Ladies and gentlemen, thank you for standing by, and welcome to the JOANN's First Quarter Fiscal 2023 Earnings Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker, Mr. Ajay Jain, Head of Investor Relations. Please go ahead. Thank you, operator, and good afternoon. I'd like to remind everyone that comments made today may include forward-looking statements, which are subject to significant risks and uncertainties that could cause the company's actual results to differ materially from management's current expectations. These statements speak as of today, and the company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information, or future circumstances. Please review the cautionary statements and risk factors contained in the company's earnings press release and the recent filings with the SEC. During the call today, management may refer to certain non-GAAP financial measures. A reconciliation between GAAP and non-GAAP financial measures can be found in the company's earnings press release, which was filed today with the SEC and posted to the investor relations section of JOANN's website at investors.joann.com. On the call today from JOANN are Wade Miquelon, President and Chief Executive Officer, and Matt Susz, Chief Financial Officer. I will now turn the call over to Wade. I'd like to thank everyone for their interest in JOANN and joining us on the call today. After we transitioned to a public company last year, we had a very good start to fiscal 2022 on the back of a record-setting pandemic fiscal year 2021. Since that time, we've experienced unprecedented supply chain disruptions, and more recently, we've also been impacted by geopolitical events and significant inflationary pressures affecting our customers. JOANN is obviously not immune from the same near-term challenges that are currently impacting a variety of other retailers that you've heard from during this earnings season. These factors also mean that the economic backdrop for consumers is increasingly challenging. To that end, we expect the operating environment to remain challenging through at least the next few quarters. You'll recall that we provided some commentary regarding the recent shift in consumer behavior on our last earnings call in March. As we said on that call, we had reasonable momentum until the outbreak of the war in Ukraine, after which we saw a significant drop-off in customer traffic. Since late March, things have steadily improved week to week, but are not at the rate we would like yet. Despite the recent sales softness, our adjusted gross margin rate and gross profit dollars remain strong, especially relative to pre-pandemic levels. In light of the near-term macroeconomic uncertainty, we are managing our cash position and balance sheet very carefully. Until the inflationary backdrop and supply chains begin to normalize, we will continue to manage our business cautiously with the assumption that the economic environment will remain challenging, and any normalization will be a bonus for us. As an organization, we've successfully navigated through many different economic cycles throughout our operating history. While some expect a soft landing as a likely scenario, my view continues to be that entering a recession is highly probable and, in fact, may be the most likely scenario. What would that mean for JOANN? From experience, we typically see strong resilience in our customer base when a recession occurs, as our consumers tend to forgo high-ticket goods and services and double down on sewing, crafting, and other hobbies that generate peace of mind. Recall that our average customer basket size is roughly $30. Recessionary environment would also help to curb inflation, including feedstocks, encouraging more labor participation, and heal broken and overburdened supply chains. Based on our extensive history through a variety of economic cycles, we believe that we can manage through an economic downturn more quickly compared to many other discretionary retailers, as long as we adjust our cash cost and pricing choices accordingly. For perspective, during the last major economic downturn 15 years ago, after initial same-store decline of about 6%, we comped positively during each of the following 4 consecutive years. A more concerning economic environment would be that of entering a period of sustained stagflation. That is not our base case scenario, but one that all companies should hold out as a possible risk scenario to manage and mitigate. During Q1, we experienced sales declines across our customer segments, with sales down by 13.3% relative to last year and -12.9% on a total comparison basis. This decline was in line with industry trends, and importantly, we're very confident that the recent softness does not reflect any incremental competitive pressures or any loss of market share. Recall that we cycled a 15% positive comp in Q1 in fiscal 2022. After adjusting for $28.9 million of excess ocean freight and related supply chain costs, gross profit declined by 11% from last year and increased versus pre-pandemic comparisons. We're pleased that our adjusted gross margins has continued to improve. Our gross margin performance should further benefit from strategic pricing actions