Matt Boss

Matt Boss of JPMorgan Chase & Co. inquired about the primary drivers of Ralph Lauren's recent outperformance, their sustainability, and the factors needed for a more positive second-half consumer outlook. He also asked about the expected drivers of gross margin in the latter half of the year.

Answer

President & CEO Patrice Louvet attributed the durable strength to brand desirability, a broad product portfolio, and the key city ecosystem model, while remaining cautious on the second half pending consumer reaction to inflation. CFO Justin Picicci explained that while first-half gross margin is strong, the second half will see pressure from tariffs and cost inflation, though tailwinds like AUR growth and lower promotions remain.

Matt Boss inquired about the specific drivers behind Coach's 21% revenue growth, representing an 800 basis point acceleration on a two-year stack, and the sequential acceleration across all geographies. He also asked why the back-half guidance implies moderation on that two-year stack.

Answer

Scott Roe (CFO and COO, Tapestry) attributed the significant inflection to strong unit growth, new customer acquisition (transacting at higher Average Unit Retail or AURs), and broad geographic expansion, particularly in North America, China, and Europe. Todd Kahn (CEO and Brand President of Coach) reinforced confidence in the brand's strong positioning, noting the prudent approach to the back-half guidance despite positive current trends.

Matt Boss of JPMorgan Chase & Co. inquired about the specific drivers behind Coach's 21% revenue growth and 800 basis points acceleration on a two-year stack, asking for a breakdown of the material inflection and the rationale for embedded moderation in the back-half guidance.

Answer

CFO Scott Roe explained the inflection was driven by significant unit growth alongside mid-teens AUR, strong new customer acquisition (over 2 million), and broad geographic expansion, particularly in North America, China, and Europe. Coach CEO Todd Kahn reinforced confidence in the brand's positioning, noting the conservative guidance approach for the balance of the year.

Matt Boss asked about the drivers behind the inflection in unit sales at Coach despite lower promotions, the future interplay between AUR and units, and the expected phasing of gross margin throughout fiscal 2026.

Answer

CEO Joanne Crevoiserat noted that Coach has reached a 'tipping point' in its brand-building efforts. Coach CEO Todd Kahn added that while AUR will be the primary growth driver, unit growth is also expected, supported by plans for physical store expansion. CFO & COO Scott Roe detailed that gross margin will be stronger in the first half before tariff impacts are fully reflected in the second half, with Q1 gross margin guided to increase by approximately 100 basis points.

Matt Boss from JPMorgan Chase & Co. asked for elaboration on the 'ample opportunity remaining' for net yields, margins, and returns, seeking a ranking of improvement areas, and inquired about constraints on achieving the cost algorithm (costs growing below yields) for 2026 and multi-year.

Answer

CEO Josh Weinstein indicated that the 13% ROIC is not a ceiling, with plans to provide longer-term targets in Q2 2026, expecting continued yield and margin improvement. CFO David Bernstein affirmed the long-term expectation for yields to grow faster than costs, leveraging scale and cost-saving initiatives, despite the challenge of low capacity growth impacting unit costs.

Matt Boss of JPMorgan Chase & Co. asked about current consumer behavior across income cohorts and plans to amplify value, while also seeking an update on the progress of shrink recovery and other multi-year gross margin drivers.

Answer

CEO Todd Vasos described the consumer as resilient and value-seeking, noting accelerating trade-in from all income levels. He highlighted DG's value proposition through everyday low prices and over 2,000 items at $1 or less. EVP & CFO Kelly Dilts added that shrink recovery is progressing well due to multiple initiatives and that damages are also improving, reaffirming confidence in long-term margin drivers like the DG Media Network.

Matt Boss inquired about the improving comparable sales cadence during the second quarter, trends seen in August, and the current state of deal flow amid tariff disruptions.

Answer

President and CEO Eric van der Valk stated that deal flow remains strong, thriving on market disruption from tariffs and retail bankruptcies, which has created additional buying opportunities. EVP and CFO Robert Helm detailed the quarterly comp cadence, noting that May was flat, June accelerated, and July was the strongest month of the quarter.

