All sites on hold. We appreciate your patience. And we ask that you please continue to stand by. To all sites on hold, we appreciate your patience, and we ask that you please continue to stand by. Please stand by. Your program is about to begin. Good morning, everyone, and welcome to today's PVH Corp. Second Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one key. Please note this call may be recorded. And I will be standing by should you need any assistance. It is now my pleasure to turn today's program over to Sheryl Freeman, Senior Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to the PVH Corp. Second Quarter 2025 Earnings Conference Call. Leading the call today will be Stefan Larsson, Chief Executive Officer, and Zac Coughlin, Chief Financial Officer. This webcast and conference call is being recorded on behalf of PVH Corp. and consists of copyrighted material. It may not be recorded, rebroadcast, or otherwise transmitted without PVH's written permission. Your participation constitutes your consent to having anything you say appear on any transcript or replay of this call. The information to be discussed includes forward-looking statements that reflect PVH's view as of August 26, 2025, of future events and financial performance. These statements are subject to risks and uncertainties indicated in the company's SEC filings and the Safe Harbor statement included in the press release, which is the subject of this call. These include PVH's right to change its strategies, objectives, expectations, intentions, and the company's ability to realize anticipated benefits and savings from divestitures, restructurings, and similar plans such as the actions undertaken to focus principally on its Calvin Klein and Tommy Hilfiger businesses and its current multiyear initiative to simplify its operating model and achieve cost savings. PVH does not undertake any obligation to update publicly any forward-looking statement, including without limitation, any estimates regarding revenue or earnings. Generally, the financial information and projections to be discussed will be on a non-GAAP basis as defined under SEC rules. Reconciliations to GAAP amounts are included in PVH's Second Quarter 2025 earnings release, which can be found on www.pvh.com and in the company's current report on Form 8-K furnished to the SEC in connection with the release. At this time, I am pleased to turn the conference over to Stefan Larsson.

