Fossil Group Inc (FOSL) 2024 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen and welcome to the Fossil Group Second Quarter 2024 Earnings Call. [Operator Instructions] This conference call is being recorded and may not be reproduced in whole or in part without written permission from the company.

女士們、先生們，下午好，歡迎參加 Fossil 集團 2024 年第二季財報電話會議。【操作須知】本次電話會議正在錄音中，未經公司書面許可，不得全部或部分複製。

Now, I'll turn the call over to Christine Greany of The Blueshirt Group to begin. Christine.

現在，我將把電話轉給 Blueshirt Group 的 Christine Greany 開始。克里斯汀.

Thank you. Hello, everyone and thanks for joining us. With us today on the call, are Jeff Boyer, Interim CEO; and Andy Skobe Interim CFO.

謝謝。大家好，感謝您加入我們。今天參加電話會議的有臨時執行長傑夫·博耶 (Jeff Boyer)；和安迪·斯科比臨時財務長。

I would like to remind you that information made available during this conference call contains forward-looking information and actual results could differ materially from those that will be discussed during this call.

我想提醒您，本次電話會議期間提供的資訊包含前瞻性信息，實際結果可能與本次電話會議期間討論的結果有重大差異。

Fossil Group's policy on forward-looking statements and additional information concerning a number of factors that could cause actual results to differ materially from such statements is readily available in the company's Form 8-K, 10-Q and 10-K reports filed with the SEC.

Fossil Group 關於前瞻性陳述的政策以及涉及可能導致實際結果與此類陳述存在重大差異的多種因素的其他信息，可在該公司向SEC 提交的8-K、10-Q 和10-K 表格報告中輕鬆取得。

In addition, Fossil assumes 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.

此外，Fossil 不承擔公開更新或修改任何前瞻性聲明的義務，無論是由於新資訊、未來事件或其他原因，除非法律要求。

During today's call, we will refer to constant currency results. Please note that you can find a reconciliation of actual results to constant currency results and other information regarding non-GAAP financial measures discussed on this call in Fossil's earnings release, which was filed today on Form 8-K and is available in the Investors section at fossilgroup.com.

在今天的電話會議中，我們將參考固定匯率結果。請注意，您可以在Fossil 的收益報告中找到實際結果與固定匯率結果的對賬，以及有關本次電話會議中討論的非GAAP 財務指標的其他信息，該報告今天以8-K 表格形式提交，可在投資者部分取得：化石集團.com。

And with that, I'll now turn the call over to Jeff.

現在，我將把電話轉給傑夫。

Thanks, Christine, and good afternoon, everyone. Thanks for joining us. I'd like to welcome Andy Skobe, our newly appointed Interim CFO to the call. Andy joined us on July 1, and has quickly ramped up on our business, allowing for a seamless transition into the CFO role.

謝謝克里斯汀，大家下午好。感謝您加入我們。我歡迎我們新任命的臨時財務長安迪‧斯科比 (Andy Skobe) 參加電話會議。Andy 於 7 月 1 日加入我們，並迅速擴大了我們的業務，從而能夠無縫過渡到財務長的角色。

I'll begin with a high-level overview of our financial results and business performance then I'll do a deeper dive on our TAG Plan and why we're confident it will position Fossil to return to profitability. Then I'll pass the call to Andy for a more detailed look at the financials.

我將首先對我們的財務表現和業務績效進行高度概述，然後深入探討我們的 TAG 計劃，以及為什麼我們有信心該計劃將使 Fossil 恢復盈利。然後我會把電話轉給安迪，讓他更詳細地了解財務狀況。

Second quarter results were in line with our expectations with top line trends remaining relatively constant year-to-date. Against this backdrop, ongoing progress within our TAG Plan allowed us to deliver meaningful gross margin expansion, continue to take costs out

第二季業績符合我們的預期，年初至今營收趨勢保持相對穩定。在此背景下，我們的 TAG 計劃不斷取得進展，使我們能夠實現有意義的毛利率擴張，並繼續降低成本

of the business and substantially narrow our adjusted operating loss. The highlights for the quarter include 390 basis points of gross margin expansion, an 18% reduction in SG&A, and a nearly 40% reduction in our adjusted operating loss.

