CARTERS INC
For the period ended Jul 4, 2026. Filed Jul 31, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 4, 2026 · Filed Jul 31, 2026
CRI$32.01-1.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-04-04; filed 2026-05-06.
0001060822-26-000071
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-07-04; filed 2026-07-31.
0001060822-26-000109
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 138 previous paragraphs and 184 current paragraphs.
69 unchanged; 50 reworded; 57 added; 19 removed; 0 previous and 8 current paragraphs rearranged.
Tables are not compared: 3 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (57)
Current report
During the second quarter of fiscal 2026, the Company received refund payments from U.S. Customs and Border Protection totaling approximately $132 million, including interest, in connection with various adjudicated claims, and the related recovery has been recognized. The Company recorded approximately $128 million of the recovery as a reduction of Cost of goods sold and $4 million in Interest income. As of July 4, 2026, the Company’s remaining unadjudicated IEEPA refund claims, which continue to be accounted for as gain contingencies, were approximately $2 million. Uncertainty remains regarding the timing, amount, and ultimate receipt of any further refunds, and accordingly no additional amounts have been recognized in the condensed consolidated financial statements for these remaining claims.
Current report
In response to the ruling on IEEPA tariffs, the U.S. Administration imposed a new 10% global tariff under Section 122 of the Trade Act of 1974 (“Section 122”), effective February 24, 2026. In May 2026, the U.S. Court of International Trade issued a ruling finding the Section 122 tariffs unlawful, although this ruling is currently stayed pending appeal. During the first two quarters of fiscal 2026, the Company paid approximately $26 million of incremental Section 122 tariffs related to imports from Vietnam, India, Bangladesh, Cambodia, and other countries. As of July 4, 2026, approximately $18 million of these tariffs remained capitalized within the Company’s inventory balances.
Current report
The Section 122 tariffs imposed effective February 24, 2026 expired on July 24, 2026. Effective July 24, 2026, the U.S. Administration imposed additional tariffs under Section 301(b) of the Trade Act of 1974 (“Section 301”) as a result of the Administration’s investigations into forced labor practices of various foreign countries. These tariffs range from 10% to 12.5% and apply to imports from approximately 60 countries and territories. In addition, the U.S. Administration is continuing its separate investigation, under Section 301(b), into excess capacity and production in manufacturing sectors in foreign countries, signaling its intent to maintain tariff levels comparable to those previously in effect under the IEEPA tariffs. As of the date of this filing, no proposed tariffs have been imposed as a result of the excess capacity investigation. Because the Company sources substantially all of its apparel and other products from a global network of third-party suppliers, primarily located in Asia, any new or increased tariffs, quotas, embargoes, or other trade barriers have the potential to adversely affect its supply chain, cost structure, margins, and competitiveness. Retaliatory actions taken by impacted countries could further disrupt global trade and create additional inflationary pressures in raw materials and logistics.
Current report
•Consolidated net sales increased $30.2 million, or 5.2%, to $615.5 million.
Current report
◦U.S. Wholesale sales increased $22.6 million, driven by growth in our core and exclusive Carter’s brands, as well as in Skip Hop, and strong demand for Fall product, which was partially offset by lower sales to our off-price wholesale channel customers.
Current report
◦International sales increased $2.5 million, driven by growth in Mexico and Canada, partially offset by unfavorable timing of shipments to our international partners.
Current report
•Consolidated gross profit increased $130.8 million, or 46.4%, to $412.6 million, and consolidated gross margin increased 1,890 bps to 67.0%, primarily due to $128 million of IEEPA tariff refund recoveries and higher average unit retail (“AUR”), partially offset by higher average unit cost (“AUC”) driven by incremental tariff-related costs, investment in product make, and channel mix.
Current report
•Consolidated net income increased $104.5 million to $105.0 million, primarily due to the factors discussed in detail below. Adjusted net income increased $3.1 million, or 49.3%, to $9.4 million.
Current report
SECOND FISCAL QUARTER ENDED JULY 4, 2026 COMPARED TO SECOND FISCAL QUARTER ENDED JUNE 28, 2025
Current report
Consolidated gross profit increased $130.8 million, or 46.4%, to $412.6 million and consolidated gross margin increased 1,890 bps to 67.0%. The increase in consolidated gross profit and gross margin was driven by approximately $128 million of IEEPA tariff refund recoveries and higher AUR, partially offset by higher AUC and channel mix. AUC, which excludes the impact of tariff refund recoveries, increased by a low-double digit percentage, driven by incremental domestic and international tariff-related costs and investments in product make. Incremental tariff-related costs, which represent tariff costs in excess of the duty rates in effect prior to the tariff actions initiated in fiscal 2025, unfavorably impacted Cost of goods sold by approximately $28 million.
Current report
Consolidated SG&A expenses decreased $4.8 million, or 1.7%, to $276.1 million and decreased as a percentage of consolidated net sales by 310 bps to 44.9%. This decrease in SG&A rate was driven by fixed cost leverage on higher net sales, costs related to operating model improvements in the second quarter of fiscal 2025 that did not reoccur in the second quarter of fiscal 2026, reduced costs resulting from previously implemented restructuring actions, lower performance-based compensation, and lower distribution costs. This was partially offset by increased leadership transition costs, incremental marketing investments, and inflationary pressure in retail store-related expenses.
Current report
Consolidated operating income increased $135.8 million to $139.8 million and increased as a percentage of net sales by 2,200 bps to 22.7%, primarily due to the factors previously discussed.
Current report
Interest Income
Current report
Consolidated interest income increased $4.2 million to $8.5 million, primarily driven by approximately $4 million of interest recognized on IEEPA tariff refund recoveries.
Current report
Other Expense (Income), Net
Current report
Consolidated other expense was $0.4 million in the second quarter of fiscal 2026 compared to consolidated other income of $1.2 million in the second quarter of fiscal 2025, which was primarily driven by changes in foreign currency exchange rates during the period.
Current report
Consolidated income tax provision increased $30.4 million to $31.7 million and the effective tax rate decreased to 23.2% from 73.8% in the prior period. The increase in the consolidated income tax provision was driven by higher pre-tax income, while the decrease in the effective tax rate was primarily attributable to discrete tax items recognized in the prior comparable period, including incremental tax expense related to expiring stock-based compensation, which had a disproportionate impact on the effective tax rate given the lower level of pre-tax income in that period.
Current report
Consolidated net income increased $104.5 million to $105.0 million, driven by the factors previously discussed.
Current report
Results by Segment - Second Quarter of Fiscal 2026 compared to Second Quarter of Fiscal 2025
Current report
(2)Unallocated corporate expenses include corporate overhead expenses that are not directly attributable to one of our business segments and include unallocated accounting, finance, legal, human resources, and information technology expenses, occupancy costs for our corporate headquarters, and other benefit and compensation programs, including performance-based compensation.
