Ladies and gentlemen, thank you for standing by, and welcome to the Burlington Stores fiscal first quarter earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you need to press star one on your telephone. If you require any further assistance, please press star zero. I would now like to turn the call over to your host, David Glick, Senior Vice President of Investor Relations and Treasurer. Thank you, operator, and good morning, everyone. We appreciate everyone's participation in today's conference call to discuss Burlington's fiscal 2022 first quarter operating results. Our presenters today are Michael O'Sullivan, our Chief Executive Officer, and John Crimmins, Chief Financial Officer. Before I turn the call over to Michael, I would like to inform listeners that this call may not be transcribed, recorded, or broadcast without our express permission. A replay of the call will be available until June 2, 2022. We take no responsibility for inaccuracies that may appear in transcripts of this call by third parties. Our remarks and the Q&A that follows are copyrighted today by Burlington Stores. Remarks made on this call concerning future expectations, events, strategies, objectives, trends, or projected financial results are subject to certain risks and uncertainties. Actual results may differ materially from those that are projected in such forward-looking statements. Such risks and uncertainties include those that are described in the company's 10-K for fiscal 2021 and in other filings with the SEC, all of which are expressly incorporated herein by reference. Please note that the financial results and expectations we discuss today are on a continuing operations basis. Reconciliations of the non-GAAP measures we discuss today to GAAP measures are included in today's press release. Now here's Michael. Thank you, David. Good morning, everyone, and thank you for joining us. I would like to cover three topics this morning. Firstly, I will review our first quarter results. Secondly, I will discuss our outlook for Q2 and for the balance of the year. Thirdly, I will offer a few comments on the external retail environment, and I'll explain that while this environment may create near-term headwinds for us, we believe that it could drive longer-term strategic benefits for our business. After that, I will hand the call over to John to walk through the financial details. Then we will be happy to respond to your questions. Okay, let's talk about our results. Comparable store sales for the first quarter decreased 18%. In Q1 of last year, we achieved 20% comparable store sales growth. We had estimated at the time that the federal stimulus checks had driven 10-15 points of this growth. As we developed our plan for Q1, we knew we were up against this headwind, so we planned the quarter at a mid-teens comp decline. We viewed this as a baseline that we would be able to beat. In fact, we missed this plan. As I will explain, this was largely self-inflicted. The root cause of this sales miss was that in-store inventory levels were too low and unbalanced in February and March. We had deliberately planned inventories down in Q1, but this backfired on us as we faced late deliveries and receipt churn early in the quarter. Let me explain what we were trying to do. In the past 12-18 months, we have reduced inventory levels significantly, providing greater flexibility and driving faster turns, more freshness, and lower markdowns. We believe that we still have room to turn faster, so we reduced inventory levels further in Q1. We were also mindful of the fact that during the quarter we would be lacking the federal stimulus checks, so we felt that these lower inventory levels would provide additional flexibility. As I say, this completely backfired. In February, we experienced significant receipt delays. These created big gaps in our assortment, especially in our fastest-trending businesses, and these assortment gaps critically impacted our sales trend. In March, we moved quickly to take up receipt and inventory levels. By early April, our in-store inventories were back up and in line with last year. Since then, our comp trend has improved. During this call, when describing our comp trend, I'm going to use a three-year geometric comp stack. This is just like a simple three-year comp stack, but it accounts for the compounding effect of growth from year to year. Given our very large comp numbers last year, we believe that this geometric stack provides a more meaningful indicator of our multi-year trend. This metric is described in more detail in today's press release. In February, our three-year geometric comp stack was -6%. In March, it was -2%, and in April, it was +5%. For Q1 as a whole, our three-year geometric comp stack was -1%. Again, we are very unhappy with this result, and we recognize that it was largely self-inflicted. Our trend in April suggests that if our inventories had been appropriate since the start of the quarter, then our comp performance could have been 6 points higher in Q1. One other point on this inventory issue, and then I'll move on. We have raised our inventory plans for the rest of the year so that in-store inventories will be in line to slightly higher than last year. We still believe that we have room to increase turns, but we will not go after this opportunity until global shipping issues and delays normalize. To be clear, inventory levels for the rest of this year are now planned to be in line to slightly above 2021, but this means they will still be well below historic levels. I'm going to move on now to talk about Q2 and the outlook for the rest of the year. As I mentioned a moment ago, our three-year geometric stack in April was +5%. Our May month-to-date trend has been consistent with April. That said, we think it is prudent to plan Q2 more cautiously than