Good morning, everyone, and allow me to welcome you to JP Morgan's 12th Annual Retail Roundup. It's our pleasure to host the event inside JP Morgan's new global headquarters here. I hope you're enjoying the building. Don't miss the flag in the lobby waving 24 hours a day. Our fireside chat today is with DICK'S Sporting Goods, and it's my distinct pleasure to welcome the management team, including an absolute legend of retail, Mr. Ed Stack, Executive Chairman, as well as CEO Lauren Hobart and CFO Navdeep Gupta. Team DICK'S, thank you for your time and thanks for joining us today. Happy to be here. By the way, that lobby is pretty awesome. Oh, the whole building. Oh, my goodness. Jamie's a patriot. Yeah. Jamie is a patriot. Pretty awesome. For anyone who's around tomorrow, Matt and I will be interviewing Buck in this room. In terms of format, I have a series of questions that I'll cover, and I'll open up towards the end for questions for those of you in the room. We're going to kick it off and talk a little bit about Foot Locker. We've looked at the Foot Locker acquisition as in terms of playing long ball, in terms of balancing the power between you and the vendors. At times in the past, vendors have been irrational at times. It seems like this is your longer-term vision to try to create more stability in the relationship. Then obviously, there's a lot of substantial retail 101 margin improvements. Our first question on the topic, is that the right way to think about it? I think the bear case is that it's sort of a necessary means to expand your TAM because you have such high share in your core DICK'S business. Yeah. Well, thanks. It's nice to be here. Thanks for having us. It's not to increase our TAM. Our business is a pretty good-sized business right now. We've only got roughly 9% market share here in the U.S., so we've got a lot more market share that we could go after. The Foot Locker acquisition was really about a different consumer than what the DICK'S consumer is. It was really about the fact of we thought we could create some real value in Foot Locker based on the fact that they kind of did kind of forget about retail 101. The due diligence we did and all the things that we looked at from a Foot Locker standpoint, there's a big opportunity in Foot Locker from making sure that they've got the right assortment and the retail execution that we can bring to the business is pretty substantial. We couldn't be more excited about Foot Locker. I've said before and I'll say it because it's Masters Week and use a golf analogy, if we had a mulligan, we'd buy this all over again, and we would do nothing different. We just think there's that much of an opportunity. This was not a defensive play. I'm not sure I would characterize the brands as irrational, or at least I wouldn't say that publicly. You can, I can't. It really wasn't about that. It was really about the value that we can create, a different consumer that we can service that we don't service at DICK'S today, to give us a global footprint that we don't have today, and that we think that there's a very big opportunity. As we've gotten into this, since we closed, we're even more excited about the opportunity than we were when we first bought the business. You've talked about vendors being very supportive of the acquisition and getting behind the merchandising changes that you're trying to do there. Have vendors voiced any concerns? As you think about what investor questions have been asked of you, what's been essentially the pushback, if any, from the vendors and from the investor community? There's been no pushback from the vendors at all. The vendors couldn't have been more supportive of us doing this because they see the potential of what Foot Locker could be for their business also. It wasn't living up to the potential that they thought could help their business. The brands couldn't have been more supportive of this. They helped us with the whole idea of cleaning out the garage. They've helped us from an access standpoint, allocation standpoint, and really want there to be a growing, vibrant Foot Locker. They couldn't have been more supportive. The investment community is all the things that you would expect it to be, and it's the, Why did you do this? Your business is doing so well. Why would you do this? Well, the answer is all the things that I just talked about that gives us a global footprint, service a consumer that we don't service today, and we see big upside. We understand all that. The other piece of this is can you really turn Foot Locker around? We believe we can. We do understand that we're kind of in a bit of a wait-and-see aspect that the investor community wants to say, Okay, great. We've got a lot of trust in you and what the management team, Lauren and Navdeep, myself, the rest of the management team have done. We've got great confidence in you, but we really want to see if you can really do it. I can tell you, we really can do it. We'll prove it to you, and we understand that that's the rules of the game and we'll go do that. Other than that's kind of what we've heard from the investors, and like I said, the brands are totally jazzed that we did this. As you think about the 11 Fast Break Foot Locker test stores that you opened last quarter or opened and had for a full quarter, how do these stores, I think some of us have been in the stores, but can you maybe help us visualize how those stores are different from what the old Foot Locker stores look like? What have been your biggest learnings so