Jack Preston: Yes, I think, look, when you look at the sequential just change in our absolute sales. So, when we went from revenue in Q2 of $992 million and gross margin of 52.8% million and going to $869 million in Q3 and 49.7%. As Gary mentioned, a lot of that is occupancy deleverage. So, — and if you think about Q4, there’s a further sequential decline, right? Q4 is a smaller quarter for us. So, at the midpoint of the guide, we’re at $789 million. So, if you do — if you just — we were not guiding gross margin, but if you do sort of like similar sort of math and transposition of numbers going from Q3 to Q4, as you did from Q2 to Q3, you’d naturally see a gross margin decline built into that because, again, the absolute sales are lower than Q3. So, it’s just math. I mean, directionally, probably 100 basis points-ish, but again, we’re not officially guiding gross margin. It’s just a correctional number.
Gary Friedman: Yes, I would just say, look, if you look at the housing industry and track the housing industry and if you track the performance of home furnishings retailers against past housing downturns, that would tell you things are going to get worse before they get better here. The housing industry is in a free fall. I think the National Association of Realtors just reported that housing demand was down 37% in October. We’ve never — at least in my lifetime, I’ve never seen interest rates rise so quickly. I don’t think anybody on the phone has either and the impact on the housing market, especially when you look at it versus the housing market that was overinflated and run up by COVID, you’re going to have some wild swings here.
And it’s happening first to the luxury market. If you look at the numbers and if you track the last, yes, nine months or the reporting on Redfin, I think it started — the luxury housing market started going down in the Q4 last year. And the luxury housing market went up faster and higher, and the luxury housing market is going to go down faster and lower. And that’s just an outcome. And so the question is, there’s going to be people that rode it up and they’re going to try to stay up and they’re going to promote their business, and I think they’re going to break their models. And next thing you know, you got to send out 1,000 e-mails to let next year, too, and you’re just going to what I call the downward spiral. We’re in the dish. And so we’ve kind of expected from the beginning that this COVID lift wasn’t anything that we manufactured.
And generally, when that happens, those kind of things go up and then they go down. And you try to stay focused on the long-term. But we’re not going to try to break our model to try to and promote the business in a period. I mean, we — we have people that are in our industry right now that has some pretty good sales. Their whole website is 30% to 40% off. If I put our whole website, 30% to 40% off, we changed the sales trend by 50 points. Problem is you’re just going to have a much less productive business, because doing more volume and lower margins and all that volume also creates costs that are inefficient through a model. I’ve already run companies like that. So yes, we have a different model. Someone asked me the other day, ‘Hey, what if you’re wrong on your long-term view?
