Good day, welcome to the Duluth Holdings Inc. First Quarter 2023 Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the Star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star, then one on your telephone keypad. To withdraw your question, please press Star, then two. Please note this event is being recorded. I would now like to turn the conference over to Nitza McKee. Please go ahead. Thank you, and welcome to today's call to discuss Duluth Trading first quarter financial results. Our earnings release, which was issued this morning, is available on our investor relations website at ir.duluthtrading.com under Press Releases. I'm here today with Sam Sato, President and Chief Executive Officer, and Heena Agrawal, Senior Vice President and Chief Financial Officer. On today's call, management will provide prepared remarks, and then we will open the call to your questions. Before we begin, I would like to remind you that the comments on today's call will include forward-looking statements, which can be identified by the use of words such as estimate, anticipate, expect, and similar phrases. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts, and assumptions, and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Such risks and uncertainties include, but are not limited to, those that are described in our most recent annual report on Form 10-K and other SEC filings as applicable. These forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. With that, I'll turn the call over to Sam Sato, President and Chief Executive Officer. Sam? Thank you for joining today's call. We're pleased to share the first quarter results, reflecting strong demand for our spring and summer collections and the great progress we're making on several strategic growth initiatives. Fiscal 2023 business is off to a good start, with several positive trend reversals in the business from the fourth quarter, including overall net sales that increased from last year, an increase in total customers for the quarter, and better inventory in-stock positions that are fulfilling demand and driving greater efficiency in our working capital. While we still expect the economic crosscurrents to weigh on consumer price sensitivity, our conservative business planning for 2023 provides flexibility in our go-to-market strategies to achieve near-term goals, and we remain committed to our long-term objective, as outlined in our Big Dam Blueprint growth strategies to build a platform of can-do lifestyle sub-brands. It was one year ago that we announced the rebranding of Duluth by Duluth Trading Company and AKHG to align with our customers' distinct use cases. Duluth is focused on serving the needs of our customers for durable, functional workwear. Our target customers are fine tuners, fixers, and tinkerers who believe that calloused hands and dirty fingernails build character. A great example of serving our customers who like to dig in is our garden, landscaping, and planting collection, which has continued to build each year as we expand in both size and breadth across apparel and gear. This category was up nearly 30% compared to last year in the first quarter and represents a healthy long-term growth category for us. AKHG is our outdoor recreation brand for those who believe the work of outdoor experiences makes it worth it, and the grind is part of the adventure. These folks live to be outside in their free time, and they invest in outdoor experiences. For them, fun tends to start where reliable cell service ends. Since last year's spring launch of our women's collection by AKHG, we continue to see a tremendous positive response from our customers. I'll share more details shortly regarding recent product performance, but I'm excited to share that along with the addition of women's, AKHG men's has also seen growth, and the overall sub-brand was up 43% from last year's first quarter. We see opportunities to leverage our brand platform for potentially new brands we develop or through acquisitions that are in adjacent, underdeveloped categories with customers that have some similarities and crossover with Duluth and AKHG. We're not going to stray far from who we are, rather, move into underpenetrated categories within our current business and either develop or acquire expertise in categories where we don't currently participate. We look forward to sharing more about the incremental brand growth opportunities when the time is right. Now I'll touch on our recent results. Today, we reported first quarter net sales of $123.8 million, an increase of nearly 1%, a net loss per share of $0.12, and positive Adjusted EBITDA of $5.3 million. These results were in line with our plans and keep us on track with the full year outlook provided on our last call. Our inventory levels ended the quarter down roughly 5% from the same period last year, and down 6% from the fourth quarter. Our disciplined efforts to appropriately plan our purchase and receipt flow has resulted in a well-positioned inventory mix of seasonal, year-round, and clearance goods. Given the macro pressures consumers are facing with persistent high inflation and higher interest rates, we are seeing price and basket sensitivity as consumers remain selective in their discretionary purchases. The underpinnings of our brand remain strong, as evidenced by our strong unit sales growth of 6% over last year. Dave will share further details on our financial results. I'd like to commend our teams for continuing to be nimble and focused on executing our plans and serving our customers at the highest level. Our improvements in the demand trend this quarter can be attributed to several actions we took. Most