Chuck Grom: Got it. Thank you very much.
Anne Bramman: Yes, on the 2023 question, I think the thing I would add to that is we — as Pete talked about, we’re really focusing on the categories they’re responding with the customers. I think for us, we’re also focusing on being pretty conservative agile as well. So it’s giving us the capability to chase more than what we’ve seen in the last couple of years coming out of the pandemic. Certainly, supply chain has gotten much better. Access to goods has gotten much better. And so this is giving us the ability to be more being able to chase where the customer is going as well. So we’re trying to keep powder dry as we go into 2023, but also really focusing on seeing early trends and responding to the customer.
Chuck Grom: Great. Thanks, Anne.
Anne Bramman: Yes.
Operator: Next is Oliver Chen with Cowen.
Unidentified Analyst: Hi, there. This is Katie on for Oliver. Thanks for taking our question. First was on the variable costs. Are those permanent improvements, or is that just sort of more flexing with the sales performance. And then our second question is more on the excess inventory. How much is left to sort of clear through in Q4? Thank you.
Anne Bramman: Yes. So I’ll take the variable cost piece and then Mike and Pete, if you want to take the inventory component that would be great. So on the variable costs, those are actually permanent. As we talked about the last couple of quarters, coming out as I would even rewind a little bit at the end of last year, we saw inflationary costs and headwinds. We determined that we thought those were going to be pretty permanent out there. So we started taking into doing initiatives around really driving improvement. And we talked about in the last couple of quarters that we thought we were going to get leverage in our overhead in the first half based on top line, just your fixed overhead getting leverage on the sales side. On the second half, we — as we’ve indicated, we really — we’re continuing to get momentum in our supply chain cost per unit initiatives and efficiencies.
And so for that, you saw that coming through in Q3, and that’s continuing to build in Q4 and beyond.
Michael Maher: Hey, Katie, with respect to the inventories, we said at the end of last quarter that we expected to take approximately $200 million of incremental markdowns in the back half of the year, roughly evenly split between the third and fourth quarters, and we’re on track for that. So we still expect to exit the year in a healthy and current inventory position.
Unidentified Analyst: Thank you so much. Have a great holiday.
Operator: Next is Kimberly Greenberger with Morgan Stanley.
Kimberly Greenberger: Great. Thank you so much. Good evening. I wanted to ask about — just some of the puts and takes in your operating margin as we head into next year, it would seem that the inventory cleanup and potentially lower markdown rate in 2023 could be a tailwind for gross margin? Are there any headwinds that might be noteworthy? And then — and specific to your comments on SG&A, I would assume that SG&A dollars are likely to grow next year. There’s still ongoing inflation out there, and I would imagine that you’re experiencing some of the same. But do you have any — do you or Michael have any sort of preliminary thoughts on how we should think about the growth in SG&A in 2023 compared to this year? Thanks.
