Financial Data and Key Metrics Changes - The company reported a diluted earnings per share increase of 11.5% to $0.58 compared to $0.52 in the same period last year, reaching the high end of expectations [5] - Sales for the quarter rose by 7.1% to $1,214 million, with comparable store sales increasing by 0.4%, marking the first quarterly increase since 2022 [5][15] - Gross profit rose by 8.5% compared to the same period last year, driven by a 7.1% increase in sales and a 60 basis points improvement in the gross margin rate, which rose to 43.9% [26][29] Business Line Data and Key Metrics Changes - Connected Customer sales rose by 2% year over year, now accounting for approximately 19% of sales, with strong growth in weekly active users and conversions [18] - The design services segment delivered strong sequential and year-over-year sales growth, significantly outpacing the company average [18] - Spartan Surfaces saw sales rise approximately 7% year over year, with June marking the strongest month in the company's history [22] Market Data and Key Metrics Changes - Store sales in the West Division outperformed the company for the quarter and year to date [15] - The second quarter benefit to comparable store sales from Hurricane Helene and Milton was approximately 40 basis points compared to 100 basis points in the first quarter [15] - Existing home sales fell 2.7% in June to a seasonally adjusted annual rate of 3,930,000 units, marking the lowest level in nine months [32] Company Strategy and Development Direction - The company plans to open 20 new warehouse format stores in fiscal 2025, with a disciplined and agile growth strategy [7][8] - The company is focused on mitigating the impact of tariffs through vendor negotiations and product diversification [10][11] - The company aims to maintain pricing gaps and reinforce its everyday low price message while enhancing its product assortment [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the resilience of the U.S. consumer, supported by a solid labor market, but acknowledged challenges in discretionary spending due to elevated mortgage rates [31][32] - The company does not expect significant changes in consumer behavior or housing activity for the remainder of 2025 [33] - Management highlighted the importance of internal initiatives to drive sales and improve in-store productivity amid a challenging macro environment [66][68] Other Important Information - The company ended the quarter with $876.9 million in unrestricted liquidity, consisting of $176.9 million in cash and cash equivalents [30] - The effective tax rate increased to 21.8% from 19.8% in the same period last year, primarily due to a decrease in excess tax benefits related to stock-based compensation [29] Q&A Session Summary Question: How much of the ticket increase was tariff-induced versus trade-up to better products? - Management indicated that much of the average ticket increase came from product mix, particularly in wood, with minor price changes affecting the ticket [41][44] Question: How does the company view pricing throughout the year given inventory cycles? - Management stated that modest price increases are expected in the back half of the year, with a focus on managing tariffs through SKU adjustments and vendor negotiations [45][46] Question: What is the outlook for fiscal 2026? - Management noted it is too early to react to 2026 estimates, emphasizing the need for improvement in existing home sales and the impact of new store maturation [52][54] Question: How does the company approach creating shareholder value in a challenging environment? - Management highlighted ongoing investments in in-store experiences and commercial opportunities to drive growth, even if existing home sales remain subdued [65][66] Question: How is the company performing across different income demographics? - Management indicated that the company attracts a wide range of income levels and is revisiting its studio strategy to appeal to higher-income consumers [88][90]

