Ladies and gentlemen, thank you for standing by. Welcome to Best Buy's First Quarter Fiscal 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded for playback and will be available by approximately 1:00 p.m. Eastern Time today. [Operator Instructions]. I will now turn the conference call over to Mollie O'Brien, Vice President of Investor Relations.

Thank you, and good morning, everyone. Joining me on the call today are Corie Barry, our CEO; and Matt Bilunas, our CFO. During the call today, we will be discussing both GAAP and non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, and an explanation of why these non-GAAP financial measures are useful, can be found in this morning's earnings release, which is available on our website, investors.bestbuy.com. Some of the statements we will make today are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may address the financial condition, business initiatives, growth plans, investments and expected performance of the company, and are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Please refer to the company's current earnings release and our most recent 10-K and subsequent 10-Qs for more information on these risks and uncertainties. The company undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call. I will now turn the call over to Corie.

Good morning, everyone, and thank you for joining us. Today, we are reporting Q1 sales results that are right in line with the expectations we shared in March and profitability that was better than expected, demonstrating our strong operational execution. We are appropriately balancing the need to adjust in response to the current industry sales trends with the need to invest, so we can capitalize on opportunities as our industry moves through this downturn and returns to growth. In this environment, customers are clearly feeling cautious and making trade-off decisions as they continue to deal with high inflation and low consumer confidence due to a number of factors. At the same time, in Q1, we saw our purchasing customer behavior remain relatively consistent in terms of demographics, and the percent of purchases categorized as premium. In addition, our focus on being there for our customers with expertise and support was highlighted by material improvements and satisfaction scores for our in-home services and delivery and record scores in remote support, in-home repairs, store care, and Best Buy Totaltech call center experiences, all key differentiators for us. We remain as confident as ever about our strong position in the industry despite reporting lower sales than last year. In Q1, our comparable sales were down 10.1% on a year-over-year basis. From a merchandising perspective, similar to the past few quarters, the largest impacts to our Domestic comparable sales decline came from computing, home theater, and appliances. The promotional environment played out largely as expected. It was slightly more promotional than last year, and we believe we are now fully normalized to pre-pandemic levels from both the percent of products being promoted and the depths of promotions. In some products and categories, the environment was more promotional than we had expected, and we saw…

Good morning, everyone. Let me start by sharing details on our first quarter results. Enterprise revenue of $9.5 billion declined 10.1% on a comparable basis. Our non-GAAP operating income rate of 3.4% declined 120 basis points compared to last year. Non-GAAP SG&A was $40 million lower than last year and increased approximately 180 basis points as a percentage of revenue. Partially offsetting the higher SG&A rate was a 60 basis point improvement in our gross profit rate. Compared to last year, our non-GAAP diluted earnings per share of $1.15 decreased 27%. While our revenue was down to last year, overall our results once again aligned closely with our expectations entering the quarter. Our non-GAAP operating income exceeded our expectations due to both higher gross profit rate and lower SG&A. The better-than-expected gross profit rate included favorable supply chain costs and benefits associated with changes made last year to our free My Best Buy membership offering. The favorable SG&A was driven by a combination of several smaller items with store payroll expense being the largest driver. Next, I will walk through the details on our first quarter results compared to last year. In our Domestic segment, revenue decreased 11% to $8.8 billion, driven by comparable sales decline of 10.4%. From a phasing perspective, February was our best-performing month on a year-over-year basis with trends softening through the remainder of the quarter. From a category standpoint, the largest contributors to comparable sales decline in the quarter were computing, appliances, home theater and mobile phones, which were partially offset by growth in our gaming and service categories. In our International segment, revenue decreased 11.6% to $666 million. This decrease was driven by the negative impact of foreign exchange rates and a comparable sales decline of 5.5% in Canada. Our Domestic gross profit rate…

[Operator Instructions] And your first question comes from the line of Simeon Gutman from Morgan Stanley. Your line is open.

Hey, good morning, and nice job navigating in this backdrop. My question -- my one question is on industry growth, this idea that maybe we bottomed this year. If you look at the category, it's more than reverted to your point, Matt, around sales trends. It looks like it's overshot in a way. And you could have made the case that this year '23 could have -- should have been sort of the bottom and even the turn. So, what gives you confidence in '24? Because once you overshoot, it's hard to determine where that bottom is. Curious if you can provide some more color.

