Good day, and welcome to the Five Below fourth quarter 2023 earnings 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 zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Christiane Pelz, Vice President, Investor Relations and Treasury. Please go ahead. Thank you, Rocco. Good afternoon, everyone, and thanks for joining us today for Five Below's fourth quarter 2023 financial results conference call. On today's call are Joel Anderson, President and Chief Executive Officer, and Kristy Chipman, Chief Financial Officer and Treasurer. After management has made their formal remarks, we will open the call to questions. I need to remind you that certain comments made during this call may constitute forward-looking statements and are made pursuant to and within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in the press release and our SEC filings. The forward-looking statements made today are as of the date of this call, and we do not undertake any obligation to update our forward-looking statements. In this presentation, we will refer to our SG&A expenses. For us, SG&A means selling, general, and administrative expenses, including payroll and other compensation, marketing and advertising expense, depreciation and amortization expense, and other selling and administrative expenses. If you do not have a copy of today's press release, you may obtain one by visiting the investor relations page of our website at fivebelow.com. I will now turn the call over to Joel. Thank you, Christiane, and thanks, everyone, for joining us for our fourth quarter 2023 earnings call. As discussed in early January at the ICR conference, we were pleased with our holiday sales, led by an amazing assortment of Wow products sourced by our passionate merchants. For the full fourth quarter, despite the impact of unfavorable January weather, sales ended at the midpoint of our guidance, and comparable sales were slightly above the high end of guidance. Consistent with the rest of the year, results for both the holiday period and the quarter overall were achieved through comp transaction growth, led by the Five Beyond format stores, which continued to outperform the non-Five Beyond format stores. These results illustrate the effectiveness of our conversion strategy, the relevancy of the extreme value trend-right products, and the fun treasure hunt shopping experience we offer to our customers. Total fourth quarter sales were $1.34 billion, or growth of over 19%, and comparable sales increased 3.1%, driven by outperformance in the candy, style, sports, and seasonal worlds. Despite these strong sales results, earnings per share of $3.65 was at the low end of our internal expectations and can be fully attributed to higher than planned shrink. Our prior expectations assumed that our mitigation efforts would result in a reduction of the shrink rate we observed earlier in the year, versus the consistent rate we noted in our January physical inventories. Kristy will discuss the impact of the higher shrink on our financial results in more detail shortly. Underpinning these results is the progress our team continued to make against our key strategic pillars, which drive our long-term growth. Let me review each one. First, store expansion. As a leading high growth retailer with a stated goal of achieving 3,000+ Five Below locations nationwide by 2030, new store openings remain vital to our growth plan. In 2023, we opened a record 205 new stores, including 64 in the fourth quarter, with a total ending count of 1,544 stores across 43 states. Following the pandemic-driven disruption and delays to our store opening plans, we are firmly back on track, as evidenced by the stepped up store growth in 2023 versus 150 new store openings in 2022. We achieved this growth by playing offense and refocusing resources, while also demonstrating flexibility to pursue leases outside of our traditional approach. We created efficiencies and opportunities across our deal making, legal, new stores, and hiring teams to achieve the growing number of store openings. For example, our streamlined real estate review process reduced the time needed to execute leases. We also proactively secured 23 leases from bankrupt retailers and tested alternative venues for stores such as grocery anchored centers. With this flexibility, we were able to capitalize on various opportunities in very desirable existing centers. We are pleased with the outcomes thus far for the class of 2023. Second, store potential. This pillar is all about increasing average unit volume, or AUVs, including growing our Five Beyond format stores and product offering. We've been focused on converting existing stores to this new format, which highlights the store within a store Five Beyond section. We successfully converted over 450 in fiscal 2023, or more than one a day, with nearly 400 completed in the first half alone. Combined with the 250 converted stores in 2022, we now have approximately 700 stores, or over 50% of our same-store comp base in the Five Beyond format. Our strong sales and transactions in these converted stores demonstrate the appeal of Five Beyond. Feedback from customers on our ability to provide extreme value in new and existing product categories has been very positive. Our third pillar is product and brand strategy. We are a merchandise-driven company, and our buyers scour the globe to bring our customers the value, trends, wow, and newness that keep them coming back to Five Below. In 2023, strong performers included licenses such as Hello Kitty, Disney, and Harry Potter, as well as trends like hydration and collectibles, and the continuation of Squishmallows. In addition, our version of need-based categories like candy, food, beverage, and beauty continue to outperform. The flexibility of our model with our eight worlds is unique and enables our teams to quickly introduce trend-right, relevant products to our customers. As we've seen in the past, our growing scale opens up even more