Martin Waters: To be clear, we were contemplating it at the Investor Day. We just couldn’t talk about it.
Operator: Thank you. Our next question comes from Omar Saad with Evercore Partners. Your line is open.
Omar Saad: I wanted to do one kind of follow-up on the near-term recent acceleration. Having a hard time taking out, is it the kind of accelerated promotionality if you guys kind of really lean into the value and seeing the customer respond to that or the Black Friday acceleration? Or do you think it’s more shopping, consumers returning to kind of historical shopping patterns more centralized around the holiday period? I’d love to just if you have any thoughts around that, and I have a couple of quick follow-ups.
Martin Waters: I’ll take a shot at that, and it’s really looking in the crystal ball and guessing what’s going to happen. It logics to me that when the customer is pressured in a very tough economic environment that she gravitates towards opportunities to save money. And Black Friday and Cyber Monday are opportunities to save money. So was I surprised that it was a strong Black Friday and a strong Cyber Monday? No, I was not surprised about that at all. What I don’t know is whether this is the beginning of a new trend, and the whole of December is going to follow it in that way. I doubt it. Because I think when we look at previous patterns of difficult economic times, customers gravitate to deals and then she spends up and then she waits for the next round of deals.
So I just think we’re in for a tough December all around across retail, and we need to be prepared to sharpen our elbows and fight as hard as we can. Because as I said before, it’s not just about winning within our category, it’s about taking dollars to our category rather than to somebody else’s. So that’s about the only forecast that I can give you, Omar. You should be assured that we’re taking it on a day-to-day basis with all over our results, even intraday results we’re agile and we’re able to change and pivot as needed. We have strong plans and we have contingencies in place and we’ll be prepared to make sure that we get whatever is available and out there. TJ, do you want to add anything or…
TJ Johnson: Yes. I agree with everything that Martin mentioned there, and the one add I would have is really an acknowledgment to the team both here and across the country in our stores. Being prepared for Black Friday weekend, I think most reports out there and certainly, what we look at from a mall perspective or mall traffic, the mall was very busy. We actually think that we were one of the busier stores in the mall. And I think that’s been reported, and we’re seeing that in the numbers. So the lift in traffic that we saw, we think, was a little bit better than the mall. And we think that’s a little — that’s directly correlated to the preparedness programs that Martin mentioned on the part of the team.
Omar Saad: Very helpful color. Yes, that’s very helpful color. Maybe quickly, any thoughts on why Beauty is so strong? And then Martin, important details in the store of the future for people who haven’t been in one?
Martin Waters: Yes. So why would Beauty be stronger than other categories? So I think it reflects the fact that the market is more open. So you’re more likely to wear a fragrance when you’re going out to party, or to work out — than being at home. And the reality is that people are more out and about right now than they were this time last year. So it kind of logics to me and my Beauty team will be listening to this and saying, but what about the newness? What about all the great content that we developed. And so I would give a nod to that also that we have got some terrific merchandise out there. The Bare fragrance is truly groundbreaking innovative and unique in some respects. And so yes, it’s a function of the fact that the team did a really good job, and it’s also a function of the fact that Beauty is a stronger category across the board this year than last.
Store of the Future, thank you for asking. We feel very good about Store of the Future. We’ve got 12 of the 16 that we plan to open in North America open. And they’re doing well. They’re performing at high single-digit better than the control group. The store presents as being less intimidating, easier to shop, lighter, brighter. The merchandise is the hero rather than the environment being the hero. It’s less overwhelming. From a business perspective, it’s lower CapEx. It’s typically smaller stores. We don’t need the amount of square footage to the previous management thought that we needed. So it’s a more efficient, less intimidating, more attractive environment. And there are some neat technologies in there that are really helping. The Crave technology that we have in the fitting room has been extremely well received.
That, I think, is the highlight of the Store of the Future. And we’ll continue to evolve it as we put more down on the ground. One part of that initiative is changing our dependence on malls to have a focus on off-mall locations where we’ve been underpenetrated, and we’re very pleased with the performance of those off-mall locations that indicate that they could be a very good backfill to downward pressure that there will be on some D and E malls across the United States. If we can replace some of that real estate with off-mall real estate, that will be a good thing for us. So in many respects, from many perspectives, the Store of the Future is a really good initiative and we’re very pleased with the results so far.
