Matthew Boss: Great color. Thanks.
Harmit Singh: Thank you, Matt.
Michelle Gass: Thanks, Matt.
Operator: Thank you. Our next question comes from the line of Dana Telsey of Telsey Advisory Group. Your question please, Dana. [Operator Instructions]
Dana Telsey: Hi. Best of luck, Chip, you’ll be missed and hello, Harmit and Michelle. As you think about the wholesale business — hi, Michelle. As you think about the wholesale business in each of the different regions and you think about the path through 2024, given you talked a little bit about the improvement in the US, anything you’re doing in terms of activating it differently by region and how you’re thinking of pricing by region and how you build up the gross margin? Thank you.
Michelle Gass: Sure. Why don’t I talk about the sales side of it and Harmit can also talk about the margin and profitability, both of which were optimistic, but we’re being cautious as we enter the year. So, I think that really the wholesale conversation is largely across the US and in Europe, both of which, as I was saying earlier, we’ve had — it’s been a volatile past year, as I was talking about earlier, but we feel good about the areas within our control. The pricing we took, we have no additional plans to take further pricing really across the board. We feel good about what we did do in the US. We’re seeing the traction there. Specific to the US, we had a lot of congestion this past year in our distribution centers. That is behind us.
And the inventory positions are really solid in the channel for us and for our customers. And so I believe we are primed to take advantage of the demand that’s there. And as we presented newness to our key customers, they’re excited. So, we talked about lightweight denim, that’s across all channels, Performance Cool. And then also, as I was mentioning earlier in my remarks, we have a new non-denim offering that’s going in both channels, wholesale and DTC, our active Tech Pant, which is non-denim, have a lot of performance attributes that truly is a product that people can wear out and about on a hike, in the office, et cetera, multiple colors, five pocket, chino. So that is a big launch here in the US. We’ll see how that goes. That could be a global opportunity.
And then specifically to Europe, to your question, again, we are leaning into the consumer demand, but we’re also being realistic given the macro headwinds there and the pressure that we see with some of our key customers. But similarly, we’ve been working closely with them on innovation and needs and there’s been great response on lightweight denim. As I was talking about women’s fashion, so the low loose response to denim dressing. And to me, a really key data point in Europe wholesale is that our pre-book for the second half is positive. And so as we look to the year, we are optimistic to see an inflection point in the back half of the year as it relates to Europe wholesale. And candidly, for both markets. And that’s complemented, of course, with the strength in our DTC business, which continues to perform very strongly.
Harmit Singh: And, Dana, to your question on gross margin across regions and pricing, we haven’t built in a lot of pricing in ’24. We’re just conscious of a value-conscious consumer and the pricing we have taken. We haven’t built in price reductions. And what we did in the US is it. So, as you think about AURs, the growth and the channel mix, higher DDC, as an example, and higher international offsets the price reduction impact that we see in the first half of pricing actions we took in the US. If you think about across the regions, I would say Latin America and Asia see a little bit of FX impact on gross margin. And as you think about the US in H1, there is the anniversarying of the price reduction we took. So, you’ll see that margin impact in the US as against other regions. So that’s just a little bit of color.
Dana Telsey: Thank you.
Michelle Gass: Thanks, Dana.
Harmit Singh: Thanks, Dana.
Operator: Thank you. Our next question comes from the line of Laurent Vasilescu of BNP Paribas.
Laurent Vasilescu: Good afternoon. Thank you very much for taking my question. I want to follow-up on Jay’s question on the $100 million cost savings program. Harmit, I think there’s some savings across the COGS line and this SG&A line. Can you just kind of give us a rough shape of that across the $100 million? And then a second quick question here. Bangladesh, I think is an important sourcing hub. They did raise minimum wages nicely, over 50% a few months ago. Just curious to know if you’re going to see somewhat of an impact on that or you even able to offset that from the wage hikes? Thank you.
Harmit Singh: Yeah. The — Laurent, the $100 million is mostly SG&A. There’s probably a minor in COGS, but mostly SG&A. At this point, as we continue the program, we’re going after driving more productivity in assortments, et cetera. So that’s going to probably come over time. To your question about Bangladesh, yes, we did see it, our COGS guidance assumes the inflation that you’re talking about.
Laurent Vasilescu: Great. Thank you very much.
Aida Orphan: Thanks, everyone for joining the call and we look forward to speaking with you in April.
Michelle Gass: Thank you.
Operator: This concludes today’s conference call. Please disconnect your lines at this time.
Harmit Singh: Thank you.
