Okay, welcome everyone. Thank you for joining us here live in Laguna, as well as those on the webcast. My name is Will Gaertner. I'm the small cap and midcap footwear and sporting goods analyst here at Wells Fargo. And today we're thrilled to be hosting John Vandemore, CFO of Skechers. Just as a quick refresher, Skechers is a $10 billion market cap global footwear company, sells their products in over 180 countries, and most notably, Skechers is the third largest footwear brand in the U.S. and globally in terms of market share, behind only Nike and Adidas. So John, thank you for joining us, and we appreciate you being here. Yeah, thanks for having me. First, let's dive into your long-term targets. You know, as you march toward this $10 billion 2026 revenue target, you know, the implied CAGR over the next two years, you know, based on the midpoint of your 2024 guidance is 6%. That's down from the low double digits we've seen on average over the last couple years. Are you expecting a slowdown in top line? I mean, how are you thinking about upside to that target? Yeah, well, you're illustrating the point of when you set a goal and then you overachieve early, the goal looks much less ambitious every year. We certainly don't expect to see a slowdown in our growth. I would say, you know, four or five years ago, when we started coming up with the idea of setting a ten billion dollar target, it seemed like a very audacious goal, given our growth over the last couple of years. As you said, it now doesn't look as robust, but to be honest with you, one of my jobs internally is to try to stop somebody from setting yet another target too early. We want to first achieve what we set forth. But we feel really good about our ability to do so, given the dynamics you just mentioned. I don't think in any way we expect our brand to slow down globally. In fact, we see a tremendous amount of runway for our brand to continue to grow, you know, at somewhere between a high single digit, low teens rate, anchored by opportunities in those 180 markets outside of the United States that you mentioned. Because really, when you take a step back and you look at the opportunity for footwear globally, definitely a lot more opportunity internationally than domestically, although we do still like a lot of channels for growth in the U.S. market too. You've spoken about hitting this 11%-13% operating margin target over time. Can you just talk about the drivers there? Maybe speak about gross margin over the next several years and then, you know, expectations for SG&A, deleverage or leverage? Yeah, I would say, you know, we often are conscientious about decoupling kind of the growth message, which is, you know, getting to $10 billion and beyond, continuing to solidify our position as the third largest footwear brand in the world, and certainly growing at an outsized pace, particularly outside the United States, from our operating margin objectives. In part because sometimes those can be acting in opposite to each other. You know, one of the things that we do, I think, better than most is very willingly advance the investments for growth that are needed to kind of overachieve those top-line objectives. What we say is that the business naturally has, certainly within its capability, an operating margin at least between 11% and 13%. But we're also cautious to make sure we warn people our number one objective is growing the brand as fast and as large as we can. That is the most valuable way to contribute to the stakeholder value increase over time. When you look at the operating margin, I mean, what frustrates that in the short term has often been advanced investment. So the illustrative example I always give is, you know, every new store, the day you open it, unfortunately doesn't work at an optimal profit, right? It takes time. And so every time you open a store, you're purposefully and consciously deleveraging the SG&A in the short term, but there's long-term value in terms of its ability to both drive the brand growth and then ultimately drive profitability. I think when you, when you think about achieving that 11%-13% range, it's going to be a combination of factors of growing the business in gross margin, accretive channels like international and direct to consumer, as well as improvements in gross margin, certainly, that, that we've over contributed against in the last couple of years, and then select opportunities to deleverage in that SG&A base, coupled with investments to, to grow the brand. That last bit is kind of where it gets a little bit tricky, because if we see a good opportunity to invest for the brand, we'll take the short-term hit in order to drive long-term profitability. That all being said, there, there's nothing inside our business that prevents kind of a naturalized normal operating margin in that 11%-13% range, possibly even higher. I think we'll continue to work towards that over time. We're going to see some good growth in that area this year on the back of, you know, a couple of years of steady improvement. It's definitely a priority, but I would caution it's always one that we judge secondary relative to our opportunity to grow the brand, because that really is how we'll derive the most value for shareholders. So international, why don't we start with DTC? So that business continues to have real momentum. Can you discuss, you know, what regions you're seeing the most growth and where you see the most opportunity going forward from a regional standpoint, on the DTC side? Yeah, I mean, the opportunities are quite frankly almost endless. You take a market like Europe, which probably is one of our more developed markets, and the opportunity in DTC is really quite big. You know, there's a couple of