Good morning, and welcome to Shoe Carnival's Q2 2022 earnings conference call. Today's conference is being recorded. It is also being broadcast via webcast. Any reproduction or rebroadcast of any portion of this call is expressly prohibited. Management's remarks may contain forward-looking statements that involve a number of risk factors. These risk factors could cause the company's actual results to be materially different from those projected in such statements. Forward-looking statements should be considered in conjunction with the discussion of risk factors included in the company's SEC filings and today's earnings press release. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today's date. The company disclaims any obligation to update any of the risk factors or to publicly announce any revisions to the forward-looking statements discussed on today's conference call or contained in today's press release to reflect future events or developments. I'll now turn the conference over to Mr. Mark Worden, President and CEO of Shoe Carnival, for opening remarks. Mr. Worden, you may begin. Good morning, and welcome to Shoe Carnival's Q2 2022 earnings conference call. Joining me on today's call are Kerry Jackson, Executive Vice President and Chief Financial Officer, and Carl Scibetta, Senior Executive Vice President, Chief Merchandising Officer. As announced in this morning's press release, Shoe Carnival delivered earnings per share during the first six months of the fiscal year that already surpassed any full year of earnings in our 44 years of operation, except for 2021. I'm so proud of our nearly 6,000 team members for this accomplishment and thankful for their commitment to our customers, our communities, and our shareholders. Throughout the quarter, American households faced a challenging inflationary environment, putting pressure on disposable incomes and on our traffic counts. We also experienced an increase in supply chain disruption during the back half of the quarter. Despite these external headwinds, the company's strategic plans to double operating profit margins versus historical levels continue to work. Furthermore, profitability growth has accelerated as 2022 progressed. Our merchant organization has worked in close partnership with our strategic vendors throughout the year. Together, they delivered the freshest product assortments from our customers' favorite brands and applied customer analytics to unlock highly profitable promotions. This resulted in Q2 operating profit margins of 12.4% and marked the sixth consecutive quarter in double digits. We were most encouraged that operating profit delivered sequential growth in Q2 above the 11.1% operating margin achieved during Q1. To further illustrate the profit transformation the company has achieved, operating profit margin was 5.9% for the prior 10 year period. Throughout 2022, we've been lapping the stimulus-impacted 2021 quarters. The more normalized quarters with no stimulus benefits in 2022 have helped provide clearer visibility into the sustainability of our operating profit levels. As such, today, we are increasing our operating profit margin expectations for 2022 and providing guidance to achieve between 11.4% and 11.6% operating margins, doubling the company's historical levels. We believe the best way to understand the underlying sales and customer growth achieved and sustained at Shoe Carnival during these COVID-impacted and stimulus benefit years is to benchmark back to 2019. Overall sales have grown 20.6% for the first half of fiscal 2022. Customer counts for our loyalty membership climbed to just below 30,000,000 at the end of Q2, setting a new record, up 28% compared to 2019 and up nearly 7% versus 2021. Non-athletic sales growth has been exceptional, up over 30% versus 2019. During Q2 of 2021, the company's net sales 10.5% on top of 12.1% in Q2 2020. Compared to 2021, net sales retreated 6% during Q2 2022. The team posted solid non-athletic category performance across genders and styles, offset by declines in our athletic categories driven by supply chain delays. Related to the supply chain, key athletic inventory shipments planned did not make it fully through the global supply chain and into our stores in time to support our June and July sales as planned. While we forecast that athletic sales would pull back during Q2 due to our customers having loaded up on athletic product during 2021, this supply delay led to steeper declines. Carl and Kerry will break down the category trends and our overall inventory position shortly. As Q3 began, the delayed athletic product began to arrive, but we remain below our desired inventory levels this quarter as we replenish stores. As such, we are updating our annual sales guidance to $1.29 billion-$1.34 billion. While below our original growth ambitions for 2022 top line, this sales range represents growth of 24%-29% versus 2019. Demonstrating top-tier growth levels in the channel better reflects the challenging inflationary environment our consumer is now facing and includes the short-term disruption to our 2022 athletic supply. After growing net sales 36% during 2021, we are