incredible opportunities to source amazing products across categories our customers will love. This year, we reached a key milestone of opening our first global sourcing office in India, shipping and selling products sourced from there for the first time in the fourth quarter. We are excited to work more closely with factories across the region, which increases collaboration, quality, and innovation, and will help get products to the U.S. faster. Brand awareness is the product of our growing scale and improved target marketing. As we continue to open locations in new and existing DMAs and convert more stores to Five Beyond, we are bringing our brand to millions more people each year. Our aided brand awareness is holding steady in the mid-sixties in the majority of our markets, with the exception of the newer markets out west, which are lower. We believe this continues to be an opportunity for us to increase brand awareness in each of our markets. The customer data and analytics team is working closely with our marketing team to ensure we are reaching the right customers through digital marketing to both retain existing customers and attract new audiences. We have improved our ability to meet our customers where they are, whether it be Facebook, Instagram, or Snapchat, among other social media platforms. We are still in the early stages of this journey and see great future potential to both increase brand awareness as well as customer loyalty. The fourth pillar is focused on inventory optimization. Inventory is a key asset we leverage to drive sales and maximize profits while scaling the business as a high-growth retailer. We have already made many improvements to our systems and infrastructure over the last several years, implementing new retail merchandising, inventory ordering, and distribution management platforms, while also increasing ship center capacity and capabilities. We still have a huge opportunity to make further strides, particularly in the movement and levels of inventory. We are now integrating our new capabilities to improve inventory forecasting, ordering, replenishment, and flow, which will improve turns, in-stocks, and end-to-end visibility. These improvements are key to supporting our future high growth. Crew innovation is the fifth pillar. In 2023, we once again conducted the annual Associate Engagement Survey, inviting all Five Below crew members to participate, including full-time and part-time crews across our stores, ship centers, and WowTown. Our engagement and overall scores continued to grow. Our engagement scores landed us in the top quartile of Gallup's overall company database, which includes thousands of companies across multiple industries. We are very proud with the level of engagement of our crew, and we will continue to focus on hiring outstanding crew members. In the fourth quarter alone, we hired a new hiring milestone of 20,000+ seasonal associates. Now, let me turn to 2024. We still expect to open between 225 and 235 new stores and convert approximately 200 stores to end the year with about 70% of our comp stores in the Five Beyond format. We are excited to see the traffic and customers this format is generating. We will leverage our growing scale and sourcing capabilities to deliver even more wow product to our customers.... Our data analytics and marketing teams will continue to refine their marketing and targeting strategies to improve upon an already strong start to utilizing customer data to help inform decision making. We expect inventory to benefit from AI-powered tools and our crew to embrace simpler processes and systems utilizing technology. In summary, we are pleased with the progress we made on our strategic initiatives throughout 2023. While 2024 has started off more slowly than we expected, which we believe is due to the slower start of tax refunds, we are encouraged by the early sales of our Easter seasonal category. We're excited for 2024 and to deliver against our key operational priorities as we advance toward our Triple-Double goals. With that, I'll turn it over to Kristy to review the financials in more detail. Thanks, Joel, and good afternoon, everyone. I will begin my remarks with a review of our fourth quarter and fiscal 2023 results, and then discuss guidance for the first quarter and full year of fiscal 2024. As a reminder, the fourth quarter of 2023 and the fiscal year included an extra week versus 2022 and the upcoming fiscal year, 2024. Total sales in the fourth quarter of 2023 were up $1.34 billion, up 19.1% versus the fourth quarter of 2022, or up 14.9% on a 13-week basis. The 53rd week added sales of approximately $48 million. We opened a record 63 net new stores during the quarter and ended the year opening 204 net new stores to end the year with 1,544 stores. Comparable sales increased 3.1% for the fourth quarter of 2023 versus a 1.9% comp increase in the fourth quarter of 2022. The comp increase for the fourth quarter was driven by a 3.9% increase in comp transactions, partially offset by a 0.8% decrease in comp average ticket. The ticket trends we have seen in recent quarters continued in the fourth quarter, as lower units per transaction were partially offset by higher AUR. Gross profit increased 21.9% to $551.6 million, from $452.4 million reported in the fourth quarter of 2022. Gross margin in Q4 was 41.2%, increasing approximately 90 basis points from 40.3% last year. The increase in gross margin was primarily driven by lower inbound freight, leverage on fixed costs due to the extra week, offset in part by higher shrink, which came in above our expectations. SG&A, as a percentage of sales for the fourth quarter of 2023, increased approximately 100 basis points year-on-year to 21.2%, primarily related to lapping last year's cost management strategies, as well as higher incentive comp versus the prior year. Operating income increased 18.9% to $268.4 million, inclusive of $11.4 million from the extra week. Operating margin of 20.1% was