Oxford Industries, Inc. (OXM) Earnings Call Transcript & Summary

Thanks, and good afternoon, everyone. I want to start by reminding those on the line that some of what gets said during today's Q&A portion may count as forward-looking statements under the federal securities laws. Such statements aren't promises, and what actually happens could end up differing materially from what those statements express or imply. The key factors that might cause our operations results or financial condition to come out differently are laid out in the press release we put out earlier today, as well as in the documents we've filed with the SEC, including the risk factors in our Form 10-K. We have no obligation to revise any forward-looking statements. We'll also be talking about certain non-GAAP financial measures on this call. A reconciliation between non-GAAP and GAAP financial measures appears in that same press release from earlier today, and you can locate it under the Investor Relations tab at our website, OxfordInc.com. Now let me introduce who's joining us on today's call: here with me are Tom Chubb, our Chairman and CEO, and Scott Grassmeyer, our CFO and COO.

Thanks for listening, and now I'll hand things over to Tom Chubb. Thanks, Brian. Good afternoon, everyone, and we appreciate you being with us. It's a pleasure to be here today to go over what we delivered in the first quarter, how the portfolio is progressing, and what we expect for the rest of the year. Broadly speaking, first quarter sales came in as we had expected, while earnings exceeded what we had forecast, largely because gross margin came in stronger than anticipated; that gross margin result shows the significant effort our teams have put in over the last year to address tariff pressure, such as changing how we source, fine-tuning our pricing structure, securing better freight rates via vendor negotiations, and gaining from a larger share of direct-to-consumer business. Notably, we delivered that margin result even while taking on an $11 million, or 55 cent a share, rise in tariff costs compared with a year earlier during the quarter. Without that increase, both gross margin and earnings would have been up versus the prior year. Across the portfolio, the first quarter brought a number of meaningful positive developments. Tommy Bahama, our biggest brand, did well, driven by solid direct-to-consumer results, and our emerging brands kept up strong growth. especially at the Beaufort Bonnet Company and .CAD. Still, those positive results did not carry evenly through the portfolio. Johnny was working its way through its turnaround plan and we are encouraged by the progress on gross margin and direct to consumer performance, even though wholesale remains under pressure. Billy Pelletier fell short of what we expected while going up against a strong first quarter a year ago, and its weakness dragged on our overall results. The consumer backdrop is still unsettled. Shoppers keep dealing with macroeconomic and geopolitical pressures, among them conflicts around the world, higher energy prices, uncertainty around trade policy and tariffs, and pressured sentiment around discretionary discretionary spending. As we've said in recent quarters, while some hard data may indicate that consumers have the capacity to spend, the soft data and what we observe continue to suggest consumers who are more cautious, selective, and highly discerning. In an environment like this, having relevant products and a connection to the brand matters greatly. Consumers respond most strongly to differentiated products and brands that forge an emotional bond; and that is where our portfolio has an edge. Our brands are built around lifestyle, optimism, and experiences. And our task is to remain focused on the product, storytelling, and service that make those brands come alive for our consumers. The county of Bahama turned in the quarter's strongest performance. Our direct-to-consumer business count positive in the mid-single-digit range, with encouraging results in retail and e-commerce, and continued contribution from food and beverage. More broadly, the brand gained from a better assortment balance, improved key item execution, and the lasting appeal of its relaxed warm weather lifestyle positioning; we are pleased with the execution at Tommy Bahama. The brand still holds a distinctive place in the marketplace, thanks to a lifestyle offering that reaches past any single product category or channel. What gives it an edge is how appealing product, lucid storytelling, robust