Janine Stichter

Janine Stichter asked for more details on the wholesale footwear business outside of private label, focusing on initial orders, reorders, and the company's ability to meet additional demand. She also inquired about the current size of the Dolce Vita business and its growth opportunities.

Answer

Edward Rosenfeld, Chairman and CEO, expressed excitement about the momentum in the Steve Madden women's wholesale footwear business, noting significant acceleration in sell-throughs in the second half of 2025 (mid-teens in Q4 and early 2026). He highlighted strong reactions from wholesale customers, leading to better initial orders and chase activity. He emphasized the company's speed advantage in meeting demand, as customers are positioning themselves to chase hot items. For Dolce Vita, he stated it finished 2025 with over $240 million in revenue, calling it the strongest and most consistent growing brand since the pandemic. He noted its expansion from primarily U.S. footwear and wholesale into a successful dolcevita.com, performing stores, traction in handbags, and growth in international markets.

Janine Stichter from BTIG asked for more details on the wholesale footwear business outside of private label, including initial orders and reorders, and the company's ability to chase additional demand. She also inquired about the size and growth opportunities for the Dolce Vita brand, given its high single-digit growth projection for the year.

Answer

Chairman and CEO Edward Rosenfeld expressed excitement about the momentum in the Steve Madden women's business, noting a 'significant acceleration' in sell-throughs (mid-teens in Q4 and Q1 2026). He highlighted 'better initial orders' and 'chase activity' from wholesale customers, attributing this to a speed advantage and having the right product. Edward Rosenfeld stated that Dolce Vita finished 2025 with over $240 million in revenue, emphasizing its consistent growth, expansion from US footwear (wholesale) to a successful e-commerce business, new stores, and extension into handbags and international markets.

Janine Stichter asked for clarification on the tariff impact on gross margin in Q3 and how to think about Q4, specifically unpacking the impact between Kurt Geiger and the core business. She also inquired about pricing mitigation, asking if more than the previously mentioned 10% increases were taken or planned.

Answer

Zine Mazouzi, CFO and EVP of Operations, explained that the unmitigated tariff impact in Q3 was about 100 basis points worse than Q2, and Q4 is expected to be slightly worse than Q3. However, mitigation efforts are increasing, leading to a considerably less net impact on gross margin in Q4. Ed Rosenfeld, Chairman and CEO, confirmed that current price increases are at 10% and are not enough to fully offset tariffs, indicating a prudent approach to further increases.

Janine Stichter followed up on margin recapture, asking for the tariff impact on gross margin in Q3 and Q4, and how to differentiate between Kurt Geiger and the core business. She also sought clarification on the pricing strategy for tariff mitigation, specifically if additional price increases beyond the initial 10% were implemented or planned.

Answer

CFO and EVP of Operations Zine Mazouzi explained that the unmitigated tariff impact in Q3 was about 100 basis points worse than Q2, and Q4 is expected to be slightly worse than Q3, but the net impact to gross margin will be considerably less due to increasing mitigation efforts. Chairman and CEO Ed Rosenfeld confirmed that the 10% price increases are current, and while they don't fully offset tariffs, the company will be prudent in considering further increases.

Janine Stichter inquired about Revolve's owned brands strategy, specifically the potential for significantly higher penetration beyond the current 20% of REVOLVE segment net sales, and sought details on the 'new chapter' for owned brands in 2026. She also asked about the gross margin progression for the year, particularly how increasing owned brand penetration would offset tougher comparisons in the second half.

Answer

Co-CEO Michael Mente stated that owned brand penetration in the mid-30s is well within reach, with potential for even higher long-term growth, and teased two to three 'big' marketing-oriented launches for owned brands in the future. CFO Jesse Timmermans confirmed that owned brands are expected to build sequentially throughout 2026, but the significant gross margin gains from markdown algorithm optimization in the second half of 2025 would partially offset these gains, as reflected in the Q1 and full-year gross margin guidance.

Janine Stichter asked about the potential for Revolve's owned brands to significantly exceed their current 20% penetration of sales, inquiring about specific parameters and the meaning of a 'new chapter' for owned brands in 2026. She also questioned how owned brand penetration would offset tougher gross margin comparisons in the latter half of the year.

