Good afternoon, welcome to the Ross Stores First Quarter 2023 Earnings Release Conference Call. The call will begin with prepared comments by management, followed by a question and answer session. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Before we get started, on behalf of Ross Stores, I would like to note that the comments made on this call will contain forward-looking statements regarding expectations about future growth and financial results, including sales and earnings forecasts, new store openings, and other matters that are based on the company's current forecast of aspects of its future business. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from historical performance or current expectations. Risk factors are included in today's press release and the company's fiscal 2022 Form 10-K and fiscal 2023 Form 8-Ks on the file with the SEC. Now I'd like to turn the call over to Barbara Rentler, Chief Executive Officer. Please go ahead. Good afternoon. Joining me on our call today are Michael Hartshorn, Group President, Chief Operating Officer; Adam Orvos, Executive Vice President and Chief Financial Officer; and Connie Kao, Group Vice President, Investor Relations. We'll begin our call today with a review of our first quarter 2023 performance, followed by our outlook for the second quarter and fiscal year. Afterwards, we'll be happy to respond to any questions you may have. As noted in today's press release, despite continued inflationary pressures impacting our low to moderate income customers, first quarter sales were relatively in line with our expectations. Total sales are $4.5 billion, up from $4.3 billion last year, while comparable store sales rose 1%. Earnings per share for the 13 weeks ended April 29, 2023 were $1.09 on net income of $371 million. These results compare to $0.97 per share on net earnings of $338 million for the 13 weeks ended April 30, 2022. Cosmetics and accessories were the strongest merchandise areas during the quarter, while the Midwest was the top performing region. dd's DISCOUNTS performance in the first quarter continued to trail Ross, reflecting the aforementioned inflationary pressures that continue to have a larger impact on our lower income households. At quarter end, total consolidated inventories were down 16% versus last year. Average store inventories were up 2% at the end of the quarter. Packaway merchandise represented 42% of total inventories versus 43% last year. Turning to store growth, we opened 11 new Ross and 8 dd's DISCOUNTS locations in the first quarter. We continue to plan for approximately 100 new stores this year, comprised of about 75 Ross and 25 dd's. As usual, these numbers do not reflect our plans to close or relocate about 10 stores. Now Adam will provide further details on our first quarter results and additional color on our outlook for the remainder of fiscal 2023. Thank you, Barbara. As previously mentioned, our comparable store sales were up 1% for the quarter, driven by an increase in transactions. First quarter operating margin of 10.1% was down from 10.8% in 2022. As expected, this decline primarily reflects higher incentive compensation versus last year, when we underperformed our expectations. Cost of goods sold improved by 50 basis points due to a combination of factors. merchandise margin was up 120 basis points, primarily due to lower ocean freight costs, while domestic freight costs declined by 60 basis points. Partially offsetting these two favorable items were higher distribution expenses of 65 basis points, driven primarily by unfavorable timing of packaway related costs and deleverage from the opening of our Houston distribution center. Buying increased by 60 basis points due to higher incentive compensation and occupancy deleveraged 5 basis points. SG&A for the period rose 115 basis points, mainly due to higher incentive compensation and store wages versus last year. During the first quarter, we repurchased 2.2 million shares of common stock for an aggregate cost of $234 million. We remain on track to buy back a total of $950 million in stock for the year. Now let's discuss our outlook for the remainder of 2023. For the 13 weeks ending July 29, 2023, comparable sales are forecast to be relatively flat. Second quarter 2023 earnings per share are projected to be $1.07 to $1.14 versus $1.11 for the 13 weeks ended July 30, 2022. Our guidance assumptions for the second quarter of 2023 include the following. Total sales are forecast to increase 1%-4% versus the prior year. We plan to open 27 locations in the second quarter, including 18 Ross and 9 dd's DISCOUNTS locations. Operating margin for the second quarter is planned to be in the 9.8%-10.1% range, down from 11.3% in 2022, as higher merchandise margin from lower ocean freight costs is forecasted to be offset by an increase in expenses primarily related to incentive compensation and store wages. We expect net interest income to be approximately $31 million. The tax rate is projected to be about 25%, and diluted shares outstanding are expected to be approximately 339 million. Turning to the full year. Based on our first quarter results and guidance for the second quarter, comparable store sales for the 52 weeks ending January 27, 