Tom Greco: Yeah. I think first, the important part is the cadence, the way we’re thinking about it, really break it into a first half, second half. We think inflation is going to continue to be elevated as we’re seeing today in the first half and then that’s going to come down over time. You saw Q4 sequentially improved slightly for us, at least on product cost inflation. And as that comes down, given that we’re now on LIFO, you incur those costs as we – as the inflation hits. So inflation is steady is what we saw in Q4, that’s going to be more impactful to our gross margin, as those costs continue to abate, you get that relief over the course of the year. So I think guidance – sorry, cadence is the biggest component to that.
And I think the biggest driver really is the product cost inflation. We’ve got inflationary estimates on the rest of the P&L, but wage inflation for example we think it will be fairly static. You’ll see that kind of variation that you’ll see in product cost inflation.
Brian Nagel: Perfect. This is a follow-up. So is it still the base case assumption that even as input costs moderate, that the pricing at your stores, the price in the consumer will largely stay the same?
Tom Greco: Yeah. We obviously look at that very closely. We want to make sure we stay competitive. We have assumptions around how much price we can maintain when costs come down. There’s obviously elasticity depending on the category that you’re seeing those costs deeply or inflate for that matter. So we look at that on a category-by-category basis. And we’re going to make sure we stay competitive as we see, hopefully, the cost structure start to improve.
Brian Nagel: I appreciate the color. Thank you.
Operator: Thank you. Our next question comes from David Bellinger from MKM Partners. David, your line is now open. Please go ahead.
David Bellinger: Hey, thanks for the question. And Tom, congrats on the announcement. Could you just help us contextualize the top line acceleration Q3 to Q4? How much of that is internal versus external? Or are we seeing the payback from these inventory investments already? And I don’t think you called out the shift to private label parts as a comp sales headwind. Was that still a sizable impact in the Q4 period?
Tom Greco: Hey. Good morning, David. Yeah, first of all, the acceleration in Q4 was largely DIY. We’re really happy with our DIY business in the fourth quarter. As you know, it’s a very profitable part of our business. We paid a lot of attention to it. We had a strong quarter on DieHard. We continue to build that brand. Our Speed Perks platform is really starting to generate some returns for us. We’ve added members, we’re graduating members. So our ability to drive DIY, and by the way, through e-commerce, our e-commerce business is now back in double-digit land again, which is really important for us over the long-term. So we think we can continue to grow that DIY business as we get into 2023. And obviously, that helps us on the margin front.
We didn’t get a lot of benefit on the Pro side in the fourth quarter from the investments. We’re going to do that in a very disciplined fashion. We’ve got a very robust plan to drive growth in Pro, and we want to do it the right way. And it’s done, as I say, very targeted inventory investments, very surgical price investments. And we’re confident that, that will drive growth in Pro as the year unfolds, but we didn’t see a lot of benefit from that in the fourth quarter.
Jeff Shepherd: Just on the owned brand mix, in particular, on the top line, that was a headwind, but consistent with the third quarter, it was a benefit to our gross margin rate. So relatively consistent with what we saw in the third quarter.
Tom Greco: Yeah. It’s kind of in our base now, David. That’s why we’re not calling it out as a specific headwind. It’s in our base now, so we’re going to continue to grow it from here. But it’s – the impact is less.
