David Manthey: Thank you very much.
Operator: Thank you. And our next question today comes from Patrick Baumann with JPMorgan. Please go ahead.
Patrick Baumann: Hi. Good morning. Thanks for taking my questions.
Erik Gershwind: Good morning, Pat.
Kristen Actis-Grande: Good morning, Pat.
Patrick Baumann: Just on the web pricing realignment, can you talk program and what it entails? And the reason I’m asking is I just remember in the past, you had some pilot programs you’ve done four things like sales force changes you had made and then when it rolled out more broadly the impacts were different than what you had seen on the pilot. So I just wanted to check your confidence on the accuracy of the read on the sales lift and the neutral margins versus the control group.
Erik Gershwind: Yeah, Pat. Sure. So what I would tell you is, so first of all, what we’re doing, the goal is to present, we’ve had web pricing for a while. But for customers that don’t interact with us often and have a structured discount program, there’s cases where those aren’t competitive. So the goal is to create a market competitive price for any customer that wants to come to us. So that’s the objective. I mentioned we’re 30% of the way through it. And I think where you’re going is how accurate or REIT is the 30%. Look, I think it’s pretty good. It’s not 100% for sure. So there’s still — it’s certainly — is their uncertainty, of course, but I would say that in terms of the degree to which we’re managing this project, the rigor that we’re bringing is really sound.
So this sits with Martina and her team, I can tell you that we’re getting Kristen mentioned some expenses related to that. Most of that is getting some outside in expertise from folks who have — are specialists in this, but our team has met with a combination of our own team and some help managing this on a daily standup basis. So the visibility, the transparency is really high and so my confidence is high.
Patrick Baumann: And so what percentage of the business is actually going off at the printed web price these days?
Erik Gershwind: It’s still a relatively low percentage, but it’s not something that we — you could imagine competitively sensitive. It’s not something that we share publicly.
Patrick Baumann: In terms of the price changes on the 30% of the SKUs, was it timing-wise, did that happen late in the first quarter? And is the net price on those SKUs negative after the changes? Are there an equal or is there like an equal number of SKU price increases and decreases?
Erik Gershwind: So what I would say is, yeah, it happened a little more than halfway through our fiscal first quarter. And in terms of — there was a balance, so you can imagine there were some prices that went down some went up. I would say there were more that went down, that went up. But along with that, came in the past, if the pricing were higher, our sales people, our inside salespeople would really have to jump through hoops for the customers. So along with that came some discounting guardrails and that’s how you get to a margin-neutral outcome.
Patrick Baumann: Got it. Okay. And then it seems like you’ve given the 1% to 2% price outlook that you’re maintaining and seems like tracking favorably too. There isn’t much drag from this initiative that you would expect and then there also isn’t much deflation coming through. It seems like maybe you could provide some color on, are there any product categories where you’re seeing customers push back on pricing at all or is it basically just kind of a stable outlook and some further pockets of cost increases?
Erik Gershwind: Yeah. Sorry to interrupt you. I would describe in the environment and the word I used in the prepared remarks are stable. It’s been unusual in our history to see meaningful price deflation on our products. And I would say, we’re not seeing it now. If anything, there’s more going up than anything, but it’s relatively stable. I mean the price increase is not going to be a major event, but we did want to share it as noteworthy because I think any concern about price deflation. We’re not seeing it. In terms of the price drag from the web pricing initiative, again, our goal for the whole program, beginning with the first tranche was roughly margin-neutral. So what that means is any drag from where there were more prices down coming up gets buffered by improvements to discounting disciplines we made, and that’s what we saw.
Patrick Baumann: Understood. Okay. Thank so much for the color. Best of luck.
Erik Gershwind: Thanks Pat.
Operator: Thank you. And ladies and gentlemen, this concludes our question-and-answer session. I’d like to turn the conference back over to Ryan Mills for closing remarks.
Ryan Mills: Thank you for your time and interest this morning. As a reminder, our 2Q fiscal ’24 earnings call date is set for March 28. We look forward to seeing you in person at conferences and other investor events in the coming months. Again, thank you for your time. This now concludes our call.
Operator: Thank you. Ladies and gentlemen, you may now disconnect your lines, and have a wonderful day.
