Greetings, and welcome to the American Eagle Outfitters First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Judy Meehan. Thank you. You may begin.

Good afternoon, everyone. Joining me today for our prepared remarks are Jay Schottenstein, Executive Chairman and Chief Executive Officer; Jen Foyle, President, Executive Creative Director for AE and Aerie; and Mike Mathias, Chief Financial Officer. Before we begin today's call, I need to remind you that we will make certain forward-looking statements. These statements are based upon information that represents the company's current expectations or beliefs. The results actually realized may differ materially based on risk factors included in our SEC filings. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Consistent with the retail calendar and the 53rd week last year, first quarter 2024 results and today's discussion are presented for the 13 weeks ending May 4, 2024, compared to 13 weeks ending April 29, 2023. Comparable sales metrics are presented for the 13 weeks ending May 4, 2024, compared to the 13 weeks ending May 6, 2023. Also, please note that during this call and in the accompanying press release, certain financial metrics are presented on both a GAAP and non-GAAP adjusted basis. Reconciliation of adjusted results to the GAAP results are available in the tables attached to the earnings release, which is posted on our corporate website at www.aeo-inc.com in the Investor Relations section. Here, you can also find the first quarter investor presentation. And now I will turn the call over to Jay.

Thanks, Judy, and good afternoon, everyone. I'm incredibly pleased with our first quarter results. We posted significant growth from last year and meaningfully exceeded our guidance. These results were a strong proof point that our strategic priorities are driving business momentum and solid profit flow-through. This past March, we were excited to share our new strategy plan, powering Profitable Growth, charts a new path forward for the company and aims to deliver steady growth as we build to an operating margin target of 10% by 2026. AEO is a proven brand builder with distinct and undeniable strength. We have exceptional brands in American Eagle and Aerie with powerful customer connection and tremendous growth potential. Our best-in-class operations bring our brilliant design team's creative vision to life at the highest level every day. Our shopping experiences across stores and digital is second to none, powered by decades of customer insights. Our new strategy magnifies these strengths to go after growth opportunities, and our focus on continuous operational improvements will set the business up to deliver consistent profitable growth in the years ahead. As a reminder, our priorities are defined by 3 key strategic pillars: first, amplify our brands; second, optimize our operations; and third, execute with financial discipline. Jen and Mike will provide more detail on how we deliver against these pillars, but I want to underscore just how pleased I am with momentum out of the gate. The teams have wasted no time in attacking our priorities. Let me touch on a few highlights. First quarter revenue of $1.1 billion reflected a new record for the company, driven by 7% comp growth. What's more notable is the strength we saw across brands and channels. American Eagle, Aerie, digital and stores all experienced solid growth and healthy metrics. We saw meaningful…

Thanks, Jay, and good afternoon, everyone. It's great to see nice momentum across the business as we implement the strategic initiatives we reviewed with you last quarter. The teams have truly taken the task of amplifying our iconic brands. We are making great headway and fueling the significant opportunities we see across the assortment while elevating our store and digital experience. I'm incredibly pleased with how we delivered the first quarter. We brought innovation to core collections as well as new adjacencies, driving growth across American Eagle and Aerie. We maintained inventory discipline and chased into winning ideas efficiently, fueling merchandise margin expansion. We also grew our customer file across brands, marrying strong products with exciting marketing activation and a winning shopping experience. Starting with American Eagle. I am particularly encouraged by the acceleration to 8% revenue growth fueled by a 7% increase in comps. Key drivers of growth included women's overall, especially in tops, which as I reviewed is a major priority for us. I'll also highlight strength in dresses, skirts and jeans. In these areas, we are seeing a positive customer response as we look to capture the social casual dressing occasion and a wider age demo. Both of these are key growth opportunities within our long-term plan. Men's saw strength in pants, knit teas, sweaters and outerwear. I'd also like to add that we are seeing nice momentum in AE 24/7, our men's activewear collection. Across the AE brand, our ongoing focus on flow-through led to a 310 basis point improvement on the operating margin to 19%. Turning to other brand priorities. As you know, we are modernizing our stores and improving inventory allocation. We are seeing exciting results from action taken so far. The new lived-in store design is a truly fresh and modern update with…

