Okay, we're at time. Hi, everyone, I'm Simeon Gutman, Morgan Stanley's Hardline, Broadline, and Food Retail analyst. It is our pleasure to welcome Ulta Management to this conference for a return presentation, represented by Dave Kimbell, CEO, and Scott Settersten, CFO, Treasurer, and Assistant Secretary. I don't have my disclosure sheet, but I think I remember. Please see www.morganstanley.com/disclosures for important disclosures. Make a quick intro, sit down. I'm gonna let turn it to Dave for a minute. Everyone knows we're talking about reversion in retail, tough consumer. This business and this management team has largely bucked all these trends by staying prudent, by staying conservative, and making good investments in the business. We're coming off an investment period, which should buoy this margin structure as we look forward, and this category has not been one of overconsumption. It looks like it's been steady consumption, started a little bit later in the cycle, but a steady build throughout. With that, I'm gonna take a seat, turn it over to Dave, and then we'll get going with the Q&A. All right. Thanks, Simeon. Thanks for having us. I just wanted to take one minute to talk about Scott. We announced on our last earnings that Scott is retiring effective April first. Mm. And many of you that have followed, certainly Simeon and many of you that have followed Ulta for a while, have had the pleasure of getting to know Scott over his decade as CFO and his 20 years with our company. And I just wanted to take this moment, 'cause I won't get too many more chances, like this, next to Scott in a setting like this, to thank Scott for his contributions. I think if you look at his decade as CFO and his track record, I think it would stand up among pretty much any CFO in Fortune 500. So thank you, Scott, for your contributions. And thank you. And if you haven't met Paula Oyibo, sitting here in the second row, she... We are excited that we have such a talented internal successor, been with us for several years, and then broad experience before coming to Ulta, that will be stepping in as our CFO, effective April first. So an important transition, and I'm really grateful for Scott's contributions and for Paula's impact going forward. Yep. Scott, thanks for the steady hand and for convincing Dave to come to the conference. You're right. Yes. My pleasure. Yep. Yeah, appreciate it. So, first of all, we will take questions as the session rolls on, so just wave your hands, later on. So thanks for being here and being a regular at the event. We sat here a year ago. We talked about reversion, maybe a weaker consumer. None of those themes, not much of that has impacted you. What surprised you? What's gone better? What's gone worse? Yeah. I think, overall, we feel, generally speaking, the year has gone, I'd say, pretty consistent with how we've thought coming into the year. It is absolutely a dynamic time, and I don't need to tell any of you all the influences that are going on in consumers' minds, and the economy, and the global environment, and the political environment. A ton of pressures and a ton of impact and anxiety, but when I look through the lens of beauty, you know, we expected it to be healthy, but moderating the total category, and that is what we're seeing. You see that in our business as, you know, still very healthy comp, 4.5% comp growth in the third quarter, which we are proud of, but of course, moderating. You know, we were well into the double digits last year. So we anticipated that. We shared that as we went into this year, our expectation that we would see, you know, moderating growth throughout the course of the year, and that's largely. The consumer is still very engaged in the beauty category. That strength that we again anticipated moderation, but healthy engagement has largely held up. We see it across all parts of the business, across all price points, across, you know, consumer demographics, and across key categories. And we're really pleased with that, and we think, again, with some moderation, we remain confident in the overall category. The other thing that I'm really, you know, pleased with within our company is we set out this year on a very ambitious transformation agenda, really touching many parts of our core infrastructure, our Project SOAR, our ERP upgrade, our digital store, supply chain investments, POS upgrade, so many core systems. And you know, we've made progress pretty consistent with what we had set out to do through the course of the year. So while it's been a wild year in many ways, overarching beauty category has continued to be strong. Our business has responded well to what's, you know, going on in consumers' lives, and we've made progress on many of the core initiatives that we set out to do. We're in the holiday season. We heard from you last week. As we look forward through the holiday season and into 2024, you touched on the health of the consumer. How do you think the consumer continues on their path? Yeah. We're, you know, confident. You know, we know you all are watching and tracking everything going on in the world, and so we're well aware of that, and I touched on some of that. You know, the impact of inflation, the inflation we see, you know, unemployment being at a really good place. But you layer in global conflicts, layer in the political environment, the stress and anxiety that consumers feel, even as indicators in the economy are