Greetings and welcome to the Home Depot third quarter 2020 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star, zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Isabel Janci. Please go ahead.

Thank you Christine and good morning everyone. Joining us on our call today are Craig Menear, Chairman and CEO; Ted Decker, President and Chief Operating Officer, and Richard McPhail, Executive Vice President and Chief Financial Officer. Following our prepared remarks, the call will be open for questions. Questions will be limited to analyst and investors and, as a reminder, please limit yourself to one question with one follow-up. If we are unable to get to your question during the call, please call our Investor Relations department at 770-384-2387. Before I turn the call over to Craig, let me remind you that today’s press release and the presentations made by our executives include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include but are not limited to the factors identified in the release and in our filings with the Securities and Exchange Commission. Today’s presentation will also include certain non-GAAP measures. Reconciliation of these measures is provided on our website. Now let me turn the call over to Craig.

Thank you Isabel, and thanks for joining our call this morning. We hope that you and your loved ones are safe and healthy. As we announced yesterday, we entered into a definitive agreement to acquire HD Supply, a leading national distributor of maintenance, repair and operations products in the multi-family and hospitality end markets. Before moving to the results of the quarter, I want to take a moment to discuss how HD supply fits into our strategic framework. As you know, the MRO customer is an important pro customer for The Home Depot. We are committed to better serving the MRO customer and growing in this space. The success we’ve had with our existing MRO business makes us confident in our ability to accelerate sales growth in a highly fragmented $55 billion MRO marketplace. While the transaction is subject to customary regulatory approvals, I look forward to welcoming the HD Supply associates to The Home Depot. Richard will take you through the financial details shortly. Now let’s discuss our third quarter results. Sales for the third quarter grew $6.3 billion to $33.5 billion, up 23.2% from last year. Comp sales were up 24.1% from last year with U.S. comps of positive 24.6%. Diluted earnings per share were $3.18 in the third quarter. The third quarter was another exceptional quarter for The Home Depot as we saw the continuation of outsized demand for home improvement projects. Our results were driven by broad-based strength across the store and geographies. All of our top 40 markets posted double digit comps while Canada posted comps above the company average and Mexico posted its best performance since the onset of the pandemic, with double-digit comps in local currency. As Ted will detail, both tickets and transactions were up double digits in the quarter and we…

Thanks Craig, and good morning everyone. I want to thank all of our associates and supplier partners for their incredible effort to serve our customers in this unprecedented environment. The consistently strong demand we’ve seen over the last six month has been remarkable. For the last two quarters, we have seen comps north of 20% for 25 of the 26 weeks. The strong demand has pressured supply chains, and we have partnered with our supplier partners to make various improvements. As we mentioned last quarter, the actions we took include adjusting our assortments and plan-o-grams, introducing alternative products and, in some cases, reducing the numbers of SKUs in certain categories to focus on the highest demand products. In addition, we are further mechanizing our rapid deployment center network. We’ve now implemented mechanized floor loading in two-thirds of our facilities, meaningfully improving our productivity in those buildings. As a result of all these actions, we have seen reduced product lead times and continued improvement in our in-stock positions. The in-stock level in our U.S. stores has improved for 12 straight weeks. While we are pleased with these results, we are not at pre-pandemic levels. We have also revisited customer fulfillment choices, some of which we’d paused earlier in the year. As a result, we are starting to reestablish premium delivery windows and express car and van delivery service that covers over 70% of the U.S. population. During the third quarter, each of our merchandising departments posted double-digit comps, led by our lumber and décor and storage departments. Our comp average ticket increased 10% and comp transactions increased 13%. The growth in our comp average ticket was driven primarily by the continuation of project demand we saw in the second quarter, customers trading up to new and innovative items, as well as…

