Michael O’Sullivan: It’s a good question, you’re right. We had originally planned to open 90 net new stores this year, but we’re now expecting to open 87. But the short answer to your question is that there were some supply chain delays with air conditioning equipment and other stuff like that. So a small number of stores slipped. Those — that small number of stores will open in the spring. So we now expect to end this year with 927 stores. As a reminder, our long-term target is 2,000 stores, that has not changed. Also, as we’ve announced previously, we expect to open between 500 and 600 net new stores over the next five years over that entire period. The only update is that the actual number may vary slightly more year by year.
The reason I’m calling that out is that we expect that there will be some bricks-and-mortar retail consolidation over the next few years. That could have a very positive impact on the quality and availability of real estate locations but it’s hard to predict what that looks like year-over-year. And that means that the number of openings could be higher or lower in one year versus the next. So bottom line, the overall target has not changed, but the number of openings in any specific year might vary more depending on the availability of locations.
Matthew Boss: Great color, best of luck.
Michael O’Sullivan: Thank you.
Operator: Our next question comes from Ike Boruchow from Wells Fargo. Please go ahead. Your line is open.
Irwin Boruchow: Hey, good morning Michael, Kristin, David. I guess, Michael, first question for you, I wanted to focus on inventory levels. Any chance you could provide maybe some additional detail on inventory levels on where you ended Q3 and where you expect these to be at year-end? And then maybe also, it sounds like the off-price volume environment is very attractive. Does this mean there might be some merch margin upside in 4Q as you flow more recent buys in the stores? And then a follow-up for Kristin.
Michael O’Sullivan: Good morning Ike. I think the best thing to do is separate out our store inventory from our reserve inventory. Our store inventory is obviously what’s available for sale to customers in our stores, reserve inventory is obviously goods that we’ve packed away for later release. At the end of Q3, our store inventory was up 8% on a comp store basis. We actually expect to drive that inventory level even higher in the run-up to holiday. The reason for that, and you’ll remember this, last year, we suffered significant receipt delays which created holes in our assortment during this critical selling period. And as we lap that impact, obviously, our store inventory is going to be higher year-over-year. Similarly, at year-end, I would anticipate that we would have much higher store inventory levels than last year.
Last year, our store inventories were just too lean going into the spring. And again, you’ll remember that, that together with receipt delays really undermined our sales trend in February and March. So our plan is to start the spring season with much higher store inventory level than we did last year. Let me move on though and talk about reserve inventory. In Q3, we released a lot of receipts out of reserve to build up our store inventory levels as we enter Q4. Now it’s going to depend on the opportunities that our buyers find in the market but I would expect that by year-end, we will have built back up our reserve inventory. But again, that will depend on opportunities. On the last part of your question, yes, the off-price buying environment right now is very attractive.
There are a lot of great deals. And ordinarily, I would agree that, that should drive merchant margin upside but I think that, that’s unlikely to happen in Q4. As I described in my prepared remarks, our overriding focus in this environment is to offer great value in order to drive the sales trend, and that means that we’ll be passing along great deals to our shoppers.
