Maintaining Momentum and Margin Targets
Q: How will you maintain momentum and achieve margin targets?
A: We are confident in maintaining our momentum due to our resilient and differentiated model, investing in our brand, iconic core products, and expanding our direct-to-consumer (DTC) channels, which now represent about two-thirds of the company. " We remain firmly committed to our 15% constant currency operating margin target " , with no constraints anticipated. Our diversified growth drivers across categories, channels, and regions, along with operational agility, support sustainable long-term growth. "

Gross Margin Drivers and Cotton Prices
Q: What are the drivers for gross margin improvement next quarter?
A: For the fourth quarter, we expect operating margin to be up 350 to 400 basis points, largely driven by gross margin. " Key drivers include over 100 basis points tailwind from freight, favorable channel and geographic mix, and reduced pressure from cotton prices. " While cotton remains a slight headwind, its impact has significantly reduced compared to the prior 110 basis points headwind this year. " Average unit retail (AUR) growth also becomes a more powerful driver in gross margin. "

North America and Europe Wholesale Trends
Q: Can you elaborate on wholesale trends in North America and Europe?
A: In North America, wholesale sell-in was down 15%, but sell-out was down only mid-single digits with low single-digit increases in AUR. " We expect more balance between sell-in and sell-out moving forward. " In Europe, our business performed above expectations with solid growth in every market, despite some softness in the UK due to inflation. " The wholesale channel in Europe is more elevated, and we see opportunities to apply best practices to North America. "

Direct-to-Consumer Growth and Store Openings
Q: What are your plans for DTC growth and store openings?
A: We remain enthusiastic about expanding our DTC business, focusing on top 30 cities globally. " DTC now represents about two-thirds of the company, and we expect this percentage to increase over time. " We are on track to open about 80 stores this year and 250 new doors over a three-year horizon. " Investments in service and digital capabilities are enhancing customer experience and driving growth. " "

Cost Savings Program and Margin Expansion
Q: Can you update us on your cost savings program?
A: We are on track with our $400 million gross savings plan. " We delivered about one-third in fiscal '23 and will deliver another one-third in fiscal '24. " We are disciplined in resource allocation and expect these savings to contribute to operating income margin expansion, coupled with momentum in our DTC channels. "

Growth in Women's and High-Potential Categories
Q: How are your growth categories performing?
A: We see significant potential in women's, with women representing 56% of our customers but less than 25% of our business. " We are pleased with the strong customer response in women's, outerwear, handbags, and home. " These categories are AUR accretive and will accelerate top-line growth and margins. " Our handbag launches like the RL888 and partnerships in China are showing positive momentum. "

Outlet Channel Performance
Q: What is driving improvement in the outlet channel?
A: Our outlet channel saw healthy improvements driven by brand investments, targeted promotions, and increased store service. " We experienced solid traffic growth across all three regions and increased AUR while effectively managing promotions during peak holiday periods. " Investments in service are resulting in higher conversion rates. "

Digital Growth and Customer Acquisition
Q: How is your digital business performing?
A: Our digital business is performing well, with North America comps up 4%, driven by traffic, conversion, and basket size improvements. " We acquired 1.7 million new consumers last quarter, attracting higher-value, younger customers. " In Europe, digital grew 12%, and in Asia, it grew 25%. " Digital represents less than 30% of the company, and we expect continued acceleration. "

Investment Priorities and Outperformance Flow-Through
Q: How will you allocate investments amid outperformance?
A: We will balance flowing through outperformance with making strategic investments in our business. " Areas receiving incremental spend include digital initiatives, store expansions, and brand investments. " We are focused on enhancing productivity metrics and ensuring our investments in digital, stores, and brand continue to drive momentum. "