Okay. We got the signal that we can begin. Hello everybody. I'm Jay Sole, UBS's retailing department stores and specialty soft lines analyst. We're here at the 2025 UBS Global Consumer and Retail Conference. I am super pleased and honored to be joined by Harmit Singh, who is the Chief Growth Officer and Chief Financial Officer of Levi's. The plan for today is we're gonna do a Q&A session. Harmit and I are gonna just go back and forth. If you do have a question in the audience, definitely feel free to raise your hand at any time. There's a person in the back with a microphone. She can bring the microphone out to you. This is being webcast. If you do have a question, please wait till the microphone comes to you before asking a question. To start off, I'm gonna start with the first question. Harmit, thank you again for being here. Can you talk a lot about some of the changes that you made to the business in 2024 and in terms of really the company's ways of working and what you expect for 2025? Sure. First, thanks for having me here, and appreciate everybody participating. I wanted to dig a little deeper into our story. Just a quick comment, otherwise, Aida will say, Harmit, you did not say it. Aida is our head of IR. You know, we are in the middle of a quiet period. I am not gonna talk about trends in the core of financial performance and everything else that may be top of mind for a lot of people, but cannot, cannot do it here. To your question about the change, as you think back, you know, I have been with the company 12 plus years, and this is what I would call the third transformation happening in the last 12 years. The first was, you know, when I got here with Chip, who was the CEO at that point, the company hadn't grown the top line and bottom line, in any one year for 20 years, at the same time, right? It's either the top line or the bottom line, but not, the two consistently. We were over-levered. We were skewed towards the U.S. We were skewed towards men's bottoms, and we were skewed towards wholesale. You added up low growth, not investing, for innovation, etc. The remedy was take costs out, you know, grow the women's business, which was declining at that point to is, is twice the size today. It was about 20% of the business at that time is what, a little under 40% now, and get to profitability. That was really and, you know, invest in innovation. In the first piece, that's what happened. Between 2015 and 2019, we grew at about 6% a year and profitably improved. We took the company public early 2019. COVID happened. All of us went through a tough period. We spent the time to really digitize the company. E-commerce was about 4% of the business losing money, and today it is 10% of the business making money. EBIT margins are low double digit. In 2021, it was probably the best financial year on record for us in about two decades. EBIT margins grew over 12% at that point. The third transformation, then there was high inflation. The consumer in the Western world got a little weaker, etc. There has been a CEO transition. Michelle Gass has now been with the company two years. She took over as CEO about a year ago. During this period, they made me growth officer. And recently, in some leadership changes, you know, transformation has been added into my remit because I've done a few transformations even as part of Levi's. Basic changes are, strategy's largely consistent. We're still brand-led. DTC first, where we really sharpen. We said it's DTC first, not DTC only, which means wholesale is important to us. And then it's powering the portfolio, which is all about international and growing our brands. The first piece of the thing that began in 2024 was narrowing the focus. We said there's some low margin, low profitable business. Let's exit them. We're exiting Denizen in Target, with a real focus of growing Red Tab in Target. We have exited a footwear business in Europe, small business, about, you know, 1% of our total revenue growth, which is $60-70 million. And we just announced the exit of Dockers. We are in the process of selling that. So that's the first piece of it. We're also reducing our SKUs as we introduce new products. We're introducing, reducing SKUs. We've taken 15% off. So that's the first piece. The second is chains of working. DTC vertical retailers have a shorter go-to-market calendar. So we've got a market calendar of 16 months. We're taking it down to 12. The new product introductions, you know, whether it's the Performance Tech, whether it's skirts and, and dresses for her, they're really within that period right now. So that's the second piece. And we're becoming more directive in our assortments. So which our stores around the world will have common, more commonality. The third is driving higher productivity in our direct-to-consumer business. That means higher revenue per square foot. It is higher profit, and, you know, more SKUs that are winning versus not. As an example, our DTC profitability has gone from the low teens to the high teens. I mean, we improved close to 400 basis points last year. We think it will