consistent with the fourth quarter of 2022, and the effective tax rate for the fourth quarter of 2023 was 25.8%, compared to 24.8% in the fourth quarter of 2022. Net income for the fourth quarter increased 18% to $202.2 million, or $3.65 per diluted share, from $171.3 million, or $3.07 per diluted share last year. The EPS benefit from the 53rd week was approximately $0.15. For fiscal 2023, total net sales were $3.56 billion, an increase of 15.7% over fiscal 2022. On a 52-week basis, sales increased 14.1% to $3.51 billion. Comparable sales increased 2.8% due to a 3.9% increase in comp transactions, partially offset by an approximate 1% decrease in comp average ticket. Gross profit for the full year increased approximately 16% to $1.27 billion. Gross margin increased by approximately 20 basis points to 35.8%, driven primarily by lower inbound freight, partially offset by higher shrink. SG&A, as a percentage of sales for the year, increased 60 basis points to 25% from 24.4% in 2022, primarily due to lapping last year's cost management strategies and higher incentive compensation this year. Operating income of $385.6 million increased 11.7% in fiscal 2023 compared to last year. Operating margin of 10.8% decreased approximately 40 basis points from last year's operating margin of 11.2%, as lower inbound freight was more than offset by higher shrink in SG&A. As we discussed last quarter, our guidance assumed a shrink headwind of 50-70 basis points in fiscal year 2023, and we expected our margins to delever by approximately 10 basis points at the midpoint versus the prior year due to higher shrink, partially offset by both direct shrink mitigation and other expense reductions. Actual shrink levels for the full year came in at approximately 100 basis points higher than the prior year, before accounting for approximately 30 basis points of true up. Net income was $301.1 million versus $261.5 million in 2022, an increase of 15.1%, and our effective tax rate for the year was 24.9%, compared to 24.7% in 2022. Diluted earnings per share was $5.41 for fiscal 2023, an increase of 15.4% versus $4.69 for fiscal 2022. Diluted earnings per share included a $0.07 benefit from share-based accounting in 2023 and a $0.04 benefit in 2022. We ended the year with approximately $468 million in cash, cash equivalents, short- and long-term investment securities, and no debt. This was an increase of approximately $69 million versus 2022. Our inventory balance at the end of the year was approximately $584.6 million, an increase of approximately 11%, while average inventory per store decreased approximately 4%. With respect to CapEx, we spent $335 million in gross CapEx in fiscal 2023, excluding tenant allowances. This reflected opening 205 new stores, completing over 450 conversions to the new Five Beyond format, and investments in systems and infrastructure, including the beginning of the expansion of two distribution centers. We also made share repurchases of about $80 million or approximately 500,000 shares in 2023. Now, I'd like to turn to our guidance for the full year and first quarter of fiscal 2024. For 2024, sales are expected to be in the range of $3.97 billion-$4.07 billion, an increase of 13.1%-15.9% on a 52-week basis. The comparable sales increase is expected to be flat to 3%. As Joel previously mentioned, we plan to open between 225 and 235 new stores, reflecting unit growth of approximately 15%. For the full year, the midpoint of our guidance assumes a flat operating margin on a 52-week basis. While gross margin is expected to expand, in part due to lapping the one-time shrink true ups from 2023, that expansion is expected to be offset by G&A due to higher depreciation and payroll expenses. Again, we have not assumed any benefit from an improvement in shrink levels in 2024 in this guidance. We are forecasting a slight increase in interest income this year due to higher average invested balances versus 2023, offset partially by the expectation that interest rates will decrease in the back half of the year. We expect a full year effective tax rate of, for 2024 of approximately 25.5%, which does not include any potential impact from share-based accounting. Net income is expected to be in the range of $318 million-$346 million, representing a growth rate of approximately 8.6%-18.2% on a 52-week basis versus 2023. Diluted earnings per share are expected to be in the range of $5.71-$6.22, implying year-on-year growth of 8.6% to 18.3% on a 52-week basis. This guidance does not include any potential impact from share repurchases. We expect approximately $365 million in gross CapEx, excluding the impact of tenant allowances. This reflects the opening of between 225 and 235 new stores, approximately 200 conversions, as well as the completion of the Georgia and Arizona Distribution Center expansions and the start of the expansion at our Indiana Distribution Center, as well as investments in systems and infrastructure. For the first quarter of 2024, net sales are expected to be in the range of $826 million-$846 million, an increase of 13.7% to 16.5%. We plan to open approximately 55-60 new stores in the first quarter this year, as compared to 27 stores opened in the first quarter last year, and we are assuming a first quarter comparable sales increase in the range of flat to 2%. Diluted earnings per share for the first quarter of fiscal 2024 is expected to be in the range of $0.58-$0.69, versus $0.67 in diluted earnings per share in the first quarter of 2023. The first quarter of 2023 had a $0.06 benefit to EPS from share-based accounting, and the potential impact from share-based accounting for 2024 is not included in our guidance. The midpoint of this EPS guidance assumes operating margin deleverage of approximately 80 basis points, entirely driven by higher SG&A, due to higher planned marketing, payroll expenses and deleverage on fixed costs. While shrink will be a headwind in Q1, it will be offset by lower freight and distribution