Pete Nordstrom: Yes. This is Pete. In terms of the Rack top brands and where we are in that journey. It’s a little hard to say, but we’ve made considerable progress. And I think if you go back to our original intentions of how to think about this, we’re getting pretty close. It feels like by the end of this year, we should have a really I think a good picture of where this settles out. And I don’t think we’re particularly far from that right now. And certainly, our buys indicated. We’re talking about it relative to the sales our future on order, I think, really represents where we think we should be. So we’re fairly close. I don’t know. Maybe we’re in the bottom of the sixth that are top of the seventh I don’t know, in terms of innings, if that’s the analogy. And I’m sorry, the second question was about what? Just newness in the Rack stores?
Blake Anderson: Yes, that’s right. I wanted to ask I guess more about Rack in terms of newness?
Pete Nordstrom: Okay. Yes. We talk a lot about inventory turns, and there’s really 2 reasons for that. One of them is inventory — faster inventory turns, the leading indicator of margin health, means you’re probably selling through pretty well. You don’t have markdowns. But particularly in the Rack business and the Nordstrom banner, too, the flow really matters. And if we can really even out our flow, and have that stability and predictability. It gives us a lot of agility on the line to be able to respond. And customers, particularly in the Rack, they like to come in often and see what’s new and what’s going on there. So, a big part of our turn agenda is around flow, and that impacts the newness. So, we’re – I think probably like a lot of retailers are hearing, from the newness has always been a key driver for us in terms of what drives top line.
Blake Anderson: That’s helpful. And then I wanted to ask on the quarter-to-date traffic decline. Can you give any more detail on maybe what you think is driving that in terms of any type of income cohort? Or how much is it — I know you talked about designer remains under pressure. Any other commentary you could provide would be helpful?
Cathy Smith: Yes, Blake, maybe I’ll give it a try. So traffic, as Erik mentioned, traffic trends have remained soft. We’re seeing sales made up obviously with higher conversion and higher selling price than we’ve seen versus last year. On an income cohort basis, we do see softness across the income cohorts, but the higher income cohorts are performing, better than obviously the lower. I guess that seems pretty obvious when I say it out loud. But we see that in the data as well. So the good news is we tend to have a little higher income cohort in the Nordstrom banner, and those are performing well. So I think that’s generally what’s been driving the traffic trend. In the by banner, though, earlier in the quarter was a little softer, and then we did see some strength. But again, we’ll continue to think about where we’re going in the back half, and we’ll focus on the things we can control and hopefully have a great assortment for our customers to keep coming in.
Blake Anderson: Thank you. And if I could squeeze in one more. Maybe, Cathy, if you want to take a shot at this and welcome. Can you help us at all in terms of how to think about Q3 versus Q4 EPS? Or maybe just a little more commentary on the margins. Thanks so much.
Cathy Smith: Yes. Sure, I’m happy to. And then Blake, always happy to do that in a follow-up as well. But thinking about Q3 versus Q4. So top line has got a little bit of noise moving through. Obviously, still a sequential improvement, which I talked about earlier. As you think about from Q1 to Q2, we’d expect Q3 and then the Q4 continued sequential improvement. That’s also coming off of last year a little bit easier comps. Q3 and then Q4 was the easier comp. So that’s the first thing top line. Second thing is we have the 53rd week in the fourth quarter. So think about those as you think about the shape of the quarter. On an EBIT or EPS and subsequently, on a profitability level, we’re going to have continued supply chain productivity continuing in the back half of the year.
It will start to moderate a little bit. We’ve been seeing the four quarters of over 100 basis points of improvement, so you’ll start to see that moderate a little bit in the quarters going forward. But I think probably most significantly is in the fourth quarter, you’re going to see the lack of markdown to the extent we had last year. So that will help the profile of profitability into the fourth quarter.
Operator: Next is from Oliver Chen with TD Cowen. Please proceed
Oliver Chen: Hi, Erik, Pete and Cathy. Regarding e-commerce, what’s your path forward in terms of resuming growth there? And what’s assumed for the back half in terms of guidance. And as we think about women’s merchandise at large at those banners, what are your thoughts on the main issues? And also how you’re doing with the younger customer as well within women apparel? Thanks a lot.
Erik Nordstrom: Hi Oliver, it’s Erik. I’ll start on the digital one and Cathy can join in and then Pete can take the one merchandising question. As you know with us, we don’t really get hung up on channel splits. It’s – we look at our business by banner. We’ve invested a lot over the years to have a seamless experience and really be where the customer wants us to be. And you add to it that economically we get the same profitability – roughly the same profitability of nordstrom.com sale that we do or Nordstrom store sale. So we always got to start with the customer experience as a real focus on the channel experience. That being said, I think this year, you’re seeing out of us and others to that there is a return to stores. Stores have relatively performed well.
With us, there’s some added noise in our digital sales of – and the comparisons against last year. If you remember, last year, we turned off store fulfilled from our rack.com that had some softness, Trunk Club sunsetting, there’s some noise in those numbers there. That being said, longer term, we think nordstrom.com is a growth vehicle for us. We think Rack stores are the big growth vehicle for – in the Rack banner. But in the Nordstrom banner, we think that the digital channel presents a lot of opportunity for us. It is leveraging our physical assets. So we see continued making investments in particular in things around selection that we can continue to bring our customers the breadth of selection that they want from us.