Yes. Thank you, Simeon. Let me start with a little bit of the backdrop here. And I think we've been pretty consistent in saying -- we started really in Q2 of last year in saying the consumer is clearly making trade-off decisions in a very unique environment. So, to your kind of original question on the reversion, I think what we would say is we've been seeing a consumer who is, whether or not you call it a recession, exhibiting some recessionary behaviors depending on the different category that you're talking about. So, it's absolutely unusual. I think as we look ahead, we start to feel like you see the turn in the business as you head out the back half of this year and into next year. And there are a few industry sources that we're using to help substantiate that. If you look at NPD, CTA, Forrester, a lot of those have the same kind of points of view. So first of all, we're just looking externally to say, what do we see in the landscape. But I think we tried to lay out, even within the prepared remarks, there are some key tenets here that we believe underscore our thoughts for next year. One is, this idea of truly a larger install base. Yes, absolutely, there was some pull-forward in the pandemic, but some of that had to be incremental given you now have two times as many connected devices in people's homes as you had versus just 2019. So, you absolutely have this larger install base of product. And these are not static products. These are products that we can already see our vendors working to upgrade and innovate and drive. The second point that we made, which is replacement cycles. Natural replacement cycle is three to seven years. Like we said, quicker on the mobile side, computing in the middle, appliances and TVs more on the high end. But these are pretty consistent replacement cycles that we see over time. If anything, we saw them maybe accelerate a bit during the pandemic, normalize a bit more now. But on the whole, you've got products that because of their nature, you're going to want to upgrade. And then, the third is the pace of vendor innovation. And you can -- that's why we gave some specific examples in the prepared remarks. You can already start to see some of that innovation coming. I think the window that we have into our vendors would say it's more towards the back half of this year and into next year. I think we were clear in the prepared remarks to say, this is all based on what we can see now, and we're going to continue to evaluate. But as of right now, it feels like that consumers kind of made their choices about the industry that we're in, and we still feel really well set up as we start to head into the next calendar year.

Thank you.

Your next question comes from the line of Joe Feldman from Telsey Advisory Group. Your line is open.

Great. Thanks guys for taking the questions. I have a couple of quick follow-ups for you. With regard to the incentive comp for this year, can you help us out why it would go up as much as it is given it's such a challenging year? Not that you guys shouldn't get paid, but I just wanted to better understand it.

Yes, sure. First, I'll take you back to last year. Last year, we had about $455 million of favorability in incentive compensation. As you think about last year, by the end of last year, we had essentially not paid out any of our incentive comp based on our annual performance last year, a lot of which is driven by revenue and operating income expectations as you enter the year. And so, essentially we've reversed out all of that expense last year. And so, as you set new targets for this year FY '24, you reset your tables and expectations for sales and operating performance. And so, essentially just getting back from essentially almost a zero payout to a 1.0 payout, we've added over -- about $225 million of expense at the top end of our guidance, just simply reflect like a normal payout for this year because it's really more of a year-over-year impact of not paying out anything and then maybe starting the year with the expectation that we would pay out at a more normal midpoint.

Got it. That's helpful. Thank you for explaining. And then, a quick follow-up on the promotional side of things. I think, Corie, you had mentioned that there were some categories that were a little more promotional than expected. I was kind of curious as to what those were. And the sort of second part of promotions, are people responding when promotions do kick in?

Sure. I think, I'll start and Corie can jump in. There are a few categories that we saw a heightened level of promotionality, appliances is one of them, computing was one of them, headphones was another. There's a number that more promotional year-over-year and in some cases, even more promotional than they were pre-pandemic. And like any year, that's not just us who are incented to drive sales. Our vendors are incented to drive sales as well. And the outcome of that actually didn't lead to strengthen our product margins in totality. So the more heightened promotionality didn't necessarily manifest in profitability pressure on a year-over-year basis, but there were a number of categories that people are trying to stimulate and drive sales because of the environment we're in.

From an elasticity perspective, Joe, I hate always feeling like I answer this way, it depends on the category a little bit. I think, to Matt's point about appliances, that definitely right now is a category that is a little bit more reflecting a duress customer or someone who needs to replace an appliance versus the more aspirational customer. In that world, you have a little bit less elasticity, you can imagine, because you're not going to really respond to promotions as much. Some of the other parts of the business that Matt mentioned around particularly things like home theater, we're seeing response when there's more promotionality and more value. And I think, overarchingly, what I -- from a consumer perspective, this is absolutely a consumer who's looking for value and will respond to some extent, but it can depend a bit on the category that we're talking about and what their state of mind is in terms of how aspirational they want to be within that category.

