“And we expect that those transitory headwinds will begin to recover in fiscal year '24, and I'll give specific guidance about how much next quarter.”

In context

“increasingly confident that we're going to exit fiscal year '23 with healthy inventory levels across the marketplace, across channels in the marketplace. And in fact, I mentioned in my prepared remarks that within the financial parameters that we had set two quarters ago, we're going to exit with even leaner inventory than we had anticipated given the momentum that we're seeing. As it relates to the impact on gross margins and fiscal year '24, I mentioned that next quarter I'll provide full and complete guidance. But what I will tell you is that we've been talking about 350 basis points of transitory cost headwinds in our gross margins over the past two years between elevated ocean freight and logistics and then the promotions required to move through excess and early arriving inventory. And we expect that those transitory headwinds will begin to recover in fiscal year '24, and I'll give specific guidance about how much next quarter. Operator: Next, we'll take a question from Omar Saad, Evercore Partners. Omar Saad: I'd love to ask my question on China. Maybe you could dive in a little bit deeper on the outlook for the recovery there, maybe across a few different dimensions, being the consumer recovery, how the consumer is behaving, what you're seeing there, the competitive landscape, especially vis-a-vis locals, which may have taken some share. And then also the marketing landscape. Are you having unfettered access to all the different marketing channels that you need to resonate with the consumers? John Donahoe : Yes, Omar, bottom line is we feel good about our momentum in China. And that's both Q3, where you saw in a post-lockdown environment, growth really pick up the second month of the quarter, and our inventory”