far? Yeah. The big difference between this and heard me kind of talk about this when we were buying Foot Locker. If you walked into a Foot Locker store and looked at that wall of shoes. It was merely a run-on sentence, just a bunch of shoes stuck in the wall. There was nothing really. You couldn't tell what was important. You couldn't tell what the story was you were trying to tell. When we did this, and we had planned this, because when we went through the due diligence process, that was the plan. As soon as we closed, we were going to start this Fast Break process. We took everything off the wall, we took roughly 30% of the SKUs out and rebuilt the wall and laid out what was important to the consumer, what was the hot shoes, what story we were trying to tell, and had a huge impact on the business on those 11 stores. We did this across some stores that were lower volume stores, higher volume stores, some street stores that you would find here in New York City, some mall stores. We did a real cross-section of those. We were really more than pleasantly surprised of what went on. We brought apparel back into the stores because they had taken a lot of the apparel side out of the stores. We put apparel back in there and the results were great. Around the NBA All-Star Game, we did 10 more of these stores in L.A. and got the same type of result. Now what we'll have is, we'll have around 250 of these stores in the U.S. by back- to- school that will have been Fast Break. We will have done the same thing that we did with these 21 stores. Now, we'll have done that with 250, and we're pretty excited about the results. When doing this, the brands have come to us and said, Hey, we like what you're doing. We can instantly see when we walk into the store how different it is. They've given us access and allocation to product that Foot Locker didn't have before. We've taken these Fast Break stores, and one of the things that Foot Locker had kind of gotten away from looking important was the lease line. The lease line is really the store version of the billboard when you're driving down the highway and see all these billboards on the highway. The lease line is that billboard with the consumers walking by, that you've got to get that lease line and make it interesting for them to come into the store. We've done that. Around Valentine's Day, in a number of the stores we tested this in, there was a Valentine pack of shoes. It was red, white, pink shoes right in the window when you first walked in. It was great. It was highly successful. There was a launch of the Air Max 95 shoe a few weeks ago. We did the same thing. Highly successful. You'll see a very different wall treatment of what the wall looks like, of the wall of shoes. You'll see more apparel in there. You'll see a different lease line. You'll see different marketing. Basically, everything in Foot Locker will be pretty different than it has been. Like I said, the results so far have been really phenomenal. You've characterized it as Retail 101, and I think you did a great job of explaining that in terms of how the store operates. It's only 11 stores. It's up to 21 now. It's 21. Foot Locker's merchandise margins are maybe down 500-600 basis Correct points for the past five years. What's been the margin observation so far in these stores? They had too much of the wrong product and not enough of the right product. The markdowns that they had to take really impacted those margin rates, and they reduced significantly the apparel side of their business. You're right, their margin rates were down 500-600 basis points. I won't say that we're going to get that back in year one, but you're going to start to see margin rate improvement. Got it. Perfect. I want to talk a little bit about the secular drivers of the category in the footwear cycle. I've raised two girls. Female participation in sports is clearly a driver in the world today. Health and casualization, you've talked about that a lot, Lauren, as drivers. You've also had the emergence of two new brands in On and Hoka. We've covered retail for 23 years, and when there's innovation, specialty retailers win share. When the product cycles slow, oftentimes that share goes in the other direction. It actually reminds me a lot of Under Armour post the GFC and how much traffic that drove to your stores back then. The question that I have is it possible to disentangle the tailwinds from the footwear cycle? How do you think that's playing out in the innovation versus some sustainable structural secular drivers? Yeah. Great question. I think there's two things going on in our business. There's more than two things, but two things related to your question. One is that our consumer, the secular drivers, our consumer is obsessed with sport. The country is obsessed with sport, and we sit right at the intersection of sport and culture, and that's true in footwear, but it's also true across our entire portfolio. Wherever we see newness or technicity, technological product, or trend, so even in the hardline categories, we're seeing trends in bat launches that we used to only see in footwear launches. The whole world has become obsessed with sport, with culture, with newness, and innovation. Yes, we have secular trends that are helping us, but it's really important to note within that they're not helping everybody. Increasingly, DICK'S is the place where consumers, athletes we call consumers, are choosing to meet all of those needs, and that, I think, speaks to the second part of your question, which is the