Good day, everyone, and welcome to the Guess? Fourth Quarter Fiscal 2022 Earnings Conference Call. I would like to turn the call over to Fabrice Benarouche, Vice President of Finance and Investor Relations.

Thank you, operator. Good afternoon, everyone, and thank you for joining us today. On the call today with me are Carlos Alberini, Chief Executive Officer; and Katie Anderson, Chief Financial Officer. During today's call, the company will be making forward-looking statements, including comments regarding future plans, strategic initiatives, capital allocation and short- and long-term outlook, including potential impact from the coronavirus pandemic and the war in Ukraine. The company's actual results may differ materially from current expectations based on risk factors included in today's press release and the company's quarterly and annual reports filed with the SEC. Comments will also reference certain non-GAAP or adjusted measures. GAAP reconciliations and descriptions of these measures can be found in today's earnings release. Now I would turn it over to Carlos.

Thank you, Fabrice. Good afternoon, everyone, and thank you for joining us today. This is a very difficult time for all of us. The current situation in Ukraine is heartbreaking and very hard to process. Our hearts go out to all those being impacted by this horrific violence. While our opportunity to help is limited against, we have been doing everything we can to assist in the humanitarian efforts there. In addition to our charitable efforts, our team in Poland is supplying refugees with housing, food, blankets and other necessities. And we are very grateful that we have extraordinary people with big hearts that respond strongly and adapt to crisis like this one. Regarding our business in Russia, we have a joint venture structure there, so we are not a 100% direct operation. We are actively discussing and negotiating actions with our Russian partner. For the time being, we are suspending deliveries and investments into Russia and closing our direct e-commerce business. We will continue to monitor the situation with our partner as we move forward. As part of our announcements today, we shared that Katie Anderson will be leaving Guess? to pursue another opportunity as CFO of a privately held company. Katie is very excited about her new role, and we fully support her decision and wish her the very best in this new chapter of her career. We want to thank Katie for all her contributions to Guess? during the last 2.5 years that she was with us. To support Guess? during this transition period, I'm very pleased to report that Dennis Secor will return to Guess? as Interim Chief Financial Officer. Dennis spent over 6 years as Chief Financial Officer of Guess? between 2006 and 2012, and he brings significant experience and strong leadership capabilities to the role. Many of us know Dennis well. He is highly respected within our organization and understands our business. We are confident that this will be a seamless transition, and I want to welcome Dennis back to the team. Going forward, as many of the global functions are being consolidated in Switzerland following our IP migration, we'll be launching a search for a permanent CFO based in Switzerland. Now on to our performance. I'm very pleased to report strong fourth quarter results, where we met our top line and exceeded our bottom line expectations. This caps an outstanding year for our company. For the year, we reached a 12% adjusted operating margin and exceeded $310 million in adjusted operating profit, more than doubling our pre-pandemic levels in fiscal year 2020 for both measures. We ended the year with a strong balance sheet and a return on invested capital of 26%, the highest it has been in 10 years. We also returned capital to our shareholders via our increased dividend as well as the repurchase of over $50 million in shares in Q4. This means that we have repurchased 378 million of our shares over the last 3 years at an average price of $16.41, representing 28% of the outstanding. And today, we announced that our Board has approved an increase of our share repurchase authorization to $300 million and our intention to enter into a $175 million accelerated share repurchase program as we continue this commitment to return value to our shareholders. Our strong performance this year is a clear testament to the strength and capabilities of our people across the world. Paul and I once again want to congratulate our entire team of associates who work together relentlessly and seriously to make this company better every single day no matter how challenging the circumstances. We have an amazing team and culture here at Guess? and we could not be prouder of what we have accomplished together. Let me now give you some color on our fourth quarter and full year results by segment. Our retail business in the Americas had another remarkable quarter, driven by both positive comps and significant margin expansion. This business closed the year with earnings from operations of $125 million, over 5x that of pre-pandemic levels. And we believe that there is more growth to come as we drive top line here with a much more profitable model. Our wholesale business in the Americas also had another strong quarter of growth, closing the year up 170% in operating profit to last year and 51% to LLY. Our European business performed well despite a significant impact from Omicron variant in that region. While retail sales were challenged by restrictions and consumer sentiment surrounding the COVID surge, wholesale and e-commerce showed meaningful growth. The Spring/Summer order book, which ships in the fourth quarter of last year and the first quarter of this year, was up 12% versus LLY. And I'm happy to report that this momentum continued with our order book for Fall/Winter 2022, which finished up 14% versus last year and will ship in the second and third quarters of this year. Altogether, operating profit for the Europe segment was $175 million, which is 162% higher than the prior year and 30% higher than LLY. Our Asia segment continued to be impacted by the COVID situation and government restrictions in several countries, including China, Japan and Taiwan. But even with sales down 30% to LLY for the year, the segment performed significantly better from a bottom line perspective than LLY as it is healthier because of the actions that we took. And lastly, our licensing business had a terrific year with sales up 31% to last year and 13% to LLY in spite of shipping challenges due to supply chain disruptions. Let's talk about product. Paul and the entire creative team have delivered, and their vision is extraordinary. I'm really encouraged by the product trends that we saw over the fourth quarter, which showed strength in our key focus categories, showcasing that our strategies are working. This quarter, we had strong performance in both women's and men's outerwear and activewear, including our new athleisure line. Our men's business continues to outperform. In women's, knit tops and denim, which represent over 40% of the business, outperformed other categories. In addition, we saw traction in footwear, watches and our high-end Marciano assortment. Demand