Oxford Industries, Inc. Price & Performance (OXM)

Thank you, and good afternoon. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q and A session constitute forward looking statements within the meaning of the federal securities laws. Forward looking statements are not guarantees, and actual results may differ materially from those expressed or implied in the forward looking statements. Important factors that could cause actual results of operations or our financial condition to differ are discussed in our press release issued earlier today and in documents filed by us with the SEC including the risk factors contained in our Form 10 We undertake no duty to update any forward looking statements. During this call, we will be discussing certain non GAAP financial measures. You can find a reconciliation of non GAAP to GAAP financial measures in our press release issued earlier today, which is posted under the InvestorRelationstabofourwebsite@oxfordinc..com. I'd now like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO and Scott Grosse, meyer, CFO and COO. Thank you for your attention. And now I'd like to turn over call over to Tom Chubb. Good afternoon, and thank you for joining us.

We are pleased to be reporting fourth quarter net sales and adjusted EPS that are both near the top of our guidance ranges. In December, we said that we were expecting a strong holiday selling season. That expectation turned into reality as the consumer did in fact show up to buy their loved ones and friends the gifts that they really wanted from the brands that they love. We were particularly pleased in the weeks leading up to Christmas by the performance of some of our newer special product such as Tommy Bahamas Indigo Palms Denim and Denim Friendly product the Tommy Bahama Marlin Luxe Quarter Zip Pullover and the Lilly Pulitzer Reserve collection. The performance of these higher price point products is strong evidence that when there is reason to shop, our customers are choosing to spend with our brands. And this helped drive comps for the month of December up 2%. As we moved into January, we experienced a moderation in demand, which we attribute to the recent pattern of consumers retreating when there isn't a reason to spend combined with the deterioration in consumer sentiment. As a result, January was not as strong as December with comps down 3%.

This negative trend accelerated in the beginning of fiscal twenty twenty five with comps of negative 9% in February. Given this backdrop, we are pleased with our fourth quarter performance and commend and thank our people for delivering these results. We believe the choppiness in demand we experienced towards the end of fiscal twenty twenty four is likely to continue in the near term Just as the consumer showed up and was willing to spend for Christmas, we expect the same will be true for the first half of fiscal twenty twenty five, with strong selling for big events such as Easter Mother's Day, Father's Day, Memorial Day and the fourth of July. In the in between times, we anticipate the consumer will be more hesitant to spend given the uncertainty in the current marketplace. With our powerful portfolio of happiness evoking brands, our world class omni channel platform, our strong cash and balance sheet, and our resilient team we continue to believe that long term opportunity for us is extremely bright However, we are realistic enough to recognize that we are not immune from the current headwinds. As with any time of uncertainty, the key for us in the short term is to control the controllables and to stay focused.

At the top of our focus list is our customer. Our top priority is staying hyper focused on the four point North Star that serves as the blueprint for how we run the company. As a reminder, our four point North Star starts with our overarching strategy to maximize long term shareholder value. The key here is to remember that we're building a sustainable business and shareholder value for the long term notwithstanding the short term turbulence. The second point of our strategy is to own a portfolio of life brands. We have eighty three years behind us, and have remained successful through many challenges. We know how to do this. During this uncertain time, we will make sure that we are protecting the integrity of our brands for the long term. Protecting the integrity of our brands means avoiding short term fixes to offer slightly improved near term results that would damage our brands and our prospects for the long term. Third is our purpose as a company, which is to evoke happiness in our consumers. All of our brands are happy brands, that metaphorically take our customers to their happy place. It is important for us to stay focused on delivering that happiness to our customers and not get distracted by external challenges beyond our control.