Current report
(3)Related to costs associated with the retirement of Michael D. Casey, the Company’s former Chief Executive Officer, in the first quarter of fiscal 2025 and costs related to the departure of Douglas C. Palladini, the Company’s former Chief Executive Officer, in the second quarter of fiscal 2026. Amounts are reflected within Selling, general, and administrative expenses in our condensed consolidated statement of operations.
Current report
(4)Reflects third-party legal defense costs incurred in connection with a specific intellectual property litigation matter not in the ordinary course of business described in Note 15, Commitments and Contingencies to the condensed consolidated financial statements. Amounts are reflected within Selling, general, and administrative expenses in our condensed consolidated statement of operations.
Current report
U.S. Retail segment net sales increased $5.1 million, or 1.7%, to $304.7 million, driven by higher unit volume. Unit volume increased by a low-single digit percentage driven by improved traffic and transactions in eCommerce, partially offset by the sales impact of net store closures and the timing of the Easter holiday. AUR was consistent with the prior comparable period.
Current report
U.S. Retail segment operating income increased $0.5 million, or 12.9%, to $4.3 million, primarily driven by a decrease in SG&A expenses of $2.3 million, partially offset by a decrease in gross profit of $2.1 million. Segment operating margin increased 10 bps to 1.4%, primarily driven by a 180 bps decrease in SG&A rate, partially offset by a 170 bps decrease in gross margin. The decrease in gross margin was driven by a high-single digit percentage increase in AUC, reflecting incremental tariff-related costs. The decrease in SG&A rate reflected fixed cost leverage on higher net sales, reduced costs resulting from previously implemented restructuring actions and lower store count, and lower distribution and performance-based compensation costs, partially offset by incremental marketing investments and inflationary pressure in store-related expenses.
Current report
U.S. Wholesale segment net sales increased $22.6 million, or 11.7%, to $215.6 million, driven by growth in our core and exclusive Carter’s brands, as well as in Skip Hop, and the earlier demand for Fall product as compared to the prior comparable period, which was partially offset by lower sales to our off-price wholesale channel customers. AUR increased by a low-double digit percentage, primarily reflecting higher realized pricing and sales leverage. Unit volume increased by a low-single digit percentage primarily driven by our exclusive Carter’s brands, partially offset by off-price wholesale channel customers.
Current report
U.S. Wholesale segment operating income increased $2.7 million, or 9.9%, to $29.7 million, primarily due to an increase in gross profit of $2.0 million and a decrease in SG&A expenses of $1.0 million. Segment operating margin decreased 20 bps to 13.8%, primarily driven by a 210 bps decrease in gross margin and a 20 bps decrease in royalty income as a percentage of net sales, partially offset by a 210 bps decrease in SG&A rate. The decrease in gross margin was driven by higher AUC, partially offset by higher AUR and decreased sales to low-margin off-price wholesale channel customers. AUC increased by a mid-teens percentage primarily driven by incremental tariff-related costs and investments in product make. The decrease in the SG&A rate reflected fixed cost leverage on higher net sales and lower distribution and performance-based compensation costs, partially offset by incremental marketing investments.
Current report
Unallocated corporate expenses decreased $1.4 million, or 6.1%, to $21.3 million. Unallocated corporate expenses, as a percentage of consolidated net sales, decreased 40 bps to 3.5%, driven by lower performance-based compensation and reduced costs resulting from previously implemented restructuring actions.
Current report
Consolidated Net Sales
Current report
Selling, General, and Administrative Expenses
Current report
Consolidated SG&A expenses decreased $5.1 million, or 0.9%, to $546.2 million and decreased as a percentage of consolidated net sales by 330 bps to 42.1%. The decrease in SG&A rate was driven by fixed cost leverage on higher net sales, costs related to operating model improvements in the first two quarters of fiscal 2025 that did not reoccur in the first two quarters of fiscal 2026, reduced costs resulting from previously implemented restructuring actions, lower leadership transition costs, and lower distribution costs. This was partially offset by incremental marketing investments and inflationary pressure in retail store-related expenses.
Current report
Operating Income
Current report
Consolidated operating income increased $138.1 million to $168.3 million and increased as a percentage of net sales by 1,050 bps to 13.0%, primarily due to the factors previously discussed.
Current report
Interest Expense
Current report
Interest Income
Current report
Consolidated interest income increased $4.3 million to $11.7 million, primarily driven by $4 million interest recognized on IEEPA tariff refund recoveries.
Current report
Other Expense (Income), Net
Current report
Consolidated other expense was $0.4 million in the first two quarters of fiscal 2026 compared to consolidated other income of $1.1 million in the first two quarters of fiscal 2025, which was primarily driven by changes in foreign currency exchange rates during the period.
Current report
Income Taxes
Current report
Consolidated income tax provision increased $30.1 million to $37.2 million, and the effective tax rate decreased 690 bps to 23.8%. The increase in the consolidated income tax provision was driven by higher pre-tax income, while the decrease in the effective tax rate was primarily attributable to discrete tax items recognized in the prior comparable period, including incremental tax expense related to expiring stock-based compensation, which had a disproportionate impact on the effective tax rate given the lower level of pre-tax income in that period.
Showing the first 40 of 57 passages. Open the source sections for the rest.
Removed paragraphs (19)
Previous report
Gross Profit and Gross Margin
Previous report
As of April 4, 2026, the Company had not received any refund payments, and uncertainty remained regarding the timing, amount, and ultimate receipt of any refunds. Accordingly, no gain has been recognized in the condensed consolidated financial statements for the fiscal quarter ended April 4, 2026.
Previous report
•Consolidated net sales increased $51.3 million, or 8.1%, to $681.1 million.
Previous report
◦U.S. Wholesale sales increased $1.3 million, driven by increased sales of our exclusive Carter’s brands, primarily offset by lower demand from department stores.
Previous report
◦International sales increased $12.2 million, driven by growth in Mexico and Canada, as well as favorable changes in foreign currency exchange rates used for translation.
Previous report
•Consolidated gross profit increased $2.8 million, or 1.0%, to $293.9 million, driven by increased net sales, which were primarily offset by increased product costs. Consolidated gross margin decreased 310 bps to 43.1%, primarily due to higher average unit cost (“AUC”) driven by incremental tariff-related costs, partially offset by higher AUR.
Previous report
•Consolidated net income decreased $1.2 million, or 7.7%, to $14.3 million driven by the factors we discuss in detail below, including an increase in interest expense of $3.9 million.
