Greetings and welcome to the Macy's Inc. First Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Pamela Quintiliano, Vice President of Investor Relations. Pamela, you may begin.

Thank you, operator. Good morning, everyone, and thanks for joining us. With me on the call today are Tony Spring, our Chairman and CEO, and Adrian Mitchell, our COO and CFO. Along with our first quarter 2024 press release, a presentation has been posted on the Investors section of our website, macysinc.com, and is being displayed live during today's webcast. Unless otherwise noted, the comparisons we provide will be versus 2023. All references to our prior expectations, outlook or guidance refer to information provided on our February 27 earnings call, unless otherwise noted. In addition, all references to comp sales growth throughout today's prepared remarks represent comparable owned plus license plus marketplace sales growth and owned plus license sales growth for our store locations unless otherwise noted. All forward-looking statements are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions mentioned today. A detailed discussion of these factors and uncertainties is contained in our filings with the Securities and Exchange Commission. In discussing the results of our operations, we will be providing certain non-GAAP financial measures. You can find additional information regarding these non-GAAP financial measures, as well as others on the Investors section of our website. Today's call is being webcast on our website. A replay will be available approximately two hours after the conclusion of this call. With that, I'll turn it over to Tony.

Thanks, Pam, and good morning, everyone. On today's call, we will provide updates on our Bold New Chapter strategy as well as our first quarter results and second quarter and full year outlooks. But first, let's discuss the current macro climate. Our customers across all three nameplates continue to benefit from strong wage and job growth. However, inflationary pressures persist, and they're feeling that pinch. The outlook provided on our fourth quarter earnings call as well as today's update assumes our customers will continue to carefully scrutinize their discretionary purchases. We are reading and reacting to the dynamic economic environment and competitive promotional landscape in real time. Regardless of income tier, we know our customer responds to fashion newness at compelling price points in an engaging environment. We continue to evaluate inventory depth and composition to ensure we strike the right balance. Despite the ongoing pressure on the consumer, we are confident in our ability to return to profitable growth as we execute on the pillars of our Bold New Chapter strategy, which are, one, to strengthen the Macy's nameplate, two, to accelerate luxury growth, and three, to simplify and modernize end to end operations. This morning, we are pleased to report that although early days, we are on or ahead of plan across all three pillars and that our first quarter EPS results exceeded our outlook. Now a brief update on our bold new chapter progress. At our largest nameplate, Macy's, the customer is responding well to our omnichannel initiatives across product, presentation and experience. In luxury, we are pleased with Bloomingdale's advanced contemporary growth and acceleration of digital. While at Bluemercury, skin care remains a differentiator and a standout. For both nameplates, we are evaluating new store opportunities that will strengthen our ability to accelerate omni growth. In…

Thank you, Tony, and good morning, everyone. Let me start by thanking our teams for their support of our Bold New Chapter strategy. As I've been out in the field visiting our stores and distribution centers, I've been impressed with the dedication and commitment to our customers. As Tony mentioned, we're encouraged by early progress across all three pillars of our strategy and the positive impact our investments are having on the go-forward Macy's, Inc. enterprise and our largest nameplate, Macy's. Total Macy's Inc. enterprise comps were down 0.3% year-over-year and net sales were $4.8 billion, down 2.7% from last year and near the high end of our outlook. For the go-forward Macy's Inc. business, defined as Macy's, Bloomingdale's and Bluemercury go-forward locations plus digital, comps rose 0.1% year-over-year. We are pleased with the emerging trends. We view our First 50 locations, go-forward Macy's nameplate and go-forward Macy's Inc. business as evidence that our Bold New Chapter investments are working, and they are what we are tracking most closely as predictors of our ability to return to profitable growth. At the Macy's nameplate, comps were down 0.4% and net sales were down 3.3%, while go-forward business comps were flat to last year. Our First 50, which we view as the leading indicator of go-forward store growth, achieved a positive 3.4% comp. To size that business, these locations represented about 15% of the Macy's Inc. go-forward enterprise and close to 20% of the Macy's nameplate go-forward sales last year. The First 50 comp results compared to a negative 1.3% in the remaining go-forward locations, which have not yet received growth investments, a positive 0.1% for all go-forward locations and a negative 4.5% for all non-go-forward locations. At our luxury nameplates, Bloomingdale's comps were up 0.3% and net sales were up 0.5%,…

Thank you, Adrian. Our Bold New Chapter sets us firmly on a path to change our trajectory. Although early days, our investments are gaining traction, and reinforce our belief that Macy's Inc. can return to sustainable profitable growth, accelerate free cash flow generation and unlock shareholder value. Our focus on serving the customer is unwavering. We are confident that we have the right team and strategy in place to achieve our goals, and look forward to updating you on our progress. With that, operator, we are ready for questions.

