David Aufderhaar: Thank you.
Matt Baer: Thank you.
Operator: Thank you. Our next question comes from the line of Trevor Young of Barclays.
Trevor Young: Great. Thanks. Just back to the full-year guide for kind of core US. What are you baking in terms of underlying assumptions in terms of like the macro environment, impact from student loan repayments starting back up and continued competitive pressure given higher levels of discounting at peers are at retail? Just any color on kind of what’s your kind of broader macro outlook is? And then just more of a housekeeping one. Appreciate the color on UK revs being able to back that out, but any directional commentary on what average revenue was for those customers so we can kind of contemplate that in our models as well.
Matt Baer: All right. Hi, Trevor. I appreciate the questions. This is Matt. I’ll speak at a high level to — how we’re thinking about the macro environment and our competitive positioning around discounting. David can share additional perspective on that as well as try to answer your question around the UK. So in terms of the macro environment, I think that there is ample reason to take a cautious view of the US consumer. They remain under pressure. Energy prices are rising. Interest rates are at the highest levels in recent years. Student loan payments resume next month and there is a continued drawdown in consumer savings. And you already know all of that and also all of those factors are outside of our control. So for myself and the team, what we’re focused on are the factors that are within our control.
So do we have the right assortment? Are we priced intelligently? Are we acquiring high lifetime value potential clients? Is our brand resonating with the target market? And are we fostering deep enduring relationships with our clients? And I think also with our service, we have that privilege of being delivered in the customer — customers’ homes when the macro environment is both a headwind and a tailwind. So during tough times, when discretionary spend is constrained or when a customer is reducing trips to the mall or resisted opening that addictive shopping app on their phone, we’re still being delivered to our loyal clients’ homes and our focus remains on that experience. Our focus is on winning that wallet share upfront and we also have that awesome advantage of owning a direct relationship with every single client.
So the client’s budget is stretched, they can share that with their stylist and then we can adjust the assortment we send to ensure that we meet their current needs. So as I think about it, no matter what the macro environment is, we remain focused on serving our clients each of them individually. In terms of discounting, I think we also have a competitive advantage when it comes to discounting. As we continue to mix more and more into our private brands and we see great adoption of those brands with our clients, we don’t have to worry about any price pressures in terms of price-checking from consumers. And also we have the luxury of already having that product into a customer’s home and as they’re thinking about the assortment, whether they keep it or not, we have that aided advantage of where they’re not actively price-checking that assortment as well and it gives us a unique advantage to be much more of a full-price retailer.
Now, of course, at times we don’t meet the sell-through targets that we want to on the inventory that we’ve acquired and we’re also really investing in and getting smarter about our price pricing intelligence to ensure that we have the right markdown cadence in order to drive the right sell-through and the right keep rates as our inventory ages, as well as continuing to test and learn and become better at using our Freestyle channel in order to move inventory that isn’t hitting our sell-through targets. So I do feel really good overall about our ability to compete in a tough macro environment as well as our ability to compete against retailers that might be more heavily discounting than we are.
David Aufderhaar: And then, Trevor, on your specific question around the UK. Yeah, there is definitely a reconciliation in the press release as well to give you the top line as well as gross profit and SG&A to help you sort of back those numbers out of the models. From an active client standpoint, the UK represented about approximately 180,000 clients and so you can back into our pack with that to be able to back that out of the models.
Trevor Young: Okay, great. Thanks, Matt. Thanks, David.
Matt Baer: Thank you.
David Aufderhaar: Thanks.
Operator: Thank you. Please standby for our next question. Our next question comes from the line of Blake Anderson of Jefferies.
Blake Anderson: Hi, guys. Thanks for taking my question. I had two. Wanted to first ask on just if you could provide any more color on the trajectory of the year in terms of sales and margins. It seems like Q2 through Q4 EBITDA seems like it’s around break even after Q1 so just wondering kind of the puts and takes on profitability for the back half of the year, the last three quarters versus the first quarter. And then second question was just curious if you could talk at all about kind of your return rates. How many of your customers on the fixed business are keeping boxes? How many items are they keeping? Wondering if you could share any color on how those KPIs are trending. Thank you.
