Ike Boruchow

Ike Boruchow from Wells Fargo Securities asked for clarification on the Q4 2025 gross margin, specifically if it's accurate to ballpark it as up 200 basis points excluding tariffs. He then inquired if this run rate should be expected for the first half of 2026, assuming tariffs remain, and if margins can still increase next year despite these tariff headwinds.

Answer

CFO and COO Scott Sekella confirmed that the Q4 2025 gross margin, excluding tariffs, being up 200 basis points is a 'good description.' He stated that tariffs would be a headwind through the first half of 2026, but mitigation efforts (ramping up from Q4 2025) and select price increases from the latter half of 2025 would help offset these pressures, implying a continued focus on margin expansion despite the headwinds.

Ike Boruchow asked Scott Sekella for clarification on the Q4 2025 gross margin, specifically if the ex-tariff gross margin is expected to be up 200 basis points. He then inquired if this run rate should be expected for the first half of 2026, assuming tariffs remain, and if the company can still increase margins next year despite the tariff headwinds.

Answer

CFO Scott Sekella confirmed that the ex-tariff gross margin for Q4 2025 is accurately ballparked at up 200 basis points. He stated that tariffs would be a headwind through the first half of 2026, but mitigation efforts (optimizing costs, diversifying sourcing, efficient freight mix, select pricing adjustments) would increase throughout next year, helping to offset these pressures and allowing for continued margin expansion.

Ike Boruchow asked for quantification of the shrink benefits seen in Q3, expectations for Q4, and whether there is further tailwind potential from shrink reduction efforts, given past issues.

Answer

Interim CFO Chris Lialios stated that Q3 saw a modest improvement in shrink, with another modest improvement expected in Q4. He confirmed that full-year fiscal 2025 shrink is expected to be lower than 2024, and management believes there is still some opportunity for further reduction.

Ike Boruchow asked about Signet Jewelers' Black Friday week promotional strategies, whether they deviated from plans, and how promotions factor into the cautious Q4 commentary. He also sought details on the Q4 gross margin plan, including the interplay of promotional strategy and tariff headwinds.

Answer

COO and CFO Joan Hilson confirmed that Signet stayed on plan for the Cyber 5 weekend, successfully leaning out discounts for margin. She explained that the holiday plan offers flexibility for consumer spending variability, with assortment architecture providing price point buckets for diverse customer incomes. For Q4, the gross merchandise margin rate is expected to be flat to slightly up, allowing for flexibility. Gross margin can leverage on a slightly positive comp due to operating model efficiencies, distribution center improvements, and accelerated scrap recovery from higher gold prices. She clarified that a negative comp would lead to gross margin deleverage due to fixed costs.

Ike Boruchow asked about the Black Friday week promotional strategies and how they align with the cautious commentary. He also sought details on the 4Q gross margin plan, including the interplay of promotional strategy and tariff headwinds.

Answer

COO and CFO Joan Hilson confirmed that promotional strategy remained on plan during Cyber Five, allowing for reduced discounting in appropriate areas. She stated that the Q4 gross merchandise margin rate is planned to be flat to slightly up, providing flexibility for consumer spending variability. She also mentioned leveraging distribution efficiencies and accelerating scrap recovery due to higher gold prices, but noted that gross margin could be down if comps are negative due to fixed cost deleverage.

Ike Boruchow of Wells Fargo Securities inquired about Signet's strategic thinking on the mix between its bridal and fashion categories and how that could shift, alongside the comp cadence and holiday assumptions embedded in the fiscal 2025 guidance.

Answer

CEO James Symancyk clarified the strategy is to grow both bridal and fashion categories distinctly, not merely shift the mix. He noted an opportunity to reinvigorate natural diamonds in bridal while using lab-grown diamonds to expand the fashion segment. COO & CFO Joan Hilson added that the full-year guidance reflects a measured consumer environment and does not assume a significant 'hockey stick' recovery during the holiday season.

Ike Boruchow asked how to reconcile Burlington's lower Q3 comp growth with better margin and earnings, specifically if choices were made to prioritize margin at the expense of sales, and requested more detail on the initial FY26 outlook, including key risks and opportunities.

