Ladies and gentlemen, thank you for standing by. Welcome to the TJX Companies Third Quarter Fiscal 2023 Financial Results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. At that time, if you have a question, you will need to press star one. As a reminder, this conference call is being recorded November 16, 2022. I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc. Please go ahead, sir. Thank you, Fran. Before we begin, Jeff has some opening comments. Thank you, Ernie, and good morning. The forward-looking statements we make today about the company's results and plans are subject to risks and uncertainties that could cause the actual results and the implementation of the company's plans to vary materially. These risks are discussed in the company's SEC filing, including, without limitation, the Form 10-K filed March 30, 2022. Further, these comments and the Q&A that follows are copyrighted today by The TJX Companies, Inc. Any recording, retransmission, reproduction, or other use of the same, for profit or otherwise, without prior consent of TJX, is prohibited and a violation of United States copyright laws. Additionally, while we have approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in that transcript. We have detailed the impact of foreign exchange on our consolidated results and our international divisions in today's press release and the Investor section of our website, tjx.com. Reconciliations of the non-GAAP measures we discuss today to GAAP measures are posted on our website, tjx.com, in the Investor section. Thank you, and now I'll turn it back over to Ernie. Thanks, Jeff. Good morning. Joining me and Jeff on the call is Scott Goldenberg. As we announced today, John Klinger is being promoted to Chief Financial Officer at the beginning of our new fiscal year in late January. I want to take this opportunity to congratulate John on his broader role, and I look forward to working more closely with him as we move forward. Scott is remaining with the company as Senior Executive Vice President, Finance. I would like to recognize his long and extremely successful tenure as CFO, for which we are enormously grateful. I cannot emphasize enough how beneficial Scott has been to me personally. He has truly been a great partner. We are very pleased that TJX will continue to benefit from both John and Scott's expertise and leadership. I'll start today by thanking all of our global associates for their hard work and commitment to TJX. We truly appreciate their collective efforts to deliver great merchandise and values to our shoppers every day. Now to our results. I am very pleased with our third quarter performance. Once again, we delivered strong profitability and a terrific merchandise margin. On the top line, our better-than-expected U.S. comp sales were driven by the excellent performance at Marmaxx, particularly its apparel business, where sales were strong. Our third quarter results once again highlight the outstanding execution of our flexible business model by our very talented associates. While our business is not immune to macro factors, I am convinced that the flexibility of our off-price retail model and the depth of our expertise and experience, especially within our merchant organization, will remain an important advantage for us. As we enter the fourth quarter, we're in a terrific position to take advantage of the tremendous buying environment and to flow fresh, exciting assortments to our stores and online this holiday season. We have many initiatives planned to drive sales, and our value proposition remains very strong. Further, we are convinced that our great values will continue to resonate with consumers whose wallets remain stretched. Medium and longer term, we remain extremely confident that TJX is well-positioned to gain market share and become an even more profitable company. I'll talk more about our holiday plans and our opportunities beyond 2022 in a moment. Before I continue, though, I'll turn the call over to Scott to cover our third quarter financial results in more detail. Scott? Thanks, Ernie, and good morning, everyone. I'll start with some additional details on the third quarter. Third quarter consolidated pretax margin of 11.2% was up 20 basis points versus last year. Third quarter pretax margin exceeded the high end of our guidance, largely due to the timing of some expenses. Our plans for the fourth quarter assume that most of this benefit will reverse out. Aside from the timing of expenses, the other components of our pretax margin were essentially in line with the high end of our plan. Merchandise margin was flat despite 120 basis points of incremental freight pressure. Within merchandise margin, we saw a significant benefit from mark-on, mostly due to better buying. Incremental wage costs continued to be a headwind to pretax margin, with a negative impact of 80 basis points this quarter. Third quarter US comp store sales decreased 2% and exceeded our expectations. As a reminder, we were anniversarying an outsized 16% US open-only comp increase last year, which was versus fiscal 2020. When added together, our comp would represent a 14% increase on a three-year stack basis. Further, U.S. comp sales improved each month of the quarter on that same three-year stack basis. Excluding foreign exchange, third quarter total sales would have been at the high end of our guidance. For the third quarter, U.S. average basket was up. U.S. customer traffic was down, but strengthened as the quarter progressed and improved versus the second quarter. Lastly, adjusted earnings per share were $0.86. Again, this was above the high end of our guidance, largely due to a benefit from the timing of some expenses. Our plans for the fourth quarter assume that most of this benefit will reverse out. Now to our divisional results. At Marmaxx, third quarter segment profit margin was 13.5%. Comp store sales increased 3% versus an 11% open-only comp increase last year. Marmaxx's comp sales were positive each month and improved throughout the quarter. Again, it was great to see a strong comp increase in Marmaxx's apparel business. Once again, Marmaxx's average basket increased as it has throughout the year. While customer traffic was down, Marmaxx saw improvement each month of the quarter and versus the second quarter. At HomeGoods, third quarter segment profit margin was 8.9%. The segment profit margin improvement versus the first half of this year was mostly due to a significant