Okay, good morning, almost afternoon, everybody. I'm Alex Straton, Morgan Stanley's North America Softlines Retail and Brands Analyst here at Morgan Stanley. I'm also joined by my colleague, Stephen Byrd, who's our Head of Sustainability Research, relevant for Allbirds here today. So thanks to all of you for joining us on our first day of our conference. Super excited to welcome Allbirds here to the stage today. Yeah. So, you know, as a quick introduction, and before I introduce both of these very special guests up here more formally, Allbirds is about a $200 million market cap global lifestyle brand focused on sustainable footwear and apparel. Went public in 2021, so relatively recently. Today, we're joined by Allbirds' CEO and Co-founder, Joey Zwillinger, and then also new CFO, Annie Mitchell. So thanks, guys, for joining us today. Thanks for having us. Thank you. Perfect! So let me just run you guys through the necessary format, overview details, and then the disclosures, and then we can get into your guys' background, more fulsomely. So on the format, it's gonna be a fireside chat, where we'll explore some of the recent investor questions we've been getting most frequently. Then we'll also leave some time to answer your questions at the end, so I can call on people when we get to that point. Then on disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. Always my favorite part of the presentation. Okay, Joey, maybe let's start with you. Rather than me going into a lengthy bio, how about you give me a quick overview of your background, what your career looked like before Allbirds, what led you to co-found the business? Okay. Quick overview there. Yeah, I'll do the lengthy bio. So I guess to frame it most relevantly for Allbirds, so I was a very young guy, and I took the view that the private sector, and particularly entrepreneurship, would have a really dynamic opportunity to impact the existential crisis around climate change. Took a few different paths through that journey to figure out what would be the best way to do that. The first step was investing for a few years, and then joined an operating company called Solazyme, where we actually used biotechnology to manipulate microorganisms and sell those to businesses that would then position those ingredients and those components to consumers. So we could replace petrochemicals or any petroleum derivative to be a higher performance and zero carbon impact component into a consumer product, like a shoe. I remember pitching our now competitors and they were like: "That's incredible. We want it." And then they were like: "Eh, actually, we just like plastic. Can you just do plastic cheaper?" And so this, like, Sisyphean exercise of just continually having this experience led me to realize that the consumer wanted a no-compromise offering, the technology existed, and brands really were not emotionally connecting with consumers in a way that made this relevant. And so my co-founder, Tim Brown, was more on the design and kind of intuitive consumer insights around what consumers were doing from a trend perspective and a design perspective. We took a view that the casualization of the workforce and just life in general meant that the sneaker business, particularly a little bit more minimally branded sneaker business, would be something that would transcend a multi-decade trend, that could be what athleisure was in apparel, it could be something similar in the footwear space. I think we're still really right on track with where things are headed for that. And so we decided to join forces and offer something that was no compromise for a consumer, something that was amazing and differentiated from the materials that we sourced and put into it, that also happened to be better for the environment. And so that free gift with purchase is that no-compromise offering, where we deliver amazing comfort, good style, we meet the use occasion, performance requirements for the consumer, and you also get this beautiful brand halo that we align with their personal values, which might not be why they shelled out dollars from their wallet, but is a nice thing to drive affinity for the brand. So that was the kind of underpinning of why we came together, Tim and I, and still believe pretty strongly that that vision is gonna be the next way that the generations defining brands are gonna come good. So definitely better said than I could have on the bio. Maybe, Annie, moving over to you, I know you're a little bit newer to the business, joined more recently. Perhaps give us a quick overview of your career, why you joined Allbirds. That would be super helpful. Great. Yes, I joined Allbirds almost 8 months ago. It's been fast and furious. I worked for large global companies like Gap and Adidas. I've also worked for smaller startup companies like eBags and Gymshark. And throughout there, I've always sort of had, like, an analytical or finance type role. In my last two roles, first at Adidas, I was the SVP and CFO of Adidas North America, a $5 billion business. And then I wanted to try something new, and so there was a little British startup who was opening their North American headquarters in Denver, and I joined Gymshark as their vice president of finance and analytics. And then Allbirds called earlier this year. Why I was interested in Allbirds was because Joey was really transparent and excited about the transformation that Allbirds was going to be going through. When I look back at my career, whether it be big global company or small startup, I've always been a part of change, about growing, developing, transforming, and I've really enjoyed sort of the rigor and the excitement of delivering upon that. So where some people probably would have looked at