I don’t want you guys to think we’re being overly precise about the correlation of interest rates and industrial activity in the outlook. It’s not terribly specific. It’s more like many companies, just a general view around our forecast that easing rates will be more supportive, more robust activity on the industrial side. And we’re seeing a little sign of that with March data and no cuts right now. So we’re bullish on the second half and believe that the environment will get better as we move through the year.
Chris Horvers: Understood. And then two quicks ones on the margin side. So first, on the vendor incentive program, how does that roll? So if it just change, do the benefits grow as the volumes grow? So would that be an accelerating tailwind to the gross margin over the year? And on the SG&A side, you talked about the restructuring. It’s going to be $100 million to $200 million in costs, and you’re basically saying it’s only annualizing savings, slightly less than half of that. So why wouldn’t it be something, I guess, more in line with the cost to restructure versus half of that rate? Thank you.
Bert Nappier: Yes. Look, on the vendor rebate program, we see that as pretty constant. It’s not something that’s going to accelerate through the course of the year. So I think that one is pretty straightforward. Look, on the restructuring program, when we think about that, it’s a nice opportunity for us when you take it net-net, it’s got a two-year payback. We had some variability in some of our assumptions as we started the year with the voluntary retirement program here in the U.S. But the good news is we’re well underway on the restructuring activities. Just to frame it again, the overall program is going to cost us about 50% of the cost being on the people side, another 30% or so on facility actions. We’ll get about 70% of the benefit we’ve outlined from people and about 15% from facilities, and then the rest is some other categories that probably not worth going into too much detail.
In the first quarter, about 65% of the cost we incurred of the $83 million came from people, with the remaining being on facility optimization around the globe. As we look at the first quarter, the voluntary retirement program is complete. Most of the retirees left on March 31, and we wish them all the best in their new chapter in their life, largely came in line with our expectations. And we’ll see those benefits start to accrue in Q2 as we move through the rest of the year. In terms of sizing, Chris, we gave ourselves a range. We’re not done yet. We have a lot of work left to do through the rest of the year. So we’ve given you a range of $100 million to $200 million to give us some variability in where that may land. The big piece of that so far has been the voluntary retirement program, which, as I said, is finished.
On the benefits side, we’re estimating where we’re going to be based on the take rate on the VRO and then some of the additional activities that are yet to come as we move through the rest of the year. Some of those are tied to very specific go-live dates with actions around facilities and DCs and those things. And as you know, we have an estimate of those things. They can be pulled forward and they can move back. So until we get a little bit more color, given we’re just into the first quarter of the year, the fact that we’re off to a good start is encouraging to us, but we’d like to give ourselves a little bit of room to work within the range until we get a little bit deeper in the year. So we’ll keep you — we’ll keep you guys updated on that and we’ll tighten it up when we can.
Chris Horvers: Got it. Thanks very much.
Will Stengel: Thanks, Chris.
Operator: Your next question comes from Greg Melich with Evercore ISI. Please go ahead.
Greg Melich: Hi, my first question was on inflation. I think I heard that it was still — it’s now trending slightly positive and you think it’s sort of flat going forward. Was that true for both Industrial and Auto?
Bert Nappier: Yes, Greg, it’s Bert. So the inflation impact for the quarter was less than 1% for all GPC. Both segments were pretty much in line with each other. Very, very slightly positive. So when I say less than 1%, it was pretty de minimis. And our outlook for the rest of the year is for it to stay at that less than 1% level.
Greg Melich: Got it. And then I wanted to go a little deeper. I think in the prepared comments, it might have been, Will, you mentioned Auto Care outperformed and the major accounts continue to underperform. Could you sort of give us more detail around that and how you see that playing out some of the initiatives and how that could change some of those performances in coming quarters?
Will Stengel: Yes, Greg, happy to. So Auto Care, obviously is a super important part of our commercial business and we’ve been incredibly intentional about making sure we’re servicing that customer segment with a lot of excellence. So making sure that we’ve got the right sales coverage, the right economics to motivate those folks to grow and buy from us. And so we’re seeing very nice traction in that part of our business, and we’re encouraged by the trajectory of that. Major accounts, as we’ve talked about before is a pretty diverse book of business for us. It’s about 15% to 20% of our commercial business. And inside that, there’s four or five different flavors of accounts. We have very specific strategies for each one of those sub segments and focusing and being disciplined around making sure that our value proposition is upheld and intact.