positive. So it's difficult to exactly predict where consumers in general, more broadly, are going to go. But what we do remain confident in, in beauty. Every indicator we see is that the engagement in beauty, the desire to discover new products, the desire to kind of talk and discuss and learn about new beauty ideas is, it remains. And so as we look into both the remainder of this holiday and into next year, the growth that we experienced coming out of the pandemic was not sustainable double-digit growth. So we have—as we've been saying for a while, it will moderate. Historically, the beauty category has grown in the 2%-5% range, very consistently over a long period of time. We expect the category to moderate into that, more normalized growth rate, but that's a very healthy place to be, and so we, you know, as we look forward, we're really confident in the beauty engagement going and our ability to continue to be an important player in the category. Multi-part question. Some of your vendors, they've had some ups and downs with their businesses. How does that impact you? Can you talk about the relationship with them? You're still pushing into multiple categories. You're the everything store in the category, so how does that flow through to you, and then how do you kind of diverge from them in terms of path? Well, one of the things that we take a lot of pride in, and we work very hard to live up to every day, is the relationship and the partnership we have with our brands. We very clearly, very purposely think of them as partners in our success, not as, you know, vendors or tools to get to our success. And so that comes to life through the relationships that we build, the realization that we win when they win, and they win when we win, and we've got a shared interest in driving growth and really tapping into the excitement and engagement that exists in consumers, you know, in the consumer segment and the portion of the category. So what that looks like is, it—you know, I've been here for, you know, 10 years. Scott's been here for 20 years. We see... I mean, of course, in any year, there's some brands are doing better, others maybe are struggling, you know, there's a constant ebb and flow. We have 600 brands in our store. And so what we do is work very closely. We certainly lean into those brands that are thriving. You just had one of our partners, one of our important partners, up on the stage with e.l.f. You know their track record, and we're pleased to be a key partner with them, and we lean in and partner with them in marketing and the innovation and bring them to life. And that's true across all of them. For a brand that's maybe a bit more challenged in the marketplace, maybe innovation is working, you know, we again take a partnership mentality to adjust and adapt to their plans. You know, over time, if a brand isn't meeting, you know, our productivity needs and what we have, then, you know, we make choices. We have to. But we've got long-term relationships. We've. I've seen the ebbs and flows of brands over time, and, you know, it's our job to work with them to kind of find ways to excite our guests. And, fortunately, our brands see us as a main driver of growth, and that's the way we're going to continue to do it going forward. On the most recent call, you introduced the topic, I think you called it channel expansion, and some prestige. How do you think of that strategically? Is that a short term, someone dipping their toe and that comes back? Or no, once it's in the it's proliferated, it's out there, and you just get used to the competition. Yeah, I mean, this has been a competitive category forever, and there have been... You know, you go over the years, and there's been multiple iterations of competitive changes, just like we've evolved and we've added a lot of stores and a lot of presence over years. And so, what we're experiencing right now in a concentrated period of time is it is an expansion of prestige points of presence, hundreds of new, you know, locations to physical locations for prestige products. And what we have seen historically, this is not the first time that we've had, you know, stores, competitors open close to us or in proximity or, you know, near to our existing stores. What we've seen historically and, you know, recently is, there can be a short-term impact on that store, but over time, through our model, you know, we're the only ones that do what we do. We're the only ones that deliver this holistic experience of beauty across all price points. With the power of our loyalty program, the strength of our brand, the strength of our brand partnerships, you know, we've been able to prove that, yeah, even when there's a short-term impact, we're able to return to growth and drive long-term share impact. So we're confident, but it means, you know, like we've been having to do, we need to be, you know, on the top of our game to make sure we're delivering. Our strategy is around shared growth and leading the category. We've been doing it for a long time, and we're confident in our ability to do it over the long term. Skincare, fragrance, haircare. Over the past few years, you've seen good growth in these categories. I don't know if I'd call them wellness-oriented categories, but all three have done well. What's driven the growth in the categories? How are they faring in this backdrop? And are they more or less discretionary than perceived? Yeah, we have definitely