Good day, ladies and gentlemen, and welcome to the Under Armour Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Lance Allega, Investor Relations. Sir, you may begin.

Thank you, and good morning to everyone. Thank you for joining us on today’s call to discuss Under Armour’s third quarter 2017 results. Participants on the call will make forward-looking statements. These statements are based on current expectations and are subject to certain uncertainties that could cause actual results to differ materially. These uncertainties are detailed in this morning’s press release and documents filed regularly with the SEC, all of which can be found on our website at uabiz.com. During our call, we may reference certain non-GAAP financial information, including adjusted and currency-neutral terms, which are defined in this morning’s release. We use non-GAAP amounts to lead into some of our discussions because we feel they more accurately represent the true operational performance and underlying results of our business. You may also hear us refer to amounts in accordance with U.S. GAAP, reconciliations of GAAP to non-GAAP measures can be found in the supplemental financial tables including the press release, which identify and quantify all excluded items and provide management’s view of why this information is useful to investors. Joining us on today’s call will be Under Armour Chairman and CEO, Kevin Plank; President and COO, Patrik Frisk; and Chief Financial Officer, Dave Bergman. Following our prepared remarks, we’ll open the call for questions. And with that, I’ll turn it over to Kevin.

Thank you, Lance, and good morning, everyone. Before we start, I’d like to take a moment to acknowledge the disappointment that we feel about our financial performance in 2017. We understand the issues that put us in this position, and we’ll speak to you today about how we’re addressing these challenges and how we’re proactively working to move our company forward. On our last call, we detailed a number of strategic initiatives and a restructuring plan geared at aligning our resources to make us a better company. Essential to this ongoing transformation is balance, strategic, financial and operational. In 2017, our equilibrium has been out of sync with our long-term expectations. We’ve not performed to the level we originally aspire to. Some of this imbalance is due to things in our control like product, consumer connectivity and structural changes and some things from out of our control, like the macro environment and shifting consumer behavior. Amid this backdrop, 2017 has been a reset for Under Armor and while certainly a challenging year, it is a time that has taught us invaluable lessons, strengthened our results and will prove to be a year that helps redefine us as a brand company and culture. Before going into our third quarter results and our outlook for the balance of the year, I think it’s useful to put our story into context and chapters, where we’ve been, where we are today and the actions we’re taking to position this brand for the future. Chapter one was a basement start up. There was a scrappy, hard-fought fight that established our DNA and laid our foundation. Chapter two is about expanding into women’s and International, while driving the product innovation engine, drilling consumers and taking to the limit of what was possible as a private company.…

Thanks, Kevin. In the past four months, I have traveled to Europe, Central America, Canada and all around the United States, meeting with many of our top retail accounts, manufacturing partners and the Under Armor team, and even working the floor in our own stores engaging with consumers. Following strategic deep dives in the areas I have direct responsibility for strategy, supply chain, product, marketing and sales, we have absolute clarity around the challenging impacting the company. The related root causes and the steps necessary to address them. It’s a new time and a new time requires a new playbook. And that’s one of the reasons I’m here. And what I see here is an incredible team, a team that’s used to winning. And I also see an incredible brand, a brand that is winning, but one that is not fully optimizing its strength or potential. Today, I’ll detail some initial observations and put context around our strengths and opportunities. As Kevin mentioned, we have numerous work streams in place to address our current challenges and structural complexities. Our year-end call in mid-February will provide even more detail on our plans and we’re working toward a comprehensive Investor Day next year. To build on the operate fuel innovate construct, let’s start with innovation and the importance of making great product, because our success must start and end with making great product that lights consumers, distinct, authentic, and unbelievably high-quality product, it’s our reason for existing. Blending high-performance innovation with function and style has been and will continue to be at the core of who we are. Under Armor is a performance brand. Looking back over the last few years, we’ve been inconsistent with this promise, that inconsistency stops now. Going forward, you’ll see us accelerate our purpose as a performance…

