Financial Data and Key Metrics Changes - The company reported a total revenue growth of 11% in the first quarter, exceeding the high single-digit outlook, driven by strong performance in direct-to-consumer channels [21][22] - Adjusted gross margin expanded by 160 basis points to 72.1%, influenced by average unit retail (AUR) growth and a favorable mix shift towards full-price and international businesses [24][25] - Adjusted operating margin increased by 230 basis points to 16.6%, with operating profit rising by 29%, both ahead of guidance [26] Business Line Data and Key Metrics Changes - Core product sales, which represent over 70% of the business, grew in the mid-teens, driven by seasonal items and new product offerings [12][13] - High-potential categories, including women's apparel, outerwear, and handbags, saw strong double-digit growth, outpacing total company growth [13] - Direct-to-consumer (DTC) retail comps increased by 13%, with double-digit growth in both digital and brick-and-mortar stores [14][27] Market Data and Key Metrics Changes - Asia led performance with a 19% increase in revenue, followed by Europe at 10% and North America at 8% [22][23] - China experienced over 30% growth, significantly outpacing competitors, driven by brand-building initiatives and strong consumer response [16][30] - North America maintained healthy trends with high single-digit growth, supported by strong DTC channels and stabilization in wholesale [16][27] Company Strategy and Development Direction - The company focuses on three long-term strategic pillars: elevating the lifestyle brand, driving core products, and winning in key cities through a consumer ecosystem [7][19] - Continued investment in technology, AI, and analytics is emphasized to enhance consumer service and operational efficiency [6][18] - The company plans to expand its presence in key city ecosystems, leveraging brand desirability and diverse growth drivers [48][49] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the second half of the year due to potential tariff-related pressures on consumer behavior, despite a strong start to the fiscal year [6][19] - The company expects low to mid-single-digit revenue growth for the full year, with a focus on maintaining operational discipline amid macroeconomic uncertainties [34][36] - Management highlighted the importance of brand desirability and value proposition in sustaining growth, particularly in a challenging economic environment [46][48] Other Important Information - The company ended the quarter with $2.3 billion in cash and short-term investments, and $1.6 billion in total debt, indicating a strong balance sheet [31] - Inventory increased by 18% year-over-year, primarily due to strategic pull-forwards to mitigate tariff impacts, with expectations for inventory levels to align with sales as the year progresses [31][91] - The company was recognized as one of America's Best Employers for Women by Forbes, reflecting its commitment to diversity and inclusion [18] Q&A Session Summary Question: What have been the largest drivers of upside and how sustainable are they? - Management noted the shift towards a more elevated full-price consumer base and the resilience of core consumers across regions as key drivers of upside, emphasizing the durability of these drivers [46][48] Question: Can you walk us through your updated guidance assumptions? - The updated guidance reflects over-delivery in Q1 and a positive outlook for Q2, with tariff impacts remaining broadly in line with previous expectations [56][57] Question: What is the outlook for the handbag business? - The handbag category is seen as a high-potential area, with strong initial responses to new product launches and a focus on building long-term capabilities [60][62] Question: How do you view the growth rates in Europe moving forward? - Management expects continued momentum in Europe but anticipates some deceleration in the second half due to timing shifts and macroeconomic pressures [71][72] Question: Can you comment on inventory levels and expectations for alignment with sales? - Inventory levels increased due to strategic pull-forwards related to tariffs, but management expects inventory growth to moderate and align with sales as the year progresses [89][91]