Q1 2026 Oxford Industries Inc Earnings Call
[music].
Greetings and welcome to the Oxford Industries, Inc. First quarter fiscal 2025 earnings conference call at this time.
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.
Brian Smith: Now my pleasure to introduce your host Brian Smith. Please go ahead.
Speaker Change: Thank you and good afternoon before we begin I would like to remind participants that certain statements made on today's call and in the Q&A session.
Constitute forward looking statements within the meaning of the federal Securities laws.
Forward looking statements are not guarantees and actual results may differ materially from those expressed or implied in the forward looking statements.
Important factors that could cause actual results of operations or our financial condition to differ are discussed in our press release issued earlier today.
And in documents filed by us with the SEC.
Including the risk factors contained in our Form 10-K.
Undertakes no duty to update any forward looking statements.
During this call we will be discussing certain non-GAAP financial measures you can find a reconciliation of non-GAAP to GAAP financial measures in our press release issued earlier today.
Speaker Change: Which is posted under the Investor Relations tab of our website at Oxford, Inc. Dot com.
Speaker Change: I'd now like to introduce today's call participants with me today are Tom Chubb, Chairman and CEO and Scott <unk> CFO.
Thank you for your attention and I'd like to turn the call over to Tom Chubb.
Good afternoon, and thank you for joining us we're pleased to be reporting results for the first quarter of fiscal 2020 five that we're solidly within our forecast range in the midst of very challenging and unpredictable market conditions.
Speaker Change: The so called the hard data indicates that the consumer still has the ability to spend money. However, the soft data, particularly consumer sentiment surveys as well as reports on discretionary spending indicate a consumer that is much more cautious when it comes.
Speaker Change: Spending on discretionary items, which includes fundamentally everything we sell our own experience during the quarter was similar to what we've seen over the last several quarters and that is that the consumer responds most strongly to new innovative and.
Speaker Change: I did product and promotions, where the perceived value is high.
Speaker Change: Complicating the situation is rapidly evolving U S International trade policy, particularly with regard to tariffs tariff policy is challenging us in several ways first consumer concern about the impact of tariffs on prices in the economy.
Speaker Change: Is exacerbating weak consumer sentiment.
Speaker Change: The rapid evolution of the tariff policy is making it exceptionally difficult to <unk>.
Speaker Change: Plan and forecast the business and finally, the tariff policy is requiring us to significantly realign our supply chain, which could prove to be the catalyst for implementing some changes in our sourcing strategies that ultimately benefit our company and.
Speaker Change: <unk>, but certainly present short term challenges and financial ramifications.
Speaker Change: During challenging market conditions like those that we are currently in Cameroon.
Speaker Change: It is imperative that we not lose sight of the fact that our reason for being is to evoke happiness and our customers all seven of the brands in our portfolio are what we call a happy brands and our customers look to them for the spirit of optimism and Pos.
Speaker Change: Ability that they exude.
Speaker Change: We delivered this happiness through our brand positioning our products, our marketing messages and the imagery and the experiences we provide in our stores restaurants, and bars and our resort hotel as well as on our ecommerce websites.
Speaker Change: Staying focused on bringing you happiness to our customers helps mitigate the impact of a challenging marketing conditions and ensures that as those conditions abate, we will emerge even stronger than when we went into the challenging times.
Speaker Change: Pandemic provided great reinforcement of that idea.
Speaker Change: It would have been very easy to slip into a darker more pessimistic mode with our brand messaging during the lockdowns, but we refused to do that and we emerged on the other side even stronger than ever Likewise, we are staying focused on our happiness now.
Speaker Change: During the first quarter of fiscal 2025, the continued focus on our happiness paid off with fantastic results in our Lilly pellets or brand given the environment.
Speaker Change: As the result of Lilly's focus on delighting, our most dedicated and the highest spending consumers we were able to post double digit growth with positive comps in both e-commerce and retail as well as meaningful growth in our average order size and improve.
Speaker Change: <unk> profitability.