continue to improve. The last piece is some leadership changes we just announced, which is all about aligning structure with strategy. There we have one person looking at product and merchandising. One person, the commercial, now has supply planning. I have been given transformation because, you know, my view is transformation is more than just taking costs out. You know, I am not the DOGE of Levi's. It is more about growing revenue. It is more about driving higher profitability and improving working capital. Okay? Our turns are two. We wanna get it to three that releases. That is how we are thinking about it. Now, to simplify all this, because there is a lot happening, simplify all this, we came up with the organic net revenue definition, which is, you know, primarily what, you know, how is Levi's doing and how is Beyond Yoga doing. That is what we are gonna be reporting going forward. Got it. All right. There's a lot to dig in there. I wanna touch on something that I don't know if we get a chance to talk about enough, but on a, you know, public webcast like this, I think it's great to get it out there. The first thing you said was that Levi's is brand-led. Mm-hmm. Obviously, it's a storied brand, 165-year-old plus brand. My understanding from covering the stock now for many years and talking to you many, many times is that protecting the brand integrity of the Levi's name is sacrosanct within the company. Mm-hmm. Now, tell me about that. Tell me what, what about the company? What, what's in the culture that it's just, you know, just in, in the company's, in the company's character, in the company's culture to make sure that the Levi's brand is always protected and, you know, protected from any sort of the other brand degradation things some of these other companies do to their brands? Yeah. I've, you know, no one's asked me that in a long time. The way I would think about it is, you know, number one, the brand's relevant at any point of time, and it's relevant to changing consumer landscapes, changing consumer preferences. That's the first piece, is make sure you have a product pipeline that is always offering something to her or him, and is across different demographics. It's something for, you know, an older person like me. There's something for a younger person like my millennial daughter, etc. Connecting with the youth, which is in the next generation, is critical. For example, we lead with men's. We have taken over the leadership position in women's in the U.S., and we're connecting really well with the young. Having the right product is important, plus having the product for the right, you know, for every relevant occasion. You know, baggier fits are important, but you still need the slimmer fits, you know? When my wife, for example, is wearing boots and she wants to wear a slimmer fit, there's a 721 for her. You know, if she wants a baggier fit, it's available. The same thing with us, men. We want something that's more comfortable. We've got the Performance Tech, which is our non-denim line. There's a 511 or a 501. I'm wearing the bootcut. There's something, you know, if you want a more comfortable fit. The other piece is, it's very important that the core continues to perform. We were the ones who created denim. 501 is how we started. 501 is still growing, right? It's getting closer to a billion dollars. It still had a double-digit growth last year. While you're introducing the newer fit, your core has to continue to perform. That's the first piece of it. The second is marketing, right? It's important. We spend about 7% of our revenue in marketing. There was a time we were spending much less. We were not on TV for a long time in the U.S. and some markets. We introduced that. We have signed up with Beyoncé. She's an icon herself. She's been a fan of the brand. You know, she named a song after us. That happened organically. That happened because, you know, she loves the brand. She was in Coachella, wearing our shorts, in 2019 or whatever without us knowing it, etc. Now she's, you know, supporting the brand in partnership, you know, for us. We've got this partnership for a while. That's the other way of it. The third is executing, you know? We're getting better at it. You know, when you go to our store, you should find our product. You should find your size. That's why direct-to-consumer becomes so important, where we can assort our styles ourselves and the wholesale customers can come and see how this is working and buy into it. I think that would be the ethos of it. Because we think there's so much opportunity on Levi's, we narrowed the focus on other things that we were doing and said, "Let's exit them". On the execution, let me just ask you one follow-up on that. You know, the company, I feel like, has respected price and price integrity. Mm-hmm. in a really good way. I think we've talked about this before, but I think when you got to Levi's, I think the average pair of a Levi's jean costs like $30 in the U.S. Mm-hmm. Now it's significantly higher. Mm-hmm. Obviously, one way to sort of pull a lever in the short term to drive