Good day, everyone, and welcome to the Boot Barn Holdings First Quarter Fiscal Year 2023 Earnings Call. As a reminder, this call is being recorded. Now I'd like to turn the conference over to your host, Mark Dedovesh, Vice President, Investor Relations and Financial Planning. Please go ahead, sir. Thank you. Good afternoon, everyone. Thank you for joining us today to discuss Boot Barn's first quarter fiscal 2023 earnings results. With me on today's call are Jim Conroy, President and Chief Executive Officer, Greg Hackman, Executive Vice President and Chief Operating Officer, and Jim Watkins, Chief Financial Officer. A copy of today's press release, along with a supplemental financial presentation, is available on the Investor Relations section of Boot Barn's website at bootbarn.com. Shortly after we end this call, a recording of the call will be available as a replay for 30 days on the Investor Relations section of the company's website. I would like to remind you that certain statements we will make in this presentation are forward-looking statements. These forward-looking statements reflect Boot Barn's judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting Boot Barn's business. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with the forward-looking statements to be made during this conference call and webcast, we refer you to the disclaimer regarding forward-looking statements that is included in our first quarter fiscal 2023 earnings release, as well as our filings with the SEC referenced in that disclaimer. We do not undertake any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. I will now turn the call over to Jim Conroy, Boot Barn's President and Chief Executive Officer. Jim. Thank you, Mark, and good afternoon. Thank you everyone for joining us on today's call. On this call, I'll review our first quarter fiscal 2023 results, discuss the continued progress we have made across each of our strategic initiatives, and provide an update on current business. Following my remarks, Jim Watkins will review our financial performance in more detail, and then we will open the call up for questions. We are extremely pleased with our start to fiscal 2023 and the strength of our first quarter results. During the quarter, total net sales grew nearly 20% over the prior year period, with strong sales from both existing stores and new stores opened over the past 12 months. Consolidated same-store sales grew 10%, comprised of an increase in retail store same-store sales growth of 10% and e-commerce sales growth of 9%. Consistent with prior quarters, the growth in same-store sales was driven primarily by an increase in transactions with a large portion coming from new customers. We also continued our new unit expansion by opening 11 new stores for a third straight quarter. In addition to strong top-line performance, we once again saw merchandise margin expansion as a result of further growth in our exclusive brand penetration and strong full price selling, which more than offset freight headwinds versus the prior year period. The team's ability to drive top-line growth and navigate freight and supply chain challenges resulted in an EBIT margin rate of 14.3%, which was 150 basis points above our guidance of 12.8%. Our earnings per diluted share in the first quarter was $1.29, and when adjusting for the tax benefit from share-based compensation, our EPS was $1.26 or $0.12 better than guidance. On a tax-adjusted basis, we were able to achieve flat earnings per share when compared to the prior year period, which benefited from outsized growth in revenue and significant expense leverage. We believe our sustained success and sales growth reflects the execution of our four strategic initiatives and showcases the future potential of the brand. I will now spend some time highlighting our recent progress on each initiative. Let's begin with driving same-store sales growth. First off, I want to congratulate the entire team for achieving double-digit comp sales on top of a 79% same-store sales growth in the prior year period. Over the last few years, Boot Barn sales have reached record levels, and to be able to grow on top of our new base by double digits is a testament to the level of execution across the organization. During the first quarter, we saw broad-based growth across most major merchandise categories. Ladies' apparel and boots, work apparel, cowboy hats, ball caps, and belts were our strongest performing categories. Additionally, we saw healthy growth in Men's Western Apparel, kids apparel and accessories. Sales of flame-resistant apparel exceeded the chain average, while sales of Men's Western Boots were a headwind during the quarter, with negative comps versus the prior year period. From a geographic standpoint, we saw strength in our North and West regions. The Southern region, which includes Texas, lagged the chain average, but also posted positive comp sales growth. From a marketing perspective, we continue to balance the priorities of attracting new customers while also remaining relevant to our legacy Western customer. The strategy to expand the brand into new customer segments has proven successful, and we continue to be encouraged by the growth of our active database. We are also pleased that new customers are shopping with similar frequency to our core customers. From an operational perspective, our stores were sufficiently staffed to service the strong consumer demand. We feel very good about our staffing level and ability to hire associates in such a strong labor market. I want to commend the entire field team as they continue to provide excellent customer service, all while managing sales growth, merchandise flow, and multiple omnichannel initiatives. Moving to our second initiative, strengthening our omnichannel leadership. Our e-commerce channel had a solid first quarter with comp sales growing 9% over the prior year period. As our digital business has had multiple years of outsized growth coming out of COVID, we are pleased with the ongoing growth. Additionally, we continue to expand the merchandise margin rate in our e-commerce business, driven in part by the increased penetration of our exclusive brands since the implementation of in-store fulfillment last summer. We are very pleased with the success of in-store fulfillment and all of our omni-channel initiatives as they have improved the consumer experience, increased the percentage of omni-channel customers, and helped drive profitability in our online business. Now to our third strategic initiative, exclusive brands. During the first quarter, our exclusive brand penetration grew to 31.7%, approximately 540 basis points higher than the prior year period. We are extremely pleased with the ongoing growth of our exclusive brands, which