Macy's (M) 27 Feb 182017 Q4 Earnings call transcript

Good morning, and welcome to the Macy's, Incorporated Fourth Quarter 2017 Earnings Conference Call. Today's conference is being recorded. I would now like to turn the call over to your host, Karen Hoguet. Please go ahead, ma'am.

Thank you and good morning. CFO company. Hoguet, Karen is of the This Jeff to discuss the I would XXXX. our welcome you like to for Macy's outlook quarter and Gennette earnings and fourth our call today to reproduction transcription consent our of Any prohibited. other the made call is in statements without this or beginning of replay www.MacysInc.com, will hours after on our be A two available the call website, the approximately call concludes. any morning. Investor Relations for reconciliations of website section discussion this discussed our the non-GAAP of to measures refer Please financial and are statements to subject risks in other and the most mind factors forward-looking Keep the including the due results filings. all that SEC that uncertainties actual expectations today company, company's cause recent of the differ to Form could a mentioned that and from variety risks XX-K to affect the and specified company's assumptions materially in going now I'm to over turn call to Jeff. the

everybody, Thank welcome and to you, the good and Karen, morning, call.

position. and we strong XXXX new So in capped with into momentum a Macy's a year good created solid comparable to quarter, the with had commitment we finished growth growth. fourth to and Inc. taking that to We've January, organization momentum focused a a inventories, base clear are into business, an to sales returning healthy a headed in XXXX. a engaged and return XXXX Macy's, Macy's with path We're improved and

Karen then then morning, this And a you give sense in and take on I'm at detail. of the performance XXXX. numbers So going we're XXXX to perspective give you some our how looking through you will

trend change owned positive So to significant licensed, of plus the was comp X.X%, sales us. a was quarter fourth start; for which

weather spending consumer the cold at quarter, strong benefit. was and a Looking was the

quarter. during delivered sub-brands, merchandise Macy's, initiatives in categories. launched earlier in great And the across execution all Bloomingdale's all XXXX the across the kicked the in anticipated, Bluemercury. and had of and brand we We we three that improved As fourth

Our self-purchase. holiday from solid, was strategy gifting to

additional fourth to and sets quarter improvement us by we beauty, We when the an shopping which were encouraging. throughout plan. business. gift fragrance XXXX. as additional great sticking promotional a pulled promotions. up And with while double-digit to healthy a inventory And we saw We discounting is hit we strategy offered When And maintained to our our clear trend position, first in We the strong shift and third glitches, an business, this brick-and-mortar our into we sales, sales, which prestige team inventory. in saw improved not it. our particularly skincare. we a moved quarter, the of we in to we fine-tune experienced meant need driven values trend up heading continued saw We holiday pick took Importantly, together. disciplined digital well did opportunity season, from sets growth

is all us. digital. is this in So success for Macy's healthy good recipe brick-and-mortar with a business, combined for growth robust

So the fourth we're with pleased all-in-all, quarter performance.

through guidance. you walk for of launched in Strategy give XXXX. full we progress at the perspective in to minutes exceeded Star XXXX. since where points some the made our sales of plans we the couple and our in North Strategy Looking North a take you to on the And business base for earnings seen We've and an both we expectations improvement earlier year, love I'd Star XXXX

to simplification. emphasis a the first multi-year be we we're Macy's XXXX, is We good but the will we're our strengthened the and through to reduced complexity a We a machine. And strategy fashion. tackle began calendar, So position greater of in this in point start. brand. brand Macy's effort, And pricing the our on beginning the off marketing of promotional reengineering

strengthen tender-neutral In Star program, including launch program, our XXXX, level, brand. most a particularly customers which continue feel is responding will the Platinum at launched new And customer. our about loyalty to mid-year, our the are our next of option. our phases loyalty We we valuable which Importantly, Rewards. we good enthusiastically, will

merchandise point and good strategy. second our of improving made the Edited, through In is the So assortment Exclusive strategy XXXX, about product Elevated on progress leadership. we

enhanced the improve Our seeing to AUR, customers doors. And increased in have focus our unit in well assortment we on responded the fashion merchandise and XXXX, will of quality X%. all about of average continue retail, and uptick an experience merchandise. we're to In both

a a is stores, more almost to there Backstage. on and that about store, behind stores. good in believe initiatives. in of where we've we full performance seven track upside. includes merchandising Backstage, XXXX, expanded XXX including per We on landed our we for planning malls. our we model off-price lift another are This beauty a we premium transitioning some are customer-centric saw extra increasing model. expand feel And are from offering, of on in exclusivity, putting the We number our XXXX, we're by brand-centric In and some Macy's on-mall to weight reinvent, XX of a to We points locations

a At a of direct her across customer to Checkout, of expansion our And that selection, be The new of in the initiative to Online third and customer strong strategy, explore of both come accelerated Woodbridge to revenue-generating out broadly in enhancements XXXX geography, business, also our vendor looking XXXX, launch size localized also expanding and and an know We expansion most a on to track we everything Store, Pickup across when XXXX. mobile at service step doors. of an and service. business, mean on Service fixtures opportunity proven We're the taste, experience to fashion focus personalized and healthy our of these through including the very and point XX tested actions includes have rollout In on important local we of our model we we our community XXXX, in her We stores of Mobile of scale strategies, Buy the that transact. and on as Ticket, so mid-year. Backstage number stores of improving developing We're up engagement. we're delivery learned. curated plan like the how focus going expand have last In we're customer product beverage. and important technology. will a and a further portfolio put One XXXX, and of product AI more facilities. we experience stores, experience. said, rollout to and model store models, that XX This an we options with more healthy called growth these, we're Growth Centers We're and Big the and year we'll in-store and for food taking the best As mix scale leased in We're offer marketing Your top improving customer stores' talent. we improve worked will use such us to we is and with a more that fulfillment what to ramping the accelerating what expanded in XX merchandising

is positive. pilots which engagement. @ to pop-up to to Samsung channels. drive compelling Macy's how are this new Macy's. creating @ which is the boutique Our at innovation. the believe signs ways customer XXXX, and We about customer and early traffic. XX create Experience traffic and we in continue and particularly innovate us Macy's, excited Market Market our test stores increase new more and earlier We're within The categories just about launched innovate in allows experience broadly retail will Beta, will we revenue number month In launched what and streams. potentially the to think point in fourth of brand store, a and engagement our the drive we programs increase new the traffic, and to new This We began stores XXXX, aimed In includes

of Our we management. fifth funding the on which cost is XXXX, business. efforts, to last reduction ahead is cost In key in our target investment and point finished

year We real look move cost, are and ways our In cash XXXX, operating million to smarter $XXX strategy, a a proceeds. for very productive continuous in also work with improvement. with reduce we will of estate we XXXX, in and had faster. mindset totaled And

may our time, of While the important moderate very will a transactions and remain size number part of estate strategy. over real