Thanks, Patrik. Before we get into our results and updated outlook for 2017, I’d like to provide some more context around the restructuring plan and the one-time items that impacted our quarter. In the restructuring plan announced on August 1, the company detailed expectations that we’d incur total estimated pre-tax restructuring and related charges of approximately $110 million to $130 million. In the third quarter, we recognized $89 million of these charges, which includes $29 million of goodwill impairment related to our Connected Fitness business. The goodwill impairment, which was not included in the originally estimated range was a result of the reduction of expected future cash flows for the Connected Fitness business due to a decision to deemphasize certain ancillary revenue streams, including connected hardware and related web and mobile app development. Including this goodwill impairment charge, we now expect to incur approximately $140 million to $150 million of total charges, with substantially all occurring in fiscal 2017. However, we are continuing to dig in and we may uncover additional opportunities that could be realized in 2018. With respect to anticipated savings and what that means for run rates moving forward, because we are executing real-time against this plan, we are not currently prepared to share that information. We anticipate providing greater color on our year-end call in mid-February. Moving to our third quarter, revenue was down 5% to $1.4 billion. As noted in our call today, the operational challenges we faced from our ERP system implementation and related service levels, along with lower North American demand negatively impacted our third quarter results. Clicking down further into revenue, let’s start with product type. Apparel revenue decreased 8% to $940 million as growth in Golf and sportstyle products was more than offset by declines in our outdoor women’s training and…

Thank you. [Operator Instructions] Our first question comes from the line of Jonathan Komp of Baird. Your line is now open.

Yes. Hi, thank you. Kevin, want to dig in a little bit more on the North America backdrop and especially wholesale, which has gotten progressively tougher. I know you highlighted three different areas, bankruptcies, declining productivity, shifting fashion preferences as the sources of pressure externally. And I’m just curious, in the past, it seems like the brand has been strong enough to stand on its own and perform, while despite whatever is going on in the environment. Clearly, the pressures are more intense now. But I’m just curious if you could kind of give more detail on why you think it’s more impactful now, and just broadly, the overall health of the brand as you see it today?

Yes, let me begin with North America and I’ll get Patrik actually weigh on this, and so we’ll get full perspective. Let me just say, again, in my own words just how disappointed that we are in the 2017 results. And you’re right, I think, the brand has always been able to stand on its own two legs. And hopefully, that still comes across today, we’re just doing it as a much larger organization that’s going through a shift. And I think, as we’ve demonstrated throughout our 12-year history as a public company what we’re telling you today is exactly how we ever expect to deliver for the market, our shareholders for our business. So today that we are using 2017 as a bit of a to reset, it’s a reset for our business and our brand as we look to get and run and operate as a bigger company. We’ve been evolving our structure throughout 2017. We’ve talked about the things we’ve done is that hopefully which you feel is that, we’ve been making decisions and being proactive throughout really the balance of this year from since the beginning of this year from standing up our new category management, which gets us closer to the consumer, the restructuring that we went through this year implementing our new system. So we’ve placed a lot of pain sort of on to ourselves, and none of it was meant to be self-inflicted, it was all meant to be thinking about the business that we’re going to be. And so from a brand health standpoint, number one is that, we have great confidence. I think in the company that we are and the consumer that has a relationship with our brand that we have a relationship as well. But there’s several things that are going on right now. So maybe just dig into the map, I can let Patrik talk about some of the contributing factors that led to that.

Yes, I think – thanks, Jon. I think, Jonathan, we have a couple of different things going on. We look at it really from an internal and an external perspective. We certainly have seen some effects of the – what Dave talked about as well, the ERP implementation and how we dealt with that internally and how it actually affected our service levels. We’ve also not been spending against the brand to the extent that we think we should have in 2017, as the environment has become more challenging. So there’s a couple of internal things that we believe has not helped drive the brand. And that from an external perspective, we mentioned the bankruptcies before, but there’s also a lot of traffic pressure. The promotions in the environment currently are still ramp and we believe they’re going to continue throughout the remainder of this year. And that creating a lower demand in general is, because we haven’t done as good of a job as we believe we could have, it’s also hurting the brand at this point in time. So I would really, for us, look at this is kind of a perfect storm at the moment, both internal and external factors hitting us really hard in Q3, and it’s going to remain affecting us in Q4 unfortunately.