Thank you Ted, and good morning everyone. We appreciate everyone joining the call today and we hope you and your loved ones are safe and healthy. In the third quarter, total sales were $33.5 billion, a 23.2% increase from last year. Foreign exchange rates negatively impacted total sales growth by approximately $100 million. Our total company comps were positive 24.1% for the quarter with positive comps of 21.8% in August, 27.8% in September, and 23% in October. Comps in the U.S. were positive 24.6% for the quarter with positive comps of 22.6% in August, 28.5% in September, and 23% in October. Our comps in August and September of this year were impacted by a shift in our Labor Day event. This year, our Labor Day event fell in fiscal September, and last year it fell in fiscal August. If we adjust for this shift, our monthly comps in the U.S. would be 24.7% in August and 26.4% in September. All 19 of our U.S. regions, as well as Canada and Mexico posted double-digit positive comps in local currency. In the third quarter, our gross margin was 34.2%, a decrease of approximately 30 basis points from last year. Gross margin was negatively impacted during the quarter by several factors, including product mix and pressure from shrink. Mix pressure from lumber alone negatively impacted gross margin by approximately 35 basis points in the third quarter. The decline in gross margin was partially offset by the benefit of reduced promotional events during the quarter. During the third quarter, operating expenses were approximately 19.7% of sales, representing a decrease of approximately 30 basis points compared to last year. Let me take a moment to comment on a few of our expense items. First, during the quarter we continued to support our associates with enhanced…

[Operator instructions] Our first question comes from the line of Christopher Horvers with JP Morgan. Please proceed with your question.

Thanks, good morning guys. I know you mentioned about the slight acceleration quarter to date, but I was wondering if what you’ve seen in area where COVID cases have spiked, what do you think the business looks like as it gets colder and outdoor DIY gets tougher? You mentioned the low 20% ex-gardening comp - do you think that’s a good proxy for the underlying trend, or would you expect the large pro to continue to improve and provide a benefit?

Chris, the first comment would be we see no correlation in the business as it relates to COVID cases. Our performance overall was actually really tight geography-wise, and we saw broad strength across the store. As Ted mentioned, we had an extended season because of the weather in garden, but we were extremely pleased with the performance outside of our outdoor categories, so we feel good about that. We’ve seen the pro continue to recover and the large pro recover.

Got it, and then a couple follow-up questions on the investment outlook. It sounds like you’re making progress on the store investments again. Will you end up on track versus the original plan, and what do you think about the degree at which investment dollars and SG&A are down year-over-year in 2021? Then now that you have HD Supply, was curious how many of the 150 or so new buildings that you’ve planned to build under the current investment plan related to the MRO, and does the acquisition of HD Supply impact the outlook for building those buildings and capex related to that? Thank you.

With respect to the investment outlook, as we’ve said in the past, we have deferred certain investments that principally relate to investments made inside the store. A large number of those investments remain deferred. We started the year with a capex plan of approximately $2.8 billion. We have deferred less than half a billion dollars, so while I won’t give you an exact number, I would say we will see deferral of, call it $300 million to $400 million from our original plans in 2020. Some of that may push into 2021, and we’ll update you as time goes on; but I would say that overall, 2021 is going to be very similar to 2020 in terms of capex.

And as it relates to the HD Supply asset base in total, obviously we’ll take a look at that and we’ll evaluate the combined asset base once this gets approval, and we’ll move forward with what we think the best leverage point is to serve our customers and grow in the MRO space, which is a $55 billion fragmented market that we’re pretty excited about.

If I could just take a minute, Chris, on what we’ve accomplished, while we did push a bit into 2021, we’re just thrilled that we are finishing the investment in our new look and feel of the store. Our sign packages will be done in all U.S. stores this year - I think that is probably the first time the brand standard across all the United States stores has been the same, maybe since our first two stores opened in 1979. We have completed all of our self checkout refreshes, we’ve added storage to most of our stores for online pick-up, we’ve implemented electronic sign labels in all our appliance departments, completely refreshed our color wall experience in our paint department, we’ve completed the tool corral by brand standards in those leading brands in our tool business, and we’ve also taken that to our outdoor power equipment and we’ll be done early next year resetting all our outdoor power equipment, again by those battery platforms that are leading brands in the industry. We’ve completed a ton of work despite some of the setbacks with COVID this year. The team just did a terrific job getting all that work done.

So then Richard, I know you mentioned capex deferring in, but I think originally ’21 was from an opex perspective a source of funds - you know, incremental investment dollars down year-over-year versus being up the past few years. Do you still expect those investment dollars in opex to be down in ’21?

They’ll be flat to down in ’21, those specific expense dollars with respect to the investment program that continued alongside the deferred spending in ’20.

Got it. Have a great holiday season.

Thank you.

Our next question comes from the line of Scot Ciccarelli with RBC. Please proceed with your question.

