John Klinger: Matt, so just to answer your second part of your question, I’d say we’re — first of all, we’re very pleased to get back to really — we’re forecasting to be beyond where we were in FY20 pretax profit margin. And again, that’s with approximately 100 basis points of more freight headwind. As I said earlier in the call, we’ve probably gotten back two-thirds of our freight from where we were. So, that really speaks to the performance of our merchandise margin versus FY20. But going forward, we are not going to be complacent. We’re always going to strive to improve our profitability. And again, the best way to improve our profitability is with our outsized sales and controlling our costs. So, that’s — we’re laser-focused on that part of it.
Operator: Next, we’ll go to the line of Chuck from Gordon Haskett. Please go ahead.
Chuck Grom: Just wondering if you guys talk about the cadence of sales in the quarter, particularly in October, the temperatures were a bit higher nationally, and in some pockets actually been very warm. Just curious if there’s any discernible slowdown during this time period. And if you’ve seen that demand capture so far in November as temperatures have normalized?
John Klinger: Yes. So, the cadence of the quarter, August and September were strong. The October, when the warmer weather did set in, and I’ll add in there, the geopolitical events that are also taking place, we did see our trend a little bit of a drop from our August, September trend. But when we saw the weather cooled down, towards the end of October, we saw our sales trends return, so. And again, we’re — our fourth quarter is off to a strong start, as we said in our — not only our earnings release, but also our prepared remarks this morning.
Operator: Next, we’ll go to the line of Brooke from Goldman Sachs. Please go ahead.
Brooke Roach: Can you elaborate on your outlook for comp growth between traffic versus ticket as you look forward? Did you happen to see any shifts in ticket this quarter versus your expectations? And how much more opportunity do you see to continue with the pricing strategy that has been successful year-to-date? Thank you.
John Klinger: So, as far as what we saw in tickets, so again, our sales were driven by transactions. As expected, we did see a drop in our ticket that was offset by — partially offset by additional units as we’ve seen historically. But again, the important thing is driving that top line through transactions we feel is a very healthy way for us to drive our business. And again, that ticket drop is due to mix. It’s mix related within category, so.
Ernie Herrman: And Brook, to remind you, we don’t drive — and I think John started to touch on it. We don’t drive our ticket — our average — we don’t have a top-down strategy to drive our average ticket up or down. We let the — it really starts at the buyer, merchandise manager levels when they’re saying these are the right values and having a good, better mix — good, better, best mix. And it translates into, hey, these are the right values and it could, if there’s a hot category like John said and it happens to be a lower ticket, we’re going to not go after that because our market share gain is still the priority in driving sales and top line. In terms of your — second part of your question, the opportunity on continuing the pricing strategy.
Yes, we feel like we’re in a good place on that. I think that will be a consistent opportunity as we look forward. We kind of monitor it as we look — as we go into first quarter of next year at this point. And I would say we’re positioned right where we would think we would be. And there’s a lot of — there’s a combination in this environment with so much goods and we’re always wary of where other retailers are going to potentially promote. So again, we’re very selective on where we do it, but we have been seeing us the ability to continue to retail grab where appropriate, at the same time, actually buy a little better, and that’s where we get some of the merchandise margin mark-on benefit. So, again, feeling good about it, but we’re always watching it very, very balanced, I would say and surgically.
John?
John Klinger: And look, our customers are telling us that their value perception of us remains very strong, which is — again, is key.
Ernie Herrman: Yes. We do surveys and we get data on perception. Our perception right now is actually — has improved on their perception of our values relative to others.
Operator: Next, we’ll go to the line of Alex from Morgan Stanley. Please go ahead.
Alex Straton: Congrats on a great quarter, guys. I wanted to focus on Marmaxx. Its operating margin has been at about 14% almost all year compared to slightly below that pre-COVID. So, I’m just wondering how do you think about that. Are we at peak, or are there still headwinds hurting that segment? And how do you think about it from here? Thanks a lot.
Ernie Herrman: I mean, yes, look, we’re very pleased about driving a 7 comp entirely through traffic. We’ve seen nice benefit from the freight. But look, we have — we’re continuing to see this year. I mean we’ve had headwinds on supply chain and wage, so. But we feel really good about where we are, as far as a pretax profit margin being up 50 basis points versus last year.
Operator: Next, we’ll go to the line of Michael from Evercore ISI. Please go ahead.
