Good morning, and welcome to Burlington Stores' 3rd quarter 2022 earnings call and webcast. All participants are in a listen-only mode. After the speaker's presentation, we will conduct a question-and-answer session. To ask a question, you will need to press Star followed by the number 1 on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to David Glick, Group Senior Vice President, Treasurer, and Investor Relations. Please go ahead, Mr. Glick. Thank you, operator. Good morning, everyone. We appreciate everyone's participation in today's conference call to discuss Burlington's fiscal 2022 3rd quarter operating results. Our presenters today are Michael O'Sullivan, our Chief Executive Officer, and Kristin Wolfe, our EVP and 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 November 29th, 2022. We take no responsibility for inaccuracies that may appear in transcripts of this call by 3rd parties. Our remarks in 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 four topics this morning. Firstly, I will discuss our 3rd quarter results. Secondly, I will review our outlook for the 4th quarter. Thirdly, I will talk about our 2023 outlook. Finally, I'll offer some comments on the longer term. After that, I will hand over to Kristin to walk through the financial details. We will be happy to respond to any questions. Okay, let's talk about our results. Comp store sales for the 3rd quarter decreased 17%. This was on top of 16% comparable store sales growth last year. As we have done on previous calls, today when we are describing our comp trend, we will use a 3 year geometric stack. This metric is defined in more detail in today's press release. Our 3 year geometric stack was -3% for the 3rd quarter. This was within our guidance range, but still a disappointing result. There were external headwinds that contributed to this comp performance. These headwinds are real and have affected our business all year. Today, I do not plan to spend much time talking about these. As we said on our August call, despite these headwinds, as an off-price retailer, we should be able to drive stronger performance than this. If you look at the results reported this past week, clearly we are an outlier within off-price. Again, this mirrors my comments from August. I would like to spend some time talking about the actions that we have taken since then. In off-price, the most important driver of sales is the value that we put in front of the customer. In August, I explained that we were aggressively reviewing the value and the mix in our assortment. There were numerous actions that came out of that review. Let me share some details on these. Number 1, we had originally planned to raise retail prices and increase merchant margin in the back half of the year. In Q3, we pulled back on this. We reviewed our on order, and we adjusted retails to sharpen the values on fresh receipts that flowed to stores in September and October. Number 2, we also went through our existing inventory and went after slower-moving merchandise with more aggressive markdowns. By end of September, we had rolled these markdowns through all areas of the store, and we took further aggressive markdowns in October. Number 3, we raised liquidity in faster-moving businesses and focused this open-to-buy on great opportunistic deals. These buys began to show up in stores in early October. Number 4, we used the liquidity that I just mentioned to drive up the mix of recognizable brands in our assortment. By mid-October, we achieved a much higher mix of these key brands in front of the customer compared to last year. Number 5, in addition, we focused very heavily on expanding our mix of opening price points across our businesses. We know that we have many need-a-deal customers for whom these lower price points are very important. Number 6, we accelerated releases of great values from reserve inventory. We pulled these releases forward from Q4 to Q3 and drew down reserve inventory from 52% of total inventory at the end of the second quarter to 31% of total inventory at the end of the 3rd quarter. During this period, we tightened and controlled expenses. We reinvested these savings in the actions I have just described. Since early September, we have done a lot to sharpen our values. As I acknowledged back in August, we should have done all of this sooner. In 2022, the consumer's frame of reference for value shifted significantly versus last year. We should have responded more aggressively and more rapidly. With that said, let me talk now about the results we have seen from the actions we have taken. The main headline is that since mid-October, we have seen a pickup in our sales trend that has continued into November month to date. This is a short period of time, and of course, there are many important shopping days ahead of us. We believe that this improvement is attributable to the actions we have taken, and this pickup gives us some optimism going into Q4. In fact, let me move on to talk about Q4 guidance. Although we have made significant adjustments to sharpen our values and we have seen a pickup in our sales trends, we are maintaining the guidance for Q4 that we previewed on our August earnings call. We are mindful of the fact, and 2022 has demonstrated, that we are more exposed to some of the prevailing macro headwinds than many other retailers. These headwinds have not gone away. For these reasons, we are staying with the guidance that we issued in August. As a reminder, this guidance is based on a three-year geometric stack of -4% to -1%. We hope to do better, we think it is prudent to maintain this guidance. I would like to talk about how we are thinking about 2023 and our longer-term outlook. We previewed this on our call in August. As a reminder, coming into 2022, we were concerned about the headwinds and risks across retail, it turns out that we were right. In contrast, we are optimistic about the outlook for 2023. This optimism is based on five factors. Firstly, we expect that the economy will continue to slow down, as it does, we anticipate that there will be an even stronger consumer focus on value. Secondly, throughout 2022, there has been a huge imbalance between supply and demand, with too much inventory across retail. This has driven much higher promotional activity, especially in mass channels. Put simply, in 2023, we expect a lower level of promotional activity. This should help to recover our sales trend. Thirdly, there