Core Insights - The company is experiencing broad-based revenue growth, with a reported increase of 11% in the third quarter, driven by strong performance across both Sport and workwear segments [2][16][21] - The integration of Helly Hansen is progressing well, contributing significantly to revenue and expected to provide over $25 million in run-rate synergies by 2026 [16][70] - The company is focused on increasing brand awareness in the U.S., where current awareness stands at only 29%, with plans for demand creation investments starting next year [1][12] Financial Performance - Third quarter results exceeded expectations with revenue growth of 11% and adjusted earnings per share of $1.44, a 5% increase compared to the prior year [2][18][21] - Global revenue for Helly Hansen reached $193 million, marking an 11% increase year-over-year, with strong demand across all regions [16][21] - The company raised its full-year revenue outlook to the upper end of the range, expecting approximately $3.09 billion to $3.12 billion, representing growth of 19% to 20% [21][56] Brand Performance - Helly Hansen is positioned as a leader in pro-grade workwear in Europe and is expanding its market share in the U.S. through footwear and apparel [4][12] - Wrangler has gained market share for the fourteenth consecutive quarter, with a 20% growth in the female segment and a strong performance from collaborations [6][7][12] - Lee's revenue declined by 9% due to proactive measures in China, but digital sales grew by 15%, indicating potential for recovery [8][15][60] Strategic Initiatives - The company plans to double its operating margin from high single digits to mid-teens through gross margin expansion and improved efficiency [5][10] - Investments in demand creation, technology, and direct-to-consumer channels are expected to support growth initiatives [5][24] - The company is focused on improving inventory turnover and cash generation, with a goal to reduce debt significantly in the upcoming quarters [19][20][25] Market Outlook - The company anticipates continued growth in the fourth quarter, projecting revenue between $970 million and $980 million, which includes a 39% to 40% increase from Helly Hansen [22][56] - Adjusted gross margin is expected to improve to approximately 46.4% for the full year, reflecting a 130 basis point increase compared to the prior year [23][24] - The company is optimistic about the future, with plans to leverage synergies from Project Genius and further investments in brand development [71][72]

Financial Data and Key Metrics Changes - Global revenue increased by 27%, driven by contributions from Helly Hansen [14] - Adjusted earnings per share (EPS) was $1.44, a 5% increase compared to the prior year [19] - Adjusted gross margin expanded by 80 basis points to 45.8% [18] Business Line Data and Key Metrics Changes - Helly Hansen's revenue grew by 11%, with strong performance across both sport and workwear [17] - Wrangler's global revenue increased by 1%, with a 12% growth in digital sales [14][8] - Lee's revenue declined by 9%, primarily due to proactive measures in China [10] Market Data and Key Metrics Changes - U.S. revenue for Wrangler increased by 1%, driven by an 11% growth in direct-to-consumer (D2C) sales [15] - International revenue for Wrangler increased by 2%, supported by a 19% growth in digital [16] - Lee's international revenue decreased by 9%, with declines in wholesale offsetting mid-single-digit growth in brick-and-mortar stores [16] Company Strategy and Development Direction - The company is focused on accelerating growth through product differentiation and expanding brand awareness, particularly for Helly Hansen in the U.S. [5][6] - Plans to double operating margin from high single digits to mid-teens through gross margin expansion and SG&A benefits [7] - Continued investment in demand creation and technology to support growth initiatives [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the 2025 plan, citing strong fundamentals and operational execution [12][26] - The company raised its full-year revenue, gross margin, earnings, and cash flow outlook based on year-to-date performance [14] - Management acknowledged a dynamic environment but emphasized proactive initiatives to offset market headwinds [12] Other Important Information - The company made a voluntary $25 million debt repayment in Q3 and plans to reduce debt by an additional $185 million in Q4 [11][21] - The board declared a quarterly cash dividend of $0.53 per share, a 2% increase [22] - Adjusted return on invested capital improved to 23% from 22% in the previous quarter [22] Q&A Session Summary Question: Clarification on Wrangler US wholesale growth - Management confirmed that excluding the timing shift, Wrangler's revenue increased at a mid-single-digit rate [28] Question: Drivers of Helly Hansen's revenue growth - Management noted that Helly Hansen is thriving within the company’s ecosystem, with strong performance across various markets [30][31] Question: Inventory growth concerns - Management explained that the inventory increase was due to strategic investments and expected to normalize in Q4 [34] Question: Pricing strategy and competitive landscape - Management stated that pricing adjustments were made to combat tariff impacts and were carefully planned in collaboration with retail partners [36] Question: Update on Project Genius savings - Management indicated that approximately $50 million of gross savings from Project Genius are embedded in the current outlook, with expectations for significant scaling in 2026 [57] Question: Lee's business in China - Management expressed confidence in the long-term opportunity in China, highlighting improvements in strategy and leadership [59][61]

Financial Data and Key Metrics Changes - In 2024, global revenue increased by 5%, with Wrangler's revenue growing by 9% and Lee's revenue declining by 5% [24][26][20] - Adjusted gross margin expanded by 160 basis points to 44.7%, driven by lower input costs and mix [30] - Adjusted earnings per share (EPS) was $1.38, representing a 2% increase compared to the prior year [31] Business Line Data and Key Metrics Changes - Wrangler's global revenue grew 9% in the fourth quarter, with notable growth in outdoor (29%) and female segments (19%) [17][25] - Lee's direct-to-consumer (DTC) revenue grew double digits, while wholesale revenue declined significantly [20][27] - Non-denim categories accounted for approximately one-third of global revenue, with outdoor business growing at a mid-teens rate [9] Market Data and Key Metrics Changes - The U.S. market saw a 9% growth in Wrangler revenue, while Lee's U.S. revenue decreased by 6% [24][26] - In Asia, revenue performance was better than expected, while Europe performed as anticipated [24][29] - Point of Sale (POS) trends showed a decline in February after a strong start to the year, reflecting consumer conservatism [42][101] Company Strategy and Development Direction - The company is focused on Project Genius, aiming for $100 million in savings, with benefits expected to flow through in 2025 [11][34] - Plans to explore shop-in-shop concepts in key retailers to enhance consumer experience [9] - The addition of Helly Hansen is expected to drive growth and enhance the brand portfolio [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current uncertain environment, emphasizing operational strength and brand investments [6][23] - The company anticipates a transition year for Lee in 2025, focusing on repositioning for growth [20][21] - Management noted that consumer sentiment is currently cautious due to various macroeconomic factors [101] Other Important Information - The company returned $198 million to shareholders through dividends and share repurchases in 2024 [33] - Inventory decreased by 22% to $390 million, achieving an annual turnover target of approximately 3.5 times [32] - The company expects cash from operations to exceed $300 million in 2025 [47] Q&A Session Summary Question: Details on Lee's performance and DTC vs. wholesale dynamics - Management explained that DTC growth reflects successful new product introductions, while wholesale performance lags due to pipeline filling [50][53] Question: Gross margin expectations and seasonal dynamics - Management clarified that gross margin is expected to increase by 30 basis points in Q1, with a moderation in Q2 due to seasonal dynamics and product cost inflation [51][52] Question: Insights on consumer segmentation for Lee - Management indicated a shift towards targeting a more fashion-conscious consumer, moving away from overly aspirational segments [91][92] Question: Impact of potential tariffs on operations - Management discussed that tariffs would begin to impact the P&L in late Q2, with mitigating actions expected to show results in late 2025 and early 2026 [94][95]