Matt Boss of JPMorgan Chase & Co. questioned the conservative back-half comparable sales guidance of 0-2% following a strong 5% comp in Q2, asking if this reflects the company's standard cautious playbook or a specific concern. He also requested details on the updated fall guidance, including the impact of tariffs and the expected difference in operating margin between Q3 and Q4.

Answer

CEO Michael O'Sullivan confirmed the guidance reflects their 'standard playbook' of planning cautiously and chasing upside, supported by strong merchandise supply and reserve inventory, while acknowledging external risks like weather and tariffs. CFO Kristin Wolff elaborated that the fall guidance incorporates incremental tariff pressure, which is mostly offset by actions like vendor negotiations and expense savings. She noted Q4 is expected to have higher EBIT expansion than Q3 due to greater SG&A leverage.

Matt Boss of JPMorgan Chase & Co. asked for an assessment of the global consumer's health, recent sales trends in August, and for an elaboration on the statement that 'the best is yet to come' for the Urban Outfitters brand.

Answer

CEO & Chairman Richard Hayne described the consumer as optimistic, citing positive Q2 trends in traffic, transactions, and conversion. Shay Jensen, President of Urban Outfitters Brand of North America, explained that 'the best is yet to come' refers to the brand's strong momentum and confidence in its strategy to drive continued sequential improvement on its path to profitability.

Matt Boss from JPMorgan Chase & Co. asked for a breakdown of the comparable sales inflection between traffic and basket size, and for an update on quarter-to-date trends in August and back-to-school performance.

Answer

CEO Winnie Park attributed the strong comp, particularly the 8.7% transaction growth, to new customer acquisition and repeat visits, boosted by social media marketing. Interim CFO & COO Kenneth Bull declined to comment on specific intra-quarter trends but stated that management feels good about the business and the current guidance is appropriate.

Matt Boss from JPMorgan Chase & Co. asked about the source of the strong comparable sales, questioning if it was driven by new customer acquisition or existing customer basket building, and about opportunities in the back half.

Answer

CEO Winnie Park confirmed that the 6.2% transaction growth was driven by both new and returning customers, alongside strong conversion. For the second half, she highlighted plans to amplify trends in beauty, novelty food, and style, while maintaining better in-stock positions. COO Ken Bull added that investments in store labor and process simplification will continue.

Matt Boss of JPMorgan Chase & Co. questioned the traffic cadence during Q2, early back-to-school trends, the specific reasons for the Abercrombie brand's miss, and the outlook for its comparable sales progression. He also asked for a breakdown of Q3 gross margin drivers.

Answer

SVP & CFO Robert Ball described traffic as consistently strong across all channels and brands, with momentum carrying into the back-to-school season. CEO & Director Fran Horowitz identified lower AUR, due to clearing carryover inventory, as the primary reason for Abercrombie's Q2 miss. Robert Ball then detailed the Q3 margin outlook, highlighting a ~200 bps headwind from tariffs and over 100 bps of deleverage from increased marketing.

Matt Boss inquired about the progression of customer traffic during Q1 and into May for both Abercrombie and Hollister, the current level of Abercrombie's end-of-season carryover inventory, the drivers for Q2 gross margin, and the multi-year operating margin outlook.

Answer

CEO Fran Horowitz stated that traffic was nice for Abercrombie and strong for Hollister throughout the quarter. CFO Robert Ball clarified that while some carryover inventory remains, levels are below 2023 and considered normalized compared to the abnormally low levels in 2024. For Q2 gross margin, he noted continued but lessening pressure from freight and carryover. Regarding multi-year margins, he emphasized the focus on long-term growth and the strength of the current 12.5% to 13.5% guided range.

Matt Boss questioned the traffic progression during Q1 and into May for both Abercrombie and Hollister, and asked about the current level of end-of-season carryover inventory at Abercrombie. He also asked for a breakdown of Q2 gross margin drivers and the multi-year operating margin outlook.