this trailing two months trend. We are planning Q2 based on a three-year geometric stack in the low single digits. This implies a one-year comp decline of -15% to -13%. This range compares with 19% comp growth in Q2 of 2021. There are two reasons why we are being cautious in planning Q2. Firstly, we are concerned about the economic environment and especially about the impact of inflation on retail spending. Lower-income customers are under significant economic stress, and it is not clear that this will change in the next few months. The second reason for caution is that it seems to us as if many retailers are over-inventoried and overbought. We think that this could lead to a very promotional environment later in the quarter. This kind of environment tends to hurt our business. Let me move on to our guidance for the full year. Our updated guidance for the full year is based on a three-year geometric comp stack of 5%-8%. This implies a one-year comp decline of -9% to -6%. This is up against a full-year comp growth in 2021 of 15%. Our updated full-year guidance does assume an uptick in the trend as we get into fall. While we remain concerned about the external environment, there are a couple of factors that we think could provide a tailwind for us in the back half of the year. Firstly, there's been a sea change in the availability of off-price merchandise. We do not know if this has been driven by overproduction by vendors, a decline in the sales trend at other retailers, a sudden catch-up of supply, or all of the above. Whatever the reason, the buying environment now is better than it has been for years. Our buyers are seeing great deals. We have taken this opportunity to build our reserve inventory. At the end of Q1, our reserve was double the level of last year. If this buying environment persists, then we would expect our assortment to be more compelling with even stronger values. We know that in an environment where the customer really needs a deal, a more compelling, value-driven assortment can drive an improved sales trend. We expect that the buys we are making now could begin to have an impact in late summer. The second factor that could cause our sales trend to be higher is if shoppers begin to trade down, looking for value. Clearly, there is a lot of focus and concern about the lower-income customer right now. Based on recent results, it feels like the retail industry is bifurcated. Those retailers that serve lower-income customers are experiencing a weaker sales trend. While retailers serving higher-income shoppers are seeing stronger sales growth. We think it's unlikely that the impact of inflation and of a possible broader economic slowdown this year will be confined only to lower-income shoppers. We anticipate that high inflation, higher interest rates, a falling stock market, and a possible economic slowdown will, at some point, affect other income groups as well. If this happens, then we would expect to see a trade down customer in our stores, and this could drive stronger sales trends for our business in the back half of 2022. Let me recap. Our guidance for Q2 is based on a three-year geometric stack in the low single digits, and our updated guidance for the full year is based on a three-year geometric stack of 5%-8%. This guidance feels appropriate given the risks and uncertainties. As a reminder, our inventory levels are in line with last year and we have a very strong reserve position. If the trend turns out to be stronger, then we should be well-positioned to chase it. In a moment, John will provide more financial details on our Q2 and rest of year guidance. Before we go there, I would like to provide some high level commentary on what we think might happen in the retail industry through the rest of this year. As I described a moment ago, we believe that the economic environment is likely to worsen this year and that this could further undermine the trend across the retail industry. We anticipate that if this happens, it is likely to create headaches and challenges for us in the short term. We believe that this slowdown could provide longer term benefits for our business. Many investors will remember that last summer we began to call out that 2022 could be a very difficult and turbulent year across the retail industry. At the time, we characterized the strong trend across retail as something of a sugar high, driven by a combination of government support programs and pent-up demand as the consumer emerged from the pandemic. This sugar high drove higher sales and for some retailers, higher margins than they would otherwise have been able to achieve. This sales trend was always going to be difficult to anniversary. What we did not anticipate last summer was that there would be other factors that would further undermine retail spending, specifically the impact of inflation on lower income shoppers and potentially fallout from a broader economic slowdown. The important point to make is that difficult and turbulent times in retail are almost always, in the long run, good for off-price. Historically, this has been the cycle. Make no mistake, a slowdown in retail spending makes life difficult for us in the short term. We are certainly feeling that. As an off-price retailer, we can adapt to the new trend. We can benefit from the loosening of supply, and in the coming quarters we may be able to drive our sales trend by appealing to the trade down customer. In addition, we believe that difficult and turbulent times in retail, sooner or later, will drive further rationalization of full price brick and mortar stores. We do not know if or when this might happen, but if it does, then it could represent a very important strategic tailwind to the off-price retail channel. Now, I would like to turn the call over to John, who will share more details on our first