But the — this wouldn’t be complete if we wouldn’t talk about apparel in there. So we’ve had a really strong launch around winter running. The bra category gets a lot of traction for us. And then as we move into spring next year, as you know, we’ve announced that we will enter the training category and apparel will be the driver there. So a lot of exciting things coming in Q1 and, of course, also training shoe with the Cloud Pulse.
Jonathan Komp: That’s very helpful. Thank you, both. Martin, just one follow-up if I could. Just given your positive commentary about gross margin, could you maybe just highlight the factors that are weighing on adjusted EBITDA margin in the fourth quarter? And of those factors, should we be expecting any pressures continuing into 2024?
Martin Hoffmann: Yes. So we established at the Investor Day, our aspiration to have a gross profit margin of 60% plus. We are very proud to have achieved that number, at least very close in Q3 with 59.9%. We continue to see and expect a favorable environment on the freight side. As Marc mentioned, we have a healthy inventory level, not only at our retailers, but we have further improved our inventory levels at our warehouses. So we expect a continued high share of full price sales. We don’t see a lot of currency impact at the moment on gross profit margins, also not a lot of other one-off effects. So yes, I said it in the comments, we are positive about our gross profit margin and also going into next year and the increasing D2C share will further support that.
And then on the EBITDA, so in Q4, we are — as I mentioned in the past calls, our focus is on achieving the 15% adjusted EBITDA for the full year. Now the strong Q3, but also the strong margin that we expect in Q4 allows us to double down on some of the brand awareness campaigns that we had planned for Q4, and they are running. We mentioned some of those on the call. Again, this is all for future sales growth. It’s not immediately converting into Q4. But as a result, we expect to see some higher marketing expenses. Again, this is a clear perspective of achieving the 15% adjusted EBITDA.
Operator: Your next question comes from the line of Jay Sole of UBS.
Jay Sole: Great. Martin, 2 questions. When you touched on your prepared remarks, the sell-out in the wholesale channel has been quite strong. Would it be possible to share some numbers around that? And then secondly, I think on inventory, you said that you expect inventory levels to be the same in Q4 as Q3. Now do you mean that in terms of a growth rate will be the same in Q4 versus Q3 or do you mean in terms of dollars?
Marc Maurer: So let me start, it’s Marc with wholesale, just some anecdotal evidence. We know the sell-through numbers and obviously, unfortunately, we cannot share all the numbers here. Some anecdotes, we are the #3 brand at Fleet Feet, which is very, very important to us as you know. So we continue to gain share from other brands there. Also in a market like Germany, we are the #3 brand at the RunningXpert, which is basically kind of the Fleet Feet or a summary of some of the doors that are very much kind of focused on running and run specialty. So we see that, that strategy is really paying out. We have very, very strong sell-through in DSG. So really exceeding our expectations. We had weeks and months where we were the #1 brand in running in DSG by far.
So I think we’re seeing very strong numbers. And this is also how we will continue to kind of manage the expansion going forward, making sure that we’re in a strong position in the doors where we’re in and then expand from a position of strength.
Martin Hoffmann: And then to your inventory question, so that comment referred to the absolute number. So we are very happy with the inventory level that we have and very proud about the work that the team is doing and the focus that we’re putting on this. And where we are standing now is what we communicated in the past. So we are executing our plan that for the last 6 months, we have produced less than what we have sold. And so we expect to maintain plus/minus that current inventory level towards the end, while our sales continue to grow and then also in the outlook. And we’re maintaining freshness in our inventory, which will support our high share of full price sales in the future as I just mentioned on the gross profit comment.
Operator: Your next question comes from the line of Alex Straton of Morgan Stanley.
Alex Straton: Perfect. Congrats on another great quarter, guys. A quick one from me. A number of wholesale peers have expressed more cautious front half order book outlooks on their latest calls compared to 3 months ago or so. So I’m just wondering how has the first half shaped up for you all relative to your expectations and relative to that high single-digit level that you’re expecting in the fourth quarter?
Marc Maurer: Thank you, Alex, for the question. So we are very positive around 2024. So from when we spoke last time about it, also from when we shared our 3-year plan in the Investor Day, nothing has changed. We see absolutely no cancellations. So we have the right mix in the order book, so we can really double down on performance. We see new silhouettes, for example, Caspar spoke about the Cloudtilt, resonating really well and being adopted. And especially, I want to highlight that apparel has seen a very, very strong preorder. So we’re very confident in how spring/summer ‘24 is shaping up.
Caspar Coppetti: Alex, if I may add here. We’re the most premium brand for most of our partners, and that means we’re also the most profitable brand for them. So obviously, they’re strategically invested in the On brand. And if anything, we expect that in a more difficult environment, the On brand will gain versus our competitors.
