Q1 2022 J M Smucker Co Earnings Call- Q&A Session

[music].

Yeah.

Good morning, and welcome to the J M Smucker.

Smucker company's fiscal 'twenty 'twenty, two first quarter earnings question and answer session.

This conference is being recorded and all participants are in a listen only mode.

Please limit yourselves to two questions and re queue. If you have additional questions I will now turn the conference over to Aaron Brown, Vice President of Investor Relations.

Please go ahead Sir.

Thank you good morning, and thank you for joining our fiscal 'twenty 'twenty two first quarter earnings question and answer session I.

I hope everyone has had a chance to review our result as detailed in this morning's press release.

And managements pre recorded remarks, which are available on our corporate.

At J M Smucker Dot com.

Additionally, we will post an audio replay of this call at the conclusion of this morning's Q&A session.

During today's call we will make forward looking statements that reflect our current expectations about future plans and performance. These statements rely on assumptions and estimates.

Website and actual results may differ materially due to risks and uncertainties. Additionally, we use non-GAAP results to evaluate performance internally.

Encourage you to read the full disclosure concerning forward looking statements and detailed on our non-GAAP measures in this morning's press release.

Available today.

Estimate call is Mark Smucker, President and Chief Executive Officer, and Tucker Marshall Chief Financial Officer.

We will now open the call for questions operator, please queue up the first question.

Thank you the question and answer session will begin at this time, if youre using a speakerphone please pick up the.

The handset before pressing any numbers should you have a question. Please press star one on your telephone if you wish to withdraw your question. Please press star two.

For operator assistance, Please press star zero as.

As a reminder, please limit yourself to two questions. During the Q&A session should you have additional questions.

Re queue. The company will take questions as time allows one moment, please while we pull for questions.

Our first question today is coming from Andrew Lazar from Barclays. Your line is now live.

Great. Thanks, so much for the question.

I guess I'm sure there'll be plenty of discussion around inflation and costs and pricing and whatnot, so I'd like to focus a bit.

On your prepared remarks on the recovery of the nutrition brand, which is lagging expectations. You mentioned currently evaluating additional actions to better position. The business. I guess are you able to unpack that a bit more for us or are we talking about further potential portfolio sort of optimization moves or repositioning the brand or.

Where it's pricing position in the category or really something else entirely I'm, just trying to get a better handle on sort of why it's lagging and what actions are being contemplated. Thanks. So much.

Sure Andrew Thanks for the question, it's Mark Smucker.

<unk>.

Good morning, let me just make.

Couple of very brief comments.

And just about the business in general and I will answer the nutrition question.

Just want to acknowledge first of all that we are very pleased with the results. This quarter, it's our sixth quarter in a row of meeting or exceeding expectations if.

If you look at in the prepared remarks, and you back out.

The.

The noise in terms of divestitures and really look at an apples to apples.

The total company grew 1% all of our U S businesses grew and on a two year stack.

That 6% topline growth so.

The point here is that underlying.

Business fund to mend Mentals remains strong.

Demand is still there.

Our investments almost across every part of our business our working our brands are strong I mean, just looking at the share growth two thirds of our portfolio are growing a couple of years ago that was like a quarter.

Some of our brands are growing so we are very pleased.

Pleased with the progress and the way we've been able to execute throughout the last particularly the last 18 months and the pandemic.

Sure.

And so really the.

Really one of the only spot where we have have not been set.

Satisfying is on nutrition dry dog, even the pet business itself.

<unk> grew in line with our algorithm if you look on a two year stack, it's about a 3%.

Growth and we've set our.

Algorithm is three to four so we have been meeting that.

Seeing.

Seeing growth in dogs, snacks, and cat food et cetera.

So really isolated to nutrition that dry dog.

We do remain committed to the brand.

We have continued our portfolio and packaging optimizations.

We are at the.

It's still at the early stages of the Big life launch.

No.

We clearly believe that there is still potential for the brand.

Specifically, though we have not been satisfied with some of our marketing investments and feel that they have not delivered.

The.

The requisite return and so we are actually pulling back on some of those marketing investments still supporting the master brand and big life, but making sure that that the dollars. We're spending there are truly going to make a difference and we're going to.

To pull back temporarily and reevaluate some of those investments.

And so that's why we said the full recovery of the nutrition brand will will be delayed throughout the remainder of this fiscal year.

Great. Thank you for that I appreciate it.

Thank you our next question is coming.

From Ken Goldman from Jpmorgan. Your line is now live.

