Mitchel Kummetz

Mitch Kummetz asked for clarification on the expected growth drivers for 2026, specifically regarding gross margins, tariff impacts, promotional activity, and the long-term margin profile for Stuart Weitzman, including whether organic growth is targeted for next year.

Answer

CEO Jay Schmidt confirmed targeting organic growth in 2026, driven by lead brands and structural SG&A savings, and expressed optimism for a better 2026 as Stuart Weitzman's inventory pressures are addressed. CFO Jack Calandra noted expected gross margin improvement in 2026 from tariff mitigation actions, but indicated that tariffs might not be fully offset by gross margin alone, necessitating SG&A efficiencies to keep the operating margin impact neutral. Jay Schmidt stated that Stuart Weitzman's long-term margin target is expected to be in line with the brand portfolio average, leveraging Caleres' capabilities for efficiency and growth.

Mitch Kummetz asked for clarification on the expected growth drivers for 2026, specifically regarding gross margins, tariff impacts, promotional activity, and the long-term margin profile for Stuart Weitzman, including whether organic growth is targeted for next year.

Answer

CEO Jay Schmidt confirmed targeting organic growth in 2026, driven by lead brands and structural SG&A savings, and expressed optimism for a better 2026 as Stuart Weitzman's inventory pressures are addressed. CFO Jack Calandra noted expected gross margin improvement in 2026 from tariff mitigation actions, but indicated that tariffs might not be fully offset by gross margin alone, necessitating SG&A efficiencies to keep the operating margin impact neutral. Jay Schmidt stated that Stuart Weitzman's long-term margin target is expected to be in line with the brand portfolio average, leveraging Caleres' capabilities for efficiency and growth.

Mitch Kummetz of Seaport Research Partners sought more detail on the 'encouraging' early sales from the Jordan launch, including any quantifiable store lift. He asked about the timing of the all-door rollout for back-to-school, the immediate customs impact of the tariff block, the forward-looking implications of the quarter's cost impacts (sourcing, inventory, bad debt), and the reason for the SG&A dollar increase in the Brand Portfolio.

Answer

President & CEO Jay Schmidt shared that while it's too early for lift data, Jordan's men's, boys', and accessories lines are tracking well, with a strong $100 price point, and confirmed a mid-July all-door rollout. He described the tariff situation as too new and fluid to comment on customs impact. SVP & CFO Jack Calandra explained that inventory reserves are largely addressed for spring, but tariff and credit issues could persist. Jay Schmidt attributed the Brand Portfolio's SG&A increase primarily to international investments aimed at driving growth in 2026.

Mitch Kummetz requested more detail on the 'encouraging' early sales of the Jordan brand, the timing of its full rollout, and the immediate customs impact of the tariff block. He also asked about the forward-looking implications of Q1's sourcing costs, inventory reserves, and bad debt, and questioned the rise in SG&A for the Brand Portfolio.

Answer

President & CEO Jay Schmidt shared that early Jordan sales show men's, boys', and accessories tracking well, with a full rollout planned for mid-July. He noted the tariff situation is too new to assess its immediate impact. SVP & CFO Jack Calandra explained that inventory reserves for spring are largely complete, but customer credit issues could persist. Jay Schmidt attributed the Brand Portfolio's SG&A increase primarily to strategic international investments for future growth.

Mitch Kummetz sought more detail on the 'encouraging' early sales from the Jordan launch, the timing for the all-door rollout, and the immediate impact of the tariff block. He also asked about the forward-looking implications of the Q1 cost impacts from sourcing, inventory reserves, and bad debt, and questioned the reason for the SG&A dollar increase in the Brand Portfolio.

Answer

Jay Schmidt, President & CEO, shared that early Jordan sales showed strong performance in men's, boys, and accessories, with a full rollout planned for mid-July. He noted the tariff situation is extremely new and fluid. Jack Calandra, SVP & CFO, explained that inventory reserves for spring are likely sufficient, but customer credit issues could persist. Jay Schmidt attributed the Brand Portfolio's SG&A increase primarily to international investments aimed at driving growth in 2026.

