Ladies and gentlemen, thank you for standing by. Welcome to The TJX Company's Fourth 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 as of today, February 22nd, 2023. I would now like to turn the conference over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc. Please go ahead, sir. Thanks, Ivy. Before we begin, Deb 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 filings, including, without limitation, the Form 10-K filed March 30th, 2022. 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 and other laws. 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 other non-GAAP measures we discuss today to GAAP measures are also posted on our website, tjx.com, in the Investor section. Thank you. Now I'll turn it back over to Ernie. Good morning. Joining me and Deb on the call is John Klinger. As we announced last quarter, John has been promoted to CFO. John will be covering the financials on the call and taking your financial questions today and going forward. Scott continues in the SEVP of Finance role, with more of a focus on corporate areas like business development and real estate. I am very pleased that our company will continue to benefit from both of their financial expertise and decades of TJX experience and leadership. I'd like to start today by thanking all of our global associates for their great work in 2022. I am truly appreciative of their continued commitment to both TJX and our customers. I wanna give special recognition, though, to our store, distribution center, and fulfillment center associates for their hard work and dedication every single day. Now to an overview of our results, beginning with the fourth quarter. I am extremely pleased with our strong top-line performance. Our better-than-expected U.S. comp store sales increase of 4% was driven by the excellent performance at our Marmaxx division, which delivered its strongest quarter of the year. We also saw positive U.S. customer traffic in the fourth quarter, which was also driven by Marmaxx. Our exciting assortment of gifts and great values resonated with shoppers this holiday season. I believe the freshness of our mix really sets us apart as we shipped ever-changing selections to our stores and online throughout the quarter. In terms of profitability, pre-tax profit margin increased over last year. Our merchant organization continued to do a great job buying better and retailing strategically, which drove excellent mark-on. Unfortunately, we had an outsized shrink charge in the fourth quarter that resulted in pre-tax profit margin coming in below our plan, which John will discuss in a moment. For the full year, total sales were nearly $50 billion. Profitability improved over last year, and adjusted earnings per share grew 9%. I want to again recognize all of our talented associates around the world for the excellent execution of our flexible off-price business model throughout the year. Their collective efforts drove outstanding value on our assortment, excitement in our stores, and the satisfaction of our customers. Moving to 2023, the first quarter is off to a strong start. We are excited about our plans to drive sales and customer traffic and are laser-focused on initiatives to drive profitability this year and beyond. Availability of quality branded merchandise is phenomenal. We are in a great position to take advantage of the opportunities we are seeing in the marketplace. Further, we are convinced that our commitment to value and our treasure hunt shopping experience will continue to serve us well in this environment. Importantly, we continue to see many opportunities to capture market share and improve profitability over both the short and long term. Now, before I continue, I'll turn the call over to John to cover our fourth quarter and full-year financial results in more detail. Thanks Ernie. Good morning, everyone. I'm pleased to be starting in this new role. I wanna add my sincere thanks to Scott for his guidance and mentorship over the years, and I look forward to continuing to work with him. I would also like to echo Ernie's comments and thank all of our global associates for their hard work and commitment throughout 2022. I'll start with some additional details on the fourth quarter. As Ernie mentioned, U.S. comp store sales increased 4%, exceeding our expectations. Our U.S. comp growth was driven by a very strong 7% comp sales increase at Marmaxx. For the fourth quarter, average basket was up in the U.S., driven by a higher average ticket. U.S. customer traffic was up. TJX net sales grew to $14.5 billion, a 5% increase versus the fourth quarter of fiscal 2022, despite a significant impact from unfavorable foreign currency exchange. Fourth quarter consolidated pre-tax profit margin of 9.2% was up 20 basis points versus last year, merchandise margin was down slightly. Within merchandise margin, strong mark-on was offset by higher markdowns, which were compared to exceptionally low markdowns last year. Freight was a benefit in the fourth quarter. Further, we had an unplanned shrink charge of 60 basis points versus last year. I wanna note that our fourth quarter pre-tax profit margin guidance contemplated an expected 50 basis point benefit from shrink due to the elevated charge in the fourth quarter of last year. Therefore, the negative impact of shrink versus our pre-tax profit margin guidance was 110 basis points. Lastly, we're pleased that earnings per share were $0.89, up 14% at the high end of our plans. Moving to our fourth quarter divisional performance. At Marmaxx, fourth quarter comp store sales increased a very strong 7% over a 10% open-only comp increase last year. Marmaxx's comp increase was driven by apparel and accessory categories, which had a high single-digit comp increase. In the fourth quarter, customer traffic was the main driver of the comp increase, and average basket also increased. Marmaxx's fourth quarter segment profit margin was 11.6%. HomeGoods' fourth quarter comp store sales decrease of 7% versus an outsized 