Tom Kingsbury: As I mentioned earlier, we really feel with having a lot of the online-only promotions behind us as we go into 2024, we should see growth in the digital business. But other things we’re working, we’re working on the site — functionality of the site overall. We’re also working on other things behind the scenes to improve the customer experience overall. I don’t know if you want to weigh in at all on this, Jill.
Jill Timm: Yeah, I would agree with you. I think once we can get past lapping the big moves we’ve made, particularly on the online offers that we’ve eliminated and make everything omni, but even just the clarity of pricing, so we show up better in search. So, we continue to work on ways that we can show up better in search and, I think, not having the complicated pricing that we’ve had will definitely help us with those algorithms. We continue to work with technology in terms of what those algorithms look like, how we are using those search terms so we can be much more productive in driving productive traffic to our sites. I think the site experience, like I mentioned, search relevance, better recommendations, personalization will continue.
We have a leading loyalty program. We know a lot about our customers, so continuing to capitalize on that and bring a much more personalized experience to our website. And then just really using the product assortment and curating a much more assortment that’s personalized to you and what you’ve offered so we can give you better recommendations on what you’ve searched for, what you’ve bought in the past, et cetera. So, those are all things that are continuing to be in flight, but will help us really drive that productivity both from traffic and conversion. And I think those will play as we go into next year as well. But although it hasn’t been great, we have benefited each quarter. Our digital business has gotten smaller and smaller benefits through these efforts.
So, I think as we get through Q4, you’ll start seeing in the next year, it will not be as big of a headwind as what we experienced this year.
Gabby Carbone: Got it. Thank you so much.
Operator: Our next question comes from Matthew Boss with JPMorgan. Please go ahead.
Matthew Boss: Great. Thanks. So, Tom, as we think about your key outlined initiative, gifting, home, beauty and impulse, how best to think about these opportunities for holiday? And what do you see as the sweet spot for P&L results in 2024 as these initiatives scale just given the associated lead times?
Tom Kingsbury: So, obviously, for the fourth quarter, as I mentioned earlier, beauty is really key. I mean, that’s one of the obviously key businesses for holiday — for the holiday season and beyond, all elements of it, especially gift sets. Also our entire gifting business, I came in here, a year ago. The first thing I did was move gifting to the front of the store. It was in the back of the store. But we did it, like, mid-December. I mean, it was, like, very close to Christmas because, obviously, I started full time on December 2. So, by the time we got it organized, it was really close to Christmas, and we didn’t buy into it. I mean, we just pulled together what we had. This year, we bought into it as a strategy. We also removed the register bank, so that we had additional square footage in order to put gifting in the front of the store.
We’ve also expanded the presentation into some of the apparel areas and et cetera. So, hopefully, when you go into our stores, you see just a really, really strong presentation of gifting. So, that’s really key. It’s key not only — I mean, not only now, but obviously, as we get closer and closer to Christmas. So that’s really key impulse. It’s something that — impulse is something we’ve had a little bit of that, but this year, we have a lot more, but we’re just starting the impulse business to be honest with you. Right now, we have about 80 queuing lines set up in the company. For 2024, we’re expanding the queuing line presentations considerably, so that we have a more structured approach to impulse. We have a captain that’s going to help us run the impulse business, really looking at the assortments, make sure that they’re balanced overall.
You’re going to see it in — you’re going to see improvement obviously in the fourth quarter, but a big improvement as we go into 2024. So, the other things that we’re doing well in, again, if you go into our stores, we have a very strong presentation in holiday product, our St. Nicholas Square product, and it really hits you as you come into the store by the impactful presentation we have. So, to answer your question, it’s really — it’s all about beauty, it’s all about gifting, it’s all about impulse and growing categories, especially in the home that we’ve really — we’ve neglected over time and one of those is pet as well. I mean, we had a 40% increase in pet in the third quarter. So, feel good about that. So, I will let Jill talk about P&L.
Jill Timm: Yeah. I think, honestly, all these things are definitely going to be key drivers, but we’re not going to be talking a lot about 2024. Obviously, in the next call, we’ll give you guidance for that, Matt, but I hope from the message that you heard today, this is a build. We’re obviously repositioning the company, and we’re building in all these initiatives that are really just getting started. And we’ve seen success from gifting throughout the year. And obviously, we have a lot of that in front of us from the biggest holiday of the year as we speak, but we’ll continue to learn from that and take advantage of that as we move into next year. As Tom mentioned, we have 50% more Sephoras, so we’ll be able to take advantage of that not only from a gifting perspective, but the traffic, the new customers that it brings in, and those continue to comp incredibly well.