Answer

Michael O'Sullivan (CEO) confirmed that deliberate choices, such as reducing sales and receipt plans in tariff-impacted categories and trimming inventory for faster turn, likely drove higher margin in Q3 at the expense of sales. Kristin Wolfe (EVP and CFO) outlined the FY26 outlook, planning high single-digit total sales growth, at least 110 net new stores, and flat to 2% comp sales, noting economic uncertainty, potential tailwinds (tax refunds), and headwinds (tariffs), with margin expected to be flat at 2% comp and leverage above that.

Ike Boruchow asked how to reconcile Burlington's lower Q3 comp growth with its better margin and earnings performance compared to peers, specifically inquiring if choices were made to prioritize margin at the expense of sales. He also asked Kristin Wolfe for more details on the initial 2026 outlook, including key risks and opportunities.

Answer

CEO Michael O'Sullivan confirmed that deliberate choices were made, such as reducing sales and receipt plans in high-tariff categories and trimming inventory for a faster turn, which boosted Q3 earnings despite potentially hurting sales. He noted these actions successfully absorbed tariff pressure. CFO Kristin Wolfe outlined the preliminary FY26 outlook, planning for flat to 2% comparable store sales growth and at least 110 net new stores, driving high single-digit total sales growth. She mentioned potential tailwinds like higher tax refunds and headwinds like tariff-driven price increases, while projecting flat operating margin at 2% comp, with leverage for higher comps, and noted startup costs for a new Southeastern Distribution Center.

Ike Boruchow of Wells Fargo & Company inquired about industry-level pricing trends and Burlington's potential to raise its own prices to offset tariff pressures. He also asked for a detailed breakdown of the drivers behind the Q2 operating margin beat, which significantly exceeded guidance.

Answer

CEO Michael O'Sullivan stated that while some competitors are selectively raising prices, Burlington remains cautious due to its price-sensitive customer base and will monitor the broader retail environment before acting. CFO Kristin Wolff attributed the strong Q2 margin performance to multiple factors: the 5% comp drove faster inventory turns and lower markdowns; physical inventory counts revealed lower-than-planned shortage; and the company achieved both freight and SG&A leverage through savings initiatives and higher sales.

Ike Boruchow of Wells Fargo & Company inquired about the monthly comp sales trend during the first quarter and into May, and asked for a breakdown of the Q1 earnings beat, including the expense shift to Q2.

Answer

EVP & CFO Kristin Wolfe reported that Q1 comps were down 2% in February but recovered to up 1% for the combined March-April period, with May trends continuing near the midpoint of Q2 guidance. Wolfe attributed the $0.30 EPS beat to two main drivers: approximately half ($0.14) was from a timing shift of expenses into Q2, and the remainder resulted from proactive cost-saving initiatives implemented to offset future tariff impacts.

Ike Boruchow of Wells Fargo inquired about the monthly comparable sales trend cadence during the first quarter (February, March, April) and any color on the trend for May to date. He also asked for a breakdown of the sources of the first quarter earnings upside and the details of the expense shift into the second quarter.

Answer

EVP & CFO Kristin Wolfe addressed the questions, stating that February comps were down ~2% due to weather and tax refund timing, but the combined March-April period saw comps increase by 1%. The trend in May-to-date has been similar to the March-April period. Regarding the Q1 earnings beat of about $0.30 per share, Wolfe explained that roughly half (~$0.14) was due to a timing shift of expenses from Q1 into Q2, while the other half came from proactive cost-saving initiatives implemented to offset anticipated tariff impacts.

Ike Boruchow asked about the self-checkout rollout, the number of stores it's in, its potential impact over the next 12 months, and the ROI on this investment.

Answer

Group President and COO Michael Hartshorn stated self-checkout is in 80 stores, and after resolving shrink issues, the current prototype shows lower shrink, high customer adoption, and sales impacts. It will be rolled out to more high-volume stores next year, with more details in the 2026 preview.

Ike Boruchow asked about the rollout of self-checkout, the number of stores it's in, its potential impact over the next 12 months, and the ROI on this investment.

