Greetings, and welcome to the Citi Trends first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Nitza McKee, Senior Associate at ICR. Thank you. You may begin. Thank you, and good morning, everyone. Thank you for joining us on Citi Trends' first quarter 2024 earnings call. On our call today is Interim Chief Executive Officer, Ken Seipel, and Chief Financial Officer, Heather Plutino. Our earnings release was sent out this morning at 6:45 A.M. Eastern Time. If you have not received a copy of the release, it's available on the company's website under Investor Relations section at www.cititrends.com. You should be aware that prepared remarks today made during this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Management may make additional forward-looking statements in response to your questions. These statements do not guarantee future performance, therefore, you should not place undue reliance on these statements. We refer you to the company's most recent report on Form 10-K and other subsequent filings with the Securities and Exchange Commission for more detailed discussion of the factors that can cause actual results to differ materially from those described in the forward-looking statements. I will now turn the call over to our Interim Chief Executive Officer, Ken Seipel. Ken? Thank you, Nitza. Well, good morning, everyone. I'm pleased to join you today to discuss the work ahead for Citi Trends. Heather will provide you a review of the Q1 business results, and then I will give you a brief overview of my prior experiences and a high-level outline of the work that we are undertaking to increase shareholder value. Before we discuss the business, on behalf of the board of directors and the entire Citi Trends team, I'd like to thank our former CEO, David Makuen, for his hard work and leadership these past four years. David shaped and built our purpose-driven Citi Trends culture while leading the company through some of the most challenging consumer environments in recent history. On a personal level, I'd like to thank David for his willingness to provide business advice to ensure a smooth transition, and we wanna send him very best wishes. I'd like to turn the call over now to Heather to review Q1 business results. Heather? Thank you, Ken, and good morning, everyone. We are pleased with our first quarter performance, in which we registered an improved top-line trend by delivering a positive comp store sales increase of 3.1%. The quarter was further highlighted by gross margin expansion of 160 basis points compared to last year. Both of these Q1 wins were assisted by our inventory rebuilds and targeted product categories, combined with our buy team's continued focus on making wise inventory investments, maximizing markups, while also providing incredible values for our customers. Early in the quarter, we felt the impact from the slower start to the tax refund season, as well as unfavorable spring weather patterns. However, we posted positive comps in each month of the quarter. We also experienced an improved trend in store traffic, with basket size similar to last year and continued healthy in-store conversion. These key performance indicators are proof points that our unique assortment, curated specifically for our African American and multicultural customers, resonated. As mentioned on recent earnings calls, our teams remain committed to setting up key selling moments earlier, and it paid off in the first quarter. Our Q1 product offering included a healthy balance of exclusive trends, leading brands, year-round fashion, and of course, basics for spring selling, the tax refund season, and the Easter holiday. From a category perspective, our performance was broad-based, with particular strength in Home and Lifestyle, Impulse, also referred to as our Q line, Big Men's, and Ladies' Plus, all areas positively impacted by our inventory rebuild efforts. Across our largest categories, ladies, men's, and Kids Apparel, quarterly comp sales were all positive, driven by trend right values and incredible brands that met the needs and wants of our customers for the spring season. We exited the first quarter with total inventory dollars up 4%, in line with our expectations. We feel good about the quality, mix, and value proposition across our inventory as we entered the second quarter. We are positioned to capitalize on late spring and peak summer selling weeks with a robust assortment of made-for-Citi Trends, coordinating short and tee sets, plenty of tees for the whole family, fresh takes on Americana and Juneteenth, and all the goodies for summer barbecues, from outfits to audio. With a large portion of our fleet in areas that go back to school by mid-August, we will also be well positioned to capture demand in July, with a heightened focus on kids apparel, accessories, and footwear. Lastly, our value proposition is showing up loudly on the sales floor, with many new deal priced offers that are driving strong sell-through. In addition to the inventory rebuilds and targeted product categories that we've been discussing for the past several quarters, in Q1, we leveraged our new ERP system