Good morning guys. You did talk about product mix as the primary factor for the gross margin decline. Was there much of an impact on gross margins from channel mix as ecommerce has outpaced store growth, or was it really all on the product side or were there any other factors we should be mindful of? Thanks.

Nothing in particular, Scot. By far the big driver was the lumber penetration, the lumber mix, as strong as that business was.

So as we--just thinking about this going forward, Ted, should we think about if we wind up seeing a more normalized mix, getting back to, let’s call it flattish kind of gross margins, is that the right way to think about it from a cadence perspective?

I think at this point with the level of uncertainty in the environment and the dynamics in the business today, we wouldn’t give any forward expectations with respect to margins. We’re running a very healthy business. We run it on a portfolio basis. You bring up channel mix - we run this as a portfolio and have for many, many years, and you’ve seen the stability in our gross margin reflects that. Remember that over 60% of sales that are purchased on our digital assets are picked up in the store and have an identical mix in essence to our store mix, so that’s where we stand. We’re very comfortable with the mix of business we see.

Okay, very helpful. Thanks guys.

Our next question comes from the line of Michael Lasser with UBS. Please proceed with your question.

Good morning. Thanks a lot for taking my question. There’s a lot of moving pieces with Home Depot’s longer run earnings power between any changes in consumer behavior, the incremental costs that you’re paying your associates, the acquisition of HD Supply, channel mix, so relative to the 14% operating margin expectation you put out previously, recognizing that that’s sale expectation and you’re not providing longer run guidance, do you think the business can now earn a higher, lower, or about the same margin, knowing what you know today than what you had thought previously?

Well, I’d say a lot is dynamic, but many things stay the same. I think we have executed exceptionally well in terms of expense management throughout the year, and I think you can expect that from us in the future. I think one thing I will just make sure that we clarify is how the shape of our investments to support our associates goes from 2020 into 2021. As we said, our expenses through the first three quarters of the year in support of our associates totaled approximately $1.7 billion. We are transitioning the nature of those investments into permanent wage investments during the fourth quarter, so if you think about the fourth quarter, we’re not going to quite be down to that billion dollar annualized run rate as some of these programs leak into the beginning of the fourth quarter. We will be lower than the third quarter run rate, but add it to $1.7 billion and say that 2020 will likely end at a total of $2 billion of investments in our associates. Of that $2 billion, only $1 billion will remain in our cost base in 2021, so I think that’s the most important fact with respect to our cost base. I’d like to make sure we clarify that.

And Michael, the only other comment I’d add to that is everything that we’ve been doing through our investment program is to try to position The Home Depot to grow faster than the market on a consistent basis no matter what the operating environment is, and to deliver incremental op margin dollars as a result. That’s our focus. That’s what we’re trying to get done.

Great, that’s a good segue to my second question, which is recognizing that it’s very hard to prognosticate how demand for overall home improvements is going to shape up next year, if you had to make an estimate, what percentage of your categories or your SKUs do you think you’ll be ordering inventories down next year?

First of all, the inventory planning for The Home Depot is on a very short cycle. We plan really week to week. We release orders every single day, and 70% of what we purchase is domestic goods and comes from short lead time-type performance, so we’ll manage that on a day by day, week by week basis based on what we see in demand, and really we’re not looking to extrapolate anything at this point from current performance. Our whole focus is on being able to be flexible and agile and adjust accordingly.

Okay, I guess the heart of the question was do you think home improvement demand is going to grow next year?

Look, the only thing I can tell you at this point is when we talk to our customers and we do work on surveys, the customer tells us that the home has never been more important, maintenance in the home is going up as people spend way more time in their home, and they tell us there’s a significant percentage of folks that say they are going to do a project within the next six months, so everything that we see at this point in terms of customer feedback would suggest they’re going to continue to invest in their homes.

And at the same time, there’s a lot of uncertainty in the environment. There are macroeconomic fundamentals that we’re all going to be subject to, so I think if you think about it on a comparative basis, as Craig said, home improvement is a great space to be in at the moment, and as customers--you know, it’s interesting. You look at the housing dynamics and you say when customers see their home price appreciate, they tend to invest more in their homes. Again, regarding our comments, because of the uncertainty in the macro environment, and so at this point we really can’t comment on ’21 but we do think there’s a lot of confidence with respect to home improvement in our customers’ minds.

Understood. Thank you so much, and have a really nice holiday.

