So I feel very good about the gross margin opportunity, again, on lower sales based on how the teams are managing inventories in our stores and our distribution centers.
Marni Shapiro: Thanks, and I also just wanted to clarify an earlier comment on the impact of the CFPB ruling. It sounds like you’re saying the late fees don’t flow directly into the P&L. I wanted to clarify whether they flow indirectly or are you saying it’s just not an input to your credit sharing arrangement?
Tim Johnson: It’s not an input to our P&L. That’s something that is between our provider and the customer.
Marni Shapiro: Thanks, good luck.
Martin Waters: Yes, great. Thanks Warren. Fran, I think we have time for one more question.
Operator: Then our final today is from Mauricio Serna with UBS and your line is open.
Mauricio Serna: Great, good morning. Thanks for taking my question. You just wanted to ask about the operating margin outlook. Maybe you could help us reconcile on the SG&A. As you were mentioning earlier in the call, I think you called out, first quarter it seems that SG&A dollars are up, like $10 million, $15 million year-over-year in Q1, which is roughly like 2% to 3%. Just wondering if that should be the run rate we should assume for the rest of the year, excluding the impact of the additional week on Q4. I just wanted to get more sense. If that increased, what kind of — where is that coming from? Is it technology, marketing? What would be the building blocks for that? Thank you.
Tim Johnson: Yeah, we’re not breaking down Q2, Q3, and Q4 at the line item at this point, Mauricio, so I can’t really help you too much further than what we’ve done. Other than to say, expense hours being up slightly here in the first quarter is really being driven by two or three things. I think, first off, we’re continuing to lean into investing in technology and customer experience initiatives that were talked about at the Investor Day. I think the second piece that Martin referred to a moment ago, we are seeing some timing on marketing spend principally at Adore Me business to grow the file and grow sales over the entirety of the year. We will still have some level of merit pressure across our 800 plus stores and distribution centers and 25,000 associates or more.
So there are some level of merit pressures. So I think on a base of roughly $450 million or so in the prior year, being up slightly, we think is managing the business pretty tightly in a difficult environment. So I feel very good that the team is able to accomplish an SG&A leverage point in that 1% to 2% range throughout — on an annual basis for the year.
Mauricio Serna: Got it. Thank you very much.
Tim Johnson: Thanks.
Kevin Wynk: Okay, thanks everyone. Appreciate the time today. Have a great day.
Martin Waters: Thanks everybody.
Tim Johnson:
Operator: Thank you. We are now concluded. Again, thank you very much for your participation. Please disconnect at this time. Have your great day.
