Macy's (M) Q1 2026 Earnings Call Transcript

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Date

Wednesday, June 3, 2026 at 8:00 a.m. ET

Call participants

• Chairman and Chief Executive Officer — Antony Spring
• Chief Operating Officer and Chief Financial Officer — Thomas Edwards
• Vice President, Investor Relations — Pamela Quintiliano

Takeaways

• Net sales -- $4.7 billion, up 1.8% year over year and above the $4.575 billion to $4.625 billion guidance range.
• Comparable sales (reported) -- Up 3%, outperforming guidance of 0.5%-1.5% and last year’s negative 2% comp.
• Bloomingdale’s comparable sales -- Achieved 10.2% growth, reaching the highest first-quarter sales volume in brand history.
• Bluemercury comparable sales -- Increased 6.4%, with category strength in makeup, dermatological skin care, and fragrances.
• Macy’s nameplate comparable sales -- Rose 1.6%, marking the fourth consecutive quarter of positive comps.
• Reimagine Macy’s locations -- Grew 2.4% in comparable sales; now 200 locations representing about 60% of go-forward Macy’s store base and 75% of last year’s go-forward store sales.
• Adjusted diluted EPS -- $0.13, above the high end of guidance (between a loss of $0.01 and a gain of $0.01), with a negative $0.04 per share tariff impact.
• Gross margin rate -- 38.9% of net sales versus 39.2% last year; excluding a 30-basis-point tariff impact, would have been on par with prior year.
• SG&A rate -- 39.9%, flat year over year, with SG&A dollars at $1.95 billion reflecting investments in Bold New Chapter initiatives.
• Adjusted EBITDA -- $290 million or 5.9% of total revenue, exceeding the guidance range of 4.9%-5.1% and compared to $304 million (6.3% of revenue) last year.
• Operating cash flow -- $292 million inflow, reversing a $64 million outflow last year.
• Free cash flow -- $140 million inflow, compared to a $203 million outflow last year.
• Inventory -- End-of-quarter dollars up 3.6%, in line with comp sales growth and management’s expectations.
• Shareholder returns -- $100 million returned in the quarter through $50 million in dividends and $50 million in share repurchases; $1.1 billion remains on the buyback authorization.
• Cash balance -- $1.3 billion at quarter end versus $932 million last year.
• Macy’s Media Network revenue -- $38 million, down 5%, attributed to year-over-year timing of advertising spend; company expects growth for the full year.
• Credit card revenue -- $172 million, up 12% year over year, reflecting healthy credit portfolio and reduced net credit losses.
• Guidance update -- Raised 2026 outlook; full-year net sales now expected between $21.5 billion and $21.75 billion with comparable sales up 0.5%-1.2%, adjusted EPS of $2.00-$2.20, and guidance assuming $0.10-$0.20 combined tariff and fuel cost impact to EPS.
• Q2 guidance -- Net sales targeted at $4.75 billion-$4.8 billion, comparable sales flat to up 1%, adjusted EBITDA margin of 6.9%-7.2%, and adjusted EPS of $0.29-$0.34; tariffs and fuel costs expected to have about $0.03-$0.04 negative EPS impact and 20-40 basis-point reduction to gross margin.
• AI-powered initiatives -- 35 active AI pilots supporting customer experience and operational efficiency, including Ask Macy’s chatbot and inventory forecasting tools.
• Category leaders -- Watches, petites, dresses, women’s career, kids, handbags, fragrances, and shoes outperformed; big-ticket home (especially furniture) and plus-size apparel lagged.

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Risks

• Gross margin faced approximately a 30-basis-point headwind from tariffs, with management expecting a 20- to 40-basis-point combined negative impact from tariffs and fuel costs in coming quarters.
• Management cited macroeconomic and geopolitical uncertainty as ongoing external risks potentially impacting consumer demand and competitive positioning.
• Big-ticket home and plus-size apparel segments underperformed, with furniture sales especially affected by higher tariffs and softer category demand.
• Free cash flow and gross margin are subject to volatility from fuel and tariff cost fluctuations, with guidance noting EPS headwinds of $0.10-$0.20 for the year.

Summary

Macy's (NYSE:M) delivered enterprise-wide growth and its best first-quarter comparable sales gain in four years, supported by strong execution of the Bold New Chapter strategy. Revenue, adjusted EBITDA, and adjusted diluted EPS all exceeded management's guidance, prompting an upward revision to full-year sales and profit targets. Company leaders highlighted consistent performance across banners and categories, with luxury (Bloomingdale’s) and beauty (Bluemercury) outperforming, while macro conditions and tariff/fuel costs remain managed but notable headwinds.

• Spring noted, "all nameplates and channels positive," with Bloomingdale's achieving record first-quarter sales volume and Macy's Reimagine locations delivering "positive comparable sales in 8 of the last 9 quarters."
• Edwards disclosed, "credit card revenue was $172 million, up 12% versus last year, reflecting our continued healthy credit portfolio and prudent management of net credit card losses."
• Digital performance benefited from foundational platform improvements and the introduction of the Ask Macy's AI-powered assistant, which is driving higher conversion rates among engaged users.
• Initiatives in inventory management, supply chain automation, and AI application in forecasting are expanding, with management citing early efficiency and service gains from China Grove and other distribution enhancements.
• Amid positive results, management maintained "a prudent approach to quarterly and annual guidance" to flexibly address evolving competitive and geopolitical dynamics.

Industry glossary

• Go-forward locations: Store fleet (and corresponding digital sales) that management includes in post-rationalization comp sales metrics, excluding recently closed or to-be-closed stores.
• Reimagine stores: Macy’s locations that have undergone targeted investment and operational transformation as part of the Bold New Chapter strategic initiative.
• Ask Macy’s: Macy’s proprietary AI-powered conversational shopping assistant deployed on digital platforms to facilitate search, personalization, and customer engagement.

Full Conference Call Transcript

Pamela Quintiliano: 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 Tom Edwards, our COO and CFO. Along with our first quarter 2026 press release, a Form 8-K has been filed with the Securities and Exchange Commission, and the 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 2025. All references to our prior expectations, outlook or guidance refer to information provided on our March 18 earnings call. On today's call, we will refer to certain non-GAAP financial measures.

