Bob Drbul

Bob Drbul asked about the Michael Kors business, specifically the penetration of its signature product and the current trends associated with its signature offering.

Answer

Chairman and CEO John Idol explained that about two years ago, the company significantly reduced signature product, perhaps going too far. It now represents approximately 40% of sales and is expected to decrease slightly further, as leather, suede, and other materializations are currently stronger from a trend standpoint. He noted that signature product had historically reached as high as 50% of the business, including in ready-to-wear and footwear, where its presence has also decreased. He emphasized maintaining a balance and using data analytics to monitor consumer sentiment regarding the brand's signature elements.

Bob Drbul asked about the penetration and trends of Michael Kors' signature piece offering.

Answer

Chairman and CEO John Idol explained that signature product currently runs approximately 40% of Michael Kors' sales, down from a historical high of 50%. He noted that the company had previously reduced its emphasis on signature, possibly too far, and that leather, suede, and other materializations are currently stronger from a trend standpoint. The company will continue to monitor trends and consumer sentiment via data analytics.

Bob Drbul inquired about the performance of the Europe segment, asking for details on country trends and the impact of the Blue Tab business on the strong results.

Answer

Harmit Singh, EVP and Chief Financial and Growth Officer, highlighted Europe's strong Q4 growth of 10%, led by the UK and Germany, with both wholesale and DTC channels contributing. Michelle Gass, CEO, added that Blue Tab is a global opportunity tapping into the underpenetrated premium market, showing positive early signs with elevated price points and strong consumer response, serving as an ongoing business and a brand halo.

Bob Drbul from BTIG asked for more details on Levi Strauss & Co.'s European performance, specifically inquiring about country-specific trends and the impact of the Blue Tab business on the region's results.

Answer

Harmit Singh, EVP and Chief Financial and Growth Officer, Levi Strauss & Co., highlighted Europe's phenomenal year with 10% growth in Q4, led by the UK and Germany, and strong performance across both wholesale (13% growth) and DTC channels. Michelle Gass, CEO, Levi Strauss & Co., added that Blue Tab is a global opportunity, representing a new, largely untapped premium business segment with positive early consumer response, commanding elevated price points and serving as a halo for the brand.

Bob Drbul asked about the timeline for Nike's return to double-digit EBIT margins, emphasizing its priority. He also inquired about the necessary depth of the reset in China, questioning whether the region is nearing a bottom in revenue or EBIT declines.

Answer

Matthew Friend, EVP and CFO, Nike, reiterated that improving margins is a top priority, with a clear path back to double-digit EBIT margins despite pressures from Win Now Actions and tariffs. He highlighted North America's progress in Q2, where gross margins were down 330 basis points despite over 500 basis points of tariff impact, indicating recovery. He also mentioned that growth, especially wholesale, will create leverage on the cost structure and that disciplined cost management, particularly in operating overhead, is ongoing. Elliott Hill, President and CEO, Nike, stated that China remains a powerful opportunity but requires a reset, acknowledging that Nike had become a lifestyle brand competing on price, with reduced on-the-ground presence and uncompelling stores. He detailed actions like cleaning aged product, resetting key doors in Shanghai and Beijing, and increasing investments, but noted the pace isn't fast enough. He expressed confidence in the team and the path forward, emphasizing a return to a beloved, premium, and innovative brand in China.

Bob Drbul asked for more details on G-III Apparel Group's gross margin performance, specifically the drivers behind the upside, and whether the $65 million unmitigated tariff impact for the current year could be fully mitigated next year through pricing strategies. He also sought preliminary insights into the company's top-line and bottom-line goals for the upcoming fiscal year, including potential acquisitions or new licenses.

Answer

Neal Nackman (CFO, G-III Apparel Group) explained that pre-tariff gross margins were expected to be up around 50 basis points, driven by the mix of owned brands, but tariffs caused a 200 basis point decline, primarily in Q4. He noted that strong full-price selling and avoiding heavy discounting contributed to better-than-expected Q3 gross margins. Morris Goldfarb (CEO, G-III Apparel Group) added that they have raised prices where accepted by consumers and are adjusting where needed, leveraging higher margins from owned brands and direct-to-consumer opportunities. He highlighted the significant financial benefit of retaining former PVH royalties for marketing and margin enhancement. For next year, Morris Goldfarb mentioned working on potential acquisitions, new licenses, or distribution through other channels, emphasizing a strong balance sheet and no rush to execute.

