Krisztina Katai: Great. And then just as my follow-up, just on the sequential improvement in the top line. Obviously, you’re guiding to a low-teens decrease in the third quarter and high-single-digits in the fourth quarter. So I was wondering if you can talk to one, is that generally in line with your quarter-to-date that you are seeing? Is that a fair assumption? And two, maybe just what would be the biggest variance in performance relative to the Second Quarter to get us to negative high single digits by the fourth quarter.
Jonathan Ramsden: Hey, Krisztina, I’ll give a little bit of color on that. Yes, I mean, as usual, we don’t give specific quarter-to-date comps, but our guidance for the quarter is reflective of what we’ve seen year-to-date. And obviously, in any given month, there are promotional cadence changes and so on that may have impacted that particular month relative to the quarter as a whole. But our guidance is consistent with what we’ve seen quarter-to-date. I think some of the things that are impacting the sequential change in Q2 to Q3 and Q1 are the abatement of the United Furniture headwind that we’ve talked about, which was fairly significant in Q1. We’re still there in Q2 and now it’s essentially gone. It was also, as you recall, the tax refund adverse impact in Q1, a little bit of that in Q2.
And then I think another significant factor is always the year-over-year promotional cadence. And again, we did have to clear through a lot of seasonal inventory in Q2, which gives us a little bit of a comp benefit but at a significant gross margin rate impact. So that effect is abating a little bit. So overall, we feel comfortable with that we’ll see some modest improvement in Q3 and then more significantly in Q4. Q4 is our easiest comparison on both a one-year and a multiyear basis. So that will help us then, but we’re also expecting more of a year-over-year — or less of year-over-year promo headwind in Q4 than we’ve seen in the earlier quarters.
Krisztina Katai: That’s great. Thank you and best of luck.
Jonathan Ramsden: Thank you, Krisztina.
Operator: The next question comes from the line of Daniel Silverstein with Credit Suisse. Please proceed with your question.
Daniel Silverstein: Hey, good morning. Thanks for taking our question. Just kind of similar to the last question, with respect to achieving a sequential improvement in comps in 2H, what do you guys have planned in terms of driving customer traffic and engagement in an environment where big ticket is still pressured anything beyond the family and friends sales events planned to get customers in front of the new product?
Bruce Thorn: Yes, I’ll take that one, Daniel. First off, we’re making great progress on our bargains penetration. And as you know, bargains are closeouts, anything off-price, things that we source from all over the world, Factordirect, distressed retailers distressed vendors and that amount of bargain penetration is up substantially going in the third quarter, nearly 30% of the assortment, and it’s resonating with our customers. It’s hard to move a value index with customers and to move it significantly like we did in Q2 gives us momentum and reasons to believe going into the back half. And keep in mind, when I joined the company back in late 2018, that penetration of bargains was high-single-digits and dropped to even lower than that during COVID.
So we’re making progress there. Now the key thing that we are doing going forward is communicating this unmistakable value better than ever before. So we’ve added comp ticket pricing in store, which, in many cases, takes the need to promo out of the equation. And I was looking at social influencers on YouTube and everything else, and they’re seeing this incredible value and it’s starting to — the word is starting to get out. Our bargain and caps have grown significantly, and this is high-quality products. So communicating more, increasing our messaging, both on dot-com, social influencers and our campaigns with Broyhill back and baby and pet and all these things are just going to drive that messaging even more so in the back half. In addition to that, the relevance of our stores, where they’re at, we haven’t flexed inventory and assortments and pricing as effectively as we should have in the past.
That all is changing as we enter into the back half of the year. We’re having up in the pantry areas where we know consumers shop the pantry for food and consumables, and that’s more needed now than ever and we’re upping our inventories with new freshness fear of missing out, accent furniture, new Broyhill collections, modern styles, all these things hitting the back half of the year and the fall in those rural areas that are underserved. We’re wrapping this all together and easy to shop omnichannel experience that where we have a lead against other off-price peers. And we’re investing in that infrastructure, we just redid the landing page. We treat it as an e-influence shopping experience where they can do everything online. We’ve got the ease of delivery, pickup in store financing all of that online.
And so we feel pretty good about where we are. A lot of new freshness, a lot of bargains penetration. Our goal is to be a third of bargain penetration in the assortment by the end of the year. We’re almost there now. And whereas we focus on that and bringing more bargains there, we’ll think that number will just go up, and we’ll get more aggressive about the messaging, so they know that we’re back as a value player.
Daniel Silverstein: Thanks. And just a follow-up on the higher bargain/closeout penetration. Is there a big product margin delta on those sales versus company average, let’s say?
Jonathan Ramsden: Yes. It’s a good question. Yes, the bargain penetration is margin accretive to the rest of the box, it’s [NDO] (ph) and requires less product markdowns, and that’s why it’s appealing to us and is resonating with the customer as well. It’s just an easy sell quality product at a great discount.
Daniel Silverstein: Thank you so much.
Jonathan Ramsden: Thank you.
Operator: Thank you. That does conclude today’s teleconference and webcast. A replay of this call will become available. You can access the replay until September 12 by dialing toll-free 877-660-6853 and enter replay confirmation 13740499 followed by the pound sign. The toll number is 201-612-7415 replay confirmation 13740499 followed by the pound sign. You may now disconnect and have a great day. Thank you for your participation.
