Q4 2024 American Eagle Outfitters Inc Earnings Call

March 12, 2025

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Operator: Greetings and welcome to the American Eagle Outfitters fourth quarter 2024 earnings conference. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presence If anyone should require operator assistance, please press star zero on your telephone. As a reminder, this conference is being recorded.

Operator: Greetings and welcome to the American Eagle Outfitters Q4 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Judy Meehan. Please go ahead.

Speaker Change: Greetings and welcome to the American Eagle Outfitters fourth quarter 2024 earnings Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. Please press star zero on your telephone keypad.

Speaker Change: As a reminder, this conference is being recorded it is now my pleasure to introduce Joe Judy Meehan. Please go ahead.

Judy Meehan: It is now my pleasure to introduce Judy Meehan. Please go ahead. Good afternoon, everyone.

Judy Meehan: Good afternoon, everyone. Joining me today for our prepared remarks are Jay Schottenstein, Executive Chairman and Chief Executive Officer, Jennifer Foyle, President, Executive Creative Director for American Eagle and Aerie, and Mike Mathias, Chief Financial Officer. Before I begin today's call, I need to remind you that we will make certain forward-looking statements. These statements are based upon information that represents the company's current expectations or beliefs. Results actually realized may differ materially based on risk factors included in our SEC filings. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Also, please note that during this call and in the accompanying press release, certain financial metrics are presented on both a GAAP and non-GAAP adjusted basis.

Good afternoon, everyone. Joining me today for our prepared remarks are Jay Schottenstein, Chief Executive Chairman and Chief Executive Officer.

Judy Meehan: Joining me today for our prepared remarks are Jay Schottenstein, Executive Chairman and Chief Executive Officer, Jen Foyle, President, Executive Creative Director for American Eagle and Aerie, and Mike Mathias, Chief Financial Officer. Before I begin today's call, I need to remind you that we will make certain forward-looking statements. These statements are based upon information that represents the company's current expectations or beliefs. Results actually may differ materially based on risk factors included in our SEC filings. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Jen Foyle: Jen Foyle, President Executive Creative director for American Eagle, and Aerie, and Mike Matthias Chief Financial Officer.

Speaker Change: Before I begin today's call I need to remind you that we will make certain forward looking statements. These statements are based upon information that represents the companys current expectations or beliefs.

Judy Meehan: Results actually realized may differ materially based on risk factors included in our SEC filings. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Also, please note that during this call and in the accompanying press release, certain financial metrics are presented on both a GAAP and non-GAAP adjusted basis.

Speaker Change: Results actually realized may differ materially based on risk factors included in our SEC filings.

Speaker Change: The company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information future events or otherwise except as required by law.

Judy Meehan: Also, please note that during this call and in the accompanying press release, certain financial metrics are presented on both a GAAP and non-GAAP-adjusted basis. Reconciliations of adjusted results to the GAAP results are available in the tables attached to the earnings release, which is posted on our corporate website at www.aeo-inc.com in the Investor Relations section. Here, you can also find the fourth quarter and fiscal year investor presentation.

Also please note that during this call and in the accompanying press release certain financial metrics are presented on both a GAAP and non-GAAP adjusted basis.

Judy Meehan: Reconciliations of adjusted results to the GAAP results are available in the tables attached to the earnings release, which is posted on our corporate website at www.aeo-inc.com in the Investor Relations section. Here, you can also find the Q4 and fiscal year investor presentation. Now I'll turn the call over to Jay.

Speaker Change: Reconciliations of adjusted results to the GAAP results are available in the tables attached to the earnings release, which is posted on our corporate website at www Dot a O Dash, Inc. Dot com in the Investor Relations section How're.

Speaker Change: Here you can also find the fourth quarter and fiscal year investor presentation.

Jay Schottenstein: And now, I'll turn the call over to Jay. Thanks, Judy, and good afternoon, everyone. 2024 was a solid year for AEO. We launched our new Powering Profitable Growth strategy, aligning the organization's focus on three key priorities. Amplify our brands, optimize our operations, and execute with financial discipline. And we achieved excellent results, record revenue of $5.3 billion was fueled by 4% comparable sales growth, reflecting positive momentum across brands and channels. Adjusted operating profit of $445 million, marked one of our strongest years in history, and we drove significant operating margin expansion. This included strong fourth quarter results, which came in slightly ahead of the outlook provided in January.

Jay: And now I'll turn the call over to Jay.

Jay Schottenstein: Thanks, Judy, and good afternoon, everyone. 2024 was a solid year for AEO. We launched our new powering, profitable growth strategy, aligning the organization's focus on three key priorities. Amplify our brands, optimize our operations, and execute with financial discipline. We achieved excellent results. Record revenue of $5.3 billion was fueled by 4% comparable sales growth, reflecting positive momentum across brands and channels. Adjusted operating profit of $445 million marked one of our strongest years in history, and we drove significant operating margin expansion. This included strong Q4 results, which came in slightly ahead of the outlook provided in January. Comparable sales grew 3%, building on an 8% increase in the Q4 of 2023. Aerie comp sales grew 6% and American Eagle was up 1%.

Jay: Thanks, Judy and good afternoon, everyone.

Speaker Change: <unk> 24 was a solid year for AE.

Speaker Change: We launched our new powering profitable growth strategy aligning the organizations focus on three key priorities amplify our brands optimize our operations and execute with financial discipline.

Speaker Change: And we achieved excellent results record revenue of $5 $3 billion was fueled by 4% comparable sales growth, reflecting positive momentum across brands and channels.

Jay Schottenstein: Adjusted operating profit of $445 million marked one of our strongest years in history, and we drove significant operating margin expansion. This included strong Q4 results, which came in slightly ahead of the outlook provided in January. Comparable sales grew 3%, building on an 8% increase in the Q4 of 2023. Aerie comp sales grew 6% and American Eagle was up 1%.

Adjusted operating profit of $445 million, Mark one of our strongest years in history, and we drove significant operating margin expansion.

Speaker Change: This included strong fourth quarter results, which came in slightly ahead of the outlook provided in January comparable sales rose, 3% building on an 8% increase in the fourth quarter 2023.

Jay Schottenstein: Comparable sales rose 3%, building on an 8% increase in the fourth quarter of 2023. Airy top sales rose 6%, and American Eagle was up 1%. Additionally, fourth quarter operating income of $142 million was the highest we've delivered in over a decade, with good operating margin expansion. Full year cash flow from operations was over $470 million, and we returned over $280 million to our shareholders in the form of buybacks and dividends.

<unk> comp sales were up 6% and American Eagle was up 1%.

Jay Schottenstein: Additionally, Q4 operating income of $142 million was the highest we've delivered in over a decade, with good operating margin expansion. Full-year cash flow from operations was over $470 million, and we returned over $280 million to our shareholders in the form of buybacks and dividends. Reflecting on year one of our plan, we had some clear wins. Yet meaningful opportunities remain, and we are fine-tuning our strategy moving forward. Touching on a few highlights. Within our Amplify pillar, both American Eagle and Aerie continued to resonate strongly with customers this year, delivering positive comp growth and expanding their customer counts. American Eagle maintained its number one ranking in denim with our core customer base and achieved its sixth consecutive quarter of positive comp growth. Women's was a standout, reflecting strong traction with new dressing occasions.

Speaker Change: Additionally, fourth quarter operating income of $142 million was the highest we've delivered in over a decade with good operating margin expansion.

Speaker Change: Four year cash flow from operations was over $470 million and we returned over $280 million to our shareholders in the form of buybacks and dividends.

Jay Schottenstein: Reflecting on year one of our plan, we had some clear wins, yet meaningful opportunities remain, and we are fine-tuning our strategy moving forward. Touching on a few highlights. Within our Amplify pillar, both American Eagle and Aerie continue to resonate strongly with customers this year, delivering positive comp growth and expanding their customer count. American Eagle maintained its number one ranking in denim with our core customer base and achieved its sixth consecutive quarter of positive top growth. Women's was a standout, reflecting strong traction with new dressing occasions. Men saw sequential improvement, and as Jen will share, we remain focused on reinvigorating growth.

Speaker Change: Reflected on year, one of our plan, we have some clear wins, yet meaningful opportunities remain and we are fine tuning our strategy moving forward.

Jay Schottenstein: Touching on a few highlights. Within our Amplify pillar, both American Eagle and Aerie continued to resonate strongly with customers this year, delivering positive comp growth and expanding their customer counts. American Eagle maintained its number one ranking in denim with our core customer base and achieved its sixth consecutive quarter of positive comp growth. Women's was a standout, reflecting strong traction with new dressing occasions.

Jim: Jim on a few highlights.

Jim: Within our amplified pillar, but American Eagle and Aerie, continuing to resonate strongly with customers this year.

Jim: Delivering positive comp growth and expanding their customer counts and.

Jim: American Eagle maintained its number one ranking in denim with our core customer base and achieved its sixth consecutive quarter of positive comp growth.

Jim: Women's was a standout reflecting strong traction with new dressing occasions.

Jay Schottenstein: Men's saw sequential improvement, and as Jen will share, we remain focused on reinvigorating growth. Turning to Aerie. We crossed $1.7 billion in revenue in 2024. Soft apparel and our activewear collection OFFLINE were the big highlights, more than offsetting softness in intimates and swim. I am pleased to note that in leggings, we are now the number 2 ranked specialty brand with our core demo. As Jen will review shortly, we have targeted strategies across Aerie and OFFLINE to continue strong growth through greater brand awareness and expanding our collections. Moving on to Optimized pillar. In 2024, we placed a heightened emphasis on improving our operating capabilities.

Jim: And saw sequential improvement and as Jen will share we remained focus on reinvigorating growth.

Jay Schottenstein: Turning to Aerie. We crossed $1.7 billion in revenue in 2024. Soft apparel and our active wear collection offline were the big highlights, more than offsetting softness and intimates and swim. I am pleased to note that in leggings, we are now the number two ranked specialty brand with our core demo. As Jen will review shortly, we have targeted strategies across Erie and offline to continue strong growth through greater brand awareness and expanding our collection.

Turning to Aerie.

Jim: We cross one $7 billion in revenue in 2020 for soft apparel in our activewear collection offline, where the big highlights more than offsetting softness in intimates swim.

I am pleased to note that in leggings. We are now the number two ranked specialty brand with our core demo.

Jay Schottenstein: As Jen will review shortly, we have targeted strategies across Aerie and OFFLINE to continue strong growth through greater brand awareness and expanding our collections. Moving on to Optimized pillar. In 2024, we placed a heightened emphasis on improving our operating capabilities.

Jan: As Jan will review shortly we have targeted strategies across Erie and offline to continue strong growth for greater brand awareness and expanding our collections.

Jay Schottenstein: Moving on to Optimize Pillar. In 2024, we placed a heightened emphasis on improving our operating capabilities. As Mike will review, we made strategic investments in our store fleet and digital platform to support growth across channels. And we continue to build speed and agility in our supply chain while ensuring we are delivering the best products and value to our customers. Lastly, under our third pillar, Execute with Financial Discipline, we maintain sharp control over expenses and growth efficiencies across the business, yielding improved profit flow through. In short, we executed on our strategic initiative, demonstrating the power of our iconic brands and made structural improvements to fuel long-term success.

Speaker Change: Moving on to optimize pillar in 2020 four four we place a heightened emphasis on improving our operating capabilities.

Jay Schottenstein: As Mike will review, we made strategic investments in our store fleet and digital platform to support growth across channels, and we continue to build speed and agility in our supply chain while ensuring we are delivering the best products and value to our customers. Lastly, under our third pillar, Execute with financial discipline, we maintained sharp control over expenses and drove efficiencies across the business, yielding improved profit flow through. In short, we executed on our strategic initiative, demonstrating the power of our iconic brands and made structural improvements to fuel long-term success. Now, as we shared in our press release this morning, 2025 has started off softer than anticipated. Q1 to date sales have been impacted by a less robust consumer environment and cold weather.

Speaker Change: Nick will review, we made strategic investments in our store fleet and digital platform to support growth across channels, and we continue to build speed and agility in our supply chain, while ensuring we are delivering the best products and value to our customers.

Speaker Change: Lastly, under our third pillar execute with financial discipline, we've maintained sharp control over expenses and drove efficiencies across the business, yielding improved profit flow through.

Jay Schottenstein: In short, we executed on our strategic initiative, demonstrating the power of our iconic brands and made structural improvements to fuel long-term success. Now, as we shared in our press release this morning, 2025 has started off softer than anticipated. Q1 to date sales have been impacted by a less robust consumer environment and cold weather.

Speaker Change: In short we executed on our strategic initiatives demonstrating the power of our iconic brands and main structural improvements.

Speaker Change: So a few long term success.

Jay Schottenstein: Now, as we shared in our press release this morning, 2025 has started off softer than anticipated. First-quarter date sales have been impacted by a less robust consumer environment and cold weather. For the year, ongoing consumer uncertainty and changes in the operating landscape, including tariffs and a strengthening U.S. dollar, are also creating factors for us to operating income to be down relative to last year. Jan and team are focused on driving improvements to strengthen top-line growth. Additionally, as Mike will review, we are taking proactive action to drive additional expense savings. With the benefit of both top line and cost initiatives building throughout the year, I'm confident that we can improve business performance as the year progresses.

Speaker Change: Now as we shared in our press release this morning 2012.

Speaker Change: <unk> five has started off softer than anticipated first quarter to date sales have been impacted by a less robust consumer environment and cold weather.

Jay Schottenstein: For the year, ongoing consumer uncertainty and changes in the operating landscape, including tariffs and a strengthening US dollar, are also creating factors for us to navigate. Against this backdrop, we currently expect full year revenue and operating income to be down relative to last year. Jen and team are focused on driving improvements to strengthen top line growth. Additionally, as Mike will review, we are taking proactive action to drive additional expense savings. With the benefit of both top line and cost initiatives building throughout the year, I am confident that we can improve business performance as the year progresses. Lastly, as we review our capital allocation plan moving forward, we are increasing our share repurchase authorization.

Speaker Change: For the year ongoing consumer uncertainty and changes in the operating landscape, including tariffs and a strengthening U S. Dollar are also creating factors for us to navigate against this backdrop. We currently expect full year revenue and operating income to be down relative to last year.

Speaker Change: And team are focused on driving improvements to strengthen top line growth.

Jay Schottenstein: Additionally, as Mike will review, we are taking proactive action to drive additional expense savings. With the benefit of both top line and cost initiatives building throughout the year, I am confident that we can improve business performance as the year progresses. Lastly, as we review our capital allocation plan moving forward, we are increasing our share repurchase authorization.

Speaker Change: Additionally, as Mike will review, we are taking proactive action to drive additional expense savings.

Speaker Change: The benefit of both top line and cost initiatives building throughout the year I am confident that we can't prove business performance as the year progresses.

Jay Schottenstein: Lastly, as we review our capital allocation plan moving forward, we are increasing our share repurchase authorization. Factoring in the high level of confidence we have in our long-term growth prospects, we will continue to be opportunistic with our share repurchase program, putting on the nearly $200 million in buybacks completed in 2024.

Speaker Change: Lastly, as we review our capital allocation plan moving forward, we are increasing our share repurchase authorization.

Jay Schottenstein: Factoring the high level of confidence we have in our long-term growth prospects, we will continue to be opportunistic with our share repurchase program, putting in nearly $200 million in buybacks completed in 2024. Before I turn the call over to Jen, I wanna underscore the strength of our brands, operation, and talent. We have been through challenging times before. We've always emerged stronger. I know our team's determination, focus, and creativity will continue to drive us forward. With that, I'll pass it to Jen.

Speaker Change: Factoring in the high level of confidence we have in our long term growth prospects. We will continue to be opportunistic with our share repurchase program burning off that nearly $200 million in buybacks completed in 2024.

Jay Schottenstein: Before I turn the call over to Jen, I want to underscore the strength of our brands, operation, and talent. We have been through challenging times before, but we've always emerged stronger. I know our team's determination, focus, and creativity will continue to drive us forward.

Speaker Change: Before I turn the call over to Jan I wanted to underscore the strength of our brands operation of talent.

Speaker Change: We had been through challenging times before.

Speaker Change: He has emerged stronger I know our team's determination.

Speaker Change: And creativity will continue to drive this forward with that I'll pass it to Jay Thanks.

Jen Foyle: With that, I'll pass it to Jen. Thanks, Jay, and good afternoon, everyone. As noted, we made great progress in amplifying our brands in 2024, delivering a 4% increase in comparable sales. This builds on a 3% full year comp in 2023.

Jennifer Foyle [President and Executive Creative Director: Thanks, Jay, and good afternoon, everyone. As noted, we made great progress in amplifying our brands in 2024, delivering a 4% increase in comparable sales. This builds on a 3% full-year comp in 2023. I will start today by reviewing our key wins and learnings. Let me start with American Eagle, our flagship brand that has dressed generations since 1977. After a multiyear focus on rebuilding profitability, last year we turned our focus to growth with encouraging results. Comparable sales increased 3%, accelerating from 1% the prior year. Additionally, our customer count rose to 18.6 million, reflecting an all-time high driven by growth across genders. Women's was a true highlight, where we achieved high single-digit comps. Our market-leading denim business continued to grow in the mid-single digits as we introduced new fashion, washes, and silhouettes.

Speaker Change: Thanks, Jay and good afternoon, everyone.

Speaker Change: As noted we made great progress and amplifying our brands in 2020 for delivering a 4% increase in comparable sales.

Speaker Change: This builds on a 3% full year comp in 2023.

Jen Foyle: I will start today by reviewing our key wins and learnings. Let me start with American Eagle, our flagship brand that has dressed generations since 1977. After a multi-year focus on rebuilding profitability, last year we turned our focus to growth with encouraging results. Comparable sales increased 3%, accelerating from 1% the prior year. Additionally, our customer count rose to 18.6 million, reflecting on an all-time high driven by growth across genders. Women's was a true highlight where we achieved high single-digit comp. Our market-leading denim business continued to grow in the mid-single digits as we introduced new fashion, washes, and silhouettes.

I will start today by reviewing our key wins and learnings.

Speaker Change: Let me start with American Eagle, our flagship brand that has dress generations since 1977.

Speaker Change: After a multiyear focus on rebuilding profitability last year, we turned our focus to growth with encouraging results.

Jennifer Foyle [President and Executive Creative Director: Comparable sales increased 3%, accelerating from 1% the prior year. Additionally, our customer count rose to 18.6 million, reflecting an all-time high driven by growth across genders. Women's was a true highlight, where we achieved high single-digit comps. Our market-leading denim business continued to grow in the mid-single digits as we introduced new fashion, washes, and silhouettes.

Speaker Change: Comparable sales increased 3% accelerating from 1% the prior year.

Speaker Change: Additionally, our customer count rose to $18 6 million, reflecting on an all time high driven by growth across genders.

Speaker Change: Women's was a true highlight where we achieved high single digit comps are market, leading denim business continued to grow in the mid single digits as we introduce new fashion washes and silhouettes.

Jen Foyle: Skirts and dresses delivered a record year, fueled by our expansion into social casual occasions. and the Topps category doubles. as we offered more fashion styles in line with our focus on completing the outfit and improving our tops-to-bottoms ratio. In men's, we made progress. Our customer count increased, validating the ongoing strength of our customer base. Expansion into adjacencies like activewear with 24-7 are tracking well. Pants wrote another year of positive comps fueled by social casual introductions and we were pleased to see men's tops return to growth in the fourth quarter.

