Good morning, and welcome to Kohl's Investor Day 2022 event. I'm Mark Rupe, Vice President of Investor Relations, and we have an exciting presentation for you today. Before getting started, I'd like to make a few points. First, we'll be making forward-looking statements. Our cautionary statement related to those can be found on slide two. We will also refer to certain non-GAAP financial measures and information related to these can be found in the appendix of today's presentation. In addition, our leadership team will address participant questions towards the end of today's event. Those seeking to ask questions can do so by submitting their question via the webcast page. Lastly, a replay of today's presentation will be available on the Kohl's Investor Relations website. Now let me share with you the agenda for today's presentation. Michelle Gass, our CEO, will kick off the event with a discussion of our strategy and path forward. Doug Howe, our Chief Merchandising Officer, will then talk about our key product initiatives to power the future. Greg Revelle, our Chief Marketing Officer, will share how we are engaging our customer base in new and impactful ways. Paul Gaffney, our Chief Technology and Supply Chain Officer, will present how we are innovating through our leading omni-channel platform. Jill Timm, our CFO, will provide an updated financial framework and capital allocation strategy. Then Michelle will wrap up the formal presentation by highlighting our ESG efforts. We will then take a short break before beginning the Q&A portion of the event. With that, I'd now like to introduce Michelle Gass. Thank you, Mark, and good morning. I'm thrilled to be with all of you today to share our strategy and long-term plan to drive sustained, profitable growth and provide a strong return to shareholders. Over the next couple of hours, my colleagues and I will walk you through a more detailed view of our strategy, including our key initiatives that will fuel our growth. Make no mistake, this is a transformation. It is a complete reinvention of our business model and our brand. We have laid the foundation this last year with a fundamental restructure of our business that delivered an all-time record year of EPS and margin. We've set up this business for a long-term profitable growth. Let's dive right in. Today, we'll lay out many of our key investment highlights of the company, forecasting the bright future ahead. Let me summarize. If there is one page that gives you a reason to believe that we will win, it's this one. First, Kohl's owns a differentiated position in retail. We're evolving our position from a department store to a more focused lifestyle concept centered around the active and casual lifestyle. This is unique, and we can own this space. W e have become an omnichannel leader based on the investments we've made, both in our strong off-mall store base and our robust digital business. Second, we build and foster compelling partnerships that are unique in the industry and leverage our omnichannel power. A few examples. The new partnership we launched in 2021 with Sephora will grow to be a $2 billion business. Our partnership with Amazon that we launched a couple years ago is bringing in millions of new customers. The ongoing partnerships we have with iconic national brands continues to position us as a leading destination for product people love. Third, we're expanding our reach. We plan to open about 100 new smaller format Kohl's stores over the next four years. We have a pipeline of initiatives to drive discovery and newness to appeal to even more new customers. Fourth, we're driving a data-centric approach. We're taking additional steps to increase our data science capabilities to provide greater relevance to our customers. A few examples. We're using data to increase our everyday value through our rewards program, and we're announcing today how we are enhancing that program and also launching a new co-branded credit card. The data science capabilities we continue to build will accelerate our personalization and localization efforts across the business. Finally, as we do all of this and run a healthy and growing business, we will deliver significant capital to shareholders. This is the core of our enduring financial framework that Jill will walk you through with greater detail. In essence, here's a snapshot. First, we are committed to growing the top line at least in the low single-digit range. Second, we'll continue to run this business profitably, delivering a 7%-8% operating margin. Lastly, we expect to grow our EPS in the mid to high single-digit range, aided in part by share repurchases. Supporting this framework are our capital allocation principles, maintaining a strong balance sheet, investing in growth, and returning a significant amount of capital to our shareholders. Again, you'll hear a lot more from Jill about this later. While we'll share more detail on our path forward today, I wanna take a step back for those of you who don't know Kohl's as well and provide context for why we're ready to produce the results I just laid out for you. We are proud to be celebrating our 60th year in 2022. With six decades of experience in retail, we've served generations of customers. We've evolved as customer preferences and behaviors have changed, and we've done all of this while staying true to the heritage of our brand. Kohl's was built on delivering great brands, value, and convenience. These tenets are still relevant today. While decades ago, we started this business as a brick-and-mortar company, we have evolved to become a leading omnichannel retailer, serving the needs of today's customers. To remind you of our breadth and scale, we serve more than 65 million customers nationwide. We employ 100,000 Kohl's associates working in our stores, our distribution and e-commerce centers, and our corporate offices. Our omni-channel platform includes close to 1,200 stores and a powerful and growing digital business. We have a compelling and differentiated brand portfolio with top iconic national brands, including Nike, Levi's, Adidas, Under Armour, Tommy Hilfiger, and more, and major proprietary brands that are unique to Kohl's and offer tremendous quality and value. Kohl's has a history of innovation. The introduction of one of the first designer collaborations with Vera Wang more than 15 years ago, the creation of Kohl's Cash, a concept that many have tried to emulate, and delivering breakthrough partnerships, including the Amazon Returns program and now Sephora at Kohl's. Proudly, Kohl's is one of the most recognized and awarded retailers for our commitment to ESG, supporting sustainable solutions, giving back to our communities, and making progress in diversity and inclusion efforts all across the business. If you haven't looked at Kohl's lately, please take a look at us now. We're going to Kohl's. I believe that video does a nice job of capturing the reinvention of Kohl's, still staying true to our core DNA, but making a bolder pivot to be more relevant and repositioning the company from a department store to a focused lifestyle concept, all focused on how people are living today and tomorrow, more actively and casually. I'm really excited about where this company is going, and we have a compelling vision to be the most trusted retailer of choice for the active and casual lifestyle. Nobody has carved out this space and we can own it. We introduced this strategy in October 2020, and as you recall, there was a lot of disruption in retail at that time. We were a non-essential retailer and had to close our stores for a significant period of time, which put tremendous pressure on our business. I'm incredibly proud of how this organization navigated this time, prioritizing the health and safety of our associates and customers and ensuring our financial resiliency. Importantly, we positioned this company to emerge stronger. We also tightened our strategy to think bolder and to move more quickly. Kohl's, in the mind of the customer, has always been a casual brand, and over the last five years, we've also proven we can be a credible player in the active business as well. Now we are evolving the entire Kohl's brand proposition to stand for the active and casual lifestyle. The path we were already on to be a leader in active and casual before the pandemic has only become more relevant as consumer trends accelerated during the last couple of years. It's how people are living and dressing today. According to recent research we've done, 86% of consumers now regularly wear athleisure to work. S even in 10 adults now describe their wardrobe as casual. As people return to the office, they're planning to dress more comfortably. I think we can all personally relate to this. While you may dress up a bit more than you were when you were taking a Zoom call from your home office, you may still wanna wear sneakers into the office versus dress shoes, or wear a blazer made with materials that have stretch and performance fabric, but still look great. For Kohl's, standing for active and casual means we will offer lots of solutions from active, athleisure, denim, and fashion to fulfill the needs of today and tomorrow. This creates big opportunities for Kohl's. We expect these trends will live on well into the future. We'll work with our big national brand partners like Levi's and Nike to ensure that we're bringing the best, most relevant trends and styles to meet our customer needs. We'll evolve our category and brand portfolio to deliver on this mission. The best example for us in our category evolution in delivering against this new strategy is getting into beauty in a big way with the best partner we could have ever dreamed of, Sephora. We'll continue to explore and introduce future ideas that can fulfill our mission, which will also bring new business opportunities to Kohl's. In terms of the fundamentals, we are not starting from scratch. As I mentioned earlier, the Kohl's brand was built on delivering great brands, value, and convenience. With 60 years of experience, we know how that winning combination works. While we're staying true to our heritage, we won't sit still. We will evolve with a faster pace, more innovation, and better data. We've strengthened our brand tenants and sharpened the focus to deliver a compelling product portfolio, an industry-leading value proposition, and a convenient and inspiring experience. This distinct combination supports our differentiated positioning of winning in the active and casual lifestyle. We're driving compelling initiatives that deliver against this. T o bring this all together, this is the strategic framework that we introduced in October of 2020 and continues to be the blueprint guiding our work. We have proven initiatives that will deliver sustained top-line growth into the future. As I was just speaking to, being the destination for the active and casual lifestyle, leading with loyalty and value, and building on our differentiated omni-channel experience. We'll drive this growth profitably as we remain committed to achieving a 7%-8% operating margin. We also remain committed to our investment-grade rating in maintaining a strong cash generative balance sheet. We'll do all of this the right way. We have an incredible culture. Our associates are passionate and committed. They take care of each other and our customers. On this note, I wanna share a quick story that brings our culture to life. I was just speaking about the extraordinary and difficult time during the pandemic when we had to close our stores. We often remember the challenging impact to the business, but this was devastating to our store teams who didn't know when we'd reopen our stores after we closed them mid-March. Some markets started opening up in May, and of course, I went out to visit them, and during these visits, I was reminded about the deep emotional connection that our people have with each other and with their customers. This brings me to John James, our Store Manager, store 493 in Greenville, South Carolina. As I walked the store with him, I asked him over his 20 years at Kohl's, what was his most challenging moment and what was his best? Without hesitation, he said the saddest day was March 19th, the day he locked the store, not knowing when he and his team would return. The best was that morning when he got to take his key out of his pocket and unlock the door, welcoming back his associates, his Kohl's family, and his customers. He was back doing what he loved, taking care of those around him. That is the power of our culture and how much people care. Lastly, we've raised the bar on our diversity and inclusion efforts and on ESG, which I'll address at the end of our presentation today. I have great conviction that executing this strategy will deliver long-term shareholder value. I'm proud to be here and represent this team. As you'll hear from some of them today, this team represents a great diversity of experience and skill sets, and are leading the efforts to deliver on our strategy and results. We've already made significant progress since October 2020. If we just look back at 2021, we successfully launched our partnership with Sephora, 200 stores with strong results right out of the gate, and the majority of our build-out and the opportunity still ahead of us. We've continued to grow our active business, increasing by 40%. We brought on more iconic national brands, including Tommy Hilfiger, Calvin Klein, and Eddie Bauer. We achieved our 2023 financial operating margin target two years ahead of plan. We've reinforced our commitment to creating shareholder value through significant capital returns. As we announced last week, we are doubling our dividend. We announced a $3 billion share buyback authorization and a plan to buy back at least $1 billion in shares this year. Importantly, most of our opportunity is still ahead of us. These are new, distinctive, big initiatives that Kohl's has never had. In the next two years, we will take Sephora at Kohl's from 200 locations to more than 850. We will see even more growth and rollout of our active outdoor and athleisure offerings, products that are outperforming the company. We're continuing to build a pipeline of new brands, categories, and innovation. We're going to open at least 100 more stores with a new modernized experience. To that end, let me just share a little bit more around our stores. Our business is built on a strong store base. 80% of Americans live within 15 miles of a Kohl's store. I've consistently shared my belief in the important role that stores have in retail. What has changed for customers is that they expect something different from a store experience. When they make the trip, they want more services, discovery, and a more inviting experience. We're modernizing our stores to do just that, to deliver discovery, innovation, inspiration, and convenience. We're offering more services, including buy online pickup in store, drive-up, self returns, and of course, Amazon returns. As we roll out the Sephora at Kohl's locations, we're taking the opportunity to refresh the entire store, and customers will see and feel the difference. With all of these strategies coming together, this is the new Kohl's. Take a look. As that video shows, you can see a difference in what the more modern shopping experience looks like at Kohl's. We're also currently testing new experiences in our 35,000 sq ft stores, and we're really encouraged by the results. With better data and science, as you'll hear about later, we will create more localized experiences. As an example, we've created a new test store in the Seattle area. In that region, the store is reflecting local customer preferences, such as a greater emphasis on outdoor apparel. In the South, that same size store would carry more warm weather product, such as year-round swim, sandals, and lighter weight apparel. The smaller format store gives us greater real estate flexibility and the opportunity to go into markets and neighborhoods that couldn't support a full-size Kohl's. Between the smaller format stores and a few key market openings, we are confident that we can successfully open 100 Kohl's stores in the next four years. While that organic store growth will contribute to our top line, our strategic initiatives across the business will be the biggest driver of our growth. As Doug will share with you, our active and casual portfolio will power our future. Greg will talk to you about how we're engaging our customers in new and impactful ways, and Paul will talk about how Kohl's is innovating through our leading omni-channel platform. Before I hand it off to