Reconciliations of these measures can be found in our earnings presentation and SEC filings available at www.macysinc.com/investors/. All references to comp sales throughout today's prepared remarks represent comparable owned plus licensed plus marketplace sales unless otherwise noted. All reported nameplate comp sales results are on a go-forward basis. Go forward, Macy's Inc. comp sales include the approximately 350 Macy's go-forward locations in digital and Bloomingdale's and Bluemercury nameplates inclusive of stores and Digital. Go-forward Macy's nameplate comp sales include the approximately 350 Macy's go-forward locations and Macy's Digital. Go-forward Bloomingdale's and go-forward Bluemercury comp sales include all store locations in digital.

As a reminder, on February 18, we announced an update to our non-GAAP financial disclosures, the details of which are available in the Form 8-K. These changes do not impact our historical or future GAAP metrics and disclosures. The updated disclosures, which encompass comparable sales, OLM dollar sales, revenues and non-GAAP earnings are intended to both simplify disclosures and provide increased clarity on the key metrics that support our growth profile and go-forward operating performance. Beginning this quarter, adjusted earnings metrics reflect our new non-GAAP metrics. 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 SEC. 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.

Antony Spring: Thank you, Pam. Good morning, and thank you for joining us today. I'm pleased with the strong start to the year. Our Bold New Chapter initiatives continue to gain momentum. In the first quarter, we delivered enterprise-wide growth, better-than-expected performance across all key metrics and our best comparable sales in four years with all nameplates and channels positive. These broad-based operational and financial improvements reflect the strength and viability of the Bold New Chapter strategy. Our customer-led focus is resonating and driving tangible results. Macy's Inc. net sales, comparable sales, adjusted EBITDA and adjusted diluted EPS all exceeded our guidance. Macy's nameplate delivered its fourth consecutive quarter of positive comps and led by our Reimagine 200 locations.

Bloomingdale's has achieved double-digit comps and its best first quarter sales volume on record, and Bluemercury delivered another quarter of comparable sales growth. I want to take a moment to thank our colleagues, their dedication to the Bold New Chapter strategy and consistent focus on our customer are integral to the progress we're making. Through strong cross-functional collaboration, we continue to learn from each other without becoming one another. Our results reflect the progress we're making on each pillar of the Bold New Chapter strategy. Macy's, Inc. delivered 3% comparable sales growth, representing our strongest first quarter since 2022, with go-forward Macy's, Inc. rising 3.1%.

Adjusted EPS of $0.13 was well above the high end of our guidance on stronger sales and expense management. Now let's discuss each pillar of the strategy, beginning with strengthening and reimagining Macy's. Macy's nameplate achieved positive 1.6% comparable sales with Reimagine locations growing 2.4%. We are encouraged by the Reimagine performance, which have delivered positive comparable sales in 8 of the last 9 quarters. During the first quarter, we expanded learnings to an additional 75 locations, bringing the Reimagine base to 200. As a reminder, these locations account for nearly 60% of our go-forward Macy's stores and were about 75% of our fiscal 2025 go-forward Macy's store sales.

And while we achieved our highest first quarter, Macy's nameplate Net Promoter Score on record, the Reimagine locations continue to score even higher. Digital also contributed to positive comparable sales results. Our improved digital experience reflects the foundational platform improvements we have implemented over the last several years and is supported by our store and brand initiatives. At the same time, our curated marketplace is further enhancing our fashion authority position by complementing and expanding our category and brand matrix. During the quarter, we introduced Ask Macy's, our new AI-powered conversational shopping assistant. Shaped by data and insights from thousands of colleagues, Ask Macy's creates a connected customer journey.

It serves as a starting point for discovery across channels and helps deliver the best Macy's at every touch point. Although early days, initial response has been favorable. As a multi-brand, multi-category and multigenerational retailer, we are uniquely positioned to provide inspiration for our customers everyday moments, holidays, events and everything in between. Across both stores and digital, we are benefiting from the optimization or refinement of our merchandise strategy. We've made strides in modernizing our assortments and improving curation. Our point of view across best, better and good price points classifications has become more clearly defined, and we're showing up with increased conviction.

With our strong and stable balance sheet, large addressable market, loyal customer base and steadily improving results, we're gaining market interest. We are continuously working to improve our brand matrix, reduce product redundancies and offer more fashion. During the first quarter, we introduced several new brands, including Rotie's, Donna Karan Weekend and Ted Baker Men's. In addition, we expanded Abercrombie Kids offerings to infants and toddlers and further expanded the store distribution of Reiss Free People Theory and Rodd & Gunn. Looking at category performance. watches, petites, dresses, women's career, kids, handbags, fragrances, and shoes all outperformed. We did see some softer trends including big-ticket home, especially furniture and our plus-size business.

Overall, our Macy's customers have noticed the positive changes across product, messaging and experience. And as we look ahead, I am confident we have the right initiatives in place to deliver long-term profitable growth. Turning to the second pillar of the Bold New Chapter strategy, accelerating and differentiating luxury. Bloomingdale's achieved a positive 10.2% comp and its highest first quarter sales in its 154-year history. Our premium contemporary to luxury positioning is unique, enabling us to capture and maintain customer interest. Through matrix elevation, new brand additions a vibrant shopping environment, including collaborations, activations and personalized customer service, we are providing a compelling and distinct experience. Recent strength has been broad-based with powerful growth in each channel.

Performance is anchored on multiple strategic levers, and we're confident that we can continue to expand share of wallet on a brand-by-brand, location-by-location and category-by-category basis. Looking at the first quarter, ready-to-wear men's apparel, fine jewelry, shoes, tabletop, all outperformed. We expanded the reach of a very important client program, which caters to our highest vendors and see ongoing growth opportunity with this customer. We also hosted our newest campaign, California Love, which featured California-inspired events, animation and brand exclusives. The campaign served as a strong driver of traffic and customer engagement and generated meaningful editorial media coverage. We introduced several new luxury brands, including Chloe Ready-to-Wear, Isabel Marant, Phoebe Philo, Park Denim, Aireloom and Kate Shoes.

These brands complement our existing luxury matrix, generating incremental sales among our loyal multigenerational customer base as well as attracting new clients. Potential and existing partners appreciate the transitional journey we're on which gives them the confidence to enter and expand their distribution at Bloomingdale's. Congratulations to the team on further reinforcing Bloomingdale's status as the leading modern luxury shopping destination. Rounding out the conversation on luxury, Bluemercury comparable sales growth accelerated to 6.4%. The Bluemercury customer closely aligns with the Bloomingdale's shopper. She appreciates Bluemercury's intimate relaxing and customer service-oriented environment and knowledgeable colleagues. During the quarter, results were driven by makeup, dermatological skin care and fragrances including Byredo and Parfums de Marly,as well as Dr.

