Joanne Crevoiserat: Well, I think first, let me just say that we play in a very large market, right? This market is $200 billion accessories, footwear, and apparel. And it is a fragmented market and I’ve been in this business for more years than I’d like to probably admit on the call. And over time, in a world where consumers can get pretty much anything they want, anywhere they want, anytime they want, what matters are brands. Brands matter in this marketplace and brands matter with consumers and what consumers value has changed over time and how they shop has changed over time. And I think what we’ve done in the last three years has really positioned our business to be able to speak to consumers to win in a marketplace where brands matter and we need to reach consumers in a different way.
So we’ve built the capabilities and the platform to be able to do that and we’ve invested behind our brands. Now Coach is a great example of the power of the platform where, we’ve gotten laser focused on our brand positioning and clarified it. We’ve gotten laser focused on our target consumer and we’re reaching the consumer in an omnichannel way. We’re talking to them about things that matter to them and how our brands show up in their life. And that is the brand heat that is driving the Coach momentum and the team is executing really well behind that and we’re delivering really great product, leveraging all the insights from the data that we have and bringing that balance of magic and logic together to deliver really compelling product and experiences in the marketplace.
And that is the platform that’s scalable. We can leverage that across more brands. So we’re excited for the Capri transaction to close. Again, these are truly iconic brands. These are brands that already matter in the marketplace today and we believe that we can improve the execution behind these brands and really take them to another level and reach consumers in a big marketplace, a crowded marketplace, and a noisy marketplace. We have the capabilities to help these brands cut through.
Scott Roe: And I’ll just chip in real quick, Michael, on your China question. I think you asked about Coach, China, our China business in total of which obviously Coache is the driver. We grew 9% in the first quarter. We expect mid-single digit for the full year, which would have us about flattish in the second half. We still think we’ll be above 2021 levels or slightly above 2021 levels for the full year. But that’s really reflecting the trends that we’re seeing on the ground right now.
Operator: Our next question is from Mark Altschwager with Baird.
Mark Altschwager: Good morning. Thanks for taking the questions. I guess first for Scott, just a question regarding the transaction. Any changes to how you’re thinking about initial revenue and EBITDA contribution from Capri Holdings, timing, magnitude of accretion, just in light of the evolving macro environment? And also curious if you’re going to share any expectations you have for interest rates on the deal financing.
Scott Roe: So as you can appreciate, Mark, what I can say is very limited at this point, given where we’re at. I’ll just reiterate what we said at the time of the deal. Our expectations for Capri were that in our planning horizon, which is the first three years, we expected modest growth, kind of low single digits, with it being down in the first year, this year, with the most pressure in micro [inaudible]. Based on our assumptions, we saw, and we’re confident in strong accretion, immediate double digit accretion, strong returns, et cetera. So we can’t really update what we’ve said publicly at this point, given where we’re at in the process. As it relates to interest rates, we all see what’s going on out there. There’s been some upward pressure, some moderation more recently.
But a couple of things I’ll remind you of. Well, I can’t give you any specific numbers. We did put some hedges in place on the risk-free rate, so the treasury rate, which mitigate whatever movement that you might see. And we’re still confident in the overall economics of the deal. More to come on financing as time goes on.
Mark Altschwager: Okay, thank you. Maybe switching gears. I guess first for Scott or Joanne. The execution on gross margin, really putting you in a healthy position to be able to invest, how are you thinking about the balance between letting the gross margin flow to the bottom line versus maybe investing more aggressively in marketing to drive the top line in a tougher consumer backdrop? Thank you.
Joanne Crevoiserat: I’ll start by saying we’re doing both. We are managing the business with strong gross margin because we won’t compromise brand health. We see tremendous long-term runway for our brands, and we’re thinking longer term and executing in a way that we can deliver compelling value to our consumers and continue to drive stronger gross margins. You’ve seen us do it this quarter last year, and we’ll continue to do that. We did it across all of our brands. And we’re continuing to invest in brand building because that is the dynamic that creates the flywheel, right. As we continue to drive gross margin and expand gross margin, we’re leveraging that margin expansion to invest in brand building which then helps drive top line, creates the brand heat that creates the flywheel.
So we’re doing both, but we are protecting brand health. We’re not going to chase every last sale. And we’ve been navigating what I would call a dynamic environment, but also a highly promotional environment for a while. And you’ve seen us operate with discipline. It includes, not only just the desire and will to have discipline pricing, but it includes the data and analytics that support our skew, breadth and assortment. It includes the inventory management discipline that we’ve built over the last few years to make sure we’ve got inventory well positioned that we’re responding to demand signals when we see them and connecting the back end of our supply chain to our front end demand signal. So there’s a lot of process and system and people in this place that support our ability to continue to maintain gross margin and then, also we’re looking to continue to invest in our brand.
