Michael Maher: Eric, one of the things I would just add to underscore Eric’s comment about Rack store is being a great investment. They’re a little capital investment, which you said. Just to highlight that, though, our cumulative investment this year in Rack new store openings is going to be less than 15% of our total capital expenditure plan. So, we feel really good about making that commitment and getting the returns that I talked about.
UnidentifiedAnalyst: Great. When you look at sort of the credit card business, your portfolio, just on talks of increasing delinquencies, are you seeing anything with your customers in there? And anything in the portfolio that sort of shapes the way how you think the consumer is going to spend in 2023?
Michael Maher: Yes. Well, what we’ve seen in terms of our credit card portfolio is similar to what we’ve seen sort of more broadly reported out there with larger card issuers. In general, we see consumers pulling back a little bit on discretionary categories. We see the credit metrics declining a little bit from where they were last year. But just for context, as a reminder, they were at historically good levels last year, coming out of COVID with stimulate money and excess savings, consumers paid down balances, charge-offs and delinquencies were at historic lows. And we’re back to something more normalized now, but actually still better for us than pre-pandemic levels. So, what we’re seeing now and what we expect to see and was contemplated in our ’23 guidance is that with higher balances, we’ll get higher finance charge and fee income. That will be offset by some higher loss rates. Overall, we think credit revenue will be a similar percentage of our total revenue.
Operator: Our last question comes from Oliver Chen with TD Cowen.
Oliver Chen: Hi, Eric Peter and Michael. Regarding inventory, how should we think about inventory growth relative to sales growth in the next few quarters? Also, as you mentioned, there’s a big opportunity to increase inventory turns. Which categories do you see the most opportunity? And then you also mentioned the cost method of accounting for inventory and switching from the retail to the cost method. That sounds like it could be very customer-centric and helpful would love more information on timing and how that may or may not impact agility and decision-making in terms of understanding the gross margin return on inventory profile. Thank you.
Michael Maher: Thanks, Oliver, for the question. I’ll start, and then I’m going to let Pete chime in as well. First of all, in terms of the inventory versus sales growth yes, with the 10% or better improvement in turn, you should expect inventory levels to be lower than sales. Whatever kind of change in sales we see, we should be better than that in terms of inventory. I’ll let Pete speak to the specific categories where we think have the most opportunity. But real quickly before I turn it over to him, I just want add to address the cost method. We’ve made that switch for internal merchandising. We absolutely agree. It gives us the opportunity to be much more item focused and precise in the way we’re managing our inventory, which is good for customers, as you said.
Do you just want to clarify, though, that you won’t — there is no change to our external reporting? We remain on the retail method for our financial accounting and external reporting. So, you won’t see any impact to our reported gross margin. Pete, do you want to add to that?
