Hey, everyone, and welcome to another session of the Goldman Sachs Global Retailing Conference. My name is Brooke Roach, and I cover the apparel, accessories, and branded consumer discretionary goods sector here at Goldman. I'm very pleased to introduce our next fireside chat session with Skechers. Here with me today is John Vandemore, CFO. Welcome, John. Thank you. you. Thanks for having us. John, maybe we can kick off the session with an update on where you view competitive positioning today for the Skechers brand. Where are you gaining the most market share, both in the U.S. and internationally, and where do you see the biggest opportunity? Yeah. Well, first I'd say is, Skechers does, I think, what it does really, really well, and it puts us in a very unique position. If I only say this once, you'll be thankful, but our focus is on delivering style, comfort, and quality at a reasonable price to the consumer, and I think that is a relatively unique focal point in footwear, and from it, you know, we lead, we believe in developing and delivering the type of footwear that fits many different needs, but delivers on those four characteristics. That's everywhere from kids to women's and men's. It's in work, to golf, to casual, to sandals. It's the breadth of what we offer that I think also allows us to satisfy the consumer needs, you know, in a variety of different opportunities, but also in a variety of different markets. We don't look at share, to be honest with you, in a way that I think is similar to what others. What we're keen to do is grow our brand, grow our brand in the markets in which we're interested, which is many. And so what we oftentimes measure ourselves against, are we achieving the penetration in our key areas of focus, key categories, and in those four key characteristics, the way we want to. Ultimately, I think what that means is, for our focal point, the range of value that we're looking to deliver, we are probably pound for pound, the best footwear offering out there. And it's not in any way to diminish others who do a great job in their categories, but we're in so many different categories, delivering in so many different ways. I think it stands apart from most other footwear providers. Let's dive into some of the opportunities that you have across your international markets, which is, you know, a big growth opportunity. Yeah. Starting with China, the economic recovery there has been pretty choppy. You called out more challenging trends last quarter, in particular. What's your assessment of the consumer demand in the region, and how did these choppier trends inform your outlook for the Chinese market into the second half and early 2025? Yeah, the first thing I'd say is, we all need to recognize China emerged from COVID, I think, in a very differentiated fashion as compared to almost every other economy. I mean, really, if you look back, it's only been out of kind of its post-COVID phase for about a little over a year. Interestingly, when China first came out of that phase, the business actually performed markedly better than we had expected. For the first four quarters, you know, we saw low teens growth, which was phenomenal, but we always knew that there would be points in time where there were going to be short-term obstacles, bumps in the road, if you will, and I think that's what we're seeing now. Currently, I would tell you that we are seeing some pressures on a consumer discretionary front in China that we haven't seen, you know, recently. It doesn't in any way diminish our appetite for China long term. It doesn't in any way diminish where we think the brand can grow to in that market, but clearly there's some near-term challenges. Now, what you attribute those to can come from a lot of different areas, and I don't know, quite frankly, that we know any better than others, but it's clear there's been some headwinds. I think longer term, what we continue to believe is that our brand can play a meaningful role. There's numerous strategic vectors we are pursuing for the long-term growth of that market, and ultimately, we believe it'll come back to, you know, a more normalized spend level, but there's no doubt that there's been some short-term headwinds, and you know, what I think is important about a brand like Skechers is, you know, we've been in that market a long time. We have a very skilled and talented team leading that market for us. We know we can withstand whatever pressures in the short term that come at us, and then we can stay optimistic about the long term, because that's where we think the real value is in that market. Let's pivot to India, which is another key growth market for you. Yeah. There's been some regulations that have impacted the trajectory of growth there, and that's also impacted the near term. How do we think about the capacity ramp of cadencing a product in that market? And help us contextualize the scale of business that you expect to do in India over a one, three, or five-year time horizon. Yeah, those are all interdependent in the sense that, for anybody who's dealt with the Indian market, you know two things: one, it's an enormous market of opportunity, but it's also, it's a market in which you need to exhibit the maximum amount of administrative patience you can muster. You know, recently, the government has gone through a process where, you know, positively intentioned to ensure high quality goods are reaching their shores. You know, the practical effect