Financial Data and Key Metrics Changes - Net sales increased by 5% to approximately $300 million, driven by a 5% increase in net price realization, a 2% decrease in volume, and a 2% contribution from the Core King acquisition [9][19] - Gross profit margins reached a record 52.7%, with adjusted EBITDA margin increasing to 29.5%, marking the tenth consecutive quarter of year-over-year gross margin expansion [7][12] - Net leverage was significantly reduced to 2.1 times, the lowest level in over three years, providing enhanced financial flexibility [7][23] Business Line Data and Key Metrics Changes - North American net sales increased by 6% to $255 million, driven by a 6% net price realization and a 3% contribution from the Clor King acquisition [20] - In Europe and Rest of World, net sales increased by 3% to $44 million, with a 1% contribution from favorable net pricing and a 3% favorable foreign currency translation [22] Market Data and Key Metrics Changes - End demand improved in June, resulting in customer orders generally aligning with normal seasonal patterns for the quarter [10] - Nondiscretionary aftermarket maintenance demand remained resilient, while discretionary elements of the market faced pressure [10][27] Company Strategy and Development Direction - The company is focused on mitigating tariff impacts and enhancing margins while executing strategic growth plans [8][9] - Investments are being made in advanced engineering and new product development to drive future growth [12][25] - The company aims to increase its presence in high-growth regions and capture market share through targeted sales and marketing strategies [12][102] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic environment and refining guidance for full-year 2025, raising the low end of the net sales guidance range [9][26] - The company expects solid cash flow generation in 2025, with a conversion of greater than 100% of net income [27] - Management remains positive about the long-term growth outlook for the pool industry, particularly in the aftermarket segment [27] Other Important Information - The company has authorized a share repurchase of up to $450 million over three years [25][94] - The effective tax rate was approximately 25% in the second quarter, consistent with guidance [20] Q&A Session Summary Question: Outlook for gross margin in the second half - Management highlighted that the strong Q2 gross margin performance was driven by productivity improvements and product line rationalization, with expectations for continued margin protection despite potential moderation in percentage [32][36] Question: New pool market outlook - Management indicated that the new pool market remains modestly down year-over-year but is showing signs of improvement, with expectations for upward inflection as interest rates and the housing market improve [39][41] Question: Guidance clarification - Management confirmed that the lower net price increase guidance is offset by a stronger volume outlook, particularly in the U.S. market [46][48] Question: SG&A increase explanation - The increase in SG&A as a percentage of sales is due to targeted investments in advanced engineering and customer care, with expectations to leverage SG&A in the future [55][56] Question: Trends in sell-in versus sell-through - Management noted that Q2 saw strong sell-through, particularly in June, with expectations for normal inventory levels as the season progresses [64][66] Question: Repair versus replace dynamic - Management observed an increase in parts sales, indicating a trend towards repairing rather than replacing equipment, which may impact future pricing strategies [66][74]

Group 1 - South Africa is formulating a response plan to address U.S. tariffs [1]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $3.9 billion, down 2% year-over-year and down 3% organically [10][11] - Adjusted gross margin rate for Q2 was 27.5%, a decrease from the previous year due to tariffs and lower volume [12] - Adjusted EBITDA margin was 8.1%, down 260 basis points compared to the prior year [13] - Adjusted earnings per share was $1.08, including a discrete tax benefit [13] - Free cash flow for Q2 was $135 million, reflecting strong operational performance despite trade policy impacts [14] Business Line Data and Key Metrics Changes - Tools and Outdoor segment revenue was approximately $3.5 billion, representing a 2% decline year-over-year, with organic revenue down 3% [17] - Power Tools organic revenue grew by 1%, while Hand Tools organic revenue declined by 5% due to tariff-related disruptions [19] - Outdoor organic revenue declined by 7% due to a slow buying season, but demand improved in July [20] - Engineered Fastening segment revenue was down 2% year-over-year, with a 1% organic decline [22] Market Data and Key Metrics Changes - In North America, organic revenue declined by 4%, consistent with the overall segment performance [20] - Europe saw a 1% organic revenue decline, with growth in the UK offsetting weaker demand in Germany and Italy [21] - The rest of the world delivered 1% organic growth, driven by strong performance in Latin America and the Middle East [21] Company Strategy and Development Direction - The company is focused on a multi-year supply chain transformation aimed at improving cost structure and operational efficiency [8][24] - A target of achieving an adjusted gross margin of 35% or higher is set, with ongoing initiatives to mitigate tariff impacts [30][39] - The company plans to invest over $100 million in 2025 to drive market activation and brand strengthening [38] Management's Comments on Operating Environment and Future Outlook - Management noted a slow outdoor buying season and shipment disruptions due to tariffs, impacting Q2 performance [11][12] - The company expects organic revenue to remain relatively flat in the second half of 2025 [12] - Management expressed confidence in the company's foundation for future growth and the effectiveness of their supply chain transformation [9][10] Other Important Information - The company has divested $2.6 billion in revenue to streamline its portfolio and focus on core strengths [8] - A robust cost savings initiative is expected to deliver approximately $2 billion in pretax run rate savings [24][25] Q&A Session Summary Question: Gross margin outlook for Q4 - Management expects gross margin expansion in Q3 and Q4, with Q4 potentially reaching 33% to 34% [49][50] Question: 2Q upside and full year guidance - The Q2 beat was primarily due to operational factors and tax timing, with tariff expense timing affecting the outlook [58][60] Question: Pricing actions and acceptance - The first round of price increases has been implemented successfully, with a second, more modest increase planned for Q4 [65][66] Question: Customer buying patterns and inventory levels - Inventory levels are healthy and in line with historical norms, with no significant destocking expected [78] Question: Outdoor segment performance - The outdoor segment experienced a later start to the season but is seeing improved POS activity [82] Question: Craftsman brand performance - The Craftsman brand is performing in line with market trends, with opportunities for growth in the power tool space [88]

Group 1 - The Thai government plans to implement measures to assist the private sector in coping with U.S. tariffs [1]

