Operator: Our next question comes from Lorraine Hutchinson with Bank of America. Please go ahead.
Lorraine Hutchinson: Katrina, I wanted to follow-up on Ike’s question on credit income. Would the CFPB proposal on late fees have a material effect on your operating income?
Katrina O’Connell: Well, Lorraine, I know there’s been a lot of speculation on that and sort of – we have nothing to quantify specifically at this time. At this point, I think 2024 will be the earliest impact of that, and we’re working with Barclays, who’s our credit partner on ways to mitigate the potential impact. So we’ll provide more of an update when we know more about the timing of that regulatory impact.
Lorraine Hutchinson: And then, as commodity costs go your way, is this something that you’d expect to pass through to the bottom line, or are there investments that you’ll make in product in any of the brands that might offset that?
Katrina O’Connell: I think at this point, that’s sort of a product by product discussion. I would say, universally, we don’t have plans to reinvest substantially the product cost back into the product. I’m sure, in certain brands and places where we think the customer will appreciate it, we might do that. But overall, I think just as we’ve been doing in the back half of this year, you’re seeing that with the recovery in commodity cost that’s leading to expanded gross margins. So I think it’s logical that that will likely continue.
Operator: Our next question comes from Dana Telsey with Telsey Advisory Group. Please go ahead.
Dana Telsey: With the improvement that you’ve seen in Old Navy and the focus on restoring growth to Athleta and to Banana Republic, are there any learnings from what you’ve done so far at Old Navy that harkens to Banana Republic and even Gap or the other divisions that can accelerate that turn? Thank you.
Richard Dickson: Yes. Dana, thank you for the question and the compliment on the quarter. What I would tell you is, when I speak about brand reinvigoration, I mentioned the two words that we drive from that are relevance and revenue. Each one of our brands is in a different stage of reinvigoration process. But ultimately, when I think about reinvigoration, it’s really strengthening each brand’s positioning statement and identities and purpose. In the case of Old Navy, as we’ve talked about, fun, family, fashion, and value. And I think even as an example, again, I encourage you to go online. You’ll see that crisp identity start to come through. It has to be about trend right product assortment with a clear point of view, that — I talk about delivering beyond just needs, but also deliver wants, interesting pieces, interesting segments, how we can create and amplify big ideas.
We’re going to consistently deliver merchandising presentations that tell stories with our product that excites our customers when they see it online and when they see it in our stores. And we’ll work on better and more engaging omnichannel experiences with clear and compelling pricing strategies, and again, encouraging in the early reads on some of the work that we’ve done reflected in our online presence and in our stores around a much more compelling and surgical price strategy. And last but not least, as we talk about, innovating through marketing campaigns that speak to cultural conversations, create it consistently and execute all of these touch points and interaction with excellence. You can’t do one or two of these and think we’ve got a reinvigoration on our hand.
You’ve really go to work in harmony and do all of these. And so, while I’m very pleased with some of the progress that we’re making, in particular brands like Old Navy and Gap, we do have work to do across the portfolio, following this reinvigoration road map, and we will be updating you quarter-to-quarter on how we’re doing.
Operator: Our next question comes from Mark Altschwager with Baird. Please go ahead.
Mark Altschwager: I was hoping you could help us better understand or unpack the drivers of the improvement at Old Navy this quarter, down 6 to plus 1, really an impressive inflection in this backdrop. It did seem to be well ahead of your internal plans for the quarter. Was that just conservatism at the time you were guiding, or was there a bigger shift in product acceptance with the fall product that that you weren’t anticipating?
Richard Dickson: Yes. Thanks for the question. I think it’s important to note, we’ve been seeing market share gains in Old Navy every quarter this year. And certainly, we are very pleased with the progress that we’ve made in the third quarter. It’s important also to note that these are the results of learnings that we’ve applied from a more muted first half. I mentioned the dedicated women’s marketing campaign with on-trend product, and I think that shows the deliberate intent of when we market with conviction and we associate that with great trend product, and we carry through that message through online execution and in-store merchandising. These are muscles that we are going to be strengthening, and we saw it drove positive momentum and market share gains.
And so, when we look at the continuation of that reinvigoration process, we will continue to improve our site execution, work on our marketing with compelling, creative and value messaging. Again sharp price points that express great style and great value are resonating. And we continue to believe that, we’ve got the right progress and momentum, but we need to continue to deliver that consistently. And so, as we look to the back half, you are going to see a really balanced product range with offerings like Jingle Jammies and party and active, and ultimately, a high quality inventory composition that will drive to a successful year-end for Old Navy.