is a very strong availability of great off-price merchandise. This has also been reported by our peers. By year-end, we think it is likely that we will have rebuilt our reserve inventory with great opportunistic buys. We also expect that the availability of great in-season merchandise will remain strong well into 2023. Fourthly, we have made mistakes this year that have hurt our sales trends. I realize we have to demonstrate this. We do not intend to repeat these mistakes in 2023. Finally, we believe that the expense environment in 2023 is likely to improve very significantly versus this year, especially for contracted transportation rates. Those are the reasons why we are optimistic about 2023. In terms of risks, the main call-out is a continuing concern about the lower-income customer. As we have discussed before, we have more exposure to this customer than most other retailers. In 2022, the lower-income shopper has borne the brunt of the impact of inflation. As we look forward to 2023, we do not expect that this headwind will disappear, but we think that it should moderate if the level of inflation continues to fall. To sum up on 2023, we have to get through Q4, and we need to complete our budget process before we can offer guidance. Given what we know at this point, we are optimistic about the potential to drive some recovery in sales and margin next year. I'm going to finish up with some comments about the outlook beyond 2023. We remain very excited about the ability of off-price to continue to take market share over time. We also remain confident in our ability to improve our execution of the off-price model and thereby drive higher sales and margin. I realize that there are investors listening to this call who are thinking, "Well, that all sounds great, but given your results this year, why should we be confident in this longer-term outlook?" Let me address that question. I'll start by saying that we do not believe that any of the issues we have faced this year have been what you might call structural. For example, there's been no issue with getting access to great supply and great brands. In fact, I can't recall a time when off-price supply has been better. Rather than a structural root cause, I think there have been two key drivers of our poor performance this year. Firstly, the macro headwinds have been real, especially the impact of inflation on the lower income customer. This has hurt us more than most other retailers. This is not a permanent structural change. Rather, it is temporary and driven by the economic cycle. This impact will recede over time. I would describe the second key driver of our poor performance as being developmental. In the last few years, we have been transitioning to become more off price. For example, we have been investing in our buying capabilities. By the end of this year, our buying team will be almost 50% larger than it was in 2019. It is important to note that much of this investment is now behind us. This pace of growth has already naturally slowed. The focus going forward will be on how to take greater advantage of this improved buying capability to drive sales and margin growth. To sum up, we are excited about the prospects for off price. Despite our disappointing performance this year, we are confident in our ability to drive improved execution and significant sales and margin recovery over the next few years. I would now like to turn the call over to Kristin to provide more details on our Q3 results and our rest of year guidance. Thanks, Michael, and good morning, everyone. Let me start with some additional financial details for the 3rd quarter. Total sales in the quarter were down 11%, while comp sales were down 17%. As Michael mentioned, our 3 year geometric comp stack was a -3%. Comp sales and adjusted EPS came within our guidance range. For Q3, our adjusted EPS was $0.43, which was within our guidance range of $0.36-$0.66. The gross margin rate was 41.2%, a decrease of 20 basis points versus 2021's 3rd quarter rate of 41.4%. This was driven by a 90 basis point decline in merchandise margin, which was partially offset by a 70 basis point decrease in freight expense. The decline in merchandise margin was driven by the more aggressive markdowns that Michael referenced in order to sharpen our values. Product sourcing costs were $178 million compared to $173 million in the 3rd quarter of 2021, increasing 120 basis points as a% of sales. This deleverage was driven by buying and supply chain costs. Buying costs deleveraged on the 17% comp decline, while supply chain costs were higher than expected, primarily due to a pull forward of Q4 receipts and the higher mix of true closeout merchandise, which is more labor-intensive to process. Adjusted SG&A was $544 million versus $582 million in 2021, increasing 140 basis points as a% of sales. This was driven by the overall deleverage on the sales comp decline. Adjusted EBIT margin for the quarter was 2.7%, 340 basis points lower than the 3rd quarter of 2021. Given where our comp store sales actualized within our guidance range, this margin decline is what we would have expected given our Q3 EBIT margin guidance for a decline of 260-360 basis points. Relative to our Q3 2019 adjusted EBIT margin, 2022's 3rd quarter adjusted EBIT margin declined by 520 basis points. Of this, 360 basis points is driven by supply chain and freight, with the balance driven by the deleverage on the lower comp sale. All of this resulted in diluted earnings per share of $0.26 versus $0.20 in Q3 of 2021. As a reminder, the prior year's amount included a $1.22 per share impact from a loss on debt extinguishment charges. Adjusted diluted earnings per share were $0.43 versus $1.36 in the 3rd quarter of 2021. At the end of the quarter, our in-store inventories were 8% above 2021 on a comp store basis, and our reserve inventory was 31% of our total inventory versus 30% last year. As Michael discussed, we aggressively flowed reserve inventory to stores during the month of October in order to be properly set with great values for the critical holiday selling season. In the 3rd quarter, we opened 16 net new stores, bringing our store count at the end of the quarter to 893 stores. This included 28 new store openings, 10 relocations, and 2 closings. In the 4th quarter, we plan to open an additional 39 new stores and to relocate 5 stores. As a result, we should end the year with 927 stores. This translates