Tony Spring: And I would add to Jeff’s comment that the benefit of being a department store again is that we can handle the range of these cycles. I’m 36 years into this and I haven’t known a fourth quarter that isn’t competitive and isn’t promotion. That being said, our guidance and margin gives us the opportunity to offer compelling value, to have a strong Black Friday, and take advantage of, as Jeff described, the extra days in front of the Christmas holiday season. Our website is prepared to deliver on time. Our gift guides have got a nice range of products and price points that I think show compelling value as well as a degree of newness that we just didn’t have last year.
Ashley Helgans: Great. Thanks so much.
Jeff Gennette: Thank you.
Operator: Thank you. The next question is coming from Michael Binetti of Evercore ISI. Please go ahead.
Michael Binetti: Hey, guys. Thanks for taking our question. Jeff, congrats on the retirement. It’s been a pleasure. And Tony, we very much look forward to working with you ahead. I guess, Adrian, just to clarify one thing, the low single-digit sales growth that’s referencing net sales for next year, I’m assuming you’re excluding the other revenue line because of credit. But if that’s true, would you mind just helping us think, even if at a high level, through the contributors that you see between comps, new store contribution, new store productivity, I know we have small-format stores coming on, smaller but more productive, you mentioned some store closures. So, maybe just a little, even if qualitatively, what some of the contributions we should think about are?
And then, I’m curious about the SG&A leverage point as you think ahead to next year based on some of the qualitative comments you gave to Brooke there. You guys have really hustled and taken out a lot of costs and found a lot of efficiency. Obviously, the magnitude of the sales declines this year has made SG&A a deleverage point. But maybe help us think through scenarios if comps are slightly negative next year versus slightly positive next year. Is there a point that you feel comfortable saying SG&A can leverage in a couple scenarios next year?
Adrian Mitchell: Thanks for your questions, Mike. As it relates to growth, we’ve been pretty consistent with our investments in our core business and our growth levers. And what Tony talked about a little bit earlier is really the scaling and maturation of a lot of those growth factors. So, when you think about small-format stores, you think about growing our core business, you think about the health of our different channels, it’s all focused on better shopping experience, value for the consumer, and continuing to strengthen our assortment. Those are the things that give us confidence about growth next year and we’ll certainly share the composition of that as we get into 2024 and the Q4 earnings call. Expense discipline is always the top focus for us.
We spoke earlier this year to the $200 million of capturability in 2023. That’s about $300 million to $350 million in 2024. SG&A leverages just good retail business. So, expense discipline is really important for us. We’re continuing to lean into opportunities to drive greater productivity within the business. And that’s what will lead for us to a double-digit EBITDA profile over time.
Michael Binetti: Okay. Thank you very much, guys. Appreciate it.
Adrian Mitchell: Thank you.
Operator: Thank you. The next question is coming from Bob Drbul of Guggenheim Securities. Please go ahead.
Arian Razai: Good morning. This is Arian Razai for Bob Drbul. Jeff, it was a pleasure working with you. Adrian, can you please speak to units? We’ve been hearing that the industry units have been trending down low single-digits. Do you see any reduction in the average basket? Just wanted to hear your thoughts. And if I may, on a broader consumer health, what are the expectations for tourist traffic for the holidays? Are there any sequential improvement embedded in the guidance? Thank you.
Adrian Mitchell: Yeah. As we think about units, what we saw was in the fourth — in the third quarter, AUR was up mid-single digits, sales down. So, obviously, we would expect our unit volume to actually be down. As you think about the consumer, we think the consumer is — remains under pressure and I think most importantly the consumer is discerning. No change in what we’ve spoken to about the consumer. We expect that to extend into next year, but we do expect the consumer to continue to be challenged.
Jeff Gennette: Let me take your tourism question. So, when you look at kind of — you look at tourism domestically and internationally, but let’s talk about international. It just continues to be below 2019 levels. Q3, we did see an uptick, which was encouraging, particularly in Latin, Central America, some countries in Europe. That has benefited our downtown stores when you think about the kind of tourist destination, some of these downtown metro cities, because our flagships did outperform the fleet in Q3. But we’re not anticipating a meaningful benefit for the balance of this year. And we are hopeful that we’ve always talked about the fact that with tourism being 3%-plus for our overall business international tourism, that we will — that will be a tailwind. So, we do expect an uptick in 2024 and beyond there.
Arian Razai: Got it. Thank you.
Jeff Gennette: You bet.
Operator: Thank you. The next question is coming from Chuck Grom of Gordon Haskett. Please go ahead.
Greg Sommer: Hi, this is Greg Sommer on for Chuck. I was hoping you could just provide any color on if you saw any variability in the quarter, as we saw, like warmer pockets of weather around the country, or even as student loans kicked off when the repayments restarted?
Jeff Gennette: Yeah. What I’ll say just an overall comment, sales and profit in Q3, it was better than our expectations. So, we were strategic with our promotions. That definitely helped us drive conversion. We’re not commenting on kind of the monthly performance, but the overall quarter performed better than expectations. I think the main point is that we’re definitely ready for holiday. And as you know, we’re confident in our curated offering, strong value that we’re going to be providing the customer. So please with the quality of the assortment. As Tony and Adrian have both spoke to our building flexibility to respond to how the customer signals and that inventory position that we have in our commitment to really staying liquid to respond to the changing customer behavior across all of our categories and price points is going to be critical.
