Q2 2026 Amer Sports Inc Earnings Call

August 18, 2026

Speaker #1: Hello, everyone. Thank you for joining us, and welcome to the Amer Sports second quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session.

Operator: Hello, everyone. Thank you for joining us, and welcome to the Amer Sports Q2 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Omar Saad, Head of Investor Relations and Capital Markets. Please go ahead.

Operator: Hello, everyone. Thank you for joining us, and welcome to the Amer Sports Q2 2026 earnings call. After today's prepared remarks, we will host a Q&A session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Omar Saad, Head of Investor Relations and Capital Markets. Please go ahead.

Speaker #1: If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. I will now hand the conference over to Omar Saad, Head of Investor Relations and Capital Markets.

Speaker #1: Please go ahead.

Speaker #2: Welcome, everyone. Thanks for joining the Amer Sports earnings call for the second quarter of fiscal year 2026. Earlier this morning, we announced our financial results for the quarter ended June 30, 2026, and the release can be found on our IR website: investors.amersports.com.

Omar Saad: Welcome, everyone. Thanks for joining Amer Sports earnings call for Q2 of fiscal year 2026. Earlier this morning, we announced our financial results for the quarter ended 30 June 2026, and the release can be found on our IR website, investors.amersports.com. A quick reminder to everyone that today's call will contain certain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements reflect our current expectations and beliefs only. They are subject to certain risks and uncertainties that could cause actual results to differ materially. Please see the safe harbor statement in our earnings release and SEC filings. We will also discuss certain non-IFRS financial measures. Please refer to our earnings release for important information regarding such non-IFRS financial measures, including reconciliations to the most comparable IFRS financial measures.

Speaker #2: A quick reminder to everyone that today's call will contain certain forward-looking statements within the meaning of the Federal Securities Laws. These forward-looking statements reflect our current expectations and beliefs only.

Speaker #2: They are subject to certain risks and uncertainties that could cause actual results to differ materially. Please see the Safe Harbor statement in our earnings release and SEC filings.

Speaker #2: We will also discuss certain non-IFRS financial measures. Please refer to our earnings release for important information regarding these non-IFRS financial measures, including reconciliations to the most comparable IFRS financial measures.

Speaker #2: We'll begin with prepared remarks from our CEO, James Zhang, and CFO, Andrew Page, followed by a Q&A session until 9:00 a.m. Eastern. James will cover key operational and brand highlights, then Andrew will provide a financial review at both the group and segment level.

Omar Saad: We will begin with prepared remarks from our CEO, James Zheng, and CFO, Andrew Page, followed by a Q&A session until 9:00 AM Eastern. James will cover key operational and brand highlights. Then Andrew will provide a financial review at both the group and segment level and also walk through our updated guidance. Arc'teryx CEO, Stuart Haselden, and Salomon CEO, Guillaume Meyzenq, will join for the Q&A session. With that, I will turn the call over to James.

Speaker #2: And also walk through our updated guidance. Our Tareq CEO, Stewart Hazelton, and Solomon CEO, Guillaume Bezanque, will join for the Q&A session. With that, I'll turn the call over to James.

Speaker #3: Thanks, Omar. Our global momentum continues in the second quarter, with over 30% revenue growth and strong operating margin expansion. All segments, geographies, and channels achieved strong double-digit growth, led by another exceptional quarter from Salomon, Softgoods, a strong Arc'teryx omnichannel, and our Wilson Tennis 3.0 acceleration.

James Zheng: Thanks, Omar. Our global momentum continued in Q2 with over 30% revenue growth and a strong operating margin expansion. All segments, geographies, and channels achieved strong double-digit growth, led by another exceptional quarter from Salomon Softgoods, a strong Arc'teryx omni-comp, and our Wilson Tennis 360 acceleration. We manage a portfolio of sports and outdoor brands that is very unique in the marketplace. All three of our primary growth engines, Arc'teryx, Salomon Softgoods, and Wilson Tennis 360, are still relatively small, with significant room to grow. First, I will recap key highlights from our three segments. Starting with Technical Apparel. Arc'teryx delivered another great quarter with broad-based strength across regions, channels, and categories, including another exceptional performance in women's. Strong DTC momentum also continued, driven by our 17% Technical Apparel omni-comp.

Speaker #3: We manage our portfolio of sports and outdoor brands that's very unique in the marketplace. And all three of our primary growth engines—Arc'teryx, Salomon Softgoods, and Wilson Tennis 360—are still relatively small, with significant room to grow.

Speaker #3: First, I will recap key highlights from our three segments, starting with technical apparel. Arc'teryx delivered another great quarter, with broad-based trends across regions, channels, and categories.

Speaker #3: Including another exceptional performance in women's, strong DTC momentum also continued, driven by 17% technical apparel omni comp. We believe Arc'teryx is a truly global brand with significant runway in all major markets and are encouraged by the strong double-digit growth across all four regions in Q2.

James Zheng: We believe Arc'teryx is a truly global brand with significant runway in all major markets and are encouraged by the strong double-digit growth across all four regions in Q2. The brand also resonates strongly across categories and consumer segments. I want to highlight our momentum in women's, which grows faster than any other category for Arc'teryx. Our confidence in the size and the scale of our women's opportunity is very large. Brand awareness and affinity with women is rising significantly as we improve fit, style, and function and also build expanded assortment. Redesigning our core ABCD models for her, plus expanding feminine color palettes, is driving higher female traffic and conversion. In Q2, units and the seasonal colorways generate over 60% of women's sales. Standout new franchises include the Sensora and Oria lightweight hiking styles, and also the Solano utility vest and the jacket.

Speaker #3: The brand also resonates strongly across categories and consumer segments. I want to highlight our momentum in women's, which grew faster than any other category for Arc'teryx.

Speaker #3: Our confidence in the size and scale of our women's opportunity is very large. Brand awareness and affinities with women are rising significantly as we improve fit, style, and function.

Speaker #3: And also build expanded assortments. Redesigning our core ABCD models for her, plus expanding feminine color palettes, is driving higher female traffic and conversion. In Q2, newness and the seasonal colorways generally accounted for over 60% of women's sales.

Speaker #3: Standard new franchises include the Singh Sora and Aurea lightweight hiking styles, as well as the Sony utility vest and jacket. Our remarkable success in women's bottoms with franchises like the Clark Air, Route Air, and Nia pants is helping us unlock the female consumer from head to toe, driving higher overall spend.

James Zheng: Our remarkable success in women's bottoms with franchises like the Trackare, Rutare, and the Nia pants is helping us unlock the female consumer from head to toe, driving higher overall spend. Turning to footwear, which had another great quarter, including strong double-digit growth across regions, led by both existing and new styles. Popular existing styles included Norvan LD4 trail shoe, which continues to be our biggest volume driver, followed by the Konseal trekking shoes. In March, we launched the latest version of our technical trail running shoe, the Sylan 2, performing very well so far, and we are excited to have eight Arc'teryx trail run athletes competing in the UTMB race in Chamonix next week. Looking forward, we are confident that Arc'teryx has an exciting pipeline of shoe releases for the upcoming years. Turning to our Belay sub-brand, which had a solid growth in Q2 on a small base.

Speaker #3: Turning to footwear, which had another great quarter, including strong double-digit growth across regions, led by both existing and new styles. Popular existing styles included the Northern LD4 trail shoe, which continues to be our biggest volume driver.

Speaker #3: Followed by the concierge tracking shoes. In March, we launched the latest version of our technical trail racing shoe, the Silent 2, which is performing very well so far.

Speaker #3: And we are excited to have eight Actarix trail run athletes competing in the UTMB race in Chamonix next week. Looking forward, we are confident that Actarix has an exciting pipeline of shoe releases for the upcoming years.

Speaker #3: Turning to our Valence sub-brand, which had solid growth in Q2 on our small base. We continue to focus on investing in, further developing our collections, and expanding distribution, all of which is creating engagement and awareness in the marketplace.

James Zheng: We continue to focus on investing units, further developing our collections, and expanding distributions, all of which is creating engagement and awareness in the marketplace. Turning to circularity and ReBIRD, which continue to be at the heart of Arc'teryx. In Q2, we added five new ReBIRD Service Centers, bringing us to 47 total. Later this month, we will unveil an important new innovation, which combines our passion for circularity with uncompromised technical performance. On mountain, our renowned Chamonix Alpine Academy was again a great success in July, with over 15,000 visitors in the village over the weekend and more than 1,000 attendees in clinics. Our Mountain Academies are the world's premium mountain education event and the space for mountain enthusiasts of all levels to advance their skills and the knowledge through clinics on the mountain. We are especially proud that women now account for half of the academy participants.

Speaker #3: Turning to Security and the River, which continue to be at the heart of Actarix: in Q2, we added five new River Centers, bringing us to a total of 47.

Speaker #3: Later this month, we will unveil an important new innovation, which combines our passion for security with uncompromised technical performance. Our mountain, our renowned Chamonix Alpine Academy, was again a great success in July.

Speaker #3: With over 15,000 visitors in the village over the weekend, and more than 1,000 attendees in clinics, our mountain academies are the world’s premium mountain education events and the space for mountain enthusiasts of all levels to advance their skills and knowledge through clinics on the mountain.

Speaker #3: We are especially proud that women now account for half of the academy participants. Turning to Peak Performance, which delivered solid growth in Q2, the brand continues to reduce its Nordic dependency and is rationalizing its footprint in the region.

James Zheng: Turning to Peak Performance, which delivered solid growth in Q2. The brand continues to reduce its Nordic dependency and is rationalizing its footprint in the region while seeing healthy growth in other parts of EMEA. For both Peak Performance and our winter sports equipment brands, we are excited that Freeride Ski will become an Olympic sport at the 2030 Games. Peak Performance sponsored the Freeride World Tour, and our ski equipment brand sponsor many of the professional Freeride skiers. Now, turning to the outdoor performance segment, which was led by another outstanding quarter from Salomon Softgoods. The investments we are making to grow Salomon brand awareness and the distribution footprint are paying off, driving strong footwear momentum across regions, channels, and for both sport style and the performance products. I'd like to highlight a few factors that give us the confidence that Salomon is well-positioned to achieve its long-term potential.

Speaker #3: While seeing healthy growth in other parts of India for both Peak Performance and our winter sports equipment brands, we are excited that freeride ski will become an Olympic sport at the 2030 Games.

Speaker #3: Peak Performance sponsored the Freeride World Tour, and our ski equipment brands sponsor many of the professional freeride skiers. Now, turning to the Outdoor Performance segment.

Speaker #3: This was led by another outstanding quarter from Salomon Softgoods. The investments we are making to grow Salomon brand awareness and the distribution footprint are paying off, driving strong footwear momentum across regions, channels, and for both Sports Style and Performance products.

Speaker #3: I'd like to highlight a few factors that give us confidence that Salomon is well positioned to achieve its long-term potential. Number one, global sports style momentum continues.

James Zheng: Number 1, global sport style momentum continues. Sport style is critical to developing Salomon's position as the modern outdoor sneaker brand. The XT-6 and the XT Whisper franchises are resonating with the younger and the more diverse audience from technical sports in the mountains to culture and the community in the cities. We were excited to announce that Jisoo, the global superstar singer and actress, will be Salomon's new global ambassador. The news had amazing global coverage, reaching nearly 1 billion consumers across social platforms. Second, our performance lines are also working well. We continue to believe our new Aero franchise is helping to unlock the run category for Salomon like never before. Salomon is gaining traction in the run specialty channels in North America and EMEA. In July, we launched the Aero Blaze 4 with a re-engineering upper using new mesh technology.

