And the final thing I’ll mention is our merchants continue to do a great job. People are doing less square footage, but they’re still continuing to focus on better and best. And our pricing generally speaking, when you look at our pricing versus better invest, we’re not competing as much with the home centers there, we’re competing against the independents. And our value equation goes up a lot. And that’s why that part of our business continues to take market share is because our better and best assortment is incredible and our pricing differential versus our competition is also very high.
Tom Taylor: And then the last thing I would say, along with all those benefits is once existing home sales go positive, then people start doing — they get back to doing a — mentioned earlier in the call, and one of the questions, people will do more rooms in their house. When people move into a house, they do more rooms. And today, when they’re staying in the same house, we’re in a room at time. So, when that gets back into the blend of the average ticket, that’s a good thing.
Operator: Our next question comes from the line of Jonathan Matuszewski with Jefferies. Please proceed with your questions.
Jonathan Matuszewski: So, my question has two parts. So strong gross margin results this quarter, it exceeded what we had been thinking for late ’23. So as such, how should we be thinking about 3Q and 4Q gross margin? Should we be planning for sequential improvements from recent levels? And then relatedly for gross margin, Tom, you mentioned that the pricing rollbacks have been inconclusive. Can you just share any more detail maybe where you’ve seen success, maybe where you haven’t.
Bryan Langley: Jonathan, this is Bryan. I’ll start it and then pass it over to Tom. So for the gross margin, Q1, we were at 41.8%, Q2 42.2%. So obviously, we did exceed our own internal expectations as well. We do think the back half is going to be at, if not slightly better than that 42.2%. So for the full year, we should be around kind of that 42.2% on a full year basis, which tells you the back half should be slightly better than where we just exited.
Tom Taylor: Yes. I think — and then just the — I mentioned earlier that our test results are inconclusive. I would say, that remains the case. They are inconclusive. It’s very hard. Some appear to have worked well, some appear to have not made a difference. It’s hard to ascertain if we’ve just shifted a customer within our own store to a different SKU because our assortments are so broad, they come in and we — the price on one thing and it takes them from one SKU to another. So there’s some difficulty. We do see some benefits to certain departments that we see more benefit than others, and we’re going to continue to lean on that learning and apply that as we think about more price reductions in the future.
Operator: Our next question comes from line of Karen Short with Credit Suisse. Please proceed with your questions.
Karen Short: Two research division questions. So first is when we think about comp deleverage as it relates to EBIT deleverage, can you remind me what the actual relationship is on that. So like if you have 1% comp down, what EBIT.
Tom Taylor: Yes. So this year, every component is worth about $40 million. So when you flow that through, it’s usually in the mid-30s. So for each comp point flex, that’s where we get that $0.10 in EPS that we paid for the full year. So for the back half, every comp point change is worth about $0.05, it would be about half of that. So it’s worth $20 million in the back half.
Operator: Our next question comes from the line of Chris Bottiglieri with BNP Paribas. Please proceed with your questions.
Christopher Bottiglieri: So I read that Spartan is creating a new home construction division. I guess why now? I mean historically, what have been some of the constraints that prevented. Florida court self from the end market work Spartan into that matter.
Bryan Langley: I didn’t get the question of the question. You’re talking about the new builder?
Tom Taylor: He’s talking about commercial — or excuse me, the new builder within Spartan.
Trevor Lang: Yes. So in —
Tom Taylor: So, it’s a Sales Master, no. So.
Christopher Bottiglieri: Press release that Spartan was getting into the new home construction channel not that’s accurate.
Tom Taylor: Yes, we — Spartan did a press release on someone that they’ve hired that’s going to help them with the — we weren’t sure if it was a Sales Master question or a recent hire question. Sorry about that. So yes, Spartan recently did a press release on a person that we’ve hired that’s helping us think about our new construction opportunities. It is a segment that Spartan has not really focused on historically. We do a good job at Floor & Decor through our RAMs with custom homebuilders, but we really don’t do much on the new construction side. So we wanted to get some horsepower in there to help us. We think it’s a big opportunity. We’ve got a Board member from Pulte Homes who’s helped us think about that about that business differently and help us educate us business differently.
So we think it’s a big opportunity. And if you look at what’s going on with new home sales today, as the existing home inventory is so low, that’s a sector that’s doing well, and we think we can provide good opportunities there. So we want to make it a more meaningful part of our business in the future. Thus, we hired someone really good.
Operator: Our next question comes from the line of Seth Basham with Wedbush Securities. Please proceed with your questions.
Seth Basham: I just want to follow up on a couple of your comments regarding increased focus on value by consumers, but you’re still seeing a mix shift to better invest. First of all, is that accurate? Can you square that away? And second of all, as you move forward, are you adding more merchandise to service that opening price point?
Tom Taylor: So when we talk about value, I’ll start with the first — my first kind of feelings about it when a customer elects to do the job in their house, they’re still electing to buy the best product that we have in the stores, the better and best the better and best product. The value is still important to them and value proposition on our products because mainly we compete with the independence on that the spread is really significant. So we think when someone is going to do the job, they’re still going to be looking for when they’re going to want the better and best products in their stores and we think — in their homes, and we think that our competitive moat around those products is better. So we are paying attention to opening price point.