the Allbirds and been intimidated by it, I was actually very energized by it. Then wrapped up, of course, in the fact that Allbirds has its mission-driven sustainability focus. As somebody who worked for 20 years in retail, I recognize the impact that all of these companies are having on the world. To be a part of the solution was something that was very much appealing to me. It was a combination of, one, who Allbirds is, but two, the opportunity in front of it, and knowing that I could help to really help to deliver on that transformation and take a great brand and make it a great business. That's perfect. I feel like what we were most excited about on our end was you kind of had experience at a smaller sportswear name and also a bigger one, so definitely relevant as you- Yeah Come over to Allbirds. Maybe Joey, moving back over to you. As you mentioned, you've been here since the beginning. Now you're in the middle of a transformation plan. Walk us through how we got from there to here, maybe high level. Yeah. The, it's not where you'd exactly wanna be, so acknowledge that. We were four years old when COVID happened, and so, and had just absolutely torrid growth up to that point. What we didn't have was high aided awareness. We were in the single digits for aided awareness in the U.S. when COVID happened, and that was quite a tricky period for us. And I would say there was a lot of signals from the consumer that turned out were actually noise. And we launched a product called the Dasher, which is still a fantastic performing franchise for us, which has a little bit more performance-oriented positioning to it than our traditional classic Wool Runner that we started the brand with. You know, that's an example where we read the permission from the consumer to get a little bit more aggressive into technical performance, which turns out it was just people that were running for the first time in 15 years, and they wanted to try Allbirds because we make an amazingly comfortable shoe. So you know, a few things like that were just difficult over the next couple, the next year, and the product development cycles are 18 months minimum, usually, when you're making something brand new in this industry. So pretty difficult to contend with, with the very rapid changing consumer behavior, both in terms of consumer preference on product, as well as traffic flow on the retail side. What we realized as the end of 2022 approached was, we needed to make some significant changes, and we ended the year with a lot of inventory. So as we moved into 2023, we wanted to do kind of three things. The first is fundamentally reduce the top line that's required to be profitable. So you might not enjoy the full theoretical margin that we would have otherwise anticipated, but we, we did, we did a lot of heavy lifting to drop the cost structure and rebase that, so that we could be profitable at a much smaller scale. The second thing is, we needed to get through inventory. That, that is like an albatross around any retailer's neck. If you have too much of it, you can't drive margin, you can't chase into strength because you don't have the space on your balance sheet or your warehouses. So that was point number two. And the last one was really regaining and instilling a lot more momentum into the brand, and getting that flywheel back and humming, where you build great product, tell great stories, and that stuff starts to build, and you get the ubiquity on the street, so people see your product. So those are the three things that we really wanted to do, though. The longest lead item is that third one, so that's really gonna start to come into play in 2024 and beyond, although we have some early quick points. So that was. That's kind of the arc of where we've been and what we strive to accomplish this year. Bringing in Annie has been transformational just internally, in terms of us being able to execute against that. So, yeah. Perfect. So the pillars are clear. You hinted at this a little bit. Where do you feel like you've pushed the ball forward most, and where do you have maybe more work to do? Yeah. I mean, this year has been, like, you wouldn't know it from the stock price, but it's been fantastic execution. So against what we laid out, we have, we'll end the year 40% down on, on inventory year-over-year. We have, like, significantly dropped the cost structure. And, and I'll actually take a minute to just walk you through what we did. So the cost of goods side, what you'll see next year versus this year. So this year, we have accelerated a manufacturing transition, so we have one factory group in Vietnam that's giving significant efficiencies of scale for us. They're the second biggest footwear manufacturer in the world, so we get a lot of economies of scale from them and integrated operations. So that's just pure and simple. It used to cost us this, it's gonna cost us a bunch less because we moved to this factory and get their efficiencies. We've also done a really good material sourcing program, where we'll get additional benefits on the cost of goods side. So those two things are quite important, and as that flows through our inventory and shows up on the P&L, we'll get some really good benefits. And we have a little bit of logistics tailwinds from just the container freight running through from the height of the COVID shipping costs and whatnot. So all that's really important. The second thing, just to point a delta to between 2023 and 2024, is we've significantly brought down inventory, and the way we did that was to have a pretty high rate of markdown. So the average discount was the most significant by a mile, what we've had in the history of the company. We expect to pare back on that very significantly