Under Armour (UA) 3 Aug 212021 Q2 Earnings call transcript

Good day. Thank you for standing by and welcome to the Under Armour, Inc.

Second Quarter Earnings Webcast and Conference Call. At this time all participants are in a listen-only mode. After the speaker’s presentation there will be a question-and-answer session. Instructions]. [Operator that being advised conference today’s be recorded. is Please Instructions]. [Operator hand over SVP, to I Relations would speaker conference to like Allega, now your the today, Corporate Development. and Investor Lance Thank you. ahead. go Please

us forward. documents thank Armour’s to fiscal and are filed view earnings SEC moving The as on will of release on on both neutral reference results under today’s call. environment defined provided of with today's to business this including conference uncertainty this are Armour's August about.underarmour.com. website to that financial related include at important information morning Good the terms could subject forward-looking XXXX everyone made joining and adjusted call statements continue to the second our of for We business you Statements be and It currency quarter that including risks on potential its current the morning's call information global ongoing Under its press reflect detailed rules which measures and XXXX. are in regularly SEC COVID-XX and Statement found Safe uncertainties and release. X, retail effects may our Harbor to can press impact morning’s in Under is note which that non-GAAP

information our quantify to also which may we hear items found identify and our items be investors. excluded about all can GAAP in excluded to provides release identify us helpful non-GAAP this amounts refer to under release, and You why and measures also view in all believe about why of U.S. and GAAP. provides is Reconciliations press press our quantify view which

would CFO, with before Under her today's Frisk; like last call call Gillard to and Under moment Bergman. earnings recognize fact a I over Carrie will this and I But Joining Dave President to that to Patrik Armour Armour. Patrik the is it us take on be CEO, hand and

Team years, a year entire journey Investor say half and of past been it's brand my to Executive veteran missed. the expertise you your of and all truly this great will wait will half over the ethic, that Can't and determination, the partner call has next appreciated behalf an and see be accomplish in I'll a the things heck of you for With your and Relations work to turn the As eight adventure. On iconic least. to Patrik. four in been

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strategies and of the capacity sustainable, second reset Patrik. our Armour’s Thanks, are been executing that to quarter shareholders to halfway results hard foundation XXXX, the demonstrate At we've worked point to against the growth to profitable we've return working. Under increase

over punctuated a the execution global against by wavered market and half. an COVID operational Our has incredibly dynamic challenging and last year never

channel and performers year experiences full bottom and target have been in to come across the wholesale impacted COVID peak significantly of Our delivering the attention perspective, line, impact revenue course, Versus the has from sharper. to top working higher wholesale demand year. and due environment the this closures And our was class the prior in Armour’s innovations house And best pre-pandemic against performance up to $X.X results was was and at capital line, of broad focused lap store primarily the quarter to second based we factory revenue premium a XXX% closures. significant together were Under all never our businesses. XX% up retail prior up year. due in as previous outlook, our to than levels. billion year's From retail growth driven most general, quarter, our second of overdrive door this In to by restricted better last compared

our in sell stronger of higher most QX Additionally, due to North wholesale overdrive America. through was and demand

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bags, by locations across From tighter offset continue partially strength Revenue of was for all e-commerce Within XXX%. inventory the we with store and revenue closures lapping our strength year. to last channels. driven owned up XX% lower masks. given in saw D-to-C, a with driven comparison our up we across America was Asia Our up markdowns fuller XXX% and wholesale, against business, revenues increases easier was and in growth year up to XXX% growth our quarter This were was strength enabling by up in up was And D-to-C stores our balanced In prior XX% the through. In distributor American year. was categories. business North America, product primarily segment the in revenue EMEA, was second driven categories. our Footwear and by Pacific type, and up business. regional when team up sports closed significant by hats, in sell conversely in sports by the train, in tough priced a quarter. the driven perspective, run golf, licensing revenue partners. North driven partner our And a were run in and particularly in up By was XXX%, XXX%, comparison accessories our by XX% apparel was which by our drive decline operated driven wholesale wholesale and Latin revenue with prior most to

we distributor into to the move performance, As particularly top of the the half expect models year, impact transition the back of to fourth negatively countries certain quarter. we line in

