Good afternoon, ladies and gentlemen. My name is Melissa and I will be your conference operator today. At this time, I’d like to welcome everyone to the Gap Incorporated Fourth Quarter 2018 Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] I would now like to introduce your host, Tina Romani, Senior Director of Investor Relations. Please go ahead.

Good afternoon, everyone. Welcome to Gap Inc.’s fourth quarter 2018 earnings conference call. Before we begin, I’d like to remind you that the information made available on this webcast and conference call contains forward-looking statements. For information on factors that could cause our actual results to differ materially from the forward-looking statements, as well as the description and reconciliation of the non-GAAP financial measures as noted on page two of the slides supplementing Teri’s remarks, please refer to today’s earnings press release as well as our most recent Annual Report on Form 10-K and our subsequent filings with the SEC, all of which are available on gapinc.com. These forward-looking statements are based on information as of February 28, 2019, and we assume no obligation to publicly update or revise our forward-looking statements. Joining me on the call today are President and CEO, Art Peck; and Executive Vice President and CFO, Teri List-Stoll. With that, I’ll turn it over to Art.

Hi everybody, and thanks for joining us today. I'm going to start by discussing the announcement we made this afternoon to separate Gap Inc. into two independent publicly traded companies, cleverly named NewCo and Old Navy. I'll then get into specifics around the quarterly results. Our announcement today is an acceleration of our balanced growth strategy and an indication of my commitment to position all of our brands for success. With this plan we will stand up two independent companies creating a unique and differentiated portfolio of specialty brands in NewCo and standalone Old Navy. Both well-positioned to lead in the evolving retail landscape. NewCo will bring Gap brand Athleta, Banana Republic, Intermix and Hill City into one operating model. I feel strongly that this combination of brands will be powerful. By bringing them together, we can better leverage capabilities and investments across the brands, share best practices and drive efficiencies to create value for all stakeholders. NewCo will have approximately $9 billion in annual revenue, a strong balance sheet and a significant opportunity to innovate, explore new ways to serve the customer and quite frankly what's on my mind is to write the next chapter for specialty retail. I also believe NewCo will be positioned to take a global leadership role in sustainability. It's the ethos of this company and the ethos of these brands. In Old Navy, we have one of the fastest-growing apparel retailers in the United States with a winning business model and an impressive runway for future growth, including capitalizing on opportunities like opening new stores and expanding its new product categories. The standalone company will have approximately $8 billion in annual revenue and we'll be able to capitalize in a scale, broad consumer awareness and unique positioning to drive growth. So why are we…

Thanks Art and good afternoon everyone. In the interest of time I'll be quite brief in my comments to leave time for Q&A which I expect there are a few. Let me start with some additional information on the separation announcement. We expect that the separation will be effective through a spin off to Gap Inc. shareholders that is intended to generally be tax-free for U.S. federal income tax purposes. Once the separation is complete, Gap Inc. shareholders will receive a pro rata distribution of the shares of NewCo and Old Navy stock. The ratio of shares that will be distributed will be determined prior to the actual separation. We currently expect the transaction to be completed in 2020 subject to certain conditions, including final approval by Gap Inc.'s Board of Directors, receipt of a tax opinion from counsel, the filing and effectiveness of a registration statement with the U.S. Securities and Exchange Commission and certain other customary conditions. After the separation, NewCo and Old Navy are expected to be appropriately capitalized with sufficient liquidity to support both planned operating and investment plans as well as capital allocation philosophies. Its early days in the execution planning process. So I'm sure, you'll have a number of questions that we are not prepared to answer definitively at this point. As we move through the process towards separation, we are committed to full and transparent disclosure to ensure a complete understanding of the transaction and its implications. This is an important and transformational step for Gap Inc. one that affects our employees, our investors, partners, vendors, other stakeholders and one that we certainly haven't taken lightly. It has become increasingly clear that our balanced growth strategy, while successful in building necessary capabilities in areas like supply chain and digital capability that are important…

Thank you. [Operator Instructions] Our first question will come from Randy Konik with Jefferies.