Answer

Co-Founder and Co-CEO Michael Mente stated that mid-thirties penetration for owned brands is well within reach, with potential for even more, emphasizing a focus on profitable and sustainable growth. He alluded to 2-3 exciting, marketing-oriented initiatives for owned brands in the future. CFO Jesse Timmermans added that owned brands are expected to build sequentially throughout the year, but the significant gains from markdown algorithm optimization in the second half of 2025 would partially offset these, as reflected in the gross margin guidance.

Janine Stichter asked for details on FORWARD's strong performance in a tough luxury market and inquired about the current status and future opportunity for the beauty category.

Answer

Co-Founder & Co-CEO Michael Mente attributed FORWARD's success to strong merchandising, new brand additions as competitors weaken, and progress in high-touch sales. For beauty, he described it as being in the early stages, with growth driven by assortment, and noted that improving the site experience is the next key step before a larger marketing push.

Janine Stichter asked for an update on the performance of the core business, specifically dresses, and inquired about the company's plans for its significant cash balance, including potential acquisitions.

Answer

CFO Jesse Timmermans reported that the dresses category performed well, growing 10% in Q4, which was healthy although slightly below the company's overall growth rate. Regarding the cash balance, he stated that the company continues to be opportunistic, with a share buyback plan in place and an ongoing evaluation of strategic opportunities.

Janine Stichter asked for more details on the exclusive brand pricing strategy, specifically how prices are being adjusted throughout Q4, considering previous decisions to hold prices lower for longer. She also inquired about potential impacts from lapping initial tariff concessions from suppliers next year.

Answer

CEO John Hazen explained the style-by-style approach to price increases for exclusive brands in Q4, balancing factory concessions, new product pricing, and re-tagging existing inventory. CFO Jim Watkins stated that tariff concessions have normalized and are now run-rate, with future focus on expanding merchandise margin through partner collaboration, shifting production to lower-rate countries, and benefiting from India tariff updates.

Janine Stichter asked for more details on Boot Barn's pricing strategy for exclusive brands, specifically how prices are being adjusted throughout Q4 and the rollout process. She also inquired about the impact of lapping initial tariff concessions from suppliers and if any non-repeatable benefits should be considered for next year.

Answer

CEO John Hazen explained that exclusive brand price increases were held until post-holiday to avoid disrupting store teams, and are now being implemented style by style in Q4, with some products repriced in January and others in February and March. He noted that price increases are balanced with factory concessions and new product pricing. CFO Jim Watkins added that tariff concessions have largely normalized, and the focus for next year is continued merchandise margin expansion through working with partners and exploring sourcing from countries with lower rates, viewing the India tariff update positively.

Janine Stichter inquired about the competitive landscape amid tariff volatility, specifically the potential for market share gains from independent retailers. She also asked for clarification on when the higher costs from tariff-impacted inventory will begin to affect the gross margin.

Answer

CEO John Hazen expressed confidence that Boot Barn is well-positioned to gain share due to its exclusive brands and strong inventory, expecting smaller competitors to become more risk-averse. CFO Jim Watkins explained that there will be a temporary gross margin benefit in Q2, as retail price increases are implemented before the higher-cost inventory fully flows through cost of goods sold.

Janine Stichter from BTIG asked about the relative performance of new versus legacy markets and requested more detail on the e-commerce 'halo effect' observed when new physical stores open in a market.

Answer

CEO John Hazen confirmed that new store openings for the year will be split across both legacy and new markets. He elaborated on the e-commerce halo effect, citing New York as a prime example where online sales have steadily climbed the state rankings as the store count grew to 12. While not providing specific universal metrics, he noted that in smaller new markets like Vermont, the online business can increase fivefold almost immediately after a store opens.

Janine Stichter asked about the company's inventory position, which she initially thought was lean, and inquired about its sourcing exposure to China and potential tariff risks.

