Simeon Gutman: Thanks, and then a quick follow-up. This is to clarify some of the points, Jeremy. You made, I think, Brad made around market share. The story of the incredible market share of this year, is that you said more new accounts that you hadn’t serviced before, or is being a primary distributor meeting number one on the call, is that market share penetration, it keeps ticking higher?
Jeremy Fletcher: Yes, thanks for that question, Simeon, I wouldn’t want there to be any confusion there. It’s a little bit hard for us to really classify a new account versus not a new account. Our store teams are, man, they’re relentless in understanding every dollar business that’s done in the market. We will, especially, think about going into a new market. We’re gonna canvas that market, and we’re gonna take around our credit apps, and we’re going to want to sign up everybody to be an O’Reilly customer from day one. So the concept of completely new customers is a little bit foreign for us. It’s really how do you continue to grow our larger share of that wallet? And I think what we’ve seen, just broad-based over the strong momentum we’ve had, is that we’ve been able to grow share on both our larger accounts that were heavy purchases of O’Reilly parts, and maybe we already had first-class status all the way down what the culture would have looked like.
So it’s pretty broad-based for us. I don’t know if there’s any one type of customer group that we think is outside that moves the needle versus the broader population.
Simeon Gutman: Okay, thanks. Good luck.
Jeremy Fletcher: Thanks, Simeon.
Operator: Your next question for today is coming from Greg Melich with Evercore ISI.
Unidentified Analyst: Hey, guys, good morning. It’s Mike [indiscernible] on for Greg. Thanks for taking a question. I wanted to ask, first off, if I could, about the impact of inflation in the quarter. Can you just give us a sense of the level there? And then, do you see inflation just basically turning into more disinflation in the fourth quarter, or should we be thinking about the potential for outright deflation to come in?
Jeremy Fletcher: Yes, Mike, thanks for the question. Third quarter was kind of low single digits, that’s kind of continued ratchet down this year, completely in line with what we expect. We don’t, by any means, anticipate deflation within our business. We think our industry over the long-term has been able to hold the price levels. There’s a lot of inventory investment. It’s a nondiscretionary spend for certain, even as some of us realize some cost improvements. We’ve been able to hold on to our prices, and that’s what we would anticipate seeing moving forward. We’ve really, sort of, as we’ve exited third quarter, and we think about fourth quarter, we would really say, and I’ll break that in his comments, a normalized inflation environment, we’ll have a little bit of it.
It’s gonna be in that low single digits, not a huge tailwind, but really more consistent with what we’ve historically seen within the business, with the opportunity from an added benefit perspective that as parts become more complex and the new applications have better technology, the engineered better, the complexity is going to drive the overall value of the changing dynamic of parts to cause average tickets to go up, and then it’s our challenge to continue to grow those tickets just on how we provide great service to our customers.
Unidentified Analyst: And just from a gross margin comparison, I just wanted to ask anything to know from a LIFO perspective, as we head into the fourth quarter and or any impact from that on the third quarter?
Jeremy Fletcher: No, really, as we think about our, how we report and think about our gross margin, we view our reported gross margin as the best measurement of how we think about the business, most current reflection of what we’re paying for parts today and don’t really, I think, internally or externally view some of the changes in the nominal LIFO reserves on our balance sheet to be as relevant for us as what we think the top line reported margin is, and we continue to expect that to be stable as we’ve maintained our guidance really all year long on that item.
Unidentified Analyst: Thank you, good luck.
Jeremy Fletcher: Thanks, Mike.
Brad Beckham: Thanks Mike.
Operator: Your next question is coming from Christopher Hoevers from JPMorgan.
Christopher Hoevers: Good morning, guys, and thanks for taking my question and best of luck and congratulations, Greg. My first question is trying to dial in a little bit more on the SG&A. I guess, can you talk or help us think about how much of the SG&A is just naturally more variable relative to other retail models given how you incentivize and reward your employees? So like if, if comps were up three to five and we backed out the PTO adjustment, but then you ended up doing an eight, how would you think about that normalized SG&A for store growth of two to two and a half? What would that go to holding everything else constant?
Jeremy Fletcher: Yes, thanks, Chris. Appreciate the question. And there are, I think, a lot of moving pieces in that, especially in a year like this year when we’ve done some things that are outside of our normal cadence that’s spend as it relates to the investments that we’ve made. You know, we still continue to operate a relatively high fixed cost model just because of the nature of having so many units in the store teams that are there. So that does benefit us as we grow sales and be reluctant, I think, a little bit to quantify or try to parse out those individual numbers, but I think there is a positive. Certainly in a year like this when we’ve seen such an acceleration in growth, there’s just a level of activity that that requires and that’s a lot of what we saw here in the third quarter.
Part of that’s incentive comp, but part of it is, especially on the professional side of business, we don’t want to ever be in a spot where we can’t get parts out to our shops really quickly and manage that business. So it is a little bit of a mix between the two and I think it kind of a little bit more of a normalized sales environment. We expect that we’d be in a pretty stable place, but for sure our approach this year has been as we have gained the momentum that we have have the opportunity to accelerate that growth by investing in the business has been a key priority for us.
