Good morning, everyone, and welcome to day two of our Goldman Sachs Global Retailing Conference. My name is Brooke Roach. I cover the apparel, accessories, and branded discretionary goods sector here at Goldman Sachs, and I'm thrilled to introduce our first fireside chat session of the day with Macy's. Here with me today are Tony Spring, Chairman and CEO of Macy's, and Adrian Mitchell, COO and CFO. Welcome, Tony. Welcome, Adrian. Thank you. Great to be here. Tony, would you like to kick it off with some opening remarks? Yeah, I appreciate it, Brooke. Thank you for having Adrian and I. It's always a pleasure to be in front of community, to be able to kind of talk about the Macy's story. So first, it was only a couple of weeks ago that we shared our second quarter earnings results. We were pleased with our gross margin and expense control, and obviously, our earnings per share beat. We missed slightly on sales, and I think that reflects, as we've kind of listened to so many others in the industry, a more discerning consumer, which is now baked into our outlook for the remainder of the year. As we kind of look at the performance of the brand since the middle of the second quarter, and now frankly through Labor Day, we see a little bit stronger consistent performance, but that's really in our outlook for the third quarter, and I think it reflects the nature of the consumer being choiceful, being thoughtful, being careful, and the team really responded in the second quarter and really took the appropriate actions. We can work the marketing, we can adjust our inventory, we can move people around, we can make sure that we're betting bigger on the things that are working, and frankly, pulling back more aggressively for the things that aren't working as well. We're pleased with the performance of our First 50 stores, which we really do believe is a leading indicator for the performance of the Macy's brand. Had our second consecutive quarter of comp growth, continued to see performance of new brands, continued to see outperformance of the various categories against all other Macy's stores. We're seeing good reaction to the 150 stores that we essentially have decided to exit and monetize. So we increased the amount of stores that we're going to exit to 55 this year from the original 50 that we had guided to. And we're continuing to make improvement on our end-to-end operations, and are really focused on in-stock position, lowering the cost of delivery, speeding our delivery to the consumer, making sure that we're incorporating technology, intelligence, automation into our work to make sure that the work flow is as smooth and as effective as possible. Just to mention briefly, the rest of the Macy's Inc. portfolio, which I think it's always important to remember, it's Macy's, Bloomingdale's, and Bluemercury. So, Bloomingdale's today kicks off its celebration From Italy with Love with 300 exclusives and 30 new brands. And if you have a chance to get over to 59th Street, it looks spectacular. That's the first time we've done a country promotion since 1991. And then Bluemercury, this month, celebrates its 25th anniversary. So the website is new, their marketing is new, the branding is new, and they continue with our commitment to expand that brand and to refresh a number of stores each year. And with that, we're happy to be here, and I'm sure you have a number of questions. That's great. Thank you so much for those introductory remarks. Tony, you unveiled your Bold New Chapter strategic plan about six months ago. Can you provide an update on the progress that's made so far and the most important opportunities that you see ahead? And then maybe, Adrian, you can follow with a conversation about how you think about the achievability and the timeline of your ambition to achieve positive comps and mid-single digit EBITDA growth beginning in FY 2025. All right. Sure. So A Bold New Chapter is the strategy that it's hard to believe it's only the middle of February or so when we talked about the new vision for Macy's, Inc. It was a three-year plan, so you know, we're essentially two quarters into that three-year plan. I know we're all anxious to see the results materialize as quickly as possible, but we're highly committed to a better customer experience. We're highly committed to getting back to profitable sales growth. And I think that there is a piece of that that is the important work that we do in retail, that day in and day out, and the rigor and the focus of the opportunities that we have to affect the business today and tomorrow. And then there's the important work of planting seeds for the future of what we want this business to be, and that is obviously the framework of our strategy. It was trying to deal with both the here and now, the important work of trying to provide a better customer experience. We weren't consistently doing that, but it was also planting seeds to kind of bet on the future. So just to run through quickly, if you look at the framework that we laid out, the first part was establishing what should a Macy's store experience feel like? And we selected First 50 to say, "That has to be better than it's been in the past." What does that mean? That means better merchandise