is that there were some near-term inhibitions on importing goods. Let me say, we are actually firm believers that India should become both a self-sustaining production market as well as a consumption market. We would love nothing more than ultimately someday to be shipping export out of India. The reality, though, is there's a near-term transition that needs to occur to build up the skills and the capabilities and the capacity to affect that, and I think that's where the disconnect has been with the regulatory insertion. What we expect now is, because we're seeing some positive trends in the right direction, that that will begin to resolve itself probably over the balance of this year. What that then means is we'll be able to bring a full complement of our product to the market. We will continue to nurture and produce goods in the India market, but for the short term, it's been a bit of a, you know, an exercise in patience. I would say at a consumer level, what's been interesting is there's been almost no diminished interest in our product or our brand, which is exceptionally painful for a brand. Any brand in here would know the worst position to be in the world is where you have high demand and low availability. And unfortunately, that's kind of where we found ourselves in the early part of the year. But again, I'm encouraged by the steps that have been taken recently. I'm encouraged by the collaborative spirit the government has embraced with us and other footwear manufacturers to move the ball forward. I think by the end of the year, we'll probably be in a healthier position for the long term. What we have seen in that market historically has been fantastic. It's been exceptional growth via multiple channels, but also with high profitability. And that's a market you very rarely get the opportunity to exploit in mass, and I think what we see in India long term is just that. Now, the next question would likely be then, you know, how quickly can it become another China scale, another US scale economy? And I don't really know the answer to that other than I think there's a very realistic opportunity we'll see that in the next five to ten years, which would imply very a very credible growth rate in that market. As we think beyond China and India, how should we be thinking about largest incremental opportunities, for Skechers? Should we be thinking about Southeast Asia? How should we be thinking about Europe? Yes. Each of those to us represents enormous opportunity, and then I would actually add South America. The challenge we get into when we list growth opportunities is we just endlessly drone on about every market. I won't do that here, but I would say we think all of those markets are extremely exciting. Southeast Asia is probably chief among them, just given the population size, given the depth of awareness of the brand, what it means at the consumer level. South America is a market for us that's really poised right now. We have exceptional strength in a market like Chile, but building strength in markets in the north, and then really a huge opportunity, I think, in the south. Once we can figure out how to manufacture and overcome some of the inhibitions that are in the Brazilian market in particular, you know, I think that's a huge opportunity. But we even see opportunity in Europe, both developed and developing side of Europe. You know, it's both on our DTC front, but on our wholesale business, all of which have done exceptionally well, despite what I would think are some of the most serious challenges, both macroeconomically, but also politically in the world today. So really, all of those offer for us, we think, incredible opportunity. Let's pivot to the core North American market. And maybe before we dive into Skechers' specific strategies, let's talk about what's top of mind for everyone, which is the health of the consumer. As you look against this very choppy macro backdrop that we're in, what are you seeing in consumer behavior? Are there any notable differences between segments of your business, income tier, or geography? And with the benefit of hindsight, how would you now characterize the drivers of the midsummer blip that you saw in the U.S. DTC business? My main answer on a lot of that is gonna be, I really don't know. But I do think it's one of the most perplexing questions for businesses, particularly in the consumer space. I would say if, if we wanna be very data driven, there really has been no meaningful change in consumer spend patterns, at least in our consumer. What that means is we still see very strong demand, very strong appetite, very strong responsiveness to, you know, impetus to get people in store shopping and converting. And in fact, within our own portfolio, what we've seen, which is a little bit puzzling given some of the commentary we've heard from others, is that within our price range, which again is gonna be more value-oriented, consumers are actually choosing to trade up. They're trading up into technologies that deliver comfort. Now, clearly, that's what we're about, and so for us, that's a great signal. It does seem a bit incompatible with what we see, you know, more broadly in the market. I think from an emotional standpoint, we came out of second quarter looking at the June swoon with a little bit of trepidation, because I think, like many, we're asking ourselves, where is the consumer headed? That being said, you know, as somebody who focuses on value, on delivering what