Speaker Change: Some of the highlights for the quarter and Lilly included our beautiful prints, which have an excellent balance this season between total and multi color as well as between bright colors and soft colors.
Speaker Change: We also had big success with sportswear items like the runs in top a simple T made special with gold buttons and huffy easily use.
Speaker Change: The reintroduction of Lilly men's after more than a decade as well as our collaboration with the Normandy based French brand St. James were by design not huge volume drivers that sold through at very high rates and created lots of <unk>.
Speaker Change: Does it make seismic.
Speaker Change: Our newness quotient was excellent at more than 50% this spring as compared to approximately 40% last year.
Speaker Change: On the marketing front, we continued to ride the wave.
Speaker Change: Heitman created by our Palm Beach Fashion show last fall, which featured spring 2020 type product.
Speaker Change: And our Tommy Bahama business, we continued our efforts to deliver happiness to our growing audience with the opening of two new Marlin bars. The two new locations at the King of Prussia Mall on the mainline in Pennsylvania, and South Park Mall in Charlotte North Carolina.
Speaker Change: Donna our boat in more temperate climates than our typical warm weather locations.
Speaker Change: And both are located at large regional malls, which is also different and where we are typically located marlin bars prior.
Speaker Change: Prior to building Moreland borrowers in these locations, we had Tommy Bahama stores in both Charlotte and King of Prussia, as we have seen with past Marlin bar conversions, we expect to see a meaningful uplift in our retail business in those locations as well as the <unk>.
Speaker Change: <unk> to provide an immersive Tommy Bahama brand experience on the power and restaurant side.
Speaker Change: Nothing creates passion for the Tommy Bahama brand like a nice dinner and a beverage or two with family and friends have one of our Marlin bars.
Speaker Change: South Park mall in King of Prussia Mall are two of the best in the country and we are excited to see what we can deliver there.
Speaker Change: While we are remaining focused on our long term evergreen objective of delighting the consumer with our happy brands. We're also working hard to respond to more immediate challenges at the top of the list is the rapidly evolving change in U S trade policy, particularly.
Speaker Change: Kimberly tariffs beginning more than 50 years ago. When has had in the enterprise. We first branched into international product sourcing. Our objective has always been to have a resilient supply chain that can respond to the changing needs of both the market place.
Speaker Change: As well as significant changes in U S trade policy.
Speaker Change: And through the years, there have been many significant changes to trade policy, including NAFTA various other free trade agreements, China as SaaS and to the WTO in 2005, and others and each time, our supply chain as quickly.
Speaker Change: And successfully adapted to the new policy.
Speaker Change: The only difference. This time is that the policy change has come with less notice and more fluidity done with past changes. Nevertheless, our ability to adapt is unchanged and we are doing exactly that we are making excellent progress on our goal of <unk>.
Speaker Change: Diversifying our supply chain, particularly away from China, and currently expect to exceed the milestones that we laid out in April.
Speaker Change: Second half of 2026, we currently plan to be substantially out of China.
Speaker Change: Tariffs are one of many input cost that we take into account as we work through the complicated process of establishing prices and initial gross margins for a particular season.
Speaker Change: As we go through this process for future seasons, we are of course, taking into account what we currently know about tariffs.
Speaker Change: Much work to be done, but we are pleased with the progress as an example in our largest business Tommy Bahama for spring 2026, taking into account. The currently effective elevated tariff rates, we are projecting that our AUR.
Speaker Change: We will increase by less than 3% fully recovering gross margin dollars, while our initial gross margin percent would decrease by less than 50 basis points.
Speaker Change: Subsequent seasons, we expect to be able to work initial gross margin percentages back up without any dramatic changes in pricing.
Speaker Change: While the tariffs are and we'll it will certainly create some turbulence in our results. This year, we do not see them as a long term threat to our competitiveness.
Speaker Change: Our ability to deliver long term value to our shareholders.
Speaker Change: Another more immediate challenge we are hard at work on is improving the profitability of our Johnny was business. Jonathan was is an incredible brand with absolutely beautiful product loyal and engaged customers.
Speaker Change: Incredibly dedicated hard working and professional team.
