Financial Data and Key Metrics Changes - In Q4 2025, the company reported net sales of $925 million, an 8% increase year-over-year, with a 3% increase on a comparable 13-week basis excluding the additional week of sales [11][12] - Gross margin was 43.2%, down 460 basis points from the previous 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 Line 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 the additional week in the calendar [18] - International segment reported a 10% increase in net sales year-over-year, with a strong performance in Canada and Mexico [19] Market Data and Key Metrics Changes - The company experienced broad-based demand across its business segments during the holiday season, indicating a positive consumer shopping environment [10] - The active consumer count continued to grow, particularly among Gen Z and millennial families, indicating a shift in consumer demographics [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, with 60 closures planned for 2026 to improve fleet productivity [26] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's path forward despite uncertainties related to tariffs, indicating that the recent tariff news could be net positive for the company [4][30] - The outlook for 2026 includes expected net sales growth in the low to mid-single digits, with adjusted operating income also projected 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] - The effective tax rate for 2026 is planned at approximately 22%, up from 19% in 2025, reflecting changes in global tax policies [35] Q&A Session Summary Question: Can you talk more about your full price realization and the drag from tariffs? - Management noted that full price realization is improving, with less promotional activity and higher average unit retail (AUR) prices being achieved [45][46] Question: Can you provide more detail on U.S. wholesale margins in Q4? - The decline in wholesale margins was primarily driven by the net impact of tariffs, with a significant portion of the decline attributed to inventory provisions [58][59] Question: What is the expected impact of the early Easter on sales? - Management indicated that the earlier Easter could provide a benefit of one or two percentage points to comp sales [85] Question: How does the pricing at wholesale take effect? - Pricing increases are planned across the year, with more significant benefits expected in the second half compared to the first half [67][68] Question: What is the assumption on AUR growth for the full year? - The assumption is for a mid-single digit increase in full year pricing, reflecting the pricing increases initiated in the second half of 2025 [76]

Financial Data and Key Metrics Changes - In Q4 2025, the company reported net sales of $925 million, representing an 8% increase over the previous year's fourth quarter. On a comparable 13-week basis, net sales increased by 3% [10][11] - Gross margin for Q4 was 43.2%, a decrease of 460 basis points year-over-year, primarily due to tariff impacts amounting to $40 million [11][12] - Adjusted operating income for Q4 was $89 million, with an adjusted operating margin of nearly 10%, down from 13.4% the previous year [12][14] - Adjusted earnings per share for Q4 were $1.90, compared to $2.39 in the prior year [13] Business Segment Data and Key Metrics Changes - U.S. retail net sales grew by 9% in Q4, with comparable sales increasing by 4.7%, marking the third consecutive quarter of comp sales gains [16] - U.S. wholesale net sales increased by 3% year-over-year, benefiting from an additional week in the fiscal calendar [18] - International segment reported a 10% increase in net sales year-over-year, with a growth of nearly 30% in Mexico [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 [9] - The company noted that consumer counts are growing, particularly among Gen Z and millennial families, who are increasingly purchasing higher-priced products [5][6] Company Strategy and Development Direction - The company aims to return to sustainable and profitable growth by reducing promotional activity, enhancing pricing power, and focusing on emotional brand storytelling [4][5] - Strategic pillars for 2026 include consumer-led initiatives, brand focus, and a direct-to-consumer (D2C) model [24] - The company plans to close approximately 150 lower-margin stores by 2028, with around 60 closures planned for 2026 to improve fleet productivity [26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's path forward despite uncertainties related to tariffs, indicating that productivity initiatives and demand creation investments are expected to yield positive results [8][31] - For 2026, the company anticipates low to mid-single-digit net sales growth and adjusted operating income growth, with a focus on mitigating tariff impacts through pricing and supply chain actions [33][34] Other Important Information - The company ended the year with strong liquidity of over $1 billion and successfully refinanced its debt, issuing $575 million in new senior notes [19][20] - The effective tax rate for Q4 was 15.4%, lower than expected, due to a higher mix of income outside the U.S. [13] Q&A Session Summary Question: Can you talk more about your full price realization and the drag from tariffs? - Management indicated that full price realization is improving, with less promotional activity and higher average unit retail (AUR) sales. The gross impact of tariffs is expected to be around $200 million for the year [43][46] Question: Can you provide more detail on U.S. wholesale margins in Q4? - The decline in wholesale margins was primarily driven by the net impact of tariffs, with approximately $20 million of the $40 million tariff impact affecting gross margins [55][56] Question: When does pricing at wholesale take effect? - Pricing increases are planned across all segments, with more significant benefits expected in the second half of the year [64][66] Question: What is the impact of the early Easter on sales? - Management expects the early Easter to provide a benefit of one to two percentage points in comparable sales [82] Question: Can you discuss the cadence of marketing and demand build investments? - The company is ramping up investments in marketing to drive demand and improve brand equity, with early signs of positive returns [91]