Or is there more of a desire at some point to recoup some of these upfront investments and kind of return to trend off of maybe a 2021 base? Like how do you think about that from just how you’re managing the business from here?
Matt Farrell: Yes. Well, look, I’ve been here for a long time, since 2006, and we’ve lived with our evergreen model for many, many years and it’s served us well. And last year was an anomaly for us. And we said, okay, we got to get back to our algorithm. And we said we had a big step up in 2023, and by virtue of what we’ve shown in the first half we’re going to get to 6% EPS growth in 2023. We’re going to get marketing back up to 11% of sales, which is how we want to run the railroad. And we sold 200 basis points light versus what our gross margins were pre-COVID. So when we get to the end of 2023, that’s ahead of us. So it’s going to take us a few years to get back there, but as we improve our gross margin in 2024 and 2025, that’s obviously going to throw off a fair amount of profit.
So if you look at the – just the first half of this year we had double digit gross profit growth. That’s a great trend. So I’d say that the short story is, is that the success we’ve had in the first six months, the strength we see in the second half certainly on sales and gross profit growth gives us greater confidence, so we can return to our normal evergreen model algorithm in 2024. But we’re not – it’s too early to be calling numbers at this point, but I think going to 11% of marketing as a percentage of sales this year is a big deal. It won’t be a headwind in next year, that 2024 versus 2023, and we still have the ambition to grow gross margin significantly in the next couple of years. So that’s a short story about how we think about the P&L, Steve.
Steve Powers: Okay. Thank you very much.
Matt Farrell: All right.
Operator: Your next question comes from Anna Lizzul from Bank of America. Please go ahead.
Anna Lizzul: Hi, good morning. Thank you for the question. I was wondering on the distribution gains with Hero and THERABREATH. Could you comment on where you’re seeing the largest gains in distribution with your various retail partners? And are there any challenges to gaining distribution? Also, to what extent do you think you have more runway on distribution? And do you have any concerns from some of the larger brands that have been innovating in this space with similar offerings that might have distribution already well established? Thanks.
Matt Farrell: Yes, and when I – as I go through, you’re going to have to remind me about the question three and four. As far as where the distribution is coming from, you take Hero. So Hero was built through Amazon, Target and Ulta, and those were the mainstay retailers that the Hero team chose to grow their brand. So consequently every other retailer in class of trade is an opportunity for us. And so we’ve – that’s what we’ve been pursuing. We’ve been going after a mass, which would be companies like – retailers like Walmart, the big drug chains, et cetera, and then food. And the opportunity is A, would be distribution and B would be facings. Now, if you go to THERABREATH, THERABREATH was more developed as far as the – throughout many classes of trade, but not with respect to facings and how many variants are shown.
So there’s two things happening with THERABREATH. One is, yes, we’re getting more retailers, but we’re spreading out more on shelf. And as – because of this is the – actually the highest priced mouthwash, it’s accounting for 50% of the category growth in mouthwash in Q2. Now the retailers see that, their penny profit is high on THERABREATH mouthwash. So consequently, they’re interested in helping us grow. So we can anticipate more facings in the future particularly in 2024. So I think both of those brands have a big tailwind going forward.
