Q4 2023 Under Armour Inc Earnings Call
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Good day, and thank you for standing by and welcome to the Q4 'twenty three earnings conference call.
At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session you'll need to press star one one on your telephone you didn't hear an automated message advisor in your hand is raised to withdraw your question. Please press star one again, please be advised that today's conference.
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I'd now like to turn the call over to Lance Omega SVP of Investor Relations Corporate development. Please go ahead.
Thank you good morning, and welcome to the normal fourth quarter and full year fiscal 2023 earnings conference call today's banking recorded for replay.
Joining us on today's call will be under armour executive Chair and branch, Kevin Plank, President and CEO , Stephanie monarch and CFO , Dave Bergman. Our remarks today include forward looking statements that reflect our numbers management's current view and certain forecasts elements of our business.
2023.
Statements made are subject to risks and other uncertainties detailed in documents regularly filed with the SEC, including our annual report on Form 10-K, and our quarterly reports on Form 10-Q. Today's discussion also includes the use of non-GAAP references under armour believes these measures provide investors with helpful perspective on underlying business trends.
These are reconciled to the most comparable U S. GAAP measures reconciliations of which along with other pertinent information can be found in this morning's press release, Robert Dot com with that I'll turn the call over to Kevin.
Thank you Lance and good morning to everyone joining us on today's call.
And under Armours, 18th year as a public company I'd like to thank our shareholders for their continued support and belief in the dream, we collectively sure.
Your trust and confidence of empower us to become one of the world's largest athletic brands responsibility that permeates everything we do.
However, we also know that it has been at times and inconsistent journey. One we acknowledged has not created shareholder value that we see this brand capable of.
Over time, we've seen periods of significant growth and challenges that have tested our grit and resolve along the way.
In response to these we've built a tremendous foundation of talented people operational and financial agility, and most importantly brand love.
With new leadership in place continued strategic evolution and a renewed mindset I am both proud and confident the steps we've taken that put us in a position to begin to reach the full potential. We all believe is available for this brand.
Next to me is under Armours, New President and CEO Stephanie Lennart.
With less than three months in the role she has been hard at work assessing under Armours capabilities leadership talent and focusing on the strategic priorities necessary to put us on a path towards reigniting growth.
Deep brand and consumer expertise and a fresh perspective on the business have laid the groundwork for challenging some of the ways that we work and Reenergize the leadership team across UA as we lay out the growth strategy in our next chapter.
I was one of the most unique brands and sports under armour has a right to compete at the world's highest professional levels are legitimate.
Field authentic athletic presence with tremendous headroom from which to grow.
This coupled with broadening our aperture to include sports style box, a significant evolution in our journey and our ability to win the hearts and minds consumers everywhere.
Witnessing the emotional connection between under armor and young athletes the insights we gain and the enthusiasm of our team as we continue to evolve our strategy is infectious.
Our history has deep our confidence is strong and our commitment is all encompassing.
None of this is possible without innovations like the products, we deliver to our global roster of teams and athletes that continue to push the boundaries of what is possible.
That's one of the most iconic athletes and under Armours history. This couldnt be sure then our partnership with Stephen Curry.
In late March we announced that we are deepening our partnership with Stefan by forging a long term commitment.
Together, we are dedicated to pushing performance and prioritizing the impact of sport our communities worldwide and we see growing the Curry brand, it's one of our more significant catalysts.
Under this new deal Stefan also becomes a meaningful shareholder a testament to its long term commitment to our joint success and belief in an incredibly bright future.
This brings us to another highlight of the quarter.
Stefan said, everyone has to come back to their roots to remind themselves who they are.
Well, we did just that with the relaunched protect this house a tenant of under armour, that's ubiquitous with perseverance.
Protect this house is not merely a tagline.
Ethos and the bedrock of our messaging.
Putting cry for UA athletes that Galvanizes unity, and a mindset for switching effortlessly between offense and defense.
With Activations in the months ahead, we will continue to add dimension. So this iconic phrase across some of the most important sporting events and social platforms.
Encouraging the next generation of young athletes to protect this house.
From energy comes opportunity and the product spectrum of good better and best.
Under armour has built a 6 billion dollar brand with a lot of good products.
Our amount of better.
And the opportunity with consumers for much greater representation of best level products.
Great example of why we believe we can be successful in this strategy, our better and best focus is the real time reaction, we have seen with the under armour slip speed.
Our versatile trading sneaker engineered with our current flow out so better racing system and the defining feature of its convertible heal.
Launched in February .
$150 game changing innovation with a design that is on point and is being authentically adopted by athletes everywhere quickly, becoming one of our most reviewed products and carrying a 94% recommendation rating.
Available in full price UA direct to consumer and a select number of partners, including Dick's Sporting goods here in the United States.
With the global launch Rolling out now in EMEA and APAC.
Along with well orchestrated authentic storytelling UA slip speed is working.
This is a prime example, and template of what we will do moving forward innovative product inspirational design.
It factor that only UA com brand and.
And our product pipeline is full inclusive of new innovations like slip speed and specifically ensuring that we finish the play on slip speed by bringing the technology to additional sneaker categories. Soon that makes this a platform and not just a singular shoe.
In addition to new innovation. Our pipeline also consists of some of our past greatest hits that we will be re introducing to athletes and have great confidence that that heritage of success.
Combined with our modern 2023 lens is a great formula for us to pursue.
We will ensure this cadence of new becomes a consistent theme of product freshness from Yue.
The key to continuing to unlock this consistency is pulling the best product lines the planet together.
The good news is that we have great talent at UA, We're now empowered to ignite this plan of product attack.
But I've also been proactive and recently, bringing on a few outside experts in both apparel and footwear to help exploit our incredible product opportunity.
Moving forward, we will continue to challenge and energize ourselves and the industry to create even greater excitement in the marketplace. We also know that doing business as usual doing what we've done in the past just slightly better is not enough.
We are committed to the principles that guide us here and understand the urgency to become better focused and more aggressive in managing for growth.
And the trust youre, placing enough to get this done.
I believe that trust is built in drops and lost in buckets. This phrase has been front and center in our culture for years. It plays a part in consumers' decisions about what to buy where teenage choose to work with shareholders.
Tried to invest.
In Newsweek's 2023 survey that ranks so most trustworthy companies in America across those three criteria.
Under armour ranked number one as the most trusted company in our sector.
Congratulations to the 17000 strong UA teammates, whose character ethics and leadership earned this recognition one drop at a time well done.
