Jolie Wasserman

Jolie Wasserman asked about DICK'S ability to influence Foot Locker's inventory orders, confirming full impact by Q3 2026, and any slighter impact in H1 2026, including the percentage of spring ordered. She also inquired about the Q3 gross margin for Core DICK'S, specifically regarding the promotional environment, tariff costs, and the Game Changer business.

Answer

Ed Stack, Executive Chairman, confirmed some impact on Q1 and Q2 inventory is possible with brand cooperation, but Q3 2026 will see the full impact of the new team's buying. Navdeep Gupta, CFO, detailed DICK'S Q3 gross margin expansion of 27 basis points, noting participation in select promotions, tariff impact, and a slight unfavorable mix from strong license business, while maintaining confidence in full-year gross margin expansion.

Jolie Wasserman followed up on DICK'S ability to influence Foot Locker's inventory orders, confirming that the full effect won't be seen until Q3 2026, but asking about any potential impact in the first half, specifically on spring orders since the acquisition and how that flows into fall. She also inquired about the core DICK'S Q3 gross margin, asking about the promotional environment, tariff costs, and contributions from businesses like GameChanger.

Answer

Ed Stack, Executive Chairman, confirmed that some impact on Q1 and Q2 inventory is possible, with more influence on Q2, as they work with brands to secure needed product, but Q3 will show the 'big difference' with their team fully buying and merchandising. Navdeep Gupta, CFO, reported a 27 basis points gross margin expansion for DICK'S in Q3, noting participation in select back-to-school promotions, inclusion of tariff impacts, and a slight unfavorable mix impact from the strong license business. He expressed confidence in full-year and back-half gross margin expansion, driven by merchandising capabilities, GameChanger, and DICK'S Media Network.

Jolie Wasserman, on for Christopher Horvers, asked for the updated view on Q4 merchandise margin, how Q3 shrink performed, and about the sales cadence during the quarter considering factors like weather and the election.

Answer

CFO Navdeep Gupta stated the expectation is for merchandise margin to increase again in Q4, and noted that Q3 shrink results came in slightly better than or in line with expectations. President and CEO Lauren Hobart clarified that despite warmer weather late in the quarter, it did not have a material impact, every month was strong, and no meaningful impact was seen from the election.

Jolie Wasserman asked about Wayfair's consumer outlook for the holiday season, the rationale behind Way Day's timing, and whether spending is expected to be more spread out or driven by urgency due to potential 232 tariffs.

Answer

Niraj Shah (Co-founder, CEO, and Co-Chairman) clarified that Wayfair has not observed significant consumer behavior changes due to tariffs, noting only minor, short-lived pull-forwards. He explained that Way Day's timing reverted to its traditional late October slot (similar to 2022 and 2023) as it's considered more optimal, suggesting holiday shopping patterns will likely be similar to past years. Wasserman also inquired about Wayfair's 2026 outlook, including the ability to lap accelerated share gains, the role of price increases, and strategies for gross margin and advertising margin expansions. Shah outlined Wayfair's 2026 focus on driving further top and bottom-line growth, with EBITDA growth outpacing revenue, attributing this to compounding benefits from improving the core recipe (price, selection, speed, availability), scaling new programs (physical retail, Wayfair Rewards, Wayfair Verified), and leveraging technology investments post-replatforming. Kate Gulliver (CFO and Chief Administrative Officer) emphasized optimizing contribution margin (gross margin less customer service/merchant fees and advertising) to ensure strong flow-through to adjusted EBITDA dollars, given the relatively constant SOTGNA line.

Jolie Wasserman asked about Wayfair's consumer expectations for the holiday season, the strategic timing of Way Day, and whether potential 232 tariffs influenced consumer spending patterns. She also inquired about Wayfair's 2026 outlook, including strategies for sustaining accelerated share gains, the role of price increases, and plans for expanding gross margin and advertising margin.

Answer

Niraj Shah, Co-founder, CEO, and Co-Chairman, clarified that Way Day's timing reverted to its traditional late October slot for optimal results and denied significant tariff-induced consumer behavior. He outlined three pillars for 2026 growth: continuous improvement of the core recipe, scaling new programs, and leveraging technology investments. Kate Gulliver, CFO and Chief Administrative Officer, emphasized optimizing contribution margin to drive EBITDA dollar growth faster than revenue, highlighting the interplay between gross margin and marketing spend.

Jolie Wasserman of Stifel inquired about the quarter-to-date holiday performance, including Black Friday and Cyber Week, and how it aligns with Q4 guidance given the compressed holiday calendar. She also asked for a breakdown of the Q3 gross margin decline drivers and the outlook for freight costs in Q4.

Answer

CEO Steve Lawrence noted that after a slow start to November, business accelerated significantly for Black Friday, which was the largest sales day in company history. He explained the calendar shift's impact and confirmed they are tracking to their forecast. CFO Carl Ford detailed the Q4 guidance, expecting a -4.5% comp and a 50 basis point gross margin improvement. Ford also quantified the Q3 margin decline, attributing 30 basis points to merchandise mix (strong outdoor sales) and 20 basis points to supply chain costs, which are not expected to persist at the same level in Q4.