Financial Data and Key Metrics Changes - Net sales decreased by 6% as reported and 7% in constant currency to $1.74 billion [18] - Adjusted gross margin decreased by 290 basis points to 50.2% [18] - Adjusted operating income decreased by $117 million to $387 million [18] - Adjusted earnings per share decreased by $0.25 to $0.89 [18] - Total company gross billings decreased by 5% in constant currency [18] Business Line Data and Key Metrics Changes - Dolls category declined by 12%, primarily due to Barbie and Polly Pocket, partially offset by growth in Wicked, Monster High, and American Girl [19] - Vehicles category grew by 6%, with Hot Wheels on track for an eighth consecutive record year [19] - Infant Toddler and Preschool (ITPS) declined by 26% due to declines in Fisher Price and preschool entertainment [20] - Challenger categories collectively grew by 9%, driven by action figures [20] - UNO maintained its position as the number one card game globally, growing for the ninth consecutive quarter [20] Market Data and Key Metrics Changes - North America gross billings declined by 10% due to shifts in retailer ordering patterns [21] - EMEA region grew by 3% and Asia Pacific by 11%, while Latin America declined by 4% [21] - The toy industry grew high single digits in the third quarter, reflecting momentum heading into the holiday season [13] Company Strategy and Development Direction - The company is advancing its strategy to grow its IP-driven toy business and expand its entertainment offerings [9] - A new brand-centric organizational structure has been implemented to enhance global brand management capabilities [9] - The company is focusing on scaling digital games and has announced several licensed games for console and PC [13] - Strategic collaborations with OpenAI and Netflix are being pursued to enhance product offerings and market reach [10][11] Management's Comments on Operating Environment and Future Outlook - Management noted that while the U.S. business faced challenges, consumer demand for products grew in every region [16] - The company expects a strong holiday season and is reiterating its full-year guidance for 2025 [9][28] - Management expressed confidence in the fundamentals of the business and the ability to navigate current trade dynamics [17] Other Important Information - The company repurchased $2 million of shares in the third quarter, totaling $412 million for the year, with a target of $600 million for the full year [7][23] - Retail inventories are modestly lower compared to the prior year, positioning the company well for the holiday season [24][29] - The company achieved $23 million in savings in the third quarter as part of its cost optimization program [27] Q&A Session Summary Question: Can you quantify POS in the third quarter? - Management confirmed that POS increased in all regions, including the U.S., and generally outperformed gross billings, indicating healthy consumer demand [33] Question: What is driving the retailer order acceleration? - The shift from direct import to domestic shipping has led retailers to accelerate orders in response to increasing POS, preparing for expected consumer demand [40][42] Question: What are the expectations for Barbie in Q4? - Management expects improving trends for Barbie in Q4 driven by cultural relevance, packaging innovation, and expanding adult demand [71] Question: How are tariffs impacting gross margin? - Tariff-related costs, foreign exchange, and inflation have impacted gross margin, but the full effects are expected to be seen more in Q4 [37] Question: What is the outlook for international business in Q4? - Current trends in international markets are expected to persist, with strong consumer demand and disciplined execution across markets [51] Question: What is the expected impact of the Wicked movie on content support? - The Wicked movie is anticipated to significantly contribute to the fourth quarter, alongside other major releases planned for next year [60] Question: How does the company view pricing strategies moving forward? - The company aims to keep prices low for consumers and has no plans for additional price increases this year, focusing on efficiencies to mitigate costs [85]