Good day, ladies and gentlemen, welcome to the Levi Strauss & Co. third quarter earnings conference call for this period ending August 29, 2021. All parties will be in a listen-only mode until the question and answer session, at which time instructions will follow. This conference is being recorded and may not be reproduced in whole or in part without written permission from the company. A telephone replay will be available two hours after the completion of this call through October 13, 2021. Please use conference ID 1570959. This conference call also is being broadcast over the internet, a replay of this webcast will be accessible for one quarter on the company's website at levistrauss.com. I would now like to turn the call over to Aida Orphan, Senior Director, Shareholder Relations and Risk Management at Levi Strauss & Co. Thank you for joining us on the call today to discuss the results for our third fiscal quarter of 2021. Joining me on today's call are Chip Bergh, President and CEO of Levi Strauss, and Harmit Singh, our CFO. We have posted complete Q3 financial results in our earnings release on our IR section of our website, investors.levistrauss.com. The link to the webcast of today's conference call can also be found on our site. We'd like to remind everyone that we will be making forward-looking statements on this call, which involve risks and uncertainties. Actual results could differ materially from those contemplated by our forward-looking statements. Please review our filings with the SEC, in particular, the Risk Factors section of the quarterly report on Form 10-Q that we filed today, for the factors that could cause our results to differ. Note that the forward-looking statements on this call are based on information available to us as of today, and we assume no obligation to update any of these statements. During this call, we will discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in today's earnings release on our IR website. These non-GAAP measures are not intended to be a substitute for our GAAP results. Finally, this call in its entirety is being webcast on our IR website, and a replay of this call will be available on our website shortly. Today's call is scheduled for 1 hour, please limit yourself to 1 question at a time to give others the opportunity to have their questions addressed. Now I'd like to turn the call over to Chip. Good afternoon, everyone, and thanks for joining us today. We delivered another strong quarter. Revenues were $1.5 billion, up 41% versus Q3 2020 and up 3% versus pre-pandemic levels of Q3 2019, with profitability at a multi-decade high, well exceeding our expectations. Our results, the continued acceleration over the past few quarters, and our improved structural economics clearly underscore that the Levi's brand continues to be hot, our strategies are working, and we are emerging from the pandemic stronger than ever. All this is despite the ongoing impacts of COVID, supply chain constraints, and other macro issues, including inflationary pressures. The casualization trends that have been accelerated by the pandemic globally are here to stay, and the denim cycle we started pre-pandemic is continuing to drive growth. In the U.S., both the apparel segment and the denim category are now larger than pre-pandemic, with denim growth outpacing total apparel for the second quarter in a row. We expect these drivers will provide our business with a multi-year tailwind. The impressive bounce back we saw in our U.S. business in the second quarter accelerated into Q3, up 8% to 2019 on a reported basis. Consumer demand in Europe remains strong, with the region inflecting to growth, up 7% versus 2019 as stores reopened. This despite tourism being down markedly in both the U.S. and Europe. We're excited to see consumers returning to our stores as markets reopen with company-operated brick-and-mortar revenue returning to pre-pandemic levels. Impressive results given traffic remains down versus 2019 and 10% of our doors were closed in the quarter. Importantly, despite stores reopening, revenues through digital channels were up 10% versus prior year and represented approximately 20% of total third quarter revenues. This follows 60% growth last year. Our team is doing an outstanding job mitigating the unprecedented challenges on the supply and logistics side. Our globally diversified sourcing strategy, combined with our scale, are a source of competitive advantage. We long ago decided that we would not source more than 20% of our product from any one country. Our sourcing currently spans 24 countries. We did this to avoid concentrations to be less exposed to bottlenecks in production capacity, like what's going on currently with Vietnam, where our exposure is less than 4% of our global volume. We also have implemented a strategy to cross-source key products. For example, more than 50% of our current bottoms volume is approved for production with suppliers in at least 2 different source countries, sometimes more for men's core. A large portion of tops are also cross-sourced. Our supply chain network, including the cross-sourcing, allows us to quickly shift production. As an example, after the China tariffs were implemented, we rapidly reduced our China exposure in the U.S. from 8% to less than 1%. More recently, as backups at West Coast ports began to intensify, we quickly redirected the vast majority of our goods to come in through East Coast ports. We're also leveraging our scale, expertise, and strong relationships with our vendors to protect our capacity and control costs. We've locked in approximately 70% of ocean volume and costs through the summer of next year. Since cotton is very much in the news, I will remind you that we have negotiated most of our product costs through the first half of 2022 at very low single-digit inflation. For the second half, we are anticipating a mid-single digit increase, which we will offset with pricing actions we've already taken. Let me now shift to some key highlights from our third quarter. The Levi's brand was up 4% versus 2019, and even stronger in our