to 87 net new store openings this year. Let me turn to our outlook for Q4. As Michael mentioned, we are maintaining our outlook for the 4th quarter, which is based on a -4% to -1% three-year geometric comp stack. This translates to a one-year comp decline of 9% to 6%. This range should lead to a Q4 adjusted EBIT margin of flat to up 70 basis points versus 2021 and to 4th quarter adjusted EPS of $2.45 to $2.75. For the full year fiscal 2022, this implies a one-year comp range of -15% to -14%. Based on this range, our adjusted EBIT margin is expected to decline by 400-370 basis points. Given our actual 3rd quarter results and Q4 guidance, this translates to an updated adjusted EPS outlook for fiscal 2022 of $3.77-$4.07. I will now turn the call back to Michael. Thanks, Kristin. Let me summarize the key points that we have discussed. In August, we took a step back to challenge and reset the values and mix in our assortment. We made significant changes. We believe that these drove the improvement in our trend towards the end of the quarter. Despite these changes and the improvement in the trend, we are cautious. 2022 has shown that we are more exposed to the prevailing macro headwinds than many other retailers. Despite the recent improvements, we are maintaining our previously issued guidance for Q4. Looking ahead to 2023, there are several reasons why we are optimistic about the outlook. We need to get through Q4 before we offer guidance, but we believe we should be able to drive some recovery in sales and margin in 2023. Lastly, as we look further out, we remain confident in the prospects for the off-price model and in our ability to drive improved execution of that model over time. With that, I would now like to turn the call over to your questions. Thank you. As a reminder to ask a question, please press star followed by 1 on your telephone keypad. In the interest of time, we ask that you please limit yourself to 1 question and 1 follow-up. Thank you. Our first question comes from Matthew Boss from JP Morgan. Please go ahead. Your line is open. Great, thanks. Michael, maybe to dig further in on the long term? Clearly 2022 has not gone according to plan and has been a pretty major setback in terms of financial performance. How best to think about your ability to get back on track and the potential and timing to achieve some of the longer-term financial targets that you laid out last year? Well, good morning, Matt. Thanks for the question. I think that the way that you phrased it is exactly right. 2022 has been a major setback in terms of hitting our longer-term financial targets. Let me explain why I believe that we can get back on track and what we need to do to get there. Firstly, the reason why I believe we can get back on track is because nothing fundamental or structural has changed. That's kind of what I was getting at in the prepared remarks. There have really been 2 key drivers of our performance this year. Firstly, macro headwinds, which have been significant, I don't see those as being permanent. They're just part of the economic cycle. Secondly, our own mistakes, driven by poor execution. The long-term opportunity, in my view, has not changed. Let me talk about what we need to do to get back on track as we go after that opportunity. The number one priority is sales. We have to drive sales. The only way to do that in our business is to continue to improve our ability to deliver value to the customer. You know, I realize 2022 has not been a good advertisement for our ability to do that, but we'll learn from the mistakes that we've made this year. The other aspect of getting back on track to our longer-term financial targets is to drive earnings as well as sales. If you look at the deleverage in our operating margin this year versus 2019, it comes from two sources: expense deleverage, lower sales, and higher freight and supply chain costs. You know, as I said, our number one priority as we get into 2023 and beyond is to drive sales. If we can do that, then we can drive leverage. We're also very focused on driving down freight and supply chain expenses as rates and as external conditions start to normalize. It's too early to put a more specific timeframe on it, I believe that we can get back to our 2019 margins within the next few years. In addition, as we've talked about before, there are longer-term initiatives that should help us to deliver an even stronger margin over time. For example, the rollout of our smaller, more profitable new store prototype. I guess let me finish up by saying we've deliberately not provided a formal update to the longer-term financial model that we shared last year. I'm still very confident in our ability to achieve those longer-term financial targets. Frankly, for an update to that model to have any credibility, we have to get through 2023 first. We really have to demonstrate improved performance and execution. Great. Then maybe a follow-up on new store openings. It looks like you're on track to open 87 net new stores this year. That's a bit shy of your original target of 90. Could you just provide any additional color on that? Should we interpret this as a slowdown? It's a good question. You're right. We had originally planned to open 90 net new stores this year. We're now expecting to open 87. The short answer to your question is that there were some supply chain delays with air conditioning equipment and other stuff like that. A small number of stores slipped. That small number of stores will open in the spring. We now expect to end this year with 927 stores. As a reminder, you know, our long-term target is 2,000 stores. That has not changed. Also, as we've announced previously, we expect to open between 500 and 600 net new stores over the next 5 years, over that entire period. The only update is that the actual number may vary slightly more year-over-year. The reason I'm calling that out is that we expect that there'll be some bricks and mortar retail consolidation over the next few years. That could have a very positive impact on the quality and availability of real estate locations. It's hard to predict what that looks like year-over-year. That means that the number of openings could be higher or lower in one year versus the next. Bottom line, the overall target has not changed. The number of openings in any specific year might vary more depending on the availability of locations. Great color. Best of luck. Thank