Thank you.

Your next question comes from the line of Karen Short with Barclays. Please proceed with your question.

Hi, thanks very much. Just a couple questions. I guess I’m wondering with respect to your inventory, following up on Michael’s question, do you actually think you maybe lost sales with inventory that was a little too lean, and then wondering how to think about inventory for the fourth quarter? Then the second question I had is you obviously have more and more information on your DIY customer than you’ve had for the last several quarters, given the ecomm penetration. I’m wondering if you could give a little more color on what the general demographic is looking like now and what the biggest shift or changes that you’ve seen from an age or income cohort.

On inventory, Karen, it would be hard to gauge some of the lost sales opportunity. That would have likely been more of a Q2 impact for us because we did go in with a little more conservative approach when the pandemic hit. As you know, we limited customer hours, limited customer counts, and we also pulled back on inventory. Since that time, though, between the merchandising team and the supply chain team and the sourcing teams and transportation team, they really have just done an incredible effort flowing product into the store. As I said in my prepared remarks, we improved in-stock levels every week of the quarter. Our inventory grew over $400 million from the prior year, and that was our first year-over-year increase that we have seen this year. In pure volumes, if you look at our accounts payable, that gives you an indication of how much goods we have flowed into the buildings - it’s over $3 billion from our low point, so the in-stocks still are not exactly where we’d like them to be, but incredible improvement. The work the merchants have done, even though the in-stocks still have some ways to go, by working on the right SKUs with our supplier partners, updating plan-o-grams and the like, we believe we have the product and the type of items in the store that our customers are looking for. As it relates to online trends, you’re absolutely right - our online business, we couldn’t be happier with the performance of our digital assets, and remember we are an interconnected business, so with everything I’m about to say, remember that over 60%-odd of our goods are picked up in our store. Nonetheless, our interconnected business grew by 80%, the penetration was 13% to the business, the sales--you know, that translates to nearly $2 billion of sales growth in the quarter for our online business. Our visits are up dramatically - we’re up in mobile, desktop, mobile web. Our conversion is up despite hyper growth in app and mobile web, that tend to have lower conversion rates than desktop. Our app downloads are way up, our active app users are way up, our orders are up. My Account - these are folks who are setting up an account with Home Depot, so obviously we know them better when they set up an account or weigh up. Millennials are highly engaged with The Home Depot. You asked customer profile - our pros are highly engaged, our B2B website is seeing record volumes and engagement with our pro customer. I’ll stop there, but it is a robust interconnected digital environment right now at The Home Depot.

Great, thanks very much.

Your next question comes from the line of Kate McShane with Goldman Sachs. Please proceed with your question.

Hi, good morning. Thanks for taking my question. I know you gave your comments on HD Supply, but I wonder if there was any more color you could give on the source and magnitude of any synergies, and how much debt might be taken or raised for the deal?

We’re really excited about what the combination of these two MRO businesses will bring to our customer. We think we’ve got the opportunity to create significant shareholder value creation through that combination. We’re not going to talk about the degree of accretion, but we’re confident that we’ll see earnings per share accretion in 2021.

Kate, what we’re excited about is if you--you know, these are rough numbers. If you think about $130 million occupied households in the United States, about 80 million of that is kind of owned households, single family. There’s 50 million that is rental, and of the 50, about 30 million give or take is in the multi-family operations type business. That is a huge opportunity for The Home Depot to continue to grow not only on the MRO side but as we build relationships with customers on the MRO side, we build relationships to be able to participate in capital refreshes of those facilities as well, which is something that we’re pretty focused on. We’re super excited about the opportunity that comes with this MRO space.

Okay, thank you. I wonder if I could ask an unrelated follow-up question, just in regards to your seasonal business that you do in the fourth quarter. Is there any way to dimensionalize or size how big of a business that is becoming for you in the fourth quarter?

I’m trying to remember off the top of my head. We talk about seasonal breakout of outdoor categories. The fourth quarter is the lowest of the year, right Ted?

Yes, so generally it’s been shifting a little bit this year given the extended garden season and as engaged as customers have been. But we usually think of Q4 of low 21%-ish penetration of what we would deem outdoor business, and that very much is the low point with Q2 traditionally being the high point - think of mid-30s, so that’s sort of the range of changes in the business.

Thank you.

