Michael Foeth : Just two last questions for me. The first one is on inventories. You obviously made a great job in reducing the inventory levels. My question is, where sort of is the limitation to that inventory reduction? And if you can give a bit more specifics on the whole Red Sea situation, any disruptions there in terms of your supply chains or delivery shipments and the related inventory that you would need to build up to counter that? And then my second question would be and I’ll ask it straight away. You mentioned, obviously, in terms of growth for 2025, the trajectory that you depicted in your shareholder letter. It leaves a little bit room for interpretation in terms of where the trajectory goes. It looks like it would go slightly into the positive but maybe not to that high-single digit growth. Is it correct that you’re expecting it to turn slightly positive, but maybe not as fast as your long-term will suggest?
Chuck Boynton: Certainly. On the inventory side, again, it was such an impressive quarter on inventory. We ‘ve stated now for the last few quarters that we want to drive down on-hand inventory and channel inventory. And I just want to thank our employees and our teams for executing on this plan because it’s really, really paid massive dividends, improving linearity, improving return on invested capital. Again, if you have less inventory, you have higher return invested capital or ROACE, as you say, in Europe or ROACE. That is such an important metric. And we have driven down inventory levels 6.5 turns in the quarter is a really great number. We said our operating model is between 5% and 6%. That would be on an annualized basis.
So again, we’re going to go in now into our trough quarter. So the turns will probably come down. I don’t think inventory will come down in Q4 with the Red Sea challenges. Is there more room? There is more room. We can do better, but we’re getting to that point of diminishing returns because importantly, we don’t want stock outs. We want to carry inventory on in our distribution centers to meet our customers’ demands. Customer sat is number one, but we want to do that the right way. So I think we’re approaching that point of the efficient frontier on inventory levels, and we’re targeting 5% to 6% precautious so good, maybe he can get to 7% occasionally. But I would say 6 is kind of hitting that best-in-class or upper quartile. As it relates to the Red Sea, it adds about four weeks of lead time.
So it’s not that material. There will be an impact to air, as I mentioned earlier, and a little higher cost. So I would expect a little bit of inventory increase, maybe we can keep it flat, but I would expect a little bit of an inventory increase as we get into Q4. And then the — what was the last part, Hanneke?
Hanneke Faber : The gradual growth and does it leave room for interpretation?
Chuck Boynton: I’ll let you answer that one.
Hanneke Faber : I’ll go back to where we started. I think growth is really a question of when, not if. We will get back to growth. But there are so many uncertainties out there that we’re just a little cautious on giving you exact numbers of when and how much.
Chuck Boynton: We will at Analyst Day. So stay tuned. And in middle of May, we’ll have an Analyst Day and talk about our view and our outlook. I think the idea now is just like be cautious going into next year. People are getting excited. And I think overall, it’s a great business, a great operating model, but we need to be cautious looking out into next year given the uncertainties.
Nate Melihercik: And with that, Hanneke, that’s our last question today.
Hanneke Faber : Great. Well, thank you, Nate. Thanks, everyone. It’s been really nice to meet you guys. Thanks for joining us for your interest in Logitech. And of course, a huge thank you to all the Logitech teams around the world for everything they continue to do. I look forward to speaking with you guys next quarter. Take care.
Chuck Boynton: Thank you.
