Group 1 - China and Southeast Asia have maintained a close trade relationship, being each other's largest trading partners for five consecutive years, with trade volume expected to approach $1 trillion in 2024 [2] - The upcoming Christmas season in the U.S. has led to increased demand for holiday gifts, putting pressure on Southeast Asian factories [2] - U.S. tariffs have triggered a chain reaction affecting various exports, including everyday gloves, popular headphones, and children's toys, leading to higher prices in U.S. stores and significant pressure on Southeast Asian manufacturers [2] Group 2 - Southeast Asian economies, particularly Malaysia, Vietnam, Laos, and Indonesia, are heavily reliant on low-cost exports and are caught in the escalating economic competition between the U.S. and China [2] - The new U.S. tariff system is viewed as a "China +1 penalty mechanism," where exporters using Chinese components face base tariffs and potential additional fees of up to 40% [2] - Despite the challenges, completely disengaging from the Chinese supply chain is difficult, as China remains a crucial supplier of raw materials and intermediate products for countries like Malaysia and Vietnam [2] Group 3 - In August, U.S. apparel imports peaked as many importers sought to reduce reliance on traditional sourcing countries facing high tariff pressures, including China, Bangladesh, and Vietnam [5] - Malaysia has signed trade agreements to maintain its market presence in the U.S. despite facing a 19% tariff on knitted sleepwear, gloves, and cotton-blend fabrics [3] - The toy industry, exemplified by Mattel's situation, highlights the complexities of supply chains in Southeast Asia, where significant portions of exports are directed to the U.S. [5] Group 4 - Southeast Asian manufacturers are beginning to shift final assembly operations to countries like Vietnam, Indonesia, and Thailand, while still relying on China for design and high-end component manufacturing [5] - The ongoing trade tensions reflect the intricate balancing act smaller nations must perform amid the larger geopolitical competition between the U.S. and China [5] - Workers in Southeast Asian factories are working overtime to ensure timely delivery of holiday gifts, indicating the continued importance of this trans-Pacific trade [5]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $318 million, essentially flat year over year, while GMV increased low single digits [13] - Adjusted net income was $7 million, or $0.21 per share, with adjusted EBITDA of $26 million, representing a year-over-year increase of approximately 28% [17] - Gross margin improved to nearly 52%, an increase of approximately 120 basis points from Q3 2024 [16] Business Line Data and Key Metrics Changes - U.S. e-commerce business generated $180 million, a decrease of approximately 3% compared to Q3 2024, attributed to improved promotional productivity [13] - Third-party marketplace business grew approximately 34%, with significant contributions from Amazon and Macy's [13][14] - School uniform business grew over 20%, driven by a strong back-to-school season [14] Market Data and Key Metrics Changes - Sales in Europe decreased approximately 20% year-over-year due to increased promotional activity and macroeconomic pressures [16] - Revenue from the licensing business grew over 30% year-over-year, reflecting increased brand visibility [16] Company Strategy and Development Direction - The company is focused on connecting with customers through an asset-light, agile business model, emphasizing high-quality solutions [4] - A long-term partnership with Delta Air Lines was secured, positioning the company as the exclusive design and manufacturing partner for uniforms [6] - The company is expanding its marketing strategy to appeal to younger consumers, with a focus on customization and personalization [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth momentum in North America and noted strong performance in November, particularly during the holiday season [20] - The company is focused on managing promotional levels effectively to maintain gross margins while driving sales [29][30] - Future guidance includes expected net revenue between $1.33 billion and $1.36 billion for the full year, with GMV expected to grow low single digits [19] Other Important Information - The company achieved record gross margins despite tariff uncertainties and is refining its supply chain strategies [11] - Leadership appointments were announced to strengthen strategic focus and drive growth [21][22] - The board is exploring strategic alternatives, with no further comments at this time [23] Q&A Session Summary Question: What did you see in promotional levels during Black Friday? - Management noted that promotional levels were well-managed, with a successful back-to-school campaign and strong early sales leading into the holiday season [28][29] Question: Can you provide an update on the licensing business? - Management indicated that licensing is expected to continue growing, with new licenses set to take effect in the fourth quarter and into next year [37][39] Question: How should we think about inventories going forward? - Management expressed pride in keeping inventory increases to only 3% despite tariff headwinds, indicating a focus on efficiency [46][47]