Lauren Ng

Lauren Ng asked about Acushnet's 2026 product calendar, specifically the innovation pipeline for new driver and wedge launches, and expectations for the U.S. market in 2026, including volume versus price dynamics.

Answer

President and CEO David Maher detailed the accelerated driver launch timing and compared the 2026 product pipeline to 2024. He also discussed the healthy U.S. market fundamentals, strong consumer base, and current inventory levels. EVP and CFO Sean Sullivan added insights on golf ball and club business performance relative to prior years.

Lauren Ng asked about Acushnet's 2026 product calendar, specifically seeking more color on the innovation pipeline for new driver and wedge launches, and also inquired about expectations for the U.S. market in 2026, including thoughts on volume versus price for key categories.

Answer

Sean Sullivan, EVP and CFO, clarified the 2-year product introduction cycle for 2026, noting the acceleration of the new driver launch to late June, with more details to follow. David Maher, President and CEO, highlighted the U.S. market's health, driven by a strong consumer base and increased golfer participation over several years. Sean Sullivan added that for 2026, they expect flat to down volumes in the golf ball business (not a Pro V1 launch year) but good growth from the club business with the metals launch compared to 2024.

Lauren Ng asked why the comp guidance for Q2 and the implied second half doesn't suggest a material improvement in trends, given the positive initiatives. She also sought clarification on the potential comp run rate for Sally Ignited stores based on current remodels.

Answer

Denise Paulonis, President and CEO, explained that the Q2 comp guidance reflects easier comparisons from last year, but the company remains optimistic for the second half, expecting continued momentum from initiatives like LCOD, personalization, performance marketing, digital, marketplaces, and innovation. She noted the guidance is appropriately guarded due to ongoing macro uncertainties. For Sally Ignited, she stated that a specific comp run rate has not been provided yet, but the company is evaluating a rollout pace of 100-200 stores per year for FY27, anticipating a favorable tailwind over a multi-year horizon as the program scales.

Lauren Ng asked for clarification on the Q2 comp guidance and the implied stability of trends in the second half of fiscal 2026, questioning why trends shouldn't materially improve given positive initiatives, and sought details on the potential comp run rate and rollout pace for Sally Ignited stores.

Answer

Denise Paulonis, President and CEO, explained that the full-year comp guidance of flat to up 1% reflects Q2 benefiting from easier prior-year comparisons. She expressed optimism for the second half, anticipating continued momentum from customer base growth, new categories, and initiatives like LCOD, personalization, and digital, while maintaining a guarded outlook due to ongoing macro uncertainties. Regarding Sally Ignited, Paulonis stated that specific comp run rate information is not yet provided, but they are evaluating a rollout pace of 100-200 stores per year and expect a favorable tailwind over a multi-year horizon.

Lauren Ng asked for expectations on the Q4 comparable store sales, clarifying the acceleration mentioned, and sought to size the impact of tariff-related expenses on Q3 gross margin, also asking if Q4 gross margin contraction is primarily tariff-driven.

Answer

Robert Helm (EVP and CFO) clarified that Q4 comps are running ahead of guidance, not necessarily accelerating, driven by strong mid-single-digit transaction trends and a positive low single-digit AUR (compared to negative high single-digits in Q3). He stated that Q4 gross margin was always planned in the mid-39% range, with tailwinds from closeouts, lower markdowns/shrink, and price adjustments offsetting supply chain costs and tariffs. He did not explicitly size the Q3 tariff impact but implied it was a factor in the overall gross margin.

Lauren Ng asked for clarification on expectations for the Q4 comparable store sales, specifically how quarter-to-date trends relate to the guidance and what drives the anticipated acceleration. She also inquired about the impact of tariff-related expenses on Q3 gross margin and whether tariffs are the primary reason for the expected meaningful contraction in Q4 gross margin year-over-year.

Answer

EVP and CFO Robert Helm clarified that Q4 comps are currently running ahead of guidance quarter-to-date, not necessarily needing acceleration. Confidence stems from consistent mid-single-digit transaction trends throughout the year and a positive low single-digit average unit retail (AUR) in Q4, a shift from the negative high single-digits in Q3. He stated that Q4 gross margin was historically planned in the mid-39% range. He noted tailwinds like lower markdowns, shrink benefits, and the ability to adjust prices on tariff-impacted products, which contribute to confidence in delivering Q4 gross margin, while maintaining conservative guidance. President and CEO Eric van der Valk added that Ollie's manages price gaps and acts as a fast follower; if tariffs decrease, the market adjusts prices, and Ollie's will adjust to maintain price gaps, not expecting an unexpected positive gross margin win.

Lauren Ng, on for Simeon Gutman, asked what specifically drove the higher merchandise margin (better buying vs. product mix) and requested a breakdown of the 5% Q2 comp between ramping new stores and mature stores.

Answer

EVP and CFO Robert Helm attributed the higher merchandise margin primarily to strong deal flow with better-than-expected margins and lower shrink, noting that product mix was in line with expectations. Regarding the comp drivers, he stated that the company saw broad-based strength across all store cohorts and vintages, rather than it being driven by a specific group.

Lauren Ng of Morgan Stanley, on for Simeon Gutman, asked how the company's high leverage ratio is affecting its ability to execute its strategic plan and inquired about any supply chain constraints.

Answer

Interim CFO & Treasurer Tony Iskander asserted that reducing debt is the top capital priority and that the company maintains sufficient liquidity, having recently paid off its revolver. CEO Jason McDonell clarified that recent inventory reductions were driven by internal optimization efforts, not external supply issues, and were achieved while simultaneously improving in-stock rates.

Lauren Ng, on behalf of Simeon Gutman at Morgan Stanley, asked to reconcile positive category sentiment with the updated comp guidance and inquired about the gross margin cadence from the new marketplace.

Answer

CFO Matt Bilunas explained the updated guidance of -1% to +1% incorporates Q1 trends and then layers on the estimated impact from tariffs. He stated that margin benefits from the marketplace and ads are expected in the second half of the year, with the marketplace being accretive to the full-year operating income rate.

Lauren Ng, on behalf of Simeon Gutman at Morgan Stanley, asked about the drivers of the strong 5% domestic comp, questioning the split between company initiatives and market demand, and asked about future focus areas for commercial growth.

Answer

CEO Philip Daniele attributed the vast majority of the sales growth to company-specific initiatives, such as improved execution, the expansion of hubs and mega hubs, and enhanced product assortments, which are driving market share gains. He reiterated that the commercial strategy remains focused on local assortments, hub deployment, and improving delivery speed.

Lauren Ng, on behalf of Simeon Gutman at Morgan Stanley, asked about the drivers behind the strong 5% domestic comp, seeking to understand the split between company initiatives and underlying market demand, and inquired about future focus areas for the commercial business.

Answer

CEO Philip Daniele attributed the vast majority of the sales growth to company-specific initiatives, including improved execution, the rollout of hubs and mega hubs, and enhanced product assortments. For the commercial business, he reiterated the focus on improving local store assortments, deploying hubs, and refining delivery strategies to reduce fulfillment times.

Lauren Ng of Morgan Stanley, on for Simeon Gutman, asked about the drivers of the consumables segment improvement, specifically if it was ticket-driven or from new customers.

Answer

Executive Joel Anderson attributed the consumables strength to fundamental retail execution, including better in-stock positions from a new inventory system, improved inventory flow, and competitive pricing. CFO Brian LaRose added that the fresh and frozen food category was a standout performer, growing 20% year-over-year.