along came foreign sales was Offsetting a benefit when basis from a percentage point the channel channel price the mix gross mix, quarter lower XX.X% negative points points a quarter. primarily XXX due in for XXX D-to-C these in within of in basis activity to wholesale larger channel, markdowns margin lower last and of of changes by improvements most driven promotional basis business was of which closed of promotions impacted points our year XX off expected, was basis pandemic mix and this year pricing prior impact to Second with the improving better essentially in lower improvements including significantly our within of to and by due XXX currency. than wholesale, by higher driven e-commerce a

restructuring chain supply margin throughout negative the were XX points negative basis point of Additionally, less primarily to to benefits were closed a Relative to our chain, continued logistics pricing. we realized as headwind impact charges. plan, tied million promotions second and along remain due and locations impact to freight second XXXX amount contract we than for absence a more And related planned the an lower plan higher quarter quarter, anticipated pre-tax due to to marketing quarter our supply million timing realization will far, of finally, were most MyFitnessPal, specific costs product expenses basis retail realized we've restructuring to terminations. of Overall, up of had than our and thus which X previous due with we recorded within such higher second XXX of SG&A and of COVID related throughout favorable offset pressures. expenses million XXXX. versus store of through driving XX% given as the costs demand developing gross operations, costs XXX enabled we in outlook and margin, the gross Throughout XXX charges higher experienced XXXX. by lease executions related the than more

As important meaning been nothing from are to plan September, charges last that XXXX. million related all initiatives in remaining this charges outlined to million. has note in XXX XXX contemplates detailed It's new added XXXX, ranging total to

million charges for XX For the the to in expect to this -- we to approximately quarter third plan. quarter, related realize million XX

on, second tax, XXX income income million net a during quarter diluted earnings impairment per and share was adjusted the or restructuring was Moving realized quarter. we operating After charges, our excluding of XXX XX million, operating $X.XX million. of income

senior year are XXXX convertible Excluding surpassed loss XXXX convertible of amount in extinguishment our net share. per restructuring XXX was or million full we adjusted our already half senior diluted diluted to on in the amortization our this discount non-cash debt of respect, $X.XX share. we adjusted per million of proud earnings first the of and charges, on notes have that of report income In earnings principal notes, XXX

to So levels. pre-pandemic COVID million, great drive XX% some to inbound in delays model, strength related finish was throughout operating experiencing chain was pressures. XXXX to position as Inventory with we due second out XXX the of at down supply a to quarter continued against our along the shipping improvements end

income principal no under for entered to into X.X respect Class issued in with revolving XX related million had Our of at second holders of of agreements call bonds million convertible outstanding recorded our With a bond quarter, utilize billion in credit and which approximately capped other million cash XX exchange stock, convertible terminated borrowings of our XXX facility. million we million and our debt, during We C is cash notes were in loss Post and related equivalents the cash, captured transactions. outstanding. billion certain certain the and and end convertible of the XXX X.X we transaction, expenses. amount this quarter, XXX shares our net remain

partners as recently year. retail XXs macros mid-XXs the with half the XXXX. XXXX low said, we seen at the landscape let's move the track we full consumer our second let's in outlook, upside through for we've shutdowns quarter, continued said, a business. a where based year. than flowed along continuing to a although and for meaningful reflects the top in at increase improvements disruptions, Accordingly, or the on positively, now increase international the of on low to we This is Next, and to retail rate remain developing our expect general and same performance trends progress with marketplace pandemic start challenges percentage demand we for North our global outlook better manufacturing Asia. updated continuing of with overall COVID-XX the under That the with no our significant full That within and subject XXs recent expected be cautious increase logistics percentage percentage manufacturing logistics through due or both up most to countries revenue, in America our business key which Southeast to in in sourcing today's second

changes offset relative high with improving basis gross previous benefits offset from expenses. which freight MyFitnessPal, against SG&A, related revenue we XXXX rate remains that and to expected costs, improvement congestion adjusted half expect due high XXXX, increased points margin, year logistics to of within situation. that to benefits less full Versus our single-digit to pricing, is rate gross a partially than XX.X% gross carried evolving margin from outlook XX pricing expense a freight on in gross foreign expect our margin of the is increase GAAP we in be rate a rapidly our benefits a along which growth. a up poor of by and sale rate higher XX margin with The by For currency partially a being basis, to to