have grown approximately 10 percentage points in the last two years. Once again, three of our exclusive brands were among the top five selling brands in the quarter. Additionally, the initial feedback on the four new brands we launched at the end of last year has been strong, and we are very pleased with the initial adoption by consumers. I would like to commend our exclusive brand team for designing innovative and compelling products, expanding our brand portfolio and successfully managing a complicated supply chain environment. It has been remarkable to see the incredible growth in this portion of our business over the last several years. For perspective, our exclusive brand business has grown from $5 million in annual revenue 10 years ago to over $400 million last year. Finally, our fourth initiative, expanding our store base. During the first quarter, we opened 11 new stores, bringing our total count to 311 stores across 38 states. New stores opened in both existing and new markets continue to perform in line with our $3.5 million sales expectations, which results in a payback on our investment much faster than our stated three-year goal. We are confident in our ability to continue this momentum and are excited about our new store pipeline for the year, with planned store openings in new markets, including New York, New Jersey, and Maryland. Turning to current business. Through the first four weeks of our second fiscal quarter, our consolidated same-store sales are slightly positive compared to the prior year period. While we have seen a deceleration in discretionary purchases, our more functional businesses remain strong. It is encouraging that we've been able to grow on top of the tremendous growth in the business in fiscal 2022. As a reminder, the step function change in sales growth that Boot Barn has been delivering began in the first quarter last year. While there has been a concern that this growth was transitory and we would revert back to pre-pandemic average store sales, it appears that this new level of revenue and store AUV is sustainable going forward. I'd like to now turn the call over to Jim Watkins. Thank you, Jim. In the first quarter, net sales increased 19% to $366 million. Sales growth was driven by a 10% increase in consolidated same-store sales and sales from new stores added during the past 12 months. Gross profit increased 18% to $138 million or 37.7% of sales compared to gross profit of $116 million or 38% of sales in the prior year period. The 30 basis point decrease in gross profit rate resulted from 70 basis points of deleverage in buying, occupancy, and distribution center costs, partially offset by a 40 basis point increase in merchandise margin rate. The merchandise margin rate increase was primarily a result of growth in exclusive brand penetration and better full price selling, partially offset by a 70 basis point headwind from higher freight expense. Selling general and administrative expenses for the quarter were $85 million or 23.3% of sales, compared to $63 million or 20.5% of sales in the prior year period. As expected, SG&A expense deleveraged primarily as a result of higher store labor and marketing expense as we normalized our cost structure compared to the first quarter of fiscal 2022. Income from operations was $52 million or 14.3% of sales in the quarter, decreasing 320 basis points compared to $54 million or 17.5% of sales in the prior year period. Net income was $39 million or $1.29 per diluted share, compared to $41 million or $1.35 per diluted share in the prior year period. Excluding the tax benefits primarily resulting from share-based compensation in each year, net income per diluted share was $1.26 in both periods. Turning to the balance sheet. On a consolidated basis, inventory increased 80% over the prior year period to $534 million. This increase was primarily driven by a 50% increase in average comp store inventory in order to support the increase in average unit sales volume. When evaluating our in-store inventory against our updated sales projection, we have approximately 24 weeks of forward supply, which is in line with the inventory levels required to turn twice a year, consistent with our historical average. Additionally, we have added inventory to our distribution centers in order to support our exclusive brand growth, which continues to exceed our expectations. The final portion of the increase in total inventory can be attributed to new stores, both the 36 new stores opened over the past 12 months, as well as the inventory needed to stock the pipeline of stores that will open over the next couple of quarters. The team has done a tremendous job of securing the merchandise needed to fuel our growth, and we continue to feel that the composition and the freshness of our inventory is healthy. We finished the quarter with $75 million drawn on our revolving line of credit and $16 million in cash on hand. Earlier this month, we amended our revolving credit facility. This amendment increased our capacity on the line of credit by $70 million from $180 million- $250 million and extended the maturity date by three additional years to 2027. Turning to our outlook for fiscal 2023. In light of recent macroeconomic uncertainty coupled with the deceleration in our business, we have updated our guidance for the year. For the fiscal year, we now expect total sales to be between $1.68 billion and $1.70 billion, representing growth of 12.9%-14.2% over the prior year. We expect same-store sales to be in the range of approximately flat to +2% and earnings per diluted share to be between $6 and $6.20. Our income from operations is expected to be between $247 million and $255 million or 14.7%-15.0% of sales. We expect net income for fiscal 2023 to be between $182.7 million and $188.6 million. We also expect our interest expense to be $4 million and capital expenditures to be between $80 million and $87 million. For the balance of the year, we expect our effective tax rate to be 25.2%. We are on track to open 40 new stores during the year, including the 13 stores we have already opened year to date. Please refer to pages 13 and 14 of the supplemental financial presentation that we will be releasing shortly for further information on our revised fiscal 2023 guidance. As we look to the second quarter, we expect total sales to be between $339 million and $346 million, and same-store sales of approximately flat. We expect earnings per diluted share to be between $0.87 and $0.93. Now I'd like to turn the call back to Jim for some closing remarks. Thank you, Jim. We are very pleased with our strong start to fiscal 2023. We are confident in our ability to execute on our four strategic initiatives and drive growth this year and over the long term. I would also like to extend my gratitude to the thousands of associates in our stores, distribution centers, call centers, and the Irvine office for their hard work and dedication. Now I would like to open the call to take your questions. Kevin? Thank you. