Christopher Horvers: So following up on the first question, I guess, relative to the last time that you spoke to us, do you think the consumers deteriorated at all? Anything that you’re seeing on what they’re buying, how price sensitive, private label, income demographic? What are your observations around the rate of change for the consumer?
Richard Galanti: Not terribly different than a quarter ago or probably in David’s January sales recording. So again, it all centers around big-ticket discretionary. And we look at that and we look at how it compared to a year ago and then 2 years ago. We had so much strength there not only with COVID and people buying big-ticket stuff, now the economy and the interest rates, so that’s to be expected. Again, we kind of go phew, our strength in food and sundries and fresh foods and health and beauty aids and things like that help to counter some of that. One interesting comment that I think I haven’t made in the past, we’ve been asked that during this concern about inflation and people trading down, have we seen any delta in the sales penetration of our own Kirkland Signature items.
And of course, my first comment is that’s a trade up or a trade equal, not a trade down. But at the end of the day, we have seen actually, in the last few months, a bigger delta than normal. I’d say over the last 10 years, we see 0.5% or a little less than 0.5% a year of increased penetration. For this quarter year-over-year, we’re seen a little over 1.5 percentage point increase in sales penetration on the food side, foods being anything packaged or dry or wet, you name it. And so we have seen a little bit of an increase in that. I guess that’s consistent with the concession that most people are looking to save money. And of course, if it’s our brand, that’s great. That creates loyalty.
Christopher Horvers: Yes. And then on the pricing/LIFO point, last quarter, you talked about like we could have a LIFO benefit and that could be a source of funds in terms of investing in price. So a two-part question, if prices stayed here today, would we essentially get back the LIFO headwinds that you had a year ago as we think about going forward? And then the second question is, you mentioned your price gaps are as good as they’ve ever been but, at the same time, there was some change in consumer. So should we think about that LIFO as a source of funds to further invest in price?
Richard Galanti: I was looking at it more not as a source of funds but more as — look, to the extent that, and this is just using this as an example, if there was no LIFO charge plus or minus in Q3 and Q4, on a year-over-year comparison, you have, on a pretax basis, $130 million positive delta and a $223 million positive delta. Those are nice numbers to have a positive delta. So from a standpoint of looking at the earlier question about are we cognizant of earnings growth, if you will, or reported earnings per share, part of that plays into that, that gives us a little bit of cushion there as does gasoline from time to time, as does, first and foremost, stronger sales. So all those things play into that. I think generally speaking, we’re still going to do what’s right, in our view, to drive sales.
That’s what we want to do, first and foremost. And to the extent that, that example occur in Q3 and Q4, that gives us a little room to do that without even thinking about it.
Christopher Horvers: And then just from the accounting perspective, should we automatically get that back if prices stay at these levels on the lap?
