Financial Data and Key Metrics Changes - Sales decreased 4% to $445.9 million, slightly below expectations due to cautious spending from consumers and retail partners [35][36] - Adjusted net income decreased 7% to $55.2 million, with adjusted net income per share down 6% to $0.66 [46][56] - Adjusted gross profit decreased 4% to $257.6 million, representing 57.8% of adjusted sales, a slight increase from 57.7% in the prior year [45][46] Business Line Data and Key Metrics Changes - Drinkware sales declined 4% to $236.4 million, reflecting a challenging U.S. market and temporary inventory constraints [36][49] - Coolers and equipment sales decreased 3% to $200.6 million, with growth in hard coolers offset by a decline in soft coolers [36][37] - Bags business gained traction, with significant opportunities identified in the bags and packs market [36][12] Market Data and Key Metrics Changes - International sales grew 2% to $78.1 million, representing approximately 18% of total sales, with Europe showing strong growth [42][43] - U.S. wholesale channel sales decreased 7% to $197.3 million, driven by cautious ordering patterns from retail partners [39][40] - Direct-to-consumer sales decreased 1% to $248.6 million, accounting for approximately 56% of total sales [37][38] Company Strategy and Development Direction - The company is focused on product innovation, with plans to exceed the target of launching 30 new products in the fiscal year [8][9] - A strategic partnership with Fanatics is set to expand the company's presence in sports, offering team-colored drinkware and hard coolers [19][20] - The company is transforming its supply chain to reduce exposure to U.S. tariffs, aiming for less than 5% of total cost of goods sold to be affected by tariffs on goods sourced from China by year-end [29][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macroeconomic uncertainty and cautious behavior from consumers but expressed confidence in long-term sustainable growth [6][31] - The company is optimistic about the growth potential in international markets, particularly in Europe and Japan [16][17] - Management expects a modest adjustment to top-line expectations, reflecting a prolonged recovery in the U.S. Drinkware market [31][49] Other Important Information - The company repurchased 745,000 shares for $23 million as part of a $450 million share repurchase authorization [47][48] - Inventory decreased 10% year-over-year to $342.1 million, reflecting strategic management of inventory purchases [48] - The company expects full-year sales to be flat to up 2% compared to the previous fiscal year [49][50] Q&A Session Summary Question: Expectations between volume and price in the second half of the year - Management indicated that pricing actions were minor and that volume would be the primary driver of growth, with confidence in international business and innovation in hard coolers and bags [60][64] Question: Ability to chase inventory for the Camino Tota - Management expressed excitement about the bags business and plans to continue investing in capabilities and innovation, with a focus on sustainable long-term growth [65][69] Question: Opportunity for recent innovations to offset lower productivity levels - Management highlighted strong innovation and expansion in product offerings, with expectations for growth in the Drinkware category as supply chain constraints ease [74][76] Question: Sell-through versus sell-in dynamics - Management noted that sell-through outpaced sell-in in the U.S., indicating healthy inventory levels and strong consumer demand internationally, despite some caution from wholesale partners [83][86] Question: Long-term gross margins outlook - Management acknowledged uncertainties related to tariffs but emphasized ongoing efforts to drive product cost efficiencies and the potential for improved margins as the Drinkware category returns to growth [88][90]