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 1. One moment please while we poll for questions. Our first question today is coming from Matthew Boss from J.P. Morgan. Your line is now live. Great, thanks. So Jim, maybe to kick off on July same-store sales, could you help maybe speak to drivers in your view of the sequential moderation relative to June? If we broke it down, how the composition breaks down between basket size, purchase frequency, or did you see any notable differences in performance by region? Sure. Our first quarter total sales growth was 19%. Our second quarter, at least in July, was +10%. From a comp standpoint, that's our first quarter went from +10%, and now we're sort of slightly positive. Most of the delta in same-store sales growth is transactions based. Our transactions for July were down about 1%, a little over 1%. In the first quarter, they were up about 7.5% or something like that. Most of the deceleration has been due to a falloff in transactions. We made up a little bit of that ground with our basket size getting slightly bigger in the second quarter to date versus the first quarter, which got us to a slightly positive growth in the stores. In terms of the regional differences, the way I would think about it is the West had a very strong first quarter and has gone slightly negative in the second quarter. The complication there is the West is up against incredibly strong numbers. As we look at the business and we try to look at what's going on in our West business, we still actually feel it's quite strong. On a two-year basis, last year was up 60% or 59% or something like that. To give 2 points of that back isn't so bad on a kind of three-year comp basis. The other business that turned negative in the second quarter was our South business. That's slightly negative. Our two other regions, both the North and the East, are doing well, and they're positive in the second quarter. That's kind of the composition of what's changed between Q1 and Q2 in terms of transactions versus basket and by region. The other cut, Matt, which wasn't your question, but the other way to look at it is we continue to try to remind investors that most of our business still is functional in nature. When we look at many of our functional categories, Work Boots, Work Apparel, Men's Western Apparel, Hats, all of those businesses in July were pretty solid. The fall off, and perhaps expectedly, given what everybody's talking about in terms of discretionary purchases, has been a slowdown in ladies apparel and ladies boots. That's kind of where the business has decelerated from a merchandise category perspective. That's helpful. Maybe just to follow up, Jim, on gross margin. How best to think about second quarter and back half drivers as now you walk through some of the categories and components on the top line. Maybe if we're thinking about merchandise margin, incorporating some of what you're seeing in terms of sales by category versus freight and occupancy, just how best to think about gross margin in the second quarter and the back half of the year. Yeah, Matthew. One thing I would say to the group is we did post a supplemental presentation on our site that we're having some technical difficulties with the SEC and then posting it on our site. If that's not up now, it will be up shortly, and we've got some more detail there. If you've got access to it, great. It's slide 14 I'll refer to, where we've updated the fiscal 2023 financial guidance. As far as the margin drivers, you know, we would expect to generate 80 basis points of product margin, and that's gonna be driven by 300. So again, this is for the full year piece. The balance of the year will be a little bit less than the 80 basis points. That's gonna be driven by more full price selling, similar to what we've seen in this last quarter and the previous quarters, as well as product margin improvement will be, you know, around what we've got in there, 80 basis points for the full year. Offsetting that, we've updated our guidance to be 100 basis points of freight headwinds for the full year. What we found this last quarter was 70 basis points. We expect that the freight expenses will continue to be elevated, and that's what we've got baked into the last half of the year. As far as the occupancy deleverage and SG&A expense, when we outlined our guidance at the beginning of the year, we were pretty granular on what we had guided there. As the top line has come down, you know, we're not guiding the different parts like we did before. As the top line comes down, we expect the deleverage around SG&A and buying and occupancy to continue to be, you know, probably a little bit worse than what it was before. That's helpful. Best of luck. Thank you. Thanks, Matt. Thanks, Matt. Thank you. Next question is coming from Steven Zaccone from Citi. Your line is now live. Great. Good afternoon, everybody. Thanks for taking my question. I wanted to focus specifically on inventory positioning. It sounds like you're pretty comfortable, but, Jim, curious if you could elaborate a little bit more 'cause it looks a little high. You know, I guess the question I'd have too is if the sales trends were to just, you know, deteriorate from here, what are the levers that you could pull to appropriately manage inventories? Steven, it's Greg, and I'm gonna take this question given I have, you know, direct line of sight over merchandise planning and the inventories. You know, as Jim mentioned, we do feel really good about our inventory position. Understand the point of your question. If we look at the increase, the 80% increase, it's really broken into three parts. Jim spoke to the first part, which is the comp store inventory build, and I'll go into a little bit more depth there. The second piece is we've built up inventory in our Fontana distribution center that supports exclusive brands and container buys. The third piece is directly related to new stores added over the last 12 months. If we take that first chunk that the growth in our average inventory per store, that's about 45% of the 80% increase, right? Almost half. The average inventory per store is up 50% over the prior year. As you may remember, we were chasing inventory last year as our business continued to do very well. If you were to look at our inventory growth over the three-year period, meaning a pre-COVID Q1 compared to this quarter, our inventory is up 47%, but our sales in that timeframe are up 61%. We've actually sped the turn a bit. In the supplemental deck, if you have it available, on page 5, we kind of show historic weeks of supply, forward weeks of supply, and where we're positioned now, given our new guidance, we have about 24 weeks of supply, and that compares, I'll say, favorably to Q1 of three years ago and Q1 of two years ago. It's a little bit more inventory than last year, but again, we had a very strong sales trend. We were light on inventory. The second piece is Fontana, that's about 30% of the growth. In March of last year, we signed an amendment to our DC lease there, where we doubled the space. We went from 200,000 sq ft to 400,000 sq ft. We weren't really in a position to grow inventory in that additional 200,000 square feet during the first quarter last year, again, as we were trying to get inventory into the stores. That's a piece of the growth. Finally, 18% of the 80% growth is because of the 36 new stores that we added over the past 12 months. Jim Conroy commented, right, that, you know, most of what we sell is functional and basic in nature. 