Corey Tarlowe

Corey Tarlowe asked about the tobacco segment's margin performance in Q4 and expectations for the future. He also inquired about the impact of this year's winter storms, especially when compared to last year's severe weather, and any effects from recent changes in SNAP benefits.

Answer

Mindy West, President and CEO, explained that Q4 tobacco margins were affected by the timing of promotional dollars and volumes, though Murphy USA gained market share in cigarettes. She noted that nicotine categories are highly promotional, leading to lumpy quarter-to-quarter growth, but overall nicotine contribution has grown significantly, with strength in pouches and other products. She confirmed the business normalized in January. Regarding winter storms, she mentioned January was good but acknowledged ongoing storms impacting the network, which factored into not materially increasing EBITDA guidance. For SNAP, she stated the exposure is small (<2% of sales) and changes effective January 1st in five states primarily affect candy and energy drinks. Early reads suggest a modest headwind, with a less than $5 million impact included in guidance, as most customers are expected to continue purchasing these items.

Corey Tarlowe asked about the tobacco side's margin performance in the fourth quarter and expectations for the future. He also inquired about the impact of this year's winter storms compared to last year's severe weather, and any effects from changes in SNAP benefits.

Answer

Mindy West, President and Chief Executive Officer, explained that Q4 tobacco margins were impacted by the timing of promotional dollars, particularly in cigarettes, though Murphy USA gained market share. She noted that the category is highly promotional, leading to lumpy quarter-to-quarter performance, but overall nicotine contribution has grown significantly, with strength in pouches. The business normalized in January. Regarding winter storms, Ms. West mentioned higher maintenance costs but offsetting higher margins, with the net effect included in guidance. For SNAP changes, she indicated a modest headwind (less than $5M overall) primarily affecting candy and energy drinks in five states, with Red Bull being the top EBT item.

Corey Tarlowe from Jefferies Group LLC asked for the rationale behind updating the long-term 2028 EBITDA target and for details on the building blocks of the revised forecast. He also inquired about any expected shifts in operational or financial dynamics for the second half of the year compared to the first half.

Answer

President, CEO & Director Andrew Clyde explained the 2028 target was updated to provide clarity to investors amid recent business headwinds. He reconciled the new ~$1.2 billion potential by noting that shortfalls in merchandise and store months are largely offset by better-than-planned OpEx, higher-performing new stores, and structurally higher retail fuel margins. For the second half, he anticipates no major operational shifts but sees more potential upside than downside in areas that were weak in H1, while acknowledging the unpredictability of the macro environment.

Corey Tarlowe from Jefferies asked for details on the updated 2028 EBITDA target, including the key changes, the rationale for the update, and the building blocks for the new target. He also inquired about which operational or financial dynamics from the first half might persist or change in the second half of the year.

Answer

President, CEO & Director, Andrew Clyde, explained the 2028 target was updated in response to investor questions. The new ~$1.2B potential EBITDA reflects shortfalls in merchandise and store months, offset by better-than-planned OpEx, new store performance, and higher fuel margins. He noted a path back to the original target exists if they can reclaim about a penny of fuel margin. For the second half, he expects no major shifts but sees more upside than downside in areas that were weak in H1, like tobacco, while the company remains focused on executing its controllable strategies.

Corey Tarlowe of Jefferies asked for expectations on the performance of new stores, including the planned rollout and target metrics. He also inquired about any further opportunities for SG&A efficiencies.

Answer

CEO Andrew Clyde highlighted the strong performance of recent new store classes, with the 2022 and 2023 cohorts delivering fuel volumes over 310,000 gallons per store month and robust merchandise sales. Regarding SG&A, Clyde confirmed that there are further efficiency opportunities, which are already factored into the 2025 guidance. These efficiencies are expected to be realized from retiring old systems and leveraging new technology investments.

Corey Tarlowe inquired about the growth in middle and high-income customers and its implications, as well as the momentum in food and beverage and the impact of fuel price volatility.

Answer

CEO Andrew Clyde detailed that the share of middle to high-income customers in their loyalty program has grown from ~40% to nearly 50%, reflecting a broader consumer search for value. He attributed strong QuickCheck food and beverage performance to digital investments and new promotions, and noted that fuel price volatility is beneficial for margins as competitors are slower to react.

Corey Tarlowe inquired about product categories that performed well in Q2 and Q3, highlighting any 'green shoots,' and asked about the evolving role of technology and AI in J.Jill's business, including opportunities for leverage and efficiencies, following a new Chief Growth Officer hire.

Answer

CEO Mary Coyne identified bottoms, jackets, and outerwear as strong categories in Q3, with newness in faux leather and faux suede performing well, and successful small tests in cashmere and sleep. CFO Mark Webb explained that recent foundational system upgrades provide cleaner data and modern interfaces, preparing the tech stack for AI. Mary Coyne added that the new Chief Growth Officer, Viv Rettke, will lead AI initiatives to improve operational efficiency, speed, and test-and-learn capabilities through a roadmap of large-scale projects and quick-win platforms.

Corey Tarlowe of Jefferies inquired about successful product categories and 'green shoots' observed in Q2 and Q3, alongside the evolving role of technology, including AI, in driving business efficiencies and leverage.