Diamond's Metacine and SkinCeuticals. New and remodeled stores remained outperformers. Turning to the final pillar of our strategy, simplifying and modernizing end-to-end operations. We recently expanded its scope to incorporate optimizing and scaling enterprise-wide organizational excellence, which we believe more accurately reflects our model and innovation capabilities. This pillar supports revenue growth and customer experience enhancements and is driving efficiencies. We've been testing, refining and implementing initiatives, including AI and believe there are meaningful opportunities to better serve our customers and support our colleagues. Now I'd like to discuss our thoughts on the consumer and our outlook. The Macy's, Inc. customer, who is predominantly middle to upper income, remained resilient in the first quarter.

We found that when the product and the experience are differentiated and compelling, engagement and spend increase. During the quarter, our customer appreciated the assortments, marketing events that supported key holidays, including Valentine's Day, Presidents' Day and Easter. In the second quarter, we have continued to actively engage with our customer. We expanded our immersive Macy's Flower Show from Herald Square to our State Street location in Chicago. This event served as a strong traffic driver, drawing 800,000 customers to those stores and generating significant media coverage. At Bloomingdale's, the TV show, Margo's Got Money Troubles has pushed us further into the cultural Zeitgeist by declaring there are no victims in Bloomingdale's, a line that has gained momentum.

We quickly leveraged that powerful statement across both social and experiential activations. 2026 is our year of celebration and it's our country's 250th anniversary. In just about a month, we will host one of our signature events, the 50th Anniversary of the Macy's Fourth of July fireworks, our biggest yet. And later in the year, we'll host our 100th Macy's Thanksgiving Day Parade. And we have a new partnership with Live Nation and Major League Baseball designed to help our customers celebrate the summer. Across amphitheaters and stadiums nationwide, we will be powering fan-first experiences from moment before inspiration and in-venue surprises, the celebration nights, sweepstakes and rewards. We're also hosting a series of unique World Cup events.

At Macy's, we have transformed the mezzanine at Herald Square to an immersive and engaging World Cup experience with customer activations and official merchandise from adidas, Nike, Lids and more. And at Bloomingdale's 59th Street, we'll have a Hugo Boss David Beckham collaboration that includes a personal adherence from the soccer star himself. Between our recent results and upcoming celebrations, there's a lot to be excited about. Now turning to our guidance. We are committed to building on the momentum and remain focused on the factors that are within our control. We are pleased with our second quarter performance to date and are raising our full year outlook.

Our updated guidance incorporates better-than-expected first quarter top line and bottom line results as well as a modest increase in sales for the remaining quarters. Recognizing macroeconomic and ongoing geopolitical uncertainty, guidance provides flexibility to respond to potential changes in the competitive landscape and consumer demand. In closing, I am encouraged by the team's strong execution and our results. Customers are responding to our curated product assortments, focused service, targeted messaging and traffic driving promotions and events. This is supported by an improved end-to-end omnichannel experience.

And with five consecutive quarters of better-than-expected top line and bottom line results, four consecutive quarters of comparable sales growth and ongoing positive Reimagine comps, I am confident that the Bold New Chapter initiatives have firmly laid the foundation for sustainable, profitable growth and long-term shareholder value creation. With that, let me turn it over to Tom.

Thomas Edwards: Thank you, Tony, and good morning, everyone. In the first quarter, the Bold New Chapter continued to gain traction across all three pillars of our strategy. Both top and bottom line results were well above guidance. We benefited from our strongest first quarter comparable sales results in four years, delivered net sales growth for the first time since emerging from the pandemic and achieved better-than-expected results across key income statement metrics. Our progress is fueled by the dedication and commitment of our teams and partners. The substantive enterprise-wide improvements we are making are resonating and our customers are responding. Looking at a detailed view of the quarter, beginning with Macy's, Inc. Net sales grew 1.8% to $4.7 billion.

Results were above guidance of $4.575 billion to $4.625 billion and compared to $4.6 billion last year. Excluding a roughly $40 million impact from the 14 non-go-forward store closures at the end of last year, net sales grew 2.7%. Comparable sales on a reported basis rose 3% versus guidance of 0.5% to 1.5% and negative 2% last year. Go-forward comps grew 3.1%. By nameplate, Macy's comparable sales rose 1.6%. We continue to be encouraged by the performance of the Reimagine locations, which grew 2.4%. Bloomingdale's comparable sales were up 10.2% and Bluemercury comparable sales increased 6.4%. Total revenue rose 2.1% to $4.9 billion.

Other revenue, which includes credit card and Macy's Media Network, was $210 million, up 8% versus last year. Within that, credit card revenue was $172 million, up 12% versus last year, reflecting our continued healthy credit portfolio and prudent management of net credit card losses. Macy's Media Network revenue was $38 million, 5% below last year, reflecting the timing of advertising spend on a year-over-year basis. Gross margin was $1.8 billion or 38.9% of net sales compared to 39.2% last year. Excluding an approximately 30-basis-point tariff impact, gross margin rate would have been even with last year. SG&A rate of 39.9% was better than our expectations and was flat with last year.

SG&A dollars of $1.95 billion were in line with our expectations despite higher sales and compared to $1.91 billion last year. SG&A reflects investments in Bold New Chapter initiatives to drive growth, partially offset by our always-on approach to expense savings. Adjusted EBITDA was $290 million or 5.9% of total revenue. This exceeded the high end of our guidance range of 4.9% to 5.1% and compared to $304 million or 6.3% of total revenue last year. Adjusted EPS of $0.13 was above the high end of our guidance range for a loss of $0.01 to a gain of $0.01. Results reflect a roughly $0.04 tariff impact.

Our disciplined approach to cash flow and balance sheet management continues to support our strong financial position. During the first quarter, operating cash flow was an inflow of $292 million versus an outflow of $64 million last year. And free cash flow was an inflow of $140 million versus an outflow of $203 million last year. End of quarter inventory dollars were up 3.6% compared to last year, in line with our expectations and comp sales growth. We are well positioned for summer with increased newness across price points and lower aged inventories relative to last year. Capital expenditures were $177 million, which were flat to the prior year period.