Speaker #3: Sports style is critical to developing Salomon's position as the modern outdoor sneaker brand. The XT-6 and XT-Whisper franchises are resonating with a younger and more diverse audience, from technical sports in the mountains to culture and the community in the cities.

Speaker #3: We were excited to announce that Jie Zheng, the global superstar singer and actress, will be Salomon's new global ambassador. The news had amazing global coverage, reaching nearly a billion consumers across social platforms.

Speaker #3: Second, our performance lines are also working well. We continue to believe our new global franchise is helping to unlock the run category for Salomon like never before.

Speaker #3: Salomon is gaining traction in the run specialty channels in North America and India. In July, we launched the Aero Blaze 4, with the re-engineered upper using new mesh technology.

Speaker #3: We also recently launched the second generation of Genesis, a highly technical trail shoe. Salomon athletes were winning races in Q2, including Courtney Dauwalter earning her fourth Hardrock 100 title.

James Zheng: We also recently launched the second generation of Genesis, a highly technical trail shoe. Salomon athletes were winning races in Q2, including Courtney Dauwalter earning her fourth Hardrock 100 title, validating Salomon's technical merit on the hardest trails. Third, Salomon continued to have excellent brand heat in Greater China and Asia, where we believe we operate the most productive and profitable sneaker shops in the industry. Greater China continued to deliver very strong double-digit growth in Q2, driven by strength across sport styles, performance, and apparel. Our local for local apparel and accessories lines in China with technical products inspired by outdoor and trail running has also been gaining traction the past few quarters. Beyond China, Salomon is also experiencing surging demands in Korea and Japan, very important markets given their influence on global sneaker culture. Fourth, our epicenter strategy is working.

Speaker #3: Validating Salomon's technical merits on the hardest trails. Third, Salomon continues to have excellent brand heat in Greater China and Asia, where we believe we operate the most productive and profitable sneaker shops in the industry.

Speaker #3: Greater China continued to deliver very strong double-digit growth in Q2, driven by strengths across sports styles, performance, and apparel. Our local proof for local apparel and accessories lines in China, with technical products inspired by outdoor and trail running, has also gained traction over the past few quarters.

Speaker #3: Beyond China, Salomon is also experiencing surging demand in Korea and Japan—very important markets given their influence on global sneaker culture. Fourth, our epicenter strategy is working.

Speaker #3: Focusing on key global mature markets is allowing us to build up Salomon's reach and presence in the right way. Our tier one global epicenters—Paris, London, Shanghai, Beijing, Tokyo, New York, and Los Angeles—are all driving very strong sales momentum, as well as rising brand awareness.

James Zheng: Focusing on key global metro markets is allowing us to build up Salomon's reach and presence in the right way. Our Tier 1 global epicenter, Paris, London, Shanghai, Beijing, Tokyo, New York, and Los Angeles, are all driving very strong sales momentum as well as rising brand awareness. We approach these markets by opening a handful of impactful brand stores in the most relevant locations, alongside handpicked elevated wholesale doors. In these markets, we also invest in event partnerships, community activations, and the local media to build a strong and lasting connection with our consumers. We plan to adopt and expand this approach to several new major cities in the future, including Berlin, Seoul, Miami, San Francisco, Chicago, and Boston. Fifth is the strong demand we are experiencing in our home market, Europe, driving strong reorders, pre-orders, and sales through.

Speaker #3: We approach these markets by opening a handful of impactful brand stores in the most relevant locations, alongside hand-picked, elevated wholesale doors. In these markets, we also invest in event partnerships, community activations, and local media to build a strong and lasting connection with our consumers.

Speaker #3: We plan to adopt and expand this approach to several new major cities in the future, including Berlin, Seoul, Miami, San Francisco, Chicago, and Boston.

Speaker #3: Fifth is the strong demand we are experiencing in our home market, Europe, driving strong reorders, preorders, and sales through. Sports Style continues to be the biggest growth driver, but the global is also inflecting in Europe, supported by marketing campaigns, in-store events, and running event activations.

James Zheng: Sportstyle continues to be the biggest growth driver, but Gravel is also impacting in Europe, supported by marketing campaigns, in-store events, and the running event activations. We are seeing high e-com growth in Europe, even as we expand our premium DTC and wholesale footprint. In market, we have been very active hosting a Gravel-focused running event called Gravelander, sponsoring music festivals and artist collaborations, and most recently, we began a unique partnership with the National Opera House of Paris to outfit their dancers. Lastly, I will mention the US, which is the largest single sneaker market in the world, but still a small business for us. We know there's a strong demand for Salomon here, but still very limited distribution for consumers to find us.

Speaker #3: Also, we are seeing high e-com growth in Europe, even as we expand our premium DTC and wholesale footprint. In markets, we have been very active, hosting a global focus running event called Global Lantern, sponsoring music festivals and artist collaborations, and most recently, we began a unique partnership with the National Opera House of Paris to outfit their dancers.

Speaker #3: Lastly, I will mention the US, which is the largest single sneaker market in the world, but still a small business for us. We know there's strong demand for Salomon here.

Speaker #3: But still, very limited distribution for consumers to find us. Today, we are seeing a clear acceleration in North America, as we leverage the rising brand awareness to expand distribution with both new and existing wholesale partners, as well as our own stores and e-commerce.

James Zheng: Today, we are seeing a clear acceleration in North America as we leverage the rising brand awareness to expand its distribution with both new and existing wholesale partners, as well as our own stores and e-com. in Q2, we opened our first North American flagship store on Fifth Avenue in the Flatiron District of New York City, offering both footwear and apparel. We continue to carefully expand our footprint and shelf space in existing wholesale partners, including Nordstrom, JD Sports, and Foot Locker. Lastly, before I switch to Ball and Racquet, although Q2 is a very small quarter for our winter sports equipment franchise, Salomon, Atomic, and Armada, we are pleased that our brands continue taking share despite challenging conditions in certain markets. Moving to Ball and Racquet highlights, Ball and Racquet sales grew 24% in Q2, driven by continued strength in Tennis 360.

Speaker #3: In Q2, we opened our first North America flagship stores on 5th Avenue and in the Flatiron District of New York City, offering both footwear and apparel.

Speaker #3: And we continue to carefully expand our footprint and shop space in existing wholesale partners, including North Street, JD Sports, and Foot Locker. Lastly, before I switch to board and the record, although Q2 is a very small quarter for our winter sports equipment franchise—Salomon, Atomic, and Armada—we are pleased that our brands continue taking share, despite challenging conditions in certain markets.

Speaker #3: Moving to Board & the Record highlights. Board & the Record sales grew 24% in Q2, driven by continued strength in 10360, both soft goods and records, as well as improved growth in baseball, golf, and inflatables.

James Zheng: Both softgoods and rackets, as well as improved growth in baseball, golf, and inflatables. Our Tennis 360 strategy continues to resonate very well with consumers, from unique lines of tennis apparel and footwear to high-performance rackets. Wilson had a couple very big racket launches this spring, including a Q1 rollout of our iconic Blade franchise, version 10. This has been one of the strongest launches in our history and also the racket for world number one Aryna Sabalenka. We also recently launched a completely new racket line called Defyer. This is our first ever power spin racket, which has been a growing segment of the racket market. Early results from the Defyer are even exceeding the Blade v10's launch I just mentioned.

Speaker #3: Our 10-360 strategy continues to resonate very well with consumers, from unique lines of tennis apparel and footwear to high-performance rackets. Wilson had a couple of very big racket launches this spring.

Speaker #3: Including the Q1 rollout of our iconic Braid franchise version 10. This has been one of the strongest launches in our history, and also the rackets for world Sabrinka.

Speaker #3: We also recently launched a completely new racket line called Defy. This is our first-ever power spin racket, which has been a growing segment of the racket market.

Speaker #3: Early results from the Defy are even exceeding the Braid V10 launch I just mentioned. We continue to invest in new tour players, recently signing former world top five players.

James Zheng: We continue to invest in new tour players, recently signing former world top five player Holger Rune, and the 17-year-old rising star Eliakim Coulibaly, both playing the Defyer racket. Marta Kostyuk, one of our highest profile head-to-toe athletes, has been creating great buzz for the brand with her unique Wilson tennis outfits, reaching the semifinals at both Roland Garros and Wimbledon. Wilson softgoods continue its exceptional trajectories with very strong growth across all four major regions. Also, baseball, golf, and inflatables saw improved growth in the quarter. Before turning it over to Andrew, I'd like to conclude by saying that given the broad-based momentum across our portfolio, the healthy and growing premium sports and outdoor markets, and the world-class teams we have in place around the world, I'm very confident in the future outlook for Amer Sports. Andrew?

Speaker #3: Hogan Room and the 17-year-old rising star, Morris Coleman, both playing the Defy racket. Marta Costa, one of our highest-profile head-to-toe athletes, has been creating great buzz for the brand with her unique Wilson tennis outfits.

Speaker #3: Reaching the semifinals at both Roland Garros and Wimbledon. Wilson soft goods continue its exceptional trajectory with very strong growth across all four major regions.

Speaker #3: Also, baseball, golf, and inflatables saw improved growth in the quarter. Before turning it over to Andrew, I'd like to conclude by saying that, given the broad-based momentum across our portfolio, the healthy and growing premium sports and outdoor markets, and the world-class teams we have in place around the world, I'm very confident in the future outlook for Amer Sports.

Speaker #3: Andrew?

Speaker #1: Thanks, James. We had a great financial performance in Q2 across the P&L, with strong sales growth, margin expansion, and EPS growth. The investments we're making are paying off, driving strong momentum across each of our three biggest opportunities: Arc'teryx, Salomon soft goods, and Wilson Tennis 360.

Andrew Page: Thanks, James. We had a great financial performance in Q2 across the P&L, with strong sales growth, margin expansion, and EPS growth. The investments we're making are paying off, driving strong momentum across each of our three biggest opportunities, Arc'teryx, Salomon Softgoods, and Wilson Tennis 360. In Q2, Amer Sports grew sales 32% on a reported basis, or 30% ex currency. Our three growth engines all eclipsed 20% growth, with technical apparel and outdoor performance growing more than 30%. By channel, the group continues to be driven by D2C, which grew 40%, led by all three big brands. At the group level, D2C represented approximately 55% of revenue in Q2, marking a record high. Wholesale grew 24%, led by Arc'teryx and Salomon. Growth was also very strong across all geographies, led by Asia Pacific, which increased 60%, and China, which grew 36%.

Speaker #1: In Q2, Amer Sports grew sales 32% on a reported basis, or 30% ex-currency. Our three growth engines all eclipsed 20% growth, with technical apparel and outdoor performance growing more than 30%.

Speaker #1: By channel, the group continues to be driven by DTC, which grew 40%, led by all three big brands. At the group level, DTC represented approximately 55% of revenue in Q2, marking a record high.

Speaker #1: Wholesale grew 24%, led by Arc'teryx and Salomon. Growth was also very strong across all geographies, led by Asia Pacific, which increased 60%, and China, which grew 36%.

Speaker #1: The Americas accelerated to plus 26%, and EMEA grew 20%. Turning to profitability, adjusted gross margin increased 710 basis points to 65.8% in Q2, primarily driven by a one-time net tariff refund benefit of $64.3 million, or 390 basis points.

Andrew Page: The Americas accelerated to +26%, and EMEA grew 20%. Turning to profitability. Adjusted gross margin increased 710 basis points to 65.8% in Q2, primarily driven by a one-time net tariff refund benefit of $64.3 million, or 390 basis points. Excluding this net tariff refund benefit, we generated more than 300 basis points of underlying gross margin expansion, driven by favorable pricing, product, channel, and geographic mix, as well as favorable transportation and duties costs. The benefit from lower tariff rates versus our plan during Q2 was relatively immaterial. Adjusted SG&A expenses as a percentage of revenues increased 20 basis points and represented 54.9% of revenues in Q2. SG&A leverage in both technical apparel and outdoor performance was offset by deleverage at ball and racket due to investments in Wilson Tennis 360, as well as higher Amer corporate expenses.

