Matthew Boss

Matthew Boss asked about Nike's 'middle innings' turnaround, seeking elaboration on areas of progress versus remaining opportunities and overall confidence in winning the game. He also inquired about the components of gross margin, specifically underlying expansion excluding tariffs for Q3, and future progression.

Answer

President and CEO, Elliott Hill, explained that growth drivers come from Win Now Actions and the Sport Offense, highlighting Nike brand growth, Running's market share gains, North America's strong performance, and a healthier base. He noted that different business dimensions are moving at varying speeds, with North America leading and China having the longest road. EVP and CFO, Matthew Friend, detailed margin pressures from transitory and structural headwinds, emphasizing North America's Q2 gross margin resilience despite tariff impacts. He projected Q3 gross margin expansion excluding tariffs, driven by North America's momentum, while noting continued challenges in Greater China and Converse.

Matthew Boss inquired about Nike's "middle innings" turnaround, specifically asking Elliott Hill to elaborate on areas of progress versus remaining opportunities and his confidence in achieving long-term goals. He also asked Matt Friend to detail the components of gross margin, particularly underlying expansion excluding tariffs, and the expected progression moving forward.

Answer

Elliott Hill, President and CEO, Nike, explained that the path to sustainable, profitable growth is driven by Win Now Actions and accelerated by the Sport Offense, highlighting progress in Nike brand growth, Running (over 20% growth), portfolio diversification, North America's 9% growth, and an improved order book. He noted that different business dimensions (brands, product, geographies) are moving at varying speeds, with North America leading and China having the longest road. Matthew Friend, EVP and CFO, Nike, added that gross margins are impacted by transitory and structural headwinds, including tariffs. He pointed to North America's Q2 gross margin decline of 330 basis points despite a 500+ basis point tariff impact as evidence of Win Now Actions working. For Q3, he guided a 175-225 basis point decline, but positive expansion excluding the 315 basis point tariff impact, indicating a recovery of transitory headwinds.

Matthew Boss asked for elaboration on Nike's early wins, such as North America's return to growth and the acceleration in running, and the structural foundation built to expand this strategy across the portfolio.

Answer

Elliott Hill, President and CEO, explained that early wins stem from 'Win Now' actions focusing on innovative product, emotional storytelling, and an integrated marketplace, yielding success in running (up 20%), wholesale, and North America. He detailed the 'Sport Offense' as a new organizational structure, aligning cross-functional teams by brand, sport, country, and channel to drive insights and competitiveness, placing the athlete at the center.

Matthew Boss asked for elaboration on Nike's early wins, particularly the return to growth in North America and the acceleration in running. He also inquired about the structural foundation built to expand this strategy to other parts of the portfolio.

Answer

President and CEO Elliott Hill explained the 'win-now' actions, focusing on athlete-centric, innovative product, emotional storytelling, integrated marketplace, and ground game, which drove progress in running (up 20%), wholesale, and North America. He acknowledged ongoing work in Greater China, Nike Direct digital commerce, and sportswear. Elliott Hill then introduced the 'sport offense,' activated in September, which reorganizes the company by brand, sport, country, and channel to gain deeper athlete and consumer insights, enhance competitiveness, and strengthen consumer connectivity, ultimately putting sport and the athlete back at the center.

Matthew Boss of JPMorgan Chase & Co. inquired about the accelerated actions under the 'sport offense' realignment, the phasing of innovation into the second half of fiscal 2026, and the expected revenue cadence for the upcoming year.

Answer

President & CEO Elliot Hill detailed the 'sport offense' strategy, emphasizing a relentless flow of innovative products across Nike, Jordan, and Converse, highlighting running's success with the Vomero franchise. CFO Matt Friend explained that Q1 revenue is expected to be down mid-single digits due to headwinds from classic franchises and inventory liquidation, which will be concentrated in the first half. He noted that improving wholesale order books signal a positive trend for the second half.

Matthew Boss asked management to rank the opportunities within its 'fields of play' and to provide a reasonable timeline for realigning inventory to a pull market and returning to sustainable growth.

Answer

President and CEO Elliott Hill identified five key focus areas: running, basketball, global football (soccer), training, and sportswear. He explained the strategy is to segment each by men's, women's, and kids to unlock incremental growth. While he did not provide a specific timeline, he expressed confidence that this offense, which allows the brand to show up authentically by sport or by gender, will drive future growth.

Matthew Boss with JPMorgan Chase & Co. inquired about the rationale behind Birkenstock's more conservative 13%-15% constant currency revenue growth target for fiscal 2026, contrasting it with the 20% growth in Q4 and 18% for the full year 2025, and asked if any demand slowdown was observed in Q1, along with how this pace aligns with the long-term growth algorithm.

Answer

CEO Oliver Reichert explained that strong demand persists, particularly in multi-brand environments favored by Gen Z, but production capacity, especially for complex clog styles like Bostons and Naples which require double the production minutes of sandals, is the primary growth limitation. He affirmed a mid-teens long-term growth algorithm, supported by investments in pre-production capacity in Portugal, a new facility in Wittichenau for footbed capacity, and final assembly lines expected by 2027.

Matthew Boss from JPMorgan Chase & Co. asked about current demand trends, the company's visibility into its projected Q4 revenue acceleration, and the sustainability of its high gross and EBITDA margins, particularly when excluding foreign exchange impacts.

Answer

CEO Oliver Reichert confirmed that without FX headwinds, the Q3 EBITDA margin would have been a record 35.1%. He stated that demand is exceptionally strong, with production capacity being the main constraint, not consumer demand. Reichert emphasized the company's long-term goal is to drive margin improvement by increasing production capacity and efficiency, and he sees no slowdown in consumer demand.

Matthew Boss asked about the company's confidence in its full-year outlook and raised EBITDA margin guidance, considering the macroeconomic uncertainty from tariffs and foreign exchange.

Answer

CEO Oliver Reichert stated that the current situation is viewed as an opportunity, not a risk, and expressed confidence in fully offsetting tariff effects. He noted that consumer demand remains strong with no changes in behavior, high full-price realization, and a robust order book. CFO Ivica Krolo added that the improved EBITDA margin guidance is driven by better-than-expected gross margin from manufacturing absorption and pricing actions.

Matthew Boss of JPMorgan Chase & Co. asked for details on the key drivers of the Q1 revenue upside, particularly the direct-to-consumer acceleration late in the quarter. He also inquired if any demand has softened post-holiday and about visibility into the second half of the year.

Answer

CEO Oliver Reichert stated there has been no softening in demand, citing the brand's global strength and a very strong order book. President, EMEA Nico Bouyakhf added that growth was broad-based, driven by a strong holiday season and the success of white space opportunities like closed-toe shoes (up 600 bps in share), retail expansion, and accelerated growth in the APAC region.

Matthew Boss asked about the rationale for guiding to 15-17% revenue growth versus the historical 20%+ trend, and inquired about performance in the first quarter relative to this new guidance.

Answer

CEO Oliver Reichert explained that a mid-to-high teens growth rate is a mindful and sustainable pace for a vertically integrated company, equating to doubling the business every five years. He emphasized that while faster growth is possible, the company prioritizes quality and long-term brand health. Regarding Q1, he noted a strong holiday season and stated that performance would likely be at the higher end of the 15-17% annual guidance range, even against a tough prior-year comparison.

Matthew Boss asked about the cadence of demand in the U.S. during the third quarter, quarter-to-date trends, particularly the slowing post-Black Friday, and the timeline for product assortment optimization.

Answer

CFO Meghan Frank stated that Q3 U.S. demand progressed as expected, with August being the strongest month and October the softest. She noted strong Thanksgiving performance but a pullback in demand post-Thanksgiving, which is reflected in guidance. CEO Calvin McDonald added that benefits from product assortment optimization are expected to begin in Q1 2026, with newness penetration increasing and activation efforts underway. Frank also discussed 2026 operating margins, anticipating that negative factors like full-year tariffs and the need to layer back certain expenses will outweigh positives, despite ongoing efficiency efforts.

Matthew Boss asked for more details on traffic trends throughout Q2 and into Q3, which informed the revised outlook for the U.S. and China. He also requested elaboration on industry changes impacting the core assortment and regional differences between the U.S. and international markets.

Answer

CFO Meghan Frank noted that May was the strongest month in Q2, with deceleration through July, and traffic slowed in both stores and e-commerce. She added that Q3 U.S. trends are in line with guidance, Canada is slightly lower, and China is at the higher end. CEO Calvin McDonald stated that while Lululemon's brand remains strong, competition has intensified with more players. He explained that international markets, being earlier in growth, continue to see strong momentum, while U.S. high-value guests are seeking more newness.

Asked about the progression of comps through Q1 and into Q2, whether Q2 guidance implies a slowdown, and for clarification on the increased markdown assumption for the full year.

Answer

There were no material changes in trends month-to-month in Q1, and Q2 trends are similar. The increased markdown forecast for the full year is a precautionary measure due to macro uncertainty, not based on current performance, as markdowns were actually down in Q1.

Matthew Boss asked for details on U.S. sales metrics in response to new products and inquired about the company's comfort with its current inventory position and the markdown assumptions in its guidance.

Answer

CFO Meghan Frank explained that while an industry-wide negative traffic trend is affecting the U.S. business, this is being offset by an improvement in Average Order Value (AOV) and Units Per Transaction (UPT), driven by newness. She affirmed she is pleased with the current inventory level and composition, and the guidance for both Q1 and the full year assumes markdowns will be flat compared to the prior year.

Asked about North American traffic trends through Q3 and into the holiday season, new customer acquisition, the start of the holiday season internationally, and confidence in multi-year operating margin targets.

Answer

North American traffic was in line with plans, with positive e-commerce trends. New customer acquisition is strong, supported by the 24 million-member loyalty program. The holiday season started well globally. The company remains committed to its long-term operating margin expansion goal.

Matthew Boss inquired about the traffic cadence in North America during Q3 and into the holiday season, new customer acquisition, and the holiday start internationally. He also asked for an update on the confidence in the multi-year operating margin target.

Answer

CFO Meghan Frank noted that while they don't disclose monthly traffic, U.S. e-commerce traffic was positive while store traffic was slightly lower, with overall results meeting expectations. CEO Calvin McDonald highlighted strong guest growth, with the North American membership program reaching 24 million members, and a pleasing start to the holiday season globally. Regarding margins, Frank reiterated the company's commitment to its long-term target of modest annual operating margin expansion.

Matthew Boss asked about the long-term revenue growth outlook for North America after current execution issues are resolved and what guardrails are in place to ensure consistency. He also inquired about inventory levels and markdown plans.

Answer

CFO Meghan Frank reiterated commitment to the 'Power of Three x2' plan's low double-digit growth target for North America but noted it was too soon to forecast 2025. CEO Calvin McDonald explained that a new product organization structure now balances design and merchandising to improve consistency. Regarding inventory, Frank stated levels were down 14% as expected, with the main opportunity being in the product mix. Markdowns were flat year-over-year in Q2 and are expected to remain flat for the full year.

Matthew Boss asked about Lululemon's long-term revenue growth algorithm for North America post-recovery and the guardrails being implemented for consistency. He also inquired about inventory levels and markdown performance.

Answer

CFO Meghan Frank reiterated the company's commitment to the Power of Three x2 plan, which targets low double-digit growth in North America, while noting it's too early for a specific 2025 forecast. CEO Calvin McDonald explained that a new product organization structure, which balances design and merchandising, will drive consistency. Frank added that Q2 inventory was down 14%, in line with expectations, and markdowns were flat year-over-year, better than planned.

Matthew Boss inquired about the components of the third-quarter comparable store sales, focusing on transaction growth versus basket decline, and how this aligns with customer acquisition strategy. He also asked about the monthly comp cadence in Q3 and the strong start to Q4, including trends before and after Black Friday.

Answer

Robert Helm (EVP and CFO) noted a 3.3% comp increase driven by mid-single-digit transaction growth and a low single-digit basket decline due to high single-digit AUR decrease. Eric van der Valk (President and CEO) added that the AUR decline was a strategic investment in lower-priced deals to drive traffic and customer acquisition. Robert Helm also mentioned a slowdown mid-quarter due to weather/shutdown, with momentum returning in October and carrying into November, with Q4 AUR now positive.

Matthew Boss asked for details on the components of the third-quarter comparable store sales, particularly transaction growth versus basket decline, and how this aligns with the customer acquisition strategy. He also requested insight into the monthly comp cadence in Q3 and the 'strong start' cited for Q4, including trends before and after Black Friday.

Answer

EVP and CFO Robert Helm reported a 3.3% comparable store sales increase in Q3, driven by a mid-single-digit transaction increase (an acceleration from Q2) partially offset by a low single-digit basket decline, which included a high single-digit decrease in average unit retail (AUR). He noted a mid-quarter slowdown due to weather and the government shutdown, with momentum returning in October and carrying into November, where Q4 quarter-to-date trends are ahead of guidance and AUR is now positive low single-digits. President and CEO Eric van der Valk reiterated that AUR is not overtly managed, but rather price gaps, and the investment in lower AUR deals in Q3 was a strategic move for customer acquisition and retention.

Matthew Boss asked for details on the cadence of Q1 same-store sales, including recent trends, and whether the full-year guide includes any lift from the Big Lots market share opportunity. He also asked if Ollie's could be a net beneficiary of tariffs and what comp is needed to leverage SG&A.

Answer

Executive Robert Helm stated that after a tough February, a recent step-change in momentum has brought quarter-to-date comps in line with guidance, but no benefit from the Big Lots closures is included in the forecast. He also noted tariffs create disruption that Ollie's thrives on, expecting it to become a buying opportunity. He added that SG&A leverage should occur around the midpoint of the 1-2% comp range.