to optimize assortments in key African American neighborhoods where we've identified significant sales opportunity. This initiative, using our improved planning and allocation methods, is impacting about 20% of the chain and had encouraging results in the quarter. We'll continue to monitor results and refine our approach based on what we learn, with the potential to expand this effort as we move through the year. In the quarter, we continued testing radio and paid social marketing, turning the dials on market size, repeat markets, frequency of messaging, and combinations with other initiatives. We've seen particularly strong results with a combination of remodels and marketing. To date, we've touched about 140 stores with our marketing efforts, and we'll increase that number throughout the year with back-to-school and holiday campaigns. We remodeled 20 stores in the first quarter and an additional 15 locations in May, quickly closing in on our fiscal year goal of 40 remodels. As we've discussed in prior calls, these refreshed stores see positive results with mid to high single-digit sales lifts and at half the prior cost. Including the May remodels, CTS stores represent approximately 21% of our fleet. Turning to the details of gross margin. Our first quarter adjusted gross margin expansion of 160 basis points was driven by the focus on markup I described earlier, significant freight expense improvement, and effective markdown management. Partially offsetting the growth margin benefits in the quarter was an unexpected shrink headwind as a result of physical inventory counts. As we've discussed on prior calls, we count a portion of our store fleet each month and continue to see issues in very specific stores and very specific categories. We do not believe that this is a chain-wide problem. At Citi Trends, we are accustomed to managing shrink, and although a headwind this year, it remains a very small component of our margin structure. Internally, we have engaged cross-functional experts to reduce the impact of shrink, with particular focus on internal theft. We are ensuring that stores have well-placed cameras and are leveraging recently improved exception reporting to quickly identify root causes and to take appropriate action. We're updating key loss prevention policies and are establishing a more robust restitution program. Key to all of this, we've been working to upgrade our store talent and our training programs. Next, we'll turn our attention to our supply chain, tightening controls and reporting to identify and resolve any additional causes of shrink. Importantly, we will continue to place the safety and well-being of our employees and customers at the center of our operational decisions to stem this headwind. Despite pressure from shrink, we remain confident in our ability to deliver continued growth margin expansion for the balance of 2024, driven by incremental markup improvement and reduced freight rates. Moving to SG&A. Adjusted SG&A expenses increased about $3 million in the quarter compared to last year, in line with our expectations and reflecting our previously discussed reset of the SG&A base. The increase, as expected, was driven by merit increases in stores and corporate and a modest increase in advertising spend. During the quarter, we closed three stores as part of our ongoing store optimization effort, ending the period with 599 locations. Now turning to the balance sheet. At the end of the quarter, we remained in a healthy financial position with a strong balance sheet, including no debt, no drawings on our $75 million revolver, and $58 million in cash. With liquidity of approximately $133 million, we can more than sufficiently fund our business initiatives, building on our foundational strength for future profitable growth. Before I turn the call back to Ken, I want to reiterate that we are encouraged by our first quarter results. Our strategic initiatives are driving improved performance, and we are playing offense while controlling what we can control. This approach is particularly important as our customer continues to face inflationary pressures and is carefully managing their discretionary spend. We still believe in the overall approach to the annual outlook we shared in March. However, with one quarter under our belt, we felt it was prudent to make a few adjustments to our 2024 outlook as follows: Full year comp store sales are expected to grow by low to mid single digits compared to fiscal 2023, a range slightly below our previous outlook. We expect full year gross margin to expand by approximately 75 basis points-100 basis points, consistent with previous outlook. We are now planning an SG&A dollar increase of 1.5%-2.5% over 2023, slightly better than what we discussed during our last earnings call, driven by streamlining costs in a variety of areas. Consistent with our previous outlook, resulting full-year EBITDA is expected to be in the range of $4 million-$10 million. As we shared in March, we plan to open up to five new stores, remodel approximately 40 locations, and close 10-15 underperforming stores, ending fiscal 2024 with approximately 