some sales is to discount and promote, but that can sort of erode the price and power, the integrity of brands. Seems like the company's been able to avoid that. Mm-hmm. How do you, how do you keep that discipline? I mean, especially. Yeah. No. No. Yeah. No. It's a very good point. Our product, you know, provides great value for money. You go to, you know, you go to a premium wholesale customer like Nordstrom and take our women's product versus some of the others, we have great value for money. As an example, you walk into a store, you still get product for $70, $80, etc. Protecting the price value is important. About a year ago, as I was looking at the numbers and our products were actually hitting the mark, they're very relevant, you know, I said to the folks, I said, "There are a couple of things we gotta really take a hard look at. Are we growing gross profit dollars faster than SG&A dollars? What percentage of our product are we selling full price?" Okay? When you looked at both, there was opportunity. We really focused on driving higher full price, especially in our stores, right? Because you can control that, especially when the product is hitting home. Those are the things we're looking at. You know, we did some tests around the world, you know, and I was sharing this with folks. I mean, I remember this discussion because we used AI a little bit. Where AI is effective is just determining the level of promotions and markdowns. In Europe, you know, we had, we were marketing on product. You know, Europe was going through a tough period. You know, it's growing again in the beginning of the second half of last year, but it had some tough quarters. We had product that we were merchandising and marketing and marking down. And then we had new products. People were gravitating to the new stuff and paying full price versus gravitating to the old stuff. That was marked down. That, you know, just explains that the brand is really relevant. The consumer is thinking differently. The question is, you know, if you have a product pipeline that's really strong, you know, can you do more of it? Understood. All right. One other piece of the transformation is you mentioned this, the lead times, especially from going from 16 months to 12 months. You know, talk about the challenges of making that happen. Obviously, it's a company that's been a North America wholesale men's jeans business for a long time. Right. It is a certain way of doing business. Now you are a global multi-channel men's and women's lifestyle brand, which is a whole nother set of skills you are having to build up. Mm-hmm. Talk about what it takes to go from 16 to 12. Yeah. I think the biggest constraint and the biggest opportunity is the internal mindset of our merchandisers and product people, as well as the mindset of buyers in our customers. They are used to, you know, a longer timeline. They are used to taking a little time before they make the choice versus a shorter timeline. Let's take it this way. Today we're sitting, it's March, and we are potentially ordering product 16 months out. We have not even seen how the current product is doing well. It is largely the seasonal product. We have a lot of core. We do not need to do 16 months for core. Core can be replenished much faster. It is just the way we have been operating for years. I think it is the mindset. Plus, it is about using digitized tools. You don't need to get a product, you know, and see it, touch and feel it. When it's probably the same 501 that you ordered for yours or it's very similar, you can just order it, you know, just, you know, seeing the photos and the digital structure, etc. It's basically thinking through that a little differently. It takes time. It doesn't happen overnight. That's what we're working through right now. We'll get there. If you get when you get there under my transformation remit, because I said, "Okay. I mean, you from 16 to 12 is very, very good. But what's the outcome?" Right? Are we gonna get better sales, growth? Are we gonna drive higher gross margins? Is it gonna be fewer inventory, and working capital? That's where I come in and say, "Okay. I work with whoever's trying to do it." And say, "Okay. Now let me help you." Yeah. Think through the outcome a little bit. Okay. So interesting. Now, to 12, do is 12 sort of an average? I mean, like some things like core is gonna get replenished and that product will get. Mm-hmm. Ordered in a three-month span, you know? And some tees, like graphic tees, Batwing tees, whatever, that's. Mm-hmm. Four months. Mm-hmm. Other stuff that's maybe newer and more innovative and has new fiber technology, whatever, that's like 16 months. Mm-hmm. Is that 12 really a blend of a lot of different things? Yeah. Twelve is a blend of a lot. But you know, what happens is if you're conservative, which, you know, traditionally we have been, you know, everything gravitates to the average. And so we have to maybe the top speed as we grow way stuff, you know, because that's an opportunity for us, it gets a shorter go-to-market. You know, some things that, you know, are