22% open-only comp increase last year. HomeGoods' fourth quarter segment profit margin was 7.3%. Internationally, we're pleased with the performance of both our TJX Canada and TJX International divisions in the fourth quarter. At our Canadian division, net sales were up 10% on a constant currency basis versus last year. Segment profit margin on a constant currency basis was up 12.5%, which exceeded their fiscal 20 margin. At our international division, net sales on a constant currency basis were up 11% versus last year. Segment profit margin on a constant currency basis was up 7.2%. Excuse me, segment profit margin on a constant currency basis was 7.2%. To our full year consolidated fiscal 2023 results. U.S. comps, U.S. comp sales were flat versus a 17% U.S. open-only comp sales increase last year. TJX net sales grew to $49.9 billion, up 3% compared to fiscal 22, despite a significant impact from unfavorable foreign currency exchange. Full year adjusted pre-tax profit margin was 9.7%, a 10 basis point increase versus last year's adjusted 9.6%, and merchandise margin was down. Within merchandise margin, strong mark-on was more than offset by 120 basis points of incremental freight cost and higher markdowns, which again, were up against exceptionally low markdowns last year. Shrink expense negatively impacted full-year merchandise margin by approximately 30 basis points and was not contemplated in our most recent full year guidance. Full year adjusted earnings per share were $3.11 at the high end of our plan and up 9% versus last year's adjusted $2.85. Moving to inventory. Balance sheet inventory was down 2% versus the fourth quarter of fiscal 2022. We are confident that we are strongly positioned to both capitalize on the abundant merchandise in the marketplace and flow fresh assortments to our stores and online this spring. I'll finish with our liquidity and shareholder distributions. For the fourth quarter, we generated $3 billion in operating cash flow. For the full year, we generated $4.1 billion in operating cash flow. We ended the year with $5.5 billion in cash. In fiscal 2023, we returned $3.6 billion to shareholders through our buyback and dividend programs. I'll turn it back to Ernie. Thanks John. I'll pick it up with some full year divisional highlights. Before I begin to speak to them, however, individually, I wanna highlight the outstanding performance of our teams across each of our divisions in 2022, while they navigated historic levels of inflation and an uncertain retail environment. All year long, each of our retail banners delivered shoppers an excellent assortment of apparel, accessories, and home merchandise and offered great value every day. Beginning with Marmaxx. Full year comp store sales increased 3% and total divisional sales reached $30 billion. Marmaxx's apparel and accessories businesses were very strong all year long, with a mid-single digit comp increase. For the year, average basket was up significantly and customer traffic increased slightly. Marmaxx's full year segment profit margin was 12.7%. During the year, we opened a combined 50 T.J. Maxx and Marshalls stores. We remodeled approximately 225 stores, and the feedback from customers has been terrific. We are extremely pleased with the performance of our largest division and see a significant opportunity to continue growing the top and bottom lines. At HomeGoods, full year comp store sales decreased 11%. It is important to remember that last year, HomeGoods had a remarkable 32% comp sales increase as we saw consumers spend an outsized amount in home-related categories. While HomeGoods customer traffic was down for the year, average basket increased. HomeGoods' full year segment profit margin was 6.3%. In 2022, we surpassed 900 stores for this division with the opening of over 50 HomeGoods and HomeSense stores. Long term, we continue to see the potential for HomeGoods to open over 500 additional stores and for profitability to significantly improve. At TJX Canada, net sales were nearly CAD 5 billion and increased 18% on a constant currency basis. Segment profit margin increased to a very strong 14%. Our Canadian business operates more than 550 total stores and is very well penetrated throughout the country. TJX Canada is one of the top apparel, accessories, and home retailers in that country, and a shopper destination for several signature categories. We remain confident that TJX Canada is well-positioned to capture additional market share over the short and long term. At TJX International, net sales surpassed $6 billion and increased 22% on a constant currency basis. Segment profit margin improved to 5.7% on a constant currency basis. In Europe, we believe we significantly outperformed many other major brick-and-mortar retailers as our values resonated with consumers in a heightened inflationary environment. In Australia, sales were very strong and we continued expanding our store footprint across the country. Going forward, we believe that we can grow our market share in each country that we operate in and continue to improve this division's profitability. As to e-commerce, we added new categories and brands to each of our online banners in 2022. While e-commerce only represents a very small percentage of our overall net sales, it allows us to offer shoppers our great brands and values 24 hours a day. As we look ahead, we are convinced that the characteristics of our business and the depth of talent in our organization will allow us to capitalize on the opportunities that we see to further grow our top and bottom lines. First, we are in an excellent position to continue offering consumers great value and freshness every day. We have a team of more than 1,200 buyers who source from a universe of approximately 21,000 vendors last year, including many new ones. Our ability to buy goods across good, better, and best categories gives us tremendous flexibility in the vendor marketplace. Again, availability of merchandise is phenomenal, and we'll have