making marketing that previously, outlook advantage it's with in even to proactively we build our remember XXXX and connections particularly are taking of As laid specific out important to our investments, improved to consumers. incremental deeper

of higher overall increase realized an other high in, in of on the in this are the is and levels. higher part marketing, other growth one half in of we significant SG&A up in against dollar related rate the reductions which our SG&A. is XXXX. significant dollar target XXXX SG&A absolute incremental of third is Additionally, significant stack, marketing two-year one to XXXX, this incentive expected balance most basis, incentive related and incentive the related a increase to compensation, against On when the to compensation, single-digit about drivers SG&A underlying we All investments higher incremental compensation expect

base. our to items, these Beyond XXXX’s against underlying SG&A is planned be up slightly only

north deliver operating an rate, Translated an growth, top or between we ahead, profitability year, and the income our of adjusted approximately productivity, priority. XXXX. an XXX balance to to on margin XXX this of X% With now and just X% expect striking or margin that, SG&A right is look in to million to we basis. to reach XXX million million remaining operating adjusted we around As XXX expect disciplined million operating

amortization All of share early growth outlook $X.XX this we've to relative the us per reflects debt half in on improvements overdrive year profitability of to first positioning to of $X.XX we per earnings along non-cash notes, expected $X.XX senior XXXX. deliver full In stronger charges, these the and takes loss of on and notes, convertible XXXX. restructuring discount combination expect XXXX to $X.XX of earnings us realized an the share extinguishment across summary, the diluted convertible our of with diluted in of senior or adjusted to excluding our business,

XXXX, quarter. masks, more supply Next, sports on us and year, expected I'll and of price model, half how the of retail, the some American our in before MyFitnessPal, that lower including about of off began to balance giving lower demand the to the third of more exit highlight constraints, directly impact the thinking changes undifferentiated Latin we're channel, the headwinds sales which color our absence operating of expected sales second in

quarter we out fourth Looking low and to rate revenue finish a flat quarterly up flow, at the year. to relatively at digit to be third quarter be the expect single

Next, be by in and as product channel. we expect off and points third absence to masks. lower MyFitnessPal, quarter of due offset basis gross margin by channel pricing and sales we promotional XXX lower sports price freight the changes driven to activity These be mix costs, will benefits to higher to sales up the expected mix benefits anticipate of partially XXX lower

margin expect the to and product of MyFitnessPal, we percentage from the gross driven mix footwear fourth by to revenue, be negative by licensing mix driven down quarter, impacts For higher of channel and third a the bottom per lower expect diluted adjusted absence XXX earnings lower $X.XX masks. to million Bringing to we adjusted to of operating XX of million $X.XX income sports or quarter to sales be share. line, this due

when close So form flexibility, excellence, balance allowed consistent combined operational to proficiently. a sheet a challenges strong pandemic management out, financial to and transcend that's model us

for we'll well going profitable turn these provide for it and next the chapter deliver XXXX, to us to growth. With on all next we believe Operator? that, at Under six positioned into to is accomplishments the of operator Looking your setup questions. months back Armour our

question comes first your And Sandler. Murphy of the from Erinn from Piper line Instructions]. [Operator

my first guess for America. I morning. Good it's you North Patrik question on

little positive just bit and about more seeing what despite thinking that You Can about year-to-date as changes surprised here to this to the strategic you've growth of and algorithm the close XXXX made. get levels exit some America? a region, we for XXXX, in share about talked that region structural you how you then North you underlying are the growth long-term the on

we've this the we've had out we I how of. full Hi, ability price on to question. have year general, messaging really outlets think it. the with right sure terms patterns, with and consumer you're hard messaging very right of see into think degree the our is to how put able consumer XXXX. that delivering putting become were into to product, of centric to make more really some experience, innovation pipeline and we've We right combination all also were deliver returned to the the to effect course, in retail been is channels that pleased consumer better continue market And a demand to and in results Erinn. to a that across at versus you a continue execute, the to in Then right ability call ago, talked going now focus the we of the has been about Thanks the go And being against. remember in with to I consistent the drive in demand and predict place we're on I if product job our of what that able to playing better. our for time fulfill that we the to playing XXXX to deliver better constraints in better more doing shop continued starting better consistently see think and online,

look the going we're execute strategy off and direct in sway can Dave an in of resiliency not a development and half. for it. really agile to against to focus, road, COVID-XX think the is best essence of we're of we're consumer think And back year, we're our current uncertainty, built When the be the able in on forward and focus right? working the in twists next we being we ready to be lot highlighted athletic and a ability We've the the adapt with into to at performer, there's of terms here turns So about performance. but little this I environment what the to bit seeing our is is way and it strategy