Answer

CEO Mary Coyne identified bottoms, jackets, and outerwear as strong product categories in Q3, with newness in faux leather and suede performing well. She also noted successful small tests in cashmere and sleepwear. CFO Mark Webb explained that foundational system upgrades have prepared their tech stack for new technologies like AI, enabling cleaner data and modern interfaces. Mary Coyne added that the new Chief Growth Officer, Viv Redke, will lead AI initiatives to enhance operational efficiency, speed, and testing capabilities.

Corey Tarlowe asked Mary Ellen Coyne about her observations and strategic priorities after 100 days as CEO, focusing on opportunities for change, innovation acceleration, and current business strengths. He also asked Mark Webb about margin dynamics for the back half of the year, beyond tariffs, and the long-term strategy for sustaining high-teens EBITDA margins.

Answer

Mary Ellen Coyne (CEO and President, J.Jill) highlighted cultural shifts and the successful ship-from-store implementation as early wins. She emphasized growing the customer file through product evolution, enhancing the customer journey, and improving operational efficiency, with a focus on marketing mix adjustments and compelling assortments for 2026. Mark Webb (Executive VP, CFO, and COO, J.Jill) reiterated tariffs as the primary margin factor for the back half, noting strategic pricing and tighter promotions as mitigation. He outlined the path to sustained high-teens EBITDA margins through investments in customer file expansion, broader assortment appeal, and refined marketing.

Corey Tarlowe asked new CEO Mary Ellen Coyne about what attracted her to J. Jill, the key strengths she identifies, and potential opportunities in specific product categories. He also requested context on the quarter-to-date sales momentum in May compared to Q1.

Answer

President & CEO Mary Ellen Coyne described the opportunity to build on the brand's history as 'irresistible,' highlighting potential in multichannel expansion, product elevation, and new category introductions. EVP, CFO & COO Mark Webb explained that the down mid-single-digit sales trend in May was a continuation of the slowdown seen in April, which coincided with increased global trade uncertainty and is a primary reason for suspending guidance.

Corey Tarlowe from Jefferies asked about the specific product categories that performed well during the quarter and requested a walkthrough of how inventory levels are expected to progress throughout the upcoming fiscal year.

Answer

Executive Claire Spofford highlighted strength in bottoms, jackets, and sleepwear, while noting continued challenges in dresses and sweaters. Executive Mark Webb explained that reported inventory levels will remain elevated through Q1 due to early shipping strategies to mitigate Red Sea delays, but should normalize in Q2 as the company anniversaries those actions.

Corey Tarlowe requested more detail on customer file trends, particularly the performance of different customer cohorts, and inquired about the store opening outlook for 2025.

Answer

Executive Claire Spofford stated that while the overall customer file contracted slightly with traffic, the 'best customer' cohort outperformed and remained strong. Executive Mark Webb reiterated the long-term goal of 50 net new stores over five years and indicated that the net new store count would continue to ramp up from the four expected this year.

Corey Tarlowe of Jefferies requested insights into the sales cadence during the second quarter and any quarter-to-date trends, and also asked about the company's inventory position versus its promotional strategy for the second half of the year.

Answer

Executive Claire Spofford described a strong start to Q2 in May and June, followed by a significant drop-off in traffic in July that continued into August. Executive Mark Webb explained that the 15% year-over-year inventory increase is optically high due to a strategic early shipment of fall goods to mitigate Red Sea delays, with actual on-hand inventory being flat. He confirmed that the July slowdown necessitated markdowns, and this disciplined inventory management approach is factored into Q3 guidance.

Corey Tarlowe asked for insights into SG&A for Q3 and Q4, and how to project it for next year from a dollar perspective, considering factors like marketing and incentive compensation. He also inquired about the specific drivers of Aerie's strong momentum compared to competitors, its market share gains, and future opportunities.

Answer

CFO Mike Mathias stated that incremental advertising investment is expected through H1 next year, pacing towards a 5% annual rate, with incentive comp plans still being set for 2026. President and Executive Creative Director Jen Foyle attributed Aerie's momentum to doubling down on product, recalibrating categories, rebuilding franchises like undies, and effective marketing campaigns like '100% Real.' She highlighted that Aerie's brand awareness is still only 55%-60%, indicating significant future growth opportunity, and the team is focused on new ideas, innovations, and product drops.

Corey Tarlowe asked for clarification on SG&A expectations for Q3 and Q4, and how to project dollar amounts for next year, considering marketing and incentive compensation. He also inquired about the specific drivers of Aerie's strong momentum compared to competitors, market share gains, and future opportunities.

Answer

CFO Mike Mathias indicated continued incremental advertising investment in the first half of next year, pacing towards a 5% annual rate, with more details on incentive comp and 2026 SG&A to be provided in March. President and Executive Creative Director Jen Foyle highlighted Aerie's significant growth opportunity due to 55-60% brand awareness, attributing momentum to product recalibration, rebuilding franchises like undies, strategic promotions, and effective marketing campaigns like '100% Real' and influencer programs.

Corey Tarlowe asked for a ranking of the biggest opportunities for savings within the different buckets of SG&A expenses.

