J.D. Walker: Hi Bill. It’s J.D. I’ll take a shot at that. You know, I would say that we’re taking a very cautious approach to our outlook for fiscal 2024, after the last two years. We’re still, as most companies are still trying to understand consumer behavior in a post-pandemic period. Household penetration has been down over the last couple of years. Niko referenced in his script that foot traffic at retail has been down in our largest channels, it’s down 8% in home centers and 2% in mass channels. So, given all of that and two years of challenging weather, you know, it’s a little bit difficult to get too aggressive in terms of looking at next year. I will say this, when we look at the controllable causal factors, things like total points of distribution, they’re up mid-single-digits.
We feel great about the level of support that we’re going to get from our retailers next year. We have a long list of Cost and Simplicity initiatives and those will fund some of our strategic investments in the business. So, there’s a lot to like here. However, while we’re optimistic, we think that, you know, taking a more measured approach to planning for the year is appropriate.
Bill Chappell: Okay. And then just last one on that. Are you seeing anything different from the competitive landscape in Garden, certainly as you have a competitor that’s kind of gets through the excess inventory and maybe some excess inventory going into early next year, do you see it being more promotional than normal or that’s just kind of all factored in?
J.D. Walker: It’s all factored in, Bill. But I – just as Niko said earlier, we expect it to be more promotional next year. We expect the retailers to be trying to drive footsteps into the stores in the spring season. Our competitors, we expect to continue to be very competitive and aggressive in that area and we will as well.
Bill Chappell: Great. Thanks so much.
Operator: Our next question comes from the line of Jim Chartier with Monness Crespi and Hardt. Please proceed with your question.
Jim Chartier: Hi. Thanks for taking my questions. First on the Garden business, can you tell us what POS trends were in fourth quarter and for the year?
J.D. Walker: Hi Jim, it’s J.D. POS was flattish, down slightly, less than 1%, in Q4.
Jim Chartier: Throughout the quarter?
J.D. Walker: For the quarter, and up for the year. Up low single-digits.
Jim Chartier: Great. And then, in terms of the promotional activity, are you seeing increased promotions today? Have the retailers communicated to you already that they, you know, that they expect lower pricing or is this just something that you’re expecting will happen and embedding that in the guidance?
J.D. Walker: Jim, it’s something we’re expecting will happen. So, the retailers are very much in their planning stages right now, so we don’t have hard evidence that it’ll be more aggressive, but we’re expecting that. We’re not seeing any unusual activity at the moment.
Jim Chartier: Okay. And then Niko, can you just tell us what the sales and earnings impact was from the extra week for both the Garden and Pet segment?
Niko Lahanas: The earnings were de minimis. It was very – it was very small. Top-line, I mean, what I would do is just, you know, use straight math on the quarter and calculate it that way.
Jim Chartier: Okay.
Niko Lahanas: Yes.
Jim Chartier: And then…
Niko Lahanas: Because it’s really like, you know, that part of the year, there’s not a lot going on in Garden, it’s sort of counter-seasonal. So, we’re not throwing off a lot of EBIT.
Jim Chartier: Okay. And then how should we think about interest income next year? You know, your cash balance is up nicely.
Niko Lahanas: Yes.
Jim Chartier: What are you forecasting for interest expense and income next year?
Niko Lahanas: Yes. We’re – you know, it’s always tricky, right, because we’ve got our working cap build that really starts now and then goes into March, and then it’s going to also depend on what type of M&A we do. It certainly is going to be, you know, probably lower than it is this year. I think this year, we printed around $50 million. So, you know, I would guide somewhere, you know, $45 million to $50 million, in that range, but again there’s a lot of variability there just based off of M&A activity and what sort of working cap build we end up with.
Jim Chartier: Okay. And then, on the Pet business, did you say the POS was up high single-digits? And then, kind of, if so, what’s kind of forming your caution on that business? Was there anything unusual that drove strong POS in this quarter?
John Hanson: Yes. This is John. Yes, Q4 POS was up, you know, mid-high single-digits along with sales, so we, you know, felt good about that. You know, the big thing going on for us is still the mix between consumables and durables, right. You know durables, you know, I think we started communicating back in Q2, you know, durables are about 25% of the category, 20% of Central’s business. Back in Q2, we started seeing the declines. The declines accelerated in Q3 and Q4. You know, so we feel like we’ve got a couple of quarters ahead of us to lap that. And then hopefully it moderates and we see some flattening of it.
