Dana Telsey

Dana Telsey inquired about differences in the DTC channel by brand (e-commerce vs. stores), plans for store openings this year, specific working retailers in the wholesale channel, and any exposure to Saks.

Answer

Stefano Caroti, President and CEO, stated that Deckers has little to no exposure to Saks. He noted that both retail and e-commerce channels performed well. For wholesale, he highlighted strong performance across various retailers, including Journeys, Foot Locker, DSG, and run specialty, where HOKA is a top brand alongside Brooks in the U.S.

Dana Telsey asked about any differences in DTC channel performance (e-commerce vs. stores) by brand, plans for store openings this year, and more color on specific wholesale retailers performing well. She also inquired about any exposure to Saks.

Answer

President and CEO Stefano Caroti stated that both retail and e-commerce channels performed well. He confirmed little to no exposure to Saks. Caroti highlighted strong performance across wholesale retailers, including Journeys, Foot Locker, DSG, and Run Specialty, where HOKA is a top brand alongside Brooks.

Dana Telsey of Telsey Advisory Group asked for more color on the earlier wholesale shipments, questioning if they varied by brand or region. She also inquired about the potential for upside to UGG's mid-single-digit growth guidance given its product newness.

Answer

CFO Steven Fasching explained that for UGG, earlier shipments were driven by partners wanting to stock up after last year's sell-throughs. For HOKA, it was driven by opening new points of distribution in the first half. He noted that while there's always potential for upside, the company remains disciplined in its marketplace management.

Dana Telsey inquired about Lululemon's segment performance relative to the broader market, the flow of new products across segments (bottoms, tops, men's, women's), and the desired qualities for the new CEO.

Answer

CEO Calvin McDonald noted pressure in the apparel space, with Lululemon holding share in premium athletic but losing slight share in performance apparel due to consumer trade-down. He detailed that newness will be balanced across performance active categories (run, train, yoga, golf, tennis) and lifestyle, aiming for 35% new style penetration by spring, including a train campaign and updates to core franchises like Scuba, Swiftly, and ABC. CFO Meghan Frank confirmed the CEO search has begun, focusing on a leader with experience in growth and transformation.

Asked for details on tariff mitigation efforts, category strength in the U.S. from new products, and early performance of the 'no line align' leggings.

Answer

The company plans strategic, modest price increases and sourcing efficiencies to mitigate tariffs, with the main impact in the second half of the year. Newness is performing well across both lifestyle (Day Drift trouser) and activity (Glow Up, Align No Line), and the company is chasing inventory for these successful items.

Dana Telsey asked about the strategy for international market activations, the expected cadence of margins throughout 2025, and whether Q1 sales were tracking within the guided range.

Answer

CEO Calvin McDonald explained that the U.S. community-based activation model is being applied globally, customized for market maturity. CFO Meghan Frank detailed that over half of the guided 100 basis point operating margin decline for 2025 is due to FX and tariffs, with Q1 facing a larger 120 basis point decline due to tough comps. She confirmed that current quarter-to-date trends are reflected in the Q1 guidance.

Dana Telsey inquired about the inventory positioning for Q3 versus Q4 and asked if there would be any markdown or gross margin impact from withdrawing the 'Breathe Through' product.

Answer

CFO Meghan Frank stated that inventory is expected to increase in the mid-teens in Q3, with a similar or slightly higher growth rate in Q4. She reiterated that the 'Breathe Through' product was a very small test and its withdrawal has an immaterial and negligible impact on both Q2 results and the financial guidance for the rest of the year.

Dana Telsey inquired about the inventory positioning for the third and fourth quarters and asked for clarification on whether the 'Breathe Through' product withdrawal would result in any markdowns or impact gross margin.

Answer

CFO Meghan Frank projected a mid-teens inventory increase in Q3, with Q4 at or slightly above that level. She reiterated that the 'Breathe Through' situation was a very small test, resulting in an immaterial and negligible impact on both Q2 results and the financial guidance for the rest of the year, with no notable markdown or gross margin effects.

Dana Telsey asked about the future opportunities and strategic direction for Stuart Weitzman, including potential for margin and top-line growth, and the outlook for its retail and wholesale portfolio. She also inquired about Famous Footwear's performance in AUR, traffic, fashion versus athletic categories, and women's segment, with a follow-up on Brand Portfolio margins and SG&A.

Answer

CEO Jay Schmidt outlined plans for Stuart Weitzman to achieve break-even in 2026 through gross margin improvement (post-inventory cleanup) and SG&A reductions from TSA removal and operational efficiencies. He noted positive consumer response to product and marketing, progress in North America retail, and opportunities in wholesale, digital DTC, and international markets (Europe and China). For Famous Footwear, Jay Schmidt highlighted success with premium brands like Birkenstock and Timberland, strong athletic performance (especially Jordan), and building fashion business. CFO Jack Calandra detailed expectations for Q4 gross margin improvement in both Famous Footwear (from shrink and LIFO reserves) and Brand Portfolio (from favorable channel/customer mix, despite similar tariff impact).

Dana Telsey asked about the future opportunities and strategic direction for Stuart Weitzman, including potential for margin and top-line growth, and the outlook for its retail and wholesale portfolio. She also inquired about Famous Footwear's performance in AUR, traffic, fashion versus athletic categories, and women's segment, with a follow-up on Brand Portfolio margins and SG&A.

Answer

CEO Jay Schmidt outlined plans for Stuart Weitzman to achieve break-even in 2026 through gross margin improvement (post-inventory cleanup) and SG&A reductions from TSA removal and operational efficiencies. He noted positive consumer response to product and marketing, progress in North America retail, and opportunities in wholesale, digital DTC, and international markets (Europe and China). For Famous Footwear, Jay Schmidt highlighted success with premium brands like Birkenstock and Timberland, strong athletic performance (especially Jordan), and building fashion business. CFO Jack Calandra detailed expectations for Q4 gross margin improvement in both Famous Footwear (from shrink and LIFO reserves) and Brand Portfolio (from favorable channel/customer mix, despite similar tariff impact).

Dana Telsey of Telsey Advisory Group inquired about the impact of tariff headwinds on product pricing for portfolio brands, the gross margin outlook for the Brand Portfolio, and the potential for restructuring or exiting weaker brands. She also asked about Famous Footwear's inventory readiness for back-to-school, any differentiation in brand performance, and the specifics of the planned $15 million in SG&A reductions.

Answer

President & CEO Jay Schmidt explained that selective price increases are being thoughtfully implemented brand-by-brand starting with fall receipts. He noted that while lead brands are getting stronger, the company continuously reviews its portfolio but has no restructuring to announce. For Famous Footwear, he confirmed they are in a good inventory position for back-to-school and will have 53 Flair stores operational. SVP & CFO Jack Calandra detailed the SG&A cuts, stating they are permanent, structural changes amounting to $15 million annually, with $7.5 million in savings expected in the second half of 2025, split evenly between Q3 and Q4.

Dana Telsey inquired about the impact of tariff headwinds on pricing and gross margins, particularly for the Brand Portfolio. She also asked about potential restructuring of weaker brands, the inventory status for Famous Footwear's back-to-school season, and specifics on the planned $15 million in strategic expense cuts.

Answer

President & CEO Jay Schmidt explained that Caleres is implementing selective price increases starting with fall receipts and is continuously reviewing the brand portfolio, though no restructuring is currently announced. He confirmed that Famous Footwear is well-positioned with inventory for back-to-school. SVP & CFO Jack Calandra detailed that the $15 million in annualized SG&A savings are structural, will begin in Q3, and be split evenly between Q3 and Q4.

Dana Telsey inquired about the impact of tariff headwinds on brand pricing for summer and fall, the gross margin outlook for the Brand Portfolio, and the potential for restructuring weaker brands. She also asked about Famous Footwear's inventory readiness for back-to-school and the specifics of the planned $15 million in SG&A cuts.

Answer

Jay Schmidt, President & CEO, explained that the company is taking a thoughtful, brand-by-brand approach to selective price increases starting with fall receipts and is continuously evaluating the brand portfolio. He confirmed that Famous Footwear is in a good position with inventory for back-to-school. Jack Calandra, SVP & CFO, detailed that the $15 million in SG&A savings are structural, will begin in Q3, and will be spread evenly across the back half of the year.

Dana Telsey of Telsey Advisory Group asked about gross margin levers like freight and discounts, category performance trends following weakness in Sam Edelman booties, wholesale order trends, and the performance of remodeled Famous Footwear 'Flare' stores.

Answer

CFO Jack Calandra noted margin pressure from tariffs but highlighted offsets like an AI pricing tool at Famous and a favorable mix shift to DTC and contemporary brands. CEO John Schmidt clarified the Sam Edelman weakness was a specific Q4 issue and the brand is focused on newness. He also confirmed the strong performance of Flare stores, with plans to upgrade 25 more in 2025, bringing the total to 60.

Dana Telsey asked about performance drivers within the Brand Portfolio, the health of the Famous Footwear consumer, the status of the FLAIR store rollout, and the promotional strategy for Q4. She also inquired about how Caleres's performance compared to broader footwear industry trends.

Answer

CEO Jay Schmidt highlighted strength in fashion sneakers, flats, and tall-heeled boots for the Brand Portfolio, while noting athletic trends remain strong at Famous Footwear, contrasting with weakness in short casual boots. He confirmed 32 FLAIR stores are open, with one more planned for Q4. CFO Jack Calandra stated Famous Footwear's Q4 promotional cadence will be similar to last year's BOGO-heavy strategy, whereas the Brand Portfolio will see more clearance activity to clean inventory. He also mentioned the total footwear industry was down 3% in the quarter, with the fashion segment performing worse than the total.

Dana Telsey inquired about the impact of tariff headwinds on pricing for portfolio brands, the future of gross margins, and potential restructuring of weaker brands. She also asked about Famous Footwear's inventory for back-to-school and specifics on the planned $15 million in expense reductions.

Answer

President & CEO Jay Schmidt explained that Caleres is implementing selective price increases starting with fall receipts and is continuously evaluating its brand portfolio. He confirmed Famous Footwear is well-positioned with inventory for back-to-school. SVP & CFO Jack Calandra detailed the $15 million in structural SG&A savings, noting they will begin in Q3 and be split evenly between Q3 and Q4.

Dana Telsey inquired about the impact of tariff headwinds on pricing strategies for portfolio brands, the outlook for gross margins, potential restructuring of weaker brands, the inventory status for Famous Footwear's back-to-school season, and specifics on the planned $15 million in structural expense cuts.

Answer

President & CEO Jay Schmidt explained that Caleres is implementing selective and thoughtful price increases starting with fall receipts and is continuously reviewing the brand portfolio without any current plans to announce exits. He confirmed that Famous Footwear is well-positioned with inventory for back-to-school and that Flair stores will total 53 for the season. SVP & CFO Jack Calandra detailed that the $15 million in SG&A savings are structural, with $7.5 million to be realized evenly in Q3 and Q4 of 2025, and noted an external partner is also seeking further efficiencies.

Dana Telsey inquired about the revenue drivers and challenges across different business segments, promotional activity, and any surprises during the Black Friday period. She also asked for insights into the sustained gross margin strength, its contributing factors, and the outlook for 2026.

Answer

CEO Andrew McLean expressed satisfaction with North American revenue growth and the positive momentum in Europe, despite earlier disappointments. He noted that promotional levels were well-managed, particularly during a successful back-to-school campaign, and highlighted strong early season sales around Veterans Day, indicating a shift in seasonality due to a younger customer base. CFO Bernie McCracken added that gross margin improvement was driven by disciplined promotional strategies, effective tariff mitigation, and enhanced operational efficiencies in distribution centers.

Dana Telsey asked about the revenue drivers and promotional levels, particularly around Black Friday, and sought insights into the sustainability and future outlook for gross margin, including potential changes in 2026.

Answer

CEO Andrew McLean discussed strong North American revenue growth offsetting European declines, noting successful back-to-school campaigns and well-managed promotional levels, with an earlier start to the holiday season. CFO Bernie McCracken highlighted gross margin improvement driven by deliberate promotional calendars, tariff mitigation, and increased operational efficiencies in distribution centers.

Dana Telsey inquired about the drivers behind Lands' End's accelerating top-line momentum into Q3, specifically asking about product category performance, the impact of lower promotions, pricing strategies in the tariff environment, and the contribution of the new Lands' End Essentials line to margin and overall mix.

Answer

Andrew McLean, CEO of Lands' End, explained that the momentum stems from a distributed commerce model, meeting customers across various channels like Amazon, Macy's, and Nordstrom with tailored product assortments and pricing. He highlighted the success of the Lands' End Essentials line in attracting new customers who then migrate to landsend.com for the full assortment. McLean also noted strong performance across all categories, particularly swim and outerwear, benefiting from a "weatherproofing" strategy. Regarding tariffs, he stated that Lands' End is mitigating impacts through sourcing network changes, vendor collaboration, internal efficiencies, and a relatively small price increase to customers. Tom Altholz, Senior Director of Financial Planning and Analysis, added that the later swim season provided a tailwind for Q3 and emphasized the early lift from the Essentials line.

Dana Telsey inquired about the drivers behind Lands' End's accelerating top-line momentum into Q3, specifically asking about product category performance, promotional strategies, tariff-related pricing adjustments, and the impact of the new Lands' End Essentials line on margins and price points.

Answer

CEO Andrew McLean explained that momentum stems from a distributed commerce model, meeting customers across various channels like Amazon, Macy's, and Nordstrom, and leveraging an AI engine for tailored product display pages. He noted strength across all categories, particularly from a weatherproofing strategy that allowed strong swim and outerwear sales over Labor Day. McLean confirmed small price increases due to tariffs, mitigated by sourcing network changes and vendor burden-sharing. Senior Director Tom Altholz added that a later swim season provided a tailwind for Q3 and highlighted the early lift from the Essentials line.

Dana Telsey asked about the acceleration in top-line momentum, specific product category performance, the impact of lower promotions, pricing strategies amidst tariffs, and the contribution of Lands' End Essentials to margins and the overall mix.

Answer

CEO Andrew McLean detailed the shift to a distributed commerce model, leveraging different channels like Amazon for price-sensitive customers and Macy's/Nordstrom for higher price points. He highlighted the success of an AI engine for product display pages, broad strength across categories, and the effectiveness of the weatherproofing strategy, noting strong swim and outerwear sales. McLean also addressed tariff impacts, explaining mitigation through sourcing changes, vendor burden sharing, internal adjustments, and minimal price increases to customers. Senior Director of Financial Planning and Analysis Tom Altholz added that a later swim season provided a Q3 tailwind and Lands' End Essentials showed an early lift.

Dana Telsey inquired about the expected sales cadence for the upcoming year, the growth trajectory of the U.S. eCommerce business, and the potential impact of tariffs on pricing, particularly in the context of the company's shift to an asset-light licensing model.

