Jennifer Hyman: As an example, this Black Friday, Cyber Monday, we were far less promotional than Black Friday, Cyber Monday in previous years. So, as an example, our promotion this year ran for 15 fewer days than last year, we spent 40% less promo dollars than last year and we are acquiring customers in a more profitable way. Now, the fact that loyalty rates are up across all of our cohorts, meaning that LTV is up and our margins are improving, it means that we have also more room to play around with promotions at different points during the year. So, we are going to continue to experiment, but to Sid’s point, we do not believe that we have to be as promotional as we once were.
Andrew Boone: Thank you.
Operator: Thank you. Our next question comes from the line of Ross Sandler with Barclays. Please proceed with your question.
Ross Sandler: Hey, Sid. Question on the gross margins. So your fulfillment margin looks fine. The gross margin was down a little bit from the rental depreciation uptick. So, is that just from the overall aggregate rental product purchases being higher last couple of quarters on the inventory replenishment or was there some mixed shift back to wholesaler, some kind of channel mix thing we should be aware about, and I guess, what is the outlook for gross margin for next year? And then the second question for, Jen, picked up kind of anecdotally in some of the surveys that you guys are looking or experimenting a little bit with lower price points. Could you just talk about what you are seeing there and is that part of the strategy? Thank you.
Sid Thacker: On the first question, so, yes, you are absolutely right. The gross margin decline this quarter really reflects a much higher level of inventory spend over the last couple of quarters and certainly relative to last year. We are not giving specific gross margin guidance for fiscal 2024, but I will say and as we pointed out several times in this call, we do expect to be pre cash flow break-even in fiscal year 2024. And obviously, one part of that is, our inventory spend is expected to be considerably lower than it is in fiscal 2023 as we have really adjusted all of the depth issues and fixed the depth issues that we needed to address.
Jennifer Hyman: Ross, I am not sure what you mean about lower price points because the MSRPs of our rental products are actually going up, meaning we are renting more aspirational higher end product, even though the cost of those products are going down because of the either discounts we get with our vendors or the pay for performance deals that we have with them. So, were you talking about price points of inventory or something else?
Ross Sandler: Yeah. The inventory. It might just be anecdotal, but are there — is there any new strategy around lower price inventory? It sounds like no, but that is what I was asking.
Jennifer Hyman: No. If you track our inventory over the last four years or five years, the MSRPs have gone up every year, meaning the inventory across all of our categories is actually getting more aspirational. Our brands are better. They are more premium. And while there are growing competitors in the space, there is very little brand overlap between Rent the Runway and fashion rental competitors. We really hold the premium space in the market with the hundreds of designer brands that we have and we further buttressed that today with the launch of luxury.
Sid Thacker: And I think the last thing to clarify that I think I didn’t mention, to your point — to answer your question around is the mix changing at all, the mix is not changing towards wholesale. In fact, it’s going the other way. As Jen mentioned in her remarks, in the first half of fiscal 2024, we expect almost 50% of our total inventory buy to come on consignment or pay.
Jennifer Hyman: And I’ll just kind of remind everyone that when we IPO’d the business two years ago, we stated that over the medium- to long-term that we would expect a third of inventory to come in via pay for performance and we’re already announcing that close to 50% of the inventory in the first half of fiscal 2024 is coming in via pay for performance, meaning we do not pay for it up front and the only revenue share on the performance. This is no risk inventory for us. So we are really beating the goals that we set out in basically the most important category — the most important expense bucket of the business.
Ross Sandler: Thank you.
Operator: Thank you. There are no further questions at this time and I would like to turn the call back over to management for any closing comments.
Jennifer Hyman: So thanks for joining us today. We were really happy to have the opportunity to really transparently address what we think are the real elephants in the room as it relates to our business. We are excited about this constructive relationship we have with our lender about our debt restructuring. We think that it gives the business opportunity to break-even, to become a profitable business, to prove out this model to the market. We’re very excited about the path ahead and the data that we’re seeing in the business and looking forward to talking to you more about it.
Operator: This concludes today’s teleconference. You may now disconnect your lines at this time. Thank you for your participation. Good-bye.
