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Operator: Good morning, good afternoon and good evening, ladies and gentlemen. Welcome to the Samsonite Group 2025 Third Quarter Results Conference Call. [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Mr. William Yue, Vice President of Investor Relations. Thank you. Please go ahead, sir.
William Yue: Thank you very much, operator, and thank you very much, everyone, for joining the call. We have the pleasure today of our CEO, Kyle Gendreau; and our CFO, Reza Taleghani with us, and our CEO, Kyle Gendreau, will start off with a few remarks. Thank you very much.
Kyle Gendreau: Okay. Thanks, William. Thanks, everybody, for joining from Hong Kong. I realize we have a time change. So sorry, this is at 10:00 New York Time, if I'm getting the times right. But thanks for being with us. So I'm on Page 5. And I think the way I would start with title sums up really well, strong momentum in the business supported by innovative products, which you'd expect from us. But importantly, all regions in our core brands -- actually, all of our brands are delivering sequential improvement in Q3 versus Q2. We've seen clear sales momentum in Q3, our net sales decline for the quarter. Constant currency is 1.3%, coming off of the Q2 that was down 5.8%. Encouragingly, net sales growth was positive in the month of August, September and October in all regions and brands, as I said, are seeing sequential improvement in constant currency growth Q3 versus Q2. If I take one lens, the one market that's continuing to have some challenges on the wholesale side with wholesale buy-in, consumer sentiment and lower inbound tourism in North America. We'll cover North America in a little bit of detail as we're going through. Our net sales would have increased in the quarter by 0.3%, just adjusting for North America. Our Q3 benefited from growth in our overall direct-to-consumer business and both our -- and also our non-travel sales had positive growth -- noticeable positive growth. Clearly, sequential improvement on those, and we continue to see sequential improvement on our travel net sales. Our direct-to-consumer sales consolidated up 3.5% period-over-period. Our DTC e-commerce was up a little over 10% -- our owned company stores were up 1.1% off the back of store openings and building momentum. Our DTC mix today is -- in Q3 is 42% versus 38.9% last year. We'll cover that in a little more detail later, but we continue to move in that direction, similar to what we saw in Q2. Our overall wholesale channel net sales declined 4.5% period-over-period, with sales for our traditional, I call it, brick-and-mortar wholesales down around 7% due to more cautious purchasing by a few of our key wholesale customers, particularly in the U.S. that are driving a lot of this. But this was partially offset by meaningful growth in our e-retailer sales, up 12.3% in the quarter. And then lastly, I talked about non-travel. I've got a slide in my deck, and Reza, I think, has one in his as well, but our non-travel sales were up almost 7% in the quarter as we continue to focus on this opportunity, which is white space opportunity for us, becoming a more meaningful percentage of our overall business, as you know, but really a very strong trend there. I think one of the real highlights of the numbers as well beyond improving sales trend is the gross margin story. Our gross margins expanded in the quarter with impacts from tariffs really well managed. Our Q3 gross margin was 59.6%. That's up 30 basis points to last year. And importantly, up 60 basis points to the prior quarter. And when you think about the full effect of tariffs going in at the beginning of Q3, it speaks to kind of our tremendous ability to navigate and mitigate tariffs. Our U.S. business is around 1/3 of our business, but well managed. You can see it in the overall gross margin of the business. I can't thank our sourcing teams enough. What they've done to navigate is tremendous. What our teams on the front end have done and the relationships and the partnership we have with our suppliers really speaks to our scale advantage and the ability to manage the gross margin of this business well. And it trends into Q4 looking just as strong. We do expect sequential improvement in our sales in Q4 relative to Q3. We believe we're capitalizing on the growth in travel, which continues. We have really amazing products. We'll talk about a few that we've launched in the midst of the quarter, like Paralux that you can see to the right of this page. And we have a positive sales trend leading into Q4. Last 3 months have been strong. The first month of Q4 is a positive growth story. And there's good momentum leading into holiday. A lot of Q4, as you know, depends on holiday. But I would say the early reads from -- across our markets are feeling good on the holiday story. But a lot happens in the next 4 or 5 weeks, but we're well positioned on that front. And as you know, we're really very positioned really well for profitable long-term growth. I'll cover it in my outlook as well, but the medium and long-term growth prospects for our business and our competitive advantage on product innovation, real strength on advertising and really being able to capitalize on the underlying growth in travel that continues and seizing the white space on the non-travel opportunities, which we've shown over the last couple of quarters and for sure in this quarter, really underpins kind of the strength and our ability to continue to deliver medium- and long-term growth for the business. Next slide, from a brand perspective, you can see each -- every one of our brands delivering improvement over last quarter. Importantly, Samsonite improved from roughly down 5% to down 4% in Q3. But when you peel into that, Europe is positive 1.3%; Latin America, positive 8%. Tremendous performance shift in Asia with building momentum in the quarter, down 4% versus down 9% in Q3. And our North America business, again, largely driven by wholesale customers and some of the buying behaviors and cautionary approach was down 10%, just a bit better than what it was in the previous quarter. A real tremendous shift to TUMI's trajectory. We were performing down 2% to 3% for the first half of the year. Q3 shifted to positive 5%. Importantly, it came from across all of our regions, particularly in Asia, which was up 7.1% and Europe, up 6.3% off the back of initiatives pushing the business, new store openings and a consumer group in this higher income class that has shown more resilience in Q3 than the rest of our consumers. And North America, importantly, was up 3.3% in the quarter. And if I call out China specifically, where we have a laser focus within our Europe business, that was up 10% in Q3 for the TUMI business. So really solid performance, good trends as we move into the back half of the year. And American Tourister had a really quite dramatic shift. That was at the start of the year, and we talked about this in the last two earnings calls, a consumer group that's under strain more than others, particularly in the U.S. market, but around the globe, that consumer was moving more cautiously. We saw a really meaningful shift in improvement, largely off of what we've done to shift the product offering within the brand, particularly in Asia, particularly in India, which shifted to positive 3% growth for American Tourister. And as you know, that's our biggest market for American Tourister in the globe and really sequential improvement, noticeable improvement from where we were in the first half of the year. And I think we're set up well as we finish the year and go into the start of next year. Page 7 is a slide we've looked at before. And I just want to drive the point. And for me, this company is hitting an inflection point that we've been talking about coming. As we exit Q3 and step into Q4, you can clearly see the shift. But importantly, if I go back to this revenge travel period '21 to '23, where our business was up 23% against an industry that was up 3.8%, tremendous growth. We were 6x growth in industry off the surge of travel that came back. Global air traffic is still projected to grow. This business correlates really well with air travel. I have a slide that you've seen before a little later in the deck. 4% growth in global air traffic really underpins the resilient of consumer spending on travel. Maybe they're not spending the same way. I think that's had some impact on our business, but the sheer travel numbers continue to grow and the outlook