Matthew Boss asked about the cadence of Q3 comparable sales, the impact of transitory headwinds, and the outlook for Q4 given November trends. He also inquired about the multi-year unit growth opportunity and the state of vendor relationships.

Answer

CFO Robert Helm detailed the Q3 comp flow, noting a flyer shift and weather impacted results, but confirmed strong November trends and a 100 bps comp benefit expected in Q4 from the shifted flyer. CEO-elect Eric van der Valk discussed the opportunistic real estate strategy, a self-imposed annual new store governor of 75-80 units, and how Ollie's scale and strong balance sheet are enhancing closeout deal flow.

Matthew Boss asked about the sales cadence during the strong second quarter, trends seen in August, and the multi-year opportunity from industry consolidation, including market share, scale, and vendor relationships.

Answer

CFO Robert Helm noted that comparable sales were positive in all three months of Q2, with momentum continuing into August, though guidance remains cautious due to competitor liquidations. Executive Vice President and COO Eric van der Valk stated the company is raising its long-term unit growth floor to 10% annually with the ability to accelerate, citing real estate and market share opportunities from distressed retailers. CEO John Swygert emphasized that Ollie's growing size and scale solidify its position as the 'first call' for closeout vendors.

Matthew Boss from JPMorgan Chase & Co. inquired about the current state of closeout availability, the potential impact of tariffs on deal flow, and the progression of customer traffic trends through Q1 and into May.

Answer

CEO Eric van der Valk confirmed that deal flow is very strong, driven by retail bankruptcies and store closures, which he believes will continue. CFO Robert Helm noted that customer traffic was strong and built throughout Q1, with the core comp in Q2 running in the low to mid-single-digit range, despite some weather-related impact on seasonal categories.

Matthew Boss asked Hillary Super about the inflection in performance relative to intimate category growth, focusing on market share capture in the U.S. and globally. He also requested a breakdown of monthly comps for Q3 2025, particularly October's exit rate, and details on the strong start to Q4 2025, including any changes in momentum or demand. For Scott Sekella, he asked about the embedded promotional opportunity in Q4 2025 margins and the overall "inning" of the promotional opportunity, seeking a breakdown of margin delta drivers (promotional activity vs. SG&A) to reach double-digit margins.

Answer

CEO Hillary Super stated that Victoria's Secret can grow market share despite overall market declines, reinforcing its leadership position by executing well and connecting emotionally with customers. She noted that both bras and panties grew market share impressively in Q3. CFO Scott Sekella explained that Q3 saw strong performance throughout, with comps amplifying in October post-fashion show, and this momentum continued into November. He mentioned caution for post-holiday consumer pullback. For Q4, less promotional benefit is expected, but a shift to regular price selling continues. He reiterated that promotional pullback is in the "early middle innings" and operational leverage (buying, occupancy, SG&A) will be the primary driver for long-term margin expansion.

Matthew Boss from JPMorgan Chase & Co. asked about Victoria's Secret's market share capture relative to the overall intimates category trends in the U.S. and globally. He also requested a breakdown of the monthly comparable sales cadence in Q3 2025, particularly October's exit rate, and details on the strong Q4 start compared to Q3's 8% comps. He followed up on the extent of promotional benefit embedded in Q4 margins and the overall stage of promotional opportunity, asking for a breakdown of how promotional activity and SG&A contribute to reaching double-digit operating margins.

Answer

CEO Hillary Super stated that Victoria's Secret can grow market share despite overall market declines, citing Q3 growth in both bras and panties. CFO and COO Scott Sekella detailed Q3 performance, noting strong momentum throughout, amplified in October by the fashion show, which has sustained into November. He mentioned caution for post-holiday consumer pullback. For Q4, he indicated less promotional benefit in margins but a continued shift to regular price selling. He described the promotional pullback as being in the 'early middle innings' of a multi-year journey, with the primary driver for long-term margin expansion being leveraging the operational foundation (buying, occupancy, SG&A) as sales grow.

Matthew Boss of JPMorgan Chase & Co. asked about the largest low-hanging fruit in the product assortment for the back half of the year and beyond, and also questioned the permanence of SG&A savings and the revenue growth needed to achieve leverage.

Answer

CEO Hillary Super identified marketing optimization and a focused customer acquisition strategy as the primary low-hanging fruit, alongside product innovation in PINK, Beauty, and intimates. CFO Scott Sekella confirmed that SG&A savings from non-customer-facing areas are intended to be permanent and stated that the company's fixed cost leverage point is approximately 1-2% revenue growth.

Matthew Boss asked about the drivers for the forecasted gradual improvement throughout 2025, which near-term trends are considered transitory, and the product pipeline for the second half of the year at both Victoria's Secret and PINK.

Answer

CEO Hillary Super explained that the projected improvement stems from installing new leadership, enhancing full-funnel marketing, and creating stronger differentiation between the VS and PINK brands. While specific product launches remain confidential, she indicated that several 'tentpole moments' are planned for the back half of the year, following a quieter first half focused on building marketing capabilities.

Matthew Boss asked about the strategy for balancing top-line growth with gross margin expansion, whether this represents a multiyear inflection point, and the potential for future markdown recapture.

Answer

CEO Hillary Super affirmed a strong commitment to becoming less promotional and more brand-forward as product and storytelling improve, noting that strong recent performance creates opportunities to pull back on promotions. CFO Tim Johnson added that there is an opportunity in 2025 to test into more effective promotions for better margins. He highlighted that, encouragingly, the base business is now stronger outside of promotional events, a shift from prior quarters.

Matthew Boss asked about the pace of underlying improvement for the Calvin Klein brand, including new customer acquisition metrics and performance KPIs from enhanced marketing, and for high-level considerations for 2026 operating margins given Q4 cost savings.

Answer

CEO Stefan Larsson discussed Calvin Klein's brand desirability, noting consumer recruiting in e-commerce (North America, APAC) and progress in key categories like underwear and denim, driven by full-funnel marketing and a refreshed loyalty program. CFO Zac Coughlin highlighted the PVH Plus Value Driver Five initiative, confirming over 200 basis points of SG&A improvements by the end of 2025, which will flow into 2026.

Matthew Boss of JPMorgan Chase & Co. asked for a breakdown of the drivers behind the sequential improvement in the Americas' direct-to-consumer (D2C) business and for details on the European order book composition for Fall 2025 and Spring 2026.

Answer

CEO Stefan Larsson attributed the Americas D2C improvement to stronger product, amplified full-funnel marketing, and significant growth in new, retained, and reactivated consumers. Regarding Europe, he confirmed that wholesale order books for both Fall 2025 and Spring 2026 are showing growth, driven by product strength in key categories like Calvin Klein underwear and denim, and across the Tommy Hilfiger lifestyle range.

Matthew Boss of JPMorgan Chase & Co. asked for a breakdown of the current headwinds between macro factors versus execution, the expected pace of improvement, and a detailed walk-through of the gross margin progression from Q2 to the second half.

Answer

CEO Stefan Larsson attributed the pressure primarily to the tough macro and consumer backdrop in North America and China, which the company cannot yet fully offset. CFO Zac Coughlin detailed the updated full-year gross margin guidance, which is now down 250 bps. This includes the original 100 bps decline (G3 transition, CK issues) plus an incremental 150 bps from tariffs (50 bps) and higher promotions (100 bps). He expects the CK operational impact to lessen in H2, but the promotional environment to persist through the year.

Matthew Boss of JPMorgan Chase & Co. asked for a breakdown of current headwinds between macro factors versus execution, and requested a detailed walk-through of the gross margin progression from Q2 to the back half of the year.

Answer

CEO Stefan Larsson attributed the pressure primarily to the tough macro backdrop in North America and China, which the company cannot yet fully offset. CFO Zac Coughlin detailed the incremental 150 basis point decline in the full-year gross margin outlook, attributing 50 basis points to tariffs and 100 basis points to increased promotions. He expects the impact from Calvin Klein's operational issues to lessen in the second half, while the promotional environment is expected to persist through year-end.

Matthew Boss of JPMorgan Chase & Co. asked for a breakdown of the recent slowdown between macro factors and execution, the expected pace of improvement, and a detailed walk-through of the gross margin progression for the rest of the year.

Answer

CEO Stefan Larsson attributed the pressure to the macro backdrop in North America and China, which the company cannot yet fully offset, but noted back-half improvement will be driven by PVH+ initiatives and cost savings. CFO Zac Coughlin detailed that the incremental 150 basis point decline in full-year gross margin guidance is due to tariffs (50 bps) and increased promotionality (100 bps), with improvement expected as operational issues are resolved.

Matthew Boss asked about the recent change in North American consumer trends, how PVH is planning inventory for its DTC channels, and for a breakdown of the drivers behind the Q1 gross margin decline and its expected cadence through the year.

Answer

CEO Stefan Larsson acknowledged a consumer step-back in February but noted stabilizing trends and expressed confidence in inventory composition, citing freshness and strategic investments. CFO Zachary Coughlin detailed that the Q1 gross margin decline is driven by promotions, freight costs, wholesale mix, and the G-III transition, but expects sequential improvement as these factors normalize throughout the year.

Matthew Boss asked about customer demand for the Fall 2024 product assortment, its impact on direct-to-consumer (DTC) and wholesale channels, and the company's confidence in achieving the consensus 2025 operating margin of 10.7%.

Answer

CEO Stefan Larsson highlighted double-digit sell-through improvements for the new fall product, which drove a return to growth in DTC trends for September and October and provides a strong foundation for Fall 2025 wholesale orders. Larsson expressed confidence in returning to growth in 2025 and taking another step toward the long-term 15% operating margin target. CFO Zac Coughlin added that while 2025 gross margin faces a 50 basis point headwind from a license take-back, SG&A efficiencies will help drive progress toward the margin goal.

Matthew Boss asked about the current health of PVH's brands, recent demand for new fall assortments, and the specific cost efficiencies supporting the company's operating margin targets.

Answer

CEO Stefan Larsson highlighted record consumer engagement from recent campaigns for both Calvin Klein and Tommy Hilfiger, noting the Fall '24 collection is the first to be fully influenced by the new strategy and is off to a strong start. CFO Zac Coughlin detailed cost controls, including ongoing performance management and larger simplification initiatives expected to yield 200-300 basis points in SG&A savings, reaffirming the long-term 15% operating margin goal.

Matthew Boss asked Todd Vasos about the current health of the low to middle-income customer and the historical traffic versus basket interplay in similar economic backdrops. He also asked Donny Lau about the puts and takes for next year, specifically regarding the target of 10% earnings growth at 2%-3% comparable sales, considering the moderated real estate plan.

Answer

Todd Vasos, CEO, described the low and middle-income consumer as stretched but responsive to Dollar General's value and convenience, evidenced by a 2.5% comparable sales increase driven by traffic. He highlighted the retention program for new higher-income customers and the importance of the $1 price point. Donny Lau, CFO, stated confidence in tracking towards the long-term financial framework, emphasizing the stabilization of the core business and momentum across key value drivers, leading to optimism for future growth.

Matthew Boss from JPMorgan Chase & Co. asked about the expected progression of customer traffic, May sales trends, and the drivers behind the first quarter's higher markdowns.

Answer

CEO Todd Vasos revealed that customer traffic turned positive in May, the first period of Q2, after lapping a tough +4.3% comparison in Q1. He anticipates continued momentum driven by operational improvements, customer trade-in, and store remodels. CFO Kelly Dilts explained that Q1 markdowns were in line with expectations, primarily from planned promotional activity and some store closure-related clearance, and were not indicative of a change in the competitive landscape. She emphasized that the gross margin gain was driven by a 61 basis point improvement in shrink.

Matthew Boss from JPMorgan Chase & Co. inquired about the expected progression of customer traffic, sales trends in May, and the drivers behind the higher markdowns seen in the first quarter.

Answer

CEO Todd Vasos reported that customer traffic turned positive in May and expressed optimism for continued momentum, driven by operational improvements, store remodels, and a sustained influx of trade-in customers. CFO Kelly Dilts clarified that Q1 markdowns were planned and primarily due to promotional activity and store closures, not increased competitive pressure. She emphasized that the gross margin increase was largely driven by a 61 basis point improvement from lower shrink.

Matthew Boss asked for a recap of learnings from the 2024 'Back to Basics' strategy and a ranking of 2025 initiatives, as well as the same-store sales level needed to leverage SG&A and a summary of Q1 financial puts and takes.

Answer

CEO Todd Vasos highlighted that 'Back to Basics' has successfully turned shrink into a tailwind and driven inventory down 6.9% per store, with more SKU reduction planned. CFO Kelly Dilts added that SG&A is expected to deleverage in 2025, with Q1 and Q2 facing the most pressure from remodel expenses, labor headwinds due to self-checkout removal, and tough comps. Full-year headwinds include wage inflation, normalized incentive pay (~$120M), and depreciation.

Matthew Boss asked about recent changes in consumer spending behavior between consumables and discretionary items, November sales trends, and the expected puts and takes for fourth-quarter gross margin amid a heightened promotional environment.

Answer

CEO Todd Vasos noted that the consumer remains value-focused, but showed some positive signs in discretionary categories like Halloween. CFO Kelly Dilts added that November sales were slightly above expectations, the promotional environment was anticipated, and shrink is expected to be a gross margin tailwind in Q4.

Matthew Boss requested details on the cadence of same-store sales, specifically traffic versus ticket during Q2, and asked about new concerns from consumer surveys and any observed improvement in August comps.