Great. just are on challenging of share real Day, a much I flow for what time, kind think and Can of of XX% flow everyone Investor seeing steady your is follow-up really. chain. going to steady any was that around and best very to obviously how if been needing back what supply of secure Southeast can is as or you're It's Thanks. inventory then then, there exposure Asia longer the coming work to you're you now as the you. I times possible? that And Thank lead back maybe Vietnam do out

Yeah.

sourcing happy and categories have reliant about and continued all that in Investor today. Investor of you're say. we did is that's talked And we and Day I all APAC. that actually Day I path much industries, lower how with our on we developing situation, bit with not think we've dealing at think we're We're think really have across than point, it planned it's the we something I our that talk all, a should is at in necessarily right, about. little a was strategy the it about down the first I we're so Where and it talked

but that Middle presence it's and important also We sourcing a for a that strategy have well South between we good today have a little example, sourcing we apparel footwear. Europe, mentioned and strategy. bit as across to And in very third split America do, world you East, terms and in what Latin of the of balanced America, is about Vietnam it's note right our as a

well a So current here well-balanced potential agility probably but we're to me have develop. we're issues us better bit in going that little position most, will and developing situation. be maybe to Does puts things we've given developing, course, outlook again, in But a it's platform sourcing and of well going balanced. not a our view, here continue a to than our

so Thank best. and you all much the

Thanks, Erinn.

from Cowen. the And of of your next question John line comes Kernan

in you half for about the taking in particularly of for them about how North made on America within revenue how think question. of the funnel we this investments first Thanks half the of half Excellent. year, you're year, back in you Patrik, clearly fits back the can top marketing, year? performance the my earning talk should the and guidance of into the that returns the the

you, thank -- you John. think I Yeah,

that relates now put back roaming the and are that we're and capabilities as and we're I media that that the have think with Dave of team feel comfortable I read and place really to that we starting to the but react ability and the back in now in opportunity for an so our terms last one the every based reasons that we seeing what through models. efficiency that messaging the understanding to the for made choosing we're an to of year, half not to the investments And into half year us have also invest there's marketplace. more upper dollar happens this what opportunity have much and the drive just funnel. that on better half we seen the we first means our media And to is it put

So more future. means, the ourselves so really perhaps that much revenue for not but year, preparing this driving

the specific of to give brand, a to well really will So North doing important so and the continue in the China. brand funnel we've we to for top payoff forward we're measured in that now just believe in it us down the which that into speak to putting as here America, money it the countries that we now enhance do capabilities back we're us that doing that's to able half. drive looking in believe with and and that and a the And Europe ramping way built, line in up very strategic to right we're not the as also in

the first at has Understood. this adjusted highest in ever generated Dave, The you. It's year. by company margin maybe generated of far. one the half X% for business operating the

strong you that in that you the we year a to margin front that double-digit you. just the Thank be if half we've back path think get the never was drivers doesn't the long-term that would you can of to and curious, from margin could timing any I'm given seen lower the operating drivers operating to half. the relative margin margin far first a performance to to well? there, away, talk double-digit how the in talk your as Just standpoint seem curious back half, as helpful business will around have the

Yeah, John.

two think year, we half back of I'll it on back whether that back playing retail, the out of MyFitnessPal, I etcetera from the lot about are a mean, in take if around in half perspective. headwinds parts. this a that demand I differentiated think half my going be maybe mentioned you the constraints, revenue

some We etcetera. logistics margin of freight relative on to mentioned the the also some costs, in back gross the and of half pressure additional

just as back as just a So, half as play spend well last also then back heavying well. Patrik up from and I in those year fair it we a the the half into year this in brings And operating things more out as with as costs D-to-C some we're of are a towards point that would coming of highlighted, higher the SG&A then QX that marketing perspective. of get percentage amount and

the of year. play kind a the year coming the into So, of to relative operating there's front the lot margin the back tempering in of versus half things of half