Thank you, Sheryl, and good morning, everyone. And thank you for joining our call today. I want to start by thanking our teams around the world for delivering a better-than-expected second quarter. We beat our guidance on both the top and bottom line, as we grew revenue 4% on a reported basis, achieved our 1% revenue growth guidance on a constant currency basis, and drove better-than-expected gross margin performance and EBIT margins. Total direct-to-consumer revenue was flat in constant currency, a sequential improvement compared to the first quarter, including a sequential improvement each month throughout the quarter. We grew wholesale revenue by low single digits in constant currency, benefiting from the intake and relaunch of the Calvin Klein women's business in North America. Looking ahead, we are reaffirming our earnings guidance for the full year and raising our reported revenue guidance despite tariff rates effectively doubling and a continued uneven global macro. And for the rest of the year, we have also increased our strategic investments in marketing to generate even higher visibility and customer impact. Since we last spoke, our focus has been to further strengthen our PVH plus execution. And for both brands, this means continuing to strengthen our brand-building consumer flywheel. Across product, marketing, and marketplace execution, we drive performance by leaning into the strong consumer love for our iconic brands, focusing on our biggest product categories, then bringing innovation and newness into our most iconic product franchises, amplifying them through powerful marketing and supporting it by next-level execution across all our channels. And we have already made significant progress. Regionally in Europe, we delivered another quarter of positive D2C growth and finalized our Spring 2026 forward-looking wholesale order books up low single digits, marking our second consecutive season of growth. In North America, we drove stronger D2C performance and again drove double-digit EBIT margins. And in APAC, we exceeded our plan and started to stabilize the business in key markets. We are also successfully working through the operational challenges we experienced as we set up the Calvin Klein global product capability in New York. Already now for Fall 2025, we are delivering the sequential improvements we set out to achieve. And for the Spring 2026 product season, we have already locked in the important margin improvements we target, as well as got them back to on time for our deliveries. David and the Calvin team have done a great job making this happen. Let me now share concrete examples of the actions we took that drove our performance in the second quarter. And let me start with Calvin Klein. The biggest product categories in Calvin Klein are underwear and denim. And this quarter, we further drove growth in both these categories. When we last spoke, we had just launched our spring campaign with superstar Bad Bunny to amplify the newness and innovation in our new men's ICON Cotton Stretch product franchise. It's been incredibly successful. And across all regions, this franchise is driving significant commercial impact. The combination of a powerful product category tied to strong product innovation, connected to a campaign with globally relevant talent, is a repeatable model that we know works. The Bad Bunny campaign has increased brand awareness, driving stronger traffic and conversion. It's also creating a strong halo effect across men's underwear. Sales of our cotton stretch styles were up 14% globally in the quarter, following the 25% growth we delivered last quarter. Building on this success, for this fall, we are bringing that same product innovation and newness to our largest women's underwear program with the launch of our Icon cotton modal franchise. It will also be supported by a global campaign featuring one of the most exciting global superstars in music. We will again drive commercial impact by activating a full-funnel approach across all regions. Next, in denim, we have continued to build on Calvin's strong momentum. We focused on newness through 90s styles and fashion fits to capture consumer demand for looser fit silhouettes and delivered 19% growth in fashion denim this quarter. We're also innovating with new tools to drive conversion. And we recently introduced a denim fit guide to make it easier for consumers to shop their favorite denim look with styling inspiration that captures the Calvin lifestyle. Last week, leveraging our combination of hero product amplified by mega talent, we launched the denim-focused collection featuring K-Pop star Menu. Already, we have seen more than doubling of our engagement rate on social media from this campaign, with the key denim products rising to the number one and two best-selling products in their categories and markets. This is just the beginning of what we believe will be the strongest Calvin Klein fall campaign so far. With a combination of strong product innovation, amplified with a lineup of global mega talent from the world of music and sports, we build relevance when we connect Calvin's brand DNA to the global cultural conversation. And this quarter, we have