plenty of quality branded goods going forward. Second, we are convinced that the appeal of our touch and feel treasure hunt shopping experience will continue to resonate with consumers. Giving us confidence is the continued strength of our customer satisfaction scores. Further, our leadership and flexibility allows us to take advantage of the best opportunities and the hottest trends in the marketplace. This allows us to offer our shoppers an assortment of merchandise to surprise and excite them every time they visit. We are also focused on being a gift-giving destination all year long. Third, our convenient, easy-to-access store locations attract consumers across a wide income demographic. Our eclectic mix of good, better, and best merchandise across categories allows us to offer a branded, fashionable mix across a wide span of price points. We see these as key advantages as we continue to expand our store footprint. Long term, we see the potential to open more than 1,400 additional stores across our current geographies, which we believe will attract even more shoppers to our great assortments and values. Next, our marketing has been very effective in targeting consumers with broad reaching and compelling brand campaigns across different channels and platforms where consumers are currently spending their time. Our messaging is continuing to reinforce our value leadership and demonstrate that we are one of the best choices for consumers during the current economic environment. We are particularly pleased that we continue to attract an outsized number of younger customers to our stores, which we believe bodes well for the future. As to our profitability outlook, we are planning an increase in our fiscal 2024 adjusted pre-tax profit margin to a range of 10.0%-10.2%. Beyond this year, our target remains to return to our fiscal 2020 pre-tax profit margin level of 10.6% by fiscal 2025. Giving us confidence are the sales, better buying, and strategic retailing opportunities we see going forward at each division. John will outline the other assumptions embedded in our plans in a moment. Turning to corporate responsibility. We continue to focus our global corporate responsibility efforts under our four key pillars: workplace, communities, environmental sustainability, and responsible business. Last quarter, I noted that TJX published its 2022 Global Corporate Responsibility Report, which summarizes the company's ESG efforts and progress across these four reporting areas. As a reminder, in fiscal 2023, we set expanded and accelerated global environmental goals, including a goal to achieve net zero GHG emissions in our operations by 2040. We are working hard to make progress toward our goals and help mitigate our impact on the environment. I'd also like to take a moment to speak about the work our teams are doing in our communities. In fiscal 2023, we helped support more than 2,000 nonprofit organizations globally. We're very proud of the impact this has had, including helping to provide more than 25 million meals to individuals experiencing food insecurity and helping with access to educational opportunities for more than one million students from under-resourced communities. We also continue to support nonprofits working towards racial justice through new grants to several national organizations. Finally, for the first time since the beginning of the pandemic, we were able to restart our in-person community relations programs and have seen a resurgence in volunteering across our organization. In the past six months alone, our U.S. associates provided more than 2,400 hours of service to their communities. I'm grateful to our teams around the globe for the work they do to support our global corporate responsibility priorities, and we are proud to continue to make progress across our many programs and initiatives. As always, we invite you to visit tjx.com to learn more. Summing up, we feel great about our performance in 2022 and our momentum heading into 2023. I am confident that the strength and resiliency of our flexible off-price business model and the depth of expertise and knowledge of our teams set us apart from many other major retailers and will continue to serve us well. I want to again recognize the exceptional talent we have across the organization. It is their collective efforts and execution of our off-price fundamentals that bring our business to life for our shoppers every day. As an off-price leader in every country we operate in, I am excited about the market share opportunities we see ahead in both the U.S. and internationally. I am very confident in our plans to grow TJX into an increasingly profitable $60 billion-plus revenue company over the long term. I'll turn the call back to John to cover our full year and first quarter guidance, then we'll open it up for questions. Thanks again Ernie. Before I start, I wanna remind you that our guidance includes a 53rd week in the fiscal 2024 calendar. In fiscal 2024, we are returning to reporting overall comp store sales growth versus fiscal 2023, as we now have a baseline for our TJX Canada and TJX International divisions. To our full year guidance. We are planning overall comp store sales growth to be up 2%-3%. As a reminder, our comp guidance will exclude sales from the 53rd week. We expect full year consolidated sales to be in the range of $52.5 billion-$53.2 billion, a 5%-7% increase over the prior year. This guidance assumes approximately $800 million of additional revenue from the 53rd week. We're planning full-year pre-tax profit margin to be in the range of 10.1%-10.3%. Excluding an expected benefit of approximately 10 basis points from the 53rd week, we expect adjusted pre-tax profit margin to be in the range of 10.0%-10.2%. This would represent an increase of 30-50 basis points versus fiscal 2023's adjusted pre-tax profit margin of 9.7%. Our pre-tax profit margin guidance assumes that we will see a benefit of about 80-100 basis points from lower freight expenses, as well as a