we think is, you know, high value at a reasonable price for consumers, you know, it's a market that we think plays well to our strengths, but it's certainly not something we would wish upon the market, given our druthers. The honest answer, though, is I don't know. I don't know where the consumer is going. We're optimistic that we're seeing good stability driven in part by high employment, continued excess savings, and that that will persist through holiday, but we're also alert to trend changes, and while we haven't seen any, it's something we're focused on. Can you talk about how Skechers is positioned to capture demand in the back-to-school season, and any performance thus far relative to your expectations? Yeah, what I would say about back to school is, first of all, I'm not even sure anybody here has a realistic expectation of what back to school is anymore. I mean, it used to be a fairly defined six-week period that we could start when some tax-free holidays kicked off and kids went back to school and the others. Right now, it looks like consumer spending within that range has been changing. I would tell you, probably started a little bit weaker than we anticipated and then built pretty quickly. The net effect of which was a good back to school, but not, you know, a great one by any stretch of imagination, not a terrible one. The pattern of spending was a little bit unique from our perspective. Some very good online demand, so that was good. The added element to us, though, of back to school is not just children's footwear. I mean, it's the ancillary and adjacent purchases from mom or dad who are also in the market, and I think that was a sign of good continued strength at the consumer that we took out of the back to school season. Two questions that we're asking every company at our conference today. First, on macro, as we think about your expectations for the environment into the second half of this year relative to your recent results, do you expect things to be the same, better, or worse? ... I would probably say the same at this point. I mean, there certainly are a few headwinds that have built into the markets, freight rates being one of them. Seen some adverse FX challenges in markets like China, some of the exogenous factors, like what happened in India last quarter. But on the flip side, really strong continuing demand at the end consumer level. For us, some resurgent growth on the domestic wholesale side of the business, which has been a pleasant surprise to see come back in such a strong way, which we think ultimately is a manifestation of consumer demand. So kinda net-net, when we weigh those all out, for us, it looks like a continuation, which I would say is actually, for us, pretty good, 'cause that means, you know, more opportunity to outgrow the market. The second question, and at the risk of giving you another opportunity-... to talk about comfort and value- Yeah ... at a reasonable price. The value, looking for value trends- Yeah among the consumers and something that's top of mind among all companies today. Do you think that this is a cyclical or a secular trend? Oh, man, I don't know if I could cheat and answer both. I think what's interesting, when we focus on value... I will go with, I'll always go with-- I'll go with secular to a degree. But what's interesting is, I think people often misperceive that our brand, in particular, is concentrated among, you know, low-income households. And that's really not the case. We actually see a pretty even spread, a little bit higher in the lower income ranges in certain categories, but in others, actually, probably surprising strength. What we have noticed within each of those categories is the same tendency I mentioned earlier, is people coming to our array of product are choosing the higher priced product within what we're offering. Now, they may be coming down from another price point. That's entirely possible. But what we know is within what we're offering them, they want more value, and they think there's more value for the money in our higher priced goods, which are heavily influenced by our comfort technology products. And so from what we see, we think it's a very positive exchange for the consumer. We see it across demographics. We see it across, you know, categories that we're operating in, everything from kind of work to golf to running to athletic to casual. So it's resonating. Now, I say cyclical, in part, because I think clearly people are now pivoting to more value writ large. It's hard for us to see if they're coming away from another brand into ours as a result of that, but what we know is we continue to see strength when we read a lot of reports and see a lot of data. Your DTC business, you saw lighter foot traffic last quarter, but higher e-commerce performance in the domestic market. Can you elaborate on the drivers there? And as you think about the DTC business into the back half, how are you thinking about driving traffic and conversion into the holiday period and the cadence of North America DTC relative to the low single-digit growth last quarter? Yeah, I think, you know, I'm sure we all have this. There's occasions when you look at a wall of data, and none of it makes sense because seemingly one data point controverts another. And that's a little bit of what we saw in Q2. We definitely saw traffic dip in June, noticeable. When that happened, though, we also saw conversion jump. At the same time, our online traffic grew, and