top five markets, up 9%. Both our women's and men's bottoms businesses saw strong sequential acceleration. Men's bottoms returned to growth, up 7% versus 2019. Women's bottoms outperformed all categories in Q3, up 18%, driven by strong performance in high-rise and fashion fits. The trends towards looser fits continue, representing almost half of our women's and men's bottoms assortments. We're seeing increased demand for our iconic products like the 501, which was up 20% versus Q3 2019. Our global wholesale channel grew 3% versus 2019, primarily driven by strong performance in the U.S. Our efforts to elevate the brand within U.S. wholesale are working. Our AURs are up high single digits, underscoring our pricing power, and our premium business is up 24%, both versus 2019. In our direct-to-consumer channel, accelerated momentum in the Americas and the reopening of stores in Europe drove significant growth over prior year in both regions. More importantly, revenues from our DTC business returned to growth versus pre-pandemic 2019 levels, up 4%, driven by strength in e-commerce. Despite 10% of our doors being closed in the quarter, global brick and mortar was up 1% to 2019, with strong growth in the Americas and Europe. In the U.S. and Europe, higher conversion and strong increases in AUR, driven by the pricing power of the Levi's brand, have offset lower store traffic. While tourist stores have not yet recovered, our local doors are growing, demonstrating our assortments are resonating with consumers. Our NextGen concept continues to show encouraging results. These smaller footprint doors are some of the most profitable in our U.S. mainline fleet, supporting our objective to increase distribution of our premium products in the U.S. marketplace. We are continuing to elevate our mainline fleet globally and are on track to open 100 new doors this year, most of which will be NextGen. We also continue to enhance the omni-channel experience for our consumers. During the quarter, we introduced Tailor Shop virtual workshops, began piloting self-checkout, and launched a shop with store function on our app in the Americas. Two final quick points. First, we completed the Beyond Yoga acquisition in late September. The acquisition puts us in the fast-growing and high-margin premium activewear category with a successful and authentic brand that is rooted in body positivity, inclusivity, diversity, and quality. I believe the combination of their category expertise, deep consumer understanding, and outstanding product with our expertise and capability in brand building, retail operations, men's and international is a powerful combination that makes me confident we can meaningfully and profitably scale this brand for the long term. I'm also very proud that the entire impressive Beyond Yoga team of roughly 80 innovators and entrepreneurs have stayed with the business and have joined LS&Co. Finally, we recently released our first standalone sustainability report. I invite you all to read the 200-plus page report in full, but I want to flag two pieces of it here. First, we are centering our ESG efforts on 3 main pillars: climate, consumption, and community. Second, a key objective of our report is to hold ourselves publicly accountable and to challenge ourselves to be even more ambitious in our efforts. We plan an annual reporting cadence going forward. Now over to Harmit to share the details of the quarter. Harmit? Thanks, Chip. Good afternoon, everyone. We delivered solid results against a continued challenging macro backdrop. For the third quarter, both revenue and adjusted EBIT margin exceeded our expectations, demonstrating the strength of our brands and outstanding execution against our strategic initiatives. These results were strong relative to last year's COVID impacted quarter, but more importantly, were above Q3 of 2019. The structural economics of our business continue to get stronger, driven by a larger share of digital business, sustainable gross margin accretion across all channels, and disciplined cost management. Sequentially, relative to 2019, both revenue growth and profitability have improved over the last three quarters. We believe that this momentum will continue into quarter four, as reflected in revised guidance that I will share shortly. The strength of our performance this year and the confidence in the long-term health of the business have enabled us to allocate capital across all areas of our strategy as we invest in growing our business, paying down debt, closing our inorganic acquisition, and returning incremental cash to shareholders. As I walk you through our third quarter results, my commentary will reference constant currency comparisons unless I indicate otherwise. Compared to third quarter of 2019, constant currency revenues were up 2%. Notably, currency only held revenues by roughly 1 point, half of what we expected. Thanks to the strength of our supply chain, as Chip just described, we were able to limit the revenue impact of the supply chain disruption to less than $10 million in the quarter. Adjusted diluted EPS in the third quarter was up $0.17 or 55% ahead of 2019, driven by the improved structural economics of the business and continued momentum in the Levi's brand. Let me share some color on the details. Key performance metrics in our direct-to-consumer channel are getting stronger. AURs are up mid-teens compared to 2019, driven by higher conversion, price increases, and more full price selling. Total digital ecosystem sales represented 20% of sales in the quarter. Versus Q3 2019, company-operated e-commerce is up more than 40% and remains profitable. Our third quarter adjusted EBIT margin of 14.8% was a third quarter record high, driven by continued gross margin expansion and cost discipline. Relative to 2019, reported adjusted EBIT margins were up 260 basis points. Adjusted gross margin of 57.5% expanded 450 basis points compared to 2019, despite a headwind of 70 basis points from higher air freight. Currency benefits were negligible. Three-quarters of the margin expansion is sustainable, resulting from a