customer engagement, and memorable experiences spanning retail, digital, and hospitality all come together. Because of that mix, we stay confident about Tommy Bahama's opportunity over the long term, even with near-term conditions uncertain. Over at Lilly-Pulitzer, first quarter results came in under our expectations and we have work to do. Lilly-Pulitzer is still a unique and much-loved brand, with a deeply engaged customer and a very clear point of view. the business did not execute to its potential in the first quarter. Sales came under pressure, especially in e-commerce, and in our view that pressure partly mirrored some merchandising and execution problems, among them gaps at certain entry price points plus allocation opportunities. Let us be clear that Lilly-Pellitzer's performance fell short of our expectations and fell short of where we are confident it can be. The brand carries enormous equity with its customer, yet in the first quarter, we failed to bring together product, pricing, allocation, and messaging. That responsibility rests with us, and the team is concentrated on fixing these problems. Bear in mind, this is the very same exceptionally talented Lilly team that has repeatedly produced strong results, and we have great confidence in their capacity to resolve these problems. The encouraging part is that we have pinpointed what we consider the central problems, and we consider them solvable. A number can be fixed fairly fast, such as messaging and marketing, whereas others tied to merchandising can only progress at the pace of the product development lifestyle; and will therefore require more time. We are concentrated on tackling these problems and restoring Lilly-Pulitzer's positive trajectory and unlocking its long-term growth potential. The brand is robust, and we believe the team possesses the talent, experience, and urgency to bring back the level of performance we expect. Shifting to Johnny was, we believe the brand is on track with its turnaround plan. As we have talked about before, our emphasis has been chiefly on boosting profitability and strengthening the fundamentals. Through the first quarter, gross margin rose as the team made notable headway purchasing inventory more tightly, cutting promotional activity, and lifting gross margin return on investment; regarding top line results, since the first Sales faced the most pressure in wholesale, where Johnny was has had greater exposure than our other brands to specialty stores, a market that has shrunk substantially in recent years. Sales were likewise lower to off-priced retailers owing to healthier inventory. levels, and to SACS Global, which has been affected by its bankruptcy process. In the past, Neiman Marcus and SACS have been extremely important venues for Johnny Wise. Crucially, performance in the direct-to-consumer business aligned far more closely with our expectations, and we believe that side of the business is getting healthier; we are focused on bringing greater cohesion to the design process. We're sharpening what we offer, getting more out of our marketing spend, and pushing for stronger performance in retail, e-commerce, and wholesale. Now that the new leadership group is settled in, we've also gotten more forceful about reviewing and trimming our store fleet, which meant shutting 5 weaker spots during Q1. We'll keep evaluating how retail is doing and where the opportunity sits, looking at each market and each individual location, and we'll shutter struggling stores when it makes sense so that our footprint lines up with what the brand can achieve over the long haul. A turnaround isn't something that gets done in a single night, and plenty of effort still lies ahead, yet we see substantial long-term potential in Johnny Was. What we're aiming for is a business that's stronger, more disciplined, and more profitable, one that captures the brand's power and appeal more faithfully. Our newer brands are adding value too, showing real momentum, especially Beaufort Bonnet Company and Duck Head. Those labels keep injecting vitality and room to grow into the portfolio, and we're staying committed to developing them carefully via better storytelling and wider distribution. Throughout the whole company, we're likewise continuing to reinforce the operational base. A key piece of that effort is the new Lyons-Georgia Distribution Center. Like we've mentioned previously, we don't anticipate the ramp up coming without some upfront expense or headaches, especially as we move from one facility to another.