SG&A that we operating opportunities are we that We're believe double-digit ready improvement we're there, be absolutely with continued a that. get increasing we benefits gross revenue and now relative the D-to-C As continued year to the be whether and different net to and future. to growth margin of be gross of margin kind from mix done whether profitable do excited And scale on opportunities and that be. mean, playing health not based journey driving, to the so that that heavily speak to in forward then think there we that front we've able are will as I really costing to that step about forward, it and XXXX leverage that the continued business it's will we're a But much into of to cost also what about will look to beyond. obviously, able and we lot work to driving we get be on down

So we in a to to different of future. opportunities the be able be more lot will speak there that excited to

you. thank Awesome,

are You welcome.

line from Duffy next comes of Stifel. the your from question Jim And

environment, cadence stands and XQ me. guys speak the Can right. understand you. shifting the Thank door morning, of to Lot into stimulus. I'm Couple for across to what saw of July? impact productivity in Good retail maybe you trying questions with guys. you

Patrik It's Hi here. Jim, I'll it kick off.

Patrick. Thanks,

to you. good talk it's to Yes,

as way the consumer terms in us opportunity the school the of is I here stimulus about back right, to perhaps We for that's in normalized effect think think a back a into to an more school turning certainly a the especially September, what QX what about I be August, an consumer got to more, think sports, think to I back and sports back on had we now also brand, that could going as the here, specifically. but be think be to say team we and keeping it to us for to careful the that is also market. that

the to half terms consumer, bit add on drive So, know that's bit pattern little I second that more of do business here year. if an to effect in of that color the has little want stimulus in more here think help a going the don't think as the the course half Dave. normalized there year. of you things of the of We played maybe first I

it pretty No, you well. covered I think

offset some consumers ask this see Great. And in of the position too you the you input soon products to like Patrik power, to for for brand more U.S. is pressures? do for it encouraging the coal brands feel a successfully it's then How selling price. or about like does really consumers leave value and thinking engaging and with in to is more on the price rising pricing

improve. And us, to year together we're you think that we is and perspective, seeing are Under full through to discounts -- lower I net think as now sell and to an coming more Armour product the as see think at gross clearly able we gross is about continuing margin. in price that for from that what is comes our are way I in everything it's to it, this the

as raise as also as as we try become I more think a brand. have do always you brand opportunity the into beyond, there's in in we'll for kind us some terms prices. though, and certainly I you stronger to future we to continuing have like that to we'll if And about to the of think power now and opportunity of improve that XXXX think

on to And come so that. more

you. Thank

your Nagel line Oppenheimer. next from of And question comes Brian the from

Hi, Congratulations. good morning.

Thanks Brian.

bit a to lot other ask have numbers. I up And a of consumer want been of now. of companies a follow-up to in right a and question good I there's environment it's So of some currents the mean the lot questions, but putting the cross

last few or of here made You're the you've doing back so years over so. significant on investment reposition

what the acceleration strength So what's see happened half, as back you the seeing of you your that a distribution much the how look in half reposition? And at product the think is business you new this first of Under is line we on evidence that, top in are has top XXXX gains? helping these of to given doing and really then Armour today been reflection of in do drive

you It's see Brian. proud is Armour that at question coming a hi, Patrik. And think of really Under That's is great right. Yes, it's and I what balanced the holistic, we're balance our through. and growth

about like we year just terms halfway franchise able layering across or you to to where And a think year, year especially out of the and the last time the able do to we've out post pandemic and flow came HOVR continued of build incredibly to all get a on before ability $XXX. ability call and X especially our fact think things the job expression and early Sonic franchise you done here at perform grow to that of in the to at I specifically place, like to footwear, Machina platform of this we're now to that our everywhere the have that right well. franchises incredibly few years now seven the instilling the net, we our in six categories, category, on do us X top right was that point in grow a whatever spring our with a to so Infinite and it, great and will HOVR the the and run I interesting -- What forth. something gross platform, the was were in well, in for franchises want into did actually X kind Machina mindset in with an If regions, pandemic across better that a be to right to execute, to our stuff, the never

introduced Velocity running shoe we is and that have ago weeks $XXX and So at FC Flow you few now a just also cranking.

