Q1 2026 Ross Stores Inc Earnings Call

May 21, 2026

Speaker #1: Good afternoon, and welcome to the Ross Stores first quarter 2026 earnings release conference call. The call will begin with prepared comments by management, followed by a question-and-answer session.

Operator: Good afternoon, welcome to the Ross Stores Q1 2026 earnings release conference call. The call will begin with prepared comments by management, followed by a question-and-answer session. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Before we get started, on behalf of Ross Stores, I would like to note that the comments made on this call will contain forward-looking statements regarding expectations about future growth and financial results, including sales and earnings forecasts, new store openings, and other matters that are based on the company's current forecast of aspects of its future business. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from historical performance or current expectations.

Speaker #1: If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. Before we get started, on behalf of ROSS STORES, I would like to note that the comments made on this call will contain forward-looking statements regarding expectations about future growth and financial results, including sales and earnings forecasts, new store openings, and other matters that are based on the company's current forecast of aspects of its future business.

Operator: Before we get started, on behalf of Ross Stores, I would like to note that the comments made on this call will contain forward-looking statements regarding expectations about future growth and financial results, including sales and earnings forecasts, new store openings, and other matters that are based on the company's current forecast of aspects of its future business. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from historical performance or current expectations.

Speaker #1: These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from historical performance or current expectations. Risk factors are included in today's press release and the company's fiscal 2025 Form 10-K and fiscal 2026 Form 8-Ks on file with the SEC.

Operator: Risk factors are included in today's press release and the company's fiscal 2025 Form 10-K and fiscal 2026 Form 8-K on file with the SEC. Now I'd like to turn the call over to James Conroy, Chief Executive Officer.

Speaker #1: And now, I'd like to turn the call over to Jim Conroy, Chief Executive Officer.

Speaker #2: Thank you, John, and good afternoon, everyone. Joining me on our call today are Michael Hartshorn, Group President and Chief Operating Officer; Bill Sheehan, Executive Vice President and Chief Financial Officer; and Connie Kao, Senior Vice President, Investor Relations.

James Conroy: Thank you, John. Good afternoon, everyone. Joining me on our call today are Michael Hartshorn, Group President and Chief Operating Officer, Bill Sheehan, Executive Vice President and Chief Financial Officer, and Connie Kao, Senior Vice President, Investor Relations. Before we walk through the results, I would like to thank our associates for an exceptional Q1. The entire organization contributed to the very strong performance. Our marketing team drove strong customer acquisition and engagement through a combination of creative messaging and changes to our media mix. Our merchants and planners delivered compelling assortments and worked tirelessly to secure product to feed the outside demand. Our supply chain network stepped up their efforts to keep the stores in stock in a timely manner. Finally, our stores team executed extremely well in supporting the increased product flow and customer activity.

Speaker #2: Before we walk through the results, I would like to thank our associates for an exceptional first quarter. The entire organization contributed to the very strong performance.

Speaker #2: Our marketing team drove strong customer acquisition and engagement through a combination of creative messaging and changes to our media mix; our merchants and planners delivered compelling assortments and worked tirelessly to secure product to feed the outsized demand; our supply chain network stepped up their efforts to keep the stores in stock in a timely manner; and finally, our stores team executed extremely well in supporting the increased product flow and customer activity.

James Conroy: Our merchants and planners delivered compelling assortments and worked tirelessly to secure product to feed the outside demand. Our supply chain network stepped up their efforts to keep the stores in stock in a timely manner. Finally, our stores team executed extremely well in supporting the increased product flow and customer activity.

Speaker #2: It was a remarkable group effort, and I couldn't be more proud of the teamwork demonstrated across the entire organization. Thank you to the entire team.

James Conroy: It was a remarkable group effort, and I couldn't be more proud of the teamwork demonstrated across the entire organization. Thank you to the entire team. I will now turn to our Q1 results. We delivered an outstanding quarter with total sales up 21% and earnings per share growth of 37%. The overall growth in total sales was driven by a very robust 17% increase in comparable store sales. While we attribute a portion of this growth to the increase in tax refunds versus last year, we are quite pleased that the underlying fundamentals of our growth were extremely healthy. The comp increase was primarily driven by a growth in transactions, and we saw healthy increases in customer count on a comp store basis across income levels, ethnicities, and all age groups, including the young customers.

Speaker #2: I will now turn to our first quarter results. We delivered an outstanding quarter with total sales growth of 21% and earnings per share growth of 37%.

Speaker #2: The overall growth in total sales was driven by a very robust 17% increase in comparable store sales. While we attribute a portion of this growth to the increase in tax refunds versus last year, we are quite pleased that the underlying fundamentals of our growth were extremely healthy.

James Conroy: While we attribute a portion of this growth to the increase in tax refunds versus last year, we are quite pleased that the underlying fundamentals of our growth were extremely healthy. The comp increase was primarily driven by a growth in transactions, and we saw healthy increases in customer count on a comp store basis across income levels, ethnicities, and all age groups, including the young customers.

Speaker #2: The comp increase was primarily driven by a growth in transactions, and we saw healthy increases in customer count on a comp store basis across income levels, ethnicities, and all age groups, including the young customer.

Speaker #2: In terms of monthly cadence, the quarter started strongly as we transitioned well from the holiday selling season into spring, supported by more balanced inventory levels that allowed us to drive strong demand in February, where we have historically struggled.

James Conroy: In terms of monthly cadence, the quarter started strongly as we transitioned well from the holiday selling season into spring, supported by more balanced inventory levels that allowed us to drive strong demands in February, where we historically struggled. The strength continued with solid mid-teen comps for the balance of the quarter. Performance at Ross was broad-based across both merchandise areas and geographies. While ladies and cosmetics were our strongest businesses, every major merchandise category posted comp growth in the teens or higher. Similarly, we saw strength across the entire country, with the Midwest performing the best. dd's DISCOUNTS also delivered solid top-line sales with strong performance across merchandise categories and geographic regions. Moving to inventory, consolidated inventories at the end of the quarter were up 12%, and packaway represented 36% of total inventory, compared with 41% last year.

Speaker #2: The strength continued with solid mid-teens comps for the balance of the quarter. Performance at Ross was broad-based across both merchandise areas and geographies. While Ladies and Cosmetics were our strongest businesses, every major merchandise category posted comp growth in the teens or higher.

Speaker #2: Similarly, we saw strength across the entire country, with the Midwest performing the best. CD's discounts also delivered solid top-line sales, with strong performance across merchandise categories and geographic regions.

James Conroy: Similarly, we saw strength across the entire country, with the Midwest performing the best. dd's DISCOUNTS also delivered solid top-line sales with strong performance across merchandise categories and geographic regions. Moving to inventory, consolidated inventories at the end of the quarter were up 12%, and packaway represented 36% of total inventory, compared with 41% last year.

Speaker #2: Moving to inventory, consolidated inventories at the end of the quarter were up 12%, and packaway represented 36% of total inventory compared with 41% last year.

Speaker #2: We are pleased with the overall level and composition of our inventory entering the second quarter. Turning to store growth, we expanded into new and existing markets and opened 13 new Ross and 4 dd’s DISCOUNTS locations in the first quarter.

James Conroy: We are pleased with the overall level and composition of our inventory entering Q2. Turning to store growth, we expanded into new and existing markets and opened 13 new Ross and 4 dd's DISCOUNTS locations in Q1. We continue to plan for 5% unit growth for approximately 110 new stores this year, comprised of about 85 Ross and 25 dd's. As usual, these numbers do not reflect our plans to close or relocate about 10 to 15 older stores. Consistent with our performance in 2025, we continue to be encouraged by the strength of the store openings in both new and existing markets. Overall, we remain confident in our fundamental strategy to better connect merchandising, marketing, and stores to create an improved customer experience.

James Conroy: We are pleased with the overall level and composition of our inventory entering Q2. Turning to store growth, we expanded into new and existing markets and opened 13 new Ross and four dd's DISCOUNTS locations in Q1. We continue to plan for 5% unit growth for approximately 110 new stores this year, comprised of about 85 Ross and 25 dd's. As usual, these numbers do not reflect our plans to close or relocate about 10 to 15 older stores. Consistent with our performance in 2025, we continue to be encouraged by the strength of the store openings in both new and existing markets. Overall, we remain confident in our fundamental strategy to better connect merchandising, marketing, and stores to create an improved customer experience.

Speaker #2: We continue to plan for 5% unit growth with approximately 110 new stores this year, comprised of about 85 Ross and 25 DD’s. As usual, these numbers do not reflect our plans to close or relocate about 10 to 15 older stores.

Speaker #2: Consistent with our performance in 2025, we continue to be encouraged by the strength of the store openings in both new and existing markets. Overall, we remain confident in our fundamental strategy to better connect merchandising, marketing, and stores to create an improved customer experience.

Speaker #2: While the initial results are quite encouraging, we believe we are still in the early stages with many of our initiatives and see opportunities to drive continued growth in sales going forward.

James Conroy: While the initial results are quite encouraging, we believe we are still in the early stages with many of our initiatives and see opportunities to drive continued growth in sales going forward. Now, Bill will provide further details on our Q1 results and additional color on our Q2 outlook.

Speaker #2: Now, Bill will provide further details on our first quarter results and additional color on our second quarter outlook.

Speaker #3: Thank you, Jim. Turning to our financial results, starting with the first quarter. As Jim mentioned earlier, total sales for the quarter grew 21% to $6.0 billion.

