John Garratt: Sure, Matt. I’ll start with the question around the supply chain costs. And as we called out versus previous expectations, the supply chain costs were a significant headwind more than $40 million above our previous expectations for Q3. And we do see this as near-term. And we’re making very good progress toward resolving our storage capacity constraints as more capacity comes online. And we do believe some of these cost pressures, nonetheless, will carry over into Q4. However, we do expect this will largely be resolved in Q1 of next year. So as we look ahead, we anticipate supply chain costs, both internal and external in 2023 to be down quite a bit. We’re obviously seeing it improving as others market for carrier costs as well.
And so that as a potential tailwind going forward. And then LIFO as well. We’re seeing the pace that while it will continue to pressure, Q4, we are seeing the pace of cost increases continue to moderate. And as we look at next year, we’d expect less pressure from LIFO. So certainly, some near-term pressures between LIFO between the supply chain cost. We also mentioned the sales mix shift and shrink and damages. But as we look to 2023 and beyond, we feel good about, as Jeff mentioned, one, the sales momentum in the business; but also moderating product cost and inflation, particularly around supply chain and LIFO. And as you look at the initiatives, we have that continue to contribute the other levers we have, not to mention our scale and where we’re at in price, we don’t see a need to invest.
We feel that we’re very well positioned as we look ahead to the future to continue expanding gross margin over the long-term.
Matthew Boss : That’s a great color. Best of luck.
John Garratt: You asked about markdowns as well. I didn’t want to miss that question. As you look at markdown risk, while up from the unusually low levels last year, markdowns are still well below pre-pandemic levels. If you look at the majority of the inventory growth, it’s really driven by inflation. The team has done a good job anticipating the mix shift in consumer demand and has proactively been adjusting orders. And as a result, we feel very good about the quality of the inventory, ability to mitigate the markdown risk. As always, we’ve set aside, what we believe is an appropriate markdown level for the upcoming Christmas season. And of course, this is all reflected in our guidance.
Operator: Our next question comes from Simeon Gutman with Morgan Stanley.
Simeon Gutman : I think a follow-up, John, for you. So this year, you were going to grow earnings sort of in line with excluding the 53rd week, and now it’s going to be below and yet you’re doing more sales. So there’s clearly something coiled up here in the model. I know you’re not going to guide next year, but the theoretical framework is there should be some recapture. If there is recapture, are you inclined to let that flow? Or do you manage — do you think the business just manages towards and I don’t know if it’s to reinvest or maybe we don’t see all the recapture that I’m hinting at?
John Garratt: Sure. So as you mentioned, we won’t be giving specific guidance on this call. We’ll certainly share that on the March call. But I’ll just start by reiterating that we feel great about the fundamentals of the business, the sales momentum, coupled with the moderating cost pressures that I just articulated. And as you called out, it is a 1 less week next year that’s important to bear in mind. But again, as you look at the fundamentals of the business, they’re very strong. We continue to see ourselves as 10% EPS growers over the long-term. Now we will always balance that with investing back in the business for the long-term, but feel we’re very well positioned. And more to come for next year, but feel great about the momentum of the business fundamentals.
