The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Robert Drbul - Guggenheim Partners LLC - Analyst
: Hi, good morning. It's impressive to see the outlook increase in light of the environment. Can you talk a bit more just about the third quarter
outperformance and maybe just walk us through the puts and the takes for the remainder of the year?
Question: Robert Drbul - Guggenheim Partners LLC - Analyst
: No. I think that's good. I mean on the Converse side, just the timing of when you start to ship and then I guess the other piece on Neal, the EPS
bridge sort of Q3, Q4, the updated guidance, can you just give us a little more just around some of the puts and takes there?
Question: Robert Drbul - Guggenheim Partners LLC - Analyst
: Thank you very much. Goodluck.
Question: Ashley Owens - KeyBanc Capital Markets Inc - Analyst
: Great, thanks and good morning. Just wanted to keep on the subject of gross margin really quickly with expected to be up in the fourth quarter.
Maybe just talk about the magnitude of expansion, puts and takes there? And then just some insight into how holiday promotions are panning
out relative to your expectations, let's say, three months ago?
Question: Ashley Owens - KeyBanc Capital Markets Inc - Analyst
: Okay, great. And then -- just one more on bigger picture, sorry. So bottom line grown slightly above the projected sales growth for this year.
Obviously, last year, you had significant margin expansion and bottom line growth flow through. Would just be curious to gauge your confidence
levels in the bottom line momentum next year, should the growth continue to outpace the sales line? And then any buckets of opportunity you've
identified for additional leverage going into next year?
Question: Ashley Owens - KeyBanc Capital Markets Inc - Analyst
: Okay, great. I'll pass it on. Thank you.
Question: Mauricio Serna - UBS Group AG - Analyst
: Hi, good morning. Thanks for taking my question. I just wanted to get a little bit more details on the Donna Karan brand and Nautica, but mainly
Donna Karan since it's one of the biggest launches you've had in a while. Maybe could you tell us more about like how should we think about the
contribution of that brand to this year's revenues?
And then on the gross margin, it was nice to see the outperformance. I remember like the guidance called for some contraction because of the
shift within brands. But just wanted to understand what was really like even stepping -- taking a step back, what drove the outperformance in Q3?
If it was just like healthier margins on brands on a like-for-like basis. And as we think about 2024, is it -- sorry, fiscal year '26, calendar year '25, is it
fair to assume like gross margin could continue expanding just on a revenue -- on a brand mix shift? Thank you.
Question: Mauricio Serna - UBS Group AG - Analyst
: Got it. Understood. Thank you so much. Congratulations.
Question: Paul Kearney - Barclays plc - Analyst
: Hi, good morning. Thanks for taking my question. Can you speak to the current inventory position of the go-forward portfolio compared to the
total? And on the 30% exposure to China manufacturing, how much lower do you think that can go and how quickly? And if you could provide
any thoughts on how you're planning inventory for next year, if tariffs become more of a reality, do you anticipate the need to potentially bring
inventory in early? Thank you.
Question: Paul Kearney - Barclays plc - Analyst
: Thank you very much. Happy holidays.
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