mind. execute So Strategy. initiatives Star the our queue rollout When future. in feel We XXXX continue about to commitment and we keep ahead. we and looking to ideas our in several of tested we'll We'll factors North good accelerate to year to growth, the in will primary the up for XXXX, new return XXXX at growth

and we The to up good out continued know are with us consumers do to customer consumer spending. win them. there first, it's and anticipate We

execution. second, we will improve to our continue The

people. our we which accelerating And we're a the key to the XXXX. strategies Thirdly, success, we tested our is factor, that think is in fourth

they support every The stake back play discerning are success. a today is a choices. seasonally, our has performance to to will is all-in in of Macy's role get they people plan an growth. that to And to our be teams and associate associates growth Our many associate And in be every have strategy. our to we hourly, win. is designed competitive to plan we part is why this full-time, and part-time, Today's and our need all That to in win XXXX. consumer incentive announced to want

and she return. focused to her expects investments XXXX and us. best the we customer will We are business. on areas get strategic make winning The believe we directed towards competitive where we the are are committed and what in They of being our can

a the scaling work. These from us over employee fiscal our call tax as that flexibility XXXX. In do more and and path tested for to incentive are chart Macy's, healthy And Inc. a accelerate into growth. an we about will XXXX. and to us summary, business, out we head to with to inventories, in with right includes some base which with in to company Karen, are initiatives I outlook going allow organization. This And mentioned, the a talk the the profitable return improved for And engaged sustainable growth. that momentum, things and performance XXXX. the our that, shareholders us to we tested We we I'm path thing back who additional benefits have to XXXX gave rolling turn we financial investments focused for reform plan

XX-week increased in basis, billion, improvement comp strong discussed. the Thanks, we as Digital than from $X.XXX On year, anticipated. due better were quarter had a week. continued the is fourth licensed X.X% store including expected the we impact the X.X%. quarter, owned in Jeff. trend, of sales the very sales last This as plus XXrd Jeff up to Sales in

strong particularly were beauty, than with hurricane-impacted coats, housewares. Juniors and improvement a in weaker country expectations business our children's, to experienced fragrances, sales of We handbags was shoes quarter. dresses, rebound men's also in fine home were and across from textiles. the exceeded the families jewelry, with strongest We tailored that Our the pleased areas clothing, third trend expected.

In the inventory below York, was last And fourth better XXXX, The year in addition, drop improvement last year fourth help XX the store comp to margin to the versus we still ago. with was X.X% the average inventory below and were SG&A shape up per bring year Square improved the the early experienced our Gross X% ended in transactions a in the New similar in basis, unit X%, pleased The X% a had inventory the Tourist and ability did we XX.X%, merchandise year fresh year open-to-buy down on last store. approximately trend drive down the should comp we $XX to the in fourth quarter. million Units than flagship continued quarter a the quarter. in This year to were quarter in the We and third approximately benefit sales The fourth our points from of down than were basis. increase or the resultant in billion, last sales the much receipts. improve available what last with in sales in quarter. was basis being X.X% quarter expected. third retail quarter. in to quarter. position was the higher was transaction last margin very merchandise below third but in trend strong year, at year. number helped good flat on due $X.XXX Herald our we than better the in in from the quarter versus

$XXX lower by quarter, million in For the million the fall. stores, well associated closed income. our digital better which the in XXrd had Bluemercury. as and the full set at It was grow the week, restructurings, the the in updated down $XXX part with as completed the as below is business, year, year start as well higher and from the depreciation we the last of benefited amortization, and Outlet an SG&A objective year, merchant SG&A than year, restructuring reduction full for this to the growth costs offset well Backstage, credit was as investments Bloomingdale's in as as

plan good increased to quarter $XX was also profitability the program. trend in the sales year. January, business last income well selling extra relative the to in in million, the part, improved. quarter expense up We in was This over $XXX of in due due, the credit fourth as the Credit as continued to store when higher week million

the of both last for penetration periods. XX.X% last approximately excluding billion, settlement, For million the pension up the $XX full closing full Men's gains. and income In the below versus restructuring, year booked non-cash. the XX% and $XX $XXX the XX includes related was closing in impairments, real points we in the building, In total other XX% year, Square $XXX on Square quarter, $XX store $XXX booked We was year, year. and for Brooklyn to year transactions associated in Credit the year, million million other impairments, operating of million, above versus year, Union costs, basis the $XXX booked the $XXX transactions. we costs with which quarter, credit up last excluding million, million And $X.XXX and quarter of fourth estate quarter. other million or time restructuring, with was $XXX Union or for gain fourth last gains million associated million This for income, the store Men's was of a building.

associated million retirement of We diluted $XX plans. also settlement with non-cash basis was quarter charges $X.XX. quarter booked in per the the for Earnings a share our on

benefit as fourth per closing restructurings, was and in in Square. fourth to charges, deferred in the with due reform; to back the these earnings year. gain sale $X.XX table to after-tax and of we the tax federal impairment included of versus the the seen our of $X.XX on associated the one, $X.XX settlement following from the two quarter Net Remember, comparability Men's and store items, out items, press remeasurement guidance release: of years, in the quarter per is last $X.XX of share share For would other building prior two costs. Union the a $X.XX two, taxes impact

over Excluding earnings last year. per that gain, XX% increased share

the So a just summary our that's fourth a quarter and performance, of now I'll make few year. comments about

flow owned restructuring, down settlement year, per the for well sales the the full excluding closing plus on to better tax was timing. slightly some at of million January And also So stronger an licensed related the this and debt million. X% latest which premium deferred the our expected X. expected provided $X.XX basis XXXX, full We The above on or X% last as to share start of guidance Cash provided capital cost, were XX% the in costs, is year. as X.X%, year, $X.XX than year. our the earnings minus by to in of our under-spent impairments, $XXX $XXX in adjustment guidance compares than spending store pension comp the was $X.XX to year minus for

This shortfall intentional our is has most be this XXXX. for spent into projects to guidance in but in and is of due due will delays under-runs, Some factored to XXXX. been

during continued to impacts timing $XXX a favoring including in open maturity $XXX $XXX flow the and in XXXX week in December. the approximately and to our to XXXX. having sheet. balance the XXrd debt We the of relative million demonstrates addition, cash repurchase year, cash In excess in million some payments, we the commitment utilized strong of This tender $XXX delevering completed our paid market, million a July million

our result times, So as the compared reduction, of EBITDA year the a last end ratio was X.X debt X.X year. of improvement and the leverage to as at times

leverage X.X ratio remember, year. Square Union improvement to is building, Men's And a X.X on times. range still gain X.X our last target times, versus the the the Excluding significant was times

our strategy. XXXX, on update estate So to moving on before want you real I to

we've XXXX bringing billion past great with to As said, over in close in estate in a XXXX Jeff these transactions. from $X.X our strategy the years, through few real accomplished cash deal

create estate We our forward. to through opportunities continue we look real to go value for as

We One, private sponsored fund particular real three discuss have Asset morning. store Management. this we our in to a agreement specific Brookfield updates upper by now signed to seven an in have floors sell Chicago Street the of estate to State

to expect $X receive our cost. towards total which includes We million $XX a redevelopment of million, contribution a

make rate vibrant will with great location and office And will the a in combination the two, store, can we creating profit this above internal we're store, on alliance. part shopping our make of strategic this as a small work retail addition, in by we we In above that percentage impact Number Brookfield transaction of return. that we'll space footage with over investments our more earned hoping a threshold This to square have of receive continue in a environment. store.

