Earning Date, Transcript Summary & Report

Revenue Increase Analysis: In quarter four, total revenue excluding the 53rd week increased 8% or 9% on a constant currency basis.

Operating Margin Improvement: Operating margin increased 40 basis points to 28.9%.

Earnings Per Share Increase: Earnings per share increased 16%.

Stock Repurchase Summary: In quarter four, we repurchased $332 million of stock, bringing total repurchases in 2024 to $1.6 billion.

Revenue Increase Analysis: Total revenue for the full year 2024 was $10.6 billion, with an 8% increase excluding week 53.

Operating Margin Improvement: Adjusted operating margin increased 50 basis points to 23.7%.

Earnings Per Share Growth: Adjusted earnings per share increased 15%.

Strong Financial Performance: Since 2021, revenue has grown at a 19% CAGR, adjusted operating margin increased by 170 basis points, and adjusted EPS grew at a CAGR of 23%.

Strong Outerwear and Accessories Sales: In quarter four, outerwear and second layers performed well for both women and men, and bags continued to be well-received in accessories.

Product Innovation Launch: We launched several new innovations, including the Glow Up Tight and Daydrift trousers, which received strong initial responses.

Square Footage Expansion Plan: We plan to grow square footage by approximately 10% in 2025, driven by new store openings and optimizations.

Store Expansion Plans: In 2025, we expect to open 40 to 45 net new company-operated stores and complete approximately 40 optimizations.

Net Revenue Increase: In Q4, total net revenue rose 13% or 14% in constant currency to $3.6 billion, with a 4% increase in constant dollar comparable sales.

China Revenue Growth: China Mainland revenue increased 38% or 39% in constant currency with comparable sales increasing 27%.

Rest of World Revenue Growth: In the Rest of World, revenue grew by 22% or 26% in constant currency, with comparable sales increasing by 17%.

Gross Profit Margin Increase: Gross profit for Q4 was $2.2 billion or 60.4% of net revenue, compared to gross margin of 59.4% in Q4 2023.

Cash Reserves Status: We ended the quarter with approximately $2 billion in cash and cash equivalents.

Share Repurchase Update: We repurchased 938,000 shares in Q4 at an average price of $354, with approximately $1.3 billion remaining on our repurchase program.

Consumer Caution Impact: Increased consumer caution due to inflation and economic concerns, leading to slower traffic across the industry in the U.S. during Q1.

Modest Revenue Growth Outlook: Despite strong guest response to new product launches, the overall U.S. revenue growth is expected to be modestly positive for 2025, indicating potential challenges in driving significant growth.

Brand Awareness Challenges: Unaided brand awareness remains low in key markets, with single-digit awareness in France, Germany, and Japan, suggesting a need for improved brand penetration.

Gross Margin Decline Forecast: Gross margins are expected to decrease by approximately 60 basis points in 2025 due to fixed cost deleverage, foreign exchange headwinds, and increased tariffs, indicating potential pressure on profitability.

SG&A Expense Deleverage: SG&A expenses are projected to deleverage by 40 to 50 basis points in 2025, reflecting ongoing investments that may impact short-term profitability.

Operating Margin Decline: Operating margin is expected to decrease by approximately 100 basis points in 2025, highlighting challenges in maintaining profitability amidst rising costs and investments.