fixed costs. As is our practice, we are not providing quarterly guidance beyond Q1. However, I do want to note that we expect margin improvement in our margin profile as we move into Q2 and Q3. This is because we cycle a marketing shift in Q2 and shrink true ups in Q3, creating easier comparisons in quarters two and three before we face the comparison of the extra week last year and the shorter holiday season. With that, I'd like to turn the call back to Joel. Before turning to questions, I want to reiterate what a great year it was from a sales perspective, and my gratitude to the awesome Five Below crew who helped drive this performance, along with achievement of key strategic initiatives that we just talked about that are critical to the success of our continued long-term growth. While we know shrink is industry-wide and a societal problem that accelerated over the last year, I want to be specific about what we are doing at Five Below regarding the 2023 shrink results that we observed. We tested many shrink mitigation initiatives late in Q3 into Q4, including product-related tests, front-end initiatives, and guard programs. The most significant change we made across most of the chain was to limit the number of self-checkout registers that were open, while positioning an associate up front to further assist customers. In response to the continued elevated shrink we saw during our January physicals, we immediately implemented additional mitigation efforts based on our test learnings from 2023. Specifically, we have now evolved to associate assistant checkout in all of our stores. In addition, in our high shrink stores, the primary option for checkout is more of the traditional over-the-counter associate checkout. We expect to have 75% of our transactions chain-wide, assisted by an associate, with a goal of 100% in our highest shrink, highest risk stores to be fully transacted by an associate. Additionally, in those stores, we're implementing further mitigation efforts, including receipt checking, additional store payroll, and guards. We intend to measure progress as soon as Q2, when we perform a limited number of store counts. While we are confident these measures will help us over time, as Kristy mentioned, we have not included any financial impact for shrink reduction in our 2024 guidance. Lastly, at Five Below, we always play offense and intend to aggressively pursue returning to pre-pandemic levels of shrink or offsetting the impact over the next few years. With that, we will take your questions. Thank you. We will now begin the question- and- answer session. To ask a question, you may press star then the one on your touchtone phone. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then two. We do ask that you please limit yourself to one question. If you have further questions, you may reenter the question queue. At this time, we will pause momentarily to assemble our roster. Today's first question comes from Matthew Boss at JP Morgan. Please go ahead. Great, thanks. So Joel, could you elaborate on the progression of comps that you've seen post-holiday, maybe particularly early spring trends or, or the underlying comp trend as tax refunds have normalized in the past couple weeks? And then, Kristy, I think it would be helpful if you could just walk through the cadence or maybe the bridge between flat to 2% comps in the first quarter relative to your flat to 3% comp guide for the year. Yeah. Thanks, Matt. You know, like, many have seen, February was soft and, and we've seen it improve here in March. What's hard to tease out for the March improvement, is it due to, the tax refunds starting to normalize, although they are still about 10% behind, or is it due to the early Easter versus last year? And therefore, that's, what we're-- we won't know fully until we get through, the balance of, last year's Easter cycling. But we have definitely seen a, a nice improvement from what we saw in February, and then the first quarter cadence. Yeah, so you know, flat to 2% for the quarter versus the flat to 3% for the full year is what I believe you were asking. So, you know, basically, we are focused on the midpoint for the full year being, you know, between that flat to 3%, with the slower start to the first quarter being really the only change that we have really focused on, with Q2 and Q3 still being similar to the trends we indicated and the closer to 3% comp for those two quarters. Then as you get into the holiday with the 5 fewer shopping days, you know, that will slow down from the 3% down to about 1%. Thanks, Matt. Thank you. Our next question today comes from Seth Sigman with Barclays. Please go ahead. Hey, everyone. Thanks for taking the question. I wanted to follow up on shrink and just make sure we have the message right. So it sounds like it didn't get better as you were expecting. Is the message that it's not getting worse? Do you have a good feel for that and whether, you know, it's kind of stabilized at this level? And then if you just elaborate on what is actually reflected in the guidance for shrink, is it still a year-over-year headwind, or is just a neutral, not assuming an improvement? Just help us understand that. Thanks so much. Yeah, thanks, Seth. It is a really good question, and let me try and answer that as simply as possible. You're right. Our prior guidance assumes shrink mitigation efforts would reduce our overall shrink expense. However, what we did see is that we were successful in stopping the absolute rate from growing, and what we saw in January was roughly the same rate we saw back last August, September. So, that seems to point towards the, you know, we roughly are at the high water mark. As far as our guidance goes, it reflects the same exit rates as what we saw here in January. So it does not reflect there being any improvement in shrink, but it also doesn't require us to get any better in order to fulfill our guidance, overall. Thanks, Seth. Thank you. Our next question