Jeff Miller: And just to add to that, Kate, in terms of dollars spent in marketing, as a percent of sales, we remained relatively consistent throughout fiscal ’23. And as I said earlier, we’re still early in the plans for 2024. But I think the focus will be more around making those dollars work harder for us as Satish was outlining and the approaches of how we’re doing it. And the team that we have here, The Container Store has been working very diligently and finding ways to be much more efficient with the marketing dollars that we have to have the biggest impact. And I think Satish outlined some of those ways that we feel like would have the biggest impact. We’ve been focused on making sure we’re operationally efficient from an SG&A perspective.
And implied in the Q4 guide is SG&A savings of $15 million, up to $15 million, which we started the fiscal year taking actions and we had a range in — we saved $30 million through Q3 with an initial $15 million through Q4 for total potential savings of $45 million on a year-over-year basis. With that in mind, we’ll continue to focus on marketing as a key aspect of engaging with our customer and maintaining those messages and making sure they’re much more efficient.
Kate McShane : Okay. And then our second question was just on the guide for comp in the fourth quarter. Is that primarily a function of the adverse weather trends that you mentioned in your prepared comments and the lapping of some of the tougher compares? Is there anything else within the mid-20s decline that we should be — that’s driving that?
Jeff Miller: Embedded in our guidance for Q4, if I were to speak to the high and low end, it’s really based on the January trends we saw at the time we were putting together. The high end of the guidance assumes some normalization from what we were seeing in January. And from a weather perspective, it did impact us quite a bit. We had 6x more store impacts in January than we did in the previous year. When I look at the entire quarter, February last year, did have more weather impacting, but we’re still early in February, we don’t know. So when we developed the guidance, we assumed some normalization from the January trends at the high end of the guide. The low end of the guide, assumes that January trends continue through the remainder of the quarter.
And as I said in my prepared remarks, the — it’s reflective of the continued pullback in the core and value-oriented general merchandise and we also are seeing more pressure in the nonpromotional time periods for the Elfa product line based on what we learned during Q3.
Operator: Our next question is from Christopher Horvers with JP Morgan.
Christopher Horvers : So my first question is, do you have a sense of how much the Elfa anniversary sale pulled forward demand from — into the third quarter from the fourth quarter. It’s always been a big event here in the spring, and I know you moved it forward. and it drives a lot of seasonality in that business. So I was curious if you had put some thoughts and numbers around that.
Jeff Miller: Chris, I don’t have a number to speak to from a pull-forward standpoint. But certainly, we are seeing that just on the normalization of the quarters from a revenue top line perspective, and that’s what was anticipated in our Q4 guide.
Christopher Horvers : Got it. And then I guess as you think about what is left for the — you mentioned like outside of the promotional period, there’s not as much responsiveness on the Elfa side. So I guess, what is sort of exist now in the fourth quarter to drive that business. And as we think about the upcoming year, should we assume that the Elfa sale goes back to its normal timing?
Satish Malhotra: Well, just to clarify, Chris, this is Satish. We do — we are — in Q4, we do have an Elfa event. And so the event that we were talking about earlier was our 75th anniversary event, and that was an added event from what we normally do. And so that is something we didn’t pay attention to and as we think about fiscal ’24 our expectation is to still have 4 Elfa events throughout the year. So we’re — the event that we have currently doesn’t end until mid-February and we still have 1.5 months left to close out that quarter from that event, and we definitely will continue to go after customers that have experienced a purchase with Elfa and see what we can do to make sure that they are able to take full recognition of those installations to what other potential Elfa opportunities exist as well as completing those Elfa purchases with completion products. So we still have a lot of exciting things to engage our customers with as we finish out Q4.
Christopher Horvers : Got it. And then I guess my last question is, as you think about like the current freight environment, more general merchandise is, I think, more from Asia. And then obviously, there’s some stuff going on in the Middle East. So how are you thinking about the duration of this freight tailwind that you’ve seen in the gross margin line? And what are your thoughts on — could that turn to a headwind? Or you contracted out? Or how are you managing that?
Jeff Miller: Yes, Chris, the — in terms of freight, certainly, we’ve experienced the benefit of tailwinds through fiscal 2023 based on the lower freight costs that we’ve been seeing throughout the fiscal year. We would expect that to continue a little bit, not as much in fiscal 2024 in the first half of the year. But when we look at the Red Sea situation and some of the disruption that’s going on there, we have limited routing through the Suez Canal, about less than 1% of our freight goes through there. The impact on global rates on the spot rates hasn’t impacted us yet. We have about 85% of our shipments are under contract. And certainly, we’re watching it as we move forward. It could be a potential risk, depending on how prolonged the situation is, but from a volume standpoint, we don’t have a whole lot of volume going through that part of the world.
Operator: There are no further questions at this time. This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.
