Michael Lasser: Ken, do you need a 3% comp to generate some margin expansion next year. Presumably, that’s not the new norm for the leverage point given that you’ll have some unique expenses rolled back into the base. So what is the new what is a long-term sustainable comp point comp amount that you’ll need to lever expenses? And what happens if your sales are flat in 2023, how much margin compression would you see just given there’s a lot of uncertainty in the macro environment into next year?
Joel Anderson: Let me just take the beginning, Ken, I’ll hand over to you. I just — I want — I jumped in there, and I’ll let Ken answer it specifically, Michael, because I don’t think the scenario — I mean, Ken gave you a 3% scenario, but I don’t think the scenario everyone on this call should be thinking about is a flat comp. I think clearly, as we get to March and if the world changes again, I’d unwind that comment. But I think with all the initiatives we’ve got focused on what we told you all at the Investor Day, we’re pushing ahead with all those, and we outlined 3% to 5% the next 3 years. We’re working our way into that for next year. And I think the 3% is still the right way to think about it. If you take our historical low single-digit, you add in the benefits of conversions, that’s what starts to push us at 3% or higher.
We’re not ready to go any higher than that yet. But I would caution everyone from getting off of a flat comp. And Ken, I don’t know if you want to…
Ken Bull: Yes. So Michael, if you take it a little further because you’re asking, you’re going a little further out in terms of the timing here. Just to remind everybody, 2022 was a pretty unique year. And because of a lot of things that happened this year, they’re having an impact on next year, right? I spoke about some of the headwinds, which are really carryovers from this year, reduced incentive compensation. Some of those cost management strategies and some other things. So there’s a lot going on there to unpack. But how I would answer you would go back to our Investor Day where Joel just spoke about our expectations from a top line perspective. And I think one of the things that we emphasized was our ability to lever on a kind of a higher basis, right, in terms of higher leverage given the investments that were behind us, specifically in areas like the distribution network and some other things, technology that we would have an increased ability to leverage as we move forward.
At this point, obviously, I can’t provide any specifics in — we need a little bit more time for that. But I would think that, that’s probably the key takeaway from a profit profile for us longer term and then operating leverage embedded in that.
Joel Anderson: Yes, I don’t see anything longer term, Ken, that has said our leverage tipping point needs to stay up at the 3%, 5% where we used to be. We just got to get through ’23 first.
Ken Bull: Yes.
Joel Anderson: Hopefully, that gives you some color there, Michael. Thank you.
Operator: Our next question will come from Michael Montani with Evercore ISI.
Michael Montani: Just wanted to follow up. Joe, you had mentioned about the new store side earlier. Can you give any sense for the remodel conversion front in Five Beyond next year? Can we think $300 plus? And just remind us what the CapEx is for those?
Joel Anderson: Yes. I think a $300-plus number is certainly a number. At this point, we’re still putting all that together, Michael. But I wouldn’t certainly expect it to be less than $300 at any stretch. It will probably be a little bit north of that number. And what we will lay out for all of you we get — certainly, the March call is not only how many, but some of the timing behind that. And then Ken for the investment or the build-out per store.
