Really includes the impact of pretty significant inflation, particularly when you think of steel. As we accelerate the unit growth story here, the remodels as well as build, we’re working on three distribution centers here, which is going to help our capacity. So it takes some capital to do that, but we see great returns in these. And as you look at the stores, not only are we doing more stores, we’re doing bigger stores. And we love what we see with these bigger stores with more sales, more profit per store. So a little more CapEx but really like the return from these. So I think that’s the way to think about our capital allocation priorities and the drivers.
Operator: Our next question is from Peter Keith with Piper Sandler.
Peter Keith: You had commented just on one of the last questions around tax refunds and SNAP as potential headwinds. I was hoping you could also address the social security cost of living increase that kicked in at the beginning of the year. Has that been any tailwind to your business that you’ve noted so far?
John Garratt: Yes. I’ll elaborate on SNAP a little bit, and then I can talk about tax refund and talk about COLA. In terms of SNAP, it’s interesting. You had an increase — a pretty good increase in the tender over the last few years since the pandemic, as states enacted the emergency allotment benefits. Over the last couple of years, we’ve seen about 18 states roll off — some of our key states. And what we saw is with the elimination of this, we saw an offset in other tender methods. And we didn’t see an overall impact to our sales. What we are monitoring though, is that, coupled with the tax refunds, which are lower in general, they’re a little bit ahead in terms of the number of returns filed. But per return, what we’re seeing so far and everybody is seeing, is a lower return overall in terms of the dollars.
And so we’re monitoring the two. Too early to call, but monitoring if those two and where the customer is at right now has a different impact remains to be seen. In terms of COLA, we did see some bump from COLA, particularly those consumers and those stores that over-index with that consumer that receives benefits based on COLA. However, I would say, while a benefit, we saw some bump, not a significant impact.
Peter Keith: Okay. And then I wanted to ask you a little bit about the LIFO impact. So $517 million in the full year is pretty meaningful headwind that you’ve experienced. I guess if the Fed’s going to achieve their mission and moderate inflation here over the next year or 2, you should probably have less of a LIFO charge. Do you have any LIFO benefit or lower charge here factored in for 2023 at this point?
John Garratt: Yes. The way to think about this is very significant LIFO charge last year. We don’t expect a deflationary environment this year, so we do expect a LIFO charge. But we are assuming a more moderate LIFO charge. So less of a headwind this year. I think one thing to just bear in mind as you think about the year-over-year, we did mitigate where we could, the LIFO charge by taking targeted pricing actions as we saw the market move. So that mitigated the impact of that. So I wouldn’t consider this fully a tailwind, but certainly less of a headwind as we go into this year.
Operator: Our next question is from Scot Ciccarelli with Truist Securities.