repeatedly done that. We connected the inspirational halo of our Calvin Klein collection to key cultural moments, with talent including Dua Lipa, Pedro Pascal, and Aesop Rocky. And we took this to another level when Beyonce wore custom Calvin Klein Collection underwear in her Cowboy Carter show, a moment she shared with her over 300 million followers on Instagram. We are building strong connectivity between collection and our main line to extend the halo that Veronica Leone is creating. You will see this next at our upcoming runway show at New York Fashion Week on September 12. Finally, in the marketplace, we are making investments in stores around the world to bring the full Calvin vision to life for the consumer. Tomorrow, we'll open our flagship store in Tokyo, in the center of Harajuku, a hub for youth culture, fashion, and high traffic from both local and international shoppers. The new flagship marks the next chapter in our global retail expansion, in major markets around the world. And later this year, we look forward to opening our flagship in Soho, New York, one of the most iconic retail destinations globally. Turning to Tommy. Throughout the quarter, we continued to take Tommy's iconic DNA of classic American style with a unique twist, connecting it to culture and driving strong commercial impact. In the world of sport, Tommy was twenty years ahead of its time in building early partnerships with Formula One. Our latest partnership with Apple Studios took this to the next level with Tommy the brand playing a key part in the global summer blockbuster film, Ep one, the movie. It's already become the highest-grossing sports film in history. And it's Brad Pitt's highest-grossing film to date. And for those who have seen it, you know that Tommy is impossible to miss. To support this major brand moment, we launched a full-funnel global campaign. The movie premiered at the landmark Radio City Music Hall in New York City, and it was incredible to see the iconic Tommy Hilfiger brand on the big screen, embodying the fearless drive and effortless style that define both the sport and the brand. This continued in London, where Tommy was featured on the 3D screen in Piccadilly Circus ahead of the global premiere, contributing to double-digit lifts in both brand perception and net promoter scores in that market. Globally, we have seen an incredible consumer response to our limited edition collection of key Formula One styles, with strong sell-through around the world. We'll continue building on this momentum with Cadillac, as the official apparel sponsor of the Cadillac Formula One racing team, where two of the biggest American icons are coming together to support the first US team on the grid. And staying in the world of sport, as the official lifestyle partner of the US Sale GP team, Tommy launched a capsule collection which blends high-performance sport and modern style. The partnership is at the heart of Tommy's unique DNA and opens up new consumer and commercial opportunities for the brand around the world. Throughout the quarter, we executed across the full funnel. This included celebrating the Tommy summer lifestyle through the Hill Figure Resort campaign, where our iconic hero product and strong category performance was amplified with top-tier talent including Madeline Klein and Patrick Schwarzenegger. This led to strong sell-throughs across channels for spring and summer 2025 seasons in featured key product categories. Within our summer shop styles, we drove women's wear up 10% globally and men's wear up 3%. We continue to focus on the full Tommy lifestyle by expanding both our core men's and women's business. In men's, we expanded into dress casual, an important category in the consumer's wardrobe. We previewed the collection in Milan to more than 350 wholesale partners at PT Ormo, one of the biggest men's fashion events in the world. And we are encouraged by the strong initial selling for spring 2026. Category expansion is an important strength of the Tommy brand. And we are excited for this new category to launch early next year with key wholesale partners globally as well as in premium stores and on tommy.com. In women's, building on the recent collaboration with Sofia Richie Grange, this quarter we launched the TOMMY GIRL capsule, which drove strong sell-through across regions and attracted a younger consumer. Tommy Girl has been an important feature in pop culture since the nineties, and we are tapping into that deep consumer love for the Tommy DNA. In North America, over half of our capsule purchases were new consumers to the site, and one-third became repeat purchases within thirty days. Looking to the fall season, yesterday, we launched a global lifestyle campaign featuring a cast led by supermodel Claudia Schiffer and Nicholas Hoult, the star of the summer hit film Superman. To maximize amplification, we have increased our marketing investments, which includes a global activation of the full funnel with multiple high-impact brand moments and sustained product storytelling. Now let me turn to our regional performance where we also continue to make strong progress. Starting with Europe, we drove another quarter of total D2C