There’s more investing we need to do on the digital marketing front, around social media and the activities that we do with our products, to really make our end users as fully aware as to the great innovation machine that we have and what we’re putting in the marketplace. Those are things that we have to continue to invest in and so we want to strike the right balance in 2024 of earnings in the sense and cash flow of what’s the opportunity for growth as we look at the markets and evaluate that later this year going into 2024. We have a good sense of what’s going to happen with gross margins, as Pat articulated. And then the other wildcard is really how much do we want to invest to really plant more seeds for share gain opportunities in the future.
That’s an important part of our business model that’s going to ensure that we’re successful for the next several decades, and we want to make sure we do it in the right way and the right level of balance. And that’s why we think, as you think about next year, that range of $4 to $5 probably makes sense. If we change our perspective because of market conditions or how much we want to invest, we’ll provide that as soon as possible, but I think it’s the right way to think about next year at this stage.
Operator: Thank you. Our next question comes from the line of Nicole DeBlase with Deutsche Bank. Your line is now open.
Nicole DeBlase: Yeah, thanks. Good morning, guys.
Donald Allan: Good morning
Nicole DeBlase: Maybe just a couple of follow-ups from prior questions that were asked. So on pricing, can you just characterize the competitive environment that you’re seeing? Anything concerning out there? And then with respect to the channel inventory dynamics in the tools business, I think you guys talked about some channel adjustments this quarter. Is the expectation that, that kind of continues into the back half? Where are your inventories versus where you would like them to be in the channel? That would be great. Thank you.
Donald Allan: Sure. So I’ll take the pricing question and I’ll pass the channel inventory question over to Pat. I think where we are is, we’re seeing a lot of different things occurring around deflation in the freight space. So I think, when we look at freight, we’ve all seen freight costs have gone down dramatically. We’re experiencing that. We’re seeing that benefit in our P&L and we’ll continue to try to leverage that opportunity as much as possible. On the metals side and commodity space, we’re seeing a little bit of indication that things are starting to pull back, as far as commodity prices. And so we’re chasing that opportunity, but overall the commodity basket for us is not moving down dramatically at this stage. Now we are pursuing these opportunities to ensure that we actually get the benefit when they do emerge later this year or into next year, depending on how that plays out, but also we have to recognize that we probably won’t see much of that benefit here in 2023 just given the level of inventory we have on our books.
And that will get hung up in the inventory and will read through eventually in 2024, so the question then becomes what does that mean to pricing. And so what adjustments do we need to make? What’s happening in the market? And at this point, we feel like our pricing is where it needs to be versus market conditions and the competitors. We tend to want to be, especially with brands like DEWALT, at a premium versus many of our competitors. And we feel like right now the pricing position is in a healthy place, and so we don’t see any need for any adjustments associated with that. If deflation becomes a bigger number as we go into 2024, we will continue to look at that and evaluate that. However, we do have to remember that, as we went through this historical inflationary cycle, we did not get 100% price recovery on that.
