Hello and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Kohl's Corporation First Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. I'd now like to turn the conference over to Mark Rupe, Senior Vice President, Investor Relations. Please go ahead.

Thank you. Certain statements made on this call, including projected financial results, and the Company's future initiatives are forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause Kohl's actual results to differ materially from those projected in such forward-looking statements. Such risks and uncertainties include, but are not limited to, those that are described in Item 1A in Kohl's most recent annual report on Form 10-K and as may be supplemented from time to time in Kohl's other filings with the SEC, all of which are expressly incorporated herein by reference. Forward-looking statements relate to the date initially made, and Kohl's undertakes no obligation to update them. In addition, during this call, we may make reference to non-GAAP financial measures. Reconciliation of non-GAAP financial measures can be found in the investor presentation filed as an exhibit to our Form 8-K filed with the SEC and is available on the Company's Investor Relations website. Please note that this call will be recorded. However, replays of this call will not be updated. So if you're listening to a replay of this call, it is possible that the information discussed is no longer current, and Kohl's undertakes no obligation to update such information. With me this morning are Tom Kingsbury, our CEO; and Jill Timm, our Chief Financial Officer. I will now turn the call over to Tom.

Thank you, Mark, and thank you all for joining us this morning. As we shared on our last earnings call in March, we have a significant opportunity to improve Kohl's business over the long term. More specifically, we shared the priorities and actions we had underway to drive sales and earnings performance. I am pleased to report that the first quarter was a first step in the right direction. Our overall first quarter results were in line with our expectations, and we made progress against each of our key priorities for 2023 despite continuing to operate in a challenging macroeconomic backdrop. We are refining our strategy, continuing to enhance our merchandising processes and elevate our focus on the customer. While it will take time for the full impact of our efforts to be realized, I am happy with how the entire Kohl's team is driving against these priorities with a clear focus and strong determination. Our objective is to show incremental improvement as we move through 2023, and we set ourselves up to accomplish this with our first quarter performance. As it relates to our outlook for the balance of the year, it is unchanged from our prior view. We are affirming our full year guidance. As I said, our first quarter results were in line with our expectation, and as Jill will discuss in more detail, our view on the second quarter is consistent with our plans entering the year. Our work in 2023 will position us to achieve our longer-term goals. And while we have more work to do, I remain confident in our ability to change the trajectory of our business as we move forward. Turning to the highlights of the first quarter. Net sales decreased 3.3%, and comparable sales were down 4.3%. February was the strongest…

Thank you, Tom, and good morning, everyone. I will review our first quarter results and then discuss our guidance for 2023. As Tom shared, we made initial progress against our strategic priorities and delivered results in line with our expectations during the first quarter. While we continue to operate in a challenging macroeconomic backdrop, we remain confident in our strategies and have affirmed our full year financial outlook. Turning to the first quarter. Net sales were down 3.3%. Store sales were up low single-digit percent driven by strong Sephora at Kohl's growth as well as our clearance actions. Digital sales were down 19.6% to last year. From a product perspective, national brands outperformed private brands in the quarter. Our top-performing national brands in the quarter include Nike, Hager, Izod, Columbia, Hurley and Eddie Bauer while our top-performing private brands were Apartment 9, Flex and Simply VeraVera Wang. Accessories was our best-performing line of business, up 31% to last year. Strong sales growth in Beauty was partially offset by lower sales of jewelry, which again was largely impacted by the in-store displacement associated with removing the fine jewelry counter to make room for Sephora shops. As it relates to some of our other categories, children's and men's apparel outperformed the Company average, while home, footwear and women's underperformed. Other revenue, which is primarily our credit business declined 11% in the first quarter. Performance of our credit business continues to be pressured by normalizing loss rates, which were expected. While other revenue is expected to remain down year-on-year, it will progressively improve during the balance of the year. Now let me turn to the rest of the income statement. Q1 gross margin was 39%, up 67 basis points from last year. The improvement was driven by a decline in digital-related cost of…

Our first question will come from the line of Bob Drbul with Guggenheim Partners. Please go ahead.

Nice quarter. Two questions for you, Tom, actually, if I could. The first one is just when you look at the strategy that you have laid out, can you just speak to the confidence that you have in terms of what you're seeing, what you've seen so far? And then the second question, it's probably might be for either of you, but can you just also talk to the margin sustainability on what you're doing? The gross margins were up. You're talking about the 4% operating margin for the year. If you can maybe just elaborate a bit more on that segment? That would be helpful.

