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CEO Fran Horowitz identified several bright spots in the A&F brand, including activewear, strong bottoms, and swim, emphasizing the team's ability to react to these trends. CFO Robert Ball detailed the EPS reduction, attributing the majority to the net $50 million tariff impact (100 basis points on margin). The remainder, he explained, comes from the flow-through of the Q2 operating margin outlook, which is pressured by remaining carryover inventory, and a slightly higher tax rate.

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CEO Fran Horowitz-Bonadies clarified that Abercrombie's start to the year was a 'more normalized' spring transition compared to a 'flawless' one last year, and they are seeing positive signs in spring categories. CFO Robert Ball reiterated that the Q1 operating margin pressure is driven by three factors: higher freight costs, gross margin pressure from selling through seasonal carryover inventory, and deleverage from increased marketing investments.

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CFO & COO Scott Lipesky explained that freight has become a headwind due to well-documented spikes in both ocean and air rates, which is factored into the company's outlook. Regarding inventory, he stated the company feels great about the position, noting the 9% increase is driven by higher freight costs and a mix shift towards higher-cost Abercrombie products, while unit levels remain tightly controlled in a 'read and react' mode.

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CEO Fran Horowitz identified activewear, bottoms, and swim as bright spots within Abercrombie. SVP & CFO Robert Ball broke down the EPS reduction, attributing it primarily to the ~$50 million net impact from tariffs (100 basis points on margin), with the remainder driven by the flow-through of a slightly lower Q2 operating margin outlook and a higher tax rate.

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Executive James Conroy reported that the company is hitting its branded strategy targets and has now fully anniversaried the associated margin headwinds. He was encouraged by the performance of the Ladies' apparel business, which was in line with and slightly better than the total chain average for the quarter, suggesting the strategy is yielding positive results in that key category.

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Executive James Conroy stated that the company has successfully repositioned its assortment with the branded strategy and has now fully anniversaried the margin impact, so it is no longer a headwind. He was encouraged that the Ladies' business performed in line with, and slightly better than, the chain average for the quarter.

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Group President & COO Michael Hartshorn confirmed the only notable change to the Q4 outlook was the packaway-related expense shift. He expressed confidence in achieving the 2% to 3% comp guidance, citing the lapping of Q3's negative weather impact, the strength of important holiday categories, and well-planned gift-giving assortments.

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Group President and COO Michael Hartshorn provided several examples impacting both COGS and SG&A, including DC automation (automated vehicles, robots), in-store self-checkout pilots, new handheld devices for inventory management, and flexible scheduling. CFO Adam Orvos added that domestic freight was a key area of efficiency, with favorable contracted rates and some help from fuel costs contributing to the improved outlook.

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Co-President and COO Francis Conforti stated that price increases are a last resort and would be applied 'gently and sparingly,' primarily on items with more embellishment, while protecting opening price points. Regarding guidance, he explained that maintaining the full-year forecast is a conservative approach given broader economic uncertainty, as the Q1 beat was largely driven by top-line outperformance that they hope, but are not yet planning for, will continue at the same pace.

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Co-President and COO Francis Conforti explained that gross margin expansion is expected to be driven primarily by lower markdowns at Urban Outfitters, along with leverage in occupancy and delivery expenses. He noted there is no significant difference in the healthy mid-teens operating margins of Anthropologie and Free People, and their future profit contribution will be driven more by top-line growth than further margin expansion.

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Executive Sheila Harrington explained that the brand remains strong at regular price and is comping against a 'fantastic' margin year, necessitating quick action on fashion learnings. CEO Richard Hayne added that despite a slight increase, Free People's markdown rate remains the lowest of all URBN brands and was compared against an unsustainably low rate from the previous year.

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Francis Conforti, Co-President and COO, confirmed the higher markdown plan for Q3 is a precautionary measure across all brands due to the recent sales slowdown. CEO Richard Hayne addressed the UO footprint, noting that over 50% of North American leases are up for renewal in the next three years, and decisions to renew, downsize, or close will be made on a case-by-case basis, favoring smaller, profitable formats.

