Scott Goldenberg: Yes. I mean the other thing is, given the environment over there, it’s even more difficult for most — for many retailers. And it’s certainly — and Ernie can jump in after me. But we’re certainly adding as many new vendors as we have in the past and probably getting our fair share of good, better and probably even more better and best over there in terms of the branded quality.
Ernie Herrman: Absolutely.
Scott Goldenberg: So, I think that’s the thing. And given the environment, we’ve talked about this before, we’re still taking advantage of when — of both relocation opportunities at good rates and obviously getting lower rates when we — our leases come. So, we’re minimizing some of the costs, taking advantage of those aspects that we can.
Ernie Herrman: Yes. Paul, Scott was bringing up a good point there. The level of what you do have in a situation like this is there’s some — I was talking about the good, better, best, how we go after all three. We’ve had a disproportionate amount of better and best goods over there and from some brands and sizable deals that normally we wouldn’t have seen or open some vendors we wouldn’t have opened as recently. So, that all bodes well. That’s our — truly our best form of marketing and our best form of capturing a customer for the long term. So again, I think we’ll just stay patient and we’ll weather — and we have to execute the way we always do. And we’ll mitigate any margin range or anything like that because we’re keeping the business clean.
Operator: Our next question is from Mark Altschwager.
Mark Altschwager: I guess, first for Scott, with respect to freight, just any further color on what you’re seeing in terms of the inbound versus trends in domestic freight expenses, and how you’re thinking about the recapture opportunity next year? And then Ernie, you’ve emphasized the gifting position quite a bit over the last few years. Can you talk about some of the learnings from recent years that you’ve incorporated into your holiday assortment and marketing plans this year that support your confidence? Thank you.
Scott Goldenberg: Sure. Yes, we’re certainly not going to go into giving specific guidance at this point in time. But, there’s been largely no major changes to what we thought would happen at the back half of this year and consequently what we thought would happen next year. But when we were giving the long-range guidance out for ’24 and ’25 going to that 10.6%, it contemplated over the course of those two years some freight benefit. And we still are assuming that due to — whether it’s less demerge or some of the ocean freight or some of the other factors and over two years switching some of it to more intermodal than we currently have, we do see a freight as a tailwind, but we’re not going into the details, certainly give that more on the — when we give more detailed guidance on the February call.
But yes, we definitely — it’s built in, none of the factors have really changed from what we thought over the last — so yes, so a tailwind over the next two years on that. And obviously, as I think we stated earlier, the freight will go down significantly from the third quarter impact over last year or over €˜20 versus the fourth quarter.
Ernie Herrman: Mark, so talking about our gifting position, yes, we’ve talked about that every year for the last few years. What’s really neat, I think, for us on what we’ve done in every banner and every geography we’re in, as we have become a cooler — we’ve talked about our entertainment question and all that, but we have been cooler for gifting because now we’re hitting even younger audiences that are very comfortable buying gifts from us. I think the big thing that’s happened over the last handful of years, and we have really accelerated during COVID is, a, our in-store experience from our — and I mentioned this in the script, let’s start with our store ops teams and our field organization really does an amazing job on setting up our stores for gift-giving well beyond what we did 6 or 7 years ago.
And I give them a lot of credit on how we present giftable tables and features and knowing where to put certain items toward the register and really catering to impulse gift items. And they do it with — across the board with good, better and best goods. And they are just phenomenal at setting up the — and that’s whether it’s in a Marmaxx store or a HomeGoods store, a Sierra, you name it, Winners, T.K. Maxx, every division is all over the gift-giving presentation and execution from a store level. Secondly, we are now more branded than ever. So, if you think about — if you want to give a gift and this applies to any demo on any age group, any income level, you ideally are going to lean towards giving a branded gift. It doesn’t feel good to give a private label gift or a gift that’s just kind of generic.
While we become — and then this holiday, we will be more branded than ever, I think that’s going to bode well for our gift business as we get even closer to Christmas. And then, the third aspect that we’ve tried to do every year in terms of gifting is a lot of gifting is done — significant amount is done closer to Christmas every year. It moves back a little bit. And so we, last year, ran out of a little bit of steam right towards Christmas. So, we think one of our fourth quarter opportunities this year is to have fresh flowing branded goods that are gift-oriented coming in later, which we are significantly going after this year, which I think is going to bode well for our Q4 sales, especially in the last week or two right before Christmas.
So, I think that touches on why — again, two of those reasons are really why we’ve been doing better every year at it. This last one, I think, is really about this year last year comparison. But I intend for us every year to continue to get better and grab more market share at holiday. Even though years ago, we were not thought of as a gift destination. I think now we’re absolutely becoming that. So, thank you for the question, Mark.
Operator: Our next question is from Michael Binetti.
Michael Binetti: Congrats on a nice quarter. And Scott, I’ll have to add my congrats to you here on the next steps. I think you said — just a near-term one, I think you said on the three-year rate was increasing throughout the third quarter. Strong exit rate, the guidance looks like it’s taking a little bit of a deceleration in that three-year rate. Maybe just a comment on what you’re seeing on November versus if that’s from your expectation, the rest of the quarter, any source of conservatism that you want to hold back? And then, Scott, a little math on the consensus model, looks like expectations are for about a 2% to 3% comp in that combined U.S. business in the first half next year. You looked at a number of things. You’re comfortable with/excited about it. I just want to make sure you think that’s reasonable.
Scott Goldenberg: Yes. We haven’t given any guidance on how we’re breaking out getting to the 10.6% from next year or the year after. So we haven’t — we don’t have any details to both share at this point or have on the breakout by quarter for next year. In terms of this — the fourth quarter, the start to the fourth quarter, your question that overall U.S. comps have improved over the last day or so. But, as there was some unseasonable weather early on, however, this has been factored into our increased Q4 U.S. comp guidance. So I guess, again, just all factored into what we’re — what we’ve contemplated.
Michael Binetti: Makes sense. And maybe I could follow up with one just a little bit further out. Based on the buys that you commented on, I’m wondering how long you think you’re going to have — how long do you have visibility to having these great branded assortments? Do you have visibility via your packaway into this great good, better, best assortment of branded goods into fall of next year at this point?
Ernie Herrman: Yes. Michael, so the good better, best has — that type of content has been there prior to the recent surge of availability. And I would think that will continue to the level that it’s at here, which is unusually flooded market across well more than we could ever buy. It’s hard to have visibility really as to the long term. The only thing I would say, as I said in the script, is for 40-something years we’ve always had more availability out there than we can buy. So, I don’t see that changing. And I’ll give you — and even if it lean — here’s the other thing, and I didn’t get to mention this earlier. Even if the availability out there comes down a little. One thing that has happened during COVID, and as we’ve seen over recently as for our merchants and our vendors, we have become even more important to them than ever before.
So we always like to think we’re the first call, I think from a different perspective, we have just become without a doubt, the most important for the branded market, I’m talking, we have become even more important as a relationship for them to liquidate their goods and to know that if they get aggressive on some of their cuts ahead, which, again, most of those cuts are imports that we’re going to be there for them. So, we — I think they know that even more so now when our relationships are there better than ever.
Scott Goldenberg: And Michael, the packaway, were you asking about the level of packaway?
