Good afternoon, and welcome to the Ross Stores First Quarter 2024 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 2023 Form 10-K and fiscal 2024 Form 8-Ks on file with the SEC. Now I'd like to turn the call over to Barbara Rentler, Chief Executive Officer. Good afternoon. Joining me in our call today are Michael Hartshorn, Group President and 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 2024 results, 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, though we had hoped to do better, first quarter sales were still in line with our guidance, despite macroeconomic headwinds that continued to pressure our customers' discretionary spending. Earnings results for the period were better than expected, primarily due to lower expenses relative to our plan. Total sales grew 8% to $4.9 billion, up from $4.5 billion last year, while comparable store sales rose 3%. Earnings per share were $1.46 on net earnings of $488 million for the 13 weeks ended May 4, 2024. These results compared to earnings per share of $1.09 on net income of $371 million for the 13 weeks ended April 29, 2023. Accessories and children's were the strongest merchandise areas during the quarter, while California and the Pac Northwest were the top performing regions. dd's DISCOUNTS sales trends in the first quarter were ahead of Ross as shoppers responded favorably to its improved value offerings. In the newer markets, we are in the process of updating the assortment to better address the different tastes and preferences of this diverse customer base. We will continue to make ongoing adjustments over time to better position dd's for the future. At quarter end, total consolidated inventories were up 10% versus last year, while average store inventories were up 4% at the end of the quarter due to the 53rd week calendar shift. Packaway merchandise represented 41% of total inventories versus 42% last year. Turning to store growth, we opened 11 new Ross and seven dd's DISCOUNTS locations in the first quarter. We continue to plan for approximately 90 new stores this year, comprised of about 75 Ross and 15 dd's. As usual, these numbers do not reflect our plans to close or relocate about 10 to 15 older stores. Now, Adam will provide further details on our first quarter results and additional color on our outlook for the remainder of fiscal 2024. Thank you, Barbara. As previously mentioned, our comparable store sales were up 3% for the quarter, primarily driven by an increase in traffic. First quarter operating margin of 12.2% was up 205 basis points from 10.1% in 2023. This improvement was due to lower distribution, incentive and freight costs that were partially offset by the planned merchandise margin decline. Cost of goods sold during the period improved by 140 basis points. Distribution costs levered by 75 basis points, while buying improved by 50 basis points. Domestic freight improved by 30 basis points, and merchandise margin declined by 15 basis points, as pressure from offering more sharply priced brands was partially offset by lower ocean freight costs. SG&A for the period levered by 65 basis points, mainly due to higher sales. In addition, SG&A benefited from lower incentives versus last year, when we significantly outperformed our plans. During the first quarter, we repurchased 1.9 million shares of common stock for an aggregate cost of $262 million under the new two-year, $2.1 billion authorization approved by our board of directors in March of this year. We remain on track to buy back a total of $1.05 billion in stock during 2024. Now, let's discuss our outlook for the remainder of 2024. Ongoing uncertainty in today's macroeconomic and geopolitical environments, including prolonged inflation, continue to squeeze our low to moderate income customers' purchasing power. As a result, we will remain especially focused on delivering a wide assortment of branded values throughout our stores. For the thirteen weeks ending August 3, 2024, comparable sales are forecast to be up 2%-3%. Second quarter 2024 earnings per share are projected to be $1.43-$1.49 versus $1.32 for the thirteen weeks ended July 23, 2023. Our guidance assumptions for the second quarter of 2024 include the following. Total sales are forecast to increase 5%-7% versus the prior year. We expect to open 24 locations in the second quarter, including 21 Ross and three dd's locations. If same-store sales perform in line with our forecast, operating margin for the second quarter is projected to be in the 11.5%-11.8% range, compared to 11.3% in 2023. Higher sales and lower incentive and distribution costs are expected to be partially offset by a decline in merchandise margin as we build on our efforts to offer more sharply priced brands. We expect net interest income to be approximately $37 million. The tax rate is projected to be about 25%, and diluted shares outstanding are expected to be approximately 332 million. Now, turning to the full year. Based on our first quarter results and forward guidance, comparable store sales for the 52 weeks ending February 1, 2025, remain unchanged at up 2%-3%. We now project earnings