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CEO Ernie Herrman expressed positivity about continued margin improvement at HomeGoods, supported by strong sales. CFO John Klinger added that top-line sales are a key lever for margin improvement. Regarding sourcing, Herrman explained that for most home products, they deal with third-party vendors who negotiate with factories, and he isn't concerned about availability. For toys, he acknowledged it's trickier but believes their strong vendor relationships will ensure they get their share of available goods.

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CEO Ernie Herrman explained that the international expansions are possible now because the company has the experienced talent available to lead these initiatives without risking core business execution. CFO John Klinger attributed HomeGoods' 200 basis point margin improvement primarily to lapping the costs of closing homegoods.com, along with other expense efficiencies and freight favorability.

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CEO Calvin McDonald noted that while guests are responding well to new products, a cautious consumer is impacting industry-wide traffic. CFO Meghan Frank quantified the guidance, stating North America is expected to grow in the low- to mid-single-digit range, with the U.S. at the lower end of that. She added that Q1 trends are not materially different from Q4 and face a difficult comparison to the prior year's growth.

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CEO Calvin McDonald noted that while guests are responding well to new products, a dynamic macro environment has led to a more cautious consumer and slower industry-wide traffic. CFO Meghan Frank specified that North America is expected to grow in the low-to-mid-single-digit range for the year, with the U.S. at the lower end of that range. She added that Q1 trends are not materially different from Q4.

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CEO Calvin McDonald stated that Q3 U.S. performance was in line with expectations and that newness is sequentially strengthening into Q4. He expressed confidence in future U.S. growth, citing strong guest retention, low unaided brand awareness (36%), and the opportunity to increase revenue per guest by returning to historical levels of product newness by Q1 2025. He affirmed that the company's 'Power of Three x2' growth targets for North America remain unchanged.

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CFO Meghan Frank clarified that the second-half guidance reflects Q2 trends, with Q4 adjusted for a shorter holiday season and macro uncertainty, but the relative outlook between Q3 and Q4 is unchanged. CEO Calvin McDonald attributed the revenue miss primarily to controllable, internal factors, namely a lack of product newness in the U.S. women's assortment which impacted conversion despite strong traffic.

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CFO Meghan Frank clarified that while the overall second-half outlook was lowered, the relative performance expectation between Q3 and Q4 remains unchanged, with Q4 adjusted for a shorter holiday season and the U.S. election. CEO Calvin McDonald attributed the revenue miss primarily to controllable, internal factors, specifically a lack of product newness in the U.S. women's category that hurt conversion rates despite strong store and site traffic.

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CEO Elliott Hill's biggest learning was that the direct and wholesale channels had become too siloed, and the focus is now on creating an integrated marketplace with closer partnerships. CFO Matt Friend clarified that they are not structurally lowering margins; rather, they are returning wholesale discount rates to historical levels to ensure mutual profitability and enable investment in retail presentation, which he called 'ultimately what wins'.

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President and CEO Elliott Hill identified a key learning was that NIKE had been operating its direct and wholesale channels in silos and is now moving to a more integrated marketplace approach. He also noted a need to get back 'in rhythm' with wholesale partners. CFO Matt Friend clarified that while the wholesale profit pool has been volatile, NIKE is restoring commercial terms and discount rates to historical levels, not structurally lowering them, to ensure mutual profitability and enable investment in retail presentation.

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EVP & CFO Matthew Friend attributed the unit miss to underperformance in Greater China and broad macro softness. He noted the 20% decline in NIKE Digital was largely driven by a planned, nearly 50% reduction in three classic franchises to rebalance the portfolio. For tracking the comeback, he pointed to encouraging signs like double-digit growth in new products and positive momentum in the Running category.

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President Jen Foyle outlined several initiatives, including chasing inventory in high-demand categories like denim and sleepwear, maintaining inventory flexibility for the back half, and balancing the promotional cadence. CFO Mike Mathias responded to the sourcing question by emphasizing flexibility, stating that the company has redundancy across 15 countries and will shift production as needed, without specifying destinations.

