Michael Stornant: A little bit more specifically, Laurent, we announced earlier that we were still working through the non-North American portion of our leathers business, that’s still in play, and we’re hoping to move that forward in the fourth quarter. We have some real property, some real estate and some properties that we’re also looking to sell and monetize. And we have some smaller opportunities in different markets around the world. We did an important transaction with one of our sub distributors in China for the Hush Puppies brand. and we’re looking at some opportunities similar to that, that are not quite as meaningful. But as Chris said, everything is on the table. I think we’re taking a really prudent approach to the way we’re monetizing these noncore assets.
Laurent Vasilescu: Super helpful. And then maybe as a second question, with regards to the $215 million annualized cost savings program, can you maybe — Mike, can you kind of unpack that across cost of goods sold versus SG&A for 2024. When does that materialize? Do you expect some meaningful cost savings of $215 million in the first half of the year or is it more in the second half? And then lastly, just on this point, how much cash charges or noncash charges do you expect on this $215 million?
Michael Stornant: So a large portion of the $215 million, $75 million of it is recognized this year. So the incremental benefit in ’24 is going to be $140 million or so. We announced earlier today a pretty meaningful organizational redesign and restructuring of the workforce. And that’s going to have a meaningful impact right away on 2020 for cost structure. That’s about $50 million of benefit and that’s $50 million of the $140 million that we talked about. There’s another $20 million or so of other SG&A expense benefits that will recognize incrementally in 2024. That comes in the form of a number of different things, including how we’re co-locating our teams and reducing our footprint in North America and Europe and some other just synergies and benefits that we’re getting from the work that’s been underway for quite some time in the profit improvement office.
And then importantly, $70 million of savings from supply chain and product cost related negotiations and work that’s been ongoing for some time. But that number continues to be our primary focus as we try to drive our gross margin and create more capacity, as Chris to create more capacity to put behind our brands in terms of demand creation and other things. So the breakdown is also kind of summarized in our IR deck, too, Laurent, if you want to see some of the details. But that’s — those are the highlights. I also mentioned that we have about $60 million of transitory costs this year for some of the extraordinary expenses we incurred related to the supply chain in late ’22 and early ’23. Those are not going to anniversary again next year.
So to answer your question about the phasing and the timing of this, about $50 million of profit improvement between the initiatives we talked about and the transitory costs in the first quarter and a similar number in Q2. So really, really strong improvements and benefits early in the year from the work that we’ve laid out.
Operator: Our next question is from Mitch Kummetz with Seaport Global Securities.
Mitchel Kummetz: I guess my first one is somewhat housekeeping in nature. You guys had previously given sales guide by your 5 key brands. I was hoping you could update that either for the full year or maybe just give it to us for the fourth quarter. How are you thinking about that?
Alex Wiseman: Mitch, this is Alex. We have — in our IR deck, we outlined that. It’s in Page 5 of that deck.
Michael Stornant: Let’s just mention the fourth quarter stats there.
Alex Wiseman: Yes. So for fourth quarter for Merrell, I’m looking at a high teens decline; Saucony, mid-teens decline; Sweaty Betty, high single-digit decline; and Wolverine, high 20s decline.
Mitchel Kummetz: Okay. That’s helpful. And then, Chris, you mentioned the importance of sell-through versus sell-in. I mean they’re both obviously important. But can you talk a little bit about what you’re seeing right now in terms of sell-through on kind of your Fall ’23 product line because it sounds like some of the revised guidance, a lot of that is the macro, but it sounds like some of it is a bit self-inflicted as well. So I was hoping you could address that.
Michael Stornant: Yes. Yes, for sure. I mean, I will address that. I think we’re sitting here today. There’s a lot of things we could be reacting to in the news. We could be talking about weather or student loan repayments or a lot of things in the channel. And what we’re choosing to do is really focus on the things that we can do better. And once we get all of our things in order, then you’ll probably hear us talk about some of those more macro factors. But certainly, it’s a challenged marketplace, but we’re focusing on what we can do better. I think as an organization from a product standpoint, we haven’t had our strongest introduction this year across much of the portfolio. And for us, it begins with product. We ultimately have to deliver innovative, trend-right, colored right, price right, place right products in the marketplace.
And I would say we’re not firing on all cylinders as an organization, which is why 1 of the things that we announced today was this establishment of a new center of excellence to really help our brands, help us build covetable, amazing, awesome products. And I think that’s going to benefit us tremendously as we get closer to the consumer and the marketplace. Certainly, for us is our brand, it’s all a little bit different. And we certainly are seeing some green shoots out there. Some recent introductions by Saucony have checked, and we’re encouraged by that. the Moab 3 for Merrell, which is the #1 hiking boot in the world, and we’re actually seeing some good sell-throughs of that at our key partners. But in total, I would say we are certainly underperforming.
And I think as we work to both stabilize the organization, we have a heads up, a focus on what we can do to drive and improve product pipeline and then certainly ultimately drive brand heat in the marketplace. So those are the things that we’re focused on. Obviously, what we’re seeing in the marketplace is reflected in our guide. But I can assure you, as we think about 2024, the products, especially for our big brands, Merrell, Saucony, improvements that we’re seeing out of Sweaty Betty, which we’re really encouraged by. We certainly see an improved product pipeline and then our ability to reinvest in that demand creation engine for those brands, which is why this cost takeout work that we’ve done is so critical. And I’m thankful that we started that work early and we’re going to be able to reap those benefits for the full year in 2024 and be able to divert more funds towards demand creation, where historically, we have not been as good at that.
Mitchel Kummetz: And I guess maybe just a real quick follow-up on that because you’ve identified a lot of significant cost savings opportunities, but you just mentioned the need to reinvest. You talked about that earlier in your prepared remarks. How should we think about sort of redeploying some of those savings into more investment in the business and the brands.
