Q2 2025 Columbia Sportswear Co Earnings Call
Good day, everyone. And welcome to the Columbia Sportswear Company, second quarter, 2025 Financial results.
At this time, all participants are on a listen-only mode and we'll open the floor for your questions and comments after the presentation.
It is now my pleasure to turn the floor over to your host. Andrew Burns. Sir. The floor is yours.
Good afternoon and thanks for joining us, discuss, Columbia, Sportswear Company. Second quarter results, in addition to the earnings release, we furnished, an 8K, containing a detailed CFO commentary and financial review, presentation explaining our results. This document is also available on our investor relations website, investor columbia.com.
With me today on the call, our chairman president and chief executive officer, Tim Bole Executive, Vice President, and Chief Financial Officer, Jim Swanson an Executive Vice, President and chief administrative officer and general counsel Peter Breton
Many of these risks and uncertainties are described in Colombia's SEC filings. We caution that forward-looking statements are inherently less reliable than historical information. We do not undertake any duty to update any of the 4 looking statements. After the date of this conference, call to conform the forward-looking statements to actual results or to changes in our expectations.
I'd also like to point out that during the call. We may reference certain non-gaap Financial measures including constant currency. Net sales.
About non-gaap financial measures and results, including a Reconciliation of gaap to non-gaap measures and an explanation of Management's. Rationale for referencing these non-gaap measures. Please refer to the supplemental financial information section and financial tables included in our earnings release in the appendix of our CFO commentary and financial review.
Following a prepared remarks, we will host a Q&A period, during which we will limit each card to 2 questions, so we can get to everyone by the end of the hour. Now, I'll call the call over to Tim
Thanks Andrew and good afternoon.
Overall second quarter, and first half Financial results, reflect strong demand for our products in international markets, our EMA and L AAP regions both group double digit percent. In the first half led by China, Japan Europe direct and international distributor markets.
In these markets, our teams are driving Omni Channel growth through compelling, product assortments and marketing activations. That appeal to younger consumers,
Our results also reflect ongoing challenges in the US, we're focused on re-energizing the Columbia brand through the accelerate growth strategy.
In the coming days, we will begin to roll out our new role marketing platform. That will be the Columbia brand character and voice for years to come.
This new campaign will bring Columbia back to the roots of what made us an iconic Global brand by leveraging, our signature irreverence and humoral advertising.
At a time, when much of the outdoor industry looks the same, I'm confident that our campaigns will be highly differentiated and drive deeper affinity for the brand.
Consumers will see and hear much more about Colombia in the coming weeks and months.
Not only are we investing more in demand creation but we're also investing more efficiently leveraging, modern, digital and social first strategies.
We're launching a new site redesign on colombia.com, with enhanced mobile capabilities and uplevel photography that highlights, the beauty and craftsmanship of our iconic products. I believe this brand refresh is going to be 1 of the most impactful components of our accelerate growth strategy. And I'm anxiously awaiting everybody to see it.
We are also enhancing our product assortment to emphasize Innovation and style.
The smaller launching collections like the new amazed, puff insulated jacket and redesigned rock band. We are supporting these launches with elevated in-store investments in many Wholesale in DTC locations.
Taken together, I believe the combination of product enhancements elevated in store, experiences, and differentiated marketing will energize Colombia's brand perception in the US and bring new customers in this brand.
On our last conference call 3 months ago. I referenced the unprecedented level of public policy uncertainty that our industry is facing in the United States.
Imported apparel and Footwear is already heavily taxed under Legacy trade laws.
The 10% Universal tariff, and most of the additional tariffs being contemplated are on top of already high existing duties.
Unfortunately Clarity with respect to us, trade policy has not materialized.
This uncertainty overhangs consumer sentiment.
And every decision that we make, for our us business, we continue to take action to mitigate the risks and financial impact of our tariffs, which represents the largest tax. Increase the company has faced in its history.
Our Fortress balance sheet differentiated brand portfolio, and disciplined approach to managing the business. Give me confidence in our ability to emerge from this period as a stronger company.
As we begin the second half of the Year, we're planning our us business cautiously. We expect higher prices for many consumer goods, will negatively impact consumer demand. We also expect retailers will be cautious with their inventory intakes in this uncertain environment.