encouraged by sustaining growth levels between 24% and 29% versus 2019, and to build up record customer counts level to engage with ongoing. I would like to now share an update on Q3 to date and our most important month of the year, the back-to-school period of August. We are seeing encouraging back-to-school profitability results in the Q3. Sales through August 24th have increased over 15% compared to 2019, and include the best three days of sales of any three day period in Shoe Carnival's history. Profitability for the month is very strong, with gross margins on pace to grow 650 basis points versus 2019. Based on the previously discussed athletic inventory position, we are including in our guidance that Q3 sales will be down versus 2021 in the low- to mid-single digits. August back-to-school shopping typically drives over half of our Q3 profitability. Taking into account the sales and profit achieved quarter to date, Q3 is pacing on track to deliver our targets for gross margins, for SG&A, and for operating profit. With the $1.99 of EPS achieved during the first half of the year, plus the solid Q3 profit start in hand, we are reiterating our annual guidance for earnings per share between $3.95 and $4.15. Combining the sales range guidance, the increased operating margin range, and current inflation trends, we anticipate sales and earnings per share is most likely to deliver on the mid to lower side of our annual 2022 guidance. Moving on now to an update on progress toward our key strategic plans. First, our Shoe Station banner continues to outperform expectations on all fronts. Sales were $54 million during the first half of 2022. We now expect Shoe Station sales to exceed our previously announced full-year expectations of $100 million by approximately 10%. Operating profit expectations were previously communicated as 10% for 2022. Our integration efforts of the recently acquired banner are pacing far ahead of our preliminary timelines. We have realized significant back-office synergies, as well as gaining efficiencies and best practices across merchandising, operations, and marketing. As such, we are raising our operating profit expectations for Shoe Station to a range between 11% and 12% for 2022. New store site identification efforts continue to progress throughout the South, and we expect to grow the 21 store chain acquired to 30 stores during the fiscal 2023 horizon and to build out the expansion roadmap to exceed 100 stores in the next five years. We continue to make significant progress on our fleet modernization program. Our plan to have over 50% of stores modernized by the summer of 2023 and the full program complete by the end of fiscal 2024 is on track. In addition to the modern Shoe Carnival experience rolling out now, we are launching a Shoe Station modernized prototype store in Q4 of this year at new store openings in both Alabama and Georgia. Third, we continue to improve our advanced CRM, analytics, and digital marketing capabilities, which allow us to have one-on-one communication with our customers. These highly profitable tools give us a targeted platform to reach our customers via text and email, and we're able to drive sales at attractive margins and without deep, unprofitable promotions. During this quarter, we will complete the Shoe Station integration into our CRM organization and platform technologies, and we will extend our Shoe Perks loyalty program across both banners. We'll be sharing early results of this CRM launch at our Q3 earnings call. We are so very excited to begin building CRM excellence and shared insights across the enterprise, as this will further improve profitable growth across the banners. Fourth, we are planning to rapidly expand scale in the next five years. Shoe Carnival is on track to operate 400 locations by the end of this fiscal year, and we are not expecting any store closures this year. This is such an exciting moment for the enterprise. Having completed our store productivity improvement plan, 2022 marks the first year in 20 years that no stores were closed. In conclusion, we have undergone a sustainable profitability transformation and are seeing profit growth accelerate sequentially at a very encouraging rate during 2022. While a lack of athletic inventory limited our sales potential in the first half of 2022, we delivered excellent gross margins, double-digit operating margins, and earnings per share that was more than 43 of 44 prior full-year earnings already. Our customers remain highly engaged despite the inflationary pressures. We've generated the critical profit to plan during our key back-to-school season, and we are on track to deliver against our financial and strategic targets for the remainder of fiscal 2022. With that, I'll ask Carl to discuss our performance further. Thank you, Mark. As Mark highlighted, today's results are strong evidence that our strategy is working. However, during the Q2, we experienced a shift away from our normal 50/50 athletic/non-athletic sales balance. We anticipated this move in consumer demand to non-athletic product and positioned inventories to take advantage of this fashion change. Supply chain issues