Answer

CEO Andrew McLean explained that the company is focused on managing its product assortment to adapt to market conditions, such as promoting outerwear during a cold February. He highlighted the 'flywheel effect' of the asset-light licensing model, which drives new customers to landsend.com, and noted the distinct, successful strategies for marketplaces like Amazon and Nordstrom. CFO Bernard McCracken added that with less than 8% of sourcing from China, the current guidance already incorporates the impact of implemented tariffs.

Dana Telsey asked about the expected sales cadence for the year, the growth trajectory of the U.S. eCommerce business, and the potential impact of tariffs on pricing, considering the company's shift to an asset-light model.

Answer

CEO Andrew McLean explained that the company will remain agile, managing its product assortment to react to market conditions, such as promoting outerwear during a cold February. He highlighted the 'flywheel effect' of the asset-light licensing model, which uses partners like Amazon and Nordstrom to acquire new customers and drive them to landsend.com. CFO Bernard McCracken added that the company's guidance already incorporates the impact of implemented tariffs, as its exposure to China is less than 8% of its purchasing.

Dana Telsey inquired about the expected sales cadence for the upcoming year, the growth outlook for the U.S. eCommerce business, and the potential impact of tariffs on pricing, considering the company's shift to an asset-light licensing model.

Answer

CEO Andrew McLean explained that the company will manage its assortment to adapt to market conditions, such as leaning into outerwear during a cold February. He highlighted the "flywheel effect" of the asset-light licensing model driving new customers to landsend.com and noted record performance on both Amazon and Nordstrom through tailored strategies. CFO Bernard McCracken added that with less than 8% of buys from China, the company's guidance already incorporates existing tariffs, and they will substitute products like cashmere with merino or cotton to manage costs.

Dana Telsey inquired about the demographics of Lands' End's new, younger customer base, the effectiveness of lower promotions on gross margin across different channels, the business cadence during the quarter, and the outlook for inventory levels and freight costs.

Answer

CEO Andrew McLean highlighted that new customers are, on average, 10 years younger, driving higher average order value and responding well to less price resistance. He noted that lower promotion rates are a key part of the forward strategy, supported by speed-to-market initiatives that mitigate supply chain issues. CFO Bernard McCracken added that new customers are repurchasing faster, the quarter's business flow was even, and inventory levels are expected to remain at historic lows.

Dana Telsey of Telsey Advisory Group inquired about the lack of second-quarter guidance, the expected cadence for the fiscal year, the holistic impact of tariffs on pricing and inventory, the specifics of the new Delta Airlines agreement, and the performance of the marketplaces business and European operations.

Answer

CFO Bernard Mccracken stated that due to tariff uncertainty, the company is only providing annual guidance, but has mitigation efforts in place. CEO Andrew McLean added that the company proactively shifted production to the Western Hemisphere to counter tariff impacts. McCracken clarified the Delta agreement is to complete a contract from a prior vendor. McLean noted strong growth in the Nordstrom and Amazon marketplaces, progress with Kohl's, and significant optimism for European expansion, particularly with a new focus on France.

Dana Telsey of Telsey Advisory Group inquired about the lack of second-quarter guidance, the expected cadence for the fiscal year, and the holistic impact of tariffs on pricing and inventory. She also asked for details on the new Delta Airlines agreement and the performance of the marketplaces business and European operations.

Answer

CFO Bernard McCracken explained that due to near-term tariff uncertainty, the company is only providing annual guidance, but has mitigation plans in place. CEO Andrew McLean added that the company proactively shifted production, including its large Supima program, to the Western Hemisphere to counter tariff impacts. McCracken clarified the Delta agreement is a 2.5-year completion of a contract with a previous vendor. McLean highlighted strong marketplace growth at Nordstrom and Amazon, a positive reset with Kohl's, and excitement for European expansion, particularly in France.

Dana Telsey of Telsey Advisory Group inquired about the lack of second-quarter guidance, the expected cadence for the fiscal year, and the holistic impact of tariffs on pricing and inventory. She also asked for details on the new Delta Airlines agreement and performance trends in the marketplaces and European businesses.

Answer

CFO Bernard McCracken stated that due to near-term tariff uncertainty, the company is only providing annual guidance, which already incorporates mitigation efforts. CEO Andrew McLean added that the company began shifting production to the Western Hemisphere in Q4 to counteract tariffs. Regarding the Delta agreement, McCracken clarified it's a 2.5-year completion of a prior contract. McLean noted strong marketplace growth at Nordstrom, Amazon, and Macy's, and improving trends at Kohl's. He also expressed excitement for the European business, which is being repositioned as a more premium brand with relaunched sites and expansion into France.

Dana Telsey of Telsey Advisory Group inquired about the absence of second-quarter guidance, the expected cadence for the fiscal year, and the holistic impact of tariffs on pricing and inventory. She also asked for details on the new Delta Airlines agreement and performance trends in the Marketplaces business and in Europe.

Answer

CFO Bernard Mccracken stated that due to tariff uncertainty, the company is only providing annual guidance based on current rates, with mitigation efforts in place to offset headwinds. CEO Andrew McLean added that the company proactively shifted significant production to the Western Hemisphere to build resiliency. Regarding the Delta agreement, McCracken clarified it's a 2.5-year contract to complete a previous vendor's term. McLean highlighted strong marketplace growth at Nordstrom and Amazon, a strategic reset at Kohl's, and significant optimism for European expansion, including a relaunch in France.

Dana Telsey inquired about the drivers behind the 20% increase in new customer acquisition, the demographics of these new customers, and how this data is influencing product development. She also asked for color on the Black Friday promotional landscape and the company's sourcing exposure to China, including any potential tariff impacts.

Answer

CEO Andrew McLean explained that new customer growth is driven by attracting a younger cohort, 10-12 years younger than the traditional base, through targeted marketing like social media influencers and pop-up events. He noted that product development now caters to both traditional and fashion-forward customers, citing the modernized Starfish pant as an example. McLean affirmed the company will not engage in heavy promotions, instead focusing on tight inventory and gross margin expansion. He also stated that China exposure is minimal, accounting for less than 6% of the company's open to buy, mitigating tariff risks.

Dana Telsey asked Morris Goldfarb about changing order trends in the wholesale channel, particularly for G-III's own brands like Donna Karan and Karl Lagerfeld. She also asked Neal Nackman about potential additive catalysts for 2026 and beyond, such as extended sizing, the Weekend collection, handbags, and improvements in own retail, and their incremental contribution to top line or margin.

Answer

Morris Goldfarb (CEO, G-III Apparel Group) noted that demand was significantly higher in the full-price channel this year, with strong sell-throughs across all brands, particularly in coats and dresses. He expressed satisfaction with consumer response and retail partners. Regarding future catalysts, he stated that all new initiatives for Donna Karan are working, leading to expected growth across dresses, sportswear, handbags, footwear, and the newly shipped Weekend collection. He also highlighted significant untapped international potential for Donna Karan and plans to grow the men's side of Karl Lagerfeld in North America in calendar 2026. He emphasized that G-III's owned brands have substantial organic growth potential, reducing pressure for acquisitions or new licenses.

Dana Telsey asked about the recent order trends in the wholesale channel, particularly for G-III's owned brands like Donna Karan and Karl Lagerfeld, and the incremental contribution from initiatives like extended sizing, Donna Karan Weekend, handbags, and own retail for 2026 and beyond.

Answer

Morris Goldfarb (CEO) noted significantly higher demand in the full-price channel this year, with strong sell-throughs in coats and dresses across all brands. He expressed satisfaction with consumer response and retail partners, crediting the team's management during a challenging period. For Donna Karan, he highlighted growth potential across all categories—dresses, sportswear, handbags, footwear, and the newly shipped Weekend collection—along with future international expansion. He also mentioned plans to grow the men's side of Karl Lagerfeld in North America, emphasizing ample organic growth opportunities for all owned brands without pressure for acquisitions.

Dana Telsey of Telsey Advisory Group asked about the development and extended growth plans for owned brands like Donna Karan and DKNY. She also inquired about current wholesale order trends, particularly with the company's largest customers, and the strategy for developing the direct-to-consumer (DTC) business in North America.

Answer

CEO Morris Goldfarb described the Donna Karan launch as 'amazing,' driven by product quality and strong sell-through, with plans for a nearly 40% sales increase and a 60%+ increase in its DTC digital business. He also mentioned plans for a more casual line and future store openings. Executive Neal Nackman noted that the fall order book is about 50% complete, which is a similar position to the prior year. Morris Goldfarb added that the company is focused on DTC execution, optimizing its warehouse network for quick response, and has redefined leadership on the digital side to drive growth.

Dana Telsey inquired about the growth opportunities for the brand portfolio across categories, channels, and regions, particularly for Donna Karan and Converse. She also asked for an update on freight costs and supply chain lead times.

Answer

CEO Morris Goldfarb outlined a broad strategy including distributing Pepe Jeans and Hackett in North America via the AWWG partnership and reviving the Façonnable brand. Executive Neal Nackman addressed operations, stating that while most freight is contracted, the company has factored higher spot-rate costs and minor lead time delays into its Q3 guidance.

Dana Telsey with Telsey Group inquired about the future progress of the Beauty business over the next year, its potential top-line impact, and margin contributions. She also asked for more details on the profile (age, income) of new customers attracted by effective marketing and plans to sustain active customer growth in 2026. Lastly, she sought insights into next year's Store of the Future plans, including any changes or enhancements.

Answer

CEO Hillary Super outlined Beauty's near-term opportunities for 2026, including converting existing customers (only 40% currently shop Beauty), continued acquisition, and better integration within each brand, especially PINK Beauty. For 2027 and beyond, she emphasized innovation. Regarding new customers, she reiterated an uptick in 18-24 year olds and growth across all income cohorts, driven by product and emotion. CFO and COO Scott Sekella explained that Store of the Future enhancements would focus on optimizing for the Path to Potential strategy, including better showcasing bras, differentiating PINK (especially apparel and intimates), and driving cross-shopping with Beauty, rather than a wholesale change.

Dana Telsey asked about the future progress of the beauty business, its potential top-line impact, and how it could affect margins over the next year. She also inquired about the framework of new customers (age, income) attracted by effective marketing and plans to sustain active customer growth next year. Lastly, she asked about future plans and enhancements for the "Store of the Future" concept.

Answer

CEO Hillary Super outlined that beauty's near-term opportunities include converting existing customers (only 40% currently shop beauty), integrating beauty within each brand, and expanding PINK beauty. Longer-term, it's about innovation. She confirmed new customers are primarily 18-24-year-olds, showing growth across all income cohorts (with a slight uptick in high-income), and are driven by product and brand emotion. CFO Scott Sekella stated that Store of the Future concepts are being optimized to better support the Path to Potential strategy, including enhancing bra and PINK assortments, differentiating PINK, and improving cross-shopping with beauty, with continuous enhancements rather than a wholesale change.

Dana Telsey from Telsey Advisory Group asked for an update on the performance of the core intimates market, specifically bras and panties, and inquired about the timing for the implementation of tariff mitigation measures.

Answer

CEO Hillary Super stated that the intimates market remains pressured. While the bra business rebounded in March and April after a weak February, the panties business was softer due to a less promotional stance compared to competitors. CFO Scott Sekella explained that the bulk of tariff mitigation benefits are expected in the second half of the year, as it takes time for actions like resourcing out of China to flow through the supply chain.

Dana Telsey inquired about opportunities in store space allocation and potential new visions for the 'Store of the Future' concept, and also asked for an update on the company's manufacturing and sourcing exposure to China.

Answer

CEO Hillary Super sees opportunities in re-evaluating space allocation, particularly giving PINK more space for an expanded apparel assortment and ensuring it feels distinct. She also aims to elevate the beauty experience and is considering accelerating the pace of remodels. CFO Tim Johnson stated that the vast majority of products come from Vietnam, Sri Lanka, and Indonesia, with China representing a single-digit percentage of sourcing, some of which is for the China market itself.

Dana Telsey asked about top-line performance, differences between prestige and mass categories, whether newness for the holiday season differs from last year, and the integration and reaction to Space NK and K-Beauty initiatives.

Answer

President and CEO Kecia Steelman reported that prestige beauty grew mid-single digits, with Ulta gaining share driven by skin and fragrance, and improvements in prestige hair care, across both brick-and-mortar and digital. Mass beauty also grew mid-single digits, with Ulta gaining share primarily in mass makeup. Regarding Space NK, she noted it's still early, but the acquisition offers mutual learning opportunities, particularly in clienteling and operational efficiencies, while preserving Space NK's unique identity. She did not specifically address holiday newness comparison to last year.

Dana Telsey asked about the sustainability of the strong 6.7% comparable sales growth driven by the 'Beauty Unleashed' plan, any expected differences in performance between Q3 and Q4, and the path to increasing operating margins.

Answer

President and CEO Kecia Steelman expressed confidence in the momentum from the 'Beauty Unleashed' plan but noted that the second half of the year faces tougher comparisons and ongoing macroeconomic uncertainty. Interim CFO Chris Lialios added that operating margins in the back half will be pressured by cost deleverage, moderating shrink benefits, the timing of investments, and higher incentive compensation.

Dana Telsey asked about the 'Ulta Beauty Unleashed' plan, focusing on the in-store experience, the strategy to return to 4-6% long-term sales growth, and the expected financial cadence for fiscal 2025.

Answer

CEO Kecia Steelman explained that the 'Unleashed' plan simplifies and prioritizes internal focus on core business growth and scaling new ventures. CFO Paula Oyibo clarified that fiscal 2025 is considered the primary transition year and that Q2 and Q3 likely have the greatest comparable sales growth opportunity.

Dana Telsey sought further insights into consumer behavior during the Black Friday and holiday period, specifically how it differed across channels and regions, and its implications for 2026 planning regarding product, pricing, promotionality, and channel strategy.

Answer

CEO Stefan Larsson shared observations from Black Friday, noting strong consumer engagement across various demographics, including Gen Z, and confirmed that performance was on plan in both Europe and North America, highlighting the increasing importance of this week globally.

Dana Telsey from Telsey Advisory Group inquired about the differences in promotional trends between international and domestic markets and asked for more details on store portfolio enhancements, including the new Tokyo and Soho locations.

Answer

CEO Stefan Larsson described the consumer environment as stable in Europe, choppy in APAC, and facing tariff uncertainty in North America. He highlighted the strategic importance of the new Calvin Klein flagship store opening in Harajuku, Tokyo, and the upcoming Soho, New York store. He also mentioned a multi-year plan to renovate and upgrade the majority of the global store fleet.

Dana Telsey of Telsey Advisory Group inquired about the $65 million unmitigated tariff impact, the specific mitigation strategies being employed, and the resulting effect on pricing and margins in the U.S. market.

Answer

CEO Stefan Larsson noted that PVH is somewhat insulated as 70% of its business is international. CFO Zac Coughlin detailed a multi-pronged mitigation strategy, including leveraging their global supply chain relationships to optimize costs with partners, implementing strategic discount reductions, and taking calibrated, targeted pricing actions in areas where the brands have pricing power.

