So, it’s really — it’s our core business model, just really elevated. I’ll start with the answer to the question you asked Navdeep just about the newness and the innovation for 2024. We are really excited. And I would say if you go into our stores right now, you can see our spring set. You can see the — on the soft line side as well as the hard lines and team sports. We are very excited about the innovation that’s coming down the pike and our increased access to some of the very hot product that people are reacting — the athletes are reacting really well to. Navdeep, I’ll turn it to you for the inventory question.
Navdeep Gupta: Good morning, Adrienne. Thanks for the question. So, really, pleased with the overall inventory and the quality and — of the inventory that we finished 2023 with. Our inventory grew just about 1% on top of a 5% growth in sales. And as we reiterated, this morning that the focus that we have of keeping our inventory clean and well-positioned is the core tenet and the core strategy of the company. And that is what is allowing us to continue to differentiate our results versus our competition. And in terms of our expectations for 2024, like Lauren said, there is so much of innovative and newness available to us in the market, not only from the national brands, but also from the emerging brands. So, looking deeper into it, I’m really excited about the spring assortment as well as, the more assortment that we see coming into our stores, both in House of Sport and in the next-gen 50K locations.
Adrienne Yih: Fantastic. Great job.
Navdeep Gupta: Thank you.
Operator: Your next question comes from the line of Chris Horvers with JPMorgan. Please go ahead.
Chris Horvers: Thanks. Good morning, everybody. So, my first question is trying to pull together some of the different commentary and questions that we’ve already had. As you think about — you gave the EBITDA four-wall EBITDA margin for both concepts. Can you talk about the merch margin? It sounds like it’s higher. How does that — how do you think about the other lines of the P&Ls? Is the occupancy cost higher? And then, what about the cost to actually operate the store in terms of trying to understand the breakdown to get to that 20% four-wall EBITDA margin and how does that compare to the existing box?
Navdeep Gupta: Yeah, Chris, first of all, really excited to be able to share the economics of our House of Sport location and the 50K next-gen store. This has been something that has been requested for a while, but we wanted to make sure we had enough maturity as well as enough time behind us to be able to share these economic. So, let’s start with the top-line. Really great to see — first of all, our stores open at full maturity because of the strong brand awareness and the brand positioning that we have in these markets. The House of Sport locations are opening on an omnichannel basis, almost about a $35 million in top-line sales and almost about $14 million when it comes to the next-gen 50K. Like I think that you called it out that we have a comparable EBITDA margins between both these boxes.
And as you can expect that there’s a little bit of an interplay that happens between the margin and the SG&A. You have a little bit more of the elevated experience being provided in House of Sport locations. And so, therefore, there is a little bit of a higher service level component to it, but the service also comes with the revenue associated with it. So there’s a little bit of a higher margin you get from that, I would say. And I think that you called out occupancy. There’s a little bit of a more capital investment that we are putting into it. So that plays into the depreciation. But when you look at the overall, just operating — the EBITDA margin rates that we are driving, we are very, very happy with the returns that we are driving and the strong profitability that we are delivering out of both these boxes.
Chris Horvers: Got it. So, succinctly, it allows you — and I think Lauren, you said this earlier, it’s basically, this is the next sort of lever to continue to gain share and the components might be different, but at the end of the day, the margin returns are comparable and it’s the opportunity to continue to grow?
Navdeep Gupta: Yeah. Chris, I will build on what we have been saying that the financial returns are great, but what is even better is how well this overall concept is resonating not only with our brand partners, with our athletes and also with the community. And that’s what we see as a long-term drivers of the differentiation of getting better access, getting more allocated product available to us, having the emerging brands come to us and want to partner with us in these really, really experiential destinations. And that is what we consider as a true differentiator for DICK’S Sporting Goods.
Chris Horvers: Understood. That’s very helpful. And my follow-up is, Navdeep, you talked about some particular headwinds in the first quarter. Maybe is there — maybe you could just bring those all together? And is there a certain way that we should be thinking about the investments and how that’s going to affect the SG&A? And you talked about shrink in terms of the gross margin. Would you still expect merchandise margin to be up? So, maybe just a finer point around the first quarter. Thank you.
