Korinne Wolfmeyer: Hey, good morning, team. Thanks for taking the question. My first one is on operating margin. I mean it does look like it came in a little bit towards the lower end of the range. And I think you did mention some added wage pressure and some other things going on. Can you just touch on what – on the operating line and I guess the SG&A line, what is within your control to start to bring down a little bit more versus what are things that maybe likely persist into next year? I know you gave a little bit of color on the cadence but anything more specifically, you can think about in terms of modeling the cadence of SG&A over the course of fiscal 2024? Thank you.
Marlo Cormier: Yes. Thanks, Korinne. As you think about operating margin and kind of areas as we’re looking forward to influence that really comes down to our Feel for Growth initiatives on top of all the sales growth initiatives that we’re driving. But thinking about areas that we’ve been working through, we’ve now started to see some of the benefits come through in our supply chain with our shipping frequency and we’re seeing that flow through now just in a test environment. We’re now working to ramp that up. We will be looking to bring about 80% of our fleet online with that. But when we look to 2024, we’ve talked about a $20 million benefit that we’re working to deliver as we go through that. It’s about 75% of all to the SG&A line, 25% on the margin line.
So within the margin, we’ve got expansion opportunities both within our own brand penetration but also with the Fuel for Growth activities that we’ll be driving. And that’s happening largely in the back half of the year as we start to deliver more on that. From an SG&A point of view, again more back half loaded. We’ll have higher dollars overall. But from a cadence perspective, we’ll start to see leverage as we get into the back half of the year. And that’s being driven by the Fuel for Growth efforts. Things that we have in flight again that are going to continue to ramp. We are putting in energy management systems within our stores. We’re also implementing LED light across the fleet. Like I said, we’ll continue to ramp up the shipping frequency and a lot of the benefits that we’re getting within our transportation efforts.
And then we’re also working on non-trade spend. So as we’re going through contract negotiations, those will continue to come online as well as we get through the year.
Operator: Thank you. The next question is from Ashley Helgans from Jefferies. Please go ahead.
Ashley Helgans: Hi, thanks for taking our question. I know you mentioned about traffic, but do you think consumers trade down at all in any categories or even trade out. And then anything you can tell us about your expectations for the promotional landscape. Thanks.
Denise Paulonis: Sure. Thanks for the question. I think when we think about trade down or trade out, it’s not really what we’re seeing our customers do. As I mentioned in the prepared remarks, what we are seeing customers do is search more for value. So they do gravitate a bit more to when something is on promotion more likelihood to be buying it on promotion. And so with that we certainly see a little shift in behavior from what we had seen earlier in the year about a little bit more frugality. The trend that’s persistent from the beginning of the year as people does not buying things that they don’t need. So we talk all year along about things like styling tools that seem less demand simply because that’s a bit more of a you only buy it if you need it unless you feel like you have extra money in your wallet.
So a general sense of frugality, but not much more than that in terms of new trend or new behavior. And if you could remind me, what was your second question again?
Operator: One moment. Let me reopen your line. Your line is open.
Ashley Helgans: Okay. Thanks. And then just anything you can tell us about your expectations for the promotional landscape as we move into the next fiscal year? Thanks.
Denise Paulonis: Absolutely. So overall, what we saw if I separate Sally and BSG, so promotional activity at Sally this past year was generally consistent through fiscal 2023. So what we put out there on promotion. In Q4, we saw a bit of step up in the mix of products sold on promotion, as I just mentioned in terms of how people are searching for value. We expect value to be important as we go through 2024. In BSG, promotional activity was up modestly through 2023. We expect that to remain constant in 2024 as stylists also continue to seek out deals. When we think about that holistically, the way we’re planning for the year is because our customers are remaining conservative, we’re going to stay conservative on pricing. And we’ll also though continue to lean in where we see that there’s a UPT opportunity.
