Chris Hufnagel: Yes. And I want to make sure, as we talk about the cost savings and the improvements we’re going to see, as we did this redesign work over the last handful of weeks, we were very focused on protecting our big brands and our growth engines as we did this work. And as we’re building our 2024 plans, we are really setting aside the marketing dollars that we need to reinvest. So as I think about investments still this quarter, we’re making incremental investments this year to get our brands moving again. We’re talking about how we’re spending on our own direct-to-consumer channels and how we’re spending on performance marketing to have a better holiday, cultivate new buyers that will help us in 2024. We’re working across the U.S. wholesale channel, both as we sort of liquidate and move inventory faster and then how we’re engaging with our key wholesale partners to get our brands performing better in those things.
So I think hopefully, one of the takeaways that everyone will have from this call is certainly a restructuring effort that was critical. And frankly, probably a little late, and we probably should have done some of these things much earlier than we did. But we did them now. They will impact the full year of fiscal 2024, which I’m encouraged by. But I want to make sure that the cost saving effort isn’t just going to go to the bottom line. We fundamentally have to invest back in our brands, amazing products, awesome stories. And then I know that we’re capable of driving the business.
Operator: Our next question is from Abbie Zvejnieks with Piper Sandler.
Abigail Zvejnieks: I’m just looking at Slide 9 of the Investor deck quickly about some of the aspirational growth target. So I guess, for the active group, this lays out 7% to 10% revenue growth. That’s like a long-term financial aspiration. What gives you confidence in like what you’re seeing today with the health of the brand that you can get back to that point? I understand making a lot of investments in brand building and products, but just anything that you’re seeing today that gives you confidence there?
Chris Hufnagel: Yes. I’ll start. I mean, and I’ll talk about the active group. I mean, we’ll start with Merrell, the company’s biggest brand, coming off of the best year in the brand’s history in 2022 and 2023 is a difficult year for sure. I think some of the Merrell challenges right now are self-inflicted. We did not manage the Moab 2 to Moab 3 transition well, coming out of the supply chain crisis, how we manage that, really put that brand under a lot of pressure, pressure that we’re working ourselves out of. But that transition of the #1 hiking boot in the world has certainly been problematic. Encouragingly, though, the Moab 3 continues to perform. And as it relates to market share, other than the last quarter, and we’ve had a year’s worth of market share gains.
Merrell’s biggest category though, which is outdoor, is under pressure. In fact, it’s the worst-performing category as tracked by NPD. So there are certainly some headwinds there for Merrell. At the same time, from a brand standpoint, I think the brand is very healthy. We have a very good team in place. I mentioned we have a new CMO joining the company as well. I feel good about the product pipeline as we begin in next year. We are seeing some green shoots in trail run, which is an important piece. But ultimately, we have to be better and expand beyond being so dependent upon just that core hike category. And that’s when I talk about resilient brands that can grow in any environment, we have to become less dependent and move beyond functional footwear.
As relates to Saucony, that category, there are some very hot players in that category right now and it’s ultra-competitive. Saucony arguably competes in the most competitive market of all of our brands. That really comes down to a phenomenal product pipeline than how we drive demand. I think from a Saucony perspective, I’m encouraged by the product pipeline we have in 2024 coming. New introductions for the Ride, Guide 17, the Triumph 22 and the Hurricane 24. You’re going to see our investments behind those core programs for next year. And then this year, when we innovated with Triumph 21, we actually saw a really nice pickup right when that product hit and there actually was a halo effect to the balance of the brand. Saucony ultimately, though, has to open the aperture a little bit.
We certainly have to maintain the edge as an elite running brand. But I think we’ve been too focused on a channel and a core runner — an Elite core runner. And there’s a big — much bigger market opportunity for Saucony, and I’m encouraged by the progress there. And then from a Sweaty Betty standpoint, I think certainly, as you look at our results. I think we’re really pleased by the turn that Sweaty Betty has made over the last handful of months. We have a new leadership team there as well, really sort of driving the retail fundamentals. We’re seeing a nice pickup in sort of core products. And then new categories like outerwear to them, every Tuesday, we sit and analyze every brand of the company, how everything performed last week, and we’re seeing new categories, premium price points for Sweaty Betty checking, which I’m excited by.
And I get in a plane on Sunday morning to fly to London to visit with the Sweaty Betty team into a retail and I can’t wait to get on the ground there and see what’s happening there. So that’s how we’re thinking about the active group in total. It’s a little bit different story by brand. Certainly challenged right now as it looks at it. But as we think about 2024, I think there are plenty of things to be optimistic about.
Abigail Zvejnieks: Great. And just one more, that was just helpful. On just like Morale, I mean, given the results, the stock price? I know Chris, we talked about when you joined kind of had an all hands, and it seems like everyone was really excited about the changes being made. Now that you’ve had a round of layoffs and everything. Can you just talk about the morale of the team?
Chris Hufnagel: Yes. Great question. People and culture are at the very top of my list, things that I care about most. And I think we’re going to hang up with you here in a couple of minutes, and we’re going to — in 15 minutes after we finish, we’re doing another global town hall with all our associates around the world. I’ve been really clear with the teams that we are in a turnaround and it’s really a turnaround in 3 chapters. There’s a stabilization work. There’s a transformation work and then there is the inflection work and I think certainly for us right now as a team, we have been over communicative. We’ve had global town halls every couple of weeks. I’m doing coffee hours, both in-person, with the teams here, along with virtual coffee hours with the teams around the world.
We just completed an internal pulse survey certainly, yesterday, as part of the restructure was a hard day for the team. And those are some of the most difficult decisions we make. But I do think that there is an energy in the company right now of — we know what we have to go do. And now we have to go get after that work. And the only way to get out of this back to what we know that our company’s potential is through the work. So I’m staying super close to the team. I’m very thankful of the way the team has leaned in. In the last 3 months, it certainly has been extraordinary 3 months for us from the transition to navigating a bumping environment. And at the same time, all the change that we’re asking the teams to go through. But this is a resilient team.