That's really helpful. Thanks, guys. Good luck with this quarter.

Thanks, Joe.

Your next question comes from the line of Anthony Chukumba from Loop Capital. Your line is open.

Good morning. Thanks for taking my question. I was just wondering if you could just give a little bit more color on the services business. You had a pretty strong comp increase in the Domestic business, but then in the International business, it was down. And I know part of that had to do with compares, but I was just wondering if you can just give us a little more color in terms of the divergence there. Thanks.

Yes, sure, Anthony. The -- on the Domestic side, the services revenue growth is attributable to the growth in Totaltech members from this point to last year. And so, as we continue to sign up members, we continue to have more revenue come through that. And that's essentially the growth in the services category on the Domestic side. On the International side, we did say that there is some gross profit rate pressure on services. They're doing similar membership changes in Canada, and that's simply a reflection of timing of those membership changes they made last year. This year, they start to cycle those changes they made earlier in their year after this Q1. So that is a reflection of some of the membership changes that they're also making, not the same, but similar to what the Domestic side is doing.

That's helpful. Thank you.

Thanks, Anthony.

Your next question comes from the line of Mike Baker from D.A. Davidson. Your line is open.

Hi. I just wanted to follow up on the membership question. And so, you're making some changes, which presumably is based on driving better profitability, yet the guidance for the profitability impact this year is unchanged, maybe that's just timing because it takes time to implement these changes. But what does this do to the long-term outlook in terms of the profitability on the membership business? Thanks.

Maybe I'll start and then Matt can add. We went into the year, Mike, knowing we were going to make changes to our membership program. We have the most clarity around My Best Buy, the free program, and those changes we actually put in place at the beginning of the fiscal year. But we also had an aspiration to make changes to the other side of the program. And this just gave us a little bit of time to -- before we announce the formal changes, but we had baked the assumption that we were [going to get] (ph) these changes into the guide for the year.

Yes. So, very specifically, we -- last quarter and this quarter, we've said that the gross profit rate, about 40 basis points to 70 basis points of increase this year, one of those reasons is the changes to the membership program, part of which is the My Best Buy changes, as Corie mentioned, and then just expected changes on the other parts of the membership program. And to your last part of your question, we would expect to continue to iterate and update the membership financials and expect to see probably continued profit rate expansion as you look into next year. Obviously, as you -- we still have Totaltech members that still have two years of benefits, and we'll have to honor those for that two years. And then as you get into the back half of this year, we will start to see the benefit of the changes more. And then, get into next year, we would continue to iterate and have to see it more upside.

Got it. Well, as someone who took advantage of the free installation, I'll miss that, but I'll take my $20 savings on the annual fee.

Well, we promised that there will still be great deals on installation. And we made clear that we're still going to pull some of those great deals. So, you will still see those coming. Also, please don't get too upset yet. And the other thing I just want to add, Mike, before you go is absolutely part of the changes result in impact to profitability. The intent of the changes was to understand customer behavior and then adjust the membership program based on the customer behavior we were seeing. So, in a world where you used to historically value points, but now things like free, reliable, fast shipping matter a lot more, you make that adjustment, not just because it has profitability impacts, but because you're actually learning about what your customers value and what accomplishes what you set out to do, which is to have more sticky customer relationships, increase that frequency and increase that share of wallet. So, we're really trying to balance both sides of the equation as we're making these decisions.

Got it. Fair enough. I appreciate the color.

Thank you.

Your next question comes from the line of Chris Horvers from J.P. Morgan. Your line is open. Chris Horvers, your line is open.

Thanks. Good morning. Two related questions. So, you talked about the midpoint for the year on the sales side, but you didn't comment on the operating margin range. And you did just materially beat your sort of gross -- what you talked about for the gross margin in the first quarter here. So, are you expecting some give back? Any comments on that range? And then, Corie, you mentioned preparing for a number of different scenarios. I guess, what does that mean? You have cut a lot of expense out of the business on the labor side. That's your biggest cost. It's still inflationary. Where you see the opportunity to sort of protect the bottom line if comps do come in worse than expected?

