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- **Revenue & Profit Growth**: 7% revenue rise to $122.5M, adjusted EPS up 34% to $1.03, driven by XTRATUF and Muck brand strength.
- **Gross Margin Expansion**: 210bps improvement to 40.2%, supported by price hikes and in-house production shift.
- **Tariff Mitigation Progress**: 50% in-house manufacturing target for 2026, reducing China reliance to 10%. Q4 2025 will bear peak tariff impact.
- **Key Brand Momentum**: XTRATUF e-commerce up double digits, Muck受益于Bone Collector合作，Durango面临延迟交货但Q4有望改善。
- **2026 Outlook**: Gross margins to recover to 39-40% in H2, with XTRATUF cold weather collection and Sesame Street collaboration driving growth.

**CEO Summary Section**
- **Revenue Growth**: Q3 2025 net sales increased 7% to $122.5 million, driven by double-digit growth in XTRATUF and Muck brands. Adjusted diluted EPS rose 34% to $1.03.
- **Gross Margin Expansion**: Gross margin improved 210 basis points to 40.2%, benefiting from brand mix, price increases, and higher retail sales (46.8% margin).
- **Tariff Mitigation**: Shifted 50% of production to in-house facilities (Dominican Republic, Puerto Rico) and diversified suppliers to Vietnam, Cambodia, and India, reducing China reliance to 10%.
- **Key Brand Momentum**: XTRATUF saw double-digit U.S. wholesale and e-commerce growth, while Muck benefited from Bone Collector collaboration and GMA feature. Durango faced delayed shipments due to Q2 price increase anticipation.

**CFO Financial Commentary**
- **Top Line**: Wholesale (+6.1%), Retail (+10.3%), and Contract Manufacturing (+4.1%) all expanded, with retail driving margin strength.
- **Expense Management**: Operating expenses rose 7.5% to $37.6 million, driven by logistics and marketing costs. Interest expense decreased 21% due to lower debt levels.
- **Balance Sheet**: Cash of $3.3 million and debt of $139 million. Inventories grew 12.7% to $193.6 million, with $17 million tied to tariffs. $10 million tariff impact expected in Q4, with remaining in 2026H1.
- **2025 Guidance**: Revenue up 4-5%, gross margins down 70bps to 38-39%, EPS up 10% to $2.80.

**Q&A Highlights**
- **Consumer Sentiment**: Cautious spending but strong sell-through in e-commerce and key accounts. Q3 e-commerce rebounded post-platform transition.
- **Supply Chain Delays**: $2-3 million in delayed shipments due to new supplier ramp-up. 2026 in-house production target: 50% vs. 2025's 30%.
- **Tariff Impact**: Q4 2025 will be most impacted, with 2026H2 gross margins expected to recover to 39-40% as tariffs flow through.
- **XTRATUF Outlook**: Cold weather collection launch and Sesame Street collaboration poised for Q4 success. Inland market expansion underway.
- **Durango Challenges**: Hispanic retail softness and sourcing delays, but improving in September.


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