Release Date: February 19, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you provide details on the expansion plans for Saucony and Merrell in terms of new store openings? A: Christopher Hufnagel, President and CEO, mentioned that Saucony plans to open 900 new doors this year, with many being online. Merrell is also expanding but not at the same pace as Saucony. The focus is on repositioning and expanding distribution, particularly in female-oriented specialty retail accounts.
Q: What are the expectations for gross margin improvements, and is there potential to exceed the long-term goal of 45% to 47%? A: Taryn Miller, CFO, stated that the company is pleased with the progress in expanding gross margins, driven by cost savings and healthier inventory levels. There is potential to exceed the 47% goal through continued sourcing and product cost improvements.
Q: What is the timeline for achieving mid-teen operating margins, and are there any underperforming areas that might be divested? A: Taryn Miller explained that while it's too early to set a specific timeline for mid-teen margins, the company is focused on brand-building investments and optimizing costs. Christopher Hufnagel added that the focus is on investing in brands like Saucony, which have significant growth potential.
Q: How is the company managing inventory levels, and are there any areas where inventory is too tight? A: Taryn Miller noted that inventory levels are healthy and close to target, with a modest investment planned for 2025 to support growth. The company is chasing opportunities, particularly in Saucony, but overall inventory is well-managed.
Q: Can you elaborate on the state of the run specialty channel and Saucony's market share within it? A: Christopher Hufnagel highlighted that the run specialty channel remains healthy, and Saucony is gaining market share due to product innovation and a focus on core franchises. The brand is investing in demand creation to further capitalize on this momentum.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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