innovation in our assortment, the innovation in how we approach our athletes. We have a House of Sport concept now. If you haven't been to it, I would suggest going. It's unbelievable. It's redefining retail, really experiential, and brands are leaning into that and giving us the newest and the coolest and the best new product because it is rooted in sport. We can tell a brand story head to toe. It's just really reinvented the entire way that retail is going to market. There's innovation everywhere. In the footwear side, same thing. We see innovation in how we're bringing footwear to life, but we also see innovation that we're excited about in a lot of the footwear that we see coming down the pipe with our core brands. As you think about, do you have any concern that, if you look at Hoka [and] On's wholesale numbers, the U.S. numbers, they are incredible? Yeah, they're incredible. We're all second derivative crowd here. They've slowed to pretty strong levels. Do you have concerns that we're seeing the tail end of the footwear cycle? We still have upside. We are planning, we won't get into specific category growth, but we planned it to 2%-4% comp growth. We see growth, we will have growth in footwear. On and Hoka, we still have upside in terms of door count that we're having, but we're also seeing. The thing that's great about our position is because of our relationship with so many brands, we can lean into what's hot and where the trends are going. We're seeing growth in the Nike Run construct. Brands, they get hot, they become on-trend, but in general, the category we have a lot of confidence in. We will be growing footwear. Awesome. More specific to the consumer, obviously, this conference is so well-timed. We had Liberation Day a year ago. Last night, we have. Thank God we have. Yeah, some- We're all still here. It's nice. Yeah. Thank God. There's a question, right? You have tax- stimulus out there, gas prices above $4 nationally, not $5 like we saw in 2022. How would you assess the health of consumer, and how do you think the balance between the energy price pressures and stimulus is maybe playing out? Yeah. Our consumer is very, very healthy. In addition to everything I said about the sport and culture coming together, the consumer is obsessed with sport. We haven't seen trade-down from best to better and better to good. We've seen growth across all income demographics, and that's at the DICK'S side. In the Foot Locker side, we actually very much see that when there is newness and when we have the right product, that consumer also values the category so much that they respond really well. Our consumer is healthy. We just have to keep the right product, the best experience, and that's how we're doing that. Awesome. I think, we're all so sensitive to traffic, and in the fourth quarter, the traffic did decline. You talked about it being more of a comparison. How would you think about the balance of traffic in ticket, as you think about your 2026 outlook? Yeah. No, Chris, like the way you characterized, the traffic was down, but if you look at it in fourth quarter, our results were really, really strong. We posted a 3.1% comp on top of a 6.6% comp from the year prior. On a two-year stack basis, if you look at it, we were almost about 10% comp, which was pretty consistent with where the business had been trending all of 2025. That's the way to look at it, and traffic is just one way to look at the quality of sale, and this is where we say we look at it in multiple different ways, the sales. We look at it, how are channels doing? How's e-com doing? How are stores doing? How are core categories doing? We saw strong growth coming out of all of our core categories. Apparel, footwear, team sports, golf, licensed business, the collectibles business, which Ed and Lauren have talked about, are fantastic growth drivers for us for the long term, and we saw strong traction with those categories. Then, like Lauren talked about, we look at it by the income demographic to say, Is the quality of sales still good? That's what we saw. In terms of the outlook, we don't give the outlook broken down between traffic and transaction, but here's what gives us tremendous amount of confidence. It's the core drivers of the business. Keep in mind, in 2026, we also have the excitement for the FIFA World Cup. That has been contemplated into the guidance that we have provided. Fantastic. Going back a little bit to the DICK'S Foot Locker combination, it looks like you're about 22% of Nike's wholesale business. Is that right? Surely that's a big number across the big brands, outside of Nike. If you think about that and just assume 1% of volume buying discounts from the increased scale, it does make the $100 million-$125 million look a bit low. Just trying to work through that math and think about what's the baseline sort of volume market share that you have with the larger brands, and is it implicitly you're assuming something less than 1% from a volume discounts? Well, I think so you're going back to where the synergy guidance is, and the synergy guidance that we have given is $100 million-$125 million over the medium term. Keep in mind, synergies are one way to think about this transaction. This is about, like Ed says, we didn't buy this asset for one year. This is how we are going to run this company and quite frankly, this combined companies over the next several years. Synergies, what we have guided is two components. One, merchandising synergies and the non-merchandising buying. If you look at that and