Adjusted Results Ahead of Expectations
Adjusted Q3 operating income of $26M exceeded guidance; adjusted diluted EPS of $0.09 (ex-items) also beat outlook. Company modestly raised its full-year adjusted operating income outlook to approximately $110M (high end of prior range).
Revenue Performance and Outlook Improvement
Q3 revenue declined 5% to $1.3B, slightly better than prior outlook (including ~1 ppt benefit from timing of wholesale shipments). Full-year revenue expectation narrowed/improved to ~4% decline versus prior -4% to -5% range.
Regional & Channel Wins (EMEA and Latin America)
EMEA revenue grew 6% reported (2% currency-neutral) driven by wholesale and DTC; Latin America grew 20% reported (13% cc) with balanced growth across the business—demonstrating pockets of strong international performance.
Balance Sheet and Liquidity Strength
Ended Q3 with $465M cash, $600M in restricted investments dedicated to senior notes, repaid ~ $200M of revolver borrowings and finished the quarter with no amounts outstanding under the $1.1B revolver, reflecting improved liquidity management.
Inventory and Complexity Reduction Progress
Inventory down 2% year-over-year to just over $1B; completed the 25% SKU rationalization started in fiscal 2025 and continuing efforts to simplify assortments and raw material complexity—driving tighter assortments and better planning.
Product Momentum and Pricing Power
Base layer (heat and cold gear) delivered strong double-digit growth and higher ASPs; ICON fleece and women’s Meridian gaining traction. Early footwear and sportswear launches (Velocity Elite 3, Acerta 11, HP Low, Solo, ARC 96) showed strong sell-through and higher ASP signals.
Direct-to-Consumer and Digital Engagement
Digital engagement remains strong; e-commerce conversion improved despite a promotional environment. Tools like SMS and TikTok Shop are contributing to growth and improved DTC execution.
Cost Discipline and SG&A Improvement (Adjusted)
Adjusted SG&A decreased 7% to $563M (excluding litigation reserve and transformation), driven by lower marketing spend timing, restructuring benefits, and disciplined discretionary cost management; company expects mid-single-digit decline in adjusted SG&A for the full year.