Mark Erceg: It’s a great question. So look, I guess this is what I’d offer and this is what I would say. Without getting bogged down in quarter dynamics, as we think about the first half versus the second half, and as I just mentioned earlier, we think gross margin is going to continue to grow sequentially through the balance of the year. And we actually expect the second half gross margin to be roughly 400 basis points above the first half for all the reasons I cited, the fuel productivity efforts and everything that’s going along with it, the pricing effects that are in place, there’s some normal business seasonality where we tend to have a slightly higher percentage of our total year sales in the back half. We think the trade destocking will abate as we go further along.
Our comps get easier. We have more in the first half than the second half. There’s a whole litany of reasons why we’re very, very confident that we have that progression right. With gross margin growing so strongly, we also see operating income percent of sales following along as well. And we have that roughly the same amount by about 400 basis points. One of the things I think is notable as we talked about the capability investments we’re making, I think we’ve demonstrated the ability to affect cost in a very positive way and you’re seeing that through the gross margin line. If you think about what we’re doing as it relates to overhead, however, overhead dollars in the first half versus the second half will be roughly comparable, because we’re choosing to make investments in talent upgrades, change management capabilities, process improvements, data and technology enhancements.
And then on the A&P side, you heard Chris mentioned it earlier, we’re actually going to probably be spending 50% more in the second half than we spent on the first where we have compelling consumer propositions. And if we think about the question that was asked earlier about the smaller brands maybe being a drag on the business, that might be true in part, but we believe the focus that’s going to be put against the top 25 brands and the additional resources that go against those will more than offset that, as we really start to accelerate on the top line in that regard. With your question about — the commentary we provided at Deutsche Bank when we talked about the next 12 to 18 months, I don’t think what we provided there was explicit guidance per se.
What we tried to say was that the next 12 to 18 months is going to be characterized by a number of external challenges where inflation is still going to be moderate to high, there’s going to be some level of destocking. I think the mild recession that we are concerned about is maybe less relevant now as it seems like maybe we’ll avoid that, which would be a good thing. But during that time we’re going to be fronting dollars towards the capability built out that we’ve spoken to and doing the brand rationalization effort. So we had said that core sales will be below our evergreen target, we think that’s true. We said free cash will be at or above, and this year we’re targeting over 100 now based on the good work that’s being done. And then we said there’s going to be operating margin expansion at the evergreen target, which is roughly 50 basis points.
Again, that wasn’t explicit guidance for any given quarter. This year, clearly, we have really strong progression on operating income as a percent of sales in the second half versus the first. And we are going to be over time making some choices to balance the bottom line progression on margin with additional A&P investments that we choose to make in order to put more marketing support behind our top rates. So it’s going to be a balanced approach going forward. We feel really good about where we are. If you look sequentially across every element of the P&L, it’s playing out the way that we would have hoped.