importantly, it starts with new, innovative products. We continue to see success when we expand proven technologies and fabrications that our customers already love into new products. Our Armachillo material, originally designed for men's underwear, is serving as the base fabric for a new line of sun-protecting tops under our Sunperior collection for men and women. These lightweight, long-sleeve tops provide wicking and skin-cooling attributes, plus UPF 50 protection from the sun. In the shorts category, we combined our hero fabrication in Duluth Flex Fire Hose with COOLMAX technology to provide a hot season cargo short for guys who need to work under the hot sun. With a 13-inch inseam, the extra coverage and wicking features keeps them dry and cooler than cotton. Adding the flex and standard gusset features, along with our Bonus Room elastic waistband, allows for extra ease when stretching and twisting on the job. To address our customers' affinity to get active in the water, our new Lost Lake swimwear collection for men and women was the number one collection in AKHG for the quarter. We suspected this new offering was going to be a splash, as we shared on our last call, and the positive reviews have been great, with call-outs on the extra convenience features, built-in UPF sun protection, and durable flexibility for the hike to the swimming hole or lounging under the beach umbrella. We'll continue to innovate and infuse new materials that serve a purpose or solve a problem for our customers because it's in our DNA. Like our new No Fly Zone collection of lightweight overalls, pants, and garden shirt jacks, which features an odorless, insect-repelling finish that keeps the bugs away when you're sweating on the job. Based on strong customer feedback and data analytics, we're extending our size range while simultaneously amplifying the features and benefits of our design and innovative fabric formulation. Also contributing to the positive demand trend we saw this quarter was our holistic marketing focus around college basketball and March Madness. We positioned Duluth across multiple points of engagement and interactions to create national awareness and call to action to drive conversion. We combined linear TV placements on sports-heavy channels with streaming content and leveraged sports-related influencers to drive significant brand and product impressions across the media landscape during a three-week period. The results were an increase in web visits, particularly with new, younger customers, a spike in new buyers, and increased sales in key categories. With high levels of awareness generated by the March Madness campaign, we followed up with a strong promotional offering in our first annual Do It All Days event, featuring select seasonal categories. Most of the media spend pivoted to lower funnel conversion tactics to capitalize on the greater awareness and introduce new buyers to Duluth's broader offering. These special priced events are also effective at generating retention with current customers and reactivating lapsed buyers with products that are still seasonally relevant. Our marketing strategy is anchored on a multilevel approach that strives to attract, inform, and convert consumers. When a consumer sees our ads on TV, streaming, or online, they are enticed through paid search or social ads to research the product online, and then they're given a compelling reason to buy with personalized recommendations through email, text, or social media retargeting based on their behaviors and affinities. Enabling this strategy requires an understanding of where consumers notice advertising versus where they take action and what content is needed. Therefore, our investments in consumer segmentation and modernizing the data architecture and analytic capabilities are keys to optimizing the return on our media investment and building a healthy mix of new and retained buyers. Our customers' experience on the Duluth website remains a focus for us. The website Replatforming we undertook last fall is delivering against consumer expectations for a friction-free experience, contributing to a higher conversion rate of over 50 basis points, resulting in positive direct sales growth of nearly 2.5%. We have plans through the balance of the year to continue to enhance our site experience, making shopping with us even easier. For example, we plan to improve our search function, making it more personalized, with advanced result management and product imagery incorporated into the search functionality. We're elevating our ability to tell compelling product stories on the product pages that include expanded product photography and use of video to highlight innovation and durability. Traffic to our retail stores remained challenged during the quarter, down mid-single digits, with net sales down 2% year-over-year. The retail channel contributed to our improving customer metrics by focusing on what's in their control. Tightened selling and service efforts and deeper product knowledge training drove an increase in units per transaction and close to a 300 basis point increase in shopper conversion during the quarter. We continue to gain insight on the store tests initiated last fall with the remodel of our St. Charles, Missouri, store and the 20 stores that were retrofitted to provide greater floor space for the growing women's division. Our Store of the Future design in St. Charles has contributed to that store's positive trend and will serve as a model for future remodels and new store openings. Lastly, we're pleased to report that progress on our Southeast fulfillment center in Adairsville, Georgia, remains on track