a little bit more, you know, some fashion, a little bit of fashion wristlets, etc., a little longer. So I think the average would be twelve. But that's a good cutting four months out is, is, is will have, you know, tremendous impact, especially if DTC is gonna be, you know, it's f it's close to half a business today. But if it's gonna be 55% or 60% of the business, then it gives you the license to do it. Got it. I mean, is there a trick, a management technique to getting people to change their mindsets, right? Because that's such a fascinating topic. I have to ask you this. Yeah. Because you have so much experience in this area, and I just think it's, you know, interesting. See, I think, you know, it's been, it's been tough. I mean, it's not that, you know, the last 12 years is the first time we looked at it. We looked at it, you know, you have product people saying something. You have merchants saying something. You have commercial people thinking differently. That is where the new organization changes, where product and merchant is under one person. Planning is with commercial transfer. I think this is probably our best shot of making the change. Michelle's completely, you know, behind it. The board actually wants this. You know, I think we have a good shot of making this happen. I think people will make the difference. People understand why we're doing it. You know, I'm more confident today than I was in the last attempt a couple of years ago. Sounds great. Yeah. All right. That was great. Let me, I want to ask you some topical stuff. I know people are interested. Want to ask you the, the tariff question. Uh-huh. I guess, what impact do you expect current and future tariffs have on the business? Yeah. First, let's talk about our business and, you know, where we buy what from, right? Let's put those facts in. We cross-source from 25 odd different countries, primarily Asia, you know, some North Africa. Very little is manufactured in the U.S. I mean, if you take the apparel sector, 98% of what is sold in the U.S. is manufactured outside the U.S. Beyond Yoga, which is an LA brand that's grown up in LA, has quite a bit of manufacturing in the U.S. and LA. We're now, as we grow that, taking that also overseas. That's fact number one. Over the years, we've been able to cross-source, you know, from different countries. I mean, you know, it's not difficult to manufacture our product, right? You need to have our quality controls, and you need to have the styles, but it's not, you know, I mean, there's not a lot of fashion-forward stuff that we have. You can make those shifts over time. China, for example, today, what we're importing into the U.S. from China is less than 1%. Mexico is about 5%. China used to be close to 15-16%, and over the years, it's come down. We've quantified the impact of, let's say, the 25% tariffs in 2025 will be minimal. We'll be able to withstand that from these two markets. India has been in the news. We import very little from India right now. Most of the stuff in India is made for India. Most of the stuff in China is made in, for China, etc. So, you know, wherever we could do that, we've been able to localize. And so that's, you know, financially, that's how we're thinking about it from the company's perspective. As an example, and where we need to take price, we will take price as long as we have pricing power and it doesn't hurt the consumer. As an example, in December of last year, Mexico imposed tariffs on product that was imported into Mexico. And we've just taken pricing in Mexico to offset that. We have pricing power. The brand's doing well. The consumer's in a good spot, etc. Now, the other piece is the impact on the consumer, right? And it's such a fluid situation. It changes by the minute, by the day, and by the country. You know, we'll work that out. Overall, generally, what we are seeing, the consumer in the U.S. has largely been resilient so far. The denim category is having a moment. We have growing share. We just saw our January numbers on market share. We've just continued to improve that in the U.S., etc. You know, I think time will tell on the impact on the consumer and where this finally nets out. We'll not be alone because, you know, I think in the short term, it's probably a competitive advantage to us because we're not importing a lot. Long term, we'll try and figure it out like everybody else. Okay. Let me follow up on that market share point and the denim category. Can you speak to the category outlook and the market share and their positioning in the. Yeah. Within the category? You know, generally, we've been able to grow faster than the category. I mean, you take last year. Globally, I think the category was up 1.5-2%. We were up 3% organically. You know, from 2015 to 2019, which I, the reason I go back to 2015 to 2019 is they were probably the most normal years. And then we had COVID and 2021. You could say there was some vengeance buying or whatever it is. At that time, the category was growing, you know, low single digit. We were growing at twice the pace. And so generally, our view of the world is we'll probably go faster than the category. Now, if you look at the numbers, Euromonitor's numbers for the next, you know, four or five years is annual growth of the category in the low- to mid-single digits, right? That is why if you think of our progression as a company, 2023 organic growth was flat because U.S. and Europe, you know, were having their struggles. The consumer was struggling. 