seen—I mean, nicely, we've seen strong growth and strong engagement across all aspects of beauty, and there is an increased connection that consumers have between beauty and wellness. This realization that beauty and how I take care of myself, and how I show up to the world, actually, how I present myself to the world, is very much part of my overall wellness routine, just as much as nutrition or exercise or anything else, mindfulness, anything else you might do in your wellness journey. Beauty plays an important role, and consumers kind of knew that, generally speaking, before the pandemic, but that was, boom, kind of locked in and reinforced in the pandemic as a lot of people evaluated: How am I taking care of myself? And this realization, that beauty. So the categories, skincare, fragrance, and hair care all have—but even makeup has a wellness component. But those three, and they're each a little bit different. You know, skincare and hair care, you know, have very specific, some very specific, wellness-oriented products. You know, whether obviously how you take care of your skin, how you protect yourself against, you know, with sun, you know, sun protection, how you take care of your scalp, scalp health, hair health. There's a growing element of that, but even just broadly about how I'm just engaged in those categories. Fragrance is interesting because, what the realization there is, this idea that I'm not wearing fragrance for others, I'm wearing it for myself, and I feel better when I'm wearing a fragrance, even if I'm sitting there by myself, which is a shift in how that category was maybe thought of. And so the wellness there becomes more of an inner health idea, and I think it's a good example of where the category is going. So wellness plays a bigger part in every aspect of the category, and we're investing heavily to make sure that, we're making that connection for our guests and we're a destination for our guests as broader wellness. On category mix, there's been some changes over the last, call it, decade. Where do you think it goes? Do you care where it goes? It goes where the industry goes, or is there a more favorable mix in terms of optimal profit for you? Yeah, generally speaking, we thought we want to kind of lead the category, but partner with or understand where the consumer is going. We're not trying to, you know, there is not an optimal mix for us. We want to be the destination, and we have continued to evolve. What I like about our mix right now is, we're a bit more balanced. Makeup is our biggest category, it's about 45%. It had been higher in years past, above, you know, half of our assortment, and so we like the mix. What I think in a perfect world, I'd love to see growth across all of it. From a margin standpoint, you know, our, you know, we're able to balance all of it, and we, you know, we're confident in our ability to manage margin. You know, some are a little bit higher than others, but, you know, we're not trying to, like, drive our assortment solely through the lens of margin. We want to be leading with guests, and then we'll make sure the margin delivers. As input costs or prices from suppliers or partners moderate, what's your philosophy on price, and are you satisfied with the price-value equation that you're delivering to the customer? Yeah, so when we think about price, and people normally use the word ticket, I guess, when they're referring to that. So just a quick reminder, so our prestige business, which is about half of our assortment, is really sold at MSRP. So as vendors adjust pricing, we, we follow close behind them. On the math side of our business, again, that's a little bit more flexible, and the competitive set there is much different for us. And so we're never intending to be a price leader on mass, but always a close follower and make sure we stay very competitive. I'd say we saw some extraordinary pricing action, especially in 2022. So kind of coming out of the pandemic, some in 2021, but really, an extraordinary step up in 2022. Good news is, we've seen that moderate here, and we expect that to continue as we get into 2024. When we look at the ticket overall, we don't really plan or forecast to a tick, a ticket metric per se. It's really an outcome of a lot of other choices that we make across our business. So assortment choices, new brand choices, promotion choices, you know, newness, things that come into the mix, and the halo effect that goes along with those things, as well as the pricing activity we've seen here in the last couple years. So, overall, feel like we're in good shape there. Traffic is something that we pay more close attention to. So again, I think most would agree that healthy traffic trends are really, you know, the core of a good retail business. We are happy to see what we call about a 6% transaction increase in the third quarter, on top of very healthy growth the last couple of years. So doing a good job lapping strong performance the last couple years. I would say the value piece of the question that you asked, Simeon, so the consumer has a very sophisticated way of thinking about value. And I'd say Ulta Beauty in general, value is part of our core, our core, you know, engagement with the guest. So when they shop with us, they expect... Again, a large percentage of our customers expect to get a good deal. So that'll be part and parcel of how our go-to-market tactics, you know, forever. And I'd say we