業務並大幅縮減調整後的經營虧損。本季的亮點包括毛利率擴張 390 個基點、SG&A 減少 18%，以及調整後營運虧損減少近 40%。

Let me provide some color around sales trends. Net sales declined 19% on a constant currency basis, which includes approximately five points of impact related to our strategic actions to exit the smartwatch category and optimize our retail store portfolio. At a high level, macro and category dynamics continued to present a significant headwind. As other companies in the consumer segment have noted, the wholesale channel in the US and Europe remains challenging and consumption sentiment remains soft in China.

讓我提供一些有關銷售趨勢的資訊。以固定匯率計算，淨銷售額下降了 19%，其中包括與我們退出智慧手錶類別和優化零售店產品組合的策略行動相關的約五個影響點。在高水平上，宏觀和類別動態繼續構成重大阻力。正如消費領域的其他公司所指出的那樣，美國和歐洲的批發管道仍然充滿挑戰，而中國的消費情緒仍然疲軟。

As we discussed last quarter, about half of our sales base is beginning to show signs of stabilization, with Q1 performance in this sector approximately flat and Q2 results down about 4%. The most notable areas of the business where we're seeing positive dynamics

正如我們上季度所討論的，我們大約一半的銷售基礎開始顯示出穩定的跡象，該行業第一季的業績大致持平，第二季的業績下降了約 4%。我們看到積極動態的最顯著的業務領域

emerge are Fossil traditional watches, which are approximately flat, globally on a comp basis; and India, where sales increased double-digits compared to last year reflecting strong growth across virtually all brands.

出現了 Fossil 傳統手錶，在全球範圍內的比較基礎上大致持平；印度的銷售額與去年相比成長了兩位數，反映出幾乎所有品牌的強勁成長。

The more challenging areas of our business licensed watch brands and leathers, represent about half of our revenue base in the quarter. The pressure we're experiencing in our licensed watch brands can be traced to ongoing contraction due to license or brand repositioning, as well as the soft consumer demand I noted in China. Encouragingly, we started to see watch and jewelry sales trends begin to strengthen in our key licenses or boutiques. Though a small percentage of our overall sales we view this as an early sign that the brand repositioning efforts are starting to gain traction.

我們的商業授權手錶品牌和皮革製品中更具挑戰性的領域約占我們本季營收基礎的一半。我們在授權手錶品牌中遇到的壓力可以追溯到由於授權或品牌重新定位而導致的持續收縮，以及我在中國註意到的疲軟的消費者需求。令人鼓舞的是，我們開始看到我們的主要授權店或精品店的手錶和珠寶銷售趨勢開始加強。儘管只占我們總銷售額的一小部分，但我們認為這是品牌重新定位努力開始獲得關注的早期跡象。

In our Fossil leathers category, as a result of softer-than-anticipated consumer response to our new product offerings, we are repositioning the assortment to deliver enhanced functionality and increased value to the consumer. During these challenging times, we're focused on four core priorities to position the company to return to growth and profitability: first, advancing our Transform and Grow Plan; second, strengthening our balance sheet; third, stabilizing the business; and fourth, conducting a strategic review of our business model.

在我們的化石皮革類別中，由於消費者對我們新產品的反應低於預期，我們正在重新定位該品種，以向消費者提供增強的功能和更高的價值。在這些充滿挑戰的時期，我們專注於四個核心優先事項，以使公司恢復成長和獲利：首先，推進我們的轉型和成長計劃；第二，加強我們的資產負債表；三是穩定業務；第四，對我們的業務模式進行策略審查。

Our teams are working tirelessly and delivering strong execution on multiple work streams under our TAG Plan. We're encouraged by the operational and financial progress we're seeing as reflected in our margin expansion and cost reduction year-to-date this year.

我們的團隊正在不知疲倦地工作，並在我們的 TAG 計劃下的多個工作流程中提供強大的執行力。我們對今年迄今的利潤率擴張和成本降低所反映的營運和財務進展感到鼓舞。

A critical foundational element of TAG is our shift to a globally led operating model with regional execution of consolidated brand strategies. This model, which is expected to drive greater consistency, efficiency and accountability, is better aligned with the size of

TAG 的關鍵基礎要素是我們轉向全球領先的營運模式，並在區域內執行整合的品牌策略。該模型預計將提高一致性、效率和問責制，並與企業規模更好地保持一致。

our business and our long-term strategic objectives. Standing up this new model included, some rightsizing actions in the first half of the year and we're continuing to evaluate additional opportunities as we evolve the organizational structure, in the coming quarters.

