Chuck Grom: Hi, everyone. Joel, your new store productivity dropped below 80% for the second consecutive quarter here. So I was hoping you could talk about the timing of new stores in the quarter may have been impacted the NSP, how are they performing? Or do you think that the more limited self-checkout could be impacting things? Just wanted to see if we could talk about new store productivity for a few minutes. Thanks.
Joel Anderson: Yes. No, it’s a good question. And Christian, correct me if I’m wrong, but I think it adjusted for Q4, it moves up to the mid-80s. Is that right? And overall, Chuck, there’s really no concerns on our part for new store productivity. Sorry, that’s for the year, it moves up to mid-80s on the full year. I think Q4 was – this is the most amount of stores we’ve ever opened in Q4 and that played somewhat into how the calculation is on NSP. But overall, having a new store productivity in the mid-80s for the year. And then if you look at our guide for this year, at the midpoint, it’s also right in the mid-80s. So both the exit rate of 2023 and the guide for 2024, we’re sitting in the mid-80s. I think 2019, we’re upper 80s.
And then earlier years were in the ’90s. But that was more driven to – we had massive marketing campaigns when we opened new stores. So this – we’ve been consistently now settling down into the mid-80s and feel pretty good about that number, Chuck.
Kristy Chipman: Yes. And I think I would just add that in the fourth quarter, over the past several years, we have seen somewhat of a decline in NSP, but it rebounds in the first quarter of the following year. So there is something to the seasonality there.
Joel Anderson: Well, any new stores we opened in the fourth quarter, we don’t give them holiday product as an example, so – because the timing of when they open is so late. And I’ll remind everybody, our long-term goal is to get back to not having a large wave of fourth quarter openings. And this year was the latest we opened all the way up into like second or third week of December. So a lot of change. But no, overall, Chuck, no big concerns on NSPs
Operator: Thank you. And our next question today comes from Edward Kelly of Wells Fargo. Please go ahead.
Edward Kelly: Hi. Good morning, everyone. Joel, I just want to – I’m sorry. Could you just talk about what you think drove the negative surprise on shrink? And I’m curious about this because I’m wondering if to reopen of stuff checkout, during holiday had anything to do with it. And then the changes that you’re making the self-checkout for 2024, are they going to apply to holiday as well. Obviously, that helps you with throughput, right? So could there be some potential sales impact? Thank you.
Joel Anderson: Yes. Look, Ed, we own this one in terms of probably being a little too optimistic on how easy it would be to turn shrink around. And at the same time, it happened right going into the fourth quarter, and it’s really hard to mobilize a whole different workforce plan during Q4. And you’re absolutely right that one of the benefits of self-checkout has been that we no longer have lines in our stores in Q4, and you’ve been with us a long time and you remember those days. As we turn towards 2024 here, we certainly have immediately gone to an associate checkout at the register. And what I mean by that specifically is that our customers should experience an associate scanning the items and then a customer finishing the transaction, whether they’re paying cash or credit card.
That is what we believe is a nice balance between we’re ensuring everything is being scanned. We’re providing a heightened level of customer experience and then the associate can move on to the next item, our next customer while the transaction piece is done. So it’s kind of allows for two to one. And we plan to continue that into the holiday, and it will probably be focused at holiday realistically in our high shrink markets and our high self-checkout shrink stores. So we don’t need to necessarily peanut butter at holiday if we can effectively make some significant changes here during the first 10 months of the year. Thanks, Ed.
Operator: Thank you. And our next question today comes from Michael Montani with Evercore ISI. Please go ahead.
Michael Montani: Hi, there. I just wanted to take a slightly different angle here and discuss wages and freight. Just wondering if you could give a sense of how much wage inflation you faced in 2023 and what the 2024 outlook is? And then on freight, do you see additional kind of tens of bps of tailwind for this year – which is why gross margins would be up. Any color on those two would be great?
Joel Anderson: Yes. The large benefit of freight this year will be in Q1 and then begin to moderate as we move through the year because we’ll lap the lower rates from last year. So that’s how we see freight. I remind everybody, we don’t play in the spot market. Our rates are already locked up through spring of next year. And so we have a pretty good sense of where freight is going to be for the year, and there should be no surprises there. And the second part was on payroll wages. There wasn’t much in there for last year. And in fact, I’ll tell you, George and the store operators have done a great job over time of mitigating wage inflation with productivity gains in the stores. And those two have continued to balance out for the last five, five years. We are making some additional wage investment this year, and that’s to really focus on improving shrink. Thanks, Michael.
Operator: Thank you. And our next question today comes from David Bellinger with Mizuho. Please go ahead.