Mitchel Kummetz from Seaport Research Partners requested more detail on the Q1 guidance, including the sales split between Famous Footwear and Brand Portfolio and the expected operating margin. He also sought clarification on whether the EPS guidance was GAAP or adjusted and how tariff impacts were being allocated.

Answer

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.

Mitchel Kummetz requested a detailed breakdown of the implied Q4 guidance, including the impact of the 53rd week from the prior year, expected sales growth for the Brand Portfolio, and the comparable sales assumption for Famous Footwear. He also asked about the expected Q4 operating margin drivers and the impact of weak boot sales.

Answer

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.

Mitchel Kummetz from Seaport Global Securities inquired about potential fallout on wholesale partner confidence from the ERP issues, the significance of the boot category, the Q3 comp and margin outlook for Famous Footwear, and the specific factors behind the full-year guidance revision.

Answer

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.

Mitch Kummetz sought more detail on the 'encouraging' early sales of the Jordan launch, the timing for its all-door rollout, the immediate customs impact of the tariff block, the forward-looking implications of one-time costs from sourcing, inventory, and bad debt, and the reason for the SG&A dollar increase in the Brand Portfolio.

Answer

President & CEO Jay Schmidt shared that early Jordan sales show men's and boys' products tracking extremely well, with a full rollout planned for mid-July to align with peak back-to-school weeks. He reiterated the tariff situation is too new to comment on definitively. SVP & CFO Jack Calandra explained that inventory reserves for spring are largely accounted for, though levels will remain elevated into Q2, and customer credit issues will be monitored. He attributed the Brand Portfolio's SG&A increase primarily to strategic international investments aimed at driving growth in 2026.

Mitch Kummetz requested more detail on the 'encouraging' early sales of the Jordan brand, the immediate customs impact of the tariff block, the forward-looking implications of Q1's cost pressures (sourcing, inventory, bad debt), and the reason for increased SG&A in the Brand Portfolio.

Answer

President & CEO Jay Schmidt noted strong early performance in Jordan's men's, boys', and accessories lines but said it was too early for lift data. SVP & CFO Jack Calandra explained that Q1 inventory reserves should not be a recurring headwind, but customer credit issues could persist. Jay Schmidt attributed the Brand Portfolio's SG&A increase primarily to strategic international investments aimed at future growth.

Mitch Kummetz inquired about the drivers behind Zumiez's strong hard goods performance, specifically asking if Skate or Snow in Europe was contributing and about U.S. Skate trends. He also asked about the fourth quarter outlook, including comp assumptions for the balance of the quarter, and details on private label performance, penetration, and its contribution to product margin, including strength across men's and women's categories.

Answer

CEO Rick Brooks confirmed that Skate was the primary driver across all global regions, marking a cautious reversal of a multi-year negative trend that saw Skate hard goods reach an all-time low in 2024 after a pandemic-driven high in 2020. CFO Chris Work added details on the Q4 outlook, expecting North America sales to soften slightly from November's strong performance, while international comparable sales are planned to be negative in December/January due to anniversarying prior year promotions, despite product margin dollar growth. Regarding private label, Chris Work highlighted its strong performance, with penetration up approximately 200 basis points year-over-year to just under 31% of total product, contributing to higher product margins. Rick Brooks emphasized the five-year effort in private label, its full-price, full-margin strategy, and its premium pricing in some categories, noting good strength across both men's and women's categories.

Mitch Kummetz inquired about the extent to which continued product margin opportunity is tied to growing private label penetration and asked for the product margin delta between private label and third-party brands.

Answer

CFO Christopher Work confirmed that private label contributes to product margin gains, noting a 10% to 15% product margin benefit from private label products compared to pure branded products. He also mentioned that product margin gains have historically occurred during heavy branded cycles, indicating that the company's strategy includes both private label and unique branded offerings, as well as licensed models that fall between these margin profiles.

