Unidentified Analyst: I’m just curious what your relationships with your retail customers look like today just given the disruption in the fourth quarter and has world lost shelf space to other brands? And then how do you get that back? Are there built — is there a built-in backlog? Like were there contracts with retailers that you can now fulfill those orders? Or how should we think about the market share regain in 2023 in your assumptions?
Marc Bitzer: So Liz, let me particle I guess this question relates particularly to North America, U.S., so let me respond in particular in the U.S. In Q4, we had a market share which was pretty much identical to the Q3 market share. As a reminder, in Q3, we picked up sequential market share, so we made a little bit of progress but we did not further expand by products in Q4 but basically how it’s stable. Honestly, internally, we expected share gain. And again, we’re coming back to the supply constraint which we had in Q4. So we do expect in Q1, I mean all subsequently, margin sequential, not only margin but also market share gains and that’s what we kind of right now plan. And what we see right now is happening in January, particularly to the relationship with retail, first of all, for particular U.S., you always got differentiate between builder and traditional retail.
The builder side, as you — as we probably explained over the last years, not just last year, we made tremendous progress on expanding our market share and we’re now well above 50% in that segment. By definition, that segment is right now suppressed because we have the kind of housing issues and the housing constraints in Q3 and Q4 but at one point, that will fully benefit us. On the traditional retail side, as of today, we have not lost floor space but it’s also clear. We’ve got to provide our retailers with the products which we can sell. We have a lot of fantastic innovations launched and in the pipeline, be it the Mate PET program, the 2 and 1 top load of a dishwasher which is a brand-new architecture. So we know we can sell more. We know it’s floored and we will fulfill that supply need.
Operator: Your next question comes from the line of Mike Dahl from RBC Capital Markets.
Mike Dahl: Mark, Jim, I appreciate all the color so far. If we look back at the last 6 months, I think it’s thought everyone that visibility can be challenging. It’s a quickly changing environment. When we look out at the housing landscape today, a single-family permit 40% year-on-year. Home sales are down in the mid-30s still home prices have started to soften these are all leading indicators, right? And so I guess I’m wondering, I understand your long-term views on housing. But I guess the question is why the conviction that all these headwinds will be behind you by the end of the first half of this year.
Marc Bitzer: Yes. So Michael, I can probably address in particular the U.S. housing sites. As we said before, U.S. housing, we don’t expect a major uplift in the first 6 months of this year. However, the long term and even kind of probably post summer, I do expect and see some recovery. First of all, you’ve got to differentiate 2 elements. The existing home sales and the new home construction. The existing home sales, just if you look at the numbers the last couple of months kind of fell from a run rate of more than 6 million to now slightly below 4 million. That’s slightly below €4 million. I mean, you’ve got to go back several decades to see such a low level which is below any sustainable run rate. And it’s probably the effect of ultimately mortgage rate shocks coupled with high home prices.
So what you earlier said as a leading indicator, home price started coming down, that is actually the long-term good news for existing home sales because at 1 point, it will improve home price affordability. Also, if you look at the mortgage rate, for those people who observed for over a longer time. Last year, we had the high spread between mortgage rates and 30-year treasury bonds. That is unusually high and most people would expect that spread to come down. So even though the Fed rates may not come down, there’s reason to believe that the mortgage rates will stabilize and get back to long-term historic spreads. So we do expect that home housing affordability will improve as the year progresses and that will ultimately trigger existing home sales.
On the new home construction, many for same factors apply. But the most important thing, I mean, right now, you can talk to multiple industry sources. If you look at the last 10, 15 years, most people would agree, there’s about a 3 million unit undersupply of new homes. That is about a 2-year supply at normal run rate. So at one point, that supply will be triggered, okay? Will it all happen ’23? No and it also will not happen entirely in ’24. But — it’s been — if you go back from history, probably ever since housing market has been reported which is probably the longest stretch of undersupply this market has experienced and will not last forever.
Jim Peters: Michael, I’d say the other thing to add in there is you have to remember that our industry is a large replacement industry and about 55% of our business is replacement. And if you go back to the industry in 2011 was declining in 2012, it was pretty much flat. But in 2013, you started to see some significant growth as it rebounded. And so when you look back 10 years, we’re really now entering that period where you could have a very favorable replacement trends that are underlying. Additionally, if you look at what consumers are doing today, as many consumers may not be moving do they want to stay in their homes with their existing low mortgage rates, it does lead to more remodels. And many other times, the kitchen is 1 of the things they remodel. So there are other trends out there that we do see that can be and will be positive for us.
