Financial Data and Key Metrics Changes - The company reported a 4% increase in revenue on a reported basis and a 1% increase on a constant currency basis for Q2 2025, exceeding guidance [5][34] - Gross margin was 57.7%, a decrease of 240 basis points compared to the previous year, but better than planned [39] - Earnings per share (EPS) was $2.52, reflecting a negative impact of $0.06 related to tariffs [41] Business Line Data and Key Metrics Changes - Direct-to-consumer (D2C) revenue was flat in constant currency, showing sequential improvement compared to Q1 [5] - Wholesale revenue grew by low single digits in constant currency, benefiting from the relaunch of Calvin Klein women's businesses in North America [5][36] - In the Americas, revenue increased by low double digits, driven by strong digital commerce growth [25][36] Market Data and Key Metrics Changes - In Europe, D2C growth continued with retail store sales up mid single digits, marking the fourth consecutive quarter of growth [35][24] - Asia Pacific revenue declined by 3% in constant currency, but showed significant sequential improvement compared to Q1 [36][27] - The Americas saw a 11% revenue increase, driven by double-digit growth in wholesale [36] Company Strategy and Development Direction - The company is focusing on strengthening its Calvin Klein and Tommy Hilfiger brands through strategic investments in marketing and product innovation [7][30] - Plans to open flagship stores in Tokyo and Soho, New York, are part of the global retail expansion strategy [15][99] - The company aims to navigate tariff impacts through a diversified revenue base and strategic sourcing partnerships [46][47] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty in the macroeconomic environment but expressed confidence in the brand strength and execution capabilities [30][51] - The company reaffirmed its full-year guidance for constant currency revenue and operating margin despite tariff challenges [46][42] - Management highlighted the importance of leveraging product strength and marketing to drive consumer engagement and sales [80][81] Other Important Information - The company is experiencing a significant increase in inventory, up 13% compared to Q2 last year, reflecting planned improvements [41] - Strategic investments in marketing are expected to generate higher visibility and customer impact in the second half of the year [7][45] Q&A Session Summary Question: Insights on marketing investments - Management indicated that increased marketing investments are driven by strong product performance and the need to build momentum for the second half [54][56] Question: Tariff impacts and outlook - Management discussed the challenges posed by tariffs and the strategies in place to mitigate their effects, emphasizing the strength of their diversified supply chain [62][68] Question: Operational updates on Calvin Klein transformation - Management reported sequential improvements in operational execution for Calvin Klein, with a strong global product engine now in place [73][74] Question: Drivers of D2C improvement in North America - The improvement was attributed to product strength, enhanced marketing efforts, and increased consumer engagement [80][81] Question: Update on outlet traffic and consumer trends - Management noted sequential improvement in outlet traffic and emphasized the importance of brand desirability in driving consumer engagement [65][91]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 increased by 4% on a reported basis and 1% on a constant currency basis, exceeding guidance [5][32] - Gross margin was 57.7%, a decrease of 240 basis points compared to last year, but better than planned [36] - Earnings per share (EPS) was $2.52, reflecting a negative impact of $0.06 related to tariffs [38] Business Line Data and Key Metrics Changes - Direct-to-consumer (D2C) revenue was flat in constant currency, with a sequential improvement compared to Q1 [5] - Wholesale revenue grew by low single digits in constant currency, benefiting from the relaunch of Calvin Klein women's businesses [5][32] - Calvin Klein revenues were up 5% as reported and up 3% in constant currency, while Tommy Hilfiger revenues were up 4% as reported and flat in constant currency [35] Market Data and Key Metrics Changes - In Europe, D2C growth continued with retail store sales up mid single digits, marking the fourth consecutive quarter of year-over-year growth [32][23] - The Americas saw revenue growth of low double digits, driven by strong B2C performance across both brands [24] - Asia Pacific revenue declined by low single digits in constant currency, but showed significant sequential improvement [26][34] Company Strategy and Development Direction - The company is focusing on strengthening its Calvin Klein and Tommy Hilfiger brands through strategic investments in marketing and product innovation [6][29] - A multi-year initiative is underway to simplify the operating model and achieve cost savings, with a focus on brand building and consumer engagement [3][29] - The company is committed to expanding its global retail presence, with new flagship stores opening in key markets like Tokyo and Soho [14][97] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by increased tariff rates but expressed confidence in navigating the macroeconomic environment [40][44] - The outlook for the third quarter includes projected revenue to be flat to a slight increase on a reported basis, with continued focus on brand strength and consumer engagement [41][44] - Management remains optimistic about the long-term growth potential of Calvin Klein and Tommy Hilfiger, despite current uncertainties [29][49] Other Important Information - Inventory at quarter end was up 13% compared to Q2 last year, reflecting a planned improvement [38] - The company is increasing strategic investments in marketing to enhance visibility and customer impact [6][40] - The licensing business continues to grow, contributing to sustainable profitable growth [28] Q&A Session Summary Question: What drove the increase in marketing investments? - Management indicated that the step-up in execution and product strength led to increased marketing investments to build on Q2 momentum [51][52] Question: How will tariffs impact gross margins moving into 2026? - Management noted that tariffs are affecting the entire sector, but with a diversified revenue base and strong brand positioning, they are confident in their ability to mitigate these impacts over time [59][63] Question: Can you provide an operational update on Calvin Klein's transformation? - Management reported sequential improvements in operational challenges and expressed confidence in the global product capabilities established in New York [70][71] Question: What are the drivers of sequential improvement in North America D2C? - The improvement was driven by product strength, enhanced marketing, and increased consumer engagement [76][79] Question: What is the outlook for the wholesale environment in North America? - Management indicated a normalization of wholesale shipments and a strong performance with full-price partners [105][106]