Financial Data and Key Metrics Changes - Total revenue for the second quarter was $1,280,000,000, marking a 1% decline compared to the previous year but was the second highest ever for this quarter [21][22] - Operating income improved by 2% to $103,000,000, exceeding expectations, with a diluted EPS increase of 15% year-over-year [7][21] - Gross profit dollars were $500,000,000, reflecting a gross margin of 38.9%, up from 38.6% last year [22] Business Line Data and Key Metrics Changes - Aerie experienced a comp growth of 3%, achieving record second quarter revenue driven by strong demand in intimates, soft dressing, sleepwear, and activewear [5][14] - American Eagle saw a decline in comps but improved demand in key categories such as women's jeans and tops, with notable improvements as the quarter progressed [16][21] Market Data and Key Metrics Changes - Traffic was positive across brands and channels, with significant momentum building through the second quarter and into August [6][11] - New customer acquisition increased by over 700,000, with campaigns generating 40,000,000,000 impressions [19][58] Company Strategy and Development Direction - The company is focused on strengthening its brands, improving operational efficiencies, and enhancing customer experience while managing costs [4][7] - Capital allocation remains balanced between investments for long-term growth and returning capital to shareholders, with $276,000,000 returned year-to-date through dividends and share repurchases [10][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of the brands and emphasized the importance of building on the progress made in the second quarter [12][29] - The third quarter is off to a better start, with consolidated comps up in the mid-single digits, and expectations for low single-digit increases in comparable sales for both the third and fourth quarters [27][28] Other Important Information - The company plans to open approximately 30 Aerie and offline locations and remodel 40 to 50 American Eagle stores [26] - Tariff impacts are expected to be $20,000,000 in Q3 and $40,000,000 to $50,000,000 in Q4, affecting gross margins [28][48] Q&A Session Summary Question: Can you tell us more about how you keep the momentum going with the new customers attracted by the campaigns? - The campaigns have generated unprecedented new customer acquisition, and the focus is on converting this buzz into repeat business [33][35] Question: Can you provide more details on the comp metrics, transaction ticket, and tariff impacts? - AUR was down mid-single digits, but healthy traffic was noted, with tariff impacts projected at $20,000,000 for Q3 and $40,000,000 to $50,000,000 for Q4 [46][48] Question: What percentage of sales does intimates represent for Aerie, and what is the strategy to recapture share? - Intimates account for roughly one-third of Aerie's business, and the strategy includes launching new collections and focusing on customer engagement [54][56] Question: How is the men's side of the business performing, and what are the expectations for denim? - Men's business has shown significant improvement, particularly in denim, which is trending positively [90][91] Question: What is the duration of the Sydney Sweeney and Travis Kelce campaigns? - The campaigns will continue through the remainder of the year, with new elements being introduced [94][96] Question: Can you discuss the inventory plans for Q3 and Q4? - Inventory positioning is aligned with plans, with a focus on managing costs and ensuring adequate supply for upcoming sales trends [99][100]

Investment Rating - The investment rating for the company is "Buy" [1] Core Insights - The company exceeded market expectations in H1 2025 with revenue, net profit, and operating cash flow of $1.229 billion, $98 million, and $155 million respectively, representing year-on-year growth of 12.4%, 16.8%, and 255.4% [2] - The company plans to expand its customer base in Europe in the second half of 2025, which is expected to drive future growth [3] - The company declared a dividend of 16.3 HK cents per share for H1 2025, up from 13.8 HK cents in H1 2024, with a payout ratio of 60% and an annualized dividend yield of 5.4% [2] Financial Performance - In H1 2025, the company achieved a gross margin of 19.7%, a slight increase of 0.2 percentage points year-on-year, primarily driven by improved production efficiency in leisure and underwear segments [4] - The net profit margin for H1 2025 was 8.0%, up 0.3 percentage points year-on-year, with stable administrative and R&D expenses [4] - The company’s inventory increased by 18.51% year-on-year to $352 million, leading to an increase in inventory turnover days by 4 days to 59 days [5] Growth Strategy - The company aims to leverage growth opportunities in Europe and Asia, with a focus on expanding its customer base and establishing new production facilities [3][6] - The company’s revenue forecast for 2025 is set at $2.813 billion, with net profit expected to be $235 million, corresponding to an EPS of $0.08 [7] - The company is expected to benefit from the recovery of denim and underwear customer segments, as well as the growing demand in the women's sports market [6][7] Valuation Metrics - The projected PE ratios for 2025, 2026, and 2027 are 9, 8, and 7 respectively, indicating a favorable valuation outlook [7] - The company’s revenue is expected to grow at a CAGR of approximately 13.91% from 2025 to 2026 [9]

Investment Dynamics - Manus' parent company, Butterfly Effect, is reportedly planning a new financing round of $100 million at a valuation of $1.5 billion, with state-owned enterprises participating. The funds will primarily be used to develop the Chinese market [3] - DTC snack brand Farmley successfully raised $40 million in Series C funding, led by L Catterton, with existing investors also participating. The funds will help expand its presence in the Indian health snack market [5] - AI and robotics service provider "Shouhua Technology" completed a Series A financing round of several tens of millions of RMB, led by a fund under Hangzhou Wen Guang Group. The funds will be used for AI model development, hardware upgrades, and global market expansion [6][7] Acquisition Dynamics - Spanish second-hand clothing platform Percentil was acquired by Israeli tech company MySize, avoiding bankruptcy. The acquisition includes the Percentil brand, central warehouse, AI pricing engine, quality assessment system, and over 120,000 items of inventory [11] - Dick's Sporting Goods is nearing a deal to acquire Foot Locker for an estimated price of $24 per share, totaling $2.3 billion. This news caused Foot Locker's stock to surge nearly 70% [14][15] - Borletti Group announced the acquisition of a minority stake in True Religion, which is known for its iconic "Super T" stitching. The financial details of the transaction were not disclosed [18] - Church & Dwight announced plans to acquire DTC hand sanitizer brand Touchland for $880 million, with $700 million in cash and stock, and an additional $180 million contingent on sales targets [22] - A consortium of investors has made a €60 million acquisition offer for French sportswear brand Le Coq Sportif, with Neopar set to hold 51% of the shares [25][26] Personnel Dynamics - Microsoft announced a company-wide layoff of 6,000 employees, representing less than 3% of its total workforce of 228,000, as part of a strategy to streamline management levels [29] - Balenciaga appointed Nathalie Raynaud as Vice CEO to strengthen its executive team in preparation for the arrival of a new creative director [31]