per share for the 52 weeks ending February 1, 2025, to be in the range of $5.79-$5.98, compared to $5.56 for the 53 weeks ended February 3, 2024. This guidance range includes an approximate $0.02 per share favorable impact from the timing of expenses that benefited the first quarter. As a reminder, fiscal 2023 earnings per share included a benefit of approximately $0.20 from the 53rd week. Now, I will turn the call back to Barbara Rentler for closing comments. Thank you, Adam. While overall sales were respectable in the first quarter, there remains uncertainty in the external environment, including prolonged inflation, that could continue to pressure discretionary spending from our low to moderate income customers. As a result, it's more important than ever that we remain focused on delivering the best branded values that we can possibly offer. In addition, we'll continue to manage inventory expenses tightly in order to maximize sales and earnings growth over the balance of the year. 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 a question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. And the first question comes from the line of Lorraine Hutchinson with Bank of America. Please proceed with your question. Thank you. Good afternoon. Barbara, I wanted to follow up on the efforts to offer more sharply priced products to your customers. Were you pleased with the initial results in the first quarter? Do you think it led to market share gain? What's the margin implication of your plans to build on this initiative? So let me start with just on the whole, our progress. You know, we feel like in the first quarter, we made progress on our initiative, and so, we're still at the early stages of it, but we feel like it's, it's a good place to be. In terms of do we think we, we gained market share from that? At this point, I don't really think we could, we could determine whether we think that's the case. And in terms of, you know, the sharply priced initiative, we feel like. Well, Lorraine, just say that piece again, so make sure I answer that, that piece about sharply priced correctly. I just wanted to hear about the go-forward margin implication of your plans to build on the initiative. Yeah, Lorraine, this is Adam. I'll jump in on that. So, higher quality branded merchandise will typically carry lower margins relative to lower quality, less recognizable brands. So, you know, as we move through the year, this will be pressure throughout the year, but will be even more so in the back half of fiscal 2024, you know, as we continue to make further progress on this, as Barbara talked about. Thank you. Clearly feel like long term, this is the right thing for us to do to position us to capture market share going forward. The next question comes from the line of Michael Binetti with Evercore ISI. Please proceed with your question. Hey, guys. Congrats on a great quarter. And I don't know if Michael's in the room, but Michael or Adam, jump in. Is 3% same-store sales growth, 200 basis points of EBIT margin, the new normal algorithm? And if not, can you walk us through? You've mentioned lower expenses relative to plan. Can you just help us think about the puts and takes on gross margin and SG&A for the rest of the year? I'm assuming we're not levering 200 basis points on 3%, going forward. So maybe just help us understand within the context of the 2%-3% guidance, what factors that was so helpful in the quarter and what rolls off a little bit? Then maybe it seems like dd's improved a lot more than you thought, if it was above Ross, you know, just 90 days after you telling us you had to make some adjustments to the assortment there in some of the stores performing below what you thought. Maybe just some thoughts on dd's and what's going on with the lower-income consumer? Thanks. I'll take the first part, Michael. I appreciate the spirit of your question, but you're right. So, domestic— let me just kind of walk through all the parts, right? So. Sure. The EPS speed and, and operating margin benefit, lower distribution costs. So we had higher productivity in our distribution centers. We opened a new facility in Houston, a couple of years ago, so that's getting fully ramped up, so that's providing productivity benefits. I would say on the DC cost front, the hiring environment and the retention environment is, is favorable, and we've also made investments in productivity in the distribution centers. And then lastly, on that front, I'd say, that the $0.02 of benefit that we talked about in timing is largely packaway benefits that, that kind of impacts the DC costs. We had, as expected, we had better domestic freight costs in the quarter. Would expect that to continue through the balance of the year. At somewhat—it'd be a little bit choppy, but at somewhat similar levels. We, we went through a bidding process, felt good about those results. As we sit here today, fuel's slightly helping us versus last year. And then, as we've talked about for some time, incentives, some good news in Q1, that'll be, wind at our back through the balance of the year. So even though