Answer

Michael Hartshorn (Group President and COO) stated self-checkout is in 80 stores, with a successful prototype showing lower shrink and high customer adoption. He noted sales impacts in these stores and plans for further rollout next year, especially in high-volume locations.

Ike Boruchow from Wells Fargo asked for an explanation for the greater margin degradation expected in Q3 compared to Q2, given that revenue guidance is similar and the tariff headwind is expected to be lower.

Answer

CFO Adam Orvos clarified that the primary driver for the sequential margin pressure in Q3 is the unfavorable timing of packaway-related costs. He explained that this will create a significant headwind in Q3, which the company expects to recoup in Q4 based on the projected flow of inventory.

Ike Boruchow asked about the shift in Bath & Body Works' growth and margin expectations since the CEO joined, seeking clarity on what has changed, key learnings, and the implications of Q4 guidance for 2026.

Answer

CEO Daniel Heaf acknowledged that Q3 results and Q4 expectations are below potential, attributing it to underinvestment in core categories due to a focus on adjacencies. He emphasized that the strategic reset is based on months of analysis, not a reaction to a single quarter, and aims to return to durable growth. CFO Eva Boratto added that Q4 guidance reflects macro consumer sentiment and weak core performance, with no growth expected for the full year 2026, as initiatives will only meaningfully impact the business in the second half.

Ike Boruchow asked about the shift in company expectations regarding growth and margins since the CEO joined, the reasons behind the Q4 revenue and margin compression guidance, and what this guidance implies for the 2026 outlook.

Answer

CEO Daniel Heaf re-emphasized that Q3 results and Q4 expectations fall short, attributing the underperformance to underinvestment in core categories due to a focus on adjacencies, which led to lagging the market. He clarified that the strategic reset is based on months of analysis, not a reaction to the quarter. CFO Eva Boratto added that the Q4 outlook represents a floor, impacted by macro trends and weak core performance, and stated that the company does not expect to deliver growth for the full year 2026, with initiatives impacting the business meaningfully in the second half.

Ike Boruchow focused on the underperforming digital business, asking for CEO Daniel Heaf's initial learnings, near-term plans, and long-term outlook for the e-commerce channel.

Answer

CEO Daniel Heaf acknowledged the digital platform is not up to standard and is a top priority for attracting new customers. He outlined immediate actions, including a new app in September and a mobile web relaunch in October, with a relentless focus on improvement. He emphasized the goal is to create a superior omnichannel experience rather than targeting a specific growth rate for the digital channel alone.

Ike Boruchow asked CFO Eva Boratto if the company would have raised its full-year guidance if not for the impact of tariffs. He also questioned what provides confidence in the back-half revenue growth forecast, given tougher comparisons.

Answer

CFO Eva Boratto confirmed that, all else being equal, guidance would have been raised without the recent tariff changes. She noted that at current tariff levels, results would likely be in the lower half of the guidance range. Her confidence in the second half stems from a strong innovation pipeline, including a new elevated ceramic candle, additional collaborations, and an exciting Halloween product launch.

Ike Boruchow asked if TJX has intentionally de-emphasized any categories due to tariffs and for high-level observations on whether the U.S. consumer is showing signs of pressure heading into the Holiday season.

Answer

Ernie Herrman, President and CEO, explained that while TJX might temporarily reduce sales and inventory plans for certain categories impacted by tariffs, they do not consciously de-emphasize them long-term, waiting for market cycles to normalize. He noted that the 'off-the-charts' availability of merchandise across the market suggests other retailers are struggling with tariff impacts and general retail choppiness, which serves as TJX's barometer for consumer pressure.

Ike Boruchow from Wells Fargo asked if TJX had intentionally de-emphasized or pushed harder in certain categories due to tariffs, considering the economics of each. He also sought TJX's high-level view on whether the U.S. consumer was showing signs of pressure, based on internal KPIs or market observations, going into the holiday season.

Answer

President and CEO Ernie Herrman explained that while TJX might temporarily reduce internal sales and inventory plans for a few months in tariff-impacted categories, they do not consciously de-emphasize long-term, as the market typically cycles back. Regarding the U.S. consumer, Herrman noted that while TJX doesn't have unique data, the high availability of merchandise across all price points suggests other retailers might be struggling with tariff impacts and choppy retail conditions, leading to excess inventory.

