Kelly Wall: Yes, Kyle. It’s Kelly. I mean, I would expect that there, we’d see that the trend down some, not as much as what we were thinking when — GenNext strategy, because of this hub in showroom model. We’re keeping more locations open. But I would say we’re probably going to close 10 to 20 stores this year. And less than that going forward. And that’s net. Again, I guess anything that any new stores we may open as we’re pushing out this new strategy.
Operator: We now have Bobby Griffin of Raymond James.
Bobby Griffin: Hey, good morning, everybody. Thanks for taking the questions. I guess, Kelly, first, let’s maybe to follow up on your comments there. That is, it is a little bit different on the store account. And then we talked about post spend just curious unpack kind of that change in trajectories and just what you’re seeing out there in the market potential, you see a better opportunity for market share gains, due to customers change a little bit, anything to help us understand the changing trajectory on the store count.
Douglas Lindsay: Hey, Bobby, this is Douglas, I’ll take that. I mean we’re coming off of really strong 2020 and €˜21, where profitability spiked in our business. And we were really encouraged there, we slow down the pace of our store closures to be there for our customers. And we were pleased with the profitability in our stores. I think as we look forward, we do feel like we should have fewer larger stores and a more efficient market presence. We’re doing that in a number of ways. We’re doing that through repositioning our GenNext stores and making them larger and capturing more market share. But we’re also doing that through this new hub and showroom concept. And this is really designed to drive market profitability and grow our share in the market, while still ensuring the great customer experience that our customers have come to expect.
So we’re historically and this has morphed over time and really been enabled by this new GenNext store comp separate, historically, we may have closed merged two or three stores into one, we’re now able because of the GenNext store concept and our digital servicing platforms and payments platforms, we’re now able to service larger adjacent markets with one big hub store that can do servicing, warehousing and delivery. And then having smaller sales stores around that hub that are really focused on selling. Many of these stores can have smaller footprints. So it really increases our efficiency in the market and drives further market reach. And we believe if we do that, not only will the customer count stay sort of larger than what we anticipated at the time of the spend.
We can more efficiently expand our market presence at the same time. So we’re really encouraged about that. We’re super excited about that. And as we’ve mentioned, we have 29 hub and showroom store locations open so far this year and we plan to convert 100 showrooms next year with 50 GenNext stores.
Kelly Wall: Yes, Bobby, I just want to add that while on a net basis it has fewer closed stores. With this hub and showroom strategy, we are achieving cost savings on the personnel side, the occupancy side as well as working capital free of from reduced inventory because these showroom locations while they do have merchandise on the floor, we don’t need to keep a backroom full of inventory for delivery. So that’s done at the hub.
Bobby Griffin: Okay, I appreciate that. And I guess I want to switch over maybe to BrandsMart. And just maybe kind of, obviously, the environment for that business is tough right now. One of the big electronic competitors, kind of released earnings this morning also talked about demand pressure going forward into 2023. But what do you think the long term margin profile is in that business? I guess I’m just asking in the context of for 2023, that guide implied EBITDA down versus 2022, despite having one more quarter in the results. So just curious of rebuilding that profile, and kind of what you think when synergies are flowing through the long term margin profile within the BrandsMart business?
