Steve Lawrence: Yes. I think what I would tell you is this business is a cyclical business. It always has been, and it is sometimes driven by external events and impacted by those, maybe more so some of the other businesses we had. What we shared with you in the last call, which we also believe we’re seeing right now is what gives us confidence that it’s starting to kind of level out a little bit is that the volume is becoming fairly predictable on a weekly basis. If you go back, there were huge spikes in the last year, driven by external events. And as we got through this year, ammo on a weekly basis has settled into a pretty normal cadence. The firearms business has settled into a pretty normal cadence. So really, the negative comps we’re experiencing wasn’t as much about the fluctuation in this year’s business as in the fluctuation in last year’s business.
As we get into Q4 and beyond, that starts to level out quite a bit, and that’s what gives us confidence that it’s stabilizing. That being said, it’s going to have ups and downs, right? It’s like any business that’s driven by some external factors, but the kind of the noise in the last year is starting to die down a little bit.
Christopher Horvers: Got it. Have a great holiday and Christmas season. Thanks.
Steve Lawrence: Thank you.
Operator: Our next question is from Oliver Wintermantel with Evercore ISI. Please proceed with your question.
Oliver Wintermantel: Yeah. Thanks and good morning. I had a question — you mentioned the new markets and legacy markets in your prepared remarks. Could you maybe a little bit expand on what you learned there about the cadence of when you’re opening the stores until maturity? And then, maybe add a little bit on four-wall EBITDA? Thank you.
Steve Lawrence: Yeah. I’ll tackle the first part. I’ll let Carl tackle the second. So we’re now two years into our new store openings. We opened up nine stores last year, 14 this year. I would tell you, last year, a lot of the stores were weighted more heavily to new markets, and we tested a lot of different ideas. We were testing how do we do in a more urban, dense population versus a more suburban population. We were testing some different new markets. This year, we applied a lot of those learnings that we had from last year to this year’s new stores. When you look at the two years of vintages that we’re seeing, and we called this out on the call, the stores that are within kind of our core geography or footprint, where we’ve had existing stores for a while, get off to a much faster start, and they’re beating or surpassing the plans that we put out there.
On the flip side, as we go into a newer market, maybe in the Northern Midwest, in Indiana or maybe even Illinois, starting out a little bit slower. But when we go back and we look at historical ramps, and one of the things that’s also a little tricky is some of the new stores opened from ’15 and prior have some effect of the pandemic in them, right, in the later years. So we’re trying to go back and look at ramps before that to see what that curve looks like. You’re seeing those probably have a slower ramp. And so, we wanted to call that out just to give you guys some color around that. And certainly, as we get into 2024 and give guidance, we’ll give you, hopefully, a better idea of how we’re seeing these new stores ramp and give you a little better guidance around that.
Carl Ford: Yeah. And I’ll take the EBITDA. I think, similar to what Steve talked about, within our markets where there’s high brand awareness, EBITDA rates are higher even in year one versus in other markets where the brand awareness isn’t as high. We’ve had to invest a little bit more from a marketing perspective for that local customer to get to know us. The things that we talked about, positive EBITDA as a cohort in year one, we saw that still committed to a ROIC hurdle of 20%, learned a lot coming out with FY ’22. I’ll just reiterate some of the commentary that we talked about, tested a lot of new things, went into two new states, did our first retrofits as a company. We’ve done build-to-suits historically for as long — even before Steve and I were here. Tried some new things, learned a lot. Feel like the FY ’23 are benefiting from those learnings. And we’ll update you more in March.
Steve Lawrence: Yeah. To Carl’s point, one of the things I left out at the end is we’re actually seeing the ’23 vintage get off to a faster cycling point too because we applied those learnings. So what’s really interesting is some of these newer markets, actually over Black Friday, were some of our best markets. So, that gives us a lot of confidence that people are trying the brand who maybe hadn’t tried it before, and that is starting to break through a little bit.
Oliver Wintermantel: Thanks for all the color. I just had one follow-up. There was a previous question about the reduction in CapEx to $175 million to $225 million. It looks like the cadence of store openings in the fourth quarter stays the same. Is that CapEx reduction — are you signaling something about next year’s store openings cadence?
Carl Ford: No, not at all. This has more to do with when we revised our guidance, any discretionary expense we pulled out, any discretionary capital we pulled out, we’ve been efficient. I’m going to reiterate our commitment to those four kind of initiatives that we talked about. From a new stores, omnichannel, customer data, supply chain standpoint, there’s been — none of that CapEx pull-down has anything to do with that. It’s just we’re getting closer towards the end of the year. I’m willing to refine kind of our guidance range, just like we did on the top line and EPS. It’s just coming in at a little bit lower.
Oliver Wintermantel: Perfect. Thanks for the clarification. Thank you.
Carl Ford: Thank you.
Operator: Our next question comes from Daniel Imbro with Stephens. Please proceed with your question.
Joe Enderlin: Hey, guys. This is Joe Enderlin on for Daniel. Thanks for the taking the question. Just kind of piggybacking on the last question there, could you give any additional color on what early learnings you’re taking from the 2022 vintage to the 2023 one that you think are driving the most improvement within those stores?
Steve Lawrence: Yeah. I would say there’s several. Carl hit on one. We went in with a marketing plan in terms of how we’re looking at the new stores that were both in heritage and new markets. And there’s probably more distortion that we need to make. We probably can spend a little bit less in the heritage markets, a little bit more in the new markets to drive a little more brand awareness. The last two vintages have been more back half loaded. We’re seeing stronger performance in stores that open up in spring. So we think moving more into the first half of the year is the right thing to do. So you’re going to see us start slowly moving to have a better balance across the years, having a better balance between new markets and existing markets, having a better improved localization strategy.