Our fourth and final area of focus is to generate cash that we can then reinvest to grow our existing businesses, pursue acquisitions when the opportunity exists and returning capital to our shareholders all while maintaining a healthy balance sheet. Each of our brands has detailed plans for fiscal twenty twenty five tailored to the unique circumstances challenges and opportunities. However, all of them have one thing in common, and that is that they focus on the core of what makes the brand great. For Tommy Bahama, focusing on the core is about ensuring that we are engaged and fully activated in our top 25 markets. Have a tremendous following in each of these markets that serves as a great foundation for the business. At the same time, there's a significant opportunity to attract a much larger audience to the brand. As we ignite and activate these core markets in 2025, our plan is to not only delight our current customers, but connect with prospective customers to drive more traffic and higher conversion across all channels. At Lilly Pulitzer, focusing on the core is all about the top 20% of our customer base. The top 20% of our customer base accounts for 67% or two thirds of our sales even more of our profitability as they tend to buy at full price.

Making sure that we have the products, experiences and marketing messages that delights these customers will help ensure they are fully engaged in spending money with us during fiscal twenty twenty five. We also believe that doubling down on serving our best customers will help us to attract many, many more who are demographically and psychographically similar to our existing top customer base. In JohnnyWas, focusing on the core's about getting back to the brand's roots through the type of products that made Johnny Was famous, and a favorite with hundreds of thousands of customers. As we stretch the boundaries of what the brand can be in the last several years, we probably took little bit of focus off the embroidered and embellished products that consumers came to love. During 2025, we will focus on delighting engaged customers with an enhanced assortment of what we call our collection product merchandise that better reflects Johnny Was origins. We believe this focus on what makes Johnny Was unique and differentiated in the marketplace will also help us attract new loyalists to the brand. Scott will provide more detail on our guidance in a minute, but it is fair to say that the ongoing uncertainty in the marketplace has made us a bit more cautious in our view for the full year.

That said, we still expect cash flow to remain strong with cash flow from operations projected to be approximately $170,000,000 for the year. And we intend to continue to invest that cash flow in the areas that we will believe help drive long term shareholder value. At the top of our investment priorities, is continuing to grow and strengthen our omni channel platform. In recent months, we have completed significant upgrades to our Tamina Hama Lilly Pellitzer, Southern Tide and the Beaufort Bonnet Company e commerce website. In addition, late this year, we expect expect to complete the new distribution center that will allow us to increase our inventory velocity and sell throughs as it services our very large omni channel business in the eastern and southern parts of the country. During the year, we also plan to open approximately 20 new stores including four new Marlin bars. And we remain focused as always on returning capital to shareholders and we have already purchased $50,000,000 worth of stock during first part of this fiscal year at prices that we believe over the long term will prove to be very attractive. In addition, on Monday, our Board of Directors approved a 3% increase in our quarterly dividend from $0.67 to $0.69 As a reminder, we have paid a dividend every quarter since we went public in twenty nineteen sixty.

As we navigate the uncertainty of our our confidence is buoyed, by the fact that as a company, as a team, we know who we are and we know what we are doing. I'll now turn the call over to Scott for more detail on the fourth quarter the full year and our outlook for fiscal twenty twenty five. Scott? Thank you, Tom. As Tom mentioned, we finished the fourth quarter and full fiscal year 2024 with top and bottom line results at the top end of our guidance range. Our operating groups had strong holiday seasons performed well during the fourth quarter despite pullback in consumer spending in January. Consolidated net sales in the fifty two week fiscal twenty twenty four decreased 3% one point five two billion As a reminder, 2023 net sales included an approximate $16,000,000 from the fifty third week resulting in $10,000,000 of additional gross profit. Sales in our full price brick and mortar locations were down 2%, driven by a mid single digit negative comp partially offset by the addition of new store locations. E commerce sales decreased 4%. Our food and beverage and outlet locations performed better with a 13% sales increase, respectively.

Driven by new locations, partially offset by low single digit negative comps.