You originally further of serious roughly that this contenders into XX and development. properties will alliance expected we would that study. for put that these August, be we said for In more updated two-thirds we XX approximately recall you

on approximately the including a the once assets which is in of individual contribute received either We sold, estimated developments assets, assets, Macy's cumulative nine furniture Brookfield interests of None redevelop these be participation sell malls. pad completion a although involve assets into closing joint in redevelopments these existing mall furniture These agreed involve them store those though, locations include the and of Brookfield the of the nine nine sites entitlement, individual two into approvals. plus $XX of store certain and to mixed-use the the it six of upside assets. retained have value to profits of properties or assets. will perimeter now Upon these a developments of to the would projects, ventures. If of million, box site, has two furniture its will terms main stores approval necessary a of in densification largest one location, three consolidating to cross-section

thus don't receive to of required We shopping assets the the of begin to vibrancy and nine will XXXX. any given Hopefully, and on on will customers. again desirability work. other that year, add our the transact we redevelopments We transact this site, enhancing to these experience these expect in these approvals to for expect time the predevelopment

We with Union the remaining opportunities the in also San continue continued three, the And we to in to work understanding to from our have retail Square estate real the pool. while on vibrancy create from value of Brookfield Francisco, the potential how look best at area. assets improving

Geary For San and there XXXX, Stockton sat you Macy's part became And of with flagship Magnin an corner West the Macy's buildings Macy's. be those retailer familiar the used I. In XXXXs, late whose combined retail the store. the Francisco Magnin, with flagship streets. of of history, called upscale store to I. in on

to square building location. experience important, to XXX,XXX of we XXXX. There be The in We we create even again a XXX,XXX If feet. is We be can remaining this the transaction would significant still terrific the Macy's approximately hopefully a complete this that more out, in roughly be we to strategic feet. planning are expect lot details but sell an worked shopping is very are space. store it square can now separate and believe this completed, transaction

So let's XXXX. about talk

accounting. me remind and first FASB pension regarding a revenue recognition new as the of you Let guidelines the changes of result

to our discussed our call January changes As you on in financial XXXX will know, on be we conference as XX. statements, there

quarter, and unaudited and our by our We recast preliminary for XXXX on website. have numbers posted XXXX,

to XXXX relative these for be recast guidance Our given will numbers.

with In for on you share that per XXXX EBITDA adjusted $XXX higher $X.XX new XXXX the the digital returns; as our is EBITDA the website, certain the for earnings recast million cards the and $X.XX annual adjusted I merchandise has and in higher can the of are: to sales associated words, standard. earnings is the and reported. than for recast million we accelerated So, gift recognition numbers just the when changes of see sales, discussed The two, two recognition $XX fiscal $X.XX accounting higher what one, other impacting shipped. breakage

$X.XX comparison million guidance is compared So with last million the to Included as sale guiding asset share for to $X.XX. per earnings $XXX XXXX $XXX we to be this year. as for $XXX $X.XX gains in million XXXX, are to

gains, share So earnings per sale XXXX. in excluding is grow asset to expected

this plus some me talk plus owned to sales Let comp assumed just flat to of behind X%. on about guidance, basis assumptions the key are licensed an be one,

from the so the for we Our a owned benefit of the flat in down assumed digital that down than broken Three, timing credit expect X%. expect rolled in the quarter with sales to line impacts with than due total now & X.X% down are to be comp the new revenue did quarter partial first of trend. in the the the to variability of be our to second And through sales will be program. into our plus sales do XXXX, one half. our in sales the initiatives stronger year we in back XXXX, sales to out the will approximately half half first We has less first revenue remember, loyalty have first. a Friends the year year, are total event to Comp the a out slightly. associated shift the the separate to which the assumed for licensed Family week range year wider sales sales than be Total This we P&L. and from on delivery be

mind will in both to assumed of the income the be is $XXX million guidance range on as in in that million compared new the flat as were be Four, The it XX.X% or and growth in approximately $XXX $XXX be costs expected the sales. $XXX the XXXX. announced up discussed such costs SG&A past, to in initiatives digital to card is margin compared XX the is to included fraud and dollars, In Growth depending for slightly, to reinvested to XXXX. card restructuring not Jeff credit and in $XXX XXXX, flat fall million these to of from credit on related million stores. proprietary this up For the and origination. Five, gross includes in as million saved sales expected the last Backstage, account earlier, Keep January slightly, revenue. be retail the to that

Asset expecting sales; million $XXX proceeds does in I. both and, and are to I $XXX Magnin million book million portion few building successful the mentioned we minutes cash year, to $XXX a million $XXX in guidance cash the ago, This assume of a very as in the gains which this gains. sale of for for represents XXXX. the significant

pension on new accounting, operating separate and the line income be will longer a the plan P&L will in included SG&A no With be below retirement income.

assumed with be We to estimating in approximately DA assumed to XXXX. be million, XXXX. is achieved it approximately $XXX $XX and flat approximately to to million $XXX million million Interest $XX that to are is be expense in

in last to excess and And committed to our Street we the cash our range. to We ratio key the targeted and real debt reduce XX.XX%; leverage, being are leverage Our our assumption excess to estate expected and State remain million billion will to ongoing keeping to an additional related relating plus transactions. rate, continue the cash Union work the expenditures new Square in XXXX in conjunction year tax now on per $XX done with capital basis, an be XXXX. in $X utilize

business feel to We year but a to Macy's. ahead out in XXXX the lot, we have now accomplished said a in a There we time. to of transition I've of about is XXXX. our new than you ideas, was us, lot test before, for in a as better roll work particularly which we begin efforts long will today So,

Jeff I press call in first questions, quarterly release I up day Eastern moving quarter one Before you we that will to the with AM Time. and questions. beginning opening the May, be with call in day date X:XX make with And release Wednesday, will conference happening regular both each our that, for sure take on our at our want that earnings quarter to saw your

take you. first Bob We'll Guggenheim Drbul Securities. Thank question from our with

the the And that the I plans two around the second piece. the piece acquisition on Can new about then, customer questions talk guess about end specific for is And to is about marketing XX% could increasing highlight is still one that Backstage way any us? you Morning. I and you you and it? first XXXX? talk Thank have, exclusivity, brands think the right where you. did the target

me Backstage. let with, start Well, with Bob,

So kind that that back and up, customer I of that our in think rooted new interested shop of the strategy bulk of just the remains we're to bulk in the core off-price customer Backstage our today.