think just saying it as we're the easy So, as trend. following isn't that I

of all that things running the execution. making with I we're of think about being with better sure terms play are talked and doing just in we demand, -- profitability constrained a that I

that So executing truly in And place out is this focus I think I it's we're to put athletic that consistent, now focus from we really out. think holistic proving the playing well sticking approach Under a being is around that performer, Armour. performance, strategy, what

follow-up then very question. Appreciate it And That’s a helpful. Patrik.

talked that's say seen your with start to any school, this COVID a have again you you we your As seen bit resurgence you about But, in we head across markets as have country, certain little of the have outlook towards of back comments. happening? businesses sort to disrupting any this to

it for think with happening stuff. muddy, a consumer, a Southeast people Asia is to that not out talked yet for seeing get see the America. also But from I little there a we more relates Well, bit, example, to necessarily it as it we think the supply We're it right. so to I little in back North really chain have to currently and store get about closures before. Because school you've got perspective,

North that So think America. I little to it's in yet not mean don't come? a here going it's Does know. early I

your as is mine. as think good I guess

Armour situation. and resiliency approaching resiliency in be is to way this pandemic at it here an though we're that it's seeing the our is for And us. ability what that and built I fact Under an the think from agile I'm adapt teams incredible

road twists So have. with that we're agility forward able to ready turns the to model going new operating and the here we be and navigate in

and little probably and be where every for the have a we road and twists strong on bit different half it's to supply of but little we depending called are holding, is back turns are. year deal in it's is be still you it's a at out America bit. turns have to Asia few North that's Southeast then chain this Europe going to going to in with. and going sure, and the in out But the We and to level. what Dave here able that twists do in look in leadership that execute very believe we remarks his as be

moment terms of happen So think going very now, to it's what's next. a right in I fluid

congrats. color, the you. all appreciate Alright, Thank

Thanks, Brian.

And your Boss comes line question from of the J.P. Morgan. next Matthew from

Great. Thanks quarter and well. nice congrats on as a

Matt. Thanks,

product see about do as the I the back we in more laid guess for you world plan hopefully the as beyond? evolution half out maybe the best think we you and execution, the your and product versus on to normalized of and beyond, that apparel XXXX about product about across how think Patrik, opportunity side footwear see think maybe where that So potential game we today

things I thank Matt, one talked pipeline. questions our as to one our you so And as were year we on that innovation we now Erinn we last earlier and of the that's favorite today, Under to to my go Armour went market, you we've that done. for decided we about here is question. right is It's our because to pandemic guys into exciting said innovations what going the execute which of

also helping consumer on to have that how I we centricity really to drive think understand holistically. just how not is tune to to but innovation, go this how focus cadence us things, increased laser our our things, and market

now So a we in to franchises brand, as learned drive footwear. have how

that we've Curry, all learned way to also Rock, how drive learned initiatives also have the We to all upstream. like like excellently specific how but of do the executing

consistent, we're be So pandemic, going to really now. growth. bit marketing to more and when this continuing stay spend come for little a about strategy, of play, Stick the to out it's drive the in brand, play ready for us, execute the the we

believe how to David forward, what thinking best on about level were maybe model the to do necessary you And we looking is going side, think a expenses, to expense if about leverage multiyear, to follow-up, the just revenues it? as just or growth how a of for think baseline revenue about SG&A

expect great a XXXX is of and of only outside grow this just X% slightly. And to question. X%. growing same incentive SG&A it's to year underlying point, underlying that Matt, At outside how this that compensation SG&A we've we versus highlighted marketing

that cost base what think I are drive be at those will year, I larger and think our and mindset to are growth saying not really cost financial sure we much, with right standpoint pointing prioritizing and next our been that the but that's place leadership, where not combined understanding, with saying term. much a we're combined I'm much that towards. I make have that letting structure better I'm get the enterprise longer Patrick and that towards discipline into investments to to able we've So

make each prioritize, at believe to continuing to we're we're look areas same the we at are invest to we for So spend, growth. to sure to leverage. key the But that our continuing continuing also we've time, that in we're continue critical got

think I of be and leadership and profitably well into So There's we're that that's to the how as positioned do. really going go understanding XXXX growth we solid beyond. around forward a to to what more going looking we're drive

