Rick Dreiling: Go ahead, Mike. I’m sorry.
Mike Witynski: Yes, I would say —
Rick Dreiling: Go ahead, brother, I’m sorry. Bye-bye. Go.
Mike Witynski: Rick opened up, let’s to clean it up, fill it up and straighten it up. I think getting the product filled in our stores and better store conditions and more consistently for our customer is one thing. I think that private brands is another big leverage. And I think the work that Larry and the team are going to do yet that we’re really at the beginning of that doing a better job on the category by category assortment that our merchants need and being priced right. I think those are the big levers inside our store to really keep driving the overall sales per square foot of our buildings.
Rick Dreiling: Yes. And the only thing I would add to that is we are — especially on the Family Dollar side, we are under skewed and we are under skewed based on how we ship product to the stores. We tend to ship only in case packs versus eaches for the higher margin, slower turn merchandise. If you look at our cooler commitment, we are under cooled for lack of a better phrase in our Family Dollar stores and probably our Dollar Tree stores. So there is lots of upside by managing the SKU base.
Chuck Grom: Great. Thank you.
Operator: Thank you. We will take the next question from line Kelly Bania from BMO Capital. The line is open now. Please go ahead.
Kelly Bania: Hi, good morning. Thanks for taking our questions. I was wondering if you could just help us give us a little more specific magnitude of the product cost inflation you’re seeing on the versus the discretionary side of both businesses? And just with — as you work with suppliers, are you seeing any light at the end of the tunnel in terms of the product cost inflation front?
Jeff Davis: Yes, Kelly, maybe the best way to describe the support dimension to it is, if you take a look at our inventory, and you take a look at our inventory on a year-over-year basis. And in my prepared remarks, I had mentioned that part of the inventory increase was as a result of last year, the covers being fairly there last year as a result of customer pull forward in the holiday and then us chasing goods. But even if you step back from that, about 40% to 45% of our increase in inventory on a year-over-year basis is as a result of product — vendor product cost increases. There’s another roughly 20% that is as a result of higher freight costs associated with those inventories, so just those two components represented about roughly 60%, 65% of the increase in the cost of our inventory.
And that’s what is now embedded in our inventory and then, of course, we’ll be rolling through with respect to margins on a go-forward basis, in which we have been dealing with over the course of the year. Yes, as it relates to — our merchant teams continue to be, I think, very resourceful and looking at different suppliers, negotiations, working with them around allowances, working with them across other ways to get support on the business. And then, of course, one of the things that is really important to us, and Mike had mentioned is we’re leaning into is private brands and the opportunity to blend that more into our offering. Our customers are looking for that opportunity, and it gives us more margin protection.
Operator: Thank you. We will take the next question from the line Simeon Gutman from Morgan Stanley. The line is open now. Please go ahead.
