John Kernan: Excellent. Thank you.
Operator: Your next question comes from the line of Laurent Vasilescu from BNP Paribas. Please go ahead.
Laurent Vasilescu: Good morning. Thank you very much for taking my question. I wanted to ask first on my one question Andrew, in 4Q, DTC was up 37%, while wholesale was down 4%. Could you probably share with us, how we think we should think about those two channels for the first quarter as well as the full year? And then a bigger picture question on footwear. Could you maybe share with the audience how big Solomon footwear, was for 2023? Where can it go over the next few years? And are there any key learnings that you can share, from Salomon’s success in footwear that could extend into Arc’teryx? Thank you very much.
Omar Saad: First to Franco and the Salomon Footwear.
Franco Fogliato: Yeah. Look, we see in Q1 in particular the pressure remaining. We said earlier, the pressure on the order book is there from a wholesale perspective, but DTC performance is very strong at the moment and we see that momentum in DTC to continue in Q1 as well as the strong momentum in Asia. So we’re very confident we’re off a good start to the year.
Stuart Haselden: Yeah. Thanks. And then as you think about, DTC versus wholesale, obviously, wholesale was down for all the reasons we talked Q4, very promotional environment, excess inventory. We do not anticipate wholesale to be down like that as you move forward. In fact, we believe that wholesale will be — for us wholesale will be for the full year up high-single digits and DTC will continue to be up around, in the 30s, like below 30%. And that’s how we blended.
Laurent Vasilescu: That’s very helpful. If I could squeeze one more in, how do we think about China for this year, Andrew, if you can give some color on that in terms of growth rate?
Andrew Page: With regard to the China, the region, we still expect China to see a very strong growth rate. Again, when we talk about disciplined planning, you’re going to see us plan a number in the high 20s, low 30s, but we will have the inventory to be able to service it if the demand is there.
Laurent Vasilescu: Thank you very much.
Operator: Your next question comes from the line of Jonathan Komp from Baird. Please go ahead.
Jonathan Komp: Yeah. Hi. Hello. I want to follow-up on the five year targets for Technical Apparel. The targets imply reaching well above $3 billion of revenue over the next five years. So, Stuart, I’m just wondering as you think about Arc’teryx, the long term opportunity, how do you size up the potential and what are some of the key drivers you’re looking forward to in the near term here?
Stuart Haselden: Hey, Jonathan. So, yeah, we’re very excited for the prospects for the brand globally. We see a long runway in every region. In North America, we ended the year just under 50 stores. We see the potential for over 200, and we see exciting, additional store runway in Europe and Asia, both in China and outside of China. So the very, sort of concrete objective way we’re seeing the success in our store strategy is probably the easiest way to think about how we see the revenue development towards the five year targets occurring, we’re equally bullish on our digital business. In North America, our digital business is about the same size as our retail business. And, it’s an exciting, omnichannel strategy that we have, where channels really closely intertwined.
So, we capture demand and fulfill that demand in a very cross channel manner in North America as well as Europe and Asia. Our business in China is more weighted towards retail. And so the store business there is a bigger part of the overall mix. But we also see the continued focus on product innovation. So while we have an exciting channel expansion story, the investments that we’re making and the leadership position that we have in the market and product innovation is critical, to how we see our success developing as well. So, the footwear launch that we have happening this week, tomorrow we’ll actually launch three new footwear models. The first of which that have been designed in our Portland, footwear, design center, is emblematic of our commitment to innovation and success that we’re creating through that strategy.
So, I would see certainly the channel expansion, product innovation. And then the third one I would highlight is really investment in our brand and our community strategy. So the brand is very undeveloped or the awareness levels are quite low, in most of the geographies where we operate. And so how we’re able to drive brand awareness will also drive engagement with the brand, traffic conversion to our channels. So we see the investments that we’re making across our brand and community activities as a third element of how we will achieve the targets that you mentioned.
Omar Saad: Operator, I think we have time for one oh, sorry, Andrew you had something.
Andrew Page: Yeah. Hey, I just, I want to go back and correct a comment. So on the last question, I think this is an important comment for all of you guys, for my correction on. Wholesale for the full year will be up mid-single digits, I think it’s a high single digits, so mid-single digits for the whole year, retail up right around 30%. And in the Q1, as you think about it, wholesale will be down slightly to flat to last year. I remember last year was a very strong wholesale Q1, and DTC will be up around 20%. So I think it’s just to make sure that you guys update your models to reflect that.
Omar Saad: Operator, time for one more.
Operator: Yes. Our final question today comes from Yiren Lu from CICC. Please go ahead.
Yiren Lu: Yes. Thank you for taking my question. I just have a long term question for Arc’teryx. As you have mentioned, the Arc’teryx expansion, the DTC expansion in the United — in the North America is a very important strategy for us. I just want to know, while we are very glad to hear our new flagship store opening in North America recently, what has been the changing part of our DTC expansion? And what are our unique strengths that make us doing better than our competitors? Thank you.
Stuart Haselden: Yeah. Hey, Yiren. It’s Stuart. So, yeah, North America, we see an exciting story emerging, DTC story, as you reposition the brand from primarily wholesale to now primarily direct to consumer over the last three years. And we’re seeing exciting trends in Canada and in the United States. We’re probably a little farther ahead in Canada, as it’s our home market. But we’re really bullish on the United States as well. And so we’ll open a couple of flagships that I mentioned. In Toronto, we’ll open a 8,000 square foot flagship, on Bloor Street. In New York City, we’re going to open a 14,000 square foot, flagship, in the heart of SoHo on Broadway, that we’re super excited about Manhattan in July in the summer. But the overall momentum that we’re seeing across every part, every region where we’re operating in North America is pretty exciting and it’s quite balanced as I mentioned between our retail strategies and our e commerce strategies.
And as you ask the question like how are we winning market share and how are we distinguishing ourselves in the market, we view Arc’teryx as the pinnacle competitor in the outdoor space. We believe we have the very best products, the highest level of innovation, the highest level of quality that separates our products based on the merits of its performance. And we complement that with what we believe is, really the only vertical brand in the outdoor space. And so, we are building community where we open stores. We are engaging, with our customers in a way we do not see other brands doing. And when you listen to how other brands talk about how they develop their business, they talk about their stores as a transactional platform. We operate our stores as a part of the communities where we operate and we want to engage, in those communities.
A good example of this is our rebirth strategy where we not only want to sell you a jacket, we want to help you maintain it. We want to help you clean it properly. We want to help ensure that it’s repaired when it needs it. And then when you’re ready for a new jacket, you’re going to trade it in and we’re going to keep that jacket, in service with another guest through our [indiscernible] program. So, we believe this creates a very distinct business model, that is, that is separated in the marketplace today, and is part of the success that we’re achieving.
Yiren Lu: Great. Great.
Operator: And that’s all the time we have for questions today. I’ll now turn the call the call back over to Omar for closing remarks.
Omar Saad: Thanks everyone for joining. We’ll see you after next quarter.
Operator: This concludes today’s conference call. Thank you for your participation and you may now disconnect.
