Q2 2026 Oxford Industries Inc Earnings Call

September 3, 2026

Speaker #1: All participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press *0 on your telephone keypad.

Speaker #1: As a reminder, this conference is being recorded. It is now my pleasure to introduce Brian Smith. Please go ahead.

Speaker #2: Thank you, and good afternoon. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward-looking statements within the meaning of the Federal Securities Laws.

Speaker #2: Forward-looking statements are not guarantees, and actual results may differ materially from those expressed or implied in the forward-looking statement. Important factors that could cause actual results of operations or financial condition to differ are discussed in our press release, issued earlier today, and in documents filed by us with the SEC.

Speaker #2: Including the risk factors contained in our Form 10-K. We undertake no duty to update any forward-looking statements. During this call, we will be discussing certain non-GAAP financial measures.

Speaker #2: You can find a reconciliation of non-GAAP to GAAP financial measures in our press release, issued earlier today, which is posted under our investor relations tab out of our website at oxfordink.com.

Speaker #1: Greetings, and welcome to the Oxford Industries Second Quarter Fiscal Year 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Operator: Greetings, and welcome to the Oxford Industries Q2 fiscal year 2026 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Brian Smith. Please go ahead.

Speaker #1: A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star or zero on your telephone keypad. As a reminder, this conference is being recorded.

Speaker #2: I now like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO, and Scott Grassmyer, CFO and COO. Thank you for your attention, and I turn the call over to Tom Chubb.

Speaker #1: It is now my pleasure to introduce Brian Smith. Please go ahead.

Speaker #3: Thank you, Brian. Good afternoon, and thank you for joining us. I'm pleased to be here today to discuss our second quarter results: the performance of our brands and our outlook for the balance of fiscal 2026.

Speaker #2: Thank you, and good afternoon. Before we begin, I would like to remind participants that certain statements made on today's call, and in the Q&A session, may constitute forward-looking statements within the meaning of the Federal Securities Laws.

Brian Smith: Thank you, and good afternoon. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not guarantees, and actual results may differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results of operations or financial condition to differ are discussed in our press release issued earlier today and in documents filed by us with the SEC, including the risk factors contained in our Form 10-K. We undertake no duty to update any forward-looking statements. During this call, we will be discussing certain non-GAAP financial measures. You can find a reconciliation of non-GAAP to GAAP financial measures in our press release issued earlier today, which is posted under our investor relations tab of our website at oxfordinc.com.

Speaker #2: Forward-looking statements are not guarantees, and actual results may differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results of operations or financial condition to differ are discussed in our press release issued earlier today, and in documents filed by us with the SEC.

Speaker #3: Overall, second quarter results were within our expectations, highlighted by year-over-year adjusted earnings per share growth and a low single-digit comparable sales gain at Tommy Bahama.

Speaker #3: We also delivered meaningful adjusted gross margin expansion despite a higher level of promotional activity reflecting the progress our teams have made on assortment, sourcing, and pricing across the portfolio.

Speaker #2: You can find a reconciliation of non-GAAP to GAAP financial measures in our press release issued earlier today, which is posted under our Investor Relations tab on our website at oxfordinc.com.

Speaker #3: The strong cash flow we generated enabled us to make meaningful progress reducing debt in the second quarter. Refunds of previously paid tariffs contributed to that reduction, maintaining a strong balance sheet and generating cash that can be deployed thoughtfully remain important priorities for us.

Speaker #2: I'd now like to introduce today's call participants. Joining us today are Tom Chubb, Chairman and CEO, and Scott Grassmyer, CFO and COO. Thank you for your attention, and I'll turn the call over to Tom Chubb.

Brian Smith: I would now like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO, and Scott Grassmyer, CFO and COO. Thank you for your attention, and I will turn the call over to Tom Chubb.

Speaker #3: Thank you, Brian. Good afternoon, and thank you for joining us. I'm pleased to be here today to discuss our second quarter results, the performance of our brands, and our outlook for the balance of fiscal 2026.

Thomas C. Chubb III: Thank you, Brian. Good afternoon, and thank you for joining us. I am pleased to be here today to discuss our Q2 results, the performance of our brands, and our outlook for the balance of fiscal 2026. Overall, Q2 results were within our expectations, highlighted by year-over-year adjusted EPS growth and a low single-digit comparable sales gain at Tommy Bahama. We also delivered meaningful adjusted gross margin expansion despite a higher level of promotional activity, reflecting the progress our teams have made on assortment, sourcing, and pricing across the portfolio. The strong cash flow we generated enabled us to make meaningful progress reducing debt in Q2. Refunds of previously paid tariffs contributed to that reduction. Maintaining a strong balance sheet and generating cash that can be deployed thoughtfully remain important priorities for us.

Tom Chubb: Thank you, Brian. Good afternoon, and thank you for joining us. I am pleased to be here today to discuss our Q2 results, the performance of our brands, and our outlook for the balance of fiscal 2026. Overall, Q2 results were within our expectations, highlighted by year-over-year adjusted EPS growth and a low single-digit comparable sales gain at Tommy Bahama. We also delivered meaningful adjusted gross margin expansion despite a higher level of promotional activity, reflecting the progress our teams have made on assortment, sourcing, and pricing across the portfolio. The strong cash flow we generated enabled us to make meaningful progress reducing debt in Q2. Refunds of previously paid tariffs contributed to that reduction. Maintaining a strong balance sheet and generating cash that can be deployed thoughtfully remain important priorities for us.

Speaker #3: Scott will provide more detail on our cash flow and balance sheet performance. Tommy Bahama's second quarter results were consistent with our expectations, as our largest brand, its positive comparable sales growth provided important support to the overall portfolio and helped offset pressure elsewhere in the business.

Speaker #3: Overall, second-quarter results were within our expectations, highlighted by year-over-year adjusted earnings per share growth and a low single-digit comparable sales gain at Tommy Bahama.

Speaker #3: We were also encouraged by a return to positive comparable sales in Florida—a key market for the brand that it experienced softer results in recent periods.

Speaker #3: We also delivered meaningful adjusted gross margin expansion, despite a higher level of promotional activity, reflecting the progress our teams have made on assortment, sourcing, and pricing across the portfolio.

Speaker #3: We are pleased with the consistency of the brand's performance and remain focused on sustaining that momentum through disciplined merchandising marketing and operating execution. While we continue to deliver positive results at Tommy Bahama, performance at Lily Pulitzer remained weak in the second quarter, and our outlook for the brand for the balance of the year is now below what we anticipated at the end of the first quarter.

Speaker #3: The strong cash flow we generated enabled us to make meaningful progress reducing debt in the second quarter. Refunds of previously paid tariffs contributed to that reduction.

Speaker #3: Maintaining a strong balance sheet and generating cash that can be deployed thoughtfully remain important priorities for us. Scott will provide more detail on our cash flow and balance sheet performance.

Thomas C. Chubb III: Scott will provide more detail on our cash flow and balance sheet performance. Tommy Bahama's Q2 results were consistent with our expectations. As our largest brand, its positive comparable sales growth provided important support to the overall portfolio and helped offset pressure elsewhere in the business. We were also encouraged by a return to positive comparable sales in Florida, a key market for the brand that had experienced softer results in recent periods. We are pleased with the consistency of the brand's performance and remain focused on sustaining that momentum through disciplined merchandising, marketing, and operating execution. While we continued to deliver positive results at Tommy Bahama, performance at Lilly Pulitzer remained weak in Q2, and our outlook for the brand for the balance of the year is now below what we anticipated at the end of Q1.

Tom Chubb: Scott will provide more detail on our cash flow and balance sheet performance. Tommy Bahama's Q2 results were consistent with our expectations. As our largest brand, its positive comparable sales growth provided important support to the overall portfolio and helped offset pressure elsewhere in the business. We were also encouraged by a return to positive comparable sales in Florida, a key market for the brand that had experienced softer results in recent periods. We are pleased with the consistency of the brand's performance and remain focused on sustaining that momentum through disciplined merchandising, marketing, and operating execution. While we continued to deliver positive results at Tommy Bahama, performance at Lilly Pulitzer remained weak in Q2, and our outlook for the brand for the balance of the year is now below what we anticipated at the end of Q1.

Speaker #3: As we discussed on our first quarter call, Lily Pulitzer entered the quarter with several product and marketing challenges. The core problem is the assortment with the key issue being that we shifted far too much of our inventory investment out of our entry price points to higher price points.

Speaker #3: Tommy Bahama's second quarter results were consistent with our expectations. As our largest brand, its positive comparable sales growth provided important support to the overall portfolio and helped offset pressure elsewhere in the business.

Speaker #3: We were also encouraged by a return to positive comparable sales in Florida—a key market for the brand that had experienced softer results in recent periods.

Speaker #3: Second quarter results and the trends we are currently seeing indicate that those challenges have been more significant than we originally anticipated. We are responding with actions aimed at both near-term performance and the longer-term health of the brand.

Speaker #3: We are pleased with the consistency of the brand's performance and remain focused on sustaining that momentum through disciplined merchandising, marketing, and operating execution. While we continue to deliver positive results at Tommy Bahama, performance at Lilly Pulitzer remained weak in the second quarter, and our outlook for the brand for the balance of the year is now below what we anticipated at the end of the first quarter.

Speaker #3: Because of our product development lead times, spring 2027 is the first season in which we can substantially reshape the full assortment. In the meantime, we are refining our marketing and messaging, adjusting the promotional cadence, and managing inventory and expenses more tightly.

Speaker #3: Given current trends, we expect Lily Pulitzer to be more promotional during the balance of the year. We will remain strategic and disciplined using targeted promotional activity to support customer engagement and inventory sell-through while protecting the long-term integrity of the brand.

Speaker #3: As we discussed on our first quarter call, Lilly Pulitzer entered the quarter with several product and marketing challenges. The core problem is the assortment, with the key issue being that we shifted far too much of our inventory investment out of our entry price points and into higher price points.

Thomas C. Chubb III: As we discussed on our Q1 call, Lilly Pulitzer entered the quarter with several product and marketing challenges. The core problem is the assortment, with the key issue being that we shifted far too much of our inventory investment out of our entry price points to higher price points. Q2 results and the trends we are currently seeing indicate that those challenges have been more significant than we originally anticipated. We are responding with actions aimed at both near-term performance and the longer-term health of the brand. Because of our product development lead times, spring 2027 is the first season in which we can substantially reshape a full assortment. In the meantime, we are refining our marketing and messaging, adjusting the promotional cadence, and managing inventory and expenses more tightly. Given current trends, we expect Lilly Pulitzer to be more promotional during the balance of the year.