2023, we grew organically, about 3%. In 2024, sorry, 2024, we grew at about 3%. 2025, we have guided 3.5-4.5%. Our desire to get to mid-single digit growth and the company, you know, from a little over $6 billion gets to $10 billion over time. Our gross margins were in 2023 under 58%, slightly under 58%. 2024 was a record 60% gross margin. In 2025, we are guiding about 100 basis points higher than 61%. And our EBIT margins, you know, have also seen a nice progression. They were nine in 2023. They were a little over 10 in 2024. You know, our expectation for 2025 is close to 11 on the way to 15. As we think about it, you know, that's where we think about the category. Now, you have to be relevant. The other thing we're doing is, we're reminding the consumer and ourselves they'll be more than denim. Mm-hmm. Right? It's, it's not necessarily Beyond Yoga, but it's beyond denim. The way where we think we have the license to play is in denim lifestyle. You know, think the jacket I'm wearing is inspired by denim. The shirt I'm wearing is indigo inspired by denim. We're introducing linen in the spring, but it's denim-inspired linen. Right? The other thing we're doing is looking at a non-denim line because most of you here don't necessarily wear denim every day to work, but you can wear a casual, you can wear something similar to the ABC, Lulu, linen pants. That's where we introduce the Performance Tech. That's, you know, a nice additional layer. We've introduced skirts for her, dresses for her because skirts and dresses are categories growing. Performance Tech as a category is growing. Activewear is being growing at a faster clip than just pure denim. Those are the things we're exploring, right now. It's very interesting, right? Expanding from just denim as to a lifestyle brand, where you sell many categories. Mm-hmm. Have you seen any resistance from the customer in terms of them saying, "Hey, you know, I trust Levi's for denim, but I'm not gonna buy a skirt. I'm not gonna buy a button-down shirt."? Yeah. Have you seen any issues? No. We haven't seen resistance from the consumer. Our biggest opportunity is driving awareness. Mm-hmm. Which is you wake up, in the morning, and you wanna shop denim. You wanna shop denim bottoms. You think of Levi's. when you think of tops or waist-up and the other things are non-denim, we'd like the consumer to start thinking of us. and so that's why the Beyoncé campaign, you know, you've got, the T-shirt she's wearing. You've got the trench coat that she's wearing, beside the ribcage, which is what, you know, people know we sell. And so, like in India, for example, we've, just signed up with, you know, a musician in India called Diljit Dosanjh, and he's more lifestyle, right? And so, you know, we're trying to bring that marketing, back. You'll see a lot more product marketing, in our marketing going forward, than you've seen in the past. And so that's how we're thinking through it. We have talked about this before, but I just think for people to know, the ratio of bottoms to tops. Yeah. See, yeah, it's an interesting thing. So when I joined the company, it was seven bottoms to a top. Right? Best-in-class retailers, one-to-one. I think, last year, we reported two bottoms to a top. Their markets, like India, for example, now, I think it's 1.3 tops to a bottom. Okay? So, you know, we're progressing, but it takes the time. And that's a good, that's an opportunity to make it more denim lifestyle. Now, having said that, the areas we're focused on, whether it's women's, whether it's DTC, whether it is international, they're higher gross margin than the company. And so their gross margin is creative. You know, as we think about it, and the reason women's is higher than men's is because it was 30% or so 10 years ago, and now it's over, so much over that, is because we have good volume. Okay? It's growing, and it'll get there. As we, you know, sharpen the focus on waist-up or tops, okay, and our focus is it shouldn't be margin dilutive. And as we build volume, it gets margin creative. You know, on that, you made the point earlier about it's about educating the consumer, raising awareness of the other categories besides denim. You know, the company has gone through this process of opening up what you call the next-gen stores over the last couple of years, been successful, rolled out these smaller stores, you know, kind of mall. Mm-hmm. You know, can go in the top malls. How much of that is an unlock? You know, how much meaning having your own stores of, you know, sizable, a few thousand square feet where you can show all the denim, obviously, but then all the new categories. Mm-hmm. Introduce all these other things to