William Sheehan: Thank you, Jim. Turning to our financial results, starting with Q1. As Jim mentioned earlier, total sales for the quarter grew 21% to $6.0 billion. Comparable store sales grew a very robust 17%, primarily driven by an increase in the number of transactions. Q1 2026 operating margin expanded 120 basis points to 13.4%, compared to last year's 12.2%, and significantly exceeded our expectations. Cost of goods sold was 145 basis points lower in the quarter. Merchandise margin improved by 85 basis points, while occupancy leveraged by 60 basis points on the strong sales results. Distribution and domestic freight costs declined by 15 and 10 basis points respectively. Partially offsetting these benefits were buying costs that rose 25 basis points due to higher incentives given the earnings upside. SG&A for the period rose 25 basis points due to higher incentives given the outperformance.

Speaker #3: Comparable store sales grew a very robust 17%, primarily driven by an increase in the number of transactions. First quarter 2026 operating margin expanded 120 basis points to 13.4%, compared to last year's 12.2%, and significantly exceeded our expectations.

Speaker #3: Cost of goods sold was 145 basis points lower in the quarter. Merchandise margin improved by 85 basis points, while occupancy leveraged by 60 basis points on the strong sales results.

Speaker #3: Distribution and domestic freight costs declined by 15 and 10 basis points, respectively, partially offsetting these benefits were buying costs that rose 25 basis points due to higher incentives given the earnings upside.

Speaker #3: SG&A for the period rose 25 basis points due to higher incentives given the outperformance. Both marketing and store-related costs leveraged during the quarter. First quarter net income was $650 million.

William Sheehan: Both marketing and store related costs leveraged during Q1. Q1 net income, $650 million compared to $479 million last year. Earnings per share rose 37% to $2.02 from $1.47 in the prior period. Now to our shareholder return activity. As noted in today's release, we repurchased 1.5 million shares during Q1 for an aggregate total cost of $319 million under the new two year, $2.55 billion authorization approved by our board of directors in March of this year. We remain on track to buy back a total of $1.275 billion in stock during 2026. Before turning to our forward outlook, I'd like to briefly address tariff refunds. Like other companies, we have submitted refund claims for tariffs. Given ongoing uncertainties related to the timing and ultimate amount of the reimbursement, we've excluded potential refunds from our forward guidance.

Speaker #3: Compared to $479 million last year, earnings per share rose 37% to $2.02 from $1.47 in the prior period. Now to our shareholder return activity.

Speaker #3: As noted in today's release, we repurchased 1.5 million shares during the quarter, for an aggregate total cost of $319 million. Under the new two-year $2.55 billion authorization approved by our Board of Directors in March of this year, we remain on track to buy back a total of $1.275 billion in stock during 2026.

Speaker #3: Before turning to our forward outlook, I'd like to briefly address tariff refunds. Like other companies, we have submitted refund claims for tariffs. Given ongoing uncertainties related to the timing and ultimate amount of the reimbursement, we have excluded potential refunds from our forward guidance.

Speaker #3: Now turning to our outlook for the second quarter. As Jim noted earlier, we exited spring with solid momentum. As a result, we are projecting comparable store sales for the 13 weeks ending August 1, 2026, to be up 6% to 7% and earnings per share to be in the range of $1.85 to $1.93.

William Sheehan: Turning to our outlook for Q2. As Jim noted earlier, we exited spring with solid momentum. We are projecting comparable store sales for the 13 weeks ending 1 August 2026 to be up 6% to 7%, and EPS to be in the range of $1.85 to 1.93. The operating statement assumptions that support our Q2 guidance include the following. Total sales are projected to increase 9% to 11% versus last year. If same store sales perform in line with our forecast, operating margin for Q2 is expected to be in the range of 12.8% to 13.0%, compared to 11.5% last year. The expected improvement reflects an increase in merchandise margin, as well as lower distribution costs as we anniversary the opening of the new distribution center and tariff-related ticketing costs in Q2 2025.

Speaker #3: The operating statement assumptions that support our second quarter guidance include the following: Total sales are projected to increase 9 to 11 percent versus last year.

Speaker #3: If same store sales perform in line with our forecast, operating margin for the second quarter is expected to be in the range of 12.8 to 13.0 percent, compared to 11.5 percent last year.

Speaker #3: The expected improvement reflects an increase in merchandise margin, as well as lower distribution costs, as we anniversary the opening of the new distribution center and tariff-related ticketing costs in the second quarter of 2025.

Speaker #3: We plan to add 47 new stores consisting of 35 Ross and 12 dd's DISCOUNTS during the period. Net interest income is estimated to be $24 million.

William Sheehan: We plan to add 47 new stores, consisting of 35 Ross and 12 dd's DISCOUNTS during the period. Net interest income is estimated to be $24 million. Our tax rate is expected to be approximately 25%, and weighted average diluted shares outstanding are forecasted to be about 320 million. Turning to the full year. We are raising our fiscal 2026 sales and earnings guidance to reflect the exceptional Q1 results and the solid Q2 guidance. Our assumptions for the H2 remain unchanged. Comparable store sales growth for fiscal 2026 are forecasted to increase 6% to 7%, on top of a 5% gain last year. Earnings per share for the full year are now projected to be in the range of $7.50 to $7.74, up 13% to 17% when compared to $6.61 last year.

Speaker #3: Our tax rate is expected to be approximately 25%, and weighted average diluted shares outstanding are forecasted to be about 320 million. Now, turning to the full year.

Speaker #3: We are raising our fiscal 2026 sales and earnings guidance to reflect the exceptional first quarter results and the solid second quarter guidance. In addition, our assumptions for the second half remain unchanged.

Speaker #3: As a result, comparable store sales growth for fiscal 2026 is forecasted to increase 6 to 7 percent, on top of a 5 percent gain last year.

Speaker #3: Earnings per share for the full year are now projected to be in the range of $7.50 to $7.74, up 13 to 17 percent when compared to $6.61 last year.

Speaker #3: Now I will turn the call back to Jim for closing comments. Thank you, Bill. We are very encouraged by the strong momentum to start the year.

William Sheehan: Now I will turn the call back to James Conroy for closing comments.

James Conroy: Thank you, Bill. We are very encouraged by the strong momentum to start the year. I would like to take one more moment and recognize the entire team across the company. We were able to grow sales in the quarter by more than $1 billion and posted the highest same store sales growth in the company's 40 year history. Thank you all for all of your hard work and for the fantastic execution on our new growth initiatives. At this point, we would like to open the call and respond to any questions that you may have. John?

Speaker #3: I would like to take one more moment and recognize the entire team across the company. We were able to grow sales in the quarter by more than $1 billion and posted the highest same-store sales growth in the company's 40-year history.

Speaker #3: Thank you all for your hard work and for the fantastic execution on our new growth initiatives. At this point, we would like to open the call and respond to any questions that you may have.

Speaker #3: John?

Speaker #2: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit yourself to one question and one follow-up. Thank you. One moment please while we poll for questions. The first question comes from the line of Matthew Boss with JPMorgan. Please proceed.

Speaker #2: A confirmation tone will indicate that your line is in the question queue. You may press *2 if you'd like to remove your question from the queue.

Speaker #2: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit yourself to one question and one follow-up.

Speaker #2: Thank you. One moment, please, while we pull for questions. And the first question comes from the line of Matthew Boss with JPMorgan. Please proceed.

Speaker #4: Great, and congrats on a really great quarter.

Matthew Boss: Great, congrats on a really great quarter.

Speaker #3: Thank you, Matt.

James Conroy: Thank you, Matt.

Speaker #2: So, Jim, I guess the question is, could you help us to bottoms-up build, whether it's the 17% comp in the first quarter, or 9% comps if I look at trends over the past year?

Matthew Boss: Jim, I guess the question is, could you help us to bottoms up build whether it's the 17% comp in the Q1 or 9% comps if I look at trends over the past year, and maybe just relative to the consistent 4% comp that the business generated pre-pandemic. What I'm trying to get at is how durable you believe that the drivers that's putting together these kind of comps are today, and anything that you believe the business would need to give back as we think multi-year.

Speaker #2: And maybe just relative to the consistent 4% comp that the business generated pre-pandemic, what I'm trying to get at is how durable you believe the drivers that are putting together these kinds of comps are today, and if there's anything you believe the business would need to give back as we think multi-year.

Speaker #3: Sure. Great question. The company performed extremely well for years before I got here. I think if we made any changes, it's really a shift towards more focus on customer acquisition.

James Conroy: Sure. Great question. The company performed extremely well for years before I got here. I think if we made any changes, it's really a shift towards more focus on customer acquisition. If you think of the health of our comp, and I don't think all comp sales growth is created equally. The health of our comp has been driven by transactions. For the third consecutive quarter, and it's even more driven by transactions this quarter than even in the Q4 and the Q3 in terms of the transactions as a component of their overall count. In terms of the durability, those transactions are driven by more customers. We're seeing a double-digit increase in customer count on a comp store basis. We're seeing that very strong growth across all ethnicities, all age groups, including the young customer, all income levels.

Speaker #3: So if you think of the health of our comp, and I don't think all comp sales growth is created equally. So the health of our comp has been driven by transactions for the third consecutive quarter.

Speaker #3: And it's even more driven by transactions this quarter than even in the fourth quarter and the third quarter, in terms of the transactions as a component of their overall comp.