them, let me reinforce a couple of things. We don't operate in a vacuum, and we recognize that the world around us remains volatile. We continue to operate in a global pandemic. We're navigating through an inflationary environment. We're continuing to deal with the disruption in the supply chain and also operating in a very tight labor market. We have teams addressing each of these, and we know we can address them successfully. Importantly, we have a strong balance sheet, we have a large and loyal customer base, and we have an agile and responsive operating model that we have demonstrated time and again can withstand these headwinds. We've been operating in this type of environment, and we posted record results. We have fundamentally transformed our model to improve profitability. We delivered an all-time high EPS, and we returned significant capital to shareholders. As we share more detail on this with you today, I want to reiterate the investment proposition and why Kohl's is a great company now and in the years ahead. We have a differentiated position in retail. We attract and build compelling partnerships. We are expanding our already strong reach. We'll deliver even more relevance by leveraging data science, and we are committed to delivering significant shareholder value. With that, let me introduce Doug Howe. Thank you, Michelle. I'm excited to speak with you today about our key product initiatives which will fuel our growth for the future. Today, I'll be walking you through four key points. Kohl's has a strong and differentiated brand portfolio. We will grow Sephora to a $2 billion business. We will drive continued growth in active, and we will reignite growth in women's. Let's take a closer look at each of these initiatives. We are starting with a position of strength, and we have identified additional opportunities for future growth. We will accelerate growth in active and in beauty through our partnership with Sephora. We will build our outdoor and our inclusive sizing businesses. We're reigniting women's and will maintain strength in home, men's, and kids. This unique combination of businesses is a key differentiator to fuel our growth. We have a powerful portfolio of national brands, many of which have been with us for multiple years, and in some cases, even decades. It is because of our unwavering commitment to our brand partners that they consider Kohl's a retailer of choice. As you can see, in the last five years alone, we have added a number of new and relevant brands to our assortment. Brands are attracted to Kohl's because of the scale and the reach we provide, which Michelle spoke to earlier, but also due to our proven ability to launch and grow meaningful businesses together. Our national brands are complemented by our strong private brand portfolio. Our private brand penetration is currently just over 30%. Our flagship brand, Sonoma, does well in excess of $1 billion in sales across multiple categories, and so is on a path to be a billion-dollar business as well. The duality of our portfolio is one of the things that I am most passionate about because it is a powerful point of differentiation for Kohl's. National brands provide our customers with sought-after brands and products. They engage new customers, they drive traffic, and they extend our brand reach to millions of consumers. Our private brands provide our customers with differentiated and exclusive products. They address opening price points, they address gaps in our portfolio, and they build tremendous customer loyalty. This diversity and balance of assortment is key for us. I've spoken a lot about the power of our brands, but now let's hear directly from some of our key strategic partners. Kohl's is a great partner for Adidas because Kohl's serves families all across America, and they're one of our most important wholesale partners worldwide. We only have a couple of partners, and Kohl's was quickly, you know, a yes in our minds. Kohl's presence with 1,100 stores is super important to us. We couldn't do it without partners like Kohl's. It's a suburban family-driven store. It's in the right places. It's easy to access. The very American legacy of trust, value, and respect for the consumer is what first attracted me to Kohl's. Kohl's is a great partner for my brand and I, because it's always been a true collaboration between us. Kohl's has executed very well in staying ahead of the changing dynamic of consumer behavior. Kohl's leads the way in terms of offering apparel that is performance, yet casual. We had a fantastic launch in 2021, and with that overwhelming proof of concept, we believe we can build a year-round outdoor outfitting destination within Kohl's. Kohl's is such a valuable alliance partner to us because they serve a very important consumer segment, the active consumer, and we are achieving fantastic results together. Casualization, the trend towards lifestyle, it is here to stay, and I think Kohl's is extremely well positioned to capitalize on that. Kohl's recent strategy really resonates with my brand because we've always sought out to create a sort of everyday wardrobe. The focus on a few key brands, you know, that drive consumer reaction, it's extremely well done. They execute really well on how our brands show up in our customers' stores really matters to us. By bringing in some great athletic brands, some of the best casual brands, and bringing in Sephora, Kohl's has done a really great job at being able to have both online and in-store demand. Kohl's delivered on the selective quality prestige environments that we require for our brands. Kohl's focus on a differentiated omnichannel experience gives them the opportunity to be best in class with the consumers they serve. Kohl's is one of those few who are so innovative that they would invite a big competitor to come into their store, and that would be Amazon. There's been a great renovation of existing Kohl's stores, and frankly, they are superb. I have so much confidence in them because they're smart and they know what they're doing. The consumer is gonna continue to look for casual, to look for active, to look for an easy shopping experience, and Kohl's as a partner has that availability. Kohl's will become, in the next two or three years, a major player in selective beauty in America. My partnership with Michelle and team has been one of trust, respect, evolution, and a very open dialogue. In Kohl's, we have a partner that listens, collaborates, and executes well, setting the stage for mutual success in the future. When you look at the competition that they're stacked up against, I think they're probably the strongest company out there in order to thrive in the current environment. It helps us as a company reach the kind of consumers that we need to reach, and I think it's what is contributing to Kohl's success and will continue to contribute to Kohl's success long term. Our vision is to become the active and casual destination for the family. To achieve this, we are focused on four areas: building a sizable beauty business, driving continued growth in active, reigniting growth in our women's business, and creating a destination for perpetual innovation and discovery. Now let's turn to the strategies we have in place for each of these focus areas, starting with beauty. We are on a path to grow a $2 billion business with Sephora. I couldn't be more proud of what we've already accomplished through this partnership. We've built 2,500 sq ft shops in 200 of our stores. We've delivered an elevated experience to our customers that emulates a Sephora freestanding store. We've staffed these shops with Sephora-trained beauty advisors. We've provided our customers with access to over 100 brands, and we've launched a compelling digital experience. We're attracting new and younger customers to Kohl's, and these customers are shopping other categories, over-indexing in active and in women's. But we're just getting started. We're adding another 400 stores this year, and we'll be in a minimum of 850 stores in 2023. As we've shared, since we've launched Sephora last fall, we already have realized tremendous momentum. Sephora doors are showing a mid-single-digit lift to overall store sales. 25% of these customers are new to Kohl's. These customers are younger and more diverse. As I said, they're buying Kohl's products across multiple lines of business. Clearly, we are confident in this partnership. Beyond the incredible business fundamentals, there is a common thread of an entrepreneurial spirit that both companies share. As a result, we have a pipeline of innovative pilots that we're exploring. We're adding incremental fixtures for impulse beauty trial size product. We're offering Sephora incentive at the Amazon returns location to accelerate conversion. We're testing an alternative footprint in our smaller prototype stores. We're enabling the capability to accept Sephora gift cards. What I'm arguably most excited about is our joint pilot that will allow sephora.com shoppers to pick up their online orders at Kohl's stores. Let me walk you through the customer journey. As you know, Sephora has built a very significant digital business. In the future, when a customer is shopping on sephora.com, at checkout, they'll be provided with an option to have their purchase shipped from Sephora. They'll have a second option where they could pick up their purchase at a Sephora location. Third, they'll have an option to pick up their purchase at a Sephora at Kohl's location. It's easy to imagine by the time we get to 850 stores, there is a very high likelihood that the Kohl's choice would be the most convenient for the customer. This is a win-win. It's a win for Sephora because they're able to elevate and provide a different level of convenience and service to their customers. It's a win for Kohl's because we'll have now access to customers and footsteps into our store, largely customers who are not currently shopping from Kohl's today. It's a win for both companies in the fact that we'll be leveraging our inventory. I think this is incredibly transformative. As you've heard, we are very passionate about Sephora, but our strategic efforts don't stop with beauty. You've heard us talk about our active business for the last several years, but let me take a minute to give you a little bit more color on just how impactful this category has been for our business. It currently penetrates well over 20% of our total business. We surpassed $4 billion in sales in 2021, and the category is more productive and faster turning than the company average. As you saw in the video earlier, we're making investments to further support this business as well. We're repositioning active at the front of the store. It'll be adjacent to Sephora. We're elevating our assortments, we're adding additional space, and we're investing to enhance the in-store environment. Our mission is to be the active lifestyle authority for every family. We will do this in three ways. We will continue to advance our active leadership by continuing to nurture and grow the strong relationships we have today with Nike, Under Armour, Adidas, and Champion. We'll continue to lean into the strong private label brands we have in Tek Gear and FLX. Secondly, we'll amplify athleisure, a trend that shows no signs of weakening. Third, we'll expand our outdoor offerings led by Eddie Bauer, Lands' End, and Columbia. Active will continue to be a big business for us at Kohl's, but we are also relentlessly focused on reigniting our women's business. Kohl's is a big player in this business today. It's a massive $5 billion business, and we enjoy top five market share. Admittedly, our performance has been inconsistent. We are transforming this entire business, and we are well positioned for the future. Women's was set up for success last year, but was disproportionately impacted by massive supply chain disruptions. Despite those headwinds, we achieved impressive underlying metrics of performance, including driving growth in women's active, driving growth in intimates and the bottom classification, and delivering historic high margins, regular price sell-throughs, and inventory turnover productivity rates. We have never been more confident in the strategy we have in place to reignite women's. There are four key initiatives that will return women's to growth. The first one is we will become a leader in women's casual apparel. We will significantly grow our dress business. We will own seasons by expanding outerwear and swimwear. We will amplify our opportunity in inclusivity. Let's take a closer look at how we will implement each of these initiatives. As you heard from Michelle, casual apparel is here to stay. Our focus on casual is working, and we will continue to build on that strength. A big growth driver for us within casual will be denim, where we have already achieved No. 3 market share. We are also the No. 1 retailer of Levi's. We have additional opportunity to distort denim growth in our strong private brands, and later this year, we'll be entering the premium category through an introduction of Buffalo Jeans and an exclusive offering from Levi's SilverTab. We will continue to invest to elevate our store and our digital experience, and we're having additional discussions with other premium brand partners as well. Another growth driver will be Sonoma. As I shared earlier, Sonoma is already well over a billion-dollar brand, and women's represents half of that volume. As we've edited to amplify our proprietary brand offerings, we repositioned Sonoma as our flagship brand. As a result, we achieved a historic high level of annual sales in 2021. Going forward, all Sonoma product offerings will be 100% sustainably sourced. We have additional opportunity to drive growth in bottoms, and we will capture additional upside sales by distorting dresses. Not only are we building strength in dresses in Sonoma, we see significant opportunity to grow our broader dress business at Kohl's, which I'll cover next. Dresses have the potential to be a meaningful category at Kohl's, and currently, we are underpenetrated. In the marketplace, this is a trending, incredibly relevant classification, and we are encouraged by strong customer interest. In fact, dresses ranks among our top search terms on our digital platform. We have great confidence that we have permission to be a major player from our customers in this business. To meet this customer need, starting this spring, we're creating dress destinations in our stores, and we're increasing the footprint by 75%. We've launched an elevated digital experience, and we're expanding offerings across Sonoma, SO, Nine West, Lauren Conrad, and Simply Vera Vera Wang. Dresses will represent nearly half of the sales from our recently launched Draper James RSVP line. In addition to dresses, we have an incredible opportunity to own the seasons, as I said earlier, with an emphasis on outerwear in the fall and swimwear in the spring. Growth in outerwear will be achieved by focusing on relevant brands, leaning into strength from Columbia, Lands' End, and Eddie Bauer. We're curating in-store experiences and expanding our online assortments. As it relates to the swim category, we have completely repositioned this business. We've added three exclusive brands that address either a classic, a contemporary, or a junior customer. We will also maintain swim shops in our southern markets year-round. These businesses will both drive relevance, as will our continued work to build an inclusive assortment, which I'll touch on next. We have amplified our focus on inclusivity, which for us is not only about size, but also about diverse assortments. As it relates to size, arguably, the most underserved customer are those who shop plus. While today, we have a well-established and trending business, we have additional opportunity to capture and expand this business by expanding our product offerings across our proprietary brands. Additionally, our teams are focused on broadening our product offerings with an emphasis on diversity, equity, and inclusion. To that end, we're launching an exclusive brand later this fall called In Tempo, which is focused on a younger, more diverse consumer. I've now spoken about beauty, active, and women's. As a retail destination for the entire family, we remain focused on delivering across our entire portfolio. We already have very large businesses today in men's, kids, and home, and we are continuing to build those categories to create a unique, curated customer experience. In men's, which has been one of our most consistent performing categories, last fall, we launched both Tommy Hilfiger