Operator: And our next question today comes from Warren Cheng with Evercore ISI. Please go ahead.
Warren Cheng: Hey, good morning. I wanted to ask about the Champs reposition. Are you making any tweaks to your strategy for Champs specially outlined for us in March given what’s been a pretty significant impact from the reposition? And also, is there a way to quantify the impact of the actions you’ve taken around speaker launches and pulling some Nike away from that banner?
Franklin Bracken: Yes, I’ll start. Thanks for the question on Champs. So as you recall, we talked about our sneaker growth map and then our new portfolio strategy. And Champs is very clearly positioned what we call the active athlete, which is over a $10 billion market opportunity here in North America alone. And then there’s also very good adjacencies in what we call the quality seeker and the fashion forward expression And so that’s where we pivoted and repositioned the Champs brand, which is a meaningfully different place than it has been in the past and also very differentiated from Foot Locker. The team is making very good progress on what we call the three consumer pillars: that’s performance; sport style, which has led to apparel; and then sneaker essentials.
And in fact, we just got done resetting one of our core stores here and are very happy with how it’s turning out. We’ve got another 20 that are planned for the quarter here. And we are starting to see some improved performance, and we’re also getting very good vendor support, which is important as we think about ’24. So we start to lap some of the difficult comps in terms of the Nike reset and some of the decisions we’ve taken, we expect that we’ll see improved performance through the end of the year. And then obviously, we’ll talk at a later date about our expectations for 2024.
Warren Cheng: And just a follow-up on who that Champs customer will be once the banner is fully repositioned? Is the idea there to win new customers that weren’t previously served by Foot Locker Inc. banner? Or is it more about segmenting serving your existing base?
Franklin Bracken: Yes. I think it’s a combination of both. I think we see an opportunity for new customer acquisition. When we talk about some of the performance brands, ASICs, Brooks, Under Armour, I think those are brands that have arguably been underrepresented in our Foot Locker banner. Think about our Foot Locker share in Nike at 16% ex that, we only have an 8% share of the rest of the market. And so Champs is a really great opportunity to extend that vendor assortment with a real keen focus on performance and sports style again, led through the lens of apparel. So I think it is truly incremental. So it’ll be some migration to consumers, but also the acquisition of new consumers along the way.
Operator: And our next question today comes from Kate McShane with Goldman Sachs. Please go ahead.
Brooke Roach: Good morning. This is Brooke Roach filling in for Kate. How are you feeling about footwear channel inventory across the marketplace today? And as you think into the — as you look into the back half of the year, what are you expecting for the competitive environment and for the magnitude of markdowns as you move through back-to-school and holiday?
Mary Dillon: Thank you for your question. I would say that what we’re seeing is a couple of things. One is that our customer being somewhat under pressure in terms of household budget and being [indiscernible] discerning, price sensitive in an environment that is promotional. And we would expect that, that will continue as we go through the year. It’s a somewhat higher inventory — elevated inventory. We’re all competing for that share of wallet. So we would expect and that promotional level will continue through the rest of the year.
