That should allow us some opportunity to claim back some of the markdown headwind from the year we just closed. And with growth and some mix shift, we should be able take that portfolio of tailwinds and offset those headwinds with one exception, currency still remains a headwind for us and that’s — if you think about the year we just completed where we delivered a 9.8% operating margin we told you we see about a 70 basis point headwind in currencies. At the top end of our range, that’s the bridge for you. So we’ve got tools to mitigate everything, currencies remains the challenge for us. When you pivot then to the first quarter, the first quarter is disproportionately absorbing some of those headwinds. The COVID relief, if you look back to what we said when we announced last first quarter, we benefited from a lot of COVID relief in the first quarter, so we’re up against that.
We also had very strong sales in our American wholesale business. It was largely around timing, but we have that — we’re not expecting that kind of performance in the first quarter. I talked about the calendar shift where the spring-summer collection is now delivering more in the fourth quarter than it traditionally has. So the opposite end of that will be the first quarter. Then on top of that is the currencies, while we expect currencies the translation impact to be relatively neutral based on current — the current environment for the full year. That’s not necessarily the case in the first quarter because the U.S. dollar last first quarter was relatively weak. So we’re expecting given where it is and you think — just using the euro as an example, it was $1.11 on average last first quarter, it’s in a $1.6, $1.7. So that implies a further top line headwind and all of that is going to hit the first quarter.
Once you get past the first quarter, that severe headwind for the first quarter subsides and that’s where we see a more muted impact to the bottom line for the middle quarter. And then by the time we get to the fourth quarter, we enjoy the benefit of that extra week and we should have lapped a lot of the inflation pressures that it builds up into our cost structure. So that’s the opportunity to get some bottom line tailwinds.
Carlos Alberini: Let me just add one concept here and that is — Dennis has talked about what’s inside the P&L. And I think that that’s absolutely the way we have approached this planning. But the one thing that I think is important here to consider is the assumption on the top line, because I think that we are looking at how the business is trending, the state of the consumer, what we are reading, what we are seeing and for that reason, we decided to take a very prudent approach to our outlook. And that’s why you see that 1% to 3% top line growth. But something that I think is very important to note here is that we have a business model that if we can experience a different level of growth just if we can see significant flow through to the bottom line.