[Operator Instructions] Today's first question is coming from Matthew Boss of JPMorgan Chase. Please go ahead.

Great. Thanks and congrats on the progress.

Thank you.

So, Tony, could you elaborate on the key initiatives, which you saw drive the 3% to 4% comp in the First 50 doors? Maybe what you're seeing between traffic and AUR in these stores? And how quickly could you scale this playbook? And then, Adrian, just maybe drivers on second quarter gross margin expansion and any change in your back half merchandise margin expectations?

Thanks, Matt. Appreciate the question. Look, we're excited by the early innings of First 50. It's a combination of the things that we have talked about in people, product, presentation and experience. People, it's having the right people in place at the right time. It sounds easy, but using technology and the data we have on traffic and conversion by day, by hour, making sure that we have people in the shoe department, people in the ready wear fitting rooms, people in the big ticket area and fine jewelry. But the team is all over it, and I think doing a great job in leaning into the opportunities to increase the quality of the experience in our stores. That's why we saw a 500 basis point improvement in Net Promoter Scores in the First 50 stores. It's the product, the team feeling the obligation to meet the needs of the customer, and whether that's the rollout of new brands like Donna Karan or the expansion of brands like French Connection, Free People and Karl Lagerfeld and Hugo Boss. We need more variety. We need less redundancy. We need more interest within the assortment, and I think that's making a difference in the customers' reception to the stores. The experience, it's adding animation and events into the stores, and it's also making sure from a presentation standpoint, we look crisp, we look compelling. That's the partnership with the brands to make sure that the impact is in each of the categories of business. And again, I would add that we're in the early innings. So we're going to study this. Capital is something that we care a lot about, capital allocation. We're going to be very discerning in terms of what we decide to do and where. But I feel good, and I think opportunities exist to expand this as the year progresses as soon as we see another quarter or more consistency amongst the stores and the overall results. Traffic is good. The AUR is up about 4%. So, conversion, I think, is reflective of the discerning customer who feels under pressure and is going to wait to buy the things that they love. So we accept the challenge and we'll respond to it appropriately.

Good morning, Matt, and thank you for your question on gross margin. Let me set a little bit of context as we think about the second quarter gross margin because I think what we observed and how we navigated the first quarter is pretty important. As you look at our first quarter results, we're very much pleased with how we navigated the first quarter. And as you saw, we delivered earnings that exceeded our outlook. Now the key thing, as Tony pointed out, is that we're very much focused on delivering on our customer experience. But we also recognize that the customer is under pressure, the macro environment remains uncertain and that we can only control what we can control. So as we navigated the first quarter, we're balancing a number of different variables given that context. We're balancing sales growth, delivering value for more value-conscious customers as we thought about our markdowns and discounts, ensuring healthy inventory turns and also managing our operating expenses, particularly our variable expenses pretty effectively. But really the headwind in the first quarter was really warm weather products that just simply didn't move as fast as we had expected, but we had to respond to maintain the help of the inventory. If I pivot to the inventory, as you know, we have a proven track record on inventory discipline. This is something that we've really leaned into the last several years. And what you saw in the first quarter is that we took actions -- the actions needed to maintain the health of our inventory in terms of volume and composition. What I can tell you as it relates to your question about the second quarter, is that we're entering the second quarter with less aged inventory than last year and more transitional product relative to last year. So we feel that we're well positioned for the summer season as we enter the second quarter, but also well positioned as we enter the balance of the year. And what we're trying to do here is provide ourselves the appropriate level of flexibility to respond to an environment that's more competitive, that's more promotional so that we can be able to navigate and adjust based on whatever is on the horizon. To your pointed question about the Q2 outlook in the back half of the year, as we look at gross margin outlook forecasted for the second quarter, we expect to be at least 170 basis points above last year. We like that trajectory, especially as the weather gets warmer, and we're well positioned on warm weather goods. And as we think about the composition shifting to the fall season, it's all about inventory discipline and inventory control, watching that level as we enter the third quarter and the holiday season and making sure that we have the right composition.

