Andrew Rees : Yeah, I think I’ll obviously we get a of a bit of brand color and Anne can give you some of the more specifics. I would say, it’s a continuation of the trends from last year, basically. We see – we don’t give a lot of in-quarter color. But if you think about some of the big drivers that have really be propelling the brand. And so Asia and international growth has been super important. We see Clog growth, Sandal growth and Jibbitz growth from a product perspective important and as you know, we have visibility to bookings. So we feel real confident around our wholesale bookings and we see we see solid sell-out for the brand. So I think it’s continuation mostly.
Anne Mehlman : Yeah,a nd just January, we don’t really comment on trends inter quarter, but January is a very small piece of our overall quarter when you that is pretty a material for us as a business.
Abbie Zvejnieks : Got it. That’s helpful. And just one follow-up more of a housekeeping question. Since you changed the reporting segments, is there any way you can tell us kind of what 4Q would have looked like under the old reporting segments? Thank you.
Anne Mehlman : Yeah, so, as we didn’t change our reporting segments to our new reporting segments are HEYDUDE Brand and Crocs brand as we think that reflects how we should look at the business. So as reported, North America grew 3%, in Q4, international grew 25% led by Asia Pac, which was up 36% and Amelia was up 16%. For the year operating profit dollars across all regions increased double-digits verses prior year, and the strongest growth came from Asia Amelia. So this will be the last time what we will give the information as our segments have now changed but that gives you some full-year picture.
Abbie Zvejnieks : Perfect. Thank you.
Anne Mehlman : Thank you, Abby.
Operator: The next question comes from Jim Duffy of the Stifel. Please go ahead.
Jim Duffy: Thank you. Good morning. Appreciate you taking my question. Hope you guys are doing well. Two questions. First, can you speak to the outlook for international markets, specifically, which are the markets you are excited about for ’24, certainly Chinese on that list. Are there are others that you would highlight? And likewise in the international landscape of the market do you expect to be more challenging?
Andrew Rees : Yes, absolutely, Jim. So I think, let me start with this sort of highlights. China is probably top of the list as you rightly pointed out. We’ve had kind of a multi-year investment effort and focus on China. I am really thrilled with that study to pay off in 2023 with triple-digit growth essentially doubling the business during that year from a top-line perspective. Obviously, it improves dramatically from a bottom-line perspective, as well. But we’re just getting started in China, right? So 4% of our overall revenues, if you look at sort of other global brands that benchmark of sort of Greater China substantially higher than that maybe four to five times higher than that. So, I would say second, we’re seeing great trajectory in parts of Western Europe, particularly the UK we’re probably on a two to three-year very strong growth trajectory in that market.
And it’s also an important market for influence across the European marketplace. We’re seeing strong trajectory in France also I would say thirdly North Korea – sorry South Korea has been a very steady growth driver for us. And I think I mentioned in my prepared remarks it’s actually only isolated our countries around the world is our highest market share performance even above the United States, but we see the future opportunities continued growth opportunities in South Korea. Australia has performed very strongly. We’ve seen a real turnaround in the business there. And so those are probably the highlights. I think the more challenging markets, Japan remains a slightly more challenging market. I think we’re shifting focus that market because it is a large market and we do anticipate growth in the future, but we’ve got some work to do.
And I think you know, we’re very, very optimistic about India in the long range and we’re putting substantial investments into that market a little bit like we did it around China. But there are a number of short-term issues around sourcing that are creating some I think some headwinds in there very short term. But I think in the long term India will be a big success.
Jim Duffy: Very helpful. Thank you, Andrew. Anne soon you’ll be above the fray on questions like this, but I do have a question on the tax rate outlook. It came in a little bit lower than I expected. Is that reflective of geographic mix of the profit tools? I guess that what I went after here, is that a sustained – we view that as structurally sustainable tax rate or there a one kind of dynamic related to that?
Anne Mehlman : Yeah, thanks Jim. Yes. I’m very excited to turn trekking over to tax trekking back over somebody else. But I think our tax rate as with any Q4 we moved our HEYDUDE IT from Hong Kong where we don’t have operations to Singapore and Netherlands and that created that one-time benefit of $112 million that we backed out for the purposes of adjusted EPS. You could have a better idea of our true underlying tax rate for the current year. That does have underlying benefits for this year. So that’s how we get to the 18% So it reflects some geographical mix, but also just a restructure in our in our tax structure. Right now, we’re saying we think 18% is right for this year. I would still use 20% long-term until we have a better picture going forward.
Jim Duffy: Helpful. Thank you.
Anne Mehlman : Thank you.
Operator: The next question comes from Chris Nardone of Bank of America. Please go ahead.
Chris Nardone: Great. Thank you. Good morning. Can you talk about the underlying assumptions in your outlook for the relatively stable gross margins for your core Crocs business this year? I’m just trying to understand what would be holding that back from expanding on the mid-single digit growth and if margins do come in better, are you expecting to spend against that strength or you allow some level of flow through to the bottom-line this year?
Anne Mehlman : Yeah, I think that’s a great question. So obviously we’re really pleased with our Crocs gross margins. For the year, they expanded nicely after what was a tougher 2022 on some we had some significant freight tailwinds. We think that’s pretty normalized at this point. So we think that just given all the puts and takes so, you’ve got currency, you’ve got freight, you’ve got mix from a channel perspective, pricing and product mix. We think that that about where we were last year is a fairly good place to be. So on revenue growth that’s not necessarily where we tend to see margin expansion on revenue growth as your operating margin because you leverage your SG&A. This year, we’ve made the conscious decision to take those dollars and really invest as – about that we’re investing in India and some of our other international markets as well as talent and really focused on that long-term sustainable growth.
