Greetings! Welcome to Hibbett, Inc.'s Q1's earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to Gavin Bell, Vice President of Investor Relations. Thank you. You may begin. Thank you, and good morning. Please note that we have prepared a slide deck that we will refer to during our prepared remarks. The slide deck is available on hibbett.com via the Investor Relations link found at the bottom of the homepage, or at investors.hibbett.com and under the News and Events section. These materials may help you follow along with our discussion this morning. Before we begin, I'd like to remind everyone that some of management's comments during this conference call are forward-looking statements. These statements, which reflect the company's current views with respect to future events and financial performance, are made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and are subject to uncertainties and risks. It should be noted that the company's future results may differ material from those anticipated and discussed in the forward-looking statements. Some of the factors that could cause or contribute to such differences have been described in the news release issued this morning and are noted on slide two of the earnings presentation and the company's annual report on Form 10-K and in other filings with the Securities and Exchange Commission. We refer you to those sources for more information. Also, to the extent non-GAAP financial measures are discussed on this call, you may find a reconciliation to the most directly comparable GAAP measures on our website. Lastly, I'd like to point out that management's remarks during the conference call are based on information and understandings believed accurate as of today's date, May 26th, 2023. Because of the time sensitive nature of this information, it is the policy of Hibbett to limit the archive replay of this conference call webcast to a period of 30 days. The participants on this call are Mike Longo, President and Chief Executive Officer, Jared Briskin, Executive Vice President, Merchandising, Bob Volk, Senior Vice President and Chief Financial Officer, Bill Quinn, Senior Vice President of Marketing and Digital, and Ben Knighten, Senior Vice President of Operations. I'll now turn the call over to Mike Longo. Thank you, Gavin. Good morning, welcome to the Hibbett Q1 earnings call. For those of you following along, I'm on slide three. Our financial and operating results for the Q1 reflect the challenging retail environment. Our consumers face difficulties ranging from inflation to fears over job loss. This and other factors have combined to lower consumer sentiment, and we think this adversely affects sales. The important tax season in the Q1 was negatively affected by lower tax returns versus last year and caused sales to come in lower than our expectations. Having said that, we still achieved a 7.4% year-over-year sales growth and a 4.1% comp sales increase. We believe these sales results an increased share for Hibbett and are a reason for confidence in our business model. Also, our strong relationships with our brand partners give us the ability and confidence to continue to execute our store opening plan. We continue to invest in our already best-in-class consumer experience and business model while still taking costs out of the business. In the Q1, we managed to produce leverage on SG&A of 140 basis points versus last year, and all the while, we believe we increased our market share. We believe we have a proven operating model that will support our business regardless of market conditions, and we remain committed to executing our strategy of focusing on our distinct images, namely, our customer service, a compelling product selection, best-in-class omni-channel experience, and our positioning in underserved markets. In summary, we believe Hibbett is well positioned for the short and long term to continue to grow and increase market share. Before turning the call over to Jared, I'd like to thank our approximately 11,000 team members across the organization, whether they're working in our stores or on our omni-channel platform, our logistics facilities, or our store support center. They're the face of Hibbett, provide a consistent, superior service that's synonymous with our brand. I'll now turn it over to Jared. Thank you, Mike Longo. Good morning. The Q1 started strong with double-digit gains in the first half of the quarter. As March progressed, we began to see some deceleration in our comp performance, and this deceleration continued to pressure the business into April, leading to our total comp of just over 4%. Footwear was our strongest category during the quarter, growing high teens versus the prior year. Our strong footwear results continue to be driven by several solid launches, as well as strength across basketball, lifestyle, and casual categories. In addition, we saw an improving trend in our running business. Apparel and team sports were both negative for the quarter, with apparel down in the low 20s. Approximately half of the decline in apparel came from winter carryover in the prior year that we did not anniversary. This was planned in order to ensure that our inventory was seasonally appropriate now that the supply chain is more predictable. Sales of spring and summer apparel started the season slowly and remain under pressure due to the consumer environment. Specific to footwear and apparel, men's, women's, and kids' all comped positively, driven by our footwear results. Men's and women's both were up in the