Robert Higginbotham: And I’ll just jump in quickly, sorry, on pricing and margin optimization. We’re already making progress. So our team is built machine learning pricing tools. So we’ve gone from sort of manual pricing, both in-store and online to now an automated tool, which has proven to save significant markdown dollars as we rolled that out across channels and geographies and banners. And then I think we linked it back to our loyalty program, the ability to drive personalized offers and not discount something that somebody otherwise would pay full price or have a strong affinity for. We certainly have modeled that into. And we’ll learn in our full pilot, certainly, how to quantify what that benefit means to us.
Jonathan Komp: Jon Komp from Baird. A couple of financial-related questions. Just first, given some of the comments on 2023, could you maybe shape the year a little bit more? You talked about first half comps and some of the promotional pressure in the first half that might be tailwinds later in the year. So if you could do anything more to just shape the year a little better? And then the long-term EBIT margin bridge was very helpful. Could you maybe just talk and expand about what gross margin you might need to get to the long-term EBIT margin targets and how you expect to get there?
Robert Higginbotham: Sure. So on the shape of the year, we gave you the comps kind of by half. So that down mid- to high single digits in the front half and the down low singles in the back half. In addition to that, again, we’re going to see some promotional pressure continue into the early part of the year that we saw in the back half of last year, so that’s going to continue into the early part of the year. And so the earnings growth that down 30% is going to be most pronounced in the first half, less pronounced in the back half. So that’s kind of the shape of the year. On the EBIT margin — on gross margins, our merch margins will be up from 2023 to 2026. A couple of dynamics to consider there. One is that, again, we have a little bit of pressure from the e-commerce channel being a little bit more expensive to fulfill.
But we have offsets in the form of the cost saves through the transformation work, we have offsets in terms of leveraging occupancy on top of that. So the overall merch margins will be up and overall gross margins would be up as well.
Warren Cheng: Warren Cheng from Evercore ISI. I just want to dig in a little bit on your strategy of serving more sneaker occasions. So you highlighted performance in casual as a couple of the key pillars there. Can you elaborate just more on the use cases you’re focusing on here? And a big part of casualization has been office casualization where a lot of new brands have emerged. Is there any thought towards expanding your selection on the vendors there?
Mary Dillon: Yes. How about — I’ll just start more broadly, and then we’ll go from there. I’m very excited about the fact that we’ve got the insights about the category and the consumer. And even common sense would tell you that there’s plenty of opportunities to get more people into this category and for us to get more customers in our portfolios as well as more share of wallet. I mean there’s just plenty of opportunities. And we’ve been proving — we’re doing that already, even I would say, without the capabilities that we really know are going to help us do that a lot more. So all the things we just talked about in terms of loyalty, digital, CRM, e-commerce, we’ll only continue to add to that. So the entire plan that we’re working on is really focused around how do you broaden and appeal to more people for more occasions, whether it’s in the Foot Locker banner, specifically where I think is our broadest opportunity as well as how we do that through WSS and atmos separately.
So why don’t you want to talk a little bit about the products that would fit into these occasions as well?
Franklin Bracken: Yes. So I think if you look at the left side of that consumer chart where we had the Sneaker Maven, the Fashion-Forward, certainly driven by more high heat launch energy-type products. As you migrate to the center of the Active Athlete, more performance, lifestyle and athleisure. And then the Quality Seeker and the Deal Finder, again, same brands, but a different mindset as the consumer is shopping. Deal Finder being, of course, the most sensitive to pricing promotions. Sub-100 is the biggest part of that consumer. And then the Quality Seekers willing to pay for quality, hence the name, but it’s very sort of discriminating and what they’re looking for and making sure that it meets their needs and try on and service is an important part of that value proposition.
So I think the other thing is really using our banner portfolio, particularly here in North America, where we have the strongest multi-banner offense to divide and conquer and be really discretely positioned from a consumer standpoint against discrete consumer and shopping occasions. That’s the big unlock as well as using the store experience, the digital marketing and then the retention mechanisms to make sure that, that comes through and how we communicate and engage with consumers.
Mary Dillon: And I would just add that in terms of new brands, I mean that’s what Chris and his team do all the time is really scoured the landscape and build deeper relationships with our current brand partners and also constantly be looking at new ones.
Chris Santaella: I think the key thing for us is to authentically evolve. And that’s something that’s really important as we looked at our brand product portfolio and as we work through the consumer types, we really have some opportunity to expand our portfolio through performance brands and through casual brands, but still stay authentically linked to the rest of our core business. And that’s really given us a lot of confidence as we started to evolve, and we’ve seen great results over the last couple of years, and we’ve got a lot more things coming in the pipeline.