And if I can finish with that, too, as you know, we want to be clear that we’ve certainly got some places where we’ve got significant challenges, particularly in our North American wholesale business that represents about 50% of what we do with specialty sporting goods. But we also have a lot of places – several places where we’re doing really well and we want to make sure that that is highlighted, that there is a consumer that is out there looking for our brand, but some of things we’ve seen from the shifting consumer preferences, performance which represents 90% of what we do as a business, you are obviously seeing that shift to lifestyle, so we’re answering that move and I think we’re there, but when you look at sort of the big movers, when we talk about opportunity for this company, it comes down to footwear, international and our women’s business. And obviously our international business is kicking really well for us, but footwear and women’s is a place where we feel like we can be and do a much better job. The last thing that I’ll say Jonathan is that, as difficult it is to give you the news on this call, we have a really clear line of sight, I think we have a really deep understanding of who our consumer is, with what we are doing with the leadership in place, the structure and the strategy that we’re putting forward as well. We feel that we’re fortunate to be going through an instance like this as a $5 billion brand has the ability to absorb and more importantly drive forward and so we’re incredibly focused on the future and we’ve got a team that’s ready to run and march forward. So hopefully that gives you a little bit of color towards how the way we are thinking about North America right now.

Yes, it does, thank you. And just a follow-up on the last point and really tying the broader outlook, partly relates to 2018, but more broadly. I know on this year you are on pace to be a low single-digit operating margin business. As you think about that normalizing to something higher over time, I’m just curious are there enough levers in terms of the operating efficiencies you are starting to see, the more normalized pricing environment that you think you can get to a more normalized margin or is there a sense that you need to maybe shrink the revenue base that it is today and then grow from a more profitable base, I’m just curious to hear how you are thinking about that dynamic?

Jonathan, this is Dave, it’s great, great question. Obviously as we look across North America and look at the wholesale side, we’re going to continue to look at our distribution and prioritize how we work with our accounts, but relative to going forward in operating margins and efficiencies, we’re not at this point going to be sharing information on 2018, we love to do that in the February call, but obviously as I mentioned in my script, we are digging deep in the cost structure and we’re going to continue to look at opportunities everywhere we can. So we’re going to keep driving forward to make sure that we can look for long-term sustainable profitable growth that’s my mission and we’ll give more color on that in the mid February call.

Thank you. Our next question comes from the line of Randy Konik of Jefferies. Your line is now open.

Yes, thanks a lot. I want to have a two-part question, first I want to just dig into apparel and after the response can I just go into footwear. I guess Kevin, on apparel, if you think about your Golf business and then everything else ex-Golf, your Golf business has done very well on its own in terms of the product that’s out there, it doesn’t – there is – it’s immune to promotions by others, it just – really just performs very well. So, when you think about how your Golf business is performing and then you kind of think about everything else, and you said the words, there’s two things going on there, so promotions going on in the environment and then there’s – it’s sounds fashion shifts more towards lifestyle. If you were to assess what’s impacting more the business ex-Golf, do you think it’s more promotional related or is it really more shift in preference towards the lifestyle offerings and in that regard, do you believe that – how you think about changing pricing architecture or assortment architecture going into 2018 and 2019, that’s my first question.

Yes, thank you. I think there is a lot of things that come into play is, number one, you’re right, our Golf business is doing really well, maybe it starts to top with externally, you know we’ve got a representative like Jordan Spieth out there that makes it easy for people to see Under Armour as an authentic Golf brand. And the trend line there is, it’s incredibly basic, look, it’s about pants, polo shirts and quarter-zips. And so I think what you can learn to expect from us is that, we’ll continue to be pushing the narrative of how we are going to be driving categories we’re already doing and having finding success like golf. What we see though is that where our in-line product that we’ve seen across the brand and we just think about what’s the positioning of the consumer preference of the kids today. How do we speak to them? Because a generation of kids have grown up in love with this brand, seeing us as their authentic on-field, on-court, on-pitch brand. And as we have watched them grow up, they actually – they’ve continued to evolve and so what we need to do and what you’ve seen us really take action beginning going back to the fourth quarter of last year as we started seeing some of the softness, especially with the heightened promotional environment is that shift of preference away from performance that really went to lifestyle. The kids still wants performance, I mean they still want us on field, they’re designing additional wearing occasions and we believe that our authenticity and our credibility that we have as a performance brand, it gives us license to make categories in other places. Meaning every owner of our product does something, that something is really special…

And just to clarify, do you feel that from an apparel standpoint more changes are going to be made on the product architecture rather than the pricing architecture of that apparel? And then separately on footwear, you’ve done – you’ve gotten very high remarks on the Curry 4 from an aesthetic look perspective, so what are the learnings from that Curry 4 product line that we could potentially anticipate being put forth in the traditional running categories et cetera on the footwear side?

