Good day, and welcome to the Wolverine World Wide Inc. First Quarter 2024 Earnings Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Alex Wiseman, Vice President of Finance. Please go ahead.

Good morning, and welcome to our first quarter fiscal 2024 conference call. On the call today are Chris Hufnagel, President and Chief Executive Officer; and Mike Stornant, Executive Vice President and Chief Financial Officer. Earlier this morning, we issued our earnings press release and announced our financial results for the first quarter of 2024. The press release is available on many news sites and can be viewed on our corporate website at wolverineworldwide.com. This morning's earnings press release and comments made during today's earnings call include non-GAAP financial measures. These non-GAAP financial measures were reconciled to the most comparable GAAP financial measures and attached tables within the body of the release. References made regarding financial results and outlook for 2024 and comparable results from 2023 in each case for our ongoing business exclude the impact of Keds, Wolverine Leathers and Sperry. I'd like to also remind you that statements describing the company's expectations, plans, predictions and projections such as those regarding the company's outlook for fiscal 2024, growth opportunities and trends expected to affect the company's future performance made during today's conference call are forward-looking statements under U.S. securities laws. As a result, we must caution you that there are a number of factors that could cause actual results to differ materially from those described in forward-looking statements. These important risk factors are identified in the company's SEC filings and in our press releases. With that being said, I'd now like to turn the call over to Chris Hufnagel.

Thanks, Alex. Good morning, everyone, and thank you for joining us on today's call. I'm pleased to report that we continue to make progress against our aggressive plan to turn around and transform Wolverine World Wide, executing our plan with tremendous pace to first stabilize the company, set a new foundation for a return to growth and ultimately deliver greater returns for our shareholders. Importantly, we are doing what we said we would do. In the first quarter, we exceeded revenue expectations with a balanced performance across the portfolio, led by beats to our plan for Merrell and Saucony. We exceeded earnings expectations while simultaneously investing more than we initially planned in brand marketing to capitalize the momentum we're seeing in the business today, and to help build brand equity for the future. And we continue to strengthen the company's balance sheet, which we remain intently focused on, by further reducing our debt and inventory levels more than we anticipated going into the quarter. A good start to an important year for the company. While our transformation efforts have addressed nearly every aspect of our global operations, we've worked particularly hard to rapidly improve our brand's product pipelines and presentation in the marketplace. We've made good progress to date and the product launch calendar for 2024 and into 2025 is especially strong. We've also worked to cultivate a healthier marketplace. And at retail, we continue to see inventory levels decline and rogue seller activity abate. Because of our efforts, we're beginning to see sequential improvement in our selling trends. This is encouraging and provides the level of confidence that our strategies and tactics are beginning to gain traction. Average weekly replenishment orders from our wholesale partners accelerated materially from the fourth quarter of 2023 to the first quarter of 2024,…

Thank you for those comments, Chris, and good morning to everyone on the call. This morning, I'll start with a review of the first quarter, followed by our expectations for fiscal 2024. We are very encouraged by our first quarter results. We delivered or exceeded our key financial objectives and saw improvement across performance metrics that support the stabilization of the business. First quarter revenue for our ongoing business of $390.8 million was above our outlook of $360 million. Demand trends and selling executions continue to improve. Our wholesale performance in Europe was especially strong, thanks to actions taken by our global supply chain team to mitigate logistics delays related to the Suez Canal. Approximately $8 million of revenue shifted from Q2 into Q1 as a result. As a reminder, Q1 2023 included more than $75 million of revenue that did not repeat in the first quarter of this year, including excessive end-of-life inventory liquidation, the timing shift in international shipments and business model changes. Adjusted gross margin of 46.5% was better than our outlook of approximately 46%, and improved 540 basis points versus last year. A healthier sales mix, lower e-commerce promotions and the benefit from the supply chain cost initiatives executed last year, all contributed to this record gross margin performance. As a reminder, first quarter gross margin was planned to be the highest of any quarter this year, due mostly to the lower mix of international distributor shipments in the quarter, which carry a lower gross margin. Adjusted SG&A expense of $162 million was in line with our expectations given the higher revenue, and includes a $3 million year-over-year increase in investments for demand creation and technology. Adjusted operating margin of 5% exceeded our outlook for the quarter and adjusted diluted earnings per share for the quarter…

