Mark Altschwager • Robert W. Baird & Co.

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Mehdi Bouyakhf, President of EMEA, noted that DTC channels see faster adoption of expansionary categories and that new stores deliver higher ASP and units per transaction. CFO Ivica Krolo addressed the guidance, stating the range reflects the significant and hard-to-predict volatility in currency exchange rates, which is the primary unknown factor.

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CFO Ivica Krolo affirmed that Birkenstock will fully offset the 2025 tariff impact. He outlined a multi-pronged strategy that includes leveraging pricing flexibility on a global scale, thanks to strong brand equity, and driving efficiencies across its vertically integrated value chain. He reiterated that the company views the situation as an opportunity to gain market share.

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VP, Global Finance Alexander Hoff attributed the Q1 EBITDA margin beat primarily to channel mix, as the higher-margin B2B channel grew faster. He cautioned against extrapolating this for the full year, reiterating the guidance of up to 50 bps expansion. Hoff confirmed the new facility's impact was not incremental in Q1 and expects a positive impact on gross margin from factory utilization in the second half of the year, leading to a modest full-year improvement.

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Alexander Hoff, VP of Global Finance, confirmed that for fiscal 2025, revenue growth is expected to be driven approximately two-thirds by unit growth and one-third by ASP growth. He elaborated that the ASP increase will continue to be driven by a combination of like-for-like pricing and favorable product mix, as consumers trade up to higher-priced items like closed-toe silhouettes and premium materials.

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President and CEO Rati Sahi Levesque stated that a high-single to low-double-digit (8-12%) growth rate remains the 'optimal' target for planning purposes to ensure profitable growth. CFO Ajay Gopal noted that full-year adjusted EBITDA margin guidance implies 4-5%, a significant step-up, driven by healthy gross margins, AI-driven OpEx leverage, and fixed cost leverage. He sees a path to 15-20% EBITDA margins in the medium term.

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CEO Rati Levesque expressed high confidence in Q4, citing healthy supply driven by the company's 'growth playbook' (sales, marketing, retail). She affirmed the current strategy is working and will not change, focusing on the profitable consignment model. CFO Ajay Gopal addressed gross margins, stating that while Q3's 74.9% was a record high due to a favorable consignment mix, the company feels they are in the 'right place' and expects margins to remain in a similar range.

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CFO Steven Miller confirmed that the growth acceleration seen from May through July was omnichannel, affecting both retail and e-commerce, and driven partly by recent pricing changes. Co-CEO Dave Gilboa explained that 'Warby Advisor' is an AI-powered feature that replicates the in-store personalized styling experience online. He noted its strong initial adoption is a key factor enabling the company to sunset its Home Try-On program and drive direct e-commerce purchases.

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Co-CEO David Gilboa stated the guidance revision reflects a conservative approach due to macroeconomic uncertainty potentially elongating purchase cycles. CFO Steve Miller clarified the new 13-15% growth range's midpoint represents a continuation of recent trends. Miller also projected a similar EBITDA margin shape to the prior year, with Q1 being the highest, and reaffirmed the company's commitment to its long-term target of 100-200 basis points of annual margin improvement.

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Co-CEO Neil Blumenthal explained that following a balanced 2024, the company expects a significant portion of 2025 growth to be driven by accelerating active customer growth. Regarding the Versant integration, he noted that revenue per member typically increases over a multi-year period and that early trends are tracking in line with or ahead of previous carrier rollouts, representing a long-term opportunity. Co-CEO David Gilboa added that insurance customers tend to be new to the brand and have higher initial basket values, making it an efficient acquisition channel.

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SVP and CFO Steve Miller detailed that the gross margin pressure was in line with expectations and driven by three main factors: higher occupancy costs from opening 13 new stores, deleverage from scaling the lower-margin contact lens and eye exam businesses, and a strong hiring quarter for optometrists. Co-Founder and Co-CEO Neil Blumenthal stated it's too early to assess a significant change in industry demand, but Warby Parker remains focused on outperforming the market through its value proposition and customer experience.

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CEO & Chairman Tarang Amin reported that retailer acceptance of the price increase has been good, partly because e.l.f. is selective with pricing and other brands are expected to follow suit. Senior VP & CFO Mandy Fields added that the company is waiting to observe the actual consumer elasticity before determining if the price increase fully offsets the tariff impact.

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Chairman and CEO Tarang Amin reported that retailers understand the modest $1 price increase and that consumer feedback has been positive. SVP & CFO Mandy Fields clarified that the company will be lapping outsized international growth from new market launches throughout the first half of the fiscal year, not just in Q1.

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CFO Mandy Fields confirmed that the company has not heard of any retailer destocking plans and does not expect any, as e.l.f. remains the most productive brand its retail partners carry. She explained that while the P&L has flexibility, particularly in marketing spend and supplier cost-saving programs, the primary focus remains on investing in people and infrastructure to capitalize on long-term white space opportunities.