Our next question comes from the line of Simeon Gutman with Morgan Stanley. Please proceed with your question.

Thanks, good morning everyone. First, a question for Richard. You mentioned a few macro factors, and I’m trying to extrapolate it - it sounds like you’re a little bit more bullish on those than maybe you were in prior calls. Can you give us any sense--I know you said directionally getting better. Can you give us a sense what these inputs could look like for 2021 just in terms of magnitude, whether it’s home price appreciation, housing turnover, etc.?

In my earlier comments, I said we’re really pleased with the current level of consumer sentiment and consumption in the economy. I’m not going to make a prediction on where those macroeconomic levers go in the future.

The only thing, Simeon, that I would say is I think the last number I saw is somewhere in the 2.7 months of supply in housing, and the historical average on that is six months, so you’d have to believe that’s going to continue to hold up home values. I think home value improvements have been the surprise this year

I think it’s a positive housing environment. We’re not extrapolating that into expectations for sales, principally because of the uncertainty in the macro environment. We are optimistic and current conditions are certainly favorable for home improvement, but there is uncertainty. We’ll learn a lot in the fourth quarter.

Okay, fair enough. Then my follow-up, based on the results by customer type, right - the pro customer’s coming back, can you talk about the backlog that you’re seeing? Are you seeing the jobs that are coming back to normal, indoor jobs, and I think--it may have been asked earlier, but the transition from outdoor to indoor, how is that taking place?

Simeon, you’re right - the pro has been coming back. We see double-digit comps in pro, we did last quarter as well. Small pro is leading the large pro. We’ve seen that large pro really strengthen in the larger metro markets, and our services business, if you look at that as a benchmark to pro business, we have one of the larger backlogs of to-be-installed sales jobs that we’ve ever seen, and as you’d imagine, a lot of this is special order goods, so getting the bespoke special order made and shipped to the particular job and then getting the labor to install that job continues to be a bit of a pressure, and more so in certain markets, leading to that large backlog. But if what we’re seeing our services business translates to what the larger pros are also seeing, that would be a sizeable backlog.

Thank you.

Your next question comes from the line of Chuck Grom with Gordon Haskett. Please proceed with your question.

Hey, good morning. Great quarter. Can you talk about where you are in the supply chain build-out that you’ve outlined over the past few quarters, and maybe how much of a delay COVID’s caused and the degree to which you can make that up in ’21?

Sure. Largely COVID hasn’t had a big impact, and I’ll let Mark comment on where we are.

Yes, good morning - Mark Holifield here. We’ve continued to open facilities through the pandemic. I’ve been incredibly impressed that the team has been able to keep our program on track in terms of the one supply chain initiative. In Q3, we opened up about 11 MDOs - those are market delivery operations. We now have three flatbed delivery centers open and we’ve got a very solid pipeline for ’21 that we’re working, so we’re very much on track with the one supply chain initiative.

Okay, that’s great. Then just maybe one for Richard. You spoken a lot over the past year about the ongoing margin headwind from shrink, and I realize maybe you’ve seen limited in your ability to do some of the inventory, the physical inventories, but where are we in that life cycle? It seems like it was an issue again here in the third quarter. Any line of sight on when you think the shrink could flip from a negative to a positive?

Well, at the beginning of the year, we said that impacts from our initiatives weren’t really going to be seen until the year 2021. It takes time to roll these out. We did anticipate at the beginning of the year that we would see pressure on a year-over-year basis. The results through the third quarter have been essentially consistent with our original expectations.

Our next question comes from the line of Michael Baker with DA Davidson. Please proceed with your question.

Hi, thanks. A couple. One, Halloween being strong, does that typically act as a leading indicator for Christmas, or even Thanksgiving; in other words, if people are buying the big blow-ups for Halloween, does that translate into big Christmas or--I don’t know if you do a big Thanksgiving business on that, but does that translate at all to what we should expect in the fourth quarter?

I think what we saw in the Halloween business probably is more correlated to what we’ve historically seen in storm markets. When you have a hurricane hit, our thinking years ago was that, oh jeez, we needed to pull back on all that product because that wouldn’t be where the customer focus was, and we needed the space for rebuild type product. What our customers told us was no, actually we’re looking for some kind of normalcy and we actually want to buy that product from you, and I think that’s exactly what we anticipated and are seeing through the holiday programs, as Halloween was the strongest event we’ve ever had. We had anticipated in the beginning of the year--because that’s a long cycle product that you purchase well in advance, we had anticipated that the customer would want to engage in holiday, and purchased accordingly.

