Karen M. Hoguet - Macy's, Inc. Terry J. Lundgren - Macy's, Inc.

Kimberly Conroy Greenberger - Morgan Stanley & Co. LLC Kara Szafraniec - Northcoast Research Partners LLC Matthew Robert Boss - JPMorgan Securities LLC Lorraine Maikis Hutchinson - Bank of America Merrill Lynch Paul Trussell - Deutsche Bank Securities, Inc. Paul Lejuez - Citigroup Global Markets, Inc. Priya Ohri-Gupta - Barclays Capital, Inc. Lindsay Drucker Mann - Goldman Sachs & Co. Oliver Chen - Cowen & Co. LLC Michael Binetti - UBS Securities LLC Omar Saad - Evercore ISI Robert Drbul - Guggenheim Securities LLC Brian Callen - Bank of America Merrill Lynch

Good day and welcome to the Macy's Inc. Fourth Quarter 2016 Earnings Conference Call. Today's conference is being recorded. And now I would like to turn the call over to your host, Karen Hoguet. Please go ahead. Karen M. Hoguet - Macy's, Inc.: Thanks, Evan. Good morning, and welcome to the Macy's Inc. conference call, scheduled to discuss our fourth quarter and annual financial performance. I'm Karen Hoguet, CFO of the company. Any transcription or other reproduction of the statements made in this call without our consent is prohibited. A replay of the call will be available on our website, www.macysinc.com beginning approximately two hours after the call concludes. Please refer to the Investor Relations section of our website for discussion and reconciliations of any non-GAAP financial measures discussed this morning. Keep in mind that all forward-looking statements are subject to risks and uncertainties that could cause the company's actual results to differ materially from the expectations and assumptions mentioned today due to a variety of factors that affects the company, including the risks specified in the company's most recent Form 10-K and other SEC filings. Joining me on the call today is our Chairman and CEO, Terry Lundgren. Terry is going to start the call by sharing his thoughts on the year and then the state of the industry overall. And then I'll take you through our financial performance and our outlook for 2017 and then we'll both answer your question. Terry J. Lundgren - Macy's, Inc.: Thanks, Karen and good morning, everyone. This is going to be my last earnings call as CEO, as we announced this morning that I'll be passing that baton to Jeff Gennette next month. And I wanted to join the call to provide my perspective on Macy's 2016 performance, as well as share a few thoughts of what I'm seeing in the industry as a whole. So let's cover our 2016 performance first. Frankly, it wasn't the year we expected, nor hoped for and we're not happy at all with the 2.9% decline in comp store sales on an owned and licensed basis. And the $3.11 in diluted earnings per share frankly, thought we could have done better than that, particularly in the fourth quarter. That being said, we did make significant progress in a number of areas. We completed a major restructuring of the entire organization and concluded a significant reduction in layers of management in the central organization and improvements in the field of store management structures. These were big changes for us. I'm happy to see that our organization is settling in and learning to work with leaner teams and faster processes. We took bold steps towards streamlining of our portfolio with the closure of 66 stores. We plan to close approximately another 34 additional stores over the next few years, just based on whatever timing those things will work out to be, but very focused on getting to that 100 store closure that was announced last August. This will give us a healthy physical portfolio, one that complements our growing digital business. And this is how the large majority of Americans shop. 90% of what we sell at Macy's and Bloomingdale's is still sold in a physical store. That's for all product sales, including apparel, shoes, beauty, handbags, jewelry, home furnishings, all the things we carry. 90% of these categories still sold in physical stores. Lot of people don't believe that or understand that, but I just wanted to point that out. Now it's less than that at Macy's and Bloomingdale's because we have such a highly developed online business, which continues to see double digit growth, but I want to emphasize that physical stores will play an extremely important role in the future of shopping, for us as well as for others. We feel very good about our digital investments, which have created the best, or certainly one of the best omnichannel experiences in the retail industry. But we acknowledge that more experimentation with in-store technology and creative solutions for customers who are shopping in our physical stores is an opportunity for focused capital investments in 2017. In 2016, we also continued to execute our real estate strategy and made good progress. We expect this momentum to carry on into 2017. I feel very good about the many projects we are working on and believe that they will create meaningful value out of our substantial real estate portfolio. I plan to work closely with our real estate team and expect to get a lot done in 2017. To sum up 2016, in large part, our performance was impacted by the continuing challenges in our sector and changes in the consumer shopping habits we've seen. And in my 14 years as CEO at Macy's Inc. and my six years as CEO of Neiman Marcus before that, I've seen a series of setbacks that seem to happen every five to seven years in our industry. Going back to when Campeau bought Federated in a highly leveraged transaction in the late 1980s and then Federated ended up filing for bankruptcy very shortly after like a year and a half later. Then six-and-a-half years after that, Macy's was bankrupt, largely because they levered up to buy a former employer of mine, Bullocks and Bullocks Wilshire. And in December of 1994 I rejoined Federated from Neiman Marcus in early 1994 with the idea that we would buy Macy's. We were able to do that because Macy's was bankrupt at that point and time. They had levered up to buy Bullocks and Bullocks Wilshire. Seven years after that came 9/11 and it was a tremendous hit to retail and it was written that consumer shopping habits changed forever and department stores were no longer relevant. Well, a few years after that, 2005, we were able to acquire The May Company and become the first national fashion department store in the United States and become the largest seller of most of the most-wanted brands in the country. And then 2008 came and we all know what happened to consumer spending at that time. We were hit very hard, but we made the needed adjustments, created a winning strategy, pulled together an incredibly talented team and bounced back with consecutive winning streaks for five years in a row ending with growth, a period of five years of growing by $5 billion and a 14% EBITDA with 38 fewer stores than we began that period with. So, we did what we had to do. And now here we are seven years later and after 2008 and 2009 with another setback. And once again, we're faced with challenges. These are different than before but the message is the same, and that is there's lots of concern out there about our ability to bounce back, but yet internally, so many of the people that are on our team have seen this movie or some version of it in the past and get excited about taking on that challenge. So we anticipate that the challenging environment that we experienced in 2016 will continue, but we're not standing still. We made a lot of strategic decisions this past year that are going to set us up well in 2017 and we're going to continue to fine tune our strategy and vision forward to get ourselves in position to win in the future. Before I turn it over to Karen to review the details of our performance, I want to say that it's been a privilege for me to lead this company for the past 14 years and I look forward to stepping into my new role as Executive Chairman. Jeff Gennette is an extraordinary leader and since his appointment as President of Macy's, Inc. three years ago, he's taken on increasing responsibility for operating this company and done a great job and everything that I've thrown his way. With Jeff as CEO, we have someone with deep knowledge of our business coupled with the vision and determination to reinvent Macy's as we've done every other time when I've been told that our industry was no longer relevant. So Jeff also has a terrific team around him with a mix of Macy's veterans and some key recent hires who bring a fresh new perspective. We have the deepest, most experienced and most determined team in the retail industry. I hear that continuously from our vendors and from our other partners. And the veterans on this team, including Jeff and Karen, have a long track record of winning and are determined to win again and I believe they will. With that, let me hand it back over to Karen. Karen M. Hoguet - Macy's, Inc.: Thanks, Terry. So, I'm now going to summarize the key components of our fourth quarter performance. Sales were $8.515 billion, down 4% from last year. On an owned plus licensed comp basis, sales were down 2.1%, which was at the low end of our expectations when we started the quarter. Our digital sales continued strong, with double digit growth, while sales transacted in stores continued to be below what we had expected. It isn't possible to perfectly distinguish sales between channels, but clearly customers are choosing to purchase less in store and more through digital means. By family of business, we saw the best performance during the quarter in apparel – men's, women's and kid's, as well as in fine jewelry, shoes, intimate apparel, and fragrances. The most disappointing categories in the quarter were handbags, fashion watches, and fashion jewelry. While not one of the weakest categories, we also had hoped for better performance in cosmetics. Our home businesses were tougher than expected in total, but within home we had stronger sales in furniture, mattresses, luggage and textiles. Geographically our business was strongest in the Southwest, most notably Southern California. And the trends at Bloomingdale's were similar to those at Macy's. Transactions in the quarter were down 4% while average unit retail was up 2%. Gross margin rate in the quarter was up 90 basis points over last year. The merchandise margin was up slightly more than that, but we had higher delivery expense associated with our dot-com businesses. The gross margin in the apparel areas was strong, offset in part by lower than expected margin rates in other parts of the business. Our comp inventory was up 2% at the end of the year, which was higher than expected due to sales weakness in certain center core categories and receipts of early spring transitional merchandise. SG&A in the quarter was $2.202 billion, down slightly from last year. During the quarter, expense in our stores was lower than last year, due both to flexing expense on the lower sales and from the impact of the store closing. In addition, SG&A was lower due to the expense reductions that we implemented at the start of 2016. We also benefited in the fourth quarter from $20 million higher asset sale gains than we booked last year. This year in the fourth quarter we booked asset sale gains of $133 million. This includes $10 million for Brooklyn and $123 million relating to other assets. There were no gains on sales of flagship properties in the fourth quarter or in the full year. We did complete the sale of the Union Square Men's Store in the quarter and received the cash, but the gain will be booked in the fourth quarter of 2017. The downtown Minneapolis transaction did not close during the quarter, but we do expect that it will close shortly. The SG&A reductions were offset primarily by expense associated with our fast growing digital business as well as by $72 million lower credit income than last year in the quarter. While we expected credit income to be below last year, it was worse than expected due to the lower sales, lower card usage with our proprietary penetration in the fourth quarter of 47.1% compared to 47.9% last year, as well as lower late fees. Operating income before impairment, store closings, settlement charges and other costs was $1.062 billion in the quarter, down 4.6% from last year on the same basis. Impairment, store closing and other costs in the quarter were $230 million, slightly below our original expectation of $250 million. Store closing related costs were approximately $68 million in the quarter and the restructuring related and other costs were approximately $162 million. The majority of these costs resulted from severance and other related charges. Approximately $177 million of the fourth quarter charges will be settled in cash. We also booked $17 million of settlement charges associated with our retirement plans in the quarter. Net interest was $87 million and tax expense $256 million in the quarter. Net income attributed to Macy's shareholders was $475 million. Diluted share count was 307.8 million shares and EPS on a diluted basis was $1.54. Excluding impairments, store closings, and other costs, as well as settlement charges, left EPS on a diluted basis of $2.02, which compares to last year's $2.09 on the same basis. Cash flow before financing was strong in 2016. Cash provided by operating activities net of cash used by investing activities was $1.614 billion, $722 million higher than last year. The cash provided by operating activities was $183 million below last year, but this was more than offset by $469 million in higher asset sales, $201 million in lower capital expenditures, and last year's $212 million acquisition of Bluemercury. We utilized during 2016, $316 million of cash to repurchase 7.9 million shares. We repaid approximately $750 million of debt at maturity and utilized $459 million for our dividend. So, as Terry said, our performance in the fourth quarter and 2016 in total was not what we expected. And as a result, our changes need to be more dramatic and we need to move faster. As we look to 2017, we feel good about so many things happening in the company. Our digital growth, including the dramatic improvement of our mobile apps, the progress on our real estate strategy, the restructuring of our organization, successes in our new approaches to fine jewelry and shoes, growth in exclusive merchandise, including our private brands, and an improved easier to shop clearance and off price strategy. However, we were not able to overcome the secular changes in the industry related to shopping habits. These changes appear to have had a bigger impact on our store business than we had expected. We recognize we need to make dramatic changes in how we operate the business. In some cases, we're already executing our strategies, while other strategies are still in development, most notably our marketing strategy. This includes ideas also for testing how we can simplify our pricing and for improving the store shopping experience. We also will be developing and testing new merchandise concepts and categories, new services and entertainment to help drive traffic as well as new technology to improve the customer experience and our ability to operate more efficiently. We will be utilizing a cross section of our stores, including both key strategic stores in our best malls, as well as others where we see upside opportunity. We will partner with our developers as well as our vendors and we will form new collaborations that will help us to attract more customers to our stores and convert more of the traffic we have to purchases. We also are working on a strategy to transform our beauty business, as we have done already with furniture and mattresses, fine jewelry, and shoes. This is a very important category to our customers and we need to work harder to maintain our market position. Bluemercury will be a part of this strategy as will our own internally-developed Impulse Beauty concept. These efforts will all take time to see results. It is far better, though, that we take the time to test our ideas and let our customers vote with their dollars as opposed to rolling out ideas without testing. In the meantime, we will also continue our work on reducing costs further, so we have more funds to invest into these growth initiatives. We're also continuing to execute on our real estate strategy that is focused on creating value through monetization and in some cases the redevelopment of our assets. Let me give you just a quick update on our real estate progress and I'll use the same three-part framework that we've been using to talk about our strategy. First our flagship. You'll remember that we defined this as including Herald Square, Union Square, downtown Minneapolis and downtown Chicago. With Union Square, we sold the Men's building and will be creating a more exciting shopping environment in the Men's Store as we bring men's merchandise back into that building. We were pleased with the execution of the sale of the Men's building at roughly $1,000 per square foot. In addition, we have developed an exciting plan to carve out approximately 10,000 square feet of the main Union Square store along Geary Street, facing the Square, to create luxury specialty retail opportunities surrounding our entrance on Union Square. We believe that the rents that this space will command will be very high and the luxury retailers will also create additional excitement and drive traffic to our store. As I said earlier, we are very close to completing the sale of our downtown Minneapolis store and we're still working on a plan for a downsized State Street store in Chicago, which we expect will result in a more vibrant, more productive store. This is expected to be similar to what we did in downtown Seattle, where the buyer of the store's upper floors converted this space to creative office space. We also are continuing to work on opportunities to create value at Herald Square. The strategies are wide-ranging but are all aimed at making our store even more exciting than it is today, while creating significant value. This will be one of our top priorities in 2017. The second bucket of our real estate strategy was our underperforming locations or locations where the real estate value is substantially greater than the retail value. Where we closed stores due to subpar performance we are proactively monetizing our ownership or leasehold interest. In some cases we've negotiated transactions with a mall owner and in others we're selling to a third party, typically after a marketing process. And in stores that are not critical to our strategic footprint and where we believe that there was substantial redevelopment value, we have and will continue to selectively sell. It should be noted that we start with an analysis of the potential for redevelopment and a determination of the value of our assets that we believe the redevelopment will support and then sell only if we believe the value is justified. And then the third bucket is our other locations. As you know, we are working with Brookfield on approximately 50 properties to identify redevelopment ideas and get moving on execution. We're very excited about how this partnership could help us to optimize the potential of these properties and potentially many others. Let me just give you two examples of how these could work. First, we have the opportunity to redevelop a 25-plus acre site in a top-ten market. The site enjoys tremendous trade area demographics with household incomes well into the six figures. Underutilized today by our existing store, the site presents an opportunity to once again create a dynamic mixed-use development with a mix of complementary retail, residential, and hotel uses. The potential value creation on the Macy's land from such a development could be substantial. And the second example is an opportunity where we would participate in a larger redevelopment or densification of a high potential mall in a top-20 market. This mall could be reinvented to become a mixed-use destination, encompassing a mix of uses including retail, multi-family, and again hotel uses. Increasing the density of the site could reasonably add 1 million square feet of additional commercial and residential GLA, creating significant value. Not only would this create value for the site, but would also create beneficial synergies for the ongoing Macy's retail operation. We and Brookfield are both very excited by these types of opportunities. Brookfield is taking the lead and currently we are in the predevelopment phase, which will include economic analysis, planning, approvals, et cetera. Depending on the scope of each of these projects, the timelines will vary, but we are encouraging and assisting Brookfield to move as expeditiously as possible. Of course by its nature, redevelopment of assets like these does not occur overnight, but we are excited by the potential. So our guidance for 2017 reflects our desire, as I mentioned, to take the time to test and learn before we roll out initiatives nationally. And as a result, we are assuming that there will be little to no improvement in our sales trend in 2017 relative to 2016. Fortunately, because of the $550 million SG&A reduction that we announced last month, we expect the earnings impact from the sales decline to be far less than what it otherwise would have been. We are assuming comp sales on an owned plus licensed basis to decline between 2% and 3% in 2017. On an owned basis, comp is assumed to decline approximately 20 to 30 basis points further and total sales are expected to decline approximately 100 basis points more than comp or approximately down 3.2% to down 4.3%. Also remember the 2017 is a 53-week year. The total sales guidance incorporates that extra week, but the comp guidance is on a 52-week basis. With this sales assumption, EPS on a diluted basis, excluding any charges associated with store closures, restructuring, or settlement, is expected to be $3.37 to $3.62. This guidance includes the expected $236 million or approximately $0.47 per share gain on the sale of the Union Square Men's building, which as I said earlier, is expected to be booked in the fourth quarter of 2017. Excluding this gain, our earnings guidance on that same basis would be $2.90 to $3.15. Embedded in our guidance are the following nine assumptions. One, our gross margin rate is expected to decline for the year as a whole and in each quarter. The merchandise margin is actually assumed to be approximately flat but because of the digital growth and increased free shipping, gross margin rate is assumed to decline. Two, we are assuming the SG&A savings of $550 million, offset by the growth spending of approximately $250 million. So the net reduction versus 2016 of approximately $300 million is embedded in our guidance. Should sales be at the lower end of our range, we would, however, expect SG&A dollars to be lower as well. Three, credit income for the year is assumed to be approximately $740 million to $760 million. Depreciation and amortization is assumed to be approximately $1.010 billion. The fifth key assumption is, as I said, we're assuming book gains from asset sales for Union Square of $236 million and we're also assuming $100 million, roughly, book gains for Brooklyn and $80 million to $100 million for other properties. So excluding the Union Square gains, the asset sale gains are assumed to be $180 million to $200 million, which compares to $209 million in 2016. The sixth assumption is capital expenditures. We're assuming that they'll be relatively flat with this year at approximately $900 million. Seventh key assumption relates to use of cash. The excess cash after the capital expenditures, the payment of our dividends, and the $300 million approximate debt maturity in July is all assumed to be used to repurchase debt. We ended 2016 with a debt to EBITDA ratio of 3.3 times, which as you know, is above our targeted range of 2.5 to 2.8. We are therefore using our excess cash in 2017 to help us return to the targeted range. The premium on the assumed debt repurchase is not included in our guidance. We also are not assuming that we will buy back any stock in 2017. The eighth key assumption is interest expense, which is assumed to be approximately $320 million to $325 million. The reduction versus 2016 results from paying off the debt in 2016 maturity as well as the additional $300 million in 2017 and an estimate of our anticipated debt repurchase. Actual interest expense could vary based on the timing and the actual amount of that repurchase. And the ninth and final assumption is that we're assuming an effective tax rate of 37%. So, that's an overview of the quarter as well as our outlook for 2017. As we head into 2017, we assume, as we've said, that many of the industry challenges that we faced in 2016 will continue. However, the decisions we made and the actions we have taken over the past year, should serve us well. In particular, we have significantly paired the footprint of our physical stores and are developing plans to invest in improving the customer experience in both the physical and our digital stores. We have taken a hard look at our organization and made major changes to both reduced costs and also improve agility. And we have built strong momentum for maximizing the value of our significant real estate portfolio. We've taken many actions in 2016 to deal with the industry challenges and improve our company, our store and our operations while seeking to create value for all of our shareholders. Our management team is always looking at different ideas to enhance shareholder value and improve our company. Terry and I will now take your questions, but before we start, note that we are obviously aware of the recent headlines but, consistent with our long-standing policy, we will not be answering any questions or otherwise commenting regarding rumors or speculation. I will note that we are focused on the actions that will ultimately improve our financial performance and provide the greatest value for our shareholders. And with that, Evan, why don't we open the call for questions.

