Don Allan: I think as we look at the pricing dynamics in Tools & Outdoor, we are monitoring all the different things that are happening across the different product families and categories related to price. And we really look at what our competitors are doing. We’re obviously paying attention to monitoring what we’re doing as well and making sure it’s consistent with our expectations. But we didn’t see any major turbulence in the market around pricing from our competitors during the fourth quarter. We do see here random, kind of, what I would call promotional activities to move inventory through some of our customers’ stores. So you saw some of that happen in the fourth quarter. But it didn’t dramatically shift the pricing dynamic, the list pricing dynamic in particular in that time horizon.
That’s something we will continue to monitor here going into 2023 and make sure we stay focused on that throughout the year. And it’s always something that we have to factor into our decision-making. But we think the promotional calendar that we’ve built with our customers so far for this year. And the other activities that we’re able to do will allow us to achieve the level of inventory reduction we would like to get to, which is $750 million to $1 billion. And we obviously have to be agile and flexible and look at what happens in the market. But at this stage, we’re not seeing any irrational pricing activity.
Operator: Thank you. Our next question comes from the line of Chris Snyder with UBS. Your line is now open.
Chris Snyder: Thank you. So I wanted to ask about the gross margin recovery during 2023. When we see gross margin going from the 20% currently to the mid to high 20s by the back half of the year, could you provide just a bit more color on the buildup here between the improvement of just getting past the destock versus some of the benefits of the Phase 1 supply chain transformation plan starting to come through? Thank you.
Dennis Lange: Yes, you bet, Chris. So the gross margins, as we said, in the second half of 2022, on average, we’re around 22%. And there was probably about four-point penalty driven by the production curtailments and liquidating the high-cost inventory. As we go through the course of 2023, that four-point penalty slowly starts to decline to about 3.5 and then to 2.5 points by the end of the year. And again, it’s a mix between — we don’t — as I mentioned in my view on our guidance, we don’t expect production curtailments to continue throughout the whole course of the year. So that will help us. And then as we liquidate the high-cost inventory, that also helps us. So by the end of the year, on an incurred basis, we will see margins slightly above 25%, but there will still be a little bit of penalty that would get us into the high 20s.
Operator: Thank you. Our next question comes from the line of Dan Oppenheim with Credit Suisse. Your line is open.
Dan Oppenheim: Great. Thanks very much. I was wondering of the plans in different scenarios in terms of inventory, where you’ve talked about those situations and what — how it impact production, but it doesn’t seem as though you would change your goals in terms of that $750 million to $1 billion reduction of inventory. Why not think about reducing inventory by more? Is there something in the supply chain that’s leading you to thinking about keeping a higher level than where you’ve had historically? What’s the overall thought there in terms of why not more inventory reduction?