just need to do a better job of managing that through our CRM capabilities and other levers that we've developed over the course of time just to better manage that. The pressure on ticket, I think you've been clear, the units per transaction have been coming under some pressure. Is that partly because of prices going up and the consumers buying fewer items? And then is the consumer also gravitating towards just lower priced items, even with the fewer number of items in the basket? Yeah. So, again, the great benefit that we have with our loyalty program is we have a lot of detailed transaction data to look at, and we've been monitoring that very closely here over the last couple of years coming out of the pandemic. And to this point, we haven't seen what we would call a trade-down phenomena occurring with cohorts in our loyalty program. Again, our assortment is very unique, so we see shifts in shopping patterns. So e.l.f would be a great example of that, right? It's a great value product base with a lot of great innovation and a lot of great social media traction right now. And so you can see people shifting into those brands, but it's not because it's a price point necessarily that's driving that. I'd say one of the other things affecting that is kind of the lapping effect of some of the great phenomena we've seen here, especially last year with the Dyson phenomena, right? Price point and units. We had the introduction of Fenty, Olaplex, and Drunk Elephant to our assortment last year. And so you see there's a natural halo effect that come from some of those new brand launches that I'd say we're kind of cycling over right now, that is causing some of the, the overall financial results that we're seeing with some of those metrics. You mentioned social media. Thinking about social media activation, remember when we went through the makeup momentum, probably 2017 or 2018? Mm-hmm. I don't know where social media was in terms of being able to monetize that customer directly. It's probably in better shape today, where that business, if someone sees something online, they could purchase it away, you know, from, let's say, your native app. How do you think about that? Is that an issue, or no, is the business still just flowing upstream to you? Mm-hmm. Yeah, it is another example. We've talked about the competitive environment, another example of the continued evolution of this category. Social buying has been, you know, emerging and evolving for years. What I'd say, stepping back, social engagement is sky-high, has been for a long time. You talked about it as kind of really in that 2015, 2016, 2017, as YouTube and Instagram and the role of influencers there was taking off, and there were opportunities then through the technology to buy directly, but our, you know, our business thrived over that time. TikTok is... Those two are still really big. TikTok is in the lead, though, and really making an influence, and they're, you know, they're doing, you know, some interesting things. What we've seen and what we believe and what we're driving is, one, we need to lean into it. We've got a great you know, effort in all aspects of social. You know, I'll give you an example of that that we talked about in October. In the month of October, TikTok did its first ever kind of Beauty Month, and Ulta was their partner in that, around the idea of the joy of beauty and bringing that to life. So an exclusive partnership with TikTok because we recognize and understand the power of that vehicle to educate and engage beauty enthusiasts across the board on what's new and what's exciting. It is one of the best things about this category. The level of dialogue and discussion is sky high. Beauty is one of the biggest genres of any social platform, whether it's TikTok or Instagram or YouTube. It's, you know, it's music and it's gaming, and beauty is like it's one of the top three to five genres of every. So the amount of volume, the volume of dialogue is extraordinary, and we need to be participating in it. As selling kind of evolves, you know, some of that will come and go. What we've seen generally speaking, okay, whether it's DTC brands, online selling, the strength of what we offer, the desire for guests to, like, not just buy individual items or brands, but to be able to get loyalty, to be able to curate a collective assortment of products, to mix and match what they need across a full assortment, is a preferred way of shopping, and so that's largely been true. But, we know the world's continuing to change, and we're staying close to all that. Target, they're gonna be here tomorrow. We'll ask them the same question. Yeah. Can you talk about the partnership? Are you seeing new customers? The risk to you would have been that your core customer shows up to there. For them, it seems like it's a straight home run. It seems like it's been a home run for you as well. So can you talk about the dynamic customer overlap and where the relationship goes? Yeah. Well, I'd say it's great, great partnership. We're really pleased with how we've evolved that, how we brought it to life, the experience, ultimately, the experience that we're delivering to our guests. The reason that we did this partnership is all about the guest experience and what we set out to do, and we believe that we're doing it, and we'll continue to elevate and evolve this as the partnership grows. We set out to make sure that we were meeting the needs of our