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Greetings, welcome to the Wolverine World Wide, Inc. Fourth Quarter Fiscal 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If you would like to ask a question, please press star and the number 1 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jared Filippone, Head of Investor Relations. You may begin.

Good morning, welcome to our fourth quarter fiscal 2025 conference call. On the call today are Christopher E. Hufnagel, President and Chief Executive Officer, and Taryn L. Miller, Chief Financial Officer. Earlier this morning, we issued a press release announcing our financial results for the fourth quarter and full year 2025, and guidance for fiscal year 2026. The press release is available on many news sites and can be viewed on our corporate website at wolverineworldwide.com. This morning's press release and comments made during today's earnings call include non-GAAP financial measures. These non-GAAP financial measures, including references to the ongoing business and constant currency revenue growth rates, were reconciled to the most comparable GAAP financial measures in attached tables within the body of the release or on our investor relations page on our website, wolverineworldwide.com. I'd also like to remind you that statements describing the company's expectations, plans, predictions, and projections, such as those regarding the company's outlook for fiscal year 2026, growth opportunities, and trends expected to affect the company's future performance made during today's conference call are forward-looking statements under U.S. securities laws. As a result, we must caution you that there are a number of factors that could cause actual results to differ materially from those described in the forward-looking statements. These important risk factors are identified in the company's SEC filings and in our press releases. All revenue growth rates will be cited on a constant currency basis, unless otherwise stated. With that, I will now turn the call over to Christopher E. Hufnagel.

Thanks, Jared. Good morning, everyone, and thank you for joining us on today's call. The fourth quarter marked the conclusion of a good year for Wolverine World Wide, Inc. We made substantial progress in advancing our strategy and further transforming the company while delivering solid financial results in the process. We delivered high-quality revenue growth in line with our value creation model, led by Merrell and Saucony, our two biggest brands. Merrell drove high single-digit growth for the year, while Saucony posted a record year with a 30% increase compared to 2024. I am pleased with how our global teams navigated a turbulent year, executed our strategy with pace and distinction, and delivered top and bottom-line results that exceeded our expectations, highlighted by annual adjusted earnings per share up over 50% compared to the prior year, and further progress in strengthening our balance sheet. As we turn the page to the new year, I believe our brands, company, and team are better and stronger. Brand awareness and affinity are turning positively for Merrell, Saucony, Sweaty Betty, and Wolverine. We have taken market share in important categories. We have made encouraging progress in our DTC business, and we have well-defined plans in motion to again deliver mid-single-digit top-line growth, supported by our current order book, while continuing to expand profitability in the year ahead. Even with tariffs, and as we continue to responsibly invest in product innovation, demand creation, and modern tools and capabilities to drive the business this year and into the future. I want to start this call with an update on our biggest brands, their recent progress, and their plans for this year. Beginning with Merrell. Merrell remains focused on modernizing the outside, developing more athletic, style-led, versatile performance and lifestyle footwear while elevating the brand around the world. In the fourth quarter, Merrell grew revenue 5% with balanced growth across regions and channels. Notably, DTC inflected the growth with revenue up mid-single digits, even as we were less promotional in stores and online. The brand once again took market share in the U.S. hike category. Underpinning these results, we saw increases across key brand health metrics to finish the year, a positive indicator for the work we are doing to build better brands. Merrell's key performance franchise, the Moab Speed 2, nearly doubled sell-through year-over-year at U.S. Retail in the quarter, while the Moab 3 also continued to deliver solid growth. The Agility Peak 5 contributed good growth in trail running as well. Similar to key performance franchises, the brand's latest expression of versatile lifestyle footwear, the Wrapt collection, continued to grow rapidly, with the iconic Jungle Moc also delivering solid growth. In 2026, Merrell plans to deliver newness across its key performance and lifestyle franchises, including fresh colors and materials, seasonal energy drops, and new styles to bolster the collections. Just a few weeks ago, the brand launched the new Agility Peak 6, delivering better fit, stability, and traction within the trail run category. Early sales are tracking very well relative to our expectations. Merrell also expects to introduce the new SpeedARC Peak later this summer, leveraging the brand's highly innovative and visually disruptive SpeedARC technology to further strengthen its trail run offerings. With positive momentum and a strong product pipeline, Merrell's entering the new year with an enhanced marketing strategy and demand creation plan for record investment to further elevate the brand. Next week, the team anticipates launching a new global platform, unifying its storytelling under one umbrella and advancing the brand's powerful purpose: to share the simple power of the outside with everyone. To entrench the brand's role in outdoor performance footwear, Merrell has secured title sponsorships of the Skyrunner World Series and Skyrunner National Series in the U.S., encompassing more than 20 of the most elite trail running races globally. In addition, the brand plans to build on its key city strategy in Tokyo and Paris, adding London and New York, with a focused blend of integrated events, activations, and retail presentations. Merrell celebrates its 45th anniversary in 2026, and we expect this to be a milestone year for the brand. Shifting to Saucony. Saucony is uniquely positioned as a disruptive challenger brand at the intersection of the two of the fastest-growing categories in the market: performance and lifestyle running. To conclude the brand's record year in 2025, Saucony drove broad-based revenue growth across categories, regions, and channels, a total increase of 24% in the fourth quarter. Performance, the majority of the brand's business, was up over 20%, with lifestyle growing even faster. In the biggest quarter for DTC, the channel grew mid-teens. Importantly, Saucony saw further increases across brand health metrics, especially with runners. The brand continues to lead with pinnacle innovation with an Endorphin collection for elite runners, which again drove strong growth year-over-year at U.S. Retail in the quarter. The brand's core four franchises, the Ride, Guide, Hurricane, and Triumph, aimed squarely at the broader casual running opportunity, continue to contribute good growth as well. On the lifestyle side, Saucony continues to inject energy into the brand around the world. This past fall, the brand launched collaborations with Jae Tips and Engineered Garments, among others. In December, Saucony partnered with culture-shaping powerhouse, Westside Gunn, and influential retailer, Kith, to release a very special collaboration at Art Basel. The drop, featuring the Pro Grid Triumph 4, garnered global attention and drove record traffic to saucony.com and sold out in minutes. The brand continues to have a voice in the cultural discourse, in addition to innovating in performance running, and has strong plans in place once again for 2026. This year, Saucony expects to deliver new iterations for each of its core four franchises, starting with the Ride 19 launch last month, which has immediately become a top seller on saucony.com. With this year's updates, the Triumph 24 and Hurricane 26 are both slated to get new proprietary Incredilux foam, a high-end compound that delivers a luxurious ride with enhanced energy return, cushioning, and durability. Just 25 days ago, Saucony brought to market what we expect to be its biggest debut launch of all time to date, the all-new Endorphin Azura, fueled by a fully integrated global activation plan. The Azura is a lightweight super trainer with innovative geometry and advanced energy return foam to help the runner go fast every day, and delivers all this innovation for $150. The shoe represents a meaningful incremental opportunity for the brand and has been highly anticipated and well received by the market and consumers. At this early stage, demand at saucony.com is already far ahead of forecast, and sell-through at retail, both here and abroad, has been exceptionally strong. On the lifestyle front, the Pro Grid Omni 9, Ride Millennium, and other key silhouettes are planned to see fresh colorways and materializations this year. The brand once again anticipates an impactful lineup of collaborations, including additional drops with Westside Gunn, Misses New York, Engineered Garments, and others. In addition, Saucony anticipates reintroducing archive styles like the Grid Paramount, Kinvara 1, and Gripper at Tier