you. Our next question comes from Ike Boruchow from Wells Fargo. Please go ahead. Your line is open. Hey, good morning, Michael, Kristin, David. I guess, Michael, first question for you, I want to focus on inventory levels. Any chance you could provide maybe some additional detail on inventory levels, on where you ended Q3 and where you expect these to be at year-end? Maybe also, it sounds like the off-price buying environment is very attractive. Does this mean there might be some merch margin upside in 4Q as you flow more recent buys in the stores? A follow-up for Kristin. Well, good morning, Ike. I think the best thing to do is separate out our store inventory from our reserve inventory. Our store inventory is obviously what's available for sale to customers in our stores. Reserve inventory is obviously goods that we've packed away for later release. At the end of Q3, our store inventory was up 8% on a comp store basis. We actually expect to drive that inventory level even higher in the run-up to holiday. The reason for that, and you'll remember this, last year, we suffered significant receipt delays, which created holes in our assortment during this critical selling period. As we lap that impact, obviously our store inventory is gonna be higher year-over-year. Similarly, at year-end, I would anticipate that we would have much higher store inventory levels than last year. Last year, our store inventories were just too lean going into the spring. Again, you'll remember that together with receipt delays, really undermined our sales trend in February and March. Our plan is to start the spring season with much higher store inventory level than we did last year. Let me move on, though, and talk about reserve inventory. In Q3, we released a lot of receipts out of reserve to build up our store inventory levels as we entered Q4. Now it's going to depend on the opportunities that our buyers find in the market, but I would expect that by year-end, we will have built back up our reserve inventory. Again, that'll depend on opportunities. On the last part of your question, yes, the off-price buying environment right now is very attractive. There are a lot of great deals. Ordinarily, I would agree that that should drive merchant margin upside, but I think that that's unlikely to happen in Q4. As I described in my prepared remarks, our overriding focus in this environment is to offer great value in order to drive the sales trend. That means that we'll be passing along great deals to our shoppers. Got it. Kristin, maybe can you give us a little bit more color on the Q4 guide from a margin perspective? You're calling for flat to up slightly EBIT margin. Given the significant decline in the 3rd quarter, can you just walk us through the big drivers of the improvement that you're kind of embedding for the holiday? Sure, Ike. Thanks for the question. First and foremost, our 3 year comp stack is similar to what we guided to in Q3. The 1 year is actually several 100 basis points better, given that last year, our Q3 comp was a +16, and then Q4 moderated to a +6. While we are maintaining that Q4 guidance, as Michael mentioned, since mid-October, we've seen a pickup in the sales trend. Despite a warm start to November, our month-to-date sales trend is slightly above the high end of our guidance range. This gives us confidence in that guidance. Given the improved 1-year comps for the 4th quarter, expense deleverage moderates somewhat on each line in the P&L, particularly in SG&A. Coming down to gross margin, we expect to see favorability or leverage in freight expense, given the dynamics of what's happening in transportation costs. That headwind's moderating. As a reminder, last year, those were peak import freight costs in Q4, so we're lapping that. Those factors should help us drive a modest increase in reported gross margin. We do expect to see less deleverage in product sourcing costs, including supply chain costs, given the acceleration of Q4 receipts into Q3 that Michael mentioned, as well as we're lapping 1-time incentives and hiring expenses in our distributions from last year. With regard to supply chain, we've put in place several initiatives to continue to drive productivity. We're investing in automation and efficiencies opportunities in the DCs, so continuing there. Overall, given these puts and takes and factors, we expect 4th quarter EBIT margin, as you said, to be flattest to slightly above Q4 2021. Great. Thanks. Happy holidays, everyone. Thanks. Our next question comes from Lorraine Hutchinson from Bank of America. Please go ahead. Your line is open. Thanks. Good morning. Michael, the merchandising organization has been a strategic priority for you. Can you describe the investment you've made in this capability since 2019 and how this investment might drive the sales and margins, margin objectives over time? Well, good morning, Lorraine. Thank you for the question. Yes, we've been growing our merchant team for the last few years. As you say, this has been a major priority for us. We know that merchandising capability is how you win in off-price. We've recognized since the start that we are well behind our competitors in this regard. We've been playing catch up with these capabilities. I would say our peers built their buying organizations over many years. We're trying to do it in a much more compressed period of time. As I mentioned in my remarks, by the end of this year, we will have grown our buying team by almost 50% versus 2019. This is huge. You know, I'm pleased with this growth, and more importantly, I'm very pleased with the quality of the talent that we've been able to attract. Of course, you know, this kind of growth takes a while to absorb and integrate. It will take time for this team to become as effective as it can be, as effective as it needs to be. Between 2021 and 2022, as I said in the script, there's been a huge shift in the consumer's frame of reference for value. With all the newness that I just described, we didn't respond to that shift as rapidly or as aggressively as we should have. That's disappointing, but probably not surprising. I think it reflects our stage of development. Let me sort of look further. Let me look ahead. I think that it's important to note that the major growth spurt in merchandising capability is now behind us. We'll continue to add where we need to or opportunistically where we see really great talent, but we're not gonna be