Sunil Doshi: Yes, sure, Christine. There are various dynamics at play which come through the year at different times. At a high level there are a few key topics that we’re stepping through. First, wholesale, sell-in trends, prevailing currency rates, direct to consumer trends, and then the recovery in China that Greg just discussed. I’ll start with the first half of the year. First shipments into the wholesale channel will still have some downward pressure we estimate on a year-over-year revenue comparisons. In Q1 we see that retailers are still managing replenishment type and below underlying sellout trends as they maintain a cautious outlook on consumer discretionary categories in general. We think the majority of this selling impact on our revenue should be in the first half of 2023.
Second, with respect to currencies, while the dollar has weakened a bit since late Q3 of last year, prevailing currency rates will still create some year-over-year headwinds on sales about 200 and 250 basis points in the first half of the year. In our direct-to-consumer channels we are seeing continued comparable retail sales growth enabled by investments from our digital roadmap, but we will see some overall revenue decline in the channel from planned store closures that are likely front half weighted. But again, these are lower productivity stores hitting their natural lease expirations. Partially offsetting this we are starting to see rebounds in China. Many of our accounts are re-forecasting for a return to growth and we are seeing better consumer spending on our direct channels in the market.
So our expectation is that revenue and adjusted operating margins will be down on a year-over-year basis in the first half of 2023 and in the second half we anticipate that trend will reverse, enabling us to deliver sales growth and adjusted operating margins above 2022 levels. More specific to the second half of the year first, more balanced wholesale sell-in patterns should emerge where sell-in should be more aligned with sell-out trends. That coupled with lapping the pullbacks that we saw in the back half of last year creates for better year-over-year comparisons by the second half of the year. Second, prevailing currency rates on our major operating currencies like the Euro are also favorable by the second half when the dollar had its record strengthening in 2022.
This tailwind should benefit both sales and margins. Third, the China reopening that we are seeing in Q1 provides a nice tailwind for year-over-year revenue growth by the second half of the year. As a reminder, China is a very, very profitable country model for us. It’s also worth noting that our revitalization strategy for Fossil brand, which has demonstrated growth in its core categories, will be fueled by a major marketing campaign in the second half of the year. And lastly, adjusted operating margins should also benefit from a lower freight rate market this year and from cost actions contemplated in our Tag strategy. Underlying the dynamics of the first half and second half of the year is our transform and growth strategy, which we believe creates a better and more profitable company with an accelerated path toward more sustainable top line growth, focusing on our best brands and core categories supported by increased marketing, improved gross margins with better assortments and category mix, and through cost reductions that have already begun in efficiency and improved cash flow through lower working capital.
Christine Greany: Terrific. Thank you, team, for the Q&A. That concludes today’s call. We all look forward to updating you on our first quarter 2023 call in May.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