higher proportion of sales from our direct-to-consumer channel, the price increases we have taken across all channels and a number of geographies, a higher share of women's, healthier U.S. wholesale mix, and better margin management using AI and machine learning. One-fourth of the expansion reflected lower levels of promotions given tighter inventories and a lower promotion level across the industry, which potentially may not be sustainable over the long term. Moving to SG&A. We are managing expenses while also continuing to strategically invest in our long-term growth opportunities. As expected, SG&A expenses were $50 million higher than Q3 2019. About $30 million of the increase was due to DTC investments, higher advertising, and the impact of currency. We accrued high incentives of approximately $20 million, reflecting outperformance against our internal expectations. I'll now share a few highlights from our three regions for which I will reference comparisons against the third quarter of 2019. In the Americas, net revenues grew 9%, led by growth in company-operated e-commerce and strength in U.S. wholesale. The Levi's brand was up double digits and company-operated stores inflected to growth, in part due to a larger store network in the Andes region. The Signature brand was up 36%, reflecting the strength of our value offering. We are pleased with the momentum that continues in Europe as lockdowns have lifted. Demand for the Levi's brand remains strong, with the region posting net revenue growth of 3%. Our direct-to-consumer business increased 9% as stores reopened and company e-commerce grew 34%. This reflects strength across the region, including in our top markets, France, Germany, and the U.K., which collectively were up double digits. Turning to Asia, revenues were down 23% as the region was adversely impacted by virus resurgences across markets. In addition to nearly 20% of doors being closed in the region during the quarter, traffic remained far below 2019 levels. While China sales were down due to a significant surge of the Delta variant, we remain confident in the long-term opportunity in the country. Turning to balance sheet and cash flows. Inventories at the end of the quarter were 4% below third quarter 2019. We are prioritizing our key holiday styles and using air freight as needed. Overall, the composition of our inventory remains healthy with the right balance of fresh product and styles that carry over into future seasons. We expect to end the year with inventory up mid-single digits as we gear up for holiday and incorporate Beyond Yoga. Cash and liquidity remain strong, and at the end of the quarter, net debt was negative $221 million, and overall liquidity was $2.2 billion. Adjusted free cash flow through the first nine months of the year was $220 million, strong improvement versus the $28 million in the comparable period of 2019. In addition to our higher profitability, we have embraced cash discipline and substantially improved working capital, as reflected by our cash conversion cycle, which is 25% shorter than it was in 2019. We are deploying capital across all our strategic capital allocation priorities. These include high ROI growth investments in our business, returning capital to our shareholders, and executing both organic and inorganic M&A. We continue to concentrate our capital investments in new stores, distribution capacity, and technology. Our latest outlook for capital expenditure in 2021 is approximately $175 million. We have taken our dividend back up to pre-pandemic levels, and the board of directors has approved $200 million for share repurchases. Additionally, given the strong free cash flow and consistent momentum in our business, last month, we paid down our remaining 5% notes due 2025, and our gross debt is again in line with pre-pandemic levels. This will save us $10 million in annual interest expense. After the quarter, we completed our acquisition of Beyond Yoga, which we purchased for approximately $400 million. The acquisition is expected to generate over $100 million in revenues next year with an EBIT margin that is accretive. The brand has a strong runway for profitable double-digit growth via expanded categories, geographies, and distribution. Now, turning to our fourth quarter outlook. Despite the pandemic surging in different parts of the world, given the strength of consumer demand for our brands, we are confident that we will be able to sustain the momentum in our business as we head into the fourth quarter. We expect fourth quarter reported revenue growth to continue to accelerate relative to 2019, up 6%-7%. This is reflective of trends we are seeing in September and represents an increase to our prior guide. Note that currency is benefiting us only 1 point, half the FX benefit we guided last quarter, but this will be offset by the addition of Beyond Yoga. Relative to 2020, this translates to reported revenue growth of 20%-21%. We now expect fourth quarter gross margin around 57.5%. This expectation incorporates a similar impact of air freight as we saw in Q3 2021. This also means full-year gross margin will be above 57% and more than 350 basis points above full-year 2019. We expect Q4 adjusted SG&A will be $50 million higher than Q4 2019, with the primary drivers being DTC and advertising. We expect advertising to approach 9% of Q4 revenues, nearly 250 basis points higher than it was in Q3, but only slightly above Q4 2019. In terms of profits, we expect fourth quarter adjusted EBIT margin of around 12%. This will translate to second half adjusted EBIT margin of approximately 13%, 100 basis points higher than what we shared last quarter. With respect to taxes, we expect a fourth quarter tax rate in the mid-teens. This will yield a full-year tax rate in the high single digits. We expect to deliver adjusted diluted EPS of $0.38-$0.40 in the fourth quarter, which brings us to $1.43-$1.45 for the full year, an increase of at least $0.12 over what we said last quarter. Compared to 2019, this equates to full-year growth of more than 27% and more than $1 above last year's $0.21. Before