我們的業務和長期策略目標。為了支持這一新模式，我們在上半年採取了一些規模調整行動，並且在未來幾個季度，隨著組織結構的發展，我們將繼續評估更多機會。

Importantly, the efficiencies we're capturing under our TAG Plan, are driving significant improvement in gross margin and operating expense. Year-to-date, we're tracking to achieve at least $100 million of annualized benefits from TAG in 2024, and remain on track to achieve expected total plan benefits of $300 million.

重要的是，我們在 TAG 計劃下獲得的效率正在推動毛利率和營運費用的顯著改善。今年迄今為止，我們計劃在 2024 年從 TAG 獲得至少 1 億美元的年化收益，並繼續實現 3 億美元的預期總計劃收益。

From a gross margin perspective, we're realizing benefits from SKU rationalization and pricing and promotional initiatives. From an operating expense lens, we're capturing benefits through several actions as we continue to rightsize our cost structure. These include workforce reductions, procurement and indirect cost savings, store closures, rent negotiations and store labor optimization. The actions I just outlined are expected to generate significant gross margin and SG&A benefits in the second half of 2024, and continue into next year.

從毛利率的角度來看，我們正在從 SKU 合理化、定價和促銷活動中獲益。從營運費用的角度來看，隨著我們繼續調整成本結構，我們正在透過多項行動獲得收益。其中包括裁員、採購和間接成本節約、商店關閉、租金談判和商店勞動力優化。我剛才概述的行動預計將在 2024 年下半年產生顯著的毛利率和銷售、一般行政管理 (SG&A) 效益，並持續到明年。

Our work to strengthen the balance sheet is progressing. As we discussed on our last call, during Q2, we received a US tax refund of $57 million, providing us with incremental cash and strengthening our liquidity position. Second quarter ending inventory declined 38% versus a year ago, and 10% compared to Q1 driving improved working capital.

我們加強資產負債表的工作正在取得進展。正如我們在上次電話會議中討論的那樣，在第二季度，我們收到了 5700 萬美元的美國退稅，為我們提供了增量現金並增強了我們的流動性狀況。第二季期末庫存較去年同期下降 38%，較第一季下降 10%，推動營運資本改善。

We're continuing to focus on the asset monetization opportunities, we talked about last quarter including the sale of our real estate in Europe, while also pursuing opportunities to utilize our working capital more efficiently, leverage our inventory and receivables and obtain liquidity opportunities for our non-ABL assets.

我們將繼續關注資產貨幣化機會，我們在上個季度談到了包括出售我們在歐洲的房地產，同時也在尋求機會更有效地利用我們的營運資金，利用我們的庫存和應收賬款，並為我們的公司獲得流動性機會。

We ended the second quarter, with $156 million of liquidity, comprised of cash and available borrowings under our revolving credit facility. Based on current business trends and anticipated working capital needs, we're positioned to maintain ample liquidity and generate positive free cash flow for the full year.

截至第二季末，我們擁有 1.56 億美元的流動資金，其中包括現金和循環信貸安排下的可用借款。根據當前的業務趨勢和預期的營運資金需求，我們將保持充足的流動性並在全年產生正的自由現金流。

Our near-term actions to stabilize the business are bearing fruit. In the first half of 2024, we exited 46 retail store locations at natural lease expiration and now expect to close up to 55 Fossil and Watch Station stores by year-end, as part of our store optimization initiative. Additionally, we've successfully exited the smartwatch category, with almost no inventory remaining.

我們穩定業務的近期行動正在取得成果。2024 年上半年，我們在自然租約到期時退出了 46 家零售店，現在預計到年底將關閉多達 55 家 Fossil 和 Watch Station 商店，作為我們商店優化計劃的一部分。此外，我們已經成功退出智慧手錶類別，幾乎沒有剩餘庫存。

In the second quarter, we saw trend improvements in our own stores and boutiques four traditional watches across our Fossil brand, as well as several of our major licensed brands. Of note, Fossil traditional watches were up 4% in our DTC channels, on a comp sales basis in Q2. In the second half, our teams will focus on additional upper funnel initiatives to drive awareness and heat including, brand ambassador and influencer campaigns.