Thanks, Mike. In closing, I'm encouraged by the progress we've made in just a few quarters, and even more excited that we're seeing early proof points that our strategy and execution are beginning to work. On our last call, I said 2024 would be a pivotal year for the company and that our teams were motivated by both the challenges and opportunities. I believe this is even more true today. There's no doubt we have more work to do, but I believe we've taken the right steps, and we're on the right path to transform Wolverine World Wide, all guided by becoming great brand builders and ultimately delivering greater returns for our shareholders. Thank you for taking time to be with us this morning.

[Operator Instructions] The first question comes from the line of Mitch Kummetz with Seaport Research.

Mike, really enjoyed working with you over the years and wish you the best of luck. So let me start just on the quarter, it looks like you guys beat revenues, beat your plan by maybe $30-plus million. It sounded like maybe there was $8 million of pull forward in Europe. Can you say if there was any pull forward outside of Europe, like in the U.S.? And then what really drove the beat, by brand or by channel? Any more color there? And then I've got a follow-up.

Sure. Thanks, Mitch, for the comments. I'll say overperformance really across the board. I think that was an important theme for the first quarter, whether that be at the brand level or the regional level. The call out on the pull forward or the timing shift for the Europe wholesale business really had to do with how we planned or sort of hedged our bet a little bit on the timing of logistics issues with the Suez Canal. We overcame that, and we called that out as about an $8 million shift, say there maybe $2 million or $3 million more across the business, nothing significant to call out, but a little bit more in terms of timing. Just not so much pulling forward shipments, but just the way we were able to move goods through the warehouse. And some of the demand that picked up later in the quarter, which we were able to kind of satisfy with some early shipments. So nothing dramatic outside of that issue.

And then on the guide, you adjust for the $20 million in the licensing change on Kids. It looks like the sales guide is unchanged. Given some upside in the first quarter and particularly better replenishment trends, I'm curious why you didn't flow through more of the 1Q beat or kind of raise your outlook on the year based on those improving revenue trends. Can you address that? And also maybe talk about the impact of the -- or quantify the impact of the Saucony shift from 2Q to 3Q.

Sure. I'll take the first, and then Mike can talk about the timing thing. I think we certainly were encouraged by some acceleration in the trends as we move through the quarter. How we were thinking about how the quarter might play out and certainly how the year may play out. We've talked about increasing improvement in replenishment at wholesale. We've talked about an acceleration in our direct-to-consumer business, which leaves us all sort of encouraged about the work that we're doing is getting traction, and we're working on returning the company back to growth. At the same time, our year is predicated on a back half inflection, sequential improvement quarter-by-quarter, which we've talked consistently about. And now we're actually in the place, now we're beginning to chase inventory. We worked really, really hard. As you know, as part of the turnaround is to really better manage the inventory piece, and we've done a good job at that. And we've worked to maintain lean just because of where we have been and where we thought we needed to go. Now that we're seeing an inflection and some proof points of growth, we're beginning to chase inventories. We're still taking a conservative approach. I think hopefully, it came through in my prepared remarks that while the quarter was a beat to expectations, it was a relatively low bar. And we still have work to go do as a company to get back to where we need to be as an organization. But early proof points are encouraging, and we certainly are happy about the traction that we have. At the same time, we have a lot of the year left to go.

The second part of your question, Mitch, on the distribution center transition, that's just getting underway right now. And so obviously, we're being cautious on how that might impact the quarter. I would say just -- we didn't quantify it in the remarks, but we are kind of thinking in the range of $5 million to $10 million of potential revenue shifts there. But doing everything we can to mitigate that, and the teams are already making great progress on the transition. But just important to call it out because obviously, as we get through that over the coming 4 or 5 weeks, that could have some impact on the flow of goods and chasing some of the demand that Chris has been talking about. Having said that, really good coordination with our key accounts and planning this transition and good support from our customers in terms of how we're going to refill the goods, too. The next question comes from Laurent Vasilescu with BNP Paribas.