Well, I'll answer question number one, and I'll have Jill answer the question number two. We're very confident in terms of the strategies we have in place. As I mentioned, the Sephora business has been very, very good. The active business had a little bit of a rebound in the first quarter overall. The men's and kids business has been strong relative to the other apparel areas as well. But there's a lot of opportunity to continue to grow the businesses. The home business, as I've mentioned multiple times, is a huge opportunity for us. We really should start seeing traction in the second quarter. There's a lot of categories that we weren't in. And we're starting to get deliveries now and seeing some positive business due to that. So home is just -- multiple opportunities for that business. The women's business, it was somewhat disappointing in Q1, but we did get to see traction in dresses and polish casual. And we think if we continue to deliver more product like that, we should do better in that area overall. So yes, we feel really good. We are really pleased with our performance in the stores. It's been a while since we've had that kind of performance in the stores. And I feel very good about the team in general in terms of their ability to really pivot and entertain new strategies, and they're all working very hard to get it done.

And the second question was margin sustainability. What I would say is we feel very confident in our margin outlook. In fact, the 36% to 36.5% guide for the year is well within the long-term framework that we introduced to you a couple of years ago at our Investor Day. The actions that we have put around simplifying our pricing really through de-layering offers and targeting offers to make them more productive will continue. And we have a lot of opportunity to continue to drive value for the customer, but do it in a much more targeted way, which benefits us. Taking clearance on a much more timely manner is definitely going to have better sell-throughs at better prices. So as we started doing that this year, obviously, we'll have a little bit of a change between quarters pressure in Q2 a little bit, but we do think that's the right thing to do for both the business in terms of sales from a customer perspective, but also from a margin perspective. And then as we move through the year, we'll start to see a lot of the commodity inflation abating, especially with our back-to-school receipts. So that cost number is coming down. And we'll continue to see benefit from freight, which I think will continue to increase as the year progresses. We will continue to see shrink headwinds, but we feel like we can definitely put some actions against that to at least moderate it, but we will expect that to continue. With all that being said, we feel great about our margin outlook. And even with SG&A, we're going to deleverage slightly down 2% to down 4%. So, it just shows that a lot of our efforts around cost have been paying back, particularly around driving down marketing, finding ways within the store to be more efficient with self-checkout to help us offset some of the wage increases. So although we have a pop in Q2, really due to the sales drivers that Tom had outlined. So we can fund that into the store. We do feel good with the framework that we have outlined for this year and feel confident hitting 4% and then building on that as we move forward in the outcome -- out years.

Your next question comes from the line of Gabby Carbone with Deutsche Bank. Please go ahead.

So Tom, maybe just bigger picture, how do you view the overall consumer? And do you think consumer spending behavior has changed since the beginning of the year?

Well, I think the middle income customer is being squeezed overall based on, obviously, macroeconomic issues, et cetera. But with that said, we feel good if we can continue to deliver value that we can capture the business and we can navigate around really any issues if we consistently deliver strong values to the customers. So, it really hasn't changed to be honest with you. I think it's been -- it's similar throughout. And going forward, we're going to have to continue to give the customer more value. And that's what we're doing.

Great. And then I just have a quick follow-up. Just was wondering, if you can dig into the performance of athletic and what drove the positive results there. Was it both apparel and footwear? And then, how are your own brands performing within athletic?

So, I think from an active perspective, we did see positive comps in our apparel. So we are excited to see that in the apparel. Footwear as you know has definitely been something that has been lagging the business, but we have seen some relative improvement there, particularly across our top three brand vendors. But we do still see good -- Flex was called as one of our top-performing brands, which is an athleisure brand across the store. And then tech gear, which is our opening price point, has continued to perform for us as well. But I think the big push we saw this quarter was really getting our top three brands back to growth in some instances and moderating where they had fallen off in fourth quarter and third quarter of last year.

Your next question comes from the line of Mark Altschwager with Baird. Please go ahead.

Jill, any more color you can provide on quarter-to-date comp trends or your expectations for Q2 sales relative to the down 2% to 4% annual guide? And then also hoping you could provide a bit more color on e-commerce. What is driving the channel shift? Where do you think digital penetration settles here in the medium term? And then I had a follow-up.