Thank you. [Operator Instruction] And we'll take our first question from Kimberly Greenberger of Morgan Stanley. Please go ahead. Kimberly Conroy Greenberger - Morgan Stanley & Co. LLC: Great, thank you so much. Terry and Karen, I was trying to reconcile some comments. Terry, you talked about the negative sentiment and I assume you mean among the investment community around the pressure that Macy's and other department stores have been feeling on the top line. And, clearly, there have been times in the past where sales have been very difficult to come by and you've certainly managed to navigate through those choppy waters well. At the same time, Karen talked about some of the dramatic and dynamic changes in consumer shopping behavior. So, I'm wondering, at this point in time, do you think that Macy's has the full and complete sort of toolkit of strategies to address the challenges that you see in the business, number one. And number two is this time perhaps a little different, given that the challenges presented by the industry seem to be coming from a real change in the way consumers are buying, rather than some of the other factors in during prior periods? Thanks so much. Terry J. Lundgren - Macy's, Inc.: Sure. I'll start and, Karen, you might want to fill in, but. So, to answer your question, Kimberly, that first is do we have a full set of strategies to address the need to turn our business in the right direction? I'd say the answer is they're still developing. We're going to be talking about some of the strategies that we have developed in the near term. We've got a meeting planned for our internal organization to express some of these new ideas and thoughts. But I can assure you that there's more to do. We feel great about the progress the investments we've made on our digital platform, with our online business chugging along nicely and very well developed. As Karen said, the investments we've made in our Macy's app has been very positively received. So, we're doing some good things there. But clearly the answer has to lie in our conversion of consumers who are shopping in our physical stores into sales. Instead of just shopping and browsing and then clicking and buying either at Macys.com or somewhere else, converting them into purchasers inside of our stores. And we've got test stores lined up, we've got a lot of the exciting things that we're testing and doing. But as Karen alluded to, it'd be a bad idea for us just to roll those out immediately and hope they work. So, rather, we're going to spend 2017 to try various new formats that we do believe will improve our conversion rate. And then the ones that do work, as we've experienced and we've figured out with lady's shoes and with fine jewelry, we'll do those and roll that out hopefully later in the season in 2017 and 2018. So those are still underway. And then to your point about is this different than the prior setbacks that we faced? I would say yes, it is different. But each time has been different. And so this time I think the positive this time is that consumers have money to spend. They are spending on automobiles and they're spending on healthcare and they're spending on home improvement and they're spending on all of those things. I actually thought that they would spend less on those items in 2017, believing that they had been spending in those same categories in 2016. But that is not what happened. They continued to spend in those same categories – I'm sorry in 2016 as they did in 2015. And so at some point in time you've got to believe that everybody's going to have a brand new car, at some point in time. We just had record after record performance of automobile sales. At some point in time, there's dollars that are going to be freed up for other categories of spending. And when they get to these categories we have to be a major consideration. And so one of the key strategies that we are performing well in is our exclusive and unique product. And as we've mentioned, the private brand sales are doing better than the market sales. The brands that we have from the market that are sold only at Macy's, brands like Tommy Hilfiger, as an example, are selling significantly better than the more broadly distributed brands. And so we have to work that out with our vendor partners because supply and demand has become a real issue here and an opportunity for those who are working with us.