Speaker #1: Excluding this net tariff refund benefit, we generated more than 300 basis points of underlying gross margin expansion, driven by favorable pricing, product, channel, and geographic mix, as well as favorable transportation and duties costs.

Speaker #1: The benefit from lower tariff rates versus our plan during Q2 was relatively immaterial. Adjusted SG&A expenses as a percentage of revenues increased 20 basis points and represented 54.9% of revenues in Q2.

Speaker #1: SG&A leverage in both Technical Apparel and Outdoor Performance was offset by deleverage at Ball & Racket due to investments in Wilson Tennis 360, as well as higher Amer corporate expenses.

Speaker #1: Led by strong gross margin expansion, we generated a 730-basis-point increase in our adjusted operating margin, from 5.5% last year to 12.8% in Q2.

Andrew Page: Led by strong growth margin expansion, we generated a 730 basis point increase in our adjusted operating margin from 5.5% last year to 12.8% in Q2. Excluding the above-mentioned net tariff refund benefit, adjusted operating margin expanded 340 basis points. Corporate expenses were $68 million, up from $45 million in Q2 of last year, mostly related to higher IT, personnel, and deferred compensation expense. Depreciation and amortization was $113 million, which includes $55 million of ROU depreciation. Adjusted net finance cost in the quarter was $21 million, above the $15 million guidance primarily due to higher cost of hedging and currency losses. In the quarter, our adjusted income tax expense was $50 million, which equates to an adjusted effective tax rate of 27%. Adjusted net income in Q2 was $127 million compared to $36 million in the prior year period.

Speaker #1: Excluding the above-mentioned net tariff refund benefit, adjusted operating margin expanded 340 basis points. Corporate expenses were $68 million, up from $45 million in Q2 of last year, mostly related to higher IT, personnel, and deferred compensation expense.

Speaker #1: Depreciation and amortization was $113 million, which includes $55 million of ROU depreciation. Adjusted net finance cost in the quarter was $21 million, above the $15 million guidance, primarily due to higher cost of hedging and currency losses.

Speaker #1: In the quarter, our adjusted income tax expense was $50 million, which equates to an adjusted effective tax rate of 27%. Adjusted net income in Q2 was $127 million, compared to $36 million in the prior year period.

Speaker #1: Adjusted diluted earnings per share was $0.22, compared to adjusted diluted earnings per share of $0.06 last year. Net tariff refunds benefited Q2 EPS by approximately $0.08 per share.

Andrew Page: Adjusted diluted earnings per share was $0.22 compared to adjusted diluted earnings per share of $0.06 last year. Net tariff refunds benefited Q2 EPS by approximately $0.08 per share. Now turning to segment results. Technical apparel revenues increased 32% to $674 million, led by Arc'teryx. Growth was fueled by 34% D2C expansion, including a 17% omni-comp. Technical apparel wholesale revenues grew 27%. In Q2, we opened net 8 new Arc'teryx stores globally, and we continue to plan 30 to 35 net new Arc'teryx stores for the full year of 2026 across all markets. Regionally, the technical apparel growth rate was led by Asia Pacific, followed by accelerating growth in EMEA and Americas, followed by Greater China. All regions continue to grow strong double digits.

Speaker #1: Now, turning to segment results. Technical apparel revenues increased 32% to $674 million, led by Arc'teryx. Growth was fueled by 34% DTC expansion, including a 17% omni-com.

Speaker #1: Technical apparel wholesale revenues grew 27%. In Q2, we opened a net 18 new Arc'teryx stores globally, and we continue to plan 30 to 35 net new Arc'teryx stores for the full year of 2026 across all markets.

Speaker #1: Regionally, the technical apparel growth rate was led by Asia Pacific, followed by accelerating growth in EMEA and the Americas, and then by Greater China. All regions continue to grow at strong double-digit rates.

Speaker #1: Not only is the brand seeing a nice acceleration in North America and EMEA, the largest outdoor markets in the world, but Greater China also continued to deliver strong growth and maintain exceptional profitability in Q2.

Andrew Page: Not only is the brand seeing a nice acceleration in North America and EMEA, the largest outdoor markets in the world, Greater China continued to deliver strong growth and maintain exceptional profitability in Q2. We finished Q2 with approximately 140 Arc'teryx stores in Greater China between owned and franchise and believe this could be 200 long term. We are planning 10 to 12 net new store openings in Greater China for the full year of 2026, with openings weighted toward H2 and Q4. We had one net China opening in Q2, the Chengdu flagship store, which spans over 7,000 square feet and 2 levels, featuring a distinctive cliff house design. Arc'teryx growth continued to accelerate in North America in Q2, and we delivered strong double-digit omni-comp in the US. We are seeing significant progress in US brand awareness, rising by approximately 50% versus last fall, led by top-of-funnel marketing.

Speaker #1: We finished Q2 with approximately 140 Arc'teryx stores in Greater China, between owned and franchise, and believe this could be 200 long-term. We are planning 10 to 12 net new store openings in Greater China for the full year of 2026, with openings weighted toward the second half and Q4.

Speaker #1: We had one net China opening in Q2—the Chengdu flagship store, which spans over 7,000 square feet and two levels, featuring a distinctive clip house design.

Speaker #1: Arc'teryx growth continued to accelerate in North America in Q2, and on omnichannels in the US, we're seeing significant progress in US brand awareness, rising by approximately 50% versus last fall, led by top-of-funnel marketing.

Speaker #1: We will also focus on further leveraging brand experience and community to unlock higher conversions in the U.S. Q2 store openings in North America include Oakridge Park in Vancouver and Southdale in Minnesota, both very elevated presentations of the brand.

Andrew Page: We also will focus on further leveraging brand experience and community to unlock higher conversions in the US. Q2 store openings in North America include Oakridge Park in Vancouver and Southdale in Minnesota, both very elevated presentations of the brand. We now have 75 stores in North America, which we believe could be 200 doors over time. In the US, we are expanding into a new partnership with DICK'S Sporting Goods, where we will be entering 15 hand-selected premium House of Sports locations from fall/winter 2026. Arc'teryx will be showcased in elevated and experiential shop-in-shop formats with a particular emphasis on the core outerwear offerings and including footwear. This is still in the test and learn stage, but has the potential to expand further over time. EMEA remains Arc'teryx's most under-penetrated market, and we are continuing to open great locations, including Oslo and Copenhagen in Q2, both off to exceptional starts.

Andrew Page: We also will focus on further leveraging brand experience and community to unlock higher conversions in the US.

Andrew Page: Q2 store openings in North America include Oakridge Park in Vancouver and Southdale in Minnesota, both very elevated presentations of the brand. We now have 75 stores in North America, which we believe could be 200 doors over time. In the US, we are expanding into a new partnership with DICK'S Sporting Goods, where we will be entering 15 hand-selected premium House of Sports locations from fall/winter 2026. Arc'teryx will be showcased in elevated and experiential shop-in-shop formats with a particular emphasis on the core outerwear offerings and including footwear. This is still in the test and learn stage, but has the potential to expand further over time. EMEA remains Arc'teryx's most under-penetrated market, and we are continuing to open great locations, including Oslo and Copenhagen in Q2, both off to exceptional starts.

Speaker #1: We now have 75 stores in North America, which we believe could be 200 doors over time. In the U.S., we're expanding into a new partnership with Dick's Sporting Goods, where we will be entering 15 hand-selected premium House of Sport locations from fall/winter 2026.

Speaker #1: Arc'teryx will be showcased in elevated and experiential shopping shop formats, with a particular emphasis on the core outerwear offerings and including footwear. This is still in the test-and-learn stage, but has the potential to expand further over time.

Speaker #1: EMEA remains Arc'teryx's most under-penetrated market, and we are continuing to open great locations, including Oslo and Copenhagen in Q2, both off to exceptional starts.

Speaker #1: We now have 19 stores across EMEA, and we believe the market could support 75-plus over the long term. Technical apparel adjusted operating margin expanded 470 basis points to 18.8%, including a 170 basis point benefit from net tariff refunds.

Andrew Page: We now have 19 stores across EMEA, and we believe the market could support 75 plus over the long term. Technical Apparel adjusted operating margin expanded 470 basis points to 18.8%, including 170 basis point benefit from net tariff refunds. Margin expansion was driven by both gross margin expansion and SG&A leverage on strong sales. Moving to our Outdoor Performance segment, which saw revenues increase 37% to $569 million, driven by continued very strong performance in Salomon footwear and apparel. By channel, Outdoor Performance D2C grew 52%, led by new doors and higher productivity across markets, especially Greater China, APAC, and the Americas. Outdoor Performance achieved a 28% omni comp with strength in both stores and e-commerce. E-com is continuing to grow across regions driven by sports style momentum and higher traffic, especially in the Americas and APAC.

Speaker #1: Margin expansion was driven by both gross margin expansion and SG&A leverage on strong sales. Moving to our Outdoor Performance segment, which saw revenues increase 37% to $569 million, driven by continued very strong performance in Salomon footwear and apparel.

Speaker #1: By channel, Outdoor Performance DTC grew 52%, led by new doors and higher productivity across markets, especially Greater China, APAC, and the Americas. Outdoor Performance achieved a 28% omnicom, with strength in both stores and e-commerce.

Speaker #1: E-commerce is continuing to grow across regions, driven by sports style momentum and higher traffic, especially in the Americas and APAC. Wholesale grew 25%, driven by strong sell-through and reorders for sports style, as well as door count expansion.

Andrew Page: Wholesale grew 25% driven by strong sell-through and reorders for sports style as well as door count expansion. Regionally, the Outdoor Performance growth rate was led by APAC, Greater China, and accelerating growth in the Americas, followed by EMEA. The popularity of Salomon footwear continues to inflect globally, and we are doing everything we can to ensure we are well-positioned to fully develop this large opportunity in the right way over time and across markets. In Asia, D2C continues to be the critical growth channel for Salomon, led by our highly productive Salomon shops. We opened 13 net new Salomon shops in Greater China this quarter, including both owned stores and partner stores, bringing our total count at quarter end to 315 doors with the potential for 400 to 500 doors over time.

Speaker #1: Regionally, outdoor performance growth was led by APAC, Greater China, and accelerating growth in the Americas, followed by EMEA. The popularity of Salomon footwear continues to inflect globally, and we are doing everything we can to ensure we are well-positioned to fully develop this large opportunity in the right way over time and across markets.

Speaker #1: In Asia, DTC continues to be the critical growth channel for Salomon, led by our highly productive Salomon shops. We opened 13 net new Salomon shops in Greater China this quarter, including both owned stores and partner stores, bringing our total count at quarter end to 315 doors, with the potential for 400 to 500 doors over time.

Speaker #1: For the full year of 2026, we continue to expect to open 45 net new stores in Greater China. We are focused on both expanding and upgrading the fleet with larger-format, more productive doors, and in the highest-traffic shopping centers and spaces to incorporate footwear and apparel.

Andrew Page: For the full year of 2026, we continue to expect to open 45 net new stores in Greater China. We are focused on both expanding and upgrading the fleet with larger format, more productive doors in the highest traffic shopping centers, and space to incorporate footwear and apparel. For example, we recently upgraded the best performing Salomon store in China, Shenyang MixC. The new shop performed very well in its first month, demonstrating that even high productivity doors can benefit from an upgrade. In APAC, another region where Salomon is experiencing explosive growth, we opened net seven new stores in Q2 across Japan, Korea, and Australia. Salomon's overall brand awareness and desirability continues to grow very rapidly in Asia for both sports style and performance. In the Americas, as James mentioned, Salomon footwear is continuing to see a material growth acceleration.

