Simeon Gutman: All right. You got it that time. So, I wanted to follow on this value movement we’re seeing in retail and a little bit on the fourth quarter. You said you’re not seeing trade down. I’m curious, if you — your traffic seems to suggest that you’re getting your fair share of the value movement, but we’re seeing discount mass, even dollar stores do, a little better than others. So, curious, if there’s anything there to call out if there’s anything within, Five Beyond that’s changed? And I think it was a year or it could have been two ago when you called out the fourth quarter being prime positioned for your customer for your value. And to John’s point, I think it does lineup reasonably well this time around. Curious, if you can comment on that as well.
Joel Anderson: Yes. I mean, look, on the trade down, I was more referring to the general sense of how some of the others look at trade down. But clearly, our traffic is up, and it’s up to seeing a lot of new customers in the door. And so I think that just shows we’re more relevant to more customers. And this is our off season. I mean, I think this time of year, the time when Five Below is the lease needed. So, to see that really ticking up. Our marketing is working, the customer needs it. And then certainly, you called out all the holiday stuff, Simeon, but we’re really set up nicely for a great holiday. And I think as value is, is really in vogue again. And there really isn’t any other kids’ retailer out there. Our store becomes a store of needs for families at holiday time.
And — so I’m really excited about what we’re seeing for Q4 here. And we’re going into a lot of momentum. Some of the questions John asked about, the tech resets being done earlier. The Five Beyond that are done, et cetera, et cetera. But I know you all want specific items, and those I’m just going to have to say for the next call just for competitive reasons.
Simeon Gutman: Yes. Thanks.
Joel Anderson: Yes. Thanks, Simeon.
Operator: The next question comes from Edward Kelly with Wells Fargo. Please go ahead.
Edward Kelly: Hi. Good afternoon everyone. I wanted to ask a follow-up question on shrink. The last time that you talked about shrink after that, I think it was your January accounts. You mentioned the 30 basis point year-over-year headwind. It looks like an additional 20 basis points now, but you have cost mitigation. So, I’m just wondering if you could quantify how much we’re really talking in terms of like how much is it really up year-over-year? And then as we think about the forward risk around shrink, I don’t think you do rolling count you can again in January, right? Do you think we’ve seen the bottom here, unemployment still low? And then the last part of all this is where is it coming from there? I think initially, there’s a lot of organized crime, stuff that people are talking about. But has this worked its way into more traditional customers and to employees? Thank you.
Joel Anderson: Yes, I mean, Ed, there’s a lot to unpack. And I think for all of you on the call, you just got to remember, we’ve painted for you probably in our guide, the worst-case scenario, we are still in the process of doing all the reconciliation, quantifying all our mitigation efforts. We’d already mitigated some of the things from the 30 basis increase from last year. I do think we’ve seen pretty much the high water mark. The difference is now is a year ago, we weren’t doing anything about it. In June, we put in a new return policy. We’ve changed our damages policy. So, all the mitigation efforts we are putting in just started. And also remember, the shrink that we were exiting 2022 on included a lot of stores that that were inventoried back through 2021.
This inventory really includes everything from the back half of 2022 and the front half of 2023. So, we have a really good sense now of the high watermark and it’s our job to mitigate it. And the fact remains that all retailers are seeing this and as Ken said, somewhat of a silo issue to fully mitigate, but our job is to really get after this and figure out a way to mitigate the increased shrink we’re having. And so where is it coming from? It’s coming on all angles. And you’ve got several cities now, which just simply aren’t prosecuting below the $500 level. Sadly, our hometown here in Philly is a city that’s seen some of our highest shrink rates. And we watch Target, and we’ve watched Wow Town exit Center City and so while I don’t think we’re yet at that extreme of closing Five Below stores there, these are the type of integration strategies that will be included as we consider what to do if we don’t see things improve.
So, it’s a big amount that could be, I think, in total, is 50 to 70 basis points and our job is to mitigate that. And we — as you can tell by our guide, I think it’s going to be around 20 basis points.
Edward Kelly: Great. Thank you.
Joel Anderson: Thank you, Ed.
Operator: Our next question comes from Paul Lejuez with Citi. Please go ahead.
Paul Lejuez: Hey thanks guys. Can we talk about the lift, give us an update on the lift you’re getting from remodels? Is that trending as good as you’d anticipated? And how does that lift breakdown between transaction and the increase in transactions versus ASP? And how has that changed over time? And then just curious with lift productivity in your invest mature markets versus your more mature markets, what you’re seeing? Thanks.
Joel Anderson: Yes Paul. I mean, look, nothing’s changed on the conversion stores. We’re still seeing mid-single-digit lift with transactions being even higher than that in converted stores. So really, I mean, we are uber excited and standing behind this conversion strategy. We’ve got the 400 that we’ve done this year and expect to get right back after that again next year with some more stores. But that mid-single-digit lift is consistent with what we saw at the end of last year and are continuing to see this year year-to-date. Did I catch all that there, Paul?
Paul Lejuez: That is the first one. Second one is on new store productivity is looking at your mature, more mature markets versus your newer markets, what you’re seeing?
Joel Anderson: Well, NSPs were — I mean, they’re — I think we came in what? Close to–
Kristy Chipman: Close to 90.
Joel Anderson: 90, yes.
Kenneth Bull: Yes. And it’s relatively consistent through the types of stores and regions.
Joel Anderson: All right. Thanks Paul.
Paul Lejuez: Thanks guys, good luck.
Operator: Our next question comes from Scott Ciccarelli with Truist. Please go ahead.
Unidentified Analyst: Hi, guys. This is Joe on for Scott. Thanks so much for taking my question. Actually, I just wanted to follow-up a little bit on the mid-single-digit lift you’re seeing in the remodels. Is there anything you’d call out in different areas by income demographics?
Joel Anderson: No. Honestly, it’s pretty consistent by income demographics, and we’re seeing that same type of lift consistently, no matter where we’ve opened the stores. If anything, we see it a little bit higher if it’s an older store that we converted. But in terms of income demographics and that type of thing, it’s pretty consistent.
Unidentified Analyst: Awesome. Thanks. And then — and just one follow-up question. I know you guys have been talking about people shopping closer to holidays. Just wanted to see what you were thinking about for Halloween trends this year. Would you expect that incrementally latter half boost versus last year or something around the same?
Joel Anderson: Well, yes. No, I think it’s — we’ve seen it closer to the holiday consistently for over a year now, and I think Halloween will be pretty similar this year as well.
Unidentified Analyst: Got it. Thanks so much.
Joel Anderson: Yes.
Operator: Our next question comes from Michael Lasser with UBS. Please go ahead.
Michael Lasser: Good evening. Thanks a lot for taking my question.
Joel Anderson: Hey, Michael.