today comes from Michael Lasser with UBS. Please go ahead. Good evening. Thank you so much for taking my question. Joe, if we assume higher shrink, higher labor expense are simply now a cost of doing business, how does this inform the margin potential for Five Below, especially over the next couple of years, especially as we consider that this, shrink experience this year might be, more temporary in nature? And if that, my second part of that question is, if your shrink mitigation, efforts do bear fruit, should we think about the potential for 30-50 basis points of upside to your margins for this year, just given that that would put you back into the range of what you had expected, like 50-70 basis points of a drag? Thank you. Yeah, Michael, I think it's a fair question to ask, and I think, you know, as far as the long term goes, you know, while we're not giving guidance on the long term today, we're also not changing our outlook on the long term. And as I said in my prepared remarks towards the end, it is still our expectation to either mitigate the shrink headwinds, you know, or you know, take care of that with, you know, other initiatives like on margin price. We and certainly given what we saw in Q3 and Q4, I don't think it would be prudent on our part to give any of you a guidance that requires an improvement in shrink. But I think it's fair to say, Michael, as we begin to see improvement, that'll certainly turn into a tailwind. What's unique about shrink is when it's going the wrong way, you always have that true up, and that's why the fourth quarter felt, you know, extra challenging. But when it goes the right way, you get the true up to your benefit, but that wouldn't come until later in the year. We are gonna do physical inventories earlier than we ever have, beginning in Q2, and, you know, we'll do that in Q3, as well as we traditionally do in Q4. Thank you. And our next question today comes from Scot Ciccarelli with Truist. Please go ahead. Good morning, guys. Unfortunately, another shrink-related question. So was there an additional true-up in the fourth quarter? I guess I was a little confused on that. And then a little bit of a follow-up on Michael's question. You know, with some of your shrink mitigation efforts, are they adding to SG&A pressures, like, to the point that you have more associates, you have more, let's call it security at the front end? You know, inherently, that's going to cost extra dollars. So are we really just seeing a movement within the P&L, as you wind up trying to tackle the shrink issue? Thanks. Yeah, so I'll take the first part, and then Joe can address the operational issues and the associated costs with that. So from a Q4 perspective, you know, what we had told you and you should have expected from us in the guide was about a 60 basis point pressure or headwind that at the midpoint, right? We told you 50-70. That came in at about 60 basis points worse than we thought, and a portion of that was a true-up, because as you can imagine, we had some estimates in there for stores that counted, that we needed to make sure that we were fully accrued for at the end of the year at this new rate that we're seeing right now, so that we didn't feel like we were exposed as we entered 2024. Yeah. And so on the, you know, the SG&A challenges, Scot, you know, at the end of the day, it doesn't do us much good at the operating margin level if we have to take up labor by 30 points just to reduce shrink by 30. So it's a little bit of a balancing act of, you know, how much labor can you put in to reduce shrink faster than that? Kristy certainly called out that, you know, we expect some payroll increases, so we have started to put some payroll in there. And because shrink is a lagging indicator, not a leading indicator, you know, the benefits from shrink will follow, but maybe not necessarily at the same time. But overall, our net goal is to increase SG&A pressures slower than we expect to see rate declines in shrink. Hey, I just want to follow back up because I think you asked about the quarter specifically, and I answered you based on full year. So let me backtrack a minute. We told you 25-40 basis points for the quarter. It actually came in about 125 basis points worse than that, which did include the true-up that I mentioned. Very good. Thanks, Scot. Thank you. Our next question today comes from John Heinbockel with Guggenheim. Please go ahead. So I'm gonna beat the shrink horse again. But Joel or Kristy, if you think about, are we up about 150, 160 basis points from pre-2019 or pre-2020 rather? You know, is the idea that most of that can be recaptured in a couple-year period? And then are you seeing is shrink any different by price point or world? Curious if there's any difference there. Yeah. Hey, and look, I, I think, we expected several questions on shrink, and we want to help clarify it with everybody, 'cause there is a lot to unpack here when you consider multiple quarters, the full year, guidance, you know, the impact required of accounting true-ups, accruals, et cetera, et cetera, John. So I think it's, it's pretty good. Your first part of that, though, was versus 2020, and, and that's where the confusion starts. You said 150. Some of that 150 is, is true-ups and that type of thing. But round numbers versus pre-COVID, so let's call it 2019, two thousand nineteen, we're up about 100 basis points. And the second part of your, your question was that, you know, do we expect to recapture that? I called that out in my prepared remarks, and we still expect to play offense and aggressively pursue returning to pre-pandemic levels of shrink or offsetting that impact with other measures, and I called out specifically price. Finally, it was about, are we seeing it in different categories? Certain categories have always been higher shrink than other categories. I don't think relative to their past trends, everything's kind of moving in the same relative range. What we do know is that in