Dana Telsey of Telsey Advisory Group inquired about the financial impact of tariffs, the specific strategies to mitigate the $65 million headwind, and the resulting effect on pricing and margins in the U.S.

Answer

CEO Stefan Larsson noted that the U.S. constitutes only 30% of PVH's business, limiting overall tariff exposure. CFO Zac Coughlin outlined a multi-pronged mitigation strategy, including leveraging their diversified global supply chain to optimize costs with partners, implementing strategic discount reductions, and executing calibrated, targeted price increases where the brands have pricing power.

Dana Telsey of Telsey Advisory Group asked about the expected impact of tariffs, the company's mitigation strategies, and plans for price increases in the U.S. market.

Answer

CEO Stefan Larsson noted that PVH is somewhat insulated as only 30% of its business is in the U.S. CFO Zac Coughlin detailed the mitigation plan, which includes leveraging supply chain relationships to optimize costs, using strategic discount reductions, and implementing calibrated, targeted price increases where the company has pricing power.

Dana Telsey asked about the connection between product and consumer engagement, the timing of its rollout across brands and regions, and the level of marketing spend required to support these initiatives.

Answer

CEO Stefan Larsson provided the Bad Bunny campaign for Calvin Klein underwear as a concrete example of combining hero product innovation with major talent to drive engagement and direct commercial impact, noting this systematic approach will be applied season after season. He confirmed that marketing spend continues to be a top priority for investing in growth.

Dana Telsey asked whether the current merchandising adjustments are addressing an internal issue for Torrid or if changes in the competitive landscape (product assortment, price point, customer behavior) are also contributing factors.

Answer

CEO Lisa Harper acknowledged that much of the issue is 'self-inflicted' due to neglecting core knit and woven top products. She noted a seasonal aspect in Q3 where other retailers offered more oversized, less fit-specific options, potentially drawing customers away from Torrid's tops, unlike the first half of the year. She emphasized that degradation was not seen in fit-specific bottoms or dresses. Lisa Harper highlighted the opportunity to rebuild with opening price point strategies and core applications, confirming that customer dedication and loyalty program penetration remain strong, indicating a continued connection despite the missteps.

Dana Telsey of Telsey Advisory Group inquired about a potential target for the final store count after optimization, the expected cadence of gross margin and SG&A, and which upcoming sub-brands management is most excited about.

Answer

CFO Paula Dempsey explained there is no fixed target for the store count, as the focus is on optimizing the fleet mix towards more profitable outdoor centers. She noted SG&A will be higher in the first half due to a planned shift in marketing spend. CEO Lisa Harper detailed four upcoming sub-brand launches for 2025: Belle Isle (preppy), Lovesick (junior), Tru by Torrid (active), and Studio (workwear), all aimed at building an 'internal marketplace' for the customer.

Dana Telsey asked about opening price point performance, the pricing strategy for new capsules, and future talent needs following the new Chief Merchant hire. She also inquired about marketing spend plans and the future assortment mix between core and new products.

Answer

CEO Lisa Harper noted that AOV was up and that new sub-brands will feature a mix of higher, similar, and lower price points. She expressed excitement about Laura Willensky joining and Kate Horton's dedicated focus on Intimates. Marketing spend will increase slightly, with a focus on influencer campaigns. Regarding assortment, Harper used denim as a proxy to explain how new styles become 'new core,' and capsules will serve as an incubator for future core products.

Dana Telsey of Telsey Advisory Group inquired about Torrid's long-term store fleet optimization strategy, including the target mix of mall versus outdoor centers and the cadence of closures. She also asked for details on the drivers of strong regular price comps, such as pricing power, product costs, and category-specific performance.

Answer

CFO Paula Dempsey stated the goal is a 50/50 split between mall and outdoor centers over the next 3-5 years, achieved through a mix of closures and new openings, with 20-25 additional closures planned for the end of fiscal 2024. CEO Lisa Harper attributed strong full-price sell-through to inventory scarcity and a renewed 'chase' model. She noted that platforming fabrics and strong vendor partnerships continue to improve product costs, and highlighted strong performance in Denim, Tops, and Dresses.

Dana Telsey asked about the continuation of newness in assortments, its strategic direction by category and price point, and its role in attracting new customers and engaging existing ones. She also inquired about future gross margin opportunities, considering recent tariff impacts.

Answer

Chairman and CEO Tony Spring expressed excitement about newness across good, better, and best price points for both Macy's and Bloomingdale's. He detailed adding designer/contemporary brands at Bloomingdale's and brands like Reiss, Rodd & Gunn, Theory, and MFK at Macy's to fill better/best price points, identifying women's ready-to-wear as a significant opportunity for Macy's. COO and CFO Tom Edwards outlined future gross margin opportunities, including improved customer satisfaction leading to better regular price sell-throughs, enhanced brand assortment, reduced redundancy, inventory discipline, and end-to-end efficiencies. He also expects SG&A leverage from top-line growth and cost discipline.

Dana Telsey asked about the continuation of newness in assortments, its strategic direction by category and price point, and its role in capturing new customers and increasing engagement with existing ones. She also inquired about future gross margin opportunities, considering tariffs as a potential headwind.

Answer

Chairman and CEO Tony Spring expressed excitement about newness across Macy's and Bloomingdale's, emphasizing balance across good, better, and best price points. He cited adding brands like Reiss and Rodd & Gunn at Macy's to fill better/best price points and expanding designer offerings at Bloomingdale's. He identified women's ready-to-wear as a significant opportunity for Macy's. COO and CFO Tom Edwards outlined gross margin opportunities through improved customer satisfaction leading to better regular price sell-throughs, enhanced brand assortment, inventory discipline, and end-to-end efficiencies.

Dana Telsey inquired about key learnings from the Reimagined stores, potential expansion plans for these locations (e.g., to 200 or 250 stores), and the company's pricing strategy for both private label and branded products in response to incremental tariffs impacting gross margin.

Answer

Tony Spring, Chairman and CEO, reported strong positive performance in both the first 50 and next 75 Reimagined 125 stores, attributing success to additional staffing, visual merchandising, and local empowerment, which led to record Net Promoter Scores. He described a surgical approach to tariff-related price increases and negotiations. Tom Edwards, COO and CFO, added that the full-year tariff impact to gross margin was increased to 40-60 basis points, primarily affecting Q4, and emphasized competitive pricing adjustments.

Dana Telsey of Telsey Advisory Group asked about the company's inventory planning strategy for the remainder of the year, considering potential tariff impacts and holiday pull-forwards. She also inquired about the market share opportunities for both the Macy's and Bloomingdale's banners amid the changing and tumultuous competitive landscape.

Answer

Chairman & CEO Tony Spring emphasized a continued disciplined approach to inventory, stating they would not buy excessively to avoid potential tariffs but would use their liquidity to be opportunistic. He affirmed that the current market disruption presents a significant opportunity for both Macy's and Bloomingdale's to take share, citing stronger vendor partnerships, the addition of new brands, and positive customer feedback on the improved in-store experience.

Dana Telsey asked about the private label penetration outlook, pricing strategy, and the specific number of store closures planned for 2025.

Answer

CEO Antony Spring noted that private brand penetration is at an all-time low, which presents a significant long-term margin opportunity focused on design and value, not just low prices. COO & CFO Adrian Mitchell stated that while no specific number of 2025 closures has been shared, the company remains committed to closing approximately 150 stores by the end of fiscal 2026 and is pleased with the monetization progress so far.

Dana Telsey of Telsey Advisory Group asked about the rationale for increasing the number of store closures, the performance of smaller format stores, and for an explanation of the 70 basis point decline in merchandise margin.

Answer

CEO Antony Spring explained that the increased store closures reflect favorable deal-making and an eagerness to reach the go-forward enterprise state, while noting positive initial response to the newest small-format Bloomingdale's. COO & CFO Adrian Mitchell added that the higher-than-planned asset sale proceeds provide capital for reinvestment. Regarding margin, he attributed the decline to product mix shifts from weather impacts and the competitive environment.

Dana Telsey inquired about the relative performance of other formats like small-format stores, Macy's Backstage, and digital. She also asked about the drivers of AUR gains and the specifics behind the increased capital expenditure guidance.

Answer

CEO Tony Spring explained that the strategy is to win market-by-market by complementing on-mall stores with small-format locations and a strong digital presence. He attributed the low single-digit AUR growth to improved product quality rather than higher prices. COO and CFO Adrian Mitchell stated the increased CapEx is for high-return investments, such as visual enhancements in 'First 50' stores, general store maintenance to improve the customer experience, and digital platform enhancements.

Dana Telsey of Telsey Advisory Group inquired about Macy's inventory planning strategy, particularly concerning tariff impacts and holiday pull-forwards. She also asked about opportunities for Macy's and Bloomingdale's given the changing competitive landscape.

Answer

Chairman & CEO Tony Spring emphasized a disciplined inventory approach, stating the company would not over-buy just to avoid potential tariffs. He affirmed that the current market disruption presents a significant opportunity for both Macy's and Bloomingdale's to gain share, citing stronger vendor partnerships, new brand additions, and positive customer feedback as key advantages.

Dana Telsey asked about the expected margin drag from smaller banners like James Allen and Banter for the second half of the year. She also inquired about the percentage of newness in the Q4 assortment for bridal and fashion, and provided an update on real estate optimization plans, including store refreshes and closures.

Answer

COO and CFO Joan Hilson stated that James Allen is expected to negatively impact comps by 120 basis points in the back half. She noted that newness typically targets roughly 30% of the assortment, with emphasis on content and depth in key styles. For real estate, refreshed stores (Kay, Jared, Zales) are delivering mid-single-digit sales lifts with a two-year payback. The company still plans to close up to 100 stores this year and roughly 150 over the next two years, with several Banter stores in declining malls being evaluated for repositioning.

Dana Telsey inquired about the expected margin drag from smaller banners like James Allen and Banter for the second half of the year. She also asked about the percentage of newness in the assortment for Q4, covering both bridal and fashion, and provided an update on real estate optimization plans.

Answer

COO and CFO Joan Hilson stated that James Allen is expected to negatively impact comps by 120 basis points, consistent throughout the back half. She noted that Signet targets roughly 30% newness in its assortment, emphasizing that the content and depth of key styles are more crucial than the percentage. Regarding real estate, renovated Kay, Jared, and Zales stores are delivering mid-single-digit sales lifts with a payback of just over two years. Signet still plans to close up to 100 stores this year and approximately 150 over the next two years, with several Banter locations in declining malls being evaluated for repositioning.

Dana Telsey of Telsey Advisory Group inquired about the key learnings from last year's fourth quarter that are being applied to this year's holiday playbook, particularly concerning inventory at the $200-$500 price point. She also asked about the marketing spend outlook, the completeness of the leadership team, and the reason for the updated square footage guidance.

Answer

CEO & Director J.K. Symancyk explained the holiday playbook includes tripling LGD fashion inventory below $1,000 and significant assortment newness (40-50% shift) to address last year's gaps. He described marketing spend as neutral overall. Symancyk also stated the leadership team is nearly complete, with only a technology leader role to fill. Chief Operating & Financial Officer Joan Hilson clarified the square footage guidance change was simply a refinement of the store closure plan.

Dana Telsey asked about the holiday playbook for this year, specifically how learnings from last year's Q4 (e.g., inventory gaps in $200-$500 price points, growth in LGD fashion) are being applied. She also inquired about the expected marketing spend compared to last year, the current status of the leadership team build-out, and the reason for the refined square footage guidance.

Answer

CEO J.K. Symancyk stated that inventory gaps from last year have been addressed, particularly in LGD fashion at $250-$500 price points, with triple ownership below $1,000. He highlighted significant assortment shifts (40-50% in some brands) to align with brand positioning and trends, along with focused marketing to maximize investment. J.K. Symancyk confirmed the leadership team is largely set, with one remaining technology leadership position to fill. COO and CFO Joan Hilson clarified that the square footage change is merely a refinement of the store closure plan.

Dana Telsey of Telsey Advisory Group asked about the health of the consumer across different brands, the drivers behind the 8% growth in Average Unit Retail (AUR), and the company's marketing and product strategy for the upcoming holiday season.

Answer

CEO J.K. Symancyk attributed the strong AUR growth to two factors: customers trading up in size and quality for lab-grown diamonds in bridal, and the expansion of LGDs into the fashion category, which creates a new avenue for merchandise and spend. He described the consumer as 'resilient' when presented with compelling products. For the holiday season, the strategy involves targeted marketing to leverage a 30% increase in impressions, a continued pullback on promotions, and a focus on key price points and new product launches.

Dana Telsey from Telsey Advisory Group inquired about the expected cadence of progress on the fashion versus bridal strategy throughout the year and the specific timing and criteria for the planned closure of up to 150 stores.

Answer

CEO James Symancyk outlined that progress will build during the year, with H1 focused on execution and inventory, followed by longer-term gains from brand differentiation. COO & CFO Joan Hilson detailed that the store closure decisions will be based on market potential, top-line performance, and 4-wall contribution. She highlighted the flexibility from an average lease term of just over two years and the focus on optimizing sales transference.

Dana Telsey of Telsey Advisory Group inquired about margin trends within the Digital Banners, the contribution of the Services business to overall margins, and the performance of the company's physical store fleet by banner or location type.

Answer

CFO Joan Hilson reported a 600 basis point sequential improvement in the Digital Banners' top-line, which is driving slight bottom-line margin expansion. She noted that adding more finished fashion products to these banners should further help margins. Regarding real estate, Hilson mentioned that ongoing store renovations are expected to provide a top-line lift, and that Zales' e-commerce performance was a bright spot, driven by its new fashion assortment.

Dana Telsey asked about consumer behavior, specifically the observed trend of customers waiting for promotions, and whether this applies across all brands, demographics, and regions. She also questioned if the higher rate of rental product sales at Nuuly is impacting margins and if there are demographic shifts associated with these purchases.

Answer

Richard Hayne, CEO of Urban Outfitters, explained that customers waiting for promotions is a reversion to pre-COVID behavior, indicating consumer intelligence rather than a specific demographic shift. Frank Conforti, Co-President and COO, confirmed a higher rate of rental product sales (which have lower gross profit) at Nuuly but noted no significant demographic or geographic shifts associated with these purchases.

Dana Telsey asked about the consumer's behavior of waiting for deals, its prevalence across brands, demographics, and regions, and the promotional strategies needed. She also questioned Nuuly's average active subscriber growth, the shift towards buying rental products, and its impact on margins.

Answer

Richard Hayne, CEO of Urban Outfitters, attributed consumers waiting for promotions to a reversion to pre-COVID behavior, where customers intelligently waited for anticipated deals, rather than a specific demographic shift. Frank Conforti, Co-President and COO, confirmed a higher rate of sales of rental product (which has lower gross profit than subscriptions) in the quarter for Nuuly, but noted no significant demographic or geographic shifts in these purchases.

