We’re in the early stages of a reimagination, pleased with the growth of On 34th Street in its first few months, the reimagination of I.N.C, and more to come. But we also love market brands. We want to be the best partner out there to the retail community. And so, we’re going to be flexible in our financial models. We’re going to keep pursuing our go-get list of brands that we want to be a part of Macy’s, Bloomingdale’s, or Bluemercury, and expect that we will have the brands and the products that customers expect from each of these three nameplates.
Adrian Mitchell: And Oliver, just to close out on credit card, no changes with regards to credit card. We spoke on our last earnings call about our outlook for the balance of the year. And Q3 was very much in-line with our expectations. And as we think about Q4, very much in-line with our expectations. As we think about what this means into next year, there’s just a number of unknowns that remain out there. And as we get a better sense as to what’s happening with the Bureau’s decision on late fees and a number of those other factors, we’ll share more of a perspective on 2024 and beyond.
Oliver Chen: Great. Happy holidays. Happy Black Friday. Best regards.
Adrian Mitchell: Thank you.
Tony Spring: Thanks.
Operator: Thank you. The next question is coming from Brooke Roach of Goldman Sachs. Please go ahead.
Brooke Roach: Good morning, and thank you for taking our question. I wanted to follow up on Oliver’s question about the consumer and get your thoughts on what you’re seeing from consumer discretionary demand across income cohorts relative to what we saw a few months ago. Have there been any changes in conversion or traffic across each of these cohorts? And how is that driving your strategy for the holiday season? And then, as a follow-up, Adrian, can you provide your updated thoughts on the levers that you can pull to protect profitability and EBITDA dollar generation next year if the macro backdrop or credit outlook weakens further? Thank you.
Tony Spring: Thank you, Brooke, for the question. I think the consumer remains under pressure. We know the discretionary categories remain challenging, and yet as a modern department store, we have the ability to be in multi-brand and multi-category, multi-channel and cater in off-price all the way to luxury with content the customer is interested in. And certainly the gift-giving period, even in a year where discretionary categories are more challenged, this is the time of year where they come to life. Gift giving, Christmas, Kwanzaa, Hanukkah, they still come. And our stores and our sites and our teams are prepared for the holiday with 26% less aged inventory this year, and I think a refreshed assortment of content across all three nameplates.
There’s no doubt that there is a normalization happening in the luxury sector, in answer to your point about the different income brackets. However, we believe in luxury long-term, and I think the opportunity is they are even in a challenged environment for each of our brands to capture more points of distribution. Adrian?
Adrian Mitchell: Thanks, Tony. Brooke, really good question as it relates to 2024. We remain committed to low single-digit growth beginning next year, and also low double-digit EBITDA margin over time. Right now, we’re controlling what we can control. We’re working to maintain a healthy balance sheet. We’re putting in place more and more operating disciplines around inventory management, expense management. We’re investing in our growth vectors and investing in the fourth quarter in our growth vectors as we move from testing to scaling in 2024. As we stand here today on this call, the primary headwind to achieving low double-digit EBITDA in 2024 is really around credit card revenues, inclusive of the pending credit card late fee ruling that still has not been released.
But our fundamentals remain intact. We’re excited about what we’re seeing with our growth levers. The development and scaling of that is on track and that’s why we’re leaning into some additional investments in the fourth quarter. We’re encouraged.
Brooke Roach: Great. Thanks so much.
Adrian Mitchell: Thank you.
Operator: Thank you. The next question is coming from Ashley Helgans of Jefferies. Please go ahead.
Ashley Helgans: Good morning. Thanks for taking our questions. To start, we’re just curious what kind of promotional levels you’re embedding in the fourth quarter guide. I know you mentioned the guide gave you some flexibility to respond to the promotional environment. And then also, we wanted to ask about your expectations for holiday shopping cadences this year. With more pressure on the consumer and higher rates, do you expect people to shop a little closer to holidays than they have in the past couple of years? Thanks.
Jeff Gennette: Ashley, let me take the second part of your question and I’ll throw the first part to Tony. So, when you look at the pace of our — of the holiday shopper, clearly next week and the following week are really critical. So, when you think about Black Friday, the competitive landscape has really shifted to Black Friday deals prior to Black Friday. We’re in the midst of that along with our competitors. Customers are taking advantage of that. But there is a pilgrimage that goes to brick-and-mortar in our sites for Black Friday and that full weekend. We’re well ready for that. And in Cyber Week, obviously starting with Cyber Sunday, Cyber Monday, really important. Then, we go into a 10-day or so lull, which is very typical.
We’re ready for that in terms of where customers are resetting. We’re resetting for the last 10 days. That’s a really important timeframe for us. And one thing that sets up well for all retailers is that full weekend before Christmas, with Christmas dropping to a Monday. So, all that is anticipated. I think the big thing that you’re going to see is really powerful assortments across all three of our brands, as well as the really focus on simplified values and how we’re communicating that. So, we are well ready.
