Brandon Sink : Yes. Simeon, I would say ratable as we look at the three-year period with what we shared in December. I mean, when we look at the algorithm for the guide for 2023, we are expecting roughly flat gross margin. So the bulk of the 60 to 80 basis points of EBIT expansion that’s reflected in the guide is coming from SG&A leverage, and it’s being largely driven by our productivity initiatives. So that’s specifically just translating and transitioning from what we shared on the three-year to what we’re expecting from an SG&A standpoint in 2023.
Marvin Ellison : And Simeon, this is Marvin. The only thing I’ll add is, if you take a look at Q4, just as an example, it just — it shows that even in a flat to negative sales environment, we still have the ability to leverage productivity, whether that’s expenses or operating margin. And I think that is consistent with the PPI initiatives not being solely focused in one functional area, but as you heard at our December Analyst and Investor Conference, it’s across all functions, merchandising, supply chains, to operations. And so although it’s ratable, we’re very confident in our ability to deliver upon that in a variety of macro scenarios.
Simeon Gutman: Great. Thanks. Good luck.
Marvin Ellison: Thanks, Simeon.
Operator: Next question is from the line of Kate McShane with Goldman Sachs. Please proceed with your questions.
Patrick Hollander: Hi. This is Patrick Hollander on for Kate. We just wanted to ask about price elasticity. Another item discussed at the December Analyst Day was kind of the confidence in prices sticking but your competitor mentioned that they saw more price sensitivity in the fourth quarter than they had in the third quarter. So first, are you guys seeing something similar? And then how do you address some of the price sensitivity to prices need to come down? Will we see more markdown activity? Thank you.
Brandon Sink: Yes. Hey, Patrick, this is Brandon. As it relates to the question on elasticity, just stepping back, when we look at the last three years through the pandemic, we saw consumers who were very resilient with higher prices, not necessarily impacting demand that we were seeing for our business. As I mentioned in the last response, we are seeing more normal consumer trends with consumers anticipating and responding to value. So as we look at 2023, we are expecting a modest inflation lift across the portfolio. Most of that is going to be wrap of inflation that we’re seeing in 2022, lapping into 2023. We’re expecting that inflation to continue to slow, and we’re seeing minimal activity in terms of new pipeline requests coming in from our supplier base.
And that inflation is going to impact mostly first half as those benefits are expected to normalize as we move through the year next year. And then on the transaction side, we expect that inflation to be offset by a modest decline in transactions, which we also expect to see that improve across the year. So we’re looking back half of the year and then into 2024 a more traditional balance between tuck in transaction.
Patrick Hollander: Great. Thank you.
Brandon Sink: Thank you.
Operator: Our next question comes from the line of Scot Ciccarelli with Truist. Please proceed with your questions.