next year. So you get a compounding effect of, like, much less discount, and markdown intensity drives margin up, and you couple that with all the cost savings work that we've done, on the cost of goods side. That should see really good indicators for next year in terms of what we do with gross margin. On the G&A side, we pulled out some from corporate, and then really importantly, we shifted. We've already announced four markets in our international go-to-market, shifting from direct to a distributor model, which you can kind of think akin to wholesale in terms of the gross margin and flow-through structure. And we also will strip out a bunch of G&A from the people and the store fleet that we had in the international market. So fundamentally, rebase the cost structure, and that's been complicated and tricky, and we've done a fantastic job on that. I'd say that the key remaining items are now: Okay, this 18-month product cycle, let's get this focus on our core franchises. And had an interesting discussion this morning, like, are you worried about cannibalization? Absolutely not. What we've seen is when we have icons, and we're fortunate to be the fact that we're small, we already have a couple of icons that would be defined as an icon for any footwear brand, regardless of scale, in terms of the volume that they're doing. So the idea now is we need to have consumers owning four of this, and we need to embellish them and distort them. So getting on that franchise offense is gonna be fantastic for the consumer, and it's also going to be much better and higher leverage for our business because it's easier to embellish something you already have than to create a new silhouette. So the first proof point of that was the Wool Runner 2 launch, the kind of iteration on our hero franchise that we launched the business with. We launched that about a month ago now, and it's been the best launch we've had in 18 months, and it's a noisy period to launch a product in right now. We're really pleased with the success of that, and testament to the strategy that that's the start of now pushing through and regaining that flywheel, which is what we expect to see in 2024. Perfect. I wanna circle back on the assortment changes in a little bit. Before I do that, maybe Annie, let's think about all this from your perspective. I mean, you joined in the middle of all this. So what were your initial priorities in the first few months, and how are they changing now as you're thinking about 2024? Great. So when I first joined, I really wanted to make sure that I understood and then improved upon and built upon the transformation plan, knowing that finance would have an outsized role in really bringing that to life. And in doing so, really the first priority was around cash and inventory, making sure that we were very smart and strategic about our overall cash usage, which we've brought down meaningfully year-over-year, as well as improve that inventory makeup that Joey was talking about. We knew that if we got those two things right, it would buy us the time and the freedom to be able to do the longer, more complex aspects of the overall transformation. You know, with both Q2 and Q3, we shared some great results. Inventory will be down 37%. Through Q3 last year, we spent $107 million. This year, we spent $35 million. So again, a meaningful improvement on those, because, as Joey mentioned, we do need that time to bring the new product to life, to really and then put the dollars behind marketing it. So now that I would say, like, that foundation is really there, and, and as we start to pivot to 2024, in one word, my focus is margin. We know that next year, with less discounting, we have a much cleaner inventory base. We'll be able to increase our overall ASPs, our average selling prices. The improvements in terms of the factory transition, the material innovation, the material composition changes that we've made will bring down our average unit cost. And those are going to be the two things working on both sides of the equation to really improve our margin. So that's my focus as we go into 2024. The other piece of it that's a little bit, like, sort of more complex and operational, has been the international transitions. So we are going from operating directly in six regions. We have now transitioned to two. We have letters of intent for two additional regions, and what that means is going from us selling directly to via our website, via retail stores. We've now transitioned to a distributor relationship, and these distributors have regional expertise. They have relationships with wholesalers. And so really understanding, doing the negotiations, what should that structure of that look like? And then executing again, the two that are... have already been transitioned, additional two underway. That's been another area, area of focus, for myself and my team. And again, really pleased with the speed with which we've been able to do that. To think about that, make the decision in Q1, to then actually execute two in Q3, and then as well, to announce two more. Of the four that we've announced or talked about, it makes up about 12% of our overall revenues, so meaningful to get those set up correctly and then executed well. So, those have been some of the big priority items. The second piece, as I look to 2024, as in addition to margin, is once we start to bring this new, product to life, is really getting behind and being helpful in managing the marketing spend. We intentionally pulled back marketing in 2023, and so we know that awareness is one of our biggest opportunities as a company, and so making sure that we're putting the right dollars behind marketing in 2024. So margin and marketing, that's what. A little