say that's just what the cost synergies would be. We have said that over the medium term. The opportunity is much broader than that. Like Ed said, better access, better allocation, looking and partnering with them in a very, very different way. If you look at the sports ad that is going on right now at DICK'S. Actually, Nike is sponsoring that ad with us. They gave us access to their athletes. That's a broader way to define synergies than just what we have talked about. That's the way we have thought about this opportunity as a collective way of shaping this industry for the long term. Understood. Staying on Foot Locker for a second. You're rolling Fast Break to 250 doors in 2026. Correct. By back-to-school, how are you thinking about the scale of the remodel program globally? We're starting Fast Break in Europe. We're further ahead in the U.S. than we are in Europe right now. We've got a couple of Fast Break stores in Europe, which we're really pleased with what's happening there also. We've got guidelines of what we're going to do there in Europe. It's a little bit slower for us to get the fixtures that we need and some of the things that we needed. Management team is still being built a little bit more in Europe. We've got a great leader in Matthew Barnes, who we brought from ALDI. A couple of other people, we brought another person back to be the Chief Merchant there. You will see, I'm not going to guide how many we're going to have by back- to- school for Europe, but you're going to see a meaningful number of them in Europe by back- to- school also. Won't be near the 250 number that we have in the U.S. You could just look at Foot Locker in Europe is probably going to kind of run roughly six months behind what we do in the U.S. Understood. It will get there. One of the questions that we get is how the Foot Locker acquisition is impacting the core business. You were very clear from day one saying that you're sort of taking over Foot Locker and organizing management and merchandising and the core business is not going to be affected. One of the questions that we get is, you're guiding to 67 House of Sport by the end of 2027. That's slightly below the initial 75-100. This is despite CapEx going to $1.5 billion this year. I think the question is, to what extent is that actually an indication that the stretch of sort of the capital deployment and management time is affecting what is a wonderful House of Sport opportunity? Yeah, it's got nothing to do with that. One of the things that we're finding now is with House of Sport, we're getting access to real estate that we would have never had access to before. We're just being a bit more patient. Some of the access to real estate we have right now needs to take a little bit longer to get done. An example of that is, if you look at this five, six years ago, we wouldn't be able to put a two-level DICK'S store in some of these malls. Tysons Corner in Washington, D.C. What we're doing with Cerritos in L.A. Palm Beach Gardens in Florida. Barton Creek in Austin. We have access to real estate. One thing we're working on in a couple of other things that we would never have had access to that real estate before. We will be the main new anchor in these malls. We're just being patient. We don't want to rush. We don't want to go and hit a number to just be able to hit a number. The access we have now is very different. The volume of these stores that we're going to do are going to be meaningfully, we expect to be meaningfully higher than what we had originally anticipated from a House of Sport standpoint. This new access to real estate is what the difference is between the 75 and the 68, and when you take out 67 or 68. When you look at that, it's a pretty meaningless difference in the grand scheme of things. Understood. Just a quick follow-up on that. You talked about volumes being meaningfully higher than the original mall that you talked about. Obviously, rent in those locations are higher. So how do we think about the four-wall EBITDA margin profile of those better locations? Don't assume that the rent's going to be higher or meaningfully higher. Because some of these mall developers, where there's a vacant department store in some of this better real estate, so if it was a Sears box or it was a vacant box from some other retailer, that wing of the mall is not the best leased with the best tenants at the best rents. What the landlords find is when we put a House of Sport store there, that wing of the mall, they can bring in better tenants who will pay higher rents. We can be the beneficiary of that. Don't automatically go to the fact that the rents are going to be higher. Excellent. Sticking on the margin topic. A topic that sort of faded into the background a little bit with some of the promotionality, I think, over the holiday season. Now Foot Locker is, as you think about the core DICK'S business, what the structural gross margin level actually is, and then how does that DICK'S Media Network and GameChanger change what you used to speak to from a structural gross margin perspective? Does that take it ultimately higher? Yeah, that's a great question. First of all, we don't call core non-core. We see DICK'S and Foot Locker as the core parts of the business. Just staying with the DICK'S, where the question is, we see the secular drivers of the gross margin expansion continuing to be in place. The access to the product is the first unlock, and what both Ed and Lauren have talked about, the relationship now we have with the vendor community