do. was so And set so kind experience our strategy, have full-price that their some that? store, a with they And from Macy's we how of out the to take piece a outlet could what of we learned Bloomingdale's only off-price, of within location

to that Backstage the existing getting seeing this a you And tested we're And in in store-within-store and what to went when give in aggressively. what get to pretty And out concept more with it's XXXX, taking we is we is in stores Starting trips from talk customer customers. new XX to that spending going We're our we us her. to have we more stores, about XXXX. that, So opportunity shopping as this. market XXXX we're expect doing incremental to XXX when start building. that

thing. brand more actually we're a think lifting the And headline categories is And the of cannibalization. is same in is parts the with very that by we finding the Backstage seven having we're different entire good its the what the building experience on in-store I is. put, better the limited we're full And points. new finding that that it's finding store

expect it XXXX. So and we're continue actually very continue to encouraged by Backstage, grow from we to learn to and in

is our other going of start really sub-point hear we from we're I'd that XX%, question the rooted strong we're is of to putting And how premium XX% business on make from take Star part to some about very us about of we it Backstage wanted The Strategy, locations, To performs. to as in-store to wait and into on so our that brands. stated, exclusivity, XXXX your experiment having private to North in exclusivity about track.

We continue to grow those.

them. unit retail. to getting in continue more put We higher value We're average

brands. And well very Our as wholesale all also are with tell our or product; chain And I merchants they our those. as Tommy us, in to that that customer's exclusive and and both Hilfiger, our like non-exclusive either that our those, brand for that then, track. working with responding us they capsules are we're exclusively hard great working private wholesale produce well with on produce would exclusively brands you very for our of we're supply brands, on

remains of we piece to and on very are a exclusivity the grow XX%. it path to our So strategy, pivotal

Thank you much. very Great.

And next JPMorgan. with question our we'll take Matthew Boss from

Thanks. improvement. And on congrats the

Thanks, Matt.

what the opportunities? guess, about fourth and to-date? rank dissect to you of of as I when execution XXXX, you focused progresses helped Hal way some what's thinking examples incremental company-specific the his quarter performance, those were can drive to initiatives I we specifically, that best and, to today, the think speak we And year if improvement guess, are Jeff, you team your as move on

Yeah.

why I'd I and into gives So, fourth would four as momentum the of have I'd into of us tell walk we that what kind about XXXX. Matt, bucket that confidence. tell quarter you it a reasons confidence And you is lot we

and is level her of win The out And consumer our share. there. first optimism it's shopping high get opportunity consumer. She's a there's from one business our is the to that and

So first that's the one.

the iterate and and, into of were factor a The half North Strategy, is Karen the we beginning she of year, that lot scale able of new Star of the ideas back responded. second we to put the and front mentioned, in year and those customer the the in that as

So that work. of and we scaling and roll is for really testing us, things and this out working notion iterating

learnings going So XXXX. expect growth us that into to in of and expect confidence. testing take us those new That will that roll be to and gives also that XXXX we're XXXX. we things in spine believe XXXX the the We're

in That full-time, that which we're creating we four, aligned. everybody I new is think program piece where opportunity us reward execute which of important the to every really a point our The new same is like new growth, I piece growth getting a is helping the was and that really And this focused of of has better. the And they'll achievement seasonal is ways. whole we're are third is strategy, is led And things. of lot everybody a associate really strategy, Hal on where incentive our number focused on give same to alignment. boat, you lead to really of the want part-time, an in credit based the executing players our that Hal that which mentioned, get what this

So well. I quite think we're executing

year So help we full momentum what getting to the these XXXX. now the growth to translate back have propel are four is in into things we for think going that and

rolls as Rich just then, And that great. marketing? price the so, and the of will team change your exactly his out? and what see simplification simplification are customer initiatives can be That's a guess, price more will working any follow-up, touch around on you And on that I the

Yeah.

in see the I think to that first committed you're see going you're And We're that started thing to what see promotions. going XXXX. overlap is, less to continuing going you're in in we XXXX. is to

within you're clearer. be to events to going So not and cleaner have They're events. much going

in event look to at and is the getting the price that pricing offer Last that you the closer saw we the of of overlap and a trying promotional on that that If confusing just Backstage. ticket leads keep clear. to We in We to the we're clarity really Act. reducing finished, closer take see amount

do see understand making promotional easier to starting our much our great for more it values. with content lot customer You're us and that the to of a

a we're balancing cares customer you're that is that we're we what things other to from about, then that is which those authority a sure the less launching. marketing fashion new agenda making going our is promotional able across to of So that do to having Macy's see with being Rich great fashion is capsules or headquarter businesses about those that talk and start

really marketing our because to promotional much our balance we're going we're fine-tuning So in strategy. in come more

our we a As And pricing investment and a all job it that. relates of big to one pulling team. team under science analytics on our is together pricing, with great on made analytics doing

We have is, we at out what that the at. of price supply be, we're what to something is its what looking take to we to at So date really what weeks look need price going to.

those to are giving respond And so to opportunity dollars. us we're markdown saving the that lots moving. things of slower It's

goods. less so much the in working to the And gives the really to because what's is hot sooner. right a that of fact to trend. our inventory be we price us And hot of that carryover out have are having of ready than right vendor of And respond strategically excess respond last carryover more season's our performance opportunity lot using merchants getting we're headlines big now that clear one with a think or don't markdown budget past, times inventory. helping a us in-season, have they to that's our And And inventory. the I budgets

interlinked, keep a in is We're all the think us, innings at that. big I getting but it. going better it and science So early the of win we're has to for been pricing just

Great, best of luck.

Stanley. And Greenberger Morgan from next we'll our Kimberly question take with

was to Great, so thank year And of I relative I it wanted to here a level down looks full about last basis, much. sales it's X%. XXXX. it same-store like On nice result. XXXX think for just you ask year a the acceleration sales the guidance

strategies gives if XXXX the So is sort coming more in are it clarifications. of be the million us or two bit the just for on like-for-like piece that to full-price change step million the help One, round credit a little the there. I'm you numbers, a of perhaps be AUR little you that that say, But any debt. Thank like-for-like promotions would so more midpoint. a that? improved for and on the are category let's I much. on that improvement, there would bit And assume we driving reserve accounting, so is selling is items. there bad assuming looks expected just Karen, that is $XX understand contained shift small down, secondarily could through income $XX mix And trajectory? that wondering that, confidence that you then it that's like be, at about