low single digits. Kids' was up in the high teens. Slowdown in sales in the back half of the quarter, the continued promotional environment, and a much more selective consumer, prompted additional markdowns and promotional activity during the back half of the quarter. We expect this to continue at least through the Q3 as we work to reduce our inventory. These promotional efforts, as well as support from our key brand partners, will help us to achieve our goals for inventory reduction. Year-over-year inventory compares will still be volatile due to the challenges in the supply chain during fiscal 2023, our expectations remain the same for our inventory levels. We will have growth in the first half of the year and year-over-year declines in the second half of the year. I will now hand it over to Bob to cover our financial results. Thank you, Jared, and good morning. Please refer to slide five. As a reminder, all Q1 results are reported on a consolidated basis that includes both the Hibbett and City Gear brands. Total net sales for the Q1 of fiscal 2024 increased 7.4% to $455.5 million, from $424.1 million in the Q1 of fiscal 2023. Overall, comp sales increased 4.1% versus the prior year Q1. Brick-and-mortar comp sales were up 4.7% compared to the prior year's Q1, while e-commerce sales increased 0.6% compared to the prior year. E-commerce sales accounted for 13.7% of net sales during the current quarter, compared to 14.6% in the Q1 of last year. Gross margin was 33.7% of net sales for the Q1 of fiscal 2024, compared with 37% in the Q1 of the prior year. This approximate 330 basis point decline was driven primarily by lower average product margin. Average product margin in the Q1 of fiscal 2024 was approximately 375 basis points lower than the prior year Q1, due to higher promotional activity across both footwear and apparel. Store occupancy was relatively flat as a% of sales year-over-year, while both freight and logistics operations were favorable as a% of net sales. Store operating, selling, and administrative expenses were 21.1% of net sales for the Q1, compared with 22.5% of net sales for the Q1 last year. This approximate 140 basis point improvement is primarily the result of expense reduction initiatives, lower discretionary advertising spend, and reduced incentive compensation expense, partially offset by wage inflation. Depreciation amortization in the Q1 of fiscal 2024 increased approximately $1.2 million in comparison to the same period last year, reflecting increased capital investment on store development and infrastructure projects. We generated $45.9 million of operating income, or 10.1% of net sales in the Q1, compared to $50.7 million, or 12% of net sales in the prior year's Q1. Diluted earnings per share were $2.74 for this year, compared to $2.89 per share in the prior year Q1. We ended the Q1 of fiscal 2024 with $26.9 million of available cash and cash equivalents on our unaudited, condensed, consolidated balance sheet, and $103.6 million of debt outstanding on our $160 million line of credit. Net inventory at the end of the Q1 was $438 million, a 39.1% increase from the Q1 of fiscal 2023, and up 4.1% from the beginning of the year. Please note that the majority of this increase year-over-year is due to inflation and product mix. Inventory units are up approximately 8%, and we have a heavier mix of footwear, which carries a higher average unit cost. Capital expenditures during the Q1 were $14.2 million, with over 60% of that focused on store development projects, including new stores, remodels, and relocations. We opened 10 net new stores in the Q1, bringing the store base to 1,143 in 36 states. We also completed 16 store remodels and three relocations. The remainder of our capital expenditures for the quarter were related to technology and infrastructure projects. We bought back nearly 160,000 shares under our share repurchase plan in the Q1 at a total cost of $10.2 million. We also paid a recurring quarterly dividend in the amount of $0.25 per eligible share, for a total outflow of $3.2 million. I'll now turn the call over to Bill Quinn to discuss the latest consumer insights. Thank you, Bob. Despite a challenging retail environment and pervasive inflationary impacts, our customers continued to increase their shopping with us during the Q1. In Q1, our loyalty sales were up low double digits. This growth was driven by increased sales from our existing customers. Our total customer base grew, increased their average purchase, and made more visits. However, we have started to see a slowdown in new customer shopping, and our consumer research indicates that there will be ongoing challenges to discretionary spend this year. In particular, customers have grown more cautious as concerns over inflation continue and also fears over job loss are rising. Turning to our e-commerce business. In Q1, e-commerce sales were essentially flat versus last year. The primary headwinds included the macroeconomic environment, a highly promotional online environment, and greater inventory availability in stores, which drove more in-store shopping. These factors led to decreases in traffic and conversion, which were offset by higher average purchases. As always, we remain focused on the long term and providing the best possible customer experience for online and Omni-channel shopping. To that end, we have many planned investments in improving our loyalty program, our core customer e-commerce experience, and further evolving our omni-channel offerings. We believe these efforts will