we had strong profitability in the Q1, we're still up against, 2023, where we significantly outperformed our plans. Michael, there's one other nuance in the first quarter. The, because your sales are based on a fiscal basis, your comps are on a restated. There's an outsized impact between your total sales and your comp sales because of that disconnect that corrects itself through the year. Mm-hmm. So we actually get higher leverage in the first quarter. Longer term, though, you know, we would still expect the leverage at a 3%-4%. On dd's, as we said in the commentary, sales trends were ahead of Ross. That's due in part to the easier prior year comparisons, but also shoppers responded favorably to our improved value offerings. I would say we're just at the beginning stages of making merchandise adjustments there to improve the value offerings. And while we're encouraged by the initial customer response, it's still very, very early. One point of clarification is that the efficiencies from the DC costs, ramping, does that continue with us after the first quarter through the year? Likely stays with us through the balance of the year. Okay. Thanks a lot, guys. Great quarter. But just clarifying, not at the level we saw in Q1, right? So the Q1 number. Okay. That we reported is, it has the benefit of the pack away timing, right? So. Right. You have to you know, step back that in a tangible way. Okay. Thank you. You bet. The next question comes from the line of Matthew Boss with JP Morgan. Please proceed with your question. Thanks, and congrats on another nice quarter. So, Barbara, could you speak to current health of your core consumer today, or any changes in your view relative to three months ago? And then just on cadence, could you speak to traffic versus basket trends as the quarter progressed, and just your confidence in similar performance in the second quarter and the back half of the year? Matthew, that's a lot to take in, but I'll start with the health of the consumer. I would say it's hard to say on the health of the consumer. There's clearly a lot of uncertainty in the macroeconomy. The silver lining for our business is the customer is seeking value more than ever, and we're in a position to deliver that. In terms of cadence, as you know, we typically do not get into what the monthly cadence is. I would say that the performance during the quarter was choppy throughout the quarter with weather, the Easter calendar shift and tax refund timing. For us, even though weather was choppy during the quarter, it was relatively neutral for the entire quarter. And on the comps components, average basket was up slightly, so we had higher AUR, driven by a higher mix of brands, and it was partially offset by lower units per transaction. On the health of the consumer and go forward, look, our low to moderate income consumer, you know, is still being squeezed. I mean, you know, prolonged inflation, macroeconomic environment. I think our job to drive sales is for us to continue to offer really the best possible branded bargains that we can, the values that she really wants, because she really does want to buy a brand, better quality, better product, but she needs to have it at a price that she really can afford. And I think if we continue to deliver on that, as our strategy progresses, as we go throughout the year, I think we'll probably do fine. I think that's an important component for her because she does want to continue to shop and do things, but she's got to find a place where she can get, really get what she needs, because I don't foresee anyone thinking that the pressure on that customer is going to be any different. So it's really the pressure is more on us to execute at a higher level, and I've so far, we're, you know, I would say, happy with the progress that we've made on the brand offerings, but we still have a long way to go. So if we continue to execute at a high level, again, I think, I think the health of the customer, which will be challenging, I think we'll still be able to service her. Great color. Best of luck. Thanks, Matt. To allow everyone a chance, we ask that you please limit yourself to one question moving forward. Thank you. Our next question comes from the line of Mark Altschwager with Baird. Please proceed with your question. Thank you. Good afternoon. Maybe following up on that last comment. You delivered the high end of your guidance, but you did comment that you hoped to do better. Have you identified any low-hanging fruit from an execution standpoint in the quarter, or is the delta versus what you may have hoped for, more a function of the external environment being kinda less accommodating for you? And then separately, was hoping you could speak to the current buying environment, generally, availability across the good, better, best. And as you continue to lean into this value strategy, are the merchants finding any greater ability to offset the margin pressure than maybe you initially thought of a few months ago? Thank you. Sure. In terms of the sales, our apparel business in Q1 did not perform below the chain. So as we go