assortments. That means a visually enticing and compelling presentation in the store. That means less density on the floor. That means a better flow of inventory to the floor, fewer out of stocks. That means making sure that we have the staffing in areas where we frankly were deficient in the past. So all of that, I would say, two quarters in, comp results up both quarters, 600 basis points of Net Promoter Score, which 600 basis points of Net Promoter Score, I'd like to say it twice because it just doesn't happen that often, which to me, when you see in the verbatims and in the kind of subsequent questions, it's about having a more compelling experience, it's about being in stock more consistently, and it's about having available sales colleagues on the floor. So I think that is a good part of what the future of Macy's store experience can be like. What does 50 become? We're not going to trip our way to success. We're going to do it with a lot of thought, with a lot of focus, but ultimately, that has to be the experience for what Macy's is in the future. Second part of the Macy's strategy was to really shed ourselves of underproductive and unprofitable stores. And I think we want stores. I've said before, I love stores. I'm a store guy. I started in stores. It is the quintessential retail experience because you get to use all your senses, the tactile touch, sound, smell. But bad stores are bad stores, you know, and they're bad stores for us, and they were either in bad condition, or they're in malls that are not in healthy condition, or the store is too big, or we don't make money, and so we need to address those stores, and the good news is there is an appetite for those stores for others to repurpose them into something more productive and effective. The last piece I would say is just making sure that, again, and Adrian can speak to this, that our operation is more productive, appropriate functioning, and we have to take cost out, and while I'm a big believer in putting investment in to better create a customer experience, I also believe we have to take cost out to be able to fund that experience. So we've always said 2024 was a transition and investment year. That is a part of what we're doing in remaking the Macy's brand. We are committed to expanding the footprint of Bloomingdale's and Bluemercury by about 20%, when you look at the units between the off-price model and the Bloomie's model and the Bluemercury stores. And that, I think, is important to having the variety within the portfolio that'll give us the opportunity for consistent sales performance and profit growth. To your question about kind of looking beyond, you know, we haven't spoken about 2025 yet, but we certainly laid out an algorithm, which is low single-digit top-line growth, mid-single-digit EBITDA growth, and free cash flow, getting back to what we saw historically pre-pandemic. And so when you think about the top line, Tony did a really nice job of just really describing the experimentation that we're doing, the changes that we're doing in the operation to get the top line going. And what we see in the F50 is encouraging results in the H1 of the year, and we're encouraged by what we expect to see as we get into the back half. But there's other growth vectors as well. We're actually installing and have been seeing some good traction in our digital business. We have a lot of capacity in the luxury part of the business to open up in new markets, physical footprints. And we've seen, even in our most recent market in Seattle, when we open up a footprint, we also see digital growth as well. So the market really grows for us. As we think about the cost side, we have a lot of things in the pipeline. It's probably the best way to think about it. You know, we have automation in our fulfillment facilities, which is allowing us to increase capacity by facility, speed by facility, throughput by facility with less colleagues. We have a number of things that we're doing in terms of really thinking through outsourcing routine activities that just doesn't make sense in the business, but can be done much more efficiently with our partners. We're thinking very differently about how we allocate capital so that we can reduce some of our biggest expenses, like markdown expense. So we feel really good about the things that we're doing on the cost control side to actually support that algorithm. And then the big thing for us on free cash flow is continuing to be disciplined on CapEx. You saw that our CapEx outlook for this year is about $100 million less than last year, so we're getting more and more efficient and are really working on harvesting the initiatives that we've invested in the last couple of years. But also, working capital is something that we think is a really good opportunity for us. How do we get the right level of editing? How do we get the redundancy out of the business? How do we actually get more productivity in terms of full price sell-through as opposed to clearance sell-through? So the algorithm, you know, as we think about the progress so far this year, we're pretty pleased. As Tony talked about, we're a little bit ahead of where we expect to be. We want to get to that go-forward business that doesn't include the