continued benefit from better buying and strategic retailing. We're planning these benefits to more than offset continuing headwinds from incremental wage and supply chain costs. Also contemplated in our guidance is that shrink will be similar to last year. For modeling purposes, we're currently anticipating a full year tax rate of 26.1%, net interest income of about $116 million and a weighted average share count of approximately $1.16 billion. We expect full year earnings per share to be in the range of $3.39-$3.51. Excluding an expected benefit of approximately $0.10 from the 53rd week, we expect adjusted earnings per share to be in the range of $3.29-$3.41. This would represent an increase of 6%-10% versus fiscal 2023's adjusted earnings per share of $3.11. Moving to the first quarter. We are planning overall comp store sales growth to be up 2%-3%. We expect first quarter consolidated sales to be in the range of $11.7 billion-$11.8 billion, a 3%-4% increase over the prior year. We're planning first quarter pre-tax profit margin to be in the range of 9.2%-9.5%. This guidance includes an expected benefit from freight of 130 basis points and headwinds from a combination of incremental wage and supply chain and the timing of some expenses. For modeling purposes, we're currently anticipating a first quarter tax rate of 26.4%, net interest income of about $29 million and a weighted average share count of approximately 1.17 billion. Lastly, we expect first quarter earnings per share to be in the range of $0.68-$0.71. Moving on to our fiscal 2023 capital plans. We expect capital expenditures to be in the range of $1.7 billion-$1.9 billion. This includes opening new stores, remodels and relocations and investments in our distribution network and infrastructure to support our growth. For new stores, we plan to add about 150 net new stores, which would bring our year-end total to nearly 5,000 stores. This would represent a store growth of about 3%. In the U.S., our plans call for us to add about 45 net stores at Marmaxx, 50 stores at HomeGoods, including 18 HomeSense stores. At Sierra, we're planning to open 18 stores. In Canada, we plan to add 11 new stores, and at TJX International, we plan to open 18 net stores in Europe and 6 net stores in Australia. Lastly, we also plan to remodel 400 stores and relocate approximately 55 stores in fiscal 2024. As to our fiscal 2024 cash distribution plans, we remain committed to returning cash to shareholders. As we outlined in today's press release, we expect that our board of directors will increase our quarterly dividend by 13% to $0.3325 per share. Additionally, in fiscal 2024, we currently expect to buy back $2 billion-$2.5 billion of TJX stock. I'll finish by highlighting the assumptions we've included in our fiscal 2025 pre-tax profit margin target of 10.6%. First, our outlook assumes that overall comp store sales will increase 3%-4%. Secondly, as I just highlighted, we're expecting freight to be a significant tailwind in fiscal 2024 with a smaller benefit expected in fiscal 2025. We expect that incremental wage and supply chain costs will continue to be headwinds in both fiscal 2024 and fiscal 2025. Our plans assume that shrink will remain similar to fiscal 2023 over the next two years. As Ernie highlighted, our plans assume additional merchandise margin opportunities across all our divisions. I'll mention that certain macro factors we haven't made assumptions for could change our plans, such as geopolitical events, foreign exchange volatility, consumer behavior, or a worsening shrink environment. I wanna emphasize that we have a very strong balance sheet and continue to generate a tremendous amount of cash. We are in an excellent financial position to invest in the growth in our business while simultaneously returning cash to our shareholders. We are happy to take your questions. As we do every quarter, we're gonna ask that you please limit your questions to one per person, so we can keep the call on schedule and answer as many questions as we can. Thanks, now we'll open it up for questions. Thank you. As a reminder, if you would like to ask a question, please press star one. If you need to withdraw your question, you may do so at any time by pressing star two. Our first question comes from Michael Binetti from Credit Suisse. Please go ahead. Hey, guys. Thanks for taking our question here. I guess just on a modeling cleanup, would you mind helping us quantify the swing in incentive comp dollars in 2022 and how much that we should anticipate that coming back in 2023? I guess in the bigger picture on the margin, as we look out to the North Star getting back to the 2019 pre-tax profit margin of 10.6%, this year's 9.7%, as you mentioned. You probably have, I think if I'm doing the math right, about 300 basis points or more of cumulative freight in-embedded in 2022, and I think shrink was only about a 30 basis point headwind versus 2019. You have, obviously, you know your leverage, you have pricing as a new lever since then. Maybe you can help us think about what are the other incremental headwinds we should consider that would cap the end point of the recovery at 10.6 next year? Michael, you're asking about the, you're going to the 10.6 and what would be the challenges of getting there? Well, yeah, with starting at 9.7, and you have, you know, 300 basis points of freight, you'll recapture some of that, and then shrink's only a 30 basis point headwind, I think. It just seems like there's opportunity to go above 10.6, but I would love to hear what we should think about for our models to that would. I like your attitude. That recovery. Yeah, I mean, part of this comes down to, as always, you know, we're gonna plan, as witnessed by this year, right? We did not plan on the shrink impact. Yeah. On the flip side, to your point, our sales, certainly in Q4, are showing that we have some really strong momentum and perhaps we're planning conservatively on that line. It's just a little early to call based on