Good morning, everyone. Welcome to the Kohl's Corporation fourth quarter earnings call. I would like to start today by saying thank you to the Kohl's Corporation organization and our board of directors for giving me a warm welcome to Kohl's Corporation. I'm very excited to lead this great company and as you will hear today, I believe Kohl's Corporation has a substantial opportunity to build on its solid foundation and position the company for future success. I have been in the retail industry nearly twenty years now. I've held leadership positions at Sam's Club, Walmart, and most recently served as the CEO of the Michaels Companies for the past five years. I love the fast pace of the retail industry and the challenge of meeting changing customer expectations during the ongoing retail evolution. To stay ahead, we need to take a data-informed approach to listen to the customer and meet them where they desire to be met. My review of the business is still ongoing. But today, I want to share my initial takeaways and discuss a few opportunities that we have identified to reposition ourselves for improvement in 2025 and to lay the groundwork for future progress and initiatives. Jill will then address our fourth quarter and year-end performance. Since joining Kohl's Corporation in mid-January, I have taken time to analyze our current business trends, review our strategic framework, and assess our operational structure. I've been engaging with teams across the company, visiting numerous stores, and most importantly, getting to know our customers' perceptions and expectations of Kohl's Corporation. It is very clear to me that Kohl's Corporation is built on a solid foundation that includes operating more than eleven hundred conveniently located stores nationwide, serving over sixty million customers with thirty million of those customers being Kohl's Corporation…

Thank you, Ashley, and good morning, everyone. I'll provide details on our fourth quarter performance, and then discuss our guidance for 2025. Net sales declined 9.4% in Q4, and 7.2% for the year. Comparable sales decreased 6.7% in Q4 and 6.5% for the year. The variance between net sales and comparable sales in Q4 is primarily due to the fifty-third week last year, which we previously stated was worth $164 million. From a channel perspective, our store comparable sales declined 3.1% in Q4, and were down 5.6% for the year. Store sales benefited from strong average transaction value and saw improvement throughout the quarter, with January having the strongest performance. We experienced underperformance in our digital business during Q4, with comparable sales declining 13.4% in the quarter and down 8.7% for the year. Digital sales were pressured from softness in home, particularly in legacy home, which overpenetrates into our online business. We also saw headwinds in our digital conversion in Q4. Part of the conversion headwind was due to an online inventory suppression issue that impacted our availability. We've corrected this issue and are seeing improved conversion and performance quarter to date. Turning to line of business results, nearly all lines of business improved their comparable sales performance versus Q3. Sephora continued to be a strong sales driver with comparable beauty sales increasing 13%, an acceleration from the third quarter. Fragrance, Bath and Body, and Skincare continued their outperformance in the quarter. Our expanded offerings of gift sets resonated extremely well with our customers. And we continue to see brands such as Sol de Janeiro, Laneige, YSL, and Summer Fridays perform especially well in the quarter. In addition, our accessories business excluding Sephora had a flat comp for the quarter. This was driven by our investment back into jewelry with…

Good morning. Thanks for taking my question and, Ashley, welcome. Thank you. Ashley, could you talk us through your assessment of what has been working, what hasn't been working with the merchandising strategy, where you believe you can affect the most change in the near term, what might take longer to implement, and just bigger picture, what gives you confidence that Kohl's Corporation can return to growth?

Yeah. Thanks for the question. Yeah. You know, what I saw obviously, before I took the job was you know, when I assessed the entire business, I just saw opportunity. Right? I saw an opportunity around the products we offer, the value that we're offering, the quality of the product. How we allocate, how we run the stores, and most importantly, how we an omnichannel experience. We had a lot of friction to the customer piece. I thought, you know, a lot of the issues really probably self-inflicted over many years of the decisions. And you could just see what I saw from a customer base that we have a very loyal customer. I mean, not towards stores, all I heard was how much they love Kohl's Corporation. And what I realized is, like, we're kinda making it hard for them to love us a little bit. Right? And with that being said, you could just see the opportunity in front of us as far as how we offer the customer value and product. And I just knew that we could do better, and I think the customers expect us to do better. I'm just and then I think the last thing that really kinda got me was I was amazed at our associates in the field. How committed they were and how they were just truly customer-focused. So that's I mean, that's actually very harder to create. I think in retail sometimes is a very dedicated associate base that really wants to serve customers. And so I know if you have that and you can offer the right value proposition, you knew it could turn. It's gonna take a little time. The things I laid out, they're really short term and tactical in that sense. I'm still creating the…