70% of what we sell is on replenishment. That's what, you know, we disclosed in our 10-K a few months ago. You know, we feel like there's not significant markdown risk here. As we look at sales, we are, you know, continuing to be cautious and push receipts, you know, where appropriate. We feel really good about our inventory content and quantity. Okay. Appreciate all the detail there. Just to follow up on Matt's questioning around quarter to date. You know, how much of the drought in the South, like Texas, I guess a little bit in California, is an impact? I guess we're trying to assess, you know, is the consumer slowing down because maybe gas prices are high, and they're feeling it a bit there, or is it some of it just, you know, you've seen drought here, and it's maybe impacting some of your farm and ranch customers. I think there's a combination of things that might be impacting demand. You know, drought, inflationary pressure, concerns about the economy, all those things. You know, for us, we're candidly quite pleased that we continue to grow on top of the base that we built last year, right? Had we gotten into this current fiscal year, and we were +2% the whole year, we would have been thrilled. We had a very strong first quarter as we cycled that growth from last year. That doesn't make us disappointed in the second quarter growth, if I'm honest. We're quite happy that we're holding on to the business that we have, you know, really put together over the last couple of years, and that large influx of customers that coming out of COVID, we were able to add to the business seems to be sticking. Will we get some tailwinds in the future? Potentially, right? You know, July was particularly hot. There's been the drought. It's a small month for us, et cetera. We've got some things that might help drive business for the balance of the year, but even a flat to low single-digit comp for the balance of the year we'd be pretty happy with. Great. Thanks for the detail, guys. Thank you. Next question is coming from Max Rakhlenko from Cowen and Company. Your line is now live. Thanks a lot, guys. First, can you maybe elaborate a little bit more on how your new shoppers have behaved compared to your core shoppers? Are they starting to slow, maybe similarly to the core, or are there any divergences? I think you noted that most of the delta in July is transaction-based and leaning towards discretionary a little bit, which is where I would guess that those new shoppers probably over-index a little bit more. Any commentary would be helpful. Sure. It's a very good question and probably a good hypothesis. We have better data on our first quarter. In our first quarter, the customers, both new and legacy, were behaving similarly. In the second quarter, it's hard for us to do that kind of analysis on a kind of weekly or monthly basis. If you're hypothesizing that the new stores were coming into more fashionable categories and now they're potentially shopping less, I guess that's a fair guess. But we can't really prove or disprove that, if I'm honest. As we get more information over the balance of this quarter, we'll be able to opine on it. That said, I mean, I think, when you look at how much the business has grown over the last two years, even if we're getting slightly less frequent shopping from a sliver of our new customer base, we're pretty pleased to be able to hold on to, you know, the other 99% of the business that's been growing over the last 24 months or so. Got it. That's very helpful. Then can you discuss what you're seeing in the competitive environment? Are your primary peers maintaining pricing discipline? Then what about just, you know, secondary and tertiary? Obviously, the promo environment is picking up, so just curious there. Then is that having any impact on how you're thinking about your own pricing structure over the next several quarters? Sure. On the second piece, we're a full-price selling retailer. We feel like we have a very strong handle on our inventory position. We'll have our typical promotional periods and our typical course of business markdowns for the balance of the year. We don't expect to change our promotional posture at all, to be honest. In terms of the competitive set, we compete against two or three groups of retailers out there. The number one competitive set is hundreds of single store operators, the mom and pop industry. Some of those folks may become more promotional, some may hold price. We honestly will not change our promotional stance regardless of what they do. They're just not. We don't trade customers with them very much. We typically take share and maintain sort of a stickiness with those customers, and we wouldn't chase any single store operator from a sales and promotion standpoint. We have one other chain of pure Western stores based in Texas called Cavender's. Cavender's operates very similar to what we operate, the way we operate, which is mostly full price selling, occasional modest promotions, and tend to be extremely rational. Then the last big competitor we have is sort of a group of farm and ranch players led, I guess, by Tractor Supply. You know, they continue to hold an EDLP strategy, and frankly continue to raise their prices, right? I mean, that's one of the things they called out on their call was the sales growth they've gotten thanks to inflation. I don't really expect to see a promotional environment within our industry, and nor do we believe that as mass market retailers and mall-based retailers and big boxes, if they become more promotional, candidly, we just don't think that's gonna impact on who shops with us and our core customer. Great. Thanks a lot. That's helpful. Best of luck. Thanks, Max. Thanks, Max. Thank you. Next question is coming from