Mike Stornant: Well, we can’t — it’s different by brand. We have some brands like our Work business where forward coverage can be very tight because it’s a very tight assortment and in other brands, it needs to be a little bit longer. Lead times impact that. We try to be in that 100-day to 120-day range is optimal, but I don’t think we’ll be to that level until the end of the year. And as far as the other question —
Brendan Hoffman: As far as Sperry goes, as I mentioned, I think we’ve uncovered some stuff that can help us recover what some of what we’ve lost over the last few years, and that will just make the business healthier for whatever track we decided to take it. Right now, I don’t think would be a prudent time to do anything. We’re still working through the Keds transition, which we were thrilled with that outcome. And feel like there’s some opportunities in Sperry that given the macro conditions we should focus on and then reassess.
Sam Poser: Thanks. I’ll jump back in.
Brendan Hoffman: Thanks Sam.
Operator: Thank you. Our next question comes from Mitch Kummetz with Seaport Research.
Mitch Kummetz: Thanks for taking my questions. I guess starting on the gross margin, I just want to better understand the 42% because you’re starting at 39.9% in the supplemental tables. If you kind of net the two pieces together, it looks like it’s a negative $45 million to gross margin. So obviously, there’s an offset there. I’m trying to better understand that. Is it really that in Q4 you should see a big year-over-year pickup, maybe some reversal of kind of Q4 ’22 transitory expenses. And maybe get back to a gross margin in Q4 that’s maybe more similar to Q4 of ’21. Is that kind of the way you get to the $42 million?
Mike Stornant: I think the biggest piece that’s not represented in those tables is, frankly, the higher — whether it’s promotion or just sale of closeout end-of-life inventory. And the mix impact that has on the gross margin, Mitch. It’s at least 100 basis points alone. And we see that improving sequentially through the year and as we work through the end-of-life product. We know that there will be a more “promotional environment” to contend with out there throughout the year through our — all of our channels, but we took an especially hard hit in Q3 and Q4 just selling off the excess inventory. So that’s not reflected in the table, and that’s going to be a major source of margin improvement as we work through, especially in the back half of the year.
Mitch Kummetz: Okay. And then, Mike, from a freight standpoint on the gross margin year-over-year, adding in containers and airfreight and all of that, is there any way to quantify the impact there? Is that better in ’23 than ’22?
Mike Stornant: It’s better for sure. However, we had in the first half of ’22, we have a lot of airfreight. So there’s some puts and takes there. But I would say, again, continue to see improvements there. We actually are finalizing our contract with our ocean carriers in the next month or so. And so we’ll have more information exactly how much better that could be. But we’re seeing strong improvement on the ocean freight. And then certainly, as we get through the year here, we hope to see even more improvements as we solidify those contracts. And it’s certainly part of the savings that we’re counting in our table there as it relates to supply chain costs, but potentially some upside to that number.
Mitch Kummetz: Okay. And maybe last thing real quick. I might have missed it in your prepared comments, but did you guys provide a cash flow from operations target for the year? And if so, what is that?
Mike Stornant: Yes. The target was between $200 million and $250 million of operating free cash flow for ’23. And then driving inventories down $225 million or so kind of at the middle of that range.