If we can – if we exceed what we said if we have good Investments we will make the call whether we should continue to invest for the long-term or let that flow through an compound operating margin perspective.
Chris Nardone: Got it. That’s very helpful. And then just as a quick follow-up, can you provide an assessment of how the Red Sea disruption is impacting your business today? I am just trying to gauge what you are underwriting for freight rates this year and your initial for your margin outlook?
Anne Mehlman : Yeah, so right now from a Red Sea perspective, we’re really seeing it impact from are mostly our EMEA business at this point we’re seeing a couple weeks delay. Overall from a shipping time perspective we haven’t seen a material change to our freight rates at this point. And so I would say, we don’t know what’s going to happen this year. Obviously, we don’t know how this is going to play out. But at this point, it’s not it’s not been a material impact to our business.
Operator: The next question comes from Jeff Lick of B. Riley Financial. Please go ahead.
Jeff Lick: Thanks for taking my question and Anne, I would extend my congratulations, a incredibly well-deserved promotion and increase in role. Andrew, I was wondering if you take a step back and look at 2019 as a starting point where in North America was $640 million in with the Crocs brand and international was $590 million. Obviously there’s way more people internationally than in the U.S. And I think there’s an argument to be made that the Crocs brand might even resonate a little bit better with certain countries and populations than the U.S. So, I’m just wondering if all the things that you had done leading up to the pandemic, customization, social influencing, speed to market with distribution, obviously, you did that in the U.S. first if you use the U.S. as a kind of a leading indicator, I’m wondering kind of where you’re at like what you’re seeing internationally and do would you disagree that international should be at least as big if not bigger than the U.S. And then I guess, the critics might say we’ll see the U.S. is going to come back that obviously hasn’t happened.
I was wondering maybe you could speak to what people are missing as to if anything in the US has accelerated just the dynamics between the US and international was what you could give us there?
Andrew Rees : Okay? Yeah, I think like I ought to see Japanese great way of thinking about it, right? So, just to sort of paint the picture for everybody, what we saw the Crocs brand really started inflect in the U.S. marketplace sort of late ‘18 into ‘19 and then grew dramatically through the pandemic. I think, a lot of people outside of the company kind of put that down to well, that was the pandemic and people were happy to wear Crocs at home, but they’re not happy to wear Crocs when they are back out in the real world, right? So, I think at this point, hopefully, that has proven to be incorrect in that, people are happy and excited to wear Crocs out in the real world. And I think what’s happening there is we’re engaging the consumer, we’re excited in the consumer with innovative new products with a high comfort product, with a high value product, with a product that can be personalized in many different ways and it’s pretty exciting and the customers engaged in it.
So that’s grown that business dramatically. We’ve seen that trajectory repeated in a number of our international markets. And so we look at markets like the UK. We are still probably in our third year of very accelerated growth. So we’re seeing that trajectory play out. And so, and then as I highlighted an earlier question and in our prepared remarks, we actually have the highest market share in the Korea marketplace as of today. So even above the U.S. So that’s to your point around there might be some places in the world where the Crocs brand actually resonates even better than in the U.S. Easy on and off and that’s kind of key component that where culturally there are many markets where people take their shoes off when they go into a building or go into somebody’s home.
So I think that’s a viable thesis. We’re not guiding the international businesses to be clear and then bigger than the U.S. business. I mean, I think when we did our $5 billion plan, we were pretty clear that a lot of our growth will come out of Asia and that international will be super important. And you’ve seen that in the last six quarters, the international business growing very strongly. So we can cut.
Jeff Lick: Okay. Thank you.
Operator: The next question comes from Sam Poser of Williams Trading. Please go ahead.
Sam poser : Good morning. Thank you for taking my questions. I have two for Anne want can you talk about evolving demand planning, especially with the HEYDUDE brand in order to get to the pull model that that you’re working towards and how that is working within the Crocs brand and how you in your new role intend to make that work further work? And then, for Andrew, Andrew you talked about it in the prepared remarks about promoting Anne to this position. Could you just expand on why she is, you went through a long process here wasn’t quick from what I gathered, but can you sort of go into sort of some more nuanced discussion of why she ended up being the best person for the job and in your view? Thanks.
Andrew Rees : You mean other than she’s awesome?
Sam poser : I think yes. Other than she is awesome.
Andrew Rees : I’ll let her answer the first question.
Anne Mehlman : Andrew is thinking of a good answer for you Sam now and just can’t getting at. So, yes, on the demand planning front, for both HEYDUDE and from a Crocs perspective, we have key account planning really very thoughtfully at our big accounts and we plan strategically what sell out is and we are not obviously trying to sell-in. We, as we talked about on HEYDUDE a couple of key differences we are making and remember, when we bought HEYDUDE we didn’t really have the infrastructure in place. So we were mutual and tools and that we’re implementing. We worked really hard to do that last year. So we’re also looking at making sure that the – as Andrew mentioned that we have the right products in the right accounts and that we’re thoughtful about seating product in the right place and also, depths and where we put things.
