Michael Mullican: Okay. First, welcome back. Good to have you on the call again. I want to tell you that look, Steve answered that 1 pretty well. I don’t have a lot to add. Merchandise margins have been the hero as we continue to harvest the fruit from the initiatives and the groundwork we laid many, many years ago and continue to do that. One thing that I would say, shrink has been a little higher than planned. There has been a lot of organized crime in retail. We’re experiencing that along with everybody else. We’re working with our law enforcement partners who are great partners in part because they really like the stuff that we sell and they love to shop in our stores. So we think that we have an opportunity to improve that going forward. As far as the long-term algorithm, I’d stick with what you have and largely because we want to preserve flexibility if we need to become more promotional. We want to preserve that flexibility.
Kenneth Hicks: Two adds, Kate. One is, we want to continue our value proposition. And so we do not want to forfeit growth for margins. So we will work to maintain that value proposition that we’ve worked very hard to get and the customer views us within the market. The other thing, I think, that is different when we talk about promotions, I think one, we talk about seeing more, but it is more rational and thoughtful for a couple of reasons. One, the people are in a better position and can afford to be more thoughtful about the promotions they had and had the ones back in that make the most sense to drive traffic. And two, the vendors — what the vendors have done, some of the key vendors have done over the past several years.
And it’s not just in apparel, but it’s in other places and how they’ve cut back on their distribution and our positioning as a favored retailer for them have helped to maintain some of the sensibility in the market and also support some of the margin improvements that we’ve seen in addition to the operational and process improvements that we put in place.
Michael Mullican: One more thing to add, just as a reminder, we are just embarking on a multiyear initiative to improve the efficiency and the effectiveness of our supply chain. And that work is really getting underway. And so I think from a market perspective, hopefully, the environment normalizes from a logistics and a supply chain perspective. But we have things to work on and our into that should provide a margin benefit in the out years. But I think for now, you’ve got a good number to work with that we’ve provided in the past, and I think that’s a good 1 to run with.
Kate Fitzsimons: Great. I’ll let others kick it up in the queue, but happy holidays.
Operator: Our next question comes from the line of Robby Ohmes with Bank of America.
Robert Ohmes: Just a couple of quick follow-ups. Just on the guidance, how are you thinking about transaction expectations in the fourth quarter kind of similar to the third quarter? And is some of the confidence as you just — with hunting, not being less of a drag in the third quarter helps the visibility in the fourth quarter. And the kind of follow-up question, which you’ve somewhat answered, but just the — you guys see promotions potentially coming back on and transactions have been down. That usually is a hard environment to get gross margins up or flat versus all-time highs. What’s the risk of promotions come back on and you’re not able to maintain the sort of gross margin expectations you guys have put out there?
Kenneth Hicks: Yes, I’ll start and then let Steve pick up on the second part. Our transactions have been off. And the part of it is what’s happening in the consumer environment. But part of it is also — and it’s actually a significant part of actions that we took last year, as we said there were limitations on ammunition. And while we sold a lot, we had limits on how many people could buy and we had a lot of customers coming in multiple times in a day and literally lining up coming in every day. And we aren’t seeing that now because we’ve taken those limits off, and that makes the transaction number a little bit more difficult to read year-to-year because we had created some artificial high transaction levels because of those limits that we’ve put on, and we no longer have those.
Steven Lawrence: Yes. And to the point on promotions, I think Ken was alluding to it. When you go back and you look at some of the promotions that we used to run pre the current management team being here. I mean they were, in some cases, irrational promotions. And I think you’ve heard us talk about those over time where we’d be selling something like a big bulky item like a trampoline close to cost and then on top of that, providing free shipping. And they just — they didn’t make a lot of sense. And so I think 1 of the things that’s happened over the past couple of years is not only for us but for the whole industry, is the promotional landscape has kind of been benign, it’s allowed us to kind of clear the decks and it’s really allowed us to be thoughtful about where and when and how we’re layering in those promotions.
You also have a lot of the vendors out there having much better control over their maps. So I think that kind of keeps them in check. So I think it’s the combination of us having rational promotions that we’re not up against that we don’t feel compelled to anniversary that drove top line but maybe not bottom line, coupled with a better controlled distribution out there. I think those 2 things allow us to know that we’re going to see more promotions certainly this year than we did last year, but that we’re still going to be able to hold on a majority of the margin gains.
Robert Ohmes: And just a quick follow-up. In the average transaction size, are you seeing more items per basket? Or are you seeing bigger ticket purchases. And is there any — have the vendors raised price on somewhat like items? So you’re seeing inflation in certain categories like fleece or things like that, that are supporting same-store sales?
Michael Mullican: Robby, I would just say that we generally don’t give the basket detail. I’ll give you a little bit of color. Last year, if you remember, we were up against a tremendous surge in demand for ammunition and that drove a lot of units. And so there’s a little bit of noise kind of internally, but that will provide you a little color about our basket.
Steven Lawrence: And we are seeing some AUR increases just based off of cost increases that we’ve seen out there.
Operator: Our next question comes from the line of Anthony Chukumba with Loop Capital Markets. .
Anthony Chukumba: I’m glad to hear my equipment is working. I try to get into an earlier call, they didn’t take my question. So I thought maybe there was a problem on my end. Anyway, either here nor there. Yes. So I had a question actually about your new store openings. I know it’s fairly early, but these other first new stores you’ve opened in quite some time. And so just wanted to see if you — any early reads on how those stores are performing relative to your expectations?