continues to be very positive. We've continued to invest in this business on product innovation, new product innovation, capitalizing on the white space within non-travel and pushing the advertising and elevating the advertising stories of the business. So we're continuing to invest in marketing spend, changing the lens on the way we spend these dollars to really go after not just existing customers from a loyalty perspective, but to deepen our relationships and broaden our relationships with new customers. And we're seeing clear traction on that front and investing there. I believe we're about to get the benefit of replacement cycle in this industry for the same reason that revenge travel slowed down at the end of '24 in the first few quarters of 2025. I'm certain that we're going to see the inverse of that as consumers continue to travel at a very good pace. As you know, and I presented this, I think, in the past, over 52% of travelers replace their luggage every 2 years. Non-traveler bags, 73% of travelers replace that every 2 years. And so we're now at a moment in the cycle where we're 3 to 5 years past that surge in travel. And I think we're starting to see the benefit of that in our numbers as well, which I was anticipating. We also believe consumers in this environment in many markets around have shifted towards value and have shifted to e-com. We can clearly see it in our own e-com numbers, both our direct-to-consumer e-com and wholesale. And I think importantly, because of our scale advantage, we're well positioned to capitalize on that. Our brands can hit price points -- competitive price points across all of our markets across particularly Samsonite and American Tourister, and we've been doing that. That's fueling some of our story. And we -- and as you know, we're investing in this in a strong digital platform, both digitally and importantly, on the wholesale side as well. And it's delivering. And you can see it in our numbers in Q3. And I think we're really set up for medium-term growth on both of these avenues as we move forward. We're focused on profitable long-term growth. When you think about what I'm focused on as a leader, it's really around getting this business back to its normal growth profile. We have a long history of delivering outsized growth against industry, and I think we're heading there. And importantly, we've continued to strategically invest in our business. Even as we face headwinds, we're pushing the business to really strengthen our competitive advantage in the marketplace from a leadership platform capabilities and scale advantages to continue to move us forward. We're continuing to win through product innovation. We've got some really exciting stuff that we've launched across all brands, a lot in the pipeline as we move into the start of next year. We're really laser-focused on amplifying and elevating brand awareness. As you know, we're leaders, our three core brands are leaders in the market in their own rights individually. But collectively, we're looking to amplify and really push more efficient, more effective marketing and have a vision to increasing this as we move forward. And we're really set up to do that to, again, cultivate customer loyalty, but importantly, continue to attract new customers to our business. And so you should be seeing and feeling that in our marketing messages today and as we move forward. We will capitalize on the growth in travel. The forward view for global travel continues to be strong and as a leader with really the most trusted brands in the space, we will capitalize on that growth. I say it again, this white space around non-travel, there's tremendous opportunity. I've got a slide that talks about market size and what our shares are. We have tremendous opportunity to grow the non-travel business, of which we've been doing consistently for a long period of time. I think we can accelerate what we're doing here on the non-travel side, and you'll hear and see some of that in the numbers that we're showing today. And we're strategically growing DTC really through enhanced e-commerce platforms across the globe and across land -- brand and really disciplined store openings and expanding our retail footprint in the markets that it makes us -- sense for us to do. It provides this really unique competitive advantage to us that we're executing wholesale, but we're executing perfectly digitally and pushing ourselves on the digital side. And we have a foundation of retail stores, almost 1,300 stores globally that consumers can interact with us. And these are direct owned stores that we can have this deep relationship with our consumers. And we'll continue to do that. And I think over time, our DTC mix continues to slow but steadily increase in the business at the right pace. And we remained strictly disciplined on overall cost structure. You can see that in our overall numbers. Obviously, gross margin is an art and a scale that we have, and we manage gross margin for a long time really well. But how we manage the rest of our cost structure, Reza will talk through that as well. Even as we face some headwinds over the earlier quarters of this year, -- the cost structure has been really well managed, and it's well entrenched in who we are as a business. I think this is a new slide. It's a slide that we use internally quite a bit, but we operate in a really highly attractive fragmented global bags and luggage business. I'm on Slide 9. If you look to the right, global luggage. This is what you typically think of us as when you think about us today. It's roughly 64% of our business is travel luggage. We have a 19% share in what in '24 was a $22 billion business that grew at a CAGR growth of 2010 to '24 by 3%. And that's with the COVID years. The reality is take the COVID years out, it looks more like what the forward indicators are for this industry, 2024 to 2029, 6% CAGR. And as you know, we have the ability to outpace this growth. And that's the way to think about this space. So we have a growing industry. We have meaningful scale and we have the ability to continue to grow and attract consumers into that -- into our family of customers. To the right of the page is bags, global bags. This is excluding luggage and excluding handbags, which is not us, right? This is the rest of the bag business, what people are carrying around and moving backpacks, duffles, crossbodies, things that we see every consumer in the world traveling with. That has very similar underlying growth dynamics. You can see the 10% to 24% impacted a bit by the COVID years and the forward indicator is not so different than luggage, 5% growth. And importantly, our market share here is 3%. We've been growing high single, low double-digit growth for a period of time in this space, and we have clear ability to continue to expand with collections that we've launched and been launching. I think my next page I will show you a few of those that shows that we have tremendous ability to grow share in this bucket. And it's a larger bucket with plenty of opportunity for both ongoing growth and just gaining share. And just as a reminder, in this 2010 to '24 period, if you blend the two, we -- our CAGR growth in that time period was 8.2%. That's including COVID years. That is almost 3x the industry growth that we saw in that same time period. So it speaks to kind of our ability to leverage our scale to move across these two big categories of the market we operate in. Our growth, we've covered this before, has historically been really strongly correlated to travel. And the outlook for travel remains tremendously strong. If you take a 5-year forward view, travel growth expected to be around 4%. If you shorten that up a little, I think it will actually be a little more. If you look to the left of the page here from where we are to 2019 levels, call this pre-COVID, we're up 22% in sales against the global passenger growth in that time period, including COVID, that's up 8%. So you can see this tremendous outpace that we have in growing against an industry that continues to grow. The chart on the right, we've shown before, okay? The red line is travel industry. You can see the impacts of COVID. But the real impacts are really where we are now, which is this revenge travel that I covered that we really overperform. And the forward indicators. The most important page here is the forward indicators for global passenger travel, 4% growth. And we're importantly at this inflection point that we're getting back on course. The history clearly shows we outperformed