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CFO Jim Watkins explained the flat merchandise margin guidance for the year embeds absorbing some tariff costs, primarily on exclusive brands, rather than passing all costs to consumers. He noted exclusive brand penetration growth is higher in the first half (190 bps in Q1) than the second. The lower SG&A leverage point (now a flat comp) is due to lapping high one-off costs from the prior year and the fixed-cost absorption from a larger, profitable store base.

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CEO Christopher Hufnagel explained the Q2 outlook is a mix of acknowledging current momentum while being cognizant of macro uncertainty. He declined to quantify tariff offsets but confirmed a multi-lever approach including pricing and expense control. CFO Taryn Miller noted the $30 million unmitigated figure assumes any planned imports from China would be subject to the higher rates.

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CFO Taryn Miller stated that the company will now provide quarterly guidance by segment (Active, Work) rather than by individual brand. CEO Chris Hufnagel confirmed the marketing rate, which was around 8% in 2024, will increase in 2025 to fund brand investments, particularly for Saucony. He added that recent cold weather has benefited seasonal boot sales without creating headwinds for the running business.

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CEO Christopher Hufnagel addressed tariffs by emphasizing the company's resilient business model, diversified sourcing with reduced China exposure, and recent strengthening of gross margins. For Saucony, he highlighted a thoughtful expansion, including 900 new U.S. lifestyle doors for Spring '25, guided by new leadership to strategically place the brand where consumers are shopping.

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CEO Tim Boyle stated that retail partners are looking to Columbia for guidance, and the company's strong balance sheet makes it a reliable partner. He also noted the flexibility to move inventory globally. CFO Jim Swanson mentioned that the FX outlook for Q2 is conservative but declined to give a full-year view. He confirmed that most fall inventory is already purchased and that the company will leverage its outlet stores to manage any excess product.

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EVP & CFO Jim Swanson explained the Q4 margin pressure resulted from a higher mix of sales occurring during the more promotional holiday period due to a softer October/November, as well as mid-single-digit millions in severance costs. For Q2, Swanson confirmed that a shift of $20 million to $30 million in wholesale shipments from Q1 into Q2 is the primary driver of the stronger growth rate.

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CEO Tim Boyle and CFO Jim Swanson explained that the Q4 guidance accounts for the warm October but assumes some moderation, not a "polar freeze," and the guidance range remains wide to account for this uncertainty. Boyle acknowledged it's never too early for snow. Regarding SOREL, Boyle expressed confidence in the brand's unique identity and pointed to the renewed focus on the men's product line, which was previously neglected, as a key opportunity and "green shoot" for future growth.

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CFO Jack Calandra indicated that for Q1's projected 5-6% sales decline, Brand Portfolio would perform at the better end of the range and Famous Footwear at the lower end. He stated Q1 operating margin would be the lowest of the year but did not provide a specific figure, and confirmed GAAP and adjusted EPS guidance are currently the same. Regarding tariffs, he quantified the gross margin impact from absorption at 30-40 basis points for the Brand Portfolio for the year.

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CFO Jack Calandra detailed that the prior year's 53rd week contributed $25 million in sales ($18M Famous, $7M Brand Portfolio). For Q4, he guided for both segments to be down mid-single-digits on a reported basis. Adjusting for the 53rd week, Famous Footwear is expected to have a slightly positive comp of 1% to 1.5%. Calandra noted the Q4 operating margin decline will be driven more by gross margin pressure from Brand Portfolio markdowns than SG&A deleverage. CEO Jay Schmidt added that weak boot sales accounted for about two-thirds of the Q3 sales shortfall and that a similar trend is anticipated for Q4.

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CEO John Schmidt assured that there has been no loss of confidence from retail partners, as late shipments remained within customer windows, and noted boots represent about 28% of Brand Portfolio sales in the back half. CFO Jack Calandra projected a 'modest positive comp' for Famous in Q3 but cautioned that reported sales would be down mid-single-digits due to a calendar shift and that Q3 gross margin for the segment would also be down. The full-year guidance revision was attributed to the Q2 ERP sales loss and seasonal weakness.

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CFO Christopher Work explained that Zumiez is actively diversifying its sourcing to reduce reliance on China, which currently accounts for about 50% of North America receipts. He noted that the company pulled some inventory forward to mitigate near-term tariff risks. Regarding profitability, Work stated that Zumiez expects to grow operating profit in fiscal 2025, driven by product margin expansion and leveraging costs like occupancy. He projected that SG&A would grow in line with sales, but that a profit flow-through rate of 30% or more is achievable if sales growth exceeds expectations, confirming that operating margin can expand even on a low single-digit comparable sales increase.

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Chief Financial Officer Christopher Work explained that the Q4 comp forecast is based on historical data for years when Christmas falls on a Wednesday, which concentrates sales heavily in December. He noted that while Q4-to-date footwear sales are down, this is largely due to lapping heavy promotions from the prior year, and the company is now focused on full-price selling. Regarding occupancy, Work stated that while they expect to see leverage on a positive comp, the numerous store closures planned for Q4 will add complexity to the final outcome.

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Richard Brooks, an executive, attributed the sales momentum to sequential business improvement, the strength of private label products, and new brands resonating with a '90s and 2000s fashion trend. Chief Financial Officer Christopher Work clarified that the Q3 guidance implies an adjusted sales growth of 7% to 9%, slightly below the recent peak due to seasonality, after accounting for a calendar shift that benefited Q2. Regarding Europe, Brooks confirmed the macro environment is tougher, particularly in Germany, and the company is strategically pivoting to a full-price, curated assortment, which temporarily pressures top-line sales but is expected to improve long-term profitability.

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CEO Mimi Vaughn described the start to the quarter as a "roller coaster" but noted overall satisfaction, with consumers shopping for events like Valentine's Day. She and CFO Cassandra Harris explained that Journeys' comps are expected to be strong in the first half against easier compares, though not at the double-digit levels of late fiscal '25. Mimi Vaughn detailed the long-term Journeys strategy, focusing on a larger teen girl market, elevated assortments, and the new 4.0 store format. Both executives attributed gross margin pressure to product mix shifts at Journeys and license clearances at Genesco Brands Group, while noting incentive compensation would normalize in SG&A.

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Chief Financial Officer Tom George confirmed the Q3 consolidated and Journeys comp guidance is for low-single-digit growth. CEO Mimi Vaughn added that while positive comps are expected to continue through September and October, consumer shopping will likely moderate before picking up again for holiday. She detailed that the holiday assortment will lean into athletic and casual trends rather than relying on boots. Vaughn also elaborated on the strategy to capture the teen girl market—a perceived 'white space'—through enhanced product, marketing, and in-store experiences. She clarified the fleet-wide visual refresh will be done before holiday, while a more revolutionary new store concept will begin testing in a few locations in October.

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