Thank you for that. And just a follow-up. I guess either we're good for Ashley or Jill. What are the implications from a margin perspective as you aim to elevate the quality of the private plan brands while also broadening the brand inclusion with the promotional offers? And on the promotional offer side, what has been the feedback from your brand partners initially? Thank you.

Well, I mean, if you look at how we're I mean, we started the proprietary you know, private brand into really being Q4 before I got here and the customer was resonating. We kinda lost trip assurance on, basically, the key basic. So it's not really private versus national. It's really just reserving, I would think, from an inventory level of what our customer expect, our core customers are around our proprietary brands. So and how do we get there from a discounting perspective? How we do promotions and where we put our markdowns? I think there's a lot of opportunity and particularly how we allocate product and we send product. There's a lot of opportunity on the efficiency of that. We could take a lot of cost out of that and put that into the price point. But over time, if you just look at it, our mix of what has been excluded from the coupon has gotten too high and that you that's clear. I mean, without a there's really little doubt from a customer perspective, particularly our core loyal customer. That we've excluded too many brands. From that. Which then, you know, has an impact on, obviously, how they view value from us. And I don't think I don't I think we can do both. I've and we've done it in the past. If you look at the mix between proprietary and national brands, obviously, proprietary brands have a better margin mix. We've been free I guess, creates a lot of fuel for productivity on price. So it's gonna take a lot time to get there because, I mean, if you think about it, we've already bought you know, pretty much through Q3. So I'm not saying this is an overnight piece, but I'll know how we get there over time as the mix changes. And we can drive natural brands while we increase our proprietary brands.

Thank you. Best of luck.

Thanks. Our next question comes from Dana Telsey from Telsey Group. Please go ahead. Your line is open.

Hi. Good morning, everyone. Ashley, welcome to Kohl's Corporation. And as you think about the store profile, we just heard about the twenty-seven store closings that were announced, like, a month or so ago. How do you think of the store base? What are you looking for? We always knew that they had they were profitable stores. What's the right mix to be both size and number? And then as you look at the merchandise assortment, given the reset that's going on, and we've been through active, we've been through numbers of different things. What do you want the mix to look like, and what kind of margins do you think is attainable for the business? Thank you.

We I mean, there's very, very few stores that are not for all profitable. So we're really blessed in that sense. We have a very productive prototype, particularly our main, you know, eighty thousand plus prototype. It's very productive and very profitable. As we look at so I don't really see, you know, obviously, we always do a healthy evaluation every year of our store base. But going into the very, very few that are not profitable at this point. So with that being said, if you look at inside the box, right, how we allocate space among categories and products and adjacencies, I think we lost a little bit of discipline on that part, and there's a lot of opportunity. I mean, just a simple thing we've done just recently before I got here realigning, you know, casual pants next to the dress pants and saw an increase. Right? It's just the traditional how the customer shops and the adjacencies. As far as margin piece, I'm not gonna get into that the forecast portion, but like I said, it's a very productive box. I mean, we're still thinking through the smaller format piece, as how we the build-out cost and the productivity of that. Obviously, we built several in the last few years. I think it's still a work in progress on the thirty-three thousand. The fifty-five is actually doing pretty well. Still have a lot of opportunity, I think, on how we do the build-out and the return. But we're still learning. But our workhorse is still the eighty thousand, and it's a highly productive prototype.