Previous report
FIRST FISCAL QUARTER ENDED APRIL 4, 2026 COMPARED TO FIRST FISCAL QUARTER ENDED MARCH 29, 2025
Previous report
Gross Profit and Gross Margin
Previous report
Consolidated SG&A expenses decreased $0.3 million, or 0.1%, to $270.0 million and SG&A rate decreased 330 bps to 39.6%. This decrease in the SG&A rate was driven by fixed cost leverage on higher net sales, as well as costs related to leadership transition and operating model improvements in the first quarter of fiscal 2025 that did not reoccur in the first quarter of fiscal 2026.
Previous report
Consolidated operating income increased $2.3 million, or 9.0%, to $28.4 million and consolidated operating margin increased 10 bps to 4.2%, primarily due to the factors previously discussed.
Previous report
Consolidated income tax provision decreased $0.3 million, or 5.0%, to $5.5 million, and the effective tax rate increased 60 bps to 27.8%. The increase in the effective tax rate was primarily driven by incremental tax expense related to the applicability of the global minimum tax in Hong Kong. This was partially offset by lower incremental tax expense associated with the vesting of restricted stock awards compared to the prior period.
Previous report
Consolidated net income decreased $1.2 million, or 7.7%, to $14.3 million, primarily due to the factors previously discussed.
Previous report
(1)Unallocated corporate expenses include corporate overhead expenses that are not directly attributable to one of our business segments and include unallocated accounting, finance, legal, human resources, and information technology expenses, occupancy costs for our corporate headquarters, and other benefit and compensation programs, including performance-based compensation.
Previous report
(2)Related to costs associated with the transition of our former CEO, including accelerated vesting of outstanding time-based restricted stock awards pursuant to a retirement agreement approved by the Board, executive recruiting costs, and other related costs. Amounts are reflected within Selling, general, and administrative expenses in our condensed consolidated statement of operations.
Previous report
U.S. Wholesale segment net sales increased $1.3 million, or 0.5%, to $251.4 million, driven by increased sales of our exclusive Carter’s brands, primarily offset by lower demand from department stores. AUR increased by a high-single digit percentage, reflecting pricing actions to mitigate incremental tariff-related costs. Unit volume decreased by a mid-single digit percentage primarily driven by lower demand from department stores.
Previous report
(1)Related to costs associated with the transition of our former CEO, including accelerated vesting of outstanding time-based restricted stock awards, executive recruiting costs, and other related costs.
Previous report
(2)Primarily related to third-party consulting costs to support operating model improvements.
Previous report
The Company did not repurchase and retire shares in open market transactions in either of the first quarters of fiscal 2026 and fiscal 2025.
Reworded paragraphs (50)
Previous wording
Statements in this Quarterly Report on Form 10-Q that are not historical fact and use predictive words such as “estimates”, “outlook”, “guidance”, “expect”, “believe”, “intend”, “designed”, “target”, “plans”, “may”, “will”, “are confident” and similar words are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). These forward-looking statements and related assumptions involve risks and uncertainties that could cause actual results and outcomes to differ materially from any forward-looking statements or views expressed in this Form 10-Q. These risks and uncertainties include, but are not limited to, those disclosed in Part II, Item 1A. “Risk Factors” of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 4, 2026 and Part I, Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2026, and otherwise in our reports and filings with the Securities and Exchange Commission, as well as the following factors: changes in global economic and financial conditions, and the resulting impact on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits; risks related to public health crises; risks related to the organizational restructuring plan, including, but not limited to, our ability to achieve the expected savings from the plan and to fully implement the plan; risks related to consumer tastes and preferences, as well as fashion trends; the failure to protect our intellectual property; the diminished value of our brands, potentially as a result of negative publicity or unsuccessful branding and marketing efforts; delays, product recalls, or loss of revenue due to a failure to meet our quality standards; risks related to uncertainty regarding the future of international trade agreements and the United States’ position on international trade, as well as significant political, trade, and regulatory developments and other circumstances beyond our control; the roll-back of incremental tariffs imposed under the International Emergency Economic Powers Act (the “incremental tariffs”) and any additional actions taken in response to their roll-back, including tariffs imposed pursuant to Section 122 of the Trade Act of 1974 (the “122 tariffs”); our ability to recover refunds of incremental tariff amounts or other tariff amounts paid; increased competition in the marketplace; financial difficulties for one or more of our major customers; identification of locations and negotiation of appropriate lease terms for our retail stores; distinct risks facing our eCommerce business; failure to forecast demand for our products and our failure to manage our inventory; increased margin pressures, including increased cost of materials and labor and our inability to successfully increase prices to offset these increased costs; continued inflationary pressures with respect to labor and raw materials…
Excerpt shortened here; the source contains the full paragraph.
Current wording
Statements in this Quarterly Report on Form 10-Q that are not historical fact and use predictive words such as “estimates”, “outlook”, “guidance”, “expect”, “believe”, “intend”, “designed”, “target”, “plans”, “may”, “will”, “are confident” and similar words are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). These forward-looking statements and related assumptions involve risks and uncertainties that could cause actual results and outcomes to differ materially from any forward-looking statements or views expressed in this Form 10-Q. These risks and uncertainties include, but are not limited to, those disclosed in Part II, Item 1A. “Risk Factors” of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 4, 2026 and Part I, Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2026, and otherwise in our reports and filings with the Securities and Exchange Commission, as well as the following factors: changes in global economic and financial conditions, and the resulting impact on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits; risks related to public health crises; risks related to the organizational restructuring plan, including, but not limited to, our ability to achieve the expected savings from the plan and to fully implement the plan; risks related to consumer tastes and preferences, as well as fashion trends; the failure to protect our intellectual property; the diminished value of our brands, potentially as a result of negative publicity or unsuccessful branding and marketing efforts; delays, product recalls, or loss of revenue due to a failure to meet our quality standards; risks related to uncertainty regarding the future of international trade agreements and the United States’ position on international trade, as well as significant political, trade, and regulatory developments and other circumstances beyond our control; the roll-back of incremental tariffs imposed under the International Emergency Economic Powers Act (the “incremental tariffs”) and any additional actions taken in response to their roll-back, including, but not limited to, tariffs imposed pursuant to Section 122 of the Trade Act of 1974 and tariffs imposed under Section 301 of the Trade Act of 1974; our ability to recover refunds of incremental tariff amounts or other tariff amounts paid; increased competition in the marketplace; financial difficulties for one or more of our major customers; identification of locations and negotiation of appropriate lease terms for our retail stores; distinct risks facing our eCommerce business; failure to forecast demand for our products and our failure to manage our inventory; increased margin pressures, including increased cost of materials and labor and our inability to successfully increase prices to offset these increased costs; continued…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
As of April 4, 2026, our channels included 1,062 company-operated retail stores in North America, eCommerce websites, approximately 19,500 wholesale locations in North America, as well as our international wholesale accounts and licensees who operate in over 1,100 locations outside of North America in over 90 countries.