continue to attract and retain customers. I will now turn the call back to Bob to discuss our guidance. The business outlook for the remainder of fiscal 2024 continues to be complex and difficult to forecast. There are several significant headwinds to consider as we proceed through the year. Inflation has a broad impact, not only on consumer sentiment and spending patterns, but also contributes to operating cost increases in the form of wages and prices paid for goods and services. Higher interest rates have driven up the cost of borrowing for us, but may also be affecting discretionary purchase decisions for those consumers with variable rate loans and credit card debt. We also expect the heavier promotional environment we have seen over the last two quarters to continue for the near term. In summary, economic uncertainty, coupled with a more cautious and increasingly stressed consumer, has resulted in lower expectations for the remainder of this fiscal year. As noted previously, we still have confidence in our business model and our ability to attract new customers while providing exceptional customer service and product assortment to our existing customers. We continue to make investments in the most critical elements of our business: new store development, the consumer experience, and operational efficiencies. Our inventory mix and assortments have become healthier over the last several months, we have made progress on reducing the ongoing operational costs of the organization. I'll turn to slide seven, that summarizes our guidance. Net sales for the full year, including the impact of the 53rd week, are anticipated to be flat to up approximately 2% compared to our fiscal 2023 results. The 53rd week is still expected to be approximately 1% of full-year sales. The breakdown of sales by quarter remains unchanged from the previous guidance provided. We believe that the Q1 represented approximately 26% of full year sales, with approximately 22% in the Q2, approximately 24% in the Q3, and approximately 28% in the Q4, including the 53rd week. Comparable sales are now expected to decline in the low single-digit range for the full year. Full year brick-and-mortar comparable sales and full year e-commerce revenue are also anticipated to both be in the negative low single-digit range. Net new store growth remains unchanged, with an expectation to open between 40 and 50 units. We anticipate the aggressive promotional environment to continue in the near term with a heavier impact on the Q2. The lower forecasted annual sales volume will also create additional deleverage of store occupancy costs. As a result, the revised projected full year gross margin rate is approximately 33.9%-34.0% of net sales. We expect the Q2 will yield the lowest gross margin results of the year, with improvement anticipated in the back half of the year. Although we were able to generate SG&A leverage in the Q1 of this year compared to last year, and are making good progress on cost savings initiatives, we anticipate the quarterly comparisons to the prior year to be more difficult due to fixed cost deleverage, resulting from lower sales expectations, as well as ongoing inflationary pressure in wages and other goods and services. SG&A, as a% of net sales, is now expected to be in the range of approximately 23.3%-23.5% of net sales. The Q2 will be more heavily impacted, as it's expected to be the lowest sales quarter of the year. Due to the factors mentioned previously, operating margin for the year is now expected to be in the range of 7.4% - 7.8% of net sales. Operating profit as a% of net sales in the Q1 and Q4 benefit from higher sales volume, although the 53rd week is considered near breakeven due to the low sales volume in that extra week. We expect that operating profit as a% of sales will be modestly higher in the second half of the year compared to the first half of the year. We still expect to carry debt for a majority of the year. We project borrowings will be higher in the first half of the year, as current inventory levels are not expected to decline significantly until after the back-to-school season. The lower full year sales guidance is anticipated to result in a higher interest expense than communicated in our previous guidance. Interest expense for the full year is now projected to be approximately 40 - 45 basis points of net sales, peaking in the Q2 and declining as the year progresses. Diluted earnings per share are anticipated to be in the range of $7.00-$7.75, using an estimated full year tax rate of approximately 23.5%-23.7%, and an estimated year-end weighted average diluted share count of approximately 12.8 million. We still project capital expenditures in the range of $60 million-$70 million, with the largest allocation focused on new store growth, remodels, relocations, new store signage, and improving the consumer experience. Our capital allocation strategy continues to include share repurchases and recurring quarterly dividends, in addition to the capital expenditures noted above. That concludes our prepared remarks. Operator, please open the line for questions. Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Mitch Kummetz with Seaport Research. Please proceed. Yes, thanks for taking my questions. I guess, Mike, just to start on the quarter, can you kind of walk us through metrics like traffic ticket conversion? I'm curious. It sounds like the back half of the quarter was tougher than the first half. I'm curious how some of those metrics might have evolved as the quarter transpired. Sure. Thanks for the question. Thanks for being on today. In the beginning of the quarter, we were seeing really good results. We were seeing an increase in both transactions as well as AUR and therefore, average ticket. As the quarter continued, however, it did get significantly negative with regards to transactions. We tie that back directly to the overhang, of course, of consumer sentiment, but more directly, the tax returns being down. As you know, tax returns are disproportionately going to affect our customer and our business in Q1, which we, as you know, typically refer to as tax season. Then Bob, on the guide, for 2Q, it sounds like you expect some pretty heavy margin pressure there on the product margin side. I know that in the Q1, it was down 370 basis. Are you looking for something similar there in Q2? I'll start, and then Jared can add some color. The expectation is that the trends we've seen here in the second half of the Q1 kind of continue into Q2. Q2 is notoriously kind of a quiet quarter for us. There's not a lot of big events or holidays that kind of drive the business. The expectation is that we'll still be working through some of our higher inventory levels, and that will require us to continue to be in somewhat promotional mode at this point. Jared? Yeah, Mitch, good morning. It's Jared. I think Bob's got it exactly right. I mean, we still expect some pressure, you know, very similarly to what we saw in the Q1. We have recently seen some pretty significant incremental promotions over and above what we saw Q1 from the marketplace as a whole. That'll likely continue to put some pressure. You know, we've been pretty clear around our inventory aspirations with from a first half and second half perspective. Obviously, we want to ensure that we can maintain that projection with regard to inventory. What's happening externally from a marketplace perspective could put some additional pressure on Q2. Lastly, just, I just wanna get your thoughts on back to school. I mean, it seems like you expect the consumer to remain, fairly pressured, but how are you feeling about kind of your inventory, and your access to product, for back to school? I also heard somewhere that maybe the tax-free day outlook could be better this year than a year ago. I don't know if, you're the least bit optimistic that that could, you know, maybe drive some traffic and conversion? Yeah, Mitch, I think, you know, we're confident in our, you know, first of all, the inventory that we have heading into back to school. You know, while the inventory is elevated over where we'd like it to be, you know, the team has been extremely careful with regard to receipts that are coming in for back to school, ensuring that, you know, we're only looking at what we like to call A players. We feel very good about those investments and that we'll have what the consumer is looking for. You know, typically from a back to school season, you know, Q2 and Q3 kind of have a blend between our back to school. Historically, it starts at the end of July and runs through the middle of August. We believe historically, when we've seen a pressured consumer, it tends to drive the business more last minute. Our expectations are that some of that back to school flow will likely fall more into Q3 than Q2. We do feel from a product perspective, we'll have enough product and energy to drive the business that is outlined in our guidance. Got it. All right, thanks so much. Thank you. Our next question is from Alex Perry with Bank of America. Please proceed. Hi, thanks for taking my questions. I guess just first, can you maybe talk about the more recent run rate of the business as you move further away from some of the tax refund headwinds? Alex, it's Jared. Good morning. As we said, we got off to a really hot start in the Q1. you know, strong double-digit increases and, you know, that really started to falter as we got towards the end of the quarter. We really haven't seen anything change at this point. A-level product launches still performing extremely well, but nothing from a step change perspective based off what we saw towards the back end of the quarter. Great, that's really helpful. Then could you just on the top line, can you just talk about how you're thinking about the Q2 versus the rest of the year? I think the guide implies like a sort of negative mid-single digit to high-single digit drop in the second half. I guess, you know, first part of question, is that right? Then in the press release, you said that these headwinds will be more impactful on our second fiscal quarter than in the back half of the year. Is that implying that you're sort of expecting the consumer to come back in the back half of the year? Alex, I think that's hard to say. I mean, I think specific to the Q2, obviously the run rate at the end of the Q1 was not where we would like it to be, that presents a concern. The conversation with regard to back to school and potentially some more back to school business moving into Q3, you know, based on the pressure that the consumer is under and more last minute, along with the elevated promotional activity that's going on in the marketplace. I mean, all of those things cause us to be, you know, really conservative with regards to Q2 specifically. As far as the outlook for the rest of the year, you know, we're really trying to work towards what our new normal is, what these new, you know, quarterly and monthly splits look like. Obviously, we have information from a pre-pandemic perspective, but then new