“Notably, if current exchange rates were to stay where they are right now for the entire second quarter, we would expect a headwind of approximately 120 basis points to reported sales growth.”

In context

“gains relative to periods of more constant price levels. To the extent that later markdowns need to be recorded, it can have an offsetting effect. The magnitude of these swings, both positive and negative, given the level of additional costs that could be applied to the inventory that we're purchasing right now are unprecedented in our business and could result in swings in margin and earnings by quarter. The second is the possibility of LIFO-related charges as prices go up, which we experienced in Sam's Club U.S. during a sustained inflationary period in FY '24. We currently expect that sales growth on a constant currency basis will be in the range of 3.5% to 4.5% for the second quarter, though the composition of sales through AUR versus units may be different than what we expect today. Notably, if current exchange rates were to stay where they are right now for the entire second quarter, we would expect a headwind of approximately 120 basis points to reported sales growth. For operating income, the range of outcomes for the quarter is much wider. The information related to the trade discussions taking place is changing by the week and in some cases by the day. Importantly, we also want to provide flexibility for us to play offense in this environment. And lastly, our method of accounting for inventory could have a larger impact on our earnings than in normal quarters. For these reasons, the range of outcomes for the quarter is so wide that it would be impractical to provide a range of operating income guidance that investors could credibly rely upon. I want to encourage you to think about the next couple of quarters in the aggregate. We may experience larger gains related to markups in the second quarter, and some of those may be offset by markdowns in the”