Thanks, Jen, and good afternoon, everyone. As Jay and Jen reviewed, we're off to a strong start for 2024. Our new strategy is delivering great results with healthy growth across brands coming hand-in-hand with meaningful profit and margin expansion. Our focus on optimizing our operations and executing with financial discipline contributed to strong gross margin expansion in the quarter, and we remain on track to begin leveraging SG&A in the second quarter as additional work streams come into effect. Expanding on a few highlights. Consolidated revenue of $1.1 billion was up 6% to last year, driven by a 7% increase in comparable sales growth. As discussed last quarter, the shift in the retail calendar contributed approximately $15 million to revenue, reflecting the capture of a higher volume spring week. Operating income was $78 million. This represents a 76% increase to last year's adjusted operating income of $44 million. The operating margin rose 270 basis points to 6.8% against an adjusted operating margin last year. Gross profit dollars of $464 million increased 12%. Gross margin expanded 240 basis points to a rate of 40.6%. This was our second highest rate since 2008, which really speaks to the structural improvements we're making to our business. Strong inventory management and our shift to a more profitable clearance model initiated in the second quarter of last year contributed to gross margin expansion. Lower product and transportation costs also had a favorable impact to margin. As I reviewed over the past several quarters, our focus on reducing costs across the business continue to deliver results. Operating expenses within the gross margin leverage, including 90 basis points of leverage on BOW costs driven by rent, delivery and distribution and warehousing costs. SG&A expense of $333 million was up 7% to last year and roughly in line…

[Operator Instructions] Our first question comes from the line of Matthew Boss with JPMorgan.

Great. So Jen, could you elaborate maybe on current demand trends, what you've seen in May, maybe what you're seeing across your product assortments across brands into the back half of the year? Just your confidence in comping that comp as we move through the year. And then, Mike, just on the SG&A, maybe how things came in during the first quarter relative to plan and then drivers of the inflection to leverage that you cited in the second quarter and back half of the year?

Sure. Okay. Thanks, Matt. And thinking about American Eagle first. As I said back in March, we're really up to amplifying not only American Eagle but both brands. And as I think about, Mike, you just said it well, we really did deliver on the strategy. We continue to dominate in jeans. I believe there will be tailwinds there. We're seeing early trends, particularly in women's, and the assortments look great for back-to-school and onward. And completing the outfit. That's been something so important on the American Eagle side. We were very single noted, and it was time to rebuild that lifestyle that the customer was demanding from us. And wow, those results have been better than expected. And so we're going to continue to expand in those adjacencies, Matt. And then thinking about our fleet, we have a new store design, lived-in, that is getting an incredible response from the customers. So again, we're going to continue to deliver on that. As I think just more so the product and how we're set up for back-to-school, look, the tailwinds are there in denim. I just said that. We're going to round out the assortment in men's more so with the early reads that we've seen in the business, which are great categories. We just need to dominate more, and we need to distort more into these categories that did win in men's. Women's were on a great trajectory. So we're going to continue to drive the early trends and get back into those businesses. We leave open to buy, so we can really course correct as we build out into the back half. Aerie, look, the comps outside of swim were powerful. We were right in line where we left in Q4. And those businesses continue. And actually, we build on them in Q3 and Q4. So I think you're going to see a nice change in pace in that business as well as we lead into back to -- the back-to-school season, soft dressing and some new categories. We love what we're seeing in some of these new offerings that our customer has not really seen from us, one being sleep. There's some really fun ideas around that category. We're going to continue to innovate on our core categories. Even in some of the slowdown in intimates, we held our position and our market share, and we have new surprises in that category. So lots in store for back-to-school not only just with the product offerings but also our marketing. We're going to repitch the American Eagle brand. I think you're going to be really excited with what you see. It's getting back to our roots, our heritage. The campaign looks phenomenal and same for Aerie. So lots in store.

Matt, on SG&A, Q1 result for SG&A was right in line with our guidance. Dollars were up 7%, exactly in line with our comp result of plus 7%. Second quarter, we're looking at SG&A growth in the mid-single digits on high single-digit revenue growth. That includes the impact of that $55 million shift of revenue into the quarter from the retail calendar shift, and the SG&A up mid-single include some variable expense shift with that revenue. Then the back half of the year, SG&A dollars are planned down. So from here, we are structured to leverage. I think really pleased and proud of the expense leverage we saw in the first quarter across the P&L, a lot of which was in gross margin and then depreciation from here. We're really looking to and excited the fact that SG&A is where we'll see a lot of a significant amount of leverage from the second quarter on.