forward, if we continue to execute at a higher level and continue with our brand strategy, our apparel business, as we go forward, should improve, as it historically improves as you get to quarters two, three, and four. So, you know, that's the one piece of our business that in Q1, we were not as happy with, and recognize that we have more progress to make, more things to accomplish, and that's a focus for us. So in terms of everything working perfect, I don't believe there's, I would call low-hanging fruit. I think the whole thing of sales is really going to be about how we execute and how we make the strategic moves we wanna make. Because the strategies by business of where we are on the brand increases and the penetrations is not the same within the company. So some areas have more opportunity as we increase our brands, and some areas are much further along in that strategy. Because some of those strategies really started at the back end of 2023, which is what drove a lot of our 2023 business and gave us the courage to go forward and to expand on the strategy. So as we go again, as we go along, we would think, we would think that that would help to improve our sales. In terms of the buying environment, you know, there's absolutely, you know, there's merchandise availability as there usually is, and it's pretty broad-based. You know, as usual, it's, there are some businesses that have more availability than others. That's just the natural kind of ebb and flow of the entire scenario. And then just repeat the part about the value. What's the part about value? Part of your question. Yeah. Are the merchants finding any greater opportunity to kinda offset the margin pressure than maybe you thought a few months ago? Well, look, if the merchants are, are getting better deals, we're passing it along to the customer. 'Cause we, we really believe that, you know, offering her good quality, branded product at sharp prices, is, is very important for us to be able to, to really satisfy the customer when she's really under, you know, she's under pressure. So we would pass, we would pass that along to the consumer. So that's really what-- that's really how we're thinking about it at this point. Makes a lot of sense. Best of luck. Thank you. The next question comes from the line of Chuck Grom with Gordon Haskett. Please proceed with your question. Hey, thanks very much. Great quarter. I'm curious what you'd attribute the dd's outperformance to. Clearly, a nice surprise today. And then just as a quick follow-up, any thoughts on the home category performance? Chuck, on dd's, as I said, part of the performance was against easier prior year comparisons than Ross. But we do believe that, you know, we've started making adjustments and the customer is responding. I'll just repeat: we think we're at the very early stages of making the merchandise adjustments we need to make. We'll see how it progresses through the year. At a high level, the merchants improved the value offerings that they had, whether it's different assortments, broader assortments, better quality, better products. So I think we've taken our first step forward there. And to Michael's point, you know, we feel like there's room for us to improve, and if we continue to improve, even this low-income customer, if we can satisfy her, we should do fine. And in terms of the home category, home outperformed the company. So there are, you know, puts and takes in the home business right now, with some businesses that are stronger than others. But overall, it outperformed, and we still see a lot of opportunity in our home business based on the size of it and the categories that we're in. But overall, there are some businesses that are softer than others. Thank you. The next question comes from the line of Alex Straton with Morgan Stanley. Please proceed with your question. Great. Thanks so much for taking the question. Maybe for Barbara, what KPIs are you focused on as you're assessing if some of these value initiatives are working or if they're worth rolling out more across the chain? Thanks a lot. The way we're thinking about this is we are actually building the margins the way we see them. We have a merchandise strategy. We've developed a value strategy by type of product, and we've just, you know, then went in and figured out what the margins would be. So at this stage of the game, as you know, we've lowered our margins to be able to get those values on the floor to satisfy the customer and to gain market share. This whole thing is about us gaining market share. So at this point in time, our strategy is to pass along the values as we get them, and so I wouldn't say it's quite as rigid as, you know, last year my margin was X, and I've got it planned to Y. It's not. It's a strategy we wanna execute, and so we've put together, again, all the, all the metrics based off of what we want, the products we want on the floor, the values we want on the floor, and so that we're satisfying the customer, because that is the gain to market share. So right now, it's, it's built up bottom up. Thanks, Barbara. Good luck. The next