and Calvin Klein, and customers are responding very well. Our kids business provides us with the opportunity with millennial customers by being an entry point for new parents. We've launched a private brand with Lauren Conrad in this area called Little Co., which is focused on sustainability with a highly elevated aesthetic. In the home business, we're expanding our assortments to provide solutions for the evolving needs of today's family, with a focus on home decor. In that area, we are broadening our offerings, and we're elevating our in-store experience. As you've heard, we have several initiatives in place to drive our core business, and we intend to complement those strategies with a renewed focus on discovery. Our broad base of 65 million customers appreciate us for our iconic national brands, as well as for our differentiated proprietary brands. In today's environment, more and more, both existing as well as prospective customers have a tremendous appetite for newness. To address this opportunity at Kohl's, we've kicked off a major initiative rooted in discovery and storytelling. We have introduced over 70 emerging brands to our customers since the inception of this program. This has been a win for our customers, a win for our business, and a win for our emerging brand partners. I'd love to share just one example of this. Colors For Good is a brand best known for their handmade bracelets. Their socially conscious business model empowers women in underprivileged communities and provides them with employment opportunities. Ongoing purchase orders from Kohl's have helped them expand to more communities and provide all workers with a 10% increase in wages. Partnerships like this that combine interesting product with meaningful societal impact are an ongoing priority. Our commitment to innovation remains core to our culture. We are bold, we are inventive, and we are disruptive. We have demonstrated this through our partnerships with Amazon and Sephora, and our strategy team continues to look for what's next. Today, I've shared how we will drive growth in our core businesses while also identifying transformative out-of-the-box partnerships that will enable us to continue to lead in this space. I have never been more confident in our strategy going forward. With that, I'll turn it over to Greg Revelle. Thanks, Doug. Today, I'll be covering all the new and impactful ways that we're engaging our customers. I'd like to leave you today with four key takeaways. We have a large, loyal, and growing customer base. We're improving our marketing effectiveness for both existing as well as new customers. We're enhancing the value proposition for our Kohl's card. We're announcing a couple of exciting new ways that we're gonna drive additional revenue in credit and media. As Michelle shared earlier, Kohl's has a strong and growing customer and loyalty base, with over 65 million active customers. Over half of U.S. households shop at Kohl's every year. We have 30 million Rewards members. We have so many Kohl's fans who share their passion and excitement for our stores, our brands, and our products, as well as our iconic Kohl's Cash on social media. Take a look. I'm sitting here. Kohl's doesn't even open for 20 more minutes. I am here. The search for joy continues, and I went back to Kohl's and did a little more damage. Oh, we could have went to Kohl's. I got Kohl's Cash. I got so much Kohl's Cash. Am I the only one that feel like a million bucks when you earn some Kohl's Cash? Roll up to Kohl's doing my Amazon returns, and there's a Sephora here. I'll say it again. There's a Sephora here. I fear I may have girl bossed a little too close to the sun. Okay, I wanna show you guys what I got at Kohl's. One of my favorite Kohl's brands is Tek Gear. Now, will I actually work out in these? I don't know. Thank you so much, Kohl's, for showing us that we don't have to compromise our style for comfort. Kohl's. Yes. Yes. Where are we going? Kohl's. When it comes to our customer experience, we've been on a journey toward better personalization. Now what that means is, we start with the customer, bringing information from all the different ways that they interact and shop with us, on kohls.com, on our app, through email, in Google Search, text alerts, social media, as well as in their in-store experiences. We look at customer data for targeting our messaging. Every customer wants different things at different times. Identifying customer needs and then using that to serve up the right message at the right time to our customers requires rethinking how we approach our marketing. We constantly evolve the technologies that our teams use to adjust customer experiences quickly, depending on our knowledge of the customer as well as on our business objectives. These tools allow us to automate the orchestration of a lot of different interactions that made personalization a challenge in the past. Let me share an example. We're all familiar with Kohl's Cash. The video we just watched shows how excited our customers get when they have new Kohl's Cash to spend. Here's a typical customer personalization journey. A new customer makes a purchase in women's and earns Kohl's Cash. We send her an email reminding her that she has outstanding Kohl's Cash with personalized content based on her first purchase. We also reach out to her on social media with a reminder that she has Kohl's Cash to use, often with dynamic product recommendations as well. These reminders all link back to our website, which is of course, tied to her account and include additional product and even outfit recommendations for the customer to use her Kohl's Cash. All of these touchpoints along the customer journey both drive traffic as well as increase conversion. As I mentioned, we have 65 million active customers, and owing largely to the high adoption of our credit card as well as our loyalty program, we have a customer identification rate of nearly 80%, which is higher than most other retailers. Now, knowing so many of our customers at this individual level allows us to regularly connect in ways that are both more meaningful and relevant. I've covered some of the ways that we're reaching existing customers, but what about all the potential for new customers? Now, the good news is, with a boost from our strategic partnerships with both Sephora and Amazon, we're growing our customer base, reaching new customers who are younger and more diverse. These are shoppers who we can convert to loyal Kohl's customers for the future. Now, as Doug mentioned, Sephora is a game changer in attracting new customers to our stores and online, with 25% of our Sephora customers new to Kohl's. Once they're in our stores or on our site, half of them are cross-shopping into other departments as well. Amazon is one of our compelling partnerships that's also key to driving new customers. We launched this groundbreaking partnership a few years ago, and since that time, we've brought in millions of new customers from it. Here's an example of how it works. An Amazon customer comes in to return a package, and we give him a $5 Kohl's Cash incentive. Now on his way out, some Jumping Beans kids apparel catches his eye, and so he buys a couple of onesies for his young son. When he checks out, he joins our loyalty program. We now have some data, including his email, which of course, we can use for communication, as well as knowledge that he probably has kids. We include him in a customer onboarding program where we'll personalize a series of touchpoints. Their next email will include more Jumping Beans or other kids' brands, since new customers typically shop the same category for their second purchase. We're also gonna educate him about our loyalty program benefits and issue him bonus Kohl's Cash to encourage that second trip. Our partnership is a win-win. Amazon is able to reduce its costs as well as offer a tremendous returns experience, and we drive traffic and new customers into our stores. For those reasons, we continue to be really happy with the partnership. We're getting more efficient with our marketing strategy to attract new customers as well. Our advertising spend to sales ratio efficiency has gone from 5.1% down to 4.6% in the last couple of years. That represents a savings of $130 million a year. Here's how we're doing it. We've divested out of TV and direct mail and used more customer data to better target those who respond to our remaining print communications. At the same time, we've increased our investments in paid search, email, push messaging, as well as social media for improved targeting and higher ROI. For example, personalized tactics on Facebook, Instagram, Pinterest, and Snapchat are 50% more efficient than the tactics they replaced in other channels. Now, not only are these channels more efficient, they also are more personalized and effective at reaching those younger, more diverse customers that I've talked about. We know that over 70% of Gen Z and millennials follow influencers, so we're increasing our investment with influencers. These social media partnerships are a key driver of new customer acquisition for discovery as well as for direct links to shopping. Now I want to talk about loyalty and what our platform means for our customer base, both existing as well as new. Kohl's is a leader in loyalty and has been for a long time. Our customers love to be rewarded for when they shop. As part of our fundamental foundation and value, we offer a best-in-class loyalty program that keeps customers coming back. In 2019, we launched a new rewards program, a simplified, enhanced experience that leverages personalized offers with Kohl's Cash at its core. Our goal is to acquire and retain customers, win with Millennials as well as young families, simplify our loyalty assets, and reinvigorate the Kohl's card. Kohl's Rewards is working for both new and existing customers. We offer a world-class value proposition, ranking one in program incentives compared to other retailers. Here's why loyalty matters to drive growth in spending. Our over 30 million Rewards customers spend double what our base customers do. If they have a Kohl's credit card, that jumps to 6 x more. Our most valuable credit customers spend 12 x more. I think the numbers speak for themselves. The more a customer knows Kohl's, the more value they get and the more they spend with us. Now to how we're driving revenue and profitability for the future. We want to make our loyalty program even stickier with stronger everyday value. This encourages more customers to come back and shop more frequently. We already have our industry-leading Kohl's Card, and we're ready to take it to the next level. Following a successful pilot, we're rolling out enhanced rewards for our Kohl's Card customers this spring, which will result in an incremental sales lift through increased rewards enrollment as well as higher redemption rates. Kohl's Rewards members will earn 7.5% back when they use their card. Essentially, customers will earn 50% more in rewards when they use their card. This is a huge new benefit for the nearly 19 million Kohl's Card members who are also Rewards members. Our pilot of this enhanced benefit in 2021 delivered a sales lift, more Kohl's Card acquisitions as well as usage, boosted Kohl's Rewards program enrollment, and increased Kohl's Rewards redemptions. Additionally, we're planning to launch a new co-branded card within the next couple years. This is gonna allow Kohl's card customers to use their card across a wider range of purchases, also increasing our credit revenues. We're really excited about another big growth opportunity, the Kohl's Media Network. Many retailers are investing in this area, and we've been testing and learning here. You may have seen the third-party ads on our website as well as in our emails. This is a significant growth driver for the company. We're expanding the team, standing up the supporting technologies, and we're rapidly scaling this business. This is about creating a platform to leverage our data assets, our loyalty program, our media buys and sales channels to deliver more revenue with high ROI for our advertiser partners. As you've heard today, we have a large, loyal, and growing customer base of 65 million, and we're attracting new, younger, more diverse customers. We're getting more personalized and efficient in our marketing. We're making our Kohl's card even more compelling with more rewards and adding a co-branded card. We're driving additional revenue through the launch of Kohl's Media Network. I am confident that these initiatives will drive deeper engagement with our current customers while attracting new ones as well. With that, I'll turn it over to Paul Gaffney, who's gonna walk you through how our technology transformation brings these and other opportunities to life. Thanks, Greg, and thanks to all of you for joining us today. I'm gonna talk about four things. I'm gonna talk about our strong omnichannel foundation. I'm gonna talk about the critical role that technology plays in our company transformation. Third, I'm gonna talk about the very exciting topic about how we're leveraging better data and better science to make better decisions. I'm gonna close with how we've evolved our supply chain to drive further efficiencies for Kohl's. Starting with Kohl's omnichannel foundation, we have an incredibly strong foundation. Our fleet of almost 1,200 stores across the United States are all financially healthy. They serve to provide increased awareness, driving overall sales, including digital sales, in their local markets. Our digital business continues to grow significantly, and we continue to invest in providing an ever easier and more effective experience for our customers. This past year, we opened our sixth e-commerce fulfillment center. It's our largest, and it's our most economically effective. This omni approach to business is very important because customers who engage with the full suite of digital and store business at Kohl's, they are our strongest customers. Customers who shop us across channels are 4x more productive than store-only shoppers, and they're 6 x more productive than digital-only shoppers. Turning to our second topic, technology. Technology plays a critical role in our company's transformation. Technology enables all of us to deliver a better experience to our customers, whether those experiences involve the conveniences of omni shopping, the rich and personalized experience inside of the Kohl's app, or the overall digital experience that allows our customers to find not only our wonderful store assortment, but also our extended assortment of web-only items and direct ship items. Technology allows us to give our customers a more tailored and personalized experience, and that shows up in personalized marketing offers and in localized and personalized products. As importantly as what we do for our customers, technology also makes it possible for us to deliver a much easier experience for our frontline associates in our stores and in our distribution and fulfillment centers. Making life easy for our frontline associates makes it easy for them to take care of our customers. We've made significant progress over the past several years enhancing our technology across both of our stores and our digital business and doing it very cost effectively. You've heard today from Doug and from Greg that our stores are healthy, they're productive, they're conveniently located across the country, and we're investing in making them even easier and more productive, driving more revenue growth through technology. First of all, our stores play an integral role in fulfilling our omni orders. 