“For 2023, we're targeting gross margin that's roughly flat year-over-year.”

In context

“like most of the margin pressure in 2023 is expected to land at the operating expense line. And I'm curious if you could talk to the puts and takes to gross margin specifically. And is it fair to assume the inflection we saw in Q4 to slightly positive is a fair year-over-year run rate from here just given the bulk of your supply chain investments are running their course and then freighted commodities could be a tailwind? Richard McPhail: There are a lot of ins and outs. There are a lot of ins and outs in 2022. We basically delivered gross margin precisely where we anticipated to at the beginning of the year. And underlying that was a lot of product costs and transportation costs offset by actions and within that continued supply chain investment in our downstream or delivery operations. For 2023, we're targeting gross margin that's roughly flat year-over-year. Again, it will be a year of several ins and outs. Product cost inflation has decreased but does persist above historical levels. Transportation costs should actually be a tailwind. But we still have investment in our supply chain. And look we did see some increased pressure from shrink in the back half, right? So, we've got a lot of ins and outs. But roughly speaking we're targeting essentially flat gross margin for the year. Zach Fadem: Got it. That's helpful. And then following up on the $1 billion in wage investment. Can you talk about where this puts you competitively versus your peers? And then if for whatever reason if your comp appears to be falling short of that flattish expectation range, would you still make the planned investments in 2023, or could you spread them out over a c”