quarter financial performance as well as our outlook for fiscal 2022. John? Thanks, Michael, and good morning, everyone. I'll start with some additional financial details on Q1. Total sales in the quarter were down 12%, while comp sales were down 18%. Our three-year geometric comp stack was -1%. The gross margin rate was 41.0%, a decrease of 230 basis points versus 2021's first quarter rate of 43.3%. This was driven by a 150 basis point increase in freight expense, combined with an 80 basis point decrease in merchandise margin. Product sourcing costs were $157 million versus $141 million in the first quarter of 2021, increasing 180 basis points as a percentage of sales. Higher supply chain costs represented about two-thirds of the deleverage. The drivers of these higher costs were driven primarily by higher supply chain wages. Adjusted SG&A was $513 million versus $518 million in 2021, increasing 300 basis points as a percentage of sales. Adjusted EBIT margin was 3.1%, 780 basis points lower than the first quarter of 2021. Our plan for Q1 had been for a 750 basis points decline. The shortfall relative to our plan was driven by lower than expected Comparable store sales. Put into the context of our Q1 2019 EBIT margin, the first quarter EBIT margin declined by 410 basis points versus that time period, driven by 530 basis points of combined freight and supply chain deleverage. The merchandise margins for the first quarter were still 250 basis points higher than the first quarter of 2019, reflecting the progress we've made in terms of inventory reduction and faster inventory turns. All of this resulted in diluted earnings per share of $0.24 versus $2.51 in the first quarter of 2021. Adjusted diluted earnings per share were $0.54 versus $2.59 in the first quarter of 2021. At the end of the quarter, our in-store inventories increased by approximately 2% on a comp store basis, reflecting the aggressive actions taken by our merchandising team to rebuild our comp store inventories. Our merchant team was able to take advantage of a great off-price buying environment to build our reserve inventory. At the end of Q1, reserve represented 50% of our inventory versus 35% last year. In dollar terms, this is almost double last year's levels. We are very pleased with the great values that we have put away in reserve. During the quarter, we opened 26 net new stores, bringing our store count at the end of the first quarter to 866 stores. This included 33 new store openings and 7 relocations or closures. Now, I will turn to our outlook for the full fiscal year 2022 and for the second quarter. As Michael mentioned in his comments, the macro conditions affecting all of retail make it very difficult to plan and forecast sales. Because of these conditions, the range in the outlook we are sharing today is wider than it would be under different circumstances. We are updating our full-year comp sales outlook to a decline of -9% to -6%, which, as Michael explained, is based on a three-year geometric stack of +5% to +8%. Based on this updated comp outlook, we now expect our EBIT margin to decline by 200 basis points on the low end of this comp range and by 130 basis points at the high end. This sales and margin outlook translates to EPS of about $6 at the low end of this range and about $7 at the high end. In Q2, we expect a comp decline of -15% to -13% compared to last year's Q2 comp of 19%. As Michael mentioned earlier, this is based on a low single-digit three-year geometric stack. This would result in operating margin deleverage of 670-610 basis points versus Q2 of 2021. This margin deleverage versus Q2 2021 is driven by higher freight expenses and supply chain expenses, as well as SG&A deleverage on the comparable store sales decline. This translates to EPS guidance for Q2 of $0.18-$0.31. For the back half of fiscal 2022, this outlook anticipates comparable store sales of -2% to +3% with an expectation that Q4 comp sales will be stronger than Q3. I will now turn the call back to Michael. Before we move on to questions, let me summarize some of the key points that we have covered this morning. Coming into Q1, we anticipated a difficult sales trend as we lapped the impact of the stimulus payments from last year. We planned accordingly, but we missed this plan because our inventory levels were low and unbalanced early in the quarter. This issue was largely self-inflicted. Once we got our inventories in shape in early April, our trend improved significantly. That said, our sales trend remains weak, and we're concerned about economic headwinds. We are planning Q2 based on a three-year geometric comp stack in the low single digits, and we have updated the full year based on a three-year geometric comp stack of 5%-8%. We anticipate that 2022 could be a disruptive and turbulent year across retail. If this happens, then it would create challenges for us in the short term. Our assessment is that in the past, disruptive and turbulent times in retail have almost always, in the long run, been good for the off-price channel. At this point, I would like to turn the call over to the operator for your questions. Ladies and gentlemen, if you have a question or a comment at this time, please press the star, then the one key on your touchtone telephone. If your question has been answered and you wish to move yourself from the queue, please press the pound key. Our first question comes from Matthew Boss with JPMorgan. Great, thanks. Michael, maybe to start big picture, clearly the environment has completely changed versus a year ago. What do you think this means for the Burlington 2.0 strategy and also for the longer term opportunities in your business? Well, good morning, Matt. Thanks for the question. I think that my answer is going to sound a little counter-intuitive, and I recognize, given our