So it certainly starts with having some adjustments to the assortment strategy to ensure that we’re giving that online customer what she needs. In terms of how it would compare to a brick and mortar assortment, we definitely want the overall brand experience, aesthetic, design to still be very much one brand, but we believe there’s opportunity online obviously to have some white space opportunities, test into some new businesses in the future, our drop ship business is a good place to do that. So that’s really sort of assortment mix part of it. And then on the technology side, our current platform is 12 years old and so most folks go and upgrade technology every 4 or 5 years, and so we are really at that point where we’re behind the game, in my opinion, on really the baseline expectations of what our current customer experience should be online.
We have a little more significant dips in conversion. We have some issues on our cart abandonment that continue to hinder us, and so it’s time and probably past due time for us to make an investment in a more modernized technology to support our future business. The good news on that, and I won’t get into too many specifics unless Mike wants to add some color on it, is the cost of maintaining a 12-year-old platform is very expensive. So as we move forward, we haven’t fully identified which partner we’re going to go with, but we’re getting near that decision. It will actually be beyond the implementation year, we would see flat to slightly slight savings on a new platform because of how much it’s requiring us to sort of Band Aid our existing one together.
So implementation obviously would be a little bit of a capital outlay, and Mike shared that we’re protecting that in our capital budget for whenever that kicks off, whether it’s the end of this year, early next year, but it’s definitely something that I think will not only improve conversion and ultimately sales, but also will give us probably an expense savings for several years to come just based on being able to walk away from some of these older expenses and these contracts that we have of people helping us manage a really dated website.
Jeremy Hamblin: And then just last two for me and I’ll hop out of the queue. What is your CapEx expectation for 2024? And then on the balance sheet side, what, Mike, do you think would be kind of the peak need based on your current outlook in terms of what you might draw down on your credit facility?
Mike Madden: Yes. So looking at the CapEx, last year I think we’re at 4.7% or 4.8%. I think it’ll be a little bit less than that this year. We’ve got some projects that we are doing, but it’s very much a maintenance CapEx budget year. So I expect that will be could be $3 million, $4 million range. I mentioned we’re trying to be play a little offense. I mean, we talked about the e-commerce platform. We also talked about some real estate. I mean we’re trying, it won’t be a big program, but we’re at least going through an evaluation to really target where we might be able to fill out some markets or enter some tried and true areas that we know will really work for us. So we’re trying to hold back some capability to do that. On the balance sheet side, obviously, our seasonality dictates how borrowings occur in our inventory flow.
And we expect a normal buildup in inventory. I think we will peak out higher than last year on the borrowings simply because we’re starting higher. We do have more capacity and that capacity expands as we get deeper into the season. But how much and the timing will really have a lot to do with that, but it’s going to be more than last year, but we do have additional capacity to cover that this year.
Operator: The next question comes from John Lawrence from The Benchmark Company.
John Lawrence: Amy, can you talk a little about when you went into holiday and just, looking at the whiteboard across the categories, what would you say you give the grades to? What you expected to be really good and how that turned out from sort of the planning and allocation standpoint and presentation and, maybe what surprised you or what disappointed you in the assortment?
Amy Sullivan: Sure. I would say, obviously, just from a volume perspective and another win for this category is that holiday continues, as we all know to be really a hero category for this brand. And so we had really strong results. I think the merchants of that team did a really great job of right sizing the value and buying into depth of key items. We had a handful of items in our floral category that really had a viral reaction out in the consumer marketplace. So that was a huge win for us. Strategically, we reimplemented the gift category, which you’ve been with us long enough to know that has historically been a faster turning, really high margins, and we were very pleased. I’m not shocked because I think we all had really high expectations of the category, but it did exceptionally well to the point of there were weeks in the peak holiday season where one individual gift item was the top item in the company.
And so we really feel good about the fact that we have gotten back into that business, and we’re going to maximize that all four quarters of the year. Even if you think about the first half of the year, we have a Mother’s Day period that we think we really walked away from over recent years, and that could give us some real upside in the first half of the year, largely driven by that gift assortment. And then I would say another big surprise probably is just ongoing turnaround of that decorative accessories category. If you look back at sort of historical years at Kirkland, that has been a category that’s really been a driver in the front half of the year and tends to fall off a little bit in holiday because of holiday decorating, but as I shared in my commentary, it had just immense growth and continues to be a really strong driver for us.