Our wholesale channel, which had a particularly challenging year, decreased $31,000,000 or 10% as the specialty store business across our brands continues to struggle partially offset by increased sales to major department stores. Adjusted gross margin contracted 80 basis points to 63.2%, driven primarily by a higher proportion of net sales occurring occurring during promotional and clearance events in Tommy of Bahama, Lilly Pulitzer and Johnny Wise. Across our three major brands, and throughout fiscal twenty twenty four, consumer response was strongest to our new and innovative fashion products, and during our promotional and end of season clearance events. We believe the higher proportion of spending around key promotional periods represents a return to pre COVID spending habits. The decrease in gross margin resulted resulting from an increase in promotional and clearance sales was partially offset by a change in sales mix with a greater proportion of our sales coming through our direct to consumer channels. Our Merchant Brands Group was able to significantly increase gross margin through improved inventory positions and fewer promotional sales. Adjusted SG and A expenses increased 4% to $841,000,000 compared to $8.00 $7,000,000 in fiscal twenty twenty three. Which also included approximately $11,000,000 of incremental SG and A from the fifty third week.

During fiscal twenty twenty four, we incurred higher expenses related to the annualization of incremental SG and A related to 23 net new stores added during fiscal twenty twenty three Recent and ongoing investments in our business, primarily from the addition of 30 net new brick and mortar locations opened during fiscal twenty twenty four, including three new Tommy Bahama Marlin Bar locations. Costs related to some of the approximately five new brick and mortar locations that we expect to open early in the year and the Tommy Bahama, King Of Prussia and Charlotte, North Carolina Marlin Bar locations that opened last week. And the addition of the Jack Rogers brand acquired in the fourth quarter of fiscal twenty twenty three. The result of this yielded $136,000,000 of adjusted operating income or a 9% operating margin compared to adjusted operating income of $216,000,000 or 13.8% of net sales in the prior year. Decrease in adjusted operating income reflects the impact of our SG and A investments in a difficult consumer environment that resulted in decreased sales and lower gross margins. Moving beyond operating income, we benefited from $4,000,000 of lower interest expense resulting from lower average debt levels and a lower adjusted effective income tax rate.

Our tax rate was impacted by certain discrete items, including interest income associated with a refund received related to our fiscal twenty twenty net operating loss. With all this, we ended with $6.68 of adjusted EPS which was at the top end of our guidance. I'll now move on to the balance sheet. Beginning with inventory. At the end of fiscal twenty twenty four, inventory was up 5% on both a life LIFO and FIFO basis. The increase was primarily driven by the early receipts of shipments from Asia ahead of the effective date of some of the new tariffs. Ended the year with outstanding long term debt of $31,000,000 up slightly compared to the prior year, our $194,000,000 of cash flow from operations in fiscal twenty twenty four were outpaced by our elevated level of capital expenditures of 134,000,000 primarily related to the Lyons Georgia distribution center project, and the addition of new brick and mortar locations. Dollars 43,000,000 of dividends acquisitions, and changes in working capital needs. I'll now spend some time on our outlook for 2025.

For the full year, we expect net sales to be between $1,490,000,000 and 1,530,000,000.00 or down 2% to up 1%. Compared to sales of $1,520,000,000 in 2024. The sales plan in 2025 includes a total comp decline of between 24%, growth in our Lilly Pulitzer and Emerging Brands segments partially offset by decreases in our Time Bahama and Johnny Wez segments. By distribution channel, the sales plan consists of relatively flat sales in both the brick and mortar and wholesale channels. And a mid single digit increase in food and beverage. We also expect e commerce sales to decrease in the low single digit range. We anticipate gross margin will decrease in 2025 between 5,100 basis points primarily driven by the impact of tariffs and the expectation of lower proportion of full price direct to consumer sales. Similar to what we experienced in fiscal twenty twenty four, we expect the trend of our consumers responding strongly to our promotional events and off price offerings to continue in fiscal twenty twenty five. Related to tariffs, our gross margin forecast includes an unmitigated tariff impact of approximately $9,000,000 to $10,000,000 or about $0.45 to $0.50 per share on goods made in China.