this industry, and we're pivoting into positive growth again is the way I would describe it in -- at the end of Q3, in Q4 and for sure, in the years to come. And we should do better than what the industry underlying growth is like we have for the last decade. On Page 11, non-travel category, 14% CAGR for us, 2020 to '25, right? So I just showed you a number where the industry growth was something like 2%, and we had 14% growth here. We've gone from $480 million to $912 million. We've talked about this for several years. There's real opportunity to continue to grow in this space. We delivered close to 7% growth in Q3. And we're focused, and it's across all of our brands, brands like Gregory that are largely non-travel, High Sierra which has a meaningful piece of travel. But TUMI, Samsonite and American Tourister are all delivering meaningful growth in this space and plenty of opportunity to gain share and continue to grow. As a team, we're laser-focused on really further penetrating what I would label is a big business of us, a $1.4 billion to $5 billion business, but under-penetrated from a category perspective, that I know we can do more. And in this Q3 period, we're up 270 basis points as a percentage of our sales, approaching 36% of our sales non-travel. I think when I started a long time ago, it was something like 12% of our business, right? So this is really meaningfully moving. And again, in a huge market that's got tons of potential for us. On Page 12, what does it look like? I think you know this. A good example of Samsonite Better Than Basic designed and developed in our U.S. team performing really well. This has a whole collection of backpacks, duffles, cross bodies that is performing tremendously. It's what you see consumers moving with today. Ecodiver in the middle of the page. This has been a home run, started in Europe. It's a home run all across the globe. The whole collection of duffles, backpacks, more unstructured travel goods that consumers are traveling with today. It's a top three collection in Europe overall, and it's penetrating the rest of the world over the last couple of years in a meaningful way. American Tourister take the cab and underseater. There's this huge wave of underseater bags within Europe as discount airlines put pressure. This underseater category, we're hitting with all of our brands, and there's so much more to go. And this American Tourister bag has been a tremendous success. And when you think about American Tourist, you think about bright colorful luggage, but this non-travel capacity we have in backpacks and duffles is tremendous, and the teams around the world are doing great stuff. Gregory, you get it. This is Gregory, which is super technical mountain bags. As we come off the mountain and we really penetrate into everyday bags, that make you feel like you're on the mountain, but you're in an urban setting and more lifestyle approach products with Gregory. Gregory is delivering significant double-digit growth this year for us, and it's got tremendous room to grow. Samsonite Paralux, this is a collection that we launched. I have a slide on it. This is the backpack component of this. This has been a huge success. This is a 2-in-1 backpack, where you can separate that backpack and you have a bag that you can take with you for the day and the travel component of that backpack that you can use is effectively your underseater has been a huge success, a Red Dot award-winning collection. And then TUMI's, Celina part of the-- TUMI Voyageur collection, really an amazing bag, big part of TUMI's journey and so much more to go on TUMI from a collection perspective. Think about owning totes and business bags and what TUMI is known for, there's real opportunities to drive further that space, particularly in the women's category. Just a little call out. We were -- and we've been here before, this is -- Business Travelers Award, where Samsonite was rated #1; TUMI was #3 on the list. No surprise, Samsonite is #1. This is a survey with 95,000 global travelers voting in a panel of 20 experts. And importantly, when you think about scale and the ability for us to innovate and bring products to be recognized as #1 business traveler luggage is meaningful. And you'd expect that from us. And I'm just sharing that this is with [Technical Difficulty] push in the business to really demonstrate this amazing product development, this focus on functionality, focus on sustainability and creating inspiring bags that people want to travel, and this award speaks to that. On Page 14, we've had a very successful, I would say, ahead of our expectations launch of Paralux Collection. I think I indicated we're working on this. This launched in September of 2024. It's a collection that really brings the best of our innovation from a sustainability perspective, the bag is largely sustainable. Almost every inch of this product incorporates sustainable materials. It's built for self-repairability, another real sustainable attribute. This is a bag that you can replace the wheels at home. We can help you do that very easy. And it's built to last, and it's built with superior design functionality. It's become one of my favorite bags to travel with from a carry-on perspective. It's got front access, a mid- access. It's really designed perfectly for the way consumers think about traveling and ease of travel when you're moving through airports and in hotels, what the bags deliver is tremendous. And it was recognized. We won two Red Dot awards for this, both on sustainability design and overall design. And again, it's exceeding our expectation. And I would argue it's just getting going. I think it's been a really successful collection. And it speaks to the power of a globally launched product with cohesive high-impact media campaigns across all of the regions of the world. This talks about scale advantage when we put ourselves together to deliver on a really amazing product. You should expect more of that from us as we move forward. And TUMI is really on the run. You can see the shift in performance as we stepped into Q3. We continue to focus on elevating this brand on all fronts. It's a very product-centric and communication strategy-focused business, okay? This is around delivering performance luxury products and then really meaningfully elevating the messaging to consumers on what we offer here and what this means. We had a 50-year anniversary for TUMI. Even that surprised me, I hadn't fully appreciated TUMI was 50 years in the making. It's hard to find brands in our space that are 50 years -- and it was driven. It was well presented the signature TUMI Red that you can see on the left, incorporated in some of the product materials as we are launching our 50-year messaging to consumers. We launched 19-degree light as part of this 50-year, really a testament to the innovation that continues to be deep in the brand TUMI, both on travel bags and non-travel bags, very successful line. Clear focus on lightweight that TUMI has been needing and waiting for it, very well received by consumers and more to come, is what I would say as we go into next year. And then just lastly, TUMI's Icons Tested” campaign as we talked about the icon of TUMI and what it means to travel with the TUMI that fits the true definition of performance and luxury, how it comes together. This we launched in September. We've already had 56 million impressions off of a campaign that I think has been well received, both focused on men's, non-travel, women's non-travel and talks about the true DNA of what TUMI is all about when you think about performance luxury. So we're quite excited and more to come on the TUMI's journey as well. We've opened some amazing stores for TUMI around the world. I just wanted to give you a few of these. South Coast Plaza in California, just a tremendous store. I think we talked about the TUMI store in Shanghai, this flagship location in the bottom left. That's been a tremendous success, really distinctive TUMI. When you get into that store, you feel the brand in a meaningful way. Chengdu, China. So when you see China moving and the types of stores that we're opening within this region, really amazing in Beijing, China as well. This speaks about the power of this direct-to-consumer model and the strength of the brand as we show up not just -- on digitally, not just with amazing product, but on a footprint that consumers really embrace kind of what the brand is all about. So with that, I will hand over to Reza and I'll come back with outlook right at the end.