moderation of the year-over-year impact of incremental freight costs. Comp store sales decreased 16% versus a 34% open-only comp increase last year when we saw outsize spending in home-related categories. HomeGoods' average basket increased slightly. At TJX Canada, we are pleased with their overall performance, particularly their strong profitability. Third quarter segment profit margin was 15.8%, exceeding their fiscal 2020 margin. Overall sales on a constant currency basis were up 4% in the third quarter. Further, third quarter Canadian sales growth also improved each month of the quarter when compared to fiscal 2020. At TJX International, third quarter segment profit margin was 6.7%. Despite some deleverage from lower sales, pretax margin was essentially in line versus fiscal 2020 due to better buying and expense management, which mostly offset incremental freight, wage, and other expense pressures. Overall sales on a constant currency basis were down 1% in the third quarter. Moving to inventory, our balance sheet inventory was up 26% versus the third quarter last year. This is higher than we expected due to early receipts of merchandise as the supply chain continued to improve. On a per store basis, inventory was up 31% on a constant currency basis. We are very comfortable with our balance sheet and store inventory levels when compared to fiscal 2020. Importantly, overall store inventory turns and markdowns are in line with our fiscal 2020 levels. We saw plenty of liquidity and are in excellent position to take advantage of the great buying environment, including pack away opportunities. I'll finish with our liquidity and shareholder distributions. During the third quarter, we generated $1.1 billion of operating cash flow and ended the quarter with $3.4 billion in cash. In the third quarter, we returned $843 million to shareholders through our buyback and dividend programs. Now I will turn it back to Ernie. Thanks, Scott. Now I'd like to highlight the opportunities we see to drive traffic and sales in the fourth quarter. First, in this inflationary environment, we believe it is as important as ever to deliver shoppers excellent value throughout the store and online every time they visit. This is our top priority, and I am confident that our banners will be a destination for consumers seeking great value this holiday season. Second, as I've been saying all year long, the marketplace is absolutely loaded with quality branded merchandise across good, better, and best brands. Importantly, this has set us up very well to offer an excellent assortment of branded gifts this holiday season that we believe will excite and inspire our shoppers. Third, I wanna highlight that we plan to flow fresh product to our stores and online multiple times a week, which is a key differentiator of our business compared to many other retailers. With a rapidly changing merchandise mix, I am confident that shoppers are going to be very satisfied with the gift assortments they see every time they visit. Our store teams are excellent at managing this flow and creating fresh, organized shopping presentations throughout our stores. Next, we feel great about our holiday marketing campaigns that just launched. We believe these campaigns can help drive traffic from both new and existing shoppers across each of our banners. This year, each of our divisions will reinforce our value leadership and emphasize that shoppers can get more for their money when they visit. We are also highlighting the fresh flow of merchandise throughout the holiday season with messaging such as, "Spend less, gift more, all season long." In the U.S. and Canada, we are leveraging the strengths of our retail brand portfolio in multi-banner campaigns, helping to drive efficiencies and building awareness. Further, for all our retail banners, we have strong comprehensive marketing plans in place to help us stand out. Lastly, the flexibility of our business model has allowed us to successfully operate our business against some level of retail promotion every year for the past 46 years. I really wanna emphasize that we are extremely confident that we can manage through any type of promotional environment that we may see from other retailers in the fourth quarter and beyond. Looking beyond this year, we are convinced that we are set up very well to capitalize on the growth opportunities we see for our business in the medium and long term. On the top line, we believe we are well positioned to capture additional market share. We see many opportunities to drive sales and traffic as we attract a wide range of customers across many income demographics, which we believe is a key advantage of our business. Further, we have substantial store growth potential remaining in our current geographies around the world. In a retail environment where overall pricing has been reset higher, we believe our value proposition will be even more compelling and visible to consumers, and that our treasure hunt shopping experience will hold tremendous appeal. I wanna reiterate our continued confidence in product availability to support our long-term growth plans. Throughout our history, availability of quality branded inventory has never been an issue for us. Our more than 1,200 buyers source from a universe of approximately 21,000 vendors and from over 100 countries. There has always been significantly more merchandise in the marketplace than we could buy, and we expect that to continue. As to our profitability outlook, we remain committed to returning to our fiscal 2020 pretax margin level. To be clear, that would be a 10.6% pretax margin by fiscal 2025. Over the next two years, our plans assume additional merchandise margin opportunities across all of our divisions. We also expect our overall expense headwinds to moderate, and that freight will be a tailwind next year. Lastly, this outlook assumes that our overall comp store sales will return to a low single-digit increase in each of the next two years. Turning to corporate responsibility, I am pleased to share with you that our 2022 global corporate responsibility report was published this past quarter and is available on tjx.com. This report summarizes our fiscal 2022 initiatives and progress within our four areas of focus, which are workplace, communities, environmental sustainability, and responsible business. The report includes an appendix of ESG data and maps our work and disclosures to a variety of ESG standards and frameworks, including