Our next question comes from the line of Adrienne Yih with Barclays.

Great. My first question is basically the reiteration of the full year. Does that have anything to do with sort of visibility or macro? If you can just speak to that. Jen, can you go over the percent of sales that swim contribute? Obviously, it was tough to sell somewhere when it's 50 degrees. But wondering, does that impact -- does it have -- do you have like a calculated impact on the second quarter? And then my last one is on the inventory. Mike, can you just clarify the ending inventory, how much -- I think there's some confusion. How much of that is that you are holding that inventory on your balance sheet rather than liquidating it with third party? I think that would be helpful, too.

Sure. Thanks, Adrienne. I can talk -- start with the reiteration of the full year guide. I think we're very pleased with our Q1 results, as we said. We exceeded expectations and guidance both on top line and our operating income range of $65 million to $70 million. So exceeded nicely on both revenue and income. The reiteration of the year is really we're on plan. We're slightly ahead of our plans for the first half. It's really more of a cautious guide for the back half of the year as we lap some -- the better results that started with back-to-school last year. July and August are a proof point for us in terms of what we should expect. It's always a proof point for what we would expect in the back half of the year. So I think it's just kind of maintaining the strategic path, executing on our plans. And as we see the back half of the second quarter and into back-to-school, we can update our expectations for the year. I can hit on inventory quickly, Jen, if you want to just -- on inventory, yes, plus 9% in inventory, which was in line with sales or with our brand demand. And yes, Adrienne, there's a few points around -- we would have a mid-single-digit inventory without the impact of carrying clearance and selling it ourselves profitably now versus our previous sell-off strategy. That will anniversary here in the second quarter. So second quarter ending inventory and then back half inventory will be more apples-to-apples. Right now, we are carrying more inventory as we clear it ourselves.

The impact of swim is, for Aerie specifically, high single-digit impact on the front half and then not material at all in the back half. So as I mentioned, other core categories that we will then double down on as we get into Q3 and Q4, we're really excited about. We've seen nice wins there.

Our next question comes from the line of Dana Telsey with Telsey Advisory Group.

As you look at the channel sales of stores and digital, difference between Aerie and American Eagle, what you saw traffic-wise or transaction-wise in unbundling the comp by channel? And any change to your new store openings for this year and how you're looking at it?

Yes, I can -- thanks, Dana. The channel specifics for the brands were Aerie stores and digital were pretty close to -- both mid-single. So Aerie's comp was plus 6%. Digital and stores were pretty close in terms of that plus 6%. Swim has a bigger impact on digital. So as we talk about the Aerie comp being plus 11% without swim, that impacted the digital comp more than stores. AE stores were slightly positive, and digital was high in the high teens growth. So that's -- Aerie brand plus 7% comp was a mix of stores being slightly positive, digital high teens, Aerie plus 6%. Both channels were similar. And then store plans continue to be 25 to 30 Aerie, OFFLINE new stores and kind of a net 20 or so, 20, 25 closures for AE. But that's something we're looking at even more closely. We expect that number to continue to come down as we look to reposition more locations and because of the success that we're seeing or early success in our remodel program with the results of those stores.

Got it. Just one follow-up, Jen, on the category of denim. How did denim do? How is pricing? And with some of the new styles, you mentioned tops being a key call-out. Sounds like it's helping the tops business, too. Is that driving margins also?

Absolutely. We've really taken that category back. We're winning definitely in women's. Some early learning in men's, as I mentioned, that we're going to -- you'll see more of that -- those learnings in Q3. We remain very nimble in that category, but we're definitely more balanced than we had been in the past, where we can chase the right fashion, not over a sort either, but make sure that we are in a better balanced situation. As we get into Q3, you'll see more new fits, new learnings. We've had a bunch of tests out there that will drive the assortments. And I like what I see. I definitely feel like there's tailwinds. I mentioned it earlier. I think we're about to head into a cycle, which is obviously a winning category for us, it's our dominant category. We're dominating it. And like I said, women's in particular already are seeing these trends, and we will continue to drive those trends.

Our next question comes from the line of Paul Lejuez with Citi.

If I am seeing this right, Aerie comps were up 6%. I think total revenue is up 4%. Why the negative spread on the Aerie business? And then curious if you could talk about what you saw by month throughout the quarter by brand and if you saw any weather impact.

