Matthew Boss: Congrats on a nice quarter. So a couple of things, Ernie, a key inflection this quarter, I think, was U.S. traffic turning positive for the first time in over a year. Could you speak to the traffic inflection and drivers behind the material acceleration that you saw at Marmaxx? And then, John, just to summarize on gross margin. So I think you cited freight up 80 to 100 basis points, shrink flat in the AUR strategy accretive. So is gross margin for the year up 100 basis points or so? Is that fair? Or how best to quantify the components? And then just multiyear to Ernie’s comments, is there any ceiling on gross margins relative to the 29% that we saw in 2017?
Ernie Herrman: Go ahead. You can go on the margin on that.
John Klinger: Yes. So gross margin, we are planning it up to 140 basis points. So freight is a major component of that. Also, mark on an average retail is another piece of it. So those are the drivers for why we are expecting gross profit margin to be up. Now on the other side of it, obviously, we have minimum wage and other things that are in SG&A going the other way. That’s on a full year basis.
Ernie Herrman: Does that answer that, Matt? Or yes?
Matthew Boss: Yes. And then just maybe, Ernie, on the traffic and…
Ernie Herrman: Yes. Well, the traffic we’re — you’re right, it is a bit of an inflection point. I like the way you described it. So we’re looking — we would like to see that continue here as we move into the new year. Again, we’re feeling good on the start. Going back to the way we’re planning our sales though, we’d like to see a longer-term trend there to start planning it a little more aggressively. I mean — we’re in a good position here based on the inflection. Again, the average — the average basket was up significantly, customer traffic increased slightly, which is good. We’d like to see just a little bit longer trend there. We do like across the board where our average baskets look healthy, right, John? In terms of the total. So that’s feeling really good. If we can start to get a traffic increase on a regular basis will kind of be really off to the races on the sales, although we’re feeling already that there’s — that we have some upside.
Operator: Our final question comes from Marni Shapiro.
Marni Shapiro: Congratulations on the quarter and a great year and I guess, a good start to this year. I just have one quick question. You’ve talked a lot about — you’ve seen a little bit of an increase in traffic, up a little bit in the basket, but are you seeing a change in the way people are shopping your stores? Are they buying more units or just spending more of some of the price increases? Are you still seeing new people come into your customer file? I mean, from my vantage point, every person in the U.S. is already in your file, but I know that’s not actually true. Can you just talk a little bit about what that looks like for us?
Ernie Herrman: Well, you know, Marni, yes, we’d like to thank every person . We still have so much of the population that is not shopping us strangely enough which is why we’re bullish on continuing to take — here’s what I think that happens in this environment, by the way, and it’s going to help traffic even more is the store — back to the store closures that are happening around us. Marni, even if you factor in that half of those stores, only half of the categories marry up and create a visit to us. That’s still a big number when you take in account the hundreds that are now slowing down or closing hundreds of stores. And I think that’s going to play into us because we — unfortunately, we wish we did. We don’t have everyone shopping us, and we still have a lot.
We — our market share continues to go up every year, however. And as you can tell by our performance, we are gaining percent of our sales is new customers without a doubt, and we track that. But it’s a mix of new customers, up spend of existing as well as — and some of the up spend is driven by an additional visit. Not necessarily on the basket, John.
John Klinger: Yes, I mean I would say we break down the fourth quarter is probably half transactions and half basket, probably leaning a little bit more towards transactions.
Marni Shapiro: That’s fantastic. Best of luck with the…
Ernie Herrman: We do think, Marni, to what you’re getting at is the — we’re starting to differentiate ourselves even more because of all the brands that we have and shopper, we across the different brands and the different fashion looks and the different quality levels, we’re covering it across a wide band of pricing throughout all of those and trying to appeal to wider customer range than your typical retailer, which I think is working.
Marni Shapiro: I think it’s happening automatically on TikTok, you guys are cool, which is really hard to do when you’re this bigger retailer. And for this generation, you’re a cool place to shop. I can’t believe I’m saying that, but it feels like something has changed.
