Gross margin declined 220 basis points to 43.4 percent, primarily driven by higher product costs, as well as investments in our digital business, an unanticipated customs assessment in an Emerging Markets territory related to imports that occurred during four previous fiscal years, and higher discounts on close-out sales. These factors more than offset the positive effects of price increases, lower air freight costs, growing sales in our Direct to Consumer operations and ongoing product cost reduction initiatives.
Notice the talk about higher costs; the fact that margins were down despite "the positive effects of price increases", "and ongoing product cost reduction initiatives".
The last one is particularly interesting....I wonder what those initiatives are? Could they be related to your to your perceived drop in quality?
Enough with the numbers...back to the shoes.