Yes, when I look at 2017, I don’t think that we were frankly differentiated enough for our consumer and so in no way, shape or form do we anticipate changing the pricing model that makes Under Armour special and unique is that – we invented the $25 T-shirt, we’ve pressed the balance as to what consumers will pay for apparel of thinking about it as a piece of equipment and so that’ll continue as that no one is looking for Under Armour to have the $25 hooded fleece, they want Under Armour at the $75 and $100 price point. And so we’ll continue to push and to drive there from an innovation standpoint, but you’ve seen us get caught and so we’ve been more promotional this year reacting to a broader market and so to ensure that we’ve got a differentiated product and again with a price-to-value relationship of that product is something which is – it just got to carry. We catch and stick a logo on it and expect the consumer to buy it because they like the logo, so you won’t see that happen from us, it’s always been in the DNA of our brand and they’ll continue to be going forward. As far as footwear goes, we’ve got a tremendous opportunity with a franchise like Curry. One thing I think it’s important to put in perspective is just the sheer scale of our footwear business which is over $1 billion. And so when you have these marquee franchises like Curry, like what Patrik spoke to as well about our new HOVR midsole cushioning technology that’s coming out in the spring as well, how that connects into our Connected Fitness of truly driving differentiation. You know you look for the spikes of these really high super aspirational…

Very helpful. Thank you.

Thank you. Our next question comes from the line of Edward Yruma of KeyBanc. Your line is now open.

Hey, guys, thanks for taking my question. I guess, two parts. First, on U.S. wholesale, obviously, some challenges and made especially sport stores put some strength in your new doors. I just set back how do you think about overall door count? Are there places where you think you could exit? And then on the direct front, from a store comp perspective, should we expect to see you slim that out? And then finally, on ERP, how long will it take to get mitigation kind of in place? Thanks.

Yes, this is Dave. I’ll just jump in a real quick. Relative to doors, as far as our own doors, we’ve really been adding more in China than anywhere else and a lot of those are going to be partnered doors. So we’re probably going to be adding about 300 doors this year in total globally, and we should be ending the year closer to 900. And again, most of those are are going to be the partnered doors that we have in China. But relative to the SAP implementation, what was your specific question around that?

Well, just how long until you can kind of get service levels back to an acceptable level?

Okay. So, the SAP implementation, I think, as we look at that, there’s a couple different pieces to it that we’ve been working through. I think, one of the aspects was the change management, that’s been a little bit tougher than we expected, including working even with our inventory partners, our vendors, trying to get them up and trained on the system as well and just getting all the things in place. So right now that – the system is operating well, it’s stable. But the change management in the learnings and the reporting is what we’re still working through here. So, we expect that in Q4, we won’t have the same level of impact that we had in Q3, but they won’t be completely gone yet. We’ll continue to work through it, and they continue to fine tune as we move into 2018.

Yes, and maybe I can add some color on the wholesale there as well in terms of number of doors in our distribution. We’re happy with where we’re at right now, and we will not be adding any additional distribution in our wholesale channels going forward the way we look at it at this point in time. But again, as the environment continues to change out there, we’re going to continue, of course, to evaluate where the brand is going to show up in the future, but there are no plans at this point in time to expand any distribution further.

Great. Thanks so much.

Thank you.

Thank you. Our next question comes from the line of John Kernan of Cowen. Your line is now open.

Good morning, guy. Thanks for taking my question.

Thank you, John.

Kevin, could you talk about how comfortable you are with the inventory of 22%, given where the U.S. wholesale trends are running, and where that inventory is located by category and geography? Thank you.

Yes. John, this is Dave, I’ll take that one. I mean, relative to our inventory, it is a little bit larger than we would like it to be in Q3. Some of that was the impact of the service levels and the implementation challenges that shifted some things out to Q4, that was probably 2 to 4 percentage points of growth there. And when you look at the inventory between North America and our international markets, the international inventory growth rates are significantly higher as we’re expecting a very large Q4 revenue for international. So the inventory growth rates in North America are definitely small. We’re continuing to manage that down. I also want to just remind you that, 9 days back we talked about how we would be carrying over some core styles internally to be able to move through our factory house relative to keeping the wholesale floors and partners a little bit cleaner and bringing in returns a little bit more. So we’re seeing that as well and not a carry through in the year-end as well. So you will continue to see a little bit elevated inventory levels probably in those low-20% range, as we get to the end of the year as well. And then we’ll be moving through more of that inventory in the front-half of 2018 and working that down as we move forward.