markets that we have more penetration in, like the UK, one of our first markets outside the United States, but there are many, many more that we're just beginning that approach on DTC, and that includes both stores but also online capabilities, some of which we launched you know in the last couple of years that are proving extremely valuable as we grow the brands in those markets. And the benefit that we get in bringing our DTC to those markets is it's a more fulsome display of the brand. It shows our strength across multiple categories. It's our best presentation of the brand, and what we're seeing is when we bring that to market, it resonates at the consumer level. There's a lot of opportunities in South America. Our anchor market in South America has long been Chile, where we have one of the highest per capita in our portfolio, of pairs per thousand. And we see that the brand has tremendous resonance. Today, we're exploring opportunities to continue to expand that across almost every market, everything from Argentina and Brazil, all the way up to, you know, Colombia, Peru, et cetera. And we think those have a lot of opportunity as well. And then not least by any measure, is, you know, the broader envelope of Asia. You know, China, India, Southeast Asia, all of those markets are ripe for opportunity to continue to grow the DTC presence. In the short term, some are having some challenges right now. As we all know, China is experiencing some pretty severe consumer discretionary pressures. That's a bit worse than we had anticipated, and it's certainly something they're going to have to struggle through, but in the long-term view, we certainly remain extremely excited about the opportunity in China and all of the other markets in Asia, because there's just so much room to continue to grow the brand. So maybe we move to international wholesale. So that slowed a little bit in 2Q. I mean, how should we think about that channel into the second half? Yeah, I think you'll see improvement overall in the second half. There's a couple of factors that impacted us in the early part of the year, you know, one of which was the Suez Canal crisis, and the inability of container companies to get through there. That created a short-term dip, if you will, in kind of available product in Europe, most pronounced. You also saw some issues around the implementation of the Bureau of Indian Standards regulations in India that caused a bit of a short-term drag. Actually, I was remarking earlier today that, you know, Q1 and Q2 actually felt pretty good from an international wholesale perspective, except for these isolated incidents. Unfortunately, they were big enough isolated incidences to actually, you know, drag down the growth in international wholesale in the first half of the year, but we definitely expect things will get better. We're actually starting to move through some of the inventory issues that collected as a result of the Red Sea issue. You know, India, I think, is gonna find its way through the BIS regulatory implementation. That's already starting to improve. You know, maybe the one question again goes back to China, and really how long it takes for some of this consumer-related issues to unfold and cure. But again, I don't, I don't really have much concern long term. It's just gonna be something we navigate. I think that means, as a result, you're looking at a back half of the year that's much improved to the first half of the year. Can you just first discuss, I mean, you touched on Red Sea and some issues that you had there. Can you first just talk about how your freight logistics work? You know, when do you lock in contracts? How long do you lock them in for? How much do you use the spot rate market? Yeah. Let me answer that first by stating I know much more about logistics than I had ever hoped to, and I have to thank COVID for that and all the repercussions to logistics that have occurred since then. So I think the most important thing to know is, you know, as you mentioned, we contract annually for capacity with many of the world's largest shipping companies. And we use that as a guard against, you know, both short-term price fluctuations that you see in the spot market, but also because we need to make sure we have the availability to continue to deliver goods on time and in full, and that really is our priority from a logistics standpoint, relative to our customers. You know, we wanna deliver on time and in full, and so you need to have that capacity. The benefit of that in the short term is it has protected us somewhat from the higher spot rates that we saw unfold, particularly in kinda June, July timeframe, where you saw pretty much globally, container rates for a forty-foot equivalent kinda go up to, you know, almost in the $6,000-$7,000 range. I will note that's still a far cry from where we got to post-COVID, but still elevated relative to historical norms. Thankfully, we can rely on our contract rates, and we've seen good adherence to contract rate with our container partners. That has allowed us to mitigate a lot of this. Some exposure, certainly, because you never can perfectly plan your capacity, so occasionally, you're dipping into the spot rate when you need to. I think what will happen is, you know, simultaneous with some of those issues abating, you're already starting to see the WCI index come down. You're seeing spot rates come down to much more normalized levels. You know, some of the pressure over the short term of the summer has also come off, and that should allow rates to start to stabilize. So when you kind of step back, the impact isn't enormous. It's really more of a logistical challenge for us at the moment. I would expect that by the balance of this year, when