Monetization proceeds were $25 million compared to $38 million last year. In the first quarter, we returned $100 million to shareholders through a $50 million of quarterly cash dividend and $50 million of share repurchases, leaving approximately $1.1 billion remaining on our buyback authorization. And we ended the quarter with $1.3 billion of cash on our balance sheet compared to $932 million last year. Now I'd like to provide an update on our end-to-end initiatives. We continue to make meaningful progress modernizing our operations and improving effectiveness. Our China growth distribution facility is ramping nicely. We are realizing the early benefits of automation in both service levels and cost efficiencies and expect ongoing progress as we build capacity for holiday.

From an organizational point of view, we are leveraging AI, including evaluating several inventory forecasting and management initiatives to further improve our ability to meet customer needs. Looking ahead, we are confident we can build on these and other initiatives across the enterprise and find new areas of opportunity. Moving to guidance. We entered the second quarter with relevant new products supported by compelling marketing, visual presentation and events. We are encouraged by quarter-to-date results, but still have the majority of sales volume ahead. Consistent with our past practice, we are taking a prudent approach to quarterly and annual guidance, giving ourselves the flexibility to respond to changes in the competitive landscape and macroeconomic and ongoing geopolitical unknowns.

For the full year, we are raising our outlook to incorporate better-than-expected first quarter top and bottom line results. In addition, we are modestly increasing our sales for the remaining quarters. Our full year guidance also reflects updated tariff and fuel assumptions. For tariffs, our guidance now reflects current rates, which are lower than our previous assumptions. For fuel and transportation costs, we are factoring in elevated levels based on what we know today. The estimated impact of lower tariffs and higher fuel costs is net neutral for the fiscal year. We will continue to closely monitor developments as the environment evolves. Regarding tariff refunds, while we are seeking refunds, the timing and amounts remain uncertain.

As such, any potential benefit is not incorporated in our outlook. Looking at second quarter guidance, we expect net sales of approximately $4.75 billion to $4.8 billion. Last year's store closures contributed about $35 million to sales in the comparable period. Comparable sales to be approximately flat to up 1%. Adjusted EBITDA as a percent of total revenue of 6.9% to 7.2%, and adjusted diluted EPS of $0.29 to $0.34. Tariffs and fuel costs combined are expected to have a roughly $0.03 to $0.04 negative impact to EPS and a 20- to 40-basis-point negative impact to gross margin. For the full year, we now expect net sales of approximately $21.5 billion to $21.75 billion.

Fiscal 2025 store closures contributed roughly $145 million to net sales in the comparable period. Comparable sales to be approximately up 0.5% to up 1.2%, other revenue of approximately $920 million, gross margin as a percent of net sales to be 38.4% to 38.6%, reflecting a roughly 20- to 30-basis-point negative impact from tariffs and fuel. SG&A to be up 1% to 2% on a dollar basis compared to last year, with the rate roughly in line with prior year in the second and fourth quarters and above in the third quarter, reflecting timing of investments to fund growth.

Adjusted EBITDA as a percent of total revenue of 7.7% to 7.9%, interest expense of roughly $100 million and adjusted diluted EPS of $2 to $2.20, which assumes a roughly $0.10 to $0.20 combined tariff rate and fuel cost impact. In closing, it's an exciting time at Macy's, Inc. We have a clear strategy in place and the discipline and financial strength to execute. We are taking our learnings to refine and fortify each pillar of the Bold New Chapter. As I look to our future, I'm confident we have the right foundational initiatives in place to drive long-term, sustainable, profitable growth and deliver compelling value to our shareholders.

Now let me turn the call back to Tony for closing remarks.

Antony Spring: Thanks so much, Tom. We're now in the third year of our Bold New Chapter. And while there's still more work to be done, our strategy is delivering results. Initiatives are continuing to gain traction across all three pillars. We have returned to top line growth while continuing to provide value to shareholders through our dividend and stock buyback programs. As we look ahead, our strong balance sheet and cash flow generation support the necessary investments to fuel long-term profitable growth. I'm encouraged by the progress made, confident in the strategy and excited for our future. And with that, operator, we're now ready for questions.

Operator: [Operator Instructions] Our first question today is coming from Blake Anderson of Jefferies.

Blake Anderson: Congrats on a great quarter. So I wanted to start off with the comp. Can you talk about what you're seeing most recently there? Any commentary you can provide on kind of how the comp was throughout the quarter and then what you're seeing most recently versus your guide? I know there's some moving pieces with the macro in terms of gas prices and tax refunds, but kind of any update on what you're seeing most recently in your ability to deliver upside in Q2? And then with the updated guide, kind of it seems like it implies maybe flat comps in the second half.

How do you feel about your ability to continue to generate positive comps into the second half as well?

Antony Spring: Thanks, Blake. Good to talk to you. Yes, we're pleased with the second quarter performance to date, very consistent performance throughout the first quarter. There were no vagaries between one month to the next, and we really comment on the entire quarter. Just glad to see the consistency of the business across all three nameplates and the consistency of the business across multiple categories of business, to see the dress business, the women's career business, the kids business, the watch business, the women's shoe business, the men's shoe business, there are so many categories that are trending healthy right now that I'm cautiously optimistic about our ability to continue to drive our performance.

We obviously have a prudent guide relative to the geopolitical and macroeconomic factors. But the things that are within our control, we feel really good about. I'll let Tom comment on the guide for the back half of the year.

Thomas Edwards: Thanks, Tony. The guide for the back half of the year, Blake, we're really pleased to have raised our overall guidance for the year on comp sales, really reflecting the Q1 over delivery as well as additional sales through the rest of the year, which includes the back half. So as we're around a flat implied comp for that it's really benchmarked against stack comps. But what it means is our Bold New Chapter is going to continue to deliver. We're going to continue to execute against it. We're heading into the second quarter with good inventories, much newness. So very excited about the future and continuing to deliver for the consumer in the second half of the year.

Antony Spring: Yes, Blake, and I just end with, we look at the 2-year, 3-year stack, and we don't want to end up with a hockey stick in the fall. So we want to make sure that we have the opportunity to not only continue our performance, but give ourselves the opportunity to navigate the things we don't know right now.

Blake Anderson: That makes sense and very helpful. And then if I could ask a longer-term question. As part of your Bold New Chapter strategy you laid out medium-term targets of sales growth with mid-single-digit EBITDA growth. And given now there are a lot of moving pieces with tariffs, fuel, your store closures, I was just wondering, Tom, if you could update us on the underlying business, how do you feel about your confidence and visibility for margin expansion over the medium term? And what would be the factors that are in your control, you feel most that can drive upside?