adding much in headcount at anything like the same pace as we have over the last 3 years. The focus going forward is gonna be to drive greater efficiency and value from the investment that we've already made. Just to bring this to life a little bit more, compared with 2019, we now have much greater off-price merchant expertise, more experienced leadership, stronger vendor coverage, and much greater buying resources, especially targeting our highest opportunity growth businesses. I feel like we've built a huge asset, and I've got no doubt that this asset is going to drive significant growth in sales and earnings over the next few years. Thanks. For Kristin, can you walk us through the puts and takes on your margins in Q3? Supply chain costs were a little higher than we had expected. Can you help us understand why they're still elevated and then what the path to recapturing at least a portion of this supply chain deleverage looks like? Sure. Lorraine, thanks for the question. I'll walk through the puts and takes on Q3. From a gross margin standpoint, we came in about where we expected. Merchandise margin was down 90 basis points and freight lower by 70 basis points came in largely in line with what we were expecting. SG&A did come in lower than we had planned due to strong expense control, as you noted, we did incur higher than expected supply chain costs. These were offset in the context of our guidance with that lower SG&A, it was higher. Let me walk you through the key factors on supply chain. It's a bit of a good news, bad news story. The good news is we were able to accelerate releases of great values from Reserve. Michael mentioned it in his prepared remarks, I think it bears repeating. Reserve inventory went from 52% of total inventory at the end of the 2nd quarter and then down to 31% of total inventory at the 3rd quarter. The other good news is that we were able to secure more highly desirable branded closeout buys. These buys are typically messier. They're more labor-intensive, less efficient to work through the distribution centers. Those are sort of the good news items. The bad news, of course, is that all these drove higher supply chain expenses. As I mentioned, with Ike's question, we should see improvement in the 4th quarter, again, with that receipt pull forward, lapping the higher incentives, but also with the productivity and automation initiatives we're continuing, which will continue into 2023. Thank you. Our next question comes from John Kernan from Cowen. Please go ahead. Your line is open. Good morning, Michael, Kristin, and David. Michael, I have a question about the low income customer. Clearly, this customer's been under inflationary pressures this year. How long do you think it'll take before their spending levels begin to recover? Until that happens, do you think it's gonna be difficult to drive your historical levels of comps and sales? I have a quick follow-up for Kristin. Good morning, John. When we look at our core customer demographics, we index as much lower income, much more ethnic, younger and larger family size than most other retailers. These are, I think, the very consumers that have been disproportionately hurt by the higher cost of living this year. Unlike other income groups, you know, these demographics don't have savings to draw from. But, you know, I have to say, we love this customer. These shoppers have driven the growth of bricks-and-mortar value retail over many years. It may take a while, but this customer is gonna recover. Over the long term, it's a very attractive and growing customer base. You know, as we look forward to 2023, we anticipate that this low income customer will continue to be pressured economically. Our optimism around 2023 is not predicated on a sudden bounce back by this customer group. We think that constrained spending levels by lower income customers will still be a headwind for us in 2023, but just less of a headwind than it was in 2022. Our optimism about 2023 is driven by other factors, specifically, a greater focus on value by other income groups and therefore more trade down traffic, less of an inventory overhang and therefore lower promotions, especially in mass retail, an improving expense environment, especially for contracted freight. Lastly, of course, better execution by us as we lap our own mistakes from this year. Maybe just a final question here for Kristin or David. Can you give us some color on your cash levels and free cash flow? How might the cash flow profile impact your ability to continue share repurchases given the cash balance has moderated year-over-year? This is David. Good morning, John. I'll take that one. Thanks for the question. Just as a reminder, you know, our approach to our capital structure is to maintain a conservative and flexible balance sheet to fund our growth. We want to have adequate liquidity to manage through different economic scenarios. Of course, we wanna deploy excess cash in the most accretive way possible for our shareholders. 2022 was a really unusual year from a cash flow perspective, particularly as it related to working capital. That was a substantial use of cash. Why? You know, we really rebuilt our inventory levels, especially our reserve inventory, which, you know, we've talked about on this call. In addition, we continued to invest in our growth with over $500 million in forecasted CapEx this year. We still repurchase stock, having bought back approximately $250 million in shares year to date, and we also paid down about $65 million in debt earlier this year. As a result of the actions that I just walked you through, in addition to lower EBITDA levels, our excess cash balance has certainly moderated from 2021 levels. That said, if you look at our balance sheet at the end of the 3rd quarter, we had nearly $1.3 billion in liquidity, including $429 million in cash, which, you know, we would expect to build seasonally as we go through Q4. Given the challenging operating environment, we would expect a more modest pace of buybacks going forward, perhaps more similar to our activity that you saw in Q3. We're gonna remain flexible in our approach and react to the environment appropriately. You know, the outlook remains very uncertain, and we wanna take a prudent approach to how we manage our balance sheet. As we look forward to 2023 from a cash flow perspective, it is important to recognize that we do not expect working capital to be the drag that