Thank you, Chris, and welcome everyone. In 2025, we executed our strategy by advancing our product pipeline, accelerating marketing activation, and strengthening operations to support profitable growth. We delivered revenue growth, expanded margins, and further strengthened the balance sheet while navigating a dynamic trade policy environment. This performance reflects disciplined execution and positions us for sustained growth in 2026. I will start today with our full year 2025 results, then cover fourth quarter performance, and conclude with our outlook for 2026. Fiscal 2025 revenue was $1.874 billion, an increase of 7% compared to 2024 on a reported basis. Revenue increased 6% on a constant currency basis as foreign currency provided a $14 million benefit. Additionally, the 53rd week contributed approximately 70 basis points to revenue growth, with the benefit largely concentrated in the DTC channel. Gross margin was 47.3%, an increase of 300 basis points compared to the prior year, with the improvement largely driven by lower supply chain costs and a favorable mix shift towards more full price sales. The timing benefit from tariff mitigation efforts, net of higher tariff costs, provided a 50 basis point positive impact. Adjusted operating margin was 9%, an increase of 170 basis points compared to the prior year. Adjusted diluted earnings per share increased 53% to $1.35, compared to $0.88 in 2024. I will now take you through the highlights from our fourth quarter. Revenue was $517 million, above the $506 million midpoint of our guidance. The over delivery was driven primarily by the Active Group, with the Work Group also performing slightly better than expectations. Reported revenue growth was 5% compared to the prior year, or 3% on a constant currency basis, with foreign currency providing an $8 million benefit. The following channel, segment, and brand performance is provided on a constant currency basis. Wholesale revenue increased 3% compared to the prior year, driven by international growth. While the U.S. was approximately flat, as Wolverine and the broader Work Group continued their marketplace reset. DTC revenue increased 4% compared to the prior year, including the benefit of the 53rd week driven by the strength in EMEA and solid performance in the U.S. at Merrell and Saucony. Active Group revenue increased 10% in the fourth quarter, ahead of our guidance of high single-digit growth, while Work Group revenue declined 12% and was slightly better than expected. Merrell revenue increased 5% in the quarter, driven by strong wholesale performance in EMEA and in the U.S., supported by continued market share gains and its key city strategy. DTC returned to growth both in the U.S. and internationally, following a successful holiday season. Saucony revenue increased 24% in the quarter, driven by strong growth in both the U.S. and internationally. Double-digit wholesale growth was supported by continued positive sell-through at retail. DTC grew in mid-teens, and both performance and lifestyle categories delivered meaningful gains. Sweaty Betty revenue increased 5% in the quarter, driven by growth in EMEA, DTC, and wholesale. Results were supported by product newness, strength in outerwear, expanded international wholesale distribution, and the benefit of a 53rd week, partially offset by the brand's ongoing reset of the U.S. market to a more premium DTC business. Wolverine revenue declined 11% in the quarter, reflecting the ongoing U.S. marketplace recalibration. Retail sell-through trends were encouraging and supported market share gains, underscoring the brand's building strength in its core boot category. Consolidated gross margin for the fourth quarter was 47%, an increase of 340 basis points compared to the prior year and 70 basis points above our expectations. The year-over-year improvement reflects continued product cost savings, a favorable mix shift toward more full price sales, and an 80 basis point timing benefit from our tariff mitigation efforts net of higher tariff costs. Adjusted operating margin was 11%, an increase of 110 basis points compared to the prior year and 50 basis points above our expectations. The improvement was driven by a continued gross margin expansion, which more than offset strategic investments and higher incentive compensation. As a result, adjusted diluted earnings per share increased 13% to $0.45, compared to $0.40 in the prior year and exceeded our outlook of $0.39–$0.44. Turning to the balance sheet. In 2025, we built on the progress made over the past two years, delivering solid cash flow, further strengthening the balance sheet, and improving financial flexibility. Operating free cash flow in 2025 was $126 million, above the $90 million midpoint of our guidance, largely due to working capital timing. Improved profitability and better-than-expected operating free cash flow enabled us to reduce net debt by $81 million in 2025, ending the year at $415 million. As a result, we exited the year with bank-defined leverage of 2 times. Approximately 90% of our gross debt is now comprised of senior notes maturing in 2029, providing us with a well-positioned and flexible maturity profile. During the fourth quarter, we opportunistically repurchased approximately $15 million of our common stock at an average price of $16.13. The repurchase was intended to offset dilution from stock-based compensation and had no impact on 2025 earnings per share. We ended the year with approximately $135 million remaining under our current share repurchase authorization. Turning to our outlook for 2026, which is anchored in a focused strategy to sustain momentum in our largest brands, while continuing to drive more consistent performance across the rest of the portfolio. For full year 2026, revenue is expected to be in the range of $1.96 billion–$1.985 billion, representing reported growth of approximately 5.2% at the midpoint. This includes an estimated $14 million foreign currency benefit compared to the prior year. The absence of the 53rd week is expected to be an approximately 70 basis point headwind to revenue growth, with the impact largely concentrated in our DTC business. On a constant currency basis and excluding the 53rd week in 2025, we expect revenue to grow approximately 5.2% at