guests and attracting new guests. So meeting the needs of our guests. What I mean by that is, what we've seen in our experience is the more touch points we can deliver for our guests, the more opportunities we have to intersect in their lives and to add value to their lives in ways that engage them deeper into all that Ulta has to offer. So shopping in store, shopping in salon, using our app, getting our credit card, you know, using our buy online, pick up in store, getting salon services, doing your brows, and now shopping at Target. Every pretty much every one of those experiences add incremental value and increased spend and love and loyalty of Ulta. And so we set out to make it easier, another touch point to make it easier. Not to replace, not to, you know, you know, set aside our existing stores, but to make another incremental touch point for our existing guests, and that's, you know, that we are proud of what we brought to light. And we feel like it's an opportunity to grow, contribute to the growth of our loyalty program. Our loyalty program grew 8% in the third quarter, 42.2 million members. It wasn't the biggest driver by any means, but it was a contributor to that, because there's opportunity to, again, intersect a guest, both reactivate those that maybe have fallen out of the program, for whatever reason, by giving them a touch point. Oh, yeah, I do love Ulta, and I'm gonna shop in here." And then there, you know, there's 30 million people that walk through a Target every week, I mean, more in holiday, but on average, and many of them are not Ulta loyalty members, and so we've had some, you know, success attracting them. So we see it as a way to delight our guests, to grow our member profile, and deliver a great experience. We believe we're doing that, and there's more to come in that journey together, and they've been a great partner on that. All things shrink. Do you think? First, where is it, if we've quantified it? Do you think 2023 is the peak pain year? What are you doing to mitigate it? And the fact that you are working to mitigate it, shouldn't it be the peak pain year? Yeah. So whatever. It's no secret, and it's not just Ulta, and it's not just beauty, right? A lot of retailers have been talking about ORC pressures on the business and driving step increase in shrink trends, you know, across the spectrum. So what's Ulta Beauty doing? Fixtures. Fragrance fixtures in our stores. These help us mitigate impacts from people coming in, you know, and cleaning shelves off and things like that. So roughly 75% of the fleet is covered right now at the end of the quarter with the new fragrance fixtures. We expect that to be 100% early 2024. We've seen it. We know that that works. That helps us mitigate shrink in our stores. We also have staffing and training of our personnel, so store associates. So where we put those fragrance in line, we also add incremental labor to the stores to make sure that the guest experience is not impacted in a negative way, and that guests can still get access to the products that they're looking for. Training, make sure people are ready. So again, we're not gonna stop ORC things happening in our stores, but we want our people to be prepared to react to that. Again, guest and associate safety is at the top of the list when these situations occur, and then making sure we get back in stock quickly, so when the guest comes back, that we're in stock and ready to sell product. Self-help, so internal process improvement. So again, kind of an all hands call across the enterprise to make sure that we're doing everything we can to eliminate or, you know, minimize shrink in all the other different forms that it takes across our business, from the vendor dock to the front door of our store, right? Again, it manifests itself in many different ways, and there's things we can do to help ourselves on that front, and we're making good progress there. And then lastly, bigger picture, Dave and others in our organization are working with RILA and NRF, with local and federal legislatures, to help change some of the rules and the laws to help mitigate some of the bigger picture pressures out there and try to de-incentivize some of the behavior that we're seeing in our stores. So the good news is, third quarter, we mentioned last week that we seem to be gaining on it a little bit. Again, we've kind of mitigated some of the deleverage points that are coming from shrink across our business. Again, there's still a long way to go there. So, we're optimistic that over the long term, we can claw back some of the shrink give back here over the last couple of years, but there's still a lot of work for us to do. Gonna talk about the promotional environment. We're about 12 minutes, so if you have questions, start thinking and raise your hand. So first, can we talk about the promotional environment around the holiday? A year ago, we talked about... You were prudent to say: Look, we think promotions will, will come back. We debated whether oligopoly was setting in, such that we don't have to see it, the same environment that we used to, but seem like we're slowly getting there. What else can insulate the business from higher levels of promotions over time, and besides, talking about the current environment? Mm-hmm. Yeah, so fourth quarter, the holiday season specifically, it's always been promotional, right? And Ulta Beauty, we participate in that, like most of retail does, right? We're