and on budget. With roughly 500,000 sq ft, this facility will be the largest and most efficient of our fulfillment center sites, with the investment in automation and robotics representing our single largest investment to date. We're excited to ramp up hiring and begin processing orders over the next few months, with the goal of servicing over 50% of direct orders during the upcoming peak season. I'm confident that the long-term health of our brands and business are sound through our actions to invest deeper in our innovation and new product pipeline, while continuing to attract new customers to the brand through cut-through marketing that's informed by rigorous data analytics. Expanding our platform for growth through the investments we're making in logistics, technology, and customer experience is positioning us well to address our customers' hands-on lifestyle needs in work and outdoor adventure. Our priorities are informed by this goal, with the ultimate measure being increased value for all stakeholders involved. I'll turn it over to Heena to provide more details on our first quarter results. Heena? Thanks, Sam. Good morning. For the first quarter, we reported net sales of $123.8 million, up 0.7% compared to $122.9 million last year. Sales in our direct channel were up 2.3% from last year in the quarter, with slightly better trends from direct volume in store markets versus non-store markets. Online conversion was up 50 basis points across both mobile devices and desktop. A combination of enhancements to our website speed and functionality that reduced friction, along with proven marketing conversion tactics, helped increase our channel efficiency. Our retail channel was down 2.1%, with store traffic down 5.5% compared to last year, which is an improvement from the traffic trends in our fourth quarter and an increase in the traffic conversion rate of close to 300 basis points compared to last year. We shared on our last call, we anticipated our mix of full price sales to be below last year, as was the trend in the back half of last year, with customers responding more to items on sale or clearance price. Our average unit retail was down from prior year, but offset by an increase in the units sold. Our actions to improve the inventory flow and pull receipts in earlier than last year positioned us well during the quarter to capture both sales and core categories, as well as make our seasonal offering more impactful with support from key marketing campaigns. As Sam shared, our development of a holistic gardening, landscaping, and planting collection for women and men gained traction earlier in the quarter and continues to build on this anchor category that has many years of future growth. Our first quarter gross profit margin was 53%, compared to 54.6% last year, and reflects the lower mix of full price sales and deeper discounting that impacted the gross margins on items sold on promotion and on clearance. This represents a 2% decline in gross profit dollars from $67.1 million last year to $65.7 million this year. Mix of items sold at clearance price was roughly the same as last year. The degree of discount was greater in order to move through the clearance units and finish the quarter with this bucket of inventory representing a mid-single-digit% of the total, as planned. The lower product gross margin was partially offset by expensing $3.9 million of expedited freight during the first quarter of 2022. Excluding the expedited freight charge, product gross margin was down close to 500 basis points year-over-year. We do expect the contraction in product gross margin to improve in the second quarter as we begin to comp the period last year, when customers' heightened sensitivity to pricing emerged. We estimate that total gross profit margin will be down as much as 50 basis points in the second quarter compared to last year. Turning to expenses, SG&A for the first quarter increased 3.2% to $70.2 million, or 56.7% of sales, compared to $68 million last year, or 55.3% of sales. This included a decrease of $900,000 in advertising and marketing expenses, an increase of $2.6 million in general and administrative expenses, and an increase of $500,000 in selling expenses. Selling expenses as a percentage of net sales increased 40 basis points to 16.2%, compared to 15.8% last year, and was the result of higher outbound shipping costs from a greater volume of direct orders shipped with a lower average order value. We controlled our variable store and fulfillment center labor expenses well during the quarter and kept variable operating costs flat as a percentage of total sales. Advertising and marketing costs were $11.4 million in the quarter, compared to $12.3 million last year. As a percentage of sales, decreased 80 basis points to 9.2%, compared to 10% last year. An increase in national TV and streaming placements to support the March Madness advertising presence was more than offset by a reduction in creative asset development costs, which will shift into later quarters. As Sam noted, the execution of our merchandising and marketing plans are growing customer engagement. Ensuring demand for our assortment remains robust. Our efforts in customer insights and data analytics are enabling a more flexible and nimble marketing strategy that is driving growth in both our buyer file and increases in retention rates, while acquiring a younger customer over time, which is a key strategic objective of our Big Dam Blueprint. General and administrative expenses during the first quarter were $38.8 million, or 31.3% of net sales, compared to $36.2 million, or 29.5% last year. $2.6 million increase from last year