Zach Fadem: Hey. Good morning. Could you walk us through the sequential performance for commercial in a little bit more detail as last quarter stepped down a touch on a multiyear basis, while this quarter bounced back nicely. So the question is, could you walk us through what you think could be driving the fluctuation in the do-it-for-me transactions from Q1 to Q2? And then with the three-year commercial compare looking a bit tougher, is it fair to assume that double-digit growth can sustain in the second half of the year?
Jamere Jackson: Yeah. Great question. So a couple of things I will highlight. As I have mentioned, we have had 10 straight quarters of double-digit sales growth, and quite frankly, six of the last eight have been above 20%. We like the competitive dynamics in the marketplace today. We also like the fact that we are underpenetrated. We are a four to five share in a huge market that’s approaching $100 billion. So there’s a tremendous opportunity for us to create a faster-growing business. If we look at our business on a two-year basis — on a two-year stack basis, we are over 45%. So we like where we are from a commercial standpoint and all the initiatives that we have in place, improving the quality of our Duralast brand, expanding our assortments with our mega-hubs, improving our delivery times, leveraging technology and the competitive pricing dynamics that we saw in the marketplace a couple of years ago that we addressed give us a lot of confidence about it.
So we have been comfortably double digits. You have heard us say that our goal is to continue to grow that share and growing that share means that we aspire to have a business that’s growing double digits really as far as the eye can see.
Zach Fadem: Got it. That’s helpful. And Jamere, just to clarify your gross margin commentary, you mentioned no negative LIFO impact in Q3. Does that mean your LIFO balance of $106 million remained stable in Q3 and Q4 or is it fair to expect that line to gradually or maybe more drastically shrink sequentially? And then big picture, is it fair to say that 52% gross margin is a fair run rate for the business going forward?
Jamere Jackson: Yeah. So first, on LIFO, what we said is that, we anticipate minimal if any LIFO charges in 3Q and by the fourth quarter and certainly into FY 2024, we could potentially see that $106 million balance start to burn down, which means we would actually take gains through the P&L. It will take several quarters for us to work our way through $106 million based on our current forecast today. But we will be very transparent about what we are seeing and what gives us this confidence, quite frankly, is that as I mentioned before, we are seeing freight moderate. And as such, in the back half of this fiscal year, barring any disruptions like we have seen in the past, we are not expecting to take any charges and again, possibly see us flipping back to gains.
In terms of our gross margin run rate, we have said that our commercial business is going to grow faster than our DIY business and that’s going to put, let’s call it, 35 basis points to 40 basis points of headwind on our gross margins going forward. Now that doesn’t mean that you can expect our gross margins to deteriorate in the perpetuity. We are still running the same play with intensity inside the company to drive margin improvement that will mute some of that, if not offset all of it. So we feel pretty good about those initiatives. Our merchants and our supply chain teams are doing a tremendous job, as Bill mentioned before, not only working on in-stocks, but driving margin improvement. And as some of the cost pressures ease in the marketplace and some of the cost pressures that our vendors and suppliers have been seeing, it gives us an opportunity to go work on margins in a more fulsome way going forward.
