Thomas Forte: Excellent. And then for my follow-up question, you talked about the opportunity for gross margin improvement next fiscal year on better freight. So, at a high level, how should we think about your planned use of the higher gross profits to the extent that you may engage in more promotional activity or more marketing, or to the extent you let more flow through to the bottom line? Just €“ can you talk about it at a high level?
Donna Dellomo: Good morning. So, yes. So yes, we are planning to see some gross margin expansion out of lower freight rates next year. There’s a couple of things that we’re looking at, although we’re not going to guide to next year where we €“ there is €“ a part of it is going to be used to mitigate some of the higher outbound freight costs that everybody is experiencing through the FedEx and the of the world. We are projecting to see some higher warehousing costs just as relative to the increase in labor cost at our , so a piece of that will be used to mitigate that. And we will be investing a portion back into the business next year as we continue to say that we still have some foundational infrastructure investments we need.
And we do anticipate a portion of that gross margin expansion to flow through to the bottom line, but we’re going to navigate that. You know us. We’re extremely agile, and we’re going to navigate that and allow as much as we think we can flow to the bottom line next year as we navigate through the year. So, we have €“ there is use of that gross margin expansion, but we will continue to operate the way that we always are and very fiscally responsible and agile, and we believe we have a lot of opportunity next year.
Thomas Forte: Great. Thanks for taking my questions.
Operator: Thank you. Our next question comes from the line of Brian Nagel with Oppenheimer. Please proceed with your question.
Unidentified Analyst: This is Andrew on for Brian Nagel. I just want to start off by congratulating you guys on another great quarter. My first question is in regards to just the sales in the period. On the Q2 call, you discussed the potential for about $9.5 million in sales. Can you discuss any other drivers to the Q3 sales slowdown? And then my follow-up question will just be a follow-up to the first question on the outlook for the balance of the year. Can you discuss some of the drivers, the expected slowdowns and any dynamics that may have changed since you laid out prior guidance for low 20% growth for Q4? Thank you.
Mary Fox: Hi, good morning Andrew, it’s Mary. Thank you for your question. I’ll take the first part. So, in terms of sales, as you referenced, we have discussed last quarter, there was of revenue that was pulled forward, some was increased throughput and some was the open-box inventory that we talked about. And then obviously, as I said in my remarks for quarter three, whilst our revenue was up 15.5%, if you factored in for that pull-forward, our revenue really is at 24%. And slightly ahead of, obviously, the strength that we saw in our total demand for the quarter at 22%, which we see as being the strongest growth in revenue, compared to anyone else that has recently reported from that side. So, you see that continuation in performance growth, and then obviously, one of the key benefits for us is our omnichannel model.
So, we really are able to respond to where our customers want to go for sales. So, whether it be more in person or whether it be online, we’re agnostic to where the sales will be from that side. And then I think, Donna, do you want to talk through on quarter four in terms of the guidance and a bit of that profile?
Donna Dellomo: Yes. Sure. So, the guidance that we’re providing for Q4 as far as being high single digits, mid-teens range, is that growth is coming out of the comp showroom sales, non-comp showroom sales. We’re adding Costco pop-up shops, which we didn’t have this time last year. We’re adding the Costco roadshow perform at the €“ that comp show performance is coming through stronger than we’ve seen in prior periods, and we do have the addition of the additional Best Buy shop-in-shops that we did not have this year. As far as the decrease in the guidance that we provided for the year on our second quarter earnings call, we are experienced, but at a lot lesser impact you see other retailers are. So, again, what Mary said, what Shawn had said, we are very, very happy with the performance of our net sales volume, our associates and €“ still coming through.
Even if you use the midrange of the high-single-digits to mid-teens, that indicates approximately a 26% year-over-year growth rate, which is very, very strong for our category this year.
Unidentified Analyst: Thank you so much.
Operator: Our next question comes from the line of Matt Koranda with ROTH Capital Partners. Please proceed with your question.
Matt Koranda: Hi guys. Good morning. Just really quickly on the fourth quarter trends that you mentioned. I think you said, you’re tracking toward the higher-end of the fourth quarter guidance on the top line. So, just wanted to confirm that that’s what we’ve seen specifically quarter-to-date in terms of year-over-year growth? And then just any spikes or trends within the Black Friday, Cyber Monday period to call out?
Mary Fox: Hey, good morning Matt. Thank you for the question. So yes, as we shared, we are tracking at the high-end of the range and have seen really good strength as we think about, for example, Black Friday that you’ve asked about, very strong. The weekend was a little bit softer, but still growing, and then Cyber Monday was strong. And actually, what’s really been good is the, kind of the days following Cyber Monday have also been really strong. So, I think similar to what you’ve heard from others, I think comparing to last year is not a great comparison because everybody bought earlier because they were concerned about inventory shortages, so they’re just €“ the whole shape of the quarter was a little bit different, and we’re seeing strengthening demand that just keeps on coming.
And I think on top of promotional cadence, strength that we have, some softer comparisons in December, for example, and even a bit into January, plus very strong marketing campaigns, we feel good for where we’re going to land and obviously continue to lead the category in our performance map.
Matt Koranda: Okay. Very helpful, Mary. And then I guess follow-up, which is, why have a, sort of on the low-end, a mid-single-digit guide for the top line for the quarter, just given that you’ve tracked towards the mid-teens quarter-to-date and then comparisons seem to get easier as we move through the quarter, just given the cadence that you mentioned, I guess? Just curious like, sort of why, what would drive you guys down towards that lower-end of the guide or does that assume some, sort of significant macro deterioration? What are the assumptions have been in the lower-end of the guide? That would be helpful.
Donna Dellomo: It’s the conservatism, right. I think everybody knows us to be extremely conservative. But €“ and that’s why we called out that although we are providing that range, we are trending quarter-to-date even through yesterday, absolutely to the higher range. But you never know what could happen macro-wise, right. So, we thought it’d be very prudent to build a range in there, although, again, we’re trending to the higher side. And you know us always build some type of conservatism into our modeling, and that’s why we elected to provide that range. There’s no indicators to us right now that we should be coming in at that lower-end. And again, our performance is extremely strong and it continues to be every single day as we monitor our demand volume. So, again, it’s purely baked out of conservatism and some variability as to what macro impacts could happen as we finish up the fourth quarter. That’s the only reason we provided that low end of the guidance.
Matt Koranda: Okay, very helpful. Thanks for that Donna. I’ll jump back in queue.
Operator: Thank you. Our next question comes from the line of Alex Fuhrman with Craig-Hallum Capital Group. Please proceed with your question.
