Financial Data and Key Metrics Changes - Third quarter sales decreased by 9%, with a favorable foreign exchange impact of almost 2% [13] - Gross profit for the third quarter was $127 million, a decrease of 8%, but the margin rate improved by 50 basis points to 33% [13][14] - Adjusted operating income for the third quarter was $39 million compared to $45 million a year ago [14] - Adjusted EPS was in line with expectations despite lower sales [5][13] - Year-to-date adjusted free cash flow was $42 million, including $17 million from the sale of two owned facilities [17] Business Line Data and Key Metrics Changes - In the Americas segment, comparable sales declined by 12%, impacted by lower demand and timing for Nintendo Switch 2 accessory sales [15] - The international segment saw comparable sales decline by 7%, with underlying demand down in Europe, particularly in Germany, the UK, and France [16] - Sales in the technology accessories category were modestly down but expected to return to growth in the fourth quarter due to new product launches [9][24] Market Data and Key Metrics Changes - Sales for the back-to-school season in the U.S. and Canada were down mid-single digits, influenced by purchasing decisions in response to tariffs [6][7] - In Latin America, sales were weaker than expected due to a constrained consumer, with trade down prevalent [7][8] - Demand in Europe was soft, while Australia and Asia showed increases, indicating mixed demand across international markets [9] Company Strategy and Development Direction - The company is focused on a $100 million multi-year cost reduction program, realizing an additional $10 million in savings in the third quarter [5] - There is a commitment to pivot the business towards higher growth categories while streamlining operations and optimizing the cost structure [12] - The company is evaluating strategic opportunities, including potential acquisitions and licensing agreements, to reposition its product portfolio into faster-growing categories [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in seeing improved sales trends in the fourth quarter, driven by the holiday season and new product launches [24][18] - The evolving tariff environment and cautious consumer spending remain challenges, but management believes they are well-positioned to navigate these dynamics [18][19] - The company reaffirmed its sales and adjusted EPS guidance for the full year, expecting reported sales to be down 7% to 8% [18] Other Important Information - The company has no debt maturities until 2029 and maintains a focus on productivity savings and cost management [19] - The company returned $7 million to shareholders in the form of dividends during the quarter [17] Q&A Session Summary Question: What underpins your confidence for fourth quarter improvement? - Confidence is based on expected growth in technology accessories and new product launches, along with a shift in timing for price increases and orders from Q3 to Q4 [24][25] Question: Can you elaborate on the trade-down dynamic? - Trade down is observed across most geographies, but the company is well-positioned with a brand portfolio that caters to various price points [29] Question: Are there plans for additional acquisitions? - The company is always evaluating accretive acquisitions and licensing agreements to enhance its product portfolio [31] Question: Have you seen any pickup in Brazil for back-to-school? - Results are consistent with expectations, with customers deferring purchases later into the quarter [34] Question: How do you manage product cannibalization with new launches? - New products are generally introduced at higher gross margin averages, and the company aims to minimize cannibalization while providing value across price points [35][36] Question: What opportunities exist for channel expansion? - The company sees opportunities in verticals like healthcare and is focusing on developing relationships with end users [37] Question: How meaningful is the revenue shift from Q3 to Q4? - The shift is significant enough to impact guidance, but specific details are not publicly defined [40][42] Question: Were tariff-related price increases passed through dollar-for-dollar? - The goal was to pass through price increases, but not all were implemented in Q3; margin improvement was also due to cost reductions [50] Question: What gives you confidence in Brazil's market despite challenges? - There have been modest improvements in trends, but caution remains as the back-to-school season progresses [52]

Financial Data and Key Metrics Changes - Consolidated second quarter comparable sales decreased by 10.5%, aligning with guidance [8][19] - Reported sales for the second quarter decreased by 10%, with a slight favorable FX impact [19] - Gross profit for the second quarter was $130 million, a decrease of 15%, with the margin rate contracting about 200 basis points to 32.9% [20] - Adjusted operating income for the second quarter was $47 million, down from $65 million a year ago [21] - Year-to-date adjusted free cash flow was an outflow of $24 million, in line with expectations [24] Business Line Data and Key Metrics Changes - In the Americas segment, comparable sales declined by 14%, primarily due to purchasing disruptions and soft demand [21] - The international segment saw comparable sales decline by 4%, an improvement from the first quarter [23] - Gaming accessories grew mid-single digits, driven by the Nintendo Switch 2 launch [11][12] - Sales of office products remained soft in Europe, particularly in Germany, the UK, and France [12][23] Market Data and Key Metrics Changes - Sales in Latin America were weaker than expected, particularly in Mexico, due to constrained consumer spending and competition at lower price points [10] - In Brazil, sales were down modestly, with back-to-school sales expected to occur later in the year [11] - The company noted an increase in low-priced products entering Latin America from China, prompting adjustments in pricing and product assortment [11][41] Company Strategy and Development Direction - The company is focused on a $100 million multiyear cost reduction program, achieving over $40 million in cumulative savings to date [6][16] - Strategic price increases have been announced to mitigate tariff impacts while maintaining competitive positioning [7][27] - The company is expanding its product offerings in higher growth categories through both organic and inorganic initiatives [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current market dynamics with discipline and agility, despite ongoing uncertainties [17][29] - The outlook for the third quarter and full year anticipates reported sales to decline by 7% to 8.5% [28] - Management expects pricing actions to partially mitigate continued softness in consumer and business spending [28] Other Important Information - The company successfully settled a long-standing tax assessment in Brazil, reducing the reserve from $20 million to $7 million [22][61] - The company amended its bank credit agreement to increase its leverage covenant by 50 basis points for the remainder of 2025 [25] Q&A Session Summary Question: Impact of back-to-school season on sales - Management noted that the decline in sales is attributed to a mix of factors including shifts in purchasing and lower market demand, with inventory levels being managed tightly by retailers [31][34] Question: Contribution of new product development to revenue - Management indicated that the benefit from new products will be modest in the second half, with more significant impacts expected in 2026 [36] Question: Adjustments to product assortment in response to demand - Management confirmed that they are adjusting product assortments to remain competitive against lower-cost competitors from China [40][41] Question: Pricing increases and gross margin expectations - Management expects modest improvement in gross margin in the second half, with pricing initiatives aimed at covering tariff costs [46][47] Question: Market share expectations for back-to-school season - Management stated it is too early to determine market share changes, but they are well-positioned with strong brand offerings [71][72] Question: Incremental sales opportunities from gaming accessories - Management indicated it is premature to provide specific dollar amounts for gaming accessory sales, but they are optimistic about the upcoming holiday season [73][74]