Chris, you and your team have done a lot of heavy lifting over the last year. With divestitures and business model changes like the JV and the license business announced a couple of days ago, curious to know if you're contemplating any more changes over the next 6 months? Or if you've reached, do you think, a steady state point for the business to grow going forward?

Thank you, Laurent. Appreciate the question. We certainly have done a lot of heavy lifting over the past 9 months or so, really focused on stabilizing the business. And we've take -- we've tried to take sort of a very thoughtful sequential systematic approach to what we thought we needed to go to do, to both turnaround and then ultimately transform the business. We have done a tremendous amount of things sort of on the back office side in that effort. Are we done doing all of those things? I think we certainly have done a lot of them. Will we continue to contemplate other things? I think we will. I think we have to become very active, and it's a very fast-changing dynamic marketplace. And I think we can't afford to get comfortable. And I think we have to keep optimizing the business. And I think we have to keep very focused on what our fewest priorities are and really driving growth behind a handful of our brands and frankly, trying to do fewer things, but just do those things better. I will tell you that it is refreshing now as we've done a lot of those hard activities and whether selling things or divesting things or restructuring the business, the conversations around here have really pivoted towards growth, and where our brands are in the marketplace, how are we chasing inventories, what's working from a demand creation standpoint, how are we doing on DTC. So I don't want to say that all of the stabilization work and all of that is done is behind us because I, frankly, think great companies are always -- we're working to optimize. At the same time, the conversations here right now are about chasing demand and really becoming awesome brand builders.

Very helpful, Chris. And then if I can zero in on Saucony. Saucony, I appreciate the slides, the 2Q guide. If Saucony implies 2H revenue to be down mid-teens, maybe can you unpack that a bit more? What are you seeing in terms of the order book? How is the one specialty channel doing? Are inventories clean there? Are you seeing growth in some of your Retro products? Any color there, Chris, would be very helpful for the audience.

Sure. Yes. Thank you, Laurent. Saucony is a fascinating story right now. I remain very encouraged and bullish on the prospects of Saucony. I mentioned that on the last call, and we certainly are seeing early proof points of the work that we've done. Really, first and foremost, really attacking the product pipeline, bringing innovation back, looking at what categories in which we play and thinking about color and materials, and then really using the archives as a growth vehicle. So there certainly are some really strong signs that we're seeing good momentum, really behind the Ride and Guide 17. The Endorphin Collection was an immediate shot in the arm when the brand dropped that a month or so ago. And then just last week, we dropped the Triumph 22, which is an awesome new shoe. So there is chatter in the important run specialty channel, and we are seeing our styles begin to pick up. There is a nice movement in search interest. For those of you that pay attention to Google search interest, I think we're up 23% year-to-date as a brand, which is encouraging. At the same time, we're working to clean up the business that Saucony is. So there are headwinds there around the close up sales that we're anniversarying. We had a very low margin profile business in some of the family channel accounts that we have to work on that margin business. And we're working to be less promotional at dot-com as well. So I think the -- I think you have to look under the covers of the Saucony business and not just at the top line, and understand how we're trying to rationalize that business, take a new strategic approach. We're anniversarying some things that are going to go away, but then I would encourage everyone to focus on the new products that we've dropped and the momentum we're driving, both behind performance and lifestyle run and then importantly, the Retro Track Collection, which is just an amazing gift we have in our archives.

The next question comes from Sam Poser with Williams Trading.

I just want to follow up on the lifestyle product or the Retro product in Saucony, and then I got a couple of other questions. When you look at sort of the big growth driver over time, is this going to be a more performance running? Or do you see it getting a more -- just more scale across of, call it, athlete specialty and so on?