we go to Q&A, I'd like to leave you with three key thoughts. First, we once again exceeded our expectations and are raising our full-year outlook. We anticipate full-year revenues nearly reaching 2019, while delivering a significantly higher profitability, ensuring that we emerge from the pandemic a stronger company. Our momentum is broad based, which we attribute to tailwinds from the denim cycle, which we are leading, and our continued brand strength, best demonstrated by our pricing power and AUR increases. Second, the benefits of our structural economics are largely sustainable and will enable us to offset inflationary pressures. We continue to get stronger through the pandemic as we operate with cleaner inventory, more favorable margin dynamic, and the ability to drive robust free cash flows. We're making discretionary investments to propel the Levi's brand and accelerate DTC. Third, we continue to increase capital deployment across all our priorities while generating higher returns on invested capital versus 2019. We are extremely optimistic about the future as we continue to advance our strategic initiatives and leverage our strong balance sheet to drive future profitable growth. With that, I will now open it up for questions. Certainly. Ladies and gentlemen, if you have a question at this time, please press star then one on your touchtone telephone. If your question has been answered and you'd like to remove yourself from the queue, please press the pound key. Our first question comes from the line of Matthew Boss from JPMorgan. Your question please. Great. Thanks, and congrats on a nice quarter. Thanks, Matt. Chip, in a world with COVID, your brand and category are doing well, particularly on a relative basis. I guess, how much of this do you think is company specific versus expanding category TAM, maybe tied to casualization? Just on the other side of the crisis, how do you feel about market share opportunity? I know you've cited competitor consolidation. You guys have changed your wholesale distribution. I think you've outlined a pretty robust retail door expansion. From a pricing power perspective, do you believe you have the opportunity to continue to take price from here? Good question, Matt. First of all, I would say, clearly we are benefiting and our peers are benefiting from some of the tailwinds which we talked about in the prepared remarks. The casualization trends, the new denim cycle, which I think I was the first to declare it a couple of quarters ago, and I think we could say now quite confidently that these new looser fits, new silhouettes are definitely driving a new denim cycle. In fact, I just got some data. The total jeans category in the past nine-month basis is up to $11.2 billion here in the U.S. That's higher than it was pre-pandemic. During the same nine-month period, it was $10.6 billion and way higher than it was during the pandemic at $8.5 billion. Clearly, the category is bouncing as people need to refill their wardrobes, and that's helping everybody. I think the vast majority of our results are driven by the strategic choices that we've made and the quality of execution that we've driven over the past couple of quarters. I think that's going to be true going forward. The majority of our gains are being driven by the fact that the brand is really, really strong. That's probably best demonstrated by our ability to take and secure price increases with the AUR growths that we referred to. We're also highly focused on premiumizing the brand, particularly here in the U.S., still our largest market by far. We have really focused on our wholesale distribution footprint, which you alluded to, which is much healthier today and more premium, with a negligible amount of off-price. Certainly helped by a low promotion environment today as well. These NextGen stores which we're launching are working. We're committed, as we said in the script, we're going to have a total of 100 new NextGen doors this year. Not all in the U.S., to be clear, but we're committed to premiumizing here in the U.S. I would argue based on the supply chain results this past quarter, that we're navigating that and have been very thoughtful and had good foresight, I guess, in terms of how to navigate this, which has helped us pretty significantly during this challenging quarter. Finally, as Harmit alluded to towards the close of our prepared comments, the structural economics that we've kind of worked on very hardly during the pandemic has left us with a very different looking company from a P&L standpoint. It's driving significant improvement in cash flow, but it's also giving us a lot of powder and ammunition to invest in driving profitable growth, and that's what we're doing. Clearly the tailwinds are helping us, but we think there's share growth opportunity. Last I should mention, don't forget we acquired Beyond Yoga, which puts us into this performance athletic category, and I've got the data on that as well. In the U.S. on the past nine-month basis, that's a $50 billion category, five times bigger than the total jeans category. Also up versus pre-pandemic, and even up on a past 9-month basis versus the pandemic period. I think our future is really, really bright. There's share growth opportunities, and then we've got these tailwinds that I think are going to help us, and as long as we can continue to navigate the challenges thrown at us every single quarter, I think we're going to come out in a winning place. That's great color. Best of luck. Thanks, Matt. Thanks. Thank you. Our next question comes from the line of Laurent Vasilescu from Exane BNP. Your question, please. Oh, good afternoon, Chip. Good afternoon, Harmit. Thank you very much for taking my question. Chip, I think you mentioned in your prepared remarks, the hot topic du jour is obviously cotton. I think you called out cotton for 1H 2022 is anticipating up low single digits and anticipated up mid-single digits for the back half of 2022. Can you talk about your business and your pricing power relative to the last cotton bubble seen in 2011? I think you're in a