And our next question comes from Kara Szafraniec from Northcoast Research. Please go ahead. Kara Szafraniec - Northcoast Research Partners LLC: Good morning. One quick modeling question. How much can we assume that the extra week in 2017 will be worth in earnings? Karen M. Hoguet - Macy's, Inc.: I can't give you an answer on earnings. It's worth about 120 basis points for the year in sales. Kara Szafraniec - Northcoast Research Partners LLC: Perfect. Thank you. Just to kind of follow up on some of the testing concepts, especially the simplified pricing structure that you had mentioned this morning, and it was in your press release. I was just hoping maybe you can elaborate on some of the details of this? Is this a test basis or is this something that we can expect to see rolled out chain-wide sometime soon? Karen M. Hoguet - Macy's, Inc.: Well, we're testing lots of different components of it, one of which you all know about was the Last Act strategy, where we rolled out a greatly improved clearance strategy that is working extraordinarily well. Helping us to clear clearance faster and better, but it also, as you know, we moved the second and third markdowns into a special area of our stores and put it together within a category. So, all of the women's apparel, for example. Terry J. Lundgren - Macy's, Inc.: With no additional coupons. Karen M. Hoguet - Macy's, Inc.: Right. And so the price on the ticket is what the price is. No coupon, no POS discount. So, the customer A sees the price that she's going to pay, which simplifies the experience greatly. And also the customer who loves shopping for clearance can find it altogether. So, that's been terrific. The other benefit is, frankly, it's cleaned up the regular price parts of the floor. And so it's helping the regular price sales as well, because it looks better without all of the clearance merchandise displayed in the same place. So that's been hugely successful and we continue to roll that out to all of the categories in the store. We're also testing some other strategies to move away from some of the coupon reliance. That's going to take a little bit longer to develop. As we all know, making dramatic changes in coupon strategies is not good, but you will hear more on this subject as we move forward. Kara Szafraniec - Northcoast Research Partners LLC: Perfect. Thank you for the detail.

Our next question comes from Matthew Boss of JPMorgan. Please go ahead. Matthew Robert Boss - JPMorgan Securities LLC: Thanks. Karen, on the top line, so, you've outlined a number of top line initiatives, but what's the best way to rank the opportunities, I guess, as we see it over the next 12 months? Karen M. Hoguet - Macy's, Inc.: Yeah, I mean, as you look over just the next 12 months as opposed to into the future, obviously digital ranked high because again the improvements we're making in the site and the mobile apps will continue to happen. And as we've said that's naturally where the growth is occurring. I would say also on the exclusive products, you think about brands like Tommy Hilfiger or a private brand that had just a terrific year in 2016. The shoe strategy I'm very excited about, but that will be rolled out during the year. Fine jewelry will continue to be very helpful in 2017. And then there are two other factors that will help 2017. One is the retention of sales from the closed stores will help the other stores nearby and so that should help comp in 2017. And also this is again mathematical but a mix effect that adds digital growth. That growth has a bigger impact on the total Macy's, Inc. side, both for Macy's and Bloomingdale's, as the store business is smaller. So, that will also help the top line, albeit just mathematical. So, there's a lot of good things happening that should help 2017. Matthew Robert Boss - JPMorgan Securities LLC: Great. And then, Terry, just a higher level question for you. If you were to build Macy's from scratch today, how would the structure differ from what we see out there today? And anything you think you could execute differently as a private company? Terry J. Lundgren - Macy's, Inc.: Well, I think what we're trying to do is – when we announced a year ago that we were closing 100 stores, we didn't just come up, pull from a hat – let's take 100 out of the 800, but instead we laid out on a sheet of paper the demographics of each marketplace and said, where are our populations growing? Where are household incomes strong enough to support a regular diet of a Macy's store? Where are cities and markets where we can win on a competitive basis? We laid it out that way and then chose which stores we were going to close and where we wanted to remain open. And so that's how we came up with our plan. So, I think to answer your question, our physical environment was done that way. And that may change, Matt, over time, but when we laid this out a year ago, that was our intention that this was not just a plan for 2016 and 2017, but a longer term look at our need for our physical stores. And then more and more, we're convinced that the consumer is entering the store with their mobile device and making their decision where they're going to shop before they leave their home or their car and making sure that we are able to convert those individuals once they choose to come to our store to make a purchase inside our store, as opposed to a search that might bring them to an alternative site where they believe they can get a similar or a same product for a better value. That can happen. And we have to be stronger, more aggressive on that subject to ensure that we are always very competitive. And that's where it has to go for us. We have to make sure that we understand that the transparency that is clear to the consumer today, that we are responding to that and in fact anticipating that that's the way the consumer will shop and getting in front of it. So, I think we're on that track. I think that we're doing all of those things that I would do. And I've said this before, if the department store did not exist today, there'd be a group of smart people sitting in Silicon Valley inventing the department store today, because it will serve a purpose. Matthew Robert Boss - JPMorgan Securities LLC: That's great. Best of luck.

