Michael Montani: Hey, good morning. Just wanted to ask first off two questions related to the store closures. I guess number one, is there additional opportunity that we should be thinking about here in terms of re-bannering in addition to the closures? And then number two, wanted to see your thoughts around the potential to recapture some of that $700 million of revenue given the proximity to the other stores?
Rick Dreiling: Great — two great questions. As far as re-bannering, we’ve already looked at a modest number of stores that we intend to do that in. And as we move through the portfolio, we will continue to research that. The one thing we want to be very careful of is: number one, the proximity to another Dollar Tree; and number two, we want to be careful that we don’t distort the Dollar Tree brand. So, it’s a little more complicated than just standing up saying, “Change them all to Dollar Trees and move forward.” But it’s a very good question that we’re actually looking at as we speak. And what was the second part of the question?
Jeff Davis: Recapturing sales.
Rick Dreiling: Yeah, recapturing the sales. I think we feel pretty bullish about that. A lot of these stores that we’re rationalizing out of the system were built on top of another store. And there is the opportunity for us to take back some cannibalization. And I think it’s a matter of time and, of course, we’re going to continue to build new stores next year.
Operator: Thank you. Our next question is coming from Kate McShane from Goldman Sachs. Your line is now live.
Rick Dreiling: Good morning, Kate.
Kate McShane: Hi, good morning. Thanks for taking our question. I wondered if we could ask about the supply chain, the changes that you’ve been making and how it’s impacted inventory levels and turns.
Rick Dreiling: I mean, I’ll speak to half of that question and let Jeff do the hard part. The fascinating thing, it depends on how many cases a store gets in an order to determine how many hours of savings there are. But I can tell you this, we’ve reduced our unload time to approximately one hour, which will benefit us long term majorly, especially in terms of store standards, in-stocks, which should lead to higher transactions, and the rest will be history having been through it. And in regards to inventory?
Jeff Davis: Yeah. So, from a supply chain basis, one of the things we’ve been very focused on this past year is not only in-stock in the stores, but how we get in-stock in the DCs. So, working with our supplier partners to make sure that we’re getting the merchandise at a timely basis according to the POs that we’ve placed. We’ve actually seen some good improvement in that area, which has benefited us ultimately in having our inventories in store at the time that we need to. The fourth quarter is just an example of that, where last year we had a little bit more supply chain disruption. The year before this year, we were able to have the merchandise in country, in DC, in our stores, and that helped us with our overall sell-through, which ultimately helped us on our inventory levels at year-end, because we were able to flow that through versus not having inventory at the right time for the customer.
But I believe overall, the other actions that we’re taking with respect to some of our systems to give us better visibility into where inventories lie and where our needs are across the network will allow us to further improve on our in-stock positions.
Rick Dreiling: And Kate, if I — I’d like to call out Mike Kindy, who’s been with me for years, who’s driving the supply chain now. And again, you raised a very good question. Mike is working on two things. The inbound service rate, which is getting the right inventory here at the right time and then the outbound service rate, which is shipping what the stores are drawing. And we’ve had trouble with that, to be frank, over the years. But again, it’s another example of improvements we’re making.
Operator: Thank you. Our next question today is coming from Paul Lejuez from Citigroup. Your line is now live.
Rick Dreiling: Good morning, Paul.
Paul Lejuez: Good morning. Thanks, guys. Two questions. Just curious what’s driving the average ticket lower at Dollar Tree even as you add the higher price points? And how do you think about rolling in those higher-priced items, the eventual impact on the average ticket at Dollar Tree? And then second, and sorry if I missed this, but what’s the cash cost of closing the 600 stores, Family Dollar? And maybe if you can talk about the location of those stores? Are they concentrated in certain geographies? Any common threads other than just not earning their cost of capital? Thanks.
Rick Dreiling: I’ll let you manage the second part, which is the hard part. What we’re seeing is the reason our average ticket is down, I think, it’s because we’re seeing more trips. People are coming more often. I think eventually that will probably shake itself out, but it’s all driven by the frequency at which the customer is coming in.
Jeff Davis: Just to top that off also, what we’ve seen is that when a customer has a multi-price item in basket, their basket many times is as much as 2 times the average basket. So, as it relates to the variety that we’re asked — we’re providing, it’s definitely giving us a larger basket. But as Rick has said, the additional traffic, people are coming more often and the baskets just on average lower. As it relates to the stores that we’re taking action on, from a geography standpoint, there’s really no real concentration across the country. It’s pretty much reflective of our overall fleet demographics, if you will, across the country. As it relates to the cash cost of closing these stores, on a cash basis, we’ll actually be neutral to actually accretive in closing these stores.