preview, Alex, on what you're gonna hear from me on the next couple of earnings calls. Perfect. From what you and Joey have shared, there's a lot of moving pieces. A s you execute this turnaround plan. Annie, when you first met with the sell side community, I think you did a nice job outlining the puts and takes by line item. Yeah. I want you to share that here. Great. Maybe let's start with the top line. Like, what are the different moving pieces there? How we should think about modeling it? If you would walk us through the moving pieces, would be helpful. Sure. When you really look at our business, especially with the changes that we're making on the international side of it, up until the end of Q3 this year, the international business made up about 26% of our revenues. And so that's the piece that's gonna go through the largest transformation in terms of visibility, in terms of the financials. As we transition then from being a direct market, where we're selling directly to consumer, to then selling to the distributor, that, as we go to 2024, is obviously going to have a material impact on our top line, because 26% of our business, 12% of it that we've announced so far, is going to be sold at what we kind of affectionately call a wholesale minus. And so whereas we used to be selling something, I'll use some really simple math, at $10 to consumer, we're going to be selling it for $3 to the distributors. And the reason we are willing to sell it that low is, one, it's a very, very low cost structure for us underneath it. It simplifies our overall business, which is a key tenet of our transformation plan. And third, there's huge benefits in terms of working capital in the way that we set this up. And so that's a big component to think that that piece of our business is going to go from, again, like a $10 to a $3. and we'll talk, I think, about this in a little bit, but also that transition is immediately profitable with the sales, even at a lower base, again, because of that really light operating structure underneath it. When we look at the U.S. business, specifically the direct business, again, that focus is going to be on margin. So it's not about necessarily growing the top line, it's about improving the quality of the top line. So if you go from a year like 2023, that is relatively highly promotional, you're going to expect to see lower sort of unit sales potentially next year, but a higher average selling price. And then with our wholesale business, which is relatively small, low single digits, that one we've intentionally pulled back, just like we are really waiting to come to market with some new, great, fresh, innovative product in 2024. That's also the time frame that you would see us intentionally want to grow again with our wholesale partners versus pulling back in the first portion of the year. So as you said, lots of moving pieces, and when I try to think about it for myself and my team, I sort of break it up that way, like, what's happening internationally, what's happening in the U.S., and then within the U.S., what's going on within the channels? No, that's a great overview, and you previewed this a little bit. Maybe now walk us through profitability. What are the puts and takes we should be thinking about there as you execute that, this plan? Great. So building again on that international piece of the story, while we are selling at a distributor price, you know, we'll have set price lists. You should expect to see that top line again come down year-over-year, but we expect a contribution margin on that business to be north of 20%. And again, it's largely because, you know, what we give in terms of the selling price, we have very, very little in terms of marketing or OpEx expenses to come along with it. And then the other piece is really going to be that trade-off between margin and marketing as we go into 2024 for our direct business. We are ending this year so clean in terms of inventory. Again, we project to be down 40% year-over-year. Our open- to- buy is going to be filled up with great product in our core colors and our core styles. Those are the ones that we can sell at much fuller price. And so really, getting back to that sort of traditional Allbirds, higher ASP, healthy margins, is part of the puts and takes. One of the other activities that we did this year, or actions that we took, was we did a reduction in force in May. And so when we go into 2024, we'll have the full 12-month impact of that reduction in force. So those are a couple of the big moving nuggets. As you guys can imagine, there's about 300 little ones underneath, but those are the big ones that we think about when we talk about. Maybe one follow-up from me there. Yes. As you think about the path to higher ASPs, lower promotionality, how do you guys high level think about the timeline right now? Right. So we're really pleased not only with the overall size of our inventory coming down year-over-year, but more importantly, how we're ending the year in terms of the composition of it. We've been able to, this year, clear through those non-core colors, non-core styles, the ones that we intentionally want to sunset this year. And so as we go into early next year, we're very well aware of the overall macro economy, the state of the consumer, where their heads are at. And so I would say it's going to be a, you know, a modest approach in the first half of the year, where we continue to sort of push a little bit on certain levers in terms of promotionality. And then we feel very good about the second half of the year in terms of our product pipeline, and I would say even less promotions then. And so it'll be sort of, like, heavy this year, light to medium in the first half of the year, and then