the Global Reporting Initiative, United Nations Sustainable Development Goals, and the Sustainability Accounting Standards Board. We're proud to continue to make progress in our programs and initiatives, and I'm grateful to our teams around the globe for the work they do to support our global priorities. As always, we invite you to visit tjx.com to read our full report, and we'll continue to update the site over the next year. In closing, I want to again thank all of our associates around the world for their hard work that led to our strong results in the third quarter. Our teams have put us in an excellent position this holiday season. I am convinced that we have some of the best talent in all of retail and across all areas of the business. Further, I believe their depth of off-price knowledge and expertise is unmatched and has driven our strong execution. I truly believe our associates will continue to be a major advantage for TJX going forward. I am convinced that the flexibility of our off-price model and our commitment to value set us apart and have allowed us to successfully operate in many different economic, retail, and promotional environments. While we are impacted by macro factors, we have historically outperformed in both good and bad environments throughout our 45-plus-year history. We are confident that we can execute on our short and long-term growth plans to build TJX into an increasingly profitable $60 billion-plus revenue company. Now, I'll turn the call back to Scott to cover our full year and fourth quarter guidance, and then we'll open it up for questions. Scott? Thanks again, Ernie. I'll start with the full year. We increased our outlook for full-year U.S. comp sales and now expect them to be down 1% to down 2% versus our previous guidance of down 2% to down 3%. This guidance now reflects the flow-through of our above-plan third quarter U.S. comp sales and our increased expectations for the fourth quarter. For the full year, we're now planning total TJX sales in the range of $49.3 billion-$49.5 billion. The change versus our previous guidance is due to our forecast that unfavorable foreign exchange rates will negatively impact our fourth quarter reported sales. For full year adjusted pretax margins, we're anticipating a range of 9.8%-9.9%, maintaining the high end of our full year margin guidance. For full year adjusted earnings per share, we now expect a range of $3.07-$3.11, which is up 8%-9% over last year's adjusted $2.85. The change to the high end versus our previous guidance is due to an incremental $0.02 negative impact from unfavorable foreign exchange rates. Excluding this incremental foreign exchange impact, the high end of our adjusted EPS guidance would be unchanged. For modeling purposes, for the full year, we're currently anticipating approximately 130 basis points of incremental freight expense and 70 basis points of incremental wage costs. Also, we're assuming an adjusted tax rate of 25.3%, net interest expense of approximately $10 million, and a weighted average share count of approximately 1.18 billion. We remain committed to returning cash to shareholders through our dividend and stock repurchase programs. In fiscal 2023, we continue to expect to buy back $2.25 billion-$2.5 billion of TJX stock. Now to the fourth quarter. For the fourth quarter, we are increasing our plan for US comp store sales to be flat to up 1% over an outsized 13% US open-only comp store sales increase last year. Next, we are planning total fourth quarter TJX sales in the range of $13.9 billion-$14.1 billion. In the fourth quarter, we're now planning pretax margin in the range of 9.5%-9.8%. This outlook now assumes that most of our third quarter timing of expenses, the expense benefit will reverse out in the fourth quarter. For modeling purposes, in the fourth quarter, we're currently expecting a headwind from incremental wage costs and for freight to be flat. We're also anticipating a tax rate of 24.9%, net interest income of approximately $19 million, and a weighted average share count of approximately 1.17 billion. As a result of all of these assumptions, we're planning fourth quarter EPS of $0.85-$0.89 per share. This outlook now assumes that most of the third quarter timing of expense benefits will reverse out in the fourth quarter and also reflects an expected unfavorable impact due to foreign exchange rates. In closing, I want to highlight that we are in great position operationally and financially to grow our business. We have a very strong balance sheet and continue to generate outstanding cash flow. Further, we are set up extremely well to continue making important investments to support the growth of our business while simultaneously returning significant cash to our shareholders. Now, we're happy to take your questions, and as we do every quarter, we're going to ask that you please limit your questions to one per person, so we can keep the call on schedule and can answer questions from as many analysts as we can. Thanks. Now we will open it up for questions. Thank you very much. As we're now going to start the question and answer session, if you would like to ask a question, please press star one. Please unmute your phone and record your name clearly when prompted. Your name is needed to introduce your question. Our first question is from Omar Saad. Thanks for taking my question. Great job in the quarter. Ernie, as you take a look at the consumer, you know, there's a macro lens through your business, maybe you could talk a little bit about whether you're still seeing any resistance to the pricing that you've put through your business and. Mm-hmm. through the products, and also any trade-down effects showing up, whether inside your business or you're pulling cost-conscious consumers in from other more premium channels. Thanks. Thanks, Omar. Well, on the macro lens with regard to the pricing, we are seeing very, very little resistance, and I would say our hit rate is in the 90%+ in terms of success on measuring it. In fact, at one point, I think Scott, in his script, talked about how our turns are essentially where they were in FY 2020, which is always a barometer. We look at pre-COVID, and we get all the way down to a SKU level. We look at categories, we look at departments, and then we go to SKU level, and obviously, we zero in on where we've adjusted the retail. Because of what's happened around us, where the retails have gone up so much significantly, we have really