John Keyport

John Keyport questioned the composition of the Q4 same-store sales guide, specifically the online deceleration despite new sites and the stronger retail performance despite storm impacts. He sought clarity on the confidence behind the retail guide, observed recovery since the storms, and the reliance on March's Houston Rodeo activation. He also asked for confirmation that the 50 basis points of buying and occupancy deleverage in Q4 is inclusive of Q1 2027 pull-forward costs, implying an organic sequential improvement.

Answer

CFO Jim Watkins explained that the Q4 guidance for both e-commerce and stores is based on broader trends from the past four months and historical seasonality, not recent storm recovery, as the second storm just hit. He noted that March is a larger volume month due to spring and the Houston Rodeo, contributing to confidence. He confirmed that the 50 basis points of buying and occupancy deleverage in Q4 is inclusive of the Q1 2027 pull-forward costs, and that organically, the deleverage is sequentially better than in Q3, despite the temporary pressure from pre-opening rent for future stores.

John Keyport asked about the composition of the Q4 same-store sales guide, specifically the online deceleration despite new sites, and the clarity behind the stronger retail outlook despite storm impacts. He also inquired about the confidence hinging on March activation around the Houston Rodeo and the sequential improvement in organic buying and occupancy deleverage.

Answer

CFO Jim Watkins explained that confidence in the Q4 guide stems from broader trends and historical seasonality, not recent storm recovery. He noted a shift in Houston Rodeo impact between February and March and that new exclusive brand sites have no marketing slated for the next couple of months. He confirmed that the 4Q deleverage in buying and occupancy costs includes the pull-forward of Q1 FY27 expenses, implying an organic sequential improvement.