Kaumil Gajrawala: I guess as we get towards the end of the call, putting a lot of it together, lots of information on volume, on organic revenue, also why it should get better sequentially. I think putting that in the context of what your earnings have grown year-to-date versus the guidance of 10 to 11 implying almost a flat 4Q, I think that suggests a very significant step up in reinvestment or maybe in something else. So can you maybe just try to reconcile each of those pieces?
Andre Schulten: Yes. Kaumil, the main driver here is the profile of some of the tailwinds and headwinds. I don’t expect a major step up in spend quarter over quarter. I think we will sustain good investment levels. And again, as I said, we will be ROI driven, so it’s up to the teams. But I don’t expect a step up as the main explanation of why Q4 looks different in terms of EPS growth. The main driver is a lot of the commodity help has been booked in the front half of the year. And if anything, there’s a little commodity herd coming in Q4. As we talked, oil potentially as reflected in diesel rates and maybe some of the pulp impact will hit this fiscal year. And then the foreign exchange rate, so forget about Argentina. I think we’ve discussed that.
But the balance of the foreign exchange rate will mostly hit in the second half, and that’s heavily in quarter four. And then the last element is just base period. So Q4 last year was very strong because of a different profile. This profile looks a little bit different for the reasons I explained. But don’t expect a material change in spend behavior. It’s really more of the macro drivers that impact the profile.
Operator: The next question comes from Mark Astrachan with Stifel.
Mark Astrachan: One follow-up on SK-II. Last quarter, you talked about your research suggesting that brand sentiment was improving. I didn’t hear that. I guess, is that still the case? You’re still doing more work on what’s going on, I guess, specific to what’s happening in China? And then more broadly, reinvestment has just been considerable this year, obviously, because gross margin has expanded, at least in part because gross margin has expanded so much and allows you to do that. As you think about the setup from here, commodities unknown, but probably not as big of a tailwind, net, net and pricing clearly not as big of a tailwind as it’s been. So as you go into next year and you presumably have a little less gross margin to play with, how do you think about what the reinvestment levels look like?
And then what is the contribution? I mean, I know it’s a squishy question, but how much contribution do you think you’ve had from 300 plus basis points of reinvestment back in the business to drive share, volume, value, etcetera? Thank you.
Andre Schulten: Yes. Mark, on SK-II, I think the brand sentiment has been sequentially improving. The work the team is doing on innovation, on communication and credentialing, I think, is resonating with the consumer. And as the overall sentiment towards Japanese brands is improving, we are also getting a bit more bold in the breadth of the communication, the reach and frequency that we use. So I think all of that is pointing in the right direction. As I mentioned, I think the order behavior might lag, so we might see improvement in consumption before we see improvement in shipment. So that’s why I was cautioning that while we see consumer sentiment improving, that first has to translate in increased consumption, and that then has to translate into increased orders and shipment, and that will take some time.
So the team is doing the right work, and I’m glad they’re actually doing it in a very balanced way to ensure that we’re rebuilding this brand for the long-term. In terms of spending, I think this will really be done business by business, geography by geography, so it’s hard to give you an answer. The only thing I’d point to is we are planning on significant productivity to continue in the marketing spend area. So that in and of itself would be somewhere between $400 million and $500 million of productivity in the space. That is always up for discussion. Do you reinvest or do you flow it through. And it will really depend on the level of innovation we are able to drive. More innovation means more spend and hopefully better return. And I’ll leave it at that in terms of the ROI.
I think I’ve answered the question before. It’s there in the aggregate discipline of the categories, but I wouldn’t want to go into more detail. I think it’s really down to the category country combinations at which we measure it, and at which those decisions are made.
Operator: Today’s final question comes from Brett Cooper with Consumer Edge Research.
Brett Cooper: And I wanted to follow on Nik’s question. Over the last few quarters, some of your peers, your competitors have talked about elevating their rates of growth. You touched on this a bit before, but I was hoping you could talk about the opportunity or capacity for category growth rates to elevate further if more players are deploying strategy than you execute. And how do we see that come through with respect to volume or price or mix? And then just finally, if there’s anything that you need to do with respect to elevating innovation more or do anything in light of what may be a more competitive environment on that front? Thank you.
