Jonathan Komp: Okay. That’s helpful. Just last one for me, Dave, that the inventory — when I look at the current inventory relative to annual sales, it looks like about a mid-20% ratio inventory relative to full year sales. Prior to COVID, it was more like 18% to 19%. So, is there some aspect of the business that requires more inventory today relative to several years ago, or what other factors are you looking at when you highlighted the comfort with the current inventory base? Thank you.
Dave Loretta: Yes. longer term, as Sam described, some of the sourcing initiatives and even the logistics initiatives, those will enable us to turn inventory quicker, be more — shorten the lead times on new products and allow us to operate with less inventory relative to sales. In this environment that we’re in, we’re getting the product in that’s new and fresh [Technical Difficulty] and really still coming off with some of the supply chain issues from the last two years, our focus was more about making sure we’ve got fullness in our assortment, the size ranges, and we’re measuring where the categories really have relevance to the customer. So, I’d say, inventory turns are going to improve this year. So we’re moving in the right direction.
But the urgency isn’t to manage that down and stifle the demand from a customer standpoint. And so, it’s a secondary initiative, primary is to keep the brand robust with newness. And — but we’re confident that inventory turns will return and even exceed any prior year period that we’ve realized because of those investments.
Operator: Our next question will come from Jim Duffy with Stifel.
Jim Duffy: Dave, thanks for all the help all these years. Dave, I’m going to let you off easy and I think focus most of my questions to Sam. Sam, can you please just speak to marketing strategies for the second half of the year? I’m specifically interested in media mix and messaging and messaging as it relates to branding versus specific products? And then, I’ll have some follow-ups. Thanks.
Sam Sato: Yes, sure. So, as you know, Jim, marketing is a fluid and dynamic complex part of the business. And we continue to learn more and more about the right combinations to engage our customers. And just at a high level, we’re focused on — specifically, we’ve got this great loyal current customer that’s been with us. And so, we want to make sure that we’re continuing to serve up product and content that keeps them engaged with our brand as well as new customer acquisitions on an improving trend. And obviously, our focus to continue to build on new customers and bring new folks into the brand is a critical component. So, across the spectrum, where we have found continued success, it’s a combination of top of the funnel in terms of brand building, and that really comes through a lot of streaming.
When it comes to traditional network television, as an example, when we place big bets during certain times of the year and specifically around certain programming, we get a pretty good lift in visits to our site. And then when it comes to our current consumer base, when we want to talk specifically about products, product features, bring, for instance, Wayforger stories to them, we do that largely through social media and different social owned platforms, and we get big lift from that, including video content, whether it’s our YouTube channel or other places. So, it’s — we’re targeting into what is a really broad mix of media. Streaming audio has become really important to us. And so, that’s become a big part of our initiative. And so, really, it’s based on where we’re trying to attract a broader visibility and brand awareness, that influences where we invest.
And then when we go deeper into the funnel, where we’re trying to create greater education and understanding around our product innovation that leads ultimately to transactions. We’re doing that on a much more personalized targeted basis.
Jim Duffy: Okay. The follow-up and related question, the gains you’re seeing in women’s and AKHG suggest that the core men’s offering is in decline. I understand you have a lot of newness coming for the second half of the year. But can you speak to how you’re allocating marketing spend to recruiting new consumers through women’s or AKHG versus stabilizing that core men’s offering or trying to drive growth in that?
Sam Sato: Yes. So the men’s business for the quarter was down 3.5%, but it was an improved trend from Q1. And I think what’s exciting is what we’re seeing is some of our core offer for men’s that we’re bringing newness to whether it’s new colors and fits in our big Longtail T program or we’re really starting to see increased demand for our Double Flex denim pant and we’re bringing additional styles, washes and fits. So, some of that core program, as we’re evolving it a bit, I talked in my prepared remarks about new items like the new Fire Hose pant, which is our most durable Flex Fire Hose fabric to date. Those are things that we’re doing to renew and evolve many of our core programs, which we believe over the long term, we’ll bring that core business back to growth.
Specific to women’s, we’re really excited, and we talked 1.5-year or so ago about the women’s opportunity, not only being a really great white space for us but has become one of our internally focused strategic initiatives. And we continue to see season-over-season not only growth in top-line sales and profitability, but we’re getting more and more feedback from her and really allowing us to extend our brand and our offer into adjacent categories. As an example, base layer, women’s intimates really, really competitive market. And yet as we’ve introduced it and have gotten feedback and learned more about what she wants and potentially what’s missing in the marketplace, our product development and design team has done a great job of bringing that to market and having it be a part of our assortment.
And that business just continues to grow and expand. And so, I think that we’ve got a tremendous opportunity to really optimize a women’s offer, which today, while it’s much larger than it was 1.5-year ago, it’s 35% of our total. And so when you think about that in the scheme of things, we got a long way to go in terms of building that business. And then lastly, specific to your question around marketing, we really don’t look at it as an either/or. We’re going to invest in those businesses for him and for her. And we’re going to do it in a way that’s appropriate, not only from a brand position, but in terms of frequency and the types of stories that we tell. And so, we don’t look at it as trading off dollars. We allocate certain monies at the beginning of the year, but our brand and creative teams really have the flexibility throughout the year to change and rebalance and refocus initiatives based on some of the things that we’re seeing relative to consumer demand or consumer feedback.
Jim Duffy: That’s helpful. Thanks. And Sam, just from a standpoint of allocation of capital, can you speak to any differences in cohort, your behavior that you’re seeing between men and women. I’m curious whether she is a higher lifetime value or has higher repeat purchase frequency than your male consumer.
Sam Sato: Yes, it’s interesting. At a high level, what’s always been fascinating to me at Duluth and something that I think is it’s hard to develop. And so when you have it, you have to make sure you keep your eyes on that. And that is we’ve talked about we have a 50-50 ratio of women and men buyers. And while our business isn’t 50% women’s and 50% men’s, we have a lot of female buyers that are buying for him. And so, that’s also what’s led to our belief that there’s an opportunity for us to better assort our stores and provide a more compelling offer specifically for her because she’s shopping our brand. And so, what we’re seeing is as we’re expanding the women’s business, we’re seeing frequency, and with our most loyal customers basket size increase. I wouldn’t say it’s necessarily more men than women. I would just say in totality, as we’ve expanded into women’s and added additional categories, we’re seeing, for sure, more frequency in shopping.
Operator: Our next question will come from Dylan Carden with William Blair.
Dylan Carden: I just want to make sure I understand kind of the balance of the guidance here. You’re coming out of the second quarter with the nice, least inflection here, seemingly in sales of cleaner inventories. But the incremental downside to margins on the year is still kind of a promotional overhang. Do I have that right?
Dave Loretta: That’s right, Dylan. That’s really the update that we made was an overhang, given the pricing pressures that we think will continue.
Dylan Carden: And so, I guess, the question embedded in that is, do you not feel given kind of what — are you giving the inflection through heightened promotional activity? Has that sort of ticked up incrementally? You’ve kind of been asked this, I guess, different ways on the call, but I guess, why not kind of hold price more as opposed to give up the margin?
