Vivien Azer: I wanted to follow up on that question a little bit, but with a focus on BioSteel. Recognizing that there’s appetite to absorb continued losses in FY24 as you continue to grow the top line, certainly, it sounds like with some of the marketing realignment, the nonproductive sampling, revisiting some of the sponsorship agreements that certainly, you’re at least looking to narrow the magnitude of those losses. So, Judy, I was wondering, one, if you could kind of dimensionalize that path to profitability in BioSteel. And then, two, as a follow-up, David, maybe you could just comment on the realignment in terms of the priority retail channels in the U.S. because it seems like the reorientation of the brand kind of moves away from the channels with which you’re most familiar and have the deepest relationships.
So just wondering whether that can create some dislocation in the top line might impede some of the profit improvements that you guys have planned for FY24 on BioSteel.
Judy Hong: So I’ll start, Vivien, thanks for the question. So, to be clear, we are not accepting the level of operating losses that we are seeing at BioSteel today. We understand that BioSteel currently is a sizable drag to our overall profitability. And we are very focused on significantly reducing our cash burn in that business as well as exploring other options to minimize cash burn that is impacting the overall cash at the Canopy level. In terms of, I think, the year-over-year change as it relates to BioSteel profitability, there have been a few discrete items in fiscal ‘23 that did drag the profitability more than, I think, in normal years. We did have sizable inventory write-downs in FY23 as well as certain contract manufacturing costs that are not expected to occur in FY24, just given that we now own our manufacturing facility in Verona.
And we think the rightsizing of the inventory and reducing the current inventory levels will also allow us not to see the level of inventory write-downs that we saw in FY23. In addition, there’s — as I said earlier, we have a number of initiatives to really rightsize our marketing spend and make sure that we can generate a path to being a profitable business for this company because I think the brand is doing really well. It’s just really making sure that we’ve got the right cost structure to support the brand in a way that is more focused and disciplined. And I think that that will also go a long way from our overall profitability standpoint and getting to a significant reduction in our overall cash burn and adjusted EBITDA improvement in addition to the business transformation that we have announced as it relates to Canada and the rest of the businesses.
David Klein: Yes. And Vivien, in terms of channel strategy, I think when you look at BioSteel, first of all, the issues that we outlined related to the brand are really unfortunate because it’s overshadowing the fact that the brand continues to be accepted by consumers and taken off the shelf as evidenced by being up 101% year-over-year. We think, though, that the playbook in Canada is the right playbook to use ultimately in the U.S. And so in Canada, it was a brand that started out in the — on the soccer fields and hockey rinks and in the gyms, kind of building that kind of authentic affinity with its consumer base. And now, you can see BioSteel on the shelf with all of the major retailers in prominent positions and with more and more consumer takeaway.
