Bob Eddy: Look, I think why don’t we start in reverse? CapEx this past year was, I think, the highest CapEx budget in our history and the new year will be even higher, and that is really reflecting our confidence in our ability to grow our chain through additional stores. So you look at about $0.5 billion of CapEx in the New Year, about 80% of that, maybe 75% of that is in our real estate portfolio as we try and extend our reach and get into markets that are growing quite quickly. I think that’s a great story. That’s not something we take lightly. It’s a lot of money, but we have tremendous confidence in our ability to spend that money effectively for the long term. And certainly, you’re absolutely right, we did face a sort of favorability in incentive comps this year, which turns into a headwind for next year. And maybe I’ll let Laura talk about SG&A in general.
Laura Felice: Yeah. Thanks, Bob. The thing I’d add, Ed, on CapEx being our largest plan, you’re right in that. I think the thing I’d say to think about is that $500 million is largely new clubs and gas stations. And there is a little bit of build that is two years out, right? So as we think about our new club openings. For this year, Bill talked about, we’ve already opened one in Goodlettsville, And the remainder of our new clubs this year are back-weighted in Q3 and Q4. And the CapEx plan contemplates the start of new club builds for the following year. So a little bit of that is in this year’s plan. But you should expect us to continue on that same trajectory going forward. I think we’re really proud of the work we’ve made on our real estate portfolio and then think those are great investments of our dollars.
You asked about the comp to leverage the business, and that hasn’t changed. It’s roughly 2% to 3%. So we will continue down that path. I think the thing you’re seeing on SG&A, which I talked about in the prepared remarks is there still is a little bit of deleverage as we continue to build out our real estate portfolio. So there is some ramp time, which we’ve talked about historically as expenses ramp differently than the top line. So think about kind of year three to four when a club hits maturity. So we’re in our third year, this will be our third year of 10 club growth. So it’s just kind of the layering in. And I think over time, we see SG&A kind of hitting a level playing field from a leverage perspective.
Ed Kelly: Got it. And Bob, could you just remind us how you’re thinking about membership fee increase philosophy? Obviously, you’re providing really good value, generating good growth in membership. Are you at the point where you just would not want to disrupt that? Or if you see competition do that? You may be interested in following, just curious on updated thoughts there.
Bob Eddy: Yeah. It’s a good and recurring question. My view on it hasn’t changed. We’ve had such tremendous momentum in the business. I’m a little leery to disrupt that. We will certainly be mindful of what goes on out in the industry. But as we sit here and consider the best way to grow our chain and grow the number of members and the quality of those members. We take that MFI question into that calculus a little bit. I do think the math around it is fairly compelling from a perspective of the dollars that it would yield. If I were you, I would be considering that as an investment pool for us to play with, not so much that it would fall to the bottom line. So I don’t think it would really initially impact our EBITDA or EPS all that much because we would look to reinvest that to further grow our chain, so we’ll see how the year plays out, how the future plays out, but there are no plans today. Nothing is embedded in our guidance from a fee increase perspective.
Ed Kelly: Great. Thank you.
Bob Eddy: Thanks, Ed.
Operator: Our next question comes from Kate McShane from Goldman Sachs. Your line is now open. Please go ahead.
Kate McShane: Hi. Good morning. Thanks for taking our question. We noticed that there wasn’t much discussion or talk around promotions during the fourth quarter. And I just wondered if you could maybe talk to that what you saw with regards to the promotional environment in Q4. And how you’re thinking about it for 2024?
Bob Eddy: Yeah, okay. Look, I think the promotional environment is fairly normal, right? It was certainly a little bit more promotional than prior quarters. I think as we look at it, it sort of feels like pre-COVID promotional environment at this point, maybe slightly less than that. But the brands, as you know, most of our promotion is funded by our supplier partners. They’re certainly more interested in driving units today than they were two years ago. They are investing behind places, I think, that they can grow, and we’re certainly willing and able to help them do that as well. So we did see a slight increase in promotion in the quarter and the full year last year. Probably the biggest and most impactful area for us was in general merchandise trying to make sure that we held that story of improved quality, improved experience, improved value in general merchandise as we renovate that business.
That — our Black Friday promotions, our Thanksgiving promotions were incredibly powerful as I talked to earlier. And we’ll look to do a little bit more of those. I think as we as we look back on the past couple of years when we do the promo schedule correctly and invest behind some weight, we get disproportionate results. And so we won’t look to raise our overall level of promotions. We’ll probably look to reallocate from one period to another. But our team has done a fantastic job using promotions in a smart way to drive the business.