But it is now time for us to marry the fundamentals that make you a great brand and trusted company with groundbreaking innovation style storytelling and execution for consistent growth and increased shareholder return.
That I will hand, the call over to Stephanie.
Thank you, Kevin and good morning, everyone.
I will open my remarks today by underscoring that I am honored and thankful for the conviction that Kevin and the board has placed in me to lead under armour.
In the past that led me here respect for iconic and innovative brands loved for sport and admiration for under armour is hard earned and unique reputation have remained a constant backdrop.
Reflecting on my first 70 days here, it's been exciting intense and eye opening there.
There are quite a few topics I plan to touch on today, and I will be as transparent as possible about my observations and thoughts thus far.
Having learned much in a short time I will say that the potential for this brand is even bigger than I imagined when I walk through the door at the end of February .
Hi, I'm realistic about our challenges and I am confident that we have the right core components and are developing the right plans to reignite growth in the company and to create value for shareholders.
That said like any athlete, we must measure ourselves against our competition and potential.
Operating in the athletic performance sportswear and retail sector, which is a huge addressable market and consistent revenue CAGR to tap into we have yet to capitalize on our full potential.
For athletes customers and shareholders, we must realize this potential and stop at nothing until we deliver renewed growth.
Growth is without a question our highest priority.
Throughout my career I have prioritized people and believe that the only way to succeed is to have a great team around you.
This is something that I noticed right away at under armour.
The teammates working here, our talented hard working and passionate about our purpose of empowering those who strive for more and our mission to make athletes better.
This NRG will be a crucial asset as we leverage our strengths drive through areas, where we need to finish the play and accelerate our ability to reshape our future trajectory.
Under armour has always had a unique strength and the commitment and engagement of Kevin plank, bringing his passion and energy to the business in ways only a founder can do having.
Having worked in a founder led culture for the past 25 years I know firsthand the advantage that this presents.
Over the past few months I have had deep dives with teammates key wholesale customers athletes and have piled through a mountain of analyst reports.
As a result, there are three areas that I would like to address today as an initial assessment of our strengths and opportunities.
Brand.
And North America.
In light of this I have set three priorities to drive clarity and business alignment across the company.
And appropriately we are calling this protect this house three or <unk>, three which is about three big things over the next three years.
With the plan taking shape I am excited to share my initial ideas on it today and look forward to providing more details and progress reports in the coming quarters.
Of course execution will not happen overnight, it's a journey that will require.
We acquire improved execution in some areas, new talent and greater accountability for our leaders to drive positive and tangible business results.
At its core it's adult focus.
Execution and accountability.
With that let's start with brand.
Under armour is one of only a few brands that can be found on the field to play globally at the highest levels of competition, meaning under armour products are chosen by professional athletes, who trust us to equip them as they pushed the boundaries of what is possible.
With the demand to support nearly 6 billion in expected revenue in fiscal 'twenty for our base business remains solid and sizable yeah.
Yet we are not pulling in our fair share of market growth.
I believe a causal factor here is the inconsistency of how the under armour brand shows up across our regions with the most significant opportunity to improve in the United States.
Outside the United States, Our brand has received and it's most premium position in Europe .
This results from nurturing strong quality wholesale relationship.
Disciplined channel segmentation and consistently optimize brand activations.
And this of course shows up in our results.
In fiscal 'twenty, three EMEA was our highest growth region with a 23% increase in currency neutral revenue.
Moving forward, we will continue to build on this momentum focusing full funnel media and sports marketing efforts, especially with global football in the UK and Spain to win with 16% to 20 year old varsity athletes.
In APAC, particularly China under armour is viewed as what locals generally describe as a professional athletes brand. So the connection of brand heat delivering results continues to be consistent with our objectives.
Growth wise fiscal 'twenty three was challenged in the first nine months of the year due to ongoing lockdowns and market disruptions from lingering COVID-19 impacts as.
As we ended the year, however, currency neutral revenue was up 31% in the fourth quarter. So the environment seems to be normalizing more now.
With fitness as a tailwind improved storytelling and a growing loyalty program in China, we remain bullish on the region's future.
In North America, specifically the U S. There is no question that athletes loved the under armour brand and while our consumer insights tell us that we have tremendous brand awareness. There is also a high level of latent brand equity.
Leighton because consumers are aware and engaged yet conversion is more enormous then it should be.
I attribute this state inconsistent execution across our product marketing and retail efforts.
The lining products to be premium at every price point to disciplined channel segmentation to more consistent product marketing there is a significant opportunity to activate more simply across the dimensions that matter and drive improved brand affinity.
So how is this translating into action.
From both the global and U S perspective, we're assessing how our products athletes and marketing strategies are or are not breaking through to reach our target consumers.
From brand Activations to our roster that includes Stephan Curry, Justin Jefferson Jordon speed and others, we have a massive investment in place yes.
Yet it is clear to me that we are not capitalizing on our assets to our best advantage or return.
Driving brand heat of course is not a one size fits all approach we cannot simply apply the same storytelling product and distribution strategies across the regions and expect to generate the same levels of brand globally.
Yet unifiers can be crucial to driving consistency.
As Kevin mentioned, one Unifier, we are all proud of is the relaunch of protect this house.
Since then the execution of our teams and positive response from consumers has been impressive and inspiring and a simple reminder of the strength of under Armours core brand DNA.
Reinventing protect this house is a new call to action for young athletes, who has motivations differ from the generations, who came before them. We will continue to be brought to life across many dimensions, including this summer women's World Cup.
Targeting targeting young women, our World Cup campaign will feature Kelley O'hara, and Alex Greenland and the journey to compete highlighting the grit edge and swagger necessary to perform on the world's most elite stage.
Employing a digital first content strategy that distorts beyond typical media placements, where we're utilizing an always on approach to meet athletes, where they live train compete and recover.
Also local activations like our all American and UA next events will continue in North America and transition into other regions like EMEA to drive brand advocacy further.
Taking a step back to accelerate my understanding of how the various components of these elements play together I have made some leadership changes and we are in the midst of a search for a chief consumer officer.
So for now the heads of brand sports marketing and digital all report directly to me.
As I get closer to these areas of our business and continue to assess our needs. We are working on adding new world class marketing and commercial talent to ensure our teams have the right leadership and capabilities to fuel our growth expectations.
To wrap up this section when taken in total drive global brand with a focus on the U S becomes the first of three priorities that I laid out for the company.
With love for our brand that plays considerably larger than the business.
I'm confident that simplification and doing more with less will be an outstanding unlock to generate excitement and increase conversion towards greater top line growth.