在第二季度，我們看到我們自己的商店和精品店的 Fossil 品牌的四種傳統手錶以及我們的幾個主要授權品牌的趨勢有所改善。值得注意的是，以第二季的比較銷售額計算，Fossil 傳統手錶在我們的 DTC 通路中成長了 4%。下半年，我們的團隊將專注於其他上層漏斗計劃，以提高知名度和熱度，包括品牌大使和有影響力的活動。

Just this morning, we announced supermodel and entrepreneur Ashley Graham, as a new ambassador for Michele, our luxury women's watch brand. She'll serve as the face of Michele's latest marketing campaign. Similar partnerships are expected in the coming months.

就在今天早上，我們宣布超級名模兼企業家 Ashley Graham 擔任我們的奢華女式手錶品牌 Michele 的新大使。她將擔任米歇爾最新行銷活動的代言人。預計未來幾個月也會出現類似的合作關係。

From a licensed brand perspective, we just signed an expansive license agreement with SKECHERS, broadening the scope of our agreement and extending the terms to 2029. Over the past five years, we've grown our SKECHERS watch business by 35% annually. We're extremely excited to continue our partnership with one of the world's fastest-growing brands and look forward to driving further growth on a global scale in the coming years.

從授權品牌的角度來看，我們剛剛與 SKECHERS 簽署了一份廣泛的授權協議，擴大了我們協議的範圍，並將條款延長至 2029 年。在過去五年裡，我們的斯凱奇手錶業務每年成長 35%。我們非常高興能夠繼續與世界上成長最快的品牌之一合作，並期待在未來幾年推動全球範圍內的進一步成長。

We continue working closely, with our advisers on our strategic review including an ongoing analysis of our business model, development of strategic initiatives, refinement of our financial plans and comprehensive reviews of our capital structure and financing alternatives.

我們繼續與我們的顧問密切合作進行策略審查，包括持續分析我們的業務模式、制定策略舉措、完善我們的財務計劃以及對我們的資本結構和融資方案進行全面審查。

Looking ahead to the remainder of 2024, we expect to see sequential improvement in trends across sales, gross margin and adjusted operating margin. We remain on track with our TAG Plan and reiterate our full year expectation to achieve net sales of approximately $1.2 billion, adjusted operating margin of minus 3% to minus 5% and positive free cash flow inclusive of the $57 million tax refund.

展望 2024 年剩餘時間，我們預期銷售額、毛利率和調整後營業利潤率的趨勢將持續改善。我們仍按照TAG 計畫進行，並重申全年預期實現約12 億美元的淨銷售額、調整後的營業利潤率為-3% 至-5%，以及包括5,700 萬美元退稅在內的正自由現金流。

We're acting urgently to drive improved financial performance and remain committed to building long-term shareholder value. We appreciate the dedication of our teams and the support of our shareholders.

我們正在緊急採取行動，以推動改善財務業績，並持續致力於建立長期股東價值。我們感謝我們團隊的奉獻和股東的支持。

Now, I'll turn the call to Andy to review the financials and we'll conclude the call with some Q&A led by Christine.

現在，我將把電話轉給安迪，讓他審查財務狀況，然後我們將透過克里斯汀主持的一些問答來結束這次電話會議。

Thanks Jeff, and good afternoon all. It's great to be here and I look forward to getting to know our shareholders in the coming quarters. Despite continued top line pressure, our TAG Plan has allowed us to drive improvement across the rest of the P&L. Second quarter net sales totaled $260 million, that's down 19% in constant currency and includes five points of impact related to our smartwatch exit and store closures.

謝謝傑夫，大家下午好。很高興來到這裡，我期待在未來幾季認識我們的股東。儘管營收壓力持續存在，但我們的 TAG 計劃使我們能夠推動損益表其餘部分的改進。第二季淨銷售額總計 2.6 億美元，以固定匯率計算下降 19%，其中包括與我們的智慧手錶退出和商店關閉相關的五個影響點。

Gross margin expanded 390 basis points compared to last year, which primarily can be traced to improved product margins resulting from the TAG initiatives that Jeff discussed, as well as the benefit of lower smartwatch mix. We expect to achieve continued gross margin expansion in the second half of the year driven by sourcing, and supply chain initiatives and ongoing benefits from SKU rationalization, pricing and promotion.

與去年相比，毛利率增長了 390 個基點，這主要歸功於傑夫討論的 TAG 舉措帶來的產品利潤率的提高，以及智能手錶組合減少的好處。我們預計，在採購和供應鏈計劃以及 SKU 合理化、定價和促銷帶來的持續效益的推動下，下半年毛利率將持續成長。

SG&A expenses were down $34 million compared to last year, representing an 18% decrease as we continue to focus on cost takeout. The year-over-year reductions are attributable to lower store operating costs and fewer stores and lower compensation and administrative costs driven by TAG initiatives that Jeff described.