Yes. Great question, Sam. And that has been sort of the big work that we've done in Saucony around strategy. And I think Saucony has an amazing opportunity in front of it. I think for a long time, the brand was potentially a little bit -- have too much of a myopic focus on the ends of the spectrum. The really Elite Run, which is beautiful innovative product, but the market size just isn't big enough. And then on the lifestyle side, really focused on the collaboration piece, the Sneakerhead piece that is very cool, but also doesn't have a lot of scale. So as we think about Saucony, we want to maintain great innovative product, which is why the Endorphin 4 Collection was so important. And we want to maintain an amazing credibility in Sneakerhead culture, which is why we're so glad that we won the collaboration of the year last year with Jae Tips. At the same time, the big commercial opportunity for Saucony moves a little bit towards the middle. And that's as performance run as a lifestyle opportunity. And I think you have seen that pivot enough and us specifically in color and materialization and specifically the work around her. At the same time, the broader life opportunity around the original, specifically the Retro Track, which currently is in fashion right now. So I think us opening the aperture on Saucony, thinking about the greater market opportunity, maintaining the high ground in innovation, in coolness at the ends of the spectrum. At the same time, having a much stronger focus on the bigger commercial opportunities more towards the middle.

And then I have just one other question then a housekeeping. The reduction of $20 million from the new licensing businesses. Number one, does that mean that since you only took $4 million out of your revenue that something went up? Like something better than what you thought it was before? And if so, what is it?

Sam, the guidance adjustment that we made to revenue was exactly the $20 million that we referenced, and it's solely related to the change in the business model. So early May, we announced the change. So we have revenue under the wholesale model in the first 4 months of the year and then a shift in the last 8.

Okay. And then the other question is on interest on interest expense. What do you foresee the interest expense being for the year within your guidance?

About $40 million.

As your debt comes down?

Yes. We had net interest, I think, last year of about $63 million. So coming down to about $40 million in our guidance right now, driven by the ongoing progress we've made in reducing the debt.

Got you. Congratulations, Mike.

Thank you, Sam.

The next question comes from Jonathan Komp with Baird.

Mike, good luck with the transition. Congratulations on your role change going forward. .

Thank you, Jon.

And Mike, if I could follow up maybe just first with the gross margin drivers in the first quarter. I know you called out some mixed tailwind. So could you maybe just talk a little bit more about the drivers of the gross margin expansion? How you see that going forward? And then really just the second half operating margin inflection that you talked to, if you could review some of the drivers there?

Sure. I think that the good news on the gross margin performance in Q1, which was slightly ahead of our guidance for the quarter, was that we saw the benefit and the crystallization of a lot of the work that has been done over the last year to improve the supply chain performance but also the cost structure. And whether that be the reduction in the transitory costs that we had to contend with for 2023 and slightly previous to that. And obviously, the product cost initiatives that we put into place in the middle of '23. So those all came to fruition as we expected. The benefit from just a healthier inventory, having worked through a lot of that end-of-life inventory in 2023 as painful as it was, set us up for a much cleaner business this year. And starting in Q1, we saw the benefit of that. And then I would say, again, as we mentioned on the revenue side, all the elements of our gross margin contribution in the quarter were quite solid. Our full price margins held up to plan. We were able to drive a good amount of e-commerce improvement on our gross margins as well, by being less promotional and driving a healthier business there. So all the things that we kind of laid out in our original guidance back in February, Jon, really kind of kind of came together in the first quarter, and we expect that trend and those benefits to continue throughout the balance of the year. On the H2 operating margin expansion. Obviously, driven off of a couple of things that are really important to restate. One is just the sequential improvement in some of those profit improvement initiatives that we called out. Those are starting to be more prominent, especially on the gross margin side in Q3 and Q4. So some of those savings that are benefiting our autumn winter assortment is going to start to show up in Q3 and Q4. The cost reductions and restructuring benefits will be fully in place by the back half of the year. So you're seeing a stabilization on SG&A expense in the back half, while we obviously expect to see sequential improvement in revenue and growth in the fourth quarter. So being able to continue to drive the SG&A efficiency and leverage that to the bottom line as we grow the business. All in all, a really important part of our model as we kind of think about pivoting into '25, but seeing some real proof points in the latter part of 2024 in terms of how we're a leaner, better structured organization now. So I think it's really those drivers and the healthy mix of revenue that we see sequencing into the third and fourth quarter.