Speaker Change: We believe Johnny was also has an opportunity to improve its profitability.
Speaker Change: The two a level similar to what we are accustomed to and Lilly pellets are in Tommy Bahama.
Speaker Change: After a period of very rapid growth, including rapid expansion of its retail store footprint over the last six or seven years, some of which was before we bought the brand we are shifting our focus to increasing profitability and reinforcing the fundamentals.
Speaker Change: This includes Brian creative merchandising assortment and planning marketing efficiency and retail execution.
Speaker Change: We have been working diligently on this project over the last several months and have brought in additional talent and external resources to help.
Speaker Change: We look forward to reporting to you on the plan and the progress in the coming quarters.
Speaker Change: Progress on our new state of the art fulfillment center in South Georgia is on track and we expect to be complete at the end of the fiscal year.
Speaker Change: Once complete we believe the new S C will be a competitive advantage for our most <unk>.
Speaker Change: <unk> important reach in the southeastern United States, especially Florida.
Speaker Change: Without a doubt we are operating in very difficult circumstances, but are responding to the current challenges as well while never losing sight of the long term goals and objectives. We are grateful to all of our team members for all of US I do on behalf of our customers.
Speaker Change: Our shareholders.
Speaker Change: I'll now turn the call over to Scott for more details on our first quarter results as well as our expectations for the balance of the year Scott.
Scott: Thank you Tom.
Speaker Change: Tom mentioned, our teams face unprecedented uncertainty and challenges related to the rapidly developing.
Scott: Tariff and trade environment during the first quarter. Despite the substantial challenges our team focused on what they could control and delivered top and Bottomline results within our people see issued guidance ranges.
Scott: In the first quarter of fiscal 2025 consolidated net sales were $393 million compared to sales of $398 million in the first quarter of 'twenty four.
Scott: And towards the high end of our guidance range of $375 million to $395 million sale.
Scott: Sales in our brick and mortar.
Scott: Locations were down 1% driven by a negative comp of 5%.
Scott: Partially offset by the addition of new store locations.
Scott: Commerce sales decreased 5% sales in our food and beverage locations were down 3%, our sales and our outlet locations were comparable year over year.
Scott: Sales in our wholesale channel increased 4% compared to the first quarter 2024 with increased sales to major department stores and off price retailers.
Scott: Segment lower sales at time Bahama, Johnny was were partially offset by a low double digit sales increase at Lilly Pulitzer self assess with its strategy to focus on product that resonates strongly with its core customer.
Scott: And an increase in emerging brands driven by promising rollout of new retail locations.
Scott: Adjusted gross margin contracted 110 basis points to 64, 3% driven primarily by increased freight expenses to ecommerce customers at Tommy Bahama increased markdowns during clearance events at Lilly Pulitzer and Johnny Wise.
Scott: And a change in sales mix with wholesale cells, including all price wholesale sales, representing a higher proportion of net sales.
Scott: So kurt incurred $1 million of additional charges or an approximate 20 basis point negative impact to consolidated gross margin or <unk> <unk> per share in cost of goods sold resulting from the U S tariffs.
Scott: Imported goods implemented in the first quarter of fiscal 2025.
Scott: Adjusted SG&A expenses increased 5% to $221 million compared to $210 million last year with approximately $6 million or 59% of the increase due to increases in employment costs occupancy costs and depreciation expense due to the opening of 31, new brick and mortar retail location.
Scott: <unk>, including four new Tommy Bahama Marlin bars since the first quarter of fiscal 2020 for.
Scott: This includes the eight new.
Scott: Eight net new stores, including two time Bahama Marlin bars opened in the first quarter of fiscal 'twenty. Five we also incurred preopening expenses related to some of the approximate seven net new stores planned to open during the remainder of fiscal 'twenty five including an additional Tommy Bahama Marlin bar.
Scott: We sold this yielded a 39 million adjusted operating profit or a nine 8% operating margin compared to $57 million operating profit by 14, 4% margin in the prior year. The decrease in adjusted operating income reflects the impact of our investments in a challenging consumer and macro.