40% of our digital orders are fulfilled by stores. The investment we've made in making our store associates' jobs easier by giving them better handheld tools, providing better functionality and better services, makes that 40% of store-based fulfillment super efficient and super effective for our customers. We're also leaning into technology to deliver on future store experiences that customers want more of. Customers absolutely want simple, easy, and convenient experiences. Often, that involves allowing them to choose self-service as a major convenience. We're focused on the future of making our customers' lives easier through self-service, including what we believe is the easiest customer experience for self pickup of an order at a store, self returns, and self-checkout. We've been testing these in a handful of stores this past year and have received fantastic customer response. I believe we've built the best self-pickup experience in America. We will have a quarter of our stores equipped with some form of self-service by 2023. We will roll out the self-service pickup experience to all stores by the end of this year. The second easy experience for our customers is self returns. We've got that in over 100 stores now. We plan to roll that out to even more over the course of the next 18 months. It is the simplest returns experience, one of the most challenging experiences in retail. It's as simple as scanning your item, dropping it in a bag, and leaving it in a designated box in our stores. Later this year, we'll even make it possible for our customers to start that return before they even come to a store. If they wanna drop that off at curbside, we are also gonna experiment with enabling that. Finally, we intend to lead in self-service checkout. You don't see a lot of self-service checkout in general merchandise and apparel. We'll be testing that throughout the course of this year and hope to have more to say about that in the future. Turning to the strength of our digital business. Digital itself continues to grow because customers are taking us there. Consumers continue to shift their shopping habits online and across channels, starting product engagement online and finishing in the stores. Mobile penetration continues to grow and to grow rapidly. Devices become more prevalent, people spend more time on their devices. Our Kohl's app delivers a fantastic and rich experience, and it currently makes up a third of our digital business. We're focused on driving more customers to use it so we can connect even more deeply. The app allows us to deliver the most deeply personalized experience. Our technology investment in the digital platform is enabling us to optimize our product portfolio to drive increased profitability and to grow strategically in all of the key priority areas that Doug has talked about. We're supporting enhanced discovery, easy shopability for the customer, and we do that iteratively, releasing new features and functions almost continuously. This allows us to convert more customers to be omni-customers by giving them a true sense of an integrated store and digital experience. We leverage digital to acquire new customers into the Kohl's ecosystem. We do that through things like the Sephora digital business, which is brand new to many customers for Kohl's. We do that through continuing experimentation with new payment options. We have a very robust and very efficient payments pipeline, and on top of that, you will see us this year pilot extensions to that like PayPal, which will eventually lead to Venmo, and some buy now, pay later options. It allows us to do targeted marketing and to really take advantage of hyperlocalization. I'm very proud of the work we've done to transform technology to better serve our customers across stores, digital, and really fulfilling that world-class omni-experience. Now, I wanna talk to you about the exciting future of what we have started to do and will increasingly do more with, and that's doing more with better data and better science. Kohl's has always been a data-centric, data-driven organization. Greg talked to you about the robustness of our customer file and the things we already know about our customers. We're now starting to leverage data science and, more importantly, the explosion of third-party data to provide an even better, more relevant, and more scientific experience that allows us to drive even greater growth while remaining very operationally efficient. In the investment community, you're all familiar with the explosion of third-party data. It allows you to look at sources and triangulate the performance of a company from sources of data that you weren't able to see even a decade ago. This explosion of third-party data, combined with the continued advancement of more and more computing power and storage at lower and lower prices, has really led to a revolution in how data-centric organizations can now open the aperture and bring more data and more science to bear. At Kohl's, we've invested in access to a new data platform and some new data science, and we're focused on using that better science to separate the signal from the noise in this massive amount of third-party data, and then leverage that insight to make better decisions across lots of different categories in our enterprise. Data is one of our strongest assets, and we're strengthening our database. If, for example, prior to accessing third-party data, we knew several dozen things about our customers, we've added knowledge of several hundred more things to tens of millions of our customer records. We're then improving our data science capabilities to take those new facts and apply them in ways that might challenge our intuition, but that machine learning can actually see for us and help us satisfy our customers more and make more money for Kohl's. Better data and better science come together to enable us to make better, more granular decisions at scale. Given the complex nature of our business, we have many opportunities to apply this more granular decision-making across our entire value chain to create more relevant customer experiences, drive higher revenue, higher margin, and greater asset productivity. One of those dimensions of improvement is how we treat product, particularly the local assortment of product, and we're working hard to hyper localize our product mix based on these additional signals about local customer needs and preferences. Marketing is another area where we're able to tap into rich third-party data and better science to personalize our marketing even more, communicating an effective message to the right customer across all channels based on an individual customer's spending patterns, lifestyle interests, and other interesting facts. Finally, better data and better science will allow us to continue the path that we've been on of supporting higher levels of sales with lower levels of inventory. Scientifically placing inventory in the right channel at the right location and the right time to give customers access to the products they want, but to do it really efficiently as an inventory investor. Finally, on the value front, delivering on our promise to be the place that when you shop as a Kohl's customer, you're convinced that you're getting value every day. Better data and better science will allow us to become more surgical with our price and offer differentiation, localizing our price based on local competition, and presenting customers with offers that uniquely drive incrementally, incrementality for those individual customers. What you'll see this year are our initial efforts on product hyperlocalization and improved marketing personalization, and I'm gonna walk you through two examples to make those concrete. Let's start with product hyperlocalization. Hyperlocalization uses new customer and new product data signals to generate assortment tweaks that are at a much finer grain than we've made assortment tweaks in the past. We have historically built assortments based on an intersection of climate and the productivity of a given brand in past years' results. This approach has served us well, but we've learned that there are many things that it doesn't take into account. Things like local lifestyle differences, localized demographic differences, the effect of local competition, lack of local competition, and economic differences across stores, including subtle things like what jobs are people actually working at during the day. Those things impact customer preferences in some ways that are more compelling than climate and volume. Interestingly, different categories have very different drivers. When you think about the dozens of categories that we're in and the many different parts of this country that we're in, you can start to understand that you have to use data and science to get insights into these different drivers. I'll give you an example of this in men's big and tall. In men's big and tall, we fed 10 million different data points into a machine learning algorithm to figure out what actually drove brand and class sales. That machine learning algorithm looked at those 55,000 sources of new potential signals and found 135 of them that were actually relevant to localizing the big and tall assortment within our business. Those demand drivers included things like what jobs were people working in? What was their behavior with other competitors? What is the local competitive set? What are the specific geographic nuances, and what are some other economic data? That allowed us to take the big and tall department and cluster stores into six different demand cohorts based on those relevant demand drivers. That also varies by department, however. We have some that have between four and eight distinct demand drivers. For example, men's hosiery, it's got less variation. There are only five demand cohorts. Junior fashion tops has a lot more, eight demand cohorts. If you think about doing this across all departments, you would understand that we have to rely on this wonderful new machine learning technology that figures out the matches between this brand and class mix and the demand drivers in each of these, in each of these areas. Continuing with our men's big and tall example, some of the insights that came out of machine learning are things like where customers have less opportunity to cross-shop, we actually do a lot better in certain brands. This insight allows us to over-assort those brands in exactly those areas where they will do better. We've also learned that stores in more rural locations actually have some lower demand in other brands, and that allows us to reduce our exposure to those brands in those specific clusters. We've been testing this approach to hyperlocalization for the better part of a year in clusters of several hundred stores. We've been incredibly pleased with the results, and we expect hyperlocalization to positively impact our results in the fall of 2022. Starting in spring of 2023 and through the balance of 2023, we expect to have applied hyperlocalization to our entire assortment. As Greg talked to you about, we know our customers, and we know how they shop Kohl's really well. But with this additional third-party data, we actually now have a better understanding of how customers are shopping outside of Kohl's, and that allows us to better tailor their experiences across channels based on that wider view of their behavior. Let's take Jess and Rachel as an example, and these are two real customers of Kohl's. Prior to looking at third-party data, Jess and Rachel, they looked pretty much the same to us. They both shop Kohl's 4x a year. They spend about $350. They're both in the Rewards program, and they both love active home and kids apparel. Based on just that data, our first-party data about Jess and Rachel, we would basically treat them the same and serve them the same personalized marketing. When we open the aperture and look at the third-party data available about Jess and Rachel, we're able to learn some additional details. Jess, it turns out, spends most of her share of wallet at Kohl's, but we have a big opportunity because she's buying beauty products elsewhere. We've learned that she has some specific interests in cooking. Rachel, on the other hand, once we look at this third party data, it turns out she spends only a small portion of her share of wallet at Kohl's. She shops some other value-oriented retailers for apparel, and she's super interested in exercise and women's apparel. With this new data, and with the science to interpret it, we can now treat Jess and Rachel very differently in a way that is very personalized for them and very economically productive for Kohl's. For Jess, we'll prioritize making sure she knows that she can transfer her beauty spending elsewhere to Sephora at Kohl's, and we'll feature some home and kitchen content knowing that that's a specific interest of hers. For Rachel on the other hand, we'll highlight new and trending active and women's products, and we'll do it during specific sales events to really play into her quest for value. We'll also take extra efforts to show her the additional value she could save by using her Kohl's card. While these two customers have historically looked very similar to us, with this new platform we have for enhanced third-party data, we uncover differences that can have a meaningful impact, serving Jess and Rachel in a more personalized way, having a healthier economic relationship with both of them. We're just at the start of what will be a multiyear data science journey. We're incredibly excited about the impact that it will have, the ability to transform our decision-making, unlock more relevant customer experience, and enable Kohl's to do that in an economically very advantaged way. Before I hand it over to Jill, I wanna close by talking a little bit about supply chain, and I'm gonna take you through three things. The state of the global supply chain and how we have managed it to date, how Kohl's is planning for this continued disruption to the global supply chain, likely for another year, and our underlying confidence in our significant supply chain operation, an operation that spans 15 buildings and over 10 million sq ft in distribution and logistics with significant state-of-the-art automation. First, the state of the global supply chain and how we managed it. Prior to the supply chain crisis, we had already been working on making our supply chain more flexible, more nimble, and more cost-effective. That enabled us to do a number of things in 2021 to attempt to combat global supply chain disruption. We added drayage capacity. We invested in higher speed ocean transport. We did everything possible in the parts of the supply chain that a retailer can control to make sure we were as positioned as good as we possibly could be. As all of you have seen in the late summer and early fall, the situation, particularly at the ports of L.A. and Long Beach, got even worse than anyone anticipated, and it definitely impacted our sales in Q4. We've made even more changes based on that, extending our planning calendar, looking to move product sourcing to countries that are closer to the U.S., moving volume out of L.A. and Long Beach into some of the ports in the U.S. that are capable and less congested. Bottom line is it's a challenging time, but we believe we're taking a very economically prudent approach, and we have confidence in our significant supply chain operation. We're now able to treat all of our inventory as omni-inventory, and we've been able to dynamically reallocate using intelligent machine learning-based allocation algorithms to move product between channels and react to dynamically changing customer needs. We've added capabilities to direct product where we need it right up until the last minute, and we're beginning to apply our paradigm of better data and better science to the forecasts we use to plan and allocate inventory, allowing us to improve what we've already demonstrated is a very economically robust approach to inventory turn. With that, I'll turn it over to Jill Timm. Thanks for your time. Thank you, Paul. As you've heard today, Kohl's is in a very strong financial position. We're focused on driving both top and bottom lines while we continue to invest in driving that growth. We're going to continue to drive shareholder value. Kohl's is a vibrant retailer. Last year, we generated $19.5 billion of revenue with $2.5 billion of EBITDA and generated over $1.5 billion in free cash flow. We are gonna continue to build on those strong 2021 results. We've made great progress against our strategy, and we're building on that momentum to drive our future success. This is our financial framework. We're focused on driving both the top line and bottom line. We're targeting low single-digit sales growth while delivering a 7%-8% operating margin and mid- to high single-digit EPS growth. This will allow us to continue to invest in our growth and return significant capital to our shareholders. Let's first talk about how we're gonna drive that top line growth. There are five key initiatives that you heard outlined today. As you can see, they're broad-based from a product and channel perspective, and also on how we're gonna engage our customers through loyalty. First, Sephora. As you heard Doug say, it's going to be a $2 billion business by 2025. We're gonna have 850 stores with 400 opening this year. We're seeing a mid-single-digit sales lift, and it's coming through both traffic and higher ticket. 