Ike Boruchow inquired about the 2026 outlook, specifically regarding door growth for both Salomon and Arc'teryx. He also sought an update on Salomon's penetration and progress in the United States, balancing growth with the push-pull model.

Answer

Andrew Page, CFO of Amer Sports, deferred detailed store growth updates to the Q4 call. Guillaume Meyzenq, CEO of Salomon, emphasized Salomon's distinctive market position, authentic mountain performance, global design recognition, and cultural relevance, detailing the US strategy focused on epicenters, running specialty distribution, and curated media investment.

Ike Boruchow inquired about potential additional information on door growth for both Salomon and Arc'teryx for the upcoming year. He also sought an update on Salomon's progress in the United States, including penetration levels, growth measurement, and balancing growth with the push-pull model.

Answer

Andrew Page, CFO of Amer Sports, stated that a more detailed update on store growth would be provided during the Q4 call. Guillaume Meyzenq, CEO of Salomon, emphasized Salomon's distinctive market position, authentic mountain performance, global design recognition, and growing cultural relevance. For the U.S., he highlighted the shift from winter sports/outdoor to city presence via an epicenter strategy, traction in running specialty, and plans for more store openings, curated media, and B2B partnerships.

Ike Boruchow asked for more insight into the trajectory of North America wholesale, noting its positive inflection and low double-digit growth this quarter (with an 11-point shift), and the planned pullback from unproductive sales in Q4. He sought clarity on how the shift impacts Q3 and the overall trend line and channel plan.

Answer

Justin Picicci, CFO, expressed encouragement regarding the underlying quality growth in the wholesale business, driven by strong brand momentum and strategic elevation work. He described a 'stable-to-up' growth algorithm for North America wholesale, balancing growth in top-tier doors, digital, and key cities with wholesale partners, against the culling of off-price and lower-tier distribution. Picicci outlined expected second-half pressure from off-price reductions in Q4 (2-3 points), caution around the U.S. consumer, and continued brand elevation reinvestments. He concluded that while there will be some expected pressure in the second half, the core business remains strong, with a stable-to-up normalized organic trajectory when one-offs are excluded.

Ike Boruchow asked for deeper insight into the trajectory of North America wholesale, noting its positive inflection for three quarters, the 11-point shift this quarter, and planned Q4 pullbacks from unproductive sales, seeking clarity on the trend line and channel planning.

Answer

Justin Picicci, CFO, discussed the underlying quality growth in North America wholesale, driven by brand momentum and diversified growth drivers, particularly in top-tier channels and women's apparel. He described a 'stable-to-up' growth algorithm for the channel, balancing growth in top-tier doors, digital, and key cities with strategic culling of off-price and lower-tier distribution. Mr. Picicci explained that second-half pressure is expected from planned off-price reductions in Q4 (2-3 points), caution regarding the U.S. consumer, and brand elevation reinvestments, but affirmed confidence in the core business's normalized organic trajectory.

Ike Boruchow of Wells Fargo asked about the drivers of Tapestry's accelerated growth and the sustainability of this momentum, specifically questioning Coach's ability to maintain double-digit revenue growth against tougher comparisons.

Answer

CEO Joanne Crevoiserat highlighted the structural and sustainable advantages, new customer acquisition (especially Gen Z), and compounding increases in acquisition and retention. Coach CEO Todd Kahn provided five proof points: product innovation, engaged people, strategic place (stores and new locations), increased marketing investment for future acquisition, and price positioning in the $200-$500 range.

Ike Boruchow asked about the drivers of Tapestry's accelerated growth and the sustainability of momentum, specifically for Coach's double-digit revenue growth given upcoming tougher comparisons.

Answer

Joanne Crevoiserat (CEO, Tapestry) highlighted structural and sustainable advantages, new customer acquisition (especially Gen Z), and compounding growth. Todd Kahn (CEO and Brand President of Coach) provided five key 'P's' (product, people, place, promotion, price) as foundational proof points for long-term growth, emphasizing innovation, customer engagement, strategic store locations, increased marketing investment for acquisition, and the compelling $200-$500 price range.