impacted athletic inventory availability. Despite our unparalleled vendor relations, we were simply unable to deliver enough new athletic receipts to meet demand within our athletic product categories. Athletic inventories ended the quarter down high teens versus 2019. Our team continues diligently to manage the supply chain, and looking ahead, we believe athletic inventories will replenish as we move through the Q3. In addition, deliveries of new fall non-athletic product are flowing much better than 2021, and we are well positioned from an inventory perspective to deliver on the sales and profit guidance for the remainder of the fiscal year. At quarter end, our inventory forward weeks of supply was down 6% versus 2019. Importantly, both aged inventory and seasonal carryover inventories are in line. As a result, we do not have a glut of inventory and see no need for deep discounts or dump goods in the second half of the year. Turning to results. Mark mentioned the challenges we saw within the athletic area. The quarter started off strong and sales weakened as athletic inventory levels slipped by quarter's end due to late deliveries. The quarter finished with men's, women's, and children's athletic comparable store sales down low teens compared to 2019. Versus last year, these categories were down in the mid-20s. However, as I previously highlighted, we saw continued strength in non-athletic shoes. Women's non-athletic was up in the high 20s versus 2019. Sales were driven by dress up over 50%, sport up in the high 30s, and sandals up in the mid-teens. Men's non-athletic sales were up in the mid-20s versus 2019. Men's dress and casual shoes were both up over 20% with men's boots up over 30%. Children's non-athletic sales were up in the high 50s. Increases were driven by children's casuals up over 90% and infants up in the high 70s. Versus last year, women's was up low singles and men's and children's were down mid-singles. With the trends we are seeing and the anticipated product flow, we see strong sales results in non-athletic categories for the remainder of 2022. As Mark highlighted earlier, we continue to deliver excellent product margins. Using the data provided from our best-in-class CRM, we continue to drive loyal customer growth. This data gives us insight into our consumers and gives us a path to engage with them through smart, effective promotions that are not margin dilutive. Before turning the call over to Kerry, I would like to highlight one of these ongoing promotional strategies. We recently created an Inflation Buster program that highlighted key back-to-school products and brands, along with storewide events, as well as gasoline and grocery incentives to our customers. This drove increased traffic at accretive margins. We engaged our existing consumers while new loyal customers drove store traffic and built brand loyalty. With the help of these innovative analytics-based marketing campaigns, we are confident that our marketing and promotional strategies will continue to drive the margin levels we have seen the past several quarters. In fact, this Inflation Buster promotion produced the best three combined sales days of any three day period in the company's history and delivered the strong margin levels we have seen throughout the entire year. Based on the strength of the emerging fashion categories, athletic inventory flows improving, and effectiveness of our modernized promotional strategies, we feel confident we will deliver on the sales and profit guidance for the balance of the year. With that, I will turn the call over to Kerry for a review of our financials. Kerry? Thank you, Carl. I'm excited to share with you the financial highlights from another successful quarter, which again demonstrate a transformed and sustainable profitability profile for the company. Similar to previous quarters, we are comparing results versus 2019 as we see as the most relevant and normalized period prior to the start of the pandemic. Net sales in Q2 were $312.3 million and were the second highest Q2 sales in our history, surpassed only by Q2 last year. These sales increased $44.0 million or 16.4% compared to the pre-pandemic Q2 2019, driven by sales from the Shoe Station banner and a comparable store sales increase of 8% from the Shoe Carnival banner. Year to date, net sales have increased $107.8 million or 20.6% compared to 2019, with both store banners contributing nearly equally to the year to date increase. Sales from the Shoe Station banner stores acquired in December 2021 or opened in 2022 added net sales of $27.2 million for the quarter and $53.4 million year to date. Against last year's stimulus-enhanced Q2, total sales in Q2 this year were down 6.0% and comparable store sales declined 13.8%. These results were against the comparable store sales increase of 11.4% in Q2 2021, which was on top of a 12.6% increase in Q2 2020. Our Q2 gross profit margin was 36.2%, a 560 basis point increase compared to Q2 of 2019. An increase in merchandise margin of 680 basis points was partially offset by a 120 basis point increase in distribution costs due to the impact of inflation on transportation and