Got it. Thanks. And just any comments on your customer, what you're seeing from the customer, how they performed exiting the fourth quarter, and you're looking for them going forward. Thank you.

I mean, if you break down the customer, I think, you know, from a macro perspective, you see a pretty decent bifurcation among income level. We don't see it too much geographically. Per se. But when you look at income level, if you're making less than fifty that consumer's pretty constrained from a discretionary standpoint. If you're making less than a hundred, it's also pretty challenging. And you see that very clearly in numbers. And, obviously, we hear the inflation numbers. We thought they're coming down or two to three percent, but they're still pretty elevated from a particularly from a grocery and a rent perspective over the last few years because they haven't actually deflated. So not sure wages have kept up with that. So in that if you're in that income cohort, which we do have, you know, a decent portion of our customer base in that. You know, it's a headwind from a macro perspective. You definitely see that in them. They're seeking out value. You see it in the mix of the product we're selling. You see it in the promotions that we are doing. They're definitely seeking value. I don't I don't think we're an anomaly in that if you listen to the other resellers that have come before us and out, they keep talking about people are looking for value. And that will probably expand probably across income cohorts over the next probably three or four months. Would assume. And I think, you know, that's really how we're positioning ourselves. Which I'll let off in quality and value. Which I think will resonate with our customers, particularly in this time.

Thank you.

Our next question comes from Oliver Chen from TD Callen. Please go ahead. Your line is open.

Thanks so much. Hi, Ashley. We were curious about which initiatives would be earlier versus later. And what's your take on what might be more difficult to achieve, you know, versus longer lower hanging fruit? And, Jill, you've had the experience of many changes at Kohl's Corporation over the years as well as management. What are your thoughts about how this may be different and comparing it and contrasting it to aspects of the past? Angela, as we model free cash flow, it's certainly less than last year. Are there puts and takes in networking capital and CapEx that we should know about to help inform the decline? We're modeling, like, less than half the free cash flow this year versus last. Thank you.

Yep. I mean, like I referenced, it's gonna take some time. Obviously, the three things I've laid out in 2025 are I call them, you know, almost tactical that. Short term, no-regret moves. I mean, it's a long lead time business. If anybody has been around, you know, we're looking at, you know, nine months in some cases, to get product. And so the things that we have the changes that we are implementing will take a little bit of time. Right? We probably won't even see the initial ping until next year. Obviously, there's a lot of things around how we operate the store from a cost perspective, how we do promotions, how we do our summer pricing, and then and the proprietary mix. Are more short term. The longer term is around the value proposition and how we go to market. We're still developing. But it like I said, it's this is a long lead time business. And so it takes a little bit of time to turn the ship. Just the nature of how the product flows there and works.

In terms of free cash flow, Oliver, I think what's gonna see this year is, obviously, we came into the year with our inventory up a little bit as we're building back into our proprietary brand. You know, we talked on the call that January was actually our strongest month. We said we had a strong start to February. So as we build back into that brand portfolio, we're seeing it really resonate with customers because it does give them value. So as we're doing that, we're not gonna get as much benefit out of inventory particularly in the front half of the year. We'll continue to work that down, and I'll expect by for the full year, inventory turn will be flat. Which does mean our receipts will have to be down, but you'll see that the aggressive decline in receipts as the year moves on. You won't get as much of a working capital benefit from inventory in 2025 as you did in 2024.

Okay. And, Jill, what's your context for the nature of what needs to be done now, you know, relative to your experience?