for handbags has been solid, but lack of inventory due to supply chain delays in this category impacted that business in the fourth quarter. Our overall trends clearly indicate the customer is venturing out of their home and enjoying more social interactions. Guess? is a true lifestyle brand, and we are confident that our product lines are well positioned to capitalize on this return to pre-pandemic life. Regarding the supply chain, we have been successfully navigating this dynamic and challenging global environment and are confident that we will have the appropriate inventory to support our business this year. We ended the year with inventories up 19% to last year and the LLY period. We have a higher portion of product in transit and placed orders earlier to mitigate delay risk. We are very happy with the makeup of what we own and have strategically planned our buys to include more timeless assortment like essentials, which gives us the capacity to support higher demand without taking significant inventory risk. We are seeing some signs of decreased congestion of the ports, but have built our plans, assuming prices will remain elevated for the remainder of the year. Now I will walk you through the transformation of our business model that we successfully executed over the last 2 years. Then I will take you through the building blocks for our future growth. We have elevated the Guess? and Marciano brands, redefined the company's global e-commerce strategy, optimized our store footprint, enhanced supply chain and driven efficiencies across the business. I'm going to summarize this most for you, as I believe understanding the drivers behind the margin expansion demonstrates its true sustainability. I will, of course, start with the elevation of the brand, which has been led by Paul and the product and creative teams and has produced incredible results for us this year. We have elevated the quality and sustainability of our product and upgraded our marketing and visual merchandising. For the first time in the company's history, we completed the launch of a global product line for all categories. This allowed us not only to maintain consistency of our product worldwide, but also streamline our vendor base from over 500 suppliers 3 years ago to around 100 today and reduced SKU development by over 40% during that time. We were able to eliminate overhead, increase SKU productivity and drive down our cost with higher volume buys. Over the last few years, we have done a lot of work on driving IMU growth, including moving sourcing to lower-cost regions and consolidating vendors. We have strategically aligned our prices with the perceived value of the product and the competitive environment, resulting in AUR growth of over 15% in both North America and Europe. As a result, IMU expansion contributed roughly 250 basis points of margin this year versus the pre-pandemic LLY period in spite of investments that we are making in both sustainability and the enhanced quality of our products. We have adjusted our buying strategies to maximize full price selling, resulting not only in a cleaner and more upscale image of our brand, but also a margin pickup of nearly 200 basis points this year. For example, the portion of our sales sold at full price last year in North America increased 11% versus the pre-pandemic LLY period. In North America, we integrated our G by GUESS brand into our Factory business, reducing costs and driving productivity, resulting in an improvement in store contribution of almost 3x versus LLY. In our retail channel, we closed underperforming stores representing 16% of our store base, including highly unprofitable flagship locations, eliminating roughly $20 million of operating losses. We renegotiated over 490 leases, leaving us with much better terms for our existing stores. These initiatives drove around 120 basis points of efficiencies in our occupancy rate. And lastly, we streamlined our organizational structure with globalizing functions, allowing us to reduce costs and increase accountability. This business model transformation has built a strong base for sustainable and profitable growth as we move the business into its next phase of growth. I would classify last year as a baseline year where we suppressed demand by decreasing promotions and increasing prices and faced challenges, including significant decreases in customer traffic due to COVID and lack of product availability as a result of supply chain disruptions. This gives us a great opportunity to build the top line from here. Let me walk you through some of the key initiatives for this year that will drive our growth and the future of our brand. The upgrades that we have made to our brand have positioned us very well in the marketplace. Our wholesale partners are embracing our product and buying more. The customer in our stores is doing the same. We have cleaned up our store portfolio to eliminate unproductive stores and concentrate our retail operations in the stores in which we see growth opportunities. In addition, to align our store image with the elevated branding, we have embarked on a remodeling program that will ultimately touch over 600 stores, with around 230 remodels completed so far. Including our new stores, this will represent almost 80% of our entire fleet of stores in Europe and North America. We have also reimagined our assortment. For example, for our Guess? North America business, just a year ago, 75% of our denim assortment was represented by skinny jeans, with additional styles like flare, bootleg, straight leg and the mom jean. Skinny jeans now would represent only 50% of our assortment going forward. Our handbags have no competition in the market, given the unique quality, styling and colors that we offer at our price point. Dresses have always been a key driver of our women's business. In the past, we were focused primarily on fashion and print, but now we also have a foundation of essential dresses that are doing very well. This combination is powerful for expanding this important category. Our outerwear collection for women's, men's and kids is incredible and is selling very well. Outerwear is another key category for us with high price points to build spend and increase store productivity and profitability. These are just some examples of levers that will continue to fuel our comp growth and our wholesale business this year and into the future. Digital has been a priority for us. So let me talk a bit about our progress for that business. As you might recall, in 2020, we finished the rollout of our new faster and more user-friendly e-commerce platform, which helped us to deliver 15% growth in e-commerce sales this past fiscal year in Europe and North America. In late 2021, we launched our new CRM platform in Europe, which gives us a 360-degree view of our customer and enables us to improve the way we segment and personalize our communication, marketing and promotional strategies. Our customer database in Europe grew by almost 20% last year. The customers in our database represent roughly 1/3 of our sales, spending 20% more per transaction and engaging more across categories than our generic customers. We can now facilitate multistep