consumer to raise their awareness. Like, how much is the store an unlock for the opportunity to sell more categories, but also just make the consumer aware of what you're doing and all that? Yeah. No, I think it's huge. We can't go over. We just can't build larger stores, but it's a huge unlock because when we assort what we really want to sell, we're able to sell. Right? It's not, and to your point, that, you know, it's evidence that consumer will buy, right? You know, so when we assort a store, 50% women, 50% men, lo and behold, the mix is 50/50. When we have more tops, like in India, we have more tops. The mix is higher tops than bottoms. I think the consumer is giving us the license. Mm-hmm. to do it. and we just have to, you know, do it thoughtfully in a disciplined way. Take your question about white space. U.S., as an example, was primarily a wholesale market, you know, 70% wholesale, you know, 30% DTC. Our focus is to make it more 50/50. you know, make it 50/50 by growing direct-to-consumer business part and growing wholesale moderately, not, you know, not a lot. Right. because wholesale customers, over time, they're closing the underperforming stores. We said, "Let's control the expression." Today, U.S. is more like 55% wholesale, 45% direct-to-consumer because direct-to-consumer business has done really well. Now, if you take our direct-to-consumer presence here, it was primarily outlets, okay? Very few full-price stores. Mm-hmm. Today, we have 75 to 80 full-price stores. I mean, over the last four or five years, we added 40-odd doors. Last year, I said, "Okay. Let's just take pause. Let's not add like 10 doors a year. Let's really focus on driving profitability and productivity." I won't give you the numbers, but, you know, the way I think of profitability and productivity in DTC is higher revenue per square foot. And the volumes and I look, you know, look at volume in a store on an annual basis. It's grown very, very nicely as we've introduced new assortments and made more of a balance between men's and women's. Profitability has skyrocketed. Now we're gonna go back and open more stores. We have over 75, 80 stores. We think we can double that in the U.S. You know, I mean, there are lots of cities. I mean, take Boston, for example. We have one store. We had zero store till two years ago, right? New York is a good example where we have stores in Soho and Times Square, which is a flagship, 34th Street. We have one in Hudson Yards, etc. We can have a few more doors here. Average size, 3,000-4,000 sq ft. There are places where we are realizing if you take the 3,000 to 4,000 sq ft door and add a couple of thousand sq ft, it actually makes a difference. India's a good example. We just opened a larger small store in India, 10,000 sq ft. I was very nervous, to be perfectly honest. Will they, will this work? It's working because they've been able to assort men and women, at a 50/50 mix, tops and bottoms. The thing that we're looking at doing, you'll see it more, I think in, in around spring here, we're also looking at the portfolio and saying, "Can we premiumize our product?" We're introducing, very soon, something called Blue Tab. It's basically inspired by made in Japan. You take Asia. 30% of the Asia denim market is premium. We never played in that category, okay? We had some made-in-Japan product, but, you know, we didn't have a wide assortment. There's nothing for her. We just introduced the Blue Tab. It's launched in Asia. I was just there in Asia in Singapore a couple of weeks ago. It's taken off. That's coming to the US in, you know, a couple of hundred bucks. We'll launch it in DTC, maybe very few premium wholesale customers. If it works well, then we'll expand it. We are looking at different layers of growth and different categories around the world. Okay. Because you mentioned the U.S., you know, thinking you had another 75-80 stores, I think you said. Yeah. Can you just talk about the store opportunity globally, you know? Yeah. you know. Yeah. The thing I would say, and I say this humbly, but there are very few retailers that have what I call a trifecta effect, which is growing comp sales. And we have had, you know, we do not give the number, but we have positive comp sales now for 11 consecutive quarters. Adding doors. Last year, we opened 100 net doors. And the year prior to that, we opened a little over that. This year, we have guided 50-60 net doors. I will come to that in a minute, as well as growing e-commerce in the high teens, right? We have been doing this for a while, the trifecta effect. I believe we can do it for a while. To your question of number of doors, because under my growth remit, I, you know, am responsible for retail fleet expansion, but I am also responsible for franchisee expansion. If you take our total number of doors around the world, we have a little under 3,500 doors at the end of last year, okay? Two thousand or so are franchise. You know, the rest is company, 1,200, 1,300 company. And it's very important, at least for us and for me, to grow our franchise doors, largely because franchisees, if