That can span from a heavy Hispanic market that might skew a little bit lower income, to a more middle income closer to college/university environment that would be out there, and literally everything in between, and that’s where we’re really excited about the planning that we’ve done to pull the pilot together to say, three months, six months, nine months from now, we’ll be so much smarter about where it resonates, what we would do to tweak the concept, and where we would go. But most of these will all be in traditional types of strip mall centers, just different ones depending upon the notion of the demographic that we’re going after.
Ashley Helgans: Great, super helpful.
Operator: Thank you, and once again if you have a question, please press one then zero. Our next question is from Olivia Tong from Raymond James. Please go ahead.
Olivia Tong: Great, thanks. Good morning. I wanted to ask you about the comp, which slowed after a promising performance in the March quarter. You did talk about some weakness last quarter on that first call in March and April, it sounded like May got a little bit better. Can you talk a little bit about where you stand relative to the guide, is some of that a view on perhaps improving profitability as you narrow your margin target to the upper end? Just kind of a little bit more color in terms of the components of the comp, thank you.
Denise Paulonis: Sure, so if we break it up, we have the BSG and the Sally businesses performing a little differently this quarter, but if I backed up one step, I think when you think about the performance this quarter, we also have to look at the historical comparison. Marlo mentioned that a bit in our prepared remarks, but the comparison that we were going up against in third quarter fiscal ’22 was comparing against an incredibly high base in fiscal ’21, coming off of the COVID reopening where we had a quarter that was over a billion dollars in sales. We posted a modestly negative comp last year coming off that high, and Q3 last year was really a good normalized baseline to kind of compare the business go forward. On the Sally business this quarter, what we saw was continued strength in the recaptured sales from the store optimizations that contributed almost all of the 3 comp that we put out there in the market, and to your point about the cadence of the quarters, we did see the softness in April and, interestingly, it looks like many retailers out there experienced that similar level of softness in April.
But we did see it improve moving into May and kind of stabilized as we continued to move through June, so glad that we saw that resurgence of activity from where we were in that March-April timeframe, but that April timeframe did factor into the performance in the quarter. Then I think the only other important part that I’d mention on the Sally side is if we thought about what happened in Q2, where we posted a 9 comp, remember that that had a different comparison in the prior year, which was really the year when we still had the COVID outbreak situation in the January-February timeframe, and so a portion of that was simply lapping the prior year. Overall, Sally on track with where we thought that it would be as we moved through the year, and then with BSG, I think the thing that I’m personally most pleased about is we continue to see transaction growth and we continue to see strength in color with growth in color.
Offsetting that a bit, we did see stylist demand trends remaining consistent with what we’ve seen the last few quarters, where there is a frugality and really buying what is needed. I think the other part for us that we saw coming into the quarter was that in hair care this year in Q3, we launched a lot of new innovation. The reality though, while much of that innovation was quite successful, it wasn’t enough to offset what was a very big innovation quarter last year, which included the launch of Olaplex No. 9., so a little moderation on that care side just as we were in a different innovation cycle last year versus what we were in this year. All in all, the quarter came in, when we think about versus year ago, very similar to what we thought.
Cadence for the balance of the year – you know, I think performance that we saw in Q3 gives us confidence to deliver on our full year guidance, which was comp sales up low single digits and total sales down low single digits. The strength of our efficiency program, the solid performance of our continued gross margin above 50%, is really what gives us great confidence to go to the upper end of our guide, and when we think about that operating income, I think we’re now guiding between 9% and 9.4% from an operating margin rate, so all in all quarter and year are playing out very much as we expected. I think we remain quite agile and data driven in making our decisions as we work through a pretty interesting macro environment that we’re all seeing, but looking to finish the year strong.