Reza Taleghani: Thank you very much, Kyle. We're on Slide 18, just looking at the overall results, and some of this Kyle has covered, but just to go through it. Overall, Q3, we're reporting sales that are down 1.3%, a meaningful improvement from the first half. The first half, as you'll recall, was down 5.2%. So we are seeing that sequential improvement that we had indicated on our last call. Very importantly, this gross margin improvement, not only are we maintaining gross margins despite the tariff headwinds, but we're actually 30 basis points better year-over-year. And as you'll recall, gross margin last year was running at record levels for most of the year. So we're very, very pleased with what we've been able to do on the gross margin front. Adjusted EBITDA, obviously, the sales have been down, and therefore, that's working its way into the adjusted EBITDA numbers. So we're reporting $143 million of adjusted EBITDA in the quarter. If you're looking at the margin levels, we have had 43 net new stores that have come in year-over-year. So that obviously has a cost implication that works its way into that margin. So the margin has been impacted between the sales being lower. We have some incremental stores that have some SG&A associated with it. And so we're looking at 16.3% from an adjusted EBITDA margin for the quarter. And adjusted net income at $64 million as well, just looking at the total flow-through of that. Again, I think the important point on the sales is the last 3 months have been positive, and we're feeling pretty good about where the business stands right now. On Slide 19, just to give you a sense in terms of how everything is performing by region. Net sales did improve sequentially in every region since the last quarter. So as we mentioned, we had a North America business that has been under strain, but even that is looking better quarter-over-quarter. Just to go through the numbers. Asia has had a meaningful improvement, so roughly flat in Q3. And as you can see, the first half of the year, Q1 Asia was down 7%, Q2 was down 7.6%, and we're looking at about 30 basis points down for Q3. So a meaningful improvement, largely on the back of TUMI as well, although all brands are performing. North America down 4.5%. Obviously, as Kyle mentioned, the wholesale customers from the Samsonite brand impacting that number and that consumer sentiment point that we have been talking about earlier in the year continuing a little bit. Europe returning to positive. We're feeling pretty good about the Europe business, although the travel statistics and the inbound tourists are a little bit lower than what we've expected in the past few years. Reporting Europe up about 1% in Q3 and Latin America up 1.2% in the quarter. Largely, if we didn't have -- you'll see it on a subsequent slide, if Mexico weren't caught up in some of these tariff issues and some consumer confidence and wholesale buying issues in Mexico, that would have been the normal double-digit growth that you would expect from Latin America in the quarter as well. On the next slide, we can get into it a little bit at a country level just to give you a sense in terms of the individual drivers. If I'm looking at net sales in North America, you should be aware that TUMI really had a good improvement quarter after quarter. So TUMI was positive 3.3% in Q3 in North America as compared to down 3.3% in Q2. So that's a meaningful shift that we saw quarter after quarter. The Samsonite brand still under pressure in North America, but it is getting a little bit better, and it's largely drawn off of the cautious buying that we're seeing from our wholesale customers. Net sales in Asia, roughly flat, and we're seeing sequential improvement in net sales of TUMI. TUMI was up 7.1% in Q3 versus up 5.2% -- versus a 5.2% decrease in Q2. So very meaningful shift in terms of what we're seeing in the TUMI business in Asia off the back of the initiatives that Kyle outlined. Strong growth of the brand in China, 10% growth in China in Q3 alone. So we feel very good about TUMI globally. Sequential improvement in net sales of Samsonite brand in Asia. So if you're looking at it quarter after quarter, Q2 Samsonite brand was down about 9%, Q3 down 4.3%. So getting a little bit better as we get enter the back half of the year. And then meaningfully, you saw the shift that we saw in American Tourister overall. That was -- a lot of it was due to Asia, but specifically India. And so if you're looking at Q3, India improved 8.5% growth in Q3 from down 2.7% in Q2. So really meaningful improvement in terms of the sequential improvement that we saw in that market as well. Going on to the next slide, we can touch on Europe a little bit. Europe sales up about 1% in Q3 as compared to down about 1% in the previous quarter. Both Samsonite and TUMI are delivering positive net sales growth in that region. The specific markets where we've seen improvement, we've seen France and the U.K. help drive a lot of that sequential improvement. But overall, most of the countries in Europe are performing relatively well. I would tell you that Germany has started to come back a little bit as well, but we were pleased, especially with these two specific markets in Europe. The net sales growth in Latin America improved 1.2% in the quarter. Again, I think this Mexico point is very important as you look at Latin America, excluding Mexico, it would have been up 13.2% in the quarter as compared to Q3 of 2024. So Mexico is under pressure as we look at that Latin America market overall. On Slide 22, gross margin stability is really a key. It has been all year, but I think we're very proud of where we ended the quarter as well. So Q3 gross margin, 59.6%, 30 basis points higher than the 2024 number of 59.3%. Some of that is driven by mix effects. As we have said over the course of the year, the teams have been very disciplined in terms of maintaining the promotional activity and the cadence. Obviously, we're still trying to make sure that we don't miss on sales and pursuing that, but we have been very disciplined in terms of what we're looking at on the promotional side. And really, the actions taken to mitigate tariffs have been tremendous. We've talked about this the last -- since the April tariffs on the last couple of calls, we've been talking about this, but you can actually see that with tariffs in full effect right now, if anything, we've actually improved our gross margin. So the mitigation efforts have been very successful. Those included partnering with our suppliers to manage the cost, reengineering product in the medium term to make sure that we hit those price points while making sure that we hit the business specific gross margin targets that we have for all the brands. And we do anticipate being able to continue that going forward as well. On the next slide, just some of the other financial highlights that bear mentioning coming out of the quarter. We're on Slide 23. Overall, Q3 distribution and G&A expenses were $339 million. That's up 5.1% compared to last year. But bear in mind that we do have 43 net new company-owned stores over the past 12 months. So that's working way into the cost structure. Advertising spend, 6.1% of net sales in the quarter. So that was $53 