Financial Data and Key Metrics Changes - For Q2 2025, the company reported net income of $1.8 million or $0.13 per diluted share on net sales of $54.3 million, with gross margins at 24.7%, up from 24.2% in the prior year [16] - Net sales declined approximately 13% year over year, which was anticipated by the company [5][6] - Gross margin expanded by nearly 60 basis points, primarily due to lower manufacturing and logistics costs [6][16] - Selling, general, and administrative expenses decreased by 1.8% to $10.2 million compared to the prior year [16] Business Line Data and Key Metrics Changes - The decline in sales was attributed to delayed customer orders and unfavorable weather conditions impacting seasonal demand [6][10] - Despite the overall sales decline, the company maintained or gained market share in key categories such as basketball, safety, archery, and recreational games [11] Market Data and Key Metrics Changes - Consumer sentiment remains below historical averages, with concerns about tariffs, inflation, and a potential economic slowdown affecting discretionary spending [10] - Elevated interest rates and a frozen housing market have negatively impacted sales in indoor and outdoor recreational categories [10] Company Strategy and Development Direction - The company is focused on strengthening supply chain resiliency and increasing U.S.-based manufacturing capacity [8] - Continued investment in product innovation is emphasized, with new product launches planned for the second half of the year [12][15] - The company is evaluating strategic acquisition opportunities to expand its presence in core categories [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the current macroeconomic environment but expressed confidence in the company's ability to navigate these challenges and capitalize on market share opportunities [11] - The company is committed to disciplined capital allocation and has successfully implemented a tariff mitigation strategy [14] Other Important Information - The company reduced inventory by approximately $14 million in Q2 compared to the prior year, enhancing flexibility in sourcing [7] - Free cash flow remained strong, allowing for debt repayment of $2 million and share repurchases of nearly $800,000 [14] Q&A Session Summary Question: Impact of tariff and retail inventory situation on new product launches - Management confirmed that they are closely working with customers and will not change the product launch cadence, instead accelerating new product introductions [22][24] Question: Details on unfavorable product mix affecting gross margins - Management indicated that weather conditions and tariff situations impacted shipments, particularly in basketball and outdoor recreational products [26][27]