So yes, we do want to see some sunshine. And then to your question, we feel really good about inventory levels and I think more importantly, retailers remain extremely committed to the category. They understand that the press of the category starts now and there’s a lot of opportunity here between now and 4 of July.
Operator: Our next question comes from Dara Mohsenian with Morgan Stanley.
Dara Mohsenian : I just wanted to touch on A&P spending levels. It’s been in the 10% to 11% range as a percent of sales the last few quarters in the last couple years. You go back a few years pre-COVID, it was generally more in the 13% to 14% range. I know we’ve talked about previously, you guys are driving greater efficiency there, so that’s why it’s come down over time. But we are seeing your peers in the industry really ramp up A&P spend as a percent of sales looking to drive a volume recovery. We don’t see it happening as much on your end despite some of the growth opportunities you’re focused on and the gross margin recovery, your solid productivity. So just wanted to understand conceptually, A, why strategically we’re not seeing more reinvestment in ad spend?
B, do you think you’re at the right levels in terms of share of voice relative to peers? And then — and to support the volume recovery going forward. And then C, just what’s the right level as a percent of sales maybe looking out longer term or are you pretty comfortable with where you are today?
Dan Sullivan : I’ll start, and then I’ll hand it to Rod. Look, I think we’re going to continue to stay extremely disciplined here about where dollars drive ROI, that’s the primary focus. We don’t get too caught up in percent of sales metrics year-over-year. And so, we did expect to spend a bit more in the quarter, about a half a point more in revenue. And as we saw things getting delayed, Rod talked about that as we saw NPD being delayed, as we saw the sun season starting out a bit soft, we said, look, this isn’t good spend and we’re going to continue to follow that. We will step it up in the third quarter about a point of sales more than last year in support of the things that Rod talked around innovation and NPD and just good seasonal execution.
But before I hand to Rod, I would make two comments though I think are important to understand just as you try to balance level of spend. I think one we did as we exited the quarter start to move dollars out of A&P into sort of shelf execution, retail execution, promotional dollars. We did do that. We expect we will continue to do that in the back half of the year. So I think, we’ve got to recognize that dollars are shifting now based on competitive move and category dynamics. It doesn’t mean we’re not spending, it means we’re spending differently. And I think secondly, just purely rate of sale driven as international grows at an accelerated rate relative to North America it carries with it a lower A&P dollar. And so, you’re going to actually get a mixed benefit here where the growth is coming from markets where we don’t spend at the level we do in North America.
So I think that’s an important point. Rod, what would you add?
Rod Little : Yes, two things to add on top of that Dara. One, is as we return our gross margins back to that 45% plus range, which we’re committed to doing, part of what we will do with that margin pickup over time is invest more in A&P. That’s part of our model. That’s part of our plan on how we think about delivering our growth algorithm for the future, which we’re very confident we should do. It’s going to come with some incremental support and spend on that A&P line over time. The thing that 0.2 that encourages me that we can do this in a way that’s value creating is we have developed some internal data and analytics capability that is really, really impressive around where to spend next dollar. We’re effectively doing in-house market mix modeling, big data and analytics to drive through to Dan’s point on where is ROI and where do you spend the next dollar, which brand, which category, which customer, do you potentially go after much, much better analytics.
And so as we create better branding, better messaging, we now have the analytics to point us where to spend with that. I think we’re more willing to lean in and drive an increase in the rate because we know we’ll get the return. I could not have said that to you two or three years ago. We’ve been on a journey there and yes, we want to spend more. We’ll do it in a way that when we increase margin, we’ll drop some to the bottom line and we’ll reinvest in the business over time. That’s what you should expect to see from us.
Operator: Our next question comes from Susan Anderson with Canaccord Genuity.
Susan Anderson : I guess maybe just going back to the Fem Care business, I guess I’m curious how you’re thinking about sales now for the year. It looks like down low-teens in the first half. I guess, should we think about getting most of that back to in flat for the year now or how should we think about that? And then I was curious too, just on the new launch, if you are getting any shelf gains.