Answer

CFO Jim Watkins clarified that same-store inventory was intentionally up 10.5% and the company feels well-positioned for the holidays. Former CEO Jim Conroy stated that sourcing from China for exclusive brands has been reduced from over 50% to a planned 30%, significantly de-risking tariff exposure.

Janine Stichter asked about the outlook for margins in 2026, specifically regarding markdown trends in Q3 and Q4, and the confidence in increasing full-price penetration, including its expected timing.

Answer

CFO Meghan Frank attributed higher markdowns to sales not meeting expectations and the need to clear seasonal inventory. For 2026, she stated that Lululemon is adopting a more conservative inventory posture, managing units below sales plans to mitigate markdown exposure and utilize chase capabilities. This strategy is expected to begin in Q1, with multiple scenarios prepared to adapt to different trend outcomes.

Janine Stichter inquired about the impact of product department changes on the back half of the year, the proportion of casual wear in the assortment, and the confidence in the identified fixes. She also asked about the observed impact of recent price increases and whether the new tariff environment would alter pricing strategies for the next year.

Answer

CEO Calvin McDonald detailed the product pipeline's focus on performance, new lounge/social styles like LoungeFull and Big Cozy, and fresh perspectives on iconic items. He noted that new styles would increase from 23% to 35% by Spring 2026, with casual wear representing 40% of the mix. CFO Meghan Frank stated that modest price increases were rolling out as planned, with positive reception to date, and pricing would continue to be evaluated as a lever.

Inquired about the drivers of comparable sales, specifically trends in traffic, transaction size, and conversion, and asked about the business progression from April into May.

Answer

In Q1, U.S. store traffic decline moderated but was still lower, conversion was slightly down, and average dollars per transaction were up. No material changes in trends were noted progressing from April into May.

Janine Stichter inquired about lululemon's SG&A philosophy, asking how spending would adjust if sales came in either above or below guidance.

Answer

CFO Meghan Frank stated that about 20 basis points of the guided 40-50 basis point SG&A deleverage is from FX headwinds, with the remainder funding strategic investments in international growth, stores, marketing, and technology. She explained that future SG&A adjustments would depend on business momentum and the broader environment, noting the company has contingency plans for both upside and downside sales scenarios.

Janine Stichter asked for more detail on the women's business, which saw a nice pickup from Q2. She specifically highlighted the positive mention of leggings and inquired about what is driving this and what to expect going forward.

Answer

CEO Calvin McDonald explained that the women's business is performing well globally, and in the U.S., guests are responding strongly to newness in categories like leggings, particularly through new colors, prints, and patterns. He noted that Lululemon gained market share in women's activewear globally and in the U.S. The key opportunity remains increasing the level of newness in the assortment back to historical levels, which is the team's focus for Q4 and 2025.

Asked about the timeline for reintroducing the 'Breathe Through' fabric and for details on the potential impact of new product launches in the second half, particularly in the training category.

Answer

The 'Breathe Through' fabric was well-received and teams are working to reintroduce it in new styles, but it will not return in 2024. In the back half, newness is coming to the Wunder Under and Align franchises, along with a new performance train legging, to help address the newness gap.

Janine Stichter, using the name Janine Hoffman Stichter, asked for the timeline to reintroduce the 'Breathe Through' fabric in new styles and for details on the potential scale and impact of new product launches planned for the second half of the year.

Answer

CEO Calvin McDonald confirmed the 'Breathe Through' fabric was a success and the team is working to bring it back in a different style, though it will not return in 2024. For the back half, he highlighted upcoming innovation in the training category, including a new performance legging and new fabrics for the Wunder Under franchise. He emphasized that a key focus is adding more seasonal newness (color, print) to core lines like Align.

Janine Stichter asked for insights into the wholesale business, specifically regarding retailer caution, inventory levels in the channel, and whether the decrease in off-price sales is a strategic decision. She also questioned if Q4 represents the peak headwind from tariffs and how much of this impact is expected to continue into Q1 of next year.