Yet as time goes on, we think Lyons is going to represent a significant edge in the marketplace, especially while direct-to-consumer demand keeps capturing a larger portion of our portfolio. Next, looking past the brands individually, the start of our fiscal year left us encouraged. That said, as April progressed, sales patterns weakened, and that slowdown carried forward through May and the first part of June. Part of this mirrors the wider consumer landscape and the growing hesitancy around discretionary purchases that we're observing, together with the changed timing of the key Father's Day holiday. Ongoing weakness at Lilly Pulitzer matters here too, especially since certain product and merchandising fixes we're implementing will need time before they work their way fully into the assortment. In light of these patterns, we think it makes sense to adopt a more conservative stance regarding the potential sales upside for the rest of the year. Consequently, we're reducing the high end of our range, thereby narrowing our full-year sales guidance; we see this as a sensible move given what's happening in our business and the wider conditions right now. Meanwhile, we're also tightening our EPS guidance range for the remaining portion of the year by lifting the bottom end of our prior range, thanks to the effect of today's lower tariff rates carrying through for the rest of the year, paired with disciplined expense and inventory control. Tariffs continue to be a big subject and a cause of uncertainty. Scott is going to walk through the revised assumptions built into our outlook in greater detail. On the operational side, our priorities haven't changed. refine sourcing, handle pricing with care, safeguard gross margin wherever possible, and steer clear of moves that could harm our brands' long-term wellbeing. Times like these can pressure companies into playing defense and thinking too near term. That is not what we'll do. Our brands are here to deliver happiness, optimism, and a feeling of what's possible to our customers; that's a genuine point of differentiation, and we think the short-term tweaks we're making amid today's conditions will leverage what makes each brand special and put us in position to deliver long-term value for our shareholders. As ever, I'd like to express gratitude to our teams throughout Oxford. Their resilience, creativity, and dedication to our customers underpin everything we do. With that, I'll hand the call to Scott for a more detailed discussion of our.