the midpoint. In terms of phasing for 2026, we expect revenue growth to be slightly more first half weighted, with the majority of the foreign currency benefit expected in the first quarter, while the fourth quarter comparison reflects the absence of the 53rd week that benefited 2025. The following segment and brand outlook is provided on a constant currency basis. Active Group revenue is expected to increase mid-single digits, and Work Group revenue is expected to be approximately flat. Merrell revenue is expected to increase mid-single digits, supported by new product launches, including the Agility Peak 6, refreshes across core franchises in modern colorways and materials, and disciplined marketing investments. We also expect improved DTC performance, with the momentum generated in the fourth quarter carrying into the new year on a healthier foundation. Saucony is expected to drive outsized and broad-based growth in the low to mid-teens, with gains across both performance, which makes up the majority of the brand's revenue, and lifestyle. In performance, the recent Endorphin Azura launch and the planned refresh of all the four franchises in 2026, supported by continued marketing investment and ground game activations, are expected to drive global growth. Lifestyle growth is expected to be led by international markets, particularly in EMEA, where we are seeing healthy demand supported by key city activations. In the U.S., following expanded distribution, 2026 is focused on optimizing the footprint through sharper assortments and marketing to support full price sell-through and sustainable long-term growth. Sweaty Betty revenue is expected to decline low single digits, with growth in its EMEA DTC business and expanding distribution in select international markets, more than offset by the absence of the 53rd week and the ongoing transition of its U.S. business toward a more premium DTC model. Within the Work Group, Wolverine revenue is expected to be approximately flat, with performance anticipated to improve in the second half of the year as the brand continues to recalibrate the U.S. marketplace and the benefits of improved product and marketing builds throughout the year. Before turning to gross margin, I will walk through the tariff assumptions underlying our outlook. Our 2026 guidance reflects the continuation of the tariff rates that went into effect in August 2025. Based on that assumption, we now estimate the full year unmitigated impact from higher tariffs to be approximately $60 million, or an incremental $50 million versus 2025. Any tariff rate reduction would impact the second half of the year. If the recently announced 15% tariff rate were to be implemented and remain in place through the end of 2026, we estimate it would reduce the 2026 tariff impact by approximately $5 million–$7 million relative to our current guidance. We are closely monitoring recent trade policy developments. We will evaluate potential changes as clarity improves. Gross margin is expected to be approximately 46%, down 130 basis points compared to 2025. The decline is being driven by higher tariff costs, an estimated 300 basis point unmitigated impact, partially offset by pricing and other mitigation actions, a favorable mix shift towards more full price sales and product cost savings. Adjusted operating margin is expected to be approximately 9.1%, up 10 basis points compared to last year, reflecting the impact of higher tariffs on gross margin that is anticipated to be more than offset by operating leverage from revenue growth, cost discipline across the organization, and continued efficiency improvements. We continue to make disciplined investments in our brands, primarily in marketing and key capabilities. Interest and other expenses are projected to be approximately $23 million, down from $28 million last year due to the reduction in net debt. The effective tax rate is projected to be approximately 18%. As a result, adjusted diluted earnings per share is expected to be in the range of $1.35–$1.50, compared to $1.35 in 2025. We have not assumed any future share repurchases in our 2026 outlook. Operating free cash flow is expected to be in the range of $105 million–$120 million, with approximately $20 million of capital expenditures. Moving to our first quarter outlook. Revenue is expected to be in the range of $445 million–$450 million, representing reported growth of approximately 8.5% at the midpoint compared to the prior year. On a constant currency basis, revenue is expected to increase 5.1% at the midpoint, with most of the full-year foreign currency impact anticipated to occur in the first quarter. Active Group revenue is expected to be up high single digits, and the Work Group is expected to be down mid-single digits compared to the prior year. Gross margin in the first quarter is expected to be approximately 47.5%, down 10 basis points compared to last year. This includes an approximate 260 basis point unmitigated tariff impact. First quarter gross margin is expected to be higher than the full year average, as Q1 typically benefits from favorable channel mix. As the year progresses, tariff impacts are expected to become more pronounced, while the year-over-year benefit from mitigation actions implemented in the second half of last year is anticipated to moderate. Adjusted operating margin is expected to be approximately 6.6%, an increase of 30 basis points compared to last year, as pricing, product cost savings, and SG&A leverage are anticipated to more than offset tariff headwinds. Adjusted diluted earnings per share is expected to be in the range of $0.20–$0.22, compared to $0.19 last year. In summary, 2025 was a year of meaningful progress. We delivered revenue growth, expanded margins, generated strong cash flow, and strengthened the balance sheet, while continuing to invest in our brand-building model and the capabilities that support consistent execution across the portfolio. We look ahead to 2026, we recognize the operating environment remains dynamic. While there is more work to do, our strategy is sound, our investment priorities are clear, and we enter the year from a stronger financial and operational foundation. With that, let me turn the call back to Chris before we open it up for questions.

