Good morning, ladies and gentlemen, and welcome to the Signet Jewelers Q2 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 31, 2023. I would now like to turn the conference over to Rob Ballew, SVP of Investor Relations. Please go ahead, sir. Good morning. Welcome to Signet Jewelers' second quarter earnings call. On the call today are Signet CEO, Gina Drosos, and Chief Financial, Strategy and Services Officer, Joan Hilson. During today's presentation, we will make certain forward-looking statements. Any statements that are not historical facts are subject to a number of risks and uncertainties. Actual results may differ materially. We urge you to read the risk factors, cautionary language, and other disclosures in our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. Except as required by law, we undertake no obligation to revise or publicly update forward-looking statements in light of new information or future events. During the call, we will discuss certain non-GAAP financial measures. For further discussion of the non-GAAP financial measures, as well as reconciliation of the non-GAAP financial measures most directly comparable to those GAAP measures, investors should review the news release we posted on our website at www.signetjewelers.com/investors. With that, I'll turn the call over to Gina. Thank you, Rob, and thanks to all of you for joining us today. Before getting into our prepared remarks, I want to thank our Signet team for their dedication, resilience, and disciplined execution this quarter. In a challenging environment, we over-delivered on our commitments. Signet's recognition as a Great Place to Work is driven entirely by our team members' capability and commitment and the winning and inclusive culture we continue to build together. There are three key messages I'd like to emphasize today. First, we are on track to deliver the year. In the second quarter, we exceeded our revenue and bottom-line commitments, and we remain confident in our full-year guidance. We delivered these results in a challenging macro environment, which impacts our mid-market customers disproportionately, and as we predicted, with significantly fewer engagements in the quarter resulting from COVID's disruption of dating three years ago. Our performance against these headwinds reflects both the agility of our team and our flexible operating model. Second, trends are modestly improving. We've seen generally modest improvement in customer traffic and purchase behavior since early June, with lower price points rebounding, particularly in fashion. Average transaction value, or ATV, appears to have stabilized and is trending roughly in line with last year. Further, our data capabilities now allow us to track 45 signals of couples progressing toward engagement, and these are falling in line as we anticipated, pointing to a multi-year recovery beginning in our fourth quarter. These are all positive signs as we finalize our preparations for the holiday season. Third, we are widening our moat of competitive advantages, especially in our personalized marketing, digital experience, data analytics, and services. We are generating meaningful cost savings, on track to land between $225 million-$250 million this year, and reinvesting to drive market share growth over time. We remain confident that we can deliver the midterm goals we outlined at our Investor Day earlier this year. Let's take a closer look at each of these three messages, beginning with our performance in the second quarter. We exceeded the high end of our guidance in Q2, delivering approximately $1.6 billion in sales and $103 million in non-GAAP operating income. We achieved this quarter's results despite the meaningful drags of both the challenging macro environment and the predicted decline in engagements. We believe we continue to grow bridal share during this trough, and we are confident that engagements are on track to begin their multi-year recovery later this year. Non-GAAP operating income reflects core merchandise margin expansion of more than 180 basis points compared to last year, driven by an increase in services mix, our scaled sourcing efforts, and higher Lab-Created Diamonds mix, which remains a mid-teen% of our diamond business mix. Because of Signet's strategic efforts in branding, style offerings, and specialty cuts, the items we are selling with LCDs carry both a higher margin and higher ATV than natural diamonds. Importantly, compared to this time pre-pandemic, non-GAAP operating margin is up 250 basis points on 18% higher sales, despite 16% fewer stores, showcasing that our transformation and flexible operating model is working as intended. The second point I want to emphasize is the modest improvement we're seeing in the overall health of our customer. Fashion merchandise sales increased sequentially in the second quarter, up 4 points year-over-year compared to the first quarter results. This was led by stronger performances at Kay and Banter, which saw improved same-store sales for much of the second half of the quarter. While overall fashion sales improved modestly, we saw a robust improvement through the quarter for fashion merchandise below $1,000. For example, Kay drove great performance in our refreshed basics assortment, comprised of timeless core products like hoops and diamonds and gold, as well as classic styles in necklace and bracelet pieces. We've seen the same trend at accessible price points in Banter, pieces that provide customers with versatility and that they can wear every day. Kay, Zales, and Jared also saw comparable sales growth at the highest price points in our fashion assortment, as our core banners remained strong in romantic gifting. Our data on independent jewelers shows declines in this segment, reflecting our share gains in the quarter. As we finalize our preparations for the upcoming holiday season, merchandising assortment plays a critical role in our strategy. For example, at Kay, we're leaning into innovation in yellow gold, which continues to trend well