Thanks, Tom. As he mentioned, our teams executed the plan with a lot of discipline and resilience even though consumers and the broader economy were tough. Consolidated net sales came in at 391 million for Q1 of fiscal 26, versus 393 million in Q1 of fiscal 25, and that landed above the midpoint of the 385 million to 395 million guidance range. Overall comparable sales for the company fell 2%, with retail and e-commerce each down 2%. Non-comp stores that mostly opened a year earlier accounted for the entire retail comp decline. Food and beverage stood out with a 14% gain, mostly from non-comp locations. On a year-over-year basis, wholesale declined 5%, but that was still better than our initial projection. Turning to our brands, Tommy Bahama delivered a strong performance: total sales grew versus last year, driven by mid-single-digit comparable sales gains in our DTC channels, which were partially offset by weaker wholesale. Our emerging brands maintained their momentum, with sales up in the low double digits. The gains from Tommy Bahama's positive comps and the emerging brands were offset by sales decreases at Lilly Pulitzer and Johnny Was. At Lilly Pulitzer, significant e-commerce declines set against a difficult prior-year comparison drove overall comps down by a low teen percentage. Johnny Was, as Tom noted, saw its sales decline come from a sizable drop in wholesale, along with mid-single-digit negative comps in our DTC channels. Adjusted gross margin fell 90 basis points to 63.4%, as roughly $11 million, or 280 basis points, of higher cost of goods sold came from the extra tariffs put in place beginning in fiscal 25. Even with the US Supreme Court's ruling in late, tariffs already paid had been capitalized into the inventory we sold in Q1. Across the portfolio, we changed how we source and how we price, and that helped counter a portion of the tariff headwind. Another benefit came from paying less to move goods to customers, since we renegotiated contracts and secured better carrier rates. We also saw a shift in sales mix, with wholesale accounting for a smaller portion of net sales. Adjusted SG&A came in at $209 million, up 1% from $206 million in the prior-year period. The main drivers were new brick-and-mortar retail and food and beverage locations, increased spending on sales software and consulting, and expenses related to transitioning operations at our Lyons, Georgia distribution center. Partially offsetting those were lower advertising outlays and reductions in more discretionary items, including travel. The result of all this was adjusted EBITDA totaling $45 million, which works out to an 11.6% adjusted EBITDA margin, compared with $54 million, or 13.7%, in the same period last year. Outside of EBITDA, adjusted depreciation and amortization came in flat on a year-over-year basis, since increased depreciation tied to our new Lyons facility and newly opened brick-and-mortar locations was canceled out by reduced depreciation related to software. At $2 million, interest expense exceeded the prior year, reflecting a higher average depreciation. Our effective tax rate was 25.4%, higher than the level from a year ago, due to certain discrete items. Debt levels also matched our expectations. When you put all of that together, adjusted EPS came to $1.39. Now, looking at our balance sheet. Inventory declined by $15 million, a 9% drop, under LIFO, while on a FIFO basis it was down $3 million, or 1%, compared with Q1 of 2025. And that happened despite $9 million in additional tariff costs being capitalized into inventory, up from $3 million at year-end — that being the end of the first quarter of 2025. Our three larger brands each contributed to that decrease, which was partially offset by higher inventory levels in the emerging brands group, where the extra stock exists to fuel their quicker expansion. We closed out the quarter carrying $143 million in long-term debt, compared to $118 million when the first quarter of 2025 wrapped up, and $116 million at the finish of fiscal 2025. In the first quarter of fiscal 26, our operations generated $8 million in cash flow, compared with $4 million consumed by operating activities during the same period of fiscal 25 — a swing driven by favorable working capital changes that made up for softer earnings. Spending on capital projects came to $23 million, with the bulk going toward the Lyons-Georgia Distribution Center initiative and newly opened brick and mortar locations. Dividend payments of $11 million also went out, and because of that, our long-term debt has climbed relative to where it stood when the fiscal year began. Now I'd like to take you through our revised 2026 outlook. As Tom mentioned, the positive momentum we enjoyed earlier in the year lost some steam as the first quarter drew to a close, and that trend continued into the second quarter. Looking at the second quarter, our current projection for total company comps falls in a range from a low single digit decline up to flat. When we look at the whole year, the comp assumption we've updated to covers anywhere from somewhat negative to somewhat positive. Both of these revised figures — for Q2 and for the full year — are lower than our prior expectation, which had been flat to low single digit positive comps. Given this revision to our comp assumptions, we are bringing down the upper bound of our full-year revenue guidance range; net sales for the entire year are expected to come in somewhere between $1.475 billion and $1.505 billion, representing roughly flat results to a 2% increase compared with the $1.478 billion in sales we recorded in fiscal 2025. For the entire 2026 fiscal year, our updated sales strategy projects higher revenue at Time Bahama, along with ongoing expansion among our newer labels. That gain will be partly offset by lower sales at Lilly Pulitzer and Johnny Wuz. Under our revised plan, we do expect things to get better during the back half of the year as we fix the problems we've talked about at Lilly Pulitzer, while Johnny Wuz keeps working through its turnaround effort. Another lift will come from resolving the merchandising problems tied to tariffs that hurt results across most of our brands during the same period a year earlier — particularly in Q4 and over the holidays. Looking at our distribution centers, for the whole year our sales plan breaks down this way: we expect a high single digit gain in food and beverage, which gets a lift from new locations that came on board in fiscal 2025, though that's partly offset by a low single digit decline to flat performance in direct-to-consumer, along with a mid-single-digit drop in wholesale. Now turning to gross margin. What we're assuming right now is that the present tariff — the lower 10 percent rate — stays in effect through the rest of the year. Those rates are broadly in line with what applied to the bulk of our inventory receipts in the first quarter of 2026. We aren't factoring tariff refunds into our guidance, but we did pay roughly $40 million in tariffs during fiscal 2025, plus another 5 million in the first quarter of 2026, which the Supreme Court ruling in February ultimately invalidated. About $25 million relates to Phase 1 claims, and refunds have started coming in. No process exists yet for Phase 2 or our remaining unfiled claims, though we're prepared to submit refund claims the moment one is set up.

