Kristin Wolfe : Great. Thanks. Yes, our comp store inventory was relatively flattish, up about 2%. Total inventory was down 8% now the biggest driver of that decrease was lower reserve inventory and lower in transit. And I can provide just a little bit of color on each of these. First, on reserve. In the third quarter last year, we significantly built up reserve inventory. One of the key reasons for doing that was that we were concerned about industry-wide supply chain disruption and delays in Q4 so we brought goods in early, and we stage them in reserve. Now this year, the environment is very different, and there’s been no need to bring in receipts in early. And in addition, again, because of those supply chain delays last year, we had an unusually high level of in-transit inventory.
And this inflated our overall inventory levels. This year or in transit inventory is much lower and at a more normalized level. Our supply chain teams are doing a great job moving goods quickly through the DCs and flowing product to stores. Our reserve penetration as a percent of inventory at the end of the third quarter was essentially flat to last year, 30% versus 31% and I’ll just add that we feel really good about the content of this inventory and the availability of reserve bus remains quite strong.
Michael O’Sullivan: Operator, last question.
Operator: Your last question comes from the line of Brooke Roach.
Brooke Roach: I was hoping you could elaborate on the drivers of what gives you confidence in delivering a 2% comp result in 2024? Relative to the more cautious outlook embedded in the fourth quarter outlook, understanding that you have delivered a 5% year-to-date. Just trying to understand the more cautious outlook for fourth quarter and then the improvement into next
Michael O’Sullivan: Brooke, I’ll take that. Of course, most retailers do not give guidance for the year ahead until they get through Q4. And as Kristin said in her remarks, our final guidance, our formal guidance for 2024 will be informed by developments over the next few months, of course, it will. We need to get through Q4 to really. Before we’re ready to give final guidance Nevertheless, let me sort of — I think it’s helpful at this point to share our initial thinking and that’s what we’ve tried to do in terms of putting that 2% comp growth out there. So let me explain why we think that an appropriate assumption at this point. And we recognize that next year, there’s lots of concern and uncertainty about the economy, about lower income shoppers, other risks but with all that said, there are 3 reasons why we think a 2% comp growth is appropriate.
The first and we’ve touched on some of these during our remarks today. The first is that — the lower income customer who was really struggling in 2022 has stabilized and is even starting to show some signs of improvement. Now I know analysts are worried about the economy next year, and they’re worried about that customer for next year. But frankly, that customer was already — already went through a lot in 2022. So I think with the cost of living, if the cost of living continues to grow at a slower pace, I think that customer will continue to — they’ll feel relief, and I think they’ll continue to recover. Secondly, as I said earlier, we’ve also seen some trade down traffic this year. When I look at when I look at our business, we’re getting really good turns on recognizable brands at higher price points.
And when I look at some specific merchandise categories, it’s clear that we’re attracting that trade-down customer and it’s supposing that the economy does slow down next year, I think we’ll likely see more of that trade-down customer and then the third thing I’d say is when we look within our own business this year, there were things this year that we could have done better in every quarter so far this year in Q1, in Q2 and in Q3 there were businesses where I know we could have done better. And I mentioned some of those a little bit earlier. So there are lessons that we’re taking away from this year that we can apply to next year. So if I put those 3 things together, we feel pretty we have some confidence in the 2% comp growth assumption at this point.
Brooke Roach: Great. And then for Kristin, can you elaborate on your capital allocation priorities beyond the step-up in CapEx that was identified in the prepared remarks? What contribution potential do you see the long term to the long-range model from share buyback? And how are you evaluating the potential near-term cadence of buybacks, given your confidence in the Burlington 2.0 plan?
Kristin Wolfe : Want to take that?
David Glick: Yes, I’ll take that one, Kristin. Thanks, Brooke, for the question. Our first priority always is to invest in our growth, and we talked about that in the prepared remarks, the reasons why we’re stepping up but that said, we expect to generate sufficient cash flow in our 5-year plan to return excess cash to shareholders. You probably noted that in the fourth quarter, we did, in fact, step up our — excuse me, in the third quarter, we did step up our buybacks versus the second quarter, about double the previous quarter. We don’t guide to buybacks. But you probably also noted in our release today, we had over $600 million in cash and $1.4 billion in liquidity. So we’re in a really strong liquidity position. So our expectation is that we’ll continue to return cash to shareholders at appropriate levels.