Yes, thanks a lot. Hi, guys. Congratulations on the strategic direction. I think it's a great move by the company. I guess Art or Teri, I wanted to ask last time we got disclosure around margins by division Old Navy was around mid-teens marks. Obviously the weather is going to impact that a little bit because of markdowns, et cetera. But I was just curious, just because people will be interested on the call here to get some sense of how to value Old Navy properly now that it’s being split off. Do you see Old Navy as more of that kind of stable mid-teens type of operating margin business? Just curious on your thoughts there on how we should be thinking about that over time given such a very stable type business model. And then second, as it relates to Gap division, you gave some great color last quarter that showed the various, almost profit differences, margin differences between Gap Specialty versus Gap Outlet versus Gap Online. Any kind of update to that, and how we should be thinking about how the store closures of the Gap Specialty side help to get to a normalized profit margin rate for the entire Gap division. Because I think that will be helpful to people as well as to how should we be thinking about what could Gap divisional segment margins kind of look like going forward on a normalized basis once these stores are closed. Thanks guys.

Sure. Thanks, Randy. So you will over time get a great deal of transparency on both of the questions you asked. We will of course as we move forward towards separation have audited financial statements for Old Navy that will have a great deal of detail and the same for NewCo. The way we see Old Navy is having tremendous growth prospects both in terms of the top line growth levers that Art mentioned but also in terms of margin expansion over time. There's no question that in 2018, Old Navy margins did take a bit of a hit particularly from the fourth quarter trends that we talked about today such a big part of the year that is difficult to recover from that. And as we often do because Old Navy is such a units business the most responsible thing for us to do when traffic flows is to move through that inventory take the necessary markdowns and the margin impact and move forward so that we can continue to start clean. And so we saw all of the facts. But that is not what we believe is the long-term trajectory of the brand. Very much the Old Navy is having growth opportunity in both the top and the bottom line going forward. With respect to Gap, we talked about that magnitude of the impact of the closures in specialty as we look forward in terms of their contributions to total company. So obviously dramatically changing the complexion of the specialty channel and changing the mix of the business across the channels for the Gap brand. We are not going to get into specific margin rate for the Gap brand or the specific channels other than to say that as we continue to drive forward with not just the fleet restructuring but with the overall brand revitalization we see again opportunity for tremendous margin progress there over time and we will certainly continue to paint that picture with the additional specifics necessary to understand the progress and timeline as we move through and prepare for the separation.

Understood. Thank you.

Our next question will come from Dana Telsey with Telsey Advisory Group.

Good afternoon everyone. Congratulations on moving forward to extract greater value. Art and Teri as you think about the puts and takes of separating the businesses we've talked in the past about supply chain, manufacturing systems. How do you think about separate businesses? And they're still big but what expense changes do you envision from having separate businesses? Thank you.

Thanks Dana. It's Art and I'll let obviously Teri chime in on this one as well. And when you put your finger on a big part of the work that we've been doing because the benefit of scale and size is a real benefit, to your point these are still going to be frankly substantially larger than the average apparel company or companies. And so we feel a number of places are far enough down the scale curve that we can actually hold onto that and continue to move forward. We have done some work on looking at what the potential dis-synergies would be. We are continuing to work on our technology stack and some opportunities that we have there. We are certainly doing the work back end from a supply chain standpoint. There is a -- I guess I would point out here and we will talk more about this I'm sure but the -- probably what really got me there frankly and why I want to move with urgency on this and I'm so committed to -- believe this is the path forward is that there has been an accelerating divergence between the businesses with the path for Old Navy and the path for the other businesses. And that's also true on the back end with our vendors where there is more alignment with Old Navy and less overlap with the other brands. The other brands overlap each other, but overlap Old Navy less. The other side of it is, I continue to believe and I know Teri feels the same way that we are a long way from done with the productivity opportunity in the company. And we've made progress. In my mind not enough progress and not progress fast enough. And I am very acutely aware and focused on the fact that a catalytic event like this can help us potentially accelerate that. So while I'm not going to give specifics right now. I know you really like those. We will continue to work those. And I'll just reiterate Teri's commitment in her remarks, which is a lot of questions we can't answer right now. We are quite confident that we have done the work to get us to this point in forming the fact that we believe this is a very significant and important step and it does unlock significant value creation potential. As we continue to do the work and learn things, we are going to be as transparent as we possibly can to really show you what these two new companies look like, and what the puts and takes are associated with this. But we are confident this is the right thing to do, absolutely confident.

Thank you.

Our next question will come from Mark Altschwager with Baird.

Good afternoon. Thanks. Art, I don't know if you'll be able to answer this at this point. But what strategies do you have in mind for Gap brand that you think will be better executed as a standalone company versus part of Old Navy? I mean do you see major changes untapped to the makeup of the assortment, the target customer, the pricing architecture? I guess big picture, where do you see Gap's sweet spot in the next chapter of specialty retail?

