Financial Data and Key Metrics Changes - For Q3 fiscal 2026, consolidated revenues were $62.3 million, a decrease of 11.7% compared to the prior year [8][26] - Net loss from continuing operations was $8.3 million, or $0.30 per diluted share, compared to a loss of $3.7 million, or $0.13 per diluted share in the previous year [27][28] - Gross margin for the quarter was 41.7%, down from 54.5% in the prior year, primarily due to an inventory write-down [29][30] - SG&A expenses decreased to $37.4 million, or 60.0% of net revenues, from $43.6 million, or 61.8% of net revenues in the prior year [30] Business Line Data and Key Metrics Changes - Direct segment revenues were $49.7 million, a 5.3% decrease from $52.5 million in the prior year [28][29] - Indirect segment revenues totaled $12.6 million, a 30.2% decrease from $18 million in the prior year, primarily due to a decline in specialty and key account orders [29] Market Data and Key Metrics Changes - The company opened five new stores and closed 14 since the prior year, impacting total revenues [29] - Inventory decreased by 24.3% year-over-year to $82.9 million, indicating improved inventory management [31][32] Company Strategy and Development Direction - The company is focused on five strategic pillars under "Project Sunshine," aimed at brand rejuvenation and operational excellence [5][9] - Key initiatives include sharpening brand focus, resetting go-to-market strategies, optimizing the digital ecosystem, and reimagining the outlet experience [6][7][20][22] - The company aims to engage both existing and new customers through innovative products and storytelling, while maintaining a focus on profitability and cash generation [12][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the transformation strategy, highlighting early wins in product innovation and brand storytelling [8][24] - The focus on product quality and customer engagement is expected to drive future growth, particularly with the upcoming spring-summer 2026 product launches [40][55] - Management acknowledged the challenges of re-engaging younger customers but sees potential in recent product offerings that resonate with this demographic [55] Other Important Information - The company is actively searching for a new CEO while continuing to implement Project Sunshine [25] - The recent appointment of a Chief Brand Officer is expected to enhance marketing efforts and customer engagement [55] Q&A Session Summary Question: What key signposts should be expected as Project Sunshine progresses into Q4 and 2026? - Management emphasized that product focus is crucial, with significant impacts expected from spring-summer 2026 product launches [39][40] Question: What has been the consumer response to Outlet 2.0 stores? - Early feedback has been positive regarding the store environment and customer journey, with performance in line with stores having more SKUs [46][47] Question: How can the company improve inventory productivity? - Management sees opportunities to improve inventory turns from less than two to a target of greater than two to three over the next 12-18 months [52] Question: How long will it take to attract a younger customer demographic? - Management acknowledged it will take time but is focused on re-engaging loyal customers while also targeting younger demographics through effective marketing and product offerings [55]

Financial Data and Key Metrics Changes - For Q3 fiscal 2026, consolidated revenues were $62.3 million, an 11.7% decrease from $70.5 million in the prior year [26][28] - Net loss from continuing operations was -$8.3 million or -$0.30 per diluted share, compared to -$3.7 million or -$0.13 per diluted share in the previous year [27][28] - Gross margin was 41.7% of net revenues, down from 54.5% in the prior year, primarily due to a $5.9 million inventory write-down [29][30] - SG&A expenses decreased to $37.4 million or 60.0% of net revenues, down from $43.6 million or 61.8% in the prior year [30] Business Line Data and Key Metrics Changes - Direct segment revenues were $49.7 million, a 5.3% decrease from $52.5 million in the prior year [28][29] - Indirect segment revenues totaled $12.6 million, a 30.2% decrease from $18 million in the prior year, primarily due to a decline in specialty and key account orders [29] Market Data and Key Metrics Changes - The company experienced a sequential improvement in key metrics across nearly all direct segment channels, with positive comparable channel sales extending from back-to-school through Black Friday [8][28] - Inventory decreased year-over-year by 24.3% to $82.9 million, compared to $109.6 million at the end of the previous year [31][32] Company Strategy and Development Direction - The company is focused on five strategic pillars under "Project Sunshine," aimed at transforming the brand and improving operational excellence [5][9] - Key initiatives include sharpening brand focus, resetting the go-to-market approach, rewiring the digital ecosystem, implementing Outlet 2.0, and reimagining organizational structure for sustainable growth [6][7][22] - The