We said it during our prepared remarks. We think that the consumer is going to be looking for value, and that’s because they are very sensitive to price. We are making a huge effort to, number one, put the right products into our assortments. We revisited some of the pricing structure that we have in all brands and we were able to make changes to really make sure that we had the right, just offering in front of the customer. But in addition to that, to having the right product at the right price, it’s important that we are careful with how much we buy and — in order not to create excess inventory. I think this is something that we pride ourselves on for now many years, I think we have done a good job in managing inventories, and the key was to not buy in excess.
And just also really monitoring how the competition is performing and how aggressive they are. We — so far, we have been able to stay in our lane on this and we have been able to really manage to our elevation of the brand strategy that we have, which has been very, very critical for our success in repositioning the brand in the minds of the consumer. Just it’s very difficult to really try to anticipate where the customer is going to be just a few months from now. I mean, there is a lot of uncertainty. And this is one of the main reasons why we have been more cautious in the way we looked at the — our outlook for fourth quarter. So, just we will give more color when we are ready to provide guidance for next year. But, just our plan has been and our strategy has been to continue to really watch how the consumer is responding and navigating through the current times and then acting accordingly in terms of how we position our business plans.
Markus Neubrand: Hi. Hi, Corey. This is Markus. Adding to what Carlos just explained for Americas Retail, what we’ve seen in the third quarter, as shared, Canada performed better than the US. I think we’ve been up with positive store comps, low-single digits. I think, as shared, our US traffic was the key, I think, driver for the negative store comps. In addition, I think to share, I think what we’ve seen now in our more tourist stores, we’ve seen a relatively better performance compared to our non-tourist ones. And adding to what Carlos also just said and I think if you see, if you look at our inventories, we are down 2% in US dollars, 4% in constant currency. If you look at the regional breakdown, we have been down in the Americas and in Europe. I think then also just confirming, I think then also in the line with our plans, I think, as Carlos shared, and we are on track also to end the year with 10% lower inventories compared to last year.
Carlos Alberini: Lower.
Markus Neubrand: Lower. Yes, lower.
Corey Tarlowe: That’s great. And then just shifting gears a little bit, the gross margin performance has been very, very strong. Is there a way to parse out for us within that gross margin line what you believe is sustainable going forward and maybe qualitatively some of the puts and takes that are associated with the gross margin as we look ahead?
Carlos Alberini: Yes. Corey, I’m Just going to make a very general statement here. But just I think that we saw a lot of change in our margin structure during the last few years, and some of it were things that we drove. Just the elevation of the brand being one of them. Just being very, very disciplined with the way we were buying inventory, another one. Increases in prices, so they were pretty significant. When you compare our average unit retail today to what they were pre-pandemic, I mean, you’re talking about increases over 20%. And that is — that has been kind of like a very big catalyst to — for margin expansion in our business. This past year or the current year, we benefited from inbound freight reductions in costs.
I mean, I think this has happened in the industry, so everybody is driving the same boat. But we feel that now we are in a much more stable place, and we are not expecting that we’ll increase prices significantly. We are not expecting that there are going to be significant cost increases. Just we are working with our vendors across the board and I think that we are seeing that there is a stability in cost. So, overall, I don’t think that you should expect, other than for mix, that there will be a significant change in our gross margin structure of the business.
Markus Neubrand: Adding to what Carlos just said, from a product margin point of view, we do not expect material headwinds or tailwinds, I think going into, I think, the new year. A lot of the improvements that we’ve had now in the initial markup are mainly driven by the inbound freight. I think they’ve already been executed and are realized this year. And also, in addition to it, at the prevailing exchange rates, we do not anticipate meaningful upsides or downsides from currencies on our product margin.
Carlos Alberini: And I would add one more thing just I talk quite a bit about our platform and the opportunities to really do a lot more with the infrastructure that we have. We have a phenomenal sourcing and production team and a set of vendors. We have contracted the vendor base tremendously during the last few years. And I’m talking about going from 535 vendors, I think, we had four years or five years ago to slightly over 120, 130 now. So, a big, big concentration of vendors, which means that each vendor gets a pretty sizable business with us. And as a result of that, we can really get a lot of efficiency here and optimization of cost. So, when you think about an initiative like the Guess? Jeans initiative, where we want to be very competitive with pricing and that’s how the entire collection is priced just very competitively.