Answer

CEO Todd Vasos declined to comment on August but stated it was within guidance. He acknowledged a 1% traffic gain but noted competitors captured a larger portion of available market share. CFO Kelly Dilts elaborated that June was the strongest month, turning negative in July due to a step-down in transactions, not basket size. She highlighted that the softest sales weeks were at the end of each calendar month, and survey data shows their core customer feels financially worse off than six months ago.

Matthew Boss inquired about the monthly progression of comparable sales during Q3, the drivers behind exceeding initial guidance, and the start to Q4, asking if a similar sequential moderation scenario is embedded in the current holiday season outlook.

Answer

CFO Dan Sullivan stated that monthly year-over-year growth in Q3 was fairly consistent, with traffic growth strengthening as the quarter progressed. He confirmed that the start to the holiday season in November and Black Friday weekend was in line with expectations, and the Q4 guidance reflects a consistent growth pattern.

Matthew Boss asked where the company has made the most progress on its value and product initiatives and where the biggest opportunities lie. He also inquired about the appropriate long-term pace of new store growth and the metrics used for evaluation.

Answer

CEO Winnie Park highlighted opportunities in reinforcing the core $5 and below offering and ensuring products above $5 provide exceptional value, with a renewed focus on the kid customer. COO Ken Bull reiterated the long-term potential for 3,500 stores, emphasizing disciplined growth by targeting specific returns and 4-wall EBITDA levels, densifying existing markets, and expanding into new ones like the Pacific Northwest.

Matthew Boss requested elaboration on the Q3 comp contribution from newness and value initiatives, commentary on November sales trends, and which financial line item was impacted by the $21 million inventory write-off.

Answer

Interim CEO Ken Bull attributed the broad-based Q3 comp improvement to successful product chases, newness, and value in categories like style, tech, and a strong Halloween season. He confirmed a solid Black Friday weekend that was on plan but did not provide specific November comps. CFO Kristy Chipman clarified that the $21 million inventory reserve was an adjustment recorded within gross profit.

Matthew Boss from JPMorgan Chase & Co. asked for an update on customer behavior and comp trends exiting Q2 and into August, and also questioned the rationale behind the reduction in store growth for 2025.

Answer

Interim President and CEO Kenneth Bull noted that the trend of lower-income customers underperforming and higher-income customers outperforming continued from Q1, suggesting some trade-down benefits. While traffic improved in August, this dynamic persisted. Bull explained that store growth for 2025 is being moderated to 150-180 stores primarily to allow the organization to focus on executing the key turnaround initiatives.

Matthew Boss asked about the traction of Macy's reimagined store initiatives, specifically regarding traffic versus basket size, and sought details on November comparable sales trends and customer behaviors compared to the third quarter.

Answer

Chairman and CEO Tony Spring noted positive growth in Reimagined 125 stores, attributing it to new brands, better presentation, and improved staffing. He highlighted consistent traffic and improved average unit retail (AUR) across both physical and digital businesses. Spring also mentioned the prudent approach to Q4 guidance, acknowledging the choiceful aspirational customer.

Matthew Boss asked about the traction of Macy's Reimagined 125 store initiatives, specifically regarding traffic versus basket performance, and requested an update on November comp trends and customer behaviors compared to the third quarter.

Answer

Chairman and CEO Tony Spring highlighted positive growth in the Reimagined 125 stores, with sequential improvement to a 2.7% comparable sales increase, driven by new brands, better presentation, and improved staffing. He noted consistent traffic in stores and digital, along with continued average unit retail (AUR) improvement. Spring expressed satisfaction with the start of the fourth quarter but maintained a prudent outlook due to the 'choiceful consumer,' emphasizing that guidance serves as guardrails, not a ceiling.

Matthew Boss asked about the rank order of drivers for sequential improvement in same-store sales, the progression observed during the quarter, any changes in momentum in the third quarter, and the rationale behind the forecasted moderation in comparable sales.

Answer

Tony Spring, Chairman and CEO, highlighted broad-based growth across categories, noting Q2 as the strongest in 12 quarters for Macy's Inc. and the Macy's brand. He mentioned July was the strongest month, with momentum continuing into early Q3 driven by back-to-school and cold weather categories. Spring expressed cautious optimism but maintained prudent guidance due to tariff uncertainty.

Matthew Boss of JPMorgan Chase & Co. asked if comparable sales in May had improved to positive territory across Macy's nameplates. He also sought more detail on the specific customer behaviors observed in the 'Reimagine' stores that reinforce the company's confidence in its 'Bold New Chapter' strategy.

Answer

Chairman & CEO Tony Spring declined to give specific May performance figures but confirmed that consumer demand remains better than sentiment, with customers responding to newness and value. In the 'Reimagine 125' stores, he cited improved regular-price performance, better colleague engagement, lower staff turnover, and positive customer sentiment as key indicators of the strategy's success and future potential.

Matthew Boss asked about the key strengths and constraints embedded in the 2025 same-store sales guidance and the primary drivers of SG&A rate pressure.

Answer

CEO Antony Spring explained that while the 'Bold New Chapter' strategy shows progress in reimagined stores, the cautious guidance reflects the large number of stores yet to be updated and the uncertain economic environment. COO & CFO Adrian Mitchell added that SG&A pressure is due to reinvesting savings from store closures into customer-facing growth initiatives, which is partially offset by operational efficiencies.

Matthew Boss of JPMorgan Chase & Co. inquired about the drivers of comparable sales improvement in the latter half of the year, the sustainability of these initiatives into 2025, and whether the high-30s gross margin is a sustainable long-term target.

Answer

CEO Antony Spring pointed to the positive 1.9% comp in 'First 50' locations as a key indicator of growth potential, highlighting strength in various categories and the completion of the private brand reinvention as a future tailwind. COO & CFO Adrian Mitchell added that while navigating a competitive environment, the company is encouraged by top-line momentum and fundamental improvements in execution, such as better in-stocks and faster delivery, which support profitable growth.

Matthew Boss asked about the cadence of comparable sales as Q2 progressed, changes in the consumer backdrop, early back-to-school trends, and the drivers of the back-half gross margin expansion despite a heightened promotional environment.

Answer

CEO Tony Spring noted that Q2 sales were softer than expected mid-quarter, prompting swift actions in marketing and inventory that showed positive effects carrying into Q3. He highlighted the 'First 50' stores as a successful model. COO and CFO Adrian Mitchell explained that the gross margin outlook is supported by disciplined inventory management, favorable shortage trends from asset protection initiatives, and lower delivery costs through carrier diversification and fulfillment optimization.

Matthew Boss of JPMorgan Chase & Co. asked if May comps had turned positive and requested details on customer behavior in 'Reimagine' doors that gives management confidence in its 'Bold New Chapter' strategy.

Answer

Chairman & CEO Tony Spring declined to give specific May figures but confirmed the trend was better than prior months and that consumer demand is stronger than sentiment suggests. In 'Reimagine' stores, he highlighted improved regular-price sell-through, positive customer sentiment feedback, better colleague engagement, and lower staff turnover as key indicators of success.

Matthew Boss inquired about the drivers behind the same-store sales acceleration in October, current comp trends in November supporting the Q4 guidance, and a breakdown of gross margin expansion opportunities for Q4 and high-level puts and takes for the next fiscal year.

Answer

CEO Mike Creedon highlighted a strong finish to Q3 driven by Halloween sales, multi-price assortment, and positive seasonal performance, expressing confidence in the Q4 guide. CFO Stewart Glendinning detailed Q4 gross margin drivers, including freight favorability, higher discretionary sales mix, and SG&A, and outlined next year's gross margin target of ±50 basis points, supported by the Five Merchant Levers and an algorithm for high-teens EPS improvement.

Matthew Boss asked about the drivers behind Dollar Tree's same-store sales acceleration in October, current comp trends in November supporting the Q4 guide, and the gross margin expansion opportunities for Q4 and the high-level puts and takes for next year.

Answer

CEO Mike Creedon attributed the Q3 acceleration to a strong Halloween performance and the resonance of the multi-price assortment, expressing confidence in the Q4 guide. CFO Stewart Glendinning stated that Q4 gross margin drivers would be similar to Q3, with freight and markdowns being key factors for next year, aiming for a margin equivalent to this year's ±50 basis points, supported by the Five Merchant Levers and the Investor Day algorithm for high-teens EPS growth.

Matthew Boss of JPMorgan Chase & Co. asked for a breakdown of the first quarter's mid-single-digit comp, highlighting the balanced contribution from traffic and ticket, and questioned if this balance would continue through the rest of the year.

Answer

CEO Michael Creedon expressed satisfaction with the balanced Q1 comp, attributing it to a favorable holiday calendar and the positive impact of multi-price on seasonal merchandise. He confirmed that while multi-price naturally lifts the ticket, the company strives to maintain a balance by also driving traffic through its expanded assortment to build lasting customer relationships.

Matthew Boss asked for elaboration on consumer trends across different income levels and the key drivers behind the 3% to 5% comparable sales growth guidance for Q1, questioning if the acceleration from Q4's 2% comp was driven by traffic or ticket.

Answer

CEO Mike Creedon identified several comp drivers: maturing new stores (including the 99 Cents Only portfolio), the continued maturation of multi-price conversions, a more favorable holiday calendar, and improved store standards. On consumer behavior, he noted that while lower-income shoppers need Dollar Tree for essentials, higher-income shoppers are increasingly turning to the banner for value, driving traffic and market share gains.

Matthew Boss requested elaboration on consumer trends across different income cohorts and asked for the key drivers behind the guided 3% to 5% comp for Q1, an acceleration from the 2% comp reported in Q4.

Answer

CEO Michael Creedon attributed the guided comp acceleration to several factors: new stores entering the comp base (including 99 Cents Only conversions), the continued maturation of multi-price stores, and a more favorable holiday calendar. He noted that while middle-income is their core, they are seeing trade-in from higher-income shoppers, which is helping drive traffic and share gains.

Matthew Boss asked about customer demand trends across income levels and whether Dollar Tree banner comps were positive in November. He also questioned the performance of multi-price conversions versus plans and the reason for slowing the rollout.

Answer

Interim CEO Mike Creedon noted that lower-income customers are pressured and focused on consumables, and while November was soft due to timing shifts, the Q4 guidance implies a low single-digit comp. CFO Jeff Davis added that multi-price conversions are meeting expectations overall, with margins performing better than anticipated in Q3 due to product mix.

Matthew Boss asked for details on the softening same-store sales trend at the Dollar Tree banner during Q2 and any changes seen in Q3. He also questioned the performance of the 80% of non-converted stores, whose flattish comps lag the pre-pandemic 3% run rate.

Answer

COO Mike Creedon attributed the Q2 softening to macro pressures extending to middle-income shoppers, causing a shift from discretionary 'wants' to consumable 'needs.' He anticipates improvement from holiday drivers in Q3 and Q4. For the core, non-converted stores, he highlighted their strong multi-year stacked comps and expressed confidence that the broader multi-price rollout will ultimately lift these locations by driving traffic for the 'thrill of the hunt.'

Matthew Boss asked for details on the softening sales progression at the Dollar Tree banner during Q2 and into Q3, and questioned the performance of the non-converted stores relative to their pre-pandemic comp trends.

Answer

COO Mike Creedon attributed the softening trend to macro pressures extending to middle-income shoppers, causing a shift from 'want' to 'need' based spending. He noted Q2 lacks a major holiday to drive discretionary sales. Regarding the core, non-converted stores, he acknowledged their modest positive comp but emphasized their strong multi-year performance stack and expressed confidence that the broader multi-price rollout will ultimately lift these locations as well.

Matthew Boss inquired about the specific drivers of Aerie's same-store sales improvement over the past two quarters, including customer acquisition trends and initiatives to sustain double-digit comparable sales growth. He also asked about Q4 markdown expectations, inventory health, and gross margin levers for the upcoming year.

Answer

President and Executive Creative Director Jen Foyle attributed Aerie's success to a pivot in strategy, focusing on core competency businesses, new categories like sleep, and the proven OFFLINE business. She noted strong and accelerating customer acquisition, increased spending, and effective marketing campaigns like '100% Real.' CFO Mike Mathias stated that Q4 markdowns are expected to be similar to Q3, with inventory well-positioned. He highlighted ongoing efforts to mitigate tariff impacts and leverage non-tariff costs to support gross margin.

Matthew Boss inquired about the drivers of Aerie's same-store sales improvement over the past two quarters, customer acquisition trends, and strategies to sustain double-digit comp growth. He also asked about Q4 markdown expectations, inventory health, and future gross margin levers.

Answer

President and Executive Creative Director Jen Foyle attributed Aerie's success to a strategic pivot, strong core categories, new businesses like Sleep and OFFLINE, robust customer acquisition, and the '100% Real' campaign. CFO Mike Mathias stated inventory is well-positioned (+11% cost, +8% units), Q4 markdowns are expected to be similar to Q3, and gross margin will benefit from mitigating tariffs and operational efficiencies like freight favorability.

Matthew Boss of JPMorgan Chase & Co. inquired about the current consumer health and its impact on the retail landscape, asking to distinguish between macro-environmental factors and internal execution issues affecting AEO's performance. He also requested a breakdown of the Q2 operating income guidance, specifically concerning gross margin assumptions and the inventory cleanup timeline.

Answer

Executive Chairman & CEO Jay Schottenstein expressed optimism for the second half, acknowledging that while macro concerns had an influence, the company is focused on execution. Executive VP & CFO Mike Mathias detailed the Q2 outlook, stating that the recent inventory write-down positions them better for the back half. He confirmed the Q2 guidance includes a negative three percent comparable sales trend, ongoing promotional activity to clear spring/summer goods, and expected expense deleverage on lower sales.

Matthew Boss inquired about the demand progression for Aerie in the fourth quarter, opportunities to accelerate growth in the upcoming year, and expectations for promotions and gross margin drivers.