and is also multiculturally appealing. Kay is also focusing on gift box assortments under $500, as well as strong bridal innovation, including larger center stone pieces and new collections in Neil Lane and Monique Lhuillier. At Zales, we'll bring new styles into our premier bridal collection, Vera Wang Love, while also introducing new fine jewelry essentials, including hoop earrings in multiple metal options and sizes, as well as diamond fashion at accessible price points for everyday wear and gifting. At Jared, we've lifted the penetration of yellow gold to 30% across bridal, innovated around a collection of gender-inclusive bands and engagement rings, and developed a beautiful, new, elevated entry price, personalized charm collection with New York City influencer designer, Lisa Salzer, with a collection from Lulu Frost. We believe this innovation is on trend culturally and at the right price points. Similar to last year, we anticipate that customers will wait a bit later into the holiday season to begin their shopping. Economic pressure on discretionary dollars often leads customers to delay their shopping to Black Friday and the days leading into Christmas. We've built our marketing, labor planning, and merchandising strategy for the back half to attract these customers with this in mind. In marketing, this means leveraging our customer data to drive smarter, more personalized messaging on the platforms that our customers are using most, making more effective and efficient use of our spend. Within our labor planning, we're using store-by-store, hour-by-hour level data to match labor hours to customer demand. The key message here is that our data and scaled innovation positions us with meaningful advantages for the holidays. The third and most important point I want to make is our continued confidence that we can deliver our midterm goals over the next three to five years as we continue to invest to widen our competitive advantages. Two of the most common questions we receive from investors are, first, how we've bridged our current year performance from pre-pandemic, and second, how we're bridging the current year to our midterm goals. We've posted a new investor deck this morning, which I believe addresses these two questions, and I'll devote the balance of my remarks to why we are confident in our midterm goals. We're focused on 4 growth drivers: winning the engagement recovery, expanding accessible luxury, growing services, and developing unassailable competitive advantages in digital and data-driven marketing. Taken together, we believe these 4 drivers will lead to $9-$10 billion in revenue, 11%-12% annual non-GAAP EBIT margin, and diluted non-GAAP EPS of $14-$16 per share over the next 3-5 years. Importantly, both the current year and our midterm goals assume no pandemic spending lift, with a 1%-2% compound annual growth rate for the jewelry category from calendar 2019 to calendar 2028. The first big opportunity is bridal. By design, bridal is a big business for us, and as engagements begin their recovery later this year, we're positioning ourselves to capture a multi-year tailwind. This is important because bridal is a highly strategic category. It's frequently the most important emotional and financial point of market entry into the jewelry category. That means that in addition to initial sales, it drives the beginning of lifetime relationships, leading to future purchases for special events, anniversaries, and holidays throughout our customers' lives. We see bridal as a $600 million revenue growth opportunity. Prior to the pandemic, we estimate the number of engagements was consistently close to 2.8 million per year. That began dropping last year, and we estimate it will bottom out this calendar year, 2023, between 2.1 and 2.2 million, or nearly 25% fewer engagements than normal. Based on our data, we believe engagements will begin recovering in Q4 and fully rebound over the next three years. Just holding our estimated 30% share of the bridal market and engagement ATV constant, the 650,000 increase in total engagements is worth more than $500 million in revenue from engagement rings alone... But we are positioning ourselves to grow bridal market share as we are doing in 2023, and create competitive advantage in the bridal ecosystem of jewelry gifting, as well as extending our reach into customers' lifetime value. The remaining $100 million or more of opportunity reflects our investments in personalization, customization, and loyalty to accomplish this. So why are we confident that engagements will recover? Our confidence is based on 45 proprietary milestones we track to measure a couple's journey toward engagement. While every couple is unique, dating and relationships tend to follow patterns. Not every couple experiences all of the 45 milestones we track, but we know that once they reach 25-30 of these milestones, they become statistically significantly more likely to move on to engagement. This quarter, we saw the pool of couples approaching the 25-30 milestones increase by 700 basis points. Additionally, we are seeing states like Texas and Florida, which reopened earlier in the pandemic, 10 points closer to pre-pandemic engagement levels compared to California and New York, which reopened later in the pandemic. One final data point here. When we look at early relationship triggers, we're also seeing improvement to last year. For example, one of the early relationship triggers we've mentioned before is going to a sporting event or concert together, an indicator that is up 7% to early 2022. This is equally important because this recovery will be multi-year and gradual. Signet is well-positioned to win in this environment. We have identified a proprietary audience of more than 14 million people who are in dating relationships and are targeting them with education and marketing that's right for them as their journey progresses. Our next growth driver is accessible luxury, which we believe represents $1 billion in revenue growth potential, driven