That shouldn’t surprise anyone. It’s the retail business. You have new products coming in, you’ve got to get rid of old products. So you mark it down. If your sales are down, you’ve got more old products. So you’re going to mark it down a little faster. Otherwise, your DC can’t process it. So yes, that’s all that’s happening. And if prices go up, raw materials go up, shipping goes up like everything that happens in COVID. You’re going to take your pricing up. The customer — consumers going to understand it. It’s well now, but they’re also going to understand when things come down. And so our whole business, you look at everything through a lens of design, quality and value in that order. If the design is not beautiful and inspiring, nobody buys it.
if the design is great, then they get closer to the product and they assess the quality. If they love the design and they believe it’s really good quality, it’s great quality then they look at the price. And then the consumer makes the decision for that design and that quality. Is this a good value and do I buy it? We try to guess where that best point is. Sometimes we’re right, sometimes we’re wrong. So we adjust pricing all the time. We’re never going to price anything exactly €“and we’re never going to buy it exactly right.
Seth Basham: As it relates to your clearance strategy, Gary, is the primary channel of clearance through your full-price stores and website as opposed to your outlets?
Gary Friedman: Yes. Yes. You want — like we’ve got way more galleries with way more people coming into them, right? And so — and we have a website, our full-price website is where we have the most traffic. So you don’t want to move product out of that channel right away. Like we have — yes, we would — you just back up inventory really fast. I mean this isn’t the luxury apparel business where they just throw it in a dumpster and burn it. This is furniture. We’re never going to run it exactly like the luxury apparel people or the luxury jewelry people and stuff like that. I mean, our business, we can’t throw away the product, and it’s just got a different thing. We’re going to have a different kind of outlet clearance model all the time.
Something comes back as a return, you can’t take it back at the store, can’t put it back on the shelf. I mean once it goes on a truck and it’s out of the box, you got to take it somewhere, so you have outlets because customer doesn’t like it or it’s got a tiny scratch or that you can’t fix or something is wrong, you’ve got to figure out what to do with it. But when you have plans to say, okay, here’s the collections, there’s things that are going to be going out that you’re going to be marking down and your demand falls pretty rapidly. That’s going to change your pricing strategy. It has to because you’ve got inventory that’s on order that’s coming in. Bulky goods like ours, you better keep that inventory moving because Fernando is sitting here, if we don’t move the inventory, he will figure out — he’ll have to figure out where to put it, and we might not like what he does with it.
Seth Basham: Okay. Lastly, if I may, a point of clarification. Did you say earlier that you could do 20% operating margins next year if you pulled back on a lot of investments? So, with this tough macro environment, should we think of 20% as sort of the high watermark for next year?