Core Viewpoint - The Vietnamese Ministry of Industry and Trade emphasizes that tariffs provide manufacturers with opportunities to increase added value, and the ministry is coordinating with businesses to develop measures to respond to these tariffs [1] Group 1 - The Ministry is working with enterprises to formulate strategies to address the impact of tariffs [1] - Proposed measures include improving product quality and exploring new markets [1]

Financial Data and Key Metrics Changes - The company reported a consolidated revenue of $1.1 billion, a decline of 5% compared to the previous year, with comparable sales decreasing by 3% [19][20] - Adjusted operating loss for the quarter was $68 million, with an adjusted loss per share of $0.29 [4][22] - Gross profit dollars were $322 million, with a gross margin of 29.6%, impacted by approximately $75 million in inventory write-downs [20][21] Business Line Data and Key Metrics Changes - American Eagle brand comparable sales were down 2%, while Aerie brand comparable sales declined by 4% [4][19] - Aerie faced challenges in soft apparel, particularly in fleece tops and shorts, while certain categories like intimates showed improvement [12][14] - American Eagle saw growth in women's business, particularly in social casual dressing and achieved its best quarter ever in fleece [15][16] Market Data and Key Metrics Changes - Traffic was reported to be up across brands and channels, although the overall performance was constrained by lower average unit retails (AURs) and conversion rates [19][30] - The company is focusing on diversifying its supply chain and reducing sourcing exposure to China to under 10% this year [23] Company Strategy and Development Direction - The company is committed to optimizing operations and strengthening its supply chain, including closing two Edge fulfillment centers, which is expected to generate annualized savings of approximately $5 million [6][22] - Capital allocation priorities include investments for long-term growth while returning capital to shareholders, including a $200 million accelerated share repurchase program [8][9] - The company is focused on improving product performance and preparing for the back-to-school season with fresh merchandise [24][36] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with the first quarter performance but remains optimistic about the second half of the year, hoping for improvement as the macro environment stabilizes [4][28] - The company has paused full-year guidance until greater visibility is achieved but expects to see improvement in growth and profitability as the year progresses [22][24] Other Important Information - The company recorded a non-GAAP charge of $17 million related to the closure of fulfillment centers [6][22] - SG&A expenses increased by 2% due to higher advertising investments, with a focus on customer-facing spend [21][63] Q&A Session Summary Question: What is the view of the consumer today and its impact on the retail landscape? - Management remains optimistic about the consumer outlook, hoping for positive economic stimulation from potential tax plans [28] Question: Can you break down the assumptions for gross margin and promotional activity in Q2? - The company expects to maintain a similar comp expectation as Q1, embedding promotional activity to clean inventory for back-to-school [30][31] Question: What are the merchandising issues and how quickly can improvements be made? - Management acknowledged product misses but is working swiftly to address these issues and prepare for back-to-school [35][36] Question: How is the capital allocation and CapEx expenditure being approached? - The company has reduced CapEx guidance to $275 million, recadencing projects to preserve cash [44] Question: How are both brands trending relative to the Q2 comp guide? - Both brands are trending similarly to the guidance of down 3% for Q2 [82] Question: What is the outlook for promotions and SG&A expenses? - Promotions are expected to continue in the near term to clean inventory, with SG&A projected to be flat for the year [59][63] Question: How did digital performance compare to stores during the quarter? - There was an uptick in digital performance, with the company leaning into this channel during the quarter [67] Question: What are the plans for inventory for the remainder of the year? - The company is planning inventory in line with sales expectations and maintaining flexibility in buying [88]

Core Viewpoint - Costco executives stated that price increases are considered a "last resort" in response to tariffs [1] Group 1: Company Insights - Costco is exploring various strategies to manage the impact of tariffs without immediately resorting to price hikes [1] - The company emphasizes maintaining customer loyalty and competitive pricing as key priorities [1] Group 2: Industry Context - The retail industry is facing challenges due to rising tariffs, prompting companies to reassess pricing strategies [1] - Executives across the industry are discussing the balance between cost management and consumer price sensitivity [1]