by tiering up the Jared brand, expanding the Diamonds Direct fleet, and growing our digital banners, James Allen and Blue Nile. We believe Jared represents a $500 million growth opportunity as we expand the assortment of more premium offerings. Compared to Q2 of fiscal year 2020, this strategy has already led to growth of ATV of more than 60% at Jared. Importantly, this reflects only a low single-digit impact from taking price, as Jared's ATV improvement has been driven almost completely by assortment, optimization, and premium items. Our test pilot for preferred assortment continues to drive significantly higher comparable revenue than the remainder of the fleet, and based on early results, that alone would be worth more than $100 million in revenue applied to all Jared stores. We will be expanding the preferred assortment to 50 additional stores in the third quarter ahead of the upcoming holiday season, with further expansion planned in coming quarters. We expected to grow Diamonds Direct revenue by $350 million over the medium term as we open more than 20 new locations across the country, each of which we expect will build to over $15 million of average annual revenue. Notably, Diamonds Direct revenue is highly skewed to bridal, with an ATV that is more than 4 times the average of our other banners. Rounding out growth and accessible luxury are our digital banners. Often the tip of the spear for digital enhancements and innovations, our midterm goals reflect a path to more than $1 billion in revenue between Blue Nile and James Allen. We are pleased that the digital replatform was completed on time at the end of July, and we are now fully focused on delivering the growth and synergies made possible by this acquisition. Our third growth driver is services, which we see growing by $500 million-$1.2 billion in revenue. Services, which have a roughly 20-point margin premium over merchandise, will see about half of that growth from extended service agreements or ESAs, as we focus on customer visibility and employee training to enhance our customer shopping experience by providing a path to worry-free wear, building trust, and growing our lifetime customer base. We drove a 370 basis point increase to ESAs attachment rate on in-store bridal purchases this quarter compared to prior year. Product education for our jewelry consultants or JCs, as well as pricing transparency for our customers, has been key. We continue to introduce product enhancements like post-purchase attachment. This feature allows customers to purchase the ESAs up to 30 days after the jewelry purchase, allowing our JCs to follow up, for example, with the purchaser after the gifting occasion. The progress we've made in ESAs is one of the reasons services outperformed merchandise again this quarter, as we delivered more than 4% growth in services revenue. Customization, repair, and piercing will drive the rest of the growth in services. Last month, we acquired SJR National Repair, primarily a full-service jewelry and watch repair services business. This acquisition complements the recent transition of Signet's Blue Nile Seattle fulfillment center to a new enterprise-wide repair facility. Signet's national service network now enables business-to-business repair services, watch repair, and mailing capabilities, among other offerings. We are also increasing the number of locations that provide piercings, as well as soldering for permanent jewelry, which is a growing trend, particularly among Gen Z and social media platform users. The final growth driver is our increasingly digital and data-driven approach to marketing, which enables highly personalized communication and experiences. We see a $450 million opportunity here. We're continuing to grow our newly implemented customer data platform or CDP. This platform is helping us drive both more effective marketing and customized digital shopping experiences. We increased our return on advertising spend by more than 20% this quarter when compared to this time last year by enhancing our targeting and optimizing our channel mix. Further, when a known customer visits our website, we personalize their experience with content based on the customer's known interests, intent, and prior shopping behavior. This more personalized shopping experience often targets relevant life. For example, dating anniversaries, graduations, or potential engagements. We recently launched personalized product recommendations for our customers as our first activation and have plans for many others. This level of personalization at scale is a clear competitive advantage. Rounding out my comments on personalization and customer data, I'd quickly point out that we continue to make great progress in participation and impact with our loyalty program. This quarter, we increased our total enrollment by more than 30%. The ATV of our loyalty members this quarter was 40% higher than non-loyalty members. We continue to test loyalty offerings that elevate the shopping experience in ways unique to jewelry and special occasions. What I hope you can see is that we have concrete, achievable building blocks that get us to our midterm goals, and these strategic initiatives are in flight and showing the results we expect. Signet's business fundamentals are strong, and the structural changes we've made over the past few years are working as we intended. As a result, we believe our confidence in our midterm goals is well-placed. I'll now pass it over to Joan. Thanks, Jenna, and good morning, everyone. Our performance this quarter reflects the strength and importance of our flexible operating model as we delivered on our commitments amidst a challenging retail landscape. We drove over $1.6 billion in sales this quarter, down 8.1% to this time last year, with same-store sales down 12%. We have seen top-line improvements since the May timeframe, with second quarter comp sales better than the first quarter, driven by a stronger June and July. Bridal performed as we expected, and we saw an increase