2024, are still planned to be relatively flat. We now project earnings per share for the 53 weeks ending February 3rd, 2024, to be $4.77 to $4.99, compared to $4.38 for the 52 weeks ended January 28, 2023. This guidance includes an estimated benefit to full year 2023 earnings per share of approximately $0.15 from the 53rd week. Now I'll turn the call back to Barbara Rentler for closing comments. Thank you, Adam. As noted on our last earnings call, we had expected fiscal 2023 to be another challenging year. This was especially true given the continued uncertainty in the macroeconomic, geopolitical, and retail environment. As a result of today's uncertain external landscape, especially the prolonged inflationary pressures negatively impacting our customers' discretionary spend, shoppers are seeking even stronger values when visiting our stores. In response, we remain focused on delivering the most compelling bargains possible while diligently managing expenses and inventory to maximize our opportunities for growth. At this point, we'd like to open up the call and respond to any questions you may have. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. In the interest of time, we ask that you please limit yourself to one question. Thank you. One moment please, while we poll for questions. The first question comes from the line of Matthew Boss with JP Morgan. Please proceed with your question. Great, thanks. Barbara, maybe given the pressure on your low to middle income or low to moderate income customer base that you cited, how do you feel today about your merchandise assortments across categories from that value perspective? How are you managing buys in the marketplace, just given the current level of disruption across the apparel landscape today? The merchandise assortment from a value perspective. First, let me lead with, you know, we weren't really satisfied with our results. As I look across the different businesses, you know, we had some businesses where the business didn't perform as well as we had expected, and we're addressing those issues. Let me start with that. As I look at value across the store, that has been a main focus for the merchants for the last few months. I'd say that we've, you know, made progress across the board, but I still think that that is a major focus for us, offering the customer the best branded bargains possible at the best possible values we can put out there. I would say we're on a journey and everyone is r eally, the merchant team is highly focused on this, and I really think that that's an important part, especially for our, you know, mid to lower income customers. You're saying in terms of managing supply in the marketplace? Is that how I interpret that question? Yeah, just how you're managing buys, given how much disruption there is in the overall apparel landscape. How much you're leaving, thinking about current open to buy and relative to maybe things opportunistic from a pack away perspective? Okay. Well, we have enough open to buy for both pack away and to chase the business. Right now the plan is postured that we would chase the business as we're coming across, and we're monitoring the speed of spending. The hotel, same scenario. Hotel inventories are basically at the same rate as they were last year, and so the merchants are out in the market seeking out deals, and based on those deals, we make those decisions. If a deal comes in one business and that wasn't really even planned for that business, we might take that plan up. You know, we're really looking for with the overarching idea that what we wanna do is get best possible values on the floor. The merchants go to the market and then there's discussions about what's out there. I know you know that there is, you know, pretty broad-based availability out there, maybe, you know, across most businesses anyway and most brands in the market, because you know, as you know, supply fluctuates by type of product and vendor. You know, you have to kind of be out there and be in it to really see what's out there and then come back and then decide where do we wanna take the deals. That is our focus in both companies, delivering the best branded bargains that we possibly can. Great. Best of luck. The next question comes from the line of Mark Altschwager with Baird. Please proceed with your question. Good afternoon. Thank you for taking my question. you're holding your comp guide for the year, though you noted the consumer is looking for deeper value and your merchants are focused on that. I guess I'm wondering how the expected makeup of that flat comp has changed versus your expectations at the start of the year. To the extent that there's perhaps some lower ticket involved, are there any margin implications we should be aware of? Thank you. Hi, Mark. It's Michael Hartshorn. Let me start by just talking a little bit about the first quarter. You know, the comp in the first quarter was driven by a number of transactions. That was, you know, for us, that's our proxy for traffic. It was up versus a year ago, so that's a good sign on customer traffic returning. The average basket was flat. It was flat on units per transaction up on lower AUR. As far as how we're looking at the year, our outlook