Clearly, we just came across the fourth quarter of 2023 where that was the case. So I’ll put a check mark next to that for a job well done by the team. We said that Adore Me needed to continue to grow both in sales and profitability. They were relatively close to their targets for 2023 and we have plans for growth in 2024. So we feel good about that element of the model. We said the gross margin rate would go up, would increase both based on sales, but also based on some of the cost work that we’re doing around cost of goods sold. You started to see that come through in the fourth quarter and that’s embedded in our first quarter guide. So that is working as intended. The expense rate we said needed — we needed about a 1% to 2% increase in sales to leverage on expenses.
That’s not our current forecast for the year. However, our internal plans that we review on a regular basis with the board were comfortable that our expenses are in line and would be leveraging if sales were up 1% to 2%. We also said that our debt to EBITDA or our leverage ratio should be 2 times or less. And we just came across the year where that is true as well. So the single biggest challenge in the model right now is the North America sales trend and that’s what would be driving the majority of the flow through that you’re challenging. So, I’m confident that the gross margin — when I look at estimates, actually our gross margin rate was likely above the street for the year, even on a lower sales. When we look at expense rate and leverage opportunities, in any given quarter Ike, we’re talking about expense dollars that are up minimally year-over-year.
It really comes back to the North American sales element. Even in the first quarter that we just guided to, when you start to work through the model, I think you’re going to find that we’re talking about expense dollars maybe being up $10 million to $15 million year-over-year. And as a business we continues to invest in technology and continues to want to provide for a good and merit, etcetera. I think those numbers are probably pretty minimal relative to what you might see elsewhere. So I feel good that expenses are well under control. It really comes back to the top line movement that we need to see in North America. The second part of your question around share repurchase, I think we mentioned in our prepared comments that there is no assumption for share repurchase activity in our guidance for 2024.
So we worked with our board of directors and we aligned on a share repurchase authorization candidly based on feedback from shareholders that they wanted to know and feel confident that we could be in the market at any given time. But at this time, we’re not providing a forecast on how we might go into the market or when. We’re very focused on making sure that we’re trying to increment the trend of the business, stabilize and improve the profitability in a down intimates market. We’re very focused on making sure that we’ve got sufficient liquidity to execute our strategies and when we know that we do based on our forecasts. So future decisions on capital allocation and share repurchase will be made in concert with the board on a quarterly basis.
Hope that helps.
Irwin Boruchow: Yep it does. Thanks.
Operator: Thank you both. Our next question now is from Simeon Siegel with BMO Capital Markets. And sir, your line is open.
Simeon Siegel: Thanks. Hey, everyone. Good morning. Martin, how are you thinking about marketing this year? I guess last year you had a tour in Mariah, I assume some big investments that were going to be lapping. So any learnings on those spends? How you are planning marketing this year? And then just maybe a little higher level, just recognizing the industry’s top line pressures are what they are. And then TJ, the point you just made about despite operating profit guide down the gross margin is showing improvement. Any changes in how you are thinking about the value of promotions and maybe balancing the focus on revenue versus profits? Thank you.
Martin Waters: Yes, thank you, Simeon. Good questions. I’ll Start with the marketing. We plan to invest marketing dollars at about the same percentage of sales that we did in 2023. So continue to invest in the brand. Essentially that’s across the five areas that we talked about at our investor day. So firstly, in terms of customer, really deeply understanding the customer, segmenting the customer file, building data and personalizing. So more and more of our spend is going through personalized marketing, particularly through social media, but also through curated online experiences through the app and on site. Continued investment in our brand focusing on relevance and brand heat, positioning around powerful, confident, sexy on her terms and then supporting product launches.
Our broader category appeal beyond intimates, getting back into sport, all of those initiatives will be supported with marketing dollars. And trying to find ways to go to market that are at the intersection of brand and product and entertainment. And to some extent, the World Tour was a sort of a tiptoe back into that last year. As we hindsight it, I would say we got enormous media coverage, like 17 billion media impressions that were in excess of 80% positive, so that was good. We were part of the narrative about popular culture and that was certainly our intent and it gave us some good assets that we could use in the fourth quarter marketing. To a large extent, it met our objectives. However, I think about the way that we went to market during the fourth quarter is more of a sequence.