Kimberly, just step change. me start So, the let with

X.X% lot quarter, that I down the accomplished to fourth was we to a the But expect increase of we it in third quarter year-to-date the to what continue. the the momentum end the we and as that earlier. at what really from mentioned four So accomplished comes things of going

shopping. So consumer's the

sales, the a XXX continue we start then, working. we that in the what you're going XXXX significant new shop add is that see based new direct, us in, are giving Buy actually Strategy to on into have success the significant that of existing got to amount our to had the Store. there. that and going to in play within Online Backstage option brick-and-mortar that also third we to XX going expect to growth to which We've the middle the of takes is into fulfillment new traffic, propel to Growth which XXXX. Ship that we improve We growth growth with in program, That going know planned in vendor come to that loyalty going know loyalty XXXX. We've us going tender-neutral going call but also our in more. customer. we we is is to have program. the overall The starting her in And year that's available us out giving We've the we be the key North The competitors. the have That's got us but in really expand got but quarter, is test to the the we planned that offerings it's start, volume to options Star And to new year. initiatives doors,

to the Buy in its cousin, going Pickup that's So Online Store. join

ever mentioned earlier, all Matt's more piece, those the execution respond And then than that are, three organization working business. back what believe strategy question down vendors which organizations the aligned our all we and to incentive people and making plan rowing is by in entire all have collapsing towards our hands the more fleet touching Fewer same the And in decisions XXX,XXX-strong to have there, we they if last the decisions. Then we is We which is is and faster. to confidence the more liquidity is on the believe, deck. they unites growth. focused tell direction in decisions So the thing that are we're that out I simplified one. to now merchandising inventories behind there's and team have to I in getting that our the piece. think you to We're They able is, as are would massively before. be the talked August you

from still why have and we to do quarter. are momentum We So to lot those lot fourth confidence a have a prove. the and

what as we're iterate up that Our And is expect test, much down. works. and what head roll we're we'll it's going going to as to out

week the On than levels, the of lose for XX-week impact year. we but this of being fact, the higher of next part a booked And reason very year debt, year we decline credit, XX-week, a at had low is, the also, against a still in bit credit bad a in what essence. income,

last the than on of would different And it the So really the really no that. AUR increase, be couple explanation that's quarters.

being up more so inventory do shape, year I it the And two full last great has quarters, was the AUR think with XXXX, in X%; any For change. such mix the up than X%. to

a say better just And more the in add increased into Kimberly, is to and more we that embellishment And degree, our in And, think customer's to the noticing And that as putting that, that is and into that focused products. I'd based and carryover merchants really and what Karen the on inventory finding we're that to putting job regular-priced is nice sell-through regular-priced the the make sell-through. better AUR have the done putting value is I the value that. have merchants mentioned, fabrics. the goods are that we're so higher on don't

Very helpful. so Thanks much.

Lejuez Paul from with question next our take we'll Citigroup. And

Karen, And Should mentioned have just or in is curious in XXXX? there? can that rate, all in weather you we you about you the Hey, the might weather performance that that said now think to might use think that in clarify, give on one-time you anything done I the where can the properties that years of how I talking nine expect quarter? I to you just, and there a last, at coats what there guys. beyond regional else that have it that going Brookfield tax something in thanks, Also that impacting in might category future to means helped the the we nothing know the happen quantification XXXX. the that assume other be should XX.XX% in Is wanted originally, good XX? Is does then, happening the about were you, of is good but other much on XXXX? category. a two-thirds you fourth be mentioned Karen, XX terms business whether considered, where any terms Thanks. basis were performance? quantify stand what

my estimate. continue we So would question, as end if do we remarks, say thought the And, XX that start good you I about with Brookfield could that's of still had I a beyond with said to two-thirds work said redeveloped, we nine. up the in being the and probably Brookfield

get again, Don't there, in changed really potential had we've to work in all we said others. and nothing's But on the we the as there. August. of expect got So, XX terms to fruition continue to nine

rate, In terms nothing in that. one-time the of tax there's

going cold fourth So, again, of throughout big storms but which country, expect the the forward. things chunk snow We it a change, not was in rate that could a a in weather, quarter, the obviously. I hurt would terms had change of And negatively major business.

I really in a and the of weather. did to the big coats sit balance, well, big not here say but I today factor can't chunk you would with performance had weather on a was do performance. that tell So, good Yes, big

guys. Good Karen. Thanks, Okay. luck,

take Haskett. question from And Chuck with Gordon next Grom our we'll

good Thanks, Hi. and morning.

which quarter ease. slightly, you said guide, is your Just being trying flat fourth the about think inventories momentum, comparisons and that down clear comparing that talked performance then on dots first and half the I to given to you connect particularly light to

So I'm it you wondering frame us out. if just can help

from mean, remember, that the fourth discussed. get do in penetration, benefit digital the I we increase the Chuck, quarter Yes. that we've think, in I

didn't again, a have first sitting could looking the the And half want from first today, ahead half. to of that But impact out Absolutely. here So we ourself. will negative are where better? get we on be

Okay.

Sorry.

get just stores, to we There's And, Chuck, are disruption capital of going are ready. Growth that add, at of those to also beginning we the going them. disruption in ready third in be which business, we There's a our pretty them. them buildings, expect as piece of XX spent to these on in some significant so most quarter

how shift, help then any Okay, Friends think for Family you on could you just helpful. us? And if & that play quantify the will or

expected, sure worse. I first better be would just have because can't. the make to wanted than quarter quarter and what would you look the really I then will a a little second little

Okay.

really can't number. I give But you a specific

could Okay. last tell the And from the us what of then, were just tested on some year, the employee that learnings just test year? last you you incentive program

things. by We sales during the the sales that you of you learning if timeframe a reward to that in its achievement. play accorded worked was makes some that a amounts number It it incentive that that quarterly, is we do make do what's what tested you that make seasonal, building of tested everybody is was, rooted, So that though, with. get plan, store in that plan piece that going that

that aligned hours this, of the And we was at We X%, then line was of associate, that in the was stores exceeded also a sight. six their it well. districts And that associate, it, the looking plan based played that associates clear that divvied front-line sack on, quarterly by And that the the that what best amongst that they in if gave did of bigger. really was worked on measure. money up the

sight going terms basically worked doing their that it's how had they paycheck. the for store we to us. so nice they're what business get their And a have in versus in in increase know districts, picking associates then all that how well, Those line of a what districts by of can to improvement so comparable we're having meaningful

about managers plan. day rallying they So gave and talk every how versus opportunity to it store cry those an their were performing

gets in same the everybody just it direction. So going

this stores let's okay, centers. based in go. that So that, doing at, our to looked about way we the We talk then call on knew was

Let's look warehouses. at our

not executives the who corporate work our at or incentive current look a that offices plan. on Let's are in bonus

so a is that in it that to monthly, daily, growth Macy's And our expand us wanted would have And XXXX, we so gave aligned. everybody dialogue that that. opportunity as weekly, in that to play gets to have path in everybody quarterly the

in rolled one is one, here out first just quarter? quick Jeff, And it... gets the Or that

is. That

we is and So people the that first we we're and announced it reward quarter measuring this first are quarter going for. to morning the

to morning starting a great a Macy's So, stake in this for have as with we're opportunity yeah, growth. out people returning this to

you a Makes much. sense. Thank lot of very

our of from America. with And question Bank we'll Hutchinson Lorraine take next

guidance Thank to being the the you. of you're slightly, the to new follow-up Good offsets the continued up gross margin morning. to on to impact e-comm, loyalty program thinking those flat wanted shift about how what I and are the factors.