In Fall 2025, we're working with our retail partners to deliver value to consumers and keep inventory and dealer margin sculpting.
As a result, we're not making any significant price changes to our fall, 25 product line and expect to absorb much of the incremental toss tariff costs this year.
We estimate the financial impact of the current 10% universal tariff rate, combined with tariff-related supply chain expenses and inclusive of our mitigation efforts, will be approximately $35 to $40 million in 2025.
By August the 1st, we will have received approximately 70% of our Us Fall, 25 product.
Fall, 25 product would be exposed to higher tariff rates beyond the 10% Universal rate.
We don't know what the final tariff structure will be.
How long it will last?
Lacking tariff rate, certainty, we will continue to work all options for offsetting the impact of higher us. Tariffs on our business.
Our goal is to offset higher tariffs. Over time through a combination of actions, including price increases vendor, negotiations sgna expense efficiencies, and other mitigation tactics.
We will balance these actions with our overall growth strategy. Seeking to minimize the impact to Consumer demand, and maximize our market share potential.
I'll provide more details on how we're planning the balance of the year, as well as our spring 26, wholesale business, later in the call.
We continue to identify and execute cost-savings actions as part of the profit Improvement plan.
During the quarter, actions included a reduction in force that primarily impacted our Us, corporate headcount.
Year to date. We have actioned over 70 million dollars in annual cost savings on top of the 90 million. We actioned in 2024.
Given the timing of these actions Severance and other 1-time expenses, the full impact of cost savings will be rapidly realized over the next 12 months. This effort is ongoing
as we continue to seek additional profit Improvement opportunities,
I will now quickly review second quarter financial performance.
I'd like to remind everyone that the second quarter is our lowest volume sales quarter.
Small year-over-year changes in sales and expense timing can have a material impact on reported results.
Net sales, increased 6% year-over-year to 605 million.
This was slightly ahead of our outlook, primarily driven by earlier fall wholesale shipments.
Where possible, we accelerated the receipt and shipment of Fall 2025 U.S. inventory to mitigate the impact of potential additional tariff increases.
Wholesale net sales, increased 14% while direct to Consumer was down. 1%
Wholesale growth, reflects spring and fall shipment timing.
Which benefited sales in the quarter as well as higher spring, 25 orders.
Gross margin expanded 120 basis points to 49.1% and sgna expenses. Increased 8%. This performance resulted in a loss per share of 19 cents compared to a loss per share of 20 cents in the prior year.
Looking at net sales by geography us, net sales decreased 2%.
Overall us Columbia Brands spring 25 sell through has been soft.
He's outdoor categories and consumer. Headwinds reinforce our focus on re-energizing the Columbia brand.
Through the accelerate growth strategy.
the US wholesale business increased, low single-digit percent
Reflecting timing of spring and Falls. So shipments, which benefited sales in the quarter.
Us DTC, net sales decline, mid single digit percentage in the quarter.
Brick and mortar was down low, single-digit percent, reflecting the closure of temporary clearance locations, partially offset by contributions from new stores.
The exit of the quarter was 7 temporary clearance locations, compared to 46.
Exiting second quarter last year.
E-commerce was down low double-digit percent reflecting Soft Spring season itself through, which was partially impacted by ongoing efforts, to refine and evolve our online promotions and marketing Investments.
For my review of second quarter year-over-year, net sales growth in international geographies, how it reference constant currency growth rates to illustrate, underlying performance in each market.
Lap, net sales increased 12%.
China, net sales, increased High, Teens percent with broad-based growth across wholesale and DTC.
Our team in China continues to do an amazing job bringing young active consumers, into the brand with premium localized, product offerings and unique Marketplace activations.
Our e-commerce business across T-Mobile JD and Tik Tok remains a vital component of our growth strategy in China.
A phe influencer campaign drove Miller's millions of Impressions, raising awareness of our highly differentiated PFG product line including the iconic PFG Bahamas shirt.
Japan's net sales increased by mid-single-digit percent, led by strong e-commerce growth.
For the spring season. The team did a great job of promoting. Our proprietary Technologies, like Omnimax Footwear and omni-freeze zero apparel with relevant localized marketing activities.