Tom Chubb: As we discussed on our Q1 call, Lilly Pulitzer entered the quarter with several product and marketing challenges. The core problem is the assortment, with the key issue being that we shifted far too much of our inventory investment out of our entry price points to higher price points. Q2 results and the trends we are currently seeing indicate that those challenges have been more significant than we originally anticipated. We are responding with actions aimed at both near-term performance and the longer-term health of the brand. Because of our product development lead times, spring 2027 is the first season in which we can substantially reshape a full assortment. In the meantime, we are refining our marketing and messaging, adjusting the promotional cadence, and managing inventory and expenses more tightly. Given current trends, we expect Lilly Pulitzer to be more promotional during the balance of the year.

Speaker #3: Promotions are one lever, but lasting improvement will also require stronger product relevance, marketing effectiveness, and execution. We are laser-focused on delivering these requirements. For spring 2027, our work is centered on four areas: our pricing architecture strategy, balance of print pattern and color, mix of intended use occasions between social and casual, and the proportion of new versus continuing styles.

Speaker #3: Because of our product development lead times, Spring 2027 is the first season in which we can substantially reshape the full assortment. In the meantime, we are refining our marketing and messaging, adjusting to promotional cadence, and managing inventory and expenses more tightly.

Speaker #3: These assortment changes will not drive a positive trends change in fiscal 2026, but we believe they will create a more balanced and compelling assortment and better position Lily Pulitzer or improve performance beginning with the spring 2027 season.

Speaker #3: Given current trends, we expect Lilly Pulitzer to be more promotional during the balance of the year. We will remain strategic and disciplined, using targeted promotional activity to support customer engagement and inventory sell-through while protecting the long-term integrity of the brand.

Thomas C. Chubb III: We will remain strategic and disciplined, using targeted promotional activity to support customer engagement and inventory sell-through while protecting the long-term integrity of the brand. Promotions are one lever, but lasting improvement will also require stronger product relevance, marketing effectiveness, and execution. We are laser-focused on delivering these requirements. For spring 2027, our work is centered on four areas: our pricing architecture strategy, balance of print, pattern, and color, mix of intended use occasions between social and casual, and the proportion of new versus continuing styles. These assortment changes will not drive a positive trends change in fiscal 2026, but we believe they will create a more balanced and compelling assortment and better position Lilly Pulitzer for improved performance beginning with the spring 2027 season. We remain confident in Lilly Pulitzer's long-term potential.

Tom Chubb: We will remain strategic and disciplined, using targeted promotional activity to support customer engagement and inventory sell-through while protecting the long-term integrity of the brand. Promotions are one lever, but lasting improvement will also require stronger product relevance, marketing effectiveness, and execution. We are laser-focused on delivering these requirements. For spring 2027, our work is centered on four areas: our pricing architecture strategy, balance of print, pattern, and color, mix of intended use occasions between social and casual, and the proportion of new versus continuing styles. These assortment changes will not drive a positive trends change in fiscal 2026, but we believe they will create a more balanced and compelling assortment and better position Lilly Pulitzer for improved performance beginning with the spring 2027 season. We remain confident in Lilly Pulitzer's long-term potential.

Speaker #3: We remain confident in Lily Pulitzer's long-term potential. The brand has a clear point of view, a strong emotional connection with its customer, and meaningful opportunities for improvement.

Speaker #3: Promotions are one lever, but lasting improvement will also require stronger product relevance, marketing effectiveness, and execution. We are laser-focused on delivering these requirements. For Spring 2027, our work is centered on four areas: our pricing architecture strategy; balance of print, pattern, and color; mix of intended use occasions between social and casual; and the proportion of new versus continuing styles.

Speaker #3: That confidence does not lessen the urgency of the current situation. We are focused on addressing the issues directly and returning Lily Pulitzer to the level of performance we expect from the brand.

Speaker #3: At Johnny Was, we continue to make progress on the turnaround plan. The brand's significantly increased EBITDA during the second quarter—driven by higher gross margin resulting from tighter inventory management and fewer promotions—together with disciplined SG&A cost management.

Speaker #3: These assortment changes will not drive a positive trend change in fiscal 2026, but we believe they will create a more balanced and compelling assortment and better position Lilly Pulitzer to improve performance beginning with the spring 2027 season.

Speaker #3: There is still work to do, but we are encouraged by the improvement in profitability. Stepping back, weaker consumer sentiment has added pressure to discretionary demand.

Speaker #3: Our customers, particularly at Tommy Bahama and Lily Pulitzer, tend to be active travelers and, although they continue to travel, higher airfare lodging and other travel costs may be leaving less room in their discretionary budgets for apparel.

Speaker #3: We remain confident in Lilly Pulitzer's long-term potential. The brand has a clear point of view, a strong emotional connection with its customers, and meaningful opportunities for improvement.

Thomas C. Chubb III: The brand has a clear point of view, a strong emotional connection with its customer, and meaningful opportunities for improvement. That confidence does not lessen the urgency of the current situation. We are focused on addressing the issues directly and returning Lilly Pulitzer to the level of performance we expect from the brand. At Johnny Was, we continue to make progress on the turnaround plan. The brand significantly increased EBITDA during Q2, driven by higher gross margin resulting from tighter inventory management and fewer promotions, together with disciplined SG&A cost management. There is still work to do, but we are encouraged by the improvement in profitability. Stepping back, weaker consumer sentiment has added pressure to discretionary demand.

Tom Chubb: The brand has a clear point of view, a strong emotional connection with its customer, and meaningful opportunities for improvement. That confidence does not lessen the urgency of the current situation. We are focused on addressing the issues directly and returning Lilly Pulitzer to the level of performance we expect from the brand. At Johnny Was, we continue to make progress on the turnaround plan. The brand significantly increased EBITDA during Q2, driven by higher gross margin resulting from tighter inventory management and fewer promotions, together with disciplined SG&A cost management. There is still work to do, but we are encouraged by the improvement in profitability. Stepping back, weaker consumer sentiment has added pressure to discretionary demand.

Speaker #3: That confidence does not lessen the urgency of the current situation. We are focused on addressing the issues directly and returning Lilly Pulitzer to the level of performance we expect from the brand.

Speaker #3: Even so, the steady performance at Tommy Bahama reinforces the compelling product and consistent execution can still produce solid results in this environment. A responsibility is to deliver that level of product relevance and execution more consistently across the portfolio.

Speaker #3: At Johnny Was, we continue to make progress on the turnaround plan. The brand significantly increased EBITDA during the second quarter, driven by higher gross margin resulting from tighter inventory management and fewer promotions, together with disciplined SG&A cost management.

Speaker #3: The continued softness at Lily Pulitzer—including the impact of a more promotional posture for the balance of the year—together with softer demand and certain other parts of the portfolio led us to lower our top and bottom-line guidance for the remainder of the year.

Speaker #3: There is still work to do, but we are encouraged by the improvement in profitability. Stepping back, weaker consumer sentiment has added pressure to discretionary demand.

Speaker #3: At Lily Pulitzer, the issues are primarily assortment and marketing-related, while the pressure elsewhere in the business more cautious, discerning consumer. We believe the updated guidance represents a proven assessment of current business trends—the macro environment and the actions we expect to take.

Speaker #3: Our customers, particularly at Tommy Bahama and Lilly Pulitzer, tend to be active travelers and, although they continue to travel, higher airfare, lodging, and other travel costs may be leaving less room in their discretionary budgets for apparel.

Thomas C. Chubb III: Our customers, particularly at Tommy Bahama and Lilly Pulitzer, tend to be active travelers. Although they continue to travel, higher airfare, lodging, and other travel costs may be leaving less room in their discretionary budgets for apparel. Even so, the steady performance at Tommy Bahama reinforces the compelling product, and consistent execution can still produce solid results in this environment. Our responsibility is to deliver that level of product relevance and execution more consistently across the portfolio. The continued softness at Lilly Pulitzer, including the impact of a more promotional posture for the balance of the year, together with softer demand in certain other parts of the portfolio, led us to lower our top and bottom line guidance for the remainder of the year.

Tom Chubb: Our customers, particularly at Tommy Bahama and Lilly Pulitzer, tend to be active travelers. Although they continue to travel, higher airfare, lodging, and other travel costs may be leaving less room in their discretionary budgets for apparel. Even so, the steady performance at Tommy Bahama reinforces the compelling product, and consistent execution can still produce solid results in this environment. Our responsibility is to deliver that level of product relevance and execution more consistently across the portfolio. The continued softness at Lilly Pulitzer, including the impact of a more promotional posture for the balance of the year, together with softer demand in certain other parts of the portfolio, led us to lower our top and bottom line guidance for the remainder of the year.

Speaker #3: Scott will provide more detail on a revised outlook and the assumptions underlying it. Against this backdrop, our priorities are clear: sustain the positive momentum at Tommy Bahama, address the assortment and marketing issues at Lily Pulitzer, and build on the profitability improvement at Johnny Was.

Speaker #3: Even so, the steady performance at Tommy Bahama reinforces that compelling product and consistent execution can still produce solid results in this environment. Our responsibility is to deliver that level of product relevance and execution more consistently across the portfolio.

Speaker #3: We are managing inventory expenses and capital carefully, while maintaining our focus on cash generation and debt reduction and a strong balance sheet. After Scott's comments, I will turn briefly to discuss several broader actions underway across Oxford.

Speaker #3: The continued softness at Lilly Pulitzer—including the impact of a more promotional posture for the balance of the year, together with softer demand in certain other parts of the portfolio—led us to lower our top- and bottom-line guidance for the remainder of the year.

Speaker #3: At Lilly Pulitzer, the issues are primarily assortment and marketing related, while the pressure elsewhere in the business is more closely tied to a more cautious, discerning consumer.