Speaker #1: For example, we recently upgraded the best performing Salomon store in China, Shangyang Mixi. The new shop performed very well in its first month, demonstrating that even high-productivity doors can benefit from an upgrade.

Speaker #1: In APAC, another region where Salomon is experiencing explosive growth, we opened a net 7 new stores in Q2 across Japan, Korea, and Australia. Salomon's overall brand awareness and desirability continue to grow very rapidly in Asia, for both sports style and performance.

Speaker #1: In the Americas, as James mentioned, Salomon footwear is continuing to see a material growth acceleration. The brand is seeing great DTC demand in stores and e-com, in both sports style and performance.

Andrew Page: The brand is seeing great D2C demand in stores and e-com in both sports style and performance. We are pleased to see traffic is up very strongly in e-com, which tracks our expanding geographic presence, distribution, and awareness across key cities. As we shared on our last call, and aligning with our epicenter strategy, Salomon has begun to expand into a small number of key wholesale doors with important US sneaker retailers such as Nordstrom, Foot Locker, and JD Sports. It is still in the early stages, but these channels are performing very well in terms of pre-orders, sell-through, and reorders. We will continue to selectively expand with these retailers over the next couple of years. We are also expanding our own retail footprint in North America, including our first flagship store on Fifth Avenue in the Flatiron District of New York City.

Speaker #1: We are pleased to see traffic is up very strongly in e-com, which tracks our expanding geographic presence, distribution, and awareness across key cities. As we shared in our last call and aligning with our epicenter strategy, Salomon has begun to expand into a small number of key wholesale doors with important U.S. sneaker retailers, such as Nordstrom, Foot Locker, and JD Sports.

Speaker #1: It is still in the early stages, but these channels are performing very well in terms of pre-orders, sell-through, and reorders. We will continue to selectively expand with these retailers over the next couple of years.

Speaker #1: We are also expanding our own retail footprint in North America, including our first flagship store on Fifth Avenue in the Flatiron District of New York City.

Speaker #1: The store is the first one in North America to carry a wide range of both footwear and apparel, and is off to a very strong start.

Andrew Page: The store is the first one in North America to carry a wide range of both footwear and apparel, and is off to a very strong start. The new Salomon store in the Upper West Side of New York City also continues to perform very well. Looking ahead, as we expand our Los Angeles epicenter, we are planning a Beverly Hills location for October. We will continue to focus on our epicenter strategy in 2026 and beyond, particularly New York, Los Angeles, Miami, and San Francisco. We continue to plan to open 7 to 10 new Salomon shops in the Americas this year. In EMEA, key epicenters Paris and London are seeing strong growth. We are also further developing other European markets, including a Barcelona shop that opened in July.

Speaker #1: And the new Salomon store in the Upper West Side of New York City also continues to perform very well. Looking ahead, as we expand our Los Angeles epicenter, we are planning a Beverly Hills location for October.

Speaker #1: We will continue to focus on our epicenter strategy in 2026 and beyond, particularly in New York, Los Angeles, Miami, and San Francisco. We continue to plan to open seven to ten new Solomon shops in the Americas this year.

Speaker #1: In EMEA, key epicenters—Paris and London—are seeing strong growth. We are also further developing other European markets, including a Barcelona shop that opened in July.

Speaker #1: Lastly, while Q2 is by far the smallest quarter of the year for our winter sports equipment franchises, we are encouraged by the positive order book trends and continued market share gains, despite challenging weather and market conditions.

Andrew Page: Lastly, while Q2 is by far the smallest quarter of the year for our winter sports equipment franchises, we are encouraged by the positive order book trends and continued market share gain despite challenging weather and market conditions. The demand for ski vacations in the mountains remains high and consistent, and the core alpine on-piste market is healthy despite inconsistent snow conditions, as most top ski resorts now have excellent snowmaking capabilities. Outdoor Performance adjusted operating profit margin expanded 800 basis points from last year to 14.6% in Q2, including a 270 basis point positive impact from net tariff refunds. This improvement was largely driven by gross margin expansion due to mix shift benefits and SG&A leverage on strong sales. Moving to Ball and Racket, where revenue increased 24% to $390 million, driven by softgoods and racket sports. We continue to see very strong momentum in Tennis 360 globally.

Speaker #1: The demand for ski vacations in the mountains remains high and consistent, and the core alpine on-piste market is healthy despite inconsistent snow conditions, as most top ski resorts now have excellent snowmaking capabilities.

Speaker #1: Outdoor performance adjusted operating profit margin expanded 800 basis points from last year to 14.6% in Q2, including a 270 basis point positive impact from net tariff refunds.

Speaker #1: This improvement was largely driven by gross margin expansion due to mix shift benefits and SG&A leverage on strong sales. Moving to Ball & Racket, revenue increased 24% to $390 million, driven by soft goods and racket sports.

Speaker #1: We continue to see very strong momentum in Tennis 360 globally. By category, the growth was led by soft goods, up very strong double digits, with continued momentum in all regions.

Andrew Page: By category, the growth was led by softgoods, up very strong double digits with continued momentum in all regions. Rackets growth was also strong across the board, driven by China, APAC, and EMEA. Performance rackets grew more than 50%, driven by the very strong Blade v10 launch. We are also seeing Padel gaining momentum, and it has become one of the top five revenue drivers in Q2. Beyond tennis, we saw a return to growth in baseball after slower sell-in last quarter. Golf and inflatables also saw solid growth in the quarter. All regions generated double-digit growth for Ball and Racket, led by Greater China, APAC, and EMEA, followed by the Americas. We opened 12 net new Wilson brand stores in Q2, with the majority split between Greater China and APAC. We have extensive store opening plans for China given the performance of existing Wilson Tennis 360 shops there.

Speaker #1: Rackets' growth was also strong across the board, driven by China, APAC, and EMEA. Performance rackets grew more than 50%, driven by the very strong Blade V10 launch.

Speaker #1: We are also seeing padel gaining momentum, and it has become one of the top five revenue drivers in Q2. Beyond tennis, we saw a return to growth in baseball after slower sell-in last quarter.

Speaker #1: Golf and inflatables also saw solid growth in the quarter. All regions generated double-digit growth for Ball & Racket, led by Greater China, APAC, and EMEA, followed by the Americas.

Speaker #1: We opened 12 net new Wilson brand stores in Q2, with the majority split between Greater China and APAC. We have extensive store opening plans for China, given the performance of existing Wilson Tennis 360 shops there.

Speaker #1: For the full year, we continue to plan to open approximately 40 net new Wilson Tennis 360 shops in China, between owned and partner doors.

Andrew Page: For the full year, we continue to plan to open approximately 40 net new Wilson Tennis 360 shops in China between owned and partnered doors. APAC continues to drive meaningful Wilson growth, driven by softgoods in Korea and rackets in Japan. In North America, we saw strong growth across channels as baseball and inflatables rebounded. We have also continued to expand our Tennis 360 offering into more DICK'S Sporting Goods locations, including House of Sports, and are now in 450 Dick's stores with our full head-to-toe-to-hand offering. Looking ahead to the rest of the year, please keep in mind that Ball and Racket's tremendous 24% growth in Q2 benefited from some big product launches and related sell-in, and we do not expect this level of growth on an ongoing basis.

Speaker #1: APAC continues to drive meaningful Wilson growth, driven by soft goods in Korea and rackets in Japan. In North America, we saw strong growth across channels, as baseball and inflatables rebounded.

Speaker #1: We have also continued to expand our Tennis 360 offering into more DICK'S Sporting Goods locations, including House of Sports, and are now in 450 DICK'S stores with our full head-to-toe-to-hand offering.

Speaker #1: Looking ahead to the rest of the year, please keep in mind that Ball & Racket's tremendous 24% growth in Q2 benefited from some big product launches and related sell-in, and we do not expect this level of growth on an ongoing basis.

Speaker #1: Ball and Racket segment adjusted operating profit margin increased 1,300 basis points to 17.2%, including a 970 basis point benefit from net tariff refunds. The underlying margin expansion was driven by favorable pricing, product, channel, and region mix.

Andrew Page: Ball and Racket segment adjusted operating profit margin increased 1,300 basis points to 17.2%, including a 970 basis point benefit from net tariff refunds. The underlying margin expansion was driven by favorable pricing, product, channel, and region mix. This was slightly offset by higher SG&A and our intentional decision to invest behind Wilson softgoods, including Tennis Tour Pros. Turning to the group balance sheet. We ended the quarter with $573 million of net cash and exited the quarter with inventories up 19% year-over-year, well below our 32% sales growth. We are very comfortable with the level and quality of our inventory and happy to see the inventory levels normalize versus revenues earlier than planned. Driven by strong profit growth and disciplined working capital management, we generated $339 million of operating cash flow in H1 2026 compared to $108 million last year.

Speaker #1: This was slightly offset by higher SG&A and our intentional decision to invest behind Wilson soft goods, including tennis tour pros. Turning to the group balance sheet, we ended the quarter with $573 million of net cash and exited the quarter with inventories up 19% year over year, well below our 32% sales growth.

Speaker #1: We are very comfortable with the level and quality of our inventory and are happy to see inventory levels normalize versus revenues earlier than planned.

Speaker #1: Driven by strong profit growth and disciplined working capital management, we generated $339 million of operating cash flow in the first half of 2026, compared to $108 million last year. For the full year of 2026, we continue to expect to generate solid operating cash flow growth versus 2025 levels.

Andrew Page: For the full year of 2026, we continue to expect to generate solid operating cash flow growth versus 2025 levels. Now moving to guidance. We had another great financial performance in Q2 across the P&L, with strong sales growth, margin expansion, and EPS growth. The investments we have been making in our brands are paying off in the form of exceptional trends across each of our three biggest opportunities, Arc'teryx, Salomon softgoods, and Wilson Tennis 360. We will continue to reinvest behind these early-stage growth engines to ensure high quality, long-duration growth, and strong brand equity over the long term. Our guidance assumes that the most recently announced Section 301 tariff rates remain in place for the remainder of 2026. We have already received the majority of our total tariff refund submission amount, and any remaining impacts will be negligible.

Speaker #1: Now, moving to guidance, we had another great financial performance in the second quarter across the P&L, with strong sales growth, margin expansion, and EPS growth.

Speaker #1: The investments we have been making in our brands are paying off in the form of exceptional trends across each of our three biggest opportunities: our tariffs, Salomon soft goods, and Wilson Tennis 360.

Speaker #1: We will continue to reinvest behind these early-stage growth engines to ensure high-quality, long-duration growth and strong brand equity over the long term.

Speaker #1: Our guidance assumes that the most recently announced Section 301 tariff rates remain in place for the remainder of 2026. We have already received the majority of our total tariff refund submission amount, and any remaining impacts will be negligible.

Speaker #1: Let's begin with the updated full-year 2026 outlook. We are raising 2026 revenue growth guidance from 20–22% to approximately 24%, which includes a 200 to 250 basis point currency benefit at current exchange rates.

Andrew Page: Let's begin with the updated full-year 2026 outlook. We are raising 2026 revenue growth guidance from 20% to 22% to approximately 24%, which includes a 200 to 250 basis point currency benefit at current exchange rates. By segment, we are raising our Technical Apparel 2026 revenue growth guidance from approximately 22% to 24% to 25% to 26%. We are also increasing our Outdoor Performance sales growth expectations from 22% to 24% to 27% to 28%. Our Ball and Racket sales growth guidance goes from 10% to 12% to approximately 14%. Turning to margins. We are fortunate to have the revenue and gross margin momentum that allows us to reinvest behind our three growth engines to ensure high-quality growth and strong brand equity over the long term, while also expanding our operating margins over time.