growth, and we delivered our fourth consecutive quarter of store revenue growth. D2C growth was offset by a decline in wholesale, from shipment timing that we mentioned last quarter which benefited the first quarter. While overall revenue was down low single digits in constant currency for the quarter, importantly, we ended the first half with revenue slightly up versus last year. I'm also pleased to share that we drove growth in our wholesale order book for spring 2026, up low single digits compared to the prior year, building on our growth in fall 2025. This performance reflects our ability to further strengthen our product offering season by season, combined with our strong sales teams and wholesale partnerships in the region. Importantly, across the region, our stepped-up execution and product improvements drove growth in our largest category businesses in the quarter. In Tommy, we grew menswear up 3% versus last year, and in Calvin, we grew underwear up 6% versus last year. Turning to The Americas. We grew revenue by low double digits, including above-planned D2C performance across both brands. Our disciplined execution again drove double-digit EBIT margins. We delivered strong growth in our digital channels, supported by a double-digit increase in traffic, fueled by our product strength and marketing effectiveness, and driven by our investments that continue to further elevate the online shopping experience. This quarter, both brands had positive consumer growth across new, retained, and reactivated consumers across our digital platforms. The consumer is choosing iconic products with newly introduced features and is showing up in our performance with strong trend improvement across both brands and our D2C channels. We also saw higher sell-throughs of these new products with our key wholesale partners. While there is still uncertainty in the back half of the year tied to tariffs, we are focused on continuing to deliver iconic fashion with newness to our consumers. Moving on to Asia Pacific. For the second quarter, we drove better-than-expected top-line performance, with revenues declining low single digits in constant currency, representing a significant sequential improvement. This was driven by performance in our own channels, high-quality consumer engagement across the full funnel, and strong execution of key holidays. We again won in big consumer moments such as six eighteen, where we delivered high single-digit GMV growth outperforming our expectations adding to our double-digit GMV growth last year. During six eighteen, both Calvin and Tommy ranked among the top five international brands on Tmall. Although the macro remains choppy, our strong execution has started to stabilize performance. This summer, I visited our teams in Japan and Korea, and it was incredible to see the brand love we have in these markets. Whether it's Calvin's presence at Hyundai's sales Gen C store or the strength of Tommy's flagship store in Tokyo. Each quarter, we continue to build out the strength of our brands leveraging the combination of our category performance and iconic hero products amplified with locally relevant talent. We still have significant untapped opportunity to grow our brands in APAC. We are increasing our investments in marketing to activate the full funnel and drive new store expansion. Reflecting our long-term commitment to the region, which remains an important growth driver for our global business. Now turning to global licensing. Our licensing revenue, excluding the licenses that we are transitioning, continues to grow. As previously mentioned, our large and diversified global licensing business is a key competitive advantage. Our licensing partners help bring our vision to life across multiple complementary categories. They are critically important to how we drive sustainable, profitable growth through the PVH plus plan. In collaboration with our licensing partner, Cody, we are deep into preparations for our biggest fragrance launch since CK One. While we are preparing for the big launch next year, we have already had early success in recent new product launches especially with younger consumers. In closing, the second quarter marked another step forward on our multiyear journey to unlock the full potential of Calvin Klein and Tommy Hilfiger, and step by step building them into the most desirable lifestyle brands in the world. In a choppy macro environment, we delivered by intensifying and expanding the impact of our PVH plus execution. And we are making significant progress. We continue to demonstrate that where we lean in to execute, we deliver. And I'm proud of how the team stepped up execution again this quarter to drive the business forward. The areas we said we were going to lean into last quarter delivered on. While the global macro landscape continues to evolve and remain uncertain, we are focused on what's within our own control: building our brands and business for the long term. We continue to take concrete action to build on the momentum we created in the first half, to drive our performance in the back half, continuously learning and improving to become stronger over time. And with that, I'll turn the call over to Zac.

