American Eagle Outfitters (AEO) Q2 2026 earnings call transcript

I would now like to turn the conference over to Alexis Tragas, Vice President of Corporate Communications. Please go ahead. Good afternoon, everyone. Joining me today for our prepared remarks are Jay Schottenstein, Executive Chairman and Chief Executive Officer, Jen Foyle, President, Executive Director for American Eagle and Airy, Ravi Fanawala, Chief Financial Officer, and Mike Matthias, Strategic Advisor. Before we begin today's call, I need to remind you that we will make certain forward-looking statements.

These statements are based upon information that represents the company's current expectations or beliefs. The results actually realized may differ materially based on risk factors included in our SEC filings. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. You can find our second quarter investor presentation on our corporate website at www. aoe-ink. com in the investor relations section.

Now, I'll turn the call over to Jay.

Thanks, Alexis, and good afternoon, everyone. The second quarter represented another important step forward for AEO. We built on the strength of our portfolio making progress at American Eagle, while Airy continued to deliver outstanding performance. The second quarter came in at the high end of our expectations, with revenue of $1.4 billion and comparable sales growth of 6%. Operating income of $211 million included in that tariff refund benefit of approximately $161 million.

We remain focused on driving stronger profitability across the business, and these results underscored the strength and relevance of our brands and the progress against our priorities. At Airy, which includes offline, momentum continued. Airy delivered revenue of 25% total growth and comparable sales growth 19%. Reflecting the broad-based demand across categories and channels. We remain confident in the long-term opportunity for Airy and our ability to reach new customers.

Turning to American Eagle, total revenue grew 1% with comps declining 1% in improvement from the first quarter. AEO men's posted its fourth and second quarter positive comps, seemingly continued traction and relevance. We are moving in the right direction. You have to remain's work to do. Our progress is fueled by our people. I'd like to extend my gratitude to our associates for their relentless dedication and commitment to our brands and customers.

Before I turn over to Ravi, I want to take a moment to thank Mike for his many years of service to AEO. Mike has been and will continue to be a trusted partner to me, and I'm grateful for his leadership, his commitment and the many contributions he has made to our business over the years.

I'm also very pleased to welcome Ravi to the team. He brings comprehensive financial operating expertise, a fresh perspective, and a deep understanding of what drives long-term shareholder value. As we look at the opportunities ahead, I'm excited about the breadth of our experience and judgment he brings to the team. As we work together to make AEO a stronger, more productive business over time.

Now I'll turn the call over to Ravi.

Thank you, Jay. I'm excited to step into the CFO law. I've been at AEO for just a few weeks, so I'm spending a great deal of time listening, learning, and getting to know the business and our teams. What attracted me to AEO was the strength of its brands, the connection to its customers, and the opportunity I see to create meaningful, long-term value for shareholders.

I'll be focused on driving durable value creation by connecting brand growth with disciplined execution, stronger profitability, and the thoughtful allocation of resources.

Those are the areas where I'm spending time on with Jay and the leadership team as I get deeper into the business. And still early, and I want to be thoughtful about drawing conclusions. However, I'm excited by the opportunity I see at AEO and look forward to sharing more about my perspective and priorities over time. I also wanted to thank Mike and the entire finance team for the support they've given me through this transition.

Mike has been extremely generous with his time and his knowledge of AEO and are grateful to have the benefit of his experience and perspective. Given how recently I joined the company, Mike will be taking you through the details of the second quarter results and the outlook. I've spent considerable time with Mike and the team reviewing the outlook and the assumption supporting it. I'm comfortable with the company's expectations for the balance of the AEO.

Now I'd like to turn the call over to Jen. Thank you, Ravi, and good afternoon, everyone. Before I get into the brand details, I want to share my appreciation to our entire organization. Their passion for our brand, our product, and our customers shows up every day, and I am proud of the work they are doing. Aryan offline delivered another outstanding quarter with broad strength across the business and tremendous response from our customers.

At American Eagle, we made progress from the first quarter with continued strength and mens. There's still work to do, yet I am encouraged by the opportunity ahead. Turning first to Aryan offline, we delivered another exceptional quarter. Comparable sales increased 19% and total revenue grew 25% to $536 million. What I am most excited about is the breadth and quality of that growth.

We sought strength across channels and categories with growth in core apparel, intimates, and activewear. There was a consistent demand in airy, apparel, and teats, tanks, fleas, and bottoms. Head to co-opeting, curated monthly drops, sleep to street, and wear now fabrications resonated with our customers. Mixed and matched summer bright stripes and a little leopard all worked.