Answer

Chairman and CEO Tom Chubb confirmed a general level of caution among specialty retailers in the wholesale channel. CFO and COO Scott Grassmyer added that decreased off-price sales were due to less inventory needing liquidation. Mr. Chubb clarified that Q4 is the peak for tariff impact on product assortment, while Mr. Grassmyer noted that Q1 of next year will see tariffs on all inventory (unlike Q1 last year), with price increases aimed at mitigation.

Janine Stichter asked how Oxford Industries was able to reiterate its gross margin guidance despite incremental tariff headwinds, specifically inquiring about the evolution of pricing strategies in response to tariffs and the reception of initial price increases. She also sought clarification on the improved gross margin from promotional activity at Tommy Bahama and its repeatability.

Answer

Tom Chubb, Chairman and CEO, explained that pricing adjustments have been selective and item-by-item, balancing margin protection with tariff uncertainty. He noted low to mid-single-digit price increases, with higher adjustments for Lilly Pulitzer's spring collection, and highlighted the successful launch of the higher-priced Boracay Island Chino as an example of consumer acceptance for improved products. Regarding Tommy Bahama's promotional gross margin, Mr. Chubb mentioned selling more full-priced products during promotional periods, and Scott Grassmyer, CFO and COO, added that less inventory and less severe markdowns contributed to the improvement.

Janine Stichter inquired about the company's ability to reiterate gross margin guidance despite incremental tariff headwinds, focusing on the evolution of pricing strategy and the initial reception of price increases. She also asked for clarification on improved gross margins from Tommy Bahama's promotional activity and its repeatability.

Answer

Tom Chubb, Chairman and CEO, stated that price increases have been selective and item-by-item, aiming to cover gross margin dollars for the balance of the year, with spring 2026 focusing on recouping dollars, not necessarily percentage. He cited the new Boracay Island Chino as an example of a successful price increase on an improved product. Scott Grassmyer, CFO and COO, clarified that improved gross margins at Tommy Bahama during promotional periods were due to selling more full-priced product and having less inventory for end-of-season sales, resulting in less severe markdowns.

Janine Stichter asked about the company's pricing strategy in response to tariff headwinds, specifically how pricing plans have evolved and the initial reception of price increases. She also sought clarification on the improved gross margin from promotional activity at Tommy Bahama and its repeatability.

Answer

Chairman and CEO Tom Chubb explained that price increases have been selective and item-by-item, balancing margin protection with tariff uncertainty. The strategy aims to cover gross margin dollars for the balance of the year, with Spring 2026 focusing on recouping gross margin dollars, not necessarily percentage. He cited the new Boracay Island Chino as an example of a successful price increase on an improved product. Regarding Tommy Bahama's gross margin, Mr. Chubb noted selling more full-priced product during promotional periods, while CFO and COO Scott Grassmyer added that there was less inventory for end-of-season sales and less severe markdowns.

Janine Stichter of BTIG inquired about the learnings from J.Jill's strategic price increases in Q3, their effectiveness in offsetting tariff headwinds, and the company's approach to promotional levels and inventory planning for 2026, particularly for first-half purchases.

Answer

CEO Mary Coyne stated that strategic, measured price increases in Q3 led to an overall Average Unit Retail (AUR) increase, indicating positive customer response to single-digit price adjustments. She noted that Q4 is exceptionally promotional due to early and deep competitor discounts, and J.Jill will manage promotions to exit the quarter clean, aiming for measured promotions in 2026 by focusing on strong product. CFO Mark Webb added that inventory buys for 2026 will be conservative, given evolving assortments and uncertain consumer sentiment.

Janine Stichter asked about the learnings from J.Jill's strategic price increases in Q3, their impact on offsetting the $5 million tariff headwind, and the company's strategy for promotional levels and inventory planning for 2026, particularly given market volatility.

Answer

CEO Mary Coyne stated that strategic, measured single-digit price increases in Q3 resulted in an overall Average Unit Retail (AUR) increase, with positive customer response. CFO Mark Webb confirmed that the AUR benefit largely offset the tariff pressure. For 2026, Mark Webb indicated conservative inventory planning due to evolving assortments and uncertain consumer sentiment. Mary Coyne added that while Q4 is highly promotional, J.Jill aims for measured promotions in 2026, with product response being key to reducing the need for discounts.

