Heather Plutino: Greg, good to hear from you. Yes. So here’s what I will say. We’ve been talking for a while now that we anticipate some modest improvement for our customer in the second half. And we’ve confirmed that with third-party economists that still holds. You are right that we under-index on student debt. Gas price increases harm our customer, there’s no doubt. But here’s what we need to focus on is really controlling what we can control. So if you think about the four initiatives that David has laid out, that is what is driving our expected improvement in the second half; making sure that we have the right product in the stores; that we are being as agile as we are known to be in adjusting to our — the way our customer is voting with their wallet; making sure we’ve got the right mix of good, better, best; managing margin, you’ve heard before, right, controlling expenses and leveraging our technology.
So it’s really — we’re hopeful that our consumer, who we love very much gets some relief, but we’re not sitting back and waiting for that. We are being pretty aggressive in going after all of the levers that we can pull.
Greg Sommer: Great. I had a quick follow-up. I was wondering if you could just comment on direction that your basket is trending and then also kind of the breakdown of the basket between AURs and units?
Heather Plutino: Yes, sure. Thanks, Greg. So we’re happy to say that basket has improved in the second quarter versus the first quarter, and it’s really driven by UPT primarily. So that’s telling us that our customer is responding to our move to put more opening price points in our store, and they’re filling their basket accordingly.
Greg Sommer: Great. Thank you.
Heather Plutino: Thank you.
Operator: Our next question is from the line of John Lawrence with Benchmark. Please go ahead.
John Lawrence: Thanks. Good morning. Congrats, guys. David, would you talk a little bit about — we’ve talked a lot about the ERP system. You’re doing high 30s, and you work really hard to maintain that gross margin line. Looking forward, obviously, that system gets a return. We’ve talked about all the benefits and all of that. Can you spend a little time on what does it do for you on the expense line? I mean, does it help you leverage that line a little bit? And I see the possibility in ’25 and ’26 of a 40-plus gross margin, is that reasonable?
David Makuen: John, good to hear from you. I think what I’d say and summarize in the following way. The impact of the upgrading the ERP system will, first and foremost, drive the right product into the right stores at the right time, meaning it adds significant new functionality catered towards better planning and smarter allocations. So I always want to anchor the benefit around improving top line sales, which, as you know, is really what we’re aggressively chasing given a relatively and high, frankly, fixed cost structure within the Citi Trends model. So I want to be sure that we always anchor our talks around ERP system impacts that it’s all about the top line. Now to your point, it will impact gross margin, we believe, over the course of the next couple of years, can’t comment whether or not we’ll hit the number you mentioned just yet, too early in the game here, but it definitely provides us a really interesting way and compelling way to think about how we run the business a little differently from a planning and allocation point.