Let me answer the first part. The current trend, May is slightly less than we anticipated. However, we feel we can make it up throughout the quarter. Looking back to last year, one of our toughest months was June. So, we feel that we can make up the ground that we that we lost slightly in May overall. But I think as we go through the quarters, a lot of our strategies will continue to evolve. And as I mentioned earlier, we feel good about the business and that we have a lot of great things in place.

And then in terms of digital, I think first, we're really excited about the storage business, as Tom indicated, running a positive comp. And a lot of the initiatives we've outlined are focused on driving to the store. And I think even with Tom's comments on the quarter, we have 250 more Sephora stores opening this year in the June and July time frame. So, we definitely feel like we have some momentum through the stores. From a digital perspective, we definitely expect that our digital business will improve throughout the year. As we were talking about removing some of the offers to simplify our equation and getting rid of the delayering, some of those were online-only offers. And so when we were looking at what was productive for us, what really prevented value to the customer, those didn't make the cut. So, I think they maybe had a little bit more outsized impact from that perspective. As we move forward, though, we have a lot of things that we're working on, and one is just through pricing clarity. We know that's incredibly important on digital, having that pricing transparency. So with the pricing actions we have, but that's really focused on driving that transparency, which should help in the digital space. We're also doing a lot to enhance the site experience, so customer experience that we spoke to in stores. We're doing a lot to replicate that online as well. So, you're going to have more inspiration, better search relevance, more recommendations. So a lot of things there so that we can drive what the consumer is looking for. And then we're also curating that product assortment much better for the customers so we can deliver those needs. And then also, we're refining our strategies around marketplace and our media network, which just really helps in that digital space as well. So we feel confident with the strategy that we have. So we expect to see progressive improvement throughout the year.

Yes, I just want to also comment on that. I want everyone to understand that we are committed to the digital business. And as Jill said, we're taking a lot of actions going forward. And we -- as Jill said, we see improvement as we go through the year.

And then a quick follow-up. You touched on some of this, but I was hoping you could unpack some of the value simplification initiatives. It sounds like you're being very measured here, but I guess, what's working? And maybe where are you gaining some confidence that you could lean in maybe sooner than initially thought? And how is that flowing through to the gross margin?

Well, obviously, that's one of our key strategies in terms of simplifying our value message. What we're doing right now is we're just eliminating some of the layered events that we had last year. Jill mentioned about the layered events in digital overall. So we still are very, very confident in the model that Kohl's has in terms of delivering value to the customer. We just think that we need to get rid of some of the layered events, as I mentioned before. We also are trying to get rid of general public offerings where we give a discount to everybody. We think it needs to be more targeted in terms of driving the business through those kind of events relative to general promotions. And we're going to be bringing in, as we mentioned in the last call, some key value items. It's going to start during the back-to-school season where we price the goods, not at everyday low value. We're not going to convert to the off-price model, but it's going to be brought in at a price point that is going to accelerate the selling. And we're going to look at that. We're doing it very, very carefully. We're going to measure it. And if it is good, then we'll move forward. If not, we'll look at doing something else. But overall, I don't know if we're going to accelerate anything because we're really testing and we obviously don't want to make any mistakes in terms of the promotional calendar. We're just looking for things that we can eliminate without any big impact to the business.

Your next question comes from the line of Matthew Boss with JPMorgan. Please go ahead.

Congrats on the early progress. So Tom, on the inventory progress, could you speak to key learnings to date and elaborate on initiatives that you've put in place to sustainably manage the receipts and drive newness across the assortment?

Okay. Music to my ears. Having the -- well, having a disciplined approach to the inventory is obviously key for many, many reasons. We are happy with the progress we have made from end of January to now in terms of being down 6%. We -- right now, we could be better than that in the end of the second quarter. Things are moving around, and we have open to buy to chase. But we feel that mid-single-digit decreases is what we're going to do and what we're going to execute to. And the positives are, again, being able to have money open to buy at any point in time, the chase things is really key. And the process is really is just -- we're really putting a lot of emphasis on the processes that we're trying to execute overall. And it's a lot of eyeballs on it and trying to be proactive to catch things if we see things are getting a little higher than we want them to be. But overall, it's been a good team effort in terms of managing the inventory overall.