Janine Stichter asked Mary Ellen Coyne for insights into the current sentiment of J.Jill's consumer, particularly after a challenging start to Q2 and considering their sensitivity to economic headlines. She also sought clarification on expected promotional levels for the back half of the year, given clean inventory but a price-sensitive customer base.

Answer

Mary Ellen Coyne (CEO and President, J.Jill) noted a slow but steady return of the consumer, with sequential month-over-month improvement in Q2, expressing optimism for Q3 as tariff-related uncertainty settled. Regarding promotions, she reiterated that back-half levels would depend on customer acceptance of strategic price increases, forming part of the range of outcomes in their guidance.

Janine Stichter asked for an update on new store openings, including the performance of recent openings and the rationale for lowering the full-year target. She also asked CEO Mary Ellen Coyne for more details on potential 'white space' or new product categories.

Answer

EVP, CFO & COO Mark Webb clarified that the reduction in the 2025 new store forecast is due to deal timing and availability, not a change in the long-term strategy of opening 50 net new stores by 2029. He noted recent openings are performing in line with expectations. President & CEO Mary Ellen Coyne stated that plans for new categories are in development and will be shared on the September earnings call.

Janine Stichter inquired about the specific product missteps, the consumer feedback guiding these corrections, and the reasons behind higher promotional activity in the digital channel compared to stores.

Answer

CEO Lisa Harper detailed that merchandising missteps were primarily in tops (50% of revenue miss), shoes (40% due to tariff-driven pause), and jackets (10%). She explained the tops issue as an 'abdication of core fabrications' and a shift away from solution-based products, which is being corrected with chase orders and enhanced guardrails. Chief Strategy and Planning Officer Ashlee Wheeler attributed increased digital promotions to the tops miss, noting no inventory issues. Lisa Harper also confirmed that Q4 guidance incorporates current performance, with no substantive recovery expected in tops or shoes this quarter.

Janine Stichter asked about conversion rates given the strong traffic and new customer acquisition, especially with product improvements, and sought insights into the company's view of the Gen Z consumer, who is reportedly facing economic pressure.

Answer

CFO Mike Mathias explained that Q3 metrics showed traffic as a key driver, with AUR and conversion remaining relatively flat, and a similar mix expected for Q4. President and Executive Creative Director Jen Foyle stated that the company is not seeing pressure on the Gen Z consumer, as both brands are resonating across all age groups, and the holiday season also benefits from gift-giving purchases by parents.

Janine Stichter from BTIG asked for more details on the Abercrombie brand's men's business, specifically how it contributed to sequential improvement, given that women's led the progress. She also inquired about the expected tariff impact in the first half of next year, following the $60 million net impact in Q4, and the ongoing mitigation efforts.

Answer

CEO Fran Horowitz confirmed sequential improvement in both women's and men's categories for Abercrombie, highlighting clean inventories and strong positioning for Q4 in key categories like denim, fleece, and sweaters. CFO Robert Ball discussed the company's diversified sourcing footprint and proven playbook for tariff mitigation, including targeted price increases for spring deliveries starting late December/January, and vendor negotiations, expressing confidence in navigating the environment and aiming to meaningfully offset tariff headwinds longer term.

Janine Stichter asked for clarification on the Abercrombie brand's men's business, given that sequential improvement was led by women's. She also inquired about initial thoughts on the tariff impact for the first half of fiscal 2026, considering Q4's $60 million impact net of mitigation.

Answer

CEO Fran Horowitz confirmed sequential improvement in Abercrombie's men's business, with clean inventories and a strong focus on key categories like denim, fleece, and sweaters for Q4. CFO Robert Ball discussed tariff mitigation efforts for 2026, including pricing adjustments for spring deliveries (late December/January) and vendor negotiations, expecting some relief from Q4's 360 basis points tariff headwind in Q1 2026.

Janine Stichter sought an update on the company's tariff mitigation strategy, specifically the target of offsetting 50% of the gross impact this year, the progress of initial pricing actions, and the timing for fully offsetting tariffs by fiscal 2027.

