So this model is absolutely intact. And when we think about it, we’ve still got a long runway for growth. We think 700 and 900 stores are sure still in our future. We’ve got a lot of remodel progress that we have on our plates as well. And that, as you know, contributes 150 to 200 basis points of comp contribution, so still really solid there. And we’ve got a lot of long-term drivers, some new, which Todd just talked about, making sure that we’re reducing shrink. The inventory optimization gives us a lot of efficiencies, both in the store and in the distribution centers. But then we have those long-term drivers that we’ve had in place for a while and continue to benefit of, the DG Media Network, private brands, the global sourcing, category management, all of those things that we’ve had for a while are certainly still in place.
And with that, we expect to continue to generate cash and are looking forward to being able to return that cash back to shareholders, not only through the dividend, which we’re doing now but also through share repurchases over the long-term. So lots of reasons to believe back in that 10% to 10% EPS growth, and we feel good about the future.
Operator: Our next question is from John Heinbockel with Guggenheim Partners. Please proceed with your question.
John Heinbockel : Hey, Todd, I wonder if you can address the mini market format, your thoughts on potential — how many stores you think you could have if we’re talking several thousands. And then remind us of the economics of that. I know it’s relatively new. But when you think about whether it’s sales per store, sales per foot, four-wall margins, how that might look versus other formats that you use.
Todd Vasos : Sure. Thanks for the question, John. And you and I have been talking about fresh and about these type of stores for quite a while. And I would tell you, when we put into place here years ago, our ability to grow cooler count, to grow fresh produce, the way we have over the years very methodically to be profitable at it as well as then enabling all of that and soon to be produced in the near future into self-distribution, I would tell you that we feel very good about that. Then as you think about municipalities across this country that are in food deserts and/or looking for help in more fresh options, that mini market, as you indicated, our DG Market is really a lifesaver for those areas and a true lifeline for those areas where the grocery have left years ago, and we’re there and can be there to help them.
So we believe in that concept greatly, and as you look at the economics — and I’ll pass it over to Kelly to add a little bit more color to it. But I would tell you that we like the sales economics there. We do like the four-wall profitability that’s thrown off by that. As we continue to look at balancing it, I would tell you there are thousands of opportunities for that box across the U.S. Kelly?
Kelly Dilts: That’s right. Now and I think Todd hit on most of it. We really like the IRR. They’re certainly at the upper end of what we expect from new stores and a payback of less than two years. We like the top line and the flow-through on the operating margin, and the four-wall is strong. So we think it hits all cylinders. It’s great for the business, but as Todd alluded to, it’s also great for our customer.
Operator: Our next question comes from Rupesh Parikh with Oppenheimer. Please proceed with your question.
Rupesh Parikh : Good morning. And thanks for taking my question. So I have two related questions to gross margins. So Kelly, you commented on your expectation for the promotional backdrop to revert to pre-pandemic levels. Just curious if you’re seeing any changes in the promotional backdrop today or whether that’s just an expectation for the balance of the year. And then just on gross margins, we heard a lot about the headwinds. But just wanted any granularity in terms of whether you expect gross margins to be up or down as we think about ’24.
Todd Vasos : Rupesh, let me start, and I’ll pass it over to Kelly. Yeah, as we look out into 2024, we do believe that the promotional environment will have an uptick here. We believe that it will revert closer to where pre-pandemic levels were. In 2023, we saw an increase as well. So this isn’t an immediate left or right-hand turn here. This is what we had anticipated, quite frankly, over the last couple of years that as we enter ’24, we would probably start to see this. And by the way, I think our CPG partners, and I’m sure you’ve seen, have signaled this for quite a while now in that they need to move units and, through that, encourage, if you will, some of that promotional activity to occur. The great thing about Dollar General, we talked about the levels of markdown, but the great thing about Dollar General is that with our size and scale, we’re able to get a tremendous amount of CPG help when it relates to this higher level of activity.
And so our margins usually tend to be okay, if you will, as we move through these higher markdowns — promotional markdowns. But what it also does right now, Rupesh, I believe, is it just gives that customer that’s looking for more and more value right now. And by the way, this customer is getting healthier and healthier every day. We’re seeing it. She’s figuring out her expenses. I think you probably remember, I talked about this quite often. It takes her a few quarters to figure out when she gets a shock to the system. And unfortunately, this inflationary environment we’ve lived in for the last couple of years has been a shock and maybe even a double shock to her. But she’s starting to figure it out. You can see it through the transaction data.
