We’ve moved into our chair distinct strategy, which is anchoring science-based whitening through the profession as well. So, science continues to play very importantly into our growth strategy. And you’ve seen that play out in oral care, certainly seen it play out in in our pediatrician business, as well as very recently in skin health. And likewise, as we look at some of the innovations coming on in our home care business, we’ve seen some great innovation on concentrate, some great innovation on tablets in Europe. So, we continue to use science as a way to drive differentiation and certainly drive our premiumization. Specifically on the Hawley & Hazel business, as I mentioned in the second quarter, we took pricing. That has taken longer to actually get executed in the market, given the multiple levels of our go-to-market strategy on the Hawley and Hazel business.
And obviously, you’ve seen a slowdown in the category in China, which has also come on top of that. But the good news, as we exited the third quarter, we saw the Hawley & Hazel business start to inflect positively, and we continue to see that as we speak. So, we’re not completely out of where we want it to be, but everything is moving in the right direction. Conversely, the innovation behind Hawley & Hazel is very strong. Once we have that pricing executed, we’ll come in with a good first half plan of innovation, and that will be science-based innovation, as I mentioned. The parallel to that is obviously the great success we’ve had in China with the Colgate business. The Colgate business continues to perform very, very well, growing share in e-commerce, the fastest growing channels, and that is driven behind premium innovation with real science-based structures to that.
Operator: Next question will come from Rob Ottenstein of Evercore. Please go ahead.
Rob Ottenstein: Great, thank you very much. I’m wondering if we can drill in on the US and maybe talk a little bit about what’s going on in the non-track channels, kind of which channels are leading the growth and why do you continue – do you expect that to continue in the future, having a pretty big gap between the scanner results and the non-track? And then if you could put that also in the context of how you see the US consumer and the health of the US consumer developing over the next couple of quarters and any pivots that you may do or adjustments to potentially a weakening consumer outlook. Thank you.
Noel Wallace: Yes. Hey, good morning, Rob. Thanks. Clearly, in the results, and you’ve seen the scanner data, which continues to be soft, and as I mentioned, we’re addressing that more sharply in the fourth quarter. Our non-track business continues to perform exceptionally well, and that has been a strategy that we’ve talked about for quite some time. Those are some of the faster growing channels. We continue to invest in those channels. We continue to grow share in those channels. And overall, that’s certainly leading to a broader-based healthier business for us moving forward. You talk Club. You talk some of the discount channels. You talk some of the e-commerce channels as well. So, overall, we think we’re well positioned in the US to continue to leverage where the growth is coming from.
The consumer continues to be resilient. I would say the promotional environment is constructive right now. We’ve seen a little bit of pickup in some categories, but overall, still below pre-COVID levels. And as we continue to be, as I said, very thoughtfully prudent on how we elevate our cadence of promotions moving forward, we feel good about our ability to continue to drive non-track. Now, I’ll remind you that non-tracked are about 14% of the total company sales. And so, while very important for us in the US and the team there under Jesper’s leadership is laser focused on addressing that, we’re going to get that back to a healthier share as we move forward.
Operator: Our last question today is a follow-up from Bryan Spillane of Bank of America. Please go ahead.
Bryan Spillane: Hi. Thanks again, Operator. Hey Stan, just a question around inflation. I know in the press release or the prepared remarks, you talked about – or I guess the press release, talked about still several hundred million dollars of inflation expected for this year. Can you just give us some context of, is it the same moderating? Like, as we’re exiting the year, just how we should be thinking about the trend on inflation? I know you called out inflation in pet. So, just trying to get a sense of whether or not it’s – how it’s trending. Is it trending better or worse than kind of where we were coming out of 2Q?
Stan Sutula: Yes, sure, Bryan. So, as we said, our view on raw materials in total remains consistent with prior quarters. And we still do see several hundred million of gross cost inflation raw materials for 2023. But while the overall totals in line, there have been some shifts underneath that. First, agriculture has not eased. In some cases, it’s actually gone up. That affects primarily our Hill’s business. Offsetting that, some commodities such as resins and oils have actually softened a bit. But when we look in total, that basket is roughly still in line. And while it hasn’t gotten worse, it hasn’t gotten a lot better. The one we continue to watch carefully is obviously energy with all the volatility in that market. And then also just keep in mind, some of our raw materials are not pure commodities, but specialty, flavors, fragrances.
Those tend to have less volatility. But I think if you pull back, our teams have done a great job driving productivity to mitigate some of that inflation. And you saw in our funding the growth, this has really helped us balance the margin. You combine that with RGM, and it’s resulted in that margin expansion. So, if I got to pull that back, while that’s been relatively steady in total, the pieces moving around underneath, that has – our gross profit in total for the company has gone up 140 basis points year-to-year. And that’s a combination of that pricing in RGM has been able to more than compensate for the raw materials going through. So, as we look at that heading into the last quarter, we haven’t actually seen a lot of change in the commodity basket, so we expect that to continue through the end of the year.
Noel Wallace: Yes, Bryan, I’d just reiterate, again, that 140, you add another 50 basis points for private label, and if you add logistics in there, which others include in cost of goods, that adds roughly another 130. So, north of 300 basis points of margin improvement in the quarter. And that’s terrific in terms of how we saw things ultimately playing out. And as we see hopefully a more benign cost environment over the medium term and our ability to hold pricing and continue to innovate at the high end, we feel pretty good about the continued ability to sustain high margins in the categories in which we compete.
Noel Wallace: So, thanks everyone for joining the call today. Let me just close up by saying we really appreciate your interest in the company. We hope you agree that we have the strategies and the plans in place to deliver consistent, compounded profitable growth to drive value for all of our shareholders. And I would be remiss not to thank all the Colgate from all folks around the world who have delivered a very strong quarter for us in the third quarter of 2023. So, thanks everyone. We’ll talk to you in January.
Operator: Conference has now concluded. Thank you for attending today’s call. You may now disconnect.
