Mary Dillon: Yeah. Thank you, Janine. I’d start with general view of the consumer, there certainly are a lot of different factors come here, people I think of any household income right, so persistent inflation higher interest rates, some reduced savings, student loan repayments. We have — our customer, 50% of our customers are under $50,000 or so household income. So, the monthly pressure is real, but having said that, what we’re seeing is people just all year being pretty discerning on how and when to spend being event-driven, things like back-to-school, things like Black Friday, Cyber Monday, but also seeing indication that there’s a lot of interest in demand and full key items that are full price as well. So, I would say that we’re — we feel that we’re in a good place in terms of our assortment and our promotions planned as we get through holidays and feel that, in fact, we’re actually seeing some indication that some of our customers are more willing to cut back on experiences in our category.
So, we’ll see how it plays out. I think it’s a little early to say that we’ve changed — have much impact on income cohort, but certainly our proposition appeals to people of all income levels. So — but we feel we’ve got a good handle on how our customer is feeling and also how they’re responding positively to what we’re offering.
Janine Stichter: Great. Thanks so much.
Operator: Thank you. The next question is from Lorraine Hutchinson with Bank of America. Please go ahead.
Lorraine Hutchinson: Thank you. Good morning. I wanted to focus on the NBA agreement, are there financial obligations that Foot Locker will have to cover that?
Frank Bracken: Yeah. Hi, Lorraine. This is Frank. Yeah, so it is a multi-year agreement, there are contractual obligations on both sides; one from, obviously, from a cash and media commitments standpoint on our side and in turn from the NBA the commitment and access to content creation to events and activations and to collaborations to bring really great compelling storytelling and consumer experiences. So, one of the tenets of our Lace Up plan behind Foot Locker is reaffirming our basketball leadership and we think that the brand Foot Locker and the NBA brands sort of go hand in — hand in glove, and so we’re very excited to reestablish that relationship, which has a 25-year history. I think it will be a very compelling proposition for our consumers, the outreach and the support we’ve already gotten from our brand partners has been terrific and you already see some of our activations here heading into the end of the year as we get into the holiday games and into All-Star Weekend in February of 2024.
So we’re very excited about this partnership.
Mary Dillon: Yeah. And I would only add that, a great part of the value of this partnership is media value. And so even just for example exposure to NBA’s Instagram followers, which is 84 million people, right. So it gives us an amazing platform to amplify the natural partnership between Foot Locker and NBA and we’re already seeing several positive traction.
Lorraine Hutchinson: Thank you. And then just to follow up, and you’ve got a lot of cost out over the past year or so as you think about SG&A next year and in the coming years, how do you see the trade-off between further cost cuts or building back some of these marketing and other buckets?
Mike Baughn: Yeah, Lorraine. This is Mike. So from a cost standpoint, I think we’ve highlighted that we think in total there is $350 million that we can take out and we’re still very confident that this year we’ll take out about 40% of that total. As we think about SG&A going forward, there is about two-thirds of that will be reinvested back into the business as we think through both technology and then marketing and brand building and items like that. So, I think as we get back end return to growth here, there’s an opportunity for us to continue to leverage SG&A and that’s how we’re thinking about it going forward.
Operator: Thank you. The next question is from Tom Nikic with Wedbush Securities. Please go ahead.
Mary Dillon: Tom, you might be on mute. Operator, we can take the next call. Operator, we can take the next question.
Operator: Yeah. And our next question today will come from Tom Nikic of Wedbush Securities. Please go ahead.
Tom Nikic: Hi. Can you hear me now?
Mary Dillon: We were waiting for you, thank you.
Tom Nikic: Sorry, I apologize for that [Multiple Speakers]
Mary N. Dillon: No worries.
Tom Nikic: Telephone service.
Mary Dillon: No worries.
Tom Nikic: I wanted to ask about the Nike relationship, and I know Mary at the Investor Day earlier this year you talked about reinvigorating that relationship, should we still think that you resume growth with Nike next year in 2024?
Mary Dillon: Thank you, Tom. Yeah, listen, our relationship with Nike is strong. And I’d say we’re very aligned on the areas that we can complement each other in the marketplace and drive growth. So, you’ve heard us talk about basketball, kids, and sneaker culture, especially with the young multicultural customer base that Foot Locker brings to the marketplace. So, Nike, as well as all of our brand partners, I think, appreciate the investment that we’re placing in the Lace Up plan, which is simply raising our game is a retailer in the ecosystem. So, we’re focused on leading with — focus on customer insights and how we can uniquely drive growth together, elevating the customer’s retail experience, and you’ve heard us talk about our store refreshes, power community doors all out-comping rest of the fleet, the third focus is elevating our digital and loyalty experiences and that of course which Frank just commented on investing in — investing in our brand and specifically our basketball leadership position.
So the NBA partnership, the Heart of Sneakers, Home Court, in fact, I think Nike like other brand partners was pleased to hear about our partnership and they immediately partnered with us to provide one of their premier NBA partners Kevin Durant for our Heart of Sneakers campaign. So that said — all of that said, we’re still in the midst of a reset year and together, we’re looking forward to 2024 and beyond stabilizing and returning to growth. We’re in the early planning stages and I’d say, we’ll be in a better position to get more specific as we report our fourth quarter results and talk about ’24 and beyond.
Tom Nikic: Great. Thank you very much, Mary, and best of luck for the rest of the holiday season.
Mary Dillon: Thank you.
Operator: Thank you. The next question is from Michael Binetti with Evercore ISI. Please go ahead.
