DECK
#<UNK>, great question.
We feel really good about how that transition to the Classic has gone, especially since we made a decision to reduce price earlier and clear a lot of inventory in Q3.
We had less than we had planned on originally coming into Q4.
For the most part, the channel was pretty clean, we're taking back a little bit of inventory that we are going to continue to use to fuel our outlet business.
So we will be running the original Classic, the 1.0 so to speak, in our outlets over time at the current price, so the reduced price.
There is some inventory out there, the older Classic in some smaller doors, and some of the Bailey Bow and Button products.
But for the most part when we launch in July, in major accounts, you will see only the 2.0 or the new Classic on the floor, it won't be sitting next to the older Classic, except for perhaps a few small independent accounts across the board.
But generally speaking the top 10 of our accounts, which is the majority of our business, will be clean and it will have pure presentation of the new Classic.
The historical price of the original Classic was $160, we're bringing this one out at $165.
I think, <UNK>, that what you want to consider there is between the flat scenario and the down scenario from a sales perspective, really the only swing item is in that December quarter.
We would expect some operating margin expansion in the December quarter on the low case, and in the high case we would expect more operating margin expansion in that December quarter.
The fourth quarter is a smaller quarter, and from a basis point improvement perspective, that's the quarter that has the highest basis-point improvement.
The first quarter is relatively flat year over year and then the second quarter, the expansion is more in line with the total-year number.
On the down scenario, we are assuming a similar promotional environment we did last year, and on the flat scenario we are assuming a little bit better promotional environment.
This is <UNK>.
The goal of this fall and holiday, obviously, is not to repeat the level of promotions.
As we said last fall and holiday, the Classic and the Bailey Bow and Button promotions were a one-time event, and the goal is to get back to normal cadence of mark downs; that would be on seasonal product only, and continue back to the full-price carryover model that we've had in the past.
So, that's why you see a little bit of conservatism in the plan as well, is we want to maintain the integrity of the brand and the pricing and not have to get into a promotional environment.
Great, thanks.
Thank you.
I know we had unit growth, the average selling prices when you strip the promotions away, we know had some improvement there, but the promotional environment really put some pressure on that.
Just to answer because I think I know where you're going.
So, ASPs, if you look at them for FY16 lower than they were in the prior year, primarily driven by the lower promotion ---+ sorry the higher level of promotion driving lower ASP, and then as we look out in our guidance we are assuming a higher level ASP in the guidance because of a slightly lower level of promotion, as well as bringing on the new Classic, which will have the higher price point without the promotion.
And the Slim.
Yes, we've been focused on that for the past 12 months and when you saw what we announced with the consolidation of the brands into two lifestyle groups, relocating HOKA and Sanuk into Goleta, those transitions are still in place.
And Wendy and team are looking at the restructure of how to best streamline those brands; but it's something we are continuing to focus on, and looking across the organization and our supply chain network, SKU efficiencies within the brands, making sure our ads and drops are in line with how they should be.
And generally speaking, there's a mindset here of being more efficient, more focused on the things that are going to matter, but we will be taking a quick look, or hard look I should say, over the next 60 to 90 days of additional opportunities where we think there are efficiencies in the organization to streamline SG&A.
I'm really excited about that store design, and anybody that hasn't seen that, it's worth taking a look at the Disney Springs store we just opens a few weeks ago.
It represents the new brand positioning, which we rolled out last year, which is much more California casual contemporary.
But if you think about the fact that we opened our first door 10 years ago as a footwear store, and we've gone 10 years with expanded categories, getting into new categories of lounge and apparel and accessories; it's time to evolve our store design and in-store experience for our consumer.
So, it's a little bit more younger, a little more contemporary, a little more modern, which we think represents where the brand is today.
It does appeal to a younger consumer, and it takes in all the things we've learned over the last year with regards to service levels, customer experience, and a lot of the omni-channel capabilities that we have tested over the last two years.
So, the goal is to use that as a new beacon for the brand, and then we will take that experience down to our wholesale partners globally through shop and shops partner stores as part of our long-term effort to continue to elevate and reposition the UGG brand.
Thanks.
Let me just say it's been an incredible honor and privilege to be the CEO of this company.
And I couldn't be more excited and enthused about <UNK> <UNK> stepping into the role.
Over the last 11 years, I've had the incredible good fortune of working with so many special people to build an incredible success story in Deckers Brands, and we've created tremendous opportunity for a lot of folks.
I look forward to continuing to assist <UNK> and the management team as we move to the next chapter, and it's going to be a great ride.
I would just add that, I am incredibly grateful for the opportunity to work with <UNK> and have the support of the Board and the organization.
I'm very excited to work with an exceptional leadership team that we have at Deckers, the existing leadership as well as new leaders we've brought in over the last 18 months.
Deckers is a special place; we are a best-in-class in a lot of ways.
But most importantly, as a culture and an organization and great people that work hard and get after business.
So I'm very excited to take on the opportunity.
There is great opportunity for all of our brands and all of our people globally.
We're very focused on driving shareholder value over the long term and continuing to do great things at Deckers, so looking forward to it.
