I think it’s important to note that we, as we’ve discussed, we remain really committed to discipline promo. So, we’re not buying sales with promos and we’re really growing in a sustainable way. And in addition, we are incorporating, the sustained inflationary pressures that we’ve seen. And that’s really kind of the difference between what we’re seeing in the second half versus the first half performance.
Operator: Thank you. The next question will be from the line of Matt Koranda with ROTH/MKM. Your line is now open.
Matt Koranda: Hey, everyone. Thanks for taking the questions. Understanding that the cadence of promotions is not changing for you guys. But I did notice that ATGT wasn’t on the site in recent weeks. And just wondering if there’s any significant change we should note in terms of the promotional strategy that you have. Just if maybe you’re clearing product in different channels or how we should be thinking about sort of the strategy toward promotions in the backup of the year.
Trina Spear: Yes, I mean, I think, ATGT was literally awesome today, gone tomorrow and it’s gone, which is exciting. I think we’re really, want to ensure that when we launch products, you come and you engage with our products. We have promos at specific times throughout the year and we’re being really disciplined around how we, offer promotions to our community. And, that is the plan.
Matt Koranda: Okay, got it. And then on teams, it’s interesting you noted, even without really playing much offense, you’re at a mid single digit percentage of revenue. Just curious if we should be thinking about a strategy that you have to play more offense there in terms of either hiring an external sales force or we’re just marketing more aggressively toward the right decision makers on that front to juice growth on the teams program.
Trina Spear: Yes, I think, given the growth, the growth we’ve seen and how health care is changing and evolving in front of us. We are executing a strategy to proactively drive growth in the future in the team’s business. It’s starting with the upgrade of our teams platform and making that more scalable. We’re creating a dedicated customer experience team that’s providing a more, more close knit white glove experience. We’re developing our plan around a more robust outbound strategy and that relates to marketing as well as sales. And so there’s a lot that we’re doing investing behind this business and we’re really excited about what it can be in the future.
Operator: Thank you. The next question will be from the line of Adrienne Yih with Barclays. Your line is now open.
Adrienne Yih: Great. Thank you very much. Just three quick questions. Danielle, you talked about kind of starting to see the capitalized average in a cost come down as you move through the inventory. Can you also talk about sort of when you might have renegotiated some of these big contracts straight contracts and whether that’s an added potential benefit in the back half. My second question is, I believe you said that teams was mixing up average unit retail and possibly margins. So can you talk about kind of the content of what they’re buying there and how that’s driving the, the AUR piece of it. And then lastly, either Trina or Daniela, can you talk about the fulfillment upgrades? So what, what, what are the goals after you make those fulfillment upgrades? Is it capacity, productivity, reduced cost or all of this rate? Thank you very much.
Trina Spear: Thanks, Adrienne. On your first question, so we have seen ocean freight rates come down considerably and we have walked in those rates at a much, much more beneficial place than we’ve been over the past couple years. As we discussed, we’re not anticipating a ton of benefit from that in the back half of the year because we’ve really materially lowered the amount of inbound receipts that we’re bringing in as we work to bring our inventory down to that target of 25 weeks of supply. And so those inbound receipts at those lower ocean freight rates are just going to have a smaller impact on overall gross margin, but we do expect that to be a benefit looking into 2024 and beyond. On the team side, we have mentioned that teams is a driver of AOV and really that’s through higher units per transaction as these teams orders are bulk orders for hospitals and institutions looking to outfit their workforce.
And because of that, they have a really interesting margin profile. And so teams, while slightly lower gross margin because we’re offering discounts for those bulk purchases. If you look down the P&L, it’s actually a really strong contribution margin profile stronger than our core business because we’re getting efficiencies and outbound shipping on those larger orders. And we’re really efficient in marketing as it’s been entirely inbound today. And so it’s a really great tailwind that we’re seeing as we continue to grow this teams business as we continue to shift more into it. It has a strong return on our financials as well. For fulfillment. So for the fulfillment project, really what we’ve spoken about is we’re looking to set the groundwork for our distribution network.