Speaker #3: In terms of the durability, those transactions are driven by more customers. So we're seeing a double-digit increase in customer count on a comp store basis; we're seeing that very strong growth across all ethnicities, all age groups, including the young customer, and all income levels.

James Conroy: If you think about the flywheel concept of bringing in more customers through marketing initiatives, great in-store environment, great merchandising selection, getting them in the store, converting the shoppers into buyers with just compelling assortments, tidier stores, and better in-store merchandising. That just drives more comp store sales. That gets you more store labor and more marketing. We talked about this on the last call. We just have gotten started on many of these initiatives. I think it is durable. We probably had 2 unique cases in Q1. 1 was idiosyncratic to Ross, which was Q1 historically had been 1 where we were very conservative. We probably had a little bit more pent-up demand to go after.

Speaker #3: And then, if you think about the flywheel concept of bringing in more customers through marketing initiatives, great in-store environment, great merchandise selection—getting them in the store, converting shoppers into buyers with just compelling assortments, tidier stores, and better in-store merchandise—and that just drives more comp store sales.

Speaker #3: It gives you more store labor and more marketing, and we talked about this on the last call. But we just have gotten started on many of these initiatives.

Speaker #3: So I think it is durable. We probably had two unique cases in the first quarter: one was idiosyncratic to Ross, which was the first quarter that historically had been one where we were very conservative.

Speaker #3: So we probably had a little bit more pent-up demand to go after. The second one was across all of retail, at least all of retail at our kind of price tier.

James Conroy: The second one was across all of retail, at least all of retail at our kind of price tier, which is, we do believe that some portion of the sort of outsized comp could be attributed to higher tax rebates versus last year. Even if you strip those two things out, that we just had a very strong quarter and are quite pleased. It's a really great team effort with every function in the business contributing.

Speaker #3: Which is, we do believe that some portion of the sort of outsized comp could be attributed to higher tax rebates versus last year. But even if you strip those two things out, we just had a very, very strong quarter.

Speaker #3: And quite pleased, just a really great team effort, with every function in the business contributing.

Speaker #2: Great, great caller. Jim, you cited exiting the quarter with continued momentum, and I know you don't lay out a 6% to 7% forecast lightly.

Matthew Boss: Great color. Jim, you cited exiting the quarter with continued momentum, and I know you don't lay out 6% to 7% forecasts lightly. Have you seen any change in customer behavior so far in Q2, or just any change in trends, maybe if we're thinking about by category?

Speaker #2: Have you seen any change in customer behavior so far in the second quarter, or just any change in trends—maybe if we’re thinking about by category?

Michael Hartshorn: Matt, I wouldn't comment on Q2, but maybe it'd be helpful if I talked about the trends during Q1. The quarter started particularly strong in February. Jim talked about this a little bit, but we transitioned very well from holiday to spring selling, a place where we've struggled for a number of years. We've always been very conservative to start the year, and the merchant and planning team did a fabulous job of planning and executing against that transition. We continued to see mid-teen comp for the balance of Q1. Some of that was likely aided somewhat by the tax refunds. Jim also mentioned that. The Easter calendar shift did move some demand, and again, that's demand versus last year, earlier in Q1. All in, we started very strong and had good momentum throughout Q1.

Speaker #3: Matt, I wouldn't comment on the second quarter, but maybe it'd be helpful if I talked about the trends during the first quarter. The quarter started particularly strong in February.

Speaker #3: Jim talked about this a little bit, but we transitioned very well from holiday to spring selling, a place where we've struggled for a number of years.

Speaker #3: We've always been very, very conservative to start the year, and the merchant and planning team did a fabulous job of planning and executing against that transition.

Speaker #3: We continued to see mid-teen comp for the balance of the quarter. Some of that was likely aided somewhat by the tax refunds. Jim also mentioned that.

Speaker #3: And then the Easter calendar shift did move some demand, and again, that's demand versus last year, earlier in the quarter. So, all in, we started very strong and had a good quarter.

Speaker #2: Great, caller. Best of luck.

Matthew Boss: Great color. Best of luck.

Speaker #3: Thanks, Matt.

Michael Hartshorn: Thanks, Matt.

Speaker #2: Thank you. And the next question comes from the line of Lorraine Hutchinson with Bank of America. Please proceed.

Operator: Thank you. The next question comes from the line of Lorraine Hutchinson with Bank of America. Please proceed.

Speaker #5: Thank you. Good afternoon. The '17 was an unprecedented comp, and probably was the result of unprecedented amounts of chase inventory. So can you just talk about how comfortable you are with your inventory reserve levels and quality, and ability to continue to chase into this six to seven comp?

Lorraine Hutchinson: Thank you. Good afternoon. The 17% was an unprecedented comp and probably was the result of unprecedented amounts of chase inventory. Can you just talk about how comfortable you are with your inventory reserve levels and quality and ability to continue to chase into this 6 to 7 comp?

Speaker #3: Sure. I think we're very comfortable. The availability of closeouts in the marketplace is still outstanding. I think you'll hear that from each of the players in the industry.

James Conroy: Sure. I think we're very comfortable. The availability of closeouts in the marketplace is still outstanding. I think you'll hear that from each of the players in the industry. I think our buyers and our merchants have been very aggressive. We did really have to react to a pretty sharp spike in sales, and were able to feed demand. The other great thing is, I think the market is now recognizing that our growth rate is a bit outsized, and we're getting a lot of first calls now. Again, hats off to both of our chief merchants, Karen and Karen, and their teams for really hustling to make sure we had product available and seasonally appropriate product to transition us from holiday to spring through Easter into Mother's Day. It's just been a fantastic execution. I would not be worried about availability of product.

Speaker #3: I think our buyers are very aggressive. The whole—we did really have to react to a pretty sharp spike in sales. And we were able to feed demand.

Speaker #3: The other great thing is, I think the market is now recognizing that our growth rate is a bit outsized. And we're getting a lot of first calls now.

Speaker #3: And again, hats off to both of our chief merchants, Karen and Karen, and their teams for really hustling to make sure we had product available and seasonally appropriate product to transition us from holiday into spring, through Easter, into Mother's Day.

Speaker #3: It's just been a fantastic execution, but I'm worried about availability of product.

Speaker #5: Thank you.

Lorraine Hutchinson: Thank you.

Speaker #3: Thank you.

James Conroy: Thank you.

Speaker #2: And the next question comes from the line of Paul Lejue with Citigroup. Please proceed with your question.

Operator: The next question comes from the line of Paul Lejuez with Citigroup. Please proceed with your question.

Speaker #5: Thanks. It's Tracy Kogan filling in for Paul. I think you guys said domestic freight leveraged this quarter, and I was wondering what the driver was there, and what you're building in for the year.

Tracy Kogan: Thanks. It's Tracy Kogan filling in for Paul. I think you guys said domestic freight leveraged this quarter, and I was wondering what the driver was there and what you're building in for the year. I think ocean is a smaller piece for you, but wondering if you could give some color on what you're seeing on that piece of freight as well. I have one follow-up. Thanks.

Speaker #5: And then I think ocean is a smaller piece for you, but wondering if you could give some color on what you're seeing on that piece of freight as well.

Speaker #5: And then I have one follow-up. Thanks.

Speaker #3: Go ahead. You mentioned freight costs did lever 10 bps year over year, but higher expected fuel prices did limit some of that leverage that we typically get from that sales outperformance.

William Sheehan: As you mentioned, freight cost did lever 10 bps year over year. Higher expected fuel prices did limit some of that leverage that we typically get from that sales outperformance. Going forward, we're finalizing freight contracts as we speak, and our guidance does reflect the assumption that we'll have elevated fuel prices that will pressure freight costs, both ocean and domestic, in Q2 and the full year.

Speaker #3: And then, going forward, we're kind of finalizing freight contracts as we speak, and our guidance does reflect the assumption that we'll have elevated fuel prices.

Speaker #3: That will pressure freight costs, both ocean and domestic, in the second quarter and the full year.

Speaker #5: Thank you. And you guys mentioned traffic being the driver this quarter. I was hoping you could talk about some of the other metrics like average basket or units, conversion.

Tracy Kogan: Thank you. You guys mentioned traffic being the driver this quarter. I was hoping you could talk about some of the other metrics, like average basket, AUR, units conversion. Thank you.

Speaker #5: Thank you.

Speaker #3: Sure, Tracy. So, as we said, the primary driver was traffic. The average basket also grew, but by a significantly lower proportion than the sales growth.

Michael Hartshorn: Sure, Tracy. As we said, the primary driver was traffic. The average basket also grew by a significant lower proportion of the sales growth. The units sold were flat.

Speaker #3: And the units sold were flat.

Speaker #5: You said flat?

Tracy Kogan: You said flat?

Speaker #3: Units per transaction were flat.

Michael Hartshorn: Units per transaction were flat.

Speaker #5: Were flat? I'm sorry. I was just clarifying.

Tracy Kogan: Were flat? I'm sorry, I was just clarifying.

Speaker #3: Flat. Yeah. So, units per transaction were flat.

Michael Hartshorn: Flat.

James Conroy: Yes, units per transaction-

Tracy Kogan: Thank you.

James Conroy: were flat.

Speaker #5: Thank you. Thank you.

Tracy Kogan: Thank you.

Speaker #3: Of course. Thanks, Tracy.

Michael Hartshorn: Of course. Thanks.

Speaker #2: And the next question comes from the line of Corey Tarlow with Jefferies. Please proceed with your question.

