Adrian Yee

Adrian Yee from Barclays observed extraordinarily long lines in stores and asked if TJX was seeing an earlier cadence to holiday shopping behavior or promotionality, and if a shift in the holiday season was expected. He also asked CFO John Klinger about the long-term positive impact of supply chain and transportation logistics work and its effect on the gross margin leverage point.

Answer

President and CEO Ernie Herrman stated that TJX doesn't believe there's a purposeful shift to earlier shopping but rather a natural evolution due to TJX becoming a stronger gift-giving destination and increased brand equity. CFO John Klinger reiterated that the gross margin leverage point remains flat to up 10 basis points on a 3-4% comp, and while supply chain efficiencies are ongoing, the impact on the leverage point is not expected to change significantly. He noted that higher ticket items require more operational efficiency and that expanding existing facilities is preferred over opening new ones where possible.

Adrian Yee observed extraordinarily long lines in stores and asked if TJX is seeing an earlier cadence to holiday shopping or increased promotionality, and about the longer-term positive impact and leverage point changes from supply chain and transportation logistics work.

Answer

Ernie Herrman, President and CEO, stated there's no purposeful shift to earlier shopping, attributing the observed trend to TJX becoming a stronger gift-giving destination and increased brand equity. John Klinger, CFO, reiterated that the gross margin leverage point remains flat to up 10 basis points on a 3-4% comp. He also noted that supply chain work focuses on increasing efficiency for higher ticket items and expanding existing facilities to boost capacity.

Adrian Yee of Barclays asked about Coach's significant inflection in the European market, seeking insights into brand positioning, engagement with younger audiences, marketing spend, and penetration potential. He also inquired about Kate Spade's merchandise margin progress, excluding tariff impacts, and any stabilization in promotional activity.

Answer

Coach CEO Todd Kahn attributed Coach's 39% growth in Europe to its global value proposition and purpose campaigns, focusing on customer acquisition, youth appeal, and strategic store openings beyond traditional high streets. CFO Scott Roe explained that Kate Spade's margin pressure stems from tariffs (disproportionately impacting the brand) and strategic investments in customer engagement, with efforts to reduce discounting impacting the top line but aiming for long-term growth.

Adrian Yee asked a thematic question about Coach's performance in the European market, inquiring about the brand's positioning, appeal to younger audiences, marketing spend, and penetration potential. He also asked Scott Roe about Kate Spade's merchandise margin progress, excluding tariff impacts, and the stabilization of promotional activity.

Answer

Todd Kahn (CEO and Brand President of Coach) attributed Europe's 39% growth to globally consistent strategies, including a strong value proposition, purpose-led campaigns, focus on youth, and strategic store openings beyond traditional high streets. Scott Roe (CFO and COO, Tapestry) explained that Kate Spade's margin pressure stems from tariffs and strategic investments in customer engagement, with a deliberate focus on reducing discounting to foster long-term sustainable growth.

Adrian Yee asked about the impact of price actions taken in July for both UGG and HOKA brands on demand, and whether any sell-through issues have been observed in DTC or wholesale channels. He also inquired about the company's strategy for normalizing the balance between DTC and wholesale channels.

Answer

President and CEO Stefano Caroti stated that the company's premium brands have elasticity, and that selective and strategic price increases have not caused any issues, with strong sell-throughs continuing for both UGG and HOKA. CFO Steve Fasching explained that the company has been underpenetrated in wholesale compared to peers and is strategically expanding its wholesale presence for long-term growth, not short-term sales. He reiterated that wholesale growth will eventually slow, and DTC will pick up, as the company aims for a 50/50 wholesale to DTC balance. Stefano Caroti emphasized the flexibility of their omnichannel model to react to consumer demand.

Adrian Yee inquired about the impact of price actions taken by Deckers Brands in July for both UGG and HOKA, specifically if any sell-through data or DTC performance indicated consumer concern. He also asked about the timeline for normalization in the DTC versus wholesale balance, and when wholesale growth might slow for DTC to pick up.

Answer

President and CEO Stefano Caroti stated that Deckers Brands' premium brands have elasticity, and selective price increases have not caused issues, with strong sell-throughs for key UGG and HOKA styles. CFO Steve Fasching explained that the company is strategically expanding wholesale distribution due to underpenetration, which temporarily impacts DTC growth but is part of a long-term strategy to reach a 50/50 DTC-wholesale balance. He anticipates wholesale growth will begin to slow, allowing DTC to pick up as the company continues to increase demand and points of purchase.

An associate for Adrian Yee asked for details on what drove the outperformance in dual-channel traffic and if this trend is sustainable. He also asked CEO Daniel Heaf about his approach to capital allocation, particularly the balance between shareholder returns and growth investments.

Answer

CFO Eva Boratto confirmed positive dual-channel traffic that outperformed benchmarks and stated these trends are factored into the Q2 guidance. CEO Daniel Heaf commented that it is too early to signal any changes to capital allocation, and his immediate priority is ensuring current investments are directed toward the highest-potential growth areas.