Answer

Mike Mathias, CFO, explained that the primary focus for SG&A efficiency remains on the largest cost centers, which account for about 85% of the total. These include compensation (both store and corporate), advertising, and purchased services and maintenance. These areas drove the leverage seen in Q2 and will continue to be the key focus for achieving future targets.

Corey Tarlowe asked about the sustained momentum of the Hollister brand, particularly how the company plans to build on its back-to-school success into the holiday season and looking ahead to fiscal 2026. He also asked about the outlook for traffic versus ticket heading into holiday and its implications for next year.

Answer

CEO Fran Horowitz celebrated Hollister's 16% net sales growth, marking its 10th consecutive quarter of growth, driven by balanced performance across genders and categories, growing AURs on lower discounts, and strong traffic. CFO Robert Ball noted stable tickets for the holiday season, with anticipated increases for spring deliveries post-holiday. He confirmed positive traffic and growing AURs across both Hollister and Abercrombie brands.

Corey Tarlowe from Jefferies asked about the impressive momentum of the Hollister brand, its continuation from back-to-school into holiday, and strategies to sustain this growth into 2026. He also inquired about the expected dynamics of traffic versus ticket heading into the holiday season and implications for the next year.

Answer

CEO Fran Horowitz emphasized Hollister's 16% net sales growth, marking its 10th consecutive quarter of growth, driven by balanced performance across genders and categories, improved AURs from lower discounts, and strong customer engagement. CFO Robert Ball noted stable ticket prices for holiday, with targeted increases planned for spring deliveries, and highlighted positive traffic trends and growing AURs across both Hollister and Abercrombie brands.

Corey Tarlowe from Jefferies Group LLC asked about the specific drivers behind Hollister's impressive 19% sales momentum and requested an update on the status and composition of the company's carryover inventory.

Answer

CEO & Director Fran Horowitz attributed Hollister's success to being highly attuned to the teen consumer, with strong results across genders, categories, and activations like the Y2K heritage launch. SVP & CFO Robert Ball confirmed inventory is now in a 'clean and current position,' with units up 7% and only a minor 1-point cost impact from tariffs in Q2.

Corey Tarlowe asked about the company's confidence in its full-year sales outlook, particularly the raised high end, despite a downward revision to the profit forecast due to tariffs. He also sought clarity on the expected timing and drivers for the Abercrombie brand's return to growth.

Answer

CFO Robert Ball confirmed the full-year sales guide of 3% to 6% growth reflects rolling through the Q1 beat while the margin reduction is primarily due to the $50 million net impact of tariffs. COO Scott Lipesky added that confidence stems from being on offense with a strong balance sheet, investing in marketing, technology, and 100 new store experiences. CEO Fran Horowitz reiterated that Abercrombie is expected to see an inflection in the back half, driven by reacting to new category trends.

Corey Tarlowe asked about the expected cadence of operating margins throughout fiscal 2025, the reasons for elevated inventory levels, and the company's capital allocation strategy following the new buyback announcement.

Answer

CFO Robert Ball explained that the 22% inventory increase consists of a 6% unit increase to support Q1 sales, with the remainder split between higher freight costs, a more normal seasonal carryover, and mix into higher-cost categories. He noted freight costs will be a headwind in H1 2025 before becoming a tailwind in H2. Regarding capital allocation, Ball reaffirmed the strategy of investing in the business while returning cash to shareholders, highlighting the new $1.3 billion repurchase authorization and a target of ~$100 million in buybacks per quarter.

Corey Tarlowe from Jefferies asked for an analysis of the primary growth drivers for the Abercrombie brand, including the performance of the YPB line, and questioned the sustainability of the company's current margin profile.

Answer

CEO Fran Horowitz-Bonadies credited the Abercrombie brand's 15% growth to strong, balanced performance across genders and categories like sweaters, dresses, and jeans, noting the YPB line continues to grow nicely. COO Scott Lipesky affirmed that the entire P&L structure is sustainable, citing a strong platform for global growth, an agile inventory model supporting gross margins, and a clean store base that enables strong flow-through to the bottom line.

Corey Tarlowe asked for an analysis of the primary growth drivers for the Abercrombie brand, including any specific momentum and the performance of the YPB line. He also questioned the long-term sustainability of the company's current margin profile.

Answer

CEO Fran Horowitz-Bonadies attributed Abercrombie's success to strong alignment between product and marketing, with balanced growth across genders and categories like sweaters, dresses, and jeans, and noted that the YPB line continues to grow nicely. COO Scott Lipesky affirmed that the entire P&L structure is sustainable, supported by a global growth platform, an agile inventory model, and strong operational flow-through.

Corey Tarlowe from Jefferies asked about the various growth vectors for the Abercrombie brand, such as The Wedding Shop and the NFL partnership, and which categories management sees as most sizable long-term. He also inquired about the performance and momentum of the digital channel.

Answer

CEO Fran Horowitz-Bonadies explained that the brand's growth is driven by staying close to the customer, citing the success of The Wedding Shop, the expanded NFL collection, and the YPB activewear line as examples of a test-and-learn approach. CFO & COO Scott Lipesky added that digital channel growth is strong, supported by continuous investments in the user experience on apps and mobile web.