Scott: Right.
Scott: Moving beyond operating income our adjusted effective tax rate of 24, 2% was impacted by certain discrete items, most notably from the receipt of interest related to a U S. Federal income tax receivable.
Scott: Interest expense was $1 million higher compared to the first quarter of fiscal 2024, resulting from higher average debt levels with all of this we ended with a $1 82 of adjusted net earnings per share.
Scott: I'll now move on to our balance sheet, beginning with inventory.
Scott: The first quarter of fiscal 'twenty, five inventory increased $18 million or 12% on a LIFO basis, and $20 million or 9% on a FIFO basis with inventory increasing in all of our operating groups as Seth Johnny was primarily due to the impacts associated with the U S. Tariffs that were implemented in the first quarter of <unk>.
Scott: 2025, including accelerated purchases of inventory before the anticipated implementation of increased tariffs.
Scott: <unk> increased cost capitalized into inventory after the implementation of the tariffs at the end of the first quarter 25, our inventory balances included an additional $3 million of costs associated with the increased tariffs implemented in the first quarter of fiscal 'twenty five.
Scott: We ended the quarter with long term debt of $118 million, we used $4 million in cash flows from operation in the first quarter of fiscal 'twenty, five driven primarily by lower net earnings changes in working capital needs, including accelerated inventory purchases and $12 million of expenditures.
Scott: To implementation cost associated with cloud computing arrangements that are classified as operating cash outflows.
Scott: We also had $51 million of share repurchases capital expenditures of $23 million, primarily related to the Lyons, Georgia distribution Center project and the addition of new brick and mortar locations and $2 million of dividends that led to an increase in our long term debt balance.
Scott: I'll now spend some time on our updated outlook for 2025.
Scott: We finished the first quarter of fiscal 2025, with a negative comp of 5%, which was slightly lower than our previous forecast of negative 2% to 4% comps.
Scott: Comp sales figures in the second quarter to date are negative similar to the first quarter, which is a trend we expect to continue for the remainder of the quarter. While we believe the negative comp trend will moderate slightly as we enter the second half of fiscal 2025 and lap easier comparisons due in part to the negative effects of two hurricanes that.
Scott: Impacted the southeastern United States in the third quarter of fiscal 2024, our forecast includes negative comp negative comps in the low single digit range for the remainder of the year for the full year. We now expect net sales to be between $1 75 billion to 151 5 billion.
Scott: Reflecting a decline of 3% to just slightly negative compared to sales of $1 five 2 billion in fiscal 2024.
Scott: Our updated sales plan for the full year of 2025 now includes a total company comp sales decline in the low to mid single digit range.
Scott: Decreases in our Tommy Bahama, Johnny was segments, driven by negative comps, partially offset by new store locations that.
Scott: That decline is expected to be tempered by growth in our Lilly Pulitzer in emerging brands segments, driven by positive comps and new store locations.
Scott: By distributions channel. The sales plan consist of a low single digit decrease in e-commerce and wholesale sales, partially offset by a flat to low single digit increase in both full price retail and outlet sales.
Scott: Expect a full price retail and outlet channels will benefit from the addition of approximately 15 net new locations during the year, partially offset by a navy by negative comp sales. We also expect low to mid single digit increase in our food and beverage channel that will benefit from the addition of three new Marlin bar locations during the year.
Scott: Year.
Scott: Our updated guidance also reflects the most recent tariff developments when we last issued guidance in March additional tariffs placed on Chinese imports were 20% and reciprocal tariffs on countries other than China had not yet been announced.
Scott: Tariffs placed on imports from countries around the world have also fluctuated significantly since march including pauses and delays in tariffs and additional tariffs placed on Chinese imports that reached as high as 145%.
Scott: Our current forecast includes the assumption that the current we implemented additional 30% tariff placed on Chinese imports and 10% when all other countries will remain in place for the remainder of fiscal 2025.
Scott: Based on these updated assumptions, we now expect that gross margin will contract by approximately 200 basis points for the year. This contraction includes $40 million in additional tariff cost for $2 per share after tax which is an increase from the $9 million to $10 million included in our March forecast we're working.
