Dave Kimbell : Okay, thanks Olivia. Yes, I’ll talk about new product at our newness pipeline and then Paula can pick up on your question around margins, so yeah, we’re, well, first I’ll say newness is always a critical part of our business and historically has been between 20% to 30% of our sales And that’s an important part of the category and one of the best things about the category There is a large desire from our beauty enthusiasts guests from our members to discover what’s new and exciting across all of our categories and so we do have what I believe is a well-balanced portfolio of new brands between big, recognized brands like Charlotte Tilbury, as well as a steady stream of emerging brands that are unique or exciting within the Ulta Beauty environment, and so we’re not going to give any specific numbers about newness this year versus last year, but I will give you a couple of highlights.
First, you mentioned Charlotte Tilbury, and just to reiterate, that is in 600 stores and online, and we’re excited about that. It was one of the top requested brands from our members, and we’re pleased to be partnering with them to bring a unique and powerful experience to life. The Sol de Janeiro is in 700 stores and also online, and also was highly requested and brings just a terrific experience in store and online and has been very well received since we launched that in January. But there’s a whole range of products that we’re going to continue to launch and bring to life. We do focus, as I said, on emerging brands. And while I’m not going to for competitive reasons share some of the pipeline that are ahead of us, I’d highlight some of the brands that we launched last year, like Lola Bay, Polite Society, Half Magic, a brand like Live Tinted, which has been with us for a little bit, important brands playing an exciting role in driving growth in various categories that we’re excited about, and our luxury business that I talked about.
We continue to add brands to that throughout the year and see growth. So newness important. We like the balance that we have. We’re excited about the brands that we’ve launched so far, and I look forward to rolling out more partnerships and bringing newness across our portfolio throughout 2024. Paula, on the margin question?
Paula Oyibo : Yes. So from an operating margin perspective, we share 14% to 14.3% of sales, and that is mostly deleverage coming from SG&A as we complete many of our foundational elements of our transformational agenda and move to investments to enable growth, as well as we operationalize the investments that we made to date, and those go into one state. We also are managing ongoing wage pressures, which is assumed in a guidance, and we also will continue to support core traffic and experienced drivers. And so as you think about SG&A growth for the year, it will moderate into the high single digit range from the 12.5% growth we saw in fiscal 2023. And then we do expect gross margin to be down modestly as lower merchandise margin and deleveraged from supply chain costs are partially offset by the growth we see and expect in other revenues.
Operator: Our next question comes from the line of Michael Baker with DA Davidson.
Michael Baker: Okay, thanks. Really, just to follow up on what you just said, can you tell us where you are in this investment, in these foundational investments? I think you said $62 million in 2023, which was a blow plan and shift some into 2024. So what should it be in 2024? And even working backwards, can you remind us what it was in ‘21 in 2022, it was sort of supposed to be a three year investment plan that was rolling off. Sounds like it’s still rolling off, although there’ll be some lingering costs in 2024, so just trying to conceptualize what 2024 investments will look like versus 2023. Thank you.
Paula Oyibo : Yes, Michael, I’ll start with some of the numbers and then turn it over to Kecia so she can give a little bit more flavor for where we are. So we had incremental $55 million in 2022 related to our transformational strategic investments. We communicated $62 million incremental in 2023. As you think about 2024, we expect limited incremental investment as we complete the foundational elements of our transformational agenda. Think about project SOAR, Digital Store, and other IT projects. But as I communicated, once we completed those particular systems, these upgraded systems rolled into our core operations and become a part of our base and there’s run cost associated with that. So there is run costs associated with those foundational investments. We will continue to invest to enable growth, as well as the other items that I mentioned regarding wage pressures in investing in traffic and experienced drivers. Kecia?
Kecia Steelman: Yes, so in regards to like where we are on the investments and where we are in the projects for our ERP upgrade or what we’re internally calling as Project SOAR. Just this week, we completed our Dallas DC and we have plans to wrap up Greenwood and Fresno and open up our new MFC in Bolingbrook, which is a relocation of the existing FFC in Romeoville, all before peaks this year. Part of that ERP upgrade, we are also transitioning our store systems and our merchandising systems and we have those plans to be completed before the second half again prior to peak. For supply chain in ’24, we’re continuing to invest in our automation capabilities and I mentioned already the MFC and Bolingbrook hits on our supply chain lines and then also finishing out that retrofit in Dallas, the Dallas DC.
And then for the digital store of the futures, a digital store platform we expect that to be completed in the first half of 2024 and we are wrapping up all of our upgrades around our analytical tools and reporting capabilities. So bottom line, we continue to be on track and on our budget and we are all in on wrapping these foundational enabling systems up this year.
Operator: Our next question comes in the line of Anthony Chukumba with Loop Capital Markets.
