Financial Data and Key Metrics Changes - In Q4 2025, the company reported net sales of $925 million, an 8% increase compared to the previous year, with a 3% increase on a comparable 13-week basis [11][12] - Gross margin was 43.2%, down 460 basis points year-over-year, primarily due to tariffs impacting $40 million [12][14] - Adjusted operating income was $89 million, with an adjusted operating margin of nearly 10%, down from 13.4% the previous year [13][15] - Adjusted earnings per share were $1.90, compared to $2.39 last year [14] Business Segment Data and Key Metrics Changes - U.S. retail net sales grew 9% in Q4, with comparable sales increasing 4.7%, marking the third consecutive quarter of comp sales gains [16] - U.S. wholesale net sales increased 3%, benefiting from an additional week in the fiscal calendar [18] - International segment reported a 10% increase in net sales, with a constant currency growth of 8% [19] Market Data and Key Metrics Changes - The company experienced broad-based demand across its business segments during the holiday season, indicating a strong consumer shopping environment [10] - The active consumer count continued to grow, particularly among Gen Z and millennial families, indicating a shift in consumer demographics [5][8] Company Strategy and Development Direction - The company aims to return to sustainable and profitable growth by reducing promotional activity and focusing on higher-priced products [5][24] - Strategic pillars include consumer-led initiatives, brand focus, and a direct-to-consumer model to enhance consumer connectivity and brand loyalty [24] - Plans to close approximately 150 lower-margin stores by 2028 to improve fleet productivity and profitability [26] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty surrounding tariffs but expressed optimism about the company's path forward, citing strong consumer demand and improved financial outcomes [4][9] - The outlook for 2026 includes expected net sales growth in the low to mid-single digits, with adjusted operating income also anticipated to grow in the same range [32][36] Other Important Information - The company ended the year with strong liquidity of over $1 billion, including nearly $500 million in cash [19][20] - Operating cash flow for 2025 was $122 million, reflecting a decline due to lower earnings and higher inventories [22] Q&A Session Summary Question: Can you talk more about your full price realization and the drag from tariffs? - Management noted an increase in full price realization with less promotional activity, particularly in emerging brands like Little Planet [42][44] - The gross impact of tariffs is expected to be over $200 million for the year, with pricing increases planned to offset this [46][47] Question: Can you provide details on U.S. wholesale margins in Q4? - The primary driver of margin decline was the net impact of tariffs, with approximately $20 million of the $40 million impact attributed to this factor [54][55] Question: What is the timing of pricing at wholesale? - Pricing increases are planned across the year, with more significant benefits expected in the second half [62][64] Question: How does the early Easter impact sales? - Early Easter is expected to provide a benefit of one to two percentage points in comp sales [80][82] Question: What are the key drivers underpinning your confidence in the sales guidance? - The assumption includes a mid-single digit increase in pricing, with strong growth planned in e-commerce and retail channels [74][76]

Financial Data and Key Metrics Changes - The company has experienced three consecutive quarters of comparable store growth, maintaining higher average unit retail prices (AUR) without the typical unit degradation associated with price increases [11][12] - The wholesale business in the U.S. represents approximately $1 billion of the company's $3 billion in revenue, with a significant portion attributed to exclusive brands [35] Business Line Data and Key Metrics Changes - The direct-to-consumer (DTC) business showed strong performance, with the wholesale business exceeding expectations during the holiday period [11] - The company has identified around 150 stores for closure, primarily those that are lower margin, which collectively represent about $110 million in revenue [22][26] Market Data and Key Metrics Changes - The company has diversified its market approach, performing well across wholesale, international, and retail channels, with all age categories exceeding expectations [11] - The shift in consumer behavior towards online shopping has been significant, with e-commerce now accounting for about one-third of U.S. retail revenue [29] Company Strategy and Development Direction - The company aims to invest in product design and demand creation to resonate with today's young consumers, particularly Gen Z parents [6][8] - There is a focus on enhancing brand identity for each product line, allowing brands like Oshkosh and Carter's to develop their unique identities [41] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the need for reinvestment in marketing and product quality to attract new consumers and regain the trust of lapsed customers [6][16] - The expectation for growth in sales and earnings remains for 2026, with a focus on sustainable and profitable growth rather than growth driven by discounts [39][40] Other Important Information - The company is transitioning its Amazon business from a private label to core flagship brands, which is expected to drive future growth [36] - The supply chain team has successfully diversified sourcing to mitigate tariff impacts, resulting in meaningful cost savings [20] Q&A Session Summary Question: What are the biggest challenges faced since the new CEO took over? - The CEO highlighted the need for investment in product design and demand creation to align with consumer expectations [6] Question: Can you elaborate on the holiday performance? - The CEO noted strong performance across all channels, with the ability to maintain higher prices without losing unit sales [11] Question: What is the strategy for store closures? - The company plans to close 150 stores identified as lower margin, with expectations that some revenue will transfer to nearby locations [22][26] Question: How does e-commerce fit into the overall strategy? - E-commerce is a significant part of the business, expected to grow as physical store closures occur, with a focus on omnichannel capabilities [29] Question: What is the outlook for the wholesale business? - The wholesale business is expected to evolve, focusing on exclusive brands and adapting to changes in retail environments [36][37]