Jennifer Foyle [President and Executive Creative Director: Skirts and dresses delivered a record year, fueled by our expansion into social casual occasions. The tops category doubled as we offered more fashion styles in line with our focus on completing the outfit and improving our tops to bottoms ratio. In men's, we made progress. Our customer count increased, validating the ongoing strength of our customer base. Expansion into adjacencies like activewear with AE 24/7 are tracking well. Pants rode another year of positive comps fueled by social casual introductions, and we are pleased to see men's tops return to growth in Q4. Now looking ahead, we continue to see incredible growth opportunities across genders. In women's, this includes introducing more diversity in our assortments across bottoms, dresses, and tops to provide more dressing options.

Skirts and dresses delivered a record year fueled by our expansion into social casual occasions.

Speaker Change: And the tops category doubled.

Speaker Change: As we offered more fashion styles in line with our focus on completing the outfit and improving our tops to bottoms ratio at mens we made progress our customer count increased validating the ongoing strength of our customer base.

Speaker Change: Expansion into Adjacencies like Activewear with 24, seven are tracking well pants wrote another year of positive comps fueled by social casual introductions and we are pleased to see men's comps returned to growth in the fourth quarter.

Jennifer Foyle [President and Executive Creative Director: Pants rode another year of positive comps fueled by social casual introductions, and we are pleased to see men's tops return to growth in Q4. Now looking ahead, we continue to see incredible growth opportunities across genders. In women's, this includes introducing more diversity in our assortments across bottoms, dresses, and tops to provide more dressing options.

Jen Foyle: Now looking ahead, we continue to see incredible growth opportunities across genders. In women's, this includes introducing more diversity in our assortments across bottoms, dresses, and tops to provide more dressing options. On the men's side, we are integrating more active looks and performance fabrics where we have seen a positive reception to date. Additionally, we are enhancing our price value equation for basics by delivering greater optionality at opening price points.

Speaker Change: Now looking ahead, we continue to see incredible growth opportunities across genders and womens. This includes introducing more diversity in our assortments across bottoms dresses and tops to provide more dressing options.

Jennifer Foyle [President and Executive Creative Director: On the men's side, we are integrating more active looks and performance fabrics, where we have seen a positive reception to date. Additionally, we are enhancing our price-value equation for basics by delivering greater optionality at opening price points. Turning to Aerie, 2024 was another strong year. Revenue hit a new record, fueled by a 5% comparable sales increase, and we grew our customer count to 11.8 million. This is an all-time high as we expanded our reach and brand awareness with stores and marketing initiatives. Two clear wins in the year were our soft apparel and activewear businesses, both of which saw double-digit growth. In soft apparel, we continued to win in cozy fleece, sweaters, and new fashion items. Additionally, our extension into sleepwear was a huge success. In activewear, OFFLINE by Aerie saw strength in leggings, sports bras, fleece, and shorts.

Speaker Change: On the men's side, we are integrating more active looks and performance fabrics, where we have seen a positive reception to date. Additionally, we are enhancing our price value equation for basics by delivering greater optionality at opening price points.

Jen Foyle: Turning to Aerie. 2024 was another strong year. Revenue hit a new record fueled by a 5% comparable sales increase. and we grew our customer count to 11.8 million. This is an all-time high as we expanded our reach and brand awareness with stores and marketing initiatives. Two clear wins in the year were our soft apparel and activewear businesses, both of which saw double-digit growth. In soft apparel, we continued to win in cozy fleece, sweaters, and new fashion items. Additionally, our extension into sleepwear was a huge success. In active wear, Offline by Aerie saw strength in leggings, sports bras, fleece, and shorts.

Speaker Change: Turning to Aerie 2024 was another strong year revenue hit a new record fueled by a 5% comparable sales increase.

Speaker Change: And we grew our customer count to 11.8 million. This is an all time high as we expanded our reach and brand awareness with stores and marketing initiatives.

Jennifer Foyle [President and Executive Creative Director: Two clear wins in the year were our soft apparel and activewear businesses, both of which saw double-digit growth. In soft apparel, we continued to win in cozy fleece, sweaters, and new fashion items. Additionally, our extension into sleepwear was a huge success. In activewear, OFFLINE by Aerie saw strength in leggings, sports bras, fleece, and shorts.

Speaker Change: Two clear wins in the year, where our soft apparel and activewear businesses.

Speaker Change: <unk> of which saw double digit growth in soft apparel, we continued to win and cozy fleece sweaters and new fashion items.

Additionally, our extension into sleepwear was a huge success.

Speaker Change: In activewear offline by Aerie saw strength in leggings sports Bras fleece and shorts.

Jen Foyle: Our powerful platform combined with our winning price, quality, and value equation continues to differentiate us in the market. And as Jay noted, we are number two in the leggings category. Intimates and Swim were down last year, driven by ongoing challenges across the industry, yet I am happy to note that we grew our share in intimates across core bras and undies, fueled by innovation with our smoothies collection and new novelty fabrications like lace. The long-term runway for Aerie is significant. Offline is our biggest growth opportunity across the company. We are continuing to broaden brand awareness, build equity in famous fur franchises like Real Me, and add more performance styles.

Jennifer Foyle [President and Executive Creative Director: Our powerful platform, combined with our winning price, quality, and value equation, continues to differentiate us in the market. As Jay noted, we are number two in the leggings category. Intimates and swim were down last year, driven by ongoing challenges across the industry. Yet I am happy to note that we grew our share in intimates across core bras and undies, fueled by innovation with our SMOOTHEZ collection and new novelty fabrications like lace. The long-term runway for Aerie is significant. OFFLINE is our biggest growth opportunity across the company. We are continuing to broaden brand awareness, build equity in famous for franchises like Real Me, and add more performance styles. In apparel, we are leaning into innovation through seasonal drops. We are also excited to build on our success in sleep by transforming it into a year-round franchise.

Speaker Change: Our powerful platform combined with our winning price quality and value equation continues to differentiate us in the market.

Speaker Change: And as Jay noted we are number two in the leggings category.

Speaker Change: Intimate swim were down last year, driven by ongoing challenges across the industry, yet I am happy to note that we grew our share in intimates across core bras and undies fueled by innovation with our smoothies collection and new novelty fabrications lately.

Jennifer Foyle [President and Executive Creative Director: The long-term runway for Aerie is significant. OFFLINE is our biggest growth opportunity across the company. We are continuing to broaden brand awareness, build equity in famous for franchises like Real Me, and add more performance styles. In apparel, we are leaning into innovation through seasonal drops. We are also excited to build on our success in sleep by transforming it into a year-round franchise.

Speaker Change: The long term runway for area significant offline as our biggest growth opportunity across the company. We are continuing to broaden brand awareness build equity and famous for franchises like real knee and add more performance styles.

Jen Foyle: In apparel, we are leaning into innovation through seasonal drop. We are also excited to build on our success in sleep by transforming it into a year-round franchise. In Intimates, we see opportunity to re-energize our basics offerings with new base layers and styles focused on everything from life to lounge. And at the same time, we will also invest to elevate franchise collections like Smoothies, where we are building a strong following. In addition to product enhancements across brands, we will continue to invest in marketing. We will leverage learnings from optimization workstreams in 2024 to speak to our customer base more effectively.

Speaker Change: In apparel, we are leaning into innovation through seasonal drops.

Speaker Change: We are also excited to build on our success in fleet by transforming it into year round franchise.

Jennifer Foyle [President and Executive Creative Director: In intimates, we see opportunity to re-energize our basics offerings with new base layers and styles focused on everything from life to lounge. At the same time, we will also invest to elevate franchise collections like SMOOTHEZ, where we are building a strong following. In addition to product enhancements across brands, we will continue to invest in marketing. We will leverage learnings from optimization work streams in 2024 to speak to our customer base more effectively. We are highly focused on growing where our customers are across social media in a bigger way with a focus on favorite and emerging platforms. We also have an exciting new AE men's campaign planned for the second half of the year.

Speaker Change: And intimates, we see opportunity to Reenergize, our basics offering with new base layers and style focused on everything from life to lounge and at the same time, we will also invest to elevate franchise collections like smoothies, where we are building a strong following.

Speaker Change: In addition to product enhancements across brands, we will continue to invest in marketing, we will leverage learnings from optimization work streams in 2024 to speak to our customer base more effectively we.

Jennifer Foyle [President and Executive Creative Director: We are highly focused on growing where our customers are across social media in a bigger way with a focus on favorite and emerging platforms. We also have an exciting new AE men's campaign planned for the second half of the year.

Jen Foyle: We are highly focused on growing where our customers are across social media in a bigger way with a focus on favorite and emerging platforms. We also have an exciting new A.E. men's campaign planned for the second half of the year.

Speaker Change: We are highly focused on growing where our customers are across social media in a bigger way with a focus on favorite and emerging platforms.

We also have an exciting new AE mens campaign planned for the second half of the year.

Jen Foyle: And now entering 2025, it's important to note that we are cycling a strong spring season from last year when we saw nicely positive results across brands. This spring, we have been facing headwinds. Colder weather has clearly been a factor, as well as some uncertainty with the consumer. As I will discuss, we also had some out-of-stocks and big categories, as well as product opportunities, which we have been working hard to correct. Quarter to date, while we have continued to see positive traffic into AE and AERI across channels, demand has been softer than anticipated. From a category standpoint, bare looks, such as shorts and tees, have been soft.

Jennifer Foyle [President and Executive Creative Director: Now, entering 2025, it's important to note that we are cycling a strong spring season from last year, when we saw nicely positive results across brands. This spring, we have been facing headwinds. Colder weather has clearly been a factor, as well as some uncertainty with the consumer. As I will discuss, we also had some out of stocks in big categories, as well as product opportunities, which we have been working hard to correct. Quarter to date, while we have continued to see positive traffic into AE and Aerie across channels, demand has been softer than anticipated. From a category standpoint, bare looks such as shorts and tees have been soft, while cold weather items like sweaters have outperformed. Fashion items are clicking with positive trends in categories like dresses at AE and soft apparel and activewear at Aerie.

Speaker Change: And now entering 2025. It is important to note that we are cycling a strong spring season from last year. When we saw a nicely positive results across brands.

This spring we have been facing headwinds.

Speaker Change: Weather has clearly been a factor as well as some uncertainty with the consumer.

As I will discuss we also had some out of stocks and big categories as well as product opportunities, which we have been working hard to correct.

Jennifer Foyle [President and Executive Creative Director: Quarter to date, while we have continued to see positive traffic into AE and Aerie across channels, demand has been softer than anticipated. From a category standpoint, bare looks such as shorts and tees have been soft, while cold weather items like sweaters have outperformed. Fashion items are clicking with positive trends in categories like dresses at AE and soft apparel and activewear at Aerie.

Speaker Change: Quarter to date, while we have continued to see positive traffic into AE and aerie across channels demand has been softer than anticipated.

Speaker Change: From a category standpoint, bare looks such as shorts and Tees has been soft while cold weather items like sweaters have outperformed.

Jen Foyle: Why cold weather items like sweaters have outperformed. Fashion items are checking with positive trends in categories like dresses at AE and soft apparel and activewear at Aerie. Of note, we have seen warmer markets perform better overall. We have also been chasing high-demand denim styles to manage outages in some of our best-selling items. We are working hard to address the current business trends and thoroughly reviewing assortment opportunities for upcoming seasons.

Fashion items are checking with positive trends in categories like dresses at AE and soft apparel and activewear at Aerie.

Jennifer Foyle [President and Executive Creative Director: Of note, we have seen warmer markets perform better overall. We have also been chasing high demand denim styles to manage outages in some of our best-selling items. We are working hard to address the current business trends and thoroughly reviewing assortment opportunities for upcoming seasons. In light of ongoing consumer uncertainty, we are also leaving open to buy for the back half of the year while ensuring we are in stock in the right items. Before I turn the call over to Mike, I wanna thank the teams for a successful 2024 and maintaining such strong focus through the near-term bumps in the road. Overall, we remain very excited about the long-term opportunity to grow our incredible portfolio of brands. We are acting on what we can control, staying disciplined, and maximizing flexibility to drive performance. With that, I will turn the call over to Mike.

Speaker Change: Of note, we have seen warmer markets performed better overall.

Speaker Change: We have also been chasing high demand denim styles to manage outages and some of our best selling items.

Speaker Change: We are working hard to address the current business trends and thoroughly reviewing assortment opportunities for upcoming seasons.

Jen Foyle: In light of ongoing consumer uncertainty, we are also leaving open to buy for the back half of the year while ensuring we are in stock in the right items. And before I turn the call over to Mike, I want to thank the teams for a successful 2024 and maintaining such strong focus through the near-term bumps in the road. Overall, we remain very excited about the long-term opportunity to grow our incredible portfolio of brands. We're acting on what we can control, staying disciplined, and maximizing flexibility to drive performance.

In light of ongoing consumer uncertainty. We are also leaving open to buy for the back half of the year, while ensuring we are in stock in the right items.

Jennifer Foyle [President and Executive Creative Director: Before I turn the call over to Mike, I wanna thank the teams for a successful 2024 and maintaining such strong focus through the near-term bumps in the road. Overall, we remain very excited about the long-term opportunity to grow our incredible portfolio of brands. We are acting on what we can control, staying disciplined, and maximizing flexibility to drive performance. With that, I will turn the call over to Mike.

Speaker Change: And before I turn the call over to Mike I want to thank the teams for a successful 2024 and maintaining such strong focus through the near term bumps in the road overall.

Speaker Change: Overall, we remain very excited about the long term opportunity to grow our incredible portfolio of brands.

Speaker Change: We are acting on what we can control staying disciplined and maximizing flexibility to drive performance.

Mike Mathias: And with that, I will turn the call over to Mike. Thanks, Janet. Good afternoon, everyone. I'm pleased with how we delivered the first year of our Powering Profitable Growth Plan. While we experienced some choppiness in demand and unforeseen currency headwinds, we navigated with agility. We drive efficiencies across the business to deliver significant profit and margin expansion. As Jay noted, four-year adjusted operating income of $445 million reflected a 19% increase to last year, hitting the high end of our long-term algorithm. Our adjusted operating margin expanded by 120 basis points to 8.3%. We close the year on a positive note with strong fourth quarter results.

Mike: And with that I will turn the call over to Mike.

Mike Mathias: Thanks, Jane, and good afternoon, everyone. I'm pleased with how we delivered the first year of our Power and Profitable Growth Plan. While we experienced some choppiness in demand and unforeseen currency headwinds, we navigated with agility. We drove efficiencies across the business to deliver significant profit and margin expansion. As Jane noted, full year adjusted operating income of $445 million reflected a 19% increase to last year, hitting the high end of our long-term algorithm. Our adjusted operating margin expanded by 120 basis points to 8.3%. We closed the year on a positive note with strong Q4 results. Expanding on a few highlights. Q4 consolidated revenue of $1.6 billion was down 4% to last year, reflecting an $85 million adverse impact from the retail calendar, as previously discussed. Comparable sales increased 3%.

Mike: Thanks, Dan and good afternoon, everyone.

Mike: I'm pleased with how we delivered the first year of our powder and profitable growth plan.

Mike: While we experienced some choppiness in demand and unforeseen currency headwinds, we navigated with agility.

Mike: You have efficiencies across the business to deliver significant profit and margin expansion.

As Jay noted full year adjusted operating income of $445 million reflected a 19% increase to last year hitting the high end of our long term algorithm.

Mike Mathias: Our adjusted operating margin expanded by 120 basis points to 8.3%. We closed the year on a positive note with strong Q4 results. Expanding on a few highlights. Q4 consolidated revenue of $1.6 billion was down 4% to last year, reflecting an $85 million adverse impact from the retail calendar, as previously discussed. Comparable sales increased 3%.

Mike: Our adjusted operating margin expanded by 120 basis points to eight 3%.

Mike: We closed the year on a positive note with strong fourth quarter results.

Mike Mathias: Expanding on a few highlights, fourth quarter consolidated revenue of $1.6 billion was down 4% to last year, reflecting an $85 million adverse impact from the retail calendar as previously discussed. Comparable sales increased 3%. Operating income is $142 million, up slightly to last year, including an approximately $20 million adverse impact from the retail calendar and approximately $10 million of adverse impact from the strengthening of the U.S. dollar. The adjusted operating margin expanded 50 basis points to 8.9%. Gross profit dollars were $599 million, the rate of 37.3% reflected higher freight and product costs, which were offset by lower markdowns.

Mike: Expanding on a few highlights fourth quarter consolidated revenue of $1 6 billion was down 4% to last year, reflecting an $85 million adverse impact from the retail calendar as previously discussed.

Mike: Comparable sales increased 3%.

Mike Mathias: Operating income was $142 million, up slightly to last year, including an approximately $20 million adverse impact from the retail calendar and approximately $10 million of adverse impact from the strengthening of the US dollar. The adjusted operating margin expanded 50 basis points to 8.9%. Gross profit dollars were $599 million. The rate of 37.3% reflected higher freight and product costs, which were offset by lower markdowns. BOW costs were roughly neutral as we successfully offset deleverage associated with the retail calendar shift with efficiencies across several expense areas, including delivery and compensation. These efforts also had a positive impact on the SG&A line, which decreased 6% and leveraged 40 basis points as a rate to sales.

Mike: Operating income was $142 million up slightly to last year, including an approximately $20 million adverse impact from the retail calendar and approximately $10 million of adverse impact from the strengthening of the U S. Dollar.

Mike: Adjusted operating margin expanded 50 basis points to eight 9%.

Mike: Gross profit dollars were $599 million the rate of 37, 3% reflected higher freight and product cost, which were offset by lower markdowns.

Mike Mathias: BOW costs were roughly neutral as we successfully offset deleverage associated with the retail calendar shift with efficiencies across several expense areas, including delivery and compensation. These efforts also had a positive impact on the SG&A line, which decreased 6% and leveraged 40 basis points as a rate to sales.

Mike Mathias: The O.W. costs were roughly neutral as we successfully offset the leverage associated with the retail calendar shift with efficiencies across several expense areas including delivery and compensation. These efforts also had a positive impact on the SG&A line, which decreased 6% and leveraged 40 basis points as a rate to sale. The improvement was driven by lower compensation, including incentive costs, partially offset by higher advertising, where we made choiceful investments to support long-term growth. Appreciation was down year over year, leveraging 10 basis points. The fourth quarter tax rate was 29.4% and earnings per share was 54 cents.

Mike: <unk> costs were roughly neutral as we successfully offset deleverage associated with the retail calendar shift with efficiencies across several expense areas, including delivery and compensation.

Mike: These efforts also had a positive impact on the SG&A line, which decreased 6% and leveraged 40 basis points as a rate to sales.

Mike Mathias: The improvement was driven by lower compensation, including incentive costs, partially offset by higher advertising, where we made choiceful investments to support long-term growth. Depreciation was down year-over-year, leveraging 10 basis points. The Q4 tax rate was 29.4% and earnings per share was $0.54. Consolidated ending inventory costs was down 1% year-over-year as we maintained strong inventory control in a choppy demand environment. As Jennifer noted, our healthy cash position allowed us to fuel investments in our business as well as return cash to shareholders. Q4 CapEx totaled $65 million. Full-year CapEx investments were $223 million. This included a rollout of our new store design to 56 stores where results have been positive and 22 new Aerie and OFFLINE locations.