conversion was kind of flat. Same product, same promotions, maybe a little bit more depth online than in stores, but not remarkably so. And I honestly can't explain that with a good synthesis other than, you know, we saw a bit of a shift to online. I think the operating thesis I would hold is that everybody in this room went to Europe for the summer, and you shifted all your buying to DTC in Europe, and that's why it jumped. I think the reality, though, is what we continue to see is, you know, puzzling set of stats across our DTC business that would suggest that net-net, things are pretty stable. You know, again, that's why we come to this, I think it's gonna continue. I think it's gonna endure because what we've seen is a pretty, you know, in aggregate, consistency across consumer demand. It's something, again, you know, we're watching carefully. We're watching the traffic in stores carefully. I think, back to school, quite frankly, was a little bit more encouraging than we had feared, which was good. But we still see, you know, more strength online. I don't know. I don't know if we're seeing a transition of shopping patterns. I don't know if we're seeing some, you know, higher value-seeking behavior that's driving people into our brand. I do think it's a positive for us, but it's certainly not one that we feel like we have a cogent answer to yet. It is something we'll continue to watch, though. Before we shift to wholesale, let's tie out the conversation about North America DTC with an outlook on how you're thinking about the most important strategic growth drivers for that business looking forward over the medium term. How should we be thinking about new units versus comp growth? Yeah, I mean, look, it, it's all gonna be product driven, and for us, we think that manifests most directly in driving units, driving trial, driving awareness, driving people into our product, really giving everybody a chance to try Skechers Hands Free Slip-ins and all the accordant technologies that we offer around comfort. They carry with that the positive benefit of also being accretive on the ASP basis. So I think those will continue to be the points of strength for us. As I mentioned, the wholesale side is complementing the DTC growth we saw last year. So net-net, we're getting onto more feet, and that's an important trial element to us. And I think that's something we can build off of with both our marketing, you know, and our consumer-directed programs on, you know, online and in mobile. What about the cadence of new store expansion in that market? Yeah, I think it'll still be pretty heady. You know, the challenge with stores is you wanna avoid getting in a situation where your motivation is to open stores versus open profitable stores. So that's a metric we always allow to move a bit because we don't wanna get into a position where somebody's motivation is just to open a door. We need it to be a profitable door. And so I think over the back half of the year, we do have a pretty heavy slate, but it will be only, you know, executed in a way that complements what we think the right pro forma for that store is, because that is a very individualized decision we make, particularly in the United States. Before we move on, let's talk about everyone's favorite topic, North America wholesale. With comp trends negative and worsening in the second quarter, and several management teams taking a more cautious approach to the second half, how are you thinking about the outlook for growth for Skechers in North America wholesale? What are you seeing on sell-in versus sell-through? Yeah, this is where I think we tend to see a fairly divergent picture than some. We're seeing actually really positive indicators of strength in the domestic wholesale marketplace. Now, to be fair, I think some of that is a manifestation of where we were last year, when many wholesale partners were struggling one way or another. Where we've seen strength build over the back half of the year, it's either with wholesale partners who have dramatically embraced the comfort technology we're bringing to market and continue to ride that wave of success, or it's actually a wholesale partner who didn't embrace that last year, either they couldn't or they wouldn't, and have now embraced some of that product. Actually, the net effect of that is those two elements of our business are really channeling the success that we're gonna see over the back half of the year. I would make a point, you know, it's tough to paint the whole domestic wholesale marketplace with one brush because it doesn't behave like that at an account level. But the two pillars of strength we see are based on those who are really embracing our product and our technologies. From a sell-in, sell-through perspective, it feels like it's actually getting right. Last year was one of our bigger complaints, as we had very strong sell-through, and sell-in struggled. I think there were some exogenous factors contributing to that, and it seems like those are starting to come more into line. That all being said, it is something that needs to be judged over a broader swath of time than any one quarter, so we need to pull back at the end of the year and see how that turns out. But it does feel like it's getting closer into line. Very helpful. As we think about some of the drivers of that, with wholesale partners taking or not taking levels of newness. Yeah ... how would you describe the level of inventory in the channel