Yeah. I think that how Ashley's outlined it, you know, some of the steps we took were probably a little too far, and we really polarized our core customer and they're the ones who took some of the brunt from it. You know, you see that a little bit on the credit side, particularly in the credit revenue. That customer really came to look for value, wanted to use their coupon, wanted the familiarity of brands that we actually took away from them, they overpenetrated in jewelry or petite. So, you know, some of those actions, I think, were harmful to that poor customer. So we need to move back and build that brand love with them again. What I would say is we did bring in a lot of new customers. I mean, obviously, Sephora was helpful from that perspective. And we're driving those customers into our loyalty program. But we're really just really need to establish that, we have a great experience when you come to the store. We have Trip Assurance so that we have that depth of image when you come to the store. You can get what you're looking for. And we have the brands that you've come to love and look at for Kohl's Corporation from a value perspective. So I think, you know, again, just some of the basics. But I think as we moved farther away from that, that was what really became harmful, and it really became in that core customer from our perspective that we had to bring back in.

Okay. And finally, just to follow-up, Ashley, as you think about value intensely, what's the interplay between supply chain speed and agility? Relative to value. I think we're in a permanent phase of, like, unprecedented levels of volatility. You know, which may require shorter lead times. But I know you're often balancing that against price and transport costs.

Yeah. I mean, it's a really good question. Obviously, I mean, what I've noticed over the last, you know, I got three to four years is the semi shock seem to be more frequent over time, particularly from a supply chain and the way the world supply chains are becoming kind of rethought and obviously rebuilt. I was very pleased when I got here that Kohl's Corporation was actually kinda on the forefront of supply chain diversity and product assurance. I mean, they started really back in eighteen. Diversifying their supply base. Which I would say is probably two to three years ahead of most people that I'm aware of. So I was very pleased that there was a really strategic plan that, you know, all the way back to eighteen of having a kind of a diverse agile supply chain. And one of my biggest, I guess, impressive parts is how well our supply chain actually works here at Kohl's Corporation. It is a well-oiled machine. There's a lot of on the allocation part from, say, the corporate side as far as the supply chain become been very pleased with how this part of the company operates. And like I said, I think it was they saw the dominoes calling well in advance and around how you're getting supply chain diversity around security of supply. So not really over-indexed in the individual country, which has been quite helpful. Thank you. Best regards.

Our next question comes from Michael Binetti from Evercore. Please go ahead. Your line is open.

Hey, guys. Thanks for taking my question. Just a couple tactical ones. Could you maybe help us could you speak to the expectations going forward for Sephora this year in both, you know, maybe same-store sales or store additions? I guess, secondly, could you explain the comment that the changes the last few years have caused some friction with the legacy existing core Kohl's Corporation customer? Maybe your answer was embedded in a couple of the other answers here. I just wanted to ask specifically what you saw with that comment, and then also elaborate a little bit on the comment of how you're addressing promotions where there's a lot of efficiency that you can take costs out, but push those savings into the price just so we understand a little bit more tactically what you mean by that. Thanks.

Yeah. So I think this year, we will complete. We opened a hundred and forty stores in 2024. We'll complete our rollout this year in 2025. For the remaining stores. Those will be all these small shops though because they're gonna go into our smaller format stores. So the contribution from Sephora, you know, will become less. Now we're excited that we actually saw, you know, a thirteen percent comp in the quarter. It actually accelerated from Q3, so we continue to see it really resonate with our customer, particularly the trip driver for that customer. It's a new customer coming in. And we see that customer, you know, about thirty-five percent of the time buying something else that while they're at Kohl's Corporation. So we have a big opportunity to continue to expand that basket. I think that's where a lot of that opportunity lands. The newness continues to resonate. We called out a lot of great brands, and I know we have new as we come into 2025 as well that will help continue to drive that. Obviously, we won't have the continued contribution of having new store openings. You'll see a little bit less of that contribution to the overall comp in 2025 just because you have less new stores opening this year than you did last year.

