And you got some things that are — you’re always going to have things that outperform what you think and underperform what you think. So you take all the pluses and minuses and aggregate those, but then focus your efforts to optimize your real winners and — but everything real early, everything looks, I’d say, real good for only 40%. So just keep that into context. I’ll have a lot more to say next quarter. And if something really is meaningful enough, maybe we talk to everybody or do something sooner. We’ll see. I mean this is — we’re very early and we’re very positive. But we’re still in a not-so-positive housing market environment. So it’s going to be a conservative tone to a degree but will be a lot smarter in another eight weeks and then we’ll have enough information to make moves to kind of think about investments in the first half of next year from mailings perspective and how big, how deeply we go, how right are we, and how big do we go.
But we’re going to be some degree of right here. This is not going to be a swing and a miss. I mean, I don’t want to jinx anything. But, like, we’ve been doing this a long time and we’re good at reading the data. So it’s just — I think it’s just, what degree of really good to great is the outcome? And then [indiscernible] as a reset, and then how do you compound on kind of that reset?
Curtis Nagle: Got it. If I may, just a follow-up? International, so you’ve got Munich and new stores coming up, right? I think secondly, within the four months, just looking at the newsletter, how are you feeling about things openings? And I guess just curious why lead with those two cities?
Gary Friedman: Yeah, those are just smaller ones. Yeah, smaller ones who don’t have a lot of capital like they —
Jack Preston: Nor hospitality.
Gary Friedman: Nor hospitality or anything, right? So these are some locations that we thought the locations were decent. It will give us some without putting a lot of capital in, just give us some feedback at the brand out there. I mean, look, I mean Abercrombie didn’t have any bad locations. These were just — we think we’re going to get — we’re in a learning — get information, right? And then we’ll decide how long might we stay in these locations because we’ve acquired some leases and are there bigger or better places to go. And what do we do? But I think one of the key things is just kind of get the brand out there in a good way. But the real key was what did we do first. When people met us or heard about us, what did they hear, what did they get pointed to, how do they think.
So now, we’ve done that. I don’t think people will think Munich and Dusseldorf aren’t beautiful galleries, they’re just not going to be at the level of London and Paris and Milan and some of the other ones we’re doing. So — but like they’re locations that where we were prior to take to get some of the really key locations that we really wanted and that was Central London and the Paris locations. So we think these are fine. Okay. Let’s get going. Let’s learn, let’s see how the business builds. Let’s quickly learn how to operate in these different countries at a relatively low investment and a much lower effort than doing the really big ones with a lot of work that take multiple years that — and that have hospitality and other levels of complexity.
So —
Curtis Nagle: Got it. Thanks. I appreciate the thoughts.
Gary Friedman: Sure.
Operator: Your next question comes from the line of Seth Basham from Wedbush Securities. Please go ahead.
Seth Basham: Thanks a lot and good afternoon. My question is around margins. How should we think about the product margins on the new product lines that you plan to be much sharper on pricing? So if you are thinking about consolidated gross margins in the mid-40% on a run rate basis going forward?
Gary Friedman: I think we’ll have more to say. I think we believe long-term emergence can be at our historical highs. I think we’ve got to kind of win some share here, and we’ve got to play a little offense and just be sharper. And so there’s some — there’s a few points of investment we’re making there, but we also have places where we’re playing aggressively, but our margins are at historical highs. So it all tends like what we’re targeting, how we’re targeting certain categories. [indiscernible] more to say, yeah — let’s see how these books do when they get in. Let’s see what’s performing, let’s see what we’re responding to. There’s going to probably be places where we’ve taken pricing that’s really sharp. There are many places we’re going to take pricing up, right?
We’ve already got one collection that’s kind of through the roof. It looks like our best collection ever. Then we’re going to probably take prices up this week. So just as we’ve got so much demand, and we think we can — the product is still going to be positioned at a disruptive value. We probably just swung the pendulum a little too far on some — this is — the business we’re in, it’s day-to-day, week-to-week, you’re learning, you’re getting data, you’re rethinking things, you’re — everything you do when you buy a new product is speculative based on backward-looking data. So you’re never — everything we buy is 100% wrong. We’ve never bought anything and we go, that thing is exactly how it’s selling. That’s exactly right. So you’re only suggesting, right?
You’re getting real data, real information. And then you’re learning from that, and you’re extrapolating that and you’re making next best decisions. So I wouldn’t jump to any conclusions just because of our, what I’d call, more short-term view of just trying to transition from the current kind of products to the new — the next-generation products and playing offense from a disruptive value equation point of view. It’s how we got here. I just think it’s probably, we should have kept that edge the way we did, and — but you go through a period where you’re in COVID and your business is running at 40% and your prices are going up and you’ve got — you went through — we went through multiple rounds of tariff increases and price increases and supply chain increases and COVID increases and ocean freight increases.
And I think that’s why I made the comments I did at the end of my letter. Like, I think we’re finally at the point of everything that kind of like made everything go up, with COVID, it’s one that — kind of the backside of the cycle of everything going down and everybody — everything washing through. And I think if you just like kind of take those years and say, okay, what are the best things I learned, now get them out of the way and you’ve got to kind of rethink about your business, but I think — I just wouldn’t make any long-term assumptions based on anything that’s happening on a short-term basis right now in this transitionary period. I think you’ll see us return to a really good model. If we get the inflection that we believe that’s going to happen in the top line, especially where we think it will peak as we get into kind of the first half of next year, you’ll see our whole business model snap back.
Seth Basham: Right. But just to be clear, Gary, so the margin — the product margins on the new product that you guys are launching over the next, say, six to nine months is going to be lower by a few points, and what you are earning on products during the pandemic. And then the real benefit that gross margins could be from volume, improved volumes?