all fighting for gift-giving dollars. So it's a different period of time for us than the rest of the year when we're up against fashion and electronics and sporting goods and everybody across the retail universe. So we compete, we compete, you know, in an aggressive manner there to make sure we get our fair share. So the fourth quarter, as a standalone measurement period, I would say, last year, it was not more promotional than it had been. Again, when you look at the full year, 2022 was at a historic low promotional level. The fourth quarter was a step up from where it was, right, the first three quarters of the year. So as we're going to 2023, we're not expecting it to be materially different. Yes, we've seen the material environment kind of, or the, the promotional environment tick up a bit as we've gotten deeper into the year. As we've communicated to investors, that's what we expected to happen in 2023, as people got back to more normal and our competitive set got back to a more normal kind of operating environment. So I'd say overall, we're, we're, we're on track with kind of where we thought we would be in 2023. What can we do? Things that we've been working on for many years, and we've seen continue to, to mature and to scale over time, all things related to our loyalty platform and our CRM capabilities. So adding new tools, new, you know, people and capabilities, you know, usually think of the word data scientists, right? So giving us more insights into the data and helping us, develop more personalized approaches to market to our guests, and kind of moving away from some of the old, I'd call, more broad scale, kind of blunt instrument, kind of discounting tactics, and just be able to use more of our, our digital relationship with our guests and to drive more one-to-one kind of promotional offers, which we think are more impactful and build a deeper sense of loyalty with our guests over a period of time. So again, promotion, it's always going to be part of our business. That's part of our DNA. People expect to get a good deal when they shop with Ulta Beauty, and now it's our job, and we've gotten better at this over time, is just being able to navigate our way through that with better overall margin rate impacts to the business. Right. The big investment bucket, supply chain, UB Media, SOAR. Can you talk about the phasing, where we are with these investments? And I can tell based on the last call, everyone's yearning for the payoff. When is the payoff? What does it look like? Yeah, so this has all been sequenced. Again, many of you have probably heard bits and pieces of this over the last couple of years. So we are in the midst, Dave mentioned earlier, in the midst of an ambitious transformational agenda across our business, and that's really a function of somewhat, I'd call, deferred maintenance, maybe a bit because of the disruption from the pandemic. So again, we were being careful, and not conservative, we were being prudent. Mm-hmm. Yep. And part of it is replacing outdated, end-of-life kind of systems, and part of it is continuing to build for the future to support growth. So I'll start with the quickest payback to the longest tail. So POS, across our store fleet in 2023, hardware and software enables new capabilities, takes friction out of the shopping experience for our guests. Done. UB Media, out of the starting gate in 2022, ramping up in 2023, delivering benefits to the business now, will continue to scale and deliver more over 2024 and beyond. Digital store of the future, major re-platforming, front and back end of our digital business. All right? Again, age and wear and tear, and getting prepared for the next $1 billion of revenue in that channel of our business. Largely complete, will be finished up in the first half of 2024. Gets us out of double expense. We're maintaining two platforms right now until we get it over the finish line in the first half of 2024. Project SOAR, rebuild of our ERP system. Again, this was one age and, and, you know, amping out of that one. So that was Y2K technology. We were forced to do it now. We've made a lot of great progress over the last two years. We expect to finish that off in the second half of 2024. And then lastly, would be our supply chain transformation. Again, thinking about cost pressures that are on the horizon around labor and last mile delivery and things like that. So going back and looking at our existing fleet and, putting automation in there to help with some of those things, and then, implementing what we call MFCs, which are shared inventory, closer, smaller buildings, but closer to some of our key end markets to take some cost out of, out of the system there. So overall, when we think about benefits, so POS now, UB Media now and growing. Digital store, the future starts in 2024. SOAR, 2025 and beyond, and then supply chain, kind of a longer tail. So again, there's going to be, you know, some bumps along the road. Not everything goes perfectly, but we're very happy with our accomplishments so far and feel like we're well-positioned for the long term. You teed it up for Paula's future. That's right. Yes. Two more from me. Again, if you have questions, feel free. Oh, we have one in the back. Feel free. Thank you. Can you, can you just elaborate on, in particular? How can you size the opportunity and how, how—you know, when you talk about kind of 2024 and beyond, as it grows over the time, how do we think