today relative to the newness percentage that you would have seen historical or normal? I think it's gotten a lot better. Now, I think that's a little bit cheating at solitaire, to be perfectly honest, because what we're making is new, infused with a lot of new. I think it's, quite frankly, what we've excelled at most over the last couple of quarters, maybe even year, compared to some others. You know, there's no shortage. In fact, in some instances, there's almost too much newness when you look at our array. And so we're infusing a lot of that into the marketplace, and I think as a result, you're seeing that more in the build of inventory and what's available. But I think it also is complemented by the fact that you, you do have some wholesale partners who previously, again, either wouldn't or couldn't embrace some of the newer technologies, and as a result, they couldn't benefit from the marketing, they couldn't benefit from the other efforts we were making to, to really make consumers aware of that comfort technology. And, and the fact that they can this year, I think, is a tremendous positive for us and a positive for them, and it's, it's definitely evidencing itself in sell-through. In North America wholesale, can you talk a little bit about the opportunity for incremental expansion of the Skechers brand relative to your current footprint? Do you see any opportunities? We always see opportunity. I think the challenge is getting some of those wholesale partners to see it as well. You know, I would say that's a never-ending battle. You're always angling for more opportunities. I think what we can do on our account is continue to innovate, continue to bring really good product to market at a compelling price for consumers. I think at the other end, we really need collaboration with some of those newer wholesale accounts. If they wanna embrace the brand, if they wanna support the brand, I think we'd certainly be open to it. But we also wanna be cautious that we don't need to chase doors at this juncture. We feel like we have a very solid base of partners with whom we can work, and we can continue to grow the brand, complemented by our very strong DTC network, which we think has ample room to continue growing. So I wouldn't say it's an imperative. It's certainly an opportunity we'll look at. I would add to that, as we enter performance categories that we haven't historically operated in, that may avail us of some newer opportunities. We'll wait and see how that materializes or not, but certainly it's something we'd like to see, but I don't know that we're dependent upon seeing for the future of our growth. Just to put a bow on this, one of the questions we're asking all companies at our conference today is whether or not they expect to have more or less points of distribution in the U.S. next year. Oh, more or less? You know, I'd probably have to say less. I think what you're starting to see develop in the wholesale marketplace is, you know, a handful of really strong players and others who struggle to keep pace, and I would anticipate over time that that trend continues, and what that ultimately means is we'll be left, at the end of the day, with fewer doors, but healthier doors, larger. As you think about your wholesale business, there's been a shift in competitor strategy over, or footwear industry strategy, over the course of the past few years, where some have moved in and out of wholesale partners. Has this enabled lasting changes in shelf space allocation or strength of your relationships with partners? I think maybe on the margin. I don't know that that is a significant contributing factor to our success in the wholesale marketplace. Again, as I said, you know, we're a pretty distinctive offering, both for our partners and for the consumer. I think the potential overlap and conflict is actually much lower than most people anticipate. I mean, when we get asked about our competitive set, I think most would anticipate that we're answering with the juggernauts in the marketplace, but the reality is, given the breadth of our product, it's much broader than that, and it's less deep than that. And so I think maybe there's been some marginal pickup and benefit as a result of that, but not anything that I would say is extraordinarily material. So if the competitive backdrop changes materially because of a step-up in innovation or new products from competitive brands, you don't see that as having any impact on Skechers? Oh, I think it has an impact, but the impact is it has to keep a fire under our rear to keep moving forward and I think we feel that either way. We're blessed with a founder who will not let anybody rest a moment unless they're innovating at the maximum end of their capacity, but that doesn't change whether or not, you know, any of the bigger brands are innovating. He'll continue to push us, and the organization itself just embraces change in a way that I think will always motivate us. I think that's the biggest risk, to be honest with you, though, is we can't get complacent. We can't stop innovating. We have to continue to push the envelope. And that means trying stuff that will work and trying stuff that won't, and trying new styles and leaning on old styles and everything in between. That's the imperative. It's almost agnostic to what others are doing, but it certainly, you know, isn't something that we can afford to take our eye off of. I wanna follow up on the innovation point, but before we