Paul, yes, the difference in the Aerie plus 6% comp versus plus 4% total revenue is fully an impact from sell-off revenue last year. So as we still -- last year in the first quarter, we had not made the operational change around selling our own clearance profitably versus sell-off. So we did have -- we did book sell-off revenue in the first quarter last year at a loss. So that differential this year impacted -- that impacted Aerie more last year in the first quarter, which is driving that differential this year. We'd expect that to normalize as we anniversary that in the second quarter, and you won't have that impact go forward. We still expect Aerie's spread to be about 1 point directionally for the rest of the year. And then I think by month, to answer that question, yes, I think it's always a little rocky when you've got kind of the spring break and Easter calendar shifts. Definitely a couple of rocky weeks there in terms of weather, but that's always a March, April phenomenon. We're pleased with the total quarter results coming in above our expectations.

And in May 2Q to date, anything you can talk about by brand?

Yes, continued momentum, similar to what we've been seeing. Pretty commensurate with the first quarter trend. So we're very pleased with that coming into the second quarter. Our guidance is based on mid-single. So again, early in the quarter, 3.5 weeks in, certainly in the year in general. So both the second quarter guide and the full year, we still have got a long way to go. Some big kind of summer and back-to-school weeks coming in the second quarter, and then obviously, our bigger time of year is back-to-school and holiday. So pleased with -- very pleased with the start of the year, a lot of business ahead of us.

Our next question comes from the line of Jonna Kim with TD Cowen.

Just curious on the promotion side, if you saw any more uptick this year was last year and AUR that you've seen this quarter and what your expectations are for the remainder of the year. And it looks like you have a lot of exciting marketing initiatives. Just any color around the spend, if you're looking to increase spend year-on-year. And how are you allocating by channel?

On promotions, I think our gross margin result is a testament to our strategies and our plans. We have 240 basis points of gross margin expansion. And that came from multiple facets within gross margin, product margin and initial IMUs were healthy with controlled freight and transportation costs and our sourcing strategies at work. That structural change in clearance, as much as we didn't book that revenue, there was actually a benefit to gross margin in the quarter because of selling through clearance profitably versus selling off those goods historically at a loss. And then we leverage the expenses and gross margin by 90 basis points. So very pleased with that result in the first quarter. Promotions are still in very much in check. Those are structural changes we've made that we've talked about that we do not plan to revert, which are changes to our day and day out. No BOGO on jeans like we were running for a long time. We've made changes to our loyalty program, where we're not giving away free jeans or free bras anymore. And then there's clearance change that has a structural benefit to markdowns as well within the gross margin. All those things are permanent and happy with the results we've seen from all those changes. In marketing spend, we are -- we have spent more. We do plan to spend more. I've talked about advertising dollars and marketing expense not being a place that we're looking to reduce spend. It's actually a place as we're looking to reduce or leverage in other places that we want to continue to fund marketing as we get -- we've gotten better and better at spending our marketing dollars effectively and measuring the return from that spend. It is in the media space, kind of digital media, performance marketing and then brand in general. So we're seeing great results kind of across the disbursement of that spend, and we'll continue to look at ways to spend advertising dollars where we're generating a return.

Next question comes from the line of Chris Nardone with Bank of America.

Mike, just a follow-up on SG&A. How should we think about the outlook for SG&A dollar growth for the full year, if you guys are approaching the upper end of your sales guidance? And then in the back half, I think you alluded to SG&A dollars down. Can you walk through some of the specific drivers of where you're seeing savings versus last year?

Sure. Yes. Look, I think we're entering a period now where SG&A leverage will be a good contribution to operating rate improvement. We're structured to leverage from here, as we said. We're talking about mid-single-digit growth in the second quarter on high single-digit revenue expectations. That will produce significant leverage in the second quarter. Third quarter dollars are down slightly on a low single digit, both -- basically low single-digit assumption for the back half in both quarters. SG&A dollars are down. So we're actually looking to leverage SG&A on low single-digit comps. And then a reminder that with the retail calendar shift, we actually have kind of flat total revenue dollars in that assumption in Q3, and then total revenue would actually be down slightly in the fourth quarter off that assumption. So the exciting part about that for me is we are structured to leverage on any -- every comp point of upside from there, knowing that the revenue -- the revenue expectation right now is cautious until we see a few more months of business here. So yes, Chris, we're looking to leverage SG&A significantly for the rest of the year across the remaining 3 quarters. And then at the high end of revenue guide, we would just expect a healthy flow-through on -- to the bottom line from expense leverage.

