As a reminder, we are still not back to our pre-pandemic levels of in-stock, but we’re pretty darn close.
Max Rakhlenko: Got it. That’s helpful. And then you guys touched on delivery times improving a few times throughout the prepared remarks. So, can you speak to what your average delivery times are now in the markets where you’ve got the megas? And then how much more room do you have to improve? And then just the cadence we should think about in order to get there?
Phil Daniele: Yes. Yes, just delivery times can be wildly different depending on proximity of the part and how close that shop may be to a given store or a hub or mega hub. And the delivery times on mega hub inventory or what we call expanded parts can differ wildly if it has to be relayed through a store or delivered directly. Our average delivery times, you’re kind of thinking in that 30-minute range. So, a 10% improvement in delivery times is pretty meaningful, but it may be 3 to 5 minutes, and that matters when a customer is sitting there trying to turn their bay. So we believe we’ll continue to leverage and improve our delivery times. And that’s a key strategy for us because it’s a measure of customer service.
Operator: Your next question is coming from Chris Horvers from JPMorgan.
Chris Horvers: Congratulations to everybody. So I wanted to follow up on the question more broadly about the consumer. You talked about some of the tire businesses remaining weak. You talked about some discretionary front-room pressure in DIY. I guess, how much of this do you think is just a deferral that’s building that you typically see as a category and as you start to see the slowdown in the consumer front, consumer starts to defer? Are you seeing evidence of that? And do you think we’re still in the point of that sort of getting worse before ultimately that demand potentially releases?
Bill Rhodes: That’s a terrific question, Chris. Let’s step back and talk about this on a long-term basis first. If you think about the retail business, which we have much more experience in the retail business and you think about it over long periods of time, we don’t spend a lot of time talking about the strength of the consumer, much more so when tough times happen, i.e., recessions, those have been the periods where we’ve outperformed more so than any other periods of time. So, we don’t spend a whole lot of time on the consumer. We certainly see in the retail business, there’s some trading down going down the good, better, best product assortments. I think in the commercial side, we have suppositions that we haven’t yet proven because we haven’t been in that business at this level for an extended period of time.
I believe we think that there may be some consumers that are trading from DIFM into DIY in certain jobs as they’re trying to save money. The thing I would encourage us all to focus on more so than minor fluctuations in consumer sentiment. As we enter the second quarter, the one thing I always worry about is the weather patterns in the second quarter are extremely volatile, and they can have big impacts on our performance, both positive and negative. And as we’ve said, those impacts of the weather, particularly in the Rust Belt, can have ongoing implications as we get into the spring and summer and even the fall months. If we get significant snow and ice, particularly in the Rust Belt in the Northeast, that bodes well for us. If we don’t, then we’re going to have a little bit of a challenge.
To me, that is the more impactful thing that’s going to happen in the near term than consumer sentiment.
Chris Horvers: And so as a follow-up to that, I think last year, December was pretty good in terms of the weather impact, right? So, it would seem like as you look past today, the comparison gets tough, but it was a record warm winter last year. So, I guess, as you look into your crystal ball, do you think there’s sort of — ends up being a bit of a weaker start and stronger finish to the second quarter?
Bill Rhodes: Yes. It’s interesting, Chris, because the beginning of the quarter last year, there was no weather. We had significant weather around the holidays for a couple of weeks and thought, okay, here we go on, our business responded really, really well. And then the January, February, into March, particularly in the Rust Belt, it was lack of snow and ice and fairly moderate temperatures. Unfortunately, we don’t have a meteorologist on staff either. And at the end of the day, we’re running this business for not quarters, not years, but for decades. And the weather implications, they’re going to even out. I just always try to make sure and caution everybody at the beginning of the second quarter that we could have really strong performance and we can have really weak performances driven by weather, and that doesn’t need to change how we approach our strategy over the long term.
Operator: Your next question is coming from Seth Sigman from Barclays.
Seth Sigman: I wanted to follow up on commercial. It seems like you’ve really accelerated the rollout of new programs over the last few quarters, obviously, at a time when sales growth on a comp basis has been lower. So, can you just help us better understand what driving that decision right now, particularly as we think about your comment around in-stock levels improving, but not necessarily where you want it to be. So, how do we think about that thought process around accelerating right now?
Phil Daniele: Yes. That’s a great question. If you — and I even mentioned it in the prepared remarks, if we go back to when I was SVP of Commercial, the facts are, our per store performance has improved on a per store basis, the productivity of those individual stores. Looking back over a decade’s worth of time, we went through this phase where we had less than 50% of our stores or around 50% of our stores had commercial. And we slowly — not slowly, we ramped up to roughly 70 — high-70s, low-80% of our stores in commercial. Then, we had a period of time where we really focused on per store productivity. And that’s been going on for the last several years, say, 5 to 7 years. Today, we’re at a spot where we’ve had stores that previously didn’t have commercial in them, and we’ve looked at the market differently with a much different share ownership, where we believe those stores are now productive and we’re opening them.
If you kind of forecasted that out into the future, we think we’ve probably opened the vast majority of those stores that previously didn’t have commercial. There’ll probably be some, but I don’t think you’ll see this large opening of previously opened stores that didn’t have commercial programs that do today. But we think those stores over time will be as productive as the stores we have that have been open for a long period of time, and we like that productivity model going into the future.
Seth Sigman: Okay. And then just a follow-up would be around thinking about the investments that may be required to drive that improvement in commercial. And I think this was talked about in a few different ways, including around pricing, but I’m thinking more from an OpEx, from an SG&A perspective. It’s been growing at a relatively steady 4% rate per store. That seems reasonable. But I’m curious how you’re thinking about that? How you’re planning for that throughout this year? And whether you need to start to see a pickup in your SG&A growth?