Answer

President Jen Foyle highlighted Aerie's record Q3 revenues and plans for 45 new stores next year to drive customer acquisition, with sleepwear being a key new category. CFO Mike Mathias added that inventory is well-positioned, promotions are planned similarly to last year, and the long-term 39-40% gross margin target remains achievable through various cost efficiencies.

Matthew Boss asked about the drivers of new customer acquisition versus engagement from the core consumer, noting the double-digit growth in the customer file. He also inquired about assortment opportunities and the gross margin outlook for the third and fourth quarters.

Answer

Jen Foyle, President and Executive Creative Director, attributed customer file growth to both acquisition and retention, driven by new categories like 24/7 and AE77, effective marketing, and a strong quality-value proposition. Mike Mathias, CFO, explained that Q3 gross margin expansion will be more modest than the first half due to calendar shift-related expense deleveraging, not weaker product margins, which remain favorable.

Matthew Boss asked about the drivers behind the accelerated business performance in Q3, especially for the Urban brand, and early holiday selling trends. He also sought insight into multi-year operating margin drivers beyond the anticipated 100 basis points expansion for fiscal 2026.

Answer

Richard Hayne, CEO of Urban Outfitters, attributed Q3's strong performance to increased traffic in both stores and online, noting positive early holiday selling trends despite an expected promotional environment. Frank Conforti, Co-President and COO, stated the company is targeting 10% operating margin and sees future levers in Urban Outfitters' turnaround, Nuuly's growth, store occupancy leverage, and initial merchandise margin opportunities, excluding tariff impacts.

Matthew Boss asked about the drivers behind the acceleration in business during Q3, particularly for the Urban Outfitters brand, and early holiday selling trends. He also sought insights into multi-year margin drivers beyond the current fiscal year's anticipated operating margin expansion.

Answer

Richard Hayne, CEO of Urban Outfitters, attributed Q3 acceleration to increased traffic across all channels and brands, noting robust early holiday selling despite an expected promotional environment. Frank Conforti, Co-President and COO, outlined future operating profit opportunities, including SG&A management, markdown improvement at Urban Outfitters, store occupancy leverage, and IMU opportunity (excluding tariffs), aiming to exceed the 10% EBIT goal.

Matthew Boss asked for an update on brand performance in May, the broader view on consumer apparel spending for the second half of the year, and what a reasonable multi-year operating margin target would be for the Urban Outfitters brand.

Answer

Executive Richard Hayne reported that May-to-date sales comps were similar to Q1's performance and reiterated the Q2 guidance for high single-digit total URBN sales growth. Co-President and COO Francis Conforti addressed the UO margin, stating that while a mid-to-high single-digit operating margin is a reasonable long-term goal, the immediate focus is on making steady progress toward profitability, which is not expected to be achieved this year.

Matthew Boss asked CEO Dick Hayne to identify notable emerging category trends for the upcoming year and to provide more color on the comment that spring sales were off to a good start.

Answer

CEO Richard Hayne identified a major trend as a 'bottoms cycle,' with baggier styles driving sales and requiring slimmer tops. He also highlighted strength in outerwear, sneakers, FP Movement, and Anthropologie's activewear (Daily Practice) and new resort wear (Celandine) concepts. For Q1, he projected total URBN revenue growth in the mid- to high-single-digit range, with specific comp guidance for Anthropologie (mid-single-digit), Free People (low to mid-single-digit), and Urban Outfitters (flattish).

Matthew Boss asked for elaboration on the optimism for Q4 comp store sales, how each brand was tracking in November, and the key puts and takes for Q4 gross margin.

Answer

CEO Richard Hayne expressed optimism for Q4, citing resilient consumer spending and strong sales from October that continued into early November. Co-President and COO Francis Conforti added that Q4 gross margin is expected to improve by about 100 basis points, driven primarily by a lower markdown rate at Urban Outfitters and improved initial margins (IMU).

Matthew Boss asked for an update on August demand trends at the Anthropologie and Free People brands and for commentary on the initial customer response to the back-to-school season at Urban Outfitters.

Answer

CEO Richard Hayne described a slight demand deceleration across all brands from mid-July into August, which he characterized as a return to more normal pre-COVID consumer behavior. He noted strong traffic is still driving positive transactions. Shea Jensen, President of Urban Outfitters North America, confirmed similar trends for UO but highlighted positive momentum in key back-to-school categories like denim, accessories, and home.

Matthew Boss inquired about Burlington's Q3 2025 relative comp performance compared to off-price peers, expressing concern over the significant reversal from Q2, and asked for details on the 60 basis points of operating margin expansion despite tariffs and a 1% comp.

Answer

Michael O'Sullivan (CEO) acknowledged the substantial comp gap, attributing half to weather sensitivity unique to Burlington and the other half to needing to better capitalize on the strong off-price shopper trend. Kristin Wolfe (EVP and CFO) detailed the margin expansion, citing a 10 basis point increase in merchandise margin (driven by tariff mitigation), 20 basis points leverage in freight, 40 basis points leverage in product sourcing costs, and 20 basis points leverage in SG&A from store efficiencies, partially offset by higher depreciation.

Matthew Boss asked about Burlington's relative comp performance compared to off-price peers in Q3, noting a reversal from Q2, and inquired about management's concern regarding this change. He also asked Kristin Wolfe for more detail on the 60 basis points of operating margin expansion in the quarter, especially given tariff pressures and a 1% comparable store sales growth.

Answer

CEO Michael O'Sullivan acknowledged the significant comp gap with peers, attributing half of it to weather's unique impact on Burlington's cold weather categories. He noted that while weather explained a portion, the company needs to further analyze and address the remaining performance difference. CFO Kristin Wolfe detailed the 60 basis points of EBIT margin expansion, highlighting a 10 basis point increase in merchandise margin (despite tariffs, due to mitigation strategies), a 20 basis point decrease in freight expenses, 40 basis points of leverage in product sourcing costs from supply chain efficiencies, and 20 basis points of SG&A leverage from store efficiency initiatives, partially offset by 20 basis points of de-leverage from higher depreciation.

Matthew Boss of JPMorgan Chase & Co. asked about the overall impact of tariff-related disruptions on the off-price sector and inquired about Burlington's confidence in its guidance amid these pressures.

Answer

CEO Michael O'Sullivan explained that while disruption is typically good for off-price, the tariff situation is complex. He noted that the recent volatility has the potential to create attractive buying opportunities. O'Sullivan detailed the company's proactive mitigation efforts, including remixing assortments, securing tariff-free inventory, and building a 'war chest' of margin and expense savings, which provides a clear path to achieving their original full-year guidance.

Matthew Boss inquired about the sales trends observed early in the first quarter and the rationale behind the conservative Q1 comparable sales guidance. He also asked for a breakdown of the drivers for the projected Q1 margin contraction and the expected margin cadence throughout fiscal 2025.

Answer

CEO Michael O'Sullivan explained that weaker-than-expected February trends, attributed to unfavorable weather in the Northeast/Midwest and delayed tax refunds, prompted a more cautious Q1 comp guide. He noted that as these factors normalized, sales trends improved. O'Sullivan also detailed the margin cadence, explaining that Q1 faces the toughest comparison from the prior year's 170 bps expansion. He cited modest mark-on pressure, anniversarying DC lease increases, and fixed cost deleverage on lower Q1 sales volume as key factors for the Q1 margin outlook, expecting improvement throughout the year with the most significant expansion in Q4.

Matthew Boss asked for clarification on the 300-basis-point comp sales impact from weather, inquiring if it included hurricanes and about potential Q4 weather risks. He also asked for an update on inventory levels and any associated markdown risk.

Answer

CEO Michael O'Sullivan clarified that the 3-point comp impact was solely from warm temperatures, with hurricanes representing an additional 1-point negative impact. He expressed optimism for Q4, noting November sales were ahead of plan and holiday gift-giving would soon outweigh weather sensitivity. CFO Kristin Wolfe added that inventories are clean, with comp store inventory down 2%, and no major markdown liability exists for Q4. She also noted reserve inventory increased to 32% of total inventory.

Matthew Boss inquired about current back-to-school sales trends, performance in August, and the extent to which the 'better brands' initiative is driving comparable sales growth.

Answer

CEO Michael O'Sullivan confirmed that back-to-school is a crucial sales driver, with strong performance in July and a solid start to Q3 in August, though he cautioned against extrapolation. He described the 'better brands' initiative as an 'evolution' that attracts trade-down shoppers and creates a 'halo' effect for the entire store, noting its lower markup is already factored into guidance.

Matthew Boss of JPMorgan Chase & Co. asked for a larger picture view on whether tariff-related disruption is ultimately good or bad for the off-price sector and for Burlington's reaction to the recent Court of International Trade ruling. He also followed up by asking for details on the specific actions taken that give management confidence in hitting original guidance despite tariff pressures.

Answer

CEO Michael O'Sullivan explained that while the court ruling's impact is still unknown, the company is planning as if current tariffs remain. He stated that while extreme tariffs that halt supply are bad, the current stop-start volatility is creating attractive buying opportunities, which could be very good for off-price. To offset margin pressure, O'Sullivan detailed a multi-pronged strategy initiated in early March, including remixing assortments away from China-exposed goods, working with vendors to absorb costs, opportunistically buying tariff-free inventory already in the U.S. for its reserve, and building a 'war chest' of margin and expense savings across the P&L.

Matthew Boss from JPMorgan Chase & Co. asked about the cadence of trends for the Abercrombie brand during the third quarter and into November. He also requested details on the inventory composition across both brands and the gross margin puts and takes for the fourth quarter.

Answer

CFO Robert Ball discussed the strong third quarter performance, sequential improvement for Abercrombie, and Hollister's market share gains, noting momentum into Q4. He detailed inventory composition, with costs up 5% and units up 1% year-over-year, and outlined Q4 gross margin factors including a 360 basis point tariff impact, a 150 basis point freight tailwind, and an expectation for flat AURs. CEO Fran Horowitz's response was implicitly covered by Robert's comprehensive overview of brand performance and outlook.

Matthew Boss asked about the cadence of trends for the Abercrombie brand during Q3 and early November. He also requested details on the inventory composition across both brands and the gross margin puts and takes for the fourth quarter.

Answer

CFO Robert Ball affirmed strong Q3 performance and momentum into Q4. He detailed inventory as being in good shape, up 5% at cost (3% from tariffs) and units up 1%, with Hollister units growing more than Abercrombie. For Q4 gross margin, he projected a 360 basis point tariff impact ($60 million), a 150 basis point freight tailwind, and an assumption of flat AURs.

Matthew Boss asked for elaboration on the Q1 revenue guide, including brand contributions and 'green shoots' at Abercrombie, and also questioned what revenue growth is needed to sustain or expand operating margins long-term.

Answer

CEO Fran Horowitz-Bonadies reiterated that Hollister has strong momentum while Abercrombie has had a more normalized start to the year, but noted positive signs in dresses, skirts, and swim, with the goal to grow both brands for the year. CFO Robert Ball stated that while the current guide doesn't assume significant operating leverage, sales outperformance would likely generate leverage. COO Scott Lipesky emphasized the focus is on driving top-line growth, which produces strong flow-through and allows the bottom line to grow faster than the top line.

Matthew Boss of JPMorgan Chase & Co. inquired about global brand awareness, new customer acquisition overseas, and the current business momentum from the early holiday response. He also requested a breakdown of Q4 gross margin expectations and management's comfort with inventory levels.

Answer

CEO Fran Horowitz-Bonadies expressed excitement about balanced global performance, driven by localized assortments and marketing, and confirmed a strong start to the holiday season with well-staffed stores and distribution centers. COO Scott Lipesky stated that Q4 gross margin is expected to be roughly flat year-over-year, with lower promotions being offset by higher freight costs and FX headwinds. He added that the company feels great about its inventory position, having proactively used air freight to ensure readiness for peak season.

Matthew Boss inquired about the company's global brand awareness, new customer acquisition overseas, and the current business momentum, including the early holiday response in November. He also requested a breakdown of Q4 gross margin expectations and management's comfort with inventory levels.

Answer

CEO Fran Horowitz-Bonadies noted strong global performance driven by localized playbooks and a strong start to the holiday season with well-stocked stores. COO Scott Lipesky expects the Q4 gross margin to be roughly flat to last year, with lower promotions offset by freight and FX headwinds. He expressed confidence in inventory levels, explaining the increase was a proactive measure to ensure product availability for the holidays.

Matthew Boss of JPMorgan Chase & Co. requested more detail on the strong start to August and the specific category trends driving back-to-school performance. He also asked about the potential for multi-year operating margin expansion beyond the current 14-15% target for fiscal 2024.

Answer

CEO Fran Horowitz-Bonadies attributed the strong performance to balanced growth across brands, regions, and genders, with consistent strength in tops, bottoms, and dresses, as well as newness in men's suiting. CFO & COO Scott Lipesky outlined long-term margin opportunities, pointing to top-line growth potential in underpenetrated international markets, further gross margin gains from inventory management, and future operating leverage from strategic investments.

Matthew Boss asked Richard Dickson about the drivers of Old Navy's top-line inflection, early holiday momentum, and the brand's market share opportunity. He also asked Katrina O'Connell about the impact of cost structure actions on annual operating income dollar growth given a low single-digit top-line baseline.

Answer

Richard Dickson, President and CEO, attributed Old Navy's strong quarter (6% comps, market share gains) to its value proposition, growth across income cohorts, trend-right products in key categories (Kids & Baby, Denim, Active), and strategic partnerships (Disney, Anna Sui) and beauty expansion. Katrina O'Connell, CFO, noted $150 million in cost savings, partially reinvested, and an operating margin of 7.2% absorbing tariff impacts, with expectations for 2026 tariffs not to cause further operating income declines.