it was in 2022. You know, as Michael talked about earlier in his prepared remarks, you know, we are optimistic that EBITDA can begin to recover in 2023. We should be able to generate sufficient free cash flow to not only support the growth of our business and maintain adequate liquidity, but return excess cash to shareholders probably at, you know, at a similar pace as we did in Q3. How we deploy that excess cash, that's always a function of, you know, what we view as the most accretive avenue for our shareholders. All this depends on our results and of course, the environment we're operating in, but at a high level, that's how we're thinking about our cash flow. Great. Happy Thanksgiving and best of luck in the holidays. Same to you, John. Thank you. Our next question comes from Alex Straton from Morgan Stanley. Please go ahead. Your line is open. Great. Thanks for taking my question. This one is really best for Michael. One dynamic we've seen across off price this year is that the price gap to the full price channel has certainly compressed given the significant promotions and discounting. Now that players like Walmart and Target seem more clean on apparel inventory, perhaps that's an opportunity for next year, and even into the 4th quarter. I guess at the same time, some of the more specialty retailers continue to have high inventories heading into the 4th quarter. There's definitely some puts and takes. I'm just wondering how do you think about that value gap dynamic as it relates to Burlington in both the 4th quarter and then into next year? Thanks. Good morning, Alex. I think the way that you described it in terms of the value gap, that's something we watch very closely. I would say, looking back over this year, I think our value differentiation... I mean, what drives our sales is when we offer great value compared with other retailers. I would say our value differentiation got very compressed in Q2 into early Q3. And that was driven, you know, by significant promotional activity. And we didn't respond to it soon enough. And I feel like the... A big part of the pivot that we made in late August was to take actions to restore that value differentiation by doing all the things I described in the prepared remarks. As we go into Q4, we feel better about our value differentiation versus other retailers. I guess two things. One is it's not a one and done exercise. I think we need to continue, and there's much more I think we can do to drive even better value in front of the customer. Our merchants, our planners, our operators are very focused on those additional steps we can take. Secondly, I would say that I agree with your point. It seems like inventory levels in the mass channels have improved significantly. That they're now much more rational than they were in the middle of the year. In specialty, I think there's still a lot of inventory. We don't know what to expect in Q4 in terms of promotions. We think, you know, certainly in terms of mass channels, it should be better, but there's still plenty of inventory out there. We think, you know, Q4 could be quite promotional. We feel like we've factored that in appropriately to our guidance. Great. That's super helpful. Maybe one more from me is just on the merchandising org part, it sounds like hiring component is mostly complete, but maybe could you talk about the other pieces to that that could get the business or that part of the business where it needs to be going forward? Is there anything maybe outside of just the hiring and the leadership that you've already seemingly gotten in place? Thanks. Yeah. Actually, it's a really important point. You know, growing our merchant capability, our merchandising capability isn't just about headcount. Obviously, headcount and bringing in talent is important, but it's also about processes and tools. We've had. We've talked about this before. For the last 18 months, 18-24 months, we've had a project internally at Burlington called Merchandising 2.0, that is focused on our buying processes, our planning processes, making these more nimble, more off-price, and basically putting better tools, better reports, better structure around those processes. I would say that this has been probably the most important project in the company. Certainly one of the most important projects in the company. That project has already started to deliver some improvements, but I would say most of the deliverables from that project, 80% of the benefits, I'm gonna say, are still ahead of us and mostly ahead of us in terms of being delivered in 2023. I think in 2023, we're gonna have a combination of great talent that we've hired plus improved processes, tools, reports, et cetera. I think that's gonna really put us in a position to take advantage of the investment that we've made in our merchandising organization. That's great color. Good luck. Thank you. Our next question comes from Chuck Grom from Gordon Haskett. Please go ahead. Your line is open. Hey, good morning. Thanks very much. Michael, as the quarter progressed, I'm curious if you saw any pickup in trade down activity as some of the external factors that have impacted your business intensified, and maybe that partially explained the acceleration towards the end of October. I was also curious if there's any geographic call-outs across the country particularly at the end of the month and into November. Sure. Let's start with the trade down. I would say that we don't yet have any clear evidence of a trade down customer in our stores. Yeah, I think I may have said this in August, but with the external promotional environment being what it is, I just think the incentive, the motivation for a trade down is diluted. 