Sam Poser: So, then Carl, how do you get the €“ I mean how are you maneuvering bringing the inventory down, or is most of this inventory down coming out of athletic receipts in the first €“ athletic and kids receipts in the first part of the year and then that improves, so to not have to take the markdowns like in boots and stuff like that.
Carl Scibetta: Yes. Sam, the inventory, as I have stated from a seasonal category and an age category is well in line. In fact, the seasonal inventory carryover is less than it was a year ago. We delivered and Kerry had pointed out a lot and we delivered delayed product and a lot of on-time product at the same time, which elevated the inventory in both of those areas. We have worked very closely with all our vendors to put together a program that enables us to maneuver, sell through that inventory, keep freshness going and get ourselves where we want to be as we head into the back-to-school timeframe. So, the need for markdowns to push out inventory isn’t there with the partnership we have had with our vendors.
Sam Poser: Okay. When you are comparing €“ when you were comparing Q1 earlier on the question, you were talking about year-over-year or versus €˜19?
Kerry Jackson: Anything that’s referencing €˜23, Q1 €˜23 will be against Q1 €˜22. We €“ it was important this year in €˜22 to recognize that what a comparable was €“ now the best compare was in €˜19. But as we rest into €˜23, the €˜22 results, we think are the new benchmark, and we will be comparing €˜23 against €˜22 from now on.
Sam Poser: Alright. I just want to clarify something. In Q4, the improved gross margin versus in Q4 €˜22, what was the breakdown of the gross margin versus 4Q €˜21? Was it 67 basis points of merch margin and the BD&O is flat on a year-over-year basis, or can you clarify that just year-over-year?
Kerry Jackson: So you are saying, you are wanting to know Q4 of €˜22 versus €˜21? Is that what you said, Sam?
Sam Poser: Right. The merch margin versus BD&O.
Kerry Jackson: Yes. The merch margin was up 250 basis points. We deleveraged BD&O by 150 basis points, and we saw 100 basis points improvement on a GAAP basis.
Sam Poser: Your gross margin €“ alright. Thank you very much. I appreciate it.
Kerry Jackson: Yes. Sam, you have to decide if you are talking about GAAP or adjusted because we had €“ with the acquisition of Shoe Station, we had adjusted earnings in Q4 of €˜21, which changed some of the margin numbers €“ we use the same either way.
Operator: Our next question comes from the line of Jim Chartier from Monness, Crespi and Hardt. Please proceed.
Jim Chartier: Good morning. Thanks for taking my questions. So, your gross margin in fourth quarter was the strongest 3-year performance of the year and well above the full year improvement. So, I am curious as you lap some of the freight and distribution expenses in the first half, how are we thinking about what the potential benefit from some of those tailwinds are? And then what are some of the headwinds you may be facing that offset that?