the environment that's around us. Yes, we had Marmaxx have a seven comp in the quarter. We are feeling very bullish on as well as all the divisions and all the different metrics throughout all the performance metrics throughout TJX are extremely healthy. Other than the shrink surprise, to your point, and I'm just gonna try to explain why we are where we are on the plan. To your point, shrink was the only component of our operational performance that wasn't very strong. Everything else, sales, merchandise margin, the way we're retailing and buying goods, the way we operated and managed expenses and distribution at stores, all of those metrics are extremely healthy. Now we have a situation where we're looking at, you know, and John will touch on it, we're essentially planning our shrink flat, okay? For this coming year. You know, when we're putting in tactics and strategies to try to ensure that we get there, I do think, you know, we're being judicious, I think, on that plan and not trying to go to either extreme either way and expect too much or too little in terms of how we manage that. How do I put this? We're feeling very good about the way we're positioned going in because I feel on the retailing of goods and the buying of goods, we're probably in a little better position where, you know, there might be some upside there to your point. The, the strange thing that's happening in the dynamic of this is this is part of the art form, is the vendor community right now, because of a lot of store closures, as well as the slowdown in the e-com business across the board, is obviously creating an influx of inventory and better brands than we've seen even versus our last call. Every call we're talking about, you could see we purposely said phenomenal in terms of availability because the environment right now is more phenomenal availability, I would say, in terms of branded content across good, better, and best. Again, I'm giving you the merchandising side and the top line side. We just feel as though we don't wanna go out with too aggressive a sales plan when it's very difficult to forecast and the volatility. As witnessed by last year, we still, you know, we still early on didn't do the sales we're figuring on. We have HomeGoods, which we're still trying to figure out the home trend nationally. We might have another couple quarters across our home businesses, which just aren't in HomeGoods, that could keep our top line down a little. Q4, right, we ran a -7% in HomeGoods. We still hit a 4% in TJX, driven by Marmaxx and Canada and Europe. Bottom line is we're being conservative in our plans, but I think judicious given the environment. I'll let John get into some of the financial modeling margin question. Yeah. Michael, just on the, you know, getting to that 10.6%, I mean, in FY 2025, again, it does assume a three to four comp, and continued benefit from, you know, better buying and average retail. Now we do anticipate a benefit in freight in FY 2025, albeit lower than what we're seeing in FY 2024, and that's really a function of, you know, the when our domestic contracts renew. There would be a little bit of year-over-year benefit as we cycle a full year of that freight savings, along with things we're doing internally to reduce our shrink rate. Wage and supply chain costs, we expect those to moderate in FY 2025. We're adding a distribution center In all of our brands this year. There will be some, again, year-over-year, you know, the annualization of those costs in FY 2025, but we do expect those costs to moderate, and again, shrink flat over the next two years. You know, beyond FY 2025, we do expect to be able to hold or slightly increase pre-tax margin on a three to four comp. Again, it assumes a slight improvement from better buying and average retail with no outsized expense headwinds and some favorability from shrink going forward. We still feel very good about the fundamentals of the business. Next, we'll go to the line of Omar Saad. Please go ahead. Thanks for taking my question. A couple follow-ups. Maybe, Ernie, you could talk a little bit about the comment you just made about e-com, you know. That's the channel slowing down across the board as a source of inventory. Maybe also talk about the fact, at least on a multi-year basis, it seems like your home goods business is stabilizing, and you're seeing a little bit, maybe more of a predictable pattern at home at the same time as apparel and accessories accelerate. We talk about that dynamic, you have kind of both, the pandemic winner and the post-pandemic winner working at the same time, both of those kind of two sets of categories. Thanks. Omar, great, great questions. I'll go with the e-com one first. Yeah, I agree, and I think you were starting to hint at that. It creates a sales opportunity for us certainly, as e-com business has slowed across the board. By the way, and our e-com business is very complementary and additive to us, but it's such a small 2%. You know, we're not a player there per se, in terms of the key component. However, it does help our branding and our current feel for our younger customer base, as well as the older customer base for our brick and mortar. We are high on our e-com business. It's just the external businesses that are so big have been running into, as you know, some of them are home related, some of them are apparel related, and they're running into, I think, given the inflation, they're running into obviously top-line slowdowns. They might have hit saturation points within certain merchandise categories. That does create, and I think you were getting at it, an additional inventory supply for us, ironically, that we have been taking advantage of. When I was referring earlier when Michael had asked a question about our positioning, et cetera, and I was mentioning in the script the phenomenal availability, we know that a chunk of that availability is actually e-com spill off availability from many of the other e-com players. It's a tremendous source, and