Corey Tarlowe asked about management's confidence in the full-year sales outlook, which saw its high end raised despite a profit downgrade from tariffs. He also sought clarity on the expected timing and drivers for the Abercrombie brand's return to growth.

Answer

SVP & CFO Robert Ball confirmed the 3-6% full-year sales growth guide, noting the Q1 beat was rolled into the high end. EVP & COO Scott Lipesky expressed confidence stemming from being 'on offense' with a strong balance sheet and investments in new stores, marketing, and technology. CEO Fran Horowitz reiterated that Abercrombie is expected to see an inflection in the back half of the year.

Corey Tarlowe inquired about the major drivers of the business momentum acceleration under Jim Conroy's leadership, specifically asking which changes are most sticky for multi-year growth, and followed up on how new marketing campaigns have amplified improvements, particularly from a branded perspective, resonating with consumers.

Answer

CEO Jim Conroy stated that he inherited a strong company and attributed the improvement to the sophisticated merchandising team, amplified voices of the marketing and stores teams to drive traffic and improve the in-store environment. He noted the refreshed, contemporized marketing message, tweaked merchandise mix, and aggressive outreach to younger customers, emphasizing that the stickiest element is the power of the Ross brand.

Corey Tarlowe inquired about the major drivers of the substantial acceleration in business momentum since the flat Q1 start, and what changes are considered most 'sticky' for multi-year growth. He also followed up on what aspects of the new marketing campaigns have most resonated and amplified the branded strategy.

Answer

Jim Conroy (CEO) highlighted the strength of the merchandising team, amplifying the voices of marketing and store teams to drive traffic and improve the in-store environment. He noted the contemporized marketing message, tweaked merchandise mix, and aggressive outreach to younger customers as key, emphasizing the enduring power of the Ross brand.

Corey Tarlowe of Jefferies asked for a big-picture perspective on the scalability of the business, the potential to accelerate unit growth, and the expected comp lift from the ongoing store renovation program.

Answer

CEO James Conroy expressed strong optimism about accelerating unit growth, citing the company's organizational strength, supply chain capabilities, and very encouraging results from recent entries into new markets. Regarding the renovations, COO Michael Hartshorn stated that it is still too early to measure a specific sales impact or comp lift from the initiative.

Corey Tarlowe asked for more color on traffic trends throughout the quarter and the key drivers behind the Average Unit Retail (AUR) performance.

Answer

Executive James Conroy detailed a sequential improvement in business from a slow February to a strong April. He highlighted that the healthy April comp was driven primarily by an increase in customer transactions. The average basket was also larger due to more units per transaction (UPT), while AUR itself saw only a small increase.

Corey Tarlowe of Jefferies requested more color on the traffic trends throughout the first quarter and asked about the key drivers behind the Average Unit Retail (AUR).

Answer

Executive James Conroy detailed that the business improved significantly from February through April. He noted that the strong April comp was healthy, driven primarily by transaction growth, with a small increase in AUR and a larger basket from more units per transaction. The exit rate from the quarter was described as strong.

Corey Tarlowe asked for historical context on the number of new vendors being added and for details on performance within the shoe category, distinguishing between athletic and brown shoes.

Answer

CEO Barbara Rentler stated she could not quantify the number of new vendors, as the vendor base is dynamic. Regarding shoes, she noted the category underperformed against a very tough comparison. Athletic and active footwear performed well, while brown shoes were more mixed. She also mentioned a strategic timing shift for the fall boot transition based on learnings from last year.

Corey Tarlowe inquired about the allocation of the planned $5 billion CapEx for the next fiscal year, asking for details on key investment areas and whether this level of investment is considered optimal for achieving significant business improvements.

Answer

COO Michael Fiddelke explained that investments follow a focused strategy and chase strong returns, primarily in new stores (especially larger formats outperforming expectations), store remodels (driving reliable sales lifts), and technology (enhancing guest personalization and team efficiency). CFO Jim Lee added that new stores also expand fulfillment footprint and digital reach. Corey Tarlowe followed up on the 'multitude of change' and the impact of price reductions. Michael Fiddelke reiterated the urgency of change due to dissatisfaction with past performance, emphasizing clear priorities in design-led product and excellent experience, with visible progress in areas like FUN 101 and in-stocks.

Corey Tarlowe of Jefferies Group LLC questioned the key operational and strategic levers Target will use to achieve its long-term sales growth target, particularly in light of the CEO succession. He also asked about specific strategies to drive traffic and basket size amid discretionary spending pressures.

Answer

Incoming CEO Michael Fiddelke identified the path to growth through three priorities: reclaiming merchandising authority, elevating the guest experience, and leveraging technology. EVP & CCO Rick Gomez detailed drivers of recent improvement, including a 5% comp in 'Fun 101' (hardlines) and a 28% comp in women's denim, attributing success to delivering new, on-trend, and stylish products at affordable prices.

Corey Tarlowe asked about the average unit retail (AUR) lift in the business, specifically the impact of selling higher-priced boots versus sneakers on sales and comparable sales, and what this implies for next year's AUR. He also inquired about the perceived tone shift in commentary around wholesale, from order cancellations to ramping up, and whether this is due to better channel performance or market share gains. Finally, he asked about the implications of strong product resonance for promotions and what's embedded in the outlook.

