So we’re sensitized to it. We’re trying to remain competitive, but at the same time, not jeopardize our brand position. But no, we also have to ensure that we’re delivering sell-through so that it doesn’t come back to bite us next quarter.
Jonathan Komp: Just as a follow-up, is it right to think at some point in the future getting back to mid, maybe high 50s gross margin might be required to drive higher profitability for this business? Is that sort of a reasonable expectation? And is there a path to get there? Or if not, are there other paths to drive better profitability?
Sam Sato: Yes, absolutely. I think the way you’re thinking about it is right. And what I would point you to is as I mentioned, the enablers to our big dam blueprint, specifically logistics vis-a-vis Adairsville that not only — that only benefits us from a consumer expectation perspective, but certainly from a speed and expense perspective, it significantly more efficient than our legacy fulfillment centers. The second part is our sourcing and product innovation initiative. Last call, we mentioned we onboarded several new members. We just hired a new VP of Sourcing and she’s got unbelievable experience in the industry and [Indiscernible] not only a greater depth of experience and expertise, but she’s going to really help us start to optimize the team that we’re hiring to bring more innovation, more frequently, quicker and, quite frankly, with expansions in IMU.
And so we’re addressing how we structurally change the financial model of the organization from the top, meaning IMUs through the P&L on expenses like variable related to our fulfillment centers. And then of course, we’ve got a whole technology transformation road map that will help us make better, faster, more informed decisions that’s more future-looking than it is kind of review looking. So yes, I think I think numerically, the way you’re thinking about it is right, and I think that we’ve got a solid plan to deliver those things, and they’re starting to come to fruition.
Jonathan Komp: Okay. And then could you just maybe talk about the factors in the fourth quarter guidance. It looks like the revenue range is somewhat wide, could be down slightly to maybe up mid-single digits year-over-year. So just how are you thinking about the factors embedded in the near-term outlook?
Sam Sato: Yes. So I’ll start at the top line. The reguide really was just well, it’s primarily driven by the actualization of the Q3 number. Q4, while we don’t share quarterly numbers, what we had in our internal plans for the back half of the year, Q4 remains intact, and it’s really the Q3 actualization. It does call for an improvement in trend from Q3 and year-to-date. And we remain optimistic and bullish in that regard for a couple of reasons. One is, as I mentioned in my prepared remarks, some of the things that our team has been working on more tactically to change the trend, including chasing in kind of hot sellers as well as fast-forwarding some new introductions into Q4. So things like I already mentioned it, but like AKHG fitness, a whole new category for us, the expansion of No-Yank Tanks, big category for us, and we believe bringing in the new spring products will get us some upside as well as — I talked about fire hoses, HD and then our Double Flex denim program has really done well.
And so we’re chasing that in to take advantage of that during this big sales period. So — so Q4 is largely intact. So that’s part one. Part two is, again, while I don’t want to lean too heavily on what we saw Black Friday through Cyber Monday, it was a solid enough business trend that it just affirms our confidence that Q4 is a deliverable quarter that — then brings our year-end to within that range.
Jonathan Komp: Just last one for me. I’ll just ask just given some of the activity that looks almost more like liquidation online, is best made still part of the ongoing plan? And should we think acquisitions are off the table until the core business is stable for longer. Just any thoughts on those 2?
Sam Sato: Yes. So yes. So a couple of things. Our intent is not for it to look like kind of a liquidation. In fact, we’re being purposeful, as I said, in the frequency of our global events and then really offering kind of post deals I wouldn’t say in reaction to the marketplace, but recognizing that the marketplace is significantly more price competitive and consumers are much more price sensitive than they have been in recent years. Best Made actually, we announced the sale of Best Made 3 weeks ago or something like that. And so in fact, the original founder we were talking with. And ultimately, he repurchased the brand from us. And the fact of the matter is, as we continue to work hard on growing the dilute business, AKHG is starting to get a lot of traction as well as our women’s initiative.
And so our focus was to get our product development and merchandising teams really narrowly focused on making those brands kind of the winners in the near term. And so this was an intentional act to just narrow the focus on those 2 brands. And then the last thing I would say relative to acquisitions is we’re still in the kind of vetting mode. We’re vetting different potential acquisitions. But as we’ve always talked, we’re not going to stray too far from where we are. We’re going to remain focused on Duluth and AKHG. If an opportunity presents itself, we’ll look more deeply, but I’ll tell you right now, we’re in the crawl stage. We’re not aggressively seeking out acquisitions as the next phase of growth. We think we’ve got some near-term opportunities with Duluth and AKHG.
Operator: The next question comes from Dylan Carden of William Blair.
Dylan Carden: Curious on the promotion, just following up with that. I mean, I don’t know if you can answer this per se, but one thought would be that you’ve kind of trained your customer over time to sort of look for these rapid fire promotions? And the evidence of that potentially being that even if you pull back on promotions, the mix share still skews higher clearance, higher promo. Is that something that you think is a valid concern? Or is this sort of more a reflection of the environment for a value-seeking consumer?
Sam Sato: Yes, I’d say a couple of things, Dylan. One is we are highly, highly sensitized to that. And that’s part, as I mentioned in my answer to Jonathan, is internally, we talk about this balance, the balance of being competitive with the broader marketplace with brand positioning. And we have strategically, while maybe it doesn’t appear that way. We’ve strategically shied away from more and deeper at the expense of driving greater top line. And we do that purposely because — at the end of the day, that additional top line doesn’t necessarily flow through. And importantly, it starts to, I think, weighed into this area of training the customer to think about Duluth as an off-price brand only. And so we’re highly sensitized to that.
