Kate McShane: If I could just ask a quick follow-up on the promotions. I know there’s been a lot of vendor support for promotions over the last year or so. Are you expecting the same level of vendor support in ’24, is what you saw in ’23?
Steve Lawrence: Yes. I mean, obviously we have really strong partnerships with our vendors. I don’t see any reason why they wouldn’t support us to the degree that they’ve supported us in ’23 and beyond. I think that candidly we’re seeing more vendor support on a multitude of fronts, not just obviously margin of price support, but on marketing and other initiatives, because they look at us as a growth partner. And that means we’re getting access to more products, newer products, more innovative products. It means better support on the marketing front. So, we actually see our vendor support growing in the future, not declining or maintaining.
Kate McShane: Thank you.
Steve Lawrence: Thank you.
Operator: Our next question is from Greg Melich with Evercore ISI. Please proceed with your question.
Greg Melich: Hi, thanks. Maybe just to help us on the, what’s driving the growth of that inflection you talked about, Steve. In the fourth quarter, ticket was still positive and transactions running down 5. If you look at the guide this year, would you expect all the improvement to be on transactions and transaction growth if we get back to a zero comp, actually being positive this year?
Carl Ford: Yes. I’ll take it, Greg. This is Carl embedded within the ’24 guidance. If you just kind of look at the midpoint, how we see it, is tickets lightly up and traffic slightly down. We’re very aware that the consumer is challenged. We’re going to monitor it throughout the year. But at the midpoint, that’s how we would model it.
Greg Melich: And in terms of a progression, just given how it sounds like it’s the first quarter would be the weakest and then we’ll get slowly better over time or do the comparisons get harder by the end of the year given how December was strong?
Steve Lawrence: I think you stated it correctly the first way you said it, the way we see the quarter progressing or the year progressing is, and obviously customers still under pressure. That didn’t change as we turn the page 2024. So we think that’s going to continue into the first part of 2024. So we do expect Q1, to be the softest quarter. And that’s how we model it. We expect Q2 to build upon that. We expect the back half of the year to be better than the first half of the year.
Greg Melich: Got it. And just to clarify that the SG&A now including the stock comp and thanks for that. It’s nice to make it clean. Is that 100 bps increase that you flagged? Is that a new run rate that we should think of in terms of stock-based comp, or was there something about this year that sort of steps it up versus last year?
Carl Ford: No, I think the $30 million is spare to use going forward. But I do want to kind of speak to what’s embedded within FY ’24 in the holistic SG&A. It’s about at the midpoint it’s about 100 basis points of deleverage and expense. And I want to take you back to our long range plan, where we said we anticipate 200 basis points of expense deleverage offset, by about 150 basis points of supply chain and overall like gross margin benefits, which is inclusive of private brands and what not. So the deleverage that we’re seeing is from a dollar perspective what we anticipated. What is causing the, deleverage from a rate perspective is running a negative 6.5% comp. To Steve’s earlier point and I think it’s been very well discussed in the retail industry this year, the consumers under pressure.
So that is what we are experiencing. That does not make us second guess these strategies that we’re building this long range plan on. We’re going to continue to open stores. We’re going to continue to invest in omni-channel. We’re going to continue to invest in customer data and supply chain. But specific to stock compensation, $30 million in the next year is a fine run rate to think about. But we’ll obviously update you year-by-year.
Greg Melich: That’s great. Thanks and good luck.
Steve Lawrence: Thanks. Appreciate it.
Operator: Our next question is from Chris Horvers with JPMorgan. Please proceed with your question.
Chris Horvers: Thanks and good morning guys. So a couple follow-ups there. So first on the comp, do you expect the first quarter to be within the range of the year and sort of, are you essentially expecting 1Q look like the quarter to-date trend? And then as you think about it, can you talk about like the gross margin puts and takes you mentioned rolling out WMS over the next 18 months, you talked about some efficiencies that the new head of supply chain is seeing. How are you thinking about the gross margin good guys in 2024, and what are the offsets?
Steve Lawrence: Yes so, we’ll probably tag this one. In terms of the comp progression I think it plays out exactly as I said before, where we see the first quarter being the weakest. You know it’s certainly we’re coming out of Q4 last year, with the down 3-6 trend. If you look at – one of our guidance it’s negative forward, which is basically in line with that. And then as you progress forward through the year we expect the Q2 to be better and then obviously the fall will be better than that. So you can kind of model it based off of that feedback. In terms of margin puts and takes you know there’s several right and Carl’s got a long list here. A couple I just hit on is, private brand continues to be a tailwind for us. They’re mixing into a higher margin mix and private brand is a big tailwind for us.