由於我們繼續關注成本削減，SG&A 費用比去年減少了 3,400 萬美元，下降了 18%。同比減少的原因是商店營運成本降低、商店數量減少以及傑夫描述的 TAG 措施推動的薪酬和管理成本降低。

We closed 20 stores in Q2 ending the quarter with 258 stores which is a reduction of 18% compared to a year ago. As Jeff mentioned, we have exited 46 locations in the first half of the year and expect to close up to 55 by year end. As a reminder, all closures occur at natural lease expiration.

我們在第二季關閉了 20 家門市，截至本季末，我們關閉了 258 家門市，比去年同期減少了 18%。正如傑夫所提到的，我們在今年上半年已經關閉了 46 家店，預計到年底將關閉至 55 家。提醒一下，所有關閉都發生在自然租約到期時。

Ongoing cost actions are expected to drive continued reductions in SG&A dollars through the remainder of 2024 with anticipated second half year-over-year comparisons down in the low double-digits. The combination of gross margin expansion and cost reduction in the second quarter enabled us to significantly narrow Q2 adjusted operating loss to $17 million. That reflects an improvement of 39% versus an adjusted operating loss of $28 million a year ago.

持續的成本行動預計將推動 SG&A 美元在 2024 年剩餘時間內持續減少，預計下半年將年減兩位數。第二季毛利率的成長和成本的降低使我們能夠將第二季調整後的營運虧損大幅縮小至 1,700 萬美元。與一年前 2,800 萬美元的調整後營運虧損相比，這一數字改善了 39%。

Turning to the balance sheet. We ended the quarter with total liquidity of $156 million providing us with the flexibility to continue to execute our TAG Plan. We brought down inventory levels by 38% versus a year ago improving working capital. Cash flow from operations totaled $35 million in the quarter reflecting seasonal cash use of approximately $22 million which was more than offset by our receipt of $57 million tax refunds in April.

轉向資產負債表。本季結束時，我們的流動資金總額為 1.56 億美元，為我們提供了繼續執行 TAG 計畫的靈活性。與一年前相比，我們的庫存水準降低了 38%，改善了營運資本。本季營運現金流量總計 3,500 萬美元，反映出約 2,200 萬美元的季節性現金使用，這被我們 4 月收到的 5,700 萬美元退稅所抵銷。

Moving to guidance. We are reiterating our outlook for full year. Worldwide net sales are expected to be approximately $1.2 billion, while the adjusted operating margin loss is expected to range from negative 3% to negative 5%. Our net sales guidance of approximately $1.2 billion assumes an approximate $100 million negative impact from our strategic actions including store and concession closures and the exit from smartwatches.

轉向指導。我們重申全年展望。全球淨銷售額預計約為 12 億美元，而調整後的營業利潤率損失預計為負 3% 至負 5%。我們的淨銷售額指引約為 12 億美元，假設我們的策略行動（包括關閉商店和特許經營店以及退出智慧手錶）產生約 1 億美元的負面影響。

We remain on track to achieve at least $100 million of annualized P&L benefits in 2024 across gross margin and SG&A under our TAG Plan. Restructuring costs related to TAG are estimated to be approximately $40 million for the full year of 2024.

根據我們的 TAG 計劃，我們仍有望在 2024 年透過毛利率和銷售及一般費用實現至少 1 億美元的年度損益效益。預計 2024 年全年與 TAG 相關的重組成本約為 4,000 萬美元。

Looking at cash flow we anticipate the seasonal working capital needs coupled with continued sales declines will require operating cash use in the third quarter. As we enter the holiday period and our initiatives continue to take hold we expect to generate positive free cash flow in Q4. We also expect to be free cash flow positive for the full year in 2024 inclusive of the $57 million tax refund.

從現金流量來看，我們預期季節性營運資金需求加上持續的銷售下降將需要第三季的營運現金使用。隨著我們進入假期，我們的舉措繼續實施，我們預計第四季度將產生正的自由現金流。我們也預計 2024 年全年自由現金流為正，其中包括 5,700 萬美元的退稅。

While we're pleased to see our TAG initiatives showing up in the P&L the business is not where we know it has the potential to be. We remain laser-focused on the priorities that Jeff laid out which include actions to stabilize the business, the exploration of opportunities to improve the capital structure and we're moving as quickly as possible in all fronts.