Peter Keith from Piper Sandler. Your line is now live. Hi. Thanks for taking my question, guys. Just looking at the revision to the EBIT margin guidance for the year, is it just purely a function of just taking a reduced sales outlook, or are there any other puts and takes with regard to gross margin or expenses? Yeah. That is the main driver, Peter. It's a top line driven. The other puts and takes that I would say is the product margin expansion that we had originally guided was gonna be 50 basis points. What we're seeing is strength in Q1 and even into July when it comes to product margin. We had about 100 basis points of product margin expansion, you know, before being impacted by freight. We've raised that to 80 basis points of expansion for the year. The freight headwinds that we had initially called out as being 130 basis points for the year, we've lowered that to 100 basis points. Again, quite a headwind. We're still seeing elevated freight costs, but, you know, we are seeing the cost of containers come down. We're seeing, you know, the highs come down, or we're coming down off of those highs. We're encouraged that while we'll still see a freight headwind the rest of the year, that 100 basis points, you know, per quarter seems more reasonable. Then hopefully, you know, as spot rates continue to come down and, you know, at some point the fuel surcharges that we've seen increase, at some point those will reverse, you know, whether that's next year or beyond. There'll be some good news coming our way at some point in the future, probably next fiscal year. You know, we're encouraged by what we saw this last quarter. 100 basis points there. Those were the two drivers that we called out. It's you know, we didn't provide updated guidance around buying and occupancy, you know, deleverage and OpEx deleverage. You know, we had previously, you know, guided to 40 basis points and 90 basis points of deleverage respectively in those categories. You know, the deleverage will be a little bit worse in both of those areas. That's kind of the drivers to get to that updated guide from an OpEx or sorry, from an EBIT margin rate. Okay, helpful. Then this may be more of the near term question as everyone's trying to understand what's going on with the consumer and the competitive set. Interesting that you're seeing this continued positive trends in the North and the East. Anything to read into the geographic disparity? Top of mind for me is maybe it's a little less competitive in those segments versus South and West, but I'd love to hear if you have any thoughts. You know, it's hard to create a cogent narrative, if I'm honest, when we look at sort of the pockets of strength and pockets of relative weakness. For example, we've had strength in West Texas from a drilling perspective, but we've had weakness in Houston from a refining standpoint. Again, it's hard to find a bunch of dots that line up. Texas is definitely more competitive. We have a very strong competitor down there in Cavender's. In the West, you know, we've grown up here, we've been here for 40 years. We're the strongest player out here, I think by a lot. I can't really place sort of the slowdown in the West on competitive pressures. Candidly, I think the West is partly due to some of the core ag markets in California experiencing drought and inflation on their raw materials, et cetera. Plus, just going up against monster numbers for multiple years in a row. So our West region, if you were to parse through the last several years of earnings calls, we almost always led with growth in the West. For them to finally have a pretty modest slowdown on top of a gigantic growth last year, it's kinda hard to blame it on anything other than, you know, that business, you know, can possibly grow to the sky. With some of the pressures that they're facing now, perhaps transitory, you know, they'll probably get back to growth over the next couple of months or quarters, knowing that team. That's kind of how we view it. You're right. In the North and in the East, perhaps there's less organized competition. It's more mom and pops. We've seen some really nice growth in those two regions. Okay. All right. Sounds good. Thanks so much. Thanks, Peter. Thanks, Peter. Thank you. Next question is coming from Jonathan Komp from Baird. Your line is now live. Yeah. Hi. Thank you. Good afternoon. Wanna just ask a question on the implied back half outlook. I think the comps guidance is something like flat to down low single digits in the back half. Maybe could you just talk through the factors you've considered, you know, in formulating that guidance? Then maybe a bigger picture, just what your thoughts are in terms of how the business would react today in a recessionary scenario. Sure. Really what we did, Jonathan, on the back half of the year is we looked at the current trend in July and you know, we're up 0.6% from a same store sales standpoint. On the back half, we looked and we said, "Okay, if we were to hold that trend and be flat for the rest of the year," that seemed like our best estimate as to where the business goes. I mean, we saw really nice growth in Q1 with a +10% comp and 19% total sales growth. You know, there's a scenario where we re-accelerate as well as hold where we are or maybe it deteriorates a little bit from here. I think based off of just four or five weeks of business, you know, guiding reducing that guidance to be more in that flat range or, you know, flat to -2% for the balance of the year and, you know, total sales growth of around 11%-13% seemed like the prudent thing to do, you know, given the backdrop. Then you had the question on the recession. What was your question on the recession, Jon? I apologize. Yeah. Would love to hear just your broader perspective on how the business would react in a recessionary scenario, or if you have any views on how your core customer would hold up. Just any thoughts there. Sure. You know, look, when we've had downturn from the economy, including when we had, you know, the big crunch in the oil patch several years ago, our core customer still needs our product, right? They're still wearing through work boots and denim and jackets. Many of our Western customers work in that product as well, and they use our merchandise for real functional purpose. Certainly, if there was a massive change in employment, maybe we'd see some slowdown in those categories. Most of our business isn't really discretionary in nature. Even when we had that downturn in the price of a barrel of oil, in 2015 and 2016, the worst our annual comp ever got to was flat. I think it speaks to sort of the resiliency of the model and the diversification of our market base now in our consumer and stores further helps us to offset weakness in one area with strength