Nearly $50 million is related to costs that are on the balance sheet and are coming through in 2022 — I’m sorry, in 2023. So costs that we have great visibility to. We know the timing of those expenses and will be behind us by the middle of the year. So that’s one of the major issues that’s suppressing gross margin in the first half of the year. I think the second part of your question is on Sperry and the trajectory there. I’ll let Brendan start.
Brendan Hoffman: Yes. I mean with Sperry, I mean, we’ve really done a lot of work over the last three or four months to be in perspective on what’s wrong with the business, what we’ve done wrong, what we need to do differently and really focusing on Sperry’s recovery. And we realized over the last few years, we’ve taken some missteps in product we’ve been chasing product that others had success in, but really weren’t relevant to our customer. We need to refocus on boat and making boat cool again. And that includes focusing our co-labs and marketing. Around boat with new updated styles that really resonate to the core. We were late to recognize that the duck boat trend was declining and replacing it with more fashion boots like the Torrent that provide function, as well as updating our marketing to focus on what our core is looking for.
We took some big bets with people like John Legend and one, we didn’t have enough money to then go ahead and amplify the collaboration, but also it wasn’t core to what we were trying to do. So I think we’ve uncovered a lot about getting back to the core. We let fashion go — historically, core was 70% of our business focused around boat boot and boat that dropped to 50% over the last couple of years and just — it did not work out there in the marketplace. So I think the team has done a great job now understanding that better and using 2023 to reset the mix. And one very positive thing if you saw the New York fashion shows, there was a lot around prep, and that’s a big pillar for Sperry. In fact, they were showcased in the flu and food show, which is Elizabeth Hilfiger’s product line.
She really leaned into prep and Nautical and styled everything with Sperry. So there’s some real opportunities out there. We need to take advantage of, but I think the biggest thing for us is recovering some of the steps we’ve made.
Unidentified Analyst: Great. And if I may add just a very quick one on capital allocation. You mentioned that the plan is to get to have a healthier balance sheet by the end of the year focused on deleveraging. But how should we think about that in terms of the buybacks? We’ve seen like hasn’t been really — they haven’t really been taking place since, I think, second half of 2022. So how should we think of that in 2023 and beyond 2023? Thank you.
Mike Stornant: No. Our priority now is to continue to pay down debt for the balance of the coming year here. And as we see opportunities, certainly, we’ll consider those other opportunities, but our primary focus will be on deleveraging.
Unidentified Analyst: Thank you very much.
Operator: Thank you. Our next question comes from Jim Duffy with Stifel.