Well, I mean the first thing we've done obviously is with the step on store closures is to pretty radically remix the channel exposure. And that's important. This is the remixing of the channel exposure is something that every retailer that has been dominant in the higher end of the specialty apparel segment is going to need to do. And I frankly see Gap leading the way in informing some of the things we need to do. We are going to close some stores inside Banana Republic. Overall Banana has a much healthier fleet. But we are going to take this opportunity to close some stores that we don't think in the same way have attractive economics that are right for the brand. And we've been pretty purposeful and intentional about, frankly not building Athleta as a business of the past, but rather a business of the future. So it's less about the specifics of Gap brand than the divergence between the needs and opportunities in Old Navy and the needs of the specialty brands. And that divergence is fleet the specialty brands have more like in their fleets than not. They both have outlet businesses, Athleta does not. They have an international footprint, Old Navy less so. And then technology options as well. A simple example would be is that Old Navy's use and need for a mobile POS solution is quite different because of the in-store service model than an Athleta or Banana Republic. And part of what got me here, and frankly why I really have a lot of energy about this is, I found myself in the process of allocating capital and OpEx for investment decisions, increasingly negotiating compromises in the portfolio that frankly were the least bad solution versus highly optimized for the two different business models. And so I'm a big believer that least bad solutions aren't the best way to win, and therefore a lot of this is just getting that focus, that focus around investments, that focus around alignment of incentives, the purity of what these two businesses need to do. And it's going to make the work a lot easier and a lot faster as well. And then there's just a couple of points of alignment which is I am big on the sustainability thing. It's not that Old Navy isn't there as well. But I think we can get there really fast with NewCo and we know that matters to our customers. And I think we are going to see it matter to our customers at an accelerating rate. That's kind of a gift with purchase if you will but it is an important one for me. I don't know Teri if you want to say anything more. No?

I think you've tackled the focus point more and more often over the past year or so. In particular we have found ourselves having to debate internally what's right for Old Navy versus what's right for one of the other brands. And often particularly if you think about the needs of Old Navy versus in Athleta whether that's web investments or data analytics investments or technology tools that as Art mentioned more, more often you're coming with quite different answers for Old Navy versus the other specialty brands. And then as Art said you're forced with suboptimal choices. So this feels like an absolutely right way to set Old Navy up to continue to exploit its growth opportunity unencumbered by suboptimal compromises with the other brands and vice versa for the NewCo brand to really be able to continue to focus on reinventing retail and being leaders in their spaces.

Thank you.

Next we will take a question from Adrienne Yih with Wolfe Research.

Good afternoon. Teri this is a question on the store closures. So the $230 million how are they distributed globally and how many are flagships if any? And then from the perspective of I think you said 150 of them are going to come off of natural lease expirations or lease options. So the $250 million to $300 million of cash is that just for the remaining $80 million? If you can give any color on that that will be very helpful. Thank you.

Sure, sure. So the 230 stores are global but they are largely located in the U.S. So that is where the majority of them are. And yes there are flags included in that number. We are -- we really -- Art mentioned this in the earlier calls. We've really challenged the old-fashioned notion of what a flag should be, how big it should be and how much you're willing to invest in negative contribution for our flag. And we have been very selective in retaining a certain number of flags that are we believe have been very selective in retaining a certain number of flags that are we believe in flag. And we have been very selective in retaining a certain number of flags that are we believe necessary to drive customer engagement customer acquisition in key geographies. But very thoughtful about how we want those to appear and how many of those we need. So you're right that the 150 that I cited will be the natural expirations which leaves us call it $80 million-ish -- or 80 -- 80 stores not 80 million stores. And those 80 stores are largely what's making up the restructuring costs. There are things beyond closures included. You have some severance and...

Inventory issues yes.

Inventory and books value write-off. But that is largely related to those 80 or so stores. And part of the reason for the number is they tend to be longer lease terms and they tend to be…

Yes.

--the flags. So there is additional expense. But we very much have looked at the projected future losses associated with those leases and come up with what we think is economic way to deal with it.

And then just in terms of inventory buys for this year for Gap, do they contemplate say half of them are they at the end of this fiscal year or are they weighted toward the Q1 of each of those years?

Yes enclosures are. Sorry.

No, go ahead.

Yes, so they are weighted toward the end of 2019 and we are planning our inventory appropriately to minimize the write-off that would come with closure. And obviously we are pretty aggressive. We've -- unfortunately been doing this for a while. We know to close Gap specialty stores and minimize the inventory impact. This is a bit larger scale, but we are planning for it.

