Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Chris Growe - Stifel Nicolaus
Chris Growe - Stifel Nicolaus
I just had two questions for you, the first one just as I was looking at SG&A and it being down so dramatically or so meaningfully this year, at least as a percentage of sales, I wonder if you could speak more about that. I know you have cost savings coming through but as I balance that against the incremental marketing, I was surprised by the degree of the decline in SG&A. And I guess related to that, when you say consumer marketing and some of that going into promotion or things that would be netted against the top line, maybe that’s why I’m not seeing it all come through that line.
Alan Wilson
The consumer promotion spend that we have, some of it is certainly going to consumer advertising, some of it is going to more value promotion which would be a reduction in net sales. So what you’re seeing with our spend is pretty pure on the SG&A line.
Now we have had very good results in terms of managing our costs this year. We also have the leverage of Lawry’s because we added virtually no SG&A as we brought Lawry’s in, other then the incremental advertising.
Gordon Stetz
I’d just like to add, its obviously the Lawry’s impact which we’ve talked about previously, distribution expenses are also a factor that we mentioned. We’ve had some favorability in some employee benefits so all of those factors have contributed to improved SG&A margin.
Chris Growe - Stifel Nicolaus
Okay, and then related to the consumer division in the Americas, with volume down in the quarter, given the at home eating trend, I was surprised by that. I guess, is that something where you see a need to increase your spending as well, whether its promotion or its consumer based marketing. I know you have some new products coming out that look pretty exciting, but just curious how you look at that volume decline in the quarter.
Alan Wilson
We’re certainly not happy with the volume, what we are seeing is that our overall volume sales are not keeping track with what we’re seeing from a consumer takeaway in the measured channels that we can follow.
So that’s why we feel relatively good about our fourth quarter but I would add that last year in the third quarter our volumes were up 4%. Some of that was pipeline fill for sales to a couple of dollar retailers where we increased distribution, which didn’t repeat this year.
- To read the full transcript on Seeking Alpha, click here »