been so effective at it and hit extremely low resistance. A lot more, I guess, opportunity as we move forward to keep doing it because we've spotted, as you can imagine, we're also spotting places where we've gone up in retail, and we can go up again. You have that dynamic, which is a little unusual because sometimes we do an intermediate price point raise and the goods, whether it's apparel or hard lines, have gone up a couple of price points. Because remember, some of the inflationary hits have been more than just 2% or 3%. There are some items that have gone up 10% or 20%, and we've only gone up the first price point. All in all, Omar, definitely more opportunity there, if anything, in terms of pricing assistance. Scott? Yeah. Hi, Omar. Scott. You know, the other thing, we said this last quarter. I'll use Marmaxx as the example, you know, in terms of our sales and obviously, you know, we had some outperformance at Marmaxx. It's the consistency. You know, asking on the trade-down, not necessarily that we saw any, but it was just a consistency across regions, across age of stores, across locations, urban, suburban, rural, across volume. Almost any way you look at it, we saw that same level of consistency. You know, most of our departments improved, you know, versus the second quarter as you would expect as the overall numbers went up. You know, I think it goes back to what Ernie's been saying, you know, just, you know, the strong execution of our buying and, you know, planning out and our allocation teams. Yeah. You know, the interesting thing, Omar, that I tried to emphasize this in the script is the nature of one of our biggest strengths. We've talked about this before. We probably don't emphasize it enough. It is the fact that we trade so broadly between the good, better, and best in the brands. It makes it a little, by the way, to what Scott said, tougher to read if there's a trade-down or not because we're not going after a certain demographic. Do you know what I mean? We're trying to trade as broadly as we can. We're going after demos, all different income levels, age levels, and we do not go after, you know, one sector of good, better, or best goods. It makes it actually tough to see, you know, are you taking from one trade-down area when in fact, I think in some cases, because we've had some great buys, I see a list every week at the good level, which means in some cases we're taking goods sideways, not necessarily trade-down from other retailers, if that makes sense. Again, I think we're in the advantage of having a good, better, best wide offering is going to continue to serve TJX well on taking market share. Thanks for the color. Congrats, Scott and John. Our next question is from Lorraine Hutchinson. Thank you. Good morning. I wanted to dig in on inventory a little bit further. Are there any pockets of excess inventory, particularly in home? What does your packaway capacity look like? If you were to purchase a large volume of spring product, does that preclude you from taking advantage of some of the great deals you're seeing during holiday? You know, I'll actually prompt Ernie to actually talk first about you know the markdowns you know and how you know overall how that's been. Yeah, I think, Lorraine, great question. One of the things we do, I think that is also different than what some of our counterparts, not just in off-price counterparts across the board, is we take aggressive, timely markdowns throughout the year. With that, it becomes even if we end up with, well, I guess you'd call it liability of inventory, something you're kind of, I think, touching on there, we clear those situations fast. Because we turn so fast, as you know, I think all of you know, we turn our home inventories extremely fast. We have a high standard on taking aggressive markdowns there probably as much as anywhere, if not more so. It never precludes us taking advantage of other opportunities in the market because we're always addressing any issues we have in our stores or inventory very quickly. It really limits any excess inventory situation that we would have anywhere within the box, within its online. By the way, that applies to whether it's HomeGoods or home within Marmaxx or home within Winners in Canada or Homesense in Europe. It applies to every brand. Great question, by the way, because if we manage that differently, and this is where I think it goes to the talent that we have, the seasoning and other people have a similar model of business, does not mean they execute it the same and take the markdowns as aggressively as we do. I think again, it's another advantage. Yeah. Talking about just the markdowns, you know, this year, you know, we keep talking about our markdowns rate has been better all year than our fiscal 2020 levels, although our markdowns have been slightly higher than what we had anticipated, but they've been built into each, you know, forecast that we give you and have largely been exactly where we thought they would end up. No surprises there. Again, just to reiterate, we have adjusted a lot of our inventory pickup has been due to getting inventories a bit, you know, earlier than we expected as the supply chain improved quicker than what we had, you know, when we had ordered the goods and, you know, they just came in quicker. We expect, again, our inventories to come in at the end of the year. We've adjusted all our open-to-buys. The receipts will obviously have a bit less receipts this year than last fourth quarter. Really, by, you know, flushing that inventory down, you know, we'll have both the inventory levels where we want and great cash flow in the fourth quarter compared to both last year and even compared to fiscal 2020. Thank you. Our next question is from Matthew Boss. Thanks, and congrats on a nice quarter in a tough backdrop. Thank you. Thank you. Ernie, could you speak to drivers of comp improvement as the quarter progressed? Notably, I think you cited sequential acceleration in traffic. Maybe how you see Marmaxx positioned to take share in holiday. Then Scott, merchandise margin, if you exclude freight, remains materially above 2019 levels. I guess maybe if you could just help walk through what are the structural improvements in the model that you see relative to pre-pandemic? Right. Yeah. Matt, let me go with the first couple, and then Scott will jump in with regard to some of the margin aspects. Yes, acceleration within the quarter, total sales, but I think what