go there, let's wrap up the wholesale discussion with a chat about international wholesale. Mm-hmm. What are you seeing there beyond some of the timing shifts in Europe? What are you watching? Europe's a big one, just because of the resolving Red Sea crisis and how that's impacted logistics. It's kind of the one thing in, you know, in the next probably month and month and a half, we're really gonna focus on making sure we can get the processing capacity up to what we need, you know, for that market. I'd say broadly speaking, the indicators tend to look very positive. Again, some of that is aided by the fact that we are bringing some of the newer product into those markets in kind of the first tranches. Also, you're seeing, you know, really good health in some markets, particularly Southeast Asia. You know, even outside of China, you're seeing really good strength. As I mentioned, you know, South America looks good. Even Europe, I mean, Europe's shockingly positive given the events that they've had to withstand. So I would say, generally speaking, pretty strong. I think probably the one asterisk is China. We need to wait and see how China kind of shakes out from a consumer standpoint, because our wholesale business there is very tightly linked with the performance of the franchise market, and that's a very fast turn, and so it's something we need to focus on. As we think about innovation, comfort technologies and slip-in have been some of the biggest drivers of your market share growth. How do you think about the proportion of your assortment that currently features either slip-in technology versus comfort technology? And then how do you think about putting that across your price point? Yeah, so the one thing I'd note is, today, you can buy products with and without, in almost every category, almost every style. What we're seeing, though, is people are gravitating towards the styles that have the comfort technologies in them. The one thing that we caution is, I don't really know the answer to what level of penetration we should see out of some of these. Because in many respects, the analogy I would use, which is lent to me, is, you know, we all have cars here. How many of us choose not to have power windows? Pretty much nobody, because it's more convenient and it's easier. And so we're all willing to pay just a little bit more for the convenience of that feature. And in many respects, we think the comfort features that we deliver are the same way, but in footwear. What that means is there's probably an upper bound somewhere from a price perspective that would limit that, but from a use, from an engagement, from a consumer satisfaction, there may not be. And so that's something we're going to have to continue to test out. What we like about our features is that they're, in a way, they're stackable. You can have one, you can have two, you can have three, and our ability to, again, assess value for that at the consumer level is holding firm, which is great. One other area where you're innovating is in football/soccer and basketball. Can you talk about the cadencing of scale that you expect in those categories? Yeah. I would first say that we're really early stages in all of those. I'm in New York, so I have to mention Julius Randle being a huge ambassador for us and one we've worked closely with on our basketball product. But I would very much think of those as in nurture stage for us. We start with ambassadors, we start with that high-quality product because we wanna demonstrate our ability to make and deliver high-quality product. I think quite honestly, if Julius can play in a pair of our basketball shoes, so can I. From there, we will look at commercialization opportunities, but we wanna be patient in how those evolve into the marketplace. It's not a necessity for reaching our $10 billion sales objective. We think it can contribute, but it's not absolutely essential. And I think what that affords us, which is unique in the footwear space, is the ability to patiently penetrate into those markets. I would also say it's important to recognize that the markets we've chosen to start with are internationally based, right? We can be successful in football, with or without significant contributions out of the U.S. because it's a worldwide game. Basketball, the same way. You know, second most you know, important market in basketball is China. And so we've geared these entries to be very significant from an international perspective. And while we'll pursue the U.S., you know, we're not gonna looking to achieve a head-to-head battle with some of the bigger brands. That's not gonna be our modus operandi. We're gonna move forward in a way that we think allows us to build the quality of the product, build the brand, build the commercialization opportunity, and then react to what we see as it unfolds. Let's move to inventory and margins. Inventory's been a little choppy because of the Red Sea, especially in Europe. As you think about inventory across regions, how should we be thinking about that as we move through the back half? Any cadencing that you can help us with? Yeah, unfortunately, some of that cadencing is gonna be out of our control. What we saw at the end of the second quarter was a significant balloon and in transit, largely attributable to the Red Sea crisis, but also some other, what I would say, related impacts in kind of shipping. Those look like they're beginning to resolve themselves. You know, if that comes