Scott: Hard at mitigating the gross margin dollar impact of tariffs and expect to be fully mitigated by spring of 'twenty six.
Scott: Planned mitigation efforts to move sourcing from China to countries with lower tariffs rates, including our effort to reduce sourcing from China from approximately 40% in 2024 to approximately 30% for 2025.
Scott: And our expectation of increased activity during promotional events across our brands as a challenging macroeconomic environment will lead to consumers looking for deals and promotions.
Scott: In addition to lower sales and gross margin, we expect SG&A to grow in the mid single digit rate range at a rate higher than sales in 2025, primarily due to continued investments in our business, including the <unk> of incremental SG&A from the 30 net new locations added during fiscal 2024.
Scott: Incremental SG&A related to the addition of approximately 15 net new locations, including three new Tommy Bahama Marlin bars, including the two that opened in the first quarter and a third plan to open on the Big Island of Hawaii late this year.
Scott: An increase in adjusted depreciation and amortization from $57 million in fiscal 2000 $24 million to $59 million in fiscal 2025, which excludes $11 million in amortization of acquired intangibles.
Scott: In fiscal 'twenty, $4 8 million in fiscal 'twenty five.
Scott: Also within operating income, we expect lower royalties and other income of approximately $1 million in fiscal 2025.
Scott: Additionally, our fiscal 'twenty <unk> guidance includes the unfavorable impact of nonoperating items, including $5 million of higher interest expense compared to $2 million in 2024.
Scott: <unk> 20 to 25 cents EPS impact.
Scott: The increased debt levels in fiscal 'twenty.
Scott: Due to our continued capital expenditures from the Lyons, Georgia distribution Center technology investments and return of capital to shareholders exceeding cash flow from operations. We also expect a higher adjusted effective tax rate approximately 26% compared to 29% in 2024, which benefit.
Scott: Certain favorable items, primarily related to interest income tax receivables that are not expected to reoccur in 2025.
Scott: A higher tax rate will result in an approximate 20% to 25 per share impact.
Scott: Considering all these items, including the $2 impact from tariffs higher interest expense and a higher tax rate.
Scott: 2025 of adjusted EPS to be between $2 80.
Scott: $3 24.
Scott: Adjusted EPS of $6 68 last year.
Scott: In the second quarter of 2025, we expect sales of 395 million to $415 million compared to sales of $420 million in the second quarter of 2024. This reflects our low to mid single digit negative comp assumption, partially offset by the addition of non comp store stores and relatives.
Scott: Flat wholesale sales.
Scott: We also expect gross margin to contract by approximately 250 basis points, which includes our updated care for assumption of $15 million in additional tariff costs were <unk> 75 per share after tax.
Scott: SG&A to grow in the mid single digit range, primarily related to the new store locations increased interest expense of $2 million.
Scott: Flat royalty and other income.
Scott: And a higher effective tax rate of approximately 31% from net discrete tax expense for stock based compensation.
Scott: We have spent this to result in second quarter adjusted EPS of between $1 five and $1 25.
Scott: Compared to $2 77 in the second quarter 2024.
Scott: I'd now like to discuss our Capex outlook for the remainder of the year materially consistent with our prior guidance, we expect capital expenditures to be approximately $120 million, including the $23 million incurred during the first quarter compared to $134 million in fiscal 2024 with approximately $70 million related to finish.
Scott: The project to build the new distribution center in Lyons, Georgia remaining capital expenditures relate to the execution on our pipeline of new stores in time, Bahama Marlin bars, including increases in store count across Tommy Bahama, Lilly Pulitzer Southern tide and to be for buying a company. We spent this elevated capital.
Scott: Expenditure level to moderate in 2026 and beyond after the completion of the Lyons, Georgia project.
Scott: We expect cash flows from operations to be strong as we head into our busiest time of the year, allowing us to fund the previously mentioned investments our quarterly dividend and reduced our outstanding borrowings. Although we do expect to be in a debt position for the remainder of the year due to our first quarter share repurchase dividend payments anticipated.