about... Yeah. The size of that? Yeah, I'll just say generally in UB Media, we're really... It's an important, you know, growth opportunity for us, and we're excited about the progress. The core idea is, you know, leveraging the power of our 42.2 million members, the strength of the data we have across our assortment. We're the only ones that have transaction-level insights and data for across all price points, across, you know, makeup and skincare and hair care and fragrance with services, physical stores, digital, big digital presence, app usage. I mean, you go down the list. So we've got arguably the best level, transactional level data in beauty, because of the breadth and the scale of our offering. It gives us a platform that adds value to our brands, our brand partners who want to optimize and elevate the ROI of their marketing spend, and they increasingly see the opportunity to do that through more personalized, tailored spend with the power of our data, and that's a very important part of the overall marketing mix. We believe that, you know, there's opportunity we add uniquely. You want to talk about how that then flows through? Yep. So again, 2022, we communicated initially, kind of planted the flag, I guess I would say. 2023, we're scaling up a team. This is a whole new way of doing business for us, so it's taken some incremental, I call, foundation investments around tools and ways of doing business for, for our internal teams. And so now we're poised to really begin scaling that next year. And when we think... I'm sure you'll work one in here on margin before we're all done, Simeon, but this is something we're counting on to help us, you know, be a tailwind when we think about margin expansion over the longer term. Good transition, Scott. Yeah. So if you think about all the big box retailers the last couple of years, a lot of them had margin targets, expectations that we hold where we were. I think you're one of the few, if not of any, that got the margin progression correct. Got to a certain level, it's retrenched a little bit, but it's been within the guideposts. So that means what you say about forward margin is probably gospel. So what is the right margin for this business? All right, [Paula], I'll take care of you on this one. Okay. Mm-hmm. Yeah. Yeah, so we've been. You know, again, we reiterated last week that the 3-5 comp should get us 14%-15% operating margins in for the foreseeable future, I guess, the next couple of years, in accordance with the financial algorithm we provided at our last Analyst Day. So again, for folks not following as closely, so the question always is 2019 versus 2022, right? And so 2019, I'd say, was the toughest point in the cycle. So we were under a lot of pressure. The promotion lever was pulled back hard in 2019 because the disruption we saw in our prestige color cosmetics business during the course of the year, and then the channel mix challenge we were having back in 2019. And then juxtaposition to 2022, where you're at all-time historic lows on the promotional side of things, and that, again, Ulta participated, as all of retail did, in that phenomenon. And then the channel mix kind of went the other way, right? As the store base kind of came out of it very strongly, out of the pandemic, e-commerce, while we doubled the size of that business, on a rate basis, it moderated, right? So the headwinds weren't as significant. Then there was a lot of other things we did during the course of those three or four years to make our business healthier, put ourselves in a better position. So new capabilities like BOPUS, right? Buy Online, Pick Up in Store, didn't exist in 2019 in any meaningful way. Ship from store capabilities to help us mitigate some of the last mile costs. Same-day delivery now capability in our stores. There's things we did under our EFG umbrella, our cost optimization objectives that, you know, across our business, the merchants having better data capabilities to prepare them for negotiating with our vendors and making sure our assortment choices are more disciplined now than maybe they were pre-pandemic timeline. The work we've done on our store fleet to optimize our footprint and to make sure we've got the best-in-class economics on our new store leases as we're renewing across the portfolio. Couple that with the UB Target thing that we're doing now, a nice royalty. UB Media added to the mix, and then, of course, over time, we expect these strategic initiatives, the stores, the digital stores, the other things we have in the queue on the big projects to deliver benefits to the business. So again, we feel like we're in a good position, and we're confident that we can deliver within our long-term guidance. I'd like to paraphrase by saying there should be upward pressure to that range, but you wouldn't commit to that, correct? Yeah, well, you know, there's a... I guess I probably skipped over. There's headwinds, too, right? I mean, there's wage pressures, there's last mile delivery pressures, there's lots of things across the business, and then year to year, we make choices on the assortment, right? In some years, we're willing to give up a little rate for the halo that comes with some of those new brands. So again, we take it in a very pragmatic fashion and just try to make smart choices to optimize. Thank you. Thanks for being here. Good luck in the fourth quarter in 2024. Congratulations to everybody. Great, thank you.