We'll take our next question from Lorraine Hutchinson of Bank of America. Please go ahead. Lorraine Maikis Hutchinson - Bank of America Merrill Lynch: Thank you, good morning. I just wanted to follow up on CapEx. I heard the guidance for this year, but it sounds like many of the tests around cosmetics and entertainment options would require some pretty big investment in your store base. So I was just wondering how we should think about CapEx in the out years and if you'd expect that to be a growing line item? Karen M. Hoguet - Macy's, Inc.: Yeah, it's a good question, Lorraine. We clearly, as we look at our budget for 2017 and the next couple of years, are allocating money to the stores. We believe that's going to be important as we go forward. Given the EBITDA reduction, though, we try to be balanced. So, as EBITDA grows, I wouldn't be surprised if CapEx grows a bit. Maybe to $1 billion, but I don't see it growing significantly from what we've got. It's really just how we allocate the money. One of the things, also, I should mention as part of our cost reduction was also looking at areas of spend that aren't expense. For example, how we purchase things that go into a store remodel. And hopefully that's going to allow us to accomplish more for the dollars that we did spend in store as we go forward. So, I could see it potentially going up a bit, but again I don't see it as an enormous increase. The only exception to that would be if we find ideas that are fabulous that are making a big difference, you better believe we'll invest to make that growth happen. Terry J. Lundgren - Macy's, Inc.: And I would just add that we're spending similar amount this year as we spent last year. One could argue that with our sales decreasing in 2016 and again in 2017 on a comp store basis, plus the fact that we have 66 fewer stores going to 100 fewer stores, you could make the argument that we should spend less in capital, but we are actually spending the same amount, which means more per store on average, just to Karen's point, to make sure that we are prepared to invest in the ideas that are driving sales in our physical stores. Karen M. Hoguet - Macy's, Inc.: And, Lorraine, one other thought also is the other way the capital could increase over time, not in 2017, but as we go forward, is as we develop real estate strategies. For example, if you think about Union Square, we sold the Men's building for the $250 million, but it does costs something to bring Men's back into the building. So, it is possible that as we create value through real estate, there will be a capital cost associated with making that happen. And so again not in 2017, but as we think about the out years, that could happen also, but it would be, in essence, funded by the asset sale. Lorraine Maikis Hutchinson - Bank of America Merrill Lynch: Great. And then just to follow up on the SG&A. The $300 million of net reduction, is that inclusive of any inflationary pressures you may feel on some of those SG&A line items? Karen M. Hoguet - Macy's, Inc.: Yeah. That's included in the $250 million offset to $550 million. In part, that's why, as we both said, the $550 million represented a major restructure of the company as well as significant pressure in the non-payroll area. But that was intended to offset that as well. Lorraine Maikis Hutchinson - Bank of America Merrill Lynch: Thank you.

We'll take our next question from Paul Trussell of Deutsche Bank. Please go ahead. Paul Trussell - Deutsche Bank Securities, Inc.: Good morning. Karen, thanks for the color on guidance. Just wanted to inquire if there was any variability that we should be thinking about in 1Q or first half versus the back half when it came to some of the metrics such as comps or SG&A spend, credit income, et cetera, real estate gains. And then Terry, just kind of big picture, part of the narrative beyond the weaker mall traffic and the changing spending habits of the consumer, is a narrative around apparel and the lack of excitement in the category and the downward pricing pressure that that category is facing. Do you agree or disagree with that? And then just maybe what are you seeing on the horizon from a product or category standpoint that the consumer could be excited about going forward? Terry J. Lundgren - Macy's, Inc.: Sure. Karen M. Hoguet - Macy's, Inc.: Paul, to your question around guidance by quarter, as we think about the spring season versus the fall, we do expect the spring season to be tougher than the fall, largely because, as you've heard, many of these initiatives on the sales line are to be rolled out as we go through the year. So, I would expect, as we progress from the spring season into the fall season that happens, with the strongest quarter expected today to be in the fourth quarter. But obviously we'll continue to provide updates as we go. In terms of the gross margin rate, I'd say similar just based on things that are happening. Typically margin goes along with sales. And asset sale gains, I don't know how to predict it by quarter. That's why we often give guidance without asset sale gains because those will be lumpy and will happen when they happen. The Union Square Men's though is a huge lump and put that in the fourth quarter. So, that one's big, but the others are really hard to anticipate. As I said, we do expect Minneapolis to close shortly, but the others are harder to anticipate. Terry J. Lundgren - Macy's, Inc.: Let me talk, Paul, about your question about the mall traffic, and then apparel, specifically. First of all, I think there's a lot of very good work being done right now by several of the developers on trying to reinvent and create new reasons for consumers to come to their shopping centers. And you're starting to see some real investments there that are addressing those opportunity. That's good for us when they do that and we want to work side by side with them to ensure that we're investing where they're investing, one. Two is that the consumer is just more organized today and so since they've already done their homework and done their searches for what they want to buy and where they want to buy it from, they are visiting fewer stores once they get to the mall. So I think there's enough consumers in the mall. It's just a matter of where they're choosing to shop based on the searches that they've done. And so we have to be top of mind in that search process for them. And our technology team has worked very hard, along with our merchant team to make sure that we match up well. And then finally on the apparel subject, look, the reality is you're hearing consistently from other retailers that the apparel business is difficult and yet we've called it out as our strength. So, it isn't across the board everywhere and everyone. Apparel is a category that when you have the right product at the right time and in a price point that consumers consider a value, whatever that price point might be, you're going to get a response and we've. And also as I alluded to earlier, this whole subject of supply and demand becomes very, very relevant in the apparel business. And, in our case, our apparel business is good because it's the exclusive product, the unique product. The products are only available at Macy's or 100% Bloomingdale's, our program there. Those are clearly the leaders in our performance in the whole store, but certainly in the apparel area. I think that's the answer. By the way, the other key thing is not everybody can do that because it takes a very talented merchant team who understands what consumers are going to want six months from now or three months from now, when they're making their decisions. And being able to forecast that and work with our designers and our vendors to find the products that are going to be right for our customers, because if they wanted to sell you what they didn't sell to somebody else, that's a disaster. So having merchants that truly understands the opportunity to buy product for their stores and have a unique and exclusive in our stores, that's a skill set that's hard to duplicate and I'm very, very proud of the team at Macy's and Bloomingdale's because we stand out among others as having the best in the industry in that regard. So, I think that's the key to it. Paul Trussell - Deutsche Bank Securities, Inc.: Thank you.