question comes from the line of Paul Lejuez with Citi. Please proceed with your question. Thank you. It's Tracy Kogan filling in for Paul. I just wanted to clarify if was anything within cost of goods meaningfully favorable to your plan, or was it primarily an SG&A beat? And then I know you mentioned that you expect lower margins on these more recognizable brands, but I'm wondering if you build in any benefit from having faster inventory turns or lower markdowns because the customers—these are brands that customers want. Thanks. Within Cost of Goods Sold, Tracy, freight is included in our Cost of Goods Sold, and we did see favorability. Yeah, and the DC costs. In terms of, you know, what we've built in because they're recognizable brands, they turn quickly, but quite frankly, we turn everything quickly. So, you know, in terms of a benefit, just purely out of turn, I don't see that as one of our levers in terms of turn of markdowns. I think the markdowns will be reasonable based on the brands that they are, the values they are, the retails they are. And so again, we have gone in, and we built that bottom up. But we didn't go in and say that we have any expectation that certain things are gonna turn at certain weeks of supply, because remember, we're in a process here, so we're learning, right? So as we're going and it's evolving, and we're fine-tuning what we're doing, our expectation would be, yes, that our trends will continue, will continue to improve. But with that, we didn't build with a specific turn expectation. And again, the company turns everything very quickly, so our expectation on this would be to level set based off of what we think the customer will accept. Great. Thank you. The next question comes from the line of Adrienne Yih with Barclays. Please proceed with your question. Great. Thank you very much, and nice quarter. Barbara, my question is on the packaway, the 41%, I believe, it was this quarter. Typically, if I'm correct, that's typically a short stay, I think. Can you comment on if you were being impacted by weather events, as was TJX and more than most off-price retailers also would be, are you seeing, you know, that short stay opportunity, and have you taken advantage of it to deploy in the second quarter, perhaps? Thank you. Adrienne, just on the 48, the pack away. Pack away usually stays in about, the average is about four months. That said, you could obviously use it for short stay if you needed to. Great. Go Great. Go ahead. So in terms of you're asking, are there closeout opportunities out there based off of tough weather across the country, and their vendors moved goods? Yes. I think some vendors are starting to move goods, and some vendors that, you know, depending upon what your cash flow looks like, are still holding onto those goods because of everything that you're saying. The weather was a little bit tougher across the country, and they don't really need to move those goods today. If we were at, you know, June 15th, I might tell you something different. So I really think that goes back to who the vendor is, what their needs are, what their cash flow is, if they're a public company. There's a variety of things, but at this point in time, have there been some closeouts? Yes, there's been some closeouts, but what you're saying, where there were big jags of goods that we would short stay if it was a great deal, absolutely, we would do that. But at this moment in time, we're a little early, little early in the game. Okay. I don't think vendors are feeling that anxious about those products yet. Okay, thank you very much. That's all. The next question comes from the line of Bob Drbul with Guggenheim. Please proceed with your question. Hi, great quarter. Good afternoon. I was just wondering if you could talk more on the geographic differences and, you know, within both Ross and dd's, if, if there was a big variation within your store base in terms of. Sure, Bob. I would only talk on a consolidated basis. But as we said in the commentary, the geographic performance was strongest in California and the Pacific Northwest. Both of those are areas that were impacted by poor weather last year, so easier to compare, perhaps. For our other largest markets, Texas was above the chain, while Florida was just slightly below. Great. Thank you very much. The next question comes from the line of Simeon Siegel with BMO Capital Markets. Please proceed with your question. Thanks. Hi, everyone. Afternoon. Just so recognizing the goal for the sharper prices, just what is the implied AUR embedded within the comp guides that you've given? And then just higher level, as you think about the challenges of the environment, but also perhaps the potential trade-down into your business as you think about the market share, I guess, how do you assess prioritizing the assortment of sharply priced brands versus maybe some better brands that are a little bit higher priced, but still great value to bring people in? Thank you. On AUR, I'd say we don't plan or focus on driving a specific price point. While it was up in the first quarter, our focus is on delivering