“Krista, merchandise margin will continue to be primarily driven by ocean freight benefit. I mentioned earlier, we'll have a little bit of tailwind just from as we had elevated markdown levels, that will be helped to us.”

In context

“retailers and the types of real estate that we typically prefer. That said, our team has a very methodical process of developing a healthy real estate pipeline to support our long-term growth plans. And in terms of rent, obviously, we're under contract and have option renewals, and we're not seeing, at this point, major increases in our rent costs. Operator: And the next question comes from the line of John Kernan with TD Cowen. Krista Zuber: This is Krista Zuber on behalf of John. Just given the still broadly highly promotional environment across retail heading into the second half in your sharper value proposition. I wonder if you could just talk to rather broadly or directionally, how you see sort of your merchandise margin in relation to your Q3 operating margin guidance. Adam Orvos: Krista, merchandise margin will continue to be primarily driven by ocean freight benefit. I mentioned earlier, we'll have a little bit of tailwind just from as we had elevated markdown levels, that will be helped to us. And really, that's all we see as major moving components within merchandise margin. Operator: We have time for one final question coming from the line of Jay Sole with UBS. Jay Sole: I guess if you just take a step back and just give us an idea of how the overall inventory buying environment compares right now to a year ago? Because if you go back a year ago, it was really a time where a lot of retailers and just the whole industry realized how much excess inventory had been built up post reopening and I think sort of the slowdown as inflation really started to kick in. So could you just give us an idea of how you think about the environment now relative to them? Is it as good? Is it better? Is it a little bit worse? Is it a lot worse? Any kind of context there would be helpful. Barbara R”