Thomas C. Chubb III: At Lilly Pulitzer, the issues are primarily assortment and marketing related, while the pressure elsewhere in the business is more closely tied to a more cautious, discerning consumer. We believe the updated guidance represents a prudent assessment of current business trends, the macro environment, and the actions we expect to take. Scott will provide more detail on our revised outlook and the assumptions underlying it. Against this backdrop, our priorities are clear: sustain the positive momentum at Tommy Bahama, address the assortment and marketing issues at Lilly Pulitzer, and build on the profitability improvement at Johnny Was. We are managing inventory expenses and capital carefully while maintaining our focus on cash generation, debt reduction, and a strong balance sheet. After Scott's comments, I will turn briefly to discuss several broader actions underway across Oxford. As always, I want to thank our teams across Oxford.

Tom Chubb: At Lilly Pulitzer, the issues are primarily assortment and marketing related, while the pressure elsewhere in the business is more closely tied to a more cautious, discerning consumer. We believe the updated guidance represents a prudent assessment of current business trends, the macro environment, and the actions we expect to take. Scott will provide more detail on our revised outlook and the assumptions underlying it. Against this backdrop, our priorities are clear: sustain the positive momentum at Tommy Bahama, address the assortment and marketing issues at Lilly Pulitzer, and build on the profitability improvement at Johnny Was. We are managing inventory expenses and capital carefully while maintaining our focus on cash generation, debt reduction, and a strong balance sheet. After Scott's comments, I will turn briefly to discuss several broader actions underway across Oxford. As always, I want to thank our teams across Oxford.

Speaker #3: As always, I want to thank our teams across Oxford. Their resilience, creativity, and commitment to our customers are the foundation of everything we do.

Speaker #3: Without it, I'll turn the call over to Scott for more detailed commentary on our financial performance and outlook.

Speaker #3: We believe the updated guidance represents a prudent assessment of current business trends, the macroenvironment, and the actions we expect to take. Scott will provide more detail on the revised outlook and the assumptions underlying it.

Speaker #2: Thank you, Tom. Consolidated net sales are $394 million in the second quarter of fiscal 26, compared to $403 million in the second quarter of fiscal 25, and near the high end of our guidance range of $380 million to $400 million.

Speaker #3: Against this backdrop, our priorities are clear: sustain the positive momentum at Tommy Bahama, address the assortment and marketing issues at Lilly Pulitzer, and build on the profitability improvement at Johnny Was.

Speaker #2: The company comparable sales were down slightly at 1%, including a 3% decrease in retail sales, and flat e-commerce sales. The decline in retail comp sales was partially offset by sales from non-comp stores open primarily in the prior year.

Speaker #3: We are managing inventory, expenses, and capital carefully while maintaining our focus on cash generation, debt reduction, and a strong balance sheet. After Scott's comments, I will turn briefly to discuss several broader actions underway across Oxford.

Speaker #2: Notably, food and beverage sales increased 11%, driven primarily by non-comp locations. Wholesale sales decreased 14% compared to the prior year, but was primarily driven by lower sales of residual inventory through off-price channels.

Speaker #3: As always, I want to thank our teams across Oxford. Their resilience, creativity, and commitment to our customers are the foundation of everything we do.

Speaker #2: By brand sales growth at Tommy Bahama, health to partially offset decreases in our other businesses. Sales decreases at Lily Pulitzer and Johnny Was were driven by a mid-single-digit negative comp and lower off-price wholesale sales.

Thomas C. Chubb III: Their resilience, creativity, and commitment to our customers are the foundation of everything we do. With that, I'll turn the call over to Scott for more detailed commentary on our financial performance and outlook.

Tom Chubb: Their resilience, creativity, and commitment to our customers are the foundation of everything we do. With that, I'll turn the call over to Scott for more detailed commentary on our financial performance and outlook.

Speaker #3: With that, I'll turn the call over to Scott for more detailed commentary on our financial performance and outlook.

Speaker #2: While the sales decline at emerging brands was driven primarily by lower wholesale sales. The positive sales growth at Tommy Bahama was driven by a low single-digit positive comp in our DTC channels, partially offset by a decline in wholesale sales driven primarily by lower off-price clearance sales.

Speaker #1: Thank you, Tom. Consolidated net sales were $394 million in the second quarter of fiscal '26, compared to $403 million in the second quarter of fiscal '25, and near the high end of our guidance range of $380 million to $400 million.

Scott Grassmyer: Thank you, Tom. Consolidated net sales were USD 394 million in the Q2 of fiscal 2026, compared to USD 403 million in the Q2 of fiscal 2025, and near the high end of our guidance range of USD 380 million to USD 400 million. The company comparable sales were down slightly at 1%, including a 3% decrease in retail sales and flat e-commerce sales. The decline in retail comp sales was partially offset by sales from non-comp stores opened primarily in the prior year. Notably, food and beverage sales increased 11%, driven primarily by non-comp locations. Wholesale sales decreased 14% compared to the prior year, but was primarily driven by lower sales of residual inventory through off-price channels. By brand, sales growth at Tommy Bahama helped to partially offset decreases in our other businesses.

Speaker #1: The company’s comparable sales were down slightly at 1%, including a 3% decrease in retail sales and flat e-commerce sales. The decline in retail comp sales was partially offset by sales from non-comp stores open primarily in the prior year.

Speaker #2: Adjusted gross margin expanded 140 basis points to 63.1%, driven primarily by updated assortment sourcing and pricing strategies across our portfolio that resulted in higher IMUs along with a change in sales mix with off-price wholesale sales representing a lower proportion of net sales.

Speaker #1: Notably, food and beverage sales increased 11%, driven primarily by non-comp locations. Wholesale sales decreased 14% compared to the prior year, but this was primarily driven by lower sales of residual inventory through off-price channels.

Speaker #2: These factors were partially offset by a higher proportion of net sales in our DTC channels, occurring during promotional events, at Tommy Bahama, Lily Pulitzer, and emerging brands.

Speaker #2: Tariff cost, included in inventory sold during the year, will materially consistent with the prior year. As Tom mentioned, we recorded and received significant tariff refunds during the quarter.

Speaker #1: Brand sales growth at Tommy Bahama helped to partially offset decreases in our other businesses. Sales decreases at Lilly Pulitzer and Johnny Was were driven by a mid-single-digit negative comp and lower off-price wholesale sales.

Scott Grassmyer: Sales decreases at Lilly Pulitzer and Johnny Was were driven by a mid-single-digit negative comp and lower off-price wholesale sales. While the sales decline at Emerging Brands was driven primarily by lower wholesale sales. The positive sales growth at Tommy Bahama was driven by a low single-digit positive comp in our DTC channels, partially offset by a decline in wholesale sales, driven primarily by lower off-price clearance sales. Adjusted gross margin expanded 140 basis points to 63.1%, driven primarily by updated assortment, sourcing, and pricing strategies across our portfolio that resulted in higher IMUs, along with a change in sales mix, with off-price wholesale sales representing a lower proportion of net sales. These factors were partially offset by a higher proportion of net sales in our DTC channels occurring during promotional events at Tommy Bahama, Lilly Pulitzer, and Emerging Brands.

Speaker #2: We recorded a reduction to cost of goods sold of $42 million of tariffs, previously paid and received substantially the entire balance during the second quarter, or shortly thereafter.

Speaker #1: While the sales decline at emerging brands was driven primarily by lower wholesale sales, the positive sales growth at Tommy Bahama was driven by a low single-digit positive comp in our DTC channels, partially offset by a decline in wholesale sales driven primarily by lower off-price clearance sales.

Speaker #2: The impact of these refunds was excluded from our adjusted results. Adjusted SG&A expenses increased slightly to $210 million compared to $209 million last year, impacted primarily by a new brick-and-mortar retail and food and beverage locations, as well as increases in software and consulting cost and costs associated with the transition of our Alliance Georgia distribution center operations.

Speaker #1: Adjusted gross margin expanded 140 basis points to 63.1%, driven primarily by updated assortment sourcing and pricing strategies across our portfolio that resulted in higher IMUs, along with a change in sales mix, with off-price wholesale sales representing a lower proportion of net sales.

Speaker #2: These increases were partially offset by lower incentive compensation and cuts in more discretionary categories like travel. The result of this yielded adjusted EBITDA of $45 million or an 11.4% adjusted EBITDA margin, compared to adjusted EBITDA of $43 million or a 10.7% in the prior year.

Speaker #1: These factors were partially offset by a higher proportion of net sales in our DTC channels occurring during promotional events, at Tommy Bahama, Lilly Pulitzer, and Emerging Brands.

Speaker #1: Tariff cost included in inventory sold during the year was materially consistent with the prior year. As Tom mentioned, we recorded and received significant tariff refunds during the quarter.

Scott Grassmyer: Tariff costs included in inventory sold during the year were materially consistent with the prior year. As Tom mentioned, we recorded and received significant tariff refunds during the quarter. We recorded a reduction to cost of goods sold of $42 million of tariffs previously paid and received substantially the entire balance during Q2 or shortly thereafter. The impact of these refunds was excluded from our adjusted results. Adjusted SG&A expenses increased slightly to $210 million compared to $209 million last year, impacted primarily by new brick-and-mortar retail and food and beverage locations, as well as increases in software and consulting costs and costs associated with the transition of our Lyons, Georgia, distribution center operations. These increases were partially offset by lower incentive compensation and cuts in more discretionary categories like travel.

Speaker #2: Moving beyond EBITDA, adjusted depreciation amortization increased by approximately $1 million compared to the prior year, primarily due to increases in depreciation related to our new Alliance facility.

Speaker #1: We recorded a reduction to cost of goods sold of $42 million of tariffs previously paid and received substantially the entire balance during the second quarter or shortly thereafter.

Speaker #2: Interest expenses relatively flat compared to the prior years, our average debt levels declined during the year. Our effective tax rate of 27.5% was lower than the prior year of 29.6% due to certain discrete items that were more significant in the prior year.

Speaker #1: The impact of these refunds was excluded from our adjusted results. Adjusted SG&A expenses increased slightly to $210 million compared to $209 million last year, impacted primarily by new brick-and-mortar retail and food and beverage locations, as well as increases in software and consulting costs and costs associated with the transition of our Alliance, Georgia distribution center operations.

Speaker #2: With all this, we ended up with $1.34 of adjusted EPS. Moving to the balance sheet, inventory decreased $20 million or 12% on a LIFO basis that included a $10 million increase in to the LIFO reserve.

