Operator: And our next question comes from the line of Olivia Tong with Raymond James. Please proceed with your question.
Olivia Tong: I have two questions. First one one on newness. Because you had a few brands that really anchored newness and I would imagine contributed towards the upper end of your average ranges this year. So could you talk about your view on innovation, the level of innovation as you think about the next 12 months versus the prior 12? And then you also mentioned in your prepared comments that Mass is outperforming for stage, but in your view, wasn’t definitively trade down. So could we dig into that a little? Is there more newness in one versus the other? Or any other reason that you think that Mass is starting to outperform Prestige, if it wasn’t related to such consumer.
Dave Kimbell: Yes. So just on the broader idea of newness, it’s important to our business and the beauty category always. And as I mentioned in our remarks, typically 20% to 30% of sales are new items, and that’s the range that we will land this year and anticipate we’ll be able to continue to be in that range going forward. As I — we did — Scott mentioned, we had some really important new brands in 2022. But we’re excited and encouraged by the outlook. This category, both big brands like some mentioned, but also new and emerging brands that take off and connect. I mentioned a couple of those like Good Molecules, among others. So we’ve got a portfolio of brands as we look forward into next year and confident about newness, both new brands and newness from our existing brands.
That plays a big role. And as we work with all of them and see their pipeline, we’re encouraged by what we’re seeing. The trends are strong across each of the categories. And we’re seeing healthy growth. And we think newness will play an important part in that going forward, knowing that we’ve got some of these big brands that Scott mentioned earlier to launch or to lap. As it relates to the Mass and Prestige, we did see Mass growing somewhat faster than Prestige. But both sides were strong and healthy. So I wouldn’t say the strength in Mass or the somewhat higher growth in Mass as we look at it and do — and analyze our members didn’t come at the expense of Prestige. It’s just a came because Mass is strong and there’s good newness brands like e.l.f., NYX, Ordinary, La Roche-Posay, CeraVe, I mean there’s strong, newness and engagement.
And so they’re just capturing and growing. But Prestige is doing really well, too. So I don’t look at them being a little bit higher than Prestige as coming at the expense of just the their — several of these brands and some of our bigger brands are hitting the mark, and that’s working. All of our analysis suggests that we have not seen clear signs of trade down. But I’d reinforce, if there is that, we are uniquely positioned to deliver and support our guests regardless of what choices they make from a price point.
Operator: Our next question comes from the line of Michael Lasser with UBS. Please proceed with your question.
Michael Lasser: Scott, can you help stress test a couple of the key variables that are going to impact Ulta’s gross overall operating margin in 2023 between the expense spending that you slated for this year and the step-up that you had originally planned for 2023. Is it reasonable that we think around about that as like a $50 million increase in the next year? And then the second part of the question, you’re on pace to have a 15.5% to 15.6% operating margin this year. If you were to take the level of promotional activity from 2019 and apply it, all else being equal, to this year, is it reasonable that you would have like a 14.5% operating margin. So a worst case, if promotions go back to 2019 levels, that would be like 100 basis points to the operating margin.
Scott Settersten: Is this a Michael Lasser that I know? I mean, I appreciate your question, Michael. Yes, and I understand. But we can’t — we’re not going to piecemeal out the bits and pieces of the variables and the formula for our EBIT margin for next year. It’s just — it’s too hard, and that’s why we said we would — we’ll update in March if it’s appropriate, okay? And we kind of see how 2022 shakes out here in totality. And then look at our ’23 plan, which we’re in the heat of battle on right now, finalizing here, which the final step of that is as we get finalized through the holiday season, so to see what the numbers look like. So we either — as I’ve laid out for Ike here a little bit earlier in the call, all the different variables and of course, they’re all on wide continuums, right?
And so we’re doing our best to assess each one of those. And coming up with our best idea how we think it’s going to shake out for next year. Again, we’re very optimistic about the long-term options for our business. I mean, we’re in a great position. We’ve got lots of levers to push and pull, to deliver healthy operating margins over the long term.