Thanks, Taryn. In the year ahead, we anticipate building upon the good work we have done to date and continue to transform the company to become great builders of global brands. We are focused squarely on building awesome products, obsessing over design to deliver innovative, trend-right performance and lifestyle products that help make our consumers' lives better. Telling amazing stories, amplifying marketing activations to raise our brand's awareness and deepen our emotional connections to consumers, and importantly, driving the business each and every day. I am pleased the heavy lift of the turnaround is behind us with our transformation now well underway. Our balance sheet is stronger and our business is much healthier. Our streamlined portfolio, enabled by our platform of lean centers of excellence, is focused on brands rooted in authenticity, product innovation, and category leadership. We believe our brands are well aligned with long-term macro consumer trends at their core and uniquely positioned to extend into broader adjacent lifestyle opportunities. Our biggest brands are growing around the world, and Sweaty Betty and Wolverine are getting better each day. Finally, our teams are motivated, aligned, and squarely focused on our consumers in executing our brand-building model with pace and distinction, working together as One Wolverine to make every day better. I would like to close by expressing my sincere thanks to our teams around the world for their work last year, not only delivering solid financial results, but also building better brands and a better Wolverine World Wide, Inc. in the process. You have been great, and I am excited to see what we can do together in the year ahead as we write the next chapter in our company's history. With that, thank you to all for taking the time to be with us this morning, and we will now open for questions. Operator?

