Simeon Gutman: Hey, good morning guys. It’s Simeon Gutman. Following up on this freight question, I wanted to ask maybe a different way. So is part of it that the timing of contracts means that we don’t see a lot of the savings in ’23? Or are you just reserving the right to figure out how to plan the business? There will be savings, but you’re not sure of how to reinvest or use the savings yet.
Jeff Davis: Yes, I think you’re spot on. As it relates to the freight those contracts and the way that we would recognize it is more of a forward look. So it would be into a 2023 year. And then as that freight — as we negotiate this new freight costs or see those freight costs coming down, it would run through our inventory turns.
Simeon Gutman: Okay. So I guess it’s a €˜23 into €˜24 phenomenon where the real savings builds up, is that the right way to interpret that answer?
Mike Witynski: We should see in the back half of the €˜23, we should start to see. It’s about a quarter drag, we turn our inventories 4 times a year. So it’s usually about a quarter drag once we start appreciating the lower rates, then we can see that in our product as it’s coming through.
Simeon Gutman: Okay. And then just my quick follow-up. On the traffic on Dollar Tree, can you talk about — I’m sure this has been asked, but why like multiyear, I think it got a little better this quarter, but structurally, it’s been down for the past several years. Can you talk about that? And then why shouldn’t the right algo be you get price, but traffic is either flat or it could decline, because it’s hard to understand why the traffic has structurally been weaker over the last several years? Thank you.
Mike Witynski: Yes, I would just say this. I think it’s a lot due to our assortment that we provided for our customer, and the majority of that was on the consumables side. And then just during the pandemic, our customer, it was — we weren’t high consumable-driven and high discretionary where they were — when they had money in their pocket, trips were consolidated in €˜20 and €˜21, and they were buying high ticket items to decorate their homes, decorate outside and replacing a lot of things inside their house. That’s not what Dollar Tree is at our single fixed price point. So €˜20 and €˜21 were okay for us. But when we saw the consumable side of the business, that assortment go away, that was impacting our traffic.
That’s why I’m really excited about going forward. The last two quarters now, we’re seeing that consumable sales come back 9.4% comp in the third quarter and we see that continuing, especially on the consumable. And then on the frozen side of the business, we do see that traffic starting to settle back into what Dollar Tree has been known for, that low single-digit traffic increases with ticket increase to have a nice go-forward balance between the two and continuing to balance our mix between consumables and discretionary. I think that’s ahead of us and that’s what the work that the team has been doing. In the last two quarters, we’re seeing evidence of it.
Simeon Gutman: Thank you. Good luck.
Operator: There are no further questions, so I will hand it back over to your host to conclude today’s conference. Thank you.
Randy Guiler: Thank you, Caroline, and thank you for joining us for today’s call. Our next quarterly earnings conference call to discuss both Q4 and fiscal year-end results is tentatively scheduled for Wednesday, March 1, 2023. Thank you, and have a good day.
Operator: Thank you for joining today’s call. You may now disconnect.