And then maybe on the improved inventory -- on the improved productivity that you cited in the stores, could you just help rank the traffic driving initiatives that you're the most excited about and just how best to think about the store fleet over time from here?

Sure. So I think the first traffic-driving initiative for us is clearly Sephora. And you saw the stats around Sephora comping in those first 200 stores in the mid-teens and then continue to see just the outsized impact there. And we have now a solution to go to our smaller stores, which -- those first test stores are exceeding our expectations. So, I think we're definitely seeing traffic. We're seeing new customers. So that would definitely be ranked number one. I think my number two is that we have the registers moving out, and we're adding that selling space to the front of the store and really going to have more of a home decor presence. And Tom has done this a lot. It's a big white space. So it's a big opportunity. It's also more of an impulse to find that item that you're walking in really get inspired for so we can have an added item to the basket. So I think that would be two. And three for me is really the gifting, and we saw that proof-point through holiday, Valentine's Day, and most recently, Mother's Day, really, when we were able to pull those collections to the front of the store and just seeing the customers' reaction to that and being able to shop easily and add that into their basket as well. So, I think those changes around spaces that we hadn't been participating in, really, what gets me in bringing those footsteps back into the stores. I think those continue to be great opportunities for us, especially with the expansion into Q2 of the additional 250 stores. And then in Q3, adding about 45 new small stores for Sephora. And then throughout Q2, we're pulling out the registers and all of our fleet, and we're able to bring that home to core to the front. So, I think there's a lot of opportunities in front of us, which is why I think Tom and I show that confidence in the progressive improvement in top line.

Yes. And I want to comment on that a little bit as well. For a long, long time, when you walk into a Kohl's store, you would see men's on the right- or left-hand side and women's on the right or left-hand side, and it was the same for a long time. So removing one of the register base gives us an opportunity to have more gifting in the front, as Jill said. So it's -- when they walk into the store, they're seeing something new, something different, something very giftable, and a different look. We want to excite the customers every time they come into a Kohl's store overall. So we're very excited about that. As Jill said, I mean, we started it really in the fourth quarter in terms of moving our giftables to the front, and they sold very well. Valentine's Day sold well. Easter sold well. I mean everything we put up in the front has worked out very nicely. But yes, we've also -- we changed graphics in the stores. We removed a lot of the older graphics. We put up more Kohl's branding throughout the store, much more modern look. It's cleaner. It's brighter. So again, it's all part of our improving the in-store experience for the customer.

Your next question comes from the line of Dana Telsey with Telsey Advisory Group. Please go ahead.

Very nice progress. As you think about how you wanted to re-imagine the store and how you're going to bring, whether it's promotions upfront and whether it's in the back, whether it's adjusting how the store looks and the value messaging. Where are you in that? And how are you thinking about back-to-school? And how you want the execution to look? And then just lastly, one more time just on packing, the digital expenses and the gross margin. How do you frame them going forward? And what levers should we see for adjustments there?

I'll do the question number one, and Jill can to question number two. We've made progress in terms of transforming the stores. Actually, we've made good progress, and we're going to continue to complete it in the second quarter. And as far as back-to-school, we'll probably have a presentation of back-to-school items as you walk into the store, obviously highlighting that time of year. But we're going to continue just to rotate the looks based on seasonality. Like I said, we have Americana upfront for Memorial Day and for July 4. And we've tried to highlight every gift-giving period that we can. But I'm pleased with the way we've -- the team's gotten behind it and with the execution so far.

Yes. And in terms of digital, I think we've always kind of given you the rule of thumb of when we have the penetration change and the impact it has to margins. So you saw it definitely benefited our margin in Q1 with having less of that cost of shipping data. We're going to expect that digital will improve, but we had some outsized penetration post pandemic. We think that that's going to come down as we see people migrate more to the stores, which is a nice benefit for us from a margin perspective. In terms of leverage overall from a company, I still think our leverage point is around that 1.5% comp. We do expect slight deleverage this year, down 2% to down 4%, and really have a lot of efforts focused on how we can be much more efficient but still serve the customer appropriately. And that's really the lens that we're looking at as we make all these changes in the store is we want to make sure that we're still investing back into that customer experience, also with an associate to be there to help them as well. So, I think that's kind of where I would say, overall, the framework still works as it always had. Typically, you're seeing costs should be a headwind because of the digital moving up. But now as that's kind of rightsizing, we're getting that benefit back to your cost of shipping.