Based on the recently enacted incremental tariffs currently in fact. As the entire tariff landscape becomes clearer, we will continue to put further mitigation steps in place. Our mitigation steps have and will continue to include receipt of inventory ahead of the effective date of new tariffs, sourcing shifts to countries with lower duty and tariff rates, sharing of tariffs with our vendors, merchandising shifts to more favorable duty products, and select price increases. Our strong brand management teams have a track record of successfully mitigating past tariff increases and are proactively implementing migration strategies related to the known tariff shifts. We expect to be able to materially mitigate the impact of the known and implemented tariffs by the spring of twenty twenty six. Through these mitigation actions. Moving beyond tariffs and gross margin, we expect SG and A to grow in the low to mid single digit range, primarily due to the annualization of incremental SG and A from the 30 net new stores added during fiscal twenty twenty four.

Investments in additional brick and mortar locations openings in 2025, including four new Marlin bars Our net new brick and mortar count is expected to increase by approximately 20 locations. And incremental costs related to the opening of our new distribution distribution center in Lyons, Georgia in the fourth quarter of twenty twenty five. While we expect our store count to increase in fiscal twenty twenty five, primarily due to [indiscernible] lease agreements in our store pipeline. We anticipate that our store opening pace will slow during fiscal twenty twenty five and into 2026 as we sign fewer new agreements and opened fewer Johnny Was and Southern Tide locations. At the same time, Tommy Bahama and Lilly Pulitzer will continue to be highest highly selective with any new locations. Also within operating income, we expect royalties and other income to be relatively flat fiscal twenty twenty five. Additionally, our fiscal twenty twenty five guidance includes the unfavorable impact of non operating items including anticipated higher interest expense at $7,000,000 for the year compared to $2,000,000 in 2024 or an approximate 20,000,000 to $0.25 EPS impact. The increased debt levels in fiscal twenty twenty five are due to our continued capital expenditures on the Lions Georgia distribution center and return of capital to shareholders exceeding cash flow from operations.

We also expect a higher adjusted effective tax rate of approximately 24.5% compared to 20.9% in 2024. Which benefited from certain unfavorable items primarily related to interest income from tax receivables that are not at expected to reoccur in 2025. The higher tax rate will result in approximately $0.02 0 to $0.25 per share impact. Considering all these items, including the $0.85 to $1 impact from tariffs higher interest expense and a higher tax rate expect 2025 adjusted EPS to be between $4.6 and $5 versus adjusted EPS of $6.68 last year. In the first quarter of twenty twenty five, we expect sales of $375,000,000 to $395,000,000 compared to sales of $398,000,000 in the first quarter of twenty twenty four. The sales plan in the first quarter includes decreases in our direct to consumer channels partially offset by an increase in our wholesale channel. We also expect decreased gross margin resulting from lower proportion of full price sales and the impact of tariffs. SG and A deleveraging largely from the impact of new stores as previously mentioned, higher interest expense of approximately $1,000,000 and effective tax rate of approximately 100 basis points lower than the first quarter, 2024 rate of twenty five point six.

We expect this to result in first quarter adjusted EPS between $1.7 and $1.9 compared to $2.66 in the first quarter of twenty twenty four. As spending on the investments we intend to make in our business, I'd like to briefly discuss our CapEx fiscal twenty twenty four and our outlook for 2025. In fiscal twenty twenty four, total capital expenditures of $134,000,000 included approximately $70,000,000 spent on the multiyear Alliance distribution center project. That we anticipate will require a total investment of 130,000,000 Similar to fiscal twenty twenty four, the most significant portion of our anticipated $125,000,000 of capital expenditures in fiscal twenty twenty five will relate to the completion of the Lions, Georgia distribution facility expected in the fourth quarter of fiscal twenty twenty five. The remaining capital expenditures in fiscal twenty twenty five will relate to the execution of our pipeline of new stores and Marlin bars including four expected to open in 2025. And increases in store count, primarily across Tommy Bahama Lilly Pulitzer, Southern Tide, TBBC, and store remodels and other maintenance capital. We expect the elevated level of capital expenditures in fiscal twenty twenty four and fiscal twenty twenty five to meaningfully moderate for fiscal twenty twenty six.

