The second part of your question was the buying environment. I think the truth is the buying environment and other retailers, other off-price retailers have reported the same thing. The buying environment right now is tremendous across brands, across categories. And from our point of view, that offers a short-term opportunity, obviously, because it means we can get great merchandise that will either flow to stores or will put in reserve, but it also provides us a bit of a strategic opportunity because part of the catch-up that I described earlier when I was talking about the merchandising organization, also applies to our vendor network. So this kind of environment gives us a chance to open up new vendors and/or develop and grow existing vendors.
So the buying environment right now is very favorable for us in the short term, and as I say, strategically. What would I expect — how would I expect that buying environment to evolve? I would say that I think there’s going to be great deals in the market, certainly for the next several months. Beyond the next several months, it’s always hard to tell. It will depend, I think, on what happens to overall consumer demand next year. If consumer demand next year weakens and specifically, if it turns out to be weaker than the outlook that vendors and retailers have used to set their production forecast, then we should continue to see a fairly plentiful supply of off-price. And I think there is a reasonable chance of that’s how things will play out.
Mark Altschwager: Thanks for the detail. Best of luck.
Michael O’Sullivan: Thank you.
Operator: Our next question comes from Brook Roche from Goldman Sachs. Please go ahead. Your line is open.
Brooke Roach: Good morning and thank you so much for taking our question. Earlier in the call, you commented that you believe that you can get back to 2019 margins within the next two years. Can you provide a little bit more commentary around the drivers, the cadence of recapture and your degree of confidence in that recapture, perhaps you could bucket the proportion of the margin improvement that’s embedded there between each of kind of the key drivers of freight rate, supply chain leverage, and other margin categories?
Michael O’Sullivan: Good morning Brooke. Yes, it’s a good question and we are — let me start with sort of the buckets that we’re going to have to — that we need to drive in order to recover our margin back to 2019 levels. I think there are really three key drivers. There’s sales, as I talked about. I mean we — this year, our comp sales is obviously very negative. And with a very negative comp sales, we’ve experienced significant fixed expense deleverage. So the number one priority is to drive sales. And I would say a good chunk of what I’ve talked about this morning has been around how we’re going to do that, and it’s really around driving sharper value in our assortment and also making our — getting our merchant organization to be more effective in shopping that value and therefore driving sales.
So that’s priority number one, above all, drive sales. Sort of lever number two if you like, is freight and supply chain expenses. Those expenses ran up significantly over the last couple of years for lots of reasons that we all understand. But we’re already starting to see some improvement, I would say, certainly, in freight rates, but even in terms of the supply environment. I think a lot of the headwinds that we had in freight and supply chain are starting to abate. Now as we get into 2023, I expect to see more of that. It’s hard to quantify it too precisely because there are other things that could affect those numbers in 2023. For example, diesel costs right now are pretty high and depending upon what happens with those, they could partially offset some of the benefit we might see in terms of lower freight rates.
