I know you’ve been planning that market very cautiously for a long time. It’s nice to see you coming in above your above your guidance. But is maybe a little bit more context on what you think the underlying growth rate is in Europe in the fourth quarter and how we should think about that market for ’24? Are you seeing any less pressure on the wholesale side there? Maybe just a little bit of color, please?
Jane Nielsen: Sure. Let me start with your first question on wholesale. So we did see our sell-in down 15% in North America. What’s encouraging is that our sellout was down about mid-single digits in the quarter. And we had low single-digit increases in AUR. Now Michael, what’s underscoring that is we wanted to be competitive, we didn’t intend to be moved backward in that channel through the holiday season. We were intentional about our sell-in as we came off a softer spring and fall, we wanted to make sure that our receipts reflected a more cautious view of seasonal inventory, and we were able to backfill into stronger core and replenishment items. So as I look into the future, especially in the fourth quarter, I see more balance between sell-out and sell-in.
And I think the expectation of what we saw in sell-out this quarter is a good indicator of what we’ll see in Q4. And then on Europe, we were really pleased with what we saw in Europe this quarter. Overall, our business performed above our expectations. We had solid growth in every market with some softness in the U.K. based on the inflation and some consumer pressures that we had there. But really, we saw strong continued full digital pure-play strength as well as good wholesale strength with accelerating DTC trends. So some of the investments that we’ve talked about specifically in North America also paid dividends in Europe as we invested back in service and really saw marketing momentum with our new consumers. As I think about Q4, we do remain cautious.
It’s an inflation pressured environment. Obviously, the situation in the Middle East and the situation in the Ukraine are closer in on Europe. I see some pressures in Europe and in Spain with inflation. But I do see that over the course of the quarter what you’ll see in wholesale is the underlying growth is going to be pretty stable. And then, we’re going to come in, as we talked about in Europe with some ups and downs and some timing shifts that we expect Europe to perform in the low single-digit range for the year. Again, I know there’s some quarter-to-quarter volatility based on timing shifts.
Patrice Louvet: And maybe I’ll just add one data point on your first perspective, which is on North America wholesale where indeed need to be cautious moving forward. We are encouraged by our digital wholesale performance this past quarter, which was up mid-single digits. So the challenge really is stores, driving traffic in the stores, running conversion in the stores working closely with our wholesale partners to activate this.
Operator: Your next question comes from Jay Sole with UBS.
Jay Sole: Great. Thank you so much. So maybe, Patrice, just to follow up on those last comments. Can you just talk about your enthusiasm for your direct consumer business, particularly opening stores, given the comments you made in the opening remarks. Can you maybe just compare how you feel about it now versus, say, 90 days ago?
Patrice Louvet: Still is enthusiastic, Jay. So if I step back a little bit, just think about our go-to-market model, really focused on top 30 cities around the world building an ecosystem that is led by DTC, but incorporates quality wholesale within that. And we know, as we look at our footprint, particularly in North America and in Europe or in China, actually, that we have opportunities to expand our full-price store presence. And you’ve seen us do this at a relatively healthy clip probably most actively in China, but more recently in Europe and in North America. As we think through the model going forward, Jay, we’re still going to operate with this focus on the top 30 cities, build this ecosystem and lean into DTC. So I mentioned earlier, DTC is about 2/3 of the company.
We expect that percentage to increase over time. Because that’s really where we have the opportunity to better engage with the consumer and provide a full raw foreign experience. This being said, quality wholesale continues to play a role in the mix moving forward. We’ve committed to a number of store openings during Investor Day, and we still stay true to that but this year, it’s about 80 stores.
Jane Nielsen: And we’re still on track for about 250 new doors over the 3-year time horizon.
Operator: The next question comes from Brooke Roach with Goldman Sachs.
Brooke Roach: Good morning and thank you for taking our question. Healthy improvement in the outlet channel again this quarter. And I know a lot of ground has been covered on DTC, but I was hoping you could elaborate on the changes that are working best there and your plans for further actions to drive continued accelerated improvement from here in outlet in both North America and Europe. Thank you.
Jane Nielsen: Yes. So Brooke, we were really pleased with what we saw in the outlet channel. And what we see working is that the investments that we’ve made in our brands are paying off across our channels. But it’s particularly in the outlet channels, we’ve seen nice solid growth in traffic across all three regions. Additionally, some of the very targeted promotion activities that we did during the peak holiday selling period worked very effectively, especially in the outlet channel. And we’re able to do that while still increasing AUR across all three regions. We also see a role for the investments that we made in service. So we increased our service in our stores, and we’re seeing conversion as a result of that. Obviously, brand investments and service investments are durable groups over time. And as we said, we’ll be led by our consumers on our elevation journey and be very targeted in addressing some of our value-oriented consumers over time.