Okay.
Next up is product.
From a core athletic performance perspective, we continue to deliver industry, leading innovations that once athletes have them they can't imagine living without.
That said, we haven't finished the play on becoming premium at every price point, nor created a critical mass business and the better part of the product pyramid assess.
Especially in footwear, where most of our peers enjoy considerably larger businesses.
From any cuts footwear remains our single most significant growth opportunity.
We have built a successful $1 $5 billion footwear business, which is challenging given the barriers to entry and competition.
A large part of this momentum is due to our focus on building franchises, which have resulted in loyalty and repeat business from.
From velocity Phantom and Infineon and running to Curry breakthrough in spine in basketball to our coveted highlight and spotlight cleats and American football. This business has established gaming strength and ready to realize greater future potential.
That said you will hear us talking a lot more about sneaker culture, especially as we open the aperture to sports style.
Additionally, under armour sneakers are right for collaborations which will become a larger part of our future offering.
To do this and do it well we are bringing in sneaker and branding experts, who will add industry proven design horsepower to the team.
Especially as we expand our sports style offerings.
Ultimately, it's about getting the right talent in the right place to ignite our product and marketing engines and performance and style.
Our performance apparel business also continues to deliver on our promise to make athletes better.
With a strong portfolio of products that have made us famous like heat gear cold gear and compression, we have an excellent base to leverage two into existing and new categories.
In our current lineup rush NRG peak woven flex woven and vanished along with our broth collection. They all continue to elevate our premium offering.
Additionally, given our strengthened partnership with Steffan, there is a significant opportunity to amplify the curry brand in basketball and categories like golf.
And speaking of golf, we are working on a premium collection in partnership with a top designer to be launched this time next year.
Strengthened by one of the world's best players Jordon speed.
Golf is a business that I believe we have underserved as of late and it is an area, where we have a right to win where product performance and style win the day.
So expect more here too.
Another significant opportunity as our women's business as a woman and an athlete I believe we make exceptional women's products in specific collections.
However at less than a quarter of our revenue we are still not cutting through enough to realize the growth available in the marketplace.
In apparel, we have had success, specifically with our bras and bottoms products, but we have yet to make our definitive must habit product. So that it is top of mind as we work to drive more significant growth.
Footwear must also be part of the long term equation to grow the women's business.
And here too we have a solid base from which to grow but we need accelerators.
The consistency of great design that and the all important style factor across the entire offering is not where we needed to be and where I am confident we can take it.
So to underscore this opportunity we will go after women harder than this company has ever seen full stop.
Another important area of opportunity is sports style, where we have begun leveraging the credibility of our solid athletic performance foundation to compete deeper across the marketplace.
Here, we are progressing by repositioning some of our current products and showing them and non active occasions. The live part of an athlete's debt.
To be clear sports style through an under armour lens is the intersection of our style and design meet performance.
This means easy to wear premium executions of fabric fit and finish.
With a robust product roadmap continuing to take shape due to the product design cycle. This business will not become a material driver until fiscal 'twenty five.
So we have seen early success in our essentials and unstoppable apparel collections fleece and warm ups and we are looking forward to new offerings as our slip speed footwear platform adds new options. This fall.
Of course footwear women's and sports style are not mutually exclusive they are a venn diagram of opportunity that takes our total addressable market to more than 300 billion globally.
That said linking back to our first priority brand heat must always work symbiotically with product and I don't believe we've done a great job at this consistently.
Through research, we have discovered that even our athletes are not fully aware of the depth of innovations we offer.
The opportunity to close this gap will require the redeployment of dollars to support better storytelling to enhanced demand here.
Here too we are on it.
So all of this translates to our second priority, which is deliver elevated design and products with a focus on footwear women's and sports style.
And this brings us to the third area, which is North America.
Assuming we execute well with the first two priorities drive global brand heat and make better products, we expect growth to return to North America in fiscal 'twenty five.
Digging into this a bit more historical context is important to understand where we were and where we are.
Following the sector wide promotional environments of 2017, and 18 and the current one which started last year.
Under armour is continuing to navigate a legacy of higher than desired promotional activities in our home market.
I believe this can be attributed to many of the factors I have discussed today and consistent product marketing and segmentation discipline, along with sector wide inventory malaise, all of which have constrained brand affinity in the U S.
That's not to say, we have not made progress and the quality of our U S business for example, going into the pandemic, we exited undifferentiated wholesale doors reduced our off price exposure by more than two thirds and reorganized our people systems and processes.
As a result, we have seen customer acquisition and retention metrics improve establishing a healthier base for growth.
In North America, we run a very productive and profitable outlet business with our factory house concepts, but these represent about 90% of our physical DTC locations in the region.
That leaves only 18 full priced brand house stores in our home market.
Not many places where we can showcase our brand and the best presentation possible.
So compared to the roughly 70 525 split that many of our competitors have working for them.
This is an opportunity for premium growth.
As such we plan to focus our full price stores and productivity and consumer experience driven by smaller easier to navigate store formats, better storytelling to appeal to young athletes exceptional customer service and always being in stock.
By the end of this calendar year or full price concepts will also be revamped to showcase sports style products with a more robust curation.
Longer term, we want to build on this progress by expanding the number of full priced house stores as we protect us.
Nearer term based on learnings from our flat Iron New York City pop up as part of the slip speed launch we are working to identify additional ways to support critical moments like sporting events competitions and festivals.
From a digital perspective, we will continue to work to reduce promotional activities in our E Commerce business.
However in short order you a dot com must become a showcase for our brand. So we are investing in improving the digital experience, including better product presentation, streamline checkout and faster mobile site speed.
The team understands the interconnectivity between physical and digital retail and is making the right investments to ensure that our stores and website drive more meaningful sales across our broader north American ecosystem, including our wholesale partner business.
That said, we are making good progress with our U S loyalty program, which we plan to rollout more broadly later this year based on our successful pilot.
Early reads continue to show meaningful improvements in metrics, including higher conversion rates and average dollars per transaction and program members versus non members in our test markets.
In our wholesale business, we have solid relationships with best in class sports specialty and department stores and pure play E Com companies.
Phil here to the critical mass in our U S business is oriented towards good level products. So we have an opportunity to build out the better and best part of our segmentation.
In addition, we continue to evolve our strategic partnerships towards areas, where we believe we are underpenetrated, including the mall and run in golf specialty shops as examples.
To wrap up this becomes our third strategic priority, which is to drive U S sales.
Improving our U S business is critical to growing our global business.