Speaker #1: These increases were partially offset by lower incentive compensation and cuts in more discretionary categories like travel. The result of this yielded adjusted EBITDA of $45 million, or an 11.4% adjusted EBITDA margin, compared to adjusted EBITDA of $43 million, or 10.7%, in the prior year.

Speaker #2: On a FIFO basis, inventory decreased $9 million or 4% compared to the second quarter of 2025, with decreases in emerging brands Lily Pulitzer and Johnny Was.

Scott Grassmyer: The result of this yielded adjusted EBITDA of $45 million or an 11.4% adjusted EBITDA margin, compared to adjusted EBITDA of $43 million or 10.7% in the prior year. Moving beyond EBITDA, adjusted depreciation amortization increased by approximately $1 million compared to the prior year, primarily due to increases in depreciation related to our new Lyons facility. Interest expense was relatively flat compared to the prior year as our average debt levels declined during the year. Our effective tax rate of 27.5% was lower than the prior year of 29.6% due to certain discrete items that were more significant in the prior year. With all this, we ended up with $1.34 of adjusted EPS. Moving to the balance sheet, inventory decreased $20 million or 12% on a LIFO basis. That included a $10 million increase to the LIFO reserve.

Speaker #2: We ended the quarter with long-term debt of $73 million which is down $70 million compared to $143 million at the end of the first quarter.

Speaker #2: And compared to long-term debt of $81 million at the end of the second quarter of fiscal 25, and $116 million at the end of fiscal 2025.

Speaker #1: Moving beyond EBITDA, adjusted depreciation and amortization increased by approximately $1 million compared to the prior year, primarily due to increases in depreciation related to our new Alliance facility.

Speaker #2: Cash flow from operations provided $97 million in the first half of 2026, which includes $29 million received related to tariff refunds. Compared to $80 million in the first half of 2025.

Speaker #1: Interest expense was relatively flat compared to prior years, as our average debt levels declined during the year. Our effective tax rate of 27.5% was lower than the prior year's rate of 29.6%, due to certain discrete items that were more significant in the prior year.

Speaker #2: We also had lower capital expenditures of $32 million in the first half of '26 compared to the first half of fiscal '25 of $55 million.

Speaker #1: With all this, we ended up with $1.34 of adjusted EPS. Moving to the balance sheet, inventory decreased $20 million, or 12%, on a LIFO basis. That included a $10 million increase in the LIFO reserve.

Speaker #2: The decrease which primarily related to the addition of fewer new bricks-and-mortar locations and lower expenditures on the Alliance Georgia distribution center project is that project comes to a close also allow for further reduction of our long-term debt, while also paying dividends of $22 million.

Speaker #1: On a FIFO basis, inventory decreased $9 million, or 4%, compared to the second quarter of 2025, with decreases in emerging brands Lilly Pulitzer and Johnny Was.

Scott Grassmyer: On a FIFO basis, inventory decreased $9 million or 4% compared to Q2 2025, with decreases in Emerging Brands, Lilly Pulitzer, and Johnny Was. We ended the quarter with long-term debt of $73 million, which is down $70 million compared to $143 million at the end of Q1, and compared to long-term debt of $81 million at the end of Q2 fiscal 2025, and $116 million at the end of fiscal 2025. Cash flow from operations provided $97 million in H1 2026, which includes $29 million received related to tariff refunds, compared to $80 million in H1 2025. We also had lower capital expenditures of $32 million in H1 2026, compared to H1 fiscal 2025 of $55 million.

Speaker #2: I'll now spend some time on our updated outlook for 2026. As Tom mentioned, the ongoing challenges in the Lily Pulitzer business, along with our generally conservative view of consumer sentiment, led us to reduce our top and bottom line outlook for the remainder of the year.

Speaker #1: We ended the quarter with long-term debt of $73 million, which is down $70 million compared to $143 million at the end of the first quarter.

Speaker #1: And compared to long-term debt of $81 million at the end of the second quarter of fiscal '25, and $116 million at the end of fiscal 2025.

Speaker #2: For the full year, we now expect a low single-digit negative comp for the total company which is lower than our previous range of slightly negative to slightly positive.

Speaker #1: Cash flow from operations provided $97 million in the first half of 2026, which includes $29 million received related to tariff refunds. This compares to $80 million in the first half of 2025.

Speaker #2: As a result of the change in our comp assumptions, we are revising our guidance range for the full year and now expect sales to be between $1.43 billion and $1.47 billion, or a decline of 3% to relatively flat.

Speaker #1: We also had lower capital expenditures of $32 million in the first half of '26, compared to the first half of fiscal '25, when we spent $55 million.

Speaker #2: Compared to sales of $1.478 billion in fiscal 2025. Our revised sales plan for the full year of 2026 includes a sales decrease in Lily Pulitzer and Johnny Was partially offset by a sales increase in Tommy Bahama and growth in the emerging brands.

Speaker #1: The decrease, which primarily related to the addition of fewer new bricks-and-mortar locations and lower expenditures on the Alliance, Georgia distribution center project as that project comes to a close, also allowed for further reduction of our long-term debt, while also paying dividends of $22 million.

Scott Grassmyer: The decrease, which primarily related to the addition of fewer new bricks-and-mortar locations and lower expenditures on the Lyons, Georgia, distribution center project, as that project comes to a close, also allow for further reduction of our long-term debt. We are also paying dividends of $22 million. I will now spend some time on our updated outlook for 2026. As Tom mentioned, the ongoing challenges in the Lilly Pulitzer business, along with our generally conservative view of consumer sentiment, led us to reduce our top and bottom line outlook for the remainder of the year. For the full year, we now expect a low single-digit negative comp for the total company, which is lower than our previous range of slightly negative to slightly positive.

Speaker #2: By distribution channel, the full year sales plan consists of low single-digit decreases in our direct-to-consumer channels, and a high single-digit decrease in wholesale partially offset by a low double-digit increase in our food and beverage channel that has benefitting from the additional new locations.

Speaker #1: I'll now spend some time on our updated outlook for 2026. As Tom mentioned, the ongoing challenges in the Lilly Pulitzer business, along with our generally conservative view of consumer sentiment, have led us to reduce our top- and bottom-line outlook for the remainder of the year.

Speaker #2: Moving on to gross margin, our outlook assumes that the tariff rates reflected the tariff rates reflecting the recent Section 301 changes will remain in effect for the balance of fiscal 2026.

Speaker #1: For the full year, we now expect a low single-digit negative comp for the total company, which is lower than our previous range of slightly negative to slightly positive.

Speaker #2: Because those rates are only modestly higher than the rates applicable to most of our first-half inventory receipts, we do not expect the changes to materially affect fiscal 2026 results.

Speaker #1: As a result of the change in our comp assumptions, we are revising our guidance range for the full year and now expect sales to be between $1.43 billion and $1.47 billion, or a decline of 3% to relatively flat.

Scott Grassmyer: As a result of the change in our comp assumptions, we are revising our guidance range for the full year and now expect sales to be between $1.43 billion and $1.47 billion, or a decline of 3% to relatively flat, compared to sales of $1.478 billion in fiscal 2025. Our revised sales plan for the full year of 2026 includes a sales decrease in Lilly Pulitzer and Johnny Was, partially offset by a sales increase in Tommy Bahama and growth in the Emerging Brands. By distribution channel, the full-year sales plan consists of low single-digit decreases in our direct-to-consumer channels and a high single-digit decrease in wholesale, partially offset by a low double-digit increase in our food and beverage channel that is benefiting from the addition of new locations. Moving on to gross margin.

Speaker #2: Any additional tariff increases implemented during the balance of the year would be expected to affect primarily future periods due to the timing of our inventory receipts and sales.

Speaker #1: Compared to sales of $1.478 billion in fiscal 2025, our revised sales plan for the full year of 2026 includes a sales decrease in Lilly Pulitzer and Johnny Was, partially offset by a sales increase in Tommy Bahama and growth in the Emerging Brands.

Speaker #2: When removing any tariff refund related impact, we now expect an approximate 50 basis points increase in gross margin for the year with improved IMUs and a continuation of the shift to a higher proportion of direct consumer sales to be partially offset by higher promotional activity, particularly at Lily Pulitzer.

Speaker #1: By distribution channel, the full-year sales plan consists of low single-digit decreases in our direct-to-consumer channels and a high single-digit decrease in wholesale, partially offset by a low double-digit increase in our food and beverage channel, which has benefited from the addition of new locations.

Speaker #2: As a result of these factors, we expect gross margins to improve approximately 100 basis points in both Q3 and Q4 of fiscal '26 compared to the prior year.

Speaker #1: Moving on to gross margin, our outlook assumes that the tariff rates reflecting the recent Section 301 changes will remain in effect for the balance of fiscal 2026.

Speaker #2: In addition to lower sales and higher gross margins, we expect SG&A to grow in the low single-digit range, primarily due to the annualization of incremental SG&A from new stores added primarily in fiscal 2025.

Scott Grassmyer: Our outlook assumes that the tariff rates reflecting the recent Section 301 changes will remain in effect for the balance of fiscal 2026. Because those rates are only modestly higher than the rates applicable to most of our H1 inventory receipts, we do not expect the changes to materially affect fiscal 2026 results. Any additional tariff increases implemented during the balance of the year would be expected to affect primarily future periods due to the timing of inventory receipts and sales. When removing any tariff refund related impact, we now expect an approximate 50 basis points increase in gross margin for the year, with improved IMUs and a continuation of the shift to a higher proportion of direct consumer sales to be partially offset by higher promotional activity, particularly at Lilly Pulitzer.

Speaker #1: Because those rates are only modestly higher than the rates applicable to most of our first-half inventory receipts, we do not expect the changes to materially affect fiscal 2026 results.

Speaker #2: Additional costs related to transition to the Alliance Georgia distribution center and increased software-related cost. Also within the EBITDA, we expect higher royalties and other income of approximately $2 million in fiscal '26, largely due to the normalization of sales from our licensing partners that were heavily impacted by the implementation of tariffs in fiscal '25.

Speaker #1: Any additional tariff increases implemented during the balance of the year would be expected to affect primarily future periods due to the timing of our inventory receipts and sales.