The grand opening of our new Columbia. Tokyo flagship store in the center of era, Juku was a success.
The beautiful store represents 1 of the most premium expressions of
the Columbia brand and the global Marketplace.
Tobey and net sales, increased low single-digit percent. During the quarter, we partnered with a new Columbia brand ambassador in Korea after Choo young. Woo.
He was the face of our spring cooling campaign, helping to increase brand visibility as well as Drive. Sell through our team in Korea, continues to make progress laying the foundation for future growth with a focus on accelerating digital.
Revitalizing, our DTC Store Fleet and optimizing marketing Investments.
Lap distributor markets were up mid teens percent driven by a healthy order book growth.
Emet sales increased 24%.
Europe, direct net sales, increased High, Teens percent with growth across all channels led by DTC stores.
Europe is sustaining its brand momentum through. Grassroots brand activation in the important height category as well as elevating online and in-store marketing across wholesale and DTC.
We have immense market, share opportunities in Europe and our team has been unlocking this potential each and every season.
Our EMA distributor business increased, high 20s percent driven by a healthy order book and early ship and a full 2525 orders.
distributor markets, the
brand is performing an exception.
I believe this reflects the distributor confidence in the Columbia brand and the success of St. Several product initiatives, including Omnimax Footwear,
Our premium titanium Collections and PFG.
Our merchandising team has partnered with Distributors to enhance assortments and Retail displays to create hundreds of elevated Brands store, environments around the world.
Success with Footwear, in these markets validates, the tremendous long-term growth potential. We have for Columbia Footwear
That sales increased 5% in the quarter, with wholesale growth more than offsetting a decline in DTC.
Looking at second quarter performance by brand, Columbia net sales increased 8%.
This spring Columbia, Columbia's product collection, emphasized, differentiated sun, protection, and cooling Technologies and re-energized PFG styles.
Our product teams continue to focus on creating products and driving growth with our targeted consumers, who value innovation and style.
To activate our product strategy. We also invested in the elevated in-store presentations, and brand storytelling across the marketplace.
For Columbia's iconic. PFG product line, this meant new active fit Styles and bold prints and colorways.
We celebrated pft's Classics, like the Tammy ammy shirt with marketing activations and connected with PFG fans, through creative new, social content.
The spring, we introduced a new product collection with insect Shield technology.
This invisible apparel protection, utilizes.
An active ingredient bonded, to the fabric for Effective. Long-lasting insect repellency, we successfully launched, insect shield, with Premium Retail Partners in the US and in select International markets.
In footwork, our new Omnimax. Conos featherweight is performing well in the marketplace and receiving positive accolades.
Women's Health selected, the new conos featherweight as the best new lightweight shoe in their 2025 sneaker Awards.
This past weekend. It was exciting to see Columbia brand ambassador. Bubba Wallace when the Brickyard 400 Nascar race at the Indianapolis Motor Speedway.
Congratulations. Bubba.
Before reviewing emerging brands' performance, I'd like to discuss an organizational change.
Aligned, our Columbia, North America, Regional organization to bring together a wholesale and direct to Consumer businesses.
This new structure will sharpen our focus and improve our ability to seize growth opportunities in our largest region.
Peter Roush will step into the role of general manager for the Columbia brand in North America.
Peter most recently oversaw, our Asian Direct business and has held several international finance leadership roles over the years
He was a key leader in our transformational project, connect initiative.
And in his new role Peter will lead an integrated growth strategy and operating model tailored to the unique needs of our North American consumers and partners.
now, turning to our emerging brands,
Sell net sales, decreased 10% for primarily driven by lower spring, 25 orders and lower DTC clearance activity compared to elevated. Pfas product clearance in the prior year,
Sell through for sell spring product line, including sneakers, and sandals has been healthy and suggests. The brand is stabilizer.
I believe momentum will continue to build for surreal in the seasons ahead. This fall, new products, and, and brand imagery will further energized, surell and retailers are responding positively to the spring 26 collection. I'm confident surrealistic in the right direction.
Bonnet sales, decreased 6% in the quarter.
Primarily reflecting soft. E-commerce performance in part due to lowest lower clearance activity compared to Prior year levels.