Speaker #1: By segment, we are raising our technical apparel 2026 revenue growth guidance from approximately 22 to 24% to 25 to 26%. We are also increasing our outdoor performance sales growth expectations from 22 to 24% to 27 to 28%.

Speaker #1: Our ball and racket sales growth guidance goes from 10–12% to approximately 14%. Turning to margins, we are fortunate to have the revenue and gross margin momentum that allow us to reinvest behind our three growth engines, to ensure high-quality growth and strong brand equity over the long term.

Speaker #1: While also expanding our operating margins over time. For 2026, we are raising our full year adjusted gross margin guidance from 59 to 59 and a half percent to 60.5 to 61%, which includes the 80 basis point benefit from the Q2 net tariff refund.

Andrew Page: For 2026, we are raising our full-year adjusted gross margin guidance from 59.5% to 60.5% to 61%, which includes the 80 basis point benefit from the Q2 net tariff refund. We are raising our adjusted operating margin guidance from 13.4% to 13.7% to 14.2% to 14.5%. By segment, we are raising Technical Apparel adjusted operating margin guidance from approximately 22% to approximately 22.5%, which includes approximately 30 basis point of net tariff refund benefit from Q2. For Outdoor Performance, we are raising adjusted operating profit margin guidance from 15% to 15.5% to 16% to 16.5%, which includes approximately 50 basis points of tariff refund benefit. For Ball and Racket, we are raising the adjusted operating margin from 4.7% to 5% to 6.7% to 7.2%, which includes approximately 250 basis point benefit from tariff refunds.

Speaker #1: And we are raising our adjusted operating margin guidance from 13.4% to 13.7%, to 14.2% to 14.5%. By segment, we are raising Technical Apparel adjusted operating margin guidance from approximately 22% to approximately 22.5%, which includes approximately 30 basis points of net tariff refund benefit from Q2.

Speaker #1: For outdoor performance, we are raising adjusted operating profit margin guidance from 15 to 15 and a half percent to 16 to 16 and a half percent, which includes approximately 50 basis points of tariff refund benefit.

Speaker #1: And for Ball & Racket, we are raising the adjusted operating margin from 4.7–5.0% to 6.7–7.2%, which includes approximately a 250 basis point benefit from tariff refunds.

Speaker #1: We are assuming 2026 net finance cost of approximately $85 million, which is up from the previous $70 million guidance, mainly attributable to an increase in the cost of hedging, FX losses, as well as an increase in lease expense.

Andrew Page: We are assuming 2026 net finance cost of approximately $85 million, which is up from the previous $70 million guidance, mainly attributable to an increase in the cost of hedging, FX losses, as well as an increase in lease expense. We continue to assume an effective tax rate of 28%. Other operating income should be approximately $43 million for the full year. Corporate expense is now expected to be $240 million versus $220 million previously, primarily due to higher IT investment spend and deferred compensation expense. Net income attributable to non-controlling interests is expected to be approximately $30 million for the full year. We now expect adjusted diluted EPS of $1.27 to $1.30, versus our prior guidance of $1.18 to $1.23, which is based on approximately 585 million fully diluted shares. Other full-year modeling items to consider.

Speaker #1: We continue to assume an effective tax rate of 28%. Other operating income should be approximately $43 million for the full year. Corporate expenses are now expected to be $240 million, versus $220 million previously.

Speaker #1: Primarily due to higher IT investment spend and deferred compensation expense. Net income attributable to non-controlling interest is expected to be approximately $30 million for the full year.

Speaker #1: We now expect adjusted diluted EPS of $1.27 to $1.30, versus our prior guidance of $1.18 to $1.23, which is based on approximately 585 million fully diluted shares.

Speaker #1: Other full-year modeling items to consider: we're also assuming depreciation and amortization of approximately $450 million, including about $220 million of ROU depreciation.

Andrew Page: We are also assuming depreciation and amortization of approximately $450 million, including approximately $220 million of ROU depreciation. CapEx is still expected to be approximately $400 million, primarily to support our retail expansion and IT infrastructure investments. Now, turning to the Q3 guidance. We expect reported revenue growth for the group in the range of 18% to 20%, which assumes an approximate 50 basis point tailwind from favorable FX impact at current exchange rates. We expect adjusted gross margin to be approximately 59% in Q3 2026 and an adjusted operating profit margin of 13.5% to 14%. Keep in mind that last year's Q3 gross margin benefited by approximately 50 basis points from one-time inventory reserve adjustments. Net finance costs will be $15 million to $20 million, and our effective tax rate will be approximately 28%. We expect adjusted diluted EPS of $0.31 to $0.33 in Q3.

Speaker #1: Capex is still expected to be approximately $400 million, primarily to support our retail expansion and IT infrastructure investments. Now, turning to the third quarter guidance.

Speaker #1: We expect reported revenue growth for the group in the range of 18 to 20 percent, which assumes an approximate 50-basis-point tailwind from favorable FX impact at current exchange rates.

Speaker #1: We expect adjusted gross margin to be approximately 59% in Q3 2026, and an adjusted operating profit margin of 13.5% to 14%.

Speaker #1: Keep in mind that last year's Q3 gross margin benefited by approximately 50 basis points from one-time inventory reserve adjustments. Net finance cost will be $15 to $20 million, and our effective tax rate will be approximately 28%.

Speaker #1: We expect adjusted diluted EPS of $0.31 to $0.33 in Q3. Lastly, should better-than-anticipated demand materialize, we believe we are well positioned to deliver financial performance ahead of our expectations.

Andrew Page: Lastly, should better than anticipated demand materialize, we believe we are well-positioned to deliver financial performance ahead of our expectations. With that, I will turn it back to the operator for questions.

Speaker #1: With that, I'll turn it back to the operator for questions. Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow-up.

Operator: Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Matthew Boss from JPMorgan. Please go ahead. Apologies, Matthew, one moment.

Operator: Thank you. We will now begin the Q&A session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Matthew Boss from JPMorgan. Please go ahead. Apologies, Matthew, one moment.

Speaker #1: If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #1: And if you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Matthew Boss from J.P. Morgan.

Speaker #1: Please go ahead. Apologies, Matthew. One moment.

Matthew Boss: 32-

Speaker #2: 32.

Speaker #1: Your line is now open. Please go ahead.

Operator: Your line is now open. Please go ahead.

Speaker #2: Okay, great. Thanks. And congrats on a really nice quarter. So, James, 32% revenue growth, sequential acceleration at all three brands in the second quarter.

Matthew Boss: Okay, great. Thanks, and congrats on a really nice quarter. James, 32% revenue growth, sequential acceleration at all three brands in Q2. Can you elaborate on the strong top-line momentum that you cited has continued into Q3? Andrew, can you walk through top-line and margin back half assumptions, or why not more top and bottom-line upside, given the revenue strength and margin flow-through rate that you saw in the front half of the year?

Speaker #2: Can you elaborate on the strong top-line momentum that you cited has continued into the third quarter? And Andrew, can you walk through top-line and margin back-half assumptions, or explain why there isn't more top- and bottom-line upside given the revenue strength and margin flow-through rate that you saw in the front half of the year?

Speaker #3: Good morning, and thank you for your questions. Okay. So, we achieved exceptional results in Q2. We feel very good about the foundation we have built, especially for the three major brands.

James Zheng: Good morning. Thank you for your questions. We got the exceptional result in Q2. We feel very good about the foundation we built up, especially for the major three brands. They are on right track to grow the market cross-border in the world. For Q3, I think the momentum is still there and we already give the guidance. We will grow our revenue top line from 18% to 20%, based on the much higher base of our business. Q3 is one of the largest quarters cross-border this year. I think based on our current projections, whole year we will foresee 24% growth cross-border for the company. Overall, I think the momentum still carry on and the management team got the very good confidence to continue to steer our business on healthy track.

Speaker #3: They are on the right track to grow the market, close quarter in the world. So for Q3, I think the momentum is still there. And we already gave the guidance.

Speaker #3: So we will grow our top-line revenue from 18 to 20 percent, okay, based on the much higher base of our business. Okay. So, Q3 is one of the largest quarters in cross-border this year.

Speaker #3: So I think, based on our current projections, for the whole year we foresee 24% gross cross-border for the company. So overall, I think the momentum will still carry on, and the management team has very good confidence to continue to steer our business on a healthy track.

Speaker #4: Yeah. Hey, Matt, thanks. This is Andrew. And as you think about the flow-through and the momentum coming out of Q2, we feel very good about our guidance going forward, as James said.

Andrew Page: Yeah. Hey, Matt. Thanks. This is Andrew. As you think about the flow-through and the momentum coming out of Q2, we feel very good about our guidance going forward. As James said, we continue to always strive to provide ambitious and yet responsible guidance. As you think about the flow-through, just really think about the fact that we are going to deliver at the midpoint of our guidance. We are going to deliver well over 100 basis points of margin expansion.

Speaker #4: I mean, we continue to always strive to provide ambitious, and yet responsible, guidance. As you think about the flow-through, I mean, just really think about the fact that, you know, we're going to deliver—at the midpoint of our guidance—we're going to deliver well over 100 basis points of margin expansion.

Speaker #4: And we've done that consistently since the IPO. We've delivered, on average, over 150 basis points a year. We have visibility to be in that ballpark as we go through this.

Andrew Page: We have done that consistently since the IPO. We have delivered over 150, on average, 150 basis points a year. We have visibility to be in and at ballpark as we go through this. In the back half, there are going to be some continued investment into the growth in our business, especially as you look at the big opportunities we have in Salomon, Arc'teryx, and Tennis 360. We are going to have a little bit more increase, as I talked about in my prepared remarks, increase in our net finance costs as we look at some of the hedging and FX exposure that we have. We did note the increase in our corporate expenses related to IT investments that we are making. But at the end of the day, we are still focused on delivering very strong bottom-line expansion.

Speaker #4: And in the back half, you know, there are going to be some continued investments into the growth in our business, especially as you look at the big opportunities we have in Salomon, Arc'teryx, and Tennis 360.

Speaker #4: We're going to have a little bit more increase, as I talked about in my prepared remarks, in our net finance costs as we look at some of the hedging and FX exposure that we have.

Speaker #4: And we did note the increase in our corporate expenses related to IT investments that we're making. But at the end of the day, we are still focused on delivering very strong bottom-line expansion. We're excited about where we're going, and we have the opportunity to continue to invest in our growth opportunities and responsibly provide guidance for the back half of the year.

Andrew Page: We are excited about where we are going, and we have the opportunity to continue to invest in our growth opportunities, and responsibly provide guidance for the back half of the year.

Speaker #2: Great. Best of luck.

Matthew Boss: Great. Best of luck.

Speaker #1: Your next question comes from the line of Laurent Vasilikou from BNP Paribas. Your line is open.

Operator: Your next question comes from the line of Laurent Vasilescu from BNP Paribas. Your line is-

Speaker #5: Oh, good morning. Thank you very much.

Laurent Vasilescu: Good morning. Thank you very much.

Speaker #1: Welcome. Go ahead.

Operator: Go ahead.

Speaker #5: Good morning. Thank you very much for taking my questions. I wanted to ask first on Salomon. With the recent rollout at Foot Locker, and then also, I think, JD Sports a few quarters back, I’m curious to know how many doors you are currently at in these two key retailers?

Laurent Vasilescu: Good morning. Thank you very much for taking my questions. I wanted to ask first on Salomon, with the recent rollout of Foot Locker, and also JD Sports a few quarters back. Was curious to know, how many doors are you currently at in these two key retailers, and where do you think the opportunity lies, going forward in terms of number of doors? Thank you so much. I have a follow-up on ball and racket.

