Dana Telsey (Telsey) asked about the Middle East impact and how it is planned for Q2 and the balance of the year, what percent of sales it represents, whether the ERP is now complete, and how Fran would frame the Abercrombie and Hollister consumer.
Robert said the Middle East was about a 50 bps drag to the total versus the March outlook and management expects more of the same, adjusting inventory and promos to stay close to demand; the ERP cutover is complete and 'in the rearview mirror,' strengthening the foundation for new channels and categories. Fran said both brands are healthy, the consumer is showing up with no change in performance across cohorts, Abercrombie grew for a second straight quarter, and Hollister was strong in the Americas but hit by EMEA.
Corey Tarlowe (Jefferies) asked about intra-quarter trends by month, quarter-to-date, the go-forward comp shape for Hollister against tough compares, and the promotional cadence.
Fran said Q1 trends have continued and are built into the 2%-4% Q2 outlook with potential acceleration; inventory is well controlled, AUR grew nicely, and the promo/pricing strategy is unchanged. On Hollister, she cited the 22% two-year stack and strength in graphic tees, shorts, swim, and warm-weather categories, reiterating expectations for full-year Hollister growth. Robert added that promos were consistent with plan, AUR was positive, and modest AUR growth is expected for the full year.
Marni Shapiro (The Retail Tracker) asked whether Hollister's fast inventory turns mean the company is in chase mode and whether chase carries extra cost given fuel, plus an update on YPB and any shift toward dressier men's product.
Fran said the business runs in chase mode and Hollister is firmly in it, enabled by a supply chain producing in 16 countries; fuel costs affect the back half more, and chase purchases are typically better bets. YPB has seen nice acceleration this year. On men's, she emphasized a 'balanced' assortment serving both casual and more dressed-up customers.
Mauricio Serna (UBS) asked what drives the acceleration to the full-year 3%-5% guide when Q1 and Q2 both run below it, and to break down the EBIT margin bridge between the tariff benefit and the freight/marketing offsets.
Robert cited the 50 bps Middle East and 100 bps ERP headwinds (the latter returning) as building blocks to stay in the 3%-5% range. On margin, tariffs are 180 bps of Q1 headwind and ~120 bps ($20M) in Q2 but flip to a tailwind in H2; freight was a 180 bps Q1 tailwind that normalizes and becomes a slight H2 headwind; net, tariffs and freight are each just tens of basis points of full-year headwind, with modest AUR growth largely funding brand investments, keeping margin at 12%-12.5%.
Mauricio Serna (UBS) followed up asking whether both brands comped positive in the Americas and what benefits the company has seen from its AI investments.
Fran said AI is embedded across forecasting, inventory, and customer care, with a company-wide AI academy and Copilot Premium access, plus the Perplexity agentic-commerce launch. Robert said both brands grew in the Americas with positive AURs, unit growth, positive traffic on both a one- and multi-year basis, and stable conversion.
Brooke Roach (Goldman Sachs) sought to confirm the EMEA/Hollister math, asking whether netting out the Middle East still implies Hollister comped down about 1% and what drove that.
Robert said the thought process was directionally right but that EMEA is primarily a Hollister business, so a 50% assumption understates the Hollister impact and more of the drag should be skewed to Hollister. He stressed the issue is concentrated and specific, that the U.K. remains strong, and that the company is controlling inventory and promos with its proven playbook to improve the trend.
Brooke Roach (Goldman Sachs) followed up on what looks like elevated Hollister online promotional cadence and how that squares with positive AUR.
Robert cautioned that Q1 is a messy quarter for promo comparisons because Easter shifts, said the company executed against its March promo plan, and emphasized that strong product acceptance and value drove positive AUR. He framed it as a demand-led story with both unit and AUR growth, with tight inventory positioning the company to keep growing AUR.
Suraj Malhotra (Raymond James, for Rick Patel) asked about denim demand and whether it holds at full price, and about SG&A levers, including whether the company could cut EMEA spend to preserve margin.
Fran and Robert said there is no change in denim demand, it is a category being protected on price with success across both brands and genders, and they are well-positioned into back-to-school. On SG&A, Robert said the model is unchanged with balanced flow-through at the guide midpoint, the company is choosing to invest in marketing, stores, and capabilities for long-term growth, and leverage rolls through above the 3%-5% sales range.
Tom Nikic (Needham) asked whether strong APAC growth and EMEA geopolitical issues change the calculus on the Asia strategic review.
Robert said the strong APAC quarter reinforces the long-term opportunity and the review is proceeding unchanged, focused on scaling the right way via partnerships or other capital-light approaches, with more to share later this year; EMEA is near-term choppy but the long-term belief is intact, helped by U.K. strength.
Tom Nikic (Needham) followed up on the Q2 EBIT margin puts and takes, given the implied ~400 bps decline.
Robert cited three drivers: ~120 bps ($20M) of tariff coming off the top, freight as only a slight tailwind (tens of bps versus the 180 bps Q1 benefit), and continued marketing and new-store investment, which combined with modest AUR growth walks margin down to around 10%.
Janine Stichter (BTIG) asked whether 12%-12.5% is the right structural operating margin level and whether upside above the 3%-5% sales range would flow through or be reinvested; she also asked about raw materials/fuel costs and footwear expansion.
Robert said the model has delivered strong double-digit margins for years, it is about balance and building a sustainable long-term business rather than managing quarter-to-quarter, and above the 3%-5% range some leverage and potential margin expansion flow through, though the company will be diligent about reinvesting. On costs, freight flips to a back-half headwind on sell-through timing and raw materials are relatively stable with a slight synthetics uptick already in the guide. Fran said the Sperry footwear collaboration saw nice success (customers want to 'complete the outfit') and the company continues to explore the category.
Janet Kloppenburg (JJK Research) asked why the U.K. held up while the rest of EMEA was challenged, whether there are other fundamental issues, whether promotions will pick up in the region, and whether easing Hollister comparisons could improve EMEA through the year.
Fran said the U.K. is the largest EMEA market and the launch pad for the company's playbook, aided by the London office and customer proximity; the company is controlling inventory tightly and reacting quickly rather than leaning on promotions. She said expected improvement is built into the held Q2 (2%-4%) and full-year outlook. Robert declined to give brand-by-region specifics but said Q2 looks consistent with Q1's exit, with Americas/APAC strength and continued EMEA pockets of challenge being navigated via inventory and promo alignment.