they're opening doors, it's their money, okay? That means the brand's working well. Last year, of the 100, I think 40 were franchise doors. I mean, for a year or two, it had stalled. We got it back to growth. Growing that is critical. To your question, I think we can do 50-60 doors for the next five years, and that's another 250 doors. It has some franchise doors. It has some company doors. U.S. will be a, you know, a piece of that. Asia is the other piece. I think we, you know, if we take the last five years, we've probably grown, added 150, 160 doors in Asia. The reason the 100 has come down to 50-60 is we have slowed down net doors in China. You know, China is, you know, I would say, is, is gonna be slow this year. We've slowed it down for obvious reasons. As we consider exiting Dockers, we have shut the Dockers new doors. That's why the 50-60 is more what I call the organic, you know, going back to the organic net revenue is very similar. Got it. So just to tie one of the points we were talking about before to the stores, I mean, how much how critical is it to get the lead times from 16 months to 12 months to be able to turn the inventory in the store fast enough, to be able to have the newness and the freshness frequent enough, to bring her back often enough, to get her give her the reason to come back often, to drive that consistent traffic and the repeat purchase and the brand loyalty. Yeah. Which also maybe, you know, gets some other purchases. Yeah. No, it's, it's very important. Our inventory turns huge opportunity. Mm-hmm. In 2019, you know, our inventory turns were over three and a half turns, okay? Last year, it was two, right? You know, obviously, Red Sea disruptions. And there's a whole bunch of factors. And we have a work stream, again, under the transformation remit. We have a work stream that's working on inventory turns. As we become more of a DTC business, how can we turn faster in our stores? A big piece of the puzzle is we have a lot of SKUs that are not turning as fast, not as productive. As we're introducing new products, you know, we're working on eliminating the unproductive SKUs. That will improve turns, as an example, right? You know, I have a whole, you know, a little bit of a, you know, you know, the, the, you know, different bars saying, "Okay. We're at two. How do we get to three?" The one-day unlock is a couple of hundred million in working capital. That is important because then we can use that for other pieces. It's a real focus. I won't give you the date when we get to three, but it's clearly, you know, it's something we're working on. Mm-hmm. There are various ways to do it, but we're thinking through. I think this whole distribution remap that we're doing, where we're going to a hybrid structure, third party as well as us, will also make a difference because you are servicing your stores faster. Our distribution centers were largely built for a wholesale business. Mm-hmm. Now we're more DTC. Yes. It's a totally different way of doing things. You know, we had a choice. We could do it ourselves, okay, and spend all that capital, you know, how much it cost to build a DTC, or leverage some of the experts who do this for a living, like GXO and Maersk. We chose to build this hybrid structure and think through this a little differently. I mean, it's exciting because, you know, it seems like there's so many flywheels are an overused expression at this point, but obviously, you got this iconic brand. Mm-hmm. You got, you know, investments consistently behind the brand. Mm-hmm. You've had this, you're going through this transformation to capitalize on this just brand love that's global. Mm-hmm. You know, take it from a jeans business to a lifestyle brand. Exactly. You got the channels to be able to do it. You got the strategy to do it. You know, you're building the infrastructure. You know, you're gonna, you know, now you get the lead times down, get the turns down. You know, you're talking about getting to 5% growth. Mm-hmm. Organically on an annual basis. You can see how when all the pieces are fitting together, I mean, the strategy seems very logical and coherent. It's just a matter of, like, flipping the switch where everything now starts to crank, and you can see how the flywheel will start to turn. Yeah. I mean, is that you're smiling? I mean. Yeah. No, I think, you know, I mean, there are two ways to look at it. You know, some folks would say, "Oh my God, there's a lot going on," okay? You know, I grant you there's a lot going on, but that's what's exciting. Yeah. That's what's energizing. That's what, that's why I'm there for the last 12 years, and will be there for many more. I think, I think just, you know, proper governance, with the board, with the, having the right people, and that's why some leadership changes, having the right structure. I, I and, you know, a consumer that is granting us a license to become more lifestyle. Mm-hmm. I think those are the things that will make a difference. We're doing it thoughtfully. You know, we're not, you know, we're not saying we're going from 3% growth