Current wording
As of July 4, 2026, our channels included 1,042 company-operated retail stores in North America, eCommerce websites, approximately 19,500 wholesale locations in North America, as well as our international wholesale accounts and licensees who operate in over 1,100 locations outside of North America in over 90 countries.
Previous wording
The Company’s chief operating decision maker is the Chief Executive Officer. The chief operating decision maker evaluates the operating performance of the segments based upon each segment’s net sales and segment operating income. Segment operating income includes net sales, royalty income, and related cost of goods sold and selling, general, and administrative expenses attributable to each segment. Segment operating income excludes unallocated corporate expenses as well as specific charges that are not directly attributable to segment operations, including operating model improvement costs, restructuring costs, leadership transition costs, and impairment charges related to goodwill and indefinite-lived intangible assets.
Current wording
The Company’s chief operating decision maker is the Chief Executive Officer. The chief operating decision maker evaluates the operating performance of the segments based upon each segment’s net sales and segment operating income. Segment operating income includes net sales, royalty income, and related cost of goods sold and selling, general, and administrative expenses attributable to each segment. Segment operating income excludes unallocated corporate expenses and the impact of tariff refund recoveries, as well as specific charges that are not directly attributable to segment operations, including operating model improvement costs, restructuring costs, leadership transition costs, specific intellectual property litigation costs, and impairment charges related to goodwill and indefinite-lived intangible assets.
Previous wording
Gross profit represents consolidated net sales less cost of goods sold. Gross margin is calculated as gross profit divided by consolidated net sales. Cost of goods sold includes the cost of products, as well as changes in inventory reserves and expenses related to the merchandising, design, and procurement of product, including inbound freight costs, purchasing and receiving costs, and inspection costs. Costs of goods sold also includes the costs of shipping eCommerce orders directly to end consumers. For omni-channel transactions, Costs of goods sold includes the costs of shipping product to end consumers or to retail stores. Our gross profit and gross margin may not be comparable to other entities that define their metrics differently.
Current wording
Gross profit represents consolidated net sales less cost of goods sold. Gross margin is calculated as gross profit divided by consolidated net sales. Cost of goods sold includes the cost of products, as well as changes in inventory reserves and expenses related to the merchandising, design, and procurement of product, including inbound freight costs, purchasing and receiving costs, and inspection costs. Cost of goods sold also includes the costs of shipping eCommerce orders directly to end consumers. For omni-channel transactions, Cost of goods sold includes the costs of shipping product to end consumers or to retail stores. Our gross profit and gross margin may not be comparable to those of other entities that define their metrics differently.
Previous wording
On May 1, 2026, subsequent to April 4, 2026, the Company announced that the Board of Directors (the “Board”) approved the appointment of Sharon Price John as Chief Executive Officer & President of the Company and a member of the Board effective June 15, 2026. In connection with the appointment of Ms. John, Douglas C. Palladini has departed the Company as Chief Executive Officer & President and resigned as a member of the Board effective April 28, 2026. Effective April 28, 2026, Richard F. Westenberger, the Company’s Chief Financial Officer & Chief Operating Officer, was appointed as Interim Chief Executive Officer & President. Mr. Westenberger will maintain his existing responsibilities in addition to serving as interim Chief Executive Officer & President until Ms. John’s start date. Additional information regarding these management changes and related arrangements is included in the Company’s Current Report on Form 8-K filed with the SEC on May 1, 2026.
Current wording
On May 1, 2026, the Company announced that the Board of Directors (the “Board”) appointed Sharon Price John as Chief Executive Officer & President of the Company and a member of the Board effective June 15, 2026. In connection with the appointment of Ms. John, Douglas C. Palladini departed the Company as Chief Executive Officer & President and resigned as a member of the Board effective April 28, 2026. Additional information regarding these management changes and related arrangements is included in the Company’s Current Report on Form 8-K filed with the SEC on May 1, 2026.
Previous wording
During the first quarter of fiscal 2026, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were unlawful. Subsequent to April 4, 2026, following the April 20, 2026 launch of U.S. Customs and Border Protection’s Consolidated Administration and Processing of Entries (“CAPE”) process, the Company submitted claims seeking approximately $130 million of refunds of previously paid IEEPA tariffs through the CAPE system.
Current wording
During the first quarter of fiscal 2026, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were unlawful. During the second quarter of fiscal 2026, following the April 20, 2026 launch of U.S. Customs and Border Protection’s Consolidated Administration and Processing of Entries (“CAPE”) process, the Company submitted claims seeking approximately $130 million of refunds of previously paid IEEPA tariffs through the CAPE system.
Previous wording
The Company has elected to apply a gain contingency model in accordance with ASC 450-30,“Gain Contingencies” to account for potential recoveries of previously paid IEEPA tariffs. Under this model, a gain contingency is not recognized in the financial statements until the gain is realized or realizable. Any recovery, when recognized, would be reflected as a reduction of inventory to the extent the related goods remain on hand, or as a reduction of Cost of goods sold for amounts related to goods already sold.
Current wording
The Company has elected to apply a gain contingency model in accordance with ASC 450-30,“Gain Contingencies” to account for recoveries of previously paid IEEPA tariffs. Under this model, a gain contingency is not recognized in the financial statements until the gain is realized or realizable. Any recovery, when recognized, is reflected as a reduction of Cost of goods sold for amounts related to goods already sold, or as a reduction of inventory to the extent the related goods remain on hand.
Previous wording
First Fiscal Quarter 2026 Financial Highlights
Current wording
Second Fiscal Quarter 2026 Financial Highlights
Previous wording
Unless otherwise stated, comparisons are to the first quarter of fiscal 2025:
Current wording
Unless otherwise stated, comparisons below are to the second quarter of fiscal 2025. References below to adjusted operating income, adjusted net income, and adjusted diluted net income per common share are non-GAAP financial measures; see “Reconciliation of Non-GAAP Financial Measures to GAAP Measures.”
Previous wording
◦U.S. Retail sales increased $37.8 million driven by higher unit volume and average unit retail (“AUR”) in both retail stores and eCommerce channels. Comparable net sales, including retail stores and eCommerce, increased 10.5% for the period, reflecting a fourth consecutive quarter of positive comparable net sales growth.
Current wording
◦U.S. Retail sales increased $5.1 million driven by higher unit volume. Comparable net sales, including retail stores and eCommerce, increased 5.1% for the period, reflecting a fifth consecutive quarter of positive comparable net sales growth.
Previous wording
•Consolidated SG&A expenses decreased $0.3 million, or 0.1%, to $270.0 million. SG&A as a percentage of consolidated net sales (“SG&A rate”) decreased 330 bps to 39.6%, driven by fixed cost leverage on higher net sales and costs related to leadership transition and operating model improvements in the first quarter of fiscal 2025 that did not reoccur in the first quarter of fiscal 2026.
