Budd Bugatch: So you’re seeing better DTC than you’re seeing in-store, is that what I understand?
Debbie Propst: We think about our direct-to-consumer business as both our store business and our e-commerce business. We also have a wholesale business, which is the sell-in of our products into third-party retail partners. Our direct-to-consumer business is performing much more resiliently right now, given the more agility we have and the levers we can deploy in that piece of our business versus in our wholesale business.
Budd Bugatch: And I think we said this, and that was my understanding that your wholesale business is primarily offshore, not domestic.
Debbie Propst: Primarily international.
Andi Owen: Yes. That’s correct, Budd.
Budd Bugatch: Okay. A couple of other things. You’ve raised the earnings guidance for the year. And I think when you were giving that guidance at the end of the fiscal year, you also mentioned a sales expectation modestly below that you’re just reported. Any update on that sales expectation for the full year, Jeff?
Jeff Stutz: Yes. Well, I think, we’re largely in the same place. I mean we’re several quarters out to end of fiscal. I think what we wanted to make sure we signaled here is that the over-performance that we delivered in Q1, we believe we can take that to the bottom line full year. I don’t think there’s a meaningful change in the outlook from a revenue perspective. But we were intentionally vague, as you remember, at the end of the year when we talked about the revenue guide. So I think we’re basically in the same place.
Budd Bugatch: I do. I do remember. And last —
Andi Owen: Of course, you feel bad.
Budd Bugatch: Sorry, that’s just — it’s a fault that I just — I’m trying to overcome. Last for me is the restructuring. Can you give us a little bit of color on what that is and where it is in the process? Do you still see more restructuring charges in the upcoming quarters? And is it primarily on the salary, the compensation side?
Jeff Stutz: Yes. So Budd, maybe a point of clarity. So we have total charges in the quarter that I’ll call for purposes of the discussion, special charges that totaled about $15 million. A subset of those costs were true restructuring-related expenses that tied to workforce reduction actions that are both here in the US and some international that have already been announced and implemented. I can’t say that we have other imminent plans for further restructuring. Obviously, we will react to business conditions like we always do. The remainder of the cost, so the restructuring component of that was about $5 million. The balance that you see there in the total charges for the quarter continue to relate to cost to achieve and integration-related costs related to our synergy capture program.
And those costs, Budd, are just ongoing in-flight integration projects. We’re nearing the end of the process, as we — our full target is a three-year goal, and that would essentially be at the end of Q1 of next fiscal year would be that three-year mark. And we’re at a point now where most of the remaining in-flight projects are either consolidation related to showroom or some manufacturing-related moves that are planned. So you’ve got a combination of operating expenses from showroom moves that should be further synergies as well as cost of goods sold impact related to some of the factory work that we’ve got in place. So you’ll see some more of that over the balance of this fiscal year as we complete those projects.
Budd Bugatch: So we’ll continue to see the integration side. We know the amortization of PI. That’s going to continue. The restructuring, you will do that as you find projects and things that you’re going to — that may affect. And I understand this is quite sensitive compensation and workforce. But those are not yet announced. Is that the way to understand it?