Alright, thanks, so much.

I wanted to just dig a little bit.

One of the questions. We're getting this morning is not only on the first quarter, but on the second quarter, the timing of shipments versus what we saw at Nielsen or really just.

Overall beyond Nielsen as well.

Were there any mismatch between those two in the quarter just reported and then does your outlook for the second quarter include any assumption that maybe some of your customers will buy a little bit ahead of some announced price increases. Thank you.

Okay.

Ken Good morning, everyone.

As it relates to first quarter shipments the first quarter from a big picture perspective came in line with expectations.

We did have two areas that were a bit softer than anticipated one due to labor and transportation issues throughout the entire network. There were some shipments left on the dock.

That occurred at the end of July that should pick up into August.

And secondly, due to some specific situations with two e-commerce retailers E com in the quarter was a little bit softer. So we would anticipate in the second quarter and beyond.

Events to recover and then also a bit of return in the E Commerce channel.

Okay, Great. That's helpful. And then just quickly to follow up on something.

I appreciate you don't buy forward or hedge everything you still have some exposure to spot markets each quarter.

But I'm a little surprised by the near term headwinds this much worse right.

In particular for <unk>. So is there any way to help us order or size some of the incremental cost challenges right, whether it's direct inputs for foodstuffs or packaging or labor just so we better understand a little bit what's hitting you harder than than you initially.

Shinhan as we came into the fiscal year, we were anticipating mid single digit cost inflation as a percent of our total cost of goods sold.

Now, we're seeing high single digit cost inflation as a percentage of our total cost of goods sold.

The change from our initial experts.

Asia is really driven within our commodity ingredients area transportation, and then packaging and when you think of commodity ingredients. There have been a few factors that have been driving that one is weather related so that would impact coffee, particularly with Brazil weather patterns.

I expect the second was also weather patterns and the west specifically the Pacific northwest that impacted fruit. So those are two areas of commodities or ingredients, where we've seen inflation come through particularly in the second half of our fiscal year transportation due to the volatility and tightened.

Tightness of supply chain continues to be real not only from a labor standpoint, but also from a unit standpoint, and just an overall sort of backlog in the system that has persisted throughout the entire pandemic.

And then on the packaging front packaging continues to have the implications of just ongoing pricing.

<unk> pressures that continue candidly from the weather disruption that occurred in the winter timeframe in Texas due to the freeze.

And so as a result of this.

<unk> inflation, we continue to manage through very effectively not only through our supply chain and relationships with our suppliers and the great work by our teams we've.

<unk> knowledge this inflation in our P&L and we need to recover it and we're going to recover it through additional pricing actions.

This fiscal year that we anticipate in the second and third quarters in order to recover that so we do believe this is a timing impact and as a result of the timing impact it should have pressure on the margin.

We've got to be noted as well, but I do want to acknowledge two things we remain confident in the way we've executed throughout the entire pandemic and we will going forward and I also want to acknowledge that this is not a symptom specific the smucker candidly. This is the symptoms specific to the entire economy.

Understood. Thank you very much.

Thank you next question is coming from Chris Growe from Stifel. Your line is now live.

Hi, Good morning, Good morning, Hi, I just had a quick question to follow up on some of the supply chain issues and kind of the labor related issues I guess I want to understand the degree to which.

Those are an incremental factor in the lower gross margin outlook in relation to the inflation is there one that's more than the other or just how to frame those two in relation to the gross margin.

Softness youre going to see relative to your previous guidance.

Chris Good morning.

<unk> there are two factors that are driving.

The inflationary environment for US one is just the underlying input commodity ingredient.

<unk>.

The second is transportation as you have noted and that has been a persistent headwind not only last fiscal year, but it continues to be one this fiscal year and again it is predominantly driven by.

By the availability of labor.

And it's also driven to some extent by the capacity of the system and so that's what we continue to manage through we have been very successful in managing not only on long term contracts, but also our spot rate contracts as well we continue to do our best but as you bring material and as you produce.

Any ship material out the entire network right now is impacted from a transportation standpoint, and it is it is material.

And so Tucker the transportation factor or is that does that.

Half the gross margin decline is it that big or ingredients, a bigger factor I'm, just trying to get a relative size on how big each one could be.

No the comedic commodity and ingredient would be the leading factor.

<unk> closed secondary factor would be transportation and packaging, if you're thinking in terms of order of magnitude. Okay. And then just a follow on to that.

Is this something that you can price too and I mean from a high level and not look at it next.