represents additional personnel and depreciation expenses, as well as fixed costs for the new Southeast Fulfillment Center, scheduled to go live in the third quarter. We expect slightly higher deleverage in our second quarter for similar reasons. Adjusted EBITDA for the first quarter was $5.3 million, or 4.3% of sales, compared to $7.9 million, or 6.4% of sales last year. Net loss per share was $0.12, versus a loss per share of $0.04 last year, and was in line with our internal expectations. Moving to the balance sheet, we ended the quarter with net working capital of $89 million, including $9 million in cash and zero outstanding on our $200 million line of credit. Our cash balance is down $36 million from the beginning of the quarter, primarily due to the capital outlays associated with the new Southeast Fulfillment Center and investment in automated fulfillment capabilities and warehouse management technology. We're excited to see this project go live in the coming months, as it represents a truly transformational advancement in our supply chain capabilities that moves us forward in meeting customers' growing expectations for online shopping, speed and accuracy, and positions us to gain operational efficiencies as early as our peak selling season this year. Our total capital expenditure plan for the year remains at approximately $55 million, of which nearly half was expended in the first quarter. To confirm our cash flow expectations, we expect the cash from operations will fund the capital expenditures in 2023. We will end the year with positive free cash flow. Our inventory balance ended the quarter down 5% from the same period last year, and is in a healthy position with roughly one third of the mix in seasonal products and two-thirds in year-round products as planned. We are confirming our guidance for fiscal year 2023 with the following outlook: full year net sales of $645 million-$660 million. Gross profit margin for the full year to be flat to up 20 basis points, reflecting continued price and basket sensitivity, with improvements coming in the back half of the year. SG&A expenses as a percentage of net sales to be flat to down 20 basis points as we continue to prudently manage expenses with leverage coming entirely in our fourth quarter. Our interest expense, which includes cost of borrowings on our line of credit, as well as imputed interest finance lease liabilities, are expected to increase $600,000-$1.1 million from last year due to higher interest rates. Depreciation and amortization expense, including software subscription implementation costs, are expected to be roughly $36 million. Full year Adjusted EBITDA of $47 million-$49 million, and EPS of $0.02-$0.08. In closing, we're pleased with the start of 2023 and have confidence in achieving our annual goals, despite what remains a dynamic consumer and macro environment. Our actions to manage cost and inventory flow have positioned us well to weather the environment, while still advancing our strategic objectives of growing customer engagement and investing for future brand platform expansion, setting the foundation to enable extended growth into new channels, brands, and customer adjacencies. With that, we'll open the call for questions. Thank you. We will now begin the Q&A session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Janine Stichter with BTIG. Please go ahead. Hey, good morning. You have Ethan Saghi on for Janine this morning. Thanks for taking our questions. First off, just could you give some more details around what drove the acceleration in the men's business in the first quarter? Then on top of that, if you could give any more details on what you're planning for inventory levels in the second half of the year, that would be super helpful. Hi, Ethan. Thanks. This is Sam. I'll take the first part on the men's business. Yeah, we're pleased with the significant trend improvement from the prior quarter. We are down slightly in men's, but, you know, compared to a, you know, a double-digit decrease ending Q4, really pleased with that. We continue to see pockets of strength as we've gone through the spring season. As I said in my prepared remarks, you know, consumers reacting really well to our spring and summer offer. In particular, we're seeing strength across seasonal fabrications like Dry on the Fly, Armachillo, Breeze Shooter. He's responding really well to these lighter weight technical fabrics and new colors. What's interesting about the men's business is, you know, a big chunk of it is on our year-round goods, and so, you know, we have to continuously innovate and find ways to bring him into the store or online, especially as discretionary spend, you know, is more challenged. Yeah, we're really, we're really pleased with the progress and acceleration of that business, and in particular, the reception that he's showing to the new products that we're introducing. Yeah, Ethan, I can address the inventory question for back half of the year. We are on track with inventory levels coming in below last year. This first quarter, we were below last year, about 5%, and so we're gonna expect that to continue kind of mid-single digits, and then in Q2 and Q3 and Q4, start to decline even more, upwards of 10%-15% below last year at the end of the year. We've been able to adjust that inventory flow given the business trends we're on, and feel good about the supply chain traction that we've got this year. Great. That's super helpful. Then, one last quick one for me. You kind of highlighted, you know, the cautiousness from the consumer. Could you just talk about the cadence of sales you saw in the first quarter and now you're seeing