Gary Millerchip: Yes. As you know, we generally don’t get into a ton of specific guidance. But I would say, in general, we’re thinking and the way we built our model is very much in balance and consistent with what we delivered in 2022 in terms of — when you think about gross margin, we’ll be continuing to invest in the customer in key areas of value whatever important to them, whether that’s pricing, promotions continuing to roll out Boost, which creates a short-term headwind as you build the loyalty of the customer and get the incremental value over a longer period of time. We believe that there’ll be some continued meaningful tailwinds in our gross margin rate as we continue to execute on our go-to-market strategy. So thinking about alternative profit streams.
The work I mentioned in my prepared remarks about continuing to see improvement in Our Brands penetration, which is helpful to gross margin. And so we overall, think it’s going to be a pretty balanced year. There’s an awful lot going in there as we’re investing in the customer, investing in the experience. But as our model is now kind of reaching more of a rhythm and maturity of delivering on those gross margin improvements that we’re able to balance those things. I would say from an Express Scripts point of view and some of the other work that we’ve done around Kroger Specialty Pharmacy are making sure that we’re really focusing on profitable growth in our health and wellness business that those probably create a call it, a sort of 10 basis point tailwind in gross margin, but a 10 basis point headwind in OG&A.
It’s kind of net, net neutral in terms of the operating profit impact, as I mentioned in my prepared remarks, but it will change the optics a bit just because the sort of pulling those sales numbers out of our overall business model.
Operator: Our next question comes from Simeon Gutman from Morgan Stanley.
Simeon Gutman: My first question, it’s a little similar to Ed’s question. If you look at the FIFO EBIT guided for 2023, essentially, call it, flattish. I’m just rounding relative to ’22. If you divide the business up into core, I don’t know alternative and maybe gas as profit pools, and I don’t know if those would be the right 3, the big ones to focus on. Can you give us a sense of the movement within getting to that flat — roughly flat for EBIT year-over-year?
Gary Millerchip: Yes. I think what I’d probably say, Simeon, as I think about it, the sort of 3 bigger picture moving parts that I tried to sort of tee up the overall guidance with as well. So I think about it as the 53rd week adding, call it, $0.15 of earnings per share. So that’s helping with — think of $0.01 of about $9 million to $10 million. So I think if it’s like $150 million tailwind from the 53rd week. I think of gas, so fuel being a headwind of — in the sort of $200 million to $250 million range. And then I would think of the sort of core supermarket business is really sort of continuing to grow year-over-year. So the gap is more than offsetting the impact of the 53rd week. The core supermarket business sort of executing on our value creation model, as I mentioned.
So underlying sales growth in that 2.5% to 3.5% growth because the Express Scripts business really hasn’t contribute to the bottom line, continuing to invest in the customer, continuing to execute on our plans around driving cost out of the business and improving mix and those things net overall getting us to a slight improvement. And I’ll probably — we won’t get into the specifics obviously of breaking down the individual pieces, but we really categorize all profit as part of the overall ecosystem because we don’t have media revenue unless we’re driving the digital supermarket business. So we very much look at it as a total ecosystem.