Your next question comes from the line of Chuck Grom with Gordon Haskett. Please go ahead.

I have one question on the near term, one a little bit more longer term. On the near term, Jill, how should we think about the second quarter comp that's embedded in some of the components that you provided on margin and SG&A? Do you expect it to be within the down 2% to 4% full year range? Or should we think about holding the four-year stacks from the first quarter to get to that number? Just trying to triangulate where earnings is going to fall out here in 2Q.

Yes. I think what we had said is we expected sales would make some progressive improvement throughout the year. We saw February was our strongest month, as Tom had indicated, and then April really came in where our expectations were. May slightly below our expectations, but we think with all of the strategies that we just outlined, there's a lot in front of us, which we feel that we'll be able to make up in terms of where we are for Q2. So, I would say it's still going to be towards the latter part of that comp just because we're saying, hey, we're going to build on that, especially with the benefit of Sephora happening in Q2 and then moving into the back half of the year with a lot more of those strategies. And even in terms of product, we have a lot of Tom's influence. We have a new chief merchant, and a lot of that influences going to land in the back half of the year. And so, that's why we feel confident in the build from that perspective. So, I would say that I'd expect Q2 to be more towards the bottom end of the guide as we build our way up for the rest of the year from that perspective, and let our strategies take hold, but that's also why we have confidence in Q2 to build and really get back to our expectations.

Okay. Okay. Great. That's very helpful. And then I guess more for Tom, just when you're doing this clearance strategy throughout the quarter, how is the customer reacting? I mean, clearly, they're not used to seeing that in the stores, but it's sophisticated, sounds smart. I'm just curious how the customer is reacting and responding.

The customers love clearance, to be honest with you. It's doing very well. I mean, as we said a couple of times already, it really drove our February business. It drove our January business overall. So timely markdowns, there's nothing better than that, okay? Taking the markdowns when the customers really want the product, we are waiting. I mean, we are waiting to take markdowns like we would take fall markdowns in February and March, and we would take spring markdowns in August and September. It was just too late. And taking them on a timely basis, as I said, is really critical to running the business and hopefully, improving our inventory turns.

Okay. And then one more, if I could, just a follow-up on Matt's question earlier about the inventory, obviously, you can see the balance sheet and the changes in the dollars. But from a systems perspective and an overall approach from the merchants, what else -- what needs to be done? Or do you have the tools in place or it's just a matter of change in the philosophy and approach?

We have the processes in place. And we've had the processes in place for a while now. It's just more about, again, having eyeballs on the inventory levels at all times, making sure that we're delivering what we said we're going to deliver. But it's not systemic. It's just more about understanding the importance of having open to buy to chase. It's one of the things that I learned in off-price is if you're open to spend, there's so many benefits with that.

Your next question comes from the line of Paul Lejuez with Citigroup. Please go ahead.

Inventory, just -- dollars, we obviously know but units, can you talk about where you ended with units at the end of the first quarter? And what the plan is as you move throughout the year? How that might look different versus units? And then second, Tom, I guess you've been a little longer now. I'm curious if you've had any change in the way that you think about the number of stores in the fleet, are you finding any multi-store markets where you might have an opportunity to close stores, transfer some of that volume to the stores that remain? Any change in your view on that front?

Sure. So from an inventory perspective, our units are actually down more than the dollars just given that we talked a lot about commodity and cost inflation, particularly in the first half of the year, which we do think will benefit from in the latter part of this year. And even with that being said, just in the context that we do have the incremental Sephora stores that we opened, which you understand would come with a lot more units just given the small unique piece of it. So Units were down more, but I would suspect in the back half of the year as we start seeing costs abate that those would be much more in line as we move forward.

We really don't have any changes in terms of how we're approaching the stores overall. Our stores are profitable. And we don't anticipate closing a lot of stores, very few, if any, just because they make money. So, we're going to -- right now, we have like seven stores opening in '23, one of which is a relo. And right now, we're planning on staying at that typical level. But we're looking to see whether or not we can do more, but we really -- right now, we're just staying as is.

