So if that deteriorates further, then that would give us pause. But as we sit here today and as we see the world, we’re comfortable giving a range of 30 to 35, if things deteriorate from here to the next quarter, then we’ll let you know.
Trevor Lang: Yes, Michael. The only thing I was just going to add to that is if you look at our mature class of stores, our stores doing 5 — our stores are 5 years or older, they’re still doing $26 million in sales and making $6.1 million in 4-wall EBITDA. And if you look at our stores that are 10 years older, some of our best class of stores, they’re doing almost $28.6 million in sales and $7 million or 4-wall EBITDA. So this is a point in time. It’s a rough point in time, arguably other than the housing recession in 2007 through ’10, and this is one of the worst ones. And so we’re very confident that we’re going to get well above a 25% cost of capital — return on cost of capital long term as you think about — because these are obviously 15-, 20-year investments. So as Tom said, we’re going to watch it. We’ll be close, but we feel good about where these returns will be long term.
Michael Lasser: My follow-up question is, it’s really anyone’s guess right now, what the comps might be next year? But you have given us a rule of thumb that decremental margins are around 35%. So if you lost $100 million of sales, you lose $35 million of profit. Are there any locations or close to any locations where you’re running into minimum staffing levels or other constraints such that if you cut down next year at the same rate that you are this year, the decremental margins would be worse than your rule of thumb. And does it change at all if more of your comp decline next year is ticket driven rather than traffic driven?
Trevor Lang: Yes. About 20 — this is Trevor. About 20% of our stores, maybe just a nudge above that are on minimum hours today, and our gross margin rate is higher now than it was then, too. So yes, I think if things are not in our expectations or if things are worse, I think it’s likely you’d see that flow-through rate be a little bit higher. I don’t know if it gets to 40%, but I think that is a reasonable expectation.
Bryan Langley: Michael, this is Bryan. So that $0.10 per comp point, 35% flow-through rate. That’s usually against the plan, not necessarily year-over-year to Trevor’s point, we do expect modest improvement in gross margin, which will help offset some of that. So when you guys are thinking about your model and you’re thinking about the comp, it’s really a change in comp against the plan, not necessarily year-over-year because you always have step investments where you have changes that we can go in and do. But that gross margin is the lever that will help kind of offset some of that.
Thomas Taylor: I just want to make one comment on the store labor. We pay very close attention to our customer service scores and how they feel about their experience within our stores. And as we adjust ours, we’re trying to do it where we can take tasks away from the store or where we can change the way we operate, bring things in during the day, do tasking during the day that we’ve historically done it, so that we’ve got good presence on the floor. So as we adjust those hours, we’re going to do — we certainly pay attention to customer experience because we know this, as Trevor said, this is a moment in time, we’ll get through this. And then when we come out on the other side, we don’t want our brand damaged anyway.
Operator: Our next question is from the line of Chuck Grom with Gordon Haskett.
Charles Grom: I’m curious what you’re seeing from the competition over the past few months and maybe even in October, particularly independents. Is pricing still rational? Or have things started to change?
Thomas Taylor: I’ll start, and I’ll let Ersan weigh in. I think from the big box perspective, the big boxes, they’re always trying to improve, always trying to compete. I wouldn’t say that it’s much different than it’s historically been. So it’s just some of the people — they’re certainly — we have to pay attention to them. It’s just difficult with the square footage that they dedicate for them to compete with us. On the independents, yes, I think they’re being more aggressive. They’re desperate. This is a tough market. And by all indications, if we’re struggling on the top line, they’re struggling worse. So yes, I think they’re being a little bit more aggressive. But them being aggressive doesn’t really bother us because our spread against them is so significant that we still feel like we compete with them very well. I don’t know, Ersan, if you’re seeing anything different in the market.
Ersan Sayman: No, that’s absolutely right. I think the changes that we see are not irrational at all. And then also, in some cases, when there is a promotional activity that we see, there’s definitely an inferior quality of the product, not in comparison to what we do. But we’re paying close attention to it. Nothing irrational.
Charles Grom: Okay. Great. And then just holistically, Tom, you talked about holding the 42% gross margin rate. But at what point would you sacrifice that to invest in price and try to induce activity? Or do you feel like the price actions and price reduction efforts that you’ve made over the past year would tell you that, that’s not — that potentially wouldn’t be successful? I guess how are you thinking about that longer term?
Thomas Taylor: Yes. I would say we certainly have played around with price in multiple tests and multiple markets. And we tend to price against ourselves. So a customer comes within the store and they’re trading down to something that we adjust price on. So the only place where we see good traction is in installation materials, which is what the Pro buys often. We have been more aggressive on the pricing side on that. We’ll continue to be aggressive there because we know that Pros in the store every other week, and we want to make sure that we’re getting them taken care of. So in our ability to grow gross margin, we can still be aggressive within installation materials to be aggressive with price. But because we’re getting gross margin from first cost reduction, we’re getting it from lower freight expense.
Our better and best penetration has really remained unchanged. It’s still driving business. That’s growing gross margin and innovation and newness. So this isn’t a category where this is — there’s a lack of traffic in the marketplace behind the category versus this is a pricing issue. So I feel very comfortable with where our pricing is at. We’ll continue to be aggressive with installation materials. But we’ll drive gross margin improvement through our other levers.
Operator: Our next question is from the line of Seth Sigman with Barclays.
Seth Sigman: I wanted to follow up on the slowing performance that you saw in the third quarter and then again into the fourth quarter. What are you seeing in terms of mature stores versus newer stores? And part of that is just context around how you have a lot of new stores that are supposed to come into the comp base here in the fourth quarter. I think they were expected to contribute positively. So I’m curious whether that is part of what’s changed here as well.