we get into next year and start negotiating rates, this is hopefully a non-issue. That would be the thing to watch, because if it ends up being a durable rate increase, that would have a more pronounced impact. But right now, we don't think that'll be the case, and overall, we don't believe there'll be a significant margin impact associated with the crisis, but it is a logistical challenge that we've had to work through. Is that, is that typically how most companies in the footwear universe work as far as contracting annually? I mean, I don't know if you can speak to that, and using the spot rate, you know, if there's, if you're chasing demand, for example. Yeah. Well, I mean, you know, it's funny, it's not a perfect science, right? Yeah. Because in order for it to be perfect, I'd have to know exactly what I'm gonna ship, when I'm gonna ship, and, and it really breaks down to almost a weekly demand cycle, because that's how often the carriers are departing. You always want to lock in some amount. I mean, we would probably always bias towards wanting to lock in more. To be fair, it's a negotiation, though, so we're subject to what our container partners are willing to guarantee. And that always leaves you over in the market a little bit on spot. Not usually a significant amount, but, you know, it can be. And then, you know, situations arise where, you know, goods are late or goods need to be moved early, and that can push you into the spot occasionally. But overall, and I would certainly credit our teams, you know, our logistics team do a very good job of attempting to manage within the envelope of capacity that we've contracted for, and that helps keep a lid on the pressures. That all being said, you know, hearkening back to COVID, I mean, we saw a breakdown in a lot of that during COVID. I think, you know, we weren't able to ship a lot under contract during COVID because container companies were playing with the market. The spot rate was so high, demand was so constrained. That kind of upset the apple cart everywhere. We're not seeing that in this instance, so that's encouraging. But again, I think overall, this will be a mitigatable issue as long as it doesn't persist into 2025. As far as I mean, you talked about, in-transit inventory is up 150%, I believe, in Europe. Last quarter. I mean, are you seeing further delays in deliveries, or, is this kind of in the rearview now? I'd say it's partially in the rearview mirror. I mean, definitely going, exiting Q2 was an issue. Product was delayed. That delays our shipments to customers. That's something we've been working furiously against to kind of get through as quickly as possible. We've made significant progress. You know, I think the question will be, Can we make enough progress, so it all benefits us in Q3 versus Q4? That's probably gonna come down to, quite frankly, the last week of the quarter, as it so frustratingly often does. But at the end of the day, we also know it'll get resolved. And the good news is, you know, these are orders for which, you know, quite frankly, customers are clamoring. They want the product. The product's selling well, demand is high, and so we know at the end of the day, there's a customer out there who needs these goods, and our challenge is just to get it in their hands as quickly as possible. And that, that's, you know, often, again, one of the more frustrating aspects of dealing with supply chain and logistics issues is you just want to get the product into the hands of the customer. That's your goal, and when that's harder to do than normal, it's a little bit dispiriting, but by the same token, encouraging that the demand's out there. Maybe we talk a little bit about how... We mentioned Europe here. You know, you've been bucking the trend there. It's been, you know, soft for a lot of folks, but it seems you guys are have really robust growth there. Can you just talk a little about some of the drivers there and, you know, how you see that region going forward? Yeah, you know, I think a couple of years ago, we would've thought Europe was gonna be a bit of a struggle, to be honest with you. Quite frankly, we've seen the opposite since then. You know, I think in large part, we have to credit the product. The product that we've brought to market in Europe in particular, but also, you know, globally, has resonated really, really well. Like I said, there's also a lot of opportunity to get the brand out in more, you know, locations, destinations for consumers, and we've taken advantage of that, and that, that's helped as well. Ultimately, though, I, I'd have to comment that the, you know, the European consumer continues to be, you know, pretty healthy, which is a bit of a surprise, given all that's going on in that region. But that health has led to, you know, continuing demand for product that I think is satisfying the needs of the consumers. And I think also stands out in terms of its level of newness, level of freshness, level of innovation, and I think there's only a couple of brands out there today who are really driving kind of that message at the consumer level, and those brands are doing well, and that includes Skechers, thankfully. Are you seeing more growth on the wholesale side or on the DTC side in that region? That's the funny thing, we're seeing both. And that's where I think we really gain confidence that it's a product-driven cycle because otherwise it would be one over the other. I mean, they're not completely matched because they don't all have the same product at the same point in time. But generally speaking, we're seeing strength across both, and that's been most encouraging. Why don't we pivot to China? So, you know, always a hot topic of conversation here. Maybe just touch