Peter McGoldrick • Stifel Financial Corp.

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Mehdi Bouyakhf, President of EMEA, stated that closed-toe continues to outpace open-toe, and importantly, non-Boston styles like Naples Wrap, Tokyo, and Lutria are growing at the same pace. He noted that the company is not yet at the ceiling for closed-toe's share of business, which typically grows even faster in the autumn season, without cannibalizing the robust growth of the open-toe business.

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President of Americas David Kahan stated that wholesale growth primarily comes from expanding assortments within existing accounts, with over 90% of growth from current partners. EMEA President Nico Bouyakhf added that they are highly selective with new partners. CEO Oliver Reichert noted that long-term, new product categories for professional and outdoor use will naturally create opportunities for a broader distribution network.

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CEO Mike Dennison explained that strong first-half bike growth was due to OEMs accelerating new model launches to clear old inventory. He views the expected second-half moderation as a positive sign of disciplined inventory management by partners. He stated that 2025 will be a growth year for the bike business, resetting the foundation for a return to historical growth rates in 2026.

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President, CEO and Chair, Scott Baxter, expressed that the cultural fit between Kontoor and Helly Hansen has been exceptional, rating the integration an 'A to A plus'. He highlighted significant opportunities in outdoor, workwear, and footwear. Baxter detailed that U.S. expansion will be driven by leveraging Kontoor's digital and D2C engines, opening more retail stores, and expanding into outdoor specialty channels. He also emphasized the untapped potential of bringing Helly's innovative workwear to the U.S. market. EVP, CFO & Global Head of Operations, Joe Alkire, added that Helly's growth will be highly accretive as it plugs into Kontoor's existing platforms.

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CFO Joseph Alkire noted Helly Hansen is on track for double-digit growth in H2 2025 and reiterated the long-term high-single-digit growth target. CEO Scott Baxter highlighted the stability provided by Helly's workwear segment. Alkire added that the current cash flow guidance does not yet include a significant working capital benefit from Helly that is expected to materialize in 2026.

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CFO Jesse Timmermans linked new customer acquisition strength to the areas of net sales growth and highlighted strong productivity from existing customers. Co-Founder & Co-CEO Mike Karanikolas attributed fashion apparel growth to a mix of fashion trends and strategic investments in categories beyond the company's traditional core.

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Co-CEO Michael Karanikolas emphasized a long-term focus, stating that investments in areas like owned brands and AI are judged on ROI, not short-term P&L impact. He highlighted physical retail as a powerful new customer acquisition channel, noting that nearly half of purchases at their Grove store came from new-to-file customers, even in their home market of Los Angeles.

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EVP & CFO Jim Swanson clarified that the current financial outlook only includes cost savings actioned to date. Regarding tariffs, he explained that based on roughly $800 million in annual U.S. FOB imports, a 10% universal tariff equates to an $80 million annualized gross impact. Chairman, President & CEO Tim Boyle stated that unifying the wholesale and DTC businesses under the new North American structure should yield "almost immediate results" in improving their go-to-market consumer strategy.

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CEO Tim Boyle explained that market share gains are expected from competitors and private label businesses that are more dependent on Chinese manufacturing and will face import challenges. He affirmed a strong commitment to increasing marketing spend starting in August with a new, more efficient, and distinctive global campaign. CFO Jim Swanson supported this by noting that Q1 marketing spend was already 6.4% of sales, indicating their intent to follow through on the strategy.

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President & CEO Bracken Darrell confirmed an increased focus on back-to-school marketing, which is an annual priority. He clarified that while Vans is a major focus, the investment is not exclusive to that brand and reflects a more concerted effort than the prior year.

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EVP & CFO Harmit Singh did not quantify a specific contribution from the loyalty program, but reiterated its strategic importance. He noted that loyal fans drive higher purchase frequency and are embracing the broader denim lifestyle offerings. He emphasized the significant opportunity for growth, stating the company should have 100 million loyal fans, up from nearly zero just a few years ago.

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CEO Kevin Plank explained the strategy is to shift the product mix to 25% good, 50% better, and 25% best, using the tiered Velocity running shoe franchise as an example of how a pinnacle product authenticates the entire line and elevates the brand. CFO David Bergman added that a shifting mix away from lower-ASP categories should help AUR in FY26. However, he declined to quantify the tariff impact, citing significant uncertainty.

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CEO Christopher Hufnagel expressed bullishness on Saucony's lifestyle segment, noting its expansion is test-based and performing well in new doors like Foot Locker. For Sweaty Betty, he confirmed the 1,000 bps margin improvement was driven by a strategic shift to a less promotional, more premium positioning, which will pressure the top line in the short term for long-term brand health.

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Executive John Vandemore responded that while pricing is a lever under consideration, any increases would likely be specific to the U.S. market to maintain logical consistency for customers. He emphasized a flexible approach. Regarding expenses, Vandemore noted that while there is discretion, the company wants to avoid being 'penny wise, pound foolish' and will continue to invest for long-term brand health, drawing parallels to its successful strategy five years ago.

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CFO John Vandemore stated that the regulatory environment in India had a noticeable impact in Q2 but that local production is a primary focus and is improving. He expressed optimism for the back half of the year due to positive trends in certification processes. For China, he noted that constant currency sales growth was double the reported rate and that the first half of the quarter was encouraging. While the 6/18 event was weak and price-driven, he expects a better second half and remains confident in the brand's resonance and long-term opportunity.

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CEO Stephen Bratspies stated that international growth, particularly in Australia, is driven by consumer pull and innovation, not channel fill, highlighting new 'Bonds everyday value' products. Regarding Printwear, he described it as a highly incremental growth opportunity for 2025, supported by a new leadership team and the 50th anniversary of the Beefy-T, but did not disclose its specific size.

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Co-CEO Marc Maurer explained that On views marketing as a single, integrated effort rather than a split between brand and performance. The strategy is to authenticate products with consumers through relevant personalities and stories. He confirmed this approach will continue in 2025, with a focus on key priorities like performance running, training, outdoor, and establishing On as a head-to-toe brand. Maurer pointed to the strong Q3 results as validation of this holistic marketing philosophy.

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