Speaker #5: And where do you think the opportunity lies going forward, in terms of number of doors? Thank you so much. And then I have a follow-up on ball and racket.

Omar Saad: Thanks for your question, Laurent. We are going to go to Guillaume, who is off-site and dialed in, for the Salomon section.

Speaker #4: Thanks for your question, Laurent. We're going to go to Guillaume, who is off-site and dialed in for the Salomon question.

Guillaume Meyzenq: Hello. Good morning, everybody. First of all, we have this very diligent strategy developing the D2C doors in US. One thing I want to highlight before we speak about how we develop is we are very much driven by consumer demand. We are also driven by our epicenter strategy, so that we are looking at the consumer, not door by door and the kind of numeric distribution, but where do the door sit and how much we are able to drive demand across the market. Today, our longest partner is Nordstrom, then we have JD Sports, then we just started Foot Locker in July, as maybe you have seen in our communication that we have been doing. We are very pleased about the results. We have very strong demands, is it on pre-order, sell through, and reorder.

Speaker #5: You know, good morning, everybody. First of all, you know, we have this very diligent strategy developing the B2B doors in the US. One thing I want to highlight before we speak about, you know, how we develop is we are very much driven by consumer demands, and we are also driven by our epicenter strategy.

Speaker #5: So, we are looking at the consumer not door by door and the kind of numeric distribution, but where the doors sit, and how much we are able to drive demand across the market.

Speaker #5: So today, we have our longest partner, which is Nordstrom, where we see a very strong Nordstrom. Then we have JD Sport, and then we just started with Foot Locker in July, as you may have seen in our communication that we have been doing.

Speaker #5: So we are very pleased about the results. We have very strong demand, both in pre-orders, sales through, and reorders. And now we are really planning to have this development.

Guillaume Meyzenq: Now we are really planning to have these developments. This is very much handpicked locations, so we are looking for epicenter. Starting from New York City, of course, but LA, Chicago, San Francisco, Miami, and others. Once again, we start from small. You know that this type of partner, they have a very large fleet of doors. Today we just speak about the ambition is couple of hundred on the best location where we are going to have the best sell-through. This is where we are driving today, the demand and the success. In parallel, this partner, they have also a very strong e-com platform, which is also helping because this e-com platform drive quite a lot of traffic also in North America. It is more quality over quantity today.

Speaker #5: These are very much handpicked locations. So we are looking for epicenters, starting from New York City, of course, but also LA, Chicago, San Francisco, Miami, and others.

Speaker #5: And once again, we start from small. So you know that this type of partner, they have a very large fleet of doors. And today we just speak about a couple—the ambition is a couple of hundred—on the best locations where we're going to have the best sell-through.

Speaker #5: But this is where we are driving today—the demand and the success. And in parallel, this partner, they also have a very strong e-commerce platform, which is also helping, because this e-commerce platform drives quite a lot of traffic also in North America.

Speaker #5: So, for us, it's more quality over quantity today. And this is the way we would like to plan in order to really secure the brand's positioning, the brand equity, and also continue to support the consumer demands behind Salomon.

Guillaume Meyzenq: This is a way we would like to plan in order to really secure the brand's positioning, the brand equity, and also continue to support the consumer demands behind Salomon.

Speaker #5: Wonderful. And then, Andrew, under your leadership and now Carrie's leadership, Ball & Racket is really taking off with this 24% growth. I know you mentioned that it should not grow at this rate over the next few quarters, but near term, I know you're not in the habit to give us color by segment by quarter, but it does imply, if we assume low double digits for Q3, that it's materially close to mid-single digits for Q4.

Laurent Vasilescu: Wonderful. Andrew, under your leadership and now Carrie's leadership, Ball and Racket has really taken off, with this 24% growth. I know you mentioned that it should not grow at this rate over the next few quarters. But, near term, I know you're not in the habit to give us color by segment or by quarter, but it does imply, if we assume low double digits for Q3, that it materially slows to mid-single digits for Q4 if we take the guide for the full year. Is that the right way to think about it near term? And then in the last year at the Investor Day, you called out that it should be growing mid-single digits at top line overall over the next few years. Is that still the right way to think about it? Thank you so much.

Speaker #5: If we take the guide for the full year, is that the right way to think about it near term? And then, you know, last year at the Investor Day, you called out that it should be growing mid-single digits at the top line overall over the next few years.

Speaker #5: Is that still the right way to think about it? Thank you so much.

Speaker #4: I won't. And yep, I'm here. Yes. So hi, this is Andrew. Thanks for the question. You know, very, very strong—as you talked about—very strong third quarter, second quarter for Ball and Racket.

Andrew Page: If you want, then yeah, I'm here.

Laurent Vasilescu: Yeah.

Andrew Page: Hi, this is Andrew. Thanks for the question. Very strong as you talked about. Very strong Q2 for Ball and Racket. It was led by a couple of things. Our go-to-market strategy for our wholesale accounts in North America, we've really amped that up. Our key national accounts, providing them a more fulsome offering, we really amped that up. Wilson Tennis 360, in both soft goods and rackets, really had a strong Q2 led by our two racket launches of the Defyer, and Blade v10. And our soft goods door expansion in DICK'S Sporting Goods going from 250 to 450 doors.

Speaker #4: It was led by a couple of things. Our go-to-market strategy for our wholesale accounts in North America—we really amped that up. So, for our key national accounts, providing them a more fulsome offering—we really amped that up.

Speaker #4: Wilson Tennis 360, in both soft goods and rackets, really had a strong second quarter, led by our two racket launches of Defire and Blade V10.

Speaker #4: And our soft goods door expansion and VIX going from 250 to 450 doors so if you think if you think about all of those things that I just talked about, the two successful launches, the increased door count with VIX, the revision of our go-to-market strategy and focus on our offerings to our key wholesale accounts, those were, you know, accelerators in the in the quarter, and they drove that outsized performance.

Andrew Page: If you think about all of those things that I just talked about, the two successful launches, the increased door count with DICK'S Sporting Goods, the revision of our go-to-market strategy and focus on our offerings to our key wholesale accounts, those were accelerators in the quarter, and they drove that outsized performance. We also had solid performances in our baseball and our golf irons, and our inflatables business. So we feel great about Ball and Racket's record quarter. We would not expect such high growth rates to sustain given the new launches. So there were new launches and new sell-ins and revision of our go-to-market. Our updated guidance reflects the appropriate growth rate that we believe is appropriate for the H2.

Speaker #4: We also had solid performances in our baseball and our golf irons, and our inflatables business. So we feel great about ball and rackets' record quarter.

Speaker #4: We would not expect such high growth rates to sustain given the new launches. So, there were new launches and new sell-ins, and a revision of our go-to-market.

Speaker #4: So, our updated guidance reflects the appropriate growth rate that we believe is suitable for the second half.

Speaker #5: And longer term, it should have grown mid-single digits as a segment?

Laurent Vasilescu: And longer term, it should grow mid-single digits as a segment?

Speaker #4: Update the algorithms on the Q2 call, Laurent. But yeah, it is a fair point that the soft goods business has become a lot larger, and that business is growing faster.

Andrew Page: Update the algorithms on the Q2 call, Laurent. But it is a fair point that the softgoods business has become a lot larger and that business is growing faster.

Speaker #5: Okay. Thank you very much, Investor Locker.

Laurent Vasilescu: Okay. Thank you very much, and best of luck.

Speaker #1: Your next question comes from the line of Brooke Roach from Goldman Sachs. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Brooke Roach from Goldman Sachs. Your line is opening up. Please go ahead.

Speaker #6: Good morning, and thank you for taking our question. I was hoping you could elaborate on the growth investments in the business that you're making in the back half of the year.

Brooke Roach: Good morning, and thank you for taking our question. I was hoping you could elaborate on the growth investments in the business that you are making in the back half of the year. Is there any texture you can provide regarding the categorization of spend? Is this a step up in marketing spend as a percent of sales relative to your prior forecast, or are these more durable and permanent investments such as headcount? How should we be thinking about the revenue and sales growth opportunity on the back of this? Thank you.

Speaker #6: Is there any texture you can provide regarding the categorization of spend? Is this a step-up in marketing spend as a percent of sales relative to your prior forecast, or are these more durable and permanent investments such as headcount?

Speaker #6: And how should we be thinking about the revenue and sales growth opportunity on the back of this? Thank you.

Andrew Page: Brooke, hi, this is Andrew. Let me kick off a little bit, amplifying some of the points I made earlier. Philosophically, because of the significant value creation potential for each of our three growth engines, we are going to invest behind the brands and the capabilities so we can deliver healthy, sustainable growth while also ensuring strong brand equity over the long term. As I noted, we have delivered a very large amount of margin expansion over a short period of time. If you think about the midpoint of our 2026 guidance, we have averaged 150 basis points of annual EBIT margin over the three years since the IPO, from 9.8% in 2023 to 14.2% to 14.5% this year. This is well above our 30 to 70 basis points plus dips on an annual margin expansion in our algorithm.

Speaker #4: Well, Brooke, hi. This is Andrew. Let me kick off a little bit. You know, amplifying some of the points I made earlier, philosophically—because of the significant value creation potential for each of our three growth engines—we're going to invest behind the brands and the capabilities so we can deliver healthy, sustainable growth, while also ensuring strong brand equity over the long term.

Speaker #4: As I noted, we've delivered a very we've delivered a very large amount of margin expansion over a short period of time. And as you if you think about our the midpoint of our 2026 guidance, we've averaged 150 basis points of annual EBIT margin over the three years since the IPO.

Speaker #4: You know, from 9.8 percent in 2023 to, you know, 14.2 to 14.5 percent this year. So this is well above our 30 to 70 basis points, plus bips, on an annual margin expansion in our algorithm.

Speaker #4: So, we believe we have three of the most unique brands in all of consumer discretionary, and we're sitting in one of the healthiest and fastest-growing segments.

Andrew Page: We believe we have three of the most unique brands in all of consumer discretionary, and we are sitting in one of the healthiest and fastest-growing segments. So making it well worth our investment on our sales and gross margin upside to ensure that we capitalize on these opportunities in the right way and still be able to deliver bottom-line margin over time. This means, again, attracting high-quality talent, supporting our brands with best-in-class marketing, building premium owned stores, and developing our IT digital platforms. As you think about that, I will hand it over to James because I think it is important for you guys to really understand what are we investing in for our key big growth drivers.

Speaker #4: So, making it well worth our investment on our sales and gross margin upside to ensure that we capitalize on these opportunities in the right way, and still be able to deliver bottom-line margin over time.

Speaker #4: So this means, again, attracting high-quality talent, supporting our brands with best-in-class marketing, building premium owned stores, and developing our IT digital platforms. So, as I—as you think about that, you know, I'll hand it over to James because I think it's important for you guys to really understand what we are investing in for our key big growth drivers.

Speaker #2: Yeah, I will add more color relating to the brand investment areas. So for Acarix, we will continue to invest in our overall global brand awareness, okay?

James Zheng: Yeah, I will add more colors relating to the brand investment areas. For Arc'teryx, we will continue to invest on our overall global brand awareness. Through very strong global brand campaigns, we will continue to leverage our store opening process and make sure we have a good level of penetration in the markets we would like to move in. Obviously, we will put a good level investment on our products, especially on women footwear and apparel, where we really think it is a key growth engine for coming years. For Arc'teryx, obviously, these are the major areas. For Salomon, as Gail mentioned, epicenter strategy is still on the way, cross-border in the world, especially in Europe and North America.