is at a whole different level. We had great access to begin with. That access is even further enhanced. The investments that we are making in House of Sport, in Field House, in DICK'S Media Network capability, is actually allowing us to partner even deeper with some of the emerging brands that a few years ago, we didn't have that level of depth of relationship. That opportunity remains really well in place. The work that our teams are doing on vertical brands. We used to talk a couple of years ago that the vertical brand margin was 600 basis points-800 basis points higher. We have said in recent years that it's now 700 basis points-900 basis points. Actually, the margins are even becoming better than our current expectations that we have. The teams are doing a fantastic job, not only at driving growth and how well that product is resonating with the athletes, but also driving margin expansion. Then the new latest drivers that you talked about between GameChanger and DICK'S Media Network, we feel we are in an early growth opportunity with both these opportunities. Fantastic, and probably one of the most not well understood and a true hidden gem is the GameChanger business. It's almost about $150 million in revenue size, very fast-growing, very profitable, and we believe that will be continuing to be a differentiating capability as we look to the long term. Do we get a new number today? Well, we have not given. No. We have not given a long-term rubric, and I won't do that today. We feel really confident that the secular drivers continue to remain well in place. Yeah. We've had about a 40% CAGR for years. On the other side of the business, and to your credit, Ed, you've always embraced investment. You've always embraced building a brand. The nature of this category is different from some other companies that in my coverage, there's newness, there's trend. Conversion is so important, and the store display is so important to the store. Advertising, 4% of sales versus some of my more consumables-oriented retailers spend 1.5%, 2%. Mm-hmm. The question is, how to think about the structural growth rate in SG&A dollars in the context of the category that you operate in, and related to that, how do you think about what the right leverage point on SG&A is? Yeah. Chris, this is something that we have been talking about for the last couple of years very clearly, that look to us to drive top-line growth and bottom-line growth. There will be interplays between SG&A and margin. For example, last few years, we have been investing from an SG&A perspective while delivering really strong gross margin, and the investments have gone into the things that are driving these differentiating results. DICK'S Media Network, GameChanger, the capabilities that we have built around personalization, the e-com drivers. Those investments show up in SG&A, but the benefits show up in margin. That's the interplay that we have always talked about. From a leverage perspective, we will balance the near-term results against the long-term differentiating capabilities. We still feel there is a clear opportunity for us to gain share. We are at 9%, even just looking at DICK'S. We want to continue to build on that opportunity that we see. At this point, I'm going to pause and see if there's any questions in the audience here. There are microphones on the table. If you have a question, if you could speak into the microphone so people on the could hear you. Hello, can you hear me? Yeah. I can hear you, Danny. Yeah, I got a couple interesting questions. First of all, could you talk three of them maybe talk a little bit about cultural change in the company. Mm. How the level of enthusiasm is within the company, because I think that's one that's important. Another one is, I noticed the warehouse stores that you're cleaning out. You didn't mention anything about that, how it's working and potential growth. The third one that you did touch on, which is GameChanger. I think it's phenomenal, but a lot of people that are even signed up, they don't know it's part of DICK'S. Mm-hmm. How do we get that out there and get them into the stores as well? How are you going to capitalize on that opportunity? That's it. All right. It's all you. All me. All right. Great. Well, we'll start with culture. I think you're right. Sometimes people don't understand that all of our strategies, the product, the reinvention of retail, all of our digital strategies only come to life because of the strength of our team. We have an amazing management team, but even more important, the culture throughout our stores is so energetic and so focused on wanting to win and deliver. It is a secret asset, it is a secret weapon. I would say, with the Foot Locker acquisition, happens to be also their secret sauce. When they have the right product, you wait till you see what these stripers can do. I think the dynamic in the company is absolutely part of what's driving the growth. Now, I remember number three was GameChanger. What was number two? Going, Going, Gone! Going, Going, Gone! you want to come take that one? It's good. Sure. I'm going to come back to the culture piece, too. Okay. We just did our annual engagement survey. Yep. To put this in perspective, when you benchmark it against other retail. Our benchmarks from an engagement standpoint are almost 2,000 basis points higher than the average retail. The culture in the company, I won't say it couldn't be better, but it's as good as there is in retail and better than most everybody else in retail. The team