We are also pleased with continued growth in offline's cloud fleas franchise, sports bras, and incredibly strong results across bottoms. I love seeing this breadth because it tells us the customers responding to the complete lifestyle offering, not just one category or one trend.

Our core intimate business also remains strong throughout the quarter. We continue to win with what Aryan has stood for from the beginning, real comfort. Customers responded to our focus on fabrication and the 20 years of happy booties anniversary campaigns. In July, we also introduced our new float bra collection, designed for weightless feel. Float complements our structured bra franchise and gives customers a new way to experience airy signature comfort.

Our customer base continues to grow. We are expanding the airy community and deepening their engagement with us. Our airy real makers continue to be an important part of that connection. Across the quarter, we nearly doubled the size of the advocate program and found fresh new ways to bring new customers to the brand and engagement.

As we move into the third quarter, we are doing something I love to see. We are copying the comp. We are sustaining growth against increasingly strong comparisons and seeing strength across categories while continuing to expand our customer base. So now, turning to American Eagle, we are seeing steady traction as we actively work to refine our strategies. We delivered sequential improvement from the first quarter, yet there is opportunity to build on our progress and further accelerate our performance.

Men's continues to deliver as we posted our fourth consecutive quarter of positive comps. Growth was driven by strength across all bottoms categories with tops continuing to meet our expectations. This demonstrates that our focus and strategies to restore top line growth in the A. E. men's business is paying off. In women's, customers responded well to our focus on outputting, particularly pairing tiny tops with oversized bottoms.

We leaned into the cargo trend and fashion bottoms performed positively. In women's denim, new fashion fits, including wide leg straight and low rise, gained strong acceptance. And moving forward, we recognize where there is still opportunity to restore consistent growth across categories.

A. E. 's brand awareness and cultural significance remain strong. And the active customer file continues to grow. Our marketing strategies are built on multiple touch points, tapping into differing interests, rituals and experiences. We have strategically invested in our presence at the mall as a place to shop, gather and connect on campus with our sorority partners to own a stake in Rush Talk.

And in sports on the biggest stage of the year with global brand ambassador, Lamine Lamont. We spent the last four quarters investing in brand awareness to drive purchase consideration. And now we are shifting our marketing dollars into conversion driving tactics. Ultimately, this is about showing up for our customers during the biggest moments, building the wardrobes while building our community.

And looking ahead to the second half of this year, our strategic priorities across A. E. O. are clear. To deliver best in class products, maintain our investment in marketing tactics that drive conversion, remain focused on our inventory management and improve margin health. We are also making strategic investments in product and marketing as we build towards A. E. O. 's 50th anniversary in 2027.

We enter the third quarter with Momentum and Aryan offline, a game plan to make clear improvements in American Eagle, and a highly engaged customer community across all brands.

And I'm excited about what the brands can accomplish together. Aryan's consistent growth, the opportunity we see in offline, and American Eagle's deep customer relationships give us multiple ways to serve our customers across more categories, occasions, and moments in their lives. Each brand has its own identity and distinct opportunities. Together, they give A. E. O. a springboard to grow. We have talented teams across our stores, distribution centers, and corporate offices, bringing these brands to life every day. And I have tremendous confidence in what we can achieve together.

Thank you all of our associates for all of your hard work. With that, I'll turn the call over to Mike.

Thanks, Jen, and good afternoon, everyone. Different by strong momentum across Aryan, our second quarter revenue and operating income hit the top end of our guidance.

As you heard from Jay and Jen, we're zeroed in on opportunities for the A. E. Brand, and are continuing to fuel Aryan's exceptional growth.

I'm going to take you through the financial results, including the impact of the tariff refunds recognized in the quarter, and then discuss our outlook for the balance of the year. All reported results include the impact of tariff refunds.

Second quarter consolidated revenue, $1.4 billion increased 8% to last year with comparable sales, growing 6%. Ary strong business continued with total sales, growing by 25% and comparable sales up 19% with growth across channels. A. E. total sales increased 1% with comparable sales declining 1%. The gross profit dollars of $672 million rose 34% from last year, and gross margin of 48.7% increased 980 basis points.

Included in gross profit this year is a net benefit of $179 million related to tariff refunds, which drove 1,300 basis points of the gross margin expansion.

