Sean Sullivan: And, George, just to clarify, I guess what I was highlighting in the script was we’re going to see about $85 million of CapEx, obviously very much focused on the ball and club segments and franchises to continue to support the growth. I talked about some of the technology investments, but specifically distribution and customization was about taking ownership and control of the quality, lead times, and delivery of our product. I think David talked about the specific segments and products that are within this Massachusetts distribution and customization facility, primarily FootJoy and Gear. So those were really the comments in my script that I was highlighting.
David Maher: George, the final point I’ll make is we’re a lot bigger than we were three, four, five years ago. So our historical distribution methods have been pressured. So this is as much a commentary on building a distribution network for the future, recognizing it that our past infrastructure was taxed to the point where we had to make some meaningful changes.
George Kelly: Okay. That was helpful. Thank you.
Sean Sullivan: Thank you.
Sondra Lennon: Thanks, George. Operator, next question.
Operator: Thank you. Our next question is from Noah Zatzkin from KeyBanc Capital Markets. Noah, please go ahead. Your line is open.
Noah Zatzkin: Hi. Thanks for taking my questions. Maybe first, if you could give just an update on the competitive environment and channel health and footwear, and maybe the unlock as you see it from FootJoy, FootLab. And then second, any color on the differences in the markets outside of the U.S., both from an industry and strength of sport perspective that’s kind of baked into the guide would be helpful as well. Thanks.
David Maher: Yeah. So specific to footwear. I’ll walk it back a bit. And we saw that inventory globally spike, really in Q2 last year, and then we saw it retreat in Q3 and Q4. We like where it’s trending. We think we’re in the back half of a correction, maybe 60%,70% downfield on the correction but we’re going in a good place. And if you see a situation like that and it corrects itself in less than a year, we feel pretty good about it. So as we’ve guided, we think we work our way through it, through Q2, and then return to sort of a more normal, healthy cadence within footwear and should return to more normalized growth. And you said it, part of it is a response to the after-effect of COVID where there was a time when the marketplace had an insatiable appetite for footwear and then demand normalized.
The other part of it is you saw a lot of new competitive entries into the marketplace. I am pleased with, in particular, how FootJoy share and premium positioning has held up during this time. And I think that’s commentary on a lot of the great products they’ve brought to market, particularly on the premier franchise. And I think we continue to build upon that with SLX and traditions and some of our newer footwear models. Again, I think we’re in the back half of that correction and after two-quarters of inventory reduction. And when I say that, I’m speaking to global inventory at retail. And the final point I’ll make on that is we’re pleased with our inventory in-house. It’s down quite a bit from a year ago, so we think we’re healthy and nimble and agile.
So we like where that positions us. In terms of your second question, how we feel about markets around the world? I’ll start with U.S. market was clearly the strongest in 2023, and we don’t see that changing in 2024. There’s a vibrancy in the U.S. market that I think everybody’s in tune with. As we look around the board, I’m not sure any one market jumps out, right ? We’re projecting growth in EMEA, in Korea, and Rest of World, so there’s not a market that stands out. I do like to call out Korea just because it’s such a vibrant golf marketplace. I’ve said before, the average course in Korea does about 70,000 rounds a year, which is extraordinary, just a strong demand, vibrant golf marketplace. And then the only other comment I’d add is EMEA.
We’ve all been cautious and careful about EMEA, certainly in 2023, whether it’s inflation or energy costs or the war, I thought it held up pretty well last year. And the outlier, if you will, would be the UK, where golf remains vibrant. And in particular, golf tourism is really at terrific levels. So that’s a high level of our perspective as to key regions around the world.
Noah Zatzkin: Thank you.
Sondra Lennon: Thanks, Noah.
David Maher: Okay. Thanks, everybody. As always, we certainly appreciate your time this morning and your interest in Acushnet. Hope you all have a great spring and we look forward to talking to you again on our next call.
Operator: Thank you, everyone, for joining today’s call. You may now disconnect your lines and have a lovely day.