At this time, if you would like to ask a question, press star, then the 1 on your telephone keypad. To withdraw your question, simply press star 1 again. We kindly ask that you limit yourself to 1 question and return to the queue for any follow-ups. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Jonathan Robert Komp with Baird. Please go ahead.

Hi, good morning. Thank you. I want to ask about the outlook for Saucony for the year. A very healthy growth projected again. Could you give a little more context specifically on the domestic business, the drivers that you see across performance and lifestyle? If you could, any color on how distribution might play out year-over-year for the year, any color there? Just separately, unrelated question on tariffs. Are you changing any of your practices given the ruling with IEEPA tariffs? Are there scenarios that you accelerate any purchases or try to take advantage of lower rates here temporarily? Thank you.

Sure. Thanks, John. I will tackle the Saucony question first, and then we can talk about tariffs at the end. Saucony remains, I think, a very compelling growth story in total. Following a record year in 2025, we are looking at low to mid-teen growth in 2026, and that growth is really broad-based, performance and lifestyle, domestic and international. Performance piece is a very encouraging part of that business, the biggest piece of the business. We just launched the Endorphin Azura, which we think is going to be the biggest debut launch in the history of the brand at this time, and we are refreshing the brand's core four franchises, the Ride, Guide, Triumph, and Hurricane. The Ride just launched, and it is well ahead of our expectations out of the gate. We are coupling a very strong product pipeline with a record year of investments, going after our key city strategy and doubling down, because that has proved very beneficial around the world. Sponsoring events, the London 10K, the Shoreditch Half Marathon, the Eiffel Tower 10K, adding the Berlin 10K, and then bringing it stateside with the Philadelphia Love Half Marathon, and then our own events, like The Maze. Going further with the Run as One campaign, and then importantly, investing in the ground game, in POS and activation at retail, so we can do better on the sales floor where consumers are engaging in the business. On the lifestyle side, it is a strategically important piece of the business, but smaller than the performance piece in total, and going to grow this year. After a very good year last year, domestically, we gained 130, 140 basis points of market share in lifestyle in the U.S. respectively. We remain encouraged by that. Key styles are the ProGrid Omni 9, the Ride Millennium, and then importantly, a really strong cadence of collaborations again this year. Westside Gunn, Minted New York, Engineered Garments, and they are really targeting that Tier

John, as Chris noted, the tariff environment does remain dynamic, but our mitigation strategy, which you asked about, is unchanged, and it builds on the actions that we began in 2025 and that we are advancing further in 2026 as it relates to the pricing actions, the product cost savings, the focus on that full price discipline and discretionary savings. Our mitigation strategy is unchanged. Specifically, to your question about any planned acceleration of inventory, I would say, given the recent change to the 15%, the incremental tariff that was communicated, not implemented yet, and the continued policy uncertainty, we are not planning any material changes to our normal inventory receipts at this time.

That is all very helpful. Thank you. Thank you, John.

Your next question comes from the line of Mitchel John Kummetz with Seaport Research. Please go ahead.

Yes, thanks for taking my questions. Chris, on Saucony, the plan for 2026 U.S. lifestyle, it was not clear to me in your response to Jonathan's question if you expect U.S. lifestyle to be up for the year. I know you talked about the door count, which is helpful. I am curious what you are seeing in those go-forward doors that you added last year that you are continuing to sell into. Are you seeing growth there? How are you seeing that? Are they taking more product? Are they taking a broader assortment? I do have a follow-up.

Thanks, Mitch. I think we continue to see strength in U.S. lifestyle around the lifestyle assortment that we have. Again, the majority of doors that we opened over the past couple of years, those doors have checked and met expectations. A subset did not, and we are working quickly to rationalize those doors to make sure that the learnings that we have taken, we can apply to go-forward doors, and build a base from which to grow again. U.S. lifestyle globally will be up for the brand this year, and we anticipate it being up for this year. U.S. lifestyle will contract this year, just based on lapping that door count. We view that as a one-year lapping that door expansion, and then moving forward and building a healthier base going forward.

You mentioned some things happening at sort of Tier

That is a great question. I appreciate you asking about fashion and trend because that is really what we are competing in this piece of the Saucony business. Retro Tech remains healthy. I think three of the top five styles in the fourth quarter were Retro Tech styles, and I think four of the top five growth styles in the fourth quarter were Retro Tech styles. It remains a healthy piece of the business. At the same time, we are gaining share in that category, up over 100 basis points in both. I think we are thinking about where the world moves next and then the diversification of the product line. I will be very honest, I am really lucky that Saucony is a 100-plus-year-old brand that has an amazing archive from which to pull from to react to trends. Not all brands have that privilege, we do. We are trying to bring newness and diversification to the line. I think Tier

That is helpful. Thanks.

I am getting choked up, I am.

Your next question comes from the line of Peter Clement McGoldrick with Stifel. Please go ahead.

Hi, good morning. Thanks for taking my question. I was curious if you can help us think about the makeup of revenue growth in 2026. It is really encouraging to see the improvement in DTC. Can you quantify what is embedded in your DTC outlook and the pace of direct consumer engagement across your brand portfolio?