Matthew Boss asked about the drivers of Old Navy's top-line inflection, its market share opportunity, and how cost structure actions will impact annual operating income dollar growth given a low single-digit top-line baseline.

Answer

Richard Dickson, President and CEO of Gap Inc., attributed Old Navy's 6% comp growth to its value proposition, growth across income cohorts, trend-right products in key categories (Kids and Baby, Denim, Active), and strategic partnerships. Katrina O'Connell, CFO, noted $150 million in cost savings, partially reinvested, and stated that 2026 tariff annualization is not expected to cause further operating income declines, with future sales growth benefiting operating income.

Matthew Boss asked about the drivers behind the 500 basis point sequential acceleration in same-store sales, inquiring how much was due to company-specific initiatives (marketing, store experience) versus the macro backdrop, and sought elaboration on the strong momentum cited in November that supported the Q4 raise.

Answer

CEO Jim Conroy attributed the improvement to broad-based growth across all major merchandise categories and geographic regions, acknowledging potential macro tailwinds like weather but giving significant credit to the product team for assortments, strategic AUR maneuvering, and the marketing and stores teams for excellent execution.

Matthew Boss asked about the 500 basis point sequential acceleration in same-store sales, inquiring how much was due to company-specific initiatives like marketing and store experience versus the macro backdrop, and sought elaboration on strong November momentum supporting the Q4 raise.

Answer

Jim Conroy (CEO) attributed the broad-based strength across all major merchandise categories and geographic regions to the team's execution, fantastic product assortments, strategic AUR maneuvering, effective marketing, and strong store team performance, while acknowledging potential macro tailwinds.

Matthew Boss of JPMorgan Chase & Co. inquired about the specific areas of sequential top-line improvement, the sharp rebound in July sales, early back-to-school trends, and the drivers for gross margin in the third and fourth quarters.

Answer

CEO James Conroy highlighted broad-based sequential improvement across most merchandise categories, with cosmetics and ladies' apparel being particularly strong. He noted the 2-3% comp guide for the back half is cautiously optimistic. CFO Adam Orvos explained that Q2 operating margin was impacted by tariff-related product and distribution costs. He anticipates tariff pressure will lessen through the year but noted that packaway timing will pressure Q3 margins before being recouped in Q4, alongside deleverage from a new distribution center.

Matthew Boss of JPMorgan Chase & Co. inquired about the drivers behind the sharp comparable sales improvement during Q1, trends observed in May, and the specific strategies in place to mitigate tariff impacts in the second half of the year.

Answer

Executive James Conroy stated the sequential sales improvement was broad-based across merchandise categories. Group President and COO Michael Hartshorn detailed three tariff mitigation strategies: negotiating better vendor costs, carefully passing on price increases while maintaining a significant value gap versus mainstream retail, and utilizing tariff-unburdened closeouts and packaway inventory.

Matthew Boss asked for details on the drivers behind the sharp comparable sales improvement during Q1, trends seen in May, and strategies to mitigate tariff impacts in the second half of the year.

Answer

Executive James Conroy noted the sales improvement was broad-based across merchandise and pointed to the Q2 guidance of flat to +3% comps as an indicator of current business health. Group President and COO Michael Hartshorn outlined three tariff mitigation strategies: negotiating better costs with vendors, carefully passing on price increases while maintaining a value gap, and utilizing closeouts and tariff-free packaway inventory.

Matthew Boss asked new CEO Jim Conroy about his top strategic priorities, potential structural changes, and near-term sales trends in regions less impacted by weather.

Answer

CEO James Conroy stated he will continue the existing brand strategies for Ross and dd's, focusing on evolutionary changes. He identified opportunities to enhance the store environment and marketing, calling marketing the "least developed muscle." He noted broad-based strength in Q4 but acknowledged a recent slowdown in February, which he believes is a transitory shock related to weather and consumer confidence.

Matthew Boss asked for details on opportunities to improve merchandising execution, the company's confidence in its Q4 comp guidance, and the key drivers of gross margin in Q3 versus the outlook for Q4.

Answer

CEO Barbara Rentler explained that merchandising opportunities involve correcting execution issues in specific product categories and continuing to iterate on the brand strategy. She expressed confidence in the Q4 forecast due to the seasonal importance of currently strong categories like cosmetics and gifting. CFO Adam Orvos added that Q3 merchandise margin benefited from better-than-expected shrink results, while Q4 will face pressure from a packaway timing shift and continued investment in branded merchandise.

Matthew Boss inquired about the progression of business trends during the quarter, the progress of initiatives to enhance value and brands for the second half, and the outlook for gross margin drivers.

Answer

Group President and COO Michael Hartshorn noted that comparable sales were strongest mid-quarter. CEO Barbara Rentler added that the company's stronger value offerings are resonating with customers and this strategy will continue. CFO Adam Orvos detailed the margin outlook, explaining that while distribution, buying, and freight costs were favorable, merchandise margin decreased by 80 basis points due to the brand strategy, with pressure expected to increase in the second half.

Matthew Boss inquired about the key performance indicators (KPIs) the company is monitoring to build confidence in the new core-focused strategy, given the previous positive stance on adjacencies and collaborations, and asked for a reasonable timeline for business stabilization.

Answer

CEO Daniel Heaf highlighted progress in talent acquisition and the upcoming Amazon launch to address gray market sales and reignite the brand. He noted digital improvements, including app and website refreshes, and the significant opportunity in digital sales penetration. Key KPIs include total active consumers, core category growth, digital traffic, and dwell time. CFO Eva Boratto reiterated that while no growth is expected for full year 2026, business improvement is anticipated throughout the year, with consumer-first initiatives becoming visible in the second half.

Matthew Boss inquired about the new strategy's key performance indicators (KPIs) and a reasonable timeline for stabilization, given the shift from previous positive views on adjacencies and collaborations.

Answer

CEO Daniel Heaf highlighted progress in talent acquisition and the upcoming Amazon launch as short-term wins. He detailed digital enhancements, including app/website relaunches and new product photography, noting the significant digital penetration opportunity. Key KPIs include total active consumers, core category growth, and digital traffic/dwell time. CFO Eva Boratto reiterated that while no growth is expected for 2026, business should improve, with new products and digital initiatives showing meaningful impact in the second half.

Matthew Boss inquired about CEO Daniel Heaf's perspective on growth opportunities after his first full quarter and asked about Q2 traffic trends and the August outlook.

Answer

CEO Daniel Heaf stated he sees even more opportunity for growth than initially thought, highlighting assortment, merchandising, leveraging the Beauty Park supply chain, and brand storytelling. CFO Eva Boratto noted that Q2 traffic was positive, with a strong June offsetting a softer May due to sale timing. She confirmed the Q3 sales outlook of 1-3% growth incorporates performance to date and is supported by upcoming launches like the Disney Villains collaboration.

Matthew Boss asked CEO Daniel Heaf to outline the key building blocks for accelerating growth beyond the current low-single-digit rate, inquiring about market share opportunities and any necessary investments.

Answer

CEO Daniel Heaf noted that while it is still early, his strategy will be consumer-centric with 'fewer bolder priorities.' He identified immediate opportunities in digital enhancements, packaging, alternative distribution, and international expansion. He stressed a focus on reallocating existing investments for maximum impact ('edit to amplify') rather than seeking new funding. CFO Eva Boratto added that the company continuously seeks efficiencies, like the recent consolidation of a fulfillment center, to fund new initiatives.

Matthew Boss of JPMorgan Chase & Co. asked about the drivers behind recent traffic acceleration, the sustainability of the revenue inflection, and the level of sales growth required to achieve operating margin expansion.

Answer

CEO Gina Boswell attributed traffic growth to the '3-legged stool' of compelling product, viral marketing, and technology-enabled personalization, expressing confidence in its sustainability. CFO Eva Boratto stated that operating margin expansion requires approximately 2-3% sales growth for B&O leverage and 2.5-3.5% for SG&A leverage, consistent with their existing algorithm.

Matthew Boss asked for elaboration on Q3 category trends versus plan, the cadence of store traffic during the quarter and into November, and for a bridge of the drivers for the Q4 gross margin expansion.

Answer

CEO Gina Boswell noted that all major categories (body care, home fragrance, soaps/sanitizers) grew low single digits, driven by newness. CFO Eva Boratto added that store traffic was positive throughout the quarter, exceeding external benchmarks, and was boosted by new launches and a strong Halloween performance. For Q4, she explained the 40 basis point gross margin expansion is primarily driven by Buying & Occupancy (B&O) efficiencies, direct fulfillment optimization, and home office cost reductions.

Matthew Boss from JPMorgan asked for an elaboration on current customer traffic versus Average Unit Retail (AUR) trends and the balance between these drivers. He also requested an update on category demand in August and the early consumer response to the fall assortment.

Answer

CEO Gina Boswell noted that while traffic was challenging in Q2, mix-adjusted AUR was flat, indicating a balanced approach. CFO Eva Boratto added that traffic has improved in Q3 relative to Q2 and that this improvement is factored into the current guidance. She also mentioned excitement around new launches like Everyday Luxuries and Stranger Things.

Matthew Boss asked for elaboration on the acceleration at Marmaxx, specifically regarding new customer acquisition versus expanded basket from existing customers, and any observed softening or opportunities for the Holiday season given the strong start to Q4.

Answer

Ernie Herrman, President and CEO, confirmed that Marmaxx is consistently acquiring new customers at a balanced rate, alongside increased spending from both infrequent and frequent existing customers. He attributed Marmaxx's strength to excellent execution, a balanced merchandise mix, favorable weather, and exceptional availability of branded merchandise. Mr. Herrman highlighted strong Holiday marketing campaigns aimed at value leadership and attracting new shoppers. John Klinger, CFO, added that continued investments in payroll, remodels, and fixtures contribute to a great shopping environment.

Matthew Boss from JPMorgan asked for elaboration on the acceleration at Marmaxx, specifically regarding new customer acquisition versus expanded basket from existing core customers. He also inquired about the strong start to the fourth quarter, any observed softening in business, and opportunities for the holiday season.

Answer

President and CEO Ernie Herrman confirmed that new customer acquisition is consistently strong, balanced with increased spending from both infrequent and frequent existing customers. He attributed Marmaxx's success to excellent execution, a balanced merchandise mix across all business families, and favorable weather. Herrman highlighted exceptional availability of quality branded merchandise and robust holiday marketing campaigns aimed at attracting new shoppers and encouraging existing ones to visit more frequently. CFO John Klinger added that continued investment in payroll, remodels, and store fixtures contributes to a great shopping environment.

Matthew Boss asked about the consistency of TJX's comparable sales amid a volatile macro environment, the strength seen at the start of Q3, product availability, and the outlook for merchandise margins in the second half of the year.

Answer

CEO Ernie Herrman attributed the consistent comp sales to a healthy performance across all major categories—home, apparel, and accessories—and the company's flexible business model. He confirmed that product availability remains exceptionally strong. CFO John Klinger added that while foreign exchange remains a headwind for Q3 merchandise margins, the company is confident in its ability to offset tariff pressures.

Matthew Boss of JPMorgan Chase & Co. asked about the comp trend progression at Marmaxx in March and April after early weather disruptions and for elaboration on the strong start to Q2. He also asked for gross margin considerations for the rest of the year.

Answer

CFO John Klinger confirmed that Marmaxx comps improved month-to-month in Q1 as weather improved, a trend that continued into Q2, leading to the "strong start." CEO Ernie Herrman added that he was encouraged by the broad-based strength across all divisions. On gross margin, Klinger explained that Q2 will be the most impacted by tariffs, but mitigation efforts and a reversal of Q1's negative inventory hedge mark-to-market impact should lead to improvement in the second half.

Matthew Boss asked for elaboration on new customer acquisition trends driving transaction growth and for an assessment of the product assortment's breadth and value proposition heading into spring, as well as recent business momentum excluding weather impacts.

Answer

CFO John Klinger confirmed that strong transaction growth is attracting new customers, particularly in the 18-to-34 age range. CEO Ernie Herrman described the spring product breadth as 'kicked up a notch' from the prior year, emphasizing new vendors and categories. He also stated that in areas with normal weather, the company was pleased with its performance.

Matthew Boss asked about the comparable sales cadence at Marmaxx, excluding weather disruptions, and inquired about the specific drivers of the third-quarter merchandise margin expansion.

Answer

CEO Ernie Herrman explained that Marmaxx started the quarter strong but was impacted by unseasonably warm weather and hurricanes, though Q4 has begun on a strong note. CFO John Klinger attributed the gross margin beat to higher merchandise margin and expense savings in distribution centers due to more efficient inventory processing.

Matthew Boss inquired about the demand trends globally, particularly the acceleration in advanced bookings for both river and ocean, what differentiates Viking for customer loyalty, and how the company plans to optimize pricing for remaining capacity. He also asked for insights into recent booking trends over the last three months and any differences in customer demand between ocean and river experiences.

Answer

Tor Hagen, Chairman and CEO, highlighted Viking's differentiation through small, destination-focused ships and a child-free environment, noting strong demand unaffected by overcapacity in other segments. He mentioned being deliberately ahead on ocean bookings due to new builds. Leah Talactac, President and CFO, stated that demand is in line with expectations, with ocean being more booked than river. She emphasized no significant bifurcation in consumer demand across segments or geographies, underscoring the brand's consistency and sustained pricing power.

Matthew Boss inquired about global demand trends, what differentiates Viking's loyalty, and how the company plans to optimize pricing on remaining capacity, given the acceleration in advanced bookings for both river and ocean.