Got it. And then just a quick one on the back half comp expectations above low single digits. Is that uniform across both brands? Or are you expecting different trends between Eagle and Aerie in the back half?

We'd expect Aerie to be on the higher end. Again, the comp in Q1 was plus 11% when you back out the impact of swim. We're seeing that continue into the second quarter. Swim becomes less of a contribution to the brand as we pass through the second quarter. Like last year, we saw some pressure on Aerie's comp through the first half because of swim and went right back to double-digit comps in the back half. So there's no reason to expect we wouldn't see kind of Aerie's comp exceed AE. But the flip side of that is we're seeing momentum in the AE brand as well. So I think -- because the reasons why I guide in the back half is cautious, it's early in the year. We've got momentum across the brands. The strategies we've got in place to grow the brands are working. So I think to answer the question, on average, you think would be a little below Aerie based on that, but we've got momentum in both brands, which is exciting.

Our next question comes from the line of Marni Shapiro with Retail Tracker.

Jen, congrats. The stores have looked really beautiful. The tops are amazing. I wanted to talk a little bit about something you said about broadening or widening the age range for the Eagle customer. I wasn't sure if that was Eagle and Aerie or the combination of the 2. Are you seeing an older shopper, a non-high school teen shopper stay longer or come into OFFLINE? Or is it kind of a reflection -- I've noticed in some of your media posts and things like that, that the teens look a little bit older, and there's a feeling out there that the teens are going from like -- I'm going to make myself sound like an old person, but that they're going from like 12 to 18 today. They're skipping that hole in between. So can you just talk a little bit about where your head is at with this widening of the age?

Sure. Marni, welcome to my world. I have a 17-year-old. Right. Just going back to our strategy, we are staying the course, and I love what I'm seeing. Look, we will always dedicate to our core customer, and we'll make sure that we always have offerings to serve that customer so that they can enter with us. I think our focus is now how do they stay with us. And thinking back to our strategy that we put forth, we want to offer new occasions, core occasions, social casual, men's active, everyday casual. And I think as we brought in those assortments, customers are going to stay with us, and we're seeing that. We're actually seeing the next bracket of age -- of the age group actually increase slightly. So they are sticking around, and that has been an initiative for us because in the past, they did jump out a certain age. And the more we focus on this, and like I said, broaden our assortment, I think the more they will stay with us. And that's -- and it's working. So you'll see more offerings around this as we head into future assortments and quarters. I think...

Will the marketing stay very reflective of the younger shopper and just the product assortment will expand a little bit?

Product will expand. And I think you're going to see a more balanced age demo as we continue to offer these other occasions. And of course, denim is ageless, our core competency business. And as we offer new fits, we're getting customers -- new customers because we were so focused on one fit in the past, particularly in women. I think now that we've broadened that assortment, we're getting more and more customers. And they love our jeans. They just -- for all the reasons that we know, between price, value, quality, wash, our innovation there. So I like that we might be having some tailwinds in this category. We're seeing it because I think that will bode well for this brand.

Our next question comes from the line of Janet Kloppenburg with JJK Research.

Congratulations on a great quarter. Jen, I know you work hard on every aspect of your business, but weather has hurt you in the swim area for a couple of years in a row now. And it just -- I just wonder about the time and focus you put into it and how you'll think about that category going forward. I also wanted to hear what you're thinking about the progress in the men's business and in the social occasion business. And Mike, I think you said that SG&A would be up mid-single digits in the second quarter and down, I presume, on dollars in the back half. Maybe you could give us an idea of how much. But that we should have leverage even in the fourth quarter with sales up modestly. I think that's what you're guiding to. Very modest fourth quarter.

Yes. Great call. Certainly, we dedicate the time that's appropriate for that category. We have a new team in place, new eyeballs on it, new ideas. I just went through their strategies for next year. I like what I'm seeing. And we will, course correct as we continue into 2025. I saw the assortments. And again, we have new categories that we're offering in Aerie that you will see expanded not only digitally but in stores as well. So that will also be a great win for the brand next year and as we continue -- actually, starting in Q3. Men's, look, we have some great wins in men's. I think it was just really more about distorting into those wins that we saw early on. 24/7 is doing great out of the gate, select knit categories, outerwear. I mentioned them on my script there. And look, it's really now about getting the investment behind the new wins that we're seeing. I think you can see in the marketing, you'll see more trends, right, categories on the go forward, and we will be leaning in there.