to fruition, what we should see by the end of the year is a more balanced inventory position that is positioned for, you know, the right type of growth in the year ahead. It's something we're watching carefully because it also has impacts on our ability to deliver against the order book in a timely fashion, which is incredibly important. So that's actually, you know-... Something that we're spending more time rather than less on, because we want to make sure this doesn't become another situation similar to what we saw kind of post-COVID. That's really helpful. As we think about gross margin, there's been a lot of transitory cost recapture. What opportunities do you see on the horizon to expand gross margins as we move forward? Should we be thinking about cadence and mix of wholesale? What about supply chain and these cost pressures, especially freight? And then how are you thinking about promotionality? Yeah. I would say, in general, we very much like what we've done with our gross margins over the last couple of years. It's largely been attributable to, in part, recapturing some of the costs, but also bringing more value to consumers that allows us to get a slightly better margin. And I expect that will continue. Very satisfied right now with where we are from a product level margin. Mix is always important because of the dynamics of our business. I think if you look at things from a mix-adjusted perspective, we really would like to see stability, and then any growth achieved vis-a-vis bringing more value to the market, bringing, you know, higher ASPs because we're bringing more technologies to the market. The net effect of that, we think, over the balance of the year, is a pretty stable year-on-year margin structure, which is fantastic because it evidences significant improvement from, you know, even kind of pre-COVID. We are watching freight, like I'm sure everybody is. It does seem like freight's starting to abate somewhat, which is nice to see. We don't expect that it'll be an enduring issue, but one that we've, you know, certainly had to navigate over the last couple of months. It definitely feels more localized, and as a result, less impactful than what happened after COVID, but it is something we're monitoring. You know, thank goodness, we had the opportunity to lock in shipping rates at the beginning of the year, and that protects us for a large portion of our shipping needs, but it's something we'll watch carefully. One question that we're asking on promotionality for every retailer at our conference is how they expect the promotional environment to be for them this holiday season relative to last year, and then how that compares to your expectation for the industry that you operate in. Yeah, our expectation right now is for stability. I mean, it seems like things are pretty stable in the market as a whole. You know, we see continuing efficacy with the promotions we're offering when we offer them. It doesn't seem like there's anything imbalanced dramatically in the marketplace with any of our competitors or any, you know, major wholesale partner. So right now, our expectation is that things will remain stable. That's perfectly satisfactory from our perspective, because when we are launching promotions, we are seeing them drive traffic, drive conversion, and that's, you know, certainly what you want to have happen. Just to put a bow on the conversation on costs, the other cost question that we're asking every company at our conference is, do you expect cost pressures that we just discussed, materials, labor, tariffs, et cetera, do you think they'll be the same, better, or worse than 2025? I would say the same. We've really seen decent stability on kind of input costs over the course of really the last two to three years, so that looks like it's stable. Marketing has been another area where you've been investing. Yeah. How should we think about the right% of sales that you should spend on marketing, and, and where do you expect leverage? You should think of that as a rigorous, lively debate on a regular basis internally at Skechers because it is. We have amplified purposely our marketing in the first half of this year, including the third quarter, because we feel it's really important as we're focused on delivering newness and innovation, that we inform both consumers and customers of our support, you know, in that area. In particular, some of our products, like our Skechers Hands Free Slip-ins, it's a very difficult innovation to explain without illustrating it to the consumer. And so we've wanted to make sure that we very clearly brand that as Skechers, inform individuals of what it means as a Skechers innovation. We also know that others are gonna be coming after the innovation, and so we wanna make sure it gets firmly ensconced as a Skechers-level innovation. We're not intending to reset, you know, where we've traditionally put our sales and marketing. That's something we'll continuously evaluate, but this year has definitely been a purposely amplified year in order to brand, you know, several innovations as Skechers innovations. Great. That's really helpful. Any closing thoughts or comments that you'd like to share with the audience? No. Buy, buy some Slip-ins. You'd love them. All right. Well, you heard it from John himself, buy some Slip-ins. Thank you for attending this session. Thank you, John. Immediately after this, we have a cocktail reception at the lobby bar, in case of interest. Thank you.