25% of the customers are new. The beauty sales are highly incremental, and we're seeing a solid halo effect, with 50% of our baskets including other categories such as active, women's, and accessories. This partnership is highly accretive to our operating margin, and we are expecting a significant ROI on our investments with a payback period of less than 3.5 years. Second, we're going to benefit from our enhanced brand portfolio. We're gonna continue to drive growth in active, which is now almost 25% of our sales and grew 40% last year. We're gonna continue to benefit from new brand launches, which are off to a great start. Eddie Bauer is expanding to all stores from 500, and Tommy Hilfiger and Calvin Klein are expanding space and assortment in 600 stores. As you heard Doug outline, we have repositioned our women's business for growth, and we will continue to pursue partnerships to drive newness and discovery. Third, we continue to see opportunities in our stores. We have an incredibly healthy and profitable store base. 99% of our stores were four-wall profitable. 95% of our stores generated more than $1 million in four-wall cash flow. They're also highly convenient. 80% of Americans live within 15 miles of a Kohl's store, and nearly 90% of our customers last year shopped them. Stores are fulfilling approximately 40% of our digital sales with both BOPUS and drive-up and ship from store. Based on the health of our stores, we plan to open over 100 stores in the next four years. We're reaching more customers in smaller markets. We successfully tested a smaller size store in recent years, the 35,000 sq ft store in various markets, and we see an opportunity to serve an underserved customer base. We expect over $500 million of sales from this opportunity, and we're targeting a 15%+ return on investment. Fourth, Kohl's is known for providing great value, and that value comes through our leading loyalty program. We have over 30 million customers in our rewards program, and they spend 2 x more than our non-loyalty customers. As you heard Greg say today, we're gonna continue to reward them further. We tested a 7.5% rewards on Kohl's card in 2021, and we saw a 1% sales lift in test markets. As you've heard from Greg today, we're gonna be rolling this out to all markets later this year. In addition, we're going to expand our reach with a co-branded card in the future. Last, we have a $6 billion digital business today. We see a path to at least $8 billion in sales. Our digital business will benefit from all the things we outlined today, Sephora, loyalty, and converting more of our store customers to omni customers, which are more productive. As a result, we expect to grow our digital penetration. We will also continue to enable a best-in-class omni capabilities with both stores and digital 'cause they're just better together. Now let me transition to our margins. We are committed to delivering a 7%-8% operating margin. We believe this is the right level for our operating model. Our 2022 guidance is within this range. There are a lot of drivers which I will review in a minute, but I also want to acknowledge there are a lot of pressures such as freight, wage investments, and the growth of our digital business. From a gross margin perspective, we see margin in 36%-37% range. Now let me talk about how we'll drive this. First, we have inventory management. We are focused on driving turn of at least 4 x. We got there in 2021, and we intend to maintain this level moving forward. We also plan to be more dynamic in our inventory allocation, getting inventory to the right place at the right time. We will focus on speed by placing product closer to the customer, allowing for faster store replenishment and better in stocks. Our category productivity benefits include Sephora replacing jewelry, active getting more space, and all the newness in apparel. We will continue our sourcing efforts. We made great progress against our 2021 goals of $125 million-$175 million, and we see more opportunities ahead. We're simplifying our pricing and promotional strategies, and this is really resonating with our customers. We showed more simplified offers to new customers to reduce complexity, and we use greater use of personalized and targeted offers. Moving on to SG&A. We have a long history of disciplined expense management. We have strong initiatives in place to drive continued SG&A efficiency. We're transforming our labor model, which is our largest expense item, focused on driving productivity in stores and fulfillment centers by leveraging technology and self-service. We're gonna build on the initial success in marketing efficiency with the goal of lowering our marketing spend to 4% of sales or below. We reduced our marketing spend to 4.6% of sales in 2021, with more than $125 million less spend relative to 2019, and we have more room to go. We'll maintain our technology efficiency gains that are already reduced by over $100 million. What does this mean for our earnings? Following 2022, we will drive a mid- to high single-digit percent annual growth rate in EPS. Now I'd like to turn to the balance sheet and our capital allocation strategies. 2021 showcased our commitment to disciplined capital management. First, we returned the balance sheet to its pre-pandemic strength and demonstrated our continued commitment to maintaining our investment-grade rating. Second, we've showcased our ability to drive strong cash flows with over $2 billion of operating cash flow for the year. Third, we returned over $1.5 billion of capital to our shareholders. Here's the framework we're gonna use as we approach capital allocation decisions. To start with, we're focused on maintaining strong balance sheet with the long-term objective of maintaining our investment grade rating. This discipline has served us well over the years. When it comes to using the cash on our balance sheet, our first priority is to invest back in our business. Then next, we'll return that capital back to shareholders through both the dividends and the share repurchase program. From a balance sheet perspective, we've had more than two decades of being an investment grade-rated company, and this is really important to us. Our leverage is consistently in the low- to mid-2x range, and we feel this is a good range to sustain our investment-grade rating. We have also shown our ability to take debt out when leverage is moving up, and we plan to address our 2023 maturities in the coming year. As it relates to cash flow, we operate a highly cash generative business. For the past f i ve years, we've averaged $1.8 billion of operating cash flow and $1.1 billon of free cash flow. Our strategies will allow us to continue to drive strong cash flows going forward. During the next th ree years, we're targeting $5.5 billion or more of operating cash flow and approximately $2.5 billion of free cash flow. Now let me share with you how we're investing to drive growth. As you heard last week, we're stepping up our investments in the business. This is for 2022, but will also continue. Over the next th ree years, we're expecting to spend approximately $2.5 billion in cumulative capital expenditures. This is a step-up versus our pre-pandemic investments, and it reflects our commitment to driving growth through initiatives such as Sephora, refreshes, and new stores. 65% of the spend will be across our stores. Approximately 15% of the spend will be in omnichannel, and the remainder will support technology as we roll out strategies including the Kohl's Media Network, hyper-localization, and increased automation in stores. We are committed to returning capital to shareholders. Over the past 10 years, we have returned nearly $10 billion in capital. We reinforced this commitment last year and are doing so again this year. Our board recently increased the dividend by 100%, equating to an annual dividend of $2 per share. We also authorized a $3 billion share repurchase program and will repurchase at least $1 billion in 2022. In summary, Kohl's is committed to driving profitable growth. We are laser-focused on three metrics throughout the P&L: low single-digit sales growth, delivering a 7%-8% operating margin, and mid- to high single-digit EPS growth. We have a th ree year operating cash flow target of $5.5 billion or more, and we'll invest nearly half of that back into the business to drive growth. We'll return the remainder through our dividend and share repurchase program. Altogether, we believe this financial and capital allocation framework will translate into significant shareholder value. Thank you so much. With that, I'll turn it back to Michelle. Thank you, Jill. Before we open it up for Q&A, I'd like to talk about Kohl's long-standing focus on ESG, environmental, social, and governance stewardship. You can find more detail in our annual ESG report. In this year's report coming out next month, we will be including SASB and TCFD reporting. I am so proud to work for a compan y that has a long-standing focus on ESG stewardship. Let me walk you through a couple of highlights. Our strong environmental platform is well respected and recognized by leading third parties, such as the EPA, Carbon Disclosure Project, Dow Jones Sustainability Index, and the S&P Global Sustainability Yearbook. Kohl's social platform consists of our diversity, equity, and inclusion focus, philanthropy, and factory compliance efforts. We have a long history and track record of giving back in the communities where we live and work. We've taken a sharper focus in recent years to make progress supporting D&I across the business. Kohl's holds itself to a high level of ethical standards, and we have many programs to ensure this. A good example is we've been repeatedly recognized by Ethisphere as one of the world's most ethical companies. Let me go a little deeper on our environmental practices. We are deeply committed to our role in caring for our people and the planet, and we take this responsibility seriously. This is part of our DNA, and we've been an early mover in retail, taking meaningful steps to reduce our carbon footprint. Our main sustainability efforts are structured around three pillars, helping to fight climate change, more recycling and less waste, and accelerating sustainable sourcing. When it comes to climate, we are establishing a goal of reaching net zero by at least 2050, and we're committed to expanding renewable energy platforms to help us reach that goal. To give you a couple of examples, we're aiding the transition to low carbon transportation by increasing the number of electrical vehicle charging stations. We have approximately 300 stations now and will have 1,000 by the end of 2023. We'll add 200 new EV charging stations this year and another 400 in 2023. We're also expanding our solar program, and we'll have 175 solar locations by the end of this year. Additionally, we're continuing to update stores with energy-saving LED lighting. We are committed to updating all of our stores with LED lighting by 2025. This will deliver at least a 20% reduction in scope 2 emissions. With regard to waste and recycling, we are making great progress against our goal of diverting 85% of Kohl's operational waste from landfills. We reached that goal in 2021 and are committed to keeping that in focus in the years ahead. We're also continuing to focus on reducing plastic and cardboard in our brand packaging. We're accelerating our sustainable sourcing efforts, reducing water and chemical usage, and increasing recycled materials into Kohl's own brands. This is a global effort, and we are working with partners and vendors around the world that share our values and help us reach our goals. From a social perspective, Kohl's takes great pride in giving back to the communities where we live and work. Under the Kohl's Cares banner, we have given more than $800 million back to communities. Our associates have contributed more than 5.5 million volunteer hours since this program began in 2000. Kohl's philanthropic efforts are focused on supporting family health and wellness, and we're proud to support our three major national partners that share this value, Boys & Girls Clubs of America, Alliance for a Healthier Generation, and our newest partner brought on in 2021, the National Alliance on Mental Illness. Kohl's is also proud of our commitment to diversity and inclusion across the business, our framework of driving progress for our people, our customers, and our community. This strategy accelerates how we're embedding D&I throughout our business by being intentional about our programs and practices and holding ourselves accountable with measurable goals and results. We know that making progress in our D&I efforts will enhance our workplace, the experience for our customers, and our overall business. With our people pillar, our overall population is reflective of U.S. population demographics, and we're working on enhancing representation across the company, including at leadership levels. To support our goals serving our people, we are leveraging new recruiting tools and expanding our search efforts to bring more diverse candidates to Kohl's. We've invested in leadership assessment, internal programs, external courses, and peer networks designed to meet the personal and professional needs of diverse talent across the company. Kohl's has always been a great place for young talent to start their career, hiring about 500 interns every year. This year, I'm pleased to share that we have the most diverse intern class in our company's history. This is a great example of our commitment to building a more diverse workforce at all levels. We have an expansive business resource group program representing eight associate communities with 20,000 associates participating in these groups. Examples include Black Professionals, Diverse Abilities, Hispanic and Latino, and Pride BRGs. Now to customers. We have many efforts across the company to drive greater relevance to broaden the diversity of our customer base. We have a focused effort to offer more relevant brands and assortments, and we've instituted things like a diversity design council to drive authenticity in the design, art, and curation of our products. We also leverage our BRGs I just mentioned for inspiration and consultation. We're committed to launching diverse owned brands and introduced nearly a dozen this year, and these are just a few examples, and you'll see more from us in the coming years. For our community, we have committed millions of dollars to support nonprofit organizations that support diverse communities, including several new partnerships with organizations in our hometown here in Milwaukee. We've pledged to double our spending among diverse suppliers by 2025. Today, we are increasing that goal to triple our spend by 2025. We'll continue to share examples like this and progress against our D&I goals in our 2021 ESG report. Lastly, from a governance standpoint, let me touch on our board. We have strong governance practices. We've made significant board refreshment, including bringing on six new independent directors just in the last three years. This board is strong, diverse, and experienced and has the right skill set to help guide this company into the future. To close it out before we move to Q&A, first, I just want to thank all of you for watching and listening in to our presentation today. As you've heard from myself and the team, we have great passion and conviction around a compelling strategy and set of initiatives that will propel the growth and earnings power of this company. We are a strong company. We have demonstrated our resiliency in light of significant headwinds. We're reinventing the brand to be more relevant, and we're strengthening an already strong cash generative operating model. As we profitably grow this business, we look forward to delivering significant returns to our shareholders. Thank you. At this time, we will begin the Q&A portion of the event. As a reminder, if you'd like to ask a question, please submit it via the webcast page. We will do our best to address your questions. Our first question comes from Bob Drbul of Guggenheim Securities. Bob, your line is open. Bob, your line is open. We'll come back to Bob. Our next question comes from Steph- Hello? Hey, Bob. Hello, Mark. Bob, please go ahead. Can you hear me now? Yes, please go ahead. Mark. Sorry. Couldn't hear you before. Yeah, I got a couple of questions. I guess the first one is on Sephora. Just wondering if you can, you know, maybe put some more numbers around the assumptions to get to the $2 billion, you know, sales per sq ft, you know, specifically would be very helpful and/or the profitability. Just wondering if you have some of the economics around, you know, some of the innovation and engagement, the Sephora gift cards or the cross-company initiatives that you're talking about. Can we just talk through some of those a little bit? That would be helpful. You bet, Bob. Good morning. Yeah, I'm gonna hand over to my colleague, Doug, to answer that question. Great. Again, we couldn't be more confident in the Sephora partnership. We are extremely confident that we'll be able to build this to a $2 billion business, as we talked about. Obviously, from a margin perspective, it's highly accretive, both from an operating margin as well as our gross margin. Also very accretive, obviously, from the revenue perspective. Couldn't be more pleased with the initial results that we're seeing, obviously, in the 200 stores. As we shared, those stores are experiencing a mid-single-digit increase in a lift overall store sales. Again, early days, and we just expect that to build over time. We're, you know, very, very pleased with obviously the underlying kind of business performance that we're seeing. What I'm equally excited about is, again, all of the pipeline of innovation that we have teed up across both companies. Again, really encouraged by the fact that we're acquiring new customers. 