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Mike Mathias, CFO, reiterated that the revenue guidance adjustment is due to non-core revenue components, not the AE or Aerie brands. He explained the operating income cadence is a function of the retail calendar shift: Q3 will have a similar operating rate to last year due to flat revenue, while Q4 will see significant operating rate improvement from SG&A leverage, leading to a full-year rate expansion of approximately 140 basis points.

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EVP & CFO Kristin Wolfe explained the 15% inventory increase was driven by the addition of 101 net new stores and a strategic increase in reserve inventory, which rose to 46% of total inventory from 39% the prior year. She noted that comp store inventory was down 3%, reflecting faster turns. CEO Michael O'Sullivan added that in addition to the 64 Bed Bath & Beyond leases acquired in 2023, Burlington secured another 39 store locations late last year from other bankrupt retailers, which are included in the 2025 new store opening plan.

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CEO Michael O'Sullivan highlighted two key initiatives: a new in-season trending process for merchants and new machine-learning-based store allocation algorithms to customize assortments. CFO Kristin Wolfe stated that regular-priced selling was very strong, with a 3% comp increase in Q3, 200 basis points above the overall trend. She noted this validates their inventory control strategy but cautioned that Q4 clearance levels would be more similar to last year, providing less margin benefit.

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CEO Michael O'Sullivan stated that Burlington has always over-indexed with younger shoppers and families, a core demographic they serve with a strong mix of relevant categories like Juniors and kids. CFO Kristin Wolfe clarified that the only material change to the back-half guidance from the prior quarter was the inclusion of a new $0.10 EPS headwind from higher ocean freight costs.

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CEO Hillary Super clarified the focus reflects the different stages of each brand, not a preference. She sees an enormous, faster-to-capture opportunity in PINK apparel, which requires a brand repositioning. For Victoria's Secret, which is further along its path, the focus is on supercharging lifestyle categories and refining brand voice. She identified lifestyle categories (sport, swim, apparel) as current growth drivers, while the key challenge in bras is ensuring new launches lift the entire category.

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CFO Tim Johnson attributed digital success to strong product, technology investments improving conversion and basket size, and more efficient media buying. Regarding customers, he noted the loyalty program shows existing customers are shopping more, while October market data indicated new customer growth for the first time in months. CEO Hillary Super added that she is anecdotally seeing younger customers and that November brand equity data showed a clear uptick with Gen-Z.

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CFO and Interim CEO, Timothy Johnson, clarified that the annual sales guidance was raised primarily due to outperformance in the spring season, with back-half expectations remaining largely unchanged. He expressed optimism about strong early customer acceptance of new products in both the Victoria's Secret and PINK brands. On promotions, Johnson acknowledged the discount rate is up year-over-year, reflecting the competitive environment and the strategy to drive trial for new merchandise. While he believes the company can be less promotional in the future, current data indicates that promotions are accretive to both sales and margin dollars.

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Co-CEO Marc Maurer stated that while the company surpassed CHF 100 million in apparel sales, the long-term goal is 10% of total revenue. He explained that growth is strongly correlated with the company's own retail footprint, where apparel share often exceeds 20%. Future plans include enhancing the e-commerce presentation and streamlining the collection to improve sell-through. Executive Co-Chairman David Allemann added that marketing will increasingly link apparel to key partnerships, such as an upcoming co-created collection with Zendaya.

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CFO and Co-CEO Martin Hoffmann stated that while short-term measures have improved product flow, the long-term solution is warehouse automation, with the Atlanta facility going live in Spring 2025. Co-CEO Marc Maurer outlined the 2025 strategy, which includes growing D2C share by opening 20-25 new stores, slowing wholesale door expansion to focus on sell-through, and prioritizing apparel growth, supported by a strong S/S '25 preorder book.