I want to flag something first: because of when we've scheduled our inventory receipts for the rest of the year, any adjustments to tariff rates made during fiscal 2026 should affect fiscal 2026 results less than they would affect later periods. Beyond our reduced tariff assumptions, we anticipate a substantial gross margin lift from the sourcing changes and pricing architecture updates our teams spent the past year working on, along with a greater share of sales coming from direct-to-consumer. So we're looking for gross margins to rise 100 to 200 basis points in Q2, Q3, and Q4 of fiscal 26 versus the same periods a year earlier, with roughly a 100 basis point gain overall for the year once the first quarter headwind is factored in; on top of softer sales and stronger gross margins, SG&A should increase in the low single-digit range, mostly from higher software-related costs and the annualization of added SG&A tied to new stores opened after the close of the second quarter of fiscal 25. On EBITDA as well, we anticipate roughly $2 million more in royalties and other income during fiscal 26. Below the EBITDA line, depreciation should rise, reflecting substantially all the incremental costs of running the new lines DC plus fiscal 2016 depreciation. Taking everything together — $7 million of interest expense and a higher 28% tax rate — we are narrowing our 2026 adjusted EPS guidance to $2.30 to $2.70, against adjusted EPS of $2.11 a year ago. Once again, no tariff refund effects are baked into our guidance. For the second quarter of 2026, our expectation is sales between 380 million and 400 million, versus 403 million in the second quarter of 2025. That mostly mirrors our assumption of a low single digit negative to flat comp and wholesale sales declining in the high single digit range. Looking at brands, we see softer sales at Lilly Pulitzer and Johnny was being partly offset by a gain at Tommy Bahama and ongoing growth at emerging brands; we also anticipate gross margin expansion of about 100 basis points, SG&A growth in the low single digit range, royalty income near $5 million, interest expense of $2 million, and a higher effective tax rate around 29%, largely from our annual stock vesting. We expect that to produce second quarter adjusted EPS of $1.20 to $1.40, versus $1.26 a year ago. Turning to our CapEx outlook for the rest of the year, we project capital expenditures of about $60 million, which includes the 23 million spent in the first quarter of fiscal 26, against a total of $108 million in fiscal 2025. The remaining capital expenditures go toward the new distribution center line Georgia and new brick-and-mortar locations. Thank you for your time today.

Absolutely, and good afternoon. Perhaps as a starting point, I'd like to dig deeper into what was said regarding the softening pattern we saw from April through May and then in early June, along with the Father's Day timing shift you pointed out. Is there a way to help us separate how much of that slowdown stems from the calendar versus actual weakening in demand? Once the Father's Day timing is normalized, what does the underlying trend look like there? After that, I'll have a follow-up. So what I'd say is that we factored into our guidance a range of flat to low single digit negative for Q2. And I think at present we're leaning more toward the low single digit negative side. Once Father's Day has passed, I believe we'll settle more into that flat to low single digit negative zone, that's where I think we'll end up. I think we're going to see a bit of a pickup as we move through Father's Day; and at this moment we're tracking fine.

And then maybe as a second point, looking at wholesale more generally, I'm just wondering — clearly, since our last conversation, higher gas prices have kept up and discretionary sentiment among consumers remains soft. So I'd be interested to know whether you're noticing any changes in wholesale ordering patterns throughout your portfolio for the rest of the year, like any retailers cutting back on purchases or delaying shipments.

Is there anything worth mentioning? Thanks. They continue to be careful, and we still expect to be down, though nothing dramatic has emerged. That said, everyone is being somewhat cautious given the conditions, so the chance for certain gains may not be as available as we'd wanted. Still, I believe they're observing much of what we're observing at present. And sure, those shifts exist. Many folks are trying to work out what's happening in the current business and how much of it stems from this father-stay shift versus from the consumer, and honestly that's tough to determine. In my view, it's partly each of those.

And, as you know, Ashley, it always boils down to your results on their floor and how our wholesale business does in total. That has held up fairly nicely so far this year. Certain spots are doing better than others, but on the whole I'd say it's been quite solid.