As regards to DTC, we talked about the improvements that we saw in the fourth quarter, as that has been a focus in terms of improving the performance in the holiday season, and encouraged by the improvement we saw in that fourth quarter. Looking into 2026, we did not give specifics in terms of DTC versus wholesale, but I would say that we would expect growth in both DTC and wholesale contributing to the business.

Could you give any color across the brands, is it Merrell or Saucony leading that, any outsized performance relative to the brand guidance that you represented for 2026?

I would not call any specific brand out. The approach that our team is taking, Chris talked about how we are looking across the portfolio when we are building out capabilities, and the team came together and demonstrated that in the fourth quarter, looking into the holiday, in terms of what were the learnings that we are applying, whether it is Saucony, whether it is Merrell, whether it is Sweaty Betty, or the Work Group. We have a healthier foundation in total across the business. As I look at DTC, the only thing I would call out is DTC in the fourth quarter of 2026 will have an absence of a 53rd week. As I said in my prepared remarks, the 53rd week does have a bigger impact on DTC, given just the nature of that business model of always on when you think of e-commerce and in the stores.

Okay, very helpful. Thank you.

Thanks, Peter.

Your next question comes from the line of Anna A. Andreeva with Piper Sandler. Please go ahead.

Great. Thank you so much for taking our question. Nice results. To Taryn, on the guide for 2026. You guys have been in investment mode for, I guess a good portion of two years now. Can you break down the sources of leverage implied in the 2026 guide? How should we think about marketing within that? I think you mentioned a marketing campaign at Saucony coming up. Can you just talk about the durability of SG&A leverage in the context of your longer term margins? Chris, sorry if we missed this, on Sweaty Betty growing mid-single digits in 4Q, how did the business perform in the core markets in the U.S. and U.K.? I think you said still in the reset mode in the U.S. Maybe talk about specific initiatives to return the brand to stabilization and then growth. Thank you so much.

Sure. I will go first, and answer the Sweaty Betty question, and then have Taryn talk to you about investment and leverage. I think we are pleased with Sweaty Betty's performance in the fourth quarter. We the business. Again, I think the important thing is how we have redefined and reset that strategy, really focusing on the home market. I think that the business checked in the fourth quarter, we are pleased, less promotional. I think the messaging is resonating. We are seeing increases in brand health metrics, and then importantly, we are seeing new category diversification working well for that brand. Outerwear, new bottom silhouettes are certainly encouraging. In the U.K., which is a fairly tough trading environment right now, and certainly a fiercely competitive category in which that team operates. Pleased with the product pipeline, pleased with the DTC performance, pleased that the heavy lift of the integration is now behind us, and that team is really laser-focused. I think this year, moving forward, I spent time with the team just a couple of weeks ago reviewing product and marketing, and I think that they are very well lined up and situated really well for this year, both on the product piece, but it is really getting back to their distinctive voice, this distinctly Sweaty Betty, this rebellious roots. I think that Born Sweaty campaign is a perfect amplification and manifestation of that approach. In the U.S., frankly, after the acquisition, we became very promotional, and it was really damaging to the brand in total, and we did not have the financial wherewithal to make all of the needed investments around the world that were planned. We have worked to reset and retrench that U.S. business, becoming less promotional, becoming more full price, becoming more premium, and thinking about that in the longer term. We are coupling that reset in the U.S. with doubling down on the U.K. business and then plugging Sweaty Betty into our international business and really beginning to grow across EMEA and in Asia Pacific. I am really pleased with the progress that team has made. I am very happy with the strategy and certainly the results in the fourth quarter and how we are thinking about 2026, give me increased confidence about that brand and what it can mean to the portfolio.

Anna, for SG&A, the leverage that we are guiding to in 2026 really reflects the work we have been doing as part of our broader strategy, which is making those targeted investments that we have talked about the last two years in our brands and in our key capabilities to support growth. While we have been making those investments, we have also been continuing to drive efficiencies across the rest of the organization. More specifically, a meaningful portion of the leverage comes from scale efficiencies on that higher revenue base. As we have made those investments in the brand and in those capabilities of growing the revenue, we are getting scale efficiencies there. The leverage from that, from the majority, where we are seeing the leverage is across the majority of our cost structure outside of those four brand-building investments. It is not just one area, it has been broad-based as we have been looking for those efficiencies in the business. We are also benefiting from the targeted cost actions that we took in 2025, that we brought and carried into 2026 on a structural basis. I think how I would summarize it is that SG&A leverage in 2026 is driven by a combination of the scale efficiencies and the targeted cost actions that we have been taking over the last two years, that we had called out that it would be key to our value creation model. The final point regarding your specific question on marketing, we have made over the last couple of years, needed investments into marketing and building that brand awareness, building out the brand building model. I would expect in 2026 that it would remain fairly consistent, as a % of revenue, as where it was in 2025.