higher crime rate index stores, the shrink is higher than lower crime index stores, and we know that our self-checkout stores are higher than non-self-checkout stores. So the opportunity really rests immediately in tightening up our policies and how we operate in our high crime index self-checkout stores. So John, hopefully that gives you some more color on what's going on with shrink. Thank you. Our next question today comes from Kate McShane with Goldman Sachs. Please go ahead. Hi, thanks for taking our question. I'm gonna switch the topic a little bit and just go to just inventory. Just with regards to how comfortable you are with your current inventory levels and in stocks, and any product categories where you're still trying to figure things out for 2024 when it comes to inventory. Yeah, it's a great question, and I think in general, what I would say to all of you is that, you know, shrink aside, we really had a great year in 2023. Our Q4 success at the department level is probably the most departments we've ever had comp positive since I've been here. So it really was a broad-based win for the merchandising groups. And as it relates specifically to inventory, Kate, you know, this is something that since Ken took on the new role as COO, an area that he has been very focused on. And while we've continued to make improvements there, Ken would say we still got a long ways to go. But I'll tell you, relative to where we were two years ago with the supply chain, I felt really very positive about our inventory levels. They continue to get better quarter- over- quarter, and there's no glaring areas that we're overly concerned about. It just keeps getting better. Thanks, Kate. Thank you. Our next question today comes from Chuck Grom with Gordon Haskett. Please go ahead. Hey, everyone. Joel, your new store productivity dropped below 80%, for the second consecutive quarter here. So I was hoping you could talk about the timing of new stores in the quarter may have been impacted, the NSP, you know, how are they performing? Or do you think that the more limited self-checkout could be impacting things? Just wanted to see if we could talk about new store productivity for a few minutes. Thanks. Yeah, no, it's a good question, and, Kristy, correct me if I'm wrong, but I think it adjusted for Q4, it moves up to the mid-eighties. Is that right? And overall, Chuck, there's really no concerns on our part for new store productivity. Sorry, that's for the year. It moves up to mid-eighties on the full year. I think Q4 was this is the most amount of stores we've ever opened in Q4, and that played somewhat into how the calculation is on NSP. But overall, having a new store productivity in the mid-eighties for the year. And then if you look at our guide for this year, you know, at the midpoint, it's also, you know, right in the mid-eighties. So both the exit rate of 23 and the guide for 2024, you know, we're sitting in the mid-80s. I think 2019, we're upper 80s. And then, you know, earlier years were in the 90s, but that was more driven to, you know, we had massive marketing campaigns when we opened new stores. So this—we've been consistently now settling down into the mid-80s and feel pretty good about that number, Chuck. Yeah, and I think I would just add that in the fourth quarter, over the past several years, we have seen somewhat of a decline in NSP, but it rebounds in the, you know, first quarter of the following year. So there is something to the seasonality, there. Well, any new stores we open in fourth quarter, we don't give them holiday product as an example, so, 'cause the timing when they open is so late. And I'll remind everybody, you know, our long-term goal is to get back to not having a large wave of fourth quarter openings. And this year was the latest. We opened all the way up into, like, second or third week of December, so a lot of change. But no, overall, Chuck, no, no big concerns on NSPs. Thank you. And our next question today comes from Edward Kelly at Wells Fargo. Please go ahead. Hi, good morning, everyone. Joel, I apologize, but I want to ask one more follow-up on shrink. Could you just talk about what you think drove the negative surprise on shrink? And I'm curious about this because I'm wondering if the reopen of self-checkout during holiday had anything to do with it, and then the changes that you're making to self-checkout for 2024, are they gonna apply to holiday as well? And obviously, that helps you with throughput, right? So, you know, could there be some potential sales impact? Thank you. Yeah. Yeah, so hey, look, Ed, we, we own this one in terms of, probably being a little too optimistic on how easy it would be to turn shrink around. And at the same time, you know, it, it happened right going into the fourth quarter, and it, you know, it's really hard to mobilize a whole different workforce plan during, during Q4. And you're, you're absolutely right that one of the benefits of self-checkout has been, that we no longer have lines in our stores in Q4. And, you know, you've been with us a long time, and you remember those days. As we turn towards 2024, 2024 here, we certainly have have immediately gone to an associate checkout at, at the, at the register. And what I mean by that specifically is that, our customers should experience an associate scanning the items, and then a customer finishing the transaction, whether they're paying cash or, or with a credit card. That is what we believe is a nice balance between we're ensuring everything is being scanned, we're providing a heightened level of customer experience, and then the associate can move on to the next item or next customer while the transaction piece is done. So it kind of allows for a 2-to-1. And we plan to continue that into the holiday, and it'll probably be focused at holiday, realistically, in our high shrink markets and our high self-checkout shrink stores. So we don't need to necessarily peanut butter at holiday, if we can effectively