Jeremy Hamblin: Thanks, and I’ll add my congratulations on the strong results. In terms of capital plans and investment for next year, you have obviously the new DC. I think you indicated 35 remodels for ’23. And just wanted to get a sense. It sounds like you’re on track for 50, kind of 50 to 55 new unit openings next year. I wanted to confirm that one and then also just get a sense on the remodels, which sound like they’re going well. Should we expect a similar type of number for 2024?
Rob Helm: Hey, Jeremy, this is Rob. I’ll take a couple of pieces of that multipart question, and Eric will take a couple. From a capital planning perspective, we typically, from an [al and algo] (ph) perspective, would plan for 2% to 2.5% of sales is our capital plan. For next year, we do have the carrying of the completion of the fourth distribution center that would increase that number. I would say without giving guidance for next year, I would say probably in the range of $75 million for next year just with the carryover. From remodels and new store units, I’ll hand it off to Eric.
Eric van der Valk: Thanks, Rob. Jeremy, the remodel program, it’s less about how many. It’s more about maximizing the effectiveness, enrolling the best improvements that we’re making to these stores into the rest of the chain as well as influencing our new store design and tweaking our new store design as were going forward. With that said, we’re expecting to remodel approximately the same number of stores next year, approximately. Again, to Rob’s point, not giving guidance at this point. From a cap — tying into capital, they’re relatively light from a capital standpoint and the total investment is between $125,000 and $200,000. So it doesn’t add up to particularly material number as a percentage of our overall capital spend, low cost, relatively quick paybacks.
Jeremy Hamblin: Got it. And then just switching gears to — you had some interesting color on some of your marketing plans and how that’s developing more use of social media and influencers. I wanted to see if you could elaborate on that. And I think you also noted that younger customers were your fastest-growing segment. I wanted to see if you could clarify the age range that you’re talking about and just potentially expand on what the company’s plans are in terms of those marketing efforts to continue to expand your Army?
Eric van der Valk: Sure, Jeremy. I guess kind of a retrospective on marketing several years ago, we’ve spent almost nothing in digital channels. It’s about as close to zero as you can get. Now several years later, it’s over a third of our overall marketing spend. So it’s very, very meaningful. We hired a marketing expert as well who really knew digital, Tom Kuypers to the team several years ago, and he’s really accelerated, propelled our investments in digital over the last several years. A large percentage of that investment is in social media channels. Meta channels, Facebook and Insta. We have a strategic relationship with Google now and with YouTube. We’re on TikTok. The influencer program, over 50 now that we’re working with, mostly nano-micro influencers.
We think authenticity is really critical with influencers, so we look for people that are already talking about us, and then give them incentive to talk about us more. So, we continue to test in every available digital channel to see what’s most effective. And to your point, it does look like it’s producing results in growth of younger customers. In terms of defining the age of a younger customer, we’re seeing strength in the under 45 year old customer, so call it 18 to 45, as well as the 45 to 55 year old customer. We have a large percentage of customers that are over 55, which are indexing slightly down, and cohorts below 45 are indexing up, and we see very positive momentum there.
Jeremy Hamblin: Great. Thanks so much for all that color. Best wishes.
Eric van der Valk: Thanks, Jeremy.
Operator: One moment for our next question. Our next question will come from Matthew Boss of JPMorgan. Your line is open.
Matthew Boss: Great, thanks, and congrats on a nice quarter.
Eric van der Valk: Thanks, Matt.
John Swygert: So, John, maybe larger picture. At 1% to 2% same-store sales, what do you think is the right operating margin, maybe longer term for the business, or how best to think about a bottom line annual growth algorithm with the business returning to that 1% to 2% historical comp trajectory going forward?
John Swygert: Yeah, I think, Matt, the 1% to 2% comp long-term algo, the operating income will be definitely compressed from our, call it, our all-time high. If you look at 2019 per se, we have increased costs now in the SG&A world that are permanent in nature. We used to be probably close to 25.3% SG&A ratio. It’s probably closer to mid-26s now. So probably about 100 basis point loss in overall operating income. So I would say that you probably see that on a carry-forward, long-term basis. As we go, you might get a little bit, 10 bps here and there, but not much more than that on a significant basis. So I think that with the top line growth and the margin of 40 points, we should be able to still be able to maintain double-digit EBITDA growth every year for a seeable future.
Matthew Boss: Great. And then maybe, Rob, just a follow-up on the gross margin. Any puts and takes in the fourth quarter just to consider? And then as we think about the spread in terms of your values in the marketplace today, is 40% a multi-year gross margin ceiling or do you think there’s any opportunity there to potentially press that a bit higher?
