Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Jeff Klinefelter from Piper Jaffray.
Jeff Klinefelter - Piper Jaffray
Yes, thank you and congratulations on a great year-to-date everybody. My question is for Michael and John, both of you or how you want to split it up. Could you put a little bit more contacts to around the off-margins comments that you made. I think it’s important to appreciate how you not only sustain but expand those margins from the very high level of this year, may be something around comp trends activity or may be contrasting the business model today in terms of the efficiencies versus several years ago when you last had a prior peak op margins?
John Call
Sure, Jeff. Relative to the operating margin, clearly the strongest driver is then our ability to resist inventory levels, while still maintaining and excelling sales line. So, most of that operating margin year-to-date and also in the third quarter has been from that factor.
We’ve also maintained strict eye on expenses throughout the model, so as Mike had mentioned, we feel very good about where we are. We believe those levels are sustainable going forward. We do believe there’s still a bit more than to take inventories down, which should drive further improvement in operating margin.
Jeff Klinefelter - Piper Jaffray
John, can you also just comment maybe most specifically on Q4 when you are looking for a pretty material comp improvement, obviously, year-over-year? Where is the conservativism within your guidance and where would the potential upside come from? Is it purely just going to be comp over your guidance or are you also being cautious about reserving promotional dollars at this point?
John Call
As it relates to the fourth quarter, the five to six comp we have not change that guidance, obviously that there’s a lot for it to go. If we were to do better on the top line, clearly, the bottom line will comp. We believe we’ll be appropriately conservatively positioned to go ahead for the season.
As I mentioned in the prepared remarks, we are up again some headwinds that we haven’t had in other quarters. I mean that freight normalizes and our incentive plan will take away about 60-70 basis points on operating margin improvement and also we mentioned the shift in distribution center cost from the third quarter, which we believe is a positive as we are processing those unit's costs to needs. So the combination of those factors, are somewhat dampens our operating margin gains that we had in the past but we still believe that for the year we will deliver very, very meaningful earnings per share goal.
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