Great color. Best of luck.

Thank you.

Thanks, Matt.

Thank you. The next question is coming from Michael Binetti of Evercore ISI. Please go ahead.

Hey, good morning. This is Warren Cheng on for Michael. I wanted to follow up on your comment that the vendor partners are engaging with the enhancements you're making in these First 50 stores. Is that driving a lift in the vendor mix or allocations versus what you had planned? And also curious if that's driving any impact on the full price sell-through or margins you're realizing in those First 50 stores?

Thanks, Warren, for the question. I think the vendors feel a sense of partnership and there is a natural obligation that we have to each other. We do well when the vendors do well, the vendors do well when we do well. And I think that we have seen a level of engagement relative to these First 50. I think as we talked about on the last call, we hate closing stores or even rationalizing the store base, but the vendors were very supportive of that idea, meaning they wanted to focus on our most productive assets. They wanted to invest with us. They wanted to offer us a better assortment in the stores. They see higher full priced sell-through in those stores. And that's really all kind of coming to fruition. Again, it's early innings, so we're going to be careful, but we wouldn't do these weekly events if our vendors weren't partnering with us. We wouldn't be able to add the level of staffing if our vendors weren't partnering with us. We certainly wouldn't be able to offer the distinction and variety within our assortment if our vendors weren’t partnering with us. And so I feel it's a story of two mutually dependent partners. I think we said private brand was 15% last year. Maybe one day, we'll get it back to closer to 20%. But ideally, we're going to lean into the partnerships where 80% of our business is to make sure that they feel Macy's, Bloomingdale's and Bluemercury are the best places to do business.

Thanks. That's really helpful. And I wanted to ask a follow-up on your credit card revenues. 1Q came in a little bit better than you expected. You also raised the rest of the year slightly. Can you give us an update on how you're seeing credit losses and delinquencies trend over the last three months?

Yeah. I'll go ahead and take that one. When we think about our credit card results in the first quarter, we're pretty pleased. And to your point, Warren, we did increase our annual outlook by about $15 million. The reality is that we saw higher balances in our portfolio. In terms of the delinquency metrics, the payment metrics, they are very much in line with our expectations. But also what contributed to our beat in the first quarter was also better than expected profit sharing with Citi as well.

Thanks. Good luck.

Thank you.

Thank you.

Thank you. The next question is coming from Ashley Helgans of Jefferies. Please go ahead.

Hey, good morning. For the First 50 locations that were up 3.3%, how much was ticket versus traffic? And then maybe you could talk about the level of promotions at those stores versus the rest of the fleet?

Sure, Ashley. There was no difference in the level of promotion in those stores versus the rest of the fleet. So no change there. The difference was in traffic, a higher conversion rate and a comparable increase in average unit retail. The customers are responding, as we said, to the right recipe. And I use the analogy of a recipe because a recipe means you have to get all the ingredients right. Sometimes in our business, the merchants want to do their part only if the stores do their part. And the stores only want to do their part if the digital team does their part. In First 50, we're all doing our part, and we're getting credit for product improvement. We're getting credit for visual animation. We're getting credit for the experiences we're adding. We're getting credit for the service experience. Those Net Promoter Scores are a great indicator, and we drill down to perception on availability of size and color. We drill down to the inspiration from visual animation. We drill down to have the brands and styles and products that I like. We're seeing meaningful increase across all of those metrics. And I think that's a good indicator, early innings, but the team working together and improving the overall experience in our First 50 stores.

Tony, if I may just add, I just want to amplify Tony's point about this being early innings. On one dimension, we're 90 days in. And we're still practicing around things like selling and service. We're getting better every day on staffing, on moving the team around the store. But also there are a number of changes that have not been implemented in these First 50 yet. So to amplify Tony's point, it's early innings. We're still experimenting. There's still more changes coming into the store based on what our customers expect of us. But overall, we're encouraged by the early wins.

That's super helpful. And if I could just squeeze in one more. So what is the high end of your comp guide for the fiscal year as soon -- in terms of the health of the consumer versus current levels? I guess, said differently, would the consumer need to get better to hit that range?