that we've got, and this isn't just at the senior management level, this is throughout the whole organization. Down distribution centers, the stores, everything. We couldn't be happier. A big part of the culture being what it is really Lauren's leadership of how she's really taken culture and really kind of remapped culture, and our head of HR, Julie. The culture. It's important. couldn't be any better. In Foot Locker, the culture was somewhat difficult. The culture in the stores are great. The stripers and these young men and women love sneakers. They know sneakers. They love talking about it. They know about their business. They give us great insight into it. The culture inside the organization was somewhat siloed, and we're breaking that down. We hired Ann Freeman from Nike as President of Foot Locker. The head of HR for Foot Locker comes from DICK'S, so he's trained under Julie and making real strides there, and the culture in Foot Locker has changed meaningfully. If you sat and talked to people at Foot Locker today and said, How are things today versus what they were six, eight months ago? They would tell you it's entirely different, and they couldn't be happier. Going, Going, Gone! standpoint on the value chain that we have, this has been a great win for us. It gives us the ability to get products. You run a business, any retailer, you're going to buy product, and you're going to think that it's just going to sell, and it doesn't sell as well as you think. It's a great way for us to clean that product out, clean the product out of the existing stores, bring new product in at full margins in the existing stores, and part of our margin rate improvement that we've had over the last several years has come from the execution from our Going, Going, Gone! or value concept. It's something that we'll Going, Going, Gone! concept will also help us with Foot Locker because we'll be able to clean out footwear Going, Going, Gone!, foot locker's product through that channel that Foot Locker didn't have the ability to do before. We haven't guided to this, and I don't really think it's that big a deal to tell you. The footwear capacity Going, Going, Gone! stores has never been at 100%. We actually have some capacity from a standpoint to put more shoes Going, Going, Gone! concept, and we'll be able to do that and help Foot Locker clean out their excess inventory, which will help their margins and help keep that. We're not going to let that run-on sentence come back in Foot Locker. Danny, I think that hits everything you- Nope. GameChanger. Yeah. Well, GameChanger. So- Which is our secret weapon. Yes. I mean, it's Just like our culture. Yeah. GameChanger, you're right. It is an incredible asset, and you're probably also right that we don't merge the two branding between DICK'S and GameChanger. GameChanger, it says the DICK'S Sporting Goods company under it. Increasingly, you're going to see that change, and it's both for the consumer, but also behind the scenes. For example, GameChanger, because of the authenticity in diamond sports, has created a concept called Bat Lab, where we're bringing in the best high school players around the country to test out the new bats. If you go into a DICK'S store today, you're going to see this is the Bat Lab recommendation by GameChanger. That's happening. People are increasingly aware. We've got some ideas long-term about our loyalty program, kind of opening up some access to GameChanger. Behind the scenes, the data that we have at GameChanger and the data we have at DICK'S are brought together, and we use it for co-marketing. We use it for our media network, so that the media network actually goes to market as one where you can have access to all things sport, our scorecard data, as well as our GameChanger data, as well as our teammate product knowledge. I think you're right. We're early innings in terms of overt brand recognition, but we're moving quite quickly toward partnership even more than we've ever had before, and then data, bringing that to life in a combined way. Similar to what we said about DICK'S and Foot Locker, GameChanger is a fantastic growth engine. What we also want to be careful of is to be purposeful in what are the places that we are bringing these two brands together. Because we don't want to distract, similar to DICK'S, we don't want to distract the GameChanger on the 40% CAGR that it has had for the last several years. That's the balance that we always strike as well internally. Yeah. Question right here. Yeah. Hi. Thank you. You've talked about the Foot Locker customer. They seem to be in pretty good shape. They respond to newness and innovation, that there was big misexecution on merchandising. Any reason to believe that the Foot Locker margin couldn't recover to its historic level, or is there something structural there that might have changed? Thanks. I don't think there's anything structural. We're not going to give a timeframe right now, but there's nothing structural that would keep you from being able to do that. [audio distortion] In apparel. You're putting words in my mouth, but. In apparel. Yeah. We think that there's meaningful- expansion. As we get further along in this process with Foot Locker, we'll continue to provide more and more information. I think when you get done and we look back on this, it'll be that this was a transformational acquisition that DICK'S made with Foot Locker. You're obviously reading my questions here. I have a follow-up to your question, which is, merch margin being down about 600 basis