in conversion in the second quarter compared to the first quarter. We saw sequential improvement in price points below $1,000, particularly within the fashion assortment. Our average transaction value in North America grew more than 4%, with 5 points attributable from Blue Nile. Comparable ATV was relatively flat, consistent with the last quarter. Compared to pre-pandemic, our core banners have grown low single digits, driven by off-mall and e-commerce growth. Services represents nearly half of the growth in our core banners over the last four years, with fashion driving the balance consistent with our strategic priorities. Consumer access to credit in the quarter was healthy, and approval rates remained near the historical norms, with overall payment plan penetration at 44%, and the amount financed are both relatively consistent to last year. While we're not directly impacted by rising or declining delinquency rates, those rates among our finance partners have been stable in recent months. Within our agreements, we have guaranteed commitment levels. Turning now to gross margin, we delivered $611 million of gross margin or 38% of sales, roughly in line with last year. Overall, merchandise margin expanded 80 basis points, largely due to higher services margin, as well as a higher penetration of services. Additionally, while Organized Retail Crime loss is up across retailers generally, our mitigation efforts have resulted in a decrease in store losses compared to the same time last year, boosting gross margins by 15 basis points. Offsetting those gains is deleveraging of fixed costs such as occupancy on lower sales. Now turning to SG&A. Our non-GAAP spend of $507 million, or 31% of revenue, was 420 basis points higher than last year. Our total SG&A dollars increased due to the Blue Nile acquisition... As we said, we continue to make strategic investments to enhance our moat of competitive advantages, which was approximately 120 basis points of the deleverage in SG&A during the quarter. The remaining balance is due to advertising shift into Q2 from Mother's Day timing and deleveraging of fixed costs on lower volume. As a result, we drove a non-GAAP operating margin of $103 million this quarter, or 6.4% of sales above our guidance range on the improved performance in June and July. We remain on track to deliver cost savings in the range of $225 million-$250 million, which is reflected in our guidance, which is split fairly evenly between gross margin and SG&A. Key drivers of the savings include non-customer impact initiatives, such as product sourcing initiatives through The Loop, cloud integration, enhanced credit agreements, and advertising efficiencies. Tracking as we expected, through the first half of the year, we achieved approximately $75 million of savings. As we mentioned last quarter, we plan to close up to 150 stores as part of our fleet optimization efforts over the next 12 months. Approximately 90% of these expected store closures are in mall locations and/or are among the lower-performing stores in the U.K. market. We also expect to open between 30-35 new stores, primarily Kay, Jared, and Diamonds Direct locations, which have bigger stores and higher ATVs than the closures. This means that while our store count will decline by roughly 4%, our total square footage will be similar to the prior year. We ended the quarter with $2.1 billion in inventory, which was down $97 million to last year. Inventory, excluding Blue Nile, was down $167 million, or 8% compared to last year, and when compared to pre-pandemic, it was down 20%, excluding acquisitions. Our inventory turns at 1.4 times, consistent with the first quarter, is 40% improved compared to pre-pandemic. We see opportunities to further improve our turns over time. The health of our inventory has improved significantly over the last four years, with clearance inventory reduced by approximately 50% compared to pre-pandemic, providing room for critical newness within our assortment. Now, turning to the balance sheet, we ended the quarter with over $690 million of cash and equivalents, down $162 million compared to a year ago. Recall that we paid out $200 million in legal settlements in the first quarter, as well as acquired Blue Nile last Q3 for nearly $390 million. Excluding those one-time items, we would have increased our cash position by roughly $425 million compared to the prior year. Our four capital allocation priorities continue to be led by strategic investments to drive organic growth, including $75 million in expenses this year, focused on our digital and consumer insight capabilities, and up to $200 million in capital investments. Our other three capital allocation priorities include capital returns to shareholders, maintaining a strong balance sheet, and small capability building tuck-in acquisitions, like SJR Repair. Capital returns to shareholders remain an important part of capital allocation. We repurchased $43.3 million of shares in the quarter, or nearly 700,000 shares, and have repurchased $82.4 million year to date. We had approximately $718 million in remaining repurchase authorization at the end of the quarter. This morning, we also declared a $0.23 dividend to common shareholders, which, as a reminder, is 15% higher than a year ago, and we believe being a dividend growth company is an integral part of our capital allocation strategy. Within our debt structure, $148 million in bonds are now current, and we anticipate paying those off at maturity next June with cash on hand. The convertible preferred shares, which dilutes our share count by approximately 15%, are redeemable in November 2024, and we are weighing our options to address those at this time and look forward to sharing those plans when we are able. Turning to guidance, consistent with my comments last quarter, we continue to anticipate a cautious consumer, driven by macro pressure, reflected in traffic decreases. We will continue to use strategic levels of promotion to encourage traffic and conversion. For the third