has not changed. We'll continue to manage the business with a conservative posture and be in a position to chase trends, chase the business, and manage expense and inventory very conservatively. On a stack basis, as we move through the quarter, and as weather became more favorable, we did see trends improve on a multi-year basis. What that says to us is obviously healthy traffic and a trend that in our mind hasn't changed and hasn't changed our outlook for the year. That's great. Thanks for the color. The next question comes from the line of Paul Lejuez with Citigroup. Please proceed with your question. Hey, guys. Thanks. Curious about geographic dispersion. Maybe if you could talk about some of your big states' performance in those states, specifically California, how the trends look from the beginning of the quarter to the end of the quarter, and if maybe you could talk about apparel versus home performance. Thanks. Sure, Paul. On trends during the quarter, as I just mentioned, on a stack basis versus pre-COVID, we did see trends improve as we moved through the quarter with April being the strongest. Geographically, we mentioned the Midwest was the top performing region for our larger markets. Texas was above the chain average. Florida was in line, and California underperformed the chain average given the difficult weather throughout the quarter in the West. Merchandise-wise, accessories and cosmetics were the best performing businesses, as we said in the script. Overall, shoes performed above the chain average while home was in line and apparel trailed. Michael, can you, just a little bit more on, California, any quantification of how much it was below the chain? Did that, gap close that, you know, between California and the rest of the chain by the end of the quarter? It did close. It was, we wouldn't get into the specifics, but it did underperform the chain average, and it improved as weather improved. Thank you. Good luck. The next question is from the line of Lorraine Hutchinson with Bank of America. Please proceed with your question. Thanks. Good afternoon. As you moved through the quarter, did you see any signs of customers trading down into Ross or any other notable changes in consumer behavior? I'd say overall, Lorraine, it's hard. There's so many factors that go into sales. Obviously, the low-end customer continues to be pressured, whether it's ongoing inflation, reduction in SNAP benefits, lower tax refunds. It was hard to see whether there's a trade-down customer in that data. The lower AUR in the quarter, was that all moving towards sharper price points, or is there a mix component to that that we should factor in? That's really off of sharper price points. It wasn't generated by mix. Thank you. The next question is from the line of Chuck Grom with Gordon Haskett. Please proceed with your question. Hi. Good afternoon. The merchandise margin had a nice uptick here in the first quarter relative to the last quarter. Can you talk about the drivers, I think you called out freight, then how you're thinking about that line item over the balance of the year? Yeah. Chuck, this is Adam. I mentioned the merchandise margin grew by 120 basis points in Q1. Ocean freight was clearly the most impactful component here driving the improvement. Our performance in merch margin was in line with what we embedded in our guidance for Q1, assuming rates stay where they are, expect that to continue as we move through the year. Thank you. The next question is from the line of Adrienne Yih with Barclays. Please proceed with your question. Great. Thank you very much. Barbara, I wanted to ask you about packaway, the 42% this year versus 43%. First and foremost, it sounds like you believe that your assortment is on trend. Typically, when there are these kind of late weather breaks to kind of warmer weather across retail, it gives you the opportunity to chase into sort of known winners. Do you feel better about the assortment heading into the second quarter? Adam, well, Adam or Barbara, you know, with frontline still being very promotional, does that somehow impede the ability to drive maybe higher AURs because the value is not as evident as it may be when frontline's a little bit less promotional? Thank you very much. Adrienne, let's start with packaway. I think the first question was about packaway, the content of packaway? Yeah. We have a series of questions here. Content. The content of packaway, we feel good about that content of packaway. Last year at this particular moment in time was when we started to bring in goods because of all the carrier issues that went on with, when everything speeded up. We took goods and put them into packaway, as we've told all of you, that we use later on in the year, really our direct imports. The packaway that we have in there now is really closeout great deals that we feel very good about. The percent might be the same, but the content is different. That's the first one. The second one, in terms of the late weather break, I'm not sure I 100% understand what you mean by that. Oftentimes when, you know, it's been cold in the Northeast and many people were sort of. Retailers were sort of missing plan for just because it was colder than for longer. In