And for our categories, that still means the vast majority of our sales are done off the shelf with no price reduction. Most of this is good quality merchandising, targeting the consumer around key price points, et cetera. So we think those in combination are the right level of spend given the consumer dynamics, given what we see from a return perspective and what we think is needed to grow categories and to grow share over the long term.
Anna Lizzul: Great. Very helpful. Thank you very much.
Operator: And our next question comes from Dara Mohsenian from Morgan Stanley. Please go ahead, Dara.
Dara Mohsenian: Hey, guys. Good afternoon. So I just wanted to touch on the fiscal ‘24 guidance. You’re assuming gross margins come in well below the fiscal Q4 level and the level in the back half of the year. I know you’ve got $200 million of higher costs you mentioned in prepared remarks. First, can you just give us some more detail specifically on that bucket and what’s driving cost increases? And then, b, just as you think about it conceptually, the lack of sequential progress versus the back half of the year, obviously, it’s up year-over-year for the full year. Just wondering how that fits in with your goal to eventually move back towards those pre-COVID gross margin levels and why not more progress this year, again, specifically relative to that back half. Thanks.
Kevin Jacobsen: Yeah. Happy to take those questions, Dara. Maybe let me start with cost inflation and what we’re projecting for this year. Maybe if I step back and just think a little longer term in terms of what we’ve been dealing with and you folks know fiscal year ’22, a really difficult year given that extreme levels of cost inflation, about $800 million. Last year, we experienced about $400 million of cost inflation. And this year, we’re projecting about $200 million. So sequentially getting better, it’s moderating, but we’re still expecting to operate in a higher cost environment. As we look at that $200 million worth of supply chain inflation, there’s really two areas we’re predominantly seeing those cost increases coming through.
I would say about a third of that we’re projecting will hit in commodities. There’s a number of items we still see inflating, particularly chemicals, substrate, corrugate and linerboard, we’re still looking at rising costs year-over-year. Resin for us, we’re looking as a fairly neutral cost. It came down last year, and we’re assuming it’d be relatively flat this year. And then we are seeing some cost declines in some of our ag products and diesel. But overall, we think that bucket will be modestly inflationary. And then the other item we’re looking at really hits particularly manufacturing and warehousing primarily driven by labor that we continue to expect to be operating inflationary environment. And so those are the primary buckets where we expect to see the $200 million.
Now on the gross margin goals this year and the phasing of those — as you said, Dara, we’re expecting to continue to make progress rebuilding gross margin. And you folks know we’ve talked about this quite a bit, we’re committed getting back to those pre-pandemic levels of margin. I think we made good progress last year. We’ve improved about 360 basis points. We expect to build on this this year, expecting another 150 basis points to 175 basis points of improvement. And so by the end of this year, assuming we deliver this plan, we will have recovered a little over 500 basis points of that 800 basis points we lost. Now in terms of the phasing, I’d say, Dara, typically Clorox has some seasonality in terms of our margins. Typically, our fourth quarter is our highest margin.
And that’s particularly because we do an — a disproportionate amount of our Kingsford business in the fourth quarter. I think as you folks know, we sold out 50% at Kingsford in the fourth quarter. It’s a very business. So that tends to generate our highest margin. And then typically, Q2 is our lowest margin point. One, because we do very little Kingsford as well as we do some, a lot of gift packing on our Burt’s business, which is a great activity to drive awareness and trial, but it comes at a lower margin. So you should normally think about our business. Once we’ve gotten past the normalization and the pricing and all the disruptions, historically, Q2 is a low point and then Q4s are high. So I think it’s better to look on a year-over-year basis versus sequentially quarter by quarter.