Operator: The next question comes from the line of Corey Tarlowe with Jefferies. Please proceed with your question.

Speaker #6: Great, thanks. I guess, Jim, as you think about how broad-based this really strong comp has been, can you talk about if you saw any inflections by category, whether it's ladies, home, footwear, or even juniors, perhaps within ladies?

Corey Tarlowe: Great, thanks. I guess, Jim, as you think about how broad-based this really strong comp has been, can you talk about if you saw any inflections by category, whether it's ladies, home, footwear, or even juniors, perhaps within ladies? Is there anything specific you think that's driving that mix shift? There's very clearly been quite a strong acceleration in trends quarter-over-quarter.

Speaker #6: And is there anything specific you think that's driving that mix shift? Because there's very clearly been quite a strong acceleration in trends quarter over quarter.

Speaker #3: Yes, thank you. The strength was broad-based, and the sequential improvement was pretty broad-based also. Some of the categories that tend to get more focused—the ladies' business had a very nice sequential improvement from the first quarter.

James Conroy: Yes. Thank you. The strength was broad-based and the sequential improvement was pretty broad-based also. Some of the categories that tend to get more focus, the ladies business had a very nice sequential improvement from Q1 and actually outperformed the balance of the businesses. We called out cosmetics also a nice sequential improvement and outperformed. Within ladies, lots of strength there. The juniors business was very strong. As we look down the categories, in an effort to try to give a little bit more transparency and a little bit more color than I think is typical, we wanted to comment that every category was positive and the teams were higher. We were obviously very, very pleased with the performance across the board. Every buying office should be just thrilled with what they were able to achieve.

Speaker #3: And actually, outperformed the balance of the businesses we called out. Cosmetics also saw a nice sequential improvement and outperformed. But within ladies, lots of strength there.

Speaker #3: The juniors' business was very strong. As we look down the categories, in an effort to try to give a little bit more transparency and a little bit more color than I think is typical, we wanted to comment that every category was positive in the teens or higher.

Speaker #3: So, we were obviously very, very pleased with the performance across the board. And every buying office should be just thrilled with what they were able to achieve.

Speaker #6: Makes sense. And that's also very helpful. I have a follow-up for Bill. Just as we think about the flow-through on comp versus plan, could you just remind us how to think about that and maybe what you saw in the quarter?

Corey Tarlowe: Makes sense. That's also very helpful. I have a follow-up for Bill. Just as we think about the flow-through on comp versus plan, could you just remind us how to think about that and maybe what you saw in the quarter? Thanks so much.

Speaker #6: Thanks so much.

William Sheehan: Bill, for the quarter, the earnings flow-through on our gross sales was actually above our expectations but right in line with the model. That felt pretty good. Going forward, from our guidance perspective, as we talked about, we beat Q1 by about 35%, sorry, and are flowing about $0.38 for the full year based on the higher Q2 guide. We feel like we're right in line where we should be.

Speaker #3: For the quarter, the earnings flow-through on the robust sales was actually above our expectations, but right in line with the model. So that felt pretty good.

Speaker #3: And then, going forward, from our guidance perspective, as we talked about, we beat Q1 by about 35%, sorry, in our flow, and about $0.38 to the full year, based on a higher Q2 guide.

Speaker #3: So we feel like we're right in line where we should be.

Michael Hartshorn: On the flow-through, we typically say every point of comp is worth about 10 to 15 basis points. We were within that range at the high end of the range in Q1. Some movement between categories. We were slightly better on merchandise margin in our normal flow-through, we did spend more store payroll to support the increased product flow.

Speaker #4: On the flow-through, we typically say every point of comp is worth about 10 to 15 basis points. We were within that range, at the high end of the range.

Speaker #4: In the first quarter, some movement between categories—we were slightly better on merchandise margin in our normal flow-through, but we did spend more on store payroll to support the increased product flow.

Speaker #6: That's really helpful. Thanks so much, and best of luck.

Corey Tarlowe: That's really helpful. Thanks so much, and best of luck.

Speaker #3: Thanks, Corey.

James Conroy: Thanks, Corey.

Speaker #2: And the next question comes from the line of Michael Benetti with Evercore ISI. Please proceed with your question.

Operator: The next question comes from the line of Michael Binetti with Evercore ISI. Please proceed with your question.

Speaker #7: Hey, guys. Thanks for taking our questions. Congrats on the quarter. I guess, as we—let me think about that last answer there. We deleveraged SG&A on a 17 comp.

Michael Binetti: Hey, guys. Thanks for taking our question. Congrats on the quarter.

James Conroy: Thank you.

Michael Binetti: Let me think about that last answer there is, we de-levered SG&A on a 2017 comp. It sounds like there was some potential investment in incentive comp. Certainly incentivizing employees can help grow top line, so seems like a good investment. Does SG&A leverage on the 6 or 7 comp in Q2, or the 2 to 3 comp that's baked in H2? If we come in above that, do we start looking for other buckets to invest in to support the top line?

Speaker #7: It sounds like there were some intentional investments in incentive comps. Certainly, incentivizing employees can help grow top lines, so it seems like a good investment.

Speaker #7: But does SG&A leverage on the 6 or 7 comp in the second quarter, or the 2 to 3 comp that's baked in the back half?

Speaker #7: Or, if we come in above that, do we start looking for other buckets to invest in to support the top line?

Speaker #3: Michael, maybe I'll give some more color on the first quarter. As you said, and as we said in the commentary, we delivered by 25 basis points.

Michael Hartshorn: Michael, maybe I give some more color on Q1. As you said, and as we said in the commentary, we delivered by 25 basis points. That was all due to higher incentives. Without the incentives, both marketing and store-related costs leveraged during the quarter. We had, in our guidance plan, selling costs up slightly, and that was due to wage growth and with some investments and improvements in the store experience to drive top-line growth. With the strong comp that we believe was somewhat helped by those investments, we got leverage there.

Speaker #3: That was all due to higher incentives. Without the incentives, both marketing and store-related costs leveraged during the quarter. We had, in our guidance, planned selling costs up slightly.

Speaker #3: And that was due to wage growth, and with some investments and improvements in the store experience to drive top-line growth. So with the strong comp that we believe was somewhat helped by those investments, we got leverage there.

Speaker #3: And then on the go-forward, right, from a guidance perspective, the largest driver is going to be merch margin. And we would expect to see some benefit in DC costs as we anniversary the opening of our Arizona distribution center.

James Conroy: On the go forward, from a guidance perspective, the largest driver is going to be merch margin. We would expect to see some benefit in DC costs as we anniversary the opening of our Arizona distribution center. We do, again, anticipate merch margin to remain a benefit in Q3 and Q4.

Speaker #3: We do, again, anticipate merch margin to remain a benefit in Q3 and Q4.

Speaker #6: Okay. And then, if I could follow that, on new stores—you gave us kind of a higher new store productivity assumption last year or last quarter, Michael, as far as modeling out relative to the 65 you gave us historically.

Michael Binetti: Okay. If I could follow that. On new stores, you gave us a higher new store productivity assumption last quarter, Michael, as far as modeling out, relative to the 65 you gave us historically. You're delivering numbers well above that new guidance. I think it was 75. I think it was something with a nine handle this quarter. Can you just give us a little idea of the financial bridge into what looks to be a pretty different new store opening profile?

Speaker #6: But you're delivering numbers well above that new guidance—I think it was 75. I think it was something with a 9 handle this quarter.

Speaker #6: Can you just give us a little idea of the financial bridge into what looks to be a pretty different new store opening profile?

Speaker #3: Sure. As we said, we have 110 openings, and we are in, I'd say, possibly the best shape we've been in in terms of getting leases done.

Michael Hartshorn: Sure. As we said, we have 110 openings, and we are in, I'd say, possibly the best shape we've been in terms of getting leases done. This year looks very good, and our pipeline into next year also looks very good to maintain that 5% unit growth. You asked about new store productivity. Last year, our new store productivity was above that level, so there's a number of stores that haven't comped yet, and those stores continue to do very well. We gave you guidance for 70% to 75% of a mature store for the new stores this year. I'd say it's very early, but we hope to beat that number.

Speaker #3: So, this year looks very, very good, and then our pipeline into next year also looks very good to maintain that 5% unit growth. You asked about new store productivity.

Speaker #3: Last year, our new store productivity was above that level. So there's a number of stores that haven't comped yet. Those stores continue to do very, very well.

Speaker #3: We gave you guidance for 70% to 75% of a mature store for the new stores this year. I'd say it's very early, but we hope to beat that number.

Speaker #6: Okay. Thanks a lot, guys.

Michael Binetti: Okay. Thanks a lot, guys.

Speaker #3: Thank you.

James Conroy: Thank you.

Speaker #2: And the next question comes from the line of Chuck Grom with Gordon Haskett. Please proceed with your question.

Operator: The next question comes from the line of Chuck Grom with Gordon Haskett. Please proceed with your question.

Speaker #8: Hey, thanks very much. Just to follow up on Michael's question—just NSP really strong. How are you thinking about units going forward? Do you still want to target the 5%?

Chuck Grom: Hey, thanks very much. Just to follow up on Michael's question, just NSP really strong. How are you thinking about units going forward? Do you still want to target the 5%? Do you think about densifying in the Northeast more? Just a little bit of thought on unit growth, maybe over the next several years, given how strong you're opening up stores right now.