disappointing Q1 results, I need to offer this answer with a huge dose of humility. We think that the external conditions that we're seeing now, and that we're likely to see in the upcoming quarters, could present a major opportunity for our business. Now last year, there were several investors who asked me to describe what would an ideal environment look like for our business in 2022. You should file this under be careful what you wish for, because my response was that the best scenario for us would be number one, a dramatic slowdown in the sales trend across retail, leading to significant expansion of off-price supply with really great buying opportunities, and also leading to downward pressure on expenses, especially freight rates. Secondly, a much sharper consumer focus on merchandise value. Look, we're not completely in this scenario yet, but there are signs that could be where we're headed. You know, I think you can see aspects of this scenario in what's going on right now. If the full economy starts to slow down in the coming months, then this could lead, we think, to a further weakening in the sales trend across retail, a further increase in supply, downward pressure on expenses, and a heightened focus on value. Now, last year, at the time I was describing that scenario, I conceded that those conditions would also make life difficult for us for a period of time, that we're not immune to economic difficulties. We know that we can adapt, and we know we can take advantage of these circumstances in a way that other retail models cannot. Everything we've been doing on Burlington 2.0 is aimed at improving our ability to offer great value to our customers and making us more flexible so we can react to changes in trend or supply. Again, I say this with some humility, given our Q1 results, but we believe that the current conditions in the upcoming quarters could present a big opportunity for us. Okay. That's great color. Just to follow up on inventory supply, as it sounds like this is another situation that has also drastically changed. Could you just elaborate on the buying environment today? What categories and types of merchandise are you seeing? What do you think is driving this increase in supply, and do you think it will last? Yeah. It's a good question. You know, as I said in the prepared remarks, there has been a complete sea change in terms of merchandise availability. We're seeing availability now in categories where supply has really been constrained for a long time, and we're seeing brands that we haven't seen for a couple of years. You know, this increase in supply has been pretty broad-based, seasonal, basics, apparel, Home, Accessories. We've been able to make some great deals. Now when you buy a large amount of merchandise in a short period, it can't all flow to stores at once. Many of those deals have gone into reserve, and we'll release those over the next few months. On the part of your question about what's driven the increase in supply, you know, I suspect it's a number of things. I think that many retailers and vendors over ordered and overproduced versus what they're now seeing in their sales trends. Also, I think that retailers and vendors probably built in a cushion to their orders to account for shipping delays, and those shipping delays have now eased, so they have too much merchandise. Finally, the mix of merchandise that the consumer is buying has really shifted, and I think that's taken some vendors by surprise. So there are some categories where there is now what I would call a glut of supply. I think the final part of your question was, will it last? We don't know. If the economy weakens, then we could see even more merchandise availability. The other complicating factor, though, is the COVID situation in China. It's hard to know what impact the recent shutdowns there could have. They could create shortages later in the year. That's possible. On the other hand, if vendors overcompensate, then they could add to merchandise availability. We'll have to see. It's a great color. Best of luck. Thanks, Matt. Our next question comes from Ike Boruchow with Wells Fargo. Hey, good morning. Michael, I'm curious how you're thinking about AURs within your own business. I think compared with some of the other retailers, you've been a little bit more cautious on taking up your retails. I guess in light of the much weaker sales trends that you're seeing right now. How are you thinking about AURs for yourself and for your peers? Yeah. Good morning, Ike. Thanks for the question. As you say, we've been quite wary about taking up retail prices. You know, our view has been that. Well, our view was that retail prices rose across the industry last year, mainly because consumer demand exceeded supply. Our concern was always what happens when that reverses. That's kinda what's happening now. The supply of merchandise in most of the categories we compete in has now outgrown demand. Sooner or later, we would expect that will pressure retail prices. You know, in the earlier comments, we made the point that at the end of Q2, so at the end of the spring season, we think that the retail environment could get a lot more promotional as retailers try and clear their spring merchandise. With that said, you know, we also recognize that the underlying costs of product are now permanently higher. Some of those higher freight and supply chain costs aren't going away. For us, that means that retails, even promoted retail prices, are unlikely to ever go back to their 2019 levels. We think that means that there is now a permanently higher price umbrella, and that's why we see some potential to edge up our own prices even in this environment. Now, I think on the last call, we explained that we've developed a plan to raise retails really in the back half of 2022. That plan is