We're not going to -- I'm not concerned about inventory overhang that's unplanned here.

Perfect, great. Great luck with the new strategy.

Thank you.

[Operator Instructions] Next your question will come from Matthew Boss with JPMorgan.

Great, thanks. So at the Gap brand, may be Art, what categories do you see is fixable by -- versus areas you see taking more time? And then similarly should we expect negative same-store sales at the Old Navy concept in the front half of the year? May be just the timeframe you see necessary to restabilize that concept?

Well Teri and I were both kind of looking at each other wondering where that came from.

Matt. May be we could say I think Art -- we are not going to give you Old Navy comp guidance for the quarters. But certainly, we didn't mean to imply that there is some tremendous overhang in Old Navy, quite the opposite. There are a lot of categories in Old Navy that are doing very well. We have the weather which is a factor for sure. You've seen that in a lot of companies. It’s something we are dealing with and we will work through. And then somewhat what I would characterize as relatively minor product opportunities that we are going to work through in the first half.

Yes I don't -- in no way shape or form I'll just say it again do I view Old Navy as sick in any way shape or form. Brand health is good. We are retooling our marketing on the right schedule which is what we do every period to refresh that.

Still growing share.

Yes, still growing share, impressive two-year stack. I would love to have done better in the holiday. I think we have a pretty good handle on what we should have done to do better. But I don't even -- I was going to say it's not sick. I'm not even sure it's a little cold quite honestly. I said for a long time that we are in a business where not every quarter is going to be perfect and this quarter wasn't perfect. But that is way-way different than there being any fundamental issue with the business model, the health of the brand, the product offering, the capabilities of the team, all of that stuff. So I'm quite confident. And quite honestly, I wouldn't have gone down this path if I felt like we had it repair job on our hands right now. I don't feel that way in any way shape or form.

That's great. And then just with the Gap brand?

Well you said fix. As we know, fixed is a relative thing. We are -- I'm quite confident with what we are seeing. We are seeing key category improvement period-over-period. You know we brought Pam Wallack in now a few months ago. Pam and I worked together in the last significant successful turnaround of Gap brand. Denim is at the core of the brand and there's a lot of attention focused there. We've made significant progress on the knits business both on reducing the number of CCs and styles and putting more depth behind the knits as well as improving the quality. And so, to me there's core categories that Gap has to stand for. It has to stand for denim. And as we are getting into spring and into summer in the fall, we are absolutely on top of the high-rise trend, the super high-rise trend, the change in leg shape silhouette with a straight, with a cigarette, et cetera. And then bringing it in a place where we haven't, which is a little bit more wash range and some more novelty, which has been working. We've just been modestly invested in those areas. I am exceedingly pleased with what I've seen in men's, men's development season-over-season. And then kids and baby continues to be a very solid strong business for us. So it's really about women's and those key categories, and denim and knits have been two with fleece on top of that and we are in a fleece moment. We are investing bigger in fleece as we get into spring, summer and fall. It should be a place where Gap should be able to dominate and really own that. And we are putting the investment behind it to make it happen. So again I've called the turn before. And I've eaten my words. I'm not calling a turn again. What I'm looking forward is period-over-period improvement, and I'm quite confident and comfortable with what I'm seeing.

Great color. Thanks.

Next we will take a question from Paul Lejuez with Citi Research.

Thanks. Hey, guys. Art, can you give us a ballpark, dissynergy range that factors into the equation that help you determine the separation made sense? And also curious about the website. All brands operate on the same platform. Is the plan for Old Navy to no longer be linked to the other brands online? I'm curious what kind of crossover shopping you have between Old Navy and the other brands online. Thanks.

Yes. So I'm not going to give you the dissynergy number right now frankly, because the really relevant number here is going to be what's the net. And as you can imagine and something is material is this, we've been working this with a very able group inside the company, but it's a very small group. We believe we've got the right people inside the tent. As I said before, to make sure that we were stage gating this, and not going to get hung up on a structure issue or a cost issue or a tax issue or something like that. So we are confident that number one, it's the right thing to do, and number two, we can get it done. We have a lot of work to do on both really getting into the substance of the dissynergies and then the offset of the dissynergies. And so Teri and I go back and forth on this, but we both have, I would say very aggressive objectives when it comes to minimizing the dissynergies and getting the maximum out of accelerated SG&A productivity. So from that standpoint. On the website to be determined quite honestly how we shake that all around. We do have some overlap with Gap overlap saw Old Navy the most Banana and Athleta by far the least Hill City and Intermix certainly the least. But I'm not ruling anything out here, and obviously the world is filled with a number of people attempting to stand up third party marketplaces right now, third party digital marketplaces. I have one right here in this company. And so I'm sure Sonia is going to want to as our the executives in NewCo going to want to preserve as much economic value as possible, and we figured that one out. So that is a to-be-determined also, but I wouldn't jump to conclusions.