also some good brands in there as well, because some of the vertical e-com players, as you can imagine, tough to forecast that their sales were gonna be that hit that hard, that they were gonna yield this much goods, which is why we are very, very bullish on the branded content of our mix, specifically even on the better and best levels. We, you know, we have lulls every now and there. You know, key to our success, we believe, is carrying ranges of good, better and best merchandise across all the categories consistently as much as possible, and e-com has been a great supplier of that. Home and Home Goods. Yeah. Yeah. HomeGoods, Michael, is. Well, it's very interesting. You could see our decrease there in Q4. It's getting a little better, and I think, Omar, I mean, the way you were referring to it, I think, Omar, as we look out, you know, we're kind of watching the next couple of quarters and seeing where we're gonna go with that business. What I would say here is talk about store closures and e-com declines in that arena. That is going to create. All we have to do there is weather the storm and keep HomeGoods and home and our Marmaxx business going, and we think we come out the other side here, and even a bigger player in a fashion home business than anybody, you know, thought we would be. The key is everyone has to go through this lull in the demand. I think that creates a shakeout that actually, to your point, we see light at the end of the tunnel. It's just, you know, we're not seeing it right now. HomeGoods, you know, still down 11% for the year, down 7% in the quarter. The interesting thing is if you look at total TJX, we still ran a 4% with HomeGoods down 7% because we have everything else clicking, which is one of the best parts about our portfolio, is we're so diverse that we're able to flex. We talk about our flexible business model all the time. This is the time when that flexible business model really shines. I think when you have a category like home, which is a rollercoaster ride, we're able to mitigate the ups and downs by the rest of our business. Great question. I'll just add on that. You know, it feels like sales are getting close to stabilizing. Q1, as Ernie mentioned, is up against, you know, really strong sales from previous years. It's actually the highest three-year stack of the year that we're going into. We feel like Q2 will probably start to see more clearly, you know, where we are with that. You know, we feel, you know, really good about the value proposition, which is still strong. We're attracting new customers, we're opening new stores, and we're likely to benefit from other home store closures. We still feel very positive about the HomeGoods business. Thank you. Our next question comes from Lorraine Hutchinson. Please go ahead. Thanks. Good morning. I wanted to get your updated thoughts on pricing. Was there any change to the customer reaction to your price increases in 4Q? What are your plans for prices this year? Lorraine, okay, great touch base on that. Yeah, no. The pricing strategy has continued to work extremely well. In fact, very few situations, and again, our buyers are all over it. When it doesn't work, we have repriced. The good news is we turn so fast, as all of you know, that it doesn't last long in any SKU, and it's been. I'm saying we're 95% successful on it. Going forward, as I mentioned in the script, that is a key component of our way to continue to raise our margins because it's a combination, by the way, of buying better and the strategic retailing of the goods. Lorraine, one of the big advantages we have, you know, we've been looking at this a lot in depth recently. Well, it goes to a couple things. It goes to the fact that we do good, better, best. Many other retailers, as you know, are fairly narrow, and I don't wanna say the names of them, but some, you know, some of them, they're good. Maybe they'll dabble in bit better, but they surely don't do good, better, best. That's in terms of quality, the level of brands, good, better, there are, you know, there are good brands, meaning they're household names, but they're at a moderate price per se, better brands, and then there's, you know, higher end designer/best brands. Because we tend to wanna have a balance of all of that in every category throughout the store, we're able to execute the strategic retailing of the goods more effectively than I think retailers that are really kind of boxed in more of a, just a good and low, better only situation. Once again, that's. We have this team. The other thing, we keep talking about the business model. Other retailers have strong business models, but they don't have the tenure that we have across TJX and the experience and, you know, the teaching, the university. You know, I was looking for all the different areas within TJX. That's allows us to do some of these pricing things without the risk where you're swinging a pendulum because you don't have the talent, the experienced merchants that we have here. We have such long tenure in buying and planning and stores distribution, marketing, logistics, IT, finance, HR, legal, administrative. I mean, we just have such tenure that it helps us execute some things that I think some other companies run into, where they're not as experienced at it. You know, to your point about the customers, it's, we've had no issues at all. In fact, given our sales, you can see it's. Yeah. We do. By the way, our perception of value, and I think I mentioned that there somewhere in the script, is continues to go up on our surveys on our perception of value by our customers. Thank you. Thank you for the question. Thank you. Our next question comes from Paul Lejuez from, p lease go ahead. Hey, thanks, guys. I think you mentioned higher markdowns within the fourth quarter, the drag on merch margins. Can you just talk about what drove that and if you think that was unique to 4Q, or might that linger into the first quarter? Also, I was curious, inventory, if you could talk