you're getting at is on some of the categories, we mentioned that our, and we're very pleased with this, our apparel in general and Marmaxx outpaced the store. That is an extremely healthy barometer for us. It also means that we are going to be driving more traffic down the road when we do that. It's very healthy. Whenever we typically run some of our best market share gains is because the whole store is participating. Of course, last year you had across the board, not just in TJX, a home business that was over-indexing in most businesses. We are very happy, particularly happy with our apparel business in Marmaxx. So when you ask, you know, what any categories help driving it? Yes, apparel, ironically. I don't think that is the same story with other retailers. I think you're gonna hear more mixed reads as more results come out on the apparel business. Once again, I'll give you the different why do I think our apparel shines. By the way, this, I think we're performing better in every division there is because of the branded content, good, better, best brands. Our apparel is not non-branded driven. It's brand driven, and it's across good, better, and best. That applies to whether it's our ladies business or our men's or our kids business. We try to go after all three levels and really have a branded focus, not a private label focus. I think that's really key. I think that's why I look at the future. You're asking, I think one of your questions there was about Marmaxx. How we position open-to-buy is in great shape. We have open-to-buy in all the areas that are some of our higher driving sales, better sales performing areas right now. I also look at the on order, because we can see some of the. Again, we buy close to need, but we still can see a first quarter on order. 'Cause as we start, you know, buying and putting goods into those buckets, so to speak, the branded content based on what's been available in the market, this applies not just to apparel. This applies to accessories or to our hard lines areas, to our tech areas. The branded content is really going to be at a new level here, going forward. A lot of that is the nature of what's been happening in the marketplace, just yielding an amount of inventory across all of these brands that is beyond what we normally see. I'll let Scott now talk to the margin. Yeah. Well, you know, I'm not the expert on actually why we're buying better, so I'll let Ernie, you know, say that. Oh, yeah, I didn't mean for you to. Yeah. Well, I'll speak a bit on the technical side there. I think when we look back since the beginning of the year and what we did on, you know, in the last, in August, is that our retails have largely, as we've said for the last couple of quarters, been unchanged. It's not because we're raising retails any more or any less than what we thought. It's really basically what we thought has happened. The cost increases have come through. They, you know, they haven't been changing dramatically and our retails have raised up slightly above the cost, but we haven't done that any more than what we had thought. What has changed over the last you know couple of quarters and when we changed our forecast last quarter is that we're buying better. The marketplace, as we said, was absolutely loaded, and we've actually been buying better. Some of this and again is the freight is largely coming in where we want a little timing between the third and fourth quarter. Markdowns came in slightly higher, but again, on our forecast. It's largely we're actually buying better than what we thought, not a real increase more than what we thought. We would expect the same thing in the fourth quarter to have a strong you know merchandise margin you know buying and you know with better you know better overall mark-on. That's about, you know, all I have to say on the merchandise margin. Yeah. I'll just jump in, Matt. I think Scott's saying it. Really, it's been a two-pronged effort in terms of buying the goods better and retailing. The retailing continues, but I think the new news is that we are buying better based on the market environment than I think we had even anticipated back a couple of months ago. Although that's where I think what anything you'd read about the availability and that creating, you know, more inventory out there for models of business like us to take advantage of, that part is turning out to be true, so. Yeah. We've also been helped out as we thought it would because we saw the apparel in, you know, getting better as we move through the back half of the year. You know, last year when it was all about having a significantly higher home contribution, we're kind of back to where we were from the apparel home contribution at the end of this third quarter, where we were back in fiscal 2020. You know, it's almost been a 6%-7% change in the apparel home contribution, which certainly has benefited us, you know, a bit on just from a mix point of view on the average retail. Thank you. Our next question now is from Brooke Roach. Morning, thank you so much for taking our question. Ernie, I wanted to follow up on a few of the high-level guardrails that you provided into next year and calendar 2024. As you contemplate that low single-digit comp sales increase that you suggested next year, are there any color and takes that we should be contemplating by major banner? Do you expect this to be led by a sequential increase in traffic, or will this be a balanced traffic and ticket driver as a result of ongoing pricing strategy and better branded availability in the stores? Well, those are good high-level questions. I think the first one on the single- digit comp, first of all, hard for us to call today on how much will be from traffic or ticket. We're being very conservative on our traffic expectations based on what's going on, but I think it's probably gonna be a combination. It is a little early for us to kind of step out and make a call on that. Your first part of the question is, I think, how much does it vary by, you know, banner. Right now, our initial thinking is it's in a pretty narrow bandwidth by banner. They're all going to be planned fairly similarly within a couple of points, I would say. This is not different than this past year, and the volatility of what's around us is making it a little challenging for us to kind of, you know, Scott and his team, myself, with all the SEVPs, we try to figure out, you know, what's our best guess. Who could forecast some of