Okay. And then just one final up – follow-up. The direct-to-consumer guide for high single-digit for the year implies a pretty enormous deceleration in the fourth quarter. Is there anything going on there? Are you closing doors and how does domestic DTC in international DTC play into that guidance? Thank you.

Yes, John, I mean, when you look at Q4, it’s not necessarily around closing doors, it’s more around continuing to kind of watch the environment and wanting to make sure that we’re playing prudently relative to the traffic patterns that we’re seeing both on e-comm and within retail and also our factory house doors. So, we’re tracking against that everyday, and we’re continuing to try to make the best calls and want to make sure that we’re protecting the brand in the right way and not going too far on discounting relative to the environment. So really it’s more just about the most prudent planning we think for Q4, it’s not really about closing doors.

Okay. And then just one final question. The international sustainability…

Coming in and out.

Sorry, guys. Just sustainability of international growth into next year, obviously, that highlighted the whole portfolio at this point. Can you just talk to the sustainability of 20%, 25%-plus top line growth into next year in international? Thank you.

Yes, I can take this one. So I’ve had the opportunity to travel around and I’ve been both in Europe and Latin America and also up in Canada over the last four months. And we’ve been digging into understanding the distribution that we currently have and what we’re looking at going forward. And I think, the components of where the growth is going to come from differs a little bit depending on where you are. We believe we still have a big opportunity in Europe, for example, both in wholesale and direct-to-consumer. As we continue to roll out our e-commerce platforms and opening up more wholesale in Europe, we see a continued opportunity in Asia Pacific to grow in partnership stores and some owned direct-to-consumer, as well as e-commerce as well. And in Latin America, it’s a little bit of a mix, depending on whether you’re in Central America or in South America. But the fact is that, we only have about a $1 billion of our business in international. And if you compare that to the opportunity that’s out there, we believe we have an enormous runway for international, and we’ll give you guys a lot more color on that as we go into the Investor Day next year, and a lot of work to be done to quantify all of that. But in terms of my experience and what I’ve seen before, that’s currently an enormous opportunity for us, and it’s different depending on where you’re looking in the world. So, the great thing is, we have the capability and the capacity to expand into that either one of those different distribution channels. And what we’re really spending a lot of time doing now is making sure that we’re also building our category management to be able to segment ourselves into that kind of a structure and also in international, not just here in North America.

Okay, thanks, guys. Best of luck.

Thank you.

Thank you. Our next question comes from the line of Matt McClintock of Barclays. Your line is now open.

Yes. Hi, good morning, everyone. Kevin, just to follow-up on some of the comments just the magnitude of the inventory build, as well as the continued promotional environment in North America wholesale, how do you think about launching new innovation into that kind of dynamic? And I guess, more broadly thinking, it doesn’t seem like the North America wholesale environment is going to get much better anytime soon. How are your thoughts of all being using the DTC channel to maybe shift more into where you can control the environment a little bit better? Thank you.

Yes, I’ll take that one. So, hi, Matt. I think, when we think about our ability to manage the brand across our distribution channels, Dave highlighted that how we’re going to think about our inventory positions differently thing going forward. We have a lot of different levers to still pull there. One of the things that we’re, of course, also doing as we look into the future is thinking about how we actually plan our business, which I think we could do a little bit better in terms of where we’re building inventory and how we think about our go-to-market strategy. Ultimately, we believe that by tuning our go-to-market strategy and dropping the innovation into the go-to-market in a commercially ready way at regular intervals, building actually our innovation funneled to be connected to the go-to-market for our commercial business is part of the key and unlock to us being consistent in delivery. And at the same thinking about how we build our inventory through our planning. Those two things in combination, they’re working together. So when we think about our process here, we think about three components of that process. We think about our innovation process, we think about our go-to-market process, and we think about our S&OP or Sales and Operations Planning Process. They all three work together and we see opportunity in doing a better job with all three making sure that we’re dropping the right innovation into the commercial funnel at the right time and then planning our business, so that we don’t build as much inventory as we have previously and actually also supporting the innovation in a better way and then ultimately being able to deliver that product and innovation on time to the right place. It’s going to be the job, of course, of our back-end. I see opportunity in all those three and putting it together is, what’s going to ultimately drive a more efficient machine for us.