Answer

Tor Hagen, Chairman and CEO, highlighted Viking's distinct product, minimal exposure to the Caribbean, and ability to capitalize on the shift from large to smaller ships. He noted strong demand, particularly for ocean due to new builds, and expressed satisfaction with current margins. Leah Talactac, President and CFO, added that demand is in line with expectations, with consistent brand loyalty and pricing power across both segments and geographies.

Matthew Boss of JPMorgan Chase & Co. asked how the strong 55% booked position for 2026 enables Viking to optimize pricing for the remaining capacity. He also sought confirmation on whether mid-single-digit yield growth is the appropriate baseline expectation for 2026, given the 4% advanced booking per PCD growth.

Answer

Torstein Hagen, Founder, Chairman & CEO, responded that while they could potentially push prices higher, they aim for a balance to ensure guests receive good value, and he is satisfied with the current position. Leah Talactac, President & CFO, affirmed that mid-single-digit price growth is their goal, noting the 4% increase is on top of a 7% gain in 2025. She highlighted the strong ship payback periods (4-6 years) and healthy consumer engagement as indicators that their pricing goals are achievable and support long-term growth.

Matthew Boss asked for clarification on the drivers of diverging net yield growth between the River and Ocean segments in Q1 and questioned how to think about structural changes to EBITDA margins compared to pre-pandemic levels.

Answer

President and CFO Leah Talactac and EVP of Finance Linh Banh explained that Q1 net yield divergence was due to seasonality, as the River segment's main season begins in Q2, and a different mix of World Cruises in the Ocean segment. They directed investors to the full-season booking curves for a better outlook. Regarding margins, Banh stated that Viking anticipates growth from increased capacity, mid-single-digit pricing growth, and disciplined expense management.

Matthew Boss inquired about the drivers behind the diverging net yield growth between the River and Ocean segments in Q1 and how this should be viewed for the remainder of the year. He also asked about structural changes to EBITDA margins compared to pre-pandemic levels.

Answer

President and CFO Leah Talactac and EVP of Finance Linh Banh clarified that the Q1 divergence was due to the River segment's seasonality and the Ocean segment having only one World Cruise in Q1 2025 versus two in Q1 2024. They advised focusing on the full-season booking curves for a better outlook. Regarding margins, Banh stated that Viking anticipates growth through increased capacity, mid-single-digit pricing gains, and disciplined expense management.

Matthew Boss asked for an elaboration on current demand trends by region for both River and Ocean segments and questioned the company's strategy for optimizing yields amidst double-digit capacity growth.

Answer

Leah Talactac, President and CFO, confirmed strong demand, noting the 2025 season is 88% sold following a robust Q4 and wave season. She reiterated the company's belief that achieving mid-single-digit yield growth alongside double-digit capacity growth is a strong outcome. She pointed to the 2025 booking data, which shows a 12% capacity increase and a 7% rise in advanced bookings per PCD, as evidence of this successful strategy.

Matthew Boss inquired about current forward demand indicators, the consumer backdrop, and the company's strategy for capitalizing on its product in 2025. He also asked for details on the composition of 2025 pricing for River and Ocean segments relative to internal plans.

Answer

CEO Torstein Hagen stated that performance is in line with their long-term plan with no surprises, emphasizing their product's appeal to older travelers by excluding children and casinos. CFO Leah Talactac added that the full-year expectation for pricing growth remains in the mid-to-high single digits as the booking curve for 2025 evolves.

Matthew Boss asked James Zheng about his confidence in guiding 2026 revenue growth to mid-teens, the high end of the long-term algorithm. He also asked Stuart Haselden to elaborate on the cadence of Arc'teryx's 27% omni-comp in Q3 and any changes in global demand heading into the holiday season.

Answer

James Zheng, CEO of Amer Sports, expressed high confidence in delivering mid-teens growth for 2026, citing the solid foundation built in 2025. Stuart Haselden, CEO of Arc'teryx, noted the 46% D2C revenue increase and 27% omni-comp reflected a strong two-year trajectory, driven by healthy traffic increases in Q3 with consistent markdown levels. He highlighted strong global momentum across all regions, particularly North America's acceleration.

Matthew Boss asked about Amer Sports' confidence in guiding 2026 revenue growth to mid-teens. He also requested details on Arc'teryx's Q3 27% Omnichannel cadence and global demand momentum into Q4 and the holiday season.

Answer

James Zheng, CEO of Amer Sports, expressed strong confidence in achieving mid-teens growth for 2026. Stuart Haselden, CEO of Arc'teryx, highlighted healthy D2C revenue growth, strong retail KPI performance driven by traffic, consistent markdown levels, and robust global demand across all regions into Q4.

Matthew Boss from JPMorgan Chase & Co. inquired about the sales momentum carrying into the third quarter, the specific drivers behind the growth inflection at the Solomon brand, and the factors supporting the raised full-year expectations for Arc'teryx.

Answer

CEO James Zheng highlighted sustained Q3 momentum, particularly for Solomon's 'outdoor sneaker' category, which is resonating with younger, female consumers. He also noted the success of Wilson's Tennis 360 format. Arc'teryx CEO Stuart Haselden added that the outlook reflects strong underlying trends, a favorable wholesale shipment comparison in Q3, and a healthy 15% Q2 omni-comp achieved despite a significant reduction in markdowns.

Matthew Boss asked about the competitive advantages of Amer Sports' portfolio approach, the growth momentum and whitespace for the Salomon brand, and the outlook for Arc'teryx's omni-channel comparable sales strength.

Answer

CEO Jie Zheng highlighted the unique portfolio of premium brands and the strong demand in the outdoor segment, particularly for Salomon's 'modern outdoor sneakers.' Arc'teryx CEO Stuart Haselden noted the strong +19% omni-comp was traffic-driven against a tough prior-year comparison and that comps moderate for the rest of the year. He added that lower outlet sales, a positive indicator of full-price demand, were a slight drag on the comp figure.

Matthew Boss asked about the competitive advantages of Amer Sports' portfolio approach, the specific momentum and growth opportunities for the Salomon brand, and the outlook for Arc'teryx's omni-channel comparable sales growth.

Answer

CEO Jie Zheng highlighted the unique portfolio of premium brands and the success of Salomon's 'modern outdoor sneakers' in attracting new consumers. Arc'teryx CEO Stuart Haselden noted the strong +19% omni-comp was traffic-driven against a tough prior-year comparison and that the company strategically pulled back on outlet sales to protect brand equity, viewing it as a positive indicator.

Matthew Boss from JPMorgan Chase & Co. asked about the drivers behind Arc'teryx's nearly 30% comp acceleration in Q4, post-holiday demand trends, and the status of inventory and in-stocks for 2025.

Answer

Arc'teryx CEO Stuart Haselden attributed the strong comparable sales growth to a significant increase in customer traffic, both in-store and online, complemented by healthy conversion rates and higher average order values. He confirmed that strong momentum continued into Q1 and stated that inventory ended the year clean, with a focus on improving in-stocks for 2025, particularly for footwear.

Matthew Boss asked about Arc’teryx's Q3 performance versus plan across different regions, demand trends for Q4, and sought clarification on SG&A investments and the outlook for SG&A leverage next year.

Answer

Arc’teryx CEO Stuart Haselden stated that Q3 performance exceeded expectations across all regions, channels, and categories, with APAC being a standout. He noted that strong demand meant sales were constrained by inventory. CFO Andrew Page explained that gross margin gains are being reinvested into high-return areas like new stores and technology. He guided for SG&A leverage to be roughly flat in 2025, with leverage expected to begin post-2025.

Matthew Boss from JPMorgan Chase & Co. asked about the overall health of The North Face brand and its market share opportunity in the outdoor channel, and what factors continue to constrain Vans, despite cited product improvements, leading to high single-digit underlying revenue declines.

Answer

Bracken Darrell (President and CEO) affirmed The North Face is "very healthy," with ongoing opportunities to expand year-round, target women, and grow categories like footwear (strong double-digit growth). For Vans, he reiterated that "product, product, product" (e.g., Super Lowpro, Skate Loafer, SZA's influence) and relevant, powerful, socially-centered marketing are crucial for overcoming current declines and driving future growth.

Matthew Boss asked about the overall health of The North Face brand and the market share opportunity within the outdoor channel. He also inquired about the factors still constraining Vans, despite cited product improvements, given its underlying revenues were down high single digits.

Answer

Bracken Darrell, President and CEO, VF Corporation, affirmed The North Face's strong health, emphasizing strategies for year-round relevance, growth in the women's business, and expansion in categories like footwear. For Vans, he reiterated the critical focus on 'product, product, product' (e.g., Super Low Pro, skate loafer) and ensuring marketing is relevant, powerful, and socially-centered, with the SZA partnership expected to be beneficial.

Matthew Boss asked what, if any, major reset actions remain for the portfolio and about the company's visibility for a return to growth in the second half of the year. He also inquired about factors constraining the Q2 gross margin outlook.

Answer

President & CEO Bracken Darrell responded that the major reset actions are now behind them, though minor adjustments are always possible. He did not provide specific timing for a return to growth. EVP & CFO Paul Vogel noted the flat Q2 gross margin outlook is partly due to lapping tough comparisons but affirmed the positive underlying trajectory.

Matthew Boss asked about the health of The North Face brand, its direct-to-consumer momentum into the spring season, and the progress being made on the company's cost-saving initiatives.

Answer

President and CEO Bracken Darrell expressed confidence in The North Face, citing strong DTC sales and growth in its all-season footwear business, aided by a new 4-season development cycle. EVP and CFO Paul Vogel confirmed that the 'Reinvent' program has achieved over $300 million in savings from its first phase, with early benefits from the second phase contributing to the Q4 operating income beat.

Matthew Boss inquired about recent successes at Timberland and The North Face compared to softer trends at Dickies, and asked for clarification on the outlook for the first half of fiscal 2026 to be similar to the second half of fiscal 2025.

Answer

President and CEO Bracken Darrell highlighted Timberland's momentum from brand-building and collaborations, while noting Dickies is a 'deep turnaround' requiring patience. He clarified that the fiscal 2026 commentary was intended to manage near-term growth expectations while the company focuses on improving profitability and executing its long-term transformation plan.

Matthew Boss requested an update on the Vans reset actions, the brand's top priorities, and the expected timeline for improvement under its new leadership.

Answer

CEO Bracken Darrell declared that the major reset actions from the previous year are now in the 'rearview mirror.' He noted that new leadership is already influencing product and marketing, and while he didn't provide a specific timeline, he pointed to rising consumer search interest as an early positive indicator of the turnaround's progress.

Matthew Boss inquired about the momentum Levi Strauss & Co. is experiencing entering the holiday season, focusing on trends within the denim category and broader consumer behavior. He also asked Harmit Singh if the Q4 organic revenue moderation was due to actual demand changes in September/October or prudent planning.

Answer

Harmit Singh, Chief Financial and Growth Officer, clarified that Q4 moderation is due to prudent planning, not underlying demand changes. Michelle Gass, President and CEO, highlighted the accelerating denim category, Levi's market leadership across segments (men's, women's, youth, premium, Signature), and product innovation driving growth. She emphasized the expansion to head-to-toe denim lifestyle, consumer resilience driven by unit growth, and robust holiday preparedness with a seasonally relevant assortment and marketing.

Matthew Boss asked Michelle Gass to elaborate on the momentum Levi Strauss & Co. is experiencing as it enters the holiday season, focusing on trends within the denim category and broader consumer behavior. He also asked Harmit Singh if there had been any material changes in global demand trends in September or October, or if the Q4 organic revenue guidance moderation was purely prudent planning.

Answer

Harmit Singh, Chief Financial and Growth Officer, clarified that the Q4 guidance moderation was due to prudent planning for macro complexities, with no material change in underlying demand trends observed in September or October. Michelle Gass, President and CEO, highlighted the accelerating denim category, Levi's market leadership, and share gains in youth and premium segments. She emphasized product innovation, the expansion into head-to-toe denim lifestyle, and consumer resilience, noting that Q3 growth was largely unit-driven.

Matthew Boss inquired about the key drivers behind the 9% organic growth, focusing on consumer demand and market share in the Americas, and asked about the expected gross margin cadence for Q2 versus the second half of the year.

Answer

CEO Michelle Gass attributed the growth to broad-based strength across geographies and channels, with DTC up 12% and wholesale up 5%. She noted market share gains in U.S. men's and women's. CFO Harmit Singh explained that the record 62.1% Q1 gross margin was driven by lower product costs and favorable mix. He guided for Q2 gross margin to be up 80-100 bps, with more muted growth in the second half due to tougher comparisons.

Matthew Boss inquired about the health of the denim category in the U.S. and Europe post-holiday, the company's confidence in its 3.5% to 4.5% organic growth guidance for 2025, and any new category priorities or changes in pricing power.

Answer

President and CEO Michelle Gass stated that Levi's outgrew the global denim market and achieved the #1 women's denim brand position in the U.S. She expressed confidence in the 2025 growth target, highlighting that it will be driven by underpenetrated areas like women's, tops, dresses, and the DTC channel. Gass emphasized the strategy is to evolve into a head-to-toe apparel brand rooted in denim, expanding the total addressable market.

Matthew Boss from JPMorgan Chase & Co. inquired about the drivers behind the 5% global growth for the Levi's brand, its performance relative to the denim category, market share trends by region, and whether the long-term gross margin expansion algorithm has changed.

Answer

CEO Michelle Gass credited the Levi's brand growth to a 12% increase in the direct-to-consumer (DTC) channel, strong performance in the women's category, and market share gains that solidified its #1 position in U.S. women's denim. CFO Harmit Singh reaffirmed the long-term annual gross margin expansion algorithm of 30-40 basis points, highlighting potential upside from a higher DTC mix and increased full-price sales.