And beyond after the completion of the Lions Georgia project. Wrapping up our guidance, cash flow from operations are expected to be strong along with borrowings under on our revolver will provide us with ample room to fund the previously mentioned investments pay our quarterly dividend and fund share repurchases. In the first quarter of fiscal twenty twenty five, we initiated and completed a $50,000,000 10b5-one program where we repurchased 842,000 shares or approximately 5% of outstanding shares at what we believe will prove to be an attractive average price of $59.38 following our recent buying activity the Board authorized a new $100,000,000 share repurchase repurchase program on March 24, replaces our previous authorization. Thank you for your time today, and we will now turn the call over for questions. Stacy?

Thank you. We will now be conducting a question and answer session. You may press 2 if you would like to remove your question from the queue. Your first question comes from Ashley Owens with KeyBanc Capital Markets. Please go ahead. Good afternoon. So to start, I wanted to touch on the first quarter guide. I know you spoke to some of the comps and what you've seen this for. Thus far. Maybe if you could help us unpack some of the different headwinds you mentioned in the magnitude of each. Did it vary by brand at all? Then additionally, as we think about the balance of the year, some of the puts and takes in your assumptions for both the low and high end of the revenue guidance ranges. Thank you.

Well, on the relative strength of the brands, what I would tell you is that Lilly is the strongest performer right now and is actually doing pretty well right now. The rest of the brand the bigger brands are off a bit. I will point out that we did do have the Easter shift this year. So not entirely surprising to see March comping down a bit given that Easter shifted really completely out of March and in April. And then in terms of the guidance for the balance of the year, puts and takes on the top and bottom end of the revenue range.

Yes. And we do have new stores, which are helping offset the negative comp assumption. But again, we expect Lilly to comp positive, maybe some of our smaller brands to comp positive. And Tommy and Johnny was our plans have been comping a little bit negative.

Okay. Great. And then quickly as well, I'm hearing from some of the other brands we spoken to. We're hearing from wholesale partners that they're tightening some of the order books for the remainder of the year and becoming cautious again. Would be curious if this is something you've observed and if there's any variances by brand. Then additionally, just maybe a little bit on the details for the Johnny Woods plan. It was down nine in the quarter. So, where you're observing some of the soft spots, if regional or broad based, anything outside of the assortment that you want to or see opportunity to change the year? Then anything you can say on wholesale door increases as we move through the year?

I believe you mentioned before that the brand was reentering some accounts in 2025.

Yes. I think in terms of overall wholesale market, there is, I think, concern out there that some of the big retailers will pull back their orders a bit. On and we would look at that as being a potential headwind for sure in we've thought about that as we build our forecast On the other hand, the performance of our brands on the retail floor of our key whole accounts has been quite good, quite strong. Usually, that helps protect you against some of the downdraft. So a bit of sort of country indications, if you will, headwind of what they may be feeling in the overall market. But the sort of the tailwind that we might be getting from our our very strong performance. In fact, in a lot of cases, we're performing better in those stores than we are in our own stores. In terms of Johnny Was, we do hope to be able to read the wholesale business there, which has slipped a bit in years, especially in the majors and I think are optimistic about that, although again, you have the kind of the potential headwind of the market just more broadly pulling back there?

And I think that was did she have another question?

I think that come from him.

I mean, the only other thing would have been with Johnny was just anything outside of the assortment for opportunity to change this year.