much stronger position today. What percentage of your COGS actually come from cotton? I know, Harmit, you didn't provide explicit FY, any guidance really on FY 2022, but should we think there's still further runway on the gross margin into next year? Let me- Chip- You want to go first or Okay? Yeah, let me start on It's a great question, Laurent, and thank you for asking because I think we are in a very, very different place than we were in 2011. In fact, I joined the company in September of 2011 in the midst of the cotton run-up at that point in time. Let me just paint a picture of how different we are, which gives me a great deal of confidence in our ability to work our way through this increased cotton market. By the way, the low single digit that we referred to in the prepared remarks was total COGS, not cotton. It was total cost of goods. In 2011, when I joined the company, 48% of our business was U.S. wholesale. Our total U.S. business was almost 60% of the total company. Today, that's a very, very different picture. We were 20% DTC back then. We're now, I think this last quarter, we were 35%, 36% DTC. We've got a very different looking distribution footprint. Much more of our business is overseas now, international, which skews higher gross margin, more retail, stronger brand, particularly in Europe. That is a big, big difference. Then I think the second thing that is just night and day difference is the strength of the brand. Back in 2011, when we were still a wholesale-dominant business, it was a turnaround situation when I joined. The brand was weak. We hadn't really grown revenues and profits at the same time in over a decade. In 2011, we didn't have pricing power. I had Jim Collins come and talk to our leadership team. He said, "You know you've got a strong brand when you don't have to hold a prayer meeting to take pricing." In 2011, we needed a prayer meeting. Very different situation today as I think our AURs clearly support. We've been able to take pricing over the last 12 months. It's sticking. I think if the inflation issues and/or cotton and/or cost of goods gets worse than what we've got built into our model right now, if we have to take more pricing, we'll figure out where and how to do that. We're also much more disciplined and have much better capabilities in terms of data analytics, machine learning even, where we can apply some of those tools to make very, very strategic decisions on getting incremental pricing if that's going to be necessary. We have taken pricing over the last 12 months in anticipation of costs going up. That's part of the reason we're seeing these incredible gross margins over the last couple of months as we priced ahead of some of these inflationary pressures hitting us. I'll let Harmit talk a little bit about the cotton piece. Yeah, sure. Thanks, Chip. Just 2 things. I'll answer the question on gross margin in a second. Just on cotton, as Chip said, it's not a 1-to-1 ratio. We use 2 pounds of cotton in every pant, so think about cotton driving 20% of the cost of our wonderful denim bottoms. As we do buy in 2 halves, the 2 seasons, we have locked in prices for the first half of 2022 at about 1% inflation to 2021 numbers. The second half, we're in the process of negotiating as we speak. We think we can land at about mid-single digit inflation. We think between the pricing actions we have taken that Chip referenced and the ones that if we have to take, given the strength of the brand, we'll be able to mitigate the impact on COGS. To your question about gross margins, first, isn't it beautiful to have gross margins of 57.5% and sustaining its record gross margins? If you go back the last couple of quarters sequentially, it's only improved. As I said in my script, it's difficult because the environment is less promotional. Everybody's running with leaner inventories. My view of the world is that strong brands like us, as Matt, you asked, will come out of this a lot stronger. Between Chip and I and the team, we have an experience of five recessions. That's probably what's happened. If you go back in the couple of economic hardships, strong brands really come out well if they do the right thing. As you think about our margin accretion, gross margin accretion, I'd say, about three-fourths of it is structural and here to stay. That's all driven by the diversification, the use of AI, more international, premiumizing our product, price increases, et cetera. About a fourth, 100 basis points, potentially, if the environment becomes more promotional, et cetera. We'll all have to figure out. I think to your question about what is the appropriate guidance for 2022 on gross margin, I think history is a good predictor of the future. We've successfully grown gross margin over the years, and I'd say our intent is to continue to grow gross margin. We have puts and takes in gross margin. Right now, the headwind is air freight. It's about 70 basis points. It's reflected in Q3, it's reflected in the guidance for Q4. Our view is that our intent is to meet consumer demand, and economically, if we have to air freight, we will air freight to meet that. I think gross margin has a few things working against us and a lot of things working for us. I'd say we'd probably give a better perspective on 2022 when we come out with earnings for the year in Q4, sometime late January, early February. Thank you very much for all the color. Thank you. Our next question comes from the line of Omar Saad from Evercore. Your question, please. Good afternoon. Thanks for taking my question. Great job on the quarter. Thanks, Omar. Absolutely. I wanted to ask you about Beyond Yoga. It's kind of the first chance we get to ask you about it in public on a conference call. It's obviously a small transaction. It's relative to the core Levi's brand. But maybe you could talk a little bit about how your experience and the platform you built to kind of turn around and rejuvenate Levi's, which was already large and widely recognized as a brand, albeit under-monetized, but how you bring that to bear in this more early-stage hyper-growth situation