David Bellinger: Hey, thanks for the question and Ken, congrats. Can you guys talk about potentially the longer term opportunity you have within the collectibles category? We came across some in-store events around Pokemon trading cards over some weekend. So, should we expect more of that and could these events or further expansion and collectibles open Five Below up to some type of new set of customers, maybe an older set of customers with more spending power? Thank you.
Joel Anderson: Yeah. Look — it’s a great question. I’m glad you guys noticed. It means you’re out in the stores. I always love that. Prior to the pandemic, we did a lot of events in our stores and the events just kind of disappeared for three years. But it — at the end of the day, it’s really about creating experiences and the collectibles creates a great experience in our stores. Kids were having funs trading them, and just gathering — it’s kind of back happening again. Ear piercing’s another good one that’s attracted. It — excuse surprisingly male, which we did not expect or when we originally thought about that. But I think it’s — because our store is such a safe zone for boys and girls and we saw — we’ve seen a lot of boys in there doing ear piercing.
So, any one of those is just another thing about celebrating the rituals and milestones are growing up and creating experiences and collectibles have been a good one. And I think you’ll continue to see more of those for sure.
Operator: The next question is from Karen Short with Credit Suisse. Please go ahead.
Karen Short: Hey, thanks very much and congrats on a good quarter. Two questions just combined. So, would you just be able to give a little bit of cadence on puts and takes on gross margin as we progress throughout the year? And then on CapEx as a percent of sales, is this — with your guidance for 2023, is that kind of the right run rate to think about going forward?
Kenneth Bull: Thanks Karen. In terms of the — you asked for, I believe gross margin cadence as we go through. On a year-over-year basis, don’t — first quarter don’t really see any type of material move either way. It looks like relatively flat. And then it should continue to grow as we move through the year. Gross margin really driven by those lower freight costs that we’re seeing versus last year. Because if you remember, we did have high freight costs and the team’s done a great job in terms of renegotiating newer contracts. So, you’ll see growth in growth in gross margin as we move through the year by quarter. And then CapEx as a percent of sales, you do see the growth year-over-year 2023 versus 2022, a lot of that’s driven by the increase in the number of new stores, right?
50 more stores opening in 2023 and also about 150 more conversions, which is driving that. I would expect that to be relatively similar as we move forward into out years. I mean, more to come on that, probably less in 2024 from a DC perspective. There’s a little bit of that going on in 2023 as we expand Georgia and Arizona. But I think you could expect to see either consistent with what we’re looking at in 2023 or maybe even a little bit less as a percent of sales as we move forward into 2024.
Joel Anderson: Yeah. I’d expect it to tick down.
Kenneth Bull: Drop, yeah.
Joel Anderson: Yeah. All right. Hey, thanks Karen.
Operator: The next question is from Michael Montani with Evercore ISI. Please go ahead.