the past, it seems like those types of poor weather transitions have given you the opportunity. I think you just answered it in their first one. Yeah. You're saying, were there additional great deals out there because the weather wasn't good and people canceled? Yeah. That's kind of ongoing as the merchants, yes, are in the market looking for closeouts, chasing the business and all of that. That's very different by type of business. Yes, there are. That's part of the supply availability that's out there. The spread from frontline to your pricing. I think you're just saying that they're promoting now. It's more promotional than it's been, and then what's our relationship to their promotional environment? Yeah. Does it make it harder to create that value notion when the frontline retailers are sort of every day sitting on 50% off? Yeah. No. Well, listen. I look, I think the promotional environment is still competitive. It's still a competitive market. We watched people get more promotional, you know, in these last few months. I don't think that that's going away. I think what has to happen is, and what is happening, is that the buyers have to be in the market constantly working with vendors to understand two things: One, not only just brand availability, but also pricing because they know that they need to have their values be sharper. They're competitive shopping, seeing what's going on in stores, and then they're in the market, and vendors are, you know, giving them the lay of the land, availability. I have the, what you're talking about, the excess goods closeout, and also kind of where the pricing is. They're keeping that in mind because they're studying that. For a while, you know, the world got very different, and there was much more regular price selling in, particularly in department stores. You know, we're watching as you're watching that erode and it becoming more promotional. You know, those have been best practices for the company for years. That's what the merchants are doing to ensure that, you know, they're watching it and then making some assumptions about what they believe could happen in front of them, which would be what traditionally is done at off price prior to all the things that have gone on since COVID has started and more regular price selling and all of that. Fantastic. That's very helpful. Thanks, Barbara. Best of luck. Thank you. The next question comes from the line of Ike Boruchow with Wells Fargo. Please proceed with your question. Yes. Hi, this is Kate on for Ike. Thanks for taking our question. I guess, just to hone in on the gross margin piece. You know, you guys had a decent amount of volatility in both distribution and buying buckets last year within COGS. Can you walk us through how you think those line items progress through the rest of the year? You know, maybe direction or magnitude? Thank you. Yeah. Hi, Kate. This is Adam. We'll take them individually. Ocean freight costs, you know, significant tailwind in Q1. Again, given all the volatility we've seen over time, don't wanna get too far ahead of ourselves. Kind of what's embedded in the guidance is, you know, we'll continue to see that as a tailwind as we go through the balance of the year. Domestic freight, we called out the 60 basis points of improvement year-over-year. Again, highly dependent here on fuel prices. Obviously there's wage increases embedded in those costs. Assuming those things stay stable, would continue to expect that to be a tailwind for us as we go forward. The biggest piece that we've called out for some time, offsetting those benefits are incentive costs. We gave you the details of that approximately in the call comments. I would also say in the second quarter when we look at it, will probably be the most impactful quarter for us from an incentive cost, you know, increase this year versus last year. We also commented on distribution expenses. Again, you know, driven by timing of packaway, and then the planned deleverage from our newer distribution center in Houston. Very helpful. Thank you. You bet. Thanks. The next question comes from the line of Alex Straton with Morgan Stanley. Please proceed with your question. Great. Thanks a lot for taking the question. It feels like this is kind of an ongoing narrative for the last year that you're not super happy with the value you're offering the customer, though historically, I think you've proven super consistent and successful there. I'm just wondering, has anything changed in the buying organization or what do you think the buying team is getting wrong now, and maybe how you're thinking about correcting this or putting initiatives in place to perhaps get this back on track? Thanks a lot. Sure. Look, I think the value equation we've been working on for the last few months, over the last year, moving towards getting to that value point. I think we're kind of at a different place now than where we were a few months ago, both in brands and in values on the floor. I don't see it kind of as, you know, the merchants aren't doing their job. I kind of see it as an evolution. We are very highly focused now on delivering compelling values as we watch our customers in both companies, you know, struggle with all the inflation