make some significant changes here during the first 10 months of the year. Thanks, Ed. Thank you. Our next question today comes from Michael Montani with Evercore ISI. Please go ahead. Hey there. Just wanted to take a slightly different angle here and discuss wages and freight. Just wondering if you could give a sense of how much wage inflation you faced in 2023 and what the 2024 outlook is. And then on freight, you know, do you see additional kind of tens of basis points of tailwind for this year? You know, which is why gross margins would be up. Any color on those two would be great. Yeah, the large benefit of freight this year will be in Q1, and then begin to moderate as we move through the year, 'cause we'll lap the lower rates from last year. So that's how we see freight. Remind everybody, we don't play in the spot market. Our rates are already locked up through spring of next year, and so we have a pretty good sense of where freight is gonna be for the year, and there should be no surprises there. And the second part was on payroll? Wages. You know, there wasn't much in there for last year, and in fact, I'll tell you, George and the store operators have done a great job over time of mitigating wage inflation with productivity gains in the stores, and those two have continued to balance out for the last four or five years. We are making some additional wage investment this year, and that's to really focus on improving shrink. Thanks, Michael. Thank you. Our next question today comes from David Bellinger with Mizuho. Please go ahead. Hey, guys. Thanks for taking the question. I want to ask on the implied Q4 comp. Kristy, I think you talked about being up +1%, even though that's on your toughest comparison for the year. So just help us get through that change in demand. Is there anything that you see changing after you get through this tax refund impact at Q1? Is there some inflection baked into the guide? Or maybe just frame up, you know, how are you thinking about the specific impact from that 5 less selling day period between Thanksgiving and Christmas? Is there any way to specifically focus on that? Yeah, David, let me take that. And Kristy, if I miss anything, jump in. Look, nothing has really changed from what we said. I'm talking about the top line here. What we said to you at ICR, in that, you know, our long-term algorithm is 2-4 comp, and we expected 2024 to be on the low end of that, largely driven by the 5 less days at holiday. David, if you recall, 2019, we misguided there, and we really didn't effectively account for the 5 less days, which is the sister year from when that happened. So, you know, if you look at where we're where Kristy guided, the 0-3, you know, that's focused on the midpoint. It's about 1.5, just slightly below what we said at, you know, the 2%, and that's almost entirely driven by, you know, what we've seen here in Q1, with tax refunds and have not seen any change in how we're thinking about the outlook for the rest of the year. And we'll move forward from there, Dave. Oh, and you got it. Thank you. Our next question today comes from Jeremy Hamblin with Craig-Hallum Capital Group. Please go ahead. Thanks for taking the question. I wanted to come back to the holiday period, you know, for a second, and, you know, just ask in terms of, you know, I thought the throughput question was an appropriate one. You do have that compressed, you know, five days less between Thanksgiving and Christmas this year. So I wanted to get a sense for, you know, A, what you thought the potential impact might be to comps on that. And then secondly, you know, what the—if you're not able to see meaningful progress, on, you know, shrink mitigation efforts, what you think the particular impact might be from an SG&A perspective for staffing, during that time? Yeah, look, Jeremy, we're not at the point of giving specific guidance on individual quarters at this point in time. But, you know, we have said in the past that, you know, each day, incremental day or each day going backwards is somewhere between 20 and 50 basis points impact. So, you know, if you just take the midpoint of that, you know, you're talking about a 150 basis point impact. And so I think, you know, Q4, that's, you know, in the, you know, you know, 0 to 2, 0 to 1 range is probably the right way to think about it. But let us get closer to the holiday, too early to think about SG&A changes. We are moved very fast since January in terms of really tightening up our self-checkout. In fact, converting it from self-checkout to associate checkout. And I would expect any SG&A gain, any SG&A increases to be offset by shrink impact. Kristy, anything different? Nope. Good. Thanks, Jeremy. Our next question today comes from Anthony Chukumba with Loop Capital. Please go ahead. Thanks for taking my question. My question was actually on, on Five Beyond, in terms of how did it perform during the fourth quarter relative to your expectations, and you know, what was the comp lift from Five Beyond in the fourth quarter? Thank you. Yeah, it looks, it's, and when you say Five Beyond, we specifically, all my comments here are in the Five Beyond format stores, because I think that's the better way to look at it. And what we saw, consistent with the other three quarters, is we're seeing a mid-single-digit lift in stores that we convert, and that continues throughout their first year. The fourth quarter was no different than that. Those stores that were converted were roughly in that mid-single digit range. And then in year two, you know, we expect them to comp right in line with the chain comp, and that also continued in Q4 as well. Thanks, Anthony. Thank you. Our next question today comes from Paul Lejuez with Citi. Please go ahead. Hey, thanks, guys. Can you just be a little bit more specific on the shrink drag, you know, by quarter? I think you'll still see a drag based on your comments about the exit rate from January, and then what you're expecting, when