Brendan Hoffman: Yes. I mean I don’t think you’re going to see too much of a change there. I think over the last 1.5 years, we’ve tried to price more as merchants and really try to understand what the product attributes are and what we think the customer can pay for rather than just do a strict IMU calculation. I mean that’s going to be even more valuable for us with the profit improvement office and the costs we’re taking out of our input margins and making sure we still price what we think the goods are worth. More of my concern is just what we alluded to was just getting the promotions out of there that have taken whatever price we started at and discounted it. So I think all those brands are in a much better shape and using more analytics to help price the figure out what the initial price should be.
Dana Telsey: Thank you.
Brendan Hoffman: Thanks Dana.
Operator: Our next question comes from Jay Sole with UBS.
Unidentified Analyst: Hi, good morning. This is on behalf of Jay Sole. Thanks for taking our questions. I guess I wanted to ask about the gross margin outlook. It just seems like the — to get to that 42% guidance that you provided, how should we think about the gross margin by half, implying like maybe you could talk about like a 40% in the — around 40% in the first quarter. Like how should we think about the cadence second quarter? And like what does that imply actually for the second half gross margin? And then specifically on the Sperry brand, how should we think about the brand’s turnaround plan, given high single-digit decline guidance for fiscal year ’23? Thank you.
Brendan Hoffman: Yes. I’ll start with the gross margin and let Mike top off and then come back to Sperry. But I think it was — a lot of what I just said to the previous question was the first half is burdened with all of these high costs from last year that we paid for, but didn’t recognize in the P&L when containers were over $20,000, and we were airfreighting everything in and et cetera, et cetera, and the storage costs we’re dealing with now. So as we get to the back half of the year, we see a double opportunity. One, as I just mentioned, all of those are gone and have really flipped the other way. But plus we’re also going to start to get the benefit of the work, the profit improvement office during the last six months as we really work on input costs on materials and other margin components.
So I feel good about the opportunity to not only recapture what we have given away over the last 12 months, but really set ourselves up for the future with new improved margin base. But Mike, do you want to touch on that?
Mike Stornant: Sure. No, importantly, too, I mentioned it in the script, but — in the press release, in the last section, we added a supplemental table that helps, I think, explain the flow of these costs as well as the benefits that we’re seeing from the supply chain improvements, the cost reductions from the profit improvement office. So I think it really helps to guide you both to the expected improvements from cycling away from the transitory costs in the back half of the year and seeing those profit improvement savings start to benefit in Q3. But the margin rates kind of in the back half of the year would start to be in the — certainly in that 43% to 44% range, given that timing. And really important to emphasize that a large amount of the cost that we’re expensing in 2023, especially in the first part of the year.