595 stores. Finally, we continue to expect full year capital expenditures to be approximately $20 million. With that, I will turn the call back to Ken. Ken? Thank you, Heather. Appreciate it. First, I'd like to share my appreciation to the Citi Trends team for their hard work that generated a 3.1 comp store sales increase and gross margin rate growth of 160 basis points compared to last year. The board remains committed to the core strategies of the business. As I take the reins, I'm focused on ensuring that the business consistently executes those strategies to improve top-line sales and EBITDA profit. Now, if I may, I'd like to briefly introduce myself and discuss the near-term road ahead for Citi Trends. I joined the Citi Trends board in late 2019, and have recently served as chair of the Nomination and Governance Committee, and also members of the Audit and Finance Committee. The majority of my 40-year professional career has been in value apparel retailing. The first half of my career was with J.C. Penney in the 1980s. I was with Target in the 1990s during their brand development and rapid growth, at Old Navy in the 2000s, where I led explosive store growth and eventually becoming the largest specialty store retailer in the world. During my time in the Fortune 100 companies, I held a number of executive roles in most company functions, including merchandise buying and in operations. In 2010, I entered the second phase of my career, focused on working in private equity-backed retail companies, where I assumed the role of CEO and co-investor in all business engagements. I found that owning a financial stake in each business created strong alignment with the shareholders and really helped reinforce an acute focus on increasing shareholder value. As co-owner, entrepreneur, and leader, I was able to generate three successful business turnarounds, which resulted in returns of 3x, and in some cases over 6x, the initial investment for our shareholders. I've been fortunate to have a wide variety of retail experiences. However, my time as CEO of Gabe's, an off-price apparel store, serving a low-end consumer, is the most relevant to Citi Trends. My experiences in both public and privately held companies have taught me there are just a few critical and foundational points to restoring company profit and setting it on the path to long-term sustainability. First, successful companies need to clearly understand the core customer and how to best serve their needs. As this core customer evolves in response to their environment, it's critical for that organization to be nimble and adaptable as well. Next is a compelling and differentiated value proposition that distinguishes the business from competition and generates increasing market share in a highly competitive environment. Also, critical to success is operational excellence. This is the ability for a company to consistently execute the business model with profitable cost efficiencies. Next is a compelling growth plan that allows the company to continually expand and capture market share. And last but not least, are well-trained, highly engaged people who are dedicated to bringing the strategies to life. I have found in my past, a balanced focus on the core customer, a compelling value proposition, strong operational excellence, clear growth avenues, and engaged people, creates unstoppable momentum for a company. Oh, yeah, and by the way, all of this has to be done very fast. I'm really looking forward to bringing my past retail experiences and learnings to lead the next chapter for Citi Trends. I'm optimistic about Citi Trends because of its unique position in the marketplace as a value retailer, serving a largely underserved consumer. With nearly 600 retail locations, we're one of the largest national retailers focused on lower-income consumers. Our company is rooted on the strength that we have in the African American community, which to this day, accounts for the majority of our financial success. Because of our long-term neighborhood presence, our customers are highly engaged and loyal to Citi Trends. When we get it right, our customers respond. Another positive trait of our company is the balance sheet, which gives us a big competitive advantage today, in today's world of higher interest rates, also allowing us the flexibility to take advantage of growth opportunities to increase our market position. You know, and although an appointment of an Interim CEO could be viewed as a transitional period, I want to assure you there will be minimal disruption because I am familiar with Citi Trends, which will aid me in quick transition into the day-to-day work. My objective is to deliver consistent top-line growth, streamline expenses, lay the groundwork for long-term store expansion, and it all begins with really getting back to the basic blocking and tackling of a good retail company. My goal is to first clearly understand what's working and find ways to accelerate that work, as well as remove obstacles so our team can perform their jobs more efficiently. To that end, we're going to focus on the following initiatives. Number one, driving