Merchandise margin is the leveraged 330 basis points with improvement in A. E. , offset by markdowns in A. E. , as we previously guided to for the second quarter.

S&A dollars increased 19% and 290 basis points to a rate of 29.6%, inclusive of $18 million of incentive expense attributable to tariff refunds. The remaining increase is primarily resolved to plan investments in advertising.

The appreciation decreased slightly every year at $52 million compared to $55 million last year. We recorded a second quarter operating profit of $211 million compared to $103 million last year, included in operating profit this year as a net benefit of $161 million related to tariff refunds.

Interest expense increased primarily due to the sale of tariff claims as discussed last quarter. Other income increased due to unrealized gain on equity method investments.

The second quarter tax rate was approximately 25% and EPS was 79%. Consolidated inventory costs was up 14% with units up 9%. The increase in costs includes the impact of incremental tariffs this year. Unit inventory plans will continue to be rebalanced between brands and categories for the remaining of the year. And the second quarter as Jay noted, we continue to make long-term investments in our business while returning cash to shareholders.

Second quarter cap X total $66 million in the company returned 21 million to shareholders during the quarter via the quarterly dividend.

We ended the quarter with approximately $148 million in cash and investments and $783 million of total liquidity, including our revolver.

Before turning to our outlook, I want to note that Ravi has been engaged with the team in reviewing our plans and expectations for the balance of the year. The outlook I'll discuss today reflects the company's current expectations.

So the third quarter we expect comparable sales growth in the mid to high single digits with the area and offline continuing in the high team to 20% range in American Eagle approximately flat. Gross margin is expected to be similar to last year with full year gross margin up year over year.

Operating income for the third quarter is expected to be in the range of 110 to $115 million with SNA expense up in the high single digits.

The tariff rate assumption for the rest of the year reflects the section 301 tariff implemented in late June. For the full year, we expect operating income in the range of 540 to 550 million based on consolidated comparable sales growth in the mid single digits.

In closing, we're committed to building on the momentum and area and offline, accelerating improvement at American Eagle, and unlocking greater profitability across the business. With that, we'll open up the questions.

Thanks. Look, we're seeing sequential improvement in denim. Sorry, I have a little bit of a cold. So. But we are seeing sequential improvement. As I mentioned in my last earnings call, we definitely need to pivot. We needed to pivot and we pivoted quite nicely into the fits that we're working 100%. Really it was low rise that we really wanted to get into that business. And as you saw that that was our marketing launch for back to school. So really excited about how we repositioned denim.

What we are needing to work through right now is just some of the older fits and really just rebalancing our inventory. It's as simple as that. And our numbers reflect the guide in a as we look to airy. I mean, we continue to launch new ideas and airy. All categories are working. All categories are firing. We can't ask for more. I mean, these numbers, you know, we're proving. I love what I said, right? We're proving we can comp the comp.

And I think the team's really geared up for holiday. We're seeing, you know, nice continuation of the sales comp again, reflective in the guide. And with all our new launches, we relaunched our booty campaign, our undies campaign, intimates is gaining share, our float bra launch. We're going to really work on bra innovation. That's a new playbook for us.

We're going to reinvigorate it because we're excited about some new ideas and bras. I think we're really going to compete on that end with really launching ideas that I think our customers are going to really embrace. So some new ideas that are coming your way, and that will build into next year. And then, of course, apparel. Apparel has been really on fire.

The numbers are incredible, and they like completing the outfit, right? We're building them from inside out, and that's what we do in airy. And offline certainly has seen incredible growth as well.

Okay. Thank you so much.

Sure. We've seen a little pressure, as Mike mentioned, on seasonal ideas in AE. So we continue to see a little of that pressure as we go into Q3. So we're working through that again, right sizing our inventory. And airy's been doing an outstanding job leveraging this customer base that's growing our brand awareness. That's another thing that I didn't mention in my last answer, the brand awareness in airy. We're still only at 59%, albeit it's growing. There's still a lot of opportunity for runway in airy.

But pivoting back, like as we think about the promotional cadence airy, has done a really nice job balancing out their promotions.

Leveraging the newness. They've been doing new drops. And we've been easily able to reconstruct the promotional activity between brands so that we're balancing this out.

Hey, Kelly. I can take that. I think Jen mentioned or prior answer that calm guidance by brand is in line with where we are quarter to date. So a relatively flat, some sequential improvement from what we just reported for Q two area in the high teams to 20% again, similar to what we just reported in Q two. So the trend continues there. And also as Jen said, I mean, you know, copying the comp and actually maintaining com trend against tougher compares, which is what the team has been going after. So we have a good proof point here, quarter to date an area on that front.