Speaker #8: Do you think about densifying in the Northeast more? Just a little bit of thought on unit growth, maybe over the next several years, given how strong you're opening up stores right now.

Speaker #3: Yeah, I think what we're modeling internally is the 5% unit growth over the longer term. If we happen to get a big deal through bankruptcy or get ahead of that store opening, I don't think we'd hesitate to increase that target.

Michael Hartshorn: Yeah, I think what we're modeling internally is the 5% unit growth over the longer term. If we happen to get a big deal through bankruptcy or get ahead of that store opening, I don't think we'd hesitate to increase that target.

Speaker #8: Okay. And anything geographically you think about differently?

Chuck Grom: Okay, anything geographically you'd think about differently?

Speaker #3: Well, the Northeast is certainly open. That's certainly built into our five-year plan in New York. We have a loan in—obviously, we'll go further into the Northeast—but we exited '25 with 12 stores in the New York area and have two locations in the first quarter.

Michael Hartshorn: Well, the Northeast is certainly open. That's certainly built into our five-year plan in New York. We have alone, and obviously, we'll go further into the Northeast, but we exited 2025 with 12 stores in the New York area and have two locations in Q1. Those stores are doing very well for us.

Speaker #3: And those stores are doing very well for us.

Speaker #8: Gotcha. Great. And then as you think about the second half, right, in the tougher comparison about the lap, how do you think about the drivers to help you comp the comp?

Chuck Grom: Got you. Great. As you think about H2, and the tougher comparator about the lap, how do you think about the drivers to help you comp the comp? The implicit comp is at 2 to 3. What gives you the confidence there in terms of the marketing and store changes, the product assortment? I guess, how would you force rank what gives you the confidence to lap that positively?

Speaker #8: The implicit comp is a 2 to 3. What gives you the confidence there in terms of the marketing and store changes, the product assortment?

Speaker #8: I guess, how would you force rank what gives you the confidence to the lap that positively?

James Conroy: I would circle back to some of my earlier comments on this call and on the prior call. There are two schools of thought. One is you're up against strong comps and how you're possibly going to put numbers on top of that. The second is you're in the early stages of transforming a company. You're starting to build momentum. The comp is driven by more customers. That customer count increase continues to get stronger with each quarter. We also have a lot of merchandising initiatives. The merchants are constantly opening up new brands. We found the confidence now to introduce brands that are more in the better and best price points and add those to the great stable of brands that we already have. That may give us some more comp increase.

Speaker #3: I would circle back to some of my earlier comments. On this call and on the prior call, there are two schools of thought. One is you're up against strong comps, and how are you possibly going to put numbers on top of that.

Speaker #3: But the second is you’re in the early stages of transforming a company. You’re starting to build momentum. The comp is driven by more customers.

Speaker #3: That customer count increase continues to get stronger with each quarter. And we also have a lot of merchandising initiatives, right? The merchants are constantly opening up new brands.

Speaker #3: We've found the confidence now to introduce brands that are more in the better and best price points and add those to the great stable of brands that we already have.

Speaker #3: So that may give us some more comp increase. The stores have proven that they can contribute to the store growth, but they're in their very early stages of changing visual merchandising and store labor models, and shifting hours—reallocating store labor hours to sales-driving activities.

James Conroy: The stores have proven that they can contribute to the store growth, but they are in the very early stages of changing visual merchandising and store labor models and shifting hours, reallocating store labor hours to sales-driving activities. Aaron and that team have just done incredible work. We're still learning. We're in the very early stages of many of these initiatives. I hear you that people will constantly wonder if you can comp a 7, a 9, or a 17. Given the momentum that we're seeing and given the underlying KPIs in the growth, meaning customer count, customer count across geographies, the strength in the transactions. At the risk of laying out new H2 guidance right now, I think we have plenty of more opportunity for continuing very solid comps. Maybe not a 17, but very solid comps for the balance of the year.

Speaker #3: And Aaron and that team have just done incredible work. But we're still learning, right? We're in the very, very early stages of many of these initiatives.

Speaker #3: So, I hear you that people will constantly wonder if you can comp a 7, a 9, or a 17. Given the momentum that we're seeing, and given the underlying KPIs in the growth—meaning customer count, customer count across geographies, the strength in the transactions—at the risk of laying out new second-half guidance right now, I think we have plenty more opportunity for continuing very solid comps.

Speaker #3: Maybe not a 17, but very solid comps in the balance of the year.

Speaker #8: Got it. Thanks for that answer. Good.

Chuck Grom: Got it. Thanks for that answer. Good.

Speaker #3: Thank you.

James Conroy: Thank you.

Speaker #2: And the next question comes from the line of Brooke Roach with Goldman Sachs. Please proceed with your question.

Operator: The next question comes from the line of Brooke Roach with Goldman Sachs. Please proceed with your question.

Speaker #9: Good afternoon. Thank you for taking our question. Jim, I was hoping you could reflect on what's working very well in marketing today, and what we should expect might change as we look into the back half of the year as you annualize some of these initiatives.

Brooke Roach: Good afternoon. Thank you for taking our question. Jim, I was hoping you could reflect on what's working very well in marketing today and what we should expect might change as we look into the back half of the year as you annualize some of these initiatives?

Speaker #3: Sure. I think you'll see more of what we have been doing. We're really trying to modernize the creative methods. We're mixing up our media mix.

James Conroy: Sure. I think you'll see more of what we have been doing. We're really trying to modernize the creative message. We're mixing up our media mix. We're doing more events. All of those things are adding to the proverbial top of funnel. We've got some pretty exciting things upcoming. In a competitive industry like off-price, sometimes it's hard to give more color because you then see it end up in one of your competitors and what they're doing. Suffice it to say, I think that we're in the very early stages of focusing on the Ross and dd's brands, contemporizing them and having them get their own sort of followership. You can see it, right? You can follow us on social media.

Speaker #3: We're doing more events. All of those things are adding to the proverbial top of funnel. We've got some pretty exciting things upcoming. It's in a competitive industry like off-price; sometimes it's hard to give more color, because you then see it end up at one of your competitors and what they're doing.

Speaker #3: But suffice it to say, I think that we're in the very, very early stages of focusing on the Ross and dd's brands, contemporizing them, and having them get their own sort of followership.

Speaker #3: And you can see it, right? You can follow us on social media. You can see our television spots. And I think it's a very refreshed view of how to go to market in retailing, and certainly in off-price retailing.

James Conroy: You can see our television spots. I think it's a very refreshed view of how to go to market in retailing and certainly in off-price retailing. Stay tuned. There's a lot more coming over the next few months from a marketing standpoint.

Speaker #3: So stay tuned. There's a lot more—there's a lot more coming over the next few months from a marketing standpoint.

Speaker #9: Great. And then, just a quick follow-up. I was hoping you could put a finer point on your expectations for fuel surcharges for the year.

Brooke Roach: Great. Just a quick follow-up. I was hoping you could put a finer point on your expectations for fuel surcharges for the year. Can you quantify the headwind that you're expecting in H2 and what oil price is embedded within the guide?

Speaker #9: Can you quantify the headwind that you're expecting in the back half, and what oil prices are embedded within the guide?

James Conroy: We try to estimate based on what the DOE and others estimate. Like we said, we do expect some pressure in the H2. Again, if fuel prices differ materially from where they are now, then we'd see some additional pressure. That's something we're monitoring closely and try and get the best estimates that we can.

Speaker #3: We try and estimate based on what the DOE and others estimate. And so, like we said, we do expect some pressure in the second half, but again, if fuel prices differ materially from where they are now, then we'd see some additional pressure.

Speaker #3: So that's something we're monitoring closely, and try to get the best estimates that we can.

Speaker #9: Great, thanks so much. I'll pass it on.

Brooke Roach: Great. Thanks so much. I'll pass it on.

Speaker #2: Thank you. And the next question comes from the line of Mark Altschwagger with Baird. Please proceed with your question.

Operator: Thank you. The next question comes from the line of Mark Altschwager with Baird. Please proceed with your question.

Speaker #10: Good afternoon. Thanks for taking the question. Seems a little silly to ask about consumer headwinds when you reported a 17% comp and you're guiding 6 to 7, but just wondering if you're seeing any indications of shifts in consumer behavior as the inflationary pressures have ticked up.

Mark Altschwager: Good afternoon. Thanks for taking the question. Seems a little silly to ask about consumer headwinds when you reported a 17% comp and you're guiding 6% to 7%, just wondering if you're seeing any indications of shifts in consumer behavior as the inflationary pressures have ticked up. You said strength broad-based across regions, any color on California specifically where gas prices are even higher?

Speaker #10: You said strength was broad-based across regions, but any color on California specifically, where gas prices are even higher?

James Conroy: On your first question, on both customer count and comp growth, we did not see a variation across income levels. Actually, all income levels were very strong. California performed in line with the chain during the quarter. I would say on fuel costs, generally, historically, it has been hard for us to see any immediate direct correlation between fuel prices and our sales performance. That said, obviously the potential impact can vary based on the magnitude and how long the increased fuel prices last. I would also add the silver lining for off price is that any uncertainty in the macro environment could lead to customers seeking more value when shopping and create closeout opportunities for us from the supply side.

Speaker #3: Just to add on your first question, on both customer count and comp growth, we did not see a variation across income levels. Actually, all income levels were very strong.