you have at Beyond Yoga. What are the key elements from Levi's that you think you're going to be able to apply? Is it marketing? Is it international? I have one small follow-up, if that's okay, on Beyond Yoga. Okay. Yeah, we touched on this a little bit in the prepared remarks, but maybe I'll just elaborate on it. I guess the first thing I would say, and I think most of you know this, at the end of the day, I'm a brand guy. I spent 28 years at P&G building brands, launching new brands, creating brands, turning around brands. When I joined Levi's, part of the reason I joined was it was a turnaround opportunity, and my thesis coming in was Levi's was 85% of the company, and if I could turn the brand around, we could turn the company around. That fundamentally, at the end of the day, is kind of what we've done. It's not about me, this is about the whole team that did it, but that's pretty much what we've done. When we were kind of looking at acquisitions, one of the things that really impressed us about Beyond Yoga is it has legs. This is a brand that is built on a deep consumer insight around body positivity and the fact that any woman can be an athlete and can work out and should feel good about working out and her body, regardless of her body shape. That is part of the insight. It celebrates that inclusion and that diversity, and when you look at the website, you'll see it, and it resonates with consumers. It is a real fundamental consumer insight. We think that what they bring to the party is this deep consumer understanding and insight. They've built a community of users. They know their consumer really well. Combined with a deep understanding of the category, and amazing product, and great product knowledge. What we bring to the party, I think, is an ability to scale a brand and really bring great brand-building capabilities to bear. This is a brand that, by the way, has grown double-digit for the last 10 years, and they've been profitable their entire existence. They've managed the business kind of the old-fashioned way. As they made money, they poured it back into growing the business. Our capital will also be a help to them. What we bring to bear is this deep brand-building capability, number 1. Number 2, a deep understanding of men's, which is a clear opportunity for this brand. It's total white space at this time. Number three is retail capabilities, because retail is clearly an opportunity, and given the structural economics of this business, it's almost a no-brainer. We're not going to go out really fast. We're going to learn our way there. Then finally, this is a brand that can travel internationally. Right now, almost all of its business is here in the U.S., most of it online, a little bit of wholesale business. So we think all of those things together, their capabilities combined with our capabilities, is what gives me confidence that we're going to be able to drive this business Continue that double-digit growth trajectory and do it very, very profitably. I think over time, it's going to be a meaningful contributor to the business. Got it. That's great color, Chip. Chip, go ahead. Omar, the only thing I'd add, if you look at the history since Chip got here last decade, we've not only increased capital, but we also increased returns. I think, as we scale this, we're disciplined capital allocators. If you think about the three filters based on which our board approved this acquisition, any acquisition, the financial filter is as important as the cultural filter and the strategic filter. We are on the hook to scale and grow, and we think this can be really big. Got it. Then just to clarify, when you said, Harmit, accretive to margins, you mean accretive to the current LS&Co. margin, which I think you said is going to be over 12%? That's right. Beyond Yoga is already above that? Yes. Great. Thanks guys for all the color. Good luck. Thanks, Omar. Thanks, Omar. Thank you. Our next question comes from the line of Kimberly Greenberger from Morgan Stanley. Your question please. Great. Thank you so much. I'm noticing very nice growth, obviously, compared to 2019 in the Americas and Europe, where you talked about that high single-digit growth rate. Asia, I think is suffering from some store closures. I was just wondering if you could talk about the path to recovery in that geography. I'm assuming that the first step is, let's get all the stores open and operational and sort of life back to normal as maybe a first step. What are the key things that you think need to come together to get that business back to where it ought to be? Then separately on supply chain and inventory. It's very evident that you've managed through the supply chain challenges very, very well. I suspect the inventory, which I think if I'm looking at the right numbers here, is down around 4% from 2019. I suspect that's gonna be one of the best numbers that we're gonna see through this earnings season. You're in what looks like quite good shape, but I know you have aspirations to get that inventory number into the positive territory. Do you have sort of line of sight as to when you think you'll be able to get that inventory back into positive territory? Are you experiencing delays? Because it just looks like you're sort of sailing through all of the supply chain challenges, in a way that is better than what we're hearing from others. Any color there would be helpful. Thanks so much. Sure, Kimberly. Thank you for your question. Asia's performance in the quarter, is largely driven by the fact that there were lockdowns and continue to be lockdowns in different forms, in different countries around Asia. If you think about our store base during the quarter, we had 20% of our store base closed during the quarter, and I think if you look at the revenues, we were down 23%. A little bit of traffic softness, but it's essentially driven by lockdowns and, as you think about the world, I'd say the Western part of the world, higher vaccination rates, the Eastern part of the world scaling up over time. That's what's really driving the softer numbers in Q2. It was largely