Answer

Ed Rosenfeld, Chairman and CEO, attributed significant AUR increases to both tariff-driven price increases and a favorable mix shift towards higher-priced categories like boots, reporting high-single-digit AUR growth in DTC for Q3 and mid-teens for Q4. He confirmed the improved tone in wholesale, attributing it to both the abatement of external tariff noise and improved underlying demand and sell-through. He stated that strong product performance has allowed for a meaningful reduction in promotional days in DTC for Q4 compared to last year, with efforts to remain less promotional where possible.

Corey Tarlowe inquired about the Average Unit Retail (AUR) lift in the business, its impact on sales and comparable store sales, and how current fashion trends might influence future AUR. He also asked about the shift in wholesale commentary from order cancellations to ramping up, seeking to understand if this reflects channel improvement or market share gains. Finally, Mr. Tarlowe questioned the implications of strong product resonance for promotional activity and the company's promotional outlook.

Answer

Chairman and CEO Ed Rosenfeld attributed the significant AUR increase to both price increases and a favorable mix from higher-priced categories like boots, noting high-single-digit AUR growth in Q3 DTC and mid-teens in Q4. He explained the improved wholesale outlook is due to both the abatement of tariff-related external noise and stronger underlying demand/sell-through, leading to more aggressive plans from wholesale customers. Mr. Rosenfeld also stated that strong product resonance has allowed for a meaningful reduction in promotional days in Q4 DTC, with efforts to remain less promotional where possible.

Corey Tarlowe of Jefferies Group LLC requested a dimensionalization of the significant increases in both inventory and operating expenses, asking for a breakdown of the drivers including the impact of the Kurt Geiger acquisition.

Answer

Chairman and CEO Edward Rosenfeld clarified that excluding Kurt Geiger, inventory was up only 1%, with the increase attributable to tariff inflation and longer transit times. When normalized for these factors, inventory levels were in line with the revenue decline. Similarly, he stated that operating expenses, excluding Kurt Geiger, were up less than 3%.

Corey Tarlowe asked for an update on the handbag category, which was previously described as having excess inventory in the channel. He also requested color on wholesale sell-through and the level of order cancellations in April.

Answer

CEO Ed Rosenfeld confirmed that excess channel inventory in handbags remains a factor constraining shipments, now compounded by tariff disruptions. He noted that wholesale sell-through in April was good and similar to March's improved levels. However, he acknowledged an increase in order cancellations, primarily from FOB customers who bear the tariff costs directly, and from other customers unwilling to accept price increases or later delivery dates.

Corey Tarlowe of Jefferies LLC asked about the health of the company's inventory, which was up double-digits, the performance of the boot category during the colder weather, and the progress and future opportunities in shifting international business structures.

Answer

CFO Zine Mazouzi explained that the 12.5% inventory increase was primarily due to longer transit times, and on a comparable basis, inventory was up only low-single digits. Chairman and CEO Edward Rosenfeld added that the boot season was very strong, particularly for tall-shaft styles. He also noted that the transition of international markets to JVs is an ongoing process, with the APAC region representing the largest future growth opportunity.

Corey Tarlowe asked about the growth drivers in the grocery and general merchandise category, particularly the strong gross margin, and what to expect for its trajectory going forward.

Answer

Darren Rebelez, President, CEO & Board Chair, identified non-alcoholic beverages, especially energy drinks, as the primary growth driver (over 8%). Margin improvement was attributed to effective joint business planning, cost of goods management, and retail pricing. A favorable mix shift, with lower combustible cigarette share and higher nicotine alternative share, combined with growth in high-margin non-alcoholic beverages, also contributed. Mr. Rebelez cautioned against optimizing individual category margins, emphasizing the goal is to maximize total 'inside the store gross profit velocity outcome,' potentially reinvesting grocery margins into prepared foods.

Corey Tarlow from Jefferies asked about the growth drivers in the grocery and general merchandise category, specifically mentioning energy drinks, and the factors contributing to the category's strong gross margin in Q1. He also sought insight into the sustainability and trajectory of this margin going forward.

Answer

CEO Darren Rebelez identified non-alcoholic beverages, particularly energy drinks, as the strongest growth driver (over 8%). He attributed the margin improvement to effective cost of goods management, retail pricing, and a favorable mix shift: declining share of lower-margin combustible tobacco offset by higher-margin nicotine alternatives, and growth in high-margin non-alcoholic beverages. CFO Steve Bramlage cautioned against optimizing for individual category margins, emphasizing the goal of improving total inside gross profit velocity.

Corey Tarlowe asked about the drivers behind the strong momentum in energy drinks and the effectiveness of recent promotions on inside sales. He also asked for a reminder of the typical ramp-to-maturity timeline for a new Casey's store and how it might contrast with the Fikes acquisition.