fuel expenses. Excluding the impact of transportation and fuel costs, our merchandise margins increased over 800 basis points. We expect higher transportation and fuel costs to persist for the remainder of the year. However, we feel the year-over-year increase will continue to moderate in the second half of this year, allowing us to leverage our buying, distribution, and occupancy costs by 30 basis points or more compared to the second half of 2019. SG&A expense in Q2 was $74.3 million or 23.8% of sales, compared to $66.4 million or 24.8% of sales in Q2 2019. We leveraged these expenses by 1 percentage point due to the higher sales in the quarter. Q2 operating income was $38.8 million or 12.4% of sales. This is in line with expectations of an annual double-digit operating margins, which are more than double our historical run rate. As Mark mentioned, this is our 6th consecutive quarter of double-digit operating income. Net income for the Q2 of 2022 was $28.9 million or $1.04 in diluted earnings per share. This is the second highest Q2 diluted earnings per share in our history and an increase of 160% compared to the Q2 of 2019. We closed out the quarter with inventory of $385.5 million, which is up $48.6 million compared to the Q2 of 2019. Approximately 59% of the increase in inventory for the Shoe Station stores acquired last year are open this year. The 14.4% increase in inventory is supportive of the 20.6% increase in net sales year to date compared to 2019, and the expectation of increases in sales for the remainder of the year. At the end of Q2, we had total cash equivalents, and marketable securities of $62.6 million and no outstanding net debt. As is typical for this time of year when we're building our back-to-school inventories, we expect our cash balances as we enter Q2 to be the low for the year. With the influx of cash from sales in August, today our cash balances are more than $100 million. With the expectation of positive cash provided by operations in the second half of this year, we should end the year with cash balances a little below last year's ending balance of $132 million, excluding the effect of any additional share repurchases. As of July 30 2022, the company had $29.5 million available for future repurchases under its share repurchase program. During the Q2, no shares were repurchased. Summarizing our expectations for 2022 fiscal year, we expect sales to range from $1.29 billion-$1.34 billion, gross profit margin to range from 36.6%-36.7%, operating margin to range from 11.4%-11.6%, and diluted earnings per share to range from $3.95-$4.15. However, based on our year-to-date performance and second half expectations, we are more comfortable with the mid to lower range of our annual guidance. In closing, our Q2 results are a continuation of increasingly sustainable profitability for Shoe Carnival compared to pre-pandemic levels. We are confident in our ability to execute in the second half of this year, and we are poised for long-term growth through a combination of organic store expansion and modernization and selective acquisitions. This concludes our financial review. Now I'd like to open the call for questions. At this time, if you would like to ask a question, simply press star followed by the number one on your telephone keypad. We will take the first question from the line of Mitch Kummetz with Seaport Research. Yes, thank you, and thanks for taking my questions. Carl, I just want to better understand the athletic business and the inventory there. I think you made the comment in your prepared remarks that going into the quarter that you position the inventory more towards non-athletics. I guess I'm trying to understand how much of the athletic maybe shortfall, I don't know if shortfall is the right word, was due to kind of how you position the inventory going in versus, you know, some of the supply chain challenges that occurred during the quarter or late in the quarter. Can you just maybe go through that a little bit? Sure, Mitch. We planned the athletic business for the quarter to be relatively flat. It was hurt obviously by delay in athletic receipts of fresh new back-to-school products. At the beginning of the quarter, we were in good shape, sold through the product, and the deliveries were pushed back. That really affected the sales on the athletic side. On the non-athletic side, we've been aggressively going after that business, frankly, over a year as we saw consumers move to the more fashion categories based on multiple years of taking that off and really focusing on athletic and products that were really more tied into staying at home and outdoor physical activity. Okay. In the press release, you mentioned that, based on the weekly averages in the quarter, athletic inventory was down, like, 26% year-over-year. Where does that stand now, and where do you see that kind of moving through the Q3? Athletic inventory, Mitch? Yeah. Yes. We see it improving. Information we're getting from our athletic resources shows an improvement in deliveries as we move through the quarter, and we anticipate by the end of the quarter for our inventory to be in the position that we