quarter, we expect revenue in the range of $1.36 billion-$1.41 billion and non-GAAP operating income in the range of $10 million-$25 million. The top end of our range assumes comp trends similar to the first half. We continue to expect the deleverage of fixed costs to continue in the third quarter on lower sales.... As well as the impact of strategic investments, which will be marginally higher as a percentage of sales in the third quarter due to seasonally slower revenue. We expect to achieve approximately $65 million of cost savings in the third quarter. Of note, Blue Nile becomes comparable beginning in the third quarter. For the full year, we are reaffirming revenue and non-GAAP operating income guidance. Recall that fiscal 2024 revenue guidance is in the range of $7.1 billion-$7.3 billion, and non-GAAP operating income in the range of $635 million-$675 million. We are raising our non-GAAP earnings per share guidance to be in the range of $9.55-$10.14, reflecting share repurchases in the second quarter. Recall, in the fourth quarter, we believe we will begin a multiyear engagement recovery. We will cycle shutdowns in the U.K. in the fourth quarter, and our strategic investment impact is lower as a% of sales due to the seasonally strong holiday revenue. Before we move on to Q&A, I want to thank our team for their focus on the consumer, which enabled us to exceed our revenue and bottom-line commitments in the quarter and advance our strategic priorities. With that, we'll open the line for Q&A. Thank you, ma'am. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the number one on your touchtone phone. Again, that's star followed by the number one on your touchtone phone. If you would like to withdraw your request, please press star followed by the number two. Your first question comes from the line of Ike Boruchow from Wells Fargo. Please go ahead. Hey, okay. Good morning, everyone. I guess two questions from me. Maybe, Joan, just a little bit more just back to credit, given what's in the headlines of late. Can you just, you know, just make sure we all understand, like, is there a profit share that's embedded in your credit arrangements today? I know your credit business is very different than what it was five years ago. So I guess my first question there is: Is there a profit share? And then how do you... You know, yes or no, how do you think about potential headwinds on your top line in a tightening credit environment? And then I have a follow-up after that. Great, Ike. Thanks for the question. As you know, our consumers have access to a broad range of credit through strong partnerships that provide a variety of financing options, and it's on a cascading, or, level. We've continued to achieve a financing penetration that's roughly flat year to date to last year. It's 44%, just to dimension it, and 39% of that is with our private label credit card program. We have guaranteed commitment levels with our financing partners, in terms of credit approval. And as you know, we have no consumer credit, balance sheet risk, and we have no revenue or loss sharing provisions within our agreement. So while we don't share in, you know, the credit risk with our credit partners, our partners have indicated that our portfolio delinquency rates are in line with last year. And we also have strong partnerships, including second looks for lower credit scores. Got it. And then just one more follow-up. Just on margin, so can you just kinda... Looking at the back half, and specifically to Q4, can you kinda talk about the bridge of the margin that you've seen in the first half and the improvement or the stabilization you're kinda planning in the back half? Thanks. Sure, Ike. Thanks for the question. In the first half of the year, we saw a point of impact from Blue Nile, roughly a point from strategic investments that of, you know, roughly $75 million that we anticipate for the year, and two points essentially from the deleverage on fixed costs, given the lower comp range of, you know, double digit. In the third quarter, the street, the strategic investments will be slightly higher, slightly higher impact because of the seasonally lower sales. But for the overall back half, the Blue Nile impact will begin to abate. We'll have less deleverage on fixed costs with improved comp sales in Q4 from engagement recovery and U.K. cycling of the, the shutdowns, and then more cost synergies, particularly in Q4. This will allow operating margins to improve in the back half of the year. Great. Thanks. Thank you. Your next question comes from the line of Lorraine Hutchinson from Bank of America. Please go ahead. Thank you. Good morning. Can you talk to the factors driving the improved fourth quarter sales? And maybe just give us some more clarity on how much benefit you've included from the expected recovery engagements, the lapping of the issues in the U.K. and any other considerations. Sure. Hi, Lorraine. Let me start on that, and then, Joan, feel free to jump in. We, you know, let me, let me go through a little bit what's included in our guidance and what's not included in our guidance. ... So what is included is an assumption that the overall consumer environment stays the same or even worsens modestly. The cost savings that Joan talked about in her remarks of $225 million-$250 million, which is largely back-ended. Engagement decline, so we are expecting that engagements will begin to improve. They trough in Q3 and will begin to come up in Q4, but it is a multi-year recovery. So we have assumptions in that engagements will still be below year ago in the fourth quarter. And we are assuming that the UK cycles the shutdowns that were in fourth quarter last year. So said a different way, what's not in is we're not assuming improvements in macro trends, we're not assuming weather improvements, and we're, we're not assuming any change in the normal flow-through from sales. Thank you. And then, Joan, could you just talk- I was just gonna add on the low end of guidance. You know, our-- it allows