Kelly Wall: Yes. Great question, Bobby. It’s Kelly. So first to address 2023, what your, what we’re seeing in 2023, what’s reflected in the outlook is that we’re planning to open up to two new stores here in the fourth quarter. And so as you’re aware, as you’re opening new stores, that tends to be a loss in the first year, we’re no different. And so opening up stores is putting some pressure, particularly in Q4 on earnings and impacting margin. So as we take into account, right, the impact of those new store openings, we’re looking over the next three years, and we’re going to average probably 3.5% or so EBITDA margins. But again, I want to highlight that impacted by the downward pressure from opening new stores. As we look at opening new stores, we do expect and we included this in the presentation material that we provided on our website for the quarter, we are anticipating four wall economics and margins, they’re about 8% at the store level, and you again, would be a loss in the first six months returning the positive thereafter, and then getting the full maturity with an EBITDA range of call it $3 million to $7 million per store in the third year.
Operator: Now have Scot Ciccarelli of Truist Securities.
Unidentified Analyst: Hey, guys, this is John for Scott. I was just wondering if you can talk about any new trends you’re seeing in centralized data. And if any concerns might cause you to further tighten credit standards like you did last year? And how much of that, if any, is baked into the guidance? Thank you.
Douglas Lindsay: Yes, John, hey, this is Douglas. So we’re really pleased with the results we’re seeing. In our decisioning, we continue to optimize, we got a lot because we’re a direct to consumer business, we have a lot of levers to play with. So that really benefits us, we continue to look at it. I would say right now we’re leaning slightly defensive due to the macroeconomic environment. But I think that’s paid off for us. We’re seeing improving trends in Q4. And we’re really encouraged, as I said before, what we’re seeing in Q1, our delinquencies are trending down. And right now we are trending towards pre-pandemic, write-off levels by the end of Q1, which is really good. As of right now, where I stand today, we expect the write-offs to reduce sequentially going into the first quarter by possibly another 100 basis points.
So that’s really encouraging. So all the actions that we’ve taken in 2022 are paying off and we’ll continue to optimize it and decide whether we tighten or expand approval rates on an ongoing basis.
Kelly Wall: And to expand on that, our 2023 outlook does not include any further adjustments to our decisioning. But obviously, as macroeconomic conditions and the activity we’re seeing from our customers directly change to the course of the year, we could adjust that either whether it means loosening or tightening as we go forward.
Unidentified Analyst: Got it. Thanks. And then when you said 100 basis points sequential improvement is that’s just 4Q, 1Q or is that have to do with seasonal factors as well?
Douglas Lindsay: So it takes both into account. So it’s a sequential improvement, but it’s taking into account both the benefits we’re seeing from decisioning and the seasonal changes.
Operator: We now have Jason Haas with Bank of America.
Jason Haas: Hey, good morning. And thanks for taking my questions. I’m curious if you give us an update on how lease-to-own is performing at BrandsMart. I know that was rolled out somewhat recently. So I’m curious how that’s been progressing. Thanks.
