John Garratt: No. No. Thank you, Michael. I’ll try and tackle each of these. In terms of the carryover impact of the supply chain costs. We didn’t give a specific number on that. It will be less, but still a meaningful impact to us. In terms of LIFO, the way to think about that is even though we don’t anticipate — we anticipate a slowdown in the number of price increases. The way you do that number is at a point in time, we project the full year impact of all the price increases we’re aware of, and we spread that across the year. So that gets you in the game of what Q4 looks like. And as we look ahead to next year, it remains to be seen, but would anticipate a considerable reduction to that LIFO number. So as you look at — as I mentioned, as you look ahead to next year, we think the supply chain costs will be down considerably because we won’t have these near-term onetime costs, we don’t anticipate because we think that will be resolved in Q1.
And then the market is favorable in terms of just overall transportation costs, both foreign and domestic. And of course, we continue to stand up our private fleet, which we’re going to — every time we convert, we take 20% out and we’re going to double that in size this year. So that’s certainly a significant savings driver for us as well. And so as you look ahead to next year, I think it’s safe to assume that there’s a number of tailwinds. There’s certainly some headwinds we mentioned. We’ll have to wait and see what the mix does. We want to be there for the customer, and we’ll go where she goes. So we have to see where that goes. As we said, shrink has a tail to it. And we’re all over it. We know how to attack that, but it does have a bit of a tail.
So as you look ahead to next year, there’s some puts and takes. But again, we feel like there’s a lot of tailwinds when you think of LIFO, when you think of the supply chain costs and all the other levers that we’ve talked about, not to mention the initiatives.
Michael Lasser : Okay. My follow-up question will be less a bit picky. I’m sorry. The — we’ve seen now some cost pressure at Dollar General. This follows a significant decline in profitability your largest competitor. Should we take these as onetime event? Or is there anything to say that just the overall profitability of the small box value convenience sector is permanently under pressure or long-lasting under pressure because of some of the competitive dynamics? Because of the shift to consumables and other factors? Or would you expect that this is not a trend that’s going to be long lasting?
John Garratt: Yes. I’ll just reiterate, we see most of the pressures as transitory. When you look at the LIFO, when you look at the supply chain, we see that as transitory. We still feel very good about our nonconsumable products, and see this more as a transitory macro pressure. Again, we’re growing share. We’re just kind of following the market trend, which people are just shopping more toward consumables versus discretionary items. But we’re taking share and feel that will certainly do very well there as the economy improves. And just structurally, we feel we’re well positioned in terms of — as we look at wages, we feel we’re well positioned in terms of applicant flow and staffing levels. We feel we’re investing appropriately in the business.
We feel that our pricing is very appropriate. And again, I think it’s important to mention that as you look at Q3, yes, we were down 27 basis points in gross margin, but we’re still about 1 point above pre-pandemic levels despite all these transitory pressures I mentioned. We’re still a point above where we were back in 2019 and Q3.