that we've taken to offset higher input costs. To provide some context on inter-quarter trends for Q2, we note our May comp was better than Q1, and we look forward for further sequential improvement in sales and gross margin performance as we move forward. We're also experiencing very strong momentum in our online business, with double-digit increases in traffic in the current quarter. Some of this acceleration can be attributed to the recent surge in COVID cases, which, according to many reports, are vastly underreported due to a variety of factors. Now, you'll recall that last year, a significant drag on our operating performance was the impact of the delayed reopening on our special event-driven business. Event-driven categories have been a significant bright spot for us in fiscal 2023 thus far. On the other end of the spectrum, we are experiencing significant year-on-year softness in higher-ticket discretionary purchases within our technology-based categories. We have previously been optimistic about the prospect of returning to positive one-year sales comparisons beginning in Q2. However, we currently do not expect to return to positive same-store sales growth in this current quarter. As mentioned, the recent rise in COVID cases is also a development that we are monitoring closely in relation to our store traffic. Overall, we're currently trending at a high single-digit sales decline for Q2, and while I anticipate that trend should continue to improve throughout the year, I will caveat this by saying that there are still many unprecedented variables we're managing through, and these aren't only consumer demand related. For example, on the supply side, we still have the war in Ukraine and related commodity inflation, the China COVID shutdown, and the L.A. port negotiations, all of which the team is currently managing through extremely well but are very hard to label as business as usual. While we lack the visibility on the timing for a positive inflection point in sales growth, we're very confident the current set of challenges in the business will prove to be temporary and cyclical in nature. We recognize we must adapt and control the things that we can control, such as our cost and capital decisions, while preserving the rarefied air customer experience levels that we've been achieving. Relatedly, Net Promoter Scores have remained at all-time record highs throughout fiscal 2023, so I'd like to commend the field on the record customer satisfaction despite the labor challenges that are plaguing the retail and service sectors. Our recent proprietary survey work confirms that our core customers and customers across the creative products industry have very specific concerns about inflation, the economy in general, and the ongoing situation in Ukraine. Encouragingly, however, these same customers also say that they anticipate to spend more dollars in sewing and crafting in this upcoming year, not less. We're confident that we currently have a very good handle on all the issues that are within our control in relation to supply chain disruptions. The impact of excess ocean freight costs was in line with our expectations for the most recent quarter. Following recent negotiations for new freight contracts, we expect to have more operating flexibility through a wider range of ocean freight carriers compared to fiscal 2022. The increased capacity should allow for more timely delivery of product and ensure a strong in-stock position ahead of our all-important fall and holiday season. We're also encouraged by the recent developments in the spot market in relation to ocean freight costs. However, we expect the ocean freight market to remain extremely volatile through the balance of the year. We'll obviously continue to monitor the situation in China and the potential for a work stoppage based on current contract negotiations between unionized workers and the port authorities in Southern California. So far, the recent COVID shutdowns in Shanghai have not materially impacted our flow of goods or product availability. Based on the current uncertainty in the current retailing environment, we are taking steps to manage our balance sheet with a near-term focus on cash. We're not contemplating any major long-term changes in our capital allocation plans, but we will continue to be opportunistic in this area moving forward. Our store refresh program remains the biggest long-term focus among our capital allocation priorities, and we still expect to relocate or remodel the vast majority of our fleet through this multiyear initiative. That said, we think it's appropriate to defer some capital projects based on the current market conditions, and Matt will cover this topic in more detail in his comments. Our multipurpose distribution center in West Jefferson, Ohio, is set to go live later this fall. We remain very excited about our various Blue Ocean growth initiatives as well. As a reminder, current projects under the Blue Ocean framework that we've already announced include, but are not limited to, Ditto, which is our joint venture with Singer, which we believe will be a major source of innovation for the sewing industry, our wholesale initiative in partnership with JDM, which will