Thomas Edwards: I feel really confident, Blake, about our opportunity to grow the business and to deliver long-term profitable growth. And I'd start by saying that we are already delivering that growth. In Q1, EPS was up versus prior year. We've provided some additional new metrics earlier this year that showed last year, we were delivering growth, excluding tariffs on the bottom line as well as EBITDA. So we feel good about our opportunities. And the other thing I'd point out is in Q1, as we over deliver revenue, it drops to the bottom line. So we can show how we can flow through.

We have opportunities on gross margin to continue to improve assortment, add new brands, manage inventory with many new initiatives and continue to deliver excellent customer experience. And on SG&A, we'll continue to lever that and invest with rigor to drive the top line.

Operator: Our next question is coming from Matthew Boss of JPMorgan.

Matthew Boss: Congrats on a very nice quarter. So two questions. So, Tony, could you elaborate on the cross-functional collaboration that you cited that's happening between Macy's and Bloomingdale's? Really how you think has impacted results to date and the opportunities that you think it provides maybe relative to the underlying Bold New chapter plan? And then, Tom, could you speak to the drivers of gross margin versus plan in the first quarter, and then the underlying build to get to the 40 to 60 basis points of expansion for the year as we think about the second quarter versus back half?

Antony Spring: Thanks, Matt. yes, we've got a healthier cross collaboration. Some is obviously having spent 35, 36 years at Bloomingdale's and coming to Macy's and building bridges in terms of talent between the two brands, making sure that in our reporting, we are looking at the business in a comparable fashion and trying to better understand underlying trends, geographic trends, sharing where we see brand opportunities, where things overlap. And as you know, at the same time, making sure that we can learn from each other without becoming one another.

I have every intention of making sure that we preserve the specialness and uniqueness of Bloomingdale's and build on the 10.2% comp growth they had in the first quarter, and at the same time, make Macy's more fashionable, make sure that we are editing out brands and styles and redundancies within our assortment as we flow new brands into the Macy's architecture that include theory and Rodd & Gunn and Free People and more to come. Because I think that there is this opportunity with 38 million people shopping at Bloomingdale's -- at Macy's and 4 million people shopping at Bloomingdale's that we can have our cake and eat it too.

We can absolutely be better collaboratively and at the same time, make sure that we have the distinction that's necessary for both brands.

Thomas Edwards: And Matt, with regard to gross margin, in Q1, excluding tariffs, our gross margin was flat to prior year. And just looking at what we said in Q4 and giving guidance to be down in Q1 and then build over the course of the year. We still expect that build. And what's driving it for the year is multiple factors. We're expanding our Reimagine program from 125 to 200. That's already delivering results. Expect to see that continue.

We expect to drive regular price sell-through multiple initiatives, including to Reimagine, how we are managing inventory on a day-to-day, month-to-month basis, leveraging areas like hold and flow that have been working so well in the past and using new forecasting tools, which we're exploring as part of our AI initiatives on how we both forecast demand and replenishment. So there's a number of underlying factors here that are helping support our long-term business.

Operator: Our next question is coming from Brooke Roach of Goldman Sachs.

Brooke Roach: Tony, can you speak to the drivers of the comp acceleration that you're seeing across banner? What proportion of the comp gains that you're seeing are driven by traffic versus ticket? And within that, what are you seeing in AUR?

Antony Spring: Thanks, Brooke. We are seeing continued AUR growth and consistent traffic. And I think we're balancing the improvements in AUR with a slight reduction in conversion, but still an overall basket size increase. So more customers shopping, people being choiceful as they look at the value equation between prices and categories, but overall, architected by Macy's and Bloomingdale's. We think there's tremendous opportunity to make sure that the range of our price points across both banners makes sense relative to the types of consumers that we're catering to. So we want best, better, good across the pyramid. We also will see AUR expansion when we're selling more expensive materials. So that could be leather versus vegan leather.

That could be linen versus cotton. And so we have really challenged our teams to make sure that we are not undershooting the customer, we are embracing the best of what is happening in fashion, that we are making sure that our assortment architecture has the right variety necessary to attract as many consumers as possible while, at the same time, we've got our off-price offering with Backstage at Macy's and the outlet store Bloomingdale's. So we feel like we've got on the barbell, we're catering to it in an effective manner.

Thomas Edwards: And Brooke, I'd add that we've been seeing this algorithm, higher AUR, consistent traffic and higher basket size over multiple quarters of a very long period of time. So it's one we want to drive going forward and support our long-term goals to grow.

Brooke Roach: Great. And then just a follow-up for Tom. Can you quantify the size of the headwind to the business that you're currently seeing from higher fuel costs? How are you thinking about the resiliency of your business if oil prices continue to rise into the back half of the year?

Thomas Edwards: Sure, Brooke. I'm happy to. And for fuel costs, we expect them to be a full year headwind of about 10 to 20 basis points. And that's fuel EPS up to $0.15 from about $0.05 to $0.15. And we're incorporating in our outlook what we see as the current view of fuel and it is offset by lower tariffs. So for the year, we're net neutral as we have incorporated lower tariff rates, which were, by the way, in line with the tariffs that were announced that's potentially coming into play later this year. So we feel like we're well positioned there.

And then we'll continue to monitor this closely on both fronts, tariff and fuel, but feel -- we appropriately for what we know now incorporated in our forecast.

Operator: Our next question is coming from Dana Telsey of Telsey Advisory Group.

Dana Telsey: Bloomingdale's looks terrific. 59th Street, you just got the new Prada shoe department or the new installation, it looks great. On the reimagined Macy's stores, while it was up 0.9% in Q4 accelerated to 2.4% in Q1, what are you seeing in the acceleration? And given the major events that are taking place like the 250 where you do the huge fireworks and all, how should we be thinking about marketing spend going forward? And then, Tony, how do you think about the promotional environment and what you've seen out there?

Antony Spring: Thanks, Dana. I agree. I think the Prada shoe installation at 59th Street looks outstanding. We're excited about the Reimagine 200 program. It's 8 of 9 quarters of growth with the Reimagine stores. We got all cohorts growing. We're seeing growth across multiple categories. What I love about the program is it's a recipe. It's not one idea, it's the merchandise, it's a better assortment, it's the presentation, it's better storytelling, it's more people in the stores, it's better service, record Net Promoter Scores even higher in the Reimagine stores. It's service in the fitting room. It's service in the beauty department when people sit down in a chair and decide on what their beauty regimen is.

