Jeremy Hamblin: Thanks and congrats on the strong momentum in the business. So I want to come back here to performance in the quarter. And your ecommerce business was up 26% versus the retail side of the business, down 2.7%. Just in terms of thinking about the pricing actions and kind of that interplay between ecomm and your retail store channel. Is that a reflection of the pricing actions being maybe more powerful on the digital side of your business? I wanted to just understand, you saw a pretty significant reacceleration here in Q3 in that channel of business specifically.
Dawn Phillipson: Good morning, Jeremy. So I would encourage you to remember that what’s reported from a channel perspective in the Q is really based off of delivered. So less about kind of the underlying demand trends in the organization, really more around just timing of deliveries. But with that being said, certainly, some of your commentary is valid. So I’ll pass it over to Jen and she can talk about the ecomm drivers.
Jennifer Porter: Good morning, Jeremy. I mean, we’re really, really pleased with ecommerce. We’ve seen strong traffic, strong conversion, strong engagement, strong sales to your point. We definitely do see clients respond to and react to price actions digitally. If they find them, they come in. We also spoke on our last call about the team really focusing on how we are merchandising and displaying pricing actions and sale products on our site. So we’re really pleased with the reaction engagement there. So definitely seeing a response there. I do think that, that is somewhat stronger on ecommerce and digital channels and in retail just because it’s more prevalent. It’s easy for that consumer to find their way to the sales section and see all that product and shop it directly.
Having said that, though, we are incredibly happy with how clients are responding to our full price product on ecomm as well. We’re seeing really great engagement with that product. We’re seeing really great sales in that product on our ecomm channel. We also know that the majority of our clients who are ultimately making purchases in our retail showrooms are starting that journey or at some point, continuing that journey on ecommerce as well. So where we’re looking at, we’re seeing a really healthy growth of our ecommerce business. It’s been really strong all year. We’re happy with the Q3 performance. And one of the things we’ve talked about for the last couple of years is growing ecomm not only as a sales channel, but also as that omnichannel presence to uplift our total company business has been a real focus since the relaunch of our site about a few years ago now, and the teams continue to look at that.
But overall, we’re really happy, and we’re going to continue to focus on building that channel out going forward.
Dawn Phillipson: And I would just add to that, that even with the price action that we’ve taken in mid-June, we have seen really nice lifts in AOV. So I think that also kind of lends to the strength of our newness and kind of core business that was not price actions.
John Reed: And just one last thing on ecomm is as we open these new stores and new clients find us, we see in those areas, our ecomm business go way up as well. So the new store and the renovation stores, and so forth really helps drive the ecomm business as well because people come in the stores, they sit on things and they go home and order it online. And it goes both ways. We know people that have come into stores have already been on the web and studied our products and so forth. So it really works in conjunction and we’re very happy with the performance of both the stores and the ecomm business.
Jeremy Hamblin: Great. And then just a clarifying question here. Still significant noise around backlog. So I think prior commentary, you had indicated that kind of excess backlog delivered in Q4 of last year was about $40 million. And so if we look at the midpoint of your guide here for Q4 3/31 versus kind of 3/16 last year adjusted for that excess backlog delivered. In terms of that upside and obviously, if you have positive written order growth, are we kind of apples-to-apples? Are you kind of implying that the business would be positive ex the normalization of backlog or however you prefer to characterize it?
Dawn Phillipson: So I think one point of clarification is that last year, we had about $150 million of abnormal backlog in the second half of the year. This $40 million is not the only backlog that was in the fourth quarter. That was the portion of the abnormal backlog that we hadn’t anticipated that flows through a little bit quicker than anticipated due to Dallas opening so strong. So I think keeping in mind that of the $150 million, $40 million was expected in 2023, but pulled into 2022. The balance of $110 million of backlog was spread over Q3 and Q4. So just a clarification point there, which I know backlog has been a bit confusing to folks. So hopefully, that’s a little bit helpful. As we think about this year, we will still have some abnormal backlog deliveries in the fourth quarter of this year.
So I think a little bit of noise in 2023 from backlog against a little bit of noise in 2022 of backlog. I think the great news is that we’ll be through it all by the end of this year. And then in 2024, we can have a clean slate and really just be back to a normal business cadence. So we feel good about that. But hopefully, did that answer your question? Is there more I can elaborate on?
Jeremy Hamblin: No. I think by the end of the year, it sounds like it will be cleared through the abnormal backlog. Thank you.
Dawn Phillipson: Thank you.
Operator: Thank you. Our next question comes from the line of Jonathan Matuszewski with Jefferies. Please proceed with your question.
Jonathan Matuszewski: Hey good morning and thanks for taking my question. First one was just on the demand comp guide. Just curious if you could give us a justification for that coming off of the strong 12% demand comp in 3Q. Curious whether kind of that low single digit is reflected by what you’re seeing in October or just conservatism in anticipation of slowing in November and December? Thanks.
Dawn Phillipson: Good morning, Jonathan. So we’re really pleased, of course, with the third quarter demand comp. We’re very pleased with what we saw in October, which was above the low single digits that we’re guiding to for the fourth quarter. As we think about November and December, in November of last year, we had some promotions that we will not be comping this year. So as we think about the price actions that we’ve taken in June and just the overall product portfolio, we’re being a little bit strategic in the promotional cadence for November. So keeping that in mind, along with just general macro uncertainty around the consumer, which, I guess, persists for several years now. But just kind of being conservative in our view of what may happen in the fourth quarter.
That being said, our product continues to resonate. The marketing continues to resonate. So pleased with what we’re seeing. I would also just remind everyone that we are not a holiday-driven business from a demand perspective. While we do have a holiday assortment, that’s not a significant driver of our business, and most folks aren’t purchasing sofas or desks as holiday gifts. So just a little added context there.