25% of them are new. They're younger, they're more diverse, they're broadly shopping other categories as we shared 50%. Again, we would expect that to just continue to build over time. I'm excited about a lot of the initiatives, but I'd say the one that from my perspective is most transformational is the cross-company buy online, pickup in store. I think that's just gonna be a huge win for both companies and for the customer. Again, really encouraged by the initial results and, incredibly confident in our ability to get to, $2 billion in sales. Great. Our next question comes from Steph Wissink of Jefferies. Steph, your line is open. Thank you. Good day, everyone. I had a question for Michelle and Jill. Maybe this is a combination question, but you laid out Sephora at $2.5 billion for small format stores, another $2 billion in digital. There's, you know, at least $4.5 billion there, if not maybe a little bit of double counting. Talk a little bit about, you know, your base at $19 billion that you reported the growth of several billion more. How does that affect the incremental margins of the business? If the 7%-8% holds at the operating level, what are the offsetting investments inside the P&L that you expect to make the margin at that 8% on the upper end. Thank you. Great question, Steph. I will start first on the sales side, and then I'll have Jill speak to the investment in margin. We have a great deal of confidence. As you saw, we guided low single digits over the long term. This year, as you know, 2%-3%. We have a robust set of initiatives starting with Sephora, which we were just speaking to, digital growth, 100 new stores. But we're also being thoughtful around how we plan. We still operate in a pretty uncertain environment, so I think the guide is very realistic. But we are very confident, and, you know, we look at this as well as omnichannel, so driving digital growth, but also driving our store growth. The new stores, of course, but also driving productivity within our existing fleet, given all these great initiatives, like I said, Sephora, active growth, new brands, and the like. Then on the margin investment, I'll hand you over to Jill. Sure. Good morning, Steph. I think the 7%-8% is really the enduring framework, but I never wanna say it would be capped. I think you just saw we finished the year at 8.6% operating margin. Of course, we're always gonna look for ourselves to be able to grow, but we don't want to limit the investments we can make back in the business to ensure that we are growing the top line. This year of all years, there's a lot of uncertainty, and I think value becomes one of those big delineations from us versus others, and we wanna make sure we can invest in that for the customer. We know there's pricing pressures, there's freight pressures, so we wanna take that into consideration. Secondly, as we do grow that digital business to $8 billion, it will become a bigger portion of the pie, and as you know, that also provides a headwind into the operating margin. I think 7%-8% is just a really great place for us to work to be able to invest in our growth and maintain a high profitability. Thank you. Our next question comes from the line of Oliver Chen of Cowen. Oliver, your line is open. Hi. Thank you team for all the great detail. On the long-term guidance of low single digit, there's Sephora, smaller stores and new brands, but there is uncertainty as you mentioned. What parts of the algorithm in our model might be more uncertain? Are you still seeing traffic volatility, and where do you see the most opportunity in the assortment, given that there's so many great initiatives? Second, there was a great module on machine learning and personalization. As we think about how that impacts your financial algorithm, if you could help dimensionalize top line relative to margin, 'cause it looks like there's demand creation as well as getting the right stuff at the right place at the right time. Lastly, on ESG, that was very helpful. Supply chain and ESG is a big industry topic. Do you see opportunities for collaboration, diving into supply chain, what are some ESG priorities there? Thank you very much. Great. Oliver, very thoughtful questions. Thank you. I'll take the first one on the guide and our initiatives, probably just reiterating what I was just saying, but I'll take another pass at that. I can hit ESG broadly, and then as it relates to all things around our data science and what you mentioned, I'll hand it over to Paul, and he can also add to my comments on supply chain. You know, overall on the top line, again, we are positioned for growth, and we're positioned to do that profitably. I think the efforts over the last couple years, all the big bold changes we made around margin and inventory management, our expense structure, puts us in a really good place to not only drive growth, but like I said, do it profitably. We feel like we have a playbook of initiatives that we've never had before. I mean, Sephora, we keep talking about it's a game changer for us. It will drive the top line. I mean, we're excited about these initiatives Doug was just talking about, in our stores. There's also a digital component, and it's a very healthy return. As Jill mentioned in the presentation, this initiative pays back in three and a half years. All the good that comes with that, including importantly, the new customers, the younger customer, the changes we made, around our assortments, we feel very good about. Again, you heard about that this morning. Active and casual, that is still highly relevant with the consumer. Yes, they're going back to work and they're going out, but they don't wanna give up comfort. We believe we will be able to serve both. As it relates to our data science, it's gonna help us make a lot better decisions, and I'll pass it over to Paul in a moment. Around ESG, this is, you know, a long-standing commitment that Kohl's has had, and we're raising the bar. To your point, we operate globally. Yes, we do work with our vendors and partners, you know, across the globe, and I think you see that in some of the recognitions we've gotten. You know, we're driving initiatives around our environment, our environmental footprint, as I talked about, as well as what we're doing on the sustainable sourcing. You're gonna continue to hear more from us. We have a lot of detail as we do every year with our ESG report, and that's that one for this year is coming up soon. Take a look for that report. I'll hand it over to Paul. Thanks, Michelle, and Oliver, thanks for the question about data science. We actually are pretty confident that data science will affect all three of our fundamental drivers, sales, gross margin, and inventory productivity. The work that we've done so far in hyper-localization showed us some really potentially stunning upside on comp sales lift through relevance. That was a test period and we're in the scale-up period right now, so we've baked only a small portion of that upside into our plans. We'll certainly keep you all updated as that unfolds through the balance of this year and into next year. We've got really strong evidence that the hyper-localization helps with overall comps, and we expect that to start compounding into the future. Then on the margin side, you saw our examples of improving our personalization. What probably wasn't completely clear is that translates to our personalized offers as well. We'll be able to target offers more effectively, therefore, helping Doug's overall plans to improve gross margin. Then finally on turn, the improvements in forecasting, which we're in very early days on, and placement and last-minute allocation, that's gonna allow us to continue this trend that we really cemented this year of getting our inventory turn up into pretty productive levels. Now the science is what's gonna allow us to sustain that into the future. We think data science is critical to all three of those and has a lot of upside. The only thing I'd add to Michelle's comments on ESG relative to supply chain, most of our opportunities and efforts are kind of beginning of supply chain things, sustainable sourcing, good factory practices, good labor relationships. We run a relatively carbon efficient domestic supply chain. We'll continue to make incremental improvements there. Our next question comes from Mark Altschwager of Baird. Mark, your line is open. Great, good morning, and thanks for all the detail, today. Just to start, with respect to the low single digit sales growth target, it would seem that with the Sephora rollout and the $2 billion goal along with the $500 million from new stores, you know, that would get you know, comfortably within the low single digits. I'm curious, what are your embedded assumptions for growth in the core, most notably with the women's business? You sound pretty confident in the reinvigoration there. And then just a quick follow-up there on women's and just more generally on private label. Where do you see that private label penetration going longer term, and would you expect that to re-expand as that women's reinvigoration takes hold? Thank you. Thanks for the question, Mark. Why don't I pass over to Jill first on the guide, and how we're thinking about that. I know I've commented on it a couple times. Then as it relates to women's and the brand penetration, I'll let Doug take that one. Jill? Sure. I think, Mark, you heard obviously with Sephora and the new stores, those are big growth enablers, but we still have confidence that active will be a key growth for us, and you're gonna hear from Doug. I think he has more confidence than ever that we can grow women's. We also wanna be thoughtful of the environment that we're operating in, and we know that the competitive nature of the environment is high. We know there's a ton of uncertainty with the consumer. We need to take that into consideration. As we look at the low single digits, that it's completely achievable, we feel it's an enduring way for us to run our business. Of course, we're always gonna look for more from that perspective. I think given the circumstances that we're in today, we wanted to make sure that it was a thoughtful guide that we could achieve. I'm glad that you see there's a lot more benefit in the strategy that we outlined today for us to actually overachieve that. Yeah, I'll comment on the women's business. As, again, as Jill said, couldn't be more confident in the strategy we have in place to reignite growth in women's. Again, we saw some very, very strong underlying metrics in 2021. As it relates to penetration, women's is actually one of our more penetrated businesses as it relates to private label. We don't get prescriptive, honestly, with regards to what that penetration would be. We are leaning into businesses where we're seeing customer demand. Again, I think that's the power of this duality of our portfolio. We can lean into national brands, and we can lean in to complement that on proprietary brands as well. We are seeing strength across both of those. Obviously, we're seeing outsized growth in national brands. Very, very encouraged by the reinvention of this whole transformation on the private brand portfolio as well. I talked about SO as an example. There's well in excess of $1 billion in sales today. Over half of that comes from women's. Again, really encouraged by what's happening on both national brand and private brand. What's really exciting in women's is again, all the underlying metrics that we saw green shoots on, specifically as it relates to several year high on inventory turnover, productivity metrics, regular price sell-throughs, merchandise margin. Tons of reasons to believe that we're on the right path there. Again, couldn't be more confident in the ability to get that business back to growth. Our next question comes from the line of Omar Saad of Evercore ISI. Omar, your line is open. Thanks for taking my question, and thanks for the really useful presentation. I wanted to ask a quick follow-up. Maybe you could quickly talk through your share repo assumptions in that guidance, especially given that $3 billion number. It's a huge number, represents something like 40% of the outstanding shares at the current share price. I think you're only looking for mid- to high single-digit EPS growth. I also wanted to ask some follow-ups around leveraging your strong digital traffic and through your ecosystem. You talked about ad services or the Kohl's Media Network. Maybe talk about the size and profitability opportunity for that business, when it becomes material. Also on that front, I didn't hear any mention of third-party marketplace, as a strategic priority for you guys. Maybe talk about why you're not pursuing that business when some others in the marketplace are? Thanks. Okay, three-part question here. First, I think Jill can speak to the share buyback. We'll have Greg touch on leveraging the ecosystem, and maybe, Paul, you can touch on marketplace. So. Sure. Omar, so first on the share repurchase, obviously the $3 billion ask, we didn't really put a timeline across it, but we did say that we'd buy back at least $1 billion this year. Obviously, that's really to show you that we have confidence in this strategy and that we feel there's a lot of value left in our stock. As we move forward, I think you can assume that we're gonna continue the repurchases. You've seen us really do that over the last 10 years to buy back our stock based on the free cash flow. We've given you a $5.5 billion operating cash flow target, $2.5 billion of CapEx. You can assume the rest of that will be returned to shareholders, both through the dividends, which obviously we increased 200%, or 100%, this year to $2, and then the balance of that through the share buyback program as well. For this year, I'd keep it at around that at least $1 billion. I think, you know, you'll see that probably equally throughout the year, maybe a little bit more front-loaded, as we mentioned, potentially using an ASR, an accelerated OMR program. Greg? Yeah. From a media network perspective, I'll just start with we generate 1.7 billion visits a year on our website. A huge amount of traffic coming all the time. We do a lot of things with product and all the newness that we're introducing there. We also wanna grow our presence in the media business. As I shared, we think it's a great opportunity for us to build from the base that we are now. We think it could be $200 million a year in ad sales over the next several years. We're really excited about it. Then we also have Marketplace as well, which is an emerging opportunity. Maybe I'll pass that off as well. Thanks, Greg. Omar, thanks for the question. As you might recall from my earlier remarks, we do have a really strong digital platform and a multifaceted merchandising offering. We have a lot of our store-based assortment, all of our store-based assortment available. A really healthy web exclusive, which for the most part is extensions of colors and sizes. We do a healthy direct ship business, and we have been experimenting with Marketplace. We try to pride ourselves on a data-driven and a scientific approach to the way we improve our business. We've been experimenting in Marketplace for a little bit of the past year. We're using the primary third-party platform, the folks at Mirakl. They're great partners. We have a handful of tenants that we've attracted to our