Speaker #1: When removing any tariff refund-related impact, we now expect an approximate 50 basis point increase in gross margin for the year, with improved IMUs and a continuation of the shift to a higher proportion of direct-to-consumer sales, to be partially offset by higher promotional activity, particularly at Lilly Pulitzer. As a result of these factors, we expect gross margins to improve approximately 100 basis points in both Q3 and Q4 of fiscal '26 compared to the prior year.

Speaker #2: Outside of EBITDA, we expect an increase in depreciation due to significantly all of the incremental costs to operate the new Alliance DC in fiscal '26 being depreciation related.

Speaker #2: We also expect interest expense of $6 million which is lower than our previous estimate due to our recent significant reduction in debt. Considering all these items and a tax rate between $27 and $28%, we are revising our 2026 adjusted EPS guidance to $1.60 to $2 versus adjusted EPS of $2.11 last year.

Scott Grassmyer: As a result of these factors, we expect gross margins to improve approximately 100 basis points in both Q3 and Q4 fiscal 2026, compared to the prior year. In addition to lower sales and higher gross margins, we expect SG&A to grow in the low single-digit range, primarily due to the annualization of incremental SG&A from new stores added primarily in fiscal 2025, additional costs related to transition to the Lyons, Georgia, distribution center, and increased software-related cost. Also within the EBITDA, we expect higher royalties and other income of approximately $2 million in fiscal 2026, largely due to the normalization of sales from our licensing partners that were heavily impacted by the implementation of tariffs in fiscal 2025. Outside of EBITDA, we expect an increase in depreciation due to significantly all of the incremental costs to operate the new Lyons DC and fiscal 2026 being depreciation related.

Speaker #1: In addition to lower sales and higher gross margins, we expect SG&A to grow in the low single-digit range, primarily due to the annualization of incremental SG&A from new stores added primarily in fiscal 2025.

Speaker #2: In the third quarter of '26, we expect sales of $280 to $300 million compared to sales of $307 million in the third quarter of '25.

Speaker #1: Additional costs related to the transition to the Alliance Georgia distribution center and increased software-related costs. Also within EBITDA, we expect higher royalties and other income of approximately $2 million in fiscal '26, largely due to the normalization of sales from our licensing partners that were heavily impacted by the implementation of tariffs in fiscal '25.

Speaker #2: This primarily reflects a mid-single-digit negative to low single-digit negative comp assumption and relatively flat wholesale sales. By brand, we expect lower sales at Lily Pulitzer and Johnny Was to be partially offset by a sales increase at Tommy Bahama and growth at emerging brands.

Speaker #2: We also expect gross margins to expand approximately 100 basis points. SG&A to grow in the low single-digit range. Royalty income of approximately $3 million and interest expense of $1 million.

Speaker #1: Outside of EBITDA, we expect an increase in depreciation, due to significantly all of the incremental costs to operate the new Alliance DC in fiscal '26 being depreciation related.

Speaker #2: And an effective tax rate of approximately 24%. We expect this to result in third quarter adjusted loss per share between $1.40 and $1.20. Compared to a loss per share of $92 last year.

Speaker #1: We also expect interest expense of $6 million, which is lower than our previous estimate due to our recent significant reduction in debt. Considering all these items and a tax rate between 27% and 28%, we are revising our 2026 adjusted EPS guidance to $1.60 to $2.00, versus adjusted EPS of $2.11 last year.

Scott Grassmyer: We also expect interest expense of $6 million, which is lower than our previous estimate due to our recent significant reduction in debt. Considering all these items and a tax rate between 27% and 28%, we are revising our 2026 adjusted EPS guidance to $1.60 to $2 versus adjusted EPS of $2.11 last year. In Q3 2026, we expect sales of $280 to $300 million, compared to sales of $307 million in Q3 2025. This primarily reflects a mid-single digit negative to low single-digit negative comp assumption and relatively flat wholesale sales. By brand, we expect lower sales at Lilly Pulitzer and Johnny Was to be partially offset by a sales increase at Tommy Bahama and growth at Emerging Brands.

Speaker #2: Our fourth quarter sales plans include the benefits of some additional promotional activity, primarily at Lily Pulitzer, along with most of our groups benefitting from the correction of tariff-related merchandising issues that significantly impacted our holiday season and fourth quarter results last year.

Speaker #1: In the third quarter of '26, we expect sales of $280 million to $300 million, compared to sales of $307 million in the third quarter of '25.

Speaker #2: As a result, our fourth quarter plan includes a comp assumption of relatively flat to slightly positive. Moving to our capex outlook for the remainder of the year, we expect capital expenditures for the year to be approximately $60 million including the $32 million spent in the first half of fiscal '26.

Speaker #1: This primarily reflects a mid-single-digit negative to low single-digit negative comp assumption and relatively flat wholesale sales. By brand, we expect lower sales at Lilly Pulitzer and Johnny Was to be partially offset by a sales increase at Tommy Bahama and growth at emerging brands.

Speaker #2: Compared to a total of $108 million in fiscal '25. The remaining capital expenditures relate primarily to new brick-and-mortar locations and the remaining capital expenditures for the new distribution center and Alliance Georgia.

Speaker #1: We also expect gross margins to expand approximately 100 basis points, SG&A to grow in the low single-digit range, royalty income of approximately $3 million, and interest expense of $1 million.

Scott Grassmyer: We also expect gross margin to expand approximately 100 basis points, SG&A to grow in the low single-digit range, royalty income of approximately $3 million, and interest expense of $1 million, and an effective tax rate of approximately 24%. We expect this to result in Q3 adjusted loss per share between -$1.40 and -$1.20, compared to a loss per share of -$0.92 last year. Our Q4 sales plans includes the benefits of some additional promotional activity, primarily at Lilly Pulitzer, along with most of our groups benefiting from the correction of tariff related merchandising issues that significantly impacted our holiday season and Q4 results last year. As a result, our Q4 plan includes a comp assumption of relatively flat to slightly positive. Moving to our CapEx outlook for the remainder of the year.

Speaker #2: I will now turn it back to Tom for some closing comments.

Speaker #1: And an effective tax rate of approximately 24%. We expect this to result in third quarter adjusted loss per share between $1.40 and $1.20, compared to a loss per share of $0.92 last year.

Speaker #3: Thank you, Scott. Before we open the call for questions, I want to briefly discuss a broader review we recently initiated across the enterprise aimed at meaningfully enhancing operating margins in the next few years.

Speaker #3: The review is focused on opportunities to simplify the business, improve efficiency, and sharpen how we allocate resources across Oxford in order to become less dependent on historical rates of growth to fuel higher profitability.

Speaker #1: Our fourth quarter sales plans include the benefits of some additional promotional activity, primarily at Lilly Pulitzer, along with most of our groups benefitting from the correction of tariff-related merchandising issues that significantly impacted our holiday season and fourth quarter results last year.

Speaker #1: As a result, our fourth quarter plan includes a comp assumption of relatively flat to slightly positive. Moving to our capex outlook for the remainder of the year, we expect capital expenditures for the year to be approximately $60 million, including the $32 million spent in the first half of fiscal '26.

Speaker #3: We are still developing our plans and expect to share more as they are finalized, but we believe it is important to highlight several actions already underway.

Scott Grassmyer: We expect capital expenditures for the year to be approximately $60 million, including the $32 million spent in H1 of fiscal 2026, compared to a total of $108 million in fiscal 2025. Remaining capital expenditures relate primarily to new brick-and-mortar locations and the remaining capital expenditures for the new distribution center in Lyons, Georgia. I will now turn it back to Tom for some closing comments.

Speaker #3: First, we have made significant progress ramping up the Alliance Georgia distribution center. As the facility matures, we'll look to take full advantage of our investment and move more product into the building including from a legacy 3PL to operate more efficiently across our increasingly automated footprint.

Speaker #1: Compared to a total of $108 million in fiscal '25. The remaining capital expenditures relate primarily to new brick-and-mortar locations and the remaining capital expenditures for the new distribution center in Alliance, Georgia.

Speaker #1: I will now turn it back to Tom for some closing comments.

Speaker #2: Thank you, Scott. Before we open the call for questions, I want to briefly discuss a broader review we recently initiated across the enterprise, aimed at meaningfully enhancing operating margins in the next few years.

Thomas C. Chubb III: Thank you, Scott. Before we open the call for questions, I want to briefly discuss a broader review we recently initiated across the enterprise aimed at meaningfully enhancing operating margins in the next few years. The review is focused on opportunities to simplify the business, improve efficiency, and sharpen how we allocate resources across Oxford in order to become less dependent on historical rates of growth to fuel higher profitability. We are still developing our plans and expect to share more as they are finalized, but we believe it is important to highlight several actions already underway. First, we have made significant progress ramping up the Lyons, Georgia, distribution center. As the facility matures, we will look to take full advantage of our investment and move more product into the building, including from a legacy 3PL, to operate more efficiently across our increasingly automated footprint.

Tom Chubb: Thank you, Scott. Before we open the call for questions, I want to briefly discuss a broader review we recently initiated across the enterprise aimed at meaningfully enhancing operating margins in the next few years. The review is focused on opportunities to simplify the business, improve efficiency, and sharpen how we allocate resources across Oxford in order to become less dependent on historical rates of growth to fuel higher profitability. We are still developing our plans and expect to share more as they are finalized, but we believe it is important to highlight several actions already underway. First, we have made significant progress ramping up the Lyons, Georgia, distribution center. As the facility matures, we will look to take full advantage of our investment and move more product into the building, including from a legacy 3PL, to operate more efficiently across our increasingly automated footprint.

Speaker #3: With a major investment phase nearing completion, we also expect capital expenditures to normalize after several years of elevated spending on Alliance which will increase the cash available for further debt reduction.

Speaker #2: The review is focused on opportunities to simplify the business, improve efficiency, and sharpen how we allocate resources across Oxford, in order to become less dependent on historical rates of growth to fuel higher profitability.

Speaker #3: With impending retirements within our technology leadership, we have transitions underway that will support a reassessment of our IT infrastructure with an eye towards simplifying our tech stack and advancing our data analytics and AI capabilities across the enterprise.

Speaker #2: We are still developing our plans and expect to share more as they are finalized, but we believe it is important to highlight several actions already underway.

Speaker #3: We are also optimizing our store fleet including converting selected Southern Tide and Johnny Was locations to Lily Pulitzer where we believe the market and location are better suited to that brand.