about inventory in units, how that breaks down by segment? Thanks. Yeah. Thanks, Paul. Yeah, markdowns were higher versus FY 2022, again, FY 2022 was up against an exceptionally low year. When you look at our markdowns compared to FY 2020, they're actually favorable. You know, the markdown is. Most of it is due to the comparison to a, you know, just an exceptionally low year. Thank you. Inventory? Inventory. Oh, I'm sorry. What was your question on inventory? I'm just curious what it was in units, and how that breaks down by segment? Just to follow up on the last piece, is that markdown issue expected to linger into the first quarter? Do you have really difficult comparisons, would you say in the first quarter of 2023? As far as the first quarter, markdowns, we expect them to be in the first quarter roughly flat to the previous year. Mm-hmm. Now as far as our inventory levels for Q4, you know, we ended the year, essentially, you know, 1% up on a per store basis. We do anticipate the inventory levels to increase a little bit into Q1. Part of it is that the inventory levels, you know, we had forecasted bringing our inventory levels down as Scott had talked about it in previous quarters. We did bring the inventory levels down. We probably came in a little bit lower due to the shrink impact that we had in the first quarter, which we are correcting, excuse me, in the fourth quarter, which we are correcting into the first quarter. You know, we feel very comfortable with where the inventory levels are in our stores. Yeah, by the way, Paul, I'll just jump in on that. On the inventory levels, as John said, it may be a notch lighter than we expect. The other thing is sales, obviously. We had outperformed. Right. In sales, which added to the slightly less inventory. We love our position right now. By the way, this could end up helping with our markdown rate. We're so fresh going into the first quarter and, you know, our start to the year on sales is a strong start, it will allow us to chase and potentially do even better than the sales plan. As you guys have witnessed, for example, we didn't plan to run a 7% in Marmaxx in the fourth quarter. We were able to chase it and achieve it, nor did we plan a 4% overall in TJX. In 2021 when we ran, we had like a 3% comp plan that we ran, I don't know, a 15% or something like that. We did not plan that. We just, you know, we were able to chase because the market has those goods, and there's more goods today than there was then. I like our inventory position because I think it's just textbook for us to. I like our sales momentum, so it's a good combination going in this way. Yeah. Into the new year. Got it. Thank you guys. Good luck. Thank you. Next, we'll go to the line of Brooke Roach. Please go ahead. Good morning, thank you so much for taking our question. Ernie, you framed the opportunity from strategic retailing, buying better, and your pricing initiative in driving margin improvement as you track towards 10.6% pre-tax profit margins. Yep. Can you talk to the sustainability of this better buying environment and the key levers for continuing to expand that buy-in margin, even if industry inventory overhangs begin to ease or the consumer continues to shift towards value? Sure. Yeah, Brooke, let me mention that last thing first. The consumer does continue to shift toward value, and that's one of the reasons our top line is so healthy. We don't think that's gonna change for a number of years, especially in an inflationary environment where there's a pressure on the average consumer with all costs in their household going up. This is really a textbook situation for us. In terms of the buying better, it's all in a few pieces here. Part of it is the strategic retailing of the goods is actually a little different than the buying better. The buying better is, and what you're getting at, is how sustainable is that. One reason I think there's a long sustainability to it is because you're running into a lot of closures and slowdowns with other retailers, permanent store closures, and we are becoming even more important to vendors today than we were even as recently as a year ago, certainly as we were three years ago. We're just seeing the beginning, the tip of the iceberg, I would say, on our ability to leverage that with our all of our vendors. Yes, we have 21,000 vendors, but the reality is we have a lot of really key relationships with the biggest brands in the industry. I would think most of them, and I was on the phone recently with two of our biggest vendors, and I think they would all say that we are more important to them today than ever before. That will help in terms of, in terms of our buying better for a long period of time. That's not just an availability of goods today. That's a long term, more important to the key brands, and we're so brand driven. Unlike other retailers that, b y the way, good, better, best plays into that as well. We're also not, you know, we're not private label driven, where many other retailers are relying on that so much, and that doesn't yield this type of benefit for them because they're their own importers, and they're up against their own dealing directly that way. In terms of the retailing of the goods, that we have many years to go because the inflation. We do shopping reports about how many of our SKUs. We look at our SKUs, how our buyers comp shop our SKUs, how are they at the other retailers. There is still so much more room for us to continue to move along those lines to surgically raise retails because the other retailers around us are having to do it because of inflation. That also a long tail, so very sustainable, not a one-year thing, a multi-year opportunity. We're probably one of the only retailers set up to be able to capitalize on this the way we can. We really are excited about this not being a short-term window because of those two dynamics. It's a great question and one we talk about in depth here. Thank you Brooke for asking that. Thank you. Next, we'll