want it to be in. Okay. Then I'm trying to reconcile the sales guide a little bit. I think you guys said Q3 down low- to mid-singles. If I take, you know, down mid-singles, I think that implies that the three year sales growth is up kind of low- to mid-20s again, on a three year. It sounds like your August to date sales are up 15% on a three year. Help me understand how we get from kind of mid-teens to low- to mid-20s on a three year. Is that just again based on the improvement of the inventory situation? Hi, Mitch, it's Mark. It's twofold. It's, one, continued improvement with the athletic inventory situation, as Carl already addressed. Second, it's also traffic improvement. We've seen a direct correlation to the price of gas and the inflation spiking in the mid-June and July time. As gas surpassed $5 across the markets we operate in, there's a direct correlation to traffic declining from what was positive traffic in the beginning of the quarter. It turned to low double-digit negative in the middle of the quarter. As gas prices receded as we got towards the end of July and August, traffic has rebounded back to low single-digit decline to low positive increases day by day. In summary, we see the traffic impact tied to inflation combined with the shortfall of the unexpected athletics in Q2 being an anomaly to the year. We'll see that improving sequentially, we believe. We're already seeing it in Q3, as we've shared, with very strong results. Okay. Lastly, maybe could you speak to the difference in performance between Shoe Station and the Shoe Carnival businesses? I know the consumers are a little bit different. The merchandise mix is a little bit different. Just wondering if, you know, as you think about the consumer and the health of the consumer, the impact of inflation, Mark, you talked about gas prices. Are you seeing much difference in how those two consumer groups are behaving or the kind of merchandise that you're selling or maybe the price points that you're selling in, you know, Shoe Station versus Carnival? I know it's kind of a different price point structure. Maybe just discuss that a little bit, and that's it for me. Thanks. Yes. We're seeing Shoe Station far outperform what we thought. Our hypothesis was the Shoe Station banner had a complementary consumer, that was higher household incomes above $50,000-$70,000 range. Our belief would be that during inflationary time frames, that would help balance out the business. What we're seeing is absolutely true. You know, the Shoe Station business is continuing to show resilience. The consumer is healthy. The sales continue to far outpace our expectations. There's no inventory concerns or backup. In fact, you know, profitability from early synergies is far outpacing as we've guided higher sales, higher profitability for this first year. If the consumer is healthy at Shoe Station, it is acting differently than the lower demographic segments of the Shoe Carnival banner, particularly the urban consumer that has really been pressured as inflation spiked in Q2. We're very, very pleased with what we've purchased. I think our message is this growth engine is ready to rapidly expand, and we're gonna be doing so in the next years. Okay. Thanks again, and good luck. Thank you, Mitch. Your next question comes from the line of Sam Poser with Williams Trading. Please go ahead. Thanks for taking my questions, gentlemen. Just can you give us a view on. I mean, you talked about Shoe Station. When we look at. I mean, are you being conservative with the $110 million now based on the trends and normally is Shoe Station's back half revenue better or than first half revenue? I mean, can you give us some historics? Secondly, based on, my math is terrible as you all know, so based on your numbers, what is the EPS accretion of Shoe Station expected? Hi, Sam. Hey Sam, it's Mark. With $54 million in the first half achieved at Shoe Station, we're on track to surpass the $100 million original guidance by approximately 10%. We think the run rate takes us to that range of about 10% higher for the overall year. What was really pleasing though is with the integration efforts and the synergies coming across the entire back office, things like accounting and human resources, that's all been synergized now into the Shoe Carnival broader enterprise. Our original expectation at 10% op margin now is pacing in the 11%-12%, and will be either in line with Shoe Carnival or has the potential to be slightly accretive if synergies progress even further. As far as the EPS associated with that, Kerry? I don't have that with me right now, Sam. We'll have to get back to you on that. Okay. Carl, when you break down the non-athletic trends, and I know you guys look at it a little bit differently than others, not everybody looks at it the same way. Can you give us some of the categories within non-athletic that you know, you're seeing, let's say the best in you know, where you're seeing the best improvements? On dress, how sustainable do you believe the dress business is? Sam, I think the dress business is very sustainable. We've been running really hot on dress shoes since April 2021. I see