Dana Telsey of Telsey Advisory Group requested clarification on the SG&A outlook for the second half, including the magnitude of marketing spend, and asked about the real estate strategy, particularly regarding remodels and the new Maeve store concept.

Answer

CFO Melanie Marein-Efron confirmed that SG&A is expected to grow in line with sales for the second half, with deleverage in Q3 and leverage in Q4 due to the timing of marketing campaigns. Tricia Smith, Global CEO of Anthropologie Group, outlined plans to launch the first standalone Maeve store in Raleigh, NC, this fall, with a 3-4 store test in the spring to evaluate long-term potential.

Dana Telsey inquired about the profitability profile of the Nuuly business, its pricing strategy concerning tariffs, and trends related to the Nuuly customer, including potential cannibalization from other URBN brands.

Answer

Executive David Hayne confirmed that Nuuly has no current plans to raise subscription prices to offset tariff impacts. Co-President and COO Francis Conforti added that Nuuly is not expected to be dilutive to URBN's 10% operating profit goal, implying a 10% margin is an achievable long-term target for the rental business. He praised the team for reaching over 5% operating profit in Q1.

Dana Telsey requested an update on the progress of the Urban Outfitters brand's five-pillar transformation strategy and asked about product innovation at Anthropologie, particularly the new Celandine collection.

Answer

Executive Shea Jensen reported good progress on Urban Outfitters' transformation, noting the first positive regular price comp in years, evolved marketing creative, and cleaned-up inventories. Executive Tricia Smith shared that Anthropologie's new resort wear brand, Celandine, launched in January and is exceeding expectations, proving to be an additive business across all its categories.

Dana Telsey asked about the progress on cross-functional initiatives driving gross margin and how inventory and markdown levels are being planned for Urban Outfitters going forward.

Answer

Co-President and COO Francis Conforti reported that the company is on track to achieve its three-year goal of a 500 basis point IMU improvement by the end of the fiscal year. He also stated that all brands are planning inventory to be in line with sales going forward, which should not negatively impact markdown rates.

Dana Telsey asked about the appropriate inventory levels for Q3 and Q4 amid sales softening, the marketing spend strategy for Anthropologie and Urban Outfitters given their customer shifts, and if the own-brand versus third-party brand mix is changing.

Answer

CFO Melanie Marein-Efron noted that while Q2 inventory was well-managed, Q3 buys were planned before the recent slowdown, necessitating potential markdowns, and Q4 plans are more conservative. Tricia Smith, Global CEO of Anthropologie Group, stated that marketing is successfully attracting a younger customer without alienating the core base. CEO Richard Hayne added that the average customer age at Anthropologie has only decreased by a few years.

Dana Telsey asked about other proprietary brands or categories to watch for meaningful growth beyond women's, the potential impact of tariffs on margins, and the current status of brand inclusion in coupons. She also inquired about Kohl's ongoing store portfolio strategy, including any plans for openings, closings, or relocations.

Answer

CEO Michael Bender stated that coupon inclusion is currently where they want it, following two tranches of brand additions. He highlighted activewear brands like Tek and FLX as key proprietary growth areas, noting FLX's expansion into kids' departments. CFO Jill Timm acknowledged that while Q3 margins saw less tariff impact due to effective sourcing, more pressure is expected in Q4 and 2026 due to full-year exposure and increased certainty. Michael Bender confirmed that reviewing the store fleet is a regular practice, with over 90% of stores being profitable, and adjustments will be made as necessary, similar to the 20 stores closed last year.

Dana Telsey inquired about other meaningful proprietary brands or categories to watch beyond women's, the potential impact of tariff changes on margins, and the current status of brand inclusion in coupons. She also asked about the company's strategy for its store portfolio, including openings, closings, and relocations.

Answer

CEO Michael Bender stated that coupon inclusion is currently where the company wants it to be, following two tranches in April and August. He highlighted the active side, specifically Tech and Flex, as important proprietary brands, noting Flex's expansion into kids' departments. CFO Jill Timm indicated that while Q3 saw less tariff impact, Q4 and 2026 are expected to face more pressure on margins due to full-year exposure and increased certainty around tariffs. Michael Bender confirmed that reviewing the store fleet is a normal annual practice, with over 90% of stores being profitable, and adjustments will be made as necessary, similar to the 20 stores closed last year.

Dana Telsey questioned the company's strategy for its store footprint, including the optimal number of stores, potential for additional closures, and ideal format size. She also asked for an update on managing inventory and pricing in light of recent tariff news.

Answer

CFO Jill Timm described the store base as very healthy and profitable, viewing recent closures as routine 'hygiene.' She mentioned the company is exploring smaller 55,000 sq. ft. formats for future flexibility. Both Timm and Interim CEO Michael Bender stated that the tariff situation is fluid but manageable within the current guidance, thanks to a diversified supply chain. They do not foresee major changes to their inventory strategy, which targets a high-single-digit reduction by year-end.

Dana Telsey inquired about the future of Kohl's store profile, including the optimal size and number of stores, the target merchandise mix, sustainable margins, and the behavior of the Kohl's customer.

Answer

CEO Ashley Buchanan responded that the store fleet is highly profitable, with very few unprofitable locations, so she does not foresee significant closures beyond the recently announced 27. She noted the 80,000 sq. ft. prototype is the company's productive 'workhorse,' while smaller formats are still being evaluated. Regarding merchandise, Buchanan highlighted opportunities to improve space allocation and adjacencies within the existing store box. She also observed that the consumer, particularly those earning under $100k, is constrained and actively seeking value, which reinforces the company's renewed focus on quality and value.

Dana Telsey of Telsey Advisory Group asked for a high-level assessment of how much of the company's performance issues are internal versus macro-driven, and also inquired about expense management, particularly labor costs for the holiday season.

Answer

CEO Tom Kingsbury stated that while macro factors affect their customer, he believes most issues are internal and fixable through better execution. CFO Jill Timm explained that expenses are managed via a variable store labor model, but the company will increase Q4 investment in marketing to re-engage customers and highlight the return of valued categories like fine jewelry and petites.

Dana Telsey asked where the biggest impacts are expected from new partnerships like Babies "R" Us, given recent improvements in conversion and traffic. She also inquired about opportunities within the home category.

Answer

CFO Jill Timm stated that Babies "R" Us represents a significant opportunity to attract younger families, especially with a new registry launching, and expects a positive halo effect on the kids' business. She also highlighted new, market-sourced brands as key drivers. CEO Thomas Kingsbury addressed the home category, noting strong progress in home decor and pets. He identified the large electrics and bedding businesses as key areas needing a turnaround but expressed confidence in the overall repositioning of the category for growth, particularly for the holiday season.

Dana Telsey inquired about the Abercrombie brand's performance, specifically asking for a breakdown by category (men's and women's), channel differences, overall brand progress, and international regional dynamics including puts and takes in EMEA and APAC.

Answer

CEO Fran Horowitz highlighted Abercrombie's strength with positive traffic, growing customer file, and strong digital and store engagement, noting readiness for Q4 with well-inventoried denim, fleece, and sweaters. CFO Robert Ball discussed EMEA's opportunities, strong U.K. performance, and early stages in Germany and other European markets. He also addressed APAC's large market with a small, growing business, expressing confidence in global opportunities.

Dana Telsey with Telsey Advisory Group inquired about the Abercrombie brand's performance by category (men's and women's), channel differences, overall brand progress, and international regional dynamics, including specific puts and takes in EMEA and APAC.

Answer

CEO Fran Horowitz highlighted the Abercrombie brand's strength, positive traffic, growing customer file, and strong engagement across digital and stores, noting preparedness for Q4 with well-inventoried categories like denim, fleece, and sweaters. CFO Robert Ball elaborated on EMEA opportunities, strong U.K. results, and the early stages of growth in Germany and other European markets, while also addressing APAC dynamics and overall confidence in global brand opportunities.

Dana Telsey of Telsey Advisory Group inquired about the key growth indicators for the Abercrombie brand, the accounting treatment of the credit card settlement in guidance, and the initial performance of the Abercrombie Kids launch in department stores.

Answer

CEO & Director Fran Horowitz expressed confidence in Abercrombie's return to growth by year-end, citing strong traffic, the NFL partnership, and new product trends. SVP & CFO Robert Ball clarified the $39M settlement benefit is included in the GAAP guidance, offsetting new tariff impacts. EVP & COO Scott Lipesky added that the kids' licensing deal is effectively reaching new customers and expanding the brand's presence.

Dana Telsey inquired about the forward outlook for the Hollister and Abercrombie brands, including men's and women's performance, key growth initiatives for Hollister, and the rationale behind the updated real estate strategy, which involves fewer store closures and remodels.

Answer

CEO Fran Horowitz explained that Abercrombie's Q1 performance was impacted by clearing carryover inventory, affecting AUR, but noted strong response to new swim products and expects an inflection in the back half. For Hollister, she highlighted the success of culturally relevant campaigns like the "Grad Shop" and broad strength across categories. CFO Robert Ball added that the reduction in store closures is due to successful landlord negotiations and strong store performance, justifying keeping more locations open.

Dana Telsey inquired about current business trends in the macro environment and opportunities for pricing and category enhancements at the Abercrombie and Hollister brands.

Answer

CEO Fran Horowitz-Bonadies noted that while 2024 was outstanding, the transition to spring 2025 is more 'normalized,' with Hollister showing strong momentum and Abercrombie starting slightly negative but with positive 'green shoots.' COO Scott Lipesky highlighted the significant global growth opportunity, particularly in international markets. CFO Robert Ball added that the company is satisfied with its current pricing architecture, having achieved double-digit AUR growth over multiple years without significant ticket price increases, and plans no major changes.

Dana Telsey of Telsey Advisory Group inquired about the drivers behind Hollister's significant comp acceleration, including any performance differences between men's and women's, and asked for details on the company's forward-looking investment strategy, particularly in marketing.

Answer

CEO Fran Horowitz-Bonadies attributed Hollister's 21% comparable sales growth to balanced performance across genders, key categories like sweaters and fleece, and strong traffic, positioning the brand as a leader in the teen space. COO Scott Lipesky confirmed the company will continue to increase marketing investments year-over-year, citing strong traffic to both store and digital channels, and will also invest in store refreshes and technology to enhance the customer journey.

Dana Telsey inquired about the forward-looking trajectory for the Hollister brand following its recent acceleration, including any performance differences between men's and women's apparel. She also asked about the strategy for incremental investments, particularly in marketing.

Answer

CEO Fran Horowitz-Bonadies highlighted that Hollister is now a leader in the teen space, showing balanced growth across genders, categories, and regions with strong traffic. COO Scott Lipesky added that the company is pleased with the returns on its marketing investments, which are driving traffic, and will continue to invest in stores, digital experiences, and technology to enhance the operating model.

Dana Telsey of Telsey Advisory Group inquired about the back-to-school season's performance, specifically AUR growth by brand and category. She also asked for a detailed breakdown of the Q3 operating margin guidance, questioning the impact of gross margin, freight, and cotton costs.

Answer

CEO Fran Horowitz-Bonadies highlighted strong back-to-school performance and continued AUR growth driven by product acceptance and inventory control. CFO & COO Scott Lipesky explained the Q3 margin guide, noting that while the top line is strong, freight costs are a headwind and the company will continue to invest aggressively in marketing and infrastructure, moderating OpEx leverage compared to recent quarters.

Dana Telsey inquired about the forward outlook for the Abercrombie and Hollister brands, specific growth initiatives at Hollister, and the rationale behind the updated real estate strategy of reducing store closures and remodels.

Answer

CEO Fran Horowitz explained that Abercrombie's Q1 AUR was pressured by inventory carryover but expects a rebound in the second half, driven by chasing successful tests like swimwear. For Hollister, she highlighted culturally relevant campaigns like the 'Grad Shop' as key growth drivers. SVP & CFO Robert Ball added that the change in real estate strategy is due to successful landlord negotiations and strong store productivity, justifying keeping more locations open.

Dana Telsey asked Katrina O'Connell about the effectiveness of tariff mitigation strategies, particularly if pricing adjustments are becoming less frequent. She also asked Richard Dickson for his view on the overall consumer, including differences by brand, income level, and generation, and how this influences merchandising and demand.

Answer

Richard Dickson, President and CEO, noted consistent customer strength, winning across all income cohorts due to portfolio differentiation (Old Navy, Gap), less discounting, better regular price sell-through, and increased AUR, indicating product resonance. Katrina O'Connell, CFO, confirmed slight pricing in Q3 but emphasized maintaining value, with less discounting and better regular price sell-through being the primary drivers of outperformance, giving confidence for continued AUR growth.

Dana Telsey inquired about the effectiveness of tariff mitigation strategies, whether pricing adjustments are becoming less frequent, and Richard Dickson's view on the overall consumer, including differences by brand, income level, and generation, and its impact on merchandising and demand.

Answer

Richard Dickson, President and CEO of Gap Inc., noted consistent customer strength, winning across all income cohorts with less discounting and increased AUR, driven by strong product and marketing. Katrina O'Connell, CFO, confirmed slight pricing in Q3 (e.g., denim) but emphasized that less discounting and better regular price sell-through were bigger drivers of outperformance in tariff mitigation.

Dana Telsey asked about the lower-income customer, trade-down to Ross, dd's performance, and any differences in lower-income store performance. She also inquired about store expansion plans for next year, particularly in the Northeast, and the impact of higher costs in dense areas on sales and leverage. She followed up on other categories besides women's showing opportunity from brand enhancements and store refreshes.

Answer

Group President and COO Michael Hartshorn stated that the 7% comp was broad-based across all income levels, with no distinction between lower or higher-income customers, and dd's performed similarly. He noted that 70% of store openings are in existing markets and 30% in newer markets like the Northeast, expecting this pace to continue. He believes returns on new stores won't decline in the Northeast, as denser populations should drive higher sales to offset costs. CEO Jim Conroy added that the home business showed tremendous sequential improvement, moving from a drag in Q2 to nicely positive in Q3, and they feel well-positioned for holiday gifting.

Dana Telsey asked about customer assessment, particularly lower-income customers, trade-down trends, and performance differences in lower-income areas for Ross and dd's. She also inquired about store expansion plans for the Northeast, including opening costs and sales opportunities in dense areas. She followed up on other categories showing opportunity from store refreshes and brand enhancements.

Answer

Michael Hartshorn (Group President and COO) stated that the 7% comp was broad-based across all income levels, with no distinction between lower or higher-income customers, making trade-down hard to discern. He expects the pace of new store openings (70% existing, 30% new markets like Northeast/Puerto Rico) to continue, with new Northeast stores driving higher sales to offset higher costs. Jim Conroy (CEO) highlighted sequential improvement in the home business, which was a drag in Q2 but nicely positive in Q3, and expressed optimism for Q4 gifting/toy categories.