profitable sales. Number two, sharpening our product assortment decisions and improving inventory returns. Number three, streamlining costs. Four, optimizing our supply chain. And five, leveraging benefits from recent IT upgrades Heather mentioned a moment ago. I plan to lead the company through a fresh review of our current business performance in each of these areas. Our goal is to rely on the facts, focus on the opportunities to accelerate areas of success, and course-correct areas of opportunity. The strategy themes are pretty familiar, and I believe many of the answers already exist. The difference will be a laser focus on initiatives to significantly improve our execution and speed on all fronts. Regardless of external factors, we will control what we can control, and we're gonna fight hard to significantly improve our top-line sales results. Excuse me. As I enter the business, there are a few questions on my mind that I want to quickly answer. First, are we offering enough exciting brands and compelling prices? Increasing frequency and enticing new customers begins with putting more treasure in the treasure hunt of product choices. You know, the thrill of finding unexpected deals is the reason customers love to shop off-price and value retail formats.... It's also the key reason our business has a defensible moat around external competition and online retailers. We will review all product categories and adjust the assortments as needed to ensure that we have compelling treasure throughout the store to excite our customers. Next question is, really, our product assortment breadth of offering and value-price value equation strong enough in all of our categories? You know, we know that many of our product categories are doing well, and they offer us opportunities to study and replicate their success. And we can capitalize on these early positive results in our key line product, for example, and the successful apparel departments, plus continue expanding our reach in home categories. However, there is an opportunity in some categories to sharpen the value equation and improve customer choice counts. All in all, I see a good deal of opportunity to consistently grow our top line sales. Also, in support of our sales initiatives, we have an opportunity to ramp up business analytics and product allocations. As previously reported, the company installed a new enterprise resource system, and we have the opportunity to realize efficiency savings from the new technology, which include driving sales through more accurate store-by-store product allocations and the ability to more accurately analyze markdowns. Another area to review is our supply chain costs, which impacts our gross profit. Work is already underway in the supply chain, where our distribution teams are beginning to uncover ways to reduce our transportation costs and the cost of processing product. An example is vendor direct-to-store shipments that can be reduced and result in significant savings. We also have line of sight with savings in transportation by renegotiating our inbound shipping rates. Both business analytics and supply chain efficiency initiatives will have a positive impact on our gross profit. We also need to lower SG&A expense base. Over time, our total sales have decreased, while our SG&A has steadily increased. Clearly, this relationship is untenable, and it must be reversed. Increasing sales will help, but we also need to find cost efficiencies to offset inflationary pressures. We intend to deep dive review every cost center to ensure that the SG&A is cost-efficient and supports our go-forward strategies. I expect we're gonna find a lot of smaller expenses that's going to add up to significant SG&A savings. We will find ways to lower our expenses and improve our operational execution. I also want to dig into our new stores. Our recent new stores performance has been a divergence from our long, successful new store strategy. We're embarking on a detailed review of our performance to understand root cause issues and what's driving the underperformance. Nonetheless, the company has a long history of successful new stores, and our demographic market white space data tells us we have a sizable opportunity to grow our square footage. We are a growth company, and we will return to industry standard return on investment new store growth. An initiative that we can accelerate also is our successful store remodel program that Heather touched on. She outlined the remodel count and our success so far this year. But with a little over 20% of our store base remodeled, we have an opportunity to bring more stores current over time. We're gonna continue this good work and combine current store remodels with top market growth initiatives to ensure that we capture top-line sales available to us in each marketplace. Another big question we're going to work on is getting a fresh view of the quantitative characteristics and qualitative desires of our customer base. As the new shopping alternatives have emerged, it has likely shifted our customers' perception, value, and selection. We need to clearly understand our customers' current