“Those benefits don't kick-in until halfway through the second quarter. And so, we'll start to see that tailwind come in, in Q2 and then accelerate in Q3 and Q4 and then carry into fiscal year 2025.”

In context

“margins by 140 basis points to 160 basis points, and that includes a 50 basis point negative FX headwind. If we back out the FX, it's approximately 200 basis points of operational gross margin expansion. The large majority of the 200 basis points is the beginning recapture of transitory headwinds. We will continue to see structural benefits in fiscal year 2024, but those are being partially offset by higher product costs and inflation in parts of our supply chain. When I look at the large majority of our transitory headwinds, we've been talking about two for the past several years. One is, freight and logistics; and the second one is, liquidation. We've now negotiated our ocean freight rates with partners for fiscal year 2024, and we've negotiated rates that are near pre-pandemic levels. Those benefits don't kick-in until halfway through the second quarter. And so, we'll start to see that tailwind come in, in Q2 and then accelerate in Q3 and Q4 and then carry into fiscal year 2025. As it relates to the liquidation impact, we are planning for an improvement in full price mix and markdowns. And we've baked that into our plans for fiscal year 2024, but we recognize, as I answered the question for Jim a little bit earlier, that we continue to operate in a promotional marketplace. And so, we're going to continue to read and react. And as a result of that, we've planned for a modest recovery of those costs. And you'll also recall that in fiscal year 2023, we were comparing to extraordinary levels of full price realization, well above the 65% threshold that we had provided as our target. And so, at this point in time, we're not planning that we're going to recover back to that level of full price realization, but that instead, we will be operating at or around the 65% leve”