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CEO Tarang Amin stated that international growth remains consistent and is driven by strong underlying consumption in new markets, not just initial pipeline fill. CFO Mandy Fields reiterated the full second-half revenue growth outlook of 16% to 20% but declined to provide specific quarterly guidance for Q3 versus Q4, pointing to the building blocks of share gains, pipeline, and international momentum.

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COO Jubran Tanious clarified the store target refinement was not due to any systemic issue but a focus on high-quality deals. CFO Michael Maher described labor cost growth as typical and in line with long-term averages. CEO Mark Walsh added that while they are constantly testing production innovations, none are ready for a broad rollout yet.

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CFO Michael Maher stated that while pleased with the start to the year, macro pressures and policy uncertainty warrant a cautious approach, hence reaffirming guidance. Executive Jubran Tanious described on-site donation growth as stable and robust, not necessarily an acceleration. Michael Maher added that the lower sales yield is a result of processing more volume cost-effectively, which is still profitable at the margin.

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Executive Michael Maher provided a bridge for the 2025 EBITDA outlook, attributing the pressure to a $10 million headwind from new store investments and a $6.5 million headwind from a weaker Canadian dollar. He explained that at the guidance midpoint, core EBITDA is flat on a 1.5% comp. For the long-term, he reiterated a model of high single-digit revenue growth and low single-digit comps, with 2026 expected to be an earnings inflection point as new stores mature.

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CFO Michael Maher stated the guidance was narrowed to reflect softer-than-expected Q3 results in Canada. The Q4 outlook assumes stable macro conditions and continued low-single-digit comps in the U.S., with the guidance range reflecting uncertainty in Canada's performance. Executive Jubran Tanious addressed the production question, explaining that they manage it based on transaction volumes and acknowledged they had pulled back too aggressively in Canada. He stressed that future adjustments will be more gradual to better balance profitability with the need for fresh inventory.

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CFO Eva Boratto stated that more collaborations are planned for the second half of the year. While the Disney Princess collaboration was the most expansive to date, she described the upcoming partnerships as 'meaningful enough' to be key contributors to achieving the full-year growth target of 1% to 3%. More specific details are expected to be shared in the future.

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CFO Eva Boratto explained that for the full year, international net sales are expected to grow in the mid-single-digit range with no significant margin impact. However, Q1 will see an outsized impact, with double-digit reported net sales growth due to shipment timing, which will act as a headwind to the Q1 gross margin rate.

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CFO Eva Boratto stated that gross margin was in line with expectations, as the company was lapping a significant 140 basis point expansion from the prior year and had strategically planned for incremental promotions. She reaffirmed that the company's long-term targets remain a 45% gross margin and a 20% operating income margin, indicating satisfaction with the progress toward these goals.

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Interim CEO Michael Bender stated that no major strategic shifts are planned, emphasizing that the turnaround will take time and requires focusing on value for a stressed consumer. CFO Jill Timm added that guidance was held due to macroeconomic uncertainty. She noted that tariff impacts are being mitigated through supply chain diversification and adjusted orders, with these factors already incorporated into the full-year outlook.

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CEO Ashley Buchanan stated that Kohl's has a significant opportunity to improve by better serving its loyal customer base, which has been alienated by recent strategic shifts. She emphasized that the turnaround will take time and outlined three immediate priorities: curating a balanced assortment, re-establishing value leadership, and creating a frictionless omnichannel experience. Buchanan noted that while attracting new customers was important, it came at the cost of deemphasizing core categories and proprietary brands. Regarding margins, she explained that improving the proprietary brand mix provides fuel for price productivity and that there is an opportunity to optimize promotional spending by re-evaluating which brands are excluded from coupons, a list that has grown too large and created customer frustration.

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CEO Tom Kingsbury and Independent Chair Michael Bender affirmed the transition timing was based on a robust succession plan and Tom's two-year commitment. They stated the new CEO, Ashley Buchanan, is aligned with the current strategy. CFO Jill Timm clarified that the co-brand card offers a significant revenue opportunity, particularly in 2025, by attracting younger customers and generating interest-based income, which would be an upside if proposed late-fee regulations do not take effect.

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President & CEO Kecia Steelman attributed the growth to digital enhancements like Splitcart, BOPIS, and ShopMyStore, as well as high engagement on the mobile app, which drives over 60% of e-commerce sales. CFO Paula Oyibo added that the company anticipated this growth and has been focused on improving channel profitability through various fulfillment options, so the channel mix shift is not the largest driver of gross margin pressure.

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CEO Kecia Steelman stated that the beauty category is expected to grow in the low to mid-single-digit range. CFO Paula Oyibo added that the company's guidance assumes a rational promotional environment will continue, similar to what was observed in 2024.

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Executive James Conroy acknowledged a potential short-term production gap from China but expressed confidence in managing through it with available closeouts and receipt planning. He affirmed that the company will not pause its long-term, expense-neutral vision to contemporize the brand and improve the store experience, viewing it as an evolutionary change.

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Executive James Conroy acknowledged a potential short-term influx of closeouts followed by a production gap from China, but expressed confidence in managing inventory flow. He affirmed that longer-term strategic plans to enhance the brand and store experience will proceed in an evolutionary, expense-neutral manner and will not be put on pause despite the current environment.