雖然我們很高興看到我們的 TAG 計劃出現在損益表中，但該業務並未達到我們所知的潛力。我們仍然高度關注傑夫提出的優先事項，其中包括穩定業務的行動、探索改善資本結構的機會，並且我們正在所有方面盡快採取行動。

Now I'll turn the call back to Christine for Q&A.

現在我將把電話轉回給克里斯汀進行問答。

Thanks Andy. I'll take us through some questions that we've been getting from shareholders. Let me start with Jeff. Jeff, what are you doing to stabilize the top-line? And when do you expect to start growing again?

謝謝安迪。我將向我們解答一些股東提出的問題。讓我從傑夫開始。傑夫，你正在採取什麼措施來穩定營收？您預計什麼時候會再次開始成長？

Thanks, Christine. We're directing programs and funding against our key and most important top-line opportunities. We've increased our upper funnel marketing programs on a number of brands to generate additional brand heat and demand. As I mentioned previously, earlier today we announced Ashley Graham as the new ambassador for Michele our luxury women's watch brand with additional influencers and endorsers planned for our own brands as well as for our licensed watch brand partners.

謝謝，克里斯汀。我們正在針對我們關鍵和最重要的頂線機會來指導計劃和資金。我們增加了對許多品牌的上層漏斗行銷計劃，以產生額外的品牌熱度和需求。正如我之前提到的，今天早些時候，我們宣布阿什利·格雷厄姆(Ashley Graham) 擔任我們的豪華女式手錶品牌米歇爾(Michele) 的新大使，併計劃為我們自己的品牌以及我們的授權手錶品牌合作夥伴計劃更多的影響者和代言人。

On the inventory front, we're distorting inventory into the brands categories and markets that are showing the most substantial growth potential such as traditional watches in emerging markets such as India and Mexico. These efforts are the primary drivers behind the stabilization and growth in about half of our traditional watch business.

在庫存方面，我們將庫存扭曲到顯示最大成長潛力的品牌類別和市場，例如印度和墨西哥等新興市場的傳統手錶。這些努力是我們約一半的傳統手錶業務穩定和成長的主要推動力。

Great. Thank you. Can you help us understand what's happening in the core traditional watch business and how that tracks to overall industry performance?

偉大的。謝謝。您能否幫助我們了解核心傳統手錶業務正在發生什麼以及它如何影響整個產業的表現？

During Q2 about half of our traditional watch business performed consistent with the industry based on NPD data. This includes the Fossil, Armani Exchange, Tory Burch and Skechers brands. The remaining parts of our business including our Armani, Kors and Diesel remain pressured. This is primarily due to softness in China resulting from the weak consumer environment as well as ongoing brand position efforts by some of our licensed brands. Recognize also that our top-line is being impacted by the strategic decisions we made to close stores and exit the smartwatch category.

根據 NPD 數據，第二季我們約一半的傳統手錶業務表現與業界一致。其中包括 Fossil、Armani Exchange、Tory Burch 和 Skechers 品牌。我們業務的其餘部分，包括阿瑪尼 (Armani)、科爾斯 (Kors) 和迪賽 (Diesel) 仍然面臨壓力。這主要是由於疲軟的消費環境以及我們的一些授權品牌持續的品牌定位努力導致中國市場疲軟。也要認識到，我們的營收受到我們關閉商店和退出智慧手錶類別的策略決策的影響。

Got it. Thanks. And given your liquidity levels, Jeff, are you considering buying back equity or bonds?

知道了。謝謝。考慮到您的流動性水平，傑夫，您是否正在考慮回購股票或債券？

As we look at the business, we do believe that our current valuation levels are not reflective of the long-term potential we see for the business. That said, however, we believe it's very important to maintain financial flexibility given the current macro environment.

當我們審視該業務時，我們確實認為我們目前的估值水平並不能反映我們對該業務的長期潛力。儘管如此，我們認為，鑑於當前的宏觀環境，保持財務靈活性非常重要。

And under our operating capital allocation framework, deploying resources towards strengthening our business is the highest priority. As you can see in our usage results, the investments in and execution of our TAG plan are driving operational and financial improvements including better bottom line results, and this is our primary focus at this time.