But just in general do you view these costs as transitory or is there another round of pricing or are you adjusting your pricing increases to account for this incremental costs you're bearing.

Sure Chris This is mark as we think about.

Cost and.

Quarter being recovery, we really tried to take a holistic view and.

And make sure that as we've said before our working with our retail customers and a prudent and fair way to recover.

Essentially the aggregate costs and.

So when we look at costs.

Price how they impact the finished product we really look at that in totality and as we go forward with with our retail partners, just making sure that we have.

And open and transparent dialogue of what needs to happen. So that we can indeed recover those costs through through our.

<unk> and her entire toolkit, whether thats lift price net revenue optimization or what have you.

Okay. Thanks, a lot.

Thank you.

Thank you. Our next question is coming from Bryan Spillane from Bank of America. Your line is that a lot.

Hey, good morning, everyone.

Morning.

I guess, just a coffee or a question more specific to coffee and actually two one is just.

It sounds like.

Or maybe I wanted to clarify that even coffee costs in the quarter were running higher end.

The fact that it's going to hit you seemingly reasonably soon.

Does it suggest that you're just maybe your hedges were at the end or you werent hedged out as long as you normally we're just I'm just trying to understand the dynamic of green coffee costs have clearly moved but.

No.

It seems to be impacting your pretty quickly and so just if you can kind of walk us through.

I guess, how you were positioned.

Positioned are hedged for higher coffee costs.

Brian Good morning, as it relates to our cost position for the year as we said coming into our fiscal year, we knew that we would have year over year cost inflation.

Which was inclusive of our coffee portfolio as.

Well and we knew that that inflation was going to begin to hit us on a 12 month basis and that we were taking initial pricing actions in July to begin to recover that initial wave of inflation and so the margin in coffee for the quarter, but yet the margin for the entire business for the quarter.

Does reflect that inflation ahead of the pricing recovery.

As you think about what's happened since our initial guidance you began to have weather impacts in Brazil that began to affect the underlying commodity and as a result of that we've been managing through how we think about delivering.

Balance of the year.

We'd like to give you the specifics on our hedging position, we don't disclose that but what we can share is that coffee costs have gone up and that we will take additional pricing actions and measures to ensure that we recover the inflationary.

Impact that we're seeing to the P&L.

Okay.

And then I guess to the extent that the weather its been part of the issue is is there also a.

I guess a question of pressure around just availability of green coffee or are you concerned at all about just supply of raw materials.

Yes, Brian it's Mark generally speaking.

The Frost in Brazil, which is what <unk> was referring to.

Over over a longer period over.

A 12 month period is going to have some impact on the amount of coffee thats available. However.

As one of the we are the largest roaster in the U S and one of the larger.

The grocers in the World, we still will be able to get our needs Matt.

But as Tucker reference it is going to be at at higher prices, which we will continue to manage through our robust set of hedging.

Tool. So we think we can manage through it.

But just acknowledge that both.

The Brazilian crop as well as some of the ongoing transportation issues are contributing to those those costs, okay, and if I could just sneak one last one in just the same topic on coffee just.

Maybe if you can give us mark some perspective.

We've had other periods of time and coffee, where there's been inflation in the industry has had to price it through.

Theres been some elasticity.

Can you just maybe.

Give us some context in terms of this current situation with cost rising and having to price it through.

Kind of where the consumer is.

Do you expect this to be an abnormal period in terms of prices going up and elasticity or is this a pretty normal sort of course of action for again, a category that has that pass through element.

Sure.

I guess the headline there would be that as we have managed.

Managed through this initial phase of pricing, which is now in effect.

The elasticity that we have modeled have generally performed as expected.

You know we.

We can't predict what green coffee is going to do.

Over the over the long term in terms of cost, but we are certainly not.

At historical highs.

And so we would anticipate that.

As we think about further pricing actions and the elasticity that we should be able to manage through that.

And even.

No elasticity model is ever perfect, we do have confidence that.

We'll be able to manage through that in a realistic fashion.

Alright, thank you for the color.

Thank you.

Thank you. Your next question today is coming from Alexia Howard from Bernstein. Your line is not a lot.

Good morning, everyone.

Good morning, good morning.

So can I ask about the.

The key drivers of uncertainty.

The biggest risk so I guess over the next few quarters. It seems as though the level of uncertainty around particularly around supply chain disruption.

Absent for agility.

Even though the supply chain.

Increased.

