Chris Peterson: I would say that right now we continue to expect low single digit inflation that is pretty much balanced throughout the quarters of the year as we sit here today. One of the things that we haven’t talked as much about today is just the fabulous work that our supply chain organization is doing on cost takeout. If you look from 2019 to 2022 as an example, they were taking out roughly 3% of COGS each year. With Phoenix, we centralized the supply chain, and that brought everything under the auspices of a world class supply chain organization that had been built up over that course of time. We also took the procurement organization and took certain businesses like kitchen and Outdoor & Rec that had otherwise been kind of managed on their own and centralize that as well.
And so with those movements, we’ve now seen our cost takeout go from roughly 3%, from 19% to 22% to 6%, if you look at last year and this year. So we’ve literally doubled the rate of cost takeout from some of those moves that we’ve affected. So we feel really, really good about where we are from a cost standpoint. The teams are doing fabulous work, and right now we see that low single digit inflationary environment across our collective pools.
Filippo Falorni: Got it. That’s helpful, Mark. And then, if I could follow up, Chris, you mentioned there’s no plan for further price increases in the U.S. granted the international market is still pricing, but what are you seeing from a pricing environment in the U.S.? Are you seeing some competitors, increased promotional activity? And, any sense from the retailer feedback, any pushback on potentially lower pricing or increasing promotional activity will be helpful. Thank you.
Chris Peterson: Yes. I think what we’re hearing from retailers is they’re asking us about, hey, is there a chance to roll back pricing and that type of thing. And our response has been that we’re still seeing inflation in low single digits. And so we’ve generally said we’re going to offset that low single-digit inflation with the productivity that Mark just talked about, which more than offsets it. But our plan is not to reduce prices in the market. We have not seen the promotional pressure really ramp up or change meaningfully this year versus last year. There are some categories that you might see us move one way or the other relative to that. But when you look at the company as a whole, I would say there’s not really that much of a movement in pricing in the U.S. market.
We are absorbing that low single digit inflation this year without pricing for it, but we’re more than offsetting it with productivity, with the mix benefit that I talked about and with the carryover inflation from last year.
Filippo Falorni: Got it. That’s helpful. Thank you, guys.
Operator: Thank you. Our last question comes from Brian McNamara with Canaccord Genuity. You may proceed.
Brian McNamara: Hey, good morning. Thanks for taking our questions. Chris, we’re coming up on a year since you took over as CEO. A very busy year at that. And I’m curious your opinion of the progress the company has made relative to your initial expectations last May. Where is the company today relative to where you thought you’d be at this point and what’s been easier or harder to accomplish in implementing your new strategy?
Chris Peterson: Yes. Thanks, Brian. I would say we’ve had three quarters since I’ve come in and we’ve reconstituted the leadership team. During that period of time, we completed the full capability assessment. As we’ve talked, we rolled out a new strategy last June. We’ve cascaded that strategy to each of the different business units, each of the brands, each of the geographies. We’ve now built that strategy into individual work plans for 2024 for every professional and clerical employee in the company. We’ve changed the operating model and changed how we’re working and how we’re executing and how we’re focused. And so a lot of that foundational work, I think, has been put in place. And as we turn to this year and as we said in our priorities, this is really the year where we’re focused on executing against that, given the foundational work that we put in place and beginning to show progress as a result of the strategic choices that we’ve made.
So I think it’s been a lot of work to put the foundation in place with the new strategy, the new operating model, the new work plans, and the new organization structure. But I’m very excited about some of the results that we’re starting to see early results from those strategic choices, and I’m very optimistic about where we’re headed over the next couple of years here.
Brian McNamara: Great. Thank you. Best of luck, guys.
Chris Peterson: All right. Thanks, everybody for joining. We will leave it there, and I’m sure talk with many of you in follow-up conversations shortly.
Operator: Thank you. This concludes today’s conference call. Thank you for your participation. A replay of today’s call will be available later today on the company’s website at ir.newellbrands.com. You may disconnect, and have a great day.