Thanks, Stefan, and good morning. My comments are based on non-GAAP results and are reconciled in our press release. As Stefan discussed, this quarter we took another step forward on our multiyear journey to build Calvin Klein and Tommy Hilfiger into the most desirable lifestyle brands in the world, delivering or exceeding expectations across all key financial metrics for the second quarter. In Q2, we delivered another quarter of revenue growth, drove a sequential improvement in year-over-year gross margin percent, and continued our strong SG&A discipline. And while our EPS for the quarter was lower than last year, it was better than expected. As we look forward, we are reaffirming our full-year guidance for constant currency revenue, operating margin, and EPS in spite of new tariff rates, which have effectively doubled since our last call. I will now discuss our second-quarter results in more detail and then move on to our outlook. Revenue for the second quarter was up 4% on a reported basis, and up 1% on a constant currency basis. Starting from a regional perspective, our EMEA business was up 3% on a reported basis, and down 3% in constant currency for the quarter. In constant currency, we delivered growth in the direct-to-consumer business, which was up slightly, and notably, sales in our retail stores were up mid-single digits, the fourth consecutive quarter of year-over-year growth. Our wholesale business was lower by mid-single digits reflecting the timing shift to Q1 of this year that I discussed last quarter. Looking at the first half overall for EMEA, which normalizes for the wholesale timing effect, our total EMEA business was up slightly in constant currency driven by growth in the direct-to-consumer business, and wholesale revenue in line with the prior year. In our Americas business, revenue was up 11% driven by double-digit growth in wholesale, which includes the impact of Calvin Klein women's sportswear and jeans wholesale transition in-house. As I discussed last quarter, the wholesale shipments this year were planned to reflect a more balanced first-half second-half weighting versus last year when shipments were more heavily weighted to the back half. Direct-to-consumer revenue in The Americas was flat, a sequential improvement versus Q1. We delivered double-digit growth in our digital commerce business, which marks the fourth consecutive quarter of year-over-year growth, fueled by the investments we've made to elevate the online consumer experience. While stores were down low single digits for the quarter, we delivered a sequential improvement compared to Q1 and exited the quarter with modest sales growth in July. Revenue in our Asia Pacific business was down 3% on a currency basis, a significant sequential improvement compared to the first quarter. Growth in our owned and operated digital commerce business was more than offset by declines in the wholesale business and in our stores, reflecting the choppy consumer environment in the region, particularly in China. While direct-to-consumer revenue in China was down compared to last year, we saw a sequential improvement in our bricks and mortar stores compared to the first quarter and drove growth in our digital commerce business. Revenue for Asia Pacific business was down 1% on a reported basis. In our licensing business, revenue was down 3% versus last year, more than explained by the previously mentioned transition of Calvin Klein women's sportswear and jeans in-house. Turning to our global brands, Tommy Hilfiger revenues were up 4% as reported and flat in constant currency, Calvin Klein revenues were up 5% as reported and up 3% in constant currency. From an overall PVH channel perspective, our direct-to-consumer revenue was up 4% as reported and flat in constant currency, a sequential improvement over the prior quarter. Sales in our retail stores were up 4% as reported and flat on a constant currency basis, driven by mid-single-digit growth in EMEA, offset by low single-digit declines in each of Americas and APAC. Sales in our owned and operated ecommerce business were up 3% as reported and flat in constant currency, as strong growth in Americas and APAC was offset by a decline in EMEA. Total wholesale revenue was up 6% as reported and 2% in constant currency, which reflects the previously mentioned transition of Calvin Klein women's sportswear and jeans in-house. In the second quarter, our gross margin was 57.7%, a decrease of 240 basis points compared to last year, but better than planned, largely due to the delayed impact of tariffs. As we have discussed previously, approximately 50 basis points of the decrease was the impact of our North America license transitions, and in Q2, gross margin reflected the initial early impact of tariffs of approximately 20 basis points. The remaining 170 basis point decrease was largely a continuation of the three main factors we felt in Q1, including higher promotions, the mix of shipments and wholesale, which negatively impacted gross margin, but not our overall profitability, and the impact of Calvin Klein product shipment delays. SG&A spending was down in constant currency and SG&A as a percent of revenue improved 140 basis points versus last year, to 49.5%, reflecting our strong cost discipline. EBIT for the quarter was $178 million and operating margin was 8.2%. Earnings per share was $2.52 reflecting a negative impact of 6¢ related to tariffs and a positive impact of 16¢ related to exchange. Interest expense was $22 million and our tax rate for the quarter was approximately 22%. As a reminder, our earnings per share of $3.01 in the second quarter last year included a benefit of approximately $0.55 related to the favorable settlement of a multiyear international tax audit, which drove our tax rate to 0% for last year's quarter. Absent this benefit, Q2 2024 EPS would have been $2.46. Inventory at quarter end was up 13% compared to Q2 last year, including a 1% increase due to tariffs, and reflects a planned improvement compared to up 19% in Q1. The rest of the increase in the current quarter was primarily due to a purposeful investment in best-selling core product categories, and an increase to support our projected sales in the third quarter. Availability also improved across all regions and channels, as we make strategic investments in the most essential styles. Our inventory is fresh and current, and we remain on track to land the year with inventory aligned to our sales