Total comparable store sales increased by 13% globally, with digital commerce growing 20% and brick-and-mortar up 12% in North America. Europe saw 10% comparable store sales growth, and Asia achieved an impressive 18%, demonstrating strong consumer demand and effective retail strategies.

Capital expenditures increased significantly to $187.3 million for the quarter, up from $33.4 million in the prior year, primarily for real estate, store openings and renovations, and enhancements to information technology systems. This reflects a strategic focus on strengthening the direct-to-consumer model and global infrastructure.

The company is in the early stages of its 'Next Generation Transformation project,' a large-scale, multi-year global initiative to redesign end-to-end processes and implement new technology systems. This strategic pivot aims to optimize inventory, increase speed to market, and further enable a direct-to-consumer-oriented model, with $11.0 million in related charges incurred this quarter.

Selling, general, and administrative (SG&A) expenses as a percentage of net revenues declined by 100 basis points to 55.2% year-over-year. This indicates effective cost management and operating leverage on higher net revenues, despite increased marketing investments and variable selling expenses.

Gross profit margin increased by 180 basis points to 72.3%, primarily driven by average unit retail (AUR) growth, favorable foreign currency effects, and lower cotton costs. This demonstrates management's ability to enhance profitability through strategic pricing and diversified sourcing, offsetting tariff pressures.

Net restructuring and other charges increased to $19.3 million for the quarter, up from $7.4 million in the prior year, primarily due to severance costs and charges related to the Next Generation Transformation project. These charges reflect ongoing efforts to streamline operations and pivot towards a direct-to-consumer model.

The company highlights ongoing military conflicts, including Russia-Ukraine, Israel-Hamas, and Red Sea attacks, as significant risks that could amplify inflationary pressures, foreign currency volatility, and impact consumer sentiment. These factors create uncertainty for global economic stability and supply chains.

The recently signed 'One Big Beautiful Bill Act' in July 2025 includes provisions effective for Fiscal 2026, and the company is currently evaluating its future impact on consolidated financial statements. This introduces regulatory uncertainty regarding tax obligations and could affect future earnings.

While not significantly impacted yet, the company acknowledges risks from potential tariff increases, port congestion, and disruptions to major waterways, which could lead to shipping delays and higher freight costs. Management is implementing mitigation strategies like supply chain diversification and pricing actions.

Achieving 13% total comparable store sales growth, with digital commerce up 20% and brick-and-mortar up 12% in North America, demonstrates strong market acceptance and effective competitive strategies. This performance is notable given the challenging and promotional retail environment mentioned in the MD&A.

The 180 basis point increase in gross profit margin to 72.3%, primarily driven by average unit retail (AUR) growth, indicates the company's ability to maintain pricing power. This suggests strong brand equity allows for price increases even amidst competitive pressures and inflationary environments.

The company's business is diversified across North America, Europe, and Asia, and through retail, wholesale, and licensing channels, which allows it to maintain a dynamic balance. This diversification helps mitigate risks associated with performance fluctuations in any single geographic area or distribution channel.

SG&A expenses as a percentage of net revenues declined by 100 basis points to 55.2% for the three months ended June 28, 2025. This improvement reflects the company's ability to achieve operating leverage on higher net revenues, effectively managing costs relative to sales growth.

Gross profit margin increased by 180 basis points to 72.3%, primarily due to average unit retail (AUR) growth, favorable foreign currency effects, and lower cotton costs. This indicates successful execution of strategies to optimize product costs and pricing, enhancing overall profitability.

Inventories increased significantly to $1.222 billion as of June 28, 2025, from $949.6 million at March 29, 2025, and operating cash flow was negatively impacted by unfavorable changes in inventory. This was driven by higher in-transit inventory, product, and freight costs, suggesting potential challenges in inventory optimization.

The company is undertaking a multi-year global project to redesign end-to-end processes and implement a suite of technology systems to pivot towards a direct-to-consumer model. This initiative, which incurred $11.0 million in charges this quarter, aims to significantly improve operational efficiency and market responsiveness.

Capital expenditures increased substantially to $187.3 million, with a portion allocated to enhancements of information technology systems. This reflects a commitment to modernizing technological capabilities to support strategic growth initiatives and digital transformation efforts.

Digital commerce comparable store sales grew by 20% in North America, 11% in Europe, and 35% in Asia, contributing significantly to overall revenue growth. This performance underscores the success of the company's digital transformation efforts and its ability to engage consumers through online channels.

The Board approved an additional $1.5 billion for the common stock repurchase program, bringing total repurchases for the quarter to $250.0 million. This aggressive capital return strategy reflects management's confidence in the company's intrinsic value and commitment to enhancing shareholder returns.

The quarterly cash dividend was increased from $0.825 to $0.9125 per share, payable on July 11, 2025. This dividend increase signals management's confidence in sustained profitability and its commitment to providing consistent returns to shareholders.

The company issued $500 million of 5.000% Senior Notes due 2032 in June 2025, increasing total debt to $1,637.0 million from $1,142.6 million as of March 29, 2025. The proceeds are intended for general corporate purposes, including potential repayment of existing debt, indicating a proactive approach to capital structure management.

The company explicitly mentions its ability to achieve goals regarding citizenship and sustainability practices, including those related to climate change, human capital, and its supply chain, as a forward-looking statement. This indicates an ongoing focus on environmental and social responsibility within its strategic objectives.

Management confirmed the effectiveness of its disclosure controls and procedures as of June 28, 2025, based on the COSO 2013 Framework. This demonstrates a commitment to transparency and sound governance practices, ensuring accurate and timely reporting of financial information.

The company's forward-looking statements include its ability to achieve goals regarding citizenship and sustainability practices, encompassing human capital and supply chain. This suggests that ESG considerations are embedded within the company's long-term growth strategy and operational planning.

The company acknowledges ongoing inflationary pressures, high interest rates, and foreign currency volatility continue to impact consumer discretionary income levels, spending, and sentiment. This challenging macroeconomic backdrop necessitates adaptive strategies to maintain sales momentum.

Ongoing military conflicts in Russia-Ukraine, Israel-Hamas, and the Red Sea, along with diplomatic tensions, are identified as factors adversely impacting the global economy. These events contribute to supply chain disruptions and volatile foreign currency exchange rates, creating an uncertain operating environment.

The retail industry is characterized by increased promotional activity, particularly in the U.S., and consolidations within the department store sector. This competitive environment requires the company to continuously adapt its product innovation, pricing strategies, and customer engagement to maintain market share.