Mark Walsh: Well said, Jubran. I think on automated book processing, we continue to see the merits of that program continuing. We’ve got 93 stores that are being served by the automated book processing units that we have in place, both in central processing centers and in the back of some stores. Presents us exceptionally well from a consumer-facing standpoint, sharply priced and very well merchandised books, and look, books is a gateway category for thrifters. So this initiative has proven to be quite successful and a great return on investment for us from a capital perspective.
Peter Keith: Okay, very interesting. Thank you. I want to pivot to inventory, and I think it was asked earlier, but I am intrigued with the 50% growth in inventory year-on-year. It’s a pretty big step up from prior quarters. So on one hand, maybe this suggests some very healthy sales that could come down the pipe. On the other hand, it could suggest some gross margin pressure. Maybe just help us think about the balance between those two. And maybe also is OSD and GreenDrop going to just drive this level of inventory growth in the quarters to come?
Jay Stasz: Yes, Peter, this is Jay. And really, that inventory increases the function of the great supply that we’ve been seeing. We have a process where we take an inventory and if it’s not the right season, we back stock it and hold it. So that’s really the driver there from, again, the basis of our inventory is so low that we do not have an aged or obsolete inventory risk or a gross margin risk from that standpoint. So we feel very good about it.
Peter Keith: Okay. Thank you very much, guys.
Mark Walsh: Thank you.
Operator: Your next question is from Anthony Chukumba from Loop Capital Markets. Please ask your question.
Anthony Chukumba: Good morning, or sorry, good afternoon. Thanks for taking my question. And nice job beating on the top line given the lightness on the top or beating on the EBITDA given a little bit of lightness on the top line. So I guess my first question, so you talked about the 2% to 3% comp guidance and sort of setting expenses to assuming that. I guess my question is, let’s say you do 4%. How much would that incremental 100 basis points of comp mean in terms of EBITDA?
Jay Stasz: Yes. So we estimate we would flow that through about 30%.
Anthony Chukumba: Got it. Okay. So call it like a 30% incremental EBITDA margin. Is that the right way to look at it or think about it?
Mark Walsh: Yes, I think that’s fair.
Anthony Chukumba: Okay. I’ll pass it on. I know a lot of other people have questions. Keep up the good work, guys.
Jay Stasz: Thanks, Anthony.
Mark Walsh: Thank you.
Operator: Your next question is from Mark Petrie from CIBC. Please ask your question.
Mark Petrie: Hi. Thanks for the question. I have two questions. Could you just give us a sense of the geographic breakdown of the 22 new stores? And are any of those in the boutique format that you’ve used selectively in Canada?
Jubran Tanious: Yes. Hi, Mark, Jubran. The geography of the 22 stores, it is across all three countries. We do have a couple that are in the boutique format, but the vast majority are traditional stores. And then across the geographies themselves, it’s pretty distributed. So we are not single threaded in any one or two markets in Canada or the U.S. As we’ve talked about in the past, we are fishing in every major market and looking for great opportunities. So you see a pretty good spread across all three countries.
Mark Petrie: Okay. And the boutique, they’re all in Canada at this point? I’m sorry. Go ahead.
Jay Stasz: I’m sorry. I just wanted to chime in. I mean, basically, right, Jubran, we have a handful of Australian opportunities that we’re looking at that may come, but the majority of what we have in the 22 stores is basically 50-50 split between U.S. and Canada.
Mark Petrie: Okay. And just to clarify, all of the boutiques, those remain in Canada, or are you going to test that in the U.S.?
Jubran Tanious: No, that is none in the U.S. Those are in Canada.
Mark Petrie: Yes. Okay. Perfect. And then just on the GreenDrops, how many of those do you have in the market today? And what’s the plan for 2024?
Mark Walsh: Yes. GreenDrop is, again, we are actively pursuing multiple markets at the same time. As we talked about earlier, Mark, you can’t start any supply conversation without talking about onsite donations. And so from a supply perspective, we are in a very robust position right now, not just for this year, but beyond. And we should expect that to continue. We’ve talked about this, right? I mean, when we provide the donor with a reliably fast, friendly experience, we can expect to be the donation destination of choice, whether that be the onsite donation or the GreenDrop. GreenDrop is our long-term play to take that same fast, friendly experience and meet the donor where they’re at, part of a daily use, and help us elevate supply quality for years into the future.
So we like the performance of the GreenDrops we’ve opened. We will continue to open up GreenDrops this year, actually making an entrance into Canada as well. And again, we think that it’s replicatable. Now, as we’ve talked about on previous calls, municipalities, landlords love GreenDrops. They love the use. It’s fast, friendly, clean, it presents well. There are some obstacles when it comes to what the code and the use envisions. There are many municipalities where that sort of very attractive staff donation point is not even envisioned in the code. So that varies by municipality. And the way that we mitigate against that is that we’re fishing in multiple markets at the same time. And that’s what allows us to continue to grow that into the future.
So as we sit today, we are just shy of 70 GreenDrop locations. And we’ll continue to add to that this year and beyond.
Mark Petrie: Okay. Thanks. And then just back to the new store pipeline. I recall that one of the sort of business case arguments for the CPCs was a simplification of the shipping into different locations. And effectively, it sort of broadens the potential scope of the locations. You could open fewer receiving doors, I guess, specifically. So are any of the locations that you’ve agreed to for 2024 in that sort of spec? Or is it still the typical location that you’ve signed up for?