journeys, powered by AI tools, to optimize communication using various levels of customer data. This includes optimal times to send messages when the customer is more likely to engage as well as segmentation tools to predict content, which will most likely resonate with the customer and the customers' sensitivity to various discounts. These tools will allow us to further drive engagement and spend from these already valuable customers. We have been testing this platform in 3 pilot markets in Europe, and engagement with communications has increased 40% versus the benchmark. We are quickly learning the capabilities of the tool in Europe, which will enable us to drive quick wins in North America when we roll this out here later this year. Using these tools, paired with the elevation of our product, our stores and our online platforms, we will focus on driving customer lifetime value and retention rates and lowering customer acquisition costs. This represents a significant go-forward growth opportunity for our company. We continue to believe in the importance of our stores as the customer is increasingly engaging with brands on an omnichannel level. We opened 87 new stores last year and are trying to open 50 to 60 new stores this year. We have substantial white space for stores in many of our markets as well as the opportunity for specialty concepts like accessories, activewear, Marciano, kid's and our Gen Z concept GUESS Originals. Current market dynamics are allowing us to open shorter-term pop-up stores, providing us with a cost-effective way to test markets and concepts. In addition to completing the omnichannel experience, our stores showcase the lifestyle attributes of our brand and drive new customer acquisition. And with the work that we have done to optimize our margins, stores represent a profitable and synergistic path for future growth. Sustainability continues to be a top priority at Guess? We released our sustainability report last summer with ambitious goals to empower our people and protect our planet. Guess? is the first in fashion and one of the firsts in the world to have its report undergo reasonable level assurance review, with the examination led by Big 4 assurance provider, KPMG. We have ambitious environmental goals. And in Q4, we made our first ever purchase of renewable energy, solar and wind in the Americas, Europe and Asia, equivalent to power approximately 20% of our stores globally. We also continued to strengthen diversity and inclusion. In 2022, Guess? has made diversity and inclusion training mandatory for U.S. associates, and we are working to expand this abroad. Currently, 40% of our senior executive leaders are female. And over 70% of our managers are female. In fiscal year 2021, we achieved gender pay parity at the U.S. corporate headquarters, and we'll continue to monitor and report on this metric globally as we are committed to maintaining equal pay for equal work at Guess? We also incorporate diversity and inclusion values into our performance review metrics across the organization. Now I want to give you some context around our expectations for this fiscal year. I will start with the macro environment, where we see both opportunities and challenges in fiscal 2023. We believe consumer demand will remain strong as wages continue to rise and people return to life outside the home post-pandemic. For this year, we see a recovery in store traffic, particularly in regions which have been slower to rebound from the pandemic like Europe. We expect that international tourism will provide renewed business across regions, particularly in the back half of the year. At the same time, we will continue to be impacted by supply chain disruptions, including the recent COVID surge in China, and will face more uncertainty and volatility, given the potential global impact of the war in Ukraine. We are confident in our plans to capture the demand and navigate through the challenges in fiscal 2023. We are expecting sales growth of up low single digits versus fiscal year '22 for total revenue of almost $2.7 billion. As you may recall, last year's first quarter was materially impacted by COVID-related store closures, especially in Europe and Canada. For fiscal 2023, we do expect stores to be open, which will benefit this year's revenues by roughly $60 million or 2% of revenue growth. We are also planning for positive comp store sales. The elevation of the brand has fueled higher AURs through higher prices and lower promotions. We expect AUR to help drive positive store comp sales in fiscal 2023, especially in the front half of the year as fiscal 2022 benefited from it in the back half. As mentioned earlier, we also expect tourism to start recovering in the back half of the year and drive higher traffic into our stores. Turning to wholesale. As I previously mentioned, this business has momentum. In Europe, our order books for Spring/Summer and Fall/Winter 2022 are up double digits, with the growth in that channel being driven by higher average buys from our wholesale partners. Finally, we still believe that our e-commerce business has the potential to continue to grow as we augment our customer analytic capabilities. We will have a healthy business in fiscal year '23 with high margins and lower promotions. We expect operating margin to be around 10.5%, almost double pre-pandemic levels, but less than this past fiscal year, mostly driven by cost pressures in product costs and logistics and wages, especially in the first half of the year. Katie will take you through the details here in a few minutes. Regarding fiscal 2024, we are still confident in our goals to reach sales of $2.8 billion and a 12% operating margin. We believe that many of the headwinds that we are facing this year, like elevated freight costs, will normalize and we will realize the benefits of both sales leverage and additional operational efficiencies in the longer term. In closing, the last 2 years with the global pandemic were very challenging for the world, for our industry and for our company. COVID impacted the way we live, the way we work, the way we prioritize life and, for sure, the way we shop. Paul and I are very proud of how our team and our company responded to this crisis to transform our business, leaving no stone unturned. We executed well and adapted with agility and courage to make Guess? better, not just for the next quarter or the next year, but for the next generation. Today, I believe our company is better positioned than ever with a business model that delivers sustainable double-digit operating margins and high return on invested capital. Today, our Guess? brand enjoys strong momentum and is capitalizing on its elevated position globally. Today, we have significant opportunities to grow our business profitably. And today, we have a strong team that is highly engaged and greatly inspired to take Guess? to the next level of growth and profitability, no matter what challenges lie ahead. And this is a team that is highly committed to delivering inspiring product to our customers and extraordinary value to all our shareholders today and for many years to come. With that, let me pass it to Katie to review our financials in more detail. Katie?