Speaker #3: California performed in line with the chain during the quarter. I would say on fuel costs generally, historically, it's been hard for us to see any immediate, direct correlation between fuel prices and our sales performance.

Speaker #3: That said, obviously, the potential impact can vary based on the magnitude and how long the increased fuel prices last. I would also add the silver lining for off-price is that any uncertainty in the macro environment could lead to customers seeking more value when shopping and create close-out opportunities for us on the supply side.

Speaker #10: Thank you. And a follow-up for Jim. If you could give us an update on the branded apparel rollout, how broad is the strategy beyond ladies at this point?

Mark Altschwager: Thank you. Follow-up for Jim, if you could give us an update on the branded apparel rollout. How broad is the strategy beyond ladies at this point? With the acceleration you're seeing in new customer acquisition and overall growth, how are you thinking about that balance between the good, better, best, and what's resonating most with that newer customer you're bringing in? Thanks again.

Speaker #10: And with the acceleration you're seeing in new customer acquisition and overall growth, how are you thinking about that balance between the good, better, best, and what's resonating most with that newer customer you're bringing in?

Speaker #10: Thanks again.

James Conroy: The brand strategy in ladies and across the entire business is now very much in place and has been. I think we've lapped it a few quarters ago. It was a great adjustment to kind of correct a time when perhaps the business, certainly before I got here, had evolved away from some of the really compelling brands, and the company was able to correct that also before I got here. There's a lot of people that are working really hard to put that in place, and we can see it in the strength and now the pervasive strength in the ladies business mostly, but perhaps it's also a part of the strategy across the board. In terms of good, better, best, we're hyper-focused on that right now because you're right to call out the potential softness and pressure in consumer, and it's all over the news.

Speaker #3: So the brand strategy in Ladies and across the entire business is now very much in place, and has been—I think we've lapped it a few quarters ago.

Speaker #3: It was a great adjustment to kind of correct the time when, perhaps, the business—certainly before I got here—had evolved away from some of the really compelling brands.

Speaker #3: And the company was able to correct that also before I got here. So, there's a lot of people that I'm working with really hard to put that in place.

Speaker #3: And we can see it in the strength, and now the pervasive strength, in the ladies’ business mostly. But perhaps it's also a part of the strategy across the board in terms of good, better, best.

Speaker #3: We're hyper-focused on that right now because, right, to call out the potential softness and pressure in the consumer, and it's all over the news. It's what other retailers are calling out, etc.

James Conroy: It's what other retailers are calling out, et cetera. We have to ensure that we're in stock with sort of the best bargains across price points, but certainly the good price points. When we look at our data, our customer KPIs are unbelievably strong, right? More customers shopping more frequently and spending more on each trip. Now we're trying to find if there's some more opportunities to stretch our prices, not on same goods, but on new brands and new goods, and really just deliver even a broader assortment for our customer out there. We're really thrilled with the health of the business, and we're very cognizant of what's happening in the macro environment. We want to deliver the absolute best bargains and best values for our customers, particularly those under pressure from the prices of oil or gas prices, et cetera.

Speaker #3: So we have to ensure that we're in stock with sort of the best bargains across price points, but certainly the good price points. But then, when we look at our data, our customer KPIs are unbelievably strong, right?

Speaker #3: More customers shopping more frequently and spending more on each trip. So we're now trying to find if there's even some more opportunities to stretch our prices—not on same goods, but on new brands and new goods—and really just deliver even a broader assortment for our customer out there.

Speaker #3: So we're just—we're really thrilled with the health of the business, and we're very cognizant of what's happening in the macro environment.

Speaker #3: We want to deliver the absolute best bargains and best values for customers, particularly those under pressure from the price of oil or gas prices, etc.

Speaker #3: But we also have this sort of growing customer base that seems to be responding across good, better, and best.

James Conroy: We also have this sort of growing customer base that seems to be responding across good, better and best.

Speaker #2: Thank you. And the next question. Thank you. And the next question.

Operator: Thank you. The next question.

James Conroy: Go ahead, John.

Speaker #3: Go ahead, John.

Speaker #2: Sorry about that. The next question comes from Dana Tellsy with the Tellsy Advisory Group. Please proceed with your question.

Operator: Sorry about that. The next question comes from Dana Telsey with the Telsey Advisory Group. Please proceed with your question.

Speaker #9: Hi, good afternoon, and congratulations on the very nice results. Given the new customer acquisition that seems to have accelerated and the flywheel of marketing driving new customers, as you think about the sales gains that you had—the new customer acquisition—any different demographic profile, younger maybe, wealthier, with a trade-down? Anything you're seeing there?

Dana Telsey: Hi, good afternoon. Congratulations on the very nice results. Given the new customer acquisition that seems to have accelerated and the flywheel of marketing driving new customers, as you think about the sales gains that you had, the new customer acquisition, any different demographic profile, younger, maybe wealthier with a trade down, anything you're seeing there? Then how do you think of the cadence of marketing spend as you go through the balance of the year? Is Q1 more allocated than another? Then just lastly, on the NY stores, the 12 that you mentioned, how much higher are they than your plan? What are you seeing that's new or different, and how do you think of Northeast openings as a percentage of the total mix going forward? Thank you.

Speaker #9: And then, how do you think of the cadence of marketing spend as you go through the balance of the year? Is one quarter more allocated than another?

Speaker #9: And then just lastly, on the New York stores—the 12 that you mentioned—how much higher are they than your plan? What are you seeing that's new or different?

Speaker #9: And how do you think of Northeast openings as a percentage of the total mix going forward? Thank you.

Speaker #3: All right, Dana. Thanks for the questions. I'll get started. I think Michael will take the stores question. In terms of customer group, it's one of those report cards that you just—you almost can't believe, but we've had customer growth across every ethnicity, every age group, and every income level.

James Conroy: All right, Dana. Thanks for the questions. I'll get started. I think Michael will take the stores question. In terms of by customer group, it's one of those report cards that you almost can't believe. We've had customer growth across every ethnicity, every age group, and every income level. We're using the third-party available credit card data. I think the two things that would make our customer count unique relative to the rest of retail right now is certainly the magnitude. I think the number of customers that we're capturing and the year-over-year increase based on what we can see, for us and for other players, is higher. Notably, the younger customer, that very difficult to attract 18 to 24-year-old customer. We're just outperforming virtually every other retailer that we can track.

Speaker #3: I think the part that—and we can—we're using the sort of third-party available credit card data. I think the two things that would make our customer count unique relative to the rest of retail right now is certainly the magnitude.

Speaker #3: I think the number of customers that we're capturing, and the year-over-year increase based on what we can see for us and for other players, is higher.

Speaker #3: And then notably, the younger customer—that sort of very difficult to attract 18- to 24-year-old customer—we’re just outperforming virtually every other retailer that we can track.

James Conroy: Those two pieces, if you're looking for nuances, that younger customer has really gravitated towards us, which has been part of the strategy and is really starting to take root. In terms of the cadence of the spend, firstly, as a rate of sales, we didn't spend any more in Q1 than we did last year. In fact, we got a little bit of leverage there. We continuously get questions as, well, should we be investing more? Maybe over time we will, but right now we're certainly driving healthy traffic and comps with the marketing spend that we have. As we look at it by quarter, there might be some small investments here or there in the balance of the year. Nothing that will move the needle in a material way.

Speaker #3: So those two pieces, if you're looking for nuances, that younger customer has really gravitated towards us, which has been part of the strategy and is really starting to take root.

Speaker #3: In terms of the cadence of the spend, firstly, as a rate of sales, we didn't spend any more in the first quarter than we did last year.

Speaker #3: In fact, we got a little bit of leverage there. We continuously get questions like, "Well, should we be investing more?" And maybe, over time, we will.

Speaker #3: But right now, we're certainly driving healthy traffic and comps with the marketing spend that we have. As we look at it by quarter, there might be some small investments here or there in the balance of the year.

Speaker #3: Nothing that will move the needle in a material way. And clearly, we spend more money in the holiday quarter in absolute dollars, but not necessarily as a rate.

James Conroy: Clearly, we spend more money in holiday Q4 in absolute dollars, but not necessarily as a rate. That's sort of our view right now from a marketing standpoint. From a stores perspective, Michael will take that one.

Speaker #3: So that's sort of our view right now from a marketing standpoint. And then, from a stores perspective, Michael will take that one.

Michael Hartshorn: Dana, obviously, we're very excited about further expansion into the Northeast. I don't want to forget about our existing markets. Right now, our new store growth, only about 20% of our new store growth is in the newer markets. What I can tell you about the New York stores, as you know, not every store is created equal, but I can give you a benchmark versus our underwriting pro forma, and we've far exceeded our expectations of what we thought were needed from an underwriting standpoint. We're very excited about the expansion. We see we can be very successful. Obviously, the population density in the Northeast is very similar. Actually, more population density than even our oldest market of California.

Speaker #1: Dana, obviously we're very excited about further expansion into the Northeast. I don't want to forget about our existing markets. Right now, our new store growth—only about 20% of our new store growth is in the newer markets.

Speaker #1: What I can tell you about the New York stores is, as you know, not every store is created equal, but I can give you a benchmark versus our underwriting pro forma.

Speaker #1: And we've far exceeded our expectations of what we thought or needed from an underwriting standpoint. So we're very excited about the expansion. We see we can be very successful.

Speaker #1: Obviously, the population density in the Northeast is very similar—actually, more population density than even our oldest market of California. So, the Northeast real estate department has done a nice job of beginning to write leases there.