Your next question comes from the line of Oliver Chen with TD Cowen. Please go ahead.

Historically, as we look back at Kohl's, balancing merchandise margins relative to traffic has been difficult. Also, the Company has been somewhat weather-sensitive, and then third, driving women's and younger customer apparel. That's been an opportunity. Tom would love your take on those features and how you're thinking about that and if there are valid risk factors in terms of what you see going forward? And then, there's lots of really awesome ingredients for changes you're making. Could you rank order them in some way just in terms of the most impact, perhaps in the second half relative to longer term and/or lower hanging fruit versus longer term? And then lastly, Jill, you've had an iconic Kohl's Cash program and personalization have been efforts in the past. I guess what's different now, and how you'll manifest that relative to all the AI we're seeing and the data that you do have?

Well, let me start -- I mean that's a lot of questions. Let me first start with what are the priorities? Obviously, continuing our relationship with Sephora. I mean, continuing to build that business overall. Having a strong beauty business is really key to growing some of the business you talk about -- you talked about. I mean having a good beauty business should result in having a very strong women's business overall. We are working hard on our assortments in women's. I just reviewed the back-to-school assortments for young women's and it looks really terrific. It's a good mixture of key items, some great fashion items as well. So, we feel very good about that as we go through the back-to-school period overall. Our other priorities are really to continue to grow the stores business. It's 70% of our business, and we really feel that it will help our overall growth by getting that stabilized and growing that piece of it as well as the digital business. We talked about that earlier, and we're committed to it. We're definitely committed to it. The performance in the first quarter wasn't what we wanted, but we see progress as we go throughout the year. But the other priorities is the home business, and we're going to grow that through capturing businesses that we're underpenetrated in, like wall art and pat and home decor overall. And the gifting piece, as we talked about before, we feel very good about that, very good about impulse business overall and trying to get our mix improved in terms of more casual versus dress. We've already seen a lot of progress in terms of moving the dress business because we serve a broad audience, and we need to have product for everywhere. But again, we're still committed to the active business, but we're looking for a rebalance. So, I'll let Jill talk about the gross margin.

Yes. So I think overall, from your question around margin and traffic and Kohl's Cash, I think we're still going to deliver value to our customers. And that, I think, is really what is going to be a key driver for why they come to Kohl's. But that combined with everything that Tom outlined is really that great product. And really finding places in the white space we haven't participated in, such as gifting, such as home decor, such as impulse. We're going to expand on pat. Outdoor continues to be great for us. So those are all places that we have opportunity. And then, of course, as you mentioned with women, with Sephora, we're bringing in a much younger customer, they're new to Kohl's, and so we have a big opportunity to have them walk across the aisle in the shop into women's. And so, we're really focused on elevating that product. But it all starts with price. And I think that's why simplified pricing is really important. We don't want it to be confusing, having to understand the stackability of our offers. So we want them to understand in a simplified way the value that Kohl's can present to them. And then Kohl's Cash plays a key role because it bounces them back in. It causes another trip. It brings back that traffic and has been a part of our ecosystem for a really long time. It's part of what is a great loyalty leading program in the industry and we're going to continue to leverage that as we move forward as well. So I think between the white space that we haven't filled and really the focus on products that Tom and our new merchant has brought into Kohl's together with all the initiatives that we outlined today. It feels great that we'll hit the margins that we outlined as well as continue to drive traffic into the stores.

Okay. One follow-up. Tom, on the initiatives across home, how do you see your merchant organization evolving? Because a lot of this sounds new, and I'm just curious about the capabilities you have versus the ones you want, and how that intersects with the constant need for speed and agility? The open-to-buy programming is also new and different. That's a different kind of skill set perhaps, but it sounds like you're laser-focused on inventory as well as having a lot of direct reports.

Yes. As far as the merchandise organization, as always, we work on how many buyers we want in the organization. So, we may -- going forward, that might be part of the plan just in terms of targeting more areas with more people. But as far as leadership goes, we feel very good about where we stand today. Again, as I mentioned a couple of times, everyone is really, really receptive to new things. Our job is to teach, train and develop, and that's what we're focused on. But right now, I feel very good about the merchant organization that we have in place, and they can get it done.

Well, thank you, everyone, for listening on the call today. Have a good day.

That will conclude today's meeting. You may now disconnect.