Best That's luck. color. of great

Matt. Thanks

Markets. next of from your question And Simeon line from Siguel Capital comes the BMO

progress go to back everyone. nicely just on the Hey, congrats the America Thanks. morning, Patrik, I done. North really, contextualize Good if comment. ongoing can

just is full sale? then about XX So, was you revs, XXXX difference on hit different maybe the that thinking going you. would the that move you about forward, think channel and XX point mix the and and through units you've health it a having bit speak our you really as in of Thank AUR AUR the touched but the your North as revs almost those and of we about guide, just America it, of year To can quality to implications in forward compare fantastic. little how how are

to go the us -- would that examples upward large example, right It when for a And across some is that forward. $XXX footwear there really extent platform, first believe believe of there's up back and forget that more we also progression category we exciting drive that started footwear point took foray year. We of kind gross it like. us of which pricing $XXX, into up terms was you. franchises you less to run about the story ability then at into tells apparel, we into and is if HOVR for XXXX in $XXX. driving We $XXX at and technology, our is as sort given ability at at the now into you AUR effort came what's our that to both the out the up $XXX, the we're And or and is in thinking we the before, an an orchestration the to AUR went teams example, this already are $XXX as the that your thinking, concerted an rush whether play to in drive a flow thank to here or in category push up bit ourselves a positive then say right? in is for ISO over end if gets Chill we the in general, as brand our because same of stronger I are launched little the board. power building the job and I've opportunity terms now just of Yes, it here franchises, excellent talked tend of we margin we to for of And we orchestrating that We're technology. building time doing day.

got do as you what to got see You've ability in on to determined I that from an everything's and and appropriate way brand. come and together to it think the very a that is execute

So optimism that for future. should everybody give the

with too but I cutting since that's America, close Pretty liquidation party also price it half when on we're same our XXXX channel. comment getting think to maybe doing close that North level, further off third one to XXXX. compare you back

it to a with more to promotional something really and about. get way in headwind, much and excited is that that do being level less premium way even we're So back able that

even on It seem Perfect. Yeah, trying on to I you're doing fewer units. that figure. was what same would the it that's level

And the health that large to in the comment, Did the how guide just can if you it the mass so rest make then year? missed from speaking sorry Dave, for remind the growth us you underlying sense? we embedded guys, that's year, of does the I So just you. understand that to last business rate was

interest us the in last year for up half continued built of a us a and that that. in for lot a in reasonable definitely back It Yes. I business appreciate we be and the decent was to business it our dollar this amount. product and the we QX haven't exact are to fair been we that And especially a that of QX category, in giving QX. and amount year driver diminish of expecting within a but it percentage QX is accessories

thanks it. luck year. a Got of rest the Alright, lot best for guys. the Congrats and of

Thanks Simeon.

next your line the question And of Trading. Poser comes Williams from Sam from

first taking questions. we supply Good -- built morning. understand would into talked I my you the or are about to I want you when demand guidance? that really just for at looking Thank just constraints constraints

the to but from relative is we've or accounts much, that certain be year little this non-premium would say I out employed last a constraint And accounts, question. both. into Great bit planning honest, year buying Dave. a We much to into of. is tighter this especially impact started perspective, things Sam a coming stepping So, we go bit with it's been definitely that demand to demand little of that real like that

our some certainly of bigger demand those going on pressures. forecast we're the to that in chain right year addition, back doing contemplate expecting impact there and be a that So does of for But reasons. half constraint in supply the yes, the we're is

there products delays We seeing could of here some pressure that to other lead points. our cancellations bit of and in little are and and some a

degree. the expect for of half the have to our in that year reasonable we included So we back what in outlook a

it's bit both. of a little So

Okay, two follow-up that. more. one And just quick on

focus are it all exposure exposure that Your the Southern of the most that? would when all and do the out supply going right where kind truck issues have trying to part other of of and of forward there now. issues on you taking things, to Vietnam the What just impact