provide JOANN with access to a variety of B2B growth channels, and our recent acquisition of WeaveUp, which will streamline the production of digital fabric printing and related finished products. On several of our Blue Ocean initiatives we've already announced, the revenue opportunities are especially compelling. We'll have more to share with the investor community as these initiatives begin to have a more material impact on our financial results. Regarding Section 301 tariffs, we don't have any material updates on the ongoing litigation, potential expiration of existing tariffs, or the prospect of a more substantive policy reform. Any incremental tariff relief would be very beneficial to our perspective and very welcomed. There are a lot of moving parts in the economy and the world right now, but having said that, we've got winning strategies, and we have customers who love our brand, and we've got team members who are passionate beyond comprehension. I have no doubt that we'll seize the moment in time and come out of it as an even stronger and better organization, as we always have before. With that, I'll turn the call over to Matt for a more detailed recap of our financial performance. Thank you, Wade. I agree with the sentiments Wade shared regarding the challenging economic environment for our consumer and our key input costs, which have impacted our recent results. I will provide more specific details around those first quarter results, as well as insights into how we expect to manage through those impacts for the balance of this fiscal year and the next. Net sales for our first quarter totaled $498 million, reflecting a total comparable sales decline of 12.9%, which compares to 15% total comparable sales growth for the same quarter last year. We saw much stronger performance in several of our event-driven sewing categories that had been impacted by pandemic-related restrictions. However, those tailwinds were more than offset by softer customer traffic and challenging overall industry trends in our technology-related categories. While higher-ticket technology items were down against very strong results last year, they were still up by 32% on the quarter versus pre-pandemic levels. Our sales trends were weakest in March, tracking closely to the start of the war in Ukraine and cycling of stimulus spending last year. Sales trends steadily improved over the final five weeks of the quarter. As expected, gross margins were challenged by excess ocean freight costs as our spring season goods had some of the largest impacts of higher carrier rates and ancillary costs of port congestion on a per-unit basis. These excess costs totaled $28.9 million for an impact on GAAP basis gross margin of 580 basis points in the quarter. GAAP basis gross margin was 48.3%, a decrease of 440 basis points from the same quarter last year. After adjusting for excess ocean freight costs, gross margin improved by 140 basis points to 54.1%. We have been pleased with our ability to manage product costs in the face of inflationary pressures and to execute our planned strategic pricing actions on targeted assortments. Our selling general administrative expenses totaled $259.1 million, an increase of 3.7% compared to the same period last year. While below the level of general inflation, that increase is larger than the 1.5%-2.5% we have historically managed to in terms of growth. Increases were primarily driven by costs associated with our store refresh initiative, increases in labor rates, and distribution costs to handle later arriving spring inventory. The totality of those factors resulted in a net loss of $35.1 million and diluted loss per share of $0.86 for the first quarter on a GAAP basis. Our adjusted diluted loss per share was $0.22 during the quarter. Adjusted EBITDA in the quarter was $18.6 million compared to $57.5 million last year. Moving to the balance sheet and debt levers metrics, cash and cash equivalents were $22.3 million, and net long-term debt was $931 million as of April 30, 2022, up from $760.4 million at the same time last year. At the end of quarter one, our trailing twelve-month credit facility Adjusted EBITDA was $214.3 million for a net leverage ratio of 4.4 x at the end of the quarter. A key driver of the increase in net debt was inventory costs. We ended the quarter with merchandise inventory of $674.5 million, an increase of 25% over the prior year. The quality of our inventory remains very high, with clearance merchandise representing less than 5% of our total inventory mix and on-hand units in our stores and distribution centers that are only up 2% year-over-year despite slower than expected consumer demand in the quarter. The increase in inventory costs was primarily driven by higher international and domestic logistics, which were $40 million above the same time last year. We also made a conscious choice to bring in our peak inventory build earlier this year to mitigate the risk of supply chain disruptions. As a result, at the end of the quarter, we had 23 million more in-transit inventory on its way to our distribution centers than at the same point last year. The balance of the increase was driven by some shift in mix to higher price point assortments