So what I love is this last ingredient, which we've added in the last 6 to 12 months, which is local empowerment, giving our local leaders the opportunity to allocate the resources a little more effectively by floor and by area as well as add in the local ingredients that really allow us to be this national retailer that executes much more effectively on a local basis. i think marketing spend continues to be consistent.

I think what we're working on is the right balance between top of funnel and bottom of funnel, or what we're doing to kind of tell the story about the brands we sell and the fashion that we sell and the brand Macy's, Bloomingdale's and Bluemercury, and how we convert in-store and online with the right level of search marketing investment. Tom, what would you add?

Thomas Edwards: I'd add on the Reimagine stores. We're very pleased with how they're performing, and it's a great example of us investing in the business to drive growth and generating good returns on that. We have followed each tranche and seen how they have improved at the top line as well as the bottom line over time and pleased with how they are progressing going forward. We always look to be good stewards of capital and returns and feel these are great investments to improve our customer experience and drive the top line.

Dana Telsey: Any update on the promotional environment, what you're seeing?

Antony Spring: Dana, I don't see any significant changes. Normally, there needs to be a bigger glut of inventory and a significant change in consumer demand before you see the kind of causal effects of promotion. Right now, it's a very comparable promotional environment to what we've seen over the past several years.

Operator: Our next question is coming from Paul Lejuez of Citigroup.

Tracy Kogan: It's Tracy Kogan filling in for Paul. I just wanted to clarify one thing first. I think you said you see consistent traffic. And I just wanted to clarify if that meant traffic is flat? Or do you mean it is down or up consistent with 4Q. And then my second question is just on your credit portfolio. I think you mentioned that it was healthy, but I was wondering if you were seeing any signs in bad debt or payment trends that show any strain from the consumer?

Thomas Edwards: Thanks for the questions, Tracy. Regarding traffic, we saw it improve sequentially. And as Tony mentioned, it's been fairly consistent over time with AUR and basket size being the primary driver. Regarding the credit revenue, our credit, first, is a very important part of our overall Macy's ecosystem. It fits into our loyalty program, and it helps us understand how over 70% of our customers are spending and engaging with us over time. So it has a very broad meaning overall. And what we saw in the quarter was 12% growth and that was driven by the health of our credit portfolio and a reduction in net credit losses.

So we have a very strong credit environment in our portfolio, and we're going to be monitoring going forward to make sure we're taking care of that credit. Looking at the remainder of the year and ongoing, we expect the credit card business to grow at the rate of the overall business and we have many initiatives in place to drive both new cardholder acquisition and increased card usage.

Operator: Our next question is coming from Michael Binetti of Evercore ISI.

Michael Binetti: Congrats on a great quarter. let me ask you about the AUR. I saw the presentation, it was up 8.3%. That's a really big acceleration about 400 basis points from the prior quarter, if I'm looking at like-for-like numbers. And we haven't seen a level like that in a while. First, just love to see if you could talk a little bit about -- a little more specifically about what areas of the business drove that in the quarter? And then, Tom, I have to ask what do you think explains the gross margin flat, excluding tariffs at that level of AUR improvement? I think those two are usually a little more linked for you guys.

I'm trying to think about how we should think about that as we go forward in our models here?

Antony Spring: Thanks for the question, Mike. The AUR has been growing for the last couple of years at both brands. It's both the mix of business, as I was saying before, the different fabrication, the categories we're selling, more jackets versus T-shirts, the introduction of linen versus cotton, the breadth of brands that we're selling, Sam Edelman versus the size of our private brand business today. So some is the construct of our assortments is just different. It's evolving. There is more in the best bucket than in the better or the good bucket. And that's going to continue to allow us to increase the AUR. The AUR of the Macy's brand was more 5% and change.

The AUR the Bloomingdale's brand was in the 9%, 10% range. So you have a slight difference between the two brands that blends to the to the 8% and change. But I would say that we still have opportunity. We have less clearance than we had less -- a year ago, less aged goods that also gets you the back-end benefit of better AUR because you're not selling as much clearance. But we're going to continue to monitor the right levels of inventory in each of the price buckets to make sure that we're capitalizing on where we see the demand.

I would tell you, in the past, we were a little hesitant on the higher AUR product to be in stock and to give more distribution to our stores. I think we're trying to find the right balance of not undershooting the customer.

Thomas Edwards: And I'll add on the gross margin versus AUR. Q1, first, was in line with our expectations being flat, excluding tariffs. And it's really a mix of business around channel and product. Importantly, Michael, we have a line of sight to how gross margin will continue to expand over the remainder of the year and build as we move through the year.

Michael Binetti: Okay. And then if I could just ask a quick follow-up on beauty, great comp out of Bluemercury. Is -- can we get a sense of how much beauty was up across the total business? Is it your sense that the category is improving? Or was this just all execution at Bluemercury or something you did that you felt particularly strong about?

Antony Spring: I think Mike, it's the combination of brands and service. And I think all three of our brands are full-service beauty experiences. And when we have enough newness, there was a lot of newness in skincare, there was a lot of newness and fragrances. It's going to bode well for our total beauty business.

And then we are doubling down on the beauty experience via our beauty advisers, making sure we're giving a level of experience that people say that's better than self-service, that gives me a reason to kind of go to the department store, whether it's samples, whether it's a gift with purchase, whether it's someone who allows me to shop across brands, we're working to make sure that we're building on the sizable beauty business that we have at all three brands.

Operator: Our next question is coming from Chuck Grom of Gordon Haskett.

Ryan Bulger: This is Ryan Bulger on for Chuck here. I wanted to ask about the delta between the Macy's go forward at 1.6 and then the reimagined $200 million at $2.4 billion. And just kind of the underlying drivers there and what you'd expect to see on that going forward?

Antony Spring: Sure. The reimagined stores, we said, it's about 60% of our store base at 75% of the sales based on 2025 Macy's store sales. You have the 1.4% is the Macy's comp number inclusive of all the Macy's stores. So the 1.4% to the 1.6% is the real difference. And the Reimagine stores have the additional investments. And so whether that be staffing, whether that be additional brands, whether that be the additional visual enhancements. And so we're monitoring that carefully because we view that 2% to 3% growth is being very important to the overall architecture of our planning strategy going forward.