underperforming stores sooner rather than later, but we feel good about the progress. That's great to hear. One of the initiatives that you have within this business, and you mentioned this a couple of times, is the First 50 stores. And we get a lot of questions about First 50, and I'm curious if you can talk a little bit more to the specific changes that you're making and the results that you're seeing there. And then, Adrian, one question we often get is whether or not these stores are EBITDA margin accretive. They're comping better, but they also have higher staffing. So how should we be thinking about those plus and takes? Absolutely. I'll take the first part. We believe it's like a recipe, you know, and again, I'm a big believer in recipes as an analogy. You don't need as much baking powder as you do flour, but the ingredients need to all work together. I think one of the things that we established through, you know, 60,000 customers, in research we did in 2022 and 2023, was they wanna see it all come together consistently. So to answer your question, it was about, first, better product. We needed to put more contemporary brands into the stores. So that's why we, on the call, talked about the importance of Free People or Avec Les Filles or French Connection. It was the strength of our partnership with Ralph Lauren. It's making sure that we're investing in, our partnership with Finish Line, so we have better presentation of Birkenstock and Nike and Adidas. And so the product is very important, and the product was a primary focus of the First 50 stores. Getting product in, I would also say getting product out. We edited our shoe assortment because we wanna make sure that the brands and the styles that we believe in are clearer and more consistently presented to the consumer. Second was staffing. So we added staffing, particular areas where we heard in the research we were underserving the customer. So areas like women's shoes, where we're seeing consistent outperformance between the First 50 and our other stores, reflects the fact that we have ringers in the shoe department or runners in the shoe department. Ringers allow our sales colleagues to be able to on the floor and recommend more styles to the consumer. Runners allow our sales colleagues to stay on the floor, so they don't have to go to the back stock room to get the issues or the inventory. So we see opportunity. I think we've said both traffic and conversion are better in the First 50. That comes from the consistent flow of inventory and better staffing in the stores. We also talked about the importance of visual presentation. I do think it is a part of our responsibility to give the customer a reason to buy. We described a environment where the customer is being more choiceful at all economic levels, and so what do we do as retailers to create stories, to have point of view, to create a more compelling presentation in the store? And that, I think, when you look at the First 50 stores, exists in apparel, exists in shoes, exists in men's, exists in the home store, and that's our responsibility as retailers. We have to have a consistent presentation across the entire store. And the third thing I would say is the importance of localization activities and events. And so empowering the local management to have weekend activities, and that's anything from kids fashion show for back to school, to you know painting shoes and or sneakers, to bottle engraving for the holidays. And so it isn't how much you spend or how many you do, it's creating a level of interest, I think, for the consumer and giving her another reason or them another reason to kind of come into the store and see what we're doing. And the last piece was the micro-targeted marketing. Working with our new head of marketing, who only started a little more than six months ago, and working to provide those local emails, highlighting the newness within those stores and the events within those stores. You know, to your question about the F50 stores, you know, we're very focused on profitable growth. And so we actually took the time to look at the entire spreadsheet to understand kind of what's happening on the top and bottom line in these stores. We'll certainly, you know, share more in the future about the economics of the stores when it's appropriate. But what I would say is, the investments and staffing are necessary to get growth. And when you think about growth on a compounding basis from this investment, we've seen it in the categories we've touched, we've seen it in parts of the stores that we've touched. As Tony talked about, as we think about the recipe of staffing across the building, we're actually seeing better conversion relative to stores that don't have those changes. But what's really exciting is, when you think about where we've deployed staffing strategically, we've seen a sequential acceleration in sales growth. Shoes is a great example, handbags is a great example, and while we're actually deploying those set of staffing changes into an additional hundred stores this year. So from a top line perspective, the staffing is necessary, in addition to the assortment, better in stocks, better product flow. On the bottom line, we're quite encouraged with