Matthew Friend: And I’ll just jump in that on inventory. We’ve made tremendous progress on inventory. And two quarters ago, you’ll recall, we made clear — set clear goals and decisive actions in response to changing conditions in the supply chain and the marketplace. And we’ve been able to leverage our brand momentum into and through the holiday season and continue to be able to sustain it into spring. And we’re increasingly confident that we’re going to exit fiscal year ’23 with healthy inventory levels across the marketplace, across channels in the marketplace. And in fact, I mentioned in my prepared remarks that within the financial parameters that we had set two quarters ago, we’re going to exit with even leaner inventory than we had anticipated given the momentum that we’re seeing.
As it relates to the impact on gross margins and fiscal year ’24, I mentioned that next quarter I’ll provide full and complete guidance. But what I will tell you is that we’ve been talking about 350 basis points of transitory cost headwinds in our gross margins over the past two years between elevated ocean freight and logistics and then the promotions required to move through excess and early arriving inventory. And we expect that those transitory headwinds will begin to recover in fiscal year ’24, and I’ll give specific guidance about how much next quarter.
Operator: Next, we’ll take a question from Omar Saad, Evercore Partners.
Omar Saad: I’d love to ask my question on China. Maybe you could dive in a little bit deeper on the outlook for the recovery there, maybe across a few different dimensions, being the consumer recovery, how the consumer is behaving, what you’re seeing there, the competitive landscape, especially vis-a-vis locals, which may have taken some share. And then also the marketing landscape. Are you having unfettered access to all the different marketing channels that you need to resonate with the consumers?
John Donahoe: Yes, Omar, bottom line is we feel good about our momentum in China. And that’s both Q3, where you saw in a post-lockdown environment, growth really pick up the second month of the quarter, and our inventory is in a very healthy position. But even more importantly, and to the — some of your specifics, we look going forward, the fundamentals of this market are good, right? It is a — it is a very large market that’s growing. Sport and wellness is a key trend and tailwind there. There’s a desire for innovation and style. And the key to winning in this market is, simply put, having great innovation and connecting with Chinese consumers in a locally relevant way. And so that’s what we’re doing. On the great innovation front, our product innovation is resonating with the Chinese consumer, and it’s a nice blend of global platforms like the LeBron 20, the G.T. Cut, which, by the way, was very well received in China, the Invincible, our lifestyle franchises, along with hyperlocal innovations through our gel of the examples will be the Chinese New Year pack, or we did a Year of the Rabbit pack focused on Gen Z and Gen Alpha that’s really resonating with that constituency, and we’re really focused on those younger consumers in China.