for softening trends as a softer macroeconomy or slower recovery engagements might occur, and modest higher student loan repayment impact. So just a little bit of modest impact related to that in the low end of our guidance. Sorry, Lorraine, go ahead with your next question. Thank you. Yeah, Joan, I was just hoping you could talk us through your priorities for cash flow as you enter the back half. So as you know, cash flow in the back half, we've talked about the strategic investments that we're making, and, you know, there's roughly $75 million of those throughout the year, but we're committed to advancing our strategic priorities. Our intention is to continue with returning capital to shareholders. We announced today, you know, our dividend, which is 15% higher than last year this time. We'll continue to manage our inventories consistent with the advancements that we've made with our analytics capabilities. What's really important about the inventory management is, in my remarks, and we're 4% down to last year, 8% down, excluding acquisitions, our inventory is healthy, and it's a true strength for us. So when we look at this, Lorraine, to, you know, previous pre-pandemic levels, we're 20% down overall, but 50% down in clearance. Why that's important to our cash flow is that is enabling us to bring in newness that we're excited about. Jenna mentioned a number of those ideas within her prepared remarks. So continuing to manage inventory diligently, leveraging analytics, inventory, right place, right time, and continuing to manage, you know, turn effectively. Thank you. Thank you. Your next question comes from the line of Paul Lejuez from Citi. Please go ahead. Hey, everyone, Brandon Cheatham on for Paul. I just want to circle back on, like, the credit question. You know, are you seeing any difference in approval rates? I understand that you probably have an agreement that a certain FICO score has to get approved, but, you know, are you seeing differences in, like, the customers that are purchasing on credit? Is there any kind of difference in, like, you know, the FICO score that they have? And then, you know, the amount of customers that are using credit to make purchases, you know, can you give us any details where that is now compared to pre-pandemic? I think during the pandemic, that came down, but are you seeing that starting to normalize? Thanks, Brandon. With respect to the private label credit card program, as I mentioned, our penetration rate is 39%, and it's really relatively consistent to the prior year. Lower than pre-pandemic, we saw a shift in customer usage. Pre-pandemic, it was above 50%. And so, we've seen that shift, but that's been relatively consistent, you know, over the last couple of years. What we are seeing is that approval rates are consistent in store, but down related to the ability to apply for credit online. So it's really just a shift in channel, but our core, you know, 80% of our business in store is relatively consistent with respect to approval rates. What we are also seeing is that the average amount financed has increased to last year, which really is in sync with our average transaction value, you know, including, you know, our Blue Nile acquisition, you know, is up, you know, over the prior year. So amount financed, you know, continues to be strong for us, so we're very pleased with the credit portfolio and the work that we're doing to continue to offer a wide variety of options for our customers. Yeah, the only thing I'd add is that we do have two financing alternatives that are not FICO dependent. That's Progressive Leasing and our installment loans, kind of pay later, split pay with Affirm, and those are really catching hold. So I think the way that Joan's team has built this cascade of financing alternatives is working in our favor. ... Thanks, it's very helpful. And then I was wondering if you could talk about, like, how material costs are trending. I think I've seen diamond prices have started to come down. You know, does that end up helping your margins? And anything that you can talk about on that. There are a couple of things that are helping our margins, that was a good story in the quarter. One is the strategic sourcing efforts that we've put in place. So we work with our vendors far in advance to make sure that we can get the best pricing on our product, and then that, you know, can be passed through to our customers in great value to drive top line as well as have a bottom line benefit. So that's an ongoing effort for us. We also have put increasingly more analytics against what we call Strategic Revenue Management, so how we manage the combination of pricing, promotion, discounting, and assortment levels at different price points, and that work is really helping the margin. And then finally, it's what Joan talked about, which we have very healthy inventory, and so we're taking marks earlier and not rolling as many things through to clearance, which is a great story, so that, that's really helped. So in terms of the material costs, we think we're well positioned to kind of continue on the path that we've been on, and deliver the strong margins that we've committed to. Great. Thank you, and good luck. Thank you. Thank you. Your next question comes from the line of Mauricio Serna from UBS. Please go ahead. Great. Good morning, thanks for taking my question. I guess I just wanted to ask, first of all, the Q3 guide, sales guidance. Does that, like, imply any type of divergence in performance if, like, we think about, you know, the banners, you know, segmented, you know, according to price points, you know, the low to mid-tier versus the higher end? And then maybe you could talk about thinking about the Q4 implied operating income guidance. I think it implies a modest operating margin expansion, roughly 30 basis points. Just wanna understand if that's, like, coming both from, you know, gross margin improvement and also SG&A as a percentage of sales. Thank you. Hey, Mauricio. Let me start first with some of