Speaker #2: First, we have made significant progress ramping up the Alliance Georgia distribution center. As the facility matures, we'll look to take full advantage of our investment and move more product into the building, including from a legacy 3PL, to operate more efficiently across our increasingly automated footprint.

Speaker #3: We will continue to evaluate the fleet market by market and location by location and make changes where we believe they will create the greatest long-term value.

Speaker #3: We have a new brand leader at Southern Tide and also within our emerging brands group, we consolidated oversight of the group's finance, planning, and operations functions to improve consistency and efficiency.

Speaker #2: With a major investment phase nearing completion, we also expect capital expenditures to normalize after several years of elevated spending on Alliance, which will increase the cash available for further debt reduction.

Thomas C. Chubb III: With a major investment phase nearing completion, we also expect CapEx to normalize after several years of elevated spending on Lyons, which will increase the cash available for further debt reduction. With impending retirements within our technology leadership, we have transitions underway that will support a reassessment of our IT infrastructure with an eye towards simplifying our tech stack and advancing our data analytics and AI capabilities across the enterprise. We are also optimizing our store fleet, including converting selected Southern Tide and Johnny Was locations to Lilly Pulitzer, where we believe the market and location are better suited to that brand. We will continue to evaluate the fleet market by market and location by location and make changes where we believe they will create the greatest long-term value. We have a new brand leader at Southern Tide and also within our Emerging Brands group.

Tom Chubb: With a major investment phase nearing completion, we also expect CapEx to normalize after several years of elevated spending on Lyons, which will increase the cash available for further debt reduction. With impending retirements within our technology leadership, we have transitions underway that will support a reassessment of our IT infrastructure with an eye towards simplifying our tech stack and advancing our data analytics and AI capabilities across the enterprise. We are also optimizing our store fleet, including converting selected Southern Tide and Johnny Was locations to Lilly Pulitzer, where we believe the market and location are better suited to that brand. We will continue to evaluate the fleet market by market and location by location and make changes where we believe they will create the greatest long-term value. We have a new brand leader at Southern Tide and also within our Emerging Brands group.

Speaker #3: These are a few examples of the actions underway. Alongside the work at Tommy Bahama, Lily Pulitzer, and Johnny Was, we believe these actions will simplify the business, strengthen execution, and position Oxford for more consistent, performance, and stronger returns over time.

Speaker #2: With impending retirements within our technology leadership, we have transitions underway that will support a reassessment of our IT infrastructure, with an eye toward simplifying our tech stack and advancing our data analytics and AI capabilities across the enterprise.

Speaker #3: We'll have more to say about all of this in December. With that, we're happy to take your questions. Paul?

Speaker #2: We are also optimizing our store fleet, including converting selected Southern Tide and Johnny Was locations to Lilly Pulitzer, where we believe the market and location are better suited to that brand.

Speaker #1: Thank you. Well, now we conduct PA question and answer session. If you'd like to ask a question, please press star one on your telephone keypad.

Speaker #1: A confirmation tone will indicate your line is on the question queue. You may press star two if you'd like to remove your question from the queue.

Speaker #2: We will continue to evaluate the fleet market by market and location by location, and make changes where we believe they will create the greatest long-term value.

Speaker #1: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Speaker #2: We have a new brand leader at Southern Tide, and within our Emerging Brands Group, we consolidated oversight of the group's finance, planning, and operations functions to improve consistency and efficiency.

Speaker #1: Thank you. Our first question is from Ashley Owens with KeyBank Capital Markets.

Thomas C. Chubb III: We consolidated oversight of the group's finance, planning, and operations functions to improve consistency and efficiency. These are a few examples of actions underway. Alongside the work at Tommy Bahama, Lilly Pulitzer, and Johnny Was, we believe these actions will simplify the business, strengthen execution, and position Oxford for more consistent performance and stronger returns over time. We will have more to say about all of this in December. With that, we are happy to take your questions. Paul?

Tom Chubb: We consolidated oversight of the group's finance, planning, and operations functions to improve consistency and efficiency. These are a few examples of actions underway. Alongside the work at Tommy Bahama, Lilly Pulitzer, and Johnny Was, we believe these actions will simplify the business, strengthen execution, and position Oxford for more consistent performance and stronger returns over time. We will have more to say about all of this in December. With that, we are happy to take your questions. Paul?

Speaker #4: Hi. Great. Thanks. And good afternoon. Maybe just to start, I wanted to focus in on Tommy Bahama because I thought the point about you calling out the return to positive comps in Florida was very important just given the size of that market.

Speaker #2: These are a few examples of the actions underway. Alongside the work at Tommy Bahama, Lilly Pulitzer, and Johnny Was, we believe these actions will simplify the business, strengthen execution, and position Oxford for more consistent performance and stronger returns over time.

Speaker #4: Could you unpack what helped drive that improvement in the quarter and whether you're seeing similar strengths across both the men's and women's categories?

Speaker #2: We'll have more to say about all of this in December. With that, we're happy to take your questions. Paul?

Speaker #3: Yeah. Thank you, Ashley. Great questions. And we were and I'm glad you called it out because we really were thrilled to see Florida turn positive.

Speaker #3: Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad.

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

Speaker #3: As you know, for a number of quarters now, it's been negative for the most part in Tommy Bahama. And that is such a big and important part of our business that when it's negative, it's tough.

Speaker #3: A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue.

Speaker #3: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.

Speaker #3: When it's positive, it makes the whole world seem better. So very glad to see that. Men's versus women's overall in Tommy this year, men's has been up.

Speaker #3: Thank you. Our first question is from Ashley Owens with KeyBank Capital Markets.

Speaker #3: Women's has actually been up more than men's, which were happy to see. As you know, we believe for a long, long time that women's is a huge opportunity in Tommy Bahama.

Speaker #4: Hi. Great, thanks, and good afternoon. Maybe just to start, I wanted to focus in on Tommy Bahama because I thought the point about you calling out the return to positive comps in Florida was very important, just given the size of that market.

Ashley Owens: Hey, great. Thanks, and good afternoon. Maybe just to start, I wanted to focus in on Tommy Bahama because I thought the point about you calling out the return to positive comp in Florida was very important, just given the size of that market. Could you unpack what helped drive that improvement in the quarter and whether you are seeing similar strengths across both the men's and women's categories?

Speaker #3: We've made steady progress in growing that business. And what we've seen this year has been really encouraging.

Speaker #4: Could you unpack what helped drive that improvement in the quarter, and whether you're seeing similar strengths across both the men's and women's categories?

Speaker #4: Great. And then maybe just quickly on Lily as well. So I think you were very explicit that spring '27 is that first season where you can and are working to reshape the assortment and that the changes we're not going to see that positive trend change until fiscal within this year.

Speaker #2: Yeah. Thank you, Ashley. Great questions. And we were—and I'm glad you called it out—because we really were thrilled to see Florida turn positive.

Thomas C. Chubb III: Yeah. Thank you, Ashley. Great questions. I am glad you called it out because we really were thrilled to see Florida turn positive. As you know, for a number of quarters now, it has been negative for the most part in Tommy Bahama, and that is such a big and important part of our business that when it is negative, it is tough. When it is positive, it makes the whole world seem better. Very glad to see that. Men's versus women's overall in Tommy, this year, men's has been up. Women's has actually been up more than men's, which we are happy to see. As you know, we have believed for a long time that women's is a huge opportunity in Tommy Bahama. We have made steady progress in growing that business, and what we have seen this year has been really encouraging.

Tom Chubb: Yeah. Thank you, Ashley. Great questions. I am glad you called it out because we really were thrilled to see Florida turn positive. As you know, for a number of quarters now, it has been negative for the most part in Tommy Bahama, and that is such a big and important part of our business that when it is negative, it is tough. When it is positive, it makes the whole world seem better. Very glad to see that. Men's versus women's overall in Tommy, this year, men's has been up. Women's has actually been up more than men's, which we are happy to see. As you know, we have believed for a long time that women's is a huge opportunity in Tommy Bahama. We have made steady progress in growing that business, and what we have seen this year has been really encouraging.

Speaker #2: As you know, for a number of quarters now, it’s been negative, for the most part, in Tommy Bahama. And that is such a big and important part of our business that when it’s negative, it’s tough.

Speaker #4: I guess should we now think about Lily as being a spring '27 recovery story? Could there be improvements in the comp with some of that planned promotionality through the back half of the year?

Speaker #2: When it's positive, it makes the whole world seem better, so very glad to see that. Men's versus women's overall in Tommy this year: men's has been up.

Speaker #4: And then just any proof points to kind of watch out for that would tell you that the resets working ahead of the launch then maybe just one on the modeling side of things with the gross margin guidance.

Speaker #2: Women's has actually been up more than men's, which we're happy to see. As you know, we have believed for a long, long time that women's is a huge opportunity in Tommy Bahama.

Speaker #4: I think it was 100 bits improvement in both Q3 and Q4 despite those elevated promotions at Lily. Just anything you can say as to what's giving you the confidence in that outlook particularly if that consumer demand does remain a little bit pressured.

Speaker #2: We've made steady progress in growing that business, and what we've seen this year has been really encouraging.

Speaker #4: Thank you.

Speaker #3: Yeah. So I think you understand this Ashley, but the length of the pipeline product pipeline is really the issue. So you get into spring '26, you realize that you've got a really pretty significant assortment issue.

Speaker #4: Great. And then maybe just quickly on Lilly as well. So, I think you were very explicit that Spring ’27 is that first season where you can and are working to reshape the assortment, and that the changes—we’re not going to see that positive trend change until fiscal within this year.

Ashley Owens: Great. Then maybe just quickly on Lilly as well. I think you were very explicit that spring 2027 is that first season where you can and are working to reshape the assortment, and that the changes, we are not going to see that positive trend change within this year. I guess, should we now think about Lilly as being a spring 2027 recovery story? Could there be improvements in the comp with some of that planned promotionality through the back half of the year? Then just any proof points to kind of watch out for that would tell you that the reset is working ahead of the launch. Then maybe just one on the modeling side of things with the gross margin guidance, I think it was 100 basis points improvement in both Q3 and Q4, despite those elevated promotions at Lilly.

Speaker #3: But you've got the rest of the year's product already in the pipeline. And you can do limited things to adjust for it. So spring '27 is the first season where we were able to really incorporate what we realized was wrong about the assortment in spring '26.