Mitch Kummetz followed up on whether the skate hard goods and a specific large footwear brand have reached their bottom as pressure points on comparable sales. He also asked for further clarification on the continued product margin opportunity, specifically how much is tied to private label penetration growth and the product margin delta between private label and third-party branded products.

Answer

Rick Brooks, Chief Executive Officer, noted that skate hard goods have turned positive, expressing cautious optimism that the bottom of the cycle has been found, but wants to observe fall and winter results. He stated that the footwear category remains challenging overall, with several brands facing difficulties, and still needs to be 'figured out.' He highlighted the company's resilience in achieving comp gains despite these drags. Chris Work, Chief Financial Officer, reiterated that private label contributes to product margin gains, but also noted that branded cycles have driven gains historically. He specified that private label products typically offer a 10-15% product margin benefit compared to pure branded products, with licensed models falling in between.

Mitch Kummetz of Seaport Research Partners inquired about the impact of tariffs on the business, including Zumiez's sourcing exposure to China, the effect on COGS, and mitigation strategies. He also asked about the drivers behind the negative performance in the 'other international' segment and the company's plan to improve results in Europe.

Answer

Chief Financial Officer Christopher Work detailed the company's proactive tariff mitigation, including diversifying sourcing away from China with a goal to reduce exposure from 50% to under 30% by year-end. He explained that a combination of working with brand partners, selective price adjustments, and promotional strategies should allow for modest product margin growth. Regarding international performance, Work acknowledged the slow start in Europe but noted the focus remains on profitability, product newness, and margin management ahead of the critical fourth quarter, adding that some of the May weakness was due to timing shifts.

Mitch Kummetz of Seaport Research Partners questioned Zumiez about the impact of tariffs, its China sourcing exposure, and mitigation strategies. He also followed up on the outlook for product margins amid these cost pressures and inquired about the strategic plan to address the significant sales decline in the 'Other International' segment, particularly in Europe.

Answer

CFO Christopher Work detailed the company's proactive tariff mitigation, including reducing China sourcing from 50% to a target of 30% by year-end and aiming for no single country to exceed 20% long-term. He stated that a mix of sourcing diversification, vendor partnerships, and selective price adjustments allows them to project modest product margin growth. Regarding the international weakness, Work acknowledged the slow start in Europe but noted a focus on new products, margin control, and inventory management, emphasizing that the key fourth quarter will be critical for the segment's performance.

Mitch Kummetz inquired about the impact of tariffs, seeking details on China sourcing exposure, the effect on COGS for private label and third-party brands, and mitigation strategies. He also asked how the company expects to achieve product margin growth despite these pressures and questioned the drivers behind the significant negative comps in the 'other international' segment and the strategy for improvement.

Answer

CFO Christopher Work explained that the company is proactively managing tariffs by diversifying its sourcing base, aiming to reduce China exposure from 50% to under 30% by year-end. He stated that a combination of collaborating with brand partners, adjusting pricing and promotional strategies, and managing costs allows for the projection of modest product margin growth. Regarding the international segment, Work acknowledged a slow start in Europe but noted the fourth quarter is most critical. The focus remains on introducing product newness, controlling expenses, and managing inventory to improve profitability.

Mitchel Kummetz of B. Riley Securities inquired about the impact of potential tariffs on Zumiez's private label and branded product sourcing, and also asked about the company's operating leverage points and expected profit flow-through on sales growth.

Answer

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.

Mitchel Kummetz questioned the Q4 comparable sales guidance of 6% to 7.5% given the quarter-to-date trend of 2.9%, asking for the bridge between the two. He also sought an explanation for the footwear category's swing from a positive double-digit comp in Q3 to negative in Q4-to-date, and inquired about the Q4 occupancy cost outlook considering the 13-week versus 14-week quarter.

Answer

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.

Mitchel Kummetz inquired about the key drivers behind the strong back-to-school sales inflection, the sustainability of this momentum into the fall, and the underlying comparable sales assumptions in the Q3 guidance. He also asked for clarification on the European business's performance, questioning if weaker comps were due to strategy shifts, a tougher macro environment, or different consumer trends compared to North America.

