We’ll lean in on promotions, importantly, our vendor partners are continuing to be supportive and aligned with that strategy. So good confidence about our gross margin level staying above 50% continuing to execute the business we did, but being realistic that customers are searching for value and finding the right ways to do that. Underpinning it all is the focus on our strategic initiatives. Our strategic initiatives will actually help us drive units. And at the end of the day, while we might not see as much coming through from pricing as we’ve seen in the last few years, that comp growth from the strategic initiatives is all about customers leaning in and buying more units.
Operator: Thank you. Your next question is from Simeon Gutman from Morgan Stanley. Please go ahead.
Unidentified Analyst : Hi. This is Zack on for Simeon. Thanks for taking my questions. You guided to a flat comp and 9% margin. What can happen if the comp is negative or weaker than expected? How much cushion do you have for the 9% guidance? And in an adverse scenario, what type of negative comp would potentially jeopardize that 9%?
Marlo Cormier: Yeah. Thanks for the question. Yeah. So guiding to the 9% is about where we are right now today. So flattish sales and overcoming some cost increases, typical cost increases like merit, as an example is what we’re working to offset with our feel for growth as well as to continue to invest in our strategic growth initiatives. So we feel good about the gross margins at least 9%. As sales — bring differences come to — we do have good cost management that we’ve been able to deploy over the years. You should have seen that. So feel like we can protect that. On the upside though, we talked about the growth initiatives delivering 200 to 300 basis points. So, in a more normalized environment, if the macro pressures were to dissipate, we see top line modest growth and that’s where we see some nice expansion on the operating margin line.
Operator: Thank you. Our next question is from the line of Olivia Tong from Raymond James. Please go ahead.
Olivia Tong: Great. Thanks. Good morning. First, just on the Q1 guide, I just wanted to understand that a little bit better, because the company seems fairly straightforward and the closures have — haven’t yet lapped in Q1. But you also what’s driving the 7.5% op margin target versus the 9% for the year.
Denise Paulonis: The key driver there is the ramp of our Fuel for Growth initiatives. So we’re lapping the last quarter of our store closures from last year. So our sales number is a bit more pressured which as you’d expect pressures a bit SG&A leverage. But what really happens through the year is the Fuel for Growth initiatives, the $20 million that will be incremental is more realized later in the year than it is in Q1 which is really what’s driving the operating margin being a bit softer in Q1, fully in line with our expectations as we’re getting through that last quarter of the store closure impact. You also have a bit of a ramp, but a sequential improvement modest, but through the year with the top line as well. Beyond just the store closures you’ve got the ramp of the strategic initiatives as well.
Olivia Tong: Got it. And then can you just touch a little bit more on the Walmart partnership you mentioned? I don’t recall you talking about that before, but just what exactly is it? And — and how many — and what’s involved in that, whether there’s a store component as well?
Denise Paulonis: As you guys know, we’ve been out there and participating on Amazon.com with our marketplace for a number of years now. The initiative we have in place right now is recently fully launching our own brands on to the Walmart marketplace. So it’s a digital play. It’s really for us to get access to a new customer base that might not shop regularly at Sally today, but that we can introduce them to our own brands. And opportunity to sell through Walmart to accomplish that, but also opportunity for them to learn about the brand and learn a bit more about Sally. So we’re excited about that and then furthering that growth within the digital space in Sally. We’ll look as the first half of the year moves on to also start to participate in some other marketplaces including Instacart and DoorDash.
Olivia Tong: Got it. But just to clarify, this doesn’t impact your Amazon related actions in any way?
Denise Paulonis: Not at all, not at all. This is a build on to that. So just understanding that marketplace has been a great vehicle no matter who the partner happens to be, to be introducing some of our own brands and expanded the reach of those owned brands. Is the focus on walmart.com today. It will — it’s also the focus on amazon.com today and that will continue.