information from a post standpoint. Really understanding how that looks quarter-over-quarter, you know, period-over-period, has become quite the forecasting challenge. You add in the volatility of the consumer and the volatility of our back-to-school business, which always crosses between second and Q3. All of those things are causing us to be very conservative. Great. My last one was just I just want to clarify sort of the monthly cadence on the quarter. It sounds like maybe comps were you know, April was the worst month of comps. I think there's a better launch calendar. That's when the launch calendar improved the most, in April. Is it that, like, your casual footwear business and apparel business really And you said the liquidation times and the launches felt good, so is it, like, the casual apparel and footwear business? ... you just saw more precipitous declines in those businesses in April. Is that sort of a fair assessment? That's how we define it. I'm not sure if I would use casual, but, you know, we saw no deceleration at all in the launch product from a liquidation perspective, what we call the A players again. You know, secondary franchises, secondary brands, as we've called that in previous quarters, have gotten really challenging and have slowed down. The consumer is being extremely selective on what they're interested in and what they're willing to purchase. That continues to put some pressure on, you know, some of our liquidation efforts in those products, where we've increasing, you know, promotions and markdowns to try and accelerate it. Perfect. That's really helpful. Best of luck going forward. Thank you. Thank you. Our next question is from Sam Poser with Williams Trading. Please proceed. Good morning. Thanks for taking my questions. Can you talk a little bit about how you You know, planning the business, any evolution in the process of planning? Because while same-store sales are gonna decelerate, you know, for the rest of the year, which you talked about before, you know, you're expecting some margin improvement You know, margins are gonna get less worse in the back half. I'm wondering, sort of from a planning process, taking the macro out of it, what can you guys do better to get there in the face of the environment? Sam, it's Jared. I'll start. First and foremost, we're obviously not happy, you know, where we are. We're not happy with the composition of the inventory right now. We are happy with, you know, our continued access to, you know, high liquidation, you know, highly scarce product that, you know, we call A players. We still see that providing a lot of momentum, and we're making a lot of consumers very happy when we provide that inventory. As we go through into the back half of the year, really starting in the Q2, we were significantly more conservative with regard to our buys, not only with how much we were buying, but also what we were buying, with just an intense focus on only those, you know, A players as we described. We believe that's gonna help us significantly. Our inventory liquidation efforts that we've had underway with regard to secondary brands and secondary franchises are going a little slower than we'd like, again, based off the consumer environment and based off the consumer being very selective. That's all we have coming in, you know, through the balance of the year, is what we believe to be that high-grade product. We do expect, as we get our inventory levels back below last year levels in the back half of the year, we'll see some improvement in our aged inventory, and that we believe, put a little less pressure from a markdown and promotional cadence that we've been under. When you say your inventory is gonna be below last year, you know, to what degree? I mean, 'cause you know, I saw you ended Q4, you know, probably about $50 million heavy. I think it may have gone up to about $90 million now. You know, I figure you still got to get it to about at least 10% below last year from a pure dollar perspective to sort of be optimum. Am I thinking about that right? I think you're on the right track. I don't know if we will land in the exact same place from an optimum perspective, but, you know, we are tracking to get below last year level, likely more in the single-digit range by the end of the Q3. A significant reduction by the end of the Q4 at a similar level to what you just described. Again, I think we want to be very careful with getting real specific here. We have our aspirations of where we want to be from an inventory perspective. We're confident in our plan, but there's a lot of unknowns at this point that we want to make sure that we take into account. Your thought process around optimal level of inventory is not that far off from where ours is. Mike, can I ask one thing? Of course. Over the last, I think, Q4 or Q5, you've missed. Well, the numbers have moved around. You've missed the street estimates and so on. you know, have you taken sort of a draconian. I mean, what makes you feel comfortable, you've sort of taken a draconian enough view of this year in the, you know, in what you've now put out there? Thank you. I think you have to track back to the cause, right? What's the cause of change? The approximate cause of change in Q1, the biggest contributor, was the fact that tax returns came in significantly unfavorable. I haven't found anybody who had that in their guidance. I haven't found anybody who said, "Well, yeah, you should have known that." We didn't know that. We were surprised. We didn't stand around and