It feels somewhat different from previous commodity cycles, where it was literally just having to handle increased cost pressures and pricing through.

Other companies also saying, it's actually physically quite hot at the moment to get product from whether it's.

The palladium supply would be.

These are whether it.

Domestically in the U S because of the trucking situation I'm just wondering what you see as the biggest pain points.

And risks.

Looking out over the next few quarters.

Biggest concern at the moment thank.

Great pass it on.

Alexia it's mark.

You know as we've discussed thus far we've talked a lot about inflation and cost pressures and that is of course. The primary driver and then the second one is supply chain. As you noted I mean, if if we really want to simplify it it's primarily.

Those two factors.

There's a lot of unknowns of course about the pandemic and what course that may take and we're watching that extremely carefully but as to the supply chain specifically.

We do believe that the reason that we have had success is because of.

Merrily ability to execute and manage the supply chain. There's no question that it is tight and there are a variety of issues.

Tightness spanning from all the way upstream to all the way down to the shelf at the retailer, but I would submit that our team and our people have.

Have done such a good job of managing every single step of the way.

Engaging with suppliers and customers all the way through to the retail shelf that has been key to our success and so much so that it has allowed us to actually.

<unk> gained distribution at shelf, because we generally have been able to deliver to our customers. We have gained some and some space in recent shelf set resets because of our ability to execute.

And so if you think about that factor.

Coupled with our new commercial model, which is truly focused on the retail shelf and delivering I think that really is has been critical.

To how we've been able to deliver results, thus far and we would anticipate continuing those trends.

Okay.

And as a follow up.

Can I ask about the magnitude of pricing that you're expecting across the portfolio.

Obviously, you've got pricing actions that have just gone into place.

How much pricing do you anticipate being able to realize over the next next few quarters over the remainder of the fiscal year. Thank you and I'll pass it on.

Alexia good.

Factoring.

I think the way that we've articulated this consistently is that we're experiencing.

Double digit commodity inflation that is resulting in.

High single digit cost of products good sold inflation, which is then resulting in kind.

Good morning, low to mid single digit pricing at the total company level, we haven't necessarily disclosed by each given commodity or business.

The pricing amounts or actions, but that sort of formula I should be able to give you a sense.

And then I would also I would also share that.

On a.

Underlying organic basis, we are anticipating at the new guidance range to be.

Up.

About two points and as a result of that Youre going to see some top line pricing being offset by some underlying volume.

Kind of as well and so that should help you get a revised organic of about two 5%.

Great. Thank you very much I'll pass it on.

Thank you. Our next question today is coming from Rob Dickerson from Jefferies. Your line is now live.

Yes.

Great. Thank you so much.

My first question.

Just a quick follow up.

Just a question on.

What kind of cadence for the year.

And then just a question on pricing.

So talk to your last answer was helpful. In terms of kind of how to think about that magnitude of them soon.

But kind of more specifically I'm just curious.

As to the coffee business actually grow revenue this year right.

This is we always see.

Sometimes let's say.

See the top line can be fun, but that's.

It's still growing in this case just given this near term pressure on costs I'm curious.

Could we be looking at our retail division.

And that flattish for the year, maybe down a little bit.

Because I think that would help us also be able to right size the total company.

As we get through the year.

Rob Good morning, as it relates for coffee and its growth trajectory I think what we would say is is that we're probably anticipating kind of flat to up.

You know based on what we're seeing today, but.

But that would be inclusive of additional pricing actions I think it's I think it's difficult for us at this point to continue to break down each of the business units I think we've talked about kind of an underlying organic for total company being up two five points on the pricing front just from a K.

Base standpoint, we took pricing in July it's it's it's reflective we've discussed that we've also acknowledged that the additional pricing actions would likely come through in Q2 and Q3. So that also should give you a sense of timing as well.

Rob.

It's Mark I would just add.

Cadence and staying on coffee, which is huge.

Youll recall that our strategy has been to ensure number one that we're participating in all the segments of the category, but also continued to shift the portfolio portfolio to the growing segment. So in that case.

Add winning Dunkin cafe, bustillo and K Cups.

All all three of those are outpacing the.

The segment or the category, we are outpacing the category excuse me and even the Folgers brand has has continued to gain share and its growth, particularly.

That would be K cups has been strong as well so we feel like as the portfolio shifts we are delivering against our strategy.

Okay fair enough and the follow up kind of flows to what you were just discussing.

In the prepared remarks.

Again referencing the coffee.

In there is the ones that.