and cost increases we have taken from suppliers, particularly for items exposed to petroleum and other higher cost feedstocks to produce. Driven by delays in the supply chain, the amount of our inventory covered by open payables was unusually low at the end of the quarter at 29%, which compares to 38% at the end of the same quarter last year. We expect our inventory covered by open payables to normalize to approximately 40% over the balance of this year, which will support improved operating cash flow versus our position at the end of quarter one. We have taken a variety of actions so far this year in order to reduce the impact of excess international logistics costs on a year-over-year basis, as well as reduce inventory receipts in the back half of the year. We expect inventory to be reduced on a year-over-year basis by the end of our fourth quarter and working capital to be a source of cash for the full fiscal year. While we are not providing formal guidance on revenue or income metrics, we did want to provide insight into our business trends for the second quarter to date, our perspective on what that could indicate for our near to midterm financial metrics, and how we plan to manage the business for the coming 18-24 months. Our total comparable sales trends for the quarter have steadily improved relative to quarter one, as we are now running at a high single digit negative year-over-year trend. While we see some category trends that point toward more rapid improvement, we are taking steps to ensure strong positive free cash flow over the next 18-24 months, assuming our comparable sales could continue to run mid- to high single digit declines for the next 2-3 quarters before we begin to see more stable or growing year-over-year trends. Those efforts will include, but are not limited to, reductions to our planned inventory receipts, cost structures, and capital investments. Gross margins will continue to be pressured, particularly in the second quarter, by higher product and supply chain costs, most notably international logistics. However, our preparation for this year's peak inventory flow, low levels of clearance inventory, as well as pricing and promotional actions we have taken are expected to drive gross margin rate expansion over the back half of this fiscal year. We remain committed to our longer term debt leverage goal of 2x adjusted EBITDA. We will focus cash generated through our broad-based cost containment efforts toward debt reduction, modest investment in our Blue Ocean growth initiatives, completion of our store technology upgrades, maintenance of our store assortment and service standards, and protection of our quarterly dividend. We will also continue to execute on our store refresh initiative, but with a lower number of annual projects focused on relocation opportunities which have the highest top-line expansion. We have narrowed our current year project count to 36 locations, 9 of which are already complete, and we'll target 20-25 projects for next fiscal year, most of which have already been identified. On the cost front, we have wrapped up annual negotiations with our ocean freight carriers, expanding our capacity under contract, which will reduce our exposure to the very volatile spot market and allow us to better control costs for our peak third and fourth quarter seasonal flow compared to what we experienced last year. On the supply chain front, we are on track to launch our e-commerce fulfillment from our new West Jefferson, Ohio multipurpose distribution center in the third quarter. This capability will reduce what has been overreliance on our store network, which will control costly split shipments and create efficiencies in overall fulfillment costs. We are working a number of short and longer term plans to offset other inflationary pressures in our product costs as well as SG&A expenses, with a focus on limiting spend on items that are not essential or align with the objectives I shared earlier. We are confident that our strong and experienced team will effectively lead through this tough environment to drive a strong, focused, and cash-generative business. With that, we look forward to taking your questions. Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. We ask that you please limit yourself to one question and one follow-up question. You may then return to the queue. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Liz Suzuki with Bank of America. Please go ahead. Great. Thank you. I guess first question is that you mentioned there are no current plans to change long-term capital allocation priorities, but, you know, what would be the most likely cash outflows that would either be cut or reduced if cash flow does remain negative? I mean, it sounded like the store refresh and relocation program could get pushed out a bit. But can you help us frame things like maintenance, CapEx, and where the dividend stands on your list of priorities? Yeah. I mean, I'll say a few things, and Matt can. You know, we're gonna pull back in the next, you know, whatever period on the number of store refreshes, that free up a lot of cash flow, as well as the adjustments we're making on working capital, in particular inventory. On the refresh