Speaker #2: So, through very strong global brand campaigns, we will continue to leverage our store opening process and make sure we have a good level of penetration in the markets we'd like to move into.

Speaker #2: And obviously, we will put a good level of investment into our products, especially in women's footwear and the Balance, where we really think it's a key growth engine for the coming years.

Speaker #2: So, for Acarix, obviously, these are the major areas. For Salomon, I mean, as Guillaume mentions, the epicenter strategy is still, I mean, on the way.

Speaker #2: Cross-border in the world, especially in Europe and North America. I think these are the areas we'd really like to put the resources behind.

James Zheng: I think these are the areas we would really like to put the resource behind that through the strong product and the brand campaigns to leverage our overall brand awareness and equities. Also, we will continue to accelerate our own retail penetration in China, Asia Pacific, as well as in North America. I think these are the areas we would really like to focus on Salomon. For Wilson, obviously, Wilson Tennis 360 is the most important growth engine for Wilson for coming years. We will continue to invest on our athletes and also the overall store development both in Asia Pacific, China, and also North America. These are kind of areas we would really like to put a good level investment behind that to secure long-term sustainable growth for cross-border for these three brands.

Speaker #2: Through strong product and brand campaigns, we aim to leverage our overall brand awareness and equity. We will also continue to accelerate our own retail penetration in China, Asia Pacific, as well as in North America.

Speaker #2: So I think these are the areas we'd really like to focus on, Salomon. For Wilson, obviously, Wilson 10,360 is the most important growth engine for Wilson in the coming years, okay?

Speaker #2: So we will continue to invest in our assets and also in overall store development, both in Asia Pacific, China, and also North America.

Speaker #2: So these are the kind of areas we'd really like to put a good level of investment behind to secure long-term, sustainable growth for cross-board for these three brands.

Speaker #6: Great, thanks so much. I'll pass it on.

Brooke Roach: Great. Thanks so much. I will pass it on.

Speaker #1: Your next question comes from the line of Ike Burchil from Wells Fargo. Please go ahead.

Operator: Your next question comes from the line of Ike Boruchow from Wells Fargo. Please go ahead.

Ike Boruchow: Hey, good morning, everyone. I will add my congrats. Two questions. One, and I do not know if it is for Andrew or James, but just commenting on the constant currency growth you saw in Europe or are seeing in Europe. Could you give us an update? There have been several brands, both footwear and apparel, that have kind of called out some recent slowdowns in the past couple of months. It does not seem like you are seeing anything notable, but wanted you to comment on that. Then this one I think is for Andrew. It is just simple math, but you have your algo of 30 to 70 basis points on margin. By our math, you are getting 80 bps of the refund in the guide this year.

Speaker #5: Hey, good morning, everyone. I'll add my congrats. Two questions. One, and I don't know if it's for Andrew or James, but just commenting on the constant currency growth you saw in Europe or are seeing in Europe.

Speaker #5: Could you give us an update? There have been several brands, both footwear and apparel, that have kind of called out some recent slowdowns in the past couple of months.

Speaker #5: It doesn't seem like you're seeing anything notable, but I wanted you to comment on that. And then this one, I think, is for Andrew. It's just simple math, but you have your algo of 30 to 70 basis points on margin.

Speaker #5: By our math, you're getting the 80 basis points of the refund in the guide this year. Should we assume, just to keep the models clean, that next year year-over-year margin should net out that 80 basis points, which kind of gets you to a more flattened down margin as a starting point to your plan to adjust for the refund?

Ike Boruchow: Should we assume, just to keep the models clean, that next year-over-year margin should net out that 80 basis points, which kind of gets you more flat-to-down margin as a starting point to your plan to adjust for the refund? I just want to make sure the models kind of stay clean in the outlook. Thanks, guys.

Speaker #5: That's kind of what I want, to make sure the models stay clean in the outlook. Thanks, guys.

Speaker #4: Okay, thanks, Ike. We're going to start with Guillaume, actually, who is going to talk about the market in Europe, the market trends in Europe, and what we're seeing.

Omar Saad: Okay, thanks, Ike. We are going to start with Guillaume, actually, who is going to talk about the market in Europe, the market trends in Europe, what we are seeing in the landscape, and then, obviously, Andrew will answer your margin question.

Speaker #4: And the landscape. And then, obviously, Andrew will answer your margin question.

Speaker #5: So, I think the European market is not a fast-growing market today, but there are still some segments where we can really play a big role, and we see that we are getting some traction.

Guillaume Meyzenq: I think the European market is not a fast-growing market today, but there are still some segments where we can well play a big role, and we see that we get some traction. One is running. I think that there are still upsides and excitement for the consumer in running, and especially when we are coming with very unique stories. Trail running is one for Salomon. What we are currently building with gravel running is also another one. It looks like micro niche, but finally, you are able to attract traffic and interest from the consumer and leading conversion. The second one is this outdoor sneaker market or modern outdoor sneaker market, where Salomon was definitely building this space in the market. It is a new space.

Speaker #5: One is running. So I think that there is still upside and excitement for the consumer, especially when we are coming with very unique stories.

Speaker #5: So trail running is one for Salomon. What we are currently building with gravel running is also another one. So it looks like a micro-niche, but finally, you know, you are able to attract traffic and interest from the consumer, and leading to conversion.

Speaker #5: The second one is this outdoor sneaker market, or modern outdoor sneaker market, where Salomon was definitely building this space in the market. So it was a new space.

Guillaume Meyzenq: It looks like now obvious because we are driving big sales and as you can mention from this quarter results. This segment still is a good place to be, a good place to shape for Salomon, driving excitements, bringing the modern mountain sport in the city and attracting new consumer. In a nutshell, I think that the market is a challenging market overall, but still with some room to grow. I think Salomon is very well-positioned with very unique competitive edge in Europe.

Speaker #5: It looks like now obvious because we are driving a big sales and, as you can mention, for this quarter result. And this segment still is a place a good place to be, a good place to shape for Salomon, driving excitement, bringing the modern mountain sport in the city and attracting new consumers.

Speaker #5: So, in a nutshell, I think that it's a challenging market overall, but still with some room to grow. And I think Salomon is very well positioned, with a very unique competitive edge in Europe.

Speaker #4: Hey, hi. This is Andrew. Thanks for the question as well. So, I’m not ready to provide, to give, you know, margin guidance for next year, but I will acknowledge your point and include it in my prepared remarks that, you know, we did—the net tariff refund will be an 80 bps increment to our margin in the current year.

Andrew Page: Hey, Ike, this is Andrew. Thanks for the question as well. I am not ready to give margin guidance for next year. I will acknowledge to your point and include it in my prepared remarks that the net tariff refund will be an 80 bps increment to our margin in the current year. Recall, though, if you think about the 2-year stack, we essentially handled the tariff challenge last year, primarily through vendor sharing, which was netted out against this, and we essentially absorbed most of the hit of the tariff impact. If you look at 2025 and 2026 together, we believe that our margin reflects a good 2-year picture for us.

Speaker #4: Recall, though, if you think about the two-year stack, we essentially handled the tariff challenge last year primarily through vendor sharing, which was netted out against us.

Speaker #4: And we essentially absorbed most of the hit from the tariff impact. So if you look at '25 and '26 together, we believe that our margin reflects a good two-year picture for us.

Speaker #4: But I do acknowledge, you know, 80 bps margin expansion this year, and that's why I called it out too. When you look at, you know, where we got in the beginning of the year and the one-time impact of the 80 bps.

Andrew Page: I do acknowledge 80 bps margin expansion this year, and that is why I called it out too, when you look at where we guided at the beginning of the year and the one-time impact of the 80 bps.

Speaker #5: Thanks, Andrew.

Ike Boruchow: Thanks, Andrew.

Speaker #1: Your next question comes from the line of Adrian Yee from Barclays. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Adrienne Yih from Barclays. Your line is open. Please go ahead.

Speaker #6: Great. Thank you very much, and congratulations across the board on all the brands. James, there are two very different strategies between the two biggest brands. Wholesale drives brand awareness faster than DTC, but Arc'teryx is following a DTC strategy—maybe more brand premiumization and control.

Adrienne Yih: Great. Thank you very much, and congratulations across the board on all the brands. James, there are two very different strategies between the two biggest brands. Wholesale drives brand awareness faster than DTC, but Arc'teryx is following a DTC strategy, maybe more brand premiumization and control. Salomon is driven by the wholesale. How do you think ultimately this pans out for the longer terms in terms of channel mix and penetration? For both Stuart and Guillaume, my follow-up is, Arc'teryx has been strong in China, Salomon strong in Europe. What elements of those successes in current regions accelerate the roadmap for penetration into the US market? Thank you very much.

Speaker #6: And then Salomon’s driven by the wholesale. How do you think, ultimately, this pans out for the longer term in terms of channel mix and penetration?

Speaker #6: And then for both Stewart and Guillaume, my follow-up is: our DTC has been strong in China, Salomon's strong in Europe. What elements of those successes in current regions accelerate the roadmap for penetration into the US market?

Speaker #6: Thank you very much.

Speaker #4: Thanks, Adrian. We're actually going to have Stewart and Andrew—sorry, Stewart and Guillaume—answer your first question for our tariffs and Salomon, and how they approach DTC versus wholesale and how that might shake out long term.

Omar Saad: Thanks, Adrienne. We are actually going to have Stuart and Andrew, sorry, Stuart and Guillaume answer your first question for Arc'teryx and Salomon, how they approach DTC versus wholesale and how that might shake out long term. Then we will have James and Stuart and Guillaume answer your second question as well.

Speaker #4: And then we'll have James, Stewart, and Guillaume answer your second question as well.

Speaker #6: Awesome.

Adrienne Yih: Awesome.

Speaker #3: Okay, thanks, Omar. And Adrian, thanks for your question. I'll try to be crisp here. So, wholesale remains important for our tariffs. It helps ensure that our brand is showing up in the right points of sale and with the right comparisons.

Stuart Haselden: Okay, thanks Omar. Adrienne, thanks for your question. I will try to be crisp here. Wholesale remains important for Arc'teryx. It helps ensure that our brand is showing up in the right points of sale and with the right comparisons with other great brands that helps elevate our own brand's position. The DTC has been critical and a massive catalyst for our growth around the world and has really unlocked the trajectory we have seen over the last five years. Both parts are important and play different roles for how we are driving growth and brand awareness. Specific to the US market, Canada is our home market, where we see highest brand awareness, and it has enabled us to have a natural launching point into the US.

Speaker #3: With other great brands, that helps elevate our own brand position. The DTC has been critical and a massive catalyst for our growth around the world, and has really unlocked the trajectory we've seen over the last five years.

Speaker #3: So both parts are important, and play different roles in how we're driving growth and brand awareness. Specific to the US market—you know, Canada is our home market, where we see the highest brand awareness.

Speaker #3: And it’s enabled us to have a natural launching point into the U.S. The U.S. is the largest global market and, in many ways, the most competitive.

Stuart Haselden: US is the largest global market, and in many ways, the most competitive. Our strategy is focused on what we call epicenters, focusing on major urban areas like New York, LA, San Francisco, Chicago, where the pools of demand are greatest to drive brand awareness. That is where we focus our store openings that have been very successful over the last several years. We complement this with what we call our mountain town strategy, which is focused on the place of practice, where we see opportunities to stoke the brand identity in places like Aspen and Park City. It is the combination of those factors that build the brand while also developing the economic opportunity, and it really leverages an omnichannel approach where we are driving the brand position through our D2C channels, but also driving brand awareness, importantly, with selected premium wholesale partners.

Speaker #3: Our strategy is focused on what we call epicenters, focusing on major urban areas like New York, L.A., San Francisco, Chicago—where, you know, the pools of demand are greatest.