the consumer dynamics that we're seeing, and then, Joan, maybe you can get into the guidance aspect. But from a consumer dynamic, there are really three strategies that we have to address our holiday shoppers this year. There is always an early savvy shopper, typically a woman, typically buying at lower price points, typically comes into the category September, October, and is done with her shopping by Black Friday. We expect that shopper to shop a bit later this year, and we've really structured our marketing, our promotions, our assortment to draw her in early, but also cater to her natural cautious outlook on the economy right now and her desire to get the best deal. Then, as we move into the fourth quarter, we see more romantic gifting happen, tends to be at higher price points. We see bridal beginning its three-year recovery. And so I think, you know, those are some of the consumer trends that we consistently look at and manage our marketing, inventory, store labor, all of those to meet the consumer where they are during shopping. And then with respect to the guidance in Q3, we were pleased with what we saw in, you know, June and July. We were pleased with the selling under $1,000. We saw that pick up, particularly in fashion. So we have, you know, translated that into our Q3, Q4 guidance as well, Mauricio. So that's a bit underneath the covers from a portfolio perspective. And we're assuming consistent trends with, you know, the first half of the year in Q3. And then, as I said, you know, the cycling of UK shutdowns and, the beginning of the bridal recovery in Q4 is what's, you know, driving some of that increase in the fourth quarter. And then when you think about the front half, back half, it, with respect to the operating margin, as we, as I said in the first half, we had a point of impact from Blue Nile, a point from strategic investments, and two points from the deleverage of fixed costs. So when you look into the back half of the year, and particularly in the fourth quarter, on stronger seasonal selling in the fourth quarter, the deleverage impact abates. We are also seeing the, you know, the pressure coming from Blue Nile acquisition, you know, begin to abate in the back half. Jenna mentioned in her prepared remarks that we've completed the replatforming for Blue Nile, James Allen, and that was a critical element of us deriving the synergies from that acquisition, and that went very well. The team worked very hard to bring that, you know, so we could start the back half off, you know, on the new platform and be able to really harvest those synergies. And then, you know, there is some deleverage from or some impact related to the strategic investments as well. So overall, that's the dynamic between front half, back half, and the improvement that we're seeing in op inc. Great. ... Got it. Very helpful. And then just very quickly, just one clarification on the Q3 guide. I think you mentioned that this quarter, to Q3, Blue Nile is like, already, like, comfortable. But I think I thought, like, the, you started, like, consolidating, Blue Nile in September, so I thought we would still get, get, like, one month contribution. Just wanna clarify that point. Thanks. Yes, we acquired the Blue Nile on August 18, so there's a couple weeks of non-comp. Okay. Okay, perfect. Thank you. Yeah. Thank you, and congratulations. Thank you. Thank you. Your next question comes from the line of Jim Sanderson from North Coast Research. Please go ahead. Hey, good morning. Thanks for the question. Just wanted to follow up on the credit concerns we've heard in the marketplace. I think you had mentioned that your percentage of sales on credit had maintained at 44% in the quarter. Is that correct? That is correct. Is that, I think that's a little bit weaker than prior quarters. How should we look at that slight shift in sales mix? It's roughly the same, Jim, from quarter to quarter. Okay. We've been very pleased with the penetration, and as I mentioned earlier, the amount financed has increased, and we've been able to offer credit online to our customers. While the approval rate online is not as high in store, we're very pleased with the response to that advancement. All right. And I just had a question about the EBIT margin. I think at the IR day, you had guided to a mid- to long-term goal of about 11%. If we take out the incremental investments made this year in some technology, is that a good run rate for the type of EBIT margin we could achieve, Signet could achieve next year? So, just with thinking about the investor day, that was a midterm, you know, goal, which is really three to five years, is the dynamics that we, you know, wrapped around our goal. What we are doing to, you know, drive those increases really relate to, you know, something Jenna just mentioned was, you know, strategic revenue management is a key lever for us and really, you know, through analytics, understanding the elasticity of pricing and promotion, and then also strategic sourcing initiatives that we talked about at the investor day, where, you know, we engage in things with our vendors, you know, really driving joint business planning so that we're driving inventories into our business or receipts into our business just in time, and, you know, with cost transparency, so we're able to, you know, optimize our margins. That's a critical lever for us in that growth, in that margin expansion, as well as continuing with, you know, the analytics around our very healthy inventories and continuing to drive further productivity there. And then, with respect to, you know, cost savings and, you know, expansion, we will continue to optimize our fleet and assess the right balance of e-commerce and, you know, store and really bringing even more to life, the Connected Commerce experience for our customer. So, we're excited about the opportunity to, you know, drive into these initiatives over the next several years. Okay. Okay, understood. And just, one last question on the store closures and new unit openings. I