you expect that to turn to a tailwind. Obviously, you go up against the accrual in 4Q. So just if you could give a little bit more detail by quarter. And then second, could you talk about the average ticket in the Five Beyond stores versus the non-Five Beyond stores? And what do you assume for comps in F 2024 in both Five Beyond versus non-Five Beyond? Thanks. Yeah, so let me try it by focusing on gross margin for Q4 as we for the next this year as we move through the quarters. So I let you know that operating margin was gonna delever in Q1 by about 80 basis points. As you go into Q2 and Q3, you should start to see operating margin leverage. As I mentioned, in Q2, you know, you obviously do have some of the lapping of shrink from a headwind perspective, but you also have the ongoing freight benefits that Joel mentioned. And then, as you get into Q3 specifically, if you recall, the time when we took the large true-up related to shrink, so that will come back as a positive and improve gross margins and operating margin year-on-year. Then when you get into Q4, you know, we'll start to see the deleverage from the lower sales that exist on the overall op margin. But gross margins in Q4 are relatively flat. But gross margins, right? Yeah. And Paul, on ticket, just recall, we don't see a big difference in ticket between Five Beyond format stores and non-Five Beyond stores. The increase is coming in transactions. And that's something we've talked about a couple times. You know, honestly, when we first started rolling this out a couple of years ago, that even surprised us. But what we're seeing is, Five Beyond is giving the customer another reason to come to Five Below, and so they're relatively spending the same amount in a transaction, but they're coming more often. So we're seeing transactions increase and tickets relatively flat overall. A person that puts a Five Beyond item in the store, that transaction's about double a non-Five Beyond transaction. That's been pretty consistent for the last two years, ever since we started converting the stores. Thanks, Paul. Thank you. Our next question today comes from Joe Feldman with Telsey Advisory Group. Please go ahead. Yeah. Hey, thanks for taking the question, guys. I'm gonna also change topics here a little bit. On the real estate process, you know, and you guys talked about streamlining the review process. I'm wondering if you could share a little more color there. Like, how do you avoid the mistakes with a more streamlined process, when you're opening more stores than you did in the prior years? 225 to 235 is a lot of stores, so, you know, don't want to see the bad ones, basically. Thanks. Yeah. Yeah, and Joe, it's a good question, a fair question. You know, we've been on this streamlined process for quite some time. You know, everything from, you know, we're using Placer.ai now to help us evaluate stores, which allows us to do it quicker. The legal team has streamlined, with some AI advantages, how quickly they're able to approve leases. All those add up to weeks, not days, and so it's less about the approval at the REC Committee level, and it's more about the individual components that get it to the REC Committee and then leases signed after the REC Committee. And this has been going on for a number of years with extreme focus when we had the setback from the supply chain crisis, which, you know, impact real estate as well. And that's when we really worked to kind of perfect all these. But, Joe, we've continued to see consistency in our stores. I think Chuck asked earlier about NSPs, you know, the fact that continues in the mid-80s. You know, again, looking at the full year, kind of sends some leading indicators that we continue to approve the right, right level of stores. But great question, and, as we continue to move up, we gotta keep that due diligence going. Thanks, Joe. The next question comes from Andrew Chasanoff with Oppenheimer. Please go ahead. Hi, thank you for taking my question. My question is just gonna be in terms of current demand trends that you're seeing. So we've extrapolated the 53rd week, Q4 was up about 15%, and I think guidance at the midpoint is calling for about the same top-line strength. And I know you called out this delayed tax refund season. So I guess if you could maybe just expand on what you're seeing within the consumer demands, because obviously you're still calling for pretty strong Q1 despite this tax refund dynamic you're seeing. Yeah, I mean, I think that just shows you that we really, the only change we've seen in consumer behavior overall has been the due to the tax refund that really impacted, you know, the month of February, and we're starting to see a catch-up here in March. But, overall, you know, I would attribute that to, you know, our customer sees the value in our stores. They continue to come to us to solve needs that they have. And we've also seen the last place when a consumer feels squeezed is cutting out on their kids. And so it's great to see the families in there. These next two weeks, really kicking off with this Friday, will be a big surge in business for Easter. And that tradition, we're, you know, given the early read on our Easter product, seems to be very positive. And so I think the only thing we've seen different from our end has been the impact that tax refunds had. Thanks, Andrew. Thank you. This concludes our question- and- answer session. I'd like to turn the conference back over to Joel Anderson for closing remarks. Hey, thanks, everybody, for getting on for our Q4 call. Obviously, a lot of questions about shrink and we're happy to continue that dialogue with you. But shrink aside, as I said earlier, really strong quarter for us. We're really pleased with the progress we've made on our long-term goals in 2023. That should continue to drive success in 2024 and beyond. Thanks, and have a great day. Thank you. The conference is now concluded. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.