James Hardiman: Hey, good morning. First, I just want to close the loop on this corporate and other last question, I promised Gina. So $45 million in the first quarter, what should that number be for the year, it sounds like you’re saying less — it’s actually going to be less than $45 million so that — we should expect that to go negative for the balance of the year or maybe just give us a sort of North Star, how to think about that full year number?
Gina Goetter: Yes. Good question. I know it’s confusing to just given some of the timing components. Last year in 2023, it was roughly $20 million. When all kind of get settled out, it was roughly $20 million. I would say we’ll probably be around that plus or minus a bit just given that we have this stock comp adjustment sitting in there. It’s really held as a lot of our corporate costs sit within there. It’s trying to represent kind of that corporate overhead structure, but then much of it gets allocated back as we go throughout the year. And all of that just given all of the work that we’re doing in that area is a little bit as you can imagine, it’s moving. It’s agile this year as we make all of those changes. So I would say, call it, $20 million, $30 million by the end of the year [Multiple Speakers].
James Hardiman: And just to clarify, and then I have a follow-up. But any way to think about that from quarter-to-quarter, because that could be a pretty big swing factor as we think about potentially some negative numbers, does that start right away or is that more back half rated?
Gina Goetter: I would say in Q2 and — Q2, Q3, Q4, you’re not going to have that $20 million adjustment for the stock comp in there. And so then you’re looking kind of plus or minus a few million dollars moving in and out. So it really becomes an immaterial impact as we move through the next few quarters.
James Hardiman: Got it. Okay. And then consumer products margin, obviously pretty negative for the first quarter. But if anything, it sounds like you feel pretty positive about the trajectory of that margin. How should we think about — I don’t know if there’s a way to think about an exit rate for this year. It seems like it would be meaningfully better than that 4% to 6% range given the starting point. What I’m really trying to get at is what — how do you feel about where that’s headed, particularly for 2025 and beyond?
Gina Goetter: Got it. Yeah, I think we feel based on what we delivered in Q1, really good about our ability to deliver that 4% to 6% guidance range. And to your point, a big drag that we saw in Q1 was the E1 [ph]. And as we kind of push past that and move into growth in Q4 you’re going to see some nice underlying profitability within the business. As we move then into 2025, we’ve publicly said that, our goal is to get this as close to double digits as we can through 2025. And it’s going to be some of the same levers that you’re hearing us talk about, continue to focus on cost structure, continuing to refine our supply chain, getting really smart with our product mix and how we’re pricing in markets. And then lastly, the last lever we haven’t brought up yet on this call is the whole design to value and all of the work that we’re doing within our product design.
So far, that hasn’t had a material positive benefit on the P&L. We see that picking up as we move into Q4 and really into 2025. So I think we feel good about where Q1 landed. It tells us we’re on the right path to get us within that range of 4% to 6%, and we’re continuing to march into 2025, thinking that we’re going to push that double-digit margin.
James Hardiman: Is it crazy to say that we’re going to be pretty close to that double-digit rate sort of implied in second half or fourth quarter?
Gina Goetter: No, I think that in fourth quarter — particularly, you got to keep in mind we had that big inventory adjustment last year that becomes a huge benefit for us in the fourth quarter.
James Hardiman: Got it, perfect. Thanks Gina.
Operator: Thank you. Our next question comes from the line of Fred Wightman with Wolfe Research. Please proceed with your question.
Frederick Wightman: Hey, guys good morning. I just wanted to come back to margins. In the slides, you guys are calling out cost saves net of two points of inflation. And we’ve seen some other toy companies talk about actual benefits from deflation. So can you talk about where you’re seeing that cost inflation specifically and how to think about that as we move throughout the balance of the year?
Gina Goetter: Good question. Yes, we wouldn’t call it deflation per se. So we are seeing a couple of points of inflation. The three areas I’d call it, one is labor. That’s our biggest cost in the P&L. We’re continuing to see that inflate a few points. The second, then when you think about our largest kind of ingredient that we’re purchasing in Horizon, that also is inflationary in the year. But those are kind of the big two, I would say. I mean, our logistics cost there’s pluses and minuses. Overall, we’re managing logistics pretty well. For the year, in the quarter, we saw about two points of inflation. That’s why we think that is going to play through the rest of the year, about two points of inflation.
Chris Cocks: Yes. Just on an apples-to-apples, I’m not sure how other companies are talking deflation. When we talk about it, we talk about it as productivity based on our teams working with our vendors. And so our productivity is significantly scaling past underlying inflation in the supply chain to a pretty healthy manner, which is driving our gross margin productivity.
Frederick Wightman: Yes, that makes sense, thanks Chris. And maybe another one for you, Chris. You talked about the traction from the Littlest Pet Shop license. You also talked about the deal for Power Rangers. Does the early success that you’re seeing with some of these licensing decisions change how you’re thinking about the need to own versus license some of these CP brands going forward?