points, how would you break that down between bad merchandising, driving promotion, versus lost vendor support? That's a really good question. And I don't know that you can bifurcate the two. If loss of vendor support, then the team went, and I can understand this, and bought the next tier product to try to offset that. It didn't work quite as well, so that caused some markdowns. They're connected. Between better access, better allocation, better merchandising standards, better buying standards, we think we can get that margin rate back up there. One of the things Foot Locker didn't have, they didn't really have a defined planning, allocation, and replenishment group. The product wasn't allocated properly, and there wasn't as much of a planning process as there would be. It was too siloed. There's all of these things that are interconnected. It's a great question, but it's tough to bifurcate the two. Understood. Additional questions? Any other questions? There's one in the back there. [audio distortion] Yes. [audio distortion] You're talking about the Foot Locker reimagined stores? A fast break, though. I think you said 11. The 11 stores. Right. I think the question was basically, of the 11, thinking about the 250 that you're rolling out this year, how quickly could that accelerate over time, and what's the evaluation period? Okay. Well, we'll continue to evaluate, but the early evaluation is that we're pretty excited. We're not giving a time frame. We've got one internal, we're not going to communicate it yet. Back- to- school is 250, and we have a time frame by which what we would like to get done by holiday, but we're going to keep that to ourselves for right now. Understood. Other questions? Hey, Josh. I I just had to follow up to that. What have you seen that's giving you the confidence to go from 11 to 250 so quickly? It seems like it must be really impressive. It is. We've actually gone to 21. Okay? Not that 21 is a whole lot different than 11 in a store of like 650 or 700 stores. We've got great confidence in what we've seen in how these stores have performed. We've got great confidence because the brands have come to us. The brands that have kind of taken some allocation away or some access away have come back and said, We're back in. We're going to give you more of this product. We're going to help you. We see the investments you're making. They've walked into the fast break stores. They see the difference. They see what we're going to do from a marketing standpoint. We've laid out a plan of how we're going to invest in this business and how we're going to market this business and turn this business around, and the brands are all in. One of the reasons we've got this confidence is that the brands are going to be supporting this. We've started to see that. When we went to the brands, and we said, Hey, we need some product. They couldn't give us everything we needed, but when we need this product to test this in 11 stores, they can usually find product to kind of help you validate this in 11 stores. Then 10 more stores around the NBA All-Star Game. As we've kind of put all of these things together, it gives us tremendous confidence that this will work. If you know, we're relatively conservative, and we wouldn't be out here talking about this if we weren't confident that we were going to be able to do it. The other thing is, though, they're really capital light. This is not a massive investment. It's usually not swinging hammers. It's really more of a visual merchandise update, which is low risk and high reward. The only thing that there is, and Lauren's right, for the most part, we're not swinging hammers. The only place where we're swinging hammers is if there was a House of Hoops store next to a Foot Locker store. Then we're taking that wall out of House of Hoops, opening this up, so you get a much bigger Foot Locker store, much different sight lines. We've got some space to put apparel back in there. That's the only place that we're swinging hammers is when we eliminate House of Hoops. We have a question right here. Yeah. From our perspective, it seems like some percentage of the Foot Locker turnaround is dependent on high-heat product. It seems like there was some stuff done around February, the All-Star Game, All-Star Game weekend, the Fast Break stores, that might have changed relative to the past couple of years. Could you just talk about those changes? How much of that was your guys' actions? How we should think about that as we move into back- to- school, and how some of the successes from February, the All-Star Game weekend, might impact going forward? Yeah. There is some high heat product that's important to make yourself relevant in the marketplace. Foot Locker in the past was too dependent on that high heat product. We're building out the assortment to be more of a base business. There will certainly be high heat product that is important, whether it's Jordan Retro, fill in the number. That's still going to continue to be important, but it's not going to be as important going forward. We're going to build out this base. You think about it, when you look back, Foot Locker pretty much missed the retro run category. Didn't have much of that. If you take a look in Europe, I was surprised when I finally got there, that in Europe, they didn't buy a retro run shoe. They didn't buy a P6000. They didn't buy a Vomero 5. They didn't buy anything from a retro run standpoint, and that's a big miss. That's a big part of a base business that we can build back. We're