Pronis' brand refresh will build momentum this fall with new product collections and refreshed brand imagery. The product team is developing a clear voice and omni-channel growth strategy.
I am excited to see it come to life in the seasons ahead.
Um, Hardware, net sales decreased 7% with full price growth more than offset by lower clearance activity compared to pfas product clearance in the prior year resulting in a much higher margin.
This Outlook and commentary include forward-looking statements, please see our CFO commentary and financial review presentation for additional details and disclosures related to these statements.
Looking across the global Marketplace. There are many, external risks and uncertainties that have the potential to impact consumer demand, our operations and profitability.
At the top of this list is limited visibility as to what products will cost us in our largest market, the US.
Given these uncertainties we're giving limited second half guidance.
Our full year, 2025, net sales Outlook calls for sales of 3.3 to 3.4 billion.
We're down 1% to up 1% year-over-year. This is below our initial guidance provided at February reflecting lower assumptions for our us, wholesale and DTC businesses. Partially offset by higher forecasts in most International markets.
For the third quarter, we expect net sales to decline, 1 to 3%, year-over-year and diluted eating earnings per share would be in the range of a dollar to a dollar 20.
This financial Outlook assumes tariffs on us Imports, we remain at the additional 10% Universal rate for all countries. Except for China, which remains at 30%.
For the remainder of the year.
Any additional tariffs beyond these rates would further increase the cost of sales and reduce operating profit.
As a reminder, we are importing minimal production from China, into the us this year and do not plan to import, any finished products from China in the US in 2026.
While it's too early to discuss a 2026 Financial forecasts. I'd like to provide some color on our spring 26. Wholesale order book to date. We've received almost 90% of our projected spring 26 orders
globally, our initial spring order book, take it together with our in-season forecasts supports flat to low, single digit percent wholesale growth in the first half of 26,
all of our emerging Brands led by Mount hardware and sell
For Columbia, International orders, reflect sustained. Growth from momentum, across our direct and distributed markets.
In the US, tariff uncertainty and soft. Business Trends are weighing on initial orders.
While retailers are excited to see, Columbia's new marketing, campaign, come to life this fall. They're taking a conservative approach to placing orders for future Seasons as a result. We expect Colombia's us wholesale business to remain down in the first half of 26.
I believe we're making the necessary adjustments and Investments to re-energize the US Marketplace.
Elevating consumer's. Perception of the Columbia brand.
And ultimately restoring healthy us growth will take time.
Our new product collections, new brand voice and Marketplace Investments are just starting to take hold this fall, and will build momentum into 2026.
Before my closing remarks, I'd like to note that we are. We recently released our 2024 impact report highlighting our efforts across environment social and governance matters.
I'd encourage you to review the report which is available on our website. To learn more about the progress and accomplishments we've made empowering people sustaining places and promoting responsible process.
In closing, I'm confident we can navigate near-term uncertainty and unlock significant long-term growth opportunities ahead.
We remain committed to investing in our strategic priorities.
To xcelerate profitable growth.
Create iconic products that are differentiated functional and innovative.
Drive brand engagement with increased focused demand creation Investments.
Enhance consumer experience by investing in capabilities to delight and retain consumers.
Amplifying Marketplace Excellence. That is digitally LED Omni Channel and Global and empowered talent that is driven by our core values.
That concludes my prepared remarks. We welcome your questions for the remainder of the call. Operator, can you help us with that?
Certainly everyone at this time will be conducting a question and answer session. If you have any questions or comments, please press star 1 on your phone at this time.
We do ask that while posing your question. Please, pick up your handset if you're listening on speakerphone to provide Optimum sound quality
Once again, if you have any questions or comments, please press star 1 on your phone.
Thank you. Your first question is coming from Laurent. The Stella SKU from BNP paribus. Your line is live.
Good afternoon. Thank you very much for taking my question. Um, I wanted to ask about um 1 age results, relative to what you provided in terms of guidance, for, for, um, in February for 1 age. Looks like you beat by by about 20 million dollars. Um, Jim Jim, Jim Tim, Tim Tim, um, was that driven by that shift in the whole and wholesale from 3 to 2 to 2 and then relative to February died? I think you're cutting the full year Top Line by about 60 dollars at the midpoint.