'Cause, you know, you don't need to come to our stores if you can get great deals elsewhere. Now, you know, given the changes that we made in August, you know, I do feel like as we finish Q3, our assortments and our values were a lot more compelling. Again, I wanna be careful. There's much more we need to do and we can do. I think as we make our assortments more compelling, I think we will see a trade down customer in our stores. It's just I can't say that we have a lot of evidence of that just yet. On your question about sort of regional variations, and there wasn't a lot to call out in terms of regional performance in Q3. I would say that the comp performance on the West Coast has trailed the chain for most of the year. That continued in Q3. Other than that, our regional performance has been fairly broad-based. Okay. Thanks very much. You just touched on this a little bit in the last question, but, you know, a lot of the conversation recently with you guys has been on the build out of the systems, right? The buyers and merchants can be more efficient and use the tools to make real-time decisions. Can you just maybe go a little bit of a layer deeper on steps on that journey? You know, you talk about, you know, a lot of that happening in 2023, I'd just be curious to hear a little bit deeper explanation on that front. Yeah, sure. Actually, I guess I would take a step back, and I would say, As I've already described, we've grown our merchant team by almost 50% since 2019. I think we can get better value, more value and more effectiveness out of that team as we add improved processes, tools, reports, et cetera. I would say historically at Burlington. When I arrived in 2019, don't get me wrong, Burlington was an off-price retailer, but many of the processes that we had, many of the tools and reports that we had, they looked a lot like the processes, tools, and reports that you might find at a department store rather than an off-price retailer. That's what I meant by our Merchandising 2.0 project. It's really to take all those tools, processes, et cetera, and really sort of reconfigure them through an off-price lens. As I say, I feel like a lot of that work will be delivered in 2023. There's another piece to this, though, which actually has less to do with tools and processes. It's more about, I guess, what I would call... In any organization, I would say that there's an experience curve. I think, you know, again, when I arrived in 2019, I... You know, there's no question Burlington was an off-price retailer. Over the last 3 years, we've been attempting to become more off-price. I think we're... You know, we need to get further down the experience curve. We need to manage ourselves down the experience curve, to make sure that as we do that, we, you know, we're as effective as possible and we get value out of the investments that we've made in people and systems and reports, et cetera. Great. Thank you, Michael. Thanks. Our next question comes from Mark Altschwager from Baird. Please go ahead. Your line is open. Good morning. Thanks for taking my question. Michael, you mentioned a higher mix of branded merchandise. What is the mix of the key brands now versus pre-COVID? Wondering if there's a way to contextualize that. What's giving you the confidence that the favorable buying environment, including the favorable in-season buying environment, will continue into next year? Sure. Mark, on the first question, I think the best way to look at our mix in now versus pre-COVID is actually sort of our mix of off-price, what I call off-price buys, true off-price buys versus, you know, what many retailers would call an upfront buy. You know, something that you buy before the season and you're negotiating with the vendor for. You know, our mix of true sort of off-price buys is much higher now than it was in 2019 or historically. That obviously, that's a key part of our strategy. Now because our mix of off-price buys is higher, we're able to go after more and more interesting brands because we're buying them opportunistically. If I look at 2022 versus 2019, we've moved the needle fairly significantly in terms of the mix of our business that I would call as true off-price. The second part of your question was the buying environment. I think, you know, the truth is the buying environment and other, you know, other retailers, other off-price retailers have reported the same thing. The buying environment right now is tremendous across brands, across categories. You know, from our point of view, that offers a short-term opportunity, obviously, because it means we can get great merchandise that we'll either flow to stores or we'll put in reserve. It also provides us a bit of a strategic opportunity because part of the catch-up that I described earlier when I was talking about the merchandising organization also applies to our vendor network. This kind of environment gives us a chance to open up new vendors, and/or develop and grow existing vendors. The buying environment right now is very favorable for us in the short term, and as I say, strategically. How would I expect that buying environment to evolve? I would say that, I think there's gonna be great deals in the market, certainly for the next several months. Beyond the next several months, it's always hard to tell. You know, it will depend, I think, on what happens to overall consumer demand next year. If consumer demand next year weakens, and specifically, if it turns out to be weaker than the outlook that vendors and retailers have used to set their production forecasts, then we should continue to see a fairly plentiful supply of off-price. I think there's a reasonable chance that how things will play out. Thanks for the detail. Best of luck. Thank you. Our next question comes from Brooke Roach from Goldman Sachs. Please go ahead. Your line is open. Good morning. Thank you so much for taking our question. Earlier in the call, you commented that you believe that you can get back to 2019 margins within the next 2 years. Can you provide a little bit more commentary around the drivers, the cadence of recapture and your degree of confidence in that recapture? Perhaps you could bucket the proportion of the margin improvement that's embedded there between each of kind of the key drivers of freight rate, supply chain leverage and other margin categories. Good morning, Brooke. Yeah, it's a good question. We are. Let me start with sort of the bucket that we need to drive in order to re-recover our margin back to 2019 levels. The key. I think there are really 3 key drivers. There's, there's sales, as I talked about. That's, you know, I mean, this year, our comp sales is obviously very negative. With a very negative comp sales, we've experienced significant fixed expense deleverage. The number one priority is to drive sales. I would say a good chunk of what I've talked about this morning has been around how we're gonna do that. It's really around driving sharper value in our assortment and also getting our merchant organization to be more effective in sharpening that value and therefore driving sales. That's priority number one, above all, drive sales. Sort of lever number