going to build back the base business. The high heat product is going to be important, and we'll have more access to that high heat product than we've had in the past, based on the relationships we have with the brands. Any other questions? We've got six more minutes to burn here, so if there's any more. I have a whole list. You have more? Okay, good. As you think about staying on Foot Locker for a minute, it's really a two-parter. Buying synergies should be instantaneous. You should capture, whatever, back-to-school, back half of this year to the front half of next year. You should make yeoman's progress on the buying synergies. Is that right? With respect to, now that the garage is cleaned out, so you're not going to have the clearance pressures that Foot Locker experienced a year ago. Some degree, some of the promotionality is going to be a lot lower. I'm trying to understand, shouldn't the merchandise margin rebound at Foot Locker be this accelerating curve as we start from the first quarter into the first half of next year? We're not going to provide that guidance for you. We do have indicated that we expect that margin rate to get better. Yeah. As of right now, that's what we're going to make sure we don't get ahead of our skis. You will see margin expansion, which is part of what's taken us to grow this business again and to return it to profitability. Like I said, as we get a little bit further along, and we can prove it, we'll give you more visibility to it. Got it. Another question I have is on a hot topic, exposure to rising energy costs. Obviously, you buy from Nike U.S., so you're buying onshore mostly. Ocean freight shows up later, but how do we think about domestic trucking energy cost exposure? The direct exposure will be through the supply chain costs and that over the last several years, the team has navigated the ups and downs of that, and something that I would say that the team will continue to navigate as we go through the balance of this year. It's been volatile, and we just are trying to do the best that we can to continue to manage that cost. We feel that the capabilities and the relationships that we have with the merchandising side and on the non-merch side will be something that will. {audio distortion] Could you talk about share repurchases and how that could evolve over the next couple of years? Well, I think that goes to a larger capital allocation strategy. The first, as we have said consistently, is that our first priority is to invest into the business. The opportunities that we see with repositioning our portfolio of stores, building new capabilities like distribution center that we are building this year. If you look at it, our sales are up close to 60% versus 2019. We have the same exact number of distribution centers. Those are the fixed infrastructure investment that you have to make, the capabilities investment that we are making in GameChanger and technology. That's the first priority for us. Outside of that, our focus continues to be that we want to continue to return the excess cash to our shareholders. We have done that through growing our dividends 12 straight years, Nate, I'm looking at. From a share buyback perspective, we have been pretty consistent. At the same time, we are opportunistic. That's what has been contemplated in our guidance, just basically offsetting the normal dilution, but we'll continue to be opportunistic with the share buyback. We have plenty of capacity on the balance sheet. If I could, I think there's a DC that's going to open this year, but I assume some of that CapEx from this year will ramp down as we think about next year and beyond. How do we think about CapEx over the medium term? Yeah, we haven't given the long-term outlook for the CapEx, but keep in mind that what is the biggest driver of the CapEx growth, especially when you look at over the last few years, is the repositioning of the portfolio. What is included in the CapEx guidance for this year is opening of, call it about close to just over 30 House of Sport store locations, including 18 that will be opening in 2027. Any other last questions? We have one more. Okay, Danny. Foot Locker had a kids business and separate store on kids. You didn't say anything about the little kids. Well, when we talk about Foot Locker, we talk about the Foot Locker brand. Just the whole kids business. KFL. Kids business is really important to Foot Locker. We think there's continue to be a big opportunity there. One of the things that we did right after holiday, we got on a video call and probably talked to over 100 different managers. We had different parts of the country jump on there with 10 stores each time. We talked to well over 100, and there was a common theme around kids, and it was kids basketball. We were really under-invested in that, and we think there's a real opportunity from a kids standpoint going forward that Foot Locker let slide. We'll be really investing in that, but that's part of the whole Foot Locker strategy. I'm seeing blue and maize Nike basketball sneakers. Yeah. Popular this spring. navy blue and maize? Yes. Yeah. Just like these socks. Yeah. Oh, got it. Yeah, everybody from Michigan is pretty happy today. Yeah. Yesterday. Yep. Exciting. Yeah. Well, with that, I want to thank you so much for joining us today and all your time and all the wonderful responses. Great. Well, thank you. Thanks for having us. Thanks. Thanks, everybody. It was great. Yeah, thanks. Appreciate it. No, that was great. Thank you so much for coming. My pleasure.