And the globe is a big place. There are opportunities that we never focused on. We didn’t have the ability to with the licenses that we had. Today, we have the opportunities, we have the desire, we have the capital, and there’s recognition in Europe of who we are. We’ve done a nice job of positioning. And now, it’s time for the growth period internationally.
Will Gaertner: Got it. Maybe just one more for me. You touched on Europe, Morris. Just any color there? It sounds like you guys are performing pretty well. What’s the retailer holds for you guys? The appetite for — we’ve heard a slowdown there, and just curious what you’re seeing on your end there.
Morris Goldfarb: So, slowdown usually implies companies that of scale. We’re not going to slow down. We’re going to grow. We’re at the early stage with an appetite for our product, regardless of what economies look like. This is a fashion business. What we do is create fashion that’s in vogue. We service it well. And there’s no doubt in my mind that we’re going to grow in spite of the economic headwinds that might come our way.
Will Gaertner: Got it. Thank you. I’ll pass it on.
Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Mauricio Serna with UBS. Your line is now open.
Mauricio Serna: Great. Good morning, and thanks for taking my question. I just wanted to maybe reconcile. I think, you mentioned that the Calvin Klein and Tommy Hilfiger would roughly represent 30% of sales this year, down from 40% last year. I think that’s, like, roughly implies, like, those revenues are going to be down, like, almost $300 million. And I just want to make sure, like, I think, like, this year, you’re only losing $50 million from the — driven by the Denim license. So, I just wanted to first check on that, like, if the rest is just like winding down of the business? And then, maybe, I know, like, you have, like, several initiatives going underway this year. Maybe if you could parse out, like, how much of the growth is coming from the — like, organically from the brands that you already have, and that you just continue growing versus the new initiatives?
And then, just lastly, maybe if you could give, like, us some puts and takes on the gross margin, because it sets flat year-over-year, just how are things, kind of, like the — how are things, like, the Red Sea, disruption freight, promotions, how are the — like, what are the big drivers there that take us maybe to a flat gross margin? Thank you.
Neal Nackman: Yeah, Mauricio. So, just to help you work out some of that math. Yeah, I think, that if you look at what we’re forecasting from ’24 to ’25, we are looking at about $240 million of fall off in the Calvin, Tommy business. That’s slightly less than fell off in the previous year. So, obviously, we’re going to be up about $100 million. That means that the growth in the rest of the portfolio is about $340 million. That growth is fairly evenly split between the new initiatives and growth on the current business that we’re performing. In terms of the flat gross margin percentage, I think you hit it on the head. We are a little bit concerned about the Red Sea. It has not impacted us just yet outside of our European distribution, which it has impacted already.
We do anticipate that that will be a little bit of a headwind for us. Hopefully, it doesn’t become too great. While gross margin plan has being flat, we’re pretty pleased with that kind of result in this current environment.
Mauricio Serna: Great. Thanks for that. Good luck.
Morris Goldfarb: Thank you, Mauricio.
Operator: Thank you. One moment for our next question, please. Our next question will come from the line of Janet Kloppenburg with JJK Research Associates. Your line is now open.
Janet Kloppenburg: Hi, everybody. And I got on a little bit late, Morris. So, if I’m asking a question that’s been asked or that you discussed, I apologize. But I wondered what you were thinking and embedded in your guidance for Macy’s planned store closings and what effect that may have on your business in the next three years as they close roughly 150 stores? And with respect to the new launch of Donna Karan, which is beautiful, by the way, I wondered if that was going to be a drag on earnings this year because of the marketing investments, or if we should expect a contribution? Thank you.
Morris Goldfarb: Thank you. Janet. Let me deal with the Donna question first. Thanks for noticing the campaign. It’s — we’re…
Janet Kloppenburg: Very beautiful.
Morris Goldfarb: Thank you.
Janet Kloppenburg: Yeah.
Morris Goldfarb: We’ve been celebrated for it. There was just an event by Time magazine on the West Coast that we got well recognized, and we’re very excited by the campaign. I think I’d like to call out Trey Laird for all the wonderful work he’s done. And I have to attribute a lot of success to his talents. Internally…
Janet Kloppenburg: I didn’t know Trey did it. I didn’t know it was Trey. He’s fantastic. Yeah.
Morris Goldfarb: So, he’s — we took the best that we could get, the best that there is out there, whether it was the models, the photographer, the brain trust of Trey and his team and our own team, which also should get recognition for what they’ve done. So, the — and it will be a drag because of everything I just described. We’re spending a disproportionate amount of money on the advertising campaign and the media purchases. It’s positioning the brand to the future. It’ll pay dividends next year. And we’re not a one year show. We’re here for over 50 years, and hopefully, we’ll be here for another 50 years. So, we’re comfortable with the investment in the future. As your question on…
Janet Kloppenburg: Macy’s.