I would say light in the back half. But as Joey mentioned, you know, we've really structured the business to be able to weather economic storms that might still be with us. I think everybody is sort of waiting for what is going to happen. I think every quarter is when we think, like, this is going to be the quarter, and it never really seems to happen in terms of falling off a cliff. We want to make sure that whatever the overall macro economy is, we're well positioned next year to be able to continue to march towards profitability in 2025, regardless of what happens in the macro economy next year. That cadence is super clear in terms of kind of how you guys are thinking about it now. Maybe taking a bigger picture view as you think about this goal you've outlined of becoming EBITDA positive, cash flow positive in 2025. Talk to me about what gives you conviction that that's the appropriate timeline from here. Great. When we look at our business, and we look at the cost structure, we've done the hard work this year. Again, I mentioned the RIF that we did in 2023. We'll get a full year benefit of that in 2024, and then obviously in 2025. The overall, COGS savings that we are marching towards for 2025 are worth $20-$25 million on an annualized volume basis, with 2022 being our starting year. And so we're only going to see a portion of that in 2024, just because, again, we already have existing inventory. We'll end the year with, let's say, $70 million worth of inventory. Some of that was bought at the old factory or with the old materials. So as we're selling that down, bringing in the new inventory, that is when we will see that average unit cost really come to life, and we expect to be, you know, fully turned over in that inventory and ready to enter 2025 on a much lower cost basis. So that's it, you know, when you look at 2023, it was the reset year. You look at 2024, and it's like, ooh, partial pieces. It's coming, it's happening, but not all at once. And then 2025 is the year that it really all does come together. So that combination of focus on margin, driven by both increases in our average selling prices as well as the COGS improvements. We have some tailwinds from freight and duty, as Joey mentioned. It is also the full year impacts of the reduction in force. And then we're really positioned well with the international distributors. We do expect that the ones we're gonna transition will all be completed next year. So 2025, we'll get the full year benefit of that being a profitable segment of our business. Again, probably that contribution margin around 20%. So those big chunky pieces, we get the full year impact in 2025, which we're- Maybe I'll just add- Looking forward to. We're not gonna cut our way to profitability to the scale that we want to. The good thing that we have situated for the brand is we have the top one or two NPS of any company in the footwear space. We have, when we survey customers, like, well north of 90% say they wanna consider buying another pair from us in the next twelve months. So the underlying fundamentals of the brand health are still very strong with the consumer, and then we see that when we launch product that really resonate with the core consumer, like the Wool Runner 2. So it gives us some optimism that as we, as we transition from a year where we're really focused on just getting through inventory and cleaning up some of the business structure, on some investments that didn't work out, when we shift into 2024, we can now shift on getting smart, profitable growth. And we need to orient the marketing to start to drive growth again and start to get some momentum behind the brand. And when that happens, you—like, it'll be a tide that lifts all boats for all of these channels, including the international distributor business. So that, I would say, is an underlying health that gives us a lot of optimism, that this isn't just about a cost reduction and business transformation exercise. This is about a very healthy brand with a very healthy balance sheet that happens to be going through a transformation. The work is now a significant portion of the way done in terms of that heavy lifting aspect of what we needed to do. Joey, I'm glad you jumped in here, because one thing I wanted to circle back on as we think forward is, you mentioned the Wool Runner 2 as some initial evidence of some of the work you've done coming to life. So maybe you can address, from a qualitative perspective, what we should be looking for as evidence of this being expressed. And then maybe, Annie, two-part question: what should we be looking for in the P&L as we're trying to monitor your, your progress here? So franchise offense, that's what you should expect to see. It should be embellishments and distortions on the core, the Runners, the Dashers, and maybe the Breezers. We have a really interesting opportunity with women, where the awareness is higher than men, but the consideration is quite a bit lower, which you just logically conclude that we have an opportunity to deliver a product that's gonna work better for her. So we have a line of ballet flats that we can do as a bunch of extensions and embellishments there that can be very resonant with her. At the same time, I think where we've landed in this active life space, at the blend of casual and athletic, has a lot of opportunities. You can tug on that a little bit to the left on maybe more casual, like, like Annie's wearing, or you can do a little bit more to the right. We have an amazing new product coming out in the middle of next year, which really tugs it to the right, a little bit more athletically oriented from an aesthetic perspective and performance and functionality. But that said, it's not like a hardcore