in the second quarter so far, and just talk about, you know, what you're seeing, heightened cautiousness from the consumer, you know, things like that? Sure. You know, the first quarter, for us, started out soft in February, and then began to improve into March and even better in April. We had pretty decent April business that, you know, brought the full quarter to the slight positive overall top line. Throughout that period of time, there was continued, you know, margin pressure and the customers looking for the deal. What really triggered the increase overall was the newness in garden and in the swim collection that we called out and those items that Sam mentioned. Innovation and newness really helped pull the period positively. That's the trend we're on. Great. Thanks so much. Thank you. Thanks, Ethan. Our next question comes from Jonathan Komp with Baird. Please go ahead. Hi, good morning. Thank you. I wanna just follow up on the comments around price sensitivity. Could you expand a little bit where specifically in the store or online you're seeing the sensitivity and the behavior you're observing? Then how do you plan to react to either to the current environment or any changes you anticipate? You know, the sensitivity to pricing, John, is for the most part a little bit across the board. I think men's is feeling it a little bit more, and that's reflective in those results, but that was really a continuation from back half of last year. I don't think we can point to any particular categories other than when an item is really seasonally right. We've got, you know, more impact and better pricing outcome on those categories than those items that are the year round. I'd say when it's seasonal categories, that's where we're seeing the better kind of better promotional impact than in the year-round category. Jonathan, this is Sam. I'd add that, you know, when we look at the underpinnings of our brand, you know, we believe it remains strong. Demand is high. Unit sales growth for the quarter was up over 6% versus a year ago. As I stated in my prepared remarks, you know, our AKHG brand up nearly 43%. Total women's grew 14%. Yeah, while there's a sensitivity to discretionary spend around price and basket size, as Dave said, you know, when the offer is right, you know, we're gonna continue to capture some of that business. Importantly, you know, we've been talking a while now about how we're planning our inventories, and I think this last quarter is the start of, you know, what we intend on doing relative to sales growth and inventory growth. Inventory is being well managed, purposefully planned, you know, down 5% compared to a year ago. We're in a really good, not only good stock position, but the inventory mix is well balanced. As I've stated in the past, you know, we're gonna be competitive, but we're not gonna chase unprofitable sales. You know, at the same time, we got to be mindful of generating top line and flow through, you know, to profits, but we're not gonna do that at the expense of just throwing the baby out with the bathwater, so to speak. We're not under undue pressure because our inventories are bloated. We're in a really well position right now. You know, we're gonna be smart and strategic about how we compete from a price perspective. Okay, great. That's very helpful. Just two last follow-ups. Maybe first, Dave, just want to ask about the full year guidance. If I compare it to fiscal 2019, it looks like revenue up in the 10%-12% range implied by the guidance for the year. You know, first quarter was up, I think, about 4%. Just want to understand your confidence there. Is it based on the April, May trends you're seeing or some other contributors to the business as we go along here? Just, Sam, just, you know, given the success you're talking about on some of the product innovation on the core business, you know, why does it make sense to still consider acquisitions or adding any new complexity into the model? Thank you. Yeah, John, on the sales guidance, I mean, we feel good about that. you know, certainly relative to the prior periods, I'd say the trend that we're on this quarter is, you know, reflective in that guidance, and we'll see that play out each quarter going forward. We're not expecting any big gains in Q2 or 3 or 4. I would expect us to, you know, still be within that range of annual guidance. In terms of the acquisition, I don't know, Sam, you want to touch on that? Yeah, sure. Yeah, good question. You know, for us, you know, as I said and shared in past discussions, acquisitions really are something that we're thinking about along with other opportunities to grow the business, be it wholesale or other distribution models. This is not to suggest that it's something that we are definitively going to do, but it's certainly something that as we think about our strategic framework from an infrastructure perspective, it's with those types of opportunities in mind. We have completed a formal target profile framework work project where we've identified some pretty specific filters that we would use to vet potential acquisitions. I think importantly, Jonathan, you know, the purpose of us sharing that is that part of our infrastructure, enablement strategy is to allow us to enter into new channels of distribution or build or acquire new brands and allow us to have the capabilities to service that. We're not suggesting that, you know, it's here, you know, in the near term, but certainly, it's something that we're thinking about and positioning ourselves, if the time arises and it's a good time for us, to do that. That makes sense. Apologies, I may have misspoke on the comparison. David, just