in another. Look, we're not completely resilient to or immune to a downturn in the economy. You know, for the most part, our customers turning to us for functional product and not for discretionary or fashionable purchases. Yeah, that's really helpful. Just one follow-up. Jim, I know you mentioned no plans to change your promotional stance. I thought you mentioned maybe some other drivers that you could pursue during the year. Any other color on specific drivers you have in mind outside of, you know, using promotions to drive traffic? Yeah, I think you know, our marketing you know, team is doing a fantastic job and continues to elevate the brand. We've you know, entered into some really nice sponsorships and some extended the brand reach into some areas that we haven't you know, been in before, whether that's you know, Major League Baseball or NASCAR. So that's a nice driver from a sales standpoint. I think from a margin standpoint. You know, we talked on the last call when asked about, you know, markdowns and whether we'd see more markdowns, and we continue to believe that you know, we'll have exclusive brand penetration growth. We'll have better full price selling. You know, we expect to have some markdowns in some areas. If we need to clear out some seasonal goods, then we'll be doing that. Again, for the most part, our product is basic and core. You know, if we have too many work boots, we can use those again next year and work our way through that inventory. We don't expect markdowns to be significant, To the extent that we need to do those markdowns, what we talked about also on the last call was with the in-store fulfillment that went live last summer, we have the ability to, you know, take product that's in one store, maybe broken sizes, you know, put that on our website and get the views of the online customer and sell that product without having as deep a markdown as maybe what we used to have. Again, that's another thing that will help us from a margin standpoint or merchandise margin standpoint. We're not out of ideas as far as increasing that merchandise margin and that's why it reflected in the guidance that we have around product margins for the balance of the year. Yeah. Great. Thank you very much. Thanks, John. Thanks, John. Thank you. Next question is coming from Corey Tarlowe from Jefferies. Your line is now live. Hi, good afternoon, and thanks for taking my question. First question I wanted to ask dealt with inflation. Just curious as to how you're dealing with that. Are you taking price and passing it through to the customer, or do you have certain initiatives in place where you're looking to mitigate some of the higher costs that you're witnessing? Then also, if you could just talk a little bit about trends that you're currently seeing in Men's Western Boots and maybe how you expect that to trend as we look ahead. Just remind us how sizable that business is. Thank you very much. Sure, Corey. On the inflation piece, you know, we have seen some modest inflation in product costs and input costs and, you know, similar to what others have seen. You know, our merchants and our exclusive brand teams have been hustling and working with our vendor partners and manufacturers, and using our, I guess, growing economies of scale to, you know, offset some of these inflationary pressures. We've talked a little bit about the freight pressures that we're seeing and, you know, that's a temporary headwind that eventually will dissipate. Our approach, as you stated, has been consistent, which is to pass those price increases on to the customers while maintaining the same merchandise margin rate. That's been working for us so far and we'll continue to do that approach and use that approach. Yes, we are seeing some of that inflation, you know, come into our product cost and we're going to maintain that margin rate. I would add to that, and then I'll come back to the Men's Western Boots piece of it. You know, the credit to the merchants who have actually been managing cost inflation so well that it's for us, it's been a relatively small piece of our assortment that's gone up in price a relatively small amount. You know, if there's a downside to that, we're not getting sort of the artificial comp driver that you'd get from raising prices more. On the Men's Western Boots business, it's about. It's a pretty big business for us. It's about 13% of sales. It splits into performance sole boots and leather sole boots. That may not mean a lot to everybody listening, but the performance sole boots are more functional in nature. Candidly, we've had some difficulty trying to get some of that product in stock, and it's now coming back online. We're hopeful that that business sees some life going forward now that we're in a better inventory position with the performance soled side of the business, which is the bigger part of the business. That's how I guess I would characterize the Men's Western Boots business. Notably, the Men's Western Apparel business was strong in Q1 and almost equally strong in Q2. We're still getting that customer in the door, and perhaps they're just waiting a little bit longer on a higher AUR product like a cowboy boot versus a pair of jeans or a shirt. We'll see. Stay tuned. Got it. Have you seen any sort of interesting dynamics where people are trading down from different brands because maybe they're a little bit more strapped for cash, if you will? You've obviously seen the transactions decline in July, but just curious if you're starting to see any sort of interesting changes by pricing tier within the brands that you do carry. Honestly, we're not really seeing that. Using an example on the Men's Western Boots, for example, in the first quarter, our Men's Western Boots business was slightly down. The most expensive category of boots that we sell, Men's Western exotic skin boots, was actually up. While the natural or conventional wisdom would be people are trading down, et cetera, we actually haven't seen that. One possible explanation of that is on a relative basis, we are seeing our higher income customers performing better than our lower income customers. Maybe that's why we're not seeing the trade down because our slightly more affluent customers are still shopping, you know, in kind of more frequent way than our less affluent customers. We have looked for that trade down. We honestly haven't seen it. You know, we're anticipating that call. We recognize that other companies are calling that out. We haven't seen that here, though. Great. Very helpful. Thank you very much, and best of luck. Thank you. Thank you. Our next question is coming from Dylan Carden from William Blair. Your line is now live. Thanks a lot. Just two quick ones here. If you could just give us a sense of where