So I would say there’s nothing off the table, but as we come back in 2024 and give guidance, we’ll be able to give more color. And by then we’ll also have another picture on where the cocoa market is headed. We talked a little bit in the last call that there is some divergence between, what we see in pricing and some of the underlying fundamentals. And we still have an aspiration at some point that that will normalize. But to the extent it doesn’t, we thought that earlier this year, and it didn’t play out that way. But every quarter that goes by, we get more visibility, and that will inform how we think about the pricing question.
Michael Lavery: Okay. Great. That’s helpful. And just to follow up on buybacks, you mentioned you didn’t have any in the quarter. Obviously, the stock has been more attractively valued from a buyback perspective. How do you think about that going forward? Is there, how are you saving for M&A or is buyback something you might ramp back up?
Steve Voskuil: Yes. It is attractively priced. I agree with you. And so as we think about our capital allocation principles, share of purchase always plays role. We are looking at it closely again as we talk next year and how we’re going to allocate capital. You can imagine that’s going to play a role and we’ll continue to watch what’s happening on the stock price and other calls for capital. I will say, we’re coming off a pretty big year of capital spending this year. It’s not going to look like that next year and so that is going to allow some more cash flow to deploy to other uses. So we’ll keep that in mind as we think about 2024.
Michael Lavery: Okay. Great. Thanks so much.
Steve Voskuil: You bet.
Operator: Thank you. Our next question comes from the line of Pamela Kaufman with Morgan Stanley. Please proceed with your question.
Pamela Kaufman: Hi. Good morning.
Michele Buck: Hi, Pam.
Pamela Kaufman: We’ve seen consumer demand soften across categories, including for chocolate, as you mentioned in the prepared remarks. You also pointed to your outlook for demand elasticity to continue to return to normalized levels, but historically the chocolate category has exhibited relatively limited demand elasticity. So can you talk about how you’re thinking about demand going forward in Q4 and for next year?
Michele Buck: Sure. So, I would say we’re certainly continue to feel good about our category and the price realization potential in our category as we have had over the years. We focused a lot on the value equation, investing in our business and our brands to keep that strong. At the same time, we’re also cognizant that, it is a different time today. We know that value and affordability continue to be top of mind for consumers as budgets are stretched, some less government assistance, the restart of student loan repayments, higher interest rates. So we’ve heard from consumers that they’re needing to make difficult choices. So we are certainly focused on that, and making sure that we’re really focused on our value equation in terms of selling to value channels, having the right opening price points, et cetera.
Food has been more resilient than some other categories but we know that some of the Snap households are reporting that they’re eating and buying left. So we’re very cognizant of that. And we’ve also seen some increase in sales in some of the perimeter categories where there’s been deflation versus some of the inflationary categories. That said, where we focus on, where are the growth levers that we can continue to drive, to engage consumers and that is having the right levels and the right media targeting approach to continue to keep our brands relevant. But with both the media and the creative, we know that that’s important. We didn’t have as much innovation this year as we think was ideal on the business, and we’ve really stepped that up for next year.
Feel great about Reese’s Caramel in particular, and we’ll share some of the other innovation that’s coming as we go down the pike. Seasons continues to be a big piece of our business and winning during those seasons, getting that merchandising and it is a time where there’s a lot of emotional connectivity with consumers. So it’s a natural time for them to come in the category. And we continue to have distribution opportunities, both in terms of some places where we were short on capacity. And we had to pull back on some core items that we’re now going to be able to supply as well as some of the innate distribution opportunities that we have on the Salty business. So those are some of the places that we’re focused on to really drive growth.
Pamela Kaufman: Thanks. And for my follow-up, just wanted to talk about the competitive dynamics in the Salty Snack segment and within Popcorn, specifically that you highlighted, what do you, what are you observing in the segment? And how are you addressing these competitive pressures?
Michele Buck: Yes. So I’d start by saying that we have seen some softening in Salty Snacks overall. Volumes held fairly steady throughout the quarter. But growth decelerated as pricing lessened. And there was also some growth that shifted to non-measured channels. Again, we know that affordability and value are of increasing importance to consumers. And we’re also seeing them really prioritize some of the more satiating snacks. So as we look at our business, certainly, we’re seeing a lot of strength in Pretzels in the category as well as our Dot’s distribution opportunities. And as we look at ready-to-eat Popcorn, certainly, we do know that consumers are focused a little bit more on satiety. And we’ve had some retailers focus on private label and merchandising in particular.
As we go into next year, certainly, we’ll be focused on productivity in the category. We know that some of the branded items have greater productivity and making sure we’re working with retailers on taking full advantage of that continuing to invest in those brands to really grow household penetration and connectivity with consumers. And then certainly, as we look at this year, S4 impacted some of our ability to execute and really lean in as we had to focus on pulling back a bit on support on the business during Q3 and Q4, to enable that build that we needed in inventory and just to make sure that we could move through that very smoothly, and that will be a headwind for us next year.
Pamela Kaufman: Thank you.
Operator: Thank you. Our next question comes from the line of Bryan Spillane with Bank of America. Please proceed with your questions.
Bryan Spillane: Thanks, operator. Good morning, everyone. So I guess, I have two questions, and it’s kind of more related to, I don’t know, the momentum in the business, I guess, and what we should be reading from the fourth quarter in the implied guidance. So I guess two areas if you could touch on them. One is, if we look at the revenue guidance, and I think in the press release, you talked a little bit about in Confection, in North America Confection shipment timing help a little bit. So just if you’re thinking about the revenue guidance being held, is that, is what happened in 3Q versus the pull forward or however you want to describe it, is that just purely timing shipment? Or is it a reflection at all that is kind of the softness in every day had an impact as well in terms of the way you’re thinking about revenue outlook.
So I don’t know, is the category or the business kind of slowing more than you thought? And then maybe, Steve, if you can touch on same thing implied margins for the fourth quarter kind of lower in 4Q versus 3Q. So can you just touch on that? And is that somewhat a reflection of the potential for margin degradation? Or again, is this just more timing? So you can kind of touch on those two things, would be helpful. Thank you.
Steve Voskuil: Yes. We have to do. So I’ll start with the sales side. So the biggest driver between Q3 and Q4, and Michele said it before, was seasonal timing. We have a big seasonal timing benefit in Q3 at some at the expense of Q4. Now Q4 also has seasons. We’ve got Holiday as a big factor and maybe even some early Easter shipments potentially. But Holiday is not as big as Halloween. And so just from a seasonal impact, that’s one of the factors. We’ve kind of modeled historic elasticity. So we saw some of that coming in, in Q3, and we’ve modeled that more fully into Q4. And, we also have a slight inventory headwind on sales. So those are some of the drivers. I would say, as I think about the guide on sales for the full year, and I guess the implied Q4 around 8%.
I would say there’s probably less likely to be upside to that number. And if some of the risks would persist, we’ve got a lot of mitigating actions, but if some of those risks would persist, it’s probably more likely to be around to the lower side than around to the high side of guide on the top line. On the margin side, yes, a couple it sort of reverses some of the benefits that we had in Q3. So you’re losing some of the fixed cost absorption benefits that we had in Q3 with the higher volume. So we’ve got a little bit less pricing coming through in the fourth quarter that has an impact and then a more difficult lap also as part of that. So nothing structurally different in Q4, but reversal of some of those benefits that we saw in Q3, just manifesting themselves in Q4.