Current wording
•Consolidated SG&A expenses decreased $4.8 million, or 1.7%, to $276.1 million. SG&A as a percentage of consolidated net sales (“SG&A rate”) decreased 310 bps to 44.9%, driven by fixed cost leverage on higher net sales, costs related to operating model improvements in the second quarter of fiscal 2025 that did not reoccur in the second quarter of fiscal 2026, reduced costs resulting from previously implemented restructuring actions, lower performance-based compensation, and lower distribution costs, partially offset by higher leadership transition costs, incremental marketing investments, and inflationary pressure in retail store-related expenses.
Previous wording
•Consolidated operating income increased $2.3 million, or 9.0%, to $28.4 million and adjusted operating income, a non-GAAP financial measure, decreased $6.9 million, or 19.6%, to $28.4 million. Operating margin increased 10 bps to 4.2%, primarily due to the factors discussed in detail below.
Current wording
•Consolidated operating income increased $135.8 million to $139.8 million and adjusted operating income increased $6.4 million, or 54.1%, to $18.1 million. Operating margin increased 2,200 bps to 22.7%, primarily due to the factors discussed in detail below, including $128 million of IEEPA tariff refund recoveries.
Previous wording
•Diluted net income per common share decreased $0.04, or 9.3%, to $0.39, and adjusted diluted net income per common share decreased $0.27, or 40.9%, to $0.39.
Current wording
•Diluted net income per common share increased $2.86 to $2.87 and adjusted diluted net income per common share increased $0.09, or 52.9%, to $0.26.
Previous wording
•During the first quarter of fiscal 2026, we opened 3 stores and closed 9 stores in the United States.
Current wording
•During the first two quarters of fiscal 2026, we opened 4 stores and closed 29 stores in the United States.
Previous wording
•As a result of our strong financial position and available liquidity, we returned $9.2 million to our shareholders in cash dividends.
Current wording
•As a result of our strong financial position and available liquidity, we returned $9.1 million in cash dividends to our shareholders in the second quarter of fiscal 2026.
Previous wording
Consolidated net sales increased $51.3 million, or 8.1%, to $681.1 million, driven by increased net sales in each of our U.S. Retail, U.S. Wholesale, and International segments. AUR increased by a high-single digit percentage, reflecting higher pricing to mitigate incremental tariff-related costs and the favorable impact of changes in foreign currency exchange rates used for translation. Unit volume increased by a low-single digit percentage driven by growth across our U.S. Retail and International segments, partially offset by unit volume decline in U.S. Wholesale. Changes in foreign currency exchange rates used for translation had a favorable effect on our consolidated net sales of $5.6 million.
Current wording
Consolidated net sales increased $30.2 million, or 5.2%, to $615.5 million. The increase in net sales was driven by increased net sales in each of our U.S. Wholesale, U.S. Retail, and International segments. AUR increased by a mid-single digit percentage, primarily reflecting higher realized pricing and sales leverage in U.S. Wholesale, as well as the favorable impact of changes in foreign currency exchange rates used for translation. Unit volume increased by a low-single digit percentage driven by growth in U.S. Wholesale and U.S. Retail, partially offset by unit volume decline in our International segment. Changes in foreign currency exchange rates used for translation had a favorable effect on our consolidated net sales of $2.4 million.
Previous wording
Consolidated interest expense increased $3.9 million, or 50.4%, to $11.8 million, reflecting the impact of the Company’s fourth quarter of fiscal 2025 issuance of $575.0 million principal amount of 7.375% senior notes due 2031 and redemption of $500.0 million principal amount of 5.625% senior notes due 2027.
Current wording
Consolidated interest expense increased $3.5 million, or 44.0%, to $11.3 million, reflecting the impact of the Company’s fourth quarter of fiscal 2025 issuance of $575.0 million principal amount of 7.375% senior notes due 2031 and redemption of $500.0 million principal amount of 5.625% senior notes due 2027.
Previous wording
The following table summarizes net sales by segment and segment operating income for the first quarter of fiscal 2026 and the first quarter of fiscal 2025:
Current wording
The following table summarizes net sales by segment and segment operating income for the second quarter of fiscal 2026 and the second quarter of fiscal 2025:
Previous wording
(3)Primarily related to third-party consulting costs to support operating model improvements. Amounts are reflected within Selling, general, and administrative expenses in our condensed consolidated statement of operations.
Current wording
(5)Primarily related to third-party consulting costs to support operating model improvements. Amounts are reflected within Selling, general, and administrative expenses in our condensed consolidated statement of operations.
Previous wording
Overall, demand trends continued to improve in the first quarter of fiscal 2026 as comparable net sales, including retail stores and eCommerce, increased 10.5% and delivered a fourth consecutive quarter of positive comparable net sales growth. As of April 4, 2026, we operated 798 retail stores in the U.S. compared to 804 as of January 3, 2026, and 802 as of March 29, 2025.
Current wording
Comparable net sales, including retail stores and eCommerce, increased 5.1%, reflecting a fifth consecutive quarter of positive comparable net sales growth. Comparable net sales grew in both retail stores and eCommerce, driven by higher average transaction size. As of July 4, 2026, we operated 779 retail stores in the U.S. compared to 804 as of January 3, 2026, and 809 as of June 28, 2025.
Previous wording
International segment net sales increased $12.2 million, or 14.3%, to $97.5 million, driven by growth in Mexico and Canada. In Mexico, net sales growth reflected higher AUR, the contribution from new retail stores, and higher unit volume. Canadian comparable net sales, including retail store and eCommerce, increased 4.0%, driven by higher unit volume and the favorable impact of foreign currency exchange rates.
Current wording
International segment net sales increased $2.5 million, or 2.7%, to $95.3 million, driven by growth in Mexico and Canada, partially offset by unfavorable timing of shipments to our international partners. In Mexico, net sales growth reflected higher AUR and the contribution from new retail stores, partially offset by the timing of the Easter holiday. Canada net sales growth reflected higher comparable net sales, which increased 1.3%, driven by increased AUR.
Previous wording
AUR increased by a high-single digit percentage, driven by pricing and the favorable impact of foreign currency exchange rates. International segment unit volume increased by a mid-single digit percentage, reflecting growth across the segment. Changes in foreign currency exchange rates used for translation had a $5.6 million favorable effect on International segment net sales.
Current wording
AUR increased by a mid-single digit percentage, driven by the favorable impact of foreign currency exchange rates and pricing. International segment unit volume decreased by a low-single digit percentage driven by lower shipments to our international partners. Changes in foreign currency exchange rates used for translation had a $2.4 million favorable effect on International segment net sales.
