody's support of the company. Want to thank all of our team members. Also our investors and the people who are interested in Academy. We feel, as I said, we've got a great future. Wanna wish everybody the happiest of holidays and a terrific new year. Happy holidays and thank you. Goodbye. 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.