David Aufderhaar: Yes. Tom, thanks for the question. On the gross margin side, we are definitely really happy with the progress we’ve made. If you think about where we were — and last quarter, gross margins were — was up 140 basis points year-over-year. This quarter, gross margins are up 250 basis points year-over-year. And I think we’ve called out for the last couple of quarters. There’s a couple of things there. What Matt was talking about this quarter and last quarter about sort of strengthening our foundation and establishing retail best practices. That’s really around inventory buying and planning and really seeing the benefits there from – from a merchandising cost standpoint. We’ve also highlighted transportation has been a big part of our focus.
We’ve adjusted our carrier mix that we’ve negotiated some of our national carriers, and we continue to use local carriers as well. And so just a lot of focus around that, both inbound shipments and outbound shipments. And that’s why we’re comfortable with talking about sort of a back half guide of 44% to 45%. I think we’ve also called out historically that there’s nothing structurally different about our business that says that we can’t get back to the high end of that range of 45%. And so this continues to be a big focus of ours and making sure that we are driving gross margin leverage and contribution live bridge as we go forward.
Tom Nikic: Very helpful. Thank you very much and best of luck for the rest of the year.
David Aufderhaar: Thank you.
Matt Baer: Thanks, Tom.
Operator: Our next question comes from the line of Aneesha Sherman with Bernstein. Your line is open.
Aneesha Sherman: Hi, thank you. So Matt, if I just look at the business kind of top line growth over the last two quarters and the next two, where you’ve guided, kind of — it feels like no matter how — which way you look at it, right, to your stack versus 2020 versus 2019. Really what we’re seeing is a continued deceleration of the top line which seems like pretty much at odds with what you’re saying about structurally improving the quality of the business, the client metrics you’re seeing and heavier investment into marketing because you’re seeing that working. Can you square that for us a little bit? Like what do you see as the lag time here? Like are we talking about kind of a year lag or a couple of quarters and when that will actually start materializing in the top line and accelerating again?
Matt Baer: Hey, Aneesha. I appreciate the question. Let me first state just unequivocally, I’m confident in the future success of Stitch Fix. As I continue to immerse myself further in the business, my confidence in our future success, it continues to grow. And this is rooted in several things, many of which I’ve discussed previously. The first, as I surveyed the overall retail landscape for apparel and accessories, it’s clear the customer is just not satisfied with the current optionality that they have for their shopping. As is topical now, the physical retail experience, it remains extremely cumbersome. Online shopping remains extremely overwhelming. The service that we offer at Stitch Fix, it solves many of those frustrations for the customer.
And as I just noted previously, at Stitch Fix on Day Zero, we know our clients better than many retailers can aspire to know their customers over the course of their relationship. And it’s with that information that we’re able to know your style preference, serve your value orientation, and nail your fit as early as that very first transaction. And also critical is that for us, it’s Stitch Fix, personalization algorithms, artificial intelligence, machine learning, and data science, those are fundamental elements of our model. They’ve been part of our DNA since our inception. It’s something that we’re going to continue to build upon going forward. Many of our tool systems experiences, they’re all informed by that, and we’re going to continue to invest in that further as we go forward and as we’ve demonstrated that over the course of our 13-year history.
Now, as you noted, we’re also in the midst of a transformation, and transformations take time. And we must continue to develop a stronger foundation for our business, one that’s rooted in best-in-class operations built for scale. One that allows us to operate more efficiently. One that unlocks cost reductions from our operations, while also improving the client experience. And we’re strengthening that foundation and embedding these retail best practices throughout the organization. As we’ve already discussed on this call, too, as part of strengthening that foundation, we’re maniacally focused on a healthier client franchise. We need to make sure that we’re extremely judicious with that marketing spend, methodical in terms of the client segments that we’re targeting so that we bring — so that when we bring a client into the experience or demonstrating all the characteristics of high lifetime value, one that will have an enduring relationship with us over a long time.
And finally and critically, as we continue to reimagine the client experience and continue our proven history as a disruptive retailer, the core value proposition of just knowing your clients style preference, value orientation and fit on Day Zero, it’s quick. It’s a competitive strength and advantage for us and how that manifests through the experience, well, that needs to evolve. And as I mentioned in the prepared remarks, we’re currently reimagining the onboarding experience so that we can continue to engage with both our perspective and our current clients to make it fun and easy so that they remain extremely confident in the service that we provide. As we continue to improve these experiences, we’ll improve conversion through the funnel, better serve new clients, better serve current clients, and we’ll continue to reimagine this end-to-end experience over time, including how clients and stylists interact with each other.