India that went through a tough resurgence of COVID that dragged the numbers. As we think about Q4, our view is Q4 will be less down than Q3. We haven't talked September because we're just closing up. September was the first month of the quarter. What we are seeing is definitely the business is bouncing back. It's probably still flat to slightly down, but nowhere near the 23% that you saw. That's just a little bit of color in Asia. Asia, as you know, represents a much smaller piece of our business. It's 15, 16%, but it's probably our largest opportunity and just given the number of consumers in Asia and the strength of the brand. It's clearly an opportunity we are pursuing, starting with China. China was down in the quarter, essentially driven by the lockdowns. We do think China bounces back in quarter four. we continue the momentum that we've seen just before the recent round of lockdowns. that's our perspective on Asia. To your question on inventory. You're right, inventory is down 4% relative to 2019 in the end of quarter three. Our expectation for quarter four is inventory will probably be up about 4%. that's what you referenced by positive. It will grow, and essentially, our expectation of what's driving the growth is really the fact that we're gearing up for holiday season. We believe, like the NRF just said, that holiday should be strong, 3%-5% up relative to last year. Brands that have inventory, like us, will meet consumer demand. Others probably don't. our view is that the growth in inventory is driven by the fact that we gear up for holiday. as you know, our fiscal ends in November, not December, so we're gearing up for December. The other piece is Beyond Yoga is now in our numbers, and that is a point or two. those are the two pieces that drive growth in inventory. the overall principle, we look at inventory in two ways. One is, okay, what's the inventory levels for the year and expected demand? importantly, what's the health of the inventory? the health of the inventory continues to be really, really good. that's largely driven by the fact that we have a large core. Terrific, Color. Thanks so much. Thanks, Camilla. Thank you. Our next question comes from the line of Bob Drbul from Guggenheim Securities. Your question, please. Hi. Good afternoon, guys. Two questions, actually, if I could. Sure. The first one is, I guess we go back to cotton for a second. What you have locked in, I guess my question is, how much wiggle room do your suppliers have? How tight are your contracts? Have there been any discussions on pricing increases that you've had, I think you've talked a little bit before about sort of the benefits to the top line, but also the benefits to the margin. Just wondering if you could maybe share a little bit more in terms of the price increases that you have taken, the expectation, like the buckets for the gross margin with pricing, but also how much that does really help you on the top line. Thank you. Yeah. Bob, I think the contracts we have with our suppliers or manufacturer partners are pretty tight. When things are tough, things are tough. FX, for example, can work against us, and we just honor our bit of it. When things are tough, they honor their bit of it. They're wonderful relationships that have been cultivated for years. The thing that really helps us is a couple of things. One, the fact that we have a large core, and core is gonna be here for a very, very long time. You can start thinking about placing those orders longer term. Our manufacturers or vendors can think about this demand being there for a long, long time. I think that helps both sides, as well as the volume of what we can bring to the table. I would say that would be the answer to your first question about. The second, which is, how are we taking pricing and what are we doing about it? I think our teams on the ground do a phenomenal job thinking through this. They obviously benchmark our competitors, and because we are in market leadership position in a lot of areas, we can flex that muscle to ensure that we don't hurt consumer demand. The other thing that we're beginning to unlock, and it's a huge opportunity for us long term, is the use of AI and machine learning. given that we do have stores, you can always test pricing, and I think Chip referenced the fact that we've been proactive on pricing. I like to say it's important to take pricing when you don't need it than when you need it, and because we've been doing it on the back of a strong brand and styles or silhouettes resonating with the consumers, we feel good. Pricing is different in different parts of the world for a whole bunch of reasons. It's difficult to say with precision whether it's 4% here and 5% there or 3%. We have taken pricing during the pandemic. In the U.S., for example, on our women's style that was sold into wholesale in quarter three of last year, we took it up 10 bucks, and that generally stuck. there's a bit of art and a bit of science, but I think what is gonna really help us longer term is the use of AI and machine learning, and build a lot more discipline in the process. Thank you. Thank you. Our next question comes from the line of Ike Boruchow from Wells Fargo. Your question, please. Hey. Good afternoon, everyone. Chip or Harmit, I'm not sure who's best to answer this question, but so the elevated freight and distribution pressure that you're seeing today for Q4, are you trying to pass any of that pressure on to your retail partners at wholesale, or are you just kind of taking the hit yourself and trying to price it out? Then there's a second follow-up. When you say you're confident you can offset next year's low single digit and mid-single digit inflation in 1H and 2H, is that from initiatives in AUR you've already implemented, or is that also predicated on future strategies that you plan to implement early next year? Thanks. Yeah. Thank you for asking the question. We haven't passed the air freight costs on to our retailers because it's happening, and we're reacting to it. It's more important to meet our consumer demands, and as we think about our