to 10% tomorrow, right? We are doing it in the thoughtful way. Our gross margins are a great indication of the brand, are growing nicely. And then EBIT margins, we've got to plan. I think doing it, and we're narrowing our focus because you can't do everything. Yeah. All right. I want to ask about Beyond Yoga. Sure. On the last five minutes here because I don't want to shortchange Beyond Yoga because there is an interesting story here, and there's. Mm-hmm. Real growth potential, real dollars that we're, that we're talking about. Maybe just give us an idea of high level, you know, where obviously, we know where Beyond Yoga is today, but where do you think you can get to? And give us kind of a couple ideas of the key drivers to get there. Yeah. You know, when we underwrote Beyond Yoga, because I was part of the team that actually bought Beyond Yoga in late 2021, and we did it ourselves, organic, purchase through a little M&A team that I run. The proposal or the hypothesis was, "Here's a brand that's sub 100. Here's a brand that is, where the mix was 50% e-commerce, 50% premium wholesale." Think REI, think Nordstrom, right? E-commerce, largely using Shopify, and primarily a women's product, okay? The women's line could be expanded. They didn't have maternity. They didn't have fleece. They didn't have outerwear, all of which we have just recently introduced. There was no men's. As you can see, some of the men have really converted to the activewear faster than everybody thought. That's an opportunity. We just introduced it. It's less than 10% of our business. There were no stores, and there was no international, okay? We said, "Okay. This business that's sub 100 can grow low double-digit, mid-teens, and get to a billion over time," okay? Plus, it's in a category that's growing. The first thing is, could Levi's play in that category? For a lot of reasons, we said, "No, it'll distract us." Let's think of, think of, doing something differently. I called everybody. There were 14 different players, big, small. Everybody was called. You know, Beyond Yoga is with a company, similar culture, you know, around the corner, and a risk that was not huge, you know, you know, because we haven't done acquisitions. We said, "Okay. Let's do it." The brand is now over $100 million over after the last couple of years. We have just got a new management team. Nancy Green actually ran Athleta and grew Athleta. And the team she's brought is largely Gap, Athleta, you know, people who run big brands and are, are here for, for the ride. Their compensation is also linked to the value Beyond Yoga creates for the company. And so we have like a private equity. We just linked it that way. You know, our first step is to grow the business that's a little over $100 million, to close to, you know, double it, get to $500 million, and then build it to a billion. You know, we're not going international right now. We just, we got five stores. We were gonna open four or five this year. We're opening stores in the East Coast, Connecticut. And I've just, we've signed a couple of deals there, maybe one in Boston, and we'll come to New York and test out the East Coast. If that works, then we'll expand in the country and then take it overseas. We're also expanding our men's line, and so that's how we're thinking about it. Got it. All right. I do want to ask you one last one about capital allocation and the priorities for cash flow in 2025. And specifically, also, can you touch on what your, if your priorities might change if rates come down? Yeah. You know, as we think about our leverage and debt, we're in a good spot, okay? A billion dollars, two notes, you know, coupon for 4%. We're in a good spot from that perspective. The company's generating decent cash. We don't need to raise more debt. The way we think of capital is spending 3.5%-4% of revenue and capital primarily to grow the company. Two-thirds of it is new stores, e-commerce growth, etc., etc., some investment in AI, etc. We're a dividend-paying company. We normally increase dividends in line with net income. That normally happens in the second half of the year. Our dividend yield is nice. It's about 3%. That's good. The way we think of cash return to shareholders is a cash payout ratio of 55-65% of free cash flow. That's how we're thinking about it. You know, I've been asked about what happens, when you exit Dockers and you, you have proceeds. And, we explored different options. Should we pay down more debt? Should we use cash to grow the company? Both of which were, we don't need to do that. We can do it our, you know, without the extra cash. So it's really gonna come back to returning capital back to the shareholders. And we're thinking through options. But I don't want to, you, you know, jump the gun. Let's get the sale done, and then we'll come back and talk about proceeds. Okay. You know what? I think we got to about the end of the time here. Okay. Harmit, thank you so much. Thank you. Obviously, I'm always gonna have to get to spend time with you and talk to you. Thank you for all the time. Thanks a lot. Thank you.