Financial Data and Key Metrics Changes - For Q2, total net revenue rose 7% to $2.5 billion, with comparable sales increasing 1% [26] - Gross profit was $1.48 billion, representing 58.5% of net revenue, down from 59.6% in Q2 2024 [27][28] - Net income for the quarter was $371 million, or $3.10 per diluted share, compared to $3.15 in the same period last year [30] Business Line Data and Key Metrics Changes - Men's revenue increased 6%, women's revenue increased 5%, and accessories and other grew 15% [27] - Performance apparel continues to grow, while lounge and social product offerings have become stale, impacting sales negatively [12][13] Market Data and Key Metrics Changes - In the U.S., revenue was flat, with comparable sales down 3% [26] - China revenue increased 25%, with comparable sales up 16% [27] - The rest of the world segment saw a revenue growth of 19%, with comparable sales increasing by 9% [27] Company Strategy and Development Direction - The company is focusing on increasing the number and frequency of new styles in its product assortment, aiming to raise new styles from 23% to 35% [16] - A new Chief AI and Technology Officer has been appointed to enhance product innovation and agility [18] - The company plans to navigate increased costs from tariffs through strategic pricing and supply chain initiatives [25][22] Management's Comments on Operating Environment and Future Outlook - Management expressed dissatisfaction with current U.S. results and acknowledged the need for product innovation to meet consumer expectations [6][24] - The company expects revenue growth of 4% to 6% for the year, with a decline in U.S. revenue projected at 1% to 2% [22][32] - Management remains optimistic about international growth, particularly in China, where growth is expected to be 20% to 25% [22][32] Other Important Information - The company ended the quarter with $1.16 billion in cash and cash equivalents, and inventory increased 21% to $1.7 billion [31] - Capital expenditures for the quarter were approximately $178 million, reflecting timing of store openings [31] Q&A Session Summary Question: What changes are being made in the product department? - The focus is on maintaining momentum in performance activities, introducing new styles in lounge and social, and refreshing iconic items [46] Question: How are recent tariff increases affecting pricing strategy? - Modest price increases are being instituted on a small portion of the assortment, with ongoing evaluations of pricing strategies [49] Question: What is the right mix of casual and performance products? - A 60/40 split is considered a good benchmark, with ongoing adjustments based on consumer response to new styles [53] Question: How will the company manage inventory and course corrections before 2026? - New processes are in place to improve agility and speed in responding to consumer demand [79] Question: What impact does the de minimis exemption removal have on e-commerce? - Approximately two-thirds of U.S. e-commerce orders are fulfilled through Canada, and the removal of the exemption has a significant impact [80]