Answer

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.

Mitch Kummetz inquired about Journeys' fourth-quarter sales and comparable store sales outlook, specifically asking if a flat to low single-digit sales decline and flat to slightly positive comparable sales were expected. He also asked for the sales lift from 4.0 stores in Q3, Journeys' November comparable sales performance, the expected trajectory for December and January, and details on the Nike brand launch, including the number of doors and future expansion plans.

Answer

Mimi Vaughn, Board Chair, President, and Chief Executive Officer, explained that Journeys anticipates positive comparable sales in Q4, moderating from strong prior-year comparisons, with robust store growth offsetting a moderated e-commerce comp due to tough comparisons. She confirmed 4.0 stores continue to deliver strong performance, attracting new customers and elevating the shopping environment. Vaughn stated Journeys' comps were positive in November, with record Black Friday sales driven by full-price selling. She expects a very positive holiday season due to a strong assortment, including the recent Nike launch, but anticipates a pullback in January. Regarding Nike, Vaughn noted it launched in a handful of doors on November 12th with top-tier product, aiming to build it into a major brand over time.

Mitch Kummetz inquired about the evolution of the product assortment at Journeys since the pivot began a year ago, the progress in targeting a wider teen audience, the drivers behind the strong Q3-to-date comps, and the performance dynamics at the Schuh brand in the UK.

Answer

Mimi Vaughn, Chairman, President & CEO, explained that Journeys' assortment is now broader and deeper in successful brands, building on last year's momentum. She noted that efforts to reach a wider audience are in the "very early days." Vaughn confirmed that the current double-digit comps at Journeys are on top of double-digit comps from the same period last year. For Schuh, she acknowledged that comps turned positive in July but noted the UK market remains volatile and promotional, which is expected to continue.

Mitch Kummetz from Seaport Research Partners asked for clarity on the Q2 outlook for Journeys, the key drivers for growth in the second half against tougher comparisons, and the potential impact of price increases on "must-have" items.

Answer

CEO Mimi Vaughn and CFO Cassandra Harris clarified that while Journeys' Q2 comp is tracking well, the overall company guidance accounts for softness in other divisions. For the back half, Vaughn highlighted the strategy of serving a larger teen market, the significant sales lift from the 4.0 store remodels, and improved product allocation as key drivers. Regarding pricing, Vaughn stated they do not expect to absorb margin hits from tariffs and that brands with momentum have more ability to increase prices, though all partners are proceeding cautiously.

Mitchel Kummetz asked for clarification on quarter-to-date business trends, the detailed fiscal '26 outlook for Journeys' comps, the impact of strategic pillars, and the drivers behind the full-year margin guidance.

Answer

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.

Mitch Kummetz of Seaport Research Partners inquired about the progress of Journeys' product assortment, the impact of brand partners noticing recent success, the effects of store optimization on productivity, the rollout plan for the new store concept, specific guidance for Journeys' Q4 comparable sales, and details on new demand creation strategies.

Answer

Mimi Vaughn, Board Chair, President and CEO, explained that Journeys' assortment is now more diversified across 7-8 brands, moving beyond the previous focus on canvas products. She stated that strong brand partnerships are improving access to athletic styles and that the company is in the "early innings" of its turnaround. Regarding stores, she noted the strategy is to optimize the footprint and drive productivity in the best locations with a new, cleaner store concept, with 10 open and at least 15 more planned for next year. For Q4, she guided to positive comps for Journeys, though not at Q3's 11% level, highlighting strong full-price selling. Demand creation efforts include building a new brand purpose, increasing marketing on platforms like TikTok, and leveraging the 4 million-member loyalty program.

Mitchel Kummetz inquired about the specifics of the third-quarter guidance, particularly the consolidated and Journeys comp assumptions for September and October. He also asked about the product strategy for the holiday season, the plan to better serve the teen girl consumer, and details regarding the upcoming store refresh and new concept rollout.