Yes, I'll start, and Corie can jump in. Thanks, Chris. The -- in terms of the EBIT midpoint, we did not comment on that. I think there's more moving pieces within the EBIT level between gross margins and SG&A levers that we can pull depending on where the sales trends go. The largest factor in that equation is going to be gross profit rate. And we're, obviously, reflecting a range of 40 basis points to 70 basis points. And so, in terms of where we land, we have a little bit more drivers or levers we can pull to kind of maneuver through that range. I think, in terms of the flow-through, we didn't flow through the Q1 OI beat. It's more a function of us giving us just a little bit of room to navigate the remainder of the year. We, obviously, have a wide range of outcomes for the year, and we want to just make sure we're being prudent with how we're making decisions as we get towards the more meaningful back half of the year.

Thanks very much.

Thank you.

Your next question comes from the line of Peter Keith from Piper Sandler. Your line is open.

Hi, thanks. Good morning, everyone. I wanted to just talk about the sales trend from the last couple of months in the context of the overall retail landscape. So, you did talk about a bit of a softening through the quarter, although I think February, of the last conference call, you were roughly down 10%. So, it didn't seem like there was too much softening. At the same time, retail has seen a significant weakness in big-ticket discretionary. You would think consumer electronics would be impacted by that. So, your sales can be down, but not falling off a cliff. Maybe comment on what you're seeing within your business versus what you think is happening more broadly at retail?

Sure. I can start talking about the cadence of the quarter and then Corie can jump in about broader retail. Similar to the retail industry, we did see our sales sequentially get worse as the quarter progressed. February was the best-performing month that we come in a little bit better than our -- the guidance we gave as we started the quarter, but there are a few reasons for that. I mean we gave growth number, not a comp number, so there's a bit of difference between the growth number and the comp number. We always have a few closing the book entry. So, comps in the quarter did sequentially get worse. We have, as we indicated, starting the quarter in line with the range that we gave for the first -- for the full quarter Q2, so therefore, improving from April into May in terms of comp. And so, we feel good about that range we gave for Q2 at the moment.

As it relates to the consumer, Peter, I think we've been pretty consistent since really starting in Q1 of last year, saying, we felt like, to your point exactly, in big ticket discretion and specifically in CE, given especially how much demand we saw through the pandemic, the consumer was going to make trade-off decisions. And it's a consumer that clearly, when they're faced with record high inflation versus 2020 in food, housing and fuel, that's going to drive those trade-off decisions. And I think what we've been anchored on is making sure we provide the best possible value and even altering and changing the membership program to make sure we're meeting that consumer where they are. And what we can see, I mean, we've always said, it's really hard to measure share in our business, right, because especially when it comes to services and new categories, it's very difficult. But what we believe is we're at least maintaining share in the industry. And so, to your point, it's an industry where the consumer is making decisions, but it's also an industry where everyone needs the stuff that we've got. It's not like these are just want-to-have products they're need-to-have products. And we -- especially as we look at those innovation cycles coming up, we can start to see this will stimulate a replacement and innovation cycle. So for right now, I feel really good about what we're trying to do to stay with the customer where they are given the trade-off decisions that they're making. And this industry is quite different than some of the others. And I think we've been pretty consistently trying to articulate what we're seeing in our consumers, and therefore, addressing their needs appropriately.

Okay. Well, thank you very much, and good luck.

Thank you.

Thank you.

Your next question comes from the line of Jonathan Matuszewski from Jefferies. Your line is open.

Good morning, and thanks for taking my question. Mine is on your B2B channel or Best Buy Business. Our checks would suggest you've had some pretty big wins on this side of the enterprise as of late. Curious if you could just update us on that channel, Corie. Where is it tracking in terms of sales penetration? Is recent progress reflective of maybe any investments you've been making on that side of the business? And how are you thinking about this business performing in 2023 and beyond? Thanks so much.