what we're seeing. So, you know, it's early days. We want to get through the holiday season, which is a big part of our business. But when we look at the top and the bottom line, we're quite encouraged with what we're seeing, and then when you think about the compounding benefit of that over time, even more encouraging. But the other thing to keep in mind is we're constantly looking outside of the store, within the operation, for efficiency to continue to invest in the experience, so that from a total economics of the business, the algorithm actually works. So whether it's in supply chain, whether it's in working capital, whether it's in our delivery costs, there are a number of things that we're looking at across the entire operation because we understand, and have proven that in the spring, that the investment in the customer experience is what's fueling the growth in the F50 stores. That's really helpful color. One other thing that you mentioned earlier was store closures, and you recently accelerated the pace of store closures relative to the prior plan. How do you make sure that you don't lose the customer or lose the sales as you close these stores, and how are you making sure that that is done appropriately from a cadence? Yeah, I think the good news is that this is something that we planned for in advance, and so the team has been highly focused on: how do we retain those customers? Many of those customers are active digital customers. Many of those customers are not gonna lose a store within their market. They're gonna lose that store that they may be shopping in more frequently than the neighboring store. And so, you know, our focus is on making sure that we are trying to retain sales in stores that remain within that community, and that we are focusing on a, you know, micro geo level on how we retain business digitally. The final piece I would add is, the business may be lost in some markets when you close a store. It doesn't mean you lose all that business, because some of that inventory can be more productive in another store. And so not every family of business is the same, but in some categories where we have a limited amount of inventory, UGG, for example, if we can't get enough of a core amount of UGG, and it's going to all of these stores, and so now maybe the, you know, ownership and weeks of supply in our remaining stores is healthier and allows us to grow faster in the remaining stores. So I would say, yes, try to retain the customers, try to make sure that we are moving them to the neighboring store if it's in a market where we have a store retaining, try to work harder on the digital business in that community, and then finally, try to make sure that we're pulling the receipts that we think make sense to be able to identify the inventory in other parts of the country. It's really helpful. One of the pillars of the strategy is also accelerating luxury, and we've seen some choppy trends in luxury. Yeah ... in the U.S. the past couple of quarters, regarding the macro. Can you provide a more comprehensive update on the trends that you're seeing within your luxury banners regarding customer behavior, traffic, and conversion? Yeah. I think as we said on the call, the luxury consumer is not immune from this uncertainty and discomfort. They don't frankly like the dramatic movements in the market. They don't like the when are the rate cuts gonna come. They don't like the who's gonna win the election. So all of that weighs on people in terms of: Is that gonna have a dramatic impact on the way I should be making bigger investments?... The luxury consumer likes to spend, so let's start with that. Our job is to kind of give them a reason to spend. The thing I love about both Bloomingdale's and Bluemercury is that they are accessible luxury businesses, meaning they have plenty of product that is in a range of price points that allow people to continue to spend, even when they're being a little more careful on luxury purchases. So they're luxury brands. They attract affluent consumers, but they sell a breadth of product across price points and categories that I think helps the consumer find a way to continue to shop at both Bloomingdale's and Bluemercury. They have very loyal customer bases. You have four million active customers at Bloomingdale's, over 700,000 active customers at Bluemercury. They see their customer on a regular basis, so we have a full service selling in both of those models. So it's our job to make sure, again, we're giving the customer a reason to buy. I think we said on the call, we're in a cycle right now where some of the luxury accessory business is softer. I think you've heard that from most of the reports, outside of a couple of the top-tippy-top guys. But the apparel business is in a good cycle. You see wide-leg denim, you see embellishment, you see flow, and maxi dresses. You're in a cycle right now where people are refreshing their wardrobe. I think we've seen some nice, bright spots in back to school. As you know, we reintroduced Epic Threads. We've doubled down on our Jordan business and our Nike business and our Ralph business, and I just think a good sign that you're seeing the softer pieces of the business get an interesting response to