And I think as we’re thinking go forward that keep in mind as demand s written, and we had great demand in the third quarter. That takes some time to flow through the P&L and to be delivered. So I would expect some margin impact from these pieces over the next few quarters as product is being delivered and then keeping in mind that we’re not through all of the inventory that we would like to be through. So demand will continue selling. A lot of these products that we took price actions on, they were receded at those higher freight costs. And then just keep in mind that all of this is factored into the guide already. So just an added piece there. And then from the market perspective, we closely track and monitor competitors on what they’re doing.
We still believe that our value proposition is excellent and industry-leading. So we really remain focused on that and making sure that our value proposition is where we want it to be. So we’re comfortable at the moment with how we’re positioned in the market.
Seth Sigman: Okay, great. Thank you both.
Operator: Thank you. Our next question comes from the line of Maksim Rakhlenko with TD Cowen. Please proceed with your question.
Maksim Rakhlenko: Great. So first, can you frame how much of the strong demand in 3Q came from new products versus the core versus some of the end of life or other products that you took price actions on?
Dawn Phillipson: Good morning, Mak. We don’t want to get that granular. I think what’s important to note is that we have a good handle on the inventory with regards to price action SKUs. Clients responded to it a little bit faster than anticipated. We did have a phenomenal September with our marketing campaigns that really resonated with clients. So overall, we’re pleased with the demand that we saw and everything — all the different components that you’re asking about is factored into the guide for the fourth quarter, certainly. And then as we move forward and report and guide to 2024, it will be factored in as well. But Jen, do you have any context you’d like to add on the marketing campaign?
Jennifer Porter: Yes, good morning, Mak. Just to emphasize the point that Dawn just made, we had — we’re really, really pleased with the results of our fall campaign. So our fall catalog and collection launch hit at the end of August and just saw incredible consumer response to that, both in terms of engagement and driving traffic into stores and onto the site to purchase those new products. We’re also continuing to see really, really strong engagement with our ongoing collections that weren’t part of the price action process, our top sellers there. As you may remember, we launched our Rooted campaign in early August of Q3, which was telling the story of one of our incredible vendor partners down in Mexico, one of our top collections that really has been performing well with clients for a couple of years now.
And being able to share that additional knowledge and detail and storytelling about what makes that truly special, really resonated with the business. So we’re really, really happy and really happy with the client health we’re seeing across both new and existing clients reacting to both those price action fees, but also excitingly for all the new product and product that wasn’t included in that category.
John Reed: Yes. And Max, I’ll just add something to that as well on the product side. The current product, existing product that we’ve had is doing great. We’re not seeing a slowdown on most, if any of the current product that we’ve had for a while. And then on top of that, the new product has just been a home run as well. So we’re happy with the whole mix of product. We think we’re certainly kind of leading edge on the design side and people are really resonating with it, but our core products are doing well. Over the last four years, we’re up 99%. And so you can see if you do the math on that, that people like our products. In the last two years, we’re up almost 28%. So it’s been a nice ride here, and we think we’re hitting on all cylinders.
Maksim Rakhlenko: Got it. That’s very helpful. And just sticking with that last point that you made. So you’re meaningfully out comping peers and taking significant market share. What is your sense of how your awareness levels are now trending? And do you feel that you’re starting to move in the right direction? And then ultimately, over the medium term, where do you think that that can go as I think you used surveys where you were still meaningfully behind peers?
Jennifer Porter: Yes, Max, great question. The simple answer is yes. We definitely think our brand awareness is growing. I think there are a number of factors driving that. First and foremost are the new showrooms that we’ve been opening this year and are going to be continuing to open aggressively into next year. As I mentioned before, new showrooms and showrooms in general are the number one way that new clients are discovering Arhaus and our brands. So the teams are really focused on opening up these incredible spaces in new markets and building out existing markets. We’re really pleased with what that’s doing to increase awareness. In addition to that, building off of what John was just saying about people like our products, they’re really responding to it.
Our teams have really been focused on all aspects of service, on quality, on making sure that clients continue to have an incredible experience. And the number two way that new clients are discovering Arhaus is through recommendations from friends and family. So that is incredibly important to us. It’s something we’re really proud of. We really work very hard to maintain. It’s one of the reasons we are putting so much effort into the story telling and into being able to showcase how special our product truly is and really focused on ensuring that clients are happy so that then they are sharing their love for the brand with their friends and neighbors and families for years to come. In addition to that, I think we’ve been doing a lot of things right for the last few years and for decades before that.
We had an incredible brand awareness opportunity four years ago. We continue to have an incredible brand awareness opportunity now. We are making really good progress towards that. But there’s a very long runway for us to continue to do that as we continue to open up new showrooms, we continue to get better at telling our stories. We continue to get better at creating that really omnichannel experience. We know our showrooms are the best showrooms out there. Our teams are incredible, and we’ve been working really hard to bring that same experience and emotional connection to life online, through our health.com, through digital advertising, through social media and all of those channels. And we think we’ve done a really great job at that over the last few years, but we have so much more to come.
I’m really excited about the team is working on and how we can continue to build that. So short answer is yes. Brand awareness is growing, but huge potential for that to continue to grow in the future.