Appreciate it. Very helpful, and best of luck, guys.

Thanks, Anna.

Your next question comes from the line of Mauricio Serna Vega with UBS. Please go ahead.

Great. Thank you. Thanks for taking my questions, and congratulations on the results. First question on the Endorphin Azura. Maybe could you elaborate a little bit more on what gives you confidence about this franchise long-term opportunities? Do you think it could drive more distribution over time? The second point more to Taryn, maybe could you talk a little bit more about the cadence of the tariff impact on gross margin? I think you alluded to more meaningful impact or bigger impact as the year progressed. I just want to understand, like, in terms of cadence, like, which quarter should be the most impacted and so forth. Thank you so much.

Sure. Thanks, Mauricio. We are bullish on the Azura. I think the team did a very nice job identifying an opportunity in the marketplace, and then importantly, building a beautiful product that performs. It was really well anticipated by the marketplace, given everything that we had built into it, and all of the initial reaction to it. I think we are even more encouraged by the initial response to it. It is important, it is not just a domestic response, but we are hearing feedback both domestically and globally. Ahead of expectations, a good launch at saucony.com, beginning to feed into retail here in the U.S., and we are encouraged by that. I love the fact that we have, as Saucony, a leader in innovation and bringing elite products to elite runners, our ability to take innovation and democratize that, and identify white space in the marketplace, and then build a beautiful shoe at a $150 price point, is a testament to that product team, and certainly the opportunity we think that it possesses in the marketplace. I do think it opens up additional distribution for us, places that we may not have great exposure to today. Pleased with the Azura. Again, we anticipate it to be the single biggest debut launch in the history of the brand, to date, because we are going to try to do it again. Certainly pleased initially out of the gate, with Azura and what it can mean to the Endorphin franchise and the broader Saucony brand.

To the tariff question and the phasing of that, based on our guidance of approximately $60 million of full-year unmitigated impact, we would expect more of that already coming through in the first quarter, reflected in the guide, that in the first quarter, we said it would be unmitigated around 260 basis point impact to gross margins, and on the full year, around 300. That indicates that the unmitigated impact will start to come through more in the second quarter and into the back half of the year. The reason Q1 is a little lower than the average is primarily related to the composition of the inventory that is flowing through the P&L in the quarter, and that includes some differences in brand mix and sourcing mix as well. Somewhat, to somewhat degree, as you will recall, there were different tariff rates last year, too. Why Q1 is lower is more, somewhat lower, is a combination of that brand mix and sourcing mix.

Got it. Is it fair to assume that it goes all the way to Q4 of this year, the tariff impact?

Yes.

Thank you.

The $60 million.

Yes.

... like I said, being that 300 basis point impact, we have assumed it through the end of the year.

Great. Thank you so much.

Thanks, Mauricio.

Your next question comes from the line of Laurent Andre Vasilescu with BNP. Please go ahead.

Good morning. Thank you very much for taking my question. I wanted to follow up on Saucony. On the last call, it was mentioned that new doors was a third of Saucony's third quarter growth. Curious to know how much it was for 4Q. Then slide 9, it details your global distribution network, but this quarter, it removed a list of key accounts like DTLR, Foot Locker, JD, which was detailed in the three key slides. Curious to know why was that the case? Are there any accounts, Chris, that you are actually exiting for FY 2026? Then I have got a question following up, Taryn, on the FIFO accounting treatment.

Can you repeat the second half of—I got a little lost on the first part of your, the door count question?

Sure, Chris. For sure, 4Q, what, like, what was the like for like? The second question really was around the fact that your slide nine, in your presentation this morning, it used to give you the list of a key account, and it does not show it. I am curious to know, of that 1,300 doors, are you exiting out any of those accounts? Just if you can, for the audience, can quantify, is it, like, 300 doors, is it 400 doors you are exiting out? That would be very helpful. Thank you, Chris.

We anticipate for U.S. Saucony Lifestyle to be in about 1,000 doors in the first half of 2026 and the second half of 2026. The retailers that make up those door counts include the likes of JD, DTLR, Foot Locker, Champs, Journeys, Nice. That is that expansion, and how we are thinking about those door counts, specifically.

Wonderful. Thank you, Chris, for answering the question. Appreciate it. Then, Taryn, your 3Q 10-Q shows that 3Q EPS was boosted by $0.02 or about 7%, with the FIFO accounting change, which helped your gross margin, I think about almost 50 bps. Curious to know how much the FIFO change helps your 4Q gross margin and EPS, and how do we think about that change in accounting, as we think about 1Q, 2Q? Because I would think, when you change to FIFO, it is helpful in an inflationary environment with tariffs. Thank you very much.

Thanks, Laurent.

Yeah, Laurent. You will recall that we made the change in the third quarter.

Yep.