Answer

CEO Darren Rebelez attributed the 13% growth in energy drinks to assortment optimization with new brands and strong performance from stalwarts like Red Bull and Monster, aided by effective promotions and superior in-stock positions from self-distribution. CFO Steve Bramlage detailed the new store ramp, expecting positive returns in year one, double-digit after-tax returns by year two, and maturity in 3-4 years. He contrasted this with Fikes, where returns will be more of a step-change upon remodeling due to the introduction of Casey's pizza program to an existing business.

Corey Tarlowe sought perspective on the broader M&A trends in the convenience store industry and inquired about labor trends, specifically regarding wage inflation.

Answer

CEO Darren Rebelez attributed the active M&A environment to family businesses monetizing assets and the challenging operating conditions where scale is increasingly vital. CFO Stephen Bramlage addressed labor, stating that wage inflation has normalized to 3-4% and that turnover has improved due to store simplification initiatives and a more favorable labor market.

Corey Tarlowe with Jefferies Group LLC inquired about the current health of Torrid's customer base, their receptiveness to new product introductions, and the specific lift observed from the new sub-brands in stores, including expectations for their performance through the remainder of the year. He also asked for clarification on the updated EBITDA outlook, specifically regarding the impact of tariffs, promotional strategies, and other investments planned for the remainder of the current fiscal year and into fiscal 2026.

Answer

CEO Lisa Harper highlighted the strong engagement of top-tier customers and the positive reaction to sub-brand launches, which also create a halo effect for core categories. She noted that sub-brands are expected to constitute 10% of the total business this year and 25-30% next year, attracting new and younger demographics. Harper explained that the primary impact on EBITDA was due to tariffs, with $10 million of the total $50 million impact not yet offset. Chief Strategy & Planning Officer Ashlee Wheeler added that promotional activities were increased to drive conversion due to customer choppiness, and incremental marketing investments are focused on upper-funnel awareness for 2026 growth.

Corey Tarlowe inquired about the current health of Torrid's customer base, their receptiveness to new product assortments, and the quantifiable impact of sub-brands on in-store performance, including future expectations. He also asked for clarification on the updated EBITDA outlook, considering increased marketing investments and other operational factors.

Answer

CEO Lisa Harper highlighted the strong engagement of top-tier customers and the positive reception to sub-brands, noting their halo effect on core categories. She projected sub-brands to reach 10% of total business this year and 25-30% next year, attracting new and younger demographics. Harper also addressed the EBITDA outlook, attributing changes primarily to unmitigated tariff impacts. Chief Strategy and Planning Officer Ashlee Wheeler added that increased promotional activity is a response to consumer choppiness, with incremental marketing focused on upper-funnel awareness for 2026 growth.

Corey Tarlowe of Jefferies LLC asked for more detail on the moderating drag from clearance sales, the promotional outlook for the year, and the planned scale of the new sub-brands in relation to inventory management.

Answer

CEO Lisa Harper acknowledged that guidance embeds some pressure from potential promotions due to macro uncertainty. Chief Strategy and Planning Officer Ashlee Wheeler added that while Q1 saw more promotion, they expect full-year product margins to be relatively flat. Wheeler also stated the new sub-brands represent about 10% of receipt investment, self-funded by reducing depth in the core line, allowing overall inventory to remain flat for the year.

Corey Tarlowe asked for management's perspective on the split between macroeconomic and microeconomic factors driving the quarter's volatility. He also inquired about the expected trajectory of inventory levels given the planned influx of new products.

Answer

CEO Lisa Harper acknowledged that while the company takes responsibility for product (micro), there were anomalous and dramatic negative traffic shifts in October that recovered post-election, suggesting a substantial macro impact. Chief Strategy and Planning Officer Ashlee Wheeler stated that despite newness, inventory is expected to end the year flat to down low-single digits, with the company able to drive 2025 growth on relatively flat inventory by replacing less productive items.

Corey Tarlowe from Jefferies requested context on the reintroduction of the 'chase' inventory strategy, asking how the planned 10% of Q4 receipts compares to historical levels and its expected impact on the P&L. He also inquired about the sales cadence during Q2 and trends observed quarter-to-date in Q3.

Answer

CEO Lisa Harper explained that Torrid has not used a 'chase' strategy meaningfully since 2015 and that the current 10% of Q4 receipts could potentially grow to 15%. She emphasized this strategy improves inventory productivity and margins. Chief Strategy and Planning Officer Ashlee Wheeler noted that Q2 sales were strong except for a soft period around the July 4th holiday and confirmed that Q3 was 'on track' one month into the quarter.

Corey Tarlowe of Jefferies Financial Group Inc. asked for an update on Walmart's international strategy, focusing on Canada, India, and Mexico, and their role in the long-term growth algorithm.

Answer

Walmart International President & CEO Kathryn McLay detailed strong momentum, with 22% e-commerce growth driven by store-fulfilled delivery and marketplace. She highlighted progress in China, India's quick commerce, and platform rollouts in Canada and Mexico. President, CEO & Director Doug Mcmillon added that the long-range plan is for international profitability to grow faster than sales.

Corey Tarlowe asked for more details on the PhonePe business and its IPO plans, and for context on how high Walmart's Return on Investment (ROI) could go.