Marketplace, some of whom are remarkably successful participating in other marketplaces. What I'd say so far is several of them have told us that they really find our traffic very attractive, those 1.7 billion visits that Greg mentioned. They think that it could be something spectacular. That said, it's still experimental for us. We don't try not to announce things while they're in the experimental phase. We'll keep you all posted as that develops in whichever direction it does. Yeah. The only thing I would add, just to reiterate from all of us, just an incredible omni-channel capability that we have. That has been a big reason why we've been able to partner with the likes of, say, a Sephora, who appreciate not just the stores, but how we can extend that into our digital platform. It's those things working together. As you heard Doug talk about, you know, doing this cross-company BOPUS. You know, we'll see. We think it's a very big idea, but it really is leveraging the omni power that both companies have. Then to Greg's point on our Kohl's Media Network, I mean, yes, we think it's $200 million. I mean to quote Jill, as she was just saying on our guide, we're being prudent, thoughtful, but there's no cap to this. We're gonna continue to look for ways expanding Kohl's Media Network, experimenting with things like Marketplace and other innovations, 'cause we've invested in this omni capability over the last five years significantly. We feel like we have a leading platform and now is the time to really take advantage of that, not only through unique partnerships and brands, but also in opportunities like this. Our next question comes from Chuck Grom of Gordon Haskett. Chuck, your line is open. Hey, thank you very much. Good morning. On the 100 new store opportunity, can you shed some color on the timing of the openings, where you plan to open them physically? It looks like you're targeting about $5 million per store at maturity. So any metrics on profitability would be helpful. Then Jill, for you, can you quantify the margin headwind you expect to see from increasing the loyalty benefit to 7.5%? I wanted to make sure that's the largest factor to bridge from this year's implied 37% gross margin rate to the long-term guide that you provided today of 36%-37%. Thanks. Sure. Thanks, Chuck, and I'll start with the store assumption. As you said, we're looking over the next 4 years, 100 on smaller footprints, so that 35,000 sq ft footprint that we have been piloting, testing, and evolving over the last couple years. It is accretive, and Jill can speak to when she jumps in here on the return. Of course, from our standpoint, that's why we've been iterating and wanted to feel really confident before we you know put a stake in the ground and said there's at least 100 more out there that we can build. That will grow over the four years, so sequentially year-on-year, we are planning for that number to grow. We have identified markets, so this is very achievable. We know where those stores are gonna be. You know, we're not gonna announce those today. I did mention in my remarks earlier that one of the first newer concepts of this small footprint will be in the Seattle area, and that's taking advantage of the data science and the hyper-localization that Paul spoke to. We're using signals not only on how our current stores perform in that market, but also what we expect from the customers, things like an expanded outdoor footprint that I mentioned earlier. We're excited. These stores, yes, they are Kohl's, in terms of the core DNA of the brand, but they're all gonna look and feel differently because they are going to be developed based on what the local market, competitive and consumer dynamics are in that given market. Jill, have you time? Sure. Just to finish that out on the new stores, we are targeting a 15% return on these stores. Definitely above, you know, our cost of capital and is a nice return rate back above what you've seen from an ROIC from us as well. A lot of these have been really constructive based on the testing results, so it gives us a great amount of confidence in that return. As I pivot to your second question on margin, I would say from a loyalty perspective, you know, obviously, we see a lot of productivity out of these customers. Greg shared earlier when they're in our loyalty program, they shop us 2 x as much, and if we can get them into our Kohl's charge card, it's 6x-12 x as much. That lends to a lot more trips into Kohl's store. We did see a lift of about 1%, just over 1% when we tested this for about a year. What we actually saw was it was EBIT dollar accretive for us. When I bridge the margin of 36%-37%, you know, we continue to optimize and simplify our value equation, and this is part of using this in a much more targeted manner. We know these people actually like coming to us. They shop us when we get them into that card 6x-12 x as much. We need to take advantage of that loyalty. Now by bringing them in a lot of new brands, it affords the opportunity to continue to grow those sales at really not a huge margin offset. What we can do is we can offset a lot of that through our pricing and other promotional offers that we've really edited down as you've seen this year. I would say the biggest long-term piece of this is where digital moves to, and you know that's been a headwind for us, Chuck, for some time. As we continue to grow that penetration, it lends to more of a headwind from a cost of shipping perspective. You know, we're really looking at our margin from a holistic ecosystem, and so there are gonna be times that we choose a costlier cost of shipping because it affords us a markdown avoidance. We're really looking at that ecosystem of totality. We wanna make sure that we can also invest to drive consumer behavior. Right now, we know value is incredibly important. We're gonna lean into that core tenet for Kohl's, which may mean that we have to be a little sharper on pricing and a little more promotional to bring them into the store. Over the long term, you're gonna see this in a really simplified manner that continues to drive us to that operating margin of 7%-8%. Our next question comes from Paul Lejuez of Citi. Paul, your line is open. Thanks. It's Tracy Kogan filling in for Paul. I had a couple questions. The first is a follow-up on women's. I was wondering if you could talk about within women's, how much is casual or active versus dressy. I'm not sure how you divide it up. But then I think you mentioned dresses becoming a bigger portion. So maybe just talk about that piece, where it is now and where it can be. And then also the, you know, active versus dressy, where that has been historically and where you're moving it. And then secondly is on the Sephora locations. When will the first stores actually or the first of the 400, stores for this year open? And then can you talk about the margin profile of your Sephora sales? Thanks. Great. I think all of those are for Doug. Over to you. Yeah. Thanks for the question. Yeah. As it relates to women's, we have always had a very strong foothold in the casual component of the women's business, and we don't see any sign of that slowing down, as I said earlier. Michelle commented on that in her remarks as well. This casualization of America, that trend, we don't see that going away at all. Having said that, we do think that there's clearly an opportunity to pivot to make sure that we're offering customers that optionality of, you know, I mentioned the dress category, where today we have very low penetration, about half of our overall sportswear penetration. So again, tremendous upside there. But even within that, I mean, it's kind of all in the eye of the beholder, rather, if you think about the customer. They're still fairly casual dresses, just because we have such a very strong foothold in that business. Again, very, very strong opportunity. As it relates to active and casual, active has definitely driven outsized growth. We continue to see that continue to escalate, you know, again, as we get that business to penetrate over 30% of the total business. We definitely will always be more skewed towards, active and casual, just given that's the penetration that customers are giving us credit for. Again, we definitely will have an opportunity to pivot. I think it's a lot about, you know, how people are combining things. Paul's wearing an active sample today from our FLX brand, right? But he's totally appropriate for business wear. Again, I think it's just all how people are mixing both casual, active, and even career apparel together. I think that's, again, one of our greatest tailwinds because we have this very, very powerful product portfolio. As it relates to Sephora, as I said earlier, it is incredibly accretive at both the operating margin and the EBITDA margin. There's a lot of other things to like about this business. Obviously, it's replenishment, it drives traffic. The customers are transacting across other lines of business, definitely over-indexing in both active and women's. Again, there's a lot to like about the model. With the replenishment aspect of the business, just the overall margin of the beauty category and the repeat use and footfall that you get from that, you know, there's a lot of synergies, obviously, to help all three of those, both active, women's, and Sephora. Michelle also asked about timing of the opening. Oh, yeah. Midway this year, we'll open the store. By the time we get into third quarter and then prepared for holiday, we will be fully at scale for 600 stores. Really excited that we'll be able to have the 400 stores for this year built out before we get to the holiday timeframe. We now have a question from the webcast audience. The question is, are you still committed to an investment-grade rating given the increase in capital returned to shareholders? Jill? I couldn't be more committed to the investment grade rating, and hopefully, you heard our conviction around that today. We've held this investment grade rating for the last 20 years, and we feel like it's important to our business to be there. The amount of capital returning to shareholders is really coming because we're such a cash-generative business. Like I mentioned, it's $5.5 billion of operating cash flow. $2.5 billion will happen through CapEx. That gives us a lot of money to return back to our shareholders, but it won't come at a cost for our investment grade rating. We also committed to staying in the low- to mid-t w o leverage ratio, which we feel puts us right in the position to maintain that investment grade rating. I think you've seen over time, we've adjusted our debt portfolio accordingly. We've taken the debt out when we've gotten too high, and we also committed to addressing our debt that comes due at the end of this year as well. Our next question comes from the line of Matt Boss of JP Morgan. Matt, your line is open. Great. Thanks. Michelle, with Amazon, Sephora to date, are there any other opportunities in the assortment for additional transformational partnerships you see from here? Jill, on the expense front, with the 27%-28% SG&A rate target remaining consistent with your prior targets, are there areas within the model that you're finding potential offsets to wage inflation? Or just what comp do you expect to leverage SG&A in terms of rate moving forward? Thanks, Matt. I'll take that first one. I think there's a lot of opportunities for us ahead as we think long term. I mean, clearly the Amazon partnership was a bit of an out-of-the-box idea, but really looking at complementary strengths in terms of we get the traffic and they get an amazing customer experience. I mean, Sephora, as we've talked about extensively, is a game changer for us, not only for beauty, but what comes with that. It's really about taking advantage of our incredible omni-channel capability. 1,200 stores, building more across the country, a very healthy one on its way to $8 billion business from an e-commerce standpoint, 1.7 billion visits to our website. Those are incredible assets. You know, we're looking at excitement, innovation, discovery from what would be considered maybe smaller business opportunities to game changing ones like Sephora. I think as Doug shared his penetration in his presentation, you know, these emerging, thoughtful, interesting brands, they bring a level of discovery and make the stores and the e-commerce platform really interesting to our customers, I think especially as we build that Millennial base. Those are important as we have, you know, the big brands inside of our stores, like the Nikes and the Levi's, et cetera. You know, I would say that as we've continued to elevate the assortment and staying true to the Kohl's brands or having both these aspirational iconic brands as well as the private quality value, more opening price point, the changes that we've made to elevate the experience, elevate the brands, it's kind of like a flywheel that can bring in more brands, and some of them will be big ones like a Tommy Hilfiger or an Eddie Bauer. Some will be smaller ones like the ones that Doug spoke to, where we can bring in dozens of these on a rotating basis. Yes, we are always on the lookout for what could be some new concept, business, partnership, service even. We have work underway. I think what we've been able to demonstrate through all the partnerships we've created is that, A, we are into fostering great partnerships and creating these win-wins and building these business ideas, but it also speaks to our execution capability. I think we're all so proud of how we've executed against these partnerships. You know, as we think about Amazon, we still get, like, world-class Net Promoter Score. I think we can speak for, and you saw Jean-André Rougeot on the video. The partnership is incredibly strong as we build this business to $2 billion and beyond. On that part, there was a second question, I think, over to- Me. Jill. Yes. Yes. Thanks, Matt. I think you know, Matt, we've been incredibly focused on our cost discipline and run a really efficient SG&A over time. As we look forward, I think you heard today, we continue to see opportunity to become more efficient in marketing. You know, Greg addressed that. We were at about a 4.6 A/S. We have a goal of getting to 4%. We talked about taking $100 million out of our tech spend. We're gonna maintain that and run that in a much more efficient manner. Then I think the biggest piece for us is labor. It's our number one cost, and a lot of the things that you heard Paul lay out today is around automation. We're gonna roll out self returns to, you know, about 25% of the chain and continue to test that. We're gonna have self-pickup everywhere by holiday. As we continue to use that automation in the stores, that helps us improve productivity and really help us offset some of this wage inflation. I think second, we're also looking to increase that productivity in our fulfillment network. We just opened our sixth EFC. It's the most productive EFC that we have, so we're gonna continue to look at that technology. As part of that capital spend, do we go back and retrofit some of our buildings so we can really increase the productivity in those four walls as well? As you think about that leverage point, I don't think it changes. You know, we've talked a lot about leveraging in that 1.5%-2% comp range. That will continue as we continue to make these investments to offset some of the inflationary pressures that we're seeing today. Our next question comes from Michael Binetti of Credit Suisse. Michael, your line is open. Hey, guys. Hope you can hear me here. Thanks for all the detail today. I guess just a few for me. I know Bob asked it earlier, but on the $2 billion in Sephora, $2.5 million per store, $2.4 million per store. That, I think, will get to be about 15% of the box, in the sores that you have it in. You know, nice contribution from beauty there. I was hoping maybe you'd just give us a little bit more of a connection on how you built up to your estimate, some of the underpinnings there, any bridge from what you're seeing, any of the numerical bridges from what you're seeing other than the mid-single digit lift to comps in the stores where you're seeing it to get us comfortable with the, you know, pretty big number there. Obviously, you're happy with it out of the gate here. As you look at some of the data and analytics and the customization that you guys have been able to unlock, do you think you can run the business at a lower sustained rate of promotions and clearance than we saw in recent years as you roll out some more of those capabilities? Sure. Why don't