But I cannot reinforce enough, as I’ve said all along, that it’s not going to be an overnight improvement. It’s a plan that we have planned for 2023 and 2024, and what matters for us is to make sure that we continue to be on track with the execution of this plan. Paul, do you want to take the second one?
Paul Ruh: Happy to. Yes. Thanks, Steve, and great to talk to you. So our priority number one is to make sure that we keep the flywheel turning. Therefore, as you saw in the results of Q3, we put a lot of emphasis on productivity, and you see that reflected in our gross margins because we don’t want to miss on the opportunities to invest where we see the growth. And our model, our operating model allows us to do that. What we do is when we see opportunities to invest with high rate of return, we move the resources to that place. And if the season is starting slowly, we move the resources to where we see the season or the other opportunities for growth already there. So we have not changed our investment plans overall. Our focus is to deliver on the productivity to maintain those investments where they make most sense in terms of return.
Thibaut Mongon: And I would add, you see that reflected in our innovation program in Q3, and we have a lot of exciting innovation lined up for Q4. You will see more displays and brand activation with Tylenol. I talked about our innovation Motrin Dual Action that is doing very well and allowing Motrin to gain share. You will see brand activation around Neutrogena Hydro Boost range, in particular, and continued activation in Europe as well.
Operator: Our next questions come from the line of Jason English with Goldman Sachs. Please proceed with your questions.
Jason English: Hey, good morning, folks. Thanks for slotting me in. Two questions. I’ll start with a change of topic over to cold and flu. We heard P&G last week, double-digit growth on Vicks, really good sell-in there. And we heard from Reckitt, who also talked about really good sell-in around cold and flu. Your message is obviously contrasting pretty sharply with that, and I guess it’s a little unclear why. Two potential explanations: one, your sell-in is weaker, suggesting like maybe retailers are planning for a little less support behind you than your competitors; or secondly, like maybe sell-in is fine. You’re just looking around the corner, saying sell-in is good, but the season looks soft, so we’re going to plan for less pull-through as we look forward. So can you help provide a little more clarity on how we reconcile those and which of those potential scenarios is most close to the truth?
Thibaut Mongon: Jason, good morning first. You are absolutely right in your analysis. We have the second scenario in mind. That’s what we are seeing. We see ourselves and our retailers ready for the season. Everybody is prepared for the season, and that’s reflecting in the sell-in, and that’s reflecting in the strong performance of our self-care business in Q3. Having said that, when we look around the corner and look at signs of start of the season, we have not seen that so far given the very warm weather we have seen in the U.S., in Europe. And so that’s what we are reflecting in our outlook, not so much the sell-in. That is, as always, good to make sure that everybody is ready for the season but more what we see on the ground in terms of start of the season.
Jason English: Understood.
Paul Ruh: And a couple of points to add maybe, Jason. The first one is our readiness compared to what it was before is much higher. We have actually increased our capacity in several lines and also in our IT infrastructure to be able to connect much better with our retailers. So when the signal is there, we will be ready to react. That means that we, on a total end-to-end value chain, we’re able to optimize inventories for the benefit of us and the retailers as well. So we will be ready, and the situation is much better after the learnings that we had from the previous pandemic years.
Jason English: Helpful stuff. Thank you, and congrats on the success you’re seeing in skin health and beauty in Europe. I like what you said. I hope that is indeed an early indication of what the U.S. could look like when all these initiatives take hold. You mentioned that the cadence of the improvement is on track. It doesn’t — from the outside looking in, it doesn’t seem like that’s the case at all. We spoke last quarter about the cadence of the destock — or sorry, not the destock, the rationalization that happened this quarter last year. You’re supposed to come out of this quarter having fully cycled that. And in fact, you’re supposed to come out this quarter with now more products slotted in on shelf resets. So this was supposed to pivot from a headwind to almost net neutralize this quarter as a tailwind in the fourth quarter.
Now you’re saying no, not the case. It’s actually going to be a headwind again in the fourth quarter. So something’s gone wrong. The shelf resets must not be going as well as expected or there’s other discontinuations elsewhere. Help me understand kind of what’s been — what’s derailing this path of improvement.
Thibaut Mongon: Yes. So let me take this one. On skin health and beauty and the recovery of distribution in the U.S., as you know, the Planogram resets happen in the fall. So we are just going through the resets, as we speak, right, in the U.S., depending on which customer you are talking about. As I said, we are pleased with some of the wins we have had with these resets, and you are going to see improvement but not immediate. That has always been our plan, and we are in — we are seeing continued impact this quarter. You are going to see continued impact in Q4, less and less as the Quarter 4 and forwards as we — as these new Planogram resets materialize in our numbers. So you have a lasting impact of this loss of distribution points. But you’re right, we are recovering gradually, as we said all along, through Planogram resets, through launch of innovation. And that’s what we saw with sun, that’s what we’re going to see again in face and body, and hair will be next.
Operator: Our next questions come from the line of Anna Lizzul with Bank of America.
Anna Lizzul: Hi. Good morning, and thank you for the question. On self-care, volumes were a bit better than expected despite the more normalized or slower start to the cold and cough season. We’ve noticed that you’ve gained market share nicely in the self-care categories over the past two years. So even if we do see a softer winter season overall, should we expect volumes to continue to be bolstered by those market share gains?
Thibaut Mongon: Anna, good morning. Good question. I think what — you rightly said that we have consistently outperformed the market for a long time now in healthcare, and you continue to see that happening. You also see the power of the portfolio, our broad-based portfolio in self-care covering multiple categories. So in terms of volume, we certainly continue to expect our nonseasonal categories to outperform with innovation, with strong brand activation and execution around the world with customers and healthcare professionals. With regards to the cough, cold, and flu season, given the totally abnormal high season with the tripledemic we had last year, as we said all along, we would not expect the same type of volume to materialize this year.