strategy emphasizes reconnecting with loyal customers while attracting new segments through innovative products and storytelling [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the transformation strategy, highlighting early wins in product innovation and brand storytelling [8][24] - The focus remains on profitability, cash generation, and building a sustainable cost structure to support long-term growth objectives [24][32] - Management acknowledged the challenges ahead but remains committed to disciplined expense control and inventory management during the turnaround period [32] Other Important Information - The company is actively searching for a new CEO, with a focus on finding the right leader to guide the transformation [25] - The recent appointment of a Chief Brand Officer is part of the efforts to enhance brand engagement and marketing strategies [53] Q&A Session Summary Question: Key signposts for Project Sunshine's impact in Q4 and beyond - Management indicated that product focus is crucial, with significant impacts expected from spring-summer 2026 product launches [38][39] Question: Response to Outlet 2.0 and consumer access to full-price items - Early feedback on Outlet 2.0 has been positive, with improved customer experience and profitability noted [44][46] Question: Opportunities for inventory productivity and capturing working capital - Management sees potential for improvement in inventory turns, aiming to increase from less than two to a range of two to three over the next 12-18 months [51] Question: Journey to attract younger customers - Management acknowledged that engaging younger customers will take time, but recent product successes indicate potential for growth in this demographic [52][53]

Financial Data and Key Metrics Changes - For Q3 2026, the company reported revenues of $62.3 million, an 11.7% decrease from the prior year, compared to a 24.6% decline in Q2 [8][26] - The net loss from continuing operations for Q3 totaled negative $8.3 million, or negative $0.30 per diluted share, compared to negative $3.7 million, or negative $0.13 per diluted share in the prior year [26][27] - Gross margin for Q3 was $26 million, or 41.7% of net revenues, down from 54.5% in the prior year, primarily due to a $5.9 million inventory write-down [29][30] Business Line Data and Key Metrics Changes - Direct segment revenues were $49.7 million, a 5.3% decrease from $52.5 million in the prior year, with comparable sales declining 5.8% [27][28] - Indirect segment revenues totaled $12.6 million, a 30.2% decrease from $18 million in the prior year, primarily due to a decline in specialty and key account orders [29] Market Data and Key Metrics Changes - The company experienced a sequential improvement in key metrics across nearly all direct segment channels, with positive comparable channel sales extending from back-to-school through Black Friday [8][28] - Inventory decreased year-over-year by 24.3% to $82.9 million, compared to $109.6 million at the end of the previous year [31][32] Company Strategy and Development Direction - The company is focused on five strategic pillars under "Project Sunshine," aimed at brand rejuvenation, operational excellence, and customer engagement [5][9] - The strategy includes sharpening brand focus, resetting the go-to-market approach, rewiring the digital ecosystem, implementing Outlet 2.0, and reimagining organizational structure for sustainable growth [5][6][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the transformation strategy, emphasizing the importance of product innovation and customer engagement to drive growth [3][39] - The company is committed to disciplined expense control and inventory management during the turnaround period, aiming for improved performance and shareholder value [32][24] Other Important Information - The company is in the process of searching for a new CEO, with a focus on finding the right leader to guide the transformation [25] - The recent appointment of a Chief Brand Officer is expected to enhance marketing and digital commerce efforts [54] Q&A Session Summary Question: What key signposts should be expected as Project Sunshine progresses into Q4 and 2026? - Management highlighted that product focus is crucial, with significant impacts expected from spring-summer 2026 product launches [38][39] Question: What has been the consumer response to Outlet 2.0 stores? - Early feedback has been positive regarding the store environment and customer journey, with performance in line with stores having more SKUs [44][45] Question: How should inventory opportunities be approached moving forward? - Management sees potential for improvement in inventory productivity, aiming to increase inventory turns from less than two to a range of two to three over the next 12-18 months [51] Question: How long will it take to attract a younger customer demographic? - Management acknowledged that it will take time but emphasized the importance of re-engaging loyal customers while also targeting younger demographics through effective marketing and product offerings [52][54]