And that’s really the goal and objective that we are going after, and over time, we would like to, as we have said be able to say that we can grow somewhere between 2 times to 3 times the market.
Operator: Thank you. Our next question comes from the line of Rob Wertheimer with Melius Research. Your line is now open.
Rob Wertheimer: Thank you. I’d actually like to start where you just ended on, on market share and trends there. And my question, I guess, specifically, there has been obviously a change in the mix of construction in North America or you have larger projects, major projects, whenever. Maybe housing is holding in there. I am little bit curious if there are any margin or market share or go-to-market impacts from that, maybe have more Pro, maybe have more high need, high reliability, maybe not. I am just curious about whether that has any impact on the business? Thank you.
Don Allan: Thanks, Rob. Yeah. I think, the — we are probably over using the word dynamic, but I think it’s an appropriate word to describe the current market situation, because there’s a lot of different shifts happening. There is certainly a great deal of construction activity, but it’s shifted quite a bit from what it was 18 months, 24 months ago where it was very heavily residential focused and commercial focus to some extent and then we went through the pandemic and the commercial activity slowed down. So, we continue to see different types of shifts. We do not see radical shifts in our business model though or how we go to market at this stage. One of the really great things about Stanley Black & Decker is that we have over the years been very focused on what are the right channels to the end-user.
The professional that ultimately is the ones the individuals that use our tools and because of that history and those channels that we have very strong presence in not only North-America, but the European markets, as well as emerging markets around the globe. We have their presence to be able to ensure that we are meeting the needs of the end-user and if the end-user is shifting to e-commerce, we have the ability to serve them an e-commerce as well or if they continue to want to go to the traditional distributor that they have spent time with, we sell through that channel. So I think we are positioned well for whatever may happen in the future. Clearly, there will be a shift — continued shift over time, we are more and more people focus on e-commerce activity.
We positioned ourselves well over the last decade to be able to continue to address that. I think you will see more of that shifting as you get into some of these commercial and industrial channels with larger distributors as they built some e-commerce platforms during the pandemic to deal with a period of time where people didn’t want to get close to each other and we have been able to address that as well. So we are going to continue to do that. They will probably be an area that we will invest in overtime to make sure that we meet those needs of the channel.
Operator: Thank you. Our next question comes from the line of Joe O’Dea with Wells Fargo. Your line is now open.
Joe O’Dea: Hi. Good morning. Thanks for taking my question. I wanted to ask on the sort of returns targets around investment spend. And so when you think about investing $125 million, how do you think about the returns there and tracking them. And so, both from the market outgrowth, as well as the evidence of that. So when you spend $125 million, how do you go about tracking that it’s actually achieving the targeted outcomes?
Don Allan: Yeah. Joe, what I would say is, long-term we want to have very productive investments in SG&A that’s mostly where these investments we are talking to you are centered. And our long-term financial algorithm probably has SG&A somewhere around that 19%-ish of the net sales. And so long-term every time we put a $1 into SG&A, you need to be getting more than five of those out of the topline at a gross margin that are above our fleet average and that’s certainly as we go into these investments, very, very much be intend. The pace at which that happens, obviously, can differ depending on where you are in your certain competitive dynamics of which investments you are making at a given point in time. But that’s our financial algorithm.
Right now and maybe, Chris, might want to add some things to this, but our focus right now is on reenergizing the engineering in innovation engine and then reenergizing the activation around our pre-existing marketing investments in around that innovation. Those two together are probably 80% to 90% of the investment per spend that we are making and it’s all to get the growth of the biggest brands getting back to above market growth. I don’t know if there’s anything you want to add to that, Chris?
Chris Nelson: No. I just think that the comment that Don made about the three flagship brands that we have. And it’s not only about net incremental investment, but it’s also taking a look and seeing how we can reallocate existing dollars towards those three priority brands and the key initiatives that we see with the Pro end-user, as well as making sure that we have the right commercial resources in place to be driving those returns as well. So we are thinking at — looking at the entirety of the spend and not just the net incremental and then driving that into measurable initiatives to be able to make sure that we are getting the types of returns above fleet average that Pat referenced.
Operator: Thank you. Our next question comes from the line of Nicole DeBlase with Deutsche Bank. Your line is now open.
Nicole DeBlase: Yeah. Thanks. Good morning, guys.
Don Allan: Good morning.
Nicole DeBlase: Just wanted to ask one on pricing. So I think originally you guys were kind of expecting flat to slightly down in the quarter for Tools, obviously, a little bit weaker than that. Just maybe a little bit more color on this from a competitive perspective and your thought process on pricing into 4Q and perhaps thoughts around 2024? Thank you.
Don Allan: Go ahead, Pat.
Pat Hallinan: Yeah. Nicole, I mean, purely from a guidance and actuals perspective, I’d say, very much within the bounds. I’d say the only dynamic that played out a bit differently in the quarter is the promotional mix around margin accretive Power Tools was a bit higher, which was net accretive to the P&L, you saw the gross margin performance in the quarter. It just as you reconcile and provide out the actual color and pricing was a little bit more than we would have expect. But I think that’s kind of on the margin of just how promotional activity unfolds in the quarter. But I and Chris may want to add to this. I don’t think we see any kind of change to the competitive dynamics inclusive of the pricing related to the competitive dynamics.
Chris Nelson: No. As I said earlier, I think, we are — we see fairly good stability in the pricing and not a lot of competitive deep discounting and our — just to reiterate, our focus is to be healthily involved in the promotional aspect of the business, because we think it’s important to have those key brands and products out in front of our end-users and our customers and we intend to continue at kind of those traditional levels. But more importantly, we are looking through our innovations and how we think about launching new products to be able to continue to supplement and grow those margins as well.