Answer

Paul Vogel, EVP and CFO, VF Corporation, stated that pricing actions to mitigate tariffs would primarily begin in Q4, with minimal impact in Q2 and Q3. He reiterated that Q3 would experience the most significant tariff impact without corresponding revenue offsets. He confirmed the expectation to fully offset tariffs within fiscal 2027, with more specific details to be provided at year-end 2026.

Janine Stichter of BTIG inquired about updated expectations for mitigating 50% of the gross tariff impact this fiscal year, given initial pricing actions, and sought clarification on the timing for fully offsetting tariffs by fiscal 2027.

Answer

Paul Vogel (EVP and CFO) clarified that tariff pricing actions are minimal in Q2/Q3, primarily commencing in Q4. He reiterated that Q3 will experience the most significant tariff impact without full revenue offset. He confirmed no change to previous guidance regarding full tariff mitigation within fiscal 2027, with more specifics expected at year-end after observing elasticity and pricing.

Ethan Sage, on behalf of Janine Stichter, asked about the promotional environment for Vans and The North Face, as well as the broader industry, heading into the holiday season.

Answer

CEO Bracken Darrell described the promotional environment as better than last year, attributing the improvement to healthier inventory levels for both VF and its wholesale partners. He also noted a positive trend of increased full-price selling, though promotions remain part of the strategy.

Janine Stichter from BTIG asked about the potential ceiling for growth within existing B2B doors, given that they account for 90% of growth, and inquired about performance in newer distribution channels like sporting goods and run specialty.

Answer

David Kahan, President of Americas, explained that growth in existing doors comes from deeper penetration with more styles and inventory. He emphasized that expansion into new points of distribution is very deliberate and that the brand's core strategy of maintaining relative scarcity continues to fuel demand and performance, preventing a ceiling.

Janine Stichter asked for elaboration on the company's e-commerce initiatives and investment plans for the online channel for the remainder of the year.

Answer

President of Americas David Kahan identified the membership program as the biggest growth driver for DTC. The member base has grown to over 10 million, up 25% year-over-year, with members spending 20% more on average. He explained that investments are focused on personalized, 'lasered' marketing to this fan base to achieve a higher return on investment.

Janine Stichter from BTIG inquired about performance in newer distribution channels, such as outdoor, professional, and run specialty stores, asking about market penetration and potential for shelf space gains.

Answer

President Americas David Kahan explained that there is immediate adoption of the brand in these new, adjacent channels. He emphasized that the core driver is the footbed, which translates across multiple use occasions (recovery, work, outdoor). As the brand expands into more use occasions, it increases its 'share of closet' with consumers, who on average already own multiple pairs. The strategy is to continue expanding the footbed's presence across these new environments.

Janine Stichter of BTIG asked for an assessment of the current consumer environment compared to previous quarters and sought more detail on the growing lifestyle opportunity for the ExtraTough brand.

Answer

President, CEO & Chairman Jason Brooks described the consumer as 'a little confusing' but noted that sell-through data from retail partners in the work, farm, and outdoor categories remains positive, leading to cautious optimism. CFO & COO Thomas Robertson added that e-commerce data showed no dramatic negative shift following recent price increases. Regarding ExtraTough, Brooks highlighted its expansion into women's and kids' footwear and its growing popularity inland, while Robertson emphasized the growth of the ADB Sport line and its entry into new retail channels.

The analyst inquired about the company's strategy for building brand awareness, future marketing spend, and the consumer response to reduced promotions and potential price increases.

Answer

The company is re-evaluating its marketing funnel to focus more on upper-funnel brand awareness, with plans to reinvest cost savings into marketing as returns improve. The reduction in promotional depth and frequency has led to sequential gross margin improvement in March and April. The company is seeing positive trends in conversion and full-price sales, especially in the retail channel. Price increases are being implemented selectively on unique products to mitigate tariff impacts while being mindful of the overall value equation for the consumer.

Janine Stichter of BTIG asked about Duluth's strategy for building brand awareness, the outlook for marketing spend, and the consumer's response to reduced promotions and potential price increases.