Matthew Boss asked for elaboration on the 'ample opportunity remaining' for net yields, margins, and returns cited in the release, inquiring about the current 'inning' of Carnival's story and how to rank the continued areas for improvement. He also asked CFO David Bernstein about any constraints in delivering on the algorithm for costs to grow below yields, both for 2026 and multi-year.

Answer

CEO Josh Weinstein stated that the 13% ROIC is not a ceiling, and he expects significant long-term improvement, with plans to provide longer-term targets in fiscal Q2. He anticipates a continued track record of improving margins and yields. CFO David Bernstein affirmed expectations for improving returns and margins long-term, implying yields will grow faster than costs. He highlighted ongoing cost-saving initiatives leveraging Carnival's scale. Mr. Weinstein added that while low capacity growth means every dollar spent impacts unit costs more directly, they are committed to driving efficiencies and leveraging scale to manage costs effectively.

Matthew Boss from JPMorgan Chase & Co. asked for elaboration on the "ample opportunity remaining with net yields, margins, and returns" cited in the release, seeking insight into the current "inning" of Carnival's story and a ranking of continued areas for improvement. He also inquired about any constraints for 2026 and multi-year in achieving the algorithm of costs growing below yields.

Answer

CEO Josh Weinstein stated that 13% ROIC is not a ceiling, and significant improvement is expected, with longer-term targets to be provided in Q2 2026. He anticipates a continued track record of yield and margin improvement. CFO David Bernstein added that improving returns and margins imply yields growing faster than costs long-term, with ongoing efforts to leverage scale for cost savings. Josh Weinstein noted that low capacity growth means every dollar spent increases unit costs, emphasizing the need for efficiency.

Matthew Boss asked about the specific improvements in product and experience that are driving the above-plan pricing and onboard spending, and inquired about the incremental opportunity from future drivers like fleet enhancements, private islands, and the new loyalty program. He also asked about the future margin opportunity, noting that recent quarters have already surpassed 2019 levels.

Answer

CEO Josh Weinstein explained that consistent, incremental innovations across all brands, such as Holland America's focus on fresh, local seafood, are key drivers. He emphasized that they are still in the "early innings" with major projects like Celebration Key yet to launch. Regarding margins, Weinstein reiterated that 2019 was never seen as a ceiling and that the focus remains on driving incremental revenue while maintaining cost leadership, which flows directly to the bottom line.

Matthew Boss asked about the specific improvements in product and experience that are driving the above-plan pricing and onboard spending, the incremental opportunity from new drivers like private islands and loyalty programs, and the potential for EBITDA margins to continue expanding beyond 2019 levels.

Answer

CEO Josh Weinstein explained that consistent, step-by-step commercial improvements and product innovations, such as Holland America's focus on fresh seafood and the successful AIDA Evolution upgrades, are key drivers. He emphasized that the company is in the "early innings" of realizing benefits from major projects like Celebration Key. Weinstein reiterated that the path to higher margins involves maintaining their industry-leading low-cost structure while relentlessly focusing on driving incremental revenue, which flows directly to the bottom line.

Matthew Boss of JPMorgan Chase & Co. inquired about new customer acquisition trends and structural improvement opportunities across the brand portfolio. He also asked about capital allocation priorities beyond debt paydown as the company nears investment-grade status.

Answer

CEO Josh Weinstein explained that with limited capacity growth, the focus is on optimizing the guest mix for maximum revenue, and noted most brands have significant runway for ROIC improvement. CFO David Bernstein reiterated that debt paydown is the top priority, and other capital allocation options will be considered in 2026 after achieving investment-grade leverage metrics.

Matthew Boss asked about the foundational changes that have positioned Carnival for current demand and inquired about future initiatives to gain market share, optimize yields, and drive onboard spending. He also requested a breakdown of the 2025 net cruise cost guidance and a multi-year outlook on the spread between yield and cost growth.

Answer

CEO Josh Weinstein attributed success to leadership restructuring, enhanced commercial focus on marketing and revenue management, and active portfolio management. He highlighted ongoing investments in talent, tools, and destination strategy as key future drivers. CFO David Bernstein detailed the 2025 cost drivers, including Celebration Key operations and dry-dock days, and noted that while there's no fixed rule for the yield-cost spread, the company expects continued margin improvement.

Matthew Boss inquired about the drivers behind the continued momentum, specifically asking for details on the stronger business base for 2025, the record start to 2026, and the current volume and pricing trends across different regions, particularly Europe. He also asked about capital allocation priorities.

Answer

CEO Josh Weinstein explained that the strength is broad-based across both North American and European brands and is consistent across all quarters of 2025. He noted the company is in an "enviable place," being two-thirds booked for the next 12 months, allowing them to focus on increasing prices. CFO David Bernstein stated that the company's top three priorities are debt reduction, with the goal of achieving investment-grade metrics by the end of 2026 as part of the SEA Change program.

Matthew Boss of JPMorgan Chase & Co. inquired about Michael Kors' recent product sell-through trends in both direct-to-consumer and wholesale channels, the current product assortment relative to second-half opportunities, 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 influencer engagement, are yielding positive results. He highlighted sequentially improved traffic, stronger full-price sell-throughs, and positive AURs in the full-price channel for the first time in three years. Idol noted that while wholesale trends are improving, they are not yet positive, but consumer insight data for the fall season looks even stronger.

Matthew Boss asked about the primary drivers of demand strength in the first quarter, the notable acceleration in transaction growth in July, and the rationale for maintaining a flat comparable sales forecast for the second half of the year. He also inquired about markdown levels and the merchandise margin outlook.

Answer

CEO John Hazen attributed the strong demand to broad-based performance, particularly in denim, and effective marketing around cultural moments. He explained the cautious back-half outlook is due to macro environmental uncertainty, not just price increases. CFO Jim Watkins added that markdowns remain very low compared to both last year and historical pre-COVID levels, reflecting a healthy inventory position.

Matthew Boss asked about post-holiday demand trends in January across categories and whether the company's long-term comp algorithm has changed. He also inquired about the remaining multi-year drivers for merchandise margin.

Answer

Interim CEO John Hazen reported an acceleration in men's and women's western categories in January and confirmed the company still uses a low to mid-single-digit comp algorithm for initial planning. CFO Jim Watkins added that future merchandise margin expansion will be driven by exclusive brand penetration and buying economies, as major supply chain benefits will not repeat at the same magnitude.

Matthew Boss asked for details on the significant same-store sales inflection during Q2, October trends, and the primary drivers of the merchandise margin expansion forecasted for Q3.

Answer

Former CEO Jim Conroy attributed the sales lift to broad-based sequential improvement across all categories and regions, with every major department posting positive comps. Chief Digital Officer John Hazen detailed that the Q3 margin expansion of 100 basis points is expected to come from supply chain efficiencies and improved buying economies, including higher exclusive brand penetration.

Matthew Boss asked for the cadence of Q2 same-store sales in the U.S. and Canada, momentum into Q3, and the long-term EBITDA margin outlook.

Answer

CEO Mark Walsh attributed the U.S. strength to strong execution and secular trends, while noting Canada's improvement was driven by a focus on selection. CFO Michael Maher confirmed comps accelerated in May/June and continued into July, adding that while 2025 EBITDA margins may be a trough due to investments, the long-term target remains in the high teens.

Matthew Boss of JPMorgan Chase & Co. asked for a breakdown of the sustained mid-single-digit comps in the U.S., specifically regarding new versus existing customers and spending across income levels. He also requested an explanation for the Q1 gross margin contraction and the outlook for the rest of the year.

Answer

Executive Mark Walsh highlighted strong growth in the loyalty program, particularly among younger and higher-income cohorts, which is driving positive trends in basket size and transactions. CFO Michael Maher explained that Q1 gross margin deleverage was almost entirely due to new stores that are not yet mature, partially offset by healthy growth in on-site donations. He expects this pressure to lessen through the year.

Matthew Boss asked about the current health of the U.S. business, the drivers behind Canada's sequential improvement, the new store pipeline for 2025, and the timeline for new store profitability.

Answer

Executive Mark Walsh highlighted the solid, accelerating U.S. business and noted Canada's improvement was due to rebalanced production levels, though challenges remain. Executive Michael Maher detailed the new store economics, explaining that stores typically lose money in year one but become profitable by year two, reaching a ~20% EBITDA margin by year five. He quantified the 2025 profit headwind from new stores at approximately $10 million, driven by the accelerated opening cadence.

Matthew Boss inquired about the drivers of the third-quarter gross margin contraction, the expected puts and takes for the fourth quarter, and the long-term margin profile under a low-single-digit same-store sales scenario.

Answer

CFO Michael Maher attributed the Q3 gross margin deleverage to two main factors: the impact of new stores, which open with lower initial sales and profitability, and deleverage from lower comparable store sales. He noted that costs from off-site processing investments are beginning to be mitigated by efficiency gains, with mature facilities approaching cost parity with in-store processing. For Q4, Maher expects similar deleverage from new stores, with the magnitude depending on sales performance. He affirmed the long-term algorithm of growing EBITDA with revenue on low-single-digit comps, but cautioned that near-term margin headwinds from accelerated store openings will likely continue into 2025 before becoming a tailwind in 2026 as stores mature.

Matthew Boss of JPMorgan Chase & Co. asked for an update on booking and pricing momentum in July and any early demand indications for the newly announced Great Stirrup Cay enhancements. He also questioned the drivers behind the raised occupancy outlook and the opportunity for future load factor growth.

Answer

CEO Harry Sommer confirmed that July was a record booking month and that early indicators for Great Stirrup Cay, such as website visits and leads, were very positive in the first 48 hours. CFO Mark Kempa explained that future load factor improvements are expected from lapping Q3 2025's anomalies and the natural lift from 'Fun and Sun' itineraries, with the full impact of the new island experience anticipated after its 2026 opening.

Matthew Boss asked for elaboration on recent changes in the 2025 and early 2026 booked positions compared to historical levels, and what specific customer behavior seen in April was factored into the updated guidance. He also inquired about recent onboard spending trends and the company's cost structure flexibility to maintain its EBITDA and 2026 targets.

Answer

CEO Harry Sommer noted some booking 'choppiness' in early April for Q3 European itineraries but said trends were returning to normal, emphasizing a strategy of prioritizing price over load factor. He stated the 2026 booked position is well ahead of historical levels. CFO Mark Kempa confirmed that onboard spending remains strong and highlighted the company's ability to accelerate cost-saving initiatives to offset top-line pressure, expressing confidence in meeting 2026 targets by leveraging efficiencies gained from its transformation office.

Matthew Boss from JPMorgan Chase & Co. asked about new customer acquisition at the Gap brand, drivers of consistency at Old Navy, the viability of the long-term financial algorithm, and the potential to fully mitigate tariff impacts over time.

Answer

CEO Richard Dickson highlighted that Gap's collaborations are driving new customers with a strong core product attachment rate, while Old Navy's consistency comes from leadership in key categories like active and denim. CFO Katrina O'Connell confirmed that a model of low-to-mid single-digit sales growth and high single-digit operating income growth is the long-term goal, and that full tariff mitigation over time is achievable through business momentum, efficiencies, and strategic investments.

Matthew Boss from JPMorgan Chase & Co. asked about new customer acquisition at the Gap brand, the drivers of consistency at Old Navy, the viability of the long-term financial algorithm, and the potential to fully mitigate tariff impacts over time.

Answer

CEO Richard Dickson highlighted that collaborations are driving new customer acquisition for the Gap brand and that Old Navy's consistency stems from strength in key categories like active and denim. CFO Katrina O'Connell confirmed that low-to-mid single-digit sales growth with high single-digit operating margin growth is the long-term model and that there is no reason the company cannot fully mitigate tariff impacts over time through momentum, efficiencies, and strategic investments.

Matthew Boss asked about the health of Ralph Lauren's consumer across different regions amid economic uncertainty and inquired about the disparity between the strong Q1 revenue guidance and the more conservative full-year outlook.

Answer

President and CEO Patrice Louvet stated that while the general consumer is pressured, Ralph Lauren's core, more elevated consumer has remained resilient, and the company's strategy remains on offense. CFO Justin Picicci clarified that the full-year guidance incorporates a cautious view for the second half, particularly in North America, due to potential macro headwinds like tariffs and weakening consumer confidence, which is not reflected in current business momentum.

Matthew Boss asked about the foundational investments driving double-digit growth in Europe and China, the related market share opportunities, and how the company balances reinvestment, particularly in marketing, with margin expansion.

Answer

Executive Patrice Louvet identified key investments in marketing (now ~7% of sales with ROI as the only constraint) and strategic store openings, noting significant white space in key cities globally. Executive Justin Picicci added that the company's philosophy is to balance long-term reinvestment with near-term margin goals, stating that in Q3 they successfully increased marketing spend while delivering SG&A leverage due to high-quality revenue growth.

Matthew Boss asked about the key drivers behind the strong growth in Europe and China, the sustainability of this international momentum, and the company's multiyear operating margin drivers beyond the current fiscal year.

Answer

President and CEO Patrice Louvet attributed the international outperformance to the brand's timeless appeal, resonant product design, and an elevated go-to-market strategy in key cities. CFO Justin Picicci confirmed the company is on track for its 15% operating margin target for fiscal 2025, noting it is not a ceiling and that future expansion will come from modest gross margin gains and expense leverage.

Matthew Boss inquired about the current state of the core Golf Equipment business and the drivers behind the strategic value reset at Topgolf, questioning the balance between macroeconomic pressures and competitive factors.