Okay. Great. And Chris, if I could just follow up on Merrell, the outlook to improve and inflect the growth later in the year. Could you just maybe talk about what you're seeing from the outdoor industry supporting that view? And some of the Merrell-specific drivers that you expect to support that inflection?

Yes, sure. Thanks, Jon. Yes, for sure and Merrell, I mean, the outdoor category has been under pressure for quite some time. And I'll go back and say it's up to the category leader to -- for either newness and heat and innovation in that category and that falls squarely on the shoulders of Merrell. We're not counting on dramatic improvement in the outdoor category. So we're very much focused on the things that we can do. Encouragingly, in Merrell, we continue to gain market share, which is great. And there was a period of time here for a company where Merrell was losing share quarter after quarter after quarter. We stem that during COVID, and we continue that today. I'm encouraged by our efforts to become lighter and faster, more athletic and that's the Moab Speed 2. So early indications of that launch are very positive, extremely positive and sort of how that has been embraced really globally and the sell-throughs that we're seeing, and the replenishment that we're seeing and the reaction to the fit and the style and the color. At the same time, the Moab 3 continues to be good. And as we sort of lap some of the very difficult market conditions with overinventory and the row selling, as those things abate, we're encouraged that Merrell is in a good position to capitalize. We also -- Merrell have to extend beyond just core hike outdoor. For Merrell to have truly become a great global brand, it really needs to extend beyond just that core height business, which is why we've worked so hard in trail run. We're gaining share in trail run, which is encouraging. And we've got some awesome styles that we didn't talk about in the prepared remarks, whether it's the Agility Peak…

The next question comes from Mauricio Serna with UBS.

Maybe if you could provide more details about the DTC performance? I see in the release, you mentioned the ongoing DTC revenue was down 6%. How does that compare to the previous quarter? And maybe on inventory, great progress that we've seen over the last couple of quarters. But it sounds like there's still maybe like some work that -- you're still very focused on that. So maybe could you talk about -- are there like maybe pocket of inventory that you still need to work through? Or what is exactly the state and competition of the inventory?

Yes. So thanks for the question. I'll let Mike take the last 2. I'll just talk about DTC inflection and -- when we talk about proof points, and we talk about what we're trying to go do, certainly, we look at the DTC business every hour as we get reads and how we're performing day-to-day, week-to-week. I would say, first and foremost, we're trying to tell better stories online and trying to present our brands better and be less promotional. And we have seen us be less promotional at dot-com, which is important for the health of our brands and how our brands are received and consumers' perceptions of our brands and marketplace perceptions of our brand. So we work to be less promotional, which is paying off in the margin piece. And then from an improvement standpoint, we were down mid-teens in the fourth quarter and down, I think, around 6% in the first quarter, and we've actually sort of inflected the growth -- turned to growth in March and then that continued into April. So we're encouraged by that. Obviously, newness drives the business and then really compelling engagement with our consumers. And when we drop new products in Saucony, it's the Endorphin 4, the Triumph 22. Merrell, it's either -- it's work around the Moab Speed 2 or the Agility Peak 5 or the Wrapt Collection or even some of the 1TRL stuff continues to have momentum. And then Sweaty Betty, which we haven't talked about yet today, really good continued innovation now that Sweaty Betty team, and really telling amazing stories with Wear the Damn Shorts campaign, which I personally love and it's just so on brand for who Sweaty Betty is and the consumers that they talk to. So I would say we're encouraged by the progress we made in DTC. We're encouraged by how we have sort of stemmed those, stemmed that contraction and now we're beginning to see growth. I'm also proud of how we've done it. Again, less promotional, telling better stories, but really dropping new and innovative products at a consistent drumbeat, which is what we know what works in the marketplace. So again, not declaring victory by any stretch of the imagination, but I do think we are seeing early proof points that our strategy and execution are gaining traction.