Answer

President & CEO Stephanie Pugliese stated the company is focusing on upper-funnel marketing to drive brand awareness and will reinvest cost savings into marketing as ROI improves. She explained that promotional pullbacks are being carefully balanced with customer retention and that targeted price increases on unique products are mitigating tariff impacts. SVP & CFO Heena Agrawal added that shallower promotions are already yielding positive trends in conversion, full-price sales, and store performance, with sequential improvements seen from March through May.

Janine Stichter asked for more detail on the observation that e-commerce growth is stronger in markets with higher store density. She sought to understand the halo effect and the interplay between store growth and e-commerce performance.

Answer

Co-CEO Neil Blumenthal explained that as store density in a market reaches a critical mass, the channels become synergistic rather than cannibalistic. The physical stores act as powerful billboards, increasing overall brand awareness that benefits both channels. Co-CEO David Gilboa added that once a market is dense, its e-commerce growth often outpaces e-commerce-only markets. He noted that while new customers may start in-store, the e-commerce channel is highly effective for repeat purchases, contributing to strong revenue retention.

Janine Stichter from BTIG asked about the medium-term growth outlook for the e-commerce channel and whether new store customers tend to convert to the online channel for subsequent purchases. She also requested more detail on the expected timeline and benefits of the Versant Health partnership.

Answer

Co-Founder and Co-CEO David Gilboa affirmed the goal of returning e-commerce to growth, noting underlying momentum is stronger than the 1% reported revenue figure suggests. He confirmed that while customers tend to repeat in their initial channel, some cross-channel purchasing occurs. Regarding the Versant Health partnership, he explained it will be a multiyear tailwind as it takes time for members to become aware and use their benefits, with revenue per member expected to increase steadily over time.

Janine Stichter asked for more details on the improving performance at the Champs Sports and WSS banners, questioning what specific strategies are working. She also inquired about demographic trends, particularly regarding the lower-income consumer at WSS.

Answer

EVP and CCO Frank Bracken credited the Champs turnaround to its repositioning toward the 'active athlete' with focused assortments under the 'Sport For Life' platform. For WSS, he noted a strong August drove positive comps but acknowledged continued pressure on its lower-income consumer base (nearly 60% sub-$50k income), which has led to a slowdown in new store investments for that banner.

On behalf of Janine Stichter, an analyst asked how learnings from the new 'Reinvented Retail' concept store in Wayne, NJ, will be applied to future stores and what the expansion plans are. A second question concerned the current macro environment and any observed differences in behavior between lower- and upper-income consumers.

Answer

CEO Mary Dillon acknowledged that consumers face economic pressures but emphasized that sneakers remain a prioritized discretionary purchase, and the Lace Up plan is designed to capture that spend. CCO Frank Bracken explained that the new store concept and the broader Store Refresh program share the same goals: improving the customer journey, enhancing brand storytelling, and elevating employee service. Learnings from the new concept, which is showing strong results, are directly informing the refresh program that will scale through 2024 and 2025.

Asked about the increased use of markdowns and promotions, questioning whether it was driven by the need to clear underperforming inventory or by liquidity needs, and if this trend would continue into Q4. Also requested an update on physical retail performance.

Answer

The increased markdowns in Q3 were driven by a combination of needing to reset the separates and shoe business and generating liquidity. This promotional activity is expected to continue through Q4 and into early 2025. Regarding retail, the wholesale business is performing well with double-digit comps, and the Melrose store is a successful brand activation center, but there are no near-term plans for additional stores.

Janine Stichter from BTIG inquired about the medium-term gross margin outlook, asking about potential offsets to tailwinds like D2C mix, lower airfreight, and price increases.

Answer

An executive, likely CFO Martin Hoffmann, affirmed the 60%+ gross margin outlook remains valid, noting that while the current environment is stable, they always account for potential supply chain disruptions. He identified several sustainable drivers for high margins: strategic price increases like the upcoming Cloud 6, ongoing economies of scale in manufacturing, and the continued over-proportional growth of the high-margin D2C channel.