And for West Elm, that’s been a business they haven’t really gone after. So that’s really upside for them. Easy updates, people, they may not be buying a house, but they might decide to redo one room. And we can see the effects of that on our sales. And also, the projects, I mentioned in my prepared remarks about rejuvenation. Bath and kitchen remodels are still happening, and we are getting more attention as someone who can help provide high-quality and unique products in those spaces. New furniture, we’re seeing strong results in West Elm, as I mentioned, new forms, and that’s very exciting. And then collaboration, so whether it’s Tucci, I keep talking about Tucci, Colin King, LoveShackFancy, Sheila Bridges else. I mean, we’ve got a wide range of these collaborations.
And they’re just — they bring new customers in, and we have a great time with them. They help us think about new design language that we may not naturally design into. And all of that is really good for the teams and great for the customers. And then there’s continued categories that we’re pushing as a bigger percent of total and pulling back. And so, without going on too long or giving away too much competitive information, we’re seeing some pockets where we have a lot of upside. The other thing that’s really important in all this that you guys got to realize is that we continue to reduce our promotional offering. So at the same time that we’re pushing this growth posture for this year, we are also absolutely determined to continue to pull back on promotions, which is a tricky thing, right?
So we did it last year. You’re going to see us continue to push it this year and balance the two out. We really believe strongly that long term, this is the right thing for our business. And we will take markdowns, and we will always try new things, and sometimes they don’t work so you take a markdown, but we do not want to have up down pricing in our brands.
Max Rakhlenko: Got it. That’s very helpful. Thanks for the color. And so the big update, I think, is the new long-term EBIT margin outlook. So I’m just curious, what are you seeing now that gives you confidence to raise it? And then, as we think about post 2024, is that going to be more on gross margin or SG&A? Just curious where you see the big opportunities ahead to continue to march forward?
Jeff Howie: Yeah. Good morning, Max. I think the way we think about it is at the start of 2023, we established a 15% operating margin floor. And then year-end results, we delivered a 16.4% operating margin. And this year, we’re guiding 16.5% to 16.8%. So we remain confident in our operating margin durability, especially as we start to see our growth algorithm of mid- to high single-digit growth over the long term. So we’re pretty confident in that. And we think that as we get beyond 2024, we certainly have the upside to sustain the operating margins longer. In terms of the pieces of margin versus SG&A, we don’t — as you know, we don’t guide those particular in the line items, especially over the long term. But on the bottom line, we’ve established that we can deliver these results, and we remain confident in both for 2024 as well as the long term beyond that.
Max Rakhlenko: Great. Thanks a lot Jeff. Best regards everyone.
Operator: Your next question will come from the line of Peter Benedict with Baird. Please go ahead. Peter, your line might be unmute.
Jeff Howie: Peter, you there?
Peter Benedict: Yeah. That’s correct. It is unmuted. I apologize. Thank you for taking the question guys. So first one is just on kind of the supply chain environment. You guys have obviously been doing a great job on what you can control. I’m curious about the things that are maybe out of your control, some of the events going on, some of the costs on ocean freight. Just kind of remind us maybe where you sit there, how you may be baked some of that into the outlook here for ’24? That’s my first question.
Laura Alber: Sure. So our team, our supply chain team, I’d say, is just phenomenal, and they continue to show that through the results. Although things have normalized from the pandemic, we still have a lot of areas for improvement, which will result in margin upside. We want to continue to drive down returns and replacements and any issue that affects the customer. We want a perfect delivery. We want to take all the friction of that delivery. And so we’re seeing incredible numbers across the board, on all those metrics I mentioned in my script. When a problem comes along, they’re real, the Red Sea disruption is pretty terrible. However, it is not costing us any more money. So far, it is costing us about 10 days of delivery, give or take.
And as I mentioned last time, we padded the deliveries to our customers once we heard about it, so we didn’t disappoint them. And if we outperform and deliver faster, they’re always happier than if it’s late because they don’t — they can’t — most people don’t connect anything with these world events. And so we have to really manage our delivery quotes very quickly once we hear these things. That’s the most recent example. There is no doubt in my mind, Peter, that this year will be met with other things that we have to deal with. We tend to be very proactive about thinking about what those things could be to make sure that we’re ahead. And I guess the good news is if there is any — when these things happen, they affect everyone. And we’re usually able to get ahead of it and solve it better than most.