very carefully focused on businesses where we have that opportunity. We recognize in this environment, there are risks. So we're gonna be careful, and we're gonna make adjustments to the plan as we go along. There's one other point that I think is worth making. Actually, I think we should—it's probably a good idea to change the vocabulary on this topic. Our primary motivation here is not to take up retail prices. Our primary motivation at Burlington is to take up merchant margins. If we can increase merchant margins, then that will offset higher freight and supply chain expenses. Raising retail prices is just one way, the most obvious way, to drive up merchant margin. There are two other important levers that our merchants are focused on right now. Firstly, as off-price merchandise supply has opened up, we've started to see better deals. In other words, we're paying less for goods. In some situations, you know, we'll plan to pass on some of that value to consumers, but in other situations, we may use it to capture margin. Secondly, we're making changes to the merchandise mix, largely based on what the customer is telling us. The customer is shifting in terms of the type of merchandise that they're interested in buying. Many of those changes will also naturally drive a higher margin. Let me wrap up. Yes, we believe there's an opportunity. We still believe there's an opportunity to raise retails, but we're gonna be careful, and we're gonna make sure that whatever we do, we still offer a really differentiated value versus other retailers. At the same time, we're gonna aggressively go after other opportunities to drive up higher Merchant margin. Got it. No, super helpful. Maybe just one follow-up for John, just looking at the model. John, can you maybe walk us through the assumptions that are embedded in the updated full year guidance that you've given? I think you originally had assumed that freight and supply chain expenses could moderate in the back half of the year. Is that still the assumption we should use? Any other assumptions that you can call out would be great. Well, first of all, good morning, Ike. Thanks for the question. I'll try and explain how we're thinking about the full year guide. First, you know, obviously, we're taking a little more cautious approach. You know, we've certainly seen a slowdown in discretionary spending with some of our core customers. Let me explain our comparable store sales plan. I think it's pretty simple. Our trend over the last two months has averaged a mid-single digit, three-year geo comp. As Michael was describing earlier, we think that the sea change in product availability, the potential for trade down, some of the execution issues that we had in Q1 that are behind us and lapping some of the execution issues we had in the second half of last year creates a little bit of a tailwind for us going into the second half of the year, and that gives us reason to expect an uptick, you know, compared to our first half. Our full-year guide of -9%-6% comp is based on a three-year geo stack of 5%-8%. Now, also remember, we have easier comp sales and margin compares in the second half of the year. You know, this coupled with the dramatically improved buying environment and, you know, the potential for some pricing adjustments that we've worked in should help us show strong comp improvement on a one-year basis during the year and operating margin improvement, especially in the fourth quarter. On the cost side, as you know, our biggest drivers of deleverage have been freight and supply chain. Been talking about that for a while. We've been talking about a couple of different scenarios that could develop in the second half of the year. The first was that supply chain and freight costs would begin to moderate in the second half, as the supply-demand imbalance kinda worked its way back to a more natural or normal balance. We haven't really seen any dramatic improvement in that direction yet. We still expect it will happen over time, but we're not assuming much improvement in the second half of the year. Our second scenario assumed that if freight and supply chain costs didn't begin to improve, that this would be part of a broader inflationary environment. Obviously, you know, that's happened, you know, probably faster and more dramatically than most people were expecting a few months ago. You know, we've previously said that in an inflationary environment, we'd be confident in our ability to raise prices while maintaining our value proposition. You know, we still think this is true, but we are doing this very carefully. You know, we're aware of the degree to which today's inflation has affected the buying power, especially for, you know, our lower income customers. As Michael just said, you know, there's another way that we're able to offset cost headwinds that doesn't rely on taking up retail prices but does raise merch margins. You know, and that's the fantastic buying opportunities that are out there now, where we can get, you know, some really terrific deals. We plan to pass some of this on to consumers, but we also plan to use some of it to drive margin. To sum it up, besides the change in the sales range we gave in today's outlook, there are two other changes to our full year outlook. We now see the supply chain and freight cost deleverage a little higher than last year. You know, we had been assuming a small improvement. We've also increased our planned merchant margin for the full year, building in some upside for realization of some pricing and the other markup opportunities. The net result of the changes is a little better flow through than what we had called out in our previous outlook, you know, when we said that we would expect an operating margin deleverage of 150 basis points at a mid-single-digit comp decline. Today, we're