I think we’ve done a lot of work over the past four or five years in terms of being smarter about our localization strategy. But even as we’re opening up some of these new markets, we’re having even more learnings. We opened a store in Florida, and we gave it our best assortment of saltwater fishing, and we thought we were giving it an A+ assortment. Then, as we’re down in the market, looking at it, found that we probably need to do even more than we’re doing. So now we built an A++ assortment, and then we’re going to use that to apply to all the Florida stores that we opened on the Gulf Coast going forward. So it’s an iterative process. We’re taking the learnings from each one and applying to the next. It’s broad-based across merchandising, across marketing, across operations, across how we inventory the store.
I can just tell you that each one is getting better and better, and that’s our expectation as we move forward.
Joe Enderlin: Got it. That’s helpful. Thank you. Just as a follow-up, warmer fall weather seemed to influence sales across the industry. Does this influence how you look at the sales opportunity in 4Q at all? Do you think that initial deferral of cold weather items in 3Q could be made up in 4Q to any extent? Thank you.
Steve Lawrence: Yeah. That’s — the big question is if it gets cold, how long it stays cold, et cetera. I think one of the things that we’re happy about is that our inventories are under control, right? And candidly, it feels like the industry is in a better place today than maybe it was a year ago at this time. And so, we saw promotions elevate a little bit over Black Friday but still seem well within control and lower than where they were pre pandemic. We’ve got, obviously, increased promotions built into our forecast moving forward. But I don’t think we’re counting on a big return of business that was missed. But I also don’t think we have an overhang of inventory that we’re going to have to address or deal with either.
Carl Ford: Yeah. And the only thing I would add there is that supply chain normalization, it might not be between Q3 and Q4, but it might be intra-quarter where parents might have been buying a holiday gift and they bought it early because they were worried about it being there. I think the consumer is confident that at least looking at our inventory position, we’re going to be in stock more frequently. And so, I think some of that stuff that may have occurred in the third quarter and yesteryear, a parent or someone will have more confidence buying that closer in.
Steve Lawrence: I think when you look at our business, candidly, Q3 is usually a wildcard, right? In our geography, it can be warm, occasionally get a cold snap in October. It helps out a little bit. Generally, our geography gets colder in Q4, and it’s been fairly consistent year-over-year, and that’s when we sell the bulk of our seasonal products. And so, I think we’re going to see that same pattern hold true this year.
Joe Enderlin: Got it. That’s super helpful. Thank you, guys.
Operator: Our next question comes from Simeon Gutman with Morgan Stanley. Please proceed with your question.
Jacquelyn Sussman: Hey, guys. This is Jackie Sussman on for Simeon. Thank you so much for taking our question. Just on the 34.5% gross margin for the quarter, I think you mentioned in your prepared remarks, shrink. How are you handling shrink relative to prior quarters? How has it evolved throughout the quarter? Are things getting sequentially better? And anything to call out in terms of Q4-to-date on that would be really helpful. Thanks.
Carl Ford: Yeah, Jackie. That’s a good question. Shrink was a big topic of discussion in the second quarter. We still see it as an issue. Our shrink rate was up 12 basis points to last year in the third quarter. And when I talked about some of the muting of the tailwinds from freight, shrink is in play. Look, I don’t think — we do year-round — we talked a little bit about this at the last quarter. We do year-round physical inventory. So we started to see shrink pop in the third quarter of last year. We were up 36 basis points in shrink in the third quarter of last year. So this is 12 basis points on top of that. It’s better than the second quarter and way better than the first quarter trajectory. But I do think it’s because we got an earlier read on this and began to react to it maybe just a little bit quicker.
I’ll walk through some of the things that we’re doing without getting into kind of too much detail associated with what we’re doing. We’ve made investments in the team. We’ve made investments in internal analytics to help us see patterns, both internally and externally quicker. We’ve done a number of technology solution tests and subsequent rollouts really beginning in the third quarter of last year. That aids on the prevention side as well as on the detection side. We’ve got really strong partnerships with local law enforcement. So, on the detection side, the things that we can do to aid them, like they don’t like seeing this happen, and the tools that we can help them with, they appreciate. We’ve seen sort of from a federal standpoint, over COVID, there wasn’t as much federal participation in kind of like these local organized crime rings that we were seeing.
I feel really good about what we’re doing. We’ve led a couple of those discussions here, and we talked about one of the ORC busts that we saw in the Houston area. That was a long-running thing earlier. And lastly, we don’t want to lock up all of our product. We don’t want our customer to have a negative experience. But we test and we learn a lot. So we’ve done some test and learns with some baseball equipment that made a lot of sense. And we put the customer call button right next to where we might use a peg lock for an expensive glove, the A2000 specifically and some of the bats. That business is turning on so well associated with those premium baseball bats. We want to make sure that, that inventory is there for the customer when they come in.
So, that big mix of things is what we’re doing. But it’s a retail-wide problem. It’s a nationwide problem, and our shrink rate was up 12 basis points this quarter.