Thank you very much.

Thank you, Matt.

Thank you. Our next question comes from the line of Bob Drbul of Guggenheim. Your line is now open.

Hi, good morning. Two quick questions, I think. The first one is, in the quarter, you called out declines in the youth business, I think, both in footwear and apparel. So I was just wondering, the initiatives in place to recapture growth in that segment, I think, would be appreciated? The second question is, can you just give us an update on your Amazon business and how that’s been trending for you this year especially? Thanks.

Yes. Thanks, Bob. Let me maybe just jump at the top and sort of give an overarching, where we think we are right now from a consumer standpoint. So youth is always a great indication for us and one we’re really excited about the future of youth. We’ve had great indications and we’ve looked forward to some of our lines. But really where we believe the brand is right now is that, we believe we have a bit of a pool problem. A pool problem for us is just what we’re doing to entice the consumer to ensure that they’re desiring the Under Armour brand. And there’s three ways that we’re thinking about doing that. And first and foremost, it begins with product, delighting consumers with product that just exceeds our expectations and has them saying wow, 90%-plus of our service have been focused after – at performance. And as we continue to move ourselves in a sportstyle that’s something that’s not exclusive to just men’s and women’s, but it does go all the way down in the kids. We’ve – we’re going to double down on our performance heritage is something we’re really proud. And frankly, we think it’s what gives us the ability and the capability to sell to this kid and make sure that we remain incredibly compelling to them. Secondly, a segmentation, particular around something like youth. With our new distribution, I think, that we could have done a better job from segmenting our product lines, but we believe that consumer is very much there for us. Our current composition is something that we feel good about. As Patrik mentioned about our distribution, we believe we’re in the right doors as we’re talking to this kid. We just can do a much better job of how we show up and the way that we execute that play. Third and finally is around demand creation. As we said, we’re a pretty quiet brand in 2017, and we’re looking to continue to add that up. As that relates to our youth business and this is much more of a holistic answer just across the brand is that, we’re looking at 2017 as a year that we use and focus on internal growth and deciding for ourselves what we’re going to do to truly be a – an externally focused company that is talking and telling the story of what this brand is, which is what makes us unique. And the reason for us being is that, every product does something and makes you better. So we are going to make sure that comes true and comes out in every single product that we build. Amazon Bob?

Yes.

Yes, sorry, Patrik you want to go ahead?

Yes, I think, we continue to make good progress with Amazon, and I would actually include other pure players in that, too. I’m thinking now about Zalando in our International business, as well as ASOS in the UK and Zappos in North America. So I think, in general, that’s where we see a lot of growth and continued opportunity going forward in our business, of course. As the consumer decides to move differently in their purchase journey, we want to make sure wherever they decide to shop with the right content and with the right tone of voice. And as you guys know, we’ve been with Amazon for a while now and we believe that it’s part of our distribution footprint. And we continue to make progress in the same way that we’re also making progress in our own e-commerce. And we’re also very excited about actually the work that we’re doing currently to roll more of our e-commerce out in Europe, where we see great traction for our direct-to-consumer e-commerce business. Hope that helps.

Thank you very much. Yes, thank you.

Thank you.

Thank you. Our next question comes from the line of Jay Sole with Morgan Stanley. Your line is now open.

Great. Thank you so much. Kevin, my question is this, yes, it’s been very promotional out there. And Under Armour had just kind of play a part in that. You’ve always talked about how Under Armour has the brand equity to endure. But where do you draw the line, where you just have to say, we have to stop promoting, we can’t participate with what else is going on in the environment, because otherwise we risk doing the long-term damage to our brand that will be a very difficult to recover from. And what we get into say stop, we’re just going to stop promoting and we’re going to start to think about the very long-term future of this brand of the 5 and 10-year long-term gain? Thank you.