Scott: Capital expenditures.
Speaker Change: You for your time today, we will now turn the call over for questions Joe.
Speaker Change: Thank you Sir.
Speaker Change: Ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press star two if he would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Scott: And our first question comes from the line of Ashley <unk> with Keybanc capital markets. Please proceed.
Ashley: Hi, good afternoon. Thanks for taking our question so nice to see the strong response in Lilly in the quarter I know you elaborated on some of the strength you saw there.
Scott: Learnings have emerged from the strength is the key there to continue to drive a broad range of color ways and the newness that you're offering and just.
Scott: Any levers you could talk to that are in place to sustain that momentum during the balance of the guys. Thank you.
Speaker Change: I think a key Ashley really and thank you for the question is focusing on those most committed customers, which is sort of the top 20% of the customer base. They account for more than 60% of the sales and even more of that when you.
Scott: You look at profitability and really focus in on what they love about Lilly and delivering it to them in a way that is both consistent.
Scott: With the DNA of the brand, which were in my opinion very much doing right now while at the same time being relevant to the current customer.
Scott: And marketplace.
Scott: I just think the Lilly team has done an extraordinary job of it Ashley you know this because we pay a lot of attention and that really started at the beginning of last year as we celebrated.
Scott: The 60, <unk> anniversary and we did some special capsules and a lot of marketing things.
Scott: It kind of built up through the year and it's really paying off for US now so I would say going forward that really is the key is focusing on that core customer.
Scott: True to our DNA, but at the same time staying relevant to.
Scott: What's going on today.
Speaker Change: Okay, Great and then just a follow up I know you discussed some of the puts and takes around margin and pricing increases at Tommy Bahama kind of going into spring 2026 could you elaborate on some of your pricing plans for the other brands identified.
Speaker Change: If any just curious as you navigate some of these margin headwinds with promotional spending and then additionally, now the tax how youre balancing the potential need to stay promotional with some potential price increases to offset some of these higher costs.
Speaker Change: Yes, well a great question and I think we see the Tommy Bahama.
Speaker Change: Example, out there where our plan for spring 2026 has our AUR going up by less than 3%.
Speaker Change: And then at that level, we get back all the gross profit dollars. The gross margin. The initial margin will go down by less than 50 basis points down the other part of your question is.
Speaker Change: Are we going to experience margin dilution because of promotional activity and you would have for 2026, it's just way too early for us to.
Speaker Change: To really predict that.
Speaker Change: Kevin Scott pointed out for the balance of this year, we have baked in.
Speaker Change: Some additional probes.
Speaker Change: Promotes not really more promotions just the expectation.
Speaker Change: More business will be done during those promotional times, but for.
Speaker Change: For 2000 and fix all we're really.
Speaker Change: As far as we've got really is the initial margins.
Speaker Change: Scott.
Scott: To add anything.
Scott: For 25 years spring summer, our biggest seasons and Theres really.
Speaker Change: There is not much adjustment, we could do there and so we are starting to see some modest price increases.
Speaker Change: For fall and then springs, where we really fully mitigated.
Speaker Change: Okay.
Speaker Change: Just super helpful color, Thank you and I'll pass it along but best of luck.
Ashley: Thank you Ashley.
Speaker Change: The next question comes from the line of Joseph <unk> with <unk> Securities. Please proceed.
Joseph: Hey, guys. Thanks, so much for taking my question.
Speaker Change: I wanted to check in and see about the wholesale I think you said, 4% growth just talk about how that compared to your expectations and conversations with retailers as we get to the back half of the year.
Speaker Change: Well I'll, let Scott comment a little bit further on our expectations, but we were pleased to see that growth in the wholesale and I would say that our performance at wholesale has been quite good which we always like to see that Joe I think we've talked about that in the past.
Speaker Change: But.
Speaker Change: On the floor of one of our Big Department store customers were going head to head with some other great brands.
Speaker Change: In a tough environment like we have got right now to see that we're actually performing.
