Michael Lasser: Thank you very much and good luck.
Operator: We’ll take our next question from Chuck Grom with Gordon Haskett.
Chuck Grom: Hi, Richard. Just sticking on this – on the inflation topic here on unit elasticity, particularly in categories where you’re seeing prices actually start to fall or compress. Curious, what you’re seeing on units, if you’re seeing them improve at all to offset those price declines, if there’s any examples in either food or in GM that you can talk about?
Richard Galanti: Well, yes, I remember when we talked to a few quarters ago about some of the slowness in big-ticket discretionary, well, we got harder on price. It did a little bit, but not as much as we would have thought to start with. But again, that perhaps was the impact of what’s going on with the concerns of the economy and everything else. We know that when we put hard buys and what we call TPDs, temporary price discounts on items, even medium-sized ticket items, we do see – we do leverage – see the units increase, but it’s not as predictable I would say as it used to be.
Chuck Grom: Okay, great. And I know you don’t provide guidance, but I got…
Richard Galanti: It’s a little easier on the food side to see that sometimes more, when taking the price of meat item down.
Chuck Grom: Okay. So you are starting to see some units increase as prices drop in certain parts of the business?
Richard Galanti: Sure. And by – even a big-ticket, when we see $300 and $400 price declines because of freight and raw material cost on some big-ticket non-food items, we’ll see some of the sales pick back up on that. But, there’s nothing guaranteed.
Chuck Grom: Okay. All right. Thank you. And I know you don’t provide guidance, but I actually do remember when you did give some directional help back in the day, but are there any big puts and takes that we should be thinking about on the gross margin and SG&A line over the next four quarters that we should be thinking about? Clearly, the LIFO lap will be it will be an obvious tailwind, but just curious, any other things that we should be thinking about from a modeling perspective?
Richard Galanti: No not really. I mean, LIFO is certainly one that was impacted over the last year and started to slow down. Assuming that trend continues, there won’t be much LIFO going forward for right now what we see. Beyond that, no, we’re still opening. We opened 23 net new units this past year. We’re on board to do something in the mid-to-high 20s this year. But that’s not enough to move the needle in terms of the leverage standpoint or anything. No, I’d say it’s steady as she goes. And if anything I look to be the margins overall, given everything that’s going on, including competition that we’re doing pretty well there. We – with some of the wage hikes that we continue to do and sales being a little weaker than they had been a year ago, I think we’re doing pretty well on that as well. We’re optimistic about our future, but we’ll see what happens.
Chuck Grom: All right, great. Thank you.
Operator: We’ll take our next question from Peter Benedict with Baird.
Peter Benedict: Hi, guys. Thanks for taking the question. Richard, just – first one, just on LIFO. I was just curious, I mean, $30 million charge is small, but I’m just curious, why they were even last one. Can you give us little more color, maybe what drove?
Richard Galanti: Yes, well, I think it was on things like gas was one, and then in some of the fresh food items there was – even though there was deflation in things like eggs and some dairy products, there was – there were some inflationary trends and beef. Beyond that, do you have that handy. Yes, it’s really small, but on $16 billion of inventory, it’s a lot. I mean, it’s still a small number of $30 million and that, but – that’s all. I don’t have the details on that.
Peter Benedict: That’s fine. Yes, that’s fine, just in the context of the broader disinflation it was interesting to see that. And then, just really turning to the international stuff you talked about the rural rates impact, can you remind us maybe on the international membership trends, when you open up a new core outside the U.S., maybe give us some framework or some benchmarks around how many new members tend to sign-up? How does that compare to what you would see, let’s say in the next opening in the U.S.? And then, what kind of renewal rates you tend to see year-one, year two, just so we have a frame of reference there? Thank you.
Richard Galanti: I don’t have the exact numbers in front of me, but generally speaking, in Asia, whether it’s Korea, Taiwan, Japan or China, we’ll open a new unit including the 10 or 12 weeks of sign-ups prior to opening, with anywhere from 50,000 to 100,000 new members. We had a couple of extremes like when we first opened in Shanghai Minhang of well over 200. Now, some of that looky-loos that don’t renew and we usually in that first year of renewal and those types of outsized numbers, we might be as low as the mid-to-high 50s and it takes a few years to get even to the mid-70s. But we see those numbers overall continue to increase every year and I don’t – I can’t – I don’t – I actually probably go back to what it was in the first 10 years of our 40-year history with even the U.S. My guess, it wasn’t that extreme, but we didn’t have as many – it wasn’t national and local news events, the day we opened.
We had a lot of people coming into some of these markets that are signing up that may be live too far away or choose not to come back. So we’re seeing that continuing to grow. So by – even as simple – that’s slight 0.1% decline, it’s round the year in the sense that you opened up a couple of more units a year ago, they’ve just renewing for the first time that increases that number.
Peter Benedict: Yes. No, understood. Last one, I think I heard you say, mid-to-high 20s in terms of unit opening plan for fiscal ’24. Can you give us a sense how many of those are in the U.S. and then how many would be international? Thank you.
Richard Galanti: 70% plus in the U.S. and Canada, mostly U.S., of course.
Peter Benedict: Got it.
Richard Galanti: Which in my view is we’re finding more openings – more opportunities in the U.S. to in-fill, given our high volumes. And we got plenty going on over the years, overseas.
Peter Benedict: Yes. Thanks so much, Richard.
Richard Galanti: Thank you.
Operator: We’ll take our next question from Rupesh Parikh with Oppenheimer.