Let me just be specific on SG&A. So yes, again, dollars up mid-single digit in the second quarter on high single-digit revenue, both the revenue and SG&A dollars being impacted by the retail calendar shift with the $55 million benefit in the second quarter. Q3, we'd expect SG&A dollars to be down slightly -- yes, I think it's a cautious low single-digit comp. But again, with the retail calendar shift impact, there's a negative $45 million impact in Q3. So in that kind of comp expectation, total revenue would be relatively flat. So we'd be set to leverage. On top of that, with dollars being slightly down in the third quarter, fourth quarter, same kind of on the low end of the revenue guide and low single-digit comps. Dollars being down pretty significant in the fourth quarter, actually, could be kind of high single to 10% range in terms of SG&A dollars being down at the low end of that guide. Again, both quarters and the whole back half set to leverage on revenue above and beyond that expectation. Hopefully, that's more specific and helpful for you.

And the only way that doesn't happen is if the sales numbers disappoint?

Correct. So that's how we're structured on the low end of our revenue guide of 2%. And then we're structured to leverage significantly on kind of every comp point above that expectation.

And just, Michael, some brands are seeing uptick in their transportation costs right now, their freight. What's going on with you guys?

We are not seeing that. Again, first quarter gross margin results were kind of a mix of benefits across the board from initial markup, including freight and transportation costs, well-controlled inventory and promotions and leveraging our expenses and gross margin. Line of sight for the rest of the year is no headwinds from freight and transportation costs, and we're expecting kind of initial markup benefit in future quarters.

And our next question comes from the line of Alex Straton with Morgan Stanley.

I've just got 2 for you here. First, just on SG&A. Can you elaborate qualitatively on what exactly is happening in the back half that enables you to pull back on the spend there? Just so we can understand the drivers. And then secondly, just on the Aerie intimates weakness that I believe you all highlighted. Can you just remind us how much of the business that comprises as well as provide any color on how that market is trending or what you're seeing in intimates? That would be super helpful.

Yes. So the drivers of SG&A, we talked about really for a year now as we kind of kicked off our profit improvement initiative last year and start to see the expenses and gross margin, the benefits of work around rent, delivery, distribution, supply chain costs coming through our gross margin the whole back half of last year. We talked about those being the priorities with SG&A coming later. So as we landed our plans for this year, the work across 85% of our expense base across the P&L in general with the line items in SG&A that we talked about being store labor, corporate compensation, related incentives, services, kind of optimizing our advertising dollars, reducing leveraging supplies and repairs. A lot of that work is taking hold. Some of it in the first quarter. But then a large majority of the benefits really starting here in the second quarter and for the rest of the year, including compensation in general and incentives being in that pool. So I think that's the continuous improvement off as we've established, continuing the work on those work streams, 85% of our SG&A base continuing to find efficiencies to control costs and those benefits really coming through kind of starting here in the second quarter and the rest of the year.

And in Aerie, roughly, it's about 1/3 of the business. But as I mentioned, we're not forgetting about these core competency businesses that we launched and we owned. The SMOOTHEZ category, you're going to see newness there. Really excited about where we're taking the intimates business. And really what's changed a little bit is the customer has pivoted. If you think about our OFFLINE business, which has done incredibly well this quarter, sports bras are amazing. So thinking about that category as well, and it gives us the ability to leverage both businesses, Aerie and OFFLINE, on where the customer is going, and we certainly did that. The sports bras business has been amazing. In fact, we ranked fairly high in market share in that category and also in leggings. We gained over 2 points of market share in the leggings category in this quarter. So really excited about that business. And again, it's a natural as we head into Q3 and Q4. We're really happy about the Aerie business. And again, going back to our strategy, we want to win in intimates and in soft apparel. We're seeing that happen, particularly in apparel, growing off the OFFLINE business. And we definitely want to be the new authority in activewear. So I'm very excited about all these other areas that we are diving into and owning and winning at. So lots of expansion opportunity there. So really excited for more to come as we build out the rest of this year.

Great. Thanks, Jen. So that completes our call for this afternoon. Thanks, everyone, for your participation, and we appreciate your interest.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.