Jim Chartier: I understand the level of freight inflation. But just as kind of surprised I guess, why were you so surprised by the level of cost? It seems like something you would have had visibility into in August? So just hoping you can provide more detail on what happened in the last 3 months and then why this was such a surprise?
Josh Truppo: Yes, Jim, I think as I called out in my prepared remarks, out of the 900 basis points, there’s about 300 basis points that we didn’t expect, a vast majority of that is the incremental freight. As Jane mentioned, we continued to navigate through what was still a very volatile supply chain environment, we incurred more freight than we had planned and sold through the merchandise that we received really at a higher level of freight. So from that perspective, that’s the biggest piece of that 300 basis point decline. The other piece of that 300 basis point decline, while it’s a smaller piece relates to our distribution center, again, still under the realm of supply chain but in late September, we had a significant influx of orders, and we had to move more of our orders to our third-party fulfillment, which we fulfill at a slightly higher cost.
So as Jane mentioned, from a freight and supply chain perspective, we think go forward as we provided in Q4, and you saw our guidance, obviously. We have captured the cost that we feel we’re going to absorb in the P&L as we continue to sell through the higher freight inventory and again, really get aggressive to end 2023 — I’m sorry, end 2022 in a rightsized and really clean inventory position.
Jim Chartier: Okay. And I guess — I mean, do you — I mean, a lot of companies lock in freight costs, container costs on an annual basis. I guess, how are you approaching that? And are you going to negotiate an annual rate next year? And then when would that happen?
Josh Truppo: Yes. So we’re seeing in the market as others are supply chain costs moderating now. Obviously, that doesn’t impact our inventory that we’re going to sell through in ’22 and even to an extent in the first part of 2023, but we are starting to capitalize on the slightly lower container cost which we are seeing out in the market. And as Jane mentioned, really, when we’re going to see the significant impact of those moderating supply chain cost is going to be in the back half of 2023.
Jim Chartier: Okay. And then just on Amazon, what do you think the growth rate is going forward? And I guess where are you in terms of maximizing the potential of that opportunity?
Jane Elfers: Yes. I mean I’ll let Maegan talk about the potential with Amazon and the opportunity. I think from a numbers point of view, we talked a little bit about picking up a nice chunk of business in Q3. We haven’t really given the Amazon revenue metrics. So we’re not going to do that today. But from an opportunity point of view, Maegan, if you want to comment on that?
Maegan Markee: Yes. I mean I think longer term, we believe there’s a significant amount of growth opportunities still sitting in this partnership. There’s an incredible amount of white space in the kids business in Amazon. And really until now, there hasn’t been a leading brand in the kids category. Our product, the depth and breadth of our assortment is really unmatched in the industry and certainly in the Amazon marketplace. And I think when we look at the incredible return on investment that we’re seeing in our marketing investments and the efficiencies that we’re gaining, it’s signalling significant amount of headroom for our brands. So I think at this point, we don’t even really know how high is high, and we’re anticipating that this business will continue to grow for all of our brands on the Amazon marketplace.
Operator: We’ll take our next question from Jay Sole of UBS.