plan, excluding tariffs. Now moving on to our outlook. We are encouraged by our Q2 results, which we also recognize there continues to be significant uncertainty around global trade policy and the impact on the broader macroeconomic environment and consumer spending behavior. Our outlook is based on our best assessment of current conditions and currently announced tariff levels. Starting with the third quarter, we are projecting revenue to be flat to a slight increase on a reported basis and down slightly on a constant currency basis compared to the prior year. Our revenue outlook for the third quarter reflects the impact of wholesale shipment timing in The Americas that I spoke of earlier with this year reflecting a more balanced first-half, second-half weighting versus last year when shipments were more heavily weighted to the back half. Overall for The Americas, we are planning revenue up low single digits with growth in wholesale and DTC sales approximately flat. In EMEA, we expect continued growth in DTC and wholesale approximately flat. In Asia Pacific, we expect revenue to decline by low single digits in line with the second quarter. We are expecting third quarter gross margin to decline approximately 175 basis points versus the prior year, a sequential improvement compared to the first half trend as we begin to stabilize the Calvin Klein operational challenges we have discussed previously. Our gross margin guidance includes an unmitigated tariff impact of approximately 80 basis points, partially offset by the impact of planned mitigation actions. The impact of tariffs, we felt much more heavily in the fourth quarter given when new rates take effect and the timing of sell-through. We expect SG&A as a percentage of revenue to be up approximately 75 basis points compared to last year. As Stefan mentioned, we are investing more into marketing in the third quarter to capitalize on key consumer moments and to support our brand-building campaigns amplified by mega talent. At the same time, our growth driver five actions will continue to deliver efficiencies. Overall, we are projecting third quarter operating margin to be approximately 8%, down approximately 250 basis points compared to last year. Earnings per share is expected to be in a range of $2.35 to $2.50. Our tax rate for the third quarter is estimated at approximately 25%, higher than our tax rate projection for the full year due to timing items, and interest expense is projected to be approximately $22 million. Moving on to the full year, we remain on track to deliver the overall business outlook we shared last quarter despite the recently announced incremental tariffs on goods coming into The US. We are reaffirming our full-year constant currency revenue guidance of flat to increase slightly, our operating margin outlook of approximately 8.5%, and our EPS outlook in the range of $10.75 to $11. Our guidance reflects an incremental tariff impact compared to our prior outlook and increased marketing investments, which are being offset by the impact of favorable exchange. We expect the tariffs currently in place will have an overall net negative impact on our earnings in 2025, including an approximately $70 million unmitigated impact to EBIT, or approximately $1.15 per share, compared to previous guidance of $65 million and $1.05 per share. We expect to mitigate some of these costs through strategic actions in the second half of the year and fully mitigate the impact over time, but for this year, some we will need to absorb. The net impact of the tariffs and these mitigation actions are embedded within our guidance. We are confident that we are well-positioned to navigate the fluid tariff situation. We have a strong, globally diversified revenue base, with 70% of our revenues coming from outside The US. We work closely with an established network of global sourcing partners across more than 30 countries, and we continue to leverage our long-standing relationships to further optimize our sourcing and production costs. We are evaluating and actioning a variety of steps looking at every point along our value chain to mitigate the impact over time. On the top line, while we are reaffirming our constant currency revenue guidance, we are now projecting reported revenue to increase slightly to low single digits reflecting the favorable impact of exchange compared to our previous guidance of flat to a slight increase. Regionally, our revenue outlook remains unchanged. Europe is planned to return to growth, in The Americas, we are planning revenue up mid-single digits, including the positive impact of the Calvin Klein women's sportswear and jeans wholesale transition in-house. In Asia Pacific, revenue is planned down mid-single digits in constant currency. We continue to expect gross margin to decrease approximately 250 basis points versus last year with the incremental headwind from increased tariff rates offset by the improvements we realized in the second quarter. On SG&A, we continue to expect expense to be lower in constant currency in 2025 compared to 2024, and our SG&A expenses as a percentage of revenue to decrease approximately 100 basis points reflecting significant cost savings connected to our growth driver five actions. These actions will simplify our operating model to drive more efficient ways of working, focus on our global technology stack, our global distribution network, our operating model in Europe, and our support functions. Through the end of the second quarter, we have already made meaningful progress in each of these areas. We continue to expect these actions to deliver 200 to 300 basis points of operating margin expansion over time, with nearly 200 basis points of that benefit expected to be realized in the fourth quarter by the actions we have completed to date. Interest expense is now projected to be approximately $80 million, and our tax rate for 2025 continues to be estimated at approximately 22%. Before we open up for questions, I just want to conclude by saying that while we are navigating a dynamic and uncertain macroeconomic environment, within that backdrop, we continue to focus on taking proactive measures within what is within our control, and making progress in all dimensions of the business through our execution of the PVH plus plan. Building momentum into 2026 to deliver sustainable and increasingly profitable growth for the long term. And with that, operator, we would like to open it up to questions.