Answer

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.

Mitchel Kummetz inquired about the financial impact and cadence of Shoe Carnival's re-bannering strategy, including the drag on earnings for fiscal 2025 and 2026, and the expected recovery in 2027 and 2028. He also asked about core earnings growth projections, the performance of the boot business, and opportunities to elevate Shoe Station's product assortment with premium brands.

Answer

CFO Kerry Jackson detailed the $25 million-$30 million re-banner expenses expected for fiscal 2026, noting they will be front-loaded and impact SG&A and EPS negatively in the first half. EVP and Chief Merchandising Officer Tanya Gordon reported a slow start for boots in Q3 but strong double-digit increases in October. President and CEO Mark Worden confirmed significant opportunities to elevate Shoe Station's premium brand offerings and assortments, actively engaging with brand partners.

Mitch Kummetz of Seaport Research Partners questioned the sustainability of the strong initial results from rebannered stores, the financial impact of accelerating the rebannering plan into the next fiscal year, and the comp sales assumptions in the Q2 guidance. He also asked about new brand additions for back-to-school and the potential impact of tariffs on costs, concluding with a question on the long-term viability of the Shoe Carnival banner.

Answer

President & CEO Mark Worden cited a lapping rebannered store that is still comping positive as evidence of sustainable performance and confirmed new brand additions are focused on the Shoe Station banner. CFO Patrick Edwards detailed the acceleration of the P&L investment into the current fiscal year. Regarding tariffs, Worden expressed cautious optimism, highlighting the company's non-wholesaler status and strong balance sheet for opportunistic buys, stating no material cost impacts have been seen to date. He also acknowledged the potential synergies of a full conversion to Shoe Station, a possibility the company will begin testing in 2026.

Mitch Kummetz from Seaport Research Partners asked about the sustainability of strong initial results from rebannered stores and sought details on the P&L impact of the accelerated conversion plan for the next fiscal year. He also inquired about the comp sales assumption in the Q2 guidance and whether the company's outlook on potential tariffs has changed.

Answer

President & CEO Mark Worden indicated that early data shows rebannered stores sustain growth into their second year, suggesting long-term success. CFO Patrick Edwards explained that P&L investment costs are being accelerated and will increase beyond prior disclosures, with more details to come. Worden added that the Q2 guidance assumes similar recent trends and that despite tariff headlines, the company has not seen material cost impacts that would alter its annual guidance, citing opportunistic inventory buys as a buffer.

Mitchel Kummetz of Seaport Research Partners inquired about Shoe Carnival's major rebannering strategy, asking if the planned 50-75 store conversions in 2025 will be in existing markets like the initial test, and what provides confidence for out-of-market expansion. He also sought details on the impact of potential tariffs on vendor pricing and the company's guidance, specifically requesting more color on the comparable sales outlook and margin breakdown for the full year and Q1.

Answer

CEO Mark Worden explained that the rebannering will start within existing markets before methodically expanding to new states later in the year, with broader expansion into new regions planned for 2026, based on strong demographic data. Chief Merchandising Officer Carl Scibetta addressed tariffs, stating the situation is unsettled but he anticipates only modest, mid-single-digit price increases on select new items, a view incorporated into the current guidance. CFO Patrick Edwards clarified that the full-year sales guidance of down 4% to up 2% also applies to comps, with gross margin expected to remain above 35%. For Q1, he confirmed an expected EPS impact of $0.15 to $0.20 from the rebannering investment.

Mitchel Kummetz of Seaport Research Partners asked for a quantification of the sales impact from recent hurricanes, the status of any replacement buying, expectations for Q4 boot sales, the health of boot inventory, the rationale for the revised sales guidance, and the performance of rebannered stores in new markets.