How about on the distribution center side? How many distribution centers are shared between Old Navy and the other brands?

Again we are doing the work. We feel like the assets actually has physical units not pretty well to the brands. And so -- and scale really is pretty much inside the four walls. All those facilities are operating at a highly efficient level of productivity. So we don't see really don't see the distribution centers as being shared organs. We think it's going to be pretty clean when it comes to mapping to the brands.

Thank you. Good luck.

Yes.

Alexandra Walvis from Goldman Sachs has our next question.

Hey there thank you so much for taking my question here. Two questions for me. The first one was as you went through this process what other structural approaches you considered for this group of businesses. And I supposed why this one came out on top. And then second question is on Old Navy. You mentioned in the prepared comments you think that this brand has an underpenetrated store base. Where do you think that that store base can get to in the long-term? Thank you.

Yes. On the -- I'm sorry I was just -- Teri and I were talking very quietly. What was -- the first question again was? Sorry?

Yes. The first question is you laid out this plan for the two businesses. I'm just wondering what other options and...

Yes, yes, right, right.

For the business.

Yes. So you can have confidence that we definitely boil the ocean in looking at all the combinations and permutations here. We felt we wanted to be exhaustive and we felt we owed it to board and the employees and our shareholders to look at those. And so we really looked across the whole thing. We settled on this largely due to the business logic at the end of the day. And then obviously how to manage the di-synergies at the same time and I hope that this indicates without attempting it any way shape or form to preview more is that as we said before we are focused on value creation and have no sort of emotional attachment to a particular combination of these businesses. We believe this is the best way at this point in time to position both of these companies to create more value and more value consistently. But we did look at whether or not as an example Athleta should be in a different structure or something like that. And we feel quite confident that these specialty businesses can significantly benefit by being bundled together right now with a much leaner operating model where they can move faster and also have focused investment priorities that really meet their needs the same with Old Navy.

Yes. I will just add to that. You can imagine when you take a significant stuff like this the homework that you do and just to emphasize Art's point the range of options we obviously have looked at what we think we can deliver by staying together and continuing to drive the balanced growth strategy with as much focus and the productivity efforts that are part of that all the way to the other end of the spectrum of just sell off each of the brands for what you can get for the -- from them. And we wouldn't want anyone to think that we just said well Old Navy is going to be great on a standalone basis which we definitely believe. And therefore by default we have NewCo not that at all.

Not that at all.

The intentional choice of how to position each of the brands in a way that can create value and we really do believe the combination and the unique portfolio that's created by bringing these brands together...

And minimize the di-synergies and maximize the productivity opportunity. And that on Old Navy stores I'm not going to really put a number out there right now. There's going to be ample opportunity to talk as we pull the essentially the roadshow together for both of these businesses and tell the story. What we have been doing over the last couple of years because I am a big believer in this is placing stores in what would have traditionally been non-traditional markets or locations for Old Navy to validate the strategy. And these might be in-fill locations where like in the San Francisco Bay Area. You look for trading patterns and you realize that we are missing stores in key places where consumers are living their lives. We know that there is an opportunity in markets that are smaller than the markets that we've traditionally put stores in. And especially when you look at those markets and you realize that those are often markets that were served by very traditional legacy retailers often general merchandise retailers when a Kmart closes stores or Sears does or Penny's as was announced today et cetera those markets are often times increasingly underserved and we found great success with Old Navy in some of those smaller markets. The rents are oftentimes deminimis. The customers are super loyal. Many customers in those markets because remember we have a significant percentage of cash consumers at Old Navy that actually don't have access to the brand through the digital expression of the brand. And so what's really on our mind is here we have the number two apparel brand in the United States and a significant percentage of the population that doesn't have access to the brand. We think that's a real winning combination.

Thank you.

Our next question will come from Lorraine Hutchinson with Bank of America.