Thank you. And at this time, if you would like to ask a question, once again, to ask a question, please press the star and one on your telephone keypad. We'll take our first question from Jay Sole with UBS. Please go ahead. Your line is open.

Great. Thank you so much. Stefan, just interesting to hear you talk about marketing investments. What are you seeing that drove that? And Zac, one for you. How do you think about marketing investments in the shape of the P&L? Thank you.

Thanks, Jay. Yes, as I shared in my prepared remarks, the step-up in execution in Q2 combined with our increased strength in product allowed us to lean into our biggest categories and drive product innovation within these categories. That's why you see our investments come up in the back half. Because we are continuing to build on the momentum you saw in Q2. In Calvin Klein, we will be leaning into the strength of our underwear and denim categories, building on the positive impact we had with the Bad Bunny product innovation this spring. We will continue in the fall with the biggest and strongest lineup of global mega talent for both men's and women's. For Tommy, we are strengthening our seasonal campaigns, and the success of our F1 movie collaboration will be leveraged on into our upcoming Cadillacs involvement. It’s really about leveraging product strength with strong marketing that drives consumer interest.

Yeah. Hi, Jay. Thanks for the question. On the second half regarding SG&A, we are making significant progress with our value driver five actions, aiming for two to three hundred basis points of improvement over time. While we are also investing in marketing in the third quarter, you are going to see a little leverage in SG&A for now, but we are doing this to build momentum for the second half and holiday season. We expect to return to SG&A leverage in Q4 as we finish delivering on our commitments for the year.

Thanks for taking our question. Let me ask about tariffs. It seems like your guidance in the third quarter suggests about 280 basis points of pressure in gross margin. How should we think about that rolling into 2026? Or is the tariff impact to gross margin continuing to accelerate? And just a quick update on the outlets.

Yes. Thanks, Michael. Let me start with the outlet traffic, which has sequentially improved from Q1 to Q2, including the outlet traffic. As for tariffs, they are impacting everyone in our sector. We have a diversified supply chain with 70% of our revenues coming from international business, which gives us more positioning to navigate these tariff challenges effectively. Now, I will hand it over to Zac for more detail on that.

Absolutely. Thanks, Michael. We've successfully navigated through many disruptions before and are confident in managing this dynamic environment as well. We previously communicated that we'd mitigate approximately 50% of the cost of prior tariffs in 2025, but the new rates are significantly higher, impacting our mitigation percentage. However, we expect to continue expanding our mitigation efforts through strategic actions throughout 2026 while utilizing a premium pricing strategy for our brands carefully.

Good morning, and thank you for taking our question. Stefan, could you provide an operational update on your transformation within Calvin Klein? What are the opportunities for improved execution as you look ahead to 2026?

Thanks, Brooke. I'm pleased to share that we have delivered the operational improvements we were striving for this quarter. We are now fully back on track with the Calvin Klein global product capabilities and we secured our margin improvements targeting our deliveries just in time.

Great. Thanks for the color. In The Americas, could you break down the drivers of the sequential improvement in direct-to-consumer sales and elaborate on the composition of your Fall '25 order book?

Sure, Matt. The improved direct-to-consumer trends in North America were driven by three main factors: the strength in product offerings, improved marketing efforts expanding the mid-funnel, and increased consumer engagement focused on product storytelling. This allowed us to drive new customer acquisition at a remarkable pace. In terms of our order books, we saw growth in Fall driven by strengthening our key product categories and innovation recognized by our partners.

Good morning, everyone. What are the different promotional trends you are seeing overseas versus the US? And could you give an update on your store portfolio enhancements?

In terms of promotions, while we are still facing uncertainties due to tariffs in North America, our European clientele has remained stable over several quarters. In APAC, we are seeing some choppiness but significant improvements in our execution. Regarding our stores, the opening of our Harajuku flagship in Tokyo is a monumental step for our brand equity, and we are excited about the renovation plans we have globally.

I want to ask about the North American wholesale environment. Have you seen any incremental caution from your wholesale partners in North America, and is there any impact from the insourcing of the G3 license based on the wholesale environment?

In the second quarter, we experienced growth, partly from the relaunch of Calvin Klein women's sportswear and jeans. Our most important full-price partners showed growth, but there is a normalization in wholesale shipments for the second half of the year along historical trends.

Yes, we normalized the shipments across the year compared to previous patterns. This means we will see lower growth in the second half of 2024, compared to our stronger first half, but that's aligned with our strategic objectives for balance.

So, we appreciate your time today and apologize for any technical difficulties. We continue our journey of building Calvin and Tommy into their full potential, making strides in engaging our consumers and expanding our PVH strategy. We look forward to updating you next quarter.

Thank you. And this does conclude today's program. Thank you for your participation. You may disconnect at any time.