I am incredibly proud of what our direct team has been able to accomplish, frankly, throughout the pandemic. And we haven't specifically released this as like a separate segment of the business or sized it, but its material and its growth, in general, has been outpacing what we've been seeing in the core. And I think it's a really creative approach to everything from education, which relies highly on technology, to hospitality, which relies heavily on technology, to even agreements with sports teams and facilities where any of us know, as you walk around, there are a ton of technology experiences that are available. We continue to believe this is an interesting growth channel for us. And we even talked last time on the call a little bit about our appliance business and starting to work with homebuilders directly in a small pilot that we're doing. So there's lots of different ways we're starting to -- and continuing. This has been a business for us for a long time. I think from an investment standpoint, I'm again very proud of the team has pivoted to even more of a digital experience. So if you go online and you're trying to buy at large quantity, we will basically move you into digitally the right channels to get you to the right people who can help you make more of those scaled purchases that you're looking for. So we're finding lots of digital ways to understand our customers, and therefore, target them more as potentially small business owners versus the kind of targeting we would do for a normal customer. And so, I like -- the team is doing a very nice job creating all the capabilities a little bit behind the scenes, frankly, in serving these business customers, and I'm proud of the growth that we've seen in that part of the business.

It's helpful. Thanks.

Thank you.

Your next question comes from the line of Brian Nagel from Oppenheimer. Your line is open.

Hi. Good morning. Thanks for taking my questions.

Good morning.

So my first question, I guess, is a bit of a follow-up to some of the questions. But clearly, you managed very, very well a difficult environment here in Q1, a challenged sales quarter. In response to other questions, you said that, I think, if I heard it correctly, because it's actually deteriorated somewhat as the quarter progressed. So as you look at the business now and the performance or the activity of your consumers, what gives you the greatest confidence that this is the bottom and as we look towards '24, '25, that we'll begin -- we'll see this rebound to more normalized growth at Best Buy or within the sector?

I think when we talk about the confidence we have, I think it is both relative to the backdrop of the performance we've seen, which was a pullback in demand last year and again projecting an ongoing pullback in demand this year. So, a little bit different than some of the other industries. We started to see the change in consumer behavior much earlier than others. And as soon as, as early as last year in Q1, we talked about it, we started to see that pullback in demand. So, we're going to have now two consecutive years, as we talked about, of a consumer who's making some choices away from consumer electronics. The nature of the industry is really what gives us the most confidence, and then obviously, our very stable position within it. The nature of the industry, this is an industry where technology is necessary, necessary to live our lives every -- think about the quantity of pieces of technology you touch in any given day, and that technology is not static. If you think about how quickly both the hardware and then if you think about what I will call "the software" things like generative AI or like VR and AR, how much that is changing, that will all drive form, feature changes in the product, which is part of what underlies our confidence. At some point people want to -- and we know this based on lots of history through recessions, through lots of different types of industry performance, people will upgrade and want to replace their equipment and their consumer electronics. And so, I think what gives us confidence is understanding that there is a very large vendor community out there that is very interested in continuing to stimulate demand, continuing to create really cool solutions for our customers. And that, over time, I don't see a world where we rely less on technology. And so that -- it is all those underpinnings that are giving us confidence as we head out of this year and into next year. Now we said that -- and I'll repeat it, that is based on what we can see today, it's based on the environment as we understand it today. So, of course, we're going to continue to monitor and see how consumers navigate what is, obviously, a very volatile environment, but that underpinning of how different this industry is versus any others in terms of both need and constant innovation, that is the biggest part that underscores, and then obviously, our position within it and how confident we feel in our partnership with our vendors, that is what gives us the confidence as we head into next year.

That's very helpful, Corie. Thank you. And then if I could just ask a quick follow-up unrelated. So, a lot of talk about membership and some of the shifts you're making there with the program. So, I guess as we step back, I mean, clearly, Best Buy, there's a revenue piece of the membership program, how do customers that are members of Best Buy, how do they perform versus non-member customers from just from an overall sales perspective?

Yes. We hit out a little bit in the prepared remarks, but they remain more engaged customers. They tend to spend more, they tend to shop across categories, they tend -- on the whole, so I'm just going to talk about this big kind of lump of members, they tend to be our most engaged customers. Now, what a couple of years of paid membership has given us though is a lot of data around what is it customers distinctly value. Because there's really three things you're trying to do with any membership program: you're trying to acquire customers, you're trying to retain customers, and you're constantly trying to engage customers. Acquisition, retention and engagement are the cornerstones of any membership program. And so, Brian, what we've been spending time on is not just who are we acquiring, but do they stay engaged with the program? Are we retaining them? And so, it's not just about kind of the full, here's what we see in our customers. They're, for sure, more engaged and they're having better experiences. But now we can start to kind of bifurcate that large customer base into different need states. And we definitely see a customer who's really oriented around value and convenience, and we definitely see a customer who's really oriented around more fulsome service and support. And this gives us the opportunity, given all the now very rich customer data we have, to start to target each of those kind of populations of customers based on a more tailored offering that we believe will resonate with them.