Thank you, Carlos. Good afternoon, everyone. Fiscal year 2022 was a remarkable year for our company. We have fundamentally reengineered our business model to be more agile and profitable. And this is showcased by our results, a doubling of operating profit and EPS versus pre-pandemic levels. Our strategic moves and investments in our brand are gaining momentum, as evidenced by our expectations for revenue of almost $2.7 billion this year despite a still volatile operating environment. We are confident in our plans and our people and will continue to push our business forward to deliver long-term growth and drive shareholder value. Now let me take you through the details on the quarter. Fourth quarter revenues were $800 million, up 23% for last year and down 5% compared to LLY, right in line with our expectations. The 5% decrease in revenue to pre-pandemic LLY was almost entirely driven by permanent and temporary store closures worth about 4% to LLY. Additionally, growth in e-commerce partially offset negative comp store sales in Europe and Asia due to the continued presence of the pandemic. Let's talk a bit about sales performance by segment. In Americas Retail, revenues were up 26% versus last year and down 4% versus LLY. Again, this quarter, the decline to LLY was entirely driven by permanent store closures, which are worth roughly 6% of sales. Store comps in the U.S. and Canada were up 1% in constant currency versus LLY. Same-store sales in the U.S. remained a solid positive despite continued negative traffic trends. We saw positive conversion and AUR growth of over 25%, an increase to last quarter, driven by even further reductions and markdowns. Sales in Canada softened slightly since Q3, driven by traffic as the Omicron wave impacted that region more than the U.S. The gap between sales trends at our tourist stores versus non-tourist stores was the narrowest it has been since the pandemic started and almost half of what it was last quarter, which presents upside for us as the tour stores continue to recover. We continue to make progress in the profitability in this segment. Operating margin in Q4 was over 17% versus 6% in LLY. And operating profit was about 2.5x what it was pre-pandemic even on lower sales. In Europe, revenues were up over 30% versus last year and down 4% versus LLY. The Omicron wave impacted Europe more than our North American businesses, as governments imposed more restrictions and consumers were more cautious. Store comps for Europe were down 19% in constant currency versus LLY, driven by significantly negative traffic associated with the pandemic. Conversion and AURs remained positive. The wholesale business in this region continues its momentum with the Spring/Summer and Fall/Winter order books closing up double digits. In Asia, revenue was down 4% to last year and 20% to LLY. In both cases, more than half of this decline was driven by permanent store closures. Our store comps were down 19% in constant currency versus LLY, 6% better than Q3. The improvement is coming mostly from Korea, which had a sales comp in the negative low single digits to LLY. Sales in China also improved versus Q3, driven by traffic, but Japan continued to struggle with the pandemic. Our Americas wholesale sales were up 32% to last year and 12% to LLY, driven by higher sales in the U.S. And licensing revenue was down 10% to last year and up 1% to LLY, driven by handbags and footwear, partially offset by fragrances. Total company gross margin for the quarter was 46.3%, more than 600 basis points higher than 2 years ago. Our product margin increased 370 basis points this quarter versus LLY, primarily as a result of higher IMU and lower promotions, partially offset by increased freight, which is worth almost 150 basis points this quarter. Occupancy rate decreased 240 basis points, driven by lower rents and permanently closed stores. Adjusted SG&A for the quarter was $245 million compared to $237 million 2 years ago. The increase is a result of variable costs associated with the e-commerce business, which grew materially to LLY as well as higher performance-based compensation. Adjusted operating profit for the fourth quarter was $126 million versus $74 million last year and $102 million 2 years ago. This is a 69% increase to last year and a 24% increase to pre-pandemic levels. Other net expense was $19 million and mostly consisted of net realized and unrealized losses from foreign currency exposures. Our fourth quarter adjusted tax rate was 25.2%, up 870 basis points versus 2 years ago due to the mix of statutory earnings. Specifically, our business in the U.S. was more profitable and carries a higher tax rate. Adjusted diluted earnings per share finished at $1.14 versus $1.18 last year and $1.22 2 years ago. Its higher adjusted operating profit was offset by higher other net expenses and tax rate. Now let's talk about our balance sheet, which remains very strong. We ended the fourth quarter with $416 million in cash, $53 million lower than last year's balance at the end of Q4. Our cash balance was impacted by $107 million of U.S. tax payments made in connection with the IP transfer that we discussed last quarter, which we will cover over time, as well as $51 million in share repurchases. Inventories were $462 million, up 19% in U.S. dollars and 26% in constant currency versus last year. This increase reflects our strategy to secure goods in advance in light of the global supply chain disruptions and elongated transit times. We are particularly focused on ensuring that we have the proper inventory levels to deliver on our open orders for wholesale. While we are still living in a highly dynamic environment, we are seeing some improvements in lead times, and our inventories are well positioned to meet demand for the spring. Fiscal year capital expenditures were $64 million, up from $19 million in the prior year and $62 million in LLY, mainly driven by investments in new stores, remodels and technology. Free cash flow for the year was $61 million, driven down by the $107 million U.S. tax payment that I previously mentioned. Excluding this tax payment, our free cash flow would have been $168 million. We continue to allocate value to our shareholders. As you recall, last quarter, we doubled our quarterly dividend from $0.1125 to $0.225. In the fourth quarter, we repurchased 2.3 million shares for $51 million at an average price of $22.28. Today, we announced that our Board approved an increase to our repurchase authorization to $300 million, leaving us with $249 million available. And as Carlos mentioned, we intend to enter into a $175 million accelerated share buyback. This was a strong finish to an incredible year for our company. For the fiscal year, we delivered $311 million in adjusted operating profit, more than double pre-pandemic adjusted operating profit of $150 million. We expanded adjusted operating margin by over 600 basis points, reaching 12% versus pre-pandemic 5.6%. And we achieved this in spite of the varied and unprecedented challenges that have continued to arise as a result of this multiyear pandemic. We returned value to our shareholders as well as invested in our infrastructure and stores to support future growth. As Carlos mentioned, we are pleased with the momentum in our business, but continue to operate in an uncertain environment globally. We are expecting a revenue growth rate in the low single digits. In Q1, we will benefit from lapping significant COVID-related temporary store closures from last year. We are planning positive comp store sales as we continue to benefit from higher AUR and lower promotions in the first half of the year as well as an expected recovery in tourism in the back half of the year. Revenues are also expected to benefit from new store openings. We opened 87 stores in fiscal 2022 and plan to open roughly 50 to 60 new stores in fiscal 2023. Finally, we expect growth in both our e-commerce and wholesale businesses. On the other hand, we have modeled significant disruption to our business in Russia, which represents less than 3% of revenue for the total company on an annual basis. In addition, we are assuming currencies at prevailing rates, which is a negative impact on our revenue growth of around 4% versus last year. In terms of margins, we expect to deliver approximately 10.5% operating margin. Let me walk you through the puts and takes to explain the 150 basis point decline in operating margin versus our 12% in fiscal 2022. We are expecting 200 basis points of supply chain cost pressures, including raw material pressure and freight, which is more prevalent in the first half of the year. Currency headwinds will impact our bottom line by 50 basis points. And we had 50 basis points of onetime benefits that we received last year and will not repeat. This is partially offset by 150 basis points of sales leverage. All in, we expect gross margin contraction of about 200 basis points for the year versus last year, which is partially offset by about 50 basis points of leverage in the SG&A rate. For the first quarter, we are expecting revenue to be up low teens versus prior year, driven by last year's temporary store closures, which is worth roughly 10% of revenue growth, wholesale growth and positive store comps. In terms of profit, operating margin for the first quarter is expected to be roughly flat to prior year. Gross margin is expected to decline by nearly 70 basis points, driven primarily by higher inbound freight and raw material costs, partially offset by pricing and lower promotions. We anticipate that the adjusted SG&A rate will be down around 70 basis points as a result of sales leverage. And lastly, as we announced today, this will be my final earnings call at Guess? I would like to thank Paul and Carlos and the amazing team here at Guess? for an incredible journey over the last 2.5 years. This is a great company with truly special people, and I'm so proud of what we have accomplished together. I'm excited for what lies ahead as Guess? continues its growth path and will be cheering you all on every step of the way. And with that, I will hand it back to Carlos.