Speaker #4: I guess, should we now think about Lilly as being a spring ’27 recovery story? Could there be improvements in the comp with some of that planned promotionality through the back half of the year?

Speaker #4: And then, just any proof points to kind of watch out for that would tell you that the reset's working ahead of the launch. Then maybe just one on the modeling side of things with the gross margin guidance.

Speaker #3: The rest of the seasons for '26, we're already fundamentally in the pipeline. There are some other reasons to think that there might be some fourth quarter upside in Lily.

Speaker #4: I think it was a 100 basis point improvement in both Q3 and Q4, despite those elevated promotions at Lilly. Just anything you can say as to what's giving you the confidence in that outlook, particularly if that consumer demand does remain a little bit pressured.

Ashley Owens: Just anything you can say as to what is giving you the confidence in that outlook, particularly if that consumer demand does remain a little bit pressured. Thank you.

Speaker #3: And that's just because last year they were struggling through the tariff-related gaps in the product assortment. And they overall had a weak fourth quarter last year.

Speaker #4: Thank you.

Speaker #2: Yeah. So, I think you understand this, Ashley, but the length of the product pipeline is really the issue. So, you get into spring '26 and realize that you've got a really pretty significant assortment issue.

Thomas C. Chubb III: Yeah. So, I think you understand this, Ashley, but the length of the product pipeline is really the issue. So you get into spring 2026, you realize that you have got a really pretty significant assortment issue, but you have got the rest of the year's product already in the pipeline, and you can do limited things to adjust for it. So spring 2027 is the first season where we were able to really incorporate what we realized was wrong about the assortment in spring 2026. The rest of the seasons for 2026 were already fundamentally in the pipeline. There are some other reasons to think that there might be some Q4 upside in Lilly, and that is just

Tom Chubb: Yeah. So, I think you understand this, Ashley, but the length of the product pipeline is really the issue. So you get into spring 2026, you realize that you have got a really pretty significant assortment issue, but you have got the rest of the year's product already in the pipeline, and you can do limited things to adjust for it. So spring 2027 is the first season where we were able to really incorporate what we realized was wrong about the assortment in spring 2026. The rest of the seasons for 2026 were already fundamentally in the pipeline. There are some other reasons to think that there might be some Q4 upside in Lilly, and that is just

Speaker #3: So you might you might see some upside because of those things in the fourth quarter. And then the other thing is the resort product line, I think, which I look more like the spring '27 line, I think, could give us some early reads.

Speaker #2: But you've got the rest of the year's product already in the pipeline, and you can do limited things to adjust for it. So, spring '27 is the first season where we were able to really incorporate what we realized was wrong about the assortment in spring '26.

Speaker #3: But you're not really going to know till very late in the quarter when you've got some spring stuff. And then on the gross margin, question, certainly a good question.

Speaker #3: And I'll let Scott walk you through that and why we feel good about what we're projecting on.

Speaker #2: The rest of the seasons for '26 are already fundamentally in the pipeline. There are some other reasons to think that there might be some fourth-quarter upside in Lilly.

Speaker #2: Yeah. We are starting with higher IMUs. Also, wholesale will be a little bit lower percent of the total mix. So that will help neutralize or more than offset the higher promotional cadence that we do expect out of Lily.

Speaker #2: That's just because last year they were struggling with tariff-related gaps in the product assortment, and overall had a weak fourth quarter last year.

Speaker #2: This year.

Speaker #4: Very helpful color. Thank you.

Speaker #3: Thank you, Ashley.

Speaker #1: Our next question. It's from Janine Stichter with BPI.

Speaker #2: So you might see some upside because of those things in the fourth quarter. And then, the other thing is the resort product line, which I think will look more like the spring '27 line. I think that could give us some early reads.

Speaker #5: Hey. Hey, you got Ethan on for Janine. Thanks for taking our questions. First, I was just wondering what's driving the divergence between Tommy and the rest of the portfolio?

Speaker #5: Is it product, demographic, geography, or something else? Just any color you could give on that.

Speaker #2: But you're not really going to know until very late in the quarter, when you've got some spring stuff. And then on the gross margin question—certainly a good question.

Speaker #3: Well, what I would say is I don't think there's really a big divergence between Tommy and most of the rest of the portfolio. It's a little complicated, but Tommy and Lily clearly a big divergence.

Speaker #2: And I'll let Scott walk you through that, and why we feel good about what we're projecting.

Speaker #3: And I think that's almost all about the assortment challenges that Lily has. Johnny was, even though their comp numbers are not where Tommy's are, we kind of knew that going into the year just because of the trajectory that we came out of '25 on.

Speaker #5: Yeah. We are starting with higher IMUs. Also, wholesale will be a little bit lower percent of the total mix, so that will help neutralize or more than offset the higher promotional cadence that we do expect out of Lilly.

Speaker #5: This year.

Speaker #4: For helpful color. Thank you.

Speaker #2: Thank you, Ashley.

Speaker #3: As we've talked about, extensively, the goal in Johnny was this year is to improve profitability even if the sales number comes in a bit lower.

Speaker #3: Our next question is from Janine Stickter with BPI.

Speaker #6: Hey. Hey, you’ve got Ethan on for Janine. Thanks for taking our questions. First, I was just wondering what's driving the divergence between Tommy and the rest of the portfolio?

Speaker #3: And that's exactly what happened in the second quarter. So we really look at Johnny was as a positive story year to date. We think they're ticking the box on their turnaround plan.

Speaker #6: Is it product, demographic, geography, or something else? Just any color you could give on that.

Speaker #2: Well, what I would say is, I don't think there's really a big divergence between Tommy and most of the rest of the portfolio. It's a little complicated.

Speaker #3: And then within the emerging brands, it's really a southern tide issue. We don't they're too small for it to make sense for us to get into breaking out a lot of granularity.

Speaker #2: But Tommy and Lily clearly have a big divergence. And I think that's almost all about the assortment challenges that Lily has. Johnny was—even though their comp numbers are not where Tommy's are—we kind of knew that going into the year, just because of the trajectory that we came out of '25 on.

Speaker #3: But southern tides, the laggard there, everything else looks quite good. And as we talked about, we've brought in a new leader at Southern Tide.

Speaker #3: Very excited about him. I think this is his sixth week, maybe, on the job. And we're kind of rebooting Southern Tide. He's already seeing some good opportunities of things that we can improve.

Speaker #2: As we've talked about extensively, the goal in Johnny Was this year is to improve profitability, even if the sales number comes in a bit lower.

Speaker #3: Closer in and then obviously beyond. So I don't think there's as much of a divergence as it might seem like on the surface.

Speaker #2: And that's exactly what happened in the second quarter. So we really look at Johnny Was as a positive story year to date. We think they're ticking the box on their turnaround plan.

Speaker #5: Got it. That's a really helpful color and kind of answered my next question, which is going to be on emerging brands. So I'll pass it on.

Speaker #5: Thanks.

Speaker #3: Okay. Thank you, Ethan.

Speaker #1: Our next question is from Mauricio Serna with UBS.

Speaker #2: And then within the emerging brands, it's really a Southern Tide issue. They're too small for it to make sense for us to get into breaking out a lot of granularity.

Speaker #6: Yes. Good morning. Thanks for taking my question. Maybe could you talk about quarter to date, what kind of comps you're seeing overall? And how should we think about the comps specifically for Tommy Bahama?

Speaker #2: But Southern Tide's the laggard there. Everything else looks quite good. And as we talked about, we've brought in a new leader at Southern Tide.

Speaker #6: How are you thinking about the sustainability of that kind of comps that you delivered into Q2? And then after that, I have a follow-up on after that, I have a follow-up on Lily Pulitzer.

Speaker #2: Very excited about him. I think this is his sixth week, maybe, on the job. And we're kind of rebooting Southern Tide. He's already seeing some good opportunities, things that we can improve.

Speaker #3: Yeah. The comps quarter date, a little cloudy because you have some promotion timing. You also have a Labor Day being late. So it's a little cloudy.

Speaker #3: They're down slightly, but it's there's a lot of noise in them this early in the quarter. It will normalize more as the quarter goes on.

Speaker #2: Closer in, and then obviously beyond. So, I don't think there's as much of a divergence as it might seem like on the surface.

Speaker #6: And then on specifically on Tommy.

Speaker #6: Got it. That's a really helpful color and kind of answered my next question, which is going to be on emerging brands. So I'll pass it on.

Speaker #3: We're not going to get into comps by group this early. It's just one month is not with some of the time.

Speaker #6: Thanks.

Speaker #2: Okay. Thank you, Ethan.

Speaker #3: Our next question is from Mauricio Serna with UBS.

Speaker #6: Oh, no, no, no.

Speaker #3: Yeah.

Speaker #6: No, I wasn't asking about comps for Tommy, more like the how are you thinking about the comps for that brand in the year?

Speaker #7: Yes. Good morning. Thanks for taking my question. Maybe could you talk about quarter to date, what kind of comps you're seeing overall? And how should we think about the comps specifically for Tommy Bahama?

Speaker #3: Yeah. Yeah. For the year, Tommy, I mean, we expect them to be slightly positive for the year. And so yeah, slightly positive comps for the year.

Speaker #7: How are you thinking about the sustainability of that kind of comps that you delivered into Q2? And then after that, I have a follow-up on after that, I have a follow-up on Lily Pulitzer.

Speaker #3: Low signal.

Speaker #6: Got it. Got it. And then just on Lily Pulitzer, I guess just what we're wondering, how are you thinking about the assortment strategy? I guess in a go forward basis.

Speaker #2: Yeah. The comps quarter date, a little cloudy because you have some promotion timing. You also have a labor day being late. So it's a little cloudy.

Speaker #6: I guess I recall last year in '25, one of the things that had been successful was to move that bring more assortment that was higher AUR.

Speaker #2: They're down slightly, but there's a lot of noise in them this early in the quarter that will normalize more as the quarter goes on.

Speaker #6: And now it sounds like it seems like maybe it went too far. So is the right strategy being more towards the historical type of AURs or are you trying to figure out from that perspective how should we think about the assortment strategy?

Speaker #7: And then specifically on Tommy?

Speaker #2: We're not going to get into comps by group this early. It's just one month; it's not worth the time.

