Ken Hicks: And as part of your first question also, we are continuing to fill out markets that we’ve been in Houston, Atlanta. We are adding on to adjacent markets like Panama City, Lexington and moving into new areas. We will continue to do that, we will do it in a more powerful way. But 1 of the things we’re seeing, these are all working and where the competition has done some of the things that they’re talking about. Our stores continue to do well. As Michael said, we believe in the big box and the biggest box is working.
Michael Mullican: Last thing, if I didn’t hit 100% of what we’re talking about is self-funded from cash from operations. I think that’s obvious, but 100% of what we’re talking about is self-funded from the cash that we generate.
Operator: Our next question comes from the line of Brian Nagel from Oppenheimer.
Brian Nagel: Congrats on the continued to reposition the business successfully. My question, I do want to focus on my first question, I’m just the back or backdrop or the sector backdrop. As you look at the operating environment for Academy, I guess, Q3 to Q4 and then what we’re seeing here in early ’23. Are dynamics from the consumer’s perspective or even competitively, are they getting more challenging for you? Or is it staying the same?
Ken Hicks: Brian, I think the consumer — our view of the industry is still very bullish. It’s a big industry that’s very fragmented depending on who you talk to, it’s well over could be and nobody has a significant share. So from that degree, it’s open. We are not, I believe, as discretionary as other parts of the discretionary business. The kids still going to play baseball. You’re still going to do your hobby of for camping. The families are still going to get together on the patio. Now you may not spend as much the kid may not get a Marriott, they may get a Louisville Slugger. You may buy a little less expensive fishing rod. That said, that’s where we fit in with our value because we trade from the opening price to where the enthusiast is and they can find what they need to afford managing through this.
That said, the consumer is challenged. And I think we’re going to see at least for the first part of this year, possibly a little bit longer. The consumer being challenged and having to make decisions. We think 1 of the decisions will be, I’m going to continue to support my interest in hobbies and I’m going to want to stay healthy. And I’m going to make sure that I look for value, and we provide both of those things.
Michael Mullican: And Brian, back to my earlier point, the businesses that we had that frankly were softer than we thought were demand challenged not share challenge. And I think your question about competition, we have great competition. We respect and they do a good job. But one of the things that’s happened over the past 3 years is there’s greater segmentation in our channel. And so I think our lane is more clearly defined and it’s a little bit wider than it was a few years ago.
Steve Lawrence: Yes. I just wanted to add a couple of points around Ken’s comment around value. I think that’s one of the things that gives us confidence even if the economies continues to be a little bumpy. We know customers even if they stop traveling will mean at home. A lot of the categories we carry certainly service that. But when you think about our position of the die provider in the space, we definitely think there’s also an opportunity for customers to trade down to us. We’ve been really focused on making sure that all these key items that we have that the value we’re holding price on, in some cases, we rolled back price on some items. We’ve talked about offering value to expanded promotions. So that’s certainly embedded in what happened in Q4 and what we’re doing going forward because we’re being more thoughtful about that.
And then even clearance, clearance is the way we deliver value. And that’s something that we’ve gotten a lot smarter about how we manage and use those traffic drivers during certain time periods. So we actually feel like even if the economy continues to be a little bumpy, that we’re well positioned in terms of the categories we carry, the diverse nature of them and the value that we provide that we will do fine.
Brian Nagel: That’s all very helpful. If I can just follow up with 1 also just relatively bigger pit your question. So a lot of talk with your broader space about bloated inventories at manufacturers at retailers in a lot of these have started to work out and they remain elevated and then result in price promotion. So from an academy’s perspective, I guess how do you see this dynamic? And is this a challenge for — broadly speaking, is this a challenge for you? Or is it more of an opportunity?
Steve Lawrence: Yes. I mean I would start with — I think we’ve done a really good job of managing our inventory. That’s one of the things I think has kind of been a hallmark over the past year of how we’ve managed through this. Our inventory was up 9.5% at the end of the quarter. That was up 16.7% versus where we were in ’19. But if you look at it on a unit basis, it was down 7%, and that’s with 9 more stores. And at the same time, our sales were up 33%. So we feel like our inventory is back in stock across most categories. We feel like it’s well positioned for spring. I mean certainly, we’ve seen some more clearance elevated clearance activity out there and some increased promotions and we tried to address that. But we haven’t seen that really create into our business or impact us as much.
Operator: Our next question comes from the line of Daniel Imbro from Stephens Inc.
Daniel Imbro : Michael, I want to start on the SG&A side. Maybe stepping back from this year, that was helpful color on what’s going to drive the deleverage. But I think about — you guys have mentioned your ability to still drive down SG&A per store over the recent quarters. And so I guess, taking out the tech investments, are you looking at a same-store SG&A level. Where are we in the journey of profit improvement per store and SG&A improvement per store as you look at the assets today?
Michael Mullican: With respect to the work that the stores are doing, I tell you, I tip my cap to them, they’ve done a great job really managing tasks out of the stores that don’t add a lot of value to the customer. And so we’ve been able to give labor to the customer customer-facing hours while taking hours out of the store on an overall basis. I think that there’s always things you can do, but for the most part, that journey is over with where we will have some additional improvement is probably through the supply chain. There will be some benefit there. But overall, I think the most of that work with respect to stores, that’s — I think that’s the read of its maturity curve.
Ken Hicks: Yes. We do — are doing some things with labor scheduling. We put in a new system this past year, and that has helped us get more of the labor at the right time in the right places. But the stores have done a great job that the supply chain, we are just early in the journey there.
Daniel Imbro : Great. That dovetails well to the next question follows going to be thinking about some of these supply chain initiatives you guys have talked about, I think, a warehouse management software, a multi-store delivery on the actual store delivery side. I thought the time that you communicated was to get rolled out later in ’23, and we see some benefit this year, but more into ’24. I guess, one, would that still be your timing expectation? And then two, any way to help size up kind of the gross margin benefit that we could see from some of these investments as you think about the out years and what that could look like?
Michael Mullican: We’ll talk more about the long-term benefits in our Investor Day. But for this year, we will not get a benefit from the warehouse management systems we’ll be putting it in the very tail end of the year. We’re beginning to put it at the end of the year. The benefits that we’re going to have in the supply chain are really coming on the import freight side from lower container costs. So a lot more to come for the next several years after this year with the supply chain. There’s a lot more that we can do in approval.
Ken Hicks: Systematically, we’re doing some things like the warehouse management system we put in place this past year a trailer yard management system. We are doing some operational improvements, high-capacity racking and things that we will see some small benefits early on with the larger benefits, things like you talked about, about multi-store trucking and things like that, that’s going to be occurring over the next couple or 3 years. And but we are — we’re seeing the industry-wide benefit of lower freight costs over this year.
Operator: Our next question comes from the line of Seth Basham from Wedbush Securities.