Previous wording
As of April 4, 2026, we operated 191 and 73 retail stores in Canada and Mexico, respectively. As of January 3, 2026, we operated 192 and 72 retail stores in Canada and Mexico, respectively. As of March 29, 2025, we operated 191 and 64 retail stores in Canada and Mexico, respectively.
Current wording
As of July 4, 2026, we operated 190 stores and 73 stores in Canada and Mexico, respectively. As of January 3, 2026, we operated 192 and 72 stores in Canada and Mexico, respectively. As of June 28, 2025, we operated 192 and 64 stores in Canada and Mexico, respectively.
Previous wording
International segment operating income was $4.2 million in the first quarter of fiscal 2026 compared to segment operating loss of $0.2 million in the first quarter of fiscal 2025. This change was driven by an increase in gross profit of $8.7 million, partially offset by an increase in SG&A expenses of $4.1 million. Segment operating margin increased 460 bps to 4.3%, driven by a 340 bps increase in gross margin and a 150 bps decrease in the SG&A rate. The increase in gross margin was driven by higher AUR and product mix, partially offset by a low-single digit percentage increase in AUC. The decrease in the SG&A rate was driven by fixed cost leverage on increased net sales, partially offset by higher retail store rent and retail store employee costs.
Current wording
International segment operating income increased $1.8 million, or 50.0%, to $5.4 million, primarily due to an increase in gross profit of $3.3 million, partially offset by an increase in SG&A expenses of $1.6 million. Segment operating margin increased 180 bps to 5.7%, driven by a 230 bps increase in gross margin, partially offset by a 50 bps increase in the SG&A rate. The increase in gross margin was driven by higher AUR and channel mix, partially offset by a low-single digit percentage increase in AUC driven by incremental tariff-related costs and channel mix. The increase in the SG&A rate was driven by higher retail store rent and retail store employee costs, partially offset by fixed cost leverage on increased net sales and lower performance-based compensation.
Previous wording
Consolidated gross profit increased $2.8 million, or 1.0%, to $293.9 million and consolidated gross margin decreased 310 bps to 43.1%. The increase in consolidated gross profit was driven by higher net sales and favorable channel mix. The decrease in consolidated gross margin was driven by higher AUC, partially offset by favorable channel mix. AUC increased by a low-teens digit percentage, driven by incremental tariff-related costs and investments in product make. Incremental tariff-related costs unfavorably impacted Cost of goods sold by approximately $50 million.
Current wording
Consolidated gross profit increased $133.6 million, or 23.3%, to $706.5 million and consolidated gross margin increased 740 bps to 54.5%. The increase in consolidated gross profit and gross margin was driven by $128 million of IEEPA tariff refund recoveries, higher AUR, and channel mix, partially offset by higher AUC. AUC, which excludes the impact of tariff refund recoveries, increased by a low-teens percentage, driven by incremental domestic and international tariff-related costs and investments in product make. Incremental tariff-related costs unfavorably impacted Cost of goods sold by approximately $78 million.
Previous wording
Results by Segment - First Quarter of Fiscal 2026 compared to First Quarter of Fiscal 2025
Current wording
Results by Segment - First Two Quarters of Fiscal 2026 compared to First Two Quarters of Fiscal 2025
Previous wording
U.S. Retail segment net sales increased $37.8 million, or 12.8%, to $332.2 million. The increase in net sales was driven by higher unit volume and higher AUR. Unit volume increased by a double-digit percentage driven by higher traffic and transactions in both stores and eCommerce. AUR increased by a low-single digit percentage, reflecting pricing actions to mitigate incremental tariff-related costs, partially offset by product mix, which reflects a higher proportion of opening price point product and clearance sales compared to the prior period. In addition, the first quarter of fiscal 2026 benefited from the timing of the Easter holiday.
Current wording
U.S. Retail segment net sales increased $42.9 million, or 7.2%, to $636.9 million. The increase in net sales was driven by higher unit volume. Unit volume increased by a mid-single digit percentage driven by higher traffic, transactions, and units per transaction in both stores and eCommerce, partially offset by the sales impact of net store closures. AUR increased by a low-single digit percentage, reflecting higher pricing, partially offset by product mix, which reflects a higher proportion of opening price point product, and increased promotional activity. Comparable net sales, including retail stores and eCommerce, increased 7.8% driven by the factors mentioned above, as well as improved average transaction size in both stores and eCommerce.
Previous wording
U.S. Retail segment operating income increased $6.7 million, or 291.6%, to $9.0 million, due to an increase in gross profit of $13.9 million, partially offset by an increase in SG&A expenses of $7.1 million. Segment operating margin increased 190 bps to 2.7%, primarily driven by a 460 bps decrease in SG&A rate, partially offset by a 250 bps decrease in gross margin. The decrease in gross margin was driven by a high-single digit percentage increase in AUC as a result of incremental tariff-related costs, which was partially offset by increased AUR. The decrease in the SG&A rate reflected fixed cost leverage on higher net sales, partially offset by inflationary pressure in store-related expenses.
Current wording
U.S. Retail segment operating income increased $7.2 million, or 118.7%, to $13.3 million, primarily due to an increase in gross profit of $11.8 million, partially offset by an increase in SG&A expenses of $4.8 million. Segment operating margin increased 110 bps to 2.1%, driven by a 330 bps decrease in the SG&A rate, partially offset by a 220 bps decrease in gross margin. The decrease in gross margin was driven by a high-single digit percentage increase in AUC as a result of incremental tariff-related costs. The decrease in the SG&A rate was driven by fixed cost leverage on higher net sales, reduced costs resulting from previously implemented restructuring actions, and lower distribution costs, partially offset by incremental marketing investments and inflationary pressure in retail store-related expenses.
Previous wording
U.S. Wholesale segment operating income decreased $18.5 million, or 33.5%, to $36.8 million, due to a decrease in gross profit of $19.8 million, partially offset by a decrease in SG&A expenses of $1.7 million. Segment operating margin decreased 750 bps to 14.6%, driven by an 810 bps decrease in gross margin, partially offset by a 70 bps decrease in SG&A rate. The decrease in gross margin was driven by higher AUC and customer mix, partially offset by higher AUR. AUC increased by a high-teen digit percentage as a result of incremental tariff-related costs and investments in product make. The decrease in the SG&A rate was driven by lower distribution costs on lower unit volume and lower bad debt expense.
Current wording
U.S. Wholesale segment operating income decreased $15.8 million, or 19.2%, to $66.5 million, primarily due to a decrease in gross profit of $17.8 million, partially offset by a decrease in SG&A expenses of $2.8 million. Segment operating margin decreased 440 bps to 14.2%. The drivers of the decrease in operating margin were a 530 bps decrease in gross margin, partially offset by a 130 bps decrease in SG&A rate. The decrease in gross margin was driven by a high-teens percentage increase in AUC as a result of incremental tariff-related costs and investments in product make, partially offset by increased AUR and decreased sales to low-margin off-price wholesale customers. The decrease in the SG&A rate was driven by fixed cost leverage on increased net sales, lower distribution costs, and lower bad debt expense, partially offset by incremental marketing investments.