Mauricio, on the inventory question, I would say. Just continued progress. We ended the quarter ahead of where we had hoped and kind of planned for, a combination of really strong selling on high-quality product and just a better kind of more rigorous planning and management process there. And as we said in our guidance, expect to drive inventories down even further this year, another $75 million year-over-year. As a result of just being able to focus on some specific core areas and be rational about when we're going to sell that off and the phasing of -- but see line of sight to being able to accomplish that, obviously, and updated our guidance to actually improve on that number a little bit here since February. So we see the quality of the inventory improving across the board. It's not where we need it to be, which is why we're calling out the $75 million of opportunity. But overall, the progress being made so far is ahead of schedule.

Understood. And then just a quick follow-up on SG&A. I think -- I just want to make sure I understood. I think you mentioned SG&A dollars second half should be like fairly similar to first half? Is that right? And so like should that be more like weighted to Q3 or Q4, if I think about that?

Well, we're not giving quarterly guidance on the back half yet, but just thought it would be helpful to kind of give some perspective on both the margin expectations for the back half of the year. Pretty much in line with what we've experienced so far in the Q1 plus the guidance we gave for Q2. And then similar sort of directional guidance on the SG&A for the full half of the year. So again, we did call out Mauricio, that we expect sequential improvement in revenue every quarter with growth in the fourth quarter. So that might help your model a little bit.

The next question comes from Dana Telsey with Telsey Group.

Mike, best of luck in your next. Wanted to touch on, first of all, as you think about pricing and promotions, how are you thinking about the environment today? How has it changed? And what are you expecting going forward? On the wholesale order book and channels, the distribution there, seeing anything different from different types of accounts by brand? And then lastly, Chris, with the transformation work that's been underway, where are you on the progress organizationally in getting it to where you want it to be, whether like in headquarters or what -- how you're thinking about it with efficiencies?

Yes. Good question. All good questions, Dana. I'll get the last one first, and then we'll come back to the earlier ones. Wolverine has gone through a lot in the last 9 months. Obviously, we had a CEO transition last August. And we really focused very quickly to stabilize the business and restructure the business, which we needed to go do. We have completed a lot of those efforts, but a lot of those efforts are still -- we're still working our way through. I would say, right now, we're in the middle of moving our distribution center, closing the distribution center in Louisville and moving that product into our California distribution center. That takes a lot of work. We're working on moving our Boston Brace teammates, the Saucony team, to Michigan and having that team sort of reside here. And we're still looking for some key talent. We're still looking for leadership in Saucony. We're looking for some key brand talent, our product count and some of our brands as well. So I'm very pleased with the progress that we've made. I think we've taken the right and necessary steps. At the same time, there is work to go do. But I think we're approaching it with great pace and urgency. And also attacking the most important things first. So that's where we are. So we're not completely done restructuring. We're not completely done. The dust hasn't all settled yet, but the team has done a phenomenal job, sort of reacting to the call to action. And then importantly, posting the results and driving the business each and every day. The marketplace inventories, I think the market -- the inventories continue to get better, which is good, and so sort of become a little less promotional, especially for us…

Got it. And then pricing and promotions, what are you seeing there? And any shift in third quarter and fourth quarter as you return to growth?

Well, I can say that the proof points so far this year on pricing and promotions, both in our direct-to-consumer channels and through our wholesale partnerships has been quite positive. Overall, in the accounts or in the channels where we do get the information we're seeing, inventory coming down nearly 25% year-over-year, not to optimal levels yet, obviously, at retail, but that's an encouraging trend and sign. But at the same time, average selling price is increasing pretty dramatically for our big brands in those channels. So that's a really important proof point. We talked a little bit about the margin expansion in our e-commerce business and how that's been a very important focus for the teams. And we're seeing that benefit, I think, a combination of a bit more discipline, but most importantly, just new product that's actually resonating with the consumers right now and driving more full-price business. So I think those are the two most important proof points right now, Dana, as we think about more confidence into the back half of the year. We're not giving guidance on Q3 or Q4 phasing or trends. But just know that some of the early positive wins we're seeing in the e-com side of the business are giving us some confidence points for sure.

