But we are addressing the fact people may want a little bit of low profile, they want different uses for their product. We think there’s a tremendous opportunity in trail and hike, we’re going to go heavy after that. We have a dominant position in that already. So, it’s top of mind for the teams. I think Stefano, as the interim president of the HOKA brand, with the brand leadership team, has done an exceptional job of fast-tracking our innovation pipeline, and we’re excited to unveil some of those new concepts coming up in Q4.
Steve Fasching: Yes, and I think, Jon, just to add on that, is this aligns with the strategy that we’ve laid out. So, this is not a change as we’ve said, the importance of controlling the marketplace, product in the marketplace, maintaining full-price selling, continuing to build brand awareness aligns with our full-year outlook. And so, we’re continuing to operate on that with no change on that front. As you can see by Q2 performance, seeing still good growth with the HOKA brand, and really impressed with what we continue to deliver. But we’re going to be tight on marketplace management. And that’s our strategy, and that’s what’s paying off.
Dave Powers: Yes. I think the team here is really maintaining a healthy marketplace for the HOKA brand. And listen, HOKA is having an exceptional year. You saw the results in the first-half of the year. On a promotion event or level, we were dominant at the UTMB event this year. In Chamonix, France, our athlete won the race, first American male winner ever in that contest. Two weeks later, our athlete won the Ironman Championship in Nice, France. Actually just today, it was announced by Footwear News that HOKA is the brand of the year. You’re seeing the increases in awareness in acquisition from our consumers. Our full-price selling is exceptional. We’re still dominant in the run specialty channel. We’ve got tons of momentum here, and we want to make sure that it doesn’t get ahead of us, and that we manage the marketplace effectively to continue to drive strength in DTC.
And I think the strategy that the teams have laid out and the cadence of product introductions and innovation is spot on. So, a lot of reasons to be excited, but the same time we’re not naïve to the fact that this sector is having some challenges right now. And Q3, as people are talking about the fact that it may be really tough, we haven’t quite seen that just yet. But again, it’s a sector economic issue that we’re going to pay close attention to, but we want to maintain scarcity in the marketplace, full-price sell-through, and keep this brand moving in a healthy pace.
Jonathan Komp: That’s very, very helpful, thank you. And Steve, if I could just ask one follow-up on the financial guidance for the year, if I look at the implied second-half performance, it looks like you’re implying operating margins down maybe close to a couple hundred basis points year-over-year, and EPS flat to down slightly. Just could you help us make sense of that after the first-half, as obviously such strong year-over-year growth rates, on both of those? Thank you.
Steve Fasching: Yes, I think it’s a good question. And yes, as you’re looking to second-half, part of this is recognizing that part of Q2 was benefiting from earlier sales of planned sales that we had in the second-half of the year, right? And so, while we’re raising our overall year, it’s not the full beat of that what we’ve experienced in Q2 because some of those sales at this point in time appear to be timing. We’ll see how the marketplace plays out kind of in the back half, but combined that with some of the timing of back half sales moving into Q2, passing through what we think is a full-year lift, it is taking some of the sales out of the back half a little bit. But with the overall improvement in the year, and as you know, John, I keep saying, we’re focused on the year, not quarters.
We are lifting our full-year, we’re lifting our full-year gross margins, we’re lifting our full-year operating margin. So, like Dave said, we’re managing the business for the long run. We’re not managing the business on a quarter-to-quarter basis. We look at the full-year, that’s how we’re guiding the full-year. And some of that outperformance in Q2 is allowing us to make these additional investments.
Jonathan Komp: That makes sense. Thanks again.
Operator: The next question comes from Paul Lejuez of Citi Research. Please go ahead.
Paul Lejuez: Thanks, guys. I’m curious to be talking about the HOKA DTC business, how that trended during the quarter, and if there’s any comments you can make about quarter-to-date and then also on the UGG side, you had some unmet demand last year. You mentioned you had chased again onto UGG fires. In case of that, you’re about to chase. And what are your assumptions for the second-half on being able to fulfill that demand? Thanks.
Steve Fasching: Okay, Paul. Some of that was a little hard. I’ll take my best shot. It’s Steve, so on the HOKA DTC business, strong, very strong Q2, up 46%. And we look at that factor as the real true demand signal. We know there are going to be fluctuations with wholesale orders of when they flow. And so we closely watch the DTC performance. And having that up 46% in Q2 is just another strong demonstration of how well HOKA is resonating with consumers, so very encouraged by that. I think as we’ve said, and as Dave just articulated kind of how we’re thinking about Q3 and back half, managing the marketplace, we don’t want to get into a promotional environment. We know there’s a lot of competition out there that’s over inventory.
We’re seeing a lot of promotion. HOKA’s not in that space. We’re not having to promote like other brands are. And so how we continue to build this brand forward and then build toward a bigger fourth quarter type increase on percentages terms as we have those new style intros planned for Q4. And then your other second question was chasing, do you want to go Dave?
Dave Powers: Yes, I’ll talk about that one. So, I think one thing I think is important to clarify is if you go back three or four years and you look at the UGG brand and what drove the business, it was really one of two styles. It was all basically Classic, Short, Mini. And outside of Classic, we had varying degrees of success with other styles. If you go back seven, eight years, it was the Bailey Bow and Bailey Button. But we were more, quite honestly, of a one trick pony in those days. The way the brand has evolved, the assortment is we have now five to six top-selling franchises. We look at the Tasman, the Taz platform, the Ultra Mini, the Ultra Mini platform, some of the styles like the Classic Dipper. There’s a lot more assortment and variation in styles and heights and platforms, et cetera to choose from.
And the good news is that they’re all resonating very well. And we have a good early reads on things like UGG weather styles, the Neumel Weather and the Classic Weather program. And at the same time, the team has edited the line by about 30% versus prior years. So you have inventory that we can put, traditionally went into lower-selling styles. We put that inventory into the Top 5 to 10 styles this year. With Anne’s help on getting the team’s focus and putting more emphasis behind these key styles from a marketing perspective, we’ve also been able to put more depth in those styles and inventory. Now a couple of them, we are selling faster than expected due to the earlier demand but the teams have reacted quickly. We have the ability to chase some inventory, not a ton, but I think you know going into the back end of December will be in good shape on some of these key styles.