Yes, thank you, Jay. I think, we’re really saying that right now. I think, that’s a lot about this call in this quarter. The way that we’re looking at our business and our brand thinking about it long-term. You think about through the sort of the streak of growth that our company had, I hate ever thinking that we were sort of caught up or compelled by trying to manage something just for the sake of we did at the quarter before. We really are thinking long-term and globally. The business is balanced between $1 billion women’s business, $1 billion footwear business, $1 billion International business, so all combined into business that’s still today though is 80% or close to 80% done here in North America. Balance is incredibly important for this business in this brand. And hopefully, you always get that thought from this for us – from us about the way that we’re thinking it long-term with the brand. I – as I said earlier, we’re not thrilled with things like what we’ve delivered from footwear, where we have product that will delight, incredibly excited about our new upcoming HOVR running launch that we’ll have this spring, incredibly excited about the demand driven around Curry. We just see the ability for us to just be better to be better across the organization, to be better across the brand, and that’s what 2017 was really about us doing is focusing on the internal growth to put ourselves in a position for long-term scale, and to be able to exercise across those. So we’ve never had to pull the pricing lever. You’ve seen with the promotional environment that began in the fourth quarter of last year, that has caught us by a bit of surprise and found us reactive and…

I think it’s also a change in culture internally from being a sell-in to more of a sell-through mentality. In other words, being more of a direct-to-consumer mentality versus just a wholesale mentality. And I think that’s important and Kevin and I both recognized the importance of staying closer to consumer in the current environment, so that means, planning your business. So, that’s one of the things that we’re really looking at to ensure that we plan into less promotions as we go into 2018 and beyond.

Okay. Thanks so much.

Thank you, Jay.

Thank you. Our next question comes from the line of Omar Saad of Evercore. Your line is now open.

Thanks. Good morning. Thanks for taking my question. I just have one to ask. Kevin, you mentioned early in the prepared remarks about kind of reprioritizing and deemphasizing certain investments. I was hoping maybe you could give us some insight into the internal management process for capital allocation and resource allocation, and how that’s evolving from kind of yesterday, today, tomorrow? How you think about making those investments? And maybe some anecdotes about where you’re shifting your investments from and to? Thanks.

Thanks, Omar. I’m going to let Dave jump on that one.

Yes, Omar, I mean, we are looking at it from a lot of different angles here. I mean, we’re prioritizing the new CapEx to ensure everything aligns with a long-term strategies. We’ve got a great capital committee that focuses on that. In that, we’re doing some things around. We talked about flowing down North America Brand House builds and tempering some of the North America wholesale fixture buying just keeping really an eye on the market and investing where the best return is going to be. Also looking at relative to our DTC and office and distribution center expansion space and trying to be as prudent as we can relative to when we need to do any of that, continuing to review our operational structure and how we can simplify and add it better there, continuing to address real estate, looking at store locations, looking at our office space and distribution center space and how we have tight and operational effective there as we possibly can be, continue to dig in on other SG&A, professional service fees, T&Es and all the customary areas there. So we are kind of looking at that across the board and looking at it much more within ROI lens than we’ve done in the past. But at the same time, we’ve got to make sure that we’re protecting those areas of long-term growth. So making sure, we’re protecting and prioritizing international expansion, e-commerce development, footwear design development, areas like that, while we continue to dig in deep and kind of right-size the cost structure. So, there’s a lot of different angles that we’re looking at it right now. But again, trying to making sure that we’re looking at things from an ROI lens and really driving all the way down through to ROIC is what we’re trying to do.

And Omar, so we’ve always had, I think, that ROI approach, it’s obviously coming through a different lens, as Dave says. But that’s what the addition of Patrik being here sort of the trinity of Dave and Patrik and myself of really making sure that they were partnered working together that we have a clearly articulated strategy that’s understood by the organization throughout the company and that we’re driving that through and putting money on the things that will get us to return. So we’ve got a lot of low-hanging fruit. You hear me say sort of anecdotally women’s footwear international, the places that we’ve invested in, we’re there. We just put the right kind of smart spending we can win. So, I’ve used the saying is that, we can do anything. We just can’t do everything that’s ever been – ever more true. We’re really focused and I think really thinking about through the things that will get us the biggest return. We don’t need anything else. We don’t need to buy anything else. We have plenty of real estate. We have plenty of assets. We have plenty of categories that we’re in, we just need to focus on becoming excellent everywhere that we do business. And so that’s hopefully one message that comes across in this call is our commitment, our teamwork, the strategy that we have in place and the way that we’re looking at just go run the play in 2018 put this company in firm footing and allow us to storm and march forward and get us back in that growth pattern. Right now, we’re going to be internally a great operationally excellent company.

Thanks, guys. Thanks for all the detail today.

Thank you, Omar.

Thank you, Omar.

That will conclude our call today. Operator?