the things that happened even this year, where sales are not, you know, where we had projected. Having said that, we've been able to execute in a different manner and pull off some things that I think strategically are gonna benefit us on the long term. A flexibility of our model, but the team that we have executing that flex, that we've executed, I believe the team has executed really well. You know, again, I can't. I have to be a little vague on that because we're not sure. The only thing I can tell you is right now our initial thinking on our banners is they'll be in a pretty narrow bandwidth, all planned fairly similarly. Thank you. Welcome. Our next question from Paul Lejuez. Thanks, guys. Hey, I just wanna go back to the mark-on benefit that you spoke about. You said that it helped you in 3Q. I think it's been helping you, but you know, maybe Scott, can you frame the benefit that you saw in 3Q versus prior quarters? Also, how are you thinking about mark-on in 4Q relative to what you've been seeing? And then also just curious about the expenses, just the nature of the expenses that shifted out of 3Q and into 4Q. What were those? If you could just give any detail there. Thanks. Yeah, we're not going into the detail just due to the timing of, you know, multitude of items, some related to inventory, you know, flow and the related costs and in- and/or expenses of how they get capitalized between one quarter and another. That's really all to say on that. In terms of the margin, if you look at it on a three-year basis on our mark- on, you know, similar levels of, you know, it's largely gonna be driven by, you know, strong mark- on whether it's of, you know, on a three-year basis or a two-year basis. Nothing really much more to, you know, add there. You know, it can't break it down because there's tens of thousands of items, so it's a combination of, you know, some retail and better buying, and it's hard to parse out exactly what goes to which, but it's a combination of the both. Certainly, again, as we've talked about over the course of the last, you know, six, seven quarters, having a slightly higher average retail helps on the expense lines, whether it's in the freight stores in DC, and that's a good chunk of, you know, some of the benefit we've been getting as well. Got it. If I could just pivot one other direction, Ernie. Just, you know, there's some concerns, just macro concerns out there, you know, over in Europe. I'm curious how you feel the business is positioned over there to take advantage of, you know, maybe consumers looking for value, maybe what you're seeing over there from a promotional perspective and competitive positioning of the business. Yeah. Paul, great question. We talk about this all the time. You know, the environment there is at a different level of challenging from here. It's even more serious, and you have the market drops by retailers there are even more significant than they are here. Our sales have, you know, been below our expectations there. What we do is we look at our sales performance against the retail market, and we have been trending basically 500 basis points-1,000 basis points ahead of the competition there. We don't like the way the consumer is getting hit there and affecting us. Relatively speaking, we are actually gaining significant market share there. Our outlook there is over the next year or two to continue to gain more market share and take advantage as things level off there. We're staying extremely liquid and demanding the same, you know, type of looking for the same type of healthy terms and model execution that we do here, and being a little patient with the environment. We can't control the traffic. What we can measure there, and we do the footfall going into our stores, and that has been off, not the conversion of when they're in our store. The good news is when the customer is in our store, they're very happy with the mix they find, and they are buying at a conversion rate very similar to before. That's not the issue. The issue is footfall is off, but it's off less for us than it is for the competition. Scott, I think- Yeah. I just, I mean, the other thing is given the environment over there, it's even more difficult for many retailers. It certainly, you know, Ernie can jump in after me, but we're certainly, you know, adding as many new vendors as we have in the past and probably getting our fair share of, you know, good, better, and probably even more better and best over there in terms of the branded, you know, quality. Absolutely. I think that's a thing. You know, given the environment, we've talked about this before, we're still taking advantage, you know, of both, you know, relocation opportunities at good rates and obviously, you know, getting lower rates when our leases come. You know, we're minimizing some of the costs, you know, and taking advantage of those aspects that we can. Yeah, Paul, Scott was bringing up a good point there. The level of what you do have in a situation like this is there's some I was talking about the good, better, best, how we go after all three. We've had a disproportionate amount of better and best goods over there and from some brands and sizable deals that normally we wouldn't have seen or opened some vendors we wouldn't have opened as recently. That all bodes well. That's truly our best form of marketing and our best form of capturing a customer for the long term. Again, I think we'll just stay patient and we'll weather and we have to execute the way we always do. We'll, you know, mitigate any margin drains or anything like that because we're keeping the business clean. Got it. Thank you, guys. Good luck. Thank you. Our next question is from Mark Altschwager. Great. Thanks for taking my question. I guess first, for Scott, with respect to freight, just any further color on what you're seeing in terms of the inbound versus trends in domestic freight expenses and how you're thinking about the recapture opportunity next year? Then Ernie, you've emphasized the gifting position quite a bit over the last few years. Can you talk about some of the learnings from recent years that you've incorporated into your holiday assortment and marketing plans this year that support your confidence? Thank you. Sure. Yeah, we're certainly not gonna go into giving specific guidance at this point in time, but, you know, there's been largely no major changes to what we thought would happen at the back half of this year and consequently