And we know that, that bar is high for the consumer. In terms of your question, in terms of what’s changing it, we’re focused on brand building, delivering product excellence and great execution, including with strong inventory management. And what’s changed the trend and it’s changed pretty dramatically in the first quarter, we see an improvement. I think, number one, we’re up against easier compares from a year ago, but we’ve also accelerated newness. As we — being a direct-to-consumer model, we see the trends happening and we understand what consumers are responding to. And we’ve leveraged our agile supply chain to pull forward newness and that’s had a big impact on our results. As we’ve talked about in the first quarter, quarter-to-date, our business running roughly in line with last year.
So we’ve seen a nice turnaround there. And we’re continuing to focus on driving a healthy business staying close to our consumer and delivering that great product that the consumer continues to respond to.
Scott Roe: And Lorraine, this is Scott. Maybe just to build on how that translates into the numbers too. We’ve given guidance for North America to be up slightly through the year, but really that trend that Joanne just mentioned that we’re seeing right now is what’s reflected in the first quarter, again — against an easier comp, it distorts the year-on-year percentages a little bit. When we look at the balance of the year, it is very balanced, right? First half, second half and we’ve taken that trend on a go-forward basis in our assumptions. It’s not heroic. It really reflects what we see on the ground right now and the trends that we see.
Lorraine Hutchinson: Thank you.
Operator: Your next question is from Matthew Boss of JPMorgan.
Matthew Boss: Great. Thanks. So Joanne, with the improvement in North America, how would you assess the overall health of the handbag and accessories category globally today or maybe how best to break down your 3% to 4% revenue guidance between AUR and units? And then, Scott, excluding the pause in share buyback associated with the transaction, I guess, has anything changed with your underlying plan for $5 earnings in FY ’25? And can you speak to the free cash flow profile post integration and just the opportunity that this provides multiyear?
Joanne Crevoiserat: So thanks, Matt. I’ll pick up the first part of that question in terms of the handbag category. This is an incredibly resilient and durable category. And we’re seeing it, again, as we go through incredibly choppy demand environment around the world, the consumer continues to engage with this category in a very strong way. And it has a — the category has proven to be durable through downturns, resilient and coming out of downturns. And the challenges that we faced over the last three years have really helped us to navigate different headwinds in different regions of the world. So as I look at our business, and the consumer response to the category, we’re seeing really strong growth in our international businesses, even while the business in North America may be relatively challenged.
And as we look forward, our outlook is for growth in every region in fiscal ’24, slight growth in North America, but a continuation of the strong trends we see in international markets and our business is positioned to take advantage of those trends, both regionally and by channel, wherever the customer chooses to shop, we’re in a great position to take advantage of those trends. And these are trends we’re seeing today when a lot of the tourism business that maybe we have relied on in the past has been a bigger part of the business. We’re driving this business with more local consumers and we expect over time that tourism to rebound and that will be an added benefit to our business. So a strong and durable category and we’re well positioned to capitalize on that going forward.
Scott Roe: And that’s the perfect build, Matt, on your question around how we see the $5. The business has momentum, we’re coming from a position of strength and there’s no change in the fundamental outlook that led us to talk about our confidence in hitting the $5. As you rightly pointed out, the pause in share repurchase does impact EPS, but not operating earnings in terms of those assumptions, right? So if you think about that impact, there’s two factors. We don’t buy back as many shares. So the average share count is obviously going to be higher than previously assumed. On the other hand, we’re accumulating cash, right? And that cash will be available at closing to help pay down debt. In the meantime, it’s going to earn interest.
So the net of those two things on a cumulative basis are about $0.35 and we’ve previously already said, I think, in the press release, that’s about $0.10 in fiscal ’24. And then you asked about free cash flow, that’s the exciting part sitting as a CFO here. When I look at the potential of this transaction, first of all, just a couple of data points that maybe ground everybody, there’s about $1 billion in cumulatively, if you just add up the two companies today and the generation of cash flow, right now at this point is in excess of $1.5 billion per year, right? And we’ve said that when you consider synergies and growth over time, that number exceeds $2 billion on an annual basis. So $2 billion of free cash flow focused really acutely in the short term on paying down debt.