The majority of our inventory was already on FIFO accounting. Actually, earlier in the year, we had had part of when we were looking at how do we simplify, how do we more standardize when we look for efficiencies, part of it was related to the inventory accounting in terms of why did we have it two ways. There was an effort to put the minority of the business in line with the majority of it to move to FIFO, which we did in the third quarter. What is displayed in the tables, and Jared can expand, is just an explanation of if we had not done it. I think what is important to call out is that in the guidance that we gave in November, we had already made that accounting change and contemplated the impact.

How much—

Yeah, Laurent.

Yeah.

Yeah.

Yes.

There will be—

How much was the benefit?

On four Q? Is that the question?

Yeah, how much was it for Q4? It will be in the 10-K, obviously, that is, I think it is filed a little later. For the audience, how much was it in terms of EPS benefit for Q4?

Yeah, I would say, obviously, based on our guidance in November, this was already implied, so no impact on results versus guidance. In the quarter, just so you know, we will have a full year table. We provided the tables in 3Q call. Doing the math, it is on the COGS line, it is about $1.4 million or so.

Okay. Thank you very much. Best of luck.

Yep. Thanks, Laurent.

Your next question comes from the line of Samuel Marc Poser with Williams Trading. Please go ahead.

Thank you for taking my question. I wanted to follow up on. You say that, well, I am just trying to decipher how much bigger, what percent is the lifestyle business versus the performance business within Saucony? Can you give us some idea of the differential?

We, yeah, we talked about that last call. Performance is the majority of the business or a lion's share of the Saucony business. Lifestyle is a smaller segment.

At any degree? I mean, is it 60, 40, or, I mean...

We have been consistent. The performance is the lion share of the business in Saucony, Sam.

Secondly, in the U.S., maybe I am not sure if it is overseas, you have a third party, managing or a third-party sales team selling your lifestyle product. I am wondering why that is and why you have not brought that in-house. Because I think if you had brought that in-house, you might not have had the 1,300 stores, and you might have avoided some issues.

I think that the model which we use, a combination of in-house sales teams, along with agents and agencies, is not unique to us, especially in growing businesses. The partners that we do have, we retained for, they bring a certain expertise to the business. I think we are obviously continuing to evaluate those relationships going forward and get to a normal course of business. I think so far, the relationships have served us well.

All right. Thank you very much.

Thanks, Sam.

Your final question comes from the line of Ashley Anne Owens with KeyBanc Capital Markets. Please go ahead.

Hi. Great. Thanks for taking our question. Maybe just to start, given Saucony's low double-digit plan for the first quarter, anything you can say on the guardrails you have set with accounts on initial buys versus chase to ensure that pull, not push model holds through the first half? Secondly, talked a lot about improving that full price mix within the portfolio. As you look at the early 2026 reads, how is the consumer absorbing those higher AURs? Any categories within active that you are seeing greater elasticity? What are the areas you believe you can still lean into some more premiumization? Thank you.

Sure. Thanks for the question, Ashley. I think, as we think about growing the success that we have had in Saucony, where it was two years ago, to posting an all-time record year last year, again, with low to mid-teens growth anticipated for this year, I do think we think really closely about distribution decisions, both domestically and internationally. I think that is a big part of the Saucony story that hopefully is coming through, that it is not just a U.S. story or a single category or a single couple of shoe story. It really is broad-based growth. We do think about that. Accounts that we open up, what we offer them. I think in the past, historically, we probably have not done as good a job as a company as thinking about segmentation, distribution, and who gets what. I think that is part of our new global brand building model and the discipline we have tried to enact over the past couple of years, and that is certainly a piece of that. At the same time, with a global business, we learn a lot. We are always trying to learn both what is happening within brands in different parts of the world, at the same time, sharing learnings from brands across the other brands in the portfolio. I think our EMEA business, I think that team has done a really great job, specifically in Merrell, Saucony, growing those brands, and then certainly think about how they think about the marketplace and distribution and segmentation. Those are all things that we are paying close attention to. We do think we are at a special moment in Saucony's history. Certainly pleased with the progress we have made. At the same time, I think there is a much bigger opportunity that we need to go chase.

Regarding your question on what we are seeing in terms of the market and the pricing action. While our price increases, they have only been in market for a little over two quarters, generally, the market response has been in line with our expectations, and I think that is reflected in we were looking at fourth quarter in the busy holiday season, and that came in line with our expectations in terms of the performance. Across the business, we have taken deliberate actions, and that includes the pricing that you are referring to that offset the tariffs and improve our cost structure. We have also been innovating our products and investing in the marketing so that we can achieve more of that full price selling. I think that that healthier source from product mix, improved full price realization, and the disciplined channel execution that Chris spoke to, all of those, we are looking at contributions in terms of the growth. I would say so far, what we have seen is in line with our expectations.

Super helpful color. Thank you, and best of luck for the year.

Thanks, Ashley.