Chris Peterson: Yes. Thanks, Andrea. I think we’re trying to be prudent in the guidance is the way I would describe it. It is a volatile time period. It’s hard to predict exactly what’s going to happen in the macroeconomic environment, and we certainly don’t have a crystal ball that is unique or better than anybody else. I think probably the biggest assumption that we’re making is that the markets are going to be down low-single digits, which is an improvement in ’24 versus what we saw in ’23 where it was high-single digits. As I said, so far, in the month of January, we’re running slightly ahead of plan, but it’s too early to declare victory after one month. If you look at the business units, I feel very good about our Writing plan heading into this year.
We have strong innovation. I mentioned the first of the eight Tier 1 and Tier 2 innovations, the Sharpie Creative Markers that are launching this year, which is a new category for Sharpie that we have high hopes for. I also have high hopes for Baby this year. I think we have a bounce-back plan in place in that category. And I think that category has normalized significantly last year from the buybuy BABY bankruptcy. On the Home & Commercial business, we’ve done, which would include Kitchen, Home Fragrance and Commercial, we’ve done a lot of work to reset the margin structure in that business, particularly in Kitchen, and you can see that coming through in the gross margin and operating margin results in the back half of last year. And I think that business, particularly the Kitchen business has some exciting innovation that’s coming this year.
The Commercial business is a more stable business that we are going sort of from strength to strength. We expect that business to be more flattish this year versus last year. And then I mentioned the Outdoor & Rec business is probably the business that is going to be the most challenged this year because of the time it’s going to take us to fully get the capability build in place and have that show through in terms of financial results.
Mark Erceg: The other thing I would add, if I could, because we recognize the need to have better forecasting capabilities is, this is part of the capability set that we’ve brought to bear. So for example, the sales force is now using anti-plan in order to really discretely have sales walks that build up on discrete building blocks quarter-to-quarter brand-by-brand. We’ve taken the best-in-class practices from different business units and applied those broadly. So the capability set that we’re putting in place leverages scale, but it also allows us to get much more granular on our buildups.
Andrea Teixeira: That is super helpful. And how about R&D, is there any indication of putting more money behind R&D this year and getting understanding Kitchen, Chris you mentioned more innovation, but across the board, given that you’re coming off of a moment where you were focusing on improving profitability, is that any indication of that?
Chris Peterson: Yes. We, that is baked into our plan. So, and perhaps I should have spent a little more time on that. But the organization realignment that we announced in January, where we announced that we were changing the operating model to better enable brand management, U.S. selling, new business development, international, et cetera. Also R&D is part of that effort. So, as part of that realignment, we announced a net head count reduction of 7%. But if you look within that, we actually reduced head count by more than that, and invested back resources in areas where we needed to invest back from a capability standpoint. And one of those areas was R&D and is R&D. And so within R&D, we are investing more resources in terms of headcount.
We are focusing that head count on platform technologies that can span across Newell. And these are things like material technology that spans across multiple business units. We’re not going to disclose all of them here because some of them are competitively sensitive. But we do have a plan to upgrade the contribution and the investment in R&D specifically, and that is part and parcel to improving the innovation pipeline, and it’s baked into our guidance and our operating model change that we announced earlier this month, earlier this year.
Andrea Teixeira: Very helpful, Chris. Thank you both.
Operator: Our next question comes from Brian McNamara of Canaccord Genuity.
Brian McNamara: Hey, good morning. Thanks for taking our question. Maybe one for Chris. We’re about eight months into this new strategy and these turnarounds typically take more time than investors want. I’m curious your view on the progress made so far relative to your initial expectations? What’s been better than expected or easier and what’s been more challenging? Thanks.