that impact quarter, the Well, I shape, pricing science margin merchandise being to would enable lower in to due potentially like been think saw much offset good Jeff what the delivery to to of the the stronger you talked us we continue has fourth expect the inventory revenue. about. in the And

question back mix. I just about Kimberly's think goes point, other to the Lorraine,

that and margin science a start the communicated because gets a very in have of of that have that we mix, think our particular lot I don't mix, vendor way of our of bring sight pricing But as we a that overall line different have of an think within categories all in blend residual we existing good a AUR. fact have in we FOB, they might of that category terms margin or that to wanted, improving about a inventory. customer you of new the because

is there a so And there. mix

we're into looking a buying at not site? the or so So a heavily drives of they those our particular customer. long-term margin, day, their of looking customer, or measure a in go on gross what store with Apple we whatever, after the a or what to in does now how of at at the just trip, visits it margin electronics our footsteps. that. lower particular really it And relationship affect if during and are might we're it a of carry that lifetime mix we is of seed And item products else but, lot to wanted products what other What's end the value start basket,

you. thank Great,

We'll with Deutsche take our Trussell question next Bank. from Paul

all Good morning color on thank and for call. the you today's

return a or just And SG&A, that of of from digital. in separately, if share stores or on you've cash and Karen, particularly overall to if can Thank you about repurchase quantify can mentioned further just you touch you. you're the impact the income operating program Just on priorities merchandising follow-up debt spend and amount investments in dividend. the accelerated thinking paydown curious and XXXX, how the

Yeah, sales, I our in investment, it's guidance total in well of SG&A. terms as all taken as think the between into margin account

of think a that you I factored all in. So specific is really I give can't And number.

have not In cash terms of priorities, they changed.

ways changed. remains in to business the growth, always priority fuel first and investing Our hasn't that of profitable

ratios. leverage targeted our within keeping to committed are we Secondly,

this next earlier, performance have the year, mentioned years, to go we'll of I excess cash repurchase. builds as obviously, likely to as cash build dividend, over and us So, I buyback debt cash obviously, didn't couple and should continues which And returning more is to Obviously, have, obviously the one important the to program is the mention, which I share other discuss to well. things. as very to

luck. you. Thank Best of

you. Thank

Company. with And next & Chen we'll our take from question Cowen Oliver

you. Karen, you've inventory, been a regarding position. Thank great in Hi.

terms versus retail should cohort favorable XX with of you experiential are an associated you in large Growth be topic would love thoughts at of different age terms at Next Are speed check stores of seeing Growth the can your and as a that best of How you. than lower Thank priorities balancing of what the you XX. are initiatives? the And, demographics will this? there tackling at the and think I year, in do returns? think sales still inventory the size in do rate of what average what look traffic we Jeff, in terms you retail you on a experiential the about expenditures with

we to Yeah, beyond inventory easiest I expect turn improve, continue to about into we the as do we the inventory forward XXXX way turnover move is that. and think Oliver, think that to think,

to will continue high that a So priority. be

And, me Oliver, take on experiential let the retail.

look of when there top things number that take to really think we on. XX, wanted you at I was a these

pilot learned steroids. The was way how about Macy's in And of one first one what the of as stuff things think And really she My wanted hyper-curation. think kind it we the in a in seeing I that that of the test in customer XXXX on building. was was kind of much

XX%. stock-keeping And additional so value she massive like in that goods. take all to us bringing about in opportunity new Backstage, It and like to about edit, us buildings. to it the those them, food getting new Big the really responded. edit, And was, in more vendors, gave beverage, the editing, gave opportunity with And wow, in Ticket. we we and unit by a what previous remained things doing conversation, really things like categories, really did play And the play then it with, that amplify fashion, was the SKU saw bringing also

you Platinum we let and the device us out XX make My to with Then expansion where wants about of building If app can into be mobile is, At want that interacting without step, wants that journey her. would do. a she a what that if an everything going technology that idea that first the have sure building out doors, Service to her she quickly, associate, Star respect to wants experience, scan Your do on to she it to ready these can for get sales really about we're This she and a to you content, have the she then know service through so Stylist she that get that's you to find want to get our with register, that. Mobile be of wants Checkout, when going was. into get And say, I'd is with to

sure So, we have done. that making that

At doors doors. the of learned all now We our many, XXXX. number we buildings Your across have expanded our that in We've a XX other these and those in Centers Service of many

So wants very through one she of wants wants that wants an quick she a to to her that she return, efficient in, down that. getting if of online, number to store, way pay pick do item and bill, come to purchased the she at the up she's she door

her telling assortment. wanted with through I help, or need that, them, that I took taking that we assortment friction and made through that So, Macy's. through points the was journey. of not human sure me there's our we help. Everything if she want that technology that dissatisfied do sure what places is make either a with the her in say through attacked she's over a we all she we experienced been can of do last to the experience, that I'd people And us where years, element, enough pretty in customers the when I think find need I they're lot I complicated say to

go. buildings making go really where that to appropriately customer And them they're sure these so and they wants enough ready that are we've and focused to on in that trained the we have census

floor, customer-centric customer beauty model the brand-centric on are an beauty see particular from in. to these as associates you that may So, a evolving be interested cross-trained the products where a the example, model, in us

the So with they're the that best taking they a brand us know mascaras paycheck beyond from.

so shopping business, is say is making care there, an last sure into that trunk with this and a to to and kind have deconstructing once the we and we building in And community. community And as of way thing can the we're the the with And lot our opportunity and with of footsteps a special get XX these has outreach hubs take concert good really shows them. every within doing that. us then been using I'd is the single respect model events what customer of that way doors service of do

how that's the it. we're technology. touch there's approaching There's human So There's just assortment. great and

really That's Jeff. helpful.