Is that cut relative to the February guide? Um, driven by wholesale, the US wholesale weakness in the US. DTC weakness.
Yeah, the Ron did you, did you look at the first half or so by, and large as you're pointing out our first half, results are largely in line with the Outlook that we provided in, in February. Um, now, certainly once you get down into the underlying composition of that, you know, we've seen stronger business internationally, we've seen some softness in the domestic business and then, for sure, you know, there are some
Wholesale timing, shifts in our deliveries that uh are benefiting the first half.
Maybe just to characterize that a little bit, the benefit that we saw in the second quarter was about a thousand. Um, timing shift, half of which was later spring shipments that shifted out of Q1 and into Q2, and the other half um was earlier fall production as we accelerated production in advance of and to mitigate any potential further tariff increases.
Um, and then as it relates to the full year guidance. Yeah. We're down about 70 million. Um, is is I think you put it, um, relative to the guides we provided in February and by and large that's reflective of the same same factors softness in the in the US business. Uh partially offset by strength of what we're seeing internationally.
And you know, when I look at the PowerPoint presentation, um, with relative to talking about the performance by region, you know, everything is pretty much up even us Wholesales up, partly, due to that shift those shifts. But the, the 1 point of pressure obviously is the US DTC, um, brick and mortar. Obviously, you're lapping to some of the temporary stores but did, um, uh.com is under real pressure and it's, it seems to be like a theme, um, happening or cross a lot of vendors. Just curious to know what, your, what Your take is there. What's happening with the consumer in terms of their online purchases? And, and on that point or question rather? Um, how do should we think about um, dtc's versus wholesale for? For the third quarter? Thank you.
Yeah, I think, uh, you know, it's clear there's some pressure on .com. The way we're approaching it is we're going to have a complete refresh of our site.
Will become apparent to Consumers within the next 10 to 20 days, uh, where we've got new photography and, uh, that coupled with our, with our marketing efforts, which are breaking. And I think on the 4th of August,
Um, our expectations that we'll see some nice lift, um, we've had strong, uh, PT uh, strong digital performance through some of our wholesale customers. So it's not, um, it's not totally, um, a problem.
Entire Marketplace but uh certainly our products uh can look better and perform better with with an improved performance with our own.com business.
And then lauron the relates to the third quarter and what we anticipate in the US from a wholesale and DSC standpoint from a d Toc perspective, we really looked at the trend that we've seen over the course of the first half of the Year particularly the second quarter and you have extrapolated in there were more or less stimulate what we say on Trend with what we've seen more recently in the business and for the wholesale business, given the earlier deliveries of fall shipments, we will see that business be down, um, a bit as we get into the third quarter.
Okay very helpful and last question here. Gross margins. It looks like for 3Q gross margins down. Maybe is it fair to assume 150 bits and then within that how much is The Tariff impact, uh, embedded in that?
Yeah, I think more or less the way I would think about, uh, gross margins in the third quarter and we haven't provided detailed guidance on it Laurent. But we did indicate in the CFO commentary that we anticipate, tariffs being approximately, 15 to 20 million. So your 150 basis points of gross margin, um, contraction of the quarter largely aligned with that tariff impact. Having said that, um, we're in a much better place in terms of the health healthy. Our inventories are. So there will be a partial offset to that just give a um, the lower level of close out some liquidation activity that we would do in the marketplace.
Very helpful. Thank you very much for all the caller. Best of luck.
Thanks.
Thank you. Your next question is coming from John Kernan, from TD Cowen, your line is live?
good afternoon, Tim and Jim
Um just back to the Tariff Point. Uh you Jim you gave us pretty specific guidance, about the second half.
COGS impact on the Q1 call: $40 to $45 million incremental hit. Just curious how you see that developing mitigation?
Potential.
And now with the new rates that are getting announced how you think these costs are going to Trend into fiscal 26. Thank you.
Well I wish we knew specifically what the tariffs were going to be. We still don't know and I'm I'm not convinced that after the first and longest that we will, we will know because it's a very precarious to complicated negotiations.
So, we submitted a gated, the mitigating activities. Include, obviously, we could improve, we could...
increase prices, we have been, um, diligently discussing the topic with our
vendors in Asia.
