Operator: Our next question comes from Brooke Roach with Goldman Sachs. Please go ahead.
Brooke Roach: Good afternoon and thank you for taking our question. The Company has made a lot of progress this year on recovering gross margin and driving expense discipline. Can you elaborate on the opportunity to drive further margin expansion beyond this year? And provide your thoughts on how best to balance reinvesting those wins back into the brands to drive the strategic initiatives you’ve outlined today versus flowing those through to the bottom line.
Katrina O’Connell: Sure. Brooke, I think as you say, we’ve really developed financial and operational rigor to control the controllables. And as you say, this has really showed up, both in gross margins this year with our inventory levels down, which has led to fewer promotions, the discipline around air freight and the commodity recovery in the second half. As I think about the future, we are going to remain committed to healthy gross margins and well-controlled inventories. We are also going to remain committed to the discipline that we have around SG&A, and ensuring that we have that level of inventory — or excuse me, rigor around that as well. That’s going to enable us to really turn to the brand reinvigoration that Richard articulated that is a big priority for the company, as we aspire to return to consistent profitable revenue growth over time.
So, more to come when we provide an outlook. But that discipline around the middle of the P&L, we believe is really critical so that we can really have the room to focus then on the reinvigoration of our brands.
Richard Dickson: And Brooke, I’ll just add that none of the expansion on margin and the disciplines that Katrina mentioned, compromise the integrity of the reinvigoration plan, by no means. So, I think what we are experiencing right now is that we are demonstrating the discipline of operating in financial rigor that is actually enabling the focus on the reinvigoration plan.
Operator: Our next question comes from Michael Binetti with Evercore ISI. Please go ahead.
Michael Binetti: Hey, guys. Congrats on a really great quarter out of the gate here, Richard. Can I ask you — I guess, from time-to-time, you have been willing to share where Old Navy margins are. I don’t know that we want to get into that now in much detail, but it seems like the right time to ask, if you could help us with a little bit of perspective there, as that business shifts back to positive comps, surprisingly in the quarter, pleasantly surprisingly. And then, I guess, I would ask on Athleta for a minute. I hear you on the long time frame and on the fourth quarter sales, but we did see quite a bit on sale. I mean, that banner in the quarter, seemed like a fairly heavy purchase to get a lot of inventory out. I would assume that that’s going to be — even though the sales are down, that’s going to be a positive contributor to merch margin here, as we get into the holiday.
And then maybe just your outlook on the promotional outlook for the holiday here. We heard your thought on the promos being flat to last year, but maybe just a hint what we’re going to see as we watch the promotional environment through the holiday.
Richard Dickson: Michael, we don’t provide Old Navy margins or margins for our portfolio. But jumping to the Athleta question. Look, as I said before, we did have a disappointing quarter. Comps down 19% is not where we want to be. That being said, we had significant promotions and markdowns that we took proactively from last year to this year, to clean up the assortment that had product misfires and marketing misfires and retail execution. This dynamic, we do expect to continue at least into the fourth quarter. As you go into the stores and you look online, you will already see a more distinctive narrative in both product and brand messaging. As you go into our stores, you’re going to see a much more delineated refreshed store presentation.
The markdown assortment will get less and less as we move through it. But ultimately, we will be lapping a bit of challenge here on the misfires in product. I will say that we are seeing early indications, as I mentioned, that what we are rolling out in terms of new product, customers are responding. The work that we’ve done in marketing very quickly and the displays that we’re seeing in our digital dialogue are also encouraging, but we do have more work to do. And as I said before, out of our portfolio, this is a brand that’s operating in one of the most exciting segments in the industry, the performance segment is incredibly rich with opportunity. And while we are a number five player, we’ve got enormous potential to continue to grow this brand.
Katrina O’Connell: And then, I think, Michael, you asked about the overall promotional outlook for the holiday season. We were really pleased to enter with inventories down 22%. I think that shows discipline around controlling the inventories. We think that inventory is fresh and has good product offerings for the customer. I think what you saw in the outlook we provided was that we’re planning for our promotions to be relatively flat year-over-year. And, honestly, we want to make sure that we’re mindful of the somewhat choppy environment that we’re heading into for the fourth quarter with the consumer still feeling pressures. And so, our top priority will be about executing well for holiday and offering the right price-value equation for our customer.