the back to school period, but also to the back to office or back to the fall season. Some nice early signals, I would say, and it's not as material when you're talking about outerwear or cashmere or boots in the month of August, but good to see that the luxury consumer is interested in those categories early. And again, newness is so important. We always try to balance both fashion and basics. Continuative product is always very important to our margins, but new product is really what ignites the sales line. And so how do we balance those two things? How does every merchant make sure that there's the proper balance between newness in our stores, newness on our sites, and the continuative product, which many times is, you know, good, healthy, margins come with? Let's broaden this discussion from the luxury consumer to the Macy's core customer. Sure. You spoke a little bit more cautiously on the consumer on your last earnings call. It sounds like there's a few bright spots that are starting to emerge, but you've also made some changes since mid 2 Q to aggressively go after some of those opportunities that you've seen to improve momentum. Can you provide additional insight on the trend shift that you might be seeing? What do you attribute to your own actions? Is this trend better than what you were seeing in May? I think the trend is consistent with what we saw starting in the middle of the second quarter, when we started to take actions on a more choiceful and selective consumer. And that included really relooking at some of our marketing, some of our price transparency, the quality of some of our values, making sure we were pulling back on things that weren't working. And frankly, you know, when the business is tough, sometimes as retailers, we make a bad mistake, meaning to hit our stock expectations, we start to pull back everything. When you pull back everything, you start to pull the, you know, resources away from the things that are working. What I've tried to work with the team to discipline is important to me, the composition of the inventory, as much as the quantity of the inventory. The quantity of the inventory, as long as I understand the weeks of supply and my out date, we can manage through that, but sometimes in an effort to try to be so conservative and to try to manage to the reality that we're facing, we cut our nose off to spite our face, and we're trying not to do that, so I think that's another reality. In the middle of the second quarter, yeah, we have to pull back inventory because sales aren't turning out the way we expected. But we don't have to pull back inventory on areas that are growing, and we need to make sure that we're flowing those areas that are growing, because that's a part of what's going to get us out of the malaise that we've seen. I think the reason we've seen business continue to our expectation in the third quarter, and frankly, to our guidance for the third quarter, is because we're not resting on a set it and forget it. We are taking actions on a daily basis. Is that an email? Is that the homepage? Is that what we are featuring? Is that who gets selected to be a part of an event? All those things become important. And then finally, it's not just the off-price group that kind of goes back into market and looks for deals and opportunities. We do, too. So there's opportunities as you're presenting cancellations to kind of say, "So what are the opportunities to try to provide value for the Macy's customer? That's really helpful. You mentioned inventory, so maybe, Adrian, can we talk a little bit about inventory? Sure. Growth is ahead of sales growth. You're investing in making sure you have the items that the consumer wants, but there's also some nuance with the change to cost accounting. How should we be thinking about the cadence of inventory as we move throughout the remainder of the year? Well- What gives you confidence in that inventory management? Yes, absolutely. You know, we feel that we have a very good handle and good control around inventory. So let me just kind of start with that statement. Coming out of the second quarter, as you pointed out, being on cost accounting, about half of the reported inventory versus last year was because of the shift to cost accounting from retail accounting. But the other half was driven by a couple of factors. Number one, as Tony pointed out at the beginning of the conversation, our Q2 sales was a little bit lower than we expected, so we had a little bit of build-up there. But we also recognized that we want to lean into our areas of strength, particularly as we think about the biggest period of the year for us, which is the holiday season, so very important for us to think through that. What's really helpful around the inventory is that we don't have aged inventory, we have a lot of fresh inventory. We feel good about how we're allocating inventory better. We have very good composition. We have more newness going into the fall season, the holiday season, than what we did last year. When we look at the inventory, we feel good about it, and we're continuing to manage it in a very disciplined way. As we come out of the third quarter, on a reported basis, we do expect to be up about mid-single