side, it's actually, I think, the pragmatic thing to do now. A lot of our fixtures and other items are not only inflated, but some of them are being delayed as much as six months. Contractors in some cases are trying to charge 40% premiums. You know, we're gonna prioritize the ones that make sense now, but we're not going to, you know, rush headfirst into what we think, in those cases will be temporal inflation. To kind of put some context around that, the numbers I was sharing that we're targeting for projects on the sort of refresh initiative for next year are about a third of what our initial strategy was. I think for the reasons Wade gave, that's prudent, just really given the inflationary environment and the cost of doing those projects under that environment, which we think will normalize over time. Really, there's a lot of other projects we have that have solid ROIs. We're just tightening the belt on some of those as we kind of ride through the next several quarters. Gotcha. I mean, how should we think about maintenance CapEx? Outside of what you already have planned, if you were to scale back the store refresh program entirely and just, like, you know, do the bare minimum of expense on your stores, where would that shake out to? We have some costs to run out, kind of the technology refresh in our stores, just to modernize networks, back office systems in our point of sale, that some of those are lease costs. They'll run out at probably around $15 million per year over the next few years to wrap those up. On top of that, very modest, our maintenance CapEx on top of that might be somewhere around $10 million a year. I would say that last weekend, we launched seven refreshes, you know, over the holiday weekend. All of those are literally off to a smashing start ahead of our pro formas. We're no less optimistic about it. Like I said, there's, you know, paying 40% contractor premiums, having, you know, premiums on fixtures, delays on fixtures and the like. We also need to be smart about how we spend our money and our time. Yep, that makes sense. Just, you know, about the dividend, like, where does that stack in your list of priorities? Yeah. Obviously, we're gonna manage the maintenance capital and other things required to operate the business. We're serious about our goal of delevering over time down to 2 x EBITDA. I would say, though, appropriately right after that would be the dividend. We feel, you know, we can drive a lot of cash the back half of the year, and we can step up our, you know, our level of cash flow generation next year. Again, I think dividend is a priority for us. I do think this company, you know, can drive a lot of cash pretty quickly when we make the right choices here, so. Great. Thank you very much. Yeah. Thanks. Thank you. Our next question will come from Daniel Hofkin with William Blair. Please go ahead. Hi. Good afternoon. Just curious what you talked about expectations for kind of similar sales declines for the balance of this year, it sounds like. If that trend were to continue or even, you know, potentially worsen in a recession next year, what would be some of the things that you could do from a cost standpoint? I heard kind of your answer just now to the first set of questions, what could you do from a cost standpoint? Presumably, you'd have some reduction in freight costs and other things that would partly offset that. Are there other things that you can do from a store level standpoint, your own distribution expenses, you know, just things to internally manage down your expenses if that happened? Yeah, I guess, let me take the first part of the question. It is actually our comps have been, you know, steadily improving, you know, since the quarter, and since the worst part of the quarter, dramatically improving. Now they're trending to high single- digits, but getting kind of better period by period. We anticipate that will, in general, continue just, you know, at what pace we will see. We have also seen in the past few weeks a proprietary study across all retail, which actually across all retail has worsened dramatically the past few weeks, where ironically, we've actually continued to strengthen as a discretionary versus, again, all retail. We think that will play out. You know, to the extent that things were to get, you know, worse than planned, you know, we certainly have a lot of levers we can pull in terms of pricing, in terms of further costs that we can do, in terms of how we manage our inventory. You know, we're not seeing that at this moment, but I think in this environment that we're in, this world and all these kind of things that are getting thrown at everybody, you're kind of surfing the wave, you know, week- by- week. Yeah, I would echo that. I mean, certainly we're always looking to be more efficient with inventory and improve our turns, but you know, for shorter periods of time, you could tighten a little harder there. Then obviously, you know, the corporate overhead we have and our you know, we're focused on maintaining solid store standards. You know, there will be some room over the short term to belt-tighten in those areas as well if needed. If you take that math I gave you and looked at kind of a