Financial Data and Key Metrics Changes - In Q3 2025, the company reported net sales of $1.6 billion, a decrease of 1% compared to the prior year, and adjusted earnings per diluted share of 35 cents, both below expectations [19][24]. - The gross profit rate was 41.3%, down 220 basis points year-over-year, primarily due to a 260 basis point decrease in merchandise margin impacted by tariffs [20][21]. - Operating income for Q3 was $161 million, down 26% from the previous year [21]. Business Line Data and Key Metrics Changes - All core categories experienced low single-digit declines, indicating a need for focused investment in these areas [19]. - U.S. and Canadian store net sales were flat at $1.2 billion, while direct net sales decreased by 7% to $299 million [19][20]. - International net sales increased by 6% to $73 million, with system-wide retail sales growing 16% [20]. Market Data and Key Metrics Changes - The company noted that macro consumer sentiment is negatively affecting purchase intent, with sales down high single digits in early Q4 [23][24]. - Consumer confidence has declined due to concerns about job loss and affordability, impacting the start of the holiday season [23]. Company Strategy and Development Direction - The company plans to invest in brand fundamentals to drive sustainable long-term growth, focusing on core categories and innovative product development [5][10]. - A holistic growth plan has been announced, emphasizing consumer insights and a return to best-in-class product leadership in body care, home fragrance, and soaps [10][11]. - The strategy includes reducing complexity in product offerings and enhancing the in-store experience to attract new consumers [11][12]. Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the current consumer environment is challenging and that the brand is underperforming relative to expectations [4][24]. - The company expects Q4 sales to decline high single digits and has lowered full-year sales guidance to a decline of low single digits [24][25]. - Management remains confident in the brand's future and the potential for growth through strategic investments and operational improvements [17][39]. Other Important Information - The company is targeting $250 million in cost savings over the next two years, with over half expected to be realized in 2026 [16][18]. - Capital expenditures for the year are projected at approximately $240 million, down from previous guidance [25]. Q&A Session Summary Question: What changed between when you first joined the company and now? - Management indicated that the brand is not fulfilling its potential and that a strategic reset is necessary to address underperformance in core categories [28][29]. Question: How should we think about margins in 2026? - The company plans to invest in brand and product while also pursuing cost savings, which may pressure margins until top-line growth is achieved [39]. Question: Can you elaborate on the Amazon partnership? - The company will start with a small assortment of evergreen products on Amazon, aiming to enhance brand perception and sales [44][65]. Question: How should we think about free cash flow for FY2026? - The company remains focused on generating strong free cash flow while increasing investments to support transformation efforts [45]. Question: What is the timing for exiting non-go-forward categories? - The company plans to begin SKU rationalization and exit certain categories in Q1 2026, focusing on consumer outcomes [54].