Speaker Change: Right well in that head to head competition is.
Speaker Change: Pretty reassuring.
Speaker Change: To see that it shows the strength of our brands and our products and then in terms of how you would evaluate that relative tolerate exposure.
Speaker Change: Think wholesale is pretty much tracking to our expectations were.
Speaker Change: We knew we had a little bit up spring order book than we were expecting.
Speaker Change: The second half of the year to be down a little bit is a lot of accounts have gotten more conservative. So so now for the full year slightly down but.
Speaker Change: So slightly up from Q1 and.
Speaker Change: The specialty stores have certainly been weaker than the department stores, So that specialty store channel is still pretty challenged.
Speaker Change: Got it thanks, so much.
Jeff: Thank you Jeff.
Speaker Change: Okay.
Speaker Change: The next question comes from the line of Jimmy <unk> with <unk>.
Speaker Change: Please proceed.
Jimmy: Hey, <unk> got Ethan unfair Jeanine and thanks for taking my questions. So to start great to hear that the newness is really resonating at Lilly was just wondering if you could give some color on the newness in the assortment at Tommy and how that's resonating and then my second question just digging in on Johnny was kind of.
Speaker Change: What drove that mid teens decline in Q1, and just what gives you confidence in the guide for the brand for the rest of the year. Thanks.
Speaker Change: Okay, So with regard to.
Speaker Change: Lily.
Speaker Change: New notice as I commented on and it's certainly been a big part of the.
Speaker Change: The success in our sort of newness quotient was higher this year, we were a little over 50% this year, but as I think about 40.
Speaker Change: Last year or so.
Speaker Change: We were pleased to see that a lot of it was in sportswear items like the top that I highlighted.
Speaker Change: And that's great to see we've traditionally been very very strong in dresses, but good to see.
Speaker Change: The strength in sportswear as well and then as I mentioned, we think a lot of it.
Speaker Change: We've held our print assortment. This spring was was really quite strong and very well balanced and gave a lot of customers.
Speaker Change: Great options in terms of whether they wanted to.
Speaker Change: Go multi color more tone on tone or bright are soft.
Speaker Change: <unk> had good options and then in Tommy I would say newness is working.
Speaker Change: Also I mean, we're seeing that everywhere.
Speaker Change: Sort of as I said it.
Speaker Change: It's things that are new and exciting and different.
Speaker Change: Or.
Speaker Change: Other than that there are sort of looking for what they perceive as being high value situations.
Speaker Change: And Scott talked about that means we end up doing a little bit more business proportionately.
Speaker Change: During our.
Speaker Change: Promotional periods and then in terms of the Johnny was guide.
Speaker Change: Going forward I think.
Speaker Change: We're not projecting a.
Speaker Change: Big rebound there from what their current performance is while we would love to see that and we're doing a lot of things.
Speaker Change: To try to make that happen.
Speaker Change: As <unk> talked about the plan that we're working on that Johnny was for the most part would probably.
Speaker Change: The impact 2006 and beyond more than it would.
Speaker Change: 25, so what we've got in the guidance.
Speaker Change: Model does not really assume a big rebound in <unk>.
Speaker Change: <unk> was in the next quarter or two Scott.
Speaker Change: No that's accurate yes.
Speaker Change: Yes.
Speaker Change: Great. Thanks, I'll pass it on thanks.
Speaker Change: Ethan.
Speaker Change: Yes.
Speaker Change: The next question comes from the line of Mauricio Serna with UBS. Please proceed.
Mauricio Serna: Great. Good afternoon. Thanks for taking my question just wanted to dig into that tariff impact that you provided in your outlook. It seems.
Mauricio Serna: It's much higher than when you talked about before but even I.
Speaker Change: I guess as I look at the current tariffs.
Speaker Change: It still seems timing could you talk about what is.
Speaker Change: Gross impact that you're considering.
Speaker Change: Thank you for the $40 million.
Speaker Change: And you all have been facing any.
Speaker Change: Like how are you thinking about the mitigation.