Thanks, Katie. Before we move to Q&A, I want to briefly address the recent matter regarding Legion Partners. Guess? has a long track record of shareholder engagement and responsiveness. And in line with this, members of our Board of Directors and management have met with representatives of Legion Partners to better understand their views and engage constructively for the benefit of all shareholders. Our Board reached out to Legion Partners with the goal of achieving a mutually agreeable path forward. Notably, Legion Partners has publicly and privately complemented the company's transformation strategy and our strong business performance. Our Board of Directors and management team remain focused on executing on our strategic plan and delivering value for Guess? shareholders. While we remain open to an appropriate resolution that allows us to focus all of our energy and time on execution, we do not have further details to share related to Legion Partners and therefore ask that your questions today are focused on our financial results and business performance. With that, I will conclude the company's remarks, and let's open up the call for your questions.

[Operator Instructions] Our first question comes from Corey Tarlowe from Jefferies.

Would you mind just walking through the 10.5% operating margin guide for the full year, maybe by halves in terms of the first half and the second half? I think it was helpful to get a little bit of color as it relates to the first quarter with the gross margin expected to be down, I believe, 70 basis points. But I think it would be very helpful to get maybe some color as you're thinking about the first half and the second half as ideally those supply chain pressures, costs ease.

Yes. Corey, let me just kick this off, and then Katie will jump in with a more granular description of the numbers and how we see the bridge between this year's operating margin and next year -- or last year's and this year rather. So just -- let me just say that we are very pleased with our performance and the whole transformation of our business model. We are -- we couldn't be more excited about how the brand elevation strategy is working and how our customers are embracing this, not only our ultimate customers in stores and online, but also our wholesale customers. And this has been a tremendous initiative that everybody is behind. And we are seeing the results already to really accumulate with each of our lines since we started with this. We have adjusted prices to perceive value, and we have been very careful with this. This is done product-by-product. We have tightened promotions, and we have maximized full price selling, and we are seeing the results of that as well. Everything that we have done to optimize the store fleet, I think, is working well. As you, I'm sure, heard, 490 leases have been renegotiated. We have closed a lot of stores that were not producing for us or were not right for the brand. And we have done a lot to improve our supply chain machine and very successfully. I couldn't be more excited. Global line, that launch has been a tremendous change for us, and it's working very well. We are seeing that bestsellers, our bestsellers everywhere. And the vendor consolidation has also contributed quite a bit. So overall, we think that all these levers are here to stay, and we see a double-digit operating margin performance to be long lasting. This year, we are dealing with some very unique issues that we think are very much temporary to a great degree. And we think that going back to the 12% in fiscal year '24 is completely within our goals and within the cart. There are like 4 big topics that I think Katie is going to touch, and one is supply chain. Because of all the increased costs, some of them because of everything that we are doing to increase quality, but some of them because of the inbound freight costs, there is a foreign exchange issue. There are some one-off factors that were impacting this past year that we don't see them coming. And the fourth thing is more about what we can do with the leverage on the revenue side. So with that, Katie, do you want to get into the details?