Bob Drbul inquired about the detailed gross margin performance, the factors contributing to its upside, the strategy for mitigating tariff impacts in the upcoming fiscal year, and the company's approach to pricing.

Answer

Neal Nackman (CFO) explained that gross margins outperformed expectations due to strong full-price selling and a disciplined approach to inventory, avoiding heavy discounting. He noted that the majority of the tariff impact would be felt in Q4, but future market weeks would allow for pricing adjustments to achieve normal margins. Morris Goldfarb (CEO) added that owned brands offer better margins and direct-to-consumer opportunities, which were not available with licensed brands, and highlighted the company's progress towards break-even in its BRIX model. He also mentioned plans for a more important men's initiative and potential acquisitions or new licenses, emphasizing a strong balance sheet and no rush.

Bob Drbul asked for a deeper dive into the geographic performance dynamics across the Americas, Europe, and APAC for the quarter, and how these insights might inform planning for 2026.

Answer

CEO Stefan Larsson detailed Europe's muted consumer backdrop and internal challenges, offset by an on-plan Black Friday start. He highlighted Americas' 2% revenue growth driven by double-digit e-commerce, and APAC's better-than-expected performance with positive D2C growth and strong Double 11 results. CFO Zac Coughlin added that PVH's Q3 operating margin, excluding tariffs, was nearly 10%, reflecting sequential improvements.

Bob Drbul inquired about the impact of pricing increases or ticket increases on consumer response and vendor support. He also asked for an update on the credit business trends, including new applications and credit spend, and expectations for Q4 and 2026.

Answer

Chairman and CEO Tony Spring stated that pricing on newness and fashion had little impact on consumer appetite, especially for middle to upper-income customers, exceeding expectations. He noted that for basics, consumers might wait for promotions. COO and CFO Tom Edwards highlighted the strong performance of the credit business, with Q3 revenue up over 30% and full-year guidance up approximately 20%, driven by a healthy portfolio and improved net credit loss results. He also noted higher new applications year-over-year, indicating future growth.

Bob Drbul asked for more details on pricing increases and consumer response, as well as vendor support. He also inquired about the trends in the credit business, including new applications and higher credit spend, and expectations for Q4 and 2026.

Answer

Chairman and CEO Tony Spring explained that pricing on newness and fashion has had minimal impact on consumer appetite, particularly for middle to upper-income customers, exceeding expectations. He noted that for basics and aspirational customers, there's more waiting for value, but Macy's has planned promotions. COO and CFO Tom Edwards detailed the credit business's strong performance, with revenue up over 30% in Q3 and approximately 20% for the full year, driven by a healthy portfolio and improved net credit loss results. He highlighted higher applications year-over-year as a positive indicator for future growth, linking credit to loyalty and broader customer engagement.

Bob Drbul of BTIG asked about the performance and global consistency of Coach's footwear and bag charms businesses, inquiring about their penetration levels.

Answer

Coach CEO Todd Kahn confirmed global consistency, noting strong performance in sneakers across genders and markets, particularly in more mature markets like China and North America. He highlighted the long-term value of footwear for customer acquisition and the meaningful contribution of bag charms, which often drive repeat purchases and engagement.

Bob Drbul asked about the performance of Coach's footwear and charms businesses, specifically their global consistency and penetration rates across markets.

Answer

Scott Roe (CFO and COO, Tapestry) confirmed the global consistency and success of both footwear (especially sneakers across genders) and charms. He noted that footwear often leads to multiple purchases, and charms drive repeat customer visits, providing additional engagement opportunities.

Asked for details on the newly launched digital marketplace, including early customer feedback, future plans, and its expected contribution to digital sales.

Answer

The marketplace launched successfully in late April with positive feedback, but it was a small launch. The company plans to scale it in 2025 and does not expect a material impact on 2024 results. The primary goals are to increase customer choice and improve product discovery online.