Mike Madden: I think you’re on the right track, I think actually, we could potentially have more benefit come our way depends on what the top line is, I mentioned freight that’s kind of in place. But one other thing to keep in mind is, we’ve been spending most of the back half of this year, kind of prepping our assortment next year with higher initial markups, designed to capture more promotional activity, that will margin out at a higher margin. So with inventory levels coming down, with freight rates coming down, with supply chain just costs in the system coming down, along with an assortment that’s going to be more positioned to handle the type of promotional messaging that we’re engaged in. I think the ups — we could get back to where we were relatively quickly.
But again all of that under the heading of caution that says there’s a lot going on in the environment, the consumer is a little bit hard to predict. And the top line sales have a lot to do with where that margins out. So I think structurally, as I mentioned in the comments, the profile of our margins going in the next year is much improved. However you look at it, so it’s a matter of can we take full advantage of it with some sales momentum.
Jeremy Hamblin: Great, understood. Last one real quick for me in terms of your OpEx expectations, as you look to next year, just kind of simply, you’re going to close, I think you said close to 10 locations at the end of this year. In terms of OpEx spend for 2023, would you expect that to be up or down at this point, I mean the visibility you have?
Mike Madden: Again, I mean we have a couple of, I mentioned the store payroll, and that’s an area we’re really looking at, that’s we’re only going to really layer that in, if we see it leveraging and has an effect on driving sales. So from a dollar standpoint, that could be higher, but it will only be higher if it comes with a nice sales lift. But just stepping back big picture, knowing that we’re not quite ready to really unveil 2023, I would think about OpEx is kind of steady state, dropping with the store count, keeping our marketing spend about where it is but more effective. And again, trying some things in terms of driving store payroll to support our overall sales effort.
Jeremy Hamblin: Got it. Thanks for taking all those questions and best wishes for the holiday season.
Steven Woodward: Thanks, Jeremy.
Mike Madden: Thanks.
Operator: Our next question comes from John Lawrence from Benchmark. Please go ahead.
John Lawrence: Yes, thanks. Good morning guys. Woody, would you comment a little bit about when you look at the product assortment that you have, what are customers resonating to at the moment? What areas of the offering do you think that when you look at that lever for promotions, what is the highest sensitive area competitively and just sort of a deep dive into what consumers are buying these days?
Steven Woodward: Yes, you know, that’s a good question. Because we’ve been experiencing some relief partially and happiness in our furniture assortments have been working, although we might have been a tad over skewed in that area. So that’s part of the inventory driving down for next year, we were very pleased with that. We’ve been very pleased with our textile acceptance, pillows, throws, anything in the tabletop textile area has been very successful. Our floral business and our fragrance business has been fairly consistent. We ran a promotion last week on a jar candle and sold 150,000 candles in a couple of days. So we’re having good response. I don’t think that we’re getting the credit that we deserve right now. I think our stores possibly look better than they’ve ever looked.
The customers that are walking in are very impressed. They are buying, I wish that we could get more new customers in but we are experiencing some relief in some better customer new customer flow into the stores. There are a couple areas that are still challenging, wall decor has been a challenge for us this whole year as customers are just not interested in putting up those metal wood wall hanging things that we sold so well at Kirkland’s for so many years. And so and so we’re trying to really reduce a few reduction and kind of bringing our assortment and wall decor up to the new level of not just being one note with floral. But generally and then I do think that we had a little miss at some of our opening price points. And the merchants have done a great job for next year.
saying did we dislocate some customers who just wanted to come in and buy a $20 to $30 thing, maybe. So we’ve got that covered, it’s flowing, and it’ll be in for the Spring assortment. And I think that could be a good item for us to show that we’re an easy place to find value. But generally, I think that our goal to become a legitimate home furnishings retailer in the value space is progressing fine. And that is one of our long range goals is to make sure that as we move into the specialty store pyramid, away from the Big Box pyramid that we’ve been kind of like, compared with over the years, we’ve got to do a great job of making sure that our stores look great and our assortment is really reflective of home furnishings, the same kind of things you might see at higher end retailers, but in our store can be offered at a little bit better price point with lower cost structure.
