Seth Sigman: Hey, good morning, everyone. And I’ll add my congrats as well on all the new roles. Hey, want to follow up on the commercial business. And that last point, if you could maybe just elaborate on the execution shortfalls that you’ve seen. What are we talking about here, is that availability? Is it something more sales-related? Just any more context on that and how you’re fixing that and the response so far? And then I’ll add a follow up. Thank you.
Bill Rhodes: Now on the execution — thanks for the question. On the execution, I think if you go back to the pandemic, and some of the challenges of the pandemic, we obviously struggled with in-stock. We struggled with staffing, as everybody did. And we struggled with store level execution. Our primary objectives were keep our AutoZoners safe, take care of the customers, keep our stores in-stock. Nothing, there wasn’t any — this big one area that got broken. It was a lot of little things. And at AutoZone, we expect to operate executionally solid every single day. We didn’t achieve that. We’re continuing to work on that. And we’re taking off the execution marks to get back to flawless execution day in and day out. That frankly, takes time and it will continue to improve.
We liked the improvements we saw in Q4. I wouldn’t say we’re done. We think there’s still opportunities to improve and we’ll continue down that path. It’s just part of our culture. Execute flawlessly.
Seth Sigman: Got it. Okay, that’s helpful. And then I wanted to follow-up on another point made earlier about traffic and volume improving through the quarter, and I think that coincides with inflation moderating. Can you just give us a little bit more perspective on what you’ve seen historically, as it relates to elasticity? And then just in general, how are you thinking about inflation for this coming fiscal year? Thanks.
Bill Rhodes: Yeah. So the first point I’ll make on inflation is that, we’ve been comping hyperinflation relative to our store industry trends for quite some time now. And so as inflation has sort of moderated and faded to sort of the normal rates, those are the dynamics that we’ve been experiencing. As it relates to our business moving forward, we expect inflation to be in the low-to-mid single digit range that will impact our tickets. On the DIY side, as we’ve said, we’ve historically seen transaction counts decline kind of low single digits, if you will. And so we expect to be operating our business closer to historic norms moving forward. In terms of the macro environment, and how that’s played out from an inflation standpoint.
We haven’t seen to this point, sort of a wobble from the consumer. We think it’s been a two-speed world for a while where the low end consumer has been under some pressure, but consumers that have higher incomes have been doing well. And the net result of that is our business on the DIY side has been very, very resilient.
Seth Sigman: Okay. Thank you.
Operator: Thank you. Our next question is coming from Elizabeth Suzuki with Bank of America. Your line is live.
Elizabeth Suzuki: Great, thank you. I just, a question on expansion and store growth. I mean, just given that the cost of construction and the cost of capital has gone up quite a bit in the last couple of years, how are you thinking about capital allocation? Just it seems like store growth is a pretty big part of your long term plans. But just thinking about where that capital can be best deployed, in which areas, maybe rural areas, or international, where you think you’re going to get the best return?
Bill Rhodes: Yeah, thank you, Liz. We think we’re going t o get a great return basically, in all three countries, whether that be urban environments or rural environments. And I go back to when you’re running a ROIC of 50%, that shows that we can get really good returns. Yes, we’re making this announcement when construction costs are higher, interest rates are higher and on and on. We’re making decisions that are 40-year decisions. And we believe we’ve got a long runway for opening significant amounts of new stores. And once we finished that strategic review back in June, we made the decision that we’re going to accelerate and get back to 500 stores a year. Now remember, that’ll be between 3% and 3.5% organic store growth. So it’s not like we’re talking about going to 10% growth. We think having something that’s growing in that range makes a lot of sense for the long term.
Jamere Jackson: Now the only thing I’ll add, Liz, is that, to your point around capital allocation, this doesn’t change our long term capital allocation framework. Managing our leverage target at 2.5 times EBITDAR gives us a tremendous amount of financial firepower, to invest in our existing assets, to invest in this growth profile that Bill’s talking about, but also to give meaningful amounts of cash back to shareholders. So doesn’t change our long term capital allocation framework as we move forward.
Elizabeth Suzuki: Great, thank you. And then, you talked about Mexico and Brazil. Now in Brazil, you’re still losing some money there. What does the profit profile look like in Mexico or just for the international operations in total? And how should we think about the impact on the total company margin profile as those stores grow as a percentage of AutoZone’s total?
Bill Rhodes: Well, it’s certainly a tale of two countries. We are losing money in Brazil. We haven’t disclosed specifics in Mexico, but I’ll just say that we are very pleased with the profitability profile, and particularly the return profile in Mexico.
Elizabeth Suzuki: Great, thank you.
Bill Rhodes: Thank you.
Operator: Thank you. Our next question is coming from Chris Horvers with JPMorgan. Your line is live.
Christopher Horvers: Thanks. Good morning. Also wanted to follow up on the commercial side. You talked about 7% in the last four weeks. So to clarify was that comped, and as we look forward, clearly August was hot, and you got a weather bump there. So you talked about improving from what you’ve seen. I guess, what’s the right trend line to think about of the 7% versus the 2.5% that you actually did for the quarter?
Bill Rhodes: Yeah, the 7%, just to be clear, was a total growth in those last four weeks of the quarter. So it improved over the quarter timeframe. I’d like to forecast that we’re going to improve from there. It could be bumpy. Nothing’s a straight line. I’ll tell you, if you think about the weather performance over the quarter, like we said, the beginning parts of the quarter, the first month of May and June, were particularly cool and wet. And although that had probably a more material impact on the DIY side of the business, it impacts commercial as well. And as it got hot, you see those bigger ticket categories, like per se, air conditioning, for example. Those are big categories and big jobs. And as you get those failures due to heat, it helps the comps and the total growth.