Answer

President and CEO Chip Brewer confirmed the Golf Equipment segment's outlook remains positive with no material changes. Topgolf CEO Artie Starrs attributed recent softness primarily to macroeconomic pressure on corporate event spending, noting that consumers are responding very positively and immediately to new value initiatives like 'Sunday Funday' and 'Topgolf Nights'.

Matthew Boss inquired about Topgolf's same-venue sales trends in neutral weather conditions and the expected progression for 2025. He also asked about the initial market reception for the new Elite clubs and Square to Square putters, and the key drivers for the 2025 organic forecast in the Golf Equipment segment.

Answer

Arthur Starrs, CEO of Topgolf, explained that neutral-weather markets are seeing an improvement from Q4, running down low- to mid-single digits. He expressed confidence in the full-year guidance due to easier comparisons, improving player metrics, and promising results from new value initiatives. Oliver Brewer, President and CEO, added that the new Elite product line has been launched with excitement and the Square to Square putter line, launched in Q4, has performed exceptionally well in a popular market category.

Matthew Boss inquired about recent Topgolf trends, asking for a breakdown of traffic versus average spend and the key initiatives planned to drive same-venue sales improvement in 2025. He also asked for an update on Golf Equipment sell-through trends.

Answer

President and CEO Chip Brewer explained that the recent decline in Topgolf's consumer business was evenly split between traffic and spend. He highlighted new games like 'Sonic the Hedgehog' and the new consumer data platform as key long-term growth drivers. Regarding golf equipment, Brewer characterized the Q3 market softness as short-term volatility, noting that sell-through trends had already recovered in late September and October.

Matthew Boss asked how the company is balancing price versus volume amid economic uncertainty and about the expected annual cadence of attendance recapture at legacy Six Flags parks. He also requested a walkthrough of the puts and takes for this year's cost base reset.

Answer

CEO Richard Zimmerman stated the focus is on driving market penetration in underpenetrated markets, which is a multi-year build. CFO Brian Witherow added that while the plan is volume-focused, they remain confident in improving guest spending and will maintain pricing discipline rather than discounting. Regarding costs, he explained the reset involves organizational structure changes, IT harmonization, and vendor negotiations, with early opportunities skewed toward headcount and later ones toward non-headcount savings.

Matthew Boss asked for details on the attendance cadence in Q4 and the primary top-line growth drivers for 2025, specifically the balance between volume and per caps. He also inquired about the multiyear operating expense trajectory for legacy Six Flags parks.

Answer

CEO Richard Zimmerman pointed to strong early 2025 momentum with attendance up 2% and season pass sales up 3%, emphasizing that higher volume is the main goal. CFO Brian Witherow stated that after realizing $50 million in cost synergies in 2024, the company is targeting another $70 million in 2025 by optimizing cost structures and leveraging scale, noting that any further cost pressure would likely be driven by positive volume growth.

Matthew Boss requested more detail on the cadence of attendance trends during Q3 versus the strong October results and asked about the expected linearity of achieving the 35% EBITDA margin target by 2027.

Answer

CEO Richard Zimmerman explained that Q3 attendance was up slightly, excluding hurricane impacts, while October's 20% surge was driven by strong execution, good weather, and the appeal of Halloween events. CFO Brian Witherow stated that the path to the 35% margin target will not be linear, as it is heavily dependent on the pace of attendance growth, which provides significant operating leverage.

Matthew Boss of JPMorgan Chase & Co. posed a two-part question, asking for elaboration on the new customer acquisition and retention metrics driving North America's inflection, and for a forward-looking view on Coach's merchandising, value proposition, and market share gains.

Answer

CEO Joanne Crevoiserat highlighted the intentional strategy of acquiring younger consumers (Gen Z/Millennials) and noted that the year-one retention rate for Gen Z at Coach is meaningfully increasing, signaling durable growth. Coach CEO Todd Kahn added that the brand is taking market share across the spectrum, citing its rise to #4 on the Lyst Index as proof of its global desirability. He emphasized that the focus on big product families like Tabby and New York allows for consistent and compelling innovation.

Matthew Boss inquired about new customer acquisition trends for Coach in North America and Greater China and asked if the newly raised low-to-mid-teens EPS growth outlook is sustainable over multiple years.

Answer

CEO Joanne Crevoiserat highlighted that customer acquisition is accelerating, particularly with younger Gen Z and millennial consumers who transact at higher AURs and show greater frequency. CFO and COO Scott Roe affirmed his belief that the current EPS growth pace is sustainable, citing conviction in continued AUR/AUC strength, a disciplined investment strategy, and a strong balance sheet that provides optionality for future shareholder returns.

Matthew Boss questioned the drivers behind Coach's market share gains and exceptional margins, recent global demand trends, and the outlook for gross margin for the remainder of the year and beyond.

Answer

Coach CEO Todd Kahn attributed the brand's success to the 'magic' of its product, citing immense demand for the new 'New York' collection that is not cannibalizing the Tabby family. CFO & COO Scott Roe explained that Q1's 280 bps gross margin expansion was aided by freight and mix, but expects full-year gross margin to drive operating margin expansion. Long-term drivers remain higher Average Unit Retail (AUR) from brand heat and lower Average Unit Cost (AUC) from supply chain efficiencies.

Matthew Boss inquired about the drivers of the first-quarter outperformance, business trends in April, and the specific company initiatives expected to secure multi-year market share. He also asked where the expanded 2025 guidance embeds conservatism and if there was any change to the long-term earnings growth targets.

Answer

CEO Jason Liberty attributed the Q1 beat to strong, high-quality close-in demand, a trend that continued into April. He highlighted the company's 'flywheel' strategy, including loyalty programs, the value gap versus land vacations, and investments in destinations and technology as key long-term drivers. CFO Naftali Holtz added that conservatism in the guidance is reflected in maintaining a wide 100-basis-point range for yield growth, rather than narrowing it as is typical. He reaffirmed the company's commitment to its 'Perfecta' long-term growth targets.

Matthew Boss of JPMorgan Chase & Co. asked about the strong start to 2025 bookings, seeking details on areas of global acceleration and pricing strategy. He also asked for a high-level assessment of the company's position in the $2 trillion global vacation market.

Answer

CEO Jason Liberty reported seeing strong, elevated demand across all global products and markets, with North America being exceptionally strong, driven by new assets and sophisticated AI-driven commercial tools. Regarding the broader market, Liberty stated they are still in the 'early innings' of the opportunity to capture a larger share, indicating significant room for growth.

Matthew Boss requested elaboration on the 'elevated demand patterns' observed through October and asked for clarification on what an 'optimal' book position for 2025 means for yield and margin expansion.

Answer

CEO Jason Liberty described demand as continuously strengthening through October, allowing for price increases despite hurricane-related noise. CFO Naftali Holtz explained that an optimal book position means using AI tools to build a solid base at higher rates, providing a strong runway to maximize yield into the wave season. Liberty added they are prioritizing revenue optimization over sheer volume to avoid 'leaving revenue on the table.'

Matthew Boss asked about the health and composition of inventory at year-end and inquired about further cost rationalization opportunities and the sales comp required for SG&A leverage.

Answer

CFO Jill Timm stated she feels good about the health of inventory, noting the 2% year-over-year increase was a deliberate investment in proprietary brands and categories like jewelry, which resonated well with customers in Q4. She expects inventory churn to be flat for the full year 2025. Regarding costs, Timm highlighted that the SG&A reduction guidance of 3.5% to 5% is more aggressive than the typical 1-1.5% comp leverage point. Savings are being driven by store and fulfillment center closures, headcount rationalization, lower marketing spend, and continued optimization of store labor through initiatives like self-checkout.

Matthew Boss asked which real-time and historical demand indicators the company watches to gauge consumer health. He also inquired about the company's view on a normalized, multiyear underlying revenue growth rate for the business.

Answer

CEO Kirsten Lynch identified several key indicators: real-time Net Promoter Scores, daily visitation data against expectations, and external factors like market-wide lodging bookings. She noted that for the spring, strong conditions, positive guest experience scores, healthy lodging indicators, and data on remaining pass holder usage all support the company's positive outlook. The company did not provide a specific normalized revenue growth rate.

Speaking for Matthew Boss of JPMorgan Chase & Co., an analyst asked about early season trends, comparing visitation versus ancillary spend. He also inquired about the multi-year outlook on the "normalization" headwind on participation relative to new pass growth.

Answer

CEO Kirsten Lynch addressed normalization by noting that after an industry-wide visitation decline last year, pass sales for the current season remained resilient, with units down only 2%. This demonstrates the stability provided by the pass program despite the lagging effects of last season's normalization. The call did not provide a specific breakdown of early season visitation vs. ancillary spend.

Matthew Boss asked for an elaboration on the current health of the golf industry in the U.S. versus international markets and its translation to 2025 rounds played. He also requested a breakdown of the puts and takes for the 2025 gross margin and the state of channel inventories.

Answer

CEO David Maher stated the golfer base is healthy, especially in the U.S., and the company plans for flat rounds played, with weather being the variable. He noted international macro conditions are softer but still plans for growth. CFO Sean Sullivan added that channel inventory is very healthy. For gross margin, he cited higher ASPs from pricing actions, a normalized supply chain, and distribution efficiencies as positive drivers for 2025.

Matthew Boss inquired about current golf participation and engagement trends, asking for a comparison between the U.S. and international markets. He also asked for the gross margin outlook for the fourth quarter and commentary on the promotional and inventory landscape.

Answer

President and CEO David Maher stated that U.S. rounds of play are up nearly 2% year-to-date, on pace with 2021's record, while international rounds are down about 2%, highlighting the U.S. consumer's resilience. Maher described the equipment promotional environment as 'steady state' but noted footwear as a 'watch out'. CFO Sean Sullivan confirmed the back-half gross margin outlook is consistent with the first half, supported by strong club sales volume, pricing, and efficiency.

Inquired about the current state of the digital luxury market, the drivers of demand acceleration in the U.S. and Europe, whether momentum continued post-holiday, and the timeline to return to high single-digit EBITDA margins.

Answer

The digital luxury market is healthy, especially for top spenders, with strong growth in the U.S. and Europe but weakness in Asia. The industry has improved from a year ago as inventory issues have subsided. A return to high single-digit EBITDA margins is expected in the medium term, driven by gross margin improvements.

Asked about the health of the core luxury customer across different regions and categories, and sought details on the promotional environment, inventory levels, and the resulting gross margin outlook for the upcoming quarters.

Answer

Executives stated that the U.S. and European markets are strong, while Asia lags. Top customers are spending significantly more, and the aspirational segment is showing some improvement. Ready-to-wear and 'quiet luxury' are key categories. The promotional environment has eased due to lower market inventory, allowing Mytheresa to improve its gross margin through a focus on full-price selling. Inventory levels are now at their target.

The analyst asked about the health of the core luxury customer, customer acquisition trends, competitive advantages, current inventory levels, the promotional landscape, and the potential to return to pre-pandemic gross profit margins.

Answer

Executives stated that the core top-spending customer is 'very healthy,' driving growth. The company's competitive advantage lies in its curated, multi-brand model which attracts brand partnerships and creates a virtuous cycle. Regarding margins, they noted that while there are no structural barriers to returning to pre-pandemic levels, the timing is uncertain due to short-term promotional pressures from competitors exiting the market, even as overall seasonal inventory levels improve.

Matthew Boss from JPMorgan Chase & Co. asked for details on the cadence of attendance trends during Q3, the drivers behind the recent recovery in October, and the outlook for cost efficiencies and the multiyear cost profile.

Answer

CEO Marc Swanson noted that Q3 attendance was volatile due to weather and calendar shifts but highlighted a strong recovery post-Hurricane Milton, with attendance up approximately 8% day-to-day in late October/early November, driven by popular Halloween events. Interim CFO James Forrester added that the company is targeting approximately $20 million in new cost-saving initiatives for 2025, focusing on technology to improve labor efficiency and reduce utility and insurance costs.

Matthew Boss asked about recent changes in customer demand and dealer sentiment, the drivers behind the stronger 2025 outlook, and the expected pricing and promotional landscape for 2025.

Answer

CEO David Foulkes stated that retail demand is tracking as expected, down around 10%, with some weakening noted in Europe. CFO Ryan Gwillim detailed the 2025 outlook, citing expectations for healthier economic conditions, a stable to slightly up marine market, positive pipeline dynamics where wholesale would likely rise versus 2024, and company-specific market share gains. Gwillim also confirmed plans for modest 2025 price increases, noting that elevated retail discounting is already helping the end consumer price.

Asked about recent same-store sales trends, particularly in April, the sustainability of this performance, and the drivers for the expected Q4 EBITDA margin expansion.

Answer

Same-store sales trends are strong, with a +6% comp in April, and the company is confident in sustaining low to mid-single-digit comps. Q4 EBITDA margin is expected to expand due to positive operating leverage on sales growth, lapping of prior wage increases, and removal of legacy costs.

Asked about Lucky Strike's performance, customer reaction to pricing changes, and the long-term new unit pipeline and white space opportunity.

Answer

Lucky Strike is outperforming expectations due to its strong brand and operational improvements. Customers have not pushed back on recent price increases, indicating they see value. The company sees significant white space in the broader entertainment market and has a strong new build pipeline while preparing for future acquisitions.

Matthew Boss of JPMorgan asked for details on the annual EBITDA glide path embedded in the three-year plan, particularly the expected improvement in 2024. He also inquired about potential areas of conservatism within the plan.

Answer

CEO Josh Weinstein declined to provide specific 2024 guidance but pointed to significant tailwinds, including a large jump in occupancy and capacity growth in the high-returning Carnival brand. CFO David Bernstein noted that pre-call consensus for the annual EBITDA step-up was similar to their internal view. Weinstein avoided ranking conservative elements but affirmed his goal is to exceed the targets and restore margins to historical norms.