Chuck Grom: Hey, good morning. Great execution, guys. Curious what you’re seeing on spend across some of your different income cohorts, the low end and at the high end. And then, Adrian, I think the real surprise here this morning is a gross margin guide, which obviously demonstrates a lot of confidence. So just wondering if you can dive into that, particularly things that you can control in terms of pricing on a localization level and other factors that give you that confidence that you can hit 38.7% to 39.2% in this year?
Jeff Gennette: Hey, Chuck, it’s Jeff. So I’ll start with your question about income tiers, and then I’ll throw it to Adrian to talk about gross margins. So what I’d say is that all income tiers are going to be pressured in €˜23. As we’ve seen since the second quarter, we’ve actually seen very similar trends across income tiers of Macy’s. So really, for the last two quarters, I guess the good news on this is that we have a broad range of categories and price points that we get a lean into, the inventory discipline, the open to buy. I think the big thing to remember is what we did in really the beginning of 2020 when we went to kind of an upfront net cost model with most of our suppliers and massively reduced the reliance on markdown allowances.
The other thing that we did at the same time was that we based our incentives for our merchants on the enterprise sales versus their functional sales. That really made receipt and markdowns to be an enterprise opportunity. And it gave us then the opportunity particularly what you’re going to see in €˜23 to layer in these open-to-buy reserves on top of a more conservative view and a more cautious view of where the consumer is going. So that is €“ we’ve been able to respond to that. I think when you look at it from off-price to luxury, when you look at our nameplates and our brands, what we’re seeing is that the consumer is pressured. I would like to comment about luxury. So luxury just continues to have strength. When you look at the loyalist program at Bloomingdale’s, that spend was up 7% in the fourth quarter.
And the top of the list, which is the top of that, which is a big chunk of the overall business and very profitable business, that was up 9%. So we expect €“ when you think about share of wallet, we have opportunity to capture more and particularly that top of the list in that luxury consumer. They are really spending where they are scarcity and where they are specialness. So while we’re doing at Bluemercury, what we’re doing at Bloomingdale’s and what we’re doing in the beauty area of Macy’s, is really helping our customers see us as a place where they can buy these categories because they are so discerning in their purchases. So where we see to where we see strengths, we’ve got a model that is ready to respond to all income types.
Adrian Mitchell: Chuck, good morning to you. So as it relates to our gross margin outlook for 2023, I think one of the things that’s been very consistent that you’ve heard from us is our commitment to margin expansion as well as our commitment to inventory productivity. And so overall, as you look at 2023, we’re looking to have lower markdowns, more effective promotions to offset partially by lower ticket price increases. But let me just kind of give you a little bit of a complexion of the three things that we’re focused on. The first is healthy inventories. So when you think about inventory being down 3% to 2021, which 2021 was a year of inventory scarcity, our inventory composition as well as our levels are actually quite healthy.