what we would thought would happen next year. When, you know, when we were giving, you know, the long range guidance out for 2024 and 2025, you know, going to that 10.6%, it contemplated, you know, over the course of those two years, some freight benefit. We still, you know, are assuming, you know, that due to whether it's you know, less demurrage or some of the ocean freight or some of the other factors and over two years switching some of it to more intermodal than we, you know, currently have, we do see a you know, freight as a you know, tailwind, but we're not going into the details. Certainly give that more on the, you know, when we give more detailed guidance on the February call. Yes, we definitely, it's built in. None of the factors have really changed from what we thought over the last. Yes, a tailwind over the next, you know, two years, on that. Obviously, as I think we stated earlier, the freight will go down significantly from the, you know, third quarter impact over last year or over 2020 versus the fourth quarter. Mark, talking about our gifting positioning, yes, we've talked about that every year for the last few years. What's really neat, I think for us on what we've done in every banner and every geography we're in is we have become a cooler. You know, we've talked about our entertainment quotient and all that, but we have been cooler for gifting because now we're hitting even younger audiences that are very comfortable buying gifts from us. I think the big thing that's happened over the last handful of years, and we have really accelerated during COVID, is A, our in-store experience from our. I mentioned this in the script. Let's start with our store ops teams and our field organization really does an amazing job on setting up our stores for gift giving, well beyond what we did six or seven years ago. I give them a lot of credit on how we present giftable tables and features and knowing where to put certain items toward the register and really catering to impulse gift items. They do it across the board with good, better, and best goods. They are just phenomenal at setting up, and that's whether it's in a Marmaxx store or a HomeGoods store, a Sierra, you name it, Winners, TK Maxx. Every division is all over the gift giving presentation and execution from a store level. Secondly, we are now more branded than ever. If you think about if you wanna give a gift, and this applies to any demo in any age group, any income level, you ideally are gonna lean toward giving a branded gift. It doesn't feel good to give a private label gift or a gift that's just kind of generic. Well, and then this holiday, we will be more branded than ever. I think that's gonna bode well for our gift business as we get even closer to Christmas. The third aspect that we've tried to do every year in terms of gifting is a significant amount is done closer to Christmas every year. It moves back a little bit. We last year ran out of a little bit of steam right toward Christmas. We think one of our fourth quarter opportunities this year is to have fresh flowing branded goods that are gift oriented coming in later, which we are significantly going after this year, which I think is gonna bode well for our Q4 sales, especially in the last week or two right before Christmas. I think, you know, I think that touches on why, again, two of those reasons are really why we've been doing better every year at it. This last one I think is really about a this year, last year comparison. I intend for us every year to continue to get better and grab more market share at holiday. Even though years ago we were not thought of as a gift destination, I think now we're absolutely becoming that. Thank you for the question, Mark. Thank you. Our next question is from Michael Binetti. Hey, guys. Congrats on a nice quarter. Scott, I'll have to add my congrats to you here on the next steps. I think you said just on near term one on the three-year rate was increasing throughout the third quarter, strong exit rate. The guidance looks like it's baking in a little bit of a deceleration in that three-year rate. Maybe just to comment on what you're seeing on November versus your expectation for the rest of the quarter and source of conservatism that you wanna hold back. You know, Scott, a little math on the consensus model looks like expectations are for about a 2%-3% comp in that combined US business in the first half next year. You listed a number of things you're comfortable with slash excited about. I just wanna make sure you think that's reasonable. Yeah. We haven't given any guidance on how we're breaking out getting to the 10.6% from next year or the year after. We don't have any details to share at this point or have on the breakout by quarter for next year. In terms of the fourth quarter, the start of the fourth quarter, your question that, you know, overall US comps have improved over, you know, the last day or so. You know, as there was some unseasonable weather early on, however, this has been factored into our increased Q4 US comp guidance. I guess, again, just all factored into what, you know, what we've contemplated. Makes sense. Maybe I could follow up with one just a little bit further out. Based on the buys that you commented on, you know, I'm wondering how long you think you're gonna have. You know, how long do you have visibility to having these great branded assortments? Do you have visibility via your pack away into this great good, better, best, assortment of branded goods into fall of next year at this point? Yeah, Michael, so the good, better, best is, has been. You know, that type of content has been there prior to the recent surge of availability. I would think that will continue to the level that it's at here, which is an unusually, you know, flooded market across, you know, way more than we could ever buy. It's hard to have visibility really as to the long term. The only thing I would say, as I said in the script, is for 40-something years, we've always had more availability out there than we can buy. So I don't see that changing. Here's the other thing, and I didn't get to mention this earlier. Even if the availability out there comes down a little, one thing that has happened during COVID, as we've seen recently, is for our merchants and our vendors, we have become even more important to them than ever before. We always like to think we're their first call. I think from a different perspective, we have just