And then yes, you know, the merge margin performance in Q two and so the mark downs in 80 that we guided to back in May.

Alongside, you know, our 45 to $50 million guidance, those did come through kind of in line with expectations and then we're resulting in us hitting that high end of our op in guide. And then for Q three, we do have, as Jen said, as we're definitely still looking to rebalance the inventory. We have some mark downs in the Q three, merge margin guide for some potential mark downs as we go through that work.

And that's covered in our gross margin guide a relatively flat to the third quarter in areas continuing its nice performance there on the merge margin line. So again, a little bit of a mixed brand output where areas maintaining strength in margin. You know, definitely getting back to some strength and we do have a little bit of mark down coverage for some of this inventory work that still needs to be done.

And then just understanding with the tariff refund, I noticed you said something about, you know, I mean, if you're accruing some some higher incentive comp here. Can you just kind of walk through how that plays out in the high single digit. As she may guide, I think it's for three Q apologies if I'm missing for the details here. Is that like related to the higher intent of comp marketing anything else there? And then how does this sort of play on the fourth quarter as well? Thanks. And that's all I got.

Sure. Yes, we did book in the second quarter against their refund. Some incentive comp commensurate with the refund in line with our full year income targets tied to those incentive plans.

The accrual for the back half third and fourth quarter. I think I've got into it now back in March and then again in May that that more that elevated accrual is up against more because it's up against a lower than historical result last year. So this pop around in terms of that accrual is kind of more average or more historical. The impact of there's no impact in the third and fourth quarter to anything kind of refunds.

So that was this isolated against the refund benefit that we saw in the second quarter, any kind of incremental number. So the back half as we got in third quarter up high single.

That includes again the impact of that more historical or average incentive accrual versus a lower accrual in history last year.

And with the rest of the line advertising relatively in line. To the rate of sale and a third quarter some leverage in the fourth quarter. As we pass through look at FCA on a go forward on 12 month basis. You know, advertising we're lapping this elevated spend.

After you know, as a this quarter as we look forward on a go forward basis, advertising will be a leverage line item in 2027. And as we normally get past the next couple quarters of a bit of an half as an orange is incentive accrual impact. That will also be a leverage line item as we go into 2027. So as we look at a 12 month basis and for the full fiscal 2027 period.

We're looking to be back to position where we're leveraging FCA at a minimum at a mid single digit comp, but targeting a low to mid single in total. But again, the team and Robbie will provide more teller on that go forward. And specifically when we give guidance for 27 in March as usual.

Women's bottoms has made improvements. So why we still mix the business actually other bottoms, so that means pants. A car goes, for instance, have done very exceptionally well, but there's still some balance to do in denim. But we are excited about the momentum in denim and what we've seen headed into Q three. So we're excited about that.

It's primarily concentrated on some seasonal businesses, shorts being the number one. And there is some fashion that we need to ensure that we're clearing.

All right, great.

Thanks, Dana. I think, you know, with us reporting today, we're through the full Labor Day period and Labor Day shift. So it's a good sense of kind of where we are quarter to date accounting for those shifts. And we'll pass really all the peak back to school periods, too. Even other were shifts within August and shifts here in early September.

For the most part, we've got line of sight to those. So our, you know, again, the guidance by brand and in total kind of mid single digit comp, mid to high single digit comp for the quarter and the guidance by brand is commensurate with that quarter day trend. And at this point, we've seen for the most part any kind of impact from shifts.

Stores versus online business. I'll start with the area areas, you know, positive across the board. I think I use the description last quarter that all the conditional formatting is green. That's still the case that we're seeing here for today. Stores, digital traffic in both channels.

You are UPT, AOV, customer accountants, you name it. All going in the right direction with strength across channels, strength across categories, strength across metrics.

I eat a flattest result with guidance. Stores are definitely on the lower side of that and digital is stronger. So that's what we've kind of seen for a few quarters now.

Seeing that quarter to date here is still in Q three. Stores have gotten better. So, you know, against the negative one comp in Q two, what we've seen quarter to date here in Q three is stores coming back stronger. We always, we, we tend to see that during these peak periods, we are a destination in the mall during back. It's going holiday. We'll see how that plays out the rest of this quarter.

So, a little more rebalancing between channels versus what we saw in the second quarter, but stores still on the lower side of the average.

