Paul Lejuez: Got it. Thank you. Good luck.
Bracken Darrell: Thanks, Paul.
Operator: Thank you. Our next question is from Gaby Carbone with Deutsche Bank. Please proceed with your question.
Gabriella Carbone: Good afternoon. Thanks for taking my question.
Bracken Darrell: Hi, Gaby.
Gabriella Carbone: Hi, how are you? So, I understand you withdrawing guidance, but I just was wondering if you can dig into gross margins in the back half. Maybe what are the main buckets where you have some opportunity for expansion and in the areas you expect pressure. And then, if you could just talk about what you’re seeing on the promotional front. That would be helpful? Thank you.
Matt Puckett: Yes. Gaby, happy to do that. I will just tell you, we still feel pretty good about our ability to see improved gross margins in the back half of the year. Obviously, I’m not calling a specific number today. But the promotional environment has begun to moderate a bit in fall. We saw a bit of a benefit in Q2. We think that will continue – not going to fully recapture what we lost last year, which was obviously significant. But we’re in a position with inventories cleaner, lower sell-in this year. We’ve talked about that and improved performance, to see some improvement on the promotional side. So it’s moderating, it’s still elevated versus historical. I think that’s kind of the case across most of the marketplace, but certainly will be a bit of a benefit in the back half in our point of view.
Business mix will continue to be a bit of a tailwind in the back half from a channel and geography standpoint. Product costs will be kind of neutral to some degree. We’ve got some puts and takes in there. And then you think about FX. FX is going to be a negative number in the back half of the year. That’s probably the single biggest headwind that we see. But kind of wrapping it all up, I think we’d fully expect to see some improvement in gross margins if you look at just kind of the half two in isolation.
Gabriella Carbone: Got it. Thank you for that.
Bracken Darrell: Thanks, Gaby.
Operator: Thank you. Our next question is from Jonathan Komp with Baird. Please proceed with your question.
Bracken Darrell: Hi Jonathan.
Jonathan Komp: Thank you. Thanks for giving us all the details?
Bracken Darrell: Thank you.
Jonathan Komp: Maybe. First question, if I could, Bracken, just I know Matt outlined roughly four quarters, it sounded like to achieve the full run rate of annual cost savings that you mentioned today. Just want to get your thoughts, the time line to get the commercial organization structure in place and then maybe to start to see some tangible benefits, from cross-sharing best ideas? Do you have any initial thoughts on how long it might take – start to realize some of those benefits?
Bracken Darrell: Well, the organization will be, as we’re calling it here, stood up we’ll be standing up as an organization in Q4. And then I would expect we’ll start to see benefits from it. And early next year, could be Q1 or Q2. But it will take a few quarters to really get it to the point where it’s really humming. And then a little longer than that to really be full-blown absolutely top quite effective.
Jonathan Komp: Great. That’s very helpful. And just two other quick ones, if I could. On the thought being no sacred cows, I thought I would ask. Does it still make sense to operate the full portfolio after the PACS business process is completed? And then just separately, the enterprise level performance targets, is the Board considering any changes to the structure of how those targets and payouts are determined? Thank you.
Bracken Darrell: I’ll take the last one first, Jonathan. We’re always reevaluating our performance targets and how they work and certainly Brent Hyder, who I’m really excited, our new Chief People Officer, is just a fantastic partner for us. He and I talked about that. So I’m sure we will make changes with working with the Board and the top committee Juliana Chugg who’s been a real partner for us here already. I think we will absolutely be making some changes over time, but I don’t have anything that’s specific to call out. In terms of portfolio, I just – we’re not really in a position to talk about it today. We’re – this company has always done, I think, a pretty good job of going through and reevaluating the portfolio over time and making additions and subtractions. And I think that will continue.
Jonathan Komp: Great. Thanks again.
Bracken Darrell: Thank you.
Operator: Thank you. Our next question is from Bob Drbul with Guggenheim. Please proceed with your question.
Bracken Darrell: Hi Bob.
Bob Drbul: Hi Bracken, I just had two questions. The first one is, so with the Martino appointment, and I think Kevin, the change with Kevin’s role, do you anticipate any other sort of senior management changes? Do you feel like you’ve evaluated everything at this point, at least in the near term? And the second question I have is just, I think inventories are cleaner than they were. Are there any pockets of concern either by brand or by region that we should still be concerned with? Thanks.
