HSY
#<UNK>, first, one thing, you're double counting on the tax, because it's included in the dilution.
You don't know where we were in the $10 million to $15 million restructure savings in June.
So we could have been at the low end and now at the high end, and that's a $15 million delta.
<UNK> talked about the interest expense.
That's now at the low end, because we ended up doing the bond deal in August.
And just overall, while you're right in terms of the savings related to the restructuring that we announced in June, as I also mentioned, we're just overall holding the line on discretionary spending beyond that specific impact.
And you could see that in our third quarter, where ex M&A, we were actually down year over year in our SM&A, excluding marketing-related expenses.
So it's all of those movements and it's a pretty big number.
I was going to make the same point <UNK> did.
Just to be really clear, the tax impact related to Shanghai Golden Monkey NOLs is part of the walk of the dilution number moving from $0.20 to $0.35.
I think, <UNK>, we want to go execute against the fundamentals in the business.
We continue to be optimistic about the category and the role the category plays with retailers.
We have a pretty balanced look at 2016 from both the top and bottom line standpoint, and we'll talk a bit more about that in January.
At this point, with some of the things we're seeing with the consumer, I think it's important that we focus on the things we can control.
We've got to make sure that our portfolio is compelling and we participate where we think that the consumer is going.
And then we'll continue to read those things.
But we have to get in a position where we're winning share every day and growing our brands.
And we feel good about the plans we have.
We feel good about the innovation contribution to our Business.
So from those standpoints, I am optimistic.
I do think there's some macro issues that are impacting retailers, as well as our Business.
And so we've got to operate within that environment.
Good morning, Rob.
Yes, sure, I'd love to talk about that.
In the chocolate segment, we believe we've been underrepresented in the premium part of the category.
While it's a relatively small piece, less than 10% of the total category consumption, we recognize that we have to do a better job there.
In the value segment, a lot of what happened this year was really around sugar confectionery and sweets.
And we think the Allan Candy acquisition will enable us to do well there.
We also think there were some manufacturers that probably benefited from the spot price of sugar, and based on where things are manufactured, that could have given them an opportunity to invest in the category more so in the past.
The beauty of the Hershey brand is it's one of the most accessible brands that there is.
Chocolate in our country from all manufacturers, it's the best value per pound of any place in the world.
So I think frequency is something we have to make sure that we're driving.
I think the portfolio is largely attractive in chocolate, but we need to work on the high end.
And in the low end, we need to work on the sweet side, and that can be channel specific, as well as across many other retailers.
So that's how I'd like you to think about it.
We like to think that we work well with all of the retailers across their different needs and the changing initiatives and things that they may have.
So we'll continue to focus on the places in the store where retailers want the merchandise.
And then we have to win that.
And then if the type of ---+ and if the way that we bring consumers to the category changes, we have to adapt to that.
Some of that could be advertising, some of it could be different types of merchandising and so on.
We always have to be flexible in the way we go to market and win, where retailers have strategies and how that they want to connect with the consumer.
So I would expect us to do that.
It's not the first time in the history of the world that people have had clean-floor policies or tried to clean up merchandising and get things out of the back room and a whole list of different things.
So we'll adjust with that and we'll win wherever we can.
Yes.
One thing, <UNK>, and I think on the balance how we were thinking about it is, yes, I know we're lapping a lot of one-time type of costs related to China this year, but I think the way we've always thought about this business, and even before we got into snacks, there's never a shortage of places to invest around here.
And I think we have a lot of good, big buckets that you'll see us continue to invest in, on not only our core Business, which is always number one, but always some of the snacks and adjacencies that we're talking about.
I think good examples of that are Krave.
We've got our Brookside bars.
We mentioned Allan a little bit earlier.
And as we continue to look at snacking in total, we've got a number of things that are on the innovation front that, as appropriate, we'll be bringing those things to market.
So I think, as <UNK> says, a lot of places to invest that are attractive and, as appropriate, we'll continue to expand our portfolio.
No, I think the way to think about is, is that first of all, I think it's important that we always act with a scarcity mentality.
And certainly, you've seen some of that in the numbers that we're talking about today, in terms of where we're spending and choosing to spend.
So I think we'll continue that, that way.
We also want to invest in markets where we're trying to grow our brands.
And volume is always the magic elixir, so pace is important to think about.
So where we see there's opportunities, we need to go to the ball there, and when growth is a little tougher or less attractive, we need to moderate in those places, as well.
We'll continue to do that.
But we want to be a consumer-centric, brand-building Company, and we'll invest appropriately.
So we're still working through and negotiating our position with them around the second closing.
We're still trying to bring clarity to a number of different issues where we may have different points of view around some things.
And so that's all still in process, but we feel good about the progress that we're making.
I think the first place that we would start is that we continue to believe that the category historically is going to grow in the 3% to 4% range.
So that's a starting point.
If you look over the last decade or even longer, growth has always been a combination, almost equally split between price and volume.
And as we go through this current period, it continues to track around that model.
So what we believe is, as I said earlier, the real influencers on the category are really around this trips issue that has impacted the business more than it has been on price.
So I don't think the historical norms have changed.
Obviously, in chocolate, where we're a 45% share in the category, we have a lot of responsibility in terms of category growth.
So we have to innovate and grow and compete for consumer occasions, which are growing all the time across day-parts.
And so we have to participate in that.
But I don't think there's anything around the category itself that would cause us to think that price, et cetera, is different.
Now if we move, to your point, if we move into a period of time where commodities are less of a driver around the price piece, as we've said historically, we're a gross-margin focused company, and we would have to make sure that we continue to do that to maintain the attractive gross margins that we have today.
But I wouldn't see us thinking about that significantly different.
Good morning.
I'm glad you asked for the clarification.
No, what we're saying is after the true-up, our current net-sales estimate is about $80 million.
I think it was around $90 million, <UNK>, last time we spoke to you guys.
For the year.
On a hypothetical basis, <UNK>, if gross sales are the same year over year, net sales would be up.
Because I have all this trade running through between gross and net sales this year.
So in a hypothetical situation where gross sales are the same year over year, net sales would be up, assuming there's [up] more trade.
But I think it's also fair to say that it is overall just a re-base to a lower level, as well, in terms of the gross sales.
Great.
Thank you for joining us for this morning's call.
I'll be available all morning and afternoon for any follow-ups that you may have.