on the structure of the business, you know, just at a high level. Just remind us how it's structured in the region, DTC versus wholesale. Yeah. Well, let me first say, I mean, because we're gonna talk a lot about the current conditions in China, and those are definitely more challenging than I think anybody had anticipated. But long term, you know, for us, China continues to be at what we think is an enormous opportunity, and I think we benefit from having a very strong brand in that market. And China is a unique market in that there's really only a couple paths to the consumer. There really isn't a wholesale market per se, equivalent to what you see in the US or in Europe, in China. There's not a lot of multi-brand retail. So largely what you're dealing with is, you know, a franchise partner base that has wholesale economics, but, you know, is a franchise operator, and so they're operating doors and stores under, you know, the guise of your marketing and your product assortment, and then there's an owned retail channel. The biggest and probably most unique aspect to China, though, is the size and scale of the online offering, you know, and five or six years ago, that was largely Tmall. Today, it's a much more diversified set of operators, and so I think when you look at that market, we expect all of those to grow nicely. E-com kind of grows in concert with, you know, general trends, and I would say, you know, innovation, one of the... I don't know if you've seen, if anybody's here, has seen the livestream offerings in China. They're a little bit dizzying to your Western eyes, but it's an amazing combination of digital and almost retail, you know, merged into one. And that's a, I think, a brand of retail commerce that's gonna grow across the globe, but certainly has started in China. But it's also gonna be opening doors. Opening doors both in Tier One and Tier Two cities, in more regional cities.... customizing offerings and assortments to meet the demands of the Chinese market. Again, I think right now it's a tough time in that market, and we've certainly seen kind of had to reduce our expectations for the year as a result. And that's a disappointment. But I think longer term, we continue to believe that that market has extraordinary opportunity, you know, across a wide range of avenues of growth. You know, everything from the online to things like live streaming, to retail and franchise operators, which are well-owned paths. So, you know, very common to what you see from other brands, but also, you know, huge opportunities for growth. You touched on a little bit here, so, you know, on the call you mentioned somewhat disappointing results in China in 2Q. You also mentioned that you're expecting it to improve, though, in the second half. I mean, is that still the case, or are we thinking about China sort of growing at the run rate that we saw in 2Q, you know, into the back half? Yeah, I mean, I think we're in the process right now of kind of doing our reset for the forthcoming quarters. So I'm not ready to kind of give very specific guidance at this point in time, other than to say, you know, we've definitely seen worse conditions unfold in China than we expected for the back half of the year. So I would expect the back half of the year is gonna be more disappointing than what we had originally thought. Again, I think that's a market that's still, you know, reforming itself post-COVID. Got to keep in mind, you know, they came out of COVID a lot later than many other countries. There was no overt government stimulus in that market, you know, as compared to other countries. That's a pretty big differential. And so I think it feels very much like a market that's still continuing to cure. But in the short term, that's gonna mean more headwinds than we had anticipated. In the long term, again, no caution in our view about how, you know, how much of an opportunity it can be, but the short-term ramifications are gonna be, you know, more adverse than we thought. We move on to India. I mean, that, you know, that's been somewhat of a challenge, you know, navigating that market, right? Yeah. With you know, government issues. Can you just talk about the regulatory challenges near term and any update on what's going on there? And then perhaps touch on the long-term opportunity you see in that market. I'm gonna flip that only because I don't want anybody to take from this word anything other than wholly excited about the opportunity in India. It's one of the markets that, quite frankly, we get most excited about for a variety of reasons. One of which is, you know, depending on who you measure, you know, we're close to the top footwear provider in that market today already. It's probably one of the... You know, what we would say, it's one of the fairest fights out there with scale, because it's not already, you know, experiencing the Nikes and the Adidas and their dominance globally in that market. So we love the India market. We think there's tremendous opportunity, and we're really excited about it. You know, it's a difficult market to operate in. There's a lot of regulatory concerns you have to deal with from time to time. One of the most recent has, you know, been a quality scheme that had been put in place by the Bureau of Indian Standards. Really, you know, with a focus of trying to help develop a local production market, which, quite frankly, we're fully supportive of. In the short term, that has led to some limits on, you know, the importation of goods, and that has had a negative effect on our business, and I would argue many other businesses. By the way, not just footwear and apparel, but also in other industries as well. The net result, we think, ultimately will be a good, you