Answer

Walmart International CEO Kath McLay confirmed that PhonePe is preparing for an IPO, highlighting its strong performance with 310 million daily transactions. CFO John David Rainey stated the company's standard is for ROI to increase every year, with some current investments like supply chain automation yielding returns approaching 20%. He expressed a goal of reaching historical ROI highs over time.

Corey Tarlowe from Jefferies Group LLC asked about the drivers behind the improved performance of newer store cohorts and the potential comp lift from rolling out test initiatives. He also inquired about the future gross margin evolution.

Answer

President and CEO Jason Potter explained that new store performance is benefiting from a better mix of infill locations, improved site selection, and learnings from pilot stores. He expressed excitement about the potential to roll out successful initiatives. On margins, CFO Chris Miller stated that while they see opportunities for improvement, the current guidance of 30.0% to 30.5% remains appropriate to allow for flexibility as various initiatives are tested.

Corey Tarlowe requested more detail on the revised comparable sales outlook for Q2 and the full year, asking to unpack the cited 'basket and macro' pressures.

Answer

CEO Jason Potter stated that while initiatives to improve product mix and quality are underway, their impact timing is uncertain. CFO Chris Miller added that strong Q1 traffic (+2.3%) was offset by a soft basket (-2.0%), a trend continuing into Q2. Given this and macro uncertainty, they prudently lowered the comp guide but expect modest sequential improvement in the back half of the year.

Corey Tarlowe from Jefferies questioned whether the recently announced restructuring plan has fundamentally altered management's long-term perspective on the appropriate cadence of new store openings or the company's target margin profile.

Answer

Chairman Eric Lindberg clarified that the business's execution challenges, not the restructuring plan itself, prompted the change. He explained the decision to slow store openings was to address underperformance in new, non-adjacent markets and to better manage execution risks related to market awareness, staffing, distribution, and marketing. The restructuring was a result of this strategic narrowing of priorities.

Corey Tarlowe inquired about the future complexion of unit growth between organic expansion and acquisitions, the appropriate long-term growth rate, and the magnitude of current investments in the value proposition compared to past efforts.

Answer

Interim President and CEO Eric Lindberg affirmed that the 10% unit growth target is not at risk and will be driven primarily by organic openings, with a strong pipeline of over 50 stores for 2025. He characterized the current value investments as a necessary correction, similar to past instances, aimed at restoring key metrics like the 40% savings versus conventional grocers and enhancing the 'excitement drivers' in the assortment.

Corey Tarlowe asked for a specific timeline on when third-party price increases will be fully implemented. He also questioned if the penetration of exclusive brands has already been affected by the pricing changes across other brands in the stores.

Answer

CEO John Hazen reiterated the timeline, stating that reticketing of third-party brands will be completed by August. He clarified that the strong Q1 exclusive brand penetration was not driven by price dislocation, as the price increases had not yet been implemented. The company will evaluate raising exclusive brand prices in either October or January.

Corey Tarlowe of Jefferies asked for an breakdown of the same-store sales guidance drivers (traffic vs. ticket) throughout the year. He also inquired about the company's capital allocation strategy and priorities.

Answer

CFO Jim Watkins explained that comp growth in the first half of the year is expected to be driven by increased transactions, similar to recent trends. In the second half, as price increases take effect, he anticipates transaction growth will slow, with average unit retail (AUR) increasing, causing the two factors to partially offset each other. Regarding capital allocation, Watkins stated the top priority is funding new store growth, followed by a methodical share repurchase program to return excess cash to shareholders.

Corey Tarlowe asked for more color on the drivers of the strong transaction growth, questioning if it was from new or existing customers. He also asked for a long-term outlook on leveraging buying and occupancy (B&O) costs as the store base scales.

Answer

Interim CEO John Hazen stated that transaction growth has been consistent across all customer segments, crediting a well-balanced product assortment. CFO Jim Watkins explained that B&O deleverage is a function of the aggressive 15% annual new unit growth and that the comp required to leverage this line item is unlikely to decrease significantly in the near term.

Corey Tarlowe from Jefferies Group LLC inquired whether the CEO feels the right leadership team is now in place and asked for guidance on inventory growth for the remainder of the year.

Answer

CEO Hillary Super expressed strong confidence in her newly assembled leadership team, referring to them as the 'super squad' and stating they are the right team to drive the strategy forward. CFO Scott Sekella projected that inventory would remain up mid-single digits year-over-year, driven by the European distribution center ramp-up in the first half and the cost impact of tariffs in the second half.

Corey Tarlowe asked about the strategic opportunity in creating separate product development tracks, particularly for key categories like swim and athletic wear, and also requested commentary on performance during the Valentine's Day period.

Answer

CEO Hillary Super described moving from a single 52-week, bra-centric calendar to multiple, faster tracks as 'essential' for agility. She aims to reduce apparel lead times to around 26 weeks. For technical categories like swim and sport, separate tracks will enable a focus on product engineering. She also noted that during the January-February period, the company sold through its Valentine's sleepwear assortment too quickly and pulled back too far on marketing spend post-holiday, which impacted traffic.

Corey Tarlowe of Jefferies requested insights into the recent performance improvement at the PINK brand, asking what specific product initiatives are working and what the trajectory for the segment might look like in the second half of the year.