saying, you know, 130 basis points of deleverage at the high end of our full year comp range, which is -6%. Great. Thanks, guys. Bye-bye. Thanks, Ike. Our next question comes from Lorraine Hutchinson with Bank of America. Thanks. Good morning. Michael, my question's about the inventory issue that you had in the first quarter. I'm just curious if there's any additional context on why you planned inventories the way you did and what went wrong. Just curious if the shipping delays that you saw in February have gotten any better. Well, good morning, Lorraine. It's good to hear from you. Yeah, actually, as I said in the prepared remarks, we're very disappointed about Q1. We know we should have done better, and we recognize that we were the architects of our own downfall in the quarter. With that said, let me offer a more full-bodied explanation of what happened and what we were trying to do. I think the best starting point is that we believed, rightly as it turns out, that 2022 would be a difficult and unpredictable year, in retail. As you've heard us say in the past, our strategy for dealing with uncertainty, our playbook, if you like, is to be as nimble and flexible as possible. That's really a core principle behind Burlington 2.0. With that in mind, when we planned 2022, we tried to do three things. First of all, we planned sales conservatively. Now we're happy that we did this. It's clear it was the right thing to do. It looks like many other retailers were more optimistic, and as a result, they're now overbought and over inventoried, and we're not. That means that we have a bit more flexibility to respond to buying opportunities. Secondly, in addition to planning conservatively, we planned our liquidity very tightly. For example, this means that we still have Open-to-Buy for the second quarter and the rest of the year. Again, that just gives us more flexibility, given the current external environment. Now, the third thing we did, and this is the one that goes to the heart of your question, we planned our inventories conservatively. We believe we can turn faster, and these plans were, again, intended to increase our flexibility. Now, as I said in the remarks, this did not work. In fact, instead of providing flexibility, these leaner inventories meant that we were exposed when receipts did not show up early in Q1. This was a mistake, and it hurt badly. Let me move on to the last part of your question. Have the receipt delays improved since February? The answer is yes, they have. The situation has completely changed. Just a few months ago, many vendors were living hand to mouth. Their warehouses were empty, and they were literally just in time waiting for merchandise to get through the ports. Now, a few months later, domestic warehouses are full, and in many cases they're backing up. In this situation, the vendors really wanna get the goods out as soon as possible. As you'd expect, shipping delays have fallen off dramatically. Thanks. Just a follow-up question for John. John, you talked about some of the freight pressures you're seeing. Any other main margin drivers to call out versus 2021 and then also versus 2019 levels? Thanks. Yeah. Good morning, Lorraine. Thanks. It's a good question. I'll start with Q1 and then I'll try and give you a little color on the way we're thinking about Q2 and the full year margins as well. Yeah, as I said a little earlier in the call, for Q1, our EBIT declined by 780 basis points, and that missed the outlook that we had given by about 30 basis points. That was pretty much all related to the more deleverage on our expense base by our comp sales coming up short of our mid-teens baseline plan. About 230 basis points of the deleverage versus last year was in gross margin. 150 of that would be related to freight, 80 basis points, on the merch margin side. Product sourcing costs deleveraged by 180 basis points, and again, that was about 120 basis points supply chain and 80 basis points related to our continued investments in our merchandising team. The rest of the leverage, another 370 basis points was just deleverage on all other costs driven by the, you know, pretty large decrease in comp sales. When you compare it to the first quarter of 2019, EBIT declined 410 basis points, which was entirely driven by 530 basis points of combined freight and supply chain deleverage. In fact, you know, the merch margins for the first quarter were still 260 basis points higher than the first quarter of 2019. That's a reflection of the progress that we've made turning inventory faster and operating with you know, smaller inventories in our stores. Moving on to the second quarter, we said today we expect operating deleverage of 670-610 basis points on our comp range of -15%-13% compared to last year's you know, +19% comp. Compared to Q2 of 2019, that would mean deleverage of 500 basis points at the high end of the range, the -13% comp. The majority of that would be driven by freight and supply chain deleverage. We do expect to have some merchant margin growth in that, but that's pretty much gonna be offset by the deleverage on all other expenses at that negative comp level. Finally, for the full year, as I mentioned a little earlier, we're expecting our operating margin rate to be a little better than what we said in the last call. You know, 150 basis points of operating margin deleverage at mid-single digit comp decline was our previous outlook. Now we're saying at the -6% comp, we're expecting 130 basis points of operating margin contraction. A couple things that changed there. First, we anticipate higher gross margin rate resulting from better merch margin driven by the combination of great product availability, which drives costs down, and some selective price increases, as I mentioned earlier, partially offset by a little higher than expected