and all the things that are going on around them. You know, we've gotten pretty, you know, Let me put it this way. We're very highly focused on delivering those values. Where we were, let's say, six months ago and where how we're thinking about it now continues to evolve. You know, we wanna make sure that we have a really wide assortment of, you know, fresh receipts, branded merchandise, and where it's appropriate, that we're sharpening our branded values to strengthen the offerings because of the competitive retail environment. I don't feel like it's not necessarily working. I feel like it's evolving, and I think our business last year evolved as we went along. It's important for us to make sure that we deliver, you know, really sharp values to our customer, particularly in this timeframe. Now that the world is getting even, you know, more competitive and more promotional, you know, we have to look through that lens also. I think that, you know, we need to stay focused on it and do a better job on this and making sure that we really understand where it's appropriate, that we are sharpening out our branded values. I don't think it's not working. I think it's much more of an evolution in all of our businesses. Thank you. Our next question comes from the line of Simeon Siegel with BMO Capital Markets. Please proceed with your question. Thanks. Hey, good afternoon. Any change in the percent of sales being driven by top vendors versus last year and then just versus historical trends? Just wondering if concentration of largest vendors has changed at all. Just because it's coming up fairly frequently, any updated thoughts on shrink? Thank you. I'll start. It's Michael, Simeon. On shrink, the shrink was a little bit higher for us last year. Wasn't meaningfully higher. We've assumed that it'll stay at or slightly above those levels in our estimates. No updates. We typically update the financial impact of that when we take true of our physical inventory in the third quarter. The percentage of our top vendors versus historical, I mean, that moves based off of supply, right? One year we could have a great deal of merchandise from one vendor, top vendor, and then the next year a little bit less, but a little bit more from someone else. I think that kind of, it kind of moves around. I don't think it's changed that much. I don't know who we're defining as top vendors, but it hasn't changed that much. It changes more by the vendor itself and the availability that's out there. Great. Thanks a lot, guys. Best of luck for the rest of the year. Just as a reminder, in the interest of time, we ask that you limit yourself to one question. Thank you. Our next question comes from the line of Dana Telsey with the Telsey Advisory Group. Please proceed with your question. Hi, good afternoon, everyone. As you think about the performance of dd's and what's happening in the environment, was there any differential in dd's performance in the fourth quarter to the first quarter in what you saw? Just lastly, on the Bed Bath & Beyond locations that are available, if you were to get any, would that be in addition to the current run rate of store openings this year, or would it be part of it? Thank you. Hi, Dana. On dd's, the sales trends continued to trail Ross results during the first quarter. I wouldn't comment on the differential between fourth and first. Obviously, their customer faces even more macro headwinds relative to Ross, which is, I think, reflected in their underperformance. I would also say, though, similar to Ross, we are sharply focused on offering, you know, better values to help drive improved sales performance there. On Bed Bath & Beyond, you know, it will no doubt provide opportunities for new store locations. We'll have to, you know, review each potential new site on a case-by-case basis to see if it's appropriate for us. I would say it's not gonna impact our 100 store opening plan for this year. Thank you. Our next question comes from the line of Bob Drbul with Guggenheim. Please proceed with your question. Hi. Good afternoon. I guess just a question for me is, as you think about, you know, what's happening in the macro, when you look at your, you know, good, better, best mix, are you migrating your offering to, you know, the lower end of the spectrum? I'm just curious just in terms of the buys or how you're thinking about the merchandising piece of it. Thanks. Sure. We have a good, better, best strategy, and that is really driven by the assortment that we put on the floor and the values we put out there. We want a tiered strategy because you can attract a broader set of customers. That can move based on supply, based on availability, based on our purchases. It fluctuates as you go. As you think about the rest of the year, you're not really buying for, you know, sort of more of a good environment versus a better versus best in your offering? I think that depends by business. Got it. I think. Okay. You know, I can't tell you that that is a company-wide strategy. I think that moves by business based on what the business is. Clearly, you know, the dd's customer in particular is very price sensitive, so really paying attention to, you know, the values we're putting on the floor, the