pre-pandemic, which is a, you know, one of the only last normal years we have, you know, we would expect to, you know, kind of through balance of the year be comping positive on that with gross margins significantly up on that, from the price promotion, other activities that we've taken, and that's why we've incurred inflation. It's sort of a, you know, it's one of the years that we're recasting back to just because it's more of a normalized consumer pattern, as I think a lot of people are. You know, that's just how we're trying to piece it together. Thank you. Thank you. Our next question will come from Zach Fadem with Wells Fargo. Please go ahead. Hey, guys. This is David Lantz on for Zach. Thanks for taking our questions. I guess first one from me, can you walk through the puts and takes to gross margin outside of the 580 basis points of excess freight? Yeah. If you back that out, we're actually up about 140 basis points. Actually, most of our impacts outside of product costing and promotional efficiency are pretty comp on a year-over-year basis for the quarter. Most of that 140 basis point improvements on adjusted basis is some cost wins on product, but most of it's actually pricing action. Got it. That's helpful. For the quarter, to what extent did inflation contribute to comps, and are you passing all of those elevated costs on to consumers? How do you expect inflation to kind of trend over the next few quarters? Yeah. We had some pricing in the quarter year-on-year, and we had some cost increases. You know, as we go through the year and it rolls through our COGS, I think our price increases are gonna continue to outrun inflation. You know, that's kind of how we're seeing that. The big, I think, you know, as we think about like what's normal and not normal, you know, in terms of our base inflation, you know, really petroleum is a key driver, right? If petroleum goes up, some of the items that we buy go up. That goes up, you know, we're paying more. If that goes down, that will be a pullback. I think, you know, on the COGS side, petroleum is the number one indicator for what gets passed through. I think it's safe to say on, you know, ocean freight that, it's, you know, certainly at peak, you know. I think it can only get better from here, but at what rate it heals itself through spot market and contract renewals remains to be seen. I think in almost any circumstance that will go the other way, you know, over time. Again, tariff relief, we'll see about that. Then kind of the other big wild card out there is diesel. While we've seen, you know, a reduction in freight rates, in terms of the actual rates, we also have to pay, you know, for diesel. So that right now is pretty much, you know, offsetting the gains we'd otherwise get. Matt, anything else you'd want to say to that? No, I think that's pretty fair. Thanks. Thank you. Our next question will come from Laura Champine with Loop Capital. Please go ahead. Thanks for taking my question, and I appreciate that working capital should be a benefit by the time we get to the end of the year. We're in a pretty deep free cash flow hole with a -$142 or so for the quarter. Where do you think we end the year in terms of free cash flow, roughly? I think, you know, we'll be slightly generative. I think we're working on, you know, some efforts to even improve that further. Within the following year, we're already looking rolling forward out another year. You know, regardless of where, you know, sales remain a little bit tough, taking significant enough actions to allow us to be more at our historical level of free cash flow, which is, you know, approaching $100 million on an annual basis. Got it. Thank you. Sure. Thank you. Our next question will come from Peter Keith with Piper Sandler. Please go ahead. Hey, thanks. Good afternoon. Curious on that ocean freight contract. You said you have finalized the pricing and more capacity. I think in another response, you said your costs are down. Could we tie all that together? How should we just think about the normalized contract costs on a year-on-year basis looking forward? Yeah. For this coming year, if you look at where we were contracted last year, which again, we were very rarely getting those prices because we were typically getting denied service under those contracts, which threw us into the spot market, and we were paying four, we've said this before, 4, 5, 6 x, you know, what our, what our contracted rates would have been. So we've more broadly contracted this year, which will give us more stability. Those rates compared to our prior contract are gonna be about maybe 90% higher, but they're gonna be well below what we were paying in the spot market last year. Elevated where very much versus where we've been historically, but particularly for the back half of the year, should be again, as long as they're being honored, which I think we've taken a lot of efforts to ensure we have a broader base of carriers to do business with, that will be well below what we were actually paying in the third and fourth quarter of last year. Okay. To follow up on that, I guess because, you know, we and the Street have been stripping out the spot market costs out of the cost of goods, I think