the most compelling values possible, which, as we said, we believe will drive sales and market share gains. And in terms of the sharper prices, I just wanna be clear. The sharper prices aren't necessarily just in the goods that are in the goods. Sharper prices, I really should probably use the word stronger values on the floor. So that's tiered up in all different, each one of those tiers. It's not just we're looking for an opening. It's not an opening price point strategy. It's a value strategy. But the values, let's say, we offer perhaps four in a type of product or one of those three buckets, we may have sharpened so that the customer is getting an even better deal, an even better value. So that's really how we're thinking about the strategy. I probably shouldn't be using the word price, 'cause I think, I think everyone's finding that a little bit confusing, but, is that the answer to your question? Yeah, that makes a lot of sense. Thank you. That's a good clarification. So do you see that as an opportunity for trade down for customers that you didn't otherwise have, not in your core, but in those that'll come lower, that'll trade down into you? I mean, I think that, I think that's hard for us to measure, but I think the more branded we get and the broader assortments we can offer, the more customers we'll get. We'll gain the. Our purpose here is to gain market share, right? And so gaining market share, you would like to gain different customers. And so if we get more branded, have unbelievable values, and get broader in assortment, that, I would imagine, would be the combination we need to gain more market share. Perfect. Thanks a lot. Best of luck for the rest of the year. Thank you. The next question comes from the line of Ike Boruchow with Wells Fargo. Please proceed with your question. Hi, everyone, this is Juliana in for Ike. Thank you for taking my questions. On dd's specifically, given some improvement seen there, if perhaps that continues throughout the rest of the year, are there any thoughts on revising the real estate opportunity there, whether that's less closures and more openings? Thank you. It's a good question. I think, right now, as you know, we slowed down growth, specifically in the new markets. I think we'll have to see sustained trends before we reaccelerate growth in those newer markets. But if we see it, then we would do so. Great. Thank you. The next question comes from the line of Brooke Roach with Goldman Sachs. Please proceed with your question. Good afternoon, and thank you for taking our question. Barbara, I wanted to follow up on your comments about the opportunity that you see to improve the execution of apparel. Do you believe that the performance of the category is a function of weather or fashion execution, or is this simply a function of being in the earlier stages of your sharper value price strategy versus other categories? Just curious how you're thinking about implementing that, especially given some other companies that have invested more heavily in price in the full price sector. Thank you. Look, weather we didn't think of weather as a major component. It's always part of the component. And in Q1, our business in apparel, you know, historically has been very challenging. So we go into the quarter with a conservative plan, seeing how it works and then chasing. That's what we've done for years. The early sharpening prices and in the assortment, you know, our new strategy, I think we're at the beginning in apparel, particularly in the ladies' apparel, you know, we're at the very early stages of that. So I think in terms of an opportunity to improve, I think it's there because I think we—the customer wants. Our apparel business has been challenging over the last few quarters, and the customer wants something different, and this is what she's voting on, and we can see, although particularly in ladies, at the beginning of the journey, we can see what she's voting on and what we need to build on. So I think there are opportunities to improve. I think there's some things that are tangible. I don't think it will be an overnight thing in ladies. As we know, ladies is naturally a challenging business, but I feel like there's things that we can build on it at this point. Great. Thanks so much. The 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 offering of value in both concepts, Ross and dd's, is the magnitude of what you're working to do, does it differ by category in terms of the more intensified value, whether home or apparel? And does it differ at all by concept in terms of what you expect to change? Thank you. Okay, let's start with so with Ross, the magnitude is different by category. Some businesses, by the nature of what they are, are more branded. Let's use shoes, for example, that's a highly branded business. Handbags is a highly branded business. Naturally, it's a highly branded business. And then I think as we go into different categories, we set different targets of what that looks like, based off of what's in the outside world, the brand, just the brand strategies of everyone else and what