Okay. The or part two of that question. On the core customer piece, if you look at so when we added these initiatives over time, we took away, I would call it, you know, highly productive, highly incremental product. I mean, Sephora went in. It was actually, you know, wildly successful. Brought in a new customer base, did all the metrics that you would expect it to do, and they've been a fantastic partner. It went into the jewelry section. Right? Which if you look at the way jewelry works, there really is no substitute. You come in for it. It's not like you're gonna buy it. Well, I'm gonna go buy a shirt now. It was highly incremental and actually highly productive. Labor-intensive, but highly productive. Instead of just moving that and I would say removing duplicative or duplicated product elsewhere or less productive space in the floor it was just gotten rid of. Right? Well, that's a core customer, that really you know, there's no other place for it to go. And then you replicate that among petites, you know, big and tall, and you have this kind of a rolling piece of where the ideas that we're putting were right think it goes back to how you reallocate the space from a data perspective. And making sure you're looking at any profit incrementality. Because petite, again, it's one hundred percent incremental because you can't really find that product anywhere else because of the size fit piece. So the ideas were good. I think we could've done both if you look in retro years later, but it definitely caused friction over time with our core customer. That was used to that product. Even though we attracted different customers.

Got it. And then the promotion comment?

And your question on promotion comment, it was.

Yeah. I just wanted to see if you could elaborate on the comment that you see an opportunity to make the promotions efficient, take some of the cost out and push those savings into the price point just for us spreadsheet folks. What does that actually mean a little bit more tactically on a retail floor? Thanks.

Probably my comment's probably won't help you with your spreadsheet. But from philosophically, though, if you look at how we promote how we promote it, the depth of what we promote it, and the efficiency and the incrementality of it, you get a little bit of peanut butter spreading across many categories where some are actually way more elastic than others too. We tend to give away a lot of I'll call it markdown at the register. If you look at tactically how we do it, you know, the customer comes in and is not asking for that, that deal, and we tend to give it to them. And so if you think about those two components, you're spending a lot of money at the point where the customer really doesn't you're not asking for that as opposed to them putting it into things that are highly elastic that customer is really looking for. So there's some interesting ways that we operate, and it's just a legacy way of doing it. It's pretty typical sometimes when you see in retail, but you can take that money and probably get a higher return that the customers recognize more versus probably just at the register.

Okay. Alright. Thanks a lot, guys. I appreciate the help.

Our next question comes from Ashley Helgans from Jefferies. Please go ahead. Your line is open.

Hi. Thanks for taking our questions. So to start, maybe you could just talk about what sort of kinda consumer health level is embedded in the guide, because it's up coming year. And then, Ashley, for you, are you thinking about the right mix of private label versus national brands? Thanks.

Sure. I think, you know, overall, we know that there's a lot of uncertainty with the customer. And, you know, we try to definitely take a prudent approach with our guidance. So, really, our outlook both recognizes the time needed that we have to make the necessary changes that we've outlined today, as well as the uncertainty that a consumer is facing in the macro environment. And I think, you know, that's why, you know, we came out a little bit lower to make sure that we were addressing that on uncertainty and the time needed. So I would say it's incorporated in everything we gave you today.

You know, it's a very common question. You know, what's the right mix and what is your target? In my twenty plus years, I have found that to be a very dangerous thing to actually throw out, particularly to merchandisers here in retail. Because you can tell them to hit a target, and they will hit a target. What I would say would be the customer will decide the mix in the end. I think there'll always be a place for high quality, high value proprietary brands. And then putting that in front of the customer. Along with pre quality national brands that people recognize. And then you let the customer decide. Historically, when you set kind of artificial targets that this category is going to be twenty percent or thirty percent, I think it kinda takes the customer lens out, and you're kinda forcing that upon the a little bit. So, ultimately, I think the customer decide, used yeah. I get the question. I used to get the question all the time, like, you know, what does your ecom mix want to want it to be? What your store mix want it to be? Whatever the cost were. Our job to meet the customer wherever they wanna be met. And we can do a better job of that, but I won't give a target. Then they'll just hit it. What I want them to do is offer great products, a great values, and then let the customer decide. And then tell them effectively. That's I know that sounds like probably not the what you're looking for, but that's really the answer that is deserved for this organization for sure.

Great. Thanks so much.