Dana Telsey from Telsey Advisory Group requested an update on the performance of apparel and home categories, and also asked about new store opening costs, leasing expenses, and the productivity of new locations.

Answer

CEO James Conroy reported encouraging broad-based improvement, with the ladies' business comping above the chain average. He noted the home business was more challenged but turned slightly positive in July. COO Michael Hartshorn described a healthy real estate pipeline, benefiting from retail bankruptcies like Rite Aid. He highlighted that new stores in Puerto Rico and the New York Metro area have far exceeded initial expectations, signaling strong potential in these new markets.

Dana Telsey asked about performance differences in stores along the border, the performance of the dd's DISCOUNTS banner, and the expected puts and takes for merchandise margin going forward.

Answer

Group President and COO Michael Hartshorn noted that Texas border stores underperformed the chain average due to cross-border traffic delays. Executive James Conroy stated that dd's continues to perform well and was comp-enhancing. CFO Adam Orvos added that excluding tariffs, Q2 merchandise margin is expected to be neutral compared to the prior year.

Dana Telsey of Telsey Advisory Group asked about performance differences in border stores, the performance of the dd's DISCOUNTS brand, and the expected puts and takes for merchandise margin going forward.

Answer

Group President and COO Michael Hartshorn noted that Texas border stores underperformed the chain average due to cross-border traffic delays. Executive James Conroy said the dd's business continues to perform well and was comp-enhancing for the quarter. CFO Adam Orvos added that excluding tariffs, Q2 merchandise margin is expected to be neutral year-over-year.

Dana Telsey asked new CEO Jim Conroy what he brings from his time at Boot Barn and requested a reminder of how Ross reacted during the last tariff cycle.

Answer

CEO James Conroy highlighted his experience in unifying a team and establishing a go-forward strategy. Group President and COO Michael Hartshorn explained that during the last tariff cycle, the company reacted by negotiating costs, mixing the business, and selectively raising prices. Conroy added that the team is experienced in navigating such disruptions.

Dana Telsey inquired about the company's potential response to future tariffs and whether any management or strategy shifts are occurring at dd's DISCOUNTS given its improved performance.

Answer

Group President & COO Michael Hartshorn stated that in the event of tariffs, Ross's focus would be on maintaining its value proposition and price umbrella versus other retailers, not on leading price increases. CEO Barbara Rentler confirmed that dd's DISCOUNTS will continue to build upon its current successful strategy with no new changes planned.

Dana Telsey inquired about performance updates for the ladies' and home businesses, the focus on brands within them, and the company's approach to pricing in the context of its value strategy.

Answer

CEO Barbara Rentler explained that ladies' apparel is a key focus for assortment shifts to add more brands and value. In the home category, the brand focus is more targeted to specific businesses. She emphasized the strategy is centered on delivering 'value' relative to competitors, not a specific price point, utilizing a 'good, better, best' assortment to maintain a broad appeal and the 'treasure hunt' experience.

Dana Telsey asked for an update on the 40 million loyalty customers, including insights into their behavior, who is joining or leaving, and how the transformation strategy impacts them. She also inquired about the future role of collaborations given the refocus on the core.

Answer

CEO Daniel Heaf confirmed the loyalty program is a competitive advantage, now with 40 million customers. CFO Eva Boratto added that loyalty customers show strong retention, increased reward redemption, and incremental spend across all deciles. Daniel Heaf clarified that collaborations are valued for driving energy, equity, and excitement, with exciting ones planned for the next fiscal year, but they will be used tactfully to build long-term brand equity for core franchises, not to 'carry the quarter.'

Dana Telsey inquired about the loyalty customer base, how it breaks down through the transformation strategy, and what is being learned about these consumers. She also asked about the future opportunity for collaborations with the refocus on the core, and how they can maximize product strength and enhance sales or margins.

Answer

CEO Daniel Heaf affirmed that the loyalty program, with 40 million active members, is a competitive advantage that will continue to be leveraged to drive sales and basket size. CFO Eva Boratto added that the loyalty program shows strong retention, increased reward redemption, and incremental spend across all deciles, with members driving 80% of sales. Daniel clarified that collaborations are valued for driving energy, equity, and excitement into the brand and specific franchises, rather than being used to 'carry quarters' as the Villains collection did. He stated that exciting collaborations are lined up for the next fiscal year, to be used more tactfully for long-term brand equity.

Dana Telsey asked about additional top-line initiatives outside of company stores, plans to accelerate margins amid tariffs, and any changes to the promotional or marketing cadence for Q4.

Answer

CFO Eva Boratto stated the Q4 promotional cadence is expected to be similar to last year, with margin improvement over Q3 driven by the timing of tariff impacts. CEO Daniel Heaf reiterated top-line drivers like digital and distribution, and added a significant opportunity exists in re-marketing iconic core fragrances to new consumers, which he sees as a major growth lever.

Dana Telsey inquired about performance differences between open-air and enclosed mall stores. She also asked CEO Daniel Heaf for his perspective on the store fleet mix and any upcoming website enhancements.

Answer

CFO Eva Boratto confirmed the consistent trend of off-mall stores outperforming mall locations, driven by stronger conversion. CEO Daniel Heaf added that he likes the traffic from anchor tenants near off-mall stores. He stated that website enhancements are a priority, with the underlying tech allowing for rapid changes. Feature updates are planned for the app in August, with a larger aesthetic and functional overhaul of digital platforms coming in the following quarters to drive both brand connection and conversion.

Dana Telsey of Telsey Advisory Group inquired about the growth outlook for the loyalty program, the demographic profile of new customers, and future opportunities for cost savings.

Answer

CEO Gina Boswell noted the loyalty program grew 6% to 39 million active members and that the focus is on quality engagement, driving higher spend and retention. CFO Eva Boratto added that while the company has exceeded its initial cost-saving targets, a mindset of continuous improvement is now embedded in the culture to find further efficiencies without impacting the customer experience.

Dana Telsey asked about regional trends in store traffic, differences between off-mall and on-mall locations, and the performance of the Buy Online, Pick-up in Store (BOPIS) service.

Answer

CFO Eva Boratto reported that off-mall stores outperformed mall-based stores in both traffic and conversion, with no notable variance across different geographic regions. She highlighted that BOPIS continues to be a strong performer, growing 40% year-over-year in the quarter and now representing 25% of total digital demand, with about a third of users making an incremental in-store purchase.

Dana Telsey of Telsey Advisory Group asked for specifics on how the Semi-Annual Sale might be changed in the future. She also inquired about which of the new categories (lip, hair care, deodorant) is gaining the most traction and if AURs are being adjusted for them.

Answer

President of Retail Julie Rosen suggested that one potential change for the Semi-Annual Sale is adjusting its timing to allow new product deliveries a longer selling period. Regarding new categories, she noted they are in different rollout stages but highlighted that lip products are attracting a younger customer and doubling sales in their rollout stores. She confirmed they are actively testing pricing and promotions across these new lines to find the 'sweet spot' and drive trial.

Dana Telsey asked about the core consumer's behavior and stability, trends in Wax Pass sales, and any notable regional differences in performance, particularly comparing California to other areas. She also followed up on the outlook for center openings and closings, inquiring about potential changes in opening costs or configurations, and future closure expectations.

Answer

Chairman and CEO Chris Morris stated that the core consumer base remains very stable, with a slight uptick in Wax Pass sales year-over-year. He noted that while the business is stable, the main opportunity lies in driving existing guest frequency and new guest acquisition. Regionally, California showed improvement, while New York, Philadelphia, and D.C. continued to exhibit some weakness, though overall consistency was observed. Regarding unit development, Morris expressed satisfaction with narrowing the closure range for 2025 and reiterated the target to return to net positive center growth by the end of 2026, with more detailed guidance for 2026 expected in February.

Dana Telsey inquired about the core consumer's behavior and any changes observed during the quarter, trends in Wax Pass sales, and specific regional performance differences, particularly between California and other areas. She also asked about the outlook for center openings and closings, including any changes in opening costs or configurations, and the strategy for future closures.

Answer

Chris Morris, Chairman and CEO, noted the business remains very stable with a slight uptick in Wax Pass sales and a stable core guest base. Regionally, California showed improvement, while New York, Philadelphia, and DC continued to exhibit some weakness, though consistency was seen across the country. Regarding development, Morris confirmed narrowing the closure range to 35-40 for 2025, with some timing shifts into 2026, and reiterated the target of returning to net positive center growth by the end of 2026. Closures are primarily low-volume units due to factors like real estate or market conditions, with lease expirations playing a significant role.

Dana Telsey inquired about what the company's data is revealing regarding regional performance, new product acceptance, and the trajectory of Wax Pass sales and frequency.

Answer

Chairman & CEO Chris Morris noted that while California remains a challenging market, regions like Texas and Florida have shown improvement. He highlighted that the most significant data insight is the ability to identify and re-engage guests who are falling out of their routine. Morris also stated the company is pleased with new product acceptance and that Wax Pass sales were up nearly 2% year-over-year, remaining a core part of the business.

Asked about the characteristics of successful franchisees, whether the company would consider buying back stores, if the franchisee agreement needs changes, and about any other regional trends.

Answer

Successful franchisees are passionate and detail-oriented; the company aims to provide them with better analytical tools. While open to owning stores eventually, it's not a current priority. The franchise agreement is not being changed for now, but it's early days for the new CEO. No new regional trends were discussed beyond the previously mentioned California pressures.

Dana Telsey inquired about the criteria for closing underperforming units, potential changes to franchise terms, regional performance in California, and the spending behavior of Wax Pass members versus other customers.

Answer

CEO David Berg stated that no material changes to franchise agreements are planned and the priority is keeping centers open by improving performance. He acknowledged higher cost pressures in California, which could be addressed by targeted pricing. CFO Stacie Shirley added that the current Wax Pass promotion is performing well, signaling continued loyalty from core guests.

Dana Telsey inquired about Ralph Lauren's retail distribution, specifically comparing performance between full-price and outlet stores amidst AUR increases, the trajectory of higher-priced products in outlets, and any supply chain benefits for future margins.

Answer

Patrice Louvet, CEO, reported consistent growth across all DTC channels, including full-price stores, outlet stores, and RalphLauren.com, with disproportionate growth in digital. He noted that marketing activations and product offerings resonate consistently across these channels. Mr. Louvet stated expectations to continue expanding full-price stores (38 opened globally this quarter), consolidate or close outlet doors, and aggressively lean into digital operations. Regarding the supply chain, he highlighted its well-positioned global sourcing, strong partnerships, diversification, alternate sourcing capabilities, and focus on driving efficiencies and innovation to mitigate cost inflation, with actions ramping up into next year.

Dana Telsey asked about Ralph Lauren's retail distribution, specifically if there are differences in performance between full-price and outlet stores with the AUR increases, and the trajectory of higher-priced products in the global outlet space. She also inquired about any supply chain benefits for margin going forward.

Answer

Patrice Louvet, CEO, reported consistent growth across all DTC channels—full-price stores, outlet stores, and RalphLauren.com—with disproportionate growth in digital. He noted that marketing activations and product offerings resonate consistently across these channels. Louvet stated that the company expects to continue expanding full-price stores globally, while not expanding outlet doors, and instead combining existing outlet presences and anticipating some closures to elevate the brand. He confirmed aggressive investment in RalphLauren.com and digital operations due to strong responses. Regarding the supply chain, Louvet highlighted its well-positioned, diversified nature with strong partnerships, enabling agility in navigating cost inflation. He mentioned maintaining alternate sourcing capabilities and working with partners to drive efficiencies, with mitigating actions expected to ramp up this year and next.

Dana Telsey of Telsey Advisory Group inquired about North American channel trends, asking about performance differences between full-price and outlet stores and wholesale AUR. She also asked about the drivers of the notable acceleration in China and plans for second-half pricing and supply chain diversification.

Answer

CFO Justin Picicci noted strength across both full-price and outlet stores in North America, with full-price leading and digital accelerating. President & CEO Patrice Louvet attributed China's over 30% growth to strong brand building, product resonance, and key city ecosystem execution. Picicci added that Q2 AUR growth will begin to reflect targeted pricing for fall.

Dana Telsey asked about the plans for marketing spend, the outlook for high-growth categories like women's apparel, outerwear, and handbags, and the company's real estate strategy following the acquisition of its SoHo flagship store.

Answer

President and CEO Patrice Louvet confirmed that marketing spend will remain at the elevated level of ~7.3% of revenue and that the company will continue to drive accelerated growth in its high-potential categories. Both Louvet and CFO Justin Picicci described the SoHo store purchase as a smart, selective investment in a key city ecosystem, indicating that future real estate acquisitions would be similarly targeted at iconic, long-term locations.

Dana Telsey inquired about the drivers behind the acceleration in brick-and-mortar performance, particularly in North America, and asked for an expansion on the company's use of and opportunities in AI.

Answer

Executive Justin Picicci attributed the strong brick-and-mortar results to both full-price and outlet channels, with full-price stores leading growth and outlet comps accelerating. He noted strong AUR, traffic, and basket size. Executive Patrice Louvet explained their AI strategy focuses on 'creativity' (e.g., website search, contact center enhancement) and 'productivity' (e.g., predictive buying, allocation tools), viewing AI as a 'copilot' to enhance operations.

Dana Telsey asked about the drivers behind the accelerated growth in core and high-potential product categories and followed up with a question on the company's exposure to potential tariffs, particularly from China.

Answer

President and CEO Patrice Louvet confirmed that the strong performance of both core and high-potential categories is consistent globally, driven by the brand's credibility. CFO Justin Picicci addressed the tariff question by stating the supply chain is agile and that China now represents a high single-digit percentage of sourced units, a diversification that mitigates risk.

Dana Telsey asked about the performance of the wholesale business by type (off-price, department stores, mass) and the outlook going forward. She also inquired about any differences in performance between full-price and outlet stores within the direct-to-consumer segment. Lastly, she asked about the marketing strategy for Q4, particularly regarding social media and the holiday season.

Answer

Ed Rosenfeld, Chairman and CEO, noted the strongest wholesale performance in regular price channels, with more pressure in value price channels (off-price, mass) due to significant pullbacks during high tariff periods, though these businesses are now normalizing. In DTC, full-price channels performed much better, while outlets remained a drag, partly due to underperforming border stores and supply chain disruption. He stated that the company would continue its current effective marketing strategies, focusing on storytelling and consumer engagement.

Dana Telsey asked about the performance differences within the wholesale business by channel (off-price, department stores, mass) and between full-price and outlet performance in the DTC segment. She also inquired about the reasons for the pullback in the value wholesale channel and the Q4 marketing strategy, particularly regarding social media and holiday season initiatives.

Answer

Chairman and CEO Ed Rosenfeld reported stronger wholesale performance in regular price channels, with more pressure in value price channels (off-price, mass). In DTC, full-price stores performed much better, while outlets remained a drag, partly due to border stores and supply chain disruptions. He explained that value channels pulled back significantly during the 145% China tariffs but are now normalizing. For Q4 marketing, Mr. Rosenfeld stated the company would continue its current storytelling and investment, as it is proving effective.