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EVP and CFO Adam Orvos explained that 2024 was an 'investment year' for branded goods, and 2025 will be about learning, leading to the neutral margin guide. CEO James Conroy confirmed that softness in mainstream retail is creating more closeout opportunities, which should benefit the company's value proposition and margins going forward.

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CEO Barbara Rentler stated her advisory role will be heavily focused on merchandising strategy and ensuring a smooth transition for the incoming CEO, Jim Conroy. She clarified that she does not foresee any changes to the core brand strategy, as it is fundamental to gaining market share, though she expects it will continue to be refined.

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Group President and COO Michael Hartshorn explained that the Q2 earnings beat was flowed through to the full-year guidance. He highlighted that the company is ahead of its initial projections on various expense and cost-saving initiatives, and the expected benefit from these efficiencies in the back half was incorporated into the updated forecast, helping to offset planned merchandise margin pressure.

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Co-President and COO Francis Conforti quantified the markdown benefit as contributing 'about half' of the 204 basis point core gross margin improvement in Q1. Regarding long-term targets, he acknowledged the potential for upside beyond 10% but emphasized the immediate goal is to first achieve and sustain that target before setting a new one. He noted the current full-year plan puts them on a path to a 9.6% operating margin.

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Executive Tricia Smith explained that Anthropologie's store growth is accelerating now due to strong brand momentum and a proven, profitable store model, with a goal of reaching 270 stores globally. For Urban Outfitters, executive Kelly Crago stated the strategy involves closing underperforming or oversized locations to better align with customer population shifts and a target store size of 6,000-8,000 sq. ft. Executive Sheila Harrington added that FP Movement plans to open at least 20 new stores, seeing a long-term potential for over 300 stores in North America.

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Executive Sheila Harrington stated that FP Movement is expected to continue delivering double-digit growth, driven by store expansion and wholesale opportunities. She also noted that the brand is successfully attracting a new customer, distinct from the core Free People shopper, which supports its growth trajectory.

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CEO Richard Hayne directly declined to set specific timelines or financial projections for the Urban Outfitters turnaround. He emphasized that the immediate focus is on executing the new strategy, with the belief that positive results will follow that execution.

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CEO Joanne Crevoiserat stated that the business in Greater China accelerated to mid-single-digit growth, outperforming a pressured market, and that the company sees no signs of anti-American sentiment in its consumer data or business results. Coach CEO Todd Kahn explained that their global strategy is built on the idea that 'a great bag is a great bag everywhere,' with product families like Tabby resonating globally. This allows for concentrated marketing and a more efficient, less regionalized product assortment.

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CEO Joanne Crevoiserat confirmed that digital growth outpaced a slight decline in stores, emphasizing the company's focus on its margin-accretive omnichannel capabilities. On sourcing, CFO & COO Scott Roe highlighted Tapestry's highly diversified and agile supply chain as a key competitive advantage, stating the company is well-versed in managing through changing tariff regimes and has robust mitigation strategies in place.

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CFO Jesse Timmermans clarified that the guidance reflects their 'best estimate' of mitigation efforts, not minimal mitigation. He explained that while they can flex inventory sourcing quickly, they remain optimistic about owned brands, viewing sourcing diversification as more of a 2026 initiative. He also noted that the primary impact on demand is a consumer shift to more accessible price points, affecting Average Order Value (AOV).

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Co-CEO Michael Karanikolas attributed the marketing efficiencies largely to internal initiatives, including AI-powered performance marketing and more efficient brand events. CFO Jesse Timmermans clarified that the 10% G&A growth is on a 'core' basis, excluding prior year non-routine costs, and reflects investments in physical retail, new owned brand launches, and a full year of costs for the Vauthier acquisition.

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Co-CEO Michael Karanikolas attributed the strong performance to the company more fully capitalizing on its brand and market opportunity after several quarters of operational improvements came together. CFO Jesse Timmermans clarified that while optimistic about maintaining double-digit growth, the 20% growth target is a longer-term goal for beyond 2025, advising some caution.

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CFO John Klinger noted that the company does not parse out the specific drivers of gross profit benefit, such as price versus a better buy. CEO Ernie Herrman added that the current retail environment is 'textbook' for TJX, with increased merchandise availability creating more opportunities for buyers to achieve strong mark-on.

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CFO Meghan Frank attributed the Q2 comp variance from Q1 primarily to the timing of the Chinese New Year, highlighting that growth remained very strong at 37% in constant currency. CEO Calvin McDonald added that while monitoring the macro environment, the business remains robust due to its relatively small market size, localized brand-building strategy, and strong performance across all city tiers.

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CFO Meghan Frank attributed the variance in growth rates between Q1 and Q2 primarily to the timing of the Chinese New Year. CEO Calvin McDonald added that while they monitor the macro environment, the business in China remains strong due to its relatively small scale, localized brand-building strategy, and unique wellness positioning. He confirmed they have not seen a material impact on their business.

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