it was $29 million this past quarter. Now that you're gonna have less exposure to spot, your contract rate's up year-over-year. Will you have gross margin pressure on an adjusted gross margin basis looking forward through the rest of the year? A bit versus last year. The other thing is that those blend in, and a lot of the costs we incurred last year were also a lot of these port congestion and demurrage and detention is technically what they're called. We also see those being less on a year-over-year basis. I think on a GAAP basis, definitely in the back half, we see you know we should expect improvement versus where we were last year. On an adjusted basis, I think you'll be more you know flattish. We've been steadily improving, but I think you know we'll be comparable year-over-year, but on a GAAP basis, definitely starting to see improvements in the third and fourth quarter. Okay. Part of the thing we see most retailers doing now is trying to figure out contingency plans to avoid Los Angeles in case of a shutdown. You know, it's very expensive to go to other ports. On the other hand, I think everyone is doing at least a reasonable percent of that because it's a real wild card. Okay. I wanted to ask then about the promotional environment. It does seem like promotions are starting to pick up across retail. I think you're comfortable with your inventory level, but other retailers are not. What are you seeing out there across the different categories that you sell into? Is there some elevated promotions that are starting to pick up, maybe more couponing by some of your competitors? Just curious what's happening out there. Well, I think it's still a good promotional environment. You know, we're still hitting some key demand drivers. In general, we also do lots of holdouts. I don't think that right now, you know, you can buy, you know, a lot of business in most of the categories by being more aggressive, and I think managing for margin is the way to go, especially with these supply chain costs. It's just so expensive to get it here. As Matt said, our inventory is very clean. So even though the dollars look high right now, actually, when you look at the units and the fact that we pulled ahead to be in better shape to be able to sell through our fall season earlier, you know, we feel very good about that aspect of the business. You know, if I think that's a good choice, too, because if we had, you know, pushed this a little bit later, something happens in L.A. and, you know, Shanghai and China were to get complicated, et cetera, then you end up spending, you know, a fortune to try to expedite, push it through, you know, clear because you're late in the season. I actually think we're, you know, from that point of view, in pretty good shape. Okay. Sounds good. Thank you very much. Thank you. Our next question will come from Cristina Fernandez with Telsey Advisory Group. Good afternoon. Thanks for taking my question. I wanted to follow up on the comment on inventory and pulling some of it forward. Can you kind of give us some guidance on how to expect the inventory flow through the year? Will it peak into Q or it'll still be a seasonal pattern of peaking in the third quarter? Yeah. We definitely still will see our inventory peak in the third quarter because a lot of what we sell through, we do sell through quite a bit in the third quarter, but a lot of that's really for the fourth quarter. I would say you're just seeing a shift and a percentage of our receipts, mostly seasonal product and some fashion product, move up, you know, a couple of months, a little bit earlier. Our second quarter end was obviously higher than it's been for that reason. You'll see that again in the second quarter, and then, it'll more normalize on a year-over-year basis as we move through third and fourth quarter. Thank you. That's helpful. My follow-up is, can you comment on how this business has performed during past recessions? I mean, has it been down or held in? Maybe some comment there just so, you know, in a worst-case scenario, we have better idea of how the arts and crafts in your category, you know, your products in particular, do in that scenario. Yeah, I know as we've gone back through history, you know, in general, we've performed very well through recessions. I think it's two parts. One, I think is people They start to forgo, you know, expensive travel trips, maybe a new car, but then they double down on the things that we do. I think you also saw the pandemic where people, you know, weren't traveling as much, so they were looking for things to do at home for their spare time. It's one of the reasons why we struggle always in the summertime, is we're just less relevant because people are gardening. Their kids are out of school, so maybe they're traveling with them. I think we feel good about that. I do think, you know, that we are seeing kind of, you know, week to week, this strengthening a bit. Like I said, the past few weeks, the aggregate of retail as far as we can tell, you know, the necessity retailers are actually starting to weaken a bit versus prior trends. We'll see if that continues. You know, I do think at the end, it's a $30 basket. It's something that gives people peace