that looks like and what we think that percent should be for us. So that is built with the strategy of what we believe it should be. Now, I will tell you, as we're going through this, as you would expect and imagine, it evolves, right? So we learn, and the customer's telling us, and we're gonna keep learning and keep evolving. And so some of these businesses will take longer to go on, but some of the businesses naturally are different. If we move over into the home bucket, as you know, there's certain parts of home that can be branded, and there's certain parts of home that are not branded. So housewares is a very branded business. You know, bed & bath can be very branded. You know, if you go into room decor and furniture and things like that, then they're not necessarily branded. So again, we built the entire company strategy by business, by in a good, better, best—what do we think it should look like? Where are we today, and where do we think we wanna get to in our first pass until the customer votes and really tells us, in which case, I'm sure that some things will accelerate more than what we originally expected, and maybe some things will be a little bit less than we originally expected. So that's kind of where we are on the Ross side. On the dd's side, the dd's customer, that assortment isn't quite as branded as the Ross customer. But even in that assortment, you wanna make sure that you're offering the customer different tiers. Their version of what might be best is a different tier than what's the best at Ross. But what, you know, what is the stretch for that customer? And again, we wanna make sure that the quality is good, the fashion's right, and the prices are sharp. So it's different. The thought process is similar, but it's not the same in terms of execution because the models are not the same, the brands are not the same, the customer is not exactly the same. But thinking through it, you know, as you would think that the value, the best bucket at dd's would not be as big as the best bucket at Ross could be. But, you know, again, dd's, we're at the very beginning of where we're going with that. You know, the performance with improved value offerings this quarter, you know, shows we're getting ourselves, you know, kind of back on track. We were up against an easy compare, I understand that, but the merchants are now moving, moving in a direction, and that, too, will have to seek its own level. But the Ross side of the strategy is much more structured than on the dd's side, since we also have other work, consumer work that's gone on about other things we need to do in that assortment, more, you know, broader in terms of satisfying some of her needs, more necessarily than on the tiering of good, better, best. Thank you. Very helpful. The next question comes from the line of Aneesha Sherman with Bernstein. Please proceed with your question. Thank you. So your comp guidance of 2%-3% through the year is an acceleration versus this quarter, and whether you look at it on a one-year basis or a two-year stack or even versus 2019, can you talk about what drives your confidence in that acceleration? Is it about these changes you're making to assortment and pricing, or is it around macro or something else? And then a quick, quick follow-up for Adam. You didn't mention wages as a headwind. Are you happy with where you are on wages at stores and DCs, and do you see that being a continued area of investment, or are you, are you good where you are now? Thank you. Aneesha, on the guidance, I mean, I would say it's our best assessment of where the business is and the merchandising plans we have to further increase the brand of bargains we offer as we progress through the year. As you know, and as you look at the stack comps, we have, for many years now, had stronger comps beyond the first quarter. So we believe we plan the business appropriately based on what we know. On wages, I would say, generally speaking, wages in our stores and DCs are relatively stable. In fact, part of the productivity improvements in the DCs in the first quarter is lower turnover, which means we had more tenured associates, and they were more productive. So I think we feel good about where we are with wages, and like we always have, we'll take a market-by-market approach, and where we need to raise wages, we will. But the pressure's still there from, you know, where we have to take statutory increases, right? And that's where we're. As Michael said, and as I said earlier, that's where we're working hard to try to find offsets to them. The next question comes from the line of Laura Champine with Loop Capital Markets. Please proceed with your question. Thanks for taking my question. I wanted to check in on inventory as it grew faster than sales, despite pack away actually being a little bit lower as a percentage of the mix. Is there some spring product in areas that had negative weather trends that maybe you're looking to sell through? Or, if you could give us some thoughts there. In terms of inventory, part of the increase, Laura, was that with the fiscal calendar and restated