Michael Kobayashi: The Northeast real estate department has done a nice job of beginning to rent leases there, and we'll have more to say as we expand our rollout in 2027.

Speaker #1: And we’ll have more to say as we expand our rollout in 2027.

Dana Telsey: Thank you.

Speaker #9: Thank you.

Operator: The next question comes from the line of Simeon Siegel with Guggenheim. Please proceed with your question.

Speaker #2: And the next question comes from the line of Simeon Siegel with Guggenheim. Please proceed with your question.

Simeon Siegel: Thanks. Hey, good afternoon, everyone. Really nice job. I'm going to try and sneak three quick ones in if I can. What percent of the growth in transactions at this point are coming from new customer acquisition versus that greater frequency of existing that you mentioned, Jim? How are you thinking about the timing of CapEx this year? I think Q1 was somewhat similar to last year, but you do have the lift guided for the full year. Just taking a quick step back, just any help on long-term EBIT margin opportunity, recognizing the ongoing strength we're hearing from you. Maybe even how are you thinking about benchmarking that or analyzing that opportunity? Thanks, guys.

Speaker #10: Thanks. Hey, good afternoon, everyone. Really nice job. I'm going to try and sneak three quick ones in if I can. What percent of the growth in transactions at this point are coming from new customer acquisition versus that greater frequency of existing that you mentioned, Jim?

Speaker #10: And then, how are you thinking about the timing of CapEx this year? I think Q1 was somewhat similar to last year, but you do have the lift guided for the full year.

Speaker #10: And then, just taking a quick step back—just any help on the long-term EBIT margin opportunity, recognizing the ongoing strength we're hearing from you?

Speaker #10: Maybe even, how are you thinking about benchmarking that or analyzing that opportunity? Thanks, guys.

James Conroy: All right, Simeon. That was impressive. Very quick in getting all three of those questions out. I'll take the first one, and then Michael or Bill will take the others. Without parsing out the components of the comps too finely, I would say, and we're on record already saying transactions was the primary driver of the comp, and of the transactions, new customers was the primary driver of that.

Speaker #3: All right, Vivian. That was impressive—very, very quick, and getting all three of those questions out. I'll take the first one, and then Michael will be able to take the others.

Speaker #3: But without parsing out the components of the comps too finely, I would say—and we're on record already saying—transactions was the primary driver of the comp.

Speaker #3: And of the transactions, new customers was the primary driver of that.

William Sheehan: On the CapEx side, we typically don't get into parsing it out by quarter. It's not skewed particularly at all. We are slightly up this year, but I don't think it's very divergent by quarter.

Speaker #10: Let me—on the CapEx side, we typically don't get into parsing it out by quarter. It's not skewed particularly at all. We are slightly up this year, but I don't think it's very divergent by quarter.

Michael Hartshorn: In total, we're still estimating about a $1.1 billion in capital versus $810.19 million last year. I think your last question is on long-term operating margin. Our model hasn't changed at this point. We've said double-digit EPS growth, about 5% unit growth, that 60% to 70% productivity drives 3% to 4% EPS growth, long-term gains at 3% to 4% on comp, and I'll come back to that in a second, and 2% to 3% from share repurchase program. If we can comp higher than the 3% to 4%, we'd expect outsized EBIT growth.

Speaker #1: In total, we're still estimating about $1.1 billion in capital versus $819 million last year. I think your last question is on the long-term operating margin.

Speaker #1: Our model hasn't changed at this point. We've said double-digit EPS growth, about 5% unit growth, that 60% to 70% productivity drives 3% to 4% EPS growth.

Speaker #1: Long-term gains at 3 to 4 percent on compound—come back to that in a second. And 2 to 3 percent from the share repurchase program.

Speaker #1: If we can comp higher than the 3 to 4 percent, we'd expect outsized EBIT growth.

Simeon Siegel: Makes total sense. Thanks, guys. Great job. Best of luck for the rest of the year.

Speaker #10: Makes total sense. Thanks, guys. Great job. Best of luck for the rest of the year.

James Conroy: Thanks so much.

Speaker #3: Thanks so much.

Operator: The next question comes from the line of Krisztina Katai with Deutsche Bank. Please proceed with your question.

Speaker #2: And the next question comes from the line of Christina Khatai with Deutsche Bank. Please proceed with your question.

Krisztina Katai: Hey, guys. Great quarter. Congrats. I wanted to ask on cosmetics, obviously, it was a standout in the quarter. Is that primarily branded availability? Is it consumer trade into prestige, just getting the trend right, or increased base allocation? How durable is that?

Speaker #9: Hey, guys. Great quarter—congrats on that. So I wanted to ask about cosmetics. Obviously, it was a standout in the quarter. Is that primarily branded availability?

Speaker #9: Is it consumer trade into prestige? Just getting the trend right, or increased space allocation? And how durable is that?

James Conroy: Well, I think it's several things. I think, one, the team, Michael K. and Stephanie, have just done an unbelievable job of driving that business, and has been a standout from a category perspective for several quarters now. Secondly, they've done a really nice job of bringing in new brands. You can see them in the store, but there's some new, hot, exploding brands that are now selling to us, which have been fantastic. Thirdly, there is a little bit of just an underlying consumer trend there. Korean beauty products is one of them, and they really just have done a great job being on top of that. In terms of space allocation, we haven't really changed the space allocation with stores for cosmetics in any meaningful way. I think their sales productivity on a per square foot basis has just gone up quite nicely.

Speaker #3: Well, I think it's several things. I think, one, the team—Michael Kay and Stephanie—have just done an unbelievable job of driving that business.

Speaker #3: And that's been a standout from a category perspective for several quarters now. Secondly, they've done a really nice job of bringing in new brands, and you can see them in the store. But there are some new, high—kind of exploding—brands that are now selling to us, which have been fantastic.

Speaker #3: And then, thirdly, there is a little bit of just an underlying consumer trend there—Korean beauty products is one of them. And they've really done a great job of being on top of that.

Speaker #3: So in terms of space allocation, we haven't really changed the space allocation in the stores for cosmetics in any meaningful way. So I think their sales productivity on a per square foot basis has just gone up quite nicely.

Krisztina Katai: Great. Sorry. If I can just ask a follow-up, just very quickly. You mentioned gaining priority access to deals. Can you talk about how that is showing up with buying costs, IMU, speed to floor conversion rates? Just considering your strong top line, can that advantage expand further? Thank you.

Speaker #9: Great. And if I can just ask—sorry. And if I can just ask a follow-up, just very quickly, you mentioned gaining priority access to deals.

Speaker #9: Just can you talk about how that is showing up in buying cost, IMU, speed to floor, conversion rates, and then just considering your strong top line?

Speaker #9: Can that advantage expand further? Thank you.

James Conroy: Sure. I think the sentiment in the market. Look, we're one of three big competitors out there. The relationships that the merchants have with the off-price market is critical. The relationships that the Ross merchandising team has is just remarkable. I marvel as a new entry into this world of how relationship-based it is. Having said that, I think the market is starting to see the transformation of Ross going from a very good company and accelerating from there. It's getting noticed, and I think now when someone has a good deal or more closeouts, we're getting calls, and it's partly because we can take the goods. We have seen some cancellations in the market, some from mainstream retail and some from other off-pricers, that we are able to pick up.

Speaker #3: Sure. Sure. I think the sentiment in the market—and look, we're one of three big competitors out there. The relationships that the merchants have with the off-price market is critical.

Speaker #3: And the relationships that the ROSS merchandising team has are just remarkable. I marvel, as a new entry into this world, at how relationship-based it is.

Speaker #3: Having said that, I think the market is starting to see the transformation of Ross going from a very good company and accelerating from there.

Speaker #3: And it's getting noticed. And I think now, when someone has a good deal or more closeouts, we're getting calls, and it's partly because we can take the goods.

Speaker #3: We have seen some cancellations in the market, some from mainstream retail and some from other off-pricers that we are able to pick up. So I think the last thing I would say is, I think our merchants not only have great relationships but tend to be very easy to work with in the market.

James Conroy: I think the last thing I would say is I think our merchants not only have great relationships, but tend to be very easy to work with with the market. That's a philosophy that I inherited from my predecessor. We absolutely want to continue to do that. We want to be partner-like and low friction.

Speaker #3: And that's a philosophy that I inherited from my predecessor, and we absolutely want to continue to do that. We want to be partner-like and low friction.

Michael Hartshorn: We've opened up new vendors, and we've seen a lot of early calls on opportunistic goods.

Speaker #3: But we've seen we've opened up new vendors, and we've seen a lot of sort of early calls on opportunistic goods.

Operator: The next question comes from Aneesha Sherman with Bernstein. Please proceed with your question.

Speaker #2: And the next question comes from Anisha Sherman with Bernstein. Please proceed with your question.

Aneesha Sherman: Thank you, and congrats on the quarter. I have two, please. Jim, you mentioned the word transformation earlier on in your comments. I wanted to ask, over the last year, the company's pursued a lot of new initiatives with marketing, assortments, stores, et cetera. Do you think there's been a cultural shift in how decisions are being made that is driving this broader set of ideas and initiatives across the company? Then I have a follow-up as well.

Speaker #9: Thank you, and congrats on the quarter. I have two, please. Jim, you mentioned the word 'transformation' earlier on in your comments. I wanted to ask, over the last year the company’s pursued a lot of new initiatives in marketing, assortments, stores, etc.