Previous wording
Unallocated corporate expenses decreased $0.5 million, or 2.2%, to $21.5 million. Unallocated corporate expenses, as a percentage of consolidated net sales, decreased 30 bps to 3.2%, driven by lower consulting costs.
Current wording
Unallocated corporate expenses decreased $1.9 million, or 4.2%, to $42.8 million. Unallocated corporate expenses, as a percentage of consolidated net sales, decreased 40 bps to 3.3% driven by reduced costs resulting from previously implemented restructuring actions and lower consulting costs.
Previous wording
We have provided non-GAAP adjusted operating income, income taxes, net income, and diluted net income per common share measures, which exclude certain items presented below. We believe that this information provides a meaningful comparison of our results and affords investors a view of what management considers to be our core performance, and we also, from time to time, use some of these non-GAAP measures, such as adjusted operating income, as performance metrics in awards under our annual and long-term incentive compensation plans. These measures are not in accordance with, or an alternative to, generally accepted accounting principles in the U.S. (GAAP). The most comparable GAAP measures are operating income, income tax provision, net income, and diluted net income per common share, respectively. Adjusted operating income, income taxes, net income, and diluted net income per common share should not be considered in isolation or as a substitute for analysis of our results as reported in accordance with GAAP. Other companies may calculate adjusted operating income, income taxes, net income, and diluted net income per common share differently than we do, limiting the usefulness of the measure for comparisons with other companies.
Current wording
We have provided non-GAAP adjusted cost of goods sold, gross profit, SG&A expenses, operating income, interest income, income tax provision, net income, and diluted net income per common share measures, which exclude certain items presented below. We believe that this information provides a meaningful comparison of our results and affords investors a view of what management considers to be our core performance, and we also, from time to time, use some of these non-GAAP measures, such as adjusted operating income, as performance metrics in awards under our annual and long-term incentive compensation plans. These measures are not in accordance with, or an alternative to, generally accepted accounting principles in the U.S. (GAAP). The most comparable GAAP measures are cost of goods sold, gross profit, SG&A expenses, operating income, interest income, income tax provision, net income, and diluted net income per common share, respectively. Adjusted cost of goods sold, gross profit, SG&A expenses, operating income, interest income, income tax provision, net income, and diluted net income per common share should not be considered in isolation or as a substitute for analysis of our results as reported in accordance with GAAP. Other companies may calculate adjusted cost of goods sold, gross profit, SG&A expenses, operating income, interest income, income tax provision, net income, and diluted net income per common share differently than we do, limiting the usefulness of the measure for comparisons with other companies.
Previous wording
Our ongoing cash needs are primarily for working capital (consisting primarily of inventory), capital expenditures, employee compensation, interest on debt, the return of capital to our shareholders, and other general corporate purposes. We expect that our primary sources of liquidity will be cash and cash equivalents on hand, cash flow from operations, and available borrowing capacity under our secured asset-based revolving credit facility. We believe that our sources of liquidity are sufficient to meet our cash requirements for at least the next twelve months. However, these sources of liquidity may be affected by events described in “Forward-Looking Statements” section of this Form 10-Q, including, but not limited to, our risk factors discussed under the heading “Risk Factors” in Part II, Item 1A. of this Quarterly Report on Form 10-Q, the risk factors discussed under the heading “Risk Factors” in our most recently filed Annual Report on Form 10-K, and in other reports filed with the Securities and Exchange Commission from time to time.
Current wording
Our ongoing cash needs are primarily for working capital (consisting primarily of inventory), capital expenditures, employee compensation, interest on debt, the return of capital to our shareholders, and other general corporate purposes. We expect that our primary sources of liquidity will be cash and cash equivalents on hand, cash flow from operations, and available borrowing capacity under our secured asset-based revolving credit facility. We believe that our sources of liquidity are sufficient to meet our cash requirements for at least the next twelve months. However, these sources of liquidity may be affected by events described in the “Forward-Looking Statements” section of this Form 10-Q, including, but not limited to, our risk factors discussed under the heading “Risk Factors” in Part II, Item 1A. of this Quarterly Report on Form 10-Q, the risk factors discussed under the heading “Risk Factors” in our most recently filed Annual Report on Form 10-K, and in other reports filed with the Securities and Exchange Commission from time to time.
Previous wording
As of April 4, 2026, we had $473.4 million of cash and cash equivalents held at major financial institutions, including $78.0 million held at financial institutions located outside of the United States. We do not expect any material restrictions on our ability to access or use cash held outside of the United States. We maintain cash deposits with major financial institutions that exceed the insurance coverage limits provided by the Federal Deposit Insurance Corporation in the United States and by similar insurers for deposits located outside the United States. To mitigate this risk, we utilize a policy of allocating cash deposits among major financial institutions that have been evaluated by us and third-party rating agencies as having acceptable risk profiles.
Current wording
As of July 4, 2026, we had $653.6 million of cash and cash equivalents held at major financial institutions, including $67.9 million held at financial institutions located outside of the United States. We do not expect any material restrictions on our ability to access or use cash held outside of the United States. We maintain cash deposits with major financial institutions that exceed the insurance coverage limits provided by the Federal Deposit Insurance Corporation in the United States and by similar insurers for deposits located outside the United States. To mitigate this risk, we utilize a policy of allocating cash deposits among major financial institutions that have been evaluated by us and third-party rating agencies as having acceptable risk profiles.
Previous wording
Net accounts receivable at April 4, 2026 were $196.6 million compared to $203.9 million at March 29, 2025 and $178.6 million at January 3, 2026. The decrease of $7.3 million, or 3.6%, at April 4, 2026 compared to March 29, 2025 primarily reflects the timing of wholesale customer shipments. Due to the seasonal nature of our operations, the net accounts receivable balance at April 4, 2026 is not comparable to the net accounts receivable balance at January 3, 2026.
Current wording
Net accounts receivable at July 4, 2026 were $167.9 million compared to $140.4 million at June 28, 2025 and $178.6 million at January 3, 2026. The increase of $27.5 million, or 19.6%, at July 4, 2026 compared to June 28, 2025 primarily reflects the timing of wholesale customer shipments. Due to the seasonal nature of our operations, the net accounts receivable balance at July 4, 2026 is not comparable to the net accounts receivable balance at January 3, 2026.
Previous wording
Inventories at April 4, 2026 were $465.9 million compared to $474.1 million at March 29, 2025 and $544.6 million at January 3, 2026. The decrease of $8.2 million, or 1.7%, at April 4, 2026 compared to March 29, 2025 was driven by lower days of supply, partially offset by incremental tariffs imposed on products imported into the United States.