marketing costs are in regards to historic ranges and maybe, you know, when you might start lapping some of that headwind. Similarly, you know, on the merch margin side, when you lap the most significant kind of increase in freight costs and when maybe the higher penetration rates, lower promotion, cadence can kind of offset that more fully. Thanks. Yeah. Dylan, on the marketing costs, you know, Q1 and Q2 last year, you know, the marketing costs were lower as a percent of sales than what we've guided for the full year. Again, as a reminder, we tend to target a 3% of sales spend in marketing. A year ago in Q1 and Q2 as sales accelerated, you know, the planned marketing expenses, you know, were a lower percent of the increased sales, right? In Q1 and Q2, we're up against kind of that timeframe where the, you know, we had the lower spend in marketing as a rate of sales. That headwind should get a little bit better in Q3 and Q4. As far as freight from the prior year standpoint, the freight was pretty consistent last year, you know, headwinds. I think if you look back at container costs and some of the things that we had, it did kind of peak in really I guess about six months ago. If I look at the freight headwinds going back, Q4 was 60 basis points, Q3 was 60 basis points, Q2 was 10 basis points, and Q1 was 10 basis points, right? We saw in the third quarter the freight really getting elevated. I think as we move into the back half of this year, you know, we'll see that I guess the compare ease a little bit. Again, there's a little bit of accounting nuance with, you know, how it takes six months, you know, for the freight, the higher freight charges to, you know, work its way through the P&L as freight expense. And so that's really why we've got the guide out there of 100 basis points of headwind for the rest of this year, and that we would expect that next year is when we might start seeing some relief, as it comes to freight headwinds. Excellent. Thanks a lot. Thanks, Dylan. Our next question is coming from Sam Poser from Williams Trading. Your line is now live. Thanks for taking my questions. Good afternoon. Can I just ask this, the gross margin question straightforward? How should we think about the total gross margin for the year? I mean, are we looking at like mid-37% range? Is that a good number as it should improve in the back half, or is that too high? No, I think that's a pretty good number, Sam. I think yeah, mid-30s. I think that's great. I might have missed it, but your sales in your work category, how were they in the quarter? In the first quarter, both work boots and work apparel grew nicely. Our work apparel business was a solid double-digit growth in the first quarter. In this part of the year, work apparel is only about 5% of our sales. That was a help to overall comp, but it's just not that big a business. Work boots were also high single-digit positive comps in the first quarter. As we got into the second quarter, both businesses are still solidly positive. They both slowed a little bit. What we really saw sequentially between Q1 going into July is ladies' boots and ladies' apparel decelerated massively. Now, they started with a very strong trend, but they lost, you know, double-digit pieces of their trend. They came down almost 20 points in comp. Ladies' Western Boots in the second quarter are still slightly positive. Ladies' Western Apparel is slightly negative, but they were strongly positive in Q1. I guess my question as a follow-up to that is what can you do through your expanding omni-channel operations and your loyalty program and so on without getting promotional to encourage that woman or the customers that have slowed down to come back? You know, given what's going on. Or are we dealing with potentially, you know, a six-week blip and back to school starts, and gas prices come down. You know, I mean, you're guiding, it sounds like, just to what's happening now and not assuming that there's gonna be much improvement except for maybe some fall off of some freight costs that'll help the gross margin. Is that a fair- No, that's very fair. I think our guide right now, and I think every management team is trying to outguess a number of different highly impactful macroeconomic factors all at the same time and try to give Wall Street a nine-month view into their business. That said, we had an extremely strong last year, and we had an extremely strong first quarter, and we had four weeks of less strong business, which if you really wanted to look at it with a microscope, looked slightly better in the latter part of July versus the first part of July. I think part of it is we're extrapolating current business, and we're also looking at all the macro factors and trying to be conservative with what our outlook is. Part of the thinking was, even in this scenario, our business still holds up pretty strongly. Our earnings holds up pretty strongly. I mean, it certainly seems that the market is expecting much worse, right? At least looking at our multiple. So even with this conservative guide, you know, we'll generate $6-$6.20 worth of earnings on the year, which over the last few years, you know, that's a nice growth rate going back for, you know, three or four years. So that's the way we're thinking about it. It's not intended to be overly pessimistic, but it is looking at a very short time period and candidly a very small or low volume month of sales and trying to project what's gonna happen for the balance of the year. Thanks very much, and appreciate the insight. Thanks, Sam. Thanks, Sam. Thank you. Our next question is coming from Jeremy Hamblin from Craig-Hallum. Your line is now live. Thanks. I wanted to follow up on exclusive brand penetration and just in terms of thinking about, you know, price points for that, you had another quarter of extraordinary, you know, penetration or growth in share of mix in that, you know, closing in on 32%. You know, is. Do you see that as, you know, one, how do you view those brands' price points, versus some of your other kind of high sales mix brands like an Ariat or so forth? And then secondly, wanted to get a sense for. You've launched a whole bunch, four new exclusive brands this year and to get a sense of how those brands are tracking versus, you know, some of the incredible success you've had with, you know, Idyllwind or, you know, Shyanne, Cody James, Hawx, et cetera over the years. Sure. On the second piece, they're tracking well. They're tracking in line with expectations or slightly better. You know, there's four different trajectories there, so they're not all exactly the same. But we feel very good about their additions to the business, and we expect them to build over time. We have somewhat of a balanced approach. We wanna bring out those