Mike: <unk> was driven by lower compensation, including incentive costs, partially offset by higher advertising, where we made choice for investments to support long term growth.

Depreciation was down year over year, leveraging 10 basis points.

The fourth quarter tax rate was 29, 4% and earnings per share was <unk> 54.

Mike Mathias: Consolidated ending inventory costs was down 1% year over year as we maintain strong inventory control in a choppy demand environment. As Jay noted, our healthy cash position allowed us to fuel investments in our business, as well as return cash to shareholders. Fourth quarter CapEx totaled $65 million, four-year CapEx investments were $223 million. This included a rollout of our new store design to 56 stores, where results have been positive, and 22 new area and offline locations. We returned approximately $24 million to shareholders through the fourth quarter cash dividend and completed $3.5 million in share repurchases amounting to $60 million.

Mike: Consolidated ending inventory at cost was down 1% year over year, as we maintained strong inventory control and choppy demand environment.

Mike Mathias: As Jennifer noted, our healthy cash position allowed us to fuel investments in our business as well as return cash to shareholders. Q4 CapEx totaled $65 million. Full-year CapEx investments were $223 million. This included a rollout of our new store design to 56 stores where results have been positive and 22 new Aerie and OFFLINE locations.

As Jay noted our healthy cash position allowed us to fuel investments in our business as well as return cash to shareholders.

Speaker Change: Fourth quarter Capex totaled $65 million full year Capex investments were $223 million. This includes the rollout of our new store design to 56 stores, where results have been positive and 22, new aerie and offline locations.

Mike Mathias: We returned approximately $24 million to shareholders through the Q4 cash dividend and completed 3.5 million in share repurchases amounting to $60 million. For the year, we repurchased a total of 9.5 million shares. As Jane noted, we have upsized our share repurchase authorization, demonstrating strong confidence in our brands and long-term growth plan. We ended the year with a strong balance sheet with approximately $359 million in cash and investments and over $920 million of total liquidity, including our revolver. Our 2024 financial results were strong proof points of our agility and expense discipline, and this work continues. As noted, 2025 has started off softer than anticipated. In light of this, Jen walked you through the actions she's taking on the top line.

Speaker Change: We returned approximately $24 million to shareholders through the fourth quarter cash dividend and completed $3 5 million in share repurchases amounted to $60 million.

Mike Mathias: For the year, we repurchased a total of 9.5 million shares. As Jay noted, we have upsized our share repurchase authorization, demonstrating strong confidence in our brand and long-term growth plan. We ended the year with a strong balance sheet with approximately $359 million in cash and investments and over $920 million of total liquidity, including our Revolver. Our 2024 financial results were strong proof points of our agility and expense discipline, and this work continues.

Speaker Change: For the year, we repurchased a total of $9 5 million shares.

Speaker Change: As Jay noted, we have upsized, our share repurchase authorization, demonstrating strong confidence in our brands and long term growth plan.

Mike Mathias: We ended the year with a strong balance sheet with approximately $359 million in cash and investments and over $920 million of total liquidity, including our revolver. Our 2024 financial results were strong proof points of our agility and expense discipline, and this work continues. As noted, 2025 has started off softer than anticipated. In light of this, Jen walked you through the actions she's taking on the top line.

We ended the year with a strong balance sheet with approximately $359 million in cash and investments and over $920 million of total liquidity, including our revolver.

Speaker Change: Our 2024 financial results were strong proof points of our agility and expense discipline and this work continues.

Mike Mathias: As noted, 2025 has started off softer than anticipated. In light of this, Jen walked you through the actions she's taking on the top line. Additionally, we're taking proactive actions to pull back on expense plans for the year with a thorough assessment of all costs and capital spend. We're also actively working to further diversify our supply chain to mitigate tariff impact. Our current outlook reflects a first-quarter revenue decline in the mid-single digits with operating income in the range of $20 to $25 million. This includes an approximately $10 million negative impact from the strengthening of the U.S.

As noted 2025 has started off softer than anticipated in light of this Gen walk you through the actions you're taking on the top line. Additionally.

Mike Mathias: Additionally, we're taking proactive actions to pull back on expense plans for the year with a thorough assessment of all costs and capital spend. We're also actively working to further diversify our supply chain to mitigate tariff impacts. Our current outlook reflects a Q1 revenue decline in the mid-single digits with operating income in the range of $20 to 25 million. This includes an approximately $10 million negative impact from the strengthening of the US dollar. For the year, our outlook reflects revenue down in the low single digits with operating income in the range of $360 to 375 million. Includes an approximately $20 million adverse impact from the strengthening of the US dollar and approximately $5 to 10 million adverse impact from US tariffs on China, net of early mitigation strategies.

Speaker Change: Additionally, we're taking proactive actions to pullback on expense plans for the year with a thorough assessment of all costs and capital spend.

We're also actively working to further diversify our supply chain to mitigate tariff impacts.

Speaker Change: Our current outlook reflects our first quarter revenue declined in the mid single digits with operating income in the range of $20 million to $25 million.

Speaker Change: This includes an approximately $10 million negative impact from the strengthening of the U S dollar.

Mike Mathias: dollar. For the year, our outlook reflects revenue down in the lowest single digits with operating income in the range of $360 to $375 million. includes an approximately $20 million adverse impact for the strengthening of the U.S. dollar and approximately $5 to $10 million adverse impact from U.S. tariffs on China, net of early mitigation strategy. We anticipate a mid-single-digit revenue decline in the first half, recovering to flatten slightly up in the back half, driven by improved merchandising, easier comparisons, and a normalization of year-over-year currency headwinds. Additionally, it anticipates profit declines in the first half. second half operating profit flat to last year's levels on improved top-line trends, lower currency headwinds, and its cost savings and tariff mitigation activities built through the year.

Mike Mathias: For the year, our outlook reflects revenue down in the low single digits with operating income in the range of $360 to 375 million. Includes an approximately $20 million adverse impact from the strengthening of the US dollar and approximately $5 to 10 million adverse impact from US tariffs on China, net of early mitigation strategies.

Speaker Change: For the year, our outlook reflects revenue down in the low single digits with operating income in the range of $360 million to $375 million.

Speaker Change: Includes an approximately $20 million adverse impact of the strengthening of the U S dollar and approximately $5 million to $10 million adverse impact from U S tariffs on China net of early mitigation strategies.

Mike Mathias: We anticipate a mid-single digit revenue decline in the first half, recovering to flat to slightly up in the back half, driven by improved merchandising, easier comparisons, and a normalization of year-over-year currency headwinds. Additionally, it anticipates profit declines in the first half, with second half operating profit flat to last year's levels on improved top line trends, lower currency headwinds, and as cost savings and tariff mitigation activities build through the year. For the Q1 and the year, the gross margin is expected to be down due to higher markdown activity, tariffs, and BOW cost deleverage on the comp decline. SG&A dollars are expected to be flat to last year in the Q1 and down for the full year. This reflects higher marketing investments to drive top line with declines in all other line items driven by expense initiatives.

Speaker Change: We anticipate a mid single digit revenue decline in the first half recovering to flat to slightly up in the back half driven by improved merchandising easier comparisons and a normalization of year over year currency headwinds.

Speaker Change: Additionally, <unk> anticipates profit declines in the first half with second half operating profit flat to last year's levels unimproved topline trends lower currency headwinds and as cost savings and tariff mitigation activities build through the year.

Mike Mathias: For the Q1 and the year, the gross margin is expected to be down due to higher markdown activity, tariffs, and BOW cost deleverage on the comp decline. SG&A dollars are expected to be flat to last year in the Q1 and down for the full year. This reflects higher marketing investments to drive top line with declines in all other line items driven by expense initiatives.

Mike Mathias: For the first quarter in the year, the gross margin is expected to be down due to higher markdown activity, tariffs, and BOW costly leverage on the comp decline. SG&A dollars are expected to be flat to last year in the first quarter and down for the full year. This reflects higher marking investments to drive top lines with declines in all other line items driven by expense initiatives. The full year tax rate is expected to be approximately 25 percent. Our weighted average share count is projected to be in the low 190s before accounting for repurchase activity beyond offsetting internal grants.

Speaker Change: For the first quarter and the year. The gross margin is expected to be down due to higher markdown activity tariffs and DSW cost deleverage on the comp decline.

Speaker Change: SG&A dollars are expected to be flat to last year in the first quarter and down for the full year.

Speaker Change: This reflects higher marketing investments to drive top line with declines in all other line item is driven by expense initiatives.

Mike Mathias: The full year tax rate is expected to be approximately 25%. Our weighted average share count is projected to be in the low 190s before accounting for repurchase activity beyond offsetting internal grants. This year, we expect capital expenditures of approximately $300 million. This includes a one-time $40 million cost of relocating to a new Manhattan office to provide more favorable lease terms. We're also investing to enhance our digital platform to support our growing e-commerce business, further strengthen the customer experience. This year, we're investing in automation in our DCs to create greater cost efficiencies. I'll end by saying across AEO, the teams are highly focused on improving performance. We're managing the business with discipline, taking action with urgency as we navigate through the current environment. With that, we'll open up for questions.

Speaker Change: The full year tax rate is expected to be approximately 25% our weighted average share count is projected to be in the low 190, <unk> before accounting for repurchase activity beyond offsetting internal grants.

Mike Mathias: This year, we expect capital expenditures of approximately $300 million. This includes a one-time $40 million cost of relocating to a new Manhattan office. It provides a more favorable lease term. We're also investing to enhance our digital platform to support our growing e-commerce business and further strengthen the customer experience. And this year we're investing in automation in our DCs to create greater cost efficiency.

Speaker Change: This year, we expect capital expenditures of approximately $300 million.

Speaker Change: This includes a one time $40 million cost of relocating to a new Manhattan office provides more favorable lease terms.

Mike Mathias: We're also investing to enhance our digital platform to support our growing e-commerce business, further strengthen the customer experience. This year, we're investing in automation in our DCs to create greater cost efficiencies. I'll end by saying across AEO, the teams are highly focused on improving performance. We're managing the business with discipline, taking action with urgency as we navigate through the current environment. With that, we'll open up for questions.

Speaker Change: We're also investing to enhance our digital platform to support our growing ecommerce business and further strengthen the customer experience.

Speaker Change: And this year, we're investing in automation in our Dcs to create greater cost efficiencies.

Mike Mathias: I'll end by saying across AEO, the teams are highly focused on improving performance. We're managing the business with discipline, taking action with urgency as we navigate through the current environment.

Speaker Change: I'll end by saying across the teams are highly focused on improving performance, we're managing the business with discipline, taking action with urgency as we navigate through the current environment.

Operator: And with that, we'll open up for questions. Thank you. We'll now be conducting a question and answer.

And with that we'll open up for questions.

Operator: Thank you. We'll now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you. Our first question is from Jay Sole with UBS.

Speaker Change: Thank you, we'll now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Operator: If you would like to ask a question, please press star 1 on your telephone. Confirmation tone will indicate your line Press Star 2 if you'd like to remove... Participants using speaker equipment, it may be necessary to pick up your hands. One moment, please, while we... Thank you.

Speaker Change: Information Tonawanda Kate your line of my question queue, You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

Speaker Change: One moment, please while we poll for questions.

Speaker Change: Okay.

Thank you. Our first question is from Jay sole with UBS.

Jay Sole: Our first question is from Jay Sole. Would you be... Great. Thank you so much.

Jay Sole: Great. Thank you so much. I have a two-part question. Jen, the first part is for you. You talked about how some stores in warmer areas have done better than stores that have been affected by the cold. If you could just maybe give us an idea of, like, what the difference in comp has been. And then secondly, for Mike, you know, if you think about beyond fiscal 25, you know, can you just talk about your ability to control SG&A? Because the SG&A control has been really solid, you know, just like the company had said over the past year.

Speaker Change: Great. Thank you so much I have a two part question first part is for you you talked about how some stores and warmer.

Jen Foyle: I have a two-part question, Jen. The first part is for you. You talked about how some stores in warmer areas have done better than stores that have been affected by the cold. If you could just maybe give us an idea of what the difference in comp has been.

Speaker Change: Areas have done better than stores that have been affected by the court.

Speaker Change: Give us an idea of what the difference in comp has been and then secondly for Mike.

Mike Mathias: And then secondly, for Mike, you know, if you think about beyond fiscal 25, you know, can you just talk about your ability to control SG&A because the SG&A control has been really solid, you know, just like the company had said over the past year. But can you talk about your ability to control SG&A going forward to, in other words, re-leverage those costs and get back to the margin targets or get to the margin targets that you've had, assuming that sales sort of bounce back as this consumer environment normalizes again and returns to normal? Thank you.

Speaker Change: If you think about beyond fiscal 'twenty five.

Speaker Change: Can you just talk about your ability to control SG&A SG&A control has been really solid just like the company had said over the past year, but can you talk about your ability to control SG&A going forward to in other words re leverage those costs and get back to the margin targets are.

Jay Sole: Can you talk about your ability to control SG&A going forward to, in other words, releverage those costs and get back to the margin targets or get to the margin targets that you've had, assuming that sales sort of bounce back as this consumer environment normalizes again and returns to normal? Thank you.

Get to the margin targets that you've had assuming that sales sort of bounce back as the consumer environment normalizes again and returns to normal. Thank you.

Jen Foyle: Thanks for the question. And certainly, yes, we do penetrate a little higher in the softer markets, definitely in the warmer weather climates, we did see some, you know, better comps, but certainly not enough to go off to go off on for this quarter. So still a lot to come. We're only a third of the way into this quarter, lots of volume to be had, and we're ready to compete.

Jennifer Foyle [President and Executive Creative Director: Thanks for the question. Certainly, yes, we do penetrate a little higher in the softer markets. Definitely in the warmer weather climates, we did see some, you know, better comps, but certainly not enough to go off on for this quarter. Still a lot to come. We're only a third of the way into this quarter, lots of volume to be had, and we're ready to compete.

Speaker Change: Thanks for the question and certainly yes, we do penetrate a little higher in the softer market definitely in the warmer weather climates, we did see some.

Speaker Change: Better comps.

Speaker Change: Certainly not enough to go off to go off on for this quarter, so still a lot to come.

Speaker Change: We're only a third of the way into this quarter lots of volume to be had and.

Speaker Change: We're ready to.

Speaker Change: Compete.

Mike Mathias: Jay, on SG&A, it's a good question. I think if you look at 2024 as a proof point of what we've been talking about, we've got this muscle built now around expense controls, cross-functional teams working through our transformation office with the FP&A team, with the kind of cost center owners across the organization on a constant basis. We were able to leverage SG&A for the year. Last year, for comp result and revenue up low single digits. Actually, the entire operating rate improvement last year of 120 basis points was all from expense leverage. Just the proof points of everything we've been doing for the last two years now. Then even on this guide for 2025, Jen and team will work vigorously at the top line improvement.

Mike Mathias: And Jay, on SG&A, it's a good question. I think you look at 2024 as a proof point of what we've been talking about. We've got this muscle built now around expense controls. Cross-functional teams working through our transformation office with the FP&A team, with the cost center owners across the organization on a constant basis. We were able to leverage SG&A for the year last year on the four comp result and revenue upload single digits, and actually the entire operating rate improvement last year of 120 basis points was all from expense leverage, so just the proof points of everything we've been doing for the last two years now.

And Jay on SG&A and that's a good question I think you look at 2024 as a proof point of what we've been talking about we've got this muscle built now around expense controls cross functional teams working through our transformation office with the FAA team with.

What kind of cost center owners across the organization on a constant basis.

Speaker Change: Over to leverage SG&A for the year last year on the four comp result in revenue up low single digits and actually the entire operating rate improvement last year of 120 basis points was all from expense leverage. So just the proof points of everything we've been doing for the last two years now.

Mike Mathias: And then even on this guide for 2025, Jen and team are going to work vigorously at the top-line improvement, but even messaging at this point that dollars on the year are down similar to the revenue assumption, kind of down those single digits. I'm not sure the last time we've been able to say that walking into a year like this. We were structured in a similar way going into the year where within our algorithm, SG&A was set to leverage, so the starting point for this work that we kicked off immediately when we started seeing this trend has allowed us to at least capture that.

And then even on this guide for 2025 Gen in <unk>, where we're going to work vigorously at the topline improvement.

Mike Mathias: Even messaging at this point, the dollars on the year are down similar to the revenue assumption, kind of down low single digit. I'm not sure the last time we've been able to say that walking into a year like this. We were structured in a similar way going into the year where within our algorithm, SG&A was set to leverage. The starting point for this work that we kicked off immediately when we started seeing this trend has allowed us to at least capture that. The work continues. We've got more decisions coming at us here in the next few weeks that we're gonna make this really decide on a few other line items across the P&L.

Speaker Change: But even messaging at this point the dollars on the year are down similar to the revenue assumption kind of down low single digits, unless Jeremy last time, we've been able to say that walking into a year like this where we restructured in a similar way going into the year were within our algorithm.

Speaker Change: G&A was set to leverage to the starting point for this work that we've kicked off with me.

Speaker Change: Really when we start seeing this trend.

Speaker Change: It's allowed us to lease capture that.

Mike Mathias: But then the work continues, we've got more decisions coming at us here in the next few weeks that we can, that we're going to make this, really decide on a few other line items across the P&L. Big store expenses like rent, store labor, services. delivery, SLA's. percent of the rate is still intact. We need revenue growth to do that, there's no doubt about that. We're confident we'll get back to that revenue growth, but we're structured to continue to manage expenses for leverage. Got it. Thank you so much.

Speaker Change: But then the work continues we've got more decisions coming at US here in the next few weeks then we can that we're going to make us really decided on a few other line items across the P&L.

Mike Mathias: The big, you know, store expenses like rent, store labor, services, delivery, SLAs, decisions we can make across our, you know, distribution fulfillment capabilities there, all discretionary spend. It's all in work at the moment, and I'm confident we're gonna be able to knock that number down even further, with kind of more updates to come from there. We're structured to do this. In the out years, yes, our target of 25% to 26% as a rate is still intact. We need revenue growth to do that. There's no doubt about that. We're confident we'll get back to that revenue growth. We're structured to continue to manage expenses for leverage.

Speaker Change: Yes.

Speaker Change: Store expenses like rent store labor services deliver.

Speaker Change: Delivery ESL is decisions, we can make across our distribution fulfillment capabilities there.

Speaker Change: All discretionary spend so its all in work at the moment I'm confident we're going to be able to knock that number down even further.

Speaker Change: More updates to come from there. So we're structured to do that so in the out years, yes, our target of 25 to 26.

Percent of the rates is still intact, we need revenue growth to do that Theres no doubt about that we are confident we'll get back to that revenue growth but.

Speaker Change: But we are structured to continue to manage expenses for leverage.

Jay Sole: Got it. Thank you so much.

Speaker Change: Got it thank you so much.

Matthew Boss: Our next question is from Matthew Boss with Jake. Great, thanks.

Operator: Our next question is from Matthew Boss with JPMorgan.

Matthew Boss: Our next question is from Matthew boss with Jpmorgan.

Amanda Douglas: Great. Thanks. It's Amanda Douglas on for Matt. Jen, could you elaborate on early spring selling trends that you're seeing across the American Eagle brand relative to Aerie, and how that's reflected in your Q1 revenue outlook?

Great. Thanks, It's Amanda Douglas on for Matt.

