Joern Iffert: And the first one would be, please, to you, Hanneke. May I quickly ask you, when you look over the next three to five years, do you think the categories and the segments Logitech has right now is the right base to be to drive your growth vision? Or are you also willing to go into new end markets like, for example, health care, which could be necessary to maintain the growth model going forward?
Hanneke Faber : I think we’re playing in some really great spaces. So, the big space of work and play, that’s what people do in life. So we play in some gargantuan spaces, and they give us good growth. Within that, are there verticals we could step on a little harder? Possibly, and that’s what we’re exploring in our strategy work right now. So a bit early for me to say yes or no, but we’ll be back on the May.
Joern Iffert: Yes, sure. I appreciate this. And then the second question, a little more technical one on the quarter, please. You were mentioning that outside the promotion season, which was Black Friday, Cyber Monday, volumes were a little bit short of your expectations. Is this linked to macro end market weakness? Or is this linked to the market share losses? I think you also mentioned a couple of market share losses, also gains, of course, but also some share losses that gaming keyboards, for example, in China and then some other stuff? So is it also linked to share and losses or many macro?
Chuck Boynton: I think generally, I would characterize the quarter from a share standpoint as a strength and a weakness. So on balance, we executed well. And I think when the dust settles and the final reporting comes in, it’s not all finally in yet, we need to see all the final data coming in. I think it will show on balance. We gain share across key categories. The categories where we may had some challenges where we had older products and NPIs or new product introductions are on the way. So I feel on the share side, pretty good. I think, overall, the consumer as it was a year ago, was looking to buy on promotion. And the run rate business globally was more challenged outside of the promotional windows. And we’re seeing that so far in the first few weeks of this quarter.
So I don’t –it’s hard to say is that interest rates, is that — consumer confidence is okay right now? Was it the enterprise spending? I think it’s kind of the all of the above. I think there’s just a little bit of uncertainty out there. And that gives us a little bit of caution going into Q4 and into next year on when will that return? I think there’s news about sticky inflation and maybe rates won’t get cut. There’s a lot of macro factors that we read in the news every day. And I think that translates into our customers buying our products and other companies’ products. But I don’t — I would not say it’s a share issue. I think our share is strong and it’s doing quite well across the board outside of some key pockets that we’re addressing.
Anything, Hanneke, you’d like to add there?
Hanneke Faber : I think you said it well.
Nate Melihercik: Our next question is from Andreas Mueller at ZKB.
Andreas Mueller : Can you discuss maybe the gap between sell-in and sell-through, particularly in the Americas? Is this seasonal? Or do you see your clients already increasing inventories sustainably there?
Chuck Boynton: Thanks, Andreas. The chart you’re referring to in our earnings deck shows sell-through and sell-in. And I’ll just say, I don’t like that chart in general. We’ve agreed to keep it through this year, and we’ll revise it to make it more meaningful at Analyst Day. That data shows that America’s sell-through was down 4%, yet we saw fairly strong revenue growth actually. And so you look at that and say, “Gee, how can sell-through be down but sell-in go up. You must have built channel inventory. We did not actually. America’s channel inventory was roughly flat. What’s driving that is less promotional activity or selling at a higher price and prompting less. So the sell-through is in gross dollars and the revenue is in net dollars, and that’s just that delta of 700 basis points is the margin expansion based on less promotional activity and efficient promo activity.
So we’re going to revise that chart to give you a little more view into kind of the changes in channel inventory, which is, I think, the better metric. So I wouldn’t read into that too much. It’s kind of comparing apples and oranges a little bit. But we didn’t want to pull it. I started just less than a year ago. I didn’t want to pull that chart without replacing it with something to give you better visibility. So there will be an update to that coming in May, I — but I would not read into that overall other than saying we did a great job on driving North American promo activity during the holiday period.
Andreas Mueller: And then my next question on the gross margin progress, the lower product costs were mentioned. Can you give here some more details? I mean you mentioned production efficiency, but also, I mean, what was the impact of raw materials, for example, Asian currency were weak, which might have helped. Can you say something here?
Chuck Boynton: Certainly. I missed the very first part. Was it gross margin in Q4?
Andreas Mueller: Yes. And on the production side or products.
Chuck Boynton: So, we had about 200 basis points of benefit year-over-year on our product costs. Quarter-over-quarter, it was roughly in line, but a year ago to this year, about 200 basis points of expansion. That should be durable and should translate into future quarters as well. 200 basis points year-over-year was logistics, ocean, air, freight. And then there were some other kind of noise between lower promo and mix. But overall, the freight side is going to come back. We’re going to have more freight headwinds in Q4. That will be a challenge. And then on the FX side, year-over-year to Q3, it was about 100 basis point benefit. As you look into Q4 to Q4 and Q3 to Q4, currently, FX is roughly flat. So there will be — there should be no currency impact.
Of course, rates can change. But as we sit here today and you look at the euro and the pound and the various currencies around the world, on balance year-over-year and quarter-over-quarter, were roughly in line from Q3 to Q4.