We'll take our next question from Paul Lejuez from Citi. Please go ahead. Paul Lejuez - Citigroup Global Markets, Inc.: Hey, thanks. You guys closed 40 stores about a year ago. Just curious what you think the transfer rates were from those closed stores? And what do you hope to see on the most recent class of store closings? What do you consider an acceptable rate? Thanks. Karen M. Hoguet - Macy's, Inc.: Well, first off, we're getting better and better at this because, as we've closed more stores, we've learned a lot about how to retain sales in other stores. So, fortunately, last year we did significantly better than we had done in the past and we hope that, with the closures this year, to do even better than that. The answer, Paul, is actually a little complicated. It has to do with whether it's a single store market where we obviously can't repeat store sales. Sometimes they'll travel a bit to another, but we assume no retention there. And we do lose a little bit on Macys.com. So one of the things we did last year was a strategy through Macys.com in e-mails to retain that customer as best that we can. But as you've heard we say many times, our customers buying online love to return in store. They love to shop in store, buy online. So we are, I think, forever going to lose some of that Macys.com business when we close a single-store market. In a multi-store market, the answer will depend on how dense the stores are in that market, how far away the nearest store is, and also how similar the trading areas are. So, where the demographics are similar, trading areas are similar, we could retain roughly 40% to 45% of the sales. But in other cases it's only 10%. So, it really does depend on the individual situation. But I will say that – last year's closures, we did better than what we had anticipated and I'm hopeful that maybe the same thing will happen again as we develop marketing strategies and also assortment strategies. One of the reasons we've announced the closures earlier than we used to is so that our buying and planning teams can think through in that store vendor X did really well or they tended to buy sizes large and extra large compared to stores nearby. And by announcing it and talking about it earlier, we've been able to do a better job of getting the assortment right for the new store, so that we could retain more of the sales. So, it's a long way of saying we've made progress and hope to continue to make progress. Paul Lejuez - Citigroup Global Markets, Inc.: Thanks. Good luck, guys. Karen M. Hoguet - Macy's, Inc.: Thank you.

And our next question comes from Priya Ohri-Gupta from Barclays. Please go ahead. Priya Ohri-Gupta - Barclays Capital, Inc.: Great. Thank you so much. Two questions, if I may. First, Karen, just given some of the rating agency actions in the last couple of months, how should we think about your desire to maintain a mid BBB versus a low BBB credit rating? And how that could impact your financing costs? And then just secondly, as we think about your debt reduction actions through the year, philosophically would you look to reduce your interest expense as a priority? Or should we think about you trying to maximize the amount of debt that you are actually able to take out? Thank you. Karen M. Hoguet - Macy's, Inc.: Yeah, look, you'll recall back in 2008/2009 we set our targets for our credit ratios. And so frankly that's really our objective, which is to get back into the targeted range that we've talked about. Being an investment grade company, as you know, is very important to us. And that's why we're utilizing our excess cash in 2017 to repurchase debt. We do believe that a retailer that is investment grade is the right answer for our company and so we are taking that quite seriously. In terms of the philosophy around debt reductions, we tend to focus on the net present value as sort of the primary factor, but we will also take into consideration interest rates and things like that as well as we develop that strategy. Priya Ohri-Gupta - Barclays Capital, Inc.: Great. Thank you very much.

And our next question comes from Lindsay Drucker Mann of Goldman Sachs. Please go ahead. Lindsay Drucker Mann - Goldman Sachs & Co.: Thanks. Good morning, everyone. I wanted to ask about inventory. Could you talk a little bit about the inventories that you're holding per store? And it sounds like you ended a little bit heavy, but my question is more maybe the characteristic of the inventory and whether as you think about 2017 your inventory levels are where you want to be or if you have any strategies to make your inventory turns more efficient? Karen M. Hoguet - Macy's, Inc.: Yeah, I mean, I think, Lindsay, as you know, we are working to improve the efficiency or inventory turns as we go forward. We think that's an important part of simplifying the shopping experience, to make it easier for the customer, and to see what we're offering and have it edited and making sure that what we have is, in size and color, consistent with what the customer wants. We believe that that will lead to an improved inventory turn over time. So I do believe that's something we are focused on. Lindsay Drucker Mann - Goldman Sachs & Co.: Okay. Then maybe, Karen, on the credit card penetration rate, could you talk about what drove the lower penetration versus prior year and maybe even versus your expectation? And if there are any specific strategies on that for next year or for this year? Karen M. Hoguet - Macy's, Inc.: Yeah, we actually had anticipated that it would come down somewhat this year. But, as I said, it did come down more than what we had expected. And I think we are focused on that. I referred earlier to changing marketing strategy, a piece of that also will be around loyalty and credit. And I think you're going to see more efforts to build our offers for our most loyal credit customers. Lindsay Drucker Mann - Goldman Sachs & Co.: Okay. Thanks very much.