As the most profitable region growing faster here means more future dollars to invest in product marketing and our international business as well as increasing returns to shareholders.
Okay.
With that you now have the three initial priorities I've mandated for under armour over the next three years PTH III.
SaaS driving global brand team stay relentlessly focused on elevating design and building better products and drive growth in the U S.
As I said, while these priorities are clear there are at a starting point and we have just begun thinking about how we can make you a better and I look forward to providing more detail on these in coming quarters.
I Love and believe in under armour and I couldn't be more excited to be here I want this brand to win to really win by achieving the vision, we all have for it.
We are operating and executing with our eyes wide open.
We know there is much work ahead of us and that we must move with urgency.
Although fiscal 'twenty four will be a year of building as we lay the groundwork aligned with our priorities.
I am confident that we will achieve the growth and profitability that I know this brand is capable of over the long run.
Now is the time for bold decisions and distinct actions that yield results are.
Our athletes teammate shareholders and brand deserve it.
And with that I will pass it to Dave to review, our financial results and outlook.
Thanks, Stephanie and welcome to your first earnings call at under armour.
As a nearly 20 year veteran here My love for this brand runs deep.
Having worked closely with Stephanie in her first few months here or desire to execute for sense of urgency.
And most importantly, our dedication to motivating and inspiring and energizing the team have been magnificent.
With PTH three underway I am confident the path were laying to drive increased brand E.
Elevate our product and drive growth in the U S will create a more advantageous position to unlock more consistent sustainable growth for our shareholders over the long term.
Diving right in fiscal 'twenty three results were in line with our expectations. When we closed out the year with a solid fourth quarter with revenue up 8% to $1 4 billion on.
On a currency neutral basis revenue was up 10% in the quarter.
From a regional and segment perspective.
Fourth quarter revenue in North America was up 3% driven by growth in our full price and off price wholesale businesses are.
Our DTC business was flat during the quarter with solid e-commerce growth offset by softness in our retail stores.
In our international business EMEA revenue was up 14%.
We're up 20% on a currency neutral basis, driven by strength in both our wholesale and DTC businesses.
APAC revenue was up 24% in the quarter were up 31% on a currency neutral basis, driven primarily by significant growth in our wholesale business benefiting from China's reopening and an easier comp against last year's meaningful COVID-19 impacts.
We also saw solid performance in our South Korean business.
Revenue in Latin America was down 8% or down 13% on a currency neutral basis, primarily due to a temporary fulfillment issue that impacted our wholesale business.
From a channel perspective.
Fourth quarter wholesale revenue increased 10% driven by solid performance in our full price business and growth in sales to the off price channel.
Our direct to consumer business was up 3% led by 6% growth in our e-commerce business and 1% growth in our owned and operated retail stores.
And licensing was down 3% due to softness in our Japanese business.
By product type.
Apparel revenue was up 1% with strength in our golf and run businesses, partially offset by softness in train.
Footwear was up 27% driven by strength in team sports run and golf.
And our accessories business was down 1% with strength and team sports and outdoor offset by softness in train.
Relative to gross margin.
Our fourth quarter declined 310 basis points to 43, 4%.
This decline was driven by 400 basis points related to higher promotional activity within our DTC business as we manage through prior season products.
Unfavorable pricing related to sales to the off price channel.
70 basis points of unfavorable product and channel mix.
And 40 basis points of adverse effects from changes in foreign currency.
These headwinds.
<unk> were partially offset by 180 basis points of supply chain benefits related to inbound ocean and air freight <unk>, which more than offset product cost and freight to customer headwinds during the quarter.
And 20 basis points of favorable regional mix driven by higher APAC sales.
Moving down the P&L.
SG&A expenses were down 4% to $572 million.
Primarily due to lower marketing spending and lower incentive compensation during the quarter.
Our fourth quarter operating income was $35 million, thus in line with our previous expectation.
After tax we realized a net income of $171 million or <unk> 38 of diluted earnings per share during the quarter.
Excluding an 87 million fourth quarter benefit primarily from a tax valuation allowance release related to prior period restructuring.
Our adjusted net income was $84 million or 18.
Adjusted diluted earnings per share.
From a balance sheet perspective.
Inventory was up 44% to $1 2 billion, which came in better than a 50% increase we had anticipated.
As mentioned earlier this negatively impacted gross margin, but was a result of a proactive choice to reduce inventory levels, which was prudent given the dynamic industry environment.
That said the composition of our inventory is generally current and healthy and.
And about half of the $366 million year over year increase is pack and hold the service designated future demand.
To wrap up our cash and cash equivalents were $712 million at the end of the fourth quarter and we had no borrowings under our $1 $1 billion revolving credit facility.
Looking forward we are.
Closely watching several factors, we believe will continue to impact our business, including consumer spending and retail demand, especially in our largest market of North America.
We are also monitoring the pace of inventory normalization globally across our peers and key wholesale partners.
As Stephanie mentioned fiscal 'twenty four it will be a year of building for under armour as we focus on implementing our PTH three priorities and leveraging our innovative expertise to drive into new categories and markets.
Within this context, we are laser focused on expense control as we shift investment dollars to the areas that underpin these efforts.
So jumping into our initial outlook for fiscal 'twenty four.
We expect revenue to be flat to up slightly with North America expected to be down slightly.
Our international business to be up at a mid single digit percentage rate.
For gross margin, we expect a full year rate to improve by 25 to 75 basis points from last years rate of 44, 9%.
Primarily driven by tailwind related to lower freight costs.
These tail winds are expected to offset negative impacts from channel mix as we anticipate revenue from the off price channel to increase yet still remain within our 3% to 4% of revenue operating principle.
And higher promotions, primarily in our DTC channel as we continue to work through inventory.
Next we expect SG&A to be flat to up slightly in fiscal 'twenty four.
We will prioritize investments that support the three strategic priorities that Stephanie outlined while continually looking for ways to simplify and optimize our cost structure.
This translates to an expectation that operating income will reach $310 million to $330 million.
As a percentage of revenue. This represents an operating margin of approximately five 5% versus four 8% for fiscal 'twenty three.
Dropping this through we expect diluted earnings per share for fiscal 'twenty four to be in the range of 47 to 51.
A slight decline as our effective tax rate normalizes back to a low twenties percentage rate following fiscal 'twenty threes onetime events.
Next I want to provide some color on the first quarter of fiscal 'twenty four.
From a revenue perspective, we expect sequential improvement in quarterly growth rates as the year unfolds as our priorities takes shape in our wholesale order books gained momentum.
