Jeff Shepherd: So the fourth quarter — there’s a couple of things that are going to drive this significantly. The first is the start-up costs associated with our footprint expansion, namely in California. We’re going to be lapping that. We’ve opened 37 stores here in the third quarter. We’ve got a robust agenda to open stores in the fourth quarter and get well within our range of about 125 to 150 stores. And that will help give us the leverage on the SG&A related to new stores. The other is really just we’re starting to lap the wage inflation that we saw in the fourth quarter. So on a year-over-year basis, that starts to even out and help us out on a year-over-year basis. So those are going to be the two primary drivers. Now keep in mind, fourth quarter is incredibly volatile.
And so we’re going to be managing our costs very, very closely, certainly our store labor costs. In addition to that, looking very closely at travel and any other discretionary costs that we really don’t think we need going into the last 12 weeks of the year here. So it’s going to be a combination of those that really give us the confidence that we’re going to leverage SG&A in the fourth quarter. Looking to 2023, we’ll give you more guidance as we work through our AOP in February, but we will be lapping a number of these costs and we’re going to take that into consideration as we put together our plan for next year.
Operator: Your next question is from the line of David Bellinger with MKM Partners.
David Bellinger : Just following up on that last one. So on the annual guidance, you lowered the EPS range about $0.30 at the midpoint. Based on your comments just now, so that the FX headwind was $0.20 in Q3, expected another $0.10 in Q4. So just absent the FX factor, is there anything else really changing in your fundamental view? Or should we just think about this guide down being all FX-driven and the underlying fundamentals Q3 to Q4 not really seeing any change?
Jeff Shepherd: Look, the short answer is yes. I mean, it’s entirely driven by the FX and that’s the $0.30 that you’ve called out, $0.20 in Q3 and $0.10 in Q4. Everything else is in line with the expectations and the guide that we put out in August, which is why we haven’t changed the rest of the P&L guide, if you will, for Q4.
David Bellinger : Got it. And then just my follow-up here. Any comment on sales trends through the quarter? And then implied in that Q4 guide, I think there’s a pretty wide range of outcomes there. You’d be slightly positive all the way down to negative 4% on the comps. So can you give us some indication of where trends are through mid-November? I know we’re hearing some overall softening in retail sales in recent weeks. Are you seeing any of that show up in your business?
Tom Greco : David, well, first of all, just to round out Q3, our strongest period of the quarter was the last period. So we saw improvement in the summer. We talked about making sure that we are removing these unprofitable discounts, that, that was going to have a bigger impact and would dissipate over time. So we expect that will happen. As we get into the fourth quarter, this is a highly volatile quarter. That’s really the origin of the guide. This is a very resilient industry. You’ve heard that from us before. We expect that the category will continue to grow at the rates that it has been growing. It’s been a robust year for the industry. We just need to be growing faster in Advance. That’s why we’re taking the actions that we’re taking.
So relative to what you’re hearing about in total retail, we’re not seeing that. I think that you’ll continue to see strength in the automotive aftermarket. The DIY segment performed well at the end of the quarter for us. So we feel like the industry performance will continue to be strong, with the caveat that the fourth quarter is our smallest of the year and it has the most volatility.
Operator: Your next question is from the line of Mike Montani with Evercore ISI.
Michael Montani : It’s Mike on for Greg Melich. Just wanted to ask if I could, first off, just for some additional color, if you could share it in terms of the comp trend for DIY versus Pro as well as ticket versus transaction count? And then I had a follow-up question.
Tom Greco : Sure. I’ll start with the channels. We basically said DIY, Pro were in line with each other, which would imply actually an acceleration of DIY for us in the quarter. And we’re actually pretty happy with what’s going on in DIY. We’re strengthening. Our expansion in the West has helped us there. We are gaining a lot of market share in our West market. We’re going to continue to focus on DIY. It’s a very important part of our business. DieHard continues to do well. So overall, we saw strengthening in DIY. Where we saw weakness relative to the second quarter was in Professional. And that’s why we’re taking the actions that we’re taking, targeted inventory investment, surgical pricing actions. So really DIY is getting — got stronger for us, Pro got weaker overall.
Ticket versus transaction, more of the same versus the second quarter, Mike. Our tickets were down in both Pro and DIY. And obviously, transactions continue to grow in terms of average ticket. So that’s the tail to take there.