wait for it to happen to us. We began to take action very rapidly. In anticipation of risk in the year, we also, as we've communicated, took on a systematic review of our costs, which are in the early innings, but we're certainly doing that. Okay, get back to the question. What happened? In the backdrop of pretty serious macroeconomic challenges. We had a specific and pinpoint Q1 problem, and that being a significant part of our year, was part of the downdraft. In addition to that, going forward, we still have the overhang of the consumer, the consumer sentiment, the macro pressures, et cetera, along with a somewhat higher inventory level entering into Q2 than we anticipated, which is directly related to the lower sales than our expectation. That allows us, doesn't allow us, forces us to change some of our thinking around gross margin. More inventory, lower gross margin. These are not huge changes, but they're material in the plan. Now you've got, fewer sales, a little bit less gross margin, and as a result, we have to be prudent. We believe we're being prudent on the SG&A lines and the interest lines. Interest being one of those things that we've talked a little bit about, interest is going to be slightly higher, somewhat higher than we anticipated, because, again, sales then leads to inventory, which then leads to debt, which then leads to interest. Debt and money has a cost now. We're managing all those things and put them together. I think this is a prudent way to approach the guidance. Thanks very much. Thank you. Our next question is from Cristina Fernandez with Telsey Advisory Group. Please proceed. Good morning, and hi, everyone. I wanted to ask about your view of the industry with a lot of the brands and retailers already having reported. What is your view as far as the inventory in the marketplace, how long will it take inventory to normalize and the level of promotions, where do you see them now versus pre-pandemic? Yeah, hi, Cristina, it's Jared. Good morning. You know, I think that from an expectation perspective, I think we felt fairly confident that, you know, by the midway point of this year, a lot of the promotional environment from an industry perspective would be a lot better. I think since that point, you know, the consumer health has certainly changed, specifically for our industry, their focus has narrowed significantly around what they're engaging with and what they're going to purchase. That I think, you know, as I call that in my commentary, I think that moves the line at least through the end of the 3rd quarter, where I would expect that we'll see significant promotions, but it could be longer than that, you know, depending on what happens with the consumer, you know, through the rest of the year. Recently, we've seen significantly more promotions in the marketplace, which certainly indicates to us that the cleanup of the industry as a whole could take a little bit longer than we were expecting. My second question is around the cost-cutting initiatives across the organization. Last call, you talked about SG&A, you know, reining that in. Can you give more color and update of where you are in your cost-cutting initiatives and anything incremental you're doing now, based on the lower sales outlook? Yeah, thank you. We did talk about that last time. We brought it up this time. It is a systematic review. We're relatively early in it, but it has yielded some results. some of that contributed to the SG&A, but there are other reasons for the SG&A leverage in Q1 that are called out in the press release. I think it is also worth noting that those investments that we've made over the past few years are bearing fruit and some of it in SG&A. Ben, you want to speak to some of the things that you're doing? Yeah, as Mike mentioned, you know, we have invested in the business over the last few years, and particularly in respect to the mobile environment, the mobile platform at the store level. That's helped us in a couple of things. Obviously, enhanced the experience inside the store, very similar to our experience, you know, on the web and bringing that omnichannel experience in the store. It's also allowed us to become more productive and more engaged with our, you know, more engagement between our associates and our consumers. That's allowed us to take some of the cost out of the business, quite honestly, from a labor perspective at store level, and we've become more productive. We've accelerated some of those efforts. We've got more on the table, but really, you know, through those investments over the last few years, allowed us to kind of, you know, push that a little bit. Yeah, Cristina, this is Bob. Just to kind of finish that kind of thought off. You know, one of the things we are still dealing with as much as, you know, we are working actively to reduce, you know, some kind of ongoing structural costs within the organization, also taking advantage periodically of some discretionary opportunities to reduce spend. The one thing we can't forget about is, as we have, you know, obviously lowered our revenue guidance, there is still real inflation affecting wages and the goods and services that we need to support the organization. As much as we are doing right at the moment, I think this is gonna pay bigger dividends in the future years, but this year is still a little bit under pressure from a leverage standpoint, again, just because we've got that tough sales environment as well. Thank you. Our next question is from Justin Klebba with Baird. Please proceed. Hey, good