Alex Straton: Great, thanks for taking my question. Hi, Joey, Annie, Good to speak to you again. I have one quick high level question and then a more specific guidance question for Annie. So maybe, Joey, the first one for you, the strategic transformation plan has been underway for a few quarters now. Where do you think you’ve made the most progress or already seeing results? And then, maybe on the other end, what has kind of proven more challenging than you thought when you started this journey? Then for Annie, you have a wide revenue guidance range for the fourth quarter. Can you just walk us through what that accounts for on the low end and the high end? Thanks a lot.
Joey Zwillinger: Alex, thanks. Okay, so let’s do it in order. I’d say – I’ll zoom back and just put it in perspective on how I would characterize what we’ve done in the last few quarters here as we entered this transformation to help answer that question. So, I’d say, at the top level, this year is one where we have fundamentally altered the cost structure in such a way that we can be profitable at a much smaller top line level. And we’ve talked a lot about the work that we’ve done on cost of goods and some of the G&A streamlining and the go-to-market in international regions. That has not been a trivial amount of work, and the execution has been excellent on those elements. And so, while you don’t get to see that benefit in the P&L necessarily as we burn through the inventory that we currently have on the balance sheet, that is probably the most important element of what we’ve accomplished this year.
Along the way, we started the year with, I would call it, an unhealthy level of inventory and an unhealthy mix of inventory, and we have gotten ourselves on track to really fix that. So, we expect to end the year and enter 2024 in a really healthy position as it comes to inventory. And that’s going to allow us to then inflect our gross margin in such a way that we can take the benefits of all those cost savings that we’ve done throughout the year and also [ wean ] the customer and the consumer back to a full price selling model by lightning the markdown intensity and driving the new innovation from the recalibrated product assortment that we introduced in the marketplace at full price. And so, that gives us a great focus in 2024 to drive fairly significant gross margin expansion, particularly in the direct channel.
And that, I would say, just like zooming out is the big thing and I’d say – and the thing we’re probably most proud of that we can sit here and hammer down today. Of course, when we think about the look forward, it’s product. We haven’t yet brought all of this fresh and new innovative product that we have on the road map to market. So, the proof points aren’t quite there yet. But I’ll say we’re off to a really good start with what we’ve shown for the Wool Runner 2. And I think it’s a really good testament to the type of changes and updates we’re going to be bringing to market. And the results speak for themselves as far as we’re seeing internally and sharing with you today. So, pretty encouraged by that, albeit that’s the one that just has the longest lead time, given the product development lifecycles for making footwear.
So, that’s the one that we’re still plugging away at and really can’t give you as many proof points as we can on the cost side.
Annie Mitchell: When we’re looking at our top line for Q4 and the guidance given, specifically the range, it primarily reflects the macro-driven pressures that’s affecting traffic and sales industry-wide. Adding on top of that, of course, is a continuation of our transformation work, which, of course, is progressing extremely well and setting us up to engage with the consumer in fresh, new and innovative ways in 2024. Combined with that is, of course, the – we are planning for a highly promotional environment this holiday season. We know that consumer is going to be looking for a great product at a great price point, and we want to ensure that we’re going to be competitive throughout the quarter.