go to the line of Matthew Boss. Please go ahead. Great. Thanks, and congrats on a nice quarter. Thank yo Matt. Couple things Ernie, a key inflection this quarter, I think, was U.S. traffic turning positive for the first time in over a year. Could you speak to the traffic inflection and drivers behind the material acceleration that you saw at Marmaxx? John, just to summarize on gross margin. I think you cited freight up 80 - 100 basis points, shrink flat in the AUR strategy accretive. Is gross margin for the year up 100 basis points or so? Is that fair, or how best to quantify the components? Just multi-year to Ernie's comments, is there any ceiling on gross margin relative to the 29% that we saw in 2017? You wanna start it? What can I do? Oh, go ahead. You can go on the margin. Yeah. Gross margin, you know, we are planning it up 140 basis points, so freight is a major component of that. Also, mark-on an average retail is another piece of it. Those are the drivers for why we are expecting gross profit margin to be up. Now, on the other side of it, you know, obviously, we have minimum wage and, you know, other things that are in SG&A going the other way. That's on a full year basis. Does that answer that, Matt, or? Yeah? Yeah. Just maybe, Ernie, on the traffic. Yeah. Well, the traffic, you know, you're right. It is a bit of an inflection point. I like the way you described it. We would like to see that continue here as we move into the new year. Again, we're feeling good on the start. Going back to the way we're planning our sales though, you know, we'd like to see a longer term trend there to start planning it a little more aggressively. I mean, our gut is we're in a good position here based on the inflection. Again, the average basket was up significantly. Customer traffic, you know, increased slightly, which is good. We'd like to see just, you know, a little bit longer trend there. We do like across the board where our average baskets look healthy, right, John? Yeah. In terms of the. Total. That's feeling really good. If we can start to get a traffic increase on a regular basis, we'll kinda be really off to the races on the sales, although we're feeling already that there's, you know, that we have some upside. Thank you. Our final question comes from Marni Shapiro. Please go ahead. Hey, guys. Congratulations on the quarter and a great year. Thank you, Marni. A good start to this year. I just have one quick question. You've talked a lot about, you know, you've seen a little bit of an increase in traffic, up a little bit in the basket, but are you seeing a change in the way people are shopping your stores? Are they buying more units or just spending more 'cause of some of the price increases? Are you still seeing new people come into your customer file? I mean, from my vantage point, every person in the U.S. is already in your file, but I know that's not actually true. Can you just talk a little bit about what that looks like for us? Well, you know, Marni, we, yeah, we'd like to think every person, but they're not. We still have so much of the population that is not shopping us, strangely enough, which is why we're bullish on continuing. Here's what I think that happens in this environment, by the way, it's going to help traffic even more, back to the store closures that are happening around us. Even if you factor in that half of those stores, only half of the categories marry up and create a visit to us, that's still a big number when you take into account the hundreds that are now slowing down or closing hundreds of stores. Mm-hmm. I think that's going to play into us because we unfortunately, we wish we did, we don't have everyone shopping us. We still have a lot. We, our market share continues to go up every year, however, and as you can tell by our performance, we are gaining% of our sales as new customers without a doubt, and we track that. Right. It's a mix of new customers, up-spend of existing as well as, you know, and some of the up-spend is driven by an additional visit, not necessarily on the basket, John, do you agree? Yeah. I mean, I would say to break down the fourth quarter, you know, is probably, you know, half transactions and half basket. Right Leaning a little bit more towards transactions. That's fantastic. Yeah. Best of luck with the spring season. We do think, Marni, to what you're getting at, is the, we're starting to differentiate ourselves even more because of all the brands that we have. You, you know, you're an avid shopper. Mm-hmm Across the different brands and the different fashion looks and the different quality levels, we're covering across a wide band of pricing throughout all of those and trying to appeal to wider customer range than your typical retailer, which I think is, you know, is working. I think it's happening. Yeah. Automatically on TikTok. You guys are cool. Yeah, exactly. Which is really hard to do when you're this big a retailer, and, you know, for this generation, you're a cool place to shop. I can't believe I'm saying that, but, you know. Yeah. No, thanks I t feels like something has changed. What you're saying is, we have some marketing studies, when you look at TikTok or you look at the average age of our new customers. Yep. I'll give you one other metric, which I mentioned in the script, is we're becoming a gifting destination all year long, which is an indication that we're cool because when people buy gifts, they don't do it from uncool retailers. Years ago, I don't think we were a big candidate for gifting, and now we are throughout the year, which says we're cooler to your point. Best of luck with spring, you guys. All right. Thank you. Thank you, Marni. appreciate all the time with everybody. I think that's the end of our call. Thank you for joining us. We will be updating you again on our first quarter earnings call in May. Thank you all for your time. Ladies and gentlemen, that concludes our conference call for today. You may all disconnect, and thank you for your participation.