Thank you. I just wanted to follow-up on Old Navy. If you feel like you've fully diagnosed the problem because I think there were a few fashion misses in 3Q as well. So if you think that that is fixed for spring? And how quickly could you get that margin back on track at Old Navy specifically?

Yes there's always going to be a few fashion misses. And if you're going to hold, I don't mean you specifically, but if we're going to be held to the standard of perfection that's a tough standard. There's a reason they call it fashion and a reason they call it trend. And there's always going to be some of those. We don't -- if I could go back and I compare it to Q4 of 2015 when Old Navy just definitively snatched defeat from the jaws of victory in Q4, we had fashion misses. We were over assorted. We had a bow wave of inventory that we are pushing forward from the port backups et cetera and that was a mess and it took us two quarters to get out from that mess. Really Q4 and then we started to see the business turn as we got into Q2. And that was a mess. I will say this again, I'm not going to predict the business turn. If I look at the business right now and I walked it with the team just a week ago when we looked at our product, I believe a little bit of warm weather would see a significant uptick in the business. And a lot of the categories that are in there right now would start to fly out the door. So I don't -- this is not a wreck and redo by any stretch of the imagination. I'm beyond super solidly -- super solid about the business and about health of the brand and about the product that we have in the box.

And as we’ve said there are a number of factors as we've done the hind-sighting to make sure that we are well-positioned and certainly as we start the first quarter where there is probably number one the marketing refresh that Art mentioned is going to be able to help us drive some traffic and then these product fixes in these couple of categories are likely to be more second-half benefit than first half. But again to get the margin back on track, we actually -- Old Navy has probably industry-leading margin and certainly a portfolio leading margin. So we feel very good about the overall health. But we actually think it can do better.

Thank you.

Our last question will come from Oliver Chen with Cowen and Company.

Hi regarding the separation what are your thoughts in terms of the data piece and the digital side with both speed to the consumer and the data scientists that you're employing across the organization and also supply chain? Just curious on how that will manifest in the separation because there were benefits that you had and you also kind of had a customer through different parts of his or her life. So I am -- I would love your thoughts there. And I think you helped articulate this but why now in terms of the separation? Thank you.

Yes. The data piece and again I've talked about this. I'm sort of interested in this because I'm not sure we are getting a little bit of benefit. We are getting a lot of benefit as we talked about our strategy so I hope you don't get a lot of penalty as we talk about the fact that we are separating. That all said, we've look very carefully at the data asset and we believe we have a relevant data life for both organizations that continues down the path of everything we are doing. Quite honestly the use of the data again this is an element of the divergence of the two businesses, the use of the data we see as having differential benefits in the specialty businesses than in the Old Navy, Navy business whether it's personalization, whether it's marketing, whether it's predictive analytics to inform the buying process. So, I don't in no way shape or form do I believe that we have anything other than a significant opportunity that was the same as what it was and we continued to pursue it. We do have customer overlap. And that's something that we are going to manage. The file will be a property we think of both companies. That's something we need to sort out. It's been a healthy and growing file. And again there are different ways of working through this marketplace solutions and that kind of thing. So it's an issue. We are aware of it. We are focused on it and again as we know more we will certainly come back and talk about what the implications are. There was a second question then. I was focused on the first. Or was there? Was that?

The second question was…

Why now. As we've talked in the -- sorry go ahead.

That's all. Just that's exactly. Thank you.

Yes. Why now is I think, very straightforward and it may not be the answer that you're expecting. Why now is that we've done this work as I've mentioned several times on an ongoing basis for as long as I've been in the company where we've looked at the portfolio and the parts of the company and where there are other ways of operating the company that we believed led to better business outcomes. Why now was frankly that we became convinced with the divergence of the business models and the needs of each business the investment requirements of the business and our ability to manage the dissynergy and the productivity that was the right thing to do. And I believe very strongly that when you come to that point beyond reasonable probability of doubt when you move and you move quickly with urgency and with responsibility. And that's where we are right now. So why now was I believes, absolutely that is the right thing to do. I'm energized and excited about both of these companies. The most painful thing to me was having, to choose between the two because I love Old Navy and have an incredible affinity for its business model and the purity of what it does in the growth opportunity in front of it. But I'm also super excited about frankly the gift the opportunity and the imperative to reinvent specialty apparel retail because we all know what needs to happen. And I believe we are and we can continue to lead the way at an accelerating rate to monetize these brands in a different business model and surprise a lot of people.

Thank you and best regards.

Have a great day.

Thank you and once again that does conclude our conference for today. Thank you. You may now disconnect.