Current wording
Inventories at July 4, 2026 were $577.7 million compared to $619.1 million at June 28, 2025 and $544.6 million at January 3, 2026. The decrease of $41.3 million, or 6.7%, at July 4, 2026 compared to June 28, 2025 was driven by lower days of supply and the timing of inbound inventory receipts, partially offset by increased product costs. Due to the seasonal nature of our operations, the inventory balance at July 4, 2026 is not comparable to the inventory balance at January 3, 2026.
Previous wording
Prepaid expenses and other current assets at April 4, 2026 were $75.7 million compared to $50.2 million at March 29, 2025 and $60.5 million at January 3, 2026. The increase of $25.5 million, or 50.8%, at April 4, 2026 compared to March 29, 2025 was driven by the reclassification of Rabbi Trust assets from long-term to current to align with the anticipated settlement of associated deferred compensation liabilities in fiscal 2026.
Current wording
Prepaid expenses and other current assets at July 4, 2026 were $73.4 million compared to $60.6 million at June 28, 2025 and $60.5 million at January 3, 2026. The increase of $12.7 million, or 21.0%, at July 4, 2026 compared to June 28, 2025 was driven by the reclassification of Rabbi Trust assets from long-term to current to align with the anticipated settlement of associated deferred compensation liabilities in fiscal 2026.
Previous wording
Accounts payable at April 4, 2026 were $188.7 million compared to $199.1 million at March 29, 2025 and $235.7 million at January 3, 2026. The decrease of $10.3 million, or 5.2%, at April 4, 2026 compared to March 29, 2025 was driven by the timing of payments for purchases of inventory. Due to the seasonal nature of our operations, the accounts payable balance at April 4, 2026 is not comparable to the accounts payable balance at January 3, 2026.
Current wording
Accounts payable at July 4, 2026 were $323.6 million compared to $306.4 million at June 28, 2025 and $235.7 million at January 3, 2026. The increase of $17.2 million, or 5.6%, at July 4, 2026 compared to June 28, 2025 was driven by the timing of vendor payments. Due to the seasonal nature of our operations, the accounts payable balance at July 4, 2026 is not comparable to the accounts payable balance at January 3, 2026.
Previous wording
Other current liabilities at April 4, 2026 were $111.3 million compared to $84.7 million at March 29, 2025 and $133.8 million at January 3, 2026. The increase of $26.6 million, or 31.4%, at April 4, 2026 compared to March 29, 2025 was primarily driven by the timing of interest payments on long-term debt and the reclassification of deferred compensation liabilities from long-term to current to reflect the anticipated settlement of plan participant balances.
Current wording
Other current liabilities at July 4, 2026 were $139.9 million compared to $95.3 million at June 28, 2025 and $133.8 million at January 3, 2026. The increase of $44.6 million, or 46.8%, at July 4, 2026 compared to June 28, 2025 was primarily driven by additional income taxes accrued for the receipt of IEEPA tariff refunds, the timing of interest payments on long-term debt, and the reclassification of deferred compensation liabilities from long-term to current to reflect the anticipated settlement of plan participant balances.
Previous wording
Other long-term liabilities at April 4, 2026 were $16.4 million compared to $33.0 million at March 29, 2025 and $19.4 million at January 3, 2026. The decrease of $16.5 million, or 50.1%, at April 4, 2026 compared to March 29, 2025 was primarily driven by the reclassification of deferred compensation liabilities from long-term to current to reflect the anticipated settlement of plan participant balances.
Current wording
Other long-term liabilities at July 4, 2026 were $14.2 million compared to $33.4 million at June 28, 2025 and $19.4 million at January 3, 2026. The decrease of $19.2 million, or 57.6%, at July 4, 2026 compared to June 28, 2025 was primarily driven by the reclassification of deferred compensation liabilities from long-term to current to reflect the anticipated settlement of plan participant balances.
Previous wording
Net cash provided by operating activities for the first quarter of fiscal 2026 was $6.4 million compared to net cash used in operating activities of $48.6 million in the first quarter of fiscal 2025. Our cash flows from operating activities are driven by net income and changes in our net working capital. The increase in operating cash flow was primarily driven by higher sell through of inventory during the period, resulting in reduced days of supply, and the timing of interest payments on our senior notes.
Current wording
Net cash provided by operating activities was $202.3 million for the first two quarters of fiscal 2026 compared to net cash used in operating activities of $8.3 million in the first two quarters of fiscal 2025. Our cash flow provided by operating activities is driven by net income and changes in our working capital. The increase in operating cash flow was primarily driven by $132 million in IEEPA tariff refund recoveries, including interest, lower days of supply and the timing of inbound inventory receipts, and favorable timing of interest payments on our senior notes as compared to the prior period. The income taxes associated with the tariff refund recoveries are expected to be paid in the third quarter of fiscal 2026.
Showing the first 40 of 50 pairs. Open the source sections for the rest.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
Current report — wording carried from elsewhere
TWO FISCAL QUARTERS ENDED JULY 4, 2026 COMPARED TO TWO FISCAL QUARTERS ENDED JUNE 28, 2025
Current report — wording carried from elsewhere
The following table summarizes our results of operations.
Current report — wording carried from elsewhere
(*)Effective tax rate is calculated by dividing the provision for income taxes by income before income taxes.
Current report — wording carried from elsewhere
Note: Results may not be additive due to rounding. Percentage changes that are not considered meaningful are denoted with “nm”.
Current report — wording carried from elsewhere
Consolidated net sales increased $81.5 million, or 6.7%, to $1.30 billion. The increase in net sales was driven by increased net sales in each of our U.S. Retail, U.S. Wholesale, and International segments. AUR increased by a mid-single digit percentage, primarily reflecting higher realized pricing and sales leverage in U.S. Wholesale, as well as the favorable impact of changes in foreign currency exchange rates used for translation. Unit volume increased by a low-single digit percentage driven by growth in our U.S. Retail and International segments, partially offset by unit volume decline in our U.S. Wholesale segment. Changes in foreign currency exchange rates used for translation had a favorable effect on our consolidated net sales of $8.0 million.
Current report — wording carried from elsewhere
Consolidated interest expense increased $7.4 million, or 47.2%, to $23.1 million, reflecting the impact of the Company’s fourth quarter of fiscal 2025 issuance of $575.0 million principal amount of 7.375% senior notes due 2031 and redemption of $500.0 million principal amount of 5.625% senior notes due 2027.
Current report — wording carried from elsewhere
(5)Primarily related to third-party consulting costs to support operating model improvements. Amounts are reflected within Selling, general, and administrative expenses in our condensed consolidated statement of operations.