Ernie Herrman: Yes. I think, Lorraine, so great question. One of the things we do, I think that is also different than what some of our counterparts, not just on off-price, counterparts across the board is we take aggressive timely markdowns throughout the year. And with that, it becomes a — even if we end up with, well, I guess, you’d call it, liability of inventory, something you’re kind of, I think, touching on there, we clear those situations fast. And because we turn so fast, as you know, I think all of you know, we turn our home inventories extremely fast. We have a high standard on taking aggressive markdowns there probably as much as anywhere, if not more so. And so, it never precludes us taking advantage of other opportunities in the market because we’re always addressing any issues we have in our stores or inventory very quickly.
So, it really limits any excess inventory situation that we would have anywhere within the box, within its online. And by the way, that applies to whether it’s HomeGoods or home within Marmaxx or home within Winners in Canada or HomeSense in Europe, it applies to every brand. Great question, by the way, because if we manage that differently, and this is where I think it goes to the talent that we have, the seasoning and other people have a similar model of business, does not mean they execute it the same and take the markdowns as aggressively as we do. And I think, again, it’s another advantage.
Scott Goldenberg: Yes. So talking about just the markdowns this year, we keep talking about our markdowns, rate has been better all year than our fiscal ’20 levels. Although our markdowns have been slightly higher than what we had anticipated, but they’ve been built into each forecast that we give you and have largely been exactly where we thought they would end up. So, no surprises there. Again, just to reiterate, we have adjusted — most of our — a lot of our inventory pickup has been due to getting inventories a bit earlier than we expected as the supply chain improved quicker than what we had — when we had ordered the goods, and they just came in quicker. But we expect, again, our inventories to come in at the end of the year, we’ve adjusted all our open to buys, the receipts will obviously a bit less receipts this year than last fourth quarter.
And really, so by flushing that inventory down, we’ll have both inventory levels where you want and great cash flow in the fourth quarter compared to both last year and even compared to fiscal ’20.
Operator: Our next question is from Matthew Boss.
Matthew Boss: Congrats on a nice quarter and a tough backdrop.
Ernie Herrman: Thank you.
Matthew Boss: So Ernie, could you speak to drivers of comp improvement as the quarter progressed? And notably, I think you cited sequential acceleration in traffic. Maybe how you see Marmaxx positioned to take share in holiday? And then Scott, merchandise margin, if you exclude freight, remains materially above 2019 levels. I guess, maybe if you could just help walk through what are the structural improvements in the model that you see relative to pre-pandemic?
Ernie Herrman: All right. Yes. So Matt, let me go with the first couple, and then Scott will jump in with regard to some of the margin aspects. Yes, acceleration within the quarter, total sales. But I think what you’re getting at is on some of the categories, we mentioned that our — and we’re very pleased with this, our apparel in general and Marmaxx outpaced the store. So, that is an extremely healthy barometer for us. It also means that we are going to be driving more traffic down the road. When we do that, it’s very healthy. Whenever we typically run some of our best market share gains is because the whole store is participating. And of course, last year, you had across the board, not just in TJX, a home business that was over indexing in most businesses, but we are very happy, particularly happy with our apparel business in Marmaxx.
So, when you ask what any categories help driving it, yes, apparel ironically. And I don’t think that is the same story with other retailers. I think you’re going to hear more mixed reads as more results come out on the apparel business. Once again, I’ll give you the different why do I think our apparel shines. And by the way, this — I think we’re performing better in every division there is because of the branded content, good, better, best brands. So, our apparel is not non-branded-driven. It’s brand-driven, and it’s across good, better and best. And that applies to whether it’s our ladies business or our men’s or our kids business. We try to go after all three levels and really have a branded focus, not a private label focus. So, I think that’s really, really key.
And I think that’s why I look at the future, you’re asking, I think one of your questions there was about Marmaxx, how we position, open to buys in great shape. And we have open to buy in all the areas that are some of our harder driving sales, better sales performing areas right now. And I also look at the on order because we can see some of the — again, we buy close to need, but we still can see our first quarter on order because as we start buying and putting goods into those buckets, so to speak, the branded content based on what’s been available in the market, this applies not just to apparel. This applies to accessories or to our hardlines areas, to our tech areas. The branded content is really going to be at a new level here going forward.
And a lot of that is the nature of what’s been happening in the marketplace just yielding an amount of inventory across all of these brands that is beyond what we normally see. I’ll let Scott now talk to the margin.
Scott Goldenberg: Yes. Well, I’m not the expert. I’m actually why we’re buying better. So, I’ll let Ernie say that.