And we love seeing the Reimagine stores growing across all the cohorts and seeing the consumer respond across geographies to the changes that we're making in the Macy's name plate.

Operator: The next question is coming from Bob Drbul of BTIG.

Robert Drbul: I guess I'm curious to see, as you look into the second quarter, and you mentioned some of your World Cup initiatives, do you think that's going to be a big driver to any of your big geographies?

Antony Spring: Well, we've invested in the active category in partnership with Nike and with Adidas and to a smaller degree, with Puma and creating a reason to come to the store a reason to shop. We'll have personal appearances at both Macy's and Bloomingdale's, not just in our flagship stores, but in our local stores as well. I think these events, just like Prom or Valentine's Day kind of give the reason for the consumer to kind of come into the store, vote by being a part of something that's happening in the country.

And we view World Cup is just something that people are excited about the same way if you're in New York, you're excited about the Next right now. Or if you're watching, hopefully, the fourth of July fireworks, you're going to be excited seeing the fact that we have fireworks on both the west side and the east side this year. And we -- as a retailer, we have a responsibility to kind of give people a reason to buy, to bring in the animation to add kind of more than just a need-based purchase. This is an emotional business, and so to me, it's fun to see all the sports teams.

It's fun to see the activations and young kids all the way up to dads and moms looking to be a part of the celebration of World Cup.

Robert Drbul: Great. And I guess, just could you spend a few minutes just on the Ask Macy's, the AI utilization, and sort of what you're seeing there throughout the business?

Antony Spring: Sure, Bob. Early days. We're learning as we go. What I love seeing is the higher conversion rate for the people that are engaging with Ask Macy's because it's giving people a better prompt-driven response to the search that they're looking to complete. We're also trying to use Ask Macy's as a foundational way to help educate more of our colleagues. We view AI and humanity working together, and that creates the best possible results. But early days, pleased with the response to Ask Macy's and eventually Ask Macy's will become Ask Bloomingdale's. And so that will allow us to scale it across both brands.

Thomas Edwards: And Bob, I'd add that we have AI initiatives across the business, we have 35 tests and pilots that we're running. And we're really looking to leverage it in customer-facing, helping our associates be more effective in their roles as well as in areas like supply chain. So we're really trying to see where it can help us, and as Tony mentioned, help us serve our customer and work with humanity as well as the science.

Operator: Our next question is coming from Oliver Chen of TD Cowen.

Oliver Chen: Tony and Tom, a really exciting in terms of the growth you're seeing. Regarding back-to-school, what are your thoughts and key catalysts in terms of managing the opening and value relative to what you're clearly seeing with the best and better matrix? Also, it's competitive. So timing regarding that balance between just-in-time versus earlier due to the nature of competition? And second, as we think about artificial intelligence and labor, merchandising as well as inventory, what are your -- how would you prioritize how this is going to impact the business as the pricing and supply chain is different, but equally important to the large language models?

And how you're thinking about humanization of search and problem solution and agentic search optimization?

Antony Spring: Let me take the first part, Oliver, and then I'll let Tom take the second part. I'm excited about back-to-school. We have back to kind of camp or day camps going on right now. The kids business is really healthy across boys, girls, the infants business that we do. I love the matrix that we have that you go from our own private brands to Ralph Lauren, to Abercrombie, to Nike, to Jordan. We have a unique, I think, compelling assortment across both genders. And so I think we're becoming more of a destination for the kids category. Team is doing a terrific job.

And I think the assortments that I've seen look great, and we're doing a better job, I think, by the way, of being set up for the South, which goes back to school earlier versus the north that obviously goes back to school after Labor Day. Let me just say this on AI, and then I'll let Tom add his comments as well. Our AI strategy is our Bold New Chapter. First is we start with the Bold New Chapter. And how do we power the Bold New Chapter?

It's through our belief that AI can help us drive revenue, make sure that we're giving our colleagues an easier experience and our customers a better experience, and making sure that we're creating efficiencies like in the supply chain example you were raising. So our strategy is the Bold New Chapter, and our drivers kind of come from all the different proof of concepts we have in AI. Tom, what would you add?

Thomas Edwards: And I'd add, Oliver, that we're good stewards of returns and ROI and very cognizant that AI can be costly to implement as well as providing great benefits on the other end, and that could be helping associates in store, in the office or in the supply chain where we're already using it in places like China Grove. So we're going to keep that in mind and make sure that as we leverage it, it's leveraged in a way that makes sense from a return perspective, and then, as Tony mentioned, support our overall strategy.

Oliver Chen: One follow-up, Reimagine, we've noticed better service and also a compelling product assortment. Within that, what should we know about your private label initiatives as you have really important franchises there? And I'm sure you're thinking about how to manage the differentiation amongst the private labels as well as innovation. And also Reimagine going forward, can you speed up the implementation to the whole base in terms of the progress you're seeing there?

Antony Spring: Thanks, Oliver. Yes, we're very proud and excited about the growth in the Reimagine stores, 2.4% across geographies, across all cohorts of stores, and we're going to go as fast as we possibly can. Right now, we're focused on the 200 stores that represent 60% of the store base and 75% of the Macy's store sales. The customer is responding. They like the balance of market brands and private brands. They like the balance of newness and fashion and basics. Our private brands are a strategy, but the private brands really serve as a part of the assortment architecture area by area. And we have parts of the business where private brand is 30% or 40% of the business.

We have parts of the business where private brand is less than 3% of the business. And it has to be what's appropriate in the individual category. Are the market brands not servicing our needs and does private brands have a reason for being, can we make more money by having something in the commodity in private brands? And if we don't need to duplicate what is necessary and better potentially from the market brands with what we do in private brands. So obviously have a private brand strategy. We are committed to building our private brand business, but it's going to be more now based on what's appropriate area by area based on our assortment architecture.

Operator: The next question is coming from Simeon Siegel of Guggenheim Securities.

Simeon Siegel: Tony, really encouraging to hear the breadth of categories that are working. Just any high-level thoughts on what areas might be lagging and where you still see meaningful to improve there? And then, Tom, can you just elaborate on the marketing timing shift within the Macy's Media Network at all and how you're thinking about media versus credit card sales embedded within the full year other guide?

