It took many quarters for the pricing actions to get into our customers and so we experienced a lot of margin pain in that transition period. And so there has to be a tail at the back end associated with this deflationary cycle, whatever it is. And we’re going to work with our customers in a balanced way to do the right thing for ourselves, our company and for them. And we’ll continue to take that approach, as we’ve done in the past, and we think it’s the right approach for this particular cycle. Pat, do you want to talk about where we are with channel inventory and where we’re going?
Patrick Hallinan: Yes. Nicole, channel inventories. We look at our current level of channel inventories relative to history. We’re very much at or right around normal levels of channel inventory. And so I think, if there wasn’t macro uncertainty or if short-term rates weren’t as high as they are, we would be biased to stay where we are or to the upside, but I think, because of the rate picture in particular, with our channel partners paying much more in short-term rates to support their inventory and the fact there is macro uncertainty, their bias is to keep things low and, if not, to try to find new lows. We don’t think there’s big moves out there ahead of us. It’s something very modest. And I would say our back half guidance anticipates somewhere in the neighborhood of $50 million to $100 million of inventory reduction in our guidance, as we’ve talked here today, and we think that’s a pretty good number for the back half of the year.
I mean obviously it could range outside of that if the macro environment changes, but that’s what we’ve considered for the back half of the year.
Operator: Thank you. Our next question comes from the line of Adam Baumgarten with Zelman & Associates. Your line is now open.
Adam Baumgarten: Hey, good morning.
Donald Allan: Good morning.
Adam Baumgarten: Can you just talk about how demand trended throughout the quarter into July? It seems like it built throughout the quarter. And the July commentary is pretty encouraging. Just maybe some additional color there would be helpful.
Donald Allan: Well, I think the markets are — do have some volatility to them. However, when you step back and look at the trends that have been emerging in the first six months of 2023, we all know it was a very challenging outdoor season. And everyone in the industry experienced it. We experienced it to. And the higher-priced ticket items, as I mentioned in my presentation, continue to be a pressure point. There’s no doubt that the outdoor business went through a bubble during the pandemic. And there was a lot of purchasing activity because people were at home, and we’re starting to see the back-end effect of that here in — we experienced some of it last year and we’re experiencing more here again in ’23, and then we’ll see what ’24 brings in the future.
The trends in POS continue to be positive, and I said that in my comments. July has been a good start to the quarter. At this point, it’s not something that is an indication that we already feel like we’re going to outperform expectations. As Pat said, it’s a potential upside for us to evaluate and monitor as we go throughout the summer. And we’ll see where things are trending, but the consumer continues to shift a lot of money away from home improvement and we just have to make sure that we continue to monitor that and see what happens. So I look at it as an opportunity and a positive that, hopefully, evolves as the back half plays out, but I don’t want to get too excited about three or four weeks of activity at this stage.
Operator: Thank you. I would now like to hand the conference back over to Dennis Lange for closing remarks.
Dennis Lange: Shannon, thanks. We’d like to thank everyone again for their time and participation on the call. Obviously, please contact me, if you have further questions. Thank you.
Operator: This concludes today’s conference call. Thank you for joining. You may now disconnect.