Answer

CEO Fran Horowitz stated that traffic was strong for both brands, with Abercrombie's sales issue being AUR compression from carryover inventory, not a lack of customer interest. SVP & CFO Robert Ball clarified that carryover levels are now considered normalized and below 2023 levels. For Q2, he noted continued but lessening pressure from freight and carryover, while affirming the company's focus on long-term growth and the strength of the 12.5%-13.5% operating margin guide.

Matt Boss of JPMorgan Chase & Co. asked for an update on customer response to new golf club and ball launches and the company's visibility into its low single-digit back-half revenue forecast. He also questioned the gross margin and operating expense outlook for the second half.

Answer

President & CEO David Maher expressed satisfaction with new product launches like the Pro V1, noting strong sell-through and share trends. He said the back-half outlook is supported by the new T-series iron launch, order books, and healthy inventory levels. CFO Sean Sullivan added that while second-half gross margins will be impacted by approximately $30 million in tariffs, the company is pleased with the overall profile and will continue to invest in growth, with operating expenses also reflecting the costs of a voluntary retirement program.

Matt Boss asked for a high-level assessment of the golf industry's health and the drivers of the improved golf equipment forecast. He also questioned if Topgolf's value proposition is now correctly positioned and what is needed to achieve positive comps.

Answer

President & CEO Chip Brewer described the golf equipment business as very healthy, particularly in the U.S., with an engaged consumer and low-single-digit sell-through growth. Topgolf CEO Artie Starrs stated that while he is encouraged by the immediate positive traffic response to value initiatives, he is not yet providing a specific date for a return to positive comps, emphasizing that momentum is building.

Matt Boss of JPMorgan Chase & Co. asked for details on Michael Kors' recent product performance, including sell-through trends for new launches in both direct-to-consumer and wholesale channels, the status of the product assortment for the second half of the year, and any early signs of demand elasticity or pricing power.

Answer

Chairman & CEO John Idol explained that strategic shifts in marketing, including the 'Hotel Stories' campaign and increased use of influencers, are driving positive consumer engagement and a shift in brand affinity. He noted that AURs in the full-price channel turned positive for the first time in three years, and sequential improvements in full-price store comps are continuing. Idol highlighted that while wholesale is improving, the focus has been on correcting design and pricing issues, which is now showing results in stronger full-price sell-throughs for new handbag styles. He also mentioned the forward-looking consumer data for the fall season appears even stronger.

Matt Boss of JPMorgan Chase & Co. asked for elaboration on the accelerating demand trends, including July bookings, and inquired about Royal Caribbean's long-term offensive strategy to grow its share of the $2 trillion global vacation market. He also asked about the assumptions for close-in demand embedded in the second-half guidance.

Answer

President & CEO Jason Liberty highlighted a significant acceleration in close-in demand, driven by a financially healthy consumer with strong confidence. He detailed an offensive strategy centered on increasing customer repetition and lifetime value by investing in new ships, private destinations like Perfect Day and Royal Beach Clubs, expanding into new experiences like river cruising, and leveraging a digital commercial platform with AI. CFO Naftali Holtz added that the current guidance does not factor in further acceleration of close-in demand, which represents potential upside. He reiterated that the company is well-positioned to achieve its 'Perfecta' targets, with share buybacks offering a supplemental return not yet factored into those plans.

Matt Boss of JPMorgan Chase & Co. inquired about the key drivers behind Levi's current demand strength, whether momentum has moderated, the extent of market share gains, and the structural changes supporting the significant gross margin improvement.

Answer

President & CEO Michelle Gass attributed the broad-based growth to the successful pivot to a DTC-first model and a full lifestyle brand, highlighting product resonance and strong brand marketing. EVP & CFO Harmit Singh explained that record gross margins are structurally driven by a better mix (DTC, women's, international), a narrowed brand focus, improved assortment productivity, and higher full-price sales, stating "we're not done yet."