Got it. I appreciate all the color. Thank you.

And your next question comes from the line of Seth Basham from Wedbush Securities. Your line is open.

Thanks a lot, and good morning. My question is around store labor. You guys have made a lot of changes to the labor model over the last year or two, and you're continuing to iterate. I'd like to get a sense from you as to what you think the status is of morale within the labor force? And then secondly, whether or not the lack of the specialized roles could impact customer service levels in a negative way?

Yes, I'm going to start with the second part of the question, I'll work my way backwards. There is still very specialized labor in our stores. And we are very proud of that, and we are working very hard to make sure that we retain and continue to develop that very specialized experience over time. I think what we're trying to do is make sure that we are most effectively matching our labor, some of which is specialized, like any retailer, some of which is more kind of part-time and generalized in nature, that we are matching that specifically with how many and what type of people are coming into our stores and what it is that they need. And so, we have continued to obviously invest in wages. We were one of the first to go to a minimum $15. Our hourly wages are up more than 25% versus pre-pandemic. We're overarchingly investing hundreds of millions of dollars in benefits, and also, importantly, investing in career development and culture. And then really doing a lot of work to make sure we are bringing our employees along as we make these changes, involving them in the decisions and really trying to make sure that they feel like they also have a voice. And I think, how do we measure that? Well, one way is, obviously, we're looking at turnover, and we're pretty constantly looking at turnover. And we believe our general approach is working. Our turnover remains very low versus retail averages. It's consistent year-over-year. It is incredibly low in some of the most key areas like our general managers, where our turnover is in the mid-single digits, even given everything that RGMs have gone through in the last four years in particular. And I think that is one of the indicators. A second indicator, we continue to see a very high level of applications. Our applications have grown substantially year-over-year. So, you're seeing people want to come into the business, which is a good sign, because that means that GMs are pulling them into the business. And then third, you can imagine, we measure employee engagement. And we measure it very consistently. And not just at the high level, like here's the number. We're looking literally regionally, store-by-store, distribution center by distribution center, how engaged are our employees? And what can we do? How do we read those verbatims? How do we pull the themes? So, we are doing everything we can to create the most engaged workforce. So, it is constant work. It is not easy for our employees to go through this level of constant change, and I am incredibly proud that so many are choosing to stay with us and continue to build this culture for the future.

Great. Thank you.

Thank you.

And your final question comes from the line of Steven Forbes from Guggenheim Securities. Your line is open.

Good morning, Corie and Matt. Maybe just a high-level question on ROIC. Curious if you could update us on your various initiatives, inclusive of space allocation utilization. And then, where do you see ROIC stabilizing sort of as we work our way through this normalization period? I don't know if you could sort of reference a pre-COVID level, mid 20%s. Any thoughts on where we sort of stabilize ROIC?

Yes, sure. I think, at the highest level, our ROIC is impacted by the level of profitability that's flowing through that calculation. And I think where we're pointed is at continuing to make improvements in our operating model and our efficiency. As we've talked about, as we look into the next few years, we've said that we expect and want to continue to grow our operating income rate, at the same time, the industry will begin, we believe, turnaround, and we'll continue to grow in sales and our OI rate will continue to improve as we look forward or expected to. With that happening, we'll be able to drive a better profitability and that ROIC will start to climb probably back up closer to where we were, but again, that's through a combination of the industry improving, our initiatives continuing to improve and creating efficiencies and optimization through our business.

I think we have a great history, I would argue, in optimizing ROIC and making those educated bets. I would use even our store footprint as an example, things like our Experience stores, our outlets. There's a reason that we are pursuing those with vigor. And you can imagine what we're seeing in terms of return on those investments is giving us a lot of confidence into the future. There're other places where we're still testing and trying to make sure we feel like that ROIC is in line. So I think we're point to that continuing to drive that return for our investors. And with that, I think that was our last question. So thank you for joining us today. I hope that many of the investors for listening today will be able to join us for our Annual Shareholder Meeting, which will be held virtually on June 14. So, thank you, and have a great day.

This concludes today's conference call. Thank you for your participation. You may now disconnect.