Financial Data and Key Metrics Changes - For the second quarter, sales increased by 2% year-over-year to $991 million, with operating profit rising by 22% and EPS increasing by 60% to $0.24 [9][14][15] - Gross margin improved by 145 basis points to 41.2%, while operating margin expanded by 255 basis points to 15.5% [10][14] - SG&A expenses decreased by 2% compared to the prior year, resulting in a 110 basis point leverage [11][14] Business Line Data and Key Metrics Changes - The intimates business experienced a decline compared to last year, while basics saw low single-digit growth, active products grew nearly 30%, and new businesses, including scrubs and loungewear, grew by 165% [10][60] - Operating margin for the quarter was driven by cost restructuring actions and productivity improvements [11][15] Market Data and Key Metrics Changes - On a constant currency basis, sales in The Americas increased, were flat in Australia, and decreased slightly by about $5 million in The US [10] - The US Interwear market faced ongoing consumer headwinds, particularly in the intimate apparel category [10] Company Strategy and Development Direction - The company is focused on innovation, expanding product categories, and investing significantly in brand development, with spending levels more than double compared to four years ago [7][8] - The strategy includes leveraging advanced analytics and AI for operational improvements and maintaining a diversified supply chain [8][9] - The company aims to drive increased shareholder returns through consistent sales growth, margin expansion, and continued debt reduction [12][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current macroeconomic conditions and consumer demand dynamics, citing strong performance and visibility into the second half of the year [6][27] - The company raised its full-year guidance, expecting sales to reach approximately $3.53 billion, operating profit to increase by 17%, and EPS to rise by 65% [16][17] Other Important Information - The company has paid down $1.5 billion of debt, reducing leverage by nearly 2.5 turns over the past two years [9] - Management highlighted the importance of mitigating tariff impacts and maintaining competitive pricing strategies [33][42] Q&A Session Summary Question: What drove the outperformance in the quarter and the increased outlook? - Management noted strong performance across key metrics, with operating margin at 15.5%, driven by cost savings and productivity initiatives [22][23][27] Question: Insights into tariff impacts through 2025 and 2026? - Management indicated that tariff costs would not be felt until Q4 and expressed confidence in mitigating these costs through proactive measures [32][34] Question: Pricing pushback in the mass channel? - Management acknowledged the importance of pricing as part of the tariff offset strategy and expressed confidence in their ability to implement price increases supported by brand strength [38][42] Question: Bringing international business profitability closer to US operations? - Management stated that cost savings initiatives are being applied broadly, and improvements are being seen consistently in the international business [46][48] Question: Benefits of lower cotton on margins and competition from private labels? - Management noted that cotton is a small percentage of total costs and emphasized that the broader innerwear business is performing well despite challenges in the intimates category [55][60][62]