Jeremy Hamblin: Got it. Thanks so much for the color, and best wishes.
Peter Stratton: Thank you.
Harvey Kanter: Thanks. Happy Thanksgiving to you.
Operator: One moment for our next question, please. Our next question comes from Raphi Savitz with RYS Advisors. Your line is open.
Harvey Kanter: Hey, Raphi.
Raphi Savitz: Hey, good morning, guys. Maybe one tactical question and then kind of a bigger picture question. On the tactical side, as you’re reinvesting in the store base here, have you revisited at all how you’re thinking about incentivizing your workers and your store managers to ensure success?
Harvey Kanter: Yeah. So, we have three different programs in place. We have a base compensation program. It varies by locale where the minimum wages are different. But every single store is above minimum wage in its locale and the combination of the store quarterly bonus and the actual sales associate commission ultimately creates their hourly pay. And we’re, I’d say, at a high level, comfortable with where they are. They’re materially greater than any historical perspective in terms of their hourly wage rates. I think if you’re going to a store and actually experience interaction, you would find it remarkable, you would never know they’re on commission where often enough in commissioned stores, you have a heavier push of the sales because they’re trying to sell you what’s on the rack.
And in our case, the first question is, how can I help you today? May I take your measurements by our certified fit specialists. And it’s really understanding what they came in for, what they’re shopping for and helping them put together looks. And the outcome is successfully doing that, achieves an average DPT or average transaction value that is above what most other retailers have an average transaction value. And ultimately, a result of that is a higher commission and a better store bonus if we achieve our results. So, kind of a backdoor way to look at that. I think the outcome of their compensation is the effectiveness of creating the experience that we talk about so often and frequently.
Raphi Savitz: Got it. Okay. And then as you think about the next few years at DXL, you’ve talked about, again, kind of inflecting growth and really driving growth in the out years. How do you think about kind of rank ordering, what will drive that growth? Is it kind of the increased customer lifetime value of existing folks? Is it the branding efforts to bring in new folks? Is it the new stores?
Harvey Kanter: Yeah, it’s a great question. I was just going to say, there is no silver bullet. I want to caution you, there’s not a silver bullet. So, what you’ve referred to, there’s a little bit embedded in each one of those elements. But obviously, the way we’ve thought about it and prioritize it and we’re trying to balance it is we believe that our share of awareness in the marketplace is just sub water. We have done research. We have consumer insight. We did a brand study. We are in single-digit awareness levels on an unaided basis and low double-digit awareness levels on an aided basis. And in both cases, just by the name of other retailers that are not really specialists in this business at any shape, matter or form and more general merchants, their awareness levels perceived are higher even though the reality is they might not be the same in terms of the assortment breadth and depth we carry.
So our job number one is share of voice, our job number two is awareness, actual awareness, and job number three is trial. And when you successfully do all of those things, you create new customer acquisition. I cannot tell you that it’s prioritized literally as number one, but it is a very strong priority for us. The flip side is it’s not necessarily number one exclusively because as you might imagine, if we did that, the cost of acquisition is always the highest versus the cost of reengaging your current customer. So, the reason we talk about trial and repeat and lifetime value is because we both appreciate that the core customer with us today generates more efficacy in our marketing returns by just reminding them of who we are and the reason to come in, and the combination of both new and repeat hopefully creates the long-term growth opportunity we have.
When the day is done, you obviously have to appreciate and recognize that we have to exponentially grow our new customer file. So we have to do that in a, what I would say, is the pragmatic and thoughtful way because the cost to do that is a challenge to the P&L, which is why we’ve talked about the fact that the P&L as a percentage of EBITDA margins will go down for a period of time before they go back up as we try to engage more customers. But we’ve even moderated that view given the environment and the efficacy of our marketing return where traffic in the customer is just more challenged today than ever. And the expectation might be in 2024 that we’re going to have a rougher year than we — I think any of us really hoped for.
