So that’s how we’re thinking about the cadence of the quarter.
Matt Koranda: Okay. All right. That sounds fair. And then just in terms of the product margins, maybe I wanted to drill down on that a bit more. I guess they’ve been in decline for a couple of years. And I think largely, it seems like it’s probably a product of the environment and more promotionality across a lot of competitors and peers. But what are the levers that we can understand that you have at your disposal to sort of improve product margins over this coming year other than just sort of waiting for a better demand environment?
Hezy Shaked: Well, it’s pretty basic. We are renegotiating cost and lowering our costs quite a bit, believe it or not. And where applicable, we’re increasing retail, which we didn’t do for a long time, and we’ve been completely out of whack with the market. So that’s the two reasons and ways we’re going to change those margins.
Michael Henry: Yes. And Matt, I’d just add, last year, our product margins were at a company low. So it speaks to the nature of the opportunity that’s there, if we can execute better as we go through the year. Obviously, we need to prove that over the course of all four quarters of the year to continue to move us back in the right direction. But we’re reasonably satisfied with what we’re seeing so far. There’s a long way to go, but we are pretty pleased with the improvement that we’ve seen thus far.
Hezy Shaked: I will add one more thing is that margins are results of, as you know, cost, retail and level of inventory. So the level of inventory was very good throughout the years. It wasn’t a prom of too many markdowns. The opportunity was we got our eyes off the ball a little bit in the two areas that I mentioned.
Matt Koranda: Okay. Great color, guys. I appreciate that. One other one, if I could sneak one in. Just — on SG&A, I noticed the guide there for the first quarter looks just a touch down year-over-year. So I just wanted to see and maybe give you the chance to call out, elements of efficiency that you’re generating in SG&A, where maybe we’re getting a little bit of potential for leverage as you start to grow that top line, hopefully, eventually?
Michael Henry: Yes. The biggest thing in SG&A, as you know, is store payroll and related benefits. It’s almost half of total SG&A, and our store operations teams and my financial planning teams work awful hard on that together, trying to be as sharp as we possibly can, week after week, store by store, planning what we expect realistic sales expectations to be and being as tight on the hours as we can. Those groups have just done a great job of being super sharp despite the conditions that we’ve been facing from top line. And there’s just — at some point, there’s a floor, right? With the size of our stores, you can’t go below two people coverage in a store and be safe for our employees and have good customer service. So there are limits to how far we can squeeze that — but I’m really proud of the effort that those teams have put in.
That’s the biggest item in SG&A is store payroll. The rest of it is, I’ll call it, reasonably fixed. There’s some things that do move with sales like credit card processing fees and minor things like that, but it’s really about store payroll being managed tightly for us to keep control over that SG&A line.
Operator: Your next question will come from Mitch Kummetz with Seaport Research.
Mitch Kummetz: Mike, can we — just housekeeping to start with. Can you give us comp by month for the fourth quarter?
Michael Henry: Hold on just a moment. They were fairly consistent from month to month. November was down 8.5, December was down 9.5, January was down 7.2.
Mitch Kummetz: Okay. And on Q1, so you talked about California and some of the challenges there early in the quarter. I know there were some weather challenges in California last year. Can you remind us when were those issues?
Michael Henry: I don’t have last year’s specific dates in front of me. I can just tell you, as I mentioned earlier, obviously, with what we faced this year California was down 23%, 24% in the first week and was down between 17% and 22% between Northern and Southern California in the second week. So that started us in a meaningful hole when you think about 100 of our stores, 100 of our roughly 250 being in our home state. And then — the last two weeks of February were a little bit better. And then as I mentioned so far in March, total company were down single digits with California getting very close to flat and showing signs of turning positive. So we’re really hopeful that trend line can continue and actually see some growth in California at some point. We’re hopeful.
Mitch Kummetz: I guess I was asking the question, just to try to help understand if maybe some of that improvement is that you’re now lapping the bad weather from a year ago. Maybe it doesn’t seem that way. And then maybe a couple of last things, through back-to-school and holiday last year, there’s a lot of talk from a lot of retailers about consumers’ shopping events and then kind of going dark in between. How do you see like the first half setting up from an event standpoint? I know you talked about maybe better weather can help drive some traffic. But do you really see there being any kind of must shopping advance between now and back-to-school?