Ike Boruchow inquired about the data supporting confidence in lapping strong prior-year comparisons, particularly regarding new customer growth, and asked how the increased tariff headwind (from $90M to $160M) affects the company's ability to maintain margins.

Answer

CEO Joanne Crevoiserat explained that strong acquisition of younger customers with higher retention rates is building a durable growth foundation. Coach CEO Todd Kahn added that product newness drives frequent return visits. CFO & COO Scott Roe stated that while the tariff impact is significant and recent, the company's operating margins are still guided to expand, and they have confidence in fully offsetting the impact over time without sacrificing business momentum.

Ike Boruchow asked about any initial indications from retailers regarding holiday orders or order books, noting any differences by channel or region, and the overall demand perspective for the upcoming holiday season.

Answer

Bracken Darrell, President and CEO, VF Corporation, stated it was too early to provide specific insights into holiday order books due to the early stage of the season and the company's significant direct-to-consumer business. He expressed optimism about the company's plan and products, hoping for continued 'stubbornly positive' consumer behavior despite the uncertain macroeconomic environment.

Ike Boruchow of Wells Fargo Securities asked about early indications from retailers regarding holiday orders and order books, inquiring about any channel or regional differences and the overall demand outlook for the upcoming holiday season.

Answer

Bracken Darrell (President and CEO) indicated it was too early to provide specific insights into holiday orders due to the ramp-up period and macro uncertainties. He expressed optimism about the company's plans and products, hoping for continued "stubbornly positive" consumer behavior.

Ike Boruchow inquired about several aspects of Carter's financial outlook, including clarification on Q4 wholesale sales guidance regarding the 53rd week, the projected U.S. store count post-closures, and further details on the Simple Joys brand's size and future impact. He also pressed for the rationale behind the company's confidence in projecting earnings growth for next year, considering significant tariff headwinds, planned investments, and the loss of a 53rd week, which seemed to outweigh the announced productivity savings.

Answer

Richard Westenberger (Senior Executive VP, CFO and COO, Carter's Inc) confirmed the 53rd week's total value ($30 million) and its wholesale contribution ($5 million), and affirmed the directional store count projections (700 next year, 650 in the out year). He declined to size the Simple Joys brand but acknowledged it as a revenue drag likely continuing into next year, with Doug Palladini (CEO and President, Carter's Inc) emphasizing the larger opportunity with core brands on Amazon. Westenberger attributed confidence in 2026 earnings growth to consumer acceptance of price increases, expected benefits from productivity initiatives, and accretive returns from increased marketing investments, which are designed to cover a good portion of gross tariff exposures and other inflationary pressures.

Ike Boruchow from Wells Fargo & Company asked which channel, direct-to-consumer or wholesale, is expected to outperform in the second half and how revenue trends might change with more aggressive pricing. He also sought clarification on whether the $35 million net tariff impact already assumes price increases and asked for framing on when margins might bottom out during the current business reset.

Answer

CFO Richard Westenberger projected higher revenue growth in the second half, led by the direct-to-consumer business, and confirmed the $35 million tariff headwind is a net figure that already accounts for partial offsets like price increases and vendor sharing. CEO Douglas Palladini did not specify a bottom for margins but reiterated his focus on achieving long-term, sustainable, profitable growth and winning back market share through product innovation and strategic investments.

Ike Boruchal focused on Levi Strauss & Co.'s SG&A costs, specifically asking about the distribution line running at 7% of sales, the moving pieces related to warehousing and DCs, and the timeline for margin benefits from these initiatives. He also inquired about a timeline for the company's return to a 15% EBIT margin.

Answer

Harmit Singh, Chief Financial and Growth Officer, explained that Q3 gross margin expansion was driven by structural mix, targeted pricing, higher full-price selling, and FX benefits, offsetting tariff headwinds. Regarding SG&A, he noted that gross profit dollars are growing faster than SG&A dollars. Distribution costs increased due to a reclassification for e-commerce, volume, and parallel DC running during network transformation. He expects parallel DC operations to ramp down by early Q1 2026. Singh outlined the path to 15% EBIT margin through continued gross margin expansion, SG&A leverage, and strategic advertising reinvestment.

