So I hope that answers the question. I mean, it’s — of course, we’d prefer to have growth. We get more margin that way it helps build our merchandise margin, but it’s truly just a result of the math of the business and I think we also have other abilities to grow our merchandise margin in addition to Exclusive brands.
Jim Watkins: And Dylan, as we look into fiscal ’25, we are planning on returning to growth in exclusive brand penetration, right? So this is a one-quarter drag on the business.
Dylan Carden: Great. And it kind of bleeds into another question around one way to think about the unit volume question perhaps is what business you’re losing. And as you kind of look through some of the categories where you’ve been weaker, obviously women’s, do you feel like you’re reaching a point where the discretionary nature of some of what’s remaining or just the behavior of newer customers or anything to kind of give you some comfort in and around how much more, in theory you could lose? Does that makes sense?
Jim Conroy: It does. I think we continue to have a very solid base functional business. So all of work business, both men’s and ladies’, most of Men’s Western business, is functional, and a portion of our ladies’ business is functional. So the bid that is more cyclical, perhaps caught up in a fashion cycle a couple of years ago, there is — it could still decline further and we still have fashion ladies business in the store and still are doing some relatively significant sales there. But it’s tempered to a large extent by the overall business that does tend to be much more functional. So I don’t think we’re necessarily out of the woods in the Ladies’ business yet. I do think at some point we’ll, probably in the next few quarters, start to see that trend improve, and hopefully, get to flatten, perhaps positive after that, but I don’t think that’s going to happen in the next one or two quarters.
Dylan Carden: Understood. Thanks a lot, guys.
Operator: Thank you. Our next question comes from the line of Janine Stichter with BTIG. Please proceed with your question.
Janine Stichter: Hi, everyone. Yes, wanted to ask about the E-commerce business. It seems like it’s still kind of hovering down in that negative low-double-digit range. Want to know how you think about the pieces of the business that are not bootbarn.com business? Remind us of the strategic importance of having Sheplers, Country Outfitter, the Amazon business. And then would love to hear how you’re thinking about driving that business into next year? We’re hearing of ad rates continuing to push higher, so how do you think about how that business evolves, just in light of maybe higher cost on ad spend into next year? Thank you.
Jim Conroy: Sure, very good question. So the four pieces, bootbarn.com, of course, is an extension of the store, and we do really pride ourselves on that omnichannel experience and I think those two channels have been stitched together quite well and they also share the same retail prices. Sheplers.com, true to its heritage, is a very price-conscious customer, and oftentimes, frankly has a lower price than bootbarn.com, and we like that brand because it enables us to compete against other online players that are playing a price game, so that’s kind of the Sheplers strategic importance. Country Outfitters was an acquisition several years ago. It tends to be focused on ladies’ fashion, which is one of the reasons why it’s having so much difficulty right now.
We do think there is some long-term possibility for that business to get back to growth. It also gives us a testing ground for trying new things without impacting the two bigger business. The Amazon business is, I think a necessary evil. We sell some products on there, so do a lot of other people. It tends to be a low-margin business for us, but still profitable. So we participate in sort of the behemoth of Amazon, and that business gives us a read on sort of the general public demand that might be more casual purchasers of our product. In terms of the future of the Online business and the growth, the Online spend and the inefficiency of that is real. We could quite easily get more sales and spend more money and those sales would be EBIT eroding, so we just don’t do it.
So we manage it somewhat algorithmically. I do think that will normalize at some point. There’ll be sort of a new equilibrium. That is another business that when we look at a historical perspective, it’s grown extremely strongly over a few years, and while we’d like to get back to positive sales, the fact that it’s giving a portion of the business back, after such outsized growth, it might be kind of expected, but we do think it can get back to positive sometime in fiscal ’25.
Janine Stichter: Perfect, thank you. And then, just wanted to follow up on the tariff question. Do you have an estimate of what you directly import from China? I understand that I think you said half of your products are from China, but only a portion of that is…
Jim Conroy: Yes, it’s similar with the exclusive brands — between exclusive brands and third-party, it’s still about 50%.
Janine Stichter: Perfect. Thank you.
Jim Conroy: The direct import would be half of 37% roughly.
Janine Stichter: Got it. Thank you very much.
Operator: Thank you. Our next question comes from the line of Jonathan Komp with Baird. Please proceed with your question.
Jonathan Komp: Yes, hi, thank you. Maybe just a follow-up once more, when you run through the exercise and look at the sales volumes that you called out for projecting the fourth quarter sales and comps, could you just share a little more insight, when you do that same exercise, what does that inform you to when the comps of the business could turn back positive and how should we think about any swing factors, one way or another?