relationship with our wonderful retailers, there's a whole profit pool, air freight and other things are just part of it. That's how we're thinking about it, at least for now. The answer to your second question is we've taken pricing actions, and the pricing actions were taken six to 12 months ago. We feel good about offsetting the inflation in the first half and inflation up to, I would say, mid-single digits in the second half. That's what we're contemplating right now. If things get tougher, then obviously we'll sharpen the pencil on two things. One is obviously pricing, and the second is cost initiatives. Our job is to balance consumer demand and profitability and ensure that we go after that wonderful growing addressable market that Chip and Matt referred to, as well as ensuring that we drive profitability to our shareholders and other stakeholders. Thank you. Thank you. Our next question comes from the line of Paul Lejuez from Citi. Your question, please. Hey, guys. Thanks. In an environment where we're talking so much about prices going up, you guys taking price, curious how you're thinking about units. How are your wholesale partners ordering units? If there's any color you can provide on order books for first half from a unit perspective, that'd be helpful. Just second, do you expect supply chain delays to have more of an impact than the $10 million you called out in 3Q as we think about 4Q? Thanks. I could take the second piece, and Chip, feel free to jump on. I think I referenced it, but I may not have been as clear. We do expect the $10 million that we probably were not able to service in quarter three to increase in quarter four. The good news is there is demand. The better news is our growth accelerates, but if we had more inventory and more product, we could probably sell more. I think it's a key balance between building a lot of inventory, ensuring that we're able to manage all the constraints that I think Chip referred to in supply chain and meet demand. I think we're managing through that as best as we can. There is demand out there, and we're doing our best to address it. I think to your second question, Paul, was about demand book and order book and volumes. Volumes are down. If you look at year-over-year, we mentioned sales was up 3%, but I think volumes are slightly down relative to 2019. As we think about the order books, we haven't publicly talked about volume, but I can say that the pre-book, as we think about the first half, and the area we really have pre-book is really Europe. Pre-book is up, but we haven't publicly talked about the difference in volume and sales. I think it'll follow the similar trends that we're seeing so far. I think over time, because the addressable market has increased, I think over time, volumes will tend to also accelerate and grow relative to 2019. Difficult to predict when, but that's what I'd say at this time. Okay. Thank you. Thanks. Thank you. Our next question is our final question for today. Comes from the line, Jay Sole from UBS. Your question, please. Great. Thank you so much. Chip, I want to ask you a Beyond Yoga question. This is sort of the opposite of the earlier question, is it possible that Beyond Yoga can help the Levi's brand with its women's assortment outside of the core bottoms business when it comes to tops and some of the outerwear potential that it could possibly do? You've talked about potential acquisitions in the past being something that could bring skills into the company that could help you grow your business. Is there an aspect of Beyond Yoga that maybe will give some insights into how you grow that lifestyle component of the women's business? Yeah. In fact, thank you for kind of piling on. One of the reasons we did this strategically is one of our key strategic pillars is to continue to diversify the company. We said our ambition is to get our women's business to 50% of our total business. This is clearly going to help there. They do bring capabilities and skills that I think will help us beyond just Beyond Yoga, if you will. One of the things that we are trying to really protect is this very scrappy team, if you will, that has demonstrated an ability to just build this business organically, again, by focusing on really satisfying and meeting the consumer and delivering great product. I think a lot of what they are doing, we're going to be able to take some of those learnings back to our core business. I think it will help us over time. One of the big strategic reasons for doing this is to further diversify the company. It puts us into a market size that's bigger than total denim by a lot, and it's a tiny little brand that I think has so much potential long term. On its own, it should be very accretive. Beyond that, the skills that they bring, some of the capabilities that I think we will learn about fabrics and fabrication in this more performance-oriented business can help us on the rest of our business, and could really halo over the rest of the company, and that's my hope over time that we see it do that. Got it. Thank you so much. Yeah. Thanks a lot, guys. I know that there are still a couple of questions left on the call, and we do have to wrap up here, but I want to thank everybody. We just have to be punchier, I guess, in answering our questions so that we can get through all of the questions on the line. I know that we've got follow-up calls with everybody, and we'll get to everybody in the follow-up calls. If you didn't get a question answered that's burning, send it to Aida, and we'll make sure that we get it turned around real quickly. Thank you all for joining us. Our next call isn't until the end of January when we'll have our Q4 and full-year announcement. At that point in time, we'll also provide guidance for fiscal 2022. Thank you all for joining us. Since we won't be talking to you in a big way, I hope everybody has a really safe and happy holiday ahead of them, and go out and buy lots of Levi's and put them under the tree. Thank you all very much, and we'll talk to you again soon. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.