And our next question comes from Oliver Chen of Cowen and Company. Please go ahead. Oliver Chen - Cowen & Co. LLC: Thank you. Hi, Karen and Terry. I have a question regarding speed and the concept of speed. What are your thoughts in terms of transforming of both the relationship with your vendors and buyers as well as thinking about speed in terms of customers wanting packages from drones and just the customer experience really needing speed as a factor. And my second question was about the long-term store footprint. You've given a lot of really helpful and agile details regarding real estate. But the five year plan, in terms of making sure resource allocations is in the right place in the footprint and kind of achieve the right place in terms of the brand and as mobile continues to accelerate beyond a lot of expectations, what are your thoughts about the long-term store footprint? Terry J. Lundgren - Macy's, Inc.: Let me start with the speed and you can talk about the long-term because you're going to be here. But on the subject of speed, which I think is a very good and important question is that we have been working hard on this with our own private brand initiatives with some success. It does require some change in the way that our merchant team works with anticipating product delivery. You do have to commit up front without actually seeing the product, touching the product. And you have to have some trust that if you're prepared to work with speed that you're going to forego the approval process. That is what slows it down. And so we're doing that in private brand. We've got a great leader there who's taking on that initiative and studied companies, particularly some of the specialty stores who have done such a great job on this subject. And we're learning to forego those approval processes and make quick decisions and speed the process along. How that translates to – I know our vendors – it's hard for us to certainly dictate, but I do know that many of our vendors are thinking along those same terms there. They realize that the way the consumer is shopping today there is an absolute need for reducing the weeks of supply in the system. The only way to do that is to commit the fabric up front and to commit to design process without approvals along them – several steps along the way that historically have been part of the process. So, I do think you're going to see more of that in our industry and we're clearly going to see that with what we can control with our own private brand groups. And I'll let Karen respond to the other question. Karen M. Hoguet - Macy's, Inc.: Well, and as Terry said earlier, before we came up with the 100 store closures, we had done a full review of all of our real estate and really looking at it strategically. And within the 100 are many, many, many stores that we never would have closed in 2016/2017 or even 2018. We've tried to look out four or five years. And, as you know, none of our stores are cash flow negative. So this was painful, but we felt we were trying to get the footprint right for the future. So we did look forward. So, obviously, though, that could change. It could change if customer behavior changes differently than what we had anticipated. Or I think it also could change based on the work we do with real estate and maybe we find ways of changing the footprint as we go forward. So, I couldn't possibly tell you that I know what it's going to look like in five years. I can tell you that we worked hard to look forward, but we're constantly looking to see if the world is changing and are going to be very flexible should that happen or should through the real estate work we find different opportunity. Oliver Chen - Cowen & Co. LLC: Thanks a lot.

And our next question comes from Michael Binetti of UBS. Please go ahead. Michael Binetti - UBS Securities LLC: Hey, Karen and Terry. Good morning. Karen M. Hoguet - Macy's, Inc.: Morning. Michael Binetti - UBS Securities LLC: I'm just curious. One thing for the model, Karen. Just based on the credit guidance for – I think it's for flat to slightly up, I'm curious what the components are? It's a little counterintuitive based on the revenue guidance down 3% to 4%. What the components in the credit guidance are that would drive it up? Karen M. Hoguet - Macy's, Inc.: Yeah, I think as I said earlier, we're hoping that the penetration improves somewhat. So that should help offset that. Also, the profitability of the portfolio, we think, has dropped a little bit in 2016 after a very good 2015. And I think that's getting back to a more normal level, as well. Michael Binetti - UBS Securities LLC: Okay. Thanks for that. I wondered like, on the apparel, you guys had called it out for a few quarters now. Maybe you can just give us some sense. It seems like it's a fairly big opportunity on the margin line in particular. I know that was below what you guys had hoped for, for quite a while. A lot of the brands – I guess as a corollary – a lot of the major brands that sell through your stores have talked about reducing promo levels, backing off of Friends & Family and those kind of things. I'm wondering if you could help us think about the strategy there and how much of an opportunity it is, if the nice apparel trends you've seen in the last two quarters continue. Karen M. Hoguet - Macy's, Inc.: Well, as I said in the fourth quarter, the margins in apparel actually were strong. So I think that's obviously good news as we go forward. Our private brands in apparel, most notably ready to wear had a really strong year in 2016, and as I said, the exclusive merchandise, branded merchandise. So we feel good about it as we go forward. And to your point, it should be helpful, but there are pressures other places that are offsetting some of that. Michael Binetti - UBS Securities LLC: Great. Okay and then just one last one. I guess, based on some of the earlier commentary on paying down debt this year, you'll have to excuse me, we're still working through all the puts and takes on the cash flow model. But just based on the plan in place for EBITDA this year, the debt pay down and then any cash from real estate that is realized, is it too early to know if share repurchases can restart as early as 2018 at this point? Karen M. Hoguet - Macy's, Inc.: You know what? It's too early to know. We'll just have to see. Michael Binetti - UBS Securities LLC: Okay. Thanks a lot, guys. Karen M. Hoguet - Macy's, Inc.: We are aiming to get our credit ratios back into the 2.5 to 2.8 range. So that is a priority and it will depend on a lot of factors. Michael Binetti - UBS Securities LLC: Okay. Thanks a lot.

Our next question comes from Omar Saad from Evercore ISI. Please go ahead. Omar Saad - Evercore ISI: Thanks for taking my question. I have two questions. The first one I wanted to ask is about the interest in the release today around Backstage. Looks like you're going to expand it to 30 locations in the store. Would love to hear more about what you're seeing with that platform and the factors that led you to kind of expand it further? And I have one follow up. Terry J. Lundgren - Macy's, Inc.: Go ahead. Karen M. Hoguet - Macy's, Inc.: So, on Backstage, we're actually really excited about what it's doing in store. We believe that not only is it helping to grow the total store and make it more productive, but it's also giving our current customers more reasons to make trips to our stores, and also beginning to bring in new customers. So, we feel good about it in general. Some are working better than others. So, we are still working on refining the format, but we do think it could add a lot of value to a certain set of stores. Terry J. Lundgren - Macy's, Inc.: And we look at it as if a store in particular has decreased in sales over the last couple of years, then obviously we need to get the productivity up of that location. And one way to do that is to bring in a new business. So, it's similar to bringing in a Bluemercury shop within a shop or a leased Sunglass Hut or a Finish Line, something like that. Instead, we're bringing in our own Macy's Backstage and hopefully attracting a different customer. And so we think maximizing the existing real estate is something we must do and expanding our Backstage into these stores is proving to be positive to get additional comp store sales in these locations. Omar Saad - Evercore ISI: That's really interesting. Thanks. And then I wanted to also ask about one of your vendors, Hugo Boss, had said on a recent call something along the lines of moving to more of a concession format and I think in seven or eight of their locations. Wanted to A) make sure we were interpreting that properly and that that is something you're testing and looking at with different brands. And kind of what your thought process is around that concession model? Terry J. Lundgren - Macy's, Inc.: We haven't done that with a large number of our vendors, but we have done it with some, particularly at Bloomingdale's. And so it just depends on the store and the situation where we believe we can maximize the business potential, expand our customer base. It's really true added value for the customer and for us and for the vendors when we do it. But it's really on an individual store, individual brand basis. We have the license agreement with brands like Gucci and with Louis Vuitton and some others. But the others are just really one here and one there. But, I know we have – Bloomingdale's has several of these examples where just a handful of their stores they are using a license arrangement, whereas in the majority of their stores they are buying and owning the inventory as they have in the past. So it's been a mix. Omar Saad - Evercore ISI: Is the Hugo Boss example the first time in Macy's? Terry J. Lundgren - Macy's, Inc.: No. We have Louis Vuitton at Macy's. We have Gucci at Macy's. Our Sunglass Hut is a licensed operation. So, this is not something new. Omar Saad - Evercore ISI: Understood. Thanks for the info, guys. Good luck.