needs and understand our recently lapsed customers, so we can more able and accurately focus strategic efforts on remaining or becoming their store of choice. We use differential analysis to determine how to implement measured and meaningful steps to sharpening our overall value proposition, investments in categories of product to fulfill consumer demand, and service and convenience options that might be expected in a neighborhood store. This work will take us a few months to complete, but I expect the insights will be a key driver of our long-range growth plans. Well, as I just outlined, we have a lot of work to do. I plan on spending the first few weeks listening and learning from the internal team. My goal is to clearly understand what's working and accelerate that work, as well as remove obstacles so our team can perform their jobs more efficiently. And some of the themes mentioned on today's call may sound familiar to those of you that have been tracking our business for the past few years. As I mentioned at the beginning of the call, operational excellence is one of the five tenets of a successful company. I plan to lead the team through deep thorough analysis, narrowing focus on opportunities that have the most significant impact on sales and EBITDA, relentless tracking of results, and course corrections as needed. In short, we will execute, we will achieve operational excellence, and we will move fast. Now, Citi Trends is really fortunate to have such a talented team of people who are highly invested in our company's success, and I feel fortunate to work with the Citi Trends team. We will analyze together, we will learn together, we will execute initiatives together to significantly improve our shareholder value. I look forward to updating you in the future on our progress. I'd like to now return the call to our operator to facilitate questions. Christine, back to you. Thank you. We will now be conducting a question-and-answer session. We ask that all callers limit themselves to one question and one follow-up. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star keys. One moment please while we poll for questions. Thank you. Our first question comes from the line of Michael Baker with D.A. Davidson. Please proceed with your question. Okay, great. Hopefully you can hear me okay. It seems to me, you guys were heading in the right direction, but maybe speed was the issue, trying to get there a little bit faster. You mentioned that a couple times, Ken. In your past experiences in the three turnarounds you referenced, how long does it take to get, you know, typically to, to where you wanna go? And then I'll ask my follow-up, which is: where do you wanna go? What do you think the right margin is for this business? I think you said you got there in 2019 on the board, EBITDA margins were close to four and change. What do you think they should get back to? Thanks. Yeah, thanks for your question, Mike. I appreciate it. Yeah, in terms of turnaround and turnaround timing, I mean, the answer to that question varies greatly on each company's situation and depending upon the depth and breadth of some of the initiatives. You know, my thoughts are is to take a few moments, as I mentioned earlier, really kind of evaluate what's going on, do a lot of listening and learning. It's a little bit of a go slow to go fast philosophy. And then by the point of getting into about 30 days of learning and listening, you know, themes really do emerge. And what I've found is that there's often some low-hanging fruit that can be enacted right away, and you'll start to see some improvement in some areas of the business. You know, I touched briefly on transportation is a good example of something that can be done, and we can see some results of that sooner than later. Whereas when you get into some of the assortment decisions and some of those things, it takes a little bit longer for the training to take effect and for those to really impact the marketplace. So the answer to your question is I view it a business journey, and it's difficult to give an exact timeframe on that, but that's essentially that would be where I would go. I think in terms of your second question, which was on EBITDA margin rates, you know, as you go back and you look at the history of the business, and I think we've been kind of in that. We should be in that mid-single digit range for sure. And I do think that as you look at the industry, particularly in value and off price, you know, the market actually sometimes will pay for a better EBITDA margin rate. But I certainly see an opportunity for us to get back into mid-single digits, and that is certainly a goal and focus we have. Hopefully, that answers your question okay. Yeah. Thank you. I appreciate that. Thank you. Mm-hmm. Thanks, Mike. As a reminder, if you would like to ask a question, press star one on your telephone keypad. Again, we ask that all callers limit themselves to one question and one follow-up. Our next question comes from the line of Jeremy Hamblin with Craig-Hallum. Please proceed with your question. Thanks, and congrats, Ken, looking forward to working