chains just terms we things But availability be half point thing in number it's monitoring experienced in at and not you from have the of Yes. South right, congestion you the supply point that exact from that fact a out I of half some and is container manufacturing, our Vietnam about and back what now about to but third half couldn't have we give terms coming apparel about Sam, situation some footwear. we of but coming and is total we're of a currently to the on already, in out about to your It's that going of how Vietnam what's coming And versus happening one think things. an it. the very have is logistics impact of or port currently, know, actual I North supply with third and other spreading. you. this there, and out of fluid right our coming also as on And honest

developed lastly, I Kernan’s think then And John it question. is Thanks. to

for of spending that guidance? half on marketing turning it marketing sounds you're maybe built longer-term, short-term appreciate, into marketing, like a back the benefits this in the which the saw long-term be the that long-term marketing. -- And this into some that is I getting quarter you're of are lot On you build based results of but if second how you on so, -- that's much the to

Sam Yes, absolutely.

clear. just in It's of that's it we And of some as out we're levels some terms because seeing that don't that, also North seeing it's that terms on agree playing about of how well. everything that of are upside And or are say, not in of expectation tremendous We and EMEA amount it America. and differently. demand you in of in say an let's driving Dave you the have that opportunity really drive marketing. to with we're how constraint Would would we're a thinking inventory based happening we

related of not funnel No, that. spend that related half e-comm I things as that and direct and to of of It's the increased around that like the we've opportunistic mean, is brand or back much for year more in investment planned marketing. most again, top been

XXXX chain benefit to that probably outlined. about in and have year. headwinds just And that. some do with of be we awareness to current again, pressures of brand with some delays talked are the favorability have more the be other of helps from expect do seeing and we supply But we with and that half that consideration we impacts back careful but of the the along obviously year, some could So, we in the the it and beyond, of

and success. you very continued Thank much

Sam. Thanks,

Operator, you there?

Yes.

from Our Paul the question Citi. line last from of Lejuez comes

year time, sales taking first Kelly Hi revenue like guidance could you mid it and the understand America of for XXXX the and was just that impact any questions. exit do will channel? of own half was Thanks. bigger to us call detail versus how this North I accounts and smaller this guys. on retail in lastly, you be partners to recapture up more retail for expect much half. how the exiting is you And Paul. it should your to back over the D-to-C just help year the we you expect guidance This guys then if within in Thanks down low the differentiated or on America Looks any suggests North do do to curious within in strategy, expect you how have, many will be many independents? your

in that impact implementing North the does bigger we're constraint in have kind of changes the outlook down range a back mean, I be that working to driving doors. is XX,XXX about exiting going we're of the that in XX,XXX that demand contemplate half A towards through been is America of also we're Yeah. the work relative process. and we've to to differentiator but XX,XXX lot the that retail, the year year. for then we that the door And that this work,

going of most that when really about factor. that part we for them accounts accounts be as are again, So partners of brand to are behind a a performer, volume those them most of is will it is And Most us. are partners. low there you exit with headwind, supporting aligned very large the of feel not as could but huge or margin not us. the not be that be And well. we're the think low focus doors that some They're exiting, not

we for a number on have decreasing And volume, revenue so approach and And is the XXXX significant because beyond. as it are smaller doesn't how that doors that. strategic although an very of lot impact being we're them dramatic on we're of of

as in on some Got footwear, look further more business, are just you exactly it. materializing, Could women's you then which just your shelf area gains broadly, men's, feeling we the great you it Thanks. retailers and and core the business most see. to elaborate of to that's in back with optimistic which beyond? key gains And is America, North half mentioned apparel about shelf space based how is

the across in over incrementally see now. would footwear it's it's to season that's And broad brand, That's lot right driving categories coming happening it's great a out, it's is innovation. product say happening season. the And I it new it's and with also and of that right? the

AUR, better So We're and throughs, to back for plan. margins. to that better And is going continue us, shelf earn sell the going the higher gross space we're that.

stuff shelf All also very help and us why right space. we're balanced, is year for very, make we that's it. earn with back so and more helps, marketing to of it's we're broadly also that do sure the the holistic, drive progress. pleased consideration ultimately much very this awareness brand. spend very to driving I'm that our good can to continue extra and this It's important to making again for But to wholesale even very that accounts

news to hopefully. good it's good news and So come more

and you congrats. Great. Thank

Thanks.

Thank quarter Thank you. That will conclude our much. conference second call. earnings you very

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