million in total. That's about $3 million lower than what we had last year. It's roughly about the same number. We do anticipate increasing advertising as we enter really next year, but you may see a little bit of an increase going into Q4 as well. We want to make sure that we're investing behind the brand, especially now that we have all of these really great product introductions coming in. We want to make sure that the marketing is supporting that as well. Operating profit of $139 million in the quarter, that compared to $133 million in the previous period in 2024. Strong adjusted free cash flow, $64.7 million. So continuing to generate free cash flow. This business has always had a great track record of doing that. And then a net debt position of $1.2 billion. When we get to the balance sheet, I'll touch on the fact that we had this refinancing that we just announced last week as well, so we can get through that a little bit in terms of extending all of the maturities. That net debt position is after returning almost $300 million of capital to our shareholders as well, so $279 million in aggregate between our share buyback program last year as well as the dividend. Our net leverage ratio was right around two turns, which is our long-term target for the company. And then liquidity at the end of the period, we were at $1.3 billion of liquidity. Post the refinancing that we did, that did improve a little bit as well. On Slide 24, the DTC sales mix, Kyle touched on this a little bit. Overall, if you're looking at it year-over-year, the wholesale is down about 2% as we increased our DTC mix. So our DTC mix is now 42% in aggregate. If you're looking at it in terms of the component parts of it, our own e-commerce channels have grown to 11.8% of the total number of sales that compared to 10.5% last year. Our retail, our own store fleet is delivering -- is now about 30% of the mix of that as compared to 29.3%. I know we oftentimes get the question as to what is our store strategy. But what we usually say is that we're trying to keep that portion of the pie that comes from the retail fleet the same. So it should be around 30% going forward. And most of the DTC growth going forward should come from e-commerce. The other point that I'll just raise is if you're looking at the breakdown of that wholesale pie, wholesale includes e-tailers for us. So it includes Amazon as well as Mercado Libre and the other etailers that you see around the globe. The portion of that 58% that comes from the e-tailers is now 9.2%, that's a full point better than where we were last year as well. So even that wholesale portion, you're seeing us push the e-commerce channels as well. On Slide 25, looking at travel versus non-travel, Kyle just showed you where the huge opportunity is in terms of trying to expand our presence and stretching our brands into non-travel. Non-travel growth, if you're looking at it sequentially from last year versus this year, non-travel growth up 6.7%. So we have a meaningful investment in this category. So now non-travel represents 35.6% of our total sales. Just compared to last year, we were just shy of 33%. So that 6.7% growth is meaningful and an area that we're going to continue to invest in. So just looking at it on a year-to-date basis on Slide 26. Obviously, as I mentioned, the first half was down 5.2%. Q1 was down 1.3%. That blends to we are just around down 3.9% year-to-date. Obviously, going to the back half of the year I am going into Q4, we're hoping that, that continues to improve as we get to the back end. Kyle will touch on that in his outlook. Gross margin year-to-date remains very strong. Again, 59.3% year-to-date. And we do expect as Asia starts to grow back to its normal clip and TUMI, which is performing, that will also further help the gross margin story for us. Adjusted EBITDA is down $77 million year-over-year. That's largely due to the fact that the sales are obviously lower. And there's a little bit of gross margin that's declined year-to-date between last year versus this year. And that's partially offset by a little bit of lower advertising as well. And year-to-date net income, $187 million as well. Looking at the balance sheet. Again, we have a very strong balance sheet. We feel very good about where we stand. Again, I have a specific slide dedicated to the refinancing, which is on the next one. But just on this slide, we are very well positioned to capitalize on long-term growth prospects. We have significantly delevered coming out of COVID, but we have a lot of financial discipline, and we expect that deleveraging story to continue. Ample liquidity at $1.3 billion and net leverage stands just right around two turns of net leverage. On Slide 28, I want to just spend a minute in terms of talking about this refinancing that we did. Basically, we refinanced all of the corporate debt that we had on the balance sheet at Samsonite. This is important because it was massively oversubscribed, showing the strength of our balance sheet overall and the interest in Samsonite. The importance is all of the debt maturities have now been extended. So our core pro rata facilities, our Term Loan A and revolving credit facility now have a maturity of 2030. The Term Loan B has been set to a maturity of 2032, so going out 7 years. And our senior notes, the Eurobonds that we had talked on the last few calls that were coming due beginning of next year have now refinanced to 2033 as well. If you look at the component parts, we were able to actually reduce pricing on the pro rata facilities, the Term Loan A, the revolving credit facility by removing the CSA that was there. So that's a 10 basis point improvement in pricing there. The Term Loan B, we were able to also reduce the margin on that by 25 basis points as well. So we're now at SOFR plus 175 basis points. Obviously, the bond markets are very different than where they were when Kyle initially executed the Eurobonds, but we still were very pleased with the outcome of 4.38% on that piece of debt as well. And you should be aware that we're also entering a number of swap transactions that should also help us in the near term in terms of managing the overall financing. The net-net of all this is basically we've extended the maturities and the interest expense is about the same with where it was previously. And we did improve liquidity by another $40 million as well as a result of this. On Slide 29, just looking at CapEx. Again, I mentioned that we had 43 net new stores year-over-year. Again, we're very disciplined on how much CapEx we spent. Year-to-date, we're at $54 million of CapEx, which is a slight improvement over where we were last year. Most of the CapEx goes into the retail fleet, as you can see, so $33.8 million of that is going into the stores. The breakdown of that is about $17 million is going into remodels, about $3 million into fixtures. And then new stores is about $13 million of CapEx. Again, very disciplined about how we're choosing to spend the additional CapEx that we have, but we are investing in stores because we believe in the opportunity there as well. I went through that very quickly to leave time for questions, but let me turn it over to Kyle for outlook, and then we'll open it up for questions.