two, if you like, is freight and supply chain expenses. Those expenses ran up significantly over the last couple of years for lots of reasons that we all understand. We're already starting to see some improvement, I would say, certainly in freight rates, but even in terms of the supply environment. I think a lot of the headwinds that we had in freight and supply chain are starting to abate. Now as we get into 2023, I expect to see more of that. It's hard to quantify it too precisely because there are other things that could affect those numbers in 2023. For example, you know, diesel costs right now are pretty high. Depending upon what happens with those, you know, they could partially offset some of the benefit we might see in terms of lower freight rates. That's the second lever. The 3rd lever where I think we have an opportunity to recover margin is actually in merchandise margin. I wanna be careful on this one. I believe that, you know, the way that we're now buying merchandise, the way that we're more opportunistically buying merchandise provides us with an opportunity to run a higher merchandise margin 'cause we're buying the goods at a better deal. That's not an opportunity that we're going after in Q4, you know, as we've said. It may not be an opportunity that we really wanna go after in 2023 because I think our focus is really to drive sales by offering the best value that we can. I think as we sort of come out of this, certainly as we come out of this promotional cycle, we'll take another look at that, and we'll see whether or not we have an opportunity to maybe take up margin a little bit. The combination of those three things, sales, freight and supply chain expenses, and merchant margin gives me confidence that we can get back to 2019 levels. I would not expect that to happen, certainly not in a single year. I think over the next few years, you know, we should be able to get back to 2019 levels. At that point, we need to push on. We've always believed, and we still believe that we're doing things that over the longer term should drive our margin above 2019 levels. You know, the one example that's perhaps the easiest to visualize is what we're doing in terms of our new store program. As we open new stores, especially as we open new stores that are in our smaller prototype, that, you know, are accretive. We underwrite those stores to be accretive from a operating margin point of view. That should give us some additional tailwind in terms of operating margin. Thank you so much. I will pass it on. Thank you. Our last question will come from Adrienne Yih from Barclays. Please go ahead. Your line is open. Great. Thank you very much. Good time to be an off-pricer. Michael, I guess I wanna go back to the merchandising organization, the 50% increase, because it seems like that is the root of the source of kind of upside to sales, et cetera. My characterization, how would you characterize the kind of buying misstep sort of earlier in the year? Was it a strategic misdirection in categories, right, to more casual, et cetera? Or was it a newer organization that was sort of more at the micro level, just learning and trying to gain experience? Then where are you hiring these merchants from? Sure. Adrienne, I would say, it was kind of a bit of all of the things that you just described. I think, I think there were certainly some businesses where I think we made the wrong decisions, maybe in terms of styles or fashions or mix. You know, if I sort of zoom up from there, I think, I think we just, we didn't move rapidly enough across categories and move money rapidly enough across categories and businesses. You know, maybe most significantly, we didn't put enough focus on sharpening our value. You know, as I kind of described, I feel like in the summer we kinda got caught out on that. I feel like as promotions ramped up in Q2 and early Q3, you know, our value differentiation was just being squeezed. Now as I look at our merchant organization, I look at the talent in our merchandising organization, we have a lot of excellent off-price experience. We have a lot of great merchants who've been around off-price for a long time, and they know off-price. It's not to do with the merchants' backgrounds. I do think that it's two things. I think, you know, I think the improved processes, tools that I described a little bit earlier I think will help us. I also think that, realistically, when you grow an organization very rapidly like that, you do get some missteps. I think, you know, I think we have to acknowledge that and learn from it. I think it's a combination of those things. Okay. My just final wrap up would be, how do you make sure that you now don't overbuy? Your stores are still markedly larger than your peers in the in the space. Just what are the guardrails to make sure that we don't over-index the other way? Yeah, that's a good question. We, the key thing to understand, and this is something, you know, we've put a lot of focus on this over the last 3 years, is that the amount of inventory that we buy, the volume of receipts that we buy has absolutely nothing to do with the size of the store. It's driven by the sales volume. We look very closely at our inventory turn, and if we think, you know, sales are trending up, we give the store more inventory. If the store happens to be an 80,000 sq ft store versus a 25,000 sq ft store, that doesn't mean it gets more inventory. It's only if its sales volume justifies that. The implication of that, and, you know, I'm sure many analysts and investors have noticed this, is if you go to some of our older stores, our older, less productive stores, you're gonna see a lot of empty space. It may be space that we've that we've tried to manage by putting in temporary walls, but you're gonna see some of that because, as I say, you know, we're very careful the amount of inventory we put in the store is not driven by the physical square footage of the store. It's driven by the sales volume and sales trend in that store. That's very helpful. Best of luck. Happy Thanksgiving. You too. Thank you. We are out of time for questions today. I'd like to turn the call back over to Michael O'Sullivan for 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 March to discuss our 4th quarter and full year 2022 fiscal results. Thank you for your time today. This concludes today's conference call. Thank Thank you for your participation. You may now disconnect.