that business continuing to be strong as consumers fill their closets back up with more current product. We see that progressing in multiple categories of dress. Beyond that, the fashion elements that we started seeing emerge in fall of 2019 sort of took a hiatus for 2020 and 2021 based on the consumer's behavior change because of the pandemic. Those same trends, and I'll just say late 1990s trends, in casual and in sport shoes, more aggressive bottoms, combat, platforms, all of that business in the non-athletic area continues to emerge and gain traction, as well as the non-athletic canvas piece of the business. Lastly, can you talk about what you're seeing for product inflation on like for like product? You know, we saw an inflation rate on products that going into Q3 that was probably I would say high single digits. We're seeing that temper now with the cost of freight and the cost of containers going down. We've not seen any resistance by our consumers to any price increases that we were forced into based on inflation, and we do see that leveling out as we move forward. Okay. Let me just sneak in one more. Carl, what percent of your product would you call new at this time of year versus the same time, you know, pre-pandemic? I would say it's pretty much as it was pre-pandemic. I don't see any major change from that, from where we were. Like I said, in my remarks, deliveries of not a lot of product are coming in just fine, much better than a year ago, much more in line with where they would have been in 2019. Boot inventory, we feel, will flow much better than a year ago, and we feel good about the boot opportunity compared to a year ago with the disruptions we had in supply chain last year. All right. Thanks very much. Continued success. Sam, let me finish off the question you asked about the EPS. At the high end of our guidance, Shoe Station should be about $0.35 of EPS accretive. Okay. Thanks, Kerry. Your next question comes from the line of Jim Chartier with Monness, Crespi, & Hardt. Please go ahead. Good morning. Good Good morning. Thanks for taking my question. Kerry, did you have any incremental costs related to the integration of Shoe Station in the first half of the year? Any costs in the back half related to that either? Not material and not that we weren't expecting. Okay. On Shoe Station, how's the e-commerce launch coming there? Is it gonna be ready for Q4? What's the outlook for that? Hey, Jim, it's Mark. We're launching our CRM platform this quarter. We're thrilled. We're bringing them onto the technologies that have been so successful here at Shoe Carnival. We're rolling out the Shoe Perks program across banners again later this quarter, which will have us over 30,000,000 consumers we can talk to on a daily basis. Then our plan is after that's completely launched and up and running this quarter, we'll be able to roll out our shoestation.com by the holiday season this year is our plan. Great. Any thoughts on kind of the store opening pipeline for next year? I think you said, you know, 30 stores for Shoe Station by the end of next year. What's the outlook for the Shoe Carnival banner? We're still aiming to open double-digit store counts annually starting in 2023, and accelerate as more real estate becomes available in 2024 and out years. We're on track to grow to 400 store count, which is quite an important milestone for us. As we've said, we're so proud that we've completed that store productivity plans, and the entire fleet now is remaining open with our current view, with no store closures for the first time in two decades. As you said, specifically to Shoe Station, it was 21 stores when we acquired it December last year. We are on target to surpass 30 stores by the end of fiscal 2023, and we're looking for new sites as quick as they become available. Great. That's all I had. Best of luck. Thanks, Jim. Your next question comes from the line of Mitch Kummetz with Seaport Research. Yeah, thanks. Just a couple of follow-ups. Carl, I think you just made the comment in response to one of Sam's questions that you feel good about your boot inventory, especially relative to last year. Can you remind us of some of the constraints around boots last year, kind of how that business played out in the Q4, just so we have a better sense of the comparison? You also talked about some of the trends, I think you said kinda dress and lug sole, things like that. How do you feel about those trends and how important are they to your boot business, particularly in the Q4? I have one more. Sure, Mitch. Boot deliveries frankly lagged throughout the entire timeframe, moved back anywhere from 30-60 days with freight, which obviously put us into a pressure situation on inventory levels as we came through the month of October into November, December, and then even into January. We see a more normalized flow of boot deliveries like we had in 2019. We think that's opportunity as we go with much more normalized inventory flow. As far as what we see in boots as trend, you know, we continue to see combat and lace-up boots performing well, and we see that strong, especially with some lug bottom and chunkier heels