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CEO Gina Boswell noted that while the average age isn't a key metric, the brand is increasingly seen as more youthful, driven by product lines like Everyday Luxuries and Lip, and targeted social media outreach. CFO Eva Boratto clarified that the sales guidance is expected to be volume-led, as they are not assuming a step-up in promotional activity.

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CFO Eva Boratto confirmed that when normalized for calendar shifts, the company is driving growth consistent with its Q3 performance. She noted that adjacency margins are factored into the overall outlook and typically improve with scale. CEO Gina Boswell added that adjacencies grew above the company average in the quarter, and importantly, the core business also drove sequential improvement, indicating both are contributing to growth.

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CFO Eva Boratto explained that a cautious consumer and traffic pressures persisted throughout Q2, with the Semi-Annual Sale (SAS) underperformance being a significant factor; excluding SAS, net sales were down only 1%. She noted that traffic improved late in the quarter and into early Q3, supported by recent launches like Everyday Luxuries and the Stranger Things collaboration, providing confidence for the upcoming quarter.

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John Vandemore (executive) attributed the international deceleration primarily to an 11% decline in China, stating that the business was robust elsewhere. He noted the 2025 international outlook is heavily impacted by a ~$200 million FX headwind. Regarding the tax rate, Vandemore explained it is driven by new global minimum tax regulations, which will likely establish a new base rate going forward for Skechers and other companies, though it is subject to regulatory changes.

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CFO John Vandemore explained that higher selling expenses were due to a front-loaded marketing investment and expects some leverage in Q4. He anticipates the overall OpEx base will not see significant leverage or deleverage going forward. Executive David Weinberg added that while it's still early, the brand's expansion into technical athletics is creating positive momentum that could eventually lead to opportunities with new wholesale partners.

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Executive David Weinberg clarified that Q2's international wholesale results were distinctly impacted by issues in Europe and India. He reiterated a net positive view on China, noting that constant currency growth was solid and that bumps in its recovery are expected. Regarding selling expenses, he stated that while investment will continue, the level of year-over-year increase seen in Q2 was a focal point and is not expected to be similar in the back half, leading to less deleverage.

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COO & CFO Adrian Mitchell explained that the digital business has been a multi-year challenge, but recent investments in SEO, category pages, and site stability are now showing traction with improvements in conversion and traffic. CEO Antony Spring outlined that 2025 will be a year of 'scaling' rather than 'testing,' with key headwinds like the delivery expense issue and cost accounting conversion behind them. He also highlighted the opportunity to expand new brands and the 'First 50' initiative.

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CEO Tony Spring expressed confidence in the holiday assortment, highlighting more newness, exclusive partnerships, and a broader range of gift ideas beyond just cold-weather items. COO and CFO Adrian Mitchell explained that the back-half improvement is expected from the ongoing execution of the 'Bold New Chapter' strategy. This includes in-store and digital changes, an adjusted media mix, a sharper value focus, better in-stocks, and faster delivery, all contributing to sequential top-line improvement.

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Chairman & CEO Tony Spring stated that while the 'Reimagine 125' stores are not immune to macro pressures, their performance trend is improving month-over-month and they continue to outperform the rest of the fleet. COO & CFO Adrian Mitchell explained the wider SG&A range provides flexibility to navigate uncertainty, while reiterating the plan for SG&A dollars to be down low-single-digits for the year.

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CEO Lisa Harper confirmed the 2025 growth expectation is for both comparable and total sales, and they anticipate positive results for the entire year, by quarter. She stated the company will lap the clearance headwind in Q1 2025. Harper defended the strategy, acknowledging it was aggressive but is glad the company is now in a healthy inventory position, which provides a foundation for growth.

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CFO Paula Dempsey clarified that the guidance was narrowed to reflect six months of actual performance and to account for the 53rd week in the prior year, which was worth about $22 million. CEO Lisa Harper addressed the customer age, stating the goal is to rebalance it slightly younger by introducing new capsule collections and ensuring product relevance, like the updated denim assortment, without alienating the loyal core customer.

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