with you. I wanted to first start with you know, some sense of what you're seeing in terms of current trends in the business. You're lapping, you know, compares that are not as easy in Q2 as you saw in Q1. And just in terms of, you know, with the performance in Q1, you know, $186 million and change on total sales, you know, there's a kind of a typical or historical seasonality to the business in which, you know, Q1, Q4 are your strongest quarters. You know, you noted that tax season was a little bit slower than normal, you know, this year because the filings started a week late. Wanted to get a sense, you know, Ken and Heather, in terms of, you know, what you were expecting, you know, in terms of how that seasonality plays out this year, and to get to your low single-digit comp guide, you know, how you might see that kind of flowing throughout the year? Great. Yeah, I'll- Jeremy, thank you. Oh, go ahead. Yeah. Thank you. Sorry. Ken and I are doing airplane signals to each other, Jeremy. You can't see us. Thank you for the question. Always good to hear from you. As far as the lap in Q2, look, May is a tough one to say that is a read for the full quarter. It is the least important month of the quarter. June and July are by far more impactful as we get into summer and we get into early back to school. Very important seasons, as you know. So yeah, maybe a little bit more difficult lap, but as I mentioned in my prepared remarks, we're set up. We're ready. We know that our earlier set works. Our customer needs some time to plan out their spend for important time frames, like the ones that are coming up, so we feel good about that. As far as how the balance of the year looks, I hear you that Q1 is usually looking like Q4. Our intent is that Q4 this year will be stronger than Q1, from a dollar sales perspective. The builds are based on history, but with some breaking in there, because that's our challenge, is break the build, right? Build more sales, quarter- to- quarter. And then let's remember, there are some... W e've talked about this before with the calendar shift. There's some sales that move into Q2 out of Q3. So it's gonna be a little bit different throughout the year. But we're planning, we're watching. The most important thing is that our inventory is right and that it's set up correctly in the store. We've got product that's compelling, our, then our customer will respond. All of the initiatives that we have in place will support that as well. You've heard us talk about it, remodels, marketing, and the testing and learning that we've been doing, and has been enhanced with our ERP system and our ability to better analyze data and to react and act much more quickly. So we feel good about hitting our target top line for the year. Ken, do you want to add anything? Yeah, thank you. Yeah, Jeremy, thank you. It's a good question, and, and I'll certainly add, everything that, Heather said there. Your, your central question is, what are we seeing in the current trends? And, and it kind of goes back to what I said earlier in the script. I mean, there are certainly some things going in the business right now that look good, and we have a lot to build on, and then we can accelerate those results. And, you know, I mentioned earlier, the resort... the, the remodels, we're just getting those completed. You'll see some momentum in those, you know, moving forward, which is exciting. We have a handful of categories that have had a reasonably good start for the year and, and appears to be continuing, and we can accelerate those things. From my desk, I have a good deal of confidence that we can continue to accelerate our business going forward. Got it. That's helpful. And then wanted to come back to the point that you made on your SG&A, and expense management. So it looks like, I think by my math, your SG&A dollar guide for the year, you have about $2 million lower than what you were, previously expecting. It sounds like you feel like there is more opportunity than that, you know, over time here, over the next year or two. Can you give us a sense of what you think? Obviously, you're not new to the business, but can you give us a sense for what, you know, you think the magnitude of range might be, on that opportunity? I mean, are we talking about, you know, something that's on the order of $10 million in annualized savings or, or something bigger than that? Any way to square it up? Yeah, Jeremy, I'll start with that, and I'll certainly give it to Heather for follow-up on that. I think a couple things I'd say about that. Obviously, we, as you mentioned, have lowered our guide for the back half in terms of expenses, which is a good start. As I mentioned in my script, the answer to your question is TBD. We're going to be going through each of our expense centers, taking a really deep look at where we are at and looking for opportunities for efficiencies. And I think there's gonna be some things that will unfold over time, that we'd be more equipped to better share, you know, a solid answer to your question in the future here. We had some immediate line of sight in some areas, as I mentioned, in