digits. But we have a lot of things that we're encouraged by, as Tony said, in terms of what we've seen through Labor Day, in terms of our sales performance in line with our expectations. We continue to see the recipe coming together to also move that product into customers' hands. So we're encouraged by how we're navigating that. One question we're asking all companies at our conference today is: Are your expectations for the environment in the H2 relative to your recent results? Do you expect them to be the same, better, or worse? Could you provide your thoughts there? Yeah. And then maybe also contextualize the sequential acceleration that's embedded in the comp for the third quarter and the fourth quarter? Yeah, absolutely. So when we think about the environment that we're in relative to when we entered the second quarter, I would say that we expect higher promotional activity in the back half, and we also expect a customer that's more discerning. We are seeing it in luxury. We're also seeing it in the Macy's business as well. As we think about the sequential improvement in our business that's reflected in our outlook, there are kind of a few things that we kind of think about. One is just the initiatives that's making the business better. So Tony pointed to the marketing mix. We spent a lot of time around the level and mix of marketing to be much more efficient with every dollar that we're spending. The initiatives we're putting in stores, we're seeing it in that 50. We're saying: "Hey, other stores can benefit, so let's start blowing that out a little bit earlier than we expected." And, you know, there's just a number of initiatives in digital that's really beginning to get traction, and that we're actually quite encouraged with as we think about the trends that we're seeing quarter to date. We also have to manage our inventory well. You know, we have to have good inventory in order to sell. That's what customers are buying. So what I spoke about a few moments ago, about the freshness, about the newness, about being really maniacal, about where it's deployed by channel, by store, by market, those things also put product in the right place for the customer. But also just good execution. You know, we're better this year than we were last year in in-stocks. We're faster in delivering to customers that buy on digital than we were last year. Our execution in stores are better. Our NPS store scores are better. So as we think about the combination of initiatives, the health of our inventory, and better execution, we're encouraged by the improvement we expect in the back half. You mentioned promotions, and you commented that you expect promotions to increase. One question, or clarification question, that we're asking all companies at the conference is: Do you expect your level of promotions this holiday season to be higher versus last year? And how does that compare to your expectations for the industry? Our promotions are gonna be consistent with what we did a year ago. They're just going to be clearer, they're going to be sharper, they're going to be more varied and offer more variety. I think that, you know, when you get into an environment where things are a little more promotional, the one danger you have is that everything starts to look like a sea of sameness, just like product. And so what I've challenged the group is to make sure we're a promotional department store at Macy's, we offer value at Bloomingdale's. How do we look at every single week, every single month, the events that we offer, the product that we offer, and make sure that there's a clear reason to buy? If we do that, you'll likely buy. It'll exist in a promotional environment, but we'll have far better results from the work that we've done on our promotional calendar. It's really helpful color. On pricing, your AUR growth has slowed sequentially the last couple of quarters, but last quarter, you spoke to low single-digit growth opportunity going forward. We've also heard in the industry some comment about additional focus on opening price points and, in some cases, price cuts. Can you elaborate on how you're thinking about that AUR growth between mix shift versus like-for-like pricing? Most of our AUR growth will continue to come from mix shift and from mix shift. When I say mix shift, I'm talking about selling jackets versus T-shirts. We have undershot the consumer, in many cases, on the Macy's brand, on the willingness to pay a slightly higher price point for a better quality garment, for a better quality shoe, for a better quality bracelet, whatever the category might be. We're gonna continue to offer a wide range of price points. This isn't about losing a customer. This isn't about walking away from being a promotional department store. This is about making sure that we're not losing the opportunity to better service all customers. When I buy a gift, I want to buy a gift at this price point. When I want to buy something that is a basic, I want to buy it at this price point. We also have the benefit of having Backstage in the majority of our Macy's stores. There is plenty of product at great, compelling value that exists within Backstage for any place where we have shaved off an opening price within the Macy's