Good afternoon. I'd like to dig into how Tommy Bahama and Lilly each performed. The way Tommy Bahama has improved — even comparing the fourth quarter with the first — is certainly striking, and I was hoping to hear what's behind it: is it men's, women's, or the price category? Then on the Lilly decline: during our conversation last quarter, you mentioned headwinds, including weather in Florida, yet it seemed the structural pieces of Lilly remained very much in place. So what's different now? Where exactly is the weakness showing up? Is it regional, channel-based, or customer-based? Is it prints, patterns, solid-color promotions — and how long will it take to fix Lilly? Thank you.

Okay, I'll begin with Tommy Bahama. I'd describe it as a really strong quarter for that brand, and we're quite proud of it. Ben saw growth in our direct-to-consumer business compared with a year earlier. Back in March we discussed this, but the main engine was core product we'd been soft on during the prior year — items such as the Enfield, the Boracay, and several of our major linen programs. Those are what truly fueled it. Within the quarter, the standout was that while men's did well, women's did even better. Our results were largely powered by the women's portion of the business, and that's something we're delighted to see, because as you're aware, over the long term we keep believing there's a very big opportunity in Tommy Bahama's women's line. The women's DTC business rose, I believe, roughly 7 1/2% during the quarter, which is pretty impressive, and the fashion side — either the fashion part of the business or a few categories inside it — is what propelled it. I'd say pants and wovens both performed well in that period, and we were happy to see it. Men's apparel continues to drive the bulk of what we do, yet the surge we saw in women's was outstanding and played a big part in how we performed this quarter. There's another modest statistic I like to mention: during Q1 of 2026, 30% of orders placed online included something from our men's assortment as well as our women's assortment. Compared with the same period a year earlier, that's an increase, since the number then stood at 25%. Solid comparative figures for this metric are hard to come by, but we believe it stands out as a strong sign that we can market successfully to shoppers of both genders, particularly when almost one out of every three orders spans both. To us that looks truly impressive, and we're quite happy with the results Tommy Bahama posted this quarter. As for some of the softness in April and May, it stemmed from certain timing shifts and perhaps a minor planning hiccup. My honest belief is that once we're past Father's Day, we'll still be on a very solid path. The shift makes it tough to read right now. The number is still fine. It simply isn't as robust as before. Still, my read is that this is the Father's Day move we're observing. Turning to Lilly-Pulitzer, I genuinely think Florida's February weather played a part. When we spoke back in March, that reasoning held up well, since February and the early days of March brought average daily temperatures far beneath the typical averages. At that point on the calendar, it carried real weight in Florida for whether shoppers felt inspired. Yet as the quarter wore on, we came to see that assortment problems existed alongside problems with the messaging and marketing behind it. As we laid out, Dana, in the prepared remarks, one problem was that our opening price point bucket was badly under-inventoried, and my sense is that we lost business because of it. Certain shoppers were ready to climb to a higher price point, yet others, I believe, simply stopped purchasing, and that is likely where much of the sales erosion came from. Shifting to print and color, in case you've been following along, we pushed hard on vintage prints, and although we adore those prints and find them gorgeous, my feeling is we went overboard. Those styles speak more to the most loyal Lilly fans and perhaps less to newer Lilly fans. So that, I think, was a problem; the final major one I'd point to is what we refer to as novelty. As you're aware, David, there's been heavy focus, from us and from the broader marketplace alike, on newness and novelty and similar themes. My belief is that this spring we let the pendulum swing too far in that direction, and while having a decent amount of it helps, we simply carried too much of it, and too little of our assortment felt more versatile. And that matters particularly, uh, once you reach a stretch when shoppers grow more discerning about what they buy. My sense is she weighs how versatile that dress is somewhat more than she would while in a freer spending mode. So, uh, we discussed this yesterday, but this spring we had an utterly stunning dress, the sort you'd wear to a charity ball or gala or something along those lines. It's an absolutely stunning piece, but realistically it's the kind of dress you'll likely wear just a single time. And since it's so distinctive, so special, so dramatic and eye-catching — and, you know, it cost more than $700, which is a steep price point for us — we simply have too much of that. So when it comes to how long the fix will take, I'd add that embracing vintage and nostalgia, I think, also came through in our messaging and marketing. You know how this goes, Dana. Generally, messaging and marketing can be tackled faster. On the targeting front and those kinds of things, we're already making adjustments. Take promotions, for example — you might have noticed we did a major Lilly Pulitzer promo over the weekend, and that was what I'd describe as a nimble reaction to what's going on. Those kinds of moves can be shifted faster. The timeline for developing product, though, is fixed. So really it's resort before you can truly — right up until resort, you're essentially dealing with the merchandise you came up with and purchased long ago. Honestly, I think our feeling is that certain deliveries later in the summer came through somewhat better and possibly carry fewer problems. Beyond that, with how we're handling things through our agile approach and by rethinking process promotions and everything else, I believe we'll come out of this as well as we can. The way the Lilly team has stepped up makes me incredibly proud. Dana, you're familiar with this, but fashion is the kind of industry where a stumble like this pops up from time to time. And that problem — well, it simply comes with the territory. Ideally this would be a rare occurrence, yet from time to time it's inevitable. What matters most is the way you handle it, both right away and over the longer haul. From what I can see, the Lilly team is performing excellently on both of those fronts. That was quite a lengthy answer, but I hope it addressed what you were asking. That's very useful. Thanks.