Thank you. Yeah. You know, in both brands, we're very excited about, honestly, the brand health for both brands has been extremely positive. So, let's start with that. So, what we're working on the American Eagle side is really converting those customers and entertaining them. And we're very focused on getting them to stores. This is when we really gear up. I do think long legs are going to build into the, into Q3 and into Q4. So, with AE, that should be, you know, hopefully positive and some optimism there.

Again, still eight weeks to go in this quarter, but we're not into full long length yet either. So, I think we have some opportunity there. The key items that the teams have worked through, the new ideas, all of our fun ideas that we do during the holiday season in both brands. I think we're really going to excite the customer there. Color, optimism, fun.

Airy is going to continue to do its drops, as well as AE. All the newness drops have been working. It's new ways to re-engage our customers and get them into the stores. And I think, I think we have a lot brewing for the holiday season.

We're excited what we're seeing and intimate. There is some market share gain. And we're really focused on newness and bras as we move forward. Sports bras have been working well, other bras. But we really want to gain credit for all the innovation we do in our core bras. And I think there'll be a lot of work and some new innovation that you'll see on the go forward. Keeping in mind as we head into Q4, we definitely dive into other categories as well. It's a gift-giving season. And I think Airy does it best.

We're not going to really disclose our ad spend contribution. However, you know, if I looked at a brand awareness, which is roughly 76%, look at that gap right there and think about the concept area is able to drive. So I'm pretty excited about the opportunity there. Our goal is to get it, you know, at least equal, if not exceed the brand awareness that we see in our portfolio. What I will say, the teams are up to everything. I mean, from in-store events to our double down on digital spend, which I think has been really optimized, you know, connecting with our customers, building on our airy real makers, building on our advocate C program.

Everything is really begun. You know, we're firing on all cylinders and the customer and the community is really responding. This is what where the magic happens in airy. This community that we're able to build and retain and add the spend, our spend is up for customer, double digits in line with these numbers that you're seeing. So I think the team, you know, it's our secret to us. So we don't share that, but I think the team knows how to deliver on this.

And then just a quick clarifier for Mike and Ravi, buying an occupancy or BOW. They leveraged about 150 basis points last quarter, but we're roughly flat this quarter. I'm curious if there's anything to call out there regarding distribution costs, occupancy or anything else like that. And, you know, is that leverage plan to come back in the back half? Thank you.

Yeah, I think for the second, what you'd expect in the third and fourth quarter to be similar to second quarter. First quarter is a little bit of shift between things with kind of disposition or the wind down of our quiet.

Third part of the logistics business. So the BOW line that expect from here to be to have a similar result from a leverage perspective that we saw here in the second quarter. With more work on danger constantly, you know, there's rent, delivery, distribution costs that are in that bucket of expenses. There's cross functional teams still in place working on all those line items that we've since, you know, our expense initiative a few years ago and that's still in place.

That helps a lot. That's the block.

Can you unpack your expectations for gross margins a little further? How do we think about the puts and takes in Q three and if that differs from your two four plans? I know that inventory cleanup is ongoing. So curious if that's done with in Q three or if that's something that spills over into Q four.

Yeah, I'll provide some additional detail there. So I think in general, we're looking for areas continued strong performance on the merge margin line to continue. And again, definite improvement from the first half of the year, some placeholder markdowns to cover us as we work through some of this inventory balancing. I just hit the BMW line item.

Similar expectations in the third and fourth quarter as the second quarter kind of been relatively in line to last year as a rate. I think the other moving parts, we do have some head in there. I'll call it or the potential for some freight fuel surcharge. In fact, so we believe we're covered there. We don't know for sure exactly where things are going. Oil is over $100 a barrel again, but we want to make sure we're covered there. Not surprised by anything. Nothing significant to date, but, you know, the, the potential of that to happen is covered.

And then from a tariff impact perspective, you know, Q three will be kind of a negligible difference to last year again with these. You know, the kind of the rates in place just announced in June versus kind of a partial quarter impact last year, the dollar difference is pre negligible in the third quarter. And then at that 12 and a half rate for fourth quarter up again, it's kind of full of either tariffs could be a little upside, but we're also, you know, we know that there's still.

Kind of analysis and studies being done, potential person to increase to those tariffs in the fourth quarter. So I'm the impact of the fourth quarter. It doesn't happen could be some upside there. So growth margin in general, or, you know, all those in the now relatively flat for the third quarter.

