Corey Tarlowe: Lisa, I was wondering if you could just talk a little bit from a trend perspective, what worked for you in the quarter and into holiday? And how are you flexing into some of those trends as we head throughout the next couple of key weeks here of the fourth quarter?
Lisa Harper: So some of the things that are working well for us are anything in the cozy area. So sweat shirts, any cozy fabrications, graphics are working for us, denim and a lot of different leg shapes. So denim is down overall. But as we’ve gone into flare and wide leg and boot and a variety of leg shapes, that is really catching the attention of the customer and delivering. I think that we’ve done a good job with our holiday kind of sparkle assortment, and that’s been very, very well received and moving through. So what’s interesting about it is that we have kind of the high end event driven product that’s working and then we have the cozy casual pieces that are working as well. And so that is, I think, a precursor of how we’re thinking about our assortment and our customers’ end use as we move forward.
The other pieces that are working in intimate, bralette, panties, push up plunge, silhouette are all working really well. Silverettes worked really well. Anything Christmas specific has worked really well. So as we move forward, obviously, the Christmas pieces are less relevant. But I think the balance between casual, cozy and higher event driven end use is a better way for us to manage our business as we progress.
Corey Tarlowe: And Paula, just on the gross margin, as you think about the factors that have impacted the gross margin so far this year and in the third quarter, as you think holistically about some of the puts and takes of the margin headwinds and tailwinds. What are some that you expect to stay for a little while and what are some that perhaps are going to come away and as perhaps sales get better and we start to see a much higher margin in the future?
Paula Dempsey: So as you noted, for Q3, our gross margin was slightly down. But as we mentioned, our product margin was up. So it was down really due to deleverage, more to do so with volumes of net sales. As we move forward into Q4, from an expectation standpoint, we think it’s going to be aligned with where we were last year more in sale. And so as sales continue to improve, we’re definitely going to see that improvement in gross margin into the next year. Hopefully, that answers.
Operator: Our next question comes from the line of Mark Altschwager with Baird.
Amy Teske: This is Amy Teske on for Mark. You noted some positive results from the testing of the clearance stores. Were there any traffic trends here that were different from the balance of the chain, and is this attracting a different type of customer? And then bigger picture, could you just help us size the opportunity here, how many stores could become clearing stores?
Mark Mizicko: So for the clearance centers and the clearance feeder stores, I think the highlight of the performance is the margin expansion that we saw in the feeder stores in particular, which was driven by a few things. One, there was a shift out of clearance selling into REG because there was much less clearance on the floor, of course. And the second part is that we took some of the space and we put some more of our reg price assortment in it. So there was a pretty nice expansion of margin dollars in the feeder stores. We’re still doing some work on trying to optimize the particular model of how many feeder stores there are per clearance center, how to continue to drive even more margin dollars in the clearance centers themselves.
As for the traffic and the customer trends, it was not meaningfully different. I don’t have — we didn’t really dissect it yet to see if there are differences in demographics going in, the traffic trends were very similar. It was just more of a makeup of what they were picking up that was driving it.
Operator: [Operator Instructions]. Our next question comes from the line of Dylan Carden with William Blair.
Dylan Carden: I’m just trying to fill out what if any conservatism you’re kind of baking into guidance, given the performance you just put up kind of looking at pre-pandemic sales levels, it would suggest something of a deceleration. I just want to sort of make sure I understand kind of how you’re thinking about the world here.
Lisa Harper: I would just say that we are watching the customer from week to week. There’s a lot of business to be done right now. We don’t peak the same way that other retailers peak in the fourth quarter. We have a big event with – toward cash in January that again is something that’s always back loaded in our performance. As I mentioned earlier, we were happy with margin performance, particularly, which was our strategy over Black Friday and Cyber and we’re very happy with our inventory levels. So we don’t have a lot of product to clear. We don’t have a lot of areas of inventory that are backlogging us at all. So it is a cleaner scenario. But we are watching the consumer week by week and becoming more and more comfortable with that performance. So I can’t tell you what scale of conservatism that we’re in here, we’re trying to be as pragmatic and prudent as possible as we move forward, and with executing some of our strategies and refining them.