calendar, at fiscal year-end, we were one month closer to Mother's Day, where we tend to drive receipts. So that's why you see in-store inventory position up 4%. I'd say the other factor is we do have more goods in transit. Part of that is due to the Suez Canal, and we're going around the Horn of Africa, so that creates a little bit more of in-transit inventory coming into the country. Is that likely? Sorry. Sorry, Barbara. Go ahead. No, go ahead, Laura. Oh, I don't wanna cut you off on that one. No, no, no, I was gonna, I was gonna pivot, so go back to him. Go back to Michael. Okay, the Suez Canal issue, does that create a reversal in your positive freight costs as we move through the year, or do you think that is gonna be a benefit all year long? It's actually relatively flat for the rest of the year, in terms of ocean freight, and we do have our contracts locked in at this point, including the Suez Canal shipments. We think ocean freight will be neutral the balance of the year, and it's more of a transit time issue than a cost. Understood. Thank you. Our next question comes from the line of Marni Shapiro with Retail Tracker. Please proceed with your question. Hey, guys. Nice quarter with traffic up again, and I'm curious if there's anything you could point to that's driving the increases in traffic. And also, I've noticed you guys, Ross Stores, in general, has been a little bit more active on social media. You are showing - or maybe you're just showing up in all my feeds. You're showing up on my For You Page and TikTok, actually. So I was curious, just, are the two things related potentially? Are you getting a younger shopper coming in? If you could just talk a little bit about that. Marni, we're just showing up in your feeds. You know, our marketing strategy has stayed fairly consistent. You know, we have, like everybody else over the years, have shifted more of our media to digital from broadcast, and maybe that's what you're seeing, because we have more of our marketing in digital channels. Maybe the fact that I'm talking about you, and my phone is listening to me. But are you seeing younger shoppers come into the store, and are you getting new shoppers into the stores? I would say it's, we've always done well with the younger customer, and we continue to do well with the younger customer. You know, when we look at the performance, say, Q4 and Q1, it's been fairly broad-based across trade area demographics, and that includes income. So from an income standpoint, it's hard to pinpoint whether there's increasingly a trade-down customer. But what it does say is we're attracting a very broad customer base, which is good for us. Fantastic. Best of luck for the next month, next quarter. Thanks, guys. The next question comes from the line of John Kernan from TD Cowen. Please proceed with your question. Hi, this is Alex on for John. Thanks for taking our question. So I had one on gross margin. So how should we think about the quarterly sequencing of gross margin through fiscal 2024, and any puts and takes there? And then also related to that, it looks like you guys are still running a little below your pre-COVID gross margin run rate of 28%-29%. Is that just due to the focus on sharper values, or is there anything else that we should be thinking about there? Thank you. Yeah, Alex, so, again, domestic freight, it was favorable in Q1, expected to be favorable the balance of the year, assuming fuel stays where it is. We talked about distribution cost, feel good about productivity levels, the hiring environment, would expect that to continue the balance of the year. Merchandise margin is probably the big call-out that we were below last year in Q1 and expect that to get to be further below last year as we move through the quarter, as we get farther into the branded strategy that Barbara spoke of. I think back to the, I guess, your pre-COVID question, you know, still bullish on our ability to drive leverage. So again, you know, anywhere between 3% and 4% comp, we believe we'll have operating margin leverage. It'll take to get back to pre-COVID levels, it'll take outsized comp sales growth. That's the most important variable, and I think the kind of the biggest variables are where are fuel prices over time, and assuming that wages continue to stabilize. The biggest differences, though, in gross margin between COVID, you know, pre-COVID levels, are freight costs that spiked during COVID. They're still pretty sticky with driver wages, but we made progress last year. We're gonna make progress again. Then the other big factor is in our distribution center with wages, and you see that at least in the first quarter, we had good productivity gains. So, both of those, we believe we can track back over time, again, depending on the macroeconomy when it comes to fuel prices on freight. That, that's very helpful. Thank you. There are no further questions at this time. I would like to turn the floor back over to Barbara Rentler for any closing comments. Thank you for joining us today and for your interest in Ross Stores. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.