Our next question comes from Chuck Grom from Gordon Haskett. Please go ahead. Your line is open.

Hey. Thanks very much. You know, regaining traction with lost customers can be hard and oftentimes can take a long time. I'm curious of what, you know, what steps you're taking to improve on this front. You know, you talked about rebuilding the private brand. I'm just curious, like, what else you can do to go back to those customers? You have a big file. How are you attacking that? And is there a cost associated with that as well?

Yeah. It's good. I mean, obviously, it's easier to keep the customer and regain it. Historically, right, in retail. First, we actually have to make the changes. Gonna start with that. We actually have to go back to proprietary brands. We have to put the categories back effectively in the store base. We have to get the brands that our customers want back on the coupon and then we have to effectively tell them. The great news is we have a large very large customer file that's still existing. We have a large database of active and deactivated customers that we can still reach out to that will take a little time. I don't think there's that much incremental cost associated with it, given our marketing budget, but that part will take a little bit of time. You have to do the first part before you can tell them. I think the worst thing you could do is tell them there's something different when it hasn't changed yet. But you can see that in history of retail, to be very a precarious situation. So for us, it's about getting the proposition right and then bringing them back. Not in the reverse order.

Okay. Fair enough. And then on the store fleet, you're closing twenty-seven stores and, you know, a lot of your peers are more aggressive on that front. I'm curious, like, what was you know, what was the logic behind the twenty-seven? And I guess why not close more stores? And I guess, are you prohibited because of the Sephora deal to closing stores so that's why you're not getting more aggressive on that front?

Yeah. Chad, I'll start. I think we've always talked about the fact that our fleet is incredibly healthy, and we didn't have a lot of stores that were underperforming. We're generating cat you know, four wall cash, four wall profit out of the vast majority of all of our stores. There's really not a need to close the stores. I look at these twenty-seven stores as hygiene and that's something we should be doing all the time. We look at it annually. We look at the stores that are underperforming. And, you know, we're closing those regardless. There's no limitations on which we could close. And what makes the most sense. I think as we come up in the next several years, we have a lot of leases coming due. Which then affords you an opportunity to relook at should we be relocating that store downsizing that store, closing that store. But typically, because we're generating profit and cash in these stores, it's a pretty easy decision to continue moving forward. As, you know, Ashley mentioned, we could make the four walls more productive inside them. But as it sits today, there's just not a reason to have to make a lot of closures. In fact, I think if you look forward, we're testing into these small store formats. We've talked a lot about the fifty-five and thirty-five k. So it's more about where and how can we expand once we figure out the four walls of our box to say how can we get into some of these more rural markets that we know we have opportunity to serve with our format.

Great. Thank you.

Our next question comes from Matthew Boss from JPMorgan.

Great. Thanks. So, Jill, could you speak to the overall health and composition of inventories exiting the fourth quarter? And then just with the cost structure, maybe if you could speak to further areas of rationalization, or is one percent to two percent still the comp required for SG&A leverage in the model?

Sure. I think from an inventory perspective, I feel really good with the health. Although it's up two percent, as we mentioned, we made that investment back into our proprietary brands. And also, actually, into some of the brands we exited, like jewelry. We did have a strong presence of that in the fourth quarter. We thought resonate with our customers and as we talked about, we saw a flat comp in accessories without Sephora. Going back to that category. So I think as we move into the first quarter, we have an opportunity both with Valentine's Day and Mother's Day to take advantage of that category. So I feel good with the health and the composition of the inventory. Like I mentioned, we're gonna continue to rationalize our receipts based on the sales guidance we gave today. And for the year, look for our churn to be flat. But I feel like we've done everything we need to do from a health of inventory as we entered into the year. To set us up well for 2025. In terms of the cost structure, obviously, with the guidance down, we're down three and a half to five. So we are showing both in 2024 and 2025. We've cut costs at a more aggressive rate to than the typical know, one to one and a half percent comp leverage point that we've given you. So I think if you run your model, you'll see we'll be well beyond that with the guide that we gave for 2025. So I think if we look at these opportunities, we continue to you know, we closed an EFC. We closed the twenty-seven stores. We've done some headcount rationalization as well. So we continue to look for big ways to optimize as we move into 2025. We have some other areas such as lowering our marketing costs. We've talked about know, moving that a to s goal down, year on year to become more efficient there. So we'll continue to lean into that. And always looking for ways to optimize our store payroll. We still have two hundred and fifty stores with self-checkout, so as we test and learn there, how can we become more efficient from that labor pool as well. And then as we have been rationalizing down the inventory, that also alleviates labor both in our distribution and in our stores. And so those type of items will continue. As we move into 2025. So I think you know, the point that I like looking at is one and one half comp, but we've clearly done better than that in 2024 and the guidance we gave for 2025.