Antony Spring: Sure. Thanks, Simeon. We've mentioned the softness in the big-ticket business, particularly furniture. I think that the tariffs, in that case, made some of our products more expensive and the consumer push back. I also think the category has been softer just based on interest rates and the overall mortgage environment. So we're working hard to change the trajectory of our furniture business. The other business that we saw softer was in plus sizes, and that, again, for us has been soft for some time. So the team is busy at work trying to improve the quality of our assortments and make sure we have the right representation for the plus size customer.

We're just excited by the fact that we have so many categories right now that are trending positive. And I think it's a good indication that there is more working than not across both Macy's, Bloomingdale's and Bluemercury.

Thomas Edwards: And Simeon, with regard to Macy's Media Network and credit card revenue, Macy's Media Network was down 5% in the quarter due to the timing of spending, but we have a line of sight to grow this business for the year. And it's a very important revenue stream that builds on the Macy's brand equity and one that we're very excited about. It is still in early stages as we're growing it. We're focused on engaging with current and new advertisers, activating growth initiatives, including the Amazon Ad partnership that we announced last year. And it is a real strong part of the broader Macy's ecosystem.

So we expect growth for the year, and we expect it to build over the course of the year. With regard to the credit card, the benefit of the net credit losses was taken in Q1. Going forward, we would expect the growth of the credit card is more in line with the overall business. And between the two of them, our goal and outlook for the year of $920 million of revenue is unchanged from our prior outlook and reflects growth year-over-year.

Operator: Our next question is coming from Jay Sole of UBS.

Jay Sole: Just want to follow up on the gross margin discussion. It looks like for EBITDA for Q2, you're guiding to EBITDA margin down 60 to 90 bps, and you're talking about SG&A flat as a percentage of sales. So I guess that implies gross margin should be down about 60 to 90 bps. Do we have that right? And then what will be driving that?

Thomas Edwards: Gross margin, we expect to be fairly consistent, excluding tariffs in Q2 and the tariffs and the fuel costs, which were new for the quarter are around at 20 to 40 bps impact. So again, as we look forward to the year, Jay, we look to continue to grow the underlying gross margin and expand through the back half of the year.

Operator: The next question is coming from Marni Shapiro of Retail Tracker.

Marni Shapiro: Congratulation. So I had two very quick questions. The marketing, how should we think about it in the back half of the year? Because you've appraised like the 100th parade coming up in the fourth quarter, and that's seems to be a pretty big deal. So I'm wondering if it's a little bit more weighted than usual to the fourth quarter? And do you have events planned around that? And then just I think you mentioned that you have more people coming into the brand. Are you seeing younger shoppers come in? And are they signing up for credit cards and the loyalty program and the whole arrangement at Macy's?

Antony Spring: Thanks, Marni. Yes, Go Nicks is right. We're excited about the parade. We had to have the fireworks first and the World Cup, but the 50th fireworks. We have lots of products for the 50th fireworks as well as the first time ever, the East side and the West side, we'll have Fireworks, the partnership with MLB and stadium activations. And yes, the 100th parade is going to be like never before. And we are busy at work trying to make sure that we have once-in-a-lifetime moments that will be a part of that overall celebration.

It's a great partnership between merchandise, marketing and digital, that brings it all to life to make sure that we deliver something that's meaningful and memorable for the consumer. We're absolutely attracting new customers to both Macy's, Bloomingdale's and -- I keep saying both, to Macy's, Bloomingdale's and Bluemercury, across all three brands. We are seeing sign-ups of credit cards to all generations of customers. It's making sure that the loyalty program first kind of credit second is that there's a reason to be a part of the membership of these brands that there's something exciting to be a part of beyond just the points or the discount.

And I think the teams are doing a nice job in that regard. And then finally, I would say we sell brands. So to your report, whether it's Addicted, whether it's Birkenstock, whether it's UGG, whether it's Levi's, whether it's Ralph Lauren, whether it's Coach, the better our brands do at attracting Gen Z and Gen Alpha, the more business we are going to have because we're the biggest partner for many of these brands.

Thomas Edwards: And I'd add, Marni, that on the credit card and loyalty and the sign-ups, we've talked about in the past, applications being up as we've worked across both digital and stores to engage with new customers. and bring them into our program. So we're very excited about the potential to continue to drive our credit card and loyalty program.

Operator: The next question is coming from Janet Kloppenburg of JJK Research Associates.

Janet Kloppenburg: Congratulations. I just have one question. I think you said that traffic has been consistent. And I think you also said that marketing as a percentage of sales might be flat. So I'm wondering if you need to invest in marketing to get the traffic up in the stores to tell the customer, how Macy's has changed, how it's been upgraded? And obviously, that's working, but maybe there's more opportunity there.

Antony Spring: Thanks, Janet. I appreciate the challenge. I think there's what you spend and there's what you talk about. So one could argue, we spend enough on marketing. We need to spend some of that money to better communicate the changes we're making, which is the challenge that we accept. We need to have a better balance of the top of funnel and bottom of funnel and make sure that there is a communication about the why in addition to the what. We are constantly looking at geographies and the business between physical and digital.

I'm less concerned, frankly, about our traffic than I am about making sure that we get the right conversion on the quality of the assortment that we're providing for the customer without unnecessary levels of discounting. So I think the team has done a really good job of balancing where the customer is paying full price, where the customer is excited by the assortment, converting that customer at full margin and then taking the necessary markdowns on things that aren't working as well. Tom, what would you add?

Thomas Edwards: Janet, I'd add that I really enjoy my partnership with our CMO, and we take a very disciplined approach to marketing spending. And I'm a big supporter of making sure we support the brand, but also drive results. So we're looking at that on an ongoing basis, and we do want to leverage marquee events. I'd also add, Janet, this is all supported by a really robust strong free cash flow and strong free cash flow yield as well as a healthy balance sheet with no maturities out to 2030. So we have the flexibility to invest both in the business in other areas as well as marketing as we move forward.

Operator: Ladies and gentlemen, that brings us to the end of today's question-and-answer session. I would like to turn the floor back over to Mr. Spring for closing comments.

Antony Spring: Thank you, everybody, for your participation. Just a reminder, please make sure you watch our fireworks on the 4th of July. They're going to be bigger, better than ever before with some incredible performances, and a big shout out and thank you to the Parade and Fireworks team for what I know is going to be a wonderful day for the brand. Have a good week, everybody.

Operator: Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.

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