Hello, and thanks for answering my question. I want to explore the gross margin topic a little more deeply. You said there have been some notable sourcing victories, so could you maybe elaborate on what's succeeding there, and to what extent you view those gains as lasting and built into the business? After that, when you think about the forecast calling for gross margin to increase for the rest of the year, what assumptions does that include about brand-level promotions, the way you intend to run them, and how customers are responding to those promotions? Thanks.

Sure, on the subject of gross margin, we have in fact implemented a large number of changes to sourcing. Additionally, a lot of those higher prices were tied to fresh merchandise. That means several items are delivering healthy margins for us. And Tommy specifically stands out — we moved through that inventory well without needing discounts. Because of that, the payoff was quite good, and our gross margin came in above what we'd projected. After that, as we noted earlier, duties currently sit at 10%, and that's the figure we're building into our plans moving ahead. So we — and across the board we ran somewhat fewer markdown events, both within our own operations during Q1 and on everything we sold at every price point to wholesale partners. That gave us a lift. On top of that, direct channels made up a bigger share of our overall revenue compared with wholesale, which is always a positive as well. On the promotions front, Lilly is likely to see a bit more discounting activity than we had initially budgeted for this year, simply because of how things kicked off. At Tommy, things are running at roughly the usual pace. All told, I don't expect our promotional rhythm across the entire company to look dramatically different — maybe slightly elevated, with Lily. Over at Johnny Wise, it's considerably lower. Johnny Wise is essentially working through an inventory reduction and has gotten far stricter about when it runs promotions, and their gross margins came in strong, which I expect to hold through the remainder of the year. So there are some structural strengths at Johnny Wise that are genuinely solid. that'll become visible in our gross margin and through some of the SG&A discipline we've applied.

My guess is those effects start appearing on the top line sometime later this year. Understood. Turning to the price increases — at either brand, has any resistance come up regarding those increases, and are there additional plans for further ticket increases during the remainder of the year?

Janine, I'd describe that as having a nuanced answer. Direct pushback hasn't really materialized, but looking at our numbers, you know, unit volumes are down. So look, both average order value and average unit retail are climbing — customers are paying the higher prices. That said, the overall count of units we moved this quarter slipped somewhat. It's not a dramatic drop, but figuring out exactly what that tells us isn't easy. Some of it probably points to weaker demand and shoppers generally holding back, and we're digging into it carefully to make sure we haven't drifted away from what buyers are willing to pay. Our view is that we're not out of step with the market whatsoever; we think we're right in line with our peers or competitors, whichever word you want to use, though it definitely warrants a closer look.