to clarify, it looks like you don't assume a major acceleration or deceleration in the trend, that would get you to the full year guidance. Just so I'm clear, since I may have misspoken. Yeah, that's right. That's right, John. Okay. Thank you very much. Thank you. Thank you. Our next question comes from Jim Duffy with Stifel. Please go ahead. Hi, this is Peter McGoldrick on for Jim. Thanks for taking our questions. I just wanted to start, could you talk about your newer customers, both the younger customers acquired through sports television and the women's consumer? How is their makeup relative to the heritage men's Duluth customer? Are you seeing difference in promotional engagement, basket size, or frequency of purchase? Yeah, Peter, this is Sam. A couple of things I'll say. You know, as we described in our Big Dam Blueprint, our target customer, 40 to 50 versus, you know, our average customer currently is north of 50 years old. You know, we're being purposeful in trying to target that younger consumer. As we stated, you know, we're seeing success there. In fact, nearly half of all of our new customers acquired in Q1, were under the age of 50. Somewhere in our target range, which is, you know, what we want importantly. The size of spend is important there, and just, you know, for our future growth, you know, we need that slightly younger consumer. From a women's perspective, it's interesting because nearly half of our customer count is female. Where our opportunity really was because the percentage of our total women's business was somewhat lower than that customer count, you know, it was clear to us, and we affirmed it through analytics, that she was buying a lot of his clothing. Our intention to focus on her needs, I think was not only a good unlock for us, but is starting to pay dividends today. What we're really seeing is we've always attracted this female consumer. We just didn't necessarily have the breadth of offer to really compel her to shop with us versus other places she shops. As we've continued to invest in her, specifically around how we're speaking to her, what channels of marketing, we're engaging with her, some of the investments we've made in our stores to expand our women's offer, is starting to pay dividends, and we see that in our results. Okay. One question I had on something that wasn't discussed was the wholesale business. Could you give us an update on your wholesale distribution aspirations? How big is this business today in terms of revenue and doors, representing the brand? How do you view this as a volume driver, this year and beyond? Yeah, wholesale for us today is just we're still in a kind of a test and learn phase. You know, it's largely limited to our Tractor Supply partnership. The real intent of that is really as a target for our infrastructure investment strategy. As an example, the Adairsville fulfillment center that will be fully automated allows us to not only distribute direct to consumers that are shopping with us online, but also fulfill our retail store inventory needs. Additionally to that, will allow us to be able to service wholesale accounts. The opportunity, we think, is significant for our brand across wholesale. There's obviously other components that we'll have to invest against, like personnel, you know, a wholesale team. The infrastructure from a strategic perspective, I think has been well documented internally. Again, the purpose of some of these investments we're making in back of the house is really to allow us one day to enable that opportunity. Thank you. I'll pass it on. Thank you very much. Our next question comes from Dylan Carden with William Blair. Please go ahead. Thank you very much. Yeah, just curious, the 50% of units being handled through the direct channel for the holiday period, is that kind of the end target for the sort of total capacity utilization of that center? How does that inform some of your margin outlook for the year? Hey, Dylan, this is Sam. Yeah, it's 50% out of Adairsville or Adairsville will handle 50% of our direct sales demand. That's just as we're ramping up. The fulfillment center actually has a greater capacity than 50%. You know, obviously, as that amount grows, you know, and we reduce some of the more expensive, labor-driven CPUs in the other fulfillment centers, you know, there's an opportunity for us to gain even greater efficiencies. You know, for the most part, that 50-some percent of capacity is of demand is built into our current model, largely it will be reflected in the fourth quarter. Excellent. Correct me if I'm wrong, you've quantified kind of the contribution benefits from doing that. Can you remind me? Yeah. you know, we estimated roughly 20 basis points of leverage in our selling expenses this year, again, back end and fourth-quarter weighted. Next year, you could go 20 to 40 basis points on a full year basis of leverage, once we really have that operating at full capacity and through the full year period. Excellent. The initiatives around kind of marketing efficiency, and even promotions. I get that promotions are kind of comping up against, you know, maybe harder comparisons as far as sort of depth is concerned. You know, where do you feel you are as far as meat on the bone from kind of continuing to drive efficiencies on both of those costs? I'm sorry, Dylan, you talking about the costs of selling costs or? Yeah, I guess I'm talking about, you know, it seems to me there's an ongoing journey in kind of rationalizing promotional activity. As you look to a more normalized period, kind of how you feel about the opportunity to kind of, you know, reduce or make more efficient, rather, some