transportation, that we're encouraged about and DC processing, but there's a whole lot more there. So we definitely know that as we step back and think about our SG&A rate, it needs to be lowered. It's certainly untenable, as I mentioned in the script earlier, and we're gonna continue to work on it. But I believe the answer to your question will be just over time here, we're gonna find bits and pieces here that'll make us a much more efficient organization. And Heather, if you'd add anything to that. Yeah, and, and, not surprising, Jeremy, your math is spot on, right? It's about $1.4-$2.8 on my math, in the range, the amount that we've reduced SG&A in our guide. We were able to do that because, you know, we're showing our Citi Trends chops. We're a, we're a nimble, agile team. We're able to find savings across the board, on discretionary spend. Nothing that will, harm our ability to achieve our initiatives, nothing that will harm our ability to achieve our financial goals for the year. So, to Ken's point, longer term, this is a moment of, you know, he talked about, let's, let's get the data, study, and analyze. So that's, that's what we will be doing with Ken's leadership, and, more to come as we learn and uncover. But I think we've proven that we are able to control our SG&A and can make the adjustments that need to be made in order to bring that line down, is something that we'll partner with Ken on over time, and it's gonna be great. Great. Last one for me. In terms of, you know, getting back to, let's say that, well, to get to a mid-single digit, operating margin, or even just to get to that 4%, where do you think your gross margin needs to be, to, to get there? You know, I think as you look at it, there's been some, some nice, improvements that have been made, versus where the business was, let's say, in 2018 or 2019. You know, and obviously, you just made, the implementation on, on the systems upgrades that, is, is creating some opportunity. But, really, to get to that, that plan, I mean, are, are you targeting, you know, 40%, something higher than that? Any color that you might be able to share would be helpful. Yeah, for sure, Jeremy. You know, we've been in the high 30s, right? We're very proud of our gross margin rate, but we think we've got room to grow. We're shooting to have that start with a four over time on the backs of freight rates and improvements. Our supply chain team, shout out to them, are tireless in being able to find opportunities to improve that line. Markup and expansion, we've been talking about that throughout the call. Plus markdown management, right? And that's where the ERP system comes in. And then, you know, finally, of course, getting shrink back to nice low levels. It's all in the mix. So certainly starting with a four, and we're gonna keep pushing to make that happen. As a follow-up on that, that shrink comment, I think previously, because you had noted on the last call in March that there was some elevated shrink, and it sounds like maybe that's not only remained elevated, but maybe even a little bit worse than you had expected. So I think previously, Heather, you'd quantified it as maybe a 25 basis points-30 basis point impact for FY 2024 is what you had expected. Can you give us an update on where that expectation is on shrink? And, you know, I gather that that's probably not something that can be cured, you know, incredibly quickly. But, you know, how long do you think, how many quarters or possibly longer than that, do you think, before we can see significant improvement and get it to a level where you're content? Yeah. Thanks, Jeremy, and I'm gonna have to make this the last question so we can move on to our next analyst. But, thanks for the call or the question. Really appreciate it, as always. Look, shrink is continuing to be a concern, right? I will say and remind you that this is not new for Citi Trends. We have managed shrink well over our history, but it is a bit of a sign of the time. It's a bit of some we can't control external. We do what we can. It's all about safety, when it comes to external theft, so we've been very much focusing on internal theft, as I mentioned in my prepared remarks. So was it another surprise in the quarter, disappointing surprise? Yeah, it was. We expect it to come down over time, but this takes time, right? Because shrink is a function of physical inventory count. We do, as you know, count a portion of our fleet each month. So, I expect this to still be a headwind, but we'll start to see it mitigating in the second half of the year as we are lapping the beginning of what I would call our surprise period, right? And then into the following year, we'll start to see it improve even more based on all of the levers that we're pulling to put controls in place and to get ahead of it. So, wish us well, please. Heather, I might just add, I believe- Thanks for taking all my questions. Good luck. Yeah, thank you. Go ahead, Ken. Just to add to that a little bit. Yeah, I just gonna say on the backside of that, I know you guys have been really, really focused on shrink, which is good, and certainly it would appear that