Answer

CEO Mark Worden attributed the sales miss roughly half to hurricanes and half to warm weather delaying boot sales, noting replacement buying has not yet materialized but is expected. He and Chief Merchandising Officer Carl Scibetta stated that while pent-up demand for boots exists, Q3's lost sales are unrecoverable, and boot inventory is being managed down. Worden confirmed the lower end of the sales guidance is likely due to continued warm weather but reiterated that the profit outlook is strong and the rebannered stores are showing promising results, exceeding the 3-5% growth target even in new markets.

Mitchel Kummetz of Seaport Research Partners inquired about the monthly comparable sales trend in Q2, the composition of Q3 sales, the comp expectation for the back half, the outlook for the boot category, full-year margin guidance, and the specific adjusted EPS and comp sales outlook for Q3.

Answer

President and CEO Mark Worden stated that Q2 months did not have wild swings and guided for a flat to +5% comp for the back half, with the lower end of the range being more likely. He clarified the remainder of Q3 is expected to be flat to a slight increase. Chief Merchandising Officer Carl Scibetta noted that boots were planned up low-single digits for the fall. Executive Steve Alexander confirmed the full-year margin guidance and indicated the Q3 adjusted EPS would be slightly higher than the GAAP figure of $0.70.

Mitch Kummetz of Seaport Research Partners asked for a breakdown of Saucony's Q2 growth between new and existing doors and how that informs the back-half outlook. He also inquired about the drivers behind the recent improvement in the overall hike category.

Answer

CEO Christopher Hufnagel stated that new door expansion drove 'well less than half' of Saucony's Q2 growth, emphasizing the broad-based momentum across channels, regions, and product types. Regarding the hike category, he suggested the improvement could be due to lapping weak periods, but also credited market leaders like Merrell for bringing innovation and energy to the category.

Mitchel Kummetz questioned the assumptions behind the Q2 revenue outlook, asking if it reflects a continuation of April trends or a more cautious stance. He also sought to quantify potential offsets to the $30 million tariff impact and asked if the company was currently landing goods at the high tariff rate.

Answer

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.

Mitchel Kummetz questioned the assumptions behind the Q2 revenue forecast, asking if it assumes current trends hold or a more cautious stance. He also asked if the company is currently landing goods at the high tariff rate and sought to quantify potential offsets like price increases and SG&A savings.

Answer

CEO Christopher Hufnagel explained the Q2 outlook is a mix, balancing current business momentum with awareness of macro uncertainty. He declined to quantify specific offsets but confirmed a multi-lever approach to mitigate tariff impacts. CFO Taryn Miller added that while not getting into specifics on shipments, the significant reduction in China sourcing is a key part of their mitigation strategy.

Mitchel Kummetz requested Q1 sales guidance by brand for the Active Group (Merrell, Saucony, Sweaty Betty). He also asked about the marketing spend rate for 2025 compared to 2024 and the business impact of recent cold weather.

Answer

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.

Mitch Kummetz questioned the company's strategy for potential new tariffs in 2025 and asked for more details on Saucony's distribution expansion, including net door growth and the mix between U.S./international and lifestyle/performance channels.

Answer

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.

Mitch Kummetz of Seaport Research asked for clarification on what pricing mitigation is embedded in the merchandise margin guidance, the quarterly cadence of exclusive brand penetration growth, and the reason for the lower SG&A leverage point.

Answer

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.

Mitchel Kummetz asked about any signs of preemptive buying or spending pullbacks from consumers and retailers, the company's updated foreign exchange outlook, and its strategy for managing inventory and the order book amid uncertainty.

Answer

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.

Mitchel Kummetz from Seaport Research Partners questioned the disconnect between Q4 sales being near the high end of guidance while operating margin was below the midpoint, asking if increased promotions or spending were the cause. He also asked about the drivers for the strong implied Q2 sales growth.

Answer

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.

Mitchel Kummetz asked about the weather assumptions embedded in the Q4 outlook, questioning if it assumes normal or continued warm weather and when the cold weather needs to arrive to avoid heavy promotions. He also asked about the SOREL brand, seeking any "green shoots" that support its long-term $1 billion potential given its current decline and weak spring order book.

Answer

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.