Speaker Change: Mitigation strategy beginning to materialize in your operations over the next couple of quarters.
Speaker Change: Yes, most of the $40 million is the gross.
Speaker Change: Before we were at 9% to 10 growth.
Speaker Change: So the increase in before.
Speaker Change: As a reminder, the only.
Speaker Change: <unk> tariff at the time was the China, 20% there were no additional tariffs on the other countries at the time of that guidance. So now we've gone from 10% everywhere in China going from 20 to 30.
Speaker Change: Is the change so that's what caused the 9% to 10 to go up to 40, we are working on mitigation actions, but again as I mentioned earlier spring some of our biggest seasons, there's really.
Speaker Change: There's really nothing we can do about that some of the later fall deliveries there is some.
Speaker Change: Select increases and then when we get into spring again, we should we expect to be fully mitigated.
Speaker Change: So it.
Speaker Change: It will hit us hard in 'twenty five but as a reminder, we left last year of 40%.
Speaker Change: China. This year, we will average, 30%, but we'll leave the year lower.
Speaker Change: And then next year, we expect to be below 10%, China, So our China.
Speaker Change: Percentage is continuing to come down, but we obviously couldnt affect spring summer and really Couldnt effect.
Speaker Change: Early fall are really fall much.
Speaker Change: Shifts but for <unk>.
Speaker Change: <unk>.
Speaker Change: Spring of next year, we have some major moves coming.
Speaker Change: Understood. Thank.
Speaker Change: Thank you.
Speaker Change: Thank you Mauricio.
Speaker Change: Ladies and gentlemen, again, if you'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: And the next question comes from the line of Paul.
Speaker Change: <unk> with Citi. Please proceed.
Tracy Kogan: Thank you, it's Tracy Kogan filling in for Paul I had a couple of question.
Speaker Change: Wondering I know you said comps were down about 5% for the quarter as a whole I was wondering how that trended in February.
Speaker Change: March and April combined and then I was curious what you're seeing in the restaurant business in terms of traffic and ticket I saw that business was down but just wondering.
Speaker Change: What the drivers were there thanks.
Speaker Change: So the response of the.
Speaker Change: First part of your question Tracy Your April was definitely the strongest month for us and that was true I believe in both retail and E com.
Speaker Change: And part of that undoubtedly was the Easter shift so we would have expected.
Speaker Change: And did expect to have a pretty good performance in April and that turned out to be accurate.
Speaker Change: And then in terms of restaurant.
Speaker Change: Overall was down 3%, but the comp was actually only down 1%, so pretty close to flat last year.
Speaker Change: I don't know if we've got the <unk>.
Speaker Change: Traffic numbers for restaurants or.
Speaker Change: Ill take.
Speaker Change: At our hand is right now I think in general Tracy.
Speaker Change: The ticket size has been ticking up a little bit.
Speaker Change: And that's due to some of the item price is going up.
Speaker Change: And Tracy or this year you remember our Sarasota restaurant is still not open we're moving locations. So thats.
Speaker Change: Where we had it last year during busy season, we did not have it this year, but it should open I believe late this summer and Thats why the comp yes.
Speaker Change: So the cost is really you know.
Speaker Change: We were close to flat.
Speaker Change: Certainly better than what we saw in our retail stores.
Speaker Change: Got it thank you and just get back to that first question. What would you look at March March and April combined just wondering how that period compared to.
Speaker Change: February did your business picked up yes.
Speaker Change: Yes.
Speaker Change: It definitely did I mean basically the improvement was.
Speaker Change: Sequential through the quarter in April was the best March was better February was the worst.
Speaker Change: Got it thanks very much guys.
Speaker Change: Yeah. Thank you.
Speaker Change: Thank you there are no further questions at this time I would like to turn the call back to Tom Chubb for closing remarks.
Tom Chubb: Okay. Thank you Joe and thanks to all of you for your interest we look forward to talking to you again in September and hope all of you have a great summer.
Speaker Change: This concludes today's conference you may disconnect your lines at this time.
Speaker Change: Thank you for your participation.
Speaker Change: [music].