Yes, Corey, so I laid out these numbers in the prepared remarks, but let me walk you through some more details in each one. So I'll start with sales leverage. So that's going to be a positive, about 150 basis points. We're planning on positive comps, positive sales from net new stores, wholesale and e-commerce growth. On the negative side, the supply chain is going to cost us about 200 basis points. So as Carlos mentioned, we're going to continue to see pressures from freight, especially in the first half of the year because last year, it really started in the back half of the year, as well as inflation on raw material costs. And then we have some one-offs, which is worth about 50 basis points that we benefited from this past year, but will not benefit -- or last year, will not benefit this year. So this is government subsidies for closed stores, rent relief, et cetera. And then the last one is currency. So we have about 50 basis points of currency, but the euro being weaker, last year was about EUR 1.18 to USD. And the prevailing right now is much weaker. So we have translational and transactional impact on our P&L. And actually, if you adjust for this in terms of margin as well as on the top line, the impact of FX on our model for next year is $25 million of operating profit. So if you add that back, really, the business is about flat in operating profit this year to last year. And then in terms of the cadence, the first quarter last year, we had a lot of stores closed. So we had temporary store closures in -- mostly in Europe, also some in Canada. So we're really going to benefit this year from all our stores being open, and that's why we're modeling up low teens to prior year in Q1. So that's not only going to benefit sales, but it's also going to help us get some leverage. And that's why operating profit is flat. But as we go Q2, that's not going to repeat. And we're still under pressure with supply chain, et cetera. So I would say Q2 operating margin is going to be closer to 10% versus 14% last year. So that's how we see the cadence going.

Yes. And I think that I would add, when you think about the first quarter, obviously, because we are lapping all those store closures, the growth in top line is significantly higher than what we expect in the rest of the year. So in the second quarter, you're going to see that the low teens coming down to mid-singles or so.

Right, for the rest of the year.

Very helpful. And then would you also just mind unpacking the recent momentum that you've witnessed regionally and perhaps what's embedded in the first quarter guidance for -- in terms of sales and comps?

Well, I'm going to start again. So when you think about what has happened during the last few months, just there is a significant difference between momentum in the business and is primarily driven by customer traffic in each region, that has been greatly impacted by what happened with Omicron at the time and COVID in general. And the North America business did a lot better and recovered a lot better and faster, especially in the U.S. And we have seen momentum that has been very consistent throughout the year, and we continue to see that. Then you have Canada that really was impacted more severely and -- by COVID, and that impacted our customer traffic and, in many cases, we had to be closed for extended periods of time. And of course, that reflected in our revenue performance as well. But since the stores reopened, we are seeing a pretty healthy momentum there as well. And then you look at Europe, and Europe has been very, very challenged because COVID was very tough across multiple countries, almost all of them and because governments established significant restrictions that impacted customer traffic severely. And that, in turn, impacted our ability to conduct a big business from stores. Our e-commerce business fortunately picked up quite a bit of that. But overall -- the overall tone of the business was impacted greatly. And now we have all stores open. So definitely, we have a big expectation that things are going to get significantly better, and that's what we mentioned during our prepared remarks. And then we have, in some cases, obviously, the impact of the current situation in Ukraine, but that is somewhat limited to the area where the war is taking place and, obviously, the situation in Russia, as I mentioned in my prepared remarks. But overall, I think that we continued to see a complete alignment between COVID and how the regions have responded with customer traffic and that impacted our sales. The good thing is that we see that conversion continues to be very healthy. We see that when the COVID situation is under control, people are coming into the stores. Our customer traffic continues to improve. I think Katie mentioned that even for those tourist centers, we are seeing that the gap between the performance of those tourist centers or those stores that are impacted by tourism versus the rest of the chain has been narrowing quite a bit. So we are excited about that. We see that as a big opportunity for us.

That's great. And then final question, which is just a housekeeping item. On the store openings for this year, I believe it was 50 to 60 new stores. Is that a net number?

No. That's a gross number. The net number could be up to half of that.

[Operator Instructions] Our next question comes from Dana Telsey from Telsey Advisory Group.

Good afternoon, everyone. As you think about some of the macro topics, we've talked about supply chain, about inflation. How do you see inflation impacting the business, whether it's in wages, whether it's in raw materials, pricing and potential price increases? Does it differ by region? And then lastly, Carlos, you mentioned lower customer acquisition costs. What does marketing look like for this year? And how are you thinking about the new social media presence that's been enhanced with Guess? And what -- how it's delivering in terms of conversion?