Ike Boruchow asked about the SG&A cost line, specifically the increase in distribution costs to 7% of sales from historical levels, seeking details on the warehousing and distribution center transformation and the timeline for margin benefits. He also inquired about the timeline for Levi Strauss & Co. to return to a 15% EBIT margin.

Answer

Harmit Singh, Chief Financial and Growth Officer, explained that Q3 gross margin expansion was driven by structural mix, pricing, full-price selling, and FX benefits. For SG&A, he noted gross profit dollars growing faster than SG&A dollars, with increases due to performance compensation, store openings, and distribution costs. He detailed the distribution network remapping, including parallel DCs and e-commerce reclassification, expecting parallel running to ramp down by Q1 2026. For the 15% EBIT margin, he outlined building blocks: 200 basis points from gross margin expansion, 200 basis points from SG&A leverage, and a 50 basis point headwind from increased advertising reinvestment.

Ike Boruchow of Wells Fargo inquired about the drivers behind The RealReal's strong Q2 revenue beat and impressive guidance, asking for details on recent business cadence. He also asked about the margin profile, specifically if the take rate will continue to decline due to a mix shift towards higher-value items.

Answer

President and CEO Rati Sahi Levesque confirmed that the momentum from a 'breakout' Q2 is continuing into Q3, driven by double-digit new seller growth and successful growth playbook reinvestments. CFO Ajay Gopal explained that while the take rate declines with higher average order values (AOV), this brings in higher gross profit dollars. He noted the anchor is the strong consignment gross margin (89.3%) and expects total gross margin to remain in the 74% to 75% range.

Ike Boruchow of Wells Fargo inquired about the specific EBIT contribution and annualized revenue and EBIT run-rate for the newly acquired Helly Hansen brand. He also asked for an initial outlook on fiscal 2026, focusing on growth sustainability, the impact of Helly Hansen on corporate margins, and overall operating margin trajectory.

Answer

EVP, CFO & Global Head of Operations, Joe Alkire, clarified that Helly Hansen's annualized revenue is approximately $680 million with around $50 million in operating income, noting this has evolved with tariff impacts. For the second half, Helly is expected to contribute about $425 million in revenue and $0.32 of EPS accretion. For 2026, Alkire provided a framework expecting organic growth from Wrangler, a transition year for Lee, and scaling benefits from Project Genius to help offset tariff headwinds, while reiterating the goal to double Helly's operating margins over time.

Ike Boruchow pressed for details on the DTC momentum, asking if the double-digit comp trend seen throughout the quarter had experienced any slowdown and whether this trend was sustainable into the more significant winter months. He also followed up on the wholesale channel, asking if there was any reason it couldn't return to growth given the healthy order book and completed channel reset.

Answer

Carrie Baker, President of Brand & Commercial, expressed confidence in the sustainability of the DTC momentum, stating there's no reason to believe it would change, barring major macro events, as it's driven by controllable factors like product, marketing, and execution. Dani Reiss, Chairman & CEO, added that he has lots of confidence given the current momentum. On wholesale, he and Carrie Baker agreed that while they are not planning for it this year, there is no reason it cannot return to growth over the long term and that they are happy with the response from partners.

Ike Boruchow of Wells Fargo questioned the sustainability of the strong DTC momentum into the key winter season and asked if the wholesale business could return to growth given its healthy order book.

Answer

Management expressed confidence in the sustainability of DTC momentum, attributing it to controllable factors like product, marketing, and execution. CFO Neil Bowden noted continued strength, with softness confined to the UK and Japan. Regarding wholesale, CEO Dani Reiss and President of Brand & Commercial Carrie Baker stated that while they are prudently not planning for growth this year, they see no fundamental reason it cannot grow and expect it to be a strong channel long-term.

An analyst on behalf of Ike Boruchow asked about the full-year plan for the wholesale channel and its growth trajectory beyond the current fiscal year.

Answer

President Carrie Baker explained the strategy is to elevate the wholesale channel by optimizing partners, tightening inventory, and improving brand presentation, noting positive partner feedback. She confirmed the full-year wholesale revenue is expected to decline by approximately 20%, attributing the significant Q1 drop to timing. The long-term outlook was not detailed.