Came in a little bit lower than expectation, but just a little wider.

But then there's also the commentary around the increased distributions coming from Folgers.

Just trying to kind of rightsize that like.

Why do you think maybe things are a little bit softer than you thought but then.

Rafi bid at the same time, what's really driving that increase distributions on the Folgers brand. That's it. Thank you.

Yeah. If you look at coffee on a two year basis in that two year stack, we are seeing 8%. So that's obviously very strong and.

And also the distribution gains that were referenced I think in the prepared remarks were relative to primarily recent.

Some shelf resets as well as some new pick up at some key customers. So those we haven't seen those come through.

Our our P&L yet.

But that will that will clearly be a help as we move forward, Rob and I would also ask Rob.

Rob.

Remind you that a year ago, we were experiencing a continued momentum of the early stages of the pandemic and to our first quarter and we had the inventory replenishment in the first.

But so there is a big what we refer to as a COVID-19 lap.

And particularly for your consumer and coffee businesses.

Yes, I mean bottom line.

It seems like you can get pricing in coffee, that's obviously coming through but then once you lap the inventory build in Q.

Quarter on and you get some incremental distributions it doesn't seem like we're thankful.

Drastic elasticity as we get through the year is that fair and I'll leave it at that.

Okay.

The direction that you're sharing seems reasonable.

Thank you.

Okay.

Thank you next question today is coming from Jason English from Goldman Sachs. Your line is now live.

Hey, folks thanks for Slotting me in.

Two quick questions.

The magnitude of inflation pressure that you're facing in the industry at large is facing.

Continues to escalate and there's certainly a lot larger than any of us anticipated a couple of quarters ago.

But we've been talking about resumed inflation for about nine months ago.

You've got you've got almost no price now if not almost you you'll have no price rolling through your P&L yet.

Including in the areas like pet, where you're actually lapping deflation in the prior year.

What's been the impediment to getting price in the system so far.

There hasn't been any impediment, Jason that most of the pricing was it was effective in July.

Broadly and it's and it's now on shelf, so youre going to see that initial wave coming through in the second quarter and as we work through some of the additional pricing across our business.

This type of I've mentioned earlier, it will be effective likely in the end of the second quarter at the beginning of the third quarter.

So yes, we are confident that we will be able to work through that.

And that will be reflected in I'm sorry, the first part of your question could you repeat.

So you answered it.

So let me let me actually just flip to my second question then.

It sounds like Tucker, just sort of unpack some of the comments you've made already.

Pricing somewhere plus or -4%, implying volumes somewhere minus one five points or so.

That looks like a lower elasticity.

Just to be a function than you've historically had.

Which I compare it to your trade spend and last year in your 10-K, you disclosed it's now 39% of sales which is up.

It's 800 basis points from five years ago.

So you're you're you're now seem to be a lot more rely on promotions to.

To drive volume.

You used to be you look to be the only only companies who actually didn't benefit from lower trade rates during COVID-19.

Any context about sort of promotional dependence shouldn't we expect <unk> to be higher than it historically has why what gives you confidence in underwriting as sort of a lower elasticity functions in history.

Jason I would say that on a year over year basis.

Pricing is going to contribute sort of up to mid single digit growth.

And it's going to be offset by sort of low.

Single digit growth.

Volume mix other than what you have to be careful about in the volume mix. Other is one its underlying business momentum for the smokers on cross the Bulls brand continued advancement of Cafe, Bustillo, and Dunkin and advancement of our pet snacks portfolio, along with a return on the away from home.

Yes.

Then it is offset by a decrease in at home consumption.

It is also offset by supply chain disruption, which we are experiencing through our pet food portfolio, particularly on wet pad.

And it's also offset by any.

Additional trainer promotion like.

Business about but that trader promotion isn't the biggest bucket, what's causing sort of that change and then lastly, as I would just acknowledge that in our volume mix bucket. We also have factored in price elasticity is for our pricing actions across the portfolio.

Okay.

You've talked about some mixed benefits in there to contemplate it's not you're not expecting volumes to be down one and a half or so but I think that's the answer correct.

Theres, a big bucket and they are to your point, where theres more than one variable.

Okay, all right. Thanks, I'll pass it on.

Thank you. Your next question today is coming from Pamela.

Got it.

From Morgan Stanley Your line is that right.

Hi, good morning morning.

Can you elaborate on the factors that contributed to the size of the margin pressure in the pet segment. This quarter. This was the lowest operating margin that you reported in the segment to date and how are you thinking.

