So, we still think that the best is to come in terms of continued margin upside from AUC. And the discounting, we have started with women’s and like women’s is where we have seen the most progress as we expand that thinking there to other categories, we see that we will be able to continue that momentum as well. And it’s the story as best, Dana, we stayed with it pretty consistently since I took over absolutely committed to it. I believe we will get this done. And this is a really great margin story that we have in Lands’ End at the moment and really a re-elevation of our product. And then, Dana, I will just add for the inventories for perspective that you can use pre-pandemic levels as a guide to what our future levels will be and the timing of the inventory levels.
And then you also received benefit as you have saw are in the announcement that we also have announced a number of license with kids, our licensing arrangements will also have a benefit to reducing our inventories.
Dana Telsey: Got it. Thank you very much.
Andrew McLean: Thanks. You bet.
Operator: Thank you. Our next question will come from Alex Fuhrman with Craig-Hallum Capital Group. Please go ahead.
Alex Fuhrman: Hey guys. Thanks very much for taking my question. So, clearly, the focus on prioritizing profitability over revenue is producing some nice results here. I am curious how much more room you think there is to pull back on unprofitable sales? Could there be another leg down of revenue as you identify more promotions or clearance activity that you want to pull back on? And then looking out over the next couple of years, as you add more high-margin revenue, presumably from growing the licensing business, can you continue to grow EBITDA without necessarily a big increase in revenue? Can this be a $100 million EBITDA business on the current $1.5 billion revenue base as you start to grow some of those other areas like licensing?
Bernie McCracken: Yes. Alex, I am not sure you have been sitting in some of our strategy meetings. But yes, I think what really is important for us when we talk about licensing, that’s one of the strategies that will reduce our current sales. When we get out of the products, we are not as focused on and we don’t have authority on. We will be able to drive without a top line, we will be able to drive a better profit, a better net income number from a licensing arrangement than selling a lot of product at clearance that we tended to do in the past. So, I think you would definitely hit on that we expect to be able to drive up $1 million of EBIT, $1.5 billion revenue company.
Andrew McLean: And we can say that, Alex, it’s like as we look further out, there is a point where we have the customer reeducated. That’s what’s happening right now. I mean that we have customer deciles and our lowest decile is the one that we have probably averaged the most customers, they love the brand, they are committed to the brand. You know what customers come then they stay with Lands’ End ‘17, ‘18, ‘19 years. What they are not – what they are struggling most to respond to is that they traditionally uses a little bit like a such option, which is like they put product in their basket and they wait and talk they get the price they want, and then they will buy it. We are moving towards customers who will buy the product narrow or it won’t be there.
We are not going to discount our product. We are going to spend on our brands. We are going to stand on what we believe are the key attributes of the Lands’ End solution company that we have built and we are going to drive that. And I think what you will see, and we are seeing ourselves in our internal discussions is we are shifting from – sorry, all simple decile based model that looks at our customers the same and we are moving to more thoughtful psychographic model that looks at customers in cohorts and the two cohorts that we have identified are resolvers and evolvers. And it would be fair to say that we have used the fourth quarter to start repositioning some of the thinking around them and how we go to market to them, how we sell to them more uniquely versus more generically and how we attract them, part of what we have been doing in Q4 and part of what we use Black Friday and Cyber Monday for us to go out and find new customers, new customers that we like, which is why – and I know with just some throwaway comments in the script, but it’s why we talk so much about social media.
We really like the customer we are finding from that. They fit our revolver platform, and it’s like they are much less inclined to buy at a discount. So, we are doing the hard work right now, the commitments you are getting from me, the commitments you are getting from this management team is that we are going to deliver gross margin comps in dollars. This isn’t just about getting rate and declaring victory. We understand, so we are here to drive EBITDA and ultimately, earnings per share. And it’s like we are fairly focused on that. So, we are constantly evaluating that and threading that need every day, be that Black Friday, Cyber Monday or just like Casual Tuesday in January.
Alex Fuhrman: Okay. That’s really helpful. Thank you. I appreciate your insights, and congratulations again on the strong third quarter results.
Andrew McLean: Thank you.
Operator: Thank you. This does conclude today’s Lands’ End third quarter earnings call. You may all disconnect at this time and have a wonderful day.