Dana Telsey of Telsey Advisory Group inquired about performance during the Nordstrom anniversary sale as a forward indicator, how Kurt Geiger's sell-through compares to other brands, and the pricing and distribution expansion strategy for Kurt Geiger in the U.S.

Answer

Chairman and CEO Edward Rosenfeld described the Nordstrom anniversary event as very successful, with the best sell-through in years, providing optimism for the fall season. He noted that while Kurt Geiger sell-through is strong, so is performance in other core brands. For Kurt Geiger in the U.S., he confirmed price increases are similar to or 'a little bit more' than other brands and that future distribution expansion will focus on opening more of its own retail stores.

Dana Telsey inquired about the near-term performance differences between private label and branded products, as well as between international and domestic markets. She also asked about the potential long-term opportunities that could arise from the current sourcing shifts.

Answer

CEO Ed Rosenfeld confirmed that in Q1, branded business outperformed private label, and international markets performed better than domestic. He stated that the current disruption could create long-term opportunities to gain market share, as many smaller, less-capitalized competitors with higher China exposure may struggle to adapt as quickly. He believes Steve Madden's ability to shift production and continue investing provides a competitive advantage.

Dana Telsey of Telsey Advisory Group asked about the strategy for implementing price increases to offset tariffs, the performance and outlook for the Almost Famous division, and the scale and focus of the increased marketing investment.

Answer

Chairman and CEO Edward Rosenfeld explained that price increases will be surgical, focusing on new products with elevated materials and detailing to justify higher prices, rather than an across-the-board hike. He reported a strong 2024 for Almost Famous but noted its 2025 results will be impacted by a shipment pull-forward and caution in the private label segment. Marketing investment will see a significant increase in Q1 to support a new campaign, 'House of Steve,' before normalizing for the rest of the year.

Dana Telsey from Telsey Advisory Group inquired about performance variations across different wholesale channels (department stores, off-price, mass) and within the DTC business (outlets vs. full-price). She also asked about key style trends driving the wholesale footwear category.

Answer

Chairman and CEO Edward Rosenfeld explained that in wholesale, value-priced retailers and the off-price channel are outperforming department stores, with the private label business being particularly strong. For DTC, he noted a recent reversal, with full-price stores now outpacing outlets. Rosenfeld highlighted tall shaft boots, soccer-inspired sneakers, and Mary Janes as key footwear trends performing well and driving demand.

Dana Telsey asked about the growth rates of different categories within Levi Strauss & Co.'s lifestyle offering, including tops, bottoms, and jackets. She also inquired about the average unit revenue (AUR) opportunities going forward, considering the company's marketing efforts and collaborations.

Answer

Michelle Gass, President and CEO, expressed satisfaction with the acceleration in the tops business, which grew 9% for the quarter and 10% year-to-date, noting significant upside as tops currently represent only 22% of the business. She detailed strong growth in men's tops (up 10%, with wovens up 20%) and women's tops (up 8%, with denim tops up 12% and wovens up 37%). She highlighted the goal to shift the bottoms-to-tops ratio from 3:1 to 1:1, emphasizing the role of tops as a driver for units per transaction and traffic.

Dana Telsey asked Michelle Gass about the specific growth rates observed across different categories within Levi Strauss & Co.'s lifestyle offering, such as tops, bottoms, and jackets. She also inquired about the future opportunities for Average Unit Retail (AUR) given the company's recent marketing campaigns and collaborations.

Answer

Michelle Gass, President and CEO, reported that the tops business grew 9% for the quarter and 10% year-to-date, with men's tops up 10% (western tops, wovens up 20%) and women's tops up 8% (denim tops up 12%, wovens up 37%, dresses/jumpsuits up nearly 20%). She highlighted the significant upside, as tops currently represent only 22% of the business, with a goal to reach a 1:1 bottoms-to-tops ratio from the current 3:1. Gass emphasized that newness and core products are both driving growth, contributing to AUR opportunities.

Dana Telsey of Telsey Advisory Group inquired about upcoming marketing activations, the level of marketing spend, the status of price increases, and where the company sees further opportunity for Average Unit Retail (AUR) growth.

Answer

President & CEO Michelle Gass highlighted upcoming marketing including more with Beyoncé, a new men's campaign for the fall, and the recent Nike collaboration. EVP & CFO Harmit Singh noted that marketing spend is around 7% of revenue with a timing shift from Q4 to Q3. He added that AUR growth is broad-based, driven by both volume and price, with room to grow through premium offerings like the BlueTab line and a focus on full-price sales.

Dana Telsey asked about inventory planning for wholesale, trends from retail accounts, and the growth outlook for the denim market, particularly in the women's and men's businesses, given recent brand activations and product innovations.

Answer

CFO Harmit Singh reported that Q1 ending inventory was up 7% but healthy, with product for Q2 secured and no changes to wholesale orders. CEO Michelle Gass highlighted the brand's strength, with the Levi's brand up 8% and the women's business growing double-digits for the fourth consecutive quarter to represent 38% of revenue, driven by the successful pivot to a head-to-toe lifestyle offering.

Dana Telsey asked about the key drivers of Stitch Fix's top-line growth, specifically inquiring about the performance of new brands and non-apparel categories, and the impact of tariffs on Average Order Value (AOV). She also questioned the company's market share gains and its strategic planning for the upcoming holiday season given the volatile economic outlook.

Answer

CEO Matt Baer detailed that Q4 revenue growth was fueled by accelerated performance in both women's and men's businesses, driven by non-apparel categories and new established brands. He cited over 35% growth in women's footwear and strong demand for denim, skirts, and athleisure, alongside double-digit growth in men's business with high demand for footwear, athleisure, and national brands. Baer clarified that Q4's 7.6% AUR and 12% AOV growth were not tariff-driven due to mitigation efforts. He explained that market share gains stem from Stitch Fix's personalized service outperforming traditional retailers, evidenced by five consecutive quarters of improved active client growth rates and 90-day new client LTVs at three-year highs. For the holiday season, Stitch Fix plans to leverage family accounts for gifting, an enhanced assortment, and new GenAI features like Vision and Stylist Connect. CFO David Aufderhaar added that active client year-over-year comparisons are improving, with a projected quarter-over-quarter inflection in net adds by Q3 FY26, and Q1 FY26 active clients expected to be roughly flat to down 0.5% sequentially.

Dana Telsey from Telsey Advisory Group inquired about the primary drivers of top-line growth, specifically from new brands and non-apparel categories, and the impact of tariffs on Average Order Value (AOV). She also asked about Stitch Fix's market share gains and their strategic planning for the upcoming volatile holiday season.

Answer

CEO Matt Baer highlighted accelerated year-over-year revenue growth in both women's and men's businesses in Q4, driven by non-apparel categories like footwear and established brands. He noted no tariff impact on AOV due to mitigation efforts. Baer stated Stitch Fix is gaining market share from retailers failing to deliver personalization, attributing this to their superior service and improved client metrics. For holiday, he emphasized building on last year's success with enhanced flexibility, family accounts for gifting, a strengthened assortment, and new AI-driven features. CFO David Aufderhaar added that active client trends are improving, with a projected quarter-over-quarter inflection in Q3 FY26 and continued growth in new client LTVs.

Dana Telsey from Telsey Advisory Group inquired about the primary drivers of top-line growth, particularly from new brands and non-apparel categories, and the impact of tariffs on Average Order Value (AOV). She also asked about Stitch Fix's market share gains and holiday planning strategies given the volatile outlook.

Answer

CEO Matt Baer explained that both women's and men's businesses accelerated revenue growth, driven by non-apparel categories like footwear and specific apparel trends (e.g., wide-leg denim, midi skirts), and strong performance from national brands. He clarified that the AOV growth was not attributable to tariffs due to mitigation efforts. Baer further stated that Stitch Fix is gaining market share from retailers failing to deliver personalization, highlighting improvements in active client growth rates and 90-day new client LTVs. He detailed holiday strategies including increased flexibility (themed/larger Fixes, family accounts for gifting), improved assortment, and new features like Vision and Stylist Connect. CFO David Aufderhaar added that the methodical approach to client base rebuilding is working, projecting a quarter-over-quarter inflection in active clients in Q3 FY26, and noted continued year-over-year growth in new client LTVs.

Dana Telsey asked about consumer behavior, keep rates, and product acceptance in Q3, the outlook for Q4, and the drivers behind the gross margin guidance, including potential tariff impacts.

Answer

CEO Matt Baer attributed the return to revenue growth to strong Average Order Value (AOV), up 10% YoY, driven by larger Fixes, higher keep rates, and improved AUR. He noted growth in the Women's, Men's, and Fix channels, alongside two consecutive quarters of new client growth with high LTV. CFO David Aufderhaar explained the Q4 gross margin guidance reflects strategic investments in assortment, but highlighted a strong contribution margin above 33%. Regarding tariffs, Baer expressed confidence in mitigating risks through their multi-brand model and diversified sourcing, stating no price increases are anticipated in the current fiscal year.

Dana Telsey inquired about the potential impact of tariffs on pricing and the mix between private and national brands, as well as which product categories are performing well or being adjusted.

Answer

Executive Matt Baer stated that a dedicated task force has a mitigation strategy involving sourcing flexibility and shifting the brand mix, and he does not anticipate tariffs impacting margins or client prices in the second half of the fiscal year. He noted the brand mix is client-led, with recent investments in national brands driving success. Baer highlighted strong performance in non-apparel categories like sneakers and accessories, aided by increased item flexibility in Fixes. Executive David Aufderhaar added that these investments are being made while maintaining strong gross and contribution margins.

Dana Telsey inquired about the profile of Stitch Fix's current active client, how the promotional environment is affecting revenue per active client (RPAC), and the role private labels play in these dynamics.

Answer

CEO Matt Baer described the core client as one who values convenience, fit, and guided styling, noting a focus on segmented marketing to groups like teachers. He explained that improved CRM allows for judicious promotions to drive wallet share. CFO David Aufderhaar added that the quality of new client cohorts, measured by 90-day LTV, is a key driver of the 5% year-over-year growth in RPAC.

Dana Telsey asked about the competitive environment concerning tariffs, whether Oxford Industries is gaining market share, and the marketing strategy for the upcoming holiday season. She also inquired about any changes in wholesale partnerships and the components of the direct-to-consumer (DTC) comp, specifically online versus in-store performance.

Answer

Tom Chubb, Chairman and CEO, noted that retail stores were relatively stronger than e-commerce during the quarter, consistent with broader industry trends. He believes Oxford Industries is holding and gaining share in wholesale channels despite cautious forward buys, and that wholesale accounts have reacted positively to their pricing strategy. For the fourth quarter, Mr. Chubb indicated similar marketing efforts to the past, with some specific twists for the holiday season. He emphasized the significance of strong, mutually beneficial wholesale partnerships, which he believes are stronger than ever.

Dana Telsey asked about the competitive environment with tariffs, potential market share gains, the breakdown of direct-to-consumer comparable sales (online vs. stores), fourth-quarter marketing plans, and the dynamics of wholesale partnerships.

Answer

Tom Chubb, Chairman and CEO, noted that retail stores performed relatively stronger than e-commerce during the quarter, aligning with broader industry trends. He believes Oxford is holding and gaining market share in wholesale channels despite cautious forward buys and highlighted positive reactions from wholesale accounts regarding Oxford's pricing strategy. He indicated that Q4 marketing would involve similar strategies to the past but with some new 'twists' for the holiday season. He also emphasized the significant value and strength of Oxford's mutually successful wholesale partnerships.

Dana Telsey inquired about the competitive environment, specifically if Oxford Industries is gaining market share due to competitors pulling collections amid tariff changes. She also asked about the marketing spend and new product activation plans for the upcoming holiday season (Q4) and the direct-to-consumer comp components (online vs. stores).

Answer

Chairman and CEO Tom Chubb noted that retail stores performed relatively stronger than e-commerce during the quarter, consistent with broader industry trends. He believes the company is holding and gaining share in wholesale channels, despite overall market caution, and that wholesale accounts have reacted positively to their pricing strategy. For Q4 marketing, Mr. Chubb mentioned similar plans to the past with some 'twists' for holiday. He also emphasized the strength and importance of their wholesale partnerships.

Dana Telsey from Telsey Advisory Group asked for insights into consumer behavior across different channels, the sales cadence during the quarter, and which product categories performed best. She also inquired about the depth of markdowns, the impact of freight costs on margins, and any planned adjustments to strategic initiatives like store openings.

Answer

CEO Tom Chubb described a worsening sales cadence through the quarter, with July being particularly weak. He noted that new, differentiated products and dressier categories performed better, while casual and swim categories were slower. CFO Scott Grassmyer added that markdowns were steeper and more frequent, a trend expected to continue. On freight, Grassmyer quantified a 15-20 basis point margin hit is built into guidance. Both executives affirmed they are proceeding 'full steam ahead' with growth initiatives like store openings and the new distribution center, viewing the current downturn as temporary.

Dana Telsey from Telsey Advisory Group asked for a comprehensive overview of the consumer environment, including differences in performance between outlets and other channels, the sales cadence during the quarter, category performance, and the depth of markdowns. She also inquired about the impact of freight costs and any potential adjustments to strategic initiatives like store openings.

Answer

Chairman and CEO Tom Chubb described a consumer who is increasingly value-driven, with sales trends worsening sequentially through the quarter, particularly in July. He noted that new, differentiated products and dressier categories outperformed, while casual wear was slower. CFO and COO K. Grassmyer added that guidance reflects this caution, with an expected 15-20 basis point margin impact from higher freight costs. Both executives affirmed that long-term growth initiatives, such as new stores, Marlin Bars, and the Lyons distribution center, are proceeding as planned.

Dana Telsey from Telsey Advisory Group asked about the new "Let Us Surprise You" marketing campaign, seeking insights into tracked store productivity metrics, potential real estate implications, and the outlook for marketing spend as a percentage of sales. She also inquired about the performance of key brands like Birkenstock and Nike, and expectations for Q4 brand activations.

Answer

CEO Doug Howe discussed the "Let Us Surprise You" campaign, launched in Q3, noting positive anecdotal feedback and its aim to enhance the in-store experience, though specific metrics are still developing. EVP, CFO & Chief Administrative Officer Jared Poff explained that marketing spend is being optimized, pivoting from less profitable digital sales, with no significant deleverage expected. Mr. Howe highlighted strong performance from top eight brands, including Birkenstock and Nike, which achieved a 1% comp and 45% penetration, attributing success to improved in-stock levels and enhanced brand storytelling in stores.

Dana Telsey from Telsey Advisory Group asked about the key metrics and markers Designer Brands Inc. is monitoring for the new "Let Us Surprise You" marketing campaign, especially given the high percentage of in-store shoppers. She also inquired about the impact on store productivity, real estate strategy (openings/closings), and the company's outlook on marketing spend as a percentage of sales for the year. Additionally, she asked about the performance of key brands like Birkenstock and Nike, and expectations for Q4 brand activations.