Thank you, Dana. Well, so let me start with the -- your first question about macro. Just of course, we read all the same papers and we see inflationary forces at work here in every aspect of everything we do. And this is not just limited to any particular region, but is definitely a global phenomenon. So we have been watching every one of those factors. I mean, of course, we are seeing increases in the cost of raw materials. And that has been compounded by the fact that we are increasing the quality of what we put into the product. So we see a big factor that is contributing to higher average unit cost for us. But for now, we haven't seen a significant increase in everything that we own today, but we are anticipating that we will see it as we go into the back half of the year. We see also increases in wages, of course. We have been making adjustments everywhere to stay very competitive because we are committed to getting the best talent that we can have. And the competitive environment is pretty high here, not only in North America, but in Europe as well and even in Asia, we're seeing that. We have made price increases something that has touched every product category. But we have done it in a very surgical way, meaning going back to the way we are pricing everything, which is perceived value of the product. We start with that, and it's like what is the perceived value. And based on that, we do make price adjustments. Of course, this is a dynamic and fluid process. So you are never done, especially during an inflationary moment like we are experiencing right now. So we will continue to look at that, but we want to be balanced in the way we approach pricing. We think that in a way, we suppressed demand this past year because we didn't -- not only do we increase prices, but also we didn't push for promotions or additional discounts. Our whole strategy here is to retrain the customer to really buy primarily at full price. And we can do that because we feel that the price of the product is representative of the true value of the product. You asked about changes by region. I would say that this is happening across the board. Really there are some regions where this is more noticeable. But overall, just we see that price increases are embraced by the customer when they are ripe for the product. And we think that we are doing a great job. I mean in all my years with Guess?, I think that I've never seen the kind of integrity that we have with pricing every product in the line. And this includes not only what we do internally, but also what our licensees are doing. So this exercise and this practice is impacting every single product in our entire line, which is pretty wide, as you know. And we are seeing that in some cases. Because the customer really likes the product, the price increases can be very significant. I'm talking about 20%, 30% in some categories. And that is because the product is worth that kind of price. The last question you had is about marketing. And I have to say, we have made a plan here that relies on additional spending and for marketing in general. If you go to Europe today and you just walk through multiple -- all the big cities, you're going to see Guess? everywhere. We have been spending and increasing our investment in the brand significantly. I don't think that there is any other brand that is at our level in terms of visibility and imaging. And that also applies to our social media in our spend. And you can see that we are in Instagram constantly. We are doing some things in China that are very interesting, TikTok over the year [indiscernible]. And it's representing about 25% of our business now, and that has happened almost overnight. So we are seeing a lot of opportunities that good investment can bring great return on investment. In Europe, our spend has been very productive. We are seeing that in addition to what we are doing online with our new infrastructure. Just knowing more about customer analytics and being able to really redirect our spend has been a productive way to really create more momentum and deliver more value with that spend. And the big thing for us, this is somewhat muted because everybody talks about digital, but it's our stores. We have, with all the stores including the ones that we run plus the ones that our partners run, we're talking about 1,600 stores worldwide. And these are all tools to be able to acquire customers for the Guess? brand. And to us, this is a huge, huge driver for customer acquisition. And those customers are always a lot more loyal over time because they see the brand, they see the entirety of the lifestyle that we offer as a brand with multiple products and everything presented in the way that it can be outfitted. So overall, I think that we have a great plan. Just in the past, we have been very efficient with how we spend marketing dollars. I think Paul does an incredible job on this. And we don't use agencies. We do all this direct. And obviously, that gives us a lot more power for the money that we spend.

And our next question comes from Susan Anderson from B. Riley FBR.

Carlos, I was wondering, I guess, as the European business continues to recover from a sales perspective this year, do you expect the profit of that business, I guess, to improve and maybe move closer to the U.S.? And then also, I was just curious in terms of the margin pressure this year because of freight, et cetera. Should we think about that being equally across all of the different regions?

Yes. Yes -- no. So I think that the profitability for Europe should definitely improve because we are talking about comparing a year with all stores opened versus a lot of stores closed and a very limited customer traffic environment because of COVID. So we are definitely excited about what this could mean. And then when you put on top of that the fact that our e-commerce business has a lot of energy and great momentum and you put on top of that the fact that our wholesale business is growing up double digits, just -- and when you think about wholesale just between Spring/Summer and Fall/Winter, you're talking about 3 quarters that are kind of like completely just have both. So seeing double-digit growth in the business is very, very strong. You put it all together and all those businesses are accretive. So we should be able to really do better in terms of profitability. On the other hand, the situation with Russia obviously has an impact. Katie talked about how big this business is and going to a breakeven is what you got in our outlook. So overall, that is already embedded into the numbers that we are giving you today. And then with respect to inbound freight, just it's different because we have different ways that we receive product and we move products, depending whether we are dealing with product that we do in-house versus what we buy from licensees and so forth. So it's -- the mix and the formulas are somewhat difference. But obviously, the delays are a lot more pronounced right now into America, especially on the West Coast because of all the congestion that we're seeing in Los Angeles. Just the product that we are bringing through the East Coast is coming through a lot faster and more seamlessly without the kind of disruptions that we are seeing on the West Coast. So overall, just it's kind of like a big puzzle. We -- I think our team has done a great job with this, and we have been able to minimize air freight. But in spite of all that, we spent about 9% of our trade in air freight versus 3% historically. So obviously, it has implications everywhere.