think you mentioned potentially, was it a 4% drag on same-store sales related to closures, but offset by the incremental revenue from the new store openings for the next twelve months? Is that the right way to look at that balance between openings and closings? Yeah, what we said is that the openings, Jim, relate to, you know, larger stores and higher volume stores, so that's helping us with the top line. And then the larger stores is what keeps... Even though we're closing, you know, up to 150 and opening 30-35, they're larger stores, so therefore, our square footage remains, you know, similar to the prior year. Understood. Thank you very much. You're welcome. Thank you. Your next question comes from the line of Dana Telsey from Telsey Advisory Group. Please go ahead. Hi, good morning, everyone. It was encouraging to see that the ATV increased 4%, and Blue Nile obviously being a contributor to that. If you X out Blue Nile, what did you see throughout the banners? And obviously, lower price point fashion is a big mention. What are you seeing there across the banners? How's the margin profile on that, especially given the strength in the gross margin that we saw this quarter, the opportunity for that to continue? Thank you. Mm-hmm. Thanks, Dana. So, you know, ex Blue Nile, you know, we saw, you know, relatively consistent ATV performance to the prior quarter, down slightly. They're relatively flat, down slightly is the way I'd picture that for you. And what contributed to that was the we saw consistent, you know, performance in some buckets, some price points, but what we were very pleased with was the improvement in the price points under 1,000 and, you know, specific bands over 1,000 were also strong. And we saw that happen more so in June and July. So as we think about that leading into the holiday season, we were, you know, very encouraged by that and the response to the fashion assortment that we 5 have. Bridal, in and of itself, was relatively, you know, consistent throughout the quarter as we, you know, in line with our expectations. And so as we, and as you know, we're at 50%, roughly 50%, you know, penetration in bridal in our business. So as we lean into the recovery of, you know, bridal or engagements in the fourth quarter, we would expect to see, you know, ATV have a positive impact on ATV. Got it. Thank you. And then any more color on the gross margin, Joan, that you would add for the balance of the year into next year? What's sticky, what's not? Yeah. So what we've said is within our cost savings, you know, roughly half of those of the $225 million-$250 million is within gross margin. It's really back-ended for the year, and a significant portion of that just, you know, proportionately in the fourth quarter. So that's something that will continue to be a positive for us as we progress through the year. I think inventory health is just another a very strong management by our team, you know, across all banners. You know, we have, you know, very strong inventory discipline and the analytics to tell us, you know, right assortment, right place, right timing is... You know, we're really leaning into that, and we'll use strategic promotion as we always do. We have, you know, I think Jenna mentioned in her prepared remarks that we have, you know, items at a price that bring value to our customers, but they've been strategically, you know, positioned within our assortment to manage gross margin. We've talked in the past- Thank you. about value engineering that we do with our vendors, where we can use, you know, off-weight diamonds to construct pieces that offer consumers a better value, but also give us a higher margin. So we have a number of strong value engineered items at a price in this year's holiday assortment. Thank you. Thank you. We do have a follow-up question coming from Mauricio Serna from UBS. Please go ahead. Great, thanks. Just wanted to follow up on, you know, if you have any additional commentary on, you know, lab-grown diamonds. You know, there's still, like, concerns about, you know, the impact on, on pricing, profitability. I think you, you alluded to this has been a, a benefit to you so far, but maybe what you're seeing across the industry, or do you have, like, any concerns going into, you know, the back half of, you know, a consumer that's still, you know, very constrained on their discretionary spending and, you know, whether, you know, an increasing shift to that particular lab-grown diamonds could affect you at some point. Thank you. Thanks, Mauricio. So we are seeing consumers gravitate increasingly to lab-created diamonds. They do offer a great value for customers, especially in the kind of macroeconomic environment that we found ourselves in, and so we're seeing that increase. They still represent a mid-teen percentage of our mix, so of our diamond mix, so not incredibly significant in that sense. But through our scaled sourcing efforts, and the work that we've done on branding, style offerings, special cuts, our LCD items actually carry both a higher margin and a higher ATV than natural diamonds on average. So we believe that our efforts to, you know, strategically brand our assortments are working, and that consumers, you know, who often come in with a budget in mind, are actually trading up to higher size or higher quality lab-created diamonds, which gives them an even more beautiful look and, you know, creates great lifetime relationship potential for us. So our teams have done a terrific job making that a higher margin and higher ATV offering for us. Great. Thank you so much. Thank you. There are no further questions at this time. I'd now like to turn the call back over to Ms. Gina Drosos, CEO, for any closing remarks. Well, thank you again for joining us today. We continue to navigate this pressured environment and are confident in our capabilities. We're leaning in to widen our competitive advantages to drive market share growth. Thank you. Thank you, ma'am. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.