Jeffery Owen : Yes. Simeon, this is Jeff. What I would say is that when you look at our comps, our opportunities are in driving our in-stock levels inside the store. And that is certainly going to help and we are seeing improvements there. But as we’ve deployed more labor in the stores and as our supply chain gets more stable, we’re going to be able to get much more consistent in the stores. And so I feel really good about the plan on driving continued performance. And I can’t underestimate again the labor investment we’ve made, the signs that we’re seeing and, more importantly, that dedicated team that helps a store that might fall off track, get back on track quicker because. That’s one of the really exciting things about this model is that we’re able to get stores back fast.
So I’m pleased with that. But as we think about it, in my experience, this is how the comp will show up. It starts with units. And so I was pleased with our unit share trends and, quite frankly, pleased with unit share gains. And then as units improve, and those generally improve through our in-stock levels and our store standards improving, which we’re seeing and our customers saying — she’s seeing it as well, but we have more to do there. It will then — word of mouth gets out and then traffic will come after that. And then once you see traffic, that’s when you really start to see the comps show up. So as Kelly mentioned, we’re lapping some significant price increases. But the underlying trends, it starts with units, and then traffic is the next opportunity that I believe the announcement we just announced today with the promotions, specifically around our NCI inventory, we really like what we saw when we’ve run those this year.
This isn’t something new. This is stuff we’ve been testing. And so we’ll have to wait and see. But as you think about the back half, our customer will be pressured. But as we move into the holiday, we’re excited to offer her these values. And she’s really shown up and responded very well to them earlier this year. So hopefully, as we look to the back half of this year and into next year, the stability in the store will help us drive continued traffic, and that’s one of the metrics we’re most focused on improving as we go forward.
Simeon Gutman : Fair enough. And then as a follow-up, there’s labor investments and you’re going to clear some merchandise, it sounds like, in a couple of places. It sounds like the new stores are doing well and the prototypes are great. Just thinking about managing the business from a practicality standpoint, is slowing stores even a consideration just temporarily so that the leverage is managed properly? Nothing to do about how the stores perform in the out years, but just thinking about balancing the SG&A to make the leverage point a little bit lower.
Jeffery Owen : Simeon, that’s a great question. I can tell you, first and foremost, we’re focused on returning to operational excellence. And this model is tremendously successful when we’re able to do that. And we have a great value proposition with a stable supply chain, with consistency at store level. That generates tremendous operating profit and allows us, quite frankly, the ability to invest back in the business at a rate we’re very pleased with. And the new stores, I continue, we’re very, very pleased. And we have an opportunity to be first mover and we want to take advantage of that. And so we are always balancing, and we will and we’ll continue to do that. Because we base everything on returns and return on capital, and that’s very important to us.
But the nice thing here at Dollar General is, is that we’re confident we can return to the operational excellence level that we have accustomed to achieving, and you combine that with a tremendous pipeline for growth that we have, and that recipe is incredibly successful and something that I’m very excited to see as we progress through ’23 and ’24 and our ability to continue to perform at the levels we’re accustomed to performing. So I feel great about the pipeline, and I also feel great about our return to operational excellence.
Operator: Our next question comes from Rupesh Parikh with Oppenheimer.
Rupesh Parikh : So I wanted to go back to the commentary on the $170 million of investments. I was curious what you view as more onetime in nature versus permanent?
Jeffery Owen : Yes, Rupesh, I’ll start and Kelly — but certainly, we’ve said this before, we believe these investments are going to accelerate our progress. I think as you look at the investments, when we look at reducing inventory, we’ve made progress on our inventory. It will make it even better. We’re impressed with the, as I said before, the test we’ve run around this. So certainly on the inventory side, I don’t think that you’ll see us having to do that as we look forward. But certainly, the labor, as you think about the labor, that is certainly something that is going to be embedded and permanent in our model and we like the returns that we’re seeing. I think that’s the key point there. And the other investments are investing in the ability to really be more efficient long term.
Specifically, as you think about the demand forecasting tool that we’re investing in, that, we believe, will have a tremendous opportunity to make our working capital even more efficient. And over the next, call it, 12 to 18 months, we believe we will be able to pull out meaningful inventory, I mean, ballpark $500 million or more. And we’re very, very excited about how all that’s going to play throughout the P&L.
Rupesh Parikh : Great. And then maybe just one follow-up question. So the guidance range is much wider going forward for the annual guide. Just curious what’s driving those and just your confidence in be able to deliver within this range.
Kelly Dilts : We have a high confidence level that we’re going to deliver in this range. And really, the width is around the sales piece primarily, Rupesh, and just how quickly the customers are going to respond to the actions that we’re taking. I mean, we feel good about getting back to operational excellence, that we’re doing all the right actions and taking all the right actions that we need to take. And it will just be a function of her response to us. But we’ll be ready, and we think after a couple of quarters we’ll be back to it in 2024.
Operator: Our final question comes from Paul Lejuez with Citi.
Paul Lejuez : Curious, what was the inflation impact in 2Q versus 1Q? And what are your expectations for inflation in 3Q and 4Q in the consumables business specifically? And just how has that changed versus how you were thinking three months ago? And then just one clarification, I’m sorry if I missed it. But are you expecting a positive comp in 4Q? And I’m just curious what your transaction versus ticket assumptions are around that?