brand. So when I walked into the Macy's brand from, again, 30 some odd, I don't want to say, years at Bloomingdale's, my perspective was: Macy's doesn't need to be Bloomingdale's. Macy's needs to kind of go back to its roots to be the best Macy's it can be, and when Macy's was at its best, it went from low to high. It had great opening price point, it had a great promotion, and we will have both those things. But it also had a willingness to experiment on products and categories and brands that we weren't avoiding because of price point. And I think what we've been pleased by in the elevated apparel selling in the First 50 stores, these are garments that are only $10, $15, $20 more, but people see the quality difference, and they're willing to pay for it. One follow-up on as we think about the price value equation and what that means for the consumer in retail today. We've seen some bifurcating trends in market share in retail overall, where some retailers, mass retail, off price, are seeing an accelerated growth in market share, and others are seeing a little bit more pressured results as a result of the macro. Tony, what gives you confidence that your strategy and the timeline of implementation of that strategy regarding the offering of consumer value and these changes that you're making to Macy's, Inc is sufficient? And if the macro continues to worsen, what further changes might you look to ensure that you're aligned with consumer preferences? As I said at the beginning, you know, I don't think a strategy is one where you set it and you never iterate it or evolve it. And so we'll be smart stewards of these brands and businesses, and we will iterate as appropriately as we go forward. That being said, we also have a soul, and I'm not gonna change who Macy's, Bloomingdale's, and Bluemercury are because this off-price retailer or this mass retailer is doing well. Cyclical or secular, I'm not bright enough to know what it is. I know that if we do a better job as Macy's, Bloomingdale's, and Bluemercury, we are consistent with the customer. We flow newness to our stores and our site. We deliver better marketing. We're gonna attract more customers to these brands. There are fewer players in our space. We're going to have a healthier business. It's gonna be an assisted selling business at Macy's. It's gonna be a full selling experience at Bloomingdale's and Bluemercury, and there are plenty of customers who don't want to buy all of their products in off-price and mass. That being said, we have Bloomingdale's, the outlet store, we have Macy's Backstage, so we'll play appropriately in the off-price space. But I do not subscribe to 100% of the business with consumers will go to off-price and go to mass. That's really helpful. Let's switch to margins for a moment. Adrian, your guidance assumes some gross margin expansion this year. We've already talked about some of the components of gross margin, AURs, category mix, promotions, and inventory. Let's put it all together. How do you see gross margins going in the near to medium term, and how would you compare that relative to the H2 exit rate? Yeah, we do expect to have some expansion in gross margin in the back half, and, you know, gross margin expansion is something that we're constantly looking at. The composition of inventory, the mix of business, but don't forget also, just the operational execution within the business as well, so for example, as we've been leaning into the back portion of the year, where we have a higher distortion around digital penetration, one of the key drivers in terms of expanding gross margin is getting our delivery expense under control for a lot of customers that are gonna be receiving deliveries to their home, so we've been, you know, in the market, looking at what's the best price, the most valuable price for delivery of our products, without compromising speed, without compromising the service levels that we have for our digital business. Those are the kinds of things that we're looking at. So we're constantly looking at these opportunities. Inventory control is a big one. It's something that we've looked at for a number of years. We've demonstrated the ability to control our inventory, and that's translated into our gross margin profile. So we're just constantly looking and working and putting initiatives in the pipeline, and we do see opportunities to be able to expand margins in the back half. I would just add 240 basis points of margin expansion in the second quarter. Only 1/3 of that was related to the conversion to cost accounting. Private brands, under pressure for the last year and a half, become a growth opportunity for us, going forward. We have the opportunity, with fresher inventory, to have healthier gross margin. We are watching very carefully, weekly sell-through, looking carefully at the margin and profitability of product, by item, by brand. It's the benefit of being in cost accounting and early innings, so it's not about a significant expansion going forward. But I don't think in a promotional environment, we have to sacrifice margin. That's great to hear. Thank you so much for walking us through your strategic initiatives and for joining us today. Thanks, Brooke. Our pleasure. Thank you.