We've been adjusting its own prices as I said. And, uh, we're looking throughout the supply chain to for areas, where we can save and increase the capability.
But it's safe to assume the biggest impact will be coming. Probably in fiscal 26. Is that correct?
Care impacts that we anticipate this year. We really don't have specifics aside from, you know, obviously continuing to be disciplined in our spend management in the form of price increases and other actions. You know, we’re absorbing the lion's share of all the tariff impact in FY 25.
Tim, you've been, you know, in the industry a long time, you've seen a lot of Cycles. Um,
A lot of companies out there are talking about.
Mitigation. Some of them talking about fully mitigating. Do you think this is an industry that's ready to accept full-blown price increases as we go into Fiscal 26?
Well, just as a reminder the apparel and Footwear Industries have been incredibly heavily tiffed from a historical perspective since the days of smooth quality. So in 2024 Columbia was the 81st largest Duty pair in the United States which
It's crazy, based on the size of the company.
um, so
consumers are have been paying heavy tariffs since the 30s.
if they want to continue to receive product, they're going to be they're going to be paying
Duties of a much larger number. That's why we're being quite cautious in terms of how we're approaching inventory investments in the US. And, um, in our expectations are the that there will be some elasticity issues as it relates to
to products being sold with heavy additional heavy tariffs.
That makes sense. And you know, just on that inventory theme, it looks like dollars are up about 13% this quarter.
Jim. How do you feel about the composition of the inventory where you are from a markdown perspective as we get into?
A cap 25.
Perfect. Excellent shape. You know, very comfortable with our overall inventory. That they think if you were to adjust our inventories for the earlier production of our fall, 25 inventory combined with the tariffs on that inventory and also some FX translation and we rebuilt some deep and inventory coming off of the pfas transitions last year, our inventories are flat to slightly down year-over-year so it's it's exceptionally clean and the Aging of the inventory is in great shape as well. So you know, we feel good going into the the latter part of the year and you know things end up better than what we're projecting. Now certainly I think there's still some opportunity for us to chase some business as well.
Very helpful. Thanks guys.
Thank you. Your next question is coming from Pete. McGoldrick, from stifel. Your line is live.
Hey, thanks for taking my question. I was curious about cost savings. So, you've already exceeded the high end of the original $125 million to $150 million range as you assess other areas of cost savings. I'm curious if any of those savings are embedded in your outlook, or would that be incremental to what you laid out today?
Um, to the degree that, uh, the outlook for the balance of our years is only inclusive of what we've achieved in cost takeout thus far. And, you know, we are continuing to evaluate any and all options with, you know, the pressure that we're seeing in the business and the impact of the tariffs, and, you know, provide further updates on that over time. But I think, uh, you know, we've provided the best estimate we can in the outlook that, uh, we provided.
Okay, thank you for that. And then uh, on on tariffs, the 35 to 40 million dollars for fiscal 25, uh, is after mitigation efforts and you mentioned, you'd be absorbing The Lion's Share. I, I was curious, if you could share sort of a uh, annualized run rate of how you expect. Um, the the gross impact of total tariffs to uh, impact the business and offsets
Well, I think that, I think that maybe the best way to explain that and I, you know, we don't get it into speculating, what might happen with future tariffs with announcements that are forthcoming. But if you look at just where tariffs are currently at the universal, 10% plus the 30% from a China standpoint, we do not anticipate having um imports from China in FY, 25 or FY 26, rather, um, our fob Imports into the us or about in round numbers, 800 million on an annual basis. And so, if you think about a 10% Universal tariff, you're looking on it, fully annualized basis, 80 million, and then you could run, you know, different different scenarios off of that. That's, that's the way I think about.
Performance and any timeline for to recognize improvements.
Certainly. Well, we've been running the business here which is, which is, uh, partially a direct to Consumer business, and partially a wholesale business, those have been distinctly managed and we expect that as the, the team coalesces, that will begin to see almost immediate results in terms of improving, the way we come to Market to Consumers. So, um, we're excited about the opportunity that include it. It's going to provide for us.
All right. Thank you very much.
Thank you. Your next question is coming from Tom Nik, from Needham. Your line is live.