Ike Boruchow of Wells Fargo & Company asked if the current guidance includes any quarterly growth for Michael Kors this year and which channel is expected to inflect first. He also requested an update on the balance sheet outlook following the Versace sale.

Answer

Chairman & CEO John Idol clarified that no year-over-year growth is baked into the guidance for any channel yet, but the full-price retail channel is getting close and is expected to be the first to turn positive. Interim CFO Rajal Mehta confirmed that proceeds from the Versace sale will be used to substantially reduce debt, leaving a strong balance sheet with minimal debt. The company will then re-evaluate a share repurchase program.

Asked about the expected revenue cadence for the next fiscal year, questioning if it will be a linear improvement or more lumpy, and also requested comments on market speculation about a potential sale of the Versace or Jimmy Choo brands.

Answer

Tom Edwards stated that for fiscal '26, they expect a progression of sales improvement throughout the year for retail, while wholesale will start negative but improve as the year progresses. John Idol added that Q4 will see the largest wholesale decline. Regarding a potential sale, Idol acknowledged the speculation and stated that while they always consider shareholder value and would listen to interested parties, the current strategy is to build the three brands and focus on the upcoming Investor Day.

Ike Boruchow of Wells Fargo & Company inquired about the primary drivers for ThredUp's significant Q2 revenue outperformance and record new buyer growth, asking for a rank-ordering of contributing factors. He also questioned the sequential growth cadence and the reasoning behind the conservative 10% growth guidance for Q4 after a strong Q3 forecast.

Answer

CEO James Reinhart attributed the strong performance to a compounding 'flywheel' effect, where AI-driven improvements to the product experience boost conversion rates, enabling more efficient marketing spend and new buyer acquisition. He explained that this momentum from new buyers acquired in previous quarters is accelerating growth into Q3. For Q4, Reinhart cited historical seasonal slowdowns in resale, higher holiday marketing rates prompting a pullback in spend, and general macroeconomic uncertainty as reasons for a more prudent growth forecast.

Asked which parts of the business are underperforming given the low 1% comp growth and questioned the rationale for increasing the markdown forecast if markdowns are not currently an issue.

Answer

Overall U.S. traffic numbers are impacting the business, with opportunities in core and seasonal colors as guests gravitate towards entirely new styles. The leading indicator for the cautious markdown forecast is the lower traffic trend and general macro uncertainty, not current markdown levels.

Ike Boruchow from Wells Fargo sought to quantify the gross margin headwind in Q2 from the lapping of a credit card benefit and asked for clarification on the back-half gross margin outlook, both with and without the potential tariff impact.

Answer

CFO Katrina O'Connell confirmed the Q2 gross margin headwind is roughly 60 basis points, largely due to the credit card benefit lap. She reiterated that underlying full-year gross margin is expected to leverage slightly. She quantified the potential full-year tariff headwind at 80-90 basis points if the estimated $100M-$150M net impact materializes, but stressed the situation remains dynamic.

Ike Boruchow of Wells Fargo asked for quantification of the gross margin impact from the lapping of the credit card benefit in Q2 and sought clarity on the implied back-half margin trajectory, both with and without the estimated tariff impact.

Answer

CFO Katrina O'Connell confirmed the Q2 gross margin headwind is roughly 60 basis points, almost entirely due to lapping the prior year's credit card benefit. She reiterated the full-year outlook for slight underlying margin leverage. Regarding tariffs, she calculated the $100-150M net impact equates to a potential 80-90 basis point annual headwind, but stressed the situation remains dynamic and subject to policy changes.

A representative for Ike Boruchow asked for an update on the G-III licensing agreement and the progress on recapturing that business for Calvin Klein and Tommy Hilfiger.

Answer

CEO Stefan Larsson confirmed that PVH is on track with its multi-year plan to take back the licensed businesses. He noted the company has established strong partnerships with key wholesale accounts and has built the necessary sourcing and product engines to support the transition, with Calvin Klein sportswear scheduled as the first launch in Spring '25.