Speaker #6: And then I think you also mentioned on the prepared remarks that you were converting some I think it was Johnny Watson and Southern Tide stores into Lily Pulitzer.

Speaker #7: Oh, no, no, no. No, I wasn't asking about comps for Tommy, more like the how are you thinking about the comps for that brand in the year?

Speaker #6: What's the rationale behind that considering that the brand seems that brand seems to be still obviously struggling and you expect that to continue throughout the rest of the year?

Speaker #2: Yeah, for the year, Tommy, I mean, we expect them to be slightly positive for the year. So, yeah, slightly positive comps for the year.

Speaker #3: Yeah. Good questions, Mauricio. And we have over the last several years been able to grow the higher price business at Lily Pulitzer and even this year.

Speaker #2: Low signal.

Speaker #7: Got it, got it. And then just on Lilly Pulitzer, I guess just what we're wondering, how are you thinking about the assortment strategy?

Speaker #3: We continue to have success in those higher price points. But think of your pricing strategy as a pyramid where that top tier, which for us in dresses is $400 and up, it's the little tiny triangle at the top of the pyramid.

Speaker #7: I guess on a go-forward basis—I guess I recall last year, in ’25, one of the things that had been successful was to move to bring more assortment that was higher AUR.

Speaker #7: And now it sounds like, it seems like maybe it went too far. So is the right strategy being more towards the historical type of AURs, or are you trying to figure out, from that perspective, how should we think about the assortment strategy?

Speaker #3: And as then you go down, the pyramid, the pieces get bigger and bigger. That's I think the way almost any brand in the world is set up from a price architecture standpoint.

Speaker #7: And then, I think you also mentioned in the prepared remarks that you were converting some, I think it was Johnny Was and Southern Tide stores, into Lilly Pulitzer.

Speaker #3: And so what we did this year, you captured it is I think we just went too far too fast in shifting up the pricing tiers.

Speaker #7: What's the rationale behind that, considering that the brand still seems to be struggling, and you expect that to continue throughout the rest of the year?

Speaker #3: And so last year, in our entry price point bucket, and for us, that's dresses, which are a big category, under $200. Last year, that would have been about half of the styles that we offered.

Speaker #2: Yeah, good questions, Mauricio. And we have, over the last several years, been able to grow the higher-priced business at Lilly Pulitzer, and even this year.

Speaker #2: We continue to have success in those higher price points. But think of your pricing strategy as like a pyramid, where that top tier—which for us in dresses is $400 and up—is the little tiny triangle at the top of the pyramid.

Speaker #3: Would have been in that price bucket. This year, it was down to almost down to a third. I think it was like 35%. That was just too much too quickly.

Speaker #3: And as a result of that, some of those customers were willing to move up a price point, but a lot of them, I think, were not.

Speaker #2: And as you go down the pyramid, the pieces get bigger and bigger. That's, I think, the way almost any brand in the world is set up from a price architecture standpoint.

Speaker #3: And that's been I think the bigger part of our problem has been the price architecture. So going forward, what we've done is we've gone back to what we had in '25.

Speaker #2: And so what we did this year, you captured it is I think we just went too far, too fast in shifting up the pricing tiers.

Speaker #3: In '26, we'll move a little more in the upward direction than '25 or excuse me, '27, we'll move a little more upward than '25.

Speaker #2: And so, last year, in our entry price point bucket—and for us, that's dresses, which are a big category under $200—last year that would have been about half of the styles that we offered.

Speaker #3: But that'll be a lot back from '26, if that makes sense.

Speaker #6: Yeah.

Speaker #3: And then on the why switch the stores, these are all locations. And Lily Pulitzer, even this year, as bad as it is, it's still a profitable brand.

Speaker #2: Would have been in that price bucket. This year, it was down to almost a third—I think it was like 35%. That was just too much, too quickly.

Speaker #3: We very much believe in the brand and the team there. This is completely a fixable issue. And the locations that we're converting are some that where we believe Johnny was in Southern Tide just because of the level of brand awareness in those markets is going to have a long, hard road to profitability.

Speaker #2: And as a result of that, some of those customers were willing to move up a price point. But a lot of them, I think, were not.

Speaker #2: And that's been, I think, the bigger part of our problem—has been the price architecture. So, going forward, what we've done is we've gone back to what we had in '25.

Speaker #3: But that Lily Pulitzer can easily be profitable in a great example is on King Street, in Charleston, where Lily Pulitzer had operated a store, the landlord was expanding a jewelry and watch business and needed to take the space back.

Speaker #2: In '26, we'll move a little more in the upward direction than '25. Excuse me, in '27, we'll move a little more upward than '25. But that'll be a lot back from '26, if that makes sense.

Speaker #3: So we were about to be off King Street in Charleston and Lily. At the same time, we had a Johnny was store that was losing a couple of hundred thousand dollars.

Speaker #7: Yeah.

Speaker #2: And then, on the why switch the stores, these are all locations. And Lilly Pulitzer, even this year, as bad as it is, it's still a profitable brand.

Speaker #3: And Charleston's not the most natural market for Johnny was. I do believe over the long term, that'll be a place where Johnny was will win.

Speaker #2: We very much believe in the brand and the team there. This is completely a fixable issue. And the locations that we're converting are some that where we believe Johnny was in Southern Tide just because of the level of brand awareness in those markets is going to have a long, hard road to profitability.

Speaker #3: But in the short term, and with all the other challenges we had, we knew if we flipped it to Lily Pulitzer, we'd immediately start making a lot of money, which is exactly what happens.

Speaker #3: So it's those types of scenarios, Mauricio.

Speaker #2: But that Lily Pulitzer can easily be profitable in a great example is on King Street, in Charleston, where Lily Pulitzer had operated a store, the landlord was expanding a jewelry and watch business and needed to take the space back.

Speaker #6: Thank you so much.

Speaker #3: Okay. Thank you for the questions.

Speaker #1: Now, our next question is from Paul Ledjway.

Speaker #7: Hi. It's Tracy Kogan filling in for Paul. I was hoping you could talk to us about the traffic AUR and average basket into Q for Tommy and Lily.

Speaker #2: So we were about to be off King Street in Charleston and Lilly. At the same time, we had a Johnny Was store that was losing a couple hundred thousand dollars.

Speaker #7: And then secondly, I was just wondering on freight, if you're seeing any delays and then also related to freight, what level of pressure you've built into your gross margin and if that has changed materially from what you expected as of 1Q.

Speaker #2: And Charleston's not the most natural market for Johnny Was. I do believe over the long term that'll be a place where Johnny Was will win.

Speaker #7: Thanks.

Speaker #3: Yeah. So in 2Q, and this is really held pretty constantly through throughout the year, traffic has been pretty good. Conversion rates have been off a little bit.

Speaker #2: But in the short term, and with all the other challenges we had, we knew if we flipped it to Lilly Pulitzer, we'd immediately start making a lot of money, which is exactly what happened.

Speaker #3: Average order values, average basket sizes have been one of the bright spots. In the story, for us, and then the AURs, I think mostly due to the level of the IMUs are higher in the MSRPs are higher, but the AURs actually gone down a bit due to the amount of stuff that we promoted this year.

Speaker #2: So it's those types of scenarios, Mauricio.

Speaker #7: Thank you so much.

Speaker #2: Okay, thank you for the questions.

Speaker #1: Now, our next question is from Paul Ledgeway.

Speaker #3: Hi, it's Tracy Kogan filling in for Paul. I was hoping you could talk to us about the traffic, AUR, and average basket in Q2 for Tommy and Lilly.

Speaker #3: And then secondly, I was just wondering on freight, if you're seeing any delays and then also related to freight, what level of pressure you've built into your gross margin.

Speaker #7: Is that true? I would guess some of that's a little different, though, between Tommy and Lily. Were you speaking about one of them in your answer there, or was that kind of an overall comment?

Speaker #3: It was more of an overall comment. There are differences in the brands, but the trend's been pretty similar.

Speaker #3: And if that has changed materially from what you expected as of Q1. Thanks.

Speaker #2: Yeah. So in Q2, and this has really held pretty constant throughout the year, traffic has been pretty good. Conversion rates have been off a little bit.

Speaker #7: Got it. Thanks. And then on the freight?

Speaker #3: Yeah. On the freight, we built in some slight increases, but we have a little bit of an offset from some of our outbound parcels.

Speaker #2: Average order values and average basket sizes have been one of the bright spots in the story for us. And then the AURs, I think mostly due to the level of the IMUs are higher and the MSRPs are higher, but the AURs have actually gone down a bit.

Speaker #3: We have low we renegotiated contracts that were in the first half of the year especially. We've got a favorable there that's helping neutralize. On the second half, I'm sure we'll get some fuel additional fuel surcharges that will have a slight increase.

Speaker #3: But overall, our base rates were starting a little bit lower on our outbound parcels, but our containers coming in from Asia are a slightly higher in that.

Speaker #2: Due to the amount of stuff that we promoted this year.

Speaker #3: It's not a real material.

Speaker #3: Is that true? I would guess some of that's a little different though between Tommy and Lily. Were you speaking about one of them in your answer there or was that kind of an overall comment?

Speaker #7: Got it. Thank you.

Speaker #1: Thank you. There are no further questions at this time. I'd like to hand the floor back over to Tom Chubb for any closing comments.

Speaker #2: It was more of an overall comment. There are differences in the brands, but the trend has been pretty similar.

Speaker #3: Thank you, Paul. And thanks to all of you for your interest. We look forward to talking to you again in December and hope all is well until then.

Speaker #3: Got it. Thanks. And then on the freight?

Speaker #2: Yeah. On the freight, we built in some slight increases, but we have a little bit of an offset from some of our outbound parcels.

Speaker #2: We had low—we renegotiated contracts, so in the first half of the year especially, we've got a favorable (impact) there that's helping neutralize. In the second half, I'm sure we'll get some additional fuel surcharges that will have a slight increase.

Speaker #2: But overall, our base rates were starting a little bit lower on our outbound parcels, but our containers coming in from Asia are a slightly higher and that's it's not a real material.

Speaker #3: Got it. Thank you.

Speaker #1: Thank you. There are no further questions at this time. I’d like to hand the floor back over to Tom Chubb for any closing comments.

Speaker #2: Thank you, Paul. And thanks to all of you for your interest. We look forward to talking to you again in December, and hope all is well until then.