That said for the first quarter of fiscal 'twenty four we anticipate a low to mid single digit revenue decline amid a challenging U S wholesale landscape.
Next we expect the first quarter gross margin to declined 75 to 100 basis points as higher planned promotions continue to outpace freight tailwind.
After that gross margin should expand for the rest of fiscal 'twenty four.
Considering these factors, we expect a slight operating loss in the first quarter with a diluted loss per share of three to five.
Turning to inventory.
As a reminder, our levels were especially lean through the summer of calendar 2022, due to our previous constraints strategy and supply chain disruptions from prior periods.
Thus, we are still normalizing in our first quarter.
Accordingly, we expect inventory to be up in the high <unk> percentage rate at the end of Q1.
The high single digit rate at the end of Q2.
And then decline in the second half of the year to end fiscal 'twenty for around $1 billion.
So as we move forward into fiscal 'twenty four our teams are driving hard to position under armour to win in the long term through our <unk> PTH three strategic priorities, while smartly managing expenses and deploying resources to areas with the highest returns.
As these initiatives take hold and we drive greater global brand heat.
Deliver elevated design in products and excite consumers, we look forward to returning to growth in North America in fiscal 'twenty, five while maintaining positive momentum in our international markets.
We are confident that with the necessary focus execution and increased accountability across all levels of the organization.
Under armour is on the right path to achieving better growth and profitability.
With that we'll turn it back to the operator for your questions operator.
And thank you.
As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Please standby, while we compile the Q&A roster and we please ask that you limit yourself to one question and one follow up again Thats one question and one follow up and one moment Bob first question.
Okay.
Okay.
And our first question comes from Jim Duffy from Stifel. Your line is now open.
Thank you and good morning, everyone welcome Stephanie Thanks for sharing your vision.
I wanted to start on brand and product in the U S. Definitely you referenced and consistent Tees in the U S market, how do you fix the inconsistent season reawaken engagement.
Curious as the wholesale distribution is appropriate.
And we appreciate you all more depth in the best categories do you need to allocate some of the good product offerings representation to elevate the brand and reawaken engagement.
Well, thank you Jim and good morning on I'm happy to be with all of you today.
As it relates to the product inconsistency challenge or the inconsistency challenge overall.
First of all you are right, it's not something that can happen overnight, but we are already starting to move on this one of the first things that we're doing is positioning some of our existing products and a more premium way. We do have some products that are best part of the pyramid and we're repositioning those products right away through better storytelling.
Selling and better merchandising, primarily through our own stores and on our website. So that's really step one and what we can do.
In the near term from a broader perspective, it really does get to building out the better and best part of the product pyramid, what I am most excited about in terms of driving consistency and driving growth is what we're going to do with sports style.
As I mentioned in my prepared remarks that triples, the size of under Armours total addressable market to 300 billion.
Big part of sports style is going to be footwear.
Women not exclusively but those are big areas of growth for us and there again, it's going to be a two step process its not going to be done overnight phase one we'll start with that repositioning of our existing products. I mean, we have some great stuff to be more specific around unstoppable joggers or our fleece graphic tees.
Yes.
The summit net sweatshirts to name just a couple of things. So we're going to we have some great stuff, we're going to merchandise and market in a different way as I mentioned the phase two was again, where youre going to see new products that are consistently.
<unk> delivered and it's also not just about the products, it's about the marketing and where we distribute them. So we've got a lot of new efforts underway about how we're going to market in a different way and particularly to new consumers and then on the distribution front. It's what we are going to continue to of course work with our <unk>.
<unk> wholesale partners, but I think we're going to open up new doors of distribution to in the mall, New department stores et cetera, and of course, our own channels will always be a focus but to just step back and summarize the answer to your question around consistency is thats really going to be a two step phase one and phase II approach.
Okay, Great and then you have this.
<unk> four product newness and increasing the frequency of newness I'm curious PPI targets to benchmark Q2, or do you have any specific objectives for penetration of new products.
As a percentage of the mix.
Yes, so we are.
Great question, we are putting together.
Kpis and metrics around the percentage of products that better and thus bucket there.
Our growth trajectory will continue to do voice of the customer work to understand how consumers are relating to that better and best part of the pyramid and of course talking to our customers. So we are putting together that scorecard of Kpis as we March forward.
I've been here two five months. So we're just getting started and I'm pulling that together, but we're hard at work at it so Kevin anything to add from your line, yes. Thank you Stephanie.
Before I answer that Jim.
Let me just say how great it's been having Stephanie here in 70 days she has gotten.
Completely.
At a level of depth of the company, that's pretty remarkable to be honest with you and bringing a world class executive experience.
And Thats not something shared by me I think if you pulled our team would be universal across the brand and so welcome Stephanie So what you're hearing is what you see is what you get very exciting for US I think is one of the things. We're Stephanie has asked me to lean in and my role is on the product side of the business and as you know Jim innovations.
These matters under armour slip speed is a great example of that if something fresh and new.
Coming out most recently, but we also have great innovations like our <unk> pocket pants.
Our new Meridian line that we have out in full force.
A steady cadence of new product is probably the right way to think about it.
One thing that I use. The example of slip speed, we launched it on October 31 of last year on Halloween with a soft launch. We then came back on Valentines day, I think making those holidays famous for the consumer to start expecting innovation and newness from under armour is one of the things you will see.
But that of course is echoed by a consistent cadence of product coming out.
That is we say likes to blow consumers' minds, we've been around long enough to actually have legacy products as well. So in addition to new innovation coming from our teams Youre also going to see some of these reinventions of previous.
Under our greatest hits as I mentioned in some of my comments that we've had.
From footwear, which I think Stephanie emphasizes us moving from a footwear culture to a real sneaker culture here at under armour is critical.
That will come through with things like performance Wise, where this brand actually won the New York City Marathon last year with sharing the Katy.
All the way to Stephan Curry, what he is doing on court and don't forget about Joel Embiid, who just won the MVP as well and so our choose absolutely play.
But there is an emphasis for us of getting those ourselves.
Beyond the courts fields in pitches.
In terms of the two and from situations, especially the incredible enough to work in that tunnel work type of scenario.
And then from an apparel standpoint, we think we've got the ability to leverage our great great force of under armour being sort of the chalk when it comes to.
Apparel innovation and what we're doing to tableau consumers' minds. There. So we feel like we've got a great opportunity and as Stephanie mentioned, we're also working with.
A few outside experts as well in both apparel and footwear to make sure that we're leaving no stone unturned.
