Alex Perry: Hi. Thanks for taking my questions here. Just first, can you maybe talk through what is embedded in your guidance in terms of wholesale versus D2C? I think at the Investor Day, you talked about modest 1H wholesale growth. Is that sort of the case and how you’re thinking about the full year? Thanks.
Jim Swanson: Yeah. I think to the degree we provided detail from a channel perspective, it’s a little bit higher level, Alex, but we are anticipating after an incredibly solid year from a wholesale perspective in 2022 that the D2C business would outpace wholesale growth in 2023. So, a couple of factors there. One, continued investment in what we’re making in from a digital and e-commerce perspective. And then as you think about the brick-and-mortar side of our business, we did add a fair amount of new stores in 2022. So we’ll be lapping the opening and the annualization of those stores in 2023 plus we’ve got a handful of new stores also planned from a growth standpoint.
Alex Perry: That’s really helpful. And then I think a lot of people have asked about your sort of balance sheet inventory, but I wanted to ask sort of about your — how you’re thinking about channel inventories. How are you sort of viewing that both for you and others that you compete with? Do you feel like channel inventories are in a good place? Or do you think that retailers will be carrying over inventory into sort of Fall 2023? Thanks.
Tim Boyle: Yeah. So we monitor something in the range of 85% of our North American retail customers’ inventories, so we can gauge how we’re doing there from a sell-through perspective on our brands. And what we’re seeing is generally average to slightly better than average sell-through performance when you compare with prior periods, including pre-pandemic prior periods. So we can’t see visibility on other brands, but as it relates to ours, we’re in a good position and when that would be approximately where we’ve been in the past. So weather plays a big portion in the second half business and the residual inventories. So, as you can see in the great cold weather that’s going through North America today, it’s making up a very big impact on the liquidation for our retailers. So our expectation is once the winter is done, that will be a good, solid, clean position with our merchandise.
Alex Perry: Perfect. That’s very helpful. Best of luck going forward.
Operator: Next question is coming from Alex Douglas with Cowen. Alex, excuse me. Please proceed.
Alex Douglas: So I just wanted to go back to the question on Fiscal 2023 gross margins and maybe how that’s broken down. Is there any more detail that you could provide on maybe specifically the impacts from freight and promotions and maybe kind of cadence throughout the year would be very helpful? Thank you.
Jim Swanson: Yeah. And if you reference the CFO commentary we provided, there’s a bullet point list there, but I can speak a little bit in terms of the relative weighting of these. So, lower inbound freight costs, that will be a — we anticipate, we’ve built into our guidance a very significant element of benefit there. And in 2022, I mentioned it was about 180 basis point headwind to us in gross margin. And that was also a headwind to us in the latter part of 2021. And with freight rates being down basically where they were in advance of the escalation we saw in those costs, we should be getting most of that back in 2023, and that’s built into the outlook that we’ve provided. To a lesser degree, there is some favorable channel mix shift as our D2C business is anticipated to outpace growth across the rest of the business.
And then the big offset in here is going to be the expectation around promotional levels coming back down to more normalized levels and is also working through getting our inventory clean. So, there’s a sizable benefit from an inbound freight standpoint it’s going to be offset to a pretty good degree given promotion levels and clearing through the inventory.
Alex Douglas: That’s helpful. Thank you.
Operator: We have reached the end of the question-and-answer session. And I will now turn the call over to management for closing remarks.
Tim Boyle: Great. Thank you very much for listening in. We’re looking forward to a great 2023 and being able to update you as we go along during our next quarterly call. So thanks for listening. We’ll talk to you soon.
Operator: This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.
