Alex Straton • Morgan Stanley

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CEO Ernie Herrman stated that both apparel and home categories were healthy at Marmaxx, and he believes the company is gaining market share in apparel. CFO John Klinger explained the Q3-to-Q4 margin variance is due to two main factors: inventory cap favorability is highest in Q3, and the timing of the shrink accrual provides a benefit in Q3 but reverses to a headwind in Q4.

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EVP & CFO Harmit Singh stated that the executive team is focused on delivering consistent mid-single-digit growth to reach its $10 billion revenue goal over time. Regarding SG&A, he explained that the company has already leveraged SG&A year-to-date and expects the full-year rate to be around 50%. The key focus is ensuring gross profit dollar growth significantly outpaces SG&A dollar increases, leading to EBIT margin expansion.

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CFO Matt Friend affirmed that returning to a double-digit margin is a worthy goal, consistent with Nike's history. He explained that the 'WinNow' actions are designed to reposition Nike as a full-price brand, and the long-term goal is to achieve operating leverage through sustainable growth and disciplined expense management. CEO Elliot Hill added that leadership is ambitious about returning to double-digit operating margins over time.

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CEO Hillary Super highlighted significant progress in PINK apparel and the Beauty division, noting they are now working to inject more 'joyful expression' into the core Victoria's Secret brand. CFO Scott Sekella detailed that the 170 basis point gross margin decline was primarily driven by higher inbound freight costs, tariff-related raw material write-offs, and increased GWP activity, which he expects to moderate in the back half of the year.

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CFO Eva Boratto stated that the semi-annual sale will start later this year to better feature Father's Day and align with broader market timing, supported by amplified marketing. For category growth, she expects Body Care to grow with the market over time, implying a rate better than low-single-digits. She noted that Home Fragrance is growing and gaining modest share despite pressures in the overall candle market, and highlighted that gifting was a strong performer, up double-digits.

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CEO Richard Dickson affirmed the company's commitment to navigating complexity without compromising long-term strategy or customer value, highlighting ongoing sourcing diversification away from China. CFO Katrina O'Connell added that the provided outlook transparently separates the underlying business health from the dynamic tariff situation, detailing a gross impact of $250-300M and a net impact of $100-150M after current mitigation plans.

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Executive VP & CFO Mike Mathias explained that reinstating full-year guidance depends on gaining better visibility, particularly on the impact of tariffs, and that a decision would likely be made by the Q2 call. He identified AUR (Average Unit Retail) and conversion as the key metrics being watched closely, as they were the primary drivers of the negative comp in Q1, while traffic and customer counts remained relatively healthy.

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EVP & CFO Kristin Wolfe reported that the Southeast region outperformed the chain, while the Midwest trailed, likely due to unfavorable weather in February that negatively impacted the Northeast and Midwest. She noted that performance across merchandise categories was broad-based, with the only specific call-out being that the beauty business was the strongest performer during the quarter.

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EVP & CFO Kristin Wolfe detailed the regional performance, noting that the Southeast outperformed the chain while the Midwest trailed, which was likely due to unfavorable weather in that region. She confirmed weather was a significant negative factor in February but normalized in March and April. Regarding categories, Wolfe stated that performance was broad-based, with the only specific call-out being that the beauty business was the best-performing category during the quarter.

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CFO Andrew Page explained that the store growth for the Ball & Racquet segment was almost entirely concentrated in Asia and Greater China, where the mono-brand retail format is highly effective. He stated that profitability is expected to improve as the company's strategic investments in the 'Tennis 360' concept begin to scale.

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CFO Andrew Page confirmed that the store growth is almost entirely in Asia and Greater China, where the mono-brand retail format is highly effective. He explained that profitability is currently impacted by strategic investments in the 'Tennis 360' concept and is expected to improve as that initiative reaches scale.

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Co-Founder and CEO Christopher Gibson explained that CCM and NF2 originated from the Recursion 0.1 platform (repurposing), while C. diff came from the 1.0 platform (new chemical entities). Chief R&D Officer Najat Khan added that the go-forward strategy emphasizes in-house molecule design and development strategies with clearer endpoints, a shift from the in-licensed nature of the older programs.

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Group President and COO Michael Hartshorn expects domestic freight to be a headwind, while ocean freight is being monitored. EVP and CFO Adam Orvos clarified the CapEx increase to $855 million is mainly for supply chain, including a new distribution facility. Hartshorn added that merchant process investments involve new buying tools and enterprise-wide data analytics.

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