freight and supply chain costs, including you know some higher domestic freight fuel costs than what we had anticipated as we developed our plan. Again, at the -6 comp high end of our range, our EBIT margin would be 7.3%. Compare that to a 2019 operating margin of 9.2%. That means deleverage of 190 basis points. We expect the deleverage story for the full year is gonna be very similar to what we talked about in Q1 and what I just said we're kind of expect in Q2, significant deleverage caused by freight and supply chain costs, some additional deleverage on the fixed cost base and all that deleverage partially offset by substantial gross margin growth. That, that's kind of the whole picture. Thanks. Our next question comes from John Kernan with Cowen. Good morning, Michael, John, and David. Just a couple questions about the macro environment and your customer. Michael, in your remarks, you referenced the low-income consumer being under economic pressure. That's intuitive given the inflationary environment. How should we think about that, the relative importance of that demographic to your business? Are there any stats you could share with us? Also curious on just detail on what you're seeing with that customer, how their traffic conversion and basket levels are trending. Sure. Well, good morning, John. I would say, compared to many retailers, you know, I would characterize our core customer demographics as younger, more ethnically diverse, a larger family size, and low to moderate income. I would say that we regard those as wonderful demographics. This segment of the population is growing and understands value. In many ways that customer group represents everything that's growing in America. In fact, for many years, I think low to moderate income shoppers have been the growth engine, not just for us, but for value retail as a whole, especially bricks and mortar value retail. Now, of course, as you say, this customer, the low to moderate income customer is under a lot of pressure right now, and that makes sense. In 2021, certainly in proportion to their income, these shoppers were big beneficiaries of government support programs, stimulus checks, child benefit, extended unemployment, and those programs have now gone. That alone would have made 2022 a difficult year. If you layer on top of that, you know, retail price inflation for essential items like food and gas is now running at extraordinarily high levels. Again, those items represent a disproportionate share of household budgets for those shoppers. It's not difficult to see why this customer is under significant economic stress. Now, you know, what can we share? Well, we see this in our own data. The vast majority of our stores are in trade areas that have average household income below 75,000. The vast majority of our stores. In 2021, our stores that are in low to moderate income areas had by far the strongest increases in comp sales across our chain. This year, not surprisingly, they've shown the biggest deceleration. Now, in the short term, we don't expect that the economic conditions for these consumers is gonna improve in the short term. We do think it's a big opportunity for us. These shoppers need value now more than ever, and in the coming quarters, we think we can do a much better job of delivering that value. Let me wrap up my answer by reinforcing the point that these customers are the future. Yes, right now they are facing headwinds and those headwinds are likely to persist for the next few quarters. This is a large demographic group, and these customers are coming back. In the coming years, we believe that this will again be a major source of growth for value retail, especially bricks and mortar, value retail. Got it. Maybe just one other follow-up question, again, related to the consumer. Are you seeing any evidence of a trade down customer in the store? Do you think that trade down business is likely to be a meaningful sales driver over time? Is there any of that built into the second half guidance? Yeah, it's a good question. I don't think we've seen much of a trade down customer so far, but we do think that in the back half of this year could change. That's why we're actually a little more optimistic about the back half of the year. We have built in an element of that to our guidance. You know, a moment ago, I said that it makes sense that the lower income customer is struggling, but we don't believe that this is where the economic stress is gonna end. You know, I think it's possible that we're only in the opening stages of this economy. We don't have a crystal ball, but it seems likely to us that high inflation, higher interest rates, a falling stock market, and a potential recession is going to affect a much broader set of consumers at some point. When those consumers are squeezed, we think that they too will be looking for value and that they may trade down. Historically, that is typically what has happened. Whenever there's been a broader economic slowdown, it hasn't just affected lower income shoppers. It's also affected middle and even some higher end shoppers. In that situation, everyone cares about value. Again, we don't know when this might happen, but if it does, then we believe that it may help to drive our sales trend. Okay. Thank you. Our next question comes from Kimberly Greenberger with Morgan Stanley. Okay, great. Thanks so much. Good morning, and thanks for all the detail today. Michael, how are you feeling about your merchandise assortment now, speaking to both quality and quantity? Based on your earlier comments, it sounds like you're in a position to chase now here in the second quarter and in the back half of the year. Assuming I heard you right on that, as you chase now, are you starting to get delivered on time, or are you still experiencing significant delays in your