Do you have that same expectation for Christmas? Did you purchase that similarly?

Yes, that’s what I mean. We bought into the whole holiday décor for the entire season - you know, Halloween all the way through Christmas, because we anticipated the customers were going to want some kind of normalcy in their life.

The holiday set has been set now for Christmas for several weeks in the store now, and as I said, we’re very pleased with the early engagement in sales in the program.

Got it, understood. If I could ask one more follow-up on the Home Depot Supply, thinking back a few years to an analyst day that you had, I think you implied that you--or said that your share in MRO was about 5%, which would have implied about $2.5 billion, and then we add on 3-plus for Home Depot Supply, you’re getting about $5 billion or about 10% share. Is that the right way to think about it?

We think it’s about a $55 billion market that we plan with a combination of our current MRO business and what will be added with HD Supply.

And what do you think your share is of that $55 billion?

We won’t speak on HD Supply’s financial information. The transaction hasn’t completed yet. We’ll refer you back to theirs. But as Craig said, call ours roughly $2 billion.

Understood, we can do that math. Thank you, appreciate it.

Our next question comes from the line of Zach Fadem with Wells Fargo. Please proceed with your question.

Good morning. With your digital sales up 80% in the quarter, I think that would imply that your in-store sales accelerated in Q3, and I’m curious if you would attribute this more so to the impact of easing some of the early COVID restrictions on stores, or do you think there were other factors like better in-stocks or incremental demand from pro customers that you would call out?

I think it’s all of the above, Zach. We’ve learned how to better operate. We ended up turning control of constraints in stores over to our store managers who are closest to the situation on the ground versus a company-wide approach. We did that at roughly the beginning of the quarter. We improved our in-stock position, as Ted indicated. We saw overall improvement with our pro customers, and our smaller pros have been steady, our larger pros improved, yet there’s still opportunity for them, and we saw our services business improve overall. I think there’s a number of factors that led to this performance in the quarter, so we’re pleased with the trends that we’re seeing in the business right now.

Got it, and then lastly on the decision to reacquire HD Supply, could you talk about why you think the timing makes the most sense now, particularly with some of their end customers like hospitality and facilities impacted due to COVID? On the strategic investments, curious how you would think about prioritizing that incremental investment dollar across the MRO business relative to your existing strategic plans?

Look, I’d say a couple things. First of all, over a period of time, the HD Supply business came down to essentially the MRO maintenance facility business that it is today, that we just put the offer in on, and so it strategically lines up with what we’re trying to get accomplished in the MRO business much more so than it did a few years ago. From a timing standpoint, that’s the logic there. We look forward as we close this deal, hopefully during our fiscal year end here, then we’ll determine the go-forward approach and how we allocate and prioritize, but we’ve got to get this deal closed first.

Got it, thanks Craig. I appreciate the time.

Sure.

Christine, we have time for one more question.

Thank you. Our final question comes from the line of Steve Forbes with Guggenheim. Please proceed with your question.

Good morning and thanks for fitting me in. I was hoping to maybe expand on the compensation enhancement for the hourly associates. I don’t know if it’s possible, Richard or Craig, if you could discuss whether the investments are concentrated in absolute wage rates or if there’s other aspects of the compensation or benefits that are being changed as we think about the cost structure going forward.

Steve, we believe that our associates are a competitive advantage to The Home Depot and they’re critical to the overall customer experience. This investment is essential in wage, and as we do everything as it relates to our associates, that’s done on a market-by-market basis overall. But yes, you can think of it as largely--it’s wage.

Then as a follow-up to that, should we expect any incremental pressure stemming from higher employment costs for the full time associate pool, or maybe--I don’t know if you can discuss the best way to think about 2021. Richard, you mentioned $2 billion transitory versus $1 billion permanent, but are there any other potential cost factors we should be considering in our models as it pertains to the full time pool?

It’s all of our frontline associates, essentially, whether they’re full time, part time, doesn’t matter.

Thank you.

Thank you. Ms. Janci, I would now like to turn the floor back over to you for closing comments.

Thank you Christine, and thank you everybody for joining us today. We look forward to speaking with you on our fourth quarter earnings call in February.

Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.