Uh, Hey everybody, uh, thanks for taking my question. Um, I want to ask about 1 of the, you know, kind of bright spots in in the quarter. And uh, you know, specifically that the last couple of quarters, uh, you know, I think, uh, you know, you're, you're a business has been quite strong. Um, I, you know, I, I just want to say, you know, dig in a little bit deeper there and, you know, like, um, you know, you know, how are you, you know, kind of, you know, uh, able to resonate so strongly with, you know, the the European consumer. And, um, you know, the obviously there's there's a lot of macro noise everywhere, but it seems like you're really, uh, fighting through it, you know, pretty strongly, uh, overseas. So we, we just love to get a little more, uh, a little more color there.
No thanks. Uh it's been a continued Focus effort by our team in Europe and remember it's a we're a for all intents and purposes a small player in Europe. So significant improvements are are maybe outsized but the team in Europe has done a great job of focusing on certain markets, including Germany, the UK and France.
To be, uh, the center point of our European expansion and growth. There's also been a, a key move in adding DTC locations, as well as a focus on opening partner stores to help us, uh, improve the total business overall in Europe. It's just been a very disciplined approach and um, this kudos to those to, those team members for making it happen.
All right, great. And, uh, if I got to ask one more about, um, so the inventory growth was plus 13% in the quarter, um, which obviously is, um, you know, higher than the projected sales growth. Uh, the next couple of quarters, uh, I would assume that there's some, you know, kind of pull forward ahead of tariffs that, uh, that impacts that number and that, you know, is there any way that we should, you know, think about what the inventory growth will look like, uh, at year-end?
Well, we see we still see a path and you know, we have provided a projection here but we do see a path where we can keep our inventories. You know exiting the year um flat to maybe even down. There's a obviously, a ton of assumptions um you know as it relates to how the Topline plays out timing and receipts of spring 26 inventory in that. Um, as I touched on in an earlier question, you know, the inventory being up a 100 million at the end of the second quarter, you know, that's
You have 70% of that is earlier production and tariff costs in the balance of its combination of currency and just replen rebuilding up our replenishment inventories coming off a low-level last year. So we're in we're in an exceptionally good shape in terms of the composition of the inventory.
All right. Sounds good. Thanks very much and that's a lot in the second half for you.
Thank you.
Thank you. Your next question is coming from Mauricio Serna from UBS. Your line is live.
Great, uh, good afternoon, and thanks for taking my questions first. Uh, maybe could you talk a little bit more about how you're thinking about the underlying, uh, growth in the order books in the second half of of 25, which is given, you know, the, the shift in, in shipments, out of Q3 to Q2, uh, and then maybe in in the DTC business, you know, you know, in the US, you know, seeing some deceleration anyway, that do you have a sense of
How much how, um, that has been driven by, you know, your strategy to pull back uh, and promotions versus, you know, maybe just like consumers being more under pressure and then, you know, reducing their discretionary spending, thank you.
Difficulty importing product based on the tariffs that are being imposed. So there's an opportunity for us to pick up market share because the smaller a smaller vendors in the community. They're not going to be able to import as it relates to DTC. It's important to know we were heavily, uh, liquidating Pas, inventories, both through our own stores. And, um,
And the, um, the temporary clearance stores that we had. Um, so my expectation is that the vast improvement, which you will see soon in our .com presentations, as well as the impact of the new marketing efforts and other efforts around product accelerating, uh, that we'll see strong improvement in the TTC business as well.
All right. And then then just a quick follow up on the, on the guidance, for the year. Uh, you know, I think if you do the math, in the midpoint, it assumes like, uh, revenues in Q3 are down 2% and then like, Down's slightly even faster and and Q4 like any like is that just like caution in the consumer or something? And that's like more tariffs get get passed through like as they feel that like the paint job tires or what is driving? That kind of like sequential reservation is also.
Yeah, I mean, our expectations is that the impact of the Tariff costs will begin to manifest themselves late in Q3 and then Q4. So it's, it's obviously difficult to predict with any kind of certainty, what will happen, but
Consumers are very likely to be, um, cautious and uh, we'll we'll be constraining their paying their, their purchases during that period.
I understand. Thank you very much.
Thank you. That completes our Q&A session everyone. This concludes today's event, you may disconnect at this time.