Your question about the 15% EBIT margins, we are completely behind that. We are going to be a Company that has 15% EBIT margins over time. This focus, we are looking at the entire cost structure of the Company, just solidifies our part to get there and get there the right way and get there during the timeframe that we believe is acceptable to our long-term shareholders. So we are committed to the 15%. This helps get us there and [Technical Difficulty] and then really make this Company a lot more efficient and agile.
Jay Sole: Got it. Thank you so much.
Operator: Thank you. Please standby for our next question. Our next question comes from the line of Matthew Boss of JPMorgan.
Matthew Boss: Great. Thanks. So, Chip, maybe on global health of the brand and category. Could you just elaborate on the sequential sales improvement and speak to current demand trends that you’re seeing across channels in North America and Europe today? And then for Harmit, could you speak to inventory health across distribution channels and just the puts and takes that are embedded in your fourth quarter gross margin outlook relative to three months ago?
Chip Bergh: Sure. First of all, Matt, I’ll try not to be too repetitive with what was in the prepared remarks, but we’re seeing a dramatic or stark contrast between the results in our direct-to-consumer business versus wholesale. So direct-to-consumer up pretty strong double-digits, up in every region, up in mainline, outlet, and e-commerce, plus we comped positively in each chain in each region and each channel on each region. So really strong results there during the quarter, and wholesale down pretty soft. And as we’ve kind of been digging into this, one of the things to consider is, our DTC assortment is very, very broad, tops, bottoms, men’s, women’s. We can also be pretty agile in responding to it. We’re going to work on becoming even more agile, as Michelle said.
But it’s been a pretty hot summer as everybody knows. And you all have known me for a long time, I barely talk about the weather report when I’m talking about our business results, but I think there is no doubt that our wholesale business was somewhat impacted by the really, really hot summer, because the wholesale assortment is pretty much denim bottoms. We did take the pricing action late in Q3. So, we announced it, we first talked about it on this call. We announced it to our customers and it went into effect in early August. Every customer kind of executes it on their own timing and they execute it their own way and that kind of [Technical Difficulty] throughout the month of August. So what impact we did see on those six items where we took pricing actions here in the US.
It was late in the quarter, but I will say that we are optimistic with what we’re seeing. We are seeing an improvement in trends on those items in those customers where we have seen the pricing reflected and that gives us confidence that we did pick the right items. I’ll also say, you all remember, we did not take pricing down on a number of items, 501s being one specifically and the 501s were up this past quarter. So I think we really were — we were very surgical and very strategic. We’re optimistic about that. Our wholesale trends, though they were down 10% [Technical Difficulty] they were better than they were the previous quarter. And our expectation is that they are going to be better in the fourth quarter in part because of the pricing actions that we’ve taken, having a full quarter’s impact of that, in part because this inventory situation that we’ve had for multiple quarters is now cleaned up and we’re getting back to more normalized customer fill rates, that’s going to help build the pipeline, where there have been out-of-stocks, that’s going to help get new product out onto the floor.