Kyle Gendreau: Okay. Thanks, Reza. So -- and importantly, and I think you can sense it from my tone and what we've been delivering, we remain really confident on the long-term tailwinds that support our business. Although the current macroeconomic environment still is uncertain and there's plenty of inflationary pressures around the world that could weigh on consumer demand, particularly in the U.S., as you've heard from us, we expect to drive medium- and long-term sales growth really against very strong product launches, strong and elevating advertising campaigns, capitalizing growth in consumer demand for travel. It continues. Travel is one of the areas that consumers continue to prioritize and seize again on the opportunities around non-travel underpenetrated geographies, and channels across our business. All of these things we're very focused on and continuing to invest behind. With positive constant currency sales growth in the recent months, we expect some level of improvement in our constant currency net sales growth in Q4 relative to Q3. Q4 is expected to continue to benefit from global travel demand, strong product launches like Paralux, which really launched at the end of Q3 that's carrying into Q4 and this elevated advertising campaigns that you're seeing and feeling from us, not just on a product like Paralux but across our business. I think that said, consumer demand remains challenging to predict. I think that hasn't really changed tremendously. And it's -- and we have a sequentially tougher period to comp in Q4 off a stronger demand that we felt at the end of last year. But early reads into Q4, particularly with a positive start with a strong October and strong momentum into holidays make me feel convinced you'll see sequential improvement in the quarter for us and as a business. You can feel it in the messaging, the tone and just the recent trends that we've seen. We believe our scale advantages, supplier relationships, tariff mitigation efforts will continue to enable us to maintain a strong gross margin profile like we just delivered in Q3. And if you listen to how we talk about kind of the shifts of mix effect as we grow TUMI at a faster pace, as Asia gets back to delivering in normal course of growth that Asia is capable of delivering, this margin has strength behind it. We've managed through the bumps of tariffs perfectly, and there's opportunities for this to continue to expand in the medium and long term from a mix perspective. We continue to leverage this asset-light business model, as Reza just talked about when we look at the balance sheet and our ability to return cash to shareholders, deleverage our balance sheet on a go-forward basis. And as Reza just went through, and we successfully just reset and optimized our corporate debt structure, something that was significantly oversubscribed when we went to market, which delivered a great result that provides kind of stable balance sheet and stable liquidity for this business as we look forward to the next 5 years. And lastly, we continue to prep -- I would say, we're well prepared for dual listing in the U.S. We've been closely monitoring global economic backdrop and our own trading conditions, and we are encouraged with recent results, improvements in our trends in our own business. The Board and I firmly believe and the management team believe that dual listings in the right -- is the right thing for this company and to enhance shareholder value over time. And we're sitting in a ready position to do that. And we intend to complete this dual listing in 2026, considering the constructive environment that we're seeing. So with that, William, we'll open up to questions.
William Yue: Thank you, Kyle. Thank you, Reza. Operator, we can go into Q&A now. Thank you very much.
Operator: [Operator Instructions]. We are now going to proceed with our first question. And the questions come from the line of Erwan Rambourg from HSBC.
Erwan Rambourg: I wanted to thank Reza. I don't know if I will speak to you again, I mean, hopefully, in the future, but just wanted to say thanks for everything and best of luck. Three questions, if I can. I think you make a good case in terms of correlation between travel trends and sales having broken down post COVID and more recently, with a bit of a digesting period. When do you think you can reconnect to growth that would be similar or maybe even slightly above the growth of travel? Is that as early as next year, you think? So that's the first question. The second question is around, I think Reza mentioned the ad spend ratio should maybe pick up a bit in Q4 and into '26 to support the comeback of the business. Where do you see that ad spend ratio more sustainably? And then last question. I think, Kyle, you said that you were confident that Q4 could show sequential improvement despite the world not being that easy. Where do you see that improvement coming from, whether it's region or brand sequentially?