of mind. It's something that, you know, that they enjoy to do. You know, again, if they have to forgo a larger purchase or a larger travel item, they still wanna be able to, you know, enjoy their life so. Thank you. Our next question will come from Paul Kearney with Barclays. Please go ahead. Hi, everybody. Thanks for taking my question. I was hoping you can provide just a reminder of capacity under the revolver to draw down and what your expectations are, whether you'll need to draw down additional debt throughout the year. We refinanced that last year and increased the base capacity up to $500 million. The debt also can accordion above that by in $25 million dollar increments. We could go another, I think it's actually another $100 million above that. Not that we're planning to do that, but that's available to us if needed. Okay. On the term loan, can you also just remind us, when that is out until? It's 2028. 2028. Okay. Lastly, sorry if I missed it, but did you provide an update on what you expect excess freight costs to be for the remainder of the year? We haven't. I would say, you know, to give some context, I think, you know, obviously, we didn't have these in second quarter last year, so it's gonna be incremental year-over-year for the quarter we're in. We do expect those to decrease a bit from first quarter but probably be fairly comparable, then be probably comparable on a year-over-year basis for third quarter, but then be down significantly in the fourth quarter versus what we saw last year. All right. Perfect. Thanks. That's it for me. Thank you. As a reminder, ladies and gentlemen, if you have a question at this time, please press the star then one key. Our next question comes from Zohair Azmi with Beach Point Capital. Please go ahead. Hi. Thanks for taking my questions. Would you guys mind talking about how comp sales varied across the categories between sewing and, like, arts and crafts and decor? Yeah, I mean, real loosely, I mean, we kind of break it into two categories. You know, I would say that on the sewing side, we saw strength in categories which are event-driven, so special occasion and the like. We saw the arts and crafts side and sewing not altogether two different aggregates. On the arts and crafts side, like we said, we had a very big year-on-year reduction in what we call technology, both in craft and sewing technology. Those categories are very strong on a pre-pandemic basis, but the year before, they were really you know, to the moon. The good news is we're starting to cycle out of that as that started to normalize about this time last year. On seasonal, actually, that's part of the arts and crafts category, but we saw some strength in there as well, so. I guess excluding, like sewing and technology parts of arts and crafts, which you've already called out as being weak, I guess how was the rest of that segment? How was the non-apparel portion of sales? I think I'll just frame roughly. I believe that kinda the technology component was, you know, maybe around a 300 basis point drag, you know, year-on-year. Again, those businesses are very strong. I think if you look over the longer period, they are still very strong over the broader trajectory. It's just that they were, you know, really strong the year prior. In part driven by- Okay. -as well, but. I guess as a follow-up, in terms of the arts and crafts space, do you have a sense of how your market share has trended versus your peers in this quarter? We do. In the arts and crafts, you know, we feel that, you know, over the past, you know, several years on aggregate, we've been gaining some share. I think that's partially a function that historically we were undershared. I think we've also been playing a pretty good game there. You know, for sure as we do our, you know, scraping of data externally, as we get our analysis from credit card scrapers and others, you know, we believe we're, you know, in aggregate at least holding our own there. That's why I think you know, I don't think that the you know, the results that we're seeing, I would have to guess that across our industry are pretty similar. I think it's the same kind of behavior and we do some work to validate that, but I don't think it's. I think it's more of just an industry game. Speakers, I'm showing no further questions in the queue at this time. I would now like to turn the call back over to management for any closing remarks. Well, look, I appreciate all your time today. You know, it was a tough quarter. I think we have a lot of reason though to feel that we have optimism and moving in the right direction. I also think there's just a lot of moving parts in the world right now, that we just gotta be very, very agile in terms of understanding how we navigate through inflation, supply chains. A lot of what we're seeing right now, I think, is that, you know, peak worst point. The question though is how fast do supply chains heal, you know, some of these feedstocks and other things. You know, we've navigated through it before. I think we're gonna come out stronger, and we'll do whatever we have to do to make sure that we do so. Thank you for your time. I appreciate it. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.