Just customer-centricity. earlier helpful regarding were really your one follow-up, comments

where any we data mind your get acquiring thinking metric what's really head lifetime more have about to new acquisition you you on existing Do think general value? about thoughts terms customers? As customer-based in of about want you balancing customers with as versus propel to and the valuation that your customer the costs models, fostering

saw Oliver, And care your program, of we address was program, know, Star that you Yeah, our exact to that, Rewards in first. what take loyalty are tent our issue. was designed the that customers

of the And they structured we on rewards at way Silver, arithmetic Star spent the with the it intent of to give and so, just Gold, when Rewards you shopped us of based being look program was kind versus progression. Platinum, on that levels them how different

And so us. worked that has for

next Platinum customer, a you to say, So were we've year. be analysis And a to were Macy's many you're always cases, were on at we're But lot program the you finding holding those customer spend with on you this hold within down, based in that a going to better. if done we're a going we're spend spends The spending those less. how is what of you in that bucket. judging that generally Platinum customer, levels be shifting customer

to spend customers are spend see, want I'll additional below I if then aspiration goodies higher. an buckets these serve that, get those for that also You as

some a launch a in So all shift of if real the existing And tender-neutral have going get to that's care services. program a and they we're positive. be credit taking a up, of is that don't was XXXX base. some but our we to What like having they you rewarded want us, to customers for that Macy's want goods because card, allegiance level that of

to have option able tender-neutral we that analytics we to personalization a a really customization interested be going in her, new to what is rolling have out second of we're look and what might do with opportunities with data customer's and we and on can she ideas all but quarter. with value the to to things transaction, in seed to with trail. at And be leads time. lots So her and and be over communicate at how starting that us data new It conversation what just lifetime spending this about not to look based

so this, So into both as we're really looking lifetime value on tent, looking is the it are ends. bringing going customers Macy's where new at as well we at on ultimately

comments. for those Best Thanks regards.

you. Thank

next our Brian from Canada. We'll Royal with Bank Tunick take question of

morning. looks on expense Good of little holiday. sales curious third that bricks-and-mortar years, you and XXXX? the improvement Karen, you very of last guess, improvement you expense to there's congrats a the of need And, to initiatives. a Thank much. were my assuming improvement well. a your get in side, biggest you about drivers I lot the couple been I like growth I you I'll generally leverage? What could takes on and the industry, are the guess, kind puts was add over if from then, think of And talk Thanks. as what lot Karen, what do the saw do expense the you quarter? Great. bricks-and-mortar

I'll first and will question the take the second. take Karen

I think was out the consumer for and was key third quarters the the fourth the Macy's in spending, and great. was that

think self-purchase quite into working very were both on assortments been for buildings, products gift have it. and strong we they hard for transacted had our that those getting gift-giving well we leveraged testing, as I as on our where customers, our been and

team we is ever programs, a And as opportunity strongly we've our we're service. that. two the look more we go, to mentioned we I experience running improvements. operation before. been shopping I times, of I having make on aligned think than good operating new with working as on better. loyalty a made fundamentals that that. nice not I think our other We're focused way customers. long more in lip have I've with executing think And single at online And friction-free And is while that's And on And an on and team happy stores. the every also against to day think, both retail

the brick-and-mortar So we we new fourth opportunity quarter while efforts brick-and-mortar, growth the momentum into we've coupled had digital have a double-down And robust healthy our it's business. have is in expect to we and so from take Macy's digital year. us that strongest very and with strong very and its had business,

And to years. the answer the second question harder has actually over gotten

a of a way as of I it Then XXXX, SG&A you X% became negative say SG&A needed used with Then think, a with comp. leveraging originally, even in leveraged many to And flat. comp. we we we comp. found we know, X%

has good reform that of forward and appropriately changed. we frankly, ways in advantage as in the enables very the So tax with we're, dealing XXXX, But see been we've gone have of finding as us. expense you world taking the flexibility

really to and XXXX. you is accelerate we tax to year, we're time, savings bigger think talking we net somewhat company's company what and over beyond are utilize of But the frankly, payback the in growth, at pivoting it's to, important about income become down investing the you're XXXX comp to but at bigger. invest its comp a that have do even looking help growth. will look so return as profitability. to And And

Super. very All Thanks right. good much and luck.

Thank you.

you. Thank

And Omar Evercore from Saad next question ISI. we'll our take from

letting for Hi, This calling is thanks a question. for Arcilla me ask Shayne Omar. in

and like sales formats, current the concession The about know in the lately. noticed Europe your of fee of the Thanks. own Macy's to the also, into would what thoughts staff concession shop-in-shops converting Macy's, terms department of in stores maybe whereby so are formats just and brand to doing wholesale Market would inventory It's these we've cons something terms many @ fixtures and and exchange? they're far. pay doing also So brands more a and pros how in are big in what And

now vendors' get model. these a And brands in this is is square for have And This wares. six So X,XXX to our of square of lot a in @ a over lot of a The that little is rental opportunity showing we X,XXX about customers. stores. today of Market in these XX brands Macy's eight of that feet, each an we're to we feet their our front and traffic, have

to what so, And expose a we is those these Macy's rent effect, do we brands. pay and brands in

have a fixture package. We common

you mean, a that that have it's I turned things opportunities like to Rabbit shoes. exciting. all have is Peter that We of promotion on many products with areas. these on can population cross-trained associate work to you these go cards XD there's soles be trained And into have to businesses. different that I pop-up a mean, really out

good. so And so far,

vendors brands part that want or this tremendous response this. be have from part a of want a to to be We of that

Market month. And be brands this, going into They we queue want check can these believe visit, parade to go that to out will flexible be of and customer so incremental bring us go of customers this newness growing of part The we kind interest out a there for longer. gives to Macy's. at But can format seed that of and a have it a will for for a what's on this @

provide the they to can We went it's these stopped. they consumer interested they see also you at? the then What look were they and actually technology, behavior. through brands back in? What can where iPad If queue did where

Herald Square. relationship with with Beta, Macy's to The is @ learning door we're Market that right next So in which our

So it's concept. interesting a very

been a on you great keep far, So posted it's and response we'll that.

our model, licensed the hybrid think, broader the licensed in relatively And versus use Bloomingdale's side have it's for versus this more can that's to estate developed done is to Bloomingdale's higher. certain is products. the your on an As brand business small of And way piece business done. there's many I in showing still overall And question Macy's. Macy's economic we I look being about real how owned who of our of of or families Bloomingdale's a in be another examples this.

in to down richer so opportunity that thrilled really just customer the think what's brick-and-mortar get And day, a strategy. of to again? place all be it experience? the I the think back comes the to What's at model the in end lease customers has I

was I Macy's in an buildings. it is having these when of this to owned great great into a vendors. make a commitment comes where Line, that like into us, of pieces to And particular store. for a It's so have service. assortment when provided other in look model gives and gives There we're us we a business application roving Sunglass ever broader we @ long, have that brand much particular business a Finish it or a Market kind too at the giving newness The without that than Hut take or dominance business on we

a to us. be And it's I in our we combination going doors. have So for think space

it's to monetize so space and profitable. this have customer-centric We more more the opportunity it's

that's And that the in productive Even advantage so be most more productive. our we have. we stores, can

getting So and the the expect edges we're continue these models to play buildings testing. content in right the on push us that economic to with

Great. you. Thank

Todd from question next with Fargo. our Wells take Duvick We'll

morning. Good

Todd, good morning.

your within you There's for congratulations leverage And reducing of continues I repurchases know. range. that, that cash lot I you your to forward, have I question going work into that guess a Karen, went targeted on indicated you debt hard is the towards tender excess reduction. combination through give debt lines? think open-market a deployed guidance point another we at those consideration and some can be then to about of you any this Should year debt reducing us along or of

point. at can't this No, I

Sorry, Todd.