you've taken the right steps to get the shrink rate accommodated in your growth rate going forward, and is contained inside of our guidance. So it's an opportunity... Yep For us to continue to improve, but you should feel confident that it has been accounted for appropriately by the business. Yep. Good point, Ken. Thank you so much. Christine, do we have any other questions? Our next question comes from the line of John Lawrence with The Benchmark Company. Please proceed with your question. Thank you. Good morning. Ken, can you talk a little bit about when you were at Gabe's and looked at that transition? I know it's a smaller store base, et cetera. But compare and contrast a little bit when you got there, you know the business, what's happened, and I assume that that's how some of these business cases are coming about. But can you talk about that and what you were able to adjust to get that business back to the level you wanted it, and what were some of the major steps to make that happen? Yeah, for sure, John. Happy to talk about that. Yeah. As when I came into the business, as you might remember, the private equity firm, A&M Capital, had purchased it, and they had bought it from the family themselves. And so, as with a family business, at times, you run into a situation where some things are good, but not everything. And so I mentioned earlier the five balanced approach that I take in the business and actually applied all of those principles there and found that as with every business, there are some things that are going quite well. In Gabe's, they have to be quite good at deal making, and they were amazing at putting treasure in the treasure hunt. However, the replication and accuracy that was not there. So what we embarked upon was really first and foremost there, was getting operational excellence, and I really find that to be the foundation of a great company, which is, and you hear the old saying, retail is detail, right? You have to get in there, just make sure that everything you do is replicable, and consistent and shows up for the consumer in that way. So that's really kind of step one. And then step two actually is helping you know get the teams really fully engaged. And what that means, basically, is really getting people excited about winning. Sometimes when you are working in turnarounds, people have been kind of used to seeing negative numbers, and it kinda can wear on individuals over time. So there's a key ingredient here about creating some little wins and getting folks excited, and the more that tends to kind of breed higher engagement. So that was kind of the next piece of the puzzle. And then, as I mentioned earlier, dialing in and getting the branding and the value proposition right. Marketing is a key piece of this. Now, not necessarily a marketing spin, but it's actually a voice of the company and making sure that it's crystal clear so the consumer can see and understand it. So I can kind of go on a little bit, but you kind of get the idea here that really working through those five tenets that I mentioned earlier, really in a sequential order. Now, I am still yet evaluating Citi Trends to decide, which and what we need to be focused on. I would not suppose for one minute to walk in with all the answers, but I do have a lot of questions, and then couple that with my past experience. I think we're gonna find, in the internal team's knowledge, the right formula for Citi Trends, and I'm incredibly confident that we can replicate some of these past experiences that I've had and perhaps even beyond. Great, thanks for that. And just a quick follow-up. Heather, can you give any kind of little deeper dive into those stores that have been remodeled that might have had that marketing spend as well in the right categories? And how significant were some of those better stores' performance? The average, it was a three, but how well did some of those successful stores really perform in the quarter? Yeah. Thanks, John, for the question. I appreciate it. I know you're a big supporter of our CTx format. I won't disclose exact details, but what I will tell you is that, as you know, with these, we're calling them our incremental initiatives, right? Marketing, remodels, inventory rebuilds, et cetera, et cetera. I mean, we're tweaking the dials as we learn, and that combination of remodel and marketing has had a particularly exciting result that we're looking at and saying, as we always do, "How do we replicate that? Where do we replicate that?" So it's small yet. It's a learning, but it's an exciting one, and we'll apply it going forward in a measured manner. Yeah, I mean, it's helping lift, for sure. Great. Thanks. Good luck. Thanks, John. Thank you. We have reached the end of the question and answer session. Mr. Seipel, I will now turn the floor back over to you for closing comments. Great. Thank you. Well, I certainly appreciate everyone joining us today on our call. Thank you for the good questions and your time and attendance here. We look forward to updating you in the future on our progress. Thank you very much. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.