We have the next question from the line of Ashley Owens with KeyBanc Capital Markets.

Just first, can you talk about your decision to roll off the Merrell, Saucony Kids businesses into license? And then any plans you can share that you have to reallocate some of those resources you were previously using to support those?

Yes. Good question. Thanks, Ashley. We appreciate that. Certainly, important decisions that we're making as an organization to how we think about Wolverine World Wide go forward. We created a global licensing group in the latter part of last year, and really are thoughtful about that business and what it can mean. We've got a great seasoned leader running that business. She brings just a great approach sort of daily to both our brands and our partners and how we can profitably grow that business. So we've created the center of excellence. We've got the right leader running it. And then we also look back on the global potential of our brands and where we know we can be great and where I think we probably know that we can use some help. I still believe in the power of our global head-to-toe opportunities, specifically from Merrell and Saucony and what those brands can be. And as it relates to Merrell, we've attempted apparel and accessories historically, and we just haven't been great at it. And I think we found a great partner in that. I literally just met with them last week, I'll meet with them in a couple of weeks. Just a really phenomenal partner that has a deep fondness for the Merrell brand. They've already built the team out around it, and are very excited about what they see as the potential for Merrell apparel and accessories to allow us to be a true global head-to-toe business. And I think we can't miss the fact that Merrell, outside of the U.S., and we've got 46 stores in the U.S., we've got a direct consumer business, we have a wholesale business. But outside of the U.S., we have a lot of direct consumer operations. And I think those…

Okay. Great. And then just quickly, one, any call-outs you could provide around which brands of products are kind of helping with that replenished rate improvement you're seeing? And then additionally, the product cadence as we get to the back half of the year and just how it compares to some of the innovation we're seeing now. As resources free up, [indiscernible] cleaner and all the transformation efforts underway as well should be seeing a little bit of acceleration in terms of launches? Or is the inflection of 4Q coming from existing products you released ramping in momentum?

Yes, great question or questions. There's a lot embedded there. I'll try to answer it. I think certainly, replenishment across the board, we have seen an improvement in. Some parts, it's better than others. But in our weekly meetings with the brand leadership teams and sales teams, we certainly have seen a nice uptick in weaker replenishment orders. Probably stronger in some brands and frankly, strong in some brands where now we're going to go chase inventory. And I'm thinking about Saucony specifically right now, some of the momentum that Saucony has. We're chasing product because we have managed the inventory very closely to help really work and reposition and reset that brand. We're also seeing it in brand like Merrell and we're chasing Moab Speed 2s now and talking about how we can prioritize orders and feed the region and channels that are driving that growth. And then even some places in the work group, which we haven't talked about today. Where product is on trend or new innovation, we're having to chase that, too. So it goes without saying, I mean you all know as well as I do that newness -- consumers crave newness and innovation, and I think when we can bring that in a meaningful way and tell a good story about it, that product checks. And that's why I'm so convinced about our global brand building model and encouraged by the progress we made around the product pipeline. While we've had some great introductions, there are still more coming this year. And I'm excited about the ReForce, which is just dropping in the Boot Group. Certainly, in Saucony, the Hurricane 24, which will drop this summer, we are encouraged by that, that is a disruptive shoe that has people talking. Continuing to chase the Endorphin, the Triumph, those are very positive. And then there's some really cool new light hikers coming out from Merrell, that will drop in the latter part of this year into next year. They are probably some of the most disruptive shoes that Merrell has built in a very long period of time. Thinking about the evolution of the trail, light and fast and things that are visually disruptive at the same time performs. So I think we worked hard to accelerate the innovation in our product pipeline. I think the teams have responded to early proof points of the new innovation working and even some of the sell-in that we're doing with accounts have been very positive. So I'm encouraged by the progress that we've made and every new drop, we get excited about.

Really appreciate the color there. And best of luck to you, Mike, in your future endeavors.

Ladies and gentlemen, we will now end the question-and-answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.