Financial Data and Key Metrics Changes - The company achieved pro forma revenue growth of 18% in the second quarter, with earnings per share (EPS) increasing by 34% to $2.69 compared to the prior year [5][21] - Operating margin expanded by 390 basis points, reflecting strong operational performance [21][24] - Gross margin for the quarter was reported at 75.5%, an increase of 110 basis points year-over-year [24] Business Line Data and Key Metrics Changes - Coach brand revenue increased by 25%, with customer acquisition driving top-line gains, welcoming 2.9 million new customers [8][21] - Kate Spade experienced a revenue decline of 14%, attributed to a strategic pullback in promotional activity [16][21] Market Data and Key Metrics Changes - North America sales increased by 17%, with Coach leading at 27% growth [21][22] - Greater China revenue grew by 34%, significantly outperforming expectations [22][23] - Europe saw a revenue increase of 22%, driven by direct business strength and market share gains [22] Company Strategy and Development Direction - The company is focused on building emotional connections with consumers, particularly targeting Gen Z, which is central to their growth strategy [6][14] - There is a strong emphasis on fashion innovation and product excellence, particularly in leather goods, which are driving growth [7][10] - The company aims to strengthen brand desirability through immersive retail experiences and targeted marketing campaigns [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain growth, citing a strong product pipeline and effective strategies [20][42] - The outlook for fiscal 2026 has been raised, with expected revenue over $7.75 billion and continued growth in key markets [30][31] - Management highlighted the importance of operational discipline and strategic investments in marketing to drive future growth [45][46] Other Important Information - The company plans to return $1.5 billion to shareholders through dividends and share repurchases in fiscal 2026 [26][28] - Inventory levels are expected to be down modestly year-over-year, indicating effective inventory management [29] Q&A Session Summary Question: What gives you confidence in the earnings guidance? - Management highlighted the systematic approach to brand building and strong customer acquisition as key drivers of confidence in future performance [41][42] Question: How can Coach sustain growth momentum in North America? - Management emphasized the importance of lower promotions and exceptional margins, along with a focus on acquiring new customers, particularly Gen Z [53][55] Question: Can you elaborate on the strength in China? - Management noted significant share gains driven by new customer acquisition and effective regional execution, with digital channels leading growth [62][63] Question: What are the opportunities for AUR growth? - Management discussed the importance of maintaining value while driving AUR growth through product innovation and customer experience [70][72]

Summary of Watsco Inc. Conference Call Industry Overview - The HVAC industry is experiencing significant changes, particularly with the transition from 410A refrigerant to newer alternatives like 454, impacting sales and inventory levels [6][41] - Industry shipments were up 22% in July of the previous year, but the current year shows a decline in demand, with units down approximately 10-12% year-to-date [6][12] - The demand structure has shifted, with new housing construction and multifamily projects seeing a decline, particularly in Florida, which constitutes 20% of Watsco's business [18][19] Company Performance - Watsco Inc. reported a 24% increase in inventory while sales were down 4% in the second quarter [25] - The company is focused on managing inventory levels to align with current market demand, aiming to reduce inventory by the end of the year [29] - The average price of products sold has increased by about 12%, contributing to stable margins despite declining unit sales [18][29] Key Challenges - The company faces challenges related to consumer spending, with indications that consumers are less willing to invest in home improvements, leading to a preference for repairs over replacements [21][22] - There is a concern about the cyclical nature of the business, with the current environment suggesting a potential trough in consumer activity [23] Strategic Initiatives - Watsco is working closely with OEM partners to develop strategies for growth, leveraging their market share and capital to support OEMs in expanding their business [28][71] - The company is focused on maintaining price stability and protecting margins while navigating the complexities of inventory management and product transitions [17][20] Future Outlook - The company anticipates a more favorable environment for growth in the upcoming year, contingent on improved economic conditions and consumer confidence [22][71] - Watsco's long history of dividend payments, averaging a 10-11% compounded rate over the last 15 years, is tied more to cash flow than EPS, allowing for flexibility in dividend increases even in a down market [63][69] Additional Insights - The transition from 410A to newer refrigerants has created an artificial writedown risk for distributors holding excess inventory, but Watsco has managed this risk conservatively [41][42] - The light commercial segment remains stable, with potential for growth depending on economic conditions and interest rates [48][50] - Watsco's extensive branch network allows for efficient inventory management, reducing the need for dealers to hold excess stock [52] This summary encapsulates the key points discussed during the conference call, highlighting the current state of the HVAC industry, Watsco's performance, challenges, strategic initiatives, and future outlook.