inventory receipts? Well, good morning, Kim. So the first part of your question, how are we feeling about the assortment right now? In terms of quantity, the overall level of inventory, I would say we feel very good. Our inventory levels right now are just a little bit higher than last year. Last year, as a reminder. In the second quarter, we ran a 19% comp. I feel pretty good about our entry level right now. The quality and the content, I feel good about the quality and the content of our inventory and our assortment. I would say that we recognize there's actually huge opportunity to take it from good to great. We actually think there's a lot of opportunity to make our assortment much better than it is. That's, you know, as I say, the starting point is good, but I think we can make it much better. The reason I say that is there are a couple of things that have happened in the past month or so. The first is I really do think it's become clear that the customer has shifted in terms of the categories that they're buying right now. You know, some of this is intuitive. You know, last year, the hottest trending categories were Home, active apparel, casual apparel, basics. This year, the customer has pivoted. They're interested in dressier classifications, back to office, career wear, much more structured apparel, woven versus knits. We had anticipated some of that, but it's happening to an even greater extent than we anticipated. I think we have an opportunity to shift our assortment more in that direction. Then secondly, the other thing that's really happened over the past couple of months is just this point about merchandise availability has opened up, and there are really great deals out there. Now, as I mentioned in response to an earlier question, when you see great deals out there, you can't just buy everything and flow it to stores straight away. You need to sort of flow it to stores over a period of time. It takes a while for it to bleed into your assortment. Over the next few quarters, I really think we're gonna have greater value in our assortment, much more compelling values. We're very excited about that. Now, the second part of your question, I think, was about are we in a position to chase, and I think the answer is yes. We feel really good about our ability to chase right now, partly because obviously our inventory level is already at a pretty good point. But secondly, we have a lot of merchandise in reserve that we can pull on. Then, as I say, merchandise availability in terms of going out there now and buying merchandise that we can flow to stores has also improved. So we feel good about our ability to chase in the second quarter if the sales trend runs ahead. You know, on timely deliveries of receipts, again, that's completely changed in the last couple of months. The situation in terms of the amount of merchandise that's now in the country and that's been imported into the country over the past few months means that domestic warehouses are pretty full. As a result, our vendors are shipping on time because they want to get those goods out of their warehouse. Three or four months ago, their warehouses were empty, and they were waiting for goods to come out of the port. As I said, that's completely changed in the couple of months. Very helpful. Thanks. Thanks. Our last question comes from Chuck Grom with Gordon Haskett. Hey, thanks very much. Most of my questions have been asked, but I'll, I just have one question for you, Michael, just given your experience in the industry. You know, when you look back at other periods of consumer duress, you know, maybe 2008 or I'm sure there's other times in the history of off-price, how long of a lag was it before you saw that middle-income customer start to trade down? You know, it looks like right now you're in a little bit of an air pocket where you're not getting the trade down, but your current consumer's starting to pull back a little bit. So just curious your perspective on the timing. Sure. Yeah, it's a good question, Chuck. Yeah, we've been thinking about that. You know, I would say that, you know, obviously the previous economic slowdown that's maybe the most applicable is the financial crisis in 2008. I would say that the one difference between what happened then and what's happening now is in 2008, the financial crisis kind of came as a shock to the whole economy all at once. Like in September of 2008, it was kind of, it was felt across the whole economy, and then that sort of then led into what happened in 2009 and 2010. Like here in 2022, this is a little bit different in that the inflation impact, at least to begin with, is being felt more by low-income customers. That they're the ones facing the immediate shock because, you know, when you look at the cost of gas prices and food, you know, those items represent such a big share of their wallet that, you know, the big increases we've seen in those areas are really hitting those customers most of all. As I said in my earlier remarks, we don't think it's gonna stop there. I think the impact on the overall economy is coming. It's ahead of us. Now, we could be wrong, but that seems to us to be likely, and therefore, it seems to me that the trade-down customer, which might have been more evident back in 2008 and more evident earlier, might take a little bit longer this time around. You know, we don't really know. That's how I would compare it with previous economic slowdowns. Great. Thanks very much. Thanks, Chuck. Now I'd like to turn the call back to Michael O'Sullivan for any closing remarks. Let me close by thanking everyone on this call for your interest in Burlington Stores. We look forward to talking to you again in late August to discuss our second quarter results. Thank you for your time today. Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.