The ability for us to own what we own which is things like the T shirt that people expect from us as.
As well as looking at co lab opportunities.
With a with a real focus on things that matter are relevant to the UA brand.
Thank you Stephanie and I look forward to your influence on the business.
Thank you Shannon.
Thank you.
And one moment for our next question.
And our next question comes from Simeon Siegel from BMO capital markets. Your line is now open.
Thank you everyone and good morning, welcome Stephanie look forward meeting you in person soon.
So like when your excitement.
Your savings for growth from here is really coming across most of the year recognizing that under armour has always been about growth can you just elaborate a little bit more and I apologize. If some of this gets repetitive, but it would be interesting to hear what gives you comfort in the opportunity for growth now and maybe why it's different than the past.
And then how youre thinking about the balance of growth versus the focus on improving profit dollars into 'twenty four as you talk about the.
The turnaround there and then into 'twenty, five as well and beyond thanks.
Sure of course.
It gives me so much confidence about our opportunity to grow the company significantly is this strong base we have in performance.
I've been really lucky in my first two five months to meet with some of our athletes and coaches in athletic directors people like Justin Jefferson <unk> Freeman from Notre Dame and I knew it before I came here, but it's even more apparent to me that athletes absolutely love under armour. They believe in the performance of our products. So we're come.
From that place of strength as we as we lean into things like sports style, which again triples, our total addressable market. So that gets me excited.
Through the key elements of our strategy, which are really all about product marketing and distribution at the end of the day and doing that in different ways better product marketing in different ways distribution growing the doors. We're in from a wholesale perspective being a better partner to our existing wholesale accounts.
Improving our own retail stores, improving our website, but why the devil is always in the details.
When you're running a company and to me why I know we can pull this off is three things and I mentioned this in my prepared remarks, but let me explain a little bit more it's about focus execution and accountability.
Got here there was a long long list of projects and efforts that the company was trying to tackle and a lot of what you've heard today I recognized some of it isn't new but what we've done is we've really narrowed down the list of projects and efforts for the next three years. So we can be laser focused.
Focus like leads to results this exit.
The second thing is about execution, it's all about making sure that we're breaking down silos across teams the product teams. The marketing teams the teams out in the regions running our business day in day out so I'm spending a lot of time and effort on how we work together as a team to drive the business.
And then third accountability.
I am holding myself my executive team the entire team accountable for business results and it's all about results at the end of the day I very much recognize the time for action is now we need to deliver and that's what I'm holding myself and the team accountable to so it's not always the most glamorous part but.
It is the tactical things that have you pull off a strategy at the end of the day focus.
Execution and accountability and as we do that we are laser focused on driving the topline, but equally focused on driving bottom line and profitable growth.
I'm spending a lot of time understanding where the profit comes from an under armour and diving deep to understand that side of the business too. So at the end of the day, it's about driving profitable growth and that is how we will be measuring ourselves not only in fiscal year 'twenty four of core spend in 'twenty five and.
Beyond where we think our efforts will really start to take off.
Yeah.
Thank you that's great and maybe just following up on that and maybe for you or for Dave just thinking about the composition of the moving pieces embedded in the gross margin guide for the full year any way to help think through those puts and takes.
Yes, I mean, there's a couple of things that are going on there.
Absolutely we're excited about some of the the tailwind that we're seeing on the freight cost side, whether it be the ocean carrier rates that have normalized a lot but also.
Just a lot less utilization of airfreight now that supply chain is more caught up and we're in a better spot there as well.
But on the flip side, we're also being real relative to what's out in the market. There is some fairly heavy inventory levels out there not just in North America, but a little bit in other parts of the world as well and we want to make sure that were planned to be able to move through that and so that includes a little bit more sales to off price channel.
Even though we're going to keep it within that 3% to 4% range of revenue. It also means that we will utilize our outlets more for even.
Higher percentage of excess product.
Which has a little bit of an impact on gross margin as well.
So theres a couple of different things that are that are really going on there that kind of come into play.
But what I'm more excited about and Stephanie alluded to this a little bit is stepping into fiscal 'twenty. Five we do believe that the inventory situations out there are going to be much much more normalized as we get into the back half of our fiscal year and certainly into fiscal 'twenty five.
And we're doing a lot of different initiatives right now.
On our overall product costing structure.
Which we believe we're going to have some real nice benefits in fiscal 'twenty, five and beyond as well.
Great. Thanks, So much guys best of luck for the year and we'll look forward maybe 70.
Likewise.
And thank you.
And one moment our next question.
And our next question comes from Jay sole from UBS. Your line is now open.
Great. Thank you so much a couple of questions first Stephanie. Thank you for all the comments and the.
Prepared remarks.
Possible to sort of give us like a high level vision.
What your financial objectives, or I mean, how big do you think under armour can be in terms of sales and what kind of.
Operating profit margins should it have in your vision and then maybe Dave for you just on China can you just talk about how the China business progressed in the quarter and what Youre expecting for China growth in fiscal 'twenty four.
At the same time on the inventory you mentioned some pack and hold.
Can you just tell us how much pack and hold your holding when you plan to sell that inventory and how much confidence you have that inventory is going to stay fresh until the time you saw it. Thank you.
Sure well good morning, I'll start and then I'll flip it to Dave but on your question about growth.
I'm not ready to put a figure out there quite yet, but I am absolutely confident that we can grow this company significantly over the years ahead.
Just a couple of statistics that I think about in that context, when our footwear business is only $1 5 billion today, that's great, but it's only 25%. So that's an area of exponential growth I mentioned the women's business.
Relatively small that's another area of exponential growth. So again, we have a lot of work to do over the coming weeks and months to flush out the details of our plan in terms of.
Our medium to long term growth targets, including our profit targets, which would incorporate our growth the way, we're thinking about gross margin, but again not prepared to call. The number today, but absolutely prepared to call that we have significant growth ahead of us in the years ahead, but Dave I'll flip it over to you for the questions on China et cetera.
Yes, so China again.
We couldnt be more proud of how the team navigated through fiscal 'twenty three I mean, if you think about the impacts from Covid early on in Q1.
And then the Lockdowns and then fighting our way back out of that so really strong Q4 quarter.
For China and for APAC as an overall region. So very proud of the team there.
Q4 did get a little extra benefit there from Comping bigger COVID-19 challenges that your prior.
And a little bit of a rebound coming out of the lockdown. So we're not anticipating that level of growth for APAC in fiscal 'twenty four but.
But definitely a very healthy growth rate for us and we believe that we're well positioned to keep driving in.