We'll take our next question from Richard Jaffe of Stifel. Please go ahead. And Richard, your line is open. You may have your mute function enabled. Again, Richard, you do have an open line. You may have your mute function enabled. We'll move on to our next question from Bob Drbul of Guggenheim. Please go ahead. Robert Drbul - Guggenheim Securities LLC: Hi, good morning, Karen, Terry. Terry, good luck and congratulations on the bump upstairs. Terry J. Lundgren - Macy's, Inc.: Thank you. Robert Drbul - Guggenheim Securities LLC: I guess couple of questions. Can you give us an idea on the exclusive versus private label, private brand mix, where it ended 2016? And I'm just curious in terms of your ability to get more exclusive national brands. You mentioned Tommy Hilfiger doing well for you. Just how that road has gone for you and what we should think about that in 2017? Terry J. Lundgren - Macy's, Inc.: Yeah, it's about – well 20% of our total assortment today, sales, is attributable to private brand products. And another 20% is where we're headed on exclusive product. Some of that comes from brands that are more broadly distributed where we had 1% of their merchandise deliveries exclusive only at Macy's. And Bloomingdale's uses this technique quite a bit with their what they call 100% Bloomingdale's promotions, where they'll work with a vendor in advance and then take a chunk of their inventory, say 15%-20% of what will be delivered from the various brands they do business with, and have it only available at their stores. And they'll work with those companies to make sure that we're creating product that is specific in demand at Bloomingdale's. But Macy's is doing the same thing with big, big brands. And so I do think that is a greater possibility of expanding our unique and exclusive products. And we'll continue to do that. We do have a couple of big ones, because they've seen the success that we've had with Kipling and with particularly Tommy Hilfiger, with RACHEL Rachel Roy, and a number of other brands. They've seen the success we've had with these brands when it is exclusive. And it has to be good for them and it has been for Tommy Hilfiger, because we've been able to do so much more business profitably for them and for us by having a single customer than they were able to do in the past with multiple customers. So we understand it has to work both ways. So, we're working on a big one right now, not ready to announce it. I do think that there's much more potential here. Robert Drbul - Guggenheim Securities LLC: Great. And can you talk about how tourism impacted the business in the fourth quarter? Karen M. Hoguet - Macy's, Inc.: Yeah, we saw a little bit of an uptick in the fourth quarter. So hopefully that could help us as we go through 2017. Terry J. Lundgren - Macy's, Inc.: But, I would say it's basically year round three years of bad performance. So we're just hoping we hit bottom. Robert Drbul - Guggenheim Securities LLC: Great. Thank you very much.

We'll take our next question from Brian Callen from Bank of America Merrill Lynch. Please go ahead. Brian Callen - Bank of America Merrill Lynch: Hi, good morning. Thank you. I just wanted to clarify, Karen, is the goal to get back into the 2.5 to 2.8 times range in 2017? Karen M. Hoguet - Macy's, Inc.: All I said is that the goal is to get back. I don't know that it will happen in 2017. Brian Callen - Bank of America Merrill Lynch: Okay. And then just maybe an extension of Michael's question. So, if real estate opportunities move more quickly or proceeds are above what's currently in the guidance, can we expect that goes to further debt reduction to the extent that you're not inside the leverage range? Or at what point do we pivot to share repurchases? Karen M. Hoguet - Macy's, Inc.: Look, at this point, what I can say is that we anticipate for 2017 that we will be utilizing all of the excess cash to get us back in that range. So that remains our priority. Brian Callen - Bank of America Merrill Lynch: Okay. Perfect. Thank you.

Your next question comes from Dana Telsey of Telsey Advisory Group. Dana, you have an open line. You may have your mute function enabled. We'll move on to our next question from Lindsay Drucker Mann of Goldman Sachs. Please go ahead. Lindsay Drucker Mann - Goldman Sachs & Co.: Thanks so much for the follow up. I just wanted to quickly ask if you had any strategies to talk about in handbags, which has been a category, a negative category call out. Anything we can focus on for 2017? Terry J. Lundgren - Macy's, Inc.: I'd just say that we're working very closely with our core vendors. We have a number of smaller brands that are performing okay. But, we've got to get the big guys on track and we're working very closely with them. We feel good about the initiatives that they are taking. They are so committed and so aggressive about getting the business turned around, because we are such important partners to one another. So, I can't tell you specifically – I know what we're doing, but I can't reveal exactly what we're doing. I don't want to share everything with our competitors. But I can tell that you we are working very, very closely and regularly and feel good about the cooperation and the strategic thinking and planning that we are doing with the big brands that we're counting on making a difference there. Lindsay Drucker Mann - Goldman Sachs & Co.: Terry, what do you think the issue has been? Terry J. Lundgren - Macy's, Inc.: It's a number of things. And we would both admit we had such a ramp up of success, as you will recall, for a big part of 2011, 2012, 2013 and 2014. And we ramped up very quickly and grew the business very fast. And I think it's got to a point where supply became greater than demand. And it was just almost as simple as that. And when that happens, when you're backed up with inventory and when you're backed up with inventory, somebody wants to reduce the price. And when somebody reduces the price, others match that reduction. And so then it gets away from you a little bit. I think that's what happened. And I think now that getting that supply and demand back on track is the first right answer. And the whole focus on design and the product itself trading up, adding more quality back into the product and making sure that we're covering the higher price points, as well as the opening price points. And we're as guilty because we went after expanding the product to many stores. And that required us to have the more opening price point much more so than the balance that we once had with these brand. And I think that's getting back on track with the quality and the uniqueness and the design of the product being the driver, as opposed to just the price, is going to be good for both of us. And it may take a while, by the way, to sort that out and for consumers to appreciate the change. So we're working patiently with these brands to make sure that that happens throughout 2017. And we feel good about the very strong cooperation we have working with these brands. Lindsay Drucker Mann - Goldman Sachs & Co.: Great. Thanks so much.

And there appears to be no other questions at this time. Karen M. Hoguet - Macy's, Inc.: Great. Well, thank you all very much and let us know if you have further questions. And, in the meantime, thanks for your support and interest. Take care. Terry J. Lundgren - Macy's, Inc.: Thank you.

And this does conclude our presentation for today. Thank you for your participation. You may disconnect.