John Morikis: I think there is some destocking. Our customers have spoken about some areas of excessive inventory that they’re driving down. And to Heidi’s point, as our additional capacity comes back online, we get through the repairs down in Garland. We’re going to take this wonderful technology and bring solutions to our customers that allow them to run their plants more efficiently.
Operator: Your next question is coming from Patrick Cunningham from Citi.
Unidentified Analyst: This is Eric on for Patrick. Given the DIY consumers under pressure, have you seen any relative share gains or losses within PSG or CBG?
John Morikis: Well, we’re clearly seeing improvement in share gain in our PSG, our stores business. Heidi mentioned the comparisons to last year in the quarter, we’re all very strong, nearly 20% comparisons, and we’ve continued to perform very well even against that backdrop. And the investments that we’re making are easy to point to as key drivers for future share, but I drive it back to the core business that we have and the expectations we have for organic growth. Heidi mentioned quickly in one of the M&A questions about that we don’t need acquisitions. And in stores, when you look at our business, you could arguably say that this core business in itself is going to be a fantastic show to watch, and it will be. But our expectations are to accelerate growth even faster.
So the investments that we’re making will allow us to capture that even quicker. As it relates to our consumer business, we’ve got wonderful partners. We’re committed to their growth. Heidi mentioned things like capacity and helping them to drive down their inventory with the reassurance that we have the ability to respond to them. So from the back side, we’re clearly trying to help position them financially. But more importantly, we’re introducing new products. We’re bringing innovation. We’re adding people in our team — on our team to help train their team members. And we do believe there is a continued opportunity to convert people that might be in our customers’ stores as shoppers, we can help turn them into buyers of products in our category.
So we’re excited. This is a type of market that most don’t hope for, I would say, arguably, we don’t hope for this type of market. But we know what to do, and we’re going to turn it into advantage to our shareholders.
Operator: Our next question is coming from Aron Ceccarelli from Berenberg.
Aron Ceccarelli: I have one on product simplification. You have been doing quite a lot of simplification inside and outside the can, reducing formulation and also rightsizing the number of SKUs. Maybe can you help me understand a little bit better where are we in this process? And if you can quantify what has been done, and where can we go from here?
Heidi Petz: Yes, Aron, I would say we’re early innings. Really confident that there’s aggressive road map ahead here. And the way I would characterize this is thinking through this is truly an end-to-end effort across the enterprise. So you mentioned whether it’s SKU rationalization, formula rationalization that’s really starting with raw materials and understanding the basket all the way through to what it is that we’re setting up to our customers. But I think an important point here is it’s a mindset that we have adopted going forward. And so it’s part of how we, John mentioned innovation as part of our new product development process. I mean, we’re going to make sure that we’re always looking at opportunities to take complexity out of the business.
And I take it a step further, if you look at our Performance Coatings Group, we still have a lot of opportunity as we think about even rationalization of footprint. So the team is hard at work. This isn’t going to be something that we land in the next 12 or 24 months, but I think we’re going to be constantly looking at going forward.
John Morikis: And I think Heidi’s strength here is, and she’s a humble person, she won’t say this. But I will say this, I am a front row to this show. You’ve got a leader that is driving the opportunity to the bottom line. She’s got a very respectful approach to our traditions and to our norms. Our 157-year-old company, there’s a lot of things that we do and have done, and many of them are right. And we’ve got an opportunity, I think, to take a look at those traditions and norms and ask if there’s a better way to do that. And this simplification effort is a great example of that. I think our company is going to come out much stronger, much more efficient, better responsiveness to our customers, and an opportunity to pursue business in new ways.
We didn’t really get into our digital approach, and the approach that Heidi is leading there to our team to better use the data that we have available in ways that we just haven’t in the past. We’ve scratched around the surface but there are some terrific opportunities that she’s leading that I think will further differentiate Sherwin-Williams.
Aron Ceccarelli: And I have a follow-up on PSG. You touched earlier on the commercial vertical. Maybe can you provide some color on property management because also this vertical has been incredibly strong this year. And again, Q3 very strong against very tough comps. So would like to understand how you think about the momentum in terms of volume growth going into next year, please?
Heidi Petz: Yes. The underlying demand is solid. I think we’ve seen some delayed CapEx and a lot of deferred maintenance that is now being addressed and we’ll continue to see that coming into next year. I would say relative to apartment turns are improving, a bit influenced by the return to travel of the school driving some of that demand. But much like our momentum in New Residential, we’re demonstrating our unique ability here to really serve the property management segment with a consistent experience that I believe only Sherwin-Williams can deliver. And regardless of the size or the location of these contractors, our goal is consistently the same. It’s — we want to make it as convenient as possible to leverage our stores, our reps and our segment-specific tools and solutions here.
So we’re taking share. We’re increasing our number of sole preferred or exclusive contracts, if you will. And we’re confident that we’re going to continue with our foot on the gas going forward.
Operator: That concludes our Q&A session. I will now hand the conference back to President and Chief Operating Officer, Heidi Petz, for closing remarks. Please go ahead.
Heidi Petz: Great. Thank you. So I expect to close out this year with momentum. I think you’ve heard that loud and clear here. We believe that we’re growing share and — we are — our humility takes us to the point where we’re saying, we recognize that there is no finish line. So we’re determined to move forward here. Going forward, as we look at 2024, here’s what I can tell you, I have clear line of reality. There is going to be some choppiness that we talked about ahead. But we have seen this movie before. And my confidence is in this team, our ability to execute on our strategy that we know is working, our confidence that our key investments that we know will deliver shareholder value. And those combined together is what gives me confidence that we’re going to outperform the market.
Any additional questions, please feel free to reach out to Jim and Eric. And we’ll conclude with just looking forward to talking with all of you in January about our outlook and our plans and have a wonderful holiday.
Operator: Thank you, everyone. This concludes today’s event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.