Answer

CEO Doug M. Howe stated it's early days for the Q3-launched campaign, but anecdotal feedback from customers and associates is very positive, emphasizing the whimsical and encouraging nature of the messaging. He highlighted the Framingham store as a pilot for new experiences. CFO Jared Poff noted that marketing as a percentage of sales is at the higher end of peers but is being optimized by shifting focus from less profitable digital sales to brand differentiation, with no significant deleverage expected. Doug M. Howe added that Birkenstock, part of the top eight brands, performed well with a 1% comp and increased penetration to 45% of total sales, and Nike is also among these strong performers, benefiting from improved in-stock levels and product access.

Dana Telsey inquired about the new 'Let Us Surprise You' marketing campaign, asking about key performance indicators, its impact on store productivity, real estate strategy (openings/closings), and marketing spend as a percentage of sales.

Answer

CEO Doug Howe stated it's early days for the Q3-launched campaign but noted positive anecdotal feedback and strong impressions, emphasizing its role in enhancing the in-store shopping experience. CFO Jared Poff added that marketing as a percentage of sales is at the higher end of peers but is being optimized and pivoted from less profitable digital spend, with no expectation of significant deleverage.

Dana Telsey of Telsey Advisory Group questioned the company's planning for the back-to-school and holiday seasons amid the volatile environment, and asked about the strategic mix of tariff mitigation tactics like diversification versus price increases.

Answer

CEO Doug Howe expressed cautious optimism for back-to-school, leveraging last year's successful playbook, but noted overall uncertainty tempers expectations. On tariffs, CFO Jared Poff and CEO Doug Howe explained that sourcing diversification has been accelerated, providing optionality to reduce China exposure significantly. They noted that DBI directly controls sourcing for less than 20% of its products and is working with brand partners on pricing.

Dana Telsey of Telsey Advisory Group asked about the underlying drivers of comparable sales (traffic, conversion, ATV), year-end inventory targets for both owned and wholesale brands, and the current impact of freight expense trends.

Answer

CEO Douglas Howe highlighted an uptick in Average Unit Retail (AUR) and improved store traffic as key comp drivers, adding that the digital business sustained mid-single-digit growth for the third straight quarter. CFO Jared Poff noted that while freight costs for the Brand Portfolio's East Coast imports have substantially increased, the overall impact on Designer Brands is limited due to its smaller direct import footprint.

Dana Telsey asked about the outlook for merchandise margin given the successful tariff mitigation and also inquired about the real estate environment regarding store openings, closings, and relocations.

Answer

CFO John Klinger expressed confidence in continuing to offset tariff pressures through strong execution. CEO Ernie Herrman added that high product availability and sourcing flexibility are key advantages. On real estate, John Klinger confirmed TJX is on track for its plan of over 130 net new stores, sees great location availability, and is having success with relocations and remodels to enhance the customer experience.

Dana Telsey asked about marketing spend as a percentage of sales for the holiday season and inquired about performance trends for new stores, relocations, and remodels.

Answer

CEO Ernie Herrman said the company is 'playing offense' by spending slightly more on marketing, with creative campaigns aimed at educating new customers on the TJX value proposition. CFO John Klinger added that remodels are keeping the store fleet fresh and relocations to better retail areas are yielding positive results.

Dana Telsey of Telsey Advisory Group inquired about the market's response to the July 1st price increases and current demand trends, specifically referencing the back-to-school season and performance during the Nordstrom anniversary sale.

Answer

David Kahan, President of Birkenstock Americas, stated that the price adjustments were surgical and well-communicated to retail partners. He reported that in the six weeks following the price actions, sell-through velocity has been exceptional and even accelerated beyond Q3 levels, with no negative impact observed on demand.

Dana Telsey inquired about the progress of absorbing new manufacturing capacity, pricing strategies for closed-toe versus sandals, and the performance and learnings from the new retail store rollout.

Answer

CFO Ivica Krolo confirmed that the absorption of the new facility is ahead of schedule, contributing a 75 basis point tailwind to gross margin in FY25 with more expected in FY26. EMEA President Nico Bouyakhf added that the retail expansion is on track to reach nearly 100 stores by year-end, with new stores ramping up performance quickly and established stores showing healthy comparable growth.

Dana Telsey of Telsey Advisory Group inquired about the D2C channel, asking for the perspective on e-commerce versus owned stores, the performance of new stores compared to the existing base, and the regional strategy for store openings.

Answer

President, EMEA Nico Bouyakhf stated that retail is and will remain the fastest-growing channel, with plans to grow from 71 to nearly 100 stores this fiscal year. He noted new stores deliver higher ASP and productivity with a CapEx payback of 12-18 months. He also highlighted significant growth opportunities in the online business, particularly in newer markets like APAC and the Middle East, and through new customer acquisition via expansionary product categories.

Dana Telsey inquired about the future outlook for unit versus ASP growth, current traffic trends in retail stores, and whether wholesale order trends in the Americas are driven by existing or new accounts.

Answer

Niko Weake, President of EMEA, responded that unit volume will become a larger driver of growth as new production capacity unlocks white space opportunities, though ASP is still expected to contribute positively. David Kahan, President of the Americas, confirmed that over 90% of wholesale growth comes from existing doors as partners increase shelf space and broaden their assortment of BIRKENSTOCK products.

Dana Telsey of Telsey Advisory Group asked about FIGS's forward-looking strategy for product newness and pricing, particularly in the context of upcoming tariffs and the normalization of healthcare professionals' buying habits.

Answer

Co-Founder & CEO Trina Spear explained that strong execution in product and marketing is driving success. She emphasized that price increases are a last resort for mitigating tariff impacts, with the company first focusing on optimizing its sourcing mix, negotiating with suppliers, reducing freight costs, and finding G&A efficiencies. Any potential pricing actions would be targeted and mindful of affordability for healthcare professionals.

Dana Telsey inquired about the near-term inventory plan, particularly the expected increase in Q2, and asked for an update on the growth potential and strategy for the B2B TEAMS business.

Answer

CFO Sarah Oughtred explained that the potential Q2 inventory increase is a strategic consideration to pull forward inventory ahead of potential tariff expirations, a move that carries less risk due to the non-seasonal nature of their products. CEO Trina Spear highlighted the significant opportunity in the TEAMS business, noting the hiring of an outbound sales team, early wins with a major healthcare company, and investments in simplifying the ordering technology to serve large institutions and growing concierge medicine practices.

Dana Telsey asked about new product category opportunities for 2025, their role in reactivating customers, potential tariff impacts, and the expected cadence of business improvement during the year.

Answer

CEO Trina Spear highlighted building out fabric platforms across the head-to-toe layering system. CFO Sarah Oughtred noted minimal tariff exposure and guided that promotional impacts would be heavier in 2H, with Q1 having the lowest adjusted EBITDA margin of the year.

Dana Telsey inquired about the 2024 initiatives that will create stability and tailwinds for 2025, and asked about the company's exposure to potential tariffs, particularly from China.

Answer

Co-Founder and CEO Trina Spear identified refined product fit, top-of-funnel marketing, and investments in international, teams, and community hubs as key drivers for 2025. Regarding tariffs, she confirmed that FIGS's finished goods are not sourced from China and emphasized the company's commitment to maintaining a nimble supply chain.

Dana Telsey from Telsey Advisory Group asked for updates on the Google partnership, the strategy for Target shop-in-shops, and the consumer response to recent price increases.

Answer

Co-CEO Dave Gilboa expressed excitement for the Google partnership, positioning smart glasses as the next major computing platform and highlighting the synergy between Google's AI and Warby's design and retail expertise. Co-CEO Neil Blumenthal reported a positive early reception for the Target shop-in-shops, which operate as authentic Warby Parker experiences. He also noted that selective price increases were well-received, with minimal impact on conversion and, in some cases, a stronger uptake of premium lenses.

Dana Telsey asked about customer adoption trends across the expanded price points above the core $95 offering. She also sought more detail on the Target partnership, including the price points to be offered, the physical size of the shop-in-shops, and the key performance indicators for future expansion.

Answer

Co-CEO Neil Blumenthal explained that higher price points ($125-$195) for more complex frame constructions have seen successful adoption as customers still perceive them as exceptional value. Regarding the Target partnership, he confirmed the product assortment and pricing will be identical to standalone Warby Parker stores. He did not provide specifics on square footage or scaling metrics but noted their vertically integrated supply chain enables easy execution.

Dana Telsey of Telsey Advisory Group inquired about the potential impact of tariffs on goods from China, asking about the company's sourcing strategy and any plans to adjust consumer pricing. She also asked for Warby Parker's perspective on the market opportunity for smart glasses.

Answer

Co-Founder and Co-CEO Neil Blumenthal stated that the company has materially reduced its exposure to China over the past five years, with around 20% of COGS from the region this year, and is confident in its ability to manage the environment. Co-Founder and Co-CEO David Gilboa expressed excitement about smart glasses, particularly with advancements in AI, and positioned Warby Parker as a strong potential partner for tech companies due to its brand, design, and distribution network.

Dana Telsey of Telsey Advisory Group asked about the company's pricing strategy by category amid tariff uncertainty and new distribution. She also inquired about the promotional landscape, order trends with the largest customer, and any changes in planning for the holiday season.

Answer

CEO Carla Vernón explained that while strong loyalty metrics provide confidence, the company is being thoughtful about pricing as it has not yet seen price advances from major competitors. Regarding customer trends, she noted that while shipments and consumption were aligned for the first half, there is a 'tale of two cities' dynamic: diaper distribution declines at one major retailer are being offset by strong 21% consumption growth in the rest of the market, driven by wipes and baby personal care.

Dana Telsey asked about the near-term business deceleration, seeking details on which customers and categories were affected and the current promotional environment. She also inquired about long-term margin opportunities from supply chain efficiencies despite tariff headwinds.

Answer

CEO Carla Vernon reiterated that the deceleration was primarily in the diaper category at Target, due to specific distribution changes and lapping prior-year promotional events. She highlighted offsetting growth in other channels and new product launches. CFO Dave Loretta affirmed that long-term margin expansion remains a core goal, driven by ongoing supply chain efficiencies and a favorable shift in product and channel mix, which will help weather tariff impacts.

Dana Telsey of Telsey Advisory Group requested a breakdown of the 14% U.S. growth by channel, asked about future pricing strategies, and inquired about wholesale opportunities beyond Nordstrom.

Answer

CEO Ciaran Long did not provide a channel breakdown but confirmed strength across DTC, retail, and wholesale. He explained that price increases of 5-8% were taken in the U.S. to help offset tariffs. Regarding wholesale, Long noted that Petal and Pup is exploring partnerships with Stitch Fix and Dillard's, while Princess Polly will remain focused on its current channels for the time being.

Dana Telsey asked about the company's exposure to potential tariffs, particularly from China, and what mitigation strategies are in place. She also requested an update on the performance and margin profile of the wholesale distribution channel.

Answer

Interim CEO and CFO Ciaran Long acknowledged that the majority of products are sourced from China and the company is actively working to diversify. He noted that the test-and-repeat model and high percentage of exclusive products provide flexibility for potential pricing actions. Regarding wholesale, he stated that all channels, including wholesale, are performing well with strong full-price selling, contributing to the overall 19.5% U.S. growth and margin expansion.

Dana Telsey of Telsey Advisory Group inquired about the potential for additional wholesale order timing shifts into Q3. She also asked about the balance between new and core product penetration and how pricing is changing in response to tariffs.

Answer

CFO Taryn Miller stated that the Q3 guidance does not assume further timing shifts. CEO Christopher Hufnagel emphasized the importance of earning shelf space with innovative products and strong brand storytelling. He noted that selective price increases were taken in June to mitigate tariffs, and the company is closely monitoring the consumer response and competitive landscape.

Dana Telsey inquired about product newness and innovation for Merrell and Saucony, expectations for full-price average unit retail (AUR), and the company's sourcing strategy, particularly concerning China.

Answer

CEO Chris Hufnagel highlighted a strong product pipeline, citing Saucony's Endorphin Elite 2 and Merrell's new SpeedARC franchise as key innovations. He confirmed plans to further reduce sourcing from China from its current mid-teens level. CFO Taryn Miller added that the company expects a continued year-over-year decline in promotional activity, supporting full-price sales.

Dana Telsey inquired about how new programs influence member retention planning, the future cadence and structure of pricing, and any notable advancements or applications of AI within the business.

Answer

CEO Caryn Seidman Becker stated that retention is driven by a great member experience and that AI is critical for both enhancing security against threats like synthetic identities and for driving internal efficiencies. President Michael Barkin added that a holistic approach to improving the member journey and offering premium add-ons like Concierge supports their methodical pricing strategy. Caryn Seidman Becker also mentioned using AI to personalize the travel experience for different member needs.

Dana Telsey of Telsey Advisory Group inquired about current air travel trends, the performance of off-airport enrollment locations, and the company's pricing strategy for the upcoming fiscal year.

Answer

CEO Caryn Seidman-Becker confirmed a bullish outlook on travel, citing record airport traffic. She noted that off-airport enrollment sites are scaling aggressively and become cash-flow positive within weeks. Executive Kenneth Cornick identified a key pricing opportunity in converting historically free airline partner tiers to paid plans. Seidman-Becker added that the pricing philosophy is centered on delivering value through improved experiences, new services, and bundled offerings.

Dana Telsey of Telsey Advisory Group inquired about the demographics of the new buyers, the impact of the de minimis loophole closure, and key category trends. She also asked about the cadence of marketing spend and the progress of the Resale-as-a-Service (RAS) business under its new open-source model.

Answer

CEO James Reinhart stated that new buyer demographics are not materially different from ThredUp's core customer base, indicating a large addressable market. He highlighted dresses as a continued winning category. Regarding marketing, he noted spend is targeted in the high teens to 20% of revenue, focused on a payback period under one year. On RAS, Reinhart mentioned that the new strategy is resonating, with renewed conversations with over 60 brands, and he feels good about the strategy shift despite it being in its early stages.

Dana Telsey inquired about the demographics of the newly acquired customers, the strategy to sustain marketing momentum, and the potential impact of tariffs on business through 2026. She also asked for details on top-performing product categories and any changes in pricing.

Answer

CEO James Reinhart explained that new customer acquisition has been highly efficient, with low CACs driven by an improved product experience. He noted the new customer demographic is consistent with the recent trend of attracting slightly more middle-to-upper income consumers. He confirmed marketing spend will continue as long as paybacks are attractive, aided by reduced ad competition. Dresses remain the top category, and while there are no structural pricing changes, the product mix is skewing higher-end due to growth in premium consignment.

Dana Telsey inquired about new CEO Mary Ellen Coyne's experience with the J. Jill customer, strategies for managing tariffs, and details on underperforming product assortments. She also asked about any remaining costs from the recent OMS system cutover and the extent of planned price increases.