Topol color. Best of luck.

Our last question today will come from Brook Roach from Goldman Sachs. Please go ahead. Your line is open.

Good morning, and thank you for taking our question. Ashley, I was hoping we could follow-up on Mark's question and speak to the process of reversing the brand exclusions on the coupon program. What does that look like in practice? And are you seeing any headway on brand conversations in getting those exclusions removed? And then for Jill, I was hoping you could provide some additional color on what you're seeing in your credit business excluding the accounting change. How is the co-branded partnership scaling? And how should we be thinking about the contribution from balances and your credit customer health? Thank you.

That's a great question. I mean, we're currently in the process of evaluating every brand. Obviously, some brands that we've carried have always been excluded. I'm not sit I'm not gonna sit here and say that we're taking them all off, actually. They'll always be very large brands that will always be excluded. I won't name them, but those are but they were over the last I don't know, several years. There have been many, many brands that didn't have asked to be excluded. We excluded them unilaterally, if that makes sense. And you do a little bit, you know, every year over the last three to four or five years, and it adds up pretty quickly. And those are really the brands I'm talking about. Our larger you know, some of the larger brands that's always been excluded, I don't really see a change in that value proposition. But hundreds upon hundreds of brands that we, you know, unilaterally did. That our customers over time added up and saying, well, this is becoming too excluded. When you add up all the product. And those are the ones we're actually looking at. And, Tay, and it doesn't really require that much of a conversation because they didn't ask for it, and sometimes they actually have asked us to repeal it. So those are the easier ones. Obviously, have strategic conversation, joint business planning with our much larger national brands and see where they are strategically. I don't see that those worlds will change that much in the short term. But those are between I they're really on a joint business planning together, how we drive our brand and their brand together. But over time, we've just shifted you know, the latter to other brands, and those are the ones that I will actively look at on a more immediate basis.

And in terms of credit, you know, what we called out with our sales being softer, we saw that softness more in our core customer, particularly in our credit customer. So that has been the softness that we've talked about in our credit revenue line is that AR balance has kind of continued to be reduced as the sales have down. We have less revolving balances. So that, I think, is we projected we go back into 2025. The S and A shift obviously makes that revenue look lower in 2025 without that shift. Our credit revenue would be better than the sales comp guide that we had given from a decrease perspective. In terms of the co-brand, we actually just fully completed the co-brand conversion to cap one in February. So that's been successfully completed from that perspective. We did see though that we gave a little bit less line increases with this last cohort than we had done with the original cohort we had done. And when we do that, we saw a little bit less spend. As the, I think, macro environment gets better, that provides us an opportunity to have a line increase which will help generate more sales from that perspective. But I would say right now, we have an opportunity in front of us to really generate more sales for that core customer in general which would then help lift our total credit revenue as we move forward. But, obviously, in the guide, we're looking at this being a little bit better than what we had seen from a total sales perspective. X the SG&A shift.

Great. Thanks so much.

We are out of time for questions today. Will conclude today's conference call. Thank you for your participation. You may now disconnect.