Yes. Well, I think improving the performance of the retail stores is a big focus. I mean, overall, now, the market is very challenging, but we're doing everything we can from the way that we're visually merchandising the stores to the way that we're staffing them to the way that we're assorting them including overall shifting the assortment a little more towards our classic collection type product. But then at a more micro level trying to sort the individual stores better. So we've got a lot of plans there to try to improve the retail performance We also obviously hope to be able improve our wholesale book of business. The wholesale has a great contribution margin So every incremental dollar of wholesale does a lot for us on the bottom line. Those are kind of the key things that Johnny was And then the last one I'd call out, which I think we talked about maybe in previous quarters, but is really trying to improve the efficiency of the marketing spend. And that's not just for Johnny Was, but I would say a especially for Johnny Was trying to improve efficiency of the marketing spend.

Okay, great. Thanks. I'll pass it along. Thank you.

Thank you, Ashley.

Next question, Janine Stichter with BTIG. Please proceed.

Hey, you've got Ethan Saggy on for Janine. First question, just with all the macro uncertainty going on so far this year, are customers still responding positively to newness in the assortment? Or have they pulled back across the board? And would you say your assortment is more balanced with newness now or is there still some room to improve?

Yeah. No, we've got significantly more new newness in, especially on biggest brands, Tommy and Lilly have taken big steps up in the amount of newness they have this spring versus last spring. And it is the newness that's driving the business. When overall you're a little bit soft, sometimes it's hard to see strength but we do have strength in newness. We're glad we have the level of newness that we have because the customer is responding to it really nicely. In Tommy Bahama, we've got the new Barbados Pro [indiscernible] Ethan, if you like to be outside during the summer months, it's just a great product. It's it builds upon a lot of pass successes that we've had in shorts and really takes it to a new level. And then Lilly Pulitzer, some of the stars have been I believe it's called the Tazia dress, which is been a star our Disney capsule collection that we just released, I believe last week. And it's done really well. And that's a new thing for us We've had Disney product before in our Disney stores Disney Springs store, but this is available everywhere and it's done really, really well. And then the last example, the ultimate in newness really is Lilly Pulitzer menswear which we last did in a meaningful kind of way about fifteen years ago.

And that's been it's small. It's not going to be a huge part of business, but it's certainly performed very well and has created a lot of excitement and buzz around the brand. So yes, newness is good. And we got some newness and we're glad we have it.

That's great to hear. And then just one more from me. So besides needing more bullish consumer, just could you provide us some more detail on internal initiatives you're taking to improve conversion?

It's all kinds of things. Better product knowledge in the stores, trying to focus the customers or excuse me, the associates help them with the knowledge they need to better sell the products tweaking the assortments as we talked about It's all kind of blocking and tackling kind of [indiscernible] That we're trying to do, making improvements to the websites that make it easier to get from wherever you start. To check out and then easier to check out So I mentioned in the prepared comments that we've done major upgrades to the Tommy Bahama Lilly Southern Tide and Beaufort Bonnet websites. And all of those have a lot of features that are in there that are designed to help move people through to check out and then get them checked out.

Got it.

That's really helpful. I'll pass it on, and best of luck Okay. Thanks, Ethan.

Next question, Mauricio Serna with UBS.

Great. Good afternoon, and thanks for taking my question. First, maybe could you talk about what is like the CommCell and March that you've seen? It sounds like things got a little bit better relative to February. So just So just wanted to get a better understanding on that. And maybe can you help us Go ahead. Yeah. Okay. Great. I was just gonna say on on the sales cadence for the year, I think, you know, like, [indiscernible] average growth in the next couple of quarters, the next three quarters to be like roughly up 1%. Is that mainly a function of the store openings or is there you're embedding some sort of comp sales improvement in upcoming quarters? Thank you.

Okay. I'll let Scott answer the second one. But as to the first one, I would say March feels better than February did. You do have the big sort of non comp event of Easter shifting out of March and into April. And as you know, moved sort of as far as it can move and is about I think as late as it can be And usually, week, ten days before Easter or a big selling period, So moving that out of March and into April, you would almost expect March to have some challenges with the comp. So I think we're we feel better about March than February. It's still negative. But I do think pick up a lot of that in April. And wouldn't be surprised to see April come positive. In the first half, we have negative comps are a bit bigger. Second half third quarter, we had a lot of noise last year in the third quarter with two hurricanes and tropical storm. So we think, third quarter will be a little easier comp, but we still are more flattish there. And kind of that trend into the fourth quarter. So we have not we hope we've been very conservative in our comps.