Yeah. From our perspective, we've been pretty consistent that the pressure on the consumer is a given in terms of how we think about our business. So as we think about the range of our comp this year, it does not assume any improvement in the consumer. What it doesn't assume is improvement in how we're executing our business and how well we're serving the customer, given the growth investments that we're placing in our stores, in digital and the acceleration of growth within our luxury nameplate. The range that you see is really reflective of the competitive environment and the continued pressure on the consumer. But from our perspective, we feel that what we can control is really what we're going to be focused on, but the consumer, we believe, will remain under pressure for the balance of the year.

Great. That’s helpful.

Thanks, Ashley.

Thank you. The next question is coming from Paul Lejuez of Citi. Please go ahead.

Thanks. It's Tracy Kogan filling in for Paul. I had a question on SG&A. It came in below your expectations this quarter, and I was wondering what the drivers of that were? And then what kind of expense initiatives you have for the remainder of the year? Thank you.

Good morning, Tracy. So to your point, we are pleased with how we're managing expense ongoing. And from a cost savings standpoint or an SG&A control standpoint, there are really two things that we focused on. The first is managing variable expenses well as we progress through the quarter as well as really making sure that we're gaining traction on the structural cost savings initiatives that we spoke about on the last call as it relates to end-to-end operations. The good news is that with regards to end-to-end operations, we're gaining traction. We're seeing the benefits flow through from the consolidation of our tech vendors on routine service contracts. We are -- we have fortunately transitioned through the offshoring of a large part of our finance team. We're better balancing fulfillment activities. But we're still in the early innings on end-to-end, but it's nice to see the progress that we're making and the value that we've been able to deliver in the first quarter. But I would say, to your question, Tracy, the combination of how we're managing variable expenses day-to-day and the traction gained on the longer-term transformation work we're doing on end-to-end operations.

Great. Thanks, guys.

Thanks, Tracy.

Thank you.

Thank you. The next question is coming from Dana Telsey of Telsey Advisory Group. Please go ahead.

Hi, good morning, everyone. As both of you think about the health of the consumer and having come through the first quarter with the unseasonal weather, staying the same, getting better, getting worse? What are you seeing? And does it differ by income levels? And lastly, can you expand on the small store format? Any tweaks or adjustments? What's working, what will be adjusted or tweaked and how you're thinking about it? Thank you.

Thanks, Dana. The health of the consumer, I never claim to be an economist. I would say, as we've described, under pressure, discerning, very choiceful. There are certainly categories that are stronger than others. The great part of being a department store is that we can move inventory. We can move people. We can move our marketing and assets and homepage exposure. And the key thing is for us to just keep our ear to the grinds on making sure that we understand where the business is happening and move our resources there appropriately. I think the teams in general are doing a very good job. We are reordering. We are canceling. And that's what you'd expect from a good merchant and planning organization, that they are active in the market making decisions based on what they're seeing in the business. I expect the consumer to remain under pressure. We got a big year in front of us. Maybe there'll be rate cuts, maybe there'll be one war ending, but it's an uncertain environment. And I think our job is not to assume anything different on the things we don't control, but to play our game with strength, to play a game with confidence, to play a game with agility. And I think the team is doing that. With regard to the different income levels, we're certainly seeing at the high end, the Bloomingdale's consumer is interested in purchasing, but she's being very thoughtful in the category she's purchasing in. So I think we said that luxury handbag and shoe business is much softer than it was, still up strong to 2019, but she's investing now in advanced contemporary. She's investing now in parts of the beauty business. She's investing now in aspects of the home. So there's just a difference, I think, as you look at the income tier. The customer at the lower tier has to make choices based on rent and family obligations. The customer at the higher tier is going to do it based on where she has interest or they have interest and passion and something that we are doing, I think that creates the motivation to buy. You want to comment, Adrian, on small format?

Yes. Thank you, Tony. We continue to remain very encouraged by the rollout of our small format stores. On the Macy's side, we just opened up a new store in New Jersey, but we have 11 more openings to go. We continue to be pleased with the small formats that we're seeing on the Bloomingdale's side, they continue to exceed our expectations. So we continue to believe that -- we expect to have one additional Bloomingdale's this year, my apologies, Dana. But look, we're encouraged. We're learning a ton. We're seeing how the customer is responding and we're going to continue to lean in.

Thank you.

No problem, Dana.

Thank you.

Thank you. The next question is coming from Chuck Grom of Gordon Haskett. Please go ahead.

Hey, good morning. Congrats on success with the First 50. Curious how quickly you guys can roll these efforts out to more stores to help the total company comp? I'm curious what categories in those stores you're seeing the greatest lift in those locations?