Okay, that's terms reduction fair balance enough. sheet. spigot you the of towards debt I guess where the off turn then for versus deploying be thing other would the in accumulating cash on

lower down end down of you more should get to you cash accumulate inclined If towards than the targeted debt? your range, pay be

range. exclude the key, we're Square yet. big mean, Union one-time very we've to want the you range I quite we I gave that, talked a event, excluding results, being maintain as somewhat we you XXXX target which in large when said, the as that when Well, gain, is not about And in

to need get flow to into staying us the committed then use we're cash there. XXXX's to So And we range.

that's think key. I really So the

Fair enough.

Karen. you, Thank helpful. That's Okay.

Advisory And Telsey Telsey we'll Group. take our next Dana with the question from

and increased and everyone, the how new that the the With there done see going brands, from the on influences nice what And the Good private fashion labels in, rate you've where learnings program are business improvement. it on to that think of some see loyalty far, Thank penetration key you. given morning, you so you do forward? initiatives bringing you're that going? do versus the

loyalty? to want take You

to I loyalty, well highest the which And well I Platinum And as a as of as good think recognition Dana, think our are such. Macys.com rewarded day. the mentioned every customers level, as as free is Macy's they the in includes of on that that key, as giveback customers appreciating component we're giving Yes. like are be the really Jeff combination benefits shipping them, I we're think finding, terms spenders, for Money

think are getting well. as are lower the that's that good I So benefits, But well. doing feeling levels, interestingly, less

going crisp of would continue a Macy's a benefits can does call think I to addition sort I that of just the I good be And benefits, we lot. fine-tune what financial give experience. we're to but clear sometimes, part think also what So just communication feel to in

terrific out So Jeff further card the also And, be credit for I'm will tender-neutral that a customer. refinements think we well. the we're proprietary expect which mentioned, excited by we rolling as component, as

from going tell many And end It's It's higher. to I XX% going private know a then, growth in of but we've can't It's to to our XX%. growth to that of to your of question currently business. exactly grow. Dana, about where go second private that you about our it's it's going piece strategies XX% up, developed brands. got very going of label,

Thank you.

We'll take from next with question our of Bank Brian Callen America.

to a quickly Thank Todd's I point just the comfort you. give even of X.X drive XXXX, long-term potentially sales zone longer-term not X.X you X.X future? the question, weakness of period gotten cushion is why target? to outside considering how XXXX, Karen, leverage below of morning. Why in guess, of and right to Good spin-off another your the or more in in [times] thinking

feel we do we for But range it if year the Look, we review believe and look these at We targets right will every us. target see it's every year. differently. obviously,

rating are Is low you're remind guess, target comfortable BBB credit And the just you, that or get I to us. there trying at I to a guess, rating?

to grade. we're the we get exact it's harder not investment think target it's to in because be important thing is key we there, I in really that rating What think control.

very as think within is our the But of we're to prefer is business maintaining to leverage an target way clearly, because I that grade the investment the important ratio control. So rating operating us.

Understood, thank you very much.

question And Wayne we'll Capital. take from with Hood our next BMO

merchandising you million and about then $XXX contribute Jeff, maybe last million. the initiatives would to Yeah, good morning. Backstage, $XX incrementally million million, $XX outlined year $XXX

million $XXX should from the side as on like we think numbers you the so rollout of a contribute to may about And that you million, ring-fence as them? you as be $XXX impact what Backstage jump to way it Can much XXXX, million same have. about the year, year merchandising looks year? to then, full you As think impact those the get us the would you last $XXX because did some given

contribute fully to these XXXX. was that do plan. out, But now, it rolling be looking significant right not at out. Backstage you're terms Wayne, a piece the more there. that initiatives to different than There's a of we're our that in fine going breaking which did how mix know overall We're is of like prepared in growth going is that of it logic things to see. a is than be because little XXXX what to going were to jewelry, going merchandising we now in It's

see same the in not to going we're So that. growth

areas to growth to you're same is We're to again handbags. new but in the You're where in going see had, we see that going merchandising not growth in growth see going shoes play. in women's

growth Big see to Ticket. in You're going more

at very same has XXXX. like growth been see which a Active, in going the is us, You're growth level in basically for things dresses. to strategy more aggressive strong on planned

the expectation with a a to So would We be direct, similar. that bit, walk. that. And then, the a in then going We're the have mix XXXX. going XXXX, was Backstage lot on to because last you'll be our change which bigger expect comment And vendor merchandising not nice XX a going Growth growth but a is piece But in part our little see piece. had strategy of be some. is is revenue going is to more the increase we to of

And what products of type that? on ahead. Go

Wayne, the do obviously, initial our start, bulk store. is be with to opportunity about what To we endless home could that. focus But of on is the going

able to to the in my specifically, may checkout these where to back the premium there? home it capture in guess, for Backstage. Because, you you do for you do to I share how California, around footwear go you been really make have find I Okay. might malls, not And question may be comes a have checkout? solve to in easier? space or But then, what where you final understand some area, challenge seamless Have through that, and correctly. is a guess that I pricing, solve you able separate And,

We're Backstage. working on the systems opportunity within

right systems at looking now. We're So now. looking right chain at supply we're

those at, So looking that at two are the big fundamentals Backstage. we're

have point business make systems So to a that is tech sure we store sure we're our a to and now. for right supply getting it's chain the focused becoming nice size what ready where our and are making that that we're systems on spend

later is test categories that being anything square answer standouts what home. most smaller going in one then, really biggest and to XX,XXX on in shoes So store. we us confidence to the a the for the we we've can seen. it XX,XXX standouts should the to we're And year. what feet. the Backstage, shoes biggest Backstage soft It's in has square cannibalized Backstage. an have did of of been you're of And real is in certainly the have do rest the the That two feet, And They some us the then, in productive not gives that respect Backstage questioning, growth of as that has with Wayne, square of we've footage. instead your starting done that been well doors, in that in in

in us that. to to expect continue So test

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be, Yeah, that at this contemplating. not something point, Wayne. there is could But we're

guys. Thanks, right. All Okay.

question Barclays. final from our Ohri-Gupta take we'll from Priya And

light of me so was wondering of you how thank what on for versus might benefits I much other? versus repurchase you sort broader-based some if to of Hey, provides one shed able And think Karen, are that in. tender. squeezing be the open about just debt some you market sort the

the market. available of bonds and there maximize trying of advantage to the the I obviously we're Well, transaction might economics open in be think take where situations

more then makes extent that available, And tender to the sense. fair? those the Is aren't that

they if even may, It are.

based again, time. we facts this the at make So, the on decision

fair? And it's an NPV economic decision. Is that

That's a sure. factor,

Thank you. Okay. That's helpful.

you participation. well call. today's as for as today's question-and-answer session concludes And your this Thank

disconnect. You may now

thanks, interest Great. your And for support. and everybody,

Thank you.