Dylan Carden: On pricing and sort of lower clearance levels, cleaner inventories. Any way to scale maybe in potentially sort of product margin terms sort of a structural level that you’re targeting as far as sort of what that opportunity to the magnitude, I would think it would be pretty big, just kind of given some of the history here.
Lisa Harper: We think there’s over the next year or so substantive [expansion] in margin in the product. I can’t say we’re going to go back to our high level from a historical basis, but we certainly feel that with all of the stress — with the costing, the improved assortment and inventory management and all the other strategies that we’ve talked about, which are — we have strategies in place that we did not have optimized in the kind of the prior experience of the brand that we think that there is, I would say, substantive margin expansion opportunity in the business from [Multiple Speakers] product margin.
Dylan Carden: Would the high watermark not be feasible given input inflation, or why wouldn’t you expect to be able to get back to that, to your point, you sort of implement…
Lisa Harper: If you look at total mix, because we’re so heavily — we shifted from ’19 through the pandemic, so much higher penetration online where we were more like 50-50 and ’19, but we’re higher than that, now that there’s the fundamental economics of the web channel really won’t allow us to get back, I don’t think at this point to the top line historical merch margins that we’ve been able to hit in the past, but still a substantial improvement overall.
Dylan Carden: And then finally, just on the marketing testing that you’re doing, and apologies if I missed this. When are you kind of looking to do a fuller rollout? And as part of the thought here that maybe you would wait for, I don’t know, better macro or a more meaningful quarter before you kind of start leaning into that more seriously.
Mark Mizicko: Well, we — the results we saw didn’t give us any indication that we have reason to pull back. So the extra level of investment that we started in on October, we’ve continued through November and into this quarter. And it’s still very early. Every metric that we look at makes us feel like the level that we have is right, we’re not ready to make a call on whether that gets increased to another level yet. But we monitor all the metrics and analyze the data on a weekly basis. And so we’re constantly having conversations about how to reallocate, where to increase and what the overall level should be. So we’ll certainly continue to monitor that and hopefully have future conversations about the direction that we’re taking.
Lisa Harper: We think it’s very important to — it’s a very important area to invest in. And as we are — we mentioned in the — I think, in the comments today that our customer acquisition numbers as a percentage are up in stores to 2019 levels, but we think that we can do a better job in terms of customer acquisition and retention through the digital channel to augment that more effectively. And I think the team has done a great job in using the data on a daily, weekly basis to make really smart calls in those investments.
Dylan Carden: And when you say it’s sort of EBITDA accretive, what are the primary drivers of that, is that just throughput leveraging.
Mark Mizicko: Well, the primary drivers are where — the returns on the levels of what we’re spending are such that the price per customer session or traffic or store bills that are — and the conversion rates that we’re getting are flowing through to EBITDA. In other words, we’re getting more than enough sales, margin dollars, considering all the additional variable costs that there are to cover the investment and have EBITDA flow through after all of that.
Operator: Thank you. There are no further questions at this time. I’d like to turn the floor back over to CEO, Lisa Harper, for closing comments.
Lisa Harper: Thank you all for joining us today. We appreciate your attention on our brand and business. I hope all of you guys have a wonderful holiday season, and we look forward to connecting with you guys in the new year with the fourth quarter and full year results. Thank you so much.
Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