pricing we're putting on the floor, both. But even at dd's, these things, it moves around. So w e are obviously conscious there, particularly with that customer. Great. Thank you. The next question comes from the line of Brooke Roach with Goldman Sachs. Please proceed with your question. Good afternoon. Thank you for taking our question. Given the ongoing inflationary pressures in the macro, I'm wondering if you can provide updated thoughts on the longer term path to recapturing pre-COVID operating margins. Are there any initiatives that you're contemplating to help drive that recovery outside of sharpening values and driving additional market share capture? Thank you. Hi, Brooke. This is Adam. Thanks for the question. You know, our long-term operating margin improvements are going to be highly dependent on us delivering strong sales over a sustained period of time. Then the question on how long do inflationary pressures persist. Over the longer term, we believe we can achieve gradual improvement in profitability. I think, you know, if you get into, like, are there any structural questions related to that? We're seeing tangible benefit in freight costs, these costs still are not at pre-pandemic levels. We're seeing some wage pressures in the stores. You know, when you talk about, you know, we've guided to CapEx of $810 million. A big component of that, in addition to distribution center capacity, in addition to investing in the 100 new stores, you know, a big chunk of that is technology investments that'll drive further efficiencies within the stores and in our distribution centers. More automation in our distribution centers and some store initiatives that we've touched on in the past. Thank you. The next question comes from the line of Laura Champine with Loop Capital. Please proceed with your question. Thanks for taking my question. It's about the weather's impact on your comp in Q1. Is that something you can quantify or maybe if that's a tough one, maybe give us the discrepancy roughly between California and the rest of the chain? Hi, Laura. It's hard to calculate. I mean, I think it's suffice it to say it didn't help our business. you know, I would say California was slightly under the, you know, trailed the chain average and did improve as weather improved, is what we'd say. Got it. Thank you. The next question comes from the line of Marni Shapiro with Retail Tracker. Please proceed with your question. Hey, guys. I just wanted to clarify. I think you'd said the 53rd week adds about $0.15. Could we expect between, like, $350 million-$400 million in sales? Is that a decent number to use for that week, or is it a little less 'cause it's a January week? Just curious. Yeah, not far. Probably a little bit less than that, Marni, given that it's, as you said, given that it's January, early February. That's what I figured. This came up on other calls. It looks like your traffic is good, that people are looking for sharper deals, but you obviously called out accessories and cosmetics, beauty, which tends to have a lower AUR. Are people gravitating towards the lower priced items? Or as you've seen the weather improve, have you seen apparel come back in slightly higher AUR, but they're looking for the apparel items that are on sale or just at the better prices? I'm curious sort of what the dynamic is there. Apparel struggles in Q1. Mm-hmm. I don't necessarily think it was driven off the prices. I think, you know, that the assortments were not necessarily where we wanted them to be. Depending upon what business you're in, that could have been the price, that could have been the product, because there's a variety of factors in there. I don't think I could take it down to a common denominator of price or say, was it driven by markdowns. It really, you know, I would say it was driven by the assortments when it's all said and done. Certainly, the weather didn't help. Yeah. For me, I don't, you know, I don't think the weather's a big enough impact that I could sit here and say that. I think our assortments weren't necessarily where we wanted them to be. You know, we're working on that, and we're gonna continue to work on that. It's not really based off of a price or one thing or, you know. We have our work cut out for us and the merchants are working on that now. was it? Marni, it wasn't driven by mix. It was driven being sharper priced across the assortment. It was you saw the softness across the assortment in apparel? No. It wasn't specific- AUR. Right, AUR. You asked, was AUR driven by mix in the business. It was not driven by mix in the business. On the apparel side, was the softness across the board, whether it was, you know, men's polo shirts or women's dresses or kids, every department across the board was soft? Were there certain spots, even without disclosing it, if you don't want to, were there certain spots that really need a lot of work and other spots that were okay? Well, obviously, we're not gonna get into details, but within all the apparel businesses, like, I mean, common sense would tell you that some businesses are better than others, right? With that, we wouldn't get into specifics, but, you know, there's no. If you're asking is there, like, a raging disaster in