Mary Meixelsperger: Yes, absolutely, Daniel. I will tell you, we saw year-over-year gross margin leverage of about 40 basis points. And if you take out the depreciation impact actually saw 140 basis points of leverage before the impact of higher levels of depreciation. And that’s certainly one of the things that impacted margins sequentially from Q4 to Q1 as well, as the depreciation impact. We’re pleased with the labor leverage we saw in the quarter. We saw some very meaningful labor leverage that was offset modestly by some operating expense deleverage. That’s really timing related in the quarter. It is a seasonally low quarter from a sales perspective. And we also have done a better balancing, if you would, of managing our maintenance expenses throughout the year.
We also, with new stores opening, saw some deleverage from those new stores as well. So there was no surprise for us in terms of how we managed, I would say, for the balance of the year. We will likely continue to see leverage at the margin line, although I wouldn’t expect to see as much labor leverage as we saw in the first quarter necessarily.
Lori Flees: Yes, Daniel, I’ll just add. Q1, we have to manage our labor, and there’s always a step down as folks transition from the summer jobs back into college. And then as our volume starts to drop, we have to manage that labor pretty extensively. So when you see the difference Q4 to Q1, some of that is literally just the leverage of the cars coming through the stores and how we balance labor. But the year-over-year compare from a margin perspective was really strong, and our teams have made a lot of progress since last year, we would have talked about the fact that we were focused on labor management and optimization and better scheduling, as you’ll recall from previous earnings calls. And really, a lot of the improvement year-over-year is a testament to that, although some of those low-hanging fruit improvements happened in Q2.
So the year-over-year compare from a labor management won’t be quite as strong because you’ll have started to see some of the labor impact hitting in Q2. So this is the last cycle. Though we still have opportunity, and we continue to manage the labor line, which is our largest cost of sales item. And the biggest thing we’re proud of is that our attrition rates are so low. As I mentioned, we’ve got the lowest attrition rate ending the quarter that we’ve had since pre-COVID, which is really a testament to the work our team has been doing across the recruiting side and setting expectations and how we attract talent to also how we onboard and train the talent to ensure that we can keep the technicians that we’re training in the stores for longer.
And those things are the things that we’re really proud about. And then our central ops team that we put in place has really been driving with operations, some of the tools that have enabled them to manage that so effectively.
Daniel Imbro: Understood. I appreciate all the color. And then maybe a follow-up on the comp growth outlook. So you said there was 100 basis points of a negative impact from the calendar in the fiscal first quarter. That will improve I guess, can you remind us how winter weather historically should impact non-oil-change revenue? Would you see a higher service battery attachment here in the second quarter where that becomes more of a positive tailwind for the ticket growth? Just trying to think about what are the impacts as you see that pent-up demand come back into the stores. Thanks.
Lori Flees: Yes. Great question, Daniel. Battery sales typically tip up when you get cold when the cold weather really sets in. Normally, we see that in December. In December, it was fairly muted because it was a milder December this year for the majority of our regions. But in January, we definitely have — I think, all of retail was impacted by pretty broad-based arctic cold coming in and making people not wanting to go out and schools being closed, et cetera. That’s actually created, we can see, some of that pent-up battery demand pushing into January and February, as they get back in their cars and realize that their battery needs to be replaced. So we are — we do see those seasonal things. Battery is a small piece of our overall ticket as an average, but we do see those things and as we would have expected with the colder weather.
Daniel Imbro: Understood. Thanks for the color and best of luck.
Operator: Thank you. And the next question goes to Kate McShane of Goldman Sachs. Kate, please go ahead. Your line is open.
Katharine McShane: Hi, good morning. Thanks for taking our question. We wanted to ask about your initiative on reducing costs of the new builds and where you are, I guess, in that process? And how we should think about unit economics going forward as a result of this initiative.
Lori Flees: Thanks, Kate. As we mentioned in our last earnings, we’ve been both working internally on the design of our stores and taking out elements of the design that add costs, but don’t add value. Some of those things will take time to cycle through. We’re in the process now of reviewing some of the opportunities with our franchise partners and getting and doing some compares around build costs and site costs that they’ve had. So what I would say is we still believe there’s opportunity, things that we can implement. We are implementing things to reduce the cost of converting an acquisition store to a Valvoline store, as an example. Some of those things will start to show in our capital cost for new builds, but the — sorry, the capital cost for conversions for new units.