Rod Little: You laid it out wrong Susan, that’s exactly how you think about it. Down in the front half, up in the back half kind of flattish for the year plus or minus. We’ll see where we landed. A lot of it’s going to depend on off take here from the new initiative and what we put against it. But it’s definitely a different profile in the second half. We don’t think the inventory reduction piece that retailers are hitting us with. We’ve got the full planogram in place. And yes, we did gain shelf space as of effectively this month going forward with the new Carefree rollout. Dan, I don’t know if you want to add anything.
Dan Sullivan: No, I think you said it well.
Susan Anderson : And then I was just curious, any early reads on the launch of Billie into women’s grooming. I guess how many stores is that in now and what are you doing just to market that new launch and get consumers interested in the product?
Rod Little: It’s exclusive at Walmart. As of this quarter, we just shipped in the new Billie Body execution. It’s in a per sprint deodorant. It washes with moisturizer to follow. Not in yet. We are on track to ahead of initial assumptions that we had made around how big that could be. We feel good about it. Walmart, I believe if you asked them, we’ll tell you they feel good about it. And we’re excited about the momentum of the Billie brand, not only in grooming as we put the new body care skews in, but also what’s happening on shave. We now have a shave business that’s north of 10 share points and continuing to grow every single period. And so as we invest incrementally in awareness, which we are doing behind the body launch. We think we’re going to be in a period where we can really start to get some halo and some efficiency in a multi-category exposure for the investment we make. Dan?
Dan Sullivan : Yes, all the right points. Susan, you’re a big fan of the brand, so I’ll add one comment. At Walmart in March, we executed a four-way mixed brand display. So the first time we’ve been able to do it in over 3000 doors and saw a 20% sequential growth. And so, to Rod’s point, you’ve got a very strong Shave brand now that is essentially 17 share at Walmart with a growing presence in body and a really supportive retailer, who’s willing to do incremental things on the floor, which is super helpful.
Operator: Our next question comes from Olivia Tong with Raymond James.
Olivia Tong: First, I want to follow up on Chris’s question, because the savings and productivity that you’ve been able to achieve has been impressive as you improve that despite a weaker top line. But the things that you said, more promo in the second half, a couple of other things seem to suggest more drags on that. So I was wondering if you could talk about that. And then just on the top line, it seems like the tougher macros are hitting your categories harder than others. But you are in a weak — in a unique position, excuse me, because of your private brands group. So was wondering if there’s anything that you’re doing there to help potentially offset some of the weakness with the branded portfolio.
Dan Sullivan : Hey, Olivia, it’s Dan. I’ll take the first question and then I’ll hand to Rod for the second. Yes, look you are right. I mean we’re, as I said earlier to Chris’s question, we feel quite confident with the margin profile and the way that we’ve built it. We do think productivity and revenue management efforts will continue to outperform our initial expectation. We do feel that in the second half of the year, I think the team’s done an amazing job both in execution of productivity and also in continued focus on unit economics and revenue management. What we are guarding against and trying to be thoughtful about is a couple of dynamics. One is reality, which is capacity utilization. You sell less, you produce less, you have less utilization on your manufacturing floor.
And so, we’ve accounted for that in the back half of the year. And then as you mentioned, what we think will be a more promotional environment. Now, if I put all of that together, what it means is our margin outlook for the back half of the year is unchanged from our previous outlook. We have not changed anything. We think there’s tailwinds in the stuff that we can really control around productivity and price. And we think that the environment will continue to be promotional and therefore we’ve contemplated that in the outlook. But for the half two, our margin outlook has not changed. So I’ll hand it over to Rod.
Rod Little : Yes. And on the private brands group, we call it Edgewell Custom brands these our vernacular for it. We have a situation that as the consumer gets challenged, if economic conditions get more difficult on a macro basis, our portfolio sets up well to benefit from that. Not only is the value tier, for example, with Billie branded now in women’s playing in disposables as well, but we also are the leader in that private label area and custom brands work, which is typically more to value price point. We are seeing better trends in that part of the business versus branded particular strength in Europe, in that business. I would call out, our execution in Europe has been outstanding in that part of the business and it is faster growing.
We’re not seeing big share shifts to private label, but we are definitely seeing strength in that part of our business, which we think is potentially a buffer for us. If the consumer does become more challenged from here, maybe it does put more macro hurt on our categories overall, but there’s definite benefit in that part of the portfolio.