I take the first one on the road to $2 billion. As we said a few times, we're not capping that, but we feel very confident with the $2 billion. I think it's important to point out that as part of that $2 billion, we are assuming a good digital business as well. While we haven't kind of yet said exactly on a per store basis, I think it's you can do the math, you can obviously see that the productivity will be very strong. But that $2 billion does encompass both your brick-and-mortar and the digital business. I think based on the build-out themselves, what we've been seeing, the mid-singles as well as the innovations to come, we feel very confident with that. I think, Greg, over to you on the analytics. Yeah, that's a great question on the analytics. I talk a lot about analytics from a media standpoint and really understanding what sort of products customers wanna buy, and then we can use our customer data in order to tailor essentially all of our experiences, around those customer needs. The same thing actually applies on the promotion side. We talked a little bit about the loyalty program. That's one that has a lot of personalization capability associated with, and it's actually more efficient to promote using that program than a lot of our base, promotional spend. We think over time, as we leverage these personalization capabilities within our promotions, we should get more efficient, from that perspective. I think the last part of your question was just about clearance and can we sustain this. I think you heard a lot from Paul today about how we're gonna be better at placing that inventory, and you've heard the commitment from Doug and myself today, we're gonna turn that at 4x. That inventory management that you saw in 2021 will sustain, and so will the opportunity that we have to run this at a higher regular sell-through business. Our next question comes from Lorraine Hutchinson of BofA. Lorraine, your line is open. Thanks. Good morning. Jill, just following on that, the prior comments you made about inventory turns, it seems like you wish you had more inventory last year. As you build that, I guess maybe talk about the tools you have to make sure that you don't rebuild into any of that clearance. Then separately, over the long term, how do you think about some of the new payment options you mentioned, like PayPal, Venmo, buy now, pay later, impacting credit penetration and the Kohl's charge? Thank you. I am incredibly passionate about inventory, Lorraine, but I think it's actually best if you even hear it from Doug, our Chief Merchandising Officer, who is going to share in my passion around inventory. I'm gonna let Doug actually answer your question since he's gonna be really executing it. Yeah, great question, Lorraine. Again, you know, we said that we obviously would have liked to have had more inventory last year. We did realize the 4x inventory turn last year or the 4x inventory turn last year. Again, the techniques, the tools, and the technology that we put in place, we're gonna continue to leverage to make sure that we can achieve those results over a sustainable period. Incredibly confident. I'd say, honestly, it really starts with complete alignment across the business. The merchandising team, the planning team, the finance team are all completely aligned on monitoring that and reporting on that very, very closely, and again, completely aligned. We have several efficiencies that we've been able to put in place through technology to be able to get more visibility with regards to where goods are in the supply chain, which we believe are gonna be able to pay meaningful dividends. Then we're continuing to evolve our sourcing strategy. We talked about an opportunity to increase our penetration, for example, in the Western Hemisphere, where we'll be able to be in a position to be able to chase into inventory. Having said that, we are leaning into building inventory in businesses that are gonna be driving outsized growth. We talked about active. Obviously, that's been a major tailwind for us, and we will continue to invest in inventory there. We're strategically, obviously, investing in our beauty inventory through the opportunities that Sephora provides. Given our commitment to reignite growth in women's, we will also very strategically be building our inventory there. Again, a lot of the tools that Paul's team has been able to put in place where we can actually leverage more data science and analytics to make sure that we're accurately forecasting that and allocating that inventory will be key to make sure that we're maintaining, that inventory level, commitment. Again, we are completely aligned and fully committed to delivering on the inventory efficiency. Greg. Doug, I'd just add on that I think it's that confidence that your teams now have in the science that when we invest into inventory, we're investing into inventory that we expect high reg price sell-through. Yeah. At the same time, we're not investing as much in certain elements of safety stock. The combination of those two things is what leads us to be able to deploy some more inventory but sell through it. Yeah, one point I should have added there. A lot of what's driving the green shoots in women's. We talk a lot about driving clarity and how that has manifested itself is both a reduction of getting out of brands that are lower productivity, but also pretty significantly reducing the customer choices. Really standing for the powerful items that we wanna stand for, increasing the depth of those, which is critically important in a size inclusive business. Raising the trip assurance when a customer comes in, she actually finds her size. Again, we feel like that's all gonna be tailwind to be able to hit the inventory goals. Dan, I'll jump in on the payment side. We really have a two-pronged strategy here. When you think about PayPal and buy now, pay later, that's really about attracting new customers and getting them to convert on those first visits. It's very early days there. We're hopeful. We'll watch it very closely. Now, on the second part, about the Kohl's card, it's obviously critically important for us to grow that part of our business. One is the loyalty benefit, and that's really what it's about. Jill mentioned the 6x-12 x more that a credit customer spends with us than sort of a base customer. We saw really nice improvements in that through the course of our pilot last year. As we roll out the new value proposition, we're pretty optimistic. We also have the co-brand opportunity, and so that's another way to drive more usage of the card. We think one is for new, one is for existing, and we'll watch how those interplay over time. We have another question from the webcast audience. The question is: Do you have a leverage target, and what is the optimal level of cash on the balance sheet? I think that's my question. So I wouldn't say I have a leverage target per se, but I think you heard today our strong commitment to investment grade, and I think that really translates into us operating around that low- to mid-2x leverage point. That will afford us the opportunity to make all the investments that we need to grow the business, as well as a strong capital return to our shareholders and really be able to run the business around that $800 million of cash on the balance sheet. Obviously, that will ebb and flow based on the timing of the year. If I think of where the year ends, that's historically where it had been a little higher, given coming out of the pandemic, we kept a little more cash on the balance sheet, but I think we'll normalize back to that level of cash. Our next question comes from Dana Telsey, from Telsey Advisory Group. Dana, your line is open. Thank you. Good afternoon, everyone. Two questions. As you think about the buckets of SG&A, I think you had mentioned that marketing expense is shifting to 4% from 4.6%. What's changing there? Are there efficiencies that are leading to that? And then as you think of the combination of private label, how do you see private label as a percentage of sales going forward and the overall impact on gross margin? Thank you. Great. Thanks, Dana, for the question. Why don't we have Greg speak to the changes in marketing, and then Doug can pick it up on private label? Yeah, starting with the marketing efficiency question. You know, as I mentioned, we've brought our marketing spend down fairly significantly in the last couple of years. That's really been driven by a couple of things. One was a lot of this personalization that I talked about, along with the shift in mix to more efficient channels. Truth is we're not done yet. There's still plenty of upside with that. Then the second is in what's gonna drive traffic outside of our media. We talk about the Sephora partnership, a lot of the new brands we're bringing in, Amazon, sort of non-traditional techniques that we're using to drive a lot of traffic. When you put all that together, yes, we're very confident that we'll be able to hit the 4%. Yeah, thanks, Dana, for the question on private label. Again, I think this is one of our greatest assets is the fact that we have this very powerful kinda duality, if you will, between national brands and private label brands. We do not have a prescribed kinda thesis on what that should be because we're actually going where the customer is taking us. You know, the active category is obviously more than doubled in the last five years. That is largely national brand penetrated. Again, leaning into growing the national brand penetration is largely an outcome of the businesses that are giving us outsized growth. The Sephora business, obviously national brand. Again, there will be some opportunities to be able to increase national brand penetration there. Then on the private brand side, again, definitely leaning into where we're getting the most productive performance there. I mentioned the Sonoma brand, the SO brand, very accretive, obviously from a margin perspective. They drive a tremendous amount of brand loyalty. But again, it'll really be going to where the customer wants to go from us. There's a tremendous amount of exclusivity and differentiated product that we'll be able to deliver there. But again, we wanna be very mindful because both of those are super powerful, obviously, with regards to national brand and private brand. Our next question comes from Kimberly Greenberger of Morgan Stanley. Kimberly, your line is open. Oh, sorry, I was on mute there. Thank you so much. I wanted to ask about some of the other levers you might have in SG&A. You know, I'm just looking back over the last 10 years, and it looks like revenue has been roughly flat, and I think over that time, e-commerce revenue grew from about $1.5 billion to about $6 billion in total sales. And that looks like in aggregate, it's been coinciding with about a 300 basis points loss in margin. I'm wondering, beyond the labor efficiency levers to try to offset those incremental expenses from digital and the marketing efficiency you just talked about, what are the other strategies to help offset what look to be rising expenses associated with the increase in e-commerce? Thanks. Sure, Kimberly. I think, you know, you definitely have seen our digital business grow exponentially over time. Over that time, we also had to add infrastructure. I think you heard from us today, we feel really well positioned. You know, Paul talked about we have the right fulfillment centers in the right places, so we won't have to make those investments which lend into the fixed costs and operational costs. We'll be able to leverage them. We've also begun to use our stores much more in terms of fulfillment, and they're fulfilling over 40% of those digital orders. Really being able to leverage the power of our store as well as the six fulfillment centers today and not having to add into the ecosystem will obviously let us grow this business and gain some leverage. The biggest costs from the P&L are the ones we did talk about, though, and I think, you know, it's labor. It comes down to the store labor, it comes down to the fulfillment labor. The more automation we have to reduce the amount of labor it takes to serve the customer, the better leverage we're gonna get from an SG&A perspective. Our second biggest cost in the P&L is marketing. You've heard from Greg, we're gonna drive that down another 60 points, and pull out. I mean, we've already pulled out over $100 million in the last several years, both in marketing and technology. We're gonna continue to see that come out in the efficiencies of marketing as well. I mean, that doesn't even address the fact that we did actually address corporate over the last 18 months as well and really reduce that headcount to be right-sized for the business that we're growing moving forward. We'll leverage that as we move forward as well. I think we've hit on the biggest f our line items in the P&L that are gonna continue to allow us to land in that 27%-28% from an SG&A perspective, and we aren't going to have to make those big investments. You saw that in the capital allocation, only 15% of our CapEx really moving into omni-channel, and that's gonna be really ROI-driven on productivity to address labor. The only thing I would add to Jill's comments. Wait, Laura. Thanks. Oh, no, I was just saying. Sorry. Please. Please. Yeah, no, just to finish it off. You know, certainly as we look ahead, feel very confident there. You look at what we've just accomplished over the last couple years and last year in particular with the restructuring of the business, and so ending the year at 8.6%. Now we are saying 7%-8%. We know that there are some significant headwinds in front of us and want to make sure we can reinvest back into the business. Maintaining a 7%-8% with the low single-digit growth, we feel like is a great combination to drive up that EPS return capital to shareholders. These things are happening today. Again, we posted the $7.33, an all-time record for the company, but I think importantly driving that margin accretion this past year. It gives us great confidence that momentum will continue. Our final question comes from Priya Ohri-Gupta from Barclays. Priya, your line is open. Great. Thank you so much for squeezing me in. I really appreciate it. Jill, I was wondering if I could have t wo quick follow-ups. First, as you think about sort of normalizing the cash balance towards $800 million, are there any key sort of macro considerations that would drive that, perhaps to sort of shift that normalization out longer than this year? Second, you know, you've been very clear in terms of articulating the company's commitment to investment-grade ratings and the leverage range that you expect to support to deliver that. As you think about other competitors that have potentially managed as high-yield companies, what's sort of the biggest benefit from staying investment-grade that you could share with us? Thank you. Sure. I think from a cash perspective, you know, I feel like this year we'll get to the $800 million. It allows us to run the business where we need it to. Obviously, there's a lot of uncertainty, so you also can see we've been able to pull back and really manage cash at a higher level if we need to. After moving through the pandemic, I think this company has become incredibly agile in how we run our cash balances, and we'll continue to use that. But we do wanna invest back in inventory. We know it was a liability to our sales line in 2021. You've heard Doug and Paul on how we're gonna come after inventory and do it in an efficient manner to still drive turn. That's probably the biggest place that we'll wanna make our investments outside of course, the CapEx that we spoke to earlier. I feel that companies who operate in investment grade are the successful companies that we're looking at. It affords you access to really efficient capital when you need it. If I think of when we entered into the pandemic, it was our investment grade rating that afforded us that access into capital. We were able to really upsize to an ABL and get $500 m illion of capital. We were able to place bonds and still maintain that investment grade rating. We were able to monetize our real estate where it made sense at a very efficient capital cost. Those things I don't know would have been afforded to us had we been running in a high yield market. I think running investment grade is really an efficient place to run. It's where you see great successful companies run who want to invest back in their business and access capital markets when it's opportunistic. Thanks, everyone, for listening in today, and have a great week.