在我們的營運資本配置架構下，部署資源以加強我們的業務是重中之重。正如您在我們的使用結果中看到的，我們 TAG 計劃的投資和執行正在推動營運和財務改進，包括更好的底線結果，這是我們目前的主要關注點。

Okay. Moving over to Andy, how many quarters of runway do you have to execute the TAG plan?

好的。轉向安迪，您需要多少季度的跑道來執行 TAG 計劃？

Thanks Christine. We believe we have ample runway to continue to execute our TAG plan. We will complete the majority of the TAG initiatives by 2024 with annualized operating income benefits of at least $100 million materializing this year.

謝謝克里斯汀。我們相信我們有足夠的跑道來繼續執行我們的 TAG 計劃。我們將在 2024 年之前完成大部分 TAG 計劃，今年將實現至少 1 億美元的年化營業收入收益。

We also see additional benefit in 2025 and 2026. Also in March 2024, we also initiated a strategic review to optimize our current business model, which includes efforts to find additional structural cost reductions as well as explore debt and equity financing options.

我們也看到 2025 年和 2026 年會帶來額外的好處。同樣在 2024 年 3 月，我們也啟動了策略審查，以優化我們目前的業務模式，其中包括努力尋求額外的結構性成本削減以及探索債務和股權融資方案。

What is the status of a potential refinancing out of your upcoming debt maturity?

您即將到期的債務的潛在再融資狀況如何？

As we discussed we are assessing potential debt and equity financings as part of our strategic review and we've retained a financial advisor to assist with this process. Importantly, we are reviewing options to support a new financing strategy in place well before the expiration of our current ABL facility in 2027 and our senior notes in 2026.

正如我們所討論的，我們正在評估潛在的債務和股權融資，作為我們策略審查的一部分，並且我們聘請了一名財務顧問來協助這一過程。重要的是，我們正在審查支持新融資策略的選項，以便在我們目前的 ABL 融資將於 2027 年到期以及我們的優先票據於 2026 年到期之前儘早實施。

Great. Thank you. Just one last question for you Andy. Could you take us through the puts and takes on cash flow this year?

偉大的。謝謝。安迪，還有最後一個問題想問你。您能否向我們介紹今年看跌期權和認購期權的現金流量？

Sure. In broad strokes, the seasonal nature of our business and the projected sales decline will require operating cash use in the near-term but we expect to generate positive free cash flow in Q4. Based on the seasonality of our business, cash collections compared to the first half of the year are anticipated to increase for the remainder of 2024. This is consistent with the implied sales increase from the first to second half based on our full year 2024 guidance.

當然。從廣義上講，我們業務的季節性特徵和預期的銷售下降將需要在短期內使用營運現金，但我們預計第四季度將產生正的自由現金流。根據我們業務的季節性，預計 2024 年剩餘時間的現金收款將比上半年增加。這與我們根據 2024 年全年指引預測的上半年至下半年的隱含銷售額成長一致。

Additionally, there will be inventory, freight and marketing expenditures to support the sales increase in the second half. There will also be increased payments to our licensing partners as well as higher tax payments. From a full year perspective, we have the one-time benefit of the $57 million tax refund received in Q2, in addition to a reduction in overall operating expenses anticipated for the year as we continue to realize the benefits under our TAG plan.

此外，庫存、貨運和行銷支出也將支持下半年的銷售成長。向我們的許可合作夥伴支付的款項以及更高的稅款也將增加。從全年的角度來看，我們還獲得了第二季度收到的5700 萬美元退稅的一次性收益，此外，隨著我們繼續實現TAG 計劃的收益，預計今年的總體運營費用將有所減少。

Thanks, Andy and Jeff. We appreciate everyone listening in today and look forward to updating you next quarter. The team is available for follow-ups. Please reach out to me directly with requests. My e-mail is included at the end of the earnings release christine@blueshirtgroup.com. Thanks again. And everyone have a good rest of the week.

謝謝，安迪和傑夫。我們感謝今天收聽的每個人，並期待下個季度為您提供最新消息。該團隊可以進行後續跟進。如有請求，請直接與我聯絡。我的電子郵件地址包含在收益發布的末尾：christine@blueshirtgroup.com。再次感謝。每個人都度過了愉快的一周。

That concludes today's call. You may now disconnect.

今天的電話會議到此結束。您現在可以斷開連線。