The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Brandon Babcock Cheatham - Citigroup Inc., Research Division - Analyst
: It's Brandon Cheatham on for Paul. I just want to circle back on like the credit question. Are you seeing any difference in approval rates? I understand
that you probably have an agreement that a certain FICO score has to get approved. But are you seeing differences in like the customers that are
purchasing on credit? Is there any kind of difference in like the FICO score that they have. And then the amount of customers that are using credit
to make purchases, can you give us any details where that is now compared to pre-pandemic, I think during the pandemic that came down, but
are you seeing that starting to normalize?
Question: Brandon Babcock Cheatham - Citigroup Inc., Research Division - Analyst
: That's very helpful. And then I was wondering if you could talk about like how material costs are trending. I think I've seen diamond prices have
started to come down. Does that end up helping your margins? And anything that you can talk about on that?
Question: Mauricio Serna Vega - UBS Investment Bank, Research Division - Analyst
: Great. I guess I just wanted to ask first about the Q3 sales guidance. Does that like imply any type of divergence in performance if we think about
the banners segmented according to price points, the low to mid-tier versus the higher end? And then maybe you could talk about thinking about
the Q4 implied operating income guidance, I think it implies a modest operating margin expansion, roughly 30 basis points. I just want to understand
if that's like coming both from gross margin improvement and also SG&A as a percentage of sales?
Question: Mauricio Serna Vega - UBS Investment Bank, Research Division - Analyst
: Got it. Very helpful. And then just very quickly, just one clarification on the Q3. I think you mentioned that this quarter to Q3, Blue Nile is like already
comfortable. But I think -- I thought like the -- you started like consolidating Blue Nile in September, so I thought we would still get like 1-month
contribution. Just want to clarify that point.
Question: Mauricio Serna Vega - UBS Investment Bank, Research Division - Analyst
: Great. Just wanted to follow up on -- if you have any additional commentary on lab-grown diamonds. There's still like concerns about the impact
on price and profitability. I think you alluded to it has been a benefit to you so far, but maybe what you're seeing across the industry? Or do you
have like any concerns going into the back half, a consumer that's still very constrained on their discretionary spending and whether an increasing
shift to that particular lab-grown diamonds could affect you at some point.
| 