technical running shoe. So that gives us a little bit of elevated ability to drive price and margin through the consumer and get them to buy multiple pairs. So I, I'd say that's, at the highest level, that's what you should expect to see. And we are striving towards a place where consumers on our consumer, on average, owns three or four pairs of our shoes. And when that happens, you just get great leverage for the business, and you can continue to expand and grow from there, so. Am I right that when we should see that kind of full assortment pivot should be, like, the back half of the year? Yeah, I mean, with an 18-month cycle, you can kind of just think of it as what if we started in the beginning of 2023, like, middle is when we should really start to see the vast majority of that. We did a little hurry-up offense on a few things, and there are small things, just like color, that you can do to get more commerciality through the line, which I think we had opportunities for. Perfect. Maybe Annie, over to you. What should we be looking for from a P&L perspective as we're monitoring this? Great. For 2024, again, largely associated with the international transitions, you should expect that the top line will be down, because it's not a like for like business. But overall, when we look at that U.S. piece, margins will be up, marketing spend will come to life again, OpEx will be relatively flat. Then you layer in the international piece, which has a completely different piece sort of look to it in terms of, again, that wholesale minus, and then very little after the margin line in terms of overall cost. We have a really small team working on that. And so, and as we get to 2025, we leverage the brand affinity that we have. We bring in some of those new products. As we march towards 2025, that's when I would expect to see us really drive the top line again and get that leverage driving us to full year profitability, and cash flow positivity in 2025. One clarification for you. When you say top line down, are you talking about the international piece or the whole business? The whole piece driven down because of international. Okay, perfect. So, yeah. That's clear. Great. One more question from me, then I'll turn it over to Stephen for some of the sustainability questions. I think one piece we didn't touch on that's new for you guys is the, the Amazon relationship. So can you guys dive into that? What's going on there? When did that start? How should we think about it? Yeah, maybe I can take a swing at that, and you can jump in if you'd like, Annie. We just view it as an incremental, profitable vehicle for us, a new channel. And so we launched in mid-November, so super early, but it's wildly outperforming our expectations, so it's going very well so far. Amazon's been a great partner. They've really leaned into it and given us all the marquee features, a great brand, storefront within their platform. And the way that it's generally works on that platform is, the core franchises and the core colorways within those get the algorithm working the best for you. So you don't wanna be changing a lot of things on that platform. You wanna be dropping your newest stuff. So the idea is keep it very tightly assorted within the core franchises, within that kind of the more neutrals: black, white, blue, et cetera, gray, kinda colorways. Get the flywheel of those reviews and, you know, all the things that you need to get working well, and that's already off to a fantastic start. So really pleased with that, and expect that we'll continue to grow that. That will be a very full price channel because of the fact that those are the things that work on that platform. So we're pleased with the relationship, pleased with where it's going, and could see that being a really nice growth vehicle for us. Perfect. Helpful overview. Maybe, Stephen, I'll turn it over to you. And if you can leave me 30 seconds at the end for the rapid fire, what we're asking everybody this conference. Absolutely. So Joey, it's clear sustainability is core to what you do in your brand. Could you give us an update on the flight plan, just progress? You've made good progress going into 2025 in terms of where you stand, but also how this relates to your transformation strategy. Could you just sort of bring that together? Sure. So the flight plan that's referenced is we have committed to a 50% reduction from 2020 carbon emissions. So the back of my shoe says 7.2 kilograms of carbon dioxide equivalent emission on the shoe. We've pledged to bring the per unit down by 50% in 2025, and down beyond 95% by 2030. And that's all within Science-Based Targets. It's It's way in excess of that. But how is that aligned? So you might be sitting here, you might say, "That's important to me." You might say, "I truly don't give a shit, and you guys just need to be profitable." The nice thing is, the way we've structured our business from day one is a full alignment between the business model and the impact model. So every time we sell a shoe, we're doing something better for the planet. We don't think we're expanding the market for sneakers very much. We think we're stealing share from other competitors. And when we do that on a marginal basis, we're doing something fantastic for the planet and good for our financials. So our material sourcing and the innovation that we deliver through materials creates differentiation in the marketplace and drives growth. It also happens to be a fundamental aspect of our cost management approach. So we get great tailwinds on the cost side, we get the differentiated position, and it also, of course, delivers on the brand promise overall, which if you don't have those integrated, hard to develop a generationally defining