Sure. Thanks, Chuck, for the question. I don't think it's a question of if we can, it's when we can. All of these are capital-light decisions that we've made. You really revolve around variable SG&A. And so we're going to roll them as soon as we see enough continued results. And the good news is we're seeing them in the majority of the stores. So it's not a handful of stores. That's a really good sign. We're seeing it in the merchandise content. That's a really good sign. We're seeing it in multiple FOBs. That's also a really good sign. As I mentioned, again, the Net Promoter Score, the customer is voting, both with her wallet and her commentary, taking the time to give us a lot of feedback. So I would say, it's not a question of if we're going to roll out, it's a question of when. And that when is going to be -- we're not going to trip on our way to success. As an organization, we are highly committed to delivering on our commitments to the Street and our commitments to our colleagues. So I think that we will have green shoots this first and second quarter. It will allow us to do some things later in the year, and I hope we're in a position to talk to you about more stores in 2025.

Okay. Great. And then one for you, Adrian. Just can you talk about the cadence of your comps throughout the quarter by month? And any early reads on how May and the second quarter has started? Thanks.

Yeah. Good question. Look, we have not commented on the monthly cadence. We're navigating the quarter -- we navigated the quarter as best as we could. We felt good about how we navigated the quarter, and that's certainly reflected in our performance. As we think about quarter-to-date results, we're just simply -- I'm not going to comment on that either. We have a lot of the quarter ahead of us, Chuck. We've got graduations, we've got Fathers' Day, we've got fourth of July. So I think it would be premature to think about the balance of the quarter based on just a couple of weeks into the quarter.

Okay, great. Thank you.

Thanks, Chuck.

Thanks, Chuck.

Thank you. The next question is coming from Alex Straton of Morgan Stanley. Please go ahead.

Hi, this is [Katie Delahunt] (ph) on for Alex Straton. My question was on the CFPB credit card regulations. Can you give us an update on what your latest view is there? And then maybe remind us of your mitigation efforts as well as if you've had any success so far with those?

Sounds good. Thank you, Katie. Our perspective is that it remains uncertain. And so what we plan to do is to disclose the impact of the late fees once it becomes certain. The size of the impact is uncertain, the timing is uncertain. So once the final ruling comes out, we'll be able to share more information at that time. We've not shared a lot of specifics with regards to mitigation strategies, but definitely know that we're exploring them with our partner, Citi. We're exploring a variety of strategies. Some of those strategies are in development. But from our perspective, we're really waiting and seeing what's going to -- what the final ruling will be and be able to proceed at that time.

Great. Thank you so much.

Thanks, Katie.

The next question is coming from Oliver Chen of TD Cowen. Please go ahead.

Hi, Tony and Adrian, I would love your thoughts on targeted promotions ahead and discounting pressure that you're seeing. I know you've been making really good strides on pricing analytics. Also, as we think about apparel, there's great changes in the private label portfolio. What are your thoughts on apparel comping positive and timing for that to happen in relation to the newness that you're introducing? And finally, as we think about marketplace model as well as digital advertising, you've made nice strides there. What should we know about modeling that and how material it will be as you continue to make progress there as well? Thank you.

Thanks, Oliver. You got a number of questions in there. Let me take them one at a time. On promotion, I feel good about the team's work, and we're obviously looking at our discount rate on a daily basis versus last year in comp events and trying to again, through our personalization engine, apply the value where it's necessary to either incent the customer to buy or to move aged inventory. And again, as Adrian talked about, we come into the second quarter in a healthier inventory position from an age standpoint, but it's a long game. And so we're playing it on a daily basis to make sure that we are making the right decisions on promotion to attract but not overinvest in value. In terms of ready-to-wear growth, I'd tell you, this learn from each other without becoming one another has great application when I look at the ready-wear business at Bloomingdale's, which right now is terrific. And it gives me optimism that we are in the early stages of that opportunity at Macy's. We have to get through the remainder of the private brand disposition that we're up against. We have to roll out more of the newer brands to gain the level of materiality to our overall business. But the impact at Bloomingdale's is really good to see, and I think it will be helpful as it relates to the opportunity at Macy's. In terms of marketplace, we had a great quarter, and that was on top of a great year in 2023. I'm excited about the baby registry launch, which puts us in the baby registry and along with wedding registry, launching over 150 brands with the start and getting good reaction from the consumer. And I think as Adrian mentioned, MMN, our media network, is up more than 20% to last year. We're seeing good vendor engagement that goes beyond just the important beauty category where we had an immediate impact. And we're diversifying what we're doing in MMN to include search and other facets of -- or the way in which we engage the consumer. So marketplace, healthy. MMN, growing. Promotion, discerning and thoughtful and targeted. And ready-to-wear growth happening at the Bloomingdale's and determined to see that result at Macy's as we progress.