of that activity. On marketing, again, you know, being more targeted bottom funnel, kind of approach, I guess sort of where we are on pulling some of those costs out of the business. Does that make more sense? Yeah. Let me handle the promotional thing. Yeah. Dylan, this is Sam. You know, the sensitivities around price, as I said earlier, has kind of stayed with us through Q1 and what we're seeing into Q2. We had hoped that Q2 would see a little bit of relief after, you know, coming out of a really highly promotional year in 2022, but that's kind of stayed with us. We're now expecting that, you know, we think as you get into Q3 and Q4, you'll start to see a reduction in promotional activity. You know, for us, as I said earlier, you know, inventories have been planned really well. Our team's done a great job of planning our purchases and our receipt flow. While we've got to be promotional to an extent to remain competitive and certainly to address, you know, the consumer headwinds relative to their sensitivities on price, we're certainly not in a position, you know, from a bloated inventory perspective, to have to chase unprofitable sales. You know, we expect that Q2 will remain highly promotional, and we'll continue to see price and basket sensitivities from the consumer. You know, we're gonna be really purposeful and selective in how we cadence our promotional activity. Yeah, Dylan, and I guess to tack on the question around the marketing, and the spend there, you know, we'll see close to 100 basis points of leverage this year on sales that are, you know, flat to slightly up. We're seeing some savings upwards of $5 million-$6 million of less ad spend for the full year. That's because we have just gotten continued efficient processes that allow us to be more nimble and digital in pulling dollars out of upfront linear TV spend. You know, there's been a dramatic shift over the last couple of years on how people are consuming their media, and so much less of it is on the cable TV side. We found efficiencies through digital and through streaming and on that side, and we'll continue to leverage the ad spend accordingly. Dylan, I'll just add one final comment to Dave's response. You know, in addition to leverage, I think the real story is around the efficiency and the effect that our brand marketing team is really having on our spend. You know, it's a complex, holistic effort, you know, from top of the funnel in creating brand awareness all the way through conversion tactics. It's a balance of, you know, long-term brand health and awareness versus immediate tactical conversion tactics that result in near-term sales. You know, our team continues to look at this highly fragmented market and doing a great job of identifying where our consumers are consuming content and engaging with us, and they're allocating dollars. The great news about, you know, digital marketing, while we're still playing in linear television, it's really targeted digital. Our teams are able to flex and change their allocation of spend, you know, almost on a daily basis. They're doing that. Every single day, they're working on pulling different levers as they see different results come across the wire. I think our team is just getting better at understanding our customers, where they, where they consume content. They're just dialing in. At some, you know, some cases, like we saw in March Madness, they're placing big bets that translate to ongoing awareness, also drive opportunities to convert those consumers more near term. Excellent. I don't know how much you're gonna speak to this, just given sort of maybe competitive positioning. As you kind of look at the opportunities across the offering, you know, white space extension, either acquisition or just sort of internal, vertical extension, do you think that there's an opportunity to grow more within kind of the work category and kind of remove maybe some of the seasonality, promotional, need of the brand? Is that one area that you're focused on as far as extension? Yeah, absolutely. I mean, you know, product innovation is, as we've always talked, is, you know, the lifeblood of our business. Acquisition aside, you know, our teams are always thinking about not only new product and new innovations within the categories we currently participate in, but also where are there opportunities within, specifically in Duluth, you know, the workwear space, that we're not either servicing the consumer or have a opportunity to expand that. A great example is, you know, we've talked a lot on this call about the gardening and landscaping category for us. We really believe we're just scratching the surface. The reason this business continues to grow is, you know, we started out with that, kind of that garden bib overall, and that's expanded into a number of different silhouettes. Similarly, in men's, you know, we're starting to grow the men's landscaping part of the business. You know, that's a great example of our team seeing a category that's getting traction, starting to expand it into, you know, other genders or other categories, product categories, that is, within the collection. Yeah, we think that there continues to be really good opportunities within Duluth. From a acquisition perspective, you know, as you and I have talked in the past, you know, it's really about addressing adjacent consumers as expanding our customer base beyond just workwear and outdoor rec, you know, is a big opportunity for our brand. Excellent. Very good. Thank you both. Thank you very much. This concludes our Q&A session, as well as our Call for today. Thank you for attending today's presentation. You may now disconnect.