Kyle Gendreau: Okay. Thanks, Erwan, and thanks for the call out on Reza. I might just make a statement because others might have a thought on Reza as well. Reza and I have been together for 7 years doing some amazing stuff with this company, so I can't thank Reza enough as well. We're in a good position as a business. We've transformed a lot, particularly through COVID and positioned it well. But we're well placed on the finance side. Reza has got an amazing team around him. That we won't miss a beat. We'll obviously start a search on that, and we'll be thoughtful, just like I was thoughtful when I brought Reza into the fold with me 7 years ago. But we're well placed. The team's well trenched the finance team super solid. As you can tell, I'm laser-focused on delivering growth in the business and driving strategy and nothing changes in that arena. This business is well rooted with deep teams around us, but I agree and thanking Reza. I haven't quite congratulated him on that because I'm slightly annoyed with him -- I'm just ready. But that's -- but that's normal, but we've done some great stuff together -- we spent a lot of time together. So thank you. On the returning to travel trends, I think we're -- as I said, I feel like we're in this inflection point right now off of the back of what we've seen from kind of surge in travel and the dip that we felt off the back of that and consumer sentiment. But we're seeing some good trends right now as we're looking at the months fall. I think we're not too levels that are normal for us. But I have an indication and inkling that next year will look more normalized for us from a growth perspective, and I think start to really show that correlation. If you go back 15 years and see how perfectly correlated we are and our ability to actually outgrow the industry. And I think we start to trend into that as we get into next year, particularly as we get into Q2 as we're comping kind of a different period. And momentum feels good as we're going into holiday. I think the Q4 kind of trend that you asked as your third question, I think we generally see it kind of across the mix. The only market that I would say, continues to be challenged and largely because -- it's a meaningful wholesale business in North America, where we see very good sell-through. We're looking at sell-throughs of our October numbers of our month of October and month to date September sell-throughs that are quite high, quite surprising, actually. It speaks to consumers moving consumers moving ahead of holiday. We can see that in our November, Decembers. So I think you'll see sequential improvement across all of our business, just like you saw in Q3, you'll continue to see that across each of our brands. I expect Samsonite maybe to improve at a faster clip. That was kind of at a different point in Q3 than maybe what you saw in TUMI and American Tourister, but I expect that to kind of catch up. And we're seeing generally growth across all of our regions and some consistent improving trend way, which speaks to me, and it helps support kind of my comment on the front. We're really at this inflection point where everything is kind of reshifting and correlating back to the trends that we typically see in our industry. From an ad spend perspective, I just want to make sure we interpret right. I think we're -- we've been leaning into advertising. But Q4 from a percentage basis, will probably look like what we've been doing roughly year-to-date, maybe even as a percentage, just a bit lower. But overall, we're in and pushing. And so for the full year, we'll probably be just shy of 6%. I think the natural place for this business, and we've talked about this before, is somewhere around 6.5%. And I think as we really continue to build momentum, don't put it past us to push it forward. But if you're thinking next year, I think we bring it up to kind of what the normal trends are for us that I think is the right levels if we're really driving new consumers to the business. And excitement to the business, really effective efficient spend, but probably in that mid-6% range is the natural place to be.
Operator: We are now going to proceed with our next question. And our next question comes from the line of Chris Gao from CLSA.
Chris Gao: So I have three questions. So firstly, is regarding the China trend. So we have been seeing very exciting sequential recovery of TUMI brand Samsonite brand, which is also similar with some of the luxury brand data points that have been reflecting a recovery in China. So the first question is how do you see the sustainability of China's -- China markets recovery in the next few quarters? And also for the TUMI brands recovering, which reached 10% in the third quarter, how much is coming from retail space expansion and how much is coming from the same-store sales. And also -- the second question is also related with China, it is about the latest update. So how do you see the Double 11 trends in China right now? And also regarding recent China recoveries consumer profile, do you see the recovery is more boosted by the existing customers coming back? Or it is mainly coming from your new customers' recruitment? So this is the second question. And the third question is regarding the cash deployment. Since we have been seeing Samsonite adding on liquidity after the refinancing of senior notes and credit facilities, and recall that last year, Samsonite has launched a tranche of buyback. Is this something that we'll continue to consider going forward? And also dividend side have been continuously improving the dividend payment in the past 2 years. So do you also consider any dividend payout ratio increase? So these are the three of my questions.
Reza Taleghani: Why don't I start with the China stuff and then Kyle, -- China -- you can take it from there.
Kyle Gendreau: Yes.
Reza Taleghani: So overall, as you can tell, we definitely are seeing a shift in China. Again, this year, China compared to last year, we felt pretty good about it, but the first half of the year was a little bit slow. So when you were looking at China, so Q2, China was down about 6%. And China now, we're still a little bit down, but we're approaching flat in Q2 or it's down about 2% right now. But we are anticipating Q4 and we can already see the early reads of it. Obviously, we've seen a little bit of Double 11 already. We've already seen October as well. We're firmly in positive territory right now with China. It is all brands, but I will be honest, TUMI has really outperformed. So you saw the 10% number that we just shared. To answer your question about where it's coming from, actually, you'll be surprised -- maybe you'll be surprised to hear this. If you're looking at TUMI overall, the total number of net new stores year-to-date in all of Asia is actually 0. So all of it is -- now there are obviously certain locations where you exit and you add another one, and we're getting -- we're trying to get some larger square footage stores in the region. But this is really just -- so it's not through additional store expansion. It's actually coming from the existing store footprint as well as those new locations really delivering. In terms of who the customers are, it's a mix. So we do -- especially for brand TUMI, we do have some greater data in terms of being able to get some loyalty information from those customers. So you are seeing existing customers come back, but we are also seeing new customers being introduced to the brand as well, especially in China, making some really meaningful investments in advertising and brand behind some local influencers has helped us in that regard. Obviously, the new product introductions have been great. You've been with us for a while, so you'll recall that last year, we were talking about one of the initiatives we had was around 19-degree light. So trying to make sure that we have a lightweight product that really resonates with that international consumer. Those are the kinds of things that we've been doing to make sure that we can address the product needs, but also investing behind it with real brand advertising as well. So overall, again, I think we feel very good about our China business at a macro level across all the brands, but TUMI has been disproportionately doing well, as well. Early reads on Double 11, we don't have the final numbers in yet, early reads have been very positive. We've been pleasantly surprised in certain cases, candidly, in terms of how well it's gone. So I think that should work its way into the Q4 numbers as well. Let me see what the other question you had -- the new customer -- cash distribution. So what we've said is the dividend policy, we generally look at about a 40% payout ratio, you should expect us to do that. That's about $150 million in terms of cash use. So expect that going forward. Nothing has changed in terms of our approach with share repurchase. We're opportunistic around it. As you migrate to a U.S. listing, we are mindful that we have certain shareholders where from a tax perspective, it's much more efficient to return capital to them via share repurchase as opposed to dividends. So we will revisit that with the Board. But actively right now, we've completed the $200 million that we were out to do that we're holding those shares in treasury. We'll decide what to do with that at the time of the listing. And then going into next year, we'll decide whether we will look at that opportunistically as well. It will probably end up being some sort of mix between the dividend and share repurchase, but that hasn't been determined yet for next year.
