Ashley Owens: So just really quickly on fulfillment. I would appreciate some color on the shaping of that as we move through 2024 and then just how you’re thinking about that return rate number and if we start to see any reversions to that? And then I have a follow-up.
Jesse Timmermans: Yes. On fulfillment, we expect to see some slight efficiencies as we progress through the year. So Q1, we were guiding towards 3.5%. And then for the full year, 3.3% to 3.5%. So there’s always some quarter-to-quarter fluctuation there. But I would say, over the course of the year, some slight efficiencies. And then return rate, we are, at this point, modeling in no kind of benefit or detriment on return rate. We’re modeling in a flattish return rate for this year, again considering the seasonal fluctuations across the year. But that said, optimistic on the things we have in works, but not quite there yet where we can model it in.
Ashley Owens: Okay. Great. And then just quickly, too. I saw that AOV for FWRD was slightly up year-over-year in the deck. So just curious as to what drove that? And then kind of as the inventory continues to rightsize here, where do you see this number normalizing?
Jesse Timmermans: Yes, that was great and good to pick up on that and a slight increase in the FWRD AOV. And maybe as a reminder as well, different from revolver where a heavy portion of the mix is dresses. FWRD is largely handbag shoes, accessories, and you can see the overall growth in handbag, shoes and accessories in some of our disclosures there. So we’re seeing good growth in those higher price point categories. And then maybe just on the AOV point as well, slightly down minus 1% year-over-year on the REVOLVE AOV, which led to the 1% decline overall in AOV. And that is also a mix component there with Beauty growing phenomenally over the course of this year that does pick the AOV down. If you remove Beauty from both years, than AOV does increased slightly on REVOLVE as well.
Operator: Your final question comes from the line of Tom Nikic from Wedbush Securities.
Tom Nikic: Jesse, I want to ask about the margin structure of the business. So it looks like this year, you should see pretty nice improvement in both the gross margin and the OpEx sales ratio. I’m assuming we’d like to kind of build back towards some of the higher margin levels that you had before, perhaps back to the high single-digit range where you were pre-COVID. If we were to look down the road a couple of years, like what line items do you think would be able to help bridge the gap between that like 3% to 4% margin you’re kind of implying for this year relative to the 8% or so that you were doing pre-COVID?
Jesse Timmermans: Yes. Yes. No, that’s a great question, Tom. Thanks. I think in the near-term, you can — we obviously gave the guidance around that. So expect to see some gross margin improvement and then starting to realize those efficiencies in that selling and distribution line. And this kind of plays out over the longer term, too, if you kind of extend that. We do expect further gross margin expansion, especially as we get forward, it’s going to take a good part of this year to get forward right size. So once that happens, we get improved margin on the FWRD business. And then over the long-term, we talked about owned brands. Still a lot of opportunity on owned brands as we get into 2025 and beyond. So those are a couple of the gross margin drivers where we expect to get back closer into that mid-50s zone versus the, call it, 52.5% to 53% we’re in today.
Some moderate efficiency gains in fulfillment, not a huge lever there. And then selling and distribution, we’ve made great gains in the past quarter. It’s looking good early on for the year and starting to realize some of the work that we put into that line item in 2023. So that’s another meaningful line item. Marketing, we want to keep the pedal down there back to Mike’s comments on just the large opportunity that we have. That’s not one that we intend to pull back on. And then finally, G&A. Over the long term, and you can kind of see what we’ve done for a few years prior to COVID and gaining multiple points of efficiency on that selling and distribution line item. But that takes, obviously, getting back into growth mode, which we’re optimistic about, but still too much uncertainty out there to call kind of timing and magnitude.
Operator: That’s all the time we have for questions today. I will turn the call back to management for closing remarks.
Michael Mente: Thanks for joining us for this 2023 year review. We’re in a very, very challenging environment, but we’re very excited about the progress that we made behind the scenes. Most proud of the team and the hard work with all the projects that we have in the upcoming quarters, and we’ll be excited to share what we have in the quarters ahead. Thank you.
Operator: This concludes today’s conference call. You may now disconnect.