know, combination of local production and importation. You know, helping the Indian government and the regulatory bodies see through to the right balance is gonna be something we and a lot of other brands, and quite frankly, we in concert with a lot of other brands, are working on. Because what we find is, you know, certainly with a desire to build local production, you need time. You need time and seasoning. And so what we don't wanna do is sacrifice near-term the opportunity to offer our full selection of product, because only so much of it can be produced in the market locally. So the best outcome, we think, long term, is a balance between imported goods and locally produced goods. Quite frankly, we would love to see India become an export market someday. I think it certainly has an opportunity to do that, and that's something we will continue to work towards. In the short term, in Q2, that was an inhibitor for us. Looks like we're seeing some good positive, you know, momentum behind a balanced solution that should improve at least the back half of the year in the short term. But I would argue, it is one of those markets where you really have to work carefully and diligently with, you know, the numerous interface points with the government to continue to succeed. That's not easy. It's why we depend in our business on a very talented local team who helps guide the business through those situations. You know, it requires a lot of, a lot of time and attention, but we think it's, quite frankly, gonna be well worth it. Maybe we move to domestic, the DTC business. So we saw a slowdown in 1Q. I think that was a concern of a lot of investors, and people often think that's a sign that a leading indicator for a wholesale slowdown. So maybe, you know, it looks like reads have improved, you know, that at least I've seen, you know, into August and to the beginning of September. Maybe talk to the back-to-school trends you saw, you know, second, how are you thinking about holiday demand in that channel? And what are your expectations, you know, between brick-and-mortar and the e-commerce channels? Yeah, I'd say the one thing is, when we assess DTC this year, it's very important to keep in mind last year. Last year was an extraordinary year in DTC. I think our overall DTC, you know, growth rate was mid-teens last year. That's a really heady pace for a domestic, you know, DTC growth rate. It had to do in part with, you know, how unhealthy the wholesale market was last year. At the end of the day, you know, we actually are very, you know, encouraged by what we're seeing out of the U.S. consumer. They seem to be, you know, albeit not growing at the leaps and bounds of last year, still doing very, very well. Our product remains in demand. We've seen good growth online, which has been encouraging. There was certainly a slowdown in foot traffic in retail in kind of the June, early July time frame. You've heard a lot about that from other brands as well, and we certainly shared in that situation. I was joking the other day. I don't know if that's because everybody went on vacation at the same time or everybody went to Europe, who knows, but there was certainly a softening there. It did perpetuate into back-to-school a little bit. You saw back-to-school start a little bit later. It was a good back-to-school season, but it definitely didn't fit kind of the standard mode of, I think, what we've come to expect out of back-to-school, so that was a little bit unusual. Overall, what we see is a healthy consumer, one who is still activated by our brand, who's seeking out our brand, and in particular, our comfort technologies that are resonating, you know, pretty widely. The other thing to keep in mind is last year we were introducing a lot of comfort technologies that, while not by design, ended up being more pronounced from an availability standpoint in our own stores. This year, with the growth we've had in the domestic wholesale side of things, those products are more widely available, so that's clearly, you know, affecting our DTC a little bit. But again, because we're agnostic between wholesale and DTC, we're completely fine with that as long as the consumer is finding the product, the Skechers product that they want. Domestic wholesale, I mean, that's been, you know, the right spot, momentum. You know, no problem. As you know, it's continued to over the last two quarters had, you know, some really great growth. Can you just talk about expectations for the balance of the year and, you know, what is driving this continued momentum? I remember last year, around this time, you know, you spoke about sell-in not aligning with sell-through- Yep. Right? Now, is that back in balance, you know, or is there still more catch up with some of these retailers? Yeah, it's an interesting dynamic. I think it's in part influenced by last year, which was not one of the better ones from a domestic wholesale standpoint. You had a few unhealthy operators who couldn't buy in, you know, from a product perspective, who had too much inventory. So I think some of this is we're resetting the bar there, which is great. Probably the most significant factor, though, is we had wholesale partners last year who were either unable to or unwilling to buy into some of our technologies. And, you know, when those technologies became the focal point of what we're marketing, what we're selling in DTC, I think what happened is it created a bit of a drag for some of those players. They didn't have the product that the consumer wanted most. Where we're really seeing growth this year, kind of above and beyond, kind of stable growth from a domestic perspective, is, you know, a couple of accounts really leaning into those technologies this year, and