Kyle Gendreau: Cash flow for the business remains tremendously strong. This kind of asset-light model that we talked about continues to deliver and to our ability to have some share buyback opportunistically pay dividend and continue to deleverage the balance sheet is something that we're very capable of doing. Even in a year where we're maybe trending down low single digit for the full year. The business generates a tremendous amount of cash flow. So all of that will stay in place.
Chris Gao: Okay. Can I follow up with one question. That is about the pricing. So the background of tourists -- can we ask about the magnitude of price increase in U.S. for the third quarter and also help it to trend in the next few quarters? And also, if there could be any price increase in other regions, could you please also update us as well?
Reza Taleghani: Yes. We haven't disclosed the level of price increases in the U.S. market. What we've said is it's been a combination between price increases, working with our suppliers. The other thing you should bear in mind as it relates to tariffs, a large portion of the landed cost of the product in the U.S. is freight, which has actually been working in our favor. So through a combination of those three, actually, it's more than that, but largely those we've mitigated it. The other point that I'll just raise is usually buy luggage every probably 3 years or so, it's not a regular good that you're regularly seeing what the price is. So the end consumer -- the actual price increases are really going to have a negligible impact. So it's not going to be like there's a sticker shock that my $200 carry on all of a sudden is $500.
Kyle Gendreau: And we're constantly redesigning product and reengineering products. So it becomes kind of a neutral story when you think about a period of 2 or 3 years because we're able to reengineer a lot of what we've been doing and a lot of what you've seen in markets like Asia and China where the consumer is doing a little bit of trade down, but within brand, we're able to reposition products to hit price points that deliver margin. And that's really what drives our business. So this is a business that you just kind of tack on price increase and off you go. This is around reengineering constantly to hit the right margins, to hit the value that consumers are looking for in the products. And there are no pending pricing. Most of everything we did on tariffs was done as we exited Q2 because we had full visibility to it. So there's nothing from a price increase perspective kind of baked in our business for Q4. And next year will be just a function of normal course if there are some on a normal course basis.
Operator: We are now going to proceed with our next question. And the questions come from the line of Anne Ling from Jefferies.
Kin Shun Ling: Just a couple of questions. First, regarding the margin, like I understand that in terms of having a stronger growth from TUMI, which is the higher-margin business and also more retail. So we have a pretty good GP margin. But I think we also have some store expense. So therefore, like our -- we have some pressure in terms of our OpEx on top of like -- top line growth was slightly negative. So my question will be like moving forward, when will we start to see like same-store sales growth start to have positive operating leverage. Maybe you can share with us some guidance in terms of like what we should be looking at in terms of the adjusted EBITDA margin. When will we be going back to the high teens level that you think that you previously mentioned. That's my first question. And my second question is on year 2026. Any like initial feel about like -- should we be going back to the mid-single-digit top line growth trajectory from that on?
Reza Taleghani: Why don't I start with the margin point. If you look at it on a percentage level, if you're just looking at our cost structure and always -- keep in mind, every time we talk about EBITDA margins, we should always look at advertising and then the rest of the cost structure as well because advertising is a lever that we move up and down, and we just finished saying that as you're entering next year, you should expect us to be increasing the advertising point as well. So if there's an increase that's coming as a result of sales rebounding, we will reinvest some of that behind advertising in the brand. But generally speaking, if you're looking at the -- so we had about a little over 40 stores, so 43 net new stores on an LTM basis that are adding a little bit to the cost structure. During that period of time, revenues have been down. So naturally, there's a deleveraging that's happening. You have some increased costs from new stores coming in. There's also just the normal wage increases, rent inflation and things like that, that you're looking at. If you're looking at it just in terms of the percentage increase, even including those stores, you're up about 4% or 5%. I think it's like 4.8%, if I remember correctly or thereabouts year-over-year. So it's not like something that's really out of whack. Usually, what happens is as soon as you return to sales growth and even just a couple of points of sales growth, you start to see the operating leverage come back. But again, you have to look at that in terms of at what point do we start to reinvest in advertising and increase that by whether it's 0.5% or thereabouts. So we haven't given guidance next year as yet for -- in terms of where we're going to be on sales or margins. We typically do that off of the year-end numbers in our normal course. So you should expect from March. What I will say is just the general trends, that Kyle said in his remarks, the trends are very favorable going into next year. We do feel good about two really big things. There's the overall macro level points in terms of what you expect travel to do, and Erwan asked the same question as well. And we're seeing that we are -- now that we've come out of that revenge travel kind of pull forward of demand that, that correlation is coming back again. So you have just the normal trends of the industry that are happening. But don't underestimate the fact that we are entering into a replacement cycle for next year as well. So you're coming up on that 3-year, 4-year period that where a lot of bag replacement happened post-COVID, and it's that natural replacement cycle should benefit us as well. So I think the combination of those two make us feel pretty good about going into 2026. But I think you should just expect formal guidance when we finish out the year.
Kyle Gendreau: And I think for '25 our Q4, you guys know our Q4 is often our strongest EBITDA margin quarter for us, and that still looks the same for us as well. So if you look at our year-to-date EBITDA margin, that will step up for the full year off the back of what typically very good EBITDA margin in Q4 that we can see will be delivering. So it gives you a good sense for it. And I think just to close the loop by, as we talk about advertising, I think Erwan asked the question. we are planning on leaning in to push advertising, which will do the same as driving sales. It will really allow kind of a lot of our brand and growth strategies to really accelerate for us. But that comes with kind of the short-term meaning on the overall margin as we lead into advertising. And so we should expect that a bit from us as well. But I think it's exactly the right thing to do as the business starts to move. And as I think I said during Erwan's question we start to get into some normal correlation to travel for next year is how we're feeling, but as we look with a slightly easier comp, which will also help next year as well. Thanks, everybody. We really appreciate the call. Any questions, you know how to get a hold of William and Alvin. And we'll be out and about meeting people as well over the next few weeks.
William Yue: Great. Thank you very much, Kyle. Thank you very much, Reza. Thank you very much, everyone, for joining the call.
Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect your lines. Thank you, and have a good rest of your day.