Modest improvement in the fourth quarter in the guide.

Thanks so much. Maybe for Robbie and my, if our math is right. It just looks like you're trimming the full year even guidance just slightly compared to last quarter. So someone has a fault to the last question. I'm just trying to understand it. Is that just higher incentive a cool or has your view on other pieces of a string A or gross margin change at all.

Now you're right. I would say we are trimming the back half guide a bit from where we were back in May. I said the number one driver of that, if you remember the color or her expectation was a to be up like low positive or low single digit positive. We're given flat guidance for the balance of the year. So that's a piece of it. A little bit of markdown placeholder as we described alongside that reduction to revenue expectations.

Flip side of that, at least for the third quarter, airy at a high team to 20 is ahead of where we thought, but the mix of that. Still, you know, taking a little bit of a bit of the income line based on the mix of that comp performance between brands.

The SGA line isn't much different. We talked kind of in line with sales mid to high single. So a few million dollars there that we're still working on, but not a big driver of the guidance trim. And in fourth quarter, it's similar essentially. We're guiding a to flax actually fourth quarter, our private prior guidance was a still low single positive for the back half and total, which meant fourth quarter as well.

And we're looking at airy kind of more in the high single to low double range, which is the same place we thought. So the trim both quarters is really. This a brand flax expectation versus upload single and a little bit of markdown kind of placeholder against that. I mean, in total, we are, you know, the third quarter guide implies apply, implies similar income result to last year. So much, much improved from the first half of the year.

With work to do fourth quarter implies some operating rate improvement and kind of mid to high single digit income increase. So, again, 12 month basis go forward, making progress here in the back half, even with a little bit of reduction to guide. And, but positioned and positioning things in general cross cross margin and SGA plans to be back to, you know, revenue outpacing expense.

I think growth outpacing revenue growth and operating leverage again now that is begin to, you know, the back half into holiday and in the next year we're past, you know, parrot impact for the most part, even though there'll be some in and out there, but. Mostly absorbed this point. SGA structured the leverage, like I said, at a low to mid single digit level in the next year. So we're confident that we get into the holiday period and then into next year that we'll be. You know, back to income outpacing revenue growth and some operating rate improvement on a 12 month forward go. 12 month forward basis.

I think traffic's a big one. I think I can wait here to, but I think look you start with the mix of what the product strategies first. I think the team feels good about where things are going forward. We're going to build on the sequential improvement. We've seen quarter over quarter here. We're given a flat guide based on quarter day performance in Q three or playing that forward into holiday. I think the team hopes to exceed that expectation to the balance of this year plans in place next year to comp negative results.

But, you know, being prudent about how we plan that and not, you know, this is this inventory work is making sure we're not getting out of our skis in terms of inventory again. The comp expectation for the first half next year, even though we're up against, even though we're up against negative. So we want to make sure we're positioned to, you know, chase trend and not get to ahead of things there. So I think, you know, I guess the intention go forward is for a on the metric side, be driven by product strategies first.

I think the marketing rebalancing we've been talking about. We're just, you know, first, first, you know, the third quarter here is our first path that's rebalancing that spend toward what was kind of top of funnel consideration brand awareness to, you know, definite, you know, conversion driving purchase behavior type spend on the digital marketing performance marketing away from bigger campaigns and top of funnel and we're seeing some traction there with sequential improvement. We've seen so far quarter of your dates. Teams are building upon that into holiday and then next year as well. So I think traffic convert traffic against.

Traffic and stores and conversion against that traffic are definitely focuses alongside product strategies go forward.

Marty, I think you could have taken this call for me. All of the above that was perfectly said. Really all bras are working. And we're going to really look to build out each franchise and find new ways to navigate bras. That's what we're up to right now. We do see these set selling. We love how they go back to the apparel.

And you'll see more of each category and probably some naming and claiming down the road. We have some excitement as we head into the back half and we go into really spring and really into back to school with some even. We have plans. Let me just say all the way through. We're already planning how we're going to try to cop next back to school. We're going to do that with some of these ideas. Excited what the teams are delivering as far as innovation, novelty, laces, new laces.

They're doing an excellent job. And yes, this match back is definitely an opportunity. And is this sexier look and intentional look? And is it something that you can carry over to EGLE without getting away from the core DNA of the brand? Absolutely. But we have to do sexy in our way. I think we do it in a different way. And I think it's relevant. But I think there's ways to do it that can be cool and understandable for our customer base.