Answer

EVP, CFO & COO Mark Webb stated that the company is mitigating tariff impacts through vendor negotiations, order adjustments, and strategic price increases. He also confirmed the OMS project is stable, with only a slightly higher-than-expected one-time cost in Q1. President & CEO Mary Ellen Coyne added that while the holiday product line is set, her focus is on optimizing marketing and in-store presentation to win customer wallet share amidst economic uncertainty.

Dana Telsey of Telsey Advisory Group inquired about the performance differences between store and digital channels, including customer behavior and regional trends, and also asked about the planned cadence for the share repurchase program.

Answer

Executive Claire Spofford explained that stores remained more full-price focused, while the digital channel saw a greater shift to promotional and markdown sales. Executive Mark Webb noted that the share repurchase program began late in Q4 and the company will continue to be opportunistic, with $24.5 million remaining on the authorization.

Dana Telsey of Telsey Advisory Group asked about several topics: differences in regional performance, category performance including the shift in dresses, plans for the shorter holiday selling season, and the marketing spend outlook for the second half.

Answer

Executive Mark Webb noted no significant regional disparities, though the South was slightly weaker and lifestyle center traffic lagged malls. Executive Claire Spofford discussed category performance, highlighting a slowdown in dresses but continued strength in core linen, gauze, bottoms, and sweaters, which are key for fall. She mentioned adjusting floor set timing for the shorter holiday season. On marketing, she described a flexible, data-driven approach, balancing brand awareness with performance marketing while being mindful of rising ad costs due to the election.

Dana Telsey from Telsey Advisory Group asked for an update on the progress at Banana Republic and Athleta, any differential tariff impacts on those brands, and trends in store versus online channels, including traffic and conversion.

Answer

CEO Richard Dickson reported encouraging progress at Banana Republic, which delivered a flat comp, while noting Athleta is in a reset year with a choppy outlook. He did not specify tariff impacts by brand. On channel performance, he stated that store sales were flat while online sales grew 6%, now representing 39% of total sales, underscoring the strength of the company's digital business.

Dana Telsey from Telsey Advisory Group asked for an update on the turnaround progress at Banana Republic and Athleta, and also inquired about the performance breakdown between store and online channels, including traffic and conversion trends.

Answer

CEO Richard Dickson reported encouraging progress at Banana Republic, which delivered a flat comp and saw success with its 'White Lotus' collaboration. He reiterated that Athleta is in a reset year with a choppy outlook as they fix fundamentals. On channel performance, he stated that store sales were flat while online sales grew 6%, now representing 39% of total net sales, underscoring the strength of their digital business.

Dana Telsey of Telsey Advisory Group inquired about shifts in capital allocation, particularly the reduction in CapEx, and how it affects the company's physical store footprint strategy regarding openings and closings. She also asked which merchandise categories are expected to see the biggest improvements in the back half of the year.

Answer

President and Executive Creative Director Jennifer Foyle highlighted that denim has been strong and will be a focus for back-to-school, along with the growing Offline and intimates categories. Executive VP & CFO Mike Mathias explained that the full-year CapEx guidance was reduced to $275 million by re-cadencing projects, such as slowing the AE remodel program and some technology spend, to preserve cash. He noted Aerie store openings are still planned for around 30 locations.

Dana Telsey of Telsey Advisory Group inquired about the performance of digital versus physical store channels, the company's store remodel and opening plans for 2025, and the outlook for marketing spend.

Answer

CFO Mike Mathias reported that both channels saw comp growth in Q4, with digital ahead of stores, a trend continuing into Q1. He outlined plans for 90-100 remodels and 35 new Aerie/OFFLINE stores within a $300 million CapEx budget. Marketing spend is planned to increase in the first half, funded by other SG&A savings, and remains a flexible lever for the second half.

Dana Telsey questioned the performance differences between digital and physical stores, the financial impact of recent hurricanes, and the performance of remodeled stores versus the rest of the fleet.

Answer

CFO Mike Mathias noted that both stores and digital channels had positive comps in Q3, with store traffic hitting historical highs during Thanksgiving week. He downplayed the hurricane impact relative to the effect of warmer weather. He also confirmed that the 70+ remodeled AE stores are outperforming the fleet average, prompting plans to accelerate the program.

Dana Telsey inquired about the performance of stores versus the digital channel, including traffic trends. She also asked for a breakdown of gross margin components, particularly the outlook for freight and cotton costs in the second half of the year.

Answer

Mike Mathias, CFO, reported that both stores and digital channels saw positive growth in Q2 and early Q3, with healthy traffic across both. Regarding gross margin, he noted that benefits from finished product costs are flowing through and that the team has successfully mitigated recent freight disruptions. The primary variable in quarterly margin rates is the expense leverage impact from the retail calendar shift.

Dana Telsey of Telsey Advisory Group inquired about the real estate strategy, specifically the opening cadence for 2025 stores and plans for the recently acquired Jo-Ann store leases.

Answer

EVP & CFO Kristin Wolfe confirmed the plan for 100 net new stores in 2025, with 25% opening in the first half and 75% in the second half, mostly in Q3. She added that the 46 acquired Jo-Ann stores are being fast-tracked to open in spring 2026, with most expected in the first quarter of that year.

Dana Telsey inquired about the potential for international expansion and asked about current trends in labor availability, wage rates, and the impact of store payroll investments.

Answer

CEO Michael O'Sullivan stated that while the off-price model has international potential, Burlington's complete focus is on the 'huge potential' for expansion within the U.S. CFO Kristin Wolfe noted that wage rate increases have been absorbed and are managed on a market-by-market basis. She also confirmed that the deliberate investment in store payroll from Q3 2023 will be fully lapped in Q3 2024.

Dana Telsey of Telsey Advisory Group inquired about the real estate strategy, asking for the expected opening cadence for the 100 net new stores in 2025 and the plans for the 46 recently acquired Jo-Ann Fabric store leases.

Answer

EVP & CFO Kristin Wolfe provided the details, stating that for the 100 net new stores in fiscal 2025, approximately 25% will open in the first half of the year, with the remaining 75% opening in the second half, primarily in the third quarter. She added that the company is focused on opening the 46 acquired Jo-Ann stores as quickly as possible, with the current expectation being for openings in the spring of 2026, mostly in the first quarter of that year.

Dana Telsey asked how the key gross margin drivers—product cost tailwinds, lower promotions, and higher quality inventory—are impacting results by channel and brand, and whether these benefits are sustainable.

Answer

President and CEO Bracken Darrell asserted that the gross margin improvements are fundamental, not temporary, and that the company has no intention of backsliding. EVP and CFO Paul Vogel added that core 'Reinvent' initiatives like integrated business planning and markdown management are standardized processes that provide sustainable benefits across all brands and channels.

Dana Telsey asked for details on changes to the free cash flow guidance and questioned how much of the brands' improved performance was due to specific products versus easier comparisons.

Answer

CEO Bracken Darrell attributed brand improvement to an integrated effort across product, channel, and marketing, making it difficult to isolate a single factor. He emphasized that these efforts are becoming more synchronized. CFO Paul Vogel declined to provide a detailed breakdown of the free cash flow guidance changes.

Dana Telsey asked about the cadence of marketing spend throughout the year, the long-term margin drivers, and the company's forward-looking inventory plans, referencing a recent consumer marketing activation she observed.

Answer

CEO Amanda Baldwin used the 'Bond House' event as an example of creating brand engagement and 'rolling thunder' to build brand love. CFO Catherine Dunleavy stated that the company's strong balance sheet allows it to invest in its strategy through any market turbulence. Regarding inventory, she noted they are managing it carefully and may build stock in certain areas to mitigate potential tariff impacts.

Dana Telsey inquired about the 2025 product launch cadence, potential differences in global product assortments, and the key factors that could drive the adjusted EBITDA margin to the high end of the guidance range. She also asked about building blocks for margin trends into 2026.

Answer

CEO Amanda Baldwin stated the innovation plan includes 2-3 launches per year, focused on differentiated science and balancing newness with support for core products. COO & CFO Catherine Dunleavy explained that hitting the high end of the EBITDA margin range depends on the speed of progress across their three strategic priorities: generating brand demand, harnessing innovation, and executing with excellence. She noted they will use detailed metrics to monitor progress and react quickly.

Dana Telsey of Telsey Advisory Group inquired about the company's effective marketing strategies, the allocation of marketing by channel, and the planned balance between physical store investments (remodels, openings) and digital initiatives to fortify the Coach brand's competitive moat.

Answer

CEO Joanne Crevoiserat emphasized that the direct-to-consumer model is a key advantage, with marketing spend now approaching 10% of sales, up from 3-4% pre-pandemic, driving a compounding effect at Coach. Coach CEO Todd Kahn added that their strategy has shifted to fewer, bigger campaigns for better recall ('spike and sustain'). He also noted investments in experiential retail like Coach Play and Coach Coffee shops to engage Gen Z consumers, who value in-person experiences.

Dana Telsey asked about sales trends surrounding the successful Valentine's Day period, including best-selling products. She also inquired about the company's pricing strategy in light of rising gold costs and followed up with questions on showroom performance, regional differences, and the future pace of openings compared to prior years.

Answer

CEO Beth Gerstein attributed the strong Valentine's Day to successful execution around key occasions, driven by new collections and core diamond essentials. She stated pricing remains data-driven via their optimization engine to balance costs and consumer sensitivity. On showrooms, Gerstein clarified the opening pace is consistent with recent years and remains ROI-focused, with continued investment in the existing 40+ store fleet and a methodical approach to new locations.

Asked about the attachment rate between fine jewelry and engagement rings, potential shifts in customer demographics, and the expected sales and EBITDA cadence for the upcoming fiscal year.

Answer

The company has not observed a significant demographic shift and notes strong repeat purchases within the fine jewelry category itself. For the upcoming year, both revenue growth and adjusted EBITDA are expected to be back-half weighted, driven by returns on investments, showroom performance, favorable comps, and a strong Q4 fine jewelry season.

Dana Telsey inquired about the attachment rate between fine jewelry and engagement rings, any demographic shifts resulting from the growth in fine jewelry, and the expected cadence of business throughout the upcoming year.

Answer

CEO Beth Gerstein stated there hasn't been a significant demographic shift and that the company is seeing strong repeat purchases within the fine jewelry category itself. CFO Jeff Kuo addressed cadence, explaining that revenue growth is expected to be back-half weighted, driven by returns on recent investments, showroom annualization, a favorable Q3 comp, and a strong Q4 fine jewelry season.

Inquired about the mix of outlet versus full-price stores in the planned store closures, the allocation of marketing spend by brand, and what other metrics, such as new customer acquisition, are being used to track progress.

Answer

John Idol clarified that the ~75 store closures planned for next year will be majority Michael Kors full-price stores, with no new outlet openings. The focus is on renovations and improving productivity in the remaining fleet. Marketing spend is between 7-8% of revenue depending on the brand. He deferred providing more detail on specific marketing tactics and performance metrics until the upcoming Investor Day.

Dana Telsey asked about the mix of outlet versus full-price stores in the closure plan, the allocation of marketing spend by brand, and any new customer acquisition metrics being targeted.

Answer

CEO John Idol clarified that the majority of the 75 store closures planned for fiscal 2026 will be Michael Kors full-price locations, while the outlet store count will remain flat. He noted that future CapEx will prioritize store renovations over IT. He stated that marketing spend is between 7-8% of revenue by brand but deferred sharing specific tactical details until the upcoming Investor Day to maintain a competitive edge. No specific new customer acquisition metrics were provided.

Dana Telsey asked what specific markers or KPIs management will use to measure the success of the 'Beauty Reimagined' initiative and inquired about the future strategy for the travel retail channel.

Answer

CEO Stephane de la Faverie outlined KPIs for each of the five 'Beauty Reimagined' pillars, including consumer coverage expansion, innovation speed, ROI on consumer-facing spend, SG&A reduction via the PRGP, and simplification of work processes. Regarding travel retail, he stated that while it remains an important channel for brand desirability, the company is actively reducing its dependency on Asia travel retail while seeking new growth opportunities in the West.

Inquired about plans for category newness, the expected top-line impact from implementing BOPUS at Rack, and the puts and takes for the Q4 and 2025 margin structure, including freight and pricing.

Answer

Executives highlighted that the focus is on top brands, especially in women's apparel. The rollout of BOPUS and store fulfillment at Rack, enabled by RFID technology, is expected to drive sales and margin by making more store inventory available online. For margins, freight rates are well-managed, and they expect a mix shift towards the lower-priced Rack banner to continue.

Dana Telsey asked about the drivers behind Milk Makeup's gross margin fluctuation, the performance of the broader beauty industry, Obagi's inventory levels, its penetration in dermatologist offices, and the international outlook for both brands.

Answer

Executive Michel Brousset explained that Milk's Q3 gross margin was affected by the timing of off-price sales and holiday kits, which he described as a phasing issue, not a structural one. He characterized the beauty market as normalizing but strong, emphasizing that Waldencast's growth is driven by execution. He added that Obagi's inventory levels have substantially improved, with a focus on growing dollars per account, and that international expansion for both brands is still in its early stages with significant potential.

Dana Telsey of Telsey Advisory Group asked about the primary drivers behind the significant gross margin expansion and the ongoing international growth for both the Milk Makeup and Obagi Medical brands.

Answer

Executive Michel Brousset attributed Obagi's gross margin strength to a favorable digital channel mix and operational efficiencies, noting it is near its target level. For Milk, margin expansion from the 40s to near-target levels was driven by operational improvements. He highlighted international growth for Milk through successful entries into the U.K. and Latin America, and for Obagi through a rebuilt, direct model in Southeast Asia and strengthening its global distributor network.

Inquired about the health of the consumer, the competitive landscape, the strategy for resetting assortment and pricing, and sought more details on the potential impact of China tariffs, including sourcing dependency and mitigation plans.

Answer

Regarding China tariffs, the company has a dependency but not a total one. They plan to mitigate impacts by sharing costs with vendors and customers, leveraging price elasticity, and continuing to diversify sourcing and improve supply chain costs. The competitive landscape is highly promotional, and they are using markdowns to reset inventory. The assortment reset will involve SKU reductions without material changes to the overall pricing structure.

Dana Telsey inquired about the performance trends of the Guess? brand versus the newly acquired Rag & Bone brand, given their different customer bases. She also asked for details on the year-over-year change in freight and marketing expenses and the expected cadence of that spending between Q3 and Q4.

Answer

CEO Carlos Alberini explained that Guess? and Rag & Bone are complementary brands targeting different consumers, with a key growth strategy for Rag & Bone being international expansion into markets where Guess? is already strong. Interim CFO Dennis Secor added that marketing spend more than doubled in Q2 and is expected to follow a similar pattern for the full year. He noted that the largest dollar increase in marketing investment is planned for Q3, which will impact margins more significantly in that quarter than in Q4.