Financial Data and Key Metrics Changes - Net sales declined by 4.1% and comparable sales decreased by 3.9% in the quarter, attributed to the closure of 24 stores [26][27] - Gross margin increased to 39.9%, up 37 basis points year-over-year, driven by category mix benefits and inventory management [30] - SG&A expenses decreased by 5.2% to $1.2 billion, leveraging approximately 32 basis points compared to last year [30] - The company reported a net loss of $15 million, with earnings per diluted share of negative $0.13, a 46% improvement from the previous year [31] Business Line Data and Key Metrics Changes - Jewelry sales increased by 10% in Q1, primarily driven by Kohl's card customers, following the reintroduction of jewelry into stores [15][16] - Women's apparel is being rebalanced to improve performance, focusing on essentials and proprietary brands [17][19] - Sephora's net sales were up 6% and comparable sales increased by 1% in Q1, contributing to a nearly $2 billion beauty business [18] - The impulse queue line rollout is expected to enhance sales, with plans to expand to nearly all stores by Q3 [18] Market Data and Key Metrics Changes - The digital business saw a sales decline of 7.7% in the quarter, underperforming compared to store sales, which declined by 2.6% [27][28] - The middle and low-income customers are under pressure, prioritizing value and trading down to lower-priced products [28] Company Strategy and Development Direction - The company is focused on three key areas: offering a curated assortment, reestablishing value and quality, and enhancing the omnichannel shopping experience [12][19][23] - Plans for 2025 include improving product assortment clarity and investing in proprietary brands to better serve customer needs [13][19] - The company aims to enhance promotions by including more brands in coupon eligibility, responding positively to customer feedback [21][22] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the ongoing transformation and the need to align the business with customer needs, particularly focusing on value [40][41] - The company is navigating a fluid environment with uncertainties, particularly affecting middle-income customers [43][44] - Despite challenges, management remains optimistic about achieving financial guidance for the year, with expectations of comparable sales down 4% to 6% [36] Other Important Information - The company completed a private offering of $360 million in senior secured notes, expected to close on May 30, to refinance upcoming debt maturities [34][35] - Inventory strategies are being implemented to manage tariff pressures, with expectations of inventory down high single digits by year-end [32][36] Q&A Session Summary Question: Any adjustments to strategic priorities and what will it take to return to comp growth? - Management does not foresee major changes to the strategy and emphasizes understanding customer needs to restore growth [39][40] Question: Insights on quarter-to-date trends and tariff impacts? - Management holds the full-year guidance due to uncertainties and notes consistent performance with some weather-related impacts [42][44][46] Question: Breakdown of gross margin increase and private label performance? - The increase in gross margin is attributed to a favorable category mix and improved inventory management, with proprietary brands expected to enhance margins [50][52] Question: Assessment of store footprint and potential closures? - The company has a healthy store base and will continue to evaluate store performance, with closures being part of regular hygiene [60][62] Question: Update on Sephora collaboration and operating environment? - Sephora is now present in all stores, and while comp growth has moderated, the company is pleased with market share gains in beauty [73][75] Question: E-commerce performance and profitability outlook? - Digital sales declined but are expected to improve as core customers return, with profitability being lower than stores due to shipping costs [80][84]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $247 million, a slight decline from $249 million in Q1 2024, reflecting a decrease of $2 million or 1% year-over-year [11][20] - Gross profit percentage decreased to 19% in Q1 2025 from 20% in Q1 2024, indicating a decline in profitability [21] - The company reported a net loss of $7 million for Q1 2025, compared to a net income of $32 million in the prior year, a decrease of $39 million [21][22] - Operational EBITDA for Q1 2025 was $2 million, down from $4 million in Q1 2024, reflecting a decline of $2 million [22] Business Line Data and Key Metrics Changes - The Advanced Materials and Chemical Group (AM and C) is highlighted as crucial for Kodak's future, with ongoing investments in growth initiatives [11][12] - The commercial print business is transitioning from controlled introduction to controlled production of the Prosper Ultra 520 press, with several units being installed at customer sites [12] Market Data and Key Metrics Changes - Demand for various types of film, including still motion picture and NDT, continues to grow, prompting investments in expanding film production capacity [12] - The company remains committed to U.S.-based manufacturing, which is expected to reduce environmental impact and ensure high quality and reliable supply [13][27] Company Strategy and Development Direction - Kodak is focused on operational efficiencies and cost reductions, having shut down unprofitable businesses to concentrate on growth areas [9][19] - The company is committed to maintaining and expanding U.S. manufacturing across all business lines, which is part of its long-term strategy [27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by global economic uncertainty but emphasized the company's commitment to executing its long-term plan [8][19] - The management expressed confidence in the core business performance and the potential for long-term gains despite short-term challenges related to tariffs [10][28] Other Important Information - The termination and settlement process for the U.S. Pension plan is proceeding as planned, with expectations to use reverted assets to reduce long-term debt [15][17] - The company ended Q1 2025 with a cash balance of $158 million, a decrease of $43 million from the end of 2024, primarily due to investments in growth initiatives and increased costs [22][25] Summary of Q&A Session - There was no formal Q&A session during the call, but the Investor Relations team is available for follow-up inquiries [7]