become, without a doubt. For the branded market, I'm talking. We have become even more important as a relationship for them to liquidate their goods and to know that if they get aggressive on some of their cuts ahead, which you know, again, most of those cuts are imports, that we're gonna be there for them. I think they know that even more so now and on our part, our relationships there are better than ever. Michael, the packaway, were you asking about the level of packaway? I'm just wondering if you already know that you've got good packaway for HomeGoods that can be deployed in the fall season next year, if the content and the amount of branded goods that you're very excited about clearly today, you have in-store today visibility in packaway today visibility that you'll be able to have those goods on the floor next fall. Yeah, we're not at a high level of packaway at this point in time. Okay. We're probably, you know, even or slightly lower than what we would have been. It's more on the come, on what we will or could buy. Right. You know, for the rest of the year for next year. I'll jump in there on that one. What could happen because of the availability is typically we're still right now. We're just in the middle of November. You're in this time, Michael, when actually you're using the goods, so you don't and we don't. You buy through a lot of these current goods, and as you go through it, as you get toward maybe December, you start saying, okay, there's goods in that category from that vendor left. I am now gonna look at packing those away. My gut would say to me, there's gonna be more of that later than there was prior. So as Scott said, right now, we don't see that. Just based on what's out there, however, I would guess there will be more packaways coming out of this Christmas that we would pack away for next fall than we did last year. Okay. Makes sense. Thanks a lot for all the detail, guys. Yep. Our next question from Chuck Grom. Hey, thanks a lot. Good morning. Congrats on a good quarter. You know, typically consumers trade down during these tough economic times, but you know, that's clearly not the case for you yet. I guess I'm curious why you think that's different today. I guess when you look ahead, when you think you may start to see that Walmart is called it out, the dollar stores have started to call it out, but you and your peers have not. Just curious if you think it's on the come, and I guess if you have any sense of when you think you might start to see it based on history in the business. Yeah, Chuck, I guess it's hard for us to read if it's trade down or if we're just getting it across the board. You know, what I think we were trying to say before is we can't read if it's trade down because again, part of that goes to we buy across the better. We're trying to service almost every customer. What happens is, I think we get trade sideways. Right now, we're gaining market share from across the board. That's why I wouldn't say we're not getting some trade down. I would say that's just a piece out of many of the trade overs, I guess you would call it. We can't seem to read it. Scott even mentioned, I think if you look region by region, where you would look at some of these stores that might be closing, where it might have created the trade down, we're not seeing any significant difference by region, which is telling us we're kind of getting a little everywhere. Scott, do you wanna? Yeah. If you go back again, you know, history, 14, 15 years, you know, during the last recession, it was a little more pronounced at the higher income, you know, demographics where you were given the stock market impact to people's 401(k)s. Overall, it was more pronounced in those demographics, so it was more noticeable. Again, I think Ernie said it right. It's that it's so across the board and so consistent, we just may be getting it more across than just from the top end. Thank you. I think we have time for one more question. Thank you very much. The final question for the day will be from Dana Telsey. Hi. Good morning, afternoon, everyone. Can you expand a little bit on the Morning, Dana. Hi. Congratulations, John, and congratulations, Scott. Can you expand a little bit more on the HomeGoods business? Exactly what you're seeing there and how you see that path of improvement coming from and what you saw in home versus apparel. I mean, Ernie, you mentioned it, apparel over in, you know, goes back to the normalized index. But what should we be expecting from home and margin opportunity go forward? Thank you. For home. Yeah, so for sales and margin, Dana, is where you're getting at going forward? You know, our would be that we start to next year, because, you know, we were up against enormous increases this year, as was everybody. The good news is from what I've seen across the board, yeah, we're dropping our home business, but not as much as some of the other retailers, so we feel good. Again, we look at that barometer. We're hoping that next year we get to a home sales trend that's more, you know, back to, as I said earlier, back to those low single- digit comps is what we would hope. Margin wise, you know, there should be some upside because of what's happening with freight becoming a bit of a tailwind. As you know, the home business was hit significantly by freight, more so than most of the other businesses. I do feel that we wouldn't have an outpacing home business. It probably starts to track toward, you know, the rest of our business. Again, tough to forecast with what's going on and all the volatility around us in the environment. But that's kind of our outlook right now. The beauty of our business is we play it hand-to-mouth, close in, and if we're not seeing that, we'll adjust. We are bullish on our accessories and apparel business still moving forward because it looks like there's consistent opportunity as well as there's some newness there. Newness always bodes well in our business as far as generating a reason to buy an impulse, which our business has so much built on impulse SKUs and categories. Again, we just feel good across the board. Good question. Thank you. Thank you. I think that was our last question for today. I'd like to thank you all for joining us today. We will be updating you again on our fourth quarter earnings call in February. Thank you, everybody. Ladies and gentlemen, that does conclude your conference call for today. You may all disconnect. Thank you very much for participating.