Release Date: February 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you discuss the gross margin pressure due to tariffs and your plans to mitigate it? Also, are there any investments needed for the Kurt Geiger acquisition? A: Edward Rosenfeld, CEO: We are facing tariff pressures and plan to mitigate them by diversifying production out of China, seeking price concessions from factories, and selectively raising prices. We've reduced our China sourcing from 71% to 58% and aim for the low 40s by November. Regarding Kurt Geiger, no significant upfront investment is needed, and we don't expect an operating margin drag in the first year.
Q: How is the Direct-to-Consumer (DTC) segment performing, and what factors are affecting it? A: Edward Rosenfeld, CEO: The DTC segment is under pressure, particularly with a slow start to spring product sales and weak store traffic. This trend is consistent across the industry, and while weather is a factor, we are also monitoring consumer confidence levels.
Q: Why is now the right time for the Kurt Geiger acquisition, and how will tariffs affect it? A: Edward Rosenfeld, CEO: The opportunity to acquire Kurt Geiger arose, and we believe in its potential for significant growth. The brand aligns with our strategic initiatives and offers a unique market position. While 35% of its business is in the US and subject to tariffs, we plan to diversify production and leverage its strong international presence.
Q: Can you elaborate on the expected growth for wholesale versus DTC, and within wholesale, how different segments are expected to perform? A: Edward Rosenfeld, CEO: We anticipate low single-digit growth overall, with wholesale down slightly and DTC up high single digits. Within wholesale, footwear is expected to grow slightly, while accessories and apparel may decline mid-single digits. We expect branded growth to outperform private label in 2025.
Q: How are you managing inventory levels, and what is the impact of longer transit times? A: Zine Mazouzi, CFO: Inventory increased by 12.5% due to longer transit times, averaging six days globally. Adjusting for this, inventory is up low single digits. We are managing inventory carefully to align with sales growth and maintain healthy stock levels.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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