And so we wanted to penetrate the broad-based national accounts for two reasons. We wanted to capture the shelf space. We also wanted to leverage the presence of the product on the shelf in the regions where the brand had not historically been distributed to raise brand awareness. I think that’s worked extremely well. We’ve definitely captured shelf space, and we’ve raised brand awareness. We talked in our prepared remarks as how we believe the awareness of the brand is now 32% on a national basis, up from 18% earlier in the year. But I think the level of inventory was too high. So, really what we’re doing is proactively lowering in-channel inventories and working with our strategic accounts to clean up that inventory and putting them in a strong sell-through and in a more profitable position.
That’s painful in terms of sell-in, which is what you see showing up in our Q4 guidance and what you see in our anticipated Spring ’24 order book. The second thing is improving segmentation and differentiation such that all of our key customers that may trade, in some cases, in the same mall or in the same center, can continue to grow their businesses collectively. So, as we get a stronger innovation and stronger product pipeline, we believe we can effectively do that. And the third thing is taking control of pricing, particularly in the digital realm. We’ve talked about when we closed a lot of our international distributors, some of that excess inventory, and I think we didn’t have full visibility to the amount of inventory that those distributors were holding.
That has started to show up on Amazon, in the grey market. We’ve seen a lot of price pressure from that. Historically, we had a strategy where we thought we could compete from a price perspective and make sure we captured our fair share that was dragging down overall pricing in the market. So we’ve pivoted from that perspective, that’s given up quite a bit of revenue expectation in the short term, but it’s raised our ASPs, raised our profitability. It’s obviously much more supportive of our wholesale customers. And we’re hoping that Gray market inventory sells out quickly, and we can reset the digital market. So those are probably the three big buckets from a Monday morning quarterback perspective, and we’re very confident that those will put us in a great position to continue to accelerate this brand in the long term.
Jim Duffy: Thank you for that. And question just on the HEYDUDE profits pool outlook into fiscal ’24, do you still see HEYDUDE gross margin of 50% is achievable in fiscal ’24? It looks like the inventories are tight and perhaps maybe even there’s less clearance than this year, do you think that the HEYDUDE profit pool be in decline in fiscal ’24?
Anne Mehlman: Yes, so first, I want to comment that, I think, inventories for both brands are in really good shape. So I would say that we’re very pleased there. And as you mentioned, HEYDUDE inventory was down about 40% of the quarter. We’re not ready to guide for next year at this point, but we do expect that HEYDUDE growth margins will improve next year as we have what’s ASP pressure from the Gray market as well as we’ve talked about will have better distribution of logistics as we open up our distribution center in Q1 of next year.
Operator: Our next question comes from Abbie Zvejnieks from Piper Sandler. Please go ahead.
Abbie Zvejnieks: Great. Thanks so much for taking my question. Just on the gross margin, I know you maintain the 55.5% or greater than 55.5% that could still imply some like year over year pressure on the gross margin line item. And since you’re not planning for a different promotional strategy at Crocs, can you just help us unpack what would lead the pressure on gross margin on the year over year business?
Anne Mehlman: Yes, so from a pressure on gross margin, I’m not completely sure that I understand the question, Abbie. I think for the overall 55.5 guide that would imply that gross margin for the fourth quarter will be up versus last year for overall consolidated by, I think, a couple 100 basis points. So maybe you can give me what you’re thinking through.
Abbie Zvejnieks : Yes, I guess just like what’s driving that pressure year over year?
Anne Mehlman: Yes, so we expect gross margins to increase for the year and we expect gross margin to be up for the fourth quarter specifically focused on the Crocs side. Again, that would be helps overall, we’ve had freight tailwinds all year and more full price selling on the Crocs side, which will be slightly offset year over year from the HEYDUDE side as those gross margins will decline in Q4 as we’ve seen all year, as we have a subpar distribution and logistics strategy, given where we are and so we can get into next year. But overall we do expect gross margins to be up year over year in Q4.
Abbie Zvejnieks: Okay. Got it, that’s helpful. And then just on the HEYDUDE DTC expectations for… And they said it’s better than wholesale, but can you just give any color on what you’re seeing? I know maybe the pricing controls are impacting that, which is any color like order to date would be helpful.
Andrew Rees: Yes, I mean, I can give a little color. I don’t think we’re going to give any more specific metrics. From a DTC perspective, we have raised prices, particularly on the Amazon components, which shows up in DTC because it’s a 3P model if you remember correct. So we no longer competing with the Gray market, so APS are up. Even in these last few weeks, we can see ASPs up on average $10 a pair, which is obviously very significant. That is given up some market share, the Gray market is taking a little bit greater share in the market. But we think Net-Net with some newness and excitement that will eject into the market that we overall can grow at DTC business. We also highlighted in our prepared remarks, we will have opened by the end of the quarter five outlet stores, those are proper outlet stores.
You may remember we had a number of clearance stores in, I would say, lower quality centers around the country where we were looking to liquidate some of the aged inventory that we bought at the acquisition. We have opened five proper outlet stores that showcase full-price goods at the front of the store, do have some liquidation capability, and also I think, showcase the brand and all of the various components of the brand. So those will also be in the DTC number for the quarter, and that will be obviously, a non-comp component.
Operator: Our next question comes from Tom Nickik from Wedbush Securities. Please go ahead.
Tom Nickik: Hey, thanks for taking my question. I know you’ve got a lot going on at HEYDUDE domestically, but in the past, you’ve kind of talked about expanding internationally, given how underpenetrated the brand is there. Do your plans to expand internationally get put on hold now, or do you kind of pump the brakes a little bit, given the challenges that you’re seeing in the domestic market?