Speaker #3: To drive brand awareness, that's where we focus our store openings, which have been very successful over the last several years. We complement this with what we call our mountain town strategy, which is focused on the place of practice.

Speaker #3: You know, where we see opportunities to stoke the brand identity in places like Aspen and Park City. So, it's the combination of those factors that build the brand, while also developing the economic opportunity, and it really leverages an omnichannel approach where we're driving the brand position through our DTC channels, but also driving brand awareness—importantly, with selected premium wholesale partners.

Speaker #3: So I'll pause there and hand it over to Guillaume.

Stuart Haselden: I will pause there and hand it over to Guillaume.

Speaker #5: So, thanks Stewart. I think that, first of all, globally, Salomon is still developing very fast in DTC. So, I think that the perception of having Salomon relying only on B2B is a little bit of an old position we have and a previous strategy we had.

Guillaume Meyzenq: Thanks, Stuart. I think that, first of all, globally, Salomon is developing very fast in D2C. I think that the perception of having Salomon relying only on B2B is a little bit kind of old position we have and previous strategy we had. I think what we are doing, turning really into omnichannel. At the global level, this is true that if we want to develop in US because of the scale of the market, we have to have this full omnichannel strategy. First step is moving to epicenter, opening some store, making sure that our e-com platform is also one of the best experience you could have for Salomon. Best experience in our store, best experience on e-com. And of course, we want to rely, and we will develop on B2B, so it is an omnichannel.

Speaker #5: I think what we're really turning into is omnichannel. So, at the global level, it’s true that if we want to develop in the US, because of the scale of the market, we have to have this true omnichannel strategy.

Speaker #5: So, first step is moving to Epicenter, opening some stores, and making sure that our e-commerce platform also offers one of the best experiences you could have for Salomon.

Speaker #5: So, best experience in our store, best experience on e-com. And of course, we want to rely on and we will develop B2B. So, it's an omnichannel.

Speaker #5: For the simple reason that traffic buying footwear is very much about traffic, and B2B partners are the ones, you know, running the traffic and doing a very good job at distributing footwear in the market.

Guillaume Meyzenq: For the simple reason that traffic buying footwear is very much about traffic, and B2B partner are the one running the traffic and doing a very good job at distributing footwear in the market. This is why we are looking at this B2B. But when we develop B2B, and maybe for the one living in New York, you have been noticing that in July, is we have a very close partnership with our partner. We want to have very strong and outstanding visual merchandising, so where you can notice the brand. We are also building activation to make sure that they are really activating their local community at every store in order to make sure that we position Salomon at the best level, even on B2B.

Speaker #5: So this is why we are looking at this B2B. But when we develop B2B—and maybe for those living in New York—you may have noticed that in July, we built a very close partnership with our partner.

Speaker #5: We want to have very strong and outstanding visual merchandising, so that you can notice the brands. We are also building activations to make sure that they are really engaging their local community at every store, in order to ensure that we position Salomon at the best level, even on B2B.

Speaker #5: So, really, the mindset for the US is building retail as an epicenter, leveraging with e-commerce, and having this partnership on B2B, because this is where you can leverage larger traffic.

Guillaume Meyzenq: This is really the mindset for US, is building retail on epicenter, leveraging with e-com and having this partnership on B2B, because this is where you can leverage larger traffic, but keeping a very strong, consistent approach toward the consumer and focusing on demands, which is, of course, our priority number one.

Speaker #5: But keeping a very strong, consistent approach toward the consumer and focusing on demand, which is, of course, our priority number one.

Speaker #2: You're next question.

Operator: Your next question comes from the line.

James Zheng: No, I mean, yeah.

Speaker #4: So I mean, yeah, yeah.

Speaker #2: Oh, apologies.

James Zheng: Oh, apologies.

Operator: Oh, apologies.

James Zheng: There is still, I would like to add a bit color on Arc'teryx China. So Adrienne Yih, you ask for Arc'teryx China. So actually now, Arc'teryx is already the largest premium outdoor brand in China market. Naturally, its growth pattern will normalize versus the hyper-growth levels during the past five years. Arc'teryx China, I think, will continue to deliver solid double-digit growth annually, especially given we only have 140 stores today versus 200 potential for coming years. The management team also got a very good level of confidence. We are running exceptional work for Arc'teryx in China markets, and we will continue to drive our business and again, market share, in China market. Okay.

Speaker #4: Yes, Stewart, I'd like to add a bit of color on our tariffs in China. So, Adrian, okay, you asked about our tariffs in China. Actually, now, our tariffs are already the largest premium out-of-brand in the China market.

Speaker #4: So, naturally, it's gross pattern. We're normalized versus the hyper-gross levels during the past five years. But our tariffs with China — I think we'll continue to deliver solid double-digit gross annually.

Speaker #4: Especially given we only have 140 stores today, versus a potential of 200 in the coming years. So the management team also has a very good level of confidence.

Speaker #4: We are running a very exceptional work for our tariffs in China markets. And we will continue to drive our business and again market share in China markets.

Speaker #4: Okay.

Speaker #6: Thank you very much.

Adrienne Yih: Thank you very much.

Speaker #2: Our final question comes from the line of Jonathan Comp from Baird. Please go ahead.

Operator: Our final question comes from the line of Jonathan Komp from Baird. Please go ahead.

Speaker #7: Yeah, hi, good morning. Thank you. If I could follow up on Salomon, I want to ask further about the new store opening in July in Flatiron, really telling the full story of footwear and apparel performance and sports style.

Jonathan Komp: Yeah. Hi, good morning. Thank you. If I could follow up on Salomon, I want to ask further that the new store opening in July in Flatiron, really telling the full story, footwear and apparel, performance and sport style, does that really represent where you see the brand heading as you continue to diversify toward a broader lifestyle, performance lifestyle brand positioning?

Speaker #7: Does that really represent where you see the brand heading? You know, as you continue to diversify toward a broader lifestyle-performance, lifestyle-brand positioning?

Guillaume Meyzenq: Yeah.

Speaker #4: Yeah.

Speaker #5: Yes, this is for me. So, Salomon has been, is rooted by performance. And there was one simple thing: this idea of modern mountain sport driven by innovation.

Guillaume Meyzenq: Yes, this is for me. Salomon is rooted by performance. There is one simple thing, this idea of modern mountain sport driven by innovation, elevating the sport experience in the mountain and beyond, because of course, now we go here to the city, but still having this idea of modern mountain sport. This is where Salomon is coming from, and this is first for footwear because this is where we have the biggest traction, but we have the ambition to move forward in apparel. Today apparel is pretty small, but we start to see some traction, and we are preparing the future pipeline of innovation as well in order to offer the full silhouette. This is a position. When we are coming and we are elevating that into culture, this is where sport style resonates to the consumer.

Speaker #5: Elevating, you know, the sport experience in the mountain and beyond, because, of course, now we concur to the city, but still having this idea of modern mountain sport.

Speaker #5: This is where Salomon is coming from, and this is first for footwear because this is where we have the biggest traction. But we have the ambition to move forward in apparel.

Speaker #5: The apparel is pretty small, but we have started to see some traction, and we are preparing, you know, the future pipeline of innovation as well in order to offer the full silhouette.

Speaker #5: So this is the position. When we are coming and we are elevating that into culture, this is where sports style resonates to the consumer.

Speaker #5: And this is why you see this momentum coming in the city with sport style. I think that Flatiron is a very good example of what Salomon wants to develop: it's not either/or; it's performance and still driven by innovation and culture.

Guillaume Meyzenq: This is why you see this momentum coming in the city with sport style. I think that Flatiron is a very good example of what Salomon wants to develop, it is not either/or, it is performance and still driven by innovation and culture. This piece of performance product moving to culture into sport style. This is footwear because this is where we express today the best of our innovation, premiumness, quality of product. We are also working hard in order to develop that in apparel. I think that your level of prettiness into the store is the right one. Keep in mind that we are coming, we are rooted by performance and innovation, and this is not either/or, but it is and. It is performance and culture together.

Speaker #5: So, this piece of performance product is moving from culture into sports style. And this is footwear, because this is where we express today the best of our innovation, premiumness, and quality of product. But of course, you know, we are also working hard in order to develop that in apparel.

Speaker #5: So I think that your level of readiness in the store is the right one. But keep in mind that we are coming—we're rooted in performance and innovation, and this is not ever 'or,' but it's 'and.' It's performance and culture together.

Speaker #7: That's very encouraging. And then Andrew, if I could just finish technical apparel margin in the back half, you know, segment operating margin, implied down year over year, is that is that reflective of incremental investment or some other factors or conservatism?

Jonathan Komp: That is very encouraging. Andrew, if I could just finish. Technical apparel margin in the back half, segment operating margin implied down year-over-year. Is that reflective of incremental investment or some other factors or conservatism? Any more color there. Thank you.

Speaker #7: Just any more color there? Thank you.

Speaker #4: Yeah, we're going to actually have Stewart, who is also dialing in remotely, talk about the margin for our Arc'teryx technical apparel.

Omar Saad: We are going to actually have Stuart, who is also dialing in remote, talk about the margin for our technical apparel.

Speaker #8: Hey Jonathan, it's Stewart. So, yeah, we're pretty confident in the overall P&L outlook. You know, for the full year, we're going to see healthy expansion in gross margin.

Stuart Haselden: Jonathan, it is Stuart. We are pretty confident in the overall P&L outlook. For the full year, we are going to see healthy expansion in gross margin. We are going to see a balanced SG&A leverage. We are going to see operating profit margins expand for the full year. The overall business momentum is healthy. As you heard from Andrew earlier on the call, characterize how we provide guidance as being responsible. Yet, there is nothing structural that would prevent us from delivering higher levels of top line as well as bottom-line results should demand materialize. I think we have had a good track record of delivering on that approach to the business in prior quarters since going public. We are going to have what we would call a responsible posture for guidance.

Speaker #8: We're going to see balanced SG&A leverage, and we're going to see operating profit margins expand for the full year. So, you know, the overall business momentum is healthy.

Speaker #8: You know, as you heard from Andrew earlier on the call, we characterize how we provide guidance as being responsible. Yet, there's nothing structural that would prevent us from delivering higher levels of top-line as well as bottom-line results, should the demand materialize.

Speaker #8: I think we've had a good track record of delivering on that approach to the business in prior quarters since coming public. So, yeah, we're going to have what we would call a responsible posture for guidance.

Speaker #8: But there's, as I mentioned, nothing structural that would prevent us from delivering higher levels of sales and profitability. And we're quite bullish on the outlook for the balance of the year and beyond.

Stuart Haselden: But there's, as I mentioned, nothing structural that would prevent us from delivering higher levels of sales and profitability. We are quite bullish on the outlook for the balance of the year and beyond. Hopefully that gives you some color or context on how we approach guidance.

Speaker #8: So, hopefully that gives you some color and context on how we approach guidance.

Speaker #7: That makes a lot of sense. Thanks again.

Jonathan Komp: That makes a lot of sense. Thanks again.

Speaker #8: Okay.

Stuart Haselden: Okay.

Operator: At this time, there are no further questions. I will now turn the call back to management for closing remarks.

Speaker #2: At this time, there are no further questions. I will now turn the call back to management for closing remarks.

Speaker #4: Thanks, everyone, for joining. A quick reminder: the Salomon/Omar Sports Investor Day is on September 17th. We look forward to seeing you there or online for the webcast.

Omar Saad: Thanks, everyone, for joining. A quick reminder, the Salomon Amer Sports Investor Day, 17 September. Look forward to seeing you there or online for the webcast. Have a great day.

Speaker #4: Have a great day.

Operator: This concludes today's call. Thank you all for attending. You may now disconnect.