that's helped them tremendously. It's helped their ASPs, it's helped their margins, sold through well, and so that's helped. There's clearly been a bit of a restocking benefit, not an enormous one, but certainly, people are getting more healthy. Wholesale partners, on the whole, are more, are better positioned from an inventory perspective. You know, you are starting to see sell-through and sell-in match up a little bit nicer, which is kind of what we want to ultimately aim for. The sum total of all of that, though, is, you know, it does argue for, and we expect to see continued robust health in the domestic wholesale marketplace over the back half of this year. And hopefully that bleeds into 2025 with, you know, really good product commanding, you know, good consumer demand. Maybe we move to gross margins. You know, you mentioned freight benefits subside. You know, you're lapping some pricing from last year. You have this outside wholesale domestic growth, which I assume is a headwind. So you're not gonna see some of these, you know, the expansion that you saw in the first half. I mean, how do you think about the gross margin, good guys and bad guys, into the back half of the year? Yeah, I would generally describe, you know, we're pretty happy with the gross margins. We've made a lot of progress on gross margins over the last three or four years, mostly because we're offering what we think are, you know, more valuable products at the consumer level. That gives the consumer the perception of more value, it gives us the opportunity to price and generate more margin. Certainly, there's been a lot of back and forth with shipping costs and other factors, but we've done a lot at the product level to improve margins, at the account level to rationalize discounts. We've, I think, delivered the right amount of promotions. The net effect of all of that is we feel really good about where the margins sit today. Our primary means of augmenting margins in the future, it's gonna be mix-driven. You know, definitely transitioning to a little bit more DTC, a little bit more international. Those have accretive gross margins, but also continuing to offer more value to consumers, to outfit our product with more of our comfort technologies that consumers pay more for, that drive more margin. And, you know, to keep a lid on things like promotions and discounts, which are always an ongoing debate with both consumers and customers. That should lead us to a really healthy position, in the future that allows us to kind of mix up our gross margin. It shouldn't be at, you know, kind of the one hundred, two hundred basis point jumps that we've seen in the last couple of years. What I would actually vastly prefer is a more modest but regular accretion of the gross margins through the mix of business, and I think that's what we're poised to deliver. So you've spoken about pricing and ASPs moderating this year. How do you think about each going forward? Yeah, I think there'll be some benefit through ASPs, but it's gonna... again, largely because we're delivering more value products to our consumers, so more technology-laden products. That's really how we want to affect price. We don't generally want to be a price taker, just marking up for, you know, year-on-year increases. We actually vastly prefer to be delivering more at the consumer level, and as a result, getting more in return. And again, I think we've been pretty successful at that. I would say my expectation would be that plays a more modest element in our growth going forward in the next two to three years, and what you're likely to see is more volume-driven increases. But it's something we continuously look at, and again, it is because it's so heavily linked to innovation-... It's why we lean so heavily on innovation at the product level, because that, that's the best way to improve, you know, across the board. Maybe I can squeeze. We have, you know, just thirty seconds left here. Maybe I can squeeze one more in here. So, you know, SG&A, always front and center- Oh, I know. With investors, right? You know, growth on a dollar basis is average, low teens over the last six quarters, mid-teens in, you know, the first half of the year. You know, how do you think about SG&A into the second half, particularly the cadence in 3Q and 4Q? And then, you know, secondly, how do we think about SG&A more long term? Do you continue to expect this sort of run rate, you know, at a low teens growth rate? Yeah, I mean, SG&A is a combination of volume-driven drivers and growth drivers. You know, those are the two things we have to continuously balance. I think the volume, the variable cost structure, that just happens with growth. That's things like distribution, et cetera. I think where we're really focused is on the other bucket, which is in part investment for the future, which we want to continue to make as long as we see opportunity to harvest that. And then looking for opportunities to become, you know, a little bit more efficient. I think that largely depends on what kind of the next couple of years look like. I would say in general, though, our primary goal is to grow the brand, to create the gross margin, and to make sure we don't delever, you know, through SG&A, and then take opportunities as they come to find, you know, ways to positively lever. And that's what we do on a regular basis. But I also would want to caution. We also want to invest. We want to invest to grow the brand, and so if there's an opportunity to open, you know, one more great store, we're gonna take it, because the short-term, you know, pain of that is definitely worth the long-term gain. All right, I guess we'll end it there. Thank you, John, for that, and appreciate all the color. Thank you.