Amanda Douglas: It's Amanda Douglas on format. So Jen, could you elaborate on early spring selling trends that you're seeing across the American Eagle brand relative to Aerie, and how that's reflected in your 1Q revenue outlook? Sure. Early on, as you mentioned, there's obviously headwinds coming out of February, you heard. Coming off of a very strong Q4, we were really pleased with our results. We entered very agile with our inventory, thinking we were down one. So we're leaving ourselves open for chase, and the new learnings are, you know, we have to react to these learnings. There's certainly opportunities across all brands, right?

Speaker Change: Ken could you elaborate on early spring selling trends that youre seeing across the American Eagle brand relative to Aerie and how that's reflected in your <unk> revenue outlook.

Jennifer Foyle [President and Executive Creative Director: Sure. Early on, as you mentioned, there's obviously headwinds coming out of February, you heard. Coming off of a very strong Q4, we were really pleased with our results. We entered very agile with our inventory, thinking we were down 1. We're leaving ourselves open for chase, and the new learnings are. You know, we have to react to these learnings. There's certainly opportunities across all brands, right? We could have had more denim in AE, specifically. Aerie, we could have had more fleece. That's good news and bad news at the same time. Because of our inventory position and because of the way we're posturing ourselves on the back half, we can chase our business, and we're ready to do so. There's learnings in February.

Ken: Sure early on as you mentioned Theres, obviously headwinds coming out of February you heard coming off of a very strong Q4, we were really pleased with our results. We entered very agile with our inventory thinking we were down one so we're leaving ourselves open for chase and.

Ken: The new learnings or we have to react to these learnings are certainly opportunities across all brands right. We could have had more denim and aes, specifically aerie, we could've had more fleece.

Jen Foyle: We could have had more denim in AE specifically. Aerie, we could have had more fleece. That's good news and bad news at the same time. But because of our inventory position and because of the way we're posturing ourselves on the back half, we can chase our business, and we're ready to do so. So there's learnings in February. It was softer than expected, and we are ready to, you know, gear up. And the teams are moving very swiftly and getting into the businesses that are working and obviously flowing the businesses that are not. So early on, you know, the weather was tough.

Ken: That's good news and bad news at the same time.

Ken: But because of our inventory position and because of the way we're posturing ourselves on the back half we can chase our business and we are ready to do so so there's learnings in February it was softer than expected and we are ready to go.

Jennifer Foyle [President and Executive Creative Director: It was softer than expected, and we are ready to, you know, gear up, and the teams are moving very swiftly and getting into the businesses that are working and obviously flowing the businesses that are not. Early on, you know, the weather was tough. You heard that. We actually are more penetrated in some of the tougher climates, so that's the truth. Early on, the teams have reacted, we've responded, inventory is well positioned, and we're taking all of our lessons and moving forward.

Ken: Europe and the teams are moving very swiftly and getting into the businesses that are working and obviously flowing the businesses that are not so early on you know the weather was tough you heard that.

Jen Foyle: You heard that. And we actually are more penetrated in some of the tougher climates. So that's the truth. But early on, the teams have reacted. We've responded. Inventory is well positioned, and we're taking all of our lessons and moving forward.

Ken: And we actually are more penetrated in some of the tougher climates. So that's the truth.

Ken: Early on the teams have reacted we've responded inventory is well positioned and.

Ken: We're taking all of our lessons and moving forward.

Jen Foyle: Great.

Amanda Douglas: Great. As a follow-up for Mike on the gross margin outlook, could you help break apart the embedded assumptions from markdowns versus product costs in Q1 and just how you see each of those progressing over the balance of the year?

Mike Mathias: And as a follow-up for Mike on the gross margin outlook, could you help break apart the embedded assumptions for markdowns versus product costs in the first quarter and just how you see each of those progressing over the balance of the year? Yeah, within gross margin, we've got currency headwind in the first half that comes through the margin line, a little bit of tariff impact, we said five to $10 million. So Small in the grand scheme of things, mitigated by the teams very well. Flexibility there is key, we've got that built depending on what actually happens with tariffs that we're all kind of waiting to confirm.

Great and as a follow up for Mike on the gross margin outlook could you help break apart the embedded assumptions from markdowns versus product costs in the first quarter and just how you see each of those progressing over the balance of the year.

Mike Mathias: Yeah. With interest margin, we've got currency headwind in the first half that comes through the margin line. A little bit of tariff impact. We said $5 to 10 million. So all in the grand scheme of things, mitigated by the teams very well. Flexibility there is key, and we've got that built depending on what actually happens with tariffs that we're all kinda waiting to confirm. The currency headwind is, you know, impact to IMU and product margin in Q1. On the downsides or, you know, the down mid-single digit, call it, revenue guide, our ability to leverage expenses and gross margin like rent, for example, diminished. You know, some expense headwinds in gross margin in Q1 as well.

Ken: Yes, I think gross margin, we've got currency headwind in the first half that comes through the margin line.

Ken: A little bit of paradigm tariff impact, we said $5 million to $10 million. So.

Small in the Grand scheme of things mitigated by the teams very well.

Ken: <unk> ability there is key and we've got that built depending on what actually happens with tariffs that we're all kind of waiting to confirm.

Mike Mathias: But the currency headwind is an impact to IMU and product margin in the first quarter. Then on the down five, or the down mid single, did you call it? Revenue guide, our ability to leverage expenses in gross margin, like rent, for example, are diminished. So We've got some things flowing through the third and fourth quarter already, but there are some lines that we're managing through right now that we could see some additional benefits to. So we're expecting gross margin to be relatively in line to last year in the back half. So front half headwinds, back half relatively similar to last year.

Ken: But the currency headwind is.

Ken: And in fact, IMU and product margin in the first quarter and then on the downside or the down mid single digit call. It revenue guide.

Ken: We leveraged expenses in gross margin like Brent for example.

Ken: Diminish so some some expense headwinds.

Ken: Gross margin in the first quarter as well when you get through the first half of the year into the back half.

Mike Mathias: When you get through the first half of the year into the back half, IMU improvement is expected and projected at the moment, which is a good change from the first half of the year. We still believe markdowns can be well controlled at a sort of flat comp or flat revenue result. Expense mitigations are. We've got some things flowing through the Q3 and Q4 already, but there are some lines that we're managing through right now that we could see some additional benefits too. We're expecting gross margin to be relatively in line to last year in the back half. Front half headwinds, back half relatively similar to last year.

<unk> improvement is expected and projected at the moment, which is unchanged from the first half of the year, we still believe Mark downs can be well controlled at a sort of flat copper flat revenue.

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Ken: Expense mitigation are we've got some things flowing through the third and fourth quarter already but there are some lines that were.

Ken: As you can see right now that we could see some additional benefits too. So we're expecting gross margin to be relatively in line for the last year in the back half.

Ken: Front half headwinds back half relatively similar to last year.

Amanda Douglas: Thank you.

Ken: Thank you.

Janet Kloppenburg: Our next question is from Janet Kloppenburg with JJK Radio. Hi, everybody. Jen, I didn't hear you call out, and I might have missed it, so forgive me.

Operator: Our next question is from Janet Kloppenburg with JJK Research.

Speaker Change: Our next question is from Janet Kloppenburg with J J K research.

Janet Kloppenburg: Hi, everybody.

Mike Mathias: Hi, Janet.

Speaker Change: Hi, Janet.

Janet Kloppenburg: Jen, I didn't hear you call out, and I might have missed it, so forgive me. Did you call out leggings as a position of strength at Aerie? I think you said activewear and comments on swim would really help there too. Getting back to American Eagle, if you could elaborate a little bit more on the slowdown in women's other than weather, like what categories and what the learnings are there, that would help me a lot. Mike, we should be using flat gross margins in the back half, and can you give us sort of a range on the front half, please?

Ken I didn't hear you call out and I might've missed it so forgive me.

Speaker Change: Thank you Carlo.

Jen Foyle: leggings as a position of strength at Aerie. I think you said active wear, and comments on swim would really help there too.

Speaker Change: <unk>.

Speaker Change: Our position of strength.

And.

I think you said activewear and comment on swim would really help there too.

Jen Foyle: And getting back to American Eagle, If you could elaborate a little bit more on the slowdown in women's, other than weather, like what categories and what the learnings are there, that would help me a lot.

Speaker Change: And getting back to American Eagle.

Speaker Change: <unk>.

Speaker Change: If you could elaborate a little bit more on the womens on the slowdown of womens other than other than weather.

Speaker Change: Like what categories and what.

Speaker Change: What the learnings are there that would help me a lot.

Speaker Change: And.

Jen Foyle: And Mike, we should be using flat gross margins in the back half, and can you give us sort of a range on the front half, please? Sure, leggings, we're very excited about that business. In fact, I'm here at a hotel in Miami and I met a customer checking in and she literally said to me, do you work for Aerie Offline? And I told, I guess she heard me speaking and I said, yes, she's like, they're the best leggings in town. And that's certainly true. We grew market share this year. We grew to the number two market share in our core demographic.

Speaker Change: Mike we should be using flat gross margin in the back half and can you give us sort of a range on the front half. Please.

Jennifer Foyle [President and Executive Creative Director: Sure. Leggings, we're very excited about that business. In fact, I'm here at a hotel in Miami, and I met a customer checking in, and she literally said to me, Do you work for OFFLINE by Aerie? Because she heard me speaking, and I said, Yes. She's like, They're the best leggings in town. That's certainly true. We grew market share this year. We grew to the number two market share in our core demographic. I'm thrilled with that number and very-

Speaker Change: Sure.

Speaker Change: Leggings, we're very excited about that business in fact at a hotel in Miami and I met a customer checking in and.

Speaker Change: She literally you said debate the Yorkshire, Aerie offline and I feel I can so you heard me speaking and I said, yes, she's like they are the best leggings and down and Thats certainly true we grew market share. This year, we grew to the number two market share in our core demographic.

Jen Foyle: I'm thrilled with that number. And you're seeing that continue here. Yes, we are actually. Activewear's a positive trend for us. We're very excited about that business.

Speaker Change: Good afternoon.

Janet Kloppenburg: You're seeing that continue here?

And Youre seeing that continue here actually.

Jennifer Foyle [President and Executive Creative Director: Yes, we are actually.

Speaker Change: Actually Act activewear.

Janet Kloppenburg: Okay.

Jennifer Foyle [President and Executive Creative Director: Activewear is a positive trend for us. We're very excited about that business. Women's, Janet, Look, we're coming off of-

Janet Kloppenburg: We're very excited about that business women's Janet.

Jen Foyle: Women's, Janet, we look, we're coming off of, Yes, Women's at Eagle. Yep, coming off of a very strong trend. We're copying the comp, the business is growing. We're introducing new fashion and obviously introducing, getting back to some of our core competency businesses, i.e. fashion tops and that social casual dressing. We're doing great there. We're dressing that girl head to toe. We're closing the gap on our tops to bottoms ratio. Very excited about that. Women's continues to comp quarter over quarter. And actually, if you look at the two-year stack, actually Women's has accelerated into Q4, including denim, which was a five comp.

Speaker Change: What does that mean.

Speaker Change: Sure.

Janet Kloppenburg: Women's at American Eagle.

Speaker Change: Yes women.

Jennifer Foyle [President and Executive Creative Director: Yes, women's at Eagle.

Janet Kloppenburg: Yeah.

Jennifer Foyle [President and Executive Creative Director: Yeah. Coming off of a very strong trend. We're comping the comp. The business is growing. We're introducing new fashion and obviously introducing getting back to some of our core competency businesses, i.e., fashion tops and that social casual dressing. We're doing great there. We're dressing that girl head to toe. We're closing the gap on our tops to bottoms ratio. Very excited about that. Women's continues to comp quarter-over-quarter. Actually, if you look at the two-year stack, actually, women's has accelerated into Q4, including denim, which was a 5 comp. Going to swim, my favorite subject.

Yes, coming up a very strong trend, we're comping the comp the business is growing where.

Speaker Change: Introducing new fashion, and obviously, introducing getting back to some of our core competency businesses E fashion tops and that social casual addressing we're doing great. There were dressing that girl head to toe.

Speaker Change: The gap on our tops to bottoms ratio very excited about that women's continues to comp quarter over quarter.

Speaker Change: And actually if you look at the two year stack actually women's has accelerated into Q4, including denim, which was a five comp.

Jen Foyle: Going to swim, my favorite subject. My favorite subject. Landed a preliminary, planning it accordingly. Some softness in some other categories that we were expecting to comp the swim business, but we did plan swim down. It's actually beating that plan as we speak. And we planned some other categories up and we needed some receipts here, to be honest, to offset some of the early headwinds that we're facing, just getting out of the gate and airy.

This is my favorite subject my favorite subject random.

Janet Kloppenburg: Yes.

Jennifer Foyle [President and Executive Creative Director: My favorite subject.

Janet Kloppenburg: Yes. Yes.

Jennifer Foyle [President and Executive Creative Director: We landed swim planning it accordingly. Some softness in some other categories that we were expecting to comp the swim business. We did plan swim down. It's actually beating that plan as we speak, and we planned some other categories up. We needed some receipts here, to be honest, to offset some of the early headwinds that we're facing just getting out of the gate in Aerie.

Speaker Change: Eric.

Planning and accordingly.

Speaker Change: Some softness in some other categories that we were expecting to comp the swim business, but we did plan swim down its actually beating that plan as we speak.

Speaker Change: And we plan some other categories up and we needed some receipts here to be to be honest to offset.

Speaker Change: Some of the early headwinds that were facing just getting out of the gate in aerie.

Jen Foyle: Okay, but Aerie, then where are the slowdowns from where you had been, Jen? It's actually not, you know, as I mentioned in my remarks, you know, intimates in general is a slowdown, but we actually gained market share in bras and in undies, and we oversold fleece early in Q4, and we needed receipts here to mitigate some of the plan, some of the swim business that we planned down. That's what we're chasing right now. The good news is we have a new set coming our way, starting on direct. Newness is hitting on Thursday, and new goods coming next week for Aerie.

Janet Kloppenburg: Okay. Aerie, then where are the slowdowns from where you had been, Jen?

Speaker Change: Okay.

Speaker Change: We then will have a slowdown from where you had batten John it's actually not.

Jennifer Foyle [President and Executive Creative Director: It's actually not. It's, you know, as I mentioned in my remarks, you know, intimates in general is a slowdown, but we actually gained market share in bras and in undies. We oversold fleece early in Q4, and we needed receipts here to mitigate some of the planned, some of the swim business that we planned down. That's what we're chasing right now.

Speaker Change: As I mentioned in my remarks.

Speaker Change: Intimates in general is a slowdown, but we actually gained market share in bras and undies.

Speaker Change: And we oversold fleece early in Q4, and we needed receipts here to.

Speaker Change: To mitigate some of the plan some of the swim business that we planned down.

Speaker Change: That's what we are chasing right now good news is we have a new set coming our way starting on direct newness is hitting on Thursday, and new goods coming next week for Aerie.

Janet Kloppenburg: Okay.

Jennifer Foyle [President and Executive Creative Director: Good news is we have a new set coming our way, starting on direct. Newness is hitting on Thursday and new goods coming next week for Aerie.

Jen Foyle: So except for men, it sounds like everything's pretty correctable in the near term. Definitely. I mean, definitely. And I love our inventory position. I love that we're open. And men's definitely had some green shoes, some new launches, some new product categories, some new fashion. We're seeing great returns in the graphics business. We're chasing that business. And 24-7 is tracking well. We're seeing a great response to the new active books. And pants has been strong for us. And I do believe as we cycle into the warmer climates, our short business is really set up for success.

Janet Kloppenburg: Except for men's, it sounds like everything's pretty correctable in the near term.

Speaker Change: So except for men's it sounds like everything's plenty collectible in the near term.

Jennifer Foyle [President and Executive Creative Director: Definitely. I mean, definitely. I love our inventory position. I love that we're open. Men's definitely has some green shoots, some new launches, some new product categories, some new fashion. We're seeing great returns in graphic, the graphics business. We're chasing that business, and 24/7 is tracking well. We're seeing a great response to the new active looks, and pants has been strong for us. I do believe as we cycle into the warmer climates, our short business is really set up for success.

Speaker Change: Definitely I mean, definitely and I love, our inventory position I love that we're open and men's definitely have some green shoots some new launches some new product categories. Some new fashion, we're seeing great.

Speaker Change: Returns in graphics, the graphics business, we're chasing that business in 2007 is tracking well, we're seeing a great response to the new active books.

Speaker Change: And pants has been solid for us.

Speaker Change: Believes as we cycle into the warm requirements. Our short business is really set up for success.

Janet Kloppenburg: Great.

Janet Kloppenburg: Great. Thank you, Jen, and good luck to you. Mike?

Janet Kloppenburg: Thank you, Janet. Good luck to you. Bye.

Matthew Boss: Great. Thank you John and good luck to you Mike.

Mike Mathias: Yeah, Janet, on gross margin, the first quarter with the guidance at the 20-25 million op bank on mid-single revenue decline, you're going to get the gross margin around 240 basis points down. The majority of that is expense de-leverage, so rent and other— rent and then fixed costs in the gross margin that are still in work, but the de-leverage there will be the biggest driver of that. We do have a little bit of IMU headwind, like I said, from currency. Q1 is still the biggest currency lap, especially against the peso last year. Jen mentioned some chase and some things being adjusted through the assortment, receipts for chasing, so a little bit of freight as well, but the majority is going to be expense de-leverage with a little bit of pressure on the merch margin from those couple items as well.

Mike Mathias: Yeah, Janet, on gross margin, Q1 with the guidance at $20 to 25 million off the back of mid-single revenue decline, you're gonna get the gross margin around 240 basis points down. The majority of that is expense deleverage. So rent and fixed costs and in the gross margin that are still in work, but the leverage there will be the biggest driver of that. We do have IMU headwind, like I said, from currency. Q1 is still the biggest currency lap, especially against the peso last year. Jen mentioned some changes and some things being adjusted through the assortment, receipts for changes, so a little bit of freight as well.

Speaker Change: Yes, John on gross margin first quarter whats the guidance at the 25 $20 million to $25 million up mid single revenue decline, you're going to get the gross margin.

Matthew Boss: Around 240 basis points down.

Matthew Boss: Surety of added expense deleverage, so rent another rather than fixed costs.

Matthew Boss: And the gross margin that are still in work, but the deleverage there would be.

Matthew Boss: The biggest driver of that we do have a little bit of headwinds like I said from from currency Q1 is still the biggest currency lapse, especially against the peso last year.

John Batten: John mentioned, some chase some things.

Speaker Change: Adjusted through the assortment receipts for chasing so a little bit afraid as well.

Mike Mathias: The majority is gonna be expense deleverage with a little bit of pressure on the merch margin from those couple items as well. Q2, definitely tighter. Call it about 150 basis points is what we're thinking projecting now. Expense deleverage is not as significant on some revenue improvements. We start to lap the currency impact in the back half of Q2 last year. That gets negated through IMU. Those two components, better than Q1, resulting in about maybe 100 basis points better difference to last year in Q2 versus Q1.

Speaker Change: But the majority is going to be expense deleverage with a little bit of pressure on the merch margin from those couple of items as well.

Mike Mathias: Second quarter, more—definitely tighter, called about 150 basis points is what we're thinking, projecting now. Expense de-leverage is not as significant on some revenue improvement. And again, we start to lap the currency impact in the back half of the second quarter last year, so that gets negated through IMU. So those two components, better than the first quarter, resulting in about maybe 100 basis points better difference to last year in the second quarter.