That's an opportunity that's going to continue to be there for long term I mean, we are still so small.
So the opportunity to continue to expand doors.
Span, even more level two to better and best product. There's just a lot of different options that we're going to continue to pursue out there.
And relative to inventory, yes, we finished with a fairly high growth rate of inventory, but our inventory turns were still at about a three as we ended fiscal 'twenty, three which isn't a bad spot and inventory for US right. Now is very healthy there's not a lot of aged inventory at all and in the pack and hold comment.
We're sitting on probably out of $175 million worth of inventory that we specifically are packing away and holding that we know we have demand for in fiscal 'twenty four as opposed to kind of blowing it out at really low prices in the back half of fiscal 'twenty. Three so that's a decision that we made and where comfort.
With it based on being able to utilize our outlet stores to a bigger capacity in fiscal 'twenty, three and so for us we see inventory.
Across the.
<unk> being a little bit higher kind of in this.
Q1, and Q2 of our fiscal year Q3, normalizing a little bit.
And then by Q4 are really in a good spot and we're expecting actually to be down.
Probably in the 13% to 14% range year over year inventory.
By the time, we get to the end of our fiscal year. So.
That again should set us up very well to be able to run in a pretty clean way for fiscal 'twenty five.
Got it thank you so much.
And thank you.
And one moment our next question.
And our next question comes from Bob <unk> from Guggenheim. Your line is now open.
Hi, Good morning, Stephanie welcome best of luck.
I just had a question for you and then I have a follow up for Kevin if you're still there.
Besides the Chief commercial officer can you just talk about any hiring priorities that youre focused on hiring targets the needs in terms of the team that you really see besides the chief commercial officer.
Sure absolutely and good morning, Bob great to be with you.
So that's the number one job we're looking for right now are one of two as the Chief commercial officer job Consumer Officer, Pardon me and where we've got a great slate of candidates lined up and hope to have that filled in the coming months another position that we are.
How about for search is a chief Communications officer, as I've mentioned marketing and commute in communications is going to be both together are going to be a critical part of how we tell our story to our athletes are consumers and to you <unk>.
Or are there other stakeholder. So those are two two jobs that I am currently looking for on my leadership team and then I'm digging in deep to figure out the rest again I've only been here two and a half months. So I'm one of the reasons I'm. So excited to have all of these direct reports to me and the interim meaning I mentioned this in my pre.
Paired remarks that had a brand marketing sports marketing digital data and analytics is in this area, having an all report directly to me allows me to roll up nicely and get into the details and figure out what additional talents and capabilities. We need in particular in that area is just one example, and then the last <unk>.
I would make on talent, because it's such an absolutely critical.
Question that you've asked is you know we're also supplementing with bringing in outside talent to work with us on collaborations and things of that nature. So it's early days for me in terms of getting my arms around our needs in this space, but it is a very very big area of focus for me for sure.
Great. Thank you.
Kevin just maybe.
A question for you if I could.
The orders are down three to one I think and I just wonder if you feel like you can bring these guys back.
Yes, we're actually making stuff and the new superpower T shirt to wear and our new service uniform right now as well as dropping some of that into a sneakers too.
I mean, its cool between we now have two mvps and the roster between Joel and stuff and watch them both of them play.
It is extraordinary and so I think we're all waiting for those heroics again with things you can't believe will happen, but it should be should be pretty exciting. So to go to war and the sixers fans, we're with you.
Thank you.
And thank you.
And one moment our next question.
Okay.
And our next question comes from Brian Nagel from Oppenheimer. Your line is now open.
Hi, good morning.
Definitely welcome and thank you for all the initial commentary here.
Thank you.
The first question I have.
Turning now to you about the new operating plan the PTH three in <unk>.
Obviously, we have your guidance you talked about maybe in the response to the last question. There are some of the new hires youre looking for but as we think about this in the repositioning if you will of the businesses.
Is there do you expect much investment there is there a need to continue to enhance or to say the core or is it more of a process type change it more process type change in under armour.
Well I think we need both over time, both investment and then anything is always about people process and systems right and so on.
There is a talent element to what were going to be pulling off with PTH III there as assistant in process piece of it and that will require investment over time and as Dave mentioned in his prepared remarks.
We are focused on expense control and simplifying and optimizing our cost structure and as we do that and particularly in the short term what its going to allow us to do is redeploy resources against our top priorities, which links back to my point on focus so keeping our costs very much in line.
With where they should be but I do think a lot of the things that we're going to do over the years ahead will require investment.
I'll use a real life example, we have a lot of work to do on our website and our App I have a real vision for where we're going to take our website and our App. We've made some progress improve things like site speed and product spec pages more kind of.
The way the site works from a more tactical standpoint, but you know.
I have a much bigger vision of where we can take it and it should be the one of the most premium ways. We can bring our brand to the world. So things like investing in our digital assets will be a focus for us so.
And again, there's many more examples but.
That's the one that comes to mind right away, but again it is about it.
<unk> talent, it's about <unk>.
<unk> and systems and it's about profit and Brian . This is Dave I would maybe just tack on a little bit there just relative to cost structure and investments I think we've proven that we've done a lot of work to be able to be more nimble from how we spend and where we invest and the leverage that we showed in fiscal 'twenty three.
See what the outlook for fiscal 'twenty for that we're actually not showing a really much leverage for fiscal 'twenty, four and thats, primarily because of a few reasons, we do need.
We need to invest in a few of these areas that Stephanie mentioned, an absolutely we're going to be pressuring certain areas and would that nimbleness, we're able to do so better than we have before but we're also going to be pouring more into the areas.
Stephanie mentioned or PTH III initiatives, so that's that.
It's really one of the aspects that goes into the outlook that we've provided.
That's very helpful.
A follow up just with regard to inventories so as we're hearing.
A big component of the PTH three plan is new product better product. So it was a rethought Ben with inventory still be elevated to more aggressively clearing out the product you have now.
In the nearer term before this new product is introduced.
Yes to a degree Brian I mean, we started that in Q4, you saw us overdrive on revenue and at the detriment of gross margin because we took some of those opportunities in Q4.
And as you think about our outlook for gross margin for fiscal 'twenty for especially the first half. It has some of that expectation built in there as well so but at the end of the day I think as a reminder.
Even though our inventory growth rates seems fairly high it's off of a very lean base and therefore, when you look at the actual composition of our inventory right now it is very healthy there's not very much.
<unk> or inactive skus.