Speaker #9: Do you think there's been a cultural shift in how decisions are being made that is driving this broader set of ideas and initiatives across the company?

Speaker #9: And then I have a follow-up as well.

James Conroy: Look, I inherited a well-run company with a great culture. I think if there's been any sort of shift in how we operate, it was a little bit of hearkening back to the earlier days in Ross when it was very entrepreneurial. We've sort of challenged ourselves to spark more growth, empower people to make quick decisions, be entrepreneurial, balance our pretty heavy focus on risk aversion with a little bit more of a growth orientation. I think internally, the team has been very welcoming of that. Yeah, I would say if you think of a continuum between playing defense and offense, we've shifted the whole company and the culture a little bit more towards offense, but still always being prudent and not taking undue risk.

Speaker #3: Look, I inherited a well-run company with a great culture. I think if there's been any sort of shift in how we operate, it was a little bit of harkening back to the earlier days in Ross, when it was very entrepreneurial.

Speaker #3: And we've sort of challenged ourselves to spark more growth, empower people to make quick decisions, be entrepreneurial, and balance our pretty heavy focus on risk aversion with a little bit more of a growth orientation.

Speaker #3: And I think, internally, the team has been very welcoming of that. So, yeah, I would say if you think of a continuum between playing defense and offense, we've shifted the whole company and the culture a little bit more towards offense, but still always being prudent and not taking undue risk.

James Conroy: Again, I just want to say it one more time, I was very lucky to be able to inherit a company that was already very well-run and already successful, and we've just been able to layer on some initiatives to augment that growth.

Speaker #3: But again, I just want to say it one more time: I was very lucky to be able to inherit a company that was already very well run and already successful.

Speaker #3: And we've just been able to layer on some initiatives to augment that growth.

Aneesha Sherman: Thank you. A follow-up on an earlier comment on double-digit growth in customer counts. Can you give us some color on what that looked like the last two quarters, the last couple of quarters, Q3, and Q4? I want to get a sense of has that run rate increased, just to help us think through the back half of the year and the comp year-over-year growth in the back half.

Speaker #9: Thank you. And then a follow-up on an earlier comment on double-digit growth and customer counts. Can you give us some color on what that looked like the last two quarters?

Speaker #9: The last couple of quarters, Q3 and Q4—I want to get a sense of has that run rate increased, just to help us think through the back half of the year and the comp year-over-year growth in the back half.

James Conroy: It's been building. We definitely didn't get a double-digit growth in customers and then comp lower than double digits fortunately. If you were to think of it in the way we think of retail same-store sales, you would say we've had sequential improvement in customer count growth on a comp store basis in each of the last 2 quarters.

Speaker #3: So it's been building. We definitely didn't get a double-digit growth in customers and then comp lower than double digits. Fortunately. But it has if you were to think of it in the way we think of retail, same-store sales, you would say we've had sequential improvement in customer count growth on comp-store basis in each of the last two quarters.

Aneesha Sherman: Okay, that's helpful. Thank you.

Speaker #9: Okay. That's helpful. Thank you.

James Conroy: You're welcome. Thank you.

Speaker #3: You're welcome. Thank you.

Operator: The next question comes from the line of Marni Shapiro with Retail Tracker. Please proceed with your question.

Speaker #2: And the next question comes from the line of Marnie Shapiro with Retail Tracker. Please proceed with your question.

Marni Shapiro: Hey, guys. Thanks, and congratulations. Jim, I love how you sound so pleasantly surprised that the market loves the Ross buyers. That's always been the case. I knew them a long time ago, and everyone loved them, so congratulations on that. You've talked about updating and renovating some of the stores. Some of it was just a light touch, modernizing them. If you can give an update on how that's going, and are those stores outperforming? Could you just also give us an update, I'm assuming this is true, that you'll continue with your buyback through the rest of the year?

Speaker #9: Hey, guys. Thanks. Thanks for the congratulations. And Jim, I love how you sound so pleasantly surprised that the market loves the Ross buyers. That's always been the case.

Speaker #9: I knew them a long, long time ago, and everyone loved them. So congratulations on that. Could you—you've talked about updating and renovating some of the stores, and some of it was just a light touch.

Speaker #9: If you can, just modernizing them—if you can give an update on how that's going and are those stores outperforming? And then, could you just also give us an update?

Speaker #9: I'm assuming this is true, that you'll continue with your buyback through the rest of the year.

Michael Hartshorn: Hi, Marni Shapiro. It's Michael Hartshorn. As you said, we've been working on refreshing all stores in the chain. Again, it was to try to give a more modern look and feel for our customer. The refresh was mainly new perimeter signing and wayfinding signage, along with addressing cosmetic repairs. We got through about half of the chain last year. We decided to pause for 2 reasons. First, we wanted to be able to measure the sales impact, and we did see a sales impact in those stores. We saw improvement in customer surveys on the shopping experience. We decided this year to pause as we're looking to see what kind of things we want to do to the store.

Speaker #10: Hi, Marnie. It's Michael. As you said, we've been working on refreshing all stores in the chain, and again, it was to try to give a more modern look and feel for our customer.

Speaker #10: And the refresh was mainly new perimeter signing and wayfinding signage, along with addressing cosmetic repairs. We got through about half of the chain last year.

Speaker #10: We decided to pause for two reasons. First, we wanted to be able to measure the sales impact. And we did see a sales impact in those stores.

Speaker #10: We saw improvement in customer surveys. On the shopping experience, we decided this year to pause, as we're looking to see what kind of things we want to do to the store.

Michael Hartshorn: When I say that, it doesn't mean we're going to go back and refresh every single store in the chain, come up with a new pro forma, and have a big capital outlay. We wanted to pause and see if there's other changes we want to make in the next half of the stores. Then also look at new store prototypes, if there's anything we want to change from look and feel or how we're merchandising the store. That's where we are at this point.

Speaker #10: And when I say that, it doesn't mean we're going to go back and refresh every single store in the chain, come up with a new performance, and have a big capital outlay.

Speaker #10: But we wanted to pause and see if there's other changes we want to make in the next half of the stores and then also look at new store prototypes if there's anything we want to change from look and feel or how we're merchandising the store.

Speaker #10: So that's where we are at this point.

William Sheehan: Regarding the buyback, no change there. We remain on track to buy the total of $1.275 billion in stock during 2006. 2026, sorry. That's unchanged.

Speaker #3: And then regarding the buyback, no change there. We remain on track to buy the total of $1.275 billion in stock during 2006—2006, sorry.

Speaker #3: So that's unchanged.

Marni Shapiro: Fantastic. Thank you, guys.

Speaker #9: Fantastic. Thank you, guys.

James Conroy: Thank you, Marni.

Speaker #10: Thank you, Marnie.

Operator: The next question comes from the line of Dylan Carden with William Blair. Please proceed with your question.

Speaker #2: And the next question comes from the line of Dylan Carden with William Blair. Please proceed with your question.

Dylan Carden: Thank you. I'm curious, Jim, to the questions on or in and around new customers. Do you feel that between access to brands, some of the new marketing you're doing, that you're kind of meaningfully, structurally expanding your market, or is it just sort of recapturing share within your existing market, either going up or down market? You mentioned younger customers. this for more meaningful change go forward. Thanks.

Speaker #11: Thank you. I'm curious, Jim, to the questions on or in and around new customers. Do you feel that between access to brands some of the new marketing you're doing that you're kind of meaningfully structurally expanding your market?

Speaker #11: Or is it just sort of recapturing share within your existing market, either going up or down market? You mentioned kind of younger customers. This is where more meaningful change could go forward.

Speaker #11: Thanks.

James Conroy: It's a very insightful question. At the risk of tipping our hand too much, that's absolutely part of the strategy. We have a bull's-eye of a core customer, and we have to ensure that we're constantly focused on that customer that has sort of built this business. In concentric circles around that core, how do we add new customer segments? That's part of the strategy. It's very early in our evolution in doing that. The early read is that we've been able to introduce the Ross brand into different pockets of consumer shoppers. Again, it's a very insightful strategic question, Dylan, appreciate it, and I think you're on the right track there.

Speaker #3: It's a very insightful question. At the risk of tipping our hand too much, that's absolutely part of the strategy. We have a bull's-eye of a core customer, and we have to ensure that we're constantly focused on that customer that has sort of built this business. But how do we, in concentric circles around that core, add new customer segments?

Speaker #3: So that's part of the strategy. It's very early in our evolution in doing that, but the early read is that we've been able to introduce the ROSS brand into different pockets of consumer shoppers and it's, again, it's a very insightful strategic question, Dylan.

Speaker #3: Appreciate it. And I think you're on the right track there.

Dylan Carden: Awesome. Thanks, Jim. Nice work.

Speaker #11: Awesome. Thanks, Jim. Nice work.

Operator: Ladies and gentlemen, there are no further questions at this time. I would like to turn the call back over to James Conroy for any closing comments.

Speaker #2: Ladies and gentlemen, there are no further questions at this time. I would like to turn the call back over to Jim Conroy for any closing comments.

James Conroy: Well, thank you everyone for joining us today, and we look forward to speaking with you on our next earnings call. Take care.

Speaker #3: Well, thank you, everyone, for joining us today, and we look forward to speaking with you on our next earnings call. Take care.

Operator: Ladies and gentlemen, thank you for your participation. That does conclude today's teleconference. Please disconnect your lines and have a wonderful day.