Tex Clark: So in regards to gross margin, I mean, again right now, we’re breaking out gross margin and sharing it obviously with the market, both organically and then on a consolidated basis. Indoff, for a long time, had a very stable margin profile, but there’s definitely activity that we’re working on with their sales reps and their sales partners to be able to move their gross margin up over time. But again, it’s naturally a slightly different business model that will have a little bit lower gross margin rate. In regards to the organic business, where we can think about, I mean, this quarter was – both the third quarter and the fourth quarter were fully consolidated businesses if you look at our gross margin in the second half of 2023.
We should expect to see that continue in as we’re always focused maintaining that gross margin profile. Like you said there’s always some headwinds that we face in the marketplace. Right now, ocean freight as we called out, I mean, currently with some of the disruptions in shipping lanes around the world are driving some rates up, but we think that’s going to be fairly short-lived, and we’ll be able to work through that. And that’s really why we invest so heavily in our pricing team and pricing analytics to make sure that we can capture price where appropriate. But maintaining gross margin is always a key priority of the company.
Michael Francis: Okay. And then I also wanted to ask about private label a little bit. You mentioned it’s 50% of the sales. Is there a target that we should think of when we think of where you want to get with that? Are you happy with where you’re at now? Or is there more room to grow there?
Barry Litwin: Couple of pieces. I’ll take that, Mike. I think one is we’re usually not providing like long-term guidance on private brand penetration, but I can tell you we do believe that there’s upside. And I think it could come in two ways. I think, one, relative to Global’s organic business today, we really take a good, better, best approach in the assortment, and we continue to refine the assortment where we see private brand to be the best fit because private brand, in our mind, really creates an added advantage in terms of the capabilities that we offer to the product. And if we can continue to provide that at a best value price in the marketplace, we’ll continue to emphasize those sales going forward. The other piece where there’s upside, I think, is relative to kind of what Tex covered.
I think the Indoff business model, which typically was really a drop-ship model. Part of our approach there is to be able to penetrate that assortment with private brand. And so between all the efforts we have relative to training and educating on the products and our new product development, we think that will create some upside and additional expansion in private brands. So we absolutely think there’s growth upside, where we are certainly beyond the 50% business today, and that’s a core strategy of ours going forward.
Michael Francis: And then one last one here. You talked a little bit about the Red Sea and shipping up. How much of your shipping is coming through there or your products coming through that channel?
Tex Clark: Actually, very little bit is actually coming through that channel. However, that’s increased the overall rates across the industry as the overall container flow has been disrupted with people moving around the Cape of Africa and other areas. We’ve seen just an overall increase in rates. So we’re not actually seeing delays due to our product coming through there, but the overall market has had rate increases. I think that’s not unique to us. That’s fairly I mean, readily available information in the market about the different – the current rate increases that ocean carriers are passing through. Again, we think that it’s ideally transitory in terms of the cost increases. And after Chinese New Year’s, we hope that, that will also begin to settle out as demand normalizes as well. So it’s an area we’re monitoring, but it’s something that we have a key focus on, trying to mitigate that where we can.
Michael Francis: All right, I’ll pass it on. Thanks guys.
Barry Litwin: Thanks.
Operator: This concludes our question-and-answer session. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