So our ability to be able to move through that fairly well and stay in that 3% to 4% mix range of off price to normal sales, we feel very comfortable with that so.
We will work through and we'll get into an even better place than we are now, but we're very confident in the process and the tools. We have laid out to be able to do that and then really be able to run into fiscal 'twenty five.
With higher growth and also with kind of a smarter inventory build.
Alright I appreciate it thank you.
Thank you Dan.
Thank you.
And one moment our next question.
And our next question comes from Laura That's Alaska.
With Bnb Paribas. Your line is now open.
Good morning. Thank you very much for taking my question and thank you Stephanie for your opening remarks.
Dave I wanted to ask about your comments regarding first quarter revenue down low singles to mid singles.
Noting that challenged U S market place can you maybe parse out a little bit more how much North America should be down for the first quarter.
I think you mentioned for the overall revenue sequential improvement for each quarter.
As the year progresses should we assume I know it's early on but.
Should we assume Q2 is an inflection point or where is it going to be more two inch waist. Thank you.
Yes, I guess a couple of things there.
Yes, Q1 is going to be our most pressured revenue quarter.
And we think about that that is going to be driven primarily by North America, and primarily by wholesale within North America and <unk>.
Lot of that has to do with.
A fairly cautious.
Order book coming in from wholesale partners based on the levels of inventory that they were carrying towards the back half of our fiscal 'twenty three and as we go into this year. So that's a big piece of that play.
We do see that or anticipate that that is going to start to work its way out as we get further into Q2, and then even more so by Q3.
So we do see that Q1 is going to be the most challenged quarter for North America and as the biggest region. Therefore, the most challenged quarter for.
Global under armor, and then we do see Q2 being the turning point back to growth and we're excited to be able to keep driving forward from there I think also you'll see that with some of the pressures with wholesale buildup of inventory youre going to see our direct to consumer outperform a little bit versus wholesale.
We go through this year as well, which is something that we're completely fine with we control the brand very well, they're a great display of all the different products and breadth in a place that we can start to shine relative to more and more curation around sports style as we move forward.
That's very helpful. David and then maybe as a follow up.
I think you called out for international to grow mid single digit rate for this year.
Pat.
About 40% of your international business.
Obviously, China is reopening.
Could you just maybe unpack a little bit more why international's to sequentially slow and then just a quick follow up as well capex spend is meaningfully up.
For this year 250 to 70 is that driven by the new HQ or you're also anticipating new store growth for this year.
Yes, I think when we think about APAC again.
Excited about what the team was able to drive through fiscal 'twenty three.
In mind Q4 of fiscal 'twenty three for APAC had somehow over index benefits from Comping, the China Covid bigger issues a year prior but also kind of the rebound out of the Lockdowns in Q4, so we wouldn't necessarily expect that level of growth to continue into fiscal 'twenty, four but definitely healthy growth.
Especially in China, but really in all parts Southern APAC, South Korea et cetera.
For us, though we do look at the overall picture there and there are still some heavy levels of inventory there as well and there's a lot of brands that have been.
Closing doors Theres a lot of brands that have been really pushing through a lot of excess inventory more so than we have and so we've got to be a little bit careful with what that looks like and how that impacts under armour. So obviously, we hope that we can be able to overdrive that but we think we're planning prudently in this in this outlook.
So when you think about Capex you are right. There is a larger increase in capex in fiscal 'twenty four planned.
That is store growth around the world owned and operated store growth.
Some of that is also investing in E. Com is Stephanie had mentioned.
Whether it be in our loyalty program, whether it be in <unk>.
Further site speed et cetera.
But then yes. There is a portion of that that is the build out of our headquarters our new headquarters here in Baltimore, which is just going to be a magnificent place to show the brand and feel the energy of under armour with the track and field and the new TMA headquarter building. So that is a piece of it. However, we still plan and we'll manage capex.
Within that 3% to 5% range of revenue even including the.
The headquarter build out so I think we're doing a great job of prioritizing there.
We're certainly not holding back on driving into the revenue generating aspects even on the IP front as we're investing and planning where event vesting in retail Pos.
M system Transportation management, so a lot of great things that will continue to enable us more so in fiscal 'twenty five as Theyre actually live in and really working to our benefit so a lot of exciting things that we're jumping into there.
Very helpful. Dave Thanks for all the color.
And thank you.
And one moment our next question.
And our next question comes from Matthew Boss from J P. Morgan and this is our last question again. This is our last question from Matthew Boss.
Great. Thanks, So Stephanie you cited fiscal 'twenty four is a year of building the brand.
In fiscal 'twenty five as the opportunity to return to growth in North America. So maybe two questions. How do you view overall health of the brand today, and then as you've sized up the opportunities what provides confidence in sustainable North American growth from here or what is the material change in <unk>.
<unk> you are really putting in place.
So I'll start with the first part what is the health of the brand today I think as we noted in our prepared remarks, and Kevin and some of his answers.
We are very very strong and the performance space very very strong there and we have a very solid base business and the good part of the product pyramid, where were not as strong in where the brand needs to get healthier is in better and best part of the product pyramid and we also need to consistently.
Execute across.
Marketing and distribution and I use the word inconsistency in the way on some of the challenges that under armour has faced very purposely because there are places where we really have done some great things.
Heath care Cold gear compression would be an example, and more recently, Kevin talked about flip speed and when we execute well across the <unk> product price place in promotion like we did with slip speed. We win so I'd say the health of the brand is is strong from a poor performance.
<unk> perspective, but needs to get healthier and grow in the better and best part of the product Pyramid and then the second part of your question was about my confidence that we can grow in fiscal year 'twenty five.
And.
Again, I have tremendous confidence that we can grow in fiscal year 'twenty five because we have all the basics all the core basics and building blocks for growth in place we have the strong base in terms of performance.
Much rather be a performance brand leaning into sports style than the other way around right to be a sports style or dare I say athleisure brand trying to get into performance. Its two five decades of hard work to get that credibility on the performance side, So I have tremendous confidence.
Again, I'd go back to the relatively low numbers, we havent footwear and women's is two examples of where we can really see exponential growth and then you have a lot of it is putting the additional building blocks in place as it relates to talent.
Dave just articulated some of the investments, we're making on the system side. So.
I'm very bullish on our future in 2020 for fiscal year 2024 is going to be the year, where we get the building blocks in place even further.
That's great color best of luck.
Thank you.
And I am showing no further questions.
Okay.
Okay.
Alright.
Great. Thank you everyone. Thank you everyone.
This concludes today's conference call. Thank you for participating you may now disconnect.
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