Thank you. Best regards.

Thank you.

Thank you. The next question is coming from Brooke Roach of Goldman Sachs. Please go ahead.

Good morning and thank you for taking our question. I was hoping you could talk a little bit more about the trends that you're seeing in luxury and some of those luxury initiatives that could be rolled out to the Macy's network in aggregate especially in Bluemercury as well. Thank you.

Thanks, Brooke. Appreciate the question. Yeah, I think that, again, this portfolio, we call Macy's Inc, offers this benefit that we get to look at the business across different consumer income levels and different value spectrums. And the Macy's team and the Bluemercury team and the Bloomingdale's team are talking and they're sharing more than ever before. And again, I have no interest in one becoming the other, but I do believe it's an advantage for us as we try and understand where peaks and valleys happen in the business. In terms of luxury trends that are happening right now, obviously, a lot has been discussed about quiet luxury. So you're seeing less logo. And that's certainly playing out in the Macy's business at a more accessible level. So we are leaning into opportunities on products and categories and brands with less logo right now. You know our business is very cyclical. So the minute I say logos are out, it will be six months or a year and logos will be back in, in some meaningful way. We're all interested to see what Alessandro will do at Valentino. And certainly, that won't be quiet luxury. In terms of Bluemercury and the beauty category, I think what they've discovered is the appetite of the consumer for high-end skin care and regimens that the consumer has no price resistance to what will help them take care of themselves, help them look their best, help them to be able to retain their youth, help recognize the difference in people's skin types. It's just not the same when you're 20 versus 40 versus 60. And I think the other thing is Bluemercury benefited from looking at the penetration of fragrances and other categories at Macy's and Bloomingdale's and has done an outstanding job at growing the fragrance business in a short period of time. So we're -- as we said on the call, really bullish on the growth opportunities at Bluemercury. We have 30 stores that we'll open over the next couple of years. We have 30 remodels, and that all begins in the second quarter. So opportunities for growth at Blue Mercury, learning between Bloomingdale's, Macy's and Bluemercury, and really trying to react and respond to where the consumer is interested and where she's stepping back.

Great. Thanks so much. I’ll pass it on.

Thank you. The next question is coming from Bob Drbul of Guggenheim Partners. Please go ahead.

Hi, good morning. I was just wondering if you could focus a little more on your asset monetization plans this quarter -- I'm sorry, this year and over the next few years, just sort of what you're seeing, how you're approaching it and just your visibility on, especially the plans for this year? Thanks.

Absolutely. The punchline on asset monetization, Bob, is that we're seeing a lot of traction. We're certainly encouraged by the deal-making activity that we've been seeing. And our focus is very much on quality deals, finding the right buyers and offering -- making sure that we're getting the right price. As you know, we have a very healthy balance sheet. We also have an apparatus of strong real estate partners and developers that we're working with to unlock value for our shareholders, but we're very encouraged by the traction that we've seen since we announced the closure of approximately 150 stores back in late February. The strategic importance is still quite critical to us, right, which is the sales proceeds that we are able to generate from a large portion of the stores that we will be closing and monetizing allows us to reinvest in the business, and you see the performance of the First 50 stores as well as return capital to shareholders. But I would tell you, we certainly recognize that we're in an elevated interest rate environment. But I've got to tell you, we're very encouraged by the pace of dealmaking that we're seeing and very encouraged about how we think about the closures of these stores and the monetization impact that it will have on our business over the next three years.

Thank you very much.

Thanks.

Thank you. This brings us to the end of the question-and-answer session. I would like to turn the floor back over to Mr. Spring for closing comments.

Thank you, operator. We hope everyone has a great Memorial Day and summer. Spend some time with your friends and family, hopefully, get a good vacation in there. And we hope to see some of you or many of you at our amazing Fourth of July fireworks. Should be spectacular this year. Have a good rest of the day, everybody.

Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines at this time, and enjoy the rest of your day.