brand, which is what our aspiration is. So we're on track for all those things. They're budgeted and resourced. They're all within the plan that we're talking about for the transformation, and frankly, they're mostly almost to an initiative, very aligned with the objective of driving a lot of profitability. Yeah. We love the alignment of ESG goals with profitability. That's- You can't do it unless you, like, weave it into the DNA of your offering. It's not like a giveaway, "We'll give you a pair if you buy a pair," or something like that. That's kind of marketing. This is woven into the DNA or knit in certain cases into the DNA of the products that we sell, and so we're offering that value directly to the consumer. So... Well said. Last question from me. I wanna give Alex a few time. When you step way back and you think about 5-10 years down the road in the industry and sustainability practices in the industry, what do you see in terms of major changes, approaches? What do you see coming long term? So I think overall, if you just look at what consumer products companies do, they are emitting a lot of carbon dioxide or equivalent warming gases into the atmosphere, and yet they're privatizing all the profit and just socializing all those costs to the public. And so I think what is happening quite quickly is that there is a very focused effort on a regulatory framework to drive disclosure of warming gases that a company emits. California has just come out with one- And there's gonna be a lot following, where companies do have to disclose their product impact all the way through their manufacturing, even if they use a capital light model like we do on manufacturing. You have to account for the products that are coming out of your factories, even if you don't own those factories. So, that disclosure piece is coming quite quickly, and then eventually people are gonna have to pay for it. Yeah. And somebody does have to pay or this stuff if we're gonna, if we're gonna shift the economy, and I think it's clear that we are headed in that direction. So there's lots of different ways that that can go down. Europe takes a border adjustment approach, where they, they charge people to import the products, and then those have to be passed on to the consumer. So it is coming. So I would say that the companies who are prepared, understand what their emissions are, and understand how to bring those down, are gonna be set up for much more success relative to their competitors in that space. So my expectation in the next few years is, we'll get broad-based company disclosure first, we'll get product-level disclosure next, and then we'll get costs flowed through these companies onto the consumer. don't exactly know how that's gonna take shape, but it will be different in different regions. And that will be, that will set companies like us who have a focus on this, particularly if it benefits the business, and it's not just a burden for the business. If we actually benefit the business because we're more sustainable, and we also are advantaged from a competitive perspective, I think that is a really nice future, and I would be remiss if I didn't say, this is just where consumers are headed. Gen Z-ers may not have any money yet, but when they do, which I assume they will at some point, they are gonna be buying against their values more significantly than Gen X and Millennials. So that is something I think we can all look forward to happening, and I think if you don't situate yourself today, you're putting yourself in a bit of a tricky situation where you're just gonna try to lobby your way out of it, and the tide just seems to be going too fast. So that'd be what I would predict for the future. Yeah, that's well said. I mean, the idea of a carbon border adjustment is becoming more and more real, and when you see certain regions take that approach, there's a possibility of a domino effect. Yeah. It's really interesting. Republican senators just proposed it here, so it's- Understandable That can show you. It's like a bipartisan thing. Yeah. It hurts China, helps us, so there's lots of reasons to think that that's gonna happen. Broadly, across many industries, we still feel investors are just early, understandably early, in really thinking through- Yeah what that might mean. So with that, I'll end. Great. I'll call this a speed round, about 30 seconds or so. So questions we're asking everybody at the conference. You, you've answered some of these in part, but just so we nail them down, maybe thinking about demand next year relative to current trend, are you guys in the accelerate, stabilize, or decelerate camp? I'm in the middle. This, I think it's just a hold. Inventories in our industry are rebalanced now, and it's healthier, but consumer spending might tighten a little bit, so. Perfect. Good enough. Short answer. Maybe Annie, for you, there's lots of puts and takes around margin, so how are you guys planning margin for next year? Up, down, neutral? Up. Perfect. We like to hear. Last one, a little bit more nuanced. On capital allocation, how do you guys prioritize next year between CapEx, buybacks, et cetera? What's influencing that? Well, first and foremost, we don't have any debt. That puts us in a great position, so we don't have to worry about paying down that. Next is, you know, our priority is really on improving the business in 2024 and bringing it to life in 2025 in terms of profitability. So we will have very limited CapEx, limited investment in 2024, and then in 2025, when we are cash flow positive, I look forward to talking to you again about what we're gonna do with all that money. Perfect. Thank you so much for joining us today, and thanks, Stephen, for joining me up here. Thanks, Stephen.