About your outlook for segment profitability over the course of the year.

Pam good morning, as it relates to the profitability margin for the Pet Foods segment in the first quarter you are correct. It did experience a decline quarter over quarter.

Thank you you have to acknowledge the.

Cost inflationary pressures in that business driven by the underlying commodities such as animal fats and proteins along with the impact of transportation and again that was ahead of any pricing benefit due to pricing actions that were taken in July so we would anticipate.

That the profitability in pet food come back in the back half of the year as pricing begins to reflect.

A happier benefit against sort of a partial year first half.

Then it will be down year over year due to the time.

Of price recovery against cost inflation.

Got it thanks, and then I guess related to that how are you thinking about your ability to take pricing and Pat at a time when the business is underperforming your expectations.

Pam we have been able to take.

<unk> and pass that through and as we observe the market we have seen.

Our peers and competitors do do similarly, and so we have confidence that we will continue to do that and just reminding that pet snacks is really a key part of our strategy and we do lead.

Craig here. So so we are clearly not only in pet snacks, but in other portions of our.

Business.

Have been able to do so so again, just the point the headline being that our pet business is performing to expectations with the exception of nutrition and so.

<unk> delivered against our algorithm on pet.

Okay. Thank you.

Thank you. Your next question today is coming from Ryan Bell from consumer Edge Research. Your line is not a lot.

Hey, everyone. Good morning.

I was just wondering how youre thinking about some of the structural.

We.

Sure demand.

Particularly around breakfast and lunch and petsmart.

Given some of the incremental at home activity that we've seen in houses are reflected in your guidance.

Ryan Thanks for the question, it's Mark Smucker again.

You know.

As I started at the beginning of the Q&A. The demand has generally remained strong.

Using coffee as an example, 75% of cups consumed or steel consumed at home.

And you know a lot more brewers in place clearly there are more pets out there and so pet snacks will continue to.

Do.

We will continue to meet our expectations because consumers will continue to treat their pets.

So that would be another one and then of course.

As I've discussed in the past even post pandemic.

However, we define that.

One.

Thing is certain which is.

Career professionals are going to continue to work from home home more than they did.

Pre pandemic and that will benefit us because it speaks specifically to breakfast and lunch occasions.

So, particularly in our spreads peanut butter and jelly as well as our impressive those business, we would expect that to be.

A positive factor on our businesses.

Thanks is there any sense for the magnitude of some of those impacts that you're modeling into your guidance.

Or is that a little bit less so for fiscal 2022, and it's more of a longer term question.

You know Ryan.

We are anticipating continued momentum in at home consumption and.

In our coffee portfolio as Mark acknowledged in our consumer portfolio also driven by the.

<unk>.

<unk>, along with the pet dynamics and so as we continue to see how the pandemic plays out.

As we continue to ensure the investment and reinvestment in our brands for the long term health of our business and therefore for the benefit of at.

Cross assumption and the stickiness of households that we've gained.

We hope to continue that momentum in this fiscal year and beyond.

Today, it's probably not the time to quantify what we think that is but the momentum that we've generated continues to perform.

Thanks, That's helpful. And then my question for me.

Home can be spend having normalized SKU assortments given some of the supply chain issues that had some experience.

Okay.

Okay.

Brian.

We continue to focus on our two things one is advancement of our strategy and a component of advancing this strategy as our portfolio reshape.

We're gonna component of our portfolio reshape is making sure that we have the right skus in order to advance the given brand or category and that we would eliminate any unforeseen or nonperforming skus and so that remains consistent and any financial plan.

And then I would say beyond that we do continue to look at our inventory.

The levels from a working capital standpoint, so that we can continue to ensure that we have the right level of raw material and finished good and support of our supply chain, but also in support of our customers and consumers and so those are two areas, where we continue to focus on in the near term, but right now we feel very.

Comfortable with the Assortments that we have behind the business.

Great. Thank you.

Thank you I will now turn the floor back over to management to conclude.

Thank you for your time and interest in our call. This morning, we do remain confident in our strategy.

The delivery of our business the underlying fundamentals and the fact that we are still able to continue to invest in our business.

To ensure that we deliver against our strategy.

We hope that many of you will be able to join us virtually for our presentation at the bar.

<unk> and global consumer Staples conference in a couple of weeks and hope everyone has a great day and a good weekend.

Ladies and gentlemen, this concludes our conference call for today. Thank you all participating and have a nice day all parties may now disconnect.