one particular area? I know what you were trying to get out there. I mean, you know. I was kind of thinking on the positive. Was there something that you're saying, "Dresses were killer"? I couldn't decide where you were going with that. Every business has businesses that were performed, performing, some businesses didn't. You know, we're not gonna get into specifics on that. What I would say is that the merchants are very diligently working on the assortments, whether it's delivering the right products, whether it's the values. I mean, they're, you know, really highly focused on that right now. Okay, great. Thank you so much. The next question comes from the line of Corey Tarlowe with Jefferies. Please proceed with your question. Hi. Good afternoon. Thank you for taking my question. Barbara, just on the availability across your good, better, best spectrum that you have, is there any better availability within any one of those three segments as you speak to your merchants? You're just saying where does the supply. The supply is pretty broad-based. I mean, you know, supply, you know, there's supply in most businesses. You know, there's always more in one vendor than the other, more on product than the other. I mean, it fluctuates. There's still a lot of supply. I wouldn't say it's bucketed in one of those three buckets. I would still say it's pretty broad-based. Got it. Just on the lower AUR comment, being driven by sharper price points, I guess within the context of the guide for the full year for flat comps, is the expectation that the AUR is likely to be lower throughout the rest of the year as well? The putting out better values doesn't necessarily mean that your AUR is going down. What we're focused on is we're focused on delivering really sharp value. You know, depending upon using your example of the good, better, best, depending upon what that mix looks like, you know, that doesn't necessarily mean the AUR is going down. What we're really trying to do is we're really trying to focus on sharpening our branded values for the customer. We think that's our path to driving sales, and we think that's our path ultimately to gaining market share. Those two don't necessarily go hand-in-hand. Understood. That's very helpful. Thank you very much, and best of luck. The next question comes from the line of Jay Sole with UBS. Please proceed with your question. Great. Thank you so much. You know, it looks like you beat the low end of your guidance you gave for EPS in first quarter by about $0.10, but you're raising the low end of the full year guidance by about $0.12. Can you just tell us what the extra $0.02 is, where that's coming from? Thank you. I think the better way to look at it is what we did on the top end. We beat the top end by 4 cents. You lose a quarter in that, then we raise the full year by the 4 cents. Got it. Okay. Thank you so much. The next question comes from the line of Aneesha Sherman with Bernstein. Please proceed with your question. Thanks for taking my question. Your guidance implies your two-year stack comp for this quarter was -6%. Your guidance implies a deceleration of that stack to about -7% for Q2 and then a pickup in the back half to get kind of closer to 0% to your stack. Can you talk about how you're thinking about the progression through the year, why are you more cautious about Q2 and then a little bit more optimistic for the back half of the year? Sure, Aneesha. I think it's hard to look at these on a two-year stack with all the fiscal stimulus and COVID. We're really looking at it pre-COVID, what's changed on a four-year stack and how that's progressed over time. We went into the year, and had a plan in the first quarter. What we saw is that four-year stack improved as we moved through the quarter, and weather improved and exited in a place that would support that stack guidance for the year. Just to clarify, you are embedding an improvement in the four-year stack through the course of the year? Correct. Yes. Okay. Thank you. The next question comes from the line of Krista Zuber with TD Cowen. Please proceed with your question. Hi, it's Krista on for John. Just a quick question. On inventory, you've had several at least two quarters here of fairly sizable declines. Just wondering how you're thinking about it through the balance of this year. Should we, you know, continue to expect declines on a quarterly basis through the end of the year, or do you think at some point you sort of pull in line with your sales growth expectations? Thank you. Sure. If you look at the first quarter, for instance, we were down 16%, but we were up against elevated inventories last year when supply chain lead times eased, and we had a surplus of early receipts. What you'd expect as we move through the year with that elevated, inventory, last year, it started to recede in third and fourth quarter, and you get more comparable. We should be lower, given the excess inventory we had last year in the first half of the year. At this time, I'm seeing no further questions. I can pass it back over to Barbara Rentler for any closing comments. Thanks for joining us today for your interest in Ross Stores. Thank you, everyone. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.