brands with somewhat of a splash, but we also are a little risk mitigated in how much dollars we commit to them. We get to see a couple of quarters of selling, and then we push on what's working, and we pull back on what's not working. We will have the ability to accelerate more going forward. If I were to think of the most recent two exclusive brand launches, probably the better one to look at that's more analogous is when we launched Hawx Workwear, and it got out of the gate relatively quickly and then expanded nicely to the point where it's, you know, a pretty decent penetration in the businesses that it operates in. Idyllwind was sort of a runaway home run from the very beginning. The product line was fantastic. Our partner with Miranda Lambert was just a great partnership and marketing push, et cetera. That's kind of an unfairly or artificially high bar to hold ourselves to. But the Hawx launch, I think, is more appropriate. And the four new brands feel like they're all following that trend line to a large extent. In terms of our exclusive brands relative to the portfolio of other brands, while some companies are looking to bring out more value-oriented product in anticipation of a weakening economy or in response to actual inflation today, we continue to stick to our strategy that our exclusive brands should be high quality, best in breed, boots or apparel that should be very much in line with the best brands in the space. Most of the other vendors that we do business with. Ariat's a great example. I mean, Ariat has helped us build our business. They're an extremely strong partner. You know, they will continue to get growth with us going forward. Typically, what happens is when we bring in our exclusive brands, a more tertiary brand gets excluded or diminished to make room for one of our new brands. We always wanna make sure that we have a nice variety and assortment of different brands and different products, both within our own exclusive brand portfolio as well as the national brands out there. Okay. Interpretation is, you know, the price points, you're, you know, kind of holding firm on price points and you don't feel like your exclusive brands are, you know, slightly lower price points than some of the other national brands and you could maybe potentially benefit from a margin perspective if there was a trade down, slight trade down? Correct. Right. I mean, well, yeah, it's, they're in line with the national brands. It would be disingenuous for us to say a customer's gonna trade down to our exclusive brands and help our margin rate because it's, they're really not trading down in price. If they trade over, so to speak, you know, retail price is equal, we of course make more margin. As we build our inventory in that part of our business, to the extent that we wind up with future markdowns, which again, I think we've tried to really make people feel comfortable that we don't. We're not too worried about ongoing future markdowns. Even if we have them, we're starting with much higher margin rate on our exclusive brands, so we have a bit of a hedge on the downside anyway. We're really not pricing them lower to take care of a customer that's trading down. We have been able to keep the price from increasing in many cases. You know, by default, we may wind up slightly lower than some third-party brands, but that's more because in some cases we've had to raise prices for our third-party brands. Got it. Just clarifying one point too. In thinking about the, you know, the guidance change, is it kind of a fair rule of thumb here? You guided down about $50 million here at the midpoint, and that equated to about 40 basis points to your EBIT margin. Is that a pretty fair rule of thumb, you know, kind of going both ways? If sales end up a little better than you're thinking, you might get, let's say by $50 million, you're gonna get that 40 basis points back or, you know, conversely, if it's, you know, a little softer by another $50 million than 40 basis points, that's about kind of the incremental margin rate, so to speak, every $50 million. Yeah. I think within a narrow range, that's okay. I think you could look at what our guidance was and how we got to where we re-guided and kind of see what that would look like on the upside. I think again, I think between the range we provided for the current guidance and then kind of the metrics and the margin we had out there before, you can kind of build a model on the downside scenario if that's what you're looking to do. At some point that range, you know, kind of falls apart if you get too high or too low off of what we've provided you. Got it. Well, thanks for taking the questions and best wishes. Thanks, Jeremy. Thanks, Jeremy. Thank you. Next question is coming from John Lawrence from Benchmark. Your line is now live. Yeah. Good afternoon, guys. Jim, would you talk a little bit about just construction cost inflation, anything that's surprising you as you move forward with these contracts, delays, et cetera, permitting, to maybe alter the growth rate at all? Sure. Well, separating the question, on the cost side, certainly there's been some inflation, but it's kind of baked into our model and it's baked into our capital assumptions, it's baked into our payback model, and our stores are performing so well, our new stores are performing so well that even if our capital expenditures have gone up slightly there, the payback has been so strong that it just gets sort of overwhelmed by the sales that the stores are generating. In terms of timing, I would say we feel very good about the phasing of stores by quarter. We're kind of holding ourselves to the standard of opening 10 stores each quarter. They've flipped a little bit within each quarter. In fact, our sales were slightly off in the quarter, even in the first quarter, because they opened a little bit later in the quarter than we initially anticipated. I view that as noise, but it is things like you talked about, we can't get an electric box, we can't get it permitted, we can't whatever. I think our real estate and construction team has done just a phenomenal job of hustling through countless jobs across the country to minimize or mitigate the delays in that area. I would just add, John, that we've modeled that into our updated guidance, a little bit of slippage in construction timing just to make sure that we're being, you know, cognizant of that. Great. Thanks, guys. Appreciate it. Good luck. Thanks. Thank you. Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to management for any further or closing comments. Very good. Thank you everyone for joining the call today. We look forward to speaking with you all on our second quarter earnings call. Take care. Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.