Chip Bergh: Sure. And it’s really good question, because it is kind of the big paradox as we take a look at the results, our U.S. DTC business, including e-commerce and especially including mainline, are performing really, really well. And that’s — I would say that’s — why that’s a strategic focus of ours globally is, we’re in control with the brand, we’re in control of the consumer experience, we’re in control of what we focus on in our stores, we’re in control of the assortment in the stores and the consumer comes into the store wanting to buy Levi’s. And we’re seeing really good success there, as you heard from the results. I think the wholesale dynamic, some of it is clearly the consumer, okay? So as we said, our value brands are down double digits.
U.S. wholesale is down double digits. Some of it is definitely a channel dynamic, I think that moderate to lower income consumer is definitely under pressure. And I suspect we’re all reading the same newspapers, feeling the trade-offs of needing to pay for a summer vacation versus a new pair of jeans. And I think that’s some of it. But we’re competing now for other dollars that are being spent out of the consumer’s wallet, and that moderate income consumer is having to make some tough choices now. So I think — I suspect that that is part of it. But there’s also the dynamic, as I said earlier, that’s within our control. This customer fill rate issue that we’ve had because of our loaded inventory, as I’ll say it that bluntly in prior quarters that as our inventory levels start to trend towards something that’s more normal, or the congestion that we were experiencing in our distribution centers has abated and our fill rates are improving literally week over week.
And as we now into the third quarter as we are seeing our fill rates improve. We’re closing out out of stocks, and that is improving sell-through. So we’re optimistic about that. And then the last point is this point about making some strategic, very selective price reductions, and they are only partial rollback. So over the last two years, we have taken price increases globally, including here in the U.S. and including here in U.S. wholesale. And we have widen the price gap versus the other brands in U.S. wholesale. And on some of the most price-sensitive items in our line, that price gap is too wide and we’re going to fix that. But to put it into perspective, we’re talking about six items in wholesale out of more than 60 items that we sell in the U.S. wholesale out of the more than 120 items that we sell in the U.S. So it’s — depending on what base you want to use, it’s less than 10% or less than 5% of the total number of items in our assortment and it’s going to be less than 15% of the total volume.
But we know from our analysis and we’ve been engaging with our customers on this as well, we know from our analysis that by closing this price gap, it should stabilize this business a little bit further. So the combination of the supply chain confidence in our deliveries and addressing this price gap to be a little bit sharper versus competition in these multi-brand wholesale customers. The combination of those two things should stabilize and potentially even get our wholesale business back on track to growth in the second half of the year and give us momentum as we’re going into the critical holiday period and into next fiscal year.
Jay Sole: Got it. That’s very helpful. Thank you so much.
Operator: Thank you. Our next question comes from the line of Ike Boruchow of Wells Fargo. Your question please, Ike.