Obviously, time will tell, but we don't have huge positive comps in the back half. We still have comps closer to flat in the back half and negative in the first half. The new stores will are helping offset some of that. We opened two new Marlin Bars last week and King Of Prussia, Pennsylvania and Charlotte, North Carolina and both are off to very nice starts. So we feel really good about those. And and do have some maybe a little little more front end loaded openings this year than in some of the past years. So hopefully we'll get a little more benefit late in the year from new stores that are opened during the year than we have in the past.

Got it. Very helpful. And then on SG and A, I recall like in the few earnings calls, had talked about trying to get some operating leverage, trying to control SG and A, but this year is still gonna be growing higher than sales. So I understand like what's the drivers of growth, but what are some initiatives that you're doing to kinda, like, try to like control the SG and A?

We're looking at everything, marketing efficiency, really marketing spend and where there have been some people reductions throughout [indiscernible] company. So we're really looking at everything we can. We're trying to negotiate hard with vendors on all kinds of contracts. Heavy initiative there. So we're looking at all all things. The a very good part of any SG and A increase is really increases really these new stores within having negative and having negative comps in our existing base. And so we're not getting your have to overcome that to get any leverage. So but it is a real focus Understood. Thank you so much.

Thank you, Mauricio.

Next question Paul Lewis with Citigroup. Please go ahead. Hey, thanks. It's Tracy Kogan filling in for Paul. I had a follow-up first on an earlier question about what you're seeing from your wholesale partners. I know you said others are hearing that they're expressing caution, but I'm wondering what your actually seeing in your order books. I think you had said your order books were positive as of your last earnings call, and I'm wondering if you're seeing changes there or if you haven't really seen it yet, but you maybe anticipate that coming. And then I have another question when you're finished with that one. Thank you.

We've now our latest projection has our wholesale business more flat up a little bit in spring and down just a little bit. But we're still booking. So I think we put a little caution into our projections of what our future bookings will be for the rest of the year. And as Tom mentioned, we are performing well on the floor, but [indiscernible] retail accounts probably are getting more cautious themselves. We are being more cautious on our inventory buys for the back half of this year. And then we'll probably do the same for going into next year. We'd rather be in a situation instead of having too much inventory, things bounce back where chasing a little bit. So we're approaching it with caution, not panic, but just caution.

Got you. That makes sense. And then I had a question on para I think you said that the dollar number, the 9,000,000 to $10,000,000 was unmitigated. And I wondered, so is the entire 9,000,000 to 10,000,000 in your guidance for this year? You assume no mitigation and maybe you might be able to mitigate some of that? I know you said thought you'd mitigate it by 2026, but just kind of wondering if there's some potential there that that comes in better if you can mitigate or maybe you've already built something in. Thanks.

We've built some mitigation in, but there were some more actions [indiscernible] our groups had identified. They're still negotiating with factories. We're still going through our pricing where we could change some retail prices for, especially the later part of of fall and into holiday. The there's still I would think it maybe gets a little bit better. But a lot of the mitigation will really impact spring of twenty twenty six, where we think we can be fully mitigated The challenge is we don't know what the true playing field is yet because we don't know what's going to happen in early April. And different countries might have tariffs. So we might be running to a that might not have been the right country to run to. So it is the unknown is difficult. But 9,000,000 to $10,000,000 we don't think it could get worse than that for this year. And hopefully gets a little bit better.

Got you. Thanks very much. Good luck, guys.

Thanks a lot, There are no further questions. I would like to turn the floor over to Tom for closing remarks.

Thank you very much, Stacy. Thanks to all of you for your interest. And we look forward to talking to you again in June. Hope you are well until then.

This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.