morning, guys. It's Justin Kleber. Jared, wanted to follow up on the promotional environment. Last year, you know, we were talking about apparel, and now it's footwear. Just, can you talk about where the footwear promotions are concentrated? Is it just broad-based outside of the launch product? Then is this really you guys driving the promotions, or are you simply responding to what some of your competitors are doing in the marketplace? Yeah, thanks, Justin. It's actually both. You know, as we talked a lot in the back half of last year, and we were very focused on getting our apparel seasonally appropriate, getting apparel cleaned up, getting to the right inventory level. And we accomplished all that. We feel good about where our apparel inventory is today. Although apparel continues to be under significant pressure from a sales standpoint, just due to the consumer environment and the general trends. Our focus now has shifted on the footwear side. It's not as simple as just launch and non-launch. You know, there are many products that are not launched that we would consider to be highly scarce and high heat that are still performing extraordinarily well. Some of the secondary franchises, tertiary franchises, you know, secondary brands has really been a significant slowdown. Some of our promotional engagement has been in response from a marketplace perspective. Some of it's also been a deterioration in what we saw, you know, at the back end of the Q1 and our ability to really alleviate some of that inventory. It's a combination of both. Okay, thank you for that. Bob, can you help me a bit on the gross margin? If I look at your Q1 gross margin rate, it's always been above the full year rate by at least 100 basis points, if not more, you know, outside of the calendar 2020, with the pandemic and stores being closed. Your full year gross margin guide this year, it's above what you just delivered in the Q1, despite more promotions, and you have occupancy that's gonna flip to a headwind given the comp outlook. Why would that be the case? Yeah, I think, again, we kind of feel like with the heavy, you know, promotional environment in the first half of the year, we think that's gonna drag down margins for that first two quarters. There's some lift coming in the back half of the year. Again, harder to predict exactly how quickly or how significant that lift will be, but the goal is that as inventory gets cleaned up, again, Jared touched on this earlier, less need to promote and reduce pricing in the back half of the year. The other thing is we are starting to get some other leverage in terms of our freight and logistics operations costs, so that's helping to offset some of the pure product margin headwinds that we're dealing with. Again, it's kind of like we feel like we're kind of, you know, dealing with a little bit heavier, you know, kind of challenge in the first part of the year and hopefully get some lift, like I said, as the year goes on. That's the thinking as we look at the full year, outlook. Okay. That's helpful. Thanks for that. Last question, just on new stores, can you guys just comment, given the environment, I mean, how new stores are performing? Are they hitting your internal hurdle rates? I mean, does it make sense to slow the pace of store growth until the environment, I guess, returns to some form of normal, whatever that's gonna look like, in the next year? Hey, Justin, it's Jared. Obviously, we continue to look at this in great detail. Our new stores are performing exceptionally well. We still see it as a real strong use of capital. You know, new store performance, along with remodels, along with new storefront signs, are having a really significant payout on our investment. We do not plan at this point to slow the growth down that we've already committed to. All right. Thanks, everyone. Best of luck. Thank you. Our last question is from John Lawrence with The Benchmark Company. Please proceed. Good morning, guys. Jared, would you talk a little bit about that basket? I mean, in normal times, without this pressure, you know, somebody picks up a pair of shoes and maybe the attach rate for apparel. Can you just talk about how that's changed from a basket perspective, or is somebody just waiting for a promotion on the apparel side? Just dive into that a little bit, please. Yeah, John, we're seeing it go down some. I mean, obviously, you know, our teams, you know, continue to focus on products that connects and continue to deploy, you know, our head-to-toe strategy, which we still believe is the right strategy. Some of those, you know, opportunities around those connected outfits are now happening over multiple transactions. At the same time, you know, the primary driver of the business is footwear. The average retail price of footwear has skyrocketed, over the last few years. That's putting a lot of pressure on apparel. We are absolutely seeing less apparel, being sold in conjunction with footwear in the current environment. Great. Thanks. Good luck. Thank you. We have reached the end of our question-and-answer session. I would like to turn the conference back over to management for closing comments. Well, again, thank you for being here today. We appreciate it. None of these results were according to our expectations. You've heard everything we had to say about our business model. We believe in it. Again, we appreciate it, and we hope everyone has a safe, long weekend and celebrates Memorial Day. Thank you. Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.