Got it. Okay. That's really helpful. And then maybe if you could just talk about just what you're expecting from the promotional environment this year. Are you expecting to give, I guess, some of those back as we get a little bit more to normalized inventory levels at some point this year?

Yes. Susan, I mean, of course, I don't know exactly what's going to happen with the environment. Nobody does. But what I know is how we are running our business. And frankly, we are buying based on what we think we are going to be able to sell. So expected demand is what's driving every decision that we make with respect to product purchases. And we -- I think after spending many, many years in this industry, I think that, that's the only way to really control promotions is to buy enough, so then you can sell a lot at full price and not buy more than that. And I think that, that has been working. Obviously, we are talking about a very unusual period during the last 2.5 years with COVID and everything else. But I think that the methodology should continue to work. So far, our increases in full price selling have been significant in spite of price increases, which gives me a lot of confidence that if you have the right product, you will be able to sell a lot at full price. And if you don't overbuy, you will be able to really maintain this kind of balance between demand and supply, so margins could be optimized. And that's -- I can tell you that the entire team here from -- all the way from the top to the bottom, everybody is absolutely aligned on our elevation of the brand strategy. And in many cases, we'll be very careful not to buy more, even if we could sell more, just to protect the business and to train the customers to know that we are always going to be selling at full price. We want the customer to come in and say, "Oh, my god, if I don't buy it today, I may not have it tomorrow. And I'm perfectly fine with paying what this garment is worth and -- but because if I don't buy it today, I may not have it."

Okay. Great. And then one last question, I guess, just on the consumer and sales. You kind of talked about trends by region. Just curious if you're seeing, I guess, any concrete evidence maybe that the consumer is starting to pull back on spending because of inflation or concerns about inflation as they kind of look forward, either in the U.S. or Europe?

It's just I would be speculating just if I said that we are seeing a significant change. Of course, you have to keep in mind that we are about to cycle through the stimulus checks event from last year. Last year, in the second quarter, we had a nice increase in the momentum of the business when the stimulus checks were released. So we know that there was some kind of impact attributable to that. But then as soon as we kind of like finished the second quarter and moved into the third quarter, this -- just the momentum slowed down. Other than that, if I told you -- I mean it's exactly the opposite in certain areas. We are having a tremendous momentum with Marciano. That's our highest price assortment that we have, but the product is amazing. So then the customer is absolutely open to spending more because again, going back to how we are pricing, just they are getting a great product for the price that they are paying. And I'm talking about 20%, 30%, 40% increases. And just as a result of a higher AUR how, coupled with significant demand for the product overall, including units that they want to buy. So I really think that if we have the right product and well priced, the consumer is completely out there and open to really buy. And this is true for women's, it's true for accessories, it's true for apparel, it's true for men's. So we are seeing -- and even kid's. Our kid's line is doing extremely well, but it's incredible product for the price that you pay.

Our next question comes from Omar Saad from Evercore ISI.

Carlos and Katie, maybe you guys could talk a little bit about how you're thinking about promotions. It seems like you're modeling lower gross margin, but it seems to be more from the inflation side and raw materials. How are you thinking about your kind of promotional assumptions embedded in that lower guidance?

Yes. So I'll start, and then, I'm sure, Katie will have comments about the numbers. But overall, just there have been very little changes in terms of taking prices down. We are running with a lot less clearance. And that has been by design, and that is the plan. We just -- we size our buys based on the sell-through that we expect at full price and then going into a clearance model. So by definition, you will always have a more limited just quantity in the -- in what you buy. We have also done a lot, and we continued to reduce SKU density, both in stores and the way we are buying the lines, including our e-commerce business. So just we made a few mistakes buying probably too much and too many styles and too broad. Now we are reeling this back and trying to buy less in terms of assortment, so then each SKU works harder and gets more productivity. And really, we think that this is the way to go. We have been very, very critical of this, just trying to be careful with the way we are buying the line. The other thing that is helping us a lot is that for the first time, I think, at least in my years with the company, we have a complete alignment between what we are buying, what we are showing in the campaigns and advertising and marketing and what we are showing in the stores and what we are showing with the other partners that we have, both at wholesale and our franchisee partners, plus where we have it online. So you put it all together and we can select the big buys and the big categories where we are going to make significant investments. And as a result of that, I think that we have a better opportunity to deliver good margins. So we are not planning margins when it comes to IMU that is not depending on the cost side of the equation down at all. In fact, if anything, we see some opportunities -- further opportunities to do better in that area because the product is selling so well. So when Katie tells you that she is expecting a 200 basis points drag in supply chain, it's primarily coming from cost and is coming from inbound freight costs, and it's not coming from increased markdowns or being more promotional or extending further discounts at all.

Yes. So Omar, last year, we had 200 basis points of margin expansion associated with lower promotions versus the pre-pandemic period. This year, we expect the promotional impact to be roughly flat to what we saw in fiscal '22.

And we have no further questions in queue at this time. So I will turn the call back to Carlos for closing comments.

Thank you, operator. Katie, good luck to you in your next chapter. We really enjoyed having you here. And again, thanks, everyone, for your time and your questions today. We couldn't be more excited about our business and our future. The fundamentals of our business are so strong, and this gives us great confidence in the value of our company. Our commitment today to repurchase a significant amount of shares showcases that confidence. Thank you, and have a very good day. Bye-bye.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for your participation. You may now disconnect.