Speaker Change: Quarter.

Speaker Change: More definitely tighter call about 150 basis points is what we're thinking basically projecting now expense deleverage is not insignificant on some revenue improvement and again you can we start to lap the currency impact in the back half of the second quarter last year. So.

Speaker Change: That gets negated through IMU.

Speaker Change: So those two components better than the first quarter, resulting in about maybe 100 basis points better.

Speaker Change: Difference to last year in the second quarter versus the first quarter.

Mike Mathias: Thank you, Mike.

Jennifer Foyle [President and Executive Creative Director: Thank you, Mike.

Thank you Mike.

Speaker Change: Hello.

Adrienne Yih: Our next question is from Adrienne Yih with Barclays.

Operator: Our next question is from Adrienne Yih with Barclays.

Speaker Change: Our next question is from Andrew <unk> with.

Speaker Change: Barclays.

Adrienne Yih: Good afternoon. So my question is, I'm going to go back to the tariff piece of it. Your assumptions for the tariff, you have the 20 percent exposure to China. I think that was for FY24, but I know you're working that down. Where are you currently? Where do you expect that to be at the end of the year? And then just kind of proactively thinking, what is your exposure to Vietnam? Does your guidance actually just assume you're taking the margin hit with no pass-through and no kind of manufacturing negotiations, et cetera?

Adrienne Yih: Good afternoon. My question is gonna go back to the tariff piece of it. Your assumptions for the tariff, you have the 20% exposure to China. I think that was for FY 2024, but I know you're working that down. Where are you currently? Where do you expect that to be at the end of the year? And then just kind of proactively thinking, what is your exposure to Vietnam? Does your guidance actually just assume you're taking the margin hit with no pass-through and no kind of, you know, manufacturing negotiations, et cetera? And then, Jen, where are we in the denim cycle of things? And obviously, you comped up 5%. Is there another iteration or another kind of, you know, progression of kind of that wider leg denim?

Speaker Change: Good afternoon.

Speaker Change: My question is.

Speaker Change: And to go back to the tariff piece of it.

Speaker Change: Your euro assumption for the tariff you had the 20% exposure to China.

That was for FY 'twenty, four but I know youre working that down where are you currently and where do you expect that to be at the end of the year and then kind of proactively thinking what is your exposure to Vietnam.

Adrienne Yih: Does your guidance actually just assume you're taking the margin hit with no pass-through and no kind of, you know, manufacturing negotiations, et cetera? And then, Jen, where are we in the denim cycle of things? And obviously, you comped up 5%. Is there another iteration or another kind of, you know, progression of kind of that wider leg denim?

Speaker Change: Does your guidance actually just assume you're taking the margin hit with no pass through with no kind of.

Speaker Change: Manufacturing negotiations et cetera, and then John where are we in the denim cycle of things and obviously your comps up 5%.

Adrienne Yih: And then, Jen, where are we in the denim cycle of things? Obviously, you've comped up five percent. Is there another iteration or another kind of progression of kind of that wider leg denim? And then if you can talk about the promotionality of both Aerie and AE brand.

Speaker Change: Is there another iteration or another kind of.

Speaker Change: Progression of kind of that wider leg denim and then if you can talk about the promotional <unk> of both aerie and AE brand. Thank you.

Adrienne Yih: If you can talk about the promotionality of both Aerie and AE brand? Thank you.

Adrienne Yih: Thank you.

Mike Mathias: I can hand it-

Speaker Change: Yes, Andrew.

Jay Schottenstein: Can I just add one thing, Jay?

Mike Mathias: Yep.

Jay Schottenstein: When it comes to terror, nobody knows what terrorism is going to put on where, when, or what. We don't know if it's going to be in Vietnam, we don't know China, we don't know India, we don't know Bangladesh, so we're shifting to, and you have to remember that eight years ago we went through this before and everything settled down. So we just have to be calm, a due course. We're not gonna be jumping all over the place until we know exactly what the story is. Nobody knows what the story is yet. We went through this eight years ago, it settled down.

Jay Schottenstein: Yes. When it comes to tariff, nobody knows what tariffs are gonna put on where, when, or what. We don't know if it's gonna be out of Vietnam, we don't know China.

Jay Schottenstein: Yes. When it comes to tariff, nobody knows what tariffs are gonna put on where, when, or what. We don't know if it's gonna be out of Vietnam, we don't know China. We don't know India, we don't know Bangladesh.

Andrew: Yes, when it comes to terror, nobody knows what tariffs put on when or what.

We don't know it could be.

Andrew: We don't know China, no we don't.

Adrienne Yih: Yep.

Jay Schottenstein: We don't know India, we don't know Bangladesh.

No.

Andrew: Youre going to have Bangladesh, yes. So.

Adrienne Yih: Yep.

Jay Schottenstein: There's a shift in every place. Where are we shifting to? You have to remember that eight years ago, we went through this before, and everything settled down. We just have to be calm, of course. We're not gonna be jumping all over the place, you know, until we know exactly what the story is. Nobody knows what the story is yet. We went through this eight years ago, it settled down. If you remember, eight years ago, the first half of business was a tough business, then it settled down, and then everything got very good for the next few years until the pandemic. I wouldn't be rushing.

Andrew: Shifting.

Andrew: Where are we shifting to you.

Andrew: And you have to remember that eight years ago, we went through this before and everything settled down.

Andrew: So we just have to call.

Andrew: Nucor's rapidly.

Andrew: The place.

Andrew: Until we know until we know exactly what the story is nobody knows what the story is yet we went through it was eight years ago.

Jay Schottenstein: We went through this eight years ago, it settled down. If you remember, eight years ago, the first half of business was a tough business, then it settled down, and then everything got very good for the next few years until the pandemic. I wouldn't be rushing. You know, if you go rushing, where am I, where am I rushing to? I don't know where I'm rushing to.

Andrew: It settled down and if you remember eight years ago. The first half of business was a tough business then it settled down and then everything got very good for the next few years until the pandemic.

Jay Schottenstein: And if you remember, eight years ago, the first half of business was a tough business, then it settled down, and then everything got very good for the next few years until the pandemic. So I want to be a Russian, where am I rushing to? I don't know where I'm rushing to. Yeah, and then the assumption... Fair, very fair. Yeah. A hundred percent, Jay. So I think flexibility is key. That's the key point there. The teams have that built. We've got redundancy built to move around if we need to. But at the moment, to Jay's point, where do you move until we know?

Andrew: So I wouldn't be.

Adrienne Yih: Yep.

Jay Schottenstein: You know, if you go rushing, where am I, where am I rushing to? I don't know where I'm rushing to.

Andrew: Yes.

Gold rush.

My rushing to I don't know where I'm rushing to.

Mike Mathias: Yeah. The assumption-

Andrew: Yeah and then.

Adrienne Yih: Very fair.

Andrew: Yes, I'm very clear.

Mike Mathias: 100%, Jay. I think flexibility is key. That's the key point there. The teams have that built. We've got redundancy built just to move around if we need to. At the moment, to Jay's point, where do you move until we know? The assumptions are right now and the reality around China penetration is we're below 20 now. We're in the high teens. Some of the mitigation is we plan to be in the single digits by the time we get to the back half of the year. That's why the a little bit of tariff headwind in the front half, back half pretty low, under these assumptions. Vietnam is similar to China at the moment, kinda high teens to 20%.

Andrew: Yes, 100%, Jay So I think flexibility is key.

Speaker Change: Point there the teams have that built who've got redundancy built to move around if we need to but at the moment to Jay's point, where do you move until we know what the assumptions are right now in the reality around China penetration as we are below 20 now we're in the high teens some of the mitigation as we plan to be in the single digits by the time, we get to the back half of the year. So.

Mike Mathias: But the assumptions are right now, and the reality around China penetration is we're below 20 now. We're in the high teens. Some of the mitigation is we plan to be in the single digits by the time we get to the back half of the year. So we're... That's why the little bit of tariff headwind in the front half. pretty low under these assumptions. Vietnam is similar to China at the moment, kind of high teens, 20%. The teams have already worked, you know, the same process around mitigation efforts with our manufacturing partners, vendors in Vietnam. So, right now the assumption is no pass through the consumer.

Mike Mathias: We're in the high teens. Some of the mitigation is we plan to be in the single digits by the time we get to the back half of the year. That's why the a little bit of tariff headwind in the front half, back half pretty low, under these assumptions. Vietnam is similar to China at the moment, kinda high teens to 20%.

Speaker Change: That's why the little bit of tariff headwind in the front half back half pretty low.

Speaker Change: Under these assumptions.

Speaker Change: Vietnam is similar to China at the moment kind of high teens to 20% the teams are already.

Mike Mathias: The teams have already worked you know the same process around mitigation efforts with our manufacturing partners, vendors in Vietnam. Right now, the assumption is no pass-through to consumer. We've actually between the mitigation efforts in China, reducing the penetration, then it's the partnerships we have with our vendors and sharing in the cost of what you know could happen at the moment. We feel good about that, and the teams have worked tirelessly for a good 6 to 9 months now, getting ready for this to create that redundancy, create flexibility across the network. We feel like we can make a lot of different moves pending, to Jay's point, what actually does occur.

Speaker Change: Yeah.

Speaker Change: The same process around mitigation efforts.

Speaker Change: Our manufacturing partners vendors and Vietnam. So.

Speaker Change: Right now the assumption is no pass through to the consumer we've actually between the mitigation efforts in China, reducing the penetration then it's the partnerships, we have with our vendors and sharing in the cost of.

Mike Mathias: We've actually, between the mitigation efforts in China, reducing the penetration, then it's the partnerships we have with our vendors and sharing in the cost of what, you know, could happen at the moment. We feel good about that. The teams have worked tirelessly for a good six, nine months now getting ready for this to create that redundancy, create flexibility across the network. We feel like we can make a lot of different moves pending, to Jay's point, what actually does occur.

Speaker Change: What could happen at the moment, we feel good about that and the teams have worked tirelessly for a good six to nine months now and getting ready for this to create that redundancy creates flexibility across the network we.

Mike Mathias: We feel good about that, and the teams have worked tirelessly for a good 6 to 9 months now, getting ready for this to create that redundancy, create flexibility across the network. We feel like we can make a lot of different moves pending, to Jay's point, what actually does occur.

Speaker Change: We feel like we can make a lot of different moves.

Jay: Lending to Jay's point, what actually does occur.

Jen Foyle: And in denim, particularly in women's, we had a strong year. Mid-single-digit comps, Q4 to run that five comp was exceptional. However, we did go into Q1 very lean, and we needed to chase goods. What I love about what's happening in the business right now is the diversity of fits. It's not just about baggy, actually. We're seeing skinny emerge. And what makes this magic on this team and our positioning in the market is how we chase denim and how we go to market, and also our fits. I mean, our fits are the best in the industry, and I'm extremely proud of what the team's able to deliver.

Jennifer Foyle [President and Executive Creative Director: In denim, particularly in women's, we had a strong year. Mid-single digit comps. Q4 to run that 5% comp was exceptional. However, we did go into Q1 very lean, and we needed to chase goods. What I love about what's happening in the business right now is the diversity of fits. It's not just about baggy, actually. We're seeing skinny emerge. What makes this magic on this team and our positioning in the market is how we chase denim and how we go to market, and also our fits. I mean, our fits are the best in the industry, and I'm extremely proud of what the team's able to deliver. However, we still have a lot of open-to-buy. We just did our denim testing, and the results came in.

And then denim, particularly in women's we had a strong year mid single digit comps Q4 to run that five comp was exceptional. However, we did go into Q1, very lean and we needed to chase goods.

Jay: What I love about what's happening in the business right now is the diversity of offense.

Just about baggy actually we're seeing skinny emerge and.

Jennifer Foyle [President and Executive Creative Director: What makes this magic on this team and our positioning in the market is how we chase denim and how we go to market, and also our fits. I mean, our fits are the best in the industry, and I'm extremely proud of what the team's able to deliver. However, we still have a lot of open-to-buy. We just did our denim testing, and the results came in.

Jay: What makes this magic in this.

On this team and our positioning in the market is how we chase denim and how we go to market and also our I mean, our fits are the best in the industry.

Jay: Extremely proud of what the team is able to deliver however, we still have a lot of open to buy.

Jen Foyle: However, we still have a lot of open to buy. We just did our denim testing, and the results came in. And again, it's a little bit more diversified than I think what other people are saying. We're seeing strength across a variety of fits, in women's in particular, and we are seeing leaner fits coming back into men's. The other thing that's happening in men's is bottoms are definitely trending for us. So other bottoms, pants and shorts, and I mentioned earlier, shorts are just beginning for that business. So a lot of new business to be had in this quarter, and hopefully we'll get that 70-degree weather.

Jay: We just hit our denim testing and the results came in and again, it's a little bit more diversified than I think.

Jennifer Foyle [President and Executive Creative Director: Again, it's a little bit more diversified than I think what other people are saying. We're seeing strength across a variety of fits in women's in particular, and we are seeing leaner fits coming back into men's. The other thing that's happening in men's is bottoms are definitely trending for us. Other bottoms, pants, and shorts. I mentioned earlier, shorts are just beginning for that business. A lot of more business to be had in this quarter, and hopefully we'll get that 70-degree weather. As I think about promotions for AE and Aerie, look, this is where we have to win, right? We have to manage our inventory. Good news is we're lean coming in with inventory. The teams don't have a lot of pressure there, but we have to compete at the same time.

Jay: What other people are saying, we're seeing strength across a variety of states in women's in particular, and we are seeing leaner fitts coming back in demand. The other thing thats happening in mens is bottoms are definitely trending for us. So other bottoms pants and shorts and I mentioned earlier shorts are just beginning for that business. So a lot of our business to be had in this.

Jennifer Foyle [President and Executive Creative Director: A lot of more business to be had in this quarter, and hopefully we'll get that 70-degree weather. As I think about promotions for AE and Aerie, look, this is where we have to win, right? We have to manage our inventory. Good news is we're lean coming in with inventory. The teams don't have a lot of pressure there, but we have to compete at the same time.

Quarter, and hopefully we will get that 70 degree weather.

Jen Foyle: As I think about promotions for AE and Aerie, look, this is where we have to win, right? We have to manage our inventory. The good news is we're lean coming in with inventory, so the teams don't have a lot of pressure there, but we have to compete at the same time. I do think that we could definitely balance out our assortments a little bit more with some opening price points so that we can compete in that value equation, but mixing that business, and we'll continue to work on that. That's what the team's working on as we speak.

Speaker Change: Think about promotions for AE and Aerie look.

This is where we have to win rate we have to manage our inventory. Good news is we're lean coming in with inventory.

Speaker Change: So the teams don't have a lot of pressure there, but we have to compete at the same time I do think that we could definitely balance out our assortments a little bit more with some opening price points. So that we can compete in that value.

Jennifer Foyle [President and Executive Creative Director: I do think that we could definitely balance out our assortments a little bit more with some opening price points so that we can compete in that value equation. Mixing that business, and we'll continue to work on that. That's what the team's working on as we speak. Again, because we're lean on inventory, we have open receipts, we can actually be nimble and manage the business well.

Speaker Change: <unk> and.

Mike Mathias: Mixing that business, and we'll continue to work on that. That's what the team's working on as we speak. Again, because we're lean on inventory, we have open receipts, we can actually be nimble and manage the business well.

Mixing that business and we'll continue to work on that that's what the teams are working on as we speak but again, because we are a lean on inventory. We have open receipts, we can actually be nimble and manage that.

Jen Foyle: But again, because we're lean on inventory, we have open receipts, we can actually be nimble and manage the business.

Yeah.

Adrienne Yih: Great, thank you very much. That's a lot.

Jennifer Foyle [President and Executive Creative Director: Great. Thank you very much. Best of luck.

Adrienne Yih: Great. Thank you very much. Best of luck.

Speaker Change: Great. Thank you very much that's what.

Operator: Thank you.

Adrienne Yih: Thank you.

Jennifer Foyle [President and Executive Creative Director: Thank you.

Speaker Change: Thank you our next call. Our next question is from Paul Lajoie with Cindy.

Operator: Our next question is from Paul Lejuez with Citi.

Paul Lejuez: Hey, thanks, guys. Just a couple quick ones. What's built in for Incentive Comp in F-25? If you could just remind us what F-24 was versus F-23, the impact for margins on Incentive Comp.

Paul Lejuez: Hey, thanks, guys. Curious, just a couple quick ones. What's built in for incentive comp in FY 25? And can you just remind us what FY 24 was versus 23, the impact from margins on incentive comp? And then, Offline, can you talk about the size of that business in dollars and what you expect for growth this year? And then, just curious if you canceled any inventory purchases for the back half. Thanks.

Speaker Change: Hey, Thanks, guys.

Speaker Change: Just a couple of quick ones whats built in for incentive comp.

Speaker Change: 25, but can you just remind us what that 24 was versus the.

Speaker Change: The impact of the margin on incentive comp and then offline can you talk about the size of that business and what you expect for growth. This year and then just curious if you cancel.

Mike Mathias: And then offline, can you talk about the size of that business in dollars and what you expect for growth this year? And then just curious if you canceled any inventory purchases from BackApp.

Inventory purchases for the back half.

Mike Mathias: Yeah, we talked in the past about, I need to mute Paul. As we talked about in the past, our incentive metric is aligned with everything we've talked about for this three-year plan, so EBIT on this guide, we'd assume very low to minimal incentive comp in 2025 off the 375 number. We've talked about in the past, you know, relative average, around $50 million. But that's, again, at $375,000, we would assume very little incentive compensation in this All right.

Mike Mathias: Yeah. Paul, on incentives, we've talked in the past about. You may need to mute, Paul. Our incentive metric is aligned with everything we've talked about for this three-year plan. EBIT, on this guide, we'd assume very low to minimal incentive comp in 2025 off a 375 number. We talked about in the past, you know, relative average around $50 million. That's, again, the 375, we would assume very little incentive compensation in this guide.

Speaker Change: Yes.

Speaker Change: As we've talked in the past about.

Speaker Change: Many of them.

Speaker Change: And then as we talked about the path our incentive metric is aligned with everything we've talked about for this three year plan. So EBIT.

On this guide, we'd assume very low to minimal incentive comp.

Speaker Change: In 2025 off of 375 number.

We've talked about in the past.

Speaker Change: Relative average around $50 million.

Speaker Change: But.

Speaker Change: The 375, we would assume very little incentive compensation in this guide.

Jennifer Foyle [President and Executive Creative Director: Offline.

Speaker Change: Topline.

Paul Lejuez: OFFLINE.

Operator: Thank you. Bye-bye.

Paul Lejuez: OFFLINE.

Speaker Change: Ballpark.

Mike Mathias: Look, we've done a lot of work, strategic work around the growth of the brands in the last several months. You know, we believe that penetration's still low. Customer awareness is very low. We've talked about Aerie in total being only around 55%, OFFLINE from an awareness perspective is next to nothing. Obviously, we've got a nice business across the categories within the sub-brands at Aerie to build. Aerie at $1.7 billion. We always talk about OFFLINE as a sub-brand being about a third of the business, around $600 million. So very small still. It's the fastest growing thing in the company as we speak. You know, set of categories, a lot of runway ahead of us. The TAM, total addressable market, is around, I think, 40-.

Jen Foyle: We've done a lot of strategic work around the growth of the brand in the last several months and we believe that penetration is still low, customer awareness is very low. We've talked about Aerie in total being only around 55% offline from an awareness perspective is next to nothing. Obviously, we've got a nice business across the categories within the sub-brand at Aerie to Billion 7. We always talk about offline as a sub-brand being about a third of the business around $600 million. It's a very small still. It's the fastest growing thing in the company as we speak, set of categories, a lot of runway ahead of us.

Speaker Change: The size of offline.

Speaker Change: But a lot of work strategic work around the growth of the brands in the last several months.

Speaker Change: And we believe that.

Speaker Change: Penetration is still low customer awareness is very low and you talked about aerie and total of being only around 55% offline from an awareness perspective is next to nothing.

Mike Mathias: Obviously, we've got a nice business across the categories within the sub-brands at Aerie to build. Aerie at $1.7 billion. We always talk about OFFLINE as a sub-brand being about a third of the business, around $600 million. So very small still. It's the fastest growing thing in the company as we speak. You know, set of categories, a lot of runway ahead of us. The TAM, total addressable market, is around, I think, 40-.

Speaker Change: Obviously, we've got a nice business.

Speaker Change: Across the categories within this within the sub brands and area to area 1 billion seven we always talk about offline as a sub brand being about a third of the business around $600 million, so very small still.

Speaker Change: Fastest growing staying in the company as we speak.

Speaker Change: Set of categories.

A lot of runway ahead of us.

Jay Schottenstein: And total adjustable market is around, I think, 40, 30, 30, 30, 40 billion. You know, small in the context of the company, a lot of opportunity for us in terms of product expansion, geographic expansion, building awareness. And as we talked about in the opening remarks, we're not going to stop or slow down the investments there. The best use of our cash right now is the return we think we can get. And think about the positioning, right? We're number two leggings business, and actually number three or four in the bra and the sports bra segment, and we've only just begun.

Speaker Change: <unk> total addressable market is around I think.

<unk> 40, 30, 30, 30 from $30 billion to $40 billion.

Jennifer Foyle [President and Executive Creative Director: $30 billion.

Mike Mathias: $30, $30, $30, $40 billion. You know, small in the context of the company. A lot of opportunity for us in terms of product expansion, geographic expansion, building awareness. As we talked about in the opening remarks, we're not gonna stop or slow down the investments there. Best use of our cash right now is the return we think we can get from the continued investment across the brands. Nothing bigger than OFFLINE at the moment.

Speaker Change: Small in the context of the company a lot of opportunity for us in terms of product expansion geographic expansion building awareness.

Speaker Change: And as we've talked about in the opening remarks, we're not going to stop.

Speaker Change: Sure.

Speaker Change: Slow down the investments there.

Speaker Change: Best use of our cash right now is the return we think we can get from.

The continued investment across the brands nothing nothing bigger than offline, a moment and think about the positioning right now.

Jennifer Foyle [President and Executive Creative Director: Think about the positioning, right? We're number 2 leggings business, and actually number 3 or 4 in the bra and the sports bra segment. We've only just begun. We haven't even marketed to this business. Lots to come here. The product is very well received, and the innovation is, like no other. Really proud of this business, and it continues to outpace the other businesses in our company.

Speaker Change: Number two leggings business and actually number three or four in Nebraska, and the sports Bra segment and we've only just begun we haven't even marketed to this business. So.

Mike Mathias: We haven't even marketed to this business, so lots to come here. The product is very well received, and the innovation is like no other. So really proud of this business, and it continues to outpace the other businesses in our thumb Got it.

Speaker Change: What's to come here.

Speaker Change: Our product is very well received and the innovation is like no other so.

Speaker Change: I'm really proud of this business and it continues to outpace the other businesses in our company.

Paul Lejuez: Got it. Any place you've adjusted inventory purchases for the back half?

Speaker Change: Got it and then thank you the adjustment the inventory purchases for the back half.

Mike Mathias: And then any place you've adjusted inventory purchases for the back half? All right, Paul, can you repeat that? You're coming through a little muffled. Inventory purchases in the back half, any adjustments that you've made? Yes, yeah, we've a lot of open to buy for Q3 still. Q4 is in work and development as we speak. So we have a lot of flexibility on the back half. We're looking at the trends and projections that we've laid out here for this guide and Jen and team working through adjustments to forward plans. And we have a lot of flexibility to do that.

Speaker Change: Okay.

Mike Mathias: Sorry, Paul, can you repeat that? You're coming through a little muffled.

Speaker Change: Sorry, Paul can you repeat that here coming through a little muffled.

Paul Lejuez: Inventory purchases for the back half, any adjustments that you've made?

Speaker Change: Inventory purchases for the back half and the adjustments that you've made.

Mike Mathias: Yes. Yeah. We've a lot of open to buy for Q3 still. Q4 is in the works, in development as we speak, so we've a lot of flexibility on the back half. We're looking at the product trends and projections that we've laid out here for this guide, and Jen and team working through adjustments to forward plans, and we have a lot of flexibility to do that still.

Speaker Change: Yes, yes.

Speaker Change: We have a lot of open to buy for Q3 still key for us and work in development as we speak so we have a lot of flexibility on the back half we're.

We're looking at.

Speaker Change: So jet trends and projections that we've laid out here for this guide an agenda team working through.

Adjustments to forward plans and we have a lot of flexibility to do that stuff.

Operator: Thanks.

Paul Lejuez: Thanks. Good luck.

Operator: Good luck.

Speaker Change: Thanks, Good luck.

Speaker Change: Yes.

Mike Mathias: Thank you.

Speaker Change: Thank you.

Dana Telsey: Our next question is...

Operator: Our next question is from Dana Telsey with Telsey Advisory Group.

Speaker Change: Our next question is from Dana Telsey with Telsey Advisory group.

Dana Telsey: Hi, good afternoon, everyone. Can you talk a little bit about the performance of digital and stores in the fourth quarter and how it's looking in first quarter to date and how you're planning to go forward? It is following up on remodels. I know that there was expected to be an acceleration in store remodels in 25. Is that still on track or what are you looking at for openings and remodels and how you're thinking about marketing spend this year?

Speaker 18: Hi. Good afternoon, everyone. Can you talk a little bit about the performance of digital and stores in Q4 and how it's looking in Q1 to date and how you're planning to go forward? Just following up on remodels, I know that there was expected to be an acceleration in store remodels in 2025. Is that still on track, or what are you looking at for openings and remodels, and how are you thinking about marketing spend this year? Thank you.

Dana Telsey: Hi. Good afternoon, everyone. Can you talk a little bit about the performance of digital and stores in Q4 and how it's looking in Q1 to date and how you're planning to go forward? Just following up on remodels, I know that there was expected to be an acceleration in store remodels in 2025. Is that still on track, or what are you looking at for openings and remodels, and how are you thinking about marketing spend this year? Thank you.

Dana Telsey: Hi, Good afternoon, everyone can you can you talk a little bit about the performance of digital and stores in the fourth quarter on how it's looking in first quarter to date and how you're planning to go forward and just following up on Remodels I know that there was expected to be an acceleration in store Remodels and 25 is that still on track.

Dana Telsey: Or what are you looking at for openings and Remodels and how you're thinking about marketing spend this year. Thank you.

Dana Telsey: Thank you. Yeah, we had growth for the fourth quarter, Dana, we had comp improvement across brands and channels, so both in digital and stores, digital ahead of stores within the plus three comp results. First quarter right now, digital is stronger than stores. Our traffic is still, relative to mall traffic, outpacing, even though traffic is down significantly in the mall. Traffic to digital is definitely healthier than in stores. And right now, on this mid-single-digit guide, digital's on the more positive side of that, with stores being down more than mid-single-digit. On remodels for the year, we talked about, we did, you know, 56 in 2024, seen nice results from those stores.

Mike Mathias: Yeah, we had growth for Q4, Dana. We had comp improvement across brands and channels, so both in digital and stores. Digital ahead of stores within the +3 comp results. Q1 right now, digital is stronger than stores. Our traffic is still relative to mall traffic outpacing, even though traffic is down significantly in the mall. Traffic to digital is definitely healthier than in stores. Right now on this mid-single digit guide, you know, digital's on the more positive side of that, with stores being down more than mid-single. On remodels for the year, we talked about we did, you know, 56 in 2024. Seen nice results from those stores.

Dana Telsey: Yes, we had growth for the fourth quarter, Dana with comp improvement across brands and channels. So both digital and stores digital ahead of stores within the three.

Dana Telsey: Plus III comp result.

Dana Telsey: First quarter right now digital is stronger than stores, our traffic is still relative to mall traffic outpacing, even though traffic is down significantly in the mall.

Dana Telsey: Traffic to digital is definitely healthier than in stores right now in the mid single digit guide.

Mike Mathias: Right now on this mid-single digit guide, you know, digital's on the more positive side of that, with stores being down more than mid-single. On remodels for the year, we talked about we did, you know, 56 in 2024. Seen nice results from those stores.

Dana Telsey: Digital's on.

Dana Telsey: The part more positive side of that.

With stores being down more than mid single.

Dana Telsey: On Remodels for the year and we talked about.

Dana Telsey: 56, and 2024 seen nice results from.

Dana Telsey: And those stores we.

Mike Mathias: We know we want to continue on this program to knock down the average ages of American Eagle fleet from 12 years to 7 years. We are planning to, still in our capital plans, do more this year, close to, probably 90 to 100, in that range, within the $300 million capital spend guide. For openings for Aerie and OFFLINE, around 35, which includes a mix of standalones and side-by-sides. Continuing to make those investments for future growth this year. Marketing spend. You know, within the earlier question around expense management, really coming into the year, we were really successful in keeping expenses down across SG&A other than advertising, really to fund additional marketing expense.

Dana Telsey: We know we want to continue on this program to knock down the average age of the American Eagle fleet from 12 years to 7 years. We are planning... Still on our capital plans to do more this year, closer probably $90 to $100 in that range within the $300 million capital spend guide. And then for openings for area and offline, around $35, which includes a mix of standalone and side-by-side. So, continuing to make those investments for future growth.

We know we want to continue on this program that knocked down the average age of the American Eagle fleet from 12 years to seven years.

Dana Telsey: We are planning.

Dana Telsey: Still on our capital plan is to do more this year closer probably 90 to 100 in that range.

Dana Telsey: Within the $300 million capital spend guide.

Dana Telsey: And then for openings for Aerie and offline around 35, which includes a mix of side by stand alone and side by sides.

Mike Mathias: Continuing to make those investments for future growth this year. Marketing spend. You know, within the earlier question around expense management, really coming into the year, we were really successful in keeping expenses down across SG&A other than advertising, really to fund additional marketing expense.

Dana Telsey: So continuing to make those investments for future growth in this year.

Mike Mathias: marketing spend. So, you know, within the earlier question around expense management, really coming into the year, we were really successful in keeping expenses down across ST&A, other than advertising, really to fund additional marketing expense. We've talked about getting a lot better in terms of the investments there, measuring those investments, continuing to invest in marketing for growth. We've got very specific acquisition and retention targets for our customer base. We don't want to slow that down either. So advertising in this guide is still similar to what we've planned. The rest of our expense dollars in SG&A is down to fund that investment.

Dana Telsey: Marketing spend so.

Dana Telsey: The earlier question around expense management really coming into the year we were.

Dana Telsey: Really successful in keeping expenses down across SG&A other than advertising really to fund additional marketing expense.

Mike Mathias: We've talked about getting a lot better in terms of the investments there, measuring those investments, continuing to invest in marketing for growth. We've got very specific acquisition and retention targets for our customer base. We don't wanna slow that down either. Advertising in this guide is still similar to what we've planned. The rest of our expense dollars in SG&A down to fund that investment. We have the opportunity to flex that still, so we're evaluating some elements of that spend. It is still. It's the one line that in an SG&A guide that is basically flat rate to last year. Advertising would deleverage within that on the year.

Dana Telsey: Talked about getting a lot better.

Dana Telsey: These are investments, they're measuring those investments continuing to.

Invest in marketing for growth.

Dana Telsey: Any specific acquisition and retention targets for our customer base, we don't want to slow that down either so advertising and this guide is still similar to what we planned what we've planned.

Mike Mathias: The rest of our expense dollars in SG&A down to fund that investment. We have the opportunity to flex that still, so we're evaluating some elements of that spend. It is still. It's the one line that in an SG&A guide that is basically flat rate to last year. Advertising would deleverage within that on the year.

Dana Telsey: The rest of our expense dollars in SG&A.

Dana Telsey: To fund that investment.

Mike Mathias: We have the opportunity to flex that still, so we're evaluating some elements of that spend. But it is still the one line in an SG&A guide that is basically flat rate to last year. Advertising would be leveraged within that on the end. I've got it.

We have the opportunity to flex that still sort of evaluating some elements of that spend.

Dana Telsey: But it is still the one line that had an SG&A guide that is basically flat rate to last year advertising with deleverage within that.

Dana Telsey: On the year.

Speaker 18: Got it. Just one follow-up on the warmer markets doing better. How much better does the warmer markets do? Jen, what are you seeing in terms of category performance that may be different in the warmer markets that is making you excited? Thank you.

Dana Telsey: Got it. Just one follow-up on the warmer markets doing better. How much better does the warmer markets do? Jen, what are you seeing in terms of category performance that may be different in the warmer markets that is making you excited? Thank you.

Got it and then just one follow up on the warmer markets doing better how much better is the warmer markets do and then what are you seeing in terms of category performance that may be different in the warmer markets that is making you excited thank you.

Jen Foyle: And then just one follow-up on the warmer markets doing better. How much better is the warmer markets do? And Jen, what are you seeing in terms of category performance that may be different in the warmer markets that is making you excited?

Jen Foyle: Thank you. Yeah, we're seeing, you know, just obviously the seasonal businesses check better in the warmer markets. We slightly penetrate higher, as I mentioned, in the cooler climates, Midwest and Northeast, slightly about 10 basis points. You know, it's still too early. We have a lot of checks and balances on this quarter, you know, with the shifts of spring break and Easter being out so late. It's very early to read, but, you know, the product that's checking, that's what we're responding to, right? And, of course, digital, you know, you see a little bit of a different demand on the digital channel, you know, less seasonal.

Jennifer Foyle [President and Executive Creative Director: Yeah. We're seeing, you know, just obviously the seasonal businesses check better in the warmer markets. We slightly penetrate higher, as I mentioned, in the cooler climates, Midwest and Northeast, slightly about 10 basis points. You know, it's still too early. We have a lot of checks and balances on this quarter, you know, with the shifts of spring break and Easter being out so late. It's very early to read, but you know, the product that's checking, that's what we're responding to, right? Of course, digital. You know, you see a little bit of a different demand on the digital channel. You know, it's less seasonal. When we're in the market, when I think about how we're reacting to this business, the teams were...

Dana Telsey: Yes, we are seeing just obviously the seasonal businesses check better in the warmer markets, we slightly penetrate higher as I mentioned in the cooler climate Midwest and northeast slightly about 10 basis points.

Dana Telsey: No.

Speaker Change: It's still too early we.

Dana Telsey: We have a lot of checks and balances on this quarter.

Dana Telsey: With the shifts of spring break and Easter being so late it's very early to read but.

Jennifer Foyle [President and Executive Creative Director: It's very early to read, but you know, the product that's checking, that's what we're responding to, right? Of course, digital. You know, you see a little bit of a different demand on the digital channel. You know, it's less seasonal. When we're in the market, when I think about how we're reacting to this business, the teams were...

Dana Telsey: The product that is checking that's what we're responding too right.

Dana Telsey: Of course digital you see a little bit of a different demand on the digital channel.

It's less seasonal.

Jen Foyle: So when we're in the market, when I think about how we're reacting to this business, the teams, you know, like I said, you definitely see some warmer, you know, trends happening in the warmer climates, shorts and tees, but it's too early to tell. And what we're doing is posturing our inventory, as I mentioned that earlier, so that we can be nimble. And the teams are chasing what is working early out. So a little early to tell here, but the team's reacting and responding.

Dana Telsey: We are in the market.

When I think about <unk>.

Dana Telsey: How we're reacting to this business.

Dana Telsey: The teams.

Jennifer Foyle [President and Executive Creative Director: You know, like I said, you definitely see some warmer, you know, trends happening in the warmer climate, shorts and tees, but it's too early to tell. What we're doing is posturing our inventory, as I mentioned that earlier, so that we can be nimble, and the teams are chasing what is working early out. A little early to tell here, but the team's reacting and responding.

Dana Telsey: You definitely see some warmer trends happening in the warmer climate shorts and Tees, but it's too early to tell and what we're doing is posturing our inventory I didn't mention that earlier, so that we can be nimble and the teams are chasing what is working early out so.

Dana Telsey: It's a little early to tell here.

But the team's reacting and responding.

Operator: Thank you.

Speaker 18: Thank you.

Dana Telsey: Thank you.

Marni Shapiro: Our next question is from Marni Shapiro with the Retail. Hey, guys. Thank you.

Operator: Our next question is from Marni Shapiro with The Retail Tracker.

Speaker Change: Our next question is from Marni Shapiro with the retail tracker.

Operator: Hey, guys. Thank you. Jen, the dresses and the fashion at Eagle really look absolutely fantastic. I just have a couple quick housekeeping questions, and then Jay, I have a question for you. Did you guys talk about the penetration of your loyalty program to your business? You talked about store openings and closings and remodels. Did you provide like a square footage number for the full year? Are those remodels the same sizes, bigger, smaller? What's the full year square footage? Then I have a big picture question for you, Jay. You know, I'm curious. You've been through a lot of cycles, obviously, before. I'm curious what you think about the consumer out there. Do you think that they're slowing down? Is it really the weather?

Marni Shapiro: Hey, guys. Thank you. Jen, the dresses and the fashion at Eagle really look absolutely fantastic. I just have a couple quick housekeeping questions, and then Jay, I have a question for you. Did you guys talk about the penetration of your loyalty program to your business? You talked about store openings and closings and remodels.

Marni Shapiro: Hey, guys. Thank you and then the dresses and fashion at Eagle really look absolutely fantastic.

Marni Shapiro: And, Jen, the dresses and the fashion at Eagle really look absolutely fantastic. Just a couple of quick housekeeping questions. And, Jay, I have a question for you. But did you guys talk about the penetration of your loyalty program to your business? And you talked about store openings and closings and remodels. Did you provide like a square footage number for the full year? Are those remodels the same sizes, bigger, smaller? So what's the full year square footage?

Speaker Change: Just a couple of quick.

Speaker Change: Housekeeping questions and then Jay I have a question for you, but did you guys talk about the penetration of your loyalty program to your business and you talked about store openings and closings and Remodels did you provide like a square footage number for the full year are those remodels same sizes bigger smaller so what's the full year.

Marni Shapiro: Did you provide like a square footage number for the full year? Are those remodels the same sizes, bigger, smaller? What's the full year square footage? Then I have a big picture question for you, Jay. You know, I'm curious. You've been through a lot of cycles, obviously, before. I'm curious what you think about the consumer out there. Do you think that they're slowing down? Is it really the weather?

Speaker Change: Your square footage.

Speaker Change: And then I.

Jay Schottenstein: I have a big picture question for you, Jay. I'm curious, you've been through a lot of cycles obviously before. I'm curious what you think about the consumer out there. Do you think that they're slowing down? Is it really the weather? Do you think that they also bought a lot over holiday and they're taking a breather? Do you think the news is actually having an impact on them? I've read some articles. I'm sure you've seen the same ones that the consumer today actually knows or is trying to figure out what a tariff is where two months ago they didn't even ask the question.

Speaker Change: Have a big picture question for you Jay.

Speaker Change: <unk>.

Speaker Change: I'm curious you've been through a lot of cycles, obviously before I'm curious what you think about the consumer out there do you think that they're slowing down is it really the weather do you think that they also bought a lot over holiday and Theyre, taking a breather or do you think the news is actually have an impact on them you know I've read some articles.

Operator: Do you think that they also bought a lot over holiday and they're taking a breather? Do you think the news is actually having an impact on them? You know, I've read some articles. I'm sure you've seen the same ones that the consumer today actually knows or is trying to figure out what a tariff is, where two months ago, they didn't even ask the question. I'm curious what your big picture thoughts are on the consumer.

Marni Shapiro: Do you think that they also bought a lot over holiday and they're taking a breather? Do you think the news is actually having an impact on them? You know, I've read some articles. I'm sure you've seen the same ones that the consumer today actually knows or is trying to figure out what a tariff is, where two months ago, they didn't even ask the question. I'm curious what your big picture thoughts are on the consumer.

Speaker Change: I'm sure you've seen the same ones at the consumer today actually knows or is trying to figure out what the tariff is where two months ago. They didnt even ask the question. So I'm curious what your big picture thoughts are on the consumer.

Jay Schottenstein: So I'm curious what your big picture thoughts are on the consumer. My picture thoughts are very simple. They have the fear of the unknown. Not just here. Not just inflation. You see the government cutting people off, they don't know how that's going to affect them. You see programs being cut, they don't know how that's going to affect them. They just don't know how it's going to affect them, and when people don't know what they don't know, you know, they get, you know, they get very conservative. I think the vast majority of Americans aren't going to be affected one way or the other, but for right now, until, you know, there's so much news on the TV, it makes everyone a little nervous.

Mike Mathias: Okay. My big picture thoughts are very simple. They have the fear of the unknown. Not just tariffs, not just inflation. You know, you see the government cutting people off. They don't know how that's gonna affect them. They see programs being cut. They don't know how that's gonna affect them. They just don't know how it's gonna affect them. When people don't know what they don't know, they, you know, they get, you know, they get very conservative. I think the vast majority of Americans aren't gonna be affected one way or the other. But for right now, until you know, there's so much news on the TV, it makes everyone a little nervous. That's what I think we're going through. I also remember 8 years ago, when we went through this before, you know, similar issues.

Jay Schottenstein: Okay. My big picture thoughts are very simple. They have the fear of the unknown. Not just tariffs, not just inflation. You know, you see the government cutting people off. They don't know how that's gonna affect them. They see programs being cut. They don't know how that's gonna affect them. They just don't know how it's gonna affect them. When people don't know what they don't know, they, you know, they get, you know, they get very conservative.

Speaker Change: Okay. My Big picture thoughts are very simple.

Speaker Change: That's fair.

No.

Speaker Change: Not just tariffs.

Just inflation.

What do you see the government cutting people off they don't know if that's going to affect them.

Speaker Change: Programs being cut they don't know, how that's going to affect them.

Speaker Change: Just don't know, how it's going to affect it and when people don't know what they do.

No.

Speaker Change: They get very conservative.

Jay Schottenstein: I think the vast majority of Americans aren't gonna be affected one way or the other. But for right now, until you know, there's so much news on the TV, it makes everyone a little nervous. That's what I think we're going through. I also remember 8 years ago, when we went through this before, you know, similar issues.

Speaker Change: I think the vast majority of merchants are going to affect it one way or the other but for right now until you know theres so much news on the.

Speaker Change: TV it makes everyone a little nervous and that's where I think we are going through.

Jay Schottenstein: And that's what I think we're going through. I also remember eight years ago when we went through this before on similar issues. These were up and down. The first six months were tough, and then things got back to normal. And then the country was, you know, everything was going very well until the pandemic. You know, I don't know what to get excited about right now or not get excited about.

Speaker Change: I also remember eight years ago.

Speaker Change: We went through this before similar issues.

Operator: Mm-hmm.

Mike Mathias: Things were up and down. The first six months were tough, and then things got back to normal. Then the country was, you know, everything was going very well until the pandemic. You know, I don't know what to get excited about right now or not get excited about. I just think you have to let things settle in first before we figure out what to do exactly.

Jay Schottenstein: Things were up and down. The first six months were tough, and then things got back to normal. Then the country was, you know, everything was going very well until the pandemic. You know, I don't know what to get excited about right now or not get excited about. I just think you have to let things settle in first before we figure out what to do exactly.

Speaker Change: We were up and down the first six months worked up and then things got back to normal and then.

Speaker Change: And then the country was.

Speaker Change: It was everything was going very well.

Speaker Change: Yeah, Mike.

So.

Speaker Change: I don't know what to get excited about right now or not get excited about.

Mike Mathias: I just think we have to let things settle in first before we figure out what to do exactly. On your loyalty penetration question, Marni, it's 75%, and that's grown over recent years. We know that, you know, we get customers into that loyalty program, we get them shopping at cross-brands in the American Eagle area, and offline, they're the most profitable customers. They are, they have the highest lifetime value, so we have very specific strategies on growing that loyalty penetration in cross-brand shoppers. That's why our customer file has never been bigger, over 24 million at the moment, and, again, it's very specific retention, or acquisition, and then retention strategies against that.

Speaker Change: Being settled in first before we figure out what to do exactly.

Operator: Yeah. Thank you.

Marni Shapiro: Yeah. Thank you.

Speaker Change: Yes.

Speaker Change: Thank you.

Mike Mathias: Okay. On your loyalty penetration question, Marni, 75%, and that's grown over recent years.

Mike Mathias: Okay. On your loyalty penetration question, Marni, 75%, and that's grown over recent years. We know that, you know, we get customers into that loyalty program. We get them shopping across brands in American Eagle, Aerie, and OFFLINE. They're the most profitable customers. They are, have the highest lifetime value.

Okay great.

Speaker Change: On your loyalty penetration question morning, 75% that's grown over recent years.

Operator: Mm-hmm. Mm-hmm.

Mike Mathias: We know that, you know, we get customers into that loyalty program. We get them shopping across brands in American Eagle, Aerie, and OFFLINE. They're the most profitable customers. They are, have the highest lifetime value. We have very specific strategies on growing that loyalty penetration and cross-brand shoppers. It's why our customer file has never been bigger, over 24 million at the moment. Again, it's very specific retention or acquisition and then retention strategies against that.

Speaker Change: We know that.

Speaker Change: We give customers into that loyalty program, we get their shopping across brands American Eagle area in offline to the most profitable customers. They are.

The highest lifetime values that we have a very specific strategies on growing that loyalty penetration and cross and cross brand shoppers, it's why our customer file never been bigger over $24 million at the moment and again, its very specific retention or acquisition and then reduction strategies against that.

Mike Mathias: We have very specific strategies on growing that loyalty penetration and cross-brand shoppers. It's why our customer file has never been bigger, over 24 million at the moment. Again, it's very specific retention or acquisition and then retention strategies against that. Square footage with the Aerie OFFLINE openings are around 35. AE still being net closure, maybe 15 to 20 in our plans, but that's under evaluation at the moment as well. You'd have square footage netting out at around a +1 to 2.

Operator: Mm-hmm.

Mike Mathias: Square footage with the Aerie offline openings around 35, AE still being net closure, maybe 15 to 20 in our plans, but that's under evaluation at the moment as well. You'd have square footage netting out at around a plus 1%.

Mike Mathias: Square footage with the Aerie OFFLINE openings are around 35. AE still being net closure, maybe 15 to 20 in our plans, but that's under evaluation at the moment as well. You'd have square footage netting out at around a +1 to 2.

Speaker Change: Square footage with the aerie offline openings around 35 still being net closure.

Maybe 15 to 20 in our plans but.

Speaker Change: Under evaluation at the moment as well that square footage netting out at around a plus one to two.

Operator: Thank you.

Marni Shapiro: Thank you.

Speaker Change: Thank you.

Operator: Thank you for the direct comments. Thank you.

Jennifer Foyle [President and Executive Creative Director: Thank you for the dress comment.

Speaker Change: Thank you for the dress comment.

Yes.

Operator: Our next question is from Rick Patel with Raymond James.

Our next question is from Rick Patel with Raymond James.

Speaker 19: Thank you. Good afternoon. Can you talk about the opportunity around basket size? You're making progress on tops, and it sounds like you're leaning more into entry price point products as well. Just curious if you see basket size as being a bigger contributor to the business this year.

Rick Patel: Thank you. Good afternoon. Can you talk about the opportunity around basket size? You're making progress on tops, and it sounds like you're leaning more into entry price point products as well. Just curious if you see basket size as being a bigger contributor to the business this year.

Rick Patel: Thank you good afternoon.

Operator: Good afternoon. Can you talk about the opportunity around basket size? You're making progress on tops. It sounds like you're leaning more into entry price point products as well.

Speaker Change: Can you talk about the opportunity around basket size Youre, making progress on top of it sounds like you are leaning more into entry price point products as well. So just curious if you see basket size as being a bigger contributor to the business this year.

Jen Foyle: So just curious if you see basket size as being a bigger contributor to the business Yeah, actually, you know, we've been holding our own in traffic against, you know, some of the data we've been seeing, and actually, the basket size is holding its own right now, and it's a focus of ours, because in this, you know, environment, we have to make sure that when she comes in or he comes in, that we're fulfilling their needs, so big focus on basket size, and like I said, the little uptick there on those numbers with traffic being, you know, some weeks slightly down to slightly negative and some weeks being them all, and it's very, right now, it's a little erratic coming out of the gate in February, so I think what the teams have been doing is, you know, what our teams have been doing is making sure that our customers are satisfied when they come in, and actually, our basket size is actually slightly up right now, so it's a focus of ours as we build out this year, and obviously, managing the promotions, and we're finding new ways to dress her and to dress him, new occasions, dressing occasions, and obviously, with the growth and offline, and some of the, you know, we're very excited about that business that we think that's not on business for all the brands, you know, as you know, we share a website, and we're definitely talking to her across brands, Aerie offline, and obviously, AE Women, so lots of opportunity there, Mike just talked about the loyalty program, and there's definitely opportunity to invite all of our customers, that 24 million into all of the brands, You can also help us with the outlook for marketing.

Jennifer Foyle [President and Executive Creative Director: Yeah. Actually, you know, we've been holding our own in traffic against, you know, some of the data we've been seeing. Actually, the basket size is holding its own right now. It's a focus of ours because in this, you know, environment, we have to make sure that when she comes in or he comes in, that we're fulfilling their needs. Big focus on basket size. Like I said, the little uptick there on those numbers with traffic being, you know, some weeks slightly down to slightly negative, and some weeks beating them all. Right now it's a little erratic coming out of the gate in February.

Rick Patel: Yes actually.

Rick Patel: We've been holding our own in traffic against.

Rick Patel: Some of the data we've been seeing and actually the basket size is holding its own right now I mean, it's a focus of ours because in this environment, we have to make sure that when she comes in or he comes in that we are fulfilling their needs. So big focus on basket size and like I said.

Jennifer Foyle [President and Executive Creative Director: Big focus on basket size. Like I said, the little uptick there on those numbers with traffic being, you know, some weeks slightly down to slightly negative, and some weeks beating them all. Right now it's a little erratic coming out of the gate in February.

Rick Patel: Little uptick there on those numbers with traffic being.

Rick Patel: Assembly slightly down to slightly negative in.

Some weeks being the mall, it's very right now, it's a little erratic coming out of the gate in February So I think what the teams have been doing is so.

Jennifer Foyle [President and Executive Creative Director: I think what our teams have been doing is making sure that our customers are satisfied when they come in. You know, actually, our basket size is actually slightly up right now. It's a focus of ours as we build out this year. Obviously managing the promotions. We're finding new ways to dress her and to dress him, new occasions, dressing occasions. Obviously with the growth in OFFLINE, and some of the. You know, we're very excited about that business that we think that's a nonstop business for all the brands. You know? As you know, we share a website, and we're definitely talking to her across brands, Aerie, OFFLINE, and obviously AE women. Lots of opportunity there.

Rick Patel: You know what our teams have been doing is making sure that our customer satisfied when they come in and actually our basket size is actually slightly up right. Now so it's a focus of ours as we build out this year and obviously managing the promotions.

Rick Patel: And we're finding new ways to address her and to address new occasions dressing occasions, and obviously with the growth in offline.

Jennifer Foyle [President and Executive Creative Director: You know, we're very excited about that business that we think that's a nonstop business for all the brands. You know? As you know, we share a website, and we're definitely talking to her across brands, Aerie, OFFLINE, and obviously AE women. Lots of opportunity there. Mike just talked about the loyalty program, and there's definitely opportunity to invite all of our customers, that 24 million, into all of our brands.

Rick Patel: And some of the well.

Rick Patel: Very excited about that business that we think thats not on business for all the brands you know as you know we share our website and we're definitely talking to her across brands.

Rick Patel: Aerie offline and obviously a women so lots of opportunity there Mike just talked about the loyalty program and there is definitely opportunity to invite all of our customers that $24 million into all of the brands.

Jennifer Foyle [President and Executive Creative Director: Mike just talked about the loyalty program, and there's definitely opportunity to invite all of our customers, that 24 million, into all of our brands.

Speaker 19: Can you also help us with the outlook for marketing? It sounds like you're going to continue investing here. I think you touched on a new campaign in the back half. Curious if there's anything else to call out in terms of timing that could be a swing factor for margins. If you don't see a good ROI on this marketing, do you see it as an opportunity to pull back and protect your margins?

Rick Patel: Can you also help us with the outlook for marketing? It sounds like you're going to continue investing here. I think you touched on a new campaign in the back half. Curious if there's anything else to call out in terms of timing that could be a swing factor for margins. If you don't see a good ROI on this marketing, do you see it as an opportunity to pull back and protect your margins?

Speaker Change: Also help us with the outlook for marketing it sounds like Youre going to continue investing here I think you've touched on a new campaign in the back half. So curious if there's anything else to call out in terms of timing that could be a swing factor for margins and if you don't see a good ROI on this marketing.

Mike Mathias: It sounds like you're going to continue investing here. I think you touched on a new campaign in the back half. So, curious if there's anything else to call out in terms of timing that could be a swing factor for margins. And if you don't see a good ROI on this marketing, do you see it as an opportunity to pull back and protect your margins? Yeah, right now we're playing up in the first half. So first quarter, second quarter, plans in place. Some of that's strategic based on a lot of learnings around some new analytics tools of sort of effectiveness of the timing of spend to get benefits into back to school and holiday.

Rick Patel: See as an opportunity to pull back and protect your margins.

Mike Mathias: Yeah. Right now we're planned up in the first half. Q1, Q2 plans in place. Some of that's strategic based on a lot of learnings around some new analytics tools of sort of effectiveness of the timing of spend to get benefits into back to school and holiday. Dollars in the back half were relatively flat. We increased investments last year in the back half. It's a flex line item for us as we get into the back half of the year still. Still working through nailing down specific plans there with Jen and the creative teams. Up in the first half, funded with SG&A dollars being flat, all other expense lines, and funding advertising in the first half. Flat in the back half for the moment with some, you know, plans to get nailed down still.

Rick Patel: Yes, right now we are planned up in the first half so first quarter second quarter of plans in place some of that strategic based on a lot of learnings around some new analytics tools sort of effectiveness of the timing of the spend to get benefits into back to school and holiday.

Mike Mathias: Dollars in the back half are relatively flat. We increased investments last year in the back half. So it's a flex line item for us as we get into the back half of the year still. Still working through nailing down specific plans. There with Jen and the creative teams. So up in the first half, funded with SG&A dollars being flat, all other expense lines and funding advertising in the first half. flat in the back half for the moment with plan to get nailed down.

Rick Patel: In the back half or relatively flat, we increased investments last year in the back half so.

Rick Patel: The flex line item for us as we get into the back half of the year still still working through nailing down a specific plans.

Mike Mathias: Still working through nailing down specific plans there with Jen and the creative teams. Up in the first half, funded with SG&A dollars being flat, all other expense lines, and funding advertising in the first half. Flat in the back half for the moment with some, you know, plans to get nailed down still.

Rick Patel: There was with Jen and the creative teams so up in the first half funded with SG&A dollars being flat all other expense lines and funding advertising in the first half.

Rick Patel: Flat in the back half for the moment with.

Some plans to get nailed down.

Operator: Thanks very much. Thanks.

Speaker 19: Thanks very much.

Rick Patel: Thanks very much.

Thanks very much.

Jennifer Foyle [President and Executive Creative Director: Thank you.

Rick Patel: Thank you.

Operator: Our next question is from Simeon Siegel with BMO Capital Markets.

Speaker Change: Our next question is from Simeon Siegel with BMO capital markets.

Speaker 20: Thanks. Afternoon, everyone. First off, sorry if I missed it. Did you say how the different brands are looking in your guided revenue declines for the year? Then Jen, when thinking about the market share versus the market growth dynamics within intimates, you were referring to, any thoughts to what or when revitalizes the intimates broader market growth? Then lastly, a bit peripheral, but it looks like you showed this uptick in the international licensed store count. At this point, how large are international license revenues and the profits? I guess, what's the right way to think about them going forward? Thanks, guys.

Simeon Siegel: Thanks. Afternoon, everyone. First off, sorry if I missed it. Did you say how the different brands are looking in your guided revenue declines for the year? Then Jen, when thinking about the market share versus the market growth dynamics within intimates, you were referring to, any thoughts to what or when revitalizes the intimates broader market growth?

Operator: Afternoon, everyone. First off, sorry if I missed it, did you say how the different brands are looking in your guided revenue declines for the year?

Thanks afternoon, everyone.

Speaker Change: First I'm sorry, if I missed it did you say how the different brands are looking in your guided revenue declines for the year and then Jen when thinking about the market share versus the market growth dynamics within intimates youre, referring to any thoughts to water when revitalized the intimates broader market growth and then lastly, a bit peripheral but it looks like you showed a nice uptick.

Jen Foyle: And then, Jen, when thinking about the market share versus the market growth dynamics within Intimates you were referring to, any thoughts to what or when revitalizes the Intimates' broader market growth? And then lastly, a bit peripheral, but it looks like you showed an uptick in the international license store count. At this point, how large are international license revenues and the profits? And I guess what's the right way to think about them going forward? Thanks, guys.

Simeon Siegel: Then lastly, a bit peripheral, but it looks like you showed this uptick in the international licensed store count. At this point, how large are international license revenues and the profits? I guess, what's the right way to think about them going forward? Thanks, guys.

Speaker Change: In the international licensed store count at this point, how larger international license revenues and the profits and I guess, what's the right way to think about them going forward. Thanks, guys.

Mike Mathias: Yeah. I think it's in the guide, Simeon. The brands are similar to what we saw in 2024. The current trends and trajectory, with, you know, AE a little bit on the negative side of the average, Aerie on the positive side. If we're down mid-single, you could assume Aerie's are better than that. AE down a little more than that. Similar, I mean, if you think about 2024, we had a 4 comp. Aerie was +5, AE was +3. I think we're looking at similar things at the moment, with more to come once we see how trends continue. A lot to absorb in current performance and see how things trend from here.

Speaker Change: Yes.

Speaker Change: Okay.

Mike Mathias: Yeah, I think for it's been the guys to me and the brands are similar. We saw in 24 the current trends and trajectory with, you know. A.E. a little bit on the negative side of the average, A.R.R.I. on the positive side. So for down mid-single, you could assume A.R.R.I.'s was better than that. A.E. down a little more than that. Similar, I mean, if you think about 2024, we had a four comp, ARE was a plus five, AE was a plus. So I think we're looking at similar things at the moment with more to come once we see how trends continue.

Speaker Change: Yes, I think it's been the guide and the brands are similar to we saw in 'twenty four.

Speaker Change: Current trends and trajectory.

Speaker Change: With.

Speaker Change: A little bit on the negative side of the average aerie on the positive side. So predominant single you could assume areas are better than that.

Speaker Change: <unk> down a little more than that.

So we're I mean, if you think about 'twenty 'twenty four we had a four comp area was a plus five plus three.

Mike Mathias: Aerie was +5, AE was +3. I think we're looking at similar things at the moment, with more to come once we see how trends continue. A lot to absorb in current performance and see how things trend from here.

We're looking at similar things at the moment with more to come once we see how trends to continue a lot to be lots of lots of absorbing current performance and see how things trended from here yeah.

Mike Mathias: A lot to be, a lot to absorb in current performance and see how things trend from here.

Jennifer Foyle [President and Executive Creative Director: Yeah. Regarding market share, obviously in this environment right now, it is a market share play, and I'm pleased to say that we certainly stack up against our core competency businesses. Denim, we're holding our rank. As I think about OFFLINE, we've grown in the leggings market share. In a declining market in Aerie, intimates has been declining. We've certainly held our own, and we've grown in bras and in undies, slightly, not huge. You know, this will be a year of, you know, us competing and getting the market share that we deserve.

Jen Foyle: Yeah, regarding market share, obviously in this environment right now, it is a market share play. And I'm pleased to say that we certainly stack against our core competency businesses, Denim. We're holding our rank. As I think about offline, we've grown in the lagging market share and then in a declining market in Aerie, Intimates has been declining. We've certainly held our own and we've grown in bras and in undies, slightly, not huge. But this will be a year of us competing and getting the market share that we deserve. On the license business, I mean, over the last several years, we've been pretty consistent with around the mid-30s revenue.

Speaker Change: Adding market share obviously in this environment right now it is a market share play and I'm pleased to say that we certainly stacked against our core competency businesses denim, we're holding our rank.

Speaker Change: As I think of that offline and these grown.

Speaker Change: In the lagging market share and then in a declining market in Aerie Internet has been declining we certainly held our own and we've grown in bras and undies slightly not huge but this will be a year of.

Speaker Change: US competing in and getting the market share that we deserve.

Mike Mathias: On the license business, Simeon, over the last several years, we've been pretty consistent with around the mid-thirties revenue from those businesses. Some of our bigger partners in the Middle East with Alshaya and Azadea, obviously a lot of disruption over the last couple of years, but their businesses have stabilized and come back a bit. You can assume something similar. We're assessing some things around kind of future international growth. The majority of our international revenue, as you know, is from Canada and Mexico. It's over 10% of our total revenue.

Speaker Change: On the license business.

Speaker Change: Over the last several years, we've been pretty consistent around the mid Thirty's revenue.

Mike Mathias: from those businesses. Some of our biggest partners in the Middle East with Alshaya and Vox, obviously a lot of disruption over the last couple of years, but their businesses are stabilizing to come back a bit. But you can assume something similar.

Speaker Change: From those businesses some of our biggest partners in the middle East with outside box, obviously, a lot of disruption over the last couple of years, but their businesses are stabilizing to come back a bit but you can assume something similar.

Mike Mathias: You can assume something similar. We're assessing some things around kind of future international growth. The majority of our international revenue, as you know, is from Canada and Mexico. It's over 10% of our total revenue.

Mike Mathias: We're assessing some things around kind of future international growth. The majority of our international revenue, as you know, is from Canada and Mexico. It's over 10% of our total revenue. Jay is good there right now. It's amazing. Yeah, it's sort of amazing to Jay's point. He would have anything going on in the Middle East that has bounced back, but pretty consistent to that. And Mexico, I'm talking about Mexico. Oh, Mexico too. Mexico. Warm weather, that's a good sign. Yeah.

Speaker Change: Testing some things around kind of future international growth the majority of our international revenues from Canada and Mexico.

Speaker Change: Over 10% of our total revenue.

Speaker 19: It's good there right now. It's amazing. It's good.

Simeon Siegel: It's good there right now. It's amazing. It's good.

And stickier right estimations.

Mike Mathias: Yeah. It's sort of amazing, to Jay's point, that even what has been going on in the Middle East, it has bounced back, but pretty consistent to that.

Speaker Change: It's sort of amazing to Jay's point, it would have been going on in the middle East that has bounced back but pretty consistent to that in Mexico on Starbucks, Mexico warm, whether that's a good sign so.

Speaker 19: Mexico, I'm talking about Mexico.

Simeon Siegel: Mexico, I'm talking about Mexico.

Mike Mathias: Oh, Mexico too. Yeah.

Jennifer Foyle [President and Executive Creative Director: Warm weather. That's a good sign.

Mike Mathias: Yeah. Nothing to think about in terms of anything significantly different from the license piece of that with what we have talked about in the last several years is the great growth, to Jay's point, coming out of Mexico. We still have a lot of room there. You know, it's been a nice impact to the AE brand over the last several years. We've kind of only gotten started there in OFFLINE. It's very small penetration to the total for those two brands in Mexico with plans to grow those brands and markets still.

Mike Mathias: Nothing to think about in terms of anything significantly different from the license piece of that. What we have talked about in the last several years is the great growth to Jay's point coming out of Mexico. We still have a lot of room there. It's been a nice impact to the AE brand over the last several years. We've kind of only gotten started with it in offline, so it's very small penetration to the total. For those two brands in Mexico, it plans to grow those brands in marketing.

Nothing to think about in terms of anything significantly different from the license piece of that with what we have talked about in the last several years as the great growth to Jay's point coming out of Mexico, We still have a lot of room there.

Speaker Change: Yes, it's been a nice.

Speaker Change: Impact of the AE brand over the last several years, we've kind of only getting started with air and offline.

Small penetration to the total for those two brands in Mexico with plans.

Speaker Change: Those brands in the market.

Operator: Okay, great.

Jennifer Foyle [President and Executive Creative Director: Great.

Speaker 20: Okay, great. I think there were some in Hong Kong that were converted. Just, is there a change or an approach to looking more to licensing internationally, or was that a one-off?

Simeon Siegel: Okay, great. I think there were some in Hong Kong that were converted. Just, is there a change or an approach to looking more to licensing internationally, or was that a one-off?

Speaker Change: Okay, Great I think it was coming up I was just I think there was a in Hong Kong that were converted so just because.

Mike Mathias: I think there were some in Hong Kong that were converted, so is there a change or an approach to looking more to licensing internationally, or was that a one-off? Yeah, we shifted that business from an own model to a licensed model in the back path. That was, I think, a strategic move for profitability purposes and just to have a partner in the market. Yeah, our own markets that are really, at this point, are Canada and Mexico now. So, growth in the future in other markets would be more through partnerships in one way or the other is our strategy.

Speaker Change: Is there not a change or an approach to looking more to licensing internationally or was that a one off.

Mike Mathias: Yeah, we shifted that business from an owned model to a licensed model in the back half. That was, you know, I think a strategic move, for profitability purposes and just to have a partner in the market. Yeah, our own markets that are really at this point are Canada and Mexico now. Growth in the future in other markets would be more through partnerships in one way or the other is our strategic thinking. Yes.

Yes, we shifted that business from an owned model to a license model in the back half that was I think a strategic move for profitability purposes, and just to have a partner in the market.

Speaker Change: Yeah, our own markets.

Speaker Change: Really at this point are Canada, and Mexico now so growth in the future in other markets would be more through partnerships in one way or the other is our strategic thinking yes.

David Brown: Sounds great. All right. Thanks, guys. Best of luck for the year.

Simeon Siegel: Sounds great. All right. Thanks, guys. Best of luck for the year.

Speaker Change: That's great Alright, Thanks, guys best of luck for the year.

Operator: Alright, thanks guys. Best of luck for the year.

Operator: Thank you.

Jennifer Foyle [President and Executive Creative Director: Thank you.

Operator: We have time for one more question. Thank you. Our last. Thanks so much.

Speaker Change: Thank you we have time for one more question.

David Brown: We have time for one more question.

Jennifer Foyle [President and Executive Creative Director: We have time for one more question.

Operator: Thank you. Our last question is from Alex Straton with Morgan Stanley.

Speaker Change: Thank you our last question is from Alex Kramm with Morgan Stanley.

Speaker Change: Okay.

Speaker 21: Thanks so much. Maybe for Jen, just you mentioned a number of top-line initiatives that should build throughout the year and enable that post Q1 sales improvement. You mentioned a number of things, so I just wanted to understand how you think about them, maybe in terms of buckets or which are the top ones. Just a quick follow-up on the tariff response. I think you said you're moving China sourcing exposure pretty materially into the back half. I'm just curious, where are you going or where are you shifting that? Thanks a lot.

Alex Straton: Thanks so much. Maybe for Jen, just you mentioned a number of top-line initiatives that should build throughout the year and enable that post Q1 sales improvement. You mentioned a number of things, so I just wanted to understand how you think about them, maybe in terms of buckets or which are the top ones. Just a quick follow-up on the tariff response. I think you said you're moving China sourcing exposure pretty materially into the back half. I'm just curious, where are you going or where are you shifting that? Thanks a lot.

Speaker Change: Thanks, So much I'm, maybe for John just you mentioned a number of top line initiatives that should build throughout the year and enable that post first quarter sales improvement you mentioned a number of things. So I just want to understand how you think about that maybe in terms of buckets or which are the top ones and then just a quick follow up on the tariff response I think.

Jen Foyle: Maybe for Jen, you mentioned a number of top-line initiatives that should build throughout the year and enable that post-first-quarter sales improvement. You mentioned a number of things, so I just wanted to understand how you think about them, maybe in terms of buckets or which are the top ones. And then just a quick follow-up on the tariff response. I think you said you're moving China sourcing exposure pretty materially into the back half. I'm just curious, where are you going or where are you shifting that? Thanks a lot. Sure. First and foremost, coming out of Q4, we had strong results.

Speaker Change: You said you're moving.

Speaker Change: China sourcing exposure pretty materially into the back half I'm, just curious where are you going or where are you shifting that thanks a lot.

Jennifer Foyle [President and Executive Creative Director: Sure. First and foremost, coming out of Q4, you know, we had strong results, and going into Q1, we had some inventory opportunities and some good news and some bad news, right? Going into the quarter, we definitely had some inventory outages, but it allows us to be nimble. We are chasing denim, you know, in women's in particular, after a strong Q4 comp. There has been some product misses that we are acknowledging, and most of it is due to inventory. Again, we needed some inventory here in some key categories in Aerie in particular, and we're seeing just some wins in some businesses that we could have had more of. For instance, in Aerie, soft dressing, sleepwear has been actually across all categories.

Speaker Change: Sure first and foremost coming out of Q4, we had strong results.

Jen Foyle: And going into Q1, we had some inventory opportunities. And some good news and some bad news, right, going into the quarter. We definitely had some inventory outages, but it allows us to be nimble. We are chasing denim, in women's in particular, after a strong fourth quarter comp. And then there has been some product misses that we are acknowledging. And most of it is due to inventory. So, again, we needed some inventory here in some key categories in Aerie, in particular. And we're seeing just some wins in some businesses that we could have had more of.

Speaker Change: And going into Q1.

We had some inventory opportunities.

Speaker Change: Some good news and some bad news right going into the quarter.

Speaker Change: We definitely had some inventory outages, but it allows us to be nimble we are chasing denim after.

Speaker Change: Women's in particular after a strong fourth quarter comp and then there has been some product niches that we are acknowledging and most of it is due to inventory. So again, we needed some inventory here in some key categories and Erie in particular.

Jennifer Foyle [President and Executive Creative Director: Again, we needed some inventory here in some key categories in Aerie in particular, and we're seeing just some wins in some businesses that we could have had more of. For instance, in Aerie, soft dressing, sleepwear has been actually across all categories.

Speaker Change: And we're seeing just some wins and some businesses that we could have had more so for instance in aerie soft dressing sleep.

Jen Foyle: So, for instance, in Aerie, soft dressing, sleepwear has been – actually, across all categories. Sleep and lounge has been really doing well, chasing that. Graphics has been great. So, of course, we have early reads. And this is what we do day in and day out. So, the early reads we're reacting to. We're ensuring that our inventory is nimble. We're ensuring that we're open on the back half, which is obviously – you know, it's our Super Bowl as we enter into Q3, when we're such a denim-driven business. And denim drives behavior for all of our brands, which is important to note.

Speaker Change: Sleepwear has been actually across all categories sleep and lounge has been.

Jennifer Foyle [President and Executive Creative Director: Sleep and lounge has been really doing well. Chasing that. Graphics has been great. Of course, we have early reads, and this is what we do day in and day out. The early reads we're reacting to, we're ensuring that our inventory is nimble. We're ensuring that we're open on the back half, which is obviously, you know, it's our Super Bowl as we enter into Q3 when we're such a denim driven business. Denim drives behavior for all of our brands, which is important to note. Denim drives traffic to our site, and then we cross-pollinate throughout our brands. That's really important to note, and we're setting ourselves up for the back half of winning in denim. I feel like the teams are doing a great job.

Speaker Change: Really doing well chasing that graphics has been great. So of course, we have early reads and this is what we do day in and day out. So the early reads. We're reacting to we are ensuring that our risk.

Nimble, we're ensuring that we're open on the back half, which is obviously it is our Super Bowl as we enter into Q3, when we're such a denim driven business in denim drives behavior for all of our brands, which is important to note denim drives traffic to our site and then we cross pollinate throughout our brands. So that is really important to note when we're setting.

Jennifer Foyle [President and Executive Creative Director: Denim drives behavior for all of our brands, which is important to note. Denim drives traffic to our site, and then we cross-pollinate throughout our brands. That's really important to note, and we're setting ourselves up for the back half of winning in denim. I feel like the teams are doing a great job.

Jen Foyle: Denim drives traffic to our site. And then we cross-pollinate throughout our brand. So, that's really important to note. And we're setting ourselves up for the back half for winning in denim. And I feel like the teams are doing a great job. So – and then, of course, we're monitoring our promotional cadence. Balancing AURs with opening price points – very important right now. And, of course, you know, just reading the business day in and day, but mostly staying connected to our customer. We've done a lot of data analytics around our customer, where she is, and what she wants.

Speaker Change: Ourselves up for the back half for winning in denim and I feel like the teams are doing a great job. So and then of course, we are monitoring our promotional cadence balancing AUR is an opening price point very important right now and of course.

Jennifer Foyle [President and Executive Creative Director: Of course, we're monitoring our promotional cadence, balancing AURs with opening price points, very important right now. Of course, you know, just reading the business day in and day out, but mostly staying connected to our customer. We've done a lot of data analytics around our customer, where she is and what she wants. The fluidity of that is really important in today's business, right? One week she's in stores or he's in stores, and the next week they're online shopping, and we have to open up the gates and ensure we are addressing where that customer is and obviously delivering to that customer. That's a high intent for the balance of this year.

Speaker Change: Just reading the business day in and day, but mostly staying connected to our customer.

Speaker Change: We've done a lot of data analytics around our customer where she is and what she wants and the fluidity. The fluidity of that is really important in today's business right. One week. She is in source our Houston stores in the next week. They are online shopping and we have to open up the gates and ensure we are addressing where that customer is and <unk>.

Jennifer Foyle [President and Executive Creative Director: The fluidity of that is really important in today's business, right? One week she's in stores or he's in stores, and the next week they're online shopping, and we have to open up the gates and ensure we are addressing where that customer is and obviously delivering to that customer. That's a high intent for the balance of this year.

Jen Foyle: And the fluidity of that is really important in today's business, right? One week, she's in stores or he's in stores. And the next week, they're online shopping. And we have to open up the gates and ensure we are addressing where that customer is and obviously delivering to that customer. And that's a high intent for the balance of this year.

Speaker Change: Obviously delivering to that customer and that's a high intent for the balance of this year.

Speaker Change: Okay.

Jen Foyle: Great.

Speaker 21: Great. Just on that China sourcing question.

Alex Straton: Great. Just on that China sourcing question.

Speaker Change: Great and then just on that China sourcing question.

Mike Mathias: And then just on that China sourcing question. Can you repeat the question? I think in the prior tariff question, maybe Mike had answered that you guys are moving China production from like a high teens percentage of the business to single digits or something. So I'm just wondering where that's going. Yeah, that's the plan for now. But again, flexibility is key. So to Jay's point earlier, depending on what actually happens, we can decide if we ultimately do that or not, and we have redundancy to move as needed. But if needed, if things that are being projected or said about China actually do occur, we have the plans right now to go from high teams to single digits.

Jennifer Foyle [President and Executive Creative Director: Can you repeat the question?

Speaker Change: Can you repeat the question.

Speaker 21: I think in the prior tariff question, maybe Mike had answered that you guys are moving China production from a high teens percentage of the business to single digits. I'm just wondering where that's going.

Alex Straton: I think in the prior tariff question, maybe Mike had answered that you guys are moving China production from a high teens percentage of the business to single digits. I'm just wondering where that's going.

Speaker Change: I think in the prior tariff question.

Speaker Change: Maybe if I kind of answered that you guys are moving China production from like a high teens percentage of the business.

Speaker Change: Single digits or something so I'm, just wondering where that's going.

Mike Mathias: Yeah, we have ability. That's the plan for now. Again, flexibility is key. To Jay's point earlier, depending on what actually happens, we can decide if we ultimately do that or not, and we have redundancy to move as needed. If needed, if things that are being projected or said about China actually do occur, we have the plans right now to go from high teens to single digits. We source across 15 countries. The teams have built redundancy across those countries. We will flex as needed.

Speaker Change: Yes, we the ability that's the plan for now, but again flexibility is key so to Joe's point earlier, depending on what actually happens we can decide if we ultimately do that or not and we have redundancy to move as needed, but if needed if things that are being.

Speaker Change: Projected or.

Speaker Change: Set about China actually do occur we have the plans right now to go from.

Speaker Change: Teens to single digits.

Jen Foyle: We source across 15 countries. The teams have built redundancy across those countries. We will flex as needed. Thank you.

Speaker Change: Sorts across 15 countries it teams and build redundancy across those countries, we will flex as needed.

Speaker 21: Thank you.

Alex Straton: Thank you.

Speaker Change: Thank you.

Jennifer Foyle [President and Executive Creative Director: Thank you.

Speaker Change: Thank you.

Operator: Thank you. This concludes our question and answer session. This is the end of today's conference. We thank you for your participation. You may disconnect your lines at this time.

Speaker Change: Thank you.

Speaker Change: This concludes our question and answer session.

Operator: This is the end of today's conference. We thank you for your participation.

Speaker Change: This is the end of todays conference.

Speaker Change: Thank you for your participation you may disconnect your lines at this time.

Operator: You may disconnect your line.

Q4 2024 American Eagle Outfitters Inc Earnings Call

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