Adrienne Yih: Ernie, I guess, my question is on — we’re hearing — we had a wholesale report, and they talk about kind of the spring season and the end channel retail department stores buying down for the first half. How do you think about that in terms of availability for next year and the continuation of this kind of great buying environment? I know it’s always great. But it seems like there’s a disconnect between their plan right now and maybe what’s actually kind of being realized as we hear from the wholesalers. Thank you very much.
Ernie Herrman: Sure, Adrienne. It’s ironic that the two people sitting here with me, we’ve talked about this yesterday as we were kind of talking — prepping for the call. Ironically, when we’re always saying there is a — I don’t know, we’ve used all different types of words, phenomenal availability. I don’t know if we used plethora of stores [ph] out there. We haven’t used that one yet. But then we keep getting pleasantly surprised because the world — how do I put this, a world that has a lot going on in terms of instability and trends in different retail around domestically and globally just continues to create more spill-off. Part of that is a lot of these companies that would like to — they’re public companies.
They cannot back off trying to push the envelope to grow. And so, for whatever reason, I understand how one might one season be able to cut back successfully. But over the course of multiple seasons and in total, with the 21,000 vendors, where it always ebbs and flows by vendor, there’s just always more. And I can’t picture in this environment where the sales projections are so erratic that there won’t be more. And I’ll go to one other key point, which is the e-com business. So the e-com business, we’ve talked about this before, Adrienne, not with just yourself but the group, is that e-com has created more spill-off. Well, the e-com, if you look at the volatility in e-com trends over the last 12 months, some of the — especially in apparel, their forecasts have been way off from where they’re trending because I think the e-com business is a little bit more fickle.
So I think that’s going to actually spill off more than what some of the more traditional brick-and-mortar vendors might be able to pull back on. So, I just see it staying at similar levels of tremendous availability.
John Klinger: Yes. And Ernie talked about the importance we have with our vendors. We add thousands of vendors every year. So again, we’re just becoming that more important to the marketplace.
Operator: Next, we’ll go to the line of Matthew from JPMorgan. Please go ahead.
Matthew Boss: So Ernie, with the continued strength in apparel and now it’s complemented by the acceleration in home, is there a way to speak to maybe the scale opportunity to drive market share across the wider demographic reach? And then, John, could you just help elaborate on pretax margin puts and takes to consider multiyear or maybe relative to the historical model flow-through if comps were to remain consistent going forward?
Ernie Herrman: Yes, great questions, Matt. Let me — I’ll go to the scale of the model, specifically in apparel, and then I’ll let John take the other part. But the — yes, we do look at it that way because also some of the competitors, specifically brick-and-mortar out there have not done a good job in apparel. And we have had a consistently pretty healthy apparel business that makes us feel like, again, market share opportunity, which is what you’re talking about. We have looked — we’ve already started looking at our apparel plans for the spring season in identifying which pockets of apparel and which areas — in which parts of the country, by the way, we think, have opportunities for us to almost take the market share from items and categories that aren’t being serviced by the competition anymore as much as they used to.
So, I don’t want to give you the exact categories, but there’s a handful of categories, by the way, which happen to skew a little younger in our customer audience, so we get a bit of a win-win there, Matt, in terms of the categories we go after. But that is our objective, not just in home but to continue to exploit the apparel opportunity that’s out there. The other neat thing that’s happening is because of department store and specialty store and online business not being as healthy in apparel, some of those key brands are more interested in doing more additional SKUs with us than in the past. So, we’re getting wider assortments in some of the brands that we’ve always had, but we’re able to get wider assortments there, which also helps our treasure hunt and our ability to do more business there and keep the turns healthy.
So John, on the…
