Peter Benedict: Hi, guys. Good morning. I guess, Kurt, maybe a question for you. As we think about the EBIT margin and how it toggles within your guidance range, roughly speaking, about 15 basis points up or down per point of comp move. If you guys — if you think we see a scenario where your comps are either below the low end of your guide range or they come in above the high end of the range, any sense for how the incrementals or decrementals would look. Anything we should think about there is 15 basis points a good benchmark? Or just curious kind of your thoughts on that. Thank you.
Kurt Barton: Yes. I’ll give you a couple of points, Peter, on that. First, we’ve considered the micro strategic drivers, the macro favorable or unfavorable pressures for this year. We’ve given a guidance range, albeit slightly larger on the top and bottom line than we historically have that recognizes we’re in a time of uncertainty. And so we believe all of those scenarios, any plausible, reasonable scenarios have been factored into our guidance. So we don’t see likelihood outside of the downside of the guidance that we’ve given. That said, inside the guidance range, even outside of the guidance range, I’d point that the EBIT margin movement within sales range is not linear. And there’s a number of factors, certainly with the level of gross margin or what might be a factor that’s driving the low end of the range.
A deflationary environment, for example, gives us upside on margin rate. So I would not point to any linear and even outside of the range when you start considering incentive comp and other things, it’s not linear as well.
Operator: Thank you. Our next question comes from the line of Scot Ciccarelli with Truist. Your line is now open.
Scot Ciccarelli: Hi, guys. Scot Ciccarelli. Can you help quantify the comp lift that you’re baking into your model from your Garden Centers this year? I think you mentioned you have about 40% penetration now, and we know that the spring selling season was largely wiped out in 2023 and probably even 2022. And maybe any other color on the performance of the Garden Centers as that program matures? Thanks.
Kurt Barton: Yes, sure. Why don’t I start with that, Scot, on the comp, and then I’ll toss it to set a little bit on the performance of Garden Centers, some of the 2024 drivers, et cetera. Our expectation and how we’ve modeled in our long-term targets is still the same as our expectations for 2024. As we continue to add Garden Centers roughly 150 to 200 of those a year. And you get from Fusion and Garden Center mid-single-digit to high single-digit on combo lift as those mature in year one and then a lower benefit in like year two, but still a benefit over the chain, that roughly plays into our algorithm, and we would anticipate for this year to play similar to that the Fusion Garden Center initiative is driving — give or take some roughly one point of comp in our guidance range.
And Neighbor’s Club is another initiative that’s driving consumers to spend up the tiers, more transactions, getting more of their share of wallet is another driver. So just kind of pointing out the two biggest strategic initiative drivers, and then I’ll toss it over to Seth, maybe to talk a little bit about what’s driving the garden centers.
Seth Estep: Yes. Thanks, Kurt. Thanks, Scot, for the question. Scot, first, I’ll just start with as we think about our garden center initiative, just the size of the addressable market there is over $20 billion. And as we know, it’s a place where our customers participated, where they didn’t necessarily look at us as their first and primary destination for those categories, and we believe we have significant share opportunities as we look at the lawn and garden segment. Over the course of the last three years, as Kurt has mentioned, we have really been focused on driving scale to build out our grower base and then build to the 450-plus garden centers where we’ll be entering spring, which we really believe this is the year that the team is really going to be able to drive some sales.
As we go into spring with those 450, I mean, obviously, we’re focused on winning those spring categories as well as building out both fall and our winter seasonal related areas to make sure that we can leverage and maximize that footprint. Not just in the spring season, but also in the 12 months of the year. So, very excited about the work that the team has been doing, very excited about the size of the prize there, and I think this is the year which really all going to come together. We built scale and how those programs are going to be hitting stores.
Operator: Thank you. The next question comes from the line of Chuck Grom with Gordon Haskett Research Advisors. Your line is now open.
Chuck Grom: Hey thanks very much. Happy New Year guys. Now that you’ve completed the Orscheln conversions, I guess I’m curious your outlook on sales productivity and margins of these locations. And I guess now that they’re in the set, how does that compare to the legacy Tractor Supply stores? And when we look at 2024 and ’25, how do we think about the sales maturation curve and the benefit to comps from those stores? Thanks.
Kurt Barton: Yes, Chuck, this is Kurt. The Orscheln conversion went very well. All stores converted, as we mentioned, to the Tractor Supply brand. The first six to nine months of — since the acquisition was a transition, a lot of noise through that. We now have them all branded Tractor Supply. The team is engaged. We’ve got the Tractor Supply products and services, our Tractor Supply, feed and food brands. And when we begin to cycle that in second quarter where we converted all over we do anticipate to see much like a new store maturation, perhaps we’ll learn it in a similar type maturation curve, but we anticipate and have baked into our guidance some new store maturation type comp benefit from those 81 stores as well. And how it compares?