on them. We continue to see booties, especially Chelsea booties, being really strong. A little bit of other boot categories that are out there. We see some platform dress boots and maybe a little bit of although not a big category anymore, but maybe some life in some of the taller shafted boots. We feel good about the opportunity. Actually, I got a follow-up on boots and then one other question. If I recall correctly, given some of the late deliveries on boots last year, I think some of the stuff may have left the warehouse and gone to the stores, and so there was some packaways. I would guess that, you know, that would be pretty margin accretive given kind of the cost on some of that product versus maybe some of the stuff that you're buying more for fall 2022. Is there any benefit on the margins from that? I mean, I don't know if it's material or not. Then again, I have one last question. There will be benefits to the margin on those particular items, and I think they may offset some of the inflation we saw on other items that we're delivering new. I don't know that it's significant to the overall. Okay. Lastly, you know, you guys are tracking to an 11.5% op margin this year, and I think when we kind of look at the year, it's you know, kind of a tough macro with the consumer and inflation, and there's higher distribution costs. I'm just kind of curious what's your takeaway on that? Obviously, that's well ahead of where you were, you know, pre-COVID, and you made a lot of changes to improve the profitability of the business. You know, given some of the challenges this year to be able to, you know, kind of accomplish that level of margin, is that. Do you think that that's kind of a new base that you could potentially grow on next year as you know, especially on the maybe the freight distribution cost side, if that were to improve a little bit next year? I don't know how you think about that. Hey, Mitch, it's Mark. This absolutely is a new base. We're 6 quarters into double-digit operating profit. As we've shared, we've sustainably doubled the levels that we're at pre-pandemic, and we do see that this Q1 and then Q2 sequential improvements of operating margin gives us the clarity we needed as what that new base is. It clearly isn't the base of 2021. That watermark was inflated with low promotions, but we're seeing the competitive environment in 2022 have us to a normal cadence of promotions, a healthy cadence of promotions. The key difference is what we've alluded to for the last few years, our investments in CRM and analytics and in changing the way we promote has transformed the profitability of our promotions. Without a shadow of a doubt, no one should misunderstand. We are a value-based retailer and continue to be, and are promotionally driven. Those promotions are incredibly profitable with all the learnings we've gathered over the last few years compared to where we were. That's generated margins that were up 560 basis points for Q2. As I said in my speech, and a further acceleration in August with up over 650 basis points expected for the month of August. Without a doubt, just to be clear, we see operating margins in the double digits sustainable. We see this setting the new base, and we will see synergies and efficiencies help us grow as the inflationary environment calms down at whatever point that does in the future. Okay, great. Thanks again. Your next question comes from the line of Sam Poser with Williams Trading. Thank you. Just a quick follow-up to that, Mark. You talked about the margins in August being up, but given the late shipments of athletic, how much is mix helping that margin? Like, is that margin a little overstated? Because from what I understand, non-athletic, you know, runs higher margins than athletic. If you sort of balanced out a normal, I know it'd still be up a ton, but if you balanced out a more normalized product mix between athletic and non-athletic, you know, what would you foresee the margins to be at? Yeah, we see the Q3 and Q2 as sustainable. It's razor-thin, you're right. The mix impact from the athletic challenge causes a razor-thin change in margin. However, we'll also be able to get better BD&O from lower distribution costs as things continue to settle down in the supply chain. You know, the puts and takes have us confident that this is the right operating profit, this is the right gross margin. We have a real base now to start comparing to as we get into 2023 and stop lapping these, stimulus, you know, infused quarters. This is just to clarify that. You're saying sort of in that, you know, high 36s will establish itself as the new base? Correct. Okay. All right. Thanks very much. Thank you. All the best, Sam. Thanks. You too. There are no further questions at this time. Mr. Worden, I turn the call back over to you. Well, thank you all for joining today's call, and I'd like to thank our Shoe Carnival team members, our customers, our vendor partners, and many shareholders. We wish you all a wonderful Q3 and look forward to sharing our successes with you in the near future. This concludes today's call. Thank you for your participation. You may now disconnect.