James Duffy: Thank you. Good afternoon, guys. I’ve got a couple of questions for you. First, Mike, can you give us some help on the inventory mix by category?
Michael Yates: By segment or by raw material, finished goods?
James Duffy: No, by segment.
Michael Yates: Yes. Well, we haven’t provided that anywhere. So, we can talk about that in BD, inventory is about $80 million. Precision Sports inventory is around $40 million. And the remainder is at Adventure, so that’s about $30 million.
James Duffy: Okay. Helpful. Thank you. And then with respect to BD, I’m curious the mix of spring/summer that you may have to carryover versus fall/winter.
Michael Yates: That’s the inventory we’re moving, right? We are taking a lot of inventory on for fall/winter. We’re being aggressive in the promotional environment and move the spring inventory, and that’s what everyone is focused on over in the Outdoor space is to right-size that inventory. That’s the whole process that we’ve been talking about. So maybe I don’t understand your question.
Aaron Kuehne: Sorry, maybe, Mike, just also to add a little additional commentary. This is Aaron, Jim. The way that we’ve traditionally thought about this from an outdoor perspective is also a function of DM versus in-line type product. And one of the things that we’ve been able to do over the — throughout this whole process is that we’ve been able to keep the DM levels pretty tight. We came out of Q2 with something around $4 million to $4.5 million of DM, which is a little bit more elevated than what we’ve had in the past, but all things considering, not that bad. Now it’s really just a matter of how we continue to reshape the highs and lows really within the different categories, and that’s where the targets that we’ve outlined of bringing inventory levels down 15% really comes into play, but it just continue to be very thoughtful as we go from season to season.
And actually, we’ll have — we’ll always be generating some level of discontinued merchandise, but it’s how you manage through that process of how you get in front of it as well by doing pre-DM type promotions and just working with retail partners, but also for your own channels and moving that inventory.
James Duffy: Okay. And Aaron, maybe you answered this question when you were speaking to lease inventory on hand at retail and that goes beyond just your brands. But a key question for the achievability of guidance in the back half of the year is your confidence that retailers are going to take those fall/winter goods and aren’t going to come back and say, you know what, I’m choking on bikes, paddle boards, hiking choose. I can’t take those fall/winter shipments. What gives you the confidence that it’s — some of those other categories aren’t going to be problematic to your business?
Aaron Kuehne: The primary driver of that is just where the weeks of inventory on hand for BD is within retail being at that six weeks to seven weeks. If we were at, call it, eight weeks to 10 weeks or 10 weeks to 12 weeks would be more — sorry, more realistic is 10 weeks, 12 weeks. Then there could be a little bit of exposure there, call it, anywhere from the half month to a month’s worth of inventory. But when you’re at six weeks to seven weeks, there’s just not enough flexibility or agility in the pipeline to be able to take that much lower. And so it really does come down to what’s on the docket from an order book perspective and how do we support it with sell-through because at that point in time, you’re really just getting into replenish-type activities, which these guys have open-to-buy dollars for because they just need to happen. We need to have the product in the shelf space around the pegs.