Answer

CFO and Interim CEO, Timothy Johnson, attributed PINK's improvement to a strong customer response to newness, particularly in tees, tanks, and dresses during the PINK Friday event. He also highlighted the success of the Wink bra and the reintroduction of backpacks for the Back to School season. Johnson noted that one of the most encouraging signs was the return of the younger 18-to-22-year-old customer demographic to the brand's stores.

Corey Tarlowe of Jefferies Group LLC asked for perspective on recent M&A in the footwear space, sought more detail on Q1 gross margin drivers and the strategy for handling tariff-related costs, and inquired about the composition of inventory growth.

Answer

CEO Mimi Vaughn addressed the M&A question by differentiating Journeys' style-led focus from the performance-athletic focus of recent deals. Regarding margins, Vaughn and CFO Cassandra Harris attributed the Q1 pressure to a planned mix shift toward athletic footwear and liquidation at Genesco Brands Group, confirming they don't plan to absorb tariff costs in margins. Vaughn also explained that Q1 inventory growth was driven by rebuilding units to support sales momentum, not by price inflation.

Corey Tarlowe of Jefferies Group LLC asked about Dollar General's response to competitors leaning into price and for details on the 'new communities' targeted for store expansion.

Answer

CEO Todd Vasos stated that the competitive pricing environment is rational and at pre-pandemic norms, and DG is well-positioned to respond if necessary due to its scale and CPG partnerships. He clarified that expanding into 'new communities' refers to building stores further from existing locations to reduce cannibalization and tap into 'white space' within their current geographic footprint, rather than entering new states.

Corey Tarlowe of Jefferies LLC inquired about the competitive pricing landscape and Dollar General's real estate strategy, specifically regarding new communities and cannibalization.

Answer

CEO Todd Vasos described the current pricing environment as stable and in line with pre-pandemic norms, stating DG is well-positioned to compete on its everyday low prices and has strong CPG partnerships to leverage if needed. Regarding real estate, he clarified that the focus on "new communities" is about increasing the distance between new and existing stores to reduce cannibalization, rather than entering new states. This marks a strategic shift from the intentional cannibalization of recent years to finding more "white space" in their current footprint.

Corey Tarlowe asked about the dynamic of decreasing inventory while in-stocks and markdowns are increasing, and also inquired about the performance of the seasonal category given the strength in consumables.

Answer

CEO Todd Vasos clarified that the sales deceleration was actually on the consumable side, which highlighted consumer price sensitivity and prompted the increased promotional activity. He noted the inventory reduction was focused on slower-turning non-consumables, improving the shopping experience. CFO Kelly Dilts called the ability to reduce inventory while improving in-stocks a 'real bright spot,' crediting supply chain efficiencies and optimization efforts.

Corey Tarlowe of Jefferies asked about the performance in international markets, noting a deceleration in comps on a multi-year basis, and if there were any region-specific factors to highlight.

Answer

Executive Gary Millerchip responded that there was nothing particular to call out regarding a slowdown. He explained that nuances in holiday timing can affect individual markets quarter-to-quarter, citing an example in Taiwan. Overall, he stated that the company remains pleased with the momentum in its international businesses, which continue to grow and gain market share relative to internal expectations and the broader market.

Corey Tarlowe requested a breakdown of the strategy to improve profitability in the U.S. and Europe, asking for a ranking of the opportunities. He also asked for an update on the hardgoods category, its recent trends, and any signs of a potential recovery.

Answer

CFO Christopher Work outlined that the domestic strategy hinges on growing sales back to peak levels, expanding product margins, and tightly managing costs like shipping and payroll. For international, the focus is on driving sales in underpenetrated markets and improving product margins. Executive Richard Brooks addressed hardgoods, acknowledging its continued pressure but highlighting a 'green shoot' in Australia, where the category has seen positive comps for five consecutive months, suggesting a potential bottoming of the cycle for the broader business.

Corey Tarlowe from Jefferies asked for an analysis of the hardgoods category's performance and its potential 'halo effect' on the broader business. He also inquired about the company's promotional strategy for the second half of the year, especially considering the shorter holiday selling period.

Answer

Executive Richard Brooks explained that the skate hardgoods category is near an all-time low in sales penetration after peaking during the pandemic in 2020. While the U.S. and Europe remain challenged, he noted signs of improvement and is hopeful that a recovery will create a positive halo effect for the entire business. Regarding promotions, Brooks stated that despite a promotional environment, Zumiez will continue to focus on delivering value through product bundling, particularly with its private label brands, rather than engaging in widespread price cuts, in order to maintain its position as a full-price retailer.

Corey Tarlowe asked for a breakdown of business trends by geography and specifically questioned when management anticipates a potential turnaround in the challenging Americas retail business.

Answer

CEO Carlos Alberini